Exhibit 2.1
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MERGER AGREEMENT
AMONG
PERSONAL CARE HOLDINGS, INC.
X.X. CHILDS EQUITY PARTNERS, L.P.
PLAYTEX PRODUCTS, INC.
AND
PCG ACQUISITION CORP.
DATED AS OF DECEMBER 22, 1997
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TABLE OF CONTENTS
Page
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
ARTICLE 1 DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . .2
1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . .2
ARTICLE 2 THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . .9
2.1 Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
2.2 Effective Time . . . . . . . . . . . . . . . . . . . . . . . . 10
2.3 Certificate of Incorporation . . . . . . . . . . . . . . . . . 10
2.4 By-laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.5 Officers and Directors . . . . . . . . . . . . . . . . . . . . 11
2.6 Effect of Merger . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE 3 CONVERSION . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.1 Conversion . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.2 Exchange of Certificates . . . . . . . . . . . . . . . . . . . 16
3.3 Exchange Procedures. . . . . . . . . . . . . . . . . . . . . . 16
3.4 Letter of Transmittal. . . . . . . . . . . . . . . . . . . . . 17
3.5 No Further Ownership Rights in Target Common Stock . . . . . . 17
ARTICLE 4 DISSENTING STOCKHOLDERS. . . . . . . . . . . . . . . . . . . . 18
4.1 Election . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.2 Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF TARGET . . . . . . . . . . . 19
5.1 Organization and Qualification . . . . . . . . . . . . . . . . 19
5.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . 19
5.3 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.4 Binding Obligation . . . . . . . . . . . . . . . . . . . . . . 20
5.5 No Defaults or Conflicts . . . . . . . . . . . . . . . . . . . 21
5.6 No Governmental Authorization or Consent Required. . . . . . . 22
5.7 Title to Properties; Liens . . . . . . . . . . . . . . . . . . 22
5.8 Real Estate. . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.9 Know-How, Trademarks, Patents, Copyrights, Etc.. . . . . . . . 25
5.10 Financial Statements . . . . . . . . . . . . . . . . . . . . . 26
5.11 Absence of Certain Changes or Events . . . . . . . . . . . . . 27
5.12 Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.13 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.14 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.15 Permits. . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
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5.16 Employment Matters . . . . . . . . . . . . . . . . . . . . . . 34
5.17 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . 35
5.18 Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.19 Environmental Compliances. . . . . . . . . . . . . . . . . . . 38
5.20 Employee Relations . . . . . . . . . . . . . . . . . . . . . . 38
5.21 Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . 38
5.22 Suppliers and Customers. . . . . . . . . . . . . . . . . . . . 39
5.23 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . 40
5.24 Transactions with Affiliates . . . . . . . . . . . . . . . . . 41
5.25 Full Disclosure. . . . . . . . . . . . . . . . . . . . . . . . 41
5.26 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE 6 REPRESENTATIONS AND WARRANTIES
OF THE PRINCIPAL STOCKHOLDER . . . . . . . . . . . . . . . . . 42
6.1 Full Disclosure. . . . . . . . . . . . . . . . . . . . . . . . 42
6.2 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . 42
6.3 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE 7 REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND SUBSIDIARY TO TARGET. . . . . . . . . . . . 43
7.1 Organization; Standing and Power . . . . . . . . . . . . . . . 43
7.2 Articles of Incorporation and By-Laws. . . . . . . . . . . . . 43
7.3 Capital Structure. . . . . . . . . . . . . . . . . . . . . . . 43
7.4 Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . 44
7.5 SEC Documents; Financial Statements. . . . . . . . . . . . . . 46
7.6 Compliance with Applicable Laws. . . . . . . . . . . . . . . . 48
7.7 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . 48
7.8 Absence of Certain Changes or Events . . . . . . . . . . . . . 49
7.9 Full Disclosure. . . . . . . . . . . . . . . . . . . . . . . . 49
7.10 Financing Commitments. . . . . . . . . . . . . . . . . . . . . 50
7.11 Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
7.12 Certain Actions. . . . . . . . . . . . . . . . . . . . . . . . 50
7.13 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE 8 REPRESENTATIONS AND WARRANTIES OF THE
COMPANY AND SUBSIDIARY TO TARGET STOCKHOLDERS
8.1 Full Disclosure. . . . . . . . . . . . . . . . . . . . . . . . 51
8.2 Validity of Stock Consideration. . . . . . . . . . . . . . . . 52
ARTICLE 9 COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . 52
9.1 Conduct of Business of the Acquired Companies. . . . . . . . . 52
9.2 Access to Information; Confidentiality . . . . . . . . . . . . 52
9.3 Publicity. . . . . . . . . . . . . . . . . . . . . . . . . . . 53
9.4 Filings and Authorizations . . . . . . . . . . . . . . . . . . 53
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9.5 Notice of Events . . . . . . . . . . . . . . . . . . . . . . . 54
9.6 Further Assurances . . . . . . . . . . . . . . . . . . . . . . 55
9.7 Notice to Stockholders . . . . . . . . . . . . . . . . . . . . 55
9.8 No Section 338 Election. . . . . . . . . . . . . . . . . . . . 55
9.9 Affiliate Transactions . . . . . . . . . . . . . . . . . . . . 55
9.10 Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . 56
9.11 Indemnification of Directors and Officers. . . . . . . . . . . 56
9.12 Solvency Opinion . . . . . . . . . . . . . . . . . . . . . . . 57
ARTICLE 10 CONDITIONS PRECEDENT TO
OBLIGATIONS OF THE COMPANY AND SUBSIDIARY . . . . . . . . . . 57
10.1 Representations and Warranties Accurate. . . . . . . . . . . . 57
10.2 Performance. . . . . . . . . . . . . . . . . . . . . . . . . . 58
10.3 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . 58
10.4 Other Agreements . . . . . . . . . . . . . . . . . . . . . . . 58
10.5 Corporate Matters. . . . . . . . . . . . . . . . . . . . . . . 58
10.6 HSR Act: Authorizations; Legal Prohibition. . . . . . . . . . 58
10.7 No Injunction. . . . . . . . . . . . . . . . . . . . . . . . . 59
10.8 Legal Opinion. . . . . . . . . . . . . . . . . . . . . . . . . 59
ARTICLE 11 CONDITIONS PRECEDENT TO OBLIGATIONS OF TARGET . . . . . . . . 59
11.1 Representations and Warranties Accurate. . . . . . . . . . . . 59
11.2 Performance by Others. . . . . . . . . . . . . . . . . . . . . 59
11.3 Certificate. . . . . . . . . . . . . . . . . . . . . . . . . . 60
11.4 Other Agreements.. . . . . . . . . . . . . . . . . . . . . . . 60
11.5 HSR Act: Authorization; Legal Prohibition. . . . . . . . . . . 60
11.6 No Injunction. . . . . . . . . . . . . . . . . . . . . . . . . 60
11.7 Legal Opinion. . . . . . . . . . . . . . . . . . . . . . . . . 60
ARTICLE 12 INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . 61
12.1 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . 61
12.2 Notice and Opportunity to Defend.. . . . . . . . . . . . . . . 61
12.3 Limitations on Indemnifications. . . . . . . . . . . . . . . . 63
ARTICLE 13 TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . 64
13.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . 64
13.2 Survival After Termination . . . . . . . . . . . . . . . . . . 65
ARTICLE 14 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 66
14.1 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
14.2 Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . 66
14.3 Survival of Representations and Warranties . . . . . . . . . . 66
14.4 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . 66
14.5 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
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14.6 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
14.7 Severability . . . . . . . . . . . . . . . . . . . . . . . . . 69
14.8 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
14.9 Binding Effect; Assignment . . . . . . . . . . . . . . . . . . 69
14.10 No Third Party Beneficiary. . . . . . . . . . . . . . . . . . 69
14.11 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . 70
14.12 Governing Law and Jurisdiction. . . . . . . . . . . . . . . . 70
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MERGER AGREEMENT
MERGER AGREEMENT (the "Agreement"), dated as of December 22, 1997,
among Playtex Products, Inc., a Delaware corporation (the "Company"), PCG
Acquisition Corp., a wholly-owned subsidiary of the Company and a Delaware
corporation ("Subsidiary"), X.X. Childs Equity Partners L.P., a Delaware limited
partnership (the "Principal Stockholder") and Personal Care Holdings Inc., a
Delaware corporation ("Target").
RECITALS
WHEREAS, subject to the terms and conditions of this Agreement, each
of the boards of directors of the Company, Subsidiary and Target have approved
the merger (the "Merger") of Target into Subsidiary, on the terms set forth in
this Agreement; and
WHEREAS, in furtherance of the consummation of the Merger and
transactions contemplated herein, the parties hereto desire to enter into this
Agreement;
NOW, THEREFORE, in consideration of and premised upon the various
representations, warranties, covenants and other agreements of the Company,
Subsidiary, the Principal Stockholder and Target contained in this Agreement,
and other good and valuable consideration, the receipt and sufficiency of which
is hereby
acknowledged, the Company, Subsidiary, the Principal Stockholder and Target
agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions. (a) The following terms, whenever used herein,
shall have the following meanings for all purposes of this Agreement.
"Acquired Companies" means each of Target and each Target Subsidiary.
"Antitrust Law" means any law of the United States governing
competition, monopolies or restrictive trade practices, including without
limitation, the Xxxxxxx Act, the Xxxxxxx Act, the Federal Trade Commission Act
and the HSR Act, in each case including any rules and regulations thereunder.
"Balance Sheet" means the audited consolidated balance sheet of Target
as at March 29, 1997.
"Balance Sheet Date" means March 29, 1997.
"Business Day" means any day that is not a Saturday, Sunday or other
day on which banking institutions in New York are authorized or required by law
or executive order to close.
"Cash Consideration" means $91,000,000 minus the aggregate amount of
Indebtedness of the Acquired Companies as of the Effective Time.
"Cash Consideration Per Share" means the amount determined by dividing
(a) the Cash Consideration by (b) the number of shares of Target Common
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Stock outstanding as of the Effective Time except as otherwise set forth in
Section 3.1(b).
"Closing Company Stock Price" means the average daily closing price
for shares of Company Common Stock quoted on The New York Stock Exchange for the
period of ten Business Days ending on the Business Day that is three Business
Days prior to the Effective Date.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company Common Stock" means the common stock, par value $0.01, of the
Company.
"Consideration Per Share" means (i) the Cash Consideration Per Share
plus (ii) the Stock Consideration Per Share.
"Environmental Claims" means any and all administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigations or proceedings arising under any
Environmental Law.
"Environmental Laws" means any United States (or other applicable
jurisdiction's) federal, state, local or municipal statute, law, rule,
regulation, ordinance, code, policy or rule of common law and any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, relating to the environment, (including
without limitation air, surface water, ground water, surface or subsurface land
and plant and animal life) health or safety, or to any chemical, material or
substance, the generation, release, transportation,
3
disposal, storage, processing, handling or exposure to which is prohibited,
limited or regulated by any Governmental Authority.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Financial Statements" means (i) the consolidated balance sheet of
Target as at March 29, 1997 and the related consolidated statements of
operations and cash flows, stockholders' investment and changes in financial
position of Target for the year ended March 29, 1997, certified by KPMG Peat
Marwick LLP, independent certified public accountants, whose opinion thereon is
included therewith, together with the notes and schedules thereto and (ii) the
consolidated balance sheet of Target as of November 22, 1997 and the related
consolidated statement of operations and cash flows, stockholders' investment
and changes in financial position of Target for the eight months ended November
22, 1997.
"GAAP" means generally accepted accounting principles.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administration functions of or pertaining
to government, including the Securities Exchange Commission ("SEC") or any other
government authority, agency, department, board, commission or instrumentality
of the United States, any foreign government, any state of the United States or
any political subdivision thereof, and any court, tribunal or arbitrator(s) of
competent jurisdiction, and any governmental or non-governmental self-regulatory
organization, agency or authority.
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"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended, and the rules and regulations thereunder.
"Indebtedness" means, without duplication, (i) all indebtedness of or
any obligation of any of the Acquired Companies for borrowed money, whether
current, short-term, or long-term, secured or unsecured, (ii) all indebtedness
of any Acquired Company for the deferred purchase price for purchases of
property (other than trade payables which are not overdue by more than 90 days),
(iii) all indebtedness of any Acquired Company created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by any Acquired Company, (iv) all lease obligations of any Acquired
Company under leases which are capital leases in accordance with GAAP, (v) all
off-balance sheet financings including, without limitation, synthetic leases and
other similar financing arrangements, (vi) any payment obligations of any
Acquired Company in respect of banker's acceptances or letters of credit (other
than stand-by letters of credit in support of ordinary course trade payables),
(vii) any liability of any Acquired Company with respect to interest rate swaps,
collars, caps and similar obligation, (viii) any debt of any Acquired Company
paid or prepaid since November 22, 1997, which payment or prepayment is a breach
of the representations and warranties set forth in Section 5.11 or in violation
of Section 9.1, (ix) obligations of any Acquired Company under the Personal Care
Holdings, Inc. Long-Term Incentive Plan (the "Long-Term Plan"); (x) obligations
of any Acquired Company to make any severance payments to the persons identified
on Schedule 1.1(a) pursuant to arrangements with Target or any Acquired Company;
(xi) present, future or contingent obligations of any Acquired Company (other
than those obligations under
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the Personal Care Group, Inc. 1996 Management Incentive Plan, the Sales
Incentive Plan or bonus arrangements with employees of any Acquired Company
other than the President and Chief Executive Officer of Target, which are being
satisfied by the Surviving Corporation pursuant to Section 9.10) under (A) any
phantom stock or similar equity appreciation rights, plan or agreement, (B) any
consulting, deferred pay-out or earn-out arrangements in connection with the
purchase of any business or entity or (C) any non-competition agreement,
(xii) any accrued and unpaid interest or other charges (including any
contractual prepayment premiums, penalties or similar charges resulting from the
transactions contemplated hereby or the discharge of such obligations) with
respect to any of the foregoing and (xiii) the excess, if any, of the Acquired
Companies' Transaction Costs over $1,600,000 (where the "Acquired Companies'
Transaction Costs" means an amount equal to all costs or expenses incurred by
the Acquired Companies in connection with the transactions contemplated hereby,
including legal fees and disbursements, Xxxx Xxxxx Xxxxxx filing fees incurred
by the Principal Stockholder and any other payments to any broker, finders,
agents or similar intermediary). Indebtedness shall be reduced by all cash and
cash equivalents held by Target as of the Effective Date. Indebtedness will be
increased by the amount of severance obligation to any of the three employees
listed on Schedule 1.1(a)(i) pursuant to the letters described therein which
severance obligation arises from or is triggered by the Company's or
Subsidiary's failure to employ any such employee at the Effective Time, if such
severance obligation is in excess of the Company's standard severance policy and
then only to the extent of such excess. The amount of any such excess severance
obligation which is to be added to Indebtedness will be calculated as
6
of the Effective Time as far in advance thereof as practicable. No severance
obligation under such aforesaid letters arising from any action or omission of
the Company or Subsidiary after the Effective Time shall be added to
Indebtedness.
