Exhibit (2)(b)
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AGREEMENT AND PLAN OF MERGER
Dated as of April 11, 2000
Among
CONOPCO, INC.,
VERMONT ALL NATURAL EXPANSION COMPANY
And
BEN & JERRY'S HOMEMADE, INC.
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TABLE OF CONTENTS
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ARTICLE I
THE OFFER AND THE MERGER
SECTION 1.01. The Offer.................................................................................2
SECTION 1.02. Company Actions...........................................................................4
SECTION 1.03. The Merger................................................................................5
SECTION 1.04. Closing...................................................................................5
SECTION 1.05. Effective Time............................................................................5
SECTION 1.06. Effects...................................................................................6
SECTION 1.07. Articles of Incorporation and By-laws.....................................................6
SECTION 1.08. Directors.................................................................................6
SECTION 1.09. Officers..................................................................................6
ARTICLE II
EFFECT ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 2.01. Effect on Capital Stock...................................................................6
SECTION 2.02. Exchange of Certificates..................................................................8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.01. Organization, Standing and Power.........................................................10
SECTION 3.02. Company Subsidiaries; Equity Interests...................................................11
SECTION 3.03. Capital Structure........................................................................11
SECTION 3.04. Authority; Execution and Delivery; Enforceability........................................14
SECTION 3.05. No Conflicts; Consents...................................................................15
SECTION 3.06. SEC Documents; Undisclosed Liabilities...................................................16
SECTION 3.07. Information Supplied.....................................................................17
SECTION 3.08. Absence of Certain Changes or Events.....................................................18
SECTION 3.09. Taxes....................................................................................20
SECTION 3.10. Absence of Changes in Benefit Plans......................................................21
SECTION 3.11. ERISA Compliance; Excess Parachute Payments..............................................21
SECTION 3.12. Litigation...............................................................................24
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SECTION 3.13. Compliance with Applicable Laws..........................................................24
SECTION 3.14. Environmental Matters....................................................................24
SECTION 3.15. Contracts; Debt Instruments..............................................................26
SECTION 3.16. Intellectual Property....................................................................26
SECTION 3.17. Labor Matters............................................................................27
SECTION 3.18. Title to Properties......................................................................27
SECTION 3.19. Equipment................................................................................28
SECTION 3.20. Suppliers................................................................................28
SECTION 3.21. Brokers; Schedule of Fees and Expenses...................................................28
SECTION 3.22. Opinion of Financial Advisor.............................................................29
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CONOPCO AND SUB
SECTION 4.01. Organization, Standing and Power.........................................................29
SECTION 4.02. Sub......................................................................................29
SECTION 4.03. Authority; Execution and Delivery; Enforceability........................................29
SECTION 4.04. Consents.................................................................................30
SECTION 4.05. Information Supplied.....................................................................30
SECTION 4.06. Brokers..................................................................................31
SECTION 4.07. Conopco Plans............................................................................31
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 5.01. Conduct of Business......................................................................31
SECTION 5.02. No Solicitation..........................................................................35
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Preparation of Proxy Statement; Shareholders Meeting.....................................38
SECTION 6.02. Access to Information; Confidentiality...................................................39
SECTION 6.03. Best Efforts; Notification...............................................................40
SECTION 6.04. Stock Options ..........................................................................41
SECTION 6.05. Benefit Plans ..........................................................................42
SECTION 6.06. Indemnification..........................................................................43
SECTION 6.07. Fees and Expenses; Liquidated Damages....................................................44
SECTION 6.08. Public Announcements.....................................................................45
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SECTION 6.09. Transfer Taxes ..........................................................................46
SECTION 6.10. Interim Directors........................................................................46
SECTION 6.11. Company Capital Stock....................................................................47
SECTION 6.12. Rights Agreements; Consequences if Rights Triggered......................................47
SECTION 6.13. Shareholder Litigation...................................................................48
SECTION 6.14. Operations of the Surviving Corporation..................................................48
SECTION 6.15. The Foundation ..........................................................................52
SECTION 6.16. Certain Employee Matters.................................................................52
SECTION 6.17. Social Milestones........................................................................52
SECTION 6.18. The Social Venture Fund..................................................................53
ARTICLE VII
SECTION 7.01. Conditions to the Offer..................................................................53
SECTION 7.02. Conditions to the Merger.................................................................56
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. Termination..............................................................................57
SECTION 8.02. Effect of Termination....................................................................59
SECTION 8.03. Amendment................................................................................59
SECTION 8.04. Extension; Waiver........................................................................60
SECTION 8.05. Procedure for Termination, Amendment, Extension or Waiver................................60
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Nonsurvival of Representations and Warranties............................................61
SECTION 9.02. Notices..................................................................................61
SECTION 9.03. Definitions..............................................................................62
SECTION 9.04. Interpretation; Disclosure Letters.......................................................63
SECTION 9.05. Severability.............................................................................63
SECTION 9.06. Counterparts.............................................................................63
SECTION 9.07. Entire Agreement; No Third-Party Beneficiaries...........................................63
SECTION 9.08. GOVERNING LAW............................................................................64
SECTION 9.09. Assignment...............................................................................64
SECTION 9.10. Enforcement..............................................................................65
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SECTION 9.11. Separate Parties.........................................................................65
EXHIBIT A Articles of Incorporation
EXHIBIT B Form of Delegation of Authority
AGREEMENT AND PLAN OF MERGER, dated as of
April 11, 2000, among CONOPCO, INC., a New York
corporation ("CONOPCO"), VERMONT ALL NATURAL
EXPANSION COMPANY, a Vermont corporation ("SUB"), and
BEN & JERRY'S HOMEMADE, INC., a Vermont corporation
(the "COMPANY").
WHEREAS Conopco believes that it is uniquely positioned to
further the Company's three-part mission through a business combination that
leverages the strengths of both Conopco and the Company;
WHEREAS the respective Boards of Directors of Conopco, Sub and
the Company have approved the acquisition of the Company by Conopco on the terms
and subject to the conditions set forth in this Agreement;
WHEREAS, in furtherance of such acquisition, Conopco proposes
to cause Sub to make a tender offer (as it may be amended from time to time as
permitted under this Agreement, the "OFFER") to purchase all the outstanding
shares of Class A Common Stock of the Company, par value $.033 per share (the
"CLASS A COMMON STOCK"), including the associated Class A Rights (as defined in
Section 3.03), and all the outstanding shares of Class B Common Stock of the
Company, par value $.033 per share (the "CLASS B COMMON STOCK", and together
with the Class A Common Stock, the "COMPANY COMMON STOCK"), including the
associated Class B Rights (as defined in Section 3.03), at a price per share of
Company Common Stock (including the associated Company Right (as defined in
Section 3.03)) of $43.60, net to the seller in cash, on the terms and subject to
the conditions set forth in this Agreement;
WHEREAS the respective Boards of Directors of Conopco, Sub and
the Company have approved the merger (the "MERGER") of Sub into the Company, or
(at the election of Conopco) the Company into Sub, on the terms and subject to
the conditions set forth in this Agreement, whereby (a) each issued share of
Company Common Stock not owned by Conopco, Sub or the Company, and (b) each
share of Company Common Stock, not owned directly or indirectly by Conopco or
the Company, shall be converted into the right to receive $43.60 in cash;
WHEREAS, immediately following the acceptance for payment of
shares of Company Common Stock pursuant to the Offer, the Company shall cause
the outstanding shares
of the Company's $1.20 Class A Preferred Stock, par value $1.00 per share (the
"COMPANY PREFERRED STOCK" and, together with the Company Common Stock, the
"COMPANY CAPITAL STOCK"), to be redeemed;
WHEREAS simultaneously with the execution and
delivery of this Agreement Ben & Jerry's Homemade Holdings,
Inc. and the Company are granting an international license
to Unilever N.V. and Unilever PLC pursuant to a License
Agreement (the "LICENSE AGREEMENT");
WHEREAS simultaneously with the execution and delivery of this
Agreement the Company and Conopco are entering into a stock option agreement
(the "STOCK OPTION AGREEMENT" and, together with this Agreement and the License
Agreement, the "TRANSACTION AGREEMENTS"), pursuant to which the Company is
granting Conopco an option to purchase shares of Class A Common Stock on the
terms and subject to the conditions set forth therein; and
WHEREAS Conopco, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to the Offer and
the Merger.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
THE OFFER AND THE MERGER
SECTION 1.01. THE OFFER. (a) Subject to the conditions of this
Agreement, as promptly as practicable but in no event later than five business
days after the date of this Agreement, Sub shall, and Conopco shall cause Sub
to, commence the Offer within the meaning of the applicable rules and
regulations of the Securities and Exchange Commission (the "SEC"). The
obligation of Sub to, and of Conopco to cause Sub to, commence the Offer and
accept for payment, and pay for, any shares of Company Common Stock tendered
pursuant to the Offer are subject to the conditions set forth in Section 7.01.
The initial expiration date of the Offer shall be the 20th business day
following the commencement of the Offer (determined using Rule 14d-2 of the
SEC). Sub expressly
reserves the right to modify the terms of the Offer or waive any condition to
the Offer, except that, without the consent of the Company, Sub shall not (i)
reduce the number of shares of Company Common Stock subject to the Offer, (ii)
reduce the price per share of Company Common Stock to be paid pursuant to the
Offer, (iii) reduce or waive the Minimum Tender Condition (as defined in Section
7.01), (iv) modify, in any manner adverse to the holders of Company Common
Stock, or add to, the conditions set forth in Section 7.01, (v) extend the Offer
or (vi) change the form of consideration payable in the Offer. Notwithstanding
the foregoing, Sub may, without the consent of the Company, (i) extend the Offer
in increments of not more than five business days each, if at the scheduled
expiration date of the Offer any of the conditions to Sub's obligation to
purchase shares of Company Common Stock are not satisfied, until such time as
such conditions are satisfied or waived, (ii) extend the Offer for any period
required by any rule, regulation, interpretation or position of the SEC or the
staff thereof applicable to the Offer and (iii) make available a subsequent
offering period (within the meaning of Rule 14d-11 of the SEC). Without limiting
the right of Sub to extend the Offer, in the event that any condition set forth
in paragraph (a) of Section 7.01 is not satisfied or waived at the scheduled
expiration date of the Offer, at the request of the Company Sub shall, and
Conopco shall cause Sub to, extend the expiration date of the Offer in
increments of five business days each until the earliest to occur of (w) the
satisfaction or waiver of such condition, (x) Conopco reasonably determines that
such condition to the Offer is not capable of being satisfied on or prior to
September 30, 2000, (y) the termination of this Agreement in accordance with its
terms and (z) September 30, 2000. In addition, on the terms and subject to the
conditions of the Offer and this Agreement, Sub shall pay for all shares of
Company Common Stock validly tendered and not withdrawn pursuant to the Offer
that Sub becomes obligated to purchase pursuant to the Offer as soon as
practicable after the expiration of the Offer.
(b) On the date of commencement of the Offer, Conopco and Sub
shall file with the SEC a Tender Offer Statement on Schedule TO with respect to
the Offer, which shall contain an offer to purchase and a related letter of
transmittal and summary advertisement (such Schedule TO and the documents
included therein pursuant to which the Offer will be made, together with any
supplements or amendments thereto, the "OFFER DOCUMENTS"). Each of Conopco, Sub
and the Company shall
promptly correct any information provided by it for use in the Offer Documents
if and to the extent that such information shall have become false or misleading
in any material respect, and each of Conopco and Sub shall take all steps
necessary to amend or supplement the Offer Documents and to cause the Offer
Documents as so amended or supplemented to be filed with the SEC and to be
disseminated to the Company's shareholders, in each case as and to the extent
required by applicable Federal securities laws. Conopco and Sub shall provide
the Company and its counsel in writing with any comments Conopco, Sub or their
counsel may receive from the SEC or its staff with respect to the Offer
Documents promptly after the receipt of such comments.
SECTION 1.02. COMPANY ACTIONS. (a) Subject to the right of the
Board of Directors of the Company (the "COMPANY BOARD", which term shall mean,
after the Effective Time (as defined in Section 1.05), the board of directors of
the Surviving Corporation (as defined in Section 1.03)) to take action permitted
by Section 5.02(b), the Company hereby approves of and consents to the Offer,
the Merger and the other transactions contemplated by the Transaction Agreements
(collectively, the "TRANSACTIONS").
(b) On the date the Offer Documents are filed with the SEC,
the Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 with respect to the Offer, including an appropriate information
statement (the "INFORMATION STATEMENT") under Rule 14f-1 (such Schedule 14D-9
and Information Statement, as amended from time to time, the "SCHEDULE 14D-9")
and shall mail the Schedule 14D-9 to the holders of Class A Common Stock. The
Schedule 14D-9 shall contain the recommendation described in Section 3.04(b),
unless such recommendation has been withdrawn or modified in accordance with
Section 5.02(b). Each of the Company, Conopco and Sub shall promptly correct any
information provided by it for use in the Schedule 14D-9 if and to the extent
that such information shall have become false or misleading in any material
respect, and the Company shall take all steps necessary to amend or supplement
the Schedule 14D-9 and to cause the Schedule 14D-9 as so amended or supplemented
to be filed with the SEC and disseminated to the Company's shareholders, in each
case as and to the extent required by applicable Federal securities laws. The
Company shall provide Conopco and its counsel in writing with any comments the
Company or its counsel may receive from the
SEC or its staff with respect to the Schedule 14D-9 promptly after the receipt
of such comments.
(c) In connection with the Offer, the Company shall cause its
transfer agent to furnish Sub promptly with mailing labels containing the names
and addresses of the record holders of Company Common Stock as of a recent date
and of those persons becoming record holders of Company Common Stock subsequent
to such date, together with copies of all lists of shareholders, security
position listings and computer files and all other information in the Company's
possession or control regarding the beneficial owners of Company Common Stock,
and shall furnish to Sub such information and assistance (including updated
lists of shareholders, security position listings and computer files) as Conopco
may reasonably request in communicating the Offer to the Company's shareholders.
Subject to the requirements of applicable Law (as defined in Section 3.05), and
except for such steps as are necessary to disseminate the Offer Documents and
any other documents necessary to consummate the Transactions, Conopco and Sub
shall hold in confidence the information contained in any such labels, listings
and files, shall use such information only in connection with the Offer and the
Merger and, if this Agreement shall be terminated, shall, upon request, deliver
to the Company all copies of such information then in their possession.
SECTION 1.03. THE MERGER. On the terms and subject to the
conditions set forth in this Agreement, and in accordance with the Vermont
Business Corporation Act (the "VBCA"), Sub shall be merged with and into the
Company at the Effective Time (as defined in Section 1.05). At the Effective
Time, the separate corporate existence of Sub shall cease and the Company shall
continue as the surviving corporation (the "SURVIVING CORPORATION"). At the
election of Conopco, any direct or indirect wholly owned subsidiary of Conopco
may be substituted for Sub as a constituent corporation in the Merger. In such
event, the parties shall execute an appropriate amendment to this Agreement in
order to reflect the foregoing.
SECTION 1.04. CLOSING. The closing (the "CLOSING") of the
Merger shall take place at the offices of Cravath, Swaine & ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ at 10:00 a.m. on the second business day
following the satisfaction (or, to the extent permitted by Law, waiver by all
parties) of the conditions set forth in Section 7.02, or at such other place,
time and
date as shall be agreed in writing between Conopco and the Company. The date on
which the Closing occurs is referred to in this Agreement as the "CLOSING DATE".
SECTION 1.05. EFFECTIVE TIME. Prior to the Closing, the
Company shall prepare, and on the Closing Date or as soon as practicable
thereafter the Surviving Corporation shall file with the Secretary of State of
the State of Vermont, articles of merger or other appropriate documents (in any
such case, the "ARTICLES OF MERGER") executed in accordance with the relevant
provisions of the VBCA and shall make all other filings or recordings required
under the VBCA. The Merger shall become effective at such time as the Articles
of Merger are duly filed with such Secretary of State, or at such other later
time as Conopco and the Company shall agree and specify in the Articles of
Merger (the time the Merger becomes effective being the "EFFECTIVE TIME").
SECTION 1.06. EFFECTS. The Merger shall have the
effects set forth in Section 11.06 of the VBCA.
SECTION 1.07. ARTICLES OF INCORPORATION AND BY-LAWS. (a) The
Articles of Incorporation of the Surviving Corporation shall be amended at the
Effective Time to read in the form of Exhibit A and, as so amended, such
Articles of Incorporation shall be the Articles of Incorporation of the
Surviving Corporation until thereafter changed or amended as provided therein or
by applicable Law.
(b) The By-laws of Sub as in effect immediately prior to the
Effective Time shall be the By-laws of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable Law.
SECTION 1.08. DIRECTORS. The directors of the Company
immediately prior to the Effective Time shall be the directors of the Surviving
Corporation who elect to remain on or rejoin the Company Board, together with
such other individuals appointed to the Company Board, all in accordance with
the provisions of Section 6.14(a).
SECTION 1.09. OFFICERS. The officers of the Company
immediately prior to the Effective Time shall be the officers of the Surviving
Corporation, until the earlier of their resignation or removal or until their
respective successors are duly elected or appointed and qualified, as the case
may be.
ARTICLE II
EFFECT ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 2.01. EFFECT ON CAPITAL STOCK. At the Effective Time,
by virtue of the Merger and without any action on the part of the holder of any
shares of Company Common Stock or any shares of capital stock of Sub:
(a) CAPITAL STOCK OF SUB. Each issued and outstanding share of
capital stock of Sub shall be converted into and become ten thousand fully paid
and nonassessable shares of common stock, par value $0.01 per share, of the
Surviving Corporation.
(b) CANCELATION OF TREASURY STOCK AND CONOPCO-OWNED STOCK.
Each share of Company Common Stock that is owned by the Company, Conopco or Sub
shall no longer be outstanding and shall automatically be canceled and retired
and shall cease to exist, and no consideration shall be delivered or deliverable
in exchange therefor. Each share of Company Common Stock that is owned by any
subsidiary of the Company or Conopco (other than Sub) shall automatically be
converted into one fully paid and nonassessable share of common stock, par value
$0.01 per share, of the Surviving Corporation.
