<PAGE>
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
------------------------
ARMOR ALL PRODUCTS CORPORATION
---------------
(Name Of Subject Company)
SHIELD ACQUISITION CORPORATION
THE CLOROX COMPANY
---------------
(Bidders)
COMMON STOCK, $0.01 PAR VALUE
------------------------
(Title of Class of Securities)
042256 10 7
------------------------
(CUSIP Number of Class of Securities)
EDWARD A. CUTTER, ESQ., THE CLOROX COMPANY
1221 BROADWAY
OAKLAND, CALIFORNIA 94612-1888
TELEPHONE: (510) 271-7000
------------------------
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications on Behalf of Bidder)
------------------------
COPY TO:
JOHN W. CAMPBELL III, ESQ.
MORRISON & FOERSTER LLP
345 CALIFORNIA STREET
SAN FRANCISCO, CALIFORNIA 94104
TELEPHONE: (415) 677-7000
------------------------
CALCULATION OF FILING FEE
<TABLE>
<CAPTION>
TRANSACTION VALUATION* AMOUNT OF FILING FEE**
<S> <C>
$407,942,743 $81,589
</TABLE>
* For the purpose of calculating the fee only, this amount assumes the purchase
of 21,369,447 shares of Common Stock of Armor All Products Corporation
("Shares") at $19.09 per Share.
** 1/50 of 1% of the Transaction Valuation.
/ / Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
<TABLE>
<S> <C> <C> <C>
FILING
AMOUNT PREVIOUSLY PAID: N/A PARTY: N/A
FORM OR REGISTRATION
NO.: N/A DATE FILED: N/A
</TABLE>
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<PAGE>
TENDER OFFER
This Tender Offer Statement on Schedule 14D-1 relates to the offer by Shield
Acquisition Corporation, a Delaware corporation (the "Offeror") and a wholly
owned subsidiary of The Clorox Company, a Delaware corporation (the "Parent"),
to purchase any and all outstanding shares of Common Stock, par value $0.01 per
share (the "Shares"), of Armor All Products Corporation, a Delaware corporation
(the "Company"), at a price of $19.09 per Share, net to the seller in cash,
without interest, upon the terms and subject to the conditions set forth in
Offeror's Offer to Purchase, dated December 2, 1996 (the "Offer to Purchase")
and in the related Letter of Transmittal (which, together with any amendments or
supplements thereto, collectively constitute the "Offer"), copies of which are
submitted herewith as Exhibits (a)(1) and (a)(2), respectively.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Armor All Products Corporation, a
Delaware corporation (the "Company"), which has its principal executive offices
at 6 Liberty, Aliso Viejo, California 92656-3829.
(b) The class of equity securities being sought is all the outstanding
shares of Common Stock, par value $0.01 per share, of the Company. The
information set forth in the Introduction to the Offer to Purchase is
incorporated herein by reference.
(c) The information concerning the principal market in which the Shares are
traded and certain high and low sales prices for the Shares in such principal
market set forth in Section 6 ("Price Range of Shares; Dividends") of the Offer
to Purchase is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d) and (g) This Schedule 14D-1 is being filed by the Parent and the
Offeror. The information set forth in the Introduction and Section 9 ("Certain
Information Concerning the Parent and the Offeror") of the Offer to Purchase,
and in Annex I thereto, is incorporated herein by reference.
(e)-(f) Neither the Offeror nor the Parent, nor, to the best of their
knowledge, any of the persons listed in Annex I of the Offer to Purchase, has
during the last five years (i) been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or (ii) been a party to a
civil proceeding of a judicial or administrative body of competent jurisdiction
and as a result of such proceeding was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting activities subject
to, federal or state securities laws or finding any violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a) The information set forth in Section 9 ("Certain Information Concerning
the Parent and the Offeror") is incorporated herein by reference.
(b) The information set forth in the Introduction, Section 8 ("Certain
Information Concerning the Company"), Section 9 ("Certain Information Concerning
the Parent and the Offeror"), Section 11 ("Background of the Offer; Past
Contacts, Transactions or Negotiations with the Company"), Section 13 ("Merger
Agreement, Stockholder Agreement and Confidentiality Agreement") and Section 12
("Purpose of the Offer and the Merger; Plans for the Company") of the Offer to
Purchase is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(c) The information set forth in Section 10 ("Source and Amount of
Funds") of the Offer to Purchase is incorporated herein by reference.
2
<PAGE>
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(e) The information set forth in the Introduction, Section 11
("Background of the Offer; Past Contacts, Transactions or Negotiations with the
Company"), Section 12 ("Purpose of the Offer and the Merger; Plans for the
Company") and Section 13 ("Merger Agreement, Stockholder Agreement and
Confidentiality Agreement") of the Offer to Purchase is incorporated herein by
reference.
(f)-(g) The information set forth in Section 7 ("Certain Effects of the
Transaction") of the Offer to Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a)-(b) The information set forth in the Introduction, Section 9 ("Certain
Information Concerning the Parent and the Offeror") and Section 13 ("Merger
Agreement, Stockholder Agreement and Confidentiality Agreement") of the Offer to
Purchase is incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the Introduction, Section 9 ("Certain
Information Concerning the Parent and the Offeror"), Section 11 ("Background of
the Offer; Past Contacts, Transactions or Negotiations with the Company") and
Section 13 ("Merger Agreement, Stockholder Agreement and Confidentiality
Agreement") of the Offer to Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Introduction and Section 17 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in Section 9 ("Certain Information Concerning the
Parent and the Offeror") of the Offer to Purchase is incorporated herein by
reference. The incorporation by reference herein of the above-mentioned
financial information does not constitute an admission that such information is
material to a decision by a security holder of the Company as to whether to
sell, tender or hold Shares being sought in the Offer.
ITEM 10. ADDITIONAL INFORMATION.
(a) The information set forth in the Introduction, Section 11 ("Background
of the Offer; Past Contacts, Transactions or Negotiations with the Company"),
Section 12 ("Purpose of the Offer and the Merger; Plans for the Company") and
Section 13 ("Merger Agreement, Stockholder Agreement and Confidentiality
Agreement") of the Offer to Purchase is incorporated herein by reference.
(b)-(c) The information set forth in Section 16 ("Certain Regulatory and
Legal Matters") of the Offer to Purchase is incorporated herein by reference.
(d) The information set forth in Section 7 ("Certain Effects of the
Transaction") and Section 12 ("Purpose of the Offer and the Merger; Plans for
the Company") of the Offer to Purchase is incorporated herein by reference.
(e) The information set forth in Section 16 ("Certain Regulatory and Legal
Matters") of the Offer to Purchase is incorporated herein by reference.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal is incorporated herein by reference in its entirety.
3
<PAGE>
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<S> <C>
(a)(1) Offer to Purchase, dated December 2, 1996.
(a)(2) Letter of Transmittal.
(a)(3) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees.
(a)(4) Letter from Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees to Clients.
(a)(5) Notice of Guaranteed Delivery.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9.
(a)(7) Summary Advertisement, dated December 2, 1996.
(a)(8) Press Release issued by the Parent on November 26, 1996.
(b) None.
(c)(1) Agreement and Plan of Merger, dated as of November 26, 1996, among the
Parent, the Offeror and the Company.
(c)(2) Stockholder Agreement, dated as of November 26, 1996, among the Parent, the
Offeror, and McKesson.
(c)(3) Confidentiality Agreement, dated as October 10, 1996, among the Parent, the
Company and McKesson.
(c)(4) First Amendment to the Agreement and Plan of Merger, dated as of December 1,
1996, among the Parent, the Offeror and the Company.
(d) None.
(e) Not applicable.
(f) None.
</TABLE>
4
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, correct and complete.
Dated: December 2, 1996
THE CLOROX COMPANY
By: /s/ KAREN M. ROSE
-----------------------------------
Name: Karen M. Rose
Title:Vice President--Treasurer
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, correct and complete.
Dated: December 2, 1996
SHIELD ACQUISITION CORPORATION
By: /s/ KAREN M. ROSE
-----------------------------------
Name: Karen M. Rose
Title: Treasurer
5
<PAGE>
EXHIBIT LIST
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER NUMBER
- --------- -------------
<C> <S> <C>
(a)(1) Offer to Purchase, dated December 2, 1996
(a)(2) Letter of Transmittal
(a)(3) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees
(a)(4) Letter from Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees to Clients
(a)(5) Notice of Guaranteed Delivery
(a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9
(a)(7) Summary Advertisement, dated December 2, 1996
(a)(8) Press Release issued by the Parent on November 26, 1996
(c)(1) Agreement and Plan of Merger, dated as of November 26, 1996, among the Parent, the Offeror and
the Company
(c)(2) Stockholder Agreement, dated as of November 26, 1996, among the Parent, the Offeror, and
McKesson Corporation
(c)(3) Confidentiality Agreement, dated as of October 10, 1996, among the Parent, the Company and
McKesson Corporation
(c)(4) First Amendment to the Agreement and Plan of Merger, dated as of December 1, 1996, among the
Parent, the Offeror and the Company
</TABLE>
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
ARMOR ALL PRODUCTS CORPORATION
AT
$19.09 NET PER SHARE
BY
SHIELD ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
THE CLOROX COMPANY
----------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON MONDAY, DECEMBER 30, 1996, UNLESS THE
OFFER IS EXTENDED.
------------------------
THE BOARD OF DIRECTORS OF ARMOR ALL PRODUCTS CORPORATION (THE "COMPANY") HAS
UNANIMOUSLY APPROVED THE MERGER AGREEMENT REFERRED TO HEREIN AND THE
TRANSACTIONS CONTEMPLATED THEREBY, HAS DETERMINED THAT THE MERGER
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY ARE FAIR TO
AND IN THE BEST INTERESTS OF THE COMPANY AND THE COMPANY'S
STOCKHOLDERS AND RECOMMENDS THAT THE COMPANY'S
STOCKHOLDERS TENDER THEIR SHARES IN THE OFFER AND
APPROVE AND ADOPT THE MERGER AGREEMENT
AND THE MERGER.
--------------------------
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THE EXPIRATION OR
TERMINATION OF ANY WAITING PERIOD UNDER THE HART-SCOTT-RODINO ANTITRUST
IMPROVEMENTS ACT OF 1976, AS AMENDED, AND THE REGULATIONS THEREUNDER APPLICABLE
TO THE PURCHASE OF SHARES PURSUANT TO THE OFFER.
--------------------------
IMPORTANT
ANY STOCKHOLDER DESIRING TO TENDER ALL OR A PORTION OF SUCH STOCKHOLDER'S
SHARES OF COMMON STOCK, PAR VALUE $0.01 PER SHARE (THE "SHARES"), OF THE COMPANY
SHOULD EITHER (I) COMPLETE AND SIGN THE LETTER OF TRANSMITTAL OR A FACSIMILE
THEREOF IN ACCORDANCE WITH THE INSTRUCTIONS IN THE LETTER OF TRANSMITTAL AND
MAIL OR DELIVER THE LETTER OF TRANSMITTAL, TOGETHER WITH THE CERTIFICATE(S)
REPRESENTING TENDERED SHARES AND ALL OTHER REQUIRED DOCUMENTS, TO THE
DEPOSITARY, OR TENDER SUCH SHARES PURSUANT TO THE PROCEDURE FOR BOOK-ENTRY
TRANSFER SET FORTH IN SECTION 3, OR (II) REQUEST SUCH STOCKHOLDER'S BROKER,
DEALER, COMMERCIAL BANK, TRUST COMPANY OR OTHER NOMINEE TO EFFECT THE
TRANSACTION FOR SUCH STOCKHOLDER. STOCKHOLDERS HAVING SHARES REGISTERED IN THE
NAME OF A BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR OTHER NOMINEE MUST
CONTACT SUCH PERSON IF THEY DESIRE TO TENDER THEIR SHARES.
ANY STOCKHOLDER WHO DESIRES TO TENDER SHARES AND WHOSE CERTIFICATES
REPRESENTING SUCH SHARES ARE NOT IMMEDIATELY AVAILABLE, OR WHO CANNOT COMPLY
WITH THE PROCEDURES FOR BOOK-ENTRY TRANSFER ON A TIMELY BASIS, MAY TENDER SUCH
SHARES PURSUANT TO THE GUARANTEED DELIVERY PROCEDURE SET FORTH IN SECTION 3.
QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE OFFER
TO PURCHASE AND THE LETTER OF TRANSMITTAL, AND OTHER TENDER OFFER MATERIALS, MAY
BE DIRECTED TO THE INFORMATION AGENT OR TO THE DEALER MANAGER AT THEIR
RESPECTIVE ADDRESSES AND TELEPHONE NUMBERS SET FORTH ON THE BACK COVER OF THIS
OFFER TO PURCHASE, AND COPIES WILL BE FURNISHED PROMPTLY AT THE OFFEROR'S
EXPENSE.
--------------------------
THE DEALER MANAGER FOR THE OFFER IS:
MORGAN STANLEY & CO.
INCORPORATED
DECEMBER 2, 1996
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
1. Terms of the Offer........................................................ 2
2. Acceptance for Payment and Payment for Shares............................. 4
3. Procedures for Tendering Shares........................................... 5
4. Withdrawal Rights......................................................... 7
5. Certain Federal Income Tax Consequences................................... 8
6. Price Range of Shares; Dividends.......................................... 9
7. Certain Effects of the Transaction........................................ 10
8. Certain Information Concerning the Company................................ 10
9. Certain Information Concerning the Parent and the Offeror................. 12
10. Source and Amount of Funds................................................ 14
11. Background of the Offer; Past Contacts, Transactions or Negotiations with 14
the Company.............................................................
12. Purpose of the Offer and the Merger; Plans for the Company................ 16
13. Merger Agreement, Stockholder Agreement and Confidentiality Agreement..... 18
14. Dividends and Distributions............................................... 25
15. Certain Conditions of the Offer........................................... 26
16. Certain Regulatory and Legal Matters...................................... 26
17. Fees and Expenses......................................................... 29
18. Miscellaneous............................................................. 29
</TABLE>
<TABLE>
<S> <C> <C>
Annex
I: Directors and Executive Officers of the Parent and the Offeror............ I-1
Annex II-1
II: Section 262 of the General Corporation Law of the State of Delaware.......
</TABLE>
<PAGE>
TO THE HOLDERS OF COMMON STOCK OF
ARMOR ALL PRODUCTS CORPORATION:
INTRODUCTION
SHIELD ACQUISITION CORPORATION, a Delaware corporation (the "Offeror") and a
wholly owned subsidiary of THE CLOROX COMPANY, a Delaware corporation (the
"Parent"), hereby offers to purchase any and all outstanding shares of Common
Stock, par value $0.01 per share (the "Shares"), of ARMOR ALL PRODUCTS
CORPORATION, a Delaware corporation (the "Company"), at a price of $19.09 per
Share, net to the seller in cash, without interest thereon, upon the terms and
subject to the conditions set forth in this Offer to Purchase and in the related
Letter of Transmittal (which, as amended or supplemented from time to time,
together constitute the "Offer"). Tendering holders of Shares will not be
obligated to pay brokerage fees or commissions or, except as set forth in the
Letter of Transmittal, transfer taxes on the purchase of Shares by the Offeror
pursuant to the Offer. The Offeror will pay all charges and expenses of Morgan
Stanley & Co. Incorporated, which is acting as Dealer Manager (the "Dealer
Manager") in connection with the Offer, First Chicago Trust Company of New York
(the "Depositary"), and Georgeson & Company Inc. (the "Information Agent"), in
connection with the Offer. See Section 17. Following the Offer, the Offeror
intends to effect the Merger described below.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "COMPANY BOARD") HAS UNANIMOUSLY
APPROVED THE MERGER AGREEMENT (AS HEREINAFTER DEFINED) AND THE TRANSACTIONS
CONTEMPLATED THEREBY, HAS DETERMINED THAT THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY ARE FAIR TO AND IN THE BEST INTERESTS OF THE
COMPANY AND THE COMPANY'S STOCKHOLDERS AND RECOMMENDS THAT THE COMPANY'S
STOCKHOLDERS TENDER THEIR SHARES IN THE OFFER AND APPROVE AND ADOPT THE MERGER
AGREEMENT AND THE MERGER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THE EXPIRATION OR
TERMINATION OF ANY WAITING PERIOD UNDER THE HART-SCOTT-RODINO ANTITRUST
IMPROVEMENTS ACT OF 1976, AS AMENDED, AND THE REGULATIONS THEREUNDER APPLICABLE
TO THE PURCHASE OF SHARES PURSUANT TO THE OFFER.
PAINEWEBBER INCORPORATED ("PAINEWEBBER"), THE COMPANY'S FINANCIAL ADVISOR,
HAS DELIVERED TO THE COMPANY BOARD ITS OPINION THAT THE CONSIDERATION TO BE
RECEIVED BY THE HOLDERS OF THE SHARES PURSUANT TO THE OFFER AND THE MERGER IS
FAIR TO SUCH HOLDERS FROM A FINANCIAL POINT OF VIEW. A COPY OF SUCH OPINION IS
CONTAINED IN THE COMPANY'S SOLICITATION/RECOMMENDATION STATEMENT ON SCHEDULE
14D-9, WHICH IS BEING MAILED TO THE COMPANY'S STOCKHOLDERS HEREWITH.
STOCKHOLDERS ARE URGED TO READ THE OPINION IN ITS ENTIRETY.
The Offer is being made pursuant to the Agreement and Plan of Merger, dated
as of November 26, 1996 (as the same may be amended from time to time, the
"Merger Agreement"), among the Parent, the Offeror and the Company. The Merger
Agreement provides that, among other things, after the satisfaction or waiver of
the conditions set forth in the Merger Agreement, and in accordance with the
relevant provisions of the General Corporation Law of the State of Delaware (the
"DGCL"), the Offeror will be merged with and into the Company (the "Merger").
Following consummation of the Merger, the Company will continue as the surviving
corporation (the "Surviving Corporation") and will be a wholly owned subsidiary
of the Parent. See Section 12. At the effective time of the Merger (the
"Effective Time"), each issued and outstanding Share (other than Shares owned by
the Company as treasury stock, Shares owned by the Parent or the Offeror or any
subsidiary thereof or of the Company, or Shares with respect to which appraisal
rights are properly exercised under Delaware law ("Dissenting Shares")), will
automatically be converted into the right to receive $19.09 in cash, or any
higher price that may be paid per Share in the Offer, without interest (the
"Offer Price"). See Section 5 for a description of certain tax consequences of
the Offer and the Merger and Section 13 for a description of the Merger and the
Merger Agreement.
1
<PAGE>
The Company has represented that, as of November 26, 1996, there were
21,369,447 Shares issued and outstanding and that, as of the same date, there
were 1,127,137 options outstanding under the Company's 1986 Stock Option Plan.
In order to induce the Offeror and the Parent to enter into the Merger
Agreement, McKesson Corporation, a stockholder of the Company ("McKesson"),
entered into a Stockholder Agreement, dated as of November 26, 1996 (the
"Stockholder Agreement"), pursuant to which McKesson agreed to tender, or to
cause the tender of, all Shares owned by it pursuant to the Offer. McKesson has
represented that it beneficially owns 11,624,900 Shares, or approximately 54% of
the Shares outstanding as of the date of the Merger Agreement. McKesson also
granted to the Parent an irrevocable proxy to vote the Shares owned by McKesson
(i) in favor of the Merger and (ii) against any action or agreement which would
impede, interfere with or prevent the Merger. As of the date hereof, neither the
Offeror nor the Parent beneficially owns any Shares, provided that 2,500 Shares
are owned by a director and executive officer of the Parent, the beneficial
ownership of which is disclaimed by the Parent and the Offeror. If the Offeror
acquires at least 10,684,724 Shares in the Offer or otherwise (assuming no
exercise of outstanding Options), it will control a majority of the outstanding
Shares on a fully diluted basis and will be able to approve the Merger without
the vote of any other stockholder. The acquisition of such number of Shares will
be accomplished if, pursuant to the Offer, the Offeror purchases the Shares
agreed to be tendered, or to be caused to be tendered, by McKesson. In the event
the Offeror acquires 90% or more of the outstanding Shares through the Offer or
otherwise, the Offeror and the Parent would be able to effect the Merger
pursuant to the short form merger provisions of the DGCL, without prior notice
to, or any action by, any other stockholder of the Company. See Section 13.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
1. TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any extension or
amendment), the Offeror will accept for payment and pay for any and all Shares
validly tendered prior to the Expiration Date (as hereinafter defined) and not
theretofore withdrawn in accordance with Section 4. The term "Expiration Date"
means 12:00 Midnight, New York City time, on December 30, 1996, unless the
Offeror shall have extended the period of time for which the Offer is open, in
which event the term "Expiration Date" shall mean the latest time and date at
which the Offer, as so extended by the Offeror, shall expire.
If the Offeror shall decide, in its sole discretion, to increase the
consideration offered in the Offer to holders of Shares and if, at the time that
notice of such increase is first published, sent or given to holders of Shares
in the manner specified below, the Offer is scheduled to expire at any time
earlier than the expiration of a period ending on the tenth business day from,
and including, the date that such notice is first so published, sent or given,
then the Offer will be extended until the expiration of such period of ten
business days. For purposes of the Offer, a "business day" means any day other
than a Saturday, Sunday or a federal holiday, and consists of the time period
from 12:01 a.m. through 12:00 Midnight, New York City time.
THE OFFER IS SUBJECT TO CERTAIN TERMS AND CONDITIONS, INCLUDING THE
EXPIRATION OR TERMINATION OF ANY WAITING PERIOD UNDER THE HART-SCOTT-RODINO
ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED, AND THE REGULATIONS THEREUNDER
(THE "HSR ACT") APPLICABLE TO THE PURCHASE OF SHARES PURSUANT TO THE OFFER. SEE
SECTION 15. The Offeror reserves the right (but shall not be obligated), in
accordance with applicable rules and regulations of the United States Securities
and Exchange Commission (the "Commission"), subject to the limitations set forth
in the Merger Agreement and described below, to waive conditions of the Offer.
If any of the conditions described in Section 15 have not been satisfied by
12:00 Midnight, New York City time, on December 30, 1996 (or any other time then
set as the Expiration Date), the Offeror
2
<PAGE>
may, subject to the terms of the Merger Agreement as described below, elect to
(i) extend the Offer and, subject to applicable withdrawal rights, retain all
tendered Shares until the expiration of the Offer, as extended, (ii) subject to
complying with applicable rules and regulations of the Commission, waive such
condition and accept for payment all Shares so tendered and not extend the Offer
or (iii) terminate the Offer and not accept for payment any Shares and return
all tendered Shares to tendering stockholders.
Under the terms of the Merger Agreement, the Offeror may not (except as
described in the next sentence), without the prior written consent of the
Company, decrease the Offer Price, extend the expiration date of the Offer
beyond December 30, 1996, or otherwise amend any other condition of the Offer in
any manner adverse to the holders of the Shares. Notwithstanding the foregoing,
the Offeror may, without the consent of the Company, extend the Offer if, at the
then scheduled Expiration Date, any of the conditions to the Offeror's
obligation to purchase any Shares tendered shall not be satisfied or waived, or
the Parent reasonably determines, with the prior approval of the Company (such
approval not to be unreasonably withheld or delayed), that such extension is
necessary to comply with any legal or regulatory requirements relating to the
Offer. Assuming the prior satisfaction or waiver of the conditions of the Offer,
and subject to the preceding sentence, the Offeror shall accept for payment and
pay for Shares validly tendered and not withdrawn pursuant to the Offer as soon
as such actions are permitted under applicable law, pursuant to this Offer to
Purchase.
Subject to the terms and conditions of the Merger Agreement, the Offeror
expressly reserves the right (but will not be obligated), at any time and from
time to time in its sole discretion, to extend the period of time during which
the Offer is open, including the occurrence of any condition specified in Annex
A to the Merger Agreement, by giving oral or written notice of such extension to
the Depositary. There can be no assurance that the Offeror will exercise its
right to extend the Offer. Any such extension, delay in acceptance for payment
or payment, or termination or amendment of the Offer will be followed, as
promptly as practicable, by public announcement thereof, such announcement in
the case of an extension to be issued not later than 9:00 a.m., New York City
time, on the next business day after the previously scheduled Expiration Date in
accordance with the public announcement requirements of Rules 14d-4(c) and
14e-1(d) under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). Without limiting the obligation of the Offeror under such rules or the
manner in which the Offeror may choose to make any public announcement, the
Offeror currently intends to make announcements by issuing a press release to
the Dow Jones News Service and making any appropriate filing with the
Commission. During any such extension, all Shares previously tendered and not
properly withdrawn will remain subject to the Offer and to the right of a
tendering stockholder to withdraw such stockholder's Shares.
Subject to the applicable rules and regulations of the Commission and
subject to the limitations set forth in the Merger Agreement, the Offeror also
expressly reserves the right, at any time and from time to time, in its sole
discretion, (i) to delay payment for any Shares regardless of whether such
Shares were theretofore accepted for payment, or to terminate the Offer and not
to accept for payment or pay for any Shares not theretofore accepted for payment
or paid for, upon the occurrence of any of the conditions set forth in Section
15, by giving oral or written notice of such delay or termination to the
Depositary, and (ii) at any time or from time to time, to amend the Offer in any
respect. The Offeror's right to delay payment for any Shares or not to pay for
any Shares theretofore accepted for payment is subject to the applicable rules
and regulations of the Commission, including Rule 14e-1(c) of the Exchange Act,
relating to the Offeror's obligation to pay for or return tendered Shares
promptly after the termination or withdrawal of the Offer.
If, subject to the terms of the Merger Agreement, the Offeror makes a
material change in the terms of the Offer or the information concerning the
Offer, or if it waives a material condition of the Offer, the Offeror will
disseminate additional tender offer materials and extend the Offer if and to the
extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act or
otherwise. The minimum period during which the Offer must remain open following
material changes in the terms of the Offer or
3
<PAGE>
the information concerning the Offer, other than a change in price or a change
in percentage of securities sought, will depend upon the facts and
circumstances, including the relative materiality of the terms or information
changes. With respect to a change in price or a change in percentage of
securities sought, a minimum ten business day period is generally required to
allow for adequate dissemination to stockholders and investor response.
The Company has provided the Offeror with the Company's stockholder list and
security position listings for the purpose of disseminating the Offer to holders
of Shares. This Offer to Purchase and the Letter of Transmittal will be mailed
to record holders of Shares whose names appear on the Company's stockholder list
and will be furnished to brokers, dealers, commercial banks, trust companies and
similar persons whose names, or the names of whose nominees, appear on the
stockholder list or, if applicable, who are listed as participants in a clearing
agency's security position listing for subsequent transmittal to beneficial
owners of Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension or
amendment), the Offeror will accept for payment and will pay for all Shares
validly tendered prior to the Expiration Date and not theretofore withdrawn in
accordance with Section 4 promptly after the later to occur of (a) the
Expiration Date and (b) subject to compliance with the applicable rules and
regulations of the Commission, including Rule 14e-1(c) under the Exchange Act,
the satisfaction or waiver of the conditions set forth in Section 15. Subject to
such compliance, the Offeror expressly reserves the right to delay payment for
Shares in order to comply in whole or in part with any applicable law. See
Sections 1 and 16. In all cases, payment for Shares tendered and accepted for
payment pursuant to the Offer will be made only after timely receipt by the
Depositary of (i) the certificates evidencing such Shares or timely confirmation
(a "Book-Entry Confirmation") of a book-entry transfer of such Shares into the
Depositary's account at The Depository Trust Company and the Philadelphia
Depository Trust Company (collectively, the "Book-Entry Transfer Facilities"),
pursuant to the procedures set forth in Section 3, (ii) the Letter of
Transmittal (or a manually signed facsimile thereof), properly completed and
duly executed, with any required signature guarantees or an Agent's Message (as
defined below) in connection with a book-entry transfer, and (iii) any other
documents required under the Letter of Transmittal.
The term "Agent's Message" means a message transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Offeror may enforce such agreement against the participant.
For purposes of the Offer, the Offeror will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered and not withdrawn as, if
and when the Offeror gives oral or written notice to the Depositary of the
Offeror's acceptance of such Shares for payment. Upon the terms and subject to
the conditions of the Offer, payment for Shares accepted for payment pursuant to
the Offer will be made by deposit of the purchase price therefor with the
Depositary, which will act as agent for tendering stockholders for the purpose
of receiving payment from the Offeror and transmitting such payment to tendering
stockholders whose Shares have been accepted for payment. UNDER NO CIRCUMSTANCES
WILL INTEREST ON THE PURCHASE PRICE FOR THE SHARES BE PAID, REGARDLESS OF ANY
DELAY IN MAKING SUCH PAYMENT. Upon the deposit of funds with the Depositary for
the purpose of making payments to tendering stockholders, the Offeror's
obligation to make such payment shall be satisfied, and tendering stockholders
must thereafter look solely to the Depositary for payment of amounts owed to
them by reason of the acceptance for payment of Shares pursuant to the Offer.
If, for any reason whatsoever, acceptance for payment of any Shares tendered
pursuant to the Offer is delayed, or the Offeror is unable to accept for
4
<PAGE>
payment Shares tendered pursuant to the Offer, then, without prejudice to the
Offeror's rights under Section 1, the Depositary may, nevertheless, on behalf of
the Offeror, retain tendered Shares, and, subject to compliance with the
applicable rules and regulations of the Commission, including Rule 14e-1(c)
under the Exchange Act, such Shares may not be withdrawn, except to the extent
that the tendering stockholders are entitled to withdrawal rights as described
in Section 4.
If any tendered Shares are not accepted for payment pursuant to the terms
and conditions of the Offer for any reason, or if certificates are submitted
representing more Shares than are tendered, certificates representing such
unpurchased or untendered Shares will be returned, without expense to the
tendering stockholder (or, in the case of Shares delivered by book-entry
transfer to a Book-Entry Transfer Facility, such Shares will be credited to an
account maintained within such Book-Entry Transfer Facility), as promptly as
practicable after the expiration, termination or withdrawal of the Offer.
If, prior to the Expiration Date, the Offeror increases the price being paid
for Shares accepted for payment pursuant to the Offer, such increased
consideration will be paid to all stockholders whose Shares are purchased
pursuant to the Offer.
The Offeror reserves the right to transfer or assign, in whole or from time
to time in part, to one or more of its affiliates the right to purchase Shares
tendered pursuant to the Offer, but any such transfer or assignment will not
relieve the Offeror of its obligations under the Offer or prejudice the rights
of tendering stockholders to receive payment for Shares validly tendered and
accepted for payment.
3. PROCEDURES FOR TENDERING SHARES
VALID TENDERS. For Shares to be validly tendered pursuant to the Offer, a
properly completed and duly executed Letter of Transmittal (or a manually signed
facsimile thereof), with any required signature guarantees, or, in the case of a
book-entry transfer, an Agent's Message, and any other required documents, must
be received by the Depositary at one of its addresses set forth on the back
cover of this Offer to Purchase prior to the Expiration Date, or the tendering
stockholder must comply with the guaranteed delivery procedure set forth below.
In addition, either (i) certificates representing such Shares must be received
by the Depositary along with the Letter of Transmittal or such Shares must be
tendered pursuant to the procedure for book-entry transfer set forth below, and
a Book-Entry Confirmation must be received by the Depositary, in each case prior
to the Expiration Date or (ii) the guaranteed delivery procedure set forth below
must be complied with. No alternative, conditional or contingent tenders will be
accepted. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE
WITH SUCH BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY
TO THE DEPOSITARY.
BOOK-ENTRY TRANSFER. The Depositary will make a request to establish an
account with respect to the Shares at each Book-Entry Transfer Facility for
purposes of the Offer within two business days after the date of this Offer to
Purchase. Any financial institution that is a participant in a Book-Entry
Transfer Facility's system may make book-entry delivery of Shares by causing a
Book-Entry Transfer Facility to transfer such Shares into the Depositary's
account at a Book-Entry Transfer Facility in accordance with such Book-Entry
Transfer Facility's procedures for transfer. Although delivery of Shares may be
effected through book-entry at a Book-Entry Transfer Facility prior to the
Expiration Date, (i) the Letter of Transmittal (or a manually signed facsimile
thereof), properly completed and duly executed, with any required signature
guarantees, or an Agent's Message in connection with a book-entry transfer, and
any other required documents, must, in any case, be transmitted to and received
by the Depositary at one of its addresses set forth on the back cover of this
Offer to Purchase prior to the Expiration Date or (ii) the guaranteed delivery
procedures described below must be complied with.
SIGNATURE GUARANTEE. Signatures on the Letter of Transmittal must be
guaranteed by a firm which is a member in good standing of a recognized
Medallion Signature Guarantee Program, or by any other
5
<PAGE>
"eligible guarantor institution," as such term is defined in Rule 17Ad-15 under
the Exchange Act (each of the foregoing being referred to as an "Eligible
Institution" and, collectively, as "Eligible Institutions"), unless the Shares
tendered thereby are tendered (i) by a registered holder of Shares who has not
completed either the box labeled "Special Delivery Instructions" or the box
labeled "Special Payment Instructions" on the Letter of Transmittal or (ii) for
the account of any Eligible Institution. If the certificates evidencing Shares
are registered in the name of a person or persons other than the signer of the
Letter of Transmittal, or if payment is to be made, or delivered to, or
certificates for unpurchased Shares are to be issued or returned to, a person
other than the registered owner or owners, then the tendered certificates must
be endorsed or accompanied by duly executed stock powers, in either case signed
exactly as the name or names of the registered owner or owners appear on the
certificates, with the signatures on the certificates or stock powers guaranteed
by an Eligible Institution as provided in the Letter of Transmittal. See
Instructions 1 and 5 to the Letter of Transmittal.
GUARANTEED DELIVERY. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's certificates for Shares are not immediately
available or time will not permit all required documents to reach the Depositary
prior to the Expiration Date or the procedure for book-entry transfer cannot be
completed on a timely basis, such Shares may nevertheless be tendered if all of
the following guaranteed delivery procedures are duly complied with:
(i) the tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Offeror herewith, is
received by the Depositary, as provided below, prior to the Expiration Date;
and
(iii) the certificates for all tendered Shares, in proper form for
transfer (or a Book-Entry Confirmation), together with a properly completed
and duly executed Letter of Transmittal (or a manually signed facsimile
thereof), and any required signature guarantees, or, in the case of a book-
entry transfer, an Agent's Message, and any other documents required by the
Letter of Transmittal are received by the Depositary within three trading
days after the date of execution of such Notice of Guaranteed Delivery. The
term "trading day" is any day on which the Nasdaq National Market ("Nasdaq")
is open for business.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted by
telegram, facsimile transmission or mail to the Depositary and must include a
guarantee by an Eligible Institution in the form set forth in the Notice of
Guaranteed Delivery.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY,
IS AT THE OPTION AND RISK OF THE STOCKHOLDER TENDERING SUCH SHARES. IF DELIVERY
IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED.
Notwithstanding any other provision hereof, payment for Shares tendered and
accepted for payment pursuant to the Offer will in all cases be made only after
timely receipt by the Depositary of (i) the certificates evidencing such Shares
or a Book-Entry Confirmation, (ii) the Letter of Transmittal (or a facsimile
thereof), properly completed and executed, with any required signature
guarantees, or an Agent's Message in connection with a book-entry transfer, and
(iii) any other documents required under the Letter of Transmittal.
BACKUP FEDERAL INCOME TAX WITHHOLDING. To prevent backup federal income tax
withholding with respect to payments of the Offer Price of Shares purchased
pursuant to the Offer, each tendering stockholder must provide the Depositary
with his or her correct Taxpayer Identification Number ("TIN") and certify that
such stockholder is not subject to backup federal income tax withholding by
completing the Substitute Form W-9 included in the Letter of Transmittal. See
Section 5 of this Offer to Purchase and
6
<PAGE>
Instruction 9 set forth in the Letter of Transmittal. If the stockholder is a
nonresident alien or foreign entity not subject to back-up withholding, the
stockholder must give the Depositary a completed Form W-8 Certificate of Foreign
Status prior to receipt of any payments.
DETERMINATION OF VALIDITY. All questions as to the form of documents and
the validity, eligibility (including time of receipt) and acceptance for payment
of any tender of Shares will be determined by the Offeror, in its sole
discretion, and its determination will be final and binding on all parties. The
Offeror reserves the absolute right to reject any or all tenders of any Shares
that are determined by it not to be in proper form or the acceptance of or
payment for which may, in the opinion of the Offeror, be unlawful. The Offeror
also reserves the absolute right to waive any of the conditions of the Offer,
subject to the limitations set forth in the Merger Agreement, or any defect or
irregularity in the tender of any Shares. The Offeror's interpretation of the
terms and conditions of the Offer (including the Letter of Transmittal and the
Instructions to the Letter of Transmittal) will be final and binding on all
parties except with respect to the interpretation of the Offeror's obligation to
extend the Offer under certain circumstances, which interpretation will be made
jointly with the Company. No tender of Shares will be deemed to have been
validly made until all defects and irregularities have been cured or waived.
None of the Offeror, the Parent, the Dealer Manager, the Depositary, the
Information Agent or any other person will be under any duty to give
notification of any defects or irregularities in tenders or incur any liability
for failure to give any such notification.
OTHER REQUIREMENTS. By executing the Letter of Transmittal as set forth
above (including through delivery of an Agent's Message), a tendering
stockholder irrevocably appoints designees of the Offeror as such stockholder's
attorneys-in-fact and proxies, each with full power of substitution, in the
manner set forth in the Letter of Transmittal, to the full extent of such
stockholder's right with respect to the Shares tendered by such stockholder and
accepted for payment by the Offeror (and any and all other Shares or other
securities or rights issued or issuable in respect of such Shares on or after
November 26, 1996). All such powers of attorney and proxies shall be considered
coupled with an interest in the tendered Shares. This appointment is effective
upon the acceptance for payment of the Shares by the Offeror. Upon acceptance
for payment, all prior powers of attorney and proxies given by the stockholder
with respect to such Shares or other securities or rights will, without further
action, be revoked and no subsequent proxies may be given or written consent
executed (and, if given or executed, will not be deemed effective). The
designees of the Offeror will, with respect to the Shares and other securities
or rights, be empowered to exercise all voting and other rights of such
stockholder as they in their sole judgment deem proper in respect of any annual
or special meeting of the Company's stockholders, or any adjournment or
postponement thereof. The Offeror reserves the right to require that, in order
for Shares to be deemed validly tendered, immediately upon the Offeror's
acceptance of such Shares for payment, the Offeror must be able to exercise full
voting and other rights of a record and beneficial owner with respect to such
Shares.
A tender of Shares pursuant to any one of the procedures described above
will constitute the tendering stockholder's acceptance of the terms and
conditions of the Offer, as well as the tendering stockholder's representation
and warranty that (i) such stockholder has the full power and authority to
tender, sell, assign and transfer the tendered Shares (and any and all other
shares of Common Stock or other securities issued or issuable in respect of such
Shares on or after November 26, 1996), and (ii) when the same are accepted for
payment by the Offeror, the Offeror will acquire good, marketable and
unencumbered title thereto, free and clear of all liens, restrictions, charges
and encumbrances. The Offeror's acceptance for payment of Shares tendered
pursuant to the Offer will constitute a binding agreement between the tendering
stockholder and the Offeror upon the terms and subject to the conditions of the
Offer.
4. WITHDRAWAL RIGHTS
Tenders of Shares made pursuant to the Offer are irrevocable, except that
such Shares may be withdrawn at any time prior to the Expiration Date and,
unless theretofore accepted for payment by the
7
<PAGE>
Offeror pursuant to the Offer, may also be withdrawn at any time after January
31, 1997. If purchase of or payment for Shares is delayed for any reason, or if
the Offeror is unable to purchase or pay for Shares for any reason, then,
without prejudice to the Offeror's rights under the Offer, tendered Shares may
be retained by the Depositary on behalf of the Offeror and may not be withdrawn
except to the extent that tendering stockholders are entitled to withdrawal
rights as set forth in this Section 4, subject to Rule 14e-1(c) under the
Exchange Act, which provides that no person who makes a tender offer shall fail
to pay the consideration offered or return the securities deposited by or on
behalf of security holders promptly after the termination or withdrawal of the
Offer.
For a withdrawal to be effective, a written, telegraphic, telex or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase. Any
such notice of withdrawal must specify the name of the person who tendered the
Shares to be withdrawn, the number of Shares to be withdrawn and the name of the
registered holder of such Shares, if different from that of the person who
tendered the Shares. If certificates for Shares to be withdrawn have been
delivered or otherwise identified to the Depositary, then, prior to the physical
release of such Share certificates, the serial numbers shown on such Share
certificates must be submitted to the Depositary and the signatures on the
notice of withdrawal must be guaranteed by an Eligible Institution, unless such
Shares have been tendered for the account of an Eligible Institution. If Shares
have been tendered pursuant to the procedures for book-entry transfer set forth
in Section 3, any notice of withdrawal must also specify the name and number of
the account at the Book-Entry Transfer Facility to be credited with the
withdrawn Shares and must otherwise comply with such Book-Entry Transfer
Facility's procedures. All questions as to the form and validity (including time
of receipt) of any notice of withdrawal will be determined by the Offeror, in
its sole discretion, whose determination will be final and binding. None of the
Offeror, the Parent, the Dealer Manager, the Depositary, the Information Agent
or any other person will be under any duty to give notification of any defects
or irregularities in any notice of withdrawal or incur any liability for failure
to give any such notification.
Any Shares properly withdrawn will be deemed not validly tendered for
purposes of the Offer, but may be retendered at any subsequent time prior to the
Expiration Date by following any of the procedures described in Section 3.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the principal federal income tax consequences
of the Offer and the Merger to holders whose Shares are purchased pursuant to
the Offer or whose Shares are converted to cash in the Merger (including
pursuant to the exercise of appraisal rights). The discussion applies only to
holders of Shares in whose hands Shares are capital assets, and may not apply to
Shares received pursuant to the exercise of employee stock options or otherwise
as compensation, or to holders of Shares who are in special tax situations (such
as insurance companies, tax-exempt organizations, non-U.S. persons or persons
who have engaged in "straddles" or other hedging transactions with respect to
their Shares).