"IRS" means the United States Internal Revenue Service.
"Knowledge" means the actual knowledge of (x) in the case of Target,
the persons listed on Schedule 1.1(b), and (y) in the case of the Company or
Subsidiary, the persons listed on Schedule 1.1(c).
"Lien" means any lien, pledge, mortgage, deed of trust, security
interest, claim, lease, license, charge, option, right of first refusal,
easement, servitude, transfer restriction, encumbrance or any other restriction
or limitation whatsoever.
"Material Adverse Effect" means a material adverse effect upon the
business, results of operations, properties, assets or condition (financial or
otherwise) of the Acquired Companies taken as a whole or of the Company and its
subsidiaries taken as a whole, as the case may be.
"Pension Plan" means each "employee pension benefit plan," as defined
in Section 3(2) of ERISA, which is sponsored by any Acquired Company with
respect to past and/or present employees of any Acquired Company.
"person" means any individual, corporation, partnership, limited
liability company, firm, joint venture, association, joint-stock company, trust,
unincorporated organization or other entity.
"Registration Rights Agreement" means the agreement so called, to be
executed on the Effective Date, among the Company and the Principal Stockholder.
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"Stock Consideration" means, if the Closing Company Stock Price is
(a) equal to or less than $12.50, 9,257,375 shares of Company Common Stock, or
(b) greater than $12.50, a number of shares of Company Common Stock derived by
dividing $115,720,000 by the Closing Company Stock Price.
"Stock Consideration Per Share" means a number of shares equal to
(a) the Stock Consideration divided by (b) the number of shares of Target Common
Stock outstanding as of the Effective Time except as otherwise set forth in
Section 3.1(b).
"Stockholders Agreement" means the agreement so called, to be executed
on the Effective Date, among the Company and the Principal Stockholder.
"Target Common Stock" means the common stock, par value $.01 per
share, of Target.
"Target Subsidiary" means an entity which Target directly or
indirectly owns or has the power to vote shares of any capital stock or other
ownership interests having voting power to elect a majority of the directors of
such entity, or other persons performing similar functions of such entity, as
the case may be.
"Taxes" means (i) any federal, state, local, foreign or other net
income, gross income, property (real or personal), sales, use, license,
franchise, employment, payroll, withholding, transfer, stamp or other tax,
custom, duty or other governmental charge, together with any interest, penalty
or addition to tax with respect thereto and (ii) any liability of any Acquired
Company for the payment of any amount described in clause (i) as a result of
such Acquired Company being a member of an affiliated or
8
combined group with, or a successor to, or guarantor or transferee of, any other
person.
"Tax Return" means any return, report, statement, form or other
information required to be filed with respect to any Taxes.
"Welfare Plan" means (i) each "employee welfare benefit plan," as
defined in Section 3(1) of ERISA; (ii) any stock option, incentive, or deferred
compensation or bonus plan or arrangement; and (iii) any severance plan or
arrangement, in each case which is sponsored by any Acquired Company with
respect to past and/or present employees of any Acquired Company.
(b) The following terms shall have the meanings specified in the
indicated section of this Agreement:
Term Section
---- ------------
Agreement ............................. Recitals
Branded Products ...................... Section 5.11
Cashless Exercise Option
Shares ................................ Section 3.1
Cashless Exercise Price ............... Section 3.1
Company ............................... Recitals
Company Permits........................ Section 7.6
Company 1996 Financial Statements ..... Section 7.8
Constituent Corporations .............. Section 2.1
DGCL .................................. Section 2.1
Dissenting Stockholder ................ Section 4.1
Effective Date ........................ Section 2.2
Effective Time ........................ Section 2.2
Improvements .......................... Section 5.8
Leased Real Property .................. Section 5.8
Indemnified Party ..................... Section 12.2
Indemnifying Party .................... Section 12.2
Leases ................................ Section 5.8
Letter of Transmittal ................. Section 3.4
Liabilities ........................... Section 5.21
Losses ................................ Section 12.1
Merger ................................ Recitals
Merger Expenses ....................... Section 14.1
Owned Real Property ................... Section 5.8
Permits ............................... Section 5.15
Permitted Encumbrances ................ Section 5.7
Principal Stockholder ................. Recitals
Proprietary Information ............... Section 9.2
Real Property ......................... Section 5.8
Stock Plan ............................ Section 7.3
Subsidiary ............................ Recitals
Subsidiary Common Stock ............... Section 3.1
Surviving Corporation ................. Section 2.1
Surviving Corporation By-laws ......... Section 2.4
Surviving Corporation Certificate ..... Section 2.3
Surviving Corporation Common Stock .... Section 3.1
Target ................................ Recitals
Target Options ........................ Section 3.1
Title Defect .......................... Section 5.8
(c) All references herein to dollars or "$" shall be to
United States dollars.
ARTICLE 2
THE MERGER
2.1 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"), at the Effective Time, Target shall be merged
with and into Subsidiary, whereupon Subsidiary shall continue as the
surviving corporation (sometimes referred to herein as the "Surviving
Corporation") and the separate corporate existence of Target shall cease.
Target and Subsidiary are sometimes referred to herein, collectively, as the
"Constituent Corporations".
2.2 Effective Time. (a) The Merger shall be effective when a properly
executed certificate of merger (together with any other documents,
certificates and instruments required by law to effectuate and consummate the
Merger) shall be filed with the Secretary of State of the State of Delaware
(or at such other time as shall be specified in such certificate of merger),
which filing shall be made as soon as practicable after satisfaction of the
conditions set forth in Articles 10 and 11.
(b) When used herein, the term "Effective Time" shall mean the
date and time at which the Merger becomes effective and the term "Effective
Date" shall mean the date upon which the Effective Time occurs.
(c) Target, the Company and Subsidiary shall use reasonable best
efforts to consummate the Merger no earlier than the fifth or later than the
fifteenth Business Day following notification by Target, the Company and
Subsidiary that the condition set forth in Section 10.6 shall have been
satisfied, provided that at
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such time all other conditions necessary to be satisfied by Target, the Company
and Subsidiary have been satisfied or waived in accordance with Articles 10 and
11.
2.3 Certificate of Incorporation. The Certificate of Incorporation
of Subsidiary in effect immediately prior to the Effective Time shall be the
Certificate of Incorporation of the Surviving Corporation (the "Surviving
Corporation Certificate"), unless and until amended as provided by the Surviving
Corporation Certificate or by law.
2.4 By-laws. The By-laws of Subsidiary in effect immediately prior
to the Effective Time shall be the By-laws of the Surviving Corporation (the
"Surviving Corporation By-laws") unless and until altered, amended or repealed
as provided by law, the Surviving Corporation Certificate or the Surviving
Corporation By-laws.
2.5 Officers and Directors. The officers of Subsidiary immediately
prior to the Effective Time shall be the officers of the Surviving Corporation
until their successors shall have been duly elected and qualified, or as
otherwise provided in the Surviving Corporation By-laws. The directors of
Subsidiary shall be the directors of Surviving Corporation until their
successors shall have been duly elected and qualified, or as otherwise provided
in the Surviving Corporation Certificate, the Surviving Corporation By-laws or
as otherwise provided by applicable law.
2.6 Effect of Merger. (a) At the Effective Time, the Merger shall
have the effects set forth in Section 259 of the DGCL. Without limiting the
generality of the foregoing, and subject thereto: (i) the Surviving Corporation
shall possess all the rights, privileges, powers and franchises, of a public and
private nature, and shall be subject to all the restrictions, disabilities and
duties of each of the Constituent
11
Corporations; (ii) all property, real, personal and mixed, and all debts due to
either Constituent Corporation on whatever account, including all choses in
action and other things belonging to the Constituent Corporations, shall be
vested in the Surviving Corporation; (iii) all property, rights, privileges,
powers and franchises, and every other interest of each of the Constituent
Corporations shall be, from and after the Effective Date, the property of the
Surviving Corporation and the title to any real estate vested by deed or
otherwise in the Constituent Corporations shall not revert or be impaired in any
way by this Agreement or the Merger provided for herein, but all rights of
creditors and all liens upon any property of either Constituent Corporation
shall be preserved unimpaired, and all debts, liabilities and duties of the
Constituent Corporations shall, from and after the Effective Time, attach to and
become the debts, liabilities and duties of the Surviving Corporation, and may
be enforced against the Surviving Corporation to the same extent as if said
debts, liabilities and duties had been incurred or contracted by the Surviving
Corporation; and (iv) all transfers vesting in the Surviving Corporation
referred to herein shall be deemed to occur by operation of law and no consent
or approval of any other person shall be required in connection with any such
transfer or vesting unless such consent or approval is specifically required in
the event of merger or consolidation by law or express provision of any
contract, agreement, decree, order or other instrument to which either or both
of the Constituent Corporations is a party or is bound.
(b) The Surviving Corporation shall assume and be liable for all
the liabilities, obligations and penalties of each of the Constituent
Corporations. No liability or obligation due or to become due, and no claim or
demand for any cause
12
existing against either Constituent Corporation or any stockholder, officer or
director thereof, shall be released or impaired by the Merger. No action or
proceeding, whether civil or criminal, then pending by or against either
Constituent Corporation or any stockholder, officer or director thereof, shall
xxxxx or be discontinued by the Merger, but may be enforced, prosecuted, settled
or compromised as if the Merger had not occurred. The Surviving Corporation may
be substituted in any such action or special proceeding in place of either
Constituent Corporation.
(c) At the Effective Time, the accounting entries with respect
to the assets, liabilities, capital, surplus and any and all other items of the
Constituent Corporations shall be taken up on the books of the Surviving
Corporation at the amounts which they, respectively, are then carried on the
books of said Constituent Corporations, subject to such adjustments as may be
appropriate in giving effect to the Merger.
(d) The employees of the Acquired Companies and Subsidiary shall
become the employees of the Surviving Corporation.
ARTICLE 3
CONVERSION
3.1 Conversion. The manner and basis of converting the shares of
common stock of each of the Constituent Corporations, and the consideration that
the holders of such shares shall receive are as follows:
(a) At the Effective Time, by virtue of the Merger and without
any action on the part of the holder thereof, each share of Target Common
13
Stock issued and outstanding immediately prior to the Effective Time (other than
shares as to which appraisal rights have not been forfeited under the DGCL, if
an effective notice of exercise of appraisal rights with respect to such shares
under Section 262 of the DGCL was required and given prior to the Effective
Time) shall be converted into the right to receive the Consideration Per Share.
All certificates or other instruments representing shares of Target Common Stock
issued and outstanding immediately prior to the Effective Time shall, by virtue
of the Merger, cease to have any rights with respect to such certificates except
the right to receive, upon surrender thereof, the Consideration Per Share
represented thereby. At the Effective Time, each share of Target Common Stock
issued and outstanding prior to the Effective Time (all of which shares will be
converted into the right to receive the Consideration Per Share) shall be
canceled and retired and shall cease to exist.
(b) Schedule 3.1(b) sets forth as of the date hereof a list of
the outstanding stock options issued by Target ("Target Options"). It is
contemplated herein that Target will enable the holders of the Target Options
which are or become vested at or prior to the Effective Time to exercise such
Target Options, to the extent vested, by means of a deemed exercise whereby the
exercise price of the Target Options with respect to which the holders thereof
have indicated they wish to elect cashless exercise (the "Cashless Exercise
Price") will be deducted from the portion of the Cash Consideration and Stock
Consideration as would otherwise be distributable to such holders had they paid
the exercise price of the Target Options in full and acquired shares of Target
Common Stock prior to the Effective Time. Such deduction for the Cashless
Exercise Price shall be allocated between the Cash Consideration Per Share
14
and the Stock Consideration Per Share according to the relative proportions of
the aggregate Cash Consideration and the aggregate Stock Consideration (valued
at the Closing Company Stock Price) delivered in the Merger. The amount of such
Cashless Exercise Price allocated to the Cash Consideration Per Share, as
aforesaid, is called the "Cash Portion of the Cashless Exercise Price," and that
allocated to the Stock Consideration Per Share is called the "Stock Portion of
the Cashless Exercise Price." The Company will effect any required tax
withholding in respect of the foregoing and make appropriate charges to the
exercising holders. The aggregate number of shares of Target Common Stock
subject to Target Options with respect to which cashless exercise elections as
aforesaid shall have been made at the Effective Time shall be called the
"Cashless Exercise Option Shares." If, at the Effective Time, there are any
Cashless Exercise Option Shares, the calculation of the "Cash Consideration per
Share" shall be changed to mean the amount determined by dividing (a) the Cash
Consideration plus the Cash Portion of the Cashless Exercise Price of all of the
Cashless Exercise Option Shares by (b) the number of shares of Target Common
Stock outstanding as of the Effective Time, including, without limitation, all
of the Cashless Exercise Option Shares, and the calculation of "Stock
Consideration Per Share" shall be changed to mean the amount determined by
dividing (x) the Stock Consideration plus the Stock Portion of the Cashless
Exercise Price of all of the Cashless Exercise Option Shares by (y) the number
of shares of Target Common Stock outstanding as of the Effective Time,
including, without limitation, all of the Cashless Exercise Option Shares. All
Target Options not exercised at or prior to the Effective Time shall
15
terminate at the Effective Time. Notices of exercise in respect of Cashless
Exercise Option Shares shall be void if the Effective Time does not occur.
(c) At the Effective Time, each share of common stock, par value
$.01 per share, of Subsidiary (the "Subsidiary Common Stock"), issued and
outstanding immediately prior to the Effective Time, shall be converted into,
and become the right to receive, one (1) share of the common stock, par value
$.01 per share, of the Surviving Corporation (the "Surviving Corporation Common
Stock"), by virtue of the Merger and without any action on the part of the
holder thereof. Immediately upon such conversion into shares of the Surviving
Corporation Common Stock, each share of Subsidiary Common Stock shall be
canceled and retired and shall cease to exist.
(d) Each share of Common Stock which is held in the treasury of
Target, at the Effective Time, shall, by virtue of the Merger and without
further action, be canceled and retired and shall cease to exist.
(e) As of the Effective Time, the stock transfer books of Target
shall be closed.
3.2 Exchange of Certificates. As of the Effective Time, the Company
shall (a) make payment of the Cash Consideration Per Share, all in cash in
immediately available same day funds, for the benefit of the holders of shares
of Target Common Stock, and (b) issue and deliver the Stock Consideration.
