CHURCH & DWIGHT CO., INC.
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made as of the 14th day
of June 2000, by and among Frederick R. Adler ("Adler"); USA Detergents, Inc., a
Delaware corporation ("USAD"); and Church & Dwight Co., Inc., a Delaware
corporation (the "Purchaser").
WHEREAS, USAD and the Purchaser are concurrently entering into a
Limited Liability Company Operating Agreement (the "Joint Venture Agreement");
and
WHEREAS, the Board of Directors of each of USAD and Purchaser has
determined that the Joint Venture Agreement and the transactions contemplated
thereby are in the best interests of their respective shareholders.
NOW THEREFORE, in consideration of the mutual terms and conditions set
forth herein, the parties hereto hereby agree as follows:
1. Purchase and Sale of Stock.
(a) Adler Sale. Subject to the terms and conditions of this
Agreement, Adler shall sell to the Purchaser, and the Purchaser shall purchase
from Adler, 1,071,428 shares (the "Adler Shares") of the common stock (the
"Common Stock") of USAD at a per share purchase price of $7.00 (the "Per Share
Purchase Price").
(b) USAD Sale. Subject to the terms and conditions of this
Agreement, USAD shall issue and sell to the Purchaser, and the Purchaser shall
purchase from USAD, 367,174 shares (the "USAD Shares") of the Common Stock at
the Per Share Purchase Price.
2. Closing.
(a) Closing Date. The purchase and sale of the Adler Shares
and the USAD Shares will take place concurrently at a closing (the "Closing"),
to be held on June 13, 2000, at the offices of Gibson, Dunn & Crutcher LLP, 4
Park Plaza, Irvine, California 92614, or at such other time and place as the
parties hereto may mutually agree.
(b) Transfer of Adler Shares. At the Closing, Adler shall
deliver to the Purchaser endorsed share certificates or executed stock powers
and other good and sufficient instruments of transfer as the Purchaser may
reasonably require to vest effectively in the Purchaser good and valid title to
the Adler Shares, free and clear of any claims, liens, pledges, options,
security interests, trusts, encumbrances or other rights or interests of any
person. Against delivery of such duly endorsed share certificates evidencing the
Adler Shares the Purchaser shall deliver to Adler, by wire transfer to an
account designed by Adler in writing not less than three (3) business days prior
to the Closing, funds representing the aggregate purchase price of $7,499,996
(the "Aggregate Adler Purchase Price").
(c) Issuance of USAD Shares. At the Closing, USAD shall issue
and deliver to the Purchaser share certificates evidencing the USAD Shares,
which shares when issued and delivered to the Purchaser in accordance with this
Agreement will be duly authorized and validly issued, fully paid and
nonassessable. Against delivery of such share certificates evidencing the USAD
Shares the Purchaser shall deliver to USAD, by wire transfer to an account
designed by USAD in writing not less than three (3) business days prior to the
Closing, funds representing the aggregate purchase price of $2,570,218 (the
"Aggregate USAD Purchase Price").
3. Representations and Warranties of Adler. Adler hereby represents and
warrants to the Purchaser that:
(a) Ownership of Shares. All of the Adler Shares are owned of
record and beneficially by Adler, free and clear of any lien, encumbrance,
charge or claim whatsoever. The Adler Shares and the 704,255 shares of Common
Stock owned by Adler that are subject to the Put & Call Agreement (as defined in
Section 6(a)(iv) below) constitute all of the shares of Common Stock owned by
Adler (it being understood that Adler or persons related to or associated with
Adler have the right to acquire an additional 353,500 shares of Common Stock
upon the exercise of outstanding stock options and warrants). When the Adler
Shares are sold and delivered to the Purchaser in compliance with the provisions
of this Agreement, the Purchaser will be vested with good and valid title to the
Adler Shares, free and clear of any claims, liens, pledges, options, security
interests, trusts, encumbrances (other than those imposed by United States
federal securities laws) or other rights or interests of any person.