THE FEDERAL INCOME TAX CONSEQUENCES SET FORTH BELOW ARE INCLUDED FOR GENERAL
INFORMATIONAL PURPOSES ONLY AND ARE BASED UPON CURRENT LAW. BECAUSE INDIVIDUAL
CIRCUMSTANCES MAY DIFFER, EACH HOLDER OF SHARES SHOULD CONSULT SUCH HOLDER'S OWN
TAX ADVISOR TO DETERMINE THE APPLICABILITY OF THE RULES DISCUSSED BELOW TO SUCH
HOLDER AND THE PARTICULAR TAX EFFECTS OF THE OFFER AND THE MERGER, INCLUDING THE
APPLICATION AND EFFECT OF FOREIGN, STATE, LOCAL AND OTHER INCOME TAX LAWS.
The receipt of cash for Shares pursuant to the Offer or the Merger
(including pursuant to the exercise of appraisal rights) will be a taxable
transaction for federal income tax purposes and also may be a taxable
transaction under applicable foreign, state, local and other income tax laws. In
general, for federal income tax purposes, a holder of Shares will recognize gain
or loss equal to the difference between his or her
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<PAGE>
adjusted tax basis in the Shares sold pursuant to the Offer or converted to cash
in the Merger and the amount of cash received therefor. Gain or loss must be
determined separately for each block of Shares (i.e., Shares acquired at the
same cost in a single transaction) sold pursuant to the Offer or converted to
cash in the Merger. Such gain or loss generally will be capital gain or loss and
will be long-term capital gain or loss if, on the date of sale (or, if
applicable, the date of the Merger), the Shares were held for more than one
year. If a holder exercises such holder's appraisal rights and receives an
amount treated as interest for federal income tax purposes, such amount will be
taxed as ordinary income.
BACKUP WITHHOLDING. Payments in connection with the Offer or the Merger may
be subject to "backup withholding" at a rate of 31%. Backup withholding
generally applies if the holder (i) fails to furnish such holder's social
security number or TIN, (ii) furnishes an incorrect TIN, (iii) is subject to
backup withholding due to previous failures to include reportable interest or
dividend payments on such holder's federal income tax return, or (iv) under
certain circumstances, fails to provide a certified statement, signed under
penalties of perjury, that the TIN provided is such holder's correct number and
that such holder is not subject to backup withholding. Backup withholding is not
an additional tax, but rather it is an advance tax payment that is subject to
refund if and to the extent that it results in an overpayment of tax. Certain
taxpayers are generally exempt from backup withholding, including corporations
and financial institutions. Certain penalties apply for failure to furnish
correct information and for failure to include reportable payments in income.
Each holder of Shares should consult with his or her own tax advisor as to his
or her qualification for exemption from backup withholding and the procedure for
obtaining such exemption. Tendering holders of Shares may be able to prevent
backup withholding by completing the Substitute Form W-9 included in the Letter
of Transmittal. See Section 3.
6. PRICE RANGE OF SHARES; DIVIDENDS
The Shares are listed on the Nasdaq under the symbol "ARMR." The following
table sets forth for the periods indicated the high and low sales prices per
Share based on published financial sources.
<TABLE>
<CAPTION>
DIVIDEND HIGH LOW
----------- --------- ---------
<S> <C> <C> <C>
CALENDAR 1994:
First Quarter.................................................................. $ 0.16 $ 21.75 $ 18.75
Second Quarter................................................................. $ 0.16 $ 22.00 $ 18.25
Third Quarter.................................................................. $ 0.16 $ 23.25 $ 20.25
Fourth Quarter................................................................. $ 0.16 $ 24.00 $ 18.00
CALENDAR 1995:
First Quarter.................................................................. $ 0.16 $ 23.375 $ 18.75
Second Quarter................................................................. $ 0.16 $ 22.50 $ 16.50
Third Quarter.................................................................. $ 0.16 $ 18.00 $ 15.00
Fourth Quarter................................................................. $ 0.16 $ 19.50 $ 15.50
CALENDAR 1996:
First Quarter.................................................................. $ 0.16 $ 18.25 $ 14.75
Second Quarter................................................................. $ 0.16 $ 16.50 $ 14.50
Third Quarter.................................................................. $ 0.16 $ 16.375 $ 14.50
Fourth Quarter (through November 29, 1996)..................................... $ 0.16 $ 18.875 $ 16.00
</TABLE>
On November 25, 1996, the last full day of trading prior to the public
announcement of the execution of the Merger Agreement, the closing price per
Share as reported on the Nasdaq was $17.50. On November 29, 1996, the last full
day of trading prior to the commencement of the Offer, the closing price per
Share as reported on the Nasdaq was $18.875. HOLDERS OF SHARES ARE URGED TO
OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES.
9
<PAGE>
7. CERTAIN EFFECTS OF THE TRANSACTION
The purchase of Shares pursuant to the Offer will reduce the number of
holders of Shares and the number of Shares that might otherwise trade publicly
and could adversely affect the liquidity and market value of the remaining
Shares held by the public.
MARKET FOR SHARES. The extent of the public market for the Shares and,
according to the published guidelines of the National Association of Securities
Dealers, Inc., the continued trading of the Shares on the Nasdaq, after
commencement of the Offer, will depend upon the number of holders of Shares
remaining at such time, the interest in maintaining a market in such Shares on
the part of securities firms, the possible termination of registration of such
Shares under the Exchange Act, as described below, and other factors. The
Company has represented that, as of November 26, 1996, 21,369,447 Shares were
issued and outstanding. If, as a result of the purchase of Shares pursuant to
the Offer or otherwise, trading of the Shares on the Nasdaq is discontinued, the
liquidity of and market for the Shares could be adversely affected. The Offeror
and the Purchaser cannot predict whether or to what extent the reduction in the
number of Shares that might otherwise trade publicly would have an adverse or
beneficial effect on the market price for or marketability of the Shares or
whether it would cause future prices to be greater or less than the Offer Price.
EXCHANGE ACT REGISTRATION. The Shares are currently registered under the
Exchange Act. Registration of the Shares under the Exchange Act may be
terminated upon application of the Company to the Commission if the Shares are
neither listed on a national securities exchange nor held by 300 or more holders
of record. Termination of registration of the Shares under the Exchange Act
would substantially reduce the information required to be furnished by the
Company to its stockholders and to the Commission and would make certain
provisions of the Exchange Act no longer applicable to the Company, such as the
short-swing profit recovery provisions of Section 16(b) of the Exchange Act, the
requirement of furnishing a proxy statement pursuant to Section 14(a) of the
Exchange Act in connection with stockholders' meetings and the related
requirement of furnishing an annual report to stockholders and the requirements
of Rule 13e-3 under the Exchange Act with respect to "going private"
transactions. Furthermore, the ability of "affiliates" of the Company and
persons holding "restricted securities" of the Company to dispose of such
securities pursuant to Rule 144 or 144A promulgated under the Securities Act of
1933, as amended, may be impaired or eliminated. The Offeror currently intends
to seek to cause the Company to apply for termination of registration of the
Shares under the Exchange Act as soon after the completion of the Offer as the
requirements for such termination are met.
If registration of the Shares is not terminated prior to the Merger, then
the Shares will be delisted from all stock exchanges and the registration of the
Shares under the Exchange Act will be terminated following the consummation of
the Merger.
MARGIN REGULATIONS. The Shares are currently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which has the effect, among other things, of allowing
brokers to extend credit on the collateral of the Shares. Depending upon factors
similar to those described above regarding listing and market quotations, it is
possible that, following the Offer, the Shares would no longer constitute
"margin securities" for the purposes of the margin regulations of the Federal
Reserve Board and, therefore, could no longer be used as collateral for loans
made by brokers.
8. CERTAIN INFORMATION CONCERNING THE COMPANY
The Company is a Delaware corporation, with its principal executive offices
located at 6 Liberty, Aliso Viejo, California 92656.
10
<PAGE>
The Company is engaged in developing and marketing a line of branded
appearance enhancement and protection products primarily for the do-it-yourself
automotive and home care markets. The Company's products are marketed in the
U.S. and Canada by its direct sales force and through independent manufacturers'
representatives and distributors. International sales are effected through
foreign sales offices, foreign distributors and a marketing and distribution
alliance. Primary customers include mass merchandise retailers, auto supply
stores, warehouse clubs, hardware stores and other retail outlets. In 1994, the
Company entered the home care market with the acquisition of the E-Z Deck
Wash-Registered Trademark- and E-Z D-TM- brands. Subsequent to the acquisition,
the Company expanded its home care line by introducing several products under
the Company brand name. Products which comprise a majority of the Company's
sales volume are manufactured under full service packaging agreements whereby
contract packagers generally own the raw materials and finished goods in their
possession and transfer title to the Company just prior to shipment to the
Company's customers.
Set forth below is certain selected consolidated financial data with respect
to the Company excerpted or derived from financial information contained in the
Company's Annual Reports on Form 10-K for the years ended March 31, 1996 and
March 31, 1995, respectively, and the Company's Quarterly Report on Form 10-Q
for the six months ended September 30, 1996. More comprehensive financial
information is included in such reports and other documents filed by the Company
with the Commission, and the following summary is qualified in its entirety by
reference to such reports and such other documents and all the financial
information (including any related notes) contained therein. Such reports and
other documents should be available for inspection and copies thereof should be
obtainable in the manner set forth below under "Available Information."
ARMOR ALL PRODUCTS CORPORATION
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
(THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED FOR THE FISCAL YEAR ENDED
-------------------- ----------------------------------
SEPT. 30, SEPT. 30, MARCH 31, MARCH 31, MARCH 31,
1996 1995 1996 1995 1994
--------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Revenues............................................. $ 92,701 $ 89,996 $ 186,326 $ 216,789 $ 182,257
Operating Income..................................... $ 12,241 $ 9,906 $ 11,031 $ 40,269 $ 38,263
Income Before Income Taxes........................... $ 13,160 $ 10,628 $ 12,632 $ 42,072 $ 39,640
Net Income........................................... $ 7,633 $ 6,164 $ 7,162 $ 24,528 $ 22,573
Earnings Per Common Share............................ $ .36 $ .29 $ .34 $ 1.16 $ 1.07
Weighted Average Common Shares Outstanding........... 21,343 21,283 21,296 21,214 21,121
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30, MARCH 31, MARCH 31, MARCH 31,
1996 1996 1995 1994
------------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
BALANCE SHEET DATA
Total Assets................................................ $ 150,247 $ 158,883 $ 172,850 $ 151,826
Total Stockholders' Equity.................................. $ 124,441 $ 122,975 $ 128,985 $ 116,029
</TABLE>
Approximately 54% of the Shares are held by McKesson, which has agreed,
among other things, to tender, or to cause to be tendered, all Shares owned by
it pursuant to the Offer. McKesson also has granted to the Parent a proxy to
vote the Shares owned by McKesson in favor of the Merger. See Section 12.
CERTAIN COMPANY PROJECTIONS. During the course of discussions between the
Parent and the Company, the Company provided the Parent with certain non-public
business and financial information about
11
<PAGE>
the Company. This information included projections of consolidated revenues and
pretax earnings for the year ended March 31, 1997 of $220 million and $37
million, respectively, prepared by the Company's management during the summer of
1996.
The Company does not as a matter of course make public any projections as to
its future performance or earnings, and the projections set forth above are
included in this Offer to Purchase only because the information was provided to
the Parent. The projections were not prepared with a view to public disclosure
or compliance with the published guidelines of the Commission or the guidelines
established by the American Institute of Certified Public Accountants regarding
projections or forecasts. The projections were based on a number of assumptions
(not all of which were provided to the Parent) that are beyond the control of
the Company, the Offeror and the Parent and their respective advisors, including
economic forecasting (both general and specific to Company's business), which is
inherently uncertain and subjective. Such projections did not and do not take
into account any of the potential effects of the transactions contemplated by
the Merger Agreement, including changes in the operations of the Company pending
the closing of the transactions contemplated by the Merger Agreement. None of
the Company, the Offeror, or the Parent or their respective advisors assumes any
responsibility for the accuracy of any of the projections. The inclusion of the
foregoing projections should not be regarded as an indication that the Company,
the Offeror, the Parent or any other person who received such information
considers it an accurate prediction of future events. Neither the Company nor
the Parent intends to update, revise or correct such projections if they become
inaccurate (even in the short term).
AVAILABLE INFORMATION. The Company is subject to the informational
requirements of the Exchange Act and in accordance therewith files periodic
reports, proxy statements and other information with the Commission relating to
its business, financial condition and other matters. The Company is required to
disclose in such proxy statements certain information, as of particular dates,
concerning the Company's directors and officers, their remuneration, stock
options granted to them, the principal holders of the Company's securities and
any material interests of such persons in transactions with the Company. Such
reports, proxy statements and other information may be inspected at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the regional offices of the
Commission located at Seven World Trade Center, 13th Floor, New York, New York
10048 and Citicorp Center, 500 West Madison Street (Suite 1400), Chicago, IL
60661. Copies of such information should be available, by mail, upon payment of
the Commission's customary fees, by writing to the Commission's principal office
at 450 Fifth Street, N.W., Washington, D.C. 20549.
COMPANY INFORMATION. Except as otherwise specified herein, the information
concerning the Company contained in this Offer to Purchase, including financial
information, has been furnished by the Company or has been taken from or based
upon publicly available documents and records on file with the Commission and
other public sources. Although neither the Offeror nor the Parent has any
knowledge that would indicate that statements contained herein based upon such
documents are untrue, neither the Offeror nor the Parent assumes any
responsibility for the accuracy or completeness of the information concerning
the Company, furnished by the Company or contained in such documents and records
or for any failure by the Company to disclose events which may have occurred or
may affect the significance or accuracy of any such information but which are
unknown to the Offeror or the Parent.
9. CERTAIN INFORMATION CONCERNING THE PARENT AND THE OFFEROR
The Offeror is a Delaware corporation and a wholly owned subsidiary of the
Parent, which is a Delaware corporation. The principal executive offices of the
Offeror and the Parent are located at 1221 Broadway, Oakland, California 94612.
To date, the Offeror has not conducted any business other than that incident
to its formation, the execution and delivery of the Merger Agreement and the
Stockholder Agreement and the commencement of the Offer.
12
<PAGE>
The Parent was originally founded in Oakland, California in 1913 as the
Electro-Alkaline Company. It was reincorporated as Clorox Chemical Corporation
in 1922, as Clorox Chemical Co. in 1928, and as The Clorox Company (an Ohio
corporation) in 1957, when the business was acquired by The Procter & Gamble
Company. The Parent was fully divested by The Procter & Gamble Company in 1969
and, as an independent company, was reincorporated in 1973 in California as The
Clorox Company. In 1986, the Parent was reincorporated in Delaware.
The Parent manufactures a range of household consumer products, emphasizing
cleaners and disinfectants. The Parent's product line includes household
cleaners, disinfectants, scrubbers, laundry additives, insecticides and cat
litter. The Parent also manufactures charcoal and barbecue products, salad
dressings and sauces and a water filtration system.
Set forth below is certain selected historical consolidated financial
information with respect to the Parent excerpted or derived from financial
information contained in the Parent's Annual Reports on Form 10-K for the years
ended June 30, 1996 and June 30, 1995, respectively, and the Parent's Quarterly
Report on Form 10-Q for the three months ended September 30, 1996. More
comprehensive financial information is included in such reports and other
documents filed by the Parent with the Commission, and the following summary is
qualified in its entirety by reference to such reports and such other documents
and all the financial information (including any related notes) contained
therein. Such reports and other documents should be available for inspection and
copies thereof should be obtainable in the manner set forth below.
THE CLOROX COMPANY
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
(THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED FOR THE FISCAL YEAR ENDED
---------------------- ----------------------------------------
SEPT. 30, SEPT. 30, JUNE 30, JUNE 30, JUNE 30,
1996 1995 1996 1995 1994
---------- ---------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net Sales.................................... $ 590,773 $ 518,486 $ 2,217,843 $ 1,984,170 $ 1,836,949
Earnings Before Income Taxes................. $ 108,822 $ 98,608 $ 370,387 $ 337,894 $ 306,633
Net Earnings................................. $ 65,510 $ 58,779 $ 222,092 $ 200,832 $ 212,057
Earnings Per Common Share.................... $ 1.27 $ 1.12 $ 4.28 $ 3.78 $ 3.94
Weighted Average Common Shares Outstanding... 51,546 52,354 51,935 53,147 53,800
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30, JUNE 30, JUNE 30, JUNE 30,
1996 1996 1995 1994
------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
BALANCE SHEET DATA
Total Assets.......................................... $ 2,225,100 $ 2,178,894 $ 1,906,672 $ 1,697,569
Total Stockholders' Equity............................ $ 975,909 $ 932,828 $ 943,913 $ 909,417
</TABLE>
The Parent is subject to the informational requirements of the Exchange Act
and in accordance therewith files periodic reports and other information with
the Commission relating to its business, financial condition and other matters.
Such reports and other information are available for inspection and copying at
the offices of the Commission in the same manner as set forth with respect to
the Company in Section 8.
Except for G. Craig Sullivan, the Chairman of the Board and Chief Executive
Officer of the Parent, who owns 2,500 Shares, none of the Offeror, the Parent,
nor, to the best knowledge of the Offeror and the Parent, any of the persons
listed in Annex I to this Offer to Purchase owns or has any right to acquire any
13
<PAGE>
Shares. None of the persons described in the preceding sentence has effected any
transaction in the Shares during the past 60 days.
Except as set forth in Sections 11 and 12, neither the Offeror nor the
Parent, nor, to the best of their knowledge, any of the persons listed in Annex
I to this Offer to Purchase, has any contract, arrangement, understanding or
relationship with any other person with respect to any securities of the
Company, including, but not limited to, any contract, arrangement, understanding
or relationship concerning the transfer or the voting of any such securities,
joint ventures, loan or option arrangements, puts or calls, guarantees of loans,
guarantees against loss or the giving or withholding of proxies. Except as set
forth in Sections 11 and 12, there have been no contacts, negotiations or
transactions since April 1, 1993 between the Offeror or the Parent or any of
their respective subsidiaries, or, to the best knowledge of the Offeror and the
Parent, any of the persons listed in Annex I, on the one hand, and the Company
or its affiliates, on the other hand, concerning a merger, consolidation or
acquisition, a tender offer or other acquisition of securities, an election of
directors, or a sale or other transfer of a material amount of assets. Except as
described in Sections 11 and 12, neither the Offeror or the Parent, nor, to the
best of their knowledge, any of the persons listed in Annex I, has since April
1, 1993 had any transaction with the Company or any of its executive officers,
directors or affiliates that would require disclosure under the rules and
regulations of the Commission applicable to the Offer.
10. SOURCE AND AMOUNT OF FUNDS
The total amount of funds required by the Offeror to purchase all
outstanding Shares pursuant to the Offer and to pay fees and expenses related to
the Offer and the Merger is estimated to be approximately $412 million. The
Offeror plans to obtain all funds needed for the Offer and the Merger through a
capital contribution that will be made by the Parent to the Offeror. For such
capital contribution, the Parent plans to use funds it has available in its cash
accounts and funds generated from its commercial paper program, for which J.P.
Morgan Securities and Lehman Brothers Inc. act as dealers. Such commercial paper
is expected to bear interest at prevailing market rates for such instruments at
the time of issuance and to have maturities not exceeding 270 days. The Offeror
has not conditioned the Offer on obtaining financing. The Parent plans to
service its additional borrowings with cash generated from seasonal changes in
the composition of its working capital and cash flow from operations and
believes that, if its lenders do not roll over any amounts outstanding with
respect to such commercial paper at maturity, the Parent will have available
sufficient alternative sources of financing, including bank credit facilities,
to repay such additional borrowing.
11. BACKGROUND OF THE OFFER; PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH
THE COMPANY
The Parent regularly explores potential acquisition opportunities. The
Parent has periodically considered whether the Armor All Protectant brand would
be a suitable candidate for acquisition. Over the past two to three years, based
on its own analysis and views expressed by members of the investment banking
community, the Parent has believed that McKesson might be interested in
divesting itself of its majority stockholder position in the Company.
In early October 1996, the Parent was advised that PaineWebber was
soliciting interest from potential acquirers of the Company. After a number of
discussions to ascertain the status of the sale process, the Parent and
PaineWebber, acting on behalf of the Company and McKesson, executed a
confidentiality agreement on October 10, 1996 (the "Confidentiality Agreement").
Following this, the Parent was provided with a confidential offering memorandum
concerning the Company.
On October 17, 1996, following a series of internal meetings among members
of the Parent's management, the Parent submitted an initial indication of
interest in acquiring the Company. On October 18, the Parent was invited to
conduct a due diligence investigation of the Company and to finalize an
acquisition proposal to be submitted to the Company during the week of November
18.
14
<PAGE>
Commencing the week of October 20, 1996, members of a due diligence team
established by the Parent conducted detailed additional due diligence involving
a presentation by the Company's management and a detailed review of confidential
information provided by the Company in a data room. Due diligence contacts and
communications with the Company continued to occur on a regular basis until
November 26.
On October 24, 1996, the Parent engaged Morgan Stanley & Co. Incorporated to
act as its financial advisor in connection with a potential acquisition of the
Company.
On October 31, 1996, members of the Parent's management met with the Chief
Executive Officer of the Company to discuss aspects of the Company's operations
identified in the due diligence process.
On November 20, 1996, following a number of questions from, and discussion
among, the directors, the Board of Directors of the Parent (the "Parent Board")
authorized the Parent to make a binding proposal to acquire all the outstanding
Shares of the Company, subject to a price limitation, and Parent thereafter made
the offer. In conjunction with the offer, the Parent submitted a mark-up of an
Agreement and Plan of Merger and a Stockholder Agreement with the Company and
McKesson, respectively, that had previously been provided to the Parent and
that, as marked, the Parent and the Offeror would be prepared to execute.
On November 21, 1996, a representative of PaineWebber contacted a
representative of the Parent's financial advisor, and stated that the Parent's
acquisition proposal was inferior as to value to two other business combination
proposals under consideration by the Company, but that Parent's proposal did not
include financing or antitrust-related contingencies included in such other
proposals. The PaineWebber representative suggested that the Parent consider
improving the value of the Parent's acquisition proposal, and modify certain
aspects of Parent's mark-up of the Agreement and Plan of Merger and Stockholder
Agreement.
On November 22, 1996, a representative of PaineWebber stated that
PaineWebber would be prepared to recommend to the Boards of Directors of the
Company and McKesson that the Parent's offer be accepted if the Parent were to
improve its offer to $19.09 per Share and were to amend the mark-up of the
proposed Agreement and Plan of Merger to reflect terms more customary for
transactions involving the business combination of a publicly traded company.
Thereafter, following a meeting among executive officers of the Parent, the
Parent increased its offer to $19.09 per Share, with the understanding that the
dividend of $0.16 per Share previously declared by the Company (to be paid on
January 2, 1997, to stockholders of record on December 2, 1996) would be paid.
On November 22 and November 23, 1996, representatives of outside counsel to
the Company and McKesson and the Parent conducted telephonic discussions
concerning the terms of the proposed Agreement and Plan of Merger and
Stockholder Agreement.
On November 24, 1996, members of the Parent's management and legal advisors,
representatives of Parent's outside counsel and representatives of the Parent's
financial advisor met with representatives of the Company and McKesson, their
legal advisors and their outside counsel to negotiate the terms of the proposed
Agreement and Plan of Merger and the Stockholder Agreement. Such negotiations
continued telephonically on November 25 and November 26, 1996.
On the morning of November 26, 1996, after completion of the negotiations
concerning the proposed Agreement and Plan of Merger and Stockholder Agreement,
the Board of Directors of McKesson (the "McKesson Board") held a meeting to
review, with the advice and assistance of McKesson's legal advisors and
PaineWebber, the proposed Agreement and Plan of Merger and the transactions
contemplated thereby, including the Offer, the Merger and the Stockholder
Agreement. Following a number of questions from, and discussion among, the
directors, the McKesson Board unanimously (i) approved the disposition of the
Shares owned by McKesson pursuant to the Merger Agreement; (ii) determined that
the disposition
15
<PAGE>
of such Shares pursuant to the Merger Agreement is expedient and in the best
interests of McKesson and its stockholders; and (iii) approved the Stockholder
Agreement and the transactions contemplated thereby.
Following the conclusion of the meeting of the Board of Directors of
McKesson, the Company Board held a meeting to review, with the advice and
assistance of the Company's legal advisors and PaineWebber, the proposed
Agreement and Plan of Merger and the transactions contemplated thereby,
including the Offer, the Merger and the Stockholder Agreement. At the meeting,
counsel to the Company reviewed the terms of the Merger Agreement and
PaineWebber rendered to the Company Board its written opinion that, based upon
and subject to various considerations and assumptions set forth therein, the
cash consideration of $19.09 per Share to be received by the holders of the
Shares pursuant to the Offer and the Merger is fair to such holders from a
financial point of view. Following a number of questions from, and discussion
among, the directors, the Company Board unanimously (i) approved the Merger
Agreement and the transactions contemplated thereby, (ii) determined that the
Merger Agreement and the transactions contemplated thereby are fair to and in
the best interests of the Company and the Company's stockholders, and (iii)
recommended that the Company's stockholders tender their Shares in the Offer and
approve and adopt the Merger Agreement and the Merger.
Immediately following the conclusion of the two Board meetings, the parties
thereto executed the Merger Agreement and the Stockholder Agreement. The
Company, McKesson and the Parent issued press releases announcing the
transactions shortly before the closing of the New York Stock Exchange and
Nasdaq on November 26, 1996. An amendment to the Merger Agreement, dated as of
December 1, 1996, clarifying the treatment of the Services Agreement was
subsequently entered into among the Company, the Parent and the Offeror. The
Offeror commenced the Offer on December 2, 1996.
Reference is made to the Company's Solicitation/Recommendation Statement on
Schedule 14D-9 for a description of the matters considered by the Company Board
in connection with its actions regarding the Merger Agreement and the Offer.
12. PURPOSE OF THE OFFER AND THE MERGER; PLANS FOR THE COMPANY
The purpose of the Offer, the Merger and the Merger Agreement is to enable
the Parent to acquire control of, and the entire equity interest in, the
Company. Upon consummation of the Merger, the Company will become a direct
wholly owned subsidiary of the Parent. The Offer is being made pursuant to the
Merger Agreement.
Under the DGCL and the Company's Certificate of Incorporation, the approval
of the Company Board and (except as described below) the affirmative vote of the
holders of a majority of the outstanding Shares are required to approve and
adopt the Merger Agreement and the transactions contemplated thereby, including
the Merger. Section 203 of the DGCL prevents certain "business combinations"
with an "interested stockholder" (generally, any person who owns or has the
right to acquire 15% or more of a corporation's outstanding voting stock) for a
period of three years following the time such person became an interested
stockholder unless, among other things, prior to the time the interested
stockholder became such, the board of directors of the corporation approved
either the business combination or the transaction in which the interested
stockholder became such.
The Company Board has unanimously approved the Offer, the Merger and the
Merger Agreement and the transactions contemplated thereby, and has taken all
actions necessary to render Section 203 of the DGCL inapplicable to the
transactions contemplated by the Merger Agreement. Unless the Merger is
consummated pursuant to the short-form merger provisions under the DGCL
described below (in which case no further corporate action by the stockholders
of the Company will be required to complete the Merger), the only remaining
required corporate action of the Company will be the approval and adoption of
the Merger Agreement and the transactions contemplated thereby by the
affirmative vote of the holders of a majority of the Shares. The Company Board
has resolved to recommend approval and adoption of the Merger Agreement by the
stockholders of the Company, subject to certain fiduciary duties. McKesson has
16
<PAGE>
granted to the Parent a proxy to vote the Shares held by McKesson in favor of
the Merger, subject to the terms and conditions of the Stockholder Agreement.
The Parent also has agreed in the Merger Agreement to vote, or cause to be
voted, all Shares owned by it or its subsidiaries in favor of the adoption of
the Merger Agreement and the Merger.
PARENT DESIGNEES TO THE COMPANY BOARD. Under the Merger Agreement,
following the purchase of a majority of the outstanding Shares pursuant to the
Offer, the Parent will be entitled to designate a number of directors on the
Company Board proportionate to its ownership of Shares. Following the election
or appointment of the Parent's designees to the Company Board, any amendment of
the Merger Agreement, any termination of the Merger Agreement by the Company,
any extension of time for performance of any of the obligations of the Parent or
the Offeror under the Merger Agreement, any waiver of any condition to the
obligations of the Company or any of the Company's rights under the Merger
Agreement or other action by the Company under the Merger Agreement shall be
effected only by the action of a majority of the directors of the Company then
in office who are Continuing Directors (as defined below). The Parent currently
intends to exercise this right promptly after it becomes available.
"Continuing Directors" is defined in the Merger Agreement as (i) any member
of the Company Board as of the date of the Merger Agreement; (ii) any member of
the Company Board who is unaffiliated with, and not a designated director or
other nominee of, the Parent or the Offeror or their respective subsidiaries;
and (iii) any successor of a Continuing Director who is unaffiliated with, and
not a designated director or other nominee of, the Parent or the Offeror or
their respective subsidiaries and recommended to succeed a Continuing Director
by a majority of the Continuing Directors then on the Company Board.
SHORT FORM MERGER. Under the DGCL, if the Offeror acquires at least 90% of
the outstanding Shares, the Offeror will be able to approve the Merger without a
vote of the Company's stockholders. In such event, the Offeror anticipates that
it will take all necessary and appropriate action to cause the Merger to become
effective as soon as reasonably practicable after such acquisition without a
meeting of the Company's stockholders. If the Offeror does not otherwise acquire
at least 90% of the outstanding Shares pursuant to the Offer or otherwise, a
significantly longer period of time may be required to effect the Merger,
because a vote or the consent of the Company's stockholders would be required
under the DGCL. Pursuant to the Merger Agreement, the Company has agreed to
convene a meeting of its stockholders as soon as practicable following
consummation of the Offer to consider and vote on the Merger, if a stockholders'
vote is required. If the Offeror owns a majority of the outstanding Shares
(which could result from the tender of the Shares owned by McKesson under the
Stockholder Agreement), approval of the Merger can be obtained without the
affirmative vote of any other stockholder of the Company.
APPRAISAL RIGHTS. No appraisal rights are available in connection with the
Offer. However, if the Merger is consummated, stockholders of the Company at the
time of the Merger will have certain rights under the DGCL to dissent and demand
appraisal of, and to receive payment in cash of the fair value of, their Shares.
Such rights to dissent, if the statutory procedures are complied with, could
lead to a judicial determination of the fair value of the Shares. See Section
16. Any such judicial determination of the fair value of the Shares could be
based upon factors other than, or in addition to, the price per Share to be paid
in the Merger or the market value of the Shares. The value so determined could
be more or less than the price per Share to be paid in the Merger.
PLANS FOR THE COMPANY. Except as otherwise set forth in this Offer to
Purchase, it is expected that, initially following the Merger, the business and
operations of the Company will be continued by the Surviving Corporation
substantially as they are currently being conducted.
The Parent will continue to evaluate the business and operations of the
Company during the pendency of the Offer and after the consummation of the Offer
and the Merger, and will take such actions as it deems appropriate under the
circumstances then existing. The Parent intends to conduct a comprehensive
review of the Company's business, operations, capitalization and management with
a view to optimizing
17
<PAGE>
the Company's potential in conjunction with the Parent's business. The Parent
intends to cause the Company to discontinue its regular quarterly dividends on
its Common Stock following payment of the dividend payable on January 2, 1997 to
stockholders of record on December 2, 1996.
Except as indicated in this Offer to Purchase, the Parent does not have any
present plans or proposals which relate to or would result in an extraordinary
corporate transaction, such as a merger, reorganization or liquidation,
involving the Company or any of its subsidiaries, a sale or transfer of a
material amount of assets of the Company or any of its subsidiaries or any
material change in the Company's capitalization or any other material changes in
the Company's corporate structure or business, or any change in the composition
of the present Company Board or management.
13. MERGER AGREEMENT, STOCKHOLDER AGREEMENT AND CONFIDENTIALITY AGREEMENT
The following is a summary of the material terms of the Merger Agreement,
the Stockholder Agreement and the Confidentiality Agreement. Such summary does
not purport to be a complete description of these agreements and is qualified in
its entirety by reference to the complete texts of the agreements, copies of
which are filed as exhibits to the Schedule 14D-1 filed with the Commission by
the Parent and the Offeror, and are incorporated by reference herein.
Capitalized terms not otherwise defined herein shall have the meanings set forth
in the respective agreements.
THE MERGER AGREEMENT
THE OFFER. The Merger Agreement provides for the making of the Offer by the
Offeror. The obligation of the Offeror to accept for payment and pay for Shares
tendered is subject to the satisfaction of the conditions described in Annex A
to the Merger Agreement. The Merger Agreement provides that the Offeror may not
decrease the Offer Price, extend the expiration date of the Offer beyond the
twentieth business day following commencement thereof or otherwise amend any
other condition of the Offer in any manner adverse to the holders of the Shares
without the prior written consent of the Company; provided, that the Offeror may
extend the expiration date of the Offer if (i) one or more conditions set forth
in Annex A shall not be satisfied or (ii) the Parent reasonably determines, with
the prior approval of the Company, that such extension is necessary to comply
with any legal or regulatory requirements relating to the Offer.
The Merger Agreement provides that, promptly after the purchase of Shares
pursuant to the Offer, the Parent shall be entitled to designate directors on
the Company Board as will give the Parent representation proportionate to its
ownership interest. Following the election of the Parent's designees, any
amendment to the Merger Agreement by the Company, any extension of time for
performance of any of the obligations of the Parent or the Offeror under the
Merger Agreement, any waiver of any condition to the obligations of the Company
or any of the Company's rights under the Merger Agreement or other action by the
Company under the Merger Agreement shall be effected only by the action of a
majority of the directors of the Company then in office who are Continuing
Directors. The parties agreed to use their best efforts to ensure that at least
three of the members of the Company Board shall, at all times prior to the
Effective Time, be Continuing Directors.
THE MERGER. The Merger Agreement provides that, at the Effective Time, the
Offeror will be merged with and into the Company, with the Company as the
surviving corporation. The Merger shall become effective at the time of the
filing with the Secretary of State of the State of Delaware of a Certificate of
Merger, or at such later time as may be specified in the Certificate of Merger.
The parties shall file such Certificate of Merger as soon as practicable
following the closing of the Merger, which shall take place on the second
business day after the conditions to the parties' obligation to effect the
Merger have been satisfied or waived, unless another date is otherwise agreed.
Each Share issued and outstanding immediately prior to the Effective Time
(other than Shares with respect to which appraisal rights have been properly
exercised, and Canceled Shares (as defined below))
18
<PAGE>
shall be converted into the right to receive $19.09 in cash, or any higher price
paid per Share in the Offer (the "Merger Consideration"), without interest. Each
Share issued and outstanding immediately prior to the Effective Time owned by
the Parent or the Offeror, or any subsidiary of the Company, the Parent or the
Offeror, and each Share held in the treasury of the Company (collectively, the
"Canceled Shares") immediately prior to the Effective Time shall be canceled and
cease to exist. Each share of Common Stock of the Offeror issued and outstanding
immediately prior to the Effective Time shall automatically be converted into
one share of Common Stock of the Surviving Corporation.
The Merger Agreement provides that the Certificate of Incorporation and
By-Laws of the Offeror shall be the Certificate of Incorporation and By-Laws of
the Surviving Corporation, provided that Article First of the Certificate of
Incorporation of the Surviving Corporation shall be amended to read in its
entirety as follows: "FIRST: The name of the Corporation is Armor All Products
Corporation." The Merger Agreement also provides that the directors of the
Offeror at the Effective Time will be the directors of the Surviving Corporation
and that the officers of the Company at the Effective Time will be the officers
of the Surviving Corporation.
STOCK OPTIONS. The Company has agreed in the Merger Agreement to take all
actions necessary to provide that, immediately prior to the consummation of the
Offer, each outstanding stock option (collectively, the "Options") under the
Company's 1986 Stock Option Plan, shall be canceled or repurchased by the
Company, and except to the extent that the Parent or the Offeror and the holder
of any such Option otherwise agree, the Company shall pay to the holder of each
Option (i) the excess of the Merger Consideration over the exercise price of the
Option, multiplied by (ii) the number of Shares subject thereto (such payment to
be net of applicable withholding taxes).
RECOMMENDATION. The Company represents in the Merger Agreement that the
Company Board has (i) determined that each of the Merger and the Offer is fair
to, and in the best interests of, the stockholders of the Company, and (ii)
resolved to recommend acceptance of the Offer and approval and adoption of the
Merger Agreement by the Company's stockholders. The recommendation of the
Company Board may be withdrawn, modified or amended if the Company Board
determines in good faith, after consultation with its counsel, that the exercise
of the directors' fiduciary duties requires such withdrawal, amendment or
modification. The Company has agreed to use its best efforts to file a
Solicitation/ Recommendation Statement on Schedule 14D-9 containing such
recommendations with the Commission and to mail such Schedule 14D-9 to the
stockholders of the Company contemporaneous with the commencement of the Offer,
but in any event not later than ten business days following the commencement of
the Offer.
INTERIM AGREEMENTS OF THE PARENT, THE OFFEROR AND THE COMPANY. Pursuant to
the Merger Agreement, the Company has agreed that, until the consummation of the
Offer, the Company and its subsidiaries will conduct their respective businesses
and operations only in the ordinary course, consistent with past practice,
except as the Parent shall otherwise agree, as required by applicable law or as
otherwise contemplated by the Merger Agreement. Except as otherwise provided in
the Company Disclosure Letter (as defined in the Merger Agreement), prior to the
consummation of the Offer, neither the Company nor any of its subsidiaries will:
(i) amend its charter or by-laws; (ii) authorize for issuance, issue, sell, or
agree or commit to issue, sell or deliver any stock of any class or any other
securities, except by the Company in connection with the exercise of employee
options granted and outstanding before the date of the Merger Agreement; (iii)
split, combine or reclassify any shares of its capital stock, declare, set aside
or pay any dividend or other distribution in respect of its capital stock or
redeem or otherwise acquire any of its securities or any securities of its
subsidiaries, provided that the Company may pay to holders of the Shares the
quarterly dividend of $0.16 per Share previously declared by the Company payable
January 2, 1997 to stockholders of record December 2, 1996; (iv) (a) incur or
assume any material long-term debt or, except in the ordinary course of business
consistent with past practices, under existing lines of credit, incur or assume
any material short-term debt, (b) assume, guarantee, endorse or otherwise become
liable or
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responsible for any material obligations of any other person, except its wholly
owned subsidiaries in the ordinary course of business and consistent with past
practices, or (c) make any material loans, advances or capital contributions to,
or investments in, any other person (other than loans or advances to the
Company's subsidiaries and customary loans or advances to employees in
accordance with past practices); (v) enter into, adopt or materially amend any
bonus, profit sharing, compensation, severance, termination, stock option,
employment, severance or other employee benefit agreements, trusts, plans, funds
or other arrangements of or for the benefit or welfare of any Company Employee
(as defined in the Merger Agreement), or (except for increases in wage and
salary compensation in the ordinary course consistent with past practices)
increase the compensation or fringe benefits of any Company employee or pay any
benefit not required by any existing plan and arrangement, or enter into any
contract agreement, commitment or arrangement to do any of the foregoing; (vi)
acquire, sell, lease or dispose of any assets outside the ordinary course of
business or any assets that are material, individually or in the aggregate, to
the Company and its subsidiaries, taken as a whole, or enter into any material
commitment or transaction outside the ordinary course of business; (vii) except
as may be required by law and as set forth on the Company Disclosure Letter,
take any action to terminate or amend any of its employee benefit plans with
respect to or for the benefit of Company Employees; (viii) hire any employee
other than to replace an employee; provided, however, that the annual salary of
such replacement employee shall not exceed $50,000; (ix) pay, discharge or
satisfy any claims, liabilities or obligations, not in the ordinary course of
business consistent with past practice or in accordance with their terms as in
effect on the date of the Merger Agreement, or liabilities reflected or reserved
against in, or contemplated by, the Company's consolidated audited financial
statements, or waive, release, grant, or transfer any rights of material value
or modify or change in any material respect any existing license, lease,
contract or other document, other than in the ordinary course of business
consistent with past practice; (x) change any material accounting principle used
by it, except for such changes as may be required to be implemented following
the date of the Merger Agreement pursuant to generally accepted accounting
principles or rules and regulations of the Commission; (xi) take any action that
would result in any of its representations and warranties in the Merger
Agreement becoming untrue in any material respect; (xii) materially change its
policy of not accepting returns of products shipped to customers; (xiii)
materially change its co-packer arrangements; or (xiv) take, or agree to take,
any of the foregoing actions.
The Company has agreed to amend its Third Quarter Incremental Volume Plan to
extend the measurement period for determining whether the incremental sales
volume targets of such plan have been satisfied to include the fourth quarter of
fiscal year 1997, and to take steps to communicate to customers eligible to
participate in such plan that the Company will honor such plan with respect to
shipments made in the fourth quarter of fiscal year 1997 and to Company sales
personnel responsible for such customers.
OTHER AGREEMENTS OF THE PARENT, THE OFFEROR AND THE COMPANY. In the Merger
Agreement, the Company and its subsidiaries agree not to (i) initiate or solicit
any inquiries or the making of any acquisition proposal, or (ii) except as
provided below, engage in negotiations or discussions with, or furnish any
information or data to, any third party relating to an acquisition proposal.