(c) CONVERSION OF COMPANY COMMON STOCK. (1) Subject to
Sections 2.01(b) and 2.01(d), each issued and outstanding share of Company
Common Stock shall be converted into the right to receive $43.60 in cash.
(2) The cash payable upon the conversion of shares of Company
Common Stock pursuant to this Section 2.01(c) is referred to collectively as the
"MERGER CONSIDERATION". As of the Effective Time, all such shares of Company
Common Stock shall no longer be outstanding and shall automatically be canceled
and retired and shall cease to exist, and each holder of a certificate
representing any such shares of Company Common Stock shall cease to have any
rights with respect thereto, except the right to receive Merger Consideration
upon surrender of such certificate in accordance with Section 2.02, without
interest.
(d) DISSENTERS RIGHTS. Notwithstanding anything in this
Agreement to the contrary, shares ("DISSENTERS SHARES") of Company Common Stock
that are outstanding immediately prior to the Effective Time and that are held
by any person who is entitled to demand and
properly demands payment of the fair value of such Dissenters Shares pursuant
to, and who complies in all respects with, Chapter 13 of the VBCA ("CHAPTER 13")
shall not be converted into Merger Consideration as provided in Section 2.01(c),
but rather the holders of Dissenters Shares shall be entitled to payment of the
fair value of such Dissenters Shares in accordance with Chapter 13 of the VBCA;
PROVIDED, HOWEVER, that if any such holder shall fail to perfect or otherwise
lose such holder's right to receive payment of fair value under Chapter 13, then
the right of such holder to be paid the fair value of such holder's Dissenters
Shares shall cease and such Dissenters Shares shall be deemed to have been
converted as of the Effective Time into, and to have become exchangeable solely
for the right to receive, Merger Consideration as provided in Section 2.01(c).
The Company shall serve prompt notice to Conopco of any demands received by the
Company for appraisal of any shares of Company Common Stock. Prior to the
Effective Time, the Company shall not, without the prior written consent of
Conopco, participate in negotiations or proceedings with respect to such demands
or make any payment with respect to, or settle or offer to settle, any such
demands, or agree to do any of the foregoing.
SECTION 2.02. EXCHANGE OF CERTIFICATES. (a) PAYING AGENT.
Prior to the Effective Time, Conopco and the Company shall select a bank or
trust company to act as paying agent (the "PAYING AGENT") for the payment of
Merger Consideration upon surrender of certificates representing Company Common
Stock. Concurrently with the Effective Time, the Company shall provide to the
Paying Agent the amount of cash required to pay the aggregate Merger
Consideration (such cash being hereinafter referred to as the "EXCHANGE FUND").
(b) EXCHANGE PROCEDURE. As soon as reasonably practicable
after the Effective Time, the Paying Agent shall mail to each holder of record
of a certificate or certificates (the "CERTIFICATES") that immediately prior to
the Effective Time represented outstanding shares of Company Common Stock whose
shares were converted into the right to receive Merger Consideration pursuant to
Section 2.01, (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Paying Agent and shall be in such
form and have such other provisions as Conopco and the Company may reasonably
specify) and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for Merger Consideration.
Upon surrender of a Certificate for cancelation to the Paying Agent or to such
other agent or agents as may be appointed by Conopco, together with such letter
of transmittal, duly executed, and such other docu ments as may reasonably be
required by the Paying Agent, the holder of such Certificate shall be entitled
to receive in exchange therefor the amount of cash into which the shares of
Company Common Stock theretofore represented by such Certificate shall have been
converted pursuant to Section 2.01, and the Certificate so surrendered shall
forthwith be canceled. In the event of a transfer of ownership of Company Common
Stock that is not registered in the transfer records of the Company, payment may
be made to a person other than the person in whose name the Certificate so
surrendered is registered, if such Certificate shall be properly endorsed or
otherwise be in proper form for transfer and the person requesting such payment
shall pay any transfer or other taxes required by reason of the payment to a
person other than the registered holder of such Certificate or establish to the
satisfaction of Conopco that such tax has been paid or is not applicable. Until
surrendered as contemplated by this Section 2.02, each Certificate shall be
deemed at any time after the Effective Time to represent only the right to
receive upon such surrender the amount of cash, without interest, into which the
shares of Company Common Stock theretofore represented by such Certificate have
been converted pursuant to Section 2.01. No interest shall be paid or shall
accrue on the cash payable upon surrender of any Certificate.
(c) NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. The
Merger Consideration paid in accordance with the terms of this Article II upon
conversion of any shares of Company Common Stock shall be deemed to have been
paid in full satisfaction of all rights pertaining to such shares of Company
Common Stock, SUBJECT, HOWEVER, to the Surviving Corporation's obligation to pay
any dividends or make any other distributions with a record date prior to the
Effective Time that may have been declared or made by the Company on such shares
of Company Common Stock in accordance with the terms of this Agreement or prior
to the date of this Agreement and which remain unpaid at the Effective Time, and
after the Effective Time there shall be no further registration of transfers on
the stock transfer books of the Surviving Corporation of shares of Company
Common Stock that were outstanding immediately prior to the Effective Time. If,
after the Effective Time, any certificates formerly representing shares of
Company Common Stock are presented to the Surviving Corporation
or the Paying Agent for any reason, they shall be canceled and exchanged as
provided in this Article II.
(d) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange
Fund that remains undistributed to the holders of Company Common Stock for six
months after the Effective Time shall be delivered to Conopco, upon demand,
subject to compliance with any applicable abandoned property, escheat or similar
Law.
(e) NO LIABILITY. To the extent permitted by applicable Law,
none of Sub, Conopco, the Company or the Paying Agent shall be liable to any
person in respect of any cash from the Exchange Fund delivered to a public
official pursuant to any applicable abandoned property, escheat or similar Law.
If any Certificate has not been surrendered prior to five years after the
Effective Time (or immediately prior to such earlier date on which Merger
Consideration in respect of such Certificate would otherwise escheat to or
become the property of any Governmental Entity (as defined in Section 3.05)),
any such shares, cash, dividends or distributions in respect of such Certificate
shall, to the extent permitted by applicable Law, become the property of the
Surviving Corporation, free and clear of all claims or interest of any person
previously entitled thereto.
(f) INVESTMENT OF EXCHANGE FUND. The Paying Agent shall invest
any cash included in the Exchange Fund, as directed by Conopco, on a daily
basis. Any interest and other income resulting from such investments shall be
paid to Conopco.
(g) WITHHOLDING RIGHTS. The Surviving Corporation shall be
entitled to deduct and withhold from the consideration otherwise payable to any
holder of Company Common Stock pursuant to this Agreement such amounts as may be
required to be deducted and withheld with respect to the making of such payment
under the Code (as defined in Section 3.11), or under any provision of state,
local or foreign tax Law.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Conopco and Sub as
follows:
SECTION 3.01. ORGANIZATION, STANDING AND POWER. Each of the
Company and each of its subsidiaries (the "COMPANY SUBSIDIARIES") is duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized and has full corporate power and authority
and possesses all governmental franchises, licenses, permits, authorizations and
approvals necessary to enable it to own, lease or otherwise hold its properties
and assets and to conduct its businesses as presently conducted. The Company and
each Company Subsidiary is duly qualified to do business in each jurisdiction
where the nature of its business or their ownership or leasing of its properties
make such qualification necessary or the failure to so qualify has had or would
reasonably be expected to have a material adverse effect on the Company, a
material adverse effect on the ability of the Company to perform its obligations
under the Transaction Agreements or a material adverse effect on the ability of
the Company to consummate the Offer, the Merger and the other Transactions (a
"COMPANY MATERIAL ADVERSE EFFECT"). The Company has delivered to Conopco true
and complete copies of the Articles of Incorporation of the Company, as amended
to the date of this Agreement (as so amended, the "COMPANY CHARTER"), and the
By-laws of the Company, as amended to the date of this Agreement (as so amended,
the "COMPANY BY-LAWS"), and the comparable charter and organizational documents
of each Company Subsidiary, in each case as amended through the date of this
Agreement.
SECTION 3.02. COMPANY SUBSIDIARIES; EQUITY INTERESTS. (a) The
letter, dated as of the date of this Agreement, from the Company to Conopco and
Sub (the "COMPANY DISCLOSURE LETTER") lists each Company Subsidiary and its
jurisdiction of organization. All the outstanding shares of capital stock of
each Company Subsidiary have been validly issued and are fully paid and
nonassessable and, except as set forth in the Company Disclosure Letter, are
owned by the Company, by another Company Subsidiary or by the Company and
another Company Subsidiary, free and clear of all pledges, liens, charges,
mortgages, encumbrances and security interests of any kind or nature whatsoever
(collectively, "LIENS").
(b) Except for its interests in the Company Subsidiaries and
except for the ownership interests set forth in the Company Disclosure Letter,
the Company does not own, directly or indirectly, any capital stock, membership
interest, partnership interest, joint venture interest or other equity interest
in any person.
SECTION 3.03. CAPITAL STRUCTURE. (a) The authorized capital
stock of the Company consists of 20,000,000 shares of Class A Common Stock and
3,000,000 shares of Class B Common Stock, as well as 900 shares of Company
Preferred Stock. The Board of Directors of the Company has duly authorized the
conversion of each issued and outstanding share of Class B Common Stock into one
share of Class A Common Stock and has authorized the mailing of a notice of
conversion pursuant to the Company Charter, upon receipt of the notice from
Conopco contemplated by Section 6.11(b), to all the holders of Class B Common
Stock. At the close of business on March 31, 2000, (i) 6,130,582 shares of Class
A Common Stock, 793,729 shares of Class B Common Stock and 900 shares of Company
Preferred Stock were issued and outstanding, (ii) 644,606 shares of Class A
Common Stock and 1,092 shares of Class B Common Stock were held by the Company
in its treasury, (iii) 1,298,627 shares of Class A Common Stock were subject to
outstanding Company Stock Options (as defined below) and 160,185 additional
shares of Class A Common Stock were reserved for issuance pursuant to the
Company Stock Plans (as defined below) (assuming for such purpose that, with
respect to the offering period in effect on the date hereof under the Company's
1986 Employee Stock Purchase Plan (the "1986 ESPP"), (A) all current
participants continue to contribute at current levels and (B) the purchase price
of the shares purchasable in respect of such offering period is determined to be
85% of the fair market value of shares of Class A Common Stock on the first day
of such offering period, and giving effect to such offering period), (iv)(A)
7,400,000 shares of Class A Common Stock were reserved for issuance in
connection with the rights (the "CLASS A RIGHTS") issued pursuant to the Rights
Agreement dated as of July 30, 1998, as amended from time to time (the "CLASS A
RIGHTS AGREEMENT"), between the Company and American Stock Transfer & Trust
Company, and (B) 900,000 shares of Class B Common Stock were reserved for
issuance in connection with the rights (the "CLASS B RIGHTS" and, together with
the Class A Rights, the "COMPANY RIGHTS") issued pursuant to the Rights
Agreement dated as of July 30, 1998, as amended from time to time (together with
the Class A Rights Agreement, the "COMPANY RIGHTS AGREEMENTS"), between the
Company and American Stock Transfer & Trust Company and (v) 125,000 shares of
Class A Common Stock reserved for issuance under the warrants held by Gordian
Group, L.P. (the "GORDIAN GROUP WARRANTS"). Except as set forth above and except
for the shares of Class A Common Stock reserved for issuance upon either (i) the
exercise of the option granted to Conopco pursuant to the Stock Option Agreement
or (ii) the
conversion of shares of Class B Common Stock, at the close of business on March
31, 2000, no shares of capital stock or other voting securities of the Company
were issued, reserved for issuance or outstanding. There are no outstanding
Company SARs (as defined below) that were not granted in tandem with a related
Company Stock Option. All outstanding shares of Company Capital Stock are, and
all such shares that may be issued prior to the Effective Time (including shares
of Company Capital Stock that shall be deemed to be shares of Class A Common
Stock upon the automatic conversion of shares of Class B Common Stock) will be
when issued, duly authorized, validly issued, fully paid and nonassessable and
not subject to or issued in violation of any purchase option, call option, right
of first refusal, preemptive right, subscription right or any similar right
under any provision of the VBCA, the Company Charter, the Company By-laws or any
Contract (as defined in Section 3.05) to which the Company is a party or
otherwise bound. There are not any bonds, debentures, notes or other
indebtedness of the Company having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on which
holders of Company Common Stock may vote ("VOTING COMPANY DEBT"). Except as set
forth above or in Section 3.03(b), as of the date of this Agreement, there are
not any options, warrants, rights, convertible or exchangeable securities,
"phantom" stock rights, stock appreciation rights, stock-based performance
units, commitments, Contracts, arrangements or undertakings of any kind to which
the Company or any Company Subsidiary is a party or by which any of them is
bound (i) obligating the Company or any Company Subsidiary to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares of capital
stock or other equity interests in, or any security convertible or exercisable
for or exchangeable into any capital stock of or other equity interest in, the
Company or any Company Subsidiary or any Voting Company Debt, (ii) obligating
the Company or any Company Subsidiary to issue, grant, extend or enter into any
such option, warrant, call, right, security, commitment, Contract, arrangement
or undertaking or (iii) that give any person the right to receive any economic
benefit or right similar to or derived from the economic benefits and rights
accruing to holders of Company Capital Stock. Except as set forth in Section
6.11, as of the date of this Agreement, there are not any outstanding
contractual obligations of the Company or any Company Subsidiary to repurchase,
redeem or otherwise acquire any shares of capital stock of the Company or any
Company Subsidiary. The Company has delivered to Conopco complete and correct
copies of the Company Rights Agreements, as amended to the date of this
Agreement.
(b) The authorized capital stock of The American Company for
Ice Cream Manufacturing E.I. Ltd. ("ACICM") consists of 18,000 Ordinary Shares
(the "SUBSIDIARY ORDINARY SHARES") and 18,000 Preferred Shares (the "SUBSIDIARY
PREFERRED SHARES"), each with a nominal value of 1.00 NIS. At the close of
business on March 31, 2000, 12,000 Subsidiary Ordinary Shares and 18,000
Subsidiary Preferred Shares were issued and outstanding, and 3,333 Subsidiary
Ordinary Shares reserved for issuance under options and 1,200 Subsidiary
Ordinary Shares were subject to outstanding options to purchase Subsidiary
Ordinary Shares and Subsidiary Preferred Shares, respectively, and no other
Subsidiary Ordinary Shares or Subsidiary Preferred Shares were issued,
outstanding or reserved for issuance. As of such date, Ben & Jerry's Homemade,
B.V., a wholly owned subsidiary of the Company, owned 18,000 Subsidiary
Preferred Shares.
(c) For purposes of this Agreement:
"COMPANY STOCK OPTION" means any option to
purchase Company Common Stock granted under any Company
Stock Plan.
"COMPANY SAR" means any stock appreciation right or other
award linked to the price of Company Common Stock and granted under any
Company Stock Plan.
"COMPANY STOCK PLANS" means the Company's 1995 Equity
Incentive Plan, 1999 Equity Incentive Plan, 1985 Stock Option Plan,
1986 Employee Stock Purchase Plan, 1992 Non-Employee Directors'
Restricted Stock Plan and 1995 Non-Employee Directors' Plan for Stock
in Lieu of Director's Cash Retainer, all separate stock option
agreements under which options were issued in 1999 (the form of which
is set forth in the Company Disclosure Letter) and the provisions of
employment agreements for officers (disclosed in the Company Disclosure
Letter) that include certain terms of options granted under the
Company's 1985 Stock Option Plan and 1995 Equity Incentive Plan.
SECTION 3.04. AUTHORITY; EXECUTION AND DELIVERY;
ENFORCEABILITY. (a) The Company has all requisite corporate power and authority
to execute and deliver each Transaction Agreement to which it is a party and,
subject, in the case of the Merger, to receipt of the Company Shareholder
Approval (as defined in
Section 3.04(c)), to consummate the Transactions. The execution and delivery by
the Company of the Transaction Agreements to which it is a party and the
consummation by the Company of the Transactions have been duly authorized by all
necessary corporate action on the part of the Company, subject, in the case of
the Merger, to receipt of the Company Shareholder Approval. The Company has duly
executed and delivered each Transaction Agreement to which it is a party, and
each Transaction Agreement to which it is a party constitutes its legal, valid
and binding obligation, enforceable against it in accordance with its terms,
subject, in the case of the Merger, to receipt of the Company Shareholder
Approval.
(b) The Company Board, at a meeting duly called and held, duly
adopted resolutions (i) adopting this Agreement, (ii) approving the other
Transaction Agreements, the Offer, the Merger and the other Transactions, (iii)
determining that the terms of the Offer and the Merger are fair to and in the
best interests of the shareholders of the Company, (iv) recommending that the
holders of Company Common Stock accept the Offer and tender their shares of
Company Common Stock pursuant to the Offer and (v) recommending that the
Company's shareholders approve this Agreement. No state takeover statute or
similar statute or regulation applies or purports to apply to the Company with
respect to this Agreement and the other Transaction Agreements, the Offer, the
Merger or any other Transaction.
(c) The only vote of holders of any class or series of Company
Capital Stock necessary to approve this Agreement and the Merger is the
approval, by person or proxy, of this Agreement by the holders of a majority of
the outstanding shares of Class A Common Stock (the "COMPANY SHAREHOLDER
APPROVAL"). The affirmative vote of the holders of Company Capital Stock, or any
of them, is not necessary to approve any Transaction Agreement other than this
Agreement or consummate the Offer or any Transaction other than the Merger.