(b) Authority. Adler has full power and authority to execute
and deliver this Agreement and the other agreements and documents contemplated
herein to which he is a party (the "Transaction Documents") and to perform of
all of his obligations hereunder and thereunder. This Agreement and the other
Transaction Documents, when executed and delivered, will constitute valid and
legally binding obligations of Adler enforceable in accordance with their
respective terms, subject to laws of general application relating to bankruptcy,
insolvency and the relief of debtors and subject to the availability of
equitable remedies (the "Bankruptcy Exception"), and to the fact that the
indemnification provisions set forth in the Transaction Documents may be limited
by applicable federal or state law (the "Indemnification Exception").
(c) Compliance with Other Instruments. The execution, delivery
and performance of this Agreement and the completion of the transactions
contemplated hereby will not result, to the knowledge of Adler, in any violation
or be in conflict with or constitute, with or without the passage of time and
giving of notice, a default under any instrument, judgment, order, writ, decree
or contract to which Adler is a party or by which he is bound or of any
provision of any federal or state statute, rule or regulation applicable to
Adler.
4. Representations and Warranties of USAD. Except as set forth on
Schedule 1 hereto (the "Disclosure Schedule") or as otherwise previously
disclosed in an SEC Report (as defined in Section 4(f) below), USAD hereby
represents and warrants to the Purchaser that:
(a) Organization and Good Standing. USAD is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware, and has full power and authority to own and operate its properties and
assets and to carry on its business as currently conducted. USAD and its
subsidiaries are duly qualified and authorized to do business, and are in good
standing as foreign corporations, in each jurisdiction where the nature of their
activities and of their properties (both owned and leased) makes such
qualification necessary, except where the failure to so qualify, either
individually or in the aggregate, would not have a Material Adverse Effect. As
used in this Agreement, "Material Adverse Effect" means any change or effect
that (i) is or is reasonably likely to be materially adverse to the business,
financial condition or results of operations of USAD and its subsidiaries, or
(ii) may impair USAD's ability to complete the transactions contemplated hereby.
(b) Capitalization. As of the Closing, the authorized capital
stock of USAD will consist of 30,000,000 shares of Common Stock and 1,000,000
shares of preferred stock (the "Preferred Stock"). All issued and outstanding
shares of USAD's capital stock have been duly authorized and validly issued,
fully paid and nonassessable. Immediately prior to the Closing, there will be
issued and outstanding 13,825,602 shares of Common Stock and no shares of
Preferred Stock. As of June 6, 2000, other than an aggregate of 1,841,395 shares
of Common Stock reserved for issuance under awards made pursuant to USAD's 1995
Stock Option Plan and its Stock Option Plan for Non-Employee Directors
(collectively, the "Option Plans"), of which 1,493,551 shares are subject to
issued and outstanding stock options, and an aggregate of 578,524 shares of
Common Stock issuable upon the exercise of outstanding warrants and options
issued outside of the Option Plans, there are no outstanding rights of first
refusal, preemptive rights or other rights, options, warrants, conversion
rights, or other agreements either directly or indirectly for the purchase or
acquisition from USAD of any shares of its capital stock. All of the outstanding
shares of Common Stock have been duly and validly issued in compliance with
federal and state securities laws.
(c) Authorization. All corporate action on the part of USAD
and its officers, directors and stockholders necessary for the authorization,
execution and delivery of this Agreement and the other Transaction Documents,
the performance of all of USAD's obligations hereunder and thereunder, and the
authorization, issuance (or reservation for issuance), sale and delivery of the
USAD Shares has been or will be taken prior to the Closing. This Agreement and
the other Transaction Documents, when executed and delivered, will constitute
valid and legally binding obligations of USAD enforceable in accordance with
their respective terms, subject to the Bankruptcy Exception and the
Indemnification Exception.
(d) Validity of Securities. The sale of the USAD Shares is not
subject to any preemptive rights or rights of first refusal that have not been
properly waived or complied with. When the USAD Shares are issued, sold and
delivered in compliance with the provisions of this Agreement, the USAD Shares
will be duly authorized and validly issued, fully paid and nonassessable, and
will be free of any liens, encumbrances or restrictions on transfer.
Notwithstanding the foregoing, the USAD Shares may be subject to restrictions on
transfer (i) pursuant to the terms of the Transaction Documents and (ii) under
state and federal securities laws as set forth herein or as otherwise required
by such laws at the time a transfer is proposed.
