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FOUNDATION AGREEMENT
THIS FOUNDATION AGREEMENT, dated as of December 8, 1999 (this
"Agreement"), is by and between Torque Acquisition Co., L.L.C., a Delaware
limited liability company ("Acquisition Company"), and Xxxxxxx Foundation, a
private charitable foundation (the "Foundation").
W I T N E S S E T H:
WHEREAS, Acquisition Company has previously presented to a Special
Committee of the Board of Directors of Xxxxxxx Corporation, a Delaware
corporation (the "Company"), a written proposal (the "Proposal") to acquire the
Company for cash at a price of $21.50 per share (which was subsequently
increased to $23 per share (the "Price per Share")) of common stock, par value
$1.00 per share, of the Company (the "Company Common Stock") pursuant to an
Agreement and Plan of Merger (the "Merger Agreement") to be entered into by and
among the Company, Acquisition Company and a wholly-owned subsidiary of
Acquisition Company ("Merger Subsidiary"), providing that, upon the terms and
subject to the conditions thereof, (i) the Company and Acquisition Company shall
jointly commence a cash tender offer (the "Offer") to purchase any and all
shares of Company Common Stock, and (ii) Merger Subsidiary shall merge with and
into the Company (the "Merger"), with the Company continuing as the surviving
corporation;
WHEREAS, as of the date hereof, the Foundation is the record and
beneficial owner of, and has the sole right to vote and dispose of, the number
of shares of Company Common Stock set forth on the signature page hereto (the
"Shares");
WHEREAS, Acquisition Company has provided to the Foundation copies
of the Proposal, a draft of the Merger Agreement, a form of Certificate of
Designation with respect to the Series A Preferred (as defined in the Merger
Agreement) and a term sheet setting forth the principal proposed terms of the
Warrants (as defined in the Merger Agreement);
WHEREAS, Acquisition Company has provided to the Foundation a copy
of the Stockholders' Agreement (as defined herein); and
WHEREAS, as an inducement and a condition to its entering into the
Merger Agreement and incurring the obligations set forth therein, Acquisition
Company wishes to obtain certain commitments from the Foundation with respect to
the Shares;
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements contained herein, the
parties hereto, intending to be legally bound hereby, agree as follows:
1. Representations and Warranties of Foundation. The Foundation
hereby represents, warrants and covenants to Acquisition Company as follows:
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(a) The Foundation is a legal entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization. The Foundation has all requisite power and
authority to execute and deliver this Agreement and perform its obligations
hereunder. The execution and delivery by the Foundation of this Agreement and
the performance by the Foundation of its obligations hereunder have been duly
and validly authorized by the Investment Committee of the Foundation, and no
other action on the part of the Foundation is necessary to authorize the
execution, delivery or performance by the Foundation of this Agreement or the
consummation by the Foundation of the transactions contemplated hereby.
(b) This Agreement has been duly and validly authorized, executed
and delivered by the Foundation and, assuming its due authorization, execution
and delivery by Acquisition Company, constitutes a valid, binding and
enforceable agreement of the Foundation; except that (i) such enforcement may be
subject to applicable bankruptcy, insolvency, reorganization or other similar
laws now or hereafter in effect affecting the rights of creditors generally, and
(ii) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
(c) The Foundation is the sole record holder and beneficial owner
(as defined in Rule 13d-3 under the Securities Exchange Act of 1933, as amended
(the "Exchange Act"), which meaning shall apply for all purposes of this
Agreement), of, and has good and marketable title to, all of the Shares, and
there exist no liens, claims, options, proxies, voting agreements, security
interests, charges or encumbrances of any nature (collectively, the "Liens")
affecting the Shares.
(d) Except for the Shares, the Foundation does not, directly or
indirectly, beneficially own or have any option, warrant or other right to
acquire any securities of the Company, nor is the Foundation a party to any
agreement (whether or not legally enforceable) relating to any securities of the
Company.
2. Representations and Warranties of Acquisition Company.
Acquisition Company hereby represents, warrants and covenants to the Foundation
as follows:
(a) Acquisition Company is a limited liability company duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization. Acquisition Company has all
requisite power and authority to execute and deliver this Agreement and perform
its obligations hereunder. The execution and delivery by Acquisition Company of
this Agreement and the performance by Acquisition Company of its obligations
hereunder have been duly and validly authorized by the Board of Managers of
Acquisition Company, and no other action on the part of Acquisition Company is
necessary to authorize the execution, delivery or performance by Acquisition
Company of this Agreement or the consummation by Acquisition Company of the
transactions contemplated hereby.
