AGREEMENT AND PLAN OF MERGER
BY AND AMONG
ARMOR ALL PRODUCTS CORPORATION
THE CLOROX COMPANY
AND
SHIELD ACQUISITION CORPORATION
DATED AS OF
NOVEMBER 26, 1996
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
Section 1.1 Definitions............................................................. 5
ARTICLE II
THE OFFER
Section 2.1 The Offer............................................................... 8
Section 2.2 Company Actions......................................................... 8
Section 2.3 Stockholder Lists....................................................... 9
Section 2.4 Directors............................................................... 9
Section 3.1 The Merger.............................................................. 10
Section 3.2 Closing................................................................. 10
Section 3.3 Effective Time.......................................................... 10
Section 3.4 Effects of the Merger................................................... 10
Section 3.5 Certificate of Incorporation and By-Laws................................ 10
Section 3.6 Directors and Officers of the Surviving Corporation..................... 10
Section 3.7 Stockholders' Meeting................................................... 10
Section 3.8 Conversion of Shares.................................................... 11
Section 3.9 Conversion of Sub's Common Stock........................................ 11
Section 3.10 Exchange of Shares; Payment............................................. 11
Section 3.11 Dissenting Shares....................................................... 12
Section 3.12 Company Option Plans.................................................... 12
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 4.1 Organization............................................................ 13
Section 4.2 Capitalization.......................................................... 13
Section 4.3 Authorization; Validity of Agreement.................................... 14
Section 4.4 No Violations; Consents and Approvals................................... 14
Section 4.5 Reports................................................................. 15
Section 4.6 Absence of Certain Changes.............................................. 15
Section 4.7 No Undisclosed Liabilities.............................................. 15
Section 4.8 Schedule 14D-9; Offer Documents; Proxy Statement........................ 16
Section 4.9 Litigation; Compliance with Law......................................... 16
Section 4.10 Employee Benefit Plans; ERISA........................................... 16
Section 4.11 Real Property........................................................... 17
Section 4.12 Intellectual Property................................................... 17
Section 4.13 Computer Software....................................................... 18
Section 4.14 Material Contracts...................................................... 18
Section 4.15 Taxes................................................................... 18
Section 4.16 Environmental Matters................................................... 19
Section 4.17 Affiliated Party Transactions........................................... 19
Section 4.18 No Brokers.............................................................. 20
2
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF PURCHASER AND SUB
Section 5.1 Organization............................................................ 20
Section 5.2 Authorization; Validity of Agreement.................................... 20
Section 5.3 No Violations; Consents and Approvals................................... 20
Section 5.4 Schedule 14D-9; Offer Documents; Proxy Statement........................ 21
Section 5.5 Sufficient Funds........................................................ 21
Section 5.6 Beneficial Ownership of Shares.......................................... 21
Section 5.7 No Brokers.............................................................. 21
ARTICLE VI
COVENANTS
Section 6.1 Conduct of Business by the Company Pending the Merger................... 22
Section 6.2 Acquisition Proposals................................................... 23
Section 6.3 Access to Information................................................... 24
Section 6.4 Best Efforts............................................................ 24
Section 6.5 Consents................................................................ 24
Section 6.6 HSR Filings............................................................. 25
Section 6.7 Public Announcements.................................................... 26
Section 6.8 Employee Agreements..................................................... 26
Section 6.10 Indemnification; Directors' and Officers' Insurance..................... 27
Section 6.11 Certain Arrangements.................................................... 28
ARTICLE VII
CONDITIONS
Section 7.1 Conditions to Each Party's Obligation to Effect the Merger.............. 29
Section 7.2 Conditions to the Obligation of the Company to Effect the Merger........ 29
Section 7.3 Conditions to Obligations of Purchaser and Sub to Effect the Merger..... 29
Section 7.4 Exception............................................................... 29
ARTICLE VIII
TERMINATION
Section 8.1 Termination............................................................. 30
Section 8.2 Effect of Termination................................................... 30
Section 8.3 Termination Fee......................................................... 31
ARTICLE IX
MISCELLANEOUS
Section 9.1 Fees and Expenses....................................................... 31
Section 9.2 Amendment; Extension and Waiver......................................... 31
Section 9.3 Survival................................................................ 31
Section 9.4 Notices................................................................. 31
Section 9.5 Interpretation.......................................................... 32
Section 9.6 Headings; Schedules..................................................... 32
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Section 9.7 Counterparts............................................................ 32
Section 9.8 Entire Agreement........................................................ 32
Section 9.9 Severability............................................................ 32
Section 9.10 Governing Law........................................................... 33
Section 9.11 Assignment.............................................................. 33
Section 9.12 Specific Performance; Submission to Jurisdiction........................ 33
Section 9.13 Brokerage Fees and Commissions.......................................... 33
CONDITIONS TO THE TENDER OFFER ............................................................ Annex A
4
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "AGREEMENT"), dated as of November 26,
1996, by and among Armor All Products Corporation, a Delaware corporation (the
"COMPANY"), The Clorox Company, a Delaware corporation ("PURCHASER"), and Shield
Acquisition Corporation, a Delaware corporation and a wholly owned subsidiary of
Purchaser ("SUB").
RECITALS:
WHEREAS, the respective boards of directors of Purchaser, Sub and the
Company have each approved the acquisition of the Company by Purchaser upon the
terms and subject to the conditions set forth in this Agreement; and
WHEREAS, the parties intend that the acquisition of the Company by Purchaser
be effected by Sub commencing a cash tender offer for the Shares (as defined
hereinafter) to be followed by the merger of Sub with and into the Company with
the Company as the surviving corporation in such merger, all as provided by and
in accordance with this Agreement; and
WHEREAS, as a condition to the obligations of Purchaser and Sub hereunder
and in consideration of the transactions contemplated hereby, McKesson
Corporation, a Delaware corporation and a stockholder of the Company
("STOCKHOLDER"), concurrently herewith is entering into a Stockholder Agreement
(the "STOCKHOLDER AGREEMENT"), dated as of the date hereof, with Purchaser and
Sub, in the form attached hereto as Exhibit A, pursuant to which Stockholder has
agreed to tender its Shares in the Offer and to grant Sub a proxy with respect
to the voting of its Shares in favor of the Merger (as such terms are defined
herein) upon the terms and subject to the conditions set forth therein; and
WHEREAS, the Company, Purchaser and Sub desire to make certain
representations, warranties, covenants and agreements in connection with such
cash tender offer and merger.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements set forth herein, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 DEFINITIONS
DEFINED IN
TERM SECTION
------------------------------------------------------------------------------ -------------
ABO........................................................................... 6.9(c)
Acquisition Proposal.......................................................... 6.2(b)
Agreement..................................................................... Preamble
Applicable Amount............................................................. 3.11
Audits........................................................................ 4.15(c)
Awards........................................................................ 3.11
Board......................................................................... 2.2(a)
Certificates.................................................................. 3.10(b)
Closing....................................................................... 3.2
Closing Date.................................................................. 3.2
Common Stock.................................................................. 2.1(a)
Company....................................................................... Preamble
Company Disclosure Letter..................................................... Article IV
Company Employee.............................................................. 6.9(b)
Company SEC Documents......................................................... 4.5
5
DEFINED IN
TERM SECTION
------------------------------------------------------------------------------ -------------
Confidentiality Agreement..................................................... 6.3(b)
DB Employees.................................................................. 6.9(c)
DGCL.......................................................................... 3.1
Dissenting Shares............................................................. 3.11(a)
Effective Time................................................................ 3.3
Environmental Laws............................................................ 4.17(a)
ERISA Affiliate............................................................... 4.10(a)
Governmental Entity........................................................... 4.4(b)
Indemnified Parties........................................................... 6.11(b)
Intellectual Property......................................................... 4.12
Merger........................................................................ 3.1
Merger Consideration.......................................................... 3.8(a)
▇▇▇▇▇'▇....................................................................... 3.10(a)
Offer......................................................................... 2.1(a)
Offer Documents............................................................... 2.1(b)
Offer Price................................................................... 2.1(a)
Offer to Purchase............................................................. 2.1(a)
Option........................................................................ 3.11
Option Plans.................................................................. 3.11
Order......................................................................... 6.6(b)
Paying Agent.................................................................. 3.10(a)
PBGC.......................................................................... 4.10(b)
Plans......................................................................... 4.10(a)
Preferred Stock............................................................... 4.2(a)
Proxy Statement............................................................... 3.7(c)
Purchaser..................................................................... Preamble
Purchaser DB Plan............................................................. 6.9(c)
Restricted Stock Units........................................................ 3.11
Retirement Plan............................................................... 6.9(c)
S&P........................................................................... 3.10(a)
SARs.......................................................................... 3.11
SEC........................................................................... 2.1(b)
Service Agreement............................................................. 6.11
Shares........................................................................ 2.1(a)
Special Meeting............................................................... 3.7(a)
Stockholder................................................................... Recitals
Sub........................................................................... Preamble
Surviving Corporation......................................................... 3.1
Termination Plan.............................................................. 4.10(h)
"AGGREGATE MERGER CONSIDERATION" means the product of (i) the Merger
Consideration and (ii) the number of Shares outstanding immediately prior to the
Effective Time, other than Shares owned by Purchaser, Sub or any Subsidiary of
the Company, Purchaser or Sub and each Share held in the treasury of the
Company.
"ANTITRUST LAW" means the ▇▇▇▇▇▇▇ Act, as amended, the ▇▇▇▇▇▇▇ Act, as
amended, the HSR Act, the Federal Trade Commission Act, as amended, and all
other federal, state and foreign statutes, rules, regulations, orders, decrees,
administrative and judicial doctrines, and other laws that are designed or
intended to prohibit, restrict or regulate actions having the purpose or effect
of monopolization or restraint of trade.
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"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANY MATERIAL ADVERSE EFFECT" means any event, condition or circumstance
that would be or would be reasonably likely to have a material adverse effect on
the properties, assets, condition (financial or otherwise) or results of
operations of the Company and its Subsidiaries, taken as a whole, but excluding
any such effect resulting from (a) general economic conditions and any
occurrence or condition affecting generally the industries in which the Company
and its Subsidiaries operate or (b) any decrease in revenues of the Company
following the date of this Agreement.
"CONTINUING DIRECTOR" means (a) any member of the Board of Directors of the
Company as of the date hereof, (b) any member of the Board who is unaffiliated
with, and not a designated director or other nominee of, Purchaser or Sub or
their respective subsidiaries, and (c) any successor of a Continuing Director
who is (i) unaffiliated with, and not a designated director or other nominee of,
Purchaser or Sub or their respective subsidiaries and (ii) recommended to
succeed a Continuing Director by a majority of the Continuing Directors then on
the Board.
"DOJ" means the Antitrust Division of the United States Department of
Justice.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FORMER STOCKHOLDERS" means the stockholders of the Company immediately
prior to the Effective Time.
"FTC" means the Federal Trade Commission.
"GAAP" means generally accepted accounting principles in effect in the
United States of America at the time of determination, and which are applied on
a consistent basis during the periods involved.
"HSR ACT" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended, and the rules and regulations promulgated thereunder.
"LIENS" means all mortgages, claims, charges, liens, security interests,
pledges, options, easements, rights of way, or other encumbrances of any nature
whosoever.
"PERMITTED LIENS" means (i) Liens for water and sewage charges and current
taxes not yet due and payable or being contested in good faith by appropriate
proceedings, (ii) mechanics', carriers', workers', repairers', materialmen's,
warehousemen's and other similar Liens arising or incurred in the ordinary
course of business, (iii) such other Liens as would not in the aggregate have a
Company Material Adverse Effect and (iv) Liens arising or resulting from any
action taken by Purchaser or Sub.
"PERSON" means an individual, partnership, joint venture, trust,
corporation, limited liability company or other entity (including, without
limitation, any government or political subdivision or any agency, department or
instrumentality thereof).
"PURCHASER MATERIAL ADVERSE EFFECT" means any event, condition or
circumstance that would or would be reasonably likely to have a material adverse
effect on the properties, assets, condition (financial or otherwise), or results
of operations of Purchaser and its Subsidiaries, taken as a whole, but excluding
any such effect resulting from general economic conditions and any occurrence or
condition affecting generally the industries in which Purchaser or its
Subsidiaries operate.
"PURCHASER PLANS" means employee benefit plans, as defined in Section 3(3)
of ERISA, or such nonqualified employee benefit or deferred compensation plans,
stock option bonus or incentive plans or other employee benefit or fringe
benefit programs that may be in effect generally for employees of Purchaser or
its Subsidiaries from time to time.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
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"SUBSIDIARY" of a Person means any entity of which the securities or other
ownership interest having ordinary voting power to elect a majority of the board
of directors or other persons performing similar functions are at the time
directly or indirectly owned by such Person.