However, the Merger Agreement provides that the Company and the Company Board
may (i) participate in discussions or negotiations with or furnish information
to any third party if the failure to do so may constitute a breach of the
Company Board's fiduciary duties, and (ii) take, and disclose to the Company's
stockholders, a position with respect to the Offer or the Merger or another
tender or exchange offer, or amend or withdraw such position, pursuant to Rules
14d-9 and 14e-2 of the Exchange Act, or make disclosure to the Company's
stockholders, in each case if the failure to take such action may constitute a
breach of the Company Board's fiduciary duties or otherwise violate applicable
law. The Company also has agreed to provide the Parent with a copy of any
written acquisition proposal and, subject to the proper discharge of the
fiduciary duties of the Company Board, to keep the Parent reasonably and
promptly informed of the status and content of any discussions with such a third
party.
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Pursuant to the Merger Agreement, the Company has agreed to give the Parent
reasonable access to its facilities, books and records, to permit the Parent to
make such inspections as it may reasonably require and to cause its officers to
furnish the Parent with such information as Parent may from time to time
reasonably request.
Each of the Company, the Parent and the Offeror has agreed in the Merger
Agreement to use its best efforts to take, or cause to be taken, all things
necessary, proper or advisable to consummate the transactions contemplated by
the Merger Agreement. Each such party also has agreed to cooperate and use its
best efforts to make all filings and obtain all licenses, permits, consents,
approvals and other authorizations of third parties, including governmental
authorities, necessary to consummate such transactions, including the filings
required of the Parent or the Offeror or any of their affiliates under the HSR
Act.
Pursuant to the Merger Agreement, each of the Company, the Parent and the
Offeror agreed not to make any public statement with respect to the Merger
Agreement or the transactions contemplated thereby without the prior consent of
the other party. The parties thereto also agreed that the provisions of the
Confidentiality Agreement would remain binding and in full force and effect.
EMPLOYEE AGREEMENTS AND EMPLOYEE BENEFITS. The Parent has agreed in the
Merger Agreement to honor the agreements with officers of the Company set forth
in Section 6.8 of the Company Disclosure Letter. In addition, as of the
Effective Time, Company employees will be terminated from future participation
in McKesson's Employee Benefit Plans (as defined in the Merger Agreement). The
benefits to be paid to Company employees under each Employee Benefit Plan
sponsored or maintained by McKesson shall not be increased by any service to the
Company following the Effective Time. Except as expressly provided in the Merger
Agreement, the Offeror and the Parent agree to provide Company employees
employee benefit and compensation plans, policies and arrangements (other than
severance plans) at a level no less favorable than provided to Parent employees
of comparable status; provided, that for one year following the Effective Time,
Company employees shall also be provided a severance benefit no less favorable
than provided by the Company as of the date of the Merger Agreement; and
provided further that the Company's severance benefit plans may be amended after
the Effective Time to clarify any ambiguities. Furthermore, the Parent agrees to
permit Company employees to participate immediately as of the Effective Date in
its medical, dental, disability and life insurance plans. The Parent agrees to
allow participation in its retiree medical plan to Company employees on a basis
no less favorable than provided to Parent employees of comparable status and to
grant eligibility and vesting credit in such retiree medical plans for service
with the Company or McKesson. The Parent agrees to provide Company employees
with service credit under the Parent's other employee benefit plans, other than
the Parent's Supplemental Executive Retirement Plan. The Company's Incentive
Plan for Business Managers shall be terminated immediately following the date of
the Merger Agreement. The Company's Employee Incentive Plan shall, immediately
following the Effective Time, be terminated, and all participants will receive
their targeted bonus for the current period as though the budgeted target had
been achieved. The Company's 1989 Short Term Employee Incentive Plan,
International Incentive Plan and Sales Incentive Plan will, on April 1, 1997, be
terminated, and the aggregate amount of individual bonus targets payable to
participants in those incentive plans will be determined as soon as practicable
after the Effective Time as though the budgeted target for fiscal year 1997 had
been achieved; individual cash payments will be modified to reflect individual
performance; provided, that such participant either (i) has remained employed
with the Company through March 31, 1997 or (ii) was terminated by the Company on
or prior to such date but after December 31, 1996, other than for cause; and
provided, further, that the participants in the Company's 1989 Short Term
Incentive Plan previously identified in writing to the Parent shall receive such
cash payment immediately following the Effective Time. As of April 1, 1997,
Company employees will become eligible to participate in the Parent's incentive
plans at a level comparable to that of other Parent employees immediately prior
to the date of the Merger Agreement. As of the Effective Time, Company employees
will participate in all of Parent's Employee Benefit Plans, on a basis no less
favorable than
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provided to Parent employees of comparable status, but excluding executive
retirement and severance plans.
COMPANY STOCKHOLDER MEETING. If required by applicable law, the Company has
agreed to: (i) hold a special meeting of its stockholders as soon as practicable
following acceptance for payment of Shares pursuant to the Offer for the purpose
of taking action upon the Merger Agreement; (ii) subject to its fiduciary
duties, prepare and file with the Commission a preliminary proxy statement
relating to the Merger Agreement and use its commercially reasonable efforts to
(a) cause a definitive proxy statement (the "Proxy Statement") to be mailed to
its stockholders following acceptance for payment of Shares pursuant to the
Offer and (b) obtain the necessary approvals of the Merger Agreement by its
stockholders. The Parent and the Offeror have agreed to vote all Shares owned by
them in favor of approval of the Merger Agreement at any such meeting. However,
in the event that the Parent or the Offeror shall acquire at least 90 percent of
the outstanding Shares, the parties will, at the request of the Parent, take
action to cause the Merger to become effective as soon as practicable after the
expiration or termination of the Offer and the completion of all activities
necessary to finance the consummation of the Merger and the transactions
contemplated by the Merger Agreement, without a meeting of stockholders of the
Company in accordance with the DGCL.
INDEMNIFICATION OF COMPANY OFFICERS AND DIRECTORS; LIABILITY INSURANCE. The
Merger Agreement provides that, in the event of any threatened or actual claim,
action, suit, proceeding or investigation, whether civil, criminal or
administrative, in which any of the present officers or directors (the
"Indemnified Parties") of the Company or any of its subsidiaries is, or is
threatened to be, made a party by reason of the fact that he or she is or was a
director, officer, employee or agent of the Company or any of its subsidiaries,
or is or was serving at the request of the Company or any of its subsidiaries as
a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, the Company, the Parent and the
Offeror will cooperate and use their best efforts to defend against and respond
thereto. It also was agreed that the Company shall indemnify and hold harmless,
and after the Effective Time the Surviving Corporation and the Parent, jointly
and severally, shall indemnify and hold harmless, as and to the full extent
permitted by applicable law, each Indemnified Party against any losses, claims,
damages, liabilities, costs, expenses (including reasonable attorneys' fees and
expenses), judgments, fines and amounts paid in settlement in connection with
any such claim, action, suit, proceeding or investigation, and in the event of
any such claim, action, suit, proceeding or investigation, (i) the Indemnified
Parties may retain counsel, and the Company, or the Surviving Corporation and
the Parent after the Effective Time, shall pay all reasonable fees and expenses
of such counsel for the Indemnified Parties and (ii) the Company and the
Surviving Corporation and the Parent will use reasonable efforts to assist in
the defense of any such matter; provided, that neither the Company, the
Surviving Corporation nor the Parent shall be liable for any settlement effected
without its prior written consent; and provided, further, that the Surviving
Corporation shall not indemnify the Indemnified Parties if prohibited by law.
The Merger Agreement provides that, until the Effective Time, the Company
shall keep in effect Article Tenth of its Certificate of Incorporation and
Article IX of its By-Laws, which provide for indemnification of officers,
directors, employees and agents, and thereafter, the Parent shall cause the
Surviving Corporation to keep in effect in its By-Laws a provision for a period
of not less than six years from the Effective Time (or, in the case of matters
occurring prior to the Effective Time which have not been resolved prior to the
sixth anniversary of the Effective Time, until such matters are finally
resolved) which provides for indemnification of the Indemnified Parties to the
full extent permitted by the DGCL.
The Merger Agreement provides that the Parent shall cause to be maintained
in effect for not less than six years from the Effective Time the current or
equivalent policies of the directors' and officers' liability insurance
maintained by the Company, if any, with respect to matters occurring prior to
the Effective Time; provided, that if the aggregate annual premiums for such
insurance at any time during such period shall exceed 200% of the per annum rate
of premium currently paid by the Company and its subsidiaries on the date of the
Merger Agreement, if any, then the Company (or the Surviving Corporation
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if after the Effective Time) shall provide the maximum coverage that shall then
be available at an annual premium equal to 200% of such rate, and the Parent, in
addition to the indemnification provided as described above, shall indemnify the
Indemnified Parties for the balance of such insurance coverage on the same terms
and conditions as though the Parent were the insurer under those policies.
CERTAIN AGREEMENTS WITH MCKESSON. The Company has agreed in the Merger
Agreement, at or prior to the Effective Time, to cause the Services Agreement
between the Company and McKesson, as amended through April 1, 1996 (the
"Services Agreement"), to be amended as provided in the Stockholder Agreement,
with all monies held by McKesson pursuant to the cash management program to be
remitted to the Company at the Effective Time. The Tax Allocation Agreement
between the Company and McKesson shall remain in effect.
REPRESENTATIONS AND WARRANTIES. The Merger Agreement contains various
representations and warranties of the parties thereto, including representations
by the Company as to, among other things, corporate existence and good standing,
capitalization, corporate authorization, consents and approvals, reports,
undisclosed liabilities, certain changes or events concerning its businesses,
compliance with applicable law, employee benefit plans, litigation and real
property, intellectual property, computer software, material contracts, taxes,
environmental matters and brokers. In addition, the Parent and the Offeror
represented as to, among other things, corporate existence and good standing,
corporate authorization, consents and approvals.
In addition, the Parent and the Offeror represented that each of them had
conducted its own independent review and analysis of the Company and its
subsidiaries, and acknowledged that each of them had been provided access to the
properties, premises and records of the Company and its subsidiaries for this
purpose. The Parent and the Offeror also acknowledged that they relied solely
upon their own investigation and analysis in entering into the Merger Agreement,
and each of them (i) acknowledged that none of the Company, its subsidiaries or
any of their respective directors, officers, employees, affiliates, agents or
representatives made any representation or warranty as to the accuracy or
completeness of any of the information provided or made available to the Parent
or their agents or representatives prior to the execution of the Merger
Agreement, and (ii) agreed, to the fullest extent permitted by law, that none of
the Company, its subsidiaries or any of their respective directors, officers,
employees, stockholders, affiliates or agents or representatives shall have any
liability or responsibility whatsoever to the Parent or the Offeror based upon
any information provided or made available, or statements made, to the Parent
prior to the execution of the Merger Agreement, except that such limitations
shall not apply to the Company to the extent (a) the Company makes the specific
representations and warranties set forth in the Merger Agreement or (b) McKesson
makes the specific representations and warranties or the specific covenant set
forth in the Stockholder Agreement, but always subject to the limitations and
restrictions contained in the Merger Agreement and the Stockholder Agreement.
CONDITIONS TO THE MERGER. The obligations of each of the Parent, the
Offeror and the Company to effect the Merger are subject to the satisfaction or
waiver of certain conditions, including (i) if required by the DGCL, the Merger
Agreement and the Merger shall have been approved by the stockholders of the
Company, (ii) no statute, rule, regulation, order, decree, or injunction shall
have been promulgated by any governmental entity which prohibits the
consummation of the Merger, (iii) the Offer shall not have expired or been
terminated prior to the purchase of any Shares, and (iv) any waiting period
under the HSR Act applicable to the purchase of Shares pursuant to the Offer
shall have expired or been terminated. Further, the respective obligations of
the Company, on the one hand, and the Parent and the Offeror, on the other hand,
are subject to the satisfaction or waiver at or prior to the Effective Time of
certain additional conditions, including (i) the representations and warranties
of the other parties or party being true as of the Effective Time, (ii) the
other parties or party having performed in all material respects their or its
obligations under the Merger Agreement, and (iii) receipt of a certificate of an
officer of the Parent or the Company, as the case may be, as to the satisfaction
of certain of such conditions, provided that the
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conditions described in this sentence with respect to the obligations of the
Parent and the Offeror shall cease to be conditions if the Offeror shall have
accepted for payment and paid for Shares validly tendered pursuant to the Offer.
TERMINATION. The Merger Agreement may be terminated and the Offer (if the
Offeror has not accepted Shares for payment) and the Merger may be abandoned at
any time prior to the Effective Time: (i) by mutual written consent of the
Parent, the Offeror and the Company; (ii) by the Parent and the Offeror, or by
the Company, if the Effective Time shall not have occurred on or before January
31, 1997; (iii) by the Parent or the Offeror, or by the Company, if the Offer
expires or terminates in accordance with its terms without any Shares being
purchased thereunder but only, if the Offeror shall not have been required to
purchase any Shares pursuant to the Offer; (iv) by the Parent and the Offeror,
or by the Company, if permanently prohibited by any United States court or
governmental body; (v) by the Parent, the Offeror or the Company if the other
party fails in a material way to comply with any material obligation of the
Merger Agreement, upon notice, after 20 days to cure; (vi) by the Parent, if any
required approval of the stockholders of the Company shall not have been
obtained by reason of the failure to obtain the required vote upon a vote held
at a duly held meeting of stockholders or at any adjournment thereof; (vii) by
the Parent, if the Company shall have (a) withdrawn its approval or
recommendation of the Merger Agreement or the Merger; (b) recommended any
Acquisition Proposal from a person other than the Parent; or (viii) by the
Company if, prior to the purchase of Shares pursuant to the Offer, a third party
shall have made an Acquisition Proposal that the Company Board determines is
more favorable to the Company and the holders of Shares than the transactions
contemplated by the Merger Agreement or the Board determines in good faith,
other than in response to an Acquisition Proposal, that the failure to terminate
this agreement may constitute a breach of its fiduciary duties. However, the
Company shall not be permitted to terminate, or consent to the termination of,
the Merger Agreement without the approval of a majority of the Continuing
Directors.
TERMINATION; FEE AND EXPENSES. The Merger Agreement provides for a
termination fee of $11 million to be paid by the Company to the Parent if the
Merger Agreement is terminated according to certain of its terms.
Pursuant to the Merger Agreement, in the event of the termination thereof,
the Merger Agreement will become null and void, without any liability on the
part of any party, except as provided therein, and provided that a party will
not be relieved from liability for any willful breach of the Merger Agreement.
FEES AND EXPENSES. The Merger Agreement provides that all costs and
expenses incurred in connection with the transactions contemplated by the Merger
Agreement shall be paid by the party incurring such costs and expenses.
AMENDMENTS AND MODIFICATIONS. Subject to applicable law, the Merger
Agreement may be amended, modified or supplemented by a written agreement of the
Parent, the Offeror and the Company, provided, that after the approval of the
Merger Agreement by the stockholders of the Company, no such amendment,
modification or supplement shall reduce or change the consideration to be
received by the Company's stockholders in the Merger.
THE STOCKHOLDER AGREEMENT
Concurrently with the execution of the Merger Agreement, the Offeror and the
Parent entered into the Stockholder Agreement with McKesson. In the Stockholder
Agreement, McKesson represented that it owns, in the aggregate, 11,624,900
Shares, of which 6,939,759 Shares are deposited with an exchange agent pursuant
to an exchange agent agreement and an indenture relating to debentures issued by
McKesson. Pursuant to the Stockholder Agreement, McKesson has agreed to tender
(and to direct its exchange agent pursuant to such exchange agent agreement and
indenture to tender) all Shares owned by it into the Offer and that it will not
(and will not direct its exchange agent to) withdraw any Shares so tendered.
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Pursuant to the Stockholder Agreement, McKesson also has granted to the
Parent an irrevocable proxy to vote its Shares, or grant a consent or approval
in respect of such Shares, in connection with any meeting of the stockholders of
the Company (i) in favor of the Merger and (ii) against any action or agreement
which would impede, interfere with or prevent the Merger, including any other
extraordinary corporate transaction such as a merger, reorganization or
liquidation involving the Company and a third party or any other proposal by a
third party to acquire the Company. Such irrevocable proxy shall terminate on
termination of the Stockholder Agreement.
During the term of the Stockholder Agreement, McKesson has agreed that it
will not (subject to certain exceptions) (i) transfer, or enter into any
contract, option, agreement or other understanding with respect to the transfer
of, its Shares, (ii) grant any proxy, power of attorney or other authorization
or consent in or with respect to its Shares, (iii) deposit its Shares in any
voting trust or enter into any voting agreement or arrangement with respect to
such Shares, or (iv) take any other action that would in any way restrict, limit
or interfere with the performance of its obligations pursuant to the Stockholder
Agreement.
The Stockholder Agreement shall terminate upon the earlier of (i)
termination of the Merger Agreement, either in accordance with its terms by a
party thereto or by mutual agreement of the parties thereto, or (ii) the date
that the Offeror pays for the Shares of McKesson pursuant to the Stockholder
Agreement, provided that certain provisions specified in the Stockholder
Agreement will survive such termination. Neither party has any other unilateral
right to terminate the Stockholder Agreement.
The Stockholder Agreement also includes provisions relating to (i) a
one-time contribution to be made by the Offeror to certain benefit plans
maintained by McKesson and in which certain Company employees participate, and
(ii) the indemnification of the Offeror and the Parent by McKesson with respect
to certain breaches of representations and warranties of the Company concerning
benefit plans of McKesson in which Company employees are participants and
certain tax liabilities which may affect the Company. McKesson also agreed to
enter into an amendment to the Services Agreement, pursuant to which McKesson
will provide to the Company certain consultation services on terms and
conditions no less favorable to the Company than provided in the Services
Agreement prior to such amendment, for a period not to exceed six months after
the Effective Time.
THE CONFIDENTIALITY AGREEMENT
The Confidentiality Agreement contains customary provisions pursuant to
which, among other matters, the Parent agreed to keep confidential all
nonpublic, confidential or proprietary information furnished to it by the
Company or McKesson relating to the Company, subject to certain exceptions (the
"Confidential Information"), and to use the Confidential Information solely in
connection with the consideration of a possible business transaction involving
the Company, the Parent and McKesson (a "Transaction"). The Parent agreed in the
Confidentiality Agreement that, for a period of three years from the date
thereof, unless invited in writing by the Company or McKesson, respectively, it
would not, among other things, acquire or offer to acquire any securities or
assets of the Company or McKesson or enter into or propose to enter into any
business combination involving the Company or McKesson or seek to influence the
management of the Company or McKesson. The Parent further agreed that, for a
period of two years from the date of the Confidentiality Agreement, it would not
interfere with the Company's employment relationship with any person who becomes
known to the Parent in connection with the Transaction.
14. DIVIDENDS AND DISTRIBUTIONS
The Merger Agreement provides that the Company will not split, combine or
reclassify any shares of its capital stock, declare, set aside or pay any
dividend or other distribution (whether in cash, stock or property or any
combination thereof) in respect of its capital stock or redeem or otherwise
acquire any of its securities or any securities of its subsidiaries; provided,
that the Company may pay to holders of the
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Shares the regular quarterly dividend of $0.16 per Share previously declared by
the Company, the record date and payment date for which were fixed by the
Company Board as December 2, 1996 and January 2, 1997, respectively.
15. CERTAIN CONDITIONS OF THE OFFER
The Offeror is required under the Merger Agreement to accept for payment and
pay for all Shares tendered as soon as such actions are permitted under
applicable law. Prior to such actions being so permitted, among other things,
the waiting period applicable to the acquisition of the Shares under the HSR Act
must expire or be terminated. However, notwithstanding any other provision of
the Offer, the Offeror shall not be required to purchase any Shares tendered,
and may terminate or amend the Offer, if on or after December 2, 1996, any of
the following events shall occur:
(a) the Company shall have breached in any material respect any of its
representations, warranties, covenants or agreements contained in the Merger
Agreement;
(b) there shall be any statute, rule, regulation, decree, order or
injunction promulgated, enacted, entered or enforced by any United States
federal or state government, governmental authority or court which would (i)
make the acquisition by the Offeror of a material portion of the Shares
illegal, or (ii) otherwise prohibit or restrict consummation of the Offer or
the Merger;
(c) the Merger Agreement shall have been terminated in accordance with
its terms; or
(d) the Company or its subsidiaries shall have suffered a change that
would result in a Company Material Adverse Effect (as defined below).
The Offeror also may terminate the Merger Agreement in certain
circumstances. See Section 13.
The term "Company Material Adverse Effect" means any event, condition or
circumstance that would be or would be reasonably likely to have a material
adverse effect on the properties, assets, condition (financial or otherwise) or
results of operations of the Company and its Subsidiaries, taken as a whole, but
excluding any such effect resulting from (a) general economic conditions and any
occurrence or condition affecting generally the industries in which the Company
and its subsidiaries operate or (b) any decrease in revenues of the Company
following the date of the Merger Agreement.
16. CERTAIN REGULATORY AND LEGAL MATTERS
Except as set forth in this Section, the Offeror is not aware of any
approval or other action by any governmental or administrative agency which
would be required for the acquisition or ownership of Shares by the Offeror as
contemplated herein. Should any such approval or other action be required, it
will be sought, but the Offeror has no current intention to delay the purchase
of Shares tendered pursuant to the Offer pending the outcome of any such matter,
subject, however, to the Offeror's right to decline to purchase Shares if any of
the conditions specified in Section 15 shall have occurred. There can be no
assurance that any such approval or other action, if needed, would be obtained
or would be obtained without substantial conditions, or that adverse
consequences might not result to the Company's business or that certain parts of
the Company's business might not have to be disposed of if any such approvals
were not obtained or other action taken.
ANTITRUST. Under the provisions of the HSR Act applicable to the Offer, the
acquisition of Shares under the Offer may be consummated only following the
expiration or early termination of the applicable waiting period under the HSR
Act.
Under the provisions of the HSR Act applicable to the purchase of Shares
pursuant to the Offer, such purchase may not be made until the expiration of a
15-calendar day waiting period following the required filing of a Notification
Report Form under the HSR Act by the Parent, which the Parent expects to submit
on December 2, 1996. Accordingly, if the Notification and Report Form is filed
on December 2, 1996, the
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waiting period under the HSR Act would expire at 11:59 P.M., New York City time,
on December 17, 1996, unless early termination of the waiting period is granted
by the FTC and the Department of Justice, Antitrust Division (the "Antitrust
Division") or the Parent receives a request for additional information or
documentary material prior thereto. If either the FTC or the Antitrust Division
issues a request for additional information or documentary material from the
Parent prior to the expiration of the 15-day waiting period, the waiting period
will be extended and will expire at 11:59 P.M., New York City time, on the tenth
calendar day after the date of substantial compliance by the Parent with such
request unless terminated earlier by the FTC and the Antitrust Division. If such
a request is issued, the purchase of and payment for Shares pursuant to the
Offer will be deferred until the additional waiting period expires or is
terminated. Only one extension of such waiting period pursuant to a request for
additional information or documentary material is authorized by the rules
promulgated under the HSR Act. Thereafter, the waiting period can be extended
only by court order. Although the Company is required to file certain
information and documentary material with the Antitrust Division and the FTC in
connection with the Offer, neither the Company's failure to make such filings
nor a request to the Company from the Antitrust Division or the FTC for
additional information or documentary material will extend the waiting period.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the Offeror's proposed acquisition of
the Company. At any time before or after the Offeror's acquisition of Shares
pursuant to the Offer, the Antitrust Division or the FTC could take such action
under the antitrust laws as either deems necessary or desirable in the public
interest, including seeking to enjoin the purchase of Shares pursuant to the
Offer or the consummation of the Merger or seeking the divestiture of Shares
acquired by the Offeror or the divestiture of substantial assets of the Company
or its subsidiaries or the Parent or its subsidiaries. Private parties and
states Attorneys General may also bring legal action under the antitrust laws
under certain circumstances. There can be no assurance that a challenge to the
Offer on antitrust grounds will not be made, or, if such a challenge is made, of
the result thereof. See Section 15.
If the Antitrust Division, the FTC, a state or a private party raises
antitrust concerns in connection with a proposed transaction, the Offeror may
engage in negotiations with the relevant governmental agency or party concerning
possible means of addressing these issues and may delay consummation of the
Offer or the Merger while such discussions are ongoing. Both the Parent and the
Company have agreed to use their respective best efforts to resolve any
antitrust issues.
OTHER FOREIGN LAWS. The Company and one of its subsidiaries conduct
business in Germany, where regulatory filings or approvals may be required or
desirable in connection with the consummation of the Offer. Certain of such
filings or approvals, if required or desirable, may not be made or obtained
prior to the expiration of the Offer. After commencement of the Offer, the
Offeror will seek further information regarding the applicability of any such
laws and intends to take such action as may be required or desirable.
STATE TAKEOVER LAWS. The Company is incorporated under the laws of the
State of Delaware. In general, Section 203 of the DGCL prevents an "interested
stockholder" (generally defined as a person who owns or has the right to acquire
15% or more of a corporation's outstanding voting stock) from engaging in a
"business combination" (defined to include mergers and certain other
transactions) with a Delaware corporation for a period of three years following
the time such person became an interested stockholder unless, among other
things, the corporation's board of directors approves such business combination
or the transaction in which the interested stockholder becomes such, prior to
the time the interested stockholder becomes such, or upon consummation of the
transaction that resulted in the stockholder becoming an interested stockholder,
the interested stockholder owned at least 85% of the voting stock of the
corporation outstanding at the time the transaction commenced, excluding stock
held by directors who are also officers of the corporation and employee stock
ownership plans that do not provide employees with the right to determine
confidentially whether shares held subject to the plan will be tendered in a
tender or exchange offer. The Company Board has approved the Offer, the Merger
and the Merger Agreement for the purposes of Section 203 of the DGCL.
27
<PAGE>
A number of other states have adopted laws and regulations applicable to
attempts to acquire securities of corporations which are incorporated, or have
substantial assets, stockholders, principal executive offices or principal
places of business, or whose business operations otherwise have substantial
economic effects in such states. In EDGAR V. MITE CORP., the Supreme Court of
the United States invalidated on constitutional grounds the Illinois Business
Takeover statute, which, as a matter of state securities law, made takeovers of
corporations meeting certain requirements more difficult. However, in 1987, in
CTS CORP. V. DYNAMICS CORP. OF AMERICA, the Supreme Court held that the State of
Indiana may, as a matter of corporate law and, in particular, with respect to
those aspects of corporate law concerning corporate governance, constitutionally
disqualify a potential acquiror from voting on the affairs of a target
corporation without the prior approval of the remaining stockholders. The state
law before the Supreme Court was by its terms applicable only to corporations
that had a substantial number of stockholders in the state and were incorporated
there.
The Company conducts business in a number of states throughout the United
States, some of which have enacted takeover laws. The Offeror and the Parent do
not know whether any of these laws will, by their terms, apply to the Offer and
have not complied with any such laws. Except as described above with respect to
Section 203 of the DGCL, the Offeror has not attempted to comply with the
takeover laws of any other state. Should any person seek to apply any state
takeover law, the Offeror will take such action as then appears desirable, which
may include challenging the validity or applicability of any such statute in
appropriate court proceedings. In the event it is asserted that one or more
state takeover laws is applicable to the Offer or the Merger, and an appropriate
court does not determine that it is inapplicable or invalid as applied to the
Offer, the Offeror might be required to file certain information with, or
receive approvals from, the relevant state authorities. In addition, if
enjoined, the Offeror might be unable to accept for payment any Shares tendered
pursuant to the Offer, or be delayed in continuing or consummating the Offer and
the Merger. In such case, the Offeror may not be obligated to accept for payment
any Shares tendered. See Section 15.
APPRAISAL RIGHTS. Holders of the Shares do not have appraisal rights as a
result of the Offer. However, if the Merger is consummated, holders of the
Shares at the time of the Merger will have certain rights pursuant to the
provisions of Section 262 of the DGCL to dissent and demand appraisal of their
Shares. Under Section 262, dissenting stockholders who comply with the
applicable statutory procedures will be entitled to receive a judicial
determination of the fair value of their Shares and to receive payment of such
fair value in cash, together with a fair rate of interest, if any. Any such
judicial determination of the fair value of the Shares could be based upon
factors other than, or in addition to, the price per share to be paid in the
Merger or the market value of the Shares. The value so determined could be more
or less than the price per share to be paid in the Merger. See Annex II.
From the time written demand for payment of the fair cash value is given
until either the termination of the rights and obligations arising from such
demand or the purchase of the Shares related thereto by the Company, all rights
accruing to the objecting stockholder, including voting and dividend or
distribution rights, will be suspended. If any dividend or distribution is paid
on Shares during the suspension, an amount equal to the dividend or distribution
which would have been payable on the Shares, but for such suspension, shall be
paid to the holder of record of the Shares as a credit against the fair cash
value of the Shares. If the right to receive the fair cash value is terminated
other than by the purchase of the Shares by the Offeror, all rights will be
restored to the objecting stockholder and any distribution that would have been
made to the holder of record of the Shares, but for the suspension, will be made
at the time of such termination.
The foregoing summary of the rights of dissenting stockholders does not
purport to be a complete statement of the procedures to be followed by
stockholders desiring to exercise their dissenters' rights. The preservation and
exercise of dissenters' rights are conditioned on strict adherence to the
applicable provisions of the DGCL.
28
<PAGE>
LEGAL PROCEEDINGS. The Offeror is not aware of any pending or overtly
threatened legal proceedings which would affect the Offer or the Merger. If any
such matters were to arise, the Merger Agreement provides that, under certain
circumstances, the Offeror could decline to accept for payment or pay for any
Shares tendered in the Offer. See Section 15.
17. FEES AND EXPENSES
The Parent and the Offeror have retained Morgan Stanley & Co. Incorporated
to act as the Dealer Manager and to provide certain financial advisory services,
Georgeson & Company Inc. to act as the Information Agent and First Chicago Trust
Company of New York to act as the Depositary in connection with the Offer. The
Dealer Manager and the Information Agent may contact holders of Shares by mail,
telephone, telex, telegraph and personal interview and may request brokers,
dealers, commercial banks, trust companies and other nominees to forward the
Offer material to beneficial owners. The Dealer Manager, the Information Agent
and the Depositary each will receive reasonable and customary compensation for
their services, will be reimbursed for certain reasonable out-of-pocket expenses
and will be indemnified against certain liabilities and expenses in connection
therewith, including certain liabilities under the federal securities laws.
Neither the Offeror nor the Parent, nor any officer, director, stockholder,
agent or other representative of the Offeror or the Parent, will pay any fees or
commissions to any broker, dealer or other person (other than the Dealer
Manager) for soliciting tenders of Shares pursuant to the Offer. Brokers,
dealers, commercial banks and trust companies and other nominees will, upon
request, be reimbursed by the Offeror for customary mailing and handling
expenses incurred by them in forwarding materials to their customers.
18. MISCELLANEOUS
The Offer is not being made to, nor will tenders be accepted from or on
behalf of, holders of Shares in any jurisdiction in which the making or
acceptance thereof would not be in compliance with the securities, blue sky or
other laws of such jurisdiction. In any jurisdiction where the securities, blue
sky or other laws require the Offer to be made by a licensed broker or dealer,
the Offer shall be deemed to be made on behalf of the Offeror by Morgan Stanley
or one or more registered brokers or dealers licensed under the laws of such
jurisdiction.
The Offeror and the Parent have filed with the Commission the Schedule
14D-1, pursuant to Section 14(d)(1) of the Exchange Act and Rule 14d-3
promulgated thereunder, furnishing certain information with respect to the
Offer. Such Schedule 14D-1 and any amendments thereto, including exhibits, may
be examined and copies may be obtained at the same places and in the same manner
as set forth with respect to the Company in Section 8 (except that they will not
be available at the regional offices of the Commission).
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF THE OFFEROR OR THE PARENT OTHER THAN AS CONTAINED IN
THIS OFFER TO PURCHASE OR IN THE LETTER OF TRANSMITTAL, AND, IF ANY SUCH
INFORMATION OR REPRESENTATION IS GIVEN OR MADE, IT SHOULD NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE OFFEROR OR THE PARENT.
SHIELD ACQUISITION CORPORATION
December 2, 1996
29
<PAGE>
ANNEX I
DIRECTORS AND EXECUTIVE OFFICERS OF
THE PARENT AND THE OFFEROR
DIRECTORS AND EXECUTIVE OFFICERS OF THE PARENT. The names, present
principal occupation or employment, and material occupations, positions, offices
or employments during the last five years of each director and executive officer
of The Clorox Company are set forth below. Unless otherwise noted, the officers
and directors have held the positions indicated below with the Parent for the
last five years or have served the Parent in various administrative or executive
capacities for at least that long. The business address of each person listed
below is 1221 Broadway, Oakland, California 94612-1888, and, except as otherwise
indicated below, each person is a citizen of the United States.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT POSITION WITH THE PARENT
DIRECTORS AND EXECUTIVE OFFICERS AND FIVE-YEAR EMPLOYMENT HISTORY
- --------------------------------------------- ------------------------------------------------------------------
<S> <C>
William F. Ausfahl........................... Director since 1984. Group Vice President and Chief Financial
Officer of the Company. Mr. Ausfahl is the senior executive
officer responsible for the financial activities of the Company,
which include controllership, treasury, tax and audit, and for
information services, investor relations, and public affairs. He
joined the Company in December 1982, and became Group Vice
President and Chief Financial Officer in January 1983.
Daniel Boggan, Jr............................ Director since 1990. Officer, the National Collegiate Athletic
Association. Mr. Boggan became the Chief Operating Officer of the
National Collegiate Athletic Association in 1996, after having
been Group Executive Director for Education Services for the
National Collegiate Athletic Association since November 1994.
Previously, he had been Vice Chancellor for business and
administrative services at the University of California at
Berkeley since 1986.
John W. Collins.............................. Director since 1993. Former President and Chief Operating Officer
of the Company. Mr. Collins was President and Chief Operating
Officer of the Company from March 1986 through December 1989. He
was also a Director of the Company from July 1983 through October
1989. Beginning January 1990, he was on a paid leave of absence
which extended until his retirement on December 31, 1993. He was
not active in the Company's affairs from January 1990 until his
reelection to the board of directors in January 1993.
Ursula Fairchild............................. Director since 1976. Professional Photographer. Mrs. Fairchild is
a professional photographer, as well as a member of the
Supervisory Board of Henkel KGaA, Duesseldorf, Germany
(manufacturer of household products and chemicals). She is a
member of the Henkel family, which controls Henkel KGaA. Mrs.
Fairchild is a citizen of the Federal Republic of Germany.
Juergen Manchot.............................. Director since 1989. Vice-Chairman of the Shareholders' Committee,
Henkel KGaA. Dr. Manchot is the Vice-Chairman of the Shareholders'
Committee of Henkel KGaA,
</TABLE>
I-1
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT POSITION WITH THE PARENT
DIRECTORS AND EXECUTIVE OFFICERS AND FIVE-YEAR EMPLOYMENT HISTORY
- --------------------------------------------- ------------------------------------------------------------------
Duesseldorf, Germany (manufacturer of household products and
chemicals). He is a member of the Henkel family, which controls
Henkel KGaA. Dr. Manchot is a director of Transaction Network
Services Inc. Dr. Manchot is a citizen of the Federal Republic of
Germany.
<S> <C>
Dean O. Morton............................... Director since 1991. Retired Executive Vice President and Chief
Operating Officer, Hewlett-Packard Company. Mr. Morton was the
Executive Vice President, Chief Operating Officer and a Director
of Hewlett-Packard Company until his retirement in 1993. Mr.
Morton is a director of ALZA Corporation, Raychem Corporation,
Tencor Instruments, Centigram Communications Corporation, and
Kaiser Foundation Health Plan, Inc. and Kaiser Foundation
Hospitals. He is a trustee of the State Street Research Group of
Funds, The State Street Research Portfolios, Inc. and The
Metropolitan Series Fund, Inc.
Klaus Morwind................................ Director since 1995. Executive Vice President and Personally
Liable Associate, Henkel KGaA. Dr. Morwind is a member of the
Management Board of Henkel KGaA, Duesseldorf, Germany
(manufacturer of household products and chemicals). He joined
Henkel KGaA in 1969 and held several management positions before
assuming his current responsibility. Mr. Morwind is a citizen of
the Federal Republic of Germany.
Edward L. Scarff............................. Director since 1986. Mr. Scarff has been a private investor for
more than five years. From 1983 through 1994, he was Chairman of
the Board and Chief Executive Officer of Arcata Corporation
(commercial printer and manufacturer of redwood lumber).
Lary R. Scott................................ Director since 1989. Executive Vice President, Arkansas Best
Corporation. Mr. Scott was elected as Executive Vice President of
Arkansas Best Corporation in January 1996. Previously, he had been
President of Alexis Consulting, a transportation consulting firm.
From 1985 to 1990, Mr. Scott was President and Chief Executive
Officer of Consolidated Freightways, Inc., a worldwide
transportation company. Mr. Scott is a director of WorldWay
Corporation.
Forrest N. Shumway........................... Director since 1985. Retired Vice Chairman of the Board,
Allied-Signal Inc. Mr. Shumway is the retired Vice Chairman of the
Board of Allied-Signal Inc. (manufacturer of products in the
aerospace, aviation, chemical and energy industries). Previously,
he was Chief Executive Officer (1968-1985) and Chairman of the
Board (1980-1985) of The Signal Companies, Inc. until its merger
into Allied-Signal Inc. Mr. Shumway is a director of Aluminum
Company of
</TABLE>
I-2
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT POSITION WITH THE PARENT
DIRECTORS AND EXECUTIVE OFFICERS AND FIVE-YEAR EMPLOYMENT HISTORY
- --------------------------------------------- ------------------------------------------------------------------
America, American President Companies, Ltd. and Transamerica
Corporation.
<S> <C>
G. Craig Sullivan............................ Director since 1992. Chairman of the Board, President and Chief
Executive Officer of the Company. Mr. Sullivan has been Chairman
of the Board, President and Chief Executive Officer of the Company
since July 1, 1992. Previously, he was Vice Chairman and Chief
Executive Officer (May-June, 1992); Group Vice President
(1989-1992); Vice President-- Household Products (1984-1989); and
Vice President--Food Service Products Division (1981-1984). He
joined the Company in 1971. Mr. Sullivan is a director of American
President Companies, Ltd.
James A. Vohs................................ Director since 1988. Retired Chairman of Kaiser Foundation Health
Plan, Inc. and Kaiser Foundation Hospitals. Mr. Vohs retired as
Chairman of the Board of Kaiser Foundation Health Plan, Inc. and
Kaiser Foundation Hospitals in March 1992. Previously, he had
served as President (1975-1991) and Chief Executive Officer
(1980-1991). Currently, Mr. Vohs serves as Deputy Chairman of the
Board of Directors of the Federal Reserve Bank of San Francisco.
C.A. ("Al") Wolfe............................ Director since 1991. Retired President, U.S. Division, DDB Needham
Worldwide and President, Al Wolfe Associates, Inc. Mr. Wolfe is
the President of Al Wolfe Associates, Inc., a marketing and
advertising consulting firm. He is the retired President of the
U.S. Division of DDB Needham Worldwide, a major advertising
agency. Previously, Mr. Wolfe had been Executive Vice President of
N.W. Ayer and Executive Vice President and General Manager of
Wells, Rich, Greene advertising agencies. He is a director of
Dolphin Software, Inc.
C.T. Alcantara............................... Joined the Company in 1992 as Area General Manager-- Latin
America. Prior to his election as Vice President--Latin America
effective July 1, 1996, he left the Company briefly from December
8, 1995 through March 31, 1996, when he returned as Area General
Manager--Latin America.
A.W. Biebl................................... Joined the Company in 1981 as Manufacturing Manager, Food Service.
Prior to his election as Vice President-- Manufacturing,
Engineering and Distribution effective June 1, 1992, he was Vice
President--Kingsford Products from 1989 through May 1992 and Vice
President--Food Service Products from 1985 through 1989.
R.H. Bolte................................... Joined the Company in April 1982. Prior to his election as Vice
President--Corporate Marketing Services in July 1995, he was
Director of Advertising and Promotion from
</TABLE>
I-3
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT POSITION WITH THE PARENT
DIRECTORS AND EXECUTIVE OFFICERS AND FIVE-YEAR EMPLOYMENT HISTORY
- --------------------------------------------- ------------------------------------------------------------------
June 1993 through June 1995 and Director of Media Services from
May 1982 through May 1993.
<S> <C>
J.M. Brady................................... Joined the Company in 1976 as a brand assistant in Marketing,
Household Products. From November 1991 until her election as Vice
President--Human Resources in September 1993, she was Vice
President--Corporate Marketing Services. She was director of
Corporate Marketing Services from August 1991 through November
1991, Director of Marketing, Kingsford Products from 1989 through
August 1991 and held various marketing positions for Household
Products and Kingsford Products from 1987 through 1989.
J.O. Cole.................................... Joined the Company in 1973 as an attorney in its Legal Services
Department. He has served in numerous capacities in that
Department and was named Associate General Counsel in 1992. In
November 1992, he was elected to the position of Vice
President--Corporate Affairs.
R.T. Conti................................... Joined the Company in 1982 as Associate Region Sales Manager,
Household Products. Prior to his election as Vice
President--Kingsford Products effective July 1, 1996, he was Vice
President--International from June 1992 through June 1996, Area
General Manager--International for Europe, Middle East and Africa
from 1990 through May 1992, and Manager of Sales Planning for
Household Products from 1987 through 1990.
C.M. Couric.................................. Joined the Company in 1973 as a brand assistant in the Household
Products marketing organization. Prior to his election in July
1995 as Vice President--Brita Products, he had served as Director,
Brita Operations from 1988 through June 1995, and as a Manager of
Business Development from 1984 through 1988.
E.A. Cutter.................................. Joined the Company in June 1983 as Vice President-- General
Counsel and Secretary. He held this position through June 1, 1992,
when he was elected Senior Vice President-- General Counsel and
Secretary, with additional responsibility for the Company's
government affairs and community affairs functions.
