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.
TABLE OF CONTENTS
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
i
(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
ii
(d) Regulatory Approvals..................................................................27
Section 7.2 Conditions to Obligations of Acquisition..............................................27
iii
(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
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Agreement
Page and Section
Exhibit Description Reference
------- ----------- ----------------
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]
Disclosure Agreement
Schedule Page and Section
Part Description Reference
---------- ----------- ----------------
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)]
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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, Xx. Xxxxxxx Xxxxx and Xxxx Xxxxxxx (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;
NOW, THEREFORE, in consideration of the mutual
representations, warranties, covenants, agreements and conditions contained
herein, and in order to set forth the terms and conditions of the Offer and the
Merger and the mode of carrying the same into effect, the parties hereto agree
as follows:
ARTICLE I
THE TENDER OFFER
SECTION 1.1 THE OFFER. (A) Provided that this Agreement shall
not have been terminated in accordance with Section 8.1 hereof and none of the
events set forth in Annex I hereto shall have occurred and be existing,
Acquisition shall commence (within the meaning of Rule 13d-2 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) the Offer as
promptly as practicable, but in no event later than five business days following
the public announcement of the execution of this Agreement, and shall use all
reasonable efforts to consummate the Offer. The obligation of Acquisition to
accept for payment any Audits Shares tendered shall be subject to the
satisfaction of only those conditions set forth in Annex I. Acquisition
expressly reserves the right to waive any such condition or to increase the Per
Share Amount or, subject to Section 1.1(b), to make other changes in the terms
and conditions of the Offer. The Per Share Amount shall be net to the seller in
cash, subject to reduction only for any applicable Federal back-up withholding
or stock transfer taxes payable by the seller. Audits agrees that no Audits
Shares held by Audits will be tendered pursuant to the Offer.
(B) Without the prior written consent of Audits, Acquisition
shall not (i) decrease the Per Share Amount or change the form of consideration
payable in the Offer, (ii) decrease the number of Audits Shares sought, (iii)
amend or waive satisfaction of the Minimum Condition (as defined in Annex I) or
(iv) impose additional conditions to the Offer or amend any other term of the
Offer in any manner adverse to the holders of Audits Shares; provided, however,
that Acquisition may extend the expiration date (x) in its sole discretion from
time to time, if on the initial scheduled expiration date of the Offer which
shall be twenty (20) business days after the date the Offer is commenced, all
conditions to the Offer shall not have been satisfied or waived; or (y) for a
period not to exceed ten (10) business days, notwithstanding that all conditions
to the Offer are satisfied as of such expiration date of the Offer, if,
immediately prior to the initial expiration date of the Offer (as it may be
extended), the Audits Shares tendered and not withdrawn pursuant to the Offer
equal less than 90% of the outstanding Audits Shares and Acquisition expressly
irrevocably waives any condition (other than the Minimum Condition) that
subsequently may not be satisfied during such extension of the Offer; or (z) for
any period required by any rule, regulation or interpretation of the Securities
and Exchange Commission (the "SEC") or the staff thereof applicable to the
Offer. Acquisition shall, on the terms and subject to the prior satisfaction or
waiver of the conditions of the Offer, accept for payment and purchase, as soon
as permitted under the terms of the Offer, all Audits Shares validly tendered
and not withdrawn prior to the expiration of the Offer as such expiration may be
extended in accordance with this Section 1.1(b).
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(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
cooperate with Audits with respect to correcting such information) and to
supplement the information contained in the Schedule 14D-9 to include any
information that shall become necessary in order to make the statements therein,
in light of the circumstances under which they were made, not misleading, and
Audits shall take all steps necessary to cause the Schedule 14D-9 as so
corrected to be filed with the SEC and disseminated to Audits's stockholders to
the extent required by applicable Federal securities laws. Acquisition and its
counsel shall be given a reasonable opportunity to review and comment on the
Schedule 14D-9 before it is filed with the SEC.
(C) In connection with the Offer, Audits shall promptly upon
execution of this Agreement furnish Acquisition with mailing labels containing
the names and addresses of all record holders of Audits Shares and security
position listings of Audits Shares held in stock depositories, each as of a
recent date, and shall promptly furnish Acquisition with such additional
information, including updated lists of stockholders, mailing labels and
security position listings, and such other information and assistance as
Acquisition or its agents may reasonably request for the purpose of
communicating the Offer to the record and beneficial holders of Audits Shares.
