DEFLECTA-SHIELD CORPORATION
0000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
October 31, 1997
PERSONAL AND CONFIDENTIAL
Harvest Partners, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx
Attn: Xxx X. Xxxxxxxx
Xxxx International Holdings, Inc.
000 Xxxx Xxxxxxxxx
Xxxxx, Xxxxxxxxx 00000
Ladies and Gentlemen:
Deflecta-Shield Corporation, a Delaware corporation ("Deflecta") and Xxxx
International Holdings, Inc. ("Xxxx"; each of Deflecta and Xxxx also being
referred to as a "Company" and together as the "Companies") each have expressed
an interest in exploring a significant transaction involving the two companies
(a "Transaction"). In order to allow the Companies to evaluate a possible
Transaction, each would like the other to deliver certain information about
itself. The Companies agree that certain of such information is confidential and
that damage could result if such information were disclosed to a third party or
used for purposes other than to evaluate a possible Transaction. The Companies
have further agreed to certain other matters respecting their respective due
diligence and their conduct should a Transaction not be consummated and
otherwise.
For purposes of this agreement, the following terms will have the
following meanings: (a) "Disclosing Party" -- Deflecta or Xxxx and its
respective subsidiaries, as applicable, when it is disclosing information to the
other; and (b) "Receiving Party" -- Deflecta or Xxxx and its respective
subsidiaries, as applicable, when it is receiving information from the other.
For purposes of this agreement, all information concerning the Disclosing
Party to be provided to a Receiving Party or its employees, agents, advisors or
other representatives (including, without limitation, lawyers, accountants,
consultants and investment bankers or advisors), or subsidiaries or affiliates,
or prospective financing sources (collectively, ""Representatives," which term
shall include, without limitation, with respect to Xxxx, Harvest Partners, Inc.
("Harvest")), together with any other information respecting the Disclosing
Party, or its subsidiaries or affiliates, which has already been provided to a
Receiving Party or its Representatives (whether prepared by
Harvest Partners, Inc.
Xxxx International Holdings, Inc.
October 31, 1997
Page 2
a Company, its agents, advisors or otherwise and irrespective of the form of
communication), is hereafter collectively referred to as the "Confidential
Material." The term "Confidential Material" also includes all notes, analyses,
compilations, studies, interpretations or other material prepared by the
Receiving Party or its Representatives containing or based, in whole or in part,
on any Confidential Material furnished by a Company or its representatives.
The term "Confidential Material" does not include information which (i)
was or becomes generally available to the public other than as a result,
directly or indirectly, of any disclosure by the Receiving Party or its
Representatives in violation of the terms hereof; (ii) was or becomes available
to the Receiving Party or its Representatives on a nonconfidential basis from a
source other than the Disclosing Party or its Representatives, provided that
such source is not to the knowledge of the Receiving Party or the knowledge of
its Representatives (x) bound by a confidentiality agreement with the Disclosing
Party or (y) otherwise prohibited from transmitting the information to the
Receiving Party by a contractual, legal or fiduciary obligation; or (iii) was
within the Receiving Party's possession prior to its being furnished to the
Receiving Party or its Representatives by or on behalf of the Disclosing Party,
provided that the source of such information was not known by it or its
Representatives to be bound by a confidentiality agreement with the Disclosing
Party, or to be otherwise prohibited from transmitting the information to the
Receiving Party by a contractual, legal or fiduciary obligation.
Each of the Companies desires to maintain the confidentiality of the
Confidential Material and is making it available to the other and its
Representatives only upon the terms and conditions set forth below. In
consideration of the opportunity to review the Confidential Material, each of
the Companies and Harvest hereby agrees for itself and its Representatives with
respect to the Confidential Information of the other or of the Company other
than the one of which it is an affiliate, and otherwise, as follows:
1. Not to use for any purpose any portion of the Confidential
Material except to evaluate a possible Transaction.
