<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 12, 1997
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------
KIMBERLY-CLARK CORPORATION
(Exact Name of Registrant as specified in its Charter)
---------------------
<TABLE>
<C> <C> <C>
DELAWARE
(State or other jurisdiction 2621 39-0394230
of incorporation or (Primary Standard Industrial (I.R.S. Employer
organization) Classification Code Number Identification No.)
</TABLE>
P.O. BOX 619100
DALLAS, TEXAS 75261-9100
(972) 281-1200
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
O. GEORGE EVERBACH
SENIOR VICE PRESIDENT -- LAW AND GOVERNMENT AFFAIRS
P.O. BOX 619100
DALLAS, TEXAS 75261-9100
(972) 281-1200
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
---------------------
Copies to:
<TABLE>
<C> <C>
DENNIS V. OSIMITZ, ESQ. PETER TIERNEY, ESQ.
SIDLEY & AUSTIN CARRINGTON, COLEMAN, SLOMAN & BLUMENTHAL, L.L.P.
ONE FIRST NATIONAL PLAZA 200 CRESCENT COURT, SUITE 1500
CHICAGO, ILLINOIS 60603 DALLAS, TEXAS 75201
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement which
relates to the merger (the "Merger") of Vanguard Acquisition Corp., a wholly
owned subsidiary of Kimberly-Clark Corporation, with and into Tecnol Medical
Products, Inc. pursuant to the Merger Agreement described herein.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
======================================================================================================================
PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER SHARE OFFERING PRICE REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
8,925,742
Common Stock, $1.25 par value.......... shares(1) N.A. $452,875,155(2) $137,235(3)
- ----------------------------------------------------------------------------------------------------------------------
8,925,742
Preferred Stock Purchase Rights........ rights(1) (4) (4) (4)
======================================================================================================================
</TABLE>
(1) Based on the maximum numbers of shares of Kimberly-Clark Common Stock to be
delivered pursuant to Section 4.1(a) of the Merger Agreement (as defined
herein) assuming the exercise of all currently outstanding options to
purchase shares of Tecnol Common Stock.
(2) Estimated solely for the purpose of calculating the registration fee
required by Section 6(b) of the Securities Act of 1933, as amended (the
"Securities Act"), and computed pursuant to Rule 457(f) under the Securities
Act by multiplying $21.31, the average of the high and low bid prices of
shares of Tecnol Common Stock on November 7, 1997, as reported on Nasdaq, by
21,251,767, the number of shares of Tecnol Common Stock outstanding at the
close of business on November 7, 1997, assuming the exercise of all then
outstanding options to purchase Tecnol Common Stock.
(3) Pursuant to Rule 457(b) under the Securities Act, $81,705.55 of the
registration fee was paid on October 2, 1997 in connection with the filing
of preliminary proxy/prospectus materials.
(4) The Preferred Stock Purchase Rights of Kimberly-Clark initially are attached
to and trade with the shares of Kimberly-Clark Common Stock being registered
hereby. Value attributable to such Preferred Stock Purchase Rights, if any,
is reflected in the market price of Kimberly-Clark Common Stock.
---------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE
ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY
DETERMINE.
================================================================================
<PAGE> 2
[TECNOL LOGO]
November 12, 1997
Dear Stockholder:
You are cordially invited to attend the Special Meeting of Stockholders of
Tecnol Medical Products, Inc. ("Tecnol") to be held at The Hotel Crescent Court,
Crescent Ballroom, 400 Crescent Court, Dallas, Texas, on Thursday, December 18,
1997, at 10:30 a.m., local time (the "Tecnol Special Meeting").
The purpose of the Tecnol Special Meeting is to consider a proposal to
approve and adopt the Agreement and Plan of Merger dated as of September 4, 1997
(the "Merger Agreement") among Kimberly-Clark Corporation ("Kimberly-Clark"),
Vanguard Acquisition Corp., a wholly owned subsidiary of Kimberly-Clark ("Sub"),
and Tecnol pursuant to which Sub will be merged (the "Merger") with and into
Tecnol and, as a result, Tecnol will become a wholly owned subsidiary of
Kimberly-Clark.
Subject to the terms and conditions of the Merger Agreement, each share of
Common Stock, $.001 par value per share, of Tecnol ("Tecnol Common Stock")
outstanding immediately prior to the effective time of the Merger (other than
shares owned directly or indirectly by Kimberly-Clark or Tecnol, which will be
canceled) will be converted into 0.42 of a share of Common Stock, $1.25 par
value per share, of Kimberly-Clark ("Kimberly-Clark Common Stock"), including
the corresponding percentage of a right to purchase shares of Series A Junior
Participating Preferred Stock of Kimberly-Clark. Cash will be paid in lieu of
any fractional share of Kimberly-Clark Common Stock.
Your Board of Directors believes that a merger between Tecnol and
Kimberly-Clark is in the best interest of the Tecnol stockholders. Your Board
has unanimously approved the Merger Agreement and recommends that you vote FOR
approval. Your Board has received a written opinion from Goldman, Sachs & Co. as
to the fairness of the consideration to be received by Tecnol's stockholders.
You are encouraged to read the accompanying Proxy Statement/Prospectus, which
provides detailed information concerning the Merger and additional information
regarding Kimberly-Clark and Tecnol.
Your vote is important, regardless of the number of shares you own. The
affirmative vote of the holders of a majority of the outstanding shares of
Tecnol Common Stock entitled to vote thereon is required for approval and
adoption of the Merger Agreement. Accordingly, on behalf of your Board of
Directors, I urge you to complete, date and sign the accompanying proxy and
return it promptly in the enclosed postage-paid envelope. This will not prevent
you from attending the Tecnol Special Meeting or voting in person, but will
assure that your vote is counted if you are unable to attend the Tecnol Special
Meeting. You may revoke your proxy at any time by filing a written notice of
revocation with, or by delivering a duly executed proxy bearing a later date to,
the Secretary of Tecnol at Tecnol's main office prior to the Tecnol Special
Meeting or by attending the Tecnol Special Meeting and voting in person.
On behalf of the Board of Directors, I thank you for your support and urge
you to vote FOR approval of the Merger Agreement.
Sincerely,
/s/ VAN HUBBARD
Van Hubbard
Chairman, Chief Executive Officer and
President
TECNOL ADDRESS
<PAGE> 3
Tecnol Letterhead
November 12, 1997
Dear Participant in the Tecnol Medical Products, Inc. Employee Stock Ownership
Plan ("ESOP"):
A Special Meeting of Stockholders of Tecnol Medical Products, Inc.
("Tecnol") will be held at The Hotel Crescent Court, Crescent Ballroom, 400
Crescent Court, Dallas, Texas, on Thursday, December 18, 1997, at 10:30 a.m.,
local time (the "Tecnol Special Meeting"). The purpose of the Tecnol Special
Meeting is to consider a proposal to approve and adopt the Agreement and Plan of
Merger dated as of September 4, 1997 (the "Merger Agreement") among
Kimberly-Clark Corporation ("Kimberly-Clark"), Vanguard Acquisition Corp., a
wholly-owned subsidiary of Kimberly-Clark ("Sub"), and Tecnol pursuant to which
Sub will be merged (the "Merger") with and into Tecnol and, as a result, Tecnol
will become a wholly owned subsidiary of Kimberly-Clark.
Subject to the terms and conditions of the Merger Agreement, each share of
Common Stock, $.001 par value per share, of Tecnol (the "Tecnol Common Stock")
outstanding immediately prior to the effective time of the Merger (other than
shares owned directly or indirectly by Kimberly-Clark or Tecnol, which will be
canceled) will be converted into 0.42 of a share of Common Stock, $1.25 par
value per share, of Kimberly-Clark ("Kimberly-Clark Common Stock"), including
the corresponding percentage of a right to purchase shares of Series A Junior
Participating Preferred Stock of Kimberly-Clark. Cash will be paid in lieu of
any fractional share of Kimberly-Clark Common Stock. Accordingly, the shares of
Tecnol Common Stock held by the ESOP immediately prior to the effective time of
the Merger would be exchanged for Kimberly-Clark Common Stock and cash in lieu
of fractional shares.
The affirmative vote of the holders of a majority of the outstanding shares
of Tecnol Common Stock entitled to vote thereon is required for approval and
adoption of the Merger Agreement. Pursuant to the terms of the ESOP, the ESOP
Trustees will vote all shares of Tecnol Common Stock allocated to your account
according to your instructions, subject to applicable fiduciary standards. If
the ESOP Trustees do not receive instructions from you as to how to vote the
shares of Tecnol Common Stock allocated to your account, the Trustees will vote,
subject to applicable fiduciary standards, those shares of Tecnol Common Stock
in the Trustees' discretion. The Trustees will also vote, subject to applicable
fiduciary standards, in their discretion shares of Tecnol Common Stock which are
not allocated to participant accounts.
You are encouraged to read the accompanying Proxy Statement/Prospectus
dated November 12, 1997, which provides detailed information concerning the
Merger and additional information regarding Kimberly-Clark and Tecnol. It is
important that you direct the ESOP Trustees how to vote the shares allocated to
your ESOP account. We urge you to complete, date and sign the accompanying
instruction card and return it promptly in the enclosed postage-paid envelope.
Your instructions will be kept confidential.
<PAGE> 4
The Merger Agreement provides for the termination of the ESOP prior to the
effective time of the Merger. Additional information regarding the ESOP
termination will be forwarded to you in the near future.
Sincerely,
/s/ Van Hubbard
Van Hubbard, ESOP Trustee
/s/ David Radunsky
David Radunsky, ESOP Trustee
/s/ Kirk Brunson
Kirk Brunson, ESOP Trustee
TECNOL ADDRESS
<PAGE> 5
TECNOL MEDICAL PRODUCTS, INC.
7201 INDUSTRIAL PARK BLVD.
FORT WORTH, TEXAS 76180
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 18, 1997
TO THE STOCKHOLDERS OF TECNOL MEDICAL PRODUCTS, INC.:
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders of Tecnol
Medical Products, Inc. ("Tecnol") will be held on Thursday, December 18, 1997,
at 10:30 a.m., local time, at The Hotel Crescent Court, Crescent Ballroom, 400
Crescent Court, Dallas, Texas (the "Tecnol Special Meeting"), for the following
purposes:
1. To consider and vote upon a proposal to approve and adopt an
Agreement and Plan of Merger (the "Merger Agreement") providing for the
merger of Vanguard Acquisition Corp., a wholly owned subsidiary of
Kimberly-Clark Corporation ("Kimberly-Clark"), with and into Tecnol,
pursuant to which (a) each outstanding share of Tecnol Common Stock (other
than shares owned directly or indirectly by Tecnol or Kimberly-Clark) will
be converted into 0.42 of a share of Kimberly-Clark Common Stock, including
the corresponding percentage of a right to purchase shares of Series A
Junior Participating Preferred Stock of Kimberly-Clark, and (b) Tecnol will
become a wholly owned subsidiary of Kimberly-Clark, all as more fully
described in the accompanying Proxy Statement/Prospectus.
2. To transact such other business as properly may come before the
Tecnol Special Meeting or any one or more adjournments thereof.
Only stockholders of record at the close of business on November 6, 1997
are entitled to notice of the Tecnol Special Meeting and to vote thereat and at
any and all adjournments thereof.
Your vote is important. Please complete the accompanying proxy and return
it promptly in the addressed envelope enclosed.
/s/ VAN HUBBARD
Van Hubbard
Chairman, Chief Executive Officer and
President
November 12, 1997
The affirmative vote of the holders of a majority of the outstanding shares of
Tecnol Common Stock entitled to vote thereon is required for approval and
adoption of the Merger Agreement. Regardless of whether you plan to attend the
Tecnol Special Meeting, please sign, date and return the enclosed proxy in the
envelope provided. PLEASE DO NOT SEND STOCK CERTIFICATES FOR YOUR SHARES AT THIS
TIME.
<PAGE> 6
TECNOL MEDICAL PRODUCTS, INC.
PROXY STATEMENT
KIMBERLY-CLARK CORPORATION
PROSPECTUS
This Proxy Statement/Prospectus is being furnished to the holders of Common
Stock, $.001 par value per share ("Tecnol Common Stock"), of Tecnol Medical
Products, Inc., a Delaware corporation ("Tecnol"), in connection with the
solicitation of proxies by the Board of Directors of Tecnol (the "Tecnol Board")
for use at a Special Meeting of Stockholders of Tecnol to be held at The Hotel
Crescent Court, Crescent Ballroom, 400 Crescent Court, Dallas, Texas, on
Thursday, December 18, 1997, at 10:30 a.m., local time, and at any and all
adjournments thereof (the "Tecnol Special Meeting").
This Proxy Statement/Prospectus relates to the Agreement and Plan of Merger
dated as of September 4, 1997 (the "Merger Agreement") among Kimberly-Clark
Corporation, a Delaware corporation ("Kimberly-Clark"), Vanguard Acquisition
Corp., a Delaware corporation and a wholly owned subsidiary of Kimberly-Clark
("Sub"), and Tecnol, which provides for the merger (the "Merger") of Sub with
and into Tecnol, with Tecnol surviving as a wholly owned subsidiary of
Kimberly-Clark. Subject to the terms and conditions of the Merger Agreement,
each share of Tecnol Common Stock outstanding immediately prior to the Effective
Time (as defined in the Merger Agreement) of the Merger (other than shares owned
directly or indirectly by Kimberly-Clark or Tecnol, which will be canceled) will
be converted into 0.42 (the "Conversion Number") of a share of Common Stock,
$1.25 par value per share ("Kimberly-Clark Common Stock"), of Kimberly-Clark,
including the corresponding percentage of a right (collectively, the
"Kimberly-Clark Rights") to purchase shares of Series A Junior Participating
Preferred Stock, without par value ("Kimberly-Clark Series A Preferred Stock"),
of Kimberly-Clark. Cash will be paid in lieu of any fractional share of
Kimberly-Clark Common Stock.
The consummation of the Merger is subject, among other things, to: (i) the
approval and adoption of the Merger Agreement by the holders of a majority of
the outstanding shares of Tecnol Common Stock entitled to vote thereon; and (ii)
the receipt of certain regulatory approvals. A conformed copy of the Merger
Agreement is attached hereto as Annex I.
This Proxy Statement/Prospectus also constitutes the Prospectus of
Kimberly-Clark filed as part of a Registration Statement on Form S-4 (the
"Registration Statement") with the Securities and Exchange Commission (the
"SEC") under the Securities Act of 1933, as amended (the "Securities Act"),
relating to the shares of Kimberly-Clark Common Stock and the associated
Kimberly-Clark Rights to be delivered pursuant to the Merger Agreement.
Kimberly-Clark Common Stock is listed for trading under the symbol "KMB" on
the New York Stock Exchange (the "NYSE"), the Chicago Stock Exchange (the "CSE")
and the Pacific Stock Exchange (the "PSE"). Tecnol Common Stock is listed for
trading under the symbol "TCNL" on The Nasdaq Stock Market ("Nasdaq"). On
September 3, 1997, the last trading day prior to the execution of the Merger
Agreement, the last sale price of Kimberly-Clark Common Stock as reported on the
NYSE Composite Transactions Tape was $47.63 per share and the last bid price of
Tecnol Common Stock, as reported by Nasdaq, was $22.00 per share. On November
11, 1997, the last trading day prior to the date of this Proxy
Statement/Prospectus, the last sale price of Kimberly-Clark Common Stock, as
reported on the NYSE Composite Transactions Tape, was $50.69 per share and the
last bid price of Tecnol Common Stock, as reported by Nasdaq, was $21.00 per
share.
This Proxy Statement/Prospectus and the accompanying forms of proxy are
first being mailed to the stockholders of Tecnol on or about November 14, 1997.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT/ PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
---------------------
The date of this Proxy Statement/Prospectus is November 12, 1997
<PAGE> 7
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
AVAILABLE INFORMATION....................................... 1
INCORPORATION OF DOCUMENTS BY REFERENCE..................... 1
SUMMARY..................................................... 3
Kimberly-Clark............................................ 3
Tecnol.................................................... 3
Sub....................................................... 3
Tecnol Special Meeting.................................... 3
Purpose................................................ 3
Record Date............................................ 4
Required Vote.......................................... 4
Change of Vote......................................... 4
The Merger and the Merger Agreement....................... 4
General................................................ 4
Effective Time......................................... 4
Recommendation of the Tecnol Board..................... 4
Opinion of Tecnol's Financial Advisor.................. 4
Certain Federal Income Tax Consequences................ 5
Anticipated Accounting Treatment....................... 5
Absence of Appraisal Rights............................ 5
Conditions to the Merger............................... 5
Termination of the Merger Agreement.................... 5
Fees and Expenses...................................... 5
Interests of Certain Persons in the Merger............. 6
Company Option Agreement............................... 6
Company Stockholder Agreements......................... 6
Kimberly-Clark Corporation Selected Consolidated Financial
Data................................................... 7
Tecnol Medical Products, Inc. Selected Consolidated
Financial Data......................................... 9
Comparative Per Share Data of Kimberly-Clark and Tecnol... 10
Market Prices and Dividends Paid.......................... 11
Comparison of the Rights of Holders of Kimberly-Clark
Common Stock and Tecnol Common Stock................... 12
RECENT DEVELOPMENTS......................................... 13
Kimberly-Clark Share Repurchase Program................... 13
TECNOL SPECIAL MEETING...................................... 13
Purpose................................................... 13
Record Date; Voting Rights................................ 13
Quorum.................................................... 13
Proxies................................................... 13
Solicitation of Proxies................................... 14
Required Vote............................................. 14
Share Ownership of Management............................. 14
THE MERGER.................................................. 15
General................................................... 15
Effective Time............................................ 15
Background of the Merger.................................. 15
Kimberly-Clark's Reasons for the Merger................... 17
Tecnol's Reasons for the Merger; Recommendation of its
Board of Directors..................................... 17
Opinion of Tecnol's Financial Advisor..................... 18
</TABLE>
i
<PAGE> 8
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Goldman Sachs.......................................... 18
Historical Stock Trading Analysis...................... 19
Conversion Number Analysis............................. 20
Selected Companies Analysis............................ 20
Selected Acquisitions Analysis......................... 21
Discounted Cash Flow Analysis.......................... 21
Pro Forma Merger Analysis.............................. 22
Analysis at Various Prices............................. 22
Leveraged Buyout Analysis.............................. 22
Contribution Analysis.................................. 22
Other Analysis......................................... 22
Certain Litigation........................................ 24
Certain Federal Income Tax Consequences................... 24
Stock Options.......................................... 25
Anticipated Accounting Treatment.......................... 26
Governmental and Regulatory Approvals..................... 26
Percentage Ownership Interest of Tecnol Stockholders after
the Merger............................................. 27
Absence of Appraisal Rights............................... 27
Resales of Kimberly-Clark Common Stock.................... 27
TERMS OF THE MERGER AGREEMENT............................... 28
Conversion of Shares in the Merger........................ 28
Fixed Exchange Ratio...................................... 28
No Fractional Shares...................................... 28
Adjustment of Conversion Number........................... 29
Exchange Agent; Procedures for Exchange of Certificates... 29
Representations and Warranties............................ 30
Conduct of Business Pending the Merger.................... 31
No Solicitation........................................... 32
Third Party Standstill Agreements......................... 33
Conditions Precedent to the Merger........................ 33
Tecnol Stock Options...................................... 34
Employee Benefits......................................... 34
Indemnification; Directors' and Officers' Insurance....... 34
Termination............................................... 35
Fees and Expenses......................................... 36
Amendment................................................. 36
Waiver.................................................... 36
INTERESTS OF CERTAIN PERSONS IN THE MERGER.................. 37
Consulting Agreements..................................... 37
Noncompetition Agreements................................. 37
Severance and Release Agreements.......................... 38
Stock Options............................................. 38
Indemnification........................................... 39
COMPANY OPTION AGREEMENT.................................... 39
COMPANY STOCKHOLDER AGREEMENTS.............................. 41
DESCRIPTION OF KIMBERLY-CLARK COMMON STOCK.................. 42
Dividend Rights........................................... 42
Voting Rights............................................. 42
Change of Control......................................... 43
Charter Provisions..................................... 43
</TABLE>
ii
<PAGE> 9
<TABLE>
<CAPTION>
PAGE
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<S> <C>
By-law Provisions...................................... 44
Stockholders Rights Plan............................... 44
DGCL................................................... 45
Liquidation Rights........................................ 45
Miscellaneous............................................. 45
COMPARISON OF THE RIGHTS OF HOLDERS OF KIMBERLY-CLARK COMMON
STOCK AND TECNOL COMMON STOCK............................. 46
General................................................... 46
Dividends................................................. 46
Voting Rights............................................. 46
Directors................................................. 47
Number and Election of Directors....................... 47
Classification......................................... 47
Removal................................................ 47
Nominations............................................ 47
Fiduciary Duties of Directors.......................... 47
Liability of Directors................................. 48
Call of Special Meetings.................................. 48
Action of Stockholders Without a Meeting.................. 48
Stockholder Proposals..................................... 48
Amendment to Charter Document............................. 48
Amendment to By-laws...................................... 49
Approval of Mergers and Asset Sales....................... 49
Indemnification of Directors and Officers................. 49
Anti-Takeover Provisions.................................. 50
Kimberly-Clark Rights..................................... 51
Liquidation............................................... 51
Miscellaneous............................................. 52
BUSINESS OF KIMBERLY-CLARK.................................. 52
BUSINESS OF TECNOL.......................................... 53
EXPERTS..................................................... 53
LEGAL OPINIONS.............................................. 53
</TABLE>
ANNEXES TO THE PROXY STATEMENT/PROSPECTUS
<TABLE>
<S> <C>
ANNEX I AGREEMENT AND PLAN OF MERGER
ANNEX II COMPANY OPTION AGREEMENT
ANNEX III FORM OF THE COMPANY STOCKHOLDER AGREEMENT
ANNEX IV OPINION OF GOLDMAN, SACHS & CO.
</TABLE>
iii
<PAGE> 10
AVAILABLE INFORMATION
Kimberly-Clark and Tecnol are subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith file reports, proxy statements and other information with
the SEC. Such reports, proxy statements and other information may be inspected
and copied at the public reference facilities maintained by the SEC at Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
following Regional Offices of the SEC: Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661; and 7 World Trade Center, Suite 1300, New
York, New York 10048. Copies of such materials relating to Kimberly-Clark can be
inspected at the NYSE, 20 Broad Street, New York, New York 10005; the CSE, One
Financial Place, 440 South LaSalle Street, Chicago, Illinois 60605; and the PSE,
301 Pine Street, San Francisco, California 94104. Copies of such materials
relating to Tecnol can be inspected at the offices of Nasdaq, 1735 K Street,
N.W., Washington, D.C. 20006. Copies may be obtained by mail at prescribed rates
from the Public Reference Section of the SEC at its principal office at 450
Fifth Street, N.W., Washington, D.C. 20549. Such materials also may be accessed
electronically by means of the SEC's web site at http://www.sec.gov.
This Proxy Statement/Prospectus does not contain all of the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the SEC. Reference is made to the
Registration Statement and the Exhibits thereto for further information.
Statements contained or incorporated by reference herein concerning the
provisions of any agreement or other document filed as an Exhibit to the
Registration Statement or otherwise filed with the SEC are not necessarily
complete and reference is hereby made to the copy thereof so filed for more
detailed information, each such statement being qualified in its entirety by
such reference.
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES BY REFERENCE DOCUMENTS THAT
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. COPIES OF SUCH DOCUMENTS (OTHER
THAN EXHIBITS THERETO WHICH ARE NOT SPECIFICALLY INCORPORATED BY REFERENCE
HEREIN) ARE AVAILABLE, WITHOUT CHARGE, TO ANY PERSON, INCLUDING ANY BENEFICIAL
OWNER OF SHARES OF TECNOL COMMON STOCK TO WHOM THIS PROXY STATEMENT/PROSPECTUS
IS DELIVERED, UPON WRITTEN OR ORAL REQUEST TO, IN THE CASE OF DOCUMENTS RELATING
TO KIMBERLY-CLARK, STOCKHOLDER SERVICES, KIMBERLY-CLARK CORPORATION, P.O. BOX
612606, DALLAS, TEXAS 75261-2606, TELEPHONE NUMBER (972) 281-1200 AND, IN THE
CASE OF DOCUMENTS RELATING TO TECNOL, WARREN HENRY, VICE PRESIDENT-INVESTOR
RELATIONS, 7201 INDUSTRIAL PARK BLVD., FORT WORTH, TEXAS 76180, TELEPHONE NUMBER
(817) 581-6424. IN ORDER TO ENSURE DELIVERY OF DOCUMENTS PRIOR TO THE APPLICABLE
TECNOL SPECIAL MEETING, ANY REQUEST THEREFOR SHOULD BE MADE NOT LATER THAN
DECEMBER 4, 1997.
INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents heretofore filed with the SEC pursuant to the
Exchange Act are incorporated herein by reference:
1. Kimberly-Clark's Annual Report on Form 10-K for the year ended
December 31, 1996;
2. Kimberly-Clark's Quarterly Reports on Form 10-Q for the quarters
ended March 31, June 30 and September 30, 1997;
3. Kimberly-Clark's Current Reports on Form 8-K reporting events on
February 20, February 25, April 24 and October 30, 1997;
4. The description of the Kimberly-Clark Rights contained in the
Registration Statements on Form 8-A and Forms 8-A/A filed by Kimberly-Clark
with the SEC on June 21, 1988, June 13, 1995 and March 17, 1997,
respectively, including any amendments or reports filed for the purpose of
updating such description;
5. Tecnol's Annual Report on Form 10-K for the year ended November 30,
1996;
6. Tecnol's Quarterly Reports on Form 10-Q for the quarters ended
March 1, May 31 and August 30, 1997; and
7. Tecnol's Current Report on Form 8-K reporting an event on September
4, 1997.
1
<PAGE> 11
All reports and other documents filed by either Kimberly-Clark or Tecnol
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to
the date of this Proxy Statement/Prospectus and prior to the date of the Tecnol
Special Meeting shall be deemed to be incorporated by reference herein and to be
a part hereof from the dates of filing of such reports and documents. Any
statement contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Proxy Statement/Prospectus to the extent that a statement contained herein,
or in any other subsequently filed document which also is incorporated or deemed
to be incorporated by reference herein, modifies or supersedes such statement.
Any statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Proxy Statement/Prospectus.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS WITH RESPECT TO THE MATTERS DESCRIBED IN THIS PROXY
STATEMENT/PROSPECTUS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE
HEREIN, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY EITHER KIMBERLY-CLARK OR TECNOL. THIS
PROXY STATEMENT/PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES, NOR DOES IT CONSTITUTE THE
SOLICITATION OF A PROXY, IN ANY JURISDICTION TO OR FROM ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE ANY SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER
THE DELIVERY OF THIS PROXY STATEMENT/PROSPECTUS NOR ANY DISTRIBUTION OF
SECURITIES HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF KIMBERLY-CLARK OR TECNOL SINCE THE
DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO ITS DATE.
CERTAIN INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROXY
STATEMENT/PROSPECTUS IS FORWARD LOOKING AND IS BASED ON VARIOUS ASSUMPTIONS.
SUCH INFORMATION INCLUDES, WITHOUT LIMITATION, THE BUSINESS OUTLOOK, FUTURE
CAPITAL RESOURCES, ANTICIPATED FINANCIAL AND OPERATING RESULTS (INCLUDING
STATEMENTS RELATING TO THE COST SAVINGS EXPECTED TO BE REALIZED FROM THE
MERGER), AND CONTEMPLATED TRANSACTIONS OF KIMBERLY-CLARK, KIMBERLY-CLARK'S
ESTIMATED EFFECTIVE INCOME TAX RATE IN 1997 AND THE STATUS AND ADEQUACY OF
KIMBERLY-CLARK'S RESERVES FOR RESTRUCTURING AND OTHER UNUSUAL CHARGES. IN
ADDITION, CERTAIN COST SAVINGS, OPERATING EFFICIENCIES AND OTHER SYNERGIES ARE
EXPECTED TO RESULT FROM THE CONSUMMATION OF THE MERGER. THESE FORWARD-LOOKING
STATEMENTS ARE BASED UPON KIMBERLY-CLARK MANAGEMENT'S EXPECTATIONS AND BELIEFS
CONCERNING FUTURE EVENTS IMPACTING KIMBERLY-CLARK. THERE CAN BE NO ASSURANCE
THAT SUCH EVENTS WILL OCCUR OR THAT THEIR EFFECTS ON KIMBERLY-CLARK WILL BE AS
CURRENTLY EXPECTED. FOR A DESCRIPTION OF CERTAIN FACTORS THAT COULD CAUSE
KIMBERLY-CLARK'S FUTURE RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN ANY
SUCH FORWARD-LOOKING STATEMENTS, SEE THE SECTION OF PART I, ITEM 1 OF
KIMBERLY-CLARK'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1996
ENTITLED "FACTORS THAT MAY AFFECT FUTURE RESULTS."
As used herein, unless the context otherwise clearly requires:
"Kimberly-Clark" refers to Kimberly-Clark Corporation and its consolidated
Subsidiaries. Unless otherwise indicated, all references to "Tecnol" also refer
to Tecnol Medical Products, Inc., its Texas predecessor corporation and its
subsidiaries. Capitalized terms not defined in this Proxy Statement/Prospectus
have the respective meanings specified in the Merger Agreement.
All information contained in this Proxy Statement/Prospectus with respect
to Kimberly-Clark and Sub has been provided by Kimberly-Clark. All information
contained in this Proxy Statement/Prospectus with respect to Tecnol has been
provided by Tecnol. All information with respect to Goldman, Sachs & Co.
("Goldman Sachs") has been provided by Goldman Sachs.
2
<PAGE> 12
SUMMARY
The following is a brief summary of certain information contained elsewhere
or incorporated by reference in this Proxy Statement/Prospectus. Reference is
made to, and this summary is qualified in its entirety by, the more detailed
information contained or incorporated by reference in this Proxy
Statement/Prospectus and the Annexes hereto.
STOCKHOLDERS OF TECNOL ARE URGED TO CAREFULLY READ THIS PROXY
STATEMENT/PROSPECTUS AND THE ANNEXES HERETO IN THEIR ENTIRETY.
KIMBERLY-CLARK
Kimberly-Clark is engaged principally in the manufacture and marketing
throughout the world of a wide range of products for personal, health care,
business and industrial uses. Most of these products are made from natural and
synthetic fibers using advanced technologies in absorbency, fibers and
nonwovens. Kimberly-Clark's products are sold under a variety of well-known
brand names, including Kleenex, Scott, Kleenex Cottonelle, Kleenex Viva,
Kimwipes, Wypall, Huggies, Pull-Ups, GoodNites, Kotex, New Freedom, Lightdays,
Depend and Poise. Consolidated net sales of its products and services totaled
approximately $13 billion in 1996.
Kimberly-Clark was incorporated in Delaware in 1928 as the successor to a
business established in 1872. Its principal executive offices are located at 351
Phelps Drive, Irving, Texas 75038 and its telephone number is (972) 281-1200.
For further information concerning Kimberly-Clark, see "--Kimberly-Clark
Corporation Selected Consolidated Financial Data," "BUSINESS OF KIMBERLY-CLARK,"
"AVAILABLE INFORMATION" and "INCORPORATION OF DOCUMENTS BY REFERENCE."
TECNOL
Tecnol is a leading provider of disposable face masks, cold therapy
products and patient safety restraints to the U.S. hospital market. Tecnol
designs, manufactures and markets more than 300 different products, which are
sold in over 60 countries, primarily under Tecnol's brand names. Tecnol reported
net sales of $144.4 million for the year ended November 30, 1996.
Tecnol, a Delaware corporation organized in 1991 as the successor to a
Texas corporation formed in 1976, is a holding company that transacts business
through its subsidiaries under the names "Tecnol," "Anago" and other trade
names. Tecnol's principal executive offices are located at 7201 Industrial Park
Blvd., Fort Worth, Texas 76180 and its telephone number is (817) 581-6424. For
further information concerning Tecnol, see "-- Tecnol Medical Products, Inc.
Selected Consolidated Financial Data," "BUSINESS OF TECNOL," "AVAILABLE
INFORMATION" and "INCORPORATION OF DOCUMENTS BY REFERENCE."
SUB
Sub was incorporated in Delaware on August 25, 1997 as a wholly owned
subsidiary of Kimberly-Clark solely for the purpose of consummating the Merger
and the other transactions contemplated by the Merger Agreement. Sub has minimal
assets and no business and has carried on no activities which are not directly
related to its formation and its execution of the Merger Agreement. Its
principal executive offices are located at 351 Phelps Drive, Irving, Texas 75038
and its telephone number is (972) 281-1200.
TECNOL SPECIAL MEETING
Purpose. The Tecnol Special Meeting will be held at The Hotel Crescent
Court, Crescent Ballroom, 400 Crescent Court, Dallas, Texas, on Thursday,
December 18, 1997, at 10:30 a.m., local time, to consider and vote upon a
proposal to approve and adopt the Merger Agreement, which provides for the
merger of Sub with and into Tecnol, with Tecnol surviving as a wholly owned
subsidiary of Kimberly-Clark. The stockholders of Tecnol will also consider and
take action upon any other business which may properly be brought before the
Tecnol Special Meeting. See "TECNOL SPECIAL MEETING -- Purpose."
3
<PAGE> 13
Record Date. Only holders of record of Tecnol Common Stock at the close of
business on November 6, 1997 (the "Record Date") are entitled to receive notice
of and to vote at the Tecnol Special Meeting. At the close of business on the
Record Date, there were 20,012,583 shares of Tecnol Common Stock outstanding,
each of which entitles the registered holder thereof to one vote. See "TECNOL
SPECIAL MEETING -- Record Date; Voting Rights." At the close of business on the
Record Date, directors and executive officers of Tecnol beneficially owned and
had the right to vote in the aggregate 4,536,489 shares of the outstanding
shares of Tecnol Common Stock (approximately 22.7% of the shares of Tecnol
Common Stock then outstanding). See "TECNOL SPECIAL MEETING -- Share Ownership
of Management."
Required Vote. Approval and adoption of the Merger Agreement will require
the affirmative vote of the holders of a majority of the outstanding shares of
Tecnol Common Stock entitled to vote thereon. Brokers who hold Tecnol Common
Stock as nominees will not have discretionary authority to vote such shares in
the absence of instructions from the beneficial owners thereof. Broker non-votes
and abstentions have the effect of a vote against the Merger. See "TECNOL
SPECIAL MEETING -- Required Vote" and "COMPANY STOCKHOLDER AGREEMENTS."
Change of Vote. Tecnol stockholders who have executed a proxy may revoke
the proxy at any time prior to its exercise at the Tecnol Special Meeting by
filing a written notice of revocation with, or by delivering a duly executed
proxy bearing a later date to, the Secretary of Tecnol at Tecnol's main office
prior to the Tecnol Special Meeting or by attending the Tecnol Special Meeting
and voting in person. Accordingly, Tecnol stockholders who have executed and
returned proxy cards in advance of the Tecnol Special Meeting may change their
vote at any time prior to or at the Tecnol Special Meeting.
THE MERGER AND THE MERGER AGREEMENT
General. At the Effective Time of the Merger, Sub will be merged with and
into Tecnol, with Tecnol continuing as the surviving corporation (the "Surviving
Corporation") and as a wholly owned subsidiary of Kimberly-Clark, and the
separate corporate existence of Sub will cease. Subject to the terms and
conditions of the Merger Agreement, each share of Tecnol Common Stock
outstanding immediately prior to the Effective Time (other than shares owned
directly or indirectly by Kimberly-Clark or Tecnol, which will be canceled) will
be converted into 0.42 of a share of Kimberly-Clark Common Stock, including the
corresponding percentage of a Kimberly-Clark Right. Cash will be paid in lieu of
any fractional share of Kimberly-Clark Common Stock. See "TERMS OF THE MERGER
AGREEMENT -- Adjustment of Conversion Number."
Effective Time. The Merger will become effective upon the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware
unless the Certificate of Merger provides for a later date of effectiveness. The
filing of the Certificate of Merger will occur as soon as practicable following
the satisfaction or waiver of the conditions set forth in the Merger Agreement.
See "TERMS OF THE MERGER AGREEMENT -- Conditions Precedent to the Merger."
Recommendation of the Tecnol Board. The Tecnol Board believes that the
Merger is fair to and in the best interests of Tecnol and its stockholders and
has unanimously approved the Merger Agreement. THE TECNOL BOARD UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS OF TECNOL VOTE IN FAVOR OF APPROVAL AND
ADOPTION OF THE MERGER AGREEMENT. See "THE MERGER -- Tecnol's Reasons for the
Merger; Recommendation of its Board of Directors."
Opinion of Tecnol's Financial Advisor. On September 4, 1997, Goldman Sachs,
financial advisor to Tecnol in connection with the Merger, delivered its oral
opinion, later confirmed in writing, to the Tecnol Board to the effect that, as
of such date, the Conversion Number (which is referred to in Goldman Sach's
written opinion as the "Exchange Ratio") pursuant to the Merger Agreement is
fair to the holders of Tecnol Common Stock. As of the date of this Proxy
Statement/Prospectus, Goldman Sachs delivered its written opinion to the Tecnol
Board that, as of the date of this Proxy Statement/Prospectus, the Conversion
Number pursuant to the Merger Agreement is fair to the holders of Tecnol Common
Stock. The written opinion of Goldman Sachs dated September 4, 1997 is
substantially similar to the written opinion of Goldman Sachs dated as of the
date of this Proxy Statement/Prospectus.
4
<PAGE> 14
The full text of the written opinion of Goldman Sachs dated as of the date
of this Proxy Statement/Prospectus which sets forth the assumptions made,
matters considered and limitations on the review undertaken in connection with
the opinion, is attached hereto as Annex IV to this Proxy Statement/ Prospectus
and is incorporated herein by reference. HOLDERS OF TECNOL COMMON STOCK ARE
URGED TO, AND SHOULD, READ SUCH OPINION IN ITS ENTIRETY. See "THE MERGER --
Tecnol's Reasons for the Merger; Recommendation of its Board of Directors" and
"-- Opinion of Tecnol's Financial Advisor."
Certain Federal Income Tax Consequences. The Merger is intended to qualify
as a "reorganization" within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code"). Accordingly, no gain or loss will
be recognized for United States federal income tax purposes by the stockholders
of Tecnol upon the exchange of their Tecnol Common Stock solely for shares of
Kimberly-Clark Common Stock pursuant to the Merger, except with respect to cash,
if any, received in lieu of fractional shares of Kimberly-Clark Common Stock.
See "THE MERGER -- Certain Federal Income Tax Consequences" and "TERMS OF THE
MERGER AGREEMENT -- Conditions Precedent to the Merger."
Anticipated Accounting Treatment. The Merger will be accounted for as a
"purchase" for accounting and financial reporting purposes in accordance with
Accounting Principles Board Opinion 16, "Business Combinations" ("APB 16"). See
" THE MERGER -- Anticipated Accounting Treatment."
Absence of Appraisal Rights. Under the Delaware General Corporation Law, as
amended (the "DGCL"), the stockholders of Tecnol are not entitled to appraisal
rights with respect to the approval and adoption of the Merger Agreement.
Conditions to the Merger. The respective obligations of Tecnol and
Kimberly-Clark to consummate the Merger are subject to waiver or satisfaction of
various conditions, including, among other things: (i) obtaining the requisite
approval of the stockholders of Tecnol; (ii) authorization for listing of the
Kimberly-Clark Common Stock to be issued to Tecnol stockholders on the NYSE;
(iii) expiration or termination of the waiting period (and any extension
thereof) applicable to the consummation of the Merger under the Hart-
Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"),
which occurred on November 5, 1997, and the obtaining, making or occurrence of
all authorizations, consents, orders, declarations or approvals of, or filings
with, or terminations or expirations of waiting periods imposed by, any
Governmental Entity; (iv) the effectiveness of this Registration Statement; and
(v) receipt of opinions from respective tax counsel as to the tax treatment of
the Merger. See "TERMS OF THE MERGER AGREEMENT -- Conditions Precedent to the
Merger."
Termination of the Merger Agreement. The Merger Agreement may be terminated
at any time prior to the Effective Time, whether before or after adoption by the
stockholders of Tecnol of the Merger Agreement by: (i) mutual written consent of
Kimberly-Clark and Tecnol; (ii) either Kimberly-Clark or Tecnol if, among other
things: (A) the other fails to comply in any material respect with any of its
covenants contained in the Merger Agreement or breaches any representation or
warranty made in the Merger Agreement, in each case subject to the terms of the
Merger Agreement, (B) the Tecnol stockholders fail to approve the Merger, (C)
the Merger has not been effected prior to the close of business on February 28,
1998, subject to certain limitations, or (D) any court or other Governmental
Entity having jurisdiction has permanently enjoined or prohibited the
transactions contemplated by the Merger Agreement; (iii) Tecnol under specified
circumstances involving a competing transaction; or (iv) Kimberly-Clark if the
Tecnol Board withdraws or modifies its recommendation of the Merger. See "TERMS
OF THE MERGER AGREEMENT -- Termination" and "-- Fees and Expenses."
