<PAGE>
________________________________________________________________________________
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
FILED BY THE REGISTRANT [x]
FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
CHECK THE APPROPRIATE BOX:
[x] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material under Rule 14a-12
BESTFOODS
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
-------------------
Payment of Filing Fee (Check the Appropriate Box):
[ ] No fee required.
[x] Fee computed below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
Common Stock, $0.25 par value, of Bestfoods
(2) Aggregate number of securities to which transaction applies:
284,448,340 shares of common stock comprising:
(a) 277,292,968 (including 2,631,306 shares held in a rabbi trust)
shares of issued and outstanding common stock and
(b) 7,155,372 shares of common stock into which 1,633,766 shares of
Series B preferred stock will be converted
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
As of May 31, 2000, there were 277,292,968 shares of common stock
(including 2,631,306 shares held in a rabbi trust), par value $ 0.25
per share, of Bestfoods outstanding. The filing fee was determined
by adding (w) the product of (i) the number of shares of common
stock that are proposed to be acquired in the merger and (ii) the
merger consideration of $73.00 in cash per share of common stock,
plus (x) the product of (i) 1,633,766 shares of Bestfoods' Series B
Preferred Stock converted into 7,155,372 shares of common stock at a
conversion ratio of 4.37968 per share and (ii) the merger
consideration of $73.00 in cash per share of common stock, plus
(y) $254,423,042 payable to holders of options to purchase shares of
common stock in exchange for cancellation of these options, plus
(z) $228,640,000 payable to holders of performance unit rights in
exchange for cancellation of these rights ((w) + (x) + (y) + (z)
together, the 'Total Consideration'). The payment of the filing fee,
calculated in accordance with Regulation 240.0-11 under the
Securities Exchange Act of 1934, as amended, equals one-fiftieth of
one percent of the Total Consideration.
(4) Proposed maximum aggregate value of transaction:
$21,247,791,862
(5) Total fee paid:
$4,249,558.37
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
________________________________________________________________________
(2) Form, Schedule or Registration Statement No.:
________________________________________________________________________
(3) Filing Party:
________________________________________________________________________
(4) Date Filed:
________________________________________________________________________
________________________________________________________________________________
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[CRS LETTERHEAD]
[INSERT DATE]
Dear Stockholder:
We will hold a special meeting of stockholders of Bestfoods at 9:00 a.m.,
local time, on [DAY], [DATE] at [LOCATION]. At the special meeting you will be
asked to adopt the merger agreement providing for our merger with an indirect
subsidiary of Unilever N.V. and Unilever PLC. If the merger is completed, we
will become an indirect subsidiary of Unilever, and you will receive $73.00 in
cash for each of your shares of Bestfoods common stock. Under Bestfoods'
restated certificate of incorporation, each share of Bestfoods Series B
preferred stock will be automatically converted into 4.37968 shares of Bestfoods
common stock immediately prior to completion of the merger, with each share of
the common stock then being converted into the right to receive $73.00 in cash
upon the effectiveness of the merger.
The Bestfoods board of directors has determined that the merger is advisable
and in the best interests of Bestfoods and its stockholders. THE BOARD OF
DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND RECOMMENDS THAT YOU
VOTE FOR THE ADOPTION OF THE MERGER AGREEMENT AT THE SPECIAL MEETING. The
accompanying notice of meeting and proxy statement explain the proposed merger
and provide specific information concerning the special meeting. Please read
these materials carefully.
Your vote is very important. We cannot complete the merger unless the merger
agreement is adopted by a majority of the voting power represented by the
outstanding shares of Bestfoods common stock and Bestfoods Series B preferred
stock entitled to vote at the special meeting, voting together as a single
class. Failure to vote will have the same effect as a vote against adoption of
the merger agreement. Whether or not you plan to attend, please vote your shares
as soon as possible by completing and returning the enclosed proxy card. You can
also vote through the Internet or by telephone by following the instructions
given on the proxy card. If you hold your shares in 'street name,' you should
instruct your broker how to vote in accordance with your voting instruction
form.
If you plan to attend the meeting, please request an admission ticket when
you vote.
Sincerely,
Charles R. Shoemate
This proxy statement is dated [INSERT DATE] and is first being mailed to
stockholders on or about [INSERT DATE].
<PAGE>
BESTFOODS
700 SYLVAN AVENUE
INTERNATIONAL PLAZA
ENGLEWOOD CLIFFS, NEW JERSEY 07632-9976
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
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<S> <C>
DATE: , 2000
TIME: 9:00 a.m.
PLACE:
ITEMS OF BUSINESS: 1. To consider and vote upon a proposal to adopt the
Agreement and Plan of Merger, dated as of June 6, 2000, as
amended as of July 7, 2000, by and among Unilever PLC,
Unilever N.V., Conopco, Inc., Titan Acquisition Company
and Bestfoods, under which Titan Acquisition Company
will be merged with and into Bestfoods and each share of
Bestfoods common stock, par value $0.25, outstanding
immediately prior to the merger (other than shares held
by Bestfoods, Unilever PLC and Unilever N.V., Conopco,
Inc. or Titan Acquisition Company, which will be
canceled, and other than shares with respect to which
appraisal rights are perfected) will be converted into
the right to receive $73.00 per share in cash, without
interest, upon surrender of a certificate formerly
representing that share.
2. To transact such other business as may properly come
before the special meeting or any adjournment or
postponement of the special meeting.
RECORD DATE: Only those persons who were holders of record of Bestfoods
common stock and Bestfoods Series B preferred stock at the
close of business on [INSERT DATE] will be entitled to
notice of, and to vote at, the special meeting and any
adjournment or postponement of the special meeting.
APPRAISAL RIGHTS: Under Delaware law, appraisal rights will be available to
Bestfoods stockholders who do not vote in favor of adoption
of the merger agreement. In order to exercise the appraisal
rights, Bestfoods stockholders must follow the procedures
required by Delaware law, which are summarized under
'Dissenters' Rights of Appraisal' in the accompanying proxy
statement.
VOTING: Your vote is important. Whether or not you expect to attend
the meeting, please ensure that your vote will be counted by
voting by the Internet, by telephone, or by signing, dating
and returning your proxy card in the prepaid envelope
provided. If you hold your shares in 'street name,' please
instruct your broker how to vote in accordance with your
voting instruction form.
</TABLE>
By Order of the Board of Directors,
Marjory A. Appel
Secretary
ENGLEWOOD CLIFFS, NEW JERSEY
[INSERT DATE]
<PAGE>
SUMMARY
This summary highlights selected information from this proxy statement and
may not contain all of the information that is important to you as a Bestfoods
stockholder. Accordingly, we encourage you to carefully read this entire
document and the documents to which it refers.
THE COMPANIES
(PAGE )
BESTFOODS
700 Sylvan Avenue
International Plaza
Englewood Cliffs, New Jersey 07632
Bestfoods and its subsidiaries constitute a worldwide business principally
engaged in one industry segment: consumer foods. We have three worldwide core
businesses: savory products, chiefly under the Knorr brand; dressings, chiefly
under the Hellmann's brand; and food service (catering). We also have several
important regional businesses including: baking, starches (basic nutritious
foods), desserts and bread spreads.
UNILEVER
Unilever PLC
Unilever House
P. O. Box 68
Blackfriars
London EC4P 4BQ
England
Unilever N.V.
Weena 455
3013AL Rotterdam
The Netherlands
The Unilever group has two parent companies, Unilever PLC and Unilever N.V.,
which operate as nearly as is practicable as a single entity. Both parent
companies have the same directors and are linked through an equalization
agreement. Unilever is one of the world's leading suppliers of fast moving
consumer goods in foods, household care, and personal products categories.
CONOPCO, INC.
390 Park Avenue
New York, New York 10022
Conopco, Inc., a corporation formed under the laws of the State of New York,
is a direct subsidiary of Unilever United States, Inc., the common stock of
which is owned 75% by Unilever N.V. and 25% by Unilever PLC. Unilever United
States, Inc. is a holding company for all of Unilever's principal operations in
the United States. Conopco, Inc.'s operating divisions consist of most of the
consumer products operations of Unilever conducted in the United States.
TITAN ACQUISITION COMPANY
390 Park Avenue
New York, New York 10022
Titan Acquisition Company, a Delaware corporation, is a wholly owned
subsidiary of Conopco, Inc. formed solely for the purpose of effecting the
merger with Bestfoods and has not conducted any unrelated activities since its
organization.
THE SPECIAL MEETING
(PAGE )
Date, Time and Place. The special meeting will be held on [INSERT DATE], at
9:00 a.m., local time at [INSERT LOCATION].
Purpose. You will be asked to consider and vote upon a proposal to adopt the
merger agreement, dated as of June 6, 2000, as amended as of July 7, 2000, by
and among Unilever PLC, Unilever N.V., Conopco, Inc., Titan Acquisition Company
and Bestfoods. The merger agreement provides that Titan Acquisition Company will
merge into us, and we will become a wholly owned subsidiary of Conopco, Inc.
Each share of Bestfoods common stock you own will be converted into the right to
receive $73.00 in cash, without interest. Under Bestfoods' certificate of
incorporation, each share of Bestfoods Series B preferred stock will be
automatically converted into 4.37968 shares of Bestfoods common stock
immediately prior to completion of the merger, with each share of Bestfoods
common stock being converted into the right to receive $73.00 in cash, without
interest. However, you will have the right to demand appraisal rights and
receive the 'fair value' of your shares as determined under Delaware law. Shares
held by us, Unilever PLC, Unilever N.V., Conopco, Inc. and Titan Acquisition
Company will be canceled.
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The persons named in the accompanying proxy also will have discretionary
authority to vote upon other business, if any, that properly comes before the
special meeting and any adjournments or postponements of the special meeting,
including any adjournments or postponements for the purpose of soliciting
additional proxies to adopt the merger agreement.
Record Date and Voting Power (page ). You are entitled to vote at the
special meeting if you owned shares of Bestfoods common stock or Bestfoods
Series B preferred stock at the close of business on [INSERT DATE], the record
date for the special meeting. You will be entitled to one vote for each share of
Bestfoods common stock you owned on the record date and 4.37968 votes for each
share of Bestfoods Series B preferred stock which you have the right to vote.
There are [ ] shares of Bestfoods common stock and [ ] shares of
Bestfoods Series B preferred stock entitled to be voted at the special meeting.
Vote Required (page ). Adoption of the merger agreement requires the
affirmative vote of a majority of the voting power represented by the
outstanding shares of Bestfoods common stock and Bestfoods Series B preferred
stock entitled to be voted at the special meeting, voting together as a single
class. An aggregate of votes will be required to adopt the merger
agreement. Record holders of common stock and Series B preferred stock of
Bestfoods on the record date can vote at the meeting. If you own Bestfoods
common stock, failure to vote and broker non-votes will have the same effect as
a vote against adoption of the merger agreement.
If you participate in the Bestfoods Stock Fund or the ESOP component of the
Bestfoods Savings/Retirement Plan for Salaried Employees, or if you are entitled
to vote under the Bestfoods Special Benefits Trust, your proxy will instruct the
trustee of the Plan or Special Benefits Trust, as applicable, how to vote. If
you participate in the Plan and you have not indicated your choice on your proxy
card, the trustee will vote your shares held in the Plan, together with the
unallocated shares held by the trustee of the Plan, in proportion to the way
other participants in the Plan as a group have voted their shares. If you are
entitled to vote under the Bestfoods Special Benefits Trust and you have not
indicated your choice on your proxy card, the trustee will vote your shares held
in the Special Benefits Trust in proportion to the way the other participants in
the Special Benefits Trust as a group have voted their shares. Thus, by
returning your completed proxy, you will direct the voting of your own shares as
well as the vote by the trustee with respect to unallocated shares and allocated
shares for which no instructions are received.
Share Ownership of Directors and Executive Officers (page ). As of
[INSERT DATE], 2000, our directors and executive officers owned less than [ ]%
of the shares of Bestfoods common stock and less than [ ]% of the shares of
Bestfoods Series B preferred stock entitled to vote at the special meeting,
together representing less than % of the total votes entitled to be cast at
the special meeting. Each of them has advised us that he or she plans to
vote all of his or her shares in favor of adoption of the merger agreement.
Voting and Proxies (page ). You may vote (1) by returning the enclosed
proxy, (2) through the Internet or by telephone as outlined on the enclosed
proxy card or (3) by appearing at the special meeting. You should not send any
stock certificates with your proxy. A letter of transmittal with instructions
for the surrender of certificates formerly representing Bestfoods common stock,
which will also include the procedures for electronic delivery of stock, will be
mailed to you as soon as practicable after completion of the merger.
Revocability of Proxy (page ). If you execute and return a proxy, you may
revoke that proxy at any time before it is voted in any one of the following
three ways:
filing with the Secretary of Bestfoods, at or before the special meeting, a
written notice of revocation which is dated a later date than the proxy,
sending a later-dated proxy relating to the same shares to the Secretary of
Bestfoods, at or before the special meeting or
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attending the special meeting and voting in person by ballot.
Simply attending the special meeting without voting will not constitute
revocation of a proxy.
Bestfoods' Recommendation to Stockholders (page ). Your board of
directors unanimously recommends that stockholders vote FOR adoption of the
merger agreement at the special meeting. Officers (including two who are
directors) of Bestfoods have interests in the merger that are different from,
or in addition to, their interests as Bestfoods stockholders, including
with respect to the receipt of certain payments, which may create possible
conflicts of interest. These interests are summarized under 'The Merger
-- Interests of Certain Persons in the Merger; Possible Conflicts of Interest.'
THE MERGER
(PAGE )
Structure of The Merger (page ). Under the terms and conditions of the
merger agreement, Titan Acquisition Company, a wholly owned subsidiary of
Conopco, Inc., will be merged with and into Bestfoods. Upon completion of the
merger, we will remain in existence as a wholly owned subsidiary of Conopco,
Inc.
Merger Consideration (page ). Upon completion of the merger, each share
of Bestfoods common stock will be converted into the right to receive $73.00 in
cash, without interest. Under Bestfoods' restated certificate of incorporation,
each share of Bestfoods Series B preferred stock will be automatically converted
into 4.37968 shares of Bestfoods common stock immediately prior to the
completion of the merger, and upon the completion of the merger, each share of
Bestfoods common stock will be converted into the right to receive $73.00 in
cash, without interest. Treasury shares, shares of Bestfoods common stock owned
by Unilever PLC, Unilever N.V., Conopco, Inc. and Titan Acquisition Company, and
shares with respect to which appraisal rights are perfected, will not be
converted into the right to receive $73.00 per share in cash.
Closing of the Merger (page ). Before we can complete the merger, we must
satisfy a number of conditions. These include:
adoption of the merger agreement by a majority of the voting power
represented by the outstanding shares of Bestfoods common stock and
Bestfoods Series B preferred stock, voting together as a single class,
receipt of a decision under the European Union antitrust laws that the
merger is compatible with the European Union common market,
expiration or early termination of the applicable time period under United
States federal antitrust laws,
the absence of any legal prohibitions against the merger,
material compliance with our representations and obligations under the
merger agreement,
receipt of material consents and approvals and
approval of the merger agreement by the shareholders of Unilever PLC and
Unilever N.V.
We expect the merger to close shortly after all of the conditions to the
merger agreement have been satisfied or waived. We expect to complete the merger
during the fourth quarter of 2000, but we cannot be certain when or if the
conditions will be satisfied or waived.
Exchange Procedures (page ). As soon as practicable after completion of
the merger, the paying agent will mail a letter of transmittal with instructions
to all record holders of Bestfoods common stock as of the time of the completion
of the merger. YOU SHOULD NOT SURRENDER YOUR CERTIFICATES UNTIL YOU HAVE
RECEIVED THE LETTER OF TRANSMITTAL AND INSTRUCTIONS.
Opinion of Financial Advisors (page ). In deciding to approve the merger
agreement, our board of directors considered the opinions of Merrill Lynch,
Pierce, Fenner & Smith Incorporated and Salomon Smith Barney Inc., its financial
advisors, that the consideration to be paid in the merger is fair to the holders
of Bestfoods common stock from a financial point
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of view. These opinions are attached as Appendices B and C to this proxy
statement. We encourage you to read these opinions carefully.
Material Federal Income Tax Consequences (page ). The merger will be a
taxable transaction to you. For United States federal income tax purposes, you
will generally recognize gain or loss in the merger in an amount determined by
the difference between the cash you receive (other than cash that represents
interest you receive in connection with the exercise of appraisal rights) and
your tax basis in Bestfoods common stock. Because determining the tax
consequences of the merger can be complicated, you should consult your own tax
advisor in order to understand fully how the merger will affect you.
Regulatory Matters (page ). The merger will be reviewed by the European
Commission and in the United States and Canada. In addition, the merger will
also be subject to regulatory review in other jurisdictions.
It is anticipated that notice of the merger will be given to the European
Commission in July 2000 and the merger will then be subject to a possible two
phase review procedure: a first phase, consisting of a one month review, which
may be extended to six weeks if undertakings are offered to meet identified EC
Commission concerns, and a second phase, consisting of a more detailed review
which can take up to four further months if, at the end of the first phase, the
EC Commission still has doubts about the compatibility of the merger with the
European Union common market. During this review period the merger may not be
completed.
Under the provisions of the United States Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, the merger may not be completed until the
expiration of a 30-day waiting period following the filing of the notification
reports by both parties with the Department of Justice and the Federal Trade
Commission. That waiting period will be extended if a request for additional
information or documentary material is received from the Federal Trade
Commission or the Department of Justice. Unilever and Bestfoods each anticipate
filing notification reports under the HSR Act in July 2000. Accordingly, the
waiting period will expire 30 days later, or after a longer period if a request
is made for additional information or documentary material.
Also in July 2000, Bestfoods and Unilever will submit a short-form
pre-merger notification filing to the Canadian Commissioner of Competition with
a request for an advance ruling certificate.
Each of Unilever and Bestfoods is taking steps to comply with all other
applicable antitrust laws.
Under the merger agreement, each of Unilever and Bestfoods has agreed to use
its reasonable best efforts to take all steps necessary to avoid or eliminate
impediments under any antitrust laws asserted by any governmental entity to
enable the merger to be completed, including the disposition of assets other
than certain specified assets.
We cannot assure you that a challenge to the merger on antitrust grounds
will not be made or, if a challenge is made, of the result.
Accounting Treatment (page ). The merger will be treated as a 'purchase'
for accounting purposes.
Interests of Certain Persons in the Merger; Possible Conflicts of Interest
(page ). Officers of Bestfoods (including two who are directors) have
interests in the merger that are different from, or in addition to, their
interests as Bestfoods stockholders. These interests include:
all of our officers hold vested and unvested Bestfoods stock options to
acquire Bestfoods common stock. The merger agreement provides that all
outstanding Bestfoods stock options will be converted at the time of the
merger into the right to receive a cash payout equal to the difference
between the $73.00 merger consideration and the exercise price of Bestfoods
stock options,
all of our officers hold performance units that entitle the holder to
receive shares and cash if we meet performance targets. The merger
agreement provides that all outstanding Bestfoods performance units will be
converted at the time of the merger into the right to
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receive a cash payout equal to the sum of (i) the product of $73.00
multiplied by the percent with respect to which the performance unit
is earned or deemed earned (upon stockholder adoption of the merger
agreement) for its performance cycle and (ii) the excess, if any,
of $73.00 over the average of the high and low trading price of shares of
Bestfoods common stock on the first trading day of the year of the grant,
some of our officers hold restricted stock, the restrictions upon which
will lapse at the time of the Bestfoods stockholder adoption of the merger
agreement and the restricted stock will be converted at the time of the
merger into the right to receive a cash payout equal to the $73.00 merger
consideration,
under the terms of our officers' respective severance agreements with
Bestfoods, if their employment is terminated by Bestfoods involuntarily
other than for 'cause' or by the officer for 'good reason,' each as defined
in the severance agreement, during the two year period following
stockholder adoption of the merger agreement, our officers will be entitled
to receive specified severance payments and benefits and
under the terms of some Bestfoods benefit and retirement plans, including
under the ESOP component of the Bestfoods Savings/Retirement Plan for
Salaried Employees, our officers may be entitled to accelerated vesting and
additional benefits.
Under the merger agreement, all rights to indemnification and exculpation
from liabilities for acts or omissions occurring at or prior to completion of
the merger now existing in favor of our officers and directors as provided in
our certificate of incorporation, by-laws and in certain indemnification
agreements will be assumed by the surviving corporation in the merger. In
addition, Unilever will maintain directors' and officers' liability insurance on
behalf of those directors and officers that are currently covered by our
existing directors' and officers' liability insurance.
As of [INSERT DATE], the officers of Bestfoods (including two who are
directors) together owned a total of [ ] shares of Bestfoods common stock
and [ ] shares of Bestfoods Series B preferred stock. In addition to the
$73.00 they will receive for each of these shares (with each share of Bestfoods
Series B preferred stock converted into 4.37968 shares of Bestfoods common
stock), these officers will receive payments of an aggregate of approximately
$ for their stock options, an aggregate of approximately $ for their
performance units and an aggregate of approximately $ for their restricted
stock. In addition, in the event of covered terminations under their severance
agreements, the officers could receive up to $ , in the aggregate.
Termination of the Merger Agreement (page ).
1. The parties may agree to terminate the merger agreement without completing
the merger, even after the stockholders of Bestfoods have approved the
merger.
2. Either Unilever or Bestfoods may terminate the merger agreement if:
the merger is not completed by March 6, 2001,
any law or ruling prohibiting the completion of the merger has become final
and cannot be appealed,
the holders of a majority of the voting power represented by the
outstanding shares of Bestfoods common stock and Bestfoods Series B
preferred stock, voting together as a single class, do not adopt the merger
agreement at the special meeting of the stockholders,
the shareholders of Unilever PLC or Unilever N.V. have not approved the
merger agreement or
the other party materially breaches its covenants under the merger
agreement.
3. We may terminate the merger agreement if Unilever, Conopco, Inc. or Titan
Acquisition Company materially breaches its representations or warranties
under the merger agreement.
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4. Unilever may terminate the merger agreement if:
we breach our representations or warranties under the merger agreement and
the breach would have a material adverse effect on us, or
our board of directors withdraws or changes its recommendation that our
stockholders vote to adopt the merger agreement, or recommends the approval
of a takeover proposal from a third party regarding a merger or similar
transaction involving Bestfoods or the acquisition of 20% or more of
Bestfoods common stock or a business that constitutes 20% or more of the
combined revenue, operating income or assets of Bestfoods and its
subsidiaries.
5. Our board of directors may terminate the merger agreement prior to the date
of the special meeting in response to an unsolicited superior proposal, after
taking account of any counterproposals by Unilever, if:
we deliver written notice to Unilever, three days prior to terminating the
merger agreement, advising Unilever that we have received an unsolicited
superior proposal, including the terms and conditions of, and the identity
of the person making, the superior proposal, and that we intend to accept
the superior proposal,
before or concurrently with the termination, we pay to Unilever the
$625 million termination fee and
simultaneously with the termination, we enter into a definitive agreement
containing the terms of the superior proposal.
Termination Fees if Merger Is Not Completed (page ). The merger agreement
requires us to pay Unilever a termination fee of $625 million if:
(a) Bestfoods or its stockholders receives a takeover proposal from a third
party, (b) thereafter Unilever or Bestfoods terminates the merger agreement
for the first or third reason described in paragraph 2 above under
' -- Termination of the Merger Agreement' and (c) within 12 months of the
termination we enter into any agreement, or complete a transaction,
relating to a takeover proposal (substituting 40% for all references to 20%
in the second reason in paragraph 4 above under ' -- Termination of the
Merger Agreement'),
Unilever terminates the merger agreement for the second reason described in
paragraph 4 above under ' -- Termination of the Merger Agreement' or
we terminate the merger agreement in the manner described in paragraph 5
above under ' -- Termination of the Merger Agreement.'
The merger agreement requires Unilever to pay us a termination fee of $100
million if the merger agreement is terminated because the shareholders of
Unilever PLC or Unilever N.V. have not approved the merger agreement.
APPRAISAL RIGHTS
(PAGE AND APPENDIX D)
Under Delaware law, our holders of common stock who do not vote for adoption
of the merger agreement and who comply with the other statutory requirements of
the Delaware General Corporation Law may elect to receive, in cash, the
judicially determined fair value of their shares of stock in lieu of the $73.00
merger consideration.
MARKET PRICE OF BESTFOODS COMMON STOCK
Our common stock is traded on the New York Stock Exchange under the symbol
'BFO.' On May 2, 2000, the last full trading day prior to our public
announcement of our board of directors' decision to reject Unilever's offer of
$66.00 per share in cash, the closing price of Bestfoods common stock as
reported on the New York Stock Exchange Composite Transactions Tape was
$50 9/16. On June 5, 2000, the last full trading day prior to the public
announcement of the merger agreement, the closing price of Bestfoods common
stock as reported on the New York Stock Exchange Composite Transactions Tape was
$63.00. On [INSERT DATE], the last full trading day prior to the date of this
proxy statement, the closing price for Bestfoods common stock as reported on the
New York Stock Exchange Composite Transactions Tape was $ .
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TABLE OF CONTENTS
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PAGE
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Summary..................................................... i
Questions and Answers About the Merger...................... 1
Forward-Looking Statements.................................. 4
The Companies............................................... 5
Bestfoods............................................... 5
Unilever PLC, Unilever N.V.............................. 5
Conopco, Inc............................................ 5
Titan Acquisition Company............................... 5
The Special Meeting......................................... 6
General................................................. 6
Record Date and Voting.................................. 6
Required Vote........................................... 6
Proxies; Revocation..................................... 7
Adjournments or Postponements........................... 7
The Merger.................................................. 8
Background of the Merger................................ 8
Bestfoods' Reasons for the Merger; Recommendation of the
Bestfoods Board of Directors........................... 11
Opinions of Bestfoods' Financial Advisors............... 13
Retention of Financial Advisors......................... 19
Certain Financial Projections........................... 19
Material Federal Income Tax Consequences................ 20
Governmental and Regulatory Approvals................... 21
Accounting Treatment.................................... 23
Treatment of the Bestfoods Series B Preferred Stock in
the Merger............................................. 23
Merger Financing........................................ 23
Interests of Certain Persons in the Merger; Possible
Conflicts of Interest.................................. 23
Indemnification of Directors and Officers............... 26
Amendment to Bestfoods Rights Agreement................. 27
The Merger Agreement........................................ 27
The Merger.............................................. 27
What You Will Receive................................... 27
Effective Time of the Merger............................ 27
Treatment of Stock Options and Other Rights............. 28
Payment for Shares...................................... 28
Representations and Warranties.......................... 29
Covenants; Conduct of the Business of Bestfoods Prior to
the Merger............................................. 29
No Solicitation of Transactions......................... 31
Employee Benefits....................................... 32
Efforts to Complete the Merger.......................... 33
Conditions to the Merger................................ 33
Termination............................................. 34
Termination Fees........................................ 35
Expenses................................................ 36
Amendment............................................... 36
Dissenters' Rights of Appraisal............................. 36
Security Ownership of Certain Beneficial Owners and
Management................................................ 39
Selected Financial Data of Bestfoods........................ 40
Independent Public Accountants.............................. 40
Stockholder Litigation...................................... 40
Stockholder Proposals....................................... 41
</TABLE>
vii
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<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Where You Can Find More Information......................... 41
Incorporation of Certain Documents by Reference............. 41
APPENDIX A -- Agreement and Plan of Merger by and among
Unilever PLC, Unilever N.V., Conopco, Inc.,
Titan Acquisition Company and Bestfoods and
Amendment No. 1 thereto....................... A-1
APPENDIX B -- Opinion of Merrill Lynch, Pierce, Fenner &
Smith Incorporated............................ B-1
APPENDIX C -- Opinion of Salomon Smith Barney Inc........... C-1
APPENDIX D -- Delaware General Corporation Law Section
262........................................... D-1
</TABLE>
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QUESTIONS AND ANSWERS ABOUT THE MERGER
The following questions and answers are intended to address briefly some
commonly asked questions regarding the merger. These questions and answers may
not address all questions that may be important to you as a Bestfoods
stockholder. Please refer to the more detailed information contained elsewhere
in this proxy statement, the appendices to this proxy statement and the
documents referred to or incorporated by reference in this proxy statement.
Q. WHAT IS THE PROPOSED TRANSACTION?
A. Unilever will acquire Bestfoods by merging a subsidiary of Unilever into
Bestfoods, thus making Bestfoods an indirect subsidiary of Unilever.
Q. WHY IS THE BESTFOODS BOARD OF DIRECTORS RECOMMENDING THE ADOPTION OF THE
MERGER AGREEMENT?
A. The Bestfoods board of directors believes that the merger is fair to and in
the best interests of Bestfoods and its stockholders. The Bestfoods board of
directors received opinions from both Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Salomon Smith Barney, Inc. that, as of June 6, 2000, and
based on and subject to the matters set forth in those opinions, the $73.00
per share in cash to be received by holders of Bestfoods common stock was
fair from a financial point of view to those holders. To review the Bestfoods
board of directors' reasons for recommending adoption of the merger
agreement, see pages through . Also, two members of the Bestfoods board
of directors who are employees of Bestfoods have additional interests in the
merger which may create possible conflicts of interest as discussed on
pages through .
Q. IF THE MERGER IS COMPLETED, WHAT WILL I RECEIVE FOR MY BESTFOODS COMMON STOCK
AND BESTFOODS SERIES B PREFERRED STOCK?
A. You will receive $73.00 in cash, without interest, for each share of
Bestfoods common stock you own, upon surrender of your stock certificates.
Under Bestfoods' restated certificate of incorporation, each share of
Bestfoods Series B preferred stock will be automatically converted into
4.37968 shares of Bestfoods common stock immediately prior to completion of
the merger, with each share of Bestfoods common stock then being converted
into the right to receive $73.00 in cash upon completion of the merger.
Q. WHEN IS THE MERGER EXPECTED TO BE COMPLETED?
A. We are working toward completing the merger as quickly as possible. The
merger cannot be effected until a number of conditions are satisfied. The
most important conditions are (i) adoption of the merger agreement by
Bestfoods stockholders at the special meeting, (ii) compliance with European
Commission merger regulations, (iii) compliance with United States federal
and other foreign antitrust laws, and (iv) approval of the merger agreement
by the shareholders of Unilever PLC and Unilever N.V.
Q. WHO IS ENTITLED TO VOTE AT THE SPECIAL MEETING?
A. Holders of record of Bestfoods common stock and of Bestfoods Series B
preferred stock as of the close of business on [INSERT DATE] are entitled to
vote at the special meeting. Each Bestfoods stockholder is entitled to one
vote for each share of Bestfoods common stock owned. Holders of record of
Bestfoods Series B preferred stock are also entitled to vote at the special
meeting, together with the holders of Bestfoods common stock as a single
class. Each holder of Bestfoods Series B preferred stock is entitled to
4.37968 votes for each share of Bestfoods Series B preferred stock owned.
Participants in the Bestfoods Stock Fund or the ESOP component of the
Bestfoods Savings/Retirement Plan for Salaried Employees, and Bestfoods
stockholders entitled to vote under the Bestfoods Special Benefits Trust,
will be entitled to instruct the trustee of the Plan or Special Benefits
Trust how to vote.
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Q. WHAT VOTE IS REQUIRED FOR THE BESTFOODS STOCKHOLDERS TO ADOPT THE MERGER
AGREEMENT?
A. In order for the merger agreement to be adopted, holders of a majority of the
outstanding voting power represented by the Bestfoods shares entitled to vote
at the special meeting, voting as a single class, must vote FOR adoption of
the merger agreement.
Q. WHAT DO I NEED TO DO NOW?
A. After carefully reading and considering the information contained in this
proxy statement, please vote your shares of Bestfoods common stock and
Bestfoods Series B preferred stock as soon as possible. You may vote your
shares (1) by returning the enclosed proxy, (2) through the Internet or by
telephone as outlined on the enclosed proxy card, or (3) by appearing at the
special meeting of stockholders. Your proxy materials include detailed
information on how to vote.
Q. IF MY SHARES ARE HELD FOR ME BY MY BROKER, WILL MY BROKER VOTE THOSE SHARES
FOR ME?
A. Your broker will vote your Bestfoods shares only if you provide instructions
to your broker on how to vote. You should instruct your broker on how to vote
your Bestfoods shares, using the instructions provided by your broker.
Q. CAN I CHANGE MY VOTE AFTER I HAVE MAILED MY PROXY CARD?
A. Yes. You can change your vote at any time before your proxy is voted at the
special meeting. You may revoke your proxy by notifying the Secretary of
Bestfoods in writing or by submitting a new proxy, in each case, dated after
the date of the proxy being revoked. In addition, your proxy may be revoked
by attending the special meeting and voting in person. However, simply
attending the special meeting without voting will not revoke your proxy. If
you have instructed a broker to vote your shares, you must follow the
instructions received from your broker to change your vote.
Q. DO I NEED TO ATTEND THE SPECIAL MEETING IN PERSON?
A. No. It is not necessary for you to attend the special meeting in order to
vote your Bestfoods shares.
Q. WILL I HAVE THE RIGHT TO HAVE MY BESTFOODS SHARES APPRAISED IF I DISSENT FROM
THE MERGER?
A. Yes, you will have appraisal rights for your shares of Bestfoods common
stock. You will not have appraisal rights for shares of Bestfoods Series B
preferred stock. If you wish to exercise your appraisal rights you must not
vote in favor of adoption of the merger agreement and you must strictly
follow the other requirements of Delaware law. A summary describing the
requirements you must meet in order to exercise your appraisal rights is
in the section entitled 'Dissenters' Rights of Appraisal' on pages
through of this proxy statement.
Q. SHOULD I SEND IN MY BESTFOODS STOCK CERTIFICATES NOW?
A. No. After the merger is completed, the paying agent will send you written
instructions for exchanging your Bestfoods stock certificates for the merger
consideration, which will include procedures for the electronic delivery of
shares.
Q. WILL I OWE TAXES AS A RESULT OF THE MERGER?
A. The merger will be a taxable transaction for all holders of Bestfoods common
stock. As a result, the cash you receive in the merger for your shares of
Bestfoods common stock and any cash you receive from exercising your
appraisal rights will be subject to United States federal income tax and also
may be taxed under applicable state, local, and other tax laws. In general,
you will recognize gain or loss equal to the difference between (1) the
amount of cash you receive (other than cash that represents interest you
receive in connection with the exercise of appraisal rights, which will be
taxable as ordinary income) and (2) the tax basis of your shares of Bestfoods
common stock. Refer to the section entitled 'The Merger -- Material Federal
Income Tax
2
<PAGE>
Consequences' on pages and of this proxy statement for a more detailed
explanation of the tax consequences of the merger. You should consult your
tax advisor on how specific tax consequences of the merger apply to you.
Q. WHAT OTHER MATTERS WILL BE VOTED ON AT THE SPECIAL MEETING?
A. Bestfoods does not expect to ask stockholders to vote on any other matter at
the special meeting.
Q. WHERE CAN I FIND MORE INFORMATION ABOUT BESTFOODS AND UNILEVER?
A. Bestfoods files periodic reports and other information with the SEC. Unilever
files Forms 20-F with, and furnishes Forms 6-K and other documents to, the
SEC. You may read and copy this information at the SEC's public reference
facilities. Please call the SEC at 1-800-SEC-0330 for information about these
facilities. This information is also available at the offices of the New York
Stock Exchange and, in the case of Bestfoods, at the Internet site maintained
by the SEC at http://www.sec.gov. For a more detailed description of the
information available, please see page .
Q. WHO CAN HELP ANSWER MY QUESTIONS?
A. If you have questions about the merger after reading this proxy statement,
you should contact D.F. King & Co. Inc. at (212) 269-5550.
3
<PAGE>
FORWARD-LOOKING STATEMENTS
This proxy statement includes and incorporates by reference statements that
are not historical facts. These statements are 'forward-looking statements' (as
defined in the Private Securities Litigation Reform Act of 1995) based on our
current plans and expectations relating to analyses of value, expectations for
anticipated growth in the future and future success under various efforts, and,
as such, these forward-looking statements involve uncertainty and risk. These
forward-looking statements are contained in the sections entitled 'The Merger--
Certain Financial Projections' and other sections of this proxy statement. These
forward-looking statements should be read in conjunction with our Annual Report
on Form 10-K for the year ended December 31, 1999 and our subsequent Quarterly
Reports on Form 10-Q. Our Form 10-K and Forms 10-Q are on file with the SEC, a
copy of which is available without charge upon written request to: Bestfoods,
700 Sylvan Avenue, International Plaza, Englewood Cliffs, New Jersey 07632,
Attention: Manager Corporate Secretarial Services. In addition, actual results
of the Company's operations and the transactions contemplated by this proxy
statement could differ materially from the forward-looking statements contained
in this proxy statement because of many factors, such as the inability to obtain
necessary antitrust approvals; actions of the U.S., foreign or local
governments; the inability to successfully integrate the businesses of Bestfoods
and Unilever; costs related to the merger; the failure to achieve the
contemplated synergies that could result from the merger; fluctuations in
currency values; competitive pricing; changes in consumption levels; costs;
political and social conditions in the economies and environments where
Bestfoods operates; the economic environment of the food and consumer product
manufacturing industry; and the general economic environment.