"TAXES" means any and all taxes, charges, fees, levies or other assessments,
including, without limitation, income, gross receipts, excise, real or personal
property, sales, withholding, social security, retirement, unemployment,
occupation, use, service, net worth, payroll, franchise, transfer and recording
taxes, imposed by any federal, state, local or foreign taxing authority, and
shall include any interest, penalties or additions to tax.
"TAX RETURN" means any report, return, document, declaration or other
information or filing required to be supplied to any federal, state, local or
foreign taxing authority with respect to Taxes.
ARTICLE II
THE OFFER
Section 2.1 THE OFFER.
(a) Sub shall, and Purchaser shall cause Sub to, as promptly as practicable,
but in no event later than December 2, 1996, commence (within the meaning of
Rule 14d-2 under the Exchange Act) an offer to purchase for cash (the "OFFER")
any and all of the Company's outstanding shares of common stock, par value $.01
per share (the "SHARES" or the "COMMON STOCK"), at a price not less than $19.09
per Share, net to the seller in cash (the "OFFER PRICE"). The Offer shall have a
scheduled expiration date 20 business days following the commencement thereof.
The Sub shall, and Purchaser shall cause Sub to, accept for payment and pay for
all Shares tendered pursuant to the terms of the Offer as soon as such actions
are permitted under applicable law, subject only to the conditions set forth in
Annex A hereto and shall be made pursuant to an offer to purchase (the "OFFER TO
PURCHASE") containing the terms set forth in this Agreement and the other
conditions set forth in Annex A hereto. Sub shall not, and Purchaser shall not
permit Sub to, decrease the Offer Price, extend the expiration date of the Offer
beyond the twentieth business day following commencement thereof or otherwise
amend any other condition of the Offer in any manner adverse to the holders of
the Shares without the prior written consent of the Company; PROVIDED, HOWEVER,
that Sub may extend the expiration date of the Offer if (i) one or more
conditions set forth in Annex A hereto shall not be satisfied or (ii) Purchaser
reasonably determines, with the prior approval of the Company (such approval not
to be unreasonably withheld or delayed) that such extension is necessary to
comply with any legal or regulatory requirements relating to the Offer.
Purchaser will not tender into the Offer any Shares beneficially owned by it.
The Company agrees that no Shares held by the Company or any Subsidiary of the
Company will be tendered pursuant to the Offer.
(b) On the date of the commencement of the Offer, Purchaser and Sub shall
file with the United States Securities and Exchange Commission (the "SEC") a
Tender Offer Statement on Schedule 14D-1 with respect to the Offer which will
include, as exhibits, an Offer to Purchase and a form of letter of transmittal
and summary advertisement (together with any amendments and supplements thereto,
the "OFFER DOCUMENTS"). The Company and its counsel shall be given a reasonable
opportunity to review and comment on the Offer Documents before they are filed
with the SEC. In addition, Sub agrees to provide the Company and its counsel in
writing with any comments Purchaser, Sub or their counsel may receive from time
to time from the SEC or its staff with respect to the Offer Documents promptly
after the receipt thereof.
Section 2.2 COMPANY ACTIONS.
(a) The Company hereby consents to the Offer and represents that its Board
of Directors (the "BOARD") at a meeting duly called and held, has (i) determined
as of the date hereof that each of the Offer and the Merger is fair to and in
the best interests of the stockholders of the Company, and (ii) resolved to
recommend acceptance of the Offer and approval and adoption of this Agreement by
the stockholders of
8
the Company; PROVIDED, HOWEVER, that such recommendations may be withdrawn,
modified or amended to the extent that the Board determines in good faith, after
consultation with its counsel, that the failure to take such action may
constitute a breach of the Board's fiduciary duties under, or otherwise violate,
applicable law. The Company further represents that PaineWebber Incorporated has
delivered to the Board its opinion that the consideration to be received by the
stockholders pursuant to the Offer and the Merger is fair to such stockholders
from a financial point of view based on, and subject to, the assumptions and
qualifications set forth in such opinion. Subject to the provisions of Article
VIII, the Company hereby agrees to use its best efforts to file a
Solicitation/Recommendation Statement on Schedule 14D-9 (the "SCHEDULE 14D-9")
containing such recommendations with the SEC and to mail such Schedule 14D-9 to
the stockholders of the Company contemporaneous with the commencement of the
Offer, but in any event not later than 10 business days following the
commencement of the Offer.
(b) Purchaser and its counsel shall be given a reasonable opportunity to
review and comment on the Schedule 14D-9 and any amendments thereto before they
are filed with the SEC. In addition, the Company agrees to provide Purchaser,
Sub and their counsel in writing with any comments the Company or its counsel
may receive from time to time from the SEC or its staff with respect to the
Schedule 14D-9 promptly after the receipt thereof.
Section 2.3 STOCKHOLDER LISTS. In connection with the Offer, the Company
will promptly furnish Sub with mailing labels, security position listings and
any available listing or computer file containing the names and addresses of the
record holders of the Shares as of a recent date and shall furnish Sub with such
information and assistance as Sub or its agents may reasonably request in
communicating the Offer to the record and beneficial holders of the Shares.
Subject to the requirements of applicable law, and except for such steps as are
necessary to disseminate the Offer Documents, Purchaser and Sub shall hold in
confidence the information contained in any of such labels, lists and files,
will use such information only in connection with the Offer and the Merger, and,
if this Agreement is terminated, will deliver to the Company all copies of such
information then in their possession.
Section 2.4 DIRECTORS. Promptly after the purchase of a majority of the
outstanding Shares pursuant to the Offer, Purchaser shall be entitled to
designate up to such number of directors, rounded up to the next whole number,
on the Board as will give Purchaser representation on the Board equal to the
product of the number of directors on the Board, after giving effect to the
directors elected pursuant to this Section, and the percentage that the voting
power represented by such number of Shares so purchased bears to the voting
power represented by the total number of outstanding Shares, to be elected as
soon as practicable after notice by Purchaser to the Company of its desire to
have such directors so elected. The Company shall, at the request of Purchaser,
take all action necessary to cause to be created vacancies for that number of
directors which Purchaser is entitled to designate under this Section and, with
respect to each vacancy created, shall take all action necessary to effect the
election of such number of Purchaser's designees to the Board of Directors,
including, if required by applicable law, mailing to its stockholders the
information required by section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder. Purchaser and Sub will provide to the Company in
writing, and be solely responsible for, any information with respect to such
companies and their nominees, officers, directors and affiliates required by
Section 14(f) of the Exchange Act and Rule 14f-1 thereunder. Following the
election or appointment of Purchaser designees to the Board any amendment of
this Agreement, any termination of this Agreement by the Company, any extension
of time for performance of any of the obligations of Purchaser or Sub under this
Agreement, any waiver of any condition to the obligations of the Company or any
of the Company's rights under this Agreement or other action by the Company
under this Agreement shall be effected only by the action of a majority of the
directors of the Company then in office who are Continuing Directors.
Notwithstanding the provisions of this Section 2.4, the parties hereto shall use
their respective best efforts to ensure that at least three of the members of
the Board of shall, at all times prior to the Effective Time be, Continuing
Directors.
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ARTICLE III
THE MERGER
Section 3.1 THE MERGER. Upon the terms and subject to conditions of this
Agreement and in accordance with the Delaware General Corporation Law (the
"DGCL"), at the Effective Time, Sub shall be merged with and into the Company
(the "MERGER"). Following the Merger, the separate corporate existence of Sub
shall cease and the Company shall continue as the surviving corporation (the
"SURVIVING CORPORATION").
Section 3.2 CLOSING. The closing of the Merger (the "CLOSING") shall take
place at the offices of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, Four
Embarcadero Center, San Francisco, California at 10:00 a.m., local time, on the
second business day after the conditions to the parties' obligation to effect
the Merger contained in Article VII have been satisfied or waived (the "CLOSING
DATE"), unless another date or place is agreed to in writing by the parties
hereto.
Section 3.3 EFFECTIVE TIME. On or as soon as practicable following the
Closing, the parties shall cause the Merger to be consummated by causing a
certificate of merger or, if applicable, a certificate of ownership and merger
with respect to the Merger to be executed, filed and recorded in accordance with
the relevant provisions of the DGCL. The Merger shall become effective at the
time of the filing with the Secretary of State of the State of Delaware of such
certificate of merger or certificate of ownership and merger in accordance with
the relevant provisions of the DGCL or at such later time as shall be specified
in the certificate of merger or certificate of ownership and merger (the
"EFFECTIVE TIME").
Section 3.4 EFFECTS OF THE MERGER. The Merger shall have the effects set
forth in the DGCL and any other applicable law.
Section 3.5 CERTIFICATE OF INCORPORATION AND BY-LAWS. Subject to Section
6.11(b) hereof, the Certificate of Incorporation and By-Laws of Sub as in effect
at the Effective Time shall be the Certificate of Incorporation and By-Laws of
the Surviving Corporation, provided that Article First of the Certificate of
Incorporation of the Surviving Corporation shall be amended to read in its
entirety as follows: "FIRST" The name of the Corporation is Armor All Products
Corporation."
Section 3.6 DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. The
directors of Sub immediately prior to the Effective Time shall be the initial
directors of the Surviving Corporation and will hold office from the Effective
Time until their respective successors are duly elected or appointed and
qualified or until their earlier death, resignation or removal in the manner
provided in the Certificate of Incorporation and By-laws of the Surviving
Corporation, or as otherwise provided by law. The officers of the Company
immediately prior to the Effective Time shall be the initial officers of the
Surviving Corporation and will hold office from the Effective Time until their
respective successors shall have been duly elected or appointed and qualified or
until their earlier death, resignation or removal in the manner provided in the
Certificate of Incorporation and By-laws of the Surviving Corporation, or as
otherwise provided by law.
Section 3.7 STOCKHOLDERS' MEETING. If required by applicable law in order
to consummate the Merger, the Company, acting through its Board, shall, in
accordance with applicable law:
(a) duly call, give notice of, convene and hold a special meeting of its
stockholders (the "SPECIAL MEETING") as soon as practicable following
acceptance for payment of shares pursuant to the Offer for the purpose of
considering and taking action upon this Agreement;
(b) subject to its fiduciary duties under applicable laws as advised by
counsel, the Company shall prepare and file with the SEC (and Purchaser and
Sub shall cooperate with the Company in such preparation and filing) a
preliminary proxy statement relating to this Agreement and the transactions
contemplated hereby and include in the preliminary proxy statement and the
definitive version thereof the recommendation of the Board referred to in
Section 2.2(a) hereof; and
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(c) subject to its fiduciary duties under applicable laws as advised by
counsel, use its commercially reasonable efforts to (i) obtain and furnish
the information required to be included by it in the Proxy Statement, and,
after consultation with Purchaser, respond promptly to any comments made by
the SEC with respect to the preliminary proxy statement and cause a
definitive proxy statement (the "PROXY STATEMENT") to be mailed to its
stockholders following acceptance for payment of shares pursuant to the
Offer and (ii) obtain the necessary approvals of this Agreement by its
stockholders.
Purchaser will provide the Company with the information concerning Purchaser
and Sub required to be included in the Proxy Statement and will vote, or cause
to be voted, all Shares owned by it or its Subsidiaries in favor of approval and
adoption of this Agreement and the Merger.
Section 3.8 CONVERSION OF SHARES. At the Effective Time:
(a) Each Share issued and outstanding immediately prior to the Effective
Time (other than (i) Shares to be cancelled in accordance with Section
3.8(b) and (ii) Dissenting Shares, if any) shall, by virtue of the Merger
and without any action on the part of the holder thereof, automatically be
converted into the right to receive $19.09 in cash, or any higher price paid
per Share in the Offer (the "MERGER CONSIDERATION"), payable to the holder
thereof, without interest thereon, upon the surrender of the certificate
formerly representing such Share.
(b) Each Share issued and outstanding immediately prior to the Effective
Time owned by Purchaser, Sub or any Subsidiary of the Company, Purchaser or
Sub and each Share held in the treasury of the Company immediately prior to
the Effective Time shall, by virtue of the Merger and without any action on
the part of the holder thereof, automatically be cancelled and cease to
exist at and after the Effective Time and no consideration shall be paid
with respect thereto.
Section 3.9 CONVERSION OF SUB'S COMMON STOCK. Each share of common stock,
par value $.01 per share, of Sub issued and outstanding immediately prior to the
Effective Time shall, by virtue of the Merger and without any action on the part
of the holder thereof, automatically be converted into and thereafter represent
one validly issued, fully paid and nonassessable share of common stock, par
value $.01 per share, of the Surviving Corporation.