Fees and Expenses. Except for printing expenses, mailing expenses and
filing fees incurred in connection with this Proxy Statement/Prospectus, which
will be shared equally, Kimberly-Clark and Tecnol will each pay its own costs
and expenses in connection with the Merger Agreement and the transactions
contemplated thereby, whether or not the Merger is consummated. The Merger
Agreement also provides that if a Purchase Event (as defined in the Company
Option Agreement) occurs, Tecnol will reimburse Kimberly-Clark for its
documented expenses in connection with the transactions contemplated by the
Merger Agreement up to a maximum reimbursable amount of $1 million. See "TERMS
OF THE MERGER AGREEMENT -- Fees and Expenses" and "COMPANY OPTION AGREEMENT."
5
<PAGE> 15
Interests of Certain Persons in the Merger. Certain persons, as members of
Tecnol's management or the Tecnol Board, have interests in the Merger in
addition to their interests as stockholders of Tecnol. Pursuant to certain
noncompetition agreements, consulting agreements and severance agreements and
releases required by Kimberly-Clark as a condition to enter into the Merger
Agreement, certain members of Tecnol's management will receive payments from
Tecnol beginning at the Effective Time. The officers and directors and one
former officer of Tecnol also have options to acquire Tecnol Common Stock and
the right to receive payment of cash following the cancellation of all such
options which are not exercised prior to the Effective Time. See "INTERESTS OF
CERTAIN PERSONS IN THE MERGER."
Company Option Agreement. In connection with the execution of the Merger
Agreement, Kimberly-Clark required, as a condition to its willingness to enter
into the Merger Agreement, that Kimberly-Clark and Tecnol enter into the Company
Option Agreement, dated September 4, 1997 (the "Company Option Agreement"),
pursuant to which Tecnol has issued to Kimberly-Clark an irrevocable option (the
"Option") to purchase from Tecnol up to 3,982,142 shares (subject to adjustment)
of Tecnol Common Stock (or approximately 19.9% of the outstanding shares of
Tecnol Common Stock as of the Record Date, without including any shares subject
to or issued pursuant to the Option) at an exercise price of $22.00 per share,
the closing bid price of Tecnol Common Stock on September 3, 1997, the last
trading day prior to the execution of the Merger Agreement. The Option is
exercisable only upon the occurrence of certain events involving a competing
offer for Tecnol. The Company Option Agreement is attached hereto as Annex II to
this Proxy Statement/Prospectus and is incorporated herein by reference. See
"COMPANY OPTION AGREEMENT."
Company Stockholder Agreements. In connection with the execution of the
Merger Agreement, Kimberly-Clark required, as a condition to its willingness to
enter into the Merger Agreement, that each of Van Hubbard, Chairman of the
Board, Chief Executive Officer and President of Tecnol, and Kirk Brunson, Vice
Chairman of the Board and Executive Vice President of Tecnol (each, a
"Significant Stockholder" and together, the "Significant Stockholders"), execute
separate Company Stockholder Agreements with Kimberly-Clark (collectively the
"Company Stockholder Agreements") pursuant to which each Significant Stockholder
agreed, among other things: (i) to vote (or cause to be voted) all shares of
Tecnol Common Stock the Significant Stockholder beneficially owns and has a
right to vote (except in his capacity as a trustee of the Tecnol Employee Stock
Ownership Plan (the "ESOP")) for the Merger and against certain other
transactions involving a competing offer for Tecnol; and (ii) not to sell shares
of Tecnol Common Stock owned by the Significant Stockholder, subject to a de
minimis exception. On the Record Date Messrs. Hubbard and Brunson beneficially
owned and had the right to vote (except in their capacities as trustees of the
ESOP), in the aggregate, 4,031,945 shares of Tecnol Common Stock. Such shares,
which represent approximately 20.1% of the shares of Tecnol Common Stock
outstanding on the Record Date, are subject to the Company Stockholder
Agreements. The form of the Company Stockholder Agreements is attached hereto as
Annex III and are incorporated herein by reference. See "COMPANY STOCKHOLDER
AGREEMENTS."
6
<PAGE> 16
KIMBERLY-CLARK CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
The following table sets forth selected historical consolidated financial
data for Kimberly-Clark for each of the five years in the period ended December
31, 1996 and for the nine-month periods ended September 30, 1996 and 1997. Such
data have been derived from, and should be read in conjunction with, the audited
Consolidated Financial Statements and other financial information contained in
Kimberly-Clark's Annual Report on Form 10-K for the year ended December 31, 1996
and the unaudited consolidated interim financial statements contained in
Kimberly-Clark's Quarterly Report on Form 10-Q for the nine-month period ended
September 30, 1997, including in each case the notes thereto, incorporated by
reference herein. See "AVAILABLE INFORMATION" and "INCORPORATION OF DOCUMENTS BY
REFERENCE."
<TABLE>
<CAPTION>
(MILLIONS OF DOLLARS, EXCEPT PER SHARE DATA)
NINE MONTHS
ENDED SEPTEMBER 30 YEAR ENDED DECEMBER 31
--------------------- ---------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net Sales................................... $ 9,457.2 $ 9,825.5 $13,149.1 $13,373.0 $11,627.9 $11,341.1 $11,745.4
Cost of products sold..................... 5,865.7 6,147.1 8,241.4 8828.1 7,793.7 7,540.1 7,679.3
--------- --------- --------- --------- --------- --------- ---------
Gross Profit................................ 3,591.5 3,678.4 4,907.7 4,544.9 3,834.2 3,801.0 4,066.1
Advertising, promotion and selling
expenses................................ 1,465.8 1,567.2 2,029.7 2,080.9 1,792.7 1,905.6 2,172.6
Research expense.......................... 150.0 147.0 207.9 207.2 208.8 208.7 204.2
General expense........................... 470.5 436.9 616.4 603.8 555.6 573.3 555.5
Restructuring and other unusual charges... -- -- -- 1,440.0 -- 378.9 250.0
--------- --------- --------- --------- --------- --------- ---------
Operating Profit............................ 1,505.2 1,527.3 2,053.7 213.0 1,277.1 734.5 883.8
Interest income........................... 24.5 20.6 28.1 33.3 24.1 21.0 25.3
Interest expense.......................... (118.3) (145.1) (186.7) (245.5) (270.5) (249.5) (255.8)
Other income (expense), net............... (4.9) 106.4 107.2 103.6 117.2 (13.6) 18.1
--------- --------- --------- --------- --------- --------- ---------
Income Before Income Taxes.................. 1,406.5 1,509.2 2,002.3 104.4 1,147.9 492.4 671.4
Provision for income taxes................ 464.1 528.2 700.8 153.5 464.9 255.0 248.5
--------- --------- --------- --------- --------- --------- ---------
Income (Loss) Before Equity Interests....... 942.4 981.0 1,301.5 (49.1) 683.0 237.4 422.9
Share of net income of equity companies... 122.8 110.8 152.4 113.3 110.5 76.1 90.0
Minority owners' share of subsidiaries'
net income.............................. (34.2) (35.1) (50.1) (31.0) (27.0) (26.3) (20.9)
--------- --------- --------- --------- --------- --------- ---------
Income From Continuing Operations
Before Extraordinary Gains (Losses) and
Cumulative Effects of Changes in
Accounting Principles................... 1,031.0 1,056.7 1,403.8 33.2 766.5 287.2 492.0
Income (loss) from discontinued operation... -- -- -- -- 48.4 (46.6) (30.9)
--------- --------- --------- --------- --------- --------- ---------
Income Before Extraordinary Gains (Losses)
and Cumulative Effects of Changes In
Accounting Principles..................... 1,031.0 1,056.7 1,403.8 33.2 814.9 240.6 461.1
Extraordinary gains (losses), net of income
taxes..................................... 17.5 -- -- -- (61.1) (9.6) --
Cumulative effects of changes in accounting
principles................................ -- -- -- -- -- -- (311.0)
--------- --------- --------- --------- --------- --------- ---------
Net Income.................................. $ 1,048.5 $ 1,056.7 $ 1,403.8 $ 33.2 $ 753.8 $ 231.0 $ 150.1
========= ========= ========= ========= ========= ========= =========
Weighted Average Shares outstanding..... 557.8 564.0 564.0 559.0 556.4 554.2 553.8
Per Share Data:
Income from continuing operations before
extraordinary gains (losses) and
cumulative effects of changes in
accounting principles................... $ 1.85 $ 1.87 $ 2.49 $ .06 $ 1.38 $ .52 $ .89
Income (loss) from discontinued
operation............................... -- -- -- -- .08 (.09) (.06)
Extraordinary gains (losses), net of
income taxes............................ .03 -- -- -- (.11) (.01) --
Cumulative effects of changes in
accounting principles................... -- -- -- -- -- -- (.56)
--------- --------- --------- --------- --------- --------- ---------
Net Income................................ $ 1.88 $ 1.87 $ 2.49 $ .06 $ 1.35 $ .42 $ .27
========= ========= ========= ========= ========= ========= =========
BALANCE SHEET DATA (AT PERIOD END):
Total assets.............................. $11,305.3 $11,362.9 $11,845.7 $11,439.2 $12,555.7 $13,210.4 $12,559.4
Long-term debt............................ 1,691.1 1,744.2 1,738.6 1,984.7 2,085.4 3,403.0 3,140.1
Stockholders' equity...................... 4,269.7 4,312.6 4,483.1 3,650.4 4,134.9 3,810.7 3,996.7
</TABLE>
7
<PAGE> 17
KIMBERLY-CLARK CORPORATION
NOTES TO SELECTED CONSOLIDATED FINANCIAL DATA
1. The unaudited consolidated financial data of Kimberly-Clark has been
prepared on the same basis as in Kimberly-Clark's 1996 Annual Report to
Stockholders and include all adjustments necessary to present fairly the
consolidated balance sheet and consolidated income data for the periods
indicated. The 1995 merger of Kimberly-Clark and Scott Paper Company ("Scott")
has been accounted for as a pooling of interests and all periods prior to the
merger are presented on that basis.
2. Share of net income of equity companies for the nine months ended
September 30, 1997 includes a net nonoperating gain of $16.3 million, or $.03
per share, primarily related to the sale of a portion of the tissue business of
Kimberly-Clark de Mexico, S.A. de C.V. ("KCM"). The sale was required by the
Mexican regulatory authorities following the merger of KCM and Scott's former
Mexican affiliate.
3. In June 1997, Kimberly-Clark sold its interest in Scott Paper Limited
("SPL"), a 50.1 percent-owned Canadian tissue subsidiary. The sale resulted in a
gain of $12.7 million, or $.02 per share, which has been reported as an
extraordinary item in accordance with APB 16 which requires that certain
transactions occurring within two years following a business combination that
was accounted for as a pooling of interests, and that were not planned at the
date of combination, be reported as extraordinary items.
In March 1997, Kimberly-Clark sold its Coosa Pines, Alabama, newsprint and
pulp manufacturing mill, together with related woodlands. In the first quarter
of 1997, Kimberly-Clark recorded impairment losses on the planned sales of a
pulp manufacturing mill in Miranda, Spain; a recycled fiber facility in Oconto
Falls, Wisconsin; a tissue converting facility in Yucca, Arizona; and an
integrated pulp making facility in Everett, Washington. These first quarter 1997
transactions were aggregated and reported together with the SPL gain as a net
extraordinary gain totaling $17.5 million, or $.03 per share, for the nine
months ended September 30, 1997.
4. Other income (expense), net for the nine months ended September 30,
1996, includes net gains of approximately $93 million in asset disposals. The
net gains relate to the divestiture of certain United Kingdom tissue businesses,
a tissue mill in Prudhoe, England, the Lakeview Tissue Mill in Neenah,
Wisconsin, the former Scott baby wipes and certain facial tissue businesses in
the U.S., as required to meet regulatory requirements associated with the 1995
Scott merger and the sale of Kimberly-Clark's remaining 20 percent interest in
Midwest Express Holdings, Inc. The net income effect of these gains was $.13 per
share.
5. Restructuring and other unusual charges for 1995 related to the
estimated costs of the Scott merger, restructuring the combined operations and
other unusual charges. The 1993 restructuring charge related to planned
restructuring and productivity improvement programs. The 1992 restructuring
charge related to a plan to strengthen Kimberly-Clark's competitive position in
consumer and service products operations in Europe and certain operations in
North America. Excluding the restructuring and other unusual charges, income
from continuing operations per share was $1.98 in 1995, $1.03 in 1993 and $1.20
in 1992.
6. Share of net income of equity companies and net income for 1995 include
a nonoperating charge of $38.5 million ($.07 per share) for foreign currency
losses incurred by Kimberly-Clark's Mexican affiliates on the translation of the
net exposure of U.S. dollar-denominated liabilities into pesos. In 1994, peso
losses charged to net income of equity companies and net income was $39.2
million ($.07 per share). The translation losses are related to the devaluation
of the Mexican peso in December 1994 and subsequent periods.
7. In 1994, the sale of S.D. Warren Company, a former printing and
publishing papers subsidiary, was completed. Its results have been segregated
and presented as a discontinued operation for the appropriate periods.
8. In 1994 and 1993 Kimberly-Clark recorded extraordinary losses for the
early extinguishment of debt.
9. The 1992 consolidated income statement includes net charges for the
cumulative effects of accounting changes related to Kimberly-Clark's adoption of
SFAS 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions" and SFAS 109, "Accounting for Income Taxes" of $311.0 million, or $.56
per share.
10. All per share data has been restated to reflect the two-for-one common
stock split which was effective April 2, 1997.
8
<PAGE> 18
TECNOL MEDICAL PRODUCTS, INC.
SELECTED CONSOLIDATED FINANCIAL DATA
The following table sets forth selected historical consolidated financial
data for Tecnol for each of the last five 52-week or 53-week fiscal years ended
November 27, 1992, December 3, 1993, December 2, 1994, December 2, 1995 and
November 30, 1996, and for the 39-week periods ended August 31, 1996 and August
30, 1997. Such data have been derived from, and should be read in conjunction
with, the audited Consolidated Financial Statements and other financial
information contained in Tecnol's Annual Report on Form 10-K for the year ended
November 30, 1996 and the unaudited consolidated interim financial statements
contained in Tecnol's Quarterly Report on Form 10-Q for the 39-week period ended
August 30, 1997, including in each case the notes thereto, incorporated by
reference herein. See "AVAILABLE INFORMATION" and "INCORPORATION OF DOCUMENTS BY
REFERENCE."
<TABLE>
<CAPTION>
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
39-WEEKS ENDED FISCAL YEAR ENDED
------------------- ----------------------------------------------------
AUG. 30, AUG. 31, NOV. 30, DEC. 2, DEC. 2, DEC. 3, NOV. 27,
1997(1) 1996(1) 1996 1995 1994 1993(2) 1992
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA (3):
Net sales........................... $116,142 $107,553 $144,393 $120,922 $120,750 $ 86,702 $71,263
Cost of goods sold.................. 64,150 62,270 82,591 66,103 62,181 42,601 34,666
-------- -------- -------- -------- -------- -------- -------
Gross profit........................ 51,992 45,283 61,802 54,819 58,569 44,101 36,597
Selling expenses.................... 18,562 17,472 23,640 21,915 20,355 16,052 13,131
General and administrative
expenses.......................... 7,366 7,014 9,131 7,249 7,137 5,014 3,978
Research and development expenses... 1,413 1,273 1,710 1,564 1,471 1,180 1,045
Amortization of intangibles......... 1,614 1,703 2,318 2,067 1,726 875 485
-------- -------- -------- -------- -------- -------- -------
Income from operations.............. 23,037 17,821 25,003 22,024 27,880 20,980 17,958
Other income (expense), net......... 72 (960) (1,015) (1,031) (909) 70 448
-------- -------- -------- -------- -------- -------- -------
Income before provision for income
taxes............................. 23,109 16,861 23,988 20,993 26,971 21,050 18,406
Provision for income taxes.......... 8,212 5,630 7,987 7,205 10,100 7,474 6,403
-------- -------- -------- -------- -------- -------- -------
Net income.......................... $ 14,897 $ 11,231 $ 16,001 $ 13,788 $ 16,871 $ 13,576 $12,003
======== ======== ======== ======== ======== ======== =======
Net income per common and common
equivalent share(4)(5)............ $ 0.74 $ 0.56 $ 0.80 $ 0.69 $ 0.85 $ 0.68 $ 0.61
Weighted average number of common
and common equivalent shares
outstanding(5).................... 20,241 20,154 20,092 20,123 19,942 20,089 19,641
BALANCE SHEET DATA (AT PERIOD END):
Working capital................... $ 54,480 $ 44,510 $ 48,545 $ 45,102 $ 39,822 $ 34,219 $29,590
Total assets...................... 173,243 152,327 159,500 143,440 128,888 114,233 77,071
Long term debt(6)................. 9,368 13,766 12,906 15,772 19,117 22,402 4,632
Stockholders' equity.............. 142,750 121,957 127,232 110,542 95,758 80,404 64,097
</TABLE>
- ---------------
(1) The unaudited consolidated financial data of Tecnol has been prepared on the
same basis as in Tecnol's 1996 Annual Report to Stockholders, except as
provided in note 3 below, and includes all adjustments necessary to present
fairly the consolidated balance sheet and consolidated income data for the
period indicated.
(2) 53-week year.
(3) Prior to the third quarter of fiscal 1997, amortization expense of goodwill
and noncompete agreements was included in other income (expense) in the
consolidated statements of income. Beginning in the third quarter of fiscal
1997, Tecnol classifies this amortization expense as "Amortization of
intangibles," a component of operating expenses. Accordingly, the income
statement data have been reclassified for comparative purposes for all
periods presented.
(4) Tecnol has not declared or paid any cash dividends.
(5) Restated for three-for-two stock split in the form of a stock dividend paid
on February 24, 1993.
(6) Includes current maturities.
9
<PAGE> 19
COMPARATIVE PER SHARE DATA OF KIMBERLY-CLARK AND TECNOL
The following table sets forth selected per share data for Kimberly-Clark
and Tecnol on an historical and unaudited pro forma combined basis. The
unaudited pro forma financial data assume that the Merger was consummated at the
beginning of the earliest period presented and give effect to the Merger as a
"purchase" under generally accepted accounting principles. Book value data for
all pro forma presentations are based upon the number of outstanding shares of
Kimberly-Clark Common Stock adjusted to include the maximum number of shares of
Kimberly-Clark Common Stock that could be issued in the Merger. The information
set forth below should be read in conjunction with the historical Consolidated
Financial Data of Kimberly-Clark and the Consolidated Financial Data of Tecnol,
including the notes thereto, appearing elsewhere herein. See "-- Kimberly-Clark
Corporation Selected Consolidated Financial Data" and "-- Tecnol Medical
Products, Inc. Selected Consolidated Financial Data."
The following table includes Tecnol data for the last fiscal year ended on
November 30, 1996, and for the 39-week period ended August 30, 1997. For ease of
reference the column headings used in such table refer to the period-ended date
of Kimberly-Clark.
<TABLE>
<CAPTION>
AT OR FOR THE
AT OR FOR THE NINE MONTHS
YEAR ENDED ENDED
DECEMBER 31, SEPTEMBER 30,
1996 1997
------------- -------------
<S> <C> <C>
KIMBERLY-CLARK HISTORICAL:
Income from continuing operations before extraordinary
gains per share...................................... $2.49 $1.85
Cash dividends declared per share....................... .92 .72
Book value per share.................................... 7.96 7.75
TECNOL HISTORICAL:
Net income per share.................................... .80 .74
Cash dividends declared per share....................... 0 0
Book value per share.................................... 6.38 7.13
KIMBERLY-CLARK UNAUDITED PRO FORMA COMBINED:(1)
Income from continuing operations before extraordinary
gains per share...................................... 2.45 1.83
Cash dividends declared per share....................... .92 .72
Book value per share.................................... 8.57 8.38
TECNOL EQUIVALENT:
Income from continuing operations before extraordinary
gains per share...................................... 1.03 .77
Cash dividends declared per share....................... .39 .30
Book value per share.................................... 3.60 3.52
</TABLE>
- ---------------
(1) The unaudited pro forma income from continuing operations before
extraordinary gains per share data for the year ended December 31, 1996 and
the nine months ended September 30, 1997 and the book value as of December
31, 1996 and September 30, 1997 illustrate the results (under
Kimberly-Clark's accounting policies) as if the transaction had occurred on
January 1, 1996. The pro forma per share data do not purport to represent
what Kimberly-Clark's results of operations or financial position would have
actually been or to project Kimberly-Clark's results of operations for any
future period or financial position for any future date.
10
<PAGE> 20
MARKET PRICES AND DIVIDENDS PAID
Kimberly-Clark Common Stock is traded on the NYSE, the CSE and the PSE
under the symbol "KMB." Tecnol Common Stock is quoted on Nasdaq under the symbol
"TCNL." The following table sets forth for the calendar periods indicated the
range of the high and low sales prices of Kimberly-Clark Common Stock as
reported on the NYSE Composite Transactions Tape and the dividends declared per
share of Kimberly-Clark Common Stock and for the fiscal periods indicated the
high and low bid prices for Tecnol Common Stock as reported on Nasdaq. Tecnol
has never paid cash dividends on Tecnol Common Stock. Tecnol currently intends
to retain all earnings for use in its business and currently has no plans to pay
cash dividends in the near future.
<TABLE>
<CAPTION>
KIMBERLY-CLARK
COMMON STOCK
-------------------------------------------
DIVIDENDS
HIGH(A) LOW(A) DECLARED(A)
------- ------ -----------
<S> <C> <C> <C>
FISCAL 1995
First Quarter...................................... 26 11/16 23 5/8 .225
Second Quarter..................................... 31 5/16 25 1/16 .225
Third Quarter...................................... 34 3/8 28 3/4 .225
Fourth Quarter..................................... 41 1/2 33 5/16 .225
FISCAL 1996
First Quarter...................................... 41 1/2 37 .23
Second Quarter..................................... 38 15/16 34 5/16 .23
Third Quarter...................................... 44 3/8 35 11/16 .23
Fourth Quarter..................................... 49 13/16 42 3/16 .23
FISCAL 1997
First Quarter...................................... 55 3/8 47 .24
Second Quarter..................................... 56 7/8 46 1/8 .24
Third Quarter...................................... 55 43 1/4 .24
Fourth Quarter (through November 11, 1997)......... 53 3/8 47 3/4 --
</TABLE>
- ---------------
(a) Adjusted to reflect a two-for-one stock split effective April 2, 1997.
<TABLE>
<CAPTION>
TECNOL
COMMON STOCK
--------------------------
HIGH LOW
---- ---
<S> <C> <C> <C>
FISCAL 1995
Quarter ended March 3, 1995........................ 17 1/2 14 1/4
Quarter ended June 3, 1995......................... 21 1/2 16
Quarter ended September 2, 1995.................... 23 15
Quarter ended December 2, 1995..................... 20 3/4 16 1/2
FISCAL 1996
Quarter ended March 2, 1996........................ 19 3/4 14 3/4
Quarter ended June 1, 1996......................... 21 1/4 16 3/4
Quarter ended August 31, 1996...................... 21 1/4 16
Quarter ended November 30, 1996.................... 17 11 3/4
FISCAL 1997
Quarter ended March 1, 1997........................ 18 3/4 12 3/4
Quarter ended May 31, 1997......................... 20 14 1/2
Quarter ended August 30, 1997...................... 24 18 7/8
Quarter ending November 29, 1997 (through November
11, 1997)....................................... 22 3/4 17 7/8
</TABLE>
11
<PAGE> 21
Set forth below are the last reported sale price of Kimberly-Clark Common
Stock and bid price for Tecnol Common Stock on September 3, 1997, the last
trading day prior to the public announcement of the execution of the Merger
Agreement, and on November 11, 1997, the last trading day prior to the date of
this Proxy Statement/Prospectus, as reported on the NYSE Composite Transactions
Tape and on Nasdaq, respectively, and the equivalent pro forma bid price of
Tecnol Common Stock on such dates, as determined by multiplying such last
reported sale price of Kimberly-Clark Common Stock by the Conversion Number of
0.42:
<TABLE>
<CAPTION>
SEPTEMBER 3, NOVEMBER 11,
1997 1997
------------ ------------
<S> <C> <C>
Kimberly-Clark Common Stock................................. $47.63 $50.69
Tecnol Common Stock......................................... $22.00 $21.00
Tecnol Equivalent........................................... $20.00 $21.29
</TABLE>
COMPARISON OF THE RIGHTS OF HOLDERS OF KIMBERLY-CLARK COMMON STOCK AND TECNOL
COMMON STOCK
See "COMPARISON OF THE RIGHTS OF HOLDERS OF KIMBERLY-CLARK COMMON STOCK AND
TECNOL COMMON STOCK" for a summary of the material differences between the
rights of holders of Tecnol Common Stock and the rights of holders of
Kimberly-Clark Common Stock.
12
<PAGE> 22
RECENT DEVELOPMENTS
KIMBERLY-CLARK SHARE REPURCHASE PROGRAM
Between April 1996 and June 1997, the Board of Directors of Kimberly-Clark
(the "Kimberly-Clark Board") authorized, for general corporate purposes, a
series of share repurchases of Kimberly-Clark Common Stock, totaling 19.0
million shares (on a post-stock split basis). Pursuant to this authority,
Kimberly-Clark purchased, in brokered transactions, 5.6 million shares in 1996
and 13.4 million shares between January 1, 1997 and September 1, 1997. On
September 4, 1997, the Kimberly-Clark Board authorized the purchase of up to 20
million additional shares of Kimberly-Clark Common Stock. Pursuant to this
authorization, Kimberly-Clark purchased 4.5 million shares between September 4,
1997 and November 6, 1997. Kimberly-Clark has made no additional purchases of
Kimberly-Clark Common Stock since that time.
TECNOL SPECIAL MEETING
The Tecnol Special Meeting will be held at The Hotel Crescent Court,
Crescent Ballroom, 400 Crescent Court, Dallas, Texas, on Thursday, December 18,
1997, at 10:30 a.m., local time.
PURPOSE
At the Tecnol Special Meeting, the stockholders of Tecnol will consider and
vote upon a proposal to approve and adopt the Merger Agreement. The stockholders
of Tecnol will also consider and take action upon any other business which may
properly be brought before the Tecnol Special Meeting.
The Tecnol Board believes that the Merger is fair to and in the best
interests of Tecnol and its stockholders and has unanimously approved the Merger
Agreement. THE TECNOL BOARD UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS OF
TECNOL VOTE IN FAVOR OF APPROVAL AND ADOPTION OF THE MERGER AGREEMENT AT THE
TECNOL SPECIAL MEETING. See "THE MERGER -- Tecnol's Reasons for the Merger;
Recommendation of its Board of Directors."
RECORD DATE; VOTING RIGHTS
Only holders of record of Tecnol Common Stock at the close of business on
the Record Date, November 6, 1997, are entitled to receive notice of and to vote
at the Tecnol Special Meeting. At the close of business on the Record Date,
there were 20,012,583 shares of Tecnol Common Stock outstanding, held by
approximately 380 record holders. Each share of Tecnol Common Stock entitles the
record holder thereof to one vote.
QUORUM
The presence in person or by properly executed proxy of stockholders
entitled to cast at least a majority of the votes that all stockholders of
Tecnol are entitled to cast on the Merger Agreement at the Tecnol Special
Meeting is required to constitute a quorum.
Tecnol Common Stock represented by proxies which are marked "abstain" will
be counted as shares present for purposes of determining the presence of a
quorum on all matters, as will shares that are represented by proxies that are
executed by any broker, fiduciary or other nominee on behalf of the beneficial
owner(s) thereof regardless of whether authority to vote is withheld by such
broker, fiduciary or nominee on one or more matters. In the event that a quorum
is not present at the Tecnol Special Meeting, it is expected that such meeting
will be adjourned to solicit additional proxies.
PROXIES
All shares of Tecnol Common Stock represented by properly executed proxies
in the enclosed form which are received in time for the Tecnol Special Meeting
and have not been revoked will be voted in accordance with the instructions
indicated in such proxies. If no instructions are indicated, such shares will be
voted FOR the adoption and approval of the Merger Agreement. Tecnol does not
know of any matter not described in the
13
<PAGE> 23
Notice of Tecnol Special Meeting that is expected to come before the Tecnol
Special Meeting. If, however, any other matters are properly presented for
action at the Tecnol Special Meeting, proxies will be voted in the discretion of
the respective proxyholders, unless such authority is withheld. Any proxy in the
enclosed form may be revoked by the stockholder executing it at any time prior
to its exercise by giving written notice thereof to the Secretary of Tecnol, by
signing and returning a later dated proxy or by voting in person at the Tecnol
Special Meeting. Attendance at the Tecnol Special Meeting will not in and of
itself constitute the revocation of a proxy.
SOLICITATION OF PROXIES
Proxies are being solicited hereby by the Tecnol Board on behalf of Tecnol.
Pursuant to the Merger Agreement, the entire cost of proxy solicitation for the
Tecnol Special Meeting, including the reasonable expenses of brokers,
fiduciaries and other nominees in forwarding solicitation material to beneficial
owners, will be borne by Tecnol, except that Kimberly-Clark and Tecnol will
share equally all printing expenses, mailing expenses and filing fees. In
addition to the use of the mail, solicitation may be made by telephone or
otherwise by officers and regular employees of Tecnol. Such officers and regular
employees will not be additionally compensated for such solicitation, but may be
reimbursed for out-of-pocket expenses incurred in connection therewith. If
undertaken, the expense of such solicitation would be nominal. Tecnol has
retained Morrow & Co., Inc. to aid in the solicitation of proxies from its
stockholders. The fees of such firm will range from $7,000 to $10,500, plus
reimbursement of out-of-pocket expenses.
REQUIRED VOTE
Approval and adoption of the Merger Agreement will require the affirmative
vote of the holders of a majority of the outstanding shares of Tecnol Common
Stock entitled to vote thereon. Brokers who hold Tecnol Common Stock as nominees
will not have discretionary authority to vote such shares in the absence of
instructions from the beneficial owners thereof. Broker non-votes and
abstentions will have the effect of a vote against the Merger.
SHARE OWNERSHIP OF MANAGEMENT
At the close of business on the Record Date, directors and executive
officers of Tecnol and their affiliates beneficially owned and had the right to
vote an aggregate of 4,536,489 shares of the outstanding shares of Tecnol Common
Stock (approximately 22.7% of the shares of Tecnol Common Stock then
outstanding).
Messrs. Hubbard and Brunson, at the close of business on the Record Date,
beneficially owned and had the right to vote (except in their capacities as
trustees of the ESOP) an aggregate of 4,031,945 shares of Tecnol Common Stock
(approximately 20.1% of the shares of Tecnol Common Stock then outstanding).
Messrs. Hubbard and Brunson have each agreed pursuant to a Company Stockholder
Agreement, among other things, to vote (or cause to be voted) all of the shares
of Tecnol Common Stock that such Significant Stockholder beneficially owns and
has the right to vote (except in his capacity as a trustee of the ESOP) to
approve the Merger Agreement.
As of the date of this Proxy Statement/Prospectus, all other directors and
executive officers of Tecnol have indicated their intention to vote their shares
of Tecnol Common Stock in favor of the Merger Agreement.
14
<PAGE> 24
THE MERGER
The description of the Merger and the Merger Agreement contained in this
Proxy Statement/Prospectus does not purport to be complete and is qualified in
its entirety by reference to the Merger Agreement, a conformed copy of which is
attached hereto as Annex I and incorporated herein by reference.
GENERAL
At the Effective Time of the Merger, Sub will be merged with and into
Tecnol, with Tecnol continuing as the Surviving Corporation and as a wholly
owned subsidiary of Kimberly-Clark and the separate corporate existence of Sub
will cease. Subject to the terms and conditions of the Merger Agreement, each
share of Tecnol Common Stock outstanding immediately prior to the Effective Time
(other than shares owned directly or indirectly by Kimberly-Clark or Tecnol,
which will be canceled) will be converted into 0.42 of a share of Kimberly-Clark
Common Stock, including the corresponding percentage of a Kimberly-Clark Right.
Cash will be paid in lieu of any fractional share of Kimberly-Clark Common
Stock. See "TERMS OF THE MERGER AGREEMENT -- Adjustment of Conversion Number."
EFFECTIVE TIME
The Merger will become effective upon the filing of the Certificate of
Merger with the Secretary of State of the State of Delaware unless the
Certificate of Merger provides for a later date of effectiveness. The filing of
the Certificate of Merger will occur as soon as practicable following the
satisfaction or waiver of the conditions set forth in the Merger Agreement. See
"TERMS OF THE MERGER AGREEMENT -- Conditions Precedent to the Merger."
BACKGROUND OF THE MERGER
In August 1994, Tecnol was contacted by a major pharmaceutical company with
a large medical products business interested in acquiring Tecnol. Members of the
senior management of Tecnol met with representatives of the interested party
over the course of several months. In June 1995, Tecnol formally engaged Goldman
Sachs to act as its financial advisor to assist Tecnol in its analysis and
consideration of various strategic alternatives. The discussions between
representatives of the major pharmaceutical company and Tecnol's management
ended in July 1995 without a firm bid having been made.
In June 1996, Mr. Hubbard, Jack G. Johnson, a Tecnol director, and David
Radunsky, a Tecnol director and its Chief Operating Officer, Secretary and
General Counsel, met with representatives of Goldman Sachs to discuss possible
strategic alternatives and business combinations. At the meeting, Goldman Sachs
discussed a preliminary list of potential strategic acquirors, including
Kimberly-Clark. In late summer of 1996, due to a decline in the price of Tecnol
Common Stock and an anticipated reduction in earnings for the third fiscal
quarter of 1996, Tecnol determined that it was not the appropriate time to
pursue a possible business combination.
In the middle of 1994, Kimberly-Clark, seeking to expand its professional
health care business began searching for suitable acquisition candidates. In
October 1994, Kimberly-Clark retained Merrill Lynch & Co. ("Merrill Lynch") to
act as its financial advisor in connection with its search. Kimberly-Clark
identified Tecnol as a possible acquisition candidate and in September 1996
authorized Merrill Lynch to initiate contact with Tecnol. On October 10, 1996,
John S. Metz, at that time the President-Professional Health Care Sector of
Kimberly-Clark and representatives of Merrill Lynch met with Mr. Hubbard and
other Tecnol representatives at Tecnol's headquarters in Fort Worth, Texas. The
parties exchanged certain public information regarding the business and
operations of the other. The following week, at a trade conference in
Scottsdale, Arizona, Mr. Metz and Mr. Hubbard spoke briefly. Although
Kimberly-Clark expressed an interest in pursuing a business combination with
Tecnol, there were no further discussions in 1996 regarding a potential
combination.
With the recovery of the price of Tecnol Common Stock in early 1997 and
after discussions with Goldman Sachs, Tecnol authorized Goldman Sachs at the end
of March 1997 to approach seven potential
15
<PAGE> 25
strategic acquirors regarding their interest in a potential business combination
with Tecnol and to deliver certain public information to such parties.
Accordingly, Goldman Sachs contacted, in addition to the other six potential
strategic acquirors, John W. Donehower, Senior Vice President and Chief
Financial Officer of Kimberly-Clark, regarding a potential business combination
with Tecnol. Subsequently, in April 1997, one additional potential strategic
acquiror was approached by Goldman Sachs and received public information. After
five of the eight parties, including Kimberly-Clark, executed confidentiality
agreements, Goldman Sachs circulated confidential memoranda to the five parties
containing more detailed information about Tecnol's business and operations.
On May 19, 1997, Robert E. Abernathy, Group President responsible for the
Professional Health Care Sector of Kimberly-Clark, sent a letter to Goldman
Sachs expressing Kimberly-Clark's interest in continuing discussions with Tecnol
and requesting from Tecnol additional due diligence information. On June 6,
1997, Tecnol's management made a presentation to representatives of
Kimberly-Clark and provided access to additional information about Tecnol in a
series of due diligence sessions. Thereafter, Tecnol and Goldman Sachs
established a bid procedure requiring that any bid for Tecnol be submitted to
Goldman Sachs by July 10, 1997.
At its June 12, 1997 regular meeting, the Kimberly-Clark Board was apprised
by senior management of the substance of discussions with Tecnol and was
provided an overview of Tecnol's business and operations. After full
deliberation, including consideration of the synergies that might be realized in
a business combination with Tecnol, the Kimberly-Clark Board unanimously
authorized management to submit a non-binding offer to acquire Tecnol.
On July 10, 1997, after conducting extensive due diligence and after
consultation with its financial and legal advisors, Kimberly-Clark submitted its
bid for the acquisition of Tecnol. Kimberly-Clark's bid proposed that the
consideration to be received by holders of Tecnol Common Stock pursuant to the
merger be 0.40 of a share of Kimberly-Clark Common Stock in exchange for each
outstanding share of Tecnol Common Stock. Kimberly-Clark's offer remained open
until July 25, 1997. None of the other parties contacted by Goldman Sachs
submitted a bid or subsequently indicated an interest in pursuing an acquisition
of Tecnol.
On July 14, 1997, the Tecnol Board met with Tecnol's legal and financial
advisors by conference call to consider Kimberly-Clark's bid. Tecnol's legal and
financial advisors reviewed the terms of the bid received from Kimberly-Clark.
On July 16, 1997, the Tecnol Board met again with Tecnol's legal and financial
advisors. At such meeting, representatives of Goldman Sachs outlined the
chronology of events leading to the receipt of Kimberly-Clark's bid and made a
presentation to the Tecnol Board concerning such bid, including background
information about Kimberly-Clark. The Tecnol Board instructed its advisors to
seek an increase in the exchange ratio to be paid to holders of Tecnol Common
Stock pursuant to the proposed merger. This request was then communicated to
Kimberly-Clark. On July 21, 1997, the Tecnol Board met again with Tecnol's legal
and financial advisors to review Kimberly-Clark's proposal. On July 24, 1997,
the day before Kimberly-Clark's initial offer was to expire, Mr. Metz sent a
letter to Mr. Hubbard indicating that Kimberly-Clark was willing to continue to
negotiate. Representatives of Goldman Sachs continued to pursue an increase in
the exchange ratio.
On August 4, 1997, Kimberly-Clark offered to increase the consideration to
0.42 of a share of Kimberly-Clark Common Stock in exchange for each outstanding
share of Tecnol Common Stock. Negotiations of the terms of the merger agreement,
as well as ancillary agreements, including noncompetition, consulting and
severance agreements with certain officers of Tecnol, were conducted in a series
of meetings and telephone conversations held between August 8 and September 3,
1997.
During the negotiations, Kimberly-Clark sought agreements from each of
Tecnol's directors to vote their shares in favor of the Merger, a termination
fee if certain events occurred after signing and before closing involving a
competing offer for Tecnol, and an option from Tecnol to purchase up to 19.9% of
the outstanding Tecnol Common Stock in certain events. The parties also
negotiated concerning certain termination rights to be triggered by a
significant increase or decrease in the market price of Kimberly-Clark Common
Stock between the time of signing and closing or, in lieu thereof, the
possibility of a "collar," which would have the effect of adjusting the exchange
ratio to fix the value of the merger consideration based upon such a change in
16
<PAGE> 26
market price during that period of time. Kimberly-Clark subsequently dropped its
request for a termination fee and voting agreements from certain of Tecnol's
directors and agreed to certain limitations on the events that would trigger the
exercisability of the option to be granted under the option agreement.
Kimberly-Clark did, however, insist that the Significant Stockholders enter into
voting agreements and required that in the event of termination under certain
conditions, Kimberly-Clark would receive reimbursement of its documented
expenses up to $1 million. Kimberly-Clark and Tecnol also agreed to a fixed
exchange ratio of 0.42 of a share of Kimberly-Clark Common Stock in exchange for
each outstanding share of Tecnol Common Stock without any termination rights or
a collar based on the market price of Kimberly-Clark Common Stock.
On September 4, 1997, the Tecnol Board met with its financial and legal
advisors to consider the results of the negotiations with Kimberly-Clark.
Tecnol's legal counsel reviewed with the Tecnol Board the terms of the Merger
Agreement, the Company Option Agreement and the agreements to be entered into in
connection therewith, including the stockholder agreements with the Significant
Stockholders and other agreements to be entered into with certain members of
Tecnol's management. Goldman Sachs made a presentation including various
financial analyses with respect to the proposed transaction and delivered its
opinion that the exchange ratio pursuant to the Merger Agreement was fair to
holders of Tecnol Common Stock. After considering reports from its advisors and
additional discussions, the Tecnol Board voted unanimously to enter into the
Merger Agreement, the Company Option Agreement and the transactions contemplated
thereby and to recommend the Merger to Tecnol stockholders.