(e) Compliance with Other Instruments. Neither USAD nor any of
its subsidiaries is in violation of any term of its current Certificate of
Incorporation or Bylaws, any material agreement, instrument, judgment, order,
or, to USAD's knowledge, any statute, rule or regulation applicable to it or its
subsidiaries, in any such case the violation of which would have a Material
Adverse Effect. The execution, delivery, and performance of and compliance with
this Agreement and the issuance and sale of the USAD Shares pursuant hereto will
not result in any violation of any term of the Certificate of Incorporation or
Bylaws of USAD or its subsidiaries, or any material agreement, instrument, or
any judgment, or order, or be in conflict with or constitute a default under any
such term, or result in the creation of any mortgage, pledge, lien, encumbrance,
or charge upon any of the properties or assets of USAD or its subsidiaries.
(f) SEC Reports and Financial Statements. Since November 14,
1997, USAD has filed all required forms, reports and documents (collectively,
the "SEC Reports") with the SEC, each of which has complied in all material
respects with all applicable requirements of the Securities Act of 1933, as
amended (the "Securities Act"), and the Securities Act of 1934, as amended (the
"Exchange Act"), and the regulations promulgated thereunder, each as in effect
on the dates such forms, reports and documents were filed. At the time each was
filed, none of the SEC Reports, including without limitation any financial
statements or schedules included or incorporated by reference therein, contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated or incorporated by reference therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading. The audited consolidated financial statements of USAD
included in the SEC Reports fairly present in all respects, in conformity with
generally accepted accounting principles applied on a consistent basis (except
as may be indicated in the notes thereto), the consolidated financial position
of USAD and its consolidated subsidiaries as of the dates thereof and their
consolidated results of operations and changes in financial condition for the
periods then ended.
(g) Title to Properties and Assets; Liens, etc. Except as set
forth in Section 4(g) of the Disclosure Schedule, USAD and its subsidiaries have
good and marketable title to their properties and assets, in each case subject
to no mortgage, pledge, lien, encumbrance, or charge, other than (i) liens
resulting from taxes which have not yet become delinquent, or (ii) minor liens,
encumbrances, or defects of title which do not, individually or in the
aggregate, have a Material Adverse Effect. With respect to the properties and
assets they lease, USAD and its subsidiaries are in compliance with all material
terms of such leases which are material to USAD and, except as set forth in
Section 4(g) of the Disclosure Schedule, they hold a valid leasehold free of any
liens, claims or encumbrances that impair its present use of such leased
properties and assets. USAD and its subsidiaries have sufficient rights to use
the property and assets used in connection with the operation of their
businesses.
(h) Related Party Transactions. Set forth in Section 4(h) of
the Disclosure Schedule is a correct and complete list of (i) all of the
indebtedness of USAD to all officers, directors and stockholders of USAD,
including any member of their immediate families (other than normal expense
vouchers) exceeding $50,000 and (ii) all of the indebtedness of USAD's officers,
directors and stockholders, including any member of their immediate families
(other than expense advances made in the ordinary course of USAD's business) to
USAD exceeding $50,000. Except as set forth on the Disclosure Schedule, none of
USAD's officers or directors nor their respective affiliates has any ownership
interest in any firm or corporation with which USAD is affiliated or with which
USAD has a business relationship in which the obligations of either party exceed
$100,000.
(i) Registration Rights. Except as set forth in Section 4(i)
of the Disclosure Schedule or as required by the Registration Rights Agreement
(as defined in Section 6(a)(iii) below), USAD is not under any obligation to
register (as defined in the Registration Rights Agreement) any of its currently
outstanding securities or any of its securities which may hereafter be issued.
