EXECUTION COPY
AMENDMENT NO. 2 TO AGREEMENT
Reference is made to the Agreement made the 7th day of February,
2006, as amended by Amendment No. 1 to the Agreement made as of the 15th day of
September, 2006 (the "Agreement"), by and among Xxxxxxx Asset Management Corp.
("Sandell"), 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, XX 00000, and Trian Fund Management,
L.P. ("Trian"), 000 Xxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000, with respect to
X. X. Xxxxx Company, a Pennsylvania corporation. The parties hereto desire to
amend the Agreement pursuant to this Amendment No. 2, made as of the 1st day of
December, 2006 (this "Amendment"). Capitalized terms used and not defined herein
shall have the meanings ascribed thereto in the Agreement.
The parties hereto agree as follows:
1. AMENDMENTS.
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(a) The following Section 7 is hereby added to the Agreement:
"7. RIGHT OF FIRST OFFER/REFUSAL.
(a) In the event that, on or after the date hereof, in the case of
the One-Third Stake, and on or after the 2007 Date, in the case
of any Securities beneficially owned by the Xxxxxxx Funds as of
the 2007 Date (as applicable, the "Subject Securities"), Xxxxxxx
decides to sell or otherwise dispose of ("Transfer") all or any
of the Subject Securities, Xxxxxxx shall promptly so notify Trian
in writing (the "Offer Notice"), including therein the number of
Subject Securities proposed to be Transferred. If Xxxxxxx has
received a bona fide third party offer (an "Offer") to purchase
the Subject Securities and is proposing to Transfer the Subject
Securities pursuant to such Offer, the terms and conditions of
such Offer, including price per share (the "Offer Price"), shall
be set forth in the Offer Notice. In the case where no Offer
exists, the Offer Notice shall state the closing price per share
on the day the Offer Notice is delivered (the "Market Price").
The Offer Notice shall be delivered on any business day not later
than 4:30 p.m., New York City time. Trian shall have until noon,
New York City time, on the business day following the day the
Offer Notice is delivered to deliver to Xxxxxxx written notice
(the "Exercise Notice") of exercise of its right to purchase,
through the Trian Funds, all or a portion of the Subject
Securities described in the Offer Notice.
(b) If Trian shall have timely delivered to Xxxxxxx an Exercise
Notice with respect to all or a portion of the Subject
Securities, then Trian and Xxxxxxx shall, within three business
days after delivery of the Exercise Notice, consummate the
transaction with respect to such Subject Securities at a price
per share equal to (i) in the case where an Offer exists, the
Offer Price, or (ii) in the case where no Offer exists, the
Market Price.
(c) Notwithstanding the foregoing, if Trian or any of the Trian Funds
are restricted from purchasing all or a portion of the Subject
Securities identified in the Exercise Notice ("Restricted
Securities") due to regulatory restrictions, Trian shall identify
such restrictions in the Exercise Notice and the parties agree to
execute a purchase agreement with respect to such Restricted
Securities within three business days after delivery of the
Exercise Notice (such date of execution, the "Signing Date"). The
purchase price per share shall be determined in accordance with
Section 7(b) above and the only condition to Trian's obligation
to purchase such Restricted Securities shall be obtaining the
necessary regulatory approval. Trian will seek to obtain such
approval, including making all necessary filings and taking any
other required actions in connection therewith, as expeditiously
as possible. Upon the earliest of (i) the consummation of the
acquisition of such Restricted Securities, (ii) the determination
by Trian that it cannot acquire the Restricted Securities due to
its inability to obtain the required regulatory approval and
(iii) the expiration of a 35-day period beginning on the Signing
Date (such earliest date, the "Payment Date"), Trian shall pay
Xxxxxxx an interest amount with respect to the purchase price (or
deemed purchase price had the sale been consummated) at the
Federal funds rate plus 0.25% for the period beginning three
business days after delivery of the Exercise Notice and ending on
the Payment Date.
