Exhibit 1
CONFORMED COPY
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AGREEMENT AND PLAN OF MERGER
Among
CONOPCO, INC.,
CONOPCO ACQUISITION COMPANY, INC.,
and
XXXXXX XXXXXX INDUSTRIES, INC.
Dated as of February 13, 1996
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TABLE OF CONTENTS
Page
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ARTICLE I
The Offer
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SECTION 1.01. The Offer . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.02. Company Actions . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE II
The Merger
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SECTION 2.01. The Merger . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.02. Closing . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.03. Effective Time . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.04. Effects of the Merger . . . . . . . . . . . . . . . . . . 6
SECTION 2.05. Certificate of Incorporation and
By-laws . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.06. Directors . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.07. Officers . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE III
Effect of the Merger on the Capital Stock of the
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Constituent Corporations; Exchange of Certificates
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SECTION 3.01. Effect on Capital Stock . . . . . . . . . . . . . . . . . 7
(a) Capital Stock of Sub . . . . . . . . . . . . . . . . 7
(b) Cancelation of Treasury Stock and
Parent Owned Stock . . . . . . . . . . . . . . . 7
(c) Conversion of Shares and Class B
Shares . . . . . . . . . . . . . . . . . . . . . 7
(d) Shares of Dissenting Stockholders . . . . . . . . . 7
SECTION 3.02 Exchange of Certificates . . . . . . . . . . . . . . . . 8
(a) Paying Agent . . . . . . . . . . . . . . . . . . . . 8
(b) Exchange Procedure . . . . . . . . . . . . . . . . . 8
(c) No Further Ownership Rights in
Shares or Class B Shares . . . . . . . . . . . . 9
(d) No Liability . . . . . . . . . . . . . . . . . . . . 9
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ARTICLE IV
Representations and Warranties of the Company
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SECTION 4.01. Organization . . . . . . . . . . . . . . . . . . . . . 10
SECTION 4.02. Subsidiaries . . . . . . . . . . . . . . . . . . . . . 10
SECTION 4.03. Capitalization . . . . . . . . . . . . . . . . . . . . 10
SECTION 4.04. Authority . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 4.05. Consents and Approvals; No Violations . . . . . . . . . 12
SECTION 4.06. SEC Reports and Financial Statements . . . . . . . . . 13
SECTION 4.07. Absence of Certain Changes or Events . . . . . . . . . 13
SECTION 4.08. No Undisclosed Liabilities . . . . . . . . . . . . . . 14
SECTION 4.09. Information Supplied . . . . . . . . . . . . . . . . . 15
SECTION 4.10. Benefit Plans; Employees and
Employment Practices . . . . . . . . . . . . . . . . 15
SECTION 4.11. Contracts; Indebtedness . . . . . . . . . . . . . . . . 19
SECTION 4.12. Litigation . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 4.13. Compliance with Applicable Law . . . . . . . . . . . . 19
SECTION 4.14. Tax Matters . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 4.15. State Takeover Statutes; Charter
Provisions . . . . . . . . . . . . . . . . . . . . . 22
SECTION 4.16. Environmental Matters . . . . . . . . . . . . . . . . . 23
SECTION 4.17. Intellectual Property . . . . . . . . . . . . . . . . . 24
SECTION 4.18. Brokers; Schedule of Fees and Expenses . . . . . . . . 24
SECTION 4.19. Opinion of financial Advisor . . . . . . . . . . . . . 25
ARTICLE V
Representations and Warranties
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of Parent and Sub
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SECTION 5.01. Organization . . . . . . . . . . . . . . . . . . . . . 25
SECTION 5.02. Authority . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 5.03. Consents and Approvals; No Violations . . . . . . . . . 26
SECTION 5.04. Information Supplied . . . . . . . . . . . . . . . . . 26
SECTION 5.05. Interim Operations of Sub . . . . . . . . . . . . . . . 27
SECTION 5.06. Brokers . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 5.07 Financing . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 5.08. Ownership of Shares . . . . . . . . . . . . . . . . . . 27
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ARTICLE VI
Covenants
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SECTION 6.01. Covenants of the Company . . . . . . . . . . . . . . . 27
(a) Ordinary Course . . . . . . . . . . . . . . . . . 27
(b) Dividends; Changes in Stock . . . . . . . . . . . 28
(c) Issuance of Securities . . . . . . . . . . . . . . 28
(d) Governing Documents . . . . . . . . . . . . . . . 28
(e) No Acquisitions . . . . . . . . . . . . . . . . . 28
(f) No Dispositions . . . . . . . . . . . . . . . . . 29
(g) Indebtedness . . . . . . . . . . . . . . . . . . . 29
(h) Advice of Changes; Filings . . . . . . . . . . . . 29
(i) Tax Matters . . . . . . . . . . . . . . . . . . . 29
(j) Capital Expenditures . . . . . . . . . . . . . . . 30
(k) Discharge of Liabilities . . . . . . . . . . . . . 30
(l) Material Contracts . . . . . . . . . . . . . . . . 30
(m) General . . . . . . . . . . . . . . . . . . . . . 30
SECTION 6.02. No Solicitation . . . . . . . . . . . . . . . . . . . . 30
SECTION 6.03. Other Actions . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE VII
Additional Agreements
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SECTION 7.01. Stockholder Approval; Preparation of
Proxy Statement . . . . . . . . . . . . . . . . . . 33
SECTION 7.02. Access to Information . . . . . . . . . . . . . . . . . 35
SECTION 7.03. Reasonable Efforts . . . . . . . . . . . . . . . . . . 35
SECTION 7.04. Directors . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 7.05. Fees and Expenses . . . . . . . . . . . . . . . . . . . 37
SECTION 7.06. Indemnification; Insurance . . . . . . . . . . . . . . 38
SECTION 7.07. Employee Benefits . . . . . . . . . . . . . . . . . . . 39
SECTION 7.08. Severance Policy and Other Agreements . . . . . . . . . 40
SECTION 7.09. Stock Options, SARs and Retricted Stock . . . . . . . . 40
SECTION 7.10. Certain Litigation . . . . . . . . . . . . . . . . . . 41
SECTION 7.11. Plans for the Company . . . . . . . . . . . . . . . . . 41
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Page
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ARTICLE VIII
Conditions
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SECTION 8.01. Conditions to Each Party's Obligation To
Effect the Merger . . . . . . . . . . . . . . . . . 42
(a) Company Stockholder approval . . . . . . . . . . . 42
(b) No Injunctions or Restraints . . . . . . . . . . . 42
(c) Purchase of Shares . . . . . . . . . . . . . . . . 42
ARTICLE IX
Termination and Amendment
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SECTION 9.01. Termination . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 9.02. Effect of Termination . . . . . . . . . . . . . . . . . 44
SECTION 9.03. Amendment . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 9.04. Extension; Waiver . . . . . . . . . . . . . . . . . . . 44
ARTICLE X
Miscellaneous
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SECTION 10.01. Nonsurvival of Representations,
Warranties and Agreements . . . . . . . . . . . . . . 45
SECTION 10.02. Notices . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 10.03. Interpretation . . . . . . . . . . . . . . . . . . . . 46
SECTION 10.04. Counterparts . . . . . . . . . . . . . . . . . . . . . 46
SECTION 10.05. Entire Agreement; No Third Party
Beneficiaries . . . . . . . . . . . . . . . . . . . . 46
SECTION 10.06. Governing Law . . . . . . . . . . . . . . . . . . . . . 47
SECTION 10.07. Publicity . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 10.08. Assignment . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 10.09. Enforcement . . . . . . . . . . . . . . . . . . . . . . 47
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AGREEMENT AND PLAN OF MERGER dated as of February 13,
1996, among CONOPCO, INC., a New York corporation
("Parent"), CONOPCO ACQUISITION COMPANY, INC., a Delaware
corporation and a wholly owned subsidiary of Parent ("Sub"),
and XXXXXX XXXXXX INDUSTRIES, INC., a Delaware corporation
(the "Company").
WHEREAS, the respective Boards of Directors of Parent, Sub and
the Company have approved the acquisition of the Company by Parent on the
terms and subject to the conditions set forth in this Agreement;
WHEREAS, in furtherance of such acquisition, Parent proposes to
cause Sub to make a tender offer (as it may be amended from time to time as
permitted under this Agreement, the "Offer") to purchase the shares of
Common Stock, par value $.50 per share, of the Company (the "Company Common
Stock"; the shares of Company Common Stock being hereinafter referred to as
the "Shares") at a purchase price of $70.00 per share (the "Offer Price"),
net to the seller in cash, without interest thereon, upon the terms and
subject to the conditions set forth in this Agreement; and the Board of
Directors of the Company has adopted resolutions approving the Offer and
the Merger (as defined below) and recommending that holders of Shares
accept the Offer and that the Company's stockholders approve and adopt this
Agreement;
WHEREAS, the respective Boards of Directors of Parent, Sub and
the Company have each approved the merger of Sub into the Company (the
"Merger"), upon the terms and subject to the conditions set forth in this
Agreement, whereby each Share and each share of Class B Common Stock, par
value $.50 per share, of the Company (the "Class B Common Stock"; the
shares of Class B Common Stock being hereinafter referred to as the
"Class B Shares"), other than the Shares and Class B Shares owned directly
or indirectly by Parent or the Company and Dissenting Shares (as defined in
Section 3.01(d)), will be converted into the right to receive the price per
share paid in the Offer;
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WHEREAS, the Board of Directors of the Company has approved the
terms of the Stockholder Agreement (the "Stockholder Agreement") to be
entered into by Parent, Sub and certain stockholders of the Company
concurrently with the execution of this Agreement as an inducement to
Parent to enter into this Agreement, pursuant to which such stockholders
have, among other things, granted to Sub the right to purchase, and in
certain circumstances Sub has agreed to purchase, such stockholders'
Class B Shares; and
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with
the Offer and the Merger and also to prescribe various conditions to the
Offer and the Merger.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally
bound hereby, Parent, Sub and the Company hereby agree as follows:
ARTICLE I
The Offer
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SECTION 1.01. The Offer. (a) Subject to the provisions of this
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Agreement, as promptly as practicable but in no event later than five
business days after the date of the public announcement by Parent and the
Company of this Agreement, Sub shall, and Parent shall cause Sub to,
commence the Offer. The obligation of Sub to, and of Parent to cause Sub
to, commence the Offer and accept for payment, and pay for, any Shares
tendered pursuant to the Offer shall be subject only to the conditions set
forth in Exhibit A (the "Offer Conditions") (any of which may be waived in
whole or in part by Sub in its sole discretion, except that, unless a
Takeover Proposal (as defined in Section 6.02(a)) shall have been made
after the date hereof, Sub shall not waive the Minimum Condition (as
defined in Exhibit A) without the consent of the Company). Sub expressly
reserves the right to modify the terms of the Offer, except that, without
the consent of the Company, Sub shall not (i) reduce
3
the number of Shares subject to the Offer, (ii) reduce the Offer Price,
(iii) add to the Offer Conditions, (iv) except as provided in the next
sentence, extend the Offer, (v) change the form of consideration payable in
the Offer or (vi) amend the Offer Conditions or any other term of the Offer
in any manner adverse to the holders of Shares. Notwithstanding the
foregoing, Sub may, without the consent of the Company, (i) extend the
Offer, if at the scheduled or extended expiration date of the Offer any of
the Offer Conditions shall not be satisfied or waived, until such time as
such conditions are satisfied or waived, (ii) extend the Offer for any
period required by any rule, regulation, interpretation or position of the
Securities and Exchange Commission (the "SEC") or the staff thereof
applicable to the Offer and (iii) extend the Offer for any reason on one or
more occasions for an aggregate period of not more than 15 business days
beyond the latest expiration date that would otherwise be permitted under
clause (i) or (ii) of this sentence, in each case subject to the right of
Parent, Sub or the Company to terminate this Agreement pursuant to the
terms hereof. Parent and Sub agree that if at any scheduled expiration
date of the Offer, the Minimum Condition, the HSR Condition (as defined in
Exhibit A) or either of the conditions set forth in paragraphs (e) or (f)
of Exhibit A shall not have been satisfied, but at such scheduled
expiration date all the conditions set forth in paragraphs (a), (b), (c),
(d) and (g) shall then be satisfied, at the request of the Company
(confirmed in writing), Sub shall extend the Offer from time to time,
subject to the right of Parent, Sub or the Company to terminate this
Agreement pursuant to the terms hereof. Subject to the terms and
conditions of the Offer and this Agreement, Sub shall, and Parent shall
cause Sub to, accept for payment, and pay for, all Shares validly tendered
and not withdrawn pursuant to the Offer that Sub becomes obligated to
accept for payment, and pay for, pursuant to the Offer as soon as
practicable after the expiration of the Offer.
(b) On the date of commencement of the Offer, Parent and Sub
shall file with the SEC a Tender Offer Statement on Schedule 14D-1 (the
"Schedule 14D-1") with respect to the Offer, which shall contain an offer
to purchase and a related letter of transmittal and summary
4
advertisement (such Schedule 14D-1 and the documents included therein
pursuant to which the Offer will be made, together with any supplements or
amendments thereto, the "Offer Documents"), and Parent and Sub shall cause
to be disseminated the Offer Documents to holders of Shares as and to the
extent required by applicable Federal securities laws. Parent, Sub and the
Company each agrees promptly to correct any information provided by it for
use in the Offer Documents if and to the extent that such information shall
have become false or misleading in any material respect, and Parent and Sub
further agree to take all steps necessary to cause the Schedule 14D-1 as so
corrected to be filed with the SEC and the other Offer Documents as so
corrected to be disseminated to holders of Shares, in each case as and to
the extent required by applicable Federal securities laws. The Company and
its counsel shall be given reasonable opportunity to review and comment
upon the Offer Documents prior to their filing with the SEC or
dissemination to the stockholders of the Company. Parent and Sub agree to
provide the Company and its counsel any comments Parent, Sub or their
counsel may receive from the SEC or its staff with respect to the Offer
Documents promptly after the receipt of such comments.
(c) Parent shall provide or cause to be provided to Sub on a
timely basis the funds necessary to accept for payment, and pay for, any
Shares that Sub becomes obligated to accept for payment, and pay for,
pursuant to the Offer.