(j) Material Licenses. USAD and its subsidiaries have all
operating authority, licenses, franchises, permits, certificates, consents,
rights and privileges necessary to conduct its business as presently conducted
(collectively "Material Licenses") the lack of which would have a Material
Adverse Effect. To the extent that USAD or its subsidiaries lack any of the
foregoing Material Licenses, as described in the Disclosure Schedule, USAD
warrants that it or its subsidiaries can obtain, without undue burden or
expense, such Material License or any similar authority for the conduct of its
business. All of the Material Licenses are in full force and effect and no
violations have been or are expected to be recorded in respect of any such
Material Licenses, except where the failure to be in full force and effect or
where such violation would not, individually or in the aggregate, have a
Material Adverse Effect. No proceeding is pending or threatened that could
result in the revocation or material limitation of any of such Material
Licenses. USAD and its subsidiaries have conducted their businesses so as to
comply in all material respects with all such Material Licenses.
(k) Employees. To the knowledge of USAD, no employee of USAD
or any of its subsidiaries is in violation of any term of any employment
contract, proprietary information and inventions agreement, non-competition
agreement, or any other contract or agreement relating to the relationship of
any such employee with USAD, its subsidiaries or any previous employer. Neither
USAD nor any of its subsidiaries has any collective bargaining agreements with
any of its employees and there is no labor union organizing activity pending or
threatened with respect to USAD or its subsidiaries.
(l) Proprietary Information. USAD has taken commercially
reasonable measures to protect the secrecy, confidentiality, and value of all
trade secrets, know-how, inventions, designs, processes, and technical data
required to conduct its business.
(m) Taxes. USAD and its subsidiaries have filed all tax
returns (federal, state or local) they have been required to file prior to the
date hereof and USAD and its subsidiaries have paid all taxes that have been due
and payable. Neither USAD nor its subsidiaries have any material liability for
any federal, state or local taxes. USAD has not elected to be treated as a
collapsible corporation pursuant to Section 341(f) or Section 1362(a) of the
Internal Revenue Code of 1986, as amended (the "Code"), nor has it made any
other elections pursuant to the Code (other than elections that relate solely to
methods of accounting, depreciation or amortization) that would have a Material
Adverse Effect. Neither USAD nor any of its subsidiaries has ever had any tax
deficiency proposed or assessed against it and has not executed any waiver of
any statute of limitations on the assessment or collection of any tax or
governmental charge. USAD is not a real property holding company within the
meaning of Section 897 of the Code.
(n) Environmental Laws. Except as disclosed on Schedule 4(n),
each of USAD and its subsidiaries is in material compliance with all applicable
federal, state and local laws and regulations relating to pollution or the
protection of human health or the environment (including, without limitation,
ambient air, surface water, ground water, land surface or subsurface strata)
(collectively, "Environmental Laws"), which compliance includes, but is not
limited to, the possession by USAD and its subsidiaries of all material permits
and other governmental authorizations required under applicable Environmental
Laws and compliance with the terms and conditions thereof. Except as disclosed
in Schedule 4(n), None of USAD or any of its subsidiaries has received written
notice of or, to the knowledge of USAD, is the subject of any action, cause of
action, claim, investigation, demand or notice by any person or entity alleging
liability under or non-compliance with any Environmental Law. There are no
circumstances that are reasonably likely to prevent or interfere with the
compliance by USAD or any of its subsidiaries with any Environmental Law in the
future.
(o) Patents, Trademarks, etc. Except as disclosed in Schedule
4(o), USAD and its subsidiaries have sufficient title or ownership of, or
license for, all patents, patent applications, licenses, trademarks, service
marks, trade names, inventions, processes, formulae, trade secrets, franchises,
copyrights and other proprietary rights (the "Intellectual Property") used in
connection with the operation of their businesses with no known infringement of
or conflict with the rights of others. Except for commercial software and
applications generally available to the public and trademarks, service marks and
trade names licensed in the ordinary course of business, there are no material
and outstanding options, licenses, or agreements of any kind relating to the
Intellectual Property, nor is USAD or any of its subsidiaries bound by or a
party to any material options, licenses or agreements of any kind with respect
to the Intellectual Property of any other person or entity. USAD is not aware of
any third party that is infringing or violating any of its or its subsidiaries'
Intellectual Property. USAD has not received any communications alleging that
USAD or any of its subsidiaries has violated or, by conducting their businesses
as proposed, would violate any of the Intellectual Property of any other person
or entity.
