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EXHIBIT 10.1
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.
NOW, THEREFORE, in consideration of the premises herein
contained, the parties agree as follows:
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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 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
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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 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
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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 the HSR Act is required, 60 calendar days) from the Notice
Date for the closing of such purchase (the "Closing Date").
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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.
(d) Certificates for Tecnol Common Stock delivered at any
closing hereunder shall be endorsed with a restrictive legend which shall read
substantially as follows:
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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;
(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
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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, judgment, ordinance, or decree, or restriction by
which Tecnol or any of its Subsidiaries or any of their respective
properties or assets is bound.
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(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
(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
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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: /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 and President
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