STOCKHOLDER AGREEMENT
STOCKHOLDER AGREEMENT (this "Agreement"), dated
as of November 26, 1996, by and among The Clorox Company,
a Delaware corporation ("Purchaser"), Shield Acquisition
Corporation, a Delaware corporation and a wholly owned
subsidiary of Purchaser ("Sub"), and McKesson
Corporation, a Delaware corporation ("Stockholder").
WHEREAS, Stockholder is, as of the date hereof,
the record and beneficial owner of 11,624,900 shares of
common stock, par value $0.01 per share (the "Common
Stock") of Armor All Products Corporation, a Delaware
corporation (the "Company"); and
WHEREAS, Purchaser, Sub and the Company
concurrently herewith are entering into an Agreement and
Plan of Merger, dated as of the date hereof (the "Merger
Agreement"), which provides, among other things, for the
acquisition of the Company by Purchaser by means of a
cash tender offer (the "Offer") for any and all of the
outstanding shares of Common Stock and for the subsequent
merger (the "Merger") of Sub with and into the Company
upon the terms and subject to the conditions set forth in
the Merger Agreement; and
WHEREAS, Stockholder and the Company are
parties to a Services Agreement dated as of July 1, 1986
between the Company and Stockholder, as amended through
April 1, 1996 (the "Services Agreement"), under which
Stockholder provides certain corporate support, employee
benefit and other services to the Company and a Tax
Allocation Agreement dated as of July 1, 1986 whereby,
among other things, Stockholder was permitted to file
consolidated income tax returns in which the Company was
included for certain tax years of the Company (the "Tax
Allocation Agreement"); and
WHEREAS, certain employees of the Company are
participants in Plans (as that term is defined in the
Merger Agreement) maintained by Stockholder for the
benefit of such employees and identified in the Merger
Agreement (the "Stockholder Plans");
WHEREAS, as a condition to the willingness of
Purchaser and Sub to enter into the Merger Agreement, and
in order to induce Purchaser and Sub to enter into the
Merger Agreement, Stockholder has agreed, to enter into
this Agreement.
NOW, THEREFORE, in consideration of the
execution and delivery by Purchaser and Sub of the Merger
Agreement and the foregoing and the mutual
representations, warranties, covenants and agreements set
forth herein and therein, and other good and valuable
consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
SECTION 1. Representations and Warranties of
Stockholder. Stockholder hereby represents and warrants
to Purchaser and Sub as follows:
(a) Stockholder is the record and
beneficial owner of 11,624,900 shares of Common Stock (as
may be adjusted from time to time pursuant to Section 6
hereof the "Shares"), of which 6,939,759 shares (the
"Exchange Shares") are deposited with The First National
Bank of Chicago ("FNB"), as Exchange Agent, pursuant to
that certain Exchange Agent Agreement, dated as of March
14, 1994, between Stockholder and FNB, as Exchange Agent
(the "Exchange Agent Agreement"), and that certain
Indenture, dated March 14, 1994, between Stockholder and
FNB, as Trustee (the "Indenture").
(b) Stockholder is a corporation duly
organized, validly existing and in good standing under
the laws of Delaware, has all requisite corporate power
and authority to execute and deliver this Agreement and
to consummate the transactions contemplated hereby, and
has taken all necessary corporate action to authorize the
execution, delivery and performance of this Agreement.
(c) This Agreement has been duly
authorized, executed and delivered by Stockholder and
constitutes the legal, valid and binding obligation of
Stockholder, enforceable against Stockholder in
accordance with its terms, except (i) as limited by
applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application
affecting enforcement of creditors' rights generally, and
(ii) the availability of the remedy of specific
performance or injunctive or other forms of equitable
relief may be subject to equitable defenses and would be
subject to the discretion of the court before which any
proceeding therefor may be brought.
