Exhibit (c)(3)
FEE AGREEMENT
WHEREAS, WBT Holdings LLC ("WBT") wishes to enter into a merger
agreement with American Filtrona Corporation ("AFC") to effect a merger (the
"Merger") between AFC and a wholly-owned subsidiary of WBT whereby WBT will
become the sole shareholder of AFC;
WHEREAS, WBT wishes to sell to Bunzl plc ("Bunzl") and Bunzl wishes to
purchase the business and assets of the Bonded Fibers Business (as defined in
the LOI) of AFC (the "Acquisition") immediately following the Merger, all
pursuant to a letter of intent dated October 22, 1996 from Bunzl to WBT, as
subsequently amended (the "LOI"); and
WHEREAS, WBT has agreed to pay $43 per share of AFC Common Stock in
cash (the "Merger Consideration") as set out in paragraph 2 of the letter of
intent dated December 12, 1996 from WBT to AFC regarding the proposed Merger
(the "Merger LOI");
NOW, THEREFORE, in consideration of the agreements set forth herein,
and other good and valuable consideration the receipt of which is hereby
acknowledged, WBT (and certain of its affiliates listed on the signature pages
hereof) and Bunzl agree as follows:
SECTION 1. Increase in Bid Price. If there is a bona fide competing bid
for the AFC Stock from a third party at a price in excess of $43 per share of
AFC common stock, and it is necessary in the reasonable judgment of WBT and
Bunzl to respond to such competing bid, WBT agrees that it will not request that
Bunzl fund any portion of the increase in the Merger Consideration if such
increase is up to a price of $45 per share of AFC common stock in cash. Subject
to the terms of the LOI, Bunzl and WBT agree that they will in good faith
negotiate with each other with respect to the Acquisition, and Bunzl will in
good faith seek to facilitate the progress of the Merger; provided that Bunzl
shall incur no liabilities or obligations in connection with such negotiations
or efforts.
SECTION 2. Alternative Transaction. If for any reason prior to April
23, 1997 either (a) definitive agreements effecting the Merger and the
Acquisition in accordance with the terms of the Merger LOI and the LOI,
respectively, are not in full force and effect or (b) such agreements are in
full force and effect but the Merger and the Acquisition have not progressed, to
Bunzl's reasonable satisfaction, toward closing, WBT will, at Bunzl's written
request, terminate negotiations for the Merger (to the extent applicable) and
will cooperate as requested by Bunzl and use its best efforts (including,
without limitation, voting its (and its affiliates') shares in AFC in favor of
any proposal or resolution (approved by the directors of AFC or providing a fair
price to AFC in the reasonable judgment of WBT) to sell the Bonded Fibers
Business to Bunzl) to ensure that Bunzl has the opportunity to negotiate a
definitive agreement for the purchase of the Bonded Fibers Business directly
from AFC (on a basis which leaves WBT's ownership interest in AFC intact).
SECTION 3. Payments. (a) If
(i) prior to September 10, 1997 (or, at Bunzl's election, a
later date up to December 31, 1997) Bunzl has not (x) consummated the
acquisition of the Bonded Fibers Business pursuant to the proposed Merger and
Acquisition (unless such failure to consummate is prevented by action or
threatened action from US anti-trust regulatory authorities or objections by one
or more of the major customers of the Bonded Fibers Business) or (y) entered
into a binding agreement to purchase the Bonded Fibers Business directly from
AFC, or
(ii) prior to September 10, 1997 AFC has terminated all
discussions or negotiations (x) with WBT with respect to the Merger and (y) with
Bunzl with respect to a purchase by Bunzl of the Bonded Fibers Business directly
from AFC or AFC has refused to enter into such negotiations (the first date on
which the condition set forth in (i) or (ii) occurs, the "Termination Date"),
then WBT will pay to Bunzl an amount equal to $100,000 multiplied by the number
of months elapsed from December 10, 1996 to the Termination Date, such amount to
be prorated for any part of any month elapsed after December 10, 1996.
(b) Within five business days of the date hereof, WBT shall deposit
marketable securities freely transferable under applicable laws and with a
market value of at least $1,250,000, together with an appropriate stock transfer
documentation, into an escrow account with an independent bank (the "Escrow
Agent") to secure its obligations to Bunzl hereunder, such marketable securities
and stock transfer documentation to be satisfactory to Bunzl. WBT will have the
right to receive dividends and exercise its voting rights with respect to such
stock during the term of the escrow, provided that there is no default
hereunder. If WBT is required to make a payment hereunder, it shall promptly
make such payment in cash and if WBT fails to make such payment in cash, the
Escrow Agent shall promptly sell such securities and distribute the amount of
the proceeds to Bunzl in the amount necessary to satisfy WBT's obligations
hereunder. The securities in the Escrow Account shall be released upon the joint
instructions of WBT and Bunzl:
(A) to Bunzl on the Termination Date, if a payment is due hereunder; or
(B) to WBT after September 10, 1997, if no payment is owed by WBT
hereunder pursuant to Section 3(a)(i).