SECTION 3.05. NO CONFLICTS; CONSENTS. (a) Except as set forth
in the Company Disclosure Letter, the execution and delivery by the Company of
each Transaction Agreement to which it is a party do not, and the consummation
of the Offer, the Merger and the other Transactions and compliance with the
terms hereof and thereof will not, conflict with, or result in any violation of
or default (with or without notice or lapse of time, or both) under, or give
rise to a right of
termination, cancelation or acceleration of any obligation or to loss of a
material benefit under, or to increased, additional, accelerated or guaranteed
rights or entitlements of any person under, or result in the creation of any
Lien upon any of the properties or assets of the Company or any Company
Subsidiary under, any provision of (i) the Company Charter, the Company By-laws
or the comparable charter or organizational documents of any Company Subsidiary,
(ii) any contract, lease, license, indenture, note, bond, agreement, permit,
concession, franchise or other instrument (a "CONTRACT") to which the Company or
any Company Subsidiary is a party or by which any of their respective properties
or assets is bound or (iii) subject to the filings and other matters referred to
in Section 3.05(b), any judgment, order or decree ("JUDGMENT") or statute, law
(including common law), ordinance, rule or regulation ("LAW") applicable to the
Company or any Company Subsidiary or their respective properties or assets,
other than, in the case of clause (iii) above, any such items that, individually
or in the aggregate, have not had and would not reasonably be expected to have a
Company Material Adverse Effect or result in a liability to the Company and the
Company Subsidiaries, taken as a whole, in excess of $1,000,000.
(b) No consent, approval, license, permit, order or
authorization ("CONSENT") of, or registration, declaration or filing with, or
permit from, any Federal, state, local or foreign government or any court of
competent jurisdiction, administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign (a "GOVERNMENTAL
ENTITY") is required to be obtained or made by or with respect to the Company or
any Company Subsidiary in connection with the execution, delivery and
performance of any Transaction Agreement to which it is a party or the
consummation of the Transactions, other than (i) compliance with and filings
under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the
"HSR ACT"), (ii) the filing with the SEC of (A) the Schedule 14D-9, (B) a proxy
or information statement relating to the approval of this Agreement by the
Company's shareholders (the "PROXY STATEMENT"), (C) the Information Statement
and (D) such reports under Section 13 of the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT") as may be required in connection with this
Agreement and the other Transaction Agreements, the Offer, the Merger and the
other Transactions, (iii) the filing of the Articles of Merger with the
Secretary of State of the State of Vermont and
appropriate documents with the relevant authorities of the other jurisdictions
in which the Company is qualified to do business, (iv) compliance with and such
filings as may be required under applicable Environmental Laws (as defined in
Section 3.14), (v) such filings as may be required in connection with the Taxes
described in Section 6.09, (vi) as may be required under any state securities
laws and (vii) such other items as are set forth in the Company Disclosure
Letter.
(c) The Company Board has taken all action necessary to (i)
render the Company Rights inapplicable to this Agreement and the other
Transaction Agreements, the Offer, the Merger and the other Transactions and
(ii) ensure that (A) neither Conopco nor Sub nor any of its affiliates or
associates is or will become an "Acquiring Person" (as defined in each of the
Company Rights Agreements) by reason of any Transaction Agreement, the Offer,
the Merger or any other Transaction, and (B) a "Distribution Date" (as defined
in each of the Company Rights Agreements) shall not occur by reason of any
Transaction Agreement, the Offer, the Merger or any other Transaction.
SECTION 3.06. SEC DOCUMENTS; UNDISCLOSED LIABILITIES. The
Company has filed all reports, schedules, forms, statements and other documents
required to be filed by the Company with the SEC since December 28, 1997 (the
"COMPANY SEC DOCUMENTS"). As of its respective date, each Company SEC Document
complied in all material respects with the requirements of the Exchange Act or
the Securities Act of 1933, as amended (the "SECURITIES ACT"), as the case may
be, and the rules and regulations of the SEC promulgated thereunder applicable
to such Company SEC Document, and did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. Except to the extent that
information contained in any Company SEC Document has been revised or superseded
by a later filed Company SEC Document, none of the Company SEC Documents
contains any untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The consolidated financial statements of the Company included in the
Company SEC Documents comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of
the SEC with respect thereto, have been prepared in accordance with generally
accepted accounting principles ("GAAP") (except, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC) applied on a consistent basis
during the periods involved (except as may be indicated in the notes thereto)
and fairly present the consolidated financial position of the Company and its
consolidated subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal year-end audit adjustments). Except as
set forth on the face of, or in the notes to, the most recent balance sheet of
the Company included in the Filed Company SEC Documents (as defined in Section
3.08), neither the Company nor any Company Subsidiary had, as of such date, any
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise) required by GAAP to be set forth on a consolidated balance sheet
or in the notes thereto.
SECTION 3.07. INFORMATION SUPPLIED. None of the information
supplied or to be supplied by the Company for inclusion or incorporation by
reference in (i) the Offer Documents, the Schedule 14D-9 or the Information
Statement will, at the time such document is filed with the SEC, at any time it
is amended or supplemented or at the time it is first published, sent or given
to the Company's shareholders, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading, or (ii) the Proxy Statement will, at
the date it is first mailed to the Company's shareholders or at the time of the
Company Shareholders Meeting (as defined in Section 6.01), contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. The Schedule 14D-9,
the Information Statement and the Proxy Statement will comply as to form in all
material respects with the requirements of the Exchange Act and the rules and
regulations thereunder, except that no representation or warranty is made by the
Company with respect to statements made or incorporated by reference therein
based on information supplied by Conopco or Sub in writing specifically for
inclusion or incorporation by reference therein.
SECTION 3.08. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as
disclosed in the Company SEC Documents filed and publicly available on or prior
to April 7, 2000
(the "FILED COMPANY SEC DOCUMENTS") or in the Company Disclosure Letter, from
the date of the most recent audited financial statements included in the Filed
Company SEC Documents to the date of this Agreement, the Company has conducted
its business only in the ordinary course consistent with recent past practice,
and during such period there has not been:
(i) any event, change, effect or development that,
individually or in the aggregate, has had or would reasonably be
expected to have a Company 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 Company Capital Stock or any repurchase for value by the Company
of any Company Capital Stock;
(iii) any split, combination or reclassification of any
Company Capital Stock or any issuance or the authorization of any
issuance of any other securities in respect of, in lieu of or in
substitution for shares of Company Capital Stock, other than the
authorization by the Company Board to convert all the outstanding
shares of Class B Common Stock into shares of Class A Common Stock and
to redeem the Company Preferred Stock;
(iv) (A) any granting by the Company or any Company Subsidiary
to any director or officer of the Company or any Company Subsidiary of
any increase in compensation, except in the ordinary course of business
consistent with prior practice or as was required under employment or
consulting agreements in effect as of the date of the most recent
audited financial statements included in the Filed Company SEC
Documents, (B) any granting by the Company or any Company Subsidiary to
any such director or officer of any increase in severance or
termination pay, except as was required under any employment,
consulting, severance or termination agreements in effect as of the
date of the most recent audited financial statements included in the
Filed Company SEC Documents, or (C) any entry by the Company or any
Company Subsidiary into, or any amendment of, any employment,
consulting, deferred compensation, indemnification, severance or
termination agreement with any such director or officer;
(v) any change in accounting methods, principles or practices
by the Company or any Company Subsidiary materially affecting the
consolidated assets, liabilities or results of operations of the
Company, except insofar as may have been required by a change in GAAP;
(vi) any material elections with respect to Taxes by the
Company or any Company Subsidiary or settlement or compromise by the
Company or any Company Subsidiary of any material Tax liability or
refund;
(vii) (A) any acquisition by the Company or any Company
Subsidiary by merging or consolidating with, or by purchasing a
substantial equity interest in or substantial portion of the assets of,
or by any other manner, any business or any corporation, partnership,
joint venture, association or other business organization or division
thereof or (B) any acquisition by the Company or any Company Subsidiary
of any assets (other than inventory) that are material, individually or
in the aggregate, to the Company and the Company Subsidiaries;
(viii) any sale, lease, license, encumbrance or other
disposition of assets of the Company or any Company Subsidiary in
excess of $500,000 in the aggregate, other than sales of products to
customers and immaterial dispositions of personal property and other
than any encumbrance created in connection with financing the purchase
of equipment and other property, in each case in the ordinary course of
business consistent with past practice;
(ix) any incurrence of capital expenditures by the Company or
any Company Subsidiary in excess of $500,000 individually, or in excess
of $1 million in the aggregate; or
(x) any other transaction, contract or commitment of the
Company or any Company Subsidiary other than in the ordinary course of
business, consistent with past practice and on an arms' length basis.
SECTION 3.09. TAXES. (a) Except as disclosed in the Company
Disclosure Letter, each of the Company and each Company Subsidiary has timely
filed, or has caused to be timely filed on its behalf, all Tax Returns required
to be filed by it, and all such Tax Returns are
true, complete and accurate. All Taxes shown to be due on such Tax Returns, or
otherwise owed, have been timely paid.
(b) Except as disclosed in the Company Disclosure Letter, the
most recent financial statements contained in the Filed Company SEC Documents
reflect an adequate reserve (in addition to any reserve for deferred Taxes
established to reflect timing differences between book and tax income) for all
Taxes payable by the Company and the Company Subsidiaries for all Taxable
periods and portions thereof through the date of such financial statements. No
deficiency with respect to any Taxes has been proposed, asserted or assessed
against the Company or any Company Subsidiary, and no requests for waivers of
the time to assess any such Taxes are pending.
(c) Except as disclosed in the Company Disclosure Letter, the
Federal income Tax Returns of the Company and each Company Subsidiary
consolidated in such Returns have been examined by and settled with the United
States Internal Revenue Service for all years through 1997. All material
assessments for Taxes due with respect to such completed and settled
examinations or any concluded litigation have been fully paid.
(d) Except as disclosed in the Company Disclosure Letter,
there are no material Liens for Taxes (other than for current Taxes not yet due
and payable) on the assets of the Company or any Company Subsidiary. Neither the
Company nor any Company Subsidiary is bound by any agreement with respect to
Taxes.
(e) Except as disclosed in the Company Disclosure Letter, no
claim has been made in the past five years by any authority in a jurisdiction
within which the Company or any Company Subsidiary does not file Tax Returns
that it is, or may be, subject to taxation by that jurisdiction.
(f) For purposes of this Agreement:
"TAXES" includes all forms of taxation, whenever created or
imposed, and whether of the United States or elsewhere, and whether imposed by a
local, municipal, governmental, state, foreign, Federal or other Governmental
Entity, or in connection with any agreement with respect to Taxes, including all
interest, penalties and additions imposed with respect to such amounts.
"TAX RETURN" means all Federal, state, local, provincial and
foreign Tax returns, declarations, claims for refunds, statements, reports,
schedules, forms and information returns and any amended Tax return relating to
Taxes.
SECTION 3.10. ABSENCE OF CHANGES IN BENEFIT PLANS. Except as
disclosed in the Company Disclosure Letter, from the date of the most recent
audited financial statements included in the Filed Company SEC Documents to the
date of this Agreement, there has not been any adoption or amendment in any
material respect by the Company or any Company Subsidiary of any collective
bargaining agreement or any bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock purchase, stock
option, phantom stock, retirement, thrift, savings, stock bonus, restricted
stock, cafeteria, paid time off, perquisite, fringe benefit, vacation,
severance, disability, death benefit, hospitalization, medical or other plan,
arrangement or understanding (whether or not legally binding) maintained,
sponsored or funded, in whole or in part, by the Company or any Company
Subsidiary providing benefits to any current or former employee, consultant,
officer or director of the Company or any Company Subsidiary (collectively,
"COMPANY BENEFIT PLANS"). Except as disclosed in the Filed Company SEC Documents
or in the Company Disclosure Letter, as of the date of this Agreement there are
not any consulting arrangements or agreements involving payments by the Company
of more that $50,000 per year or any employment, indemnification, severance or
termination agreements or arrangements between the Company or any Company
Subsidiary and any current or former employee, consultant, officer or director
of the Company or any Company Subsidiary (collectively, "COMPANY BENEFIT
AGREEMENTS").
SECTION 3.11. ERISA COMPLIANCE; EXCESS PARACHUTE PAYMENTS. (a)
The Company Disclosure Letter contains a list and brief description of all
"employee pension benefit plans" (as defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) (sometimes
referred to herein as "COMPANY PENSION PLANS"), "employee welfare benefit plans"
(as defined in Section 3(1) of ERISA) and all other Company Benefit Plans and
Company Benefit Agreements maintained, or contributed to, by the Company or any
Company Subsidiary or to which the Company or any Company Subsidiary is a party,
for the benefit of any current or former employees, consultants, officers or
directors of the Company or any Company Subsidiary. The
Company has delivered to Conopco true, complete and correct copies of (i) each
Company Benefit Plan and Company Benefit Agreement (or, in the case of any
unwritten Company Benefit Plan or Company Benefit Agreement, a description
thereof), (ii) the most recent annual report on Form 5500 filed with the
Internal Revenue Service with respect to each Company Benefit Plan (if any such
report was required), (iii) the most recent summary plan description for each
Company Benefit Plan for which such summary plan description is required and
(iv) each trust agreement and group annuity contract relating to any Company
Benefit Plan.
(b) Except as disclosed in the Company Disclosure Letter, all
Company Pension Plans that are intended to be qualified under Section 401(a) of
the Internal Revenue Code of 1986, as amended (the "CODE"), have received
favorable determination letters from the Internal Revenue Service with respect
to "TRA" (as defined in Section 1 of Rev. Proc. 93- 39), to the effect that such
Company Pension Plans are qualified and exempt from Federal income taxes under
Sections 401(a) and 501(a), respectively, of the Code, and no such determination
letter has been revoked nor, to the knowledge of the Company, has revocation
been threatened, nor has any such Company Pension Plan been amended since the
date of its most recent determination letter or application therefor in any
respect that would adversely affect its qualification or materially increase its
costs. All Company Benefit Plans have been operated in all material respects in
accordance with their terms and in substantial compliance with all applicable
laws, including ERISA and the Code. There is no material pending or, to the
knowledge of the Company, threatened litigation relating to the Company Benefit
Plans.
(c) None of the Company, any Company Subsidiary or any entity
that is considered one employer with the Company under Section 4001 of ERISA or
Section 414 of the Code contributes or has ever contributed or been obligated to
contribute to any "multiemployer plan" within the meaning of Section 4001(a)(3)
of ERISA or to any defined benefit pension plan subject to Title IV of ERISA or
to Part 3 of Subpart B of Title I of ERISA. Neither the Company nor any Company
Subsidiary, nor to the knowledge of the Company or any Company Subsidiary, any
officer of the Company or any of its Company Subsidiary or any of the Company
Benefit Plans which are subject to ERISA, including the Company Pension Plans,
any trusts created thereunder or any trustee or administrator thereof, has
engaged in a "prohibited
transaction" (as such term is defined in Section 406 of ERISA or Section 4975 of
the Code) or any other breach of fiduciary responsibility that could subject the
Company, any Company Subsidiary or any officer of the Company or any Company
Subsidiary to the tax or penalty on prohibited transactions imposed by such
Section 4975 or to any liability under Section 502(i) or 502(1) of ERISA. All
contributions and premiums required to be made under the terms of any Company
Benefit Plan as of the date hereof have been timely made or have been reflected
on the most recent consolidated balance sheet filed or incorporated by reference
in the Filed Company SEC Documents.
(d) With respect to any Company Benefit Plan that is an
employee welfare benefit plan, except as disclosed in the Company Disclosure
Letter, (i) no such Company Benefit Plan is unfunded or funded through a
"welfare benefits fund" (as such term is defined in Section 419(e) of the Code),
(ii) each such Company Benefit Plan that is a "group health plan" (as such term
is defined in Section 5000(b)(1) of the Code), complies with the applicable
requirements of Section 4980B(f) in all material respects of the Code and (iii)
each such Company Benefit Plan (including any such Plan covering retirees or
other former employees) may be amended or terminated without material liability
to the Company and the Company Subsidiary on or at any time after the Effective
Time. Neither the Company nor any Company Subsidiary has any obligations for
retiree health and life benefits under any Company Benefit Plan or Company
Benefit Agreement.
(e) Except as disclosed in the Company Disclosure Letter, the
consummation of the Offer and the Merger or any of the other Transactions will
not (i) entitle any employee, consultant, officer or director of the Company or
any Company Subsidiary to severance pay, (ii) accelerate the time of payment or
vesting or trigger any payment or funding (through a grantor trust or otherwise)
of compensation or benefits under, increase the amount payable or trigger any
other material obligation pursuant to, any of the Company Benefit Plans or
Company Benefit Agreements or (iii) result in any breach or violation of, or a
default under, any of the Company Benefit Plans or Company Benefit Agreements.
(f) Other than payments that may be made to the persons listed
in the Company Disclosure Letter (the "PRIMARY COMPANY EXECUTIVES"), any amount
or economic benefit that could be received (whether in cash or
property or in respect of the vesting of property) as a result of the Offer and
the Merger or any other Transaction (including as a result of termination of
employment on or following the Effective Time) by any employee, officer or
director of the Company or any of its affiliates who is a "disqualified
individual" (as such term is defined in proposed Treasury Regulation Section
1.280G-1) under any Company Benefit Plan or Company Benefit Agreement or
otherwise would not be characterized as an "excess parachute payment" (as
defined in Section 280G(b)(1) of the Code), and no disqualified individual is
entitled to receive any additional payment from the Company or any Company
Subsidiary or any other person in the event that the excise tax under Section
4999 of the Code is imposed on such disqualified individual. Set forth in the
Company Disclosure Letter is (i) the estimated maximum amount that could be paid
to each Primary Company Executive as a result of the Merger and the other
Transactions under all Company Benefit Plans and Company Benefit Agreements and
(ii) the "base amount" (as defined in Section 280G(b)(3) of the Code) for each
Primary Company Executive calculated as of the date of this Agreement.
SECTION 3.12. LITIGATION. Except as disclosed in the Company
Disclosure Letter, there is no suit, action or proceeding pending or, to the
knowledge of the Company, threatened against or affecting the Company or any
Company Subsidiary (and the Company is not aware of any basis for any such suit,
action or proceeding) that, individually or in the aggregate, has resulted in or
would reasonably be expected to result in a Company Material Adverse Effect or
in a liability to the Company and the Company Subsidiaries, taken as a whole, in
excess of $1,000,000, nor is there any Judgment outstanding against the Company
or any Company Subsidiary that, individually or in the aggregate, has resulted
in or would reasonably be expected to result in a Company Material Adverse
Effect or in a liability to the Company and the Company Subsidiaries, taken as a
whole, in excess of $1,000,000.