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(b) This Agreement has been duly and validly executed and delivered
by Acquisition Company and, assuming its due authorization, execution and
delivery by the Foundation, constitutes a valid, binding and enforceable
agreement of Acquisition Company.
(c) Acquisition Company is a newly formed limited liability company
which has conducted no business other than in connection with the transactions
contemplated by the Merger Agreement. Acquisition Company, upon execution of the
Merger Agreement, will enter into a commitment letter with Bankers Trust Company
(the "Bank Commitment Letter") pursuant to which the Company shall obtain,
subject to the terms and conditions therein, funds which, together with the
funds received and to be received by Acquisition Company pursuant to the Unit
Purchase Agreement, between Acquisition Company and Vestar Capital Partners IV,
L.P. (the "Unit Purchase Agreement"), shall be sufficient to consummate the
transactions contemplated by the Merger Agreement. Acquisition Company will take
all other actions required to cause the Bank Commitment Letter to be effective,
and the Bank Commitment Letter, when executed, will be a valid and binding
commitment of Acquisition Company. Acquisition Company is not, as of the date
hereof, aware of any fact, occurrence or condition that makes any of the
assumptions or statements therein inaccurate in any material respect or that
would cause the commitment provided in the Bank Commitment Letter to be
terminated or ineffective or any of the conditions contained therein not to be
met.
3. No Tender of Shares. The Foundation hereby agrees not to tender
any of the Shares pursuant to the Offer.
4. Voting of Shares. The Foundation hereby agrees that, during the
term of this Agreement, at any meeting (whether annual or special, and whether
or not an adjourned or postponed meeting) of the Company's stockholders, however
called, the Foundation shall vote (or cause to be voted) all of the Shares (i)
in favor of the Merger and the approval and adoption of the Merger Agreement and
(ii) against any non-governmental action or agreement that would impede,
interfere with, or prevent the Offer or the Merger. The Foundation shall not
enter into any agreement, arrangement or understanding with any individual,
corporation, partnership, joint venture, association, trust or other
non-governmental entity (a "Person") the effect of which would be inconsistent
with or violative of this Agreement.
5. Irrevocable Proxy. Solely for the purpose of effecting the
provisions of Section 4 hereof, the Foundation hereby grants to and appoints
Acquisition Company and any designee of Acquisition Company, and each of them
individually, the Foundation's irrevocable (until the termination of this
Agreement) proxy and attorney-in-fact (with full power of substitution) to vote
the Shares as indicated in Section 4 hereof. The Foundation intends this proxy
to be irrevocable (until the termination of this Agreement) and coupled with an
interest, and hereby revokes any proxy previously granted by the Foundation with
respect to the Shares. No such designee of Acquisition Company or
attorney-in-fact shall be a disqualified person with respect to the Foundation
within the meaning of Section 4946 of the Code.
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6. Treatment of Shares in the Merger. (a) The Foundation hereby
agrees pursuant to the terms of the Merger Agreement that (i) 202,000 of the
Shares shall not be affected by, and shall remain outstanding and owned by the
Foundation following, the Merger, (ii) 60,000 of the Shares shall be converted
in the Merger into the right to receive the Series A Preferred/Warrant
Consideration (as defined in the Merger Agreement), and (iii) the remaining
Shares (collectively, the "Remaining Shares") shall be, depending on the
Foundation's election (the "Election") in accordance with Section 6(b) hereof,
treated in one of the following ways: (A) each Remaining Share shall be
converted in the Merger into the right to receive the Price Per Share in cash
(which shall not be less than $23.00), or (B) up to 485,000 of the Remaining
Shares shall each be converted in the Merger into the right to receive the
Series A Preferred/Warrant Consideration and the rest of the Remaining Shares
shall each be converted in the Merger into the right to receive the Price Per
Share in cash (which shall not be less than $23.00).
(b) Subject to Section 7 hereof, the Foundation shall make the
Election by a date specified by Acquisition Company in a written notice to the
Foundation, which date shall be no earlier than the later of (x) the tenth day
after the date of such notice and (y) the 20th business day prior to the date
that Acquisition Company intends to consummate the Merger (the "Election
Deadline"), by furnishing a written notice (the "Election Notice") to
Acquisition Company in accordance with Section 13(e) hereof, which Election
Notice shall state the Foundation's election with respect to the Remaining
Shares as set forth in Section 6(a) hereof. In the event that the Foundation
does not furnish its Election Notice by the Election Deadline, the Foundation
shall be deemed to have elected to receive the Price per Share with respect to
all of the Remaining Shares.