(p) Litigation. Except as disclosed in Schedule 4(p), there
are no actions, suits, proceedings or investigations before any court or
administrative agency pending or, to the knowledge of USAD, threatened against
or with respect to USAD or its subsidiaries, which question the validity of this
Agreement or any action taken or to be taken in connection herewith, or which,
either individually or in the aggregate, might result in a Material Adverse
Effect. Neither USAD nor any of its subsidiaries is a party or subject to, and
none of their assets are bound by, the provisions of any order, writ,
injunction, judgment, or decree of any court or governmental agency or
instrumentality which has had, is having or will have a Material Adverse Effect.
There is no action, suit, proceeding or investigation by USAD or any of its
subsidiaries pending or that USAD or any of its subsidiaries intend to initiate.
(q) Governmental Consents. All consents, approvals, orders, or
authorizations of, or registrations, qualifications, designations, declarations,
or filings with, any governmental authority, required on the part of USAD in
connection with the valid execution and delivery of this Agreement, the other
Transaction Documents, the offer, sale or issuance of the USAD Shares, and the
completion of any other transaction contemplated hereby have been obtained,
except for notices required or permitted to be filed with certain state and
federal securities commissions after the date hereof, which notices will be
filed on a timely basis.
(r) Offering. Assuming the accuracy of the representations and
warranties of the Purchaser contained in Section 5, the offer, issue, and sale
of the USAD Shares: (i) are and will be exempt from the registration and
prospectus delivery requirements of the Securities Act and (ii) have been
registered or qualified (or are exempt from registration and qualification)
under the registration, permit, or qualification requirements of all applicable
state securities laws.
5. Representations and Warranties of the Purchaser. The Purchaser
hereby represents and warrants to each of Adler and USAD that:
(a) Authorization. All corporate action on the part of the
Purchaser and its officers, directors and stockholders necessary for the
authorization, execution and delivery of this Agreement and the other
Transaction Documents and the performance of all of the Purchaser's obligations
hereunder and thereunder have been or will be taken prior to the Closing. This
Agreement and the other Transaction Documents, when executed and delivered, will
constitute valid and legally binding obligations of the Purchaser enforceable in
accordance with their respective terms, subject to the Bankruptcy Exception and
the Indemnification Exception.
(b) Purchase Entirely for Own Account. The Adler Shares and
the USAD Shares to be received by the Purchaser will be acquired for investment
for the Purchaser's own account, not with a view to the distribution of any part
thereof, and the Purchaser has no present intention of selling, granting any
participation in, or otherwise distributing the same. The Purchaser does not
have any contract, undertaking, agreement or arrangement with any person to
sell, transfer or grant participations to such person or to any third person,
with respect to any of the Adler Shares or the USAD Shares.
(c) Investment Experience. The Purchaser is an experienced
investor and acknowledges and represents that it is able to fend for itself, can
bear the economic risk of its investment, and has such knowledge and experience
in financial or business matters that it is capable of evaluating the merits and
risks of the investment in the Adler Shares and the USAD Shares.
(d) Restricted Securities. The Purchaser understands that the
Adler Shares and the USAD Shares it is purchasing are characterized as
"restricted securities" under the federal securities laws inasmuch as such
securities are being acquired in a transaction not involving a public offering
and that under such laws and applicable regulations such securities may not be
resold in the absence of an effective registration statement covering the Adler
Shares and the USAD Shares or an exemption from registration under the
Securities Act. The Purchaser is familiar with SEC Rule 144 under the Securities
Act, as presently in effect, and understands the resale limitations imposed
thereby and by the Securities Act.
(e) Legend. The Purchaser understands that the certificates
evidencing the Adler Shares and the USAD Shares may bear a legend in
substantially the form as follows:
Thesesecurities have not been registered under the Securities Act of 1933,
as amended. They may not be resold, offered for sale, pledged or hypothecated in
the absence of a registration statement in effect with respect to the securities
under the Securities Act of 1933 or an opinion of counsel satisfactory to USA
Detergents, Inc. that such registration is not required or unless sold pursuant
to Rule 144 of the Securities Act of 1933.