SECTION 3.13. COMPLIANCE WITH APPLICABLE LAWS. Except as
disclosed in the Company Disclosure Letter, the Company and the Company
Subsidiaries are in compliance in all material respects with all applicable
Laws, including those relating to occupational health and safety. Except as set
forth in the Company Disclosure Letter, neither the Company nor any Company
Subsidiary has received any written communication during the past two years from
a Governmental Entity that alleges that the Company or a
Company Subsidiary is not in compliance with any applicable Law. This Section
3.13 does not relate to matters with respect to Taxes, which are the subject of
Section 3.09, or to environmental matters, which are the subject of Section
3.14.
SECTION 3.14. ENVIRONMENTAL MATTERS. (a) Except as set forth
in the Company Disclosure Letter, neither the Company nor any Company Subsidiary
has (i) placed, held, located, released, transported or disposed of any
Hazardous Substances (as defined below) on, under, from or at any of the
Company's or any Company Subsidiary's properties or any other properties, except
for those actions that individually or in the aggregate have not resulted in, or
would not reasonably be expected to result in, material liability to the Company
and the Company Subsidiaries, (ii) any knowledge or reason to know of the
presence of any Hazardous Substances on, under or at any Company Subsidiary's
properties or any other property but arising from the Company's or any Company
Subsidiary's properties, other than a reason to know of such presences that
individually or in the aggregate have not resulted in, or would not reasonably
be expected to result in, material liability to the Company and the Company
Subsidiaries, or (iii) received any written notice (A) of any violation of any
statute, law, ordinance, regulation, rule, judgment, decree or order of any
Governmental Entity relating to any matter of pollution, protection of the
environment, environmental regulation or control or regarding Hazardous
Substances on or under any of the Company's or any Company Subsidiary's
properties or any other properties (collectively, "ENVIRONMENTAL LAWS"), (B) of
the institution or pendency of any suit, action, claim, proceeding or
investigation by any Governmental Entity or any third party in connection with
any such violation, (C) requiring the response to or remediation of Hazardous
Substances at or arising from any of the Company's or any Company Subsidiary's
properties or any other properties, or (D) demanding payment for response to or
remediation of Hazardous Substances at or arising from any of the Company's or
any Company Subsidiary's properties or any other properties. For purposes of
this Agreement, the term "HAZARDOUS SUBSTANCE" shall mean any toxic or hazardous
materials or substances, including asbestos, buried contaminants, chemicals,
flammable explosives, radioactive materials, petroleum and petroleum products
and any substances defined as, or included in the definition of, "hazardous
substances", "hazardous wastes", "hazardous materials" or "toxic substances"
under any Environmental Law.
(b) Except as set forth in the Company Disclosure Letter, no
Environmental Law imposes any obligation upon the Company or any Company
Subsidiary arising out of or as a condition to any Transaction, including,
without limitation, any requirement to modify or to transfer any permit or
license, any requirement to file any notice or other submission with any
Governmental Entity, the placement of any notice, acknowledgment or covenant in
any land records, or the modification of or provision of notice under any
agreement, consent order or consent decree. No Lien has been placed upon any of
the Company's or its subsidiaries' properties under any Environmental Law.
SECTION 3.15. CONTRACTS; DEBT INSTRUMENTS. (a) Except as
disclosed in the Company Disclosure Letter, (i) there is no Contract that has a
future liability to the Company and the Company Subsidiaries, taken as a whole,
in excess of $200,000 per annum or $500,000 over the lifetime of such Contract
(a "MATERIAL CONTRACT"), and (ii) neither the Company nor any Company Subsidiary
is the lessee under any lease (whether of real or personal property) that
requires annual payments in excess of $200,000 or $500,000 over the lifetime of
such lease. Neither the Company nor any Company Subsidiary is in violation in
any material respect of or in default in any material respect under (nor does
there exist any condition which upon the passage of time or the giving of notice
would cause such a violation of or default under) any Material Contract to which
it is a party or by which it or any of its properties or assets is bound, and,
to the knowledge of the Company, no other party to any such Material Contract is
(with or without the lapse of time or the giving of notice, or both) in breach
or default in any material respect thereunder.
(b) The Company Disclosure Letter sets forth (i) a list of all
loan or credit agreements, notes, bonds, mortgages, indentures and other
agreements and instruments pursuant to which any indebtedness of the Company or
any Company Subsidiary in an aggregate principal amount in excess of $100,000 is
outstanding or may be incurred and (ii) the respective principal amounts
currently outstanding thereunder.
(c) The Company Filed SEC Documents include as exhibits
thereto all Contracts that are required to be filed by the Company under the
Exchange Act.
SECTION 3.16. INTELLECTUAL PROPERTY. The Company Disclosure
Letter sets forth a summary
description of all patents, patent rights, trademarks, trademark rights, trade
names, trade name rights, service marks, service ▇▇▇▇ rights, copyrights and
other proprietary intellectual property rights and proprietary computer programs
necessary to produce the products of the Company and the Company Subsidiaries
and to conduct the business of the Company and the Company Subsidiaries as
currently conducted (collectively, "INTELLECTUAL PROPERTY RIGHTS"). The Company
and the Company Subsidiaries own, or are validly licensed or otherwise have the
right to use, all Intellectual Property Rights necessary to conduct their
respective businesses as currently conducted with no infringement of, or
conflict with, the rights of any others. Except as set forth in the Company
Disclosure Letter, no claims are pending or, to the knowledge of the Company,
threatened that the Company or any Company Subsidiary is infringing or otherwise
adversely affecting the rights of any person with regard to any Intellectual
Property Right. Except as set forth in the Company Disclosure Letter, neither
the Company nor any Company Subsidiary has granted to any third party a license
or other right to any Intellectual Property Right. To the knowledge of the
Company, except as set forth in the Company Disclosure Letter, no person is
infringing the rights of the Company or any Company Subsidiary with respect to
any Intellectual Property Right.
SECTION 3.17. LABOR MATTERS. Except as set forth in the
Company Disclosure Letter, there are no collective bargaining or other labor
union agreements to which the Company or any Company Subsidiary is a party or by
which any of them is bound. Since December 31, 1996, neither the Company nor any
Company Subsidiary has encountered any labor union organizing activity, or had
any actual or threatened employee strikes, work stoppages, slowdowns or
lockouts.
SECTION 3.18. TITLE TO PROPERTIES. (a) Except as set forth in
the Company Disclosure Letter, each of the Company and each Company Subsidiary
has good and marketable title to, or valid leasehold interests in, all its
respective real properties except for such as are no longer used or useful in
the conduct of its respective business or as have been disposed of in the
ordinary course of business and assets which are material to the conduct of the
business of the Company and the Company Subsidiaries ("MATERIAL ASSETS"). All
such properties and Material Assets, other than properties and Material Assets
in which the Company or any Company Subsidiary has leasehold interests, are free
and clear of all Liens
other than (i) Liens imposed by Law that were incurred in the ordinary course of
business such as carrier's, warehousemen's and mechanic's Liens, which Liens do
not materially detract from the value of such properties and Material Assets or
materially impair the use thereof in the operation of the respective businesses
of the Company and the Company Subsidiaries, (ii) Liens arising pursuant to
purchase money security interests relating to indebtedness representing an
amount no greater than the purchase price of such properties or Material Assets,
(iii) Liens for Taxes and assessments not yet due and payable or Liens for Taxes
being contested in good faith and by appropriate proceedings for which adequate
reserves have been established, or (iv) Liens set forth in the Company
Disclosure Letter. The Company Disclosure Letter sets forth a complete list of
all real property owned by the Company or any Company Subsidiary.
(b) Except as set forth in the Company Disclosure Letter, each
of the Company and each Company Subsidiary has complied in all material respects
with the terms of all leases with annual payments in excess of $50,000 to which
it is a party and under which it is in occupancy, and all such leases are in
full force and effect. Each of the Company and each Company Subsidiary enjoys
peaceful and undisturbed possession under all such leases. To the knowledge of
the Company, no other party to any of such leases is (with or without the lapse
of time or the giving of notice, or both) in breach or default in any material
respect thereunder.
SECTION 3.19. EQUIPMENT. Except as set forth in the Company
Disclosure Letter, all (i) the material equipment of the Company and the Company
Subsidiaries, and (ii) the equipment currently in use that, in the aggregate, is
necessary to produce the products of the Company and the Company Subsidiaries
(other than the Company's novelty product line and related equipment) or
otherwise necessary to conduct the business of the Company and the Company
Subsidiaries as currently conducted, is in good operating condition and repair
(ordinary wear and tear excepted), taking into account its age and use, and is
available for immediate use in the business of the Company and the Company
Subsidiaries.
SECTION 3.20. SUPPLIERS. Except as set forth in the Company
Disclosure Letter, since January 1, 2000, there has not been (i) any material
adverse change in the business relationship of the Company or any Company
Subsidiary with any of their top 20 suppliers or (ii) any material adverse
change in the terms of the supply
agreements or related arrangements with any such supplier. Except as set forth
in the Company Disclosure Letter, to the knowledge of the Company, the
Transactions will not adversely affect its or any Company Subsidiary's business
relationship with any of their top 20 suppliers, other than as a result of a
pre-existing relationship with Conopco or Sub.
SECTION 3.21. BROKERS; SCHEDULE OF FEES AND EXPENSES. No
broker, investment banker, financial advisor or other person, other than Gordian
Group, L.P., the fees and expenses of which will be paid by the Company, is
entitled to any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the Transactions based upon arrangements made by
or on behalf of the Company. The estimated fees and expenses incurred and to be
incurred by the Company in connection with the Offer, the Merger and the other
Transactions (including the fees of Gordian Group, L.P. and the fees of the
Company's legal counsel) are set forth in the Company Disclosure Letter. The
Company has furnished to Conopco a true and complete copy of all agreements
between the Company and Gordian Group, L.P. relating to the Offer, the Merger
and the other Transactions.
SECTION 3.22. OPINION OF FINANCIAL ADVISOR. The Company has
received the opinion of Gordian Group, L.P., dated the date of this Agreement,
to the effect that, as of such date, the consideration to be received in the
Offer and the Merger by the holders of Company Common Stock is fair from a
financial point of view, a signed copy of which opinion has been or promptly
upon receipt will be, delivered to Conopco.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CONOPCO AND SUB
Conopco and Sub jointly and severally represent and warrant to
the Company as follows:
SECTION 4.01. ORGANIZATION, STANDING AND POWER. Each of
Conopco and Sub is duly organized, validly existing and in good standing under
the laws of the jurisdiction in which it is organized and has full corporate
power and authority to conduct its businesses as presently conducted.
SECTION 4.02. SUB. (a) Since the date of its incorporation,
Sub has not carried on any business or conducted any operations other than the
execution of the Transaction Agreements to which it is a party, the performance
of its obligations hereunder and thereunder and matters ancillary thereto. Sub
was incorporated solely for the consummation of the Transactions.
(b) The authorized capital stock of Sub consists of 1,000
shares of common stock, par value $0.01 per share, all of which have been
validly issued, are fully paid and nonassessable and are owned by Conopco free
and clear of any Lien.
SECTION 4.03. AUTHORITY; EXECUTION AND DELIVERY;
ENFORCEABILITY. Each of Conopco and Sub has all requisite corporate power and
authority to execute and deliver each Transaction Agreement to which it is a
party and to consummate the Transactions. The execution and delivery by each of
Conopco and Sub of each Transaction Agreement to which it is a party and the
consummation by it of the Transactions have been duly authorized by all
necessary corporate action on the part of Conopco and Sub. Conopco, as sole
shareholder of Sub, has approved this Agreement. No vote of Conopco's
shareholders is required to approve this Agreement or the transactions
contemplated hereby. Each of Conopco and Sub has duly executed and delivered
each Transaction Agreement to which it is a party, and each Transaction
Agreement to which it is a party constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms.
SECTION 4.04. CONSENTS. No Consent of, or registration,
declaration or filing with, any Governmental Entity is required to be obtained
or made by or with respect to Conopco or any of its subsidiaries in connection
with the execution, delivery and performance of any Transaction Agreement to
which Conopco or Sub is a party or the consummation of the Transactions, other
than (i) compliance with and filings under the HSR Act, (ii) the filing with the
SEC of (A) the Offer Documents and (B) such reports under Sections 13 and 16 of
the Exchange Act as may be required in connection with this Agreement, and the
other Transaction Agreements, the Offer, the Merger and the other Transactions,
(iii) the filing of the Articles of Merger with the Secretary of State of the
State of Vermont, (iv) compliance with and such filings as may be required under
applicable Environmental Laws and (v) such filings as may be
required in connection with the Taxes described in Section 6.09.
SECTION 4.05. INFORMATION SUPPLIED. (a) None of the
information supplied or to be supplied by Conopco or Sub for inclusion or
incorporation by reference (i) in the Offer Documents, the Schedule 14D-9 or the
Information Statement will, at the time such document is filed with the SEC, at
any time it is amended or supplemented or at the time it is first published,
sent or given to the Company's shareholders, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, or (ii) in the Proxy
Statement will, at the date it is first mailed to the Company's shareholders or
at the time of the Company Shareholders Meeting, contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
(b) The Offer Documents will comply as to form in all material
respects with the requirements of the Exchange Act and the rules and regulations
thereunder, except that no representation is made by Conopco or Sub with respect
to statements made or incorporated by reference therein based on information
supplied by the Company for inclusion or incorporation by reference therein.
SECTION 4.06. BROKERS. Except as set forth in the letter,
dated as of the date of this Agreement, from Conopco to the Company (the
"CONOPCO DISCLOSURE LETTER") no broker, investment banker, financial advisor or
other person, other than ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated, the fees and
expenses of which will be paid by Conopco, is entitled to any broker's,
finder's, financial advisor's or other similar fee or commission in connection
with the Transactions based upon arrangements made by or on behalf of Conopco.
SECTION 4.07. CONOPCO PLANS. Conopco has previously disclosed
to the Company or its counsel each agreement or understanding between Conopco or
its affiliates, on the one hand, and any member of the Company Board or of the
Company's Office of the Chief Executive Officer (the "OCEO") or the Chief
Executive Officer of the Company (the "CEO"), on the other hand, regarding (i)
any plans that Conopco or its affiliates may have to cause to be terminated the
employment, or
cause to be changed the responsibilities, of the CEO or of any member of the
OCEO, (ii) any plans that Conopco or its affiliates may have to cause to be
terminated the directorship of any member of the Company Board, and (iii) any
financial or other matter concerning support of the Transactions or
directorship, employment or other arrangements with Conopco or the Company
following the Effective Time.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 5.01. CONDUCT OF BUSINESS. (a) CONDUCT OF BUSINESS BY
THE COMPANY. Except for matters set forth in the Company Disclosure Letter or
otherwise expressly permitted by the Transaction Agreements, from the date of
this Agreement to the earlier of Conopco having designated a majority of the
Company Board pursuant to Section 6.10 and the Effective Time the Company shall,
and shall cause each Company Subsidiary to, conduct the business of the Company
and the Company Subsidiaries, taken as a whole, in the usual, regular and
ordinary course in substantially the same manner as previously conducted and use
all reasonable efforts to preserve intact its current business organization,
keep available the services of its current officers and employees and keep its
relationships with customers, suppliers, licensors, licensees, distributors and
others having business dealings with them to the end that its goodwill and
ongoing business shall be unimpaired, in all material respects, at the Effective
Time. In addition, and without limiting the generality of the foregoing, except
for matters set forth in the Company Disclosure Letter or otherwise expressly
permitted by the Transaction Agreements, from the date of this Agreement to the
earlier of Conopco having designated a majority of the Company Board pursuant to
Section 6.10 and the Effective Time, the Company shall not, and shall not permit
any Company Subsidiary to, do any of the following without the prior written
consent of Conopco:
(i) (A) declare, set aside or pay any dividends on, or make
any other distributions in respect of, any of its capital stock, other
than dividends and distri butions by a direct or indirect wholly owned
subsidiary of the Company to its parent, (B) split, combine or
reclassify any of its capital stock or issue or author ize the issuance
of any other
securities in respect of, in lieu of or in substitution for shares of
its capital stock (other than upon the conversion of shares of Class B
Common Stock into shares of Class A Common Stock in accordance with the
Company Charter), or (C) purchase, redeem or otherwise acquire any
shares of capital stock of the Company or any Company Subsidiary or any
other securities thereof or any rights, warrants or options to acquire
any such shares or other securities;
(ii) issue, deliver, sell or grant (A) any shares of its
capital stock, (B) any Voting Company Debt or other voting securities,
(C) any securities convertible into or exchangeable for, or any
options, warrants or rights to acquire, any such shares, Voting Company
Debt, voting securities or convertible or exchangeable securities or
(D) any "phantom" stock, "phantom" stock rights, stock appreciation
rights or stock-based performance units, other than (x) the issuance of
Class A Common Stock (and associated Class A Rights) (1) upon the
exercise of Company Stock Options outstanding on the date of this
Agreement and in accordance with their present terms, (2) pursuant to
the Stock Option Agreement, (3) upon the conversion of shares of Class
B Common Stock into shares of Class A Common Stock in accordance with
the Company Charter, (4) upon exercise of Gordian Warrants or (5)
pursuant to the 1986 ESPP (subject to Section 6.05(c)) and (y) the
issuance of capital stock of ACICM upon the exercise of options to
purchase such capital stock that are outstanding on the date of this
Agreement and in accordance with their present terms;
(iii) amend its articles of incorporation, by-laws or other
comparable charter or organizational documents;
(iv) acquire or agree to acquire (A) by merging or
consolidating with, or by purchasing a substantial equity interest in
or portion of the assets of, or by any other manner, any business or
any corporation, partnership, joint venture, association or other
business organization or division thereof or (B) any assets that are
material, individually or in the aggregate, to the Company and the
Company Subsidiaries, taken as a whole, except purchases of inventory
in the ordinary course of business consistent with past practice or
in the fulfillment of Contracts in existence on the date hereof and
copies of which have been made available to Conopco;
(v) (A) grant to any employee, officer or director of the
Company or any Company Subsidiary any increase in compensation, except
in the ordinary course of business consistent with prior practice or to
the extent required under employment or consulting agreements in effect
as of the date of the most recent audited financial statements included
in the Filed Company SEC Documents, (B) grant to any employee, officer
or director of the Company or any Company Subsidiary any increase in
severance or termination pay, except to the extent required under any
employment, consulting, severance or termination agreement in effect as
of the date of the most recent audited financial statements included in
the Filed Company SEC Documents, (C) establish, adopt, enter into or
amend any Company Benefit Agreement, (D) establish, adopt, enter into
or amend in any material respect any collective bargaining agreement or
Company Benefit Plan or (E) take any action to accelerate any rights or
benefits, or make any material determinations not in the ordinary
course of business consistent with prior practice, under any collective
bargaining agreement or Company Benefit Plan or Company Benefit
Agreement;
(vi) make any change in accounting methods, principles or
practices materially affecting the reported consolidated assets,
liabilities or results of operations of the Company, except insofar as
may have been required by a change in GAAP;
(vii) sell, lease (as lessor), license or otherwise dispose of
or subject to any Lien any properties or assets, except for leases and
disposals of trucks and trailers and sales of inventory and excess or
obsolete assets, in all cases in the ordinary course of business
consistent with past practice;
(viii) (A) incur any indebtedness for borrowed money or
guarantee any such indebtedness of another person, issue or sell any
debt securities or warrants or other rights to acquire any debt
securities of the Company or any Company Subsidiary, guarantee any debt
securities of another person, enter into any "keep well" or other
agreement to
maintain any financial statement condition of another person or enter
into any arrangement having the economic effect of any of the
foregoing, except for short-term borrowings incurred in the ordinary
course of business consistent with past practice, or (B) make any
loans, advances or capital contributions to, or investments in, any
other person, other than to or in the Company or any direct or indirect
wholly owned subsidiary of the Company;
(ix) make or agree to make any new capital expendi ture or
expenditures that, individually, is in excess of $500,000 or, in the
aggregate, are in excess of $1,000,000; PROVIDED, HOWEVER, that with
respect to proposed capital expenditures the written consent of Conopco
shall not unreasonably be withheld;
(x) make or change any material Tax election or settle or
compromise any material Tax liability or refund;
(xi) (A) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise) in excess of $100,000, other than the payment, discharge or
satisfaction, in the ordinary course of business consistent with past
practice or in accordance with their terms, of liabilities reflected or
reserved against in, or contemplated by, the most recent consolidated
financial statements (or the notes thereto) of the Company included in
the Filed Company SEC Documents or incurred in the ordinary course of
business consistent with past practice, (B) cancel any material
indebtedness (individually or in the aggregate) or waive any claims or
rights of substantial value or (C) waive the benefits of, or agree to
modify in any manner, any confidentiality, standstill or similar
agreement to which the Company or any Company Subsidiary is a party; or
(xii) authorize any of, or commit or agree to take any of, the
foregoing actions.