3.3 Exchange Procedures. At the Effective Time, each holder of an
outstanding certificate or certificates which, prior thereto, represented shares
of Target Common Stock shall, upon surrender to the Surviving Corporation of
such certificate
16
or certificates together with a Letter of Transmittal, be entitled to the
Consideration Per Share for each share of Target Common Stock represented by
such certificate or certificates so surrendered. If the Consideration Per Share
is to be paid to any person other than the person in whose name the certificate
representing shares of Target Common Stock surrendered in exchange therefor is
registered, it shall be a condition to such exchange that the certificate so
surrendered shall be properly endorsed or otherwise be in proper form for
transfer and that the person requesting such exchange shall pay to the Surviving
Corporation any transfer or other taxes required by reason of the payment of
such consideration to a person other than the registered holder of the
certificate surrendered, or shall establish to the reasonable satisfaction of
the Surviving Corporation that such tax has been paid or is not applicable.
Subsequent to the Effective Time, there shall be no further transfer on the
records of Target or its transfer agent of certificates representing shares of
Target Common Stock. Until surrendered as contemplated by this Section 3.3,
each certificate representing shares of Target Common Stock (other than
certificates representing shares which are to be canceled in accordance with
Section 3.1(d) or shares of Target Common Stock of Dissenting Stockholders)
shall be deemed at any time after the Effective Time to represent only the right
to receive upon such surrender the Consideration Per Share, as contemplated by
Section 3.1(a). No interest will be paid or will accrue on any cash payable as
Cash Consideration Per Share but shares of Company Common Stock to be issued as
Stock Consideration will be deemed to be issued on the Effective Date and
accumulate dividends and other rights to distributions associated with such
shares (if any) from such date.
17
3.4 Letter of Transmittal. Prior to the Effective Time (but in no
event less than ten days prior thereto), Target shall mail to each record holder
of certificates that, immediately prior to the Effective Time, shall represent
shares of Target Common Stock a letter of transmittal (a "Letter of
Transmittal") and instructions for use in surrendering such certificates and
receiving the consideration to which such holder shall be entitled therefor
pursuant to the terms of Section 3.1.
3.5 No Further Ownership Rights in Target Common Stock. The
Consideration Per Share paid upon the surrender for exchange of certificates
representing shares of Target Common Stock in accordance with the terms of this
Article 3 shall be deemed to be full satisfaction of all rights pertaining to
the shares of Target Common Stock theretofore represented by such certificates.
ARTICLE 4
DISSENTING STOCKHOLDERS
4.1 Election. The provisions of Article 3 to the contrary
notwithstanding, any shares of Target Common Stock as to which the holder
thereof shall have properly demanded appraisal in accordance with the
requirements of Section 262 of the DGCL (any holder duly making such demand is
referred to herein as a "Dissenting Stockholder") shall not be converted into
the right to receive the Consideration Per Share, unless and until such holder
shall have failed to perfect, or shall have effectively withdrawn or lost, the
right to appraisal of and payment for such shares of Target Common Stock under
Section 262 of the DGCL. In the event that a notice of exercise of appraisal
rights under Section 262 of the DGCL was not required
18
prior to the Effective Time, at such time as a holder of shares of Target Common
Stock subsequently properly demands appraisal rights, certificates for shares of
Target Common Stock as to which such appraisal rights are properly demanded (to
the extent such certificates have not theretofore surrendered pursuant to
Section 3.3) shall thereupon cease to represent the right to receive the
Consideration Per Share, and shall represent only the right to receive payment
for such shares under Section 262 of the DGCL.
4.2 Payment. Each Dissenting Stockholder who becomes entitled,
pursuant to the provisions of Section 262 of the DGCL, to payment of the value
of its shares of Target Common Stock shall receive payment therefor from the
Company (but only after the value thereof shall have been agreed upon or finally
determined pursuant to such provisions). If a Dissenting Stockholder fails to
perfect, or effectively withdraws or loses the right to receive payment for such
shares of Target Common Stock, pursuant to Section 262 of the DGCL, such
Dissenting Stockholder (to the extent the certificates representing such shares
have not theretofore been surrendered in accordance with Section 3.3) shall be
entitled to convert such shares of Target Common Stock as provided in
Section 3.1.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF TARGET
Target represents and warrants to the Company and Subsidiary as
follows:
19
5.1 Organization and Qualification. Each of the Acquired Companies
is a corporation duly incorporated, validly existing and in good standing under
the laws of the state of its organization, with corporate power and authority to
own its properties and carry on its business as presently owned or conducted,
and is in good standing as a foreign corporation and is duly licensed or
qualified to transact business in each jurisdiction set forth on
Schedule 5.1(a), which constitutes each jurisdiction in which the character of
its properties owned or leased, or the nature of its activities, makes such
qualification necessary except where failure to be so qualified, individually or
in the aggregate, would not have a Material Adverse Effect. None of the
Acquired Companies owns or leases property in any jurisdiction other than the
jurisdictions set forth on Schedule 5.1(b). Target has delivered to the Company
complete and correct copies of the Certificate of Incorporation, By-laws and
minute books, each as currently in effect, of each of the Acquired Companies.
5.2 Capitalization. (a) Schedule 5.2 sets forth the authorized,
outstanding and treasury capital stock of each Acquired Company. Except as set
forth on Schedule 5.2, there are no shares of Target Common Stock or other
equity securities of any Acquired Company issued, reserved for issuance or
outstanding and no outstanding options, warrants, convertible or exchangeable
securities, subscriptions, rights (including any preemptive rights), stock
appreciation rights, calls or commitments of any character whatsoever to which
such Acquired Company is a party or may be bound requiring the issuance or sale
of shares of any capital stock of such Acquired Company, and there are no
contracts or other agreements by which any Acquired Company is or may become
bound to issue additional shares of capital stock
20
or any options, warrants, convertible or exchangeable securities, subscriptions,
rights (including any preemptive rights), stock appreciation rights, calls or
commitments of any character whatsoever relating to such shares.
(b) All of the issued and outstanding shares of capital stock of
each Acquired Company have been duly authorized and validly issued and are fully
paid and non-assessable.
5.3 Subsidiaries. Each Target Subsidiary is listed on
Schedule 5.3(a). The outstanding shares of capital stock of each of the Target
Subsidiaries have been duly authorized and validly issued and are fully paid and
non-assessable and are owned by Target, directly, free and clear of any lien,
charge, encumbrance or other security interest other than such liens, charges,
encumbrances or other security interests set forth in Schedule 5.3(b).
5.4 Binding Obligation. This Agreement and the other agreements
being entered into herewith have been duly authorized and approved by the board
of directors of Target and the requisite number of stockholders of Target by
consent in lieu of a meeting and have been duly executed and delivered by Target
and, assuming that this Agreement and such other agreements constitute valid and
binding obligations of the Company and Subsidiary, this Agreement and such other
agreements constitute the legal, valid and binding obligations of Target,
enforceable against Target in accordance with their respective terms, except to
the extent that the enforceability thereof may be limited by: (i) applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
similar laws from time to time in effect affecting generally the enforcement of
creditors' rights and remedies; and (ii) general
21
principles of equity, including, without limitation, principles of
reasonableness, good faith and fair dealing (regardless of whether enforcement
is sought in equity or at law).
5.5 No Defaults or Conflicts. The execution and delivery of this
Agreement by Target and performance by Target of its obligations hereunder and
thereunder (i) do not and, as of the Effective Time, will not result in any
violation of the certificate of incorporation or by-laws of any Acquired
Company; and (ii) as of the Effective Time, will not conflict with, or result in
a breach of any of the terms or provisions of, or constitute a default under, or
result in the creation or imposition of any lien, charge or encumbrance upon any
property or assets of any Acquired Company under: (A) any indenture, mortgage
or loan agreement or any other agreement or instrument to which any Acquired
Company is a party or by which any Acquired Company may be bound or to which any
of the properties of any Acquired Company may be subject; or (B) any existing
applicable law, rule, regulation, judgment, order or decree of any Governmental
Authority having jurisdiction over any Acquired Company or any of the properties
of any Acquired Company, other than such consents, approvals, authorizations,
filings or notices as are set forth in Schedule 5.5.
5.6 No Governmental Authorization or Consent Required. Except for
the filing of the certificate of merger as contemplated by Section 2.2(a) and as
set forth in Schedule 5.6, no authorization or approval or other action by, and
no notice to or filing with, any Governmental Authority will be required to be
obtained or made by any Acquired Company in connection with the due execution
and delivery by Target of this Agreement and the consummation by Target of the
transactions contemplated hereby.
22
5.7 Title to Properties; Liens. (a) Each of the Acquired Companies
has good, sufficient and legal title to all its respective properties and assets
(except that this representation shall not apply to Real Property, which is
addressed in Section 5.8), free and clear of any Lien or encumbrances, except
for (a) Liens specifically described in the Financial Statements; (b) properties
disposed of, or subject to purchase and sales orders, in the ordinary course of
business since the Balance Sheet Date; (c) Liens securing Taxes, assessments,
governmental charges or levies, or the claims of materialmen, carriers,
landlords and like persons, all of which are not yet due and payable or are
being contested in good faith by appropriate proceedings, so long as such
contest does not involve any substantial risk of the sale, forfeiture or loss of
any material assets; and (d) Liens set forth in Schedule 5.7 (the Liens
described in the foregoing clauses (a) through (d) being collectively referred
to herein as "Permitted Encumbrances"). Except for Permitted Encumbrances, all
such properties and assets are free and clear of liens or encumbrances of any
kind.
(b) The inventories of the Acquired Companies located in the
United States and reflected on the Financial Statement net of appropriate
reserves under GAAP are of a quality and quantity consistent with the historical
practices of such Acquired Companies, are in good and marketable condition, and
are reasonably saleable in the ordinary course of business of the Acquired
Companies.
(c) The assets of the Acquired Companies include all of the
assets and services necessary, in all material respects, for the conduct by the
Acquired Companies of their business currently and through the Effective Date as
contemplated herein.
23
5.8 Real Estate. (a) An Acquired Company, as indicated upon Schedule
5.8(a), is the owner of good and insurable fee title to the land described on
Schedule 5.8(a) and to all of the buildings, structures and other improvements
located thereon (collectively, the "Owned Real Property") free and clear of all
Liens, restrictive covenants, encroachments or other defects ("Title Defects")
except for the matters listed on Schedule 5.8(a) and non-monetary encumbrances
of a minor nature that do not individually or in the aggregate interfere in any
material respect with, or materially increase the cost of, the use, occupancy or
operation of the applicable parcel of Owned Real Property as currently used,
occupied and operated. The Owned Real Property constitutes all of the real
property owned by the Acquired Companies.
(b) Schedule 5.8(b) is a true, correct and complete schedule of
all leases, subleases, licenses and other agreements (collectively, the
"Leases") under which any of the Acquired Companies uses or occupies or has the
right to use or occupy, now or in the future, any real property that is not
Owned Real Property (the land, buildings and other improvements covered by the
Real Property Leases being herein referred to as the "Leased Real Property").
Target has heretofore delivered to, or has caused the relevant Target Subsidiary
to deliver to, the Company true, correct and complete copies of all Leases
(including all modifications, amendments and supplements thereto). Each Lease
is valid, binding and in full force and effect, all rent and other sums and
charges payable by the relevant Acquired Company as tenant thereunder are
current, no notice of default or termination under any Lease is outstanding, and
no termination event or condition or uncured default on the part of the relevant
Acquired Company or, to the knowledge of Target and the relevant Target
24
Subsidiary, the applicable landlord, exists under any Lease. Except as set
forth on Schedule 5.8(b), each Acquired Company holds the leasehold estate and
interest in its Leases free and clear of all Liens.
(c) All of the land, buildings, structures and other
improvements used by the Acquired Companies in the conduct of their businesses
are included in the Owned Real Property and the Leased Real Property. The
Leased Real Property and the Owned Real Property are hereinafter collectively
referred to as the "Real Property." No person or entity other than the Acquired
Companies has any right to the possession, use, occupancy or enjoyment of the
Real Property or any portion thereof.
(d) To the Target's knowledge, all material components of all
buildings, structures, fixtures and other improvements in, on or within the Real
Property (the "Improvements"), including to the roofs, structural elements and
the building systems and facilities thereof, utilities serving the Real Property
are in generally good operating condition and repair, subject to continued
repair and replacement in accordance with past practice.
(e) None of the Acquired Companies has received notice of, and,
to the knowledge of Target and the relevant Target Subsidiary, there is not any
pending, threatened or contemplated condemnation proceeding affecting the Real
Property or any part thereof, and no sale or other disposition of the Real
Property or any part thereof in lieu of condemnation.
(f) No portion of the Real Property has suffered any material
damage by fire or other casualty which has not heretofore been completely
repaired and
25
restored. No portion of the Real Property is located in a special flood hazard
area as designated by Governmental Authority.
5.9 Know-How, Trademarks, Patents, Copyrights, Etc. Schedule 5.9
sets forth all patents, patent licenses, trademarks, service marks, trade names,
copyrights, franchises, all applications for any of the foregoing, and all
permits, grants and licenses or other rights running to or from the Acquired
Companies relating to any of the foregoing which are owned by the Acquired
Companies or used in the business of the Acquired Companies. Each of the
Acquired Companies owns, possesses or licenses adequate patents, patent
licenses, trademarks, service marks, copyrights, franchises and trade names
necessary to carry on its business as presently conducted. Except as set forth
on Schedule 5.9, none of the Acquired Companies has received any notice of
infringement of or conflict with asserted rights of others with respect to any
inventions, processes, know-how, formulas, trade secrets, patents, trademarks,
trade names, brand names and copyrights that are owned or used by, or licensed
to, any Acquired Company. To the knowledge of Target, except as set forth on
Schedule 5.9, none of the Acquired Companies is infringing or has infringed any
patent, trademark, service xxxx, trade name, copyright or franchise rights of
any third person or is using or has used without authorization any trade secret
process or confidential information of any third party. The patents, patent
licenses, trademarks, service marks, trade names, copyrights, licenses of the
foregoing and franchises set forth on Schedule 5.9 represent all of the patents,
patent licenses, trademarks, service marks, trade names, copyrights, licenses of
the foregoing and franchises used by, or
26
necessary to the operation of the businesses of, the Acquired Companies, as
currently conducted and are freely transferable thereby.
5.10 Financial Statements. (a) The consolidated balance sheets
included in the Financial Statements (copies of which have been provided to the
Company) present fairly the consolidated financial position of the Acquired
Companies as of their respective dates, and the other related statements
included in the Financial Statements present fairly the results of their
consolidated operations and cash flows for the years indicated, in each case in
accordance with GAAP applied on a consistent basis, with only such deviations
from such accounting principles and/or their consistent application as are
referred to in the notes to the Financial Statements and subject, in the case of
the unaudited interim statements, to the absence of footnotes and to normal
recurring audit adjustments, which are not individually or in the aggregate
material.