(d) If Xxxxxxx shall not receive a timely Exercise Notice from Trian,
or if Trian exercises its right under clause (a) above only with
respect to a portion of the Subject Securities referred to in the
Offer Notice, then, subject to clause (e) below, the Xxxxxxx
Funds shall have the right to Transfer the Subject Securities as
to which Trian has not exercised its right at such times and for
such purchase price as Xxxxxxx, in its sole discretion, shall
determine.
(e) If, with respect to any Subject Securities not elected to be
purchased by the Trian Funds pursuant to clause (a) above,
Xxxxxxx shall fail to close the Transfer of such Subject
Securities as permitted above within 30 days following receipt of
an Exercise Notice or, if no Exercise Notice is delivered, 30
days following the expiration of the time period referred to in
clause (a) above within which an Exercise Notice could have
timely been delivered, then Xxxxxxx shall not be permitted to
Transfer any of such Subject Securities without again first
following the procedures set forth in this Section 7.
(f) Xxxxxxx acknowledges, on behalf of itself and the Xxxxxxx Funds,
that Trian may now or hereafter possess or have access to
material non-public information concerning the Company that has
not been communicated to Xxxxxxx and that may or may not be known
by Xxxxxxx now or at the time of any transaction contemplated by
this Section 7. Xxxxxxx represents that it has such knowledge,
sophistication and experience in business and financial matters
(including with respect to the trading in securities of public
companies) so as to be capable of evaluating the merits and risks
of the transactions contemplated by this Section 7, and that it
understands the disadvantage to which it may be subject on
account of the disparity of information as between it and Trian.
Xxxxxxx acknowledges that none of Trian, the Trian Funds or any
of their affiliates has made any representation or warranty
concerning the Company or its condition (financial or otherwise),
results of operations, business or prospects, and that it is not
relying on any representation or warranty with respect to the
Company or the transactions contemplated by this Section 7 except
for those specifically set forth in this Section 7. In addition,
Xxxxxxx acknowledges that Trian is and will be relying upon the
truth of Xxxxxxx'x representations, warranties and
acknowledgments contained in this Section 7 in engaging in the
transactions contemplated by this Section 7 and that Trian would
not engage in such transactions or agree to the provisions set
forth in this Section 7 in the absence of such representations,
warranties and acknowledgments. Xxxxxxx, on behalf of itself, the
Xxxxxxx Funds and their affiliates, hereby expressly releases
Trian, the Trian Funds and their affiliates from any and all
liabilities arising from, waives any and all claims it may have
or hereafter acquire against Trian, the Trian Funds or any of
their affiliates (including pursuant to Rule 10b-5 under the
Securities Exchange Act of 1934, as amended) with respect to, and
agrees not to bring any suit, action or proceeding against Trian,
the Trian Funds or any of their affiliates in connection with,
Trian, the Trian Funds or any of their affiliates' failure to
disclose any such material non-public information to Xxxxxxx or
the Xxxxxxx Funds and otherwise in respect of the transactions
contemplated by this Section 7.
(g) All notices described in this Section 7 or in Section 8 below
must be delivered by facsimile and email, if to Trian, to both
Xxxx Xxxxxx (000-000-0000, XXXXXXX@XXXXXXXXXXXXX.XXX) and the
General Counsel of Trian (000-000-0000,
XXXXXX@XXXXXXXXXXXXX.XXX), with a copy to Xxxx Xxxxxx
(000-000-0000, XXXXXXX@XXXXXXXXXXXXX.XXX), and if to Xxxxxxx, to
Xxx Xxxxxxx (000-000-0000, XXX@XXXXXXXXXXX.XXX), with a copy to
Xxxxxx Xxxxxx, Esq. (000-000-0000, XXXXXX@XXX-XXX.XXX).
(h) All share numbers referenced in this Section 7 and Section 8
below shall be appropriately adjusted in the event of any split,
reverse split, combination of shares, reclassification,
recapitalization or similar event relating to the Company's
common stock.
(i) The provisions of this Section 7 shall no longer apply following
such time as the Trian Funds shall have sold, since the date
hereof, Securities representing at least 500,000 shares of the
Company's common stock."