Other factors and assumptions not identified above could also cause the
actual results to differ materially from those set forth in the forward-looking
statements. We do not undertake any obligation to update the forward-looking
statements contained or incorporated in this proxy statement to reflect actual
results, changes in assumptions, or changes in other factors affecting these
forward-looking statements.
All information contained in this proxy statement with respect to Unilever
PLC, Unilever N.V., Conopco, Inc. and Titan Acquisition Company has been
supplied by Unilever PLC, Unilever N.V. and Conopco, Inc.
4
<PAGE>
THE COMPANIES
BESTFOODS
Bestfoods is a global business that engages, through its subsidiaries and
affiliates, in manufacturing and marketing consumer foods. Bestfoods operates
its business in three core categories -- savory products, chiefly under the
Knorr brand; dressings, chiefly under the Hellmann's brand; and foodservice, or
catering. Bestfoods operates in more than 60 countries. In 1999, approximately
60% of Bestfoods' sales came from international operations. Bestfoods is a
Delaware corporation and was incorporated in 1959 upon the merger of The Best
Foods, Inc. (incorporated in 1898) and Corn Products Refining Company
(incorporated in 1906). Bestfoods' executive offices are located at 700 Sylvan
Avenue, International Plaza, Englewood Cliffs, New Jersey 07632, telephone
(201) 894-4000.
UNILEVER PLC, UNILEVER N.V.
Unilever consists of two parent companies, Unilever PLC and Unilever N.V.
The parent companies operate as nearly as practicable as a single entity. Both
parent companies have the same directors and are linked through an equalization
agreement. Unilever's subsidiaries and affiliates operate in 88 countries
throughout the world as manufacturers, marketers and sellers of branded and
packaged consumer goods. Unilever is one of the world's leading suppliers of
fast moving consumer goods in foods, household care and personal products
categories. Unilever products are sold in nearly all countries throughout the
world and are manufactured in many of them. Unilever PLC is a public limited
company incorporated in England and Wales, and Unilever PLC was first
incorporated in 1894. Unilever PLC's executive offices are located at Unilever
House, P.O. Box 68, Blackfriars, London EC4P 4B2, England, telephone
011-44-207-822-5252. Unilever N.V. was incorporated under the laws of The
Netherlands in 1927. Unilever N.V.'s executive offices are located at Weena 455,
3013 AL Rotterdam, The Netherlands, telephone 011-31-10-217-4000.
CONOPCO, INC.
Conopco, Inc., a corporation formed under the laws of the State of New York,
is a direct subsidiary of Unilever United States, Inc. Unilever United States,
Inc., the common stock of which is owned 75% by Unilever N.V. and 25% by
Unilever PLC, is a holding company for all of Unilever's principal operations in
the United States. Conopco, Inc.'s operating divisions consist of most of the
consumer products operations of Unilever conducted in the United States.
Conopco, Inc.'s principal executive offices are located at 390 Park Avenue, New
York, New York 10022, telephone (212) 888-1260.
TITAN ACQUISITION COMPANY
Titan Acquisition Company is a Delaware corporation formed by Conopco, Inc.
solely for the purpose of merging into Bestfoods and has not conducted any
unrelated activities since its organization. Titan Acquisition Company is a
wholly owned subsidiary of Conopco, Inc. The principal executive offices of
Titan Acquisition Company are located at 390 Park Avenue, New York, New York
10022, telephone (212) 888-1260.
5
<PAGE>
THE SPECIAL MEETING
GENERAL
This proxy statement is being furnished to Bestfoods stockholders as part of
the solicitation of proxies by the Bestfoods board of directors for use at a
special meeting to be held on [INSERT DATE], starting at 9:00 a.m., local time,
at [INSERT LOCATION]. The purpose of the special meeting is for the Bestfoods
stockholders to consider and vote upon a proposal to adopt the Agreement and
Plan of Merger, dated as of June 6, 2000, as amended as of July 7, 2000, by and
among Bestfoods, Unilever PLC, Unilever N.V., Conopco, Inc. and Titan
Acquisition Company. A copy of the merger agreement and the amendment thereto is
attached to this proxy statement as Appendix A. This proxy statement and the
enclosed form of proxy are first being mailed to Bestfoods stockholders on
[INSERT DATE].
RECORD DATE AND VOTING
The holders of record of Bestfoods common stock and of Bestfoods Series B
preferred stock as of the close of business on [INSERT DATE], the record date,
are entitled to receive notice of, and to vote at, the special meeting. On the
record date, there were [ ] shares of Bestfoods common stock and
[ ] shares of Bestfoods Series B preferred stock outstanding. Each share
of Bestfoods Series B preferred stock is entitled to cast 4.37968 votes at the
special meeting.
The holders of a majority of the voting power represented by the Bestfoods
shares entitled to vote on [INSERT DATE], represented in person or by proxy,
will constitute a quorum for purposes of the special meeting. A quorum is
necessary to hold the special meeting. Any shares of Bestfoods common stock held
in treasury by Bestfoods or by any of its subsidiaries are not considered to be
outstanding for purposes of determining a quorum. Once a share is represented at
the special meeting, it will be counted for the purpose of determining a quorum
at the special meeting and any adjournment or postponement of the special
meeting, unless the holder is present solely to object to the special meeting.
However, if a new record date is set for an adjourned special meeting, then a
new quorum will have to be established.
REQUIRED VOTE
Completion of the merger requires the adoption of the merger agreement by
the affirmative vote of the holders of a majority of the voting power
represented by the outstanding shares of Bestfoods common stock and shares of
Bestfoods Series B preferred stock, voting together as a single class. Each
outstanding share of Bestfoods common stock on [INSERT DATE] entitles the holder
to one vote at the special meeting. Each outstanding share of Bestfoods
Series B preferred stock on [INSERT DATE] entitles the holder to 4.37968 votes
at the special meeting. [ ] votes are required to adopt the merger agreement.
You may vote your shares (1) by returning the enclosed proxy, (2) through the
Internet or by telephone, as outlined on the enclosed proxy card or (3) by
appearing at the special meeting in order for your shares of Bestfoods stock to
be included in the vote. As of [INSERT DATE], 2000, the directors and executive
officers of Bestfoods owned, in the aggregate, [ ] shares of Bestfoods
common stock, or less than [ ]% of the outstanding shares of Bestfoods common
stock on that date, and owned, in the aggregate, [ ] shares of Bestfoods
Series B preferred stock, or less than [ ]% of the outstanding shares of
Series B preferred stock on that date. Together, the Bestfoods shares held by
the directors and executive officers represent less than % of the total votes
that may be cast at the special meeting. The directors and executive officers
have informed Bestfoods that they intend to vote all of their shares of
Bestfoods common stock and Bestfoods Series B preferred stock FOR adoption of
the merger agreement.
Under the rules of the New York Stock Exchange, Inc., brokers who hold
shares in street name for customers have the authority to vote on 'routine'
proposals when they have not received instructions from beneficial owners. Under
the rules of the New York Stock Exchange, Inc., brokers are precluded from
exercising their voting discretion with respect to the approval of non-routine
matters such as adoption of the merger agreement and thus, absent specific
instructions from the beneficial owner of such shares, brokers are not empowered
to vote these shares with respect to the approval of non-routine proposals
(i.e., 'broker non-votes'). Abstentions
6
<PAGE>
and properly executed broker non-votes will be treated as shares that are
present and entitled to vote at the special meeting for purposes of determining
whether a quorum exists and will have the same effect as votes against adoption
of the merger agreement.
PROXIES; REVOCATION
If you vote your shares of Bestfoods common stock or Bestfoods Series B
preferred stock by signing a proxy, your shares will be voted at the special
meeting as you indicate on your proxy card. If no instructions are indicated on
your signed proxy card, your shares of Bestfoods common stock will be voted FOR
adoption of the merger agreement. If you participate in the Bestfoods Stock Fund
or the ESOP component of the Bestfoods Savings/Retirement Plan for Salaried
Employees, or if you are entitled to vote under the Bestfoods Special Benefits
Trust, your proxy will instruct the trustee of the Plan or Special Benefits
Trust, as applicable, how to vote. If you participate in the Plan and you have
not indicated your choice on your proxy card, the trustee will vote your shares
held in the Plan, together with the unallocated shares held by the trustee of
the Plan, in proportion to the way other participants in the Plan as a group
have voted their shares. If you are entitled to vote under the Bestfoods Special
Benefits Trust and you have not indicated your choice on your proxy card, the
trustee will vote your shares held in the Special Benefits Trust in proportion
to the way the other participants in the Special Benefits Trust as a group have
voted their shares. Thus, by returning your completed proxy, you will direct the
voting of your own shares as well as the vote by the trustee with respect to
unallocated shares and allocated shares for which no instructions are received.
If you vote your shares of Bestfoods common stock or Bestfoods Series B
preferred stock through the Internet or by telephone, your shares will be voted
at the special meeting as instructed.
You may revoke your proxy at any time before the special meeting. A proxy
may be revoked prior to the vote at the special meeting by submitting a written
revocation to the Secretary of Bestfoods at 700 Sylvan Avenue, International
Plaza, Englewood Cliffs, New Jersey 07632, or by submitting a new proxy, in
either case, dated after the date of the proxy that is being revoked. In
addition, a proxy may also be revoked by voting in person at the special
meeting. Simply attending the special meeting without voting will not revoke
your proxy.
Your board of directors is not currently aware of any other business to be
brought before the special meeting. If, however, other matters are properly
brought before the special meeting or there is any adjournment or postponement
of the special meeting, the persons appointed as proxies will have discretionary
authority to vote the shares represented by duly executed proxies in accordance
with their discretion and judgment.
Officers and employees of Bestfoods may solicit proxies by telephone or in
person. However, they will not be paid for soliciting proxies. Bestfoods also
will request that persons and entities holding shares in their names or in the
names of their nominees that are beneficially owned by others send proxy
materials to and obtain proxies from those beneficial owners, and will reimburse
those holders for their reasonable expenses in performing those services.
Bestfoods has retained D.F. King & Co. Inc. to assist it in the solicitation of
proxies, using the means referred to above, at an anticipated cost of $25,000,
plus reimbursement of out-of-pocket expenses.
ADJOURNMENTS OR POSTPONEMENTS
Although it is not expected, the special meeting may be adjourned or
postponed for the purpose of soliciting additional proxies. Any adjournment or
postponement may be made without notice, including by an announcement made at
the special meeting, by approval of the holders of a majority of the voting
power represented by the outstanding shares of Bestfoods stock present in person
or represented by proxy at the special meeting, whether or not a quorum exists.
Any signed proxies received by Bestfoods will be voted in favor of an
adjournment or postponement in these circumstances unless a written note on the
proxy by the stockholder directs otherwise. Any adjournment or postponement of
the special meeting for the purpose of soliciting additional proxies will allow
Bestfoods stockholders who have already sent in their proxies to revoke them at
any time prior to their use.
7
<PAGE>
THE MERGER
BACKGROUND OF THE MERGER
Several factors have led to consolidation pressures in the food industry in
recent years, including slower growth rates in the food sector, rapid
consolidation in retail grocery store chains and fierce competition between
branded food manufacturers and private-label manufacturers.
Dating as far back as the 1980's, Bestfoods has maintained a consistent
strategy of seeking growth through strategic acquisitions. Nearly one-half of
Bestfoods' growth has traditionally come from strategic acquisitions. Bestfoods
has primarily sought acquisitions of small and medium-sized
companies -- companies with strong brands and focused product lines to be
integrated into Bestfoods' international distribution system.
Beginning in 1992, Bestfoods engaged in intermittent exploratory discussions
at the highest levels with a number of major participants (not including
Unilever) in the food industry regarding potential business combinations. While
the prospect of a business combination had been on the list of possible
considerations for Bestfoods, Bestfoods remained interested only in a
combination which would fit within the framework of the company's strategic
vision of becoming the best international food company in the world. None of
those discussions resulted in any negotiations or in any agreements or
understandings being reached.
In 1999, Bestfoods began discussions with one consumer food company
regarding a potential stock-for-stock 'merger of equals.' These discussions
progressed, and the Bestfoods board of directors held a number of meetings to
analyze the potential transaction. The parties conducted a mutual due diligence
review and engaged in negotiations. However, ultimately they could not reach
agreement on a number of issues, and those discussions terminated. Bestfoods
thereafter began periodic discussions about possible combinations with other
similarly-sized consumer foods companies that continued into the spring of 2000.
On April 20, 2000, C.R. Shoemate, the Chairman and Chief Executive Officer
of Bestfoods, received a telephone call from Niall FitzGerald, the Chairman of
Unilever PLC, and Anthony Burgmans, the Chairman of Unilever N.V. In that
telephone call, Mr. FitzGerald and Mr. Burgmans made an oral all cash proposal
for the outstanding shares of Bestfoods at between $61.00 and $64.00 per share.
Mr. FitzGerald and Mr. Burgmans asked to meet with Mr. Shoemate in person to
discuss their proposal. Mr. Shoemate responded that he did not believe a meeting
with Mr. FitzGerald and Mr. Burgmans was warranted before he discussed the offer
with the Bestfoods board of directors. Later that same day, Mr. Shoemate
received a letter from Mr. FitzGerald and Mr. Burgmans confirming the oral
proposal made earlier in the day. In the letter, Mr. FitzGerald and
Mr. Burgmans set out the basic terms of the proposal, requesting a meeting with
Mr. Shoemate prior to any meeting of the Bestfoods board of directors. Messrs.
FitzGerald and Burgmans also added that the offer was subject to receipt of
governmental and regulatory approvals, as well as to negotiation of a mutually
acceptable merger agreement.
The following day, Mr. Shoemate responded by telephone to Unilever's letter,
indicating that Bestfoods would study and submit the proposal to the Bestfoods
board of directors for review and consideration at a special meeting to be
convened as soon as the information relevant to the Bestfoods board of
directors' analysis of the Unilever proposal could properly be gathered. During
this conversation, Mr. Shoemate indicated that Unilever should provide Bestfoods
with any information beyond that which was contained in its letter that might be
relevant to the board of directors' full and fair consideration of Unilever's
proposal. Mr. Shoemate also assured Unilever that Bestfoods would take no
preclusive actions at the upcoming special meeting when the Unilever proposal
would be considered.
On April 26, 2000, Mr. FitzGerald called Mr. Shoemate to again request a
meeting in person prior to the Bestfoods board of directors meeting.
Mr. Shoemate informed Mr. FitzGerald that he would bring the Unilever proposal
to the Bestfoods board of directors at the meeting scheduled for May 2, 2000,
and that he did not think it was appropriate to meet prior to the Bestfoods
board of directors' consideration of Unilever's proposal.
8
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On April 27, 2000, Mr. FitzGerald and Mr. Burgmans sent another letter to
Mr. Shoemate, reiterating their belief that a face-to-face meeting with
Mr. Shoemate was important prior to the Bestfoods board of directors'
consideration of Unilever's proposal. Following receipt of that letter,
Mr. Shoemate called Mr. FitzGerald and, again, declined to meet with
Mr. FitzGerald and Mr. Burgmans prior to discussing the Unilever proposal with
the Bestfoods board of directors on the basis that Bestfoods had all of the
information necessary to evaluate Unilever's proposal. However, Mr. Shoemate
assured Mr. FitzGerald and Mr. Burgmans that the Bestfoods board of directors
would give full consideration to Unilever's proposal and, once more, invited
them to provide him with any additional information concerning the proposal.
Mr. FitzGerald and Mr. Burgmans sent another letter to Mr. Shoemate on April
28, 2000, stating that they wished to outline Unilever's objectives and explain
why Unilever believed that a transaction between the two companies would be
attractive to the constituencies of both Unilever and Bestfoods. In the letter,
Mr. FitzGerald and Mr. Burgmans requested that a copy of the letter be provided
to the Bestfoods board of directors.
On May 1, 2000, Mr. Shoemate received another letter from Mr. FitzGerald and
Mr. Burgmans. In that letter, Mr. FitzGerald and Mr. Burgmans increased the
offer by Unilever to $66.00 per share in cash, subject to the satisfaction of
certain conditions, including receipt of all applicable stockholder and
necessary regulatory approvals and the negotiation of a mutually satisfactory
merger agreement on an exclusive basis. They indicated that Unilever's $66.00
proposal would expire at 5:00 p.m. on May 4, 2000, unless negotiations had
commenced prior to that time.
On May 2, 2000, the Bestfoods board of directors held a special meeting to
consider Unilever's $66.00 proposal at which the Bestfoods financial advisors,
Merrill Lynch, Pierce, Fenner & Smith Incorporated and Salomon Smith Barney
Inc., and their legal advisors, Fried, Frank, Harris, Shriver & Jacobson, were
present. Bestfoods' senior management, financial advisors and legal counsel made
various presentations concerning the proposed transaction. At that meeting, the
Bestfoods board of directors determined that Unilever's $66.00 proposal was
financially inadequate and not in the best interests of Bestfoods and its
stockholders, given Bestfoods' successful business strategies and growth
prospects and, accordingly, unanimously voted to reject Unilever's $66.00
proposal.
Immediately following that meeting, Mr. Shoemate sent a letter to
Mr. FitzGerald and Mr. Burgmans indicating that the Bestfoods board of directors
had rejected Unilever's $66.00 proposal. In the letter, Mr. Shoemate noted that
the Bestfoods board of directors had determined that it was not opportune to
consider a sale of the company and that Unilever's $66.00 proposal would
preclude the Bestfoods stockholders from reaping the rewards inherent in
Bestfoods' progress and strategic positioning. Mr. Shoemate added that
Bestfoods' financial flexibility, operating strengths and size meant that
Bestfoods would be able to capitalize on the company's numerous attractive
growth opportunities that were often unavailable to others in the food industry.
Later that day, Bestfoods issued a press release publicly announcing the
determination of the Bestfoods board of directors and released a copy of the
letter that Mr. Shoemate had sent to Mr. FitzGerald and Mr. Burgmans.
On May 3, 2000, Unilever issued a press release confirming its proposal to
Bestfoods. In the press release, Unilever indicated it was disappointed with
Bestfoods' response to its proposal and unwillingness to discuss its proposal.
Unilever stated that it believed that Bestfoods should reconsider Unilever's
$66.00 proposal.
Following the May 2, 2000 Bestfoods board of directors meeting, Bestfoods
approached a number of consumer food companies with proposals for possible
strategic business combinations, including certain of those companies with which
it had held previous discussions.
At its regularly scheduled board meeting on May 16, 2000, the Bestfoods
board of directors renewed its discussions of Bestfoods' pursuit of a potential
business combination. The board of directors was presented with a legal analysis
by Fried, Frank, Harris, Shriver & Jacobson and a financial analysis by
representatives of Merrill Lynch and Salomon Smith Barney. The financial
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<PAGE>
analysis focused primarily upon a discussion of a number of potential strategic
combination transactions with the companies Bestfoods had approached and a
description of the product and geographic mix, the synergies, strategic fit and
focus, and market reaction that could result from each of the potential
transactions. The Bestfoods board of directors authorized management to continue
these discussions regarding the possibility of a strategic business combination.
Shortly after the May 16 meeting, one company advised Bestfoods that it was not
an appropriate time to discuss a business combination with Bestfoods.
During the remainder of the month of May 2000, Bestfoods continued
discussions with various companies not including Unilever concerning possible
combination transactions, and the Bestfoods board of directors met weekly via
telephone conference to discuss the status of the various proposed transactions.
In the case of one consumer foods company, discussions regarding a possible
combination ended before the companies began negotiating the significant terms
of a business combination, as the company decided that it did not wish to
proceed with further discussions with Bestfoods at that time.
In another situation, a confidentiality agreement was signed concerning a
possible acquisition of a consumer foods business by Bestfoods for a combination
of stock and cash. Business due diligence was conducted and negotiations focused
on valuation.
In another case, a confidentiality agreement was signed and negotiations
proceeded for a possible 'merger of equals' transaction whereby Bestfoods would
combine with a consumer foods company for consideration consisting of stock and
cash. The two companies engaged in mutual due diligence, with serious
negotiations of the terms of a possible transaction, and ultimately reached an
agreement on the significant principles of the proposed transaction. Bestfoods
also reached understandings with certain major stockholders of this company on
selected general principles of the proposed transaction.
On May 30, 2000, a representative of Merrill Lynch received a telephone call
from a representative of Goldman, Sachs & Co., Unilever's financial advisors. In
that telephone call, the representative of Goldman Sachs indicated that Unilever
was prepared to raise its proposal for Bestfoods from $66.00 per share to $72.00
per share. The following day, Mr. Shoemate received a letter from Mr. Burgmans
and Mr. FitzGerald of Unilever. In that letter, Mr. Burgmans and Mr. FitzGerald
indicated that they continued to be in favor of a combination of Bestfoods and
Unilever. Mr. Burgmans and Mr. FitzGerald also stated that they had re-examined
the financial assumptions and the synergies available from a possible
combination and were now prepared to pay $72.00 per share in cash. This offer
was subject to several conditions, including the negotiation of a definitive
merger agreement and receipt of applicable stockholder and necessary regulatory
approvals.
After discussing Unilever's $72.00 proposal on May 31, 2000 with Bestfoods'
legal and financial advisors and after discussing the offer at a special meeting
of the Bestfoods board of directors on June 1, 2000 by telephone, Mr. Shoemate
called Mr. FitzGerald and Mr. Burgmans, and informed them that Bestfoods
management would be willing to meet with them on Friday, June 2, 2000 to learn
more about the proposal and, if appropriate, to hold further discussions about
the possible combination and meet with senior members of Unilever's management.
Mr. Shoemate further indicated that Unilever would have the opportunity to
conduct financial and legal due diligence over the weekend. Mr. Shoemate
requested that Bestfoods be provided with Unilever's 'best and final offer' and
with a copy of a merger agreement ready for execution by Sunday night, June 4,
2000. Mr. Shoemate informed Mr. FitzGerald and Mr. Burgmans that he would
present Unilever's proposal to the Bestfoods board of directors at a special
meeting scheduled for 5:00 p.m. on Monday, June 5, 2000. On June 2, 2000,
Unilever and Bestfoods entered into a confidentiality agreement.
Over the weekend, senior members of Bestfoods' management team met with
representatives of Unilever to discuss possible synergies and to conduct
financial due diligence. Representatives of Fried, Frank, Harris, Shriver &
Jacobson, together with Bestfoods' management and in-house
10
<PAGE>
counsel, met with representatives of Cravath, Swaine & Moore, Unilever's legal
counsel, together with in-house counsel from Unilever, to comment upon a draft
merger agreement that had been furnished by Cravath, Swaine & Moore.
Representatives of Unilever also conducted a legal due diligence investigation
of Bestfoods.
At the same time, Bestfoods continued to negotiate definitive agreements
with one of the consumer foods companies with which it had been negotiating
earlier. Also during that time Bestfoods continued negotiations for the
acquisition of the consumer foods business mentioned above in an effort to reach
an agreement on price.
On Sunday night June 4, 2000, Unilever delivered a letter to Mr. Shoemate,
with a copy of a proposed merger agreement. In the letter, Unilever increased
its offer to $73.00 per share, conditioned on the execution of the merger
agreement. On the evening of June 4, 2000, Fried, Frank, Harris, Shriver &
Jacobson presented additional comments on the merger agreement to Cravath,
Swaine & Moore.
On Monday, June 5, 2000, at 5:00 p.m., the Bestfoods board of directors met
to consider Unilever's $73.00 proposal, the status of the other proposals being
negotiated by Bestfoods with respect to a potential business combination or
similar transaction and the possibility of not pursuing a transaction and
continuing to carry out the Bestfoods' strategic plan. Representatives of
Bestfoods' senior management and its legal and financial advisors made
presentations on the proposed Unilever merger, the other alternatives being
considered by the Bestfoods board of directors and reviewed the matters set
forth under ' -- Bestfoods' Reasons for the Merger; Recommendation of the
Bestfoods Board of Directors.' After considering the presentations and reviewing
the various factors relating to the alternative proposals, the board of
directors meeting was adjourned until the following morning.
On the morning of June 6, 2000, Bestfoods had further discussions with one
of the consumer foods companies on the terms of a possible transaction. At this
meeting, that company revised the terms of the transaction under discussion. On
the same day, Bestfoods also had further discussions with Unilever. Following
these discussions, the Bestfoods board of directors met. Merrill Lynch and
Salomon Smith Barney rendered oral opinions, subsequently confirmed in writing,
that, as of the date of that meeting, the consideration to be received by the
holders of Bestfoods common stock in the merger was fair to those holders from a
financial point of view. The Bestfoods board of directors unanimously approved
the merger agreement with Unilever and the related transactions.
After the requisite approvals were obtained from the Bestfoods board of
directors, the merger agreement was executed on June 6, 2000, and the execution
of the merger agreement was announced that day.
BESTFOODS' REASONS FOR THE MERGER; RECOMMENDATION OF THE BESTFOODS BOARD OF
DIRECTORS
At a special board meeting on June 6, 2000, the Bestfoods board of directors
determined that the merger is advisable, fair to, and in the best interests of,
Bestfoods and its stockholders, and it unanimously approved the merger
agreement. Accordingly, the Bestfoods board of directors unanimously recommends
that holders of Bestfoods common stock and Bestfoods Series B preferred stock
vote FOR adoption of the merger agreement. Two members of the Bestfoods board of
directors who are executive officers have interests in the merger which may
create possible conflicts of interest. See ' -- Interests of Certain Persons in
the Merger; Possible Conflicts of Interest.'
In reaching its decision to approve the merger agreement and to recommend
that holders of Bestfoods common stock and Bestfoods Series B preferred stock
vote to adopt the merger agreement, the Bestfoods board of directors considered
the following factors that supported the Bestfoods board of directors'
recommendation:
the presentations by Merrill Lynch and Salomon Smith Barney on June 5,
2000,
the opinion of Merrill Lynch that, as of June 6, 2000, and based on and
subject to the matters set forth in that opinion, the $73.00 per share in
cash to be received by holders of
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<PAGE>
Bestfoods common stock under the merger agreement was fair from a financial
point of view to such holders. See ' -- Opinions of Bestfoods' Financial
Advisors,'
the opinion of Salomon Smith Barney that, as of June 6, 2000, and based on
and subject to the matters set forth in that opinion, the $73.00 per share
in cash to be received by holders of Bestfoods common stock under the
merger agreement was fair from a financial point of view to such holders.
See ' -- Opinions of Bestfoods' Financial Advisors,'
the fact that the merger consideration is all cash, which provides
certainty of value to holders of Bestfoods common stock and Bestfoods
Series B preferred stock compared to a transaction in which stockholders
would retain stock; the Bestfoods board of directors was aware that an all
cash transaction would be taxable to stockholders of Bestfoods for United
States federal income tax purposes whereas a stock transaction could
generally be structured in a manner that would not be taxable for United
States federal income tax purposes to the extent of the stock retained or
received,
the advice of financial advisors of the Bestfoods board of directors that
the trading value for shares of Bestfoods common stock was not likely to
exceed the merger price in the near term either if Bestfoods remained
independent or effected a combination with another food company under terms
that were being evaluated,
the potential stockholder value that could be expected to be generated from
the other options available to Bestfoods, including the options of
(1) remaining independent and continuing Bestfoods' strategic plan and
(2) pursuing the other strategic alternatives, as well as the risks and
uncertainties associated with those alternatives,
the current and historical market prices of Bestfoods common stock relative
to general market indices, and the fact that the $73.00 per share merger
consideration represented a 44% premium over the closing price of Bestfoods
common stock on the last trading day prior to the public announcement of
Unilever's $66.00 proposal,
prior presentations by Bestfoods management and Bestfoods' financial
advisors regarding the business, operations, properties and assets,
financial condition, competitive position, business strategy, and prospects
of Bestfoods (as well as the risks involved in achieving these prospects),
the nature of the consumer foods industry in which Bestfoods competes, and
current industry, economic and market conditions, both on an historical and
on a prospective basis,
the terms of the merger agreement, as reviewed by the Bestfoods board of
directors with its legal advisors, including:
-- the undertakings by Unilever with respect to obtaining regulatory
approvals and the agreement to divest assets, other than certain
specified assets, if necessary to obtain regulatory approvals,
-- the absence of a financing condition,
-- a termination fee of $100 million if Unilever shareholders do not
approve the transaction and
-- Bestfoods' ability to furnish information to and conduct negotiations
with a third party, terminate the merger agreement, and enter into an
agreement relating to a superior proposal under certain circumstances,
as more fully described under 'The Merger Agreement -- No Solicitation
of Transactions,' ' -- Termination' and ' -- Termination Fees' and
the fact that no other offers to acquire Bestfoods were made after the
public announcement of the unsolicited offer by Unilever on May 2, 2000,
and the Bestfoods board of directors' determination based on advice of
Bestfoods' financial advisors that the probability that a superior offer
would be made was insufficient to justify the risk of delay in proceeding
with the favorable transaction with Unilever.
12
<PAGE>
The Bestfoods board of directors also considered a variety of risks and
other possibly negative factors in deliberations concerning the merger. In
particular, the Bestfoods board of directors considered:
Bestfoods will no longer exist as an independent company and its
stockholders will forego the upside opportunity embedded in Bestfoods'
stand-alone business plan as well as possible growth with potential
combination partners and
under the terms of the merger agreement, we cannot solicit other proposals
and must pay to Unilever a termination fee if we terminate the merger
agreement under certain circumstances, which may prevent others from
proposing an alternative transaction that may be more advantageous to our
stockholders.
The Bestfoods board of directors also considered in its deliberations
concerning the merger the interests of officers of Bestfoods (including two who
are directors) in the merger described under ' -- Interests of Certain Persons
in the Merger; Possible Conflicts of Interest' and the effects of the merger on
Bestfoods' employees and other constituencies, and the terms of the merger
agreement relating to these matters.
The foregoing discussion addresses the material information and factors
considered by the Bestfoods board of directors in its consideration of the
merger. After considering these factors, the Bestfoods board of directors
concluded that the positive factors described above outweighed the negative
factors described above. In view of the variety of factors and the amount of
information considered, the Bestfoods board of directors did not find it
practicable to make specific assessments of or otherwise assign relative weights
to the specific factors and analyses considered in reaching its determination.
The determination to approve the merger agreement was made after consideration
of all of the factors and analyses as a whole. In addition, individual members
of the Bestfoods board of directors may have given different weights to
different factors.
OPINIONS OF BESTFOODS' FINANCIAL ADVISORS
Bestfoods retained Merrill Lynch and Salomon Smith Barney (together, the
'Financial Advisors'), to act as its financial advisors in connection with a
possible transaction involving Bestfoods.
Merrill Lynch is an internationally recognized investment banking and
advisory firm. As part of its investment banking business, Merrill Lynch is
continuously engaged in the valuation of businesses and securities in connection
with mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for corporate and other purposes. Bestfoods selected Merrill
Lynch to act as its financial advisor in connection with a possible transaction
involving Bestfoods based on Merrill Lynch's qualifications, expertise and
reputation, as well as upon its prior investment banking relationship with
Bestfoods.
Salomon Smith Barney is an internationally recognized investment banking
firm that provides financial services in connection with a wide range of
business transactions. As part of its business, Salomon Smith Barney regularly
engages in the valuation of companies and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and other purposes. Bestfoods selected Salomon Smith Barney to act as its
financial advisor in connection with a possible transaction involving Bestfoods
based on Salomon Smith Barney's qualifications, expertise and reputation, as
well as upon its prior investment banking relationship with Bestfoods.
OPINION OF MERRILL LYNCH. Merrill Lynch rendered to the Bestfoods board of
directors its written opinion, dated June 6, 2000 (the 'Merrill Lynch
Opinion'), that, as of that date, based upon and subject to the factors and
assumptions set forth in its written opinion, the merger consideration to be
received by the holders of Bestfoods common stock, other than Unilever and its
affiliates, pursuant to the merger was fair from a financial point of view to
such holders.
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<PAGE>
THE FULL TEXT OF THE MERRILL LYNCH OPINION, DATED AS OF JUNE 6, 2000, WHICH
SETS FORTH THE ASSUMPTIONS MADE, MATTERS CONSIDERED, AND QUALIFICATIONS AND
LIMITATIONS ON THE REVIEW UNDERTAKEN BY MERRILL LYNCH, IS ATTACHED AS
APPENDIX B TO THIS PROXY STATEMENT AND IS INCORPORATED BY REFERENCE. THE SUMMARY
OF THE MERRILL LYNCH OPINION SET FORTH IN THIS PROXY STATEMENT IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF THIS OPINION. HOLDERS OF BESTFOODS
COMMON STOCK ARE URGED TO READ THE OPINION IN ITS ENTIRETY. THE MERRILL LYNCH
OPINION WAS PROVIDED TO THE BESTFOODS BOARD OF DIRECTORS FOR ITS USE AND BENEFIT
IN CONNECTION WITH ITS CONSIDERATION OF THE MERGER AND IS DIRECTED ONLY TO THE
FAIRNESS FROM A FINANCIAL POINT OF VIEW OF THE MERGER CONSIDERATION TO THE
HOLDERS OF THE BESTFOODS COMMON STOCK. THE MERRILL LYNCH OPINION DOES NOT
ADDRESS THE MERITS OF THE UNDERLYING DECISION BY BESTFOODS TO ENGAGE IN THE
MERGER AND DOES NOT CONSTITUTE A RECOMMENDATION TO ANY BESTFOODS STOCKHOLDER AS
TO HOW THE STOCKHOLDER SHOULD VOTE ON THE ADOPTION OF THE MERGER AGREEMENT OR
ANY MATTER RELATED TO THE MERGER.
In arriving at its opinion, Merrill Lynch, among other things:
reviewed certain publicly available business and financial information
relating to Bestfoods that it deemed relevant,
reviewed certain information, including financial forecasts, relating to
the business, earnings, cash flow, assets, liabilities and prospects of
Bestfoods furnished to it by Bestfoods,
conducted discussions with members of senior management of Bestfoods
concerning the matters described above,
reviewed the market prices and valuation multiples for Bestfoods common
stock and compared them with those of certain publicly traded companies
that it deemed relevant,
reviewed the results of operations of Bestfoods and compared them with
those of certain publicly traded companies that it deemed relevant,
compared the proposed financial terms of the merger with the financial
terms of certain other transactions it deemed relevant,
participated in certain discussions and negotiations among representatives
of Bestfoods and Unilever and their financial and legal advisors,
reviewed a draft of the merger agreement dated as of June 5, 2000, in the
form provided to it, and
reviewed such other financial studies and analyses and took into account
such other matters as it deemed necessary, including its assessment of
general economic, market and monetary conditions.
In preparing its opinion, Merrill Lynch assumed and relied on the accuracy
and completeness of all information supplied or otherwise made available to it,
discussed with or reviewed by or for it, or publicly available. Merrill Lynch
did not assume any responsibility for independently verifying such information
nor did it undertake an independent evaluation or appraisal of any of the assets
or liabilities of Bestfoods, nor was it furnished with any such evaluation or
appraisal. In addition, Merrill Lynch did not assume any obligation to conduct
any physical inspection of the properties or facilities of Bestfoods. With
respect to the financial forecast information furnished to or discussed with
Merrill Lynch by Bestfoods, Merrill Lynch assumed that it had been reasonably
prepared and reflected the best currently available estimates and judgment of
Bestfoods' management as to the expected future financial performance of
Bestfoods. The Merrill Lynch Opinion expresses no view as to this information or
the assumptions on which it is based. Merrill Lynch also assumed that the final
form of the merger agreement would be substantially similar to the last draft
reviewed by it, which is the case.
The Merrill Lynch Opinion is necessarily based upon market, economic, and
other conditions as they existed and could be evaluated on, and on the
information made available to Merrill Lynch as of the date of such opinion.
In connection with the Merrill Lynch Opinion, Merrill Lynch was not
requested to, and did not, solicit third party indications of interest in the
possible acquisition of all or part of Bestfoods.
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<PAGE>
At the request of Bestfoods, however, Merrill Lynch did participate in
discussions with third parties to determine their interest in possible
alternative transactions with Bestfoods. The Merrill Lynch Opinion expresses
no view as to, and does not address, the relative merits of the merger as
compared to any alternative business strategies that might exist for
Bestfoods or the effect of any other transaction in which Bestfoods
might engage.
Merrill Lynch has acted as financial advisor to the Bestfoods board of
directors in connection with the merger and will receive a fee from Bestfoods
for its services, a significant portion of which is contingent upon the
completion of the merger. In addition, Bestfoods has agreed to indemnify Merrill
Lynch for certain liabilities arising out of its engagement. Merrill Lynch has,
in the past, provided financial advisory and financing services to Bestfoods and
Unilever and/or their affiliates, and may continue to do so and has received,
and may receive, fees for the rendering of such services. In addition, in the
ordinary course of its business, Merrill Lynch may actively trade Bestfoods
common stock and other securities of Bestfoods, as well as securities of
Unilever, for its own account and for the accounts of customers and,
accordingly, may at any time hold a long or short position in such securities.