(b) OTHER ACTIONS. Subject to Section 5.02(b), the Company
shall not, and shall not permit any Company Subsidiary to, take any action that
would, or that would reasonably be expected to, result in (A) any of the
representations and warranties of the Company set forth
in any Transaction Agreement to which it is a party that is qualified as to
Company Material Adverse Effect becoming untrue, (B) the representations and
warranties that are not so qualified as to Company Material Adverse Effect
becoming untrue where the failure of the representations and warranties referred
to in this clause (B) to be so true, when taken together, would reasonably be
expected to have a Company Material Adverse Effect, or (C) any condition to the
Offer set forth in Section 7.01, or any condition to the Merger set forth in
Section 7.02, not being satisfied. Conopco shall not, and shall not permit its
subsidiaries to, take any action that would, or would reasonably be expected to,
result in any condition to the Offer set forth in Section 7.01, or any condition
to the Merger set forth in Section 7.02, not being satisfied.
(c) ADVICE OF CHANGES. The Company shall promptly advise
Conopco orally and in writing of any change or event that has or would
reasonably be expected to have a Company Material Adverse Effect. The Company
shall promptly provide to Conopco (or its counsel) copies of all filings made by
the Company with any Governmental Entity in connection with this Agreement and
the Transactions, except with respect to the disclosure in Item 4(c) and any
related materials in the Company's filing under the HSR Act.
(d) CONTINUATION OF CONTRACTS. The Company shall use its best
efforts to take such actions necessary to ensure the continuation of the
contracts referred to in Section 3.05 of the Company Disclosure Letter;
PROVIDED, HOWEVER, that this Section 5.01(d) shall not require the payment by
the Company of any consent or other similar fee under any such contract.
SECTION 5.02. NO SOLICITATION. (a) The Company shall not, nor
shall it authorize or permit any Company Subsidiary to, nor shall it authorize
or permit any officer, director or employee of, or any investment banker,
attorney or other advisor or representative (collectively, "REPRESENTATIVES")
of, the Company or any Company Subsidiary to, (i) directly or indirectly
solicit, initiate or encourage the submission of, any Company Takeover Proposal
(as defined in Section 5.02(e)), (ii) enter into any agreement with respect to
any Company Takeover Proposal or (iii) directly or indirectly participate in any
discussions or negotiations regarding, or furnish to any person any information
with respect to, or take any other action to facilitate any inquiries or the
making of any
proposal that constitutes, or may reasonably be expected to lead to, any Company
Takeover Proposal; PROVIDED, HOWEVER, that prior to the acceptance for payment
of shares of Class A Common Stock pursuant to the Offer the Company may, to the
extent required by the fiduciary obligations of the Company Board, as determined
in good faith by a majority of the disinterested members thereof after
consultation with outside counsel, in response to a Company Takeover Proposal
that was made by a person whom the Company Board determines, in good faith after
consultation with outside counsel and an independent financial advisor, to be
reasonably capable of making a Superior Company Proposal (as defined in Section
5.02(e)), that was not solicited by the Company and that did not otherwise
result from a breach or a deemed breach of this Section 5.02(a), (x) furnish
information with respect to the Company to the person or group making such
Company Takeover Proposal and its Representatives pursuant to a customary
confidentiality agreement not less restrictive of the other party than the
Confidentiality Agreement (as defined in Section 6.02) and (y) participate in
discussions and negotiations with such person or group and its Representatives
to the extent required regarding such Company Takeover Proposal. Without
limiting the foregoing, it is agreed that any violation of the restrictions set
forth in the preceding sentence by any Representative or affiliate of the
Company or any Company Subsidiary, whether or not such person is purporting to
act on behalf of the Company or any Company Subsidiary or otherwise, shall be
deemed to be a breach of this Section 5.02(a) by the Company. Subject to the
foregoing provisions of this Section 5.02, the Company shall, and shall cause
its Representatives to, cease immediately all discussions and negotiations
regarding any proposal that constitutes, or may reasonably be expected to lead
to, a Company Takeover Proposal.
(b) Neither the Company Board nor any committee thereof shall
(i) withdraw or modify, or propose to withdraw or modify, in a manner adverse to
Conopco or Sub, the approval or recommendation by the Company Board or any such
committee of this Agreement, the Offer or the Merger, (ii) approve any letter of
intent, agreement in principle, acquisition agreement or similar agreement
relating to any Company Takeover Proposal or (iii) approve or recommend, or
propose to approve or recommend, any Company Takeover Proposal. Notwithstanding
the foregoing, if, prior to the acceptance for payment of shares of Class A
Common Stock pursuant to the Offer, the Company Board receives a
Superior Company Proposal and a majority of the disinterested directors of the
Company determine in good faith, after consultation with outside counsel, that
it is necessary to do so in order to comply with their fiduciary obligations,
the Company Board may withdraw its approval or recommendation of the Offer, the
Merger and this Agreement and, in connection therewith, approve or recommend
such Superior Company Proposal, PROVIDED, that the Company Board shall give
Conopco five business days' notice prior to withdrawing its recommendation.
(c) The Company promptly shall advise Conopco orally and in
writing of any Company Takeover Proposal or any inquiry with respect to or that
could lead to any Company Takeover Proposal, the identity of the person or group
making any such Company Takeover Proposal or inquiry and the material terms of
any such Company Takeover Proposal or inquiry. The Company shall (i) keep
Conopco fully informed of the status, including any change to the details, of
any such Company Takeover Proposal or inquiry and (ii) provide to Conopco as
soon as practicable after receipt or delivery thereof with copies of all
correspondence and other written material sent or provided to the Company from
any third party in connection with any Company Takeover Proposal or sent or
provided by the Company to any third party in connection with any Company
Takeover Proposal.
(d) Nothing contained in this Section 5.02 shall prohibit the
Company from taking and disclosing to its shareholders a position contemplated
by Rule 14e-2(a) promulgated under the Exchange Act or from making any required
disclosure to the Company's shareholders if, in the good faith judgment of the
Company Board, after consultation with outside counsel, failure so to disclose
would be inconsistent with its obligations under applicable Law.
(e) For purposes of this Agreement:
"COMPANY TAKEOVER PROPOSAL" means (i) any proposal or offer
for a merger, consolidation, dissolution, recapitalization or other
business combination involving the Company or any Company Subsidiary,
(ii) any proposal for the issuance by the Company of a material amount
of its equity securities as consideration for the assets or securities
of another person or (iii) any proposal or offer to acquire in any
manner, directly or indirectly, a material equity interest in any
voting securities of, or a substantial portion of the
assets of, the Company or any Company Subsidiary, in each case other
than the Transactions.
"SUPERIOR COMPANY PROPOSAL" means any proposal made by a third
party to acquire all or substantially all the equity securities or
assets of the Company, pursuant to a tender or exchange offer, a
merger, a consolidation, a liquidation or dissolution, a
recapitalization or a sale of all or substantially all its assets, (i)
on terms which a majority of the disinterested directors of the Company
determines in its good faith judgment (A) to represent superior value
for the holders of Company Common Stock than the Transactions (based on
the written opinion, with only customary qualifications, of Gordian
Group, L.P. or another independent financial advisor as to such
proposal's financial superiority), taking into account all the terms
and conditions of such proposal and this Agreement (including any
proposal by Conopco to amend the terms of the Transactions), and (B) to
be no less favorable to the Company's stakeholders (not including its
shareholders), taken as a whole, than the Transactions, taking into
account all the terms and conditions of such proposal and this
Agreement (including any proposal by Conopco to amend the terms of the
Transactions) and (ii) that is reasonably capable of being completed,
taking into account all financial, regulatory, legal and other aspects
of such proposal.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. PREPARATION OF PROXY STATEMENT; SHAREHOLDERS
MEETING. (a) The Company shall, as soon as practical following the expiration of
the Offer, prepare and file with the SEC the Proxy Statement in preliminary
form, and the Company and each of Conopco and Sub shall use its best efforts to
respond as promptly as practicable to any comments of the SEC with respect
thereto. The Company shall notify Conopco promptly of the receipt of any
comments from the SEC or its staff and of any request by the SEC or its staff
for amendments or supplements to the Proxy Statement or for additional
information and shall supply Conopco with copies of all correspondence between
the Company or any of its representatives, on the one hand, and the SEC or its
staff, on the other hand, with respect to the Proxy
Statement. If at any time prior to receipt of the Company Shareholder Approval
there shall occur any event that should be set forth in an amendment or
supplement to the Proxy Statement, the Company shall promptly prepare and mail
to its shareholders such an amendment or supplement. The Company shall not mail
any Proxy Statement, or any amendment or supplement thereto, to which Conopco
reasonably objects. The Company shall use its best efforts to cause the Proxy
Statement to be mailed to the Company's shareholders as promptly as reasonably
practicable after filing with the SEC.
(b) The Company shall, as soon as reasonably practical
following the expiration of the Offer, duly call, give notice of, convene and
hold a meeting of its shareholders (the "COMPANY SHAREHOLDERS MEETING") for the
purpose of seeking the Company Shareholder Approval. Without limiting the
generality of the foregoing, the Company agrees that, unless this Agreement
shall have been terminated, its obligations pursuant to the first sentence of
this Section 6.01(b) shall not be affected by (i) the commencement, public
proposal, public disclosure or communication to the Company of any Company
Takeover Proposal or (ii) the withdrawal or modification by the Company Board of
its approval or recommendation of this Agreement, the Offer or the Merger.
(c) Conopco shall cause all shares of Class A Common Stock
purchased by Sub pursuant to the Offer and all other shares of Class A Common
Stock owned by Sub or any other direct or indirect subsidiary of either Parent
to be represented at the Company Shareholders Meeting and to be voted in favor
of obtaining the Company Shareholder Approval.
SECTION 6.02. ACCESS TO INFORMATION; CONFIDENTIALITY. (a) The
Company shall, and shall cause each Company Subsidiary to, afford to Conopco,
and to Conopco's officers, employees, accountants, counsel, financial advisors
and other representatives, upon reasonable notice reasonable access during
normal business hours during the period prior to the Effective Time to all their
respective properties, books, contracts, commitments, personnel and records and,
during such period, the Company shall, and shall cause each Company Subsidiary
to, furnish promptly to Conopco (a) a copy of each report, schedule,
registration statement and other document filed by it during such period
pursuant to the requirements of Federal or state securities laws and (b) all
other information concerning its business, properties and personnel as Conopco
may reasonably
request; PROVIDED, HOWEVER, that the Company may withhold (i) any document or
information that is subject to the terms of a confidentiality agreement with a
third party or (ii) such portions of documents or information relating to
pricing or other matters that are highly sensitive and the exchange of such
documents (or portions thereof) or information, as determined by the Company's
outside counsel, might reasonably result in antitrust difficulties between the
Company and Conopco (or any of its affiliates). If any material is withheld from
Conopco pursuant to the proviso to the preceding sentence, the Company shall
inform Conopco as to what is being withheld. Without limiting the generality of
the foregoing, the Company shall, within two business days of request therefor,
provide to Conopco the information described in Rule 14a-7(a)(2)(ii) under the
Exchange Act and any information to which a holder of Company Common Stock would
be entitled under Section 16.02 of the VBCA (assuming such holder met the
requirements of such section).
(b) The Company shall, as soon as practicable and in any event
by the end of the third week of each month, furnish to Conopco such financial
information for the previous month in such form as is provided to the Company
Board.
(c) All information exchanged pursuant to this Section 6.02
shall be subject to the confidentiality agreement dated September 27, 1999
between the Company and Conopco (the "CONFIDENTIALITY AGREEMENT").
SECTION 6.03. BEST EFFORTS; NOTIFICATION. (a) Upon the terms
and subject to the conditions set forth in this Agreement, and subject to
Section 5.02 and the Company's right to make the disclosures to its shareholders
permitted under Section 5.02(d), each of the parties shall use its best efforts
to take, or cause to be taken, all appropriate actions, and to do, or cause to
be done, and to assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective, in the most
expeditious manner practicable, the Offer, the Merger and the other
Transactions, including (i) the obtaining of all necessary actions, waivers,
consents and approvals from Governmental Entities and the making of all
necessary registrations and filings (including filings with Governmental
Entities, if any) and the taking of all reasonable steps as may be necessary to
obtain an approval or waiver from, or to avoid an action or proceeding by, any
Governmental Entity, (ii) the
obtaining of all necessary consents, approvals or waivers from third parties,
(iii) the defending of any lawsuits or other legal proceedings, whether judicial
or administrative, challenging this Agreement or any other Transaction Agreement
or the consummation of the Transactions, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental Entity
vacated or reversed and (iv) the execution and delivery of any additional
instruments necessary to consummate the Transactions and to fully carry out the
purposes of the Transaction Agreements; PROVIDED, HOWEVER, that neither the
Company nor Conopco shall be required to consent to any action described in
Section 7.01(a). In connection with and without limiting the foregoing, the
Company and the Company Board shall (i) take all action necessary to ensure that
no state takeover statute or similar statute or regulation becomes applicable to
any Transaction or this Agreement or any other Transaction Agreement and (ii) if
any state takeover statute or similar statute or regulation becomes applicable
to this Agreement or any other Transaction Agreement, take all action necessary
to ensure that the Offer, the Merger and the other Transactions may be
consummated as promptly as practicable on the terms contemplated by the
Transaction Agreements and otherwise to minimize the effect of such statute or
regulation on the Offer, the Merger and the other Transactions. Nothing in this
Section 6.03 shall be deemed to require any party to waive any substantial
rights or agree to any substantial limitation on its operations or to dispose of
any significant asset or collection of assets.
(b) The Company shall give prompt notice to Conopco, and
Conopco shall give prompt notice to the Company, of (i) any representation or
warranty made by it contained in any Transaction Agreement that is qualified as
to materiality being untrue or inaccurate in any respect when given or any such
representation or warranty that is not so qualified being untrue or inaccurate
in any material respect when given or (ii) the failure by it to comply with or
satisfy in any material respect any covenant, condition or agreement to be
complied with or satisfied by it under any Transaction Agreement; PROVIDED,
HOWEVER, that no such notification shall affect the representations, warranties,
covenants or agreements of the parties or the conditions to the obligations of
the parties under the Transaction Agreements.
SECTION 6.04. STOCK OPTIONS. (a) As soon as reasonably
practicable following the date of this Agreement, the Company Board (or, if
appropriate, any
committee administering the Company Stock Plans) shall adopt resolutions or take
such other actions as may be required to effect the following:
(i) adjust the terms of all outstanding Company Stock Options,
whether vested or unvested, as necessary to provide that each Company
Stock Option (and any Company SAR related thereto) outstanding
immediately prior to the acceptance for payment of shares of Class A
Common Stock pursuant to the Offer, including all vested and unvested
Company Stock Options, shall be canceled effective immediately prior to
the acceptance for payment of Class A Common Stock pursuant to the
Offer, with the holder thereof becoming entitled to receive an amount
in cash equal to (A) the excess, if any, of (1) $43.60 over (2) the
exercise price per share of the Class A Common Stock subject to such
Company Stock Option or Company SAR, multiplied by (B) the number of
shares of the Class A Common Stock for which such Company Stock Option
shall not theretofore have been exercised; PROVIDED, HOWEVER, that no
cash payment shall be made with respect to any Company SAR that is
related to any Company Stock Option in respect of which such a cash
payment is made; PROVIDED, FURTHER, that all amounts payable pursuant
to this Section 6.04(a)(i) shall be subject to any required withholding
of Taxes or proof of eligibility of exemption therefrom and to receipt
of the written consent of the holder thereof and shall be paid at or as
soon as practicable following the acceptance for payment of shares of
Class A Common Stock pursuant to the Offer, without interest; and
(ii) make such other changes to the Company Stock Plans as the
Company and Conopco may agree are appropriate to give effect to the
Offer and the Merger.
