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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
Among
Tecnol Medical Products, Inc.,
Kimberly-Clark Corporation
and
Vanguard Acquisition Corp.
Dated as of September 4, 1997
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TABLE OF CONTENTS
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ARTICLE I
The Merger; Closing; Effective Time
1.1. The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2. Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3. Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
Certificate of Incorporation and By-Laws
of the Surviving Corporation
2.1. The Certificate of Incorporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2. The By-Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE III
Officers and Directors
of the Surviving Corporation
3.1. Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.2. Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE IV
Effect of the Merger on Capital Stock;
Exchange of Certificates
4.1. Effect on Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(a) Merger Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(b) Cancellation of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(c) Merger Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.2. Exchange of Certificates for Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(a) Exchange Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(b) Exchange Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(c) Distributions with Respect to Unexchanged Shares; Voting . . . . . . . . . . . . . . . . . . . . . . . 6
(d) Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(e) Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(f) Termination of Exchange Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(g) Lost, Stolen or Destroyed Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.3. Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.4. Adjustments of Conversion Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
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ARTICLE V
Representations and Warranties
5.1. Representations and Warranties of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(a) Organization, Good Standing and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(b) Capital Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(c) Corporate Authority; Approval and Fairness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(d) Governmental Filings; No Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(e) Company Reports; Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(f) Absence of Certain Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(g) Litigation and Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(h) Employee Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(i) Compliance with Laws; Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(j) Takeover Statutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(k) Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(l) Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(m) Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(n) Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(o) Brokers and Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.2. Representations and Warranties of Parent and Merger Sub . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(a) Capitalization of Merger Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(b) Organization, Good Standing and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(c) Capital Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(d) Corporate Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(e) Governmental Filings; No Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(f) Parent Reports; Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(g) Absence of Certain Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(h) Litigation and Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(i) Compliance with Laws; Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(j) Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(k) Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(l) Ownership of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(m) Brokers and Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE VI
Covenants
6.2. Acquisition Proposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.3. Information Supplied . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.4. Stockholders Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.5. Filings; Other Actions; Notification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.6. Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.7. Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.8. Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.9. Stock Exchange Listing and De-listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.10. Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
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6.11. Options and Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(a) Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.12. Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.13. Indemnification; Directors' and Officers' Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.14. Takeover Statute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.15. Parent Vote . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.16. Notification of Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.17. Real Estate Transfer and Gains Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE VII
Conditions
7.1. Conditions to Each Party's Obligation to Effect the Merger . . . . . . . . . . . . . . . . . . . . . . . . . 32
(a) Stockholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(b) NYSE Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(c) Regulatory Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(d) Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(e) S-4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(f) Blue Sky Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.2. Conditions to Obligations of Parent and Merger Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(a) Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(b) Performance of Obligations of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(c) Consents Under Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(d) Tax Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.3. Conditions to Obligation of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(a) Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(b) Performance of Obligations of Parent and Merger Sub . . . . . . . . . . . . . . . . . . . . . . . . 34
(c) Consents Under Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(d) Tax Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE VIII
Termination
8.1. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.2. Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE IX
Miscellaneous and General
9.1. Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.2. Modification or Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.3. Waiver of Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.4. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.5. Governing Law and Venue; Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.6. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.7. Entire Agreement; No Other Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
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9.8. No Third Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
9.9. Obligations of Parent and of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
9.10. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
9.11. Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
9.12. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (hereinafter called this
"Agreement"), dated as of September 4, 1997, among Tecnol Medical Products,
Inc., a Delaware corporation (the "Company"), Kimberly-Clark Corporation, a
Delaware corporation ("Parent"), and Vanguard Acquisition Corp., a Delaware
corporation and a wholly-owned subsidiary of Parent ("Merger Sub," the Company
and Merger Sub sometimes being hereinafter collectively referred to as the
"Constituent Corporations").
RECITALS
WHEREAS, the respective Boards of Directors of each of Parent,
Merger Sub and the Company have approved and declared advisable the merger of
Merger Sub with and into the Company (the "Merger") and approved the Merger
upon the terms and subject to the conditions set forth in this Agreement ,
whereby each issued and outstanding share of the Common Stock, par value $.001
per share, of the Company (a "Share" or, collectively, the "Shares"), not owned
directly or indirectly by Parent or the Company, will be converted into shares
of Common Stock, $1.25 par value, of Parent ("Parent Common Stock");
WHEREAS, the respective Boards of Directors of Parent and the
Company have determined that the Merger is in furtherance of and consistent
with their respective long-term business strategies and is fair to and in the
best interests of their respective stockholders;
WHEREAS, it is intended that, for federal income tax purposes,
the Merger shall qualify as a reorganization under the provisions of Section
368(a) of the Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder (the "Code");
WHEREAS, for financial accounting purposes, it is intended
that the Merger will be accounted for as a "purchase;"
WHEREAS, concurrently with the execution and delivery of this
Agreement and as a condition to Parent's willingness to enter into this
Agreement, certain stockholders of the Company (the "Principal Stockholders")
have entered into an agreement with Parent, in the form attached hereto as
Exhibit A (the "Company Stockholder Agreement"), pursuant to which the
Principal Stockholders have agreed, among other things, to vote their Shares in
favor of the Merger; and
WHEREAS, as a condition to Parent's willingness to enter into
this Agreement, concurrently herewith: (i) the Company and Parent are entering
into a Consulting Agreement, Noncompetition Agreement, and Severance Agreement
And Release with each of Vance M. Hubbard, Valerie A. Hubbard, and Kirk
Brunson, each dated as of the date hereof; (ii) the Company and Parent are
entering into a Noncompetition Agreement and a Severance Agreement And Release
with James Weaver, dated as of the date hereof; (iii) the Company and Parent
are entering into a Severance Agreement and Release with Jeffrey A. Nick,
dated as of the date hereof; and (iv) the Company is entering into a Rescission
Agreement with Vance M. Hubbard dated
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as of the date hereof (collectively, such Consulting Agreements, Noncompetition
Agreements, Severance Agreements and Releases and Rescission Agreement are
referred to herein as the "Executive Agreements");
WHEREAS, as a condition to Parent's willingness to enter into
this Agreement, the Company and Parent are simultaneously entering into the
option agreement attached hereto as Exhibit B (the "Company Option Agreement")
pursuant to which the Company is granting an option to Parent to purchase
Shares on the terms and subject to the conditions set forth therein;
WHEREAS, the Company and Parent are simultaneously herewith
entering into the Severance Matters Agreement attached hereto as Exhibit C
(the "Severance Matters Agreement"); and
WHEREAS, the Company, Parent and Merger Sub desire to make
certain representations, warranties, covenants and agreements in connection
with this Agreement.
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
ARTICLE I
The Merger; Closing; Effective Time
1.1. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement and in accordance with the Delaware
General Corporation Law, as amended (the "DGCL"), at the Effective Time (as
defined in Section 1.3) Merger Sub shall be merged with and into the Company
and the separate corporate existence of Merger Sub shall thereupon cease. The
Company shall be the surviving corporation in the Merger (sometimes hereinafter
referred to as the "Surviving Corporation"), and the separate corporate
existence of the Company with all its rights, privileges, immunities, powers
and franchises shall continue unaffected by the Merger, except as set forth in
Article III. The Merger shall have the effects specified in the DGCL.
1.2. Closing. The closing of the Merger (the "Closing")
shall take place (i) at the offices of Carrington, Coleman, Sloman &
Blumenthal, L.L.P., 200 Crescent Court, Dallas, Texas at 9:00 A.M. on the third
business day after the day on which the last to be fulfilled or waived of the
conditions set forth in Article VII (other than those conditions that by their
nature are to be satisfied at the Closing, but subject to the fulfillment or
waiver of those conditions) shall be satisfied or waived in accordance with
this Agreement or (ii) at such other place and time and/or on such other date
as the Company and Parent may agree in writing (the "Closing Date").
1.3. Effective Time. As soon as practicable following the
Closing, the Company and Parent will cause a Certificate of Merger (the
"Delaware Certificate of Merger") to be executed, acknowledged and filed with
the Secretary of State of Delaware as provided in Section 251 of the DGCL. The
Merger shall become effective at the time when the Delaware Certificate of
Merger has been duly filed with the Secretary of State
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of Delaware or, if otherwise agreed by the Company and Parent, such later date
or time as is established by the Delaware Certificate of Merger (the "Effective
Time").
1.4. Further Assurances. If, at any time after the Effective
Time, the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments or assurances or any other acts or things are
necessary, desirable or proper (i) to vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation its right, title and interest in, to or
under any of the rights, privileges, powers, franchises, properties or assets
of either of the Constituent Corporations or (ii) otherwise to carry out the
purposes of this Agreement, the Surviving Corporation and its proper officers
and directors or their designees shall be authorized to execute and deliver, in
the name and on behalf of either Constituent Corporation, all such deeds, bills
of sale, assignments and assurances and to do, in the name and on behalf of
either Constituent Corporation, all such other acts and things as may be
necessary, desirable or proper to vest, perfect or confirm the Surviving
Corporation's right, title and interest in, to and under any of the rights,
privileges, powers, franchises, properties or assets of such Constituent
Corporation and otherwise to carry out the purposes of this Agreement.
ARTICLE II
Certificate of Incorporation and By-Laws
of the Surviving Corporation
2.1. The Certificate of Incorporation. The certificate of
incorporation of the Company as in effect immediately prior to the Effective
Time shall be the certificate of incorporation of the Surviving Corporation
(the "Charter"), until duly amended as provided therein or by applicable law,
except that (i) Article FIFTH, TENTH and ELEVENTH of the Charter shall be
deleted in their entirety and (ii) Article FOURTH of the Charter shall be
amended to read in its entirety as follows: "The aggregate number of shares
that the Corporation shall have the authority to issue is 1,000 shares of
Common Stock, par value $0.01 per share."
2.2. The By-Laws. The by-laws of the Company in effect
immediately prior to the Effective Time shall be the by-laws of the Surviving
Corporation (the "By-Laws"), until thereafter amended as provided therein or by
applicable law.
ARTICLE III
Officers and Directors
of the Surviving Corporation
3.1. Directors. The directors of Merger Sub immediately prior
to the Effective Time shall, from and after the Effective Time, be the
directors of the Surviving Corporation until their successors have been duly
elected or appointed and qualified or until their earlier death, resignation or
removal in accordance with the Charter and the By-Laws.
3.2. Officers. The officers of the Company immediately prior
to the Effective Time shall, from and after the Effective Time, be the officers
of the Surviving
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Corporation until their successors have been duly elected or appointed and
qualified or until their earlier death, resignation or removal in accordance
with the Charter and the By-Laws.
ARTICLE IV
Effect of the Merger on Capital Stock;
Exchange of Certificates
4.1. Effect on Capital Stock. At the Effective Time, as a
result of the Merger and without any action on the part of the holder of any
capital stock of the Company:
(a) Merger Consideration. Each Share issued and outstanding
immediately prior to the Effective Time (other than Shares owned by Parent,
Merger Sub or any other direct or indirect subsidiary of Parent (collectively,
the "Parent Companies") or Shares that are owned by the Company or any direct
or indirect subsidiary of the Company and in each case not held on behalf of
third parties (collectively, "Excluded Shares")) shall be converted into, and
become exchangeable for 0.42 (the "Conversion Number") of a validly issued,
fully paid and nonassessable share of Parent Common Stock, including the
corresponding percentage of a right (such rights being hereinafter referred to
collectively as the "Parent Rights") to purchase shares of Series A Junior
Participating Preferred Stock of Parent (the "Parent Series A Preferred Stock")
pursuant to the Rights Agreement, dated as of June 21, 1988, as amended and
restated as of June 8, 1995 (as so amended and restated, the "Parent Rights
Agreement") between Parent and The First National Bank of Boston, as Rights
Agent. All references in this Agreement to Parent Common Stock to be received
in accordance with the Merger shall be deemed, from and after the Effective
Time, to include the associated Parent Rights. At the Effective Time, all
Shares shall no longer be outstanding and shall be canceled and retired and
shall cease to exist, and each certificate (a "Certificate") formerly
representing any of such Shares (other than Excluded Shares) shall thereafter
represent only the right to receive the shares of Parent Common Stock into
which such Shares have been converted and the right, if any, to receive
pursuant to Section 4.2(e) cash in lieu of fractional shares into which such
Shares have been converted pursuant to this Section 4.1(a) and any distribution
or dividend pursuant to Section 4.2(c).
(b) Cancellation of Shares. Each Excluded Share 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, cease to be
outstanding, shall be canceled and retired without payment of any consideration
therefor and shall cease to exist.
(c) Merger Sub. At the Effective Time, each share of Common
Stock, par value $0.01 per share, of Merger Sub issued and outstanding
immediately prior to the Effective Time shall be converted into one share of
common stock of the Surviving Corporation.
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4.2. Exchange of Certificates for Shares.
(a) Exchange Agent. As of the Effective Time, Parent shall
deposit, or shall cause to be deposited, with Boston Equiserve L.P. or a
commercial bank having capital of not less than $5 billion selected by Parent
with the Company's prior approval, which shall not be unreasonably withheld
(the "Exchange Agent"), for the benefit of the holders of Shares, certificates
representing the shares of Parent Common Stock, and, after the Effective Time,
if applicable, any cash, dividends or other distributions, with respect to the
Parent Common Stock, to be issued or paid pursuant to the last sentence of
Section 4.1(a) in exchange for Shares outstanding immediately prior to the
Effective Time upon due surrender of the Certificates (or affidavits of loss
and, if reasonably required by Parent, indemnity bonds in lieu thereof)
pursuant to the provisions of this Article IV (such certificates for shares of
Parent Common Stock, together with the amount of any dividends or other
distributions payable with respect thereto, being hereinafter referred to as
the "Exchange Fund").
(b) Exchange Procedures. Promptly after the Effective Time, the
Surviving Corporation shall cause the Exchange Agent to mail to each holder of
record of Shares (other than holders of Excluded Shares) (i) a letter of
transmittal specifying that delivery shall be effected, and risk of loss and
title to the Certificates shall pass, only upon delivery of the Certificates
(or affidavits of loss and, if reasonably required by Parent, indemnity bonds
in lieu thereof) to the Exchange Agent, such letter of transmittal to be in
such form and have such other provisions as Parent and the Company may
reasonably agree, and (ii) instructions for use in effecting the surrender of
the Certificates in exchange for (A) certificates representing shares of Parent
Common Stock and (B) any unpaid dividends and other distributions and cash in
lieu of fractional shares. Upon surrender of a Certificate for cancellation to
the Exchange Agent together with such letter of transmittal, duly executed, the
holder of such Certificate shall be entitled to receive in exchange therefor
(x) a certificate representing that number of whole shares of Parent Common
Stock that such holder is entitled to receive pursuant to this Article IV, (y)
a check in the amount (after giving effect to any required tax withholdings) of
(A) any cash in lieu of fractional shares plus (B) any unpaid non-stock
dividends and any other dividends or other distributions that such holder has
the right to receive pursuant to the provisions of this Article IV, and the
Certificate so surrendered shall forthwith be canceled. No interest will be
paid or accrued on any amount payable upon due surrender of the Certificates.
In the event of a transfer of ownership of Shares that is not registered in the
transfer records of the Company, a certificate representing the proper number
of shares of Parent Common Stock, together with a check for any cash to be paid
upon due surrender of the Certificate and any other dividends or distributions
in respect thereof, may be issued and/or paid to such a transferee if the
Certificate formerly representing such Shares is presented to the Exchange
Agent, accompanied by all documents required to evidence and effect such
transfer and to evidence that any applicable stock transfer taxes have been
paid. If any certificate for shares of Parent Common Stock is to be issued in
a name other than that in which the Certificate surrendered in exchange
therefor is registered, it shall be a condition of such exchange that (i) the
Person (as defined below) requesting such exchange shall pay any transfer or
other taxes required by reason of the issuance of certificates for shares of
Parent Common Stock in a name other than that of the registered holder of the
Certificate surrendered, or shall establish to the satisfaction of Parent or
the Exchange Agent that such tax has been paid or is not applicable, and (ii)
that the Certificate so surrendered shall be properly endorsed and otherwise in
proper form for transfer. Parent or the Exchange Agent shall be entitled to
deduct and withhold from the
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consideration otherwise payable pursuant to this Agreement to any holder of the
Shares such amounts as Parent or the Exchange Agent are required to deduct and
withhold under the Code, or any provision of state, local or foreign tax law,
with respect to the making of such payment. To the extent that amounts are so
withheld by Parent or the Exchange Agent, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the holder of
the Shares in respect of whom such deduction and withholding was made by Parent
or the Exchange Agent.
For the purposes of this Agreement, the term "Person" shall mean
any individual, corporation (including not- for-profit), general or limited
partnership, limited liability company, joint venture, estate, trust,
association, organization, Governmental Entity (as defined in Section 5.1(d))
or other entity of any kind or nature.
(c) Distributions with Respect to Unexchanged Shares; Voting.
(i) All shares of Parent Common Stock to be delivered pursuant to the Merger
shall be deemed issued and outstanding as of the Effective Time and whenever a
dividend or other distribution is declared by Parent in respect of the Parent
Common Stock, the record date for which is at or after the Effective Time, that
declaration shall include dividends or other distributions in respect of all
shares issuable pursuant to this Agreement, provided that no dividends or other
distributions declared or made in respect of the Parent Common Stock with a
record date that is 10 days or more after the Effective Time shall be paid to
the holder of any unsurrendered Certificate with respect to the shares of
Parent Common Stock represented thereby until the holder of such Certificate
shall surrender such Certificate or affidavit of loss and, if reasonably
required by Parent, indemnity bond in lieu thereof in accordance with this
Article IV. Subject to the effect of applicable laws, following surrender of
any such Certificate, there shall be issued and/or paid to the holder of the
certificates representing whole shares of Parent Common Stock delivered in
exchange therefor, without interest, (A) at the time of such surrender, the
dividends or other distributions with a record date at or after the Effective
Time theretofore payable with respect to such whole shares of Parent Common
Stock and not paid and (B) at the appropriate payment date, the dividends or
other distributions payable with respect to such whole shares of Parent Common
Stock with a record date at or after the Effective Time but with a payment date
subsequent to surrender.
(ii) Holders of unsurrendered Certificates shall be entitled to
vote after the Effective Time at any meeting of Parent stockholders the number
of whole shares of Parent Common Stock represented by such Certificates,
regardless of whether such holders have exchanged their Certificates.
(d) Transfers. After the Effective Time, there shall be no
transfers on the stock transfer books of the Company of the Shares that were
outstanding immediately prior to the Effective Time.
(e) Fractional Shares. No certificates or scrip representing
fractional shares of Parent Common Stock shall be issued upon the surrender for
exchange of Certificates pursuant to this Article IV; no dividend or other
distribution by Parent and no stock split, combination or reclassification
shall relate to any such fractional share; and no such fractional share shall
entitle the record or beneficial owner thereof to vote or to any other rights
of a stockholder of Parent. In lieu of any such fractional share, each holder
of Shares who would otherwise have been entitled thereto upon the surrender of
Certificate(s) for exchange pursuant to this Article IV will be paid an amount
in cash
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(without interest) rounded up to the nearest whole cent, determined by
multiplying (i) the per share closing price on the New York Stock Exchange,
Inc. (the "NYSE") of Parent Common Stock (as reported in the NYSE Composite
Transactions) on the date on which the Effective Time shall occur (or, if the
Parent Common Stock shall not trade on the NYSE on such date, the first day of
trading in Parent Common Stock on the NYSE thereafter) by (ii) the fractional
share to which such holder would otherwise be entitled.
(f) Termination of Exchange Fund. Any portion of the Exchange
Fund (including the proceeds of any investments thereof and any Parent Common
Stock) that remains unclaimed by the stockholders of the Company for 180 days
after the Effective Time shall be paid to Parent. Any stockholders of the
Company who have not theretofore complied with this Article IV shall thereafter
look only to Parent for payment of their shares of Parent Common Stock and any
cash, dividends and other distributions in respect thereof payable and/or
issuable pursuant to Section 4.1 and Section 4.2(c) upon due surrender of their
Certificates (or affidavits of loss and, if reasonably required by Parent,
indemnity bonds in lieu thereof), in each case, without any interest thereon.
Notwithstanding the foregoing, none of Parent, the Surviving Corporation, the
Exchange Agent or any other Person shall be liable to any former holder of
Shares for any amount properly delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
(g) Lost, Stolen or Destroyed Certificates. In the event any
Certificate shall have been lost, stolen or destroyed, upon the making and
delivery to the Exchange Agent of an affidavit of that fact by the Person
claiming such Certificate to be lost, stolen or destroyed, a properly completed
letter of transmittal and, if reasonably required by Parent, the posting by
such Person of a bond in customary amount as indemnity against any claim that
may be made against it with respect to such Certificate, the Exchange Agent
will deliver in exchange for such lost, stolen or destroyed Certificate the
shares of Parent Common Stock and any cash payable and any unpaid dividends or
other distributions in respect thereof pursuant to Section 4.2(c) upon due
surrender of, and deliverable in respect of the Shares represented by, such
Certificate pursuant to this Agreement.
4.3. Dissenters' Rights. In accordance with Section 262 of the
DGCL, no appraisal rights shall be available to holders of Shares in connection
with the Merger.