(b) All of the receivables reflected in the Financial Statements
were generated in the ordinary course of business of the relevant Acquired
Company consistent with past practice and, except for reserves and appropriate
trade provisions therein reflected (which reserves and trade provisions are
adequate), constitute valid, undisputed claims of the relevant Acquired Company
in the amounts reflected therein, not subject to valid claims of set-off or
counterclaim other than normal cash discounts accrued in the ordinary course of
business consistent with past practice.
5.11 Absence of Certain Changes or Events. Since the Balance Sheet
Date, except as set forth in Schedule 5.11 and except for the transactions
contemplated by this Agreement, there has not been: (a) any change, occurrence
or event which (individually or together with other changes, occurrences and
events) has had or is
27
likely to have a Material Adverse Effect; (b) any declaration, setting aside or
payment of any dividend or other distribution (whether in cash, stock or
property) with respect to any of the outstanding capital stock of any Acquired
Company or any direct or indirect redemption, retirement, purchase or other
acquisition of any shares of its capital stock; (c) any split, combination or
reclassification of any of the outstanding capital stock of Target 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 the outstanding capital stock of
Target other than by reason of exercise of options granted and existing as of
the Balance Sheet Date; (d) any issuance or sale of Target Common Stock or any
right to acquire Target Common Stock by Target or any authorization for such
action or any issuance or grant of any options or warrants; (e) any change in
accounting methods, principles or practices by any Acquired Company affecting
its assets, liabilities or businesses, except insofar as may have been required
by a change in GAAP; (f) any adoption of a plan of liquidation or resolutions
providing for the liquidation, dissolution, merger, consolidation or other
reorganization of any Acquired Company (other than as contemplated by this
Agreement); (g) any material adverse change in the business policies of any
Acquired Company, including, without limitation, advertising, marketing,
pricing, purchasing, personnel, sales, returns, budget or product acquisition
policies; (h) any agreement relating to, or the occurrence of any wage or salary
increase or bonus, or increase in any other direct or indirect compensation or
benefits (including any severance or termination payment) for or to any
officers, directors, employees, consultants or agents of any Acquired Company or
any accrual for or contract or other agreement to make or pay the same except in
the ordinary course of
28
business, in a manner consistent with past practice; (i) any loan or advance
made to any officers, directors, employees, consultants, agents or other
representatives of any Acquired Company (other than travel advances made in the
ordinary course of business in a manner consistent with past practice) or any
other loan or advance except in the ordinary course of business in a manner
consistent with past practice; (j) except for any acquisition of tangible
property acquired in the ordinary course of business in a manner consistent with
past practice, any acquisition of all or any part of the assets, properties,
capital stock or business of any other person; (k) any action by Target that is
outside the ordinary course of business or in a manner inconsistent with past
practice, (l) any actions by Target outside of the ordinary course of business
which would affect the cash position of Target, including (i) any failure to
make scheduled capital expenditures substantially in accordance with its
ordinary course and customary practice; (ii) any failure to pay trade payables
or other liabilities when due, (iii) any discounting or other actions designed
to accelerate the payment of accounts receivable or (iv) any use of cash to
prepay Indebtedness, otherwise than in the ordinary course of business, (m) any
material change in the method of computation of the prices charged for the
products manufactured by or on behalf of any of the Acquired Companies that bear
a trademark owned by any of the Acquired Companies (each a "Branded Product") or
change in the credit practices of any of the Acquired Companies, except changes
in the ordinary course of business consistent with past practice, (n) any
material damage, destruction or loss, whether or not covered by insurance, to
any material assets of any Acquired Company, (o) any cancellation, compromise,
waiver or release of any right or claim (or series of rights or claims) by any
Acquired Company except such as would not have
29
a Material Adverse Effect, (p) any grant by any Acquired Company of any material
license or sublicense of any rights under or with respect to any of its
intangible property not in the ordinary course of business or (q) any agreement
to do any of the foregoing.
5.12 Contracts. Schedule 5.12 lists or describes, and the Company has
been furnished copies of, all material contracts or arrangements to which any
Acquired Company is a party or to which its assets, property or business are
bound or subject as of the date hereof which (a) obligate such Acquired Company
to pay more than $50,000 in any year, or entitle such Acquired Company to
receive more than $50,000 in any year; (b) are financing documents, loan
agreements, security agreements, or agreements providing for the guarantee of
the obligations of any party (other than any Acquired Company); (c) are
distributorship, sales agency or representative, marketing or other agreements
providing for the distribution of products of such Acquired Company; (d) are
contracts with any person for the manufacture of any products of such Acquired
Company; (e) are contracts containing covenants of any of the Acquired Companies
not to compete in any line of business or with any person in any geographical
area or covenants of any other person not to compete with any Acquired Company
in any line of business or in any geographical area; (f) are contracts or other
agreements with any current or former officer, director, employee, consultant,
agent or shareholder; (g) are contracts or other agreements with any labor union
or association relating to any current or former employee; (h) are patent,
trademark, service xxxx, trade name, copyright or franchise licenses, royalty
agreements or similar contracts or other agreements; (i) are management
agreements; (j) are contracts
30
or other agreements for the grant to any person of any preferential rights to
purchase any of the Acquired Companies' assets, properties or business; (k) are
joint venture contracts or other agreements of a similar nature; (l) are
contracts or other agreements under which any Acquired Company has guaranteed
the obligations of any person; (m) are contracts or other agreements under which
any Acquired Company agrees to indemnify any person or to share Tax liability
with any person; (n) are contracts or other agreements relating to the
acquisition by any Acquired Company of any operating business or the capital
stock of any person; or (o) are contracts or other agreements for the payment of
fees or other consideration to any officer or director of any Acquired Company
or any other entity in which any of the foregoing has an interest; Schedule 5.12
lists or describes any other material contract or other agreement, whether or
not made in the ordinary course of business. With respect to all such
contracts, none of the Acquired Companies nor, to Target's or the relevant
Target Subsidiary's knowledge, any other party to any such contract is in breach
thereof or default thereunder and there does not exist under any thereof any
event which, with the giving of notice or the lapse of time, would constitute
such a breach or default, except for such breaches, defaults and events as to
which requisite waivers or consents have been obtained or which would not, in
the aggregate, have a Material Adverse Effect.
5.13 Litigation. Except as set forth in Schedule 5.13, there are no
outstanding judgments, rulings, orders, writs, injunctions, awards or decrees of
any court or any foreign, federal, state, county or local government or any
other governmental, regulatory or administrative agency or authority or
arbitrator against or involving any Acquired Company. Except as set forth on
Schedule 5.13, as of the date
31
hereof, none of the Acquired Companies is a party to, or to the knowledge of
Target threatened with, any litigation or judicial, governmental, regulatory,
administrative or arbitration proceeding which, if decided adversely to any such
Acquired Company, could individually or in the aggregate have a material adverse
effect upon the transactions contemplated hereby or that could be reasonably
likely to have a Material Adverse Effect on any of the Acquired Companies.
5.14 Taxes. All the representations and warranties set forth in this
Section 5.14 are qualified by Schedule 5.14. All United States federal income
Tax Returns of or with respect to each of the Acquired Companies required by law
to be filed have been timely filed, all such Tax Returns are true and complete
and all Taxes shown on such returns have been timely paid; all other Tax Returns
of or with respect to each of the Acquired Companies required to be filed
pursuant to applicable federal, foreign, state, local or other law have been
filed, except insofar as the failure to file such Tax Returns would not
reasonably be expected to have a Material Adverse Effect, all such Tax Returns
are true and complete and all Taxes shown on such Tax Returns and all other
Taxes due, or claimed to be due whether by proposed assessment or otherwise, by
any taxing authority have been timely paid except for Taxes which are being
contested in good faith by proper proceedings with adequate reserves having been
taken in accordance with GAAP; and the charges, accruals and reserves on the
books of the Acquired Companies in respect of any liability for Taxes based on
or measured by net income for any years not finally determined or with respect
to which the applicable statute of limitations has not expired are believed to
be adequate to satisfy any assessment for such Taxes for any such years, except
to the extent of any
32
inadequacy that would not have a Material Adverse Effect. None of the Acquired
Companies has any liability for taxes of any person or entity other than the
Acquired Companies. The unused "net operating losses" (as defined in
Section 172 of the Code or similar provisions of state or local law) of each of
the Acquired Companies are set forth for each taxable year on Schedule 5.14 and
the utilization of such net operating losses are not subject to any limitations
under Section 382 and 384 of the Code except as set forth in Schedule 5.14.
Schedule 5.14 sets forth any "separate return year" limitations (as defined in
the Treasury Regulations under Section 1502 of the Code) upon the unused net
operating losses of each of the Acquired Companies. With respect to any period
for which Tax Returns have not yet been filed, or with respect to which Taxes
are not yet due or owing, the Acquired Companies have made due and sufficient
current accruals for such Taxes in accordance with GAAP. Each of the Acquired
Companies has made all required estimated Tax payments sufficient to avoid any
underpayment penalties. The Tax Returns of each of the Acquired Companies and
of each affiliated, consolidated, combined or unitary group of which any
Acquired Company is or has been a member have not been audited (or if audited
have subsequently been closed by the application of the statute of limitations)
or examined by the IRS. There are no outstanding agreements, waivers or
arrangements extending the statutory period of limitations applicable to any
claim for, or the period for the collection or assessment of, Taxes due from or
with respect to any Acquired Company for any taxable period. No closing
agreement pursuant to Section 7121 of the Code (or any predecessor provision) or
any similar provision of any state, local or foreign law has been entered into
by or with respect to any Acquired Company. No audit or other
33
proceeding by any court, governmental or regulatory authority or similar
authority is pending or threatened with respect to any Taxes due from any
Acquired Company. No assessment of Tax is proposed against any Acquired
Company or any of its properties or assets. No consent to the application of
Section 341(f)(2) of the Code (or any predecessor provision) has been made or
filed by or with respect to any Acquired Company or any of its properties or
assets. None of the assets of any Acquired Company is an asset or property
that is or will be required to be treated as being (i) owned by any person
(other than Target or a Target Subsidiaries) pursuant to the provisions of
Section 168(f)(8) of the Internal Revenue Code of 1954, as amended and in
effect immediately before the enactment of the Tax Reform Act of 1986 or (ii)
tax-exempt use property within the meaning of Section 168(h)(1) of the Code.
None of the Acquired Companies has agreed to or is required to make any
adjustment pursuant to Section 481(a) of the Code (or any predecessor
provision) by reason of any change in any accounting method of such Acquired
Company, there is no application pending with any taxing authority requesting
permission for any such change in any accounting method of any Acquired
Company and the IRS has not proposed any such adjustment or change in
accounting method. None of the Acquired Companies has been or is in
violation (or with notice or lapse of time or both, would be in violation) of
any applicable law relating to the payment or withholding of Taxes, the
result of which violation has or may reasonably be expected to have a
Material Adverse Effect. Each of the Acquired Companies has duly and timely
withheld from employee salaries, wages and other compensation and paid over
to the appropriate taxing authorities all material amounts required to be so
withheld and paid over for all periods under all
34
applicable laws. Except as disclosed on Schedule 5.14, none of the Acquired
Companies is a party to, is bound by, or has any obligation under, any Tax
sharing agreement or similar contract. There is no contract, agreement, plan or
arrangement covering any person that, individually or collectively, could give
rise to the payment of any amount that would not be deductible by any Acquired
Company by reason of Section 280G of the Code. None of the Acquired Companies
has been a United States real property holding corporation within the meaning of
Section 897(c)(2) of the Code during the applicable period specified in
Section 897(c)(1)(A)(ii) of the Code.
5.15 Permits. Each of the Acquired Companies has in full force and
effect all material federal, state, local and foreign governmental approvals,
consents, authorizations, certificates, filings, franchises, licenses, notices,
permits and rights (collectively, "Permits") necessary to conduct its business
as presently conducted the lack of which could be reasonably likely to have a
Material Adverse Effect. There has occurred no default under any Permit that
could be reasonably likely to have a Material Adverse Effect on any Acquired
Company. There are no proceedings relating to the suspension, revocation or
modification of any Permit in which an adverse determination could be reasonably
likely to have a Material Adverse Effect on any Acquired Company.
5.16 Employment Matters. Schedule 5.16 lists or describes, and the
Company has been furnished access to, all material employment, severance,
consulting or similar contracts to which any Acquired Company is a party or by
which any of them is bound, and, with respect to all such contracts, none of the
Acquired Companies is in material breach thereof or material default thereunder
and there does not exist
35
under any thereof any event which, with the giving of notice or the lapse of
time, would constitute such a breach or default by any Acquired Company. There
are not in existence any (a) grievance or arbitration proceedings arising out of
agreements to which any Acquired Company is a party, or (b) unfair labor
practice complaints against any Acquired Company. Except as set forth on
Schedule 5.16, none of the Acquired Companies is a party to any collective
bargaining agreement and no work stoppage, strike or similar activity is in
effect or threatened.
5.17 Employee Benefit Plans. (a) Schedule 5.17 contains a true and
complete list of each "employee benefit plan" (within the meaning of
section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), including, without limitation, multiemployer plans within the meaning
of ERISA section 3(37)), stock purchase, stock option, severance, employment,
change-in-control, fringe benefit, collective bargaining, bonus, incentive,
deferred compensation and all other employee benefit plans, agreements,
programs, policies or other arrangements, whether or not subject to ERISA
(including any funding mechanism therefor now in effect or required in the
future as a result of the transaction contemplated by this Agreement or
otherwise), whether formal or informal, oral or written, legally binding or not,
under which any employee or former employee of the Target or Target Subsidiaries
has any present or future right to benefits or under which the Target or Target
Subsidiaries has any present or future liability. All such plans, agreements,
programs, policies and arrangements shall be collectively referred to as the
"Target Plans".
(b) With respect to each Target Plan, Target has delivered to
the Buyer a current, accurate and complete copy (or, to the extent no such copy
exists,
36
an accurate description) thereof and, to the extent applicable: (i) any related
trust agreement or other funding instrument; (ii) the most recent determination
letter, if applicable; (iii) any summary plan description and other written
communications (or a description of any oral communications) by the Target or
Target Subsidiaries to their employees concerning the extent of the benefits
provided under a Target Plan; and (iv) for the most recent year (A) the Form
5500 and attached schedules, (B) audited financial statements, (C) actuarial
valuation reports and (D) attorney's response to an auditor's request for
information.