SECTION 1.3 DIRECTORS. (A) Promptly upon the purchase by
Acquisition of all of the Inducement Shares pursuant to the Inducement Agreement
or Audits Shares pursuant to the Offer, and from time to time thereafter as
Audits Shares are acquired by Acquisition, Acquisition shall be entitled to
designate such number of directors, rounded up to the next whole number, on the
Board of Directors as will give Acquisition, subject to compliance with Section
14(f) of the Exchange Act, representation on the Board of Directors equal to at
least that number of directors which equals the product of the total number of
directors on the Board of Directors (giving effect to the directors appointed or
elected pursuant to this sentence and including current directors serving as
officers of Audits) multiplied by the percentage obtained by dividing (i) the
aggregate number of Audits Shares beneficially owned by Acquisition or any
affiliate of Acquisition (including for purposes of this Section 1.3 such Audits
Shares as are accepted for payment pursuant to the Offer, but excluding Audits
Shares held by Audits) by (ii) the number of Audits Shares outstanding
(excluding Audits Shares held by Audits). At such times, if requested by
Acquisition, Audits will also cause each committee of the Board of Directors to
include persons designated by Acquisition constituting the same percentage of
each such committee as Acquisition's designees are of the Board of Directors.
Audits shall, upon request by Acquisition, promptly increase the size of the
Board of Directors or exercise its best efforts to secure the resignations of
such number of directors as is necessary to enable Acquisition designees to be
elected to the Board of Directors in accordance with the terms of this Section
1.3 and shall cause Acquisition's designees to be so elected; provided, however,
that, in the event that Acquisition's designees are appointed or elected to the
Board of Directors, until the Effective Time (as defined in Section 2.3 hereof)
the Board of Directors shall have at least one director who is a director on the
date hereof and who is neither an officer of Audits nor a designee, stockholder,
affiliate or associate (within the meaning of the Federal securities laws) of
Acquisition (one of more of such directors, the "Independent Directors");
provided, further, that if no Independent Directors remain, the other directors
shall designate one person to fill one of the vacancies who shall not be either
an officer of Audits or a designee, shareholder, affiliate or associate
4
of Acquisition, and such person shall be deemed to be an Independent Director
for purposes of this Agreement.
(B) Subject to applicable law, Audits shall promptly take all
action necessary pursuant to Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder in order to fulfill its obligations under this Section
1.3 and shall include in the Schedule 14D-9 mailed to stockholders promptly
after the commencement of the Offer (or an amendment thereof or an information
statement pursuant to Rule 14f-1 if Acquisition has not theretofore designated
directors) such information with respect to Audits and its officers and
directors as is required under Section 14(f) and Rule 14f-1 in order to fulfill
its obligations under this Section 1.3. Group Ltd. will supply Audits and be
solely responsible for any information with respect to itself and its nominees,
officers, directors and affiliates required by Section 14(f) and Rule 14f-1.
Notwithstanding anything in this Agreement to the contrary, prior to the
Effective Time, the affirmative vote of a majority of the Independent Directors
shall be required to (i) amend or terminate this Agreement on behalf of Audits,
(ii) exercise or waive any of Audits's rights or remedies hereunder, (iii)
extend the time for performance of Acquisition's obligations hereunder or (iv)
take any other action by Audits in connection with this Agreement required to be
taken by the Board of Directors.
ARTICLE II
PRINCIPAL TERMS OF MERGER
SECTION 2.1 SURVIVING CORPORATION. At the Effective Time (as
defined in Section 2.3 hereof), Acquisition shall be merged with and into Audits
upon the terms and conditions hereinafter set forth as permitted by and in
accordance with the DGCL. At the Effective Time, the identity and separate
existence of Acquisition shall cease, and Audits shall succeed to all rights,
privileges, powers, franchises, properties, assets, debts, liabilities and
obligations of Acquisition in accordance with Section 259 of the DGCL.
SECTION 2.2 CERTIFICATE OF MERGER. Subject to the provisions
of Article VII hereof, the Surviving Corporation shall execute a certificate of
merger (the "Certificate of Merger") and cause such Certificate to be filed with
the Delaware Secretary of State (the "Secretary") and recorded in accordance
with the applicable provisions of Sections 251 and 103 of the DGCL on or as
promptly as practical after the Effective Time.