L. Griffey................................... From September 17, 1986 to October 21, 1992, he acted as Vice
President of Purchasing and Distribution. From October 21, 1992 to
November 17, 1993, he was Vice President of Purchasing. Since
November 17, 1993, he has been the Vice President of International
Manufacturing.
G.E. Johnston................................ Joined the Company in July 1981 as Regional Sales Manager--Special
Markets. Prior to his election as group Vice President effective
July 1, 1996, he was Vice President--
</TABLE>
I-4
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT POSITION WITH THE PARENT
DIRECTORS AND EXECUTIVE OFFICERS AND FIVE-YEAR EMPLOYMENT HISTORY
- --------------------------------------------- ------------------------------------------------------------------
Kingsford Products from November 17, 1993 through June 1996, Vice
President--Corporate Development from June 1992 through November
16, 1993, Director of Corporate Development from 1991 through May
1992, and Director of Business Development from September 1989
through 1991.
<S> <C>
R.C. Klaus................................... Joined the Company in 1977 as Regional Sales Manager (Baltimore)
for the Company's Household Products Business. Prior to his
election as Vice President--Corporate Administration in November
1995, he was Vice President-- Clorox Professional Products from
March 1994 through October 1995, and Vice President--Food Service
Products from May 1990 through March 1994.
R.A. Llenado................................. Has been Group Vice President--Technical for the last five years.
P.N. Louras, Jr.............................. Joined the Company in April 1980 as Manager, Analysis and Control,
Kingsford Products. Prior to his election as Group Vice President
effective June 1, 1992, he was Vice President--International from
August 1990 through May 1992, Vice President--Controller from July
1988 through August 1990 and Controller, Household Products from
1987 through July 1988.
D.C. Murray.................................. Joined the Company in February 1978 as Regional Manager--Latin
America and Asia. Prior to his election as Group Vice President
effective July 1, 1996, he was Vice President--Household Products
Division from November 1994 through June 30, 1996, Vice
President--Household Products from April 1989 through November
1994, Vice President--International from November 1984 through
April 1989, and Vice President--Latin America and Asia from April
1982 through November 1984.
L.S. Peiros.................................. Joined the Company in 1982 and was elected Vice President--Food
Products Division effective July 1995. From September 1993 until
his election to his current position he was Vice
President--Corporate Marketing Services. From June 1992 through
August 1993 he was Director of Marketing--Household Products, and
from August 1991 through June 1992 he was Director of
Marketing--Kingsford Products. Prior to that, he has served in
various marketing positions in both Household Products and
Kingsford Products.
K.M. Rose.................................... Joined the Company in 1978 as a financial analyst. Prior to her
election as Vice President--Treasurer effective July 15, 1992, she
was Controller, Household Products from July 1988 through July
1992. Beginning October 1, 1994, she also
</TABLE>
I-5
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT POSITION WITH THE PARENT
DIRECTORS AND EXECUTIVE OFFICERS AND FIVE-YEAR EMPLOYMENT HISTORY
- --------------------------------------------- ------------------------------------------------------------------
assumed responsibility for the Company's investor relations and
risk management functions.
<S> <C>
H.J. Salvo................................... Has been Vice President and Controller for the past five years.
B.A. Sudbury................................. Joined the Company in 1978 as Project Leader in Research and
Development. Prior to his election as Vice President-- Research
and Development effective June 1, 1992, he was Director of
Research and Development, Household Products from 1985 through May
1992.
F.A. Tataseo................................. Joined the Company in October 1994 as Vice President--Sales.
Previously, he was employed by The Pillsbury Company (Division of
Grand Metropolitan Inc.) as Vice President, Sales (March-September
1994), and as Vice President, Direct Sales Force (June
1993-February 1994); and by The Procter & Gamble Company as Sales
Merchandising Division Manager, Soap Sector (May 1992-May 1993);
as Division Sales Manager, Laundry Products Category (November
1990-April 1993); and as Division Sales Manager, Fabric Care
Category (July 1988-October 1990).
C.E. Williams................................ Joined the Company in May 1993 as Vice President-- Information
Services. From 1987 until he joined the Company, Mr. Williams was
Director of Information Services of the Fritz Companies, Inc.
</TABLE>
DIRECTORS AND EXECUTIVE OFFICERS OF THE OFFEROR. Unless otherwise
indicated, each person identified below has been employed by the Parent for the
last five years and all information concerning the current business address,
present principal occupation or employment and five-year employment history for
each person is the same as the information given above. All persons listed below
are citizens of the United States.
DIRECTORS
W.F. Ausfahl
E.A. Cutter
G.E. Johnston
EXECUTIVE OFFICERS
G.E. Johnston, President
W.F. Ausfahl, Vice President
E.A. Cutter, Vice President and Secretary
K.M. Rose, Treasurer
I-6
<PAGE>
ANNEX II
Set forth below is Section 262 of the General Corporation Law of the State
of Delaware regarding appraisal rights, which rights will only be available in
connection with the Merger.
SECTION 262 OF THE GENERAL CORPORATION LAW OF THE STATE OF DELAWARE
262 APPRAISAL RIGHTS
(a) Any stockholder of a corporation of this State who holds shares of stock
on the date of the making of a demand pursuant to subsection (d) of this section
with respect to such shares, who continuously holds such shares through the
effective date of the merger or consolidation, who has otherwise complied with
subsection (d) of this section and who has neither voted in favor of the merger
or consolidation nor consented thereto in writing pursuant to Section 228 of
this title shall be entitled to an appraisal by the Court of Chancery of the
fair value of his shares of stock under the circumstances described in
subsections (b) and (c) of this section. As used in this section, the word
"stockholder" means a holder of record of stock in a stock corporation and also
a member of record of a nonstock corporation; the words "stock" and "share" mean
and include what is ordinarily meant by those words and also membership or
membership interest of a member of a nonstock corporation; and the words
"depository receipt" mean a receipt or other instrument issued by a depository
representing an interest in one or more shares, or fractions thereof, solely of
stock of a corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to Section 251 (other than a merger effected pursuant to
subsection (g) of Section 251), 252, 254, 257, 258, 263 or 264 of this title:
(1) Provided, however, that no appraisal rights under this section shall
be available for the shares of any class or series of stock, which stock, or
depository receipts in respect thereof, at the record date fixed to
determine the stockholders entitled to receive notice of and to vote at the
meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 holders; and further provided that no appraisal
rights shall be available for any shares of stock of the constituent
corporation surviving a merger if the merger did not require for its
approval the vote of the holders of the surviving corporation as provided in
subsection (f) of Section 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series
of stock of a constituent corporation if the holders thereof are required by
the terms of an agreement of merger or consolidation pursuant to
SectionSection 251, 252, 254, 257, 258, 263 and 264 of this title to accept
for such stock anything except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect thereof;
b. Shares of stock of any other corporation, or depository receipts
in respect thereof, which shares of stock or depository receipts at the
effective date of the merger or consolidation will be either listed on a
national securities exchange or designated as a national market system
security on an interdealer quotation system by the National Association
of Securities Dealers, Inc. or held of record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or
d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this paragraph.
II-1
<PAGE>
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under Section 253 of this title is not owned by
the parent corporation immediately prior to the merger, appraisal rights
shall be available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights are
provided under this section is to be submitted for approval at a meeting of
stockholders, the corporation, not less than 20 days prior to the meeting,
shall notify each of its stockholders who was such on the record date for
such meeting with respect to shares for which appraisal rights are available
pursuant to subsections (b) or (c) hereof that appraisal rights are
available for any or all of the shares of the constituent corporations, and
shall include in such notice a copy of this section. Each stockholder
electing to demand the appraisal of his shares shall deliver to the
corporation, before the taking of the vote on the merger or consolidation, a
written demand for appraisal of his shares. Such demand will be sufficient
if it reasonably informs the corporation of the identity of the stockholder
and that the stockholder intends thereby to demand the appraisal of his
shares. A proxy or vote against the merger or consolidation shall not
constitute such a demand. A stockholder electing to take such action must do
so by a separate written demand as herein provided. Within ten days after
the effective date of such merger or consolidation, the surviving or
resulting corporation shall notify each stockholder of each constituent
corporation who has complied with this subsection and has not voted in favor
of or consented to the merger or consolidation of the date that the merger
or consolidation has become effective; or
(2) If the merger or consolidation was approved pursuant to Section 228
or Section 253 of this title, each constituent corporation, either before
the effective date of the merger or consolidation or within ten days
thereafter, shall notify each of the holders of any class or series of stock
of such constituent corporation who are entitled to appraisal rights of the
approval of the merger or consolidation and that appraisal rights are
available for any or all shares of such class or series of stock of such
constituent corporation, and shall include in such notice a copy of this
section, provided that, if the notice is given on or after the effective
date of the merger or consolidation, such notice shall be given by the
surviving or resulting corporation to all such holders of any class or
series of stock of a constituent corporation that are entitled to appraisal
rights. Such notice may, and, if given on or after the effective date of the
merger or consolidation, shall, also notify such stockholders of the
effective date of the merger or consolidation. Any stockholder entitled to
appraisal rights may, within twenty days after the date of mailing of such
notice, demand in writing from the surviving or resulting corporation the
appraisal of such holder's shares. Such demand will be sufficient if it
reasonably informs the corporation of the identity of the stockholder and
that the stockholder intends thereby to demand the appraisal of such
holder's shares. If such notice did not notify stockholders of the effective
date of the merger or consolidation, either (i) each such constituent
corporation shall send a second notice before the effective date of the
merger or consolidation notifying each of the holders of any class or series
of stock of such constituent corporation that are entitled to appraisal
rights of the effective date of the merger or consolidation or (ii) the
surviving or resulting corporation shall send such a second notice to all
such holders on or within ten days after such effective date; provided,
however, that if such second notice is sent more than twenty days following
the sending of the first notice, such second notice need only be sent to
each stockholder who is entitled to appraisal rights and who has demanded
appraisal of such holder's shares in accordance with this subsection. An
affidavit
II-2
<PAGE>
of the secretary or assistant secretary or of the transfer agent of the
corporation that is required to give either notice that such notice has been
given shall, in the absence of fraud, be prima facie evidence of the facts
stated therein. For purposes of determining the stockholders entitled to
receive either notice, each constituent corporation may fix, in advance, a
record date that shall be not more than 10 days prior to the date the notice
is given; provided that, if the notice is given on or after the effective
date of the merger or consolidation, the record date shall be such effective
date. If no record date is fixed and the notice is given prior to the
effective date, the record date shall be the close of business on the day
next preceding the day on which the notice is given.
(e) Within 120 days after the effective date of the merger or consolidation,
the surviving or resulting corporation or any stockholder who has complied with
subsections (a) and (d) hereof and who is otherwise entitled to appraisal
rights, may file a petition in the Court of Chancery demanding a determination
of the value of the stock of all such stockholders. Notwithstanding the
foregoing, at any time within 60 days after the effective date of the merger or
consolidation, any stockholder shall have the right to withdraw his demand for
appraisal and to accept the terms offered upon the merger or consolidation.
Within 120 days after the effective date of the merger or consolidation, any
stockholder who has complied with the requirements of subsections (a) and (d)
hereof, upon written request, shall be entitled to receive from the corporation
surviving the merger or resulting from the consolidation a statement setting
forth the aggregate number of shares not voted in favor of the merger or
consolidation and with respect to which demands for appraisal have been received
and the aggregate number of holders of such shares. Such written statement shall
be mailed to the stockholder within 10 days after his written request for such a
statement is received by the surviving or resulting corporation or within 10
days after expiration of the period for delivery of demands for appraisal under
subsection (d) hereof, whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a copy
thereof shall be made upon the surviving or resulting corporation, which shall
within 20 days after such service file in the office of the Register in Chancery
in which the petition was filed a duly verified list containing the names and
addresses of all stockholders who have demanded payment for their shares and
with whom agreements as to the value of their shares have not been reached by
the surviving or resulting corporation. If the petition shall be filed by the
surviving or resulting corporation, the petition shall be accompanied by such a
duly verified list. The Register in Chancery, if so ordered by the Court, shall
give notice of the time and place fixed for the hearing of such petition by
registered or certified mail to the surviving or resulting corporation and to
the stockholders shown on the list at the addresses therein stated. Such notice
shall also be given by one or more publications at least one week before the day
of the hearing, in a newspaper of general circulation published in the City of
Wilmington, Delaware or such publication as the Court deems advisable. The forms
of the notices by mail and by publication shall be approved by the Court, and
the costs thereof shall be borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion,
II-3
<PAGE>
permit discovery or other pretrial proceedings and may proceed to trial upon the
appraisal prior to the final determination of the stockholder entitled to an
appraisal. Any stockholder whose name appears on the list filed by the surviving
or resulting corporation pursuant to subsection (f) of this section and who has
submitted his certificates of stock to the Register in Chancery, if such is
required, may participate fully in all proceedings until it is finally
determined that he is not entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded his appraisal rights as provided in subsection (d)
of this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation); provided,
however, that if no petition for an appraisal shall be filed within the time
provided in subsection (e) of this section, or if such stockholder shall deliver
to the surviving or resulting corporation a written withdrawal of his demand for
an appraisal and an acceptance of the merger or consolidation, either within 60
days after the effective date of the merger or consolidation as provided in
subsection (e) of this section or thereafter with the written approval of the
corporation, then the right of such stockholder to an appraisal shall cease.
Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery
shall be dismissed as to any stockholder without the approval of the Court, and
such approval may be conditioned upon such terms as the Court deems just.
(l) The shares of the surviving or resulting corporation to which the shares
of such objecting stockholders would have been converted had they assented to
the merger or consolidation shall have the status of authorized and unissued
shares of the surviving or resulting corporation.
II-4
<PAGE>
Facsimile copies of the Letter of Transmittal will be accepted. The Letter
of Transmittal and certificates for Shares and any other required documents
should be sent or delivered by each stockholder of the Company or his broker,
dealer, commercial bank, trust company or other nominee to the Depositary at one
of the addresses set forth below:
THE DEPOSITARY FOR THE OFFER IS:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C> <C>
BY MAIL: BY HAND: BY OVERNIGHT COURIER:
Tenders & Exchanges First Chicago Trust Company Tenders & Exchanges
P.O. Box 2569 - Suite of New York 14 Wall Street
4660-AAPC ATTN: Tenders & Exchanges Suite 4680-AAPC, 8th Floor
Jersey City, NJ 07303-2569 c/o The Depository Trust New York, NY 10005
Company
55 Water Street, DTC TAD
Vietnam Veterans Memorial Plaza
New York, NY 10041
</TABLE>
Any questions or requests for assistance or additional copies of the Offer
to Purchase and the Letter of Transmittal and Notice of Guaranteed Delivery may
be directed to the Information Agent or to the Dealer Manager at their
respective telephone numbers and locations listed below, and copies will be
furnished promptly at the Offeror's expense. Stockholders may also contact their
broker, dealer, commercial bank, trust company or other nominee for assistance
concerning the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
GEORGESON
& COMPANY INC.
Wall Street Plaza
New York, New York 10005
Banks and Brokerage Firms, please call collect (212) 440-9800
All Others Call Toll Free: 1-800-223-2064
THE DEALER MANAGER FOR THE OFFER IS:
MORGAN STANLEY & CO.
INCORPORATED
555 California Street
Suite 2200
San Francisco, California 94104
(415) 576-2332
<PAGE>
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
ARMOR ALL PRODUCTS CORPORATION
PURSUANT TO THE OFFER TO PURCHASE DATED DECEMBER 2, 1996
BY
SHIELD ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
THE CLOROX COMPANY
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON MONDAY, DECEMBER 30, 1996, UNLESS THE OFFER IS EXTENDED.
TO: FIRST CHICAGO TRUST COMPANY OF NEW YORK, AS DEPOSITARY
<TABLE>
<S> <C> <C>
BY MAIL: BY HAND: BY OVERNIGHT COURIER:
Tenders & Exchanges First Chicago Trust Company Tenders & Exchanges
P.O. Box 2569 - Suite of New York 14 Wall Street
4660-AAPC ATTN: Tenders & Exchanges Suite 4680-AAPC, 8th Floor
Jersey City, NJ 07303-2569 c/o The Depository Trust New York, NY 10005
Company
55 Water Street, DTC TAD
Vietnam Veterans Memorial Plaza
New York, NY 10041
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS LETTER OF
TRANSMITTAL IN THE APPROPRIATE SPACE PROVIDED THEREFOR AND COMPLETE THE
SUBSTITUTE FORM W-9 PROVIDED BELOW.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by stockholders either if
certificates evidencing Shares (as defined below) are to be forwarded herewith
or, unless an Agent's Message (as defined in the Offer to Purchase (as defined
below)) is utilized, if delivery of Shares is to be made by book-entry transfer
to the Depositary's account at The Depository Trust Company ("DTC") or the
Philadelphia Depository Trust Company ("PDTC") (each a "Book-Entry Transfer
Facility" and, collectively, the "Book-Entry Transfer Facilities") pursuant to
the book-entry transfer procedure described in Section 3 of the Offer to
Purchase. Delivery of documents to a Book-Entry Transfer Facility does not
constitute delivery to the Depositary.
Stockholders whose certificates evidencing Shares ("Share Certificates") are
not immediately available or who cannot deliver their Share Certificates and all
other documents required hereby to the Depositary prior to the Expiration Date
(as defined in Section 1 of the Offer to Purchase) or who cannot complete the
procedure for delivery by book-entry transfer on a timely basis and who wish to
tender their Shares must do so pursuant to the guaranteed delivery procedure
described in Section 3 of the Offer to Purchase. See Instruction 2.
<TABLE>
<S> <C>
/ / CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE DEPOSITARY'S ACCOUNT AT ONE OF THE
BOOK-ENTRY TRANSFER FACILITIES AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:
Check Box of Applicable Book-Entry Transfer Facility:
(check one) / / DTC / / PDTC
Account Number:
Transaction Code Number:
</TABLE>
<TABLE>
<S> <C>
/ / CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE
DEPOSITARY AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s):
Window Ticket No. (if any):
Date of Execution of Notice of Guaranteed Delivery:
Name of Institution which Guaranteed Delivery:
If Delivered by Book-Entry Transfer, Check Box of Applicable Book-Entry Transfer Facility:
/ / DTC
/ / PDTC
Account Number (if delivered by Book-Entry Transfer)
Transaction Code Number
</TABLE>
<TABLE>
<S> <C> <C> <C>
DESCRIPTION OF SHARES TENDERED
<CAPTION>
Name(s) and Address(es) of
Registered Holder(s)
(Please fill in, if blank, exactly as name(s) Share Certificate(s) and Shares Tendered
appear(s) on Share Certificate(s)) (Attach additional list, if necessary)
<S> <C> <C> <C>
Share Total Number of Shares
Certificate Evidenced by Share Number of Shares
Number(s)* Certificate(s)* Tendered**
Total Shares:
*Need not be completed by stockholders delivering Shares by book-entry transfer.
**Unless otherwise indicated, it will be assumed that all Shares evidenced by each Share Certificate delivered to the
Depositary are being tendered hereby. See Instruction 4.
</TABLE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby tenders to Shield Acquisition Corporation, a Delaware
corporation (the "Offeror") and a wholly owned subsidiary of The Clorox Company,
a Delaware corporation (the "Parent"), the above-described shares of common
stock, par value $0.01 per share (the "Shares"), of Armor All Products
Corporation, a Delaware corporation (the "Company"), pursuant to the Offeror's
offer to purchase any and all of the outstanding Shares, at a price of $19.09
per Share, net to the seller in cash, without interest, upon the terms and
subject to the conditions set forth in the Offer to Purchase, dated December 2,
1996 (the "Offer to Purchase"), receipt of which is hereby acknowledged, and in
this Letter of Transmittal (which together constitute the "Offer"). The Offer is
being made in connection with the Agreement and Plan of Merger, dated as of
November 26, 1996, as amended, by and among the Parent, the Offeror and the
Company. The undersigned understands that the Offeror reserves the right to
transfer or assign, in whole or from time to time in part, to one or more of its
affiliates, the right to purchase all or any portion of the Shares tendered
pursuant to the Offer.
Subject to, and effective upon, acceptance for payment of the Shares
tendered herewith in accordance with the terms of the Offer, the undersigned
hereby sells, assigns and transfers to, or upon the order of, the Offeror all
right, title and interest in and to all the Shares that are being tendered
hereby and all dividends, distributions (including, without limitation,
distributions of additional Shares or other securities) and rights declared,
paid or distributed in respect of such Shares on or after November 26, 1996,
other than the dividend of $0.16 per Share previously declared by the Company,
the record date for which is December 2, 1996 (collectively, "Distributions"),
and irrevocably appoints the Depositary the true and lawful agent and
attorney-in-fact of the undersigned with respect to such Shares and all
Distributions, with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest), to (i) deliver
Share Certificates evidencing such Shares and all Distributions, or transfer
ownership of such Shares and all Distributions on the account books maintained
by a Book-Entry Transfer Facility, together, in either case, with all
accompanying evidences of transfer and authenticity, to or upon the order of the
Offeror, (ii) present such Shares and all Distributions for transfer on the
books of the Company and (iii) receive all benefits and otherwise exercise all
rights of beneficial ownership of such Shares and all Distributions, all in
accordance with the terms of the Offer.
The undersigned hereby irrevocably appoints each designee of the Offeror as
the attorney-in-fact and proxy of the undersigned, each with full power of
substitution, to exercise all voting and other rights of the undersigned in such
manner as each such attorney and proxy or his substitute shall, in his sole
discretion, deem proper and otherwise act (by written consent or otherwise) with
respect to all the Shares tendered hereby which have been accepted for payment
by the Offeror prior to the time of any vote or other action (and any
Distributions), at any meeting of stockholders of the Company (whether annual or
special and whether or not an adjourned or postponed meeting) or consent in lieu
of any such meeting or otherwise. This proxy and power of attorney is coupled
with an interest in the Shares tendered hereby, is irrevocable and is granted in
consideration of, and is effective upon, the acceptance for payment of such
Shares by the Offeror in accordance with the terms of the Offer. Such acceptance
for payment shall revoke any other proxies and powers of attorney granted by the
undersigned at any time with respect to such Shares (and any Distributions), and
no subsequent proxy or power of attorney shall be given or written consent
executed (and if given or executed, shall not be effective) by the undersigned
with respect thereto. The undersigned understands that, in order for Shares to
be deemed validly tendered, immediately upon the Offeror's acceptance of such
Shares for payment, the Offeror must be able to exercise full voting and other
rights of a record and beneficial owner with respect to such Shares.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby and all Distributions, and that, when such Shares are accepted for
payment by the Offeror, the Offeror will acquire good, marketable and
unencumbered title thereto and to all Distributions, free and clear of all
liens, restrictions, charges and encumbrances, and that none of such Shares and
Distributions will be subject to any adverse claim. The undersigned, upon
request, shall execute and deliver all additional documents deemed by the
Depositary or the Offeror to be necessary or desirable to complete the sale,
assignment and transfer of the Shares tendered hereby and all Distributions. In
addition, the undersigned shall remit and transfer promptly to the Depositary
for the account of the Offeror all Distributions in respect of the Shares
tendered hereby, accompanied by appropriate documentation of transfer, and,
pending such remittance and transfer or appropriate assurance thereof, the
Offeror shall be entitled to all rights and privileges as owner of each such
Distribution and may withhold the entire purchase price of the Shares tendered
hereby, or deduct from such purchase price, the amount or value of such
Distribution as determined by the Offeror in its sole discretion.
No authority herein conferred or agreed to be conferred shall be affected
by, and all such authority shall survive, the death or incapacity of the
undersigned. All obligations of the undersigned hereunder shall be binding upon
the heirs, personal representatives, successors and assigns of the undersigned.
Except as stated in the Offer to Purchase, this tender is irrevocable.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 3 of the Offer to Purchase and in the
instructions hereto will constitute the undersigned's acceptance of the terms
and conditions of the Offer. The Offeror's acceptance of such Shares for payment
will constitute a binding agreement between the undersigned and the Offeror upon
the terms and subject to the conditions of the Offer, including, without
limitation, the undersigned's representation and warranty that the undersigned
owns the Shares being tendered.
Unless otherwise indicated herein in the box entitled "Special Payment
Instructions," please issue the check for the purchase price of all Shares
purchased, and return all Share Certificates evidencing Shares not purchased or
not tendered, in the name(s) of the registered holder(s) appearing above under
"Description of Shares Tendered." Similarly, unless otherwise indicated in the
box entitled "Special Delivery Instructions," please mail the check for the
purchase price of all Shares purchased and all Share Certificates evidencing
Shares not tendered or not purchased (and accompanying documents, as
appropriate) to the address(es) of the registered holder(s) appearing above
under "Description of Shares Tendered." In the event that the boxes entitled
"Special Payment Instructions" and "Special Delivery Instructions" are both
completed, please issue the check for the purchase price of all Shares purchased
and return all Share Certificates evidencing Shares not purchased or not
tendered in the name(s) of, and mail such check and Share Certificates to, the
person(s) so indicated. Please credit any Shares tendered hereby and delivered
by book-entry transfer, but which are not purchased, by crediting the account at
the Book-Entry Transfer Facility designated above. The undersigned recognizes
that the Offeror has no obligation, pursuant to the Special Payment
Instructions, to transfer any Shares from the name of the registered holder(s)
thereof if the Offeror does not accept for payment any of the Shares tendered
hereby.
<TABLE>
<S> <C>
SPECIAL PAYMENT SPECIAL DELIVERY
INSTRUCTIONS INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7) (SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the To be completed ONLY if the check for the
purchase price of Shares or Share purchase price of Shares purchased or Share
Certificates evidencing Shares not tendered Certificates evidencing Shares not tendered
or not purchased are to be issued in the or not purchased are to be mailed to someone
name of someone other than the undersigned. other than the undersigned, or to the
undersigned at an address other than that
shown under "Description of Shares
Tendered."
Issue check and/or certificate(s) to: Mail check and/or certificate(s) to:
Name: Name:
PLEASE PRINT PLEASE PRINT
Address: Address:
INCLUDE ZIP CODE INCLUDE ZIP CODE
TAXPAYER IDENTIFICATION OR SOCIAL
SECURITY NUMBER
(SEE SUBSTITUTE FORM W-9 ON REVERSE
SIDE)
</TABLE>
IMPORTANT
STOCKHOLDER(S): SIGN HERE
(PLEASE COMPLETE SUBSTITUTE FORM W-9 ON REVERSE)
.........................................................................
.........................................................................
SIGNATURE(S) OF HOLDER(S)
Dated:........................................................ , 199
(Must be signed by registered holder(s) exactly as name(s) appear(s) on Share
Certificates or on a security position listing or by a person(s) authorized to
become registered holder(s) by certificates and documents transmitted herewith.
If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person acting in a fiduciary
or representative capacity, please provide the following information. See
Instruction 5.)
Name(s): .......................................................................
................................................................................
PLEASE PRINT
Capacity: ......................................................................
PLEASE PROVIDE FULL
TITLE
Address: .......................................................................
................................................................................
INCLUDE ZIP CODE
Telephone No.: .................................................................
INCLUDE AREA CODE
Taxpayer Identification or
Social Security Number: ........................................................
SEE SUBSTITUTE FORM W-9 ON REVERSE SIDE
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED -- SEE INSTRUCTIONS 1 AND 5)
SPACE BELOW IS FOR USE BY FINANCIAL INSTITUTIONS ONLY. FINANCIAL INSTITUTIONS:
PLACE MEDALLION GUARANTEE IN SPACE PROVIDED BELOW.
<PAGE>
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Offer
1. GUARANTEE OF SIGNATURES. All signatures on this Letter of Transmittal
must be guaranteed by a firm which is a member in good standing of a recognized
Medallion Signature Guarantee Program, or by any other "eligible guarantor
institution," as such term is defined in Rule 17Ad-15 under the Securities
Exchange Act of 1934, as amended (each of the foregoing being referred to as an
"Eligible Institution"), unless (i) this Letter of Transmittal is signed by the
registered holder(s) of the Shares (which term, for purposes of this document,
shall include any participant in a Book-Entry Transfer Facility whose name
appears on a security position listing as the owner of Shares) tendered hereby
and such holder(s) has (have) completed neither the box entitled "Special
Payment Instructions" nor the box entitled "Special Delivery Instructions" on
the reverse hereof or (ii) such Shares are tendered for the account of an
Eligible Institution. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND SHARE CERTIFICATES. This Letter
of Transmittal is to be used either if Share Certificates are to be forwarded
herewith or, unless an Agent's Message is utilized, if Shares are to be
delivered by book-entry transfer pursuant to the procedure set forth in Section
3 of the Offer to Purchase. Share Certificates evidencing all physically
tendered Shares, or a confirmation of a book-entry transfer into the
Depositary's account at a Book-Entry Transfer Facility of all Shares delivered
by book-entry transfer, as well as a properly completed and duly executed Letter
of Transmittal (or facsimile thereof), with any required signature guarantees,
or an Agent's Message in the case of a book-entry delivery, and any other
documents required by this Letter of Transmittal, must be received by the
Depositary at one of its addresses set forth on the reverse hereof prior to the
Expiration Date. If Share Certificates are forwarded to the Depositary in
multiple deliveries, a properly completed and duly executed Letter of
Transmittal must accompany each such delivery. Stockholders whose Share
Certificates are not immediately available, who cannot deliver their Share
Certificates and all other required documents to the Depositary prior to the
Expiration Date or who cannot complete the procedure for delivery by book-entry
transfer on a timely basis may tender their Shares pursuant to the guaranteed
delivery procedure described in Section 3 of the Offer to Purchase. Pursuant to
such procedure: (i) such tender must be made by or through an Eligible
Institution; (ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form made available by the Offeror, must be
received by the Depositary prior to the Expiration Date; and (iii) the Share
Certificates evidencing all physically delivered Shares in proper form for
transfer by delivery, or a confirmation of a book-entry transfer into the
Depositary's account at a Book-Entry Transfer Facility of all Shares delivered
by book-entry transfer, in each case together with a Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed, with any required
signature guarantees (or, in the case of book-entry delivery, an Agent's
Message), and any other documents required by this Letter of Transmittal, must
be received by the Depositary within three Nasdaq trading days after the date of
execution of such Notice of Guaranteed Delivery, all as described in Section 3
of the Offer to Purchase.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, SHARE CERTIFICATES AND
ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER
FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER, AND THE
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF
DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. By execution of this Letter of Transmittal
(or a facsimile hereof), all tendering stockholders waive any right to receive
any notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein under "Description of
Shares Tendered" is inadequate, the Share Certificate numbers, the number of
Shares evidenced by such Share Certificates and the number of Shares tendered
should be listed on a separate schedule and attached hereto.
4. PARTIAL TENDERS (NOT APPLICABLE TO STOCKHOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER). If fewer than all the Shares evidenced by any Share Certificate
delivered to the Depositary herewith are to be tendered hereby, fill in the
number of Shares which are to be tendered in the box entitled "Number of Shares
Tendered." In such cases, new Share Certificates evidencing the remainder of the
Shares that were evidenced by the Share Certificates delivered to the Depositary
herewith will be sent to the person(s) signing this Letter of Transmittal,
unless otherwise provided in the box entitled "Special Delivery Instructions" on
the reverse hereof, as soon as practicable after the expiration or termination
of the Offer. All Shares evidenced by Share Certificates delivered to the
Depositary will be deemed to have been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of the Share Certificates evidencing such Shares without alteration,
enlargement or any other change whatsoever.
If any Share tendered hereby is owned of record by two or more persons, all
such persons must sign this Letter of Transmittal.
If any of the Shares tendered hereby are registered in the names of
different holders, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of such
Shares.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, no endorsements of Share Certificates or separate stock
powers are required, unless payment is to be made to, or Share Certificates
evidencing Shares not tendered or not purchased are to be issued in the name of,
a person other than the registered holder(s), in which case the Share
Certificate(s) evidencing the Shares tendered hereby must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name(s) of the registered holder(s) appear(s) on such Share Certificate(s).
Signatures on such Share Certificate(s) and stock powers must be guaranteed by
an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, the Share Certificate(s)
evidencing the Shares tendered hereby must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear(s) on such Share Certificate(s). Signatures on such
Share Certificate(s) and stock powers must be guaranteed by an Eligible
Institution.
If this Letter of Transmittal or any Share Certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to the Offeror of such person's authority so to act must be
submitted.
6. STOCK TRANSFER TAXES. Except as otherwise provided in this Instruction
6, the Offeror will pay all stock transfer taxes with respect to the sale and
transfer of any Shares to it or its order pursuant to the Offer. If, however,
payment of the purchase price of any Shares purchased is to be made to, or Share
Certificate(s) evidencing Shares not tendered or not purchased are to be issued
in the name of, a person other than the registered holder(s), the amount of any
stock transfer taxes (whether imposed on the registered holder(s), such other
person or otherwise) payable on account of the transfer to such other person
will be deducted from the purchase price of such Shares purchased, unless
evidence satisfactory to Purchaser of the payment of such taxes, or exemption
therefrom, is submitted. Except as provided in this Instruction 6, it will not
be necessary for transfer tax stamps to be affixed to the Share Certificates
evidencing the Shares tendered hereby.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check for the purchase
price of any Shares tendered hereby is to be issued, or Share Certificate(s)
evidencing Shares not tendered or not purchased are to be issued, in the name of
a person other than the person(s) signing this Letter of Transmittal or if such
check or any such Share Certificate is to be sent to someone other than the
person(s) signing this Letter of Transmittal or to the person(s) signing this
Letter of Transmittal but at an address other than that shown in the box
entitled "Description of Shares Tendered" on the reverse hereof, the appropriate
boxes on the reverse of this Letter of Transmittal must be completed.
8. QUESTIONS AND REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions
and requests for assistance may be directed to the Information Agent or the
Dealer Manager at their respective addresses or telephone numbers set forth
below. Additional copies of the Offer to Purchase, this Letter of Transmittal
and the Notice of Guaranteed Delivery may be obtained from the Information Agent
or the Dealer Manager or from brokers, dealers, commercial banks or trust
companies.
9. SUBSTITUTE FORM W-9. Each tendering stockholder is required to provide
the Depositary with a correct Taxpayer Identification Number ("TIN") on the
Substitute Form W-9 which is provided under "Important Tax Information" below,
and to certify whether such stockholder is subject to backup withholding of
federal income tax. If a tendering stockholder has been notified by the Internal
Revenue Service that such stockholder is subject to backup withholding, such
stockholder must cross out item (2) of the Certification box of the Substitute
Form W-9, unless such stockholder has since been notified by the Internal
Revenue Service that such stockholder is no longer subject to backup
withholding. Failure to provide the information on the Substitute Form W-9 may
subject the tendering stockholder to 31% federal income tax withholding on the
payment of the purchase price of all Shares purchased from such stockholder. If
the tendering stockholder has not been issued a TIN and has applied for one or
intends to apply for one in the near future, such stockholder should write
"Applied For" in the space provided for the TIN in Part I of the Substitute Form
W-9, and sign and date the Substitute Form W-9. If "Applied For" is written in
Part I and the Depositary is not provided with a TIN within 60 days, the
Depositary will withhold 31% on all payments of the purchase price to such
stockholder until a TIN is provided to the Depositary.
10. WAIVER OF CONDITIONS. Subject to the terms of the Offer, the Offeror
reserves the right to waive any of the specified conditions of the Offer, in
whole or in part, in the case of any Shares tendered.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF), PROPERLY
COMPLETED AND DULY EXECUTED (TOGETHER WITH ANY REQUIRED SIGNATURE GUARANTEES, OR
AN AGENT'S MESSAGE IN THE CASE OF BOOK-ENTRY DELIVERY, AND SHARE CERTIFICATES OR
CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED DOCUMENTS) OR A
PROPERLY COMPLETED AND DULY EXECUTED NOTICE OF GUARANTEED DELIVERY MUST BE
RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION DATE.
IMPORTANT TAX INFORMATION
Under the federal income tax law, a stockholder whose tendered Shares are
accepted for payment is required by law to provide the Depositary (as payer)
with such stockholder's correct TIN on Substitute Form W-9 below. If such
stockholder is an individual, the TIN is such stockholder's social security
number. If the Depositary is not provided with the correct TIN, the stockholder
may be subject to penalties imposed by the Internal Revenue Service. In
addition, payments that are made to such stockholder with respect to Shares
purchased pursuant to the Offer may be subject to backup withholding.
Certain stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, such individual must submit an Internal Revenue Form W-8, signed
under penalties of perjury, attesting to such individual's exempt status. A Form
W-8 may be obtained from the Depositary. See the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional instructions.
If backup withholding applies, the Depositary is required to withhold 31% of
any payments made to the stockholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes, a refund may be obtained from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a stockholder
with respect to Shares purchased pursuant to the Offer, the stockholder is
required to notify the Depositary of such stockholder's correct TIN by
completing the form below certifying that the TIN provided on Substitute Form
W-9 is correct (or that such stockholder is awaiting a TIN), and that (i) such
stockholder has not been notified by the Internal Revenue Service that he is
subject to backup withholding as a result of a failure to report all interest or
dividends or (ii) the Internal Revenue Service has notified such stockholder
that such stockholder is no longer subject to backup withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the social security
number or employer identification number of the record holder of the Shares
tendered hereby. If the Shares are in more than one name or are not in the name
of the actual owner, consult the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 for additional guidance on
which number to report.
<TABLE>
<S> <C> <C>
PAYER'S NAME: FIRST CHICAGO TRUST COMPANY OF NEW YORK
PART I--Taxpayer Identification
Number--
For all accounts, enter your TIN
in the box at right. (For most
individuals, this is your social
security number. If you do not
have a TIN, see Obtaining a
Number in the enclosed
GUIDELINES.) Certify by signing SOCIAL SECURITY NUMBER
and dating below. Note: If the OR
SUBSTITUTE account is in more than one name,
Form W-9 see the chart in the enclosed EMPLOYER IDENTIFICATION NUMBER
Department of the Treasury GUIDELINES to determine which (IF AWAITING TIN WRITE
Internal Revenue Service number to give the payer. "APPLIED FOR")
PAYER'S REQUEST FOR TAXPAYER PART II--For Payees Exempt From Backup Withholding, see the enclosed
IDENTIFICATION NUMBER (TIN) GUIDELINES and complete as instructed therein.
CERTIFICATION--Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a
number to be issued to me), and
(2) I am not subject to backup withholding either because (a) I am exempt from backup withholding, (b)
I have not been notified by the Internal Revenue Service (the "IRS") that I am subject to backup
withholding as a result of failure to report all interest or dividends, or (c) the IRS has
notified me that I am no longer subject to backup withholding.
CERTIFICATE INSTRUCTIONS--You must cross out item (2) above if you have been notified by the IRS that
you are subject to backup withholding because of underreporting interest or dividends on your tax
return. However, if after being notified by the IRS that you were subject to backup withholding you
received another notification from the IRS that you are no longer subject to backup withholding, do not
cross out item (2). (Also see instructions in the enclosed GUIDELINES.)
SIGNATURE DATE, 199
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. FOR ADDITIONAL
DETAILS, PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9.
Facsimiles of the Letter of Transmittal will be accepted. The Letter of
Transmittal and Certificates evidencing Shares and any other required documents
should be sent or delivered by each stockholder or his broker, dealer,
commercial bank, trust company or other nominee to the Depositary at one of its
addresses set forth above.
Questions or requests for assistance may be directed to the Dealer Manager
or Information Agent at their respective addresses and telephone numbers listed
below. Additional copies of the Offer to Purchase, the Letter of Transmittal and
the Notice of Guaranteed Delivery may be obtained from the Information Agent. A
stockholder may also contact brokers, dealers, commercial banks or trust
companies for assistance concerning the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
GEORGESON & COMPANY INC.
WALL STREET PLAZA
NEW YORK, NEW YORK 10005
BANKS AND BROKERS CALL COLLECT (212) 440-9800
ALL OTHERS CALL TOLL FREE: 1-800-223-2064
THE DEALER MANAGER FOR THE OFFER IS:
MORGAN STANLEY & CO.
INCORPORATED
555 California Street
Suite 2200
San Francisco, California 94104
(415) 576-2332
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
ARMOR ALL PRODUCTS CORPORATION
AT
$19.09 NET PER SHARE
BY
SHIELD ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
THE CLOROX COMPANY
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON MONDAY, DECEMBER 30, 1996, UNLESS THE OFFER IS EXTENDED.
December 2, 1996
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by Shield Acquisition Corporation, a Delaware
corporation (the "Offeror") and a wholly owned subsidiary of The Clorox Company,
a Delaware corporation (the "Parent"), to act as Dealer Manager in connection
with the Offeror's offer to purchase all outstanding shares of Common Stock, par
value $0.01 per share (the "Shares"), of Armor All Products Corporation, a
Delaware corporation (the "Company"), at a price of $19.09 per Share, net to the
seller in cash, without interest, upon the terms and subject to the conditions
set forth in the Offeror's Offer to Purchase, dated December 2, 1996 (the "Offer
to Purchase"), and the related Letter of Transmittal (which, as amended or
supplemented from time to time, together constitute the "Offer") enclosed
herewith. The Offer is being made in connection with the Agreement and Plan of
Merger, dated as of November 26, 1996, as amended, by and among the Parent, the
Offeror and the Company. Please furnish copies of the enclosed materials to
those of your clients for whose accounts you hold Shares registered in your name
or in the name of your nominee.
The Offer is conditioned upon, among other things, the expiration or
termination of any waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the regulations thereunder applicable
to the purchase of Shares pursuant to the Offer.
For your information and for forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominee we are enclosing
copies of the following documents:
1. Offer to Purchase;
2. Letter of Transmittal to tender Shares for your use and for the
information of your clients;
3. Notice of Guaranteed Delivery to be used to accept the Offer if
certificates for Shares are not immediately available or time will not
permit all required documents to reach the Depositary by the Expiration Date
(as defined in the Offer to Purchase) or if the procedure for book-entry
transfer cannot be completed on a timely basis.