On the same day, the Kimberly-Clark Board also considered the proposed
transaction with Tecnol. Senior management of Kimberly-Clark and representatives
of Merrill Lynch made detailed presentations to the Kimberly-Clark Board
concerning the material aspects of the proposed merger, including the material
terms and conditions of the Merger Agreement and ancillary agreements to be
entered into in connection therewith. Merrill Lynch delivered its opinion that
the exchange ratio pursuant to the Merger Agreement was fair from a financial
point of view to Kimberly-Clark. After full consideration, the Kimberly-Clark
Board voted unanimously to enter into the Merger Agreement, the ancillary
agreements and the transactions contemplated thereby.
Immediately following receipt of approval by the Kimberly-Clark Board and
the Tecnol Board, the Merger Agreement and the applicable ancillary agreements
were executed by the appropriate parties and the terms of the Merger Agreement
were announced by separate press releases of Kimberly-Clark and Tecnol.
KIMBERLY-CLARK'S REASONS FOR THE MERGER
The Kimberly-Clark Board believes that the Merger would be a significant
step toward achieving Kimberly-Clark's objective of expanding its presence in
the professional health care business. The Merger would broaden Kimberly-Clark's
product offerings, adding disposable face masks, cold therapy products and
patient restraints to its existing line of surgical gowns, drapes, infection
control products and sterilization wraps.
Moreover, the Merger is consistent with Kimberly-Clark's strategy of
building on its core technologies, well-known trademarks and strong product
franchises. The manufacture of nonwoven materials is a core Kimberly-Clark
technology; nonwoven material is an important component for face masks, which
represents about half of Tecnol's business. The Tecnol name is highly regarded
in the professional healthcare market and Tecnol holds more than 50% of the
market share for face masks in the United States. In addition, both companies
have expertise in high-speed converting and U.S./Mexico border operations. The
international professional health care businesses of the combined entity will be
nearly double the existing presence of either company, providing
economy-of-scale benefits. Synergies are expected to be realized through
technology transfers, a strengthened sales and marketing presence and the
elimination of redundancies.
TECNOL'S REASONS FOR THE MERGER; RECOMMENDATION OF ITS BOARD OF DIRECTORS
The Tecnol Board unanimously determined that the Merger is fair to and in
the best interests of Tecnol and its stockholders. Accordingly, the Tecnol Board
unanimously approved the Merger Agreement and the
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transactions contemplated thereby and recommends that the stockholders of Tecnol
vote FOR approval and adoption of the Merger Agreement.
In making its determination to approve the Merger, the Tecnol Board
considered a number of factors, including, together with the matters discussed
in "THE MERGER -- Background of the Merger," the following: (i) information
relating to the business, assets, operations, management, competitive position
and prospects of Tecnol; (ii) the financial condition, cash flows and results of
operations of Tecnol and Kimberly-Clark, both on a historical and a prospective
basis; (iii) historical market prices and trading information with respect to
Tecnol Common Stock and Kimberly-Clark Common Stock, including the market price
of Tecnol Common Stock immediately prior to the solicitation process undertaken
by Goldman Sachs; (iv) the potential efficiencies, cost savings and other
synergies expected to be realized as a result of the combination of Tecnol's and
Kimberly-Clark's operations; (v) the fact that after contacting other logical
strategic buyers for Tecnol and seeking to conduct an auction among those
strategic buyers for Tecnol, Kimberly-Clark was the only entity to submit a
proposal to engage in a business combination with Tecnol; (vi) the prospects for
liquidity, stability and dividends from the ownership of Kimberly-Clark Common
Stock as compared to the ownership of Tecnol Common Stock; (vii) the financial
and strategic analyses and presentations of Goldman Sachs as well as the opinion
of Goldman Sachs, dated September 4, 1997, to the effect that, as of such date,
based upon and subject to the various considerations set forth in such opinion,
the Conversion Number pursuant to the Merger Agreement is fair to the holders of
Tecnol Common Stock (see Opinion of Goldman Sachs, attached as Annex IV hereto
and incorporated herein by reference, which opinion is substantially similar to
the written opinion of Goldman Sachs dated September 4, 1997); (viii)
expectations that the Merger will be a tax-free transaction to Tecnol
stockholders; (ix) expectations that the Merger will provide Tecnol with access
to Kimberly-Clark's greater strength and potential in the area of technology and
product development; and (x) the terms of the Merger Agreement, including
Tecnol's right to terminate the Merger Agreement if the Tecnol Board determines
in good faith, after receiving advice of its counsel, that a Takeover Proposal
constitutes a Superior Proposal, and that such termination is in the best
interests of Tecnol and its stockholders.
In view of the wide variety of factors considered in connection with its
evaluation of the Merger, the Tecnol Board did not find it practicable to, and
did not attempt to, quantify or otherwise assign relative weights to the
specific factors considered in reaching its determination. In addition,
individual members of the Tecnol Board may have given different weights to
different factors.
THE TECNOL BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS OF TECNOL
VOTE "FOR" THE APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.
OPINION OF TECNOL'S FINANCIAL ADVISOR
Goldman Sachs. On September 4, 1997, Goldman Sachs, financial advisor to
Tecnol in connection with the Merger, delivered its oral opinion, later
confirmed in writing, to the Tecnol Board to the effect that, as of such date,
the Conversion Number (which is referred to in Goldman Sach's written opinion as
the "Exchange Ratio") pursuant to the Merger Agreement is fair to the holders of
Tecnol Common Stock. As of the date of this Proxy Statement/Prospectus, Goldman
Sachs delivered its written opinion to the Tecnol Board that, as of the date of
this Proxy Statement/Prospectus, the Conversion Number pursuant to the Merger
Agreement is fair to the holders of Tecnol Common Stock. The written opinion of
Goldman Sachs dated September 4, 1997 is substantially similar to the written
opinion of Goldman Sachs dated as of the date of this Proxy
Statement/Prospectus.
THE FULL TEXT OF THE WRITTEN OPINION OF GOLDMAN SACHS DATED AS OF THE DATE
OF THIS PROXY STATEMENT/ PROSPECTUS WHICH SETS FORTH THE ASSUMPTIONS MADE,
MATTERS CONSIDERED AND LIMITATIONS ON THE REVIEW UNDERTAKEN IN CONNECTION WITH
SUCH OPINION, IS ATTACHED HERETO AS ANNEX IV AND IS INCORPORATED HEREIN BY
REFERENCE. HOLDERS OF TECNOL COMMON STOCK ARE URGED TO, AND SHOULD, READ SUCH
OPINION IN ITS ENTIRETY.
In connection with the opinion attached hereto as Annex IV, Goldman Sachs
reviewed, among other things, the Merger Agreement; the Company Option
Agreement; each of the Company Stockholder Agreements; the Registration
Statement, including the Proxy Statement/Prospectus relating to the Tecnol
Special Meeting to be held in connection with the Merger Agreement; Annual
Reports to Stockholders and
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Annual Reports on Form 10-K of Tecnol for the five fiscal years ended November
30, 1996; certain interim reports to stockholders and Quarterly Reports on Form
10-Q; certain other communications from Tecnol to its stockholders; and certain
internal financial analyses and forecasts for Tecnol prepared by its management.
With respect to Kimberly-Clark, Goldman Sachs reviewed Annual Reports to
Stockholders and Annual Reports on Form 10-K of Kimberly-Clark for the five
years ended December 31, 1996 and certain interim reports to stockholders and
Quarterly Reports on Form 10-Q. Goldman Sachs also held discussions with members
of the senior managements of Tecnol and Kimberly-Clark regarding the Merger and
the past and current business operations, financial condition and future
prospects of their respective companies. In addition, Goldman Sachs reviewed the
reported price and trading activity for Tecnol Common Stock and Kimberly-Clark
Common Stock, compared certain financial and stock market information for Tecnol
and Kimberly-Clark with similar information for certain other companies, the
securities of which are publicly traded, reviewed the financial terms of certain
recent business combinations in the medical devices industry specifically, and
in other industries generally, and performed such other studies and analyses as
it considered appropriate.
Goldman Sachs relied upon the accuracy and completeness of all of the
financial and other information reviewed by it and assumed such accuracy and
completeness for purposes of rendering its opinion. With respect to the
financial projections for Tecnol prepared by its management, Tecnol informed
Goldman Sachs of its point of view regarding the risks and uncertainties
inherent in achieving management's projections. Kimberly-Clark did not make
available to Goldman Sachs its projections of expected future performance.
Accordingly, review by Goldman Sachs with respect to such information was
limited to discussions with management of Kimberly-Clark of research analysts'
estimates for 1997 and 1998 and the expected growth in earnings per share
through 2000. In addition, Goldman Sachs did not make an independent evaluation
or appraisal of the assets and liabilities of Tecnol or Kimberly-Clark or any of
their respective subsidiaries, and Goldman Sachs was not furnished with any such
evaluation or appraisal. Goldman Sachs' opinion does not constitute a
recommendation as to how any holder of Tecnol Common Stock should vote with
respect to the Merger.
The following is a summary of certain of the financial analyses used by
Goldman Sachs in connection with providing its oral opinion to the Tecnol Board
on September 4, 1997. Goldman Sachs utilized substantially the same financial
analyses in connection with providing the written opinion dated as of the date
of this Proxy Statement/Prospectus attached hereto as Annex IV.
Historical Stock Trading Analysis. Goldman Sachs reviewed the historical
trading prices and volumes for Tecnol Common Stock. Goldman Sachs also compared
the historical trading prices of Tecnol Common Stock to the Standard & Poor's
("S&P") 400 Industrials Index, S&P 500 Index, S&P 600 Small Cap Index and a
composite index (the "Composite Index") comprised of the following nine publicly
traded corporations in the medical products sector: Ballard Medical Products,
Biomet Inc., Conmed Corp., Maxxim Medical Inc., Respironics Inc., Steris Corp.,
Stryker Corp., Utah Medical Products, Inc. and Vital Signs Inc. (the "Tecnol
Selected Companies"). Such analysis indicated that, based on $47.75 (the closing
price of Kimberly-Clark Common Stock on September 2, 1997), the consideration to
be paid per share of Tecnol Common Stock pursuant to the Merger Agreement
represented: (i) a premium of 24.1% to a price of $16.16 per share of Tecnol
Common Stock (which price represents the six-month average closing prices of
Tecnol Common Stock from September 30, 1996 to March 31, 1997 -- the date
Goldman Sachs initiated calls to potential buyers of Tecnol); (ii) a premium of
12.5% to a price of $17.82 per share of Tecnol Common Stock (which price
represents the one-year average closing prices of Tecnol Common Stock from April
1, 1996 to March 31, 1997); (iii) a discount of 7.0% to a price (the "September
2 Closing Price") of $21.63 per share of Tecnol Common Stock (which price
represents the actual closing price of Tecnol Common Stock on September 2,
1997); and (iv) a premium of 13.1% to a price (the "Extrapolated Price") of
$17.73 per share of Tecnol Common Stock (which price represents the closing
price of Tecnol Common Stock on February 28, 1997 (one month prior to initiating
contact with potential purchasers), increased by 20% -- the average of increases
in the S&P 500 Index, the S&P 600 Small Cap Index and the mean increase in the
Composite Index from February 28, 1997 to September 2, 1997). Goldman Sachs also
reviewed the historical trading prices and volumes for Kimberly-Clark Common
Stock and compared the trading prices of Kimberly-Clark Common
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Stock to the S&P 500 Index and a composite index comprised of three companies:
Procter & Gamble Co., Clorox Co. and Colgate-Palmolive Co. (the "Kimberly-Clark
Selected Companies").
Conversion Number Analysis. Goldman Sachs calculated the consideration to
be received by the holders of Tecnol Common Stock pursuant to the Merger in
relation to the historical daily exchange ratios between Tecnol Common Stock and
Kimberly-Clark Common Stock. Such analysis indicated that the average daily
exchange ratios for the three-month period from June 2, 1997 to September 2,
1997, six-month period from March 3, 1997 to September 2, 1997, one-year period
from September 2, 1996 to September 2, 1997 and the period from September 10,
1996 to March 31, 1997 (September 10, 1996 being the date when Tecnol announced
that certain charges would be incurred by Tecnol in the third quarter of 1996,
and March 31, 1997 being the date that contact was first initiated with
potential purchasers) were 0.425, 0.376, 0.342 and 0.300, respectively, as
compared to the Conversion Number pursuant to the Merger Agreement of 0.420. In
addition, from September 10, 1996 to March 31, 1997, Goldman Sachs calculated
that the daily exchange ratio ranged from a low of 0.250 on November 5, 1996 to
a high of 0.350 on September 12, 1996.
Selected Companies Analysis. Goldman Sachs calculated certain ratios and
multiples of Tecnol to the corresponding data of the Tecnol Selected Companies.
Goldman Sachs divided the Tecnol Selected Companies into two categories. The
first category comprised of Respironics Inc., Steris Corp., Stryker Corp. and
Vital Signs Inc., which are companies with five-year earning per share growth
rates estimated by the Institutional Broker Estimate System ("IBES") to be 20%
or higher, were categorized as "High Growth Companies," while the second
category comprised of Ballard Medical Products, Biomet Inc., Conmed Corp.,
Maxxim Medical Inc. and Utah Medical Products, Inc., which are companies with
five-year earnings per share growth rates estimated by IBES to be less than 20%,
were categorized as "Growth Companies." The multiples and ratios for Tecnol and
the Tecnol Selected Companies were calculated using the closing price of their
respective common shares on September 2, 1997 and publicly available information
and research. The September 2 Closing Price, as well as the extrapolated price
on such date, were used as a basis of comparison. Goldman Sachs considered the
levered market capitalization (i.e., market value of common equity plus
estimated value of debt and preferred stock less cash) as a multiple of latest
twelve months ("LTM") sales and as a multiple of LTM earnings before interest
and taxes ("EBIT"). Goldman Sachs' analyses of the Growth Companies indicated
multiples of levered market capitalization to LTM sales, which ranged from a low
of 0.8x to a high of 5.6x (and a mean of 3.0x and a median of 2.5x), and to LTM
EBIT, which ranged from a low of 8.8x to a high of 16.8x (and a mean of 12.5x
and a median of 11.3x). Goldman Sachs' analyses of the High Growth Companies
indicated multiples of levered market capitalization to LTM sales, which ranged
from a low of 2.2x to a high of 4.1x (and a mean of 2.9x and a median of 2.6x),
and to LTM EBIT, which ranged from a low of 9.9x to a high of 26.7x (and a mean
of 16.9x and a median of 15.5x). The Tecnol Selected Companies (taken as a
whole) indicated multiples of levered market capitalization to LTM sales, which
ranged from a low of 0.8x to a high of 5.6x (and a mean of 2.9x and a median of
2.7x), and to LTM EBIT, which ranged from a low of 8.8x to a high of 26.7x (and
a mean of 14.6x and a median of 14.8x). Tecnol indicated multiples of levered
market capitalization to LTM sales and LTM EBIT of 2.9x and 15.7x, respectively,
based on the September 2 Closing Price, and 2.4x and 12.8x, respectively, based
on the Extrapolated Price.
Goldman Sachs also calculated the ratios of price to earnings for the LTM
and estimated calendar years 1997 and 1998 ("PE ratios") based on IBES
estimates, which (i) for the Growth Companies ranged from a low of 12.4x to a
high of 23.3x (and a mean of 18.5x and a median of 17.5x) for LTM PE ratios,
ranged from a low of 15.9x to a high of 21.4x (and a mean of 18.4x and a median
of 17.6x) for 1997 PE ratios, and ranged from a low of 13.0x to a high of 17.8x
(and a mean of 15.1x and a median of 13.6x) for 1998 PE ratios, (ii) for the
High Growth Companies ranged from a low of 13.4x to a high of 36.0x (and a mean
of 24.7x and a median of 24.7x) for the LTM PE ratios, ranged from a low of
14.3x to a high of 31.3x (and a mean of 22.4x and a median of 21.9x) for the
1997 PE ratios, and ranged from a low of 10.7x to a high of 26.2x (and a mean of
17.9x and a median of 17.4x) for the 1998 PE ratios, (iii) for the Tecnol
Selected Companies (taken as a whole) ranged from a low of 12.4x to a high of
36.0x (and a mean of 21.4x and a median of 22.4x) for the LTM PE ratios, ranged
from a low of 14.3x to a high of 31.3x (and a mean of 20.2x and a median of
20.2x) for the 1997 PE ratios, and ranged from a low of 10.7x to a high of 26.2x
(and a mean of 16.4x and a median of
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16.7x) for the 1998 PE ratios, and (iv) for Tecnol was 22.3x for the LTM PE
ratio, 19.9x for the 1997 PE ratio and 17.1x for the 1998 PE ratio based on the
September 2 Closing Price, and 18.3x for the LTM PE ratio, 16.3x for the 1997 PE
ratio and 14.0x for the 1998 PE ratio based on the Extrapolated Price.
Goldman Sachs calculated LTM operating margins and LTM net margins which:
(i) for the Growth Companies ranged from a low of 7.4% to a high of 33.4% (and a
mean of 22.8% and a median of 27.5%) for LTM operating margins, and ranged from
a low of 1.9% to a high of 24.4% (and a mean of 15.4% and a median of 18.3%) for
LTM net margins; (ii) for the High Growth Companies ranged from a low of 14.2%
to a high of 24.0% (and a mean of 17.9% and a median of 16.8%) for LTM operating
margins, and ranged from a low of 8.7% to a high of 16.9% (and a mean of 12.1%
and a median of 11.3%) for LTM net margins; (iii) for the Tecnol Selected
Companies (taken as a whole) ranged from a low of 7.4% to a high of 33.4% (and a
mean of 20.4% and a median of 18.4) for LTM operating margins, and ranged from a
low of 1.9% to a high of 24.4% (and a mean of 13.7% and a median of 11.8%) for
LTM net margins; and (iv) for Tecnol was 18.4% for the LTM operating margins and
11.6% for the LTM net margins.
Goldman Sachs also calculated the five-year estimated earnings per share
("EPS") growth rate (based on IBES estimates) and the ratio of estimated
calendar year 1998 PE ratios to such five-year estimated EPS growth rate, which:
(i) for the Growth Companies ranged from a low of 9.0% to a high of 18.0% (and a
mean of 13.8% and a median of 15.0%) for the five-year estimated EPS growth rate
and ranged from a low of 0.7x to a high of 1.5x (and a mean of 1.2x and a median
of 1.2x) for such ratio; (ii) for the High Growth Companies ranged from a low of
19.5% to a high of 23.0% (and a mean of 20.6% and a median of 20.0%) for the
five-year estimated EPS growth rate and ranged from a low of 0.5x to a high of
1.3x (and a mean of 0.9x and a median of 0.8x) for such ratio; (iii) for the
Tecnol Selected Companies (taken as a whole) ranged from a low of 9.0% to a high
of 23.0% (and a mean of 17.0% and a median of 18.5%) for the five-year estimated
EPS growth rate and ranged from a low of 0.5x to a high of 1.5x (and a mean of
1.0x and a median of 0.9x) for such ratio; and (iv) for Tecnol was 19.0% for the
five-year estimated EPS growth rate and 0.9x for such ratio, based on the
September 2 Closing Price and 19.0% for the five-year estimated EPS growth rate
and 0.7x for such ratio, based on the Extrapolated Price. IBES is a data service
which monitors and publishes a compilation of earnings estimates produced by
selected research analysts of companies of interest to investors.
Selected Acquisitions Analysis. Goldman Sachs analyzed certain information
relating to selected acquisitions in the medical device industry since 1988 in
which the aggregate consideration paid was greater than $150 million (the
"Selected Acquisitions"). Such analysis indicated that for the Selected
Acquisitions most relevant to Tecnol: (i) levered aggregate consideration as a
multiple of LTM sales ranged from 1.0x to 3.2x, as compared to 2.7x for the
levered aggregate consideration to be received in the Merger; (ii) consideration
as a multiple of LTM EBIT ranged from 7.2x to 101.9x, as compared to 14.0x for
the levered aggregate consideration to be received in the Merger; (iii)
consideration as a multiple of LTM net income ranged from 12.9x to 55.7x, as
compared to 23.6x for the equity consideration to be received in the Merger; and
(iv) the percentage premium paid based on the stock prices of the companies
involved four weeks prior to announcement of the acquisition (as provided by
Securities Data Corporation) ranged from 15.7% to 78.0%, as compared to the
premium paid in the Merger of 13.1% to the Extrapolated Price or a discount of
7.0% to the September 2 Closing Price.
Discounted Cash Flow Analysis. Goldman Sachs prepared a discounted cash
flow analysis for the fiscal years 1997 through 2001 based on operating and
financial assumptions, forecasts and other information prepared by management of
Tecnol in connection with the solicitation process using alternative assumptions
provided by management regarding revenue growth and EBIT margins, taking into
account potential risks of the business, and assuming a range of discount rates
and terminal values. Goldman Sachs calculated a net present value of free cash
flows for the fiscal years 1997 through 2001 using discount rates ranging from
12% to 18%. Goldman Sachs calculated terminal values in fiscal year 2001 based
on multiples ranging from 10x to 15x EBIT. Utilizing this analysis, the implied
value per share of Tecnol Common Stock (which is the present value of the free
cash flows plus the present value of the terminal value, less net debt, divided
by the number of outstanding shares of Tecnol Common Stock) ranged from a low of
$16.14 to a high of $28.95. Goldman Sachs also performed sensitivity analysis on
management's projections prepared in connection with the solicitation process,
using alternative assumptions provided by management regarding revenue growth
and
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EBIT margins, taking into account potential risks of the business. The revenue
sensitivity analysis calculated the implied per share value of Tecnol Common
Stock for compound annual revenue growth of 9%, 11%, 14% and 15% for fiscal
years 1998 to 2001. Utilizing the revenue sensitivity analysis, the implied
equity value per share of Tecnol Common Stock ranged from a low of $6.29 to a
high of $40.88. The EBIT margin sensitivity analysis calculated the implied per
share value of Tecnol Common Stock for constant EBIT margins of 17%, 19%, 21%
and 23% for fiscal years 1997 to 2001. Using the EBIT margin sensitivity
analysis, the implied value per share of Tecnol Common Stock ranged from a low
of $11.91 to a high of $32.47.
Pro Forma Merger Analysis. Goldman Sachs prepared pro forma analyses of the
financial impact of the Merger. Using IBES earnings estimates for Tecnol and for
Kimberly-Clark for the calendar years 1997, 1998 and 1999, Goldman Sachs
compared the EPS of Kimberly-Clark Common Stock, on a stand alone basis, to the
EPS of the common stock of the combined companies on a pro forma basis. Goldman
Sachs performed this analysis based on an aggregate merger consideration of $401
million in the Merger, and assuming: (i) a price for Kimberly-Clark Common Stock
of $47.75 per share (the closing price on September 2, 1997); (ii) a Conversion
Number of 0.42; (iii) 20 million shares of Tecnol Common Stock outstanding and
557 million shares of Kimberly-Clark Common Stock outstanding; and (iv) no
assumed cost savings or synergies. Based on such analyses, the proposed
transaction would have negligible effect on EPS in fiscal year 1998 and would be
slightly dilutive to Kimberly-Clark stockholders in fiscal year 1999 in the
amount of 0.1%. Based on the above assumptions, the analysis also showed that
the pretax synergies required for Kimberly-Clark to break even on an earnings
basis in fiscal year 1999 would be $1.5 million.
Analysis at Various Prices. Goldman Sachs calculated alternative values for
the leveraged aggregate consideration and various financial multiples based upon
five stock prices for Kimberly-Clark Common Stock ranging from $45.00 to $65.00
per share of Tecnol Common Stock to show the impact of changes in
Kimberly-Clark's stock price on the aggregate consideration. Those calculations
resulted in levered aggregate consideration values ranging from $378.2 million
to $546.3 million for Tecnol. Goldman Sachs also calculated the levered
aggregate consideration as a multiple of Tecnol's sales and EBIT and the
aggregate consideration as a multiple of net income for fiscal year 1996, LTM
and estimated fiscal years 1997 and 1998. Goldman Sachs' analyses indicated: (i)
levered aggregate consideration multiples of sales for 1996 that ranged from
2.6x to 3.8x, for LTM that ranged from 2.5x to 3.6x, for estimated 1997 that
ranged from 2.3x to 3.4x, and for estimated 1998 that ranged from 2.1x to 3.0x;
(ii) levered aggregate consideration multiples of EBIT for 1996 that ranged from
14.0x to 20.2x, for LTM that ranged from 13.2x to 19.0x, for estimated 1997 that
ranged from 10.6x to 15.3x, and for estimated 1998 that ranged from 9.2x to
13.3x; and (iii) aggregate consideration multiples of net income for 1996 that
ranged from 23.6x to 34.1x, for LTM that ranged from 22.2x to 32.1x, for
estimated 1997 that ranged from 17.8x to 25.6x, and for estimated 1998 that
ranged from 15.2x to 22.0x.
Leveraged Buyout Analysis. Goldman Sachs calculated the returns, leverage
ratios and coverage ratios associated with a leveraged buyout of Tecnol based on
management's projections and various assumptions including a $15.50 per share
consideration.
Contribution Analysis. Goldman Sachs analyzed and compared the respective
contribution of sales, EBIT and net income of Tecnol and Kimberly-Clark to the
combined entity resulting from the Merger based, in the case of Tecnol, on a
Wall Street research report dated March 20, 1997, and, in the case of
Kimberly-Clark, on a Goldman Sachs research report dated June 3, 1997. The
analysis indicated that the stockholders of Tecnol would receive 1.5% of the
outstanding common equity of the combined companies after the Merger (based on
the Conversion Number). Goldman Sachs also calculated the relative income
statement contribution of Tecnol and Kimberly-Clark to the combined companies on
a pro forma basis before taking into account any of the possible benefits that
may be realized following the Merger. This analysis indicated that Tecnol would
have contributed 1.1%, 1.2% and 1.4% to combined sales, 1.3%, 1.6% and 1.6% to
combined EBIT, and 1.2%, 1.4% and 1.4% to combined net income, in calendar year
1996 and estimated calendar years 1997 and 1998, respectively.
Other Analysis. Goldman Sachs calculated the present value of potential
future public market trading values of Tecnol Common Stock based on 1999 EPS
forecasts of $1.30 per share (projections prepared based on information provided
by management) and $1.40 per share (IBES estimates) applying price to earnings
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multiples ranging from 16x to 22x and expected equity returns ranging from 12%
to 18%. This analysis generated per share present values of potential future
trading values ranging from $14.33 to $22.16 per share based on management's
1999 EPS forecasts of $1.30 per share, and $15.44 to $23.87 per share based on
the IBES 1999 EPS forecasts of $1.40.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. Selecting
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 opinion of Goldman Sachs. In arriving at its fairness
determination, Goldman Sachs considered the results of all of its analyses and
did not assign relative weights to any of the analyses. No company or
transaction used in the above analyses as a comparison is identical to Tecnol,
Kimberly-Clark or the Merger. The analyses were prepared solely for purposes of
Goldman Sachs providing its opinion to the Tecnol Board as to the fairness of
the Conversion Number to be received by the holders of Tecnol Common Stock
pursuant to the Merger Agreement 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 and events beyond the
control of the parties or their respective advisors, none of Tecnol, Goldman
Sachs or any other person assumes responsibility if future results are
materially different from those forecast.
As described above, the opinion of Goldman Sachs to the Tecnol Board was
one of many factors taken into consideration by the Tecnol Board in making its
determination to approve the Merger Agreement. The foregoing summary does not
purport to be a complete description of the analyses performed by Goldman Sachs
and is qualified in its entirety by reference to the full text of the written
opinion of Goldman Sachs dated as of the date of this Proxy Statement/Prospectus
set forth in Annex IV hereto (which opinion is substantially similar to the
written opinion of Goldman Sachs dated September 4, 1997). Goldman Sachs'
opinion does not constitute a recommendation as to how any holder of Tecnol
Common Stock should vote with respect to the Merger.
Goldman Sachs, as part of its investment banking business, is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements,
and valuations for estate, corporate and other purposes. Tecnol selected Goldman
Sachs as its financial advisor because it is a nationally recognized investment
banking firm that has substantial experience in transactions similar to the
Merger. Goldman Sachs is familiar with Tecnol having provided certain investment
banking services to Tecnol from time to time, including having acted as managing
underwriter of Tecnol's initial public offering of shares in September 1991 and
having acted as financial advisor to Tecnol in connection with, and having
participated in certain of the negotiations leading to, the Merger Agreement.
Goldman Sachs also has provided certain investment banking services to
Kimberly-Clark from time to time, and may provide investment banking services to
Kimberly-Clark and its subsidiaries in the future.
Goldman Sachs provides a full range of financial, advisory and brokerage
services and in the course of its normal trading activities may from time to
time effect transactions and hold positions in the securities or options on
securities of Tecnol and/or Kimberly-Clark for its own account and for the
account of customers. As of November 10, 1997, Goldman Sachs, for its own
account, had a long position of 203,922 shares of Kimberly-Clark Common Stock
and a short position of 89,006 shares of Kimberly-Clark Common Stock.
Pursuant to a letter agreement dated June 30, 1995, as amended on February
21, 1997 (the "Goldman Sachs Engagement Letter"), Tecnol engaged Goldman Sachs
to act as its financial advisor to assist it in connection with the possible
sale of all or a portion of Tecnol. Pursuant to the terms of the Goldman Sachs
Engagement Letter, Tecnol has agreed to pay Goldman Sachs upon consummation of
the Merger a transaction fee of 0.90% of the total consideration paid for
Tecnol's equity securities in the Merger (including amounts paid to holders of
options, warrants and convertible securities). Tecnol has also agreed in the
Goldman Sachs Engagement Letter to reimburse Goldman Sachs for its reasonable
out-of-pocket expenses,
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including attorney's fees, and to indemnify Goldman Sachs against certain
liabilities, including certain liabilities under the federal securities laws.
CERTAIN LITIGATION
On September 5, 1997, a complaint was filed by Leonard Salmanson (the
"Salmanson Complaint") on behalf of a putative class of the public stockholders
of Tecnol in the Court of Chancery of the State of Delaware in and for Newcastle
County (Case No. 15909NC) against Tecnol, the members of the Tecnol Board and
Kimberly-Clark. The Salmanson Complaint alleges, among other things, that the
terms of the Merger are inherently unfair to Tecnol stockholders because the
price being paid to them is unfairly low and the process by which the
transaction was determined was unfair, the members of the Tecnol Board breached
their duties of due care and loyalty to Tecnol stockholders in agreeing to the
Merger, and Kimberly-Clark aided and abetted in such alleged breaches. The
Salmanson Complaint seeks, among other things, to enjoin the Merger and to
recover unspecified damages.
On September 5, 1997, a complaint was filed by Harbor Finance Partners and
Gachot & Gachot, Inc. (the "Harbor Finance Complaint") on behalf of a putative
class of the public stockholders of Tecnol in the Court of Chancery in the State
of Delaware in and for Newcastle County (Case No. 15908NC) against Tecnol and
the members of the Tecnol Board. The Harbor Finance Complaint alleges, among
other things, that the terms of the Merger are intrinsically unfair and
inadequate because the value of Tecnol stock is in excess of the amount offered
for such stock in the Merger and the price was not accurately ascertained
through open bidding or a market check mechanism, and that the members of the
Tecnol Board breached their fiduciary duties to Tecnol stockholders in agreeing
to the Merger. The Harbor Finance Complaint seeks, among other things, to enjoin
the Merger and to recover unspecified damages.
Tecnol believes that the claims asserted in the Salmanson Complaint and the
Harbor Finance Complaint are without merit and intends to vigorously defend
against such actions. Kimberly-Clark believes that the claims asserted in the
Salmanson Complaint are without merit and intends to vigorously defend against
the action.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
It is a condition to the consummation of the Merger that Tecnol receive an
opinion from its counsel, Carrington, Coleman, Sloman & Blumenthal, L.L.P., and
that Kimberly-Clark receive an opinion from its counsel, Sidley & Austin,
substantially to the effect that for federal income tax purposes: (i) the Merger
will constitute a "reorganization" within the meaning of Section 368(a) of the
Code, and Tecnol, Sub and Kimberly-Clark will each be a party to such
reorganization within the meaning of Section 368(b) of the Code; (ii) no gain or
loss will be recognized by Kimberly-Clark or Tecnol as a result of the Merger;
(iii) no gain or loss will be recognized by the stockholders of Tecnol upon the
exchange of their Tecnol Common Stock solely for shares of Kimberly-Clark Common
Stock pursuant to the Merger, except with respect to cash, if any, received in
lieu of fractional shares of Kimberly-Clark Common Stock; (iv) the aggregate tax
basis of the shares of Kimberly-Clark Common Stock received by a stockholder
solely in exchange for Tecnol Common Stock pursuant to the Merger (including
fractional shares of Kimberly-Clark Common Stock for which cash is received)
will be the same as the aggregate tax basis of the Tecnol Common Stock exchanged
therefor; (v) the holding period for shares of Kimberly-Clark Common Stock
received by a stockholder in exchange for Tecnol Common Stock pursuant to the
Merger will include the holding period that such Tecnol Common Stock was held by
the stockholder, provided such Tecnol Common Stock was held as a capital asset
by such stockholder at the Effective Time; and (vi) a stockholder of Tecnol who
receives cash in lieu of a fractional share of Kimberly-Clark Common Stock will
recognize gain or loss equal to the difference, if any, between such
stockholder's tax basis in such fractional share and the amount of cash
received. Each such opinion will be based on current law and various other
assumptions. Such opinions may not be applicable to stockholders of Tecnol who,
for federal income tax purposes, are nonresident alien individuals, foreign
corporations, foreign partnerships, foreign trusts or foreign estates, or who
acquired their Tecnol Common Stock pursuant to the exercise of employee stock
options or otherwise as compensation.
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In rendering such opinions, Carrington, Coleman, Sloman & Blumenthal,
L.L.P., and Sidley & Austin will rely upon representations contained in
certificates of Kimberly-Clark, Tecnol and others, including certain significant
stockholders of Tecnol.
Stock Options. Executive officers and directors of Tecnol, as well as other
current employees (and one former employee) of Tecnol holding options to
purchase Tecnol Common Stock, will be permitted to exercise such options
("Tecnol Options") whether vested or unvested, prior to the Effective Time. Any
Tecnol Options not exercised prior to the Effective Time will be canceled at the
Effective Time. Holders of canceled Tecnol Options will receive a cash payment
following cancellation of such options that are not exercised prior to the
Effective Time. See "INTERESTS OF CERTAIN PERSONS IN THE MERGER" and "TERMS OF
THE MERGER AGREEMENT -- Tecnol Stock Options." The holder of a nonqualified
stock option who exercises such option prior to the Effective Time will
generally recognize ordinary compensation income upon exercise of such option
equal to the excess, if any, of the fair market value, determined on the date of
exercise, of the shares purchased over their exercise price, and Tecnol will be
entitled to a corresponding deduction. An option holder will not recognize
income (except for purposes of the alternative minimum tax) upon exercise of an
incentive stock option and Tecnol will not be allowed a deduction with respect
to such exercise at such time. If the shares acquired by exercise of an
incentive stock option (or the shares of Kimberly-Clark Common Stock exchanged
for such shares pursuant to the Merger) are held for the longer of two years
from the date the option was granted or one year from the date it was exercised,
any gain or loss arising from a subsequent disposition of such shares will be
taxed as capital gain or loss, and Tecnol will not be entitled to any deduction.
If, however, such shares are disposed of within the above-described period, then
in the year of such disposition the option holder will recognize compensation
taxable as ordinary income equal to the excess of the lesser of: (i) the amount
realized upon such disposition; or (ii) the fair market value of such shares on
the date of exercise, over the exercise price, and Tecnol will be entitled to a
corresponding deduction. Any amount realized on such a disposition in excess of
the fair market value of such shares on the date of exercise will be taxed to
the option holder as a capital gain. Any cash received by an option holder
following cancellation of a Tecnol Option to purchase Tecnol Common Stock that
is not exercised prior to the Effective Time generally will be taxable to such
option holder as ordinary compensation income upon the receipt of such cash
payment, and Tecnol will be entitled to a corresponding deduction. Any
compensation taxable as ordinary income as described above will be subject to
tax at the option holder's ordinary income tax rate. Any compensation taxable as
ordinary income as described above upon the exercise of a nonqualified stock
option, or following the cancellation of any Tecnol Option, will be subject to
the hospital portion of the tax under the Federal Insurance Contributions Act
(i.e., FICA tax) or, for nonemployee directors, the Self-Employment
Contributions Act (i.e., SECA tax); and (iii) depending on an option holder's
individual circumstances, subject in whole or in part to the old-age, survivors
and disability portion of the FICA tax or, for nonemployee directors, the SECA
tax. The FICA tax described in the preceding sentence will be paid one-half by
Tecnol and one-half by the option holder, and the SECA tax will be paid by the
option holder. HOLDERS OF TECNOL COMMON STOCK ARE URGED TO CONSULT THEIR OWN TAX
ADVISORS.
THE FOREGOING DISCUSSION IS INCLUDED FOR GENERAL INFORMATION AND IS BASED
ON CURRENT LAW. IN ADDITION, THE DISCUSSION DOES NOT ADDRESS ALL OF THE TAX
CONSEQUENCES THAT MAY BE RELEVANT TO PARTICULAR TAXPAYERS IN LIGHT OF THEIR
PERSONAL CIRCUMSTANCES OR TO TAXPAYERS SUBJECT TO SPECIAL TREATMENT UNDER THE
CODE (FOR EXAMPLE, INSURANCE COMPANIES, FINANCIAL INSTITUTIONS, DEALERS IN
SECURITIES, TAX-EXEMPT ORGANIZATIONS, FOREIGN CORPORATIONS, FOREIGN PARTNERSHIPS
OR OTHER FOREIGN ENTITIES AND INDIVIDUALS WHO ARE NOT CITIZENS OR RESIDENTS OF
THE UNITED STATES). EACH STOCKHOLDER OF TECNOL SHOULD CONSULT SUCH STOCKHOLDER'S
OWN TAX ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES TO SUCH STOCKHOLDER OF THE
MERGER, INCLUDING THE APPLICATION AND EFFECT OF FOREIGN, STATE, LOCAL AND OTHER
TAX LAWS.
NO INFORMATION IS PROVIDED HEREIN WITH RESPECT TO THE TAX CONSEQUENCES, IF
ANY, OF THE MERGER UNDER APPLICABLE FOREIGN, STATE, LOCAL AND
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OTHER TAX LAWS. THE FOREGOING DISCUSSION IS BASED UPON THE PROVISIONS OF THE
CODE, APPLICABLE TREASURY REGULATIONS THEREUNDER, INTERNAL REVENUE SERVICE
RULINGS AND JUDICIAL DECISIONS, AS IN EFFECT AS OF THE DATE HEREOF. THERE CAN BE
NO ASSURANCE THAT FUTURE LEGISLATIVE, ADMINISTRATIVE OR JUDICIAL CHANGES OR
INTERPRETATIONS WILL NOT AFFECT THE ACCURACY OF THE STATEMENTS OR CONCLUSIONS
SET FORTH HEREIN. ANY SUCH CHANGE COULD APPLY RETROACTIVELY AND COULD AFFECT THE
ACCURACY OF SUCH DISCUSSION. NO RULINGS HAVE OR WILL BE SOUGHT FROM THE INTERNAL
REVENUE SERVICE CONCERNING THE TAX CONSEQUENCES OF THE MERGER.
ANTICIPATED ACCOUNTING TREATMENT
The Merger will be accounted for as a "purchase" for accounting and
financial reporting purposes in accordance with APB 16. For purposes of
preparing Kimberly-Clark's consolidated financial statements, Kimberly-Clark
will establish a new accounting basis for Tecnol's assets and liabilities based
upon the fair values thereof and Kimberly-Clark's purchase price, including the
direct costs of the acquisition. A final determination of required purchase
accounting adjustments and of the fair value of the assets and liabilities of
Tecnol has not yet been made. After the Merger, Kimberly-Clark will undertake a
study to determine the fair value of Tecnol's assets and liabilities and will
make appropriate purchase accounting adjustments upon completion of such study.
For financial reporting purposes, Kimberly-Clark will consolidate the results of
Tecnol's operations with those of Kimberly-Clark's operations, beginning with
the consummation of the Merger, but Kimberly-Clark's financial statements for
prior periods will not be restated as a result of the Merger.