6. Conditions to Closing.
(a) Conditions to Obligations of the Purchaser. The
Purchaser's obligation to purchase the Adler Shares and the USAD Shares is
subject to the fulfillment, at or prior to the Closing, of all of the following
conditions, any of which may be waived by the Purchaser:
(i) Representations and Warranties; Performance of Obligations. The
representations and warranties made by USAD in Section 4 hereof must be
true and correct on the date of the Closing, with the same force and effect
as if they had been made on and as of said date. The representations and
warranties made by Adler in Section 3 hereof must be true and correct on
the date of the Closing, with the same force and effect as if they had been
made on and as of said date. The business and assets of USAD must not have
been adversely affected in any material way prior to the Closing. USAD must
have performed and complied with all obligations and conditions herein
required to be performed or complied with by it on or prior to the
Closing.Adler must have performed and complied with all obligations and
conditions herein required to be performed or complied with by him on or
prior to the Closing.
(ii) Joint Venture Agreement. USAD must have entered into the Joint
Venture Agreement.
(iii) Registration Rights Agreement. USAD must have entered into a
registration rights agreement with the Purchaser of even date herewith.
(iv) Put & Call Agreement. Adler must have entered into a put and call
agreement with the Purchaser of even date herewith (the "Put & Call
Agreement").
(v) Qualifications; Legal Investment. All authorizations, approvals,
or permits, if any, of any governmental authority or regulatory body of the
United States or of any state that are required in connection with and
prior to the lawful sale and issuance of the Adler Shares and the USAD
Shares pursuant to this Agreement must have been duly obtained and must be
effective on and as of the Closing. As of the Closing, no order enjoining
the sale of the Adler Shares or the USAD Shares may have been issued and no
proceedings for such purpose may be pending or threatened by any
governmental authority having jurisdiction over this transaction. At the
time of the Closing, the sale and issuance of the Adler Shares and the USAD
Shares must be legally permitted by all laws and regulations to which the
Purchaser, Adler and USAD are subject.
(b) Conditions to Obligations of Adler. Adler's obligation to sell the
Adler Shares under this Agreement is subject to the fulfillment, at or prior to
the Closing, of the following conditions, any of which may be waived by Adler:
(i) Representations and Warranties, Performance of Obligations. The
representations and warranties made by the Purchaser in Section 5 hereof
must be true and correct at the date of the Closing, with the same force
and effect as if they had been made on and as of said date. The Purchaser
must have performed and complied with all agreements and conditions herein
required to be performed or complied with by it on or before the Closing.
(ii) Put & Call Agreement. The Purchaser must have entered into the
Put & Call Agreement.
(iii) Payment of Purchase Price. The Purchaser must have delivered to
Adler the Aggregate Adler Purchase Price at the Closing for the Adler
Shares purchased by it.
(iv) Qualifications; Legal Investment. All authorizations, approvals,
or permits, if any, of any governmental authority or regulatory body of the
United States or of any state that are required in connection with the
lawful sale and issuance of the Adler Shares pursuant to this Agreement
must have been duly obtained and must be effective on and as of the
Closing. As of the Closing, no order enjoining the sale of the Adler Shares
may have been issued and no proceedings for such purpose may be pending or
threatened by any governmental authority having jurisdiction over this
transaction. At the time of the Closing, the sale and issuance of the Adler
Shares must be legally permitted by all laws and regulations to which the
Purchaser and Adler are subject.
(c) Conditions to Obligations of USAD. USAD's obligation to
issue and sell the USAD Shares under this Agreement is subject to the
fulfillment, at or prior to the Closing, of the following conditions, any of
which may be waived by USAD:
(i) Representations and Warranties, Performance of Obligations. The
representations and warranties made by the Purchaser in Section 5 hereof
must be true and correct at the date of the Closing, with the same force
and effect as if they had been made on and as of said date. The Purchaser
must have performed and complied with all agreements and conditions herein
required to be performed or complied with by it on or before the Closing.
(ii) Joint Venture Agreement. The Purchaser must have entered into the
Joint Venture Agreement.
(iii) Payment of Purchase Price. The Purchaser must have delivered to
USAD the Aggregate USAD Purchase Price at the Closing for the USAD Shares
purchased by it.