<PAGE>
4. A letter to stockholders of the Company from Kenneth M. Evans,
President and Chief Executive Officer of the Company, together with a
Solicitation/Recommendation Statement on Schedule 14D-9 filed with the
Securities and Exchange Commission by the Company;
5. A letter which may be sent to your clients for whose accounts you
hold Shares registered in your name or in the name of your nominee, with
space provided for obtaining such clients' instructions with regard to the
Offer;
6. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9; and
7. Return envelope addressed to the Depositary.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE
THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, DECEMBER 30, 1996, UNLESS THE OFFER IS EXTENDED.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of (i) the
certificates evidencing such Shares or timely confirmation of a book-entry
transfer of such Shares into the Depositary's account at one of the Book-Entry
Transfer Facilities (as defined in the Offer to Purchase), (ii) a Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees, or an Agent's Message (as defined in the
Offer to Purchase) in connection with a book-entry delivery, and (iii) and any
other documents required by the Letter of Transmittal.
If holders of Shares wish to tender Shares, but cannot deliver such holders'
certificates or other required documents, or cannot comply with the procedure
for book-entry transfer, prior to the expiration of the Offer, a tender may be
effected by following the guaranteed delivery procedure described in Section 3
of the Offer to Purchase.
Neither the Offeror or the Parent will pay any fees or commissions to any
broker, dealer or other person (other than the Dealer Manager) for soliciting
tenders of Shares pursuant to the Offer. However, upon request, the Offeror will
reimburse you for customary mailing and handling expenses incurred by you in
forwarding any of the enclosed materials to your clients. The Offeror will pay
or cause to be paid any stock transfer taxes payable with respect to the
transfer of Shares to it, except as otherwise provided in the Letter of
Transmittal.
Any inquiries you may have with respect to the Offer should be addressed to
Morgan Stanley & Co. Incorporated, the Dealer Manager, or Georgeson & Company
Inc., the Information Agent, at their respective addresses and telephone numbers
set forth in the Letter of Transmittal.
Additional copies of the enclosed material may be obtained from the
Information Agent at the address and telephone number set forth on the back
cover page of the Offer to Purchase.
Very truly yours,
MORGAN STANLEY & CO.
INCORPORATED
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL AUTHORIZE YOU OR
ANY OTHER PERSON TO ACT ON BEHALF OF OR AS THE AGENT OF THE PARENT, THE OFFEROR,
THE COMPANY, THE DEALER MANAGER, THE INFORMATION AGENT OR THE DEPOSITARY, OR OF
ANY AFFILIATE OF ANY OF THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY
DOCUMENT OR TO MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH
THE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED
THEREIN.
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
ARMOR ALL PRODUCTS CORPORATION
AT
$19.09 NET PER SHARE
BY
SHIELD ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
THE CLOROX COMPANY
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON MONDAY, DECEMBER 30, 1996, UNLESS THE OFFER IS
EXTENDED.
December 2, 1996
To Our Clients:
Enclosed for your consideration are an Offer to Purchase, dated December 2,
1996 (the "Offer to Purchase"), and a related Letter of Transmittal (which, as
amended or supplemented from time to time, together constitute the "Offer")
relating to the offer by Shield Acquisition Corporation, a Delaware corporation
(the "Offeror") and a wholly owned subsidiary of The Clorox Company, a Delaware
corporation (the "Parent"), to purchase all outstanding shares of common stock,
par value $0.01 per share (the "Shares"), of Armor All Products Corporation, a
Delaware corporation (the "Company"), at a price of $19.09 per Share, net to the
seller in cash, without interest, upon the terms and subject to the conditions
set forth in the Offer. The Offer is being made in connection with the Agreement
and Plan of Merger, dated as of November 26, 1996, as amended, by and among the
Parent, the Offeror and the Company (the "Merger Agreement"). Also enclosed is
the Letter to Stockholders of the Company from Kenneth M. Evans, President and
Chief Executive Officer of the Company, together with a Solicitation/
Recommendation Statement on Schedule 14D-9.
WE ARE (OR OUR NOMINEE IS) THE HOLDER OF RECORD OF SHARES HELD BY US FOR
YOUR ACCOUNT. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF
RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED
TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD
BY US FOR YOUR ACCOUNT.
Accordingly, we request instructions as to whether you wish to have us
tender on your behalf any or all of the Shares held by us (or our nominee) for
your account, upon the terms and subject to the condition set forth in the
Offer.
Your attention is invited to the following:
1. The tender price is $19.09 per Share, net to the seller in cash,
without interest.
2. The Offer is being made for all outstanding Shares.
3. The Board of Directors of the Company has unanimously approved the
Merger Agreement and the transactions contemplated thereby, has determined
that each of the Merger Agreement and the transactions contemplated thereby
are fair to, and in the best interests of, the Company and the Company's
stockholders, and recommends that the Company's stockholders tender their
Shares in the Offer.
4. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on Monday, December 30, 1996, unless the Offer is extended.
<PAGE>
5. The Offer is conditioned upon, among other things, the expiration or
termination of any waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the regulations thereunder
applicable to the purchase of Shares pursuant to the Offer. See the Offer to
Purchase.
6. Tendering stockholders will not be obligated to pay brokerage fees
or commissions or, except as otherwise provided in the Letter of
Transmittal, stock transfer taxes with respect to the purchase of Shares by
the Offeror pursuant to the Offer.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing, detaching and returning to us the instruction form
contained in this letter. An envelope in which to return your instructions to us
is enclosed. If you authorize the tender of your Shares, all such Shares will be
tendered unless otherwise specified in your instructions. YOUR INSTRUCTIONS
SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US TO SUBMIT A TENDER ON YOUR
BEHALF PRIOR TO THE EXPIRATION OF THE OFFER.
The Offer is made solely by the Offer to Purchase and the related Letter of
Transmittal and any supplements or amendments thereto, and is being made to all
holders of Shares. The Offer is not being made to (nor will tenders be accepted
from or on behalf of) holders of Shares in any jurisdiction in which the making
of the Offer or the acceptance thereof would not be in compliance with the laws
of such jurisdiction. In any jurisdiction where the securities, blue sky or
other laws require the Offer to be made by a licensed broker or dealer, the
Offer shall be deemed to be made on behalf of the Offeror by Morgan Stanley &
Co. Incorporated, the Dealer Manager, or one or more registered brokers or
dealers licensed under the laws of such jurisdiction.
2
<PAGE>
INSTRUCTIONS WITH RESPECT TO
THE OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
ARMOR ALL PRODUCTS CORPORATION
BY
SHIELD ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
THE CLOROX COMPANY
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase, dated December 2, 1996, and the related Letter of Transmittal
(which, as amended or supplemented from time to time, together constitute the
"Offer") in connection with the offer by Shield Acquisition Corporation, a
Delaware corporation and a wholly owned subsidiary of The Clorox Company, a
Delaware corporation, to purchase all outstanding Shares of common stock, par
value $0.01 per share (the "Shares"), of Armor All Products Corporation, a
Delaware corporation.
This will instruct you to tender the number of Shares indicated below (or,
if no number is indicated below, all Shares) that are held by you for the
account of the undersigned, upon the terms and subject to the conditions set
forth in the Offer.
<TABLE>
<S> <C>
Dated: , 199 SIGN HERE
-------------------------------------------
Number of Shares to be Tendered:
-------------------------------- Shares*
-------------------------------------------
Signature(s) of Holder(s)
Name(s) of Holder(s):
-------------------------------------------
-------------------------------------------
Please Type or Print
-------------------------------------------
Address
-------------------------------------------
Zip Code
-------------------------------------------
Area Code and Telephone Number
-------------------------------------------
Taxpayer Identification or Social Security
Number
</TABLE>
- ------------
* Unless otherwise indicated, it will be assumed that all Shares held by us for
your account are to be tendered.
3
<PAGE>
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
ARMOR ALL PRODUCTS CORPORATION
TO
SHIELD ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
THE CLOROX COMPANY
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
This Notice of Guaranteed Delivery, or one substantially in the form hereof,
must be used to accept the Offer (as defined below) if certificates evidencing
shares of common stock, par value $0.01 per share (the "Shares"), of Armor All
Products Corporation, a Delaware corporation (the "Company"), are not
immediately available or time will not permit all required documents to reach
First Chicago Trust Company of New York, as Depositary (the "Depositary"), prior
to the Expiration Date (as defined in Section 1 of the Offer to Purchase (as
defined below)) or the procedure for delivery by book-entry transfer cannot be
completed on a timely basis. This Notice of Guaranteed Delivery may be delivered
by hand or transmitted by telegram, facsimile transmission or mail to the
Depositary. See Section 3 of the Offer to Purchase.
THE DEPOSITARY FOR THE OFFER IS:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C> <C>
BY MAIL: BY HAND: BY OVERNIGHT COURIER:
Tenders & Exchanges First Chicago Trust Company of Tenders & Exchanges
P.O. Box 2569 - Suite New York 14 Wall Street
4660-AAPC ATTN: Tenders & Exchanges Suite 4680-AAPC, 8th Floor
Jersey City, NJ 07303-2569 c/o The Depository Trust New York, NY 10005
Company
55 Water Street, DTC TAD
Vietnam Veterans Memorial
Plaza
New York, NY 10041
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION
OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an "Eligible Institution"
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Shield Acquisition Corporation, a Delaware
corporation and a wholly owned subsidiary of The Clorox Company, a Delaware
corporation, upon the terms and subject to the conditions set forth in the Offer
to Purchase, dated December 2, 1996 (the "Offer to Purchase"), and the related
Letter of Transmittal (which, as amended or supplemented from time to time,
together constitute the "Offer"), receipt of each of which is hereby
acknowledged, the number of Shares specified below pursuant to the guaranteed
delivery procedure described in Section 3 of the Offer to Purchase.
<TABLE>
<S> <C>
Number of Shares: -------------------------- --------------------------------------------
--------------------------------------------
Signature(s) of Holder(s)
Certificate Nos.
(if available):
- -------------------------------
Dated: --------------------------------, 199
-
- -------------------------------------------- Name(s) of Holder(s): -----------------------
--------------------------------------------
Check one box if Shares will be delivered by --------------------------------------------
book-entry transfer: Please Type or Print
/ / The Depository Trust Company Address: ------------------------------------
/ / Philadelphia Depository Trust Company
--------------------------------------------
Zip Code
Area Code and
Account No.: ------------------------------- Telephone No.: ------------------------------
</TABLE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, an Eligible Institution (as defined in the Offer to
Purchase), hereby guarantees delivery to the Depositary, at one of its addresses
set forth above, certificates ("Share Certificates") evidencing the Shares
tendered hereby, in proper form for transfer, or confirmation of book-entry
transfer of such Shares into the Depositary's account at The Depository Trust
Company or the Philadelphia Depository Trust Company, in each case with delivery
of a Letter of Transmittal (or facsimile thereof) properly completed and duly
executed, or an Agent's Message (as defined in the Offer to Purchase) in the
case of a book-entry delivery, and any other required documents, all within
three days, on which the Nasdaq National Market is open for business, of the
date hereof.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and Share
Certificates to the Depositary within the time period shown herein. Failure to
do so could result in a financial loss to such Eligible Institution.
<TABLE>
<S> <C>
-------------------------------------------- -------------------------------------------------------
Name of Firm Authorized Signature
-------------------------------------------- Title: ---------------------------------------
Address
-------------------------------------------- Name: -------------------------------------
Zip Code Please Type or Print
-------------------------------------------- Dated: --------------------------------, 199 -
Area Code and Telephone No.
</TABLE>
DO NOT SEND SHARE CERTIFICATES WITH THIS NOTICE. SHARE CERTIFICATES SHOULD
BE SENT WITH YOUR LETTER OF TRANSMITTAL.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens, E.G.,
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen, E.G., 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<CAPTION>
- -----------------------------------------------------------
<C> <S> <C>
GIVE THE
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY NUMBER
OF--
- -----------------------------------------------------------
</TABLE>
<TABLE>
<C> <S> <C>
1. An individual's account The individual
2. Two or more individuals The actual owner of the
(joint account) account or, if combined
funds, the first
individual on the
account(1)
3. Husband and wife (joint The actual owner of the
account) account or, if joint
funds, either person(1)
4. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
5. Adult and minor (joint The adult or, if the
account) minor is the only
contributor, the
minor(1)
6. Account in the name of The ward, minor, or
guardian or committee incompetent person(3)
for a designated ward,
minor, or incompetent
person
7. A. A revocable savings The grantor-trustee(1)
trust account (in
which grantor is
also trustee)
B. Any "trust" account The actual owner(1)
that is not a legal
or valid trust under
State law
- -----------------------------------------------------------
GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION NUMBER
OF--
- -----------------------------------------------------------
8. Sole proprietorship The owner(4)
account
9. A valid trust, estate, The legal entity (do
or pension trust not furnish the
identifying number of
the personal
representative or
trustee unless the
legal entity itself is
not designated in the
account title)(5)
10. Corporate account The corporation
11. Religious, charitable, The organization
or educational
organization account
12. Partnership account The partnership
held in the name of the
business
13. Association, club, or The organization
other tax-exempt
organization
14. A broker or registered The broker or nominee
nominee
15. Account with the The public entity
Department of
Agriculture in the name
of a public entity
(such as a State or
local government,
school district, or
prison) that receives
agricultural program
payments
</TABLE>
______________________________________ ______________________________________
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner. If the owner does not have an employer
identification number, furnish the owner's social security number.
(5) List first and circle the name of the legal trust, estate or pension trust.
NOTE:IF NO NAME IS CIRCLED WHEN THERE IS MORE THAN ONE NAME, THE NUMBER WILL BE
CONSIDERED TO BE THAT OF THE FIRST NAME LISTED.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you do not have a taxpayer identification number or you do not know your
number, obtain Form SS-5, Application for a Social Security Number Card (for
resident individuals), Form SS-4, Application for Employer Identification Number
(for businesses and all other entities), or Form W-7 for International Taxpayer
Identification Number (for alien individuals required to file U.S. tax returns),
at an office of the Social Security Administration or the Internal Revenue
Service.
To complete Substitute Form W-9, if you do not have a taxpayer identification
number, write "Applied For" in the space for the taxpayer identification number
in Part 1, sign and date the Form, and give it to the requester. Generally, you
will then have 60 days to obtain a taxpayer identification number and furnish it
to the requester. If the requester does not receive your taxpayer identification
number within 60 days, backup withholding, if applicable, will begin and will
continue until you furnish your taxpayer identification number to the requester.
PAYEES EXEMPT FROM BACKUP WITHHOLDING PENALTIES
Payees specifically exempted from backup withholding on ALL payments include the
following:*
- A corporation.
- A financial institution.
- An organization exempt from tax under section 501(a), or an individual
retirement plan, or a custodial account under section 403(b)(7).
- The United States or any agency or instrumentality thereof.
- A State, the District of Columbia, a possession of the United States, or any
political subdivision or instrumentality thereof.
- A foreign government or a political subdivision, agency or instrumentality
thereof.
- An international organization or any agency or instrumentality thereof.
- A registered dealer in securities or commodities registered in the United
States or a possession of the United States.
- A real estate investment trust.
- A common trust fund operated by a bank under section 584(a)
- An entity registered at all times during the tax year under the Investment
Company Act of 1940.
- A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to
backup withholding include the following:
- Payments to nonresident aliens subject to withholding under section 1441.
- Payments to partnerships not engaged in a trade or business in the United
States and which have at least one nonresident partner.
- Payments of patronage dividends where the amount received is not paid in
money.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals. NOTE: You may be
subject to backup withholding if (i) this interest is $600 or more, (ii) the
interest is paid in the course of the payer's trade or business and (iii)
you have not provided your correct taxpayer identification number to the
payer.
- Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- Payments described in section 6049(b)(5) to non-resident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
EXEMPT PAYEES DESCRIBED ABOVE SHOULD FILE A SUBSTITUTE FORM W-9 TO AVOID
POSSIBLE ERRONEOUS BACKUP WITHHOLDING. FILE THIS FORM WITH THE PAYER, FURNISH
YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM,
SIGN AND DATE THE FORM AND RETURN IT TO THE PAYER.
Certain payments other than interest, dividends and patronage dividends that are
not subject to information reporting are also not subject to backup withholding.
For details, see the regulations under sections 6041, 6041A(a), 6045, and 6050A.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividends,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to the IRS. The IRS uses the numbers for
identification purposes and to help verify the accuracy of your tax return.
Payers must be given the numbers whether or not recipients are required to file
tax returns. Payers must generally withhold 31% of taxable interest, dividends,
and certain other payments to a payee who does not furnish a taxpayer
identification number to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE STATEMENTS WITH RESPECT TO WITHHOLDING.--If you make
a false statement with no reasonable basis which results in no imposition of
backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--If you falsify certifications
or affirmations, you are subject to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE
- ------------
* Unless otherwise noted herein, all references below to section numbers or to
regulations are references to the Internal Revenue Code and the regulations
promulgated thereunder.
<PAGE>
This announcement is neither an offer to purchase nor a solicitation of an
offer to sell Shares. The Offer is made solely by the Offer to Purchase dated
December 2, 1996, and the related Letter of Transmittal and is being made to all
holders of Shares. The Offer is not being made to (nor will tenders be accepted
from or on behalf of) holders of Shares in any jurisdiction in which the making
of the Offer or the acceptance thereof would not be in compliance with the laws
of such jurisdiction. In any jurisdiction where the securities, blue sky or
other laws require the Offer to be made by a licensed broker or dealer, the
Offer shall be deemed to be made on behalf of the Offeror by the Dealer Manager
or one or more registered brokers or dealers licensed under the laws of such
jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
ARMOR ALL PRODUCTS CORPORATION
AT
$19.09 NET PER SHARE
BY
SHIELD ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
THE CLOROX COMPANY
Shield Acquisition Corporation, a Delaware corporation (the "Offeror") and a
wholly owned subsidiary of The Clorox Company, a Delaware corporation (the
"Parent"), is offering to purchase any and all outstanding shares of Common
Stock, par value $0.01 per share (the "Shares"), of Armor All Products
Corporation, a Delaware corporation (the "Company"), at a price of $19.09 per
Share, net to the seller in cash, without interest thereon, upon the terms and
subject to the conditions set forth in the Offer to Purchase dated December 2,
1996 (the "Offer to Purchase") and in the related Letter of Transmittal (which,
as amended or supplemented from time to time, together constitute the "Offer").
Following the Offer, the Offeror intends to effect the Merger described below.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, DECEMBER 30, 1996, UNLESS THE OFFER IS EXTENDED.
The Offer is conditioned upon, among other things, the expiration or
termination of any waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the regulations thereunder applicable
to the purchase of Shares pursuant to the Offer.
The Offer is being made pursuant to an Agreement and Plan of Merger dated as
of November 26, 1996 (the "Merger Agreement") among the Parent, the Offeror and
the Company. The Merger Agreement provides that, among other things, after the
satisfaction or waiver of the conditions set forth in the Merger Agreement, and
in accordance with relevant provisions of the General Corporation Law of the
State of Delaware ("Delaware Law"), the Offeror will be merged with and into the
Company (the "Merger"). Following consummation of the Merger, the Company will
continue as the surviving corporation (the "Surviving Corporation") and will be
a wholly owned subsidiary of the Parent. At the effective time of the Merger
(the "Effective Time"), each issued and outstanding Share (other than Shares
owned by the Company as treasury stock, Shares owned by the Parent or the
Offeror or any subsidiary thereof, or Shares with respect to which appraisal
rights are properly exercised under Delaware Law) will automatically be
converted into the right to receive $19.09 in cash, or any higher price that may
be paid per Share in the Offer, without interest.
In connection with the Merger Agreement, the Parent and the Offeror have
entered into a Stockholder Agreement dated as of November 26, 1996, with a
majority stockholder of the Company who beneficially owns 11,624,900 Shares
pursuant to which, among other things, the stockholder has agreed to tender its
Shares in the Offer.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, HAS
<PAGE>
DETERMINED THAT THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY
ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY AND THE COMPANY'S
STOCKHOLDERS AND RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS TENDER THEIR SHARES
IN THE OFFER AND APPROVE AND ADOPT THE MERGER AGREEMENT AND THE MERGER.
For purposes of the Offer, the Offeror will be deemed to have accepted for
payment (and thereby purchased) Shares validly tendered and not properly
withdrawn as, if and when the Offeror gives oral or written notice to First
Chicago Trust Company of New York (the "Depositary") of the Offeror's acceptance
for payment of such Shares pursuant to the Offer. Upon the terms and subject to
the conditions of the Offer, payment for Shares accepted for payment pursuant to
the Offer will be made by deposit of the purchase price therefor with the
Depositary, which will act as agent for tendering stockholders for the purpose
of receiving payments from the Offeror and transmitting such payments to
tendering stockholders whose Shares have been accepted for payment. Under no
circumstances will interest on the purchase price for the Shares be paid,
regardless of any delay in making such payment. In all cases, payment for Shares
tendered and accepted for payment pursuant to the Offer will be made only after
timely receipt by the Depositary of (i) the certificates evidencing such Shares
(the "Share Certificates") or timely confirmation (a "Book-Entry Confirmation")
of a book-entry transfer of such Shares into the Depositary's account at one of
the Book-Entry Transfer Facilities (as defined in the Offer to Purchase)
pursuant to the procedures set forth in Section 3 of the Offer to Purchase, (ii)
the Letter of Transmittal (or a facsimile thereof), properly completed and duly
executed, with any required signature guarantees, or an Agent's Message (as
defined in the Offer to Purchase) in connection with a book-entry transfer and
(iii) any other documents required under the Letter of Transmittal.
Subject to the terms and conditions of the Merger Agreement, the Offeror
expressly reserves the right (but will not be obligated), at any time and from
time to time in its sole discretion, to extend the period of time during which
the Offer is open, including the occurrence of any condition specified in Annex
A to the Merger Agreement, by giving oral or written notice of such extension to
the Depositary. Any such extension will be followed as promptly as practicable
by public announcement thereof, such announcement to be made not later than 9:00
a.m., New York City time, on the next business day after the previously
scheduled expiration date of the Offer. During any such extension, all Shares
previously tendered and not properly withdrawn will remain subject to the Offer
and to the rights of a tendering stockholder to withdraw such stockholder's
Shares.
Tenders of Shares made pursuant to the Offer are irrevocable, except that
such Shares may be withdrawn at any time prior to 12:00 Midnight, New York City
time, on Monday, December 30, 1996 (or the latest time and date at which the
Offer, if extended by the Offeror, shall expire) and, unless theretofore
accepted for payment by the Offeror pursuant to the Offer, may also be withdrawn
at any time after January 31, 1997. For the withdrawal to be effective, a
written, telegraphic, telex or facsimile transmission notice of withdrawal must
be timely received by the Depositary at one of its addresses set forth on the
back cover page of the Offer to Purchase. Any such notice of withdrawal must
specify the name of the person who tendered the Shares to be withdrawn, the
number of Shares to be withdrawn and the name of the registered holder of such
Shares, if different from that of the person who tendered such Shares. If
certificates evidencing Shares to be withdrawn have been delivered or otherwise
identified to the Depositary, then, prior to the physical release of such Share
Certificates, the serial numbers shown on such Share Certificates must be
submitted to the Depositary and the signature(s) on the notice of withdrawal
must be guaranteed by an Eligible Institution (as defined in the Offer to
Purchase), unless such Shares have been tendered for the account of an Eligible
Institution. If Shares have been tendered pursuant to the procedures for
book-entry transfer as set forth in Section 3 of the Offer to Purchase, any
notice of withdrawal must specify the name and number of the account at the
Book-Entry Transfer Facility to be credited with the withdrawn Shares and must
otherwise comply with such Book-Entry Transfer Facility's procedures. All
questions as to the form and validity (including the time of receipt) of any
notice of withdrawal will be determined by the Offeror, in its sole discretion,
whose determination will be final and binding.
<PAGE>
The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended, is contained in the Offer to Purchase and is incorporated herein by
reference.
The Company has provided the Offeror with the Company's stockholder list and
security position listings for the purpose of disseminating the Offer to holders
of Shares. The Offer to Purchase and the related Letter of Transmittal will be
mailed to record holders of Shares whose names appear on the Company's
stockholder list and will be furnished to brokers, dealers, commercial banks,
trust companies and similar persons whose names, or the names of whose nominees,
appear on the stockholder list or, if applicable, who are listed as participants
in a clearing agency's security position listing for subsequent transmittal to
beneficial owners of Shares.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
Questions and requests for assistance or for copies of the Offer to Purchase
and the related Letter of Transmittal, and other tender offer materials, may be
directed to the Information Agent or to the Dealer Manager as set forth below,
and copies will be furnished promptly at the Offeror's expense. Neither the
Offeror nor the Parent, nor any officer, director, stockholder, agent or other
representative of the Offeror or the Parent, will pay any fees or commissions to
any broker, dealer or other person (other than the Dealer Manager) for
soliciting tenders of Shares pursuant to the Offer.
The Information Agent for the Offer is:
GEORGESON & COMPANY INC.
Wall Street Plaza
New York, New York 10005
Banks and Brokerage Firms, please call collect (212) 440-9800
or, all others, call toll free: 1-800-223-2064
The Dealer Manager for the Offer is:
MORGAN STANLEY & CO. INCORPORATED
555 California Street
Suite 2200
San Francisco, California 94104
(415) 576-2332
December 2, 1996
<PAGE>
NEWS RELEASE
FOR IMMEDIATE RELEASE
CLOROX WILL ACQUIRE ARMOR ALL, THE LEADING LINE OF AUTOMOTIVE CLEANING
PRODUCTS
MOVE EXTENDS CLOROX'S CLEANING EXPERTISE INTO A MAJOR NEW CATEGORY
OAKLAND, Calif. -- (BUSINESS WIRE)--Nov. 26, 1996--The Clorox Company
(CLX-NY, PSE), a leading consumer products manufacturer, said today that
it will add the top line of automotive cleaning products to its portfolio
with the planned acquisition of Armor All Products Corporation (ARMR-NASDAQ).
Clorox and Armor All have entered into an agreement and plan of merger under
which Clorox will make a tender offer for 100 percent of Armor All's common
stock at a price of $19.09 per share for a total of approximately $400
million. Armor All's board of directors has unanimously approved the agreement
and recommended that Armor All's stockholders accept the Clorox offer.
McKesson Corporation, which owns 55 percent of Armor All's common stock, has
agreed to tender all of its shares.
The tender offer is expected to commence on Dec. 2, 1996 and to close before
the end of the year. Armor All's regular quarterly dividend of 16 cents per
share, declared Nov. 12, 1996, will be paid on Jan. 2, 1997 to stockholders
of record Dec. 2, 1996.
Clorox plans to fund the acquisition with cash and short-term borrowings.
The acquisition is expected to be modestly dilutive, with Clorox's fiscal
year 1997 earnings impacted by about 2-3 percent. This is based on
preliminary estimates, and actual results may vary.
Based in Orange County (Calif.), Armor All reported fiscal 1996 revenues of
$186 million. Some 73 percent of sales, or about $136 million, was in U.S.
automotive cleaners. The balance was in international Armor All sales and in
a line of domestic do-it-yourself home care products.
Armor All leads the $710 million automotive cleaning products market with a
30 percent share, and has about a 60 percent share of the $170 million
protectant segment.
"This acquisition is right on target with our strategy of finding strong
equities in new categories close in to what we do and where we can add
value," said Clorox chairman and CEO Craig Sullivan.
"Armor All is a great brand equity with leading positions in the market and
extraordinarily high consumer awareness and satisfaction ratings," Sullivan
continued. "This acquisition is a logical extension of our home cleaning
expertise into a market where we will have a leading position. It fits
virtually all of our criteria for acquisitions into new categories."
<PAGE>
Sullivan noted that the key benefits consumers want in their cleaning
products, whether in the home or in the garage, are identical. They want
surfaces to be clean and new looking with minimal effort. They want to
protect their investments, and they take satisfaction in making their
possessions look new again.
Clorox plans to achieve significant synergies with its other core businesses
in marketing and manufacturing, and in R&D, "where our goal is to lead the
category in product quality and performance," Sullivan stated. He added that
the automotive cleaner market is a favorable environment for Clorox's
marketing strengths and that "Armor All" is a strong advertisable brand name.
Since about half of Armor All volume is sold to customers with whom Clorox
already does business, there is a significant opportunity to improve delivery
efficiency for these customers. Many customers will be able to pool orders
with other Clorox products for greater savings. "We also look forward to
developing a positive growth relationship with new customers in the retail
automotive channel," Sullivan added.
Internationally, Armor All will add mass to Clorox businesses in Canada,
Mexico, Puerto Rico and Japan, all places where Clorox already has operations.
Dollar sales for the $710 million automotive cleaning products market were up
approximately 5.3 percent for the 12 months ended August 1996. In the
protectant segment, which Armor All created 25 years ago and continues to
lead, dollar sales were up approximately 5.6 percent. Armor All products also
lead the wash, tire cleaner and wheel cleaner segments.
Clorox believes several factors may drive growth faster in automotive
cleaning than in home cleaning. Among them, vehicle ownership is up 20
percent over the past 10 years and exceeds the population's growth rate.
Consumers are keeping their cars longer, and older cars are more likely to be
washed and polished at home. And because new car prices are increasing
faster than salaries, consumers are more attentive to protecting their
investment.
In addition to its line of home cleaning products, The Clorox Company
manufactures and markets bleaches, cat litters and insecticides, charcoal
briquettes, salad dressings and sauces. The company had net earnings of $222
million on sales of $2.2 billion for the year ended June 30.
This announcement contains forward looking statements relating to the
integration of the Armor All business into Clorox's business. The Private
Securities Litigation Reform Act of 1995 provides a safe harbor for such
statements provided the Company makes note of risk factors associated with
them. Therefore the Company points out that acquisitions involved a number of
risks which can cause actual results to be materially different from
unexpected results. There can be no assurance that Clorox will be able to
successfully integrate and then manage Armor All without unanticipated costs,
delays or problems.
CONTACT: The Clorox Company
Fred Reicker, 510/271-7291 (Media) 510/351-7548 (home)
Karen Rose, 510/271-7385 (Investors)
Ughetta Ugolini, 510/271-2270 (Investors)
or
McKesson
Janet Bley, 415/983-9357
<PAGE>
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
ARMOR ALL PRODUCTS CORPORATION
THE CLOROX COMPANY
AND
SHIELD ACQUISITION CORPORATION
DATED AS OF
NOVEMBER 26, 1996
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
<TABLE>
<S> <C> <C>
Section 1.1 Definitions............................................................. 5
ARTICLE II
THE OFFER
Section 2.1 The Offer............................................................... 8
Section 2.2 Company Actions......................................................... 8
Section 2.3 Stockholder Lists....................................................... 9
Section 2.4 Directors............................................................... 9
Section 3.1 The Merger.............................................................. 10
Section 3.2 Closing................................................................. 10
Section 3.3 Effective Time.......................................................... 10
Section 3.4 Effects of the Merger................................................... 10
Section 3.5 Certificate of Incorporation and By-Laws................................ 10
Section 3.6 Directors and Officers of the Surviving Corporation..................... 10
Section 3.7 Stockholders' Meeting................................................... 10
Section 3.8 Conversion of Shares.................................................... 11
Section 3.9 Conversion of Sub's Common Stock........................................ 11
Section 3.10 Exchange of Shares; Payment............................................. 11
Section 3.11 Dissenting Shares....................................................... 12
Section 3.12 Company Option Plans.................................................... 12
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 4.1 Organization............................................................ 13
Section 4.2 Capitalization.......................................................... 13
Section 4.3 Authorization; Validity of Agreement.................................... 14
Section 4.4 No Violations; Consents and Approvals................................... 14
Section 4.5 Reports................................................................. 15
Section 4.6 Absence of Certain Changes.............................................. 15
Section 4.7 No Undisclosed Liabilities.............................................. 15
Section 4.8 Schedule 14D-9; Offer Documents; Proxy Statement........................ 16
Section 4.9 Litigation; Compliance with Law......................................... 16
Section 4.10 Employee Benefit Plans; ERISA........................................... 16
Section 4.11 Real Property........................................................... 17
Section 4.12 Intellectual Property................................................... 17
Section 4.13 Computer Software....................................................... 18
Section 4.14 Material Contracts...................................................... 18
Section 4.15 Taxes................................................................... 18
Section 4.16 Environmental Matters................................................... 19
Section 4.17 Affiliated Party Transactions........................................... 19
Section 4.18 No Brokers.............................................................. 20
</TABLE>
2
<PAGE>
<TABLE>
<S> <C> <C>
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF PURCHASER AND SUB
Section 5.1 Organization............................................................ 20
Section 5.2 Authorization; Validity of Agreement.................................... 20
Section 5.3 No Violations; Consents and Approvals................................... 20
Section 5.4 Schedule 14D-9; Offer Documents; Proxy Statement........................ 21
Section 5.5 Sufficient Funds........................................................ 21
Section 5.6 Beneficial Ownership of Shares.......................................... 21
Section 5.7 No Brokers.............................................................. 21
ARTICLE VI
COVENANTS
Section 6.1 Conduct of Business by the Company Pending the Merger................... 22
Section 6.2 Acquisition Proposals................................................... 23
Section 6.3 Access to Information................................................... 24
Section 6.4 Best Efforts............................................................ 24
Section 6.5 Consents................................................................ 24
Section 6.6 HSR Filings............................................................. 25
Section 6.7 Public Announcements.................................................... 26
Section 6.8 Employee Agreements..................................................... 26
Section 6.10 Indemnification; Directors' and Officers' Insurance..................... 27
Section 6.11 Certain Arrangements.................................................... 28
ARTICLE VII
CONDITIONS
Section 7.1 Conditions to Each Party's Obligation to Effect the Merger.............. 29
Section 7.2 Conditions to the Obligation of the Company to Effect the Merger........ 29
Section 7.3 Conditions to Obligations of Purchaser and Sub to Effect the Merger..... 29
Section 7.4 Exception............................................................... 29
ARTICLE VIII
TERMINATION
Section 8.1 Termination............................................................. 30
Section 8.2 Effect of Termination................................................... 30
Section 8.3 Termination Fee......................................................... 31
ARTICLE IX
MISCELLANEOUS
Section 9.1 Fees and Expenses....................................................... 31
Section 9.2 Amendment; Extension and Waiver......................................... 31
Section 9.3 Survival................................................................ 31
Section 9.4 Notices................................................................. 31
Section 9.5 Interpretation.......................................................... 32
Section 9.6 Headings; Schedules..................................................... 32
</TABLE>
3
<PAGE>
<TABLE>
<S> <C> <C>
Section 9.7 Counterparts............................................................ 32
Section 9.8 Entire Agreement........................................................ 32
Section 9.9 Severability............................................................ 32
Section 9.10 Governing Law........................................................... 33
Section 9.11 Assignment.............................................................. 33
Section 9.12 Specific Performance; Submission to Jurisdiction........................ 33
Section 9.13 Brokerage Fees and Commissions.......................................... 33
CONDITIONS TO THE TENDER OFFER ............................................................ Annex A
</TABLE>
4
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "AGREEMENT"), dated as of November 26,
1996, by and among Armor All Products Corporation, a Delaware corporation (the
"COMPANY"), The Clorox Company, a Delaware corporation ("PURCHASER"), and Shield
Acquisition Corporation, a Delaware corporation and a wholly owned subsidiary of
Purchaser ("SUB").
RECITALS:
WHEREAS, the respective boards of directors of Purchaser, Sub and the
Company have each approved the acquisition of the Company by Purchaser upon the
terms and subject to the conditions set forth in this Agreement; and
WHEREAS, the parties intend that the acquisition of the Company by Purchaser
be effected by Sub commencing a cash tender offer for the Shares (as defined
hereinafter) to be followed by the merger of Sub with and into the Company with
the Company as the surviving corporation in such merger, all as provided by and
in accordance with this Agreement; and
WHEREAS, as a condition to the obligations of Purchaser and Sub hereunder
and in consideration of the transactions contemplated hereby, McKesson
Corporation, a Delaware corporation and a stockholder of the Company
("STOCKHOLDER"), concurrently herewith is entering into a Stockholder Agreement
(the "STOCKHOLDER AGREEMENT"), dated as of the date hereof, with Purchaser and
Sub, in the form attached hereto as Exhibit A, pursuant to which Stockholder has
agreed to tender its Shares in the Offer and to grant Sub a proxy with respect
to the voting of its Shares in favor of the Merger (as such terms are defined
herein) upon the terms and subject to the conditions set forth therein; and
WHEREAS, the Company, Purchaser and Sub desire to make certain
representations, warranties, covenants and agreements in connection with such
cash tender offer and merger.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements set forth herein, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 DEFINITIONS
<TABLE>
<CAPTION>
DEFINED IN
TERM SECTION
- ------------------------------------------------------------------------------ -------------
<S> <C>
ABO........................................................................... 6.9(c)
Acquisition Proposal.......................................................... 6.2(b)
Agreement..................................................................... Preamble
Applicable Amount............................................................. 3.11
Audits........................................................................ 4.15(c)
Awards........................................................................ 3.11
Board......................................................................... 2.2(a)
Certificates.................................................................. 3.10(b)
Closing....................................................................... 3.2
Closing Date.................................................................. 3.2
Common Stock.................................................................. 2.1(a)
Company....................................................................... Preamble
Company Disclosure Letter..................................................... Article IV
Company Employee.............................................................. 6.9(b)
Company SEC Documents......................................................... 4.5
</TABLE>
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<TABLE>
<CAPTION>
DEFINED IN
TERM SECTION
- ------------------------------------------------------------------------------ -------------
<S> <C>
Confidentiality Agreement..................................................... 6.3(b)
DB Employees.................................................................. 6.9(c)
DGCL.......................................................................... 3.1
Dissenting Shares............................................................. 3.11(a)
Effective Time................................................................ 3.3
Environmental Laws............................................................ 4.17(a)
ERISA Affiliate............................................................... 4.10(a)
Governmental Entity........................................................... 4.4(b)
Indemnified Parties........................................................... 6.11(b)
Intellectual Property......................................................... 4.12
Merger........................................................................ 3.1
Merger Consideration.......................................................... 3.8(a)
Moody's....................................................................... 3.10(a)
Offer......................................................................... 2.1(a)
Offer Documents............................................................... 2.1(b)
Offer Price................................................................... 2.1(a)
Offer to Purchase............................................................. 2.1(a)
Option........................................................................ 3.11
Option Plans.................................................................. 3.11
Order......................................................................... 6.6(b)
Paying Agent.................................................................. 3.10(a)
PBGC.......................................................................... 4.10(b)
Plans......................................................................... 4.10(a)
Preferred Stock............................................................... 4.2(a)
Proxy Statement............................................................... 3.7(c)
Purchaser..................................................................... Preamble
Purchaser DB Plan............................................................. 6.9(c)
Restricted Stock Units........................................................ 3.11
Retirement Plan............................................................... 6.9(c)
S&P........................................................................... 3.10(a)
SARs.......................................................................... 3.11
SEC........................................................................... 2.1(b)
Service Agreement............................................................. 6.11
Shares........................................................................ 2.1(a)
Special Meeting............................................................... 3.7(a)
Stockholder................................................................... Recitals
Sub........................................................................... Preamble
Surviving Corporation......................................................... 3.1
Termination Plan.............................................................. 4.10(h)
</TABLE>
"AGGREGATE MERGER CONSIDERATION" means the product of (i) the Merger
Consideration and (ii) the number of Shares outstanding immediately prior to the
Effective Time, other than Shares owned by Purchaser, Sub or any Subsidiary of
the Company, Purchaser or Sub and each Share held in the treasury of the
Company.
"ANTITRUST LAW" means the Sherman Act, as amended, the Clayton Act, as
amended, the HSR Act, the Federal Trade Commission Act, as amended, and all
other federal, state and foreign statutes, rules, regulations, orders, decrees,
administrative and judicial doctrines, and other laws that are designed or
intended to prohibit, restrict or regulate actions having the purpose or effect
of monopolization or restraint of trade.
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"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANY MATERIAL ADVERSE EFFECT" means any event, condition or circumstance
that would be or would be reasonably likely to have a material adverse effect on
the properties, assets, condition (financial or otherwise) or results of
operations of the Company and its Subsidiaries, taken as a whole, but excluding
any such effect resulting from (a) general economic conditions and any
occurrence or condition affecting generally the industries in which the Company
and its Subsidiaries operate or (b) any decrease in revenues of the Company
following the date of this Agreement.
"CONTINUING DIRECTOR" means (a) any member of the Board of Directors of the
Company as of the date hereof, (b) any member of the Board who is unaffiliated
with, and not a designated director or other nominee of, Purchaser or Sub or
their respective subsidiaries, and (c) any successor of a Continuing Director
who is (i) unaffiliated with, and not a designated director or other nominee of,
Purchaser or Sub or their respective subsidiaries and (ii) recommended to
succeed a Continuing Director by a majority of the Continuing Directors then on
the Board.
"DOJ" means the Antitrust Division of the United States Department of
Justice.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FORMER STOCKHOLDERS" means the stockholders of the Company immediately
prior to the Effective Time.
"FTC" means the Federal Trade Commission.
"GAAP" means generally accepted accounting principles in effect in the
United States of America at the time of determination, and which are applied on
a consistent basis during the periods involved.
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations promulgated thereunder.
"LIENS" means all mortgages, claims, charges, liens, security interests,
pledges, options, easements, rights of way, or other encumbrances of any nature
whosoever.
"PERMITTED LIENS" means (i) Liens for water and sewage charges and current
taxes not yet due and payable or being contested in good faith by appropriate
proceedings, (ii) mechanics', carriers', workers', repairers', materialmen's,
warehousemen's and other similar Liens arising or incurred in the ordinary
course of business, (iii) such other Liens as would not in the aggregate have a
Company Material Adverse Effect and (iv) Liens arising or resulting from any
action taken by Purchaser or Sub.
"PERSON" means an individual, partnership, joint venture, trust,
corporation, limited liability company or other entity (including, without
limitation, any government or political subdivision or any agency, department or
instrumentality thereof).