OPINION OF SALOMON SMITH BARNEY. Salomon Smith Barney rendered to the
Bestfoods board of directors its written opinion, dated June 6, 2000 (the
'Salomon Smith Barney Opinion'), that, as of such date, based upon and subject
to the factors and assumptions set forth in such written opinion, the merger
consideration was fair to the holders of Bestfoods common stock, other than
Unilever and its affiliates, from a financial point of view.
THE FULL TEXT OF THE SALOMON SMITH BARNEY OPINION, DATED AS OF JUNE 6, 2000,
WHICH SETS FORTH THE ASSUMPTIONS MADE, MATTERS CONSIDERED, AND QUALIFICATIONS
AND LIMITATIONS ON THE REVIEW UNDERTAKEN BY SALOMON SMITH BARNEY, IS ATTACHED AS
APPENDIX C TO THIS PROXY STATEMENT AND IS INCORPORATED BY REFERENCE. THE SUMMARY
OF THE SALOMON SMITH BARNEY OPINION SET FORTH IN THIS PROXY STATEMENT IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF THE OPINION. HOLDERS
OF BESTFOODS COMMON STOCK ARE URGED TO READ THIS OPINION IN ITS ENTIRETY. THE
SALOMON SMITH BARNEY OPINION WAS PROVIDED TO THE BESTFOODS BOARD OF DIRECTORS
FOR ITS INFORMATION IN CONNECTION WITH ITS CONSIDERATION OF THE MERGER AND IS
DIRECTED ONLY TO THE FAIRNESS FROM A FINANCIAL POINT OF VIEW OF THE MERGER
CONSIDERATION TO THE HOLDERS OF THE BESTFOODS COMMON STOCK. THE SALOMON SMITH
BARNEY OPINION DOES NOT CONSTITUTE A RECOMMENDATION CONCERNING HOW STOCKHOLDERS
OF BESTFOODS SHOULD VOTE WITH RESPECT TO ADOPTION OF THE MERGER AGREEMENT OR THE
MERGER.
In connection with its opinion, Salomon Smith Barney, among other things:
reviewed certain publicly available information concerning Bestfoods and
certain other financial information concerning Bestfoods, including
financial forecasts, that were provided by Bestfoods,
discussed the past and current business operations, financial condition and
prospects of Bestfoods with certain officers and employees of Bestfoods and
considered such other information, financial studies, analyses,
investigations and financial, economic and market criteria that Salomon
Smith Barney deemed relevant.
In its review and analysis and in arriving at its opinion, Salomon Smith
Barney assumed and relied upon the accuracy and completeness of the information
reviewed by it for the purpose of its opinion and did not assume any
responsibility for independent verification of this information. With respect to
the financial forecasts of Bestfoods, Salomon Smith Barney was advised by the
management of Bestfoods that these forecasts had been reasonably prepared on
bases reflecting its best currently available estimates and judgments, and
Salomon Smith Barney expressed no opinion with respect to these forecasts or the
assumptions on which they are based. In addition, Salomon Smith Barney did not
assume any responsibility for any independent evaluation or appraisal of any of
the assets (including properties and facilities) or liabilities of Bestfoods.
Salomon Smith Barney was not asked to, and did not, solicit other proposals
to acquire Bestfoods. At the request of Bestfoods, however, Salomon Smith Barney
did participate in
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<PAGE>
discussions with third parties to determine their interest in possible
alternative transactions with Bestfoods. The Salomon Smith Barney Opinion
expresses no view as to, and does not address, the relative merits of the
merger as compared to any alternative business strategies that might exist
for Bestfoods or the effect of any other transaction in which Bestfoods
might engage.
The Salomon Smith Barney Opinion was necessarily based upon conditions as
they existed and could be evaluated on the date of the opinion. The Salomon
Smith Barney Opinion does not address Bestfoods' underlying business decision to
effect the merger. The Salomon Smith Barney Opinion is directed only to the
fairness, from a financial point of view, of the merger consideration to holders
of Bestfoods common stock and does not constitute a recommendation concerning
how holders of Bestfoods common stock should vote with respect to adoption of
the merger agreement or the merger.
Salomon Smith Barney has acted as financial advisor to the Bestfoods board
of directors in connection with the merger and will receive a fee for its
services, a significant portion of which is contingent upon completion of the
merger. In addition, Bestfoods has agreed to indemnify Salomon Smith Barney for
certain liabilities arising out of its engagement. In the ordinary course of
business, Salomon Smith Barney and its affiliates may actively trade the
securities of Bestfoods, as well as the securities of Unilever, for its own
account and for the accounts of customers and, accordingly, may at any time hold
a long or short position in such securities. In addition, Salomon Smith Barney
and its affiliates have previously rendered certain investment banking and
financial advisory services to Bestfoods and Unilever for which it has received
customary compensation. Salomon Smith Barney and its affiliates (including
Citigroup, Inc.) may have other business relationships with Bestfoods and
Unilever in the ordinary course of their businesses.
FINANCIAL ANALYSIS. The following is a summary of the material financial
analyses of the merger jointly presented by the Financial Advisors to the
Bestfoods board of directors in connection with their respective opinions to the
Bestfoods board of directors and does not purport to be a complete description
of the analyses performed by the Financial Advisors.
Summary of Key Financial Terms. The Financial Advisors reviewed the key
financial terms of the proposed merger, including selected premiums and selected
multiples. Based upon the cash offer price per share of Bestfoods common stock
of $73.00, the Financial Advisors noted that the equity value of the merger was
$20.3 billion and the firm value was $24.3 billion. The Financial Advisors also
noted that the merger consideration represented a premium of:
49% over the closing price of $49.13, as of April 19, 2000 (the date prior
to the original Unilever offer);
44% over the closing price of $50.56, as of May 2, 2000 (the date prior to
the announcement of Unilever's revised offer); and
22% over the highest closing price of $59.69 for the 52-week period ending
May 2, 2000 (reached on November 18, 1999).
Historical Trading Analysis. The Financial Advisors reviewed information
regarding historical stock price performance for the Bestfoods common stock. The
review noted that, for the 52-week period beginning on May 2, 1999, and ending
on May 2, 2000, the range for the Bestfoods common stock was from a daily
closing price low of $38.19 to a daily closing price high of $59.69. The review
also indicated that for the one-month, one-year, three-year, and five-year
periods ended May 2, 2000, the average per share closing prices of Bestfoods
common stock were $49.54, $49.58, $49.94 and $43.15, respectively.
Publicly-Traded Comparables. Using publicly available information, the
Financial Advisors calculated an implied value for Bestfoods, excluding any
change of control premium, based upon the comparison of certain financial
information relating to Bestfoods with corresponding financial information for
the following publicly traded branded food companies (the 'Comparable
Companies'):
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<PAGE>
<TABLE>
<S> <C>
Campbell Kellogg
Danone Nabisco
General Mills Nestle
Heinz Quaker Oats
Hershey Unilever
</TABLE>
The Comparable Companies were chosen because they are publicly-traded
companies with operations that for purposes of analysis may be considered
similar to certain operations of Bestfoods. The Financial Advisors calculated
and compared various financial multiples and ratios for Bestfoods with those of
the Comparable Companies, as indicated below. The multiples and ratios for
Bestfoods and each of the Comparable Companies were based on the most recent
publicly-available information and on estimates provided by Bestfoods'
management.
In conducting their analysis, the Financial Advisors calculated the
relationships of common stock prices to earnings per share ('P/E multiples') and
of P/E multiples to growth rates ('P/E to growth multiples') based on May 2,
2000, prices and estimated earnings per share ('EPS') and growth rates as of
that date. The Financial Advisors then (i) applied the P/E multiples derived to
Bestfoods' 2000 estimated EPS, and (ii) applied the P/E to growth multiples
derived to Bestfoods' growth rate and applied the product to Bestfoods' 2000
estimated EPS. This analysis yielded the following results:
<TABLE>
<CAPTION>
PARAMETER REFERENCE RANGE IMPLIED EQUITY VALUE
--------- --------------- --------------------
<S> <C> <C>
May 2, 2000 Forward P/E 18x - 22x $49 - $60
May 2, 2000 Forward P/E to Growth 1.6x - 2.2x $48 - $66
</TABLE>
The Financial Advisors also calculated P/E multiples and P/E to growth
multiples on dates within the last five years that yielded the highest such
multiples for the one year forward. The Financial Advisors then (i) applied the
P/E multiples derived to Bestfoods' 2000 estimated EPS, and (ii) applied the P/E
to growth multiples derived to Bestfoods' growth rate and applied the product to
Bestfoods' 2000 estimated EPS. These values were calculated without regard to
any premium that would result in a third party acquisition transaction. This
analysis yielded the following results, assuming that market conditions were to
return to the conditions prevailing on the dates these multiples were observed:
<TABLE>
<CAPTION>
PARAMETER REFERENCE RANGE IMPLIED EQUITY VALUE
--------- --------------- --------------------
<S> <C> <C>
Recent High Forward P/E 22x - 28x $60 - $76
Recent High Forward P/E to Growth 1.8x - 2.4x $54 - $72
</TABLE>
The Financial Advisors noted that no Comparable Company reviewed was
identical to Bestfoods and that, accordingly, an analysis of the foregoing
necessarily involves complex considerations and judgments concerning differences
in financial and operational characteristics of Bestfoods that could affect its
financial information and value relative to the companies to which it was being
compared.
Comparable Acquisition Transactions Analyses. The Financial Advisors
reviewed certain publicly available information regarding selected acquisition
transactions in order to conduct three different comparable acquisition
transactions analyses.
Food Sector Acquisitions: The Financial Advisors analyzed the financial
terms, to the extent publicly available, of selected acquisition transactions in
the food sector industry (collectively, the 'Comparable Food Transactions') that
the Financial Advisors deemed relevant in evaluating the merger. The Comparable
Food Transactions (with the date the transaction was announced) analyzed by the
Financial Advisors are as follows:
Unilever - Slim Fast Foods (04/12/00)
Group Danone - McKesson HBOC (McKesson Water Products Co.) (01/11/00)
Procter & Gamble Co. - IAMS Co. (08/11/99)
PepsiCo - Tropicana Products (Seagram Co. Ltd.) (07/20/98)
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The Pillsbury Company (Grand Metropolitan PLC) - Pet Incorporated
(01/09/95)
Campbell Soup Company - Pace Foods Inc. (11/30/94)
The Quaker Oats Company - Snapple Beverage Corp. (11/01/94)
Kohlberg, Kravis, Roberts & Co. - Borden, Inc. (09/12/94)
Sandoz SA - Gerber Products (05/22/94)
Campbell Soup Company - Arnotts Limited (10/12/92)
Philip Morris Companies, Inc. - Frela Maribou AS (09/28/92)
Philip Morris Companies, Inc. - Jacobs Suchard AG (06/22/90)
Kohlberg, Kravis, Roberts & Co. - RJR Nabisco (12/01/88)
Philip Morris Companies, Inc. - Kraft, Inc. (10/18/88)
Grand Metropolitan PLC - The Pillsbury Company (10/04/88)
Nestle SA - Buitoni Group SpA (03/24/88)
The Financial Advisors reviewed the prices paid in such transactions in
terms of the enterprise value as a multiple of last twelve months EBITDA. This
analysis resulted in a multiple reference range of 12x to 16x which was then
applied to Bestfoods' last twelve months EBITDA of $1.7 billion. This analysis
yielded an implied equity value range for Bestfoods common stock of $57.00 to
$80.00 per share.
Premiums Paid in Large Transactions: The Financial Advisors used certain
publicly available information to analyze the premiums paid in representative
acquisition transactions exceeding $10 billion in value that had occurred within
the last 2 years (collectively, the 'Comparable Size Transactions') that the
Financial Advisors deemed relevant in evaluating the merger. The Financial
Advisors reviewed the premiums paid based on the prices one day prior to the
transactions and derived a premium reference range of 20% to 60% which was then
applied to Bestfoods' closing stock price of $50.56 on May 2, 2000. This
analysis resulted in an implied equity value range for Bestfoods common stock of
$61.00 to $81.00 per share.
Premiums Paid in Large Unsolicited Transactions: The Financial Advisors used
certain publicly available information to analyze the premiums paid in
representative unsolicited transactions exceeding $5 billion in value that had
occurred within the last 5 years (collectively, the 'Comparable Unsolicited
Transactions') that the Financial Advisors deemed relevant in evaluating the
merger. The Financial Advisors reviewed the premiums paid based on the prices
one day prior to the transactions and derived a premium reference range of 30%
to 70% which was then applied to Bestfoods' closing stock price of $50.56 on
May 2, 2000. This analysis resulted in an implied equity value range for
Bestfoods common stock of $66.00 to $86.00 per share.
The Financial Advisors noted that no transaction reviewed was identical to
the merger and that, accordingly, an analysis of the foregoing necessarily
involves complex considerations and judgments concerning differences in
financial and operational characteristics of Bestfoods that could affect its
acquisition value relative to the transactions to which it was being compared.
Discounted Cash Flow Analysis. The Financial Advisors performed a discounted
cash flow analysis of the after-tax, unlevered free cash flow of Bestfoods based
upon Bestfoods' management's projections for the years 2000 through 2004. Using
these projections, the Financial Advisors initially calculated an implied equity
value range for Bestfoods (excluding any estimated synergies resulting from the
merger) by applying discount rates ranging from 9% to 11% per year, determined
by analyzing the weighted average cost of capital for selected publicly traded
companies in the branded food industry, to the projected cash flows and a
terminal value calculated using multiples ranging from 10x to 12x estimated 2004
EBITDA. This analysis resulted in an implied valuation range of $51.00 to $67.00
per share. Using Bestfoods' management's estimates of the synergies resulting
from the proposed merger with Unilever, and applying a perpetual growth rate of
2% to 3% to the estimated 2004 synergies and discount rates ranging from 9% to
11% per year, the Financial Advisors then calculated an incremental implied
present
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value of all of the synergies resulting from the merger. This analysis resulted
in an implied valuation range for the Unilever synergies of $25.00 to $39.00 per
share. Together, these analyses resulted in an aggregate implied equity
valuation range for the Bestfoods common stock including 100% of the value of
the Unilever synergies of $76.00 to $106.00 per share.
The preparation of a fairness opinion is a complex process involving various
determinations as to the most appropriate and relevant methods of financial
analysis and the application of these methods to the particular circumstances
and, therefore, is not necessarily susceptible to partial analysis or summary
description. Select portions of the analyses or of the summary set forth above,
without considering the analyses as a whole, could create an incomplete view of
the processes underlying the opinions of the Financial Advisors. In arriving at
its fairness determination, each Financial Advisor considered the results of all
these analyses and did not attribute any particular weight to any factor or
analysis considered by it; rather each Financial Advisor made its determination
as to fairness on the basis of its experience and professional judgment after
considering the results of all such analyses. In addition, in performing its
analyses, each Financial Advisor made numerous assumptions with respect to
industry performance, general business, economic, market and financial
conditions and other matters. No company or transaction used in the above
analyses as a comparison is directly comparable to Bestfoods or the contemplated
transaction. The analyses were prepared solely for purposes of the Financial
Advisors providing their respective opinions to the Bestfoods board of directors
as to the fairness of the merger consideration to the holders of Bestfoods
common stock and do not purport to be appraisals or necessarily reflect the
prices at which businesses or securities actually may be sold. Analyses based
upon forecasts of future results are not necessarily indicative of actual future
results, which may be significantly more or less favorable than suggested by
such analyses. Because such analyses are inherently subject to uncertainty,
being based upon numerous factors or events beyond the control of the parties or
their respective advisors, none of Bestfoods, Salomon Smith Barney, Merrill
Lynch or any other person assumes responsibility if future results are
materially different from those forecast. As described above, the Financial
Advisors' opinions to the Bestfoods board of directors were among many factors
taken into consideration by the Bestfoods board of directors in making its
determination to approve the merger agreement. The parties to the merger
agreement determined the amount of consideration to be paid pursuant to the
merger agreement as the result of arms' length negotiations, and the Financial
Advisors were not asked to, and did not, propose the specific amount to the
Bestfoods board of directors.
RETENTION OF FINANCIAL ADVISORS
Pursuant to Bestfoods' engagement letters with each of Merrill Lynch and
Salomon Smith Barney, upon completion of the merger, Bestfoods will pay Merrill
Lynch an aggregate transaction fee equal to 0.18% of the total consideration to
be received in the merger (i.e., the total consideration paid for Bestfoods'
equity securities, including amounts paid to holders of options, warrants and
convertible securities, plus the value of all indebtedness for borrowed money as
set forth in the most recent consolidated balance sheet of Bestfoods at the time
of the merger) reduced by the amount of any fees previously paid to Merrill
Lynch pursuant to its engagement letter, and Salomon Smith Barney an aggregate
transaction fee equal to 0.15% of the total consideration to be received in the
merger reduced by the amount of any fees previously paid to Salomon Smith Barney
pursuant to its engagement letter, for an aggregate fee for the Financial
Advisors of approximately $80.2 million using $20.3 billion as the equity value
of the merger and assumed indebtedness of $4 billion. Bestfoods has also agreed
to pay Merrill Lynch and Salomon Smith Barney their reasonable out-of-pocket
expenses, including the fees and disbursements of their attorneys, and to
indemnify Merrill Lynch and Salomon Smith Barney against certain liabilities,
including certain liabilities arising under the United States federal securities
laws.
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CERTAIN FINANCIAL PROJECTIONS
Bestfoods does not as a matter of course make public forecasts as to its
future financial performance. However, in connection with the preliminary
discussions concerning the feasibility of the merger, Bestfoods furnished
Unilever with certain financial goals and projections.
The goals and projections set forth below are derived or excerpted from
information provided by Bestfoods and are based on numerous assumptions
concerning future events. The goals and projections have not been adjusted to
reflect the effects of the merger. The goals and projections should be read
together with the information contained in 'Selected Financial Data of
Bestfoods.'
The goals and projections included preliminary operating goals and
projections for Bestfoods for the calendar years 2000, 2001 and 2002 (Bestfoods
reports its financial results based on a December 31 fiscal year end) developed
by Bestfoods' senior management in October 1999 (and not updated since that
date) and are predicated on their then preliminary assumptions for macroeconomic
conditions, gross profits and operating expenses. The goals and projections
exclude the results of Arisco Produtos Alimenticios S.A., which was acquired by
Bestfoods in February 2000. Bestfoods' calendar year 2000 goals estimated total
net sales of $9,335 million, operating income of $1,450 million and earnings per
share (fully diluted) of $2.73. Bestfoods' calendar year 2001 and 2002
projections, which Bestfoods informed Unilever are highly preliminary and
speculative, estimated total net sales of $9,942 million and $10,523 million,
respectively, operating income of $1,555 million and $1,713 million,
respectively, and earnings per share growth in a range of 10% - 12% per year.
THE GOALS AND PROJECTIONS WERE NOT PREPARED WITH A VIEW TO PUBLIC DISCLOSURE
OR COMPLIANCE WITH PUBLISHED GUIDELINES OF THE SEC OR THE GUIDELINES ESTABLISHED
BY THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS REGARDING PROJECTIONS
OR FORECASTS AND ARE INCLUDED ONLY BECAUSE THIS INFORMATION WAS PROVIDED TO
UNILEVER. THESE FORWARD-LOOKING STATEMENTS ARE SUBJECT TO CERTAIN RISKS AND
UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THE
GOALS AND PROJECTIONS. THE GOALS AND PROJECTIONS REFLECT NUMEROUS ASSUMPTIONS,
ALL MADE BY MANAGEMENT OF BESTFOODS, WITH RESPECT TO INDUSTRY PERFORMANCE,
GENERAL BUSINESS, ECONOMIC, MARKET AND FINANCIAL CONDITIONS AND OTHER MATTERS,
ALL OF WHICH ARE DIFFICULT TO PREDICT, AND MANY OF WHICH ARE BEYOND BESTFOODS'
CONTROL. ACCORDINGLY, THERE CAN BE NO ASSURANCE THAT THE ASSUMPTIONS MADE IN
PREPARING THE GOALS AND PROJECTIONS WILL PROVE ACCURATE, AND ACTUAL RESULTS MAY
BE MATERIALLY GREATER OR LESS THAN THOSE CONTAINED IN THE GOALS AND PROJECTIONS.
THE INCLUSION OF THE GOALS AND PROJECTIONS SHOULD NOT BE REGARDED AS AN
INDICATION THAT BESTFOODS CONSIDERED OR CONSIDERS THE GOALS AND PROJECTIONS TO
BE A RELIABLE PREDICTION OF FUTURE EVENTS, AND THE GOALS AND PROJECTIONS SHOULD
NOT BE RELIED UPON. NEITHER BESTFOODS NOR UNILEVER ASSUME ANY RESPONSIBILITY FOR
THE VALIDITY, REASONABLENESS, ACCURACY OR COMPLETENESS OF THE GOALS AND
PROJECTIONS. NEITHER BESTFOODS NOR UNILEVER HAS MADE, OR MAKES, ANY
REPRESENTATION TO ANY PERSON REGARDING THE INFORMATION CONTAINED IN THE GOALS
AND PROJECTIONS OR INTENDS TO UPDATE OR OTHERWISE REVISE THE GOALS AND
PROJECTIONS TO REFLECT CIRCUMSTANCES EXISTING AFTER THE DATE WHEN MADE OR TO
REFLECT THE OCCURRENCE OF FUTURE EVENTS EVEN IN THE EVENT THAT ANY OR ALL OF THE
ASSUMPTIONS UNDERLYING THE GOALS AND PROJECTIONS ARE SHOWN TO BE IN ERROR.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
General. The following is a summary of the material United States federal
income tax consequences of the merger to Bestfoods stockholders. This summary is
based upon the provisions of the Internal Revenue Code of 1986, as amended (the
'Code'), applicable current and proposed United States Treasury Regulations,
judicial authority, and administrative rulings and practice. Legislative,
judicial or administrative rules and interpretations are subject to change,
possibly on a retroactive basis, at any time and, therefore, the following
statements and conclusions could be altered or modified. It is assumed that the
shares of Bestfoods common stock are held as capital assets by a United States
person (i.e., a citizen or resident of the United States or a domestic
corporation). This discussion does not address all aspects of United States
federal income taxation that may be relevant to a particular Bestfoods
stockholder in light of that Bestfoods stockholder's personal investment
circumstances, or those Bestfoods stockholders subject to special treatment
under the United States federal income tax laws (for example, life insurance
companies,
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tax-exempt organizations, financial institutions, United States expatriates,
foreign corporations and nonresident alien individuals), Bestfoods stockholders
who hold shares of Bestfoods common stock as part of a hedging, 'straddle,'
conversion or other integrated transaction, or Bestfoods stockholders who
acquired their shares of Bestfoods common stock through the exercise of employee
stock options or other compensation arrangements. In addition, the discussion
does not address any aspect of foreign, state or local taxation or estate and
gift taxation that may be applicable to a Bestfoods stockholder.
Consequences of the Merger to Bestfoods Stockholders. The receipt of the
merger consideration in the merger (including any cash amounts received by
Bestfoods stockholders that exercise appraisal rights) will be a taxable
transaction for United States federal income tax purposes (and also may be a
taxable transaction under applicable state, local and other income tax laws). In
general, for United States federal income tax purposes, a holder of Bestfoods
common stock will recognize gain or loss equal to the difference between his or
her adjusted tax basis in Bestfoods common stock converted in the merger or
subject to appraisal rights, and the amount of cash received. Gain or loss will
be calculated separately for each block of shares converted in the merger (i.e.,
shares acquired at the same cost in a single transaction). The gain or loss will
be capital gain or loss (other than, with respect to the exercise of appraisal
rights, amounts, if any, which are or are deemed to be interest for federal
income tax purposes, which amounts will be taxed as ordinary income), and will
be short-term gain or loss if, at the effective time of the merger, the shares
of Bestfoods common stock so converted were held for one year or less. If the
shares were held for more than one year, the gain or loss would be long-term,
subject (in the case of stockholders who are individuals) to tax at a maximum
United States federal income tax rate of 20%.
Backup Tax Withholding. Under the United States federal income tax backup
withholding rules, unless an exemption applies, Unilever is required to and will
withhold 31% of all payments to which a Bestfoods stockholder or other payee is
entitled in the merger, unless the Bestfoods stockholder or other payee provides
a tax identification number (social security number, in the case of an
individual, or employer identification number, in the case of other
stockholders), and certifies under penalties of perjury that this number is
correct. Each Bestfoods stockholder and, if applicable, each other payee, should
complete and sign the substitute Form W-9 that will be part of the letter of
transmittal to be returned to the paying agent (or other agent) in order to
provide the information and certification necessary to avoid backup withholding,
unless an applicable exemption exists and is otherwise proved in a manner
satisfactory to the paying agent (or other agent). The exemptions provide that
certain Bestfoods stockholders (including, 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, however, he or she must submit a signed statement (such as a
Certificate of Foreign Status on Form W-8) attesting to his or her exempt
status. Any amounts withheld will be allowed as a credit against the holder's
United States federal income tax liability for that year.
THIS SECTION DOES NOT DISCUSS ALL ASPECTS OF UNITED STATES FEDERAL INCOME
TAXATION THAT MAY BE RELEVANT TO A PARTICULAR BESTFOODS STOCKHOLDER IN LIGHT OF
THE STOCKHOLDER'S PARTICULAR CIRCUMSTANCES AND INCOME TAX SITUATION. BESTFOODS
STOCKHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE UNITED
STATES FEDERAL, STATE AND LOCAL AND FOREIGN TAX CONSEQUENCES OF THE MERGER TO
THEM IN VIEW OF THEIR OWN PARTICULAR CIRCUMSTANCES.
GOVERNMENTAL AND REGULATORY APPROVALS
European Union Antitrust. The merger will be reviewed by the European
Commission. It is anticipated that notice of the merger will be given to the
European Commission in July 2000 and the merger will then be subject to a
possible two phase review procedure: a first phase, consisting of a one month
review, which may be extended to six weeks if undertakings are offered to meet
EC Commission concerns, and a second phase, consisting of a more detailed review
which can take up to four further months if, at the end of the first phase, the
EC Commission still has doubts about the compatibility of the merger with the
European Union common market. If those
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doubts cannot be resolved, the European Commission may withhold approval or
condition that approval on undertakings offered by the parties, including the
divestiture of assets and businesses. During this review period the merger may
not be completed.
United States Antitrust. Under the provisions of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the rules and regulations
promulgated thereunder (the 'HSR Act') applicable to the merger, the merger may
not be completed until the expiration of a 30-day waiting period following the
filing of the notification reports by both parties with the Department of
Justice and the Federal Trade Commission. That waiting period will be extended
if a request for additional information or documentary material is received from
the Federal Trade Commission or the Department of Justice. In that case, the
merger may not be completed until 20 days following the substantial compliance
with that request by both parties, unless the 20-day period is earlier
terminated by the Department of Justice or the Federal Trade Commission.
Unilever and Bestfoods each anticipate filing notification reports under the HSR
Act in July 2000, and, accordingly, the waiting period will expire 30 days
later, unless a request is made for additional information or documentary
material.
The Department of Justice and the Federal Trade Commission frequently
scrutinize the legality under the antitrust laws of transactions such as the
merger. At any time before or after the merger, the Department of Justice or the
Federal Trade Commission could take any action under the antitrust laws as
deemed necessary or desirable in the public interest, including seeking to
enjoin the merger or seeking divestiture of substantial assets of Unilever or
Bestfoods or their subsidiaries. Private parties and state attorneys general may
also bring actions under the antitrust laws challenging the merger.
Canada Regulatory Review. The merger is a 'notifiable transaction' for
purposes of Part IX of the Competition Act (Canada) (the 'Competition Act'). In
July 2000, Unilever and Bestfoods will submit a short-form pre-merger
notification filing to the Commissioner of Competition in respect of the merger
pursuant to section 114 of the Competition Act, together with a request for the
issuance of an advance ruling certificate pursuant to section 102 of the
Competition Act. Completion of the merger is subject to the expiration of a
14-day waiting period following the filing of the notification, unless the
Commissioner has within that time requested long form information to be supplied
under section 123 of the Competition Act. If long form information is requested,
the waiting period is extended for an additional 42 days.
Other. Bestfoods and Unilever each conduct business in numerous countries
throughout the world. Certain of these countries have mandatory premerger
notification requirements. In certain other countries the merger can be
completed, but the transaction cannot be implemented locally without regulatory
approval. The authorities in each country may review the merger to determine if
it is compatible with their national laws on merger control. If a national
authority concludes that the transaction is incompatible with applicable law, it
could withhold its approval or condition its approval of the merger locally on
the receipt of undertakings by the parties, including the divestiture of assets
or businesses.
There can be no assurance that a challenge to the merger on antitrust
grounds will not be made by antitrust authorities or, if a challenge is made, of
the result. Under the merger agreement, Unilever and Bestfoods have agreed to
use their reasonable best efforts to avoid or eliminate impediments under any
antitrust laws asserted by any governmental entity to enable the merger to be
completed, including the disposition of assets, other than certain specified
assets. See 'The Merger Agreement -- Efforts to Complete the Merger.' The merger
agreement requires the European Commission to have issued a decision declaring
the merger to be compatible with the European Union common market, and the
waiting period applicable to completion of the merger under the HSR Act to have
expired or been terminated before completion of the merger. With respect to
other competition, merger control, antitrust or similar approvals or waiting
periods, the merger agreement requires that these approvals or waiting periods
be obtained or expire or terminate before completion of the merger, if the
failure to obtain these approvals or have the waiting periods expire or be
terminated would reasonably be expected to materially and adversely
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affect the business of Unilever and Bestfoods following completion of the merger
or result in the commission of a criminal offense. See 'The Merger
Agreement -- Conditions to the Merger.'
Bestfoods and Unilever conduct business in a number of other foreign
countries, some of which have mandatory or voluntary merger notification
procedures. If any other approval or action is required, Bestfoods and Unilever
currently contemplate that such approval or action will be sought.
ACCOUNTING TREATMENT
The merger will be accounted for under the purchase method of accounting in
accordance with Accounting Principles Board Opinion No. 16, 'Business
Combinations,' as amended. Under this method of accounting, the purchase price
will be allocated to assets acquired and liabilities assumed based on their
estimated fair values at the completion of the merger (with the excess of the
purchase price after the allocations being recorded as goodwill).
TREATMENT OF THE BESTFOODS SERIES B PREFERRED STOCK IN THE MERGER
Under the terms of the Restated Certificate of Incorporation of Bestfoods,
dated January 4, 1999, each outstanding share of Bestfoods Series B preferred
stock will, without any action on the part of Bestfoods or any stockholder, be
automatically converted into 4.37968 shares of Bestfoods common stock
immediately prior to the completion of the merger. Following this conversion,
each share of the Bestfoods common stock will be converted into the right to
receive $73.00 in cash, without interest.
MERGER FINANCING
Unilever's obligations to complete the merger are not subject to its receipt
of financing arrangements. It is expected that Unilever will require
approximately $24.3 billion in order to complete the merger, including payments
to be made to Bestfoods stockholders and holders of Bestfoods stock options,
payments under certain Bestfoods employee benefit plans and contracts, the
refinancing of Bestfoods indebtedness, and the payment of fees and expenses.
Unilever has obtained commitments for a standby credit facility to provide the
necessary financing to satisfy the terms of the offer from a bank group led by
ABN-AMRO N.V., Deutsche Bank A.G. London, Goldman Sachs International and UBS
Warburg. In addition, Unilever currently anticipates obtaining funds to pay the
merger consideration through the sale of debt securities in the public and
private debt markets.
INTERESTS OF CERTAIN PERSONS IN THE MERGER; POSSIBLE CONFLICTS OF INTEREST
General. All of Bestfoods officers, including two who are directors of
Bestfoods have certain interests in the merger that are different from or in
addition to the interests of Bestfoods' stockholders generally. These interests
may create potential conflicts of interest. These additional interests relate to
provisions in the merger agreement or Bestfoods employee benefit plans and
arrangements regarding:
certain change in control severance agreements,
the treatment of outstanding Bestfoods stock options, restricted stock and
performance units under the Bestfoods equity plans and
the vesting of benefits under certain Bestfoods employee benefits and
deferred compensation plans by reason of the merger.
All of these additional interests, to the extent material, are described
below. Under each of the agreements and plans described below, adoption of the
merger agreement by Bestfoods stockholders will constitute a change of control,
unless otherwise noted. These individuals have, to the knowledge of Bestfoods,
no material interest in the merger apart from those of the Bestfoods
stockholders generally except as described below. The Bestfoods board of
directors was aware of
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these interests and considered them, in approving the merger agreement and the
transactions contemplated thereby.
Officer Severance Agreements. Bestfoods currently maintains severance
agreements with its officers intended to ensure the continued and dedicated
service of Bestfoods' officers in the regular course of business, or in the
event of an actual or threatened change in control. The severance agreements
provide for severance payments and benefits following terminations involuntarily
other than for 'cause' or voluntarily for 'good reason' within two years after a
'change in control' (each as defined in the severance agreement and any
amendments) or for terminations in anticipation of the change in control.
As of the date of the merger agreement, 22 officers were parties to the
severance agreements, including the following five named executive officers, two
of whom serve on the Bestfoods board of directors:
Charles R. Shoemate, chairman, president and chief executive officer and
director
Robert J. Gillespie, executive vice president and director
Bernard H. Kastory, senior vice president
Axel C. A. Krauss, senior vice president
Ian M. Ramsay, senior vice president
Pursuant to the severance agreements, upon the termination of the employment
of an officer other than for cause, death or disability, or by the officer for
good reason during the two-year period following a change in control, the
officer will be entitled to receive the following payments and benefits:
accrued but unpaid compensation and vacation,
a severance benefit equal to three times the sum of:
(1) his or her highest annual salary during any 12 consecutive months
within the 36 months immediately preceding termination and
(2) his or her highest annual bonus awarded for any of the three calendar
years immediately preceding the calendar year of termination,
additional benefit accruals under the applicable Bestfoods defined benefit
pension plan as if he or she had continued to be employed by Bestfoods for
three years and
continuation of coverage of all medical and insurance benefits (but
excluding any disability, business travel, or spending account plans) for
three years following termination.
The severance agreements also provide that, if any payments under the
severance agreements or otherwise would be subject to the excise tax under
Section 4999 of the Code, Bestfoods will provide an additional payment so that
the officer will retain an amount equal to the payments the officer would have
retained if the excise tax had not applied.
Under the severance agreements, termination of employment for 'cause' means:
willful engagement in conduct which involves dishonesty or moral turpitude
in connection with employment and which either:
(1) results in substantial personal enrichment of the officer at the
expense of Bestfoods or
(2) is demonstrably and materially injurious to the financial condition or
reputation of Bestfoods or
willful violation of the provisions of a confidentiality or non-competition
agreement.
Under the severance agreements, termination of employment for 'good reason'
means:
reduction in base salary,
relocation more than 35 miles from the current place of employment,
failure to maintain benefit plans and vacation accruals,
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reduction in any manner (which an executive reasonably considers important)
of title, job authorities or responsibilities,
failure of a successor to assume the obligations of the severance
agreements or
a purported termination with cause where the board of directors fails to
provide both written notice of termination and an opportunity to rebut the
board of directors' determination that termination is for cause.
In the merger agreement, Bestfoods has agreed to enter into letter
agreements with each of Bestfoods' five named executive officers prior to the
completion of the merger that amend the definition of good reason under each of
their severance agreements. The letter agreements will provide that:
during the six-month period immediately following the completion of the
merger, the named executive officer will not have good reason to terminate
employment with Bestfoods:
(A) due solely to the fact that Bestfoods will cease to be a public company
and will become a subsidiary of another corporation, so long as the
named executive officer retains his or her title and retains job
authorities and responsibilities consistent in all material respects
with those of his or her counterparts in the substantial subsidiaries
of Unilever, or
(B) due to the fact that the named executive officer does not receive
equity-based compensation or awards at least as beneficial as the named
executive officer received before the completion of the merger, so long
as the named executive officer is provided with equity-based
compensation which is comparable to that provided to similarly situated
employees of Unilever or its subsidiaries (as determined based upon
title, position, geographical location and comparability of business
unit size);
during the six-month period immediately following the completion of the
merger, the named executive officer's death or disability (as specified in
the severance agreement) will be deemed a termination of employment by the
named executive officer for good reason entitling the named executive
officer to all severance benefits and payments under the severance
agreement; and
during the ninety-day period following the six-month anniversary of the
completion of the merger, any voluntary termination by the named executive
officer will be deemed a termination of employment by the named executive
officer for good reason entitling the named executive officer to all
severance benefits and payments under the severance agreement.
Upon the close of the ninety-day period following the six-month anniversary,
the definition of good reason under the severance agreement in effect prior to
the execution of the letter agreement will continue to apply without the
modification described above. The letter agreements are not intended to limit
the grounds for which each named executive officer may terminate employment for
good reason under his or her severance agreement.