Section 3.10 EXCHANGE OF SHARES; PAYMENT. (a) Prior to the Effective Time,
the Company shall designate a federally-insured commercial bank with a combined
capital and surplus of at least $1,000,000,000 to act as Paying Agent in the
Merger (the "PAYING AGENT"). Immediately prior to the Effective Date, Purchaser
will take all steps necessary to enable and cause it or the Surviving
Corporation to deposit with the Paying Agent, in trust for the benefit of the
Former Stockholders, the Aggregate Merger Consideration, in immediately
available funds, for disbursement to the Former Stockholders in the manner set
forth below. The funds on deposit shall be invested by the Paying Agent, as
directed by and for the benefit of and shall be payable to the Surviving
Corporation; PROVIDED, that such investments shall be limited to direct
obligations of the United States of America, obligations for which the full
faith and credit of the United States of America is pledged to provide for the
payment of principal and interest, commercial paper rated of the highest quality
by ▇▇▇▇▇'▇ Investors Service, Inc. ("MOODY'S") or Standard & Poor's Ratings
Group, a division of ▇▇▇▇▇▇-▇▇▇▇, Inc. ("S&P"), and certificates of deposit
issued by a commercial bank whose long-term debt obligations are rated at least
A2 by Moody's or at least A by S&P, in each case having a maturity not in excess
of one year.
(b) Promptly after (or, if agreed by the Purchaser and the Company, prior
to) the Effective Time, the Paying Agent shall hand deliver or mail to each
holder of record, as of the Effective Time, of an outstanding certificate or
certificates which immediately prior to the Effective Time represented Shares
(the "CERTIFICATES"), a form letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to a Certificate shall
pass, only upon proper delivery of such Certificate to the Paying Agent) and
instructions for use of such letter of transmittal in effecting the surrender of
a Certificate and obtaining payment therefor. Upon the later of the Effective
Time and surrender to the Paying Agent of a
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Certificate, together with such letter of transmittal duly executed, the holder
of such Certificate shall in exchange therefor be entitled to receive cash in an
amount equal to the product of the number of Shares represented by such
Certificate multiplied by the Merger Consideration to be paid by the Paying
Agent within five business days of receipt of such documentation. No interest
will be paid or accrued on any amount payable upon the surrender of a
Certificate. If payment is to be made to a person other than the person in whose
name a Certificate surrendered is registered, it shall be a condition of payment
that the Certificate so surrendered shall be properly endorsed or otherwise in
proper form for transfer and that the person requesting such payment shall pay
transfer or other taxes required by reason of the payment to a person other than
the registered holder of the Certificate surrendered or establish to the
satisfaction of the Paying Agent that such tax has been paid, is not applicable
or provides assurances satisfactory to the Paying Agent that any such tax will
be paid by such person. Until surrendered in accordance with the provisions of
this Section 3.10(b), each Certificate representing a Share (other than
Certificates representing Shares held in the treasury of the Company, or owned
by Purchaser, Sub or any Subsidiary of the Company, Purchaser or Sub and
Dissenting Shares, if any) shall represent for all purposes only the right to
receive the Merger Consideration, and shall have no other rights.
Notwithstanding the foregoing, any funds remaining with the Paying Agent six
months following the Effective Time shall be returned to Purchaser or the
Surviving Corporation, as specified by Purchaser, after which time the Former
Stockholders, subject to applicable law, shall look only to the Surviving
Corporation for payment of the Merger Consideration, without interest thereon,
and shall have no greater rights against the Surviving Corporation than may be
accorded to general creditors of the Surviving Corporation under Delaware law.
(c) After the Effective Time there shall be no transfers of Shares on the
stock transfer books of the Surviving Corporation. If, after the Effective Time,
Certificates are presented to the Surviving Corporation, they shall be cancelled
and exchanged as provided in this Section 3.10.
(d) If any Certificate shall have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the person claiming such Certificate to
be lost, stolen or destroyed, the Surviving Corporation shall pay or cause to be
paid in exchange for such lost, stolen or destroyed Certificate the Merger
Consideration for Shares represented thereby. When authorizing such payment of
the Merger Consideration in exchange therefor, the Board of Directors of the
Surviving Corporation may, in its discretion and as a condition precedent to the
payment thereof, require the owner of such lost, stolen or destroyed Certificate
to give the Surviving Corporation a bond in such sum as it may direct as
indemnity against any claim that may be made against the Surviving Corporation
with respect to the Certificate alleged to have been lost, stolen or destroyed.
Section 3.11 DISSENTING SHARES. Notwithstanding anything in this Agreement
to the contrary, holders of Shares who have properly exercised, perfected and
not subsequently withdrawn or lost their appraisal rights with respect thereto
in accordance with Section 262 of the DGCL (the "DISSENTING SHARES") shall not
have any of such Shares converted into or become exchangeable for the right to
receive the Merger Consideration, and holders of such Shares shall be entitled
only to such rights as are granted by such Section 262, including the right to
receive payment of the appraised value of such Shares in accordance with the
provisions of such Section 262 unless and until such holders fail to perfect or
shall have effectively withdrawn or lost their rights to appraisal and payment
under the DGCL. If, after the Effective Time, any such holder fails to perfect
or shall have effectively withdrawn or lost such right, each of such holder's
Shares shall thereupon be treated as if it had been converted into and to have
become exchangeable for, at the Effective Time, the right to receive the Merger
Consideration without interest thereon, as provided in Section 3.8(a) hereof and
such Shares shall no longer be Dissenting Shares.
Section 3.12 COMPANY OPTION PLANS. The Company shall take all actions
necessary to provide that, immediately prior to the consummation of the Offer,
(i) each outstanding stock option ("OPTIONS") outstanding under the Company's
1986 Stock Option Plan, whether or not then exercisable or vested, shall be
cancelled or repurchased by the Company and (ii) in consideration of such
cancellation or repurchase, and except to the extent that Purchaser or Sub and
the holder of any such Option otherwise agree, the
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Company shall pay to the holder of each Option an amount in respect thereof
equal to the product of (A) the Applicable Amount, multiplied by (B) the number
of Shares subject thereto (such payment to be net of applicable withholding
taxes). The term "APPLICABLE AMOUNT" shall mean the excess of (A) the Merger
Consideration, over (B) the exercise price of such Option. The total number of
Options outstanding as of the date of this Agreement is 1,127,137 and a schedule
of the exercise prices of such Options is set forth in Section 4.2 of the
Company Disclosure Letter.
Section 3.13 SUPPLEMENTARY ACTION. If at any time after the Effective
Time, any further assignments or assurances in law or any other things are
necessary or desirable to vest or to perfect or confirm of record in the
Surviving Corporation the title to any property or rights of either of the
constituent corporations, or otherwise to carry out the provisions of this
Agreement, the officers and directors of the Surviving Corporation are hereby
authorized and empowered on behalf of the respective constituent corporations,
in the name of and on behalf of the appropriate constituent corporation, to
execute and deliver any and all things necessary or proper to vest or to perfect
or confirm title to such property or rights in the Surviving Corporation, and
otherwise to carry out the purposes and provisions of this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as otherwise disclosed to Purchaser in a letter delivered to it prior
to the execution hereof (the "COMPANY DISCLOSURE LETTER"), the Company
represents and warrants to Purchaser as follows:
Section 4.1 ORGANIZATION. Each of the Company and its Subsidiaries is a
corporation or other entity duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or organization
and has all requisite corporate power and authority to own, lease and operate
its properties and to carry on its business as it is now being conducted, except
where failure to be so existing and in good standing would not in the aggregate
have a Company Material Adverse Effect. Each of the Company and its Subsidiaries
is duly qualified or licensed to do business as a foreign corporation and is in
good standing in each jurisdiction in which the nature of the business conducted
by it makes such qualification or licensing necessary, except where the failure
to be so duly qualified, licensed and in good standing or to have such power and
authority, or to be so qualified or licensed would not, individually or in the
aggregate, have a Company Material Adverse Effect. The Company has heretofore
delivered to Purchaser a complete and correct copy of each of its Certificate of
Incorporation and By-Laws, as currently in effect.
Section 4.2 CAPITALIZATION.
(a) As of the date hereof, the authorized capital stock of the Company
consists of 40,000,000 shares of Common Stock, par value $.01 per share, and
10,000,000 shares of preferred stock, par value $.01 per share (the "PREFERRED
STOCK"). As of the date hereof, (i) 21,369,447 shares of Common Stock are issued
and outstanding (including all restricted stock), (ii) no shares of Common Stock
are issued and held in the treasury of the Company and (iii) there are no shares
of Preferred Stock issued and outstanding. All the outstanding shares of the
Company's capital stock are duly authorized, validly issued, fully paid and non-
assessable. Except as set forth in Section 4.2(a) of the Company Disclosure
Letter, as of the date hereof, there are no existing, and at the Effective Time
there will not be, (i) options, warrants, calls, preemptive rights,
subscriptions or other rights, convertible securities, agreements or commitments
of any character obligating the Company or any of its Subsidiaries to issue,
transfer or sell any shares of capital stock or other equity interest in, the
Company or any of its Subsidiaries or securities convertible into or
exchangeable for such shares or equity interests, (ii) contractual obligations
of the Company or any of its Subsidiaries to repurchase, redeem or otherwise
acquire any capital stock of the Company or any of its Subsidiaries of the
Company or (iii) voting trusts or similar agreements to which the Company is a
party with respect to the voting of the capital stock of the Company.
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(b) Except as set forth in Section 4.2(b) of the Company Disclosure Letter,
all of the outstanding shares of capital stock (or equivalent equity interests
of entities other than corporations) of each of the Company's Subsidiaries are
beneficially owned, directly or indirectly, by the Company.
Section 4.3 AUTHORIZATION; VALIDITY OF AGREEMENT.
(a) The Company has the requisite corporate power and authority to execute
and deliver this Agreement and, subject to approval of its stockholders as
contemplated by Section 3.7(a) hereof, to consummate the transactions
contemplated hereby. The execution and delivery by the Company of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly authorized by the Board and, except for those actions contemplated by
Section 2.2 hereof and approval and adoption of this Agreement by the holders of
a majority of the outstanding shares of the Common Stock, no other corporate
proceedings on the part of the Company are necessary to authorize the execution
and delivery of this Agreement by the Company and the consummation of the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Company and, assuming due authorization, execution and delivery
of this Agreement by each of Purchaser and Sub, is a valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms, except as such enforceability may be subject to or limited by bankruptcy,
insolvency, reorganization, or other similar laws, now or hereafter in effect,
affecting the enforcement of creditors' rights generally, and except that the
availability of equitable remedies, including specifi performance, may be
subject to the discretion of the court before which any proceeding therefor may
be brought.
(b) The Board of Directors has taken all actions necessary to render the
provisions of Section 203 of the DGCL inapplicable to the transactions
contemplated by this Agreement.
Section 4.4 NO VIOLATIONS; CONSENTS AND APPROVALS.
(a) Neither the execution, delivery or performance of this Agreement by the
Company nor the consummation by the Company of the transactions contemplated
hereby (i) violate any provision of the Certificate of Incorporation or By-Laws
of the Company, (ii) except as set forth in Section 4.4(a) of the Company
Disclosure Letter, result in a violation or breach of, or constitute a default
(or give rise to any right of termination, amendment, cancellation or
acceleration) under, any of the terms, conditions or provisions of any material
note, bond, mortgage, indenture, guarantee, other evidence of indebtedness,
license, contract, agreement or other instrument to which the Company or any of
its Subsidiaries is a party or by which any of them or any of their properties
or assets may be bound or (iii) to the best knowledge of the Company, violate
any order, writ, judgment, injunction, decree, law, statute, rule or regulation
applicable to the Company, any of its Subsidiaries or any of their properties or
assets; except in the case of clauses (ii) or (iii) for such violations,
breaches or defaults which, individually or in the aggregate, would not (A) have
a Company Material Adverse Effect, (B) materially adversely affect the ability
of the Company to consummate the transactions contemplated in this Agreement, or
(C) become applicable as a result of the business or activities in which
Purchaser or Sub is or proposes to be engaged or as a result of any acts or
omissions by, or the status of any facts pertaining to, Purchaser or Sub.