"PURCHASER MATERIAL ADVERSE EFFECT" means any event, condition or
circumstance that would or would be reasonably likely to have a material adverse
effect on the properties, assets, condition (financial or otherwise), or results
of operations of Purchaser and its Subsidiaries, taken as a whole, but excluding
any such effect resulting from general economic conditions and any occurrence or
condition affecting generally the industries in which Purchaser or its
Subsidiaries operate.
"PURCHASER PLANS" means employee benefit plans, as defined in Section 3(3)
of ERISA, or such nonqualified employee benefit or deferred compensation plans,
stock option bonus or incentive plans or other employee benefit or fringe
benefit programs that may be in effect generally for employees of Purchaser or
its Subsidiaries from time to time.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
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"SUBSIDIARY" of a Person means any entity of which the securities or other
ownership interest having ordinary voting power to elect a majority of the board
of directors or other persons performing similar functions are at the time
directly or indirectly owned by such Person.
"TAXES" means any and all taxes, charges, fees, levies or other assessments,
including, without limitation, income, gross receipts, excise, real or personal
property, sales, withholding, social security, retirement, unemployment,
occupation, use, service, net worth, payroll, franchise, transfer and recording
taxes, imposed by any federal, state, local or foreign taxing authority, and
shall include any interest, penalties or additions to tax.
"TAX RETURN" means any report, return, document, declaration or other
information or filing required to be supplied to any federal, state, local or
foreign taxing authority with respect to Taxes.
ARTICLE II
THE OFFER
Section 2.1 THE OFFER.
(a) Sub shall, and Purchaser shall cause Sub to, as promptly as practicable,
but in no event later than December 2, 1996, commence (within the meaning of
Rule 14d-2 under the Exchange Act) an offer to purchase for cash (the "OFFER")
any and all of the Company's outstanding shares of common stock, par value $.01
per share (the "SHARES" or the "COMMON STOCK"), at a price not less than $19.09
per Share, net to the seller in cash (the "OFFER PRICE"). The Offer shall have a
scheduled expiration date 20 business days following the commencement thereof.
The Sub shall, and Purchaser shall cause Sub to, accept for payment and pay for
all Shares tendered pursuant to the terms of the Offer as soon as such actions
are permitted under applicable law, subject only to the conditions set forth in
Annex A hereto and shall be made pursuant to an offer to purchase (the "OFFER TO
PURCHASE") containing the terms set forth in this Agreement and the other
conditions set forth in Annex A hereto. Sub shall not, and Purchaser shall not
permit Sub to, decrease the Offer Price, extend the expiration date of the Offer
beyond the twentieth business day following commencement thereof or otherwise
amend any other condition of the Offer in any manner adverse to the holders of
the Shares without the prior written consent of the Company; PROVIDED, HOWEVER,
that Sub may extend the expiration date of the Offer if (i) one or more
conditions set forth in Annex A hereto shall not be satisfied or (ii) Purchaser
reasonably determines, with the prior approval of the Company (such approval not
to be unreasonably withheld or delayed) that such extension is necessary to
comply with any legal or regulatory requirements relating to the Offer.
Purchaser will not tender into the Offer any Shares beneficially owned by it.
The Company agrees that no Shares held by the Company or any Subsidiary of the
Company will be tendered pursuant to the Offer.
(b) On the date of the commencement of the Offer, Purchaser and Sub shall
file with the United States Securities and Exchange Commission (the "SEC") a
Tender Offer Statement on Schedule 14D-1 with respect to the Offer which will
include, as exhibits, an Offer to Purchase and a form of letter of transmittal
and summary advertisement (together with any amendments and supplements thereto,
the "OFFER DOCUMENTS"). The Company and its counsel shall be given a reasonable
opportunity to review and comment on the Offer Documents before they are filed
with the SEC. In addition, Sub agrees to provide the Company and its counsel in
writing with any comments Purchaser, Sub or their counsel may receive from time
to time from the SEC or its staff with respect to the Offer Documents promptly
after the receipt thereof.
Section 2.2 COMPANY ACTIONS.
(a) The Company hereby consents to the Offer and represents that its Board
of Directors (the "BOARD") at a meeting duly called and held, has (i) determined
as of the date hereof that each of the Offer and the Merger is fair to and in
the best interests of the stockholders of the Company, and (ii) resolved to
recommend acceptance of the Offer and approval and adoption of this Agreement by
the stockholders of
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the Company; PROVIDED, HOWEVER, that such recommendations may be withdrawn,
modified or amended to the extent that the Board determines in good faith, after
consultation with its counsel, that the failure to take such action may
constitute a breach of the Board's fiduciary duties under, or otherwise violate,
applicable law. The Company further represents that PaineWebber Incorporated has
delivered to the Board its opinion that the consideration to be received by the
stockholders pursuant to the Offer and the Merger is fair to such stockholders
from a financial point of view based on, and subject to, the assumptions and
qualifications set forth in such opinion. Subject to the provisions of Article
VIII, the Company hereby agrees to use its best efforts to file a
Solicitation/Recommendation Statement on Schedule 14D-9 (the "SCHEDULE 14D-9")
containing such recommendations with the SEC and to mail such Schedule 14D-9 to
the stockholders of the Company contemporaneous with the commencement of the
Offer, but in any event not later than 10 business days following the
commencement of the Offer.
(b) Purchaser and its counsel shall be given a reasonable opportunity to
review and comment on the Schedule 14D-9 and any amendments thereto before they
are filed with the SEC. In addition, the Company agrees to provide Purchaser,
Sub and their counsel in writing with any comments the Company or its counsel
may receive from time to time from the SEC or its staff with respect to the
Schedule 14D-9 promptly after the receipt thereof.
Section 2.3 STOCKHOLDER LISTS. In connection with the Offer, the Company
will promptly furnish Sub with mailing labels, security position listings and
any available listing or computer file containing the names and addresses of the
record holders of the Shares as of a recent date and shall furnish Sub with such
information and assistance as Sub or its agents may reasonably request in
communicating the Offer to the record and beneficial holders of the Shares.
Subject to the requirements of applicable law, and except for such steps as are
necessary to disseminate the Offer Documents, Purchaser and Sub shall hold in
confidence the information contained in any of such labels, lists and files,
will use such information only in connection with the Offer and the Merger, and,
if this Agreement is terminated, will deliver to the Company all copies of such
information then in their possession.
Section 2.4 DIRECTORS. Promptly after the purchase of a majority of the
outstanding Shares pursuant to the Offer, Purchaser shall be entitled to
designate up to such number of directors, rounded up to the next whole number,
on the Board as will give Purchaser representation on the Board equal to the
product of the number of directors on the Board, after giving effect to the
directors elected pursuant to this Section, and the percentage that the voting
power represented by such number of Shares so purchased bears to the voting
power represented by the total number of outstanding Shares, to be elected as
soon as practicable after notice by Purchaser to the Company of its desire to
have such directors so elected. The Company shall, at the request of Purchaser,
take all action necessary to cause to be created vacancies for that number of
directors which Purchaser is entitled to designate under this Section and, with
respect to each vacancy created, shall take all action necessary to effect the
election of such number of Purchaser's designees to the Board of Directors,
including, if required by applicable law, mailing to its stockholders the
information required by section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder. Purchaser and Sub will provide to the Company in
writing, and be solely responsible for, any information with respect to such
companies and their nominees, officers, directors and affiliates required by
Section 14(f) of the Exchange Act and Rule 14f-1 thereunder. Following the
election or appointment of Purchaser designees to the Board any amendment of
this Agreement, any termination of this Agreement by the Company, any extension
of time for performance of any of the obligations of Purchaser or Sub under this
Agreement, any waiver of any condition to the obligations of the Company or any
of the Company's rights under this Agreement or other action by the Company
under this Agreement shall be effected only by the action of a majority of the
directors of the Company then in office who are Continuing Directors.
Notwithstanding the provisions of this Section 2.4, the parties hereto shall use
their respective best efforts to ensure that at least three of the members of
the Board of shall, at all times prior to the Effective Time be, Continuing
Directors.
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ARTICLE III
THE MERGER
Section 3.1 THE MERGER. Upon the terms and subject to conditions of this
Agreement and in accordance with the Delaware General Corporation Law (the
"DGCL"), at the Effective Time, Sub shall be merged with and into the Company
(the "MERGER"). Following the Merger, the separate corporate existence of Sub
shall cease and the Company shall continue as the surviving corporation (the
"SURVIVING CORPORATION").
Section 3.2 CLOSING. The closing of the Merger (the "CLOSING") shall take
place at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, Four
Embarcadero Center, San Francisco, California at 10:00 a.m., local time, on the
second business day after the conditions to the parties' obligation to effect
the Merger contained in Article VII have been satisfied or waived (the "CLOSING
DATE"), unless another date or place is agreed to in writing by the parties
hereto.
Section 3.3 EFFECTIVE TIME. On or as soon as practicable following the
Closing, the parties shall cause the Merger to be consummated by causing a
certificate of merger or, if applicable, a certificate of ownership and merger
with respect to the Merger to be executed, filed and recorded in accordance with
the relevant provisions of the DGCL. The Merger shall become effective at the
time of the filing with the Secretary of State of the State of Delaware of such
certificate of merger or certificate of ownership and merger in accordance with
the relevant provisions of the DGCL or at such later time as shall be specified
in the certificate of merger or certificate of ownership and merger (the
"EFFECTIVE TIME").
Section 3.4 EFFECTS OF THE MERGER. The Merger shall have the effects set
forth in the DGCL and any other applicable law.
Section 3.5 CERTIFICATE OF INCORPORATION AND BY-LAWS. Subject to Section
6.11(b) hereof, the Certificate of Incorporation and By-Laws of Sub as in effect
at the Effective Time shall be the Certificate of Incorporation and By-Laws of
the Surviving Corporation, provided that Article First of the Certificate of
Incorporation of the Surviving Corporation shall be amended to read in its
entirety as follows: "FIRST" The name of the Corporation is Armor All Products
Corporation."
Section 3.6 DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. The
directors of Sub immediately prior to the Effective Time shall be the initial
directors of the Surviving Corporation and will hold office from the Effective
Time until their respective successors are duly elected or appointed and
qualified or until their earlier death, resignation or removal in the manner
provided in the Certificate of Incorporation and By-laws of the Surviving
Corporation, or as otherwise provided by law. The officers of the Company
immediately prior to the Effective Time shall be the initial officers of the
Surviving Corporation and will hold office from the Effective Time until their
respective successors shall have been duly elected or appointed and qualified or
until their earlier death, resignation or removal in the manner provided in the
Certificate of Incorporation and By-laws of the Surviving Corporation, or as
otherwise provided by law.
Section 3.7 STOCKHOLDERS' MEETING. If required by applicable law in order
to consummate the Merger, the Company, acting through its Board, shall, in
accordance with applicable law:
(a) duly call, give notice of, convene and hold a special meeting of its
stockholders (the "SPECIAL MEETING") as soon as practicable following
acceptance for payment of shares pursuant to the Offer for the purpose of
considering and taking action upon this Agreement;
(b) subject to its fiduciary duties under applicable laws as advised by
counsel, the Company shall prepare and file with the SEC (and Purchaser and
Sub shall cooperate with the Company in such preparation and filing) a
preliminary proxy statement relating to this Agreement and the transactions
contemplated hereby and include in the preliminary proxy statement and the
definitive version thereof the recommendation of the Board referred to in
Section 2.2(a) hereof; and
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(c) subject to its fiduciary duties under applicable laws as advised by
counsel, use its commercially reasonable efforts to (i) obtain and furnish
the information required to be included by it in the Proxy Statement, and,
after consultation with Purchaser, respond promptly to any comments made by
the SEC with respect to the preliminary proxy statement and cause a
definitive proxy statement (the "PROXY STATEMENT") to be mailed to its
stockholders following acceptance for payment of shares pursuant to the
Offer and (ii) obtain the necessary approvals of this Agreement by its
stockholders.
Purchaser will provide the Company with the information concerning Purchaser
and Sub required to be included in the Proxy Statement and will vote, or cause
to be voted, all Shares owned by it or its Subsidiaries in favor of approval and
adoption of this Agreement and the Merger.
Section 3.8 CONVERSION OF SHARES. At the Effective Time:
(a) Each Share issued and outstanding immediately prior to the Effective
Time (other than (i) Shares to be cancelled in accordance with Section
3.8(b) and (ii) Dissenting Shares, if any) shall, by virtue of the Merger
and without any action on the part of the holder thereof, automatically be
converted into the right to receive $19.09 in cash, or any higher price paid
per Share in the Offer (the "MERGER CONSIDERATION"), payable to the holder
thereof, without interest thereon, upon the surrender of the certificate
formerly representing such Share.
(b) Each Share issued and outstanding immediately prior to the Effective
Time owned by Purchaser, Sub or any Subsidiary of the Company, Purchaser or
Sub and each Share held in the treasury of the Company immediately prior to
the Effective Time shall, by virtue of the Merger and without any action on
the part of the holder thereof, automatically be cancelled and cease to
exist at and after the Effective Time and no consideration shall be paid
with respect thereto.
Section 3.9 CONVERSION OF SUB'S COMMON STOCK. Each share of common stock,
par value $.01 per share, of Sub issued and outstanding immediately prior to the
Effective Time shall, by virtue of the Merger and without any action on the part
of the holder thereof, automatically be converted into and thereafter represent
one validly issued, fully paid and nonassessable share of common stock, par
value $.01 per share, of the Surviving Corporation.
Section 3.10 EXCHANGE OF SHARES; PAYMENT. (a) Prior to the Effective Time,
the Company shall designate a federally-insured commercial bank with a combined
capital and surplus of at least $1,000,000,000 to act as Paying Agent in the
Merger (the "PAYING AGENT"). Immediately prior to the Effective Date, Purchaser
will take all steps necessary to enable and cause it or the Surviving
Corporation to deposit with the Paying Agent, in trust for the benefit of the
Former Stockholders, the Aggregate Merger Consideration, in immediately
available funds, for disbursement to the Former Stockholders in the manner set
forth below. The funds on deposit shall be invested by the Paying Agent, as
directed by and for the benefit of and shall be payable to the Surviving
Corporation; PROVIDED, that such investments shall be limited to direct
obligations of the United States of America, obligations for which the full
faith and credit of the United States of America is pledged to provide for the
payment of principal and interest, commercial paper rated of the highest quality
by Moody's Investors Service, Inc. ("MOODY'S") or Standard & Poor's Ratings
Group, a division of McGraw-Hill, Inc. ("S&P"), and certificates of deposit
issued by a commercial bank whose long-term debt obligations are rated at least
A2 by Moody's or at least A by S&P, in each case having a maturity not in excess
of one year.
(b) Promptly after (or, if agreed by the Purchaser and the Company, prior
to) the Effective Time, the Paying Agent shall hand deliver or mail to each
holder of record, as of the Effective Time, of an outstanding certificate or
certificates which immediately prior to the Effective Time represented Shares
(the "CERTIFICATES"), a form letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to a Certificate shall
pass, only upon proper delivery of such Certificate to the Paying Agent) and
instructions for use of such letter of transmittal in effecting the surrender of
a Certificate and obtaining payment therefor. Upon the later of the Effective
Time and surrender to the Paying Agent of a
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Certificate, together with such letter of transmittal duly executed, the holder
of such Certificate shall in exchange therefor be entitled to receive cash in an
amount equal to the product of the number of Shares represented by such
Certificate multiplied by the Merger Consideration to be paid by the Paying
Agent within five business days of receipt of such documentation. No interest
will be paid or accrued on any amount payable upon the surrender of a
Certificate. If payment is to be made to a person other than the person in whose
name a Certificate surrendered is registered, it shall be a condition of payment
that the Certificate so surrendered shall be properly endorsed or otherwise in
proper form for transfer and that the person requesting such payment shall pay
transfer or other taxes required by reason of the payment to a person other than
the registered holder of the Certificate surrendered or establish to the
satisfaction of the Paying Agent that such tax has been paid, is not applicable
or provides assurances satisfactory to the Paying Agent that any such tax will
be paid by such person. Until surrendered in accordance with the provisions of
this Section 3.10(b), each Certificate representing a Share (other than
Certificates representing Shares held in the treasury of the Company, or owned
by Purchaser, Sub or any Subsidiary of the Company, Purchaser or Sub and
Dissenting Shares, if any) shall represent for all purposes only the right to
receive the Merger Consideration, and shall have no other rights.
Notwithstanding the foregoing, any funds remaining with the Paying Agent six
months following the Effective Time shall be returned to Purchaser or the
Surviving Corporation, as specified by Purchaser, after which time the Former
Stockholders, subject to applicable law, shall look only to the Surviving
Corporation for payment of the Merger Consideration, without interest thereon,
and shall have no greater rights against the Surviving Corporation than may be
accorded to general creditors of the Surviving Corporation under Delaware law.
(c) After the Effective Time there shall be no transfers of Shares on the
stock transfer books of the Surviving Corporation. If, after the Effective Time,
Certificates are presented to the Surviving Corporation, they shall be cancelled
and exchanged as provided in this Section 3.10.
(d) If any Certificate shall have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the person claiming such Certificate to
be lost, stolen or destroyed, the Surviving Corporation shall pay or cause to be
paid in exchange for such lost, stolen or destroyed Certificate the Merger
Consideration for Shares represented thereby. When authorizing such payment of
the Merger Consideration in exchange therefor, the Board of Directors of the
Surviving Corporation may, in its discretion and as a condition precedent to the
payment thereof, require the owner of such lost, stolen or destroyed Certificate
to give the Surviving Corporation a bond in such sum as it may direct as
indemnity against any claim that may be made against the Surviving Corporation
with respect to the Certificate alleged to have been lost, stolen or destroyed.
Section 3.11 DISSENTING SHARES. Notwithstanding anything in this Agreement
to the contrary, holders of Shares who have properly exercised, perfected and
not subsequently withdrawn or lost their appraisal rights with respect thereto
in accordance with Section 262 of the DGCL (the "DISSENTING SHARES") shall not
have any of such Shares converted into or become exchangeable for the right to
receive the Merger Consideration, and holders of such Shares shall be entitled
only to such rights as are granted by such Section 262, including the right to
receive payment of the appraised value of such Shares in accordance with the
provisions of such Section 262 unless and until such holders fail to perfect or
shall have effectively withdrawn or lost their rights to appraisal and payment
under the DGCL. If, after the Effective Time, any such holder fails to perfect
or shall have effectively withdrawn or lost such right, each of such holder's
Shares shall thereupon be treated as if it had been converted into and to have
become exchangeable for, at the Effective Time, the right to receive the Merger
Consideration without interest thereon, as provided in Section 3.8(a) hereof and
such Shares shall no longer be Dissenting Shares.
Section 3.12 COMPANY OPTION PLANS. The Company shall take all actions
necessary to provide that, immediately prior to the consummation of the Offer,
(i) each outstanding stock option ("OPTIONS") outstanding under the Company's
1986 Stock Option Plan, whether or not then exercisable or vested, shall be
cancelled or repurchased by the Company and (ii) in consideration of such
cancellation or repurchase, and except to the extent that Purchaser or Sub and
the holder of any such Option otherwise agree, the
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Company shall pay to the holder of each Option an amount in respect thereof
equal to the product of (A) the Applicable Amount, multiplied by (B) the number
of Shares subject thereto (such payment to be net of applicable withholding
taxes). The term "APPLICABLE AMOUNT" shall mean the excess of (A) the Merger
Consideration, over (B) the exercise price of such Option. The total number of
Options outstanding as of the date of this Agreement is 1,127,137 and a schedule
of the exercise prices of such Options is set forth in Section 4.2 of the
Company Disclosure Letter.
Section 3.13 SUPPLEMENTARY ACTION. If at any time after the Effective
Time, any further assignments or assurances in law or any other things are
necessary or desirable to vest or to perfect or confirm of record in the
Surviving Corporation the title to any property or rights of either of the
constituent corporations, or otherwise to carry out the provisions of this
Agreement, the officers and directors of the Surviving Corporation are hereby
authorized and empowered on behalf of the respective constituent corporations,
in the name of and on behalf of the appropriate constituent corporation, to
execute and deliver any and all things necessary or proper to vest or to perfect
or confirm title to such property or rights in the Surviving Corporation, and
otherwise to carry out the purposes and provisions of this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as otherwise disclosed to Purchaser in a letter delivered to it prior
to the execution hereof (the "COMPANY DISCLOSURE LETTER"), the Company
represents and warrants to Purchaser as follows:
Section 4.1 ORGANIZATION. Each of the Company and its Subsidiaries is a
corporation or other entity duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or organization
and has all requisite corporate power and authority to own, lease and operate
its properties and to carry on its business as it is now being conducted, except
where failure to be so existing and in good standing would not in the aggregate
have a Company Material Adverse Effect. Each of the Company and its Subsidiaries
is duly qualified or licensed to do business as a foreign corporation and is in
good standing in each jurisdiction in which the nature of the business conducted
by it makes such qualification or licensing necessary, except where the failure
to be so duly qualified, licensed and in good standing or to have such power and
authority, or to be so qualified or licensed would not, individually or in the
aggregate, have a Company Material Adverse Effect. The Company has heretofore
delivered to Purchaser a complete and correct copy of each of its Certificate of
Incorporation and By-Laws, as currently in effect.
Section 4.2 CAPITALIZATION.
(a) As of the date hereof, the authorized capital stock of the Company
consists of 40,000,000 shares of Common Stock, par value $.01 per share, and
10,000,000 shares of preferred stock, par value $.01 per share (the "PREFERRED
STOCK"). As of the date hereof, (i) 21,369,447 shares of Common Stock are issued
and outstanding (including all restricted stock), (ii) no shares of Common Stock
are issued and held in the treasury of the Company and (iii) there are no shares
of Preferred Stock issued and outstanding. All the outstanding shares of the
Company's capital stock are duly authorized, validly issued, fully paid and non-
assessable. Except as set forth in Section 4.2(a) of the Company Disclosure
Letter, as of the date hereof, there are no existing, and at the Effective Time
there will not be, (i) options, warrants, calls, preemptive rights,
subscriptions or other rights, convertible securities, agreements or commitments
of any character obligating the Company or any of its Subsidiaries to issue,
transfer or sell any shares of capital stock or other equity interest in, the
Company or any of its Subsidiaries or securities convertible into or
exchangeable for such shares or equity interests, (ii) contractual obligations
of the Company or any of its Subsidiaries to repurchase, redeem or otherwise
acquire any capital stock of the Company or any of its Subsidiaries of the
Company or (iii) voting trusts or similar agreements to which the Company is a
party with respect to the voting of the capital stock of the Company.
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(b) Except as set forth in Section 4.2(b) of the Company Disclosure Letter,
all of the outstanding shares of capital stock (or equivalent equity interests
of entities other than corporations) of each of the Company's Subsidiaries are
beneficially owned, directly or indirectly, by the Company.
Section 4.3 AUTHORIZATION; VALIDITY OF AGREEMENT.
(a) The Company has the requisite corporate power and authority to execute
and deliver this Agreement and, subject to approval of its stockholders as
contemplated by Section 3.7(a) hereof, to consummate the transactions
contemplated hereby. The execution and delivery by the Company of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly authorized by the Board and, except for those actions contemplated by
Section 2.2 hereof and approval and adoption of this Agreement by the holders of
a majority of the outstanding shares of the Common Stock, no other corporate
proceedings on the part of the Company are necessary to authorize the execution
and delivery of this Agreement by the Company and the consummation of the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Company and, assuming due authorization, execution and delivery
of this Agreement by each of Purchaser and Sub, is a valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms, except as such enforceability may be subject to or limited by bankruptcy,
insolvency, reorganization, or other similar laws, now or hereafter in effect,
affecting the enforcement of creditors' rights generally, and except that the
availability of equitable remedies, including specifi performance, may be
subject to the discretion of the court before which any proceeding therefor may
be brought.
(b) The Board of Directors has taken all actions necessary to render the
provisions of Section 203 of the DGCL inapplicable to the transactions
contemplated by this Agreement.
Section 4.4 NO VIOLATIONS; CONSENTS AND APPROVALS.
(a) Neither the execution, delivery or performance of this Agreement by the
Company nor the consummation by the Company of the transactions contemplated
hereby (i) violate any provision of the Certificate of Incorporation or By-Laws
of the Company, (ii) except as set forth in Section 4.4(a) of the Company
Disclosure Letter, result in a violation or breach of, or constitute a default
(or give rise to any right of termination, amendment, cancellation or
acceleration) under, any of the terms, conditions or provisions of any material
note, bond, mortgage, indenture, guarantee, other evidence of indebtedness,
license, contract, agreement or other instrument to which the Company or any of
its Subsidiaries is a party or by which any of them or any of their properties
or assets may be bound or (iii) to the best knowledge of the Company, violate
any order, writ, judgment, injunction, decree, law, statute, rule or regulation
applicable to the Company, any of its Subsidiaries or any of their properties or
assets; except in the case of clauses (ii) or (iii) for such violations,
breaches or defaults which, individually or in the aggregate, would not (A) have
a Company Material Adverse Effect, (B) materially adversely affect the ability
of the Company to consummate the transactions contemplated in this Agreement, or
(C) become applicable as a result of the business or activities in which
Purchaser or Sub is or proposes to be engaged or as a result of any acts or
omissions by, or the status of any facts pertaining to, Purchaser or Sub.
(b) Except as disclosed in Section 4.4(b) of the Company Disclosure Letter,
no filing or registration with, notification to, or authorization, consent or
approval of, any court, legislative, executive or regulatory authority or agency
(a "GOVERNMENTAL ENTITY") is required in connection with the execution and
delivery of this Agreement by the Company or the consummation by the Company of
the transactions contemplated hereby, except for (i) filings with the FTC and
with the DOJ pursuant to the HSR Act, (ii) applicable requirements under the
Exchange Act, (iii) the filing of the certificate of merger or, if applicable, a
certificate of ownership and merger with the Secretary of State, (iv) applicable
requirements under corporation or "BLUE SKY" laws of various states, and (v)
such other consents, approvals, orders, authorizations, notifications,
registrations, declarations and filings the failure of which to be obtained or
made which, individually or in the aggregate, would not (A) have a Company
Material Adverse Effect, (B) materially adversely affect the ability of the
Company to consummate the transactions contemplated in this
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Agreement, or (C) become applicable as a result of the business or activities in
which Purchaser or Sub is or proposes to be engaged or as a result of any acts
or omissions by, or the status of any facts pertaining to, Purchaser or Sub.
Section 4.5 REPORTS. The Company has filed all reports required to be
filed by it with the SEC pursuant to the Exchange Act since March 31, 1994
(collectively, the "COMPANY SEC DOCUMENTS"). None of the Company SEC Documents,
as of their respective filing dates, contained, and none of the Company SEC
Documents filed after the date hereof will contain, any untrue statement of a
material fact or omitted, or will omit, to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. Each of the
consolidated balance sheets (including the related notes) included in the
Company SEC Documents fairly presents in all material respects the consolidated
financial position of the Company and its Subsidiaries as of the respective
dates thereof, and the other related statements (including the related notes)
included therein fairly present in all material respects the results of
operations and the changes in financial position of the Company and its
Subsidiaries for the respective periods or as of the respective dates set forth
therein. Each of the financial statements (including the related notes) included
in the Company SEC Documents has been prepared in all material respects in
accordance with GAAP during the periods involved, except as otherwise noted
therein.
Section 4.6 ABSENCE OF CERTAIN CHANGES. Except as disclosed in (a) the
Company SEC Documents filed as of the date hereof; (b) the Company's audited
consolidated financial statements for the fiscal year ended March 31, 1996
previously delivered to Purchaser, and (c) Section 4.6 of the Company Disclosure
Letter, since September 30, 1996 through the date hereof, there has not been,
occurred or arisen, whether or not in the ordinary course of business:
(i) any Company Material Adverse Effect;
(ii) any material change in or exception to the Company's policy of not
accepting returns of products shipped to customers;
(iii) any material change in the terms and conditions of the Company's
arrangements with its copackers;
(iv) any sales incentive or bonus program or trade promotion spending or
allowance (including customer allowances and performance-based promotion
spending), whether for the benefit of Company employees, distributors,
representatives, or customers, that would reasonably be expected to increase
trade inventories in anticipation of the transactions contemplated by this
Agreement or that would have the effect of rewarding any person other than
as a result of achieving the targets set forth in the Company's Sales
Incentive Plan, a copy of which has been previously provided to Purchaser;
or
(v) any action or occurrence which, if it occurred after the date hereof
would be a violation of any of Section 6.1(a) through (g) and 6.1(i) through
(n).
Section 4.7 NO UNDISCLOSED LIABILITIES. Except (a) for liabilities and
obligations disclosed or provided for in the Company SEC Documents filed with
respect to periods ending after September 30, 1996 or incurred in the ordinary
course of business since September 30, 1996 and (b) for liabilities and
obligations incurred in connection with the Offer and the Merger, since
September 30, 1996 neither the Company nor any of its Subsidiaries has incurred
any liabilities or obligations material to the Company and its Subsidiaries,
taken as a whole, that would be required to be reflected or reserved against in
a consolidated balance sheet of the Company and its Subsidiaries prepared in
accordance with GAAP as applied in preparing the consolidated balance sheet of
the Company and its Subsidiaries as of March 31, 1996 contained in the Company's
Annual Report on Form 10-K for the fiscal year ended March 31, 1996.
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Section 4.8 SCHEDULE 14D-9; OFFER DOCUMENTS; PROXY STATEMENT. None of the
information supplied by the Company for inclusion in the Schedule 14D-9, the
Offer Documents or the Proxy Statement, including any amendments thereto, will
be false or misleading with respect to any material fact or will omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they are made,
not misleading. Except for information supplied by Purchaser in writing for
inclusion therein, the Proxy Statement and the Schedule 14D-9, including any
amendments thereto, will comply in all material respects with the Exchange Act.
Section 4.9 LITIGATION; COMPLIANCE WITH LAW. As of the date hereof, except
as set forth in Section 4.9 of the Company Disclosure Letter or as disclosed in
the Company SEC Documents, there is no action, suit, proceeding or, to the best
knowledge of the Company, investigation pending or, to the best knowledge of the
Company, threatened, involving the Company or any of its Subsidiaries, or any of
their properties or assets, by or before any court, governmental or regulatory
authority or by any third party that would have a Company Material Adverse
Effect. The businesses of the Company and its Subsidiaries are not being
conducted in violation of any applicable law, ordinance, rule, regulation,
decree or order of any court or governmental entity, except for violations that
in the aggregate would not, individually or in the aggregate, have a Company
Material Adverse Effect.
Section 4.10 EMPLOYEE BENEFIT PLANS; ERISA. (a) Section 4.10(a) of the
Company Disclosure Letter lists each "employee benefit plan" (as defined in
Section 3(3) of ERISA), and all other employee benefit, bonus, incentive, stock
option (or other equity-based), severance, change in control and fringe benefit
plans maintained for the benefit of, or contributed to by the Company or its
Subsidiaries or any trade or business, whether or not incorporated (an "ERISA
AFFILIATE"), that would be deemed a "single employer" within the meaning of
Section 4001 of ERISA, for the benefit of any employee or former employee of the
Company or any of its subsidiaries (the "PLANS"). The Company has made available
to Purchaser copies of each of the Plans, including all amendments to date.
(b) Except as set forth in Section 4.10(b) of the Company Disclosure
Schedule, each of the Plans that is subject to ERISA complies with ERISA and the
applicable provisions of the Code, except for any such violations that would
not, individually or in the aggregate, have a Company Material Adverse Effect.
Except as set forth in Section 4.10(b) of the Company Disclosure Schedule, each
of the Plans intended to be "qualified" within the meaning of Section 401(a) of
the Code has been determined by the Internal Revenue Service to be so qualified
and the Company knows of no fact or set of circumstances that would adversely
affect such qualification prior to the Effective Time. Except as set forth in
Section 4.10(b) of the Company Disclosure Letter, none of the Plans is subject
to Title IV of ERISA. No "reportable event", as such term is defined in Section
4043(b) of ERISA (for which the 30-day notice requirement to the Pension Benefit
Guaranty Board has not been waived) has occurred with respect to any Plan,
except where the occurrence of any such event would not have a Company Material
Adverse Effect. There are no pending or, to the best knowledge of Company,
threatened claims (other than routine claims for benefits) by, on behalf of or
against any of the Plans or any trusts related thereto, except for any such
claims that would not, individually or in the aggregate, have a Company Material
Adverse Effect.
(c) Except as set forth in Section 4.10(c) of the Company Disclosure Letter,
no Plan provides benefits, including without limitation, death or medical
benefits (whether or not insured), with respect to any employees of the Company
or any of its Subsidiaries beyond their retirement or other termination of
service (other than (i) coverage mandated by applicable law, (ii) death benefits
or retirement benefits under any "employee pension plan," as that term is
defined in Section 3(2) of ERISA, or (iii) benefits the full cost of which is
borne by the current or former employee (or his or her beneficiary)).
(d) No Plan has incurred an "Accumulated Funding Deficiency" (as defined in
Section 302(a) of ERISA or Section 412(a) of the Code), whether or not waived,
except where the occurrence of any such event would not have a Company Material
Adverse Effect.
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(e) Except as set forth in Section 4.10(e) of the Company Disclosure Letter,
none of the Company, its Subsidiaries or any ERISA Affiliate has incurred a
"withdrawal" or "partial withdrawal", as defined in Sections 4203 and 4205 of
ERISA, from any Plan that has resulted in an unpaid liability of the Company,
any of its Subsidiaries or any ERISA Affiliate, except where the occurrence of
any such event would not have a Company Material Adverse Effect.
(f) Except as set forth in Section 4.10(f) of the Company Disclosure
Schedule, with respect to each employee benefit plan (as defined in Section 3(3)
of ERISA) which is referred to in Section 4.10(a) (including for this purpose
any terminated plan or arrangement that would be described in Section 4.10(a) if
not terminated) and which is (or was) subject to Part 4 of Subtitle B of Title I
of ERISA, none of the following now exists or has existed within the six-year
period ending on the date hereof:
(i) any act or omission by the Company or any of its Subsidiaries, or by
any director, officer or employee thereof, or, to the knowledge of the
Company or any of its Subsidiaries, by any other person, constituting a
violation of Section 404 or 405 of ERISA; or
(ii) any act or omission which constitutes a violation of Section 406 or
407 of ERISA and is not exempted by Section 408 of ERISA or which
constitutes a violation of Section 4975(c) of the Code and is not exempted
by Section 4975(d) of the Code.
(g) Each Plan has been maintained in substantial compliance with its terms,
and all contribution, premiums or other payments due from the Company or any of
its Subsidiaries to (or under) any such plan or arrangement have been fully paid
or adequately provided for on the financial statements provided in the Company
SEC Documents for the fiscal quarter ended September 30, 1996. Except as
described in Section 4.10(g) of the Company Disclosure Letter there has been no
amendment, written interpretation or announcement (whether or not written) by
the Company or any of its Subsidiaries with respect to, or change in employee
participation or coverage under, any such plan or arrangement that would
increase materially the expense of maintaining such plans or arrangements,
individually or in the aggregate, above the level of expense incurred with
respect thereto provided in the Company SEC Documents for the fiscal quarter
ended September 30, 1996.
(h) Except as described in Section 4.10(h) of the Company Disclosure Letter,
neither the Company nor any of its Subsidiaries has any material liability under
or in connection with any terminated plan or arrangement that would constitute a
"Plan" as defined in Section 4.10(a) if not terminated (a "TERMINATED PLAN"),
and all benefits accrued under each such terminated plan or arrangement,
including benefits funded through any related trust, insurance contract, annuity
contract, custodial account or similar funding method, have been paid or
distributed to the persons entitled thereto in accordance with its terms. Each
Terminated Plan intended to be qualified under Section 401(a) of the Code was so
qualified, and each related trust, insurance contract, annuity contract or
custodial account was exempt from taxation under Section 501(a) of the Code, at
the time of termination and at all times when payment or distribution of
benefits was made subsequent to or in connection with such termination.
Section 4.11 REAL PROPERTY. Section 4.11 of the Company Disclosure Letter
identifies all real property owned, leased or used by the Company or its
Subsidiaries for or in the conduct its business. The Company has, either
directly or through its Subsidiaries, (x) good title to, free and clear of all
Liens other than Permitted Liens, or (y) rights by lease or other agreement to
use, all real property used by the Company and its Subsidiaries, except where
the failure to have such title or rights would not have a Company Material
Adverse Effect. All real property leases of property under which the Company or
any of its Subsidiaries is a lessee or lessor, are valid, binding and
enforceable in all material respects in accordance with their terms and, to the
best knowledge of the Company, there are no existing material defaults
thereunder.
Section 4.12 INTELLECTUAL PROPERTY. As of the date hereof, there are no
pending or threatened claims of which the Company or its Subsidiaries have been
given written notice, by any person against their use of
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any trademarks, trade names, service marks, service names, mark registrations,
logos, assumed names and copyright registrations, formulas, trade secrets,
know-how, patents and all applications therefor which are owned by the Company
or its Subsidiaries or are used in the operation of the Company and its
Subsidiaries as currently conducted (collectively, the "INTELLECTUAL PROPERTY").
The Company and its Subsidiaries have such ownership of or such rights by
license, lease or other agreement to the Intellectual Property as are necessary
to permit them to conduct their respective businesses as currently conducted,
except where the failure to have such right would not have a Company Material
Adverse Effect. The Company is not in default of any agreement pursuant to which
the Company has rights to use any Intellectual Property except where such
default would not have a Company Material Adverse Effect.
Section 4.13 COMPUTER SOFTWARE. To the best knowledge of the Company, the
Company and its Subsidiaries have such title or such rights by license, lease or
other agreement to the computer software programs which are owned, licensed,
leased or otherwise used by the Company and its Subsidiaries and which are
material to the conduct of their businesses as currently conducted, as are
necessary to permit the conduct of their businesses as currently conducted,
except where the failure to have such right would not have a Company Material
Adverse Effect.
Section 4.14 MATERIAL CONTRACTS. Except as disclosed in Section 4.14 of
the Company Disclosure Letter, to the best knowledge of the Company, all
material agreements to which the Company or its Subsidiaries are parties are
valid, binding and enforceable in all material respects in accordance with their
terms and neither the Company nor any of its Subsidiaries nor any other party to
any such contract is in default under such agreements, other than such defaults,
if any, that would not, individually or in the aggregate, have a Company
Material Adverse Effect.
Section 4.15 TAXES. Except as set forth in Section 4.15 of the Company
Disclosure Letter:
(a) each of the Company and the Subsidiaries have (I) duly filed with
the appropriate governmental authorities all Tax Returns required to be
filed by it other than those Tax Returns the failure of which to file would
not have a Company Material Adverse Effect and such Tax Returns are true,
correct and complete in all material respects, and (II) duly paid in full or
made provision in accordance with GAAP for the payment of all Taxes for all
taxable periods or portions thereof ending on or before the date hereof;
(b) each of the Company and the Subsidiaries have complied in all
material respects with all applicable laws, rules and regulations relating
to the payment and withholding (including backup withholding) of Taxes;
(c) no federal, state, local or foreign audits or other administrative
proceedings or court proceedings ("AUDITS") are presently pending with
regard to any Taxes or Tax Returns of the Company or the Subsidiaries and
none of the Company or the Subsidiaries has received written notice of any
such Audits;
(d) there are no material Liens for Taxes upon any property or assets of
the Company or the Subsidiaries, except for Permitted Liens;
(e) the income Tax Returns of the Company and its Subsidiaries have been
examined by the Internal Revenue Service (or the applicable statutes of
limitation for the assessment of federal income Taxes for such periods have
expired) for all periods through the taxable year ended 1995.
(f) the Company has made available to the Purchaser correct and complete
copies of all federal Tax Returns of the Company and the Subsidiaries filed
from May 13, 1993 forward; PROVIDED, HOWEVER, with respect to taxable years
in which the Company was a member of the consolidated group of which
Stockholder was the common parent, only PRO FORMA federal Tax Returns or
summaries thereof have been made available; and summaries of examination
reports and income tax audit reports of the Company or the Subsidiaries.
Except with respect to the Audits described in subsection (c) of this
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Section 4.15, no waiver or extension of any statute of limitations is in
effect with respect to Taxes or Tax Returns of the Group.
(g) Neither the Company nor any Subsidiary is a "consenting corporation"
within the meaning of Section 341(f) of the Internal Revenue Code of 1986,
as amended (the "Code"), and none of the assets of the Company nor any
Subsidiary are subject to an election under Section 341(f) of the Code.
Neither the Company nor any Subsidiary is a party to any Tax allocation or
sharing agreement. No member of the Group is a party to any safe harbor
lease within the meaning of Section 168(f)(8) of the Code, as in effect
prior to amendment by the Tax Equity and Fiscal Responsibility Act of 1982.
None of the Company or any Subsidiary has entered into any compensatory
agreements with respect to the performance of services which payment
thereunder would result in a nondeductible expense to the Group pursuant to
Section 280G of the Code or an excise tax to the recipient of such payment
pursuant to Section 4999 of the Code. Neither the Company nor any Subsidiary
has agreed, nor is it required to make, any future adjustment under Code
Section 481(a) by reason of a change in accounting method or otherwise.
Section 4.14 of the Company Disclosure Letter contains an accurate and
complete description of the Company's and each of the Subsidiary's tax
carryforwards, excess loss accounts, and deferred intercompany transactions.
Except as otherwise disclosed in Section 4.15 of the Company Disclosure
Letter, the Company and each of the Subsidiaries has no net operating losses
or other tax attributes presently subject to limitation under Code Sections
382, 383, or 384, or the federal consolidated return regulations. None of
the Company or any of its Subsidiaries is an entity that is characterized as
a partnership for federal income tax purposes.
(h) None of the Company or any Subsidiary has participated (or will
participate) in any international boycott as defined in Code Section 999.