Key Employee Severance Agreements. Bestfoods currently maintains severance
agreements with certain of its key employees who are not officers intended to
ensure the continued and dedicated service of these employees in the event of an
actual or threatened change in control. The severance agreements provide for
severance payments and benefits following terminations involuntarily other than
for 'cause' or voluntarily for 'good reason' within two years after a 'change in
control' (each as defined in the severance agreement and any amendments) or for
terminations in anticipation of the change in control. As of the date of the
merger agreement, 40 key employees were parties to the severance agreements,
none of whom serve on the Bestfoods board of directors.
Pursuant to these severance agreements, upon the termination of the
employment of the executive other than for cause, death or disability, or by the
executive for good reason during the two-year period following a change in
control, the executive will be entitled to receive the following payments and
benefits:
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accrued but unpaid compensation and vacation,
a severance benefit equal to the sum of:
(1) his or her highest annual salary during any 12 consecutive months
within the 36 months immediately preceding termination and
(2) his or her highest annual bonus for any of the 3 calendar years
immediately preceding the calendar year of termination,
additional benefit accruals under the applicable Bestfoods defined benefit
pension plan as if he or she had continued to be employed by Bestfoods for
one year and
continuation of coverage of all medical and insurance benefits (but
excluding any disability, business travel, or spending account plans) for
one year following termination.
The key employee severance agreements include the same definitions of
'cause' and 'good reason' as provided under the officer severance agreements.
See '-- Officer Severance Agreements.'
Effect of the Merger on the Bestfoods Equity Plans. Under the equity-based
plans, upon a change in control of Bestfoods, the unvested stock options granted
under the equity-based plans will generally vest, the restrictions on restricted
stock will generally lapse, and the performance targets on performance units
will be deemed met. The aggregate numbers of shares of stock options, restricted
stock and performance units held by the named executive officers that will
become vested, have restrictions lapse, or have performance targets deemed met
in connection with the merger are [ ], [ ] and
[ ], respectively. The non-employee directors of Bestfoods do not
have stock options, restricted stock or performance units. For a discussion of
the consideration that holders of stock options, restricted stock and
performance units will receive in the merger, pursuant to the merger agreement,
see 'The Merger Agreement -- Treatment of Stock Options and Other Rights.'
Effect of the Merger on the Bestfoods Annual Incentive Plan. Under the
Bestfoods' Annual Incentive Plan, upon a change in control of Bestfoods, the
corporate 'Vision Targets' will be deemed met and the resulting aggregate
corporate pool will be established from which individual awards will be made.
Each previously approved participant will be eligible to receive an Annual
Incentive Plan payment and each participant who has a reserve account from prior
years will receive a lump-sum cash payment of the reserve account.
Effect of the Merger on the Bestfoods Deferred Stock Unit Plan. Under the
Bestfoods Deferred Stock Unit Plan, upon a change in control of Bestfoods,
Bestfoods will pay to each participant in a lump-sum cash payment an amount
equal to the value of the participant's account as of the date of the change in
control regardless of the participant's previous distribution election.
Effect of the Merger on the Bestfoods Cash Balance Pension Plan for Salaried
Employees. Under the Bestfoods Cash Balance Pension Plan for Salaried Employees,
participants who terminate employment with Bestfoods for any reason within two
years following a change in control will become fully vested in their accounts
under the plan.
Effect of the Merger on the Bestfoods Savings/Retirement Plan for Salaried
Employees. Under the employee stock ownership plan ('ESOP') component of the
Bestfoods Savings/Retirement Plan for Salaried Employees, upon the closing of
the merger, the outstanding ESOP loan will be repaid in full from the cash
consideration received with respect to unallocated ESOP shares, and the
remaining proceeds will then be allocated per capita to the eligible
participants in the plan. In addition, all participants will become fully vested
in their ESOP accounts.
Effect of the Merger on the Bestfoods Cash Balance Pension Plan for
International Employees. Under the Bestfoods Cash Balance Pension Plan for
International Employees, with respect to participants who have not terminated
service as international employees (as defined in the plan) as of the date of a
change in control, participants will become fully vested in their accounts
following five years of service rather than ten years of service.
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INDEMNIFICATION OF DIRECTORS AND OFFICERS
Unilever has agreed that all rights to indemnification and exculpation from
liabilities for acts or omissions occurring at or prior to the completion of the
merger as provided in the certificate of incorporation and by-laws of Bestfoods
and its subsidiaries as in effect at the time of the completion of the merger,
or in the indemnification agreements identified by Bestfoods in the disclosure
schedule attached to the merger agreement, will be assumed by the surviving
corporation and will survive the merger and continue in full force and effect in
accordance with their terms.
The merger agreement further requires that, for a period of six years after
completion of the merger, Unilever will maintain in effect the current policies
of directors' and officers' liability insurance on behalf of our directors and
officers that are currently covered by our existing directors' and officers'
liability insurance maintained by Bestfoods or policies of at least the same
coverage, except that Unilever is not required to pay aggregate annual premiums
in excess of $1.5 million.
AMENDMENT TO BESTFOODS RIGHTS AGREEMENT
In accordance with the merger agreement, as of June 6, 2000, Bestfoods has
amended its rights agreement, dated January 4, 1999, between Bestfoods and First
Chicago Trust Company of New York, to provide that neither the execution of the
merger agreement nor the completion of the merger will cause the rights to
become exercisable and that the rights will expire immediately prior to
completion of the merger.
THE MERGER AGREEMENT
THE FOLLOWING DESCRIPTION OF THE MERGER AGREEMENT DESCRIBES THE MATERIAL
PROVISIONS OF THE MERGER AGREEMENT BUT DOES NOT PURPORT TO DESCRIBE ALL OF THE
TERMS OF THE MERGER AGREEMENT. THE FULL TEXT OF THE MERGER AGREEMENT IS ATTACHED
TO THIS PROXY STATEMENT AS APPENDIX A AND IS INCORPORATED BY REFERENCE. ALL
BESTFOODS STOCKHOLDERS ARE URGED TO READ THE MERGER AGREEMENT IN ITS ENTIRETY
BECAUSE IT IS THE LEGAL DOCUMENT THAT GOVERNS THE MERGER.
THE MERGER
When the merger occurs, Titan Acquisition Company, a wholly owned subsidiary
of Conopco, Inc., will be merged with and into Bestfoods. Bestfoods will survive
the merger as a wholly owned subsidiary of Conopco, Inc.
WHAT YOU WILL RECEIVE
In the merger, each share of Bestfoods common stock outstanding immediately
before the merger, other than treasury shares, shares of Bestfoods common stock
owned by Unilever PLC, Unilever, N.V., Conopco, Inc. and Titan Acquisition
Company and shares held by holders of Bestfoods common stock that exercise and
perfect appraisal rights under Section 262 of the Delaware General Corporation
Law, will be converted into the right to receive $73.00 in cash, without
interest. Each share of Bestfoods Series B preferred stock will be automatically
converted into 4.37968 shares of Bestfoods common stock immediately prior to
completion of the merger, with each share of Bestfoods common stock converted
into the right to receive $73.00 in cash, without interest. At that time, each
holder of a certificate representing any of these shares of Bestfoods common
stock will no longer have any rights with respect to the shares, except for the
right to receive the merger consideration. Each share of Bestfoods common stock
held by Bestfoods, as treasury stock, Unilever PLC, Unilever N.V., Conopco, Inc.
or Titan Acquisition Company at the time of the merger will be canceled without
any payment.
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EFFECTIVE TIME OF THE MERGER
The completion of the merger will take place on the second business day
following the date when the last of the conditions to the merger set forth in
Section 6.01 of the merger agreement is satisfied or waived, or at any other
time and date that Bestfoods and Unilever agree upon in writing. On the closing
date of the merger, the parties will file a certificate of merger with the
Secretary of State of the State of Delaware. At that time, or at any later time
set forth in the certificate of merger, the merger will become effective.
TREATMENT OF STOCK OPTIONS AND OTHER RIGHTS
The merger agreement provides that, upon completion of the merger: (a) each
option to purchase shares of Bestfoods common stock outstanding immediately
prior to the completion of the merger, whether vested or unvested, will be
converted into the right to receive the excess of $73.00 over the exercise price
per share of the stock option multiplied by the number of shares of common stock
subject to the stock option; (b) all other rights to receive Bestfoods common
stock, whether vested or unvested, will be converted into the right to receive
an amount of cash equal to the number of shares of common stock subject to the
stock right outstanding immediately prior to the completion of the merger
multiplied by $73.00; (c) each Bestfoods performance unit outstanding
immediately prior to the completion of the merger, whether vested or unvested,
will be converted into the right to receive an amount of cash equal to the sum
of (i) the product of $73.00 multiplied by the percent with respect to which the
performance unit earned or deemed earned (upon stockholder adoption of the
merger agreement) for its performance cycle and (ii) the excess of $73.00 over
the average of the high and low trading price of shares of Bestfoods common
stock on the first trading day of the year in which the performance unit was
granted; and (d) the Bestfoods board of directors will make any other changes
to the company stock plans as Bestfoods and Unilever agree are appropriate to
give effect to the merger. All amounts payable are subject to applicable
withholding taxes.
PAYMENT FOR SHARES
Before the merger, Conopco, Inc. will appoint a bank or trust company that
is reasonably acceptable to Bestfoods to act as paying agent for the payment of
the merger consideration. Promptly following completion of the merger, Unilever
will deposit with the paying agent funds necessary to pay the merger
consideration.
After the merger, the paying agent will mail a letter of transmittal, which
will include instructions for the delivery of certificates formerly representing
Bestfoods stock to the paying agent, to all record holders of Bestfoods common
stock as of the time of the completion of the merger. The letter of transmittal
will also describe the procedures for electronic delivery of shares. Former
holders of Bestfoods common stock at the time of the merger should use this
letter of transmittal in sending certificates formerly representing Bestfoods
stock to the paying agent. After surrendering certificates formerly representing
Bestfoods common stock to the paying agent for cancellation, together with a
properly completed letter of transmittal, holders of these surrendered
certificates will be entitled to receive a cash payment in an amount equal to
the number of shares formerly represented by the certificate or certificates
they surrendered multiplied by the merger consideration of $73.00. Each
surrendered share will be canceled. BESTFOODS STOCKHOLDERS SHOULD NOT SEND IN
THEIR BESTFOODS STOCK CERTIFICATES UNTIL THEY RECEIVE A LETTER OF TRANSMITTAL.
If a transfer of ownership of Bestfoods common stock is not registered in
Bestfoods' stock transfer books, payment of the merger consideration may be made
to a person other than the person in whose name the surrendered certificate is
registered if:
the certificate is properly endorsed or otherwise in proper form for
transfer and
the person requesting the payment pays any transfer or other taxes
resulting from the payment of the merger consideration to a person other
than the registered holder of that
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certificate or establishes to the satisfaction of Conopco, Inc. that the
taxes have been paid or are not applicable.
All cash paid upon the surrender of certificates formerly representing
Bestfoods common stock in accordance with the merger agreement will be deemed to
have been paid in full satisfaction of all rights pertaining to the shares of
Bestfoods common stock so surrendered. After the completion of the merger, no
transfers of shares of Bestfoods common stock will be made on the transfer books
of the surviving corporation.
If your Bestfoods stock certificate has been lost, stolen or destroyed, you
will be entitled to obtain payment only by signing an affidavit to that effect
and, if required by the surviving corporation, posting a bond in an amount
sufficient to protect the surviving corporation against claims by any other
party related to your Bestfoods stock certificate.
REPRESENTATIONS AND WARRANTIES
The merger agreement contains representations and warranties made by us,
including representations and warranties relating to:
our corporate organization and similar corporate matters,
our subsidiaries,
our capital structure,
the authorization, execution, delivery and enforceability of the merger
agreement and the specification of any required consents or approvals,
the absence of conflict with, violation or breach of, or default under our
charter, by-laws, debt instruments, other contracts and applicable laws in
connection with the merger agreement and related matters,
the inapplicability of our stockholder rights agreement to the merger,
the accuracy of our reports and financial statements filed with the SEC,
the absence of material adverse changes to our business or material adverse
events since the end of our most recent fiscal year,
any material litigation in which we are involved,
our compliance with applicable laws since January 1, 1998,
the absence of changes in our employee benefit plans, employment agreements
and labor relations,
environmental matters,
our compliance with the Employment Retirement Income Security Act of 1974,
as amended,
tax matters,
the inapplicability of state takeover statutes,
stockholder voting requirements,
fees payable in connection with the merger and
the delivery of fairness opinions by our financial advisors.
The merger agreement also contains customary representations and warranties
by Unilever, Conopco, Inc. and Titan Acquisition Company relating to:
corporate organization and similar corporate matters,
the authorization, execution, delivery and enforceability of the merger
agreement and the specification of any required consents or approvals,
the absence of conflict with, violation or breach of, or default under the
charter, by-laws, debt instruments, other contracts and applicable laws in
connection with the merger agreement and related matters,
the operations of Titan Acquisition Company since its formation and
the sufficiency of Unilever's resources to pay the total merger
consideration.
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The representations and warranties of each of the parties to the merger
agreement will expire upon completion of the merger.
COVENANTS; CONDUCT OF THE BUSINESS OF BESTFOODS PRIOR TO THE MERGER
We have agreed that during the period from the date of the merger agreement
until the completion of the merger, we will, and will cause our subsidiaries to:
carry on our businesses in the ordinary course of business consistent with
past practice,
use reasonable best efforts to maintain our respective assets and our
respective relationships with customers, suppliers, licensors, licensees,
distributors and others having business dealings with us,
provide Unilever reasonable access to our properties, records and advisors
as well as information about our business that Unilever reasonably
requests, and
confer with Unilever regarding operational and other matters and promptly
notify Unilever of any material adverse change or material adverse effect
on or respecting Bestfoods.
We have also agreed that, during the period from the date of the merger
agreement until the completion of the merger, neither we nor our subsidiaries,
except as previously agreed upon with Unilever, will take any of the following
actions without Unilever's written approval:
declare or pay any dividend or other distribution, except for dividends
paid by our wholly owned subsidiaries and our regular quarterly cash
dividends and regular cash dividends on the Bestfoods Series B preferred
stock,
purchase, redeem or otherwise acquire any of our capital stock or other
securities or the capital stock or other securities of our subsidiaries,
split, combine or reclassify our outstanding common stock or change our
authorized capitalization, other than the conversion of Bestfoods Series B
preferred stock,
issue any of our capital stock or rights to acquire our capital stock,
other than (a) upon the exercise of stock options and other rights to
purchase or receive Bestfoods common stock or (b) conversion of shares from
our Series B preferred stock,
amend our certificate of incorporation or by-laws or those of our
subsidiaries,
acquire any business or material assets other than inventory in the
ordinary course of our business consistent with past practice,
sell, lease, license, dispose of or encumber any of our assets, except for
sales of inventory or obsolete or excess equipment in the ordinary course
of our business consistent with past practice,
repurchase, prepay, incur or guarantee additional debt, except for
short-term borrowings in the ordinary course of our business consistent
with past practice, or make any loans, capital contributions or other
investments in any person other than our wholly owned subsidiaries,
incur or authorize material capital expenditures materially inconsistent
with (a) our capital expenditure budget for fiscal 2000 or (b) a capital
expenditure budget which is subject to reasonable approval by Unilever for
fiscal 2001,
pay, discharge, settle or satisfy any material claims, liabilities or
obligations, other than the payment, discharge, settlement or satisfaction
in the ordinary course of our business consistent with past practice of
claims, liabilities or obligations reserved against in our most recent
audited financial statements or incurred since the date of our most recent
financial statements in the ordinary course of our business consistent with
past practice,
waive, release, grant or transfer any right of material value other than in
the ordinary course of our business consistent with past practice, or waive
any material benefits of, agree to modify in any adverse respect or fail to
enforce any confidentiality, standstill or similar agreement,
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except as required by law or as permitted by the terms of any contract or
Bestfoods benefit plan as in existence on the date of the merger agreement,
and except as authorized by the merger agreement, (a) fund or in any other
way secure the payment of compensation or benefits, (b) accelerate the
vesting or payment of any compensation or benefit or (c) increase the
compensation of any current or former director, officer or other employee,
except in the ordinary course of business consistent with past practice or
authorize any of, or commit, resolve or agree to take any of, the foregoing
actions.
In addition, we have agreed on behalf of ourselves and our subsidiaries not
to make any material tax election.
We have agreed, on behalf of ourselves and our subsidiaries, to take no
action that would cause any of our representations or warranties in the merger
agreement to become untrue in any material respect or cause any condition to the
completion of the merger not to be satisfied.
Each of Unilever PLC, Unilever N.V., Conopco, Inc. and Titan Acquisition
Company has agreed that from the date of the merger agreement to the earlier of
the completion of the merger or the termination of the merger agreement it, and
its controlled affiliates, will not, except as consented to in writing by
Bestfoods, (i) make any material acquisition of brands or businesses which would
be reasonably likely to materially impair its ability to consummate the merger
or cause a material delay in the completion of the merger or (ii) purchase any
shares of Bestfoods common stock, except by way of the merger, purchases after a
third party has made a takeover proposal and purchases by employee benefit
plans.
NO SOLICITATION OF TRANSACTIONS
We have agreed not to, and to not permit or authorize any of our
subsidiaries or any of our or our subsidiaries' directors, officers or employees
or advisors or representatives to, solicit, initiate or encourage or take any
other action to knowingly facilitate any takeover proposal (as defined below) or
participate in any discussions or negotiations regarding, or furnish to any
person any information with respect to, or otherwise cooperate in any way with,
any takeover proposal. We may, however, prior to the date of the special
meeting:
provide information to anyone who has made a competitive proposal (as
defined below) under a customary confidentiality agreement that contains
terms no less favorable to us than the terms of the confidentiality
agreement between Bestfoods and Unilever and
participate in discussions or negotiations with anyone who has made a
competitive proposal regarding that proposal,
in each case, only if we have promptly notified Unilever that we have received a
competitive proposal, including the terms and conditions of, and the identity of
the person making, that proposal.
In addition, we have agreed that neither the Bestfoods board of directors
nor any of its committees will:
withdraw, or modify in a manner adverse to Unilever, Conopco, Inc. or Titan
Acquisition Company, its approval of or recommendation with respect to the
merger agreement or publicly propose to do so, unless the Bestfoods board
of directors determines in good faith, after consultation with legal
counsel, that the failure to take this action would be reasonably likely to
result in a breach of its fiduciary duties under applicable law,
adopt, approve or recommend any takeover proposal or publicly propose to do
so,
cause or agree to cause Bestfoods to enter into any letter of intent or
other agreement constituting or related to, or that is intended to or could
reasonably be expected to lead to, any takeover proposal or
agree or resolve to take any of the foregoing actions.
The Bestfoods board of directors may, however, terminate the merger
agreement prior to the date of the special meeting in response to an unsolicited
superior proposal (as defined below) if:
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it delivers written notice to Unilever, three days prior to terminating the
merger agreement, advising Unilever that it has received an unsolicited
superior proposal, including the terms and conditions of, and the identity
of the person making, the superior proposal, and that it intends to accept
the superior proposal,
before or concurrently with the termination, Bestfoods pays to Unilever the
$625 million termination fee and
simultaneously with the termination, Bestfoods enters into a definitive
agreement containing the terms of the superior proposal.
Nothing described above limits our ability to take actions to comply with
specified rules under the Securities Exchange Act of 1934, as amended, or make
any disclosure to Bestfoods stockholders if, in the good faith judgment of the
Bestfoods board of directors, after consultation with outside counsel, failure
so to disclose would be inconsistent with applicable law.
We have agreed to promptly notify Unilever of any takeover proposal or of
any request for information or other inquiry we receive that we reasonably
believe could lead to a takeover proposal, the terms, conditions, and identity
of the person making a request, proposal or inquiry and to keep Unilever
informed of all developments relating to any request, inquiry or takeover
proposal.
The merger agreement defines the term 'takeover proposal' to mean any
inquiry, proposal or offer that is reasonably likely to lead to any direct or
indirect acquisition of assets or businesses that constitute (i) 20% or more of
the total revenue, operating income, EBITDA or assets of Bestfoods and its
subsidiaries, taken as a whole, or (ii) 20% or more of the outstanding shares of
Bestfoods common stock or of any class of capital stock or other equity or
voting interests in any of Bestfoods' subsidiaries directly or indirectly
holding assets or businesses referred to in clause (i) above.
The merger agreement defines the term 'competitive proposal' to mean any
bona fide written takeover proposal that the Bestfoods board of directors
determines in good faith is or could reasonably be expected to be more favorable
to the Bestfoods stockholders than the merger.
The merger agreement defines the term 'superior proposal' to mean:
any bona fide, unsolicited written offer by a third party that if
consummated would result in the third party, or its stockholders,
acquiring, directly or indirectly, all or substantially all of the voting
power of Bestfoods' common stock or all or substantially all of the
combined assets of Bestfoods and its subsidiaries and
that is made for consideration in cash and/or securities that the Bestfoods
board of directors determines in its good faith judgment, after
consultation with a nationally recognized financial advisor and taking into
account the person making the offer, the consideration offered, the
likelihood of consummation (including the legal, financial and regulatory
aspects of the offer) as well as any other factors deemed relevant by the
Bestfoods board of directors, to have a higher value than the consideration
payable in the merger.
In concluding that a proposal is a superior proposal, the Bestfoods board of
directors must consider any counterproposals that Unilever may make in response
to a superior proposal or otherwise.
EMPLOYEE BENEFITS
Following completion of the merger, Unilever has agreed to honor, and to
cause the surviving corporation to honor, all Bestfoods employment agreements
and benefit plans that have been disclosed to Unilever in Bestfoods' SEC filings
or in the disclosure schedule attached to the merger agreement in accordance
with their current terms. For a period of two years immediately following the
completion of the merger, Unilever will provide, or cause the surviving
corporation to provide, to persons who are employed by Bestfoods and its
subsidiaries at the time of the merger:
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employee benefit plans and arrangements including salary and bonus
opportunities, excluding equity or equity-based programs, which are
substantially similar in the aggregate to those provided to the Bestfoods
employees immediately prior to the completion of the merger and
equity or equity-based programs which are comparable to those provided to
similarly situated employees of Unilever or its subsidiaries.
Unilever has agreed to give Bestfoods employees full credit for their
service with Bestfoods and its subsidiaries, to the same extent their service is
recognized by Bestfoods and its subsidiaries, for purposes of eligibility, early
retirement subsidies, vesting and benefit accrual under any employee benefit
plan maintained by Unilever and its subsidiaries. Unilever has agreed to waive
all limitations as to pre-existing conditions, exclusions and waiting periods
applicable to the Bestfoods employees under any welfare benefit plans to the
extent waived under the applicable Bestfoods employee benefit plan prior to the
completion of the merger. Unilever has also agreed to provide each Bestfoods
employee with credit for co-payments and deductibles paid under Bestfoods
welfare plans prior to the completion of the merger.
With respect to Bestfoods employees who are employed outside the United
States, Unilever has agreed that, following completion of the merger, Unilever
will continue the terms and conditions of their employment as in effect
immediately before the completion of the merger, to the extent required by local
law.
In connection with the execution of the merger agreement, Bestfoods will
enter into letter agreements with the five named executive officers that amend
the definition of good reason under each of their severance agreements. See 'The
Merger -- Interests of Certain Persons in the Merger; Possible Conflicts of
Interest.'
EFFORTS TO COMPLETE THE MERGER
Upon the terms and subject to the conditions set forth in the merger
agreement, Bestfoods and Unilever have each agreed to use their reasonable best
efforts to take, or cause to be taken, all actions necessary, proper or
advisable to complete the merger, including using their reasonable best efforts
to accomplish the following:
satisfying the conditions to the completion of the merger and
obtaining all necessary government and third party waivers, consents and
other approvals or authorizations and making all necessary governmental
registrations, declarations and filings.
Bestfoods and Unilever have agreed that they will not be required to agree
or offer to divest or hold separate, or enter into any licensing or similar
arrangement with respect to certain specified products and businesses. Bestfoods
has agreed that neither it nor any of its subsidiaries will take any action with
respect to these businesses or assets without the written consent of Unilever.
CONDITIONS TO THE MERGER
The obligations of Bestfoods, Unilever, Conopco, Inc. and Titan Acquisition
Company to complete the merger are subject to the satisfaction of the following
conditions:
the merger agreement having been adopted by the holders of a majority of
the voting power represented by the shares of Bestfoods stock entitled to
vote, voting together as a single class,
the European Commission having issued a decision declaring the merger to be
compatible with the European Union common market, and the waiting period
applicable to completion of the merger under the HSR Act having expired or
been terminated,
any other competition, merger control, antitrust or similar approval or
waiting period having been obtained or expired or terminated, other than
approvals and waiting periods the failure of which to have been obtained or
terminated or to have expired would not reasonably be
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expected to materially and adversely affect the business of Unilever and
Bestfoods following completion of the merger or result in the commission of
a criminal offense and
no temporary restraining order, preliminary or permanent injunction or
other order or decree existing that prevents completion of the merger.
Unless waived by Unilever, Conopco, Inc. and Titan Acquisition Company, the
obligation of Unilever, Conopco, Inc. and Titan Acquisition Company to complete
the merger is subject to the satisfaction of the following additional
conditions:
our representations and warranties contained in the merger agreement must
be true and correct on and as of the effective time of the merger (except
to the extent that these representations and warranties speak as of an
earlier date), except for those failures to perform or to be true and
correct that would not reasonably be expected to have a material adverse
effect on us and our subsidiaries taken as a whole, and Unilever having
received a certificate signed by either our chief executive officer or
chief financial officer certifying that the representations and warranties
contained in the merger agreement are true and correct, subject to the
limitations outlined in this clause,
we must have performed in all material respects all obligations required to
be performed by us at or prior to the date on which the merger is
completed, and Unilever having received a certificate signed by either our
chief executive officer or chief financial officer certifying that we have
performed in all material respects all obligations required to be performed
by us,
the receipt of all governmental and third party consents, approvals,
authorizations, qualifications and orders, except for those the failure of
which to be obtained would not, individually or in the aggregate, be
expected to have a materially adverse effect on us and our subsidiaries,
taken as a whole, and except for consents or approvals under any
competition, antitrust or merger control law which are covered by the
condition described above, and
the approval of the merger agreement by the shareholders of Unilever PLC
and Unilever N.V.
Unless waived by Bestfoods, the obligations of Bestfoods to complete the
merger are subject to the satisfaction of the following additional conditions:
the representations and warranties of Unilever, Conopco, Inc. and Titan
Acquisition Company contained in the merger agreement must be true and
correct in all material respects on and as of the effective time of the
merger (except to the extent that these representations and warranties
speak as of an earlier date), and we must have received a certificate
signed by an executive officer of Unilever certifying that the
representations and warranties contained in the merger agreement are true
and correct, subject to the limitations outlined in this provision and
Unilever, Conopco, Inc. and Titan Acquisition Company must have performed
in all material respects all obligations required to be performed by them
at or prior to the date on which the merger is completed; and we must have
received a certificate signed by an executive officer of Unilever
certifying that they have performed in all material respects all
obligations required to be performed by them.
TERMINATION
The merger agreement may be terminated and the merger may be abandoned at
any time:
1. by mutual consent of Bestfoods, Unilever, Conopco, Inc. and Titan
Acquisition Company;
2. by either Unilever or Bestfoods if:
the merger is not completed by March 6, 2001,
any injunction, ruling or other legal restraint or prohibition preventing
the completion of the merger is in effect and has become final and cannot
be appealed,
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the holders of a majority of voting power of Bestfoods stock do not adopt
the merger agreement at the special meeting or
if the shareholders of Unilever PLC and Unilever N.V. do not approve the
merger agreement at the meetings of those shareholders held to obtain
those approvals,
3. by Bestfoods if:
(a) Unilever, Conopco, Inc. or Titan Acquisition Company has materially
breached any of its representations or warranties, or failed to perform
its covenants or other agreements in any material respect, and (b) that
breach is not cured, or is incapable of being cured, within 20 days after
notice from Bestfoods,
before the special meeting:
-- in response to an unsolicited superior proposal,
-- Bestfoods gives Unilever notice of its intention to accept the
superior proposal at least three business days before its
acceptance of the proposal and, after taking into account any
counterproposal from Unilever in response to that proposal, that
proposal continues to be a superior proposal at the end of the
three-day period,
-- before or concurrently with the termination, Bestfoods pays to
Unilever the $625 million termination fee and
-- simultaneously with the termination, Bestfoods enters into a
definitive agreement containing the terms of the superior proposal
or
4. by Unilever if:
(a) Bestfoods has breached any of its representations or warranties,
which breach would have a material adverse effect on Bestfoods, or failed
to perform its covenants or other agreements in any material respect, and
(b) the breach is not cured, or is incapable of being cured, within 20
days after notice from Unilever, or
the Bestfoods board of directors or any committee of the board withdraws
or modifies its recommendation to Bestfoods stockholders in favor of the
adoption of the merger agreement, or recommends the approval of a
proposal from a third party regarding a merger or similar transaction
involving Bestfoods or the acquisition of 20% or more of Bestfoods common
stock or a business that constitutes 20% or more of the combined revenue,
operating income or assets of Bestfoods and its subsidiaries.
TERMINATION FEES
We have agreed to pay Unilever a termination fee of $625 million if the
merger agreement is terminated under any of the following circumstances:
before the special meeting
-- a takeover proposal has been made known to Bestfoods or its
stockholders or any person has announced an intention to make a
takeover proposal,
-- Unilever or Bestfoods then terminates the merger agreement for the
first or third reason described in paragraph 2 above under
' -- Termination' and
-- within 12 months of the termination Bestfoods enters into any letter
of intent or other agreement with respect to, or completes, any
takeover proposal, except that for purposes of this clause, the
references to 20% in the definition of 'takeover proposal' are deemed
to be references to 40%,
we terminate the merger agreement for the second reason described in
paragraph 3 above under ' -- Termination' or
Unilever terminates the merger agreement for the second reason described in
paragraph 4 above under ' -- Termination.'
Unilever has agreed to pay to Bestfoods a fee equal to $100 million if the
merger agreement is terminated because the shareholders of Unilever PLC and
Unilever N.V. do not approve the merger agreement at the meetings of those
shareholders held to obtain those approvals.
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<PAGE>
EXPENSES
The merger agreement provides that all costs and expenses incurred in
connection with the merger agreement will be paid by the party incurring these
expenses, whether or not the merger is completed.
AMENDMENT
The merger agreement may be amended only by written agreement of the
parties. Any amendment may be made at any time before the completion of the
merger. After the Bestfoods stockholders adopt the merger agreement, however, no
amendment or waiver that requires further approval of the Bestfoods stockholders
may be made without the further approval of the Bestfoods stockholders.
DISSENTERS' RIGHTS OF APPRAISAL
Under Section 262 ('Section 262') of the Delaware General Corporation Law
(the 'DGCL'), if you do not vote your outstanding shares of Bestfoods common
stock in favor of adoption of the merger agreement, you will be entitled to
dissent and elect to have the 'fair value' of your shares, exclusive of any
element of value arising from the accomplishment or expectation of the merger,
together with a fair rate of interest, if any, judicially determined by the
Delaware Court of Chancery and paid to you in cash. You will not have appraisal
rights for shares of Bestfoods Series B preferred stock.
The following discussion is not a complete statement of the law pertaining
to appraisal rights under the DGCL and is qualified in its entirety by the full
text of Section 262, a copy of which is provided as Appendix D to this proxy
statement. All references in Section 262 and in this summary to a 'stockholder'
are to the record holder of the shares of Bestfoods common stock as to which
appraisal rights are asserted. If you have a beneficial interest in shares of
common stock held of record in the name of another person, such as a broker or
nominee, you must act promptly to cause the record holder to follow properly the
steps summarized below and in a timely manner to perfect your appraisal rights.
Under Section 262, where a merger agreement is to be submitted for adoption
at a meeting of stockholders, as in the case of the special meeting of Bestfoods
stockholders described in this proxy statement, the corporation, not less than
20 days prior to the meeting, must notify each of its stockholders on the record
date entitled to appraisal rights that appraisal rights are available and
include in the notice a copy of Section 262. This proxy statement is that notice
to you, and a copy of the applicable statutory provisions of the DGCL are
attached to this proxy statement as Appendix D. If you wish to exercise your
appraisal rights or wish to preserve the right to do so, you should review
carefully Section 262 and seek advice of legal counsel, since failure to comply
fully with the procedures of that Section will result in the loss of appraisal
rights.
If you wish to exercise the right to dissent from the merger and demand
appraisal under Section 262, you must satisfy each of the following conditions:
you must deliver to Bestfoods a written demand for appraisal of your shares
of Bestfoods common stock before the vote on adoption of the merger
agreement at the special meeting, which demand will be sufficient if it
reasonably informs Bestfoods of your identity and that you intend to demand
the appraisal of your shares,
you must not vote in favor of adoption of the merger agreement. Because a
proxy that does not contain voting instructions will, unless revoked, be
voted in favor of the merger agreement, if you vote by proxy and wish to
exercise appraisal rights, you must vote against adoption of the merger
agreement or abstain from voting on adoption of the merger agreement and
you must continuously hold your shares from your date of making a written
demand through the effective time of the merger. If you are the record
holder of shares of common stock on the date the written demand for
appraisal is made but thereafter transfer these shares prior to the
effective time of the merger, you will lose any right to appraisal in
respect of the shares.
Neither voting in person or by proxy against, abstaining from voting on or
failing to vote on the proposal to adopt the merger agreement will constitute a
written demand for appraisal within
36
<PAGE>
the meaning of Section 262. The written demand for appraisal must be in addition
to and separate from any such proxy or vote.
Only a holder of record of shares of Bestfoods common stock issued and
outstanding immediately prior to the effective time of the merger is entitled to
assert appraisal rights for the shares of common stock registered in that
holder's name. A demand for appraisal should be executed by or on behalf of the
stockholder of record, fully and correctly, as that stockholder's name appears
on the stock certificates, should specify the stockholder's name and mailing
address, the number of shares of common stock owned and that the stockholder
intends thereby to demand appraisal of the stockholder's shares of Bestfoods
common stock.
If your shares of Bestfoods common stock are owned of record in a fiduciary
capacity, such as by a trustee, guardian or custodian, execution of a written
demand should be made in that capacity. If your shares of Bestfoods common stock
are owned of record by more than one person as in a joint tenancy or tenancy in
common, the demand should be executed by or on behalf of all owners. An
authorized agent, including one or more joint owners, may execute a demand for
appraisal on behalf of a stockholder; however, the agent must identify the
record owner or owners and expressly disclose the fact that, in executing the
demand, the agent is acting as agent for the owner or owners.
A record holder such as a broker who holds shares of Bestfoods common stock
as nominee for several beneficial owners may exercise appraisal rights with
respect to the shares of Bestfoods common stock held for one or more other
beneficial owners while not exercising those rights with respect to the shares
of Bestfoods common stock held for one or more beneficial owners; in that case,
the written demand should set forth the number of shares of Bestfoods common
stock as to which appraisal is sought, and where no number of shares is
expressly mentioned, the demand will be presumed to cover all shares of
Bestfoods common stock held in the name of the record owner. If you hold your
shares of Bestfoods common stock in brokerage accounts or other nominee forms
and wish to exercise appraisal rights, you are urged to consult with your broker
to determine the appropriate procedures for the making of a demand for appraisal
by the nominee.
A stockholder who elects to exercise appraisal rights under Section 262
should mail or deliver a written demand to Bestfoods, 700 Sylvan Avenue,
International Plaza, Englewood Cliffs, New Jersey 07632, Attention: Corporate
Secretary.
Within ten days after the completion of the merger, the surviving
corporation must send a notice as to the effectiveness of the merger to each
former Bestfoods stockholder who has made a written demand for appraisal in
accordance with Section 262 and who has not voted in favor of adoption of the
merger agreement. Within 120 days after the completion of the merger, but not
thereafter, either Bestfoods or any holder of dissenting shares of Bestfoods
common stock who has complied with the requirements of Section 262 may file a
petition in the Delaware Court of Chancery demanding a determination of the
value of all shares of Bestfoods common stock held by dissenting stockholders.
Bestfoods is under no obligation to and has no present intent to file a petition
for appraisal, and you should not assume that Bestfoods will file a petition or
that Bestfoods will initiate any negotiations with respect to the fair value of
the shares. Accordingly, if you desire to have your shares appraised, you should
initiate any petitions necessary for the perfection of your appraisal rights
within the time periods and in the manner prescribed in Section 262.
Within 120 days after the effective time of the merger, any stockholder who
has complied with the provisions of Section 262 to that point in time will be
entitled to receive from Bestfoods, upon written request, a statement setting
forth the aggregate number of shares of Bestfoods common stock not voted in
favor of adoption of the merger agreement and with respect to which demands for
appraisal have been received and the aggregate number of holders of the shares.
Bestfoods must mail this statement to the stockholder within 10 days of receipt
of a request.