GOVERNMENTAL AND REGULATORY APPROVALS
Filings with, notifications to and authorizations and approvals of various
governmental agencies, both domestic and foreign, with respect to the
transactions contemplated by the Merger Agreement, relating primarily to
antitrust and securities law issues, must be made and received prior to the
consummation of the Merger.
The consummation of the Merger is conditioned upon the expiration or
termination of the applicable waiting period under the HSR Act. Under the HSR
Act and the regulations promulgated thereunder by the Federal Trade Commission
(the "FTC"), the Merger may not be consummated until notifications have been
given and certain information has been furnished to the FTC and the Antitrust
Division of the United States Department of Justice (the "Antitrust Division")
and the applicable waiting period has expired or been terminated. On November 5,
1997, Kimberly-Clark and Tecnol were granted early termination of the applicable
waiting period required by the HSR Act.
At any time before or after the Effective Time, notwithstanding that the
waiting period under the HSR Act has been terminated, the FTC or the Antitrust
Division could take such action under the antitrust laws as it deems necessary
or desirable in the public interest, including seeking to enjoin the
consummation of the Merger or seeking divestiture of assets of Kimberly-Clark or
Tecnol. Similarly, at any time before or after the Effective Time, and
notwithstanding that the waiting period under the HSR Act has been terminated,
any state could take such action under the antitrust laws as it deems necessary
or desirable in the public interest.
The respective obligations of Kimberly-Clark and Tecnol to consummate the
Merger are subject to the condition that no court or other Governmental Entity
having jurisdiction over Kimberly-Clark or Tecnol, or any of their respective
Subsidiaries, shall have entered any injunction or other order (whether
temporary, preliminary or permanent) which is then in effect and restrains,
enjoins or otherwise prohibits consummation of the Merger or any of the
transactions contemplated by the Merger Agreement. See "TERMS OF THE MERGER
AGREEMENT -- Conditions Precedent to the Merger."
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PERCENTAGE OWNERSHIP INTEREST OF TECNOL STOCKHOLDERS AFTER THE MERGER
Based on the number of shares of Kimberly-Clark Common Stock outstanding on
the Record Date and assuming the delivery of approximately 8.9 million shares of
Kimberly-Clark Common Stock in connection with the Merger, upon consummation of
the Merger there will be approximately 556.3 million shares of Kimberly-Clark
Common Stock outstanding at the Effective Time, of which the stockholders of
Tecnol will own approximately 1.6%.
ABSENCE OF APPRAISAL RIGHTS
Under the DGCL, the stockholders of Tecnol are not entitled to appraisal
rights with respect to the approval and adoption of the Merger Agreement.
RESALES OF KIMBERLY-CLARK COMMON STOCK
All shares of Kimberly-Clark Common Stock delivered in the Merger will be
freely transferable, except that shares received by any person who may be deemed
to be an "affiliate" (as that term is used in paragraphs (c) and (d) of Rule 145
under the Securities Act, including, without limitation, directors and certain
executive officers) of Tecnol for purposes of such Rule 145 may not be resold
except in transactions permitted by such Rule 145 or as otherwise permitted
under the Securities Act.
Tecnol has agreed to deliver to Kimberly-Clark a list identifying each
person who is, in the opinion of Tecnol, at the time of the Tecnol Special
Meeting, an "affiliate" (as that term is used in the preceding paragraph) of
Tecnol and to exercise its best efforts to cause each person so identified to
deliver to Kimberly-Clark on or prior to the date of the Tecnol Special Meeting
a written agreement, in the form attached to the Merger Agreement as an exhibit
thereto, providing that such person will not sell, pledge, transfer or otherwise
dispose of, any Tecnol Common Stock or any shares of Kimberly-Clark Common Stock
delivered to such person in connection with the Merger, except pursuant to an
effective registration statement or in compliance with such Rule 145 or another
exemption from the registration requirements of the Securities Act.
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TERMS OF THE MERGER AGREEMENT
CONVERSION OF SHARES IN THE MERGER
At the Effective Time: (i) each issued and outstanding share of common
stock of Sub will be converted into one share of Common Stock of the Surviving
Corporation; (ii) all shares of Tecnol Common Stock that are held in the
treasury of Tecnol or by any wholly owned subsidiary of Tecnol and any shares of
Tecnol Common Stock owned by Kimberly-Clark or by any wholly owned subsidiary of
Kimberly-Clark will be canceled without payment of any consideration in exchange
therefor; and (iii) each share of Tecnol Common Stock issued and outstanding
immediately prior to the Effective Time (other than shares to be canceled as
described in subparagraph (ii) above) will be converted into 0.42 of a share of
Kimberly-Clark Common Stock, including the corresponding percentage of a
Kimberly-Clark Right, provided cash will be paid in lieu of any fractional share
of Kimberly-Clark Common Stock. See " -- No Fractional Shares."
All shares of Tecnol Common Stock converted as provided in subparagraph
(iii) of the preceding paragraph will no longer be outstanding and will
automatically be canceled and retired; and each holder of a certificate (a
"Tecnol Certificate") representing immediately prior to the Effective Time any
such Tecnol Common Stock will cease to have any rights with respect thereto,
except the right to receive, as hereinafter described: (i) certificates
representing the number of whole shares of Kimberly-Clark Common Stock into
which such Tecnol Common Stock has been converted; (ii) certain dividends and
other distributions; and (iii) cash, without interest, in lieu of any fractional
share of Kimberly-Clark Common Stock. See " -- Exchange Agent; Procedures for
Exchange of Certificates."
All references in this Proxy Statement/Prospectus to shares of
Kimberly-Clark Common Stock to be received pursuant to the Merger in accordance
with the Merger Agreement will be deemed, from and after the Effective Time, to
include the associated Kimberly-Clark Rights.
FIXED EXCHANGE RATIO
The Conversion Number is expressed in the Merger Agreement as a fixed
ratio. Accordingly, the Conversion Number will not be adjusted in the event of
any increase or decrease in the price of either Kimberly-Clark Common Stock or
Tecnol Common Stock. As of September 3, 1997, the last trading day prior to the
public announcement of the execution of the Merger Agreement, the last reported
sale price of Kimberly-Clark Stock as reported on the NYSE Composite
Transactions Tape was $47.63 per share and the last reported bid price of Tecnol
Common Stock as reported by Nasdaq was $22.00 per share. As of November 11,
1997, the last trading day prior to the date of this Proxy Statement/Prospectus,
the last reported sale price and the last reported bid price were $50.69 and
$21.00, respectively. The price of Kimberly-Clark Common Stock at the Effective
Time may vary from its price at the date of this Proxy Statement/Prospectus and
at the date of the Tecnol Special Meeting. Such variations may be the result of
the changes in the business, operations or prospects of Kimberly-Clark market
assessments of the likelihood that the Merger will be consummated and the timing
thereof, regulatory considerations, general market and economic conditions and
other factors. Because the Effective Time may occur at a date later than the
Tecnol Special Meeting, there can be no assurance that the price of
Kimberly-Clark Common Stock on the date of the Tecnol Special Meeting will be
indicative of its price at the Effective Time. The Effective Time will occur as
soon as practicable following the Tecnol Special Meeting and the satisfaction or
waiver of the other conditions set forth in the Merger Agreement. Stockholders
of Tecnol are urged to obtain current market quotations for Kimberly-Clark
Common Stock and Tecnol Common Stock. See "-- Adjustment of Conversion Number"
and "-- Conditions Precedent to the Merger."
NO FRACTIONAL SHARES
No certificates or scrip representing fractional shares of Kimberly-Clark
Common Stock will be delivered upon the surrender of Tecnol Certificates for
exchange; no Kimberly-Clark dividend or other distribution or stock split,
combination or reclassification will relate to any such fractional share; and no
such fractional share will entitle the record or beneficial owner thereof to any
voting or other rights of a stockholder of Kimberly-Clark. In lieu of any such
fractional share, each holder of shares of Tecnol Common Stock who
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would otherwise have been entitled thereto upon the surrender of Tecnol
Certificates for exchange will be paid an amount in cash (without interest),
rounded up to the nearest whole cent, determined by multiplying (i) the per
share closing price of Kimberly-Clark Common Stock, as reported on the NYSE
Composite Transactions Tape, on the date on which the Effective Time shall occur
(or if Kimberly-Clark Common Stock does not trade on the NYSE on such date, the
first trading day of Kimberly-Clark Common Stock on the NYSE thereafter) by (ii)
the fractional share to which such holder would otherwise be entitled.
ADJUSTMENT OF CONVERSION NUMBER
In the event that Tecnol changes the number of shares of Tecnol Common
Stock or securities convertible or exchangeable into or exercisable for Tecnol
Common Stock, or Kimberly-Clark changes the number of shares of Kimberly-Clark
Common Stock or securities convertible or exchangeable into or exercisable for
Kimberly-Clark Common Stock, issued and outstanding prior to the Effective Time
as a result of a reclassification, stock split (including a reverse split),
dividend or distribution (other than quarterly cash dividends),
recapitalization, merger (other than the Merger), subdivision, issuer tender or
exchange offer for the issuer's own shares (other than repurchases by
Kimberly-Clark between September 4, 1997 and the Effective Time of less than 5%
of the outstanding shares of Kimberly-Clark Common Stock pursuant to Rule
10b-18, promulgated under the Exchange Act), or other similar transaction with a
materially dilutive effect, or if a record date with respect to any of the
foregoing shall occur prior to the Effective Time, the Conversion Number will be
equitably adjusted.
EXCHANGE AGENT; PROCEDURES FOR EXCHANGE OF CERTIFICATES
Boston EquiServe, as service agent for BankBoston, N.A. (formerly the First
National Bank of Boston) ("Boston EquiServe") has been selected to act as
Exchange Agent under the Merger Agreement. As of the Effective Time,
Kimberly-Clark will deposit with the Exchange Agent, for the benefit of the
holders of shares of Tecnol Common Stock, certificates representing the shares
of Kimberly-Clark Common Stock, and, after the Effective Time, if applicable,
any cash, dividends or other distributions with respect to the Kimberly-Clark
Common Stock, to be issued or paid pursuant to the Merger Agreement in exchange
for shares of Tecnol Common Stock outstanding immediately prior to the Effective
Time upon due surrender of the Tecnol Certificates (or affidavits of loss and,
if reasonably required by Kimberly-Clark, indemnity bonds in lieu thereof)
pursuant to the provisions of the Merger Agreement.
Promptly after the Effective Time, the Surviving Corporation will cause the
Exchange Agent to mail to each holder of record of shares of Tecnol Common Stock
(other than holders of shares that are owned by Tecnol or Kimberly-Clark): (i) a
letter of transmittal specifying that delivery will be effected, and risk of
loss and title to the Tecnol Certificates shall pass, only upon delivery of the
Tecnol Certificates (or affidavits of loss and, if reasonably required by
Kimberly-Clark, indemnity bonds in lieu thereof) to the Exchange Agent, such
letter of transmittal to be in such form and have such other provisions as
Kimberly-Clark and Tecnol may reasonably agree, and (ii) instructions for use in
effecting the surrender of the Tecnol Certificates in exchange for (A)
certificates representing shares of Kimberly-Clark Common Stock and (B) any
unpaid dividends and other distributions and cash in lieu of fractional shares.
Upon surrender of a Tecnol Certificate for cancellation to the Exchange Agent
together with such letter of transmittal, duly executed, the holder of such
Tecnol Certificate shall be entitled to receive in exchange therefor (A) a
certificate representing that number of whole shares of Kimberly-Clark Common
Stock that such holder is entitled to receive pursuant to the Merger Agreement,
(B) a check in the amount (after giving effect to any required tax withholdings)
of (y) any cash in lieu of fractional shares plus (x) any unpaid non-stock
dividends and any other dividends or other distributions that such holder has
the right to receive pursuant to the provisions of the Merger Agreement, and the
Tecnol Certificate so surrendered will forthwith be canceled. No interest will
be paid or accrued on any amount payable upon due surrender of the Tecnol
Certificates. In the event of a transfer of ownership of shares of Tecnol Common
Stock that is not registered in the transfer records of Tecnol, a certificate
representing the proper number of shares of Kimberly-Clark Common Stock,
together with a check for any cash to be paid upon due surrender of the Tecnol
Certificate and any other dividends or distributions in respect thereof, may be
issued and/or paid to such transferee if the Tecnol Certificate formerly
representing such
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shares of Tecnol Common Stock is presented to the Exchange Agent, accompanied by
all documents required to evidence and effect such transfer and to evidence that
any applicable stock transfer taxes have been paid. If any certificate for
shares of Kimberly-Clark Common Stock is to be delivered in a name other than
that in which the Tecnol Certificate surrendered in exchange therefor is
registered, it shall be a condition of such exchange that: (i) the Person
requesting such exchange will pay any transfer or other taxes required by reason
of the issuance of certificates for shares of Kimberly-Clark Common Stock in a
name other than that of the registered holder of the Tecnol Certificate
surrendered, or will establish to the satisfaction of Kimberly-Clark or the
Exchange Agent that such tax has been paid or is not applicable; and (ii) that
the Tecnol Certificate so surrendered will be properly endorsed and otherwise in
proper form for transfer. Kimberly-Clark or the Exchange Agent will be entitled
to deduct and withhold from the consideration otherwise payable pursuant to the
Merger Agreement to any holder of shares of Tecnol Common Stock such amounts as
Kimberly-Clark or the Exchange Agent are required to deduct and withhold under
the Code, or any provision of state, local or foreign tax law, with respect to
the making of such payment. To the extent that amounts are so withheld by
Kimberly-Clark or the Exchange Agent, such withheld amounts will be treated for
all purposes of the Merger Agreement as having been paid to the holder of shares
of Tecnol Common Stock in respect of whom such deduction and withholding was
made by Kimberly-Clark or the Exchange Agent.
All shares of Kimberly-Clark Common Stock to be delivered pursuant to the
Merger will be deemed delivered and outstanding as of the Effective Time and
whenever a dividend or other distribution is declared by Kimberly-Clark in
respect of the Kimberly-Clark Common Stock, the record date for which is at or
after the Effective Time, that declaration will include dividends or other
distributions in respect of all shares of Kimberly-Clark Common Stock
deliverable pursuant to the Merger Agreement, provided that no dividends or
other distributions declared or made in respect of the Kimberly-Clark Common
Stock with a record date that is 10 days or more after the Effective Time will
be paid to the holder of any unsurrendered Tecnol Certificate with respect to
the shares of Kimberly-Clark Common Stock represented thereby until the holder
of such Tecnol Certificate surrenders such Tecnol Certificate (or affidavit of
loss and, if reasonably required by Kimberly-Clark, indemnity bond in lieu
thereof) in accordance with the Merger Agreement. Subject to the effect of
applicable laws, following surrender of any such Tecnol Certificate, there will
be issued and/or paid to the holder of the certificates representing whole
shares of Kimberly-Clark Common Stock delivered in exchange therefor, without
interest, (i) at the time of such surrender, the dividends or other
distributions with a record date at or after the Effective Time theretofore
payable with respect to such whole shares of Kimberly-Clark Common Stock and not
paid and (ii) at the appropriate payment date, the dividends or other
distributions payable with respect to such whole shares of Kimberly-Clark Common
Stock with a record date at or after the Effective Time but with a payment date
subsequent to surrender.
Holders of such unsurrendered Tecnol Certificates will be entitled to vote
after the Effective Time at any meeting of Kimberly-Clark stockholders the
number of whole shares of Kimberly-Clark Common Stock represented by such
unsurrendered Tecnol Certificates, regardless of whether such holders have
exchanged their Tecnol Certificates.
After the Effective Time, there will be no transfers on the stock transfer
books of Tecnol of the shares of Tecnol Common Stock that were outstanding
immediately prior to the Effective Time.
STOCKHOLDERS OF TECNOL SHOULD NOT FORWARD THEIR TECNOL CERTIFICATES WITH
THE ENCLOSED PROXY CARD, NOR SHOULD THEY RETURN THEIR TECNOL CERTIFICATES TO THE
EXCHANGE AGENT UNTIL THEY HAVE RECEIVED A TRANSMITTAL LETTER.
REPRESENTATIONS AND WARRANTIES
The Merger Agreement contains various representations and warranties of
Tecnol relating, among other things, to: (i) its organization, good standing,
corporate power and similar corporate matters; (ii) its capitalization; (iii)
its authorization, execution, delivery and performance and the enforceability of
the Merger Agreement and related matters; (iv) the absence of conflicts,
violations and defaults under its certificate of incorporation and by-laws and
certain other agreements and documents; (v) the documents and reports filed
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by it with the SEC and the accuracy and completeness of the information
contained therein; (vi) the Registration Statement and this Proxy
Statement/Prospectus and the accuracy and completeness of the information
contained therein and herein; (vii) the absence of certain changes in Tecnol's
business and condition; (viii) the absence of certain litigation and
liabilities; (ix) certain employee matters; (x) compliance with laws and
permits; (xi) takeover defense mechanisms; (xii) environmental and tax matters;
(xiii) intellectual property; and (xiv) brokers and finders.
The Merger Agreement contains various representations and warranties of
Kimberly-Clark and Sub relating, among other things, to: (i) their organization,
good standing, corporate power and similar corporate matters; (ii) their
capitalization; (iii) their authorization, execution, delivery and performance
and the enforceability of the Merger Agreement and related matters; (iv) the
absence of conflicts, violations and defaults under their certificates of
incorporation or by-laws and certain other agreements and documents; (v) the
documents and reports filed by Kimberly-Clark with the SEC and the accuracy and
completeness of the information contained therein; (vi) the Registration
Statement and this Proxy Statement/Prospectus and the accuracy and completeness
of the information contained therein and herein; (vii) the absence of certain
changes in their businesses and condition; (viii) the absence of certain
litigation and liabilities; (ix) compliance with laws and permits; (x)
environmental and tax matters; (xi) ownership of Tecnol Common Stock; and (xii)
brokers and finders. All representations and warranties of Kimberly-Clark,
Tecnol and Sub expire at the Effective Time.
CONDUCT OF BUSINESS PENDING THE MERGER
Tecnol agreed as to itself and each of its Subsidiaries that during the
period from the date of the Merger Agreement through the Effective Time (unless
Kimberly-Clark otherwise approves, and except as set forth in the Company
Disclosure Letter or as otherwise expressly contemplated by the Merger
Agreement): (i) the business of it and its Subsidiaries will be conducted in the
ordinary and usual course and, to the extent consistent therewith, it and its
Subsidiaries will use all reasonable efforts to preserve its business
organization intact and maintain its existing relations and goodwill with
customers, suppliers, distributors, creditors, lessors, employees and business
associates; (ii) neither it nor any of its Subsidiaries will (A) issue, sell,
pledge, dispose of or encumber any capital stock owned by it or any of its
Subsidiaries in any of its Subsidiaries or other Affiliates, (B) amend its
certificate or articles of incorporation or by-laws, (C) split, combine or
reclassify its outstanding shares of capital stock, (D) declare, set aside or
pay any dividend payable in cash, stock or property in respect of any capital
stock other than dividends from its direct or indirect wholly owned
Subsidiaries, or (E) repurchase, redeem or otherwise acquire, except in
connection with the payment of the exercise price of any option outstanding on
the date hereof under the Stock Plan or the Director Option Agreements, or
permit any of its Subsidiaries to purchase or otherwise acquire, any shares of
its capital stock or any securities convertible into or exchangeable or
exercisable for any shares of its capital stock; (iii) neither it nor any of its
Subsidiaries will (A) issue, sell, pledge, dispose of or encumber any shares of,
or securities convertible into or exchangeable or exercisable for, or options,
warrants, calls, commitments or rights of any kind to acquire, any shares of its
capital stock of any class or any other property or assets (other than shares of
Tecnol Common Stock issuable pursuant to options outstanding on the date of the
Merger Agreement under the Stock Plan or the Director Option Agreements), (B)
purchase, transfer, lease, sell, mortgage, pledge, dispose of or encumber any
real property, or effect any improvements or expansions thereon, (C) other than
in the ordinary and usual course of business, purchase, transfer, lease,
license, guarantee, sell, mortgage, pledge, dispose of or encumber any other
property or assets (including capital stock of any of its Subsidiaries) or incur
or modify any material indebtedness or other liability, (D) make or authorize or
commit for any capital expenditures other than in the ordinary and usual course
of business, or (E) by any means, make any acquisition of, or investment in any
business, through acquisition of assets or stock of any other Person or entity;
(iv) except as may be required by applicable law, neither it nor any of its
Subsidiaries will terminate, establish, adopt, enter into, make any new grants
or awards under, amend or otherwise modify, any Compensation and Benefit Plans
or increase the salary, wage, bonus, severance, incentive or other compensation
of any employees except for grants, awards or increases occurring in the
ordinary and usual course of business (which will include normal periodic
performance reviews and related compensation and benefit increases); (v) neither
it nor any of its Subsidiaries will settle or compromise any material claims or
litigation
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or, except in the ordinary and usual course of business, enter into any material
Debt Contracts or Other Contracts or modify, amend or terminate any of its
material Debt Contracts or Other Contracts or waive, release or assign any
material rights or claims; (vi) neither it nor any of its Subsidiaries will make
any Tax election or permit any insurance policy naming it as a beneficiary or
loss-payable payee to be canceled or terminated except in the ordinary and usual
course of business; (vii) neither it nor any of its Subsidiaries will take any
action, other than reasonable and usual actions in the ordinary and usual course
of business consistent with past practice, with respect to accounting policies
or procedures; (viii) neither it nor any of its Subsidiaries will sell,
transfer, assign or abandon any patents or trademarks which are owned or
controlled directly or indirectly by Tecnol or any of its Subsidiaries, except
for any abandonment of a non-material trademark or any intercompany transfer
among Tecnol and its Subsidiaries, in either case, in the ordinary and usual
course of business; (ix) neither it nor any of its Subsidiaries will license or
otherwise encumber any patents or trademarks which are owned or controlled
directly or indirectly by Tecnol or any of its Subsidiaries, except in the
ordinary and usual course of business; (x) neither it nor any of its
Subsidiaries will make any modification to employee or customer incentives or
trade policies which would reasonably be expected to cause Tecnol's distributors
or end-user customers to increase purchases above those levels normally required
to meet their respective needs or cause an excessive increase or decrease in
Tecnol's inventories or working capital; and (xi) neither it nor any of its
Subsidiaries will authorize or announce an intention to do any of the foregoing,
or enter into any contract, agreement, commitment or arrangement to do any of
the foregoing.
Each of Kimberly-Clark and Tecnol has further agreed that neither it nor
its respective Subsidiaries will knowingly take or fail to take any action which
action or failure would jeopardize qualification of the Merger as a
reorganization within the meaning of Section 368(a) of the Code.
NO SOLICITATION
Tecnol has agreed that from and after the date of the Merger Agreement it
will not, and will use its best efforts to not permit any of its directors,
officers, employees, attorneys, financial advisors, agents or other
representatives or those of any of its Subsidiaries to, directly or indirectly,
solicit, initiate or knowingly encourage (including by way of furnishing
information) any Takeover Proposal (as hereinafter defined) from any Person, or
engage in or continue discussions or negotiations relating to any Takeover
Proposal; provided, however, that Tecnol may engage in discussions or
negotiations with, and furnish information to, any Person that makes a written
Takeover Proposal in respect of which the Tecnol Board concludes in good faith
if consummated would constitute a Superior Proposal (as hereinafter defined),
but only if the Tecnol Board concludes in good faith on the basis of the advice
of its outside counsel that the failure to take such action would be
inconsistent with the fiduciary obligations of such Board under applicable law;
and provided further that the Tecnol Board may take and disclose to Tecnol's
stockholders a position contemplated by Rule 14e-2 promulgated under the
Exchange Act, comply with Rule 14d-9 thereunder and make all disclosures
required by applicable law in connection therewith. Tecnol will as soon as
practicable and in any event no later than the date on which such Takeover
Proposal is presented to Tecnol's Board notify Kimberly-Clark of any Takeover
Proposal received by it or any of its directors, officers, employees, attorneys,
financial advisors, agents or other representatives or those of any of its
Subsidiaries or the receipt by Tecnol or any of the foregoing of any notice of
any intention to make a Superior Proposal, including the identity of the person
making such Takeover Proposal or intending to make a Superior Proposal and the
material terms of any such Takeover Proposal. As used in the Merger Agreement
and this Proxy Statement/Prospectus: (i) "Takeover Proposal" means any proposal
or offer (other than a proposal or offer by Kimberly-Clark or any of its
Affiliates), or any expression of interest by any Person relating to any actual
or potential merger, consolidation or other business combination involving
Tecnol or any of its Subsidiaries or any acquisition in any manner (including,
without limitation, by tender or exchange offer) of a substantial equity
interest in, or a substantial portion of the assets of, Tecnol or any of its
Subsidiaries; and (ii) "Superior Proposal" means a bona fide proposal or offer
made by any Person (A) to acquire Tecnol pursuant to any tender or exchange
offer or any acquisition of all or substantially all of the assets of Tecnol and
its Subsidiaries as a whole or (B) to enter into a merger, consolidation or
other business consolidation with Tecnol or any of its Subsidiaries, in each
case on terms which a majority of the members of the Tecnol Board determines in
good faith, and based on the advice of independent financial advisors, to be
more favorable to Tecnol and its stockholders than the transactions
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contemplated by the Merger Agreement (including any revised transaction proposed
by Kimberly-Clark pursuant to the Merger Agreement).
THIRD PARTY STANDSTILL AGREEMENTS
During the period from the date of the Merger Agreement through the
Effective Time, Tecnol has agreed not to terminate, amend, modify or waive any
provision of any confidentiality or standstill agreement to which it or any of
its Subsidiaries is a party. During such period, Tecnol has agreed to enforce,
to the fullest extent permitted under applicable law, but subject to the
exercise by the Tecnol Board of its fiduciary obligations after consultation
with outside counsel, the provisions of any such agreement.
CONDITIONS PRECEDENT TO THE MERGER
The respective obligations of Kimberly-Clark, Tecnol and Sub to effect the
Merger are subject to the fulfillment (or waiver) of the following conditions at
or prior to the Effective Time: (i) approval and adoption of the Merger
Agreement by the requisite vote of the stockholders of Tecnol; (ii) the listing
on the NYSE, upon official notice of issuance, of the shares of Kimberly-Clark
Common Stock deliverable pursuant to the Merger Agreement; (iii) expiration or
termination of the waiting period (and any extension thereof) applicable to the
consummation of the Merger under the HSR Act, and the obtaining, making or
occurrence of all authorizations, consents, orders, declarations or approvals
of, or filings with, or terminations or expirations of waiting periods imposed
by, any Governmental Entity, which the failure to obtain, make or occur would,
individually or in the aggregate, be reasonably likely to result in a Company
Material Adverse Effect or a Parent Material Adverse Effect; (iv) the absence of
any stop order suspending the effectiveness of the Registration Statement, any
initiation of a proceeding for such purpose or any threat of such a proceeding
by the SEC; (v) no court or other Governmental Entity having jurisdiction over
Kimberly-Clark or Tecnol, or any of their respective Subsidiaries, having
enacted, issued, promulgated, enforced or entered any law, statute, ordinance,
rule, regulation, judgment, decree, injunction or other order then in effect
which restrains, enjoins or otherwise prohibits consummation of the Merger; and
(vi) Kimberly-Clark will have received all state securities and "blue sky"
approvals, if any.
The respective obligations of Kimberly-Clark and Sub to effect the Merger
are also subject to the fulfillment (or waiver) at or prior to the Closing Date
of the following additional conditions: (i) each of the representations and
warranties of Tecnol contained in the Merger Agreement that is qualified by
materiality being true and correct when made and being true and correct at and
as of the Closing Date as if made at and as of the Closing Date and each of such
representations and warranties that is not so qualified being true and correct
in all material respects when made and being true and correct in all material
respects at and as of the Closing Date as if made at and as of the Closing Date,
in each case except as contemplated or permitted by the Merger Agreement; (ii)
Tecnol having performed in all material respects all obligations required to be
performed by it under the Merger Agreement at or prior to the Closing Date;
(iii) Tecnol having obtained the consent or approval of each Person whose
consent or approval is required under any Debt Contract or Other Contract to
which Tecnol or any of its Subsidiaries is a party, except those for which the
failure to obtain such consent or approval, individually or in the aggregate, is
not reasonably likely to have a Company Material Adverse Effect; and (iv)
Kimberly-Clark having received an opinion of Sidley & Austin relating to certain
tax matters. See "THE MERGER -- Certain Federal Income Tax Consequences."
The obligation of Tecnol to effect the Merger is also subject to the
fulfillment (or waiver) at or prior to the Effective Time of the following
additional conditions: (i) each of the representations and warranties of
Kimberly-Clark and Sub contained in the Merger Agreement that is qualified by
materiality being true and correct when made and being true and correct at and
as of the Closing Date as if made at and as of the Closing Date and each of such
representations and warranties that is not so qualified being true and correct
in all material respects when made and being true and correct at and as of the
Closing Date as if made at and as of the Closing Date, in each case except as
contemplated or permitted by the Merger Agreement; (ii) Kimberly-Clark and Sub
having performed in all respects all obligations required to be performed by it
under the Merger Agreement; (iii) Kimberly-Clark having obtained the consent or
approval of each Person whose consent or approval will be required under any
Debt Contract or Other Contract to which Kimberly-Clark or any of its
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Subsidiaries is a party, except those for which failure to obtain consents and
approvals, individually or in the aggregate, is not reasonably likely to have a
Parent Material Adverse Effect; and (iv) Tecnol having received an opinion of
Carrington, Coleman, Sloman & Blumenthal, L.L.P., relating to certain tax
matters. See "THE MERGER -- Certain Federal Income Tax Consequences."
TECNOL STOCK OPTIONS
Prior to the Effective Time, the Tecnol Options, whether vested or
unvested, will be fully exercisable without regard to restrictions contained in
the plan or agreement pursuant to which such Tecnol Options were granted. At the
Effective Time, all outstanding Tecnol Options which have not been exercised
will be canceled and each holder whose Tecnol Options are canceled will receive
an amount in cash equal to the result of multiplying the number of shares
subject to such canceled Tecnol Options, whether vested or not, by the excess,
if any, of (i) the closing quotation of one share of Tecnol Common Stock as
reported in the Wall Street Journal under The Nasdaq National Market Issues for
the trading day that occurs immediately prior to the Effective Time over (ii)
the exercise price of such Tecnol Options, subject to any required withholding
by Tecnol. Cash payments for canceled Tecnol Options will be payable as soon as
practicable, but in no event later than 45 days after the Effective Time.
EMPLOYEE BENEFITS
Kimberly-Clark has agreed that, for a period of not less than 12 months
following the Effective Time, the employees of Tecnol and its Subsidiaries in
the United States (the "Employees") will be provided with employee benefit plans
and programs that are no less favorable in value in the aggregate, as determined
by Kimberly-Clark in good faith in accordance with any method customarily used
by Kimberly-Clark for making benefit comparisons, than those provided to the
Employees immediately prior to the Effective Time, excluding the Stock Plan, the
401(k) Plan (as defined below), and the ESOP; provided, that nothing in the
Merger Agreement will limit the right of Kimberly-Clark or the Surviving
Corporation to amend, terminate or discontinue any particular employee benefit
plan or program in accordance with the terms thereof. Employees who become
participants in any employee benefit plan or program of Kimberly-Clark or any of
its Subsidiaries will be given credit under such plans and programs, for
purposes of eligibility and vesting thereunder, for all service with Tecnol or
its Subsidiaries.
Kimberly-Clark will, and will cause the Surviving Corporation to, honor all
employment agreements pursuant to the Merger Agreement in accordance with the
terms thereof and subject to the rights of termination provided therein.
Kimberly-Clark will cause the Surviving Corporation to provide severance
benefits to the Employees in accordance with and subject to the provisions of
the Severance Matters Agreements (as defined in the Merger Agreement).
Prior to the Effective Time, Tecnol will: (i) take all actions necessary to
terminate Tecnol's 401(k) Capital Accumulation Plan (the "401(k) Plan"); (ii)
make a contribution to the ESOP sufficient to repay in full the outstanding
principal and interest due on the ESOP loan, it being contemplated that the ESOP
trustees will use this amount for that purpose whereupon the Tecnol Common Stock
held in the suspense account will be allocated to participant accounts; and
(iii) take all actions necessary to terminate the ESOP.
INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE
Kimberly-Clark will indemnify and hold harmless, to the fullest extent
permitted under applicable law (and Kimberly-Clark will also advance expenses as
incurred to the fullest extent permitted under applicable law provided the
Person to whom expenses are advanced provides an undertaking to repay such
advances if it is ultimately determined that such Person is not entitled to
indemnification), each present and former director, officer and employee of
Tecnol and its Subsidiaries (collectively, the "Indemnified Parties") against
any costs or expenses (including reasonable attorneys' fees), judgments, fines,
losses, claims, damages or liabilities (collectively, "Costs") incurred in
connection with any claim, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative, arising out of or pertaining
to matters existing or
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occurring at or prior to the Effective Time, including the transactions
contemplated by the Merger Agreement; provided, that Kimberly-Clark will not
have any obligation to any Indemnified Party if and when a court of competent
jurisdiction ultimately determines, and such determination has become final,
that the indemnification of such Indemnified Party in the manner contemplated by
the Merger Agreement is prohibited by applicable law.
The Surviving Corporation will use its best efforts to maintain Tecnol's
existing officers' and directors' liability insurance ("D&O Insurance") for a
period of six years after the Effective Time so long as the annual premium
therefor is not in excess of the last annual premium paid prior to the date of
the Merger Agreement (the "Current Premium"); provided, however, that if the
existing D&O Insurance expires, is terminated or canceled during such six-year
period, the Surviving Corporation will use its best efforts to obtain as much
substantially similar D&O Insurance as can be obtained for the remainder of such
period but in no event for a premium in excess (on an annualized basis) of two
times the Current Premium.
TERMINATION
The Merger Agreement may be terminated, and the Merger abandoned, at any
time prior to the Effective Time, whether before or after the approval and
adoption by the stockholders of Tecnol of the Merger Agreement: (i) by mutual
written consent of Kimberly-Clark and Tecnol; (ii) by either Kimberly-Clark or
Tecnol if (A) the other fails to comply in any material respect with any of its
covenants or agreements contained in the Merger Agreement required to be
complied with prior to the date of such termination or breaches any
representation or warranty made as of the date of the Merger Agreement that is
not qualified by reference to a Material Adverse Effect, the effect of which has
a Company Material Adverse Effect or a Parent Material Adverse Effect, as the
case may be, or a breach by the other (or Sub if Tecnol is the terminating
party) of any representation or warranty made as of the date of the Merger
Agreement that is qualified by reference to a Material Adverse Effect, (in each
case after a 15 business-day cure period following notice of such breach), or
(B) the stockholders of Tecnol fail to approve the Merger at the Tecnol Special
Meeting; (iii) by either Kimberly-Clark or Tecnol if (A) the Merger has not been
effected on or prior to February 28, 1998, provided that the right so to
terminate will not be available to the party whose failure to fulfill any
obligation of the Merger Agreement has been the cause of, or resulted in, the
failure of the Merger to have occurred on or prior to such date, or (B) any
court or other Governmental Entity having jurisdiction has issued an order,
decree or ruling or taken any other action permanently enjoining, restraining or
otherwise prohibiting the transactions contemplated by the Merger Agreement and
such order, decree, ruling or other action has become final and nonappealable;
(iv) by Tecnol if the Tecnol Board determines in good faith that a Takeover
Proposal with respect to Tecnol constitutes a Superior Proposal, provided that
Tecnol may not so terminate unless (A) five business days have elapsed after
delivery to Kimberly-Clark of a written notice of such determination and at all
reasonable times during such five business-day period, Tecnol will have provided
Kimberly-Clark a reasonable opportunity to propose a modification of the terms
and conditions of the Merger Agreement so that a business combination between
Tecnol and Kimberly-Clark (or an Affiliate of Kimberly-Clark) may be effected
and (B) at the end of such period, the Tecnol Board continues to believe that
such Takeover Proposal constitutes a Superior Proposal and promptly thereafter
Tecnol enters into a definitive acquisition, merger or similar agreement to
effect such Superior Proposal; (v) by Kimberly-Clark if (A) the Tecnol Board has
not recommended the Merger to Tecnol's stockholders, or has resolved not to make
such recommendation, or has modified in a manner adverse to Kimberly-Clark or
rescinded its recommendation of the Merger to Tecnol's stockholders as being
advisable and fair to and in the best interests of Tecnol and its stockholders,
or shall have modified or rescinded its approval of the Merger Agreement, or has
resolved to do any of the foregoing, (B) the Tecnol Board has recommended to the
stockholders of Tecnol any Takeover Proposal (other than by Kimberly-Clark or an
Affiliate of Kimberly-Clark) or has resolved to do so, (C) a tender offer or
exchange offer for 20% or more of the outstanding shares of capital stock of
Tecnol is commenced, and the Tecnol Board fails to recommend against acceptance
of such tender offer or exchange offer by its stockholders within the 10
business-day period (or such shorter period) required by Section 14e-2 of the
Exchange Act (the taking of no position by the expiration of such 10
business-day period (or such shorter period) with respect to the acceptance of
such tender offer or exchange offer by its stockholders constituting such a
failure), or (D) Tecnol or any of its Subsidiaries, without having received
prior written
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consent from Kimberly-Clark, has entered into, authorized, recommended,
proposed, or publicly announced its intention to enter into, authorize,
recommend or propose to its stockholders an agreement, arrangement,
understanding or letter of intent with any Person (other than Kimberly-Clark or
any of its Affiliates) to (x) effect a merger or consolidation or similar
transaction involving Tecnol or any of its Subsidiaries, (y) purchase, lease, or
otherwise acquire all or a substantial portion of the assets of Tecnol or any of
its Subsidiaries or (z) purchase or otherwise acquire (including by way of
merger, consolidation, share exchange or similar transaction) Beneficial
Ownership (as defined in the Company Option Agreement) of securities
representing 20% or more of the voting power of Tecnol (in each case other than
any such merger, consolidation, purchase, lease or other transaction involving
only Tecnol and one or more of its Subsidiaries or involving only any two or
more of its Subsidiaries; and (vi) by Kimberly-Clark or Tecnol, by written
notice to the other party, if 10 business days elapse after all the closing
conditions set forth in the Merger Agreement (other than conditions that by
their nature are to be satisfied at the Closing) are satisfied or waived and the
Closing has not occurred through no fault of the terminating party.
FEES AND EXPENSES
The Merger Agreement provides that, except for printing expenses, mailing
and filing fees incurred in connection with this Proxy Statement/Prospectus,
which will be shared equally, Kimberly-Clark and Tecnol will each pay its own
costs and expenses in connection with the Merger Agreement and the transactions
contemplated thereby, whether or not the Merger is consummated. The Merger
Agreement also provides that if a Purchase Event (as defined in the Company
Option Agreement) shall have occurred, Tecnol will reimburse Kimberly-Clark for
its documented expenses in connection with the transactions contemplated by the
Merger Agreement up to a maximum reimbursable amount of $1 million. See "COMPANY
OPTION AGREEMENT."
None of the payments described above will be deemed to limit any remedies
available to any party to the Merger Agreement from any liability for any breach
thereof; provided, however, that, with respect to any breach by Tecnol of the
provisions relating to Takeover Proposals (see Section 6.2 of the Merger
Agreement) that is not the result of willful action (or willful failure to take
action) or bad faith on the part of Tecnol, Kimberly-Clark's exclusive remedy in
respect of such breach is limited to the rights under the Company Option
Agreement and to reimbursement of its expenses, up to a maximum amount of $1
million, as set forth above, and Tecnol will have no other liability to
Kimberly-Clark in respect of such breach.
AMENDMENT
Subject to the provisions of the applicable law, at any time prior to the
Effective Time, the parties to the Merger Agreement may modify or amend the
Merger Agreement, by written agreement executed and delivered by duly authorized
officers of the respective parties.
WAIVER
The conditions to each of the parties' obligations to consummate the Merger
are for the sole benefit of such party and may be waived by such party in whole
or in part to the extent permitted by applicable law.
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INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of the Tecnol Board with respect to the
Merger Agreement, the stockholders of Tecnol should be aware that certain
persons, as members of Tecnol's management or the Tecnol Board, have interests
in the Merger in addition to their interests as stockholders of Tecnol. The
Tecnol Board was aware of these interests and considered them, among other
things, in approving the Merger.
CONSULTING AGREEMENTS
Kimberly-Clark also required, as a condition to its willingness to enter
into the Merger Agreement, that Kimberly-Clark and Tecnol enter into a
Consulting Agreement with each of Messrs. Hubbard and Brunson and Valerie A.