Section 4.16 ENVIRONMENTAL MATTERS. Except as set forth in Section 4.16 of
the Company Disclosure Letter, to the knowledge of the Company, (a) the Company
and its Subsidiaries are in material compliance with all federal, state, and
local laws governing pollution or the protection of human health or the
environment ("ENVIRONMENTAL LAWS"), except in each case where noncompliance with
Environmental Laws would not reasonably be expected, individually or in the
aggregate, to have a Company Material Adverse Effect, (b) neither the Company
nor any of its Subsidiaries nor, to the best knowledge of the Company, any of
its copackers, has received any written notice with respect to the business of,
or any property owned or leased by, the Company or any of its Subsidiaries from
any Governmental Entity or third party alleging that the Company or any of its
Subsidiaries or any of its products is not in material compliance with any
Environmental Law, (c) there has been no release of a Hazardous Substance, as
that term is defined in the Comprehensive Environmental Response, Compensation,
and Liability Act, 42 U.S.C. Section 9601 ET SEQ. and used in California Health
and Safety Code Section 25359.7, in excess of a reportable quantity on any real
property owned or leased by the Company or any of its Subsidiaries that is used
for the business of the Company or any of its Subsidiaries and (d) neither the
Company nor any of its Subsidiaries has received any written claims that the
Company is in violation of California's Proposition 65 or, since January 1,
1993, relating to any injuries to any workers of a substantial nature dealing
with the Company's products, whether employed by the Company or any co-packer or
any customer.
Section 4.17 AFFILIATED PARTY TRANSACTIONS. Except as set forth on Section
4.17 of the Company Disclosure Letter, no contracts or agreements in which the
amount involved exceeds $60,000 are in effect as of the date hereof between the
Company or its Subsidiaries on the one hand, and affiliates of the Company, on
the other hand. For purposes of this Section 4.17 an "affiliate" of any Person
shall mean any other person directly or indirectly controlling or controlled by
or under direct or indirect common control with such Person. For the purposes of
this definition, "control", when used with respect to any Person means the power
to direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings that correspond to
the foregoing.
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Section 4.18 NO BROKERS. The Company has not employed any broker or finder
or incurred any liability for any brokerage fees, commissions or finders' fees
in connection with the transactions contemplated by this Agreement, except for
PaineWebber Incorporated ("PaineWebber"), whose fees and expenses in an
aggregate amount equal to $3,000,000 shall be borne by the Company, and the
Company shall not be liable for any such fees and expenses in excess of such
amount.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF PURCHASER AND SUB
Purchaser and Sub, jointly and severally, represent and warrant to the
Company as follows:
Section 5.1 ORGANIZATION. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of Delaware and Sub is a
corporation duly organized, validly existing and in good standing under the laws
of Delaware and has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as now being conducted
except where failure to be so existing and in good standing or to have such
power and authority would not in the aggregate have a Purchaser Material Adverse
Effect. Each of Purchaser and Sub is qualified or licensed to do business as a
foreign corporation and is in good standing in each jurisdiction in which the
nature of the business conducted by it makes such qualification or licensing
necessary, except where the failure to be so duly qualified, licensed and in
good standing would not have a Purchaser Material Adverse Effect. Purchaser has
heretofore delivered to the Company complete and correct copies of its
certificate of incorporation and by-laws and the certificate of incorporation
and by-laws of Sub, in each case, as currently in effect. Since the date of its
incorporation, Sub has not engaged in any activities other than in connection
with or as contemplated by this Agreement or in connection with arranging any
financing required to consummate the transactions contemplated hereby.
Section 5.2 AUTHORIZATION; VALIDITY OF AGREEMENT. Each of Purchaser and
Sub has the requisite corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery by Purchaser and Sub of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
respective boards of directors of Purchaser and Sub, and by Purchaser as the
sole stockholder of Sub, and no other corporate proceedings on the part of
Purchaser or Sub are necessary to authorize the execution and delivery of this
Agreement by Purchaser and Sub and the consummation of the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
Purchaser and Sub and, assuming due authorization, execution and delivery of
this Agreement by the Company, is a valid and binding obligation of each of
Purchaser and Sub, enforceable against each of them in accordance with its
terms, except as such enforceability may be subject to or limited by bankruptcy,
insolvency, reorganization or other similar laws, now or hereafter in effect,
affecting the enforcement of creditors' rights generally, except that the
availability of equitable remedies, including specific performance, may be
subject to the discretion of the court before which any proceeding therefor may
be brought.
Section 5.3 NO VIOLATIONS; CONSENTS AND APPROVALS.
(a) Neither the execution, delivery or performance of this Agreement by
Purchaser and Sub nor the consummation by Purchaser and Sub of the transactions
contemplated hereby (i) violate any provision of the respective certificate of
incorporation or by-laws of Purchaser or Sub, (ii) result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or acceleration)
under, any of the terms, conditions or provisions of any material note, bond,
mortgage, indenture, guarantee, other evidence of indebtedness, license,
contract, agreement or other instrument to which Purchaser or any of its
Subsidiaries is a party or by which any of them or any of their assets may be
bound or (iii) violate any order, writ, judgment, injunction, decree, law,
statute, rule or regulation applicable to Purchaser, any of its Subsidiaries or
any of their properties or assets; except in
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the case of clauses (ii) and (iii) for violations, breaches or defaults which
(A) would not have a Purchaser Material Adverse Effect, (B) materially adversely
affect the ability of either Purchaser or Sub to consummate the transactions
contemplated in this Agreement or (C) become applicable as a result of the
business or activities in which Purchaser or Sub is or proposes to be engaged or
as a result of any acts or omissions by, or the status of any facts pertaining
to, the Company.
(b) No filing or registration with, notification to, or authorization,
consent or approval of, any Governmental Entity is required in connection with
the execution and delivery of this Agreement by Purchaser and Sub or the
consummation by Purchaser and Sub of the transactions contemplated hereby,
except (i) filings with the FTC and with the DOJ pursuant to the HSR Act, (ii)
applicable requirements under the Exchange Act, (iii) the filing of the
certificate of merger or, if applicable, a certificate of ownership and merger
with the Secretary of State, (iv) applicable requirements under corporation or
"blue sky" laws of various states, and (v) such other consents, approvals,
orders, authorizations, notifications, registrations, declarations and filings
the failure of which to be obtained or made (A) would not have a Purchaser
Material Adverse Effect, (B) would not materially adversely affect the ability
of Purchaser or Sub to consummate the transactions contemplated in this
Agreement, or (C) become applicable as a result of the business or activities in
which Purchaser or Sub is or proposes to be engaged or as a result of any acts
or omissions by, or the status of any facts pertaining to, the Company.
Section 5.4 SCHEDULE 14D-9; OFFER DOCUMENTS; PROXY STATEMENT. None of the
information supplied by Purchaser or Sub for inclusion in the Offer Documents,
the Schedule 14D-9 or the Proxy Statement, including any amendments thereto,
will be false or misleading with respect to any material fact or will omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading. Except for information supplied by the Company in writing
for inclusion in the Offer Documents, the Offer Documents will comply in all
material respects with the Exchange Act.
Section 5.5 SUFFICIENT FUNDS. Purchaser and Sub have sufficient funds
available, in cash or pursuant to existing credit agreements or binding
commitments in effect on the date of this Agreement, to purchase all Shares on a
fully diluted basis at the price per Share set forth in Section 2.1 hereof and
to perform all of their obligations, and the obligations of the Company
following the Merger, hereunder.
Section 5.6 BENEFICIAL OWNERSHIP OF SHARES. None of Purchaser, Sub or any
of their respective "affiliates" or "associates" (as those terms are defined in
Rule 12b-2 of the General Rules and Regulations under the Exchange Act)
"beneficially owns" (as that term is defined in Rule 13d-3(a) under the Exchange
Act) any Shares or any securities convertible into or exchangeable for Shares.
Section 5.7 NO BROKERS. Neither Purchaser nor Sub has employed any broker
or finder or incurred any liability for any brokerage fees, commissions or
finders' fees in connection with the transactions contemplated by this
Agreement, except for Morgan Stanley & Co. Incorporated, whose fees shall be
borne by Purchaser.
Section 5.8 INVESTIGATION BY PURCHASER. Each of Purchaser and Sub has
conducted its own independent review and analysis of the businesses, assets,
condition, operations and prospects of the Company and its Subsidiaries and
acknowledges that each of Purchaser and Sub has been provided access to the
properties, premises and records of the Company and its Subsidiaries for this
purpose. In entering into this Agreement, Purchaser and Sub have relied solely
upon their own investigation and analysis, and each of Purchaser and Sub:
(a) acknowledges that none of the Company, its Subsidiaries or any of
their respective directors, officers, employees, affiliates, agents or
representatives makes any representation or warranty, either express or
implied, as to the accuracy or completeness of any of the information
provided or made available to Purchaser or their agents or representatives
prior to the execution of this Agreement, and
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(b) agrees, to the fullest extent permitted by law, that none of the
Company, its Subsidiaries or any of their respective directors, officers,
employees, stockholders, affiliates, agents or representatives shall have
any liability or responsibility whatsoever to Purchaser or Sub on any basis
(including, without limitation, in contract or tort, under federal or state
securities laws or otherwise) based upon any information provided or made
available, or statements made, to Purchaser prior to the execution of this
Agreement, except that the foregoing limitations shall not apply to the
Company to the extent (i) the Company makes the specific representations and
warranties set forth in Article IV of this Agreement or (ii) Stockholder
makes the specific representations and warranties set forth in Section 1(f)
or (3) of the Stockholder Agreement or makes the covenant set forth in
Section 9 of the Stockholder Agreement, but always subject to the
limitations and restrictions contained herein and therein.
ARTICLE VI
COVENANTS
Section 6.1 CONDUCT OF BUSINESS BY THE COMPANY PENDING THE MERGER. During
the period from the date hereof to the consummation of the Offer, except as
Purchaser shall otherwise agree in writing, as required by applicable law, or as
otherwise contemplated by this Agreement, the Company and its Subsidiaries shall
conduct their respective businesses in the ordinary course, consistent with past
practice. Further, the Company shall use reasonable efforts to preserve intact
the business organization of the Company and each of its Subsidiaries, to keep
available the services of its and their present officers and key employees in
good standing, and to preserve the goodwill of those having business
relationships with it and its Subsidiaries. Without limiting the generality of
and in addition to the foregoing, and except as set forth in the Company
Disclosure Letter hereto or as otherwise provided in this Agreement, prior to
the consummation of the Offer, neither the Company nor any of its Subsidiaries
will, without the prior written consent of Purchaser:
(a) amend its charter or by-laws;
(b) authorize for issuance, issue, sell, deliver or agree or commit to
issue, sell or deliver (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise) any
stock of any class or any other securities, except by the Company in
connection with the exercise of employee options granted and outstanding
before the date of this Agreement;
(c) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its
capital stock or redeem or otherwise acquire any of its securities or any
securities of its subsidiaries; PROVIDED that the Company may pay to holders
of the Shares the regular quarterly dividend of $0.16 per Share previously
declared by the Company, the record date and payment date for which have
previously been fixed by the Board as December 2, 1996 and January 2, 1997,
respectively;
(d) (i) incur or assume any material long-term debt or, except in the
ordinary course of business consistent with past practice under existing
lines of credit, incur or assume any material short-term debt; (ii) assume,
guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for any material obligations of any
other person except wholly owned Subsidiaries of the Company in the ordinary
course of business and consistent with past practices; or (iii) make any
material loans, advances or capital contributions to, or investments in, any
other person (other than loans or advances to the Company's Subsidiaries and
customary loans or advances to employees in accordance with past practices);
(e) enter into, adopt or materially amend any bonus, profit sharing,
compensation, severance, termination, stock option, stock appreciation
right, restricted stock, performance unit, pension,
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retirement, deferred compensation, employment, severance or other employee
benefit agreements, trusts, plans, funds or other arrangements of or for the
benefit or welfare of any Company Employee, or increase in any manner the
compensation or fringe benefits of any Company Employee or pay any benefit
not required by any existing plan and arrangement (including, without
limitation, the granting of stock options, stock appreciation rights, shares
of restricted stock or performance units) or enter into any contract,
agreement, commitment or arrangement to do any of the foregoing; PROVIDED,
HOWEVER, that nothing herein shall prohibit normal increases in wages or
salary or immaterial fringe benefits in the ordinary course of business that
are consistent with the past practices;
(f) acquire, sell, lease or dispose of any assets outside the ordinary
course of business or any assets that are material, individually or in the
aggregate, to the Company and its Subsidiaries, taken as a whole, or enter
into any material commitment or transaction outside the ordinary course of
business;
(g) except as may be required by law and except as set forth on the
Company Disclosure Letter, take any action to terminate or amend any of its
employee benefit plans with respect to or for the benefit of Company
Employees;
(h) hire any employee other than to replace an employee; PROVIDED,
HOWEVER, that the annual salary of such replacement employee shall not
exceed $50,000;
(i) pay, discharge or satisfy any claims (including claims of
stockholders), liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), except for the payment, discharge or
satisfaction of (i) liabilities or obligations in the ordinary course of
business consistent with past practice or in accordance with their terms as
in effect on the date hereof, (ii) liabilities reflected or reserved against
in, or contemplated by, the Company's consolidated audited financial
statements (or in the notes thereof) dated September 30, 1996, or waive,
release, grant, or transfer any rights of material value or modify or change
in any material respect any existing license, lease, contract or other
document, other than in the ordinary course of business consistent with past
practice;
(j) change any material accounting principle used by it, except for such
changes as may be required to be implemented following the date of this
Agreement pursuant to generally accepted accounting principles or rules and
regulations of the SEC promulgated following the date hereof;
(k) take any action that would result in any of its representations and
warranties in this Agreement becoming untrue in any material respect;
(l) make any material change in or exception to the Company's policy of
not accepting returns of products shipped to customers;
(m) make any material change in the terms and conditions of the
Company's arrangements with its copackers; or
(n) take, or agree in writing or otherwise to take, any of the foregoing
actions.
Section 6.2 ACQUISITION PROPOSALS.
(a) The Company and its Subsidiaries will not, and will cause their
respective officers, directors, employees and investment bankers, attorneys or
other agents retained by the Company or any of its Subsidiaries not to, (i)
initiate or solicit, directly or indirectly, any inquiries or the making of any
Acquisition Proposal, or (ii) except as permitted below, engage in negotiations
or discussions with, or furnish any information or data to any third party
relating to an Acquisition Proposal (other than the transactions contemplated
hereby). Notwithstanding anything to the contrary contained in this Section 6.2
or in any other provision of this Agreement, the Company and the Board (i) may
participate in discussions or negotiations (including, as a part thereof, making
any counterproposal) with or furnish information to any third party if the Board
determines in good faith, after consultation with its counsel, that the failure
to
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participate in such discussions or negotiations or to furnish such information
may constitute a breach of the Board's fiduciary duties under applicable law,
and (ii) shall be permitted to (X) take and disclose to the Company's
stockholders a position with respect to the Offer or the Merger or another
tender or exchange offer by a third party, or amend or withdraw such position,
pursuant to Rules 14d-9 and 14e-2 of the Exchange Act or (Y) make disclosure to
the Company's stockholders, in each case if the Board determines in good faith,
after consultation with its counsel, that the failure to take such action may
constitute a breach of the Board's fiduciary duties under, or otherwise violate,
applicable law. The Company shall promptly provide Purchaser with a copy of any
written Acquisition Proposal received and inform Purchaser promptly and on a
reasonable basis of the status and content of any discussions with such a third
party (provided that the Company shall not be obligated so to provide such
Acquisition Proposal or to inform Purchaser if the Board determines in good
faith, after consultation with its counsel, that such action may constitute a
breach of the Board's fiduciary duties under applicable law).
(b) For purposes of this Agreement, "ACQUISITION PROPOSAL" shall mean any
bona fide proposal made by a third party to acquire (i) beneficial ownership (as
defined under Rule 13(d) of the Exchange Act) of a majority equity interest in
the Company pursuant to a merger, consolidation or other business combination,
sale of shares of capital stock, tender offer or exchange offer or similar
transaction involving the Company including, without limitation, any single or
multi-step transaction or series of related transactions which is structured in
good faith to permit such third party to acquire beneficial ownership of a
majority or greater equity interest in the Company or (ii) all or substantially
all of the business or assets of the Company (other than the transactions
contemplated by this Agreement).
Section 6.3 ACCESS TO INFORMATION.
(a) Between the date of this Agreement and the consummation of the Offer,
during normal business hours, the Company will give Purchaser and its authorized
representatives reasonable access to all offices and other facilities and to all
books and records of it and its Subsidiaries, will permit Purchaser to make such
inspections as it may reasonably require and will cause its officers and those
of its Subsidiaries to furnish Purchaser with such financial and operating data
and other information as Purchaser may from time to time reasonably request,
which information shall include, without limitation, a copy of the Company's
Customer Tracking Report (showing orders and shipments by customer), which shall
be delivered to Purchaser substantially concurrently with its distribution to
the Company's senior management. The Company will provide access to management
of the Company regularly to discuss timing of shipments. Purchaser and its
authorized representatives will conduct all such inspections in a manner which
will minimize any disruptions of the business and operations of the Company and
its Subsidiaries.
(b) Purchaser, Sub, and the Company agree that the provisions of the
confidentiality agreement among the Company, Stockholder and Purchaser, dated as
of October 10, 1996 (the "CONFIDENTIALITY AGREEMENT") shall remain binding and
in full force and effect and that the terms of the Confidentiality Agreement are
incorporated herein by reference.
(c) Any furnishing of information pursuant hereto or any investigation shall
not affect Purchaser's and Sub's right to rely on the representations and
warranties made by the Company in this Agreement. Except as otherwise provided
by law, Purchaser, the Company and Sub each agrees to maintain all information
received pursuant to the terms of this Agreement and the Confidentiality
Agreement in accordance with the terms and conditions of the Confidentiality
Agreement.
Section 6.4 BEST EFFORTS. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use its best efforts to take, or
cause to be taken, all action, and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement.
Section 6.5 CONSENTS. Each of the Company, Purchaser and Sub shall
cooperate, and use their respective best efforts, in as timely a manner as is
reasonably practicable, to make all filings and obtain all
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licenses, permits, consents, approvals, authorizations, qualifications and
orders of governmental authorities and other third parties necessary to
consummate the transactions contemplated by this Agreement. Each of the parties
hereto will furnish to the other party such necessary information and reasonable
assistance as such other persons may reasonably request in connection with the
foregoing and will provide the other party with copies of all filings made by
such party with any Governmental Entity or any other information supplied by
such party to a Governmental Entity in connection with this Agreement and the
transactions contemplated hereby.
Section 6.6 HSR FILINGS.
(a) In addition to and without limiting the agreements contained in Section
6.5 hereof, Purchaser, Sub and the Company will (i) take promptly all actions
necessary to make the filings required of Purchaser, Sub or any of their
affiliates under the HSR Act, (ii) comply at the earliest practicable date with
any formal or informal inquiry including, but not limited to, any request for
additional information or documentary material received by Purchaser, Sub or any
of their affiliates from the FTC or DOJ pursuant to the HSR Act and (iii)
cooperate with the Company in connection with any filing of the Company under
the HSR Act and in connection with responding to or resolving any investigation
or other inquiry concerning the transactions contemplated by this Agreement
commenced by either the FTC or DOJ or state attorneys general.
(b) In furtherance and not in limitation of the covenants contained in
Sections 6.5 and Section 6.6(a) hereof, Purchaser, Sub and the Company shall
each use their best efforts to resolve such objections, if any, as may be
asserted with respect to the Offer, the Merger or any other transactions
contemplated by this Agreement under any Antitrust Law whether such objection is
raised by a private party or governmental or regulatory authority. If any
administrative, judicial or legislative action or proceeding is instituted (or
threatened to be instituted) challenging the Offer, the Merger or any other
transactions contemplated by this Agreement as violative of any Antitrust Law,
each of the parties hereto agrees to cooperate and use its best efforts
vigorously to contest and resist any such action or proceeding, and to have
vacated, lifted, reversed or overturned any decree, judgment, injunction or
other order (whether temporary, preliminary or permanent) (any such decree,
judgment, injunction or other order is hereafter referred to as an "ORDER") that
is in effect and that restricts, prevents or prohibits consummation of the
Offer, the Merger or any other transactions contemplated by this Agreement,
including, without limitation, by vigorously pursuing all available avenues of
administrative and judicial appeal and all available legislative actions. Each
of Purchaser and Sub also agrees to use its best efforts to take such action,
including, without limitation, agreeing to hold separate or to divest any of the
businesses, product lines, or assets of Purchaser or Sub or any of their
affiliates or, following the consummation of the Offer or the Effective Time, of
the Company or any of its Subsidiaries, as may be required (a) by the applicable
governmental or regulatory authority (including without limitation the FTC, DOJ
or any state attorney general) in order to resolve such objections as such
governmental or regulatory authority may have to such transactions under such
Antitrust Law, or (b) by any domestic or foreign court or other tribunal, in any
action or proceeding brought by a private party or governmental or regulatory
authority challenging such transactions as violative of any Antitrust Law, in
order to avoid the entry of, or to effect the dissolution, vacating, lifting or
reversal of, any Order that has the effect of restricting, preventing or
prohibiting the consummation of any such transactions. The entry by a court or
other tribunal, in any action or proceeding brought by a private party or
governmental or regulatory authority challenging the transactions contemplated
hereby as violative of any Antitrust Law, of an Order permitting such
transactions, but requiring that any of the businesses, product lines or assets
of any of Purchaser, Sub or any of their affiliates or, following the
consummation of the Offer or the Effective Time, of the Company or any of its
Subsidiaries be divested or held separate by Purchaser and Sub, or that would
otherwise limit Purchaser's or Sub's freedom of action with respect to, or their
ability to retain, the Company, any of its Subsidiaries or any businesses,
product lines or assets thereof or any of Purchaser's or Sub's or their
respective affiliates' other businesses, product lines or assets, shall not be
deemed a failure to satisfy any of the conditions specified in Article VII
hereof.
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Notwithstanding the foregoing, the Company shall not be required to divest or
hold separate or otherwise take or commit to take any action that, prior to the
Effective Time, limits its freedom of action with respect to, or its ability to
retain, its Subsidiaries or any of their respective businesses, product lines or
assets.
(c) Each of the Company, Purchaser and Sub shall promptly inform the other
party of any material communication received by such party from the FTC, DOJ or
any other governmental or regulatory authority regarding any of the transactions
contemplated hereby. Purchaser and Sub will advise the Company promptly in
respect of any understandings, undertakings or agreements (oral or written)
Purchaser or Sub proposes to make or enter into with the FTC, DOJ or any other
governmental or regulatory authority in connection with the transactions
contemplated hereby.
Section 6.7 PUBLIC ANNOUNCEMENTS. Each of Purchaser, Sub and the Company
agrees that it will not issue any press release or otherwise make any public
statement with respect to this Agreement or the transactions contemplated hereby
without the prior consent of the other party, which consent shall not be
unreasonably withheld or delayed; PROVIDED, HOWEVER, that such disclosure can be
made without obtaining such prior consent if (i) the disclosure is required by
law or by obligations imposed pursuant to any listing agreement with the Nasdaq
National Market and (ii) the party making such disclosure has first used its
best efforts to consult with the other party about the form and substance of
such disclosure.
Section 6.8 EMPLOYEE AGREEMENTS. Purchaser agrees, and agrees to cause the
Surviving Corporation, to honor and be bound by the terms of the agreements with
officers of the Company set forth in Section 6.8 of the Company Disclosure
Letter.
Section 6.9 EMPLOYEE BENEFITS.
(a) As of the Effective Time, Company employees will be terminated from
future participation in Stockholder's Employee Benefit Plans (as defined in
subsection (e) below). The benefits to be paid to Company employees under each
Employee Benefit Plan sponsored or maintained by the Stockholder shall not be
increased by any service to the Company following the Effective Time. Purchaser
and Sub assume no responsibility for any benefits, liabilities or contributions
to, or costs of administration of, Stockholder's Employee Benefit Plans (which
excludes the Armor All PSIP and any other plans sponsored or maintained solely
by the Company) except for the Contribution Obligation (as defined in the
Stockholder Agreement). Except as expressly provided herein, Purchaser and Sub
agree to provide Company employees employee benefit and compensation plans,
policies and arrangements (other than severance plans) at a level no less
favorable than provided to Purchaser employees of comparable status; PROVIDED,
HOWEVER, that for a period of one year following the Effective Time, Company
employees shall also be provided a severance benefit no less favorable than
provided by the Company as of the date hereof; PROVIDED HOWEVER, that the
foregoing shall not prohibit the Surviving Corporation from amending such
severance benefit plans to clarify any ambiguities therein.
(b) Purchaser agrees to permit Company employees to participate immediately
as of the Effective Date in its medical, dental, disability and life insurance
plans without imposition of preexisting condition exclusions or waiting periods
prior to participation and with full credit for deductibles and copayments paid
in respect of the current plan year. Purchaser agrees to allow participation in
its retiree medical plan to Company employees on a basis no less favorable than
provided to Purchaser employees of comparable status and to grant eligibility
and vesting credit in such retiree medical plans for service with the Company or
the Stockholder.
(c) Purchaser agrees to provide Company employees with service credit for
all purposes, including without limitation, eligibility to participate, and
vesting (other than Purchaser's severance plan, for which such Company employees
are not eligible, and Supplemental Executive Retirement Plan) under each of
Purchaser's Employee Benefit Plans for service with the Company or Stockholder.
(d) The Company shall, prior to December 2, 1996, amend each of the
Company's Incentive Plan for Business Managers, the 1989 Short Term Incentive
Plan, the Employee Incentive Plan and the Sales
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Incentive Plan as follows: The Company's Incentive Plan for Business Managers
shall, immediately following the date hereof, be terminated forthwith. The
Employee Incentive Plan shall, immediately following the Effective Time, be
terminated and all participants shall receive a cash payment equal to their
target bonus as though the budgeted target had been achieved. Each of the
Company's 1989 Short Term Incentive Plan, International Incentive Plan, and the
Company's Sales Incentive Plan, shall, on April 1, 1997, be terminated and the
aggregate amount of individual bonus targets payable to participants in those
Incentive Plans shall be determined as soon as practicable after the Effective
Time as though the budgeted target for Fiscal Year 1997 had been achieved;
individual cash payments shall be modified to reflect individual performance;
PROVIDED, HOWEVER, that such participant either (i) has remained employed with
the Company through March 31, 1997 or (ii) was terminated by the Company on or
prior to such date but after December 31, 1996, other than for cause; PROVIDED
FURTHER, that the participants in the Company's 1989 Short Term Incentive Plan
previously identified in writing to Purchaser shall receive such cash payment
immediately following the Effective Time. Effective April 1, 1997, Company
employees will become eligible to participate in Purchaser's incentive plans at
a level comparable to that of other Purchaser's employees immediately prior to
the date hereof. As of the Effective Time, Company employees will participate in
all of Purchaser's Employee Benefit Plans, including without limitation,
vacation, medical and survivor plans on a basis no less favorable than provided
to Purchaser employees of comparable status, but excluding executive retirement
and severance plans.
(e) For purposes of this Section 6.9 "Employee Benefit Plans" shall mean
employee benefit plans, incentive compensation, severance, health and welfare
plans or policies, whether or not subject to regulation under ERISA.
Section 6.10 INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE.
(a) In the event of any threatened or actual claim, action, suit, proceeding
or investigation, whether civil, criminal or administrative, including, without
limitation, any such claim, action, suit, proceeding or investigation by or in
the right of the Company or any of its Subsidiaries, in which any of the present
officers or directors (the "INDEMNIFIED PARTIES") of the Company or any of its
Subsidiaries is, or is threatened to be, made a party by reason of the fact that
he or she is or was a director, officer, employee or agent of the Company or any
of its Subsidiaries, or is or was serving at the request of the Company or any
of its Subsidiaries as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, whether
before or after the Effective Time, the parties hereto agree to cooperate and
use their best efforts to defend against and respond thereto. It is understood
and agreed that the Company shall indemnify and hold harmless, and after the
Effective Time the Surviving Corporation and Purchaser, jointly and severally,
shall indemnify and hold harmless, as and to the full extent permitted by
applicable law, each such Indemnified Party against any losses, claims, damages,
liabilities, costs, expenses (including reasonable attorneys' fees and
expenses), judgments, fines and amounts paid in settlement in connection with
any such claim, action, suit, proceeding or investigation, and in the event of
any such claim, action, suit, proceeding or investigation (whether arising
before or after the Effective Time), (i) the Indemnified Parties may retain
counsel satisfactory to them, and the Company, or the Surviving Corporation and
Purchaser after the Effective Time, shall pay all reasonable fees and expenses
of such counsel for the Indemnified Parties promptly as statements therefor are
received and (ii) the Company and the Surviving Corporation and Purchaser will
use their respective reasonable efforts to assist in the vigorous defense of any
such matter; PROVIDED, that neither the Company nor the Surviving Corporation
nor Purchaser shall be liable for any settlement effected without its prior
written consent (which consent shall not be unreasonably withheld); and PROVIDED
FURTHER that the Surviving Corporation and Purchaser shall have no obligation
hereunder to any Indemnified Party when and if a court of competent jurisdiction
shall ultimately determine, and such determination shall have become final and
non-appealable, that indemnification of such Indemnified Party in the manner
contemplated hereby is prohibited by applicable law. Any Indemnified Party
wishing to claim indemnification under this Section 6.11, upon learning of any
such claim, action, suit, proceeding or investigation, shall notify the
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Company and, after the Effective Time, the Surviving Corporation and Purchaser,
thereof (but the failure to so notify an indemnifying party shall not relieve it
from any liability which it may have hereunder, except to the extent such
failure prejudices such party). The Indemnified Parties as a group may retain
only one law firm to represent them with respect to each such matter unless
there is, under applicable standards of professional conduct, a conflict on any
significant issue between the positions of any two or more Indemnified Parties.
(b) Until the Effective Time the Company shall keep in effect Article Tenth
of its Certificate of Incorporation and Article IX of its By-Laws, and,
thereafter, Purchaser shall cause the Surviving Corporation to keep in effect in
its By-Laws a provision for a period of not less than six years from the
Effective Time (or, in the case of matters occurring prior to the Effective Time
which have not been resolved prior to the sixth anniversary of the Effective
Time, until such matters are finally resolved) which provides for
indemnification of the Indemnified Parties to the full extent permitted by the
DGCL.
(c) Purchaser shall cause to be maintained in effect for not less than six
years from the Effective Time the current policies of the directors' and
officers' liability insurance maintained by the Company, if any, (provided that
Purchaser may substitute therefor policies of at least the same coverage
containing terms and conditions which are no less advantageous) with respect to
matters occurring prior to the Effective Time; PROVIDED, HOWEVER, that if the
aggregate annual premiums for such insurance at any time during such period
shall exceed 200% of the per annum rate of premium currently paid by the Company
and its Subsidiaries for such insurance on the date of this Agreement, if any,
then Purchaser shall cause the Company (or the Surviving Corporation if after
the Effective Time) to, and the Company (or the Surviving Corporation if after
the Effective Time) shall, provide the maximum coverage that shall then be
available at an annual premium equal to 200% of such rate, and Purchaser, in
addition to the indemnification provided above in this Section 6.11, shall
indemnify the Indemnified Parties for the balance of such insurance coverage on
the same terms and conditions as though Purchaser were the insurer under those
policies.
Section 6.11 CERTAIN ARRANGEMENTS. Effective as the Effective Time, the
Company shall cause the termination of that certain Services Agreement, dated as
of July 1, 1986 between the Company and Stockholder, as amended through April 1,
1996 (the "SERVICES AGREEMENT"), and all monies held by Stockholder pursuant to
the cash management program shall be remitted to the Company upon such
termination; PROVIDED, HOWEVER, that nothing in this provision shall impact or
cause the termination of that certain Tax Allocation Agreement, dated as of July
1, 1986 between the Company and Stockholder.
Section 6.12 MERGER WITHOUT MEETING OF STOCKHOLDERS. Notwithstanding the
foregoing, in the event that Purchaser or Sub shall acquire at least 90 percent
of the outstanding Shares, the parties hereto agree, at the request of
Purchaser, to take all appropriate and necessary action to cause the Merger to
become effective, as soon as practicable after the expiration or termination of
the Offer and the completion of all activities necessary to finance the
consummation of the Merger and the transactions contemplated hereby, without a
meeting of stockholders of the Company, in accordance with Section 253 of the
DGCL.
Section 6.13 INCREMENTAL VOLUME PLAN. Promptly following the date hereof,
the Company shall (i) amend its Third Quarter Incremental Volume Plan referred
to in Section 4.6 of the Company Disclosure Letter to extend the measurement
period for determining whether the incremental sales volume targets of such Plan
have been satisfied to include the fourth quarter of fiscal year 1997, and (ii)
take all steps reasonably necessary to communicate to customers eligible to
participate in such plan that the Company will honor its Third Quarter
Incremental Volume Plan with respect to shipments made in the fourth quarter of
fiscal year 1997 and to Company sales personnel responsible for such customers.
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ARTICLE VII
CONDITIONS
Section 7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligation of each party to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of each of the
following conditions:
(a) If required by the DGCL, this Agreement and the Merger shall have been
approved and adopted by the requisite vote of the stockholders of the Company in
accordance with applicable provisions of the Company's Certificate of
Incorporation and the DGCL;
(b) No statute, rule, regulation, order, decree or injunction shall have
been enacted, entered, promulgated or enforced by any Governmental Entity of
competent jurisdiction which prohibits the consummation of the Merger or makes
the Merger illegal;
(c) The Offer shall not have been terminated in accordance with its terms
prior to the purchase of any Shares; and
(d) Any applicable waiting period applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated.
Section 7.2 CONDITIONS TO THE OBLIGATION OF THE COMPANY TO EFFECT THE
MERGER. The obligation of the Company to effect the Merger is further subject
to the satisfaction or waiver at or prior to the Effective Time of the following
additional conditions:
(a) The representations and warranties of Purchaser and Sub contained in
this Agreement shall be true and correct in all material respects at and as of
the Effective Time as if made at and as of such time unless limited by their
terms to a prior date;
(b) Each of Purchaser and Sub shall have performed in all material respects
its obligations under this Agreement required to be performed by it at or prior
to the Effective Time pursuant to the terms hereof; and
(c) The Company shall have received a certificate of the President, an
Executive Vice President, a Senior Vice President or the Chief Financial Officer
of Purchaser as to the satisfaction of the conditions set forth in Section
7.2(a) and (b).
Section 7.3 CONDITIONS TO OBLIGATIONS OF PURCHASER AND SUB TO EFFECT THE
MERGER. The obligations of Purchaser and Sub to effect the Merger are further
subject to the satisfaction or waiver at or prior to the Effective Time of the
following additional conditions:
(a) The representations and warranties of the Company contained in this
Agreement shall be true and correct in all material respects at and as of the
Effective Time as if made at and as of such time unless limited by their terms
to a prior date;
(b) The Company shall have performed in all material respects each of its
obligations under this Agreement required to be performed by it at or prior to
the Effective Time pursuant to the terms hereof; and
(c) Purchaser shall have received a certificate of the President, an
Executive Vice President, a Senior Vice President or the Chief Financial Officer
of the Company as to the satisfaction of the conditions set forth in Section
7.3(a) and (b).
Section 7.4 EXCEPTION. The conditions set forth in Section 7.3 hereof
shall cease to be conditions to the obligations of the parties if Sub shall have
accepted for payment and paid for Shares validly tendered pursuant to the Offer;
PROVIDED that the terms of this exception will be deemed satisfied if Sub fails
to accept for payment any Shares pursuant to the Offer in violation of the terms
thereof.
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ARTICLE VIII
TERMINATION
Section 8.1 TERMINATION. Notwithstanding anything herein to the contrary,
this Agreement may be terminated and the Merger may be abandoned at any time
prior to the Effective Time, whether before or after stockholder approval
thereof:
(a) By mutual written consent of Purchaser, the Sub and the Company;
(b) By Purchaser and Sub, on the one hand, or the Company, on the other
hand, if the Effective Time shall not have occurred on or before January 31,
1997 from the date hereof;
(c) By either Purchaser and Sub on the one hand, or the Company, on the
other hand, if the Offer shall expire or have been terminated in accordance with
its terms without any Shares being purchased thereunder but only, in the case of
termination by Purchaser and Sub, if the Sub shall not have been required by the
terms of the Offer or this Agreement to purchase any Shares pursuant to the
Offer;
(d) By Purchaser and Sub, on the one hand, or the Company, on the other
hand, if any court of competent jurisdiction in the United States or other
United States governmental body shall have issued an order, decree or ruling or
taken any other action permanently restraining, enjoining or otherwise
prohibiting the Merger and such order, decree, ruling or other action shall have
become final and nonappealable;
(e) By Purchaser or Sub, on the one hand, or the Company, on the other hand,
if the other party shall have failed to comply in any material respect with any
of the material obligations contained in this Agreement to be complied with or
performed by such party at or prior to such date of termination, and such
failure continues for 20 business days after the actual receipt by such party of
a written notice from the other party setting forth in detail the nature of such
failure;
(f) By Purchaser, if any required approval of the stockholders of the
Company shall not have been obtained by reason of the failure to obtain the
required vote upon a vote held at a duly held meeting of stockholders or at any
adjournment thereof;
(g) By Purchaser, if the Company shall have (i) withdrawn its approval or
recommendation of this Agreement or the Merger, (ii) recommended any Acquisition
Proposal from a person other than Purchaser; or
(h) By the Company if, prior to the purchase of Shares pursuant to the
Offer, either (i) a third party shall have made an Acquisition Proposal that the
Board determines in good faith, after consultation with its financial advisor,
is more favorable to the Company and the holders of Shares than the transactions
contemplated by this Agreement or (ii) other than in response to an Acquisition
Proposal, the Board determines in good faith, after consultation with its
counsel, that the failure so to terminate this Agreement may constitute a breach
of the Board's fiduciary duties under applicable law.
Notwithstanding anything to the contrary contained in this Section 8.1, the
Company shall not be permitted to terminate, or consent to the termination of,
this Agreement without the approval of a majority of the Continuing Directors.
Section 8.2 EFFECT OF TERMINATION. In the event of the termination of this
Agreement as provided in Section 8.1, written notice thereof shall forthwith be
given to the other party or parties specifying the provision hereof pursuant to
which such termination is made, and this Agreement shall forthwith become null
and void, without liability or obligation on the part of Purchaser, Sub or the
Company except as set forth in Sections 6.3(b), 9.1 and 9.13 hereof. Nothing
contained in this Section 8.2 shall relieve any party from liability for any
willful breach of this Agreement.
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Section 8.3 TERMINATION FEE. If this Agreement is terminated (i) by either
party pursuant to Section 8.1(f), (ii) by Purchaser or Sub pursuant to Section
8.1(e) or (g), or (iii) by the Company pursuant to Section 8.1(h), and, in each
such case, if the Company is not then entitled to terminate this Agreement by
reason of Section 8.1(e), then, in addition to any other rights or remedies that
may be available to Purchaser, the Company shall pay Purchaser promptly and in
no event later than two business days after receipt of notice of termination
pursuant to the relevant provision of Section 8.1 (by wire transfer of
immediately available funds to an account designated by Purchaser) a fee of
$11.0 million.
ARTICLE IX
MISCELLANEOUS
Section 9.1 FEES AND EXPENSES. Except as contemplated by this Agreement,
all costs and expenses incurred in connection with this Agreement and the
consummation of the transactions contemplated hereby shall be paid by the party
incurring such expenses.
Section 9.2 AMENDMENT; EXTENSION AND WAIVER. Subject to applicable law,
this Agreement may be amended, modified and supplemented in any and all
respects, whether before or after any vote of the stockholders of the Company
contemplated hereby, by written agreement of the parties hereto, pursuant to
action taken by their respective Boards of Directors (which, in the case of the
Company, shall include the affirmative vote of a majority of the Continuing
Directors), at any time prior to the Closing Date with respect to any of the
terms contained herein; PROVIDED, HOWEVER, that after the approval of this
Agreement by the stockholders of the Company, no such amendment, modification or
supplement shall reduce or change the consideration to be received by the
Company's stockholders in the Merger.
Section 9.3 SURVIVAL. (a) The respective representations, warranties,
covenants and agreements of Purchaser, Sub and the Company contained herein or
in any certificates or other documents delivered prior to or as of the Effective
Time shall not survive beyond the Effective Time, (b) notwithstanding this
Section 9.3 the covenants and agreements of the parties hereto to be performed
following the Effective Time (including by the Surviving Corporation after the
Merger) shall survive the Effective Time without limitation which by their terms
contemplate performance after the Effective Time, including, without limitation,
the covenants and agreements set forth in Sections 6.3(b), 6.8, 6.9, 6.10, 9.1
and 9.13 hereof.
Section 9.4 NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed given upon (a) transmitter's confirmation of a
receipt of a facsimile transmission, (b) confirmed delivery by a standard
overnight carrier or when delivered by hand or (c) the expiration of five
business days after the day when mailed in the United States by certified or
registered mail, postage prepaid, addressed at the following addresses (or at
such other address for a party as shall be specified by like notice)
(a) if to the Company, to:
Armor All Products Corporation
6 Liberty
Aliso Viejo, California 92656
Telephone: (714) 362-0600
Facsimile: (714) 362-0752
Attention: Kenneth Evans
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with a copy to:
Skadden, Arps, Slate, Meagher
& Flom LLP
919 Third Avenue
New York, New York 10022
Telephone: (212) 735-3000
Facsimile: (212) 735-2000
Attention: Paul T. Schnell
and
(b) if to Purchaser or Sub, to:
The Clorox Company
1221 Broadway
Oakland, California 94612
Telephone: (510) 271-7700
Facsimile: (510) 271-1652
Attention: General Counsel
with a copy to:
Morrison & Foerster LLP
345 California Street
San Francisco, California 94104
Telephone: (415) 677-7000
Facsimile: (415) 677-7522
Attention: John W. Campbell
Section 9.5 INTERPRETATION. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. Whenever the words "include", " includes" or "including"
are used in this Agreement they shall be deemed to be followed by the words
"without limitation". The phrase "made available" when used in this Agreement
shall mean that the information referred to has been made available if requested
by the party to whom such information is to be made available.
