OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
APPLIED GRAPHICS TECHNOLOGIES, INC.
AT
$0.85 NET PER SHARE
BY
KAGT ACQUISITION CORP.,
A WHOLLY OWNED SUBSIDIARY OF
KAGT HOLDINGS, INC.
--------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, JULY 18, 2003, UNLESS THE OFFER IS EXTENDED.
--------------------------------------------------------------------------------
June 20, 2003
To Brokers, Dealers, Banks, Trust Companies and other Nominees:
We have been engaged by KAGT Acquisition Corp., a Delaware corporation (the
"Purchaser") and a wholly owned subsidiary of KAGT Holdings, Inc., a Delaware
corporation ("Parent"), and Parent to act as Information Agent in connection
with the Purchaser's offer to purchase all outstanding shares of common stock,
par value $0.01 per share (the "Shares"), of Applied Graphics Technologies,
Inc., a Delaware corporation (the "Company"), at $0.85 per share (the "Offer
Price"), net to the seller in cash, without interest thereon, upon the terms and
subject to the conditions set forth in the Purchaser's Offer to Purchase dated
June 20, 2003 (the "Offer to Purchase"), and in the related Letter of
Transmittal (which, together with any amendments or supplements thereto,
collectively constitute the "Offer").
Please furnish copies of the enclosed materials to those of your clients
for whom you hold Shares registered in your name or in the name of your nominee.
Enclosed herewith are copies of the following documents:
1. Offer to Purchase dated June 20, 2003;
2. Letter of Transmittal to be used by stockholders of the Company in
accepting the Offer;
3. Letter to Stockholders of the Company from the Chairman of the
Board and Chief Executive Officer and the President and Chief Operating
Officer of the Company accompanied by the Company's
Solicitation/Recommendation Statement on Schedule 14D-9;
4. A printed form of letter that may be sent to your clients for whose
account you hold Shares in your name or in the name of a nominee, with
space provided for obtaining such client's instructions with regard to the
Offer;
5. Notice of Guaranteed Delivery with respect to Shares; and
6. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (A) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED IN SECTION 1
OF THE OFFER TO PURCHASE) THAT NUMBER OF SHARES THAT WOULD REPRESENT MORE THAN
FIFTY PERCENT OF THE FULLY DILUTED SHARES (AS DEFINED IN SECTION 14 OF THE OFFER
TO PURCHASE) ON THE DATE OF PURCHASE
(THE "MINIMUM CONDITION"), (B) ANY WAITING PERIOD UNDER THE XXXX-XXXXX-XXXXXX
ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED, IF ANY, APPLICABLE TO THE
PURCHASE OF SHARES PURSUANT TO THE OFFER OR TO THE MERGER HAVING EXPIRED OR BEEN
TERMINATED, (C) THE CONSUMMATION OF THE OTHER RECAPITALIZATION TRANSACTIONS (AS
DESCRIBED IN SECTION 14 OF THE OFFER TO PURCHASE) AND (D) THE RECEIPT OF FUNDING
UNDER THE DEBT COMMITMENT LETTER (AS DESCRIBED IN SECTION 14 OF THE OFFER TO
PURCHASE).
We urge you to contact your clients promptly. Please note that the Offer
and withdrawal rights will expire at 12:00 midnight, New York City time, on
Friday, July 18, 2003, unless extended.
The Offer is being made pursuant to the Agreement and Plan of Merger dated
as of June 12, 2003 (the "Merger Agreement"), among Parent, the Purchaser and
the Company pursuant to which, following the consummation of the Offer and the
satisfaction or waiver of certain conditions, the Purchaser will be merged with
and into the Company, with the surviving entity becoming a wholly owned
subsidiary of Parent (the "Merger"). At the effective time of the Merger, each
outstanding Share (other than Shares owned by Parent, the Purchaser or the
Company or any subsidiary of Parent or the Company or by stockholders, if any,
who are entitled to and properly exercise appraisal rights under Delaware law)
will be converted into the right to receive the price per Share paid pursuant to
the Offer in cash, without interest thereon, as set forth in the Merger
Agreement and described in the Offer to Purchase. The Merger Agreement provides
that the Purchaser may assign any or all of its rights and obligations
(including the right to purchase Shares in the Offer) to Parent or any wholly
owned subsidiary of Parent, but no such assignment shall relieve the Purchaser
of its obligations under the Merger Agreement.
The Board of Directors of the Company (a) has unanimously approved the
Merger Agreement and the transactions contemplated by the Merger Agreement,
including the Offer, the Merger and certain related recapitalization
transactions, (b) has unanimously determined that the terms of the Offer and the
Merger are fair, from a financial point of view, to the stockholders of the
Company and that the Merger is advisable, and (c) unanimously recommends that
the stockholders of the Company accept the Offer and tender their Shares
pursuant to the Offer.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (a) the certificates
for such Shares, together with a Letter of Transmittal or a manually signed
facsimile thereof, properly completed and duly executed, any required signature
guarantees and any other required documents or (b) in the case of a transfer
effected pursuant to the book-entry transfer procedures described in Section 2
of the Offer to Purchase, a Book-Entry Confirmation and either a Letter of
Transmittal or a manually signed facsimile thereof, properly completed and duly
executed, and any required signature guarantees, or an Agent's Message (as
defined in the Offer to Purchase), and any other required documents.
Accordingly, tendering stockholders may be paid at different times depending
upon when certificates for Shares or Book-Entry Confirmations with respect to
Shares are actually received by the Depositary. Under no circumstances will
interest be paid on the purchase price of the Shares to be paid by the
Purchaser, regardless of any extension of the Offer or any delay in making such
payment.
Neither the Purchaser nor Parent will pay any fees or commissions to any
broker or dealer or other person (other than the Information Agent and
Depositary, as described in the Offer to Purchase) in connection with the
solicitation of tenders of Shares pursuant to the Offer. You will be reimbursed
by the Purchaser upon request for customary mailing and handling expenses
incurred by you in forwarding the enclosed Offer materials to your customers.
Questions and requests for additional copies of the enclosed material may
be directed to the Information Agent at its address and telephone number set
forth on the back cover of the enclosed Offer to Purchase.
Very truly yours,
MacKenzie Partners, Inc.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL RENDER YOU OR
ANY OTHER PERSON THE AGENT OF THE PURCHASER, PARENT, THE DEPOSITARY OR THE
INFORMATION AGENT OR AUTHORIZE YOU OR ANY OTHER PERSON TO GIVE ANY INFORMATION
OR MAKE ANY REPRESENTATION ON BEHALF OF ANY OF THEM WITH RESPECT TO THE OFFER
NOT CONTAINED IN THE OFFER TO PURCHASE OR THE LETTER OF TRANSMITTAL.
The Information Agent for the Offer is:
MACKENZ LOGO
MacKenzie Partners, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
(000) 000-0000 (Call Collect)
or
Call Toll-Free (000) 000-0000
E-mail: xxxxx@xxxxxxxxxxxxxxxxx.xxx