A stockholder timely filing a petition for appraisal with the Delaware Court
of Chancery must deliver a copy to Bestfoods, which will then be obligated
within 20 days to provide the Delaware Court of Chancery with a duly verified
list containing the names and addresses of all stockholders who have demanded
appraisal of their shares of Bestfoods common stock. After notice to the
stockholders, the Delaware Court of Chancery is empowered to conduct a hearing
on the petition
37
<PAGE>
to determine which stockholders are entitled to appraisal rights. The Delaware
Court of Chancery may require stockholders who have demanded an appraisal for
their shares and who hold stock represented by certificates to submit their
certificates to the Register in Chancery for notation thereon of the pendency of
the appraisal proceedings, and if any stockholder fails to comply with the
requirement, the Delaware Court of Chancery may dismiss the proceedings as to
that stockholder.
After determining the stockholders entitled to an appraisal, the Delaware
Court of Chancery will appraise the 'fair value' of their shares, exclusive of
any element of value arising from the accomplishment or expectation of the
merger, together with a fair rate of interest, if any, to be paid upon the
amount determined to be the fair value. The costs of the action may be
determined by the Delaware Court of Chancery and taxed upon the parties as the
Delaware Court of Chancery deems equitable. Upon application of a holder of
dissenting shares of Bestfoods common stock, the Delaware Court of Chancery may
also order that all or a portion of the expenses incurred by any stockholder in
connection with the appraisal proceeding, including, reasonable attorneys' fees
and the fees and expenses of experts, be charged pro rata against the value of
all of the shares of Bestfoods common stock entitled to appraisal.
IF YOU CONSIDER SEEKING APPRAISAL, YOU SHOULD BE AWARE THAT THE FAIR VALUE
OF YOUR SHARES AS DETERMINED UNDER SECTION 262 COULD BE MORE THAN, THE SAME AS
OR LESS THAN THE $73.00 PER SHARE YOU WOULD RECEIVE UNDER THE MERGER AGREEMENT
IF YOU DID NOT SEEK APPRAISAL OF YOUR SHARES. YOU SHOULD ALSO BE AWARE THAT
INVESTMENT BANKING OPINIONS ARE NOT OPINIONS AS TO FAIR VALUE UNDER SECTION 262.
In determining fair value and, if applicable, a fair rate of interest, the
Delaware Court of Chancery is to take into account all relevant factors. In
Weinberger v. UOP, Inc., the Delaware Supreme Court discussed the factors that
could be considered in determining fair value in an appraisal proceeding,
stating that 'proof of value by any techniques or methods which are generally
considered acceptable in the financial community and otherwise admissible in
court' should be considered, and that 'fair price obviously requires
consideration of all relevant factors involving the value of a company.' The
Delaware Supreme Court stated that, in making this determination of fair value,
the court must consider market value, asset value, dividends, earnings
prospects, the nature of the enterprise and any other facts that could be
ascertained as of the date of the merger that throw any light on future
prospects of the merged corporation. In Weinberger, the Delaware Supreme Court
further stated that 'elements of future value, including the nature of the
enterprise, which are known or susceptible of proof as of the date of the merger
and not the product of speculation, may be considered.' Section 262 provides
that fair value is to be 'exclusive of any element of value arising from the
accomplishment or expectation of the merger.'
Any stockholder who has duly demanded an appraisal in compliance with
Section 262 will not, after the completion of the merger, be entitled to vote
the shares subject to this demand for any purpose or to receive payment of
dividends or other distributions on those shares (except dividends or other
distributions payable to holders of record of shares as of a record date prior
to the completion of the merger).
If any stockholder who demands appraisal of shares of Bestfoods common stock
under Section 262 fails to perfect, or effectively withdraws or loses, the right
to appraisal, the stockholder's shares of Bestfoods common stock will be
converted into the right to receive $73.00 per share in cash in accordance with
the merger agreement, without interest. A stockholder will fail to perfect, or
effectively lose or withdraw, the right to appraisal if no petition for
appraisal is filed within 120 calendar days after the completion of the merger.
A stockholder may withdraw a demand for appraisal by delivering to Bestfoods a
written withdrawal of the demand for appraisal and acceptance of the merger
consideration, except that any such attempt to withdraw made more than 60
calendar days after the completion of the merger will require the written
approval of Bestfoods. Once a petition for appraisal has been filed, the
appraisal proceeding may not be dismissed as to any stockholder, absent approval
of the Delaware Court of Chancery.
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<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Certain Beneficial Owners. To our best knowledge,
there was no beneficial owner (person or group) of more than five percent of the
outstanding Bestfoods common stock, as of June 30, 2000.
Security Ownership of Management. The following table sets forth, as of
June 30, 2000, the amount of Bestfoods common stock beneficially owned by each
of its directors, the five executive officers identified in 'The
Merger -- Interests of Certain Persons in the Merger; Possible Conflicts of
Interest' and all directors and executive officers as a group:
<TABLE>
<CAPTION>
STOCK
NAME SHARES OWNED(1) OTHER(2) UNITS(3) TOTAL(4)*
---- --------------- -------- -------- ---------
<S> <C> <C> <C> <C>
C. Castellini......................... 2,000 -- 5,866 7,866
A. C. DeCrane, Jr..................... 1,000 -- 14,346 15,346
W. C. Ferguson........................ 5,767 -- 15,691 21,458
R. J. Gillespie....................... 94,853 180,374 26,014 301,241
B. S. Gordon.......................... -- -- 1,413 1,413
E. R. Gordon.......................... 4,000 -- 24,426 28,426
L. I. Higdon, Jr...................... 2,000 -- 6,230 8,230
R. G. Holder.......................... -- 4,000 17,688 21,688
B. H. Kastory......................... 118,993 4,200 41,471 164,664
E. S. Kraus........................... 400 -- 13,514 13,914
A. C. A. Krauss....................... 103,424 -- 32,433 135,857
H. McGraw III......................... 1,000 -- 867 1,867
H. de C. Meirelles.................... -- -- 6,519 6,519
W. S. Norman.......................... 2,051 -- 10,707 12,758
I. M. Ramsay.......................... 50,348 -- -- 50,348
C. R. Shoemate........................ 1,256,357 239,625 110,582 1,606,564
All directors and executive officers
as a group (33 persons)............. 2,167,105 639,991 418,737 3,018,463
</TABLE>
---------
* Ownership in each case is less than one percent of the outstanding shares
of Bestfoods common stock, except in the case of all directors and
executive officers as a group, in which case it is less than two percent.
(1) Includes all shares which may be purchased before [ ], 2000 upon the
exercise of stock options as follows: R. J. Gillespie, 93,382; B. H.
Kastory, 54,620; A. C. A. Krauss, 48,321; I. M. Ramsay, 13,700; C. R.
Shoemate, 1,256,357; and all directors and executive officers as a group,
1,846,082. Also includes shares held in the Bestfoods Stock Fund of the
Savings Plan as of March 31, 2000.
(2) Includes shares held jointly with or owned by spouses or minor children or
held in trust. C. R. Shoemate and all directors and executive officers as a
group disclaim beneficial ownership of 46,408 and 83,873, respectively, of
these shares.
(3) For the executive officers, the stock units represent an annual bonus that
is deferred and credited in the form of common stock under the Deferred
Stock Unit Plan. These bonuses are payable in cash following retirement or
termination of employment. For the outside directors, the stock units
represent retainer and fees deferred in the form of common stock under the
Deferred Compensation Plan for Outside Directors.
(4) In addition, Messrs. Gillespie, Kastory, Krauss, and Shoemate have
respectively, 6,784; 6,875; 2,689 and 6,725 shares, and all executive
officers as a group have a total of 77,711 shares of ESOP preferred stock
allocated to their accounts in the Savings Plan as of March 31, 2000.
39
<PAGE>
SELECTED FINANCIAL DATA OF BESTFOODS
Our selected historical financial data set forth below for the five years
ended December 31, 1999 has been derived from our audited consolidated financial
statements. The financial data for the three-month periods ended March 31, 1999
and 1998 has been derived from unaudited financial statements. The unaudited
financial statements include all adjustments, consisting of normal recurring
accruals, which we consider necessary for a fair presentation of the financial
positions and the results of operations for these periods. The financial data
should be read in connection with our previously filed financial statements and
related notes. See 'Incorporation of Certain Documents by Reference.'
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31, FOR THE YEAR ENDED DECEMBER 31,
----------------- ------------------------------------------
2000 1999 1999 1998 1997 1996 1995
------- ------- ------ ------ ------ ------ ------
(IN MILLIONS, EXCEPT FOR PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING STATEMENT DATA:
Revenues............................ $2,218 $2,195 $8,637 $8,413 $8,438 $8,518 $7,236
Income from continuing operations
before cumulative effects of
changes in accounting
principles........................ $ 160 $ 144 $ 717 $ 640 $ 429 $ 557 $ 377
Net income.......................... $ 160 $ 144 $ 717 $ 624 $ 344 $ 580 $ 512
Income per share
Diluted --
Income from continuing
operations before cumulative
effects of changes in
accounting principles....... $ .56 $ .49 $ 2.48 $ 2.15 $ 1.43 $ 1.85 $ 1.24
Net income per share................ $ .56 $ .49 $ 2.48 $ 2.09 $ 1.15 $ 1.93 $ 1.68
Cash dividends per common share..... $ .265 $ .245 $ 1.02 $ .94 $ .86 $ .79 $ .74
SELECTED BALANCE SHEET DATA:
Property and equipment, net......... $1,924 $1,965 $1,964 $1,965 $1,941 $2,023 $1,978
Total assets........................ $6,209 $6,522 $6,232 $6,435 $6,100 $7,251 $6,848
Long-term debt, net of current
portion........................... $1,915 $1,963 $1,842 $2,053 $1,818 $1,681 $1,071
Stockholders' equity................ $ 780 $ 936 $ 938 $ 981 $1,042 $2,084 $1,987
</TABLE>
INDEPENDENT PUBLIC ACCOUNTANTS
KPMG LLP, independent public auditors for Bestfoods, has advised Bestfoods
that it will have representatives present at the special meeting. The
representatives will have the opportunity to make a statement if they desire to
do so and will be available to respond to appropriate questions.
STOCKHOLDER LITIGATION
Following the public announcement on May 2, 2000 of the Bestfoods board of
directors' determination to reject Unilever's $66.00 proposal, ten stockholders,
each purporting to sue on behalf of a class of all Bestfoods stockholders, filed
putative class actions against the company and the board of directors in the
Court of Chancery for the State of Delaware in and for New Castle County. All
actions allege violations of fiduciary duty by the board of directors in
relation to its May 2, 2000 rejection of Unilever's unsolicited acquisition
proposal at a price of $66.00 per share. Each action seeks an order enjoining
the board of directors from violating its fiduciary duties to the public
stockholders by, among other things, informing itself about offers from and
negotiating with Unilever and other bona fide offerors for the company and
otherwise acting so as to maximize the value of the stockholders' investments.
Additionally, each action seeks unspecified actual damages as well as the costs
of bringing the action, including attorneys' fees, experts' fees and
disbursements. No material action has been taken by the plaintiffs in these
actions subsequent to the filing of the complaints. Bestfoods believes that
these actions are without merit and intends vigorously to defend them.
40
<PAGE>
STOCKHOLDER PROPOSALS
Bestfoods will hold an annual meeting in 2001 only if the merger is not
completed. If the annual meeting is to be held, any Bestfoods stockholder who
wishes to submit a proposal for inclusion in the proxy materials relating to
this meeting must deliver that proposal to the Secretary of Bestfoods. The
proposal must be received at our executive offices (700 Sylvan Avenue,
International Plaza, Englewood Cliffs, New Jersey 07632) no later than
November 17, 2000. Any Bestfoods stockholder who intends to present any other
business at this meeting, including the nomination of candidates for director,
must notify the Secretary in writing of the business or candidates between
November 17, 2000 and December 16, 2000. We reserve the right to disregard or
take other appropriate action with respect to any proposal that does not comply
with these and other applicable requirements.
WHERE YOU CAN FIND MORE INFORMATION
Each of Bestfoods and Unilever is subject to the informational requirements
of the Securities Exchange Act of 1934, as amended. We file reports, proxy
statements and other information with the SEC; Unilever files Forms 20-F with,
and furnishes Forms 6-K and other documents to, the SEC. You may read and copy
such reports, proxy statements and other information at the SEC's Public
Reference Section at 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
following regional SEC offices: 7 World Trade Center, 13th Floor, Suite 1300,
New York, New York 10004; and Suite 1400, Citicorp Center, 500 West Madison
Street, Chicago, Illinois 60661. You may obtain information on the operation of
the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also
maintains an Internet website, located at http://www.sec.gov, that contains
reports, proxy statements and other information regarding registrants that file
electronically with the SEC. Unilever does not file electronically with
the SEC.
You may also read reports, proxy statements, in the case of Bestfoods, and
other information relating to Bestfoods and Unilever at the offices of the New
York Stock Exchange at 20 Broad Street, New York, New York 10005.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Bestfoods hereby incorporates by reference into this proxy statement the
following documents that have been filed with the SEC (File No. 001-04199):
Bestfoods Annual Report on Form 10-K for the year ended December 31, 1999,
previously filed with the SEC on March 27, 2000,
Bestfoods Quarterly Report on Form 10-Q for the period ended March 31,
2000, previously filed with the SEC on May 9, 2000,
Bestfoods Current Reports on Form 8-K previously filed with the SEC on May
4, 2000 and June 21, 2000 and
Bestfoods Form 8-A/A dated June 23, 2000, amending the Bestfoods Form 8-A
dated November 20, 1998.
All documents and reports filed by Bestfoods under Section 13(a), 13(c), 14,
or 15(d) of the Securities Exchange Act of 1934, as amended, after the date of
this proxy statement and on or prior to the date of the special meeting are
deemed to be incorporated by reference in this proxy statement from the date of
filing of these documents or reports. Any statement contained in a document
incorporated or deemed to be incorporated by reference in this proxy statement
will be deemed to be modified or superseded for purposes of this proxy statement
to the extent that a statement contained herein or in any other subsequently
filed document which also is or is deemed to be incorporated by reference in
this proxy statement modifies or supersedes that statement. Any statement so
modified or superseded will not be deemed, except as so modified or superseded,
to constitute a part of this proxy statement.
Any person receiving a copy of this proxy statement may obtain, without
charge, upon written or oral request, a copy of any of the documents
incorporated by reference except for the exhibits
41
<PAGE>
to these documents (other than the exhibits expressly incorporated in such
documents by reference). Requests should be directed to: Bestfoods, 700 Sylvan
Avenue, International Plaza, Englewood Cliffs, New Jersey 07632, Attention:
Manager Corporate Secretarial Services (telephone number 201-894-4000). A copy
will be provided by first class mail or other equally prompt means within one
business day after receipt of your request.
WE HAVE NOT AUTHORIZED ANYONE TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ABOUT THE PROPOSED MERGER OR OUR COMPANY THAT DIFFERS FROM OR
ADDS TO THE INFORMATION CONTAINED IN THIS DOCUMENT OR IN THE DOCUMENTS WE HAVE
PUBLICLY FILED WITH THE SEC. THEREFORE, IF ANYONE SHOULD GIVE YOU ANY DIFFERENT
OR ADDITIONAL INFORMATION, YOU SHOULD NOT RELY ON IT.
THE INFORMATION CONTAINED IN THIS DOCUMENT SPEAKS ONLY AS OF THE DATE
INDICATED ON THE COVER OF THIS DOCUMENT UNLESS THE INFORMATION SPECIFICALLY
INDICATES THAT ANOTHER DATE APPLIES.
42
<PAGE>
APPENDIX A
AGREEMENT AND PLAN OF MERGER
by and among
UNILEVER PLC,
UNILEVER N.V.,
CONOPCO, INC.,
TITAN ACQUISITION COMPANY
and
BESTFOODS
Dated as of June 6, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE I
THE MERGER
SECTION 1.01. The Merger.................................................. A-1
SECTION 1.02. Closing..................................................... A-1
SECTION 1.03. Effective Time.............................................. A-1
SECTION 1.04. Effects of the Merger....................................... A-2
SECTION 1.05. Certificate of Incorporation and By-laws.................... A-2
SECTION 1.06. Directors................................................... A-2
SECTION 1.07. Officers.................................................... A-2
ARTICLE II
CONVERSION OF SECURITIES
SECTION 2.01. Conversion of Capital Stock................................. A-2
SECTION 2.02. Exchange of Certificates.................................... A-3
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Representations and Warranties of the Company............... A-4
SECTION 3.02. Representations and Warranties of the Parents, New York Sub
and Delaware Sub.......................................... A-14
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 4.01. Conduct of Business......................................... A-16
SECTION 4.02. No Solicitation............................................. A-18
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. Preparation of the Proxy Statement; Stockholders Meeting.... A-20
SECTION 5.02. Access to Information; Confidentiality...................... A-20
SECTION 5.03. Reasonable Best Efforts; Notification....................... A-21
SECTION 5.04. Company Stock Options....................................... A-21
SECTION 5.05. Indemnification, Exculpation and Insurance.................. A-22
SECTION 5.06. Fees and Expenses........................................... A-23
SECTION 5.07. Information Supplied........................................ A-23
SECTION 5.08. Benefits Matters............................................ A-24
SECTION 5.09. Public Announcements........................................ A-25
SECTION 5.10. Rights Agreement; Consequences if Rights Triggered.......... A-26
SECTION 5.11. Parents' Shareholders' Meetings............................. A-26
SECTION 5.12. Stockholder Litigation...................................... A-26
SECTION 5.13. Control of the Company's Operations......................... A-26
SECTION 5.14. Parents' Conduct............................................ A-26
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.01. Conditions to Each Party's Obligation to Effect the
Merger.................................................... A-26
SECTION 6.02. Conditions to Obligations of the Parents, New York Sub and
Delaware Sub.............................................. A-27
SECTION 6.03. Conditions to Obligation of the Company..................... A-27
SECTION 6.04. Frustration of Closing Conditions........................... A-28
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.01. Termination................................................. A-28
SECTION 7.02. Effect of Termination....................................... A-29
SECTION 7.03. Amendment................................................... A-29
SECTION 7.04. Extension; Waiver........................................... A-29
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.01. Nonsurvival of Representations and Warranties............... A-29
SECTION 8.02. Notices..................................................... A-29
SECTION 8.03. Definitions................................................. A-30
SECTION 8.04. Interpretation.............................................. A-31
SECTION 8.05. Counterparts................................................ A-31
SECTION 8.06. Entire Agreement; No Third-Party Beneficiaries.............. A-31
SECTION 8.07. Governing Law............................................... A-31
SECTION 8.08. Assignment.................................................. A-31
SECTION 8.09. Enforcement................................................. A-31
ANNEX I Index of Defined Terms...................................... A-33
EXHIBIT A Certificate of Incorporation of the Surviving Corporation... A-35
</TABLE>
ii
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of June 6, 2000, by and among UNILEVER
PLC, a company incorporated under the laws of and registered in England ('PLC'),
UNILEVER N.V., a Netherlands corporation ('N.V.' and, together with PLC, the
'Parents'), CONOPCO, INC., a New York corporation and a subsidiary of the
Parents ('New York Sub'), TITAN ACQUISITION COMPANY, a Delaware corporation and
a wholly owned subsidiary of New York Sub ('Delaware Sub'), and BESTFOODS, a
Delaware corporation (the 'Company').
WHEREAS the Board of Directors of each of the Company and Delaware Sub has
approved and declared advisable, and the Board of Directors of each of the
Parents and New York Sub has approved, this Agreement and the merger of Delaware
Sub with and into the Company (the 'Merger'), upon the terms and subject to the
conditions set forth in this Agreement, whereby each issued and outstanding
share of common stock, par value $.25 per share, of the Company (the 'Company
Common Stock') not owned by the Parents, New York Sub, Delaware Sub or the
Company, other than the Appraisal Shares (as defined in Section 2.01(d)), will
be converted into the right to receive $73.00 in cash;
WHEREAS the Parents, New York Sub, Delaware Sub and the Company desire to
make certain representations, warranties, covenants and agreements in connection
with the Merger and also to prescribe various conditions to the Merger;
NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements set forth herein, the parties hereto agree
as follows:
ARTICLE I
THE MERGER
SECTION 1.01. The Merger. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the Delaware General Corporation
Law (the 'DGCL'), Delaware Sub shall be merged with and into the Company at the
Effective Time (as defined in Section 1.03). At the Effective Time, the separate
corporate existence of Delaware Sub shall cease and the Company shall continue
as the surviving corporation (the 'Surviving Corporation') and shall succeed to
and assume all the rights and obligations of Delaware Sub in accordance with the
DGCL.
SECTION 1.02. Closing. Upon the terms and subject to the conditions set
forth in this Agreement, the closing of the Merger (the 'Closing') shall take
place at 11:00 a.m., New York time, on the second business day after the
satisfaction or waiver of the conditions set forth in Section 6.01 (other than
those that by their terms cannot be satisfied until the time of the Closing), at
the offices of Cravath, Swaine & Moore, 825 Eighth Avenue, New York,
New York 10019, or at such other time, date or place agreed to in writing by the
Parents, on the one hand, and the Company, on the other hand; provided, however,
that if all the conditions set forth in Article VI shall not have been satisfied
or waived on such second business day, then the Closing shall take place on the
first business day on which all such conditions shall have been satisfied or
waived. The date on which the Closing occurs is referred to in this Agreement as
the 'Closing Date'.
SECTION 1.03. Effective Time. Upon the terms and subject to the conditions
set forth in this Agreement, as soon as practicable on or after the Closing
Date, a certificate of merger or other appropriate documents (in any such case,
the 'Certificate of Merger') shall be duly prepared, executed and acknowledged
by the parties in accordance with the relevant provisions of the DGCL and filed
with the Secretary of State of the State of Delaware. The Merger shall become
effective upon the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware or at such subsequent time or date as the
Parents, on the one hand, and the Company, on the other hand, shall agree and
specify in the Certificate of Merger. The time at which the Merger becomes
effective is referred to in this Agreement as the 'Effective Time'.
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SECTION 1.04. Effects of the Merger. The Merger shall have the effects set
forth in Section 259 of the DGCL.
SECTION 1.05. Certificate of Incorporation and By-laws. (a) The Certificate
of Incorporation of the Surviving Corporation shall be amended at the Effective
Time to read in the form of Exhibit A and, as so amended, such Certificate of
Incorporation shall be the Certificate of Incorporation of the Surviving
Corporation until thereafter changed or amended as provided therein or by
applicable law.
(b) The By-laws of Delaware Sub as in effect immediately prior to the
Effective Time shall be the By-laws of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable law.
SECTION 1.06. Directors. The directors of Delaware Sub immediately prior to
the Effective Time shall be the directors of the Surviving Corporation until the
earlier of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.
SECTION 1.07. Officers. The officers of the Company immediately prior to the
Effective Time shall be the officers of the Surviving Corporation until the
earlier of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.
ARTICLE II
CONVERSION OF SECURITIES
SECTION 2.01. Conversion of Capital Stock. At the Effective Time, by virtue
of the Merger and without any action on the part of the holder of any shares of
capital stock of the Company or Delaware Sub:
(a) Capital Stock of Delaware Sub. Each issued and outstanding share of
common stock of Delaware Sub shall be converted into and become one fully
paid and nonassessable share of common stock, par value $1.00 per share, of
the Surviving Corporation.
(b) Cancelation of Treasury Stock, the Parents-Owned Stock and New York
Sub-Owned Stock. Each share of Company Common Stock that is owned by the
Company as treasury stock, or by any of the Parents, New York Sub or
Delaware Sub, immediately prior to the Effective Time shall automatically be
canceled and retired and shall cease to exist and no consideration shall be
delivered in exchange therefor.
(c) Conversion of Company Common Stock. Each share of Company Common
Stock issued and outstanding immediately prior to the Effective Time (other
than shares to be canceled in accordance with Section 2.01(b) and the
Appraisal Shares) shall be converted into the right to receive $73.00 in
cash, without interest (the 'Merger Consideration'). At the Effective Time
all such shares shall no longer be outstanding and shall automatically be
canceled and shall cease to exist, and each holder of a certificate that
immediately prior to the Effective Time represented any such shares (a
'Certificate') shall cease to have any rights with respect thereto, except
the right to receive the Merger Consideration with respect to each such
share.
(d) Appraisal Rights. Notwithstanding anything in this Agreement to the
contrary, shares (the 'Appraisal Shares') of Company Common Stock issued and
outstanding immediately prior to the Effective Time that are held by any
holder who is entitled to demand and properly demands appraisal of such
shares pursuant to, and who complies in all respects with, the provisions of
Section 262 of the DGCL ('Section 262') shall not be converted into the
right to receive the Merger Consideration as provided in Section 2.01(c),
but instead such holder shall be entitled to payment of the fair value of
such shares in accordance with the provisions of Section 262. At the
Effective Time, all Appraisal Shares shall no longer be outstanding and
shall automatically be canceled and shall cease to exist, and each holder of
Appraisal Shares shall cease to have any rights with respect thereto, except
the right to receive the fair value of such shares in accordance with the
provisions of Section 262. Notwithstanding the foregoing, if any such holder
shall fail to perfect or otherwise shall waive,
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withdraw or lose the right to appraisal under Section 262 or a court of
competent jurisdiction shall determine that such holder is not entitled to
the relief provided by Section 262, then the right of such holder to be paid
the fair value of such holder's Appraisal Shares under Section 262 shall
cease and each such Appraisal Share shall be deemed to have been converted
at the Effective Time into, and shall have become, the right to receive the
Merger Consideration as provided in Section 2.01(c). The Company shall
provide reasonably prompt notice to the Parents of any demands for appraisal
of any shares of Company Common Stock, and the Parents shall have the right
to participate in and direct all negotiations and proceedings with respect
to such demands. Prior to the Effective Time, the Company shall not, without
the prior written consent of the Parents, make any payment with respect to,
or settle or offer to settle, any such demands, or agree to do any of the
foregoing.
SECTION 2.02. Exchange of Certificates. (a) Paying Agent. Prior to the
Effective Time, New York Sub shall designate a bank or trust company reasonably
acceptable to the Company to act as agent for the payment of the Merger
Consideration upon surrender of Certificates (the 'Paying Agent'). Prior to the
Effective Time, New York Sub will enter into a disbursing agent agreement with
the Paying Agent, in form and substance reasonably acceptable to the Company.
Promptly following the Effective Time, the Parents shall deposit or cause to be
deposited with the Paying Agent in trust for the benefit of the Company's
stockholders cash in an aggregate amount necessary to make the payments pursuant
to Section 2.01(c) to holders of shares of Company Common Stock in respect of
each such share (such amounts being collectively hereinafter referred to as the
'Exchange Fund'). The Paying Agent shall invest the Exchange Fund, as New York
Sub directs, in 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 all principal and interest or commercial paper
obligations receiving the highest rating from either Moody's Investors Service,
Inc. or Standard & Poor's, a division of The McGraw Hill Companies, or a
combination thereof, provided that, in any such case, no such instrument shall
have a maturity exceeding three months. Any net profit resulting from, or
interest or income produced by, such investments shall be payable to New York
Sub. The Exchange Fund shall not be used for any other purpose except as
provided in this Agreement.
(b) Exchange Procedure. As soon as reasonably practicable after the
Effective Time, the Paying Agent shall mail to each holder of record of a
Certificate (i) a form of letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates held
by such person shall pass, only upon proper delivery of the Certificates to the
Paying Agent and shall be in customary form and have such other provisions as
New York Sub may reasonably specify) and (ii) instructions for use in effecting
the surrender of a Certificate in exchange for the Merger Consideration with
respect to each share of Company Common Stock formerly represented by such
Certificate. The Paying Agent shall also establish customary procedures for
electronic or in-person delivery of Certificates and payment therefor. Upon
surrender of a Certificate for cancelation to the Paying Agent or to such other
agent or agents as may be appointed by New York Sub, together with such letter
of transmittal, duly completed and validly executed, and such other documents as
may reasonably be required by the Paying Agent, the holder of such Certificate
shall be entitled to receive in exchange therefor the amount of cash into which
the shares formerly represented by such Certificate shall have been converted
pursuant to Section 2.01(c) into the right to receive, and the Certificate so
surrendered shall forthwith be canceled. In the event of a transfer of ownership
of Company Common Stock that is not registered in the stock transfer books of
the Company, the proper amount of cash may be paid in exchange therefor to a
person other than the person in whose name the Certificate so surrendered is
registered if such Certificate shall be properly endorsed or otherwise be in
proper form for transfer and the person requesting such payment shall pay any
transfer or other taxes required by reason of the payment to a person other than
the registered holder of such Certificate or establish to the satisfaction of
New York Sub that such tax has been paid or is not applicable. No interest shall
be paid or shall accrue on the cash payable upon surrender of any Certificate.
(c) No Further Ownership Rights in Company Common Stock. All cash paid upon
the surrender of a Certificate in accordance with the terms of this Article II
shall be deemed to have
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been paid in full satisfaction of all rights pertaining to the shares of Company
Common Stock formerly represented by such Certificate. At the close of business
on the day on which the Effective Time occurs, the stock transfer books of the
Company shall be closed, and there shall be no further registration of transfers
on the stock transfer books of the Surviving Corporation of the shares of
Company Common Stock that were outstanding immediately prior to the Effective
Time. If, after the Effective Time, Certificates are presented to the Surviving
Corporation or the Paying Agent for transfer or any other reason, they shall be
canceled and exchanged as provided in this Article II.
(d) No Liability. None of the Parents, New York Sub, Delaware Sub, the
Company or the Paying Agent shall be liable to any person in respect of any cash
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law. If any Certificates shall not have been surrendered
prior to three years after the Effective Time (or immediately prior to such
earlier date on which any Merger Consideration would otherwise escheat to or
became the property of any Governmental Entity (as defined in Section 3.01(d)),
any such Merger Consideration in respect thereof shall, to the extent permitted
by applicable law, become the property of the Surviving Corporation, free and
clear of all claims or interest of any person previously entitled thereto.
(e) Lost Certificates. If any Certificate shall have been lost, stolen,
defaced or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen, defaced or destroyed and, if
reasonably required by the Surviving Corporation, the posting by such person of
a bond in such reasonable amount as the Surviving Corporation may direct as
indemnity against any claim that may be made against it with respect to such
Certificate, the Paying Agent shall pay in respect of such lost, stolen, defaced
or destroyed Certificate the Merger Consideration with respect to each share of
Company Common Stock formerly represented by such Certificate.
(f) Withholding Rights. New York Sub, the Surviving Corporation or the
Paying Agent shall be entitled to deduct and withhold any applicable taxes from
the consideration otherwise payable pursuant to this Agreement to any holder of
shares of Company Common Stock.
(g) Termination of Exchange Fund. Any portion of the Exchange Fund that
remains undistributed to the holders of Company Common Stock for six months
after the Effective Time shall be delivered to New York Sub, upon demand, and
any holder of Company Common Stock who has not theretofore complied with this
Article II shall thereafter look only to New York Sub for payment of its claim
for Merger Consideration.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Representations and Warranties of the Company. Except as set
forth on the disclosure schedule (with specific reference to the Section or
Subsection of this Agreement to which the information stated in such disclosure
relates) delivered by the Company to the Parents prior to the execution of this
Agreement (the 'Company Disclosure Schedule') (it being agreed that disclosure
of any item under a Subsection of this Section 3.01 in the Company Disclosure
Schedule shall be deemed disclosure with respect to other Subsections of this
Section 3.01 (other than Section 3.01(e) and 3.01(f)) if the applicability of
such item to any such other Subsection is readily apparent from the face of the
Company Disclosure Schedule), the Company represents and warrants to the
Parents, New York Sub and Delaware Sub as follows:
(a) Organization, Standing and Power. Each of the Company and its
Significant Subsidiaries (as defined in Section 8.03) (i) is duly organized,
validly existing and in good standing under the laws of the jurisdiction of
its organization, (ii) has the requisite corporate, company or partnership
power and authority to carry on its business as now being conducted and
(iii) is duly qualified or licensed to do business and is in good standing
in each jurisdiction in which the nature of its business or the ownership,
leasing or operation of its properties makes such qualification or licensing
necessary, other than (except in the case of clause (i) above with respect
to the Company) where the failure to be so organized, existing,
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qualified or licensed or in good standing individually or in the aggregate
would not reasonably be expected to have a Material Adverse Effect (as
defined in Section 8.03). The Company has delivered to the Parents true and
complete copies of its Restated Certificate of Incorporation and By-laws as
amended to the date of this Agreement. The Company has made available to the
Parents and their representatives true and complete copies of the minutes of
all meetings of the stockholders, the Board of Directors and each committee
of the Board of Directors of the Company held since January 1, 1997 (other
than any such minutes to the extent relating to the Company's consideration
of the Merger or other contemporaneous strategic alternatives).
(b) Subsidiaries. Except as set forth on Exhibit 21 to the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1999 on
file with the Securities and Exchange Commission (the 'SEC'), all the
outstanding shares (other than any director qualifying shares) of capital
stock of, or other equity or voting interests in, each subsidiary (as
defined in Section 8.03) of the Company listed on such Exhibit 21 are owned
by the Company, by another wholly owned subsidiary of the Company or by the
Company and another wholly owned subsidiary of the Company, free and clear
of all pledges, claims, liens, charges, encumbrances and security interests
of any kind or nature whatsoever (collectively, 'Liens'), and are duly
authorized, validly issued, fully paid and nonassessable. Except for the
capital stock of, or other equity or voting interests in, its subsidiaries,
the Company does not own, directly or indirectly, any capital stock of, or
other equity or voting interests in, any corporation, partnership, joint
venture, association, limited liability company or other entity, in any such
case, which entity conducts any activity which is material to the Company or
with respect to which the Company, directly or indirectly through one or
more subsidiaries or otherwise, has any material monetary or other
obligations or exposure to liability.
(c) Capital Structure. The authorized capital stock of the Company
consists of 900,000,000 shares of Company Common Stock, and 25,000,000
shares of preferred stock, par value $1.00 per share (the 'Company Preferred
Stock'). Prior to the Effective Time, each issued and outstanding share of
Series B ESOP Convertible Preferred Stock of the Company (the 'Company
Series B Preferred Stock') shall automatically be converted into 4.37968
shares of Company Common Stock pursuant to the Restated Certificate of
Incorporation of the Company, as amended to the date of this Agreement. As
of the close of business on May 31, 2000, (A) 277,292,968 shares of Company
Common Stock (excluding shares held by the Company as treasury shares but
including 2,631,306 shares of Company Common Stock held in a rabbi trust)
were issued and outstanding, (B) 113,249,920 shares of Company Common Stock
were held by the Company as treasury shares, (C) 37,000,000 shares of
Company Common Stock were originally reserved for issuance pursuant to the
Company's 1984 Stock and Performance Plan, 1993 Stock and Performance Plan,
Deferred Compensation Plan for Outside Directors and Deferred Stock Unit
Plan (such plans, collectively, the 'Company Stock Plans'), of which (as of
June 6, 2000) 8,569,819 shares were subject to outstanding Company Stock
Options (as defined below), (D) 1,633,766 shares of Company Series B
Preferred Stock were issued and outstanding, (E) 7,155,374 shares of Company
Common Stock were reserved for issuance upon conversion of the Company
Series B Preferred Stock and (F) 2,000,000 shares of Company Preferred Stock
were reserved for issuance in connection with the rights (the 'Company
Rights') issued pursuant to the Rights Agreement dated as of January 4, 1999
(as amended from time to time, the 'Company Rights Agreement'), between the
Company and First Chicago Trust Company of New York, as Rights Agent. Other
than 2,345,349 issued and outstanding performance unit rights (whether or
not currently earned) that are linked to the price of Company Common Stock
and have been granted under the Company Stock Plans (collectively, the
'Company Performance Units'), there are no outstanding stock appreciation
rights or other rights that are linked to the price of Company Common Stock
granted under any Company Stock Plan whether or not granted in tandem with a
related Stock Option. No shares of Company Common Stock are owned by any
subsidiary of the Company. The Company has delivered to the Parents a true
and complete list, as of the close of business on June 6, 2000, of all
outstanding Company Performance
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Units granted under the Company Stock Plans, the grant dates and the fair
market value (as determined under the applicable Company Stock Plans) of
Company Common Stock on such grant dates and the names of the holders
thereof. During the period from the close of business on April 30, 2000 to
the date of this Agreement, no Company Performance Units have been granted
by the Company. The Company has delivered to the Parents a true and complete
list, as of the close of business on June 6, 2000, of all outstanding
options to purchase Company Common Stock granted under the Company Stock
Plans (collectively, the 'Company Stock Options') and all other rights to
purchase or receive Company Common Stock (collectively, the 'Company Stock
Issuance Rights') granted under the Company Stock Plans, the number of
shares subject to each such Company Stock Option or Company Stock Issuance
Right, the grant dates and exercise prices of each such Company Stock Option
or, as applicable, Company Stock Issuance Right and the names of the holder
thereof. As of the close of business on June 6, 2000, there were outstanding
Company Stock Options (stand-alone or detached from canceled Company
Performance Units) to purchase 8,569,819 shares of Company Common Stock with
exercise prices on a per share basis lower than the Merger Consideration,
and the weighted average exercise price of such Company Stock Options was
equal to $42.90. Except as set forth above, as of the close of business on
May 31, 2000, no shares of capital stock of, or other equity or voting
interests in, the Company, or options, warrants or other rights to acquire
any such stock or securities, were issued, reserved for issuance or
outstanding. During the period from May 31, 2000 to the date of this
Agreement, (x) there have been no issuances by the Company of shares of
capital stock of, or other equity or voting interests in, the Company other
than issuances of shares of Company Common Stock pursuant to the exercise of
Company Stock Options outstanding on such date as required by their terms as
in effect on the date of this Agreement and (y) there have been no issuances
by the Company of options, warrants or other rights to acquire shares of
capital stock or other equity or voting interests from the Company. All
outstanding shares of capital stock of the Company are, and all shares that
may be issued pursuant to the Company Stock Plans will be, when issued in
accordance with the terms thereof, duly authorized, validly issued, fully
paid and nonassessable and not subject to preemptive rights. There are no
bonds, debentures, notes or other indebtedness of the Company or any of its
subsidiaries, and, except as set forth above, no securities or other
instruments or obligations of the Company or any of its subsidiaries, having
in any such case at any time (whether actual or contingent) the right to
vote (or which are convertible into, or exchangeable for, securities having
the right to vote) on any matters on which stockholders of the Company or
any of its subsidiaries may vote. Except as set forth above and except as
specifically permitted under Section 4.01(a), there are no Contracts (as
defined in Section 3.01(d)) of any kind to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries
is bound obligating the Company or any of its subsidiaries to issue, deliver
or sell, or cause to be issued, delivered or sold, additional shares of
capital stock of, or other equity or voting interests in, or securities
convertible into, or exchangeable or exercisable for, shares of capital
stock of, or other equity or voting interests in, the Company or any of its
subsidiaries or obligating the Company or any of its subsidiaries to issue,
grant, extend or enter into any such security, option, warrant, call, right
or Contract. There are no outstanding contractual obligations of the Company
or any of its subsidiaries to (I) repurchase, redeem or otherwise acquire
any shares of capital stock of, or other equity or voting interests in, the
Company or any of its subsidiaries or (II) vote or dispose of any shares of
the capital stock of, or other equity or voting interests in, any of its
subsidiaries. To the knowledge of the Company as of the date of this
Agreement, there are no irrevocable proxies and no voting agreements with
respect to any shares of the capital stock of, or other equity or voting
interests in, the Company or any of its subsidiaries. The Company has made
available to the Parents a complete and correct copy of the Company Rights
Agreement, as amended to the date of this Agreement (prior to the amendments
thereto referred to in Section 3.01(d)(ii)).