(c)(i) To the extent material, each Target Plan has been
established and administered in accordance with its terms, and in compliance
with the applicable provisions of ERISA, the Code and other applicable laws,
rules and regulations; (ii) to the extent material, each Target Plan which is
intended to be qualified within the meaning of Code section 401(a) is so
qualified and has received a favorable determination letter as to its
qualification, and nothing has occurred, whether by action or failure to act,
that could reasonably be expected to cause the loss of such qualification;
(iii) no event has occurred and no condition exists that would subject the
Target or Target Subsidiaries, either directly or by reason of their affiliation
with any member of their "Controlled Group" (defined as any organization which
is a member of a controlled group of organizations within the meaning of Code
sections 414(b), (c), (m) or (o)), to any tax, fine, lien, penalty or other
liability imposed by ERISA, the Code or other applicable laws, rules and
regulations; (iv) for each Target Plan with respect to which a Form 5500 has
been filed, no material change has occurred with respect to the matters covered
by the most recent Form since the date thereof; (v) no
37
Target Plan has entered into or proposes entering into any "prohibited
transaction" (as such term is defined in ERISA section 406 and Code section
4975); and (vi) no Target Plan is subject to Title IV of ERISA, ERISA section
302 or Code section 412 (including, without limitation, a multiemployer plan
within the meaning of section 4001(a)(3) of ERISA).
(d) With respect to any Target Plan, (i) no actions, suits or
claims (other than routine claims for benefits in the ordinary course) are
pending or threatened, (ii) no facts or circumstances exist that could give rise
to any such actions, suits or claims, and (iii) no written or oral communication
has been received from the PBGC in respect of any Target Plan subject to Title
IV of ERISA concerning the funded status of any such plan or any transfer of
assets and liabilities from any such plan in connection with the transactions
contemplated herein.
5.18 Brokers. Other than PaineWebber Incorporated and other than as
previously disclosed to the Company, no broker, finder or similar intermediary
has acted for or on behalf of Target in connection with this Agreement or the
transactions contemplated hereby, and no broker, finder, agent or similar
intermediary is entitled to any broker's, finder's or similar fee or other
commission in connection therewith based on any agreement, arrangement or
understanding with Target or any action taken by it.
5.19 Environmental Compliances. Except as set forth in Schedule 5.19,
(i) each Acquired Company is in compliance in all material respects with all
applicable Environmental Laws; (ii) each of the Acquired Companies has all
material permits, authorizations and approvals required under any applicable
Environmental Laws and is in compliance in all material respects with their
respective requirements;
38
(iii) to the knowledge of Target, there are no pending or threatened
Environmental Claims against any Acquired Company; and (iv) under applicable
Environmental Laws, to the knowledge of Target there are no circumstances with
respect to any property or operations of any Acquired Company that are
reasonably likely to form the basis of an Environmental Claim against such
Acquired Company.
5.20 Employee Relations. To the knowledge of Target, the
employer-employee relations of each Acquired Company are satisfactory in all
material respects. The employment practices of each Acquired Company have
complied in all materials respects with all applicable plant closing and
anti-discrimination laws including, without limitation, the Workers
Adjustment and Retraining Notification Act, the Age Discrimination in
Employment Act and the Americans with Disabilities Act and any similar state
laws.
5.21 Liabilities. Except as set forth on Schedule 5.21 or as
otherwise expressly disclosed in this Agreement or the Schedules or as fully and
adequately reflected or reserved against on the Balance Sheet (less Liabilities
that have been discharged in the ordinary course of business since the Balance
Sheet Date), Target does not have any direct or indirect indebtedness,
liability, claim, loss, damage, deficiency, obligation or responsibility, known
or unknown, fixed or unfixed, xxxxxx or inchoate, liquidated or unliquidated,
secured or unsecured, subordinated or unsubordinated, matured or unmatured,
accrued, absolute, contingent or otherwise, including, without limitation,
liabilities on account of Taxes, other governmental, regulatory or
administrative charges or lawsuits brought, of a kind required by GAAP to be set
forth on a financial statement (collectively, "Liabilities"). Except as
39
specifically noted on Schedule 5.21, all Liabilities were incurred in the
ordinary course of business. Except as set forth on Schedule 5.21, Target has
not incurred any Liabilities since the Balance Sheet Date except in the ordinary
course of business and for the Acquired Companies' Transaction Expenses. Target
has no knowledge of any circumstances, conditions, events or arrangements which
may hereafter give rise to any Liabilities, individually or in the aggregate,
material to the Acquired Companies, except in the ordinary course of business.
5.22 Suppliers and Customers. Schedule 5.22 lists the ten largest
suppliers and the ten largest customers of the Acquired Companies (by dollar)
and their dollar values of sales or purchases, as the case may be, for the
period since the Balance Sheet Date. The relationships of the Acquired
Companies with their respective suppliers and customers are generally good
commercial working relationships, and none of the suppliers or customers listed
on Schedule 5.22 has canceled or otherwise terminated, or threatened to cancel
or otherwise terminate, its relationship with any Acquired Company or has during
the last twelve (12) months materially decreased or limited or threatened to
materially decrease or limit, its business with the relevant Acquired Company,
and no Acquired Company has received notice that any such supplier or customer
intends to cancel or otherwise modify its relationship with any Acquired Company
or to decrease or limit materially its services, supplies or materials to any
Acquired Company or its purchase of the products of any Acquired Company. To
the knowledge of Target, the transactions contemplated by this Agreement will
not cause a material and adverse effect upon the relationship of any Acquired
Company with any of the suppliers or customers listed on Schedule 5.22.
40
5.23 Insurance. Schedule 5.23 sets forth all policies or binders of
fire, liability, workmen's compensation, vehicular or other insurance held by or
on behalf of any of the Acquired Companies (specifying the insurer, the policy
number or covering note number with respect to binders, and describing each
pending claim thereunder of more than $50,000, setting forth the aggregate
amounts paid out under each such policy since April 1, 1996 through the date
hereof and the aggregate limit of any of the insurer's liability thereunder).
To the knowledge of the Target, such policies are valid and binding in
accordance with their terms and are in full force and effect and insure against
risks and liabilities customary for the business in which the relevant Acquired
Company is engaged. None of the Acquired Companies is in default with respect
to any provision contained in any such policy or binder or has failed to give
any notice or present any claim under any such policy or binder in due and
timely fashion. Except as disclosed on Schedule 5.23, there are no outstanding
unpaid claims under any such policy or binder. None of the Acquired Companies
has received a notice of cancellation or non-renewal of any such policy or
binder and no facts exist which might form the basis for termination of any such
insurance other than for delinquencies which have been cured or for policies
replaced with other policies. Each of the Acquired Companies has or will make
provision for, insurance coverage consistent with current practices through the
Effective Date. Each of the Acquired Companies paid or will pay all premiums
due and payable for periods prior to the Effective Date with respect to
insurance policies set forth on Schedule 5.23.
5.24 Transactions with Affiliates. Except as set forth in Schedule
5.24 and transactions among the Acquired Companies, (a) none of the Acquired
Companies
41
has engaged in any transaction with any stockholder, director or executive
officer of any Acquired Company (or any affiliate thereof) and (b) none of
the Acquired Companies is a party to or bound by any lease, purchase contract
or other agreement with any stockholder, director or executive officer of any
Acquired Company (or any affiliate of any of the foregoing).
5.25 Full Disclosure. All documents and other papers identified
herein or listed in the Schedules attached hereto and delivered by or on behalf
of the Acquired Companies to the Company and Subsidiary in connection with this
Agreement and the transactions contemplated hereby are true, complete and
authentic copies thereof. The representations and warranties of Target in this
Agreement taken together with the attached Schedules and with all of the
documents and other papers expressly identified herein or listed in such
Schedules, taken as a whole, do not, to the knowledge of Target, contain any
untrue statement of a material fact or omit to state any material fact necessary
to make the statements made not false or misleading.
5.26 Solvency. The aggregate value of all of the assets of all of the
Acquired Companies on a consolidated basis, at a fair valuation, exceeds the
total liabilities of all of the Acquired Companies on a consolidated basis
(including contingent, subordinated, unmatured and unliquidated liabilities).
Each of the Acquired Companies has the ability to pay its debts as they mature
and does not have unreasonably small capital with which to conduct its business.
For purposes of this Section 5.26, the "fair valuation" of such assets shall be
determined on the basis of that amount which may be realized within a reasonable
time, in any manner through realization of the value of or dispositions of such
assets at the regular market value,
42
conceiving the latter as the amount which could be obtained for the assets in
question within such period by a capable and diligent business person from an
interested buyer who is willing to purchase under ordinary selling conditions.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES
OF THE PRINCIPAL STOCKHOLDER
The Principal Stockholder represents and warrants to the Company and
Subsidiary as follows:
6.1 Full Disclosure. All documents and other papers identified
herein or listed in the Schedules attached hereto and delivered by or on behalf
of the Acquired Companies to the Company and Subsidiary in connection with this
Agreement and the transactions contemplated hereby are true, complete and
authentic copies thereof. The representations and warranties of Target in this
Agreement taken together with the attached Schedules and with all of the
documents and other papers expressly identified herein or listed in such
Schedules, taken as a whole, do not, to the Knowledge of the Target, contain any
untrue statement of a material fact or omit to state any material fact necessary
to make the statements made not false or misleading.
6.2 Indebtedness. Except as set forth in a certificate of the
Principal Stockholder delivered to the Company on the Effective Date, there is
no "Indebtedness" (as defined in Section 1.1) with respect to any of the
Acquired Companies.
6.3 Capitalization. The representation and warranty of Target
contained in Section 5.2 is true and correct.
43
ARTICLE 7
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND SUBSIDIARY TO TARGET
The Company and Subsidiary represent and warrant to Target as follows:
7.1 Organization; Standing and Power. Each of the Company and
Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all requisite power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted, and is duly qualified and in good standing
to do business in each jurisdiction in which the nature of its business or
the ownership or leasing of its properties makes such qualification necessary
other than in such jurisdictions where the failure so to qualify would not
have a Material Adverse Effect.
7.2 Articles of Incorporation and By-Laws. The Company has
heretofore made available to Target a complete and correct copy of its and
Subsidiary's Articles of Incorporation and By-Laws, each as amended to date.
Such Articles of Incorporation and By-Laws are in full force and effect. The
Company is not in violation of any provision of its Articles of Incorporation
or By-Laws, except for such violations that would not, individually or in the
aggregate, have a Material Adverse Effect.
7.3 Capital Structure. As of the date hereof, the authorized
capital stock of the Company consists of 100,000,000 shares of the Company
Common Stock. As of the close of business on December 12, 1997, (i)
50,931,559 shares of the
44
Company Common Stock were outstanding, 2,985,764 shares of Common Stock were
reserved for issuance pursuant to the 1994 Stock Option Plan (the "Stock
Plan") and (ii) no shares of Company Common Stock were held by the Company in
its treasury. All outstanding shares of the Company Common Stock are, and
the shares of Company Common Stock to be issued pursuant to or as
specifically contemplated by this Agreement will be, validly issued, fully
paid and nonassessable and not subject to preemptive rights. As of the date
of this Agreement, except for this Agreement and shares of the Company Common
Stock available for issuance under the Stock Plan, there are no options,
warrants, calls, rights, commitments or agreements of any character to which
the Company is a party or by which it is bound obligating the Company to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock or obligating the Company to grant, extend or enter
into any such option, warrant, call, right, commitment or agreement. Except
as disclosed in the Company SEC Documents (as defined below), as of the date
hereof, the Company is not party to any agreement relating to the voting of
shares of Company Common Stock, to any voting trust with respect to Company
Common Stock or to any agreement granting any other party registration rights
with respect to shares of Company Common Stock. As of the date hereof, the
authorized capital stock of Subsidiary consists of 1,000 shares of Subsidiary
Common Stock, par value $.01 per share, all of which are validly issued,
fully paid and nonassessable and are owned by the Company.
7.4 Authority. The Company and Subsidiary have all requisite
corporate power to enter into this Agreement and the other agreements being
entered into in connection herewith and, subject to compliance with the DGCL,
to perform
45
their obligations hereunder and thereunder to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this
Agreement and such other agreements and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized by all
necessary corporate action on the part of the Company and Subsidiary and no
other corporate proceedings on the part of the Company and Subsidiary are
necessary to authorize this Agreement or such other agreements or to
consummate the transactions contemplated hereby and thereby, other than the
filing and recordation of appropriate merger documents as required by the
DGCL. Each of this Agreement and such other agreements has been or will be
duly and validly executed and delivered by the Company and Subsidiary and,
assuming that this Agreement and such other agreements constitute valid and
binding obligations of Target and the Principal Stockholder, this Agreement
and such other agreements constitute or will constitute valid and binding
obligations of the Company and Subsidiary enforceable in accordance with
their respective terms, except to the extent that the enforceability thereof
may be limited by: (i) applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or similar laws from time to time in
effect affecting generally the enforcement of creditors' rights and remedies;
and (ii) general principles of equity, including, without limitation,
principles of reasonableness, good faith and fair dealing (regardless of
whether enforcement is sought in equity or at law). Assuming that all
filings, authorizations, consents and stockholder approvals have been duly
made or obtained as expressly provided herein, the execution and delivery of
this Agreement do not, and the execution and delivery of such other
agreements will not, and the consummation of the transactions contemplated
46
hereby and thereby will not, result in any violation pursuant to any
provision of the Certificate of Incorporation or By-laws of the Company and
Subsidiary or, except (i) as contemplated by the next sentence hereof and
(ii) for certain consents that may be required from the Company's senior,
secured lenders, (which consents, if required, will be obtained prior to the
Effective Date) result in any violation of any loan or credit agreement,
note, mortgage, indenture, lease, benefit plan or other agreement,
obligation, instrument, permit, concession, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to the
Company, Subsidiary or their respective properties or assets, which violation
would, individually or in the aggregate with any other violations, have a
Material Adverse Effect. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Authority is
required by or with respect to the Company and Subsidiary in connection with
the execution and delivery of this Agreement and the other agreements being
entered into in connection herewith by the Company and Subsidiary or the
consummation by the Company and Subsidiary of the transactions contemplated
hereby and thereby, the failure to obtain which, individually or in the
aggregate with any other such failures, would have a Material Adverse Effect,
except for (i) the premerger notification requirements applicable to the
Company under the HSR Act, and (ii) the filing of the Certificate of Merger
with the Secretary of State of the state of Delaware and appropriate
documents with the relevant authorities of other states in which Target is
qualified to do business.
7.5 SEC Documents; Financial Statements. Schedule 7.5 lists each
report, schedule, registration statement and definitive proxy statement filed
by the
47
Company with the SEC since December 31, 1996 (as such documents have since
the time of their filing been amended, the "Company SEC Documents"), which
include all the documents (other than preliminary material) that the Company
was required to file with the SEC since such date. The Company has made
available to Target a true and complete copy of each of such Company SEC
Documents. As of their respective dates, the Company SEC Documents and any
forms, reports and other documents filed with the SEC by the Company after
the date of this Agreement complied or will comply in all material respects
with the requirements of the Securities Act or the Exchange Act, as the case
may be, and the rules and regulations of the SEC thereunder applicable to
such Company SEC Documents, and none of the Company SEC Documents contained,
or will contain at the time they are filed or amended, any untrue statement
of a material fact or omitted, or will omit at the time they are filed or
amended, to state a material fact required to be stated therein or necessary
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 GAAP 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, which were not individually or in the aggregate
material) in all material respects the financial position
48
of the Company as at the dates thereof and the results of its operations and
cash flows for the periods then ended.