Hubbard, President of the International Division and a director of Tecnol (each
such person is hereinafter referred to in this paragraph as a "Consultant"),
concurrently with the execution of the Merger Agreement and effective at the
Effective Time, pursuant to which each such Consultant agreed to provide
consulting services to Tecnol for up to 20 hours per week for the first 60 days
(90 days for Mr. Brunson) following the Effective Time and up to 10 hours per
month thereafter through November 30, 1998. Each such Consulting Agreement has
accordingly been executed. For the consulting services provided under each
Consulting Agreement, Messrs. Hubbard and Brunson and Ms. Hubbard will be
entitled to receive from Tecnol $70,000, $35,000 and $25,000, respectively,
payable in four equal installments, with the first installment due at the
Effective Time, and succeeding installments due on April 1, 1998, August 1, 1998
and November 1, 1998. Each Consultant is also entitled to reimbursement by
Tecnol for reasonable expenses incurred in performing his or her consulting
services. No Consultant will be eligible for benefits available to officers or
other employees of Tecnol or Kimberly-Clark. Each Consultant may terminate his
or her Consulting Agreement at any time: (i) upon 30 days' prior written notice
in which case Tecnol's obligations under the Consulting Agreement would cease;
or (ii) if Tecnol or Kimberly-Clark breaches certain obligations under the
Consulting Agreement or such Consultant's Noncompetition Agreement (described
below), in which case Tecnol will pay the Consultant all amounts remaining to be
paid under the Consulting Agreement. In the event a Consulting Agreement
terminates due to the disability or death of the Consultant, any amount
remaining to be paid under the Consulting Agreement will be paid to the
Consultant or his or her estate. Either Tecnol or Kimberly-Clark may terminate a
Consulting Agreement at any time upon written notice to the Consultant if the
Consultant breaches certain covenants in the Consulting Agreement or his or her
Noncompetition Agreement (described below), in which case Tecnol's obligations
under the Consulting Agreement would cease.
NONCOMPETITION AGREEMENTS
Kimberly-Clark also required, as a condition to its willingness to enter
into the Merger Agreement, that Kimberly-Clark and Tecnol enter into a
Noncompetition Agreement with each of Messrs. Hubbard and Brunson and Ms.
Hubbard concurrently with the execution of the Merger Agreement and effective at
the Effective Time, pursuant to which each such executive will be restricted
from competing with Tecnol or Kimberly-Clark: (i) with respect to primary Tecnol
product lines for a period of five years following the Effective Time (including
face masks, cold therapy products, patient safety restraints, operating room
specialty and other specialty products, disposable blood pressure cuffs, wound
care products, orthopedic braces and supports, disposable headwear, gowns, shoe
covers, products in development by Tecnol at the Effective Time and any other
Tecnol products not specifically identified as secondary Tecnol product lines);
(ii) with respect to secondary Tecnol product lines for a period of four years
following the Effective Time (for intravenous supports, antifog kits and
adhesive strips manufactured by Tecnol as of the Effective Time) or two years
following the Effective Time (for tube holders, telemetry pouches, pressure care
and pad products and stirrup straps manufactured by Tecnol as of the Effective
Time); and (iii) with respect to related Kimberly-Clark products which are
nonwoven based and are converted using the same or substantially the same
technology used by Tecnol at the Effective Time or during the one year period
prior thereto, for a period of two years following the Effective Time. Pursuant
to a separate Noncompetition Agreement, James Weaver, Executive Vice
President-New Business Development and Manufacturing of Tecnol, will be
restricted for a period of one year following the Effective Time from competing
with Tecnol or Kimberly-Clark with respect
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to such Tecnol product lines and related Kimberly-Clark products. Subject to the
terms of their respective Noncompetition Agreements, during the applicable
noncompetition period, each executive shall not, among other things, directly or
indirectly, own (other than a de minimis passive investment), manage or be
connected as an officer, employee, consultant, agent, partner or director with,
or provide capital or other funding to enable a third party to engage in, or
solicit customers or distributors of Tecnol or Kimberly-Clark, in each case in
connection with a competitive operation with respect to the products or product
lines described above in a geographic market in which Kimberly-Clark or Tecnol
conducts business. Each such Noncompetition Agreement has accordingly been
executed. Messrs. Hubbard, Brunson and Weaver and Ms. Hubbard will also be
restricted from soliciting Tecnol employees (except for specified family members
and personal assistants) or Kimberly-Clark Professional Health Care Sector
employees for a period of five years (one year in the case of Mr. Weaver)
following the Effective Time. Each such executive will be restricted for a
period of two years (one year for Mr. Weaver) from issuing public statements
which may have a disparaging effect on Tecnol, the Merger or the integration of
the Tecnol operations with those of Kimberly-Clark. Each Noncompetition
Agreement provides that confidential information concerning Tecnol, Tecnol's
customers and suppliers or Kimberly-Clark may not be disclosed by the executive
subject to certain exceptions. Under his Noncompetition Agreement, Mr. Hubbard
will have a right to negotiate with Kimberly-Clark for the purchase of any of
the secondary Tecnol product lines or any of the Tecnol orthopedic soft goods or
wound dressing product lines, should Tecnol or Kimberly-Clark decide to sell any
such product lines during the applicable noncompetition period, subject to
certain conditions and limitations. Under each Noncompetition Agreement, Messrs.
Hubbard, Brunson and Weaver and Ms. Hubbard will be entitled to receive
$300,000, $115,000, $35,000 and $85,000, respectively, payable in four equal
installments, with the first installment due at the Effective Time, and
succeeding installments due on April 1, 1998, August 1, 1998 and November 1,
1998. Each executive may terminate his or her Noncompetition Agreement upon 10
days' prior written notice if Tecnol or Kimberly-Clark breaches certain
obligations under the Noncompetition Agreement or such executive's Consulting
Agreement (described above).
SEVERANCE AND RELEASE AGREEMENTS
Kimberly-Clark also required, as a condition to its willingness to enter
into the Merger Agreement, that Kimberly-Clark and Tecnol enter into a Severance
Agreement and Release, concurrently with the execution of the Merger Agreement,
with each of Messrs. Hubbard, Brunson and Weaver, Ms. Hubbard and Jeffrey A.
Nick, Vice President-Finance and Accounting of Tecnol, pursuant to which each
such executive will release, at the Effective Time, Tecnol and Kimberly-Clark
(and related persons) from all claims which such executive, and his or her heirs
or assigns, may have against Tecnol or Kimberly-Clark (and related persons),
subject to certain exceptions. Each such Severance Agreement and Release has
accordingly been executed. In consideration for such release, Messrs. Hubbard,
Brunson, Weaver and Nick, and Ms. Hubbard will receive $386,692.40, $141,538.60,
$138,077.20, $128,000.00 and $100,769.32, respectively, payable in four equal
installments, with the first installment due at the Effective Time of the
Merger, and succeeding installments due on April 1, 1998, August 1, 1998 and
November 1, 1998. In addition, each such executive will receive a lump sum
payment at the Effective Time in the amount of $3,950.00, $3,321.00, $2,275.00,
$7,405.00 and $2,275.00, respectively, which the executive may use to purchase
COBRA continuation coverage under Tecnol's group health plan if he or she so
chooses. Each executive will reaffirm the provisions of the Severance and
Release Agreement through the Effective Time with respect to all matters
relating to employment by Tecnol and all officerships and directorships with
Tecnol. In connection with Mr. Hubbard's severance from employment, Tecnol and
Mr. Hubbard have entered into a Rescission Agreement, effective at the Effective
Time, which rescinds the employment agreement currently in effect between Tecnol
and Mr. Hubbard dated December 1, 1989 and amended on February 28, 1994.
STOCK OPTIONS
Tecnol will permit each person holding Tecnol Options to exercise such
options, whether vested or unvested, prior to the Effective Time. At the
Effective Time, each outstanding Tecnol Option will be canceled. The holders of
Tecnol Options that are canceled will receive a cash payment equal to the
difference between the closing quotation of one share of Tecnol Common Stock as
reported in The Wall Street Journal under The
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Nasdaq National Market Issues for the trading day immediately preceding the
Effective Time and the option exercise price multiplied by the number of
canceled options, whether vested or unvested, subject to required withholding.
Messrs. Hubbard and Brunson, Ms. Hubbard, Mr. Nick, Mr. Radunsky, and Directors
Mr. Johnson and James W. Kenney currently hold vested and unvested Tecnol
Options to purchase shares of Tecnol Common Stock. The Tecnol Options held by
Mr. Hubbard (50,000 vested, 25,000 unvested), Mr. Brunson (40,000 vested, 20,000
unvested) Ms. Hubbard (35,000 vested, 17,500 unvested), Mr. Nick (3,333 vested,
8,334 unvested), Mr. Radunsky (35,000 vested, 17,500 unvested), Mr. Johnson
(10,000 vested, 5,000 unvested), and Mr. Kenney (10,000 vested, 5,000 unvested),
granted to such persons under the Stock Plan or the Director Option Agreements,
as the case may be, and indicated parenthetically next to such person's name,
will be exercisable without restriction prior to the Effective Time. Based on
the last reported bid price of Tecnol Common Stock of $21.00 on November 11,
1997, as reported on Nasdaq, the amount of cash, before taxes, that would be
received by these individuals following the cancellation of his or her
outstanding Tecnol Options, if not exercised, is $725,003, $580,002, $507,502,
$70,002, $507,502, $145,001 and $145,001, respectively.
INDEMNIFICATION
For six years after the Effective Time, Kimberly-Clark has agreed to
maintain, or will cause the Surviving Corporation to maintain, certain rights to
indemnification in favor of each present and former director, officer, employee
or agent of Tecnol and its Subsidiaries and to maintain Tecnol's existing
directors' and officers' liability insurance policy or provide a similar policy,
subject to certain limitations. See "TERMS OF THE MERGER
AGREEMENT -- Indemnification; Directors' and Officers' Insurance."
COMPANY OPTION AGREEMENT
The description of the Company Option Agreement contained in this Proxy
Statement/Prospectus does not purport to be complete and is qualified in its
entirely by reference to the Company Option Agreement, a copy of which is
attached hereto as Annex II.
As a condition to Kimberly-Clark's willingness to enter into the Merger
Agreement, Kimberly-Clark required that Tecnol enter into the Company Option
Agreement with Kimberly-Clark pursuant to which Tecnol granted to Kimberly-Clark
the Option to purchase up to 3,982,142 shares (subject to adjustment) of Tecnol
Common Stock (or approximately 19.9% of the outstanding shares of Tecnol Common
Stock as of the Record Date, without including any shares subject to or issued
pursuant to the Option) at an exercise price of $22.00 per share, the closing
bid price on September 3, 1997, the last trading day prior to the execution of
the Merger Agreement.
Kimberly-Clark may exercise the Option only upon the occurrence of any one
of the following events (each a "Purchase Event"): (i) the Merger Agreement is
terminated by Tecnol in accordance with Section 8.1(f) thereof (this may occur
if the Tecnol Board determines in good faith that a Takeover Proposal with
respect to Tecnol constitutes a Superior Proposal, provided that Tecnol may not
so terminate unless (A) five business days have elapsed after delivery to
Kimberly-Clark of a written notice of such determination and at all reasonable
times during such five business-day period, Tecnol will have provided
Kimberly-Clark a reasonable opportunity to propose a modification of the terms
and conditions of the Merger Agreement so that a business combination between
Tecnol and Kimberly-Clark (or an Affiliate as defined in the Company Option
Agreement of Kimberly-Clark) may be effected and (B) at the end of such period,
the Tecnol Board continues to believe that such Takeover Proposal constitutes a
Superior Proposal and promptly thereafter Tecnol enters into a definitive
acquisition, merger or similar agreement to effect such Superior Proposal); (ii)
if after a Takeover Proposal has been publicly announced by any Person (as
defined in the Company Option Agreement) (other than Kimberly-Clark or an
Affiliate of Kimberly-Clark), Kimberly-Clark has the right to terminate the
Merger Agreement pursuant to Section 8.1(g) thereof (this may occur if (A) the
Tecnol Board has not recommended or has resolved not to recommend the Merger to
Tecnol's stockholders, or has modified in a manner adverse to Kimberly-Clark or
rescinded its recommendation of the Merger to Tecnol's stockholders as being
advisable and fair to and in the best interests of Tecnol and its stockholders,
or
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shall have modified or rescinded its approval of the Merger Agreement, or has
resolved to do any of the foregoing, (B) the Tecnol Board has recommended to the
stockholders of Tecnol any Takeover Proposal (other than by Kimberly-Clark or an
Affiliate of Kimberly-Clark) or has resolved to do so, or (C) a tender offer or
exchange offer for 20% or more of the outstanding shares of capital stock of
Tecnol is commenced, and the Tecnol Board fails to recommend against acceptance
of such tender offer or exchange offer by its stockholders within the 10
business-day period (or such shorter period) required by Section 14e-2 of the
Exchange Act (the taking of no position by the expiration of such 10
business-day period (or such shorter period) with respect to the acceptance of
such tender offer or exchange offer by its stockholders constituting such a
failure); or (iii) if all of the following occur: (A) prior to the Tecnol
Special Meeting the Merger Agreement is not terminated and there is publicly
announced a Takeover Proposal by any Person (other than Kimberly-Clark or an
Affiliate of Kimberly-Clark), (B) after such public announcement, the
stockholders of Tecnol do not approve the Merger at the Tecnol Special Meeting,
(C) within 12 months after the Tecnol Special Meeting Tecnol enters into any
written letter of intent, acquisition agreement, merger agreement or other
similar agreement in respect of a Takeover Proposal with such Person or such
Person commences any tender or exchange offer for the Tecnol Common Stock, and
(D) within 12 months after such entry into any letter of intent or agreement or
such commencement of any tender or exchange offer, such Person shall consummate
a transaction similar to that contemplated by such Takeover Proposal or any
tender or exchange offer for Beneficial Ownership of at least 20% of Tecnol
Common Stock.
The Option will terminate upon the earlier to occur of: (i) the Effective
Time of the Merger, or (ii) the termination of the Merger Agreement in
accordance with its terms; provided, however, that under certain circumstances
the Option will remain exercisable until the date which is 180 days after such
termination; and further provided, however, that, if prior to the termination of
the Merger Agreement in accordance with its terms, a Takeover Proposal has been
publicly announced, the Option will not terminate until the earlier of (A) the
date a Purchase Event can no longer occur; and (B) 180 days after the occurrence
of a Purchase Event, except that if the Purchase Event is of the type described
in clause (ii) of the preceding paragraph, the Option will not terminate until
180 days after the termination of the Merger Agreement.
After the occurrence of a Purchase Event (but prior to the second
anniversary of such Purchase Event), Kimberly-Clark will have the right at any
time after a Put Event (as defined below) has occurred to require Tecnol to
repurchase the Option from Kimberly-Clark, together with all of the Tecnol
Common Stock purchased by Kimberly-Clark pursuant thereto and with respect to
which Kimberly-Clark then has Beneficial Ownership (as that term is defined in
the Company Option Agreement), at the market price at the time the right is
exercised, subject to the terms and limitations of the Company Option Agreement.
A "Put Event" will be deemed to have occurred: (i) upon the consummation of any
merger, consolidation or any similar transaction involving Tecnol or any
purchase, lease or other acquisition of all or substantially all of the assets
of Tecnol and its Subsidiaries considered as a whole; or (ii) upon the
acquisition by any person of Beneficial Ownership of 50% or more of the then
outstanding shares of Tecnol Common Stock, provided that no such event shall
constitute a Put Event unless a Purchase Event shall have occurred prior to
expiration or termination of the Option.
After the date which is the later of: (i) six months after a Purchase Event
has occurred; and (ii) six months after the termination of the Merger Agreement,
Tecnol has a right to repurchase the Option, together with all shares of Tecnol
Common Stock subject thereto or purchased by Kimberly-Clark pursuant to the
exercise of the Option and with respect to which Kimberly-Clark then has
Beneficial Ownership, at the market price at the time the right is exercised,
subject to the terms and limitations of the Company Option Agreement.
For three years after a Purchase Event, Kimberly-Clark (or any holder of
more than 1,000,000 shares of Tecnol Common Stock issued pursuant to the Option)
has a one-time right to require Tecnol to file a registration statement with the
SEC covering the Tecnol Common Stock acquired upon exercise of the Option.
Kimberly-Clark required, as a condition to Kimberly-Clark's willingness to
enter into the Merger Agreement, that Tecnol enter into the Company Option
Agreement concurrently with the execution of the
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Merger Agreement, in an effort to increase the likelihood that the Merger will
be consummated in accordance with the terms set forth in the Merger Agreement.
Consequently, certain aspects of the Company Option Agreement may have the
effect of discouraging persons who right now, or prior to the Effective Time,
may be interested in acquiring all of or a significant interest in Tecnol or
proposing such an acquisition. Exercise of the Option by Kimberly-Clark in the
event it were to become exercisable would provide Kimberly-Clark with the right
to vote approximately 16.6% of the Tecnol Common Stock then outstanding, but
given the $22.00 exercise price, would have no economic consequences unless
another proposal involved consideration in excess of $22.00 per share.
COMPANY STOCKHOLDER AGREEMENTS
The description of the Company Stockholder Agreements contained in this
Proxy Statement/Prospectus does not purport to be complete and is qualified in
its entirety by reference to the Company Stockholder Agreements, the form of
which is attached hereto as Annex III to this Proxy Statement/Prospectus and is
incorporated herein by reference.
As a condition to Kimberly-Clark's willingness to enter into the Merger
Agreement, Kimberly-Clark required that each of Mr. Hubbard and Mr. Brunson
execute separate Company Stockholder Agreements pursuant to which they agreed,
among other things: (i) to vote (or cause to be voted) all shares of Tecnol
Common Stock they beneficially own and have a right to vote (except in their
respective capacities as trustees of the ESOP) to approve the Merger; (ii) to
vote against any other merger and certain other transactions; (iii) not to sell
or otherwise dispose of such shares, subject to a de minimis exception; and (iv)
not to enter into any other voting arrangement with respect to such shares. The
Company Stockholder Agreements will terminate upon the earliest to occur of: (i)
the close of business on August 31, 1998; (ii) the Effective Time; or (iii) the
termination of the Merger Agreement in accordance with its terms; provided, that
under certain circumstances the Significant Stockholders will comply with
clauses (ii), (iii) and (iv) of the first sentence of this paragraph for 180
days after the termination of the Company Stockholder Agreements.
Messrs. Hubbard and Brunson beneficially owned and had the right to vote
(except in their capacities as trustees of the ESOP), in the aggregate,
4,031,945 shares of Tecnol Common Stock on the Record Date. Such shares, which
represent approximately 20.1% of the shares of Tecnol Common Stock outstanding
on the Record Date, are subject to the Company Stockholder Agreements.
The Company Stockholder Agreements bind the actions of Messrs. Hubbard and
Brunson only in their capacity as Tecnol stockholders. Messrs. Hubbard and
Brunson have complete freedom pursuant to the Company Stockholder Agreements to
act in accordance with their fiduciary duties as directors of Tecnol.
Accordingly, while such stockholders/directors are contractually bound by the
Company Stockholder Agreements to vote as a Tecnol stockholder in favor of the
Merger and against other Takeover Proposals (should any be presented), their
fiduciary duties as Tecnol directors nevertheless require them to act in their
capacity as directors in the best interest of Tecnol both when they decided to
approve the Merger and going forward with respect to any decisions they may make
in connection with the Merger or otherwise.
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DESCRIPTION OF KIMBERLY-CLARK COMMON STOCK
The statements set forth under this heading with respect to the DGCL,
Kimberly-Clark's Restated Certificate of Incorporation (the "Kimberly-Clark
Charter"), Kimberly-Clark's By-laws (the "Kimberly-Clark By-laws") and its
Rights Agreement dated as of June 21, 1988, as amended and restated as of June
8, 1995 (as so amended and restated, the "Kimberly-Clark Rights Agreement") with
Boston EquiServe, as Rights Agent (copies of which have been filed as Exhibits
to the Registration Statement) are brief summaries thereof and do not purport to
be complete; such statements are subject to the detailed provisions of the DGCL,
the Kimberly-Clark Charter, the Kimberly-Clark By-laws and the Kimberly-Clark
Rights Agreement. See "AVAILABLE INFORMATION."
The authorized capital stock of Kimberly-Clark consists of: 1,200,000,000
shares of Kimberly-Clark Common Stock; and 20,000,000 shares of Preferred Stock,
without par value (the "Kimberly-Clark Preferred Stock"), of which 2,000,000
shares have been designated as "Kimberly-Clark Series A Junior Participating
Preferred Stock" (hereinafter the "Kimberly-Clark Series A Preferred Stock"). At
the close of business on November 6, 1997, there were 547,367,429 shares of
Kimberly-Clark Common Stock outstanding and no shares of Kimberly-Clark Series A
Preferred Stock outstanding.
The Kimberly-Clark Board is authorized to provide for the issuance from
time to time of Kimberly-Clark Preferred Stock in series and, as to each series,
to fix the designation, the dividend rate (and whether cumulative) and the
preferences, if any, which dividends on such series will have with respect to
any other class or series of capital stock of Kimberly-Clark, the voting rights,
if any, the voluntary and involuntary liquidation prices, the conversion or
exchange privileges, if any, applicable thereto and the redemption price or
prices and the other terms of redemption, if any, applicable thereto. Cumulative
dividends, dividend preferences and conversion, exchange and redemption
provisions, to the extent that some or all of these features may be present when
shares of Kimberly-Clark Preferred Stock are issued, could have an adverse
effect on the availability of earnings for distribution to the holders of
Kimberly-Clark Common Stock or for other corporate purposes.
DIVIDEND RIGHTS
The holders of Kimberly-Clark Common Stock are entitled to receive ratably,
from funds legally available for the payment thereof, dividends when and as
declared by resolution of the Kimberly-Clark Board, subject to any preferential
dividend rights of the holders of any outstanding series of Kimberly-Clark
Preferred Stock. See "SUMMARY -- Market Prices and Dividends Paid."
VOTING RIGHTS
The holders of Kimberly-Clark Common Stock are entitled to one vote for
each share held on each matter submitted to a vote of stockholders and do not
have cumulative voting rights. Accordingly, holders of a majority of the shares
of Kimberly-Clark Common Stock entitled to vote in any election of directors may
elect all of the directors then standing for election. See "-- Change of
Control" for information regarding Kimberly-Clark's classified Board of
Directors. All elections and matters submitted to a vote of stockholders are
decided by plurality vote, except as otherwise required by the DGCL or the
Kimberly-Clark Charter. The Kimberly-Clark Charter provides that the following
corporate actions require the approval, given at a stockholders' meeting or by
consent, of the holders of at least two-thirds of the shares of capital stock
outstanding and entitled to vote thereon: (i) the dissolution of Kimberly-Clark;
(ii) the sale, lease, exchange or conveyance of all or substantially all of the
property and assets of Kimberly-Clark; or (iii) the adoption of an agreement of
merger or consolidation, provided that no stockholder approval is required for
any merger or consolidation which, under the DGCL, does not need to be approved
by the stockholders of Kimberly-Clark. See "COMPARISON OF THE RIGHTS OF HOLDERS
OF KIMBERLY-CLARK COMMON STOCK AND TECNOL COMMON STOCK -- Approval of Mergers
and Asset Sales." Any action required or permitted to be taken by the
stockholders of Kimberly-Clark must be effected at a duly called annual or
special meeting of stockholders and may not be effected by any consent in
writing by such stockholders, except for stockholder approvals described in the
immediately preceding sentence. Meetings of stockholders of
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Kimberly-Clark may be called only by the affirmative vote of the directors
constituting a majority of the entire Kimberly-Clark Board or the Chairman of
the Board or Chief Executive Officer of Kimberly-Clark.
Notwithstanding that a lesser percentage may be specified by the DGCL, the
affirmative vote of the holders of shares representing at least 80% of the
voting power of all then outstanding shares of capital stock of Kimberly-Clark
entitled to vote generally in the election of directors ("Voting Stock"), voting
together as a single class, is required to amend or modify several portions of
the Kimberly-Clark Charter, including: (i) the Kimberly-Clark Board's authority
to issue Kimberly-Clark Preferred Stock; (ii) the provisions described in the
last two sentences of the preceding paragraph; (iii) the provisions described in
the second and third paragraphs under "-- Change of Control" with respect to the
Kimberly-Clark Board; (iv) the provisions described in the fourth paragraph
under "-- Change of Control" (Article X of the Kimberly-Clark Charter) limiting
the ability of an interested stockholder to participate in certain business
combinations with Kimberly-Clark; and (v) the limitations on amending or
altering the Kimberly-Clark Charter described in this sentence, unless such
amendment or modification is declared advisable by the affirmative vote of the
directors constituting at least 75% of the entire Kimberly-Clark Board and, in
the case of such Article X and this qualification, a majority of the Continuing
Directors (as defined in the Kimberly-Clark Charter).
CHANGE OF CONTROL
The DGCL, the Kimberly-Clark Charter, the Kimberly-Clark By-laws and the
Kimberly-Clark Rights Agreement contain provisions that could discourage or make
more difficult a change of control of Kimberly-Clark. Such provisions are
designed to protect the stockholders of Kimberly-Clark against coercive, unfair
or inadequate tender offers and other abusive takeover tactics and to encourage
any Person contemplating a business combination with Kimberly-Clark to negotiate
with the Kimberly-Clark Board for the fair and equitable treatment of all
stockholders of Kimberly-Clark.
Charter Provisions. The Kimberly-Clark Charter provides that, subject to
the rights of the holders of any outstanding series of Kimberly-Clark Preferred
Stock, nominations for directors can be made only by the Kimberly-Clark Board or
by any stockholder of record pursuant to notice (a "Stockholder Nomination
Notice") timely delivered to Kimberly-Clark. To be timely delivered, a
Stockholder Nomination Notice must be received by the Secretary of
Kimberly-Clark not less than 50 nor more than 75 days prior to the applicable
meeting, unless less than 60 days notice or prior public disclosure of the date
of such meeting has been given or made, in which case a Stockholder Nomination
Notice must be so received not later than the close of business on the 10th day
following the day on which such notice was mailed or such public disclosure was
made, whichever first occurs. Each Stockholder Nomination Notice must contain
specified information, including the name and address of the stockholder, a
representation that such stockholder will be entitled to vote at such meeting
and intends to appear in person or by proxy to nominate the person(s) specified
in such Stockholder Nomination Notice, the name, age, address and principal
occupation or employment of each such nominee, a description of all arrangements
or understandings between such stockholder and each such nominee and any other
person pursuant to which the nomination(s) are to be made by such stockholder
and such other information regarding each such nominee as would be required to
be included in a proxy statement filed under the Exchange Act; the consent of
each such nominee to serve if elected must also be submitted.
The Kimberly-Clark Charter specifies that the Kimberly-Clark Board shall be
divided into three classes (as nearly equal as possible) and shall consist of
not less than 11 nor more than 25 directors elected for three-year staggered
terms. The directors are given the authority to determine the exact number of
directors constituting the entire Kimberly-Clark Board and, subject to the
rights of the holders of any outstanding series of Kimberly-Clark Preferred
Stock, to fill vacancies and newly created directorships. Any directors so
elected will hold office until the next election of the class to which such
directors have been elected. The Kimberly-Clark Charter also provides that,
subject to the rights of the holders of any outstanding series of Kimberly-Clark
Preferred Stock: (i) any director, or the entire Board, may be removed from
office at any time, but only for cause and only by the affirmative vote of the
holders of shares representing at least 80% of the voting power of the then
outstanding Voting Stock, voting together as a single class; and (ii) any
director may be removed from office at any time by the affirmative vote of a
majority of the entire Kimberly-Clark Board, but only for cause.
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Article X of the Kimberly-Clark Charter applies to specified mergers,
consolidations, asset dispositions and other transactions involving a beneficial
owner of 5% or more of the voting power of the then outstanding Voting Stock.
Article X requires that any such transaction be approved, in addition to any
other vote required by law or the Kimberly-Clark Charter, and notwithstanding
that no vote may be required, or that a lesser percentage may be specified by
law or in any agreement with a securities exchange or otherwise, by the
affirmative vote of the holders of shares representing at least 80% of the
voting power of the then outstanding Voting Stock, voting together as a single
class. These special voting requirements do not apply if the transaction is
approved by a majority of the Continuing Directors (as the term is defined in
the Kimberly-Clark Charter) or the consideration offered to the stockholders of
Kimberly-Clark meets specified fair price standards (including related
procedural requirements as to the form of consideration and continued payment of
dividends), among other requirements.
The ability of the Kimberly-Clark Board to issue and set the terms of
Kimberly-Clark Preferred Stock could have the effect of making it more difficult
for a third person to acquire, or of discouraging a third person from attempting
to acquire, control of Kimberly-Clark.
By-law Provisions. The Kimberly-Clark By-laws provide that the only
business which may be conducted at a meeting of stockholders is: (i) such as has
been specified in the notice of such meeting given by or at the direction of the
Kimberly-Clark Board; (ii) otherwise properly brought before such meeting by or
at the direction of the Kimberly-Clark Board; or (iii) specified in a written
notice (a "Stockholder Meeting Notice") which has been timely delivered to
Kimberly-Clark by a stockholder of record. To be timely delivered, a Stockholder
Meeting Notice must be received by the Secretary of Kimberly-Clark not less than
75 nor more than 100 days prior to the first anniversary of the preceding year's
annual meeting of stockholders, unless the date of the forthcoming annual
meeting is advanced by more than 30 or delayed by more than 60 days from such
anniversary date, in which case a Stockholder Meeting Notice must be so received
not earlier than the close of business on the 100th day prior to such annual
meeting and not later than the close of business on the later of the 75th day
prior to such annual meeting or the 10th day following the day on which public
announcement of the date of such meeting is first made. Each Stockholder Meeting
Notice must contain specified information, including a brief description of the
business to be brought before the meeting and the reasons for conducting such
business, the name and address of the stockholder intending to propose such
business, the number of shares of Kimberly-Clark stock beneficially held, either
personally or in concert with others, by such stockholder, a representation that
such stockholder intends to appear in person or by proxy at such meeting to
present such business and any material interest of such stockholder in such
business. However, the only business that can be conducted at a special meeting
of stockholders is that which is brought before the meeting pursuant to
Kimberly-Clark's notice of meeting.
Stockholders Rights Plan. Pursuant to the Kimberly-Clark Rights Agreement,
each holder of an outstanding share of Kimberly-Clark Common Stock has received,
and each person receiving a share of Kimberly-Clark Common Stock pursuant to the
Merger will receive, one Kimberly-Clark Right entitling the holder thereof to
purchase from Kimberly-Clark, at a price of $112.50 (the "Kimberly-Clark
Purchase Price"), subject to adjustment, one two-hundredth of a share of
Kimberly-Clark Series A Preferred Stock.
Until the earlier to occur of: (i) 10 days after the first public
announcement that a person or group (other than a Kimberly-Clark related entity)
has become the beneficial owner of 20% or more of the outstanding shares of
Kimberly-Clark Common Stock; or (ii) 10 business days (unless extended by the
Kimberly-Clark Board in accordance with the Kimberly-Clark Rights Agreement)
after the commencement of, or the first public announcement of the intention to
make, a tender or exchange offer the consummation of which would result in any
person or group (other than a Kimberly-Clark related entity) becoming such a 20%
beneficial owner (the earlier of the dates specified in clause (i) and (ii)
being the "Kimberly-Clark Distribution Date"), the Kimberly-Clark Rights will be
evidenced by certificates representing Kimberly-Clark Common Stock, will be
transferable only in connection with the transfer of the Kimberly-Clark Common
Stock and will not be exercisable. After the Kimberly-Clark Distribution Date,
the Kimberly-Clark Rights become exercisable, and separate certificates
evidencing the Kimberly-Clark Rights will be mailed to the registered holders of
outstanding shares of Kimberly-Clark Common Stock. Such separate certificates
will thereafter constitute the sole evidence of the Kimberly-Clark Rights.
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In the event that any person or group (other than a Kimberly-Clark related
entity) becomes the beneficial owner of 20% or more of the outstanding shares of
Kimberly-Clark Common Stock, proper provision will be made so that each
registered holder of a Kimberly-Clark Right will thereafter have the right to
receive, upon the exercise thereof at a price equal to the then current
Kimberly-Clark Purchase Price multiplied by the number of one two-hundredths of
a share of Kimberly-Clark Series A Preferred Stock for which a Kimberly-Clark
Right is then exercisable, the number of shares of Kimberly-Clark Common Stock
having a market value of two times such price. After the occurrence of the event
described in the preceding sentence, all Kimberly-Clark Rights which are, or
under circumstances specified in the Kimberly-Clark Rights Agreement were,
beneficially owned by such person or group will be void. In addition, after the
first public announcement that any person or group has become such a 20%
beneficial owner, in the event that Kimberly-Clark is acquired in a merger or
other business combination or 50% or more of its consolidated assets or earning
power are sold, proper provision will be made so that each registered holder of
a Kimberly-Clark Right (except Kimberly-Clark Rights which have become void)
will thereafter have the right to receive, upon the exercise thereof at a price
equal to the then current Kimberly-Clark Purchase Price multiplied by the number
of one two-hundredths of a share of Kimberly-Clark Series A Preferred Stock for
which a Kimberly-Clark Right is then exercisable, the number of common shares of
the acquiring company which at the time of such transaction will have a market
value of two times such price.
Under certain circumstances, Kimberly-Clark may redeem the Kimberly-Clark
Rights, in whole, but not in part, at a price of $.005 per Kimberly-Clark Right
or exchange the Kimberly-Clark Rights (except Rights which have become void), in
whole or in part, at an exchange ratio of one share of Kimberly-Clark Common
Stock per Kimberly-Clark Right, in each case subject to adjustment. The
Kimberly-Clark Rights will expire on June 8, 2005, unless earlier redeemed or
exchanged or unless such expiration date is extended by the Kimberly-Clark
Board.
DGCL. Section 203 of the DGCL prohibits generally a public Delaware
corporation, including Kimberly-Clark, from engaging in a Business Combination
with an Interested Stockholder for a period of three years after the date of the
transaction in which an Interested Stockholder became such, unless: (i) the
board of directors of such corporation approved, prior to the date such
Interested Stockholder became such, either such Business Combination or such
transaction; (ii) upon consummation of such transaction, such Interested
Stockholder owns at least 85% of the voting shares of such corporation
(excluding specified shares); or (iii) such Business Combination is approved by
the board of directors of such corporation and authorized by the affirmative
vote (at an annual or special meeting and not by written consent) of at least
66 2/3% of the outstanding voting shares of such corporation (excluding shares
held by such Interested Stockholder). A "Business Combination" includes: (i)
mergers, consolidations and sales or other dispositions of 10% or more of the
assets of a corporation to or with an Interested Stockholder; (ii) certain
transactions resulting in the issuance or transfer to an Interested Stockholder
of any stock of such corporation or its subsidiaries; and (iii) other
transactions resulting in a disproportionate financial benefit to an Interested
Stockholder. An "Interested Stockholder" is a person who, together with its
affiliates and associates, owns (or within a three-year period did own) 15% or
more of a corporation's stock entitled to vote generally in the election of
directors.
LIQUIDATION RIGHTS
Upon the liquidation, dissolution or winding up of the affairs of
Kimberly-Clark, the holders of Kimberly-Clark Common Stock are entitled to share
ratably in all assets of Kimberly-Clark available for distribution to such
holders after the payment of all debts and other liabilities, subject to the
prior rights of the holders of any outstanding series of Kimberly-Clark
Preferred Stock.
MISCELLANEOUS
The holders of Kimberly-Clark Common Stock do not have preemptive,
subscription, redemption or conversion rights. The outstanding shares of
Kimberly-Clark Common Stock are, and the shares of Kimberly-Clark Common Stock
to be delivered pursuant to the Merger upon delivery will be, duly authorized,
validly issued, fully paid and nonassessable. The outstanding shares of
Kimberly-Clark Common Stock are, and the shares of Kimberly-Clark Common Stock
to be delivered pursuant to the Merger upon notice of issuance will be, listed
on the NYSE, the CSE and the PSE. Boston EquiServe is the transfer and dividend
disbursing agent and registrar for Kimberly-Clark Common Stock.
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COMPARISON OF THE RIGHTS OF HOLDERS OF
KIMBERLY-CLARK COMMON STOCK AND TECNOL COMMON STOCK
The statements set forth under this heading with respect to the DGCL,
Tecnol's Certificate of Incorporation (the "Tecnol Charter") and By-laws (the
"Tecnol By-laws"), the Kimberly-Clark Charter, Kimberly-Clark By-laws and the
Kimberly-Clark Rights Agreement (copies of which have been filed as Exhibits to
the Registration Statement) are brief summaries thereof and do not purport to be
complete; such statements are subject to the detailed provisions of the DGCL,
the Tecnol Charter, the Tecnol By-laws, the Kimberly-Clark Charter, the
Kimberly-Clark By-laws and the Kimberly-Clark Rights Agreement. See "AVAILABLE
INFORMATION."
GENERAL
The following summary compares certain rights of the holders of Tecnol
Common Stock to the rights of the holders of Kimberly-Clark Common Stock. The
rights of Tecnol stockholders are governed principally by the DGCL, the Tecnol
Charter and the Tecnol By-laws. Upon consummation of the Merger, such
stockholders will become holders of Kimberly-Clark Common Stock, and their
rights will be governed principally by the DGCL, the Kimberly-Clark Charter and
the Kimberly-Clark By-laws. In most respects, the rights of Kimberly-Clark
stockholders are similar to those of Tecnol stockholders. The following
summarizes the material differences between the rights of holders of Tecnol
Common Stock and Kimberly-Clark Common Stock.
DIVIDENDS
Although the rights of Tecnol stockholders and Kimberly-Clark stockholders
with respect to the receipt of dividends are essentially the same, Tecnol has
never paid cash dividends and currently has no plans to pay cash dividends in
the near future. See "DESCRIPTION OF KIMBERLY-CLARK COMMON STOCK -- Dividend
Rights" and "SUMMARY -- Market Prices and Dividends Paid."
Under the DGCL, a corporation may pay dividends out of surplus (defined as
the excess, if any, of net assets over capital) or, if no such surplus exists,
out of its net profits for the fiscal year in which such dividends are declared
and/or for its preceding fiscal year, provided that dividends may not be paid
out of net profits if the capital of such corporation is less than the aggregate
amount of capital represented by the outstanding stock of all classes having a
preference upon the distribution of assets.
Tecnol's ability to declare and pay dividends is restricted by covenants in
loan agreements governing its bank credit facility and its obligations with
respect to industrial revenue bonds that were issued to finance the acquisition
and construction of Tecnol's headquarters facility. In general, these agreements
prohibit Tecnol from declaring and paying cash dividends in any 12-month period
in excess of Tecnol's net cash flow (as that term is defined in the loan
agreements) without the prior consent of certain of Tecnol's creditors. While
Tecnol has never paid any cash dividends, as of August 30, 1997, approximately
$10.4 million was available for the payment of dividends under these
restrictions. There are no similar restrictions limiting Kimberly-Clark's
ability to pay dividends.
VOTING RIGHTS
Each share of Tecnol Common Stock and each share of Kimberly-Clark Common
Stock is entitled to one vote on each matter submitted to a vote of
stockholders. Neither the holders of Tecnol Common Stock nor the holders of
Kimberly-Clark Common Stock have cumulative voting rights in the election of
directors.
The Tecnol directors are elected by the affirmative vote of the plurality
of the shares entitled to vote in the election of directors and represented in
person or by proxy at a meeting of stockholders at which a quorum is present.
The Kimberly-Clark directors are elected by the affirmative vote of the majority
of the shares entitled to vote in the election of directors and represented in
person or by proxy at a meeting of stockholders at which a quorum is present.
For additional information regarding the comparable voting rights of the holders
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of Kimberly-Clark Common Stock, see "DESCRIPTION OF KIMBERLY-CLARK COMMON
STOCK -- Voting Rights."
DIRECTORS
Number and Election of Directors. Under the DGCL, the charter document or
by-laws of a corporation may specify the number of directors. The Tecnol Charter
and By-laws provide that the Tecnol Board shall consist of not less than three
nor greater than nine directors elected for staggered three year terms. The
Tecnol Charter established the initial number of directors on the Tecnol Board
as six, which is the current size of the Tecnol Board; the Tecnol Charter and
By-laws provide that, subject to the rights of the holders of any outstanding
series of Tecnol Preferred Stock, the number of directors may be changed only by
resolution of the Tecnol Board. Subject to the rights of the holders of any
outstanding series of Tecnol Preferred Stock, the Tecnol Board may fill
vacancies and newly created directorships. The Kimberly-Clark Charter specifies
that the Kimberly-Clark Board shall consist of not less than 11 nor more than 25
directors elected for staggered three year terms, with the exact number
determined by the Kimberly-Clark Board. The current size of the Kimberly-Clark
Board is 12. Subject to the rights of the holders of any outstanding series of
Kimberly-Clark Preferred Stock or any other class of capital stock of
Kimberly-Clark (other than the Kimberly-Clark Common Stock), the Kimberly-Clark
Board may fill vacancies and newly created directorships.
