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EXHIBIT (c)(3)
STOCK OPTION AGREEMENT
Stock Option Agreement dated as of September 13, 1995, by and
among Xxxxxx Xxxxxx, Inc., a Tennessee corporation ("Parent"), Xxxxxx
Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of
Parent ("Purchaser"), and XXXX X. XXXXXXX ("Stockholder").
RECITALS
A. Concurrently herewith, Parent, Purchaser and The X.X.
Xxxxxx Company, a Delaware corporation ("X.X. Xxxxxx"), are entering into a
Tender Offer and Merger Agreement of even date herewith (the "Merger
Agreement"; capitalized terms used but not defined herein shall have the
meanings set forth in the Merger Agreement), which contemplates, among other
things, that Purchaser will commence a tender offer to purchase all outstanding
shares of X.X. Xxxxxx Common at a price of $9.00 per share (the "Offer").
Subject to the terms and conditions of the Merger Agreement, the Offer will be
followed by a merger (the "Merger") of Purchaser with and into X.X. Xxxxxx.
B. As of the date hereof, Stockholder owns 389,472
shares of the outstanding X.X. Xxxxxx Common (the "Shares") and desires to (i)
grant to Purchaser the option to acquire all of such Shares at a per share
price equal to the greatest of (x) $9.00, (y) the price per share of X.X.
Xxxxxx Common paid for X.X. Xxxxxx purchased in the Offer or (z) the price paid
in any transaction in which any person or entity shall become the beneficial
owner of 50% or more of the outstanding shares of X.X. Xxxxxx Common; (ii)
grant to Purchaser an irrevocable proxy covering the Shares; (iii) enter into
an agreement whereby the Stockholder agrees to tender and not withdraw the
Shares in the Offer; and (iv) agree not to dispose of the Shares or any
interest therein other than in accordance with this Agreement.
C. Parent and Purchaser will enter into the Merger
Agreement in part in reliance on Stockholder's representations, warranties and
agreements under this Agreement.
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AGREEMENT
To implement the foregoing and in consideration of the mutual
agreements contained herein, the parties agree as follows:
1. THE CONDITIONAL PURCHASE OPTION
1.1 GRANT OF OPTION. Stockholder hereby grants to
Purchaser an irrevocable option to purchase the Shares at a per share price
equal to the greatest of (i) $9.00, (ii) the price per share of X.X. Xxxxxx
Common paid for X.X. Xxxxxx Common purchased in the Offer or (iii) the price
paid in any transaction in which any person or entity shall become the
beneficial owner of 50% or more of the X.X. Xxxxxx Common and on the terms and
subject to the conditions set forth herein (the "Option").
1.2 EXERCISE OF OPTION.
(a) The Option may be exercised by Purchaser (or
its designee, which designee must be Parent or a direct or indirect wholly
owned subsidiary of Parent), in whole or in part, at any time, or from time to
time, during the period beginning on the final business day before the
expiration date of the Offer and ending on the Expiration Date. As used
herein, the term "Expiration Date" means the first to occur of any of the
following dates:
(x) consummation of the Offer; or (y) the termination of the
Merger Agreement pursuant to its terms (unless Purchaser has
theretofore sent the written notice specified in Section
1.2(b)).
(b) If Purchaser wishes to exercise the Option
(the "Option Purchase"), Purchaser shall send a written notice to Stockholder
of its intention to exercise the Option, specifying the number of Shares to be
purchased, whether Purchaser and/or a designee of Purchaser will be purchasing
the Shares and the place, and, if then known, time and date of the closing of
such purchase (the "Closing Date" or the "Closing"), which date shall not be
less than two business days nor more than ten business days from the date on
which such notice is delivered; provided, that the Closing shall be held only
if (i) such purchase would not otherwise violate or cause the violation of, any
applicable law or regulations (including, the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and the rules and regulations
thereunder, or the rules of the New York Stock Exchange or American Stock
Exchange, (ii) no statute, rule, regulation, decree, order or injunction shall
have been promulgated, enacted, entered into or enforced by any
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governmental agency or authority or court which prohibits delivery of the
Shares, whether temporary, preliminary or permanent (provided, however, that
the parties hereto shall use their reasonable efforts to have any such order,
decree or injunction vacated or reversed) and (iii) there has been no material
breach of the Merger Agreement by the Purchaser or Parent. In the event the
Closing is delayed as a result of clause (i) or (ii) above, the Closing Date
shall be within five business days following the cessation of such violation,
statute, rule, regulation, decree, order or injunction, as the case may be but
not later than the Expiration Date.