SECTION 1.02. Company Actions. (a) The Company hereby approves
----------------
of and consents to the Offer and represents that the Board of Directors of
the Company, at a meeting duly called and held, at which all directors were
present and all of whom were Continuing Directors (as defined in
Article TENTH of the Certificate of Incorporation of the Company), duly and
unanimously adopted resolutions approving this Agreement, the Offer, the
Merger and the Stockholder Agreement, determining that the terms of the
Offer and the Merger are fair to, and in the best interests of, the
Company's stockholders and recommending that holders of Shares accept the
Offer and that the Company's stockholders approve and adopt this Agreement.
The Company represents that its Board of Directors has received the opinion
of Lazard Freres & Co. LLC that the proposed consideration to
5
be received by holders of Shares pursuant to the Offer, and by holders of
Shares and Class B Shares pursuant to the Merger, is fair to such holders
from a financial point of view, and a complete and correct signed copy of
such opinion has been delivered by the Company to Parent. The Company has
been advised by each of its directors and executive officers that each such
person intends to tender all Shares (other than Shares issued under the
1979 Stock Option Plan (as defined in Section 4.10(i)) owned by such person
pursuant to the Offer.
(b) On the date the Offer Documents are filed with the SEC, the
Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 with respect to the Offer (such Schedule 14D-9, as amended
from time to time, the "Schedule 14D-9") containing the recommendation
described in paragraph (a) (subject to the right of the Board of Directors
of the Company to withdraw or modify its approval or recommendation of the
Offer, the Merger and this Agreement as set forth in Section 6.02(b)), and
the Company shall cause to be disseminated the Schedule 14D-9 to holders of
Shares as and to the extent required by applicable Federal securities laws.
Each of the Company, Parent and Sub agrees promptly to correct any
information provided by it for use in the Schedule 14D-9 if and to the
extent that such information shall have become false or misleading in any
material respect, and the Company further agrees to take all steps
necessary to amend or supplement the Schedule 14D-9 and to cause the
Schedule 14D-9 as so amended or supplemented to be filed with the SEC and
disseminated to holders of Shares, in each case as and to the extent
required by applicable Federal securities laws. Parent and its counsel
shall be given reasonable opportunity to review and comment upon the
Schedule 14D-9 prior to its filing with the SEC or dissemination to
stockholders of the Company. The Company agrees to provide Parent and its
counsel any comments the Company or its counsel may receive from the SEC or
its staff with respect to the Schedule 14D-9 promptly after the receipt of
such comments.
(c) In connection with the Offer and the Merger, the Company
shall cause its transfer agent to furnish Sub promptly with mailing labels
containing the names and addresses of the record holders of Shares and
Class B Shares
6
as of a recent date and of those persons becoming record holders subsequent
to such date, together with copies of all lists of stockholders, security
position listings and computer files and all other information in the
Company's possession or control regarding the beneficial owners of Shares
and Class B Shares, and shall furnish to Sub such information and
assistance (including updated lists of stockholders, security position
listings and computer files) as Parent may reasonably request in
communicating the Offer to the Company's stockholders. Subject to the
requirements of applicable law, and except for such steps as are necessary
to disseminate the Offer Documents and any other documents necessary to
consummate the Merger, Parent and Sub and their agents shall hold in
confidence the information contained in any such labels, listings and
files, will use such information only in connection with the Offer and the
Merger and, if this Agreement shall be terminated, will, upon request,
deliver, and will use their best efforts to cause their agents to deliver,
to the Company all copies of such information then in their possession or
control.
ARTICLE II
The Merger
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SECTION 2.01. The Merger. Upon the terms and subject to the
-----------
conditions set forth in this Agreement, and in accordance with the Delaware
General Corporation Law (the "DGCL"), Sub shall be merged with and into the
Company at the Effective Time (as defined in Section 2.03). Following the
Effective Time, the separate corporate existence of Sub shall cease and the
Company shall continue as the surviving corporation (the "Surviving
Corporation") and shall succeed to and assume all the rights and
obligations of Sub in accordance with the DGCL. At the election of Parent,
any direct or indirect wholly owned subsidiary (as defined in
Section 10.03) of Parent may be substituted for Sub as a constituent
corporation in the Merger. In such event, the parties agree to execute an
appropriate amendment to this Agreement in order to reflect the foregoing.
SECTION 2.02. Closing. The closing of the Merger will take
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place at 10:00 a.m. on a date to be specified by
7
Parent or Sub, which shall be no later than the second business day after
satisfaction or waiver of the conditions set forth in Article VIII (the
"Closing Date"), at the offices of Cravath, Swaine & Xxxxx, Worldwide
Plaza, 000 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, unless another date,
time or place is agreed to in writing by the parties hereto.
SECTION 2.03. Effective Time. Subject to the provisions of this
---------------
Agreement, as soon as practicable on or after the Closing Date, the parties
shall file a certificate of merger or other appropriate documents (in any
such case, the "Certificate of Merger") executed in accordance with the
relevant provisions of the DGCL and shall make all other filings or
recordings required under the DGCL. The Merger shall become effective at
such time as the Certificate of Merger is duly filed with the Delaware
Secretary of State, or at such other time as Sub and the Company shall
agree should be specified in the Certificate of Merger (the time the Merger
becomes effective being hereinafter referred to as the "Effective Time").
SECTION 2.04. Effects of the Merger. The Merger shall have the
----------------------
effects set forth in Section 259 of the DGCL.
SECTION 2.05. Certificate of Incorporation and By-laws.
-----------------------------------------
(a) The Certificate of Incorporation of the Company, as in effect
immediately prior to the Effective Time, shall be amended as of the
Effective Time so that Article FOURTH of such certificate of incorporation
reads in its entirety as follows: "The total number of shares of all
classes of stock that the corporation shall have authority to issue is
1,000 shares of Common Stock, par value $.01 per share." and, as so
amended, such certificate of incorporation shall be the certificate of
incorporation of the Surviving Corporation until thereafter changed or
amended as provided therein or by applicable law.
(b) The By-laws of Sub as in effect immediately prior to the
Effective Time shall be the By-laws of the Surviving Corporation, until
thereafter changed or amended as provided therein or by applicable law.
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SECTION 2.06. Directors. The directors of Sub immediately prior
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to the Effective Time shall be the directors of the Surviving Corporation,
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
SECTION 2.07. Officers. The officers of the Company immediately
---------
prior to the Effective Time shall be the officers of the Surviving
Corporation, until the earlier of their resignation or removal or until
their respective successors are duly elected and qualified, as the case may
be.
ARTICLE III
Effect of the Merger on the Capital Stock of the
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Constituent Corporations; Exchange of Certificates
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SECTION 3.01. Effect on Capital Stock. As of the Effective
------------------------
Time, by virtue of the Merger and without any action on the part of the
holder of any Shares or Class B Shares or any shares of capital stock of
Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of
---------------------
capital stock of Sub shall be converted into and become one fully paid
and nonassessable shares of Common Stock, par value $.01 per share, of
the Surviving Corporation.
(b) Cancelation of Treasury Stock and Parent Owned Stock. Each
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Share and Class B Share that is owned by the Company or by any
subsidiary of the Company and each Share and Class B Share that is
owned by Parent, Sub or any other subsidiary of Parent shall
automatically be canceled and retired and shall cease to exist, and no
consideration shall be delivered in exchange therefor.
(c) Conversion of Shares and Class B Shares. Subject to
----------------------------------------
Section 3.01(d), each Share and Class B Share issued and outstanding
(other than Shares and Class B Shares to be canceled in accordance
with
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Section 3.01(b)) shall be converted into the right to receive from the
Surviving Corporation in cash, without interest, the price paid in the
Offer (the "Merger Consideration"). As of the Effective Time, all
such Shares and Class B Shares shall no longer be outstanding and
shall automatically be canceled and retired and shall cease to exist,
and each holder of a certificate representing any such Shares or
Class B Shares shall cease to have any rights with respect thereto,
except the right to receive the Merger Consideration, without
interest.
(d) Shares of Dissenting Stockholders. Notwithstanding anything
----------------------------------
in this Agreement to the contrary, any issued and outstanding Shares
or Class B Shares held by a person (a "Dissenting Stockholder") who
objects to the Merger and complies with all the provisions of Delaware
law concerning the right of holders of Shares and/or Class B Shares to
dissent from the Merger and require appraisal of their Shares and/or
Class B Shares ("Dissenting Shares") shall not be converted as
described in Section 3.01(c), but shall be converted into the right to
receive such consideration as may be determined to be due to such
Dissenting Stockholder pursuant to the laws of the State of Delaware.
If, after the Effective Time, such Dissenting Stockholder withdraws
his demand for appraisal or fails to perfect or otherwise loses his
right of appraisal, in any case pursuant to the DGCL, his Shares
and/or Class B Shares shall be deemed to be converted as of the
Effective Time into the right to receive the Merger Consideration.
The Company shall give Parent (i) prompt notice of any demands for
appraisal of Shares or Class B Shares received by the Company and
(ii) the opportunity to participate in and direct all negotiations and
proceedings with respect to any such demands. The Company shall not,
without the prior written consent of Parent, make any payment with
respect to, or settle, offer to settle or otherwise negotiate, any
such demands.
SECTION 3.02. Exchange of Certificates. (a) Paying Agent.
------------------------- -------------
Prior to the Effective Time, Parent shall designate a bank or trust company
to act as paying agent in
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the Merger (the "Paying Agent"), and, from time to time on, prior to or
after the Effective Time, Parent shall make available, or cause the
Surviving Corporation to make available, to the Paying Agent cash in
amounts and at the times necessary for the payment of the Merger
Consideration upon surrender of certificates representing Shares or Class B
Shares as part of the Merger pursuant to Section 3.01 (it being understood
that any and all interest earned on funds made available to the Paying
Agent pursuant to this Agreement shall be turned over to Parent).
(b) Exchange Procedure. As soon as reasonably practicable after
-------------------
the Effective Time, the Paying Agent shall mail to each holder of record of
a certificate or certificates that immediately prior to the Effective Time
represented Shares or Class B Shares (the "Certificates"), (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk
of loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Paying Agent and shall be in a form and have such other
provisions as Parent may reasonably specify) and (ii) instructions for use
in effecting the surrender of the Certificates in exchange for the Merger
Consideration. Upon surrender of a Certificate for cancelation to the
Paying Agent or to such other agent or agents as may be appointed by
Parent, together with such letter of transmittal, duly executed, and such
other documents as may reasonably be required by the Paying Agent, the
holder of such Certificate shall be entitled to receive in exchange
therefor the amount of cash into which the Shares or Class B Shares
theretofore represented by such Certificate shall have been converted
pursuant to Section 3.01, and the Certificate so surrendered shall
forthwith be canceled. In the event of a transfer of ownership of Shares
or Class B Shares that is not registered in the transfer records of the
Company, payment may be made to a person other than the person in whose
name the Certificate so surrendered is registered, if such Certificate
shall be properly endorsed or otherwise be in proper form for transfer and
the person requesting such payment shall pay any transfer or other taxes
required by reason of the payment to a person other than the registered
holder of such Certificate or establish to the satisfaction of the
Surviving Corporation that such tax has been paid or is not applicable.
Until surrendered
11
as contemplated by this Section 3.02, each Certificate shall be deemed at
any time after the Effective Time to represent only the right to receive
upon such surrender the amount of cash, without interest, into which the
Shares or Class B Shares theretofore represented by such Certificate shall
have been converted pursuant to Section 3.01. No interest will be paid or
will accrue on the cash payable upon the surrender of any Certificate.
(c) No Further Ownership Rights in Shares or Class B Shares.
--------------------------------------------------------
All cash paid upon the surrender of Certificates in accordance with the
terms of this Article III shall be deemed to have been paid in full
satisfaction of all rights pertaining to the Shares and Class B Shares
theretofore represented by such Certificates. At the Effective Time, the
stock transfer books of the Company shall be closed, and there shall be no
further registration of transfers on the stock transfer books of the
Surviving Corporation of the Shares and the Class B Shares that were
outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation or
the Paying Agent for any reason, they shall be canceled and exchanged as
provided in this Article III.
(d) No Liability. None of Parent, Sub, the Company or the
-------------
Paying Agent shall be liable to any person in respect of any cash delivered
to a public official pursuant to any applicable abandoned property, escheat
or similar law. If any Certificates shall not have been surrendered prior
to seven years after the Effective Time (or immediately prior to such
earlier date on which any payment pursuant to this Article III would
otherwise escheat to or become the property of any Governmental Entity (as
defined in Section 4.05)), the cash payment in respect of such Certificate
shall, to the extent permitted by applicable law, become the property of
the Surviving Corporation, free and clear of all claims or interests of any
person previously entitled thereto.
12
ARTICLE IV
Representations and Warranties of the Company
---------------------------------------------
The Company represents and warrants to Parent and Sub as follows:
SECTION 4.01. Organization. The Company and each of its
-------------
Significant Subsidiaries (as defined in Section 10.03) is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to carry on its business as now being conducted. The Company and
each of its Significant Subsidiaries is duly qualified or licensed to do
business and in good standing in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by
it makes such qualification or licensing necessary, except in such
jurisdictions where the failure to be so duly qualified or licensed and in
good standing would not have a material adverse effect (as defined in
Section 10.03) on the Company or prevent or materially delay the
consummation of the Offer and/or the Merger. The Company has delivered to
Parent complete and correct copies of its Certificate of Incorporation and
By-laws and the certificates of incorporation and by-laws (or similar
organizational documents) of its U.S. Significant Subsidiaries.
SECTION 4.02. Subsidiaries. Item 4.02 of the letter from the
-------------
Company to Parent dated the date hereof, which letter relates to this
Agreement and is designated therein as the Company Disclosure Letter (the
"Company Letter") lists each subsidiary of the Company. All the
outstanding shares of capital stock of each such subsidiary are owned by
the Company, by another wholly owned subsidiary of the Company or by the
Company and another wholly owned subsidiary of the Company, free and clear
of all pledges, claims, liens, charges, encumbrances and security interests
of any kind or nature whatsoever (collectively, "Liens"), and are duly
authorized, validly issued, fully paid and nonassessable. Except as set
forth in Item 4.02 of the Company Letter and except for the capital stock
of its subsidiaries, the Company does not own, directly or
13
indirectly, any capital stock or other ownership interest in any
corporation, partnership, joint venture or other entity.