SECTION 2.3 EFFECTIVE TIME. The Merger shall become effective
at the date and time when the Certificate of Merger is filed by the Secretary in
accordance with the applicable provisions of the DGCL (or at such later time
specified as the effective time in the Certificate of Merger), which Certificate
shall be submitted for filing as soon as practicable after all of the conditions
set forth in Article VII are fulfilled or waived, provided that this Agreement
has not been previously terminated pursuant to Section 8.1 hereof. The date and
time when the Merger shall become effective are herein referred to as the
"Effective Time."
5
SECTION 2.4 CERTIFICATE OF INCORPORATION. The certificate of
incorporation of the Surviving Corporation from and after the Effective Time
(the "Surviving Certificate of Incorporation") shall be as set forth in EXHIBIT
B to this Agreement, until thereafter further amended as provided by law and by
Section 6.2(g) hereof.
SECTION 2.5 BY-LAWS. The by-laws of the Surviving Corporation
from and after the Effective Time (the "Surviving By-Laws") shall be as set
forth in EXHIBIT C to this Agreement, until thereafter further amended as
therein provided and by Section 6.2(g) hereof.
SECTION 2.6 OFFICERS AND DIRECTORS. At the Effective Time,
those of the current directors of Audits as are designated in writing by Group
Inc. prior to the Effective Time shall resign, and the directors and officers of
the Surviving Corporation shall be as designated by Group Inc. prior to the
Effective Time; and such officers and directors shall hold office until the next
annual meeting of the stockholders or of the Board of Directors of the Surviving
Corporation and until their successors have been duly elected and qualified.
SECTION 2.7 APPROVAL OF AUDITS STOCKHOLDERS. Following
consummation of the Offer, Acquisition shall, as soon as reasonably possible,
cause Audits to take all action necessary in accordance with the DGCL, Audits's
Certificate of Incorporation and By-Laws and the Exchange Act, to hold a meeting
of its stockholders to consider and vote upon the adoption of this Agreement and
the authorization of the Merger, and at such meeting Acquisition shall vote all
Analyze Shares over which it has voting control in favor thereof. In no event
shall such meeting be held earlier than 20 business days following the date on
which a proxy statement (the "Proxy Statement") is sent to the stockholders of
Audits.
ARTICLE III
STATUS AND CONVERSION OF SECURITIES
SECTION 3.1 STATUS AND CONVERSION OF AUDITS SHARES. At the
Effective Time, by virtue of the Merger and without any action on the part of
the holders thereof:
(A) Any Audits Shares held by Audits as treasury shares or
held by any Audits subsidiary shall be canceled and retired.
(B) Each then outstanding Audits Share remaining (other than
Audits Shares to be canceled in accordance with Section 3.1(a) hereof and other
than Audits Shares held by stockholders of Audits who properly exercise
dissenters' rights available under the DGCL ("Dissenting Shares")) shall be
converted into the right to receive the Per Share Amount in cash, without
interest.
6
(C) If, between the date of this Agreement and the Effective
Time, the outstanding Audits Shares shall have been changed into a different
number of shares or a different class by reason of any reclassification,
recapitalization, split-up, combination, exchange of shares or readjustment or
other similar transaction with respect to Audits Shares, or a stock dividend
thereon shall be declared with a record date within said period, the Per Share
Amount shall be correspondingly adjusted. Audits covenants and agrees not to
take any action referred to in the preceding sentence.
(D) Each Dissenting Share as to which a written objection to
the Merger is filed in accordance with Section 262 of the DGCL at or prior to
the approval by Audits's stockholders of the Merger taken at the meeting of such
stockholders referred to in Section 2.7 hereof and not withdrawn at or prior to
the time of such approval and which is not voted in favor of the Merger shall
not be converted into a right to receive cash hereunder unless and until the
holder shall have effectively withdrawn or lost his right to payment for his
Audits Shares under such Section 262, at which time his Audits Shares shall be
converted into a right to receive cash in accordance with Section 3.1(b).
