STANDSTILL AGREEMENT July 21, 2010
Exhibit 10.2
EXECUTION
VERSION
July 21, 2010
This Standstill Agreement, dated as of July 21, 2010 (this “Agreement”), is by and among
Xxxxx, Inc., a North Carolina corporation (“Xxxxx”), Xxxxxxx X. Xxxxxxxx, individually (“MAW”) and
Xxxxxxxx X. Xxxxxxxx, individually (“PAW”).
WHEREAS, Xxxxx, Xxxxxx’x of Hanover, Inc., a Pennsylvania corporation (“Xxxxxx’x”), and Lima
Merger Corp., a Pennsylvania corporation and a wholly owned Subsidiary of Xxxxx (“Merger Sub”),
have entered into an Agreement and Plan of Merger, dated the date hereof (as amended, modified or
otherwise supplemented from time to time, the “Merger Agreement”), pursuant to which Merger Sub
will merge with and into Xxxxxx’x (the “Merger”);
WHEREAS, as of the date hereof, MAW is the Beneficial Owner of 84,965 shares of Class A Common
Stock of Xxxxxx’x, par value $100.00 per share, and PAW is the Beneficial Owner of 7,350 shares of
Class A Common Stock of Xxxxxx’x, par value $100.00 per share (collectively, with any other
Xxxxxx’x Shares which MAW or PAW become the Beneficial Owner of prior to the termination of this
Agreement, the “MAW/PAW Xxxxxx’x Shares”);
WHEREAS, upon consummation of the Merger, MAW and PAW shall receive Xxxxx Shares in exchange
for his or her MAW/PAW Xxxxxx’x Shares (such Xxxxx Shares received in exchange for Xxxxxx’x Shares
upon consummation of the Merger, together with all other Xxxxx Shares which MAW or PAW is the
record owner or Beneficial Owner of at any time, the “MAW/PAW Xxxxx Shares”); and
WHEREAS, as a condition to Lance’s willingness to enter into the Merger Agreement, Xxxxx has
required that MAW and PAW enter into this Agreement and, in order to induce Xxxxx to enter into the
Merger Agreement, MAW and PAW are willing to enter into this Agreement.
NOW, THEREFORE, intending to be legally bound, each of the parties hereby agree as follows:
1. Certain Definitions.
For the purposes of this Agreement, capitalized terms used and not otherwise defined herein
shall have the respective meanings ascribed to such terms in the Merger Agreement. As used in this
Agreement, the following terms have the respective meanings set forth below.
“Beneficial Owner” and “Beneficial Ownership” and words of similar import have the meaning
assigned to such terms in Rule 13d-3 and Rule 13d-5 promulgated under the Exchange Act and a
Person’s Beneficial Ownership of securities shall be calculated in accordance with the provisions
of such rules; provided, that a Person shall be deemed to have Beneficial Ownership of all
securities that such Person has a right to acquire without regard to the 60 day limitation in such
rule.
“Family Member” includes, with respect to MAW or PAW, any child, stepchild, grandchild,
parent, stepparent, grandparent, spouse, former spouse, mother-in-law, father-in-law, son-in-law,
daughter-in-law, including adoptive relationships, any person sharing MAW’s or PAW’s household
(other than a tenant or employee), a trust in which these persons have more than fifty percent of
the beneficial interest, a foundation in which these persons (or MAW or PAW) control the management
of assets, and any other entity in which these persons (or MAW or PAW) own more than fifty percent of
the voting interests.
