STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated July 13, 1998, among Xxxxxx KGaA, a
Kommanditgesellschaft auf Aktien (a partnership limited by shares) organized
under the laws of the Federal Republic of Germany ("PARENT"), Henkel Acquisition
Corp. II, a Delaware corporation and a wholly owned subsidiary of Parent
("PURCHASER"), and DEP Corporation, a Delaware corporation (the "COMPANY").
W I T N E S S E T H:
WHEREAS, concurrently herewith, Parent, Purchaser and the Company are
entering into an Agreement and Plan of Merger (the "MERGER AGREEMENT");
WHEREAS, as a condition and inducement to Parent's and Purchaser's
execution of the Merger Agreement and pursuit of the transactions contemplated
thereby and in consideration therefor, the Company agrees to grant Purchaser an
option to purchase Common Stock (as hereinafter defined), upon the terms and
subject to the conditions of this Agreement; and
WHEREAS, the Board of Directors of the Company has approved the grant of
such option and the Merger Agreement prior to the execution hereof;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements set forth herein and in the Merger Agreement, the parties hereto
agree as follows:
1. THE TOP-UP OPTION. The Company hereby grants to Purchaser an
irrevocable option (the "TOP-UP OPTION") to purchase, subject to the terms
hereof, that number of shares of common stock, $0.01 par value per share
("COMMON STOCK"), of the Company (the "TOP-UP OPTION SHARES") equal to the
lowest number of shares of Common Stock that, when added to the number of shares
of Common Stock owned by Purchaser at the time of such exercise, shall
constitute one share more than 90% of the shares of Common Stock then
outstanding (assuming the issuance of the Top-Up Option Shares) at a price per
share equal to $5.25 (the "OPTION PRICE"); PROVIDED, HOWEVER, that the Top-Up
Option shall not be exercisable unless immediately after such exercise Purchaser
would own more than 90% of the shares of Common Stock then outstanding.
2. EXERCISE OF TOP-UP OPTION. (a) Purchaser may exercise the Top-Up
Option, in whole but not in part, at any one time after the occurrence of a
Top-Up Exercise Event (as defined below) and prior to the occurrence of a
Top-Up Termination Event (as defined below).
(b) A "TOP-UP EXERCISE EVENT" shall occur for purposes of this Agreement
upon Purchaser's acceptance for payment pursuant to the Offer (as defined in the
Merger Agreement) of shares of Common Stock constituting more than 85% but less
than 90% of the shares of Common Stock then outstanding.
(c) Each of the following shall be a "TOP-UP TERMINATION EVENT":
(i) the Effective Time;
(ii) the date which is ten (10) business days after the occurrence
of the Top-Up Exercise Event (or such later date on which the
closing of a purchase may be consummated, as set forth in
Section 3(a) below); and
(iii) the termination of the Merger Agreement.
3. CLOSING. (a) In the event Purchaser is entitled to and wishes to
exercise the Top-Up Option, it shall send to the Company a written notice (the
date of which being herein referred to as the "NOTICE DATE") specifying a place
and date not earlier than three business days nor later than ten business days
from the Notice Date for the closing of such purchase (the "CLOSING DATE");
PROVIDED, that if the closing of such purchase cannot be consummated by reason
of any applicable judgment, injunction, decree, order, law or regulation, the
period of time that would otherwise run pursuant to this sentence shall run
instead from the date on which such restriction on consummation has expired or
been terminated; and PROVIDED, further, that if prior notification to or
approval of any regulatory or antitrust agency is required in connection with
such purchase, Purchaser shall promptly file the required notice or application
for approval, shall promptly notify the Company of such filing, and shall
expeditiously process the same and the period of time that otherwise would run
pursuant to this sentence shall run instead from the date on which any required
notification periods have expired or been terminated or such approvals have been
obtained and any requisite waiting period or periods shall have passed. Any
exercise of the Top-Up Option shall be deemed to occur on the Notice Date
relating thereto.