SECTION 4.03. Capitalization. The authorized capital stock of
---------------
the Company consists of 30,000,000 Shares, 15,000,000 Class B Shares and
5,000,000 shares of Preferred Stock, par value $.50 per share. At the
close of business on February 5, 1996, (i) 6,857,801 Shares were issued and
outstanding, (ii) 1,091,510 Shares were held by the Company in its
treasury, (iii) 1,190,258 Shares were reserved for issuance upon exercise
of options to purchase Shares ("Company Stock Options") issued pursuant to
the Company's stock option plans, (iv) 3,044,829 Class B Shares were issued
and outstanding and (v) no Class B Shares were held by the Company in its
treasury. Except as set forth above, as of the date of this Agreement, no
shares of capital stock or other voting securities of the Company were
issued, reserved for issuance or outstanding. All outstanding shares of
capital stock of the Company are, and all shares which may be issued will
be, when issued, duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights. There are no bonds,
debentures, notes or other indebtedness of the Company having the right to
vote (or convertible into, or exchangeable for, securities having the right
to vote) on any matters on which stockholders of the Company may vote.
Except as set forth above, as of the date of this Agreement, there are not
any securities, options, warrants, calls, rights, commitments, agreements,
arrangements or undertakings of any kind to which the Company or any of its
subsidiaries is a party or by which any of them is bound obligating the
Company or any of its subsidiaries to issue, deliver or sell, or cause to
be issued, delivered or sold, additional shares of capital stock or other
voting securities of the Company or of any of its subsidiaries or
obligating the Company or any of its subsidiaries to issue, grant, extend
or enter into any such security, option, warrant, call, right, commitment,
agreement, arrangement or undertaking. Except as set forth in Item 4.03 of
the Company Letter, as of the date of this Agreement, there are not any
outstanding contractual obligations of the Company or any of its
subsidiaries (i) to repurchase, redeem or otherwise acquire any shares of
capital stock of the Company or (ii) to vote or to dispose
14
of any shares of the capital stock of any of the Company's subsidiaries.
SECTION 4.04. Authority. The Company has the requisite
----------
corporate power and authority to execute and deliver this Agreement and,
subject to the approval and adoption of this Agreement by the holders of a
majority of the combined voting power of the Shares and the Class B Shares
(the "Company Stockholder Approval"), to consummate the transactions
contemplated hereby. The execution, delivery and performance of this
Agreement and the consummation by the Company of the Merger and of the
other transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of the Company and no other
corporate proceedings on the part of the Company are necessary to authorize
this Agreement or to consummate the transactions so contemplated (in each
case, other than, with respect to the Merger, the Company Stockholder
Approval). This Agreement has been duly executed and delivered by the
Company and, assuming this Agreement constitutes a valid and binding
obligation of Parent and Sub, constitutes a valid and binding obligation of
the Company enforceable against the Company in accordance with its terms.
SECTION 4.05. Consents and Approvals; No Violations. Except as
--------------------------------------
set forth in Item 4.05 of the Company Letter, and except for filings,
permits, authorizations, consents and approvals as may be required under,
and other applicable requirements of, the Securities Exchange Act of 1934,
as amended (the "Exchange Act") (including the filing with the SEC of the
Schedule 14D-9 and a proxy statement relating to any required Company
Stockholder Approval (the "Proxy Statement")), the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), the DGCL,
the laws of other states in which the Company is qualified to do or is
doing business, state takeover laws and foreign and supranational laws
relating to antitrust and anticompetition clearances, neither the
execution, delivery or performance of this Agreement by the Company nor the
consummation by the Company of the transactions contemplated hereby will
(i) conflict with or result in any breach of any provision of the
Certificate of Incorporation or By-laws of the Company or of the similar
organizational documents of
15
any of its Significant Subsidiaries, (ii) require any filing with, or
permit, authorization, consent or approval of, any Federal, state or local
government or any court, tribunal, administrative agency or commission or
other governmental or other regulatory authority or agency, domestic,
foreign or supranational (a "Governmental Entity") (except where the
failure to obtain such permits, authorizations, consents or approvals or to
make such filings would not have a material adverse effect on the Company
or prevent or materially delay the consummation of the Offer and/or the
Merger), (iii) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, amendment, cancelation or acceleration) under, any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
lease, license, contract, agreement or other instrument or obligation to
which the Company or any of its subsidiaries is a party or by which any of
them or any of their properties or assets may be bound or (iv) violate any
order, writ, injunction, decree, statute, rule or regulation applicable to
the Company, any of its subsidiaries or any of their properties or assets,
except in the case of clauses (iii) or (iv) for violations, breaches or
defaults that would not have a material adverse effect on the Company or
prevent or materially delay the consummation of the Offer and/or the
Merger.
SECTION 4.06. SEC Reports and Financial Statements. The Company
-------------------------------------
and each of its subsidiaries has filed with the SEC, and has heretofore
made available to Parent true and complete copies of, all forms, reports,
schedules, statements and other documents required to be filed by it since
March 1, 1994, under the Exchange Act or the Securities Act of 1933 (the
"Securities Act") (such forms, reports, schedules, statements and other
documents, including any financial statements or schedules included
therein, are referred to as the "Company SEC Documents"). The Company SEC
Documents, at the time filed, (a) did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading and
(b) complied in all material respects with the applicable requirements of
the Exchange Act and the
16
Securities Act, as the case may be, and the applicable rules and
regulations of the SEC thereunder. Except to the extent that information
contained in any Company SEC Document has been revised or superseded by a
subsequently filed Company Filed SEC Document (as defined in Section 4.07)
(a copy of which has been made available to Parent prior to the date
hereof), none of the Company SEC Documents contains an untrue statement of
a material fact or omits to state a material fact required to be stated or
incorporated by reference therein or necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading. The financial statements of the Company included in
the Company SEC Documents comply as to form in all material respects with
applicable accounting requirements and with the published rules and
regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis during the periods involved (except as may be indicated in
the notes thereto or, in the case of the unaudited statements, as permitted
by Form 10-Q of the SEC) and fairly present (subject, in the case of the
unaudited statements, to normal, recurring audit adjustments) the
consolidated financial position of the Company and its consolidated
subsidiaries as at the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended.
SECTION 4.07. Absence of Certain Changes or Events. Except as
-------------------------------------
disclosed in Item 4.07 of the Company Letter or in the Company SEC
Documents filed and publicly available prior to the date of this Agreement
(the "Company Filed SEC Documents"), since February 28, 1995, the Company
and its subsidiaries have conducted their respective businesses only in the
ordinary course, and there has not been (i) any material adverse change (as
defined in Section 10.03) with respect to the Company, (ii) any
declaration, setting aside or payment of any dividend or other distribution
with respect to its capital stock (other than regular quarterly cash
dividends not in excess of $.08 per Share and $.08 per Class B Share with
usual record and payment dates and in accordance with the Company's present
dividend policy) or any redemption, purchase or other acquisition of any of
its capital stock, (iii) any split,
17
combination or reclassification of any of its capital stock or any issuance
or the authorization of any issuance of any other securities in respect of,
in lieu of or in substitution for shares of its capital stock, (iv) (x) any
granting by the Company or any of its subsidiaries to any officer of the
Company or any of its subsidiaries of any increase in compensation, except
in the ordinary course of business (including in connection with
promotions) consistent with past practice or as was required under
employment agreements in effect as of February 28, 1995, (y) any granting
by the Company or any of its subsidiaries to any such officer of any
increase in severance or termination pay, except as part of a standard
employment package to any person promoted or hired (but not including the
five most senior officers), or as was required under employment, severance
or termination agreements in effect as of February 28, 1995, or (z) except
employment agreements in the ordinary course of business consistent with
past practice with employees other than any executive officer of the
Company, any entry by the Company or any of its subsidiaries into any
employment, consulting, severance, termination or indemnification agreement
with any such employee or executive officer, (v) any damage, destruction or
loss, whether or not covered by insurance, that has or reasonably could be
expected to have a material adverse effect on the Company, (vi) any
revaluation by the Company of any of its material assets or (vii) any
material change in accounting methods, principles or practices by the
Company, except as described in Item 4.07 of the Company Letter.
SECTION 4.08. No Undisclosed Liabilities. Except as and to the
---------------------------
extent set forth in Item 4.08 of the Company Letter or in the Company's
Annual Report to Stockholders for the fiscal year ended February 28, 1995,
as of February 28, 1995, neither the Company nor any of its subsidiaries
had any liabilities or obligations of any nature, whether or not accrued,
contingent or otherwise, that would be required by generally accepted
accounting principles to be reflected on a consolidated balance sheet of
the Company and its subsidiaries (including the notes thereto). Since
February 28, 1995, except as and to the extent set forth in Item 4.08 of
the Company Letter or in the Company Filed SEC Documents, neither the
Company nor any of its subsidiaries
18
has incurred any liabilities of any nature, whether or not accrued,
contingent or otherwise, that would be reasonably expected to have a
material adverse effect on the Company.
SECTION 4.09. Information Supplied. None of the information
---------------------
supplied or to be supplied by the Company specifically for inclusion or
incorporation by reference in (i) the Offer Documents, (ii) the
Schedule 14D-9, (iii) the information to be filed by the Company in
connection with the Offer pursuant to Rule 14f-1 promulgated under the
Exchange Act (the "Information Statement") or (iv) the Proxy Statement,
will, in the case of the Offer Documents, the Schedule 14D-9 and the
Information Statement, at the respective times the Offer Documents, the
Schedule 14D-9 and the Information Statement are filed with the SEC or
first published, sent or given to the Company's stockholders, or, in the
case of the Proxy Statement, at the time the Proxy Statement is first
mailed to the Company's stockholders or at the time of the Stockholders
Meeting (as defined in Section 7.01), contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. The
Schedule 14D-9, the Information Statement and the Proxy Statement will
comply as to form in all material respects with the requirements of the
Exchange Act and the rules and regulations thereunder, except that no
representation or warranty is made by the Company with respect to
statements made or incorporated by reference therein based on information
supplied by Parent or Sub specifically for inclusion or incorporation by
reference therein.
SECTION 4.10. Benefit Plans; Employees and Employment Practices.
--------------------------------------------------
(a) Except as disclosed in the Company Filed SEC Documents, since the date
of the most recent audited financial statements included in the Company
Filed SEC Documents, there has not been any adoption or amendment in any
material respect (including any increase or improvements in benefits or
coverage) by the Company or any of its subsidiaries of any collective
bargaining agreement or any bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock purchase,
stock option, phantom stock, retirement, vacation,
19
severance, disability, death benefit, hospitalization, medical, fringe
benefit, excess, supplemental executive compensation, employee stock
purchase, stock appreciation, restricted stock or other material employee
benefit plan, policy, arrangement or understanding (whether or not in
writing) providing benefits to any current or former employee, officer or
director of the Company or any of its subsidiaries (collectively, "Benefit
Plans"). Except as disclosed in Item 4.10(a) of the Company Letter, there
exist no employment, consulting, severance, termination or indemnification
agreements, or any other similar arrangements or understandings (whether or
not in writing) between the Company or any of its subsidiaries and any
current or former employee, officer or director of the Company or any of
its subsidiaries.
(b) Item 4.10(b) of the Company Letter contains a list of all
"employee pension benefit plans" (as defined in Section 3(2) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"))
(sometimes referred to herein as "Pension Plans"), "employee welfare
benefit plans" (as defined in Section 3(1) of ERISA) and all other Benefit
Plans maintained, sponsored or contributed to, by the Company or any of its
U.S., Canadian or Japanese subsidiaries for the benefit of any current or
former employees, officers or directors of the Company or any of such
subsidiaries (the "Subject Benefit Plans"). The Company has delivered to
Parent true, complete and correct copies of (i) each Subject Benefit Plan
(or, in the case of any unwritten Subject Benefit Plans, descriptions
thereof), (ii) the most recent annual report on Form 5500 (and related
schedules and financial statements or opinions required in connection
therewith) filed with the Internal Revenue Service with respect to each
Subject Benefit Plan (if any such report was required), (iii) the most
recent actuarial report with respect to each Subject Benefit Plan, as
applicable, (iv) the most recent summary plan description (and a summary of
material modifications, if applicable) for each Subject Benefit Plan and
(v) each trust agreement and group annuity contract relating to any Subject
Benefit Plan. Any Benefit Plan that is not a Subject Benefit Plan is
either required by and maintained in accordance with applicable local law
or is immaterial to the applicable subsidiary.
20
(c) Except as disclosed in Item 4.10(c) of the Company Letter,
all Pension Plans which are intended to be tax-qualified have been timely
amended to comply with ERISA and the Internal Revenue Code of 1986, as
amended (the "Code") and determination letters in respect of such Pension
Plans have been received from the Internal Revenue Service to the effect
that such Pension Plans are qualified and exempt from Federal income taxes
under Section 401(a) and 501(a), respectively, of the Code, and no such
determination letter has been revoked nor, to the best knowledge of the
Company, has revocation been threatened, nor has any such Pension Plan been
amended since the date of its most recent determination letter or
application therefor in any respect that would adversely affect its
qualification or materially increase its costs.
(d) Except as disclosed in Item 4.10(d) of the Company Letter,
each Benefit Plan has been administered in all material respects in
conformity with its terms and the applicable requirements of ERISA and the
Code and other applicable laws; and all contributions required to be made
have been made in accordance with the provisions of each such Benefit Plan
and with ERISA and the Code and other applicable laws.