Classification. Directors of both Tecnol and Kimberly-Clark serve staggered
terms of office. Both the Tecnol Charter and By-laws and the Kimberly-Clark
Charter provide that their respective boards of directors shall be divided, with
respect to the terms of office for the individual directors, into three classes,
as nearly equal as possible, with each class to serve a staggered three year
term.
Removal. In the absence of express director removal provisions, the DGCL
provides that directors may be removed, with or without cause, by a majority
vote of the holders of the voting stock of a corporation entitled to vote at the
meeting at which the vote is taken. The Tecnol By-laws provide for the removal
(only for cause) of the entire Tecnol Board or any individual director by the
affirmative vote of the holders of a majority of the shares then entitled to
vote in the elections of directors. The Kimberly-Clark Charter expressly
provides for the removal (only for cause) of the entire Kimberly-Clark Board or
any individual director by a super-majority vote representing at least 80% of
the voting power of the then outstanding Voting Stock voting as a single class.
Under the Kimberly-Clark Charter, any director may be removed from office at any
time for cause by a majority vote of the entire Kimberly-Clark Board. The Tecnol
Board does not have such a removal power.
The composition of the Tecnol Board is restricted by one of Tecnol's loan
agreements. Under the Third Amended and Restated Loan Agreement by and between
Tecnol and NationsBank of Texas, N.A., dated November 15, 1993, as modified as
of July 1, 1994, March 15, 1995, May 8, 1995, December 5, 1995, March 13, 1996
and March 12, 1997, a negative covenant prohibits the Tecnol Board from being
comprised of less than a majority of (i) members of the incumbent Tecnol Board
as of November 1, 1993 or (ii) directors who are nominated by a majority of the
Tecnol officers and directors. There are no similar restrictions on the
composition of the Kimberly-Clark Board.
Nominations. The Tecnol By-laws provide that nominations for director can
be made only by or at the direction of the Tecnol Board or by a stockholder
entitled to vote for the election of directors at a stockholders meeting. With
respect to stockholder nominations, written notice of such stockholder's intent
to make such nominations at such meeting must be received by the Secretary of
Tecnol in the manner and within the time period specified in the Tecnol By-laws.
For information regarding the comparable nominations of directors by the holders
of Kimberly-Clark Common Stock, see "DESCRIPTION OF KIMBERLY-CLARK COMMON
STOCK -- Change of Control -- Charter Provisions."
Fiduciary Duties of Directors. Under the DGCL, directors have a fiduciary
relationship to their corporation and its stockholders and, as such, are
required to discharge their duties in good faith and in a manner reasonably
believed to be in the best interests of such corporation and its stockholders.
They are required to use such care, including reasonable inquiry, skill and
diligence, as a person of ordinary prudence would use under similar
circumstances. Absent a breach of fiduciary duty, a lack of good faith or
self-dealing,
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any act of the board of directors, a committee thereof or an individual director
is presumed to be in the best interests of such corporation. Delaware courts
have held that the duty of care requires directors to exercise an informed
business judgment, which requires that they have informed themselves of all
material information reasonably available. Delaware courts have imposed a
heightened standard of conduct on directors who are responding to a proposed
change of control or are engaging in a sale or auction of their corporation.
Liability of Directors. The DGCL permits a corporation to limit the
personal liability of its directors, with specified exceptions. The DGCL permits
a corporation to include in its certificate of incorporation a provision
limiting or eliminating the liability of its directors to such corporation or
its stockholders for monetary damages arising from a breach of fiduciary duty,
except for: (i) a breach of the duty of loyalty to the corporation or its
stockholders; (ii) acts or omissions not in good faith or constituting
intentional misconduct or a knowing violation of law; (iii) a declaration of a
dividend or the authorization of the repurchase or redemption of stock in
violation of the DGCL; or (iv) any transaction from which the director derived
an improper personal benefit. Both the Tecnol Charter and the Kimberly-Clark
Charter eliminate director liability to the maximum extent permitted by the
DGCL.
CALL OF SPECIAL MEETINGS
A special meeting of the stockholders of Tecnol may be called by the Tecnol
Board, the Chairman and Chief Executive Officer of Tecnol, the President of
Tecnol or by holders of not less than a majority of all of the shares of Tecnol
stock entitled to vote at the meeting.
Meetings of stockholders of Kimberly-Clark may be called only by the
affirmative vote of the directors constituting a majority of the entire
Kimberly-Clark Board, the Chairman of the Board of Kimberly-Clark or the Chief
Executive Officer of Kimberly-Clark.
ACTION OF STOCKHOLDERS WITHOUT A MEETING
The DGCL permits the stockholders of a corporation to consent in writing to
any action without a meeting, unless the certificate of incorporation of such
corporation provides otherwise, provided such consent is signed by stockholders
having at least the minimum number of votes required to authorize such action at
a meeting. The Tecnol Charter and By-laws contain a prohibition that prevents
Tecnol's stockholders from taking any action without a meeting if the Tecnol
Common Stock is registered pursuant to a registration statement. This
prohibition was triggered upon the September 26, 1991 registration of Tecnol's
Common Stock with the SEC. The Kimberly-Clark Charter permits stockholders to
act without a meeting only with respect to specified actions. See "DESCRIPTION
OF KIMBERLY-CLARK COMMON STOCK -- Voting Rights."
STOCKHOLDER PROPOSALS
As described above, both the Tecnol By-laws and the Kimberly-Clark Charter
restrict the manner in which nominations for director may be made by
stockholders. The Tecnol By-laws establish certain notice requirements that must
be satisfied by a stockholder in order to bring other business before an annual
meeting of Tecnol stockholders. The Tecnol By-laws restrict business that may be
transacted at a special meeting of Tecnol stockholders to the subjects stated in
the notice of the meeting. The Kimberly-Clark By-laws establish certain
requirements that must be satisfied by a stockholder in order to bring other
business before a meeting of stockholders. See "Charter Provisions" and "By-Law
Provisions" under "DESCRIPTION OF KIMBERLY-CLARK COMMON STOCK -- Change of
Control."
AMENDMENT TO CHARTER DOCUMENT
Under the DGCL, the charter of a corporation may be amended by resolution
of the Board of Directors and the affirmative vote of the holders of a majority
of the outstanding shares of Voting Stock entitled to vote thereon. With respect
to any amendment to the charter of a corporation that would adversely affect a
particular class or series of stock, the DGCL requires the separate approval by
the holders of the affected class or series of stock, voting together as a
single class. Any amendment to the Tecnol Charter affecting the
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structure and terms of the Tecnol Board and any amendment affecting the Tecnol
Charter's Business Combination provisions, requires a super-majority approval by
the Tecnol stockholders. As described above, certain amendments to the
Kimberly-Clark Charter require a super-majority vote. See "DESCRIPTION OF
KIMBERLY-CLARK COMMON STOCK -- Voting Rights."
AMENDMENT TO BY-LAWS
The Tecnol By-laws may be amended or repealed by the affirmative vote of a
majority of the Tecnol Board present at a meeting at which a quorum is present.
While the Tecnol By-laws are silent regarding the Tecnol stockholders' power to
amend or repeal the Tecnol By-laws, the Tecnol stockholders have such a power
under Section 109 of the DGCL. The Kimberly-Clark By-laws permit the amendment
or repeal thereof by either the Kimberly-Clark stockholders or the
Kimberly-Clark Board.
APPROVAL OF MERGERS AND ASSET SALES
Under the DGCL, unless required by its certificate of incorporation
(neither the Tecnol Charter nor the Kimberly-Clark Charter contain such a
requirement), no vote of the stockholders of a constituent corporation surviving
a merger is necessary to authorize such merger if: (i) the agreement of merger
does not amend the certificate of incorporation of such constituent corporation;
(ii) each share of stock of such constituent corporation outstanding prior to
such merger is to be an identical outstanding or treasury share of the surviving
corporation after such merger; (iii) either no shares of common stock of the
surviving corporation and no shares, securities or obligations convertible into
such common stock are to be issued under such agreement of merger, or the number
of shares of common stock issued or so issuable does not exceed 20% of the
number thereof outstanding immediately prior to such merger; and (iv) certain
other conditions are satisfied. In addition, the DGCL provides that a parent
corporation that is the record holder of at least 90% of the outstanding shares
of each class of stock of a subsidiary may merge such subsidiary into such
parent corporation without the approval of such subsidiary's stockholders or
board of directors.
The Tecnol Charter contains provisions relating to approvals of certain
Business Combinations. See "-- Anti-Takeover Provisions."
The Kimberly-Clark Charter contains additional provisions relating to
approval of mergers, consolidations and asset dispositions. See "DESCRIPTION OF
KIMBERLY-CLARK COMMON STOCK -- Voting Rights" and "-- Change of Control."
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the DGCL permits a corporation to indemnify any person who
was or is a party or is threatened to be made a party to: (i) any action, suit
or proceeding, whether civil, criminal, administrative or investigative (other
than an action by or in the right of the corporation) against expenses
(including attorneys' fees), judgments, fines and reasonable settlement amounts
if such person acted in good faith and reasonably believed that his or her
actions were in or not opposed to the best interests of such corporation and,
with respect to any criminal proceeding, had no reasonable cause to believe that
his or her conduct was unlawful; or (ii) any derivative action or suit on behalf
of such corporation against expenses (including attorneys' fees) actually and
reasonably incurred in connection with the defense or settlement of such action
or suit, if such person acted in good faith and reasonably believed that his or
her actions were in or not opposed to the best interests of such corporation.
With respect to derivative suits and actions, in the event that a person is
adjudged to be liable to the corporation, the DGCL prohibits indemnification
unless, and then only to the extent that, either the Delaware Court of Chancery
or the court in which such derivative action or suit was brought determines that
such person is entitled to indemnification for those expenses which that court
deems proper. To the extent that a representative of a corporation has been
successful on the merits or otherwise in the defense of a third party or
derivative action, indemnification for actual and reasonable expenses incurred
is mandatory. The Tecnol Charter provides for the indemnification of directors
and officers of Tecnol to the maximum extent permitted by the DGCL. The Tecnol
Charter authorizes the Tecnol Board, from time to time, to indemnify employees
and agents of Tecnol to the maximum extent permitted by the DGCL. The
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Tecnol Charter also provides for the mandatory advancement of certain expenses
upon the delivery of an undertaking to reimburse all amounts so advanced to
which a person is determined by a court not to be entitled, if required by the
DGCL.
The Kimberly-Clark By-laws provide for indemnification of directors and
officers of Kimberly-Clark to the maximum extent permitted under the DGCL. The
Kimberly-Clark By-laws further provide for the permissive advancement of certain
expenses in accordance with the DGCL, subject to certain limitations, including
the delivery of an undertaking to reimburse all amounts so advanced to which a
person is determined by a court not to be entitled.
ANTI-TAKEOVER PROVISIONS
Section 203 of the DGCL prohibits generally a public Delaware corporation
from engaging in a Business Combination with an Interested Stockholder for a
period of three years after the date of the transaction in which an Interested
Stockholder became such, unless: (i) the board of directors of such corporation
approved, prior to the date such Interested Stockholder became such, either such
Business Combination or such transaction; (ii) upon consummation of such
transaction, such Interested Stockholder owns at least 85% of the voting shares
of such corporation (excluding specified shares); or (iii) such Business
Combination is approved by the board of directors of such corporation and
authorized by the affirmative vote (at an annual or special meeting and not by
written consent) of at least 66 2/3% of the outstanding voting shares of such
corporation (excluding shares held by such Interested Stockholder). A "Business
Combination" includes: (i) mergers, consolidations and sales or other
dispositions of 10% or more of the assets of a corporation to or with an
Interested Stockholder; (ii) certain transactions resulting in the issuance or
transfer to an Interested Stockholder of any stock of such corporation or its
subsidiaries; and (iii) other transactions resulting in a disproportionate
financial benefit to an Interested Stockholder. An "Interested Stockholder" is a
person who, together with its affiliates and associates, owns (or within a
three-year period did own) 15% or more of a corporation's stock entitled to vote
generally in the election of directors.
In addition to the DGCL, the Tecnol Charter requires the affirmative vote
of the holders of at least 80% of the Tecnol Common Stock entitled to vote in
the elections of directors ("Tecnol Voting Stock"), voting together as a single
class, to approve, among other things, certain Tecnol Business Combinations (as
defined below), unless (a) with respect to a Tecnol Business Combination that
does not involve any cash or other consideration being received by any Tecnol
stockholder, a certain number of members of the Tecnol Board remain as directors
and a majority of those remaining Tecnol Board members approve the transaction,
or (b) with respect to any other Tecnol Business Combination, among other
things: (i) the consideration received by each holder of Tecnol Common Stock is
in cash or in the same form as the Tecnol Interested Stockholder has previously
paid for Tecnol Voting Stock; (ii) the consideration received by each holder of
Tecnol Common Stock is at least equal to the greater of (A) the highest price
per share paid by the Tecnol Interested Stockholder for any shares of Tecnol
Common Stock acquired by the Tecnol Interested Stockholder within the two-year
period immediately prior to the date of the first public announcement of the
proposal of the Tecnol Business Combination (the "Announcement Date") or in the
transaction in which the Tecnol Interested Stockholder became a Tecnol
Interested Stockholder, whichever is higher, plus interest thereon and (B) the
fair market value per share of Tecnol Common Stock; (iii) the consideration
received by each holder of shares of Tecnol Voting Stock, other than Tecnol
Common Stock, is at least equal to the greater of (A) the highest price per
share paid by the Tecnol Interested Stockholder for any shares of such Tecnol
Voting Stock acquired by the Tecnol Interested Stockholder within the two-year
period immediately prior to the Announcement Date or in the transaction in which
the Tecnol Interested Stockholder became a Tecnol Interested Stockholder,
whichever is higher, plus interest thereon, (B) the fair market value per share
of Tecnol Voting Stock, and (C) the highest preferential amount per share, if
any, to which holders of shares of Tecnol Voting Stock would be entitled to
receive in the event of any voluntary or involuntary liquidation, dissolution or
winding up of Tecnol; and (iv) a proxy or information statement describing the
proposed Tecnol Business Combination and complying with the requirements of the
Exchange Act is sent to the Tecnol stockholders, regardless of whether such a
proxy or information statement is required under the Exchange Act. A "Tecnol
Business Combination" includes: (i) any merger or consolidation of Tecnol or any
of its
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subsidiaries with any Tecnol Interested Stockholder or any other corporation
(whether or not itself a Tecnol Interested Stockholder) which is, or after such
merger or consolidation would be an Affiliate (as defined in the Tecnol Charter)
of a Tecnol Interested Stockholder; (ii) any sale, lease, exchange, mortgage,
pledge, transfer or other disposition of any assets of Tecnol or any of its
subsidiaries with a fair market value of $10 million or more to any Tecnol
Interested Stockholder or any Affiliate of a Tecnol Interested Stockholder;
(iii) the issuance or transfer by Tecnol or any of its subsidiaries of any
securities of Tecnol or any of its subsidiaries to any Tecnol Interested
Stockholder or any Affiliate of any Tecnol Interested Stockholder in exchange
for cash, securities or other property (or a combination thereof) having an
aggregate fair market value of $10 million or more; (iv) the adoption of any
plan or proposal for the liquidation or dissolution of Tecnol proposed by or on
behalf of any Tecnol Interested Stockholder or any Affiliate of any Tecnol
Interested Stockholder; or (v) any reclassification of securities or
recapitalization of Tecnol or any merger or consolidation of Tecnol with any of
its subsidiaries. A "Tecnol Interested Stockholder" (as defined in the Tecnol
Charter) includes any Tecnol stockholder who: (i) is the beneficial owner,
directly or indirectly, of 15% or more of the Tecnol Voting Stock; or (ii) is an
Affiliate of Tecnol and at any time within the two-year period immediately prior
to the date in question was the beneficial owner, directly or indirectly, of 15%
or more of the Tecnol Voting Stock; or (iii) is an assignee of or has otherwise
succeeded to any shares of Tecnol Voting Stock which were at any time within the
two-year period immediately prior to the date in question beneficially owned by
any Tecnol Interested Stockholder, if such assignment or succession shall have
occurred in the course of a transaction (or series of transactions) not
involving a public offering within the meaning of the Securities Act.
Additionally, the Tecnol Charter provides that in the event of a Business
Combination in which Tecnol survives, consideration other than cash to be
received shall include shares of Tecnol Common Stock (as well as any shares of
any other class (or series) of outstanding Tecnol Voting Stock (if any))
retained by Tecnol stockholders. Under the terms of the Merger, no such shares
of Tecnol stock (Tecnol Common Stock or otherwise) are to be retained by Tecnol
stockholders.
Neither the Kimberly-Clark Charter nor Kimberly-Clark By-Laws contain any
provisions which modify Section 203 of the DGCL. For information on the
provisions of the DGCL with respect to certain Business Combinations, see "DGCL"
under "DESCRIPTION OF KIMBERLY-CLARK COMMON STOCK -- Change of Control."
KIMBERLY-CLARK RIGHTS
Kimberly-Clark has issued the Kimberly-Clark Rights and is party to the
Kimberly-Clark Rights Agreement. Tecnol is not party to any similar plan and has
neither authorized nor issued similar securities. For a description of the
Kimberly-Clark Rights, see "Stockholders Rights Plan" under "DESCRIPTION OF
KIMBERLY-CLARK COMMON STOCK -- Change of Control."
LIQUIDATION
The Tecnol Charter provides that the holders of Tecnol Common Stock are
entitled to participate equally and on the same basis as to any distributions in
the event of any dissolution, liquidation or winding up of Tecnol, whether
voluntary or involuntary, except as otherwise may be provided in any designation
of any series of Tecnol Preferred Stock. Upon the liquidation, dissolution or
winding up of the affairs of Kimberly-Clark, the holders Kimberly-Clark Common
Stock are entitled to share ratably in all assets of Kimberly-Clark available
for distribution to such holders after the payment of all debts and other
liabilities, subject to the prior rights of the holders of any outstanding
series of Kimberly-Clark Preferred Stock. See "DESCRIPTION OF KIMBERLY-CLARK
COMMON STOCK -- Liquidation Rights."
The Tecnol Charter deems the adoption of any plan or proposal for the
liquidation or dissolution of Tecnol proposed by or on behalf of any Tecnol
Interested Stockholder or any Affiliate of a Tecnol Interested Stockholder as a
Tecnol Business Combination. As discussed above, the Tecnol Charter requires the
affirmative vote of the holders of at least 80% of the voting power of the then
outstanding Voting Stock, voting together as a single class, to approve a Tecnol
Business Combination, subject to certain specified exceptions.
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MISCELLANEOUS
Neither shares of Tecnol Common Stock nor Kimberly-Clark Common Stock have
preemptive, subscription, redemption, or conversion rights.
BUSINESS OF KIMBERLY-CLARK
Kimberly-Clark is engaged principally in the manufacturing and marketing
throughout the world of a wide range of products for personal, business and
industrial uses. Most of these products are made from natural and synthetic
fibers using advanced technologies in absorbency, fibers and nonwovens.
Kimberly-Clark's businesses are separated into three segments: Personal Care
Products; Tissue-Based Products; and Newsprint, Paper and Other. Consolidated
net sales of its products and services totaled approximately $13 billion in
1996.
Personal Care Products includes disposable diapers, training and youth
pants; feminine care and adult incontinence care products; wet wipes; health
care products; and related products. Products in this business segment are for
household use and are sold under a variety of well-known brand names, including
Huggies, Pull-Ups, GoodNites, Kotex, New Freedom, Lightdays, Depend and Poise.
Tissue-Based Products include facial and bathroom tissue, paper towels, paper
napkins and wipers for household and away-from-home use; pulp; and related
products. Products in this business segment are sold under the Kleenex, Scott,
Kleenex Cottonelle, Kleenex Viva, Kimwipes, Wypall and other brand names.
Products for household use are sold directly and through wholesalers to
supermarkets, mass merchandisers, drugstores, warehouse clubs, home health care,
variety and department stores and other retail outlets. Health care products are
sold to distributors, converters and end-users. Products for away-from-home use
are sold through distributors and directly to manufacturing, lodging, office
building, food service and health care establishments and other high volume
public facilities. Newsprint, Paper and Other includes newsprint, printing
papers, premium business and correspondence papers, specialty papers, technical
papers, and related products; and other products and services. Newsprint and
groundwood printing papers are sold directly to newspaper publishers and
commercial printers. Other papers and specialty products in this business
segment are sold directly to users, converters, manufacturers, publishers and
printers, and through paper merchants, brokers, sales agents and other resale
agencies.
On March 27, 1997, Kimberly-Clark sold its Coosa Pines, Alabama pulp and
newsprint operations, and related woodlands to Alliance Forest Products Inc., a
publicly held Canadian corporation, for approximately $600 million in cash.
On February 25, 1997, Kimberly-Clark announced its intention to sell its
pulp operations and related woodlands in Terrace Bay, Ontario; New Glasgow, Nova
Scotia; and Miranda, Spain by mid-1998 as part of its plan to reduce its
exposure to the cyclical, capital-intensive pulp business. Notwithstanding the
planned divestitures, the Corporation intends to retain sufficient pulp and
recycled fiber capacity in North America to support its away-from-home products
and its consumer tissue products in the value category, all of which compete
with products from fiber-integrated manufacturers.
On June 6, 1997, Kimberly-Clark sold its 50.1 percent interest in Scott
Paper Limited, a publicly-traded Canadian company ("SPL"), to Kruger, Inc.
("Kruger") as part of a transaction in which Kruger acquired all of SPL's
outstanding common shares.
On November 3, 1997, Kimberly-Clark announced that it has agreed to sell
its pulp operations and related woodlands in Terrace Bay, Ontario, and New
Glasgow, Nova Scotia, to Harmac Pacific,Inc., a publicly held Canadian
corporation, for approximately $540 million in cash. This transaction, which is
subject to regulatory approvals and completion of financing by Harmac Pacific,
Inc., is expected to close in early January, 1998.
Kimberly-Clark was incorporated in Delaware in 1928 as the successor to a
business established in 1872. Its principal executive offices are located at 351
Phelps Drive, Irving, Texas 75038 and its telephone number is (972) 281-1200.
For further information concerning Kimberly-Clark, see
"SUMMARY -- Kimberly-Clark
52
<PAGE> 62
Corporation Selected Consolidated Financial Data," "AVAILABLE INFORMATION" and
"INCORPORATION OF DOCUMENTS BY REFERENCE."
BUSINESS OF TECNOL
Tecnol is a leading provider of disposable face masks, cold therapy
products and patient safety restraints to the U.S. hospital market. Tecnol
designs, manufactures and markets more than 300 different products, which are
sold in over 60 countries, primarily under Tecnol's brand names. Tecnol reported
net sales of $144.4 million for the year ended November 30, 1996.
Tecnol's products are classified into five groups: face masks; patient care
products, such as cold therapy products and patient safety restraints; headwear
and shoe covers; wound care; and orthopedic products. In addition to serving the
U.S. hospital market, Tecnol serves the alternate health care, dental,
industrial and consumer markets. Tecnol's products are sold to more than that
5,000 hospitals and alternate care sites in the U.S. and more than 3,000
hospitals outside the U.S. and are marketed through more than 1,350 distributors
supported by more than 150 Tecnol sales and marketing professionals.
Tecnol Medical Products, Inc., organized in 1991 as the successor to a
Texas corporation formed in 1976, is a holding company that transacts business
through its subsidiaries under the names "Tecnol," "Anago" and other trade
names. Tecnol's principal executive offices are located at 7201 Industrial Park
Blvd., Fort Worth, Texas 76180, and its telephone number is (817) 581-6424. For
further information concerning Tecnol, see "SUMMARY -- Tecnol Medical Products,
Inc. Selected Consolidated Financial Data," "AVAILABLE INFORMATION" and
"INCORPORATION OF DOCUMENTS BY REFERENCE."
EXPERTS
The consolidated financial statements and the related consolidated
financial statement schedule as of December 31, 1996 and 1995 and for each of
the three years in the period ended December 31, 1996 incorporated by reference
in this Proxy Statement/Prospectus have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their reports, which are incorporated by
reference herein, and have been so incorporated in reliance upon the reports of
such firm given upon their authority as experts in accounting and auditing.
The consolidated financial statements and consolidated financial statement
schedule for the year ended November 30, 1996 appearing in Tecnol's Annual
Report on Form 10-K for the fiscal year ended November 30, 1996 (incorporated
herein by reference) have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their reports with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in giving
said reports.
Representatives of Arthur Andersen LLP are expected to be present at the
Tecnol Special Meeting, will have the opportunity to make a statement if they
desire to do so and will be available to respond to appropriate questions.
LEGAL OPINIONS
The validity of the shares of Kimberly-Clark Common Stock being offered
hereby is being passed for Kimberly-Clark by O. George Everbach, Senior Vice
President-Law and Government Affairs of Kimberly-Clark. Mr. Everbach owned
61,648 shares of Kimberly-Clark Common Stock as of November 6, 1997 and held
options to acquire 210,718 shares of such common stock (of which 90,175 options
are currently exercisable or will become exercisable in 60 days from such date,
and 15,687 shares of such common stock were attributable to his account under
the Kimberly-Clark Corporation Salaried Employees Incentive Investment Plan).
Sidley & Austin, counsel to Kimberly-Clark, and Carrington, Coleman, Sloman
& Blumenthal, L.L.P., counsel to Tecnol, have delivered opinions concerning
certain federal income tax consequences of the Merger. William O. Fifield, a
partner in Sidley & Austin, is a director of Kimberly-Clark. Mr. Fifield
beneficially owned 2,600 shares of Kimberly-Clark Common Stock as of November 6,
1997.
53
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ANNEX I
AGREEMENT AND PLAN OF MERGER
AMONG
TECNOL MEDICAL PRODUCTS, INC.,
KIMBERLY-CLARK CORPORATION
AND
VANGUARD ACQUISITION CORP.
DATED AS OF SEPTEMBER 4, 1997
<PAGE> 64
TABLE OF CONTENTS
<TABLE>
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<C> <S> <C> <C>
ARTICLE I
THE MERGER; CLOSING; EFFECTIVE TIME
1.1. The Merger....................................................... 2
1.2. Closing.......................................................... 2
1.3. Effective Time................................................... 2
1.4. Further Assurances............................................... 2
ARTICLE II
CERTIFICATE OF INCORPORATION AND BY-LAWS
OF THE SURVIVING CORPORATION
2.1. The Certificate of Incorporation................................. 2
2.2. The By-Laws...................................................... 3
ARTICLE III
OFFICERS AND DIRECTORS
OF THE SURVIVING CORPORATION
3.1. Directors........................................................ 3
3.2. Officers......................................................... 3
ARTICLE IV
EFFECT OF THE MERGER ON CAPITAL STOCK;
EXCHANGE OF CERTIFICATES
4.1. Effect on Capital Stock.......................................... 3
(a) Merger Consideration........................................ 3
(b) Cancellation of Shares...................................... 3
(c) Merger Sub.................................................. 3
4.2. Exchange of Certificates for Shares.............................. 4
(a) Exchange Agent.............................................. 4
(b) Exchange Procedures......................................... 4
(c) Distributions with Respect to Unexchanged Shares; Voting.... 4
(d) Transfers................................................... 5
(e) Fractional Shares........................................... 5
(f) Termination of Exchange Fund................................ 5
(g) Lost, Stolen or Destroyed Certificates...................... 5
4.3. Dissenters' Rights............................................... 6
4.4. Adjustments of Conversion Number................................. 6
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1. Representations and Warranties of the Company.................... 6
(a) Organization, Good Standing and Qualification............... 6
(b) Capital Structure........................................... 6
(c) Corporate Authority; Approval and Fairness.................. 7
(d) Governmental Filings; No Violations......................... 7
(e) Company Reports; Financial Statements....................... 8
(f) Absence of Certain Changes.................................. 8
(g) Litigation and Liabilities.................................. 9
(h) Employee Matters............................................ 9
</TABLE>
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<TABLE>
<CAPTION>
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<C> <S> <C> <C>
(i) Compliance with Laws; Permits............................... 10
(j) Takeover Statutes........................................... 11
(k) Environmental Matters....................................... 11
(l) Tax Matters................................................. 11
(m) Taxes....................................................... 11
(n) Intellectual Property....................................... 12
(o) Brokers and Finders......................................... 13
5.2. Representations and Warranties of Parent and Merger Sub.......... 13
(a) Capitalization of Merger Sub................................ 13
(b) Organization, Good Standing and Qualification............... 13
(c) Capital Structure........................................... 14
(d) Corporate Authority......................................... 14
(e) Governmental Filings; No Violations......................... 15
(f) Parent Reports; Financial Statements........................ 15
(g) Absence of Certain Changes.................................. 16
(h) Litigation and Liabilities.................................. 16
(i) Compliance with Laws; Permits............................... 16
(j) Environmental Matters....................................... 16
(k) Tax Matters................................................. 16
(l) Ownership of Shares......................................... 17
(m) Brokers and Finders......................................... 17
ARTICLE VI
COVENANTS
6.1. Interim Operations............................................... 17
6.2. Acquisition Proposals............................................ 18
6.3. Information Supplied............................................. 19
6.4. Stockholders Meeting............................................. 19
6.5. Filings; Other Actions; Notification............................. 19
6.6. Taxation......................................................... 20
6.7. Access........................................................... 20
6.8. Affiliates....................................................... 21
6.9. Stock Exchange Listing and De-listing............................ 21
6.10. Publicity........................................................ 21
6.11. Options and Benefits............................................. 21
(a) Stock Options............................................... 21
(b) Employee Benefits........................................... 21
6.12. Fees and Expenses................................................ 22
6.13. Indemnification; Directors' and Officers' Insurance.............. 22
6.14. Takeover Statute................................................. 23
6.15. Parent Vote...................................................... 24
6.16. Notification of Certain Matters.................................. 24
6.17. Real Estate Transfer and Gains Tax............................... 24
ARTICLE VII
CONDITIONS
7.1. Conditions to Each Party's Obligation to Effect the Merger....... 24
(a) Stockholder Approval........................................ 24
(b) NYSE Listing................................................ 24
(c) Regulatory Consents......................................... 24
</TABLE>
ii
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<TABLE>
<CAPTION>
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<C> <S> <C> <C>
(d) Litigation.................................................. 25
(e) S-4......................................................... 25
(f) Blue Sky Approvals.......................................... 25
7.2. Conditions to Obligations of Parent and Merger Sub............... 25
(a) Representations and Warranties.............................. 25
(b) Performance of Obligations of the Company................... 25
(c) Consents Under Agreements................................... 25
(d) Tax Opinion................................................. 25
7.3. Conditions to Obligation of the Company.......................... 26
(a) Representations and Warranties.............................. 26
(b) Performance of Obligations of Parent and Merger Sub......... 26
(c) Consents Under Agreements................................... 26
(d) Tax Opinion................................................. 26
ARTICLE VIII
TERMINATION
8.1. Termination...................................................... 27
8.2. Effect of Termination............................................ 28
ARTICLE IX
MISCELLANEOUS AND GENERAL
9.1. Survival......................................................... 28
9.2. Modification or Amendment........................................ 29
9.3. Waiver of Conditions............................................. 29
9.4. Counterparts..................................................... 29
9.5. Governing Law and Venue; Waiver of Jury Trial.................... 29
9.6. Notices.......................................................... 30
9.7. Entire Agreement; No Other Representations....................... 30
9.8. No Third Party Beneficiaries..................................... 30
9.9. Obligations of Parent and of the Company......................... 30
9.10. Severability..................................................... 31
9.11. Interpretation................................................... 31
9.12. Assignment....................................................... 31
9.13. Specific Performance............................................. 31
</TABLE>
iii
<PAGE> 67
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (hereinafter called this "Agreement"), dated
as of September 4, 1997, among Tecnol Medical Products, Inc., a Delaware
corporation (the "Company"), Kimberly-Clark Corporation, a Delaware corporation
("Parent"), and Vanguard Acquisition Corp., a Delaware corporation and a
wholly-owned subsidiary of Parent ("Merger Sub," the Company and Merger Sub
sometimes being hereinafter collectively referred to as the "Constituent
Corporations").
RECITALS
WHEREAS, the respective Boards of Directors of each of Parent, Merger Sub
and the Company have approved and declared advisable the merger of Merger Sub
with and into the Company (the "Merger") and approved the Merger upon the terms
and subject to the conditions set forth in this Agreement, whereby each issued
and outstanding share of the Common Stock, par value $.001 per share, of the
Company (a "Share" or, collectively, the "Shares"), not owned directly or
indirectly by Parent or the Company, will be converted into shares of Common
Stock, $1.25 par value, of Parent ("Parent Common Stock");
WHEREAS, the respective Boards of Directors of Parent and the Company have
determined that the Merger is in furtherance of and consistent with their
respective long-term business strategies and is fair to and in the best
interests of their respective stockholders;
WHEREAS, it is intended that, for federal income tax purposes, the Merger
shall qualify as a reorganization under the provisions of Section 368(a) of the
Internal Revenue Code of 1986, as amended, and the rules and regulations
promulgated thereunder (the "Code");
WHEREAS, for financial accounting purposes, it is intended that the Merger
will be accounted for as a "purchase;"
WHEREAS, concurrently with the execution and delivery of this Agreement and
as a condition to Parent's willingness to enter into this Agreement, certain
stockholders of the Company (the "Principal Stockholders") have entered into an
agreement with Parent, in the form attached hereto as Exhibit A (the "Company
Stockholder Agreement"), pursuant to which the Principal Stockholders have
agreed, among other things, to vote their Shares in favor of the Merger; and
WHEREAS, as a condition to Parent's willingness to enter into this
Agreement, concurrently herewith: (i) the Company and Parent are entering into a
Consulting Agreement, Noncompetition Agreement, and Severance Agreement And
Release with each of Vance M. Hubbard, Valerie A. Hubbard, and Kirk Brunson,
each dated as of the date hereof; (ii) the Company and Parent are entering into
a Noncompetition Agreement and a Severance Agreement And Release with James
Weaver, dated as of the date hereof; (iii) the Company and Parent are entering
into a Severance Agreement and Release with Jeffrey A. Nick, dated as of the
date hereof; and (iv) the Company is entering into a Rescission Agreement with
Vance M. Hubbard dated as of the date hereof (collectively, such Consulting
Agreements, Noncompetition Agreements, Severance Agreements and Releases and
Rescission Agreement are referred to herein as the "Executive Agreements");
WHEREAS, as a condition to Parent's willingness to enter into this
Agreement, the Company and Parent are simultaneously entering into the option
agreement attached hereto as Exhibit B (the "Company Option Agreement") pursuant
to which the Company is granting an option to Parent to purchase Shares on the
terms and subject to the conditions set forth therein;
WHEREAS, the Company and Parent are simultaneously herewith entering into
the Severance Matters Agreement attached hereto as Exhibit C ( the "Severance
Matters Agreement"); and
WHEREAS, the Company, Parent and Merger Sub desire to make certain
representations, warranties, covenants and agreements in connection with this
Agreement.
<PAGE> 68
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
ARTICLE I
THE MERGER; CLOSING; EFFECTIVE TIME
1.1. The Merger. Upon the terms and subject to the conditions set forth in
this Agreement and in accordance with the Delaware General Corporation Law, as
amended (the "DGCL"), at the Effective Time (as defined in Section 1.3) Merger
Sub shall be merged with and into the Company and the separate corporate
existence of Merger Sub shall thereupon cease. The Company shall be the
surviving corporation in the Merger (sometimes hereinafter referred to as the
"Surviving Corporation"), and the separate corporate existence of the Company
with all its rights, privileges, immunities, powers and franchises shall
continue unaffected by the Merger, except as set forth in Article III. The
Merger shall have the effects specified in the DGCL.
1.2. Closing. The closing of the Merger (the "Closing") shall take place
(i) at the offices of Carrington, Coleman, Sloman & Blumenthal, L.L.P., 200
Crescent Court, Dallas, Texas at 9:00 A.M. on the third business day after the
day on which the last to be fulfilled or waived of the conditions set forth in
Article VII (other than those conditions that by their nature are to be
satisfied at the Closing, but subject to the fulfillment or waiver of those
conditions) shall be satisfied or waived in accordance with this Agreement or
(ii) at such other place and time and/or on such other date as the Company and
Parent may agree in writing (the "Closing Date").
1.3. Effective Time. As soon as practicable following the Closing, the
Company and Parent will cause a Certificate of Merger (the "Delaware Certificate
of Merger") to be executed, acknowledged and filed with the Secretary of State
of Delaware as provided in Section 251 of the DGCL. The Merger shall become
effective at the time when the Delaware Certificate of Merger has been duly
filed with the Secretary of State of Delaware or, if otherwise agreed by the
Company and Parent, such later date or time as is established by the Delaware
Certificate of Merger (the "Effective Time").
1.4. Further Assurances. If, at any time after the Effective Time, the
Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments or assurances or any other acts or things are necessary,
desirable or proper (i) to vest, perfect or confirm, of record or otherwise, in
the Surviving Corporation its right, title and interest in, to or under any of
the rights, privileges, powers, franchises, properties or assets of either of
the Constituent Corporations or (ii) otherwise to carry out the purposes of this
Agreement, the Surviving Corporation and its proper officers and directors or
their designees shall be authorized to execute and deliver, in the name and on
behalf of either Constituent Corporation, all such deeds, bills of sale,
assignments and assurances and to do, in the name and on behalf of either
Constituent Corporation, all such other acts and things as may be necessary,
desirable or proper to vest, perfect or confirm the Surviving Corporation's
right, title and interest in, to and under any of the rights, privileges,
powers, franchises, properties or assets of such Constituent Corporation and
otherwise to carry out the purposes of this Agreement.
ARTICLE II
CERTIFICATE OF INCORPORATION AND BY-LAWS
OF THE SURVIVING CORPORATION
2.1. The Certificate of Incorporation. The certificate of incorporation of
the Company as in effect immediately prior to the Effective Time shall be the
certificate of incorporation of the Surviving Corporation (the "Charter"), until
duly amended as provided therein or by applicable law, except that (i) Article
FIFTH, TENTH and ELEVENTH of the Charter shall be deleted in their entirety and
(ii) Article FOURTH of the Charter shall be amended to read in its entirety as
follows: "The aggregate number of shares that the Corporation shall have the
authority to issue is 1,000 shares of Common Stock, par value $0.01 per share."
2
<PAGE> 69
2.2. The By-Laws. The by-laws of the Company in effect immediately prior to
the Effective Time shall be the by-laws of the Surviving Corporation (the
"By-Laws"), until thereafter amended as provided therein or by applicable law.
ARTICLE III
OFFICERS AND DIRECTORS
OF THE SURVIVING CORPORATION
3.1. Directors. The directors of Merger Sub immediately prior to the
Effective Time shall, from and after the Effective Time, be the directors of the
Surviving Corporation until their successors have been duly elected or appointed
and qualified or until their earlier death, resignation or removal in accordance
with the Charter and the By-Laws.
3.2. Officers. The officers of the Company immediately prior to the
Effective Time shall, from and after the Effective Time, be the officers of the
Surviving Corporation until their successors have been duly elected or appointed
and qualified or until their earlier death, resignation or removal in accordance
with the Charter and the By-Laws.
ARTICLE IV
EFFECT OF THE MERGER ON CAPITAL STOCK;
EXCHANGE OF CERTIFICATES
4.1. Effect on Capital Stock. At the Effective Time, as a result of the
Merger and without any action on the part of the holder of any capital stock of
the Company:
(a) Merger Consideration. Each Share issued and outstanding immediately
prior to the Effective Time (other than Shares owned by Parent, Merger Sub or
any other direct or indirect subsidiary of Parent (collectively, the "Parent
Companies") or Shares that are owned by the Company or any direct or indirect
subsidiary of the Company and in each case not held on behalf of third parties
(collectively, "Excluded Shares")) shall be converted into, and become
exchangeable for 0.42 (the "Conversion Number") of a validly issued, fully paid
and nonassessable share of Parent Common Stock, including the corresponding
percentage of a right (such rights being hereinafter referred to collectively as
the "Parent Rights") to purchase shares of Series A Junior Participating
Preferred Stock of Parent (the "Parent Series A Preferred Stock") pursuant to
the Rights Agreement, dated as of June 21, 1988, as amended and restated as of
June 8, 1995 (as so amended and restated, the "Parent Rights Agreement") between
Parent and The First National Bank of Boston, as Rights Agent. All references in
this Agreement to Parent Common Stock to be received in accordance with the
Merger shall be deemed, from and after the Effective Time, to include the
associated Parent Rights. At the Effective Time, all Shares shall no longer be
outstanding and shall be canceled and retired and shall cease to exist, and each
certificate (a "Certificate") formerly representing any of such Shares (other
than Excluded Shares) shall thereafter represent only the right to receive the
shares of Parent Common Stock into which such Shares have been converted and the
right, if any, to receive pursuant to Section 4.2(e) cash in lieu of fractional
shares into which such Shares have been converted pursuant to this Section
4.1(a) and any distribution or dividend pursuant to Section 4.2(c).