(d) Neither the execution and delivery of
this Agreement nor the consummation by Stockholder of the
transactions contemplated hereby will result in a
violation of, or a default under, or conflict with, any
contract, trust, commitment, agreement, understanding,
arrangement or restriction of any kind to which
Stockholder is a party or bound or to which the Shares
are subject. To the best of Stockholder's knowledge,
consummation by Stockholder of the transactions
contemplated hereby will not violate, or require any
consent, approval, or notice under, any provision of any
judgment, order, decree, statute, law, rule or regulation
applicable to Stockholder or the Shares, except for any
necessary filing under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), or
state takeover laws.
(e) The Shares and the certificates
representing Shares are now and at all times during the
term hereof will be held by Stockholder, or by a nominee
or custodian for the benefit of Stockholder, free and
clear of all liens, claims, security interests, proxies,
voting trusts or agreements, understandings or
arrangements or any other encumbrances whatsoever, except
for (i) the Exchange Shares, which are subject to the
terms and provisions of the Indenture and the Exchange
Agent Agreement providing for the exchange of Debentures
(as defined in the Indenture) for the Exchange Shares by
the holders of Debentures upon the circumstances and
subject to the terms set forth therein, and (ii) any such
encumbrances or proxies arising hereunder.
(f) Except as set forth in the Company
Disclosure Letter of the Merger Agreement, the
representations and warranties of the Company in Section
4.10 of the Merger Agreement, to the extent that they
relate to any Stockholder Plan, are true and accurate as
of the date of this Agreement.
SECTION 2. Representations and Warranties of
Purchaser and Sub. Each of Purchaser and Sub hereby,
jointly and severally, represents and warrants to
Stockholder as follows:
(a) Each of Purchaser and Sub is a
corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its
incorporation, has all requisite corporate power and
authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby, and has
taken all necessary corporate action to authorize the
execution, delivery and performance of this Agreement.
(b) This Agreement has been duly
authorized, executed and delivered by each of Purchaser
and Sub and constitutes the legal, valid and binding
obligation of each of Purchaser and Sub, enforceable
against each of them in accordance with its terms, except
(i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general
application affecting enforcement of creditors' rights
generally and (ii) the availability of the remedy of
specific performance or injunctive or other forms of
equitable relief may be subject to equitable defenses and
would be subject to the discretion of the court before
which any proceeding therefor may be brought.
(c) Neither the execution and delivery of
this Agreement nor the consummation by each of Purchaser
and Sub of the transactions contemplated hereby will
result in a violation of, or a default under, or conflict
with, any contract, trust, commitment, agreement,
understanding, arrangement or restriction of any kind to
which each of Purchaser and Sub is a party or bound. To
the best knowledge of each of Purchaser and Sub,
consummation by each of Purchaser and Sub of the
transactions contemplated hereby will not violate, or
require any consent, approval, or notice under, any
provision of any judgment, order, decree, statute, law,
rule or regulation applicable to each of Purchaser and
Sub except for any necessary filing under the HSR Act or
state takeover laws.
SECTION 3. Purchase and Sale of Shares.
Stockholder hereby agrees that it shall, and direct the
Exchange Agent pursuant to Section 15.8 of the Indenture
and pursuant to the Exchange Agent Agreement to, tender
the Shares into the Offer and that it shall not, nor
direct the Exchange Agent to, withdraw any Shares so
tendered. Sub hereby agrees to purchase all the Shares
so tendered at a price per Share equal to $19.09 or such
higher price per Share as may be offered by Sub in the
Offer; provided that Sub's obligation to accept for
payment and pay for the Shares in the Offer is subject to
all the terms and conditions of the Offer set forth in
the Merger Agreement and Annex A thereto. Simultaneously
with or prior to its tender of the Shares into the Offer
Stockholder shall deliver to Sub an affidavit stating,
under penalty of perjury, the Seller's U.S. taxpayer
identification number and that the Stockholder is not a
foreign person, pursuant to Section 1445(b)(2) of the
Internal Revenue Code of 1986, as amended.