(e) None of the Company or any of its subsidiaries, or any other
person or entity that, together with the Company, is treated as a single
employer under Section 414 of the Code, currently maintains or has
maintained during the five-year period preceding the date hereof any
"defined benefit plan" (within the meaning of Section 3(35) of ERISA) or
any "multiemployer plan" (within the meaning of Section 3(37) of ERISA), or
has incurred any liability under Title IV of ERISA or to the Pension
Benefit Guaranty Corporation that has not been fully paid as of the date
hereof. None of the Company, any of its subsidiaries, any officer of the
Company or any of its subsidiaries or any of the Benefit Plans which are
subject to ERISA, including the Pension Plans, any trusts created
thereunder or, to the knowledge of the Company, any trustee or
administrator thereof, has engaged in a "prohibited transaction" (as such
term is defined in Section 406 of ERISA or Section 4975 of the Code) or any
other breach of fiduciary responsibility that could reasonably be expected
to subject the Company,
21
any of its subsidiaries or any officer of the Company or any of its
subsidiaries to any material tax or penalty on prohibited transactions
imposed by such Section 4975 or to any material liability under
Section 502(i) or (1) of ERISA.
(f) With respect to any Benefit Plan that is an employee welfare
benefit plan, except as disclosed in Item 4.10(f) of the Company Letter,
(i) no such Benefit Plan is funded through a "welfare benefits fund", as
such term is defined in Section 419(e) of the Code, (ii) each such Benefit
Plan that is a "group health plan", as such term is defined in
Section 5000(b)(1) of the Code, complies with the applicable requirements
of Section 4980B(f) of the Code and (iii) each such Benefit Plan (including
any such Plan covering retirees or other former employees) may be amended
or terminated without material liability to the Company or any of its
subsidiaries on or at any time after the consummation of the Offer.
(g) With respect to each Benefit Plan, all material reports and
information required to be filed with the U.S. Department of Labor, the
Internal Revenue Service or each Benefit Plan participant have been timely
filed.
(h) There is no dispute, arbitration, claim, suit or grievance,
pending or threatened, involving a Benefit Plan (other than routine claims
for benefits payable under any such plan), and, to the knowledge of the
Company, there is no basis for such a claim.
(i) Except as disclosed in Item 4.10(i) of the Company Letter,
there are no current or former employees holding Shares issued pursuant to
the Company's 1979 Non-Qualified Stock Option Plan (the "1979 Stock Option
Plan"). Each current or former employee holding any Shares issued pursuant
to the 1979 Stock Option Plan has executed on or prior to the date of this
Agreement a letter in the form set forth in Item 4.10(i) of the Company
Letter (the "Item 4.10(i) Letter").
(j) Item 4.10(j) of the Company Letter sets forth the names of
all current officers, directors and employees of the Company and its U.S.
subsidiaries, together with each
22
employee's current salary, most recent bonus (excluding sales bonuses),
date of birth and date of employment. All salary and wages, vacation pay,
bonuses, commissions, sick pay and other benefits earned or due (including
contributions due to Benefit Plans) through the date hereof have been paid
to employees or former employees or to the Benefit Plans or have been
properly accrued in the financial statements of the Company included in the
most recent Company Filed SEC Documents.
(k) Except as disclosed in Item 4.10(k) of the Company Letter,
there are no material controversies, strikes, work stoppages or disputes
pending or threatened between the Company and any of its subsidiaries and
any current or former employees, no labor union or other collective
bargaining unit represents or has ever represented any employee of the
Company or any of its subsidiaries and no organizational effort by any
labor union or other collective bargaining unit currently is under way or
threatened with respect to any employee. A true, complete and correct copy
of any applicable collective bargaining agreement has been provided to
Parent, and the Company and its subsidiaries are in compliance in all
material respects with the terms thereof.
(l) The Board of Directors of the Company (or, if appropriate,
any committee of the Board of Directors administering the Stock Option
Plans (as defined in Section 7.09(a))) has taken such action as is
necessary so that, as of the Effective Time, no holder of any award under
any Stock Option Plan shall have the right upon exercise of any such award
to receive securities of the Company, Sub or Parent or any of its
affiliates.
SECTION 4.11. Contracts; Indebtedness. (a) Except as disclosed
------------------------
in Item 4.11 of the Company Letter or in the Company Filed SEC Documents,
there are no contracts or agreements that are material to the business,
properties, assets, financial condition or results of operations of the
Company and its subsidiaries taken as a whole. Neither the Company nor any
of its subsidiaries is in violation of or in default under (nor does there
exist any condition which upon the passage of time or the giving of notice
would cause such a violation of or default under)
23
any loan or credit agreement, note, bond, mortgage, indenture, lease,
permit, concession, franchise, license or any other contract, agreement,
arrangement or understanding, to which it is a party or by which it or any
of its properties or assets is bound, except for violations or defaults
that could not reasonably be expected to result in a material adverse
effect on the Company.
(b) Item 4.11 of the Company Letter sets forth (i) a list of all
agreements, instruments and other obligations pursuant to which any
indebtedness of the Company or any of its subsidiaries in an aggregate
principal amount in excess of 150,000 is outstanding or may be incurred and
(ii) the respective principal amounts outstanding thereunder as of January
31, 1996, in the case of the Company and its U.S. and Canadian
subsidiaries, and November 30, 1995 with respect to all other subsidiaries.
SECTION 4.12. Litigation. Except as disclosed in Item 4.12 of
-----------
the Company Letter or in the Company Filed SEC Documents, as of the date of
this Agreement, there is no suit, claim, action, proceeding or
investigation pending or, to the knowledge of the Company, threatened
against the Company or any of its subsidiaries that could reasonably be
expected to have a material adverse effect on the Company or prevent or
materially delay the consummation of the Offer and/or the Merger. Except
as disclosed in Item 4.12 of the Company Letter or in the Company Filed SEC
Documents, as of the date of this Agreement, neither the Company nor any of
its subsidiaries is subject to any outstanding judgment, order, writ,
injunction or decree that could reasonably be expected to have a material
adverse effect on the Company or prevent or materially delay the
consummation of the Offer and/or the Merger.
SECTION 4.13. Compliance with Applicable Law. The Company and
-------------------------------
its subsidiaries hold all permits, licenses, variances, exemptions, orders
and approvals of all Governmental Entities necessary for the lawful conduct
of their respective businesses (the "Company Permits"), except for failures
to hold such permits, licenses, variances, exemptions, orders and approvals
that would not have a material adverse effect on the Company or prevent or
materially delay the consummation of the Offer and/or the
24
Merger. The Company and its subsidiaries are in compliance with the terms
of the Company Permits, except where the failure so to comply would not
have a material adverse effect on the Company or prevent or materially
delay the consummation of the Offer and/or the Merger. Except as disclosed
in the Company Letter or in the Company Filed SEC Documents, to the
knowledge of the Company, the businesses of the Company and its
subsidiaries are not being conducted in violation of any law, ordinance or
regulation of any Governmental Entity, except for possible violations that
would not have a material adverse effect on the Company or prevent or
materially delay the consummation of the Offer and/or the Merger. To the
knowledge of the Company, except as set forth in the Company Filed SEC
Documents, as of the date of this Agreement, no investigation or review by
any Governmental Entity with respect to the Company or any of its
subsidiaries is pending or threatened, other than, in each case, those the
outcome of which would not be reasonably expected to have a material
adverse effect on the Company or prevent or materially delay the
consummation of the Offer and/or the Merger.
SECTION 4.14. Tax Matters. Except as set forth in Item 4.14 of
------------
the Company Letter:
(a) The Company and each of its subsidiaries has filed all
Federal income tax returns and all other material tax returns and reports
required to be filed by it. All such returns are complete and correct in
all material respects. The Company and each of its subsidiaries has paid
(or the Company has paid on its subsidiaries' behalf) all taxes shown as
due on such returns and all material taxes (as defined below) for which no
return was required to be filed, and the most recent financial statements
contained in the Company Filed SEC Documents reflect an adequate reserve
for all taxes payable by the Company and its subsidiaries for all taxable
periods and portions thereof through the date of such financial statements.
(b) Except as set forth below, no material tax return of the
Company or any of its subsidiaries is under audit or, to the knowledge of
the Company, examination by any taxing authority. Each material deficiency
resulting from any audit or examination relating to taxes by any
25
taxing authority has been paid, except for deficiencies being contested in
good faith. No material issues relating to taxes were raised in writing by
the relevant taxing authority during any presently pending audit or examination,
and no material issues relating to taxes were raised in writing by the relevant
taxing authority in any completed audit or examination that can reasonably be
expected to recur in a later taxable period. The Federal income tax returns
of the Company and each of its subsidiaries consolidated in such returns have
been examined by and settled with the Internal Revenue Service for all years
through the taxable year ended February 28, 1989. The Federal income tax
return of the Company and its subsidiaries for the taxable year ended
February 29, 1990 has not been examined by the Internal Revenue Service,
but the statute of limitations under Section 6501(a) of the Code has
expired with respect to such return and the Internal Revenue Service has
neither proposed nor made any adjustments thereto. Field work has been
completed for the Federal income tax audit of the Company and its
subsidiaries for the taxable years ended February 28, 1991 through February
28, 1993, and the Company and the Internal Revenue Service have reached
oral agreement on all issues. The results of such oral agreement are
reflected in Item 4.14 of the Company Letter. An Internal Revenue Service
Form 870 reflecting such oral agreement is expected to be received within
two weeks after the date hereof.
(c) There is no agreement or other document extending, or having
the effect of extending, the period of assessment or collection of any
taxes and no power of attorney with respect to any taxes has been executed
or filed with any taxing authority.
(d) No material liens for taxes exist with respect to any assets
or properties of the Company or any of its subsidiaries, except for
statutory liens for taxes not yet due.
(e) Except as provided in Section 4.14(b) with respect to the
Federal income tax audit for the taxable years ended February 28, 1991
through February 28, 1993, none of the Company or any of its subsidiaries
is a party to or is bound by any tax sharing agreement, tax indemnity
26
obligation or similar agreement, arrangement or practice with respect to
taxes (including any advance pricing agreement, closing agreement or other
agreement relating to taxes with any taxing authority).
(f) None of the Company or any of its subsidiaries shall be
required to include in a taxable period ending after the Effective Time
taxable income attributable to income that accrued in a prior taxable
period but was not recognized in any prior taxable period as a result of
the installment method of accounting, the completed contract method of
accounting, the long-term contract method of accounting, the cash method of
accounting or Section 481 of the Code or comparable provisions of state,
local or foreign tax law.
(g) The disallowance of a deduction under Section 162(m) of the
Code for employee remuneration will not apply to any amount paid or payable
by the Company or any of its subsidiaries under any contract, plan,
program, arrangement or understanding currently in effect.
(h) Any amount or other entitlement that could be received
(whether in cash or property or the vesting of property) as a result of any
of the transactions contemplated by this Agreement by any employee, officer
or director of the Company or any of its affiliates who is a "disqualified
individual" (as such term is defined in proposed Treasury Regulation
Section 1.280G-1) under any employment, severance or termination agreement,
other compensation arrangement or Company Benefit Plan currently in effect
would not be characterized as an "excess parachute payment" or a "parachute
payment" (as such terms are defined in Section 280G(b)(1) of the Code).
(i) The Japanese trademark registrations for "FINESSE" and
"SALON SELECTIVES" are owned by the Company or a U.S. subsidiary of the
Company. For greater certainty, such trademark registrations are not owned
by a Japanese subsidiary of the Company. The statute of limitations for
assessment and collection of Japanese income tax from Xxxxxx Xxxxxx
Enterprises, Inc. and Xxxxxx Xxxxxx Japan, Inc. has expired with respect to
all taxable years ended on or prior to December 15, 1991, and will expire
with respect to the
27
taxable year ended December 15, 1992, on or before March 15, 1996. The
Japanese tax authorities have examined the income tax return filed by
Xxxxxx Xxxxxx Japan, Inc. for its taxable year ended December 15, 1995,
specifically with respect to the issue of whether the 5% rate in the
Technical License Agreement dated January 1, 1993, as amended, between the
Company and Xxxxxx Xxxxxx Japan, Inc. is at arm's-length and such tax
authorities have proposed no adjustment.
(j) As used in this Agreement, "taxes" shall include all
Federal, state, local and foreign income, property, sales, excise,
withholding and other taxes, tariffs or governmental charges of any nature
whatsoever.
SECTION 4.15. State Takeover Statutes; Charter Provisions. The
--------------------------------------------
action of the Board of Directors of the Company in approving the Offer, the
Merger, this Agreement and the Stockholder Agreement is sufficient to
render inapplicable to the Offer, the Merger, this Agreement and the
Stockholder Agreement and the transactions contemplated by this Agreement
and the Stockholder Agreement (a) the provisions of Section 203 of the DGCL
and (b) the supermajority voting provisions of Article TENTH of the
Company's Certificate of Incorporation. To the knowledge of the Company,
no other state takeover statute or similar statute or regulation applies or
purports to apply to the Offer, the Merger, this Agreement, the Stockholder
Agreement or any of the transactions contemplated by this Agreement or the
Stockholder Agreement.
SECTION 4.16. Environmental Matters. (a) Except as set forth in
----------------------
Item 4.16 of the Company Letter, neither the Company nor any of its
subsidiaries has (i) placed, held, located, released, transported or
disposed of any Hazardous Substances (as defined below) on, under, from or
at any of the Company's or any of its subsidiaries' properties or any other
properties, other than in a manner that could not, in all such cases taken
individually or in the aggregate, reasonably be expected to result in a
material adverse effect on the Company, (ii) any knowledge or reason to
know of the presence of any Hazardous Substances on, under or at any of the
Company's or any of its subsidiaries' properties or any other property but
arising from the Company's or any of its subsidiaries' properties, other
than in a manner that
28
could not reasonably be expected to result in a material adverse effect on
the Company, or (iii) received any written notice (A) of any violation of
any statute, law, ordinance, regulation, rule, judgment, decree or order of
any Governmental Entity relating to any matter of pollution, protection of
the environment, environmental regulation or control or regarding Hazardous
Substances on, under or emanating from any of the Company's or any of its
subsidiaries' properties or any other properties (collectively,
"Environmental Laws") that has not been resolved or settled with the
relevant Governmental Entity, (B) of the institution or pendency of any
suit, action, claim, proceeding or investigation by any Governmental Entity
or any third party in connection with any such violation, (C) requiring the
response to or remediation of Hazardous Substances at or arising from any
of the Company's or any of its subsidiaries' properties or any other
properties, (D) alleging noncompliance by the Company or any of its
subsidiaries with the terms of any permit required under any Environmental
Law in any manner reasonably likely to require material expenditures or to
result in material liability or (E) demanding payment for response to or
remediation of Hazardous Substances at or arising from any of the Company's
or any of its subsidiaries' properties or any other properties, except in
each case for the notices set forth in Item 4.16 of the Company Letter.