4.4. Adjustments of Conversion Number. In the event that the
Company changes the number of Shares or securities convertible or exchangeable
into or exercisable for Shares, or Parent changes the number of shares of
Parent Common Stock or securities convertible or exchangeable into or
exercisable for shares of Parent Common Stock, issued and outstanding prior to
the Effective Time as a result of a reclassification, stock split (including a
reverse split), dividend or distribution (other than quarterly cash dividends),
recapitalization, merger (other than the Merger), subdivision, issuer tender or
exchange offer for the issuer's own shares (other than repurchases by Parent
between the date hereof and the Effective Time of less than 5% of the
outstanding shares of Parent Common Stock pursuant to Rule 10b-18, promulgated
under the Securities Exchange Act of 1934, as amended), or other similar
transaction with a materially dilutive effect, or if a record date with respect
to any of the foregoing shall occur prior to the Effective Time, the Conversion
Number shall be equitably adjusted.
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ARTICLE V
Representations and Warranties
5.1. Representations and Warranties of the Company. Except as set
forth in the corresponding sections or subsections of the disclosure letter
delivered to Parent by the Company on or prior to entering into this Agreement
(the "Company Disclosure Letter"), the Company hereby represents and warrants
to Parent and Merger Sub that:
(a) Organization, Good Standing and Qualification. Each of the
Company and its Subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of its respective jurisdiction of
organization and has all requisite corporate or similar power and authority to
own and operate its properties and assets and to carry on its business as
presently conducted and is qualified to do business and is in good standing as
a foreign corporation in each jurisdiction where the ownership or operation of
its properties or conduct of its business requires such qualification, except
where the failure to be so qualified or in good standing is not reasonably
likely to have, individually or in the aggregate, a Company Material Adverse
Effect (as defined below). The Company has made available to Parent a complete
and correct copy of the Company's and its Subsidiaries' certificates or
articles of incorporation, as the case may be, and by-laws, each as amended to
date. The Company's and its Subsidiaries' certificates of incorporation and
by-laws so delivered are in full force and effect.
As used in this Agreement, the term (i) "Subsidiary" means, with
respect to the Company, Parent or Merger Sub, as the case may be, any entity,
whether incorporated or unincorporated, of which at least a majority of the
securities or ownership interests having by their terms ordinary voting power
to elect a majority of the Board of Directors or other persons performing
similar functions is directly or indirectly owned or controlled by such party
or by one or more of its respective Subsidiaries or by such party and any one
or more of its respective Subsidiaries and (ii) "Company Material Adverse
Effect" means a material adverse effect on the financial condition, properties
or results of operations of the Company and its Subsidiaries taken as a whole;
provided, however, that any such effect resulting from any change (i) in law,
rule or regulation applicable to all companies and businesses generally, or to
the disposable medical products industry specifically, or (ii) in economic or
business conditions generally, or in the disposable medical products industry
specifically, shall not be considered when determining if a Company Material
Adverse Effect has occurred.
(b) Capital Structure. The authorized capital stock of the
Company consists of 50,000,000 Shares, of which 20,010,762 Shares were
outstanding as of the close of business on August 31, 1997, and 1,000,000
shares of Preferred Stock, par value $.001 per share (the "Preferred Shares"),
none of which shares are outstanding. All of the outstanding Shares have been
duly authorized and are validly issued, fully paid and nonassessable. The
Company has no Shares or Preferred Shares reserved for issuance, except for
Shares reserved for issuance upon exercise of options pursuant to the Company
Option Agreement and that, as of August 31, 1997, there were 2,000,000 Shares
reserved for issuance pursuant to the Company's 1991 Stock Option Plan, as
amended from time to time (the "Stock Plan"), and 30,000 Shares reserved for
issuance to certain directors of the Company pursuant to those certain
Director's Stock Option Agreements by and between the Company and each of Jack
G. Johnson and James Kenney, dated September 21, 1991 and September 6, 1991,
respectively (the "Director Option Agreements"). The
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Company Disclosure Letter contains a correct and complete list as of a recent
date of each outstanding option to purchase Shares under the Stock Plan and the
Director Option Agreements (each a "Company Option"), including the holder,
date of grant, exercise price and number of Shares subject thereto. Each of
the outstanding shares of capital stock or other securities of each of the
Company's Subsidiaries is duly authorized, validly issued, fully paid and
nonassessable and owned by the Company or a direct or indirect wholly-owned
subsidiary of the Company, free and clear of any lien, pledge, security
interest, right of first refusal agreement, limitation on voting rights, claim
or other encumbrance. Except as set forth above, there are no preemptive or
other outstanding rights (other than rights accruing to the Company or its
Subsidiaries), options, warrants, conversion rights, stock appreciation rights,
redemption rights, repurchase rights, agreements, arrangements or commitments
to issue or sell any shares of capital stock or other securities of the Company
or any of its Subsidiaries or any securities or obligations convertible or
exchangeable into or exercisable for, or giving any Person a right to subscribe
for or acquire, any securities of the Company or any of its Subsidiaries, and
no securities or obligations evidencing such rights are authorized, issued or
outstanding. The Company does not have outstanding any bonds, debentures,
notes or other obligations the holders of which have the right to vote (or
convertible into or exercisable for securities having the right to vote) with
the stockholders of the Company on any matter.
(c) Corporate Authority; Approval and Fairness. As of the date
hereof, the Board of Directors of the Company has duly approved this Agreement,
the Company Option Agreement, the Severance Matters Agreement and the Executive
Agreements and has resolved to recommend the adoption of this Agreement by the
Company's stockholders and directed that this Agreement be submitted to the
Company's stockholders for approval. The Company has all corporate power and
authority to enter into this Agreement, the Company Option Agreement, the
Severance Matters Agreement and the Executive Agreements and to consummate the
transactions contemplated hereby and thereby, subject to the adoption of this
Agreement by the holders of at least a majority of the outstanding Shares (the
"Company Requisite Vote"). The execution, delivery and performance of this
Agreement, the Company Option Agreement , the Severance Matters Agreement and
the Executive Agreements by the Company and the consummation by the Company of
the transactions contemplated hereby and thereby have been duly authorized by
all necessary corporate action on the part of the Company, subject to adoption
of this Agreement by the stockholders of the Company. This Agreement, the
Company Option Agreement, the Severance Matters Agreement and the Executive
Agreements have been duly executed and delivered by the Company and (assuming
the valid authorization, execution and delivery of such agreements by each
other party thereto) constitute valid and binding agreements of the Company
enforceable against the Company in accordance with their terms, except that
enforceability may be limited by bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating
to or affecting creditors' rights (the "Bankruptcy Exception") and is subject
to general equity principles (the "Equity Exception").
(d) Governmental Filings; No Violations. (i) Other than the
filings and/or notices (A) pursuant to Section 1.3, (B) under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and the Securities Act of 1933, as amended (the "Securities Act"), (C) to
comply with state securities or "blue-sky" laws, if any, (D) required to be
made with the NASDAQ and (E) any filings pursuant to Section 6.17, no notices,
reports or other filings are required to be made by the Company or any of its
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Subsidiaries with, nor are any consents, registrations, approvals, permits or
authorizations required to be obtained by the Company or any of its
Subsidiaries from, any governmental or regulatory authority, agency,
commission, body or other governmental entity ("Governmental Entity"), in
connection with the execution and delivery of this Agreement or the Company
Option Agreement by the Company and the consummation by the Company of the
Merger and the other transactions contemplated hereby or thereby, except those
that the failure to make or obtain are not, individually or in the aggregate,
reasonably likely to have a Company Material Adverse Effect or prevent,
materially delay or materially impair the ability of the Company to consummate
the transactions contemplated by this Agreement.
(ii) The execution, delivery and performance of this Agreement, the
Company Option Agreement, the Severance Matters Agreement and the Executive
Agreements by the Company do not, and the consummation by the Company of the
Merger and the other transactions contemplated hereby or thereby will not,
constitute or result in (A) a breach or violation of, or a default under, the
certificate of incorporation or by-laws of the Company or the comparable
governing instruments of any of its Subsidiaries, (B) a breach or violation of,
or a default under, the acceleration of any obligations or the creation of a
lien, pledge, security interest or other encumbrance on the assets of the
Company or any of its Subsidiaries (with or without notice, lapse of time or
both) pursuant to, any loan or credit agreement, note, bond, indenture or other
instrument evidencing indebtedness for borrowed money ("Debt Contracts") or any
other agreement, lease, contract, arrangement or other obligation ("Other
Contracts") binding upon the Company or any of its Subsidiaries or any Law (as
defined in Section 5.1(i)) or governmental or non-governmental permit or
license to which the Company or any of its Subsidiaries is subject or any
judgment, order or decree to which the Company or any of its Subsidiaries or
any of its properties is subject or (C) any change in the rights or obligations
of any party under any of the Debt Contracts or Other Contracts, except, in the
case of clause (B) or (C) above, for any breach, violation, default,
acceleration, creation or change that, individually or in the aggregate, is not
reasonably likely to have a Company Material Adverse Effect or prevent,
materially delay or materially impair the ability of the Company to consummate
the transactions contemplated by this Agreement or the Company Option
Agreement.
(iii)(A) There is no event of default, or event that, but for the
giving of notice or lapse of time, or both, would constitute an event of
default under any Debt Contract binding upon the Company or any of its
Subsidiaries, and (B) there is no event of default, or event that, but for the
giving of notice or lapse of time, or both, would constitute an event of
default under any Other Contract binding upon the Company or any of its
Subsidiaries which would, in either case (A) or (B), individually or in the
aggregate, be reasonably likely to have a Company Material Adverse Effect.
(e) Company Reports; Financial Statements. Since November 30,
1995, the Company has filed all reports and other documents that it was
required to file with the Securities and Exchange Commission (the "SEC"). The
Company has delivered to Parent each registration statement, report, proxy
statement or information statement (including exhibits, annexes and any
amendments thereto) filed by it with the SEC (collectively, including any such
reports filed subsequent to the date hereof, the "Company Reports") since
November 30, 1995. As of their respective dates, the Company Reports did not,
and any Company Reports filed with the SEC subsequent to the date hereof will
not, contain any untrue statement of a material fact or omit to state a
material fact required to
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be stated therein or necessary to make the statements made therein, in light of
the circumstances in which they were made, not misleading. Each of the
consolidated balance sheets included in or incorporated by reference into the
Company Reports (including the related notes and schedules) fairly presents, or
will fairly present, in all material respects, the consolidated financial
position of the Company and its Subsidiaries as of its date and each of the
consolidated statements of income, stockholders' equity and of cash flows
included in or incorporated by reference into the Company Reports (including
any related notes and schedules) fairly presents, or will fairly present, in
all material respects, the results of consolidated operations, stockholders'
equity and cash flows, as the case may be, of the Company and its Subsidiaries
for the periods set forth therein (subject, in the case of unaudited
statements, to notes and normal year- end audit adjustments that will not be
material in amount or effect), in each case in accordance with generally
accepted accounting principles ("GAAP") consistently applied during the periods
involved, except as may be noted therein.
(f) Absence of Certain Changes. Except as disclosed in the
Company Reports filed prior to the date hereof, since November 30, 1996 (the
"Audit Date"), the Company and its Subsidiaries have conducted their respective
businesses only in, and have not entered into or engaged in any material
transaction other than in, the ordinary and usual course of such businesses and
there has not been (i) any change in the financial condition, properties,
business or results of operations of the Company and its Subsidiaries or any
development or combination of developments of which the executive officers of
the Company has knowledge that, individually or in the aggregate, has had or is
reasonably likely to have a Company Material Adverse Effect; (ii) any damage,
destruction or other casualty loss with respect to any asset or property owned,
leased or otherwise used by the Company or any of its Subsidiaries, whether or
not covered by insurance except as is not reasonably likely to have,
individually or in the aggregate, a Company Material Adverse Effect; (iii) any
declaration, setting aside or payment of any dividend or other distribution in
respect of the capital stock of the Company, except for dividends or other
distributions on its capital stock publicly announced prior to the date hereof;
or (iv) any material change by the Company in accounting principles, practices
or methods. Since the Audit Date, except as provided for herein or as
disclosed in the Company Reports filed prior to the date hereof, there has not
been any increase in the compensation payable or that could become payable by
the Company or any of its Subsidiaries to officers or key employees or any
amendment of any of the Compensation and Benefit Plans (as defined in Section
5.1(h) other than increases or amendments in the ordinary course.
(g) Litigation and Liabilities. Except as disclosed in the
Company Reports filed prior to the date hereof, there are no (i) civil,
criminal or administrative actions, suits, claims, hearings, investigations or
proceedings pending or, to the knowledge of the executive officers of the
Company, threatened against the Company or any of its Subsidiaries or any
current or former director or officer of the Company or any of its Subsidiaries
(in their capacity as such) or (ii) obligations or liabilities, whether or not
accrued, contingent or otherwise, including those relating to matters involving
any Environmental Law (as defined in Section 5.1(k)), that, in the case of
either clause (i) or (ii), individually or in the aggregate, are reasonably
likely in either such case to have a Company Material Adverse Effect or prevent
or materially burden or materially impair the ability of the Company to
consummate the transactions contemplated by this Agreement or, as of the date
hereof, the Company Option Agreement. Except as disclosed in the Company
Reports filed prior to the date hereof, there are no outstanding orders,
judgments, injunctions, awards or decrees of any Governmental Entity against
the
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Company or any of its Subsidiaries, any of its or their properties, assets or
business, or, to the knowledge of the executive officers of the Company, any of
its or their current or former directors or officers, as such, that is
reasonably likely to have, individually or in the aggregate, a Company Material
Adverse Effect.
(h) Employee Matters.
(i) Neither the Company nor its Subsidiaries has any labor
contracts or collective bargaining agreements with respect to any persons
employed by or otherwise performing services for the Company or its
Subsidiaries. Neither the Company nor its Subsidiaries has engaged in any
unfair labor practice except as is not reasonably likely to have, individually
or in the aggregate, a Company Material Adverse Effect. As of the date hereof,
there is no unfair labor practice complaint pending, or to the knowledge of the
executive officers of the Company threatened, against the Company or any of its
Subsidiaries. There is no labor strike, dispute, slowdown, or stoppage pending
or to the knowledge of the executive officers of the Company threatened,
against the Company or its Subsidiaries, and neither the Company nor its
Subsidiaries has experienced any primary work stoppage or labor difficulty
involving its employees during the last three years, except in each case as is
not reasonably likely to have, individually or in the aggregate, a Company
Material Adverse Effect.
(ii) Set forth in Section 5.1(h) of the Company Disclosure Letter
is a true and complete list of each bonus, deferred compensation, pension,
retirement, profit-sharing, thrift, savings, employee stock ownership, stock
bonus, stock purchase, restricted stock, stock option, employment, termination,
severance, compensation, medical, health, welfare, fringe benefits or other
plan, agreement, policy or arrangement which the Company or any of its
Subsidiaries maintains, or as to which the Company or any of its Subsidiaries
is or will be required to make any payment for the benefit of any employee,
director, former employee or former director of the Company and its
Subsidiaries (the "Compensation and Benefit Plans"). The Company has delivered
or made available to Parent with respect to each Compensation and Benefit Plan
correct and complete copies, where applicable, of (i) all plan documents and
amendments thereto, trust agreements and amendments thereto and insurance and
annuity contracts and policies, (ii) the current summary plan description,
(iii) the Annual Reports (Form 5500 series) and accompanying schedules, as
filed, for the most recently completed two plan years for which such reports
have been filed, (iv) the financial statements for the most recently completed
two plan years for which statements have been prepared, (v) the most recent
determination letter issued by the Internal Revenue Service (the "IRS") and the
application submitted with respect to such letter, and (vi) all correspondence
with the IRS or Department of Labor concerning any pending controversy. Any
"change of control" or similar provisions contained in any Compensation and
Benefit Plan are specifically identified in Section 5.1(h) of the Company
Disclosure Letter.
(iii) All Compensation and Benefit Plans have been administered
in all material respects in accordance with their terms and are in compliance
in all material respects with all applicable laws, including the Code and the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). Each
Compensation and Benefit Plan that is an "employee pension benefit plan" within
the meaning of Section 3(2) of ERISA (a "Pension Plan") and that is intended to
be qualified under Section 401(a) of the Code has received a favorable
determination letter from the IRS, and the Company is not aware as of the date
hereof of any circumstances likely to result in revocation of any such
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favorable determination letter or of any circumstance indicating that any such
plan is not so qualified in operation. As of the date hereof, there is no
pending or, to the knowledge of the executive officers of the Company, material
threatened litigation, claim or audit by any Person relating to the
Compensation and Benefit Plans. To the knowledge of the executive officers of
the Company, no prohibited transaction described in Section 406 of ERISA or
Section 4975 of the Code has occurred which would be expected to result in
material liability to the Company or its Subsidiaries, assuming that, for
purposes of determining materiality, the "taxable period" within the meaning of
Section 4975 of the Code with respect to such prohibited transaction had
expired as of the date hereof.
(iv) As of the date hereof, no liability under Subtitle C or D of
Title IV of ERISA has been or is expected to be incurred by the Company or any
Subsidiary with respect to any ongoing, frozen or terminated "single-employer
plan", within the meaning of Section 4001(a)(15) of ERISA, currently or
formerly maintained by any of them, or the single-employer plan of any entity
which is considered one employer with the Company under Section 4001 of ERISA
or Section 414 of the Code (an "ERISA Affiliate"). None of the Company, its
Subsidiaries and their ERISA Affiliates have contributed, or been obligated to
contribute, to a multiemployer plan under Subtitle E of Title IV of ERISA at
any time, and no liability has been or is expected to be incurred by the
Company or any Subsidiary with respect to any such plan. None of the Company,
any of its Subsidiaries or any ERISA Affiliate contributes to or maintains a
Pension Plan subject to Title IV of ERISA or has contributed to or maintained
any such plan at any time during the six-year period prior to the date hereof.
(v) All contributions required to be made under the terms of any
Compensation and Benefit Plan as of the date hereof, have been timely made or
have been reflected on the most recent consolidated balance sheet filed or
incorporated by reference in the Company Reports prior to the date hereof.
(vi) Neither the Company nor its Subsidiaries have any obligations
for retiree health and life benefits under any Compensation and Benefit Plan,
except as required under Part 6 of Title I of ERISA.
(vii) Except as contemplated by this Agreement or disclosed in
Section 5.1(h) of the Company Disclosure Letter, the consummation of the Merger
and the other transactions contemplated by this Agreement and the Company
Option Agreement will not (x) entitle any employees of the Company or its
Subsidiaries to severance pay, (y) accelerate the time of payment or vesting or
trigger any payment of compensation or benefits under, increase the amount
payable or trigger any other material obligation pursuant to, any of the
Compensation and Benefit Plans or the Stock Plan or (z) result in any material
breach or violation of, or a material default under, any of the Compensation
and Benefit Plans or the Stock Plan.
(i) Compliance with Laws; Permits. Except as set forth in the
Company Reports filed prior to the date hereof, the businesses of each of the
Company and its Subsidiaries are being conducted in compliance with applicable
federal, state, local and foreign laws (collectively, "Laws"), except for such
violations that, individually or in the aggregate, are not reasonably likely to
have a Company Material Adverse Effect or prevent or materially burden or
materially impair the ability of the Company to consummate the transactions
contemplated by this Agreement or the Company Option Agreement. The Company
and its Subsidiaries each has all permits, licenses, franchises,
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variances, exemptions, orders and other governmental authorizations, consents
and approvals necessary to own or lease and operate their respective properties
and conduct its business as presently conducted except those the absence of
which are not, individually or in the aggregate, reasonably likely to have a
Company Material Adverse Effect or prevent or materially burden or materially
impair the ability of the Company to consummate the Merger and the other
transactions contemplated by this Agreement and the Company Option Agreement.
(j) Takeover Statutes. No "fair price," "moratorium," "control
share acquisition" or other similar anti- takeover statute or regulation
(including Section 203 of the DGCL) (each a "Takeover Statute") or any
applicable anti- takeover provision in the Company's certificate of
incorporation and by-laws or any shareholder rights agreement is, or at the
Effective Time will be, applicable to the Company, the Shares, the Merger or
the other transactions contemplated by this Agreement or the Company Option
Agreement. Assuming the accuracy of Parent's representations and warranties
contained in Section 5.2(l), the Board of Directors of the Company has taken
all action so that Parent will not be prohibited from entering into a "business
combination" with the Company as an "interested stockholder" (in each case, as
such term is used in Section 203 of the DGCL) as a result of the execution and
delivery of this Agreement, the Company Stockholder Agreement, the Company
Option Agreement, or the consummation of the transactions contemplated hereby
or thereby.
(k) Environmental Matters. Except as disclosed in the Company
Reports filed prior to the date hereof and except for such matters that,
individually or in the aggregate are not reasonably likely to have a Company
Material Adverse Effect (i) to the knowledge of the executive officers of the
Company, the Company and its Subsidiaries are in compliance with all applicable
Environmental Laws; (ii) the Company and its Subsidiaries have not received any
written notices from any Governmental Entity or any other person or entity
alleging the violation of any applicable Environmental Law (as defined below);
(iii) the Company and its Subsidiaries are not the subject of any court order,
administrative order or decree arising under any Environmental Law; (iv) to the
knowledge of the executive officers of the Company, there has not been a
release of Hazardous Substances (as defined below) on any of the properties
owned or operated by the Company or any of its Subsidiaries; and (v) to the
knowledge of the executive officers of the Company neither the Company nor any
Subsidiary has generated, stored, used, emitted, discharged or disposed of any
Hazardous Substances in violation of or giving rise to liability under
applicable Environmental Laws.
As used herein, "Environmental Law" means any federal, state or
local law, statute, ordinance, rule, regulation, code, license, permit, order,
decree or injunction relating to the protection of the environment (including
air, water, soil and natural resources), or regulating or imposing standards of
care with respect to the use, storage, handling, release or disposal of any
Hazardous Substance, including petroleum.