If within one year following an exercise of the Option, there
occurs a transaction in which any person or entity (other than Purchaser,
Parent or an affiliate of either of them) becomes the beneficial owner of 50%
or more of the X.X. Xxxxxx Common and in which the consideration paid to
Purchaser or Parent exceeds the exercise price of the Option, the Purchaser
will, promptly following consummation of such transaction, pay to the
Stockholder an amount equal to the excess of the consideration paid in such
transaction per share of X.X. Xxxxxx Common over the exercise price per share,
multiplied by the number of shares acquired upon exercise of the Option. The
provisions of this paragraph shall terminate at such time as Purchaser, Parent
or any affiliate of either of them owns 100% of the X.X. Xxxxxx Common then
outstanding.
Notwithstanding the foregoing, if a transaction is proposed in
which any person or entity (other than Purchaser, Parent or an affiliate of
either of them) would become the beneficial owner of 50% or more of the
outstanding X.X. Xxxxxx Common and if the exercise price per share under the
Option shall be the amount proposed to be paid in such transaction, any notice
given pursuant to this Section 1.2(b) shall be given to Stockholder not less
than five business days prior to the termination of Stockholder's rights to
participate in such transaction. In the event notice of exercise is given by
Purchaser in accordance with the preceding sentence, the obligation of
Purchaser to purchase the Shares described in such notice shall be subject to
the condition that the transaction in which the person or entity would become
the beneficial owner of 50% or more of the X.X. Xxxxxx Common shall have been
consummated.
2. AGREEMENT TO TENDER SHARES. Stockholder agrees to accept the Offer,
to tender the Shares into the Offer and not to withdraw such Shares prior to
consummation of the Offer or withdrawal of the Offer by Purchaser, unless a
transaction is proposed in which any person or entity (other than Purchaser or
Parent) would become the beneficial owner of 50% or more of the outstanding
X.X. Xxxxxx Common and Purchaser shall not have exercised the Option.
3. IRREVOCABLE PROXY. Stockholder hereby irrevocably appoints S. Xxxxxx
Xxxxx and Xxx X. Xxxxxx, or either of them, as its attorney and proxy, with
full power of substitution, to vote or to express written consent or dissent in
such manner as such attorney and proxy
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or its substitute shall, in its sole discretion, deem proper, and otherwise act
(including pursuant to any corporate action in writing without a meeting) with
respect to all of the Shares which it is entitled to vote at any meeting of
stockholders (whether annual or special and whether or not an adjourned
meeting) of X.X. Xxxxxx, or pursuant to written action taken in lieu of any
such meeting or otherwise; provided, however, that Stockholder grants a proxy
hereunder only with respect to the following matters (the "Designated
Matters"): (i) votes or consents with respect to the Merger; (ii) votes or
consents with respect to any action or agreement that would result in a breach
of any covenant, representation or warranty or any other obligation or
agreement of X.X. Xxxxxx under the Merger Agreement; (iii) votes or consents
with respect to any action or agreement that would impede, interfere with,
delay, postpone or attempt to discourage the Offer or the Merger, including,
but not limited to, (a) any extraordinary corporate transaction (other than the
Offer and the Merger), such as a merger, other business combination,
reorganization or liquidation involving X.X. Xxxxxx, (b) a sale or transfer of
a material amount of assets of X.X. Xxxxxx or any of its subsidiaries, (c) any
change in the board of directors of X.X. Xxxxxx, except as otherwise agreed to
in writing by Parent, or (d) any material change in the present capitalization
of X.X. Xxxxxx; and (iv) votes or consents relating to any other material
change in the corporate structure or business of X.X. Xxxxxx. This proxy is
irrevocable, is coupled with an interest sufficient in law to support an
irrevocable proxy and is granted in consideration of and as an inducement to
cause the Parent and Purchaser to enter into the transactions contemplated by
this Agreement and the Merger Agreement. This proxy shall revoke any other
proxy granted by Stockholder at any time with respect to the Shares and no
subsequent proxies will be given with respect thereto by Stockholder. In
addition, if subsequent to the date hereof Stockholder is entitled to vote the
Shares for any purpose, it shall take all actions necessary to vote the Shares
pursuant to instructions received from Purchaser; provided, however, that the
provisions of this sentence shall only apply to the Designated Matters. It is
expressly understood and acknowledged by the parties hereto that nothing
contained herein is intended to restrict the Stockholder (if the Stockholder is
also a director of X.X. Xxxxxx) from voting on any matter, or otherwise from
acting, in the Stockholder's capacity as a director of X.X. Xxxxxx with respect
to any matter, including but not limited to, the general management of over-all
operation of X.X. Xxxxxx.
4. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER. Stockholder represents
and warrants to Parent and Purchaser as follows:
4.1 OWNERSHIP OF SHARES. On the date hereof, the Shares
are all of the shares of X.X. Xxxxxx Common currently beneficially owned by the
Stockholder. (1) Stockholder does not have any rights to acquire any
additional shares of X.X. Xxxxxx Common from X.X. Xxxxxx, (2) Stockholder
currently has, and at the exercise of the Option and the sale of the Shares to
Purchaser in accordance with this Agreement will
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have, good, valid and marketable title to the Shares, free and clear of all
liens, encumbrances, restrictions, options, warrants, rights to purchase and
claims of every kind (other than the encumbrances created by this Agreement and
other than restrictions on transfer under applicable Federal and State
securities laws and subject to the Stockholders Agreement), (3) the sale of
Shares to Purchaser hereunder will transfer to Purchaser good, valid and
marketable title to said Shares included in such transaction, free of all
liens, encumbrances, restrictions and claims of every kind other than
restrictions on transfer under applicable Federal and State securities laws,
subject to the Stockholders Agreement and (4) to the Stockholder's knowledge
the Stockholders Agreement has not been modified or amended except by an
Agreement dated the date hereof and remains in full force and effect as so
amended.
4.2 POWER; BINDING AGREEMENT. Stockholder has the full
legal right, power and authority to enter into and perform all of Stockholder's
obligations under this Agreement. Subject to the Stockholders Agreement, the
execution and delivery of this Agreement by Stockholder will not violate any
other agreement to which Stockholder is a party including, without limitation,
any voting agreement, stockholders agreement, voting trust or proxy. This
Agreement has been duly executed and delivered by Stockholder and, subject to
the Stockholders Agreement, constitutes a legal, valid and binding agreement of
Stockholder, enforceable in accordance with its terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium and similar laws, now or hereafter in effect affecting creditors'
rights and remedies generally or general principles of equity. Subject to the
Stockholders Agreement, neither the execution or delivery of this Agreement nor
the consummation by Stockholder of the transactions contemplated hereby will
(i) require any consent or approval of or filing by Stockholder with any
governmental or other regulatory body except for filings on Schedule 13D or
Schedule 13G and a Form 4 under the Exchange Act, or (ii) constitute a
violation of, conflict with or constitute a default under, any contract,
commitment, agreement, understanding, arrangement or other restriction of any
kind to which Stockholder is a party or by which Stockholder is bound.
4.3 FINDER'S FEE. No person is, or will be, entitled to
any commission or finder's fees from Stockholder in connection with this
Agreement or the transactions contemplated hereby.
