EXECUTION COPY
AGREEMENT
AGREEMENT made this 7th day of February, 2006, by and among Xxxxxxx Asset
Management Corp., 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, XX 00000 ("Xxxxxxx"), and Trian
Fund Management, L.P., 000 Xxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000
("Trian"), with respect to X.X. Xxxxx Company, a Pennsylvania corporation (the
"Company").
R E C I T A L S:
- - - - - - - -
The Parties wish to enter into this Agreement to coordinate certain of
their efforts with respect to: (i) the purchase of interests in the Company,
whether through the purchase of debt or equity securities of the Company and/or
options, swaps or other derivative securities or instruments relating to the
Company (collectively, "Securities"); and (ii) the proposal of certain actions
and/or transactions to the Company.
The parties hereto agree as follows:
1. PURCHASE AND SALE OF SECURITIES.
(a) The parties represent and warrant that, as of the date hereof, none of
them or any of their affiliates owns any Securities. The parties agree that,
without Trian's prior approval, no investment funds, managed accounts and other
investment vehicles managed or advised by them or their affiliates (with respect
to Xxxxxxx, the "Xxxxxxx Funds", with respect to Trian, the "Trian Funds", and
collectively, the "Funds") shall in the aggregate collectively beneficially own
5% or more of the Company's common stock.
(b) All Securities acquired in accordance with this Agreement having an
aggregate purchase price up to $660 million shall be allocated 70% to the Trian
Funds and 30% to the Xxxxxxx Funds (such percentages, the "Pro Rata
Percentages"). Any purchases in excess of $660 up to $860 million shall be
allocated to the Xxxxxxx Funds. Any purchases in excess of $860 million
shall be allocated to the Trian Funds and the Xxxxxxx Funds in accordance
with the Pro Rata Percentages. Notwithstanding the foregoing, the Pro Rata
Percentages shall automatically be adjusted to reflect the actual ratio of
Securities owned by the parties. All sales of Securities shall be allocated in
accordance with the Pro Rata Percentages. The parties understand and agree that
Trian shall have final approval with respect to the timing, amounts and prices
of purchases, sales and exercises of Securities, subject to prior discussion and
consultation with Xxxxxxx. Unless otherwise agreed to by the parties, all
purchases, sales and exercises of Securities shall be executed solely by either
Trian's or Xxxxxxx'x trading desk, subject to prior discussion and consultation
between the parties. At the end of each trading day, purchased Securities or
proceeds from sales of Securities shall be allocated to accounts designated by
the parties in accordance with the Pro Rata Percentages, with each party
responsible for its allocable portion of the purchase price of any purchased
Securities.
2. OTHER COORDINATED ACTIVITIES.
(a) The parties understand and agree that Trian shall have final approval
with respect to (i) whether to initiate any proxy contest involving the Company,
and if so, all related matters including the manner and timing thereof and the
nomination of individuals to serve as directors of the Company, (ii) the manner
in which Securities held by the Funds are voted in connection with any matter
submitted for a vote by shareholders of the Company, (iii) the manner, form,
content and timing of any communications with the Company as well as any public
disclosures, public statements or other third party communications relating to
the Company, the Securities, this Agreement and the activities of the parties
pursuant to this Agreement, including the making of any proposals regarding
corporate transactions, and (iv) any decisions with respect to changing the
intentions of the parties and the Funds from that previously disclosed in Item 4
of any Schedule 13D or any other regulatory filings filed by the parties and/or
the Funds. Any of the foregoing
actions shall be taken solely by Trian, but only after reasonable advance
notice to, and a reasonable period of consultation with, Xxxxxxx. In addition,
Xxxxxxx will be invited to participate in any pre-arranged meetings or
teleconferences relating to the activities of the parties hereunder.
Notwithstanding the foregoing, (x) Xxxxxxx shall have the right to approve in
advance (such approval not to be unreasonably withheld) any disclosure proposed
to be made with respect to Xxxxxxx or any of its affiliates in any public
statements or regulatory filings and (y) if Xxxxxxx believes, after consultation
with counsel, that it or any of its affiliates are required by applicable law to
make any public announcement with respect to the Company, this Agreement and/or
the activities of the parties pursuant hereto, it shall be entitled to make such
disclosure provided that it gives Trian reasonable advance notice and a
reasonable period of consultation before making any such disclosure.
(b) In the event Trian or any of its affiliates makes an offer to purchase
all of the outstanding common stock of the Company, Trian shall offer Xxxxxxx
the opportunity to participate in such offer.
(c) For value received, Xxxxxxx hereby appoints and constitutes Trian
and/or its designees, with full power of substitution, during the term of this
Agreement, as its proxy, including, without limitation, for the purpose of
enforcing the provisions set forth in clause (a) above relating to the voting of
Securities, in respect of all Securities now or hereafter owned by Xxxxxxx
and/or the Xxxxxxx Funds, to the full extent of their rights with respect to
such Securities. This proxy is coupled with an interest, is irrevocable and
shall survive, and shall not be affected by, the subsequent bankruptcy or
insolvency of Xxxxxxx or any of the Xxxxxxx Funds.