As used herein, "Hazardous Substance" means any substance listed,
defined, designated, regulated or classified as hazardous, toxic or radioactive
under any applicable Environmental Law, including petroleum and petroleum
products.
(l) Tax Matters. As of the date hereof, neither the Company nor
any of its Affiliates (as defined below) has taken or agreed to take any
action, nor do the executive officers of the Company have any knowledge of any
fact or circumstance, that would
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prevent the Merger and the other transactions contemplated by this Agreement
from qualifying as a "reorganization" within the meaning of Section 368(a) of
the Code. An Affiliate of a party is a Person that directly, or indirectly
through one or more intermediaries, controls or is controlled by or is under
common control with it.
(m) Taxes. The Company and each of its Subsidiaries (i) have
prepared in good faith and duly and timely filed (taking into account any
extension of time within which to file) all Tax Returns (as defined below)
required to be filed by any of them; (ii) have paid all Taxes (as defined
below) that are shown as due on such filed Tax Returns except for Taxes
provided for in a reserve which is adequate for the payment of such Taxes and
is reflected in the financial statements included in the Company Reports filed
prior to the date hereof or the books and records of the Company; and (iii) as
of the date hereof, have not waived any statute of limitations with respect to
Taxes or agreed to any extension of time with respect to a Tax assessment or
deficiency. There are not, to the knowledge of the executive officers of the
Company, any unresolved questions or claims concerning the Company's or any of
its Subsidiaries' Tax liability that are reasonably likely to have a Company
Material Adverse Effect. As of the date hereof, there are no pending or, to
the knowledge of the executive officers of the Company, threatened audits,
examinations, investigations or other proceedings in respect of Taxes or Tax
matters. The Company has made available to Parent true and correct copies of
the United States federal income Tax Returns filed by the Company and its
Subsidiaries for each of the fiscal years ended 1996, 1995, and 1994. As a
result of the transactions contemplated by this Agreement, the Company Option
Agreement, the Severance Matters Agreement, and the Executive Agreements or the
transactions contemplated hereby or thereby, none of the Company, Parent or
their Subsidiaries will be obligated to make a payment that would be an "excess
parachute payment" to an individual that is currently a "disqualified
individual" with respect to the Company as those terms are defined in Section
280G of the Code, without regard to whether such payment is reasonable
compensation for personal services performed or to be performed in the future.
To the knowledge of the executive officers of the Company, the representations
set forth in the Company Tax Certificate (as defined in Section 7.2 (d))
attached to the Company Disclosure Letter are true and correct in all material
respects.
As used in this Agreement, (i) the term "Tax" (including, with
correlative meaning, the terms "Taxes", and "Taxable") includes all federal,
state, local and foreign income, profits, franchise, gross receipts,
environmental, customs duty, capital stock, severances, stamp, payroll, sales,
employment, unemployment, disability, use, property, withholding, excise,
production, value added, occupancy and other taxes, duties or assessments of
any nature whatsoever, together with all interest, penalties and additions
imposed with respect to such amounts and any interest in respect of such
penalties and additions, and (ii) the term "Tax Return" includes all returns
and reports (including elections, declarations, disclosures, schedules,
estimates and information returns) required to be supplied to a Tax authority
relating to Taxes.
(n) Intellectual Property.
(i) The Company and/or each of its Subsidiaries owns all right,
title and interest to, or has the right to use pursuant to a valid
license, as the case may be all Intellectual Property Rights (as
defined below) used in the business of the Company and its
Subsidiaries as presently conducted, except for any failure to own or
right to use that, individually or in the aggregate, is not reasonably
likely
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to have a Company Material Adverse Effect. All registrations for
Intellectual Property Rights owned by the Company or any Subsidiary
are valid and in force, except for any invalidity or unenforceability
that, individually or in the aggregate, is not reasonably likely to
have a Company Material Adverse Effect. All applications for
registrations of Intellectual Property Rights filed by the Company or
any Subsidiary are pending and in good standing, all without challenge
of any kind, except for any lack of good standing or challenge that,
individually or in the aggregate, is not reasonably likely to have a
Company Material Adverse Effect. The Intellectual Property Rights
owned by the Company or any of its Subsidiaries are valid and
enforceable, except for any invalidity or unenforceability that,
individually or in the aggregate, is not reasonably likely to have a
Company Material Adverse Effect. The Company or its Subsidiaries have
the sole and exclusive right to bring actions for infringement,
misappropriation or unauthorized use of Owned Software (as defined
below) and the Intellectual Property Rights owned by the Company and
its Subsidiaries, except for any rights that, individually or in the
aggregate, are not reasonably likely to have a Company Material
Adverse Effect.
(ii) Except as is not reasonably likely to have a Company Material
Adverse Effect:
(A) Neither the Company nor any of its Subsidiaries
is, nor will the Company or any of its Subsidiaries be, as a result
of the execution and delivery of this Agreement or the performance
of its obligations hereunder, in violation of any license,
sublicense, or other agreement as to which the Company or any of
its Subsidiaries is a party and pursuant to which the Company or
any of its Subsidiaries is authorized to use any third-party
Intellectual Property Rights or computer software programs or
applications;
(B) The executive officers of the Company do not know
of any infringement, misappropriation, or violation of any
Intellectual Property Rights of any other person that has occurred
or results in any way from the operations of the respective
businesses of the Company or its Subsidiaries. No claim of any
infringement, misappropriation or violation of any Intellectual
Property Rights of any other person has been made or asserted in
respect of the operations of the respective businesses of the
Company or its Subsidiaries. Neither the Company nor any of its
Subsidiaries has had notice of, nor do the executive officers of
the Company have knowledge of any valid grounds for any bona fide
claim against the Company or its Subsidiaries that its Intellectual
Property Rights, operations, activities, products, software,
equipment, machinery or processes infringe, misappropriate or
violate any Intellectual Property Rights of any other person;
(C) (i) the Company or its Subsidiaries has maintained
and protected the software that each owns (the "Owned Software")
including, without limitation, all source code and system
specifications associated with such software, with such measures as
are reasonably necessary to protect the proprietary, trade secret
or confidential information contained therein; and (ii) the
executive officers of the Company do not know of any infringement,
misappropriation or violation of any Intellectual Property Rights
of any other person with respect to the Owned Software;
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(D) all employees, agents, consultants, or contractors
who have contributed to or participated in the creation or
development of inventions, discoveries, trade secrets,
copyrightable works, or ideas on behalf of the Company, any of its
Subsidiaries or any predecessor in interest thereto, if and only if
necessary to vest ownership rights in such material with the
Company and/or the Subsidiaries, either: (a) is a party to a
"work-for-hire" agreement under which the Company, a Subsidiary (or
such predecessor in interest, as applicable), is deemed to be the
original owner/author of all property rights therein; or (b) has
executed an assignment or an agreement to assign in favor of the
Company, a Subsidiary (or such predecessor in interest, as
applicable), all right, title and interest in such inventions,
discoveries, trade secrets, copyrightable works, or ideas.
(iii) As used herein, the term "Intellectual Property
Rights" shall mean: (A) all United States and foreign patents, patent
applications, continuations, continuations-in-part, divisions,
reissues, patent disclosures, extensions, re-examinations, inventions
(whether or not patentable) or improvements thereto; (B) all United
States, state, foreign and common law trademarks, service marks,
domain names, logos, trade dress and trade names (including all
assumed or fictitious names under which the Company and each
Subsidiary is conducting its-business or has within the previous five
years conducted its business), whether registered or unregistered, and
pending applications to register the foregoing; (C) all United States
and foreign copyrights, whether registered or unregistered and pending
applications to register the same; and (D) all confidential ideas,
trade secrets, know-how, concepts, methods, processes, formulae,
reports, data, customer lists, mailing lists, business plans, or
other proprietary information.
(o) Brokers and Finders. Neither the Company nor any of its
officers, directors or employees has employed any broker or finder or incurred
any liability for any brokerage fees, commissions or finders' fees in
connection with the Merger or the other transactions contemplated by this
Agreement except that the Company has employed Goldman, Sachs & Co. as its
financial advisor, pursuant to arrangements which have been disclosed to Parent
prior to the date hereof.
5.2. Representations and Warranties of Parent and Merger Sub.
Except as set forth in the corresponding sections or subsections of the
disclosure letter delivered to the Company by Parent on or prior to entering
into this Agreement (the "Parent Disclosure Letter"), Parent and Merger Sub
each hereby represent and warrant to the Company that:
(a) Capitalization of Merger Sub. The authorized capital stock of
Merger Sub consists of 1,000 shares of Common Stock, par value $0.01 per share,
100 shares of which are validly issued and outstanding. All of the issued and
outstanding capital stock of Merger Sub is, and at the Effective Time will be,
owned by Parent, and there are (i) no other shares of capital stock or voting
securities of Merger Sub, (ii) no securities of Merger Sub convertible into or
exchangeable for shares of capital stock or voting securities of Merger Sub and
(iii) no options or other rights to acquire from Merger Sub, and no obligations
of Merger Sub to issue, any capital stock, voting securities or securities
convertible into or exchangeable for capital stock or voting securities of
Merger Sub. Merger Sub has not conducted any business prior to the date hereof
and has no, and prior to the Effective Time will have no, assets, liabilities
or obligations of any nature
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other than those incident to its formation and pursuant to this Agreement and
the Merger and the other transactions contemplated by this Agreement.
(b) Organization, Good Standing and Qualification. Each of Parent
and its Subsidiaries is a corporation duly organized, validly existing and in
good standing under the laws of its respective jurisdiction of organization and
has all requisite corporate or similar power and authority to own and operate
its properties and assets and to carry on its business as presently conducted
and is qualified to do business and is in good standing as a foreign
corporation in each jurisdiction where the ownership or operation of its
properties or conduct of its business requires such qualification, except where
the failure to be so qualified or in such good standing is not reasonably
likely to have, individually or in the aggregate, a Parent Material Adverse
Effect (as defined below). Parent has made available to the Company a complete
and correct copy of Parent's and Merger Sub's certificates of incorporation and
by-laws, each as amended to the date hereof. Parent's and Merger Sub's
certificates of incorporation and by-laws so made available are in full force
and effect.
As used in this Agreement, the term "Parent Material Adverse
Effect" means a material adverse effect on the financial condition, properties
or results of operations of the Parent and its Subsidiaries taken as a whole;
provided, however, that any such effect resulting from any change (i) in law,
rule or regulation applicable to all companies and businesses generally or to
the consumer products, tissue, paper or forest products industries specifically
or (ii) in economic or business conditions generally, or in the consumer
products, tissue, paper or forest products industries specifically, shall not
be considered when determining if a Parent Material Adverse Effect has
occurred.
(c) Capital Structure. The authorized capital stock of Parent
consists of 1,200,000,000 shares of Parent Common Stock, and 20,000,000 shares
of Preferred Stock, without par value (the "Parent Preferred Stock") of which
2,000,000 shares have been designated as Series A Junior Participating
Preferred Stock (the "Parent Series A Preferred Stock"). As of August 31,
1997, 551,691,059, shares of Parent Common Stock were outstanding, and no
shares of Parent Preferred Stock were issued and outstanding. All of the shares
of Parent Common Stock deliverable in exchange for the Shares at the Effective
Date in accordance with this Agreement and all of the shares of Parent Series A
Preferred Stock deliverable to the holders of such Parent Common Stock pursuant
to the Parent Rights Agreement if and when deliverable to them under the Parent
Rights Agreement will be, when so issued, duly authorized, validly issued,
fully paid and nonassessable and free of preemptive rights. All of the
outstanding shares of Parent Common Stock have been duly authorized and are
validly issued, fully paid and nonassessable. Parent has no Parent Common
Stock or Parent Preferred Stock reserved for issuance, except that, as of
August 31, 1997, there were 2,000,000 shares of Parent Series A Preferred Stock
reserved for issuance under the Parent Rights Agreement. As of August 31,
1997, there were outstanding: (i) options to purchase 1,590,071 shares of
Parent Common Stock under Parent's 1986 Equity Participation Plan, (b) options
to purchase 10,852,840 shares of Parent Common Stock under Parent's 1992 Equity
Participation Plan, and (c) options to purchase 1,098,826 shares of Parent
Common Stock under the stock option plans of Kimberly-Clark Tissue Company
(formerly Scott Paper Company). Except as set forth above, as of the date
hereof there are no preemptive or other outstanding rights, options, warrants,
conversion rights, redemption rights, repurchase rights, agreements,
arrangements or commitments to issue or to sell any shares of Parent Common
Stock or Parent Preferred Stock or any securities or obligations
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convertible or exchangeable into or exercisable for, or giving any Person a
right to subscribe for or acquire Parent Common Stock or Parent Preferred
Stock, and no securities or obligation evidencing such rights is authorized,
issued or outstanding.
(d) Corporate Authority.
(i) No vote of holders of capital stock of Parent is necessary to
approve this Agreement and the Merger and the other transactions contemplated
hereby. The execution, delivery and performance of this Agreement, the Company
Option Agreement, the Severance Matters Agreement and the Executive Agreements
to which Parent is a party by Parent and, where applicable, Merger Sub and the
consummation by Parent and Merger Sub of the transactions contemplated hereby
and thereby have been duly authorized by all necessary corporate action on the
part of Parent and, where applicable, Merger Sub. This Agreement, the Company
Option Agreement, the Severance Matters Agreement and the Executive Agreements
to which Parent is a party have been duly executed and delivered by Parent and,
where applicable, Merger Sub and (assuming the valid authorization, execution
and delivery of such agreements by the other parties thereto) constitute the
valid and binding agreements of Parent and, where applicable, Merger Sub,
enforceable against each of Parent and, where applicable, Merger Sub in
accordance with their terms, except that enforceability may be limited by the
Bankruptcy Exception and is subject to the Equity Exception.
(ii) Prior to the Effective Time, Parent will have taken all
necessary action to permit it to deliver the number of shares of Parent Common
Stock required to be delivered pursuant to Article IV. The Parent Common
Stock, when delivered, will be validly issued, fully paid and nonassessable,
and no stockholder of Parent will have any preemptive right of subscription or
purchase in respect thereof.
(e) Governmental Filings; No Violations. (i) Other than the
filings and/or notices (A) pursuant to Section 1.3, (B) under the HSR Act, the
Securities Act and the Exchange Act, (C) to comply with state securities or
"blue sky" laws, if applicable, (D) required to be made with the NYSE, and (E)
filings pursuant to Section 6.17, no notices, reports or other filings are
required to be made by Parent or any of its Subsidiaries, including Merger Sub,
with, nor are any consents, registrations, approvals, permits or authorizations
required to be obtained by Parent or any of its Subsidiaries, including Merger
Sub, from, any Governmental Entity, in connection with the execution and
delivery of this Agreement, the Company Option Agreement, the Severance Matters
Agreement and the Executive Agreements to which Parent is a party by Parent
and, where applicable, Merger Sub and the consummation by Parent and Merger Sub
of the Merger and the other transactions contemplated hereby and thereby,
except those that the failure to make or obtain are not, individually or in the
aggregate, reasonably likely to have a Parent Material Adverse Effect or
prevent, materially delay or materially impair the ability of Parent or Merger
Sub to consummate the transactions contemplated hereby and thereby.
(ii) The execution, delivery and performance of this Agreement, the
Company Option Agreement and the Executive Agreements to which it is a party by
Parent and Merger Sub do not, and the consummation by Parent and Merger Sub of
the Merger and the other transactions contemplated hereby and thereby will not,
constitute or result in (A) a breach or violation of, or a default under, the
certificate or by-laws of Parent and Merger Sub or the comparable governing
instruments of any of its Subsidiaries, (B) a
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breach or violation of, or a default under, or an acceleration of any
obligations or the creation of a lien, pledge, security interest or other
encumbrance on the assets of Parent or any of its Subsidiaries (with or without
notice, lapse of time or both) pursuant to, any Debt Contracts or Other
Contracts binding upon Parent or any of its Subsidiaries or any Law or
governmental or non-governmental permit or license to which Parent or any of
its Subsidiaries is subject or any judgment, order or decree to which the
Parent or any of its Subsidiaries or any of its properties is subject or (C)
any change in the rights or obligations of any party under any such Debt
Contracts or Other Contracts, except, in the case of clause (B) or (C) above,
for any breach, violation, default, acceleration, creation or change that,
individually or in the aggregate, is not reasonably likely to have a Parent
Material Adverse Effect or prevent, materially delay or materially impair the
ability of Parent or Merger Sub to consummate the transactions contemplated
hereby and thereby.
(f) Parent Reports; Financial Statements. Parent has delivered to
the Company each registration statement, report, proxy statement or information
statement prepared by it since December 31, 1996 (the "Parent Audit Date"),
including (i) Parent's Annual Report on Form 10-K for the year ended December
31, 1996, (ii) Parent's Quarterly Reports on Form 10-Q for the periods ended
March 31, 1997 and June 30, 1997, and (iii) Parent's Current Reports on Form
8-K dated February 20, 1997, February 25, 1997, and April 24, 1997, each in the
form (including exhibits, annexes and any amendments thereto) filed with the
SEC (collectively, including any such reports filed subsequent to the date
hereof, the "Parent Reports"). As of their respective dates, the Parent
Reports did not, and any Parent Reports filed with the SEC subsequent to the
date hereof will not, contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances in which they were made,
not misleading. Each of the consolidated balance sheets included in or
incorporated by reference into the Parent Reports (including the related notes
and schedules) fairly presents, or will fairly present, in all material
respects, the consolidated financial position of Parent and its Subsidiaries as
of its date and each of the consolidated statements of income, and cash flows
included in or incorporated by reference into the Parent Reports (including any
related notes and schedules) fairly presents, or will fairly present, in all
material respects, the results of operations, and changes in financial
position, as the case may be, of Parent and its Subsidiaries for the periods
set forth therein (subject, in the case of unaudited statements, to notes and
normal year-end audit adjustments that will not be material in amount or
effect), in each case in accordance with GAAP consistently applied during the
periods involved, except as may be noted therein.
(g) Absence of Certain Changes. Except as disclosed in the Parent
Reports filed prior to the date hereof, since the Parent Audit Date Parent and
its Subsidiaries have conducted their respective businesses only in, and have
not entered into or engaged in any material transaction other than in the
ordinary and usual course of business and there has not been (i) any change in
the financial condition, properties, business or results of operations of
Parent and its Subsidiaries or any development or combination of developments
of which the executive officers of Parent has knowledge that, individually or
in the aggregate, has had or is reasonably likely to result in a Parent
Material Adverse Effect; (ii) any damage, destruction or other casualty loss
with respect to any asset or property owned, leased or otherwise used by Parent
or any of its Subsidiaries, whether or not covered by insurance, except as is
not reasonably likely to have, individually or in the aggregate, a Parent
Material Adverse Effect; (iii) any material change by Parent in accounting
principles, practices or methods; or (iv) any declaration, setting aside or
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payment of any dividend or other distribution in respect of the capital stock
of Parent, except for dividends or other distributions on its capital stock
publicly announced prior to the date hereof or Parent's regular quarterly
dividends or increases in such dividends which are not materially in excess of
past practice.
(h) Litigation and Liabilities. Except as disclosed in the Parent
Reports filed prior to the date hereof, there are no (i) civil, criminal or
administrative actions, suits, claims, hearings, investigations or proceedings
pending or, to the knowledge of the executive officers of Parent, threatened
against Parent or any of its Subsidiaries or any current or former director or
officer of Parent or any of its Subsidiaries (in their capacity as such) or
(ii) obligations or liabilities, whether or not accrued, contingent or
otherwise, including those relating to matters involving any Environmental Law,
that, in the case of either clause (i) or (ii), individually or in the
aggregate, are reasonably likely, in either such case, to have a Parent
Material Adverse Effect or prevent or materially burden or materially impair
the ability of Parent or Merger Sub to consummate the transactions contemplated
by this Agreement. Except as disclosed in the Parent Reports filed prior to
the date hereof, there are no outstanding orders, judgments, injunctions,
awards or decrees of any Governmental Entity against the Parent or any of its
Subsidiaries, any of its or their properties, assets or business, or, to the
knowledge of the executive officers of the Parent, any of its or their current
or former directors or officers, as such, that is reasonably likely to have,
individually or in the aggregate, a Parent Material Adverse Effect.
(i) Compliance with Laws; Permits. Except as set forth in the
Parent Reports filed prior to the date hereof, the businesses of each of Parent
and its Subsidiaries are being conducted in compliance with applicable Laws
except for such violations that, individually or in the aggregate, are not
reasonably likely to have a Parent Material Adverse Effect or prevent or
materially burden or materially impair the ability of Parent or Merger Sub to
consummate the transactions contemplated by this Agreement. Parent and its
Subsidiaries each has all permits, licenses, trademarks, patents, trade names,
copyrights, service marks, franchises, variances, exemptions, orders and other
governmental authorizations, consents and approvals necessary to own or lease
and operate their respective properties and conduct its business as presently
conducted except those the absence of which are not, individually or in the
aggregate, reasonably likely to have a Parent Material Adverse Effect or
prevent or materially burden or materially impair the ability of Parent or
Merger Sub to consummate the Merger and the other transactions contemplated by
this Agreement.