(iv) Qualifications; Legal Investment. All authorizations, approvals,
or permits, if any, of any governmental authority or regulatory body of the
United States or of any state that are required in connection with the
lawful sale and issuance of the USAD Shares pursuant to this Agreement must
have been duly obtained and must be effective on and as of the Closing. As
of the Closing, no order enjoining the sale of the USAD Shares may have
been issued and no proceedings for such purpose may be pending or
threatened by any governmental authority having jurisdiction over this
transaction. At the time of the Closing, the sale and issuance of the USAD
Shares must be legally permitted by all laws and regulations to which the
Purchaser and USAD are subject.
7. STANDSTILL AGREEMENT.
(a) Standstill Agreement. Neither the Purchaser nor any subsidiary or
other controlled affiliate of the Purchaser (the "Purchaser Group") will, on or
before the third anniversary of the Closing, without the prior written consent
of a majority of the members of USAD's Board of Directors (the "Board") who are
not affiliated with the Purchaser Group, do any of the following:
(i) acquire, offer or agree to acquire any shares of Common
Stock (or options or warrants to acquire, or securities convertible
into or exchangeable for, shares of Common Stock) if, as a result of
such acquisition, the Purchaser Group would beneficially own (within
the meaning of Rule 13d-3 under the Exchange Act) more than 25% of the
then outstanding shares of Common Stock; provided, however, that at
least one-half of any shares of Common Stock that the Purchaser Group
acquires in excess of the 2,142,857 shares contemplated herein and in
the Put & Call Agreement may not be acquired by the Purchaser Group at
a per share price of less than $7.00 and the balance of any such shares
up to the 25% limit may not be acquired by the Purchaser Group at a per
share price of less than $6.00;
(ii) directly or indirectly commence or become a participant
in a solicitation (as defined in Regulation 14A under the Exchange Act)
of proxies either to oppose the election of any person to the Board or
to seek the removal of any person from the Board, which person has been
nominated by the Board or any nominating committee of the Board;
(iii) directly or indirectly make or solicit or assist any
third party to make a tender or exchange offer to purchase any shares
of Common Stock or make any public announcement concerning, or submit
any written proposal to the Board for a tender offer, exchange offer,
merger, share exchange, acquisition of assets or similar transaction
involving USAD; or
(iv) publicly propose or publicly disclose any intention, plan
or arrangement inconsistent with the foregoing or make any public
announcement or disclosure requesting the Board to amend, modify or
waive this Section 7.
(b) The Purchaser acknowledges that money damages would not be a
sufficient remedy for any breach of the provisions of this Section 7 and that in
addition to all other remedies, USAD shall be entitled to specific performance
and injunctive and other equitable relief as a remedy for any such breach, and
the Purchaser further agrees to waive any requirement for the securing or
posting of bond in connection with any such remedy.
(c) USAD acknowledges and agrees that the Purchaser, by acquiring
shares hereunder and under the Put & Call Agreement, will become an "interested
stockholder" as contemplated by Section 203 of the Delaware General Corporation
Law. As a result of the approval by USAD's Board of Directors of the transaction
in which the Purchaser becomes an interested stockholder, in the absence of the
foregoing provisions of this Section 7, the Purchaser would be free to acquire
shares of USAD's Common Stock. The Purchaser is willing to forego such right to
acquire shares for the three-year period set forth above provided that USAD
complies with its obligations under Section 9.4(b) of the Joint Venture
Agreement. However, the provisions of Section 7(a) and 7(b) shall terminate and
be of no further force and effect upon the breach by USAD of its obligations
pursuant to Section 9.4(b) of the Joint Venture Agreement. Any good faith
dispute as to whether USAD has breached its obligations under said Section
9.4(b) shall be judicially determined before the termination of Sections 7(a)
and 7(b) shall be effective.
8. MISCELLANEOUS.
(a) Survival of Warranties. The warranties, representations
and covenants of Adler, USAD and the Purchaser contained in or made pursuant to
this Agreement will survive for a period of one (1) year after the Closing,
except that the representations and warranties of Adler made in Section 3(a)
shall survive for a period of five (5) years, the covenant of CHD contained in
Section 7 shall survive for a period of three (3) years and the representations
and warranties made by USAD in Section 4(n) shall survive indefinitely.