(d) Authority; Noncontravention. (i) The Company has the requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions
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contemplated hereby. The execution and delivery of this Agreement by the
Company and the consummation by the Company of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the
part of the Company and no other corporate proceedings on the part of the
Company are necessary to approve this Agreement or to consummate the
transactions contemplated hereby, subject, in the case of the consummation
of the Merger, to obtaining the Company Stockholder Approval (as defined in
Section 3.01(n)). This Agreement has been duly executed and delivered by the
Company and constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except that
such enforcement may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting or relating to
enforcement of creditors' rights generally and (ii) general equitable
principles. The Board of Directors of the Company, at a meeting duly called
and held at which directors of the Company constituting a quorum were
present, duly adopted resolutions (i) approving and declaring advisable the
Merger and this Agreement and the transactions contemplated hereby,
(ii) declaring that it is in the best interests of the Company's
stockholders that the Company enter into this Agreement and consummate the
Merger on the terms and subject to the conditions set forth in this
Agreement, (iii) declaring that the consideration to be paid to the
Company's stockholders in the Merger is fair to such stockholders,
(iv) directing that this Agreement be submitted to a vote at a meeting of
the Company's stockholders and (v) recommending that the Company's
stockholders adopt this Agreement. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby and
compliance with the provisions hereof do not and will not conflict with, or
result in any violation or breach of, or default (with or without notice or
lapse of time, or both) under, or give rise to a right of, or result in,
termination, cancelation or acceleration of any obligation or to loss of a
material benefit under, or result in the creation of any Lien in or upon any
of the properties or assets of the Company or any of its subsidiaries under,
or give rise to any increased, additional, accelerated or guaranteed rights
or entitlements under, any provision of (i) the Restated Certificate of
Incorporation or By-laws of the Company or the certificate of incorporation
or by-laws (or similar organizational documents) of any of its subsidiaries,
(ii) any loan or credit agreement, bond, debenture, note, mortgage,
indenture, guarantee, lease or other contract, commitment, agreement,
instrument, arrangement, understanding, obligation, undertaking, permit,
concession, franchise or license, whether oral or written (each, including
all amendments thereto, a 'Contract'), to which the Company or any of its
subsidiaries is a party or any of their respective properties or assets is
subject or otherwise under which the Company or any of its subsidiaries have
rights or benefits or (iii) subject to the governmental filings and other
matters referred to in the following sentence, any (A) statute, law,
ordinance, rule or regulation or (B) judgment, order or decree, in each case
applicable to the Company or any of its subsidiaries or their respective
properties or assets, other than, in the case of clauses (ii) and (iii), any
such conflicts, violations, breaches, defaults, rights, losses, Liens or
entitlements that individually or in the aggregate would not reasonably be
expected to have a Material Adverse Effect. No consent, approval, order or
authorization of, or registration, declaration or filing with, any domestic
or foreign (whether national, federal, state, provincial, local or
otherwise) government or any court, administrative agency or commission or
other governmental or regulatory authority or agency, domestic, foreign or
supranational (a 'Governmental Entity'), is required by or with respect to
the Company or any of its subsidiaries in connection with the execution and
delivery of this Agreement by the Company or the consummation by the Company
of the transactions contemplated hereby or compliance with the provisions
hereof, except for (1) the receipt of a decision under Article 6(1)(b) or
8(2) of Council Regulation No. 4064/89 of the European Community, as amended
(the 'EC Merger Regulation'), declaring the Merger compatible with the EC
common market, the filing of a premerger notification and report form by the
Company under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the 'HSR Act'), and the receipt, termination or expiration, as
applicable, of such other approvals or waiting periods required under any
other applicable competition, merger control, antitrust or similar law or
regulation, (2) the filing with the SEC of a proxy statement relating to the
adoption by the Company's
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stockholders of this Agreement (as amended or supplemented from time to
time, the 'Proxy Statement') and such reports under the Securities Exchange
Act of 1934, as amended (the 'Exchange Act'), as may be required in
connection with this Agreement, the Merger and the other transactions
contemplated hereby, (3) the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware and appropriate documents with
the relevant authorities of other states in which the Company or any of its
subsidiaries is qualified to do business, (4) any filings required under the
rules and regulations of the New York Stock Exchange ('NYSE') and (5) such
other consents, approvals, orders, authorizations, registrations,
declarations and filings the failure of which to be obtained or made
individually or in the aggregate would not reasonably be expected to have a
Material Adverse Effect.
(ii) The Company and the Board of Directors of the Company have taken
all action necessary to (i) render the Company Rights inapplicable to this
Agreement, the Merger and the other transactions contemplated hereby and
(ii) ensure that (A) neither of the Parents nor any of their respective
affiliates or associates is or will become an 'Acquiring Person' (as defined
in the Company Rights Agreement) by reason of this Agreement, the Merger or
any other transaction contemplated hereby, (B) a 'Distribution Date' (as
defined in the Company Rights Agreement) shall not occur by reason of this
Agreement, the Merger or any other transaction contemplated hereby and
(C) the Company Rights shall expire immediately prior to the Effective Time.
(e) SEC Documents. The Company has filed with the SEC all forms,
reports, schedules, statements and other documents required to be filed with
the SEC by the Company since January 1, 1999 (together with all information
incorporated therein by reference, the 'SEC Documents'). No subsidiary of
the Company is required to file any form, report, schedule, statement or
other document with the SEC. As of their respective dates, the SEC Documents
complied in all material respects with the requirements of the Securities
Act of 1933 (the 'Securities Act') or the Exchange Act, as the case may be,
and the rules and regulations of the SEC promulgated thereunder applicable
to such SEC Documents, and none of the SEC Documents at the time they were
filed contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading. Except to the extent that information contained in any
SEC Document filed and publicly available prior to the date of this
Agreement (a 'Filed SEC Document') has been revised or superseded by a later
filed Filed SEC Document, none of the SEC Documents contains any untrue
statement of a material fact or omits 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. The
financial statements (including the related notes) included in the SEC
Documents comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC
with respect thereto, have been prepared in accordance with generally
accepted accounting principles ('GAAP') (except, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC) applied on a consistent
basis during the periods involved (except as may be indicated in the notes
thereto) and fairly present in all material respects the consolidated
financial position of the Company and its consolidated subsidiaries as of
the dates thereof and their consolidated results of operations and cash
flows for the periods then ended (subject, in the case of unaudited
statements, to normal and recurring year-end audit adjustments). Except as
set forth in the Filed SEC Documents, the Company and its subsidiaries have
no liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise), other than (x) liabilities for taxes (as defined
in Section 3.01(l)(vi)) and (y) liabilities and obligations that
individually or in the aggregate would not reasonably be expected to have a
Material Adverse Effect.
(f) Absence of Certain Changes or Events. Since December 31, 1999, the
Company and its subsidiaries have conducted their respective businesses only
in the ordinary course consistent with past practice, and there has not been
(i) a Material Adverse Effect, (ii) prior to the date of this Agreement, any
declaration, setting aside or payment of any dividend on, or other
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distribution (whether in cash, stock or property) in respect of, any of the
Company's or any of its subsidiaries' capital stock or other equity or
voting interests, except for dividends by a wholly owned subsidiary of the
Company to its parent and except for the regular quarterly cash dividend
with respect to the Company Common Stock in the amount of $0.265 per share
and the regular semi-annual cash dividend on the Company Series B Preferred
Stock, (iii) prior to the date of this Agreement, any purchase, redemption
or other acquisition of any shares of capital stock of, or other equity or
voting interests in, the Company or any of its subsidiaries or any options,
warrants, calls or rights to acquire such shares or other interests, except
as required by the terms of the Company's Stock Options or the Company
Series B Preferred Stock or pursuant to share repurchases pursuant to
publicly announced programs, (iv) prior to the date of this Agreement, any
split, combination or reclassification of any of the Company's or any of its
subsidiaries' capital stock or other equity or voting interests or any
issuance or the authorization of any issuance of any other securities in
respect of, in lieu of or in substitution for shares of capital stock of, or
other equity or voting interests in, the Company or any of its United States
subsidiaries and, to the knowledge of the Company, its non-United States
subsidiaries, (v) except as provided or made available to the Parents prior
to the date of this Agreement or in the ordinary course of business
consistent with past practice or as was required under any agreement or
benefit plan in effect as of December 31, 1999, any granting by the Company
or any of its United States subsidiaries to any current or former director,
officer or employee of any increase in compensation, bonus or other benefits
or any such granting of any type of compensation or benefits to any current
or former director, officer or employee not previously receiving or entitled
to receive such type of compensation or benefit, (vi) any payment of any
benefit or the grant or amendment of any award (including in respect of
stock options, stock appreciation rights, performance units, restricted
stock or other stock-based or stock-related awards or the removal or
modification of any restrictions in any Company Benefit Agreement or Company
Benefit Plan or awards made thereunder) except as required to comply with
any applicable law or any Company Benefit Agreement or Company Benefit Plan
existing on such date and except as provided or made available to the
Parents prior to the date of this Agreement or in the ordinary course of
business consistent with past practice, (vii) any damage, destruction or
loss, whether or not covered by insurance, that individually or in the
aggregate would reasonably be expected to have a Material Adverse Effect,
(viii) any change in financial or tax accounting methods, principles or
practices by the Company or any of its subsidiaries, except insofar as may
have been required by a change in GAAP or applicable law or (ix) any
revaluation by the Company or any of its subsidiaries of any assets that are
material to the Company and its subsidiaries, taken as a whole.
(g) Litigation. There is no suit, claim, action, investigation or
proceeding pending or, to the knowledge of the Company, threatened against
or affecting the Company or any of its subsidiaries or any of their
respective assets that individually or in the aggregate would reasonably be
expected to have a Material Adverse Effect, nor is there any statute, law,
ordinance, rule, regulation, judgment, order or decree, of any Governmental
Entity or arbitrator outstanding against, or, to the knowledge of the
Company, investigation, proceeding, notice of violation, order of forfeiture
or complaint by any Governmental Entity involving, the Company or any of its
subsidiaries that individually or in the aggregate would reasonably be
expected to have a Material Adverse Effect.
(h) Compliance with Laws. Except with respect to Environmental Laws (as
defined in Section 3.01(j)) and taxes, which are the subject of
Sections 3.01(j) and 3.01(l), respectively, the Company and its subsidiaries
and their relevant personnel and operations are, and since January 1, 1998
have been, in compliance with all statutes, laws, ordinances, rules,
regulations, judgments, orders and decrees of any Governmental Entity
applicable to their businesses or operations, except for instances of
noncompliance that individually or in the aggregate would not reasonably be
expected to have a Material Adverse Effect. None of the Company or any of
its subsidiaries has received, since January 1, 1998, a notice or other
written communication alleging or relating to a possible violation of any
statute, law, ordinance, rule, regulation,
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judgment, order or decree of any Governmental Entity applicable to its
businesses or operations, except for notices or other written communications
alleging or relating to possible violations that individually or in the
aggregate would not reasonably be expected to have a Material Adverse
Effect. The Company and its subsidiaries have in effect all permits,
licenses, variances, exemptions, authorizations, franchises, orders and
approvals of all Governmental Entities (collectively, 'Permits'), necessary
or advisable for them to own, lease or operate their properties and assets
and to carry on their businesses as now conducted, and there has occurred no
violation of, default (with or without notice or lapse of time or both)
under, or event giving to others any right of termination, amendment or
cancelation of, with or without notice or lapse of time or both, any such
Permit, except for any such failures to have in effect, violations, defaults
or events that individually or in the aggregate would not reasonably be
expected to have a Material Adverse Effect.
(i) Absence of Changes in Company Benefit Plans; Employment Agreements.
Except as disclosed in the Filed SEC Documents or as provided or made
available to the Parents prior to the date of this Agreement, since
December 31, 1999, none of the Company or any of its United States
subsidiaries has terminated, adopted, amended or agreed to amend in any
material respect any bonus, pension, profit sharing, deferred compensation,
incentive compensation, stock ownership, stock purchase, stock appreciation,
restricted stock, stock option, phantom stock, performance, retirement,
thrift, savings, stock bonus, cafeteria, paid time-off, perquisite, fringe
benefit, vacation, severance, disability, death benefit, hospitalization,
medical, welfare benefit or other plan, program, policy, arrangement or
understanding providing benefits to any of the current or former directors,
officers or employees of the Company or any of its United States
subsidiaries (collectively, 'Company Benefit Plans') or any change in any
actuarial or other assumption used to calculate funding obligations with
respect to any Company Pension Plan (as defined in Section 3.01(k)) or any
change in the manner in which contributions to any Company Pension Plan are
made or the basis on which such contributions are determined. Except as
disclosed in the Filed SEC Documents or as provided or made available to the
Parents prior to the date of this Agreement, there exist no employment,
deferred compensation, severance or termination agreements or arrangements
between the Company or any of its United States subsidiaries, on the one
hand, and either (i) any current or former director or executive officer of
the Company, on the other hand, or (ii) any current or former director or
executive officer or employee of the Company or its United States
subsidiaries, which in the case of this clause (ii) is material to the
Company or such United States subsidiary (collectively, 'Company Benefit
Agreements'), and no Company Benefit Agreement or Company Benefit Plan
provides benefits that are contingent, or the terms of which are materially
altered, upon the occurrence of a transaction involving the Company or its
subsidiaries of the nature contemplated by this Agreement. The Company and
its United States subsidiaries have consulting agreements with no more than
seven individuals, none of which provide for compensation in excess of one
million dollars per annum.
(j) Environmental Matters. Except for such matters that individually or
in the aggregate would not reasonably be expected to have a Material Adverse
Effect and except as set forth in the Filed SEC Documents: (i) each of the
Company and its subsidiaries possesses all Environmental Permits (as defined
below) necessary to conduct its businesses and operations as currently
conducted; (ii) each of the Company and its subsidiaries is in compliance
with all applicable Environmental Laws and all applicable Environmental
Permits, and none of the Company or its subsidiaries has received any
(A) written communication from any Governmental Entity or other person that
alleges that the Company or any of its subsidiaries has violated or is
liable under any Environmental Law or (B) written request for information
pursuant to applicable Environmental Laws concerning the disposal of
Hazardous Materials (as defined below); (iii) there are no Environmental
Claims (as defined below) pending or, to the knowledge of the Company,
threatened (A) against the Company or any of its subsidiaries or
(B) against any person whose liability for any Environmental Claim the
Company or any of its subsidiaries has retained or assumed, either
contractually or by operation of law, and none of the Company or its
subsidiaries has contractually retained or assumed any liabilities or
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obligations that could reasonably be expected to provide the basis for any
Environmental Claim; and (iv) there have been no Releases (as defined below)
of any Hazardous Materials that could reasonably be expected to form the
basis of any Environmental Claim.
For the purposes of this Agreement: (A) 'Environmental Claims' means any
and all administrative, regulatory or judicial actions, orders, decrees,
suits, demands, demand letters, directives, claims, liens, investigations,
proceedings or notices of noncompliance or violation by any Governmental
Entity or other person alleging liability arising out of, based on or
related to (x) the presence, Release or threatened Release of, or exposure
to, any Hazardous Materials at any location, whether or not owned, operated,
leased or managed by the Company or any of its subsidiaries, or
(y) circumstances forming the basis of any violation or alleged violation of
any Environmental Law or Environmental Permit; (B) 'Environmental Laws'
means all laws, rules, regulations, orders, decrees, common law, judgments
or binding agreements issued, promulgated or entered into by or with any
Governmental Entity relating to pollution or protection of the environment
(including ambient air, surface water, groundwater, soils or subsurface
strata) or protection of human health as it relates to the environment,
including laws and regulations relating to Releases or threatened Releases
of Hazardous Materials or otherwise relating to the generation, manufacture,
processing, distribution, use, treatment, storage, transport, handling of or
exposure to Hazardous Materials; (C) 'Environmental Permits' means all
permits, licenses, registrations, waivers, exemptions and other
authorizations required under applicable Environmental Laws; (D) 'Hazardous
Materials' means all hazardous, toxic, explosive or radioactive substances,
wastes or other pollutants, including petroleum or petroleum distillates,
asbestos or asbestos-containing material, and all other substances or wastes
of any nature regulated pursuant to any Environmental Law; and
(E) 'Release' means any release, spill, emission, leaking, dumping,
injection, pouring, deposit, disposal, discharge, dispersal, leaching or
migration into or through the environment (including ambient air, surface
water, groundwater, land surface or subsurface strata) or within any
building, structure, facility or fixture.
(k) ERISA Compliance. (i) Section 3.01(k)(i) of the Company Disclosure
Schedule contains a true and complete list of all material United States
'employee welfare benefit plans' (as defined in Section 3(1) of the Employee
Retirement Income Security Act of 1974, as amended ('ERISA')), material
United States 'employee pension benefit plans' (as defined in Section 3(2)
of ERISA) (together, 'Company Pension Plans') and all other Company Benefit
Plans maintained or contributed to by the Company or any of its United
States subsidiaries or any person or entity that, together with the Company
or any of its United States subsidiaries, is treated as a single employer (a
'Commonly Controlled Entity') under Section 414(b), (c), (m) or (o) of the
Internal Revenue Code of 1986, as amended (the 'Code'), for the benefit of
any current or former directors, officers or employees of the Company or any
of its United States subsidiaries. Other than those filed with the Filed SEC
Documents, the Company has provided or made available to the Parents true
and complete copies of (1) each Company Benefit Plan, (2) the most recent
annual report on Form 5500 required to be filed with the Internal Revenue
Service (the 'IRS') with respect to each Company Benefit Plan (if any such
report was required), (3) the most recent summary plan description for each
Company Benefit Plan for which such summary plan description is required and
(4) each trust agreement and group annuity contract relating to any Company
Benefit Plan. Each Company Benefit Plan has been administered in accordance
with its terms, except where the failure so to be administered individually
or in the aggregate would not reasonably be expected to have a Material
Adverse Effect. The Company and its subsidiaries and all the Company Benefit
Plans are in compliance with all applicable provisions of ERISA and the
Code, except for instances of possible noncompliance that individually or in
the aggregate would not reasonably be expected to have a Material Adverse
Effect. All Company Pension Plans (other than the Company's Cash Balance
Pension Plan for Salaried Employees) that are intended to be qualified under
Section 401(a) of the Code have received favorable determination letters
from the Internal Revenue Service with respect to 'TRA' (as defined in
Section 1 of Rev. Proc. 91-66 or 93-39), to the effect that such Company
Pension Plans are
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qualified and exempt from Federal income taxes under Sections 401(a) and
501(a), respectively, of the Code, and no such determination letter has been
revoked nor, to the knowledge of the Company, has revocation been
threatened, nor has any such Company Pension Plan been amended since the
date of its most recent determination letter or application therefor in any
respect that would adversely affect its qualification or materially increase
its costs. Except as, individually or in the aggregate, would not reasonably
be expected to have a Material Adverse Effect, there is no pending or, to
the knowledge of the Company, threatened litigation relating to the Company
Benefit Plans.
(ii) Except as, individually or in the aggregate, would not reasonably
be expected to have a Material Adverse Effect, neither the Company nor any
Commonly Controlled Entity has maintained, contributed to or been obligated
to contribute to any Company Pension Plan that is subject to Title IV of
ERISA (other than a multiemployer plan within the meaning of Section 3(37)
of ERISA) with respect to which the Company or any Commonly Controlled
Entity has unfunded liabilities based upon the assumptions utilized in the
audited financial statements of the Company included in the Filed SEC
Documents under any Company Benefit Plan subject to ERISA. Neither the
Company nor any of its subsidiaries, nor to the knowledge of the Company,
any officer of the Company or any of its subsidiaries or any of the Company
Benefit Plans which are subject to ERISA, including the Company Pension
Plans, any trusts created thereunder or any trustee or administrator
thereof, has engaged in a 'prohibited transaction' (as such term is defined
in Section 406 of ERISA or Section 4975 of the Code) or any other breach of
fiduciary responsibility that would reasonably be expected to subject the
Company, any of its subsidiaries or any officer of the Company or any of its
subsidiaries to the tax or penalty on prohibited transactions imposed by
such Section 4975 or to any liability under Section 502(i) or 502(1) of
ERISA, except for any such tax, penalty or liability that individually or in
the aggregate would not reasonably be expected to have a Material Adverse
Effect. Except as, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect, all contributions and premiums
required to be made under the terms of any Company Benefit Plan as of the
date hereof have been timely made or have been reflected on the most recent
consolidated balance sheet filed or incorporated by reference in the Filed
SEC Documents.
(iii) Except as, individually or in the aggregate, would not reasonably
be expected to have a Material Adverse Effect, each Company Benefit Plan
that is a welfare benefit plan, to the extent applicable, complies in all
material respects with the applicable requirements of Section 4980B(f) of
the Code.
(iv) Except as, individually or in the aggregate, would not reasonably
be expected to have a Material Adverse Effect, the deduction of any amount
payable pursuant to the terms of the Company Benefit Plans or Company
Benefit Agreements (including by reason of the transactions contemplated
hereby) will not be subject to disallowance under Section 162(m) of the
Code.
(v) The consummation of the Merger or any other transaction contemplated
by this Agreement will not (x) entitle any employee, officer or director of
the Company or any of its subsidiaries to severance pay or (y) accelerate
the time of payment or vesting or trigger any payment or funding (whether
through a grantor trust or otherwise) of compensation or benefits under,
increase the amount payable or trigger any other material obligation
pursuant to, any of the Company Benefit Plans or Company Benefit Agreements.
(vi) Except as, individually or in the aggregate, would not reasonably
be expected to have a Material Adverse Effect, to the knowledge of the
Company all employee benefit plans established or maintained by non-United
States subsidiaries of the Company ('Foreign Employee Plans') are in
compliance with applicable foreign law. As of December 31, 1999, except as,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect, to the knowledge of the Company there are no
unfunded or unaccrued liabilities with respect to Foreign Employee Plans in
excess of the amount reflected in the most recent audited financial
statements contained in the Filed SEC Documents.
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(l) Taxes. (i) Each of the Company and its subsidiaries has timely filed
or caused to be filed all tax returns required to be filed by it and all
such tax returns are true and complete, except for such failures to file and
such incompleteness or inaccuracies that individually or in the aggregate
would not reasonably be expected to have a Material Adverse Effect. Each of
the Company and its subsidiaries has (a) timely paid or duly provided for in
its most recent financial statements contained in the Filed SEC Documents
all taxes due with respect to the taxable periods covered by such tax
returns and all other taxes otherwise due, and (b) duly provided for on its
most recent financial statements included in the Filed SEC Documents all
taxes not yet due but that are payable for periods or portions thereof
through the date of such financial statements, except for such failures to
timely pay or duly provide for that individually or in the aggregate would
not reasonably be expected to have a Material Adverse Effect.
(ii) There is no deficiency, refund litigation, proposed adjustment or
matter in controversy with respect to any taxes alleged to be due and owing
by the Company or any of its subsidiaries whether or not with respect to a
tax return filed by the Company or any of its subsidiaries, except for such
deficiencies, refund litigation, proposed adjustments or matters in
controversy that individually or in the aggregate would not reasonably be
expected to have a Material Adverse Effect. No issues relating to taxes were
raised by the relevant taxing authority in any audit or examination
presently pending or completed in the last three years, that could
reasonably be expected to have a material effect on the Company or any of
its subsidiaries. The relevant statute of limitations is closed with respect
to all United States Federal income tax returns of the Company and its
subsidiaries to the extent set forth in the Company Disclosure Schedule.
(iii) None of the Company or any of its subsidiaries is a party to or
bound by any tax sharing agreement, tax indemnity obligation or similar
agreement, arrangement or practice (including any liability for taxes of any
other person under Treasury Regulation 1.1502-6 or comparable provision of
foreign, state or local law) except for any agreement or liability solely
among the Company and its subsidiaries.
(iv) Neither the Company nor any of its subsidiaries has entered into
any (A) advance pricing agreement, closing agreement or similar agreement
with the IRS or (B) similar material agreement with any other taxing
authority, in either case which is effective as of the date of this
Agreement.
(v) None of the Company or any of its subsidiaries has constituted
either a 'distributing corporation' or a 'controlled corporation' (within
the meaning of Section 355(a)(1)(A) of the Code) in a distribution of stock
qualifying or intended to qualify for tax-free treatment under Section 355
of the Code in the three years prior to the date of this Agreement.
(vi) As used in this Agreement, (A) 'taxes' shall mean all forms of
taxation imposed by any Federal, state, local, foreign or other governmental
authority, including income, franchise, property, sales, use, excise,
employment, unemployment, payroll, social security, estimated, value added,
ad valorem, transfer, recapture, withholding and other taxes of any kind,
including any interest, penalties and additions thereto and (B) 'tax return'
shall mean any return, declaration, report, document, claim for refund,
information return or other statement or information required to be filed or
supplied to any taxing authority or jurisdiction with respect to taxes,
including any schedule or attachment thereto, and including any amendment
thereof.
(m) State Takeover Statutes. No state takeover or similar statute or
regulation is applicable to this Agreement, the Merger or the other
transactions contemplated hereby.
(n) Voting Requirements. The affirmative vote at the Stockholders
Meeting or any adjournment or postponement thereof of the holders of a
majority of the voting power represented by the outstanding shares of
Company Common Stock and Company Series B Preferred Stock, voting together
as a single class, in favor of adopting this Agreement (the 'Company
Stockholder Approval') is the only vote of the holders of any class or
series of the
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Company's capital stock necessary to approve or adopt this Agreement or the
Merger. The affirmative vote of the holders of the Company Common Stock or
the Company Series B Preferred Stock is not necessary to approve any
transaction contemplated by this Agreement other than the consummation of
the Merger.
(o) Brokers; Schedule of Fees and Expenses. No broker, investment
banker, financial advisor or other person, other than Merrill Lynch & Co.
and Salomon Smith Barney, Inc., the fees and expenses of which will be paid
by the Company, is entitled to any broker's, finder's, financial advisor's
or other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf
of the Company. The Company has delivered to the Parents true and complete
copies of all agreements under which any such fees or expenses are payable
and all indemnification and other agreements related to the engagement of
the persons to whom such fees are payable. The Company has previously
provided the Parents with its good faith current estimate of the aggregate
of the fees and expenses of any accountant, broker, financial advisor (other
than Merrill Lynch & Co. and Salomon Smith Barney, Inc.), consultant, legal
counsel or other person retained by the Company or any of its subsidiaries
in connection with this Agreement or the transactions contemplated hereby
which will be paid by or on behalf of the Company in connection with this
Agreement and the transactions contemplated hereby.
(p) Opinions of Financial Advisors. The Company has received the oral
opinion (to be subsequently confirmed in writing) of each of Merrill Lynch &
Co. and Salomon Smith Barney, Inc., to the effect that, as of the date of
this Agreement, the consideration to be received in the Merger by the
Company's stockholders is fair to the Company's stockholders from a
financial point of view. The Company has requested that such written
opinions be delivered to it as promptly as practicable following the
execution of this Agreement, and a copy of each such written opinion will be
delivered to the Parents promptly after such written opinions have been
received by the Company.
SECTION 3.02. Representations and Warranties of the Parents, New York Sub
and Delaware Sub. The Parents, New York Sub and Delaware Sub, jointly and
severally, represent and warrant to the Company as follows:
(a) Organization. Each of PLC, N.V., New York Sub and Delaware Sub is
duly organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized and has the requisite corporate power
and authority to carry on its business as now being conducted.
(b) Authority; Noncontravention. Each of PLC, N.V., New York Sub and
Delaware 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 of this Agreement by the Parents, New
York Sub and Delaware Sub and the consummation by the Parents, New York Sub
and Delaware Sub of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of the Parents, New
York Sub and Delaware Sub and no other corporate proceedings on the part of
the Parents, New York Sub or Delaware Sub are necessary to approve this
Agreement or to consummate the transactions contemplated hereby (other than
the passing of a resolution at an extraordinary general meeting of
shareholders of PLC approving this Agreement and the Merger (the 'PLC
Shareholder Approval') and the passing of a resolution at an extraordinary
general meeting of shareholders of N.V. approving this Agreement and the
Merger (the 'N.V. Shareholder Approval' and, together with the PLC
Shareholder Approval, the 'Parents Shareholder Approval')). This Agreement
has been duly executed and delivered by the Parents, New York Sub and
Delaware Sub and constitutes a valid and binding obligation of the Parents,
New York Sub and Delaware Sub, as applicable, enforceable against the
Parents, New York Sub and Delaware Sub, as applicable, in accordance with
its terms, except that such enforcement may be subject to (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting or
relating to enforcement of creditors' rights generally and (ii) general
equitable principles. The execution and delivery of this Agreement and the
consummation of the
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transactions contemplated hereby and compliance with the provisions of this
Agreement do not and will not conflict with, or result in any violation or
breach of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of, or result in, termination, cancelation or
acceleration of any obligation or to loss of a material benefit under, or
result in the creation of any Lien upon any of the properties or assets of
the Parents or New York Sub under, or give rise to any increased,
additional, accelerated or guaranteed rights or entitlements under, any
provision of (i) the organizational documents of either of the Parents or
the Certificate of Incorporation or By-laws of New York Sub or the
Certificate of Incorporation or By-laws of Delaware Sub, (ii) any Contract
applicable to the Parents, New York Sub or Delaware Sub or their respective
properties or assets or (iii) subject to the governmental filings and other
matters referred to in the following sentence, any (A) statute, law,
ordinance, rule or regulation or (B) judgment, order or decree, in each case
applicable to the Parents, New York Sub or Delaware Sub or their respective
properties or assets, other than, in the case of clauses (ii) and (iii), any
such conflicts, violations, defaults, rights, losses or Liens that
individually or in the aggregate would not reasonably be expected to prevent
or materially impede or delay the consummation of the Merger or the other
transactions contemplated hereby. No consent, approval, order or
authorization of, or registration, declaration or filing with, any
Governmental Entity is required by or with respect to the Parents, New York
Sub or Delaware Sub in connection with the execution and delivery of this
Agreement or the consummation by the Parents, New York Sub and Delaware Sub
of the transactions contemplated hereby or the compliance with the
provisions of this Agreement, except for (1) the receipt of a decision under
Article 6(1)(b) or 8(2) of the EC Merger Regulation declaring the Merger
compatible with the EC common market, the filing of a premerger notification
and report form under the HSR Act, and the receipt, termination or
expiration, as applicable, of such other approvals or waiting periods
required under any other applicable competition, merger control, antitrust
or similar law or regulation, (2) the filing with, or furnishing to, the SEC
of such reports under the Exchange Act as may be required in connection with
this Agreement, the Merger and the other transactions contemplated hereby,
(3) the filing of the Certificate of Merger with the Secretary of State of
the State of Delaware and appropriate documents with the relevant
authorities of other states in which the Company is qualified to do
business, (4) the PLC Shareholder Approval, (5) any filings required under
the listing rules of the U.K. Listing Authority in relation to the London
Stock Exchange or the listing rules and regulations of any other applicable
securities exchange and (6) such other consents, approvals, orders,
authorizations, registrations, declarations and filings the failure of which
to be obtained or made individually or in the aggregate would not impair in
any material respect the ability of the Parents, New York Sub or Delaware
Sub to perform its obligations under this Agreement or prevent or materially
delay the consummation of the Merger. Each of the PLC Shareholder Approval
and the N.V. Shareholder Approval shall require only that the majority of
the votes cast by or on behalf of the holders of the issued ordinary shares
of each of PLC and N.V., respectively, that are entitled to vote upon the
resolution to approve this Agreement and the Merger and are present or
represented by proxy at an extraordinary general meeting of the shareholders
of each of PLC and N.V., respectively, are cast in favor of such resolution.
(c) Interim Operations of Delaware Sub. Delaware Sub was formed solely
for the purpose of engaging in the transactions contemplated hereby and has
engaged in no business other than in connection with the transactions
contemplated by this Agreement. Delaware Sub is a wholly owned subsidiary of
New York Sub.
(d) Capital Resources. On or prior to the Closing Date, the Parents will
have sufficient cash to provide for payment of the Merger Consideration.
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ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 4.01. Conduct of Business. (a) Conduct of Business by the Company.