(b) Except as disclosed in Section 4.4(b) of the Company Disclosure Letter,
no filing or registration with, notification to, or authorization, consent or
approval of, any court, legislative, executive or regulatory authority or agency
(a "GOVERNMENTAL ENTITY") is required in connection with the execution and
delivery of this Agreement by the Company or the consummation by the Company of
the transactions contemplated hereby, except for (i) filings with the FTC and
with the DOJ pursuant to the HSR Act, (ii) applicable requirements under the
Exchange Act, (iii) the filing of the certificate of merger or, if applicable, a
certificate of ownership and merger with the Secretary of State, (iv) applicable
requirements under corporation or "BLUE SKY" laws of various states, and (v)
such other consents, approvals, orders, authorizations, notifications,
registrations, declarations and filings the failure of which to be obtained or
made which, individually or in the aggregate, would not (A) have a Company
Material Adverse Effect, (B) materially adversely affect the ability of the
Company to consummate the transactions contemplated in this
14
Agreement, or (C) become applicable as a result of the business or activities in
which Purchaser or Sub is or proposes to be engaged or as a result of any acts
or omissions by, or the status of any facts pertaining to, Purchaser or Sub.
Section 4.5 REPORTS. The Company has filed all reports required to be
filed by it with the SEC pursuant to the Exchange Act since March 31, 1994
(collectively, the "COMPANY SEC DOCUMENTS"). None of the Company SEC Documents,
as of their respective filing dates, contained, and none of the Company SEC
Documents filed after the date hereof will contain, any untrue statement of a
material fact or omitted, or will 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. Each of the
consolidated balance sheets (including the related notes) included in the
Company SEC Documents fairly presents in all material respects the consolidated
financial position of the Company and its Subsidiaries as of the respective
dates thereof, and the other related statements (including the related notes)
included therein fairly present in all material respects the results of
operations and the changes in financial position of the Company and its
Subsidiaries for the respective periods or as of the respective dates set forth
therein. Each of the financial statements (including the related notes) included
in the Company SEC Documents has been prepared in all material respects in
accordance with GAAP during the periods involved, except as otherwise noted
therein.
Section 4.6 ABSENCE OF CERTAIN CHANGES. Except as disclosed in (a) the
Company SEC Documents filed as of the date hereof; (b) the Company's audited
consolidated financial statements for the fiscal year ended March 31, 1996
previously delivered to Purchaser, and (c) Section 4.6 of the Company Disclosure
Letter, since September 30, 1996 through the date hereof, there has not been,
occurred or arisen, whether or not in the ordinary course of business:
(i) any Company Material Adverse Effect;
(ii) any material change in or exception to the Company's policy of not
accepting returns of products shipped to customers;
(iii) any material change in the terms and conditions of the Company's
arrangements with its copackers;
(iv) any sales incentive or bonus program or trade promotion spending or
allowance (including customer allowances and performance-based promotion
spending), whether for the benefit of Company employees, distributors,
representatives, or customers, that would reasonably be expected to increase
trade inventories in anticipation of the transactions contemplated by this
Agreement or that would have the effect of rewarding any person other than
as a result of achieving the targets set forth in the Company's Sales
Incentive Plan, a copy of which has been previously provided to Purchaser;
or
(v) any action or occurrence which, if it occurred after the date hereof
would be a violation of any of Section 6.1(a) through (g) and 6.1(i) through
(n).
Section 4.7 NO UNDISCLOSED LIABILITIES. Except (a) for liabilities and
obligations disclosed or provided for in the Company SEC Documents filed with
respect to periods ending after September 30, 1996 or incurred in the ordinary
course of business since September 30, 1996 and (b) for liabilities and
obligations incurred in connection with the Offer and the Merger, since
September 30, 1996 neither the Company nor any of its Subsidiaries has incurred
any liabilities or obligations material to the Company and its Subsidiaries,
taken as a whole, that would be required to be reflected or reserved against in
a consolidated balance sheet of the Company and its Subsidiaries prepared in
accordance with GAAP as applied in preparing the consolidated balance sheet of
the Company and its Subsidiaries as of March 31, 1996 contained in the Company's
Annual Report on Form 10-K for the fiscal year ended March 31, 1996.
15
Section 4.8 SCHEDULE 14D-9; OFFER DOCUMENTS; PROXY STATEMENT. None of the
information supplied by the Company for inclusion in the Schedule 14D-9, the
Offer Documents or the Proxy Statement, including any amendments thereto, will
be false or misleading with respect to any material fact or will 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. Except for information supplied by Purchaser in writing for
inclusion therein, the Proxy Statement and the Schedule 14D-9, including any
amendments thereto, will comply in all material respects with the Exchange Act.
Section 4.9 LITIGATION; COMPLIANCE WITH LAW. As of the date hereof, except
as set forth in Section 4.9 of the Company Disclosure Letter or as disclosed in
the Company SEC Documents, there is no action, suit, proceeding or, to the best
knowledge of the Company, investigation pending or, to the best knowledge of the
Company, threatened, involving the Company or any of its Subsidiaries, or any of
their properties or assets, by or before any court, governmental or regulatory
authority or by any third party that would have a Company Material Adverse
Effect. The businesses of the Company and its Subsidiaries are not being
conducted in violation of any applicable law, ordinance, rule, regulation,
decree or order of any court or governmental entity, except for violations that
in the aggregate would not, individually or in the aggregate, have a Company
Material Adverse Effect.
Section 4.10 EMPLOYEE BENEFIT PLANS; ERISA. (a) Section 4.10(a) of the
Company Disclosure Letter lists each "employee benefit plan" (as defined in
Section 3(3) of ERISA), and all other employee benefit, bonus, incentive, stock
option (or other equity-based), severance, change in control and fringe benefit
plans maintained for the benefit of, or contributed to by the Company or its
Subsidiaries or any trade or business, whether or not incorporated (an "ERISA
AFFILIATE"), that would be deemed a "single employer" within the meaning of
Section 4001 of ERISA, for the benefit of any employee or former employee of the
Company or any of its subsidiaries (the "PLANS"). The Company has made available
to Purchaser copies of each of the Plans, including all amendments to date.
(b) Except as set forth in Section 4.10(b) of the Company Disclosure
Schedule, each of the Plans that is subject to ERISA complies with ERISA and the
applicable provisions of the Code, except for any such violations that would
not, individually or in the aggregate, have a Company Material Adverse Effect.
Except as set forth in Section 4.10(b) of the Company Disclosure Schedule, each
of the Plans intended to be "qualified" within the meaning of Section 401(a) of
the Code has been determined by the Internal Revenue Service to be so qualified
and the Company knows of no fact or set of circumstances that would adversely
affect such qualification prior to the Effective Time. Except as set forth in
Section 4.10(b) of the Company Disclosure Letter, none of the Plans is subject
to Title IV of ERISA. No "reportable event", as such term is defined in Section
4043(b) of ERISA (for which the 30-day notice requirement to the Pension Benefit
Guaranty Board has not been waived) has occurred with respect to any Plan,
except where the occurrence of any such event would not have a Company Material
Adverse Effect. There are no pending or, to the best knowledge of Company,
threatened claims (other than routine claims for benefits) by, on behalf of or
against any of the Plans or any trusts related thereto, except for any such
claims that would not, individually or in the aggregate, have a Company Material
Adverse Effect.
(c) Except as set forth in Section 4.10(c) of the Company Disclosure Letter,
no Plan provides benefits, including without limitation, death or medical
benefits (whether or not insured), with respect to any employees of the Company
or any of its Subsidiaries beyond their retirement or other termination of
service (other than (i) coverage mandated by applicable law, (ii) death benefits
or retirement benefits under any "employee pension plan," as that term is
defined in Section 3(2) of ERISA, or (iii) benefits the full cost of which is
borne by the current or former employee (or his or her beneficiary)).
(d) No Plan has incurred an "Accumulated Funding Deficiency" (as defined in
Section 302(a) of ERISA or Section 412(a) of the Code), whether or not waived,
except where the occurrence of any such event would not have a Company Material
Adverse Effect.
16
(e) Except as set forth in Section 4.10(e) of the Company Disclosure Letter,
none of the Company, its Subsidiaries or any ERISA Affiliate has incurred a
"withdrawal" or "partial withdrawal", as defined in Sections 4203 and 4205 of
ERISA, from any Plan that has resulted in an unpaid liability of the Company,
any of its Subsidiaries or any ERISA Affiliate, except where the occurrence of
any such event would not have a Company Material Adverse Effect.
(f) Except as set forth in Section 4.10(f) of the Company Disclosure
Schedule, with respect to each employee benefit plan (as defined in Section 3(3)
of ERISA) which is referred to in Section 4.10(a) (including for this purpose
any terminated plan or arrangement that would be described in Section 4.10(a) if
not terminated) and which is (or was) subject to Part 4 of Subtitle B of Title I
of ERISA, none of the following now exists or has existed within the six-year
period ending on the date hereof:
(i) any act or omission by the Company or any of its Subsidiaries, or by
any director, officer or employee thereof, or, to the knowledge of the
Company or any of its Subsidiaries, by any other person, constituting a
violation of Section 404 or 405 of ERISA; or
(ii) any act or omission which constitutes a violation of Section 406 or
407 of ERISA and is not exempted by Section 408 of ERISA or which
constitutes a violation of Section 4975(c) of the Code and is not exempted
by Section 4975(d) of the Code.
(g) Each Plan has been maintained in substantial compliance with its terms,
and all contribution, premiums or other payments due from the Company or any of
its Subsidiaries to (or under) any such plan or arrangement have been fully paid
or adequately provided for on the financial statements provided in the Company
SEC Documents for the fiscal quarter ended September 30, 1996. Except as
described in Section 4.10(g) of the Company Disclosure Letter there has been no
amendment, written interpretation or announcement (whether or not written) by
the Company or any of its Subsidiaries with respect to, or change in employee
participation or coverage under, any such plan or arrangement that would
increase materially the expense of maintaining such plans or arrangements,
individually or in the aggregate, above the level of expense incurred with
respect thereto provided in the Company SEC Documents for the fiscal quarter
ended September 30, 1996.
(h) Except as described in Section 4.10(h) of the Company Disclosure Letter,
neither the Company nor any of its Subsidiaries has any material liability under
or in connection with any terminated plan or arrangement that would constitute a
"Plan" as defined in Section 4.10(a) if not terminated (a "TERMINATED PLAN"),
and all benefits accrued under each such terminated plan or arrangement,
including benefits funded through any related trust, insurance contract, annuity
contract, custodial account or similar funding method, have been paid or
distributed to the persons entitled thereto in accordance with its terms. Each
Terminated Plan intended to be qualified under Section 401(a) of the Code was so
qualified, and each related trust, insurance contract, annuity contract or
custodial account was exempt from taxation under Section 501(a) of the Code, at
the time of termination and at all times when payment or distribution of
benefits was made subsequent to or in connection with such termination.
Section 4.11 REAL PROPERTY. Section 4.11 of the Company Disclosure Letter
identifies all real property owned, leased or used by the Company or its
Subsidiaries for or in the conduct its business. The Company has, either
directly or through its Subsidiaries, (x) good title to, free and clear of all
Liens other than Permitted Liens, or (y) rights by lease or other agreement to
use, all real property used by the Company and its Subsidiaries, except where
the failure to have such title or rights would not have a Company Material
Adverse Effect. All real property leases of property under which the Company or
any of its Subsidiaries is a lessee or lessor, are valid, binding and
enforceable in all material respects in accordance with their terms and, to the
best knowledge of the Company, there are no existing material defaults
thereunder.
Section 4.12 INTELLECTUAL PROPERTY. As of the date hereof, there are no
pending or threatened claims of which the Company or its Subsidiaries have been
given written notice, by any person against their use of
17
any trademarks, trade names, service marks, service names, ▇▇▇▇ registrations,
logos, assumed names and copyright registrations, formulas, trade secrets,
know-how, patents and all applications therefor which are owned by the Company
or its Subsidiaries or are used in the operation of the Company and its
Subsidiaries as currently conducted (collectively, the "INTELLECTUAL PROPERTY").
The Company and its Subsidiaries have such ownership of or such rights by
license, lease or other agreement to the Intellectual Property as are necessary
to permit them to conduct their respective businesses as currently conducted,
except where the failure to have such right would not have a Company Material
Adverse Effect. The Company is not in default of any agreement pursuant to which
the Company has rights to use any Intellectual Property except where such
default would not have a Company Material Adverse Effect.
Section 4.13 COMPUTER SOFTWARE. To the best knowledge of the Company, the
Company and its Subsidiaries have such title or such rights by license, lease or
other agreement to the computer software programs which are owned, licensed,
leased or otherwise used by the Company and its Subsidiaries and which are
material to the conduct of their businesses as currently conducted, as are
necessary to permit the conduct of their businesses as currently conducted,
except where the failure to have such right would not have a Company Material
Adverse Effect.