2. Not to disclose to any person any portion of the Confidential
Material except to its Representatives who need to know such information
for the purpose of evaluating a possible Transaction and who, prior to
being provided with the Confidential Material, shall be advised by the
Receiving Party of this agreement and shall agree to comply with the terms
hereof (and you shall cause them to so comply) to the same extent as if
they were parties hereto. Each Receiving Party shall maintain a list of
those Representatives to whom Confidential Information is disclosed, which
list will be available to the Disclosing Party upon request.
Harvest Partners, Inc.
Xxxx International Holdings, Inc.
October 31, 1997
Page 3
3. Xxxx and Harvest agree not to disclose to any person except to
Xxxx'x Representatives (i) that this agreement exists or that the
Confidential Material has been made available to them, (ii) the fact that
discussions or negotiations are taking place concerning a possible
Transaction, and (iii) any of the terms, conditions, or other facts with
respect to such possible Transaction, including the status thereof or the
termination of discussions with respect thereto, unless in the opinion of
its counsel disclosure is required to be made under the Securities Act of
1933, the Securities Exchange Act of 1934 or the corporate governance
rules of or Xxxx'x listing agreement with the National Association of
Securities Dealers, Inc. Stock Market, provided that if either of them
proposes to make any disclosure based upon the opinion of its counsel as
aforesaid it will advise and consult with Deflecta prior to such
disclosure concerning the information proposed to be disclosed. The term
"person" as used herein shall be interpreted broadly to include, without
limitation, any corporation, entity, partnership or individual and shall
also include members or representatives of the media.
4. Not to make copies of the Confidential Material, except as
necessary to assist in its investigation, and to use all reasonable and
prudent efforts to protect and safeguard the Confidential Material from
misuse, loss, theft, publication or the like.
5. To return promptly to the Disclosing Party all copies of the
Confidential Material provided to the Receiving Party or its
Representatives, without retaining, in whole or in part, any copy, extract
or other reproduction thereof, and to destroy any documents, analyses,
memoranda, notes and other writing it or its Representatives may have
prepared in connection therewith (i) in the event the Receiving Party or
one of its affiliates does not proceed with a Transaction within a
reasonable time or (ii) at any earlier time upon written notice from the
Disclosing Party. Any such destruction shall be certified in writing to
the Disclosing Party by an authorized officer supervising the same. The
Receiving Party and its Representatives will continue to be bound by their
obligations hereunder notwithstanding the return or destruction of the
Confidential Material.
6. Without the prior written consent of Deflecta, for a period of
eighteen months from the date hereof, Xxxx and its Representatives
(including present affiliates and persons who become affiliates in the
future) shall not, directly or indirectly, (i) acquire, offer to acquire,
or agree to acquire, by purchase or otherwise, any assets, businesses or
securities (including direct or indirect warrants, rights or options to
acquire any securities) of Deflecta; (ii) make any public announcement
with respect to, or submit any proposal for, a transaction between
Deflecta or any of its security holders and Xxxx and/or any of its
affiliates (including, without limitation, any tender or exchange offer,
merger or other business combination, whether or not any other parties are
also involved, directly or indirectly, in such
Harvest Partners, Inc.
Xxxx International Holdings, Inc.