(j) Environmental Matters. Except as disclosed in the Parent
Reports filed prior to the date hereof and except for such matters that, alone
or in the aggregate, are not reasonably likely to have a Parent Material
Adverse Effect: (i) to the knowledge of the executive officers of Parent,
Parent and its Subsidiaries are in compliance with all applicable Environmental
Laws; (ii) neither Parent nor any of its Subsidiaries has received any written
notice from any Governmental Entity or any third party indicating that Parent
is in violation of any Environmental Law; and (iii) Parent and its Subsidiaries
are not subject to any court order, administrative order or decree arising
under any Environmental Law.
(k) Tax Matters. As of the date hereof, neither Parent nor any of
its Affiliates has taken or agreed to take any action, nor do the executive
officers of Parent have any knowledge of any fact or circumstance, that would
prevent the Merger and the other
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transactions contemplated by this Agreement from qualifying as a
"reorganization" within the meaning of Section 368(a) of the Code.
(l) Ownership of Shares. Except as to Shares which may be acquired
by Parent pursuant to the Company Option Agreement, neither Parent nor any of
its Subsidiaries is the "Beneficial Owner" (as such term is defined in Rule
13d-3 of the Exchange Act) of any Shares.
(m) Brokers and Finders. Neither Parent nor any of its officers,
directors or employees has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finders' fees in connection
with the Merger or the other transactions contemplated by this Agreement,
except that Parent has employed Merrill Lynch & Co. as its financial advisor,
the arrangements with which have been disclosed in writing to the Company prior
to the date hereof.
ARTICLE VI
Covenants
6.1. Interim Operations. The Company covenants and agrees as to
itself and each of its Subsidiaries that, after the date hereof and prior to
the Effective Time (unless Parent shall otherwise approve, and except as set
forth in the Company Disclosure Letter or as otherwise expressly contemplated
by this Agreement):
(a) the business of it and its Subsidiaries shall be conducted in
the ordinary and usual course and, to the extent consistent therewith, it and
its Subsidiaries shall use all reasonable efforts to preserve its business
organization intact and maintain its existing relations and goodwill with
customers, suppliers, distributors, creditors, lessors, employees and business
associates;
(b) neither it nor any of its Subsidiaries shall (i) issue, sell,
pledge, dispose of or encumber any capital stock owned by it or any of its
Subsidiaries in any of its Subsidiaries or other Affiliates; (ii) amend its
certificate or articles of incorporation or by-laws; (iii) split, combine or
reclassify its outstanding shares of capital stock; (iv) declare, set aside or
pay any dividend payable in cash, stock or property in respect of any capital
stock other than dividends from its direct or indirect wholly-owned
Subsidiaries; or (v) repurchase, redeem or otherwise acquire, except in
connection with the payment of the exercise price of any option outstanding on
the date hereof under the Stock Plan or the Director Option Agreements, or
permit any of its Subsidiaries to purchase or otherwise acquire, any shares of
its capital stock or any securities convertible into or exchangeable or
exercisable for any shares of its capital stock;
(c) neither it nor any of its Subsidiaries shall (i) issue, sell,
pledge, dispose of or encumber any shares of, or securities convertible into or
exchangeable or exercisable for, or options, warrants, calls, commitments or
rights of any kind to acquire, any shares of its capital stock of any class or
any other property or assets (other than Shares issuable pursuant to options
outstanding on the date hereof under the Stock Plan or the Director Option
Agreements); (ii) purchase, transfer, lease, sell, mortgage, pledge, dispose of
or encumber any real property, or effect any improvements or expansions
thereon; (iii) other than in the ordinary and usual course of business,
purchase, transfer, lease, license,
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guarantee, sell, mortgage, pledge, dispose of or encumber any other property or
assets (including capital stock of any of its Subsidiaries) or incur or modify
any material indebtedness or other liability; (iv) make or authorize or commit
for any capital expenditures other than in the ordinary and usual course of
business as described in Section 16(b) of the Company Disclosure Letter; or (v)
by any means, make any acquisition of, or investment in any business, through
acquisition of assets or stock of any other Person or entity;
(d) except as may be required by applicable law, and except as
provided in Section 6.11, neither it nor any of its Subsidiaries shall
terminate, establish, adopt, enter into, make any new grants or awards under,
amend or otherwise modify, any Compensation and Benefit Plans or increase the
salary, wage, bonus, severance, incentive or other compensation of any
employees except for grants, awards or increases occurring in the ordinary and
usual course of business (which shall include normal periodic performance
reviews and related compensation and benefit increases);
(e) neither it nor any of its Subsidiaries shall settle or
compromise any material claims or litigation or, except in the ordinary and
usual course of business, enter into any material Debt Contracts or Other
Contracts or modify, amend or terminate any of its material Debt Contracts or
Other Contracts or waive, release or assign any material rights or claims;
(f) neither it nor any of its Subsidiaries shall make any Tax
election or permit any insurance policy naming it as a beneficiary or
loss-payable payee to be canceled or terminated except in the ordinary and
usual course of business;
(g) neither it nor any of its Subsidiaries shall take any action,
other than reasonable and usual actions in the ordinary and usual course of
business consistent with past practice, with respect to accounting policies or
procedures;
(h) neither it nor any of its Subsidiaries shall sell, transfer,
assign or abandon any patents or trademarks which are owned or controlled
directly or indirectly by the Company or any of its Subsidiaries, except for
any abandonment of a non-material trademark or any intercompany transfer among
the Company and its Subsidiaries, in either case, in the ordinary and usual
course of business;
(i) neither it nor any of its Subsidiaries shall license or
otherwise encumber any patents or trademarks which are owned or controlled
directly or indirectly by the Company or any of its Subsidiaries, except in the
ordinary and usual course of business;
(j) neither it nor any of its Subsidiaries shall make any
modification to employee or customer incentives or trade policies which would
reasonably be expected to cause the Company's distributors or end-user
customers to increase purchases above those levels normally required to meet
their respective needs or cause an excessive increase or decrease in the
Company's inventories or working capital; and
(k) neither it nor any of its Subsidiaries shall authorize or
announce an intention to do any of the foregoing, or enter into any contract,
agreement, commitment or arrangement to do any of the foregoing.
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6.2. Acquisition Proposals. From and after the date hereof, the
Company shall not, and shall use its best efforts to not permit any of its
directors, officers, employees, attorneys, financial advisors, agents or other
representatives or those of any of its Subsidiaries to, directly or indirectly,
solicit, initiate or knowingly encourage (including by way of furnishing
information) any Takeover Proposal (as hereinafter defined) from any Person, or
engage in or continue discussions or negotiations relating to any Takeover
Proposal; provided, however, that the Company may engage in discussions or
negotiations with, and furnish information to, any Person that makes a written
Takeover Proposal in respect of which the Board of Directors of the Company
concludes in good faith if consummated would constitute a Superior Proposal (as
hereinafter defined), but only if the Board of Directors of the Company shall
conclude in good faith on the basis of the advice of its outside counsel that
the failure to take such action would be inconsistent with the fiduciary
obligations of such Board of Directors under applicable law; and provided
further that notwithstanding anything to the contrary herein contained, the
Board of Directors of the Company may take and disclose to the Company's
stockholders a position contemplated by Rule 14e-2 promulgated under the
Exchange Act, comply with Rule 14d-9 thereunder and make all disclosures
required by applicable law in connection therewith. The Company shall as soon
as practicable and in any event no later than the date on which such Takeover
Proposal is presented to the Company's Board of Directors notify Parent of any
Takeover Proposal received by it or any of its directors, officers, employees,
attorneys, financial advisors, agents or other representatives or those of any
of its Subsidiaries or the receipt by the Company or any of the foregoing of
any notice of any intention to make a Superior Proposal, including the identity
of the person making such Takeover Proposal or intending to make a Superior
Proposal and the material terms of any such Takeover Proposal. As used in this
Agreement: (i) "Takeover Proposal" means any proposal or offer (other than a
proposal or offer by Parent or any of its Affiliates), or any expression of
interest by any Person relating to any actual or potential merger,
consolidation or other business combination involving the Company or any of its
Subsidiaries or any acquisition in any manner (including, without limitation,
by tender or exchange offer) of a substantial equity interest in, or a
substantial portion of the assets of, the Company or any of its Subsidiaries;
and (ii) "Superior Proposal" means a bona fide proposal or offer made by any
Person (x) to acquire the Company pursuant to any tender or exchange offer or
any acquisition of all or substantially all of the assets of the Company and
its Subsidiaries as a whole or (y) to enter into a merger, consolidation or
other business consolidation with the Company or any of its Subsidiaries, in
each case on terms which a majority of the members of the Board of Directors of
the Company determines in good faith, and based on the advice of independent
financial advisors, to be more favorable to the Company and its stockholders
than the transactions contemplated hereby (including any revised transaction
proposed by Parent pursuant to Section 8.1(f)). During the period from the
date of this Agreement through the Effective Time, the Company shall not
terminate, amend, modify or waive any provision of any confidentiality or
standstill agreement to which it or any of its Subsidiaries is a party. During
such period, the Company shall enforce, to the fullest extent permitted under
applicable law, but subject to the exercise by the Board of Directors of the
Company of their fiduciary obligations after consultation with outside counsel,
the provisions of any such agreement, including, but not limited to, by
obtaining injunctions to prevent any breaches of such agreements and to enforce
specifically the terms and provisions thereof in any court of the United States
of America or of any state having jurisdiction.
6.3. Information Supplied. The Company and Parent each agrees, as
to itself and its Subsidiaries, that none of the information supplied or to be
supplied by it or its
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Subsidiaries for inclusion or incorporation by reference in (i) the
Registration Statement on Form S-4 to be filed with the SEC by Parent in
connection with the issuance of shares of Parent Common Stock in the Merger
(including the proxy statement and prospectus (the "Prospectus/ Proxy
Statement") constituting a part thereof) (the "S-4 Registration Statement")
will, at the time the S-4 Registration Statement becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, and (ii) the Prospectus/Proxy Statement and any amendment or
supplement thereto will, at the date of mailing to the Company's stockholders
and at the time of the meeting of stockholders of the Company to be held in
connection with the Merger, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
6.4. Stockholders Meeting. The Company will take, in accordance
with applicable law and its certificate of incorporation and by-laws, all
action necessary to convene a meeting of holders of Shares (the "Stockholders
Meeting") as promptly as practicable after the S-4 Registration Statement is
declared effective to consider and vote upon the approval of this Agreement.
The Company's Board of Directors shall recommend such approval and shall take
all lawful action to solicit such approval; provided, however, that the
Company's Board of Directors shall not be required to make, and shall be
entitled to withdraw, such recommendation (and cease such solicitation) if such
Board of Directors concludes in good faith on the basis of the advice of its
outside counsel that the making of, or the failure to withdraw, such
recommendation would violate the fiduciary obligations of such Board of
Directors under applicable law.
6.5. Filings; Other Actions; Notification.
(a) Parent and the Company shall promptly prepare and file with
the SEC the Prospectus/Proxy Statement, and Parent shall prepare and file with
the SEC the S-4 Registration Statement as promptly as practicable. Parent and
the Company each shall use its best efforts to have the S-4 Registration
Statement declared effective under the Securities Act as promptly as
practicable after such filing, and promptly thereafter mail the
Prospectus/Proxy Statement to the stockholders of the Company. Parent shall
also use its best efforts to obtain prior to the effective date of the S-4
Registration Statement all necessary state securities law or "blue sky" permits
and approvals, if any, required in connection with the Merger and to consummate
the other transactions contemplated by this Agreement and will pay all expenses
incident thereto.
(b) The Company and Parent each shall use its best efforts to
cause to be delivered to the other party and its directors a letter of its
independent auditors, dated (i) the date on which the S-4 Registration
Statement shall become effective and (ii) the Closing Date, and addressed to
the other party and its directors, in form and substance customary for
"comfort" letters delivered by independent public accountants in connection
with registration statements similar to the S-4 Registration Statement.
(c) The Company and Parent shall cooperate with each other and use
(and shall cause their respective Subsidiaries to use) their respective best
efforts to take or cause to be taken all actions, and do or cause to be done
all things, necessary, proper or advisable on its part under this Agreement and
applicable Laws to consummate and make effective
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the Merger and the other transactions contemplated by this Agreement as soon as
practicable, including preparing and filing as promptly as practicable all
documentation to effect all necessary notices, reports and other filings,
responding promptly to any requests for further information and to obtain as
promptly as practicable all consents, registrations, approvals, permits and
authorizations necessary or advisable to be obtained from any third party
and/or any Governmental Entity in order to consummate the Merger or any of the
other transactions contemplated by this Agreement as promptly as practicable.
Subject to applicable laws relating to the exchange of information, Parent and
the Company shall have the right to review in advance, and to the extent
practicable each will consult the other on, all the information relating to
Parent or the Company, as the case may be, and any of their respective
Subsidiaries, that appear in any filing made with, or written materials
submitted to, any third party and/or any Governmental Entity in connection with
the Merger and the other transactions contemplated by this Agreement. In
exercising the foregoing right, each of the Company and Parent shall act
reasonably and as promptly as practicable.
(d) The Company and Parent each shall, upon request by the other,
furnish the other with all information concerning itself, its Subsidiaries,
directors, officers and stockholders and such other matters as may be
reasonably necessary or advisable in connection with the Prospectus/Proxy
Statement, the S-4 Registration Statement or any other statement, filing,
notice or application made by or on behalf of Parent, the Company or any of
their respective Subsidiaries to any third party and/or any Governmental Entity
in connection with the Merger and the transactions contemplated by this
Agreement.
(e) The Company and Parent each shall keep the other apprised of
the status of matters relating to completion of the transactions contemplated
hereby, including promptly furnishing the other with copies of notice or other
communications received by Parent or the Company, as the case may be, or any of
its Subsidiaries, from any third party and/or any Governmental Entity with
respect to the Merger and the other transactions contemplated by this
Agreement.
(f) Without limiting the generality of the undertakings pursuant
to this Section 6.5, (i) the Company and Parent agree to provide promptly to
any and all federal, state, local or foreign court or Government Entity with
jurisdiction over enforcement of any applicable antitrust laws ("Government
Antitrust Entity") information and documents requested by any Government
Antitrust Entity or necessary, proper or advisable to permit consummation of
the Merger and the transactions contemplated by this Agreement and the Company
Option Agreement; and (ii) in connection with any filing or submission or other
action required to be made or taken by either Parent or the Company to effect
the Merger and to consummate the other transactions contemplated hereby or
thereby, the Company shall not, without Parent's prior written consent, commit
to any divestiture transaction, and, neither Parent nor any of its Affiliates
shall be required to divest or hold separate or otherwise take or commit to
take any action that limits its freedom of action with respect to, or its
ability to retain, the Company or any portions thereof or any of the business,
product lines, properties or assets of Parent or any of its Affiliates.
6.6. Taxation. Subject to Section 6.2, neither Parent nor the
Company shall take or cause to be taken any action, whether before or after the
Effective Time, that would disqualify the Merger as a "reorganization" within
the meaning of Section 368(a) of the Code.
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6.7. Access. Upon reasonable notice, and except as may otherwise
be required by applicable law, the Company shall (and shall cause its
Subsidiaries to) afford Parent's officers, employees, counsel, accountants and
other authorized representatives ("Representatives") access, during normal
business hours throughout the period prior to the Effective Time, to its
properties, books, contracts and records (including its audit work papers and
related documents) and, during such period, shall (and shall cause its
Subsidiaries to) furnish promptly to Parent all information concerning its
business, properties and personnel as may reasonably be requested, provided
that no investigation pursuant to this Section shall affect or be deemed to
modify any representation or warranty made by the Company, and provided,
further, that the foregoing shall not require the Company to permit any
inspection, or to disclose any information, that in the reasonable judgment of
the Company, would result in the disclosure of any trade secrets of it or third
parties or violate any of its obligations with respect to confidentiality if
the Company shall have used reasonable efforts to obtain the consent of such
third party to such inspection or disclosure. All requests for information
made pursuant to this Section shall be directed to an executive officer of the
Company or such Person as may be designated by its officers. Parent and the
Company shall each designate two representatives to meet on a monthly basis to
discuss the Company's capital expenditures, inventory management, sales
promotions, distribution arrangements, construction projects, group purchasing
organization contracts, other material contracts, patent licenses and such
other business matters concerning the Company's operations as are desired. All
such information shall be governed by the terms of the Company Confidentiality
Agreement (as defined in Section 9.7).
6.8. Affiliates. Prior to the Effective Time, the Company shall
deliver to Parent a list of names and addresses of those Persons who are, in
the opinion of the Company, as of the time of the Stockholders Meeting,
"affiliates" of the Company within the meaning of Rule 145 under the Securities
Act. The Company shall provide to Parent such information and documents as
Parent shall reasonably request for purposes of reviewing such list. There
shall be added to such list the names and addresses of any other Person
subsequently identified by either Parent or the Company as a Person who may be
deemed to be such an affiliate of the Company; provided, however, that no such
Person identified by Parent shall be added to the list of affiliates of the
Company if Parent shall receive from the Company, on or before the date of the
Stockholders Meeting, an opinion of counsel reasonably satisfactory to Parent
to the effect that such Person is not such an affiliate. The Company shall
exercise its best efforts to deliver or cause to be delivered to Parent, prior
to the date of the Stockholders Meeting, from each affiliate of the Company
identified in the foregoing list (as the same may be supplemented as
aforesaid), a letter dated as of the Closing Date substantially in the form
attached as Exhibit D (the "Affiliates Letter"). Parent shall not be required
to maintain the effectiveness of the S-4 Registration Statement or any other
registration statement under the Securities Act for the purposes of resale of
Parent Common Stock by such affiliates received in the Merger and the
certificates representing Parent Common Stock received by such affiliates shall
bear a customary legend regarding applicable Securities Act restrictions and
the provisions of this Section.
6.9. Stock Exchange Listing and De-listing. Parent shall use its
best efforts to cause the shares of Parent Common Stock to be issued in the
Merger to be approved for listing on the NYSE, subject to official notice of
issuance, prior to the Closing Date. The Surviving Corporation shall use its
best efforts to cause the Shares to no longer be quoted
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on NASDAQ and de-registered under the Exchange Act as soon as practicable
following the Effective Time.
6.10. Publicity. The initial press releases by Parent and the
Company concerning this Agreement and the transaction contemplated hereby shall
be mutually agreed as to content prior to issuance and thereafter the Company
and Parent shall consult with each other prior to issuing any press releases or
otherwise making public announcements with respect to the Merger and the other
transactions contemplated by this Agreement and prior to making any filings
with any third party and/or any Governmental Entity (including any national
securities exchange) with respect thereto, except as may be required by law or
by obligations pursuant to any listing agreement with or rules of any national
securities exchange.
6.11. Options and Benefits.
(a) Stock Options. Prior to the Effective Time, each Company
Option, whether vested or not, shall be fully exercisable without regard to
restrictions contained in the Stock Plan or the Director Option Agreements, as
the case may be. At the Effective Time, all outstanding Company Options which
have not been exercised shall be canceled and each holder whose Company Options
are canceled shall receive an amount in cash (payable as soon as practicable
but in no event later than forty-five (45) days after the Effective Time) equal
to the result of multiplying the number of shares subject to such Company
Options (whether vested or not) by the excess of (A) the closing quotation of
one Share as reported in the Wall Street Journal under the NASDAQ National
Market Issues for the trading day that occurs immediately prior to the
Effective Time and (B) the exercise price of such Company Options, subject to
any required withholding by Company.
(b) Employee Benefits. Parent agrees that for a period of not less
than twelve (12) months following the Effective Time, the employees of the
Company and its Subsidiaries in the United States (the "Employees") will be
provided with employee benefit plans and programs that are no less favorable in
value in the aggregate, as determined by Parent in good faith in accordance
with any method customarily used by Parent for making benefit comparisons, to
those provided to the Employees immediately prior to the Effective Time, as set
forth in Section 5.1(h)(ii) of the Company Disclosure Letter, excluding the
Stock Plan, the 401(k) Plan (as defined below), and the ESOP (as defined
below); provided that nothing in this Agreement shall limit the right of Parent
or the Surviving Corporation to amend, terminate or discontinue any particular
employee benefit plan or program in accordance with the terms thereof.
Employees who become participants in any employee benefit plan or program of
the Parent or any of its Subsidiaries will be given credit under such plans and
programs, for purposes of eligibility and vesting thereunder, for all service
with the Company or its Subsidiaries.
Parent agrees that it shall, and shall cause the Surviving
Corporation to, honor all employment agreements disclosed in Section 5.1(h)(ii)
of the Company Disclosure Letter (except to the extent such employment
agreements or amendments thereto are entered into in contravention of Section
6.1(f) of this Agreement or to the extent such agreements or amendments have
expired or are rescinded) in accordance with the terms thereof and subject to
the rights of termination provided therein.
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Parent agrees to cause the Surviving Corporation to provide
severance benefits to the Employees in accordance with and subject to the
provisions of the Severance Matters Agreement.
Prior to the Effective Time, the Company shall further take all
actions necessary to terminate the Company's 401 (k) Capital Accumulation Plan
(the "401(k) Plan"), including but not limited to filing an application for
determination upon termination with the IRS, and commence winding up the plan.
The Company further agrees that, prior to the Effective Time, it
shall make a contribution to the Company's Employee Stock Ownership Plan (the
"ESOP") sufficient to repay in full the outstanding principal and interest due
on the ESOP loan, it being contemplated that the ESOP trustees will use this
amount for that purpose whereupon the Shares held in the suspense account shall
be allocated to participant accounts. The Company agrees thereafter, but prior
to the Effective Time, to take all actions necessary to terminate the ESOP,
including but not limited to filing an application for determination upon
termination with the IRS, and commence winding up the plan.