7.6 Compliance with Applicable Laws. The Company holds all
permits, licenses, variances, certificates of occupancy, exemptions, orders
and approvals of all Governmental Authorities, which are material to the
operation of the business of the Company (the "Company Permits"). The
Company is in compliance with the terms of the Company Permits, except where
any such failure so to comply, individually or in the aggregate with any
other such failures, would not have a Material Adverse Effect. Except as
disclosed in the Company SEC Documents filed prior to the date of this
Agreement, the business of the Company is not being conducted in violation of
any law, ordinance or regulation of any Governmental Authority, except for
violations, which individually or in the aggregate with other violations,
would not have a Material Adverse Effect. As of the date of this Agreement,
no investigation or review by any Governmental Authority with respect to the
Company which would result in a Material Adverse Effect is pending or, to the
knowledge of the Company, threatened.
7.7 Litigation. As of the date of this Agreement, except as
disclosed in the Company SEC Documents filed prior to the date of this
Agreement, there is no claim pending or, to the knowledge of the Company,
threatened against or affecting the Company or any of its properties, which,
individually or in the aggregate with any
49
other such claims, would have a Material Adverse Effect, nor is there any
judgment, decree, injunction, rule or order of any Governmental Authority or
arbitrator outstanding against the Company, which, individually or in the
aggregate with any other such judgments, orders, decrees, injunctions, rules
or orders, would have a Material Adverse Effect.
7.8 Absence of Certain Changes or Events. Except as disclosed in
the Company SEC Documents filed prior to the date of this Agreement or in the
audited balance sheets of the Company and the related consolidated statements
of income, shareholders' equity and cash flows as of and for the period ended
December 31, 1996 (the "Company 1996 Financial Statements"), true and correct
copies of which are included in the Company SEC Documents, or except as
contemplated by this Agreement, since the date of the Company 1996 Financial
Statements, there has not been (i) any damage, destruction or loss, whether
covered by insurance or not, which has, or insofar as reasonably can be
foreseen in the future is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect; (ii) any declaration, setting aside or
payment of any dividend or other distribution (whether in cash, stock or
property) with respect to any of the Company's capital stock; or (iii) any
change, occurrence or event which (individually or together with other
changes, occurrences and events) has had or is reasonably likely to have a
Material Adverse Effect.
7.9 Full Disclosure. All documents and other papers identified
herein or listed on the Schedules attached hereto and delivered by or on
behalf of the Company or Subsidiary to Target in connection with this
Agreement and the transactions contemplated hereby are true, complete and
authentic copies thereof. The representations and warranties of the Company
and Subsidiary in this Agreement taken together with the attached Schedules
and with all of the documents and other papers
50
expressly identified herein or listed in such Schedules, taken as a whole, do
not, to the knowledge of the Company or Subsidiary, contain any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements made not false or misleading.
7.10 Financing Commitments. The Company has delivered to Target
true and complete copies of written commitments of third parties to provide
the Company and Subsidiary with financing in an amount sufficient to
effectuate the transactions contemplated hereby.
7.11 Brokers. Other than Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities
Corporation, no broker, finder or similar intermediary has acted for or on
behalf of the Company or Subsidiary in connection with this Agreement or the
transactions contemplated hereby, and no broker, finder, agent or similar
intermediary is entitled to any broker's, finder's or similar fee or other
commission in connection therewith based on any agreement, arrangement or
understanding with the Company or Subsidiary or any action taken by it.
7.12 Certain Actions. The Company has no present plan or intention
to sell or otherwise transfer or dispose of any of the stock or assets of
Target following the Merger, except for dispositions made in the ordinary
course of business. The Company has no present plan or intention to
reacquire any of its stock issued in the Merger. Following the Effective
Time, the Company has no present plan or intention to cause Target no longer
to continue (a) the historic business of Target or (b) to use a significant
portion of Target's historic business assets in a business.
51
7.13 Solvency. As of the date hereof and, after giving effect to
the Merger and assuming the representations and warranties of Target
contained in this Agreement are true and correct as of the Effective Date, as
of the Effective Date (a) the aggregate value of all of the assets of the
Company and its subsidiaries on a consolidated basis, at a fair valuation, do
and will exceed the total liabilities of the Company and its subsidiaries on
a consolidated basis (including contingent, subordinated, unmatured and
unliquidated liabilities), (b) the Company has and will have the ability to
pay its debts as they mature and does not and will not have unreasonably
small capital with which to conduct its business. For purposes of this
Section 7.13, the "fair valuation" of such assets shall be determined on the
basis of that amount which may be realized within a reasonable time, in any
manner through realization of the value of or dispositions of such assets at
the regular market value, conceiving the latter as the amount which could be
obtained for the assets in question within such period by a capable and
diligent business person from an interested buyer who is willing to purchase
under ordinary selling conditions.
ARTICLE 8
REPRESENTATIONS AND WARRANTIES OF THE
COMPANY AND SUBSIDIARY TO TARGET STOCKHOLDERS
The Company and Subsidiary represent and warrant to Target for the
benefit of all holders of Target Common Stock on the Effective Date as follows:
8.1 Full Disclosure. All documents and other papers identified
herein or listed on the Schedules attached hereto and delivered by or on
behalf of the Company or Subsidiary to Target in connection with this
Agreement and the
52
transactions contemplated hereby are true, complete and authentic copies
thereof. The representations and warranties of the Company and Subsidiary in
the Agreement taken together with the attached Schedules and with all of the
documents and other papers expressly identified herein or listed in such
Schedules, taken as a whole, do not, to the knowledge of the Company or
Subsidiary, contain any untrue statement of a material fact or omit to state
any material fact necessary to make the statements made therein not false or
misleading.
8.2 Validity of Stock Consideration. The representations and
warranties of the Company and Subsidiary contained in Section 7.3 are true
and correct.
ARTICLE 9
COVENANTS
From the date of this Agreement up to and including the Effective Time
(unless this Agreement is terminated pursuant to Article 12), the parties hereto
covenant and agree as follows:
9.1 Conduct of Business of the Acquired Companies. Except as
contemplated by this Agreement, during the period from the date of this
Agreement to the Effective Time,(a) the Target shall, and shall cause each
Target Subsidiary to, conduct its business and operations only in the ordinary
course and, without the prior written consent of the Company, the Target shall
not, and shall ensure that the Target Subsidiaries do not, undertake any of the
actions specified in Section 5.11 other than in
53
the ordinary cause of business and (b) the Company shall, and shall cause
each of its subsidiaries to, conduct its business and operations only in the
ordinary course.
9.2 Access to Information; Confidentiality. (a) During the period
from the date of this Agreement to the Effective Time, each of Target and the
Company shall, and shall cause their respective subsidiaries to, during
regular business hours and upon reasonable written request, give the other
party, and the other party's authorized representatives, reasonable access to
all of its respective subsidiaries books, records, offices and other
facilities and properties; provided however, that any such access shall not
interfere with the businesses or operations of the relevant entity.
(b) Any information provided to or obtained by the Company,
Subsidiary, Target or their respective representatives pursuant to paragraph
(a) above shall be "Proprietary Information" and shall be held by the party
obtaining such information and its representatives in confidence and no party
shall use any of the Proprietary Information for any purpose other than
evaluating the transactions contemplated hereby or disclose any of the
Proprietary Information to any other party. Proprietary Information shall
not include, however, information that (i) becomes generally available to the
public other than as a result of a disclosure by the Company, Subsidiary,
Target or representatives, (ii) was known to the party obtaining such
information on a non-confidential basis prior to its disclosure pursuant to
this Agreement or (iii) becomes available to the party obtaining such
information on a non-confidential basis.
9.3 Publicity. Until the earlier of the date on which this Agreement
ceases to be in effect and the Effective Date, none of the parties hereto will
make any
54
public release or other public disclosure of information regarding the
transactions contemplated by this Agreement, including the existence or terms
of this Agreement, without the prior approval of the other parties, which
approval shall not be unreasonably withheld or delayed, except as required by
law or court order.
9.4 Filings and Authorizations. Each of the Company, Subsidiary
and Target, within three Business Days of the date hereof, shall (a) file or
supply, or cause to be filed or supplied, all notifications and information
required to be filed or supplied pursuant to the HSR Act in connection with
the Merger and consummation of the other transactions contemplated hereby,
and (b) request early termination of the waiting period under the HSR Act.
Each of the parties hereto, as promptly as practicable, shall (i) make, or
cause to be made, all such other filings and submissions under laws, rules
and regulations applicable to it, or to its subsidiaries and affiliates, as
may be required for it to consummate the Merger and other transactions
contemplated hereby in accordance with the terms of this Agreement; (ii) use
its diligent efforts to obtain, or cause to be obtained, all authorizations,
approvals, consents and waivers from all persons and Governmental Authorities
necessary to be obtained by it, or its subsidiaries or affiliates, in order
for it so to consummate such transactions; and (iii) use its reasonable best
efforts to take, or cause to be taken, all other actions necessary, proper or
advisable in order for it to fulfill its obligations hereunder. The parties
hereto shall coordinate and cooperate with one another in exchanging such
information and supplying such reasonable assistance as may be reasonably
requested by each in connection with the foregoing.
55
9.5 Notice of Events. During the period of this Agreement to the
Effective Time, Target shall give prompt notice to the Company, and the Company
shall give prompt notice to Target, of (i) the occurrence, or non-occurrence, of
any event of which it has knowledge the occurrence, or non-occurrence, of which
would be likely to result in any of the conditions specified in (x) in the case
of the Company, Sections 10.1 and 10.6 or (y) in the case of Target,
Sections 11.1 and 11.5 not being satisfied so as to permit the consummation of
the Merger at the Effective Time; and (ii) any material failure on its part to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it hereunder; provided, however, that the delivery of any notice
pursuant to this Section 9.5 shall not limit or otherwise affect the remedies
available hereunder to any party.
9.6 Further Assurances. Each of the parties hereto shall execute
such documents and other papers and perform such further acts as may be
reasonably required to carry out the provisions hereof and the actions
contemplated hereby. Each such party shall, on or prior to the Effective Time,
use its best efforts to fulfill or obtain the fulfillment of the conditions
precedent to the consummation of the transactions contemplated hereby, including
the execution and delivery of any documents, certificates, instruments or other
papers that are reasonably required for the consummation of the transactions
contemplated hereby.
9.7 Notice to Stockholders. The Target shall give prompt notice of
all action taken by consent in lieu of a meeting pursuant to Section 228(d) of
the DGCL to approve the Merger.
56
9.8 No Section 338 Election. Neither the Company nor any affiliate
thereof shall (i) make an election under Section 338 of the Code or any similar
provision of state or local law in respect of the Merger or (ii) cause any
Acquired Company to engage in any transaction that could cause the Merger to be
treated as a purchase or sale of the assets of any Acquired Company for federal,
state, local or foreign Tax purposes.
9.9 Affiliate Transactions. Except as consented to in writing by the
Company, each of the Acquired Companies shall terminate, as of the Effective
Date, all transactions with any stockholder, director or executive officer of
any Acquired Company (or any affiliate thereof) and any agreement or contract in
respect thereof.
9.10 Employees. (a) The Company shall cause the Surviving
Corporation to extend to all employees of the Acquired Companies other than
those identified on the Schedule 1.1(a) the Company's standard severance policy
as heretofore delivered to the Target. For the avoidance of doubt, time spent
in prior service by an employee of any Acquired Company with Target's
predecessor companies, L&F Products and Reckitt & Xxxxxx, Inc., shall be
included in calculating the period an employee was employed by Target and the
Surviving Corporation to determine severance entitlement under such standard
severance policy.
(b) The Company agrees to cause the Surviving Corporation to pay
no later than April 6, 1998, to the employees of the Acquired Companies
identified on Schedule 9.10(b) to the extent such employees are employed by such
Acquired Company on the Effective Date and on March 31, 1998, the amount as
calculated on Schedule 9.10(b) in satisfaction of the Acquired Company's
obligations
57
under the terms of the Personal Care Group, Inc. 1996 Management Incentive Plan.
The Company will assume the Acquired Company's obligations under the PCG -
Fiscal Year 1998 Sales Incentive Plan.
9.11 Indemnification of Directors and Officers. The Company and
Subsidiary agree that all rights to indemnification and exculpation from
liability for acts or omissions occurring prior to the Effective Time now
existing in favor of the current or former directors or officers of the
Acquired Companies, as provided in the respective certificates of
incorporation or by-laws of the Acquired Companies, shall survive the
Effective Time and shall continue in full force and effect in accordance with
their respective terms for a period of six years after the Effective Time;
provided, that notwithstanding anything to the contrary herein or in the
certificate of incorporation or by-laws of any of the Acquired Companies, in
no event will the Company or Subsidiary indemnify or exculpate any current or
former director or officer of any Acquired Company from liability for acts or
omissions constituting fraud or wilful misconduct; and provided, further,
that the Company shall be entitled to reimbursement from such director or
officer, of all amounts expended by it or any of its subsidiaries in the
defense of any claim against a current or former director or officer of an
Acquired Company if a court of competent jurisdiction finds that such
director or officer has liability for an act or omission which constituted
fraud or wilful misconduct.
9.12 Solvency Opinion. If, in connection with the Company's obtaining
financing to satisfy its obligation to pay the consideration for the Merger, the
Company obtains a solvency opinion, then such opinion shall also be addressed to
and delivered to the Target.
58
ARTICLE 10
CONDITIONS PRECEDENT TO
OBLIGATIONS OF THE COMPANY AND SUBSIDIARY
The obligation of the Company and Subsidiary under this Agreement to
consummate the Merger shall be subject to the satisfaction, at or prior to the
Effective Time, of all of the following conditions, any one or more of which may
be waived by the Company:
10.1 Representations and Warranties Accurate. All representations and
warranties of Target contained in Article 5 and all representations and
warranties of the Principal Stockholder contained in Article 6 shall be true and
correct on and as of the Effective Date with the same force and effect as though
made on and as of the Effective Date.
10.2 Performance. Target shall have performed and complied with all
agreements, covenants and conditions required by this Agreement to be performed
and complied with by it prior to or on the Effective Time.
10.3 Certificates. The Company shall have received a (i) certificate,
dated the Effective Date, executed by an officer of the Target to the effect
that (a) the condition set forth in Section 10.2 has been satisfied and (b) that
the representations and warranties of Target contained in Article 5 are true and
correct on and as of the Effective Date, (ii) a certificate from the Principal
Stockholder that the representations and warranties of the Principal Stockholder
contained in Article 6 are true and correct on and as of the Effective Date and
(iii) the certificate contemplated by Section 6.2.