5. REPRESENTATION AND WARRANTIES OF PARENT AND PURCHASER. Each of Parent
and Purchaser represents and warrants to Stockholder as follows:
5.1 POWERS; BINDING AGREEMENT. Each of Parent and
Purchaser has full legal right, power and authority to enter into and perform
all of its obligations under this Agreement. The execution and delivery of
this Agreement by Parent and Purchaser has been authorized by all necessary
corporate action on the part of Parent and Purchaser
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and will not violate any other agreement to which Parent and Purchaser is a
party. This Agreement has been duly executed and delivered by each of Parent
and Purchaser and constitutes a legal, valid and binding agreement of Parent
and Purchaser, enforceable in accordance with its terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium and similar laws, now or hereafter in effect affecting creditors'
rights and remedies generally or general principles of equity. Neither the
execution or delivery of this Agreement nor the consummation by Parent or
Purchaser of the transactions contemplated hereby will (i) require any consent
or approval of or filing by Parent or Purchaser with any governmental or other
regulatory body except for (x) the filings required under the HSR Act and (y)
filings on Schedule 13D under the Exchange Act, or (ii) constitute a violation
of, conflict with or constitute a default under, any contract, commitment,
agreement, understanding, arrangement or other restriction of any kind to which
Parent or Purchaser is a party or by which Parent or Purchaser is bound.
5.2 FINDER'S FEES. Other than the fee payable by Parent
as disclosed in the Merger Agreement, no person is, or will be, entitled to any
commission or finder's fees from Parent or Purchaser in connection with this
Agreement or the transactions contemplated hereby.
5.3 NO CONFLICT; REQUIRED FILINGS AND CONSENTS. The
purchase of Shares from the Stockholder pursuant to this Agreement is for the
account of the Purchaser for the purpose of investment and not with a view to
or for sale in connection with any distribution thereof within the meaning of
the Securities Act and the rules and regulations promulgated thereunder.
6. FURTHER ASSURANCES. From time to time, at the other party's request
and without further consideration, each party hereto shall execute and deliver
such additional documents and take all such further action as may be necessary
or desirable to consummate the transactions contemplated by this Agreement,
including, without limitation, to vest in Purchaser good title to any Shares
purchased hereunder.
7. CERTAIN COVENANTS OF THE STOCKHOLDER. Except in accordance with the
provisions of this Agreement, Stockholder agrees, while this Agreement is in
effect, not to, directly or indirectly:
(a) sell, transfer, pledge, encumber, assign or
otherwise dispose of or enter into any contract, option or other arrangement or
understanding with respect to the sale, transfer, pledge, encumbrance,
assignment or other disposition of, any of the Shares other than transfers to
family members, trusts for the benefit of the Stockholder or family members or
in connection with estate planning but only if the transferee of such Shares
agrees in writing to be bound by the provisions of this Agreement with respect
to such Shares;
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(b) grant any proxies, deposit any Shares into a
voting trust or enter into a voting agreement with respect to any Shares; or
(c) except as otherwise permitted to X.X. Xxxxxx
and the directors of X.X. Xxxxxx pursuant to Section 6.3(a) of the Merger
Agreement and in circumstances where the Stockholder or its representative is
acting solely in his or her capacity as a director of X.X. Xxxxxx, take any
action to encourage, solicit, initiate, or participate in any way in
discussions or negotiations with, or furnish any information to, or afford any
access to the properties, books or records of the Company or any of its
subsidiaries to, or otherwise assist, facilitate or encourage, any person or
entity (other than Parent and Purchaser, or officers, directors,
representatives, agents, affiliates or associates) in connection with any
possible or proposed merger, consolidation, business combination, liquidation,
reorganization, sale or other disposition of assets, sale of shares of capital
stock or similar transactions involving the Company or any division of the
Company.
8. CERTAIN COVENANTS OF PURCHASER AND PARENT.
8.1 OFFER AND MERGER. Parent and Purchaser agree to make
the Offer, and to follow such Offer with the Merger pursuant to the terms, and
subject to the conditions, contained in the Merger Agreement.
8.2 HSR ACT FILINGS. Parent and Purchaser agree to make
in a timely manner any filings required to be made by them under the HSR Act in
connection with the transactions contemplated by this Agreement and the Merger
Agreement.