SECTION 4. Transfer of Shares. Prior to the
termination of this Agreement, except as otherwise
provided herein and in the Indenture and the Exchange
Agent Agreement, Stockholder shall not: (i) transfer
(which term shall include, without limitation, for the
purposes of this Agreement, any sale, gift, pledge or
other disposition), or consent to any transfer of, any or
all of the Shares or any interest therein; (ii) enter
into any contract, option or other agreement or
understanding with respect to any transfer of any or all
of the Shares or any interest therein; (iii) grant any
proxy, power-of-attorney or other authorization or
consent in or with respect to the Shares; (iv) deposit
the Shares into a voting trust or enter into a voting
agreement or arrangement with respect to the Shares; or
(v) take any other action that would in any way restrict,
limit or interfere with the performance of its
obligations hereunder or the transactions contemplated
hereby.
SECTION 5. Grant of Irrevocable Proxy;
Appointment of Proxy.
(a) Stockholder hereby irrevocably grants
to, and appoints, Purchaser and any nominee thereof,
Stockholder's proxy and attorney-in-fact (with full power
of substitution), for and in the name, place and stead of
Stockholder, to vote the Shares, or grant a consent or
approval in respect of the Shares, in connection with any
meeting of the stockholders of the Company (i) in favor
of the Merger, and (ii) against any action or agreement
which would impede, interfere with or prevent the Merger,
including any other extraordinary corporate transaction,
such as a merger, reorganization or liquidation involving
the Company and a third party or any other proposal of a
third party to acquire the Company.
(b) Stockholder represents that any
proxies heretofore given in respect of the Shares are not
irrevocable, and that such proxies are hereby revoked.
(c) Stockholder hereby affirms that the
irrevocable proxy set forth in this Section 5 is given in
connection with the execution of the Merger Agreement,
and that such irrevocable proxy is given to secure the
performance of the duties of Stockholder under this
Agreement. Stockholder hereby further affirms that the
irrevocable proxy is coupled with an interest and, except
as set forth in Section 8 hereof, is intended to be
irrevocable in accordance with the provisions of Section
212(e) of the Delaware General Corporation Law (the
"DGCL").
SECTION 6. Certain Events. In the event of
any stock split, stock dividend, merger, reorganization,
recapitalization or other change in the capital structure
of the Company affecting the Common Stock, or the
acquisition of additional shares of Common Stock or other
securities or rights of the Company by Stockholder, the
number of Shares shall be adjusted appropriately, and
this Agreement and the obligations hereunder shall attach
to any additional shares of Common Stock or other
securities or rights of the Company issued to or acquired
by Stockholder.
SECTION 7. Further Assurances. Stockholder
shall, upon request of Purchaser or Sub, execute and
deliver any additional documents and take such further
actions as may reasonably be deemed by Purchaser or Sub
to be necessary or desirable to carry out the provisions
hereof and to vest the power to vote the Shares as
contemplated by Section 5 hereof in Purchaser.
SECTION 8. Covenants.
(a) At the Effective Time Sub shall
transfer to Stockholder (i) $265,000 as a contribution to
the ESOP and PSIP plans maintained by Stockholder and
(ii) an additional amount not to exceed $130,000
reasonably determined by Stockholder in accordance with
past practice, representing a quarterly contribution to
Stockholder's Retirement Plan in respect of the 1996 plan
year in full satisfaction of all obligations of the
Company to contribute to such Stockholder Plans, which
exclude all plans sponsored or maintained solely by the
Company (the "Contribution Obligation"). Stockholder
shall cause an amount equal to such contribution to be
distributed to, or for the benefit of, employees of the
Company and the Subsidiaries in accordance with the
provisions of such Stockholder Plans.