6.12. Fees and Expenses.
(a) Except as otherwise provided in this Section 6.12, whether or
not the Merger shall be consummated, all costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby,
including, without limitation, the fees and disbursements of counsel, financial
advisors, accountants, actuaries and consultants, shall be paid by the party
incurring such costs and expenses, provided that all expenses incurred in
connection with the filing fees for the Prospectus/Proxy Statement and the
Registration Statement on Form S-4, and the printing and mailing of the
Prospectus/Proxy Statement shall be shared equally by the Parent and the
Company.
(b) Notwithstanding any provisions in this Agreement to the
contrary, if a Purchase Event (as defined in the Company Option Agreement)
shall have occurred, the Company shall reimburse Parent for its documented
expenses in connection with the transactions contemplated by this Agreement up
to a maximum reimbursable amount of $1 million. The Company agrees to
reimburse such amount within 15 days after receipt of the documentation
supporting such expenses.
Nothing contained in this Section 6.12 shall be deemed to limit any
remedies available to any party for any breach of this Agreement by any other
party which such remedies shall be in addition to any amounts received by any
party pursuant to this Section 6.12; provided, however, that, with respect to
any breach by the Company of the provisions of Section 6.2 that is not the
result of willful action (or willful failure to take action) or bad faith on
the part of the Company, Parent's exclusive remedy in respect of such breach
shall be limited to the rights under the Company Option Agreement and to
reimbursement of its expenses as set forth above not in excess of $1 million,
and the Company shall have no other liability to Parent in respect of such
breach.
6.13. Indemnification; Directors' and Officers' Insurance.
(a) Parent shall indemnify and hold harmless, to the fullest
extent permitted under applicable law (and Parent shall also advance expenses
as incurred to the fullest extent permitted under applicable law provided the
Person to whom expenses are
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advanced provides an undertaking to repay such advances if it is ultimately
determined that such Person is not entitled to indemnification), each present
and former director, officer and employee of the Company and its Subsidiaries
(collectively, the "Indemnified Parties") against any costs or expenses
(including reasonable attorneys' fees), judgments, fines, losses, claims,
damages or liabilities (collectively, "Costs") incurred in connection with any
claim, action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of or pertaining to matters
existing or occurring at or prior to the Effective Time, including the
transactions contemplated by this Agreement; provided, that Parent shall not
have any obligation hereunder to any Indemnified Party if and when a court of
competent jurisdiction shall ultimately determine, and such determination shall
have become final, that the indemnification of such Indemnified Party in the
manner contemplated hereby is prohibited by applicable law. All rights to
indemnification in respect of any such claim or claims shall continue until
final disposition of any and all such claims.
(b) Any Indemnified Party wishing to claim indemnification under
paragraph (a) of this Section 6.13, upon learning of any such claim, action,
suit, proceeding or investigation, shall promptly notify Parent thereof, but
the failure to so notify shall not relieve Parent of any liability it may have
to such Indemnified Party if such failure does not materially prejudice the
indemnifying party. In the event of any such claim, action, suit, proceeding
or investigation (whether arising before or after the Effective Time), (i)
Parent or the Surviving Corporation shall have the right to assume the defense
thereof and Parent shall not be liable to such Indemnified Parties for any
legal expenses of other counsel or any other expenses subsequently incurred by
such Indemnified Parties in connection with the defense thereof, except that if
Parent or the Surviving Corporation elects not to assume such defense or
counsel for the Indemnified Parties advises that there are issues which raise
conflicts of interest between Parent or the Surviving Corporation and the
Indemnified Parties, the Indemnified Parties may retain counsel satisfactory to
them, and Parent or the Surviving Corporation shall pay all reasonable fees and
expenses of such counsel for the Indemnified Parties promptly as statements
therefor are received; provided, however, that Parent shall be obligated
pursuant to this paragraph (b) to pay for only one firm of counsel for all
Indemnified Parties in any jurisdiction unless the use of one counsel for such
Indemnified Parties would present such counsel with a conflict of interest,
(ii) the Indemnified Parties will cooperate in the defense of any such matter
and (iii) Parent shall not be liable for any settlement effected without its
prior written consent. If such indemnity is not available with respect to any
Indemnified Party, then the Surviving Corporation and the Indemnified Party
shall contribute to the amount payable in such proportion as is appropriate to
reflect relative faults and benefits.
(c) The Surviving Corporation shall use its best efforts to
maintain the Company's existing officers' and directors' liability insurance
("D&O Insurance") for a period of six years after the Effective Time so long as
the annual premium therefor is not in excess of the last annual premium paid
prior to the date hereof (the "Current Premium"); provided, however, that if
the existing D&O Insurance expires, is terminated or canceled during such
six-year period, the Surviving Corporation will use its best efforts to obtain
as much substantially similar D&O Insurance as can be obtained for the
remainder of such period but in no event for a premium in excess (on an
annualized basis) of two (2) times the Current Premium.
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(d) If the Surviving Corporation or any of its successors or
assigns (i) shall consolidate with or merge into any other corporation or
entity and shall not be the continuing or surviving corporation or entity of
such consolidation or merger or (ii) shall transfer all or substantially all of
its properties and assets to any individual, corporation or other entity, then,
and in each such case, proper provisions shall be made so that the successors
and assigns of the Surviving Corporation shall assume all of the obligations
set forth in this Section.
(e) The provisions of this Section are intended to be for the
benefit of, and shall be enforceable by, each of the Indemnified Parties, their
heirs, their representatives and assigns.
6.14. Takeover Statute. If any Takeover Statute is or may become
applicable to the Merger or the other transactions contemplated by this
Agreement, the Company Stockholder Agreement or the Company Option Agreement,
each of Parent and the Company and its Board of Directors shall grant such
approvals and take such actions as are necessary so that such transactions may
be consummated as promptly as practicable on the terms contemplated by this
Agreement, the Company Stockholder Agreement and the Company Option Agreement
or by the Merger and otherwise act to eliminate or minimize the effects of such
statute or regulation on such transactions.
6.15. Parent Vote. Parent shall vote (or consent with respect to)
or cause to be voted (or a consent to be given with respect to) any Shares and
any shares of common stock of Merger Sub beneficially owned by it or any of its
Affiliates or with respect to which it or any of its Affiliates has the power
(by agreement, proxy or otherwise) to cause to be voted (or to provide a
consent), in favor of the adoption and approval of this Agreement at any
meeting of stockholders of the Company or Merger Sub, respectively, at which
this Agreement shall be submitted for adoption and approval and at all
adjournments or postponements thereof (or, if applicable, by any action of
stockholders of either the Company or Merger Sub by consent in lieu of a
meeting).
6.16. Notification of Certain Matters. Parent shall give prompt
notice to the Company, and the Company shall give prompt notice to Parent, of:
(i) the occurrence, or non-occurrence, of any event the occurrence, or non-
occurrence, of which would cause (A) any representation or warranty contained
in this Agreement to be untrue or inaccurate in any material respect or (B) any
covenant, condition or agreement contained in this Agreement not to be complied
with or satisfied in any material respect; and (ii) any failure of Parent or
the Company, as the case may be, to comply with any covenant or agreement to be
complied with by it hereunder in any material respect; provided, however, that
the delivery of any notice pursuant to this Section 6.16 shall not limit or
otherwise affect the remedies available hereunder to the party receiving such
notice.
6.17. Real Estate Transfer and Gains Tax. Either the Company or
the Surviving Corporation shall pay all state or local taxes, if any
(collectively, the "Gains Taxes"), attributable to the transfer of the
beneficial ownership of the Company's and its Subsidiaries' real properties,
and any penalties or interest with respect thereto, payable in connection with
the consummation of the Merger. The Company shall cooperate with Parent in the
filing of any returns with respect to the Gains Taxes, including supplying in a
timely manner a complete list of all real property interests held by the
Company and its Subsidiaries and any information with respect to such
properties that is reasonably necessary to complete such returns. The portion
of the consideration allocable to the real
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properties of the Company and its Subsidiaries shall be determined by Parent in
its reasonable discretion. The stockholders of the Company shall be deemed to
have agreed to be bound by the allocation established pursuant to this Section
6.17 in the preparation of any return with respect to the Gains Taxes.
ARTICLE VII
Conditions
7.1. Conditions to Each Party's Obligation to Effect the Merger.
The respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver at or prior to the Effective Time of each of the
following conditions:
(a) Stockholder Approval. This Agreement shall have been duly
approved by holders of Shares constituting the Company Requisite Vote and shall
have been duly approved by the sole stockholder of Merger Sub in accordance
with applicable law and the certificate of incorporation and by-laws of each
such corporation.
(b) NYSE Listing. The shares of Parent Common Stock deliverable
to the Company stockholders pursuant to this Agreement shall have been
authorized for listing on the NYSE upon official notice of issuance.
(c) Regulatory Consents. The waiting period applicable to the
consummation of the Merger under the HSR Act shall have expired or been
terminated and, other than the filing provided for in Section 1.3, all notices,
reports and other filings required to be made prior to the Effective Time by
the Company or Parent or any of their respective Subsidiaries with, and all
consents, registrations, approvals, permits and authorizations required to be
obtained prior to the Effective Time by the Company or Parent or any of their
respective Subsidiaries from, any Governmental Entity (collectively,
"Governmental Consents") in connection with the execution and delivery of this
Agreement and the consummation of the Merger and the other transactions
contemplated hereby by the Company, Parent and Merger Sub shall have been made
or obtained (as the case may be), except those that the failure to make or to
obtain are not, individually or in the aggregate, reasonably likely to have a
Company Material Adverse Effect or a Parent Material Adverse Effect.
(d) Litigation. No court or Governmental Entity of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
law, statute, ordinance, rule, regulation, judgment, decree, injunction or
other order (whether temporary, preliminary or permanent) that is in effect and
restrains, enjoins or otherwise prohibits consummation of the Merger
(collectively, an "Order").
(e) S-4. The S-4 Registration Statement shall have become
effective under the Securities Act. No stop order suspending the effectiveness
of the S-4 Registration Statement shall have been issued, and no proceedings
for that purpose shall have been initiated or be threatened, by the SEC.
(f) Blue Sky Approvals. Parent shall have received all state
securities and "blue sky" permits and approvals, if any, necessary to
consummate the transactions contemplated hereby.
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7.2. Conditions to Obligations of Parent and Merger Sub. The
obligations of Parent and Merger Sub to effect the Merger are also subject to
the satisfaction or waiver by Parent at or prior to the Effective Time of the
following conditions:
(a) Representations and Warranties. Each of the representations
and warranties of the Company contained in this Agreement that is qualified by
materiality shall have been true and correct when made and shall be true and
correct at and as of the Closing Date as if made at and as of the Closing Date
and each of such representations and warranties that is not so qualified shall
have been true and correct in all material respects when made and shall be true
and correct in all material respects at and as of the Closing Date as if made
at and as of the Closing Date, in each case except as contemplated or permitted
by this Agreement; and Parent shall have received a certificate signed on
behalf of the Company by its Chief Executive Officer and its Chief Financial
Officer to such effect.
(b) Performance of Obligations of the Company. The Company shall
have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing Date and Parent
shall have received a certificate signed on behalf of the Company by its Chief
Executive Officer and its Chief Financial Officer to such effect.
(c) Consents Under Agreements. The Company shall have obtained
the consent or approval of each Person whose consent or approval shall be
required under any Debt Contract or Other Contract to which the Company or any
of its Subsidiaries is a party, except those for which the failure to obtain
such consent or approval, individually or in the aggregate, is not reasonably
likely to have a Company Material Adverse Effect.
(d) Tax Opinion. Parent shall have received an opinion of Sidley
& Austin, dated the Closing Date, in form and substance reasonably satisfactory
to Parent, substantially to the effect that, for federal income tax purposes;
(i) The Merger will constitute a "reorganization" within the meaning of
Section 368(a) of the Code, and the Company, Merger Sub and Parent will each be
a party to such reorganization within the meaning of Section 368(b) of the
Code.
(ii) No gain or loss will be recognized by Parent or the Company as a
result of the Merger.
(iii) No gain or loss will be recognized by the stockholders of the
Company upon the exchange of their Shares solely for shares of Parent Common
Stock pursuant to the Merger, except with respect to cash, if any, received in
lieu of fractional shares of Parent Common Stock.
(iv) The aggregate tax basis of the shares of Parent Common Stock
received by a stockholder solely in exchange for Shares pursuant to the Merger
(including fractional shares of Parent Common Stock for which cash is received)
will be the same as the aggregate tax basis of the Shares exchanged therefor.
(v) The holding period for shares of Parent Common Stock received by a
stockholder in exchange for Shares pursuant to the Merger will include the
holding period that such Shares were held by the stockholder, provided such
Shares were held as capital assets by such stockholder at the Effective Time.
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(vi) A stockholder of the Company who receives cash in lieu of a
fractional share of Parent Common Stock will recognize gain or loss equal to
the difference, if any, between such stockholder's basis in such fractional
share and the amount of cash received.
In rendering such opinion, Sidley & Austin may receive and rely upon
representations contained in a certificate of Parent (the "Parent Tax
Certificate") substantially in the form attached to the Parent Disclosure
Letter, a certificate of the Company (the "Company Tax Certificate")
substantially in the form attached to the Company Disclosure Letter and other
appropriate certificates of Parent, the Company and others.
7.3. Conditions to Obligation of the Company. The obligation of the
Company to effect the Merger is also subject to the satisfaction or waiver by
the Company at or prior to the Effective Time of the following conditions:
(a) Representations and Warranties. Each of the representations and
warranties of Parent and Merger Sub contained in this Agreement that is
qualified by materiality shall have been true and correct when made and shall
be true and correct at and as of the Closing Date as if made at and as of the
Closing Date and each of such representations and warranties that is not so
qualified shall have been true and correct in all material respects when made
and shall be true and correct in all material respects at and as of the Closing
Date as if made at and as of the Closing Date, in each case except as
contemplated or permitted by this Agreement; and the Company shall have
received a certificate signed on behalf of Parent by its Chief Executive
Officer and its Chief Financial Officer.
(b) Performance of Obligations of Parent and Merger Sub. Each of Parent
and Merger Sub shall have performed in all material respects all obligations
required to be performed by it under this Agreement at or prior to the Closing
Date and the Company shall have received a certificate signed on behalf of
Parent by its Chief Executive Officer and its Chief Financial Officer to such
effect.
(c) Consents Under Agreements. Parent shall have obtained the consent
or approval of each Person whose consent or approval shall be required in order
to consummate the transactions contemplated by this Agreement under any Debt
Contract or Other Contract to which Parent or any of its Subsidiaries is a
party, except those for which failure to obtain such consents and approvals,
individually or in the aggregate, is not reasonably likely to have a Parent
Material Adverse Effect.
(d) Tax Opinion. The Company shall have received an opinion of
Carrington, Coleman, Sloman & Blumenthal, L.L.P., dated the Closing Date, in
form and substance reasonably satisfactory to the Company, substantially to the
effect that, for federal income tax purposes;
(i) The Merger will constitute a "reorganization" within the meaning of
Section 368(a) of the Code, and the Company, Merger Sub and Parent will each be
a party to such reorganization within the meaning of Section 368(b) of the
Code.
(ii) No gain or loss will be recognized by Parent or the Company as a
result of the Merger.
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(iii) No gain or loss will be recognized by the stockholders of the
Company upon the exchange of their Shares solely for shares of Parent Common
Stock pursuant to the Merger, except with respect to cash, if any, received in
lieu of fractional shares of Parent Common Stock.
(iv) The aggregate tax basis of the shares of Parent Common Stock
received by a stockholder solely in exchange for Shares pursuant to the Merger
(including fractional shares of Parent Common Stock for which cash is received)
will be the same as the aggregate tax basis of the Shares exchanged therefor.
(v) The holding period for shares of Parent Common Stock received by a
stockholder in exchange for Shares pursuant to the Merger will include the
holding period that such Shares were held by the stockholder, provided such
Shares were held as capital assets by such stockholder at the Effective Time.
(vi) A stockholder of the Company who receives cash in lieu of a
fractional share of Parent Common Stock will recognize gain or loss equal to
the difference, if any, between such stockholder's basis in such fractional
share and the amount of cash received.
In rendering such opinion, Carrington, Coleman, Sloman & Blumenthal,
L.L.P. may receive and rely upon representations contained in a certificate of
Parent substantially in the form of the Parent Tax Certificate, a certificate
of the Company substantially in the form of the Company Tax Certificate and
other appropriate certificates of Parent, the Company and others.
ARTICLE VIII
Termination
8.1. Termination. This Agreement may be terminated, and the Merger
abandoned, at any time prior to the Effective Time, whether before or after any
approval by the stockholders of Merger Sub or the Company of the matters
presented in connection with the Merger:
(a) by mutual written consent of Parent and the Company;
(b) by Parent, by written notice to the Company, if (i) the Company
shall have failed to comply in any material respect with any of its covenants
or agreements contained in this Agreement required to be complied with prior to
the date of such termination, which failure to comply has not been cured within
fifteen business days after receipt by the Company of written notice of such
failure to comply or (ii) the stockholders of the Company shall not approve the
Merger at the Stockholder Meeting or any adjournment thereof;
(c) by the Company, by written notice to Parent, if (i) Parent or
Merger Sub shall have failed to comply in any material respect with any of its
respective covenants or agreements contained in this Agreement required to be
complied with prior to the date of such termination, which failure to comply
has not been cured within fifteen business days after receipt by Parent of
written notice of such failure to comply or (ii) the stockholders
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of the Company shall not approve the Merger at the Stockholder Meeting or any
adjournment thereof;
(d) by either Parent or the Company, by written notice from the
terminating party to the other parties, if there has been (i) a breach by the
other (or Merger Sub if the Company is the terminating party) of any
representation or warranty made as of the date hereof that is not qualified by
reference to a Material Adverse Effect, the effect of which has a Company
Material Adverse Effect or a Parent Material Adverse Effect, as the case may
be, or (ii) a breach by the other (or Merger Sub if the Company is the
terminating party) of any representation or warranty made as of the date hereof
that is qualified by reference to a Material Adverse Effect, in each case,
which breach has not been cured (if capable of being cured) within fifteen
business days after receipt by the breaching party of written notice of the
breach;
(e) by either Parent or the Company, by written notice from the
terminating party to the other parties, if: (i) the Merger has not been
effected on or prior to the close of business on February 28, 1998, whether
such date is before or after the date of approval by the stockholders of the
Company; provided, however, that the right to terminate this Agreement pursuant
to this clause (e) shall not be available to any party whose failure to fulfill
any obligation of this Agreement has been the cause of, or resulted in, the
failure of the Merger to have occurred on or prior to such date; or (ii) any
court or other Governmental Entity having jurisdiction over a party hereto
shall have issued an order, decree or ruling or taken any other action
permanently enjoining, restraining or otherwise prohibiting the transactions
contemplated by this Agreement and such order, decree, ruling or other action
shall have become final and nonappealable;
(f) by the Company, by written notice to Parent, if the Board of
Directors of the Company shall determine in good faith that a Takeover Proposal
constitutes a Superior Proposal; provided, however, that the Company may not
terminate this Agreement pursuant to this clause (f) unless (i) five business
days shall have elapsed after delivery to Parent of a written notice of such
determination by such Board of Directors and at all reasonable times during
such five business-day period the Company shall have provided Parent a
reasonable opportunity, during such five business-day period, to propose a
modification of the terms and conditions of this Agreement so that a business
combination between the Company and Parent (or an Affiliate of Parent) may be
effected, and (ii) at the end of such five business-day period such Board of
Directors shall continue to believe in good faith that such Takeover Proposal
constitutes a Superior Proposal and simultaneously therewith the Company shall
enter into a definitive acquisition, merger or similar agreement to effect such
Superior Proposal;
(g) by Parent, by written notice to the Company, if (i) the Board of
Directors of the Company shall not have recommended the Merger to Company's
stockholders, or shall have resolved not to make such recommendation, or shall
have modified in a manner adverse to Parent or rescinded its recommendation of
the Merger to the Company's stockholders as being advisable and fair to and in
the best interests of the Company and its stockholders, or shall have modified
or rescinded its approval of the Agreement, or shall have resolved to do any of
the foregoing, (ii) the Board of Directors of the Company shall have
recommended to the stockholders of the Company any Takeover Proposal (other
than by Parent or an Affiliate of Parent) or shall have resolved to do so,
(iii) a tender offer or exchange offer for 20% or more of the outstanding
shares of capital stock of the Company is commenced, and the Board of Directors
of the Company fails to
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recommend against acceptance of such tender offer or exchange offer by its
stockholders within the ten business day period (or such shorter period)
required by Section 14e-2 of the Exchange Act (the taking of no position by the
expiration of such ten business day period (or such shorter period) with
respect to the acceptance of such tender offer or exchange offer by its
stockholders constituting such a failure), or (iv) the Company or any of its
Subsidiaries, without having received prior written consent from Parent, shall
have entered into, authorized, recommended, proposed, or publicly announced its
intention to enter into, authorize, recommend or propose to its shareholders an
agreement, arrangement, understanding or letter of intent with any Person
(other than Parent or any of its Affiliates) to (A) effect a merger or
consolidation or similar transaction involving the Company or any of its
Subsidiaries, (B) purchase, lease, or otherwise acquire all or a substantial
portion of the assets of the Company or any of its Subsidiaries or (C)
purchase or otherwise acquire (including by way of merger, consolidation, share
exchange or similar transaction) Beneficial Ownership (as defined in the
Company Option Agreement) of securities representing 20% or more of the voting
power of the Company (in each case other than any such merger, consolidation,
purchase, lease or other transaction involving only the Company and one or more
of its Subsidiaries or involving only any two or more of its Subsidiaries); and
(h) by Parent or the Company, by written notice to the other party, if
ten business days elapse after all the conditions set forth in Article VII
(other than conditions that by their nature are to be satisfied at the Closing)
shall be satisfied or waived and the Closing shall not have occurred through no
fault of the terminating party.