October 31, 1997
Page 3
proposal or transaction) unless such proposal is directed and disclosed
solely to the Board of Directors of Deflecta and Deflecta shall have
requested in writing in advance the submission of such proposal; (iii)
submit any proposals for the vote or consideration of shareholders, make,
or in any way participate in any "solicitation" of "proxies" to vote (as
such terms are used in the proxy rules of the Securities and Exchange
Commission) or seek to advise or influence any person or entity with
respect to the voting or not voting of, or giving or withholding of
consents with respect to, any voting securities of Deflecta; (iv) form,
join or in any way participate in a "group" within the meaning of Section
13(d)(3) of the Securities Exchange Act of 1934, as amended, with respect
to any securities of the Company; (v) otherwise act, alone or in concert
with others, to seek to control or influence the management, Board of
Directors, policies or affairs of Deflecta, or seek representation on the
Board of Directors of Deflecta or (vi) initiate any communications with
any employee of Deflecta concerning the Confidential Material or any
possible transaction involving Deflecta, or solicit the employment of any
current or future employee of Deflecta. Xxxx and Harvest also agree during
such period not to request Deflecta (or its directors, officers, employees
or agents), directly or indirectly, to amend or waive any provision of
this paragraph, (including this sentence) or to take any action which
would require Deflecta to make a public announcement regarding a proposed
transaction or such request. For purposes of this paragraph, the term
"Deflecta" shall include Deflecta's affiliates. The foregoing restrictions
(i) shall terminate in the event Deflecta enters into an agreement
providing for the sale of all or substantially all of Deflecta's assets,
an acquisition of equity securities representing ownership of more than
50% of Deflecta's outstanding securities, any merger or other
extraordinary transaction involving Deflecta, or any material change in
Deflecta's capital structure, or makes any public announcement to the
effect that Deflecta is "for sale"; (ii) shall not preclude the
acquisition by Xxxx and its Representative (including present affiliates
and persons who become affiliates in the future) of up to 5% of Deflecta's
outstanding securities and (iii) shall not preclude any investment banking
firm retained by Xxxx from acting as dealer, underwriter or market maker
of Deflecta's securities in the ordinary course of business without a
control intent.
Deflecta hereby agrees that it will not disclose to any person except to
its Representatives the names of Harvest and Xxxx in connection with any
disclosure (i) that this agreement exists or that the Confidential Material has
been made available, (ii) that discussions or negotiations are taking place
concerning a possible Transaction or (iii) of any of the terms, conditions, or
other facts with respect to such possible Transaction, including the status
thereof or the termination of discussions, unless disclosure of such names is
required to be made under the Securities Act of 1933, the Securities Exchange
Act of 1934 or the corporate governance rules of or the Company's listing
agreement with the National Associates of Securities Dealers, Inc. Stock Market,
or disclosure of
Harvest Partners, Inc.
Xxxx International Holdings, Inc.
October 31, 1997
Page 5
such names is requested or required by legal or regulatory process; provided
that if Deflecta proposes to make any such disclosure, it will use reasonable
efforts to advise and consult with Xxxx prior to such disclosure.
It is the responsibility of each Company to ensure that its
Representatives who are given access to the Confidential Material will be bound
by and will conduct their investigation in accordance with the terms of this
agreement. Each Company will be responsible for any breach of this agreement by
its Representatives and hereby agrees, at its sole expense, to take all
reasonable measures (including, but not limited to, court proceedings) to
restrain its Representatives from prohibited or unauthorized disclosure or use
of the Confidential Material.
If either Company or any or its Representatives is requested or required
(by oral questions, interrogatories, requests for information or documents in
legal proceedings, subpoenas, civil investigative demands or similar processes)
to disclose any Confidential Material, it is agreed that it will provide the
other Company with prompt notice of such request or requirement so that the
other Company may seek a protective order or other appropriate remedy and/or
waive your compliance with the provisions of this agreement. If in the absence
of a protective order or other remedy or the receipt of a waiver hereunder
either Company or any of its Representatives is, nonetheless, in the opinion of
its counsel, compelled under law to disclose information concerning the other
Company or else stand liable for contempt or suffer other censure or penalty, it
is further agreed that it will give the other Company written notice of the
information to be disclosed as far in advance as is practicable. Each Company
will cooperate with the other Company (at the other Company's expense) in
obtaining a protective order and confidential treatment for information
disclosed pursuant to this paragraph. Neither the Companies nor any of their
respective Representatives shall not be liable hereunder for disclosure pursuant
to the second preceding sentence.
Although each Company has endeavored to include in the Confidential
Material all information it believes to be relevant for the purpose of the other
Company's investigation, neither the Companies nor their respective affiliates
nor their Representatives make any representation or warranty as to the accuracy
or completeness of the Confidential Material, it being understood that only
those representations and warranties that may be made in a definitive written
agreement with respect to a transaction when, as and if executed and subject to
the limitations as may be specified therein, shall have any legal effect.