3. EXPENSES; INDEMNIFICATION; CONTRIBUTION.
(a) Except as otherwise set forth herein, Xxxxxxx shall pay 75% of all
expenses incurred by the parties in furtherance of the activities engaged in by
the parties pursuant to this Agreement
(collectively, "Expenses"). Notwithstanding the foregoing, all Expenses
relating to Indemnifiable Litigation (as defined below), all filing fees
required to be paid by the parties under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), and commissions and other
expenses incurred in connection with the purchase or sale of securities shall be
borne by the parties in accordance with the Pro Rata Percentages. Each of the
parties will promptly upon request reimburse the other party for their
respective portion of any Expenses paid or advanced by such other party. Upon
request, the party seeking reimbursement hereunder shall provide the other party
with reasonable documentation evidencing its Expenses.
(b) Each of the parties agrees to indemnify and hold harmless the other
party and its affiliates in accordance with their respective Pro Rata Percentage
from and against any and all expense, liability and loss (including attorneys'
fees, judgments, fines and amounts paid or to be paid in any settlement by a
party hereto and approved in advance by the other, such approval not to be
unreasonably withheld) actually incurred or suffered by such other party or any
of its affiliates in connection with any threatened, pending or contemplated
investigation, claim, action, suit or proceeding, whether civil, criminal,
administrative or investigative (collectively, "Indemnifiable Litigation"), to
which such party or any of its affiliates is made a party or is threatened to be
made a party by reason of any action or inaction taken or omitted in connection
with this Agreement and the ownership of Securities. The parties shall jointly
cooperate in the defense of any Indemnifiable Litigation. Notwithstanding any of
the foregoing, no party or any of its affiliates shall be entitled to any
indemnification hereunder for any such expense, liability or loss arising out of
such person's fraud, willful misconduct, gross negligence, bad faith or
violation of federal or state securities laws.
(c) In the event that a party's or its affiliates' right to indemnification
as provided above is for any reason not available or insufficient to hold such
party or its affiliates harmless to the extent provided herein, each of the
parties agrees to contribute to the aggregate expense, liability or loss
(including legal or other expenses reasonably incurred in connection with
investigating or defending the same) involved in proportion to their respective
Pro Rata Percentage ("Contribution Expense"). Each of the parties agrees that it
would not be just and equitable if contribution were determined by any other
method of allocation. Notwithstanding the foregoing, a party or its affiliates
shall not be entitled to contribution for any Contribution Expense arising out
of such party's or its affiliates' fraud, willful misconduct, gross negligence,
bad faith or violation of federal or state securities laws.
4. REGULATORY REPORTING.
In the event that any transaction entered into pursuant to this Agreement
gives rise to any requirement that a party hereto and/or any of its affiliates
file any schedule or report pursuant to the Securities Exchange Act of 1934, as
amended (excluding filings on Form 13F), the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended, or any other federal, state or regulatory
requirement, such person(s) shall, subject to the provisions of this Section 4,
make the required filings within the time period required. If any such schedule
or report may be filed jointly by the parties and/or their respective
affiliates, the parties shall file jointly. Trian shall prepare and timely file
all such joint filings; PROVIDED that the content thereof relating to Xxxxxxx or
any of its affiliates shall be reasonably satisfactory to Xxxxxxx, who shall be
given the opportunity to review and comment on each such filing a reasonable
period of time before such filing is made. In the event that either party or any
of its affiliates is required after the date hereof to file a Schedule 13F that
includes the name of the Company and, at the time of any such filing, the
parties have not publicly announced their investment in the Company, then the
filing party or
parties shall use its or their reasonable best efforts to seek confidential
treatment with respect to the name of the Company for purposes of such filing.
Each party will cooperate with the other, including by providing all necessary
information, in order to facilitate the timely and accurate filing of all joint
and individual filings. In the case of any joint filings, the parties shall
share all costs and expenses associated with such filings in accordance with the
Pro Rata Percentages. Except as otherwise set forth herein, all costs and
expenses associated with individual filings shall be borne by the filing party.
5. TERMINATION.
This Agreement shall terminate at the conclusion of the next annual meeting
of the Company's shareholders (including any adjoumments or postponements
thereof); PROVIDED, HOWEVER, that the provisions set forth in Section 3 hereof
and the governing law provisions set forth in Section 6(a) hereof shall survive
any termination of this Agreement.
6. MISCELLANEOUS.
(a) The terms and provisions of this Agreement may not be amended, waived
or modified except by a writing signed by all of the parties hereto.
Notwithstanding the foregoing, Trian may at any time amend this Agreement solely
to join additional parties reasonably acceptable to Xxxxxxx, provided that any
such additional parties shall be subject to the same terms as Xxxxxxx and the
parties mutually agree to revised Pro Rata Percentages. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York,
without regard to its conflict of laws principles. This Agreement may not be
assigned by either party without the prior written consent of the other party.
This Agreement may be executed in counterparts. This Agreement, together with
the Confidentiality Agreement dated February 5, 2006 between the parties hereto,
represents the entire agreement between the parties hereto, and supersedes all
prior agreements, arrangements or understandings, with respect to the subject
matter hereof.
(b) Each party represents and warrants that neither it nor any of its Funds
are in possession of any material non-public information regarding the Company,
whether received from the Company or any third party, and that in no event shall
a party make available to the other party any such information that it may in
the future obtain unless expressly authorized by such other party to do so.
IN WITNESS WHEREOF, the undersigned have entered into this Agreement 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 Xxxxxxx
---------------------------------- ----------------------------------
Xxxxxx X. Garden Xxxxxx Xxxxxxx
Member CEO