(b) Cancellation of Shares. Each Excluded Share issued and outstanding
immediately prior to the Effective Time shall, by virtue of the Merger and
without any action on the part of the holder thereof, cease to be outstanding,
shall be canceled and retired without payment of any consideration therefor and
shall cease to exist.
(c) Merger Sub. At the Effective Time, each share of Common Stock, par
value $0.01 per share, of Merger Sub issued and outstanding immediately prior to
the Effective Time shall be converted into one share of common stock of the
Surviving Corporation.
3
<PAGE> 70
4.2. Exchange of Certificates for Shares.
(a) Exchange Agent. As of the Effective Time, Parent shall deposit, or
shall cause to be deposited, with Boston Equiserve L.P. or a commercial bank
having capital of not less than $5 billion selected by Parent with the Company's
prior approval, which shall not be unreasonably withheld (the "Exchange Agent"),
for the benefit of the holders of Shares, certificates representing the shares
of Parent Common Stock, and, after the Effective Time, if applicable, any cash,
dividends or other distributions, with respect to the Parent Common Stock, to be
issued or paid pursuant to the last sentence of Section 4.1(a) in exchange for
Shares outstanding immediately prior to the Effective Time upon due surrender of
the Certificates (or affidavits of loss and, if reasonably required by Parent,
indemnity bonds in lieu thereof) pursuant to the provisions of this Article IV
(such certificates for shares of Parent Common Stock, together with the amount
of any dividends or other distributions payable with respect thereto, being
hereinafter referred to as the "Exchange Fund").
(b) Exchange Procedures. Promptly after the Effective Time, the Surviving
Corporation shall cause the Exchange Agent to mail to each holder of record of
Shares (other than holders of Excluded Shares) (i) a letter of transmittal
specifying that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates (or affidavits
of loss and, if reasonably required by Parent, indemnity bonds in lieu thereof)
to the Exchange Agent, such letter of transmittal to be in such form and have
such other provisions as Parent and the Company may reasonably agree, and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for (A) certificates representing shares of Parent Common Stock and (B) any
unpaid dividends and other distributions and cash in lieu of fractional shares.
Upon surrender of a Certificate for cancellation to the Exchange Agent together
with such letter of transmittal, duly executed, the holder of such Certificate
shall be entitled to receive in exchange therefor (x) a certificate representing
that number of whole shares of Parent Common Stock that such holder is entitled
to receive pursuant to this Article IV, (y) a check in the amount (after giving
effect to any required tax withholdings) of (A) any cash in lieu of fractional
shares plus (B) any unpaid non-stock dividends and any other dividends or other
distributions that such holder has the right to receive pursuant to the
provisions of this Article IV, and the Certificate so surrendered shall
forthwith be canceled. No interest will be paid or accrued on any amount payable
upon due surrender of the Certificates. In the event of a transfer of ownership
of Shares that is not registered in the transfer records of the Company, a
certificate representing the proper number of shares of Parent Common Stock,
together with a check for any cash to be paid upon due surrender of the
Certificate and any other dividends or distributions in respect thereof, may be
issued and/or paid to such a transferee if the Certificate formerly representing
such Shares is presented to the Exchange Agent, accompanied by all documents
required to evidence and effect such transfer and to evidence that any
applicable stock transfer taxes have been paid. If any certificate for shares of
Parent Common Stock is to be issued in a name other than that in which the
Certificate surrendered in exchange therefor is registered, it shall be a
condition of such exchange that (i) the Person (as defined below) requesting
such exchange shall pay any transfer or other taxes required by reason of the
issuance of certificates for shares of Parent Common Stock in a name other than
that of the registered holder of the Certificate surrendered, or shall establish
to the satisfaction of Parent or the Exchange Agent that such tax has been paid
or is not applicable, and (ii) that the Certificate so surrendered shall be
properly endorsed and otherwise in proper form for transfer. Parent or the
Exchange Agent shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any holder of the Shares such
amounts as Parent or the Exchange Agent are required to deduct and withhold
under the Code, or any provision of state, local or foreign tax law, with
respect to the making of such payment. To the extent that amounts are so
withheld by Parent or the Exchange Agent, such withheld amounts shall be treated
for all purposes of this Agreement as having been paid to the holder of the
Shares in respect of whom such deduction and withholding was made by Parent or
the Exchange Agent.
For the purposes of this Agreement, the term "Person" shall mean any
individual, corporation (including not-for-profit), general or limited
partnership, limited liability company, joint venture, estate, trust,
association, organization, Governmental Entity (as defined in Section 5.1(d)) or
other entity of any kind or nature.
(c) Distributions with Respect to Unexchanged Shares; Voting. (i) All
shares of Parent Common Stock to be delivered pursuant to the Merger shall be
deemed issued and outstanding as of the Effective Time and whenever a dividend
or other distribution is declared by Parent in respect of the Parent Common
Stock, the
4
<PAGE> 71
record date for which is at or after the Effective Time, that declaration shall
include dividends or other distributions in respect of all shares issuable
pursuant to this Agreement, provided that no dividends or other distributions
declared or made in respect of the Parent Common Stock with a record date that
is 10 days or more after the Effective Time shall be paid to the holder of any
unsurrendered Certificate with respect to the shares of Parent Common Stock
represented thereby until the holder of such Certificate shall surrender such
Certificate or affidavit of loss and, if reasonably required by Parent,
indemnity bond in lieu thereof in accordance with this Article IV. Subject to
the effect of applicable laws, following surrender of any such Certificate,
there shall be issued and/or paid to the holder of the certificates representing
whole shares of Parent Common Stock delivered in exchange therefor, without
interest, (A) at the time of such surrender, the dividends or other
distributions with a record date at or after the Effective Time theretofore
payable with respect to such whole shares of Parent Common Stock and not paid
and (B) at the appropriate payment date, the dividends or other distributions
payable with respect to such whole shares of Parent Common Stock with a record
date at or after the Effective Time but with a payment date subsequent to
surrender.
(ii) Holders of unsurrendered Certificates shall be entitled to vote after
the Effective Time at any meeting of Parent stockholders the number of whole
shares of Parent Common Stock represented by such Certificates, regardless of
whether such holders have exchanged their Certificates.
(d) Transfers. After the Effective Time, there shall be no transfers on the
stock transfer books of the Company of the Shares that were outstanding
immediately prior to the Effective Time.
(e) Fractional Shares. No certificates or scrip representing fractional
shares of Parent Common Stock shall be issued upon the surrender for exchange of
Certificates pursuant to this Article IV; no dividend or other distribution by
Parent and no stock split, combination or reclassification shall relate to any
such fractional share; and no such fractional share shall entitle the record or
beneficial owner thereof to vote or to any other rights of a stockholder of
Parent. In lieu of any such fractional share, each holder of Shares who would
otherwise have been entitled thereto upon the surrender of Certificate(s) for
exchange pursuant to this Article IV will be paid an amount in cash (without
interest) rounded up to the nearest whole cent, determined by multiplying (i)
the per share closing price on the New York Stock Exchange, Inc. (the "NYSE") of
Parent Common Stock (as reported in the NYSE Composite Transactions) on the date
on which the Effective Time shall occur (or, if the Parent Common Stock shall
not trade on the NYSE on such date, the first day of trading in Parent Common
Stock on the NYSE thereafter) by (ii) the fractional share to which such holder
would otherwise be entitled.
(f) Termination of Exchange Fund. Any portion of the Exchange Fund
(including the proceeds of any investments thereof and any Parent Common Stock)
that remains unclaimed by the stockholders of the Company for 180 days after the
Effective Time shall be paid to Parent. Any stockholders of the Company who have
not theretofore complied with this Article IV shall thereafter look only to
Parent for payment of their shares of Parent Common Stock and any cash,
dividends and other distributions in respect thereof payable and/or issuable
pursuant to Section 4.1 and Section 4.2(c) upon due surrender of their
Certificates (or affidavits of loss and, if reasonably required by Parent,
indemnity bonds in lieu thereof), in each case, without any interest thereon.
Notwithstanding the foregoing, none of Parent, the Surviving Corporation, the
Exchange Agent or any other Person shall be liable to any former holder of
Shares for any amount properly delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
(g) Lost, Stolen or Destroyed Certificates. In the event any Certificate
shall have been lost, stolen or destroyed, upon the making and delivery to the
Exchange Agent of an affidavit of that fact by the Person claiming such
Certificate to be lost, stolen or destroyed, a properly completed letter of
transmittal and, if reasonably required by Parent, the posting by such Person of
a bond in customary amount as indemnity against any claim that may be made
against it with respect to such Certificate, the Exchange Agent will deliver in
exchange for such lost, stolen or destroyed Certificate the shares of Parent
Common Stock and any cash payable and any unpaid dividends or other
distributions in respect thereof pursuant to Section 4.2(c) upon due surrender
of, and deliverable in respect of the Shares represented by, such Certificate
pursuant to this Agreement.
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4.3. Dissenters' Rights. In accordance with Section 262 of the DGCL, no
appraisal rights shall be available to holders of Shares in connection with the
Merger.
4.4. Adjustments of Conversion Number. In the event that the Company
changes the number of Shares or securities convertible or exchangeable into or
exercisable for Shares, or Parent changes the number of shares of Parent Common
Stock or securities convertible or exchangeable into or exercisable for shares
of Parent Common Stock, issued and outstanding prior to the Effective Time as a
result of a reclassification, stock split (including a reverse split), dividend
or distribution (other than quarterly cash dividends), recapitalization, merger
(other than the Merger), subdivision, issuer tender or exchange offer for the
issuer's own shares (other than repurchases by Parent between the date hereof
and the Effective Time of less than 5% of the outstanding shares of Parent
Common Stock pursuant to Rule 10b-18, promulgated under the Securities Exchange
Act of 1934, as amended), or other similar transaction with a materially
dilutive effect, or if a record date with respect to any of the foregoing shall
occur prior to the Effective Time, the Conversion Number shall be equitably
adjusted.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1. Representations and Warranties of the Company. Except as set forth in
the corresponding sections or subsections of the disclosure letter delivered to
Parent by the Company on or prior to entering into this Agreement (the "Company
Disclosure Letter"), the Company hereby represents and warrants to Parent and
Merger Sub that:
(a) Organization, Good Standing and Qualification. Each of the Company and
its Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of organization and has
all requisite corporate or similar power and authority to own and operate its
properties and assets and to carry on its business as presently conducted and is
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction where the ownership or operation of its properties or conduct
of its business requires such qualification, except where the failure to be so
qualified or in good standing is not reasonably likely to have, individually or
in the aggregate, a Company Material Adverse Effect (as defined below). The
Company has made available to Parent a complete and correct copy of the
Company's and its Subsidiaries' certificates or articles of incorporation, as
the case may be, and by-laws, each as amended to date. The Company's and its
Subsidiaries' certificates of incorporation and by-laws so delivered are in full
force and effect.
As used in this Agreement, the term (i) "Subsidiary" means, with respect to
the Company, Parent or Merger Sub, as the case may be, any entity, whether
incorporated or unincorporated, of which at least a majority of the securities
or ownership interests having by their terms ordinary voting power to elect a
majority of the Board of Directors or other persons performing similar functions
is directly or indirectly owned or controlled by such party or by one or more of
its respective Subsidiaries or by such party and any one or more of its
respective Subsidiaries and (ii) "Company Material Adverse Effect" means a
material adverse effect on the financial condition, properties or results of
operations of the Company and its Subsidiaries taken as a whole; provided,
however, that any such effect resulting from any change (i) in law, rule or
regulation applicable to all companies and businesses generally, or to the
disposable medical products industry specifically, or (ii) in economic or
business conditions generally, or in the disposable medical products industry
specifically, shall not be considered when determining if a Company Material
Adverse Effect has occurred.
(b) Capital Structure. The authorized capital stock of the Company consists
of 50,000,000 Shares, of which 20,010,762 Shares were outstanding as of the
close of business on August 31, 1997, and 1,000,000 shares of Preferred Stock,
par value $.001 per share (the "Preferred Shares"), none of which shares are
outstanding. All of the outstanding Shares have been duly authorized and are
validly issued, fully paid and nonassessable. The Company has no Shares or
Preferred Shares reserved for issuance, except for Shares reserved for issuance
upon exercise of options pursuant to the Company Option Agreement and that, as
of August 31, 1997, there were 2,000,000 Shares reserved for issuance pursuant
to the Company's 1991 Stock
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Option Plan, as amended from time to time (the "Stock Plan"), and 30,000 Shares
reserved for issuance to certain directors of the Company pursuant to those
certain Director's Stock Option Agreements by and between the Company and each
of Jack G. Johnson and James Kenney, dated September 21, 1991 and September 6,
1991, respectively (the "Director Option Agreements"). The Company Disclosure
Letter contains a correct and complete list as of a recent date of each
outstanding option to purchase Shares under the Stock Plan and the Director
Option Agreements (each a "Company Option"), including the holder, date of
grant, exercise price and number of Shares subject thereto. Each of the
outstanding shares of capital stock or other securities of each of the Company's
Subsidiaries is duly authorized, validly issued, fully paid and nonassessable
and owned by the Company or a direct or indirect wholly-owned subsidiary of the
Company, free and clear of any lien, pledge, security interest, right of first
refusal agreement, limitation on voting rights, claim or other encumbrance.
Except as set forth above, there are no preemptive or other outstanding rights
(other than rights accruing to the Company or its Subsidiaries), options,
warrants, conversion rights, stock appreciation rights, redemption rights,
repurchase rights, agreements, arrangements or commitments to issue or sell any
shares of capital stock or other securities of the Company or any of its
Subsidiaries or any securities or obligations convertible or exchangeable into
or exercisable for, or giving any Person a right to subscribe for or acquire,
any securities of the Company or any of its Subsidiaries, and no securities or
obligations evidencing such rights are authorized, issued or outstanding. The
Company does not have outstanding any bonds, debentures, notes or other
obligations the holders of which have the right to vote (or convertible into or
exercisable for securities having the right to vote) with the stockholders of
the Company on any matter.
(c) Corporate Authority; Approval and Fairness. As of the date hereof, the
Board of Directors of the Company has duly approved this Agreement, the Company
Option Agreement, the Severance Matters Agreement and the Executive Agreements
and has resolved to recommend the adoption of this Agreement by the Company's
stockholders and directed that this Agreement be submitted to the Company's
stockholders for approval. The Company has all corporate power and authority to
enter into this Agreement, the Company Option Agreement, the Severance Matters
Agreement and the Executive Agreements and to consummate the transactions
contemplated hereby and thereby, subject to the adoption of this Agreement by
the holders of at least a majority of the outstanding Shares (the "Company
Requisite Vote"). The execution, delivery and performance of this Agreement, the
Company Option Agreement , the Severance Matters Agreement and the Executive
Agreements by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action on the part of the Company, subject to adoption of
this Agreement by the stockholders of the Company. This Agreement, the Company
Option Agreement, the Severance Matters Agreement and the Executive Agreements
have been duly executed and delivered by the Company and (assuming the valid
authorization, execution and delivery of such agreements by each other party
thereto) constitute valid and binding agreements of the Company enforceable
against the Company in accordance with their terms, except that enforceability
may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights (the "Bankruptcy Exception") and is subject to general equity
principles (the "Equity Exception").
(d) Governmental Filings; No Violations. Other than the filings and/or
notices (A) pursuant to Section 1.3, (B) under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and the Securities Act of 1933, as
amended (the "Securities Act"), (C) to comply with state securities or
"blue-sky" laws, if any, (D) required to be made with the NASDAQ and (E) any
filings pursuant to Section 6.17, no notices, reports or other filings are
required to be made by the Company or any of its Subsidiaries with, nor are any
consents, registrations, approvals, permits or authorizations required to be
obtained by the Company or any of its Subsidiaries from, any governmental or
regulatory authority, agency, commission, body or other governmental entity
("Governmental Entity"), in connection with the execution and delivery of this
Agreement or the Company Option Agreement by the Company and the consummation by
the Company of the Merger and the other transactions contemplated hereby or
thereby, except those that the failure to make or obtain are not, individually
or in the aggregate, reasonably likely to have a Company Material Adverse Effect
or prevent, materially delay or materially impair the ability of the Company to
consummate the transactions contemplated by this Agreement.
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(ii) The execution, delivery and performance of this Agreement, the Company
Option Agreement, the Severance Matters Agreement and the Executive Agreements
by the Company do not, and the consummation by the Company of the Merger and the
other transactions contemplated hereby or thereby will not, constitute or result
in (A) a breach or violation of, or a default under, the certificate of
incorporation or by-laws of the Company or the comparable governing instruments
of any of its Subsidiaries, (B) a breach or violation of, or a default under,
the acceleration of any obligations or the creation of a lien, pledge, security
interest or other encumbrance on the assets of the Company or any of its
Subsidiaries (with or without notice, lapse of time or both) pursuant to, any
loan or credit agreement, note, bond, indenture or other instrument evidencing
indebtedness for borrowed money ("Debt Contracts") or any other agreement,
lease, contract, arrangement or other obligation ("Other Contracts") binding
upon the Company or any of its Subsidiaries or any Law (as defined in Section
5.1(i)) or governmental or non-governmental permit or license to which the
Company or any of its Subsidiaries is subject or any judgment, order or decree
to which the Company or any of its Subsidiaries or any of its properties is
subject or (C) any change in the rights or obligations of any party under any of
the Debt Contracts or Other Contracts, except, in the case of clause (B) or (C)
above, for any breach, violation, default, acceleration, creation or change
that, individually or in the aggregate, is not reasonably likely to have a
Company Material Adverse Effect or prevent, materially delay or materially
impair the ability of the Company to consummate the transactions contemplated by
this Agreement or the Company Option Agreement.
(iii)(A) There is no event of default, or event that, but for the giving of
notice or lapse of time, or both, would constitute an event of default under any
Debt Contract binding upon the Company or any of its Subsidiaries, and (B) there
is no event of default, or event that, but for the giving of notice or lapse of
time, or both, would constitute an event of default under any Other Contract
binding upon the Company or any of its Subsidiaries which would, in either case
(A) or (B), individually or in the aggregate, be reasonably likely to have a
Company Material Adverse Effect.
(e) Company Reports; Financial Statements. Since November 30, 1995, the
Company has filed all reports and other documents that it was required to file
with the Securities and Exchange Commission (the "SEC"). The Company has
delivered to Parent each registration statement, report, proxy statement or
information statement (including exhibits, annexes and any amendments thereto)
filed by it with the SEC (collectively, including any such reports filed
subsequent to the date hereof, the "Company Reports") since November 30, 1995.
As of their respective dates, the Company Reports did not, and any Company
Reports filed with the SEC subsequent to the date hereof will not, contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements made therein, in light of
the circumstances in which they were made, not misleading. Each of the
consolidated balance sheets included in or incorporated by reference into the
Company Reports (including the related notes and schedules) fairly presents, or
will fairly present, in all material respects, the consolidated financial
position of the Company and its Subsidiaries as of its date and each of the
consolidated statements of income, stockholders' equity and of cash flows
included in or incorporated by reference into the Company Reports (including any
related notes and schedules) fairly presents, or will fairly present, in all
material respects, the results of consolidated operations, stockholders' equity
and cash flows, as the case may be, of the Company and its Subsidiaries for the
periods set forth therein (subject, in the case of unaudited statements, to
notes and normal year-end audit adjustments that will not be material in amount
or effect), in each case in accordance with generally accepted accounting
principles ("GAAP") consistently applied during the periods involved, except as
may be noted therein.
(f) Absence of Certain Changes. Except as disclosed in the Company Reports
filed prior to the date hereof, since November 30, 1996 (the "Audit Date"), the
Company and its Subsidiaries have conducted their respective businesses only in,
and have not entered into or engaged in any material transaction other than in,
the ordinary and usual course of such businesses and there has not been (i) any
change in the financial condition, properties, business or results of operations
of the Company and its Subsidiaries or any development or combination of
developments of which the executive officers of the Company has knowledge that,
individually or in the aggregate, has had or is reasonably likely to have a
Company Material Adverse Effect; (ii) any damage, destruction or other casualty
loss with respect to any asset or property owned, leased or
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otherwise used by the Company or any of its Subsidiaries, whether or not covered
by insurance except as is not reasonably likely to have, individually or in the
aggregate, a Company Material Adverse Effect; (iii) any declaration, setting
aside or payment of any dividend or other distribution in respect of the capital
stock of the Company, except for dividends or other distributions on its capital
stock publicly announced prior to the date hereof; or (iv) any material change
by the Company in accounting principles, practices or methods. Since the Audit
Date, except as provided for herein or as disclosed in the Company Reports filed
prior to the date hereof, there has not been any increase in the compensation
payable or that could become payable by the Company or any of its Subsidiaries
to officers or key employees or any amendment of any of the Compensation and
Benefit Plans (as defined in Section 5.1(h) other than increases or amendments
in the ordinary course.
(g) Litigation and Liabilities. Except as disclosed in the Company Reports
filed prior to the date hereof, there are no (i) civil, criminal or
administrative actions, suits, claims, hearings, investigations or proceedings
pending or, to the knowledge of the executive officers of the Company,
threatened against the Company or any of its Subsidiaries or any current or
former director or officer of the Company or any of its Subsidiaries (in their
capacity as such) or (ii) obligations or liabilities, whether or not accrued,
contingent or otherwise, including those relating to matters involving any
Environmental Law (as defined in Section 5.1(k)), that, in the case of either
clause (i) or (ii), individually or in the aggregate, are reasonably likely in
either such case to have a Company Material Adverse Effect or prevent or
materially burden or materially impair the ability of the Company to consummate
the transactions contemplated by this Agreement or, as of the date hereof, the
Company Option Agreement. Except as disclosed in the Company Reports filed prior
to the date hereof, there are no outstanding orders, judgments, injunctions,
awards or decrees of any Governmental Entity against the Company or any of its
Subsidiaries, any of its or their properties, assets or business, or, to the
knowledge of the executive officers of the Company, any of its or their current
or former directors or officers, as such, that is reasonably likely to have,
individually or in the aggregate, a Company Material Adverse Effect.
(h) Employee Matters.
(i) Neither the Company nor its Subsidiaries has any labor contracts or
collective bargaining agreements with respect to any persons employed by or
otherwise performing services for the Company or its Subsidiaries. Neither the
Company nor its Subsidiaries has engaged in any unfair labor practice except as
is not reasonably likely to have, individually or in the aggregate, a Company
Material Adverse Effect. As of the date hereof, there is no unfair labor
practice complaint pending, or to the knowledge of the executive officers of the
Company threatened, against the Company or any of its Subsidiaries. There is no
labor strike, dispute, slowdown, or stoppage pending or to the knowledge of the
executive officers of the Company threatened, against the Company or its
Subsidiaries, and neither the Company nor its Subsidiaries has experienced any
primary work stoppage or labor difficulty involving its employees during the
last three years, except in each case as is not reasonably likely to have,
individually or in the aggregate, a Company Material Adverse Effect.
(ii) Set forth in Section 5.1(h) of the Company Disclosure Letter is a true
and complete list of each bonus, deferred compensation, pension, retirement,
profit-sharing, thrift, savings, employee stock ownership, stock bonus, stock
purchase, restricted stock, stock option, employment, termination, severance,
compensation, medical, health, welfare, fringe benefits or other plan,
agreement, policy or arrangement which the Company or any of its Subsidiaries
maintains, or as to which the Company or any of its Subsidiaries is or will be
required to make any payment for the benefit of any employee, director, former
employee or former director of the Company and its Subsidiaries (the
"Compensation and Benefit Plans"). The Company has delivered or made available
to Parent with respect to each Compensation and Benefit Plan correct and
complete copies, where applicable, of (i) all plan documents and amendments
thereto, trust agreements and amendments thereto and insurance and annuity
contracts and policies, (ii) the current summary plan description, (iii) the
Annual Reports (Form 5500 series) and accompanying schedules, as filed, for the
most recently completed two plan years for which such reports have been filed,
(iv) the financial statements for the most recently completed two plan years for
which statements have been prepared, (v) the most recent determination letter
issued by the Internal Revenue Service (the "IRS") and the application submitted
with respect to such letter, and (vi) all correspondence with the IRS or
Department of Labor concerning any
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pending controversy. Any "change of control" or similar provisions contained in
any Compensation and Benefit Plan are specifically identified in Section 5.1(h)
of the Company Disclosure Letter.
(iii) All Compensation and Benefit Plans have been administered in all
material respects in accordance with their terms and are in compliance in all
material respects with all applicable laws, including the Code and the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"). Each Compensation
and Benefit Plan that is an "employee pension benefit plan" within the meaning
of Section 3(2) of ERISA (a "Pension Plan") and that is intended to be qualified
under Section 401(a) of the Code has received a favorable determination letter
from the IRS, and the Company is not aware as of the date hereof of any
circumstances likely to result in revocation of any such favorable determination
letter or of any circumstance indicating that any such plan is not so qualified
in operation. As of the date hereof, there is no pending or, to the knowledge of
the executive officers of the Company, material threatened litigation, claim or
audit by any Person relating to the Compensation and Benefit Plans. To the
knowledge of the executive officers of the Company, no prohibited transaction
described in Section 406 of ERISA or Section 4975 of the Code has occurred which
would be expected to result in material liability to the Company or its
Subsidiaries, assuming that, for purposes of determining materiality, the
"taxable period" within the meaning of Section 4975 of the Code with respect to
such prohibited transaction had expired as of the date hereof.
(iv) As of the date hereof, no liability under Subtitle C or D of Title IV
of ERISA has been or is expected to be incurred by the Company or any Subsidiary
with respect to any ongoing, frozen or terminated "single-employer plan", within
the meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained by
any of them, or the single-employer plan of any entity which is considered one
employer with the Company under Section 4001 of ERISA or Section 414 of the Code
(an "ERISA Affiliate"). None of the Company, its Subsidiaries and their ERISA
Affiliates have contributed, or been obligated to contribute, to a multiemployer
plan under Subtitle E of Title IV of ERISA at any time, and no liability has
been or is expected to be incurred by the Company or any Subsidiary with respect
to any such plan. None of the Company, any of its Subsidiaries or any ERISA
Affiliate contributes to or maintains a Pension Plan subject to Title IV of
ERISA or has contributed to or maintained any such plan at any time during the
six-year period prior to the date hereof.
(v) All contributions required to be made under the terms of any
Compensation and Benefit Plan as of the date hereof, have been timely made or
have been reflected on the most recent consolidated balance sheet filed or
incorporated by reference in the Company Reports prior to the date hereof.
(vi) Neither the Company nor its Subsidiaries have any obligations for
retiree health and life benefits under any Compensation and Benefit Plan, except
as required under Part 6 of Title I of ERISA.
(vii) Except as contemplated by this Agreement or disclosed in Section
5.1(h) of the Company Disclosure Letter, the consummation of the Merger and the
other transactions contemplated by this Agreement and the Company Option
Agreement will not (x) entitle any employees of the Company or its Subsidiaries
to severance pay, (y) accelerate the time of payment or vesting or trigger any
payment of compensation or benefits under, increase the amount payable or
trigger any other material obligation pursuant to, any of the Compensation and
Benefit Plans or the Stock Plan or (z) result in any material breach or
violation of, or a material default under, any of the Compensation and Benefit
Plans or the Stock Plan.
(i) Compliance with Laws; Permits. Except as set forth in the Company
Reports filed prior to the date hereof, the businesses of each of the Company
and its Subsidiaries are being conducted in compliance with applicable federal,
state, local and foreign laws (collectively, "Laws"), except for such violations
that, individually or in the aggregate, are not reasonably likely to have a
Company Material Adverse Effect or prevent or materially burden or materially
impair the ability of the Company to consummate the transactions contemplated by
this Agreement or the Company Option Agreement. The Company and its Subsidiaries
each has all permits, licenses, franchises, variances, exemptions, orders and
other governmental authorizations, consents and approvals necessary to own or
lease and operate their respective properties and conduct its business as
presently conducted except those the absence of which are not, individually or
in the aggregate, reasonably likely to have a Company Material Adverse Effect or
prevent or materially burden or materially
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impair the ability of the Company to consummate the Merger and the other
transactions contemplated by this Agreement and the Company Option Agreement.
(j) Takeover Statutes. No "fair price," "moratorium," "control share
acquisition" or other similar anti-takeover statute or regulation (including
Section 203 of the DGCL) (each a "Takeover Statute") or any applicable
anti-takeover provision in the Company's certificate of incorporation and
by-laws or any shareholder rights agreement is, or at the Effective Time will
be, applicable to the Company, the Shares, the Merger or the other transactions
contemplated by this Agreement or the Company Option Agreement. Assuming the
accuracy of Parent's representations and warranties contained in Section 5.2(l),
the Board of Directors of the Company has taken all action so that Parent will
not be prohibited from entering into a "business combination" with the Company
as an "interested stockholder" (in each case, as such term is used in Section
203 of the DGCL) as a result of the execution and delivery of this Agreement,
the Company Stockholder Agreement, the Company Option Agreement, or the
consummation of the transactions contemplated hereby or thereby.
(k) Environmental Matters. Except as disclosed in the Company Reports filed
prior to the date hereof and except for such matters that, individually or in
the aggregate are not reasonably likely to have a Company Material Adverse
Effect (i) to the knowledge of the executive officers of the Company, the
Company and its Subsidiaries are in compliance with all applicable Environmental
Laws; (ii) the Company and its Subsidiaries have not received any written
notices from any Governmental Entity or any other person or entity alleging the
violation of any applicable Environmental Law (as defined below); (iii) the
Company and its Subsidiaries are not the subject of any court order,
administrative order or decree arising under any Environmental Law; (iv) to the
knowledge of the executive officers of the Company, there has not been a release
of Hazardous Substances (as defined below) on any of the properties owned or
operated by the Company or any of its Subsidiaries; and (v) to the knowledge of
the executive officers of the Company neither the Company nor any Subsidiary has
generated, stored, used, emitted, discharged or disposed of any Hazardous
Substances in violation of or giving rise to liability under applicable
Environmental Laws.
As used herein, "Environmental Law" means any federal, state or local law,
statute, ordinance, rule, regulation, code, license, permit, order, decree or
injunction relating to the protection of the environment (including air, water,
soil and natural resources), or regulating or imposing standards of care with
respect to the use, storage, handling, release or disposal of any Hazardous
Substance, including petroleum.
As used herein, "Hazardous Substance" means any substance listed, defined,
designated, regulated or classified as hazardous, toxic or radioactive under any
applicable Environmental Law, including petroleum and petroleum products.
(l) Tax Matters. As of the date hereof, neither the Company nor any of its
Affiliates (as defined below) has taken or agreed to take any action, nor do the
executive officers of the Company have any knowledge of any fact or
circumstance, that would prevent the Merger and the other transactions
contemplated by this Agreement from qualifying as a "reorganization" within the
meaning of Section 368(a) of the Code. An Affiliate of a party is a Person that
directly, or indirectly through one or more intermediaries, controls or is
controlled by or is under common control with it.
(m) Taxes. The Company and each of its Subsidiaries (i) have prepared in
good faith and duly and timely filed (taking into account any extension of time
within which to file) all Tax Returns (as defined below) required to be filed by
any of them; (ii) have paid all Taxes (as defined below) that are shown as due
on such filed Tax Returns except for Taxes provided for in a reserve which is
adequate for the payment of such Taxes and is reflected in the financial
statements included in the Company Reports filed prior to the date hereof or the
books and records of the Company; and (iii) as of the date hereof, have not
waived any statute of limitations with respect to Taxes or agreed to any
extension of time with respect to a Tax assessment or deficiency. There are not,
to the knowledge of the executive officers of the Company, any unresolved
questions or claims concerning the Company's or any of its Subsidiaries' Tax
liability that are reasonably likely to have a Company Material Adverse Effect.
As of the date hereof, there are no pending or, to the knowledge of the
executive officers of the Company, threatened audits, examinations,
investigations or other proceedings in respect of Taxes or Tax matters. The
Company has made available to Parent true and correct copies of the
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United States federal income Tax Returns filed by the Company and its
Subsidiaries for each of the fiscal years ended 1996, 1995, and 1994. As a
result of the transactions contemplated by this Agreement, the Company Option
Agreement, the Severance Matters Agreement, and the Executive Agreements or the
transactions contemplated hereby or thereby, none of the Company, Parent or
their Subsidiaries will be obligated to make a payment that would be an "excess
parachute payment" to an individual that is currently a "disqualified
individual" with respect to the Company as those terms are defined in Section
280G of the Code, without regard to whether such payment is reasonable
compensation for personal services performed or to be performed in the future.
To the knowledge of the executive officers of the Company, the representations
set forth in the Company Tax Certificate (as defined in Section 7.2 (d))
attached to the Company Disclosure Letter are true and correct in all material
respects.
As used in this Agreement, (i) the term "Tax" (including, with correlative
meaning, the terms "Taxes", and "Taxable") includes all federal, state, local
and foreign income, profits, franchise, gross receipts, environmental, customs
duty, capital stock, severances, stamp, payroll, sales, employment,
unemployment, disability, use, property, withholding, excise, production, value
added, occupancy and other taxes, duties or assessments of any nature
whatsoever, together with all interest, penalties and additions imposed with
respect to such amounts and any interest in respect of such penalties and
additions, and (ii) the term "Tax Return" includes all returns and reports
(including elections, declarations, disclosures, schedules, estimates and
information returns) required to be supplied to a Tax authority relating to
Taxes.
(n) Intellectual Property.
(i) The Company and/or each of its Subsidiaries owns all right, title and
interest to, or has the right to use pursuant to a valid license, as the case
may be all Intellectual Property Rights (as defined below) used in the business
of the Company and its Subsidiaries as presently conducted, except for any
failure to own or right to use that, individually or in the aggregate, is not
reasonably likely to have a Company Material Adverse Effect. All registrations
for Intellectual Property Rights owned by the Company or any Subsidiary are
valid and in force, except for any invalidity or unenforceability that,
individually or in the aggregate, is not reasonably likely to have a Company
Material Adverse Effect. All applications for registrations of Intellectual
Property Rights filed by the Company or any Subsidiary are pending and in good
standing, all without challenge of any kind, except for any lack of good
standing or challenge that, individually or in the aggregate, is not reasonably
likely to have a Company Material Adverse Effect. The Intellectual Property
Rights owned by the Company or any of its Subsidiaries are valid and
enforceable, except for any invalidity or unenforceability that, individually or
in the aggregate, is not reasonably likely to have a Company Material Adverse
Effect. The Company or its Subsidiaries have the sole and exclusive right to
bring actions for infringement, misappropriation or unauthorized use of Owned
Software (as defined below) and the Intellectual Property Rights owned by the
Company and its Subsidiaries, except for any rights that, individually or in the
aggregate, are not reasonably likely to have a Company Material Adverse Effect.
(ii) Except as is not reasonably likely to have a Company Material Adverse
Effect:
(A) Neither the Company nor any of its Subsidiaries is, nor will the
Company or any of its Subsidiaries be, as a result of the execution and
delivery of this Agreement or the performance of its obligations hereunder,
in violation of any license, sublicense, or other agreement as to which the
Company or any of its Subsidiaries is a party and pursuant to which the
Company or any of its Subsidiaries is authorized to use any third-party
Intellectual Property Rights or computer software programs or applications;
(B) The executive officers of the Company do not know of any
infringement, misappropriation, or violation of any Intellectual Property
Rights of any other person that has occurred or results in any way from the
operations of the respective businesses of the Company or its Subsidiaries.
No claim of any infringement, misappropriation or violation of any
Intellectual Property Rights of any other person has been made or asserted
in respect of the operations of the respective businesses of the Company or
its Subsidiaries. Neither the Company nor any of its Subsidiaries has had
notice of, nor do the executive officers of the Company have knowledge of
any valid grounds for any bona fide claim against the Company or its
Subsidiaries that its Intellectual Property Rights, operations, activities,
products,
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software, equipment, machinery or processes infringe, misappropriate or
violate any Intellectual Property Rights of any other person;
(C) (i) the Company or its Subsidiaries has maintained and protected
the software that each owns (the "Owned Software") including, without
limitation, all source code and system specifications associated with such
software, with such measures as are reasonably necessary to protect the
proprietary, trade secret or confidential information contained therein;
and (ii) the executive officers of the Company do not know of any
infringement, misappropriation or violation of any Intellectual Property
Rights of any other person with respect to the Owned Software;
(D) all employees, agents, consultants, or contractors who have
contributed to or participated in the creation or development of
inventions, discoveries, trade secrets, copyrightable works, or ideas on
behalf of the Company, any of its Subsidiaries or any predecessor in
interest thereto, if and only if necessary to vest ownership rights in such
material with the Company and/or the Subsidiaries, either: (a) is a party
to a "work-for-hire" agreement under which the Company, a Subsidiary (or
such predecessor in interest, as applicable), is deemed to be the original
owner/author of all property rights therein; or (b) has executed an
assignment or an agreement to assign in favor of the Company, a Subsidiary
(or such predecessor in interest, as applicable), all right, title and
interest in such inventions, discoveries, trade secrets, copyrightable
works, or ideas.
(iii) As used herein, the term "Intellectual Property Rights" shall mean:
(A) all United States and foreign patents, patent applications, continuations,
continuations-in-part, divisions, reissues, patent disclosures, extensions,
re-examinations, inventions (whether or not patentable) or improvements thereto;
(B) all United States, state, foreign and common law trademarks, service marks,
domain names, logos, trade dress and trade names (including all assumed or
fictitious names under which the Company and each Subsidiary is conducting
its-business or has within the previous five years conducted its business),
whether registered or unregistered, and pending applications to register the
foregoing; (C) all United States and foreign copyrights, whether registered or
unregistered and pending applications to register the same; and (D) all
confidential ideas, trade secrets, know-how, concepts, methods, processes,
formulae, reports, data, customer lists, mailing lists, business plans, or other
proprietary information.
(o) Brokers and Finders. Neither the Company nor any of its officers,
directors or employees has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finders' fees in connection
with the Merger or the other transactions contemplated by this Agreement except
that the Company has employed Goldman, Sachs & Co. as its financial advisor,
pursuant to arrangements which have been disclosed to Parent prior to the date
hereof.
5.2. Representations and Warranties of Parent and Merger Sub. Except as set
forth in the corresponding sections or subsections of the disclosure letter
delivered to the Company by Parent on or prior to entering into this Agreement
(the "Parent Disclosure Letter"), Parent and Merger Sub each hereby represent
and warrant to the Company that:
(a) Capitalization of Merger Sub. The authorized capital stock of Merger
Sub consists of 1,000 shares of Common Stock, par value $0.01 per share, 100
shares of which are validly issued and outstanding. All of the issued and
outstanding capital stock of Merger Sub is, and at the Effective Time will be,
owned by Parent, and there are (i) no other shares of capital stock or voting
securities of Merger Sub, (ii) no securities of Merger Sub convertible into or
exchangeable for shares of capital stock or voting securities of Merger Sub and
(iii) no options or other rights to acquire from Merger Sub, and no obligations
of Merger Sub to issue, any capital stock, voting securities or securities
convertible into or exchangeable for capital stock or voting securities of
Merger Sub. Merger Sub has not conducted any business prior to the date hereof
and has no, and prior to the Effective Time will have no, assets, liabilities or
obligations of any nature other than those incident to its formation and
pursuant to this Agreement and the Merger and the other transactions
contemplated by this Agreement.
(b) Organization, Good Standing and Qualification. Each of Parent and its
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of
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organization and has all requisite corporate or similar power and authority to
own and operate its properties and assets and to carry on its business as
presently conducted and is qualified to do business and is in good standing as a
foreign corporation in each jurisdiction where the ownership or operation of its
properties or conduct of its business requires such qualification, except where
the failure to be so qualified or in such good standing is not reasonably likely
to have, individually or in the aggregate, a Parent Material Adverse Effect (as
defined below). Parent has made available to the Company a complete and correct
copy of Parent's and Merger Sub's certificates of incorporation and by-laws,
each as amended to the date hereof. Parent's and Merger Sub's certificates of
incorporation and by-laws so made available are in full force and effect.