(b) At the closing referred to in subsection (a) of this Section 3,
Purchaser shall (i) pay to the Company the aggregate purchase price for the
shares of Common Stock purchased pursuant to the exercise of the Top-Up Option
in immediately available funds by wire transfer to a bank account designated by
the Company (PROVIDED that failure or refusal of the Company to designate such a
bank account shall not preclude Purchaser from exercising the Top-Up Option by
delivery of a certified check or bank draft) and (ii) present and surrender this
Agreement to the Company.
(c) At such closing, simultaneously with the delivery of immediately
available funds as provided in subsection (b) of this Section 3, the Company
shall deliver to Purchaser a certificate or certificates representing the number
of shares of Common Stock purchased by Purchaser.
(d) Certificates for Common Stock delivered at a closing hereunder
may be endorsed with a restrictive legend that shall read substantially as
follows:
"The transfer of the shares represented by
this certificate is subject to resale
restrictions arising under applicable
securities laws (including the Securities Act
of 1933, as amended)."
It is understood and agreed that the reference to the resale
restrictions arising under applicable securities laws, including the
Securities Act of 1933, as amended (the "SECURITIES ACT"), in the
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above legend shall be removed by delivery of substitute certificate(s)
without such reference if Purchaser shall have delivered to the Company a
copy of a letter from the staff of the Securities and Exchange Commission, or
an opinion of counsel, in form and substance reasonably satisfactory to the
Company, to the effect that such legend is not required for purposes of the
Securities Act or other applicable securities laws. In addition, such
certificates shall bear any other legend as may be required by law.
(e) Upon the giving by Purchaser to the Company of the
written notice of exercise of the Top-Up Option provided for under
subsection (a) of this Section 3 and the tender of the applicable purchase
price in immediately available funds, Purchaser shall be deemed to be the
holder of record of the shares of Common Stock issuable upon such exercise,
notwithstanding that the stock transfer books of the Company shall then be
closed or that certificates representing such shares of Common Stock shall
not then be actually delivered to Purchaser. The Company shall pay all
expenses, and any and all United States federal, state and local taxes and
other charges that may be payable in connection with the preparation, issue
and delivery of stock certificates under this Section 3 in the name of
Purchaser or its assignee, transferee or designee.
4. COVENANTS OF THE COMPANY. In addition to its other agreements and
covenants herein, the Company agrees:
(a) that it will not, by charter amendment or through reorganization,
consolidation, merger, dissolution or sale of assets, or by any other voluntary
act, avoid or seek to avoid the observance or performance of any of the
covenants, stipulations or conditions to be observed or performed hereunder by
the Company; and
(b) promptly to take all action as may from time to time be required
(including complying with all applicable notification, filing reporting and
waiting period requirements under HSR or otherwise, and cooperating fully with
Purchaser in preparing any applications or notices and providing such
information to any regulatory authority as it may require) in order to permit
Purchaser to exercise the Top-Up Option and the Company duly and effectively to
issue shares of Common Stock pursuant hereto.
5. REPRESENTATIONS AND WARRANTIES. (a) The Company hereby
represents and warrants to Purchaser as follows:
(i) The Company has full corporate power and authority to execute
and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by
the Board of Directors 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. This Agreement has been duly and validly
executed and delivered by the Company and constitutes a
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valid and legally binding obligation of the Company enforceable
in accordance with its terms.
(ii) All shares, upon issuance pursuant to the Top-Up Option, will
be duly authorized, validly issued, fully paid, nonassessable,
and will be delivered free and clear of all claims, liens,
encumbrances and security interests (other than those created
by this Agreement) and not subject to any preemptive rights.