Section 9.6 HEADINGS; SCHEDULES. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Any matter disclosed pursuant to the Company
Disclosure Letter shall be deemed to be disclosed for all purposes under this
Agreement but such disclosure shall not be deemed to be an admission or
representation as to the materiality of the item so disclosed.
Section 9.7 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
be considered one and the same agreement.
Section 9.8 ENTIRE AGREEMENT. This Agreement, together with the
Confidentiality Agreement and the Stockholder's Agreement, constitutes the
entire agreement, and supersedes all other prior negotiations, commitments,
agreements and understandings (written and oral), among the parties with respect
to the subject matter hereof.
Section 9.9 SEVERABILITY. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void, unenforceable or against its regulatory policy,
the remainder of the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
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Section 9.10 GOVERNING LAW. This Agreement shall be governed and construed
in accordance with the laws of the State of Delaware without giving effect to
the principles of conflicts of law thereof.
Section 9.11 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by, the parties
and their respective successors and assigns, and except to the extent necessary
to enforce the provisions of Sections 3.12, 6.8, 6.9 and 6.11, the provisions of
this Agreement are not intended to confer upon any person other than the parties
hereto any rights or remedies hereunder.
Section 9.12 SPECIFIC PERFORMANCE; SUBMISSION TO JURISDICTION. Each of the
parties hereto acknowledges and agrees that in the event of any breach of this
Agreement, each non-breaching party would be irreparably and immediately harmed
and could not be made whole by monetary damages. It is accordingly agreed that
the parties hereto (a) will waive, in any action for specific performance, the
defense of adequacy of a remedy at law and (b) shall be entitled, in addition to
any other remedy to which they may be entitled at law or in equity, to compel
specific performance of this Agreement in any action instituted in any state or
federal court sitting in Orange County, California. The parties hereto consent
to personal jurisdiction in any such action brought in any state or federal
court sitting in Orange County, California and to service of process upon it in
the manner set forth in Section 9.4 hereof.
Section 9.13 BROKERAGE FEES AND COMMISSIONS. Except as previously
disclosed in writing, the Company hereby represents and warrants to Purchaser
with respect to the Company, and Purchaser hereby represents and warrants to the
Company with respect to Purchaser and Sub, that no person or entity is entitled
to receive from the Company or Purchaser and Sub, respectively, any investment
banking, brokerage or finder's fee or fees for financial consulting or advisory
services in connection with this Agreement or any of the transactions
contemplated hereby.
IN WITNESS WHEREOF, Purchaser, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized as
of the date first written above.
ARMOR ALL PRODUCTS CORPORATION
By: /s/ KENNETH M. EVANS______________
Name: Kenneth M. Evans
Title: President and Chief
Executive Officer
THE CLOROX COMPANY
By: /s/ EDWARD A. CUTTER______________
Name: Edward A. Cutter
Title: Senior Vice
President--General Counsel
and Secretary
SHIELD ACQUISITION CORPORATION
By: /s/ EDWARD A. CUTTER______________
Name: Edward A. Cutter
Title: Vice President and
Secretary
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ANNEX A
CONDITIONS TO THE TENDER OFFER
Notwithstanding any other provision of the Offer, Sub shall not be required
to purchase any Shares tendered, and may terminate or amend the Offer, if on or
after December 2, 1996, any of the following events shall occur:
(a) the Company shall have breached in any material respect any of its
representations, warranties, covenants or agreements contained in the Merger
Agreement; or
(b) there shall be any statute, rule, regulation, decree, order or
injunction promulgated, enacted, entered or enforced by any United States
federal or state government, governmental authority or court which would (i)
make the acquisition by the Sub of a material portion of the Shares illegal, or
(ii) otherwise prohibit or restrict consummation of the Offer or the Merger;
(c) the Merger Agreement shall have been terminated in accordance with its
terms; or
(d) the Company or its Subsidiaries shall have suffered a change that would
result in a Company Material Adverse Effect.
The foregoing conditions are for the sole benefit of Sub and may be asserted
by Sub regardless of the circumstances giving rise to such conditions, or may be
waived by Sub in whole or in part at any time and from time to time in its
reasonable discretion.
A-1
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STOCKHOLDER AGREEMENT
STOCKHOLDER AGREEMENT (this "AGREEMENT"), dated as of November 26, 1996, by
and among The Clorox Company, a Delaware corporation ("PURCHASER"), Shield
Acquisition Corporation, a Delaware corporation and a wholly owned subsidiary of
Purchaser ("SUB"), and McKesson Corporation, a Delaware corporation
("STOCKHOLDER").
WHEREAS, Stockholder is, as of the date hereof, the record and beneficial
owner of 11,624,900 shares of common stock, par value $0.01 per share (the
"COMMON STOCK") of Armor All Products Corporation, a Delaware corporation (the
"COMPANY"); and
WHEREAS, Purchaser, Sub and the Company concurrently herewith are entering
into an Agreement and Plan of Merger, dated as of the date hereof (the "MERGER
AGREEMENT"), which provides, among other things, for the acquisition of the
Company by Purchaser by means of a cash tender offer (the "OFFER") for any and
all of the outstanding shares of Common Stock and for the subsequent merger (the
"MERGER") of Sub with and into the Company upon the terms and subject to the
conditions set forth in the Merger Agreement; and
WHEREAS, Stockholder and the Company are parties to a Services Agreement
dated as of July 1, 1986 between the Company and Stockholder, as amended through
April 1, 1996 (the "SERVICES AGREEMENT"), under which Stockholder provides
certain corporate support, employee benefit and other services to the Company
and a Tax Allocation Agreement dated as of July 1, 1986 whereby, among other
things, Stockholder was permitted to file consolidated income tax returns in
which the Company was included for certain tax years of the Company (the "TAX
ALLOCATION AGREEMENT"); and
WHEREAS, certain employees of the Company are participants in Plans (as that
term is defined in the Merger Agreement) maintained by Stockholder for the
benefit of such employees and identified in the Merger Agreement (the
"STOCKHOLDER PLANS");
WHEREAS, as a condition to the willingness of Purchaser and Sub to enter
into the Merger Agreement, and in order to induce Purchaser and Sub to enter
into the Merger Agreement, Stockholder has agreed, to enter into this Agreement.
NOW, THEREFORE, in consideration of the execution and delivery by Purchaser
and Sub of the Merger Agreement and the foregoing and the mutual
representations, warranties, covenants and agreements set forth herein and
therein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
Section 1. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER. Stockholder
hereby represents and warrants to Purchaser and Sub as follows:
(a) Stockholder is the record and beneficial owner of 11,624,900 shares of
Common Stock (as may be adjusted from time to time pursuant to Section 6 hereof
the "SHARES"), of which 6,939,759 shares (the "EXCHANGE SHARES") are deposited
with The First National Bank of Chicago ("FNB"), as Exchange Agent, pursuant to
that certain Exchange Agent Agreement, dated as of March 14, 1994, between
Stockholder and FNB, as Exchange Agent (the "EXCHANGE AGENT AGREEMENT"), and
that certain Indenture, dated March 14, 1994, between Stockholder and FNB, as
Trustee (the "INDENTURE").
(b) Stockholder is a corporation duly organized, validly existing and in
good standing under the laws of Delaware, has all requisite corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby, and has taken all necessary corporate action
to authorize the execution, delivery and performance of this Agreement.
(c) This Agreement has been duly authorized, executed and delivered by
Stockholder and constitutes the legal, valid and binding obligation of
Stockholder, enforceable against Stockholder in accordance with its terms,
except (i) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other
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laws of general application affecting enforcement of creditors' rights
generally, and (ii) the availability of the remedy of specific performance or
injunctive or other forms of equitable relief may be subject to equitable
defenses and would be subject to the discretion of the court before which any
proceeding therefor may be brought.
(d) Neither the execution and delivery of this Agreement nor the
consummation by Stockholder of the transactions contemplated hereby will result
in a violation of, or a default under, or conflict with, any contract, trust,
commitment, agreement, understanding, arrangement or restriction of any kind to
which Stockholder is a party or bound or to which the Shares are subject. To the
best of Stockholder's knowledge, consummation by Stockholder of the transactions
contemplated hereby will not violate, or require any consent, approval, or
notice under, any provision of any judgment, order, decree, statute, law, rule
or regulation applicable to Stockholder or the Shares, except for any necessary
filing under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR ACT"), or state takeover laws.
(e) The Shares and the certificates representing Shares are now and at all
times during the term hereof will be held by Stockholder, or by a nominee or
custodian for the benefit of Stockholder, free and clear of all liens, claims,
security interests, proxies, voting trusts or agreements, understandings or
arrangements or any other encumbrances whatsoever, except for (i) the Exchange
Shares, which are subject to the terms and provisions of the Indenture and the
Exchange Agent Agreement providing for the exchange of Debentures (as defined in
the Indenture) for the Exchange Shares by the holders of Debentures upon the
circumstances and subject to the terms set forth therein, and (ii) any such
encumbrances or proxies arising hereunder.
(f) Except as set forth in the Company Disclosure Letter of the Merger
Agreement, the representations and warranties of the Company in Section 4.10 of
the Merger Agreement, to the extent that they relate to any Stockholder Plan,
are true and accurate as of the date of this Agreement.
Section 2. REPRESENTATIONS AND WARRANTIES OF PURCHASER AND SUB. Each of
Purchaser and Sub hereby, jointly and severally, represents and warrants to
Stockholder as follows:
(a) Each of Purchaser and Sub is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, has all requisite corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby,
and has taken all necessary corporate action to authorize the execution,
delivery and performance of this Agreement.
(b) This Agreement has been duly authorized, executed and delivered by each
of Purchaser and Sub and constitutes the legal, valid and binding obligation of
each of Purchaser and Sub, enforceable against each of them in accordance with
its terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors' rights generally and (ii) the availability of the
remedy of specific performance or injunctive or other forms of equitable relief
may be subject to equitable defenses and would be subject to the discretion of
the court before which any proceeding therefor may be brought.
(c) Neither the execution and delivery of this Agreement nor the
consummation by each of Purchaser and Sub of the transactions contemplated
hereby will result in a violation of, or a default under, or conflict with, any
contract, trust, commitment, agreement, understanding, arrangement or
restriction of any kind to which each of Purchaser and Sub is a party or bound.
To the best knowledge of each of Purchaser and Sub, consummation by each of
Purchaser and Sub of the transactions contemplated hereby will not violate, or
require any consent, approval, or notice under, any provision of any judgment,
order, decree, statute, law, rule or regulation applicable to each of Purchaser
and Sub except for any necessary filing under the HSR Act or state takeover
laws.
Section 3. PURCHASE AND SALE OF SHARES. Stockholder hereby agrees that it
shall, and direct the Exchange Agent pursuant to Section 15.8 of the Indenture
and pursuant to the Exchange Agent
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Agreement to, tender the Shares into the Offer and that it shall not, nor direct
the Exchange Agent to, withdraw any Shares so tendered. Sub hereby agrees to
purchase all the Shares so tendered at a price per Share equal to $19.09 or such
higher price per Share as may be offered by Sub in the Offer; PROVIDED that
Sub's obligation to accept for payment and pay for the Shares in the Offer is
subject to all the terms and conditions of the Offer set forth in the Merger
Agreement and Annex A thereto. Simultaneously with or prior to its tender of the
Shares into the Offer Stockholder shall deliver to Sub an affidavit stating,
under penalty of perjury, the Seller's U.S. taxpayer identification number and
that the Stockholder is not a foreign person, pursuant to Section 1445(b)(2) of
the Internal Revenue Code of 1986, as amended.
Section 4. TRANSFER OF SHARES. Prior to the termination of this Agreement,
except as otherwise provided herein and in the Indenture and the Exchange Agent
Agreement, Stockholder shall not: (i) transfer (which term shall include,
without limitation, for the purposes of this Agreement, any sale, gift, pledge
or other disposition), or consent to any transfer of, any or all of the Shares
or any interest therein; (ii) enter into any contract, option or other agreement
or understanding with respect to any transfer of any or all of the Shares or any
interest therein; (iii) grant any proxy, power-of-attorney or other
authorization or consent in or with respect to the Shares; (iv) deposit the
Shares into a voting trust or enter into a voting agreement or arrangement with
respect to the Shares; or (v) take any other action that would in any way
restrict, limit or interfere with the performance of its obligations hereunder
or the transactions contemplated hereby.
Section 5. GRANT OF IRREVOCABLE PROXY; APPOINTMENT OF PROXY.
(a) Stockholder hereby irrevocably grants to, and appoints, Purchaser and
any nominee thereof, Stockholder's proxy and attorney-in-fact (with full power
of substitution), for and in the name, place and stead of Stockholder, to vote
the Shares, or grant a consent or approval in respect of the Shares, in
connection with any meeting of the stockholders of the Company (i) in favor of
the Merger, and (ii) against any action or agreement which would impede,
interfere with or prevent the Merger, including any other extraordinary
corporate transaction, such as a merger, reorganization or liquidation involving
the Company and a third party or any other proposal of a third party to acquire
the Company.
(b) Stockholder represents that any proxies heretofore given in respect of
the Shares are not irrevocable, and that such proxies are hereby revoked.
(c) Stockholder hereby affirms that the irrevocable proxy set forth in this
Section 5 is given in connection with the execution of the Merger Agreement, and
that such irrevocable proxy is given to secure the performance of the duties of
Stockholder under this Agreement. Stockholder hereby further affirms that the
irrevocable proxy is coupled with an interest and, except as set forth in
Section 8 hereof, is intended to be irrevocable in accordance with the
provisions of Section 212(e) of the Delaware General Corporation Law (the
"DGCL").
Section 6. CERTAIN EVENTS. In the event of any stock split, stock
dividend, merger, reorganization, recapitalization or other change in the
capital structure of the Company affecting the Common Stock, or the acquisition
of additional shares of Common Stock or other securities or rights of the
Company by Stockholder, the number of Shares shall be adjusted appropriately,
and this Agreement and the obligations hereunder shall attach to any additional
shares of Common Stock or other securities or rights of the Company issued to or
acquired by Stockholder.
Section 7. FURTHER ASSURANCES. Stockholder shall, upon request of
Purchaser or Sub, execute and deliver any additional documents and take such
further actions as may reasonably be deemed by Purchaser or Sub to be necessary
or desirable to carry out the provisions hereof and to vest the power to vote
the Shares as contemplated by Section 5 hereof in Purchaser.
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Section 8. COVENANTS.
(a) At the Effective Time Sub shall transfer to Stockholder (i) $265,000 as
a contribution to the ESOP and PSIP plans maintained by Stockholder and (ii) an
additional amount not to exceed $130,000 reasonably determined by Stockholder in
accordance with past practice, representing a quarterly contribution to
Stockholder's Retirement Plan in respect of the 1996 plan year in full
satisfaction of all obligations of the Company to contribute to such Stockholder
Plans, which exclude all plans sponsored or maintained solely by the Company
(the "CONTRIBUTION OBLIGATION"). Stockholder shall cause an amount equal to such
contribution to be distributed to, or for the benefit of, employees of the
Company and the Subsidiaries in accordance with the provisions of such
Stockholder Plans.
(b) Stockholder shall pay all expenses for any medical, dental, disability
or life insurance claim incurred by or on behalf of any current or former
employee of the Company or the Subsidiaries prior to the Effective Time whether
or not such claim is submitted or paid prior to the Effective Time. Stockholder
will continue to provide benefits under its retiree medical plan to those
persons receiving benefits at the Effective Time.
(c) From and after the date hereof to the Effective Time, Stockholder shall
not, and shall not permit the Company to, make any elections, or change any
existing elections, with respect to Taxes (as that term is defined in the Merger
Agreement), without the prior written consent of Purchaser.
(d) From and after the date that Sub shall have purchased and paid for all
of the Shares of Stockholder pursuant to Section 3 hereof, Stockholder shall
make available to Purchaser any and all records and other materials in
Stockholder's possession or control that relate to any of the Company's filings
or returns relating to Taxes, Tax audits affecting the Company, or any other
records relating to Taxes of the Company or for which the Company may be
responsible.
(e) Stockholder shall continue to reimburse the Company for any foregone
federal tax deductions relating to state income or franchise taxes for any
period ending on or before the Effective Time during which the Company was part
of a California unitary tax filing with Stockholder or any Affiliate of
Stockholder.
(f) At or prior to the Effective Time, Stockholder shall enter into an
amendment to the Services Agreement pursuant to which Stockholder shall provide
to the Company consultation services with respect to legal, tax, personnel,
information systems, risk management and insurance matters relating to the
Company on terms and conditions no less favorable to the Company than provided
in the Services Agreement prior to such amendment for a period not to exceed six
months after the Effective Time; PROVIDED, HOWEVER, that such consultation
services shall be provided to the Company at an hourly rate of $135, and
expenses and third party costs incurred in providing such consultation services
shall be approved prior to such incurrence.
Section 9. INDEMNIFICATION. From and after the Closing Date, Stockholder
shall protect, defend, indemnify and hold harmless Purchaser and Company from
any claims, liabilities, costs or expenses arising out of (i) any breach or
inaccuracy of the representation set forth in Section 1(f) of this Agreement and
(ii) all Taxes (including without limitation any obligation to contribute to the
payment of any Taxes determined on a consolidated, combined or unitary basis
with respect to a group of corporations that includes or included the Company to
the extent that such obligation to contribute exceeds an amount attributable to
Taxes of or attributable to the Company or its Subsidiaries) which are imposed
on the Stockholder or any member (other than the Company or its Subsidiaries) of
the consolidated, unitary or combined group which includes or included the
Company or its Subsidiaries that Purchaser or the Company or its Subsidiaries
pay, or otherwise satisfy in whole or in part, or that result in liens or
encumbrances on any assets of the Company or its Subsidiaries or Purchaser.
Section 10. TERMINATION. This Agreement, and all rights and obligations of
the parties hereunder, shall terminate immediately upon the earlier of (a) the
date upon which the Merger Agreement is
4
<PAGE>
terminated in accordance with its terms (i) by either Purchaser and Sub, on the
one hand, or the Company, on the other hand, or (ii) by mutual written consent
of Purchaser, Sub and the Company, or (b) the date that Sub shall have purchased
and paid for all of the Shares of Stockholder pursuant to Section 3 hereof;
PROVIDED, HOWEVER, that (A) the indemnification obligation set forth in clauses
(i) and (ii) of Section 9 hereof shall survive for a period equal to (i) three
years following the Effective Time and (ii) the applicable statute of
limitations, respectively and (B) the covenants set forth in Section 8(a)
through (e) shall survive without limitation and the covenant set forth in
Section 8(f) shall survive for the period specified therein. The proxy given
pursuant to Section 5 hereof shall be automatically revoked and be of no further
force or effect, without further action on the part of any party hereto,
immediately upon the termination of this Agreement.
Section 11. EXPENSES. All fees and expenses incurred by any one party
hereto shall be borne by the party incurring such fees and expenses.
Section 12. PUBLIC ANNOUNCEMENTS. Each of Purchaser, Sub and the Company
agrees that it will not issue any press release or otherwise make any public
statement with respect to this Agreement or the transactions contemplated hereby
without the prior consent of the other party, which consent shall not be
unreasonably withheld or delayed; PROVIDED, HOWEVER, that such disclosure can be
made without obtaining such prior consent if (i) the disclosure is required by
law or by obligations imposed pursuant to any listing agreement with the Nasdaq
National Market and (ii) the party making such disclosure has first used its
best efforts to consult with the other party about the form and substance of
such disclosure.
Section 13. MISCELLANEOUS.
(a) Capitalized terms used and not otherwise defined in this Agreement shall
have the respective meanings assigned to such terms in the Merger Agreement.
(b) All notices and other communications hereunder shall be in writing and
shall be deemed given upon (i) transmitter's confirmation of a receipt of a
facsimile transmission, (ii) confirmed delivery by a standard overnight carrier
or when delivered by hand or (iii) the expiration of five business days after
the day when mailed in the United States by certified or registered mail,
postage prepaid, addressed at the following addresses (or at such other address
for a party as shall be specified by like notice):
(A) if to Stockholder, to:
McKesson Corporation
One Post Street
37th Floor
San Francisco, California 94104
Telephone: (415) 983-8300
Facsimile: (415) 983-8826
Attention: General Counsel
with a copy to:
Skadden, Arps, Slate, Meagher
& Flom LLP
919 Third Avenue
New York, New York 10022
Telephone: (212) 735-3000
Facsimile: (212) 735-2000
Attention: Paul T. Schnell
5
<PAGE>
and
(B) if to Purchaser or Sub, to:
The Clorox Company
1221 Broadway
Oakland, California 94612
Telephone: (510) 271-7700
Facsimile: (510) 271-1652
Attention: General Counsel
with a copy to:
Morrison & Foerster LLP
345 California Street
San Francisco, California 94104
Telephone: (415) 677-7000
Facsimile: (415) 677-7522
Attention: John W. Campbell
(c) 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.
(d) This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which shall be considered one and
the same agreement.
(e) This Agreement (including the Merger Agreement and any other documents
and instruments referred to herein) constitutes the entire agreement, and
supersedes all prior agreements and understandings, whether written and oral,
among the parties hereto with respect to the subject matter hereof.
(f) This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Delaware without giving effect to the principles of
conflicts of laws thereof.
(g) Neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto (whether by operation
of law or otherwise) without the prior written consent of the other parties.
Subject to the preceding sentence, this Agreement will be binding upon, inure to
the benefit of and be enforceable by, the parties and their respective
successors and assigns, and the provisions of this Agreement are not intended to
confer upon any person other than the parties hereto any rights or remedies
hereunder.
(h) If any term, provision, covenant or restriction herein is held by a
court of competent jurisdiction or other authority to be invalid, void or
unenforceable or against its regulatory policy, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated.
(i) Each of the parties hereto acknowledges and agrees that in the event of
any breach of this Agreement, each non-breaching party would be irreparably and
immediately harmed and could not be made whole by monetary damages. It is
accordingly agreed that the parties hereto (i) will waive, in any action for
specific performance, the defense of adequacy of a remedy at law and (ii) shall
be entitled, in addition to any other remedy to which they may be entitled at
law or in equity, to compel specific performance of this Agreement in any action
instituted in any state or federal court sitting in Orange County. The parties
hereto consent to personal jurisdiction in any such action brought in any state
or federal court sitting in Orange County and to service of process upon it in
the manner set forth in Section 11(b) hereof.
6
<PAGE>
(j) No amendment, modification or waiver in respect of this Agreement shall
be effective against any party unless it shall be in writing and signed by such
party.
IN WITNESS WHEREOF, Purchaser, Sub and Stockholder have caused this
Agreement to be duly executed and delivered as of the date first written above.
THE CLOROX COMPANY
By /s/ EDWARD A. CUTTER
------------------------------------
Name: Edward A. Cutter
Title: Senior Vice
President--General
Counsel and Secretary
SHIELD ACQUISITION CORPORATION
By /s/ EDWARD A. CUTTER
------------------------------------
Name: Edward A. Cutter
Title: Vice President and Secretary
MCKESSON CORPORATION
By /s/ WILLIAM A. ARMSTRONG
------------------------------------
Name: William A. Armstrong
Title: Vice President Human
Resources and Administration
7
<PAGE>
CONFIDENTIAL
October 10, 1996
The Clorox Company
1221 Broadway
Oakland, CA 94612-1888
Attention: Steven S. Silberblatt
Director of Business Development
Gentlemen:
We understand that The Clorox Company desires to engage in certain
discussions with Armor All Products Corporation (the "Company"), and McKesson
Corporation ("McKesson"), a holder of a majority of the issued and outstanding
shares of capital stock of the Company, in order to evaluate a possible
transaction (the "Transaction") involving you, the Company and McKesson. You
have requested that we furnish you with certain information relating to the
Company which is nonpublic, confidential or proprietary in nature. All such
information (whether documentary, computerized or oral) furnished after the date
hereof by the Company or McKesson or their respective directors, officers,
employees, affiliates, representatives (including, without limitation, financial
advisors, attorneys and accountants) or agents (collectively, "our
Representatives") to you or your directors, officers, employees, affiliates,
representatives (including, without limitation, financial advisors, attorneys
and accountants) or agents (collectively, "your Representatives") and all
analyses, compilations, forecasts, studies, summaries, notes, data and other
documents and materials in whatever form maintained, whether prepared by you,
your Representatives or others, which contain or reflect, or are generated from,
any such information or which reflect your or your Representatives' review of,
or your interest in, the Transaction is hereinafter referred to as the
"Information." The term Information will not, however, include information which
(i) is currently known to you or is or becomes generally available to the public
other than as a result of a disclosure by you or your Representatives or (ii) is
or becomes available to you on a non-confidential basis from a source (other
than the Company, McKesson or our Representatives) that is not prohibited from
disclosing such information to you by a legal, contractual, fiduciary or other
obligation to the Company or McKesson.
As a condition to, and in consideration of the Company and McKesson engaging
in further discussions with you and of the Company and McKesson providing you
with Information, you acknowledge and agree as follows:
1. You and your Representatives (i) will keep the Information
confidential and will not (except as permitted by this Agreement or after
compliance with paragraph 3 below or as required by applicable law,
regulation or legal process), without our prior written consent, disclose
any Information in any manner whatsoever, and (ii) will not use any
Information other than in connection with your consideration of the
Transaction. You further agree to disclose the Information only to your
Representatives (a) who need to know the Information for the purpose of
evaluating the Transaction, (b) who are informed by you of the confidential
nature of the Information and (c) who agree to be bound by the terms of this
agreement. You agree to cause your Representatives to observe the terms of
this agreement and will be responsible for any breach of this agreement by
any of your Representatives.
2. Except as may be required by law or as otherwise permitted by this
agreement, without the prior written consent of the Company and McKesson,
you and your Representatives will not disclose to any person any information
regarding a possible Transaction or any information relating in any way
1
<PAGE>
to the Information, including, without limitation (i) that any
investigations, discussions or negotiations are taking or have taken place
concerning a possible Transaction, including the status thereof or the
termination of discussions or negotiations with the Company or McKesson,
(ii) any of the terms, conditions or other facts with respect to any such
possible Transaction or of your consideration of a possible Transaction or
(iii) that this agreement exists, that Information exists or has been
requested or made available or any opinion or view with respect to the
Company, McKesson or the Information. In this regard, the Company and
McKesson have advised you of their concern regarding the potential for harm
to the Company and McKesson that could result from disclosure of the
foregoing or of Information. The term 'person' as used herein will be
interpreted broadly to include, without limitation, any corporation,
company, entity, partnership, partner, group, individual, potential joint
bidder or cobidder or source of financing. The Company and McKesson shall
have a similar duty of confidentiality with respect to your interest and
negotiations.
3. In the event that you or any of your Representatives are requested
or required (by oral questions, interrogatories, requests for information or
documents, subpoena, civil investigative demand, any informal or formal
investigation by any government or governmental agency or authority or
otherwise) to disclose any of the Information, you will notify the Company
and McKesson promptly in writing so that we may seek a protective order or
other appropriate remedy or, in our sole discretion, waive compliance with
the terms of this agreement. You and your Representatives agree not to
oppose any action by the Company and McKesson to obtain a protective order
or other appropriate remedy is obtained. In the event that no such
protective order or other remedy is obtained, or that the Company and
McKesson waive compliance with the terms of this agreement, you and your
Representatives will furnish only that portion of the Information which you
are advised by counsel is legally required and will cooperate with the
Company and McKesson to obtain reliable assurance that confidential
treatment will be accorded the Information.
4. If you determine not to proceed with the Transaction, you will
promptly inform McKesson and the Company. You acknowledge and agree that the
Company and McKesson have made no decision to pursue any Transaction and you
agree that the Company and McKesson will have the right in their sole
discretion, without giving any reason therefor, at any time to terminate
discussions with you concerning a possible Transaction, to elect not to
pursue any such Transaction, or to pursue the Transaction without your
involvement. You and your Representatives agree, immediately upon a request
from McKesson, the Company or our Representatives, to return to the Company
and McKesson all Information, and no copies, extracts or other reproductions
of the Information shall be retained by you or your Representatives. Any
portion of the Information that consists of analyses, compilations,
forecasts, studies, summaries, notes, data or other documents or materials
prepared by you or your Representatives, in lieu of being returned to the
Company and McKesson, may be destroyed by you, to the extent that they
reveal or reflect any Information, in which event one of your authorized
officers shall provide certification to the Company and McKesson that such
materials have in fact been so destroyed. However, one copy of the
Information may be retained by your outside attorneys in a file to which
access is restricted to them, to be used solely as a record of the
Information that was disclosed to you. Any oral Information will continue to
be subject to the provisions of this Agreement.
5. You and your Representatives acknowledge that none of the Company,
McKesson nor their Representatives, nor any of their respective officers,
directors, employees, agents or controlling persons within the meaning of
Section 20 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), makes any express or implied representation or warranty as to the
accuracy or completeness of the Information. You and your Representatives
agree that no such person will have any liability to you or any of your
Representatives on any basis (including, without limitation, in contract,
tort, under federal or state securities laws or otherwise), and neither you
nor your Representatives will make any claims whatsoever against such
persons, with respect to or arising out of the
2
<PAGE>
Transaction, whether as a result of this agreement, any other written or
oral expression with respect to the Transaction, your participation in
evaluating the possible Transaction or the procedures therefor your review
of the Company, the use of the Information by you or your Representatives,
any errors therein or omissions from the Information, or otherwise. You and
your Representatives further agree that you are not entitled to rely on the
accuracy or completeness of the Information and that you will be entitled to
rely solely on such representations and warranties as may be included in any
definitive agreement with respect to the Transaction, subject to such
limitations and restrictions as may be contained therein.
6. You are aware, and you will advise your Representatives who are
informed of the matters that are the subject of this agreement, of the
restrictions imposed by the United States securities laws on the purchase or
sale of securities by any person who has received material, nonpublic
information from the issuer of such securities and on the communication of
such information to any other person.
7. You represent and warrant that as of the date hereof, neither you
nor any of your subsidiaries beneficially owns any securities of McKesson or
the Company. You agree that, for a period of three years from the date of
this agreement, whether or not McKesson shall continue to own any voting
securities of the Company, neither you nor any of your Representatives, on
your behalf, will, unless and until such shall hereafter have been
specifically invited in writing by the Company: (i) acquire, offer to
acquire, or agree to acquire, directly or indirectly, by purchase or
otherwise, any voting securities or direct or indirect rights to acquire any
voting securities of the Company or any subsidiary thereof or (other than in
the ordinary course of business) any assets of the Company or any subsidiary
or division thereof, (ii) make, or in any way participate in, directly or
indirectly, any "solicitation" of "proxies" (as such terms are used in the
rules of the Securities and Exchange Commission) to vote, or seek to advise
or influence any person or entity with respect to the voting of, any voting
securities of the Company, (iii) make any public announcement with respect
to, or submit a proposal for, or offer of (with or without conditions) any
merger, consolidation, business combination, tender or exchange offer,
restructuring, recapitalization or other extraordinary transaction of or
involving the Company or any of its subsidiaries or its securities or
assets, (iv) form, join or in any way participate in a "group" (as defined
in Section 13(d)(3) of the Exchange Act) in connection with any voting
securities of the Company, (v) otherwise act, alone or in concert with
others, to seek to control or influence the management, Board of Directors
or policies of the Company, or (vi) have any discussions or enter into any
arrangements, understandings or agreements (whether written or oral) with,
or advise, assist or encourage, any other persons in connection with any of
the foregoing. You also agree that, for a period of three years from the
date of this agreement, neither you nor any of your Representatives, on your
behalf, will, unless and until such shall hereafter have been specifically
invited in writing by McKesson: (i) acquire, offer to acquire, or agree to
acquire, directly or indirectly, by purchase or otherwise, any voting
securities or direct or indirect rights to acquire any voting securities of
McKesson or any subsidiary thereof or (other than in the ordinary course of
business) any assets of McKesson or any subsidiary or division thereof, (ii)
make, or in any way participate in, directly or indirectly, any
"solicitation" of "proxies" (as such terms are used in the rules of the
Securities and Exchange Commission) to vote, or seek to advise or influence
any person or entity with respect to the voting of, any voting securities of
McKesson, (iii) make any public announcement with respect to, or submit a
proposal for, or offer of (with or without conditions) any merger,
consolidation, business combination, tender or exchange offer,
restructuring, recapitalization or other extraordinary transaction of or
involving McKesson or any of its subsidiaries or its securities or assets,
(iv) form, join or in any way participate in a "group" (as defined in
Section 13(d)(3) of the Exchange Act) in connection with any voting
securities of McKesson, (v) otherwise act, alone or in concert with others,
to seek to control or influence the management, Board of Directors or
policies of McKesson, or (vi) have any discussions or enter into any
arrangements, understandings or agreements (whether written or oral) with,
or advise, assist or encourage, any other persons in connection with any of
the foregoing. You and your Representatives, on your behalf, also agree
during such period not to make
3
<PAGE>
any proposal, statement or inquiry, or disclose any intention, plan or
arrangement, whether written or oral, inconsistent with the foregoing, or
request the Company or McKesson or any of their Representatives, directly or
indirectly, to amend, waive or terminate any provision of this paragraph.
You will promptly advise the Company or McKesson, as the case may be, of any
inquiry or proposal made to you with respect to any of the foregoing,
including the specifics thereof in reasonable detail. The representation and
restrictions contained in this paragraph do not apply to any securities of
McKesson or the Company that may be owned solely for investment purposes by
any employee benefit plan which is presently maintained on behalf of your
employees, or by any Representative on behalf of its employees, provided
that said ownership does not exceed 1% of the total number of outstanding
shares of any class of voting securities of the Company or McKesson. The
representation and restrictions contained in this paragraph also will not
prevent your financial advisor from engaging in trading or brokerage
transactions in the ordinary course of its business as presently conducted,
provided that neither said advisor nor its affiliates will acquire
beneficial ownership of more than 1% of the total number of outstanding
shares of any class of voting securities of the Company or McKesson.
8. You agree that, for a period of two years from the date of this
agreement, you will not, directly or indirectly, solicit for employment or
hire any employee of the Company or any subsidiary thereof with whom contact
was made or who became known to you in connection with your consideration of
the Transaction; provided, however, that the foregoing provision will not
prevent you from employing any such person who contacts you on his or her
own initiative without any direct or indirect solicitation by or
encouragement from you, or is contacted solely on the initiative of one of
your Representatives who had no knowledge or involvement in the Information
or consideration of a Transaction.
9. You acknowledge and agree that if the Company determines to pursue a
Transaction, it may establish procedures and guidelines (the "Procedures")
for the submission of proposals with respect to any Transaction with or
involving the Company and McKesson. You and your Representatives agree to
act in accordance with the Procedures and to be bound by the terms and
conditions that may be established pursuant to the Procedures, including
adhering to any timing conditions that may be established relating to when
proposals for such a Transaction may be submitted. You acknowledge and agree
that (a) the Company and McKesson and their respective Representatives are
free to conduct the process leading up to a possible Transaction as the
Company and McKesson and their respective Representatives, in their sole
discretion, determine (including, without limitation, by negotiating with
any third party and entering into a preliminary or definitive agreement
without prior notice to you or any other person), and (b) each of the
Company and McKesson reserves the right, in its sole discretion, to change
the Procedures relating to its consideration of the Transaction at any time
without prior notice to you or any other person, to reject any and all
proposals made by you or any of your Representatives with regard to the
Transaction, and to terminate discussions and negotiations with you at any
time and for any reason.
10. You and your Representatives agree not to initiate or maintain
contact (except for those contacts made in the ordinary course of business)
with any officer, director, employee or agent of the Company except with the
express prior permission of an officer of the Company or McKesson who are
informed of the matters that are the subject of this Agreement.
11. (a) You agree that the Company and McKesson would be irreparably
injured by a breach of this agreement by you or your Representatives, that
monetary remedies would be inadequate to protect us against any actual or
threatened breach of this agreement by you or by your Representatives, and,
without prejudice to any other rights and remedies otherwise available to
us, you agree to the granting of equitable relief, including injunctive
relief and specific performance, in our favor without proof of actual
damages. You agree to reimburse the Company and McKesson for their costs
4
<PAGE>
and expenses (including, without limitation, reasonable legal fees and
expenses) incurred to remedy any and all breaches of this agreement.
(b) This agreement shall inure to the benefit of and be binding upon
each of you, the Company and McKesson and the respective successors and
persons in control of you, the Company and McKesson, notwithstanding any
sale or disposition by McKesson of all or any portion of its interest in the
Company. It is further agreed that no failure or delay in exercising any
right, power or privilege hereunder will operate as a waiver thereof, nor
will any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any right, power or privilege hereunder.
(c) This agreement will be governed by and construed in accordance with
the laws of the State of California, without regard to the principles of
conflict of laws thereof.
(d) This agreement contains the entire agreement between you and us
concerning the subject matter hereof and supersedes all previous agreements,
written or oral, relating to the subject matter hereof. No modifications of
this agreement or waiver of the terms and conditions hereof will be binding
upon you, the Company or McKesson unless approved in writing by each of you,
the Company and McKesson.
(e) If any provision of this agreement shall, for any reason, be
adjudged by any court of competent jurisdiction to be invalid or
unenforceable, such judgment shall not affect, impair or invalidate the
remainder of this agreement but shall be confined in its operation to the
provision of this agreement directly involved in the controversy in which
such judgment shall have been rendered.
(f) This agreement may be executed in counterparts, each of which shall
be deemed to be an original, but all of which shall constitute the same
agreement. You warrant that the person who executes this agreement on your
behalf has full corporate authority to do so.
(g) This agreement shall expire three years from the date hereof.
5
<PAGE>
Please confirm your agreement with the foregoing by signing and returning to
the undersigned the duplicate copy of this letter enclosed herewith.
Very truly yours,
PAINEWEBBER INCORPORATED
on the behalf of
ARMOR ALL PRODUCTS CORPORATION
By /s/ Fuad Sawaya
-----------------------------------
Fuad A. Sawaya
Managing Director
PAINEWEBBER INCORPORATED
on the behalf of
McKESSON CORPORATION
By /s/ Fuad Sawaya
-----------------------------------
Fuad A. Sawaya
Managing Director
Accepted and Agreed to as of
the date first written above:
THE CLOROX COMPANY
By /s/ Steven Silberblatt
- -----------------------------------------
Name: Steven Silberblatt
Title: Director of Business Development
6
<PAGE>
FIRST AMENDMENT TO THE AGREEMENT AND PLAN OF MERGER
THIS FIRST AMENDMENT ("FIRST AMENDMENT"), dated as of December 1, 1996, by
and among Armor All Products Corporation, a Delaware corporation (the
"COMPANY"), The Clorox Company, a Delaware corporation ("PURCHASER"), and Shield
Acquisition Corporation, a Delaware corporation and a wholly owned subsidiary of
Purchaser ("SUB").
RECITALS
A. The Company, Purchaser and Sub have entered into an Agreement and Plan of
Merger dated as of November 26, 1996 (the "MERGER AGREEMENT").
B. Purchaser, Sub and McKesson Corporation, a Delaware corporation and, as
of the date hereof, the record and beneficial owner of approximately 54.4% of
the issued and outstanding shares of common stock, par value $0.01 per share, of
the Company (the "STOCKHOLDER") have entered into a Stockholder Agreement dated
as of November 26, 1996 (the "STOCKHOLDER AGREEMENT").
C. The Company, Purchaser and Sub have agreed to amend the Merger Agreement
as set forth below.
NOW THEREFORE, in consideration of the foregoing and the mutual agreements
set forth herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. DEFINITIONS. Capitalized terms used and not otherwise defined in this
Agreement shall have the respective meanings assigned to such terms in the
Merger Agreement.
2. CERTAIN ARRANGEMENTS. Section 6.11 of the Merger Agreement shall be
deleted and replaced in its entirety as follows:
Section 6.11 CERTAIN AGREEMENTS. At or prior to the Effective Time, the
Company shall cause that certain Services Agreement, dated as of July 1,
1986 between the Company and Stockholder, as amended through April 1, 1996
(the "SERVICES AGREEMENT"), to be amended in the manner set forth in Section
8(f) of the Stockholder Agreement; PROVIDED, HOWEVER, that all monies held
by Stockholder pursuant to the cash management program shall be remitted to
the Company at the Effective Time; PROVIDED, FURTHER, that nothing in this
provision shall impact or cause the termination of that certain Tax
Allocation Agreement, dated as of July 1, 1986 between the Company and
Stockholder.
3. MISCELLANEOUS.
(a) The headings contained in this First Amendment are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this First Amendment.
(b) This First Amendment may be executed in two or more counterparts, each
of which shall be deemed an original but all of which shall be considered one
and the same agreement.
(c) This First Amendment shall be governed by, and construed in accordance
with, the laws of the State of Delaware without giving effect to the principles
of conflicts of laws thereof.
(d) Except as specifically provided herein, the Merger Agreement shall
remain in full force and effect. In the event of any inconsistency between the
provisions of this First Amendment and any provision of the Merger Agreement,
the terms and provisions of this First Amendment shall govern and control.
<PAGE>
IN WITNESS WHEREOF, the Company, Purchaser and Sub have caused this First
Amendment to be duly executed and delivered as of the date first written above.
ARMOR ALL PRODUCTS CORPORATION
By /s/ KENNETH M. EVANS
------------------------------------
Name: Kenneth M. Evans
Title: President and Chief Executive
Officer
THE CLOROX COMPANY
By /s/ KAREN M. ROSE
------------------------------------
Name: Karen M. Rose
Title: Vice President--Treasurer
SHIELD ACQUISITION CORPORATION
By /s/ KAREN M. ROSE
------------------------------------
Name: Karen M. Rose
Title: Treasurer