SECTION 3.2 AUDITS STOCK OPTIONS. With respect to all
outstanding options (referred to collectively as the "Options" and individually
as an "Option") to purchase Audits Shares, a complete list of which is included
in Part C of the Disclosure Schedule, each holder of an Option which is
surrendered by the holder for cancellation shall be entitled to receive from
Audits, immediately prior to the Effective Time, for each Audits Share
purchasable under the vested portion (but not the unvested portion) of an Option
issued under Audits's 1997 Stock Option Plan and for each Audits Share
purchasable under both the vested and unvested portions of an Option issued
under Audits's 1994 Stock Option Plan, an amount in cash in full cancellation of
such Option equal to the excess, if any, of the Per Share Amount over the per
share exercise price of such Option (or such greater amount as Acquisition shall
agree in writing), as such amount may be reduced by any required withholding in
accordance with applicable tax laws. Audits's Board of Directors will adopt a
resolution terminating Audits's 1994 and 1997 Stock Option Plans (collectively
the "Option Plans") effective as of the Effective Date. Audits agrees to use its
best efforts to obtain prior to the expiration date of the Offer written
agreements of all optionholders legally binding such optionholders to
cancellation of all Options consistent with the foregoing.
SECTION 3.3 ACQUISITION TO MAKE CASH AVAILABLE. At or prior to
the Effective Time, Acquisition shall make available to United States Trust
Company of New York, or such other entity as Acquisition shall designate to act
as paying agent (the "Paying Agent"), such funds (the "Payment Fund") as are
required for the conversion of Audits Shares into the right to receive cash
pursuant to Section 3.1 hereof. The Payment Fund may be invested from time to
time by the Paying Agent, as directed by the Surviving Corporation, in (i)
obligations of or guaranteed by the United States of America or any State, (ii)
commercial paper rated A-1 or A-2, and/or (iii) time deposits with, including
certificates of deposit issued by, any office located in the United States of
any bank or trust company that has capital, surplus and undivided profits of at
least $50,000,000, and any net
7
earnings with respect thereto shall be paid to the Surviving Corporation as and
when requested by the Surviving Corporation.
Promptly after the Effective Time, the Paying Agent shall mail
to each record holder of Audits Shares a form of letter of transmittal and
instructions for use in surrendering certificates representing such shares and
receiving payment therefor.
Each holder of Audits Shares to be converted into the right to
receive cash pursuant to this Article III shall be entitled to receive, upon
surrender to the Paying Agent of one or more certificates for such Audits Shares
for cancellation, a bank check made payable to such holder for the amount of
cash, without interest, into which the Audits Shares previously represented by
such certificates are convertible in the Merger. If a check is to be sent to a
person other than the person in whose name the certificates for the Audits
Shares surrendered for conversion are registered, it shall be a condition of
payment that the certificates so surrendered shall be properly endorsed and the
signatures thereon properly guaranteed and otherwise in proper form for transfer
and that the person requesting such payment shall pay to the Surviving
Corporation any transfer or other taxes required by reason of the delivery of
such check to a person other than the registered holder of the certificates
surrendered, or shall establish to the satisfaction of the Surviving Corporation
that such taxes have been paid or are not applicable. Until so presented and
surrendered in exchange, from and after the Effective Time each certificate
representing Audits Shares held by Audits stockholders (other than Dissenting
Shares) shall be deemed for all purposes to evidence only the right to receive
the cash to which such Audits Shares are entitled in accordance with Section 3.1
hereof.
Any portion of the Payment Fund not paid to holders of Audits
Shares pursuant to this Agreement within twelve months after the Effective Time
shall be paid over by the Paying Agent to the Surviving Corporation together
with a list of holders of Audits Shares who have not yet surrendered
certificates for Audits Shares to the Paying Agent and such holders of Audits
Shares shall thereafter look only to the Surviving Corporation for payment, but
shall have no greater rights against the Surviving Corporation than may be
accorded to general creditors under applicable law. Notwithstanding the
foregoing, neither the Paying Agent, the Surviving Corporation nor any party
hereto shall be liable to a holder of Audits Shares for any cash delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
SECTION 3.4 STATUS AND CONVERSION OF ACQUISITION SHARES. At
the Effective Time, each share of Common Stock, $.01 par value, of Acquisition
issued and outstanding immediately prior to the Effective Time shall, by virtue
of the Merger, automatically and without any action on the part of the holder
thereof, be converted into and become one validly issued, fully paid and
nonassessable share of Common Stock, $.01 par value, of the Surviving
Corporation.
SECTION 3.5 CLOSING OF TRANSFER BOOKS OF AUDITS. At the
Effective Time, the stock transfer books of Audits shall be closed and no
transfer of Audits Shares shall be made thereafter. In the event that
certificates representing Audits Shares are presented for transfer to the
8
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.
9
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
10
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
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 0000 (xxx "XXX Xxx") 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.