7. Stockholders' Agreement. (a) Subject to Section 7(b), the
Foundation shall enter into a Stockholders' Agreement (the "Stockholders'
Agreement") with the Company, Acquisition Company and the Stockholders in the
form of Exhibit 1 attached hereto on or prior to the consummation of the Merger.
(b) Acquisition Company hereby agrees to, and to use its reasonable
efforts to cause the other parties to agree to, (i) make all modifications to
the Stockholders' Agreement requested by the Foundation prior to January 31,
2000 which, upon advice of counsel to the Foundation, are reasonably required in
order to avoid application of any tax under Chapter 42 of the Internal Revenue
Code of 1986, as amended (the "Code"), which would not otherwise be incurred,
and (ii) entertain in good faith any reasonable requests made by the Foundation
prior to January 31, 2000 for other modifications to the Stockholders' Agreement
and to make all such other modifications as Acquisition Company and the other
parties shall reasonably deem appropriate, provided that, if Acquisition Company
determines in good faith that any such modification reduces its rights
thereunder or otherwise adversely affects it, then, unless the Foundation
withdraws its request for such modification, the Foundation shall not become a
party to the Stockholders' Agreement other than for purpose of Sections 12 and
15 thereof and such change shall not be made.
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8. Restrictions on Transfer, Other Proxies, Etc. (a) During the term
of this Agreement, except as otherwise provided herein, the Foundation shall
not, directly or indirectly, (i) sell, transfer, pledge, hypothecate, encumber,
assign or dispose of any Shares or the beneficial ownership thereof, or offer to
do any of the foregoing, (ii) grant any proxy or power of attorney, deposit any
Shares into a voting trust or enter into a voting agreement, understanding or
arrangement with respect to the Shares, (iii) enter into any contract, option or
other arrangement or undertaking with respect to the direct or indirect sale,
assignment or other disposition of or transfer of any interest in or the voting
of any shares of Company Common Stock or any other securities of the Company or
(iv) engage in any discussions or negotiations with any non-governmental Person
with respect to any of the foregoing.
(b) During the term of this Agreement, the Foundation shall not
acquire any shares of Company Common Stock or other securities of the Company
(other than those contemplated by Section 6 hereof) without the prior written
consent of Acquisition Company.
9. Foundation Governance. Until Acquisition Company owns less than
the Preferred Minimum Threshold and the Acquisition Company Second Minimum Share
Amount (each such term as defined in Section 18 of the Stockholders' Agreement),
the Foundation (i) shall use reasonable efforts to not permit the composition of
the Board of the Directors of the Foundation to consist of any employee of the
Company or its subsidiaries or any member of the immediate family of such
employee who lives within 500 miles of such employee (collectively, the "Company
Employee Group") unless 50% or more of the members of the Board of Directors of
the Foundation are not members of the Company Employee Group; (ii) shall not
permit any employee of the Company or its subsidiaries or any member of the
immediate family of such employee to be a member of the Investment Committee of
the Foundation; and (iii) shall cause any and all decisions with respect to the
Foundation's investment in the Company to be determined by the Investment
Committee of the Foundation.
10. Certain Ownership Requirements. Following the Merger, the
Foundation agrees that so long as it owns any shares of Company Common Stock
(whether voting or non-voting), at least 80,000 shares of such Company Common
Stock, or such lesser number of shares as the Foundation owns, shall be voting
Common Stock. Such number of shares shall be appropriately adjusted for stock
splits, stock dividends and similar changes.
11. Further Assurances. From time to time, at the request of the
other party hereto and without further consideration, each party hereto shall
execute and deliver such additional documents and take all such further lawful
action as may be necessary or desirable to consummate and make effective, in the
most expeditious manner practicable, the transactions contemplated by this
Agreement.
12. Termination. This Agreement, and all rights, interests and
obligations of the parties hereunder, shall terminate (a) if the Offer shall
expire without Acquisition Company or the Company accepting for payment or
purchasing any shares of Company Common Stock
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pursuant to the Offer, or (b) if the Merger Agreement is terminated in
accordance with its terms, or (c) (except for Sections 9, 10, 11, and 13) upon
consummation of the Merger.
13. Miscellaneous.
(a) This Agreement constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof and supersedes all
other prior agreements and understandings, both written and oral, between the
parties hereto with respect to the subject matter hereof.
(b) Except as otherwise provided in this Agreement, all fees and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such fees and expenses.