59
10.4 Other Agreements. The Principal Stockholder shall have executed
the Stockholders Agreement and the Registration Rights Agreement.
10.5 Corporate Matters. The holders of not more than one percent of
Target Common Stock shall have perfected appraisal rights under Section 262 of
the DGCL with respect to the Merger.
10.6 HSR Act: Authorizations; Legal Prohibition.
(a) With respect to the transactions contemplated hereby, all
applicable waiting periods under the HSR Act shall have expired or been
terminated.
(b) The Company and Subsidiary shall have obtained all
governmental authorizations, approvals, consents and waivers, the lack of which
prior to the Effective Time, under any applicable law, rule or regulation, would
render legally impermissible the consummation of the Merger by the Company and
Subsidiary.
(c) Target shall have obtained or made all governmental
authorizations, approvals, consents, waivers and filings, the lack of which
prior to the Effective Time, under any applicable law, rule or regulation, would
render legally impermissible the consummation of the Merger by Target.
10.7 No Injunction. There shall be no judgment, injunction,
order or decree enjoining the Company, Subsidiary or Target from consummating
the transactions contemplated by this Agreement.
10.8 Legal Opinion. The Company shall have received a legal opinion
from Target's counsel, Xxxxxxxx & Worcester LLP, covering such matters as are
customarily included in legal opinions delivered in connection with transactions
of the
60
types contemplated by this Agreement, in form and substance reasonably
satisfactory to the Company.
ARTICLE 11
CONDITIONS PRECEDENT TO OBLIGATIONS OF TARGET
The obligation of Target to consummate the Merger shall be subject to
the satisfaction, at or prior to the Effective Time, of all of the following
conditions, any one or more of which may be waived by Target:
11.1 Representations and Warranties Accurate. All representations and
warranties of the Company and Subsidiary contained in Articles 7 and 8 shall be
true and correct on and as of the Effective Date with the same force and effect
as though made on and as of the Effective Date.
11.2 Performance by Others. The Company and Subsidiary shall have
performed and complied with all agreements, covenants and conditions required by
this Agreement to be performed and complied with by it prior to or on the
Effective Date.
11.3 Certificate. Target shall have received a certificate, dated the
Effective Date, signed by an officer of the Company, to the effect that the
conditions set forth in Sections 11.1 and 11.2 have been satisfied.
11.4 Other Agreements. The Company shall have executed the
Stockholders Agreement and the Registration Rights Agreements, and the
individual named in Section 2.1 of the Stockholders Agreement shall have been
appointed to the Board of Directors of the Company.
61
11.5 HSR Act: Authorization; Legal Prohibition.
(a) With respect to the transactions contemplated hereby, all
applicable waiting periods under the HSR Act shall have expired or been
terminated.
(b) The Company and Subsidiary shall have obtained all
governmental authorizations, approvals, consents and waivers, the lack of which
prior to the Effective Time, under any applicable law, rule or regulation, would
render legally impermissible the consummation of the Merger by the Company and
Subsidiary.
11.6 No Injunction. There shall be no judgment, injunction, order or
decree enjoining the Company, Subsidiary or Target from consummating the
transactions contemplated by this Agreement.
11.7 Legal Opinion. Target shall have received a legal opinion from
the Company's counsel, Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx, covering such
matters as are customarily included in legal opinions delivered in connection
with transactions of the type contemplated by this Agreement, in form and
substance reasonably satisfactory to the Target.
ARTICLE 12
INDEMNIFICATION
12.1 Indemnification. Subject to the limitations contained in Section
12.3 and Section 14.3:
(a) the Principal Stockholder agrees to indemnify, defend and
hold harmless each of the Company and Subsidiary (and each of their respective
62
directors, officers, employees, successors and assigns) from and against any and
all losses, claims, damages, liabilities and expenses ("Losses") based upon,
arising out of or otherwise in respect of any inaccuracy in or any breach of any
representation, or warranty made by the Principal Stockholder in this Agreement
or in any certificate delivered pursuant hereto;
(b) the Company agrees to indemnify, defend and hold harmless
the Principal Stockholder (and its directors, officers, employees, successors
and assigns) from and against any and all Losses based upon, arising out of or
otherwise in respect of any inaccuracy in or any breach of any representation or
warranty made by the Company or Subsidiary contained in Article 8 of this
Agreement or in any certificate delivered pursuant hereto; and
(c) the Company and the Principal Stockholder hereby acknowledge and
agree that a claim for indemnification under this Section 12.1 arising under
Section 6.1 or 8.1 shall not be nullified solely because the facts,
circumstances and/or events giving rise to such claim may have constituted a
breach of a representation or warranty which terminated at the Effective Time
pursuant to Section 14.3.
12.2 Notice and Opportunity to Defend. Each person making a claim
under this Article 12 (an "Indemnified Party") shall, promptly after the receipt
of notice of the commencement of any action, investigation, claim or other
proceeding against such Indemnified Party in respect of which indemnity may be
sought from the indemnifying party under this Article 12 (the "Indemnifying
Party"), notify the Indemnifying Party in writing of the commencement thereof.
The failure of any Indemnified Party to so notify the Indemnifying Party of any
such action shall not
63
relieve the Indemnifying Party from any liability which it may have to such
Indemnified Party (a) other than pursuant to this Article 12 or (b) under this
Article 12 unless, and only to the extent that, such failure results in the
Indemnifying Party's forfeiture of substantial rights or defenses. In any case
in which any action, claim or other proceeding shall be brought against any
Indemnified Party, and it shall notify the Indemnifying Party of the
commencement thereof, the Indemnifying Party shall be entitled to assume the
defense thereof at its own expense, with counsel reasonably satisfactory to such
Indemnified Party; provided, however, that any Indemnified Party may, at its own
expense, retain separate counsel to participate in such defense.
Notwithstanding the foregoing, in any action, claim or proceeding in which both
the Indemnifying Party, on the one hand, and the Indemnified Party, on the other
hand, are, or are reasonably likely to become, a party, such Indemnified Party
shall have the right to employ separate counsel at the expense of the
Indemnifying Party and to control its own defense of such action, claim or
proceeding if, in the reasonable opinion of counsel to such Indemnified Party, a
conflict or potential conflict exists between the Indemnifying Party, on the one
hand, and such Indemnified Party, on the other hand, that would make such
separate representation advisable; provided, however, that the Indemnifying
Party shall not be liable for the fees and expenses of more than one counsel to
all Indemnified Parties. Each Indemnifying Party agrees that it will not,
without the prior written consent of the Indemnified Party, settle, compromise
or consent to the entry of any judgment in any pending or threatened claim,
action or proceeding relating to the matters contemplated hereby (if any
Indemnified Party is a party thereto or has been actually threatened to be made
a party
64
thereto) unless such settlement, compromise or consent includes an unconditional
release of the Indemnified Party and each other Indemnified Party from all
liability arising or that may arise out of such claim, action or proceeding.
The Indemnifying Party shall not be liable for any settlement of any claim,
action or proceeding effected against an Indemnified Party without its written
consent, which consent shall not be unreasonably withheld. The rights accorded
to an Indemnified Party hereunder shall be the exclusive remedy of such party
for any Losses based upon, arising out of or otherwise in respect of any
inaccuracy or in breach of any representation and warranty contained in this
Agreement or in any documents delivered pursuant hereto; provided, that, this
provision does not limit the liability of any holder of Target Common Stock for
any breach of any term of such holder's Letter of Transmittal for which each
such holder will be severally liable.
12.3 Limitations on Indemnifications. Except as provided in Section
12.3(c) below, the indemnification provided for in Section 12.1 shall be subject
to the following limitations:
(a) No Indemnifying Party shall be obligated to pay any amounts
for indemnification under Section 12.1 until the aggregate amount of Losses
equals one million dollars ($1,000,000) (the "Basket Amount"), whereupon the
Indemnifying Party shall be obligated to pay in full all amounts for
indemnification in excess of the Basket Amount.
(b)(i) The Company shall not be obligated to make any payment
for indemnification under Section 12.1 in excess of ten million dollars
($10,000,000) in the aggregate and (ii) the Principal Stockholder shall not be
obligated to make any
65
payment for indemnification under Section 12.1 in excess of five million dollars
($5,000,000) in the aggregate.
(c) The limitations set forth in this Section 12.3 shall not
apply to any claims under Section 12.1 for (x) breaches of any of the
representations and warranties set forth in Sections 6.2, 6.3 and 8.2, and (y) a
breach by the Company of its representation and warranty set forth Section 7.13,
but only to the extent that the Principal Stockholder or any of the holders of
Target Common Stock at the Effective Time were required to return, and returned,
to the Company any Cash Consideration received by such persons pursuant to
Section 3.1.
(d) Each party's right to make a claim for indemnification under
Section 12.1 shall terminate on the first anniversary of the Effective Date.
ARTICLE 13
TERMINATION
13.1 Termination.
(a) This Agreement may be terminated prior to the Effective Date
as follows:
(i) by mutual consent of the Company and Target; and
(ii) at the election of the Company or Target, if the
Effective Date shall not have occurred on or before February 28, 1998, provided
that a party seeking to terminate this Agreement (the "Electing Party") may not
do so if the failure to consummate the transactions contemplated hereby is the
result of a willful
66
and material breach of the representations, warranties or covenants under this
Agreement by such Electing Party or the Electing Party shall not have used its
best reasonable efforts to consummate the transaction contemplated hereby by
February 28, 1998; and
(iii) at the election of either the Company or the
Target, if on the proposed Effective Date the Closing Company Stock Price is
less than $7.50.
(b) The termination of this Agreement shall be effectuated by
the delivery by the party terminating this Agreement to the other party of a
written notice of such termination. If this Agreement so terminates, it shall
become null and void and have no further force or effect, except as provided in
Section 13.2.
13.2 Survival After Termination. If this Agreement is terminated in
accordance with Section 13.1 hereof and the transactions contemplated hereby are
not consummated, this Agreement shall become void and of no further force and
effect; provided, however, that none of the parties hereto shall have any
liability in respect of this Agreement or arising from the termination of this
Agreement, except to the extent that failure to satisfy the conditions of
Articles 10 or 11 results from the intentional or willful violation by such
party of this Agreement or the provisions of any agreement made or to be made
pursuant to this Agreement and except that the provisions of Section 9.2(b) and
Article 12 shall survive the termination of this Agreement for the periods
provided by their respective provisions.
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ARTICLE 14
MISCELLANEOUS
14.1 Expenses. If the Merger is not consummated, the Company and
Subsidiary, on the one hand, and Target and the Principal Stockholder, on the
other hand, shall each bear their respective direct and indirect expenses
incurred in connection with the negotiation and preparation of this Agreement
and the consummation of the transactions contemplated hereby. If the Merger is
consummated, the Company shall pay up to $1,600,000 of the Acquired Companies'
Transaction Expenses, and any excess of the Acquired Companies' Transaction
Expenses over $1,600,000 shall be included in the "Indebtedness" as defined in
Section 1.1.
14.2 Amendment. This Agreement shall not be amended or modified
except by a writing duly executed by all of the parties hereto.
14.3 Survival of Representations and Warranties. None of the
representations, warranties, covenants and agreements contained in this
Agreement shall survive the Effective Time, except those representations and
warranties contained in Articles 6 and 8 which shall survive until the first
anniversary of the Effective Date.
14.4 Entire Agreement. This Agreement including the Schedules
attached hereto, which are deemed for all purposes to be part of this Agreement,
and the Exhibits hereto and the other documents delivered pursuant to this
Agreement, including without limitation the Stockholders Agreement and the
Registration Rights Agreement, contain all of the terms, conditions and
representations and warranties agreed upon or made by the parties relating to
the subject matter of this Agreement and the businesses and operations of the
Acquired Companies and supersede all prior and
68
contemporaneous agreements, negotiations, correspondence, undertakings and
communications of the parties or their representatives, oral or written,
respecting such subject matter.
14.5 Headings. The headings contained in this Agreement are intended
solely for convenience and shall not affect the rights of the parties to this
Agreement.
14.6 Notices. Any notice or other communication required or permitted
under this Agreement shall be in writing and shall be deemed to have been
delivered when delivered by hand or sent by telecopier (with receipt confirmed),
or if delivered by courier shall be deemed given on the close of business on the
second Business Day next following the day when deposited with an overnight
courier or the close of business on the fifth Business Day when deposited in the
United States mail, postage prepaid, certified or registered addressed to the
party at the address set forth below, with copies sent to the persons indicated:
If to Target, to it at:
Personal Care Holdings, Inc.
c/o X.X. Childs Associates, Inc.
Xxx Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxx X. Childs
Telecopier: (000) 000-0000
With a copy to:
Xxxxxxxx & Worcester LLP
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxxxxxx Xxxxx, Esq.
Telecopier: (000) 000-0000
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If to the Principal Stockholder, to it at:
X.X. Childs Equity Partners, L.P.
c/o X.X. Childs Associates, Inc.
Xxx Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxx X. Childs
Telecopier: (000) 000-0000
With a copy to:
Xxxxxxxx & Worcester LLP
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxxxxxx Xxxxx, Esq.
Telecopier: (000) 000-0000
If to the Company or Subsidiary, to it at:
Playtex Products, Inc.
000 Xxxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxx
Telecopier: (000) 000-0000
With a copy to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
1285 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxx X. Xxxxx, Esq.
Telecopier: (000) 000-0000
Such addresses may be changed, from time to time, by means of a notice
given in the manner provided in this Section 14.6.
14.7 Severability. If any provision of this Agreement, or the
application thereof to any person or circumstance, is invalid or unenforceable
in any jurisdiction, (i) a substitute and equitable provision shall be
substituted therefor in order to remove, so far as may be valid and enforceable
in such jurisdiction, the intent
70
and purpose of the invalid or unenforceable provision; and (ii) the remainder of
this Agreement and the application of such provision to other persons or
circumstances shall not be affected by such invalidity or unenforceability, nor
shall such invalidity or unenforceability of such provision affect the validity
or enforceability of such provision, or the application thereof, in any other
jurisdiction.
14.8 Waiver. Waiver of any term or condition or breach of or failure
with respect to any such term or condition of this Agreement by any party shall
only be effective if in writing and shall not be construed as a waiver of any
subsequent breach of or failure with respect to the same term or condition, or a
waiver of any other term or condition of this Agreement.
14.9 Binding Effect; Assignment. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their permitted
successors and assigns. No party to this Agreement may assign or delegate, by
operation of law or otherwise, all or any portion of its rights, obligations or
liabilities under this Agreement without the prior written consent of the other
parties to this Agreement, which consent any such party may withhold in its
absolute discretion. Any purported assignment without such prior written
consents shall be void ab initio.
14.10 No Third Party Beneficiary. Nothing in this Agreement shall
confer any rights, remedies or claims upon any person or entity not a party or a
permitted assignee of a party to this Agreement.