2. Standstill in Respect of MAW/PAW Xxxxx Shares.
(a) MAW and PAW hereby agree that, from and after the date hereof until the third anniversary
of the Effective Time of the Merger, he or she shall not, directly or indirectly, unless
specifically agreed to in writing by a majority of the independent members of the board of
directors of Xxxxx or expressly contemplated by the terms of this Agreement:
(i) acquire, offer to acquire, or agree to acquire, directly or indirectly, by purchase or
otherwise, any securities or direct or indirect rights to acquire Xxxxx Shares or any other
securities of Xxxxx, or any material assets of Xxxxx or any Subsidiary or division thereof;
provided, that following the Effective Time, MAW and PAW shall be permitted to acquire
Xxxxx Shares (A) pursuant to exercise of stock options granted to MAW and PAW, (B) directly from a
Family Member or (C) by reinvesting dividends received in respect of MAW/PAW’s Xxxxx Shares in
accordance with applicable securities Laws and Lance’s internal policies related thereto;
provided, further, that any such reinvesting of dividends shall be done outside of
any dividend reinvestment program sponsored by Xxxxx. For the avoidance of doubt, any compensation
of MAW and PAW from Xxxxx (whether in cash, other assets or Xxxxx stock or stock options) shall not
be prohibited by this Agreement, but any Xxxxx Shares received directly or indirectly as
compensation of MAW and PAW shall be subject to the terms of this Agreement;
(ii) Transfer, or enter into any contract, option or other agreement with respect to, or
consent to, a Transfer of, any or all of the MAW/PAW Xxxxx Shares; provided, that (A) if
MAW or PAW is an “affiliate” (as such term is defined in Rule 144 of the Securities Act (“Rule
144”)) of Xxxxx, such person that is an “affiliate” shall be permitted to Transfer any of its
MAW/PAW Xxxxx Shares in a Transfer pursuant to Rule 144 or, if MAW or PAW is not an “affiliate” (as
such term is defined in Rule 144) of Xxxxx, then such person shall be permitted to Transfer any of
its MAW/PAW Xxxxx Shares to the same extent as would be permitted pursuant to Rule 144 if such
person was an “affiliate” of Xxxxx pursuant to Rule 144 and (B) each of MAW and PAW may Transfer
the MAW/PAW Xxxxx Shares held by such person to a Family Member of such person for estate planning
purposes; provided, further, that each transferee pursuant to clause (B) shall
agree in writing to be bound by the terms of this Agreement (solely with respect to the MAW/PAW
Xxxxx Shares transferred pursuant to this clause (B)) upon or prior to the consummation of such
Transfer; or
(iii) take any action contrary to the following aspects of Xxxxxx’x and Lance’s proposed
governance structure following the Merger as reflected in Exhibit C to the Merger
Agreement: (A) reducing the total number of directors from 16 in 2010 to 14 in 2011 and to 12 in
2012, (B) the re-election of those Xxxxx directors who are eligible for re-election in 2011 and (C)
the re-election of those Xxxxx directors who are eligible for re-election in 2012.
(b) Notwithstanding anything to the contrary contained in this Agreement, in no event shall
the aggregate Beneficial Ownership of Xxxxx Shares by MAW and PAW exceed thirty percent (30%) of
the issued and outstanding Xxxxx Shares at any time.
3. Representations and Warranties of MAW.
MAW and PAW hereby represent and warrant to Xxxxx as follows:
(a) No Conflicts. Neither the execution and delivery of this Agreement by MAW and
PAW, nor the consummation by MAW and PAW of the transactions contemplated hereby, will (i) conflict
with or result in any breach of the organizational documents of Xxxxxx’x; (ii) require any Permit from
any or Governmental Body or any authorization, consent or approval from any other Person; (iii)
result in, or give rise to, a violation or breach of or a default under any of the terms of any
material contract,
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understanding, agreement or other instrument or obligation to which MAW and/or
PAW is a party or by which MAW and PAW or any of the MAW/PAW Xxxxxx’x Shares or MAW and PAW assets
may be bound, or (iv) violate any applicable Law, except, with respect to any of the foregoing
clauses (i) through (iv), as does not and could not reasonably be expected to impair MAW’s or PAW’s
ability to perform its obligations under this Agreement.
(b) Reliance by Xxxxx. MAW and PAW understand and acknowledge that Xxxxx is entering
into the Merger Agreement in reliance upon the execution and delivery of this Agreement by MAW and
PAW.
4. Representations and Warranties of Xxxxx.
Xxxxx hereby represents and warrants to the MAW and PAW as follows:
(a) Corporate Organization. Xxxxx is a corporation duly organized, validly existing
and in good standing under the Laws of its jurisdiction of incorporation.