Accordingly, neither Company nor their affiliates nor their Representatives
shall have any liability to the other Company or its Representatives relating to
or resulting from the Confidential Material or any errors or omissions therein.
Harvest Partners, Inc.
Xxxx International Holdings, Inc.
October 31, 1997
Page 6
If during the period beginning on the date of this Agreement and ending
on November 24, 1997 Deflecta or its Representatives, directly or indirectly,
shall contact or be contacted by any person (other than Xxxx or any subsidiary
or affiliate of Xxxx) with respect to a possible Acquisition Transaction and, in
such event, not later than December 23, 1997, the Board of Directors of Deflecta
shall authorize entry into, and Deflecta shall enter into a written agreement
providing for an Acquisition Transaction with such person or any subsidiary or
affiliate of such person, then Deflecta shall reimburse Xxxx by wire transfer
(not later than five business days after receipt of notice from Xxxx) for all
documented reasonable out-of-pocket fees and expenses up to $500,000 incurred by
or on behalf of Xxxx in connection with the transactions contemplated hereby,
including, without limitation, fees and expenses payable to investment bankers,
accountants and counsel, due diligence expenses and fees and expenses payable by
Xxxx to potential financing sources (in each case other than any fees payable by
Xxxx to Harvest); provided that Xxxx shall not be entitled to be so reimbursed
if (i) Xxxx fails to proceed in good faith (in light of the type of possible
Transaction under consideration and the terms considered in connection with
transactions of similar structure and size by potential parties thereto) with
respect to the negotiation of definitive documentation with respect to a
possible Transaction as previously discussed or (ii) Xxxx does not in good faith
use reasonable efforts to secure financing and complete its due diligence
investigation, in each case with respect to the possible Transaction as
previously discussed, in light of, among other things, the structure and terms
under consideration, then prevailing market conditions for similar transactions
and the respective financial conditions of Deflecta and Xxxx or (iii) a
definitive written agreement is entered into by Deflecta with Xxxx or any of its
subsidiaries or affiliates providing for an Acquisition Transaction.
"Acquisition Transaction" shall mean the acquisition of all or substantially all
of the assets of Deflecta or more than 50% of the voting power of Deflecta,
whether by merger, consolidation, share exchange, tender or exchange offer or
other similar transaction other than ordinary course trading of such securities.
It is understood and agreed that money damages would not be a sufficient
remedy for any breach of this agreement and that each Company, its affiliates or
any party described in paragraph numbered 6 above shall be entitled, without the
requirement of the posting of a bond or other security (which requirement is
hereby waived), to specific performance and injunctive or other equitable relief
as a remedy for any such breach. Such remedy shall not be deemed to be the
exclusive remedy for any such breach of this agreement but shall be in addition
to all other remedies available at law or equity. Each Company also agrees to
reimburse the other Company for all reasonable costs and expenses, including
reasonable attorney's fees, incurred by it in enforcing the obligations owed to
it hereunder.
Each party hereto hereby irrevocably and unconditionally submits to the
jurisdiction of any court sitting in Delaware or any federal court sitting in
Delaware for purposes of any suit, action or
Harvest Partners, Inc.
Xxxx International Holdings, Inc.
October 31, 1997
Page 7
other proceeding arising out of this agreement (and each party agrees not to
commence any action, suit or proceeding relating thereto except in such courts)
and agrees that service of any process, summons, notice or document by U.S.
registered mail to its address set forth above or below shall be effective
service of process for any action, suit or proceeding brought against it in any
such court. Each party hereby irrevocably and unconditionally waives any
objection to the laying of venue of any action, suit or proceeding arising out
of this agreement or of the transactions contemplated hereby, in the courts of
Delaware or any federal court sitting in Delaware and hereby further irrevocably
and unconditionally waives and agrees not to plead or claim in any such court
that any such action, suit or proceeding brought in any such court has been
brought in an inconvenient forum.