14.11 Counterparts. This Agreement may be signed in any number of
counterparts with the same effect as if the signatures to each counterpart were
upon a
71
single instrument, and all such counterparts together shall be deemed an
original of this Agreement.
14.12 Governing Law and Jurisdiction. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
without giving effect to the principles of conflict of laws thereof except that
the Merger shall be governed by the DGCL.
72
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first above written.
PERSONAL CARE HOLDINGS, INC.
By: /s/ Xxxx Xxxxxx
---------------
Name: Xxxx Xxxxxx
Title: Vice President
X.X. CHILDS EQUITY PARTNERS, L.P.
By: X.X. Childs Advisors, L.P., its General
Partner
By: X.X. Childs Associates, L.P., its General
Partner
By: X.X. Childs Associates, Inc.
By: /s/ Xxxx Xxxxxx
---------------
Name: Xxxx Xxxxxx
Title: General Partner
PLAYTEX PRODUCTS, INC.
By: /s/ Xxxxxxx X. Xxxx
-------------------
Name: Xxxxxxx X. Xxxx
Title: EVP, CFO
PCG ACQUISITION CORP.
By: /s/ Xxxxxxx X. Xxxx
-------------------
Name: Xxxxxxx X. Xxxx
Title:
73
X.X. CHILDS EQUITY PARTNERS, L.P.
Xxx Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
PERSONAL CARE HOLDINGS, INC.
Xxx Xxxxxxx Xxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
January 16, 1998
Playtex Products, Inc.
PCG Acquisition Corp.
000 Xxxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxx
Re: Merger Agreement dated as of December 22, 1997 among
the addressees hereof and the undersigned (the
"Agreement")
Dear Xx. Xxxx:
This letter amends the Agreement by adding thereto, immediately after
Section 3.1(b), a new Section 3.1(b-1), which shall read in its entirety as
follows:
(b-1) In addition to the foregoing and notwithstanding
anything to the contrary contained herein, the allocation of the
Consideration Per Share set forth above may be changed with respect to the
holders of Target Common Stock and Target Options listed on
Schedule 3.1(b-1) attached hereto (each, a "Management Holder") if, prior
to the Effective Date, a Management Holder elects to receive on the
Effective Date a cash payment in lieu of the Stock Consideration Per Share
to which such Management Holder would otherwise be entitled to hereunder
(an "All Cash Election"). The cash payment to be made to a Management
Holder who makes an All Cash Election will equal the Stock Consideration
Per Share to which such Management Holder would otherwise be entitled to
hereunder multiplied by 80% of the Closing Company Stock Price (the "Cash
Election Payment"). With respect to each electing Management Holder, the
aggregate Stock Consideration Per Share otherwise allocable to such
Management Holder hereunder shall be allocated instead to the Principal
Stockholder, and an amount equal to such Management Holder's Cash Election
Payment shall be reallocated from the portion of the Cash Consideration
otherwise allocable to the Principal Stockholder to such Management Holder.
Schedule 3.1(b-1), the list of Management Holders, is attached hereto. All
other provisions of the Agreement remain unchanged.
(Signatures on following page)
Very truly yours,
X.X. CHILDS EQUITY PARTNERS, L.P.
By: X.X. Childs Advisors, L.P.,
its general partner
By: X.X. Childs Associates, L.P.,
its general partner
By: X.X. Childs Associates, Inc.,
its general partner
By: /s/ Xxxx Xxxxxx
---------------
Title:
PERSONAL CARE HOLDINGS, INC.
By: /s/ Xxxx Xxxxxx
---------------
Title:
Accepted and agreed as of the
date first written above:
PLAYTEX PRODUCTS, INC.
By: /s/ Xxxxxxx X. Xxxx
-------------------
Title:
PCG ACQUISITION CORP.
By: /s/ Xxxxxxx X. Xxxx
-------------------
Title:
2
SCHEDULE 3.1(b-1)
PCH MANAGEMENT HOLDERS
Xxxxx Xxxxxx
Xxxxx X. August
Xxxxx Xxxxxxxx
Xxxxxxxxx Xxxxxxxxx
Andy Xxxxxxxx
Xxxxx Block
Xxxxxxxx X. Block
Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxxxx
Xxxxxxx Xxx
Xxxxx Xxxxxxx
Xxxxxxxxx X. Xxxxxx
Xxxxxxxx Xxxxxxx
Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxxx
Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxxxxx
Xxxxx X. Xxxxx
Xxxxxx X. Xxxxxxxxxx
Xxxx X. Xxxxxx
Xxxxx Xxxx
Xxxx X. Xxxxx
Xxxxxx X. Xxxxxx
Xxx X. Xxxxxx
Xxxxxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxx
Xxxxxxxx X. Xxxxx
Xxxxxx Xxxxxx
Xxx Xxxxxx
Xxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxx
Xxxxx Xxxxxxxx
Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
Xxxxxx X'Xxxxx
Xxxxxx X. Xxxxxxxx
Xxxxxxx X. Page
Xxxxxx Xxxxxxxx
Sri Xxxxxxxxxxxxx
Xxxxx Xxxxxxxxxxx
Xxxxxx X. Xxxxxxxx
Xxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
Xxxx X. Xxxxx
Xxxxx X. Xxxxxxx
Xxxxxx X. Xxxxx
Xxxx Xxxxxxxx
Xxxxx X. Xxxxx
Xxxxxx X. Xxxxx
Xxxx X. Xxxxxxxx
Xxxxxxxxx Xxxxxxx
Xxxxxxxx Xxxxxxxx
X.X. CHILDS EQUITY PARTNERS, L.P.
Xxx Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
PERSONAL CARE HOLDINGS, INC.
Xxx Xxxxxxx Xxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
January 27, 1998
Playtex Products, Inc.
PCG Acquisition Corp.
000 Xxxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxx
Re: Merger Agreement dated as of December 22, 1997 among
the addressees hereof and the undersigned (as amended, the
"Agreement")
Dear Xx. Xxxx:
This letter amends Section 3.1(b-1) of the Agreement, which shall read in
its entirety as follows:
(b-1) In addition to the foregoing and notwithstanding
anything to the contrary contained herein, the allocation of the
Consideration Per Share set forth above may be changed with respect to the
holders of Target Common Stock and Target Options listed on
Schedule 3.1(b-1) attached hereto (each, a "Management Holder") if, prior
to the Effective Date, a Management Holder elects to receive on the
Effective Date a cash payment in lieu of the Stock Consideration Per Share
to which such Management Holder would otherwise be entitled to hereunder
(an "All Cash Election"). The cash payment to be made to a Management
Holder who makes an All Cash Election will equal the Stock Consideration
Per Share to which such Management Holder would otherwise be entitled to
hereunder multiplied by 80% of the Closing Company Stock Price (the "Cash
Election Payment"). With respect to each electing Management Holder, the
aggregate Stock Consideration Per Share otherwise allocable to such
Management Holder hereunder shall be allocated instead to the holders
listed on Schedule 3.1(b-1) (the "JWC Holders") in the percentage indicated
on such Schedule, and an amount equal to such Management Holder's Cash
Election Payment shall be reallocated to such Management Holder from the
portion of the Cash Consideration otherwise allocable to such JWC Holders.
Schedule 3.1(b-1), the list of Management Holders, is attached hereto. All
other provisions of the Agreement remain unchanged.
(Signatures on following page)
Very truly yours,
X.X. CHILDS EQUITY PARTNERS, L.P.
By: X.X. Childs Advisors, L.P.,
its general partner
By: X.X. Childs Associates, L.P.,
its general partner
By: X.X. Childs Associates, Inc.,
its general partner
By: /s/ Xxxx Xxxxxx
---------------
Title:
PERSONAL CARE HOLDINGS, INC.
By: /s/ Xxxx Xxxxxx
---------------
Title:
Accepted and agreed as of the
date first written above:
PLAYTEX PRODUCTS, INC.
By: /s/ Xxxxxxx X. Xxxx
-------------------
Title:
PCG ACQUISITION CORP.
By: /s/ Xxxxxxx X. Xxxx
-------------------
Title:
SCHEDULE 3.1(b-1)
PCH MANAGEMENT HOLDERS
Xxxxx Xxxxxx
Xxxxx X. August
Xxxxx Xxxxxxxx
Xxxxxxxxx Xxxxxxxxx
Andy Xxxxxxxx
Xxxxx Block
Xxxxxxxx X. Block
Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxxxx
Xxxxxxx Xxx
Xxxxx Xxxxxxx
Xxxxxxxxx X. Xxxxxx
Xxxxxxxx Xxxxxxx
Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxxx
Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxxxxx
Xxxxx X. Xxxxx
Xxxxxx X. Xxxxxxxxxx
Xxxx X. Xxxxxx
Xxxxx Xxxx
Xxxx X. Xxxxx
Xxxxxx X. Xxxxxx
Xxx X. Xxxxxx
Xxxxxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxx
Xxxxxxxx X. Xxxxx
Xxxxxx Xxxxxx
Xxx Xxxxxx
Xxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxx
Xxxxx Xxxxxxxx
Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
Xxxxxx X'Xxxxx
Xxxxxx X. Xxxxxxxx
Xxxxxxx X. Page
Xxxxxx Xxxxxxxx
Sri Xxxxxxxxxxxxx
Xxxxx Xxxxxxxxxxx
Xxxxxx X. Xxxxxxxx
Xxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
Xxxx X. Xxxxx
Xxxxx X. Xxxxxxx
Xxxxxx X. Xxxxx
Xxxx Xxxxxxxx
Xxxxx X. Xxxxx
Xxxxxx X. Xxxxx
Xxxx X. Xxxxxxxx
Xxxxxxxxx Xxxxxxx
Xxxxxxxx Xxxxxxxx
JWC HOLDERS - PRO RATA
Name Percentage
---- ----------
Xxxx Family Trust 0.05138%
X.X. Childs Equity Partners, L.P. 93.89179%
Xxxxx X. Childs 0.14087%
Xxxx X. Childs 3.26172%
Xxxxxxx X. Childs 0.14087%
Xxxxx Family Investment Trust 0.02184%
Xxxx X. Xxxxx 0.06769%
Xxxxx X. Xxxxxxx 0.21388%
Xxxxx X. Xxxx 0.23124%
Xxxxxxx X. Xxxxxxx 0.29609%
Xxxxxxxxx Xxxxxxxxx 0.02569%
L. and X. Xxxxxxxxx 0.01285%
Xxxxx Childs Preston 0.01242%
Xxxxxxx X. Xxxx 0.18800%
Xxxxxx X. Xxxxx 0.80782%
X. Xxxxx Trust 0.14607%
Xxxxx Family Limited Partnership 0.05793%
Xxxxx III Family Limited Partnership 0.04566%
Xxxx Xxxxxx 0.21388%
Suttin Family Trust 0.10808%
Xxxxx Xxxxx 0.03211%
Xxxxxxx Xxxx 0.03211%
AMENDMENT NO. 3
TO
MERGER AGREEMENT
AMENDMENT NO. 3, dated as of January 27, 1998 (the "Amendment") by
and among Playtex Products, Inc., a Delaware corporation (the "Company"), PCG
Acquisition Corp., a wholly-owned subsidiary of the Company and a Delaware
corporation ("Subsidiary"), X.X. Childs Equity Partners L.P., a Delaware
limited partnership (the "Principal Stockholder") and Personal Care Holdings
Inc., a Delaware corporation ("Target") to the Merger Agreement, dated as of
December 22, 1997 (as amended, the "Merger Agreement"), among the same
parties. Capitalized terms used herein and not defined herein are used with
the meanings ascribed thereto in the Merger Agreement.
The parties desire to amend the Merger Agreement as set forth
herein. For good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties agree as follows:
1. Amendment to Section 3.1. Section 3.1 of the Merger Agreement
is hereby amended by redesignating Sections 3.1 (c), (d) and (e) as Sections
3.1(d), (e) and (f) respectively, and by inserting the following new Section
3.1(c):
"(c) Notwithstanding the foregoing, a portion of the aggregate Cash
Consideration Per Share that any person (such person, a "PCH Holder")
is entitled to receive pursuant to this Agreement in an amount (with
respect to each PCH Holder, such PCH Holder's "Contingent
Consideration") equal to the product of (x) $350,000 times (y) a
fraction the numerator of which is the aggregate Cash Consideration
Per Share that such PCH Holder is entitled to pursuant to this
Agreement (without giving effect to this Section 3.1(c)) and the
denominator of which is the Cash Consideration, shall, in lieu of
being delivered to such PCH Holder, be delivered to an account
designated by the Principal Stockholder. In the event that as of
January 28, 1999 the Principal Stockholder has not been required to
satisfy obligations pursuant to that certain Indemnification
Agreement, dated as of January 28, 1998, between the Company and the
Principal Stockholder (the "Indemnification Agreement"), in excess of
an aggregate of $350,000, then promptly following such date, the
Principal Stockholder will deliver to each PCH Holder an amount equal
to the product of (x) the excess of $350,000 over the aggregate
amounts paid by the Principal Stockholder in satisfaction of
obligations under the Indemnification Agreement
through such date, times (y) a fraction the numerator of which is such
PCH Holder's Contingent Consideration and the denominator of which is
$350,000. PCH Holders may look solely to the Principal Stockholder for
payments, if any, to be made pursuant to this Section 3.1(c), and the
Company, the Subsidiary and the Surviving Corporation shall have no
liability whatsoever to any PCH Holder in connection with the
obligations of the Principal Stockholder to make payments hereunder."
2. Except as amended hereby, the Merger Agreement shall in all
respects continue in full force and effect. This Amendment may be executed in
two or more counterparts, all of which shall be considered one and the same
Agreement and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other parties. This
Amendment shall be governed by, and construed in accordance with the laws of the
State of New York, regardless of the laws that might otherwise govern under
applicable principles of conflicts of laws thereof.
2
IN WITNESS WHEREOF, each of the parties have signed or caused
this Agreement to be signed as of the date first above written.
PERSONAL CARE HOLDINGS, INC.
By: /s/ Xxxx Xxxxxx
---------------
Name: Xxxx Xxxxxx
Title: Vice President
X.X. CHILDS EQUITY PARTNERS, L.P.
By: X.X. Childs Advisors, L.P., its General
Partner
By: X.X. Childs Associates, L.P., its General
Partner
By: X.X. Childs Associates, Inc.
By: /s/ Xxxx Xxxxxx
---------------
Name: Xxxx Xxxxxx
Title: General Partner
PLAYTEX PRODUCTS, INC.
By: /s/ Xxxxxxx X. Xxxx
-------------------
Name: Xxxxxxx X. Xxxx
Title: EVP, CFO
PCG ACQUISITION CORP.
By: /s/ Xxxxxxx X. Xxxx
-------------------
Name: Xxxxxxx X. Xxxx
Title:
3