(b) After the Effective Time, the Surviving Corporation shall
establish an appropriate long-term incentive plan to properly incentivise its
employees.
SECTION 6.05. BENEFIT PLANS AND SPECIAL BONUS PROGRAM. (a)
Except as set forth in Section 6.04 and this Section 6.05, Conopco agrees that
after the consummation of the Offer the Company shall honor, and, on and after
the Effective Time, Conopco shall cause the Surviving Corporation to honor, all
employment, severance, termination, consulting and retirement agreements to
which the Company or any Company Subsidiary
is presently a party and which have been disclosed in the Company Disclosure
Letter, including all "constructive termination" provisions therein. Conopco
confirms that, for purposes of such agreements, the acceptance for payment, and
purchase, of the Company Common Stock pursuant to the Offer shall constitute a
"change in control".
(b) Except as set forth in Sections 6.04 and 6.05(c), the
Surviving Corporation shall maintain for a period of five years after the
Effective Time the Company Benefit Plans (other than equity or equity-based
programs), except to the extent provided in Section 6.04, in effect on the date
of this Agreement or provide benefits to each current employee of the Company
and the Company Subsidiaries that are not materially less favorable in the
aggregate to such employees than those in effect on the date of this Agreement
(other than equity or equity-based programs), except to the extent provided in
Section 6.04.
(c) As soon as practicable following the date of this
Agreement, the Company Board (or, if appropriate, any committee administering
the 1986 ESPP) shall take or cause to be taken such actions as may be necessary
to provide that (i) no options shall be granted and no payroll deductions
accepted after the earlier of June 30, 2000 or the date in which falls the
Effective Time; (ii) if the Effective Time falls on a date prior to June 30,
2000, the exercise date in respect of the offering (option) period under the
1986 ESPP that commenced January 1, 2000 shall be accelerated, and all
unexercised rights granted in respect of such offering (option) period shall be
exercised immediately prior to the Effective Time; (iii) all holding periods
with respect to shares under the ESPP shall be waived; and (iv) the 1986 ESPP
shall terminate as of the Effective Time.
(d) Six months following the Effective Time, Conopco shall
make available to the Surviving Corporation the sum of $5 million to be
distributed on a per capita basis to the then full-time employees of the Company
below the OCEO as a special bonus unless the Company Board determines in its
sole discretion that all or a portion of such amount should be contributed to
the Foundation (as defined in Section 6.14) in which case the balance shall be
distributed on a per capita basis to the then full-time employees of the Company
below the OCEO and the amount not so distributed shall be contributed to the
Foundation.
SECTION 6.06. INDEMNIFICATION. (a) Conopco and Sub agree that
all rights to indemnification under the Company Charter, the Company By-laws,
the Company's indemnification or other agreements or by Law for acts or
omissions occurring prior to the Effective Time now existing in favor of the
current or former directors or officers of the Company and its subsidiaries (the
"INDEMNIFIED PARTIES") as provided in their respective articles of
incorporation, by-laws or indemnification agreements shall survive the Merger
and shall continue in full force and effect in accordance with their terms until
the expiration of the applicable statute of limitations (PROVIDED, that in the
event any claim or claims are asserted or made prior to the expiration of all
applicable statutes of limitation, all rights to indemnification in respect of
any such claim or claims shall continue until disposition of any and all such
claims), and Conopco shall cause the Surviving Corporation to honor all such
rights. Without limitation of the foregoing, in the event any such Indemnified
Party is or becomes involved in any capacity in any action, proceeding or
investigation in connection with any matter, including the transactions
contemplated by this Agreement, occurring prior to, and including, the Effective
Time, Conopco shall, or shall cause the Surviving Corporation to, pay as
incurred such Indemnified Party's reasonable legal and other expenses (including
the cost of any investigation and preparation) incurred in connection therewith
(subject to receipt by the Surviving Corporation of an undertaking from such
Indemnified Party to repay advances if it is subsequently determined that such
Indemnified Party is not entitled to indemnification). Conopco shall pay all
expenses, including reasonable attorneys' fees, that may be incurred by any
Indemnified Party in successfully enforcing the indemnity and other obligations
provided for in this Section 6.06(a).
(b) Conopco shall cause to be maintained for a period of not
less than six years from the Effective Time the Company's current directors' and
officers' insurance and indemnification policies to the extent that they provide
coverage for events occurring prior to the Effective Time (the "D&O INSURANCE")
for all persons who are directors and officers of the Company on the date of
this Agreement, so long as the annual premium therefor would not be in excess of
200% of the last annual premiums paid prior to the date of this Agreement (such
200% amount, the "MAXIMUM PREMIUM"). If the existing D&O Insurance expires, is
terminated or canceled during such six-year period, Conopco shall use all
reasonable efforts
to cause to be obtained as much D&O Insurance as can be obtained for the
remainder of such period for an annualized premium not in excess of the Maximum
Premium, on terms and conditions no less advantageous than the existing D&O
Insurance. The Company represents to Conopco that the Maximum Premium is
$228,000.
SECTION 6.07. FEES AND EXPENSES; LIQUIDATED DAMAGES. (a)
Except as provided below, all fees and expenses incurred in connection with the
Merger shall be paid by the party incurring such fees or expenses, whether or
not the Merger is consummated.
(b) The Company shall pay to Conopco a fee of $11.4 million
if: (i) this Agreement is terminated pursuant to Section 8.01(b)(iii) as a
result of the failure of the condition set forth in paragraph (d) of Section
7.01; (ii) Conopco terminates this Agreement pursuant to Section 8.01(d) or the
Company terminates this Agreement pursuant to Section 8.01(e); (iii) after the
date of this Agreement any person makes or consummates a Company Takeover
Proposal or amends a Company Takeover Proposal made prior to the date of this
Agreement, and (A) the Offer remains open for at least five business days
following the first public announcement of the making, consummation or
amendment, as the case may be, of such Company Takeover Proposal, (B) the
Minimum Tender Condition is not satisfied at such expiration date and (C) this
Agreement is terminated pursuant to Section 8.01(b)(iii); or (iv) this Agreement
is terminated (other than termination pursuant to Section 8.01(b)(iv) or
8.01(f)) and within 12 months of such termination the Company enters into a
definitive agreement to consummate, or consummates, the transactions
contemplated by a Company Takeover Proposal. Any fee due under this Section
6.07(b) shall be paid by wire transfer of same-day funds on the date of
termination of this Agreement (except that in the case of termination pursuant
to clause (iv) above such payment shall be made on the date of execution of such
definitive agreement or, if earlier, consummation of such transactions). Conopco
shall only be entitled to one fee under this Section 6.07(b).
(c) The parties acknowledge that Conopco's damages in the
event that this Agreement is breached by the Company would be extremely costly
and impractical to calculate. Conopco and the Company have expressly negotiated
this provision, and have agreed that in light of the circumstances existing at
the time of execution of this Agreement, an amount equal to $11.9 million
represents a reasonable estimate of the harm likely to be suffered by Conopco in
the event this Agreement is terminated pursuant to Section 8.01(c) or pursuant
to Section 8.01(b)(iii) as a result of the failure of a condition set forth in
paragraph (e) or (f) of Section 7.01. Accordingly, in the event this Agreement
is terminated under such circumstances, Conopco shall be entitled to receive
$11.9 million from the Company as its sole remedy and as liquidated damages.
SECTION 6.08. PUBLIC ANNOUNCEMENTS. Each of Conopco and Sub,
on the one hand, and the Company, on the other hand, shall consult with each
other before issuing, and provide each other the opportunity to review and
comment upon, any press release or other public statements with respect to the
Offer and the Merger and the other Transactions and shall not issue any such
press release or make any such public statement prior to such consultation,
except as may be required, as determined by outside counsel, by applicable Law,
court process or by obligations pursuant to any listing agreement with any
national securities exchange.
SECTION 6.09. TRANSFER TAXES. All stock transfer, real estate
transfer, documentary, stamp, recording and other similar Taxes (including
interest, penalties and additions to any such Taxes) ("TRANSFER TAXES") incurred
in connection with the Transactions shall be paid by either Sub or the Surviving
Corporation, and the Company shall cooperate with Sub and Conopco in preparing,
executing and filing any Tax Returns with respect to such Transfer Taxes.
SECTION 6.10. INTERIM DIRECTORS. Promptly upon the acceptance
for payment of, and payment by Sub for, any shares of Class A Common Stock
pursuant to the Offer, Sub shall be entitled to designate, for election by the
Company Board, such number of directors on the Company Board as will give Sub,
subject to compliance with Section 14(f) of the Exchange Act and the VBCA,
majority representation on the Company Board; PROVIDED, HOWEVER, that in the
event that Sub's designees are appointed or elected to the Company Board, until
the Effective Time the Company Board shall have at least three directors who are
Directors on the date of this Agreement and who are not officers of the Company
(the "INDEPENDENT DIRECTORS"); PROVIDED, FURTHER, that, in such event, if the
number of Independent Directors shall be reduced below three for any reason
whatsoever, any remaining Independent Directors (or Independent Director, if
there shall be only one remaining) shall be entitled to
designate persons to fill such vacancies who shall be deemed to be Independent
Directors for purposes of this Agreement or, if no Independent Directors then
remain, the other directors shall designate three persons to fill such vacancies
who are not officers, shareholders or affiliates of the Company, Conopco or Sub,
and such persons shall be deemed to be Independent Directors for purposes of
this Agreement. Subject to applicable Law, the Company shall take all action
requested by Conopco necessary to effect any such election, including mailing to
its shareholders the Information Statement containing the information required
by Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, and
the Company shall make such mailing with the mailing of the Schedule 14D-9
(provided that Sub shall have provided to the Company on a timely basis all
information required to be included in the Information Statement with respect to
Sub's designees). In connection with the foregoing, the Company shall promptly,
at the option of Sub, either increase the size of the Company Board or obtain
the resignation of such number of its current directors as is necessary to
enable Sub's designees to be elected or appointed to the Company Board as
provided above.
SECTION 6.11. COMPANY CAPITAL STOCK. (a) Immediately following
the consummation of the Offer, the Company Board shall authorize the Company to
redeem all of the outstanding shares of Company Preferred Stock, at a price per
share that would have been received by a holder of Company Preferred Stock if
paid as Merger Consideration in the Merger, prior to the record date for the
Company Shareholder Meeting and deliver to all holders of Company Preferred
Stock the notice of redemption required by the Company Charter. The Company
shall redeem all outstanding shares of Company Preferred Stock prior to the
Effective Time.
(b) Upon receipt of a Qualified Notice (as defined below) from
Conopco, and in accordance with the Company Charter, the Company shall mail a
notice to all the holders of Class B Common Stock, which notice shall specify
that all outstanding shares of Class B Common Stock will be automatically
converted into shares of Class A Common Stock effective ten days from the date
of such mailing. The Company shall not take any action to rescind, revoke,
retrieve or otherwise impair the effectiveness of such notice of conversion or
prevent the automatic conversion of the outstanding shares of Class B Common
Stock. A "QUALIFIED NOTICE" shall mean a written notice that (i) is delivered by
Conopco to the Company not earlier than the business day immediately prior to
the then scheduled expiration date of the Offer and not later than 2 p.m.
Eastern Time on the then scheduled expiration date of the Offer and (ii) states
that, as of the time of such notice, Conopco has no reason to believe that any
condition set forth in Section 7.01 will not be satisfied at the then scheduled
expiration time of the Offer (assuming compliance by the Company with this
Section 6.11(b)).
SECTION 6.12. RIGHTS AGREEMENTS; CONSEQUENCES IF RIGHTS
TRIGGERED. The Company Board shall take all further action (in addition to that
referred to in Section 3.05(c)) requested in writing by Conopco in order to
render the Company Rights inapplicable to the Offer, the Merger and the other
Transactions. Except as approved in writing by Conopco, the Company Board shall
not (i) amend either of the Company Rights Agreements, (ii) redeem the Company
Rights or (iii) take any action with respect to, or make any determination
under, the Company Rights Agreements.
SECTION 6.13. SHAREHOLDER LITIGATION. After the Closing Date,
the Company shall give Conopco the opportunity to participate in the defense or
settlement of any shareholder litigation against the Company or its directors
relating to any Transaction.
SECTION 6.14. OPERATIONS OF THE SURVIVING CORPORATION. (a) The
Company Board immediately following the Effective Time shall consist of: (i) the
CEO; (ii) seven members to be composed of (A) such members of the Company Board
(other than the current CEO and Ineligible Directors (as defined in Section
9.03)) as of the date hereof who wish to continue or rejoin as members of the
Company Board following the Effective Time and (B) such other persons as may be
necessary to fill any vacancies in the seven members as shall be designated for
election by a majority of the persons specified in clause (A) (the "CLASS I
DIRECTORS"); (iii) two members (the "CLASS M DIRECTORS") to be designated by
Meadowbrook Lane, Inc. ("MEADOWBROOK"); and (iv) one member (together with any
alternate that Conopco may from time to time designate, the "CLASS U DIRECTOR")
to be designated by Conopco. The size of the Company Board shall be fixed at 11.
Directors shall be elected for one year terms (subject to earlier removal, death
or resignation), and a majority of directors then in office in each Class shall
designate the candidates for election to the Company Board in such Class each
year, and Conopco shall cause the election of such candidates and the CEO to the
Company Board. Vacancies on the Company Board shall be
filled in a like manner. Conopco, as sole shareholder of the Surviving
Corporation, shall remove any director of any Class at the written request of at
least a majority of the directors of such Class then in office and shall not
otherwise remove any member of the Company Board after the Effective Time, other
than a Class U Director or the CEO following termination of his or her
employment. No Ineligible Director shall be permitted at any time to be elected
to the Company Board.
(b) Immediately following the Effective Time, the Surviving
Corporation shall delegate authority to the CEO to manage the affairs of the
Company, substantially in the form of Exhibit B, appropriately adjusted for
inflation and other relevant factors. The Surviving Corporation, with the
consent of Conopco, shall review on an annual basis the proper scope of such
delegation and shall make a new delegation to the CEO as of January 1 of each
year. Within the scope of the authority delegated by the Surviving Corporation
to the CEO, the CEO may act without obtaining the prior approval of Conopco or
the Company Board. The Company Board shall not alter or challenge in any way the
scope of any delegation of authority by the Surviving Corporation to the CEO.
(c) Decisions with respect to the appointment, compensation
and removal of the CEO shall be made by Conopco after good faith consultation
with, and the participation in discussions of, an advisory committee of the
Company Board (the "APPOINTMENT COMMITTEE") consisting of ▇▇▇ ▇▇▇▇▇ ("B.C.") and
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ("▇.▇."); PROVIDED, HOWEVER, that, if from time to time one or
both of B.C. or ▇.▇. is not a member of the Company Board, then a majority of
the Class I Directors then in office shall appoint one or two, as the case may
be, Class I Directors or Class M Directors to the Appointment Committee.
(d) Subject to Sections 6.14(e) and 6.14(f), which place
primary responsibility for Social Mission Priorities and the Essential Integrity
of the Brand (each as defined below) with the Company Board, the Surviving
Corporation shall be managed by the CEO in accordance with an annual business
plan. Each year the CEO shall present a business plan for the following year to
Conopco and the Company Board. Conopco and the Company Board, in good faith
consultation with each other, shall review the proposal and Conopco, the Company
Board and the CEO shall use good faith efforts to reach agreement on the annual
business plan. If such parties are unable to reach agreement on the annual
business plan, the ultimate
determination of such plan shall be by Conopco. The annual business plan may be
modified following the principles set out in the previous two sentences.
(e) The Company Board shall have primary responsibility for
preserving and enhancing the objectives of the historical social mission of the
Company as they may evolve from time to time consistent therewith ("SOCIAL
MISSION PRIORITIES"). The Company Board shall work together with the CEO to
integrate Social Mission Priorities into the business of the Surviving
Corporation. The Company Board shall have a committee (the "SOCIAL VENTURE
COMMITTEE") that shall oversee the Social Venture Fund (as defined below)
consisting of one Class M Director, appointed by a majority of the Class M
Directors then in office, and B.C., or, if B.C. is not a member of the Company
Board, ▇.▇., or, if neither B.C. nor ▇.▇. is a member of the Company Board, a
Class I Director appointed by a majority of the Class I Directors. Schedule 6.14
contains an illustrative list of Social Mission Priorities of the Company as of
the date hereof.
(f) The Company Board shall be the custodians of the Ben &
Jerry's-brand image and shall have primary responsibility for safeguarding the
integrity of the essential elements of the Ben & Jerry's brand-name (the
"ESSENTIAL INTEGRITY OF THE BRAND"). The Company Board shall work together with
the CEO to provide that the business of the Surviving Corporation is conducted
in a manner that preserves and enhances the Essential Integrity of the Brand. As
part of this responsibility, the Company Board may prevent any action by the CEO
in the areas of new product introduction, the changing of product standards and
specifications, the approval of the content of marketing materials and the
licensing or other use of the Ben & Jerry's trademark that, in each case, a
majority of the Company Board reasonably determines to be inconsistent with the
Essential Integrity of the Brand.
(g) The Company and Conopco shall work together to develop and
mutually agree to a set of measures of the social performance of the Surviving
Corporation ("SOCIAL METRICS"). The Surviving Corporation, under the direction
of the Company Board, shall seek to have the Social Metrics of the Surviving
Corporation increase at a rate in excess of the rate of sales increases of the
Surviving Corporation.
(h) The Surviving Corporation shall continue the Company's
practice of making charitable contributions
by making contributions, for a minimum of ten years, of $1.1 million per year
adjusted annually (i) by multiplying such amount by the ratio of the U.S.