WBT and Bunzl shall give such joint instructions to the Escrow Agent within 7
days of the occurrence of any of the events referred to in (A) or (B) above;
provided that if the events described in Section 3(a)(i) have not occurred as of
September 10, 1997 (or such later date as shall have been elected by Bunzl),
such securities shall be sold and the value thereof shall be transferred to
Bunzl by the Escrow Agent upon Bunzl's certification that the Termination Date
has occurred, which certification shall be binding upon the Escrow Agent without
WBT's
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consent but shall not be binding upon WBT in any determination of its rights and
obligations hereunder.
(c) If WBT has paid a fee to Bunzl pursuant to Section 3(a) and on or
before Xxxxx 00, 0000 Xxxxx enters into a definitive agreement to purchase the
Bonded Fibers Business directly from AFC or from a party which has the full
power and authority (corporate or otherwise) to effect such sale and has the
legal title to, and the power to transfer to Bunzl, the Bonded Fibers Business,
Bunzl will repay to WBT the amount of such fee promptly upon the execution of
such definitive agreement.
SECTION 4. Expense Reimbursement. WBT and its affiliates, jointly and
severally, will reimburse Bunzl for all of its expenses in connection with the
proposed transaction described in the LOI up to a maximum of $500,000, if:
(a) the proposed transaction is not consummated because of
unavailability of financing for WBT;
(b) the proposed transaction is not consummated because the
dispute between (i) Xxxxxxx X. Xxxxx, WBT or any affiliates,
fiduciaries or beneficiaries of WBT and (ii) Xxxx Xxxxx or any
of the fiduciaries or beneficiaries of trusts for the benefit
of the members of the family of Xxxx Xxxxx, in each case with
respect to Xxxxxxx X. Xxxxx'x role as trustee of any such
trust is not resolved; or
(c) no fee is payable to WBT from AFC because WBT (or its
affiliate) has taken or omitted to take any of the acts
described in Section 8(f) of the Merger LOI which action or
omission results in WBT not receiving such fee; provided that
Bunzl is not participating in any way (including negotiating
for a separate purchase of the Bonded Fibers Business from any
other party) in connection with a competing proposal described
in such Section 8(f).
SECTION 5. Sharing of a Break-up Fee. If AFC pays a fee to WBT or its
affiliates in connection with the proposed transaction or reimburses WBT or its
affiliates for expenses of the proposed transaction, in each case whether
pursuant to the terms of the Merger LOI or otherwise, the aggregate amount of
such fee and expense reimbursement shall be divided by first reimbursing the
actual transaction-related expenses of WBT and its affiliates (except for legal
fees of Xxxxxxxxxx, Xxxxxx & Xxxxxxx) and Bunzl (provided that if such fee and
expense reimbursement is not sufficient to reimburse such expenses of both WBT
and its affiliates, on one hand, and Bunzl, on the other hand, then such fee and
expense reimbursement will be divided equally between Bunzl and WBT) and then
dividing the remainder, if any, equally between Bunzl and WBT.
SECTION 6. Representations and Warranties; Covenants. (a) Each party
hereto (i) is duly incorporated (or otherwise organized), and validly existing
and (ii) has full power and authority to execute and deliver this Agreement and
to carry out its obligations hereunder in
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accordance with the terms and provisions hereof. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all requisite corporate or
other necessary action on the part of such party, are within the powers of such
party and this Agreement constitutes the valid and legally binding obligation of
such party.
(b) WBT hereby agrees and covenants that within three business days of
the date hereof it will cause each of the trustees of the trusts for the benefit
of the members of the family of Xxxxxx Xxxxx to execute and deliver to Bunzl
documentation reasonably satisfactory to Bunzl evidencing that such trusts will
be jointly and severally responsible with WBT in respect of WBT's obligations
hereunder.
SECTION 7. Governing Law; Consent to Jurisdiction. (a) This Agreement
has been negotiated, executed, delivered and accepted at, and is deemed to have
been made at, New York, New York and is governed by and construed in accordance
with the laws of the State of New York.
(b) Each party hereby submits to the non-exclusive jurisdiction of the
United States District Court for the Southern District of New York and of any
New York State court sitting in New York City for purposes of all legal
proceedings arising out of or relating to this Agreement or the transactions
contemplated hereby. Each party irrevocably waives, to the fullest extent
permitted by law, any objection which it may now or hereafter have to the laying
of the venue of any such proceeding brought in such a court and any claim that
any such proceeding brought in such a court has been brought in an inconvenient
forum. Each party agrees that a final judgment in any such proceeding shall be
conclusive and binding upon it and may be enforced in any court of the
jurisdiction to which it is subject by a suit upon such judgment or in any
manner provided by law.
(c) To the fullest extent permitted by applicable law, the parties
hereby agree that any claim, action, or proceeding seeking any relief whatsoever
based on, arising out of, or in connection with, this Agreement or the
transactions contemplated hereby shall be brought only in the courts of the
State of New York sitting in New York City or the Federal courts sitting in the
Southern District of New York.
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IN WITNESS WHEREOF, the undersigned parties hereto have executed this
Agreement as of December 12, 1996.
BUNZL PLC
By /s/ A.T. Xxxxxxx
-------------------------
Name: A.T. Xxxxxxx
Title: Chairman
WBT HOLDINGS LLC
By /s/ Xxxxxxx X. Xxxxx
-------------------------
Name: Xxxxxxx X. Xxxxx
Title: President
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