(b) Stockholder shall pay all expenses
for any medical, dental, disability or life insurance
claim incurred by or on behalf of any current or former
employee of the Company or the Subsidiaries prior to the
Effective Time whether or not such claim is submitted or
paid prior to the Effective Time. Stockholder will
continue to provide benefits under its retiree medical
plan to those persons receiving benefits at the Effective
Time.
(c) From and after the date hereof to the
Effective Time, Stockholder shall not, and shall not
permit the Company to, make any elections, or change any
existing elections, with respect to Taxes (as that term
is defined in the Merger Agreement), without the prior
written consent of Purchaser.
(d) From and after the date that Sub
shall have purchased and paid for all of the Shares of
Stockholder pursuant to Section 3 hereof, Stockholder
shall make available to Purchaser any and all records and
other materials in Stockholder's possession or control
that relate to any of the Company's filings or returns
relating to Taxes, Tax audits affecting the Company, or
any other records relating to Taxes of the Company or for
which the Company may be responsible.
(e) Stockholder shall continue to
reimburse the Company for any foregone federal tax
deductions relating to state income or franchise taxes
for any period ending on or before the Effective Time
during which the Company was part of a California unitary
tax filing with Stockholder or any Affiliate of
Stockholder.
(f) At or prior to the Effective Time,
Stockholder shall enter into an amendment to the Services
Agreement pursuant to which Stockholder shall provide to
the Company consultation services with respect to legal,
tax, personnel, information systems, risk management and
insurance matters relating to the Company on terms and
conditions no less favorable to the Company than provided
in the Services Agreement prior to such amendment for a
period not to exceed six months after the Effective Time;
provided, however, that such consultation services shall
be provided to the Company at an hourly rate of $135, and
expenses and third party costs incurred in providing such
consultation services shall be approved prior to such
incurrence.
SECTION 9. Indemnification. From and after
the Closing Date, Stockholder shall protect, defend,
indemnify and hold harmless Purchaser and Company from
any claims, liabilities, costs or expenses arising out of
(i) any breach or inaccuracy of the representation set
forth in Section 1(f) of this Agreement and (ii) all
Taxes (including without limitation any obligation to
contribute to the payment of any Taxes determined on a
consolidated, combined or unitary basis with respect to a
group of corporations that includes or included the
Company to the extent that such obligation to contribute
exceeds an amount attributable to Taxes of or
attributable to the Company or its Subsidiaries) which
are imposed on the Stockholder or any member (other than
the Company or its Subsidiaries) of the consolidated,
unitary or combined group which includes or included the
Company or its Subsidiaries that Purchaser or the Company
or its Subsidiaries pay, or otherwise satisfy in whole or
in part, or that result in liens or encumbrances on any
assets of the Company or its Subsidiaries or Purchaser.
SECTION 10. Termination. This Agreement, and
all rights and obligations of the parties hereunder,
shall terminate immediately upon the earlier of (a) the
date upon which the Merger Agreement is terminated in
accordance with its terms (i) by either Purchaser and
Sub, on the one hand, or the Company, on the other hand,
or (ii) by mutual written consent of Purchaser, Sub and
the Company, or (b) the date that Sub shall have
purchased and paid for all of the Shares of Stockholder
pursuant to Section 3 hereof; provided, however, that (A)
the indemnification obligation set forth in clauses (i)
and (ii) of Section 9 hereof shall survive for a period
equal to (i) three years following the Effective Time and
(ii) the applicable statute of limitations, respectively
and (B) the covenants set forth in Section 8(a) through
(e) shall survive without limitation and the covenant set
forth in Section 8(f) shall survive for the period
specified therein. The proxy given pursuant to Section 5
hereof shall be automatically revoked and be of no
further force or effect, without further action on the
part of any party hereto, immediately upon the
termination of this Agreement.
SECTION 11. Expenses. All fees and expenses
incurred by any one party hereto shall be borne by the
party incurring such fees and expenses.