Each Company agrees that unless and until a definitive written agreement
with respect to any Transaction has been executed and delivered, neither Company
will be under any legal obligation of any kind whatsoever with respect thereto
except, in the case of this agreement, for the matters specifically agreed to
herein. The agreement set forth in this letter may be modified or waived only by
a separate writing by each party which expressly modifies or waives such
agreement.
Xxxx acknowledges and agrees that Deflecta reserves the right, in its sole
discretion, to reject any and all proposals made by Xxxx or any of its
Representatives regarding a proposed transaction and to terminate discussions
and negotiations with Xxxx and its Representatives at any time. Xxxx further
acknowledges that if the Board of Directors of Deflecta determines to pursue a
transaction, it may establish procedures and guidelines for the submission of
proposals with respect to any transaction with or involving Deflecta, its
affiliates or their respective securities, businesses or assets if and as it in
its sole discretion shall determine (including, without limitation, negotiating
with any other parties and entering into a definitive agreement without prior
notice to Xxxx, its Representatives or any other persons), and any procedures
relating to such process or transaction may be changed at any time without
notice to Xxxx, its Representatives or any other persons.
Each party hereto hereby acknowledges that it is aware and will advise its
Representatives who are informed as to matters which are the subject of this
agreement, that the United States securities laws prohibit any person who has
received from an issuer material, non-public information from purchasing or
selling securities of such issuer or from communicating such information to any
other person under circumstances in which it is reasonably foreseeable that such
person is likely to purchase or sell such securities. Each party hereto further
acknowledges that it is aware of the provisions of the Xxxxxxx Xxxxxxx and
Securities Fraud Enforcement Act of 1988 and will take precautions adequate to
protect the interests of the other parties in that regard.
It is understood and agreed that no failure or delay by any party hereto,
its affiliates or any party described in paragraph number 6 above in exercising
any right, power or privilege hereunder
Harvest Partners, Inc.
Xxxx International Holdings, Inc.
October 31, 1997
Page 8
shall operate as a waiver thereof, nor shall any single or partial exercise
thereof preclude any other or further exercise of any right, power or privilege
hereunder.
In the event any provision of this agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions of this agreement shall not in any way be affected or impaired
thereby. The parties hereto acknowledge that the limitations on disclosure of
Confidential Material imposed by this agreement are reasonable and necessary for
the protection of the Companies' interests. If a court of competent jurisdiction
finally determines that any such limitation is unreasonable, each party hereby
submits to a reduction of such limitation so that it is enforceable against it
to the maximum extent permissible under law.
This agreement shall inure to the benefit of any purchaser of all or
substantially all of the assets of a Company as well as any person that may
acquire after the date hereof any subsidiary or division of a Company with
respect to Confidential Material concerning the business or affairs of such
subsidiary or division. This agreement amends, restates and supersedes the
agreement dated October 9, 1997 among the parties hereto.
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 the same
agreement.
This agreement shall be governed and construed in accordance with the laws
of the State of Delaware.
Harvest Partners, Inc.
Xxxx International Holdings, Inc.
October 31, 1997
Page 9
If you are in agreement with the foregoing, please sign and return one
copy of this letter which will constitute our agreement with you and your
affiliates with respect to the subject matter of this letter. Should you have
any questions, please feel free to call Xxxxxxx X. Xxxxxxxxx, President and
Chief Executive Officer, at (000) 000-0000.
Very truly yours,
DEFLECTA-SHIELD CORPORATION
By: /s/ Xxxxxx X. Xxx
-------------------------
Name: Xxxxxx X. Xxx
Title: Vice President
ACCEPTED AND AGREED:
HARVEST PARTNERS, INC.
By: /s/ Xxx X. Xxxxxxxx
--------------------------
Name: Xxx X. Xxxxxxxx
Title: General Partner
XXXX INTERNATIONAL HOLDINGS, INC.
By: /s/ Xxx X. Xxxxxx
--------------------------
Name: Xxx X. Xxxxxx
Title: CFO