For purposes of this Agreement, the term "Hazardous Substance" shall mean
any toxic or hazardous materials or substances, including asbestos, buried
contaminants, chemicals, flammable explosives, radioactive materials,
petroleum and petroleum products and any substances defined as, or included
in the definition of, "hazardous substances", "hazardous wastes,"
"hazardous materials" or "toxic substances" under any Environmental Law.
(b) Except as set forth in Item 4.16 of the Company Letter, no
Environmental Law imposes any obligation upon the Company or its
subsidiaries arising out of or as a condition to any transaction
contemplated by this Agreement or the Stockholder Agreement, including any
requirement to modify or to transfer any permit or license, any requirement
to file any notice or other submission with any Governmental Entity, the
placement of any notice, acknowledgment or covenant in any land records, or
the modification of or
29
provision of notice under any agreement, consent order or consent decree,
except where any failure to notify or place any notice would not reasonably
be expected to result in a material adverse effect on the Company or
prevent or materially delay the consummation of the Offer and/or the
Merger. No Lien has been placed upon any of the Company's or its
subsidiaries' properties under any Environmental Law.
(c) None of the Company or any of its subsidiaries owns,
operates or leases any facility qualifying as an industrial establishment
under the New Jersey Industrial Site Recovery Act.
SECTION 4.17. Intellectual Property. The Company and its
----------------------
subsidiaries own, or are validly licensed or otherwise have the right to
use, all patents, patent rights, trademarks, trade names, service marks,
copyrights, know how and other proprietary intellectual property rights and
computer programs (collectively, "Intellectual Property Rights") that are
material to the conduct of the business of the Company and its subsidiaries
taken as a whole. Item 4.17 of the Company Letter sets forth a description
of all Intellectual Property Rights that are material to the conduct of the
business of the Company and its subsidiaries taken as a whole. Except as
set forth in Item 4.17 of the Company Letter, no claims are pending or, to
the knowledge of the Company, threatened that the Company or any of its
subsidiaries is infringing or otherwise adversely affecting the rights of
any person with regard to any Intellectual Property Right so as to
materially adversely affect any of the Company's material Intellectual
Property Rights, and the Company is not aware of any basis for any such
claims. To the knowledge of the Company, except as set forth in Item 4.17
of the Company Letter, no person is infringing the rights of the Company or
any of its subsidiaries with respect to any material Intellectual Property
Right so as to materially adversely effect such Intellectual Property
Right.
SECTION 4.18. Brokers; Schedule of Fees and Expenses. No
---------------------------------------
broker, investment banker, financial advisor or other person, other than
Lazard Freres & Co. LLC., the fees and expenses of which will be paid by
the Company, is entitled to any broker's, finder's, financial advisor's or
30
other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf
of the Company. The estimated fees and expenses incurred and to be
incurred by the Company in connection with this Agreement and the
transactions contemplated by this Agreement (including the fees of the
Company's legal counsel and the legal counsel for its financial advisor)
are set forth in Item 4.18 of the Company Letter.
SECTION 4.19. Opinion of Financial Advisor. The Company has
-----------------------------
received the opinion of Lazard Freres & Co. LLC, dated the date of this
Agreement, to the effect that, as of the date of this Agreement, the
consideration to be received in the Offer and the Merger by the Company's
stockholders is fair to the Company's stockholders from a financial point
of view, and a complete and correct signed copy of such opinion has been,
or promptly upon receipt thereof will be, delivered to Parent.
ARTICLE V
Representations and Warranties
------------------------------
of Parent and Sub
-----------------
Parent and Sub represent and warrant to the Company as follows:
SECTION 5.01. Organization. Each of Parent and Sub is a
-------------
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has all requisite
corporate power and authority to carry on its business as now being
conducted.
SECTION 5.02. Authority. Parent and Sub have requisite
----------
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate
action on the part of Parent and Sub and no other corporate proceedings on
the part of Parent and Sub are necessary to authorize this Agreement or to
31
consummate such transactions. No vote of Parent stockholders is required
to approve this Agreement or the transactions contemplated hereby. This
Agreement has been duly executed and delivered by Parent and Sub, as the
case may be, and, assuming this Agreement constitutes a valid and binding
obligation of the Company, constitutes a valid and binding obligation of
each of Parent and Sub enforceable against them in accordance with its
terms.
SECTION 5.03. Consents and Approvals; No Violations. Except for
--------------------------------------
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Exchange Act (including
the filing with the SEC of the Offer Documents), the HSR Act, the DGCL, the
laws of other states in which Parent is qualified to do or is doing
business, state takeover laws and foreign and supranational laws relating
to antitrust and anticompetition clearances, neither the execution,
delivery or performance of this Agreement by Parent and Sub nor the
consummation by Parent and Sub of the transactions contemplated hereby will
(i) conflict with or result in any breach of any provision of the
respective certificate of incorporation or by-laws of Parent and Sub,
(ii) require any filing with, or permit, authorization, consent or approval
of, any Governmental Entity (except where the failure to obtain such
permits, authorizations, consents or approvals or to make such filings
would not be reasonably expected to prevent or materially delay the
consummation of the Offer and/or the Merger), (iii) result in a violation
or breach of, or constitute (with or without due notice or lapse of time or
both) a default (or give rise to any right of termination, amendment,
cancelation or acceleration) under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, license, lease,
contract, agreement or other instrument or obligation to which Parent or
any of its subsidiaries is a party or by which any of them or any of their
properties or assets may be bound or (iv) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to Parent, any
of its subsidiaries or any of their properties or assets, except in the
case of clauses (iii) and (iv) for violations, breaches or defaults which
would not, individually or in the aggregate, be reasonably expected to
prevent or materially delay the consummation of the Offer and/or the
Merger.
32
SECTION 5.04. Information Supplied. None of the information
---------------------
supplied or to be supplied by Parent or Sub specifically for inclusion or
incorporation by reference in (i) the Offer Documents, (ii) the
Schedule 14D-9, (iii) the Information Statement or (iv) the Proxy Statement
will, in the case of the Offer Documents, the Schedule 14D-9 and the
Information Statement, at the respective times the Offer Documents, the
Schedule 14D-9 and the Information Statement are filed with the SEC or
first published, sent or given to the Company's stockholders, or, in the
case of the Proxy Statement, at the time the Proxy Statement is first
mailed to the Company's stockholders or at the time of the Stockholders
Meeting, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
are made, not misleading. The Offer Documents will comply as to form in
all material respects with the requirements of the Exchange Act and the
rules and regulations thereunder, except that no representation or warranty
is made by Parent or Sub with respect to statements made or incorporated by
reference therein based on information supplied by the Company specifically
for inclusion or incorporation by reference therein.
SECTION 5.05. Interim Operations of Sub. Sub was formed solely
--------------------------
for the purpose of engaging in the transactions contemplated hereby, has
engaged in no other business activities and has conducted its operations
only as contemplated hereby.
SECTION 5.06. Brokers. No broker, investment banker, financial
--------
advisor or other person, other than Xxxxxx Xxxxxxx & Co. Incorporated, the
fees and expenses of which will be paid by Parent, is entitled to any
broker's, finder's, financial advisor's or other similar fee or commission
in connection with the transactions contemplated by this Agreement based
upon arrangements made by or on behalf of Parent or Sub.
SECTION 5.07. Financing. Parent has sufficient funds available
----------
to purchase, or to cause Sub to purchase, on a fully diluted basis, all the
outstanding Shares and Class B Shares pursuant to the Offer and the Merger
and to
33
pay all fees and expenses related to the transactions contemplated by this
Agreement.
SECTION 5.08. Ownership of Shares. As of the date of this
--------------------
Agreement, other than pursuant to the Stockholder Agreement or through
pension plan or similar fiduciary investment accounts, the investment
decisions of which are not controlled by Parent or its affiliates, neither
Parent nor any of its affiliates is the record owner of, or has any
beneficial interest in, any Shares.
ARTICLE VI
Covenants
---------
SECTION 6.01. Covenants of the Company. Until such time as
-------------------------
Parent's designees shall constitute a majority of the members of the Board
of Directors of the Company, the Company agrees as to itself and its
subsidiaries that (except as expressly contemplated or permitted by this
Agreement or except to the extent that Parent shall otherwise consent in
writing):
(a) Ordinary Course. The Company shall, and shall cause its
----------------
subsidiaries to, carry on their respective businesses in the usual, regular
and ordinary course in substantially the same manner as heretofore
conducted and shall use all reasonable efforts to preserve intact their
present business organizations, keep available the services of their
present officers and employees and preserve their relationships with
customers, suppliers and others having business dealings with the Company
and its subsidiaries.
(b) Dividends; Changes in Stock. The Company shall not, and
----------------------------
shall not permit any of its subsidiaries to, (i) declare or pay any
dividends on or make other distributions in respect of any of its capital
stock (other than regular quarterly cash dividends not in excess of $.08
per Share or $.08 per Class B Share with usual record and payment dates and
in accordance with the Company's present dividend policy), except for
dividends by a direct or indirect wholly owned subsidiary of the Company to
its parent, (ii) split, combine or reclassify any of its capital
34
stock or issue or authorize or propose the issuance of any other securities
in respect of, in lieu of or in substitution for shares of its capital
stock or (iii) repurchase, redeem or otherwise acquire any shares of
capital stock of the Company or its subsidiaries or any other securities
thereof or any rights, warrants or options to acquire any such shares or
other securities.
(c) Issuance of Securities. The Company shall not, and shall
-----------------------
not permit any of its subsidiaries to, issue, deliver, sell, pledge or
encumber, or authorize or propose the issuance, delivery, sale, pledge or
encumbrance of, any shares of its capital stock of any class or any
securities convertible into, or any rights, warrants, calls, subscriptions
or options to acquire, any such shares or convertible securities, or any
other ownership interest (including stock appreciation rights or phantom
stock) other than (i) the issuance of Shares upon the exercise of Company
Stock Options outstanding on the date of this Agreement and in accordance
with the terms of such Company Stock Options and (ii) the issuance of
Shares upon the conversion of Class B Shares.
(d) Governing Documents. The Company shall not, and shall not
--------------------
permit any of its subsidiaries to, amend or propose to amend its
certificate of incorporation or by-laws (or similar organizational
documents).
(e) No Acquisitions. The Company shall not, and shall not
----------------
permit any of its subsidiaries to, acquire or agree to acquire (i) by
merging or consolidating with, or by purchasing a substantial equity
interest in or substantial portion of the assets of, or by any other
manner, any business or any corporation, partnership, joint venture,
association or other business organization or division thereof or (ii) any
assets that are material, individually or in the aggregate, to the Company
and its subsidiaries taken as a whole, except purchases of inventory in the
ordinary course of business consistent with past practice and expenditures
consistent with the Company's current capital budget previously furnished
to Parent.
(f) No Dispositions. Other than sales of its products to
----------------
customers and immaterial dispositions of
35
personal property, in each case in the ordinary course of business
consistent with past practice, the Company shall not, and shall not permit
any of its subsidiaries to, sell, lease, license, encumber or otherwise
dispose of, or agree to sell, lease, license, encumber or otherwise dispose
of, any of its assets.
(g) Indebtedness. The Company shall not, and shall not permit
-------------
any of its subsidiaries to, (i) incur any indebtedness for borrowed money
or guarantee any such indebtedness or issue or sell any debt securities or
warrants or rights to acquire any debt securities of the Company or any of
its subsidiaries, guarantee any debt securities of others, enter into any
"keep-well" or other agreement to maintain any financial statement
condition of another person or enter into any arrangement having the
economic effect of any of the foregoing, except for working capital
borrowings incurred in the ordinary course of business consistent with past
practice, or (ii) make any loans, advances or capital contributions to, or
investments in, any other person, other than (A) to the Company or any
direct or indirect wholly owned subsidiary of the Company or (B) any
advances to employees (1) in accordance with the terms of the Stock Option
Plans at a rate not less than the Company's cost of funds for short-term
borrowings and payable within 12 business days following the borrowing or
(2) in accordance with past practice.
(h) Advice of Changes; Filings. The Company shall confer on a
---------------------------
regular basis with Parent with respect to operational matters and promptly
advise Parent orally and in writing of any material adverse change with
respect to the Company. The Company shall promptly provide to Parent (or
its counsel) copies of all filings made by the Company with any
Governmental Entity in connection with this Agreement and the transactions
contemplated hereby.
(i) Tax Matters. The Company shall not make any tax election
------------
that would have a material effect on the tax liability of the Company or
any of its subsidiaries or settle or compromise any tax liability of the
Company or any of its subsidiaries that would materially affect the
aggregate tax liability of the Company or any of its subsidiaries. The
Company shall, before filing or causing
36
to be filed any material tax return of the Company or any of its
subsidiaries or settling any tax liability not described in the preceding
sentence, consult with Parent and its advisors as to the positions and
elections that may be taken or made with respect to such return or with
respect to such settlement.
(j) Capital Expenditures. Neither the Company nor any of its
---------------------
subsidiaries shall make or agree to make any new capital expenditure or
expenditures other than expenditures consistent with the Company's current
capital budget previously furnished to Parent.
(k) Discharge of Liabilities. The Company shall not, and shall
-------------------------
not permit any of its subsidiaries to, pay, discharge, settle or satisfy
any claims, liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the payment, discharge,
settlement or satisfaction, (i) in the ordinary course of business
consistent with past practice or in accordance with their terms, of claims,
liabilities or obligations recognized or disclosed in the most recent
consolidated financial statements (or the notes thereto) of the Company
included in the Company Filed SEC Documents or incurred since the date of
such financial statements in the ordinary course of business consistent
with past practice or (ii) of claims, liabilities or obligations to the
extent they are less than $10,000 and unrelated to the Company's
stockholders or the transactions contemplated by this Agreement and the
Stockholder Agreement, or waive the benefits of, or agree to modify in any
manner, any confidentiality, standstill or similar agreement to which the
Company or any of its subsidiaries is a party.
(l) Material Contracts. Except in the ordinary course of
-------------------
business, neither the Company nor any of its subsidiaries shall (i) modify,
amend or terminate any material contract or agreement to which the Company
or such subsidiary is a party or (ii) waive, release or assign any material
rights or claims.
(m) General. The Company shall not, and shall not permit any of
--------
its subsidiaries to, authorize any of, or
37
commit or agree to take any of, the foregoing actions otherwise prohibited
by this Section 6.01.
SECTION 6.02. No Solicitation. (a) The Company shall, and
----------------
shall direct and use reasonable efforts to cause its officers, directors,
employees, representatives and agents to, immediately cease any discussions
or negotiations with any parties that may be ongoing with respect to a
Takeover Proposal (as hereinafter defined). The Company shall not, nor
shall it permit any of its subsidiaries to, nor shall it authorize or
permit any of its officers, directors or employees or any investment
banker, financial advisor, attorney, accountant or other representative
retained by it or any of its subsidiaries to, directly or indirectly,
(i) solicit, initiate or knowingly encourage (including by way of
furnishing information), or take any other action designed or reasonably
likely to facilitate, any inquiries or the making of any proposal which
constitutes, or may reasonably be expected to lead to, any Takeover
Proposal or (ii) participate in any discussions or negotiations regarding
any Takeover Proposal; provided, however, that if, at any time prior to the
-------- -------
acceptance for payment of Shares pursuant to the Offer, the Board of
Directors of the Company determines in good faith, after consultation with
outside counsel, that it is necessary to do so in order to comply with its
fiduciary duties to the Company's stockholders under applicable law, the
Company may, in response to a Takeover Proposal which was not solicited
subsequent to the date hereof, and subject to compliance with
Section 6.02(c), (x) furnish information with respect to the Company to any
person pursuant to a customary confidentiality agreement (as determined by
the Company after consultation with its outside counsel) and
(y) participate in negotiations regarding such Takeover Proposal. Without
limiting the foregoing, it is understood that any violation of the
restrictions set forth in the preceding sentence by any director or
executive officer of the Company or any of its subsidiaries, whether or not
such person is purporting to act on behalf of the Company or any of its
subsidiaries or otherwise, shall be deemed to be a breach of this
Section 6.02(a) by the Company. For purposes of this Agreement, "Takeover
Proposal" means any inquiry, proposal or offer from any person relating to
any direct or indirect acquisition or purchase of 20% or more of the
38
assets of the Company and its subsidiaries or 20% or more of any class of
equity securities of the Company or any of its subsidiaries, any tender
offer or exchange offer that if consummated would result in any person
beneficially owning 20% or more of any class of equity securities of the
Company or any of its subsidiaries, any merger, consolidation, business
combination, recapitalization, liquidation, dissolution or similar
transaction involving the Company or any of its subsidiaries, other than
the transactions contemplated by this Agreement, or any other transaction
the consummation of which could reasonably be expected to impede, interfere
with, prevent or materially delay the Offer and/or the Merger or which
would reasonably be expected to dilute materially the benefits to Parent of
the transactions contemplated by this Agreement and the Stockholder
Agreements
(b) Except as set forth in this Section 6.02, neither the Board
of Directors of the Company nor any committee thereof shall (i) withdraw or
modify, or propose publicly to withdraw or modify, in a manner adverse to
Parent, the approval or recommendation by such Board of Directors or such
committee of the Offer, the Merger or this Agreement, (ii) approve or
recommend, or propose publicly to approve or recommend, any Takeover
Proposal or (iii) cause the Company to enter into any letter of intent,
agreement in principle, acquisition agreement or other similar agreement
(each, an "Acquisition Agreement") related to any Takeover Proposal.
Notwithstanding the foregoing, in the event that prior to the acceptance
for payment of Shares pursuant to the Offer the Board of Directors of the
Company determines in good faith, after consultation with outside counsel,
that it is necessary to do so in order to comply with its fiduciary duties
to the Company's stockholders under applicable law, the Board of Directors
of the Company may (subject to this and the following sentences)
(x) withdraw or modify its approval or recommendation of the Offer, the
Merger and this Agreement or (y) approve or recommend a Superior Proposal
(as defined below) or terminate this Agreement (and concurrently with or
after such termination, if it so chooses, cause the Company to enter into
any Acquisition Agreement with respect to any Superior Proposal), but in
each of the cases set forth in this clause (y), only at a time that is
after the second business
39
day following Parent's receipt of written notice (a "Notice of Superior
Proposal") advising Parent that the Board of Directors of the Company has
received a Superior Proposal, specifying the material terms and conditions
of such Superior Proposal and identifying the person making such Superior
Proposal. For purposes of this Agreement, a "Superior Proposal" means any
bona fide proposal made by a third party to acquire, directly or
indirectly, for consideration consisting of cash and/or securities, more
than 50% of the combined voting power of the shares of Company Common Stock
and Class B Common Stock then outstanding or all or substantially all the
assets of the Company and otherwise on terms which the Board of Directors
of the Company determines in its good faith judgment (based on the advice
of a financial advisor of nationally recognized reputation) to be more
favorable to the Company's stockholders than the Offer and the Merger and
for which financing, to the extent required, is then committed or which, in
the good faith judgment of the Board of Directors of the Company, is
reasonably capable of being financed by such third party.
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 6.02, the Company shall immediately
advise Parent orally and in writing of any request for information or of
any Takeover Proposal, the material terms and conditions of such request or
Takeover Proposal and the identity of the person making such request or
Takeover Proposal. The Company will keep Parent fully informed of the
status and details (including amendments or proposed amendments) of any
such request or Takeover Proposal.
(d) Nothing contained in this Section 6.02 shall prohibit the
Company from taking and disclosing to its stockholders a position
contemplated by Rule 14e-2(a) promulgated under the Exchange Act or from
making any disclosure to the Company's stockholders if, in the good faith
judgment of the Board of Directors of the Company, after consultation with
outside counsel, failure so to disclose would be inconsistent with its
fiduciary duties to the Company's stockholders under applicable law;
provided, however, neither the Company nor its Board of Directors nor any
-------- -------
committee thereof shall, except as permitted by
40
Section 6.02(b), withdraw or modify, or propose publicly to withdraw or
modify, its position with respect to the Offer, this Agreement or the
Merger or approve or recommend, or propose publicly to approve or
recommend, a Takeover Proposal.
SECTION 6.03. Other Actions. (a) Except as expressly
--------------
contemplated or permitted by this Agreement, the Company shall not, and
shall not permit any of its subsidiaries to, take any action that would, or
that could reasonably be expected to, result in (i) any of the
representations and warranties of the Company set forth in this Agreement
that are qualified as to materiality becoming untrue, (ii) any of such
representations and warranties that are not so qualified becoming untrue in
any material respect or (iii) any of the Offer Conditions not being
satisfied (subject to the Company's right to take actions specifically
permitted by Section 6.02).
(b) Nothing contained in this Section 6.03 or elsewhere in this
Agreement shall be deemed to prohibit the Board of Directors of the Company
from adopting a resolution contemplated by subparagraph (9) of
paragraph (D) of Article FOURTH of the Company's Certificate of
Incorporation in the event that the Board determines in good faith, after
consultation with outside counsel, that the failure to do so would be
inconsistent with its fiduciary duties under applicable law, subject to the
right of Parent or Sub to terminate this Agreement pursuant to the terms
hereof.
ARTICLE VII
Additional Agreements
---------------------
SECTION 7.01. Stockholder Approval; Preparation of Proxy
------------------------------------------
Statement. (a) If the Company Stockholder Approval is required by law,
----------
the Company shall, as soon as practicable following the expiration of the
Offer, duly call, give notice of, convene and hold a meeting of its
stockholders (the "Stockholders Meeting") for the purpose of obtaining the
Company Stockholder Approval. The Company shall, through its Board of
Directors (but subject to the right of its Board of Directors to withdraw
or modify its
41
approval or recommendation of the Offer, the Merger and this Agreement as
set forth in Section 6.02(b)), recommend to its stockholders that the
Company Stockholder Approval be given. Notwithstanding the foregoing, if
Sub or any other subsidiary of Parent shall acquire at least 90% of the
outstanding Shares and at least 90% of the outstanding Class B Shares, the
parties shall, at the request of Parent, take all necessary and appropriate
action to cause the Merger to become effective as soon as practicable after
the expiration of the Offer without a Stockholders Meeting in accordance
with Section 253 of the DGCL. Without limiting the generality of the
foregoing, the Company agrees that its obligations pursuant to the first
sentence of this Section 7.01(a) shall not be affected by (i) the
commencement, public proposal, public disclosure or communication to the
Company of any Takeover Proposal or (ii) the withdrawal or modification by
the Board of Directors of the Company of its approval or recommendation of
the Offer, this Agreement or the Merger.
(b) If the Company Stockholder Approval is required by law, the
Company shall, at Parent's request, as soon as practicable following the
expiration of the Offer, prepare and file a preliminary Proxy Statement
with the SEC and shall use its best efforts to respond to any comments of
the SEC or its staff and to cause the Proxy Statement to be mailed to the
Company's stockholders as promptly as practicable after responding to all
such comments to the satisfaction of the staff. The Company shall notify
Parent promptly of the receipt of any comments from the SEC or its staff
and of any request by the SEC or its staff for amendments or supplements to
the Proxy Statement or for additional information and will supply Parent
with copies of all correspondence between the Company or any of its
representatives, on the one hand, and the SEC or its staff, on the other
hand, with respect to the Proxy Statement or the Merger. If at any time
prior to the Stockholders Meeting there shall occur any event that should
be set forth in an amendment or supplement to the Proxy Statement, the
Company shall promptly prepare and mail to its stockholders such an
amendment or supplement. The Company shall not mail any Proxy Statement,
or any amendment or supplement thereto, to which Parent reasonably objects.
Parent shall cooperate
42
with the Company in the preparation of the Proxy Statement or any amendment
or supplement thereto.
(c) Parent agrees to cause all Shares accepted for payment
pursuant to the Offer and all other Shares owned by Parent or any
subsidiary of Parent to be voted in favor of the Company Stockholder
Approval.
SECTION 7.02. Access to Information. Upon reasonable notice and
----------------------
subject to restrictions contained in confidentiality agreements to which
the Company is subject (from which it shall use reasonable efforts to be
released), the Company shall, and shall cause each of its subsidiaries to,
afford to Parent and to the officers, employees, accountants, counsel and
other representatives of Parent all reasonable access, during normal
business hours during the period prior to the Effective Time, to all their
respective properties, books, contracts, commitments and records and,
during such period, the Company shall (and shall cause each of its
subsidiaries to) furnish promptly to Parent (a) a copy of each report,
schedule, registration statement and other document filed or received by it
during such period pursuant to the requirements of the Federal or state
securities laws or the Federal tax laws and (b) all other information
concerning its business, properties and personnel as Parent may reasonably
request. In no event shall the Company be required to supply to Parent or
its officers, employees, accountants, counsel and other representatives any
information relating to indications of interest from, or discussions with,
any other potential acquirors of the Company which were received or
conducted prior to the date hereof, except to the extent necessary for use
in the Offer Documents, the Schedule 14D-9 or the Proxy Statement. Except
as otherwise agreed to by the Company, unless and until Parent and Sub
shall have purchased Shares having a majority of the outstanding voting
power of the Company pursuant to the Offer or otherwise, and
notwithstanding termination of this Agreement, the terms of the
Confidentiality Agreement dated as of November 30, 1995, shall apply to all
information about the Company that has been furnished under this Agreement
by the Company to Parent or Sub.
43
SECTION 7.03. Reasonable Efforts. Except as otherwise
-------------------
contemplated in this Agreement, each of the Company, Parent and Sub agree
to use its reasonable efforts to take, or cause to be taken, all actions
necessary to comply promptly with all legal requirements that may be
imposed on itself with respect to the Offer and the Merger (which actions
shall include furnishing all information required under the HSR Act and in
connection with approvals of or filings with any other Governmental Entity)
and shall promptly cooperate with and furnish information to each other in
connection with any such requirements imposed upon any of them or any of
their subsidiaries in connection with the Offer and the Merger. Except as
otherwise contemplated in this Agreement, each of the Company, Parent and
Sub shall, and shall cause its subsidiaries to, use its reasonable efforts
to take all reasonable actions necessary to obtain (and shall cooperate
with each other in obtaining) any consent, authorization, order or approval
of, or any exemption by, any Governmental Entity or other public or private
third party required to be obtained or made by Parent, Sub, the Company or
any of their subsidiaries in connection with the Offer and the Merger or
the taking of any action contemplated thereby or by this Agreement, except
that no party need waive any substantial rights or agree to any substantial
limitation on its operations or to dispose of any assets.
SECTION 7.04. Directors. Promptly upon Sub having acquired a
----------
majority of the combined voting power of the Shares and Class B Shares, Sub
shall be entitled to designate such number of directors on the Board of
Directors of the Company as will give Sub, subject to compliance with
Section 14(f) of the Exchange Act, a majority of such directors, and the
Company shall, at such time, cause Sub's designees to be so elected by its
existing Board of Directors; provided, however, that in the event that
-------- -------
Sub's designees are elected to the Board of Directors of the Company, until
the Effective Time such Board of Directors shall have at least three
directors who are directors on the date of this Agreement and who are not
officers of the Company (the "Independent Directors"); and provided further
-------- -------
that, in such event, if the number of Independent Directors shall be
reduced below three for any reason whatsoever, the remaining Independent
Directors or Director shall designate
44
a person or persons to fill such vacancy or vacancies, each of whom shall
be deemed to be an Independent Director for purposes of this Agreement or,
if no Independent Directors then remain, the other directors shall
designate three persons to fill such vacancies who shall not be officers or
affiliates of the Company or any of its subsidiaries, or officers or
affiliates of Parent or any of its subsidiaries, and such persons shall be
deemed to be Independent Directors for purposes of this Agreement. Subject
to applicable law, the Company shall take all action requested by Parent
that is reasonably necessary to effect any such election, including mailing
to its stockholders the Information Statement containing the information
required by Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder, and the Company agrees to make such mailing with the mailing of
the Schedule 14D-9 (provided that Sub shall have provided to the Company on
a timely basis all information required to be included in the Information
Statement with respect to Sub's designees). In connection with the
foregoing, the Company will promptly, at the option of Parent, either
increase the size of the Company's Board of Directors and/or obtain the
resignation of such number of its current directors as is necessary to
enable Sub's designees to be elected or appointed to, and to constitute a
majority of the directors on, the Company's Board of Directors as provided
above.
SECTION 7.05. Fees and Expenses. (a) Except as provided below
------------------
in this Section 7.05, all fees and expenses incurred in connection with the
Offer, the Merger, this Agreement and the transactions contemplated by this
Agreement shall be paid by the party incurring such fees or expenses,
whether or not the Offer or the Merger is consummated.
(b) The Company shall pay, or cause to be paid, in same day
funds to Parent (x) the Expenses (as hereinafter defined) in an amount up
to but not to exceed $5,000,000 and (y) $15,000,000 (the "Termination Fee")
under the circumstances and at the times set forth as follows:
(i) if Parent or Sub terminates this Agreement under
Section 9.01(d) and at the time of such termination there is no
pending Takeover Proposal, the
45
Company shall pay the Expenses and the Termination Fee upon demand;
(ii) if Parent or Sub terminates this Agreement under
Section 9.01(d) and at the time of such termination a Takeover
Proposal shall then be pending, the Company shall pay the Expenses
upon demand; in addition, if within 18 months after such termination,
the Company shall enter into an Acquisition Agreement providing for a
Takeover Proposal or a Takeover Proposal shall be consummated, the
Company shall pay the Termination Fee concurrently with the earlier of
the entering into of such Acquisition Agreement or the consummation of
such Takeover Proposal;
(iii) if the Company terminates this Agreement under
Section 9.01(e), the Company shall pay the Expenses concurrently
therewith; in addition, if within 18 months after such termination,
the Company shall enter into an Acquisition Agreement providing for a
Takeover Proposal or a Takeover Proposal shall be consummated, the
Company shall pay the Termination Fee concurrently with the earlier of
the entering into of such Acquisition Agreement or the consummation of
such Takeover Proposal; and
(iv) if, at the time of any other termination of this Agreement
(other than by the Company pursuant to Section 9.01(f) or 9.01(g)), a
Takeover Proposal shall have been made (other than a Takeover Proposal
made prior to the date hereof), the Company shall pay the Expenses, if
terminated by the Company, concurrently therewith or, if terminated by
Parent, upon demand; in addition, if within 18 months of such
termination, the Company shall enter into an Acquisition Agreement
providing for a Takeover Proposal or a Takeover Proposal shall be
consummated, the Company shall pay the Termination Fee concurrently
with the earlier of the entering into of such Acquisition Agreement or
the consummation of such Takeover Proposal.
"Expenses" shall mean documented out-of-pocket fees and expenses incurred
or paid by or on behalf of Parent in connection with the Offer, the Merger
or the consummation of
46
any of the transactions contemplated by this Agreement, including all fees
and expenses of law firms, commercial banks, investment banking firms,
accountants, experts and consultants to Parent.
SECTION 7.06. Indemnification; Insurance. (a) Parent and Sub
---------------------------
agree that all rights to indemnification for acts or omissions occurring
prior to the Effective Time now existing in favor of the current or former
directors, officers, employees and agents (the "Indemnified Parties") of
the Company and its subsidiaries as provided in their respective
certificates of incorporation or by-laws (or similar organizational
documents) shall survive the Merger and shall continue in full force and
effect in accordance with their terms. From and after the Effective Time,
Parent shall, and shall cause the Surviving Corporation to, indemnify and
hold harmless any and all Indemnified Parties to the full extent such
persons may be indemnified by the Company or such subsidiaries, as the case
may be, pursuant to their respective certificates of incorporation or by-
laws (or similar organizational documents) or pursuant to indemnification
agreements as in effect on the date of this Agreement for acts or omissions
occurring at or prior to the Effective Time, and Parent shall, or shall
cause the Surviving Corporation to, advance litigation expenses incurred by
such persons in connection with defending any action arising out of such
acts or omissions to the extent provided by with the respective terms and
provisions of such certificates of incorporation, by-laws, similar
documents or indemnification agreements.
(b) For six years from the Effective Time, Parent shall maintain
in effect the Company's current directors' and officers' liability
insurance covering those persons who are currently covered by the Company's
directors' and officers' liability insurance policy (a copy of which has
been heretofore delivered to Parent); provided, however, that in no event
-------- -------
shall Parent be required to pay a premium in any one year in an amount in
excess of $360,000; and, provided, further, that if the annual premiums of
-------- -------
such insurance coverage exceed such amount, Parent shall be obligated to
obtain a policy with the greatest coverage available for a cost not
exceeding such amount.
47
(c) This Section 7.06 shall survive the consummation of the
Merger at the Effective Time, is intended to benefit the Company, Parent,
the Surviving Corporation and the Indemnified Parties, and shall be binding
on all successors and assigns of Parent and the Surviving Corporation.
SECTION 7.07. Employee Benefits. (a) During the period from the
Effective Time until the first anniversary thereof, Parent shall (i)
maintain or cause to be maintained the Benefit Plans that are in effect as
of the Effective Time, other than any Benefit Plan providing benefits based
on equity securities or any equivalent thereof or any incentive-based
compensation, bonus or other similar arrangement, and (ii) provide each
person employed by the Surviving Corporation and its subsidiaries
compensation (including salary, bonus and incentive compensation) that is
in the aggregate substantially comparable to that enjoyed by such employee
at the Effective Time, other than as referred to in clause (i) above
(taking into account salary, bonus and equity-based and incentive-based
benefits). From and after the first anniversary of the Effective Time,
Parent shall continue the employment arrangements described in the
preceding sentence or shall offer to each person then employed by the
Surviving Corporation and its subsidiaries, compensation and benefits
substantially comparable to those then enjoyed by other similarly situated
employees of Parent and its affiliates. For purposes of eligibility to
participate in and vesting in benefits provided under employee benefit
plans maintained by Parent and its affiliates (but not for purposes of
determining benefits (or accruals thereof) under such plans), all persons
previously employed by the Company and then employed by Parent or its
affiliates shall be credited with their years of service with the Company
and its subsidiaries and years of service with prior employers to the
extent service with prior employers is taken into account under the Benefit
Plans.
(b) On or before the Effective Time, the Company shall take any
action necessary to terminate the Xxxxxx Xxxxxx Industries, Inc. Employee
Stock Ownership Plan and Trust (the "ESOP") as of the Effective Time and
shall cause the ESOP to make lump sum distributions to ESOP participants
48
within a reasonable period of time following the Effective Time pursuant to
the terms of the ESOP and applicable law.
(c) The foregoing shall not constitute any commitment, contract,
understanding or guarantee (express or implied) on the part of the Parent
or Sub of a post-Effective Time employment relationship of any term of
duration or on any terms other than those the Parent or Sub may establish.
Employment of any of the employees by Parent or Sub shall be "at will" and
may be terminated by Parent or Sub at any time for any reason (subject to
any legally binding agreement other than this Agreement, or any applicable
laws or collective bargaining agreement, or any other arrangement or
commitment).
SECTION 7.08. Severance Policy and Other Agreements. (a) With
--------------------------------------
respect to any officer who is covered by a severance policy separate from
the standard severance policy for the Company's employees (which separate
severance policy is described in the Company Letter), Parent shall maintain
(or shall cause Sub to maintain) such separate policy as in effect as of
the Effective Time until the first anniversary of the Effective Time, and,
as to all other officers and employees, Parent shall maintain (or shall
cause to be maintained) the Company's standard severance policy as in
effect as of the Effective Time for a period of at least six months from
the Effective Time.
(b) Parent shall honor or cause to be honored all severance
agreements, employment agreements and death benefit agreements with the
Company's officers and employees to the extent disclosed in the Company
Letter.
(c) Parent and its subsidiaries shall, until the first
anniversary of the Effective Time, provide reasonable and customary
outplacement services ("Outplacement Services") to officers of the Company
and its subsidiaries whose employment is terminated without cause, which
Outplacement Services provided to such officer shall include one-on-one
counseling and assistance.
SECTION 7.09. Stock Options, SARs and Restricted Stock. (a) As
-----------------------------------------
soon as practicable following the date of this Agreement, the Board of
Directors of the Company (or,
49
if appropriate, any committee of the Board of Directors administering the
Stock Option Plans (as defined below)) may adopt such resolutions or take
such other actions as are required to provide that (i) each stock option to
purchase shares of Company Common Stock heretofore granted under any stock
option, stock appreciation rights or stock purchase plan of the Company
(collectively, the "Stock Option Plans") outstanding immediately prior to
the consummation of the Offer, whether or not then exercisable, shall
become fully exercisable immediately following the acceptance for payment
of Shares pursuant to the Offer (the "Acceleration Time"); (ii) each stock
appreciation right heretofore granted under any Stock Option Plan
outstanding immediately prior to the Offer, whether or not then
exercisable, shall become fully exercisable at the Acceleration Time; and
(iii) all restrictions applicable to any restricted stock award heretofore
granted under any Stock Option Plan outstanding immediately prior to the
Offer shall lapse at the Acceleration Time.
(b) At the Effective Time, each award then outstanding under any
Stock Option Plan, other than an award held by an officer (as such term is
defined in Rule 16a-1(f) under the Exchange Act) or director of the
Company, shall be canceled and the holder thereof shall have no further
rights with respect thereof other than the right to receive in
consideration for the cancelation thereof an amount of cash equal to the
product of (i) the number of Shares subject to such stock option or stock
appreciation right and (ii) the excess of the price paid in the Offer over
the per share exercise price, in the case of any such stock option, or the
excess of the price paid in the Offer over the per share base price, in the
case of any such stock appreciation right, in each such case minus all
applicable taxes required to be withheld by the Company; provided, however,
that no such cash payment shall be made with respect to any stock
appreciation right which is related to a stock option in respect of which
such a cash payment shall be made. Such payment to each such holder shall
be made as soon as practicable following the Effective Time upon the
delivery by such holder of a signed statement in a form satisfactory to
Parent acknowledging that such holder waives any claims against Parent, Sub
or the Company for any other consideration in respect of such stock option
or stock
50
appreciation right.
(c) As soon as practicable following the Acceleration Time, but
prior to the Effective Time, the Company shall purchase each Share issued
pursuant to the 1979 Stock Option Plan in accordance with the Item 4.10(i)
Letter.
SECTION 7.10. Certain Litigation. The Company agrees that it
-------------------
shall not settle any litigation commenced after the date hereof against the
Company or any of its directors by any stockholder of the Company relating
to the Offer, the Merger, this Agreement or the Stockholder Agreements,
without the prior written consent of Parent. In addition, the Company
shall not voluntarily cooperate with any third party that may hereafter
seek to restrain or prohibit or otherwise oppose the Offer or the Merger
and shall cooperate with Parent and Sub to resist any such effort to
restrain or prohibit or otherwise oppose the Offer or the Merger.
SECTION 7.11. Plans for the Company. Parent and its affiliates
----------------------
presently intend, among other things, that the Company will be
headquartered in Chicago, will maintain manufacturing and product
development facilities in the United States and will continue to operate
under its present corporate name. In addition, Parent and its affiliates
presently intend that the Company will have primary responsibility for the
haircare operations of Parent and its affiliates in the United States and
global responsibilities as an innovation center for haircare and will
operate in other personal care categories.
ARTICLE VIII
Conditions
----------
SECTION 8.01. Conditions to Each Party's Obligation To Effect
-----------------------------------------------
the Merger. The respective obligation of each party to effect the Merger
-----------
shall be subject to the satisfaction (or waiver by each party) prior to the
Closing Date of the following conditions:
51
(a) Company Stockholder Approval. If required by applicable
-----------------------------
law, the Company Stockholder Approval shall have been obtained.
(b) No Injunctions or Restraints. No statute, rule, regulation,
-----------------------------
executive order, decree, temporary restraining order, preliminary or
permanent injunction or other order issued by any court of competent
jurisdiction or other Governmental Entity preventing the consummation
of the Merger shall be in effect; provided, however, that each of the
-------- -------
parties shall have used reasonable efforts to prevent the entry of any
such injunction or other order and to appeal as promptly as possible
any injunction or other order that may be entered.
(c) Purchase of Shares. Sub shall have previously accepted for
-------------------
payment and paid for Shares pursuant to the Offer.
ARTICLE IX
Termination and Amendment
-------------------------
SECTION 9.01. Termination. This Agreement may be terminated at
------------
any time prior to the Effective Time, whether before or after approval of
the terms of this Agreement by the stockholders of the Company:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company:
(i) if (x) as a result of the failure of any of the Offer
Conditions the Offer shall have terminated or expired in
accordance with its terms without Sub having accepted for payment
any Shares pursuant to the Offer or (y) Sub shall not have
accepted for payment any Shares pursuant to the Offer prior to
September 30, 1996; provided, however, that the right to
-------- -------
terminate this Agreement pursuant to this Section 9.01(b)(i)
52
shall not be available to any party whose failure to perform any
of its obligations under this Agreement results in the failure of
any such condition or if the failure of such condition results
from facts or circumstances that constitute a breach of
representation or warranty under this Agreement by such party; or
(ii) if any Governmental Entity shall have issued an order,
decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the acceptance for payment
of, or payment for, shares of Company Common Stock pursuant to
the Offer or shares of Company Common Stock or Class B Common
Stock pursuant to the Merger and such order, decree or ruling or
other action shall have become final and nonappealable;
(c) by Parent or Sub prior to the purchase of Shares pursuant to
the Offer in the event of a breach by the Company of any
representation, warranty, covenant or other agreement contained in
this Agreement which (i) would give rise to the failure of a condition
set forth in paragraph (e) or (f) of Exhibit A and (ii) cannot be or
has not been cured within 20 days after the giving of written notice
to the Company;
(d) by Parent or Sub if (i) either Parent or Sub is entitled to
terminate the Offer as a result of the occurrence of any event set
forth in paragraph (d) of Exhibit A to this Agreement or (ii) the
Board of Directors of the Company (or any authorized committee
thereof) takes the action referred to in Section 6.03(b);
(e) by the Company in accordance with Section 6.02(b), provided
that it has complied with all provisions thereof, including the notice
provisions therein, and that it complies with applicable requirements
relating to the payment (including the timing of any payment) of
Expenses and the Termination Fee;
53
(f) by the Company, if Sub or Parent shall have breached in any
material respect any of their respective representations, warranties,
covenants or other agreements contained in this Agreement, which
breach or failure to perform is incapable of being cured or has not
been cured within 20 days after the giving of written notice to Parent
or Sub, as applicable; or
(g) by the Company, if the Offer has not been timely commenced
in accordance with Section 1.01.