SECTION 12. Public Announcements. Each of
Purchaser, Sub and the Company agrees that it will not
issue any press release or otherwise make any public
statement with respect to this Agreement or the
transactions contemplated hereby without the prior
consent of the other party, which consent shall not be
unreasonably withheld or delayed; provided, however, that
such disclosure can be made without obtaining such prior
consent if (i) the disclosure is required by law or by
obligations imposed pursuant to any listing agreement
with the Nasdaq National Market and (ii) the party making
such disclosure has first used its best efforts to
consult with the other party about the form and substance
of such disclosure.
SECTION 13. Miscellaneous.
(a) Capitalized terms used and not
otherwise defined in this Agreement shall have the
respective meanings assigned to such terms in the Merger
Agreement.
(b) All notices and other communications
hereunder shall be in writing and shall be deemed given
upon (i) transmitter s confirmation of a receipt of a
facsimile transmission, (ii) confirmed delivery by a
standard overnight carrier or when delivered by hand or
(iii) the expiration of five business days after the day
when mailed in the United States by certified or
registered mail, postage prepaid, addressed at the
following addresses (or at such other address for a party
as shall be specified by like notice):
(A) if to Stockholder, to:
McKesson Corporation
Xxx Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: General Counsel
with a copy to:
Skadden, Arps, Slate, Xxxxxxx
& Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxxx
and
(B) if to Purchaser or Sub, to:
The Clorox Company
0000 Xxxxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: General Counsel
with a copy to:
Xxxxxxxx & Xxxxxxxx LLP
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxxxx
(c) The headings contained in this
Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this
Agreement.
(d) This Agreement may be executed in two
or more counterparts, each of which shall be deemed an
original but all of which shall be considered one and the
same agreement.
(e) This Agreement (including the Merger
Agreement and any other documents and instruments
referred to herein) constitutes the entire agreement, and
supersedes all prior agreements and understandings,
whether written and oral, among the parties hereto with
respect to the subject matter hereof.
(f) This Agreement shall be governed by,
and construed in accordance with, the laws of the State
of Delaware without giving effect to the principles of
conflicts of laws thereof.
(g) Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be
assigned by any of the parties hereto (whether by
operation of law or otherwise) without the prior written
consent of the other parties. Subject to the preceding
sentence, this Agreement will be binding upon, inure to
the benefit of and be enforceable by, the parties and
their respective successors and assigns, and the
provisions of this Agreement are not intended to confer
upon any person other than the parties hereto any rights
or remedies hereunder.
(h) If any term, provision, covenant or
restriction herein is held by a court of competent
jurisdiction or other authority to be invalid, void or
unenforceable or against its regulatory policy, the
remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force
and effect and shall in no way be affected, impaired or
invalidated.
(i) Each of the parties hereto
acknowledges and agrees that in the event of any breach
of this Agreement, each non-breaching party would be
irreparably and immediately harmed and could not be made
whole by monetary damages. It is accordingly agreed that
the parties hereto (i) will waive, in any action for
specific performance, the defense of adequacy of a remedy
at law and (ii) shall be entitled, in addition to any
other remedy to which they may be entitled at law or in
equity, to compel specific performance of this Agreement
in any action instituted in any state or federal court
sitting in Orange County. The parties hereto consent to
personal jurisdiction in any such action brought in any
state or federal court sitting in Orange County and to
service of process upon it in the manner set forth in
Section 11(b) hereof.
(j) No amendment, modification or waiver
in respect of this Agreement shall be effective against
any party unless it shall be in writing and signed by
such party.
IN WITNESS WHEREOF, Purchaser, Sub and
Stockholder have caused this Agreement to be duly
executed and delivered as of the date first written
above.
THE CLOROX COMPANY
By________________________________
Name:
Title:
SHIELD ACQUISITION CORPORATION
By________________________________
Name:
Title:
MCKESSON CORPORATION
By________________________________
Name:
Title:
