EXHIBIT (C)(4)
Execution Copy
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AGREEMENT
among
LOCTITE CORPORATION
and
XXXXXX KGaA, XXXXXX CORPORATION
and HC INVESTMENTS, INC.
Dated as of April 14, 1994
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TABLE OF CONTENTS
Page
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Section 1. Termination of the Standstill Agreement . . . 2
Section 2. Shareholder Rights Agreement. . . . . . . . . 2
2.1 Adoption. . . . . . . . . . . . . . . 2
2.2 Prohibited Actions. . . . . . . . . . 2
2.2.1 Loctite . . . . . . . . . . . 2
2.2.2 Henkel Entities . . . . . . . 3
Section 3. Corporate Governance. . . . . . . . . . . . . 4
3.1 Board of Directors. . . . . . . . . . 4
3.2 Committees. . . . . . . . . . . . . . 7
3.3 Dissolution of Shareholder Relations
Committee . . . . . . . . . . . . . . 7
3.4 Applicability . . . . . . . . . . . . 7
Section 4. Right of First Refusal. . . . . . . . . . . . 7
Section 5. Registration Rights . . . . . . . . . . . . . 9
Section 6. Henkel Transferees. . . . . . . . . . . . . . 10
6.1 Permitted Transfers . . . . . . . . . 10
6.2 Transferability . . . . . . . . . . . 11
6.3 Distribution Transaction. . . . . . . 11
Section 7. Associates of Henkel Entities . . . . . . . . 11
Section 8. Representations and Warranties . . . . . . . 12
8.1 Loctite Share Ownership . . . . . . . 13
i
TABLE OF CONTENTS cont'd
Section 9. Miscellaneous. . . . . . . . . . . . . . . . 13
9.1 Entire Agreement . . . . . . . . . . 13
9.2 Binding Effect; Benefits; Assignment;
Survival . . . . . . . . . . . . . . 13
9.3 Amendments and Waivers . . . . . . . 14
9.4 Governing Law. . . . . . . . . . . . 14
9.5 Notices. . . . . . . . . . . . . . . 14
9.6 Further Assurances . . . . . . . . . 15
9.7 Specific Performance . . . . . . . . 15
9.8 Joint and Several Liability. . . . . 16
9.9 Termination. . . . . . . . . . . . . 16
9.10 Rights of Action . . . . . . . . . . 16
9.11 Counterparts . . . . . . . . . . . . 17
Signatures . . . . . . . . . . . . . 17
ii
Agreement made as of this 14th day of April, 1994 (this
"Agreement") among Loctite Corporation, a Delaware corporation
("Loctite"), Xxxxxx KGaA, a Kommanditgesellschaft auf Aktien
organized under the laws of the Federal Republic of Germany
("Henkel Germany"), Xxxxxx Corporation, a Delaware corporation
and an indirect wholly-owned subsidiary of Henkel Germany
("Henkel America"), and HC Investments, Inc., a Delaware
corporation and a direct wholly-owned subsidiary of Henkel
America ("Henkel Subsidiary"). Henkel Germany, Henkel America and
Henkel Subsidiary are sometimes collectively referred to herein
as the "Henkel Entities" and individually as a "Henkel Entity".
WITNESSETH:
WHEREAS, pursuant to a Stock Purchase Agreement (the
"Stock Purchase Agreement"), dated May 23, 0000, Xxxxxx xx
Xxxxxxx, Inc., the direct parent of Henkel America ("Henkel
Parent"), agreed to acquire from the sellers listed on Schedule A
thereto (collectively, the "Selling Stockholders") certain shares
of common stock, no par value, of Loctite (the "Common Stock");
WHEREAS, in connection with the Stock Purchase Agreement,
Henkel Parent and Loctite entered into an agreement, dated May
23, 1985 (the "Standstill Agreement"), setting forth certain
arrangements with respect to the relationships between them;
WHEREAS, Henkel Parent assigned to Henkel America all of
its rights and obligations under the Stock Purchase Agreement and
the Standstill Agreement and Henkel America acquired from the
Selling Stockholders all of the shares of Common Stock sold by
them pursuant to the Stock Purchase Agreement;
WHEREAS, Henkel America contributed all of its shares of
Common Stock to the capital of Henkel Subsidiary and has
designated Henkel Subsidiary to receive all shares of Common
Stock purchased by Henkel America under Section 7(b) of the Stock
Purchase Agreement; and
WHEREAS, Henkel America and Loctite desire to terminate
the Standstill Agreement, and the Henkel Entities and Loctite
desire to enter into an agreement for the purpose of governing
certain aspects of the relationships among them.
NOW, THEREFORE, in consideration of the promises herein
contained, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound hereby, each of the parties hereto
agrees as follows:
1. Termination of the Standstill Agreement. Loctite and Henkel
America agree that the Standstill Agreement shall terminate
effective as of the Record Date (as defined below). Effective as
of the Record Date, the provisions of the Standstill Agreement
shall be of no further force and effect, and there shall be no
liability on the part of any party to the Standstill Agreement
with respect to any of the provisions thereof with the sole
exception that nothing contained in this Agreement shall in any
way relieve any party from liability for any breach of the
provisions of the Standstill Agreement for the period commencing
on the date of this Agreement and ending on the Record Date. The
"Record Date" shall mean that certain date set forth in the
Rights Agreement referred to in Section 2.1 hereof on which the
authorized and declared dividend of one Right (as defined in the
Rights Agreement) is issued in respect of each share of Common
Stock outstanding as of such date.
2. Shareholder Rights Agreement.
2.1 Adoption. Simultaneously with the execution
of this Agreement, Loctite is entering into a Rights Agreement
with a bank or trust company acting as rights agent,
substantially in the form of Exhibit A hereto (the Rights
Agreement, as hereafter amended from time to time, shall be
referred to as the "Rights Agreement").
2.2 Prohibited Actions.
2.2.1 Loctite. (a) So long as this
Agreement is in effect, (i) Loctite shall not adopt any shareholder
rights plan or similar device that does not contain substantially the
same terms and conditions as those set forth in the Rights Agreement
(a "Substantially Similar Rights Plan") and (ii) Loctite shall
not amend, modify, waive, terminate or invalidate any provision
of the Rights Agreement or any Substantially Similar Rights Plan
or adopt, amend, modify, waive, terminate or invalidate any
provision of its certificate of incorporation or by-laws in any
way which would adversely affect the rights of any of the Henkel
Entities under the Rights Agreement or any Substantially Similar
Rights Plan.
(b) In the event of any Proposed Loctite
Action (as defined below), Loctite will give the Henkel Entities
notice of such Proposed Loctite Action within a reasonable period
of time prior to Loctite's taking of such Proposed Loctite Action and
a reasonable opportunity to present to Loctite and the Board (as
defined below) the Henkel Entities' views on the merits of such
Proposed Loctite Action; provided, however, that if, in the
Board's business judgment, the giving of such notice and
reasonable opportunity to make such presentation would adversely
affect the Board's ability to carry out its fiduciary
responsibilities and such Proposed Loctite Action is, in the
business judgment of the Board, in the best interests of Loctite
and its stockholders, Loctite shall have the absolute right to
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effect such proposed Loctite Action without regard to this
Section 2.2.1(b) (including, without limitation, not providing
the Henkel Entities with any notice of any such Proposed Loctite
Action and the opportunity to make a presentation with respect
thereto). As used herein, the term "Proposed Loctite Action"
shall mean (i) any proposed adoption, amendment, modification,
waiver, termination or invalidation by Loctite of any provision
of the Rights Agreement, a Substantially Similar Rights Plan, its
certificate of incorporation or its bylaws that is not prohibited
by Section 2.2.1(a) hereof or (ii) any proposed issuance by
Loctite of additional shares of Common Stock (other than pursuant
to (1) the exercise of any outstanding stock option, warrant,
convertible security or other right to purchase shares of Common
Stock, (2) any benefit plan or other similar employee or director
arrangement, (3) any stock split, stock dividend or similar
distribution made available to the holders of Common Stock
generally or (4) any issuance which alone, or together with any
prior issuance of additional shares of Common Stock covered by
this clause (4), would not exceed, in the aggregate, 2.5% of the
shares of Common Stock outstanding on the date of this
Agreement).
2.2.2 Henkel Entities. (a) So long as this
Agreement is in effect, the Henkel Entities shall not, and shall cause
each of their respective Affiliates (as such term is defined in Rule
12b-2 of the General Rules and Regulations under the Securities
Exchange Act of 1934, as amended and in effect on the date of
this Agreement (the "Exchange Act")) and any Director (as defined
below) nominated by, or which is a representative of, any Henkel
Entity or any of their respective Affiliates not to, directly or
indirectly, seek to (i) amend, modify, waive, terminate or
invalidate, or cause the amendment, modification, waiver,
termination or invalidation of any provision of the Rights
Agreement or any Substantially Similar Rights Plan in any manner
(including, without limitation, by proxy contest, shareholder
consent, or otherwise) or (ii) redeem or exchange the Rights (as
defined in the Rights Agreement) or any rights issued under any
Substantially Similar Rights Plan, in either case, unless a
majority of the duly and validly elected directors of Loctite
(each a "Director") who are neither nominees or representatives
of any Henkel Entity or any of their respective Affiliates nor
officers or employees of Loctite (each an "Outside Director")
consent to such action in writing or at a duly called meeting of
the board of Directors of Loctite (the "Board"); it being
understood that the consent of the Outside Directors may only be
obtained if there is at least one Director that is an Outside
Director.
(b) In the event of any Proposed Henkel Action (as
defined below) by any Henkel Entities or any of their respective
Affiliates (the "Henkel Affiliates"), the Henkel Entities will give
Loctite notice of such Proposed Henkel Action within a reason-
able period of time prior to the taking of such Proposed Henkel
Action by such Henkel Entity or such Henkel Affiliate (as
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the case may be) and a reasonable opportunity to present to the
Henkel Entities its views on the merits of such Proposed Henkel
Action; provided, however, that if, in the reasonable judgment of
the Henkel Entities, the giving of such notice and reasonable
opportunity to make such presentation would adversely affect the
ability of such Henkel Entity or such Henkel Affiliate (as the
case may be) to effect such Proposed Henkel Action, such Henkel
Entity or such Henkel Affiliates (as the case may be) shall have
the absolute right to effect such Proposed Henkel Action without
regard to this Section 2.2.2(b) (including, without limitation,
not providing Loctite with any notice of such Proposed Henkel
Action and the opportunity to make a presentation with respect
thereto). As used herein, the term "Proposed Henkel Action" shall
mean any proposed action by any Henkel Entity or any Henkel
Affiliate regarding the "solicitation" of "proxies" (as such
terms are defined or used in Regulation 14A of the Exchange Act)
or becoming of a "participant" in any "election contest" (as such
terms are defined or used in Rule 14a-11 of the Exchange Act), in
each case, either (i) in opposition to any proposal to the
holders of shares of Common Stock recommended by the Board or
(ii) to remove any Directors.
(c) Loctite acknowledges that, except for the
provisions of Section 2.2.2(b) hereof, nothing in this Agreement
shall be construed as prohibiting any Henkel Entity or any Henkel
Affiliates from making, or in any way participating in, any
"solicitation" of "proxies" (as such terms are defined or used in
Regulation 14A of the Exchange Act), or becoming a "participant"
in any "election contest" (as such terms are defined or used in
Rule 14a-11 of the Exchange Act), in each case, for the election
or removal of any of the Directors; provided, however, any
Director nominated by any Henkel Entity or any Henkel Affiliates
shall be subject to the restrictions contained in Section
2.2.2(a) hereof.
3. Corporate Governance.
3.1 Board of Directors. (a) As promptly as
practicable after the date hereof, but in no event later than
November 15, 1994, the Outside Directors and the Henkel Entities
shall each recommend one person to become a Director (each, an
"Initial Recommended Person") to fill the two newly-created
directorships that will result upon the expansion of the Board
from ten members to twelve members in accordance with this
Section 3.1. Subject to the second sentence of Section
3.1(c)(iii) hereof, each Initial Recommended Person shall be
subject to the approval of a majority of all of the Directors,
which approval shall not be unreasonably withheld; the parties
hereto acknowledge that it is currently anticipated that such
consent by the Directors would not be withheld in the case of an
Initial Recommended Person selected by the Henkel Entities unless
such person is the Executive Vice President-Adhesives (or
otherwise is an executive within the Adhesives division) of
Henkel Germany (or another division or subdivision of Henkel
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Germany or its subsidiaries that may in the future engage in
substantially the same activities as the Adhesives division of
Henkel Germany engages in on the date hereof) or whose membership
on the Board would be a violation of law. If an Initial
Recommended Person is not approved as provided herein, then the
Outside Directors or the Henkel Entities, as the case may be,
that recommended such person shall promptly recommend a
substitute or substitutes until approval is obtained in
accordance with the terms of this Section 3.1(a). Loctite shall
cause the Board to be expanded from ten to twelve members as soon
as practicable after the Initial Recommended Persons are so
approved (each Initial Recommended Person which is so approved,
shall be referred to as an "Initial Approved Person"), and
Loctite and the Henkel Entities shall cause the Initial Approved
Persons to be duly and validly elected as Directors to fill the
new board seats resulting from such expansion.
(b) From and after the expansion of the Board to
twelve members pursuant to Section 3.1(a) hereof, Loctite agrees
not to expand or reduce the size of the Board without the prior
written consent of the Henkel Entities.
(c) From and after the election of the Initial
Approved Persons pursuant to Section 3.1(a) hereof:
(i) Subject to Section 3.4 hereof, the Henkel
Entities shall be entitled to recommend the number of persons to serve
as Directors (each such person hereinafter referred to as a "Henkel
Recommended Person") set forth in the immediately succeeding
sentence. At any time that the Henkel Entities, together with the
Henkel Affiliates, own, in the aggregate, 25% or more of the
outstanding shares of Common Stock, the Henkel Entities shall be
entitled to recommend three Henkel Recommended Persons; at any
time that the Henkel Entities, together with the Henkel
Affiliates, own, in the aggregate, less than 25% of the
outstanding shares of Common Stock, but 15% or more of the
outstanding shares of Common Stock, the Henkel Entities shall be
entitled to recommend two Henkel Recommended Persons; and at any
time that the Henkel Entities, together with the Henkel
Affiliates, own, in the aggregate, less than 15% of the
outstanding shares of Common Stock, but 10% or more of the
outstanding shares of Common Stock, the Henkel Entities shall be
entitled to recommend one Henkel Recommended Person.
(ii) The Secretary of Loctite shall deliver
written notice (the "Secretary Notice") to Henkel America no later
than 30 days prior to any meeting of the Board at which the election
of Directors is scheduled on the agenda for action by the Board,
setting forth the date of such meeting. With respect to any
Secretary Notice, Henkel America must deliver written notice to
Loctite setting forth the Henkel Recommended Persons no later
than 15 days after its receipt of such Secretary Notice.
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(iii) Each Henkel Recommended Person shall be
subject to the approval of a majority of all of the Directors, which
approval shall not be unreasonably withheld; the parties hereto
acknowledge that it is currently anticipated that such consent by
the Directors would not be withheld unless such person is the
Executive Vice President-Adhesives (or otherwise is an executive
within the Adhesives division) of Henkel Germany (or another
division or subdivision of Henkel Germany or its subsidiaries
that may in the future engage in substantially the same
activities as the Adhesives division of Henkel Germany engages in
on the date hereof) or whose membership on the Board would be a
violation of law. Notwithstanding anything herein to the
contrary, nothing in this Agreement shall be construed as
limiting in any manner the Directors from exercising, in their
business judgment, their fiduciary duties as Directors under
applicable law in connection with their making a determination
whether to approve an Initial Recommended Person selected by the
Henkel Entities or any Henkel Recommended Person pursuant to
Section 3.1(a) hereof or Section 3.1(c)(iii) hereof, as the case
may be. If a Henkel Recommended Person is not approved as
provided herein, then the Henkel Entities shall promptly
recommend a substitute or substitutes until approval is obtained
in accordance with the terms of this Section 3.1(c). Loctite
shall include any Henkel Recommended Person that has been
approved by a majority of all of the Directors in the slate of
nominees recommended by the Board to Loctite's stockholders for
election as Directors. Each Henkel Recommended Person who is duly
and validly elected by the stockholders of Loctite to serve as a
Director shall be referred to as a "Henkel Nominee."
(d) From and after the election of the Initial
Approved Persons pursuant to Section 3.1(a) hereof:
(i) So long as there are any Henkel Nominees,
the Outside Directors shall recommend the remaining persons (other
than the Henkel Nominees) to serve as Directors (each such person
shall be referred to as an "Outside Director Recommended
Person").
(ii) Each Outside Director Recommended Person
shall be subject to the approval of a majority of all of the Directors,
which approval shall not be unreasonably withheld. If an Outside
Director Recommended Person is not approved as provided herein,
then the Outside Directors shall promptly recommend a substitute
or substitutes until approval is obtained in accordance with the
terms of this Section 3.1(d). Loctite shall include any Outside
Director Recommended Person that has been approved by a majority
of all of the Directors in the slate of nominees recommended by
the Board to stockholders for election as Directors. Loctite shall
ensure that at least one Outside Director Recommended Person so
included in such slate shall be neither a nominee or representative of
any Henkel Entity or any Henkel Affiliate nor an officer or employee of
Loctite. Each Outside Director Recommended Person who is duly and validly
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elected by the stockholders of Loctite to serve as a Director shall
be referred to as a "Non-Henkel Nominee."
(e) Each Henkel Nominee and Non-Henkel Nominee
shall hold his office until his death, retirement or resignation
or until his successor shall have been duly elected and
qualified. If any Henkel Nominee or Non-Henkel Nominee shall
cease to serve as a Director, the vacancy resulting thereby shall
be filled by another person recommended by the Henkel Entities or
the Outside Directors, respectively, and approved in accordance
with Section 3.1(c) or 3.1(d), respectively.
3.2 Committees. Subject to Sections 3.3 and 3.4
hereof, (a) at least one Henkel Nominee shall be a member of any
key committee of the Board that has up to four members on such
key committee and (b) at least two Henkel Nominees shall be
members of any key committee of the Board that has five or more
members on such key committee.
3.3 Dissolution of Shareholder Relations
Committee. Loctite shall cause the Shareholder Relations
Committee of the Board to be dissolved effective as of the Record
Date; provided, however, that Loctite retains the right to
reconstitute a committee of Disinterested Directors (as defined
below) or the Outside Directors, if in the opinion of the
Disinterested Directors or Outside Directors, as applicable, a
need for such a committee arises. The term "Disinterested
Directors" means Directors who are neither officers or employees
of Loctite nor any person proposing or attempting to effect a
business combination or similar transaction with Loctite
(including, without limitation, a merger, tender offer or
exchange offer, sale of substantially all of Loctite's assets, or
liquidation of Loctite's assets), any Affiliate or Associate (as
defined in Rule 12b-2 under the Exchange Act) of such person or
any other person acting directly or indirectly on behalf of, or
as a representative of, or in concert with, any such person,
Affiliate or Associate.
3.4 Applicability. Notwithstanding anything in
this Agreement to the contrary, Loctite shall have no
obligations, and the Henkel Entities shall have no rights
(including, without limitation, the right of the Henkel Entities
to recommend any person to serve as a Director), under Section
2.2.1(a) and this Section 3 from and after the time that the
Henkel Entities, together with their respective Affiliates, own,
in the aggregate, less than 10% of the outstanding shares of
Common Stock.
4. Right of First Refusal. (a)(i) Upon receipt by Henkel
America of a Seller's Notice (as defined in the Stock Purchase Agreement),
Henkel America shall deliver to Loctite within three days of its receipt
thereof: (A) a copy of such Seller's Notice and (B) written notice (a
"Notice of Opportunity") setting forth (I) the date that Henkel America
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received the Seller's Notice (the "Receipt Date") and (II) the
number of shares of Common Stock offered for sale pursuant to the
Seller's Notice (the "Offered Shares"); provided, however, that
Henkel America need not deliver a Notice of Opportunity if it is
permitted under Section 4(a)(ii) hereof to acquire all of the
Offered Shares related to such Seller's Notice and, within such
three day period, Henkel America shall have delivered a Xxxxxx'x
Notice (as defined in the Stock Purchase Agreement) exercising in
full its right to acquire those Offered Shares under Section 7(b)
of the Stock Purchase Agreement. Unless the Offered Shares have
been purchased in accordance with the proviso to the immediately
preceding sentence, Henkel America shall deliver to Loctite
within fifteen days of the Receipt Date (the "Henkel Time
Period") written notice (a "Notice of Decision") setting forth
whether Henkel America intends to exercise its right under
Section 7(b) of the Stock Purchase Agreement to acquire the
Offered Shares related to such Seller's Notice and, if so,
subject to Section 4(a)(ii) hereof, the number of shares of
Common Stock which Henkel America shall purchase pursuant to
Section 7(b) of the Stock Purchase Agreement (the "Henkel
Purchased Shares"). In connection with any Seller's Notice, if
Henkel America fails to provide Loctite with a Notice of Decision
within the Henkel Time Period or the Notice of Decision fails to
set forth the Henkel Purchased Shares, the Henkel Purchased
Shares shall be deemed to be zero. In connection with any Notice
of Decision, Henkel America shall purchase, or cause Henkel
Subsidiary to purchase, the Henkel Purchased Shares subject to
such Notice of Decision in accordance with the terms and
conditions set forth in Section 7(b) of the Stock Purchase
Agreement.
(ii) Each of Henkel America and Henkel
Subsidiary may only purchase shares of Common Stock pursuant to
Section 7(b) of the Stock Purchase Agreement if, after giving effect
to such purchase, no Henkel Entity is an Acquiring Person (as defined
in the Rights Agreement).
(iii) In connection with any Seller's
Notice, Henkel America hereby assigns to Loctite all of Henkel
America's rights under Section 7(b) of the Stock Purchase Agreement
with respect to the Loctite Purchasable Shares (as defined below)
related to such Seller's Notice, effective as of the earlier of the (A)
delivery to Loctite of the Notice of Decision related to such
Seller's Notice and (B) if Henkel America fails to deliver such
Notice of Decision, the expiration of the Henkel Time Period
applicable to such Seller's Notice. In connection with any
Seller's Notice, the term "Loctite Purchasable Shares" shall mean
that number of shares equal to the difference, if any, between
(A) the Offered Shares related to such Seller's Notice and (B)
the Henkel Purchased Shares related to such Seller's Notice.
(b) In connection with any Seller's Notice,
Loctite shall have the right, but not the obligation, to purchase
any or all of the Loctite Purchasable Shares related to such
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Seller's Notice by delivering written notice (the "Loctite
Notice") to Henkel America and to the proposed seller of the
Offered Shares to which such Seller's Notice relates no later
than 30 days after the Receipt Date related to such Seller's
Notice (the number of shares which Loctite agrees to purchase, as
set forth in the Loctite Notice, shall hereinafter be referred to
as the "Loctite Purchased Shares"), and Loctite shall purchase
those Loctite Purchased Shares in accordance with the terms and
conditions of Section 7(b) of the Stock Purchase Agreement.
(c) In connection with any Seller's Notice, if
the number of shares equal to the difference, if any, between (i)
the Offered Shares related to such Seller's Notice and (ii) the
sum of (A) the Henkel Purchased Shares related to such Seller's
Notice and (B) the Loctite Purchased Shares related to such
Seller's Notice is equal to 3% or more of the then outstanding
shares of Common Stock, each of the Henkel Entities and Loctite
shall use their respective reasonable best efforts to cause those
shares to be distributed as widely as practicable (it being
understood that none of the parties hereto shall have any
obligation to purchase those shares); provided, however, that no
Henkel Entity shall have any obligation to take any action
pursuant to this Section 4(c) if such Henkel Entity reasonably
determines that such action could require it to make any payment
under Section 16(b) of the Exchange Act if a suit for recovery
were duly instituted against such Henkel Entity.
(d)(i) The Henkel Entities represent and warrant
to Loctite that (A) except as set forth in Section 4(a) hereof,
Henkel America has not granted, assigned, pledged or otherwise
disposed of any rights under Section 7(b) of the Stock Purchase
Agreement to any person or entity other than Henkel Subsidiary as
set forth in the fourth recital of this Agreement and (B) a true,
correct and complete copy of the Stock Purchase Agreement, as in
effect on the date hereof, without amendment or modification, has
been previously filed as an exhibit to the Schedule 13D of Henkel
Subsidiary filed with the Securities and Exchange Commission
under the Exchange Act.
(ii) Except as provided in Section 4(a) hereof,
Henkel America shall not assign, pledge or otherwise dispose of any of
its rights under Section 7(b) of the Stock Purchase Agreement and
any attempted or purported assignment, pledge or other
disposition in violation of this provision shall be void and of
no effect.
(iii) Henkel America agrees not to amend,
modify, waive, terminate or invalidate any provision of, or take any
action or fail to take any action which would adversely affect
its rights under, Section 7(b) of the Stock Purchase Agreement.
5. Registration Rights. On at least two occasions at the
request of Henkel America, Loctite will prepare and file, and
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use its best efforts to have made effective within six months
from the receipt of such request, a registration statement on any
available form under the Securities Act of 1933, as amended (the
"1933 Act"), covering any equity securities of Loctite then owned
by the Henkel Entities, at the expense of the Henkel Entities. In
addition, any equity securities of Loctite owned by the Henkel
Entities shall, at Henkel America's request, be included in any
other registration statement covering Loctite equity securities
(other than registration statements relating to an exchange
offer, merger or consolidation by Loctite or any equity-based
benefit or dividend reinvestment plan for directors, officers or
employees of Loctite or its subsidiaries), the Henkel Entities to
pay only any incremental expenses resulting from such inclusion.
This Section 5 will not be operative if, in the opinion of
counsel for Loctite with which counsel for Henkel America
concurs, the Henkel Entities may dispose of their Loctite equity
securities in the manner and to the person, persons or class of
persons contemplated by them without registration under the 1933
Act, including, without limitation, under Rule 144 promulgated
pursuant to the 1933 Act. In addition, Loctite will use its best
efforts so that the Henkel Entities may sell their Loctite equity
securities pursuant to Rule 144 promulgated pursuant to the 1933
Act. In connection with any registration pursuant to this Section
5, Loctite and the Henkel Entities will enter into customary
agreements relating to indemnification and other matters.
6. Henkel Transferees.
6.1 Permitted Transfers. (a) In connection with
any proposed Permitted Transfer (as defined in the Rights
Agreement) by Henkel America, Henkel America shall deliver to
Loctite no later than 30 days prior to the Transfer Date (as
defined below) for such proposed Permitted Transfer (i) written
notice of such proposed Permitted Transfer (the "Transfer
Notice"), setting forth (A) the number of shares of Common Stock
proposed to be transferred, (B) the identity of the proposed
transferee (the "Proposed Transferee"), including the beneficial
owners thereof to the extent known or reasonably determinable by
Henkel America, and (C) the date on which the proposed Permitted
Transfer is to be consummated (the "Transfer Date") and (ii) an
agreement substantially in the form of Exhibit A-1 to the Rights
Agreement, duly and validly executed on behalf of the Proposed
Transferee (the "Transferee Agreement"). Upon receipt by Loctite
of the Transferee Agreement duly executed and delivered by the
Proposed Transferee, Loctite shall duly execute and deliver the
Transferee Agreement.
(b) As soon as practicable after receipt of the
Transfer Notice, the Outside Directors shall evaluate whether the
Proposed Transferee is an Adverse Person (as defined in the
Rights Agreement). Henkel America shall provide the Outside
Directors with any information within its control requested by
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them to facilitate their evaluation, as soon as practicable after
any request for information is made.
(c) Subject to Section 6.1(d) hereof, a proposed
Permitted Transfer may be consummated on the Transfer Date as set
forth in the Transfer Notice and the Transferee Agreement related
to such proposed Permitted Transfer unless the Outside Directors
shall have determined that the Proposed Transferee related to
such proposed Permitted Transfer is an Adverse Person no later
than five days prior to the Transfer Date for such proposed
Permitted Transfer; provided, that Henkel America complies with
its obligations in Sections 6.1(a) and (b) hereof.
(d) With respect to any proposed Permitted Transfer, the
Proposed Transferee shall be deemed to be an Adverse Person for
purposes of the Rights Agreement unless there is at least one
Director that is an Outside Director during the period from and
including the date Loctite receives a Transfer Notice in respect
of such proposed Permitted Transfer to and including the Transfer
Date for such proposed Permitted Transfer. Except as required by
applicable law or order of any court or other governmental
authority, Loctite covenants and agrees that it will not take any
action to cause there to be fewer than one Outside Director on
the Board at any time.
6.2 Transferability. Notwithstanding anything in
this Agreement to the contrary, no transferee of any shares of
Common Stock from any Henkel Entity shall have any rights under
this Agreement.
6.3 Distribution Transaction. In connection with
any Distribution Transaction (as defined in the Rights
Agreement), Henkel shall use its best efforts to cause the shares
of Common Stock subject to such Distribution Transaction to be
distributed as widely as practicable.
7. Associates of Henkel Entities. (a) In the event
that from time to time any of the Henkel Entities or Loctite becomes
aware of the fact that the Henkel Entities, together with their
respective Affiliates and Associates, beneficially own (as such term
is used in the Rights Agreement without giving effect to the proviso
to the definition of the term "Associate" in the Rights Agreement) a
percentage of outstanding shares of Common Stock in excess of the
Henkel Percentage (as defined in the Rights Agreement) then in effect,
the Henkel Entities (if any of them becomes aware of such fact) shall
promptly deliver to Loctite, or Loctite (if it becomes aware of such
fact) shall promptly deliver to the Henkel Entities, written notice
(an "Associate Notice") of such fact, setting forth (i) the amount
by which such party is aware that the percentage of outstanding
shares of Common Stock beneficially owned by the Henkel Entities,
together with their respective Affiliates and Associates, exceeds
the Henkel Percentage and (ii) the date that such party became
aware of such fact. As used herein, (A) the term "Excess
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Percentage" shall mean the amount of the percentage of
outstanding shares of Common Stock by which the aggregate
percentage of outstanding shares of Common Stock beneficially
owned by the Henkel Entities, together with their respective
Affiliates and Associates (if and to the extent that any Henkel
Entity has become aware of such ownership directly or pursuant to
an Associate Notice delivered to the Henkel Entities by Loctite),
exceeds the Henkel Percentage then in effect and (B) the term
"Discovery Date" shall mean the date that any Henkel Entity
becomes aware of the existence of an Excess Percentage or if
Loctite first became aware of the existence of an Excess
Percentage, the date that the Henkel Entities receive an
Associate Notice from Loctite in connection therewith.
(b) From and after a Discovery Date and so long
as the amount of the Excess Percentage is greater than zero, the
Henkel Entities shall, and shall cause their respective
Affiliates to, (i) vote with respect to any matter that
percentage of outstanding shares of Common Stock beneficially
owned by the Henkel Entities and their respective Affiliates
equal to the Excess Percentage in the same proportion as all
outstanding shares of Common Stock not beneficially owned by the
Henkel Entities and their respective Affiliates and Associates
are voted on such matter and (ii) tender into any tender or
exchange offer (or otherwise sell to the person making such
tender or exchange offer) for the shares of Common Stock that is
not opposed by a majority of those Outside Directors who are also
Disinterested Directors (as defined in the Rights Agreement) or
is for all outstanding shares of Common Stock and is held open
for a period of at least 60 days from its commencement, that
percentage of outstanding shares of Common Stock beneficially
owned by the Henkel Entities and their respective Affiliates
equal to the Excess Percentage in the same proportion as all
outstanding shares of Common Stock not beneficially owned by the
Henkel Entities and their respective Affiliates and Associates
are tendered in such tender or exchange offer.
8. Representations and Warranties. Each party hereto
represents and warrants to each other party hereto that:
(a) it has the requisite corporate power and
authority to execute and deliver this Agreement, to carry out its
obligations hereunder and to consummate each of the transactions
contemplated hereby;
(b) the execution, delivery and performance of
this Agreement and the consummation of each of the transactions
contemplated hereby have been duly authorized by its Board of
Directors (or other relevant corporate body), and no other
corporate proceedings on its part are necessary to authorize this
Agreement or to consummate the transactions so contemplated;
(c) this Agreement has been duly executed and
delivered by it and, assuming this Agreement constitutes a valid
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and binding obligation of each other party hereto, constitutes a
valid and binding obligation of it, enforceable against it in
accordance with its respective terms, except to the extent such
enforceability may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting or relating to the
enforcement of creditors' rights generally and is subject to the
general principles of equity; and
(d) neither the execution, delivery and
performance of this Agreement nor the consummation by it of the
transactions contemplated hereby nor compliance by it with any of
the provisions hereof will (i) conflict with or result in any
breach or violation of any provisions of its governing
organizational documents, (ii) require on its part any filing
with, notification to, or permit, authorization, consent or
approval of, any governmental body or authority or any other
entity (other than filings by Henkel Entities with the Securities
and Exchange Commission under the Exchange Act) or (iii)
constitute (with or without notice or lapse of time or both) a
breach, violation or default, create a lien or other encumbrance
or give rise to any right of renegotiation or termination,
amendment, cancellation, acceleration or prepayment under (A) any
material agreement or instrument to which it is a party or by
which any of its material properties or assets may be bound or
subject or (B) any order, writ, injunction, decree, statute, rule
or regulation, governmental permit or license applicable to it or
any of its material properties or assets.
8.1 Loctite Share Ownership. The Henkel Entities
represent and warrant to Loctite that as of the date hereof, the Henkel
Entities and the Henkel Affiliates own, in the aggregate, 10,488,960
shares of Common Stock.
9. Miscellaneous.
9.1 Entire Agreement. This Agreement embodies
the entire agreement and all understandings between the parties hereto
and supersedes all prior agreements and understandings relating to the
subject matter hereof.
9.2 Binding Effect; Benefits; Assignment;
Survival. This Agreement shall inure to the benefit of and shall
be binding upon the parties hereto and their respective legal
representatives, successors and assigns. Neither this Agreement
nor any of the rights hereunder may be assigned by (i) Loctite,
without the prior written consent of Henkel America, or (ii) any
Henkel Entity, unless there is at least one Outside Director and
a majority of the Outside Directors consents to such assignment
in writing or at a duly called meeting of the Board. Any
attempted or purported assignment in violation of the previous
sentence shall be void and of no effect. The representations and
warranties of the parties hereto set forth herein shall survive
without limitation as to time.
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9.3 Amendments and Waivers. No modification,
amendment, termination or waiver of any provision of this
Agreement, nor consent to any departure therefrom, shall in any
event be effective unless (i) there is at least one Outside
Director and (ii) the same shall be (a) in writing, (b) signed by
each of the parties hereto and (c) approved by a majority of the
Outside Directors, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for
which given.
9.4 Governing Law. This Agreement shall be
construed in accordance with and governed by the laws of the
State of Delaware applicable to agreements made and to be
performed wholly within such jurisdiction, without giving effect
to the choice of law provisions thereof. Each of the parties
hereto hereby irrevocably and unconditionally consents to submit
to the exclusive jurisdiction of the courts of the State of
Delaware for any litigation arising out of, or relating to, this
Agreement and the transactions contemplated hereby (and agrees
not to commence any litigation relating thereto except in such
courts). Henkel Germany hereby irrevocably appoints Henkel
America as its agent to receive, on its behalf, service of any
process, summons, notice or other document. Each Henkel Entity
agrees that service of any process, summons, notice or document
by U.S. registered mail to its respective address set forth in
Section 9.5 hereof shall be effective service of process for any
litigation brought against it in any such court. Each of the
parties hereto hereby irrevocably and unconditionally waives any
objection to the laying of venue of any litigation arising out of
this Agreement or the transactions contemplated hereby in the
courts of the State of Delaware, and hereby further irrevocably
and unconditionally waives and agrees not to plead or claim in
any such court that any such litigation brought in any such court
has been brought in an inconvenient forum.
9.5 Notices. All notices, requests, demands,
applications, services of process, and other communications which
are required to be or may be given under this Agreement shall be
deemed to have been duly given if sent by telex, telecopy or
facsimile transmission or delivered or mailed, certified first
class mail, postage prepaid, return receipt requested, to the
parties hereto at the following addresses:
To Loctite:
Loctite Corporation
00 Xxxxxxxx Xxxxxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: General Counsel
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With copies to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxxxx, Xx., P.C.