Producer Price Index for the month of December of the year in which the
determination is made to the U.S. Producer Price Index for December 1999 and
(ii) by multiplying the product of such calculation by the ratio of the
equivalent gallon sales of Products bearing the Principal Licensed ▇▇▇▇ (each as
defined in the License Agreement) sold by any person in such year to the
equivalent gallon sales of Products sold in 1999; PROVIDED, HOWEVER, that such
ratio shall never be less than one. To the extent that a material portion of the
Company's business consists of activities other than the manufacture and sale of
Products, Conopco and the Surviving Corporation shall agree on an appropriate
equivalent measure of sales volume for clause (ii) with respect to such
non-Product activities. The Company Board shall have the responsibility for
allocating annual contributions among The Ben & Jerry's Foundation, Inc. (the
"FOUNDATION"), local community charitable initiatives with the support and
oversight of employee Community Action Teams and charitable institutions
selected by the OCEO. The Company Board may allocate a portion of such
contributions to the Foundation so long as (i) the Foundation does not
significantly change its charitable purpose, (ii) none of the trustees of the
Foundation disparages the Surviving Corporation, its products or its management
and (iii) any replacement or additional trustee of the Foundation is reasonably
satisfactory to Conopco. After such ten year period, the Surviving Corporation
shall continue to make contributions as calculated in accordance with the first
sentence of this Section 6.14(h) unless the activities and performance of the
Foundation cease to be reasonably acceptable to Unilever, and provided that the
Foundation meets the other requirements set out in the previous sentence. The
Company Board shall also be responsible for making the determination referred to
in Section 6.05(d).
(i) Conopco shall not prevent the Surviving Corporation from
fulfilling its obligations under this Section 6.14.
(j) Conopco shall have primary responsibility for the
financial and operational aspects of the Surviving Corporation and the other
aspects of the Surviving Corporation not allocated to the Company Board pursuant
to this Section 6.14. Each member of the Company Board after the Effective Time
and all employees of the Surviving Corporation shall agree to abide by the
Unilever Code of Business Conduct, and all employees of the Surviving
Corporation shall agree to abide by Unilever's financial, accounting and legal
procedures.
(k) Following the Effective Time, the Surviving Corporation
shall establish a new product development unit responsible for special projects
to be headed by B.C., for so long as B.C. is a member of the Company Board and
an employee of the Surviving Corporation. The role of such unit shall include
the test-marketing of new products to a reasonable extent, provided that such
test-marketing is performed in conjunction with the Surviving Corporation's
marketing department to ensure that proper measures are utilized to determine
the success or failure of such test-marketing.
(l) The parties agree that the Company Charter and the Company
By-laws shall be amended after the Effective Time to the extent necessary to
implement the provisions contained in this Section 6.14, including if necessary
the Surviving Corporation electing to become a close corporation in accordance
with the provisions of the VBCA.
SECTION 6.15. THE FOUNDATION. Immediately prior to the
Effective Time, the Surviving Corporation shall, and Conopco shall cause the
Surviving Corporation to, make a one-time contribution of not less than $5
million to the Foundation so long as (i) the Foundation does not significantly
change its charitable purpose, (ii) none of the trustees of the Foundation
disparages the Surviving Corporation, its products or its management and (iii)
any replacement or additional trustee of the Foundation appointed before the
date of payment is reasonably satisfactory to Conopco.
SECTION 6.16. CERTAIN EMPLOYEE MATTERS. (a) The Surviving
Corporation shall not, for a period of at least two years following the
Effective Time, initiate any material headcount reduction of the employees of
the Company, such headcount to be measured on a seasonal basis taking into
account past employment practice by the Company.
(b) The Surviving Corporation shall maintain for a period of
at least five years following the Effective Time its corporate presence and
substantial operations in Vermont.
(c) The Surviving Corporation shall maintain the Company's
current "liveable wage" policy in respect of employees of the Surviving
Corporation.
(d) Following the Effective Time, a significant amount of the
incentive-based compensation of the OCEO shall be based on the social
performance of the Surviving Corporation, and the Company Board shall be
primarily responsible for the award of such social performance based amounts.
SECTION 6.17. SOCIAL MILESTONES. Following the Effective Time,
Conopco shall cause the Parents to, and the Company shall, appoint ▇▇▇▇
▇▇▇▇▇▇▇▇▇ (or such other person as the parties may agree from time to time) (the
"SOCIAL ADVISOR") to work with the Parents and the Company to develop a program
of social milestones for the assessment of the Parents' efforts to incorporate
socially responsible practices into their businesses, based on the Parents'
social audit to be completed in the year 2000 (the "PARENTS SOCIAL AUDIT"),
which will set out five-year performance goals with interim annual targets (the
"SOCIAL MILESTONES"), each of the Social Milestones to be agreed between the
Parents and the Company. The Social Advisor shall carry out an annual audit of
the Parents' performance in relation to the Social Milestones, such audit to be
publicly disseminated to the extent consistent with the dissemination of the
Parents Social Audit, or, if the Parents Social Audit is not publicly
disseminated, on a time frame and in a manner reasonably acceptable to the
Parents and the Company Board, which manner shall include publication on the
Parents' website. The reasonable fees of ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ shall be borne by
Conopco or its affiliates.
SECTION 6.18. THE SOCIAL VENTURE FUND. Following the Effective
Time, the Surviving Corporation shall establish an entity (the "SOCIAL VENTURE
FUND") independent from the Foundation and the Surviving Corporation, such
entity to be beneficially owned by the Foundation or another charitable
foundation to be established by the Surviving Corporation (so long as such other
charitable foundation constitutes an entity to which donations would be tax
deductible under the U.S. Income Tax Code). The Surviving Corporation shall fund
such entity pursuant to an agreement to be made between the Surviving
Corporation and the Foundation after the Effective Time on such terms and
conditions as they and the Social Venture Committee shall approve to provide
venture financing to (a) vendors owned by women, minorities or indigenous
people, (b) vendors which give
priority to a social change mission, and (c) such other third-party
entrepreneurial businesses within the scope of the Company's Social Mission
Priorities. The Surviving Corporation shall make available to the Social Venture
Fund an aggregate amount of $5 million. The terms of any agreement relating to
the Social Venture Fund shall limit the financial responsibility of the
Surviving Corporation to the foregoing cash contributions.
ARTICLE VII
SECTION 7.01. CONDITIONS TO THE OFFER. Notwithstanding any
other term of the Offer or this Agreement, Sub shall not be required to accept
for payment or, subject to any applicable rules and regulations of the SEC,
including Rule 14e-l(c) under the Exchange Act (relating to Sub's obligation to
pay for or return tendered shares of Company Common Stock promptly after the
termination or withdrawal of the Offer), to pay for any shares of Company Common
Stock tendered pursuant to the Offer unless (i) there shall have been validly
tendered and not withdrawn prior to the expiration of the Offer such number of
shares of Company Common Stock that, taking into account the conversion of the
Class B Common Stock to Class A Common Stock, would constitute a majority of the
combined voting power of the Company Common Stock (determined on a fully diluted
basis, after giving effect to the exercise or conversion of all options, rights
and securities exercisable or convertible into voting securities) (the "MINIMUM
TENDER CONDITION"), (ii) the waiting period (and any extension thereof) under
the HSR Act applicable to the purchase of shares of Company Common Stock
pursuant to the Offer shall have expired or been terminated and (iii) the
Company shall have mailed the notice of conversion described in Section 6.11(b)
to all holders of Class B Common Stock following receipt of the notice specified
in Section 6.11(b) and shall not have taken any action in violation of Section
6.11(b). Furthermore, notwithstanding any other term of the Offer or this
Agreement, Sub shall not be required to accept for payment or, subject as
aforesaid, to pay for any shares of Company Common Stock not theretofore
accepted for payment or paid for, and may terminate or amend the Offer, with the
consent of the Company, or if, at any time on or after the date of this
Agreement and before
the acceptance of such shares for payment or the payment therefor, any of the
following conditions exists:
(a) there shall be threatened by any Governmental Entity, or
there shall be initiated or pending any suit, action, proceeding,
application or counterclaims by any Governmental Entity or any other
person, or before any court or governmental authority, agency or
tribunal, domestic or foreign in each case that has a reasonable
likelihood of success, (i) challenging the acquisition by Conopco or
Sub of any Class A Common Stock, seeking to restrain or prohibit the
making or consummation of the Offer or the Merger or any other
Transaction, or seeking to obtain from the Company, Conopco or Sub any
damages that are material in relation to the Company and its
subsidiaries taken as whole, (ii) seeking to prohibit or limit the
ownership or operation by the Company, Conopco or any of their
respective subsidiaries of any material portion of the business or
assets of the Company, Conopco or any of their respective subsidiaries,
or to compel the Company, Conopco or any of their respective
subsidiaries to dispose of or hold separate any material portion of the
business or assets of the Company, Conopco or any of their respective
subsidiaries, as a result of the Offer, the Merger or any other
Transaction, (iii) seeking to impose limitations on the ability of
Conopco or Sub to acquire or hold, or exercise full rights of ownership
of, any shares of Company Common Stock, including the right to vote the
Company Common Stock purchased by it on all matters properly presented
to the shareholders of the Company, (iv) seeking to prohibit or limit
Conopco or any of its subsidiaries from effectively controlling in any
material respect the business or operations of the Company and the
Company Subsidiaries, or (v) which otherwise, individually or in the
aggregate, would reasonably be expected to have a Company Material
Adverse Effect;
(b) any Law shall be threatened, proposed, sought, or any Law
or Judgment shall be enacted, entered, enforced, promulgated, amended
or issued with respect to, or deemed applicable to, or any Consent
withheld with respect to (i) Conopco, the Company or any of their
respective subsidiaries or (ii) the Offer, the Merger or any other
Transaction, by any Governmental Entity that would reasonably be
expected to result directly or indirectly, in any of the consequences
referred to in paragraph (a) above;
(c) since the date of this Agreement, there shall have
occurred (i) any material damage to any material property in which the
Company or any Company Subsidiary has any interest, (ii) any suit,
action or proceeding threatened against or affecting the Company or any
Company Subsidiary or any significant development in any existing suit,
action or proceeding involving or affecting the Company or any Company
Subsidiary, (iii) any challenge to the use by the Company of any
material intellectual property rights used in its business at the date
hereof or (iv) any event, change, effect or development adversely
affecting the integrity of the trademarks or trade names under which
the Company conducts its business, that, in any case under each of
clause (i), (ii), (iii) and (iv), individually or in the aggregate,
have had or would reasonably be expected to have, a Company Material
Adverse Effect;
(d)(i) it shall have been publicly disclosed or Conopco shall
have otherwise learned that beneficial ownership (determined for the
purposes of this paragraph as set forth in Rule 13d-3 promulgated under
the Exchange Act) of more than 50% of the outstanding shares of the
Company Common Stock has been acquired by another person or (ii) the
Company Board or any committee thereof shall have withdrawn or modified
in a manner adverse to Conopco or Sub, its approval or recommendation
of this Agreement, the Offer or the Merger, failed to recommend to the
Company's shareholders that they accept the Offer and give the Company
Shareholder Approval or approved or recommended any Company Takeover
Proposal;
(e)(i) any representation and warranty of the Company in this
Agreement that is qualified as to Company Material Adverse Effect shall
not be true and correct as of the date of this Agreement, except to the
extent such representation and warranty expressly relates to an earlier
date (in which case on and as of such earlier date), and (ii) the
representations and warranties of the Company that are not so qualified
as to Company Material Adverse Effect shall not be true or correct in
all respects as of the date of this Agreement, except to the extent
such representations and warranties expressly relate to an earlier date
(in which case on and as
of such earlier date), unless the failure of all such representations
and warranties in this clause (ii) to be true and correct in aggregate,
has had or would reasonably be expected to have a Company Material
Adverse Effect;
(f) the Company shall have failed to perform in any material
respect any obligation or to comply in any material respect with any
agreement or covenant of the Company to be performed or complied with
by it under this Agreement; or
(g) this Agreement shall have been terminated in accordance
with its terms;
which, in any such case, and regardless of the circumstances giving rise to any
such condition (including any action or inaction by Conopco or any of its
affiliates), makes it inadvisable, in the sole judgment of Sub or Conopco, to
proceed with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Sub and
Conopco and, subject to Section 1.01(a), may be asserted by Sub or Conopco
regardless of the circumstances giving rise to such conditions or may be waived
by Sub and Conopco in whole or in part at any time and from time to time in
their sole discretion. The failure by Conopco, Sub or any other affiliate of
Conopco at any time to exercise any of the foregoing rights shall not be deemed
a waiver of any such right, the waiver of any such right with respect to
particular facts and circumstances shall not be deemed a waiver with respect to
any other facts and circumstances and each such right shall be deemed an ongoing
right that may be asserted at any time and from time to time.
SECTION 7.02. CONDITIONS TO THE MERGER. The respective
obligation of each party to effect the Merger is subject to the satisfaction or
waiver on or prior to the Closing Date of the following conditions:
(a) SHAREHOLDER APPROVAL. The Company shall have
obtained the Company Shareholder Approval.
(b) ANTITRUST. The waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have been terminated or shall
have expired.
(c) NO INJUNCTIONS OR RESTRAINTS. No temporary restraining
order, preliminary or permanent injunction or
other order issued by any court of competent jurisdiction or other legal
restraint or prohibition preventing the consummation of the Merger shall be in
effect; PROVIDED, HOWEVER, that prior to asserting this condition each of the
parties shall have used its best efforts to prevent the entry of any such
injunction or other order and to appeal as promptly as possible any such
injunction or other order that may be entered.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. TERMINATION. This Agreement may be
terminated at any time prior to the Effective Time, whether
before or after receipt of Company Shareholder Approval:
(a) by mutual written consent of Conopco, Sub and
the Company;
(b) by either Conopco or the Company:
(i) if the Merger is not consummated on or before
September 30, 2000, unless the failure to consummate the
Merger is the result of a material breach of any Transaction
Agreement by the party seeking to terminate this Agreement;
PROVIDED, HOWEVER, that (A) the passage of such period shall
be tolled for any part thereof during which any party shall be
subject to a nonfinal order, decree, ruling or action
restraining, enjoining or otherwise prohibiting the
consummation of the Merger, (B) this Agreement may not be
terminated pursuant to this clause (i) after Sub accepts
shares of Company Common Stock for payment pursuant to the
Offer and (C) such September 30, 2000 date may be extended to
a date not later than November 30, 2000, by Conopco or the
Company prior to termination of this Agreement, by notice in
writing to the other, if on September 30, 2000, the Offer has
not been consummated because of the failure of the condition
in clause (ii) of the lead-in paragraph in Section 7.01 or the
condition in paragraph (a) in Section 7.01;
(ii) if any Governmental Entity issues an order,
decree or ruling or takes any other action permanently
enjoining, restraining or
otherwise prohibiting the Offer or the Merger and such order,
decree, ruling or other action shall have become final and
nonappealable;
(iii) if as the result of the failure of any of the
conditions set forth in Section 7.01 to this Agreement, the
Offer shall have terminated or expired in accordance with its
terms without Conopco having purchased any shares of Company
Common Stock pursuant to the Offer; or
(iv) if, upon a vote at a duly held meeting to obtain
the Company Shareholder Approval, the Company Shareholder
Approval is not obtained; PROVIDED, HOWEVER, that Conopco may
not terminate this Agreement under this Section 8.01(b)(iv) if
the Company Common Stock owned by Sub, Conopco or any
affiliate of Conopco shall not have been voted in favor of
obtaining the Company Shareholder Approval;
(c) by Conopco, if the Company breaches or fails to perform in
any material respect any of its representations, warranties or
covenants contained in any Transaction Agreement, which breach or
failure to perform (i) would give rise to the failure of a condition
set forth in Section 7.01, and (ii) has not been cured within 30 days
after the giving of written notice to the Company of such breach
(provided that Conopco is not then in wilful and material breach of any
representation, warranty or covenant contained in any Transaction
Agreement);
(d) by Conopco:
(i) if the Company Board or any committee thereof
withdraws or modifies, or publicly proposes to withdraw or
modify, in a manner adverse to Conopco, its approval or
recommendation of this Agreement, the Offer or the Merger,
fails to recommend to the Company's shareholders that they
accept the Offer and give the Company Shareholder Approval or
approves or recommends, or publicly proposes to approve or
recommend, any Company Takeover Proposal; PROVIDED, HOWEVER,
that any public statement by the Company that (A) it has
received a Company Takeover Proposal, (B) it has given Conopco
the notice required by Section 5.02(b) in connection with the
withdrawal of its recommendation or (C) otherwise only
describes the technical
operation of Sections 5.02, 6.07 and 7.01(d)(ii) and this
Section 8.01 shall not be deemed to be a public proposal to
withdraw or modify the Company Board's recommendation for the
purposes of this clause (i) or Section 7.01(d)(ii); or
(ii) if the Company or any of its officers,
directors, employees, representatives or agents
takes any of the actions that are proscribed by
Section 5.02;
(e) by the Company if the Company Board withdraws its
recommendation of the Offer in accordance with Section 5.02(b); and
(f) by the Company, if Conopco breaches or fails to perform in
any material respect any of its representations, warranties or
covenants contained in any Transaction Agreement, which breach or
failure to perform cannot be or has not been cured within 30 days after
the giving of written notice to Conopco of such breach (provided that
the Company is not then in wilful and material breach of any
representation, warranty or covenant contained in any Transaction
Agreement).
SECTION 8.02. EFFECT OF TERMINATION. In the event of
termination of this Agreement by either the Company or Conopco as provided in
Section 8.01, this Agreement shall forthwith become void and have no effect,
without any liability or obligation on the part of Conopco, Sub or the Company,
other than Section 3.21, Section 4.06, Section 6.02(c), Section 6.07, this
Section 8.02 and Article IX, which provisions shall survive such termination,
and except to the extent that such termination results from the wilful and
material breach by a party of any representa tion, warranty or covenant set
forth in any Transaction Agreement.
SECTION 8.03. AMENDMENT. This Agreement may be amended by the
parties at any time before or after receipt of the Company Shareholder Approval;
PROVIDED, HOWEVER, that after receipt of the Company Shareholder Approval, there
shall be made no amendment that by Law requires further approval by the
shareholders of the Company without the further approval of such shareholders.
This Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties and, where any amendment relates to a provision of
this Agreement in respect of which any third party beneficiary is entitled to an
enforcement right
pursuant to Section 9.07, an instrument in writing must be signed by the person
entitled to such enforcement right.
SECTION 8.04. EXTENSION; WAIVER. At any time prior to the
Effective Time, the parties may (a) extend the time for the performance of any
of the obligations or other acts of the other parties, (b) waive any
inaccuracies in the representations and warranties contained in this Agreement
or in any document delivered pursuant to this Agreement or (c) subject to the
proviso of Section 8.03, waive compliance with any of the agreements or
conditions contained in this Agreement. Any agreement on the part of a party to
any such extension or waiver shall be valid only if set forth in an instrument
in writing signed on behalf of such party and, where any waiver relates to a
provision of this Agreement in respect of which any third party beneficiary is
entitled to an enforcement right pursuant to Section 9.07, an instrument in
writing must be signed by the person entitled to such enforcement right. The
failure of any party to this Agreement to assert any of its rights under this
Agreement or otherwise shall not constitute a waiver of such rights.
SECTION 8.05. PROCEDURE FOR TERMINATION, AMEND MENT, EXTENSION
OR WAIVER. A termination of this Agreement pursuant to Section 8.01, an
amendment of this Agreement pursuant to Section 8.03 or an extension or waiver
pursuant to Section 8.04 shall, in order to be effective, require (a) in the
case of Conopco, Sub or the Company, action by its Board of Directors or the
duly authorized designee of its Board of Directors and (b) in the case of the
Company, action by a majority of the members of the Company Board who were
members thereof on the date of this Agreement and remain as such hereafter or
the duly authorized designee of such members; PROVIDED, HOWEVER, that in the
event that Sub's designees are appointed or elected to the Company Board as
provided in Section 6.10, after the acceptance for payment of Company Common
Stock pursuant to the Offer and prior to the Effective Time, the affirmative
vote of the majority of the Independent Directors, in lieu of the vote required
pursuant to clause (a) above, shall be required by the Company to (i) amend or
terminate this Agreement, (ii) exercise or waive any of the Company's rights or
remedies under this Agreement or (iii) extend the time for performance of
Conopco's or Sub's respective obligations under this Agreement.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES.
None of the representations and warranties in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective
Time. This Section 9.01 shall not limit any covenant or agreement of the parties
which by its terms contemplates performance after the Effective Time.
SECTION 9.02. NOTICES. All notices, requests, claims, demands
and other communications under this Agree ment shall be in writing and shall be
deemed given upon receipt by the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
(a) if to Conopco or Sub, to
Conopco, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Cravath, Swaine & ▇▇▇▇▇
Worldwide Plaza
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to the Company, to
Ben & Jerry's Homemade, Inc.
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Facsimile (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Ropes & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
SECTION 9.03. DEFINITIONS. For purposes of this
Agreement:
"AFFILIATE" and "ASSOCIATE", when used with reference to any
person, shall have the respective meanings ascribed to such terms in Rule 12b-2
of the Exchange Act, as in effect on the date of this Agreement. In the case of
Conopco, "affiliate" shall include, without limitation, either Parent, and any
entity a majority of the voting control of which is owned, directly or
indirectly, by either Parent or both of them together.
A "MATERIAL ADVERSE EFFECT" means, when used in connection
with the Company or Conopco, any change or effect that is materially adverse to
the business, properties, assets, condition (financial or otherwise), or results
of operations of such party and its subsidiaries, taken as a whole, except (in
the case of the Company) as expressly set forth in the Company Disclosure
Letter.
An "INELIGIBLE DIRECTOR" means any member of the Company Board
at the date hereof who (a) fails to tender his or her shares of Company Common
Stock pursuant to the Offer, (b) makes any public statement disparaging either
Parent, Conopco, the Company, any Transaction Agreement or any Transaction, (c)
takes any action that, but for Section 9.11, would constitute a breach of this
Agreement by the Company or (d) takes any other action which is intended to
cause any of the Transactions to fail to be completed.
"PARENT" means either of Unilever N.V. or Unilever
PLC and "PARENTS" shall mean both of them.
A "PERSON" means any individual, firm, corporation,
partnership, company, limited liability company, trust, joint venture,
association, Governmental Entity or other entity.
A "SUBSIDIARY" of any person means another person, an amount
of the voting securities, other voting ownership or voting partnership interests
of which is sufficient to elect at least a majority of its Board of Directors or
other governing body (or, if there are no such voting interests, 50% or more of
the equity interests of which) is owned directly or indirectly by such first
person.
SECTION 9.04. INTERPRETATION; DISCLOSURE LETTERS. When a
reference is made in this Agreement to a Section, Exhibit or Schedule such
reference shall be to a Section of this Agreement unless otherwise indicated.
The table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the words "include", "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by the words "without
limitation". Any matter disclosed in any section of the Company Disclosure
Letter shall be deemed disclosed only for the purposes of the specific Sections
of this Agreement to which such section relates.
SECTION 9.05. SEVERABILITY. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule or
Law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner to the end that transactions contemplated hereby are fulfilled to the
extent possible.
SECTION 9.06. COUNTERPARTS. This Agreement may be executed in
one 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.
SECTION 9.07. ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES.
The Transaction Agreements, taken together with the Company Disclosure Letter
and the Conopco Disclosure Letter, (a) constitute the entire agreement, and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the Transactions, and (b) except for the provisions
of Article II and Sections 6.04(a), 6.05, 6.06, 6.15, 6.16 and 6.18 are not
intended to confer upon any person other than the parties any rights or
remedies. The provisions of Section 6.04(a) are enforceable by the holders of
the Company Stock Options. The provisions of Section 6.05(a) are enforceable by
the parties to those agreements referred to in Section 6.05(a). The provisions
of Sections 6.05(b), 6.05(c), 6.05(d), 6.16 and 6.18 are enforceable by ▇▇▇▇▇
▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ acting jointly. Conopco shall reimburse the reasonable
legal fees and expenses of ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇ in bringing any
litigation, or taking any other action, in good faith to enforce the third-party
beneficiary rights granted to them under this Section 9.07. The provisions of
Section 6.06 are enforceable by the directors and officers referred to in
Section 6.06. Until such time as the Company Board is constituted in accordance
with Section 6.14(a), the provisions of Section 6.14(a) are enforceable by any
individual who is a member of the Company Board at the date of this Agreement.
Thereafter, (i) the provisions of Section 6.14(a) relating to the removal of
directors may be enforced by any individual who was a member of the Company
Board immediately prior to the alleged breach of Section 6.14(a) and (ii) the
provisions of Section 6.14(a) relating to the appointment of a director may be
enforced by any individual who was a member of the Company Board immediately
prior to the alleged breach of Section 6.14(a) or by any individual nominated
for appointment in accordance with the provisions of Section 6.14(a) but not so
appointed by the Surviving Corporation. The provisions of Section 6.15 are
enforceable by the Foundation.
SECTION 9.08. GOVERNING LAW. THIS AGREEMENT AND ANY DISPUTE
ARISING OUT OF OR RELATING TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT
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, EXCEPT TO THE EXTENT THE LAWS OF THE
STATE OF VERMONT ARE MANDATORILY APPLICABLE TO THE MERGER.
SECTION 9.09. ASSIGNMENT. Neither this Agreement nor any of
the rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by opera tion of law or otherwise by any of the parties
without the prior written consent of the other parties except that Sub may
assign, in its sole discretion, any of or all its rights, interests and
obligations under this Agreement to Conopco or to any direct or indirect wholly
owned subsidiary of Conopco, but no such assignment shall relieve Sub of any of
its obligations under this Agreement. Any purported assignment without such
consent shall be void. Subject to the preceding sentences, this Agreement will
be binding upon, inure to the benefit of, and be enforceable by, the parties and
their respective successors and assigns.
SECTION 9.10. ENFORCEMENT. The parties agree that irreparable
damage would occur in the event that any of the provisions of any Transaction
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of any Transaction Agreement
and to enforce specifically the terms and provisions of each Transaction
Agreement in any New York state court or any Federal court located in the State
of New York, this being in addition to any other remedy to which they are
entitled at law or in equity. In addition, each of the parties hereto (a)
consents to submit itself to the personal jurisdiction of any New York state
court or any Federal court located in the State of New York in the event any
dispute arises out of any Transaction Agreement or any Transaction, (b) agrees
that it will not attempt to deny or defeat such personal jurisdiction by motion
or other request for leave from any such court, (c) agrees that it will not
bring any action relating to any Transaction Agreement or any Transaction in any
court other than any New York state court or any Federal court sitting in the
State of New York and (d) waives any right to trial by jury with respect to any
action related to or arising out of any Transaction Agreement or any
Transaction.
SECTION 9.11. SEPARATE PARTIES. Each of the parties to this
Agreement acknowledges and agrees that each party is responsible for its own
performance of its obligations hereunder and that no other party shall be liable
for a failure of another party to perform its obligations. Without limiting the
foregoing, it is acknowledged by Conopco that no Ineligible Director is
acting as a representative of the Company in connection with the Transaction
Agreements or the Transactions and that any action or failure to act on the part
of any Ineligible Director shall not be deemed to be an action or failure to act
on the part of the Company, including under Section 5.02, 6.07 or 8.01, except
to the extent that such Ineligible Director's action or failure to act is taken
under the instruction of, or with the cooperation or the concurrence of, the
Company Board.
IN WITNESS WHEREOF, Conopco, Sub and the Company have duly
executed this Agreement, all as of the date first written above.
CONOPCO, INC.,
by
/S/ MART LAIUS
--------------------------------
Name: Mart Laius
Title: Vice President
VERMONT ALL NATURAL EXPANSION
COMPANY,
by
/S/ MART LAIUS
--------------------------------
Name: Mart Laius
Title: Vice President
BEN & JERRY'S HOMEMADE, INC.,
by
/S/ ▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Chief Executive Officer
EXHIBIT A
ARTICLES OF INCORPORATION
OF
SURVIVING CORPORATION
ARTICLE I
The name of the corporation (hereinafter called the
"Corporation") is BEN & JERRY'S HOMEMADE, INC.
ARTICLE II
The address of the Corporation's registered office in the
State of Vermont is ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇. The name of the
registered agent at such address is The Corporation Trust Company.
ARTICLE III
The Corporation has the following Mission Statement: We have a
progressive, nonpartisan, social mission that seeks to meet human needs and
eliminate injustices in our local, national and international communities by
integrating these concerns into our business activities. Our focus is on
children and families, and the environment.
- The gap between the rich and the poor is wide. We strive to create
economic opportunities for those who have been denied them.
- Capitalism and the wealth it produces does not create opportunity for
everyone equally. We practice caring capitalism by integrating concern
for the disadvantaged in our day-to-day business activities, and by
advancing new models of economic justice that can become sustainable
and replicable.
- Manufacturing by definition creates waste. We strive
to minimize our negative impact on the environment.
- The growing of food sometimes uses toxic chemicals. We support socially
and environmentally sustainable methods of food production and family
farming.
The U.S. continues to spend significantly more on its military each year than
the combined spending on: child health, welfare, education, nutrition, housing,
job training and environment. We seek and support nonviolent ways to achieve
peace and justice.
We strive to manifest a deep respect for human beings inside and outside our
Corporation and for the communities of which they live.
ARTICLE IV
The total number of shares of all classes of stock that the
Corporation shall have authority to issue is 10,000,000 shares of Common Stock
having the par value of $0.01 per share.
ARTICLE V
The number of directors of the Corporation shall be fixed from
time to time by the Board of Directors of the Corporation.
ARTICLE VI
In furtherance and not in limitation of the powers conferred
upon it by law, the Board of Directors of the Corporation is expressly
authorized to adopt, amend or repeal the By-laws of the Corporation.
ARTICLE VII
Unless and except to the extent that the By-laws of the
Corporation so require, the election of directors of the Corporation need not be
by written ballot.
ARTICLE VIII
To the fullest extent from time to time permitted by law, no
director of the Corporation shall be personally liable to any extent to the
Corporation or its
shareholders for monetary damages for breach of his fiduciary duty as a
director.
ARTICLE IX
Each person who is or was or had agreed to become a director
or officer of the Corporation, and each such person who is or was serving or who
had agreed to serve at the request of the Corporation as a director, officer,
partner, member, employee or agent of another corporation, partnership, limited
liability company, joint venture, trust or other enterprise (including the
heirs, executor, administrators or estate of such person), shall be indemnified
by the Corporation to the fullest extent permitted from time to time by
applicable law.
ARTICLE X
The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the Vermont Business
Corporation Act.
EXHIBIT B
FORM OF DELEGATION OF AUTHORITY
A. Conopco and the Company Board retain authority with regard to the
following matters, among others; as between Conopco and the Company
Board the allocation of responsibility between them shall be as
provided in Section 6.14:
1. Approval on an annual basis for the upcoming year
of:
a. the Company's Strategic and Operating Plan to
include: Marketing, Sales and Social Mission
b. the Financial Plan/Budget to include:
Statement of Income, Balance Sheet and
Statements of Cash Flows (including an
Operating Budget, Statement of Projected
Financial Positions, Balance Sheet and Flow
of Funds Forecasts)
c. the Capital Expenditure Budget and Operating
Lease Budget
d. the Company's draft and final audited
financial statements
e. Trade Credit Policy: Conopco approval for
Trade Credit extended to any customer in
excess of $1 million
2. Selection of
a. Corporate Counsel
b. Independent Auditors
2.1. Approval of
a. the principal Banking Institution(s) with
which the Company maintains deposit,
borrowing or other relationships
c. any Investment Banking Institution
d. Public Relations and Advertising Agencies
e. Consultants with a contract value in excess
of $175,000 or to whom payments are expected
to exceed $175,000 in the aggregate
f. any insurance agent, broker or similar party
3. Any transaction involving
a. the sale or encumbrance of assets with a book
value over $100,000
b. the sale of stock or assets of a subsidiary
c. the acquisition of stock or assets of another
company
d. loans in excess of $30,000 made outside the
ordinary course of business not to exceed
$150,000 outstanding at any time
e. a single purchase of Inventory in excess of $5
million or any opening of Letters of Credit in excess
of $2 million (in the aggregate of excess over and
above $2 million or singular opening of Letter of
Credit above $2 million)
f. transactions with any parties related to any
officer of the Company
g. the sale or purchase of the Company's capital
stock
h. the declaration and payment of dividends
i. the approval of any other contract (including
all real property leases, joint venture, partnership
or similar contracts with vendors) with a value in
excess of $250,000 per year with terms not to exceed
five years or any other non-ordinary course payment
or purchase orders (including the settlement of
litigation claims involving payments by the Company)
in excess of $250,000
4. Total compensation (including Bonuses) of any employees at or
above the level of Officer and/or any other employees
exceeding $200,000 annually.
5. Employment termination or appointments of any employee with a
base salary at or above $200,000.
6. Any change in employee benefit plans with an annual aggregate
cost increase in excess of $300,000.
7. Any amendments of the By-laws of the Company.
8. Any amendment or alteration of the borrowing authority of the
Company or renegotiation, prepayment of or amendment to any
lending arrangement.
9. Approval of authorized signatures and signing authorities on
all bank accounts for check signing, money transfer
authorities, etc.
10. The delegation of authority to individuals other than officers
(E.G., buyers) of the Company to execute contracts or other
agreements on behalf of the Company.
11. Any amendment or new collective bargaining or other labor
agreements.
12. all matters not covered by the delegation in B and any matters
requiring, as a matter of law, a specific vote of the Board of
Directors in addition to the votes establishing the below
delegation.
B. The Surviving Corporation delegates to the Chief Executive Officer the
authority to set upon the following matters with the required written
concurrence of the Chief Financial Officer:
1. Capital Expenditures within the Capital Budget up to $700,000
per project; PROVIDED, that the total value of capital
expenditures does not exceed the amount authorized in the
Budget.
2. Capital Expenditures not in the Capital Budget up to $350,000
per project, but not over $750,000 in the aggregate. In no
event will total capital expenditures exceed the total value
of capital expenditures authorized in the Capital Budget.
3. Disposal or encumbrance of assets with a book or fair market
value of no more than $150,000 per transaction.
4. Operating Leases within Operating Lease Budget up to a total
commitment of $500,000 per transaction.
5. Operating Leases not in Operating Lease Budget, with a total
commitment of $150,000 per year in total commitment per lease
with a term not to exceed five years, but not over $450,000
annually in the aggregate.
6. Administration of the details of the Company's Compensation
Program (applying its general
compensation philosophy as previously developed) for all
employees (other than those covered in A.3 above).
7. Administration of the Employees Benefit Program, including
approval of changes with an aggregate annual cost up to
$300,000.
8. a. Execution of contracts within the ordinary
course with an individual value of up to
$500,000 that do not require special approval
by A.3 above.
b. Other non-ordinary payments in an amount up to
$150,000 that also do not require special approval by
A.3 above.
C. Conopco and the Surviving Corporation will be provided with a
comprehensive review of the following matters by the Chief Executive
Officer, or other members of the management on a regular basis, or more
often if issues create the need:
1. As soon as practical:
a. Status of material tax matters as they arise.
b. Status of material legal matters as they
arise.
c. Any material change in vendor relations.
d. Any material change in the operating or
financial performance of the Company.
e. Any contact made by potential buyers who may
be interested in purchasing the Company
and/or its assets.
f. Notices of default or acceleration under loan
agreements, notes or significant contract.
2. Monthly:
a. Financial and operating results, including
managements analysis in writing
b. Update/reconciliation of actual vs. budgeted Capital
expenditures.
3. Quarterly:
a. Status of legal matters
b. Competition update
c. Information systems
d. Report on all banking relationships
e. Product Quality
4. Annually:
a. Independent accountant management letters
b. Other tax matters
c. Officers salary, bonus and wages adjustment
recommendations
d. Property/Casualty and employee benefit
insurance programs
e. Advertising and Public Relations programs
f. Officer performance appraisals
g. Union relationships