(b) The following Section 8 is hereby added to the Agreement:
"8. TAG-A-LONG RIGHTS.
(a) In the event that Trian or Xxxxxxx (the "Selling Party") desires,
in one or a series of related private transactions, to sell,
transfer, assign or convey to a non-Affiliate Person
("Purchaser"), Securities held by the Trian Funds or the Xxxxxxx
Funds, as applicable, representing at least 500,000 shares of the
Company's common stock, pursuant to a bona fide offer from such
Purchaser (the "Sale Offer"), the Selling Party shall give
written notice (the "Tag-A-Long Notice") of such offer to the
other party (the "Tagging Party") setting forth the Purchaser's
name (provided the Selling Party is not restricted from doing
so), the amount of Securities proposed to be sold by the Selling
Party, the terms on which such Securities are to be sold
(including price and form of consideration) and the time period
within which a response from the Tagging Party is required with
respect to such Sale Offer (which shall not be less than one
business day from delivery of such notice, as determined by the
Selling Party in its sole discretion).
(b) The Tagging Party shall have the right to participate on a
pro-rata basis in the contemplated Sale Offer upon written notice
to the Selling Party within the time period prescribed in the
Tag-A-Long Notice. The Tagging Party's pro rata allocation shall
be based upon the amount of Securities held by the Tagging Party
(including the Trian Funds or the Xxxxxxx Funds, as applicable)
as a percentage of the aggregate number of Securities held by the
Trian Funds and the Xxxxxxx Funds, in each case as of the date
the Tag-A-Long Notice is delivered. The amount of Securities sold
by the Selling Party pursuant to the Sale Offer shall be reduced
by the amount of Securities, if any, elected to be sold by the
Tagging Party pursuant to this Section 8.
(c) In the event that, prior to consummating the Sale Offer, the
Selling Party receives a new sale offer with terms and conditions
more favorable to it than the Sale Offer (the "Updated Offer"),
the Selling Party shall be required to again first follow the
procedures set forth in this Section 8 with respect to the
Updated Offer prior to consummating such sale."
(c) The provisions of Section 5 of the Agreement are hereby deleted and
replaced in their entirety with the following:
"From and after December 1, 2006, Section 1 of this Agreement shall no
longer be effective with respect to one-third of the Securities beneficially
owned by the Xxxxxxx Funds as of the date hereof, which Xxxxxxx represents is
1,793,800 shares of common stock of the
Company (the "One-Third Stake"). From and after the earlier of September 1, 2007
and the conclusion of the next annual meeting of the Company's shareholders
(including any adjournments or postponements thereof) (such date, the "2007
Date"), Section 1 of this Agreement shall no longer be effective with respect to
the other two-thirds of the Securities beneficially owned by the Xxxxxxx Funds
as of the date hereof, which Xxxxxxx represents is 3,587,600 shares of common
stock of the Company. In any event, this Agreement shall terminate upon the
earlier of the Trian Funds or the Xxxxxxx Funds no longer beneficially owning
any Securities; PROVIDED, HOWEVER, that the provisions set forth in Sections 3
and 4 hereof and the governing law provisions set forth in Section 6(a) hereof
shall survive any termination of this Agreement."
2. MISCELLANEOUS.
(a) Except as described in Section 1 above or in the agreement
executed and delivered on September 15, 2006 among Bear, Xxxxxxx
& Co. Inc., Trian and Xxxxxxx, the terms and provisions of the
Agreement shall remain in full force and effect.
(b) This Amendment may be executed in counterparts.
IN WITNESS WHEREOF, the undersigned have entered into this
Amendment as of the day and year first above written.
TRIAN FUND MANAGEMENT, X.X. XXXXXXX ASSET MANAGEMENT CORP.
By: Trian Fund Management GP, LLC,
its General Partner
By: /s/ Xxxxxx X. Garden By: /s/ Xxxxxx X. Xxxxxxx
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Name: Xxxxxx X. Garden Name: Xxxxxx X. Xxxxxxx
Title: Member Title: Chief Executive Officer