(b) Authority Relative to This Agreement. Xxxxx has the requisite corporate power and
authority to execute and deliver this Agreement and to consummate the transactions contemplated
hereby. This Agreement and the consummation by Xxxxx of the transactions contemplated hereby have
been duly and validly authorized by the board of directors of Xxxxx, and no other corporate
proceedings on the part of Xxxxx are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly and validly executed and delivered
by Xxxxx and, assuming that this Agreement constitutes the valid and binding agreement of the MAW
and PAW, constitutes the valid and binding agreement of Xxxxx, enforceable against Xxxxx in
accordance with its terms, except that such enforceability may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium or other similar Laws now or hereafter in effect relating to
creditors’ rights generally, and (ii) general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law).
(c) No Conflicts. Neither the execution and delivery of this Agreement by Xxxxx, nor
the consummation by Xxxxx of the transactions contemplated hereby, will (i) conflict with or result
in any breach of the Certificate of Incorporation or the Bylaws of Xxxxx; (ii) require any Permit
from any Governmental Body; (iii) result in, or give rise to, a violation or breach of or a default
under any of the terms of any material contract, understanding, agreement or other instrument or
obligation to which Xxxxx is a party, or (iv) violate any applicable Law, except, with respect to
any of the foregoing clauses (i) through (iv), as does not and could not reasonably be expected to
impair Lance’s ability to perform its obligations under this Agreement.
5. Termination.
(a) Subject to Section 5(b), this Agreement shall terminate and neither Xxxxx nor MAW or PAW
shall have any rights or obligations hereunder upon the earliest to occur of: (i) the termination
of this Agreement by mutual written consent of Xxxxx, MAW and PAW, (ii) the termination of the
Merger Agreement in accordance with its terms, and (iii) the third anniversary of the Effective
Time of the Merger.
(b) Notwithstanding Section 5(a), (i) termination of this Agreement shall not prevent any
party hereunder from seeking any remedies (at Law or in equity) against any other party hereto for
such party’s breach of any of the terms of this Agreement, and (ii) Sections 4 and 6(b) through
6(p), inclusive, of this Agreement shall survive the termination of this Agreement.
6. Miscellaneous.
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(a) Publication. MAW and PAW hereby authorize Xxxxx to publish and disclose in the
Joint Proxy Statement, the Form S-4 and any other Filing his and her identity and ownership of
Xxxxxx’x Shares and the nature of his and her commitments, arrangements and understandings pursuant
to this Agreement.
(b) Appraisal Rights. To the extent permitted by applicable Law, MAW and PAW hereby
waive any rights of appraisal or rights to dissent from the Merger that he or she may have under
applicable Law.
(c) Further Actions. Each of the parties hereto agrees that it will use its
reasonable best efforts to do all things necessary to effectuate this Agreement.
(d) Waivers. No action taken pursuant to this Agreement, including any investigation
by or on behalf of any party hereto, nor any failure or delay on the part of any party hereto in
the exercise of any right hereunder, shall be deemed to constitute a waiver by the party taking
such action of compliance of any representations, warranties, covenants or agreements contained in
this Agreement. The waiver by any party hereto of a breach of any provision hereunder shall not
operate or be construed as a waiver of any prior or subsequent breach of the same or any other
provision hereunder.
(e) Counterparts. For the convenience of the parties hereto, this Agreement may be
executed in any number of counterparts (including by facsimile or electronic transmission), each
such counterpart being deemed to be an original instrument, and all such counterparts shall
together constitute the same agreement.
(f) Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Pennsylvania, without regard to the principles of conflict of
laws thereof.
(g) Jurisdiction; Waiver of Jury Trial.
(i) Each of the parties hereto hereby irrevocably submits to the exclusive jurisdiction of any
Pennsylvania state or federal court of appropriate jurisdiction in any action arising out of or
relating to this Agreement and hereby irrevocably agrees that all claims in respect of such action
may be heard and determined in such Pennsylvania state or federal court. Each of the parties
hereto hereby irrevocably waives, to the fullest extent it may effectively do so, the defense of an
inconvenient forum to the maintenance of such action. The parties further agree, to the extent
permitted by applicable law, that any final and nonappealable judgment against any of them in any
action referred to above shall be conclusive and may be enforced in any other jurisdiction within
or outside the United States by suit on the judgment, a certified copy of which shall be conclusive
evidence of the fact and amount of such judgment.
(ii) EACH OF XXXXX, MAW AND PAW HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, SUIT, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT
OF OR RELATING TO THIS AGREEMENT.
(h) Specific Performance. MAW and PAW recognize and acknowledge that a breach of
covenants or agreements contained in this Agreement will cause Xxxxx to sustain irreparable damage
for which Xxxxx would not have an adequate remedy at law for money damages. Therefore, MAW and PAW
agree that, in the event of any such breach or threatened breach, Xxxxx shall be entitled to seek
and obtain (a) a decree or order of specific performance to enforce the observance and performance
of such covenant or obligation and (b) an injunction restraining such breach or threatened breach. MAW and PAW
further agree to waive any requirement for the securing or posting of any bond in connection with
the obtaining
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of any such injunctive or other equitable relief. Xxxxx shall be entitled to recover
its attorneys’ fees and all of its costs and expenses in enforcing this Agreement.
(i) Notices. All notices, requests, instructions or other documents to be given
hereunder by any party to the other parties shall be in writing and shall be deemed duly given (i)
upon delivery, when delivered personally, (ii) one (1) Business Day after being sent by overnight
courier or when sent by facsimile transmission (with a confirming copy sent by overnight courier),
and (iii) three (3) Business Days after being sent by registered or certified mail, postage
prepaid, as follows:
If to Xxxxx:
Xxxxx, Inc.
00000 Xxxxxxxxxx Xxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Fax: (000) 000-0000 and (000) 000-0000
Phone: (000) 000-0000 and (000) 000-0000
Attn: Xxxx X. Xxxxxxx and Xxxxxx X. Xxxxxx, Esq.
00000 Xxxxxxxxxx Xxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Fax: (000) 000-0000 and (000) 000-0000
Phone: (000) 000-0000 and (000) 000-0000
Attn: Xxxx X. Xxxxxxx and Xxxxxx X. Xxxxxx, Esq.
with a copy to (which shall not constitute notice):
K&L Gates LLP
Hearst Tower, 47th Floor
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Fax: (000) 000-0000
Phone: (000) 000-0000
Attn: Xxxx Xxxxxx
Hearst Tower, 47th Floor
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Fax: (000) 000-0000
Phone: (000) 000-0000
Attn: Xxxx Xxxxxx
If to MAW, to:
Xxxxxxx X. Xxxxxxxx
c/x Xxxxxx’x of Hanover, Inc.
0000 Xxxx Xxxxxx
Xxxxxxx, XX 00000
Fax.: (000) 000-0000
Phone: 000-000-0000 (ext. 5201)
c/x Xxxxxx’x of Hanover, Inc.
0000 Xxxx Xxxxxx
Xxxxxxx, XX 00000
Fax.: (000) 000-0000
Phone: 000-000-0000 (ext. 5201)
with a copy to (which shall not constitute notice):
Xxxxxx Xxxxxxx Xxxxxx & Xxxxxxx, LLC
44th Floor, 000 Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Fax: (000) 000-0000
Phone: (000) 000-0000
Attn: Xxxx X. Xxxxxx, III
44th Floor, 000 Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Fax: (000) 000-0000
Phone: (000) 000-0000
Attn: Xxxx X. Xxxxxx, III
If to PAW, to:
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Xxxxxxxx X. Xxxxxxxx
0000 Xxxxxxxxx Xxxx Xxxx
Xxxxxxx, XX 00000
0000 Xxxxxxxxx Xxxx Xxxx
Xxxxxxx, XX 00000
Phone: 000-000-0000
with a copy to (which shall not constitute notice):
Xxxxxx Xxxxxxx Xxxxxx & Xxxxxxx, LLC
44th Floor, 000 Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Fax: (000) 000-0000
Phone: (000) 000-0000
Attn: Xxxx X. Xxxxxx, III
44th Floor, 000 Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Fax: (000) 000-0000
Phone: (000) 000-0000
Attn: Xxxx X. Xxxxxx, III
(j) Entire Agreement; Assignment. This Agreement constitutes the entire agreement of
the parties and supersedes all prior agreements and understandings, both written and oral, among
the parties hereto, or any of them, with respect to the subject matter hereof. This Agreement may
not be assigned by any of the parties hereto by operation of law or otherwise.