(b) Successors and Assigns. This Agreement will inure to the
benefit of and be binding upon the respective successors and assigns of the
parties (including transferees of any Adler Shares or USAD Shares). Nothing in
this Agreement, express or implied, is intended to confer upon any party other
than the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
(c) Governing Law. This Agreement will be governed by and
construed under the internal laws of the State of New York, without reference to
any principles of conflicts of laws.
(d) Headings and Captions. The headings and captions used in
this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
(e) Notices. All notices and other communications required or
permitted hereunder will be in writing and will be delivered by facsimile,
courier or nationally recognized overnight delivery service addressed as
follows:
If to Adler:
-----------
Venad Administration Services, Inc.
342 Madison Ave., Suite 807
New York, New York 10173
Attention: Jay S. Nickse, Chief Financial Officer
Telecopy No.: 212-599-2526
with a copy to:
--------------
Fulbright & Jaworski L.L.P.
666 Fifth Avenue
New York, New York 10103
Attention: Warren J. Nimetz
Facsimile: 212-318-3400
If to USAD:
----------
1735 Jersey Avenue
North Brunswick, NJ 08902
Attn: Chief Executive Officer
Telecopy No.: (732) 246-8833
with a copy to:
--------------
Fulbright & Jaworski L.L.P.
666 Fifth Avenue
New York, NY 10103
Attn: Sheldon G. Nussbaum
Telecopy No.: (212) 318-3400
If to CHD:
---------
469 North Harrison Street
Princeton, NJ 08543-5297
Telecopy No.: (609) 497-7177
with a copy to:
--------------
Gibson, Dunn & Crutcher LLP
4 Park Plaza
Irvine, California 92714
Attention: Ronald S. Beard
Telecopy No.: (949) 475-4730
(f) Finder's Fee. Each party represents that it neither is nor
will be obligated for any finders' fee or commission in connection with this
transaction. The Purchaser shall indemnify and hold harmless Adler and USAD from
any liability for any commission or compensation in the nature of a finders' fee
(and the costs and expenses of defending against such liability or asserted
liability) for which the Purchaser or any of its officers, partners, employees,
or representatives is responsible. Adler shall indemnify and hold harmless the
Purchaser from any liability for any commission or compensation in the nature of
a finders' fee (and the costs and expenses of defending against such liability
or asserted liability) for which Adler or any of his agents or representatives
is responsible. USAD shall indemnify and hold harmless the Purchaser from any
liability for any commission or compensation in the nature of a finders' fee
(and the costs and expenses of defending against such liability or asserted
liability) for which USAD or any of USAD's officers, employees, agents or
representatives is responsible.
(g) Attorneys' Fees. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the prevailing
party will be entitled to actual attorney's fees, costs and necessary
disbursements in addition to any other relief to which such party may be
entitled.
(h) Amendments and Waivers. Any term of this Agreement may be
amended, and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of each affected party.
(i) Severability. If any provision of this Agreement, or the
application of such provision to any person or circumstance, is judicially
declared to be invalid, unenforceable or void, such decision will not have the
effect of invalidating or voiding the remainder of this Agreement or affect the
application of such provision to other persons or circumstances, and the part or
parts of this Agreement so held to be invalid, unenforceable or void will be
deemed to have been stricken herefrom and the remainder of this Agreement will
have the same force and effect as if such part or parts had never been included
herein. Any such finding of invalidity or unenforceability will not prevent the
enforcement of such provision in any other jurisdiction to the maximum extent
permitted by applicable law.
(j) Entire Agreement. This Agreement and the other Transaction
Documents constitute the entire agreement among the parties with respect to the
subject matter hereof and thereof.
(k) Counterparts. This Agreement may be executed in two or
more counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
ADLER:
/s/ Frederick R. Adler
--------------------------------
Frederick R. Adler
USAD:
USA Detergents, Inc.,
a Delaware corporation
By: /s/ Uri Evan
----------------------------
Name: Uri Evan
Title: Chief Executive Officer
THE PURCHASER:
Church & Dwight Co., Inc.,
a Delaware corporation
By: /s/ Robert A. Davies, III
----------------------------
Name: Robert A. Davies, III
Title: Chief Executive Officer