11
(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
12
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
13
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
14
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:
15
(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,
16
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.
17
(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
18
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
Xxxxx & 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
Xxxxx & 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
20
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
22
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
23
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
24
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).
25
(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. Xxxxxxx Xxxxx, H. Xxxxxx Xxxxxxx, Xx., Xxxx X. Xxxxx, Xxxx X. Xxxxxx and
Xxxx Xxxxxxx (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
26
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
27
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;
29
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
30
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
Xxxxxxx Xxxxx
000 Xxxxxxxxxxx Xxxx
Xxxxxx XX0 0XX
Xxxxxxx
Attention: Mr. Xxx Xxxx
Telecopier No.: 011-44-171-579-4485
with a copy to:
United Information Group, Inc.
0 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxx, Esq.
Telecopier No.:000-000-0000
and a copy to:
Xxxxxx, Xxxxxxx & Xxxxxxx
0 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Telecopier No.: 000-000-0000
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To Audits:
Audits & Surveys Worldwide, Inc.
The Audits & Surveys Building
650 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxx Xxxxx
Telecopier No.: 000-000-0000
with a copy to:
Xxxxxx Xxxxxx Flattau & Klimpl, LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxx, Esq.
Telecopier No.: 000-000-0000
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/ Xxxxxxx X. Block
---------------------------------
UNITED NEWS & MEDIA GROUP LIMITED
By: /s/ Xxxxxxx Xxxxx
---------------------------------
AUDITS & SURVEYS WORLDWIDE, INC.
By: /s/ H. Xxxxxx Xxxxxxx, Xx.
---------------------------------
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ANNEX I
Notwithstanding any other provision of this Agreement, Acquisition
shall not be required to accept for payment or pay for any Audits Shares
tendered, and may terminate or amend the Offer (subject to the provisions of
this Agreement) and may postpone the acceptance of, and payment for, subject to
Rule 14e-1(c) of the Exchange Act, any Audits Shares tendered, (A) unless the
following conditions shall have been satisfied: (i) there shall be validly
tendered and not withdrawn prior to the expiration of the Offer a number of
Audits Shares which represents on a fully diluted basis (including for purposes
of such calculation all Audits Shares issuable upon exercise of all vested stock
options and warrants and conversion of convertible securities or other rights to
purchase or acquire shares) at least 51% of the number of Audits Shares then
outstanding (the "Minimum Condition") and (ii) any applicable waiting period
under the HSR Act shall have expired or been terminated prior to the expiration
of the Offer and any required approval of the competition authority of the
Republic of Ireland shall have been obtained or (B) if at any time after the
date of this Agreement and before the time of payment for any such Audits Shares
(whether or not any Audits Shares have theretofore been accepted for payment or
paid for pursuant to the Offer) any of the following conditions exists:
(a) there shall be in effect an injunction or other order,
decree, judgment or ruling by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission of
competent jurisdiction or a statute, rule, regulation, executive order
or other action or proceeding shall have been promulgated, enacted,
taken, initiated or instituted by a government or a governmental
authority or a governmental, regulatory or administrative agency or
commission of competent jurisdiction which in any such case (i) seeks
to restrain or prohibit the making or consummation of the Offer or the
consummation of the Merger, (ii) seeks to prohibit or restrict the
ownership or operation by Acquisition (or any of its affiliates or
subsidiaries) of any material portion of Audits's business or assets,
or seeks to compel Acquisition (or any of its affiliates or
subsidiaries) to dispose of or hold separate any material portion of
Audits's business or assets, (iii) seeks to impose material limitations
on the ability of Acquisition effectively to acquire or to hold or to
exercise full rights of ownership of the Audits Shares, including,
without limitation, the right to vote the Audits Shares purchased by
Acquisition on all matters properly presented to the stockholders of
Audits, or (iv) seeks to impose any material limitations on the ability
of Acquisition or any of its affiliates or subsidiaries effectively to
control in any material respect the business and operations of Audits;
or
(b) this Agreement shall have been terminated by Audits,
Acquisition or Group Ltd. in accordance with its terms; or
(c) there shall have occurred and be continuing (i) any
general suspension of, or limitation on prices for, trading in
securities on any national securities exchange or the over-the-counter
market, (ii) a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States, (iii) any limitation
(whether or not mandatory) by any government or Governmental Authority
of the United States on the extension of credit by banks or other
lending institutions, or (iv) in the case of any of the
34
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
35
(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.
36