To any Henkel Entity:
Xxxxxx Corporation
0000 Xxxxxxxxxxx Xxxxxxxxx
Xxxxx Xxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx, Esq.
With copies to:
Xxxxxx XXxX
00 Xxxxxxxxxxxxx
00000 Xxxxxxxxxx-0
Xxxxxxx
Attention: Xx. Xxxx Xxxxxx
and to:
Cleary, Gottlieb, Xxxxx & Xxxxxxxx
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxxxxx;
or to such other address as any party shall furnish to the other
by notice given in accordance with this Section 9.5. All such
notices, requests, demands and other communications shall be
deemed to have been duly given: at the time delivered by hand, if
personally delivered; three business days after being deposited
in the mail, postage prepaid, if mailed; when receipt is
acknowledged, if telecopied; and on the next business day, if
timely delivered (with charges prepaid) to a recognized national
air courier guaranteeing overnight delivery.
9.6 Further Assurances. Each party hereto shall
do and perform or cause to be done and performed all such further
acts and things and shall execute and deliver all such other
agreements, certificates, instruments and documents as any other
party may reasonably request in order to carry out the intent and
accomplish the purpose of this Agreement and the consummation of
the transactions contemplated hereby.
9.7 Specific Performance. The parties hereto
hereby acknowledge that each party hereto would suffer
irreparable injury and would not have an adequate remedy at law
for money damages if the provisions of this Agreement were not
performed in accordance with their terms. Each party hereto
agrees that the other parties hereto shall be entitled to
specific enforcement of the terms of this Agreement in addition
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to any other remedy to which they are entitled, at law or in
equity. Furthermore, if any action or proceeding shall be
instituted to enforce the provisions hereof, any party against
whom such action or proceeding is brought hereby waives the claim
or defense therein that there is an adequate remedy at law, and
agrees not to urge in any such action or proceeding the claim or
defense that such remedy at law exists.
9.8 Joint and Several Liability. Notwithstanding
anything to the contrary in this Agreement, it is expressly
understood and agreed that the obligations, covenants, agreements
and duties of each Henkel Entity under this Agreement shall be
joint and several and shall not be affected, modified or impaired
by the compromise, settlement, waiver, change, modification,
amendment (whether material or otherwise) or termination of any
or all of the obligations, covenants, agreements or duties of any
other Henkel Entity under this Agreement or by the taking of, or
the failure to take, or any delay on the part of Loctite in
taking, any action against any Henkel Entity to enforce, assert
or exercise any right, power or remedy conferred on Loctite by
this Agreement or otherwise.
9.9 Termination. This Agreement shall terminate
and be of no further force and effect on April 14, 2004, and upon
the termination of this Agreement, there shall be no liability on
the part of any party to this Agreement with respect to any of
the provisions hereof, with the sole exception that nothing
contained in this Agreement shall in any way relieve any party
hereto from liability for any breach of the provisions of this
Agreement for the period prior to its termination.
9.10 Rights of Action. (a) Except as set forth in
this Section 9.10, nothing in this Agreement shall be construed
to give any person or corporation (other than Loctite and the
Henkel Entities) any legal or equitable right, remedy or claim
under this Agreement. The parties agree that, at any time (but
only at such time) that there are no Outside Directors, the
rights of action by Loctite in respect of this Agreement shall be
vested in the respective holders of shares of Common Stock; and
any holder of shares of Common Stock, without the consent of any
other holder of shares of Common Stock, may, on his own behalf
and for his own benefit, enforce, and may institute and maintain
any suit, action or proceeding against any party to this
Agreement to enforce any provision of this Agreement. Without
limiting the foregoing or any remedies available to the holders
of shares of Common Stock, it is specifically acknowledged that
the holders of shares of Common Stock would not have an adequate
remedy at law for any breach of this Agreement and will be
entitled to specific performance of the obligations under, and
injunctive relief against actual or threatened violations of the
obligations of any party subject to, this Agreement.
(b) Each of the Henkel Entities hereby agrees that in
connection with any action by Loctite to enforce any provision
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of this Agreement against any of the Henkel Entities, none of the
Henkel Entities will take any action that would directly or
indirectly prevent Loctite from making the necessary funds and
personnel available to appropriately pursue such action.
9.11 Counterparts. This Agreement may be executed
in one or more counterparts, each of which shall for all purposes
be deemed an original and all of which shall constitute the same
instrument.
IN WITNESS WHEREOF, each of the parties hereto has caused
this Agreement to be duly executed on its behalf as of the date
first above written.
LOCTITE CORPORATION
By: /s/ Xxxxxx Xxxxxx
---------------------------------
Name: Xxxxxx Xxxxxx
Title: Vice President and
General Counsel
XXXXXX KOMMANDITGESELLSCHAFT
AUF AKTIEN
By: /s/ Jurgen Manchot
---------------------------------
Name: Jurgen Manchot
Title: Vice Chairman
Shareholders' Committee
By: /s/ Xxxxxx Xxxxxxxxxx
---------------------------------
Name: Xxxxxx Xxxxxxxxxx
Title: Associate General Counsel
XXXXXX CORPORATION
By: /s/ Xxxxxx X. Xxxxx
---------------------------------
Name: Xxxxxx X. Xxxxx
Title: Secretary
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HC INVESTMENTS, INC.
By: /s/ Xxxxxx X. Xxxxx
---------------------------------
Name: Xxxxxx X. Xxxxx
Title: Secretary
- 18 -