The right of Parent or the Company to terminate this Agreement pursuant to
this Section 8.1 shall remain operative and in full force and effect regardless
of any investigation made by or on behalf of such party, whether prior to or
after the execution of this Agreement.
8.2. Effect of Termination. In the event of the termination of this
Agreement by either Parent or the Company as provided in Section 8.1, this
Agreement shall forthwith become void without any liability hereunder on the
part of the Company, Parent, Merger Sub or their respective directors or
officers, except for the last sentence of Section 6.7 and the entirety of
Section 6.12, which shall survive any such termination; provided, however, that
nothing contained in this Section 8.2 shall relieve any party hereto from any
liability for any breach of this Agreement.
ARTICLE IX
Miscellaneous and General
9.1. Survival. This Article IX and the agreements of the Company,
Parent and Merger Sub contained in Sections 6.6 (Taxation and Accounting), 6.9
(Stock Exchange Listing and De-listing), 6.11 (Options and Benefits), 6.12
(Expenses) and 6.13 (Indemnification; Directors' and Officers' Insurance) shall
survive the consummation of the Merger. This Article IX, the agreements of the
Company, Parent and Merger Sub contained in Section 6.12 (Expenses), Section
8.2 (Effect of Termination and Abandonment), the Company Confidentiality
Agreement and the Confidentiality Agreement dated August 15, 1997, between
Parent and the Company (the "Parent Confidentiality Agreement") shall survive
the termination of this Agreement. All other
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representations, warranties, covenants and agreements in this Agreement shall
not survive the consummation of the Merger or the termination of this
Agreement.
9.2. Modification or Amendment. Subject to the provisions of the
applicable law, at any time prior to the Effective Time, the parties hereto may
modify or amend this Agreement, by written agreement executed and delivered by
duly authorized officers of the respective parties.
9.3. Waiver of Conditions. The conditions to each of the parties'
obligations to consummate the Merger are for the sole benefit of such party and
may be waived by such party in whole or in part to the extent permitted by
applicable law.
9.4. Counterparts. This Agreement may be executed in any number of
counterparts, each such counterpart being deemed to be an original instrument,
and all such counterparts shall together constitute the same agreement.
9.5. GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL. (a) THIS
AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL RESPECTS SHALL BE
INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAW OF THE
STATE OF DELAWARE WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
The parties hereby irrevocably submit to the jurisdiction of the courts of the
State of Delaware and the Federal courts of the United States of America
located in the State of Delaware solely in respect of the interpretation and
enforcement of the provisions of this Agreement and of the documents referred
to in this Agreement, and in respect of the transactions contemplated hereby,
and hereby waive, and agree not to assert, as a defense in any action, suit or
proceeding for the interpretation or enforcement hereof or of any such
document, that it is not subject thereto or that such action, suit or
proceeding may not be brought or is not maintainable in said courts or that the
venue thereof may not be appropriate or that this Agreement or any such
document may not be enforced in or by such courts, and the parties hereto
irrevocably agree that all claims with respect to such action or proceeding
shall be heard and determined in such a Delaware State or Federal court. The
parties hereby consent to and grant any such court jurisdiction over the person
of such parties and over the subject matter of such dispute and agree that
mailing of process or other papers in connection with any such action or
proceeding in the manner provided in Section 9.6 or in such other manner as may
be permitted by law shall be valid and sufficient service thereof.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH
MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT,
OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH
PARTY
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MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH PARTY HAS BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 9.5.
9.6. Notices. Any notice, request, instruction or other document
to be given hereunder by any party to the others shall be in writing and
delivered personally or sent by registered or certified mail, postage prepaid,
or by facsimile:
if to Parent or Merger Sub:
Kimberly-Clark Corporation
351 Phelps Drive
Irving, Texas 75038
Attention: Senior Vice President -- Law and Government Affairs
fax: (972) 281-1492
(with a copy to Dennis V. Osimitz, Esq.
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
fax: (312) 853-7036)
if to the Company:
7201 Industrial Park Blvd.
Fort Worth, Texas 76180
Attention: David Radunsky, Chief Operating Officer and
General Counsel
fax: (817) 577-6599
(with a copy to George Sampas, Esq.
Sullivan & Cromwell
125 Broad Street
New York, NY 10004
fax: (212) 558-3299)
or to such other persons or addresses as may be designated in writing
by the party to receive such notice as provided above.
9.7. Entire Agreement; No Other Representations. This Agreement
(including any exhibits hereto), the Company Option Agreement, the Company
Disclosure Letter, the Parent Disclosure Letter, the Confidentiality Agreement,
dated April 15, 1997, between Parent and the Company (the "Company
Confidentiality Agreement"), and the Parent Confidentiality Agreement
constitute the entire agreement, and supersede all other prior agreements,
understandings, representations and warranties both written and oral, among the
parties, with respect to the subject matter hereof. EACH PARTY HERETO AGREES
THAT, EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS
AGREEMENT, NEITHER PARENT AND MERGER SUB NOR THE COMPANY MAKES ANY OTHER
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REPRESENTATIONS OR WARRANTIES, AND EACH HEREBY DISCLAIMS ANY OTHER
REPRESENTATIONS OR WARRANTIES MADE BY ITSELF OR ANY OF ITS OFFICERS, DIRECTORS,
EMPLOYEES, AGENTS, FINANCIAL AND LEGAL ADVISORS OR OTHER REPRESENTATIVES, WITH
RESPECT TO THE EXECUTION AND DELIVERY OF THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY, NOTWITHSTANDING THE DELIVERY OR DISCLOSURE TO THE OTHER OR
THE OTHER'S REPRESENTATIVES OF ANY DOCUMENTATION OR OTHER INFORMATION WITH
RESPECT TO ANY ONE OR MORE OF THE FOREGOING.
9.8. No Third Party Beneficiaries. Except as provided in Section
6.13 (Indemnification; Directors' and Officers' Insurance), this Agreement is
not intended to confer upon any Person other than the parties hereto any rights
or remedies hereunder.
9.9. Obligations of Parent and of the Company. Whenever this
Agreement requires a Subsidiary of Parent to take any action, such requirement
shall be deemed to constitute an undertaking on the part of Parent to cause
such Subsidiary to take such action. Whenever this Agreement requires a
Subsidiary of the Company to take any action, such requirement shall be deemed
to constitute an undertaking on the part of the Company to cause such
Subsidiary to take such action and, after the Effective Time, on the part of
the Surviving Corporation to cause such Subsidiary to take such action.
9.10. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability or the other provisions hereof. If any
provision of this Agreement, or the application thereof to any Person or any
circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
9.11. Interpretation. The table of contents and headings herein are
for convenience of reference only, do not constitute part of this Agreement and
shall not be deemed to limit or otherwise affect any of the provisions hereof.
Where a reference in this Agreement is made to a Section or Exhibit, such
reference shall be to a Section of or Exhibit to 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."
9.12. Assignment. This Agreement shall not be assignable by
operation of law or otherwise; provided, however, that Parent may designate, by
written notice to the Company, another wholly-owned direct Subsidiary to be a
Constituent Corporation in lieu of Merger Sub, in which event all references
herein to Merger Sub shall be deemed references to such other Subsidiary,
except that all representations and warranties made herein with respect to
Merger Sub as of the date of this Agreement shall be deemed representations and
warranties made with respect to such other Subsidiary as of the date of such
designation.
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9.13 Specific Performance. The parties hereto agree that irreparable
damage would occur in the event that any of the terms or provisions of this
Agreement were not performed in accordance with their specific wording or were
otherwise breached. It is accordingly agreed that each of the parties hereto
shall be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in any
court of the United States of America or any state having jurisdiction, such
remedy being in addition to any other remedy to which any party may be entitled
at law or in equity.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the duly authorized officers of the parties hereto as of the date first
written above.
KIMBERLY-CLARK CORPORATION
By: /s/ Robert E. Abernathy
----------------------------------
Name: Robert E. Abernathy
Title: Group President
TECNOL MEDICAL PRODUCTS, INC.
By: /s/ Vance M. Hubbard
----------------------------------
Name: Vance M. Hubbard
Title: Chief Executive Officer &
President
VANGUARD ACQUISITION CORP.
By: /s/ Robert E. Abernathy
----------------------------------
Name: Robert E. Abernathy
Title: Vice President
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Exhibit A
Agreement to be executed by each
stockholder listed on Schedule A
attached hereto
COMPANY STOCKHOLDER AGREEMENT
STOCKHOLDER AGREEMENT dated as of September 4, 1997 by the
undersigned stockholder (the "Stockholder") of Tecnol Medical Products, Inc., a
Delaware corporation (the "Company"), for the benefit of Kimberly-Clark
Corporation, a Delaware corporation ("Parent").
WHEREAS Parent, Vanguard Acquisition Corp., a Delaware
corporation and a wholly-owned subsidiary of Parent ("Sub"), and the Company
are entering into an Agreement and Plan of Merger of even date herewith (as the
same may be amended or supplemented, the "Merger Agreement") providing for the
merger of Sub with and into the Company (the "Merger");
WHEREAS, the Stockholder has sole voting and dispositive power
and/or full voting power as to the aggregate number of shares of Common Stock,
par value $0.001 per share, of the Company (the "Company Common Stock") set
forth opposite his name on Schedule A attached hereto; such shares of Company
Common Stock, as such shares may be adjusted by any stock dividend, stock
split, recapitalization, combination or exchange of shares, merger,
consolidation, reorganization or other change or transaction of or by the
Company, being referred to herein as the "Subject Shares"; and
WHEREAS, as a condition to its willingness to enter into the
Merger Agreement, Parent has requested that the Stockholder enter into this
Agreement.
NOW, THEREFORE, to induce Parent to enter into, and in
consideration of its entering into, the Merger Agreement, and in consideration
of the premises and the representations, warranties and agreements contained
herein, the parties agree as follows:
1. Representations and Warranties of the Stockholder. The
Stockholder hereby represents and warrants to Parent as follows:
48
(a) Authority. This Agreement has been duly executed and
delivered by the Stockholder and constitutes a valid and binding
obligation of the Stockholder enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency, moratorium or
other similar laws relating to creditors' rights generally and to
general principles of equity. The execution and delivery of this
Agreement does not, and the consummation of the transactions
contemplated hereby and compliance with the terms hereof will not,
conflict with, or result in any violation of, or default (with or
without notice or lapse of time or both) under any provision of, any
trust agreement, loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession,
franchise, license, judgment, order, notice, decree, statute, law,
ordinance, rule or regulation applicable to the Stockholder or to the
Stockholder's property or assets, the effect of which would be
material and adverse to the ability of the Stockholder to perform his
obligations under this Agreement.
(b) The Subject Shares. Except as noted on Schedule A, the
Stockholder represents that he beneficially owns and has sole voting
and dispositive power over the number of shares of Company Common
Stock set forth opposite his name on Schedule A hereto, and that his
beneficial ownership of such shares is free and clear of all liens,
charges and encumbrances, agreements and commitments of every kind.
The representations set forth in this Agreement shall not survive the
consummation of the Merger. The Subject Shares do not include:(i)
shares held by the Stockholder in his capacity as trustee of the ESOP
(as defined in the Merger Agreement), and (ii) shares owned of record
by the Stockholder's spouse in which he may have a community interest.
2. Representations and Warranties of Parent.
Parent hereby represents and warrants to the Stockholder that Parent has all
requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by Parent, and the consummation of the transactions contemplated
hereby, have been duly authorized by all necessary corporate action on the part
of Parent. This Agreement has been duly executed and delivered by Parent and
constitutes a valid and binding obligation of Parent enforceable in accordance
with its terms.
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3. Covenants of the Stockholder.
(a) At any meeting of stockholders of the Company called to
vote upon the Merger or the Merger Agreement or at any adjournment
thereof or in any other circumstances upon which a vote, consent or
other approval with respect to the Merger or the Merger Agreement is
sought, the Stockholder shall vote (or cause to be voted) the Subject
Shares, and any other voting securities of the Company, whether issued
heretofore or hereafter, that such person has the right to vote (other
than in his capacity as trustee of the ESOP), in favor of the Merger,
the adoption by the Company of the Merger Agreement and the approval
of the terms thereof and each of the other transactions contemplated
by the Merger Agreement, provided that the terms of the Merger
Agreement shall not have been amended to adversely affect the
Stockholder.
(b) At any meeting of stockholders of the Company or at any
adjournment thereof or in any other circumstances upon which the
Stockholder's vote, consent or other approval is sought, the
Stockholder shall vote (or cause to be voted) the Subject Shares, and
any other voting securities of the Company, whether issued heretofore
or hereafter, that such person has the right to vote (other than in
his capacity as trustee of the ESOP), against (i) any merger agreement
or merger (other than the Merger Agreement and the Merger),
consolidation, combination, sale of substantial assets,
reorganization, recapitalization, dissolution, liquidation or winding
up of or by the Company or any other Takeover Proposal (as defined in
the Merger Agreement), or (ii) any amendment of the Company's
certificate of incorporation or by-laws or other proposal or
transaction involving the Company or any of its Subsidiaries, which
amendment or other proposal or transaction would in any manner impede,
frustrate, prevent or nullify the Merger, the Merger Agreement or any
of the other transactions contemplated by the Merger Agreement or
which is reasonably likely to result in any of the conditions to the
Company's obligations under the Merger Agreement not being fulfilled.
(c) The Stockholder agrees not to sell, transfer, pledge,
assign or otherwise dispose of, or enter into any contract, option or
other arrangement with respect to the sale, transfer, pledge,
assignment or other disposition of, the Subject Shares or any other
voting securities of the Company, whether issued heretofore or
hereafter, that such person has the right to vote (other than in his
capacity as trustee of the ESOP) to any person; provided, that (i) the
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Stockholder may sell up to a maximum of (x) 100,000 Subject Shares
minus (y) any shares of Company Common Stock sold by Kirk Brunson from
and after the date hereof; and (ii) the Stockholder may surrender to
the Company Subject Shares in payment of the exercise price of Company
Options (as defined in the Merger Agreement) exercised by the
Stockholder in accordance with the Stock Plan (as defined in the
Merger Agreement).
(d) The Stockholder agrees not to enter into any voting
arrangement with respect to the Subject Shares, whether by proxy,
voting arrangement, voting agreement or otherwise.
(e) The Stockholder shall not, and shall use his best
efforts to cause any investment banker, attorney or other adviser or
representative of the Stockholder not to, (i) directly or indirectly
solicit, initiate or knowingly encourage the submission of, any
Takeover Proposal or (ii) directly or indirectly participate in any
discussions or negotiations regarding, or furnish to any person any
information with respect to, or knowingly take any other action to
facilitate any inquiries or the making of any proposal that
constitutes, or would reasonably be expected to lead to, any Takeover
Proposal.
4. Affiliates Letter. The Stockholder agrees to execute
and deliver on a timely basis a letter agreement in the form of Exhibit D to
the Merger Agreement, when and if requested by Parent prior to the
effectiveness of the Merger.
5. Further Assurances. The Stockholder will, from time to
time, execute and deliver, or cause to be executed and delivered, such
additional or further transfers, assignments, endorsements, consents and other
instruments as Parent may reasonably request for the purpose of effectively
carrying out the transactions contemplated by this Agreement.
6. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by the parties without the
prior written consent of the other party. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and be enforceable
by the Stockholder, his personal or legal representatives, executors,
administrators, heirs, distributors, devisees and legatees and by the Parent,
its successors and assigns.
7. Termination. This Agreement shall terminate upon the
earliest of (i) the close of business on August 31, 1998,
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(ii) the Effective Time (as defined in the Merger Agreement), (iii) the
termination of the Merger Agreement in accordance with its terms; provided,
that (x) if the Merger Agreement is terminated pursuant to Sections 8.1(f) or
8.1(g) of the Merger Agreement or; (y) if any Takeover Proposal shall have been
made prior to termination of this Agreement, Sections 3(b), 3(c) and 3(d)
hereof shall survive for 180 days after the termination of this Agreement. The
termination of this Agreement or any provision hereof shall not relieve either
party hereto from any liability for any breach of this Agreement or such
provision prior to such termination.
8. General Provisions.
(a) Amendments. This Agreement may not be amended except by
an instrument in writing signed by each of the parties hereto.
(b) Notice. Any notice, request, instruction or other
document to be given hereunder by any party to the others shall be in
writing and delivered personally or sent by registered or certified
mail, postage prepaid, or by facsimile:
(i) if to Parent, to:
Kimberly-Clark Corporation
351 Phelps Drive
Irving, Texas 75038
Facsimile: (972) 281-1492
Attention: Senior Vice President - Law and
Government Affairs
with a copy to:
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Facsimile: (312) 853-7036
Attention: Dennis V. Osimitz, Esq.
(ii) if to the Stockholder, to
------------------------------
------------------------------
------------------------------
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Facsimile:
-------------------
Attention:
-------------------
with a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Facsimile: (212) 558-3299
Attention: George Sampas, Esq.
or to such other persons or addresses as may be designated in writing
by the party to receive such notice as provided above.
(c) Interpretation. When a reference is made in this
Agreement to Sections, such reference shall be to a Section to this
Agreement unless otherwise indicated. 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. Wherever the
words "include," "includes," or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation." Capitalized terms used herein but not otherwise defined
herein shall have the meanings set forth in the Merger Agreement.
(d) Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more of the
counterparts have been signed by each of the parties and delivered to
the other party, it being understood that each party need not sign the
same counterpart.
(f) Entire Agreement; No Third-Party Beneficiaries. This
Agreement (including the documents and instruments referred to herein)
(i) constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof and (ii) is not
intended to confer upon any person other than the parties hereto any
rights or remedies hereunder.
(g) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware.
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9. Stockholder Capacity. The Stockholder signs solely in his
capacity as the record holder and/or beneficial owner of the Subject Shares and
nothing herein shall limit, impose any obligation on, or affect any actions
taken by the Stockholder in his capacity as an officer or director of the
Company.
10. Enforcement. The parties hereto acknowledge that damages
would be an inadequate remedy for any breach of the provisions of this
Agreement and agree that the obligations of the parties hereunder shall be
specifically enforceable. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions of this Agreement in any
court of the United States located in the State of Delaware or in a Delaware
state court, this being in addition to any other remedy to which they are
entitled at law or in equity. In addition, each of the parties hereto (i)
consents to submit such party to the personal jurisdiction of any Federal court
located in the State of Delaware or any Delaware state court in the event any
dispute arises out of this Agreement or any of the transactions contemplated
hereby, (ii) agrees that such party will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court,
(iii) agrees that such party will not bring any action relating to this
Agreement or any of the transactions cont emplated hereby in any court other
than a Federal court sitting in the State of Delaware or a Delaware state court
and (iv) waives any right to trial by jury with respect to any claim or
proceeding related to or arising out of this Agreement or any of the
transactions contemplated hereby.
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IN WITNESS WHEREOF, Parent has caused this Agreement to be
signed by its respective officers thereunto duly authorized and the Stockholder
has signed this Agreement, all as of the date first written above.
KIMBERLY-CLARK CORPORATION
By:
----------------------
Name:
Title:
[STOCKHOLDER]
By:
----------------------
Name:
Title:
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Schedule A
- ------------------------------------------------------------------------------------------------------------------------------
Name of Stockholder Number of Subject Address and
Shares Contact Person
- ------------------------------------------------------------------------------------------------------------------------------
Van Hubbard, Van Hubbard
Chairman of the Board, 2,454,462 (1) 104 Quail Run
CEO and President Bedford, TX 76021
- ------------------------------------------------------------------------------------------------------------------------------
Kirk Brunson, Kirk Brunson
Vice Chairman of the 605 Hurst Drive
Board, Executive 1,580,182 (2) Bedford, TX 76021
Vice President
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------
(1)Includes 2,401,272 shares over which Mr. Hubbard has sole voting and
dispositive power and 53,190 shares that have been allocated to his ESOP account
over which Mr. Hubbard has full voting power. Mr. Hubbard does not have sole
dispositive power over the 53,190 shares that have been allocated to his ESOP
account.
(2)Includes 1,554,807 shares over which Mr. Brunson has sole voting and
dispositive power and 25,375 shares that have been allocated to this ESOP
account over which Mr. Brunson has full voting power. Mr. Brunson does not have
sole dispositive power over the 25,375 shares that have been allocated to his
ESOP account.
56
EXHIBIT B
COMPANY OPTION AGREEMENT
COMPANY OPTION AGREEMENT ("Option Agreement") dated as of
September 4, 1997, between Kimberly-Clark Corporation, a Delaware corporation
("Kimberly-Clark"), and Tecnol Medical Products, Inc., a Delaware corporation
("Tecnol").