Section 4.14 MATERIAL CONTRACTS. Except as disclosed in Section 4.14 of
the Company Disclosure Letter, to the best knowledge of the Company, all
material agreements to which the Company or its Subsidiaries are parties are
valid, binding and enforceable in all material respects in accordance with their
terms and neither the Company nor any of its Subsidiaries nor any other party to
any such contract is in default under such agreements, other than such defaults,
if any, that would not, individually or in the aggregate, have a Company
Material Adverse Effect.
Section 4.15 TAXES. Except as set forth in Section 4.15 of the Company
Disclosure Letter:
(a) each of the Company and the Subsidiaries have (I) duly filed with
the appropriate governmental authorities all Tax Returns required to be
filed by it other than those Tax Returns the failure of which to file would
not have a Company Material Adverse Effect and such Tax Returns are true,
correct and complete in all material respects, and (II) duly paid in full or
made provision in accordance with GAAP for the payment of all Taxes for all
taxable periods or portions thereof ending on or before the date hereof;
(b) each of the Company and the Subsidiaries have complied in all
material respects with all applicable laws, rules and regulations relating
to the payment and withholding (including backup withholding) of Taxes;
(c) no federal, state, local or foreign audits or other administrative
proceedings or court proceedings ("AUDITS") are presently pending with
regard to any Taxes or Tax Returns of the Company or the Subsidiaries and
none of the Company or the Subsidiaries has received written notice of any
such Audits;
(d) there are no material Liens for Taxes upon any property or assets of
the Company or the Subsidiaries, except for Permitted Liens;
(e) the income Tax Returns of the Company and its Subsidiaries have been
examined by the Internal Revenue Service (or the applicable statutes of
limitation for the assessment of federal income Taxes for such periods have
expired) for all periods through the taxable year ended 1995.
(f) the Company has made available to the Purchaser correct and complete
copies of all federal Tax Returns of the Company and the Subsidiaries filed
from May 13, 1993 forward; PROVIDED, HOWEVER, with respect to taxable years
in which the Company was a member of the consolidated group of which
Stockholder was the common parent, only PRO FORMA federal Tax Returns or
summaries thereof have been made available; and summaries of examination
reports and income tax audit reports of the Company or the Subsidiaries.
Except with respect to the Audits described in subsection (c) of this
18
Section 4.15, no waiver or extension of any statute of limitations is in
effect with respect to Taxes or Tax Returns of the Group.
(g) Neither the Company nor any Subsidiary is a "consenting corporation"
within the meaning of Section 341(f) of the Internal Revenue Code of 1986,
as amended (the "Code"), and none of the assets of the Company nor any
Subsidiary are subject to an election under Section 341(f) of the Code.
Neither the Company nor any Subsidiary is a party to any Tax allocation or
sharing agreement. No member of the Group is a party to any safe harbor
lease within the meaning of Section 168(f)(8) of the Code, as in effect
prior to amendment by the Tax Equity and Fiscal Responsibility Act of 1982.
None of the Company or any Subsidiary has entered into any compensatory
agreements with respect to the performance of services which payment
thereunder would result in a nondeductible expense to the Group pursuant to
Section 280G of the Code or an excise tax to the recipient of such payment
pursuant to Section 4999 of the Code. Neither the Company nor any Subsidiary
has agreed, nor is it required to make, any future adjustment under Code
Section 481(a) by reason of a change in accounting method or otherwise.
Section 4.14 of the Company Disclosure Letter contains an accurate and
complete description of the Company's and each of the Subsidiary's tax
carryforwards, excess loss accounts, and deferred intercompany transactions.
Except as otherwise disclosed in Section 4.15 of the Company Disclosure
Letter, the Company and each of the Subsidiaries has no net operating losses
or other tax attributes presently subject to limitation under Code Sections
382, 383, or 384, or the federal consolidated return regulations. None of
the Company or any of its Subsidiaries is an entity that is characterized as
a partnership for federal income tax purposes.
(h) None of the Company or any Subsidiary has participated (or will
participate) in any international boycott as defined in Code Section 999.
Section 4.16 ENVIRONMENTAL MATTERS. Except as set forth in Section 4.16 of
the Company Disclosure Letter, to the knowledge of the Company, (a) the Company
and its Subsidiaries are in material compliance with all federal, state, and
local laws governing pollution or the protection of human health or the
environment ("ENVIRONMENTAL LAWS"), except in each case where noncompliance with
Environmental Laws would not reasonably be expected, individually or in the
aggregate, to have a Company Material Adverse Effect, (b) neither the Company
nor any of its Subsidiaries nor, to the best knowledge of the Company, any of
its copackers, has received any written notice with respect to the business of,
or any property owned or leased by, the Company or any of its Subsidiaries from
any Governmental Entity or third party alleging that the Company or any of its
Subsidiaries or any of its products is not in material compliance with any
Environmental Law, (c) there has been no release of a Hazardous Substance, as
that term is defined in the Comprehensive Environmental Response, Compensation,
and Liability Act, 42 U.S.C. Section 9601 ET SEQ. and used in California Health
and Safety Code Section 25359.7, in excess of a reportable quantity on any real
property owned or leased by the Company or any of its Subsidiaries that is used
for the business of the Company or any of its Subsidiaries and (d) neither the
Company nor any of its Subsidiaries has received any written claims that the
Company is in violation of California's Proposition 65 or, since January 1,
1993, relating to any injuries to any workers of a substantial nature dealing
with the Company's products, whether employed by the Company or any co-packer or
any customer.
Section 4.17 AFFILIATED PARTY TRANSACTIONS. Except as set forth on Section
4.17 of the Company Disclosure Letter, no contracts or agreements in which the
amount involved exceeds $60,000 are in effect as of the date hereof between the
Company or its Subsidiaries on the one hand, and affiliates of the Company, on
the other hand. For purposes of this Section 4.17 an "affiliate" of any Person
shall mean any other person directly or indirectly controlling or controlled by
or under direct or indirect common control with such Person. For the purposes of
this definition, "control", when used with respect to any Person means the power
to direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings that correspond to
the foregoing.
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Section 4.18 NO BROKERS. The Company has not employed any broker or finder
or incurred any liability for any brokerage fees, commissions or finders' fees
in connection with the transactions contemplated by this Agreement, except for
PaineWebber Incorporated ("PaineWebber"), whose fees and expenses in an
aggregate amount equal to $3,000,000 shall be borne by the Company, and the
Company shall not be liable for any such fees and expenses in excess of such
amount.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF PURCHASER AND SUB
Purchaser and Sub, jointly and severally, represent and warrant to the
Company as follows:
Section 5.1 ORGANIZATION. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of Delaware and Sub is a
corporation duly organized, validly existing and in good standing under the laws
of Delaware and has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as now being conducted
except where failure to be so existing and in good standing or to have such
power and authority would not in the aggregate have a Purchaser Material Adverse
Effect. Each of Purchaser and Sub is qualified or licensed to do business as a
foreign corporation and is in good standing in each jurisdiction in which the
nature of the business conducted by it makes such qualification or licensing
necessary, except where the failure to be so duly qualified, licensed and in
good standing would not have a Purchaser Material Adverse Effect. Purchaser has
heretofore delivered to the Company complete and correct copies of its
certificate of incorporation and by-laws and the certificate of incorporation
and by-laws of Sub, in each case, as currently in effect. Since the date of its
incorporation, Sub has not engaged in any activities other than in connection
with or as contemplated by this Agreement or in connection with arranging any
financing required to consummate the transactions contemplated hereby.
Section 5.2 AUTHORIZATION; VALIDITY OF AGREEMENT. Each of Purchaser and
Sub has the requisite corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery by Purchaser and Sub of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
respective boards of directors of Purchaser and Sub, and by Purchaser as the
sole stockholder of Sub, and no other corporate proceedings on the part of
Purchaser or Sub are necessary to authorize the execution and delivery of this
Agreement by Purchaser and Sub and the consummation of the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
Purchaser and Sub and, assuming due authorization, execution and delivery of
this Agreement by the Company, is a valid and binding obligation of each of
Purchaser and Sub, enforceable against each of them in accordance with its
terms, except as such enforceability may be subject to or limited by bankruptcy,
insolvency, reorganization or other similar laws, now or hereafter in effect,
affecting the enforcement of creditors' rights generally, except that the
availability of equitable remedies, including specific performance, may be
subject to the discretion of the court before which any proceeding therefor may
be brought.
Section 5.3 NO VIOLATIONS; CONSENTS AND APPROVALS.
(a) Neither the execution, delivery or performance of this Agreement by
Purchaser and Sub nor the consummation by Purchaser and Sub of the transactions
contemplated hereby (i) violate any provision of the respective certificate of
incorporation or by-laws of Purchaser or Sub, (ii) result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or acceleration)
under, any of the terms, conditions or provisions of any material note, bond,
mortgage, indenture, guarantee, other evidence of indebtedness, license,
contract, agreement or other instrument to which Purchaser or any of its
Subsidiaries is a party or by which any of them or any of their assets may be
bound or (iii) violate any order, writ, judgment, injunction, decree, law,
statute, rule or regulation applicable to Purchaser, any of its Subsidiaries or
any of their properties or assets; except in
20
the case of clauses (ii) and (iii) for violations, breaches or defaults which
(A) would not have a Purchaser Material Adverse Effect, (B) materially adversely
affect the ability of either Purchaser or Sub to consummate the transactions
contemplated in this Agreement or (C) become applicable as a result of the
business or activities in which Purchaser or Sub is or proposes to be engaged or
as a result of any acts or omissions by, or the status of any facts pertaining
to, the Company.
(b) No filing or registration with, notification to, or authorization,
consent or approval of, any Governmental Entity is required in connection with
the execution and delivery of this Agreement by Purchaser and Sub or the
consummation by Purchaser and Sub of the transactions contemplated hereby,
except (i) filings with the FTC and with the DOJ pursuant to the HSR Act, (ii)
applicable requirements under the Exchange Act, (iii) the filing of the
certificate of merger or, if applicable, a certificate of ownership and merger
with the Secretary of State, (iv) applicable requirements under corporation or
"blue sky" laws of various states, and (v) such other consents, approvals,
orders, authorizations, notifications, registrations, declarations and filings
the failure of which to be obtained or made (A) would not have a Purchaser
Material Adverse Effect, (B) would not materially adversely affect the ability
of Purchaser or Sub to consummate the transactions contemplated in this
Agreement, or (C) become applicable as a result of the business or activities in
which Purchaser or Sub is or proposes to be engaged or as a result of any acts
or omissions by, or the status of any facts pertaining to, the Company.
Section 5.4 SCHEDULE 14D-9; OFFER DOCUMENTS; PROXY STATEMENT. None of the
information supplied by Purchaser or Sub for inclusion in the Offer Documents,
the Schedule 14D-9 or the Proxy Statement, including any amendments thereto,
will be false or misleading with respect to any material fact or will 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. Except for information supplied by the Company in writing
for inclusion in the Offer Documents, the Offer Documents will comply in all
material respects with the Exchange Act.
Section 5.5 SUFFICIENT FUNDS. Purchaser and Sub have sufficient funds
available, in cash or pursuant to existing credit agreements or binding
commitments in effect on the date of this Agreement, to purchase all Shares on a
fully diluted basis at the price per Share set forth in Section 2.1 hereof and
to perform all of their obligations, and the obligations of the Company
following the Merger, hereunder.
Section 5.6 BENEFICIAL OWNERSHIP OF SHARES. None of Purchaser, Sub or any
of their respective "affiliates" or "associates" (as those terms are defined in
Rule 12b-2 of the General Rules and Regulations under the Exchange Act)
"beneficially owns" (as that term is defined in Rule 13d-3(a) under the Exchange
Act) any Shares or any securities convertible into or exchangeable for Shares.
Section 5.7 NO BROKERS. Neither Purchaser nor Sub has employed any broker
or finder or incurred any liability for any brokerage fees, commissions or
finders' fees in connection with the transactions contemplated by this
Agreement, except for ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated, whose fees shall be
borne by Purchaser.