(k) Parties in Interest. This Agreement shall be binding upon and inure solely to the
benefit of each party hereto and their respective successors and assigns. 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.
(l) Severability. If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of Law or public policy, all other conditions
and provisions of this Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not affected in a manner
adverse to any party. Upon such determination that any term or other provision is invalid, illegal
or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as possible in an
acceptable manner to the end that the transactions contemplated hereby are fulfilled to the fullest
extent possible.
(m) Certain Interpretations. Unless otherwise specified, all references in this
Agreement to Sections shall be deemed to refer to Sections of this Agreement. The Section captions
herein are for convenience of reference only, do not constitute part of this Agreement and shall
not be deemed to limit or otherwise affect any of the provisions hereof. Unless the context
otherwise requires, words describing the singular number shall include the plural and vice versa,
and words denoting any gender shall include all genders. The words “include,” includes” and
“including,” when used herein shall be deemed in each case to be followed by the words “without
limitation.” The parties hereto agree that they have been represented by legal counsel during the
negotiation and execution of this Agreement and, therefore, waive the application of any Law,
regulation, holding or rule of construction providing that ambiguities in an agreement or other
document shall be construed against the party drafting such agreement or document. The parties
hereto agree that the intention of this Agreement is to provide certain restrictions on MAW and PAW
with respect to the MAW/PAW Xxxxxx’x Shares and the MAW/PAW Xxxxx Shares held by each of them, and
that any attempt by either MAW or PAW to circumvent the restrictions contemplated hereby shall be
deemed a breach of this Agreement and shall be null and void.
(n) Fees and Expenses. Except as otherwise provided herein, whether or not the Merger
is consummated, all costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such costs and expenses.
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(o) Ownership Interest. Nothing contained in this Agreement shall be deemed to vest
in Xxxxx any direct or indirect ownership or incidence of ownership of or with respect to any
MAW/PAW Xxxxx Shares. All rights, ownership and economic benefits of and relating to the MAW/PAW
Xxxxx Shares shall remain vested in and belong to MAW/PAW, and Xxxxx shall have no authority to
direct MAW/PAW in the voting or disposition of any of the MAW/PAW Xxxxxx’x Shares or MAW/PAW Xxxxx
Shares.
(p) Capacity as a Stockholder. MAW and PAW do not make any agreement or understanding
herein in his or her capacity as a director of Xxxxxx’x. MAW and PAW make their agreements and
understandings herein solely in their capacity as the record holder and beneficial owner of the MAW
and PAW Xxxxxx’x Shares and, notwithstanding anything to the contrary herein, nothing herein shall
limit or affect any actions taken by MAW and PAW in their capacity as a director or officer of
Xxxxxx’x.
[Signature page follows]
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IN WITNESS WHEREOF, Xxxxx, MAW and PAW have caused this Agreement to be duly executed as of
the day and year first above written.
| XXXXX, INC. | ||||||
| By: | /s/ Xxxxx X. Xxxxxx
|
|||||
| Name: Xxxxx X. Xxxxxx | ||||||
| Title: President and Chief Executive Officer | ||||||
| /s/ Xxxxxxx X. Xxxxxxxx | ||||||
| Xxxxxxx X. Xxxxxxxx | ||||||
| /s/ Xxxxxxxx X. Xxxxxxxx | ||||||
| Xxxxxxxx X. Xxxxxxxx | ||||||
Signature Page to Standstill Agreement