9. TERMINATION. This Agreement shall terminate on the earliest of:
(a) the date on which Parent, Purchaser and Stock
holder mutually consent to terminate this Agreement in writing;
(b) following the successful consummation of the
Offer; and
(c) prior to the successful consummation of the
Offer, the termination of the Merger Agreement pursuant to its terms.
10. NOTICES. All notices or other communications required or permitted
hereunder shall be in writing (except as otherwise provided herein) and shall
be deemed duly given when received by delivery in person, by telecopy, telex or
telegram or by certified mail, postage prepaid, or by an overnight courier
service, addressed as follows:
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If to Purchaser or Parent: If to Stockholder:
Xxx X. Xxxxxx Xxxx X. Xxxxxxx
Executive Vice President ------------------------------
Xxxxxx Xxxxxx, Inc. 0000 Xxxxxxx Xx.
Xxxxxxxxx, XX 00000 ------------------------------
Telephone: (000) 000-0000 Xxxxxxxxx, XX 00000
Facsimile: (000) 000-0000 ------------------------------
with a copy to: with a copy to:
Xxxxx X. Xxxxx, III ------------------------------
Bass, Xxxxx & Xxxx ------------------------------
0000 Xxxxx Xxxxxxxx Xxxxxx ------------------------------
Xxxxxxxxx, XX 00000 ------------------------------
11. ENTIRE AGREEMENT; AMENDMENT. This Agreement, together with the
documents expressly referred to herein, constitute the entire agreement among
the parties hereto with respect to the subject matter contained herein and
supersede all prior agreements and understandings among the parties with
respect to such subject matter. This Agreement may not be modified, amended,
altered or supplemented except by an agreement in writing executed by the party
against whom such modification, amendment, alteration or supplement is sought
to be enforced.
12. ASSIGNS. This Agreement shall be binding upon and inure to the
benefit of the parties hereto, and their respective successors and assigns, but
neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto without the prior
written consent of the other parties, except that Purchaser may assign any or
all of its rights and obligations hereunder to Parent or any direct or indirect
wholly owned subsidiary of Parent without the consent of Stockholder, but no
such transfer shall relieve Purchaser of its obligations under this Agreement
if such subsidiary does not perform the obligations of Purchaser hereunder.
13. GOVERNING LAW. This Agreement, and all matters relating hereto, shall
be governed by, and construed in accordance with the laws of the State of
Delaware without giving effect to the principles of conflicts of laws thereof.
14. INJUNCTIVE RELIEF. The parties agree that in the event of a breach of
any provision of this Agreement, the aggrieved party may be without an adequate
remedy at law. The parties therefore agree that in the event of a breach of
any provision of this Agreement, the aggrieved party may elect to institute and
prosecute proceedings in any court of competent
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jurisdiction to enforce specific performance or to enjoin the continuing breach
of such provision, as well as to obtain damages for breach of this Agreement
and such aggrieved party may take any such actions without the necessity of
posting a bond. By seeking or obtaining such relief, the aggrieved party will
not be precluded from seeking or obtaining any other relief to which it may be
entitled.
15. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same document.
16. SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provisions of
this Agreement are so broad as to be unenforceable, such provision shall be
interpreted to be only so broad as is enforceable.
17. FURTHER ASSURANCES. Each party hereto shall execute and deliver such
additional documents as may be necessary or desirable to consummate the
transactions contemplated by this Agreement.
18. THIRD PARTY BENEFICIARIES. Nothing in this Agreement, expressed or
implied, shall be construed to give any person other than the parties hereto
any legal or equitable right, remedy or claim under or by reason of this
Agreement or any provision contained herein.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first above written.
XXXXXX XXXXXX, INC.
By: /s/ Xxx X. Xxxxxx
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Title: EVP & Secretary
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XXXXXX ACQUISITION CORP.
By: /s/ S. Xxxxxx Xxxxx
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Title: President
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/s/ Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx
STOCKHOLDER