(iii) The execution, delivery and performance of this Agreement does
not and will not, and the consummation by the Company of any
of the transactions contemplated hereby will not, constitute
or result in (i) a breach or violation of or a default under,
its articles or certificate of incorporation or by-laws, or
the comparable governing instruments of any of its
subsidiaries, or (ii) a breach or violation of or a default
under, any agreement, lease, contract, note, mortgage,
indenture, arrangement or other obligation of it or any of its
subsidiaries (with or without the giving of notice, the lapse
of time or both) or under any law, rule, ordinance or
regulation or judgment, decree, order, award or governmental
or non-governmental permit or license to which it or any of
its subsidiaries is subject.
(b) Purchaser hereby represents and warrants to the Company that
Purchaser has full corporate power and authority to enter into this Agreement
and, subject to obtaining the approvals referred to in this Agreement, to
consummate the transactions contemplated by this Agreement; the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the party
of Purchaser; and this Agreement has been duly executed and delivered by
Purchaser and constitutes a valid and legally binding obligation of Purchaser
enforceable in accordance with its terms.
6. ASSIGNMENT. Neither of the parties hereto may assign any of its
rights or obligations under this Agreement or the Top-Up Option created
hereunder to any other person, without the express written consent of the other
party, except that Purchaser may assign its rights and obligations hereunder to
another wholly owned subsidiary of Parent.
7. FILINGS; OTHER ACTIONS. Each of Purchaser and the Company will
use its best efforts to make all filings with, and to obtain consents of, all
third parties and regulatory and governmental authorities necessary to the
consummation of the transactions contemplated by this Agreement, including,
without limitation, notices and filings under HSR.
8. SPECIFIC PERFORMANCE. The parties hereto acknowledge that damages
would be an inadequate remedy for a breach of this Agreement by either party
hereto and that the obligations of the parties hereto shall be enforceable by
either party hereto through injunctive or other equitable relief.
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9. SEVERABILITY. If any term, provision, covenant or restriction
contained in this Agreement is held by a court or a federal or state regulatory
agency of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions and covenants and restrictions contained in
this Agreement shall remain in full force and effect, and shall in no way be
affected, impaired or invalidated.
10. NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when delivered
in person, by fax, telecopy, or by registered or certified mail (postage
prepaid, return receipt requested) at the respective addresses of the parties
set forth in the Merger Agreement.
11. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware.
12. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
13. EXPENSES. Except as otherwise expressly provided herein, each of
the parties hereto shall bear and pay all costs and expenses incurred by it or
on its behalf in connection with the transactions contemplated hereunder,
including fees and expenses of its own financial consultants, investment
bankers, accountants and counsel.
14. ENTIRE AGREEMENT. Except as otherwise expressly provided herein
or in the Merger Agreement, this Agreement contains the entire agreement between
the parties with respect to the transactions contemplated hereunder and
supersedes all prior arrangements or understandings with respect thereof,
written or oral. The terms and conditions of this Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assignees. Nothing in this Agreement, expressed or
implied, is intended to confer upon any party, other than the parties hereto,
and their respective successors except as assignees, any rights, remedies,
obligations or liabilities under or by reason of this Agreement, except as
expressly provided herein.
15. CAPTIONS; CAPITALIZED TERMS. The Section and paragraph captions
herein are for convenience of reference only, do not constitute part of this
Agreement and shall not be deemed to limit or otherwise affect any of the
provisions hereof. Capitalized terms used in this Agreement and not defined
herein shall have the meanings assigned thereto in the Merger Agreement.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be executed on its behalf by its officers thereunto duly authorized, all as of
the date first above written.
XXXXXX KGaA
By: /s/ Xxx Xxxxxx
-------------------------
Name: Xx. Xxx Xxxxxx
Title: Executive Vice President
By: /s/ Xxxxx Xxxxxxxxxx
-------------------------
Name: Xx. Xxxxx Xxxxxxxxxx
Title: Senior Counsel
XXXXXX ACQUISITION CORP. II
By: /s/ Xxxx X. Xxxxxxx
-------------------------
Name: Xxxx X. Xxxxxxx
Title: Vice President and Treasurer
DEP CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Chairman and President