W I T N E S S E T H :
WHEREAS, the respective Boards of Directors of Kimberly-Clark
and Tecnol have approved an Agreement and Plan of Merger dated as of even date
herewith (the "Merger Agreement") providing for the merger of a wholly-owned
subsidiary of Kimberly-Clark ("Newco") with and into Tecnol with Tecnol being
the Surviving Corporation;
WHEREAS, as a condition to Kimberly-Clark's willingness to
enter into the Merger Agreement, Tecnol has agreed to grant to Kimberly-Clark
the option set forth herein to purchase 3,982,142 authorized but previously
unissued shares of the Common Stock, par value $.001 per share, of Tecnol
("Tecnol Common Stock"); and
WHEREAS, contemporaneously herewith, Kimberly-Clark, Newco and
Tecnol are entering into the Merger Agreement.
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NOW, THEREFORE, in consideration of the premises herein
contained, the parties agree as follows:
1. DEFINITIONS.
Capitalized terms used but not defined herein shall have the
same meanings as set forth in the Merger Agreement.
2. GRANT OF OPTION.
On the terms and subject to the conditions set forth herein,
Tecnol hereby grants to Kimberly-Clark an irrevocable option (the "Option") to
purchase up to 3,982,142 authorized but previously unissued shares of Tecnol
Common Stock at a price of $22.00 per share (the "Purchase Price") payable in
cash as provided in Section 4 hereof.
3. EXERCISE OF OPTION.
(a) Kimberly-Clark may exercise the Option, in whole or in
part, at any time or from time to time after a Purchase Event (as defined
below) shall have occurred; provided, however, that (i) to the extent the
Option shall not have been exercised, it shall terminate and be of no further
force and effect upon the earlier to occur of (A) the Effective Time of the
Merger; or (B) the termination of the Merger Agreement in accordance with its
terms; provided, however, that if the Merger Agreement is terminated by Tecnol
pursuant to Section 8.1(f) thereof or, after a Takeover Proposal by any Person
(other than Kimberly-Clark or an Affiliate of Kimberly-Clark), by
Kimberly-Clark
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pursuant to Section 8.1(g) thereof, the Option shall remain exercisable until
the date which is 180 days after such termination; and further provided,
however, that, if prior to the termination of the Merger Agreement in
accordance with its terms, a Takeover Proposal by any Person (other than
Kimberly-Clark or an Affiliate of Kimberly-Clark) shall have been publicly
announced, the Option shall not terminate until the earlier of (x) the date a
Purchase Event can no longer occur and (y) 180 days after the occurrence of a
Purchase Event, except that if the Purchase Event is of the type described in
clause (ii) of the definition thereof, the Option shall not terminate until 180
days after the termination of the Merger Agreement; (ii) if the Option cannot
be exercised immediately prior to its expiration date because of an injunction,
order or similar restraint issued by a court of competent jurisdiction, the
Option shall expire on the 30th business day after such injunction, order or
restraint shall have been dissolved or when such injunction, order or restraint
shall have become permanent and no longer subject to appeal, as the case may
be; and (iii) if the Option cannot be exercised immediately prior to its
expiration date because any applicable waiting periods under the Hart-
Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act") shall not have
expired or been terminated, the Option shall expire on the 30th business day
after such expiration or termination.
(b) As used herein, a "Purchase Event" shall be deemed to
have occurred if (i) the Merger Agreement is terminated in accordance with
Section 8.1(f) thereof; (ii) after a Takeover Proposal shall have been publicly
announced by any Person (other than Kimberly-Clark or an Affiliate of
Kimberly-Clark), Kimberly-Clark has the right to terminate the Merger Agreement
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pursuant to Section 8.1(g) thereof; or (iii) all of the following occur: (A)
prior to the Stockholder Meeting the Merger Agreement shall not have been
terminated and there shall have been publicly announced a Takeover Proposal by
any Person (other than Kimberly-Clark or an Affiliate of Kimberly-Clark), (B)
after such public announcement the stockholders of Tecnol shall not approve the
Merger at the Stockholder Meeting or any adjournment thereof, (C) within twelve
months after the Stockholder Meeting or the last adjournment thereof Tecnol
shall enter into any written letter of intent (whether or not binding),
acquisition agreement, merger agreement or other similar agreement or agreement
in principle in respect of a Takeover Proposal with any Person contemplated by
clause (A) above or such Person shall commence any tender or exchange offer for
the Shares, and (D) upon, or at any time within twelve months after, such entry
into any letter of intent, agreement or such commencement of any tender or
exchange offer such Person shall consummate a transaction similar to that
contemplated by such Takeover Proposal or any tender or exchange offer for
Beneficial Ownership of at least 20% of the Shares.
(c) As used herein, the terms "Beneficial Ownership" and
"Beneficially Own" shall have the meanings ascribed to them in Rule 13d-3 under
the Exchange Act.
(d) In the event Kimberly-Clark wishes to exercise the
Option, it shall deliver to Tecnol a written notice (the date of which being
herein referred to as the "Notice Date") specifying (i) the total number of
shares it intends to purchase pursuant to such exercise and (ii) a place and
date not earlier than three business days nor later than 10 business days (or,
in the event approval under
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the HSR Act is required, 60 calendar days) from the Notice Date for the closing
of such purchase (the "Closing Date").
4. PAYMENT AND DELIVERY OF CERTIFICATES.
(a) At any closing referred to in Section 3 hereof,
Kimberly-Clark shall pay to Tecnol the aggregate purchase price for the shares
of Tecnol Common Stock purchased pursuant to the exercise of the Option in
immediately available funds by wire transfer to a bank account designated by
Tecnol.
(b) At any such closing, simultaneously with the delivery
of cash as provided in Section 4(a), Tecnol shall deliver to Kimberly-Clark a
certificate or certificates representing the number of shares of Tecnol Common
Stock purchased by Kimberly-Clark, registered in the name of Kimberly-Clark or
a nominee designated in writing by Kimberly-Clark, and Kimberly-Clark shall
deliver to Tecnol a letter agreeing that Kimberly-Clark shall not offer to
sell, pledge or otherwise dispose of such shares in violation of applicable law
or the provisions of this Option Agreement.
(c) If at the time of issuance of any Tecnol Common Stock
pursuant to any exercise of the Option, Tecnol shall have issued any share
purchase rights or similar securities to holders of Tecnol Common Stock, then
each such share of Tecnol Common Stock shall also represent rights with terms
substantially the same as and at least as favorable to Kimberly-Clark as those
issued to other holders of Tecnol Common Stock.
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(d) Certificates for Tecnol Common Stock delivered at any
closing hereunder shall be endorsed with a restrictive legend which shall read
substantially as follows:
The transfer of the shares represented by this certificate is subject
to certain provisions of an agreement between the registered holder
hereof and Tecnol Medical Products, Inc. ("Tecnol"), a copy of which
is on file at the principal office of Tecnol, and to resale
restrictions arising under the Securities Act of 1933 and any
applicable state securities laws. A copy of such agreement will be
provided to the holder hereof without charge upon receipt by Tecnol of
a written request therefor.
It is understood and agreed that the above legend shall be removed by delivery
of substitute certificate(s) without such legend if Kimberly-Clark shall have
delivered to Tecnol an opinion of counsel reasonably acceptable to Tecnol, in
form and substance reasonably satisfactory to Tecnol and its counsel, to the
effect that such legend is not required for purposes of the Securities Act and
any applicable state securities laws.
5. AUTHORIZATION, ETC.
(a) Tecnol hereby represents and warrants to
Kimberly-Clark that:
(i) Tecnol has full corporate authority to execute and
deliver this Option Agreement and to consummate the transactions
contemplated hereby;
(ii) such execution, delivery and consummation have been
authorized by the Board of Directors of Tecnol, and no other corporate
proceedings are necessary therefor;
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(iii) this Option Agreement has been duly and validly
executed and delivered and represents a valid and legally binding
obligation of Tecnol, enforceable against Tecnol in accordance with
its terms, except that enforceability may be limited by the Bankruptcy
Exception and is subject to the Equity Exception;
(iv) Tecnol has taken all necessary corporate action to
authorize and reserve and permit it to issue and, at all times from
the date hereof through the date of the exercise in full or the
expiration or termination of the Option, shall have reserved for
issuance upon exercise of the Option, 3,982,142 shares of Tecnol
Common Stock (as such number may be adjusted pursuant to Section 6
hereof), all of which, upon issuance pursuant hereto, shall be duly
authorized, validly issued, fully paid and nonassessable, and shall be
delivered free and clear of all claims, liens, encumbrances,
restrictions, security interests and preemptive rights; and
(v) except as otherwise required by the HSR Act and other
than any filings required under applicable securities and blue sky
laws, the execution and delivery of this Option Agreement by Tecnol
and the consummation by it of the transactions contemplated hereby do
not require the consent, waiver, approval or authorization of or any
filing with any person or public authority and will not violate,
result in a breach of or the acceleration of any obligation under, or
constitute a default under, any provision of any charter or by- law,
indenture, mortgage, lien, lease, agreement, contract, instrument,
order, law, rule, regulation,
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judgment, ordinance, or decree, or restriction by which Tecnol or any
of its Subsidiaries or any of their respective properties or assets is
bound.
(b) Kimberly-Clark hereby represents and warrants to
Tecnol that:
(i) Kimberly-Clark has full corporate authority to
execute and deliver this Option Agreement and to consummate the
transactions contemplated hereby;
(ii) such execution, delivery and consummation have been
authorized by all requisite corporate action by Kimberly-Clark, and no
other corporate proceedings are necessary therefor;
(iii) this Option Agreement had been duly and validly
executed and delivered and represents a valid and legally binding
obligation of Kimberly-Clark, enforceable against Kimberly-Clark in
accordance with its terms, except that enforcement may be limited by
the Bankruptcy Exception and is subject to the Equity Exception;
(iv) any Tecnol Common Stock or other securities acquired
by Kimberly-Clark upon exercise of the Option will not be taken with a
view to the public distribution thereof and will not be transferred or
otherwise disposed of except in compliance with the Securities Act;
and
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(v) except as otherwise required by the HSR Act and other
than any filings required under applicable securities and blue sky
laws, the execution and delivery of this Option Agreement by
Kimberly-Clark and the consummation by it of the transactions
contemplated hereby do not require the consent, waiver, approval or
authorization of or any filing with any person or public authority and
will not violate, result in a breach of or the acceleration of any
obligation under, or constitute a default under, any provision of any
charter or by-law, indenture, mortgage, lien, lease, agreement,
contract, instrument, order, law, rule, regulation, judgment,
ordinance, or decree, or restriction by which Kimberly-Clark or any of
its Subsidiaries or any of their respective properties or assets is
bound.
6. ADJUSTMENT UPON CHANGES IN CAPITALIZATION.
In the event of any change in Tecnol Common Stock by reason of
stock dividends, stock splits, split-ups, reclassifications, recapitalizations
or the like, the type and number of shares subject to the Option, and the
purchase price per share, as the case may be, shall be adjusted appropriately.
In the event that any additional shares of Tecnol Common Stock are issued or
transferred from the Company's treasury stock account after August 31, 1997
(other than pursuant to an event described in the preceding sentence or
pursuant to this Option Agreement), the number of shares of Tecnol Common Stock
subject to the Option shall be adjusted so that, after such issuance, it equals
at least 19.9% of the number of shares of Tecnol Common Stock then issued and
outstanding (without considering as outstanding any shares subject to or issued
pursuant to the Option).
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7. REPURCHASE.
(a) At the request of Kimberly-Clark at any time after
the occurrence of a Purchase Event but prior to the second anniversary of such
Purchase Event (the "Repurchase Period"), if a Put Event has occurred, Tecnol
(or any successor entity thereof) shall repurchase the Option from
Kimberly-Clark together with all (but not less than all, subject to Section 10)
shares of Tecnol Common Stock subject thereto or purchased by Kimberly-Clark
pursuant thereto and with respect to which Kimberly-Clark then has Beneficial
Ownership, at a price per share (the "Per Share Repurchase Price") equal to the
greater of:
(i) The per share exercise price paid by Kimberly-Clark
for any shares of Tecnol Common Stock acquired pursuant to the Option;
(ii) The "Market Price" per share of Tecnol Common Stock
(defined as the average of the closing sales price per share for the
ten trading days prior to the date of such request for Tecnol Common
Stock on the National Association of Securities Dealers Automated
Quotation System Stock Market ("NASDAQ Stock Market") (as reported in
the Wall Street Journal or other authoritative source); and
(iii) The highest price per share paid in any transaction
triggering a Put Event pursuant to Section 7(c) hereof or at which a
tender or exchange offer which led to a Put Event was made for shares
of Tecnol Common Stock. In determining such price, the value of any
consideration other than cash shall be determined by an independent
nationally
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recognized investment banking firm selected by Kimberly-Clark and
reasonably acceptable to Tecnol.
(b) In the event Kimberly-Clark exercises its rights
under this Section 7, Tecnol shall, within 10 business days thereafter, pay the
required amount to Kimberly-Clark by wire transfer of immediately available
funds to an account designated by Kimberly-Clark and Kimberly-Clark shall
surrender to Tecnol the Option and the certificates evidencing any shares of
Tecnol Common Stock purchased thereunder with respect to which Kimberly-Clark
then has Beneficial Ownership, and Kimberly-Clark shall warrant that it has
sole record and Beneficial Ownership of such shares and that the same are free
and clear of all liens, claims, charges, restrictions and encumbrances of any
kind whatsoever.
(c) For purposes of this Section 7, a Put Event shall be
deemed to have occurred (i) upon the consummation of any merger, consolidation
or any similar transaction involving Tecnol or any purchase, lease or other
acquisition of all or substantially all of the assets of Tecnol and its
Subsidiaries considered as a whole or (ii) upon the acquisition by any person
of Beneficial Ownership of 50% or more of the then outstanding shares of Tecnol
Common Stock, provided that no such event shall constitute a Put Event unless a
Purchase Event shall have occurred prior to expiration or termination of the
Option.
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8. REPURCHASE AT OPTION OF TECNOL AND FIRST REFUSAL.
(a) Except to the extent that Kimberly-Clark shall have
previously exercised its rights under Section 7, at the request of Tecnol from
and after the date which is the later of (x) six months after a Purchase Event
has occurred and (y) six months after the termination of the Merger Agreement,
Tecnol may repurchase from Kimberly-Clark, and Kimberly-Clark shall sell to
Tecnol, the Option together with all (but not less than all, subject to Section
10) shares of Tecnol Common Stock subject thereto or purchased by
Kimberly-Clark pursuant hereto and with respect to which Kimberly-Clark then
has Beneficial Ownership at a price per share equal to the greater of (i) the
Market Price per share of Tecnol Common Stock (less the exercise price per
share for any unexercised shares of Tecnol Common Stock subject to the Option)
and (ii) the per share exercise price paid by Kimberly Clark for any shares of
Tecnol Common Stock acquired pursuant to the Option. Any repurchase under this
Section 8(a) shall be consummated in accordance with the procedures set forth
in Section 7(b).
(b) If, at any time after the occurrence of a Purchase
Event and prior to the third anniversary of the date of such occurrence,
Kimberly-Clark shall desire to sell, assign, transfer or otherwise dispose of
the Option or all or any of the shares of Tecnol Common Stock acquired by it
pursuant to the Option, it shall give Tecnol written notice of the proposed
transaction (an "Offeror's Notice"), identifying the proposed transferee, and
setting forth the terms of the proposed transaction. An Offeror's Notice shall
be deemed an offer by Kimberly-Clark to Tecnol, which may be accepted
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within 10 business days after its receipt of such Offeror's Notice, to purchase
such Option or shares on the same terms and conditions and at the same price at
which Kimberly-Clark is proposing to transfer the Option or such shares to a
third party. The purchase of the Option or such shares by Tecnol shall be
closed within 10 business days of the date of the acceptance of the offer and
the purchase price shall be paid to Kimberly-Clark by wire transfer of
immediately available funds to an account designated by Kimberly-Clark. In the
event of the failure or refusal of Tecnol to purchase the Option or shares in
each case as and to the extent covered by the Offeror's Notice or if the Board
of Directors of Tecnol does not approve Tecnol's proposed purchase of the
Option or such shares, Kimberly-Clark may, within 60 days from the date of the
Offeror's Notice, sell all, but not less than all, of the Option or such shares
in each case as and to the extent covered by the Offeror's Notice to such
third party at no less than the price specified and on terms no more favorable
to the purchaser than those set forth in the Offeror's Notice. These
requirements shall not apply to any disposition of Tecnol Common Stock by a
Person to whom Kimberly-Clark has sold shares of Tecnol Common Stock issued
upon exercise of the Option in compliance with the terms hereof.
9. REGISTRATION RIGHTS; APPROVAL.
(a) For three years after a Purchase Event, Tecnol shall,
if requested by any holder or beneficial owner (each a "Holder") of more than
1,000,000 shares (subject to adjustment in the event of any stock dividend,
stock split, split-up, reclassification, recapitalization or the like) of
Tecnol Common Stock issued pursuant to this Option Agreement, file a
registration statement on a form for general use under the Securities Act if
necessary in order to permit the sale or other
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disposition of the shares of Tecnol Common Stock that have been acquired upon
exercise of the Option in accordance with the intended method of sale or other
disposition requested by such Holder (it being understood and agreed that any
such sale or other disposition shall be effected on a widely distributed basis
so that, upon consummation thereof, no purchaser or transferee shall
Beneficially Own more than 2% of the shares of Tecnol Common Stock then
outstanding). Each such Holder shall provide all information reasonably
requested by Tecnol for inclusion in any registration statement to be filed
hereunder. Tecnol shall use its reasonable commercial efforts to cause such
registration statement first to become effective and then to remain effective
for such period not in excess of 90 days from the day such registration
statement first becomes effective as may be reasonably necessary to effect such
sales or other dispositions. The registration effected under this Section 9
shall be at Tecnol's expense except for underwriting commissions and the fees
and disbursements of such Holder's counsel attributable to the registration of
such Tecnol Common Stock. In no event shall Tecnol be required to effect more
than one registration hereunder. The filing of the registration statement
hereunder may be delayed for up to 120 days if such filing would require
premature disclosure of any material corporate development or otherwise
interfere with or adversely affect any proposed distribution by Tecnol of
Tecnol Common Stock or if a special audit of Tecnol would otherwise be required
in connection therewith. If requested by any such Holder in connection with
such registration, Tecnol shall become a party to any underwriting agreement
relating to the sale of such shares, but only to the extent of obligating
itself in respect of the representations, warranties, indemnities and other
agreements customarily included in such underwriting agreements for parties
similarly situated. Upon receiving any request for registration
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under this Section 9 from any Holder entitled to such registration, Tecnol
agrees to send a copy thereof to any other person known to Tecnol to be
entitled to registration rights under this Section 9, in each case by promptly
mailing the same, postage prepaid, to the address of record of the persons
entitled to receive such copies entitled to such registration.
(b) Subject to applicable law and the rules and regulations of the
NASDAQ National Market, Tecnol shall promptly file an application to list the
shares subject to the Option on the NASDAQ National Market and will use its
commercially reasonable efforts to obtain approval of such listing and to
effect all necessary filings by Tecnol under the HSR Act in connection with the
transactions contemplated hereby. Each of the parties hereto will use its
commercially reasonably efforts to obtain consents of all third parties and
governmental authorities, if any, necessary for the consummation of the
transactions contemplated.
10. SEVERABILITY.
Any term, provision, covenant or restriction contained in this
Option Agreement held by a court of competent jurisdiction to be invalid, void
or unenforceable, shall be ineffective to the extent of such invalidity,
voidness or unenforceability, but neither the remaining terms, provisions,
covenants or restrictions contained in this Option Agreement nor the validity
or enforceability thereof in any other jurisdiction shall be affected or
impaired thereby. Any term, provision, covenant or restriction contained in
this Option Agreement that is so found to be so broad as to be unenforceable
shall be interpreted to be as broad as is enforceable. If for any reason such
court
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determines that applicable law will not permit Kimberly-Clark or any other
person to acquire, or Tecnol to repurchase or purchase, the full number of
shares of Tecnol Common Stock provided in Section 2 hereof (as adjusted
pursuant to Section 6 hereof), it is the express intention of the parties
hereto to allow Kimberly-Clark or such other person to acquire, or Tecnol to
repurchase or purchase, such lesser number of shares as may be permissible,
without any amendment or modification hereof.
11. MISCELLANEOUS.
(a) EXPENSES. Each of the parties hereto shall pay all
costs and expenses incurred by it or on its behalf in connection with the
transactions contemplated hereunder, including fees and expenses of its own
financial consultants, investment bankers, accountants and counsel, except as
otherwise provided herein.
(b) ENTIRE AGREEMENT. Except as otherwise expressly
provided herein or therein, this Option Agreement and the Merger Agreement
contain the entire agreement between the parties with respect to the
transactions contemplated hereunder and supersedes all prior arrangements or
understandings with respect thereto, written or oral.
(c) SUCCESSORS; NO THIRD PARTY BENEFICIARIES. The terms
and conditions of this Option Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and permitted
assigns. Nothing in this Option Agreement, expressed or implied, is intended
to confer upon any party, other than the parties hereto and any Holder, and
their
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respective successors and assigns, any rights, remedies, obligations, or
liabilities under or by reason of this Option Agreement, except as expressly
provided herein.
(d) ASSIGNMENT. Other than as provided in Sections 8 and
9 hereof, neither of the parties hereto may sell, transfer, assign or otherwise
dispose of any of its rights or obligations under this Option Agreement or the
Option created hereunder to any other person (whether by operation of law or
otherwise), without the express written consent of the other party. Any
purported assignment in violation hereof shall be null and void.
(e) NOTICES. All notices or other communications which
are required or permitted hereunder shall be in writing and sufficient if
delivered in accordance with Section 9.6 of the Merger Agreement (which is
incorporated herein by reference).