During the period from the date of this Agreement to the Effective Time, except
as consented to in writing by the Parents or as specifically contemplated by
this Agreement, the Company shall, and shall cause its subsidiaries to, carry on
their respective businesses in the ordinary course consistent with past practice
and, to the extent consistent therewith, use their reasonable best efforts to
preserve their assets and technology and preserve their relationships with
customers, suppliers, licensors, licensees, distributors and others having
business dealings with them. Without limiting the generality of the foregoing,
during the period from the date of this Agreement to the Effective Time, except
as consented to in writing by the Parents, as specifically contemplated by this
Agreement or as set forth in Section 4.01(a) of the Company Disclosure Schedule,
the Company shall not, and shall not permit any of its subsidiaries to:
(i) (x) declare, set aside or pay any dividends on, or make any other
distributions (whether in cash, stock or property) in respect of, any of its
capital stock or other equity or voting interests except for (A) dividends
by a direct or indirect wholly owned subsidiary of the Company to its
parent, (B) regular quarterly cash dividends with respect to the Company
Common Stock, not in excess of $0.265 per share, with usual declaration,
record and payment dates and in accordance with the Company's past dividend
policy and (C) regular cash dividends with respect to outstanding shares of
Company Series B Preferred Stock in accordance with the terms thereof as in
effect on the date of this Agreement, (y) purchase, redeem or otherwise
acquire any shares of capital stock of, or other equity or voting interests
in, the Company or its subsidiaries or any options, warrants, calls or
rights to acquire any such shares or other interests, except as required by
the terms thereof as in effect on the date of this Agreement, or (z) split,
combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock or other equity or voting
interests (other than upon the conversion of shares of Company Series B
Preferred Stock into shares of Company Common Stock in accordance with the
Restated Certificate of Incorporation of the Company, as amended to the date
of this Agreement);
(ii) issue, deliver, sell, pledge or otherwise encumber any shares of
its capital stock, any other equity or voting interests or any securities
convertible into, or exchangeable for, or any options, warrants, calls or
rights to acquire, any such shares, interests or securities or any stock
appreciation rights or other rights that are linked to the price of Company
Common Stock (other than the issuance of shares of Company Common Stock (and
associated Company Rights) (1) upon the exercise of Company Stock Options
and settlement of Company Stock Issuance Rights in accordance with the terms
of such Company Stock Options and Company Stock Issuance Rights as in effect
on the date of this Agreement or (2) upon the conversion of shares of
Company Series B Preferred Stock into shares of Company Common Stock in
accordance with the Restated Certificate of Incorporation of the Company, as
amended to the date of this Agreement);
(iii) amend its certificate of incorporation or by-laws (or similar
organizational documents);
(iv) directly or indirectly acquire or agree to acquire (A) by merging
or consolidating with, or by purchasing all or a substantial portion of the
assets of, or by any other manner, any assets constituting a business or any
corporation, partnership, joint venture, association, limited liability
company or other entity or division thereof, or any direct or indirect
interest in any of the foregoing, or (B) any assets that are material,
individually or in the aggregate, to the Company and its subsidiaries, taken
as a whole, other than purchases of inventory in the ordinary course of
business consistent with past practice;
(v) directly or indirectly sell, lease, license, sell and leaseback,
mortgage or otherwise encumber or subject to any Lien or otherwise dispose
of any properties or assets or any
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interest therein that are material, individually or in the aggregate, to the
Company and its subsidiaries, taken as a whole, except sales of inventory
and excess or obsolete assets in the ordinary course of business consistent
with past practice;
(vi) (x) repurchase or incur any material indebtedness or guarantee any
material indebtedness of another person or issue or sell any debt securities
or options, warrants, calls or other rights to acquire any debt securities
of the Company or any of its subsidiaries, guarantee any material debt
securities of another person, enter into any 'keep well' or other agreement
to maintain any financial statement condition of another person or enter
into any arrangement having the economic effect of any of the foregoing,
except for short-term borrowings incurred in the ordinary course of business
consistent with past practice and borrowings to refinance existing
indebtedness on terms which are reasonably acceptable to the Parents, or
(y) make any loans, advances or capital contributions to, or investments in,
any other person, other than the Company or any direct or indirect wholly
owned subsidiary of the Company;
(vii) incur or commit to incur any capital expenditures, or any
obligations or liabilities in connection therewith, (x) with respect to
2000, in any manner materially inconsistent with the Company's current
overall capital budget for 2000, a true and complete copy of which has been
provided to the Parents prior to the date of this Agreement and (y) with
respect to 2001, in any manner materially inconsistent with the Company's
overall capital budget for 2001, as reasonably approved in advance by the
Parents;
(viii) pay, discharge, settle or satisfy any material claims (including
claims of stockholders), liabilities or obligations (whether absolute,
accrued, asserted or unasserted, contingent or otherwise), other than the
payment, discharge or satisfaction in the ordinary course of business
consistent with past practice or as required by their terms as in effect on
the date of this Agreement of claims, liabilities or obligations reflected
or reserved against in the most recent audited financial statements (or the
notes thereto) of the Company included in the Filed SEC Documents (for
amounts not in excess of such reserves) or incurred since the date of such
financial statements in the ordinary course of business consistent with past
practice, or waive, release, grant or transfer any right of material value,
other than in the ordinary course of business consistent with past practice,
or waive any material benefits of, or agree to modify in any adverse
respect, or fail to enforce, or consent to any matter with respect to which
its consent is required under, any confidentiality, standstill or similar
agreement to which the Company or any of its subsidiaries is a party;
(ix) except as required to comply with applicable law or as permitted by
any provision of any Company Benefit Agreement, Company Benefit Plan or
other Contract as in effect on the date of this Agreement, (A) take any
action to fund or in any other way secure the payment of compensation or
benefits under any Company Benefit Agreement, Company Benefit Plan or other
Contract, (B) take any action to accelerate the vesting or payment of any
compensation or benefit under any Company Benefit Agreement, Company Benefit
Plan or other Contract or (C) increase the compensation of any current or
former director, officer or other employee of the Company or any of its
subsidiaries except in the ordinary course of business consistent with past
practice;
(x) take any action that would or could reasonably be expected to result
in (A) any representation and warranty of the Company set forth in this
Agreement that is qualified as to materiality becoming untrue, (B) any such
representation and warranty that is not so qualified becoming untrue in any
material respect or (C) any condition to the Merger set forth in Article VI
not being satisfied; or
(xi) authorize any of, or commit, resolve or agree to take any of, the
foregoing actions.
(b) Certain Tax Matters. During the period from the date of this Agreement
to the Effective Time, the Company shall, and shall cause each of its
subsidiaries to, not make any material tax election except pursuant to existing
commitments without the Parents' consent (which will not be unreasonably
withheld).
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(c) Advice of Changes; Filings. The Company shall (i) confer with the
Parents upon their reasonable request to report on operational matters and other
matters requested by the Parents and (ii) as promptly as reasonably practicable
advise the Parents in writing of any change or event that would reasonably be
expected to have a Material Adverse Effect. The Company, on the one hand, and
the Parents, on the other hand, shall each promptly provide the other with
copies of all filings made by such party with any Governmental Entity in
connection with this Agreement and the transactions contemplated hereby, other
than the portions of such filings that include confidential information not
directly related to the transactions contemplated by this Agreement or which
they are not permitted to provide to the other by applicable laws or
regulations.
SECTION 4.02. No Solicitation. (a) The Company shall not, nor shall it
permit any of its subsidiaries to, or authorize or permit any director, officer
or employee of the Company or any of its subsidiaries or any investment banker,
attorney, accountant or other advisor or representative of the Company or any of
its subsidiaries (collectively, the 'Representatives') to, directly or
indirectly, (i) solicit, initiate or encourage, or take any other action
knowingly to facilitate, any Takeover Proposal (as defined below) or (ii) enter
into, continue or otherwise participate in any discussions or negotiations
regarding, or furnish to any person any information with respect to, or
otherwise cooperate in any way with, any Takeover Proposal, in each case other
than a Takeover Proposal made by the Parents; provided, however, that, at any
time prior to obtaining the Company Stockholder Approval, the Board of Directors
of the Company may, in response to a bona fide written Takeover Proposal that
the Board of Directors of the Company determines in good faith constitutes or
could reasonably be expected to lead to a Takeover Proposal that is more
favorable to the stockholders of the Company (taking into account the person
making the Takeover Proposal, the consideration offered, the likelihood of
consummation (including the legal, financial and regulatory aspects of the
Takeover Proposal) as well as any other factors deemed relevant by the Board of
Directors of the Company) than this Agreement (a 'Competitive Proposal'), and
which was unsolicited and did not otherwise result from a breach of this
Section 4.02, and subject to compliance with Section 4.02(c) and (d),
(x) furnish information with respect to the Company and its subsidiaries to the
person making such Competitive Proposal (and its representatives) pursuant to a
customary confidentiality agreement (which confidentiality agreement contains
terms that are equivalent to, and in no respect less favorable to the Company
than, the terms of the Confidentiality Agreement dated June 2, 2000, between New
York Sub and the Company (as it may be amended from time to time, the
'Confidentiality Agreement')), provided that all such information is provided on
a prior or substantially concurrent basis to the Parents, and (y) participate in
discussions or negotiations with the person making such Competitive Proposal
(and its representatives) regarding such Competitive Proposal. As of the date of
this Agreement, the Company has, and has caused each of its subsidiaries and
each of the Representatives to have, (i) terminated all discussions or
negotiations with all third parties regarding any Takeover Proposal and
(ii) requested the prompt return of all confidential information relating to the
Company or any of its subsidiaries previously furnished to any such third
parties.
The term 'Takeover Proposal' means any inquiry, proposal or offer from any
person relating to, or that is reasonably likely to lead to, any direct or
indirect acquisition, in one transaction or a series of transactions, including
by way of any merger, consolidation, tender offer, exchange offer, binding share
exchange, business combination, recapitalization, liquidation, dissolution,
joint venture or similar transaction, of (A) assets or businesses that
constitute or represent 20% or more of the total revenue, operating income,
EBITDA or assets of the Company and its subsidiaries, taken as a whole, or
(B) 20% or more of the outstanding shares of Company Common Stock or capital
stock of, or other equity or voting interests in, any of the Company's
subsidiaries directly or indirectly holding the assets or businesses referred to
in clause (A) above.
(b) Neither the Board of Directors of the Company nor any committee thereof
shall (i) withdraw (or modify in a manner adverse to the Parents, New York Sub
or Delaware Sub) or propose publicly to withdraw (or modify in a manner adverse
to the Parents, New York Sub or Delaware Sub) the recommendation or declaration
of advisability by such Board of Directors of the Company or any such committee
of this Agreement or the Merger, or recommend, or propose
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publicly to recommend, the approval or adoption of any Takeover Proposal (other
than a Takeover Proposal made by the Parents) (each such action being referred
to herein as a 'Company Adverse Recommendation Change'), unless the Board of
Directors of the Company determines in good faith, based on such matters as it
deems appropriate, after consulting with legal counsel, that the failure to take
such action would be reasonably likely to result in a breach of its fiduciary
duties under applicable law, (ii) adopt or approve, or propose publicly to adopt
or approve, any Takeover Proposal (other than a Takeover Proposal made by the
Parents), or withdraw its approval of the Merger, or propose publicly to
withdraw its approval of the Merger, (iii) cause or permit the Company to enter
into any letter of intent, memorandum of understanding, agreement in principle,
acquisition agreement, merger agreement, option agreement, joint venture
agreement, partnership agreement or other agreement (each, an 'Acquisition
Agreement') constituting or related to, or which is intended to or is reasonably
likely to lead to, any Takeover Proposal (other than a confidentiality agreement
referred to in Section 4.02(a)) or (iv) agree or resolve to take any of the
actions prohibited by clauses (i), (ii) or (iii) of this sentence.
Notwithstanding anything in this Section 4.02 to the contrary, at any time prior
to obtaining the Company Stockholder Approval, the Board of Directors of the
Company may, in response to a Superior Proposal (as defined below) that was
unsolicited and that did not otherwise result from a breach of Section 4.02(a),
cause the Company to terminate this Agreement pursuant to Section 7.01(f) and
concurrently enter into an Acquisition Agreement; provided, however, that the
Company shall not terminate this Agreement pursuant to Section 7.01(f), and any
purported termination pursuant to Section 7.01(f) shall be void and of no force
or effect, unless the Company shall have complied with all the provisions of
this Section 4.02, including the notification provisions in this Section 4.02,
and with all applicable requirements of Sections 5.06(b) (including the payment
of the Termination Fee (as defined in Section 5.06(b)) prior to or concurrently
with such termination); and provided further, however, that the Company shall
not exercise its right to terminate this Agreement pursuant to Section 7.01(f)
until after the third business day following the Parents' receipt of written
notice (a 'Notice of Superior Proposal') from the Company advising the Parents
that the Board of Directors of the Company has received a Superior Proposal,
specifying the terms and conditions of the Superior Proposal, identifying the
person making such Superior Proposal and stating that the Board of Directors of
the Company intends to exercise its right to terminate this Agreement pursuant
to Section 7.01(f) (it being understood and agreed that, prior to any such
termination taking effect, any amendment to the price or any other material term
of a Superior Proposal shall require a new Notice of Superior Proposal and a new
three business day period).
The term 'Superior Proposal' means any bona fide written offer not solicited
by or on behalf of the Company or any of its subsidiaries made by a third party
that if consummated would result in such third party (or in the case of a direct
merger between such third party and the Company or one of its subsidiaries, the
stockholders of such third party) acquiring, directly or indirectly,
substantially all of the voting power of the Company Common Stock or all or
substantially all the assets of the Company and its subsidiaries, taken as a
whole, for consideration consisting of cash and/or securities that the Board of
Directors of the Company determines in its good faith judgment (after
consultation with a financial advisor of nationally recognized reputation)
(taking into account the person making the offer, the consideration offered, the
likelihood of consummation (including the legal, financial and regulatory
aspects of the offer) as well as any other factors deemed relevant by the Board
of Directors of the Company) to have a higher value than the consideration
payable in the Merger, taking into account any changes to the terms of this
Agreement proposed by the Parents in response to such Superior Proposal or
otherwise.
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 4.02, the Company promptly shall advise
the Parents orally and in writing of any request for information that the
Company reasonably believes could lead to or contemplates a Takeover Proposal or
of any Takeover Proposal, or any inquiry the Company reasonably believes could
lead to any Takeover Proposal, the terms and conditions of such request,
Takeover Proposal or inquiry (including any subsequent amendment or other
modification to such terms and conditions) and the identity of the person making
any such request, Takeover Proposal or inquiry. The Company shall
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keep the Parents informed in all material respects of the status and details
(including material amendments or proposed amendments) of any such request,
Takeover Proposal or inquiry.
(d) Nothing contained in this Section 4.02 or elsewhere in this Agreement
shall prohibit the Company from (i) taking and disclosing to its stockholders a
position contemplated by Rule 14e-2(a) promulgated under the Exchange Act or
(ii) making any disclosure to the Company's stockholders if, in the good faith
judgment of the Board of Directors of the Company, after consultation with
outside counsel, failure so to disclose would be inconsistent with applicable
law; provided, however, that in no event shall the Company or its Board of
Directors or any committee thereof take, agree or resolve to take any action
prohibited by Section 4.02(b)(i) or 4.02(b)(ii), except as expressly permitted
pursuant to Section 4.02(b).
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. Preparation of the Proxy Statement; Stockholders Meeting.
(a) As promptly as practicable following the date of this Agreement, the Company
and the Parents shall prepare and file with the SEC the Proxy Statement and the
Company shall use its reasonable best efforts to respond as promptly as
practicable to any comments of the SEC with respect thereto and to cause the
Proxy Statement to be mailed to the Company's stockholders as promptly as
practicable following the date of this Agreement. The Company shall with
reasonable promptness notify the Parents upon the receipt of any comments from
the SEC or its staff or any request from the SEC or its staff for amendments or
supplements to the Proxy Statement and shall provide the Parents with copies of
all correspondence between the Company and its representatives, on the one hand,
and the SEC and its staff, on the other hand. Notwithstanding the foregoing,
prior to filing or mailing the Proxy Statement (or any amendment or supplement
thereto) or responding to any comments of the SEC with respect thereto, the
Company (i) shall provide the Parents an opportunity to review and comment on
such document or response and (ii) shall include in such document or response
all comments reasonably proposed by the Parents.
(b) The Company shall establish a record date for, duly call, give notice
of, convene and hold a meeting of its stockholders (the 'Stockholders Meeting')
for the purpose of obtaining the Company Stockholder Approval with the purpose
of holding the Stockholders Meeting as promptly as reasonably practicable
following the date of this Agreement. Except as expressly permitted pursuant to
Section 4.02(b), the Company shall, through its Board of Directors, recommend to
its stockholders that they adopt this Agreement, and shall include such
recommendation in the Proxy Statement. Without limiting the generality of the
foregoing, the Company agrees that its obligations pursuant to this
Section 5.01(b) shall not be affected by the commencement, public proposal,
public disclosure or communication to the Company or any other person of any
Takeover Proposal.
SECTION 5.02. Access to Information; Confidentiality. Subject to applicable
law, the Company shall, and shall cause each of its subsidiaries to, afford to
the Parents, and to either of the Parent's or their subsidiaries' officers,
employees, investment bankers, attorneys, accountants and other advisors and
representatives, reasonable access during normal business hours with reasonable
prior notice during the period prior to the Effective Time or the termination of
this Agreement to all their respective properties, assets, books, contracts,
commitments, directors, officers, employees, attorneys, accountants, auditors,
other advisors and representatives and records, and, during such period, the
Company shall, and shall cause each of its subsidiaries to, make available to
the Parents on a prompt basis (a) a copy of each report, schedule, form,
statement and other document filed or received by it during such period pursuant
to the requirements of domestic or foreign supranational, national, federal,
state or provincial laws and (b) all other information concerning its business,
properties and personnel as the Parents may reasonably request (including the
work papers of KPMG LLP). Notwithstanding the foregoing, the Company shall not
be required to provide any information to the extent that providing such
information would result in a waiver of attorney/client privilege or such
information is subject to contractual prohibitions on disclosure to third
parties. Except as required by law, the Parents will hold, and will direct their
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and their subsidiaries' respective officers, employees, investment bankers,
attorneys, accountants and other advisors and representatives to hold, any and
all information received from the Company, directly or indirectly, in confidence
in accordance with the Confidentiality Agreement.
SECTION 5.03. Reasonable Best Efforts; Notification. (a) Upon the terms and
subject to the conditions set forth in this Agreement, each of the parties
agrees to use its reasonable best efforts to take, or cause to be taken, all
actions that are necessary, proper or advisable to consummate and make effective
the Merger and the other transactions contemplated by this Agreement, including
using its reasonable best efforts to accomplish the following: (i) the taking of
all reasonable acts necessary to cause the conditions precedent set forth in
Article VI to be satisfied, (ii) the obtaining of all necessary actions or
nonactions, waivers, consents, approvals, orders and authorizations from
Governmental Entities and the making of all necessary registrations,
declarations and filings and the taking of all reasonable steps as may be
necessary to obtain an approval or waiver from, or to avoid an action or
proceeding by, any Governmental Entity (reasonable steps will include, subject
to the second succeeding sentence, agreements or proffers to divest or hold
separate the assets and businesses (or portions thereof) of the parties) and
(iii) the obtaining of all necessary consents, approvals or waivers from third
parties. In connection with and without limiting the foregoing, the Company and
its Board of Directors shall, if any state takeover statute or similar statute
or regulation is or becomes applicable to this Agreement, the Merger or any of
the other transactions contemplated hereby, use its reasonable best efforts to
ensure that the Merger and the other transactions contemplated by this Agreement
may be consummated as promptly as practicable on the terms contemplated by this
Agreement and otherwise to minimize the effect of such statute or regulation on
this Agreement, the Merger and the other transactions contemplated hereby.
Notwithstanding the foregoing or any other provision of this Agreement to the
contrary, in no event shall any party hereto be required to agree or proffer to
divest or hold separate, or take any other action with respect to, any of the
assets or any portion of any business set forth in Section 5.03 of the
disclosure schedule delivered by the Parents to the Company prior to the
execution of this Agreement (the 'Parents Disclosure Schedule'), and the Company
shall not, and shall not permit any of its subsidiaries to, take any such action
with respect to any such assets or portion of any such business without the
express written consent of the Parents. The Company and the Parents shall
provide such assistance, information and cooperation to each other as is
reasonably requested in connection with the foregoing and, in connection
therewith, shall notify the other person promptly following the receipt of any
comments from any Governmental Entity and of any request by any Governmental
Entity for amendments, supplements or additional information in respect of any
registration, declaration or filing with such Governmental Entity and shall
supply the other person with copies of all correspondence between such person or
any of its representatives, on the one hand, and any Governmental Entity, on the
other hand.
(b) The Company shall, as promptly as reasonably practicable, give notice to
the Parents of any representation or warranty made by it contained in this
Agreement becoming untrue or inaccurate such that the condition set forth in
Section 6.02(a) would not be satisfied; provided, however, that no such
notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under this Agreement.
(c) Each of the Parents, New York Sub and Delaware Sub shall, as promptly as
reasonably practicable, give notice to the Company of any representation or
warranty made by it contained in this Agreement becoming untrue or inaccurate
such that the condition set forth in Section 6.03(a) would not be satisfied;
provided, however, that no such notification shall affect the representations,
warranties, covenants or agreements of the parties or the conditions to the
obligations of the parties under this Agreement.
SECTION 5.04. Company Stock Options. (a) As soon as practicable following
the date of this Agreement, the Board of Directors of the Company (or, if
appropriate, any committee administering the Company Stock Plans) shall adopt
such resolutions or take such other actions (if any) as may be required to
provide that:
(i) each Company Stock Option outstanding immediately prior to the
Effective Time (whether vested or unvested) shall be converted at the
Effective Time into the right to receive
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an amount of cash equal to (A) the excess, if any, of (1) the Merger
Consideration over (2) the exercise price per share of Company Common Stock
subject to such Company Stock Option, multiplied by (B) the number of shares
of Company Common Stock for which such Company Stock Option shall not
theretofore have been exercised;
(ii) each Company Stock Issuance Right outstanding immediately prior to
the Effective Time (whether vested or unvested) shall be converted at the
Effective Time into the right to receive an amount of cash equal to the
product of (A) the Merger Consideration and (B) the number of shares of
Company Common Stock subject to such Company Stock Issuance Right;
(iii) each Company Performance Unit outstanding immediately prior to the
Effective Time (whether vested or unvested) shall be converted at the
Effective Time into the right to receive an amount of cash equal to the sum
of (A) the product of (1) the Merger Consideration multiplied by (2) the
percent with respect to which such Company Performance Unit is earned or
deemed earned for its performance cycle, and (B) the excess, if any, of (1)
the Merger Consideration over (2) the fair market value (as determined under
the applicable Company Stock Plan) of each share of Company Common Stock on
the date of grant of such Company Performance Unit; and
(iv) make such other changes to the Company Stock Plans as the Company
and the Parents may agree are appropriate to give effect to the Merger.
(b) All amounts payable pursuant to Section 5.04(a) shall be subject to any
required withholding of taxes or proof of eligibility of exemption therefrom,
and shall be paid as soon as practicable following the Effective Time (but in no
event later than five business days thereafter), without interest.
(c) The Company shall use its reasonable best efforts to take all actions
determined to be necessary to effectuate the provisions of this Section 5.04 as
mutually agreed by the Parents, on the one hand, and the Company, on the other
hand. Prior to the Effective Time, the Board of Directors of the Company (or, if
appropriate, any committee administering the Company Stock Plans) shall take or
cause to be taken such actions as are required to cause (i) the Company Stock
Plans to terminate as of the Effective Time and (ii) the provisions in any other
Company Benefit Plan providing for the issuance, transfer or grant of any
capital stock of the Company or any interest on or following the Effective Time
in respect of any capital stock of the Company to be deleted as of the Effective
Time.
SECTION 5.05. Indemnification, Exculpation and Insurance. (a) Each of the
Parents, New York Sub and Delaware Sub agree that all rights to indemnification
and exculpation from liabilities for acts or omissions occurring at or prior to
the Effective Time now existing in favor of the current or former directors or
officers of the Company and its subsidiaries as provided in their respective
certificates of incorporation or by-laws (or similar organizational documents)
or in the agreements identified in Section 5.05(a) of the Company Disclosure
Schedule shall be assumed by the Surviving Corporation, without further action,
at the Effective Time and shall survive the Merger and shall continue in full
force and effect in accordance with their terms.
(b) In the event that the Surviving Corporation or any of its successors or
assigns (i) consolidates with or merges into any other person and is not the
continuing or surviving corporation or entity of such consolidation or merger or
(ii) transfers or conveys all or substantially all its properties and assets to
any person, then, and in each such case, the Parents shall cause proper
provision to be made so that the successors and assigns of the Surviving
Corporation assume the obligations set forth in this Section 5.05.
(c) For six years after the Effective Time, the Parents shall maintain in
effect the Company's current directors' and officers' liability insurance
covering each person currently covered by the Company's directors' and officers'
liability insurance policy for acts or omissions occurring prior to the
Effective Time on terms with respect to such coverage and amounts no less
favorable in any material respect to such directors and officers than those of
such policy as in effect on the date of this Agreement; provided that the
Parents may substitute therefor policies of a reputable insurance company the
material terms of which, including coverage and amount, are no less favorable in
any
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material respect to such directors and officers than the insurance coverage
otherwise required under this Section 5.05(c); provided, however, that in no
event shall the Parents be required to pay aggregate annual premiums for
insurance under this Section 5.05(c) in excess of $1.5 million, provided that
the Parents shall nevertheless be obligated to provide such coverage as may be
obtained for $1.5 million.
(d) The provisions of this Section 5.05 are intended to be for the benefit
of, and will be enforceable by, each indemnified party, his or her heirs and his
or her representatives.
SECTION 5.06. Fees and Expenses. (a) All fees and expenses incurred in
connection with this Agreement, the Merger and the other transactions
contemplated by this Agreement shall be paid by the party incurring such fees or
expenses, whether or not the Merger is consummated.
(b) In the event that (i) (A) a Takeover Proposal shall have been made to
the Company or its stockholders, (B) thereafter this Agreement is terminated by
either the Parents, on the one hand, or the Company, on the other hand, pursuant
to Section 7.01(b)(i) (but only if the Stockholders Meeting has not been held by
the date that is five business days prior to the date of such termination) or
7.01(b)(iii) and (C) within 12 months after such termination, the Company or any
of its subsidiaries enters into any Acquisition Agreement with respect to, or
consummates, any Takeover Proposal (solely for purposes of this
Section 5.06(b)(i)(C), the term 'Takeover Proposal' shall have the meaning set
forth in the definition of Takeover Proposal contained in Section 4.02(a) except
that all references to 20% shall be deemed references to 40%), (ii) this
Agreement is terminated by the Company pursuant to Section 7.01(f) or
(iii) this Agreement is terminated by the Parents pursuant to Section 7.01(c),
then the Company shall pay the Parents a fee equal to $625 million (the
'Termination Fee') by wire transfer of same day funds to an account designated
by the Parents (x) in the case of a termination by the Company pursuant to
Section 7.01(f), concurrently with such termination, (y) in the case of a
termination by the Parents pursuant to Section 7.01(c), within two business days
after such termination and (z) in the case of a payment as a result of any event
referred to in Section 5.06(b)(i)(C), upon the first to occur of such events.
(c) The Parents shall pay $100 million to the Company in the event this
Agreement is terminated by the Company pursuant to Section 7.01(e)(ii) or is
terminated by the Parents pursuant to Section 7.01(d)(ii), within two business
days after such termination, in either case, so long as the Company is not in
breach of any of its representations, warranties or covenants contained in this
Agreement. All payments made pursuant to this Section 5.06(c) shall be made by
wire transfer in immediately available funds to an account designated by the
Company.
(d) The parties acknowledge that the agreements contained in
Section 5.06(b) and in Section 5.06(c) are an integral part of the transactions
contemplated by this Agreement, and that, without these agreements, the parties
would not enter into this Agreement; accordingly, if the party that is required
to pay fails promptly to pay the amounts due pursuant to Section 5.06(b) or
Section 5.06(c), as the case may be, and, in order to obtain such payment, the
other party commences a suit that results in a judgment against the party that
is required to pay for the amounts set forth in Section 5.06(b) or Section
5.06(c), as the case may be, the party that is required to pay shall pay to the
other party interest on the amounts set forth in Section 5.06(b) or Section
5.06(c), as the case may be, from and including the date payment of such amount
was due to but excluding the date of actual payment at the prime rate of
Citibank, N.A. in effect on the date such payment was required to be made.
SECTION 5.07. Information Supplied. (a) The Company agrees that none of the
information included or incorporated by reference in the Proxy Statement will,
at the date it is filed with the SEC or mailed to the Company's stockholders or
at the time of the Stockholders Meeting, or at the time of any amendment or
supplement thereof, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading, except that no covenant is made by the Company with
respect to statements made in the Proxy Statement based on information supplied
by the Parents, New York Sub or Delaware Sub specifically for inclusion or
incorporation by reference therein. The Company agrees that the Proxy
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Statement will comply as to form in all material respects with the requirements
of the Exchange Act and the rules and regulations promulgated thereunder.
(b) The Parents, New York Sub and Delaware Sub agree that none of the
information supplied or to be supplied by the Parents, New York Sub or Delaware
Sub specifically for inclusion in the Proxy Statement will (except to the extent
revised or superseded by amendments or supplements contemplated hereby), at the
date the Proxy Statement is filed with the SEC or mailed to the Company's
stockholders or at the time of the Stockholders Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading.
SECTION 5.08. Benefits Matters. (a) For purposes hereof, 'Affected
Employees' shall mean those individuals who are employees of the Company and its
subsidiaries (including those employees who are on vacation, leave of absence,
disability or maternity leave) as of the Effective Time.
(b) The Parents shall, and shall cause the Surviving Corporation to, give
the Affected Employees full credit, for purposes of eligibility, early
retirement subsidies, vesting and benefit accrual under any employee benefit
plans or arrangements maintained by the Parents, the Surviving Corporation and
their respective subsidiaries, for the Affected Employees' service with the
Company and its subsidiaries to the same extent recognized by the Company and
its subsidiaries immediately prior to the Effective Time; provided, however,
that the Parents shall have the right to offset, dollar-for-dollar, any benefit
accruals under their benefit plans or the benefit plans of their respective
subsidiaries relating to service of an Affected Employee prior to the Effective
Time to the extent such service is also recognized prior to the Effective Time
under a comparable type of benefit plan or arrangement of the Company.
(c) The Parents shall, and shall cause the Surviving Corporation to,
(i) waive all limitations as to preexisting conditions, exclusions and waiting
periods with respect to participation and coverage requirements applicable to
the Affected Employees under any welfare benefit plans in which such employees
may be eligible to participate after the Effective Time to the extent waived
under the applicable Company Benefit Plan immediately prior to the Effective
Time and (ii) provide each Affected Employee with credit for any co-payments and
deductibles paid prior to the Effective Time in the calendar year in which the
Effective Time occurs in satisfying any applicable deductible or out-of-pocket
requirements under any welfare benefit plans in which the Affected Employees are
eligible to participate after the Effective Time.
(d) The Parents agree to honor, and shall cause the Surviving Corporation to
honor, the Company Benefit Plans and Company Benefit Agreements disclosed in the
Filed SEC Documents or Section 3.01(k)(i) of the Company Disclosure Schedule in
accordance with their current terms. For a period of two years immediately
following the Effective Time, the Parents shall, or shall cause the Surviving
Corporation to, provide to the Affected Employees: (i) employee benefit plans
and arrangements including salary and bonus opportunities, but excluding equity
or equity-based programs, which are substantially similar in the aggregate to
those provided to the Affected Employees immediately prior to the Effective
Time; and (ii) equity or equity-based programs which are comparable to those
provided to similarly situated employees of the Parents or their subsidiaries
(determined, for this purpose, based upon title, position, geographical location
and comparability of business unit size) following the Effective Time.
(e) With respect to Affected Employees who are employed or provide services
outside the United States ('Non-U.S. Employees'), to the extent required by
applicable local law the Parents shall, or shall cause the Surviving Corporation
to, immediately following the Effective Time, continue the terms and conditions
of employment as in effect for Non-U.S. Employees immediately prior to the
Effective Time. Nothing herein shall be construed to impose on the Parents or
the Surviving Corporation any obligation for the continuation of employment of
any Non-U.S. Employees or such terms and conditions of employment beyond any
period of time required by local law and such terms and conditions of
employment. Except as otherwise provided by this Section 5.08, nothing herein
shall be construed as (i) guaranteeing any Affected Employee the
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right to continued employment following the Effective Time or (ii) limiting the
Parents' right to amend, modify or terminate any Company Benefit Plan, Company
Benefit Agreement or any other plan or arrangement in which Affected Employees
are eligible to participate following the Effective Time.
(f) Prior to the Effective Time, with respect to each named executive
officer disclosed in the summary compensation table included in the Company's
2000 proxy statement on file with the SEC who is employed with the Company as of
the date of this Agreement and who is a party to a change in control severance
agreement (each, a 'Severance Agreement'), the Company shall obtain an executed
letter agreement with such named executive officer amending the definition of
good reason under the Severance Agreement with such named executive officer to
the effect that (i) for a period of six months immediately following the
Effective Time, the named executive officer shall not have good reason to
terminate employment with the Company (or otherwise have the right to claim that
he or she has been constructively terminated from employment) (A) due solely to
the fact that the Company shall cease to be a public company and shall become a
subsidiary of another corporation as of the Effective Time, so long as the named
executive officer retains his or her title and retains job authorities and
responsibilities consistent in all material respects with those of his or her
counterparts in the substantial subsidiaries of the Parents or (B) due to the
fact that the named executive officer does not receive equity-based compensation
or awards at least as beneficial as the named executive officer received before
the beginning of the protection period, so long as the named executive officer
is provided with equity-based compensation which is comparable to that provided
to similarly situated employees of the Parents or their subsidiaries
(determined, for this purpose, based upon title, position, geographical location
and comparability of business unit size), (ii) the named executive officer's
death or disability (as specified in the Severance Agreement) during such
six-month period shall be deemed a termination of employment by the named
executive officer for good reason entitling the named executive officer to all
severance benefits and payments under such Severance Agreement, (iii) for a
period of ninety days following such six-month period, any voluntary termination
by the named executive officer shall be deemed a termination of employment by
the named executive officer for good reason entitling the named executive
officer to all severance benefits and payments under such Severance Agreement,
(iv) following such ninety-day period, the definition of good reason under the
Severance Agreement in effect prior to the execution of the letter agreement
shall apply and again be in full force and effect and (v) the letter agreement
is not intended to and does not otherwise limit the grounds for which each named
executive officer may terminate employment for good reason under his or her
Severance Agreement.
(g) With respect to the Bestfoods Savings/Retirement Plan for Salaried
Employees (the 'Savings Plan'), following the Effective Time, the Parents agree
to honor, and shall cause the Surviving Corporation to administer, the Savings
Plan in conformity with its current terms, including upon the sale for cash
pursuant to the transactions contemplated under this Agreement of all shares of
Company Common Stock to be issued upon conversion of the Company Series B
Preferred Stock, allocation of the net proceeds of such sale after payment of
the remaining balance of the Acquisition Loan (as defined in the Savings Plan)
to the accounts of the participants, and the termination of the employee stock
ownership plan provisions and distribution of employee stock ownership accounts
thereafter, as set forth in Amendment 10 of the Savings Plan, effective May 16,
2000.
SECTION 5.09. Public Announcements. The Parents, New York Sub and Delaware
Sub on the one hand, and the Company, on the other hand, shall, to the extent
reasonably practicable, consult with each other before issuing, and give each
other a reasonable opportunity to review and comment upon, any press release or
other public statements (other than routine employee communications) with
respect to this Agreement, the Merger and the other transactions contemplated by
this Agreement. The parties agree that the initial press release to be issued
with respect to the transactions contemplated by this Agreement shall be in the
form heretofore agreed to by the parties.
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SECTION 5.10. Rights Agreement; Consequences if Rights Triggered. The Board
of Directors of the Company shall take all action requested by the Parents in
order to render the Company Rights inapplicable to the Merger and the other
transactions contemplated hereby. Except as approved in writing by the Parents,
the Board of Directors of the Company shall not (i) amend the Company Rights
Agreement, (ii) redeem the Company Rights or (iii) take any action with respect
to, or make any determination under, the Company Rights Agreement.
SECTION 5.11. Parents' Shareholders' Meetings. Each of PLC and N.V. shall
cause extraordinary general meetings of their respective shareholders to be duly
called and held as soon as reasonably practicable after the date of this
Agreement for the purpose of obtaining the Parents Shareholder Approval.
SECTION 5.12. Stockholder Litigation. The Company agrees that it shall not
settle or offer to settle any litigation commenced prior to or after the date
hereof against the Company or any of its directors or executive officers by any
stockholder of the Company relating to this Agreement, the Merger, any other
transaction contemplated hereby or otherwise, without the prior written consent
of the Parents (not to be unreasonably withheld). In addition, the Company shall
not voluntarily cooperate with any third party that may hereafter seek to
restrain or prohibit or otherwise oppose the Merger and shall cooperate with the
Parents, New York Sub and Delaware Sub to resist any such effort to restrain or
prohibit or otherwise oppose the Merger. None of the Parents, New York Sub or
Delaware Sub, or, after the Effective Time, the Surviving Corporation, shall
settle any such litigation unless such settlement provides for the full and
unconditional release of the Company's directors and executive officers as of
the date of this Agreement.
SECTION 5.13. Control of the Company's Operations. Nothing contained in this
Agreement shall give to any of the Parents, New York Sub or Delaware Sub,
directly or indirectly, rights to control or direct the Company's operations
prior to the Effective Time. Prior to the Effective Time, the Company shall
exercise, consistent with the terms and conditions of this Agreement, complete
control and supervision of its operations.
SECTION 5.14. Parents' Conduct. During the period from the date of this
Agreement to the earlier of the Effective Time and the termination of this
Agreement in accordance with the terms hereof, except as consented to in writing
by the Company, none of the Parents, New York Sub, Delaware Sub or any of their
controlled affiliates shall: (i) make any material acquisition of brands or
businesses (including through joint venture and licensing agreements) which
would be reasonably likely to (x) materially impair their ability to consummate
the Merger or (y) cause a material delay of the Merger; or (ii) purchase any
Company Common Stock other than (x) pursuant to the Merger, (y) purchases made
after a Takeover Proposal has been made or (z) purchases by employee benefit
plans.
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.01. Conditions to Each Party's Obligation to Effect the Merger.
The obligation of each party to effect the Merger is subject to the satisfaction
or waiver on or prior to the Closing Date of the following conditions:
(a) Company Stockholder Approval. The Company Stockholder Approval shall
have been obtained.
(b) Antitrust. The European Commission shall have issued a decision
under Article 6(1)(b) or 8(2) of the EC Merger Regulation (or shall be
deemed to have done so under Article 10(6) of the EC Merger Regulation)
declaring the Merger compatible with the EC common market and any waiting
period (and any extension thereof) applicable to the Merger under the HSR
Act shall have been terminated or shall have expired. Any other approval or
waiting period required prior to the Effective Time under any other
applicable competition, merger control, antitrust or similar law or
regulation shall have been obtained or terminated or shall have expired,
other than those the failure of which to have been obtained or terminated or
to have expired would not reasonably be expected to (x) materially and
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adversely affect the business of the Parents and the Surviving Corporation
following the Effective Time (it being understood for purposes of this
clause (x) that no party may rely on the failure of this condition to be
satisfied if such failure was caused by such party's failure to comply with
the terms of Section 5.03) or (y) result in the commission of a criminal
offense.