Section 5.8 INVESTIGATION BY PURCHASER. Each of Purchaser and Sub has
conducted its own independent review and analysis of the businesses, assets,
condition, operations and prospects of the Company and its Subsidiaries and
acknowledges that each of Purchaser and Sub has been provided access to the
properties, premises and records of the Company and its Subsidiaries for this
purpose. In entering into this Agreement, Purchaser and Sub have relied solely
upon their own investigation and analysis, and each of Purchaser and Sub:
(a) acknowledges that none of the Company, its Subsidiaries or any of
their respective directors, officers, employees, affiliates, agents or
representatives makes any representation or warranty, either express or
implied, as to the accuracy or completeness of any of the information
provided or made available to Purchaser or their agents or representatives
prior to the execution of this Agreement, and
21
(b) agrees, to the fullest extent permitted by law, that none of the
Company, its Subsidiaries or any of their respective directors, officers,
employees, stockholders, affiliates, agents or representatives shall have
any liability or responsibility whatsoever to Purchaser or Sub on any basis
(including, without limitation, in contract or tort, under federal or state
securities laws or otherwise) based upon any information provided or made
available, or statements made, to Purchaser prior to the execution of this
Agreement, except that the foregoing limitations shall not apply to the
Company to the extent (i) the Company makes the specific representations and
warranties set forth in Article IV of this Agreement or (ii) Stockholder
makes the specific representations and warranties set forth in Section 1(f)
or (3) of the Stockholder Agreement or makes the covenant set forth in
Section 9 of the Stockholder Agreement, but always subject to the
limitations and restrictions contained herein and therein.
ARTICLE VI
COVENANTS
Section 6.1 CONDUCT OF BUSINESS BY THE COMPANY PENDING THE MERGER. During
the period from the date hereof to the consummation of the Offer, except as
Purchaser shall otherwise agree in writing, as required by applicable law, or as
otherwise contemplated by this Agreement, the Company and its Subsidiaries shall
conduct their respective businesses in the ordinary course, consistent with past
practice. Further, the Company shall use reasonable efforts to preserve intact
the business organization of the Company and each of its Subsidiaries, to keep
available the services of its and their present officers and key employees in
good standing, and to preserve the goodwill of those having business
relationships with it and its Subsidiaries. Without limiting the generality of
and in addition to the foregoing, and except as set forth in the Company
Disclosure Letter hereto or as otherwise provided in this Agreement, prior to
the consummation of the Offer, neither the Company nor any of its Subsidiaries
will, without the prior written consent of Purchaser:
(a) amend its charter or by-laws;
(b) authorize for issuance, issue, sell, deliver or agree or commit to
issue, sell or deliver (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise) any
stock of any class or any other securities, except by the Company in
connection with the exercise of employee options granted and outstanding
before the date of this Agreement;
(c) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its
capital stock or redeem or otherwise acquire any of its securities or any
securities of its subsidiaries; PROVIDED that the Company may pay to holders
of the Shares the regular quarterly dividend of $0.16 per Share previously
declared by the Company, the record date and payment date for which have
previously been fixed by the Board as December 2, 1996 and January 2, 1997,
respectively;
(d) (i) incur or assume any material long-term debt or, except in the
ordinary course of business consistent with past practice under existing
lines of credit, incur or assume any material short-term debt; (ii) assume,
guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for any material obligations of any
other person except wholly owned Subsidiaries of the Company in the ordinary
course of business and consistent with past practices; or (iii) make any
material loans, advances or capital contributions to, or investments in, any
other person (other than loans or advances to the Company's Subsidiaries and
customary loans or advances to employees in accordance with past practices);
(e) enter into, adopt or materially amend any bonus, profit sharing,
compensation, severance, termination, stock option, stock appreciation
right, restricted stock, performance unit, pension,
22
retirement, deferred compensation, employment, severance or other employee
benefit agreements, trusts, plans, funds or other arrangements of or for the
benefit or welfare of any Company Employee, or increase in any manner the
compensation or fringe benefits of any Company Employee or pay any benefit
not required by any existing plan and arrangement (including, without
limitation, the granting of stock options, stock appreciation rights, shares
of restricted stock or performance units) or enter into any contract,
agreement, commitment or arrangement to do any of the foregoing; PROVIDED,
HOWEVER, that nothing herein shall prohibit normal increases in wages or
salary or immaterial fringe benefits in the ordinary course of business that
are consistent with the past practices;
(f) acquire, sell, lease or dispose of any assets outside the ordinary
course of business or any assets that are material, individually or in the
aggregate, to the Company and its Subsidiaries, taken as a whole, or enter
into any material commitment or transaction outside the ordinary course of
business;
(g) except as may be required by law and except as set forth on the
Company Disclosure Letter, take any action to terminate or amend any of its
employee benefit plans with respect to or for the benefit of Company
Employees;
(h) hire any employee other than to replace an employee; PROVIDED,
HOWEVER, that the annual salary of such replacement employee shall not
exceed $50,000;
(i) pay, discharge or satisfy any claims (including claims of
stockholders), liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), except for the payment, discharge or
satisfaction of (i) liabilities or obligations in the ordinary course of
business consistent with past practice or in accordance with their terms as
in effect on the date hereof, (ii) liabilities reflected or reserved against
in, or contemplated by, the Company's consolidated audited financial
statements (or in the notes thereof) dated September 30, 1996, or waive,
release, grant, or transfer any rights of material value or modify or change
in any material respect any existing license, lease, contract or other
document, other than in the ordinary course of business consistent with past
practice;
(j) change any material accounting principle used by it, except for such
changes as may be required to be implemented following the date of this
Agreement pursuant to generally accepted accounting principles or rules and
regulations of the SEC promulgated following the date hereof;
(k) take any action that would result in any of its representations and
warranties in this Agreement becoming untrue in any material respect;
(l) make any material change in or exception to the Company's policy of
not accepting returns of products shipped to customers;
(m) make any material change in the terms and conditions of the
Company's arrangements with its copackers; or
(n) take, or agree in writing or otherwise to take, any of the foregoing
actions.
Section 6.2 ACQUISITION PROPOSALS.
(a) The Company and its Subsidiaries will not, and will cause their
respective officers, directors, employees and investment bankers, attorneys or
other agents retained by the Company or any of its Subsidiaries not to, (i)
initiate or solicit, directly or indirectly, any inquiries or the making of any
Acquisition Proposal, or (ii) except as permitted below, engage in negotiations
or discussions with, or furnish any information or data to any third party
relating to an Acquisition Proposal (other than the transactions contemplated
hereby). Notwithstanding anything to the contrary contained in this Section 6.2
or in any other provision of this Agreement, the Company and the Board (i) may
participate in discussions or negotiations (including, as a part thereof, making
any counterproposal) with or furnish information to any third party if the Board
determines in good faith, after consultation with its counsel, that the failure
to
23
participate in such discussions or negotiations or to furnish such information
may constitute a breach of the Board's fiduciary duties under applicable law,
and (ii) shall be permitted to (X) take and disclose to the Company's
stockholders a position with respect to the Offer or the Merger or another
tender or exchange offer by a third party, or amend or withdraw such position,
pursuant to Rules 14d-9 and 14e-2 of the Exchange Act or (Y) make disclosure to
the Company's stockholders, in each case if the Board determines in good faith,
after consultation with its counsel, that the failure to take such action may
constitute a breach of the Board's fiduciary duties under, or otherwise violate,
applicable law. The Company shall promptly provide Purchaser with a copy of any
written Acquisition Proposal received and inform Purchaser promptly and on a
reasonable basis of the status and content of any discussions with such a third
party (provided that the Company shall not be obligated so to provide such
Acquisition Proposal or to inform Purchaser if the Board determines in good
faith, after consultation with its counsel, that such action may constitute a
breach of the Board's fiduciary duties under applicable law).
(b) For purposes of this Agreement, "ACQUISITION PROPOSAL" shall mean any
bona fide proposal made by a third party to acquire (i) beneficial ownership (as
defined under Rule 13(d) of the Exchange Act) of a majority equity interest in
the Company pursuant to a merger, consolidation or other business combination,
sale of shares of capital stock, tender offer or exchange offer or similar
transaction involving the Company including, without limitation, any single or
multi-step transaction or series of related transactions which is structured in
good faith to permit such third party to acquire beneficial ownership of a
majority or greater equity interest in the Company or (ii) all or substantially
all of the business or assets of the Company (other than the transactions
contemplated by this Agreement).
Section 6.3 ACCESS TO INFORMATION.
(a) Between the date of this Agreement and the consummation of the Offer,
during normal business hours, the Company will give Purchaser and its authorized
representatives reasonable access to all offices and other facilities and to all
books and records of it and its Subsidiaries, will permit Purchaser to make such
inspections as it may reasonably require and will cause its officers and those
of its Subsidiaries to furnish Purchaser with such financial and operating data
and other information as Purchaser may from time to time reasonably request,
which information shall include, without limitation, a copy of the Company's
Customer Tracking Report (showing orders and shipments by customer), which shall
be delivered to Purchaser substantially concurrently with its distribution to
the Company's senior management. The Company will provide access to management
of the Company regularly to discuss timing of shipments. Purchaser and its
authorized representatives will conduct all such inspections in a manner which
will minimize any disruptions of the business and operations of the Company and
its Subsidiaries.
(b) Purchaser, Sub, and the Company agree that the provisions of the
confidentiality agreement among the Company, Stockholder and Purchaser, dated as
of October 10, 1996 (the "CONFIDENTIALITY AGREEMENT") shall remain binding and
in full force and effect and that the terms of the Confidentiality Agreement are
incorporated herein by reference.
(c) Any furnishing of information pursuant hereto or any investigation shall
not affect Purchaser's and Sub's right to rely on the representations and
warranties made by the Company in this Agreement. Except as otherwise provided
by law, Purchaser, the Company and Sub each agrees to maintain all information
received pursuant to the terms of this Agreement and the Confidentiality
Agreement in accordance with the terms and conditions of the Confidentiality
Agreement.
Section 6.4 BEST EFFORTS. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use its best efforts to take, or
cause to be taken, all action, and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement.
Section 6.5 CONSENTS. Each of the Company, Purchaser and Sub shall
cooperate, and use their respective best efforts, in as timely a manner as is
reasonably practicable, to make all filings and obtain all
24
licenses, permits, consents, approvals, authorizations, qualifications and
orders of governmental authorities and other third parties necessary to
consummate the transactions contemplated by this Agreement. Each of the parties
hereto will furnish to the other party such necessary information and reasonable
assistance as such other persons may reasonably request in connection with the
foregoing and will provide the other party with copies of all filings made by
such party with any Governmental Entity or any other information supplied by
such party to a Governmental Entity in connection with this Agreement and the
transactions contemplated hereby.
Section 6.6 HSR FILINGS.
(a) In addition to and without limiting the agreements contained in Section
6.5 hereof, Purchaser, Sub and the Company will (i) take promptly all actions
necessary to make the filings required of Purchaser, Sub or any of their
affiliates under the HSR Act, (ii) comply at the earliest practicable date with
any formal or informal inquiry including, but not limited to, any request for
additional information or documentary material received by Purchaser, Sub or any
of their affiliates from the FTC or DOJ pursuant to the HSR Act and (iii)
cooperate with the Company in connection with any filing of the Company under
the HSR Act and in connection with responding to or resolving any investigation
or other inquiry concerning the transactions contemplated by this Agreement
commenced by either the FTC or DOJ or state attorneys general.
(b) In furtherance and not in limitation of the covenants contained in
Sections 6.5 and Section 6.6(a) hereof, Purchaser, Sub and the Company shall
each use their best efforts to resolve such objections, if any, as may be
asserted with respect to the Offer, the Merger or any other transactions
contemplated by this Agreement under any Antitrust Law whether such objection is
raised by a private party or governmental or regulatory authority. If any
administrative, judicial or legislative action or proceeding is instituted (or
threatened to be instituted) challenging the Offer, the Merger or any other
transactions contemplated by this Agreement as violative of any Antitrust Law,
each of the parties hereto agrees to cooperate and use its best efforts
vigorously to contest and resist any such action or proceeding, and to have
vacated, lifted, reversed or overturned any decree, judgment, injunction or
other order (whether temporary, preliminary or permanent) (any such decree,
judgment, injunction or other order is hereafter referred to as an "ORDER") that
is in effect and that restricts, prevents or prohibits consummation of the
Offer, the Merger or any other transactions contemplated by this Agreement,
including, without limitation, by vigorously pursuing all available avenues of
administrative and judicial appeal and all available legislative actions. Each
of Purchaser and Sub also agrees to use its best efforts to take such action,
including, without limitation, agreeing to hold separate or to divest any of the
businesses, product lines, or assets of Purchaser or Sub or any of their
affiliates or, following the consummation of the Offer or the Effective Time, of
the Company or any of its Subsidiaries, as may be required (a) by the applicable
governmental or regulatory authority (including without limitation the FTC, DOJ
or any state attorney general) in order to resolve such objections as such
governmental or regulatory authority may have to such transactions under such
Antitrust Law, or (b) by any domestic or foreign court or other tribunal, in any
action or proceeding brought by a private party or governmental or regulatory
authority challenging such transactions as violative of any Antitrust Law, in
order to avoid the entry of, or to effect the dissolution, vacating, lifting or
reversal of, any Order that has the effect of restricting, preventing or
prohibiting the consummation of any such transactions. The entry by a court or
other tribunal, in any action or proceeding brought by a private party or
governmental or regulatory authority challenging the transactions contemplated
hereby as violative of any Antitrust Law, of an Order permitting such
transactions, but requiring that any of the businesses, product lines or assets
of any of Purchaser, Sub or any of their affiliates or, following the
consummation of the Offer or the Effective Time, of the Company or any of its
Subsidiaries be divested or held separate by Purchaser and Sub, or that would
otherwise limit Purchaser's or Sub's freedom of action with respect to, or their
ability to retain, the Company, any of its Subsidiaries or any businesses,
product lines or assets thereof or any of Purchaser's or Sub's or their
respective affiliates' other businesses, product lines or assets, shall not be
deemed a failure to satisfy any of the conditions specified in Article VII
hereof.