(f) COUNTERPARTS. This Option Agreement may be executed
in counterparts, and each such counterpart shall be deemed to be an original
instrument, but both such counterparts together shall constitute but one
agreement.
(g) SPECIFIC PERFORMANCE. The parties hereto agree that
if for any reason Kimberly-Clark or Tecnol shall have failed to perform its
obligations under this Option Agreement, then either party hereto seeking to
enforce this Option Agreement against such non-performing party shall be
entitled to specific performance and injunctive and other equitable relief, and
the parties
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hereto further agree to waive any requirement for the securing or posting of
any bond in connection with the obtaining of any such injunctive or other
equitable relief. This provision is without prejudice to any other rights that
either party hereto may have against the other party hereto for any failure to
perform its obligations under this Option Agreement.
(h) GOVERNING LAW. This Option Agreement shall be
governed by and construed in accordance with the laws of the State of Delaware
applicable to agreements made and entirely to be performed within such state.
Nothing in this Option Agreement shall be construed to require any party (or
any subsidiary or affiliate or any party) to take any action or fail to take
any action in violation of applicable law, rule or regulation.
(i) WAIVER AND AMENDMENT. Any provision of this Option
Agreement may be waived at any time by the party that is entitled to the
benefits of such provision. This Option Agreement may not be modified,
amended, altered or supplemented except upon the execution and delivery of a
written agreement executed by the parties hereto.
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IN WITNESS WHEREOF, each of the parties hereto has executed
this Option Agreement as of the date first written above.
KIMBERLY-CLARK CORPORATION
By:
---------------------------
Name:
Title:
TECNOL MEDICAL PRODUCTS, INC.
By:
---------------------------
Name:
Title:
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EXHIBIT C
SEVERANCE MATTERS AGREEMENT
This Severance Matters Agreement (the "Agreement") is entered into as
of September ___, 1997, between Tecnol Medical Products, Inc., a Delaware
corporation (the "Company"), and Kimberly-Clark Corporation, a Delaware
corporation ("Kimberly-Clark").
WHEREAS, concurrently herewith, the Company, Kimberly-Clark, and
Vanguard Acquisition Corp. are entering into an Agreement and Plan of Merger
dated as of the date hereof (as amended or supplemented from time to time, the
"Merger Agreement"), pursuant to which Vanguard Acquisition Corp. will be
merged with and into the Company and the Company will become a wholly-owned
subsidiary of Kimberly-Clark, subject to the terms and conditions thereof; and
WHEREAS, the Company and Kimberly-Clark desire to provide severance to
certain employees who may be terminated at or following the Effective Time of
the Merger (as such terms are defined in the Merger Agreement); and
WHEREAS, the Company and Kimberly-Clark intend that the severance
arrangement provided under this Agreement be considered an "employee welfare
benefit plan" within the meaning of Section 3(1) the Employee Retirement Income
Security Act of 1974, as amended ("ERISA").
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein, the Company and Kimberly-Clark hereby agree as follows:
1. Term of the Agreement. The term of this Agreement shall
commence at the Effective Time of the Merger and end on December 31, 1998;
provided, however, that this Agreement shall terminate and shall be of no
further force or effect if the Merger Agreement shall be terminated and the
Merger shall not become effective pursuant to the terms thereof.
2. Eligible Employees. The class of employees eligible for
severance under this Agreement shall include all salaried full-time employees
of the Company as of the Effective Time of the Merger that meet the conditions
specified in Section 4 hereof (the "Eligible Employees"). An Eligible Employee
shall not include any individual who may receive payment of severance pursuant
to any other agreement entered into prior to the Effective Time of the Merger,
pursuant to the termination of his or her employment agreement in effect prior
to the Effective Time of the Merger, or pursuant to any other severance plan,
program, or arrangement maintained by the Company prior to the Effective Time
of the Merger. Except as set forth in this Section 2, no other current or
former employee of the Company shall be eligible for severance under this
Agreement.
3. Amount of Severance. Except as otherwise provided herein,
the amount of severance to which an Eligible Employee shall be entitled is as
follows, based on such Eligible Employee's Years of Service:
Less than 2 Years of Service: A total of 3 weeks of Base Salary
2 Years of Service or More: 1-1/2 weeks of Base Salary
per Year of Service
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The severance amount determined above will be offset by any amount
paid to an Eligible Employee, but will not be less zero (0), pursuant to the
Worker Adjustment and Retraining Notification ("WARN") Act in lieu of notice
thereunder.
For purposes of this Agreement, "Base Salary" shall mean the weekly
base salary rate for the Eligible Employee as shown on the Company's payroll
records as of the date of termination of employment.
For purposes of this Agreement, "Years of Service" shall mean the
months of service for such Eligible Employee as shown on the Company's payroll
records as of the date of termination of employment, rounded up to the nearest
whole month, divided by twelve (12) and rounded to two (2) decimal places.
4. Conditions for Severance. (a) If an Eligible Employee is
involuntarily terminated without Cause from employment with the Company on or
before December 31, 1998, such Eligible Employee shall be entitled to receive
severance in the amount shown in Section 3 hereof.
For purposes of this Agreement, "Cause" shall mean any termination of
employment for one or more of the following reasons: (i) gross neglect by the
Eligible Employee in the performance of his or her job duties; (ii) dishonest
or illegal conduct or other wrongdoing by the Eligible Employee; (iii) theft,
fraud, embezzlement or other criminal activity involving the Eligible
Employee's relationship with the Company; (iv) conduct by the Eligible Employee
which is in deliberate disregard of the interests of the Company; or (v) the
Company's reasonable belief that the Eligible Employee is abusing or has abused
alcohol, drugs or any similar substance that may impair his or her ability to
perform his or her job duties.
(b) If an Eligible Employee who has had a decrease in weekly base
salary from such Eligible Employee's weekly base salary in effect at the
Effective Time of the Merger terminates his or her employment with the Company
on or before December 31, 1998, such Eligible Employee shall be entitled to
receive the severance amount set forth in Section 3 hereof; provided that such
Eligible Employee's employment terminates within thirty (30) days following
such decrease in base salary.
(c) If an Eligible Employee is offered, in good faith and in
accordance with Kimberly-Clark's normal relocation practices under similar
circumstances, a position with Kimberly-Clark or an affiliate which requires
that such Eligible Employee relocate to a location more than twenty-five (25)
miles from such Eligible Employee's then location of employment, such Eligible
Employee shall be allowed thirty (30) days in which to consider such offer. If
such Eligible Employee rejects the offer and his or her employment with the
Company is terminated voluntarily or involuntarily without Cause on or before
December 31, 1998, the severance amount shown in Section 3 shall not apply, and
the Eligible Employee shall be entitled to receive severance in the following
amount:
Less than 3 Years of Service: A total of 3 weeks of Base Salary
3 Years of Service or More: 1 week of Base Salary per Year of Service
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(d) No Eligible Employee shall be entitled to receive severance under
this Agreement unless such Eligible Employee executes a Severance Agreement and
Release in Kimberly-Clark's standard form no later than forty-five (45) days
after receipt of the Severance Agreement and Release and such Eligible Employee
does not revoke such Severance Agreement and Release in writing within the
seven (7)-day period following the date on which it is executed.
(e) Except as provided in Section 4(b) and 4(c), no Eligible Employee
shall be entitled to severance under this Agreement if such Eligible Employee
voluntarily terminates employment with the Company or Kimberly-Clark or an
affiliate.
(f) Except as provided in Section 4(b) and 4(c), no Eligible Employee
shall be entitled to severance under this Agreement upon a transfer of
employment among the Company, Kimberly-Clark, or any of their subsidiaries or
affiliates, or upon the sale of all or a portion of the business of the Company
or Kimberly-Clark or any of their subsidiaries or affiliates to a third party
under circumstances in which such Eligible Employee is offered continued
employment through December 31, 1998 by any party to the transaction.
(g) If an Eligible Employee's employment is terminated on or before
December 31, 1998, and he or she receives severance hereunder, and such
Eligible Employee is later rehired, upon rehire such Eligible Employee shall
not be entitled to receive severance hereunder with respect to any subsequent
termination of employment.
5. Payment of Severance. An Eligible Employee shall receive
payment of severance from the Company in accordance with Sections 3 and 4
hereof in a lump sum payment as soon as practicable after the Severance
Agreement and Release becomes effective pursuant to Section 4(d) hereof.
If, at the time payment of severance is to be made hereunder, the
Eligible Employee is indebted or obligated to the Company or Kimberly-Clark or
any affiliate, then such payment of severance may, at the discretion of the
Company, be reduced by the amount of such indebtedness or obligation; provided
that an election not to offset shall not constitute a waiver of its claim of
such indebtedness or obligation.
6. Withholding. The Eligible Employee is responsible for payment
of any Federal, Social Security, state, or local taxes on any severance amount
payable under this Agreement. The Company or Kimberly-Clark or an affiliate
shall deduct from any such severance payment under this Agreement any Federal,
Social Security, state, or local taxes which are subject to withholding, as
determined by the Company or Kimberly-Clark or an affiliate.
7. Claim Procedure and Authority. The Company or Kimberly-Clark
shall establish a procedure for handling all claims hereunder and review of
denied claims consistent with the provisions of ERISA. The Company, in its
sole discretion, pursuant to action taken by the President-Professional Health
Care Sector of Kimberly-Clark, shall make all determinations regarding
eligibility and payment of severance hereunder and perform such other functions
as may be necessary hereunder.
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8. Non-Guarantee of Employment. Nothing contained in this
Agreement shall be construed as a contract of employment between any Eligible
Employee and the Company or Kimberly-Clark or their affiliates, or as a right
of any Eligible Employee to be continued in the employment of the Company or
Kimberly-Clark or their affiliates, or as a limitation of the right of the
Company or Kimberly-Clark or their affiliates to discharge any Eligible
Employee with or without Cause. Nor shall anything contained in this Agreement
affect the eligibility requirements under any other plans maintained by the
Company or Kimberly-Clark or their affiliates, nor give any person a right to
coverage under any other plan.
9. No Right to Assets. Payment of severance under this Agreement
shall be made from the general assets of the Company. No Eligible Employee
shall acquire by reason of this Agreement any right in or title to any assets,
funds or property of the Company or Kimberly-Clark or their affiliates,
including but not limited to any specific funds, assets or other property the
Company may set aside. Nothing contained in this Agreement constitutes a
guarantee by the Company or Kimberly-Clark or their affiliates that assets of
either shall be sufficient to pay severance to any person hereunder.
10. Assignment. Except for the right of offset by the Company or
Kimberly-Clark or their affiliates provided in Section 5 hereof, no right or
interest of any Eligible Employee hereunder shall be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
charge, attachment, garnishment, execution, levy, bankruptcy, or any other
disposition of any kind, either voluntary or involuntary, prior to actual
receipt of payment by the person entitled to such right or interest under the
provisions hereof, and any such disposition or attempted disposition shall be
void.
11. Governing Law; Validity. Except as preempted by ERISA, the
interpretation, construction and performance of this Agreement shall be
governed by and construed and enforced in accordance with the internal laws of
the State of Delaware without regard to principles of conflicts of laws. The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provisions of this Agreement
which other provisions shall remain in full force and effect.
12. Counterparts. This Agreement may be executed in two
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument
13. Miscellaneous. This Agreement shall be subject to the
provisions of Sections 9.2, 9.6, and 9.8 (other than with respect to an
Eligible Employee's rights under ERISA) of the Merger Agreement which
provisions are incorporated by reference herein. Capitalized terms used but
not defined herein shall have the meaning set forth in the Merger Agreement.
This Agreement may be amended or modified by the Company or Kimberly-Clark on
or after the Effective Time of the Merger; provided that no such amendment or
modification shall decrease or materially affect an Eligible Employee's
severance hereunder.
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IN WITNESS WHEREOF, each of the Company and Kimberly-Clark has caused
this Agreement to be executed by its duly authorized officer as of the day and
year first above written.
TECNOL MEDICAL PRODUCTS, INC.
By:
------------------------------------
Name:
------------------------------
Title:
------------------------------
KIMBERLY-CLARK CORPORATION
By:
------------------------------------
Name:
------------------------------
Title:
------------------------------
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EXHIBIT D
FORM OF AFFILIATE LETTER FOR AFFILIATES OF THE COMPANY
Kimberly-Clark Corporation
351 Phelps Drive
Irving, Texas 75038
Ladies and Gentlemen:
I have been advised that as of the date of this letter I may be deemed
to be an "affiliate" of Tecnol Medical Products, Inc., a Delaware corporation
(the "Company"), as the term "affiliate" is (i) defined for purposes of
paragraphs (c) and (d) of Rule 145 of the rules and regulations (the "Rules and
Regulations") of the Securities and Exchange Commission (the "Commission")
under the Securities Act of 1933, as amended (the "Act"). Pursuant to the
terms of the Agreement and Plan of Merger dated as of September __, 1997 (the
"Merger Agreement") among Kimberly-Clark Corporation, a Delaware corporation
("Parent"), Vanguard Acquisition Corp., a Delaware corporation ("Sub"), and the
Company, Sub will be merged with and into the Company (the "Merger").
Pursuant to the Merger Agreement, I may receive shares (the "Fixed
Shares") of common stock, par value $1.25 per share, of Parent. I would
receive the Fixed Shares in exchange for shares of common stock, $.001 par
value per share (or options or warrants to purchase such shares), of the
Company held or owned by me.
1. I represent, warrant and covenant to Parent that when and to the
extent I hold or own Fixed Shares:
A. I shall not make any sale, transfer or other disposition of
any Fixed Shares in violation of the Act or the Rules and Regulations.
B. I have been advised that the issuance of the Fixed Shares to
me pursuant to the Merger Agreement has been or will be registered
with the Commission under the Act on a Registration Statement on Form
S-4. However, I have also been advised that, because at the
81
time the Merger is submitted for a vote of the stockholders of the
Company, (a) I may be deemed to be an affiliate of the Company and (b)
the sale, transfer or other disposition by me of any Fixed Shares has
not been registered under the Act, I may not sell, transfer or
otherwise dispose of any Fixed Shares unless (i) such sale, transfer
or other disposition is made in conformity with the volume limitations
and other conditions of Rule 145 promulgated by the Commission under
the Act, (ii) such sale, transfer or other disposition has been
registered under the Act or (iii) in the opinion of counsel reasonably
satisfactory to Parent some other exemption from registration under
the Act is available for such sale, transfer or other disposition.
C. I understand that Parent is under no obligation to register
the sale, transfer or other disposition of any Fixed Shares by me or
on my behalf under the Act or, except as provided in paragraph 3(A)
below, to take any other action necessary in order to make compliance
with an exemption from such registration available.
D. I also understand that there will be placed on the
certificates for the Fixed Shares, or any substitutions therefor, a
legend stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), APPLIES, AND MAY BE SOLD
OR OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE
LIMITATIONS OF SUCH RULE 145, OR UPON RECEIPT BY
KIMBERLY-CLARK CORPORATION OF AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO IT THAT SOME OTHER EXEMPTION FROM REGISTRATION
UNDER THE ACT IS AVAILABLE, OR PURSUANT TO A REGISTRATION
STATEMENT UNDER THE ACT."
E. I also understand that unless a sale, transfer or other
disposition of any Fixed Shares is made in conformity with the
provisions of Rule 145, or pursuant to a registration statement,
Parent reserves the right to put the following legend on the
certificates issued to a transferee of such Fixed Shares:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), AND WERE ACQUIRED
82
FROM A PERSON WHO RECEIVED SUCH SHARES IN A TRANSACTION TO
WHICH RULE 145 PROMULGATED UNDER THE ACT APPLIES. THE SHARES
HAVE BEEN ACQUIRED BY THE HOLDER NOT WITH A VIEW TO, OR FOR
RESALE IN CONNECTION WITH, ANY DISTRIBUTION THEREOF WITHIN THE
MEANING OF THE ACT AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED
OR OTHERWISE DISPOSED OF WITHOUT REGISTRATION UNDER THE ACT OR
EXCEPT IN ACCORDANCE WITH AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE ACT OR UPON RECEIPT BY KIMBERLY-CLARK
CORPORATION OF AN OPINION OF COUNSEL REASONABLE SATISFACTORY
TO IT THAT SOME OTHER EXEMPTION FROM REGISTRATION UNDER THE
ACT IS AVAILABLE, OR PURSUANT TO A REGISTRATION STATEMENT
UNDER THE ACT."
F. Execution of this letter should not be considered an
admission on my part that I am an "affiliate" of the Company as
described in the first paragraph of this letter, nor as a waiver of
any rights I may have to object to any claim that I am such an
affiliate on or after the date of this letter.
G. I have carefully read this letter and the Merger Agreement
and discussed the requirements of such documents and other applicable
limitations upon my ability to sell, transfer or otherwise dispose of
shares of the capital stock of the Fixed Shares, to the extent I felt
necessary, with my counsel or counsel for the Company.
2. I represent, warrant and covenant that, to the extent that I own,
have owned during the last two years, or will own at or prior to the Effective
Time, any shares of common stock of the Company ("Company Common Stock"): (i) I
have no current plan or intention to sell, exchange or otherwise dispose of (or
to enter into any transaction to reduce my equity risk with respect to) any
shares of common stock of Parent (if any) that I receive pursuant to the
Merger, (ii) I have not acquired or transferred, and have no current plan or
intention to acquire or transfer, any shares of Company Common Stock prior to
the effective time of the Merger (the "Effective Time") in contemplation of the
Merger (except for acquisitions pursuant to the exercise of Company Options),
and (iii) both of the foregoing representations will be true, correct and
complete as of the Effective Time (as if made as of the Effective Time). I
understand that the representations made in this paragraph will be relied upon
by Carrington, Coleman, Slomon & Blumenthal, L.L.P., counsel to the Company,
and Sidley & Austin, counsel to
83
Parent (each of whom is an intended third-party beneficiary of the
representations and agreements in this paragraph), in rendering their opinions
pursuant to Section 7.2(d) and 7.3(d), respectively, of the Merger Agreement,
and I agree to notify Carrington, Coleman, Slomon & Blumenthal, L.L.P. and
Sidley & Austin immediately should any of the foregoing representations become
untrue at or prior to the Effective Time.
3. By Parent's acceptance of this letter, Parent hereby agrees with
me as follows:
A. For so long as and to the extent necessary to permit me to
sell Fixed Shares pursuant to Rule 145 under the Act and, to the
extent applicable, pursuant to Rule 144 under the Act, Parent shall
use its reasonable efforts to file, on a timely basis, all reports
required to be filed with the Commission by Parent pursuant to Section
13 of the Securities Exchange Act of 1934, as amended.
B. It is understood and agreed that certificates with the legends
set forth in Item 1, paragraphs D and E above will be substituted by
delivery of certificates without such legend if (i) one year shall
have elapsed from the date the undersigned acquires the Fixed Shares
and the provisions of Rule 145(d)(2) are then available to the
undersigned, (ii) two years shall have elapsed from the date the
undersigned acquires the Fixed Shares and the provisions of Rule
145(d)(3) are then applicable to the undersigned, or (iii) Parent has
received either an opinion of counsel, which opinion and counsel shall
be reasonably satisfactory to Parent, or a "no action" letter obtained
by the undersigned from the staff of the Commission, to the effect
that the restrictions imposed by Rule 145 under the Act no longer
apply to the Fixed Shares held or owned by the undersigned.
Very truly yours,
-----------------------------------
84
Agreed and accepted this __ day
of _______, 199_, by
KIMBERLY-CLARK CORPORATION
By ________________________
Name:
Title:
85
[TO BE SIGNED BY EACH AFFILIATE]
_______, 1997
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Carrington, Coleman, Sloman & Blumenthal, L.L.P.
200 Crescent Court, Suite 1500
Dallas, Texas 75201
Ladies and Gentlemen:
You have been requested to render opinions regarding certain
federal income tax consequences of the merger (the "Merger") of Vanguard
Acquisition Corp., Inc. ("Merger Sub"), a Delaware corporation and a wholly
owned subsidiary of Kimberly-Clark Corporation, Inc. ("Parent"), a Delaware
corporation, with and into Tecnol Medical Products, Inc. (the "Company"), a
Delaware corporation, upon the terms and conditions set forth in the Agreement
and Plan of Merger dated as of September ___, 1997 (the "Merger Agreement")
among Parent, Merger Sub and the Company. Capitalized terms not defined herein
have the meanings specified in the Merger Agreement.
In connection with the Merger, and recognizing that each of
you will rely upon this certificate in rendering such opinions, the
undersigned, a beneficial owner of 5% or more of the issued and outstanding
Shares and acting as such, hereby certifies and represents to each of you that
the facts and representations stated herein are true, correct and complete in
all respects at the date hereof and will be true, correct and complete in all
respects as of the Effective Time (as if made as of the Effective Time):
1. The undersigned has no present plan or intention to sell,
exchange, or otherwise dispose of (or enter into any transaction to
reduce the equity risk with respect to) any shares of Parent Common
Stock to be received pursuant to the Merger.
2. The undersigned has not transferred or acquired any Shares on
or prior to the date hereof in contemplation of the Merger and has no
present plan or intention to transfer or acquire any Shares prior to
the Effective Time in contemplation of the Merger (except for
acquisitions pursuant to the exercise of Company Options).
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The undersigned hereby undertakes to inform each of you and
Parent and Company immediately should any of such statements or representations
become untrue, incorrect or incomplete in any respect on or prior to the
Effective Time.
Very truly yours,
--------------------------------------