(c) No Injunctions or Legal Restraints. No temporary restraining order,
preliminary or permanent injunction or other order or decree issued by any
court of competent jurisdiction or other legal restraint or prohibition
(collectively, 'Legal Restraints') that has the effect of preventing the
consummation of the Merger shall be in effect; provided, however, that each
of the parties shall have used its reasonable best efforts to prevent the
entry of any such Legal Restraint and to appeal as promptly as possible any
such Legal Restraint that may be entered.
SECTION 6.02. Conditions to Obligations of the Parents, New York Sub and
Delaware Sub. The obligations of the Parents, New York Sub and Delaware Sub to
effect the Merger are further subject to the satisfaction or waiver on or prior
to the Closing Date of the following conditions:
(a) Representations and Warranties. The representations and warranties
of the Company contained herein shall be true and correct, in each case as
of the date of this Agreement and as of the Closing Date with the same
effect as though made as of the Closing Date (except that the accuracy of
representations and warranties that by their terms speak as of a specified
date will be determined as of such date), other than for such failures to be
true and correct that, individually and in the aggregate, would not
reasonably be expected to have a Material Adverse Effect. The Parents shall
have received a certificate signed on behalf of the Company by the chief
executive officer or the chief financial officer of the Company to such
effect. For purposes of determining the satisfaction of this condition, the
representations and warranties of the Company shall be deemed not qualified
by any references therein to materiality generally or to a Material Adverse
Effect.
(b) Performance of Obligations of the Company. The Company shall have
performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Closing Date, and the Parents
shall have received a certificate signed on behalf of the Company by the
chief executive officer or the chief financial officer of the Company to
such effect.
(c) Consents. The Parents shall have received evidence, in form and
substance reasonably satisfactory to them, that the Parents or the Company
shall have obtained (i) all consents, approvals, authorizations,
qualifications and orders of all Governmental Entities (including any in
connection with Environmental Laws) legally required in connection with this
Agreement and the transactions contemplated by this Agreement and (ii) all
other consents, approvals, authorizations and qualifications of third
parties required in connection with this Agreement and the transactions
contemplated by this Agreement, except in the case of clauses (i) and (ii)
for those the failure of which to be obtained individually or in the
aggregate would not reasonably be expected to have a Material Adverse
Effect. This condition shall not be applicable to consents, approvals,
authorizations, qualifications and orders under any competition, merger
control, antitrust or similar law or regulation, which are the subject of
Section 6.01(b).
(d) Parents Shareholder Approval. The Parents Shareholder Approval shall
have been obtained.
SECTION 6.03. Conditions to Obligation of the Company. The obligation of the
Company to effect the Merger is further subject to the satisfaction or waiver on
or prior to the Closing Date of the following conditions:
(a) Representations and Warranties. The representations and warranties
of the Parents, New York Sub and Delaware Sub contained herein that are
qualified as to materiality shall be true and correct, and the
representations and warranties of the Parents, New York Sub and Delaware Sub
contained herein that are not so qualified shall be true and correct in all
material respects, in each case as of the date of this Agreement and as of
the Closing Date with the same effect as though made as of the Closing Date,
except that the accuracy of
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representations and warranties that by their terms speak as of a specified
date will be determined as of such date. The Company shall have received a
certificate signed on behalf of each of the Parents by an executive officer
of such Parent to such effect.
(b) Performance of Obligations of the Parents, New York Sub and Delaware
Sub. The Parents, New York Sub and Delaware Sub shall have performed in all
material respects all obligations required to be performed by them under
this Agreement at or prior to the Closing Date, and the Company shall have
received a certificate signed on behalf of each of the Parents by an
executive officer of such Parent to such effect.
SECTION 6.04. Frustration of Closing Conditions. None of the Company, the
Parents, New York Sub and Delaware Sub may rely on the failure of any condition
set forth in Section 6.01, 6.02 or 6.03, as the case may be, to be satisfied if
such failure was caused by such party's failure to use its reasonable best
efforts to consummate the Merger and the other transactions contemplated by this
Agreement, as required by and subject to Section 5.03.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.01. Termination. This Agreement may be terminated, and the Merger
contemplated hereby may be abandoned, at any time prior to the Effective Time,
whether before or after the Company Stockholder Approval has been obtained:
(a) by mutual written consent of the Parents, New York Sub, Delaware Sub
and the Company;
(b) by either the Parents or the Company:
(i) if the Merger shall not have been consummated by March 6, 2001;
provided, however, that the right to terminate this Agreement pursuant to
this Section 7.01(b)(i) shall not be available to any party whose breach
of this Agreement has been a principal reason the Merger has not been
consummated by such date;
(ii) if any Legal Restraint set forth in Section 6.01(c) shall be in
effect and shall have become final and nonappealable; or
(iii) if, upon a vote at a duly held meeting to obtain the Company
Stockholder Approval, the Company Stockholder Approval shall not have
been obtained.
(c) by the Parents in the event a Company Adverse Recommendation Change
has occurred in accordance with Section 4.02(b)(i);
(d) by the Parents (i) if the Company shall have breached any of its
representations, warranties or covenants contained in this Agreement, which
breach (A) would give rise to the failure of a condition set forth in
Section 6.02(a) or 6.02(b), and (B) has not been or is incapable of being
cured by the Company within 20 business days after its receipt of written
notice thereof from the Parents; or (ii) if, upon the votes at the duly held
meetings to obtain the Parents Shareholder Approval, the Parents Shareholder
Approval shall not have been obtained;
(e) by the Company (i) if the Parents, New York Sub or Delaware Sub
shall have breached any of their respective representations, warranties or
covenants contained in this Agreement, which breach (x) would give rise to
the failure of a condition set forth in Section 6.03(a) or 6.03(b), and
(y) has not been or is incapable of being cured by the Parents, New York Sub
or Delaware Sub within 20 business days after their receipt of written
notice thereof from the Company or (ii) if, upon the votes at the duly held
meetings to obtain the Parents Shareholder Approval, the Parents Shareholder
Approval shall not have been obtained; or
(f) by the Company in accordance with the terms and subject to the
conditions of Section 4.02(b).
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SECTION 7.02. Effect of Termination. In the event of termination of this
Agreement by either the Company or the Parents as provided in Section 7.01, this
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of the Parents, New York Sub, Delaware Sub or the
Company, other than the provisions of Section 3.01(o), the last sentence of
Section 5.02, Section 5.06, this Section 7.02 and Article VIII; provided,
however, that no such termination shall relieve any party hereto from any
liability or damages resulting from a wilful breach by such party of any of its
representations, warranties or covenants set forth in this Agreement.
SECTION 7.03. Amendment. This Agreement may be amended by the parties hereto
at any time, whether before or after the Company Stockholder Approval has been
obtained; provided, however, that after the Company Stockholder Approval has
been obtained, there shall be made no amendment that by law requires further
approval by stockholders without the further approval of such stockholders and
no amendment shall be made to ARTICLE II or Sections 5.05 or 5.08 after the
Effective Time. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
SECTION 7.04. Extension; Waiver. At any time prior to the Effective Time,
the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties contained herein or in any document delivered
pursuant hereto or (c) waive compliance with any of the agreements or conditions
contained herein; provided, however, that after the Company Stockholder Approval
has been obtained, there shall be made no waiver that by law requires further
approval by stockholders without the further approval of such stockholders. Any
agreement on the part of a party to any such extension or waiver shall be valid
only if set forth in an instrument in writing signed on behalf of such party.
The failure or delay by any party to this Agreement to assert any of its rights
under this Agreement or otherwise shall not constitute a waiver of such rights
nor shall any single or partial exercise by any party to this Agreement of any
of its rights under this Agreement preclude any other or further exercise of
such rights or any other rights under this Agreement.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.01. Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time. This Section 8.01
shall not limit any covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time.
SECTION 8.02. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed given if
delivered personally or sent by overnight courier (providing proof of delivery)
to the parties at the following addresses (or at such other address for a party
as shall be specified by like notice):
if to the Parents, to:
Unilever PLC
Unilever House
P.O. Box 68
Blackfriars
London EC4P 4BQ
England
Attention: Stephen G. Williams, Esq.
and
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Unilever N.V.
Weena 455
3013 AL Rotterdam
The Netherlands
Attention: J. W. B. Westerburgen, Esq.
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Attention: Peter S. Wilson, Esq.
Daniel P. Cunningham, Esq.
if to New York Sub or Delaware Sub, to:
Conopco, Inc.
390 Park Avenue
New York, NY 10022
Attention: Ronald M. Soiefer, Esq.
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Attention: Peter S. Wilson, Esq.
Daniel P. Cunningham, Esq.
if to the Company, to:
Bestfoods
700 Sylvan Avenue
International Plaza
Englewood Cliffs, NJ 07632-9976
Attention: General Counsel
with a copy to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, NY 10004
Attention: Arthur Fleischer, Jr., Esq.
Peter Golden, Esq.
SECTION 8.03. Definitions. For purposes of this Agreement:
(a) an 'affiliate' of any person means another person that directly or
indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, such first person;
(b) 'Material Adverse Effect' means any state of facts, change,
development, effect, condition or occurrence that could reasonably be
expected to be material and adverse to the business, assets, properties,
financial condition or results of operations of the Company and its
subsidiaries, taken as a whole, or, directly or indirectly, to prevent or
materially impede or delay the consummation of the Merger, except for any
state of facts, change, development, effect, condition or occurrence
(x) relating to the economy in general or (y) affecting the food
manufacturing industry generally and not specifically relating to the
Company or its subsidiaries;
(c) 'person' means an individual, corporation, partnership, joint
venture, association, trust, limited liability company, Governmental Entity,
unincorporated organization or other entity;
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(d) a 'Significant Subsidiary' of any person means any subsidiary of
such person that constitutes a significant subsidiary within the meaning of
Rule 1-02 of Regulation S-X of the SEC; and
(e) a 'subsidiary' of any person means another person of which 50% or
more of any class of capital stock, voting securities, other voting
ownership or voting partnership interests (or, if there are no such voting
interests, 50% or more of the equity interests) are owned or controlled,
directly or indirectly, by such first person.
SECTION 8.04. Interpretation. When a reference is made in this Agreement to
a Section, Subsection or Schedule, such reference shall be to a Section or
Subsection of, or a Schedule to, this Agreement unless otherwise indicated. The
table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the words 'include', 'includes' or 'including' are used
in this Agreement, they shall be deemed to be followed by the words 'without
limitation'. The words 'hereof', 'herein' and 'hereunder' and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement. The term 'or' is not
exclusive. The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms. Any agreement or instrument
defined or referred to herein or in any agreement or instrument that is referred
to herein means such agreement or instrument as from time to time amended,
modified or supplemented. References to a person are also to its permitted
successors and assigns.
SECTION 8.05. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
SECTION 8.06. Entire Agreement; No Third-Party Beneficiaries. This Agreement
and the Confidentiality Agreement (a) constitute the entire agreement, and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter of this Agreement and (b) except
for the provisions of Section 5.05, are not intended to confer upon any person
other than the parties hereto (and their respective successors and assigns) any
rights or remedies.
SECTION 8.07. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
SECTION 8.08. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned or delegated, in whole or
in part (except by operation of law), by any of the parties hereto without the
prior written consent of the other parties hereto, except that the Parents, New
York Sub or Delaware Sub may assign, in their sole discretion, any of or all
their respective rights, interests and obligations under this Agreement to N.V.
or PLC or to any, direct or indirect, at least 99% owned subsidiary of N.V. or
PLC or both of them together, but no such assignment shall relieve the Parents,
New York Sub or Delaware Sub of any of their respective obligations hereunder.
Subject to the preceding sentence, this Agreement shall be binding upon, inure
to the benefit of and be enforceable by, the parties hereto and their respective
successors and assigns.
SECTION 8.09. Enforcement. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of Delaware or in any Delaware state court, this being in
addition to any other remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (a) consents to submit itself to the
personal jurisdiction of any court of the United States located in the State of
Delaware or of any Delaware state court in the event any dispute arises out of
this Agreement or the transactions contemplated by this Agreement, (b) agrees
that it will not attempt to deny or
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defeat such personal jurisdiction by motion or other request for leave from any
such court and (c) agrees that it will not bring any action relating to this
Agreement or the transactions contemplated by this Agreement in any court other
than a court of the United States located in the State of Delaware or a Delaware
state court.
IN WITNESS WHEREOF, the Parents, New York Sub, Delaware Sub and the Company
have caused this Agreement to be signed by their respective officers thereunto
duly authorized, all as of the date first written above.
UNILEVER PLC,
By: /s/ Niall FitzGerald
_________________________________
Name: Niall FitzGerald
Title: Chairman
UNILEVER N.V.,
By: /s/ Antony Burgmans
_________________________________
Name: Antony Burgmans
Title: Chairman
CONOPCO, INC.,
By: /s/ Ronald M. Soiefer
_________________________________
Name: Ronald M. Soiefer
Title: Secretary
TITAN ACQUISITION COMPANY,
By: /s/ Mart Laius
_________________________________
Name: Mart Laius
Title: President
BESTFOODS,
By: /s/ Charles R. Shoemate
_________________________________
Name: Charles R. Shoemate
Title: Chairman & CEO
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ANNEX I
TO THE MERGER AGREEMENT
INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
TERM SECTION
---- -------
<S> <C>
Acquiring Person............................................ 3.01(d)
Acquisition Agreement....................................... 4.02(b)
Affected Employees.......................................... 5.08(a)
affiliate................................................... 8.03(a)
Appraisal Shares............................................ 2.01(d)
Certificate................................................. 2.01(c)
Certificate of Merger....................................... 1.03
Closing..................................................... 1.02
Closing Date................................................ 1.02
Code........................................................ 3.01(k)
Commonly Controlled Entity.................................. 3.01(k)
Company..................................................... Preamble
Company Adverse Recommendation Change....................... 4.02(b)
Company Benefit Agreements.................................. 3.01(i)
Company Benefit Plans....................................... 3.01(i)
Company Common Stock........................................ Recitals
Company Disclosure Schedule................................. 3.01
Company Pension Plans....................................... 3.01(k)
Company Performance Units................................... 3.01(c)
Company Preferred Stock..................................... 3.01(c)
Company Rights.............................................. 3.01(c)
Company Rights Agreement.................................... 3.01(c)
Company Series B Preferred Stock............................ 3.01(c)
Company Stockholder Approval................................ 3.01(n)
Company Stock Issuance Rights............................... 3.01(c)
Company Stock Options....................................... 3.01(c)
Company Stock Plans......................................... 3.01(c)
Competitive Proposal........................................ 4.02(a)
Confidentiality Agreement................................... 4.02(a)
Contract.................................................... 3.01(d)
Delaware Sub................................................ Preamble
DGCL........................................................ 1.01
Distribution Date........................................... 3.01(d)
EC Merger Regulation........................................ 3.01(d)
Effective Time.............................................. 1.03
Environmental Claims........................................ 3.01(j)
Environmental Laws.......................................... 3.01(j)
Environmental Permits....................................... 3.01(j)
ERISA....................................................... 3.01(k)
Exchange Act................................................ 3.01(d)
Exchange Fund............................................... 2.02(a)
Filed SEC Document.......................................... 3.01(e)
Foreign Employee Plans...................................... 3.01(k)
GAAP........................................................ 3.01(e)
Governmental Entity......................................... 3.01(d)
Hazardous Materials......................................... 3.01(j)
HSR Act..................................................... 3.01(d)
</TABLE>
A-33
<PAGE>
<TABLE>
<CAPTION>
TERM SECTION
---- -------
<S> <C>
IRS......................................................... 3.01(k)
Legal Restraints............................................ 6.01(c)
Liens....................................................... 3.01(b)
Material Adverse Effect..................................... 8.03(b)
Merger...................................................... Recitals
Merger Consideration........................................ 2.01(c)
New York Sub................................................ Preamble
Non-U.S. Employees.......................................... 5.08(e)
Notice of Superior Proposal................................. 4.02(b)
N.V......................................................... Preamble
N.V. Shareholder Approval................................... 5.11
NYSE........................................................ 3.01(d)
Parents..................................................... Preamble
Parents Disclosure Schedule................................. 5.03(a)
Parents Shareholder Approval................................ 3.02(b)
Paying Agent................................................ 2.02(a)
Permits..................................................... 3.01(h)
person...................................................... 8.03(c)
PLC......................................................... Preamble
PLC Shareholder Approval.................................... 3.02(b)
Proxy Statement............................................. 3.01(d)
Release..................................................... 3.01(j)
Representatives............................................. 4.02(a)
SEC......................................................... 3.01(b)
SEC Documents............................................... 3.01(e)
Section 262................................................. 2.01(d)
Securities Act.............................................. 3.01(e)
Significant Subsidiary...................................... 8.03(d)
Stockholders Meeting........................................ 5.01(b)
subsidiary.................................................. 8.03(e)
Superior Proposal........................................... 4.02(b)
Surviving Corporation....................................... 1.01
Takeover Proposal........................................... 4.02(a)
taxes....................................................... 3.01(l)
tax return.................................................. 3.01(l)
Termination Fee............................................. 5.06(b)
TRA......................................................... 3.01(k)
</TABLE>
A-34
<PAGE>
EXHIBIT A
CERTIFICATE OF INCORPORATION
OF
SURVIVING CORPORATION
ARTICLE I
The name of the corporation (hereinafter called the 'Corporation') is
Bestfoods.
ARTICLE II
The address of the Corporation's registered office in the State of Delaware
is 1209 Orange Street, City of Wilmington, County of New Castle. The name of the
Corporation's registered agent at such address is The Corporation Trust Company.
ARTICLE III
The purpose of the Corporation is to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of the
State of Delaware.
ARTICLE IV
The total number of shares of all classes of stock that the Corporation
shall have authority to issue is 1,000 shares of Common Stock having the par
value of $1.00 per share.
ARTICLE V
The number of directors of the Corporation shall be fixed from time to time
by the Board of Directors of the Corporation.
ARTICLE VI
In furtherance and not in limitation of the powers conferred upon it by law,
the Board of Directors of the Corporation is expressly authorized to adopt,
amend or repeal the By-laws of the Corporation.
ARTICLE VII
Unless and except to the extent that the By-laws of the Corporation so
require, the election of directors of the Corporation need not be by written
ballot.
ARTICLE VIII
To the fullest extent from time to time permitted by law, no director of the
Corporation shall be personally liable to any extent to the Corporation or its
stockholders for monetary damages for breach of his fiduciary duty as a
director.
ARTICLE IX
Each person who is or was or had agreed to become a director or officer of
the Corporation, and each such person who is or was serving or who had agreed to
serve at the request of the Corporation as a director, officer, partner, member,
employee or agent of another corporation, partnership, limited liability
company, joint venture, trust or other enterprise (including the heirs,
executor, administrators or estate of such person), shall be indemnified by the
Corporation to the fullest extent permitted from time to time by applicable law.
A-35
<PAGE>
FIRST AMENDMENT dated as of July 7, 2000 (this 'First Amendment'), by and
among UNILEVER PLC, a company incorporated under the laws of and registered in
England ('PLC'), UNILEVER N.V., a Netherlands corporation ('N.V.' and, together
with PLC, the 'Parents'), CONOPCO, INC., a New York corporation and an indirect
subsidiary of the Parents ('New York Sub'), TITAN ACQUISITION COMPANY, a
Delaware corporation and a wholly owned subsidiary of New York Sub ('Delaware
Sub'), and BESTFOODS, a Delaware corporation (the 'Company'), to the AGREEMENT
AND PLAN OF MERGER dated as of June 6, 2000, by and among the Parents, New York
Sub, Delaware Sub and the Company.
WHEREAS the Parents, New York Sub, Delaware Sub and the Company entered into
an Agreement and Plan of Merger dated as of June 6, 2000 (the 'Merger
Agreement'), providing for the merger of Delaware Sub with and into the Company,
and they now desire to amend the Merger Agreement to make certain modifications
to Section 5.04 thereof.
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Section 5.04. Section 5.04 of the Merger Agreement is hereby
amended by deleting clause (iii) of subsection (a) thereof in its entirety and
substituting in replacement thereof the following:
'(iii) each Company Performance Unit outstanding immediately prior to
the Effective Time (whether vested or unvested) shall be converted at the
Effective Time into the right to receive an amount of cash equal to the sum
of (A) the product of (1) the Merger Consideration multiplied by (2) the
percent with respect to which such Company Performance Unit is earned or
deemed earned for its performance cycle, and (B) the excess, if any, of (1)
the Merger Consideration over (2) the average of the high and low trading
price of shares of Company Common Stock as reported on the NYSE (as
published in The Wall Street Journal or, if not published therein, any
other authoritative source) on the first trading day of the year of grant
of such Company Performance Unit; and'.
SECTION 2. Defined Terms. Capitalized terms used without definition herein
shall have the meanings assigned to them in the Merger Agreement.
SECTION 3. Applicable Law. This First Amendment shall be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
SECTION 4. Amendment. Except as otherwise expressly modified by this First
Amendment, all terms and provisions of the Merger Agreement shall be and shall
remain unchanged and the Merger Agreement is hereby ratified and confirmed and
shall be and shall remain in full force and effect, enforceable in accordance
with its terms. Any reference in the Merger Agreement, or in any documents
required thereunder or annexes or schedules thereto, referring to the Merger
Agreement shall be deemed to refer to the Merger Agreement as amended by this
First Amendment.
SECTION 5. Counterparts. This First Amendment may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to each of the other parties.
A-36
<PAGE>
IN WITNESS WHEREOF, the Parents, New York Sub, Delaware Sub and the Company
have caused this Agreement to be executed by their respective officers thereunto
duly authorized, all as of the date first written above.
UNILEVER PLC,
By: /s/ Stephen G. Williams
__________________________________
Name: Stephen G. Williams
Title: Joint Secretary
UNILEVER N.V.,
By: /s/ Stephen G. Williams
__________________________________
Name: Stephen G. Williams
Title: Joint Secretary
CONOPCO, INC.,
By: /s/ Ronald M. Soiefer
__________________________________
Name: Ronald M. Soiefer
Title: Secretary
TITAN ACQUISITION COMPANY,
By: /s/ Mart Laius
__________________________________
Name: Mart Laius
Title: President
BESTFOODS,
By: /s/ Robert J. Gillespie
__________________________________
Name: Robert J. Gillespie
Title: Executive Vice President
A-37
<PAGE>
APPENDIX B
[Letterhead of Merrill Lynch]
June 6, 2000
Board of Directors
Bestfoods
700 Sylvan Avenue
International Plaza
Englewood Cliffs, NJ 07632
Members of the Board of Directors:
Bestfoods (the 'Company'), Unilever PLC and Unilever N.V. (together, the
'Acquirors'), Conopco, Inc., a wholly owned subsidiary of the Acquirors
('Conopco') and Titan Acquisition Company, a newly formed, wholly owned
subsidiary of Conopco (the 'Acquisition Sub'), propose to enter into an
Agreement and Plan of Merger dated as of June 6, 2000 (the 'Agreement').
Pursuant to the Agreement, the Acquisition Sub would be merged with the Company
in a merger (the 'Transaction') in which each outstanding share of the Company's
common stock, par value $0.25 per share, including, without limitation,
outstanding shares of common stock resulting from the conversion, pursuant to
its terms, of the Company's preferred stock, par value $1.00 per share,
immediately prior to the consummation of the Transaction (the 'Company Common
Stock'), but excluding Company Common Stock directly or indirectly owned by the
Company or the Acquirors or as to which dissenters' rights have been perfected,
would be converted into the right to receive $73.00 per share in cash (the
'Consideration').
You have asked us whether, in our opinion, the Consideration to be received
by the holders of the Company Common Stock, other than the Acquirors and their
affiliates, pursuant to the Transaction is fair from a financial point of view
to such holders.
In arriving at the opinion set forth below, we have, among other things:
(1) Reviewed certain publicly available business and financial
information relating to the Company that we deemed to be relevant;
(2) Reviewed certain information, including financial forecasts,
relating to the business, earnings, cash flow, assets, liabilities and
prospects of the Company furnished to us by the Company;
(3) Conducted discussions with members of senior management of the
Company concerning the matters described in clauses 1 and 2 above;
(4) Reviewed the market prices and valuation multiples for the Company
Common Stock and compared them with those of certain publicly traded
companies that we deemed to be relevant;
(5) Reviewed the results of operations of the Company and compared them
with those of certain publicly traded companies that we deemed to be
relevant;
(6) Compared the proposed financial terms of the Transaction with the
financial terms of certain other transactions that we deemed to be relevant;
(7) Participated in certain discussions and negotiations among
representatives of the Company and the Acquirors and their financial and
legal advisors;
(8) Reviewed a draft of the Agreement dated as of June 5, 2000, in the
form provided to us; and
(9) Reviewed such other financial studies and analyses and took into
account such other matters as we deemed necessary, including our assessment
of general economic, market and monetary conditions.
B-1
<PAGE>
In preparing our opinion, we have assumed and relied on the accuracy and
completeness of all information supplied or otherwise made available to us,
discussed with or reviewed by or for us, or publicly available, and we have not
assumed any responsibility for independently verifying such information or
undertaken an independent evaluation or appraisal of any of the assets or
liabilities of the Company or been furnished with any such evaluation or
appraisal. In addition, we have not assumed any obligation to conduct any
physical inspection of the properties or facilities of the Company. With respect
to the financial forecast information furnished to or discussed with us by the
Company, we have assumed that they have been reasonably prepared and reflect the
best currently available estimates and judgment of the Company's management as
to the expected future financial performance of the Company. We express no view
as to such information or the assumptions on which they are based. We have also
assumed that the final form of the Agreement will be substantially similar to
the last draft reviewed by us.
Our opinion is necessarily based upon market, economic and other conditions
as they exist and can be evaluated on, and upon the information made available
to us as of, the date hereof.
In connection with our opinion, we were not requested to, and we did not,
solicit third party indications of interest in the possible acquisition of all
or a part of the Company. At the request of the Company, however, we did
participate in discussions with third parties to determine their interest in
possible alternative transactions with the Company. We express no view as to,
and our opinion does not address, the relative merits of the Transaction as
compared to any alternative business strategies that might exist for the Company
or the effect of any other transaction in which the Company might engage.
We are acting as financial advisor to the Company in connection with the
Transaction and will receive a fee from the Company for our services, a
significant portion of which is contingent upon the consummation of the
Transaction. In addition, the Company has agreed to indemnify us for certain
liabilities arising out of our engagement. We have, in the past, provided
financial advisory and financing services to the Company and the Acquirors
and/or their affiliates, and may continue to do so and have received, and may
receive, fees for the rendering of such services. In addition, in the ordinary
course of our business, we may actively trade the Company Common Stock and other
securities of the Company, as well as securities of the Acquirors, for our own
account and for the accounts of customers and, accordingly, may at any time hold
a long or short position in such securities.
This opinion is for the use and benefit of the Board of Directors of the
Company. Our opinion does not address the merits of the underlying decision by
the Company to engage in the Transaction and does not constitute a
recommendation to any shareholder as to how such shareholder should vote on the
proposed Transaction or any matter related thereto.
On the basis of and subject to the foregoing, we are of the opinion that, as
of the date hereof, the Consideration to be received by the holders of the
Company Common Stock, other than the Acquirors and their affiliates, pursuant to
the Transaction is fair from a financial point of view to such holders.
Very truly yours,
/s/ Merrill Lynch, Pierce, Fenner & Smith
Incorporated
______________________________________________
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
B-2
<PAGE>
APPENDIX C
[Salomon Smith Barney Letterhead]
June 6, 2000
Board of Directors
Bestfoods
700 Sylvan Avenue
International Plaza
Englewood Cliffs, NJ 07632
Members of the Board:
You have requested our opinion as to the fairness, from a financial point of
view, to the holders of common stock, par value $0.25 per share ('Company Common
Stock'), including, without limitation, shares of common stock issued as a
result of the conversion, pursuant to its terms, of the Series B ESOP
Convertible Preferred Stock, par value $1.00 per share, immediately prior to the
effectiveness of the Merger (as defined below), of Bestfoods (the 'Company'), of
the consideration to be received by such holders in connection with the proposed
merger (the 'Merger') of the Company with Titan Acquisition Company (the
'Acquisition Sub') pursuant to an Agreement and Plan of Merger, dated as of June
6, 2000 (the 'Merger Agreement'), among Unilever PLC and Unilever N.V.
(together, 'the Parents'), Conopco, Inc., Acquisition Sub and the Company.
Acquisition Sub is a wholly owned subsidiary of Conopco, Inc. and Conopco, Inc.
is a wholly owned subsidiary of the Parents. Upon the effectiveness of the
Merger, each issued and outstanding share of Company Common Stock, other than
shares of Company Common Stock owned by the Parents and their affiliates, will
be converted into and represent the right to receive $73 in cash (the 'Merger
Consideration').
In connection with rendering our opinion, we have reviewed certain publicly
available information concerning the Company and certain other financial
information concerning the Company, including financial forecasts, that were
provided to us by the Company. We have discussed the past and current business
operations, financial condition and prospects of the Company with certain
officers and employees of the Company. We have also considered such other
information, financial studies, analyses, investigations and financial, economic
and market criteria that we deemed relevant.
In our review and analysis and in arriving at our opinion, we have assumed
and relied upon the accuracy and completeness of the information reviewed by us
for the purpose of this opinion and we have not assumed any responsibility for
independent verification of such information. With respect to the financial
forecasts of the Company, we have been advised by the management of the Company
that such forecasts have been reasonably prepared on bases reflecting its best
currently available estimates and judgements, and we express no opinion with
respect to such forecasts or the assumptions on which they are based. We have
not assumed any responsibility for any independent evaluation or appraisal of
any of the assets (including properties and facilities) or liabilities of the
Company.
We were not asked to, and did not, solicit other proposals to acquire the
Company. At the request of the Company, however, we did participate in
discussions with third parties to determine their interest in possible
alternative transactions with the Company. We express no view as to, and our
opinion does not address, the relative merits of the Merger as compared to any
alternative business strategies that might exist for the Company or the effect
of any other transaction in which the Company might engage.
Our opinion is necessarily based upon conditions as they exist and can be
evaluated on the date hereof. Our opinion does not address the Company's
underlying business decision to effect the Merger. Our opinion is directed only
to the fairness, from a financial point of view, of the Merger Consideration to
holders of Company Common Stock and does not constitute a
C-1
<PAGE>
recommendation concerning how holders of Company Common Stock should vote with
respect to the Merger Agreement or the Merger.
We have acted as financial advisor to the Board of Directors of the Company
in connection with the Merger and will receive a fee for our services, a
significant portion of which is contingent upon consummation of the Merger. In
addition, the Company has agreed to indemnify us for certain liabilities arising
out of our engagement. In the ordinary course of business, we and our affiliates
may actively trade the securities of the Company and the Parents for our own
account and for the accounts of customers and, accordingly, may at any time hold
a long or short position in such securities. In addition, we and our affiliates
have previously rendered certain investment banking and financial advisory
services to the Company and the Parents for which we have received customary
compensation. We and our affiliates (including Citigroup Inc.) may have other
business relationships with the Company or the Parents in the ordinary course of
their businesses.
Based upon and subject to the foregoing, it is our opinion that, as of the
date hereof, the Merger Consideration is fair to the holders of Company Common
Stock, other than the Parents and their affiliates, from a financial point of
view.
Very truly yours,
/s/ Salomon Smith Barney
______________________________________
SALOMON SMITH BARNEY
C-2
<PAGE>
APPENDIX D
Section 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 'SS' 228 of this title shall be entitled to an appraisal by the
Court of Chancery of the fair value of the stockholder's 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 'SS' 251 (other than a merger effected pursuant to 'SS'
251(g) of this title), 'SS' 252, 'SS' 254, 'SS' 257, 'SS' 258, 'SS' 263 or
'SS' 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 stockholders of the surviving corporation as
provided in subsection (f) of 'SS' 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
'SS'SS' 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 in
respect thereof) 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.
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected pursuant to 'SS' 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.
D-1
<PAGE>
(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 subsection (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 such stockholder's shares shall deliver to the
corporation, before the taking of the vote on the merger or consolidation, a
written demand for appraisal of such stockholder'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 stockholder's 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 10 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 'SS' 228 or
'SS' 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 20 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 10 days after such effective date; provided, however, that if such
second notice is sent more than 20 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 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
D-2
<PAGE>
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 such
stockholder's 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
such stockholder's 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 1 or more publications at least 1 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, 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
such stockholder's certificates of stock to the Register in Chancery,
D-3
<PAGE>
if such is required, may participate fully in all proceedings until it is
finally determined that such stockholder 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 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 such stockholder's
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.
D-4
<PAGE>
APPENDIX 1
BESTFOODS
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE COMPANY FOR THE SPECIAL MEETING ON , 2000
The undersigned hereby appoints CHARLES R. SHOEMATE, EDUARDO B. SANCHEZ
and MARJORY A. APPEL as Proxies, each with the power to appoint his or her
substitute, and hereby authorizes each of them to represent and to vote, as
P designated on the reverse side hereof, all of the shares of common and
R Series B preferred stock of Bestfoods which the undersigned is entitled to
O vote at the special meeting of stockholders to be held at
X [ ], New Jersey on , 2000 at
Y 9:00 a.m., local time, or any adjournment thereof, and in their discretion,
on the matter of the adoption of the Agreement and Plan of Merger, as
amended, by and among Unilever PLC, Unilever N.V., Conopco, Inc., Titan
Acquisition Company and Bestfoods, and, in their discretion, upon any
other matters which may properly come before the meeting.
(Change of Address)
-----------------------------------
-----------------------------------
-----------------------------------
-----------------------------------
(If you have written in the above
space, please mark the
corresponding box on the reverse
side of this card.)
SEE REVERSE
SIDE
<PAGE>
[x] Please mark your votes as indicated in this example.
This proxy when properly executed will be voted in the manner directed herein by
the undersigned stockholder. If no direction is made, this proxy will be voted
FOR Proposal 1. If you participate in the Bestfoods Stock Fund or the ESOP
component of the Bestfoods Savings/Retirement Plan for Salaried Employees, or if
you are entitled to vote under the Bestfoods Special Benefits Trust, your proxy
will instruct the trustee of the Plan or Special Benefits Trust, as applicable,
how to vote. If you participate in the Plan and you have not indicated your
choice on your proxy card, the trustee will vote your shares held in the Plan,
together with the unallocated shares held by the trustee of the Plan, in
proportion to the way other participants in the Plan as a group have voted their
shares. If you are entitled to vote under the Bestfoods Special Benefits Trust
and you have not indicated your choice on your proxy card, the trustee will vote
your shares held in the Special Benefits Trust in proportion to the way the
other participants in the Special Benefits Trust as a group have voted their
shares. Thus, by returning your completed proxy, you will direct the voting of
your own shares as well as the vote by the trustee with respect to unallocated
shares and allocated shares for which no instructions are received.
The Board of Directors recommends a vote FOR Proposal 1.
1. Adoption of the Agreement and Plan of Merger, dated as of June 6, 2000 by and
among Unilever PLC, Unilever N.V., Conopco, Inc., a New York subsidiary of
Unilever PLC and Unilever N.V., Titan Acquisition Company, a Delaware
subsidiary of Conopco, Inc., and Bestfoods; and adoption of the merger
agreement.
Special Action
<TABLE>
<S> <C> <C>
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
</TABLE>
Change of Address
on Reverse Side
Admission
Ticket No of
Request Persons ____
Please date, sign exactly as name appears hereon and return promptly in the
enclosed envelope. When shares are held by joint tenants, both should sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such. If a corporation, please sign in full corporate name by
president or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
-------------------------------------------
-------------------------------------------
SIGNATURE(S) DATE
Fold and Detach Here
BESTFOODS
Your vote is important. Failure to vote will have the same
effect as a vote against adoption of the merger agreement.
Thank you for your time and attention.
Dear Stockholder:
Bestfoods offers you the ability to vote your shares by the Internet or by
telephone, thus eliminating the need to return your proxy card. To vote your
shares by these means, please use the Voter Control Number printed in the box
above, just below the perforation. The series of numbers that appears in the
box above must be used to access the system. To ensure that your vote will be
counted, please cast your Internet or telephone vote before on .
1. To vote by the Internet
Log onto the Internet, go to the web site http://www. , and follow
the instructions provided.
2. To vote by telephone
On a touch-tone phone, call 24 hours a day, seven days a week.
Your Internet or telephone vote authorizes the named proxies in the same manner
as if you marked, signed, dated and returned the proxy card, so there is no need
for you to mail back your proxy card.
STATEMENT OF DIFFERENCES
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The section symbol shall be expressed as.................................. 'SS'