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Notwithstanding the foregoing, the Company shall not be required to divest or
hold separate or otherwise take or commit to take any action that, prior to the
Effective Time, limits its freedom of action with respect to, or its ability to
retain, its Subsidiaries or any of their respective businesses, product lines or
assets.
(c) Each of the Company, Purchaser and Sub shall promptly inform the other
party of any material communication received by such party from the FTC, DOJ or
any other governmental or regulatory authority regarding any of the transactions
contemplated hereby. Purchaser and Sub will advise the Company promptly in
respect of any understandings, undertakings or agreements (oral or written)
Purchaser or Sub proposes to make or enter into with the FTC, DOJ or any other
governmental or regulatory authority in connection with the transactions
contemplated hereby.
Section 6.7 PUBLIC ANNOUNCEMENTS. Each of Purchaser, Sub and the Company
agrees that it will not issue any press release or otherwise make any public
statement with respect to this Agreement or the transactions contemplated hereby
without the prior consent of the other party, which consent shall not be
unreasonably withheld or delayed; PROVIDED, HOWEVER, that such disclosure can be
made without obtaining such prior consent if (i) the disclosure is required by
law or by obligations imposed pursuant to any listing agreement with the Nasdaq
National Market and (ii) the party making such disclosure has first used its
best efforts to consult with the other party about the form and substance of
such disclosure.
Section 6.8 EMPLOYEE AGREEMENTS. Purchaser agrees, and agrees to cause the
Surviving Corporation, to honor and be bound by the terms of the agreements with
officers of the Company set forth in Section 6.8 of the Company Disclosure
Letter.
Section 6.9 EMPLOYEE BENEFITS.
(a) As of the Effective Time, Company employees will be terminated from
future participation in Stockholder's Employee Benefit Plans (as defined in
subsection (e) below). The benefits to be paid to Company employees under each
Employee Benefit Plan sponsored or maintained by the Stockholder shall not be
increased by any service to the Company following the Effective Time. Purchaser
and Sub assume no responsibility for any benefits, liabilities or contributions
to, or costs of administration of, Stockholder's Employee Benefit Plans (which
excludes the Armor All PSIP and any other plans sponsored or maintained solely
by the Company) except for the Contribution Obligation (as defined in the
Stockholder Agreement). Except as expressly provided herein, Purchaser and Sub
agree to provide Company employees employee benefit and compensation plans,
policies and arrangements (other than severance plans) at a level no less
favorable than provided to Purchaser employees of comparable status; PROVIDED,
HOWEVER, that for a period of one year following the Effective Time, Company
employees shall also be provided a severance benefit no less favorable than
provided by the Company as of the date hereof; PROVIDED HOWEVER, that the
foregoing shall not prohibit the Surviving Corporation from amending such
severance benefit plans to clarify any ambiguities therein.
(b) Purchaser agrees to permit Company employees to participate immediately
as of the Effective Date in its medical, dental, disability and life insurance
plans without imposition of preexisting condition exclusions or waiting periods
prior to participation and with full credit for deductibles and copayments paid
in respect of the current plan year. Purchaser agrees to allow participation in
its retiree medical plan to Company employees on a basis no less favorable than
provided to Purchaser employees of comparable status and to grant eligibility
and vesting credit in such retiree medical plans for service with the Company or
the Stockholder.
(c) Purchaser agrees to provide Company employees with service credit for
all purposes, including without limitation, eligibility to participate, and
vesting (other than Purchaser's severance plan, for which such Company employees
are not eligible, and Supplemental Executive Retirement Plan) under each of
Purchaser's Employee Benefit Plans for service with the Company or Stockholder.
(d) The Company shall, prior to December 2, 1996, amend each of the
Company's Incentive Plan for Business Managers, the 1989 Short Term Incentive
Plan, the Employee Incentive Plan and the Sales
26
Incentive Plan as follows: The Company's Incentive Plan for Business Managers
shall, immediately following the date hereof, be terminated forthwith. The
Employee Incentive Plan shall, immediately following the Effective Time, be
terminated and all participants shall receive a cash payment equal to their
target bonus as though the budgeted target had been achieved. Each of the
Company's 1989 Short Term Incentive Plan, International Incentive Plan, and the
Company's Sales Incentive Plan, shall, on April 1, 1997, be terminated and the
aggregate amount of individual bonus targets payable to participants in those
Incentive Plans shall be determined as soon as practicable after the Effective
Time as though the budgeted target for Fiscal Year 1997 had been achieved;
individual cash payments shall be modified to reflect individual performance;
PROVIDED, HOWEVER, that such participant either (i) has remained employed with
the Company through March 31, 1997 or (ii) was terminated by the Company on or
prior to such date but after December 31, 1996, other than for cause; PROVIDED
FURTHER, that the participants in the Company's 1989 Short Term Incentive Plan
previously identified in writing to Purchaser shall receive such cash payment
immediately following the Effective Time. Effective April 1, 1997, Company
employees will become eligible to participate in Purchaser's incentive plans at
a level comparable to that of other Purchaser's employees immediately prior to
the date hereof. As of the Effective Time, Company employees will participate in
all of Purchaser's Employee Benefit Plans, including without limitation,
vacation, medical and survivor plans on a basis no less favorable than provided
to Purchaser employees of comparable status, but excluding executive retirement
and severance plans.
(e) For purposes of this Section 6.9 "Employee Benefit Plans" shall mean
employee benefit plans, incentive compensation, severance, health and welfare
plans or policies, whether or not subject to regulation under ERISA.
Section 6.10 INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE.
(a) In the event of any threatened or actual claim, action, suit, proceeding
or investigation, whether civil, criminal or administrative, including, without
limitation, any such claim, action, suit, proceeding or investigation by or in
the right of the Company or any of its Subsidiaries, in which any of the present
officers or directors (the "INDEMNIFIED PARTIES") of the Company or any of its
Subsidiaries is, or is threatened to be, made a party by reason of the fact that
he or she is or was a director, officer, employee or agent of the Company or any
of its Subsidiaries, or is or was serving at the request of the Company or any
of its Subsidiaries as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, whether
before or after the Effective Time, the parties hereto agree to cooperate and
use their best efforts to defend against and respond thereto. It is understood
and agreed that the Company shall indemnify and hold harmless, and after the
Effective Time the Surviving Corporation and Purchaser, jointly and severally,
shall indemnify and hold harmless, as and to the full extent permitted by
applicable law, each such Indemnified Party against any losses, claims, damages,
liabilities, costs, expenses (including reasonable attorneys' fees and
expenses), judgments, fines and amounts paid in settlement in connection with
any such claim, action, suit, proceeding or investigation, and in the event of
any such claim, action, suit, proceeding or investigation (whether arising
before or after the Effective Time), (i) the Indemnified Parties may retain
counsel satisfactory to them, and the Company, or the Surviving Corporation and
Purchaser after the Effective Time, shall pay all reasonable fees and expenses
of such counsel for the Indemnified Parties promptly as statements therefor are
received and (ii) the Company and the Surviving Corporation and Purchaser will
use their respective reasonable efforts to assist in the vigorous defense of any
such matter; PROVIDED, that neither the Company nor the Surviving Corporation
nor Purchaser shall be liable for any settlement effected without its prior
written consent (which consent shall not be unreasonably withheld); and PROVIDED
FURTHER that the Surviving Corporation and Purchaser shall have no obligation
hereunder to any Indemnified Party when and if a court of competent jurisdiction
shall ultimately determine, and such determination shall have become final and
non-appealable, that indemnification of such Indemnified Party in the manner
contemplated hereby is prohibited by applicable law. Any Indemnified Party
wishing to claim indemnification under this Section 6.11, upon learning of any
such claim, action, suit, proceeding or investigation, shall notify the
27
Company and, after the Effective Time, the Surviving Corporation and Purchaser,
thereof (but the failure to so notify an indemnifying party shall not relieve it
from any liability which it may have hereunder, except to the extent such
failure prejudices such party). The Indemnified Parties as a group may retain
only one law firm to represent them with respect to each such matter unless
there is, under applicable standards of professional conduct, a conflict on any
significant issue between the positions of any two or more Indemnified Parties.
(b) Until the Effective Time the Company shall keep in effect Article Tenth
of its Certificate of Incorporation and Article IX of its By-Laws, and,
thereafter, Purchaser shall cause the Surviving Corporation to keep in effect in
its By-Laws a provision for a period of not less than six years from the
Effective Time (or, in the case of matters occurring prior to the Effective Time
which have not been resolved prior to the sixth anniversary of the Effective
Time, until such matters are finally resolved) which provides for
indemnification of the Indemnified Parties to the full extent permitted by the
DGCL.
(c) Purchaser shall cause to be maintained in effect for not less than six
years from the Effective Time the current policies of the directors' and
officers' liability insurance maintained by the Company, if any, (provided that
Purchaser may substitute therefor policies of at least the same coverage
containing terms and conditions which are no less advantageous) with respect to
matters occurring prior to the Effective Time; PROVIDED, HOWEVER, that if the
aggregate annual premiums for such insurance at any time during such period
shall exceed 200% of the per annum rate of premium currently paid by the Company
and its Subsidiaries for such insurance on the date of this Agreement, if any,
then Purchaser shall cause the Company (or the Surviving Corporation if after
the Effective Time) to, and the Company (or the Surviving Corporation if after
the Effective Time) shall, provide the maximum coverage that shall then be
available at an annual premium equal to 200% of such rate, and Purchaser, in
addition to the indemnification provided above in this Section 6.11, shall
indemnify the Indemnified Parties for the balance of such insurance coverage on
the same terms and conditions as though Purchaser were the insurer under those
policies.
Section 6.11 CERTAIN ARRANGEMENTS. Effective as the Effective Time, the
Company shall cause the termination of that certain Services Agreement, dated as
of July 1, 1986 between the Company and Stockholder, as amended through April 1,
1996 (the "SERVICES AGREEMENT"), and all monies held by Stockholder pursuant to
the cash management program shall be remitted to the Company upon such
termination; PROVIDED, HOWEVER, that nothing in this provision shall impact or
cause the termination of that certain Tax Allocation Agreement, dated as of July
1, 1986 between the Company and Stockholder.
Section 6.12 MERGER WITHOUT MEETING OF STOCKHOLDERS. Notwithstanding the
foregoing, in the event that Purchaser or Sub shall acquire at least 90 percent
of the outstanding Shares, the parties hereto agree, at the request of
Purchaser, to take all appropriate and necessary action to cause the Merger to
become effective, as soon as practicable after the expiration or termination of
the Offer and the completion of all activities necessary to finance the
consummation of the Merger and the transactions contemplated hereby, without a
meeting of stockholders of the Company, in accordance with Section 253 of the
DGCL.
Section 6.13 INCREMENTAL VOLUME PLAN. Promptly following the date hereof,
the Company shall (i) amend its Third Quarter Incremental Volume Plan referred
to in Section 4.6 of the Company Disclosure Letter to extend the measurement
period for determining whether the incremental sales volume targets of such Plan
have been satisfied to include the fourth quarter of fiscal year 1997, and (ii)
take all steps reasonably necessary to communicate to customers eligible to
participate in such plan that the Company will honor its Third Quarter
Incremental Volume Plan with respect to shipments made in the fourth quarter of
fiscal year 1997 and to Company sales personnel responsible for such customers.