(c) This Agreement and all of the provisions hereof shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors, personal or legal representatives, executors, administrators, heirs,
distributees, devisees, legatees and permitted assigns, but neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any party hereto (whether by operation of law or otherwise) without
the prior written consent of the other party hereto; provided, that Acquisition
Company may assign its rights, interests and obligations hereunder to any
permitted assignee of Acquisition Company's rights, interests and obligations
under the Merger Agreement. Nothing in this Agreement, express or implied, is
intended to or shall confer upon any other Person any rights, benefits or
remedies of any nature whatsoever under or by reason of this Agreement.
(d) This Agreement may not be amended, changed, supplemented, or
otherwise modified or terminated (except as otherwise provided in Section 12
hereof), except upon the execution and delivery of a written agreement executed
by each of the parties hereto. Any party hereto may waive compliance by the
other party hereto with any representation, agreement or condition otherwise
required to be complied with by such other party hereunder, but any such waiver
shall be effective only if in writing executed by the waiving party.
(e) All notices and other communications hereunder must be in
writing and are to be given (and shall be deemed to have been duly given upon
receipt) by delivery in person, by telecopy, or by registered or certified mail,
postage prepaid, return receipt requested, addressed as follows:
If to Acquisition Company:
c/o Vestar Capital Partners IV, L.P.
000 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Telecopy: (000) 000-0000
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Attention: Sander X. Xxxx
Copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxx X. Xxxx, Esq.
If after January 14, 2000, to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxx X. Xxxx, Esq.
If to the Foundation:
Gleason Foundation
0000 Xxxxxxxxxx Xxxxxx
X.X. Xxx 00000
Xxxxxxxxx, Xxx Xxxx 00000-0000
Telecopy: (000) 000-0000
Attention: Xxxxx X. Xxxxxx
Copy to:
Xxxxxx, Xxxxxxx & Xxxxx LLP
000 Xxxxxxx Xxxxx
Xxxxxxxxx, Xxx Xxxx 00000-0000
Telecopy: (000) 000-0000
Attention: Xxxxx Xxxxxxxx Xxxxxx, Esq.
or to such other address as any party hereto may have previously furnished to
the other party hereto in writing in accordance herewith.
(f) Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without affecting the
validity or enforceability of the remaining provisions hereof. Any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. If any provision
of this Agreement is so
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broad as to be unenforceable, the provision shall be interpreted to be only so
broad as is enforceable. For purposes of this Section 13(f), the term
"prohibited" includes any act or failure to act subject to tax under
Sections 4941, 4943, 4944 or 4945 of the Code.
(g) Each of the parties hereto acknowledges and agrees that in the
event of any breach of this Agreement, the non-breaching party would be
irreparably harmed and could not be made whole by monetary damages. It is
accordingly agreed that the parties hereto (i) shall 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.
(h) All rights, powers and remedies provided under this Agreement or
otherwise available in respect hereof at law or in equity shall be cumulative
and not alternative, and the exercise of any thereof by any party hereto shall
not preclude the simultaneous or later exercise of any other such right, power
or remedy by such party. The failure of any party hereto to exercise any right,
power or remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by the other party
hereto with its obligations hereunder, and any custom or practice of the parties
hereto at variance with the terms hereof, shall not constitute a waiver by such
party of its right to exercise any such or other right, power or remedy or to
demand such compliance.
(i) This Agreement shall be governed and construed in accordance
with the laws of the State of Delaware, without giving effect to the principles
of conflicts of law thereof or of any other jurisdiction.
(j) The descriptive headings used herein are inserted for
convenience of reference only and are not intended to be part of or to affect
the meaning or interpretation of this Agreement. "Include," "includes," and
"including" shall be deemed to be followed by "without limitation" whether or
not they are in fact followed by such words or words of like import.
(k) This Agreement may be executed in counterparts, each of which
shall be deemed to be an original, but all of which, taken together, shall
constitute one and the same instrument.
(1) In advance of filing with the Securities and Exchange Commission
or any other governmental entity any document pertaining to the Merger or the
transactions contemplated hereby which includes information about the
Foundation, Acquisition Company will give the Foundation a reasonable period of
prior review of such document.
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IN WITNESS WHEREOF, Acquisition Company and the Foundation have
caused this Agreement to be duly executed as of the day and year first above
written.
TORQUE ACQUISITION CO., L.L.C.
By: /s/ Sander X. Xxxx
Name: Sander X. Xxxx
Title: President
XXXXXXX FOUNDATION
By: /s/ Xxxxx X. Xxxxxx
Name: Xxxxx X. Xxxxxx
Title: Secretary and Treasurer
Shares: 1,197,346