SECTION 9.02. Effect of Termination. In the event of a
----------------------
termination of this Agreement by either the Company or Parent as provided
in Section 9.01, this Agreement shall forthwith become void and there shall
be no liability or obligation on the part of Parent, Sub or the Company or
their respective officers or directors, except with respect to the last
sentence of Section 1.02(c), Section 4.18, Section 5.06, the last sentence
of Section 7.02, Section 7.05, this Section 9.02 and Article X; provided,
--------
however, that nothing herein shall relieve any party for liability for any
-------
breach hereof.
SECTION 9.03. Amendment. This Agreement may be amended by the
----------
parties hereto, by action taken or authorized by their respective Boards of
Directors, at any time before or after obtaining the Company Stockholder
Approval (if required by law), but, after the purchase of Shares pursuant
to the Offer, no amendment shall be made which decreases the Merger
Consideration and, after the Company Stockholder Approval, no amendment
shall be made which by law requires further approval by such shareholders
without obtaining such further approval. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto. Following the election or appointment of the Sub's designees
pursuant to Section 7.04 and prior to the Effective Time, the affirmative
vote of a majority of the Independent Directors then in office shall be
required by the Company to (i) amend or terminate this Agreement by the
Company, (ii) exercise or waive any of the Company's rights or remedies
under this Agreement, (iii) extend the time for performance of Parent and
Sub's respective obligations under this Agreement or (iv) take any action
to
54
amend or otherwise modify the Company's Certificate of Incorporation or By-
Laws.
SECTION 9.04. Extension; Waiver. At any time prior to the
------------------
Effective Time, the parties hereto, by action taken or authorized by their
respective Boards of Directors, may, to the extent legally allowed,
(i) subject to the provisions of Section 9.03, extend the time for the
performance of any of the obligations or other acts of the other parties
hereto, (ii) subject to the provisions of Section 9.03, waive any
inaccuracies in the representations and warranties contained herein or in
any document delivered pursuant hereto or (iii) subject to the provisions
of Section 9.03, waive compliance with any of the agreements or conditions
contained herein. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in a written
instrument signed on behalf of such party. The failure of any party to
this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of those rights.
ARTICLE X
Miscellaneous
-------------
SECTION 10.01. Nonsurvival of Representations, Warranties and
----------------------------------------------
Agreements. None of the representations and warranties in this Agreement
-----------
or in any instrument delivered pursuant to this Agreement shall survive the
Effective Time or, in the case of the Company, shall survive the acceptance
for payment of, and payment for, Shares by Sub pursuant to the Offer. This
Section 10.01 shall not limit any covenant or agreement of the parties
which by its terms contemplates performance after the Effective Time of the
Merger.
SECTION 10.02. Notices. All notices and other communications
--------
hereunder shall be in writing and shall be deemed given if delivered
personally, telecopied (which is confirmed), sent by overnight courier
(providing proof of delivery) or mailed by registered or certified mail
(return receipt requested) to the parties at the following addresses
55
(or at such other address for a party as shall be specified by like
notice):
(a) if to Parent or Sub, to
Conopco, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telecopy No.: (000) 000-0000
and
(b) if to the Company, to
Xxxxxx Xxxxxx Industries, Inc. 000
Xxxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxx X. Xxxxx
Telecopy No.: (000) 000-0000
SECTION 10.03. Interpretation. When a reference is made in this
---------------
Agreement to an Article or a Section, such reference shall be to an Article
or a Section of this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation
of this Agreement. Whenever the words "include", "includes" or "including"
are used in this Agreement, they shall be deemed to be followed by the
words "without limitation". The phrase "made available" in this Agreement
shall mean that the information referred to has been made available if
requested by the party to whom such information is to be made available.
As used in this Agreement, the term "subsidiary" of any person means
another person, an amount of the voting securities, other voting ownership
or voting partnership interests of which is sufficient to elect at least a
majority of its Board of Directors or other governing body (or, if there
are no such voting interests, 50% or more of the equity interests of which)
is owned directly or indirectly by such first person. As used in this
Agreement, (a) "Significant Subsidiary" of any person means any Significant
Subsidiary of such person within the meaning of Rule 1-02 of Regulation S-X
of the SEC
56
and (b) "material adverse change" or "material adverse effect" means, when
used in connection with the Company, any change or effect (or any
development that, insofar as can reasonably be foreseen, is likely to
result in any change or effect) or fact or condition that, individually or
in the aggregate with any such other changes or effects, is materially
adverse to the business, properties, assets, financial condition or results
of operations of the Company and its subsidiaries taken as a whole (other
than any such change, effect, fact or condition that shall have been
disclosed under Item 4.08 of the Company Letter).
SECTION 10.04. Counterparts. This Agreement may be executed in
-------------
two or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when two or more counterparts have
been signed by each of the parties and delivered to the other parties, it
being understood that all parties need not sign the same counterpart.
SECTION 10.05. Entire Agreement; No Third Party Beneficiaries.
-----------------------------------------------
This Agreement (including the documents and the instruments referred to
herein) (a) constitutes the entire agreement and supersede all prior
agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof, and (b) except as provided in
Section 7.06 is not intended to confer upon any person other than the
parties hereto any rights or remedies hereunder.
SECTION 10.06. Governing Law. This Agreement shall be governed
--------------
and construed in accordance with the laws of the State of Delaware without
regard to any applicable conflicts of law.
SECTION 10.07. Publicity. Except as otherwise required by law,
----------
court process or the rules of the NYSE, for so long as this Agreement is in
effect, neither the Company nor Parent shall, or shall permit any of its
subsidiaries to, issue or cause the publication of any press release or
other public announcement with respect to the transactions contemplated by
this Agreement without prior consultation with the other party, which
consent shall not be unreasonably withheld.
57
SECTION 10.08. Assignment. Neither this Agreement nor any of
-----------
the rights, interests or obligations hereunder shall be assigned by any of
the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other parties, except that Sub may assign, in
its sole discretion, any or all of its rights, interests and obligations
hereunder to Parent or to any direct or indirect wholly owned subsidiary of
Parent. Subject to the preceding sentence, this Agreement will be binding
upon, inure to the benefit of and be enforceable by the parties and their
respective successors and assigns.
SECTION 10.09. Enforcement. The parties agree that irreparable
------------
damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall
be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions of this
Agreement in any court of the United States located in the State of
Delaware or in a Delaware state court, this being in addition to any other
remedy to which they are entitled at law or in equity. In addition, each
of the parties hereto (i) consents to submit such party to the personal
jurisdiction of any Federal court located in the State of Delaware or any
Delaware state court in the event any dispute arises out of this Agreement
or any of the transactions contemplated hereby, (ii) agrees that such party
will not attempt to deny or defeat such personal jurisdiction by motion or
other request for leave from any such court, (iii) agrees that such party
will not bring any action relating to this Agreement or any of the
transactions contemplated hereby in any court other than a Federal court
sitting in the state of Delaware or a Delaware state court
58
and (iv) waives any right to trial by jury with respect to any claim or
proceeding related to or arising out of this Agreement or any of the
transactions contemplated hereby.
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
CONOPCO, INC.,
by
/s/ Mart Laius
-----------------------------
Name: Mart Laius
Title: Vice President
CONOPCO ACQUISITION COMPANY, INC.,
by
/s/ Mart Laius
--------------------------
Name: Mart Laius
Title: President
XXXXXX XXXXXX INDUSTRIES, INC.,
by
/s/ Xxxxxx X. Xxxxxxx
---------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Executive Officer
EXHIBIT A
Conditions of the Offer
-----------------------
Notwithstanding any other term of the Offer or this Agreement,
Sub shall not be required to accept for payment or, subject to any
applicable rules and regulations of the SEC, including Rule 14e-1(c) under
the Exchange Act (relating to Sub's obligation to pay for or return
tendered Shares after the termination or withdrawal of the Offer), to pay
for any Shares tendered pursuant to the Offer unless (i) there shall have
been validly tendered and not withdrawn prior to the expiration of the
Offer such number of Shares that, together with the Class B Shares subject
to the Stockholder Agreement, would constitute a majority of the combined
voting power of the Shares and Class B Shares (determined on a fully
diluted basis for all outstanding stock options and any other rights to
acquire Shares) assuming for such determination that each Class B Share
subject to the Stockholder Agreement is only entitled to one vote per
share (the "Minimum Condition") and (ii) any waiting period under the HSR
Act applicable to the purchase of Shares pursuant to the Offer shall have
expired or been terminated (the "HSR Condition"). Furthermore,
notwithstanding any other term of the Offer or this Agreement, Sub shall
not be required to accept for payment or, subject as aforesaid, to pay for
any Shares not theretofore accepted for payment or paid for, and may
terminate the Offer if, at any time on or after the date of this Agreement
and before the acceptance of such Shares for payment or the payment
therefor, any of the following conditions exists (other than as a result of
any action or inaction of Parent or any of its subsidiaries that
constitutes a breach of this Agreement):
(a) there shall be threatened or pending by any Governmental
Entity any suit, action or proceeding (i) challenging the acquisition
by Parent or Sub of any Shares under the Offer or pursuant to the
Stockholder Agreement, seeking to restrain or prohibit the making or
consummation of the Offer or the Merger or the performance of any of
the other transactions contemplated by this Agreement or the
Stockholder Agreement (including the voting provisions thereunder),
or seeking to obtain from the Company, Parent or Sub any damages that
are material in relation to the Company and its subsidiaries taken as
a whole, (ii) seeking to prohibit or materially limit the
ownership or operation by the Company, Parent or any of their
respective subsidiaries of a material portion of the business or
assets of the Company and its subsidiaries, taken as a whole, or
Parent and its subsidiaries, taken as a whole, or to compel the
Company or Parent to dispose of or hold separate any material portion
of the business or assets of the Company and its subsidiaries, taken
as a whole, or Parent and its subsidiaries, taken as a whole, as a
result of the Offer or any of the other transactions contemplated by
this Agreement or the Stockholder Agreement, (iii) seeking to impose
material limitations on the ability of Parent or Sub to acquire or
hold, or exercise full rights of ownership of, any Shares to be
accepted for payment pursuant to the Offer or purchased under the
Stockholder Agreement including, without limitation, the right to vote
such Shares on all matters properly presented to the stockholders of
the Company, (iv) seeking to prohibit Parent or any of its
subsidiaries from effectively controlling in any material respect any
material portion of the business or operations of the Company or its
subsidiaries or (v) which otherwise is reasonably likely to have a
material adverse effect on the business, properties, assets, financial
condition, results of operations or prospects of the Company and its
subsidiaries taken as a whole; or there shall be pending by any other
person any suit, action or proceeding which is reasonably likely to
have a material adverse effect on the business, properties, assets,
financial condition, results of operations or prospects of the Company
and its subsidiaries taken as a whole.
(b) there shall be enacted, entered, enforced, promulgated or
deemed applicable to the Offer or the Merger by any Governmental
Entity any statute, rule, regulation, judgment, order or injunction,
other than the application to the Offer or the Merger of applicable
waiting periods under the HSR Act, that is reasonably likely to
result, directly or indirectly, in any of the consequences referred to
in clauses (i) through (v) of paragraph (a) above;
(c) there shall have occurred any material adverse change with
respect to the Company;
(d) (i) the Board of Directors of the Company or any committee
thereof shall have withdrawn or modified in a manner adverse to Parent
or Sub its approval or
recommendation of the Offer, the Merger or this Agreement, or approved
or recommended any Takeover Proposal or (ii) the Board of Directors of
the Company or any committee thereof shall have resolved to take any
of the foregoing actions;
(e) any of the representations and warranties of the Company set
forth in this Agreement that are qualified as to materiality shall not
be true and correct or any such representations and warranties that
are not so qualified shall not be true and correct in any material
respect, in each case at the date of this Agreement and at the
scheduled or extended expiration of the Offer;
(f) the Company shall have failed to perform in any material
respect any material obligation or to comply in any material respect
with any material agreement or covenant of the Company to be performed
or complied with by it under this Agreement;
(g) there shall have occurred and continued to exist for not less
than three business days (i) any general suspension of trading in, or
limitation on prices for, securities on a national securities exchange
in the United States (excluding any coordinated trading halt triggered
solely as a result of a specified decrease in a market index), (ii) a
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States, (iii) any limitation (whether
or not mandatory) by any Governmental Entity on, or other event that
materially adversely affects, the extension of credit by banks or
other lending institutions, (iv) a commencement of a war or armed
hostilities or other national or international calamity directly or
indirectly involving the United States which in any case is reasonably
expected to have a material adverse effect on the Company or to
materially adversely affect Parent's or Sub's ability to complete the
Offer and/or the Merger or materially delay the consummation of the
Offer and/or the Merger; or
(h) this Agreement shall have been terminated in accordance with
its terms.
The foregoing conditions are for the sole benefit of Parent and
Sub and may, subject to the terms of this Agreement, be waived by Parent
and Sub in whole or in part at any time and
from time to time in their sole discretion. The failure by Parent or Sub
at any time to exercise any of the foregoing rights shall not be deemed a
waiver of any such right, the waiver of any such right with respect to
particular facts and circumstances shall not be deemed a waiver with
respect to any other facts and circumstances and each such right shall be
deemed an ongoing right that may be asserted at any time and from time to
time. Terms used but not defined herein shall have the meanings assigned
to such terms in the Agreement to which this Exhibit A is a part.