28
ARTICLE VII
CONDITIONS
Section 7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligation of each party to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of each of the
following conditions:
(a) If required by the DGCL, this Agreement and the Merger shall have been
approved and adopted by the requisite vote of the stockholders of the Company in
accordance with applicable provisions of the Company's Certificate of
Incorporation and the DGCL;
(b) No statute, rule, regulation, order, decree or injunction shall have
been enacted, entered, promulgated or enforced by any Governmental Entity of
competent jurisdiction which prohibits the consummation of the Merger or makes
the Merger illegal;
(c) The Offer shall not have been terminated in accordance with its terms
prior to the purchase of any Shares; and
(d) Any applicable waiting period applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated.
Section 7.2 CONDITIONS TO THE OBLIGATION OF THE COMPANY TO EFFECT THE
MERGER. The obligation of the Company to effect the Merger is further subject
to the satisfaction or waiver at or prior to the Effective Time of the following
additional conditions:
(a) The representations and warranties of Purchaser and Sub contained in
this Agreement shall be true and correct in all material respects at and as of
the Effective Time as if made at and as of such time unless limited by their
terms to a prior date;
(b) Each of Purchaser and Sub shall have performed in all material respects
its obligations under this Agreement required to be performed by it at or prior
to the Effective Time pursuant to the terms hereof; and
(c) The Company shall have received a certificate of the President, an
Executive Vice President, a Senior Vice President or the Chief Financial Officer
of Purchaser as to the satisfaction of the conditions set forth in Section
7.2(a) and (b).
Section 7.3 CONDITIONS TO OBLIGATIONS OF PURCHASER AND SUB TO EFFECT THE
MERGER. The obligations of Purchaser and Sub to effect the Merger are further
subject to the satisfaction or waiver at or prior to the Effective Time of the
following additional conditions:
(a) The representations and warranties of the Company contained in this
Agreement shall be true and correct in all material respects at and as of the
Effective Time as if made at and as of such time unless limited by their terms
to a prior date;
(b) The Company shall have performed in all material respects each of its
obligations under this Agreement required to be performed by it at or prior to
the Effective Time pursuant to the terms hereof; and
(c) Purchaser shall have received a certificate of the President, an
Executive Vice President, a Senior Vice President or the Chief Financial Officer
of the Company as to the satisfaction of the conditions set forth in Section
7.3(a) and (b).
Section 7.4 EXCEPTION. The conditions set forth in Section 7.3 hereof
shall cease to be conditions to the obligations of the parties if Sub shall have
accepted for payment and paid for Shares validly tendered pursuant to the Offer;
PROVIDED that the terms of this exception will be deemed satisfied if Sub fails
to accept for payment any Shares pursuant to the Offer in violation of the terms
thereof.
29
ARTICLE VIII
TERMINATION
Section 8.1 TERMINATION. Notwithstanding anything herein to the contrary,
this Agreement may be terminated and the Merger may be abandoned at any time
prior to the Effective Time, whether before or after stockholder approval
thereof:
(a) By mutual written consent of Purchaser, the Sub and the Company;
(b) By Purchaser and Sub, on the one hand, or the Company, on the other
hand, if the Effective Time shall not have occurred on or before January 31,
1997 from the date hereof;
(c) By either Purchaser and Sub on the one hand, or the Company, on the
other hand, if the Offer shall expire or have been terminated in accordance with
its terms without any Shares being purchased thereunder but only, in the case of
termination by Purchaser and Sub, if the Sub shall not have been required by the
terms of the Offer or this Agreement to purchase any Shares pursuant to the
Offer;
(d) By Purchaser and Sub, on the one hand, or the Company, on the other
hand, if any court of competent jurisdiction in the United States or other
United States governmental body shall have issued an order, decree or ruling or
taken any other action permanently restraining, enjoining or otherwise
prohibiting the Merger and such order, decree, ruling or other action shall have
become final and nonappealable;
(e) By Purchaser or Sub, on the one hand, or the Company, on the other hand,
if the other party shall have failed to comply in any material respect with any
of the material obligations contained in this Agreement to be complied with or
performed by such party at or prior to such date of termination, and such
failure continues for 20 business days after the actual receipt by such party of
a written notice from the other party setting forth in detail the nature of such
failure;
(f) By Purchaser, if any required approval of the stockholders of the
Company shall not have been obtained by reason of the failure to obtain the
required vote upon a vote held at a duly held meeting of stockholders or at any
adjournment thereof;
(g) By Purchaser, if the Company shall have (i) withdrawn its approval or
recommendation of this Agreement or the Merger, (ii) recommended any Acquisition
Proposal from a person other than Purchaser; or
(h) By the Company if, prior to the purchase of Shares pursuant to the
Offer, either (i) a third party shall have made an Acquisition Proposal that the
Board determines in good faith, after consultation with its financial advisor,
is more favorable to the Company and the holders of Shares than the transactions
contemplated by this Agreement or (ii) other than in response to an Acquisition
Proposal, the Board determines in good faith, after consultation with its
counsel, that the failure so to terminate this Agreement may constitute a breach
of the Board's fiduciary duties under applicable law.
Notwithstanding anything to the contrary contained in this Section 8.1, the
Company shall not be permitted to terminate, or consent to the termination of,
this Agreement without the approval of a majority of the Continuing Directors.
Section 8.2 EFFECT OF TERMINATION. In the event of the termination of this
Agreement as provided in Section 8.1, written notice thereof shall forthwith be
given to the other party or parties specifying the provision hereof pursuant to
which such termination is made, and this Agreement shall forthwith become null
and void, without liability or obligation on the part of Purchaser, Sub or the
Company except as set forth in Sections 6.3(b), 9.1 and 9.13 hereof. Nothing
contained in this Section 8.2 shall relieve any party from liability for any
willful breach of this Agreement.
30
Section 8.3 TERMINATION FEE. If this Agreement is terminated (i) by either
party pursuant to Section 8.1(f), (ii) by Purchaser or Sub pursuant to Section
8.1(e) or (g), or (iii) by the Company pursuant to Section 8.1(h), and, in each
such case, if the Company is not then entitled to terminate this Agreement by
reason of Section 8.1(e), then, in addition to any other rights or remedies that
may be available to Purchaser, the Company shall pay Purchaser promptly and in
no event later than two business days after receipt of notice of termination
pursuant to the relevant provision of Section 8.1 (by wire transfer of
immediately available funds to an account designated by Purchaser) a fee of
$11.0 million.
ARTICLE IX
MISCELLANEOUS
Section 9.1 FEES AND EXPENSES. Except as contemplated by this Agreement,
all costs and expenses incurred in connection with this Agreement and the
consummation of the transactions contemplated hereby shall be paid by the party
incurring such expenses.
Section 9.2 AMENDMENT; EXTENSION AND WAIVER. Subject to applicable law,
this Agreement may be amended, modified and supplemented in any and all
respects, whether before or after any vote of the stockholders of the Company
contemplated hereby, by written agreement of the parties hereto, pursuant to
action taken by their respective Boards of Directors (which, in the case of the
Company, shall include the affirmative vote of a majority of the Continuing
Directors), at any time prior to the Closing Date with respect to any of the
terms contained herein; PROVIDED, HOWEVER, that after the approval of this
Agreement by the stockholders of the Company, no such amendment, modification or
supplement shall reduce or change the consideration to be received by the
Company's stockholders in the Merger.
Section 9.3 SURVIVAL. (a) The respective representations, warranties,
covenants and agreements of Purchaser, Sub and the Company contained herein or
in any certificates or other documents delivered prior to or as of the Effective
Time shall not survive beyond the Effective Time, (b) notwithstanding this
Section 9.3 the covenants and agreements of the parties hereto to be performed
following the Effective Time (including by the Surviving Corporation after the
Merger) shall survive the Effective Time without limitation which by their terms
contemplate performance after the Effective Time, including, without limitation,
the covenants and agreements set forth in Sections 6.3(b), 6.8, 6.9, 6.10, 9.1
and 9.13 hereof.
Section 9.4 NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed given upon (a) transmitter's confirmation of a
receipt of a facsimile transmission, (b) confirmed delivery by a standard
overnight carrier or when delivered by hand or (c) the expiration of five
business days after the day when mailed in the United States by certified or
registered mail, postage prepaid, addressed at the following addresses (or at
such other address for a party as shall be specified by like notice)
(a) if to the Company, to:
Armor All Products Corporation
▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇
31
with a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇
& ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
and
(b) if to Purchaser or Sub, to:
The Clorox Company
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
with a copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Section 9.5 INTERPRETATION. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. Whenever the words "include", " includes" or "including"
are used in this Agreement they shall be deemed to be followed by the words
"without limitation". The phrase "made available" when used in this Agreement
shall mean that the information referred to has been made available if requested
by the party to whom such information is to be made available.
Section 9.6 HEADINGS; SCHEDULES. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Any matter disclosed pursuant to the Company
Disclosure Letter shall be deemed to be disclosed for all purposes under this
Agreement but such disclosure shall not be deemed to be an admission or
representation as to the materiality of the item so disclosed.
Section 9.7 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
be considered one and the same agreement.
Section 9.8 ENTIRE AGREEMENT. This Agreement, together with the
Confidentiality Agreement and the Stockholder's Agreement, constitutes the
entire agreement, and supersedes all other prior negotiations, commitments,
agreements and understandings (written and oral), among the parties with respect
to the subject matter hereof.
Section 9.9 SEVERABILITY. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void, unenforceable or against its regulatory policy,
the remainder of the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
32
Section 9.10 GOVERNING LAW. This Agreement shall be governed and construed
in accordance with the laws of the State of Delaware without giving effect to
the principles of conflicts of law thereof.
Section 9.11 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by, the parties
and their respective successors and assigns, and except to the extent necessary
to enforce the provisions of Sections 3.12, 6.8, 6.9 and 6.11, the provisions of
this Agreement are not intended to confer upon any person other than the parties
hereto any rights or remedies hereunder.
Section 9.12 SPECIFIC PERFORMANCE; SUBMISSION TO JURISDICTION. Each of the
parties hereto acknowledges and agrees that in the event of any breach of this
Agreement, each non-breaching party would be irreparably and immediately harmed
and could not be made whole by monetary damages. It is accordingly agreed that
the parties hereto (a) will waive, in any action for specific performance, the
defense of adequacy of a remedy at law and (b) shall be entitled, in addition to
any other remedy to which they may be entitled at law or in equity, to compel
specific performance of this Agreement in any action instituted in any state or
federal court sitting in Orange County, California. The parties hereto consent
to personal jurisdiction in any such action brought in any state or federal
court sitting in Orange County, California and to service of process upon it in
the manner set forth in Section 9.4 hereof.
Section 9.13 BROKERAGE FEES AND COMMISSIONS. Except as previously
disclosed in writing, the Company hereby represents and warrants to Purchaser
with respect to the Company, and Purchaser hereby represents and warrants to the
Company with respect to Purchaser and Sub, that no person or entity is entitled
to receive from the Company or Purchaser and Sub, respectively, any investment
banking, brokerage or finder's fee or fees for financial consulting or advisory
services in connection with this Agreement or any of the transactions
contemplated hereby.
IN WITNESS WHEREOF, Purchaser, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized as
of the date first written above.
ARMOR ALL PRODUCTS CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. EVANS______________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President and Chief
Executive Officer
THE CLOROX COMPANY
By: /s/ ▇▇▇▇▇▇ ▇. CUTTER______________
Name: ▇▇▇▇▇▇ ▇. Cutter
Title: Senior Vice
President--General Counsel
and Secretary
SHIELD ACQUISITION CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. CUTTER______________
Name: ▇▇▇▇▇▇ ▇. Cutter
Title: Vice President and
Secretary
33
ANNEX A
CONDITIONS TO THE TENDER OFFER
Notwithstanding any other provision of the Offer, Sub shall not be required
to purchase any Shares tendered, and may terminate or amend the Offer, if on or
after December 2, 1996, any of the following events shall occur:
(a) the Company shall have breached in any material respect any of its
representations, warranties, covenants or agreements contained in the Merger
Agreement; or
(b) there shall be any statute, rule, regulation, decree, order or
injunction promulgated, enacted, entered or enforced by any United States
federal or state government, governmental authority or court which would (i)
make the acquisition by the Sub of a material portion of the Shares illegal, or
(ii) otherwise prohibit or restrict consummation of the Offer or the Merger;
(c) the Merger Agreement shall have been terminated in accordance with its
terms; or
(d) the Company or its Subsidiaries shall have suffered a change that would
result in a Company Material Adverse Effect.
The foregoing conditions are for the sole benefit of Sub and may be asserted
by Sub regardless of the circumstances giving rise to such conditions, or may be
waived by Sub in whole or in part at any time and from time to time in its
reasonable discretion.
A-1