As used in this Agreement, the term "Parent Material Adverse Effect" means
a material adverse effect on the financial condition, properties or results of
operations of the Parent and its Subsidiaries taken as a whole; provided,
however, that any such effect resulting from any change (i) in law, rule or
regulation applicable to all companies and businesses generally or to the
consumer products, tissue, paper or forest products industries specifically or
(ii) in economic or business conditions generally, or in the consumer products,
tissue, paper or forest products industries specifically, shall not be
considered when determining if a Parent Material Adverse Effect has occurred.
(c) Capital Structure. The authorized capital stock of Parent consists of
1,200,000,000 shares of Parent Common Stock, and 20,000,000 shares of Preferred
Stock, without par value (the "Parent Preferred Stock") of which 2,000,000
shares have been designated as Series A Junior Participating Preferred Stock
(the "Parent Series A Preferred Stock"). As of August 31, 1997, 551,691,059,
shares of Parent Common Stock were outstanding, and no shares of Parent
Preferred Stock were issued and outstanding. All of the shares of Parent Common
Stock deliverable in exchange for the Shares at the Effective Date in accordance
with this Agreement and all of the shares of Parent Series A Preferred Stock
deliverable to the holders of such Parent Common Stock pursuant to the Parent
Rights Agreement if and when deliverable to them under the Parent Rights
Agreement will be, when so issued, duly authorized, validly issued, fully paid
and nonassessable and free of preemptive rights. All of the outstanding shares
of Parent Common Stock have been duly authorized and are validly issued, fully
paid and nonassessable. Parent has no Parent Common Stock or Parent Preferred
Stock reserved for issuance, except that, as of August 31, 1997, there were
2,000,000 shares of Parent Series A Preferred Stock reserved for issuance under
the Parent Rights Agreement. As of August 31, 1997, there were outstanding: (i)
options to purchase 1,590,071 shares of Parent Common Stock under Parent's 1986
Equity Participation Plan, (b) options to purchase 10,852,840 shares of Parent
Common Stock under Parent's 1992 Equity Participation Plan, and (c) options to
purchase 1,098,826 shares of Parent Common Stock under the stock option plans of
Kimberly-Clark Tissue Company (formerly Scott Paper Company). Except as set
forth above, as of the date hereof there are no preemptive or other outstanding
rights, options, warrants, conversion rights, redemption rights, repurchase
rights, agreements, arrangements or commitments to issue or to sell any shares
of Parent Common Stock or Parent Preferred Stock or any securities or
obligations convertible or exchangeable into or exercisable for, or giving any
Person a right to subscribe for or acquire Parent Common Stock or Parent
Preferred Stock, and no securities or obligation evidencing such rights is
authorized, issued or outstanding.
(d) Corporate Authority.
(i) No vote of holders of capital stock of Parent is necessary to approve
this Agreement and the Merger and the other transactions contemplated hereby.
The execution, delivery and performance of this Agreement, the Company Option
Agreement, the Severance Matters Agreement and the Executive Agreements to which
Parent is a party by Parent and, where applicable, Merger Sub and the
consummation by Parent and Merger Sub of the transactions contemplated hereby
and thereby have been duly authorized by all necessary corporate action on the
part of Parent and, where applicable, Merger Sub. This Agreement, the Company
Option Agreement, the Severance Matters Agreement and the Executive Agreements
to which Parent is a party have been duly executed and delivered by Parent and,
where applicable, Merger Sub and (assuming the valid authorization, execution
and delivery of such agreements by the other parties thereto) constitute the
valid and binding agreements of Parent and, where applicable, Merger Sub,
enforceable against each of Parent and, where applicable, Merger Sub in
accordance with their terms, except that enforceability may be limited by the
Bankruptcy Exception and is subject to the Equity Exception.
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(ii) Prior to the Effective Time, Parent will have taken all necessary
action to permit it to deliver the number of shares of Parent Common Stock
required to be delivered pursuant to Article IV. The Parent Common Stock, when
delivered, will be validly issued, fully paid and nonassessable, and no
stockholder of Parent will have any preemptive right of subscription or purchase
in respect thereof.
(e) Governmental Filings; No Violations. (i) Other than the filings and/or
notices (A) pursuant to Section 1.3, (B) under the HSR Act, the Securities Act
and the Exchange Act, (C) to comply with state securities or "blue sky" laws, if
applicable, (D) required to be made with the NYSE, and (E) filings pursuant to
Section 6.17, no notices, reports or other filings are required to be made by
Parent or any of its Subsidiaries, including Merger Sub, with, nor are any
consents, registrations, approvals, permits or authorizations required to be
obtained by Parent or any of its Subsidiaries, including Merger Sub, from, any
Governmental Entity, in connection with the execution and delivery of this
Agreement, the Company Option Agreement, the Severance Matters Agreement and the
Executive Agreements to which Parent is a party by Parent and, where applicable,
Merger Sub and the consummation by Parent and Merger Sub of the Merger and the
other transactions contemplated hereby and thereby, except those that the
failure to make or obtain are not, individually or in the aggregate, reasonably
likely to have a Parent Material Adverse Effect or prevent, materially delay or
materially impair the ability of Parent or Merger Sub to consummate the
transactions contemplated hereby and thereby.
(ii) The execution, delivery and performance of this Agreement, the Company
Option Agreement and the Executive Agreements to which it is a party by Parent
and Merger Sub do not, and the consummation by Parent and Merger Sub of the
Merger and the other transactions contemplated hereby and thereby will not,
constitute or result in (A) a breach or violation of, or a default under, the
certificate or by-laws of Parent and Merger Sub or the comparable governing
instruments of any of its Subsidiaries, (B) a breach or violation of, or a
default under, or an acceleration of any obligations or the creation of a lien,
pledge, security interest or other encumbrance on the assets of Parent or any of
its Subsidiaries (with or without notice, lapse of time or both) pursuant to,
any Debt Contracts or Other Contracts binding upon Parent or any of its
Subsidiaries or any Law or governmental or non-governmental permit or license to
which Parent or any of its Subsidiaries is subject or any judgment, order or
decree to which the Parent or any of its Subsidiaries or any of its properties
is subject or (C) any change in the rights or obligations of any party under any
such Debt Contracts or Other Contracts, except, in the case of clause (B) or (C)
above, for any breach, violation, default, acceleration, creation or change
that, individually or in the aggregate, is not reasonably likely to have a
Parent Material Adverse Effect or prevent, materially delay or materially impair
the ability of Parent or Merger Sub to consummate the transactions contemplated
hereby and thereby.
(f) Parent Reports; Financial Statements. Parent has delivered to the
Company each registration statement, report, proxy statement or information
statement prepared by it since December 31, 1996 (the "Parent Audit Date"),
including (i) Parent's Annual Report on Form 10-K for the year ended December
31, 1996, (ii) Parent's Quarterly Reports on Form 10-Q for the periods ended
March 31, 1997 and June 30, 1997, and (iii) Parent's Current Reports on Form 8-K
dated February 20, 1997, February 25, 1997, and April 24, 1997, each in the form
(including exhibits, annexes and any amendments thereto) filed with the SEC
(collectively, including any such reports filed subsequent to the date hereof,
the "Parent Reports"). As of their respective dates, the Parent Reports did not,
and any Parent Reports filed with the SEC subsequent to the date hereof will
not, contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances in which they were made, not misleading.
Each of the consolidated balance sheets included in or incorporated by reference
into the Parent Reports (including the related notes and schedules) fairly
presents, or will fairly present, in all material respects, the consolidated
financial position of Parent and its Subsidiaries as of its date and each of the
consolidated statements of income, and cash flows included in or incorporated by
reference into the Parent Reports (including any related notes and schedules)
fairly presents, or will fairly present, in all material respects, the results
of operations, and changes in financial position, as the case may be, of Parent
and its Subsidiaries for the periods set forth therein (subject, in the case of
unaudited statements, to notes and normal year-end audit adjustments that will
not be material in amount or effect), in each case in accordance with GAAP
consistently applied during the periods involved, except as may be noted
therein.
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(g) Absence of Certain Changes. Except as disclosed in the Parent Reports
filed prior to the date hereof, since the Parent Audit Date Parent and its
Subsidiaries have conducted their respective businesses only in, and have not
entered into or engaged in any material transaction other than in the ordinary
and usual course of business and there has not been (i) any change in the
financial condition, properties, business or results of operations of Parent and
its Subsidiaries or any development or combination of developments of which the
executive officers of Parent has knowledge that, individually or in the
aggregate, has had or is reasonably likely to result in a Parent Material
Adverse Effect; (ii) any damage, destruction or other casualty loss with respect
to any asset or property owned, leased or otherwise used by Parent or any of its
Subsidiaries, whether or not covered by insurance, except as is not reasonably
likely to have, individually or in the aggregate, a Parent Material Adverse
Effect; (iii) any material change by Parent in accounting principles, practices
or methods; or (iv) any declaration, setting aside or payment of any dividend or
other distribution in respect of the capital stock of Parent, except for
dividends or other distributions on its capital stock publicly announced prior
to the date hereof or Parent's regular quarterly dividends or increases in such
dividends which are not materially in excess of past practice.
(h) Litigation and Liabilities. Except as disclosed in the Parent Reports
filed prior to the date hereof, there are no (i) civil, criminal or
administrative actions, suits, claims, hearings, investigations or proceedings
pending or, to the knowledge of the executive officers of Parent, threatened
against Parent or any of its Subsidiaries or any current or former director or
officer of Parent or any of its Subsidiaries (in their capacity as such) or (ii)
obligations or liabilities, whether or not accrued, contingent or otherwise,
including those relating to matters involving any Environmental Law, that, in
the case of either clause (i) or (ii), individually or in the aggregate, are
reasonably likely, in either such case, to have a Parent Material Adverse Effect
or prevent or materially burden or materially impair the ability of Parent or
Merger Sub to consummate the transactions contemplated by this Agreement. Except
as disclosed in the Parent Reports filed prior to the date hereof, there are no
outstanding orders, judgments, injunctions, awards or decrees of any
Governmental Entity against the Parent or any of its Subsidiaries, any of its or
their properties, assets or business, or, to the knowledge of the executive
officers of the Parent, any of its or their current or former directors or
officers, as such, that is reasonably likely to have, individually or in the
aggregate, a Parent Material Adverse Effect.
(i) Compliance with Laws; Permits. Except as set forth in the Parent
Reports filed prior to the date hereof, the businesses of each of Parent and its
Subsidiaries are being conducted in compliance with applicable Laws except for
such violations that, individually or in the aggregate, are not reasonably
likely to have a Parent Material Adverse Effect or prevent or materially burden
or materially impair the ability of Parent or Merger Sub to consummate the
transactions contemplated by this Agreement. Parent and its Subsidiaries each
has all permits, licenses, trademarks, patents, trade names, copyrights, service
marks, franchises, variances, exemptions, orders and other governmental
authorizations, consents and approvals necessary to own or lease and operate
their respective properties and conduct its business as presently conducted
except those the absence of which are not, individually or in the aggregate,
reasonably likely to have a Parent Material Adverse Effect or prevent or
materially burden or materially impair the ability of Parent or Merger Sub to
consummate the Merger and the other transactions contemplated by this Agreement.
(j) Environmental Matters. Except as disclosed in the Parent Reports filed
prior to the date hereof and except for such matters that, alone or in the
aggregate, are not reasonably likely to have a Parent Material Adverse Effect:
(i) to the knowledge of the executive officers of Parent, Parent and its
Subsidiaries are in compliance with all applicable Environmental Laws; (ii)
neither Parent nor any of its Subsidiaries has received any written notice from
any Governmental Entity or any third party indicating that Parent is in
violation of any Environmental Law; and (iii) Parent and its Subsidiaries are
not subject to any court order, administrative order or decree arising under any
Environmental Law.
(k) Tax Matters. As of the date hereof, neither Parent nor any of its
Affiliates has taken or agreed to take any action, nor do the executive officers
of Parent have any knowledge of any fact or circumstance, that would prevent the
Merger and the other transactions contemplated by this Agreement from qualifying
as a "reorganization" within the meaning of Section 368(a) of the Code.
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(l) Ownership of Shares. Except as to Shares which may be acquired by
Parent pursuant to the Company Option Agreement, neither Parent nor any of its
Subsidiaries is the "Beneficial Owner" (as such term is defined in Rule 13d-3 of
the Exchange Act) of any Shares.
(m) Brokers and Finders. Neither Parent nor any of its officers, directors
or employees has employed any broker or finder or incurred any liability for any
brokerage fees, commissions or finders' fees in connection with the Merger or
the other transactions contemplated by this Agreement, except that Parent has
employed Merrill Lynch & Co. as its financial advisor, the arrangements with
which have been disclosed in writing to the Company prior to the date hereof.
ARTICLE VI
COVENANTS
6.1. Interim Operations. The Company covenants and agrees as to itself and
each of its Subsidiaries that, after the date hereof and prior to the Effective
Time (unless Parent shall otherwise approve, and except as set forth in the
Company Disclosure Letter or as otherwise expressly contemplated by this
Agreement):
(a) the business of it and its Subsidiaries shall be conducted in the
ordinary and usual course and, to the extent consistent therewith, it and its
Subsidiaries shall use all reasonable efforts to preserve its business
organization intact and maintain its existing relations and goodwill with
customers, suppliers, distributors, creditors, lessors, employees and business
associates;
(b) neither it nor any of its Subsidiaries shall (i) issue, sell, pledge,
dispose of or encumber any capital stock owned by it or any of its Subsidiaries
in any of its Subsidiaries or other Affiliates; (ii) amend its certificate or
articles of incorporation or by-laws; (iii) split, combine or reclassify its
outstanding shares of capital stock; (iv) declare, set aside or pay any dividend
payable in cash, stock or property in respect of any capital stock other than
dividends from its direct or indirect wholly-owned Subsidiaries; or (v)
repurchase, redeem or otherwise acquire, except in connection with the payment
of the exercise price of any option outstanding on the date hereof under the
Stock Plan or the Director Option Agreements, or permit any of its Subsidiaries
to purchase or otherwise acquire, any shares of its capital stock or any
securities convertible into or exchangeable or exercisable for any shares of its
capital stock;
(c) neither it nor any of its Subsidiaries shall (i) issue, sell, pledge,
dispose of or encumber any shares of, or securities convertible into or
exchangeable or exercisable for, or options, warrants, calls, commitments or
rights of any kind to acquire, any shares of its capital stock of any class or
any other property or assets (other than Shares issuable pursuant to options
outstanding on the date hereof under the Stock Plan or the Director Option
Agreements); (ii) purchase, transfer, lease, sell, mortgage, pledge, dispose of
or encumber any real property, or effect any improvements or expansions thereon;
(iii) other than in the ordinary and usual course of business, purchase,
transfer, lease, license, guarantee, sell, mortgage, pledge, dispose of or
encumber any other property or assets (including capital stock of any of its
Subsidiaries) or incur or modify any material indebtedness or other liability;
(iv) make or authorize or commit for any capital expenditures other than in the
ordinary and usual course of business as described in Section 16(b) of the
Company Disclosure Letter; or (v) by any means, make any acquisition of, or
investment in any business, through acquisition of assets or stock of any other
Person or entity;
(d) except as may be required by applicable law, and except as provided in
Section 6.11, neither it nor any of its Subsidiaries shall terminate, establish,
adopt, enter into, make any new grants or awards under, amend or otherwise
modify, any Compensation and Benefit Plans or increase the salary, wage, bonus,
severance, incentive or other compensation of any employees except for grants,
awards or increases occurring in the ordinary and usual course of business
(which shall include normal periodic performance reviews and related
compensation and benefit increases);
(e) neither it nor any of its Subsidiaries shall settle or compromise any
material claims or litigation or, except in the ordinary and usual course of
business, enter into any material Debt Contracts or Other Contracts
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or modify, amend or terminate any of its material Debt Contracts or Other
Contracts or waive, release or assign any material rights or claims;
(f) neither it nor any of its Subsidiaries shall make any Tax election or
permit any insurance policy naming it as a beneficiary or loss-payable payee to
be canceled or terminated except in the ordinary and usual course of business;
(g) neither it nor any of its Subsidiaries shall take any action, other
than reasonable and usual actions in the ordinary and usual course of business
consistent with past practice, with respect to accounting policies or
procedures;
(h) neither it nor any of its Subsidiaries shall sell, transfer, assign or
abandon any patents or trademarks which are owned or controlled directly or
indirectly by the Company or any of its Subsidiaries, except for any abandonment
of a non-material trademark or any intercompany transfer among the Company and
its Subsidiaries, in either case, in the ordinary and usual course of business;
(i) neither it nor any of its Subsidiaries shall license or otherwise
encumber any patents or trademarks which are owned or controlled directly or
indirectly by the Company or any of its Subsidiaries, except in the ordinary and
usual course of business;
(j) neither it nor any of its Subsidiaries shall make any modification to
employee or customer incentives or trade policies which would reasonably be
expected to cause the Company's distributors or end-user customers to increase
purchases above those levels normally required to meet their respective needs or
cause an excessive increase or decrease in the Company's inventories or working
capital; and
(k) neither it nor any of its Subsidiaries shall authorize or announce an
intention to do any of the foregoing, or enter into any contract, agreement,
commitment or arrangement to do any of the foregoing.
6.2. Acquisition Proposals. From and after the date hereof, the Company
shall not, and shall use its best efforts to not permit any of its directors,
officers, employees, attorneys, financial advisors, agents or other
representatives or those of any of its Subsidiaries to, directly or indirectly,
solicit, initiate or knowingly encourage (including by way of furnishing
information) any Takeover Proposal (as hereinafter defined) from any Person, or
engage in or continue discussions or negotiations relating to any Takeover
Proposal; provided, however, that the Company may engage in discussions or
negotiations with, and furnish information to, any Person that makes a written
Takeover Proposal in respect of which the Board of Directors of the Company
concludes in good faith if consummated would constitute a Superior Proposal (as
hereinafter defined), but only if the Board of Directors of the Company shall
conclude in good faith on the basis of the advice of its outside counsel that
the failure to take such action would be inconsistent with the fiduciary
obligations of such Board of Directors under applicable law; and provided
further that notwithstanding anything to the contrary herein contained, the
Board of Directors of the Company may take and disclose to the Company's
stockholders a position contemplated by Rule 14e-2 promulgated under the
Exchange Act, comply with Rule 14d-9 thereunder and make all disclosures
required by applicable law in connection therewith. The Company shall as soon as
practicable and in any event no later than the date on which such Takeover
Proposal is presented to the Company's Board of Directors notify Parent of any
Takeover Proposal received by it or any of its directors, officers, employees,
attorneys, financial advisors, agents or other representatives or those of any
of its Subsidiaries or the receipt by the Company or any of the foregoing of any
notice of any intention to make a Superior Proposal, including the identity of
the person making such Takeover Proposal or intending to make a Superior
Proposal and the material terms of any such Takeover Proposal. As used in this
Agreement: (i) "Takeover Proposal" means any proposal or offer (other than a
proposal or offer by Parent or any of its Affiliates), or any expression of
interest by any Person relating to any actual or potential merger, consolidation
or other business combination involving the Company or any of its Subsidiaries
or any acquisition in any manner (including, without limitation, by tender or
exchange offer) of a substantial equity interest in, or a substantial portion of
the assets of, the Company or any of its Subsidiaries; and (ii) "Superior
Proposal" means a bona fide proposal or offer made by any Person (x) to acquire
the Company pursuant to any tender or exchange offer or any acquisition of all
or substantially all of the assets of the Company and its Subsidiaries as a
whole or (y) to enter into a merger, consolidation or other business
consolidation with the Company or any
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of its Subsidiaries, in each case on terms which a majority of the members of
the Board of Directors of the Company determines in good faith, and based on the
advice of independent financial advisors, to be more favorable to the Company
and its stockholders than the transactions contemplated hereby (including any
revised transaction proposed by Parent pursuant to Section 8.1(f)). During the
period from the date of this Agreement through the Effective Time, the Company
shall not terminate, amend, modify or waive any provision of any confidentiality
or standstill agreement to which it or any of its Subsidiaries is a party.
During such period, the Company shall enforce, to the fullest extent permitted
under applicable law, but subject to the exercise by the Board of Directors of
the Company of their fiduciary obligations after consultation with outside
counsel, the provisions of any such agreement, including, but not limited to, by
obtaining injunctions to prevent any breaches of such agreements and to enforce
specifically the terms and provisions thereof in any court of the United States
of America or of any state having jurisdiction.
6.3. Information Supplied. The Company and Parent each agrees, as to itself
and its Subsidiaries, that none of the information supplied or to be supplied by
it or its Subsidiaries for inclusion or incorporation by reference in (i) the
Registration Statement on Form S-4 to be filed with the SEC by Parent in
connection with the issuance of shares of Parent Common Stock in the Merger
(including the proxy statement and prospectus (the "Prospectus/Proxy Statement")
constituting a part thereof) (the "S-4 Registration Statement") will, at the
time the S-4 Registration Statement becomes effective under the Securities Act,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading, and
(ii) the Prospectus/Proxy Statement and any amendment or supplement thereto
will, at the date of mailing to the Company's stockholders and at the time of
the meeting of stockholders of the Company to be held in connection with the
Merger, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
6.4. Stockholders Meeting. The Company will take, in accordance with
applicable law and its certificate of incorporation and by-laws, all action
necessary to convene a meeting of holders of Shares (the "Stockholders Meeting")
as promptly as practicable after the S-4 Registration Statement is declared
effective to consider and vote upon the approval of this Agreement. The
Company's Board of Directors shall recommend such approval and shall take all
lawful action to solicit such approval; provided, however, that the Company's
Board of Directors shall not be required to make, and shall be entitled to
withdraw, such recommendation (and cease such solicitation) if such Board of
Directors concludes in good faith on the basis of the advice of its outside
counsel that the making of, or the failure to withdraw, such recommendation
would violate the fiduciary obligations of such Board of Directors under
applicable law.
6.5. Filings; Other Actions; Notification.
(a) Parent and the Company shall promptly prepare and file with the SEC the
Prospectus/Proxy Statement, and Parent shall prepare and file with the SEC the
S-4 Registration Statement as promptly as practicable. Parent and the Company
each shall use its best efforts to have the S-4 Registration Statement declared
effective under the Securities Act as promptly as practicable after such filing,
and promptly thereafter mail the Prospectus/Proxy Statement to the stockholders
of the Company. Parent shall also use its best efforts to obtain prior to the
effective date of the S-4 Registration Statement all necessary state securities
law or "blue sky" permits and approvals, if any, required in connection with the
Merger and to consummate the other transactions contemplated by this Agreement
and will pay all expenses incident thereto.
(b) The Company and Parent each shall use its best efforts to cause to be
delivered to the other party and its directors a letter of its independent
auditors, dated (i) the date on which the S-4 Registration Statement shall
become effective and (ii) the Closing Date, and addressed to the other party and
its directors, in form and substance customary for "comfort" letters delivered
by independent public accountants in connection with registration statements
similar to the S-4 Registration Statement.
(c) The Company and Parent shall cooperate with each other and use (and
shall cause their respective Subsidiaries to use) their respective best efforts
to take or cause to be taken all actions, and do or cause to be done all things,
necessary, proper or advisable on its part under this Agreement and applicable
Laws to
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consummate and make effective the Merger and the other transactions contemplated
by this Agreement as soon as practicable, including preparing and filing as
promptly as practicable all documentation to effect all necessary notices,
reports and other filings, responding promptly to any requests for further
information and to obtain as promptly as practicable all consents,
registrations, approvals, permits and authorizations necessary or advisable to
be obtained from any third party and/or any Governmental Entity in order to
consummate the Merger or any of the other transactions contemplated by this
Agreement as promptly as practicable. Subject to applicable laws relating to the
exchange of information, Parent and the Company shall have the right to review
in advance, and to the extent practicable each will consult the other on, all
the information relating to Parent or the Company, as the case may be, and any
of their respective Subsidiaries, that appear in any filing made with, or
written materials submitted to, any third party and/or any Governmental Entity
in connection with the Merger and the other transactions contemplated by this
Agreement. In exercising the foregoing right, each of the Company and Parent
shall act reasonably and as promptly as practicable.
(d) The Company and Parent each shall, upon request by the other, furnish
the other with all information concerning itself, its Subsidiaries, directors,
officers and stockholders and such other matters as may be reasonably necessary
or advisable in connection with the Prospectus/Proxy Statement, the S-4
Registration Statement or any other statement, filing, notice or application
made by or on behalf of Parent, the Company or any of their respective
Subsidiaries to any third party and/or any Governmental Entity in connection
with the Merger and the transactions contemplated by this Agreement.
(e) The Company and Parent each shall keep the other apprised of the status
of matters relating to completion of the transactions contemplated hereby,
including promptly furnishing the other with copies of notice or other
communications received by Parent or the Company, as the case may be, or any of
its Subsidiaries, from any third party and/or any Governmental Entity with
respect to the Merger and the other transactions contemplated by this Agreement.
(f) Without limiting the generality of the undertakings pursuant to this
Section 6.5, (i) the Company and Parent agree to provide promptly to any and all
federal, state, local or foreign court or Government Entity with jurisdiction
over enforcement of any applicable antitrust laws ("Government Antitrust
Entity") information and documents requested by any Government Antitrust Entity
or necessary, proper or advisable to permit consummation of the Merger and the
transactions contemplated by this Agreement and the Company Option Agreement;
and (ii) in connection with any filing or submission or other action required to
be made or taken by either Parent or the Company to effect the Merger and to
consummate the other transactions contemplated hereby or thereby, the Company
shall not, without Parent's prior written consent, commit to any divestiture
transaction, and, neither Parent nor any of its Affiliates shall be required to
divest or hold separate or otherwise take or commit to take any action that
limits its freedom of action with respect to, or its ability to retain, the
Company or any portions thereof or any of the business, product lines,
properties or assets of Parent or any of its Affiliates.
6.6. Taxation. Subject to Section 6.2, neither Parent nor the Company shall
take or cause to be taken any action, whether before or after the Effective
Time, that would disqualify the Merger as a "reorganization" within the meaning
of Section 368(a) of the Code.
6.7. Access. Upon reasonable notice, and except as may otherwise be
required by applicable law, the Company shall (and shall cause its Subsidiaries
to) afford Parent's officers, employees, counsel, accountants and other
authorized representatives ("Representatives") access, during normal business
hours throughout the period prior to the Effective Time, to its properties,
books, contracts and records (including its audit work papers and related
documents) and, during such period, shall (and shall cause its Subsidiaries to)
furnish promptly to Parent all information concerning its business, properties
and personnel as may reasonably be requested, provided that no investigation
pursuant to this Section shall affect or be deemed to modify any representation
or warranty made by the Company, and provided, further, that the foregoing shall
not require the Company to permit any inspection, or to disclose any
information, that in the reasonable judgment of the Company, would result in the
disclosure of any trade secrets of it or third parties or violate any of its
obligations with respect to confidentiality if the Company shall have used
reasonable efforts to obtain the consent of such third party to such inspection
or disclosure. All requests for information made pursuant to this
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Section shall be directed to an executive officer of the Company or such Person
as may be designated by its officers. Parent and the Company shall each
designate two representatives to meet on a monthly basis to discuss the
Company's capital expenditures, inventory management, sales promotions,
distribution arrangements, construction projects, group purchasing organization
contracts, other material contracts, patent licenses and such other business
matters concerning the Company's operations as are desired. All such information
shall be governed by the terms of the Company Confidentiality Agreement (as
defined in Section 9.7).
6.8. Affiliates. Prior to the Effective Time, the Company shall deliver to
Parent a list of names and addresses of those Persons who are, in the opinion of
the Company, as of the time of the Stockholders Meeting, "affiliates" of the
Company within the meaning of Rule 145 under the Securities Act. The Company
shall provide to Parent such information and documents as Parent shall
reasonably request for purposes of reviewing such list. There shall be added to
such list the names and addresses of any other Person subsequently identified by
either Parent or the Company as a Person who may be deemed to be such an
affiliate of the Company; provided, however, that no such Person identified by
Parent shall be added to the list of affiliates of the Company if Parent shall
receive from the Company, on or before the date of the Stockholders Meeting, an
opinion of counsel reasonably satisfactory to Parent to the effect that such
Person is not such an affiliate. The Company shall exercise its best efforts to
deliver or cause to be delivered to Parent, prior to the date of the
Stockholders Meeting, from each affiliate of the Company identified in the
foregoing list (as the same may be supplemented as aforesaid), a letter dated as
of the Closing Date substantially in the form attached as Exhibit D (the
"Affiliates Letter"). Parent shall not be required to maintain the effectiveness
of the S-4 Registration Statement or any other registration statement under the
Securities Act for the purposes of resale of Parent Common Stock by such
affiliates received in the Merger and the certificates representing Parent
Common Stock received by such affiliates shall bear a customary legend regarding
applicable Securities Act restrictions and the provisions of this Section.
6.9. Stock Exchange Listing and De-listing. Parent shall use its best
efforts to cause the shares of Parent Common Stock to be issued in the Merger to
be approved for listing on the NYSE, subject to official notice of issuance,
prior to the Closing Date. The Surviving Corporation shall use its best efforts
to cause the Shares to no longer be quoted on NASDAQ and de-registered under the
Exchange Act as soon as practicable following the Effective Time.
6.10. Publicity. The initial press releases by Parent and the Company
concerning this Agreement and the transaction contemplated hereby shall be
mutually agreed as to content prior to issuance and thereafter the Company and
Parent shall consult with each other prior to issuing any press releases or
otherwise making public announcements with respect to the Merger and the other
transactions contemplated by this Agreement and prior to making any filings with
any third party and/or any Governmental Entity (including any national
securities exchange) with respect thereto, except as may be required by law or
by obligations pursuant to any listing agreement with or rules of any national
securities exchange.
6.11. Options and Benefits.
(a) Stock Options. Prior to the Effective Time, each Company Option,
whether vested or not, shall be fully exercisable without regard to restrictions
contained in the Stock Plan or the Director Option Agreements, as the case may
be. At the Effective Time, all outstanding Company Options which have not been
exercised shall be canceled and each holder whose Company Options are canceled
shall receive an amount in cash (payable as soon as practicable but in no event
later than forty-five (45) days after the Effective Time) equal to the result of
multiplying the number of shares subject to such Company Options (whether vested
or not) by the excess of (A) the closing quotation of one Share as reported in
the Wall Street Journal under the NASDAQ National Market Issues for the trading
day that occurs immediately prior to the Effective Time and (B) the exercise
price of such Company Options, subject to any required withholding by Company.
(b) Employee Benefits. Parent agrees that for a period of not less than
twelve (12) months following the Effective Time, the employees of the Company
and its Subsidiaries in the United States (the "Employees") will be provided
with employee benefit plans and programs that are no less favorable in value in
the aggregate, as determined by Parent in good faith in accordance with any
method customarily used by Parent for making benefit comparisons, to those
provided to the Employees immediately prior to the Effective Time, as set forth
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in Section 5.1(h)(ii) of the Company Disclosure Letter, excluding the Stock
Plan, the 401(k) Plan (as defined below), and the ESOP (as defined below);
provided that nothing in this Agreement shall limit the right of Parent or the
Surviving Corporation to amend, terminate or discontinue any particular employee
benefit plan or program in accordance with the terms thereof. Employees who
become participants in any employee benefit plan or program of the Parent or any
of its Subsidiaries will be given credit under such plans and programs, for
purposes of eligibility and vesting thereunder, for all service with the Company
or its Subsidiaries.
Parent agrees that it shall, and shall cause the Surviving Corporation to,
honor all employment agreements disclosed in Section 5.1(h)(ii) of the Company
Disclosure Letter (except to the extent such employment agreements or amendments
thereto are entered into in contravention of Section 6.1(f) of this Agreement or
to the extent such agreements or amendments have expired or are rescinded) in
accordance with the terms thereof and subject to the rights of termination
provided therein.
Parent agrees to cause the Surviving Corporation to provide severance
benefits to the Employees in accordance with and subject to the provisions of
the Severance Matters Agreement.
Prior to the Effective Time, the Company shall further take all actions
necessary to terminate the Company's 401 (k) Capital Accumulation Plan (the
"401(k) Plan"), including but not limited to filing an application for
determination upon termination with the IRS, and commence winding up the plan.
The Company further agrees that, prior to the Effective Time, it shall make
a contribution to the Company's Employee Stock Ownership Plan (the "ESOP")
sufficient to repay in full the outstanding principal and interest due on the
ESOP loan, it being contemplated that the ESOP trustees will use this amount for
that purpose whereupon the Shares held in the suspense account shall be
allocated to participant accounts. The Company agrees thereafter, but prior to
the Effective Time, to take all actions necessary to terminate the ESOP,
including but not limited to filing an application for determination upon
termination with the IRS, and commence winding up the plan.
6.12. Fees and Expenses.
(a) Except as otherwise provided in this Section 6.12, whether or not the
Merger shall be consummated, all costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby, including, without
limitation, the fees and disbursements of counsel, financial advisors,
accountants, actuaries and consultants, shall be paid by the party incurring
such costs and expenses, provided that all expenses incurred in connection with
the filing fees for the Prospectus/Proxy Statement and the Registration
Statement on Form S-4, and the printing and mailing of the Prospectus/Proxy
Statement shall be shared equally by the Parent and the Company.
(b) Notwithstanding any provisions in this Agreement to the contrary, if a
Purchase Event (as defined in the Company Option Agreement) shall have occurred,
the Company shall reimburse Parent for its documented expenses in connection
with the transactions contemplated by this Agreement up to a maximum
reimbursable amount of $1 million. The Company agrees to reimburse such amount
within 15 days after receipt of the documentation supporting such expenses.
Nothing contained in this Section 6.12 shall be deemed to limit any
remedies available to any party for any breach of this Agreement by any other
party which such remedies shall be in addition to any amounts received by any
party pursuant to this Section 6.12; provided, however, that, with respect to
any breach by the Company of the provisions of Section 6.2 that is not the
result of willful action (or willful failure to take action) or bad faith on the
part of the Company, Parent's exclusive remedy in respect of such breach shall
be limited to the rights under the Company Option Agreement and to reimbursement
of its expenses as set forth above not in excess of $1 million, and the Company
shall have no other liability to Parent in respect of such breach.
6.13. Indemnification; Directors' and Officers' Insurance.
(a) Parent shall indemnify and hold harmless, to the fullest extent
permitted under applicable law (and Parent shall also advance expenses as
incurred to the fullest extent permitted under applicable law provided
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the Person to whom expenses are advanced provides an undertaking to repay such
advances if it is ultimately determined that such Person is not entitled to
indemnification), each present and former director, officer and employee of the
Company and its Subsidiaries (collectively, the "Indemnified Parties") against
any costs or expenses (including reasonable attorneys' fees), judgments, fines,
losses, claims, damages or liabilities (collectively, "Costs") incurred in
connection with any claim, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative, arising out of or pertaining
to matters existing or occurring at or prior to the Effective Time, including
the transactions contemplated by this Agreement; provided, that Parent shall not
have any obligation hereunder to any Indemnified Party if and when a court of
competent jurisdiction shall ultimately determine, and such determination shall
have become final, that the indemnification of such Indemnified Party in the
manner contemplated hereby is prohibited by applicable law. All rights to
indemnification in respect of any such claim or claims shall continue until
final disposition of any and all such claims.
(b) Any Indemnified Party wishing to claim indemnification under paragraph
(a) of this Section 6.13, upon learning of any such claim, action, suit,
proceeding or investigation, shall promptly notify Parent thereof, but the
failure to so notify shall not relieve Parent of any liability it may have to
such Indemnified Party if such failure does not materially prejudice the
indemnifying party. In the event of any such claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time), (i) Parent
or the Surviving Corporation shall have the right to assume the defense thereof
and Parent shall not be liable to such Indemnified Parties for any legal
expenses of other counsel or any other expenses subsequently incurred by such
Indemnified Parties in connection with the defense thereof, except that if
Parent or the Surviving Corporation elects not to assume such defense or counsel
for the Indemnified Parties advises that there are issues which raise conflicts
of interest between Parent or the Surviving Corporation and the Indemnified
Parties, the Indemnified Parties may retain counsel satisfactory to them, and
Parent or the Surviving Corporation shall pay all reasonable fees and expenses
of such counsel for the Indemnified Parties promptly as statements therefor are
received; provided, however, that Parent shall be obligated pursuant to this
paragraph (b) to pay for only one firm of counsel for all Indemnified Parties in
any jurisdiction unless the use of one counsel for such Indemnified Parties
would present such counsel with a conflict of interest, (ii) the Indemnified
Parties will cooperate in the defense of any such matter and (iii) Parent shall
not be liable for any settlement effected without its prior written consent. If
such indemnity is not available with respect to any Indemnified Party, then the
Surviving Corporation and the Indemnified Party shall contribute to the amount
payable in such proportion as is appropriate to reflect relative faults and
benefits.
(c) The Surviving Corporation shall use its best efforts to maintain the
Company's existing officers' and directors' liability insurance ("D&O
Insurance") for a period of six years after the Effective Time so long as the
annual premium therefor is not in excess of the last annual premium paid prior
to the date hereof (the "Current Premium"); provided, however, that if the
existing D&O Insurance expires, is terminated or canceled during such six-year
period, the Surviving Corporation will use its best efforts to obtain as much
substantially similar D&O Insurance as can be obtained for the remainder of such
period but in no event for a premium in excess (on an annualized basis) of two
(2) times the Current Premium.
(d) If the Surviving Corporation or any of its successors or assigns (i)
shall consolidate with or merge into any other corporation or entity and shall
not be the continuing or surviving corporation or entity of such consolidation
or merger or (ii) shall transfer all or substantially all of its properties and
assets to any individual, corporation or other entity, then, and in each such
case, proper provisions shall be made so that the successors and assigns of the
Surviving Corporation shall assume all of the obligations set forth in this
Section.
(e) The provisions of this Section are intended to be for the benefit of,
and shall be enforceable by, each of the Indemnified Parties, their heirs, their
representatives and assigns.
6.14. Takeover Statute. If any Takeover Statute is or may become applicable
to the Merger or the other transactions contemplated by this Agreement, the
Company Stockholder Agreement or the Company Option Agreement, each of Parent
and the Company and its Board of Directors shall grant such approvals and take
such actions as are necessary so that such transactions may be consummated as
promptly as practicable on the terms contemplated by this Agreement, the Company
Stockholder Agreement and the Company Option
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Agreement or by the Merger and otherwise act to eliminate or minimize the
effects of such statute or regulation on such transactions.
6.15. Parent Vote. Parent shall vote (or consent with respect to) or cause
to be voted (or a consent to be given with respect to) any Shares and any shares
of common stock of Merger Sub beneficially owned by it or any of its Affiliates
or with respect to which it or any of its Affiliates has the power (by
agreement, proxy or otherwise) to cause to be voted (or to provide a consent),
in favor of the adoption and approval of this Agreement at any meeting of
stockholders of the Company or Merger Sub, respectively, at which this Agreement
shall be submitted for adoption and approval and at all adjournments or
postponements thereof (or, if applicable, by any action of stockholders of
either the Company or Merger Sub by consent in lieu of a meeting).
6.16. Notification of Certain Matters. Parent shall give prompt notice to
the Company, and the Company shall give prompt notice to Parent, of: (i) the
occurrence, or non-occurrence, of any event the occurrence, or non-occurrence,
of which would cause (A) any representation or warranty contained in this
Agreement to be untrue or inaccurate in any material respect or (B) any
covenant, condition or agreement contained in this Agreement not to be complied
with or satisfied in any material respect; and (ii) any failure of Parent or the
Company, as the case may be, to comply with any covenant or agreement to be
complied with by it hereunder in any material respect; provided, however, that
the delivery of any notice pursuant to this Section 6.16 shall not limit or
otherwise affect the remedies available hereunder to the party receiving such
notice.
6.17. Real Estate Transfer and Gains Tax. Either the Company or the
Surviving Corporation shall pay all state or local taxes, if any (collectively,
the "Gains Taxes"), attributable to the transfer of the beneficial ownership of
the Company's and its Subsidiaries' real properties, and any penalties or
interest with respect thereto, payable in connection with the consummation of
the Merger. The Company shall cooperate with Parent in the filing of any returns
with respect to the Gains Taxes, including supplying in a timely manner a
complete list of all real property interests held by the Company and its
Subsidiaries and any information with respect to such properties that is
reasonably necessary to complete such returns. The portion of the consideration
allocable to the real properties of the Company and its Subsidiaries shall be
determined by Parent in its reasonable discretion. The stockholders of the
Company shall be deemed to have agreed to be bound by the allocation established
pursuant to this Section 6.17 in the preparation of any return with respect to
the Gains Taxes.
ARTICLE VII
CONDITIONS
7.1. Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver at or prior to the Effective Time of each of the
following conditions:
(a) Stockholder Approval. This Agreement shall have been duly approved by
holders of Shares constituting the Company Requisite Vote and shall have been
duly approved by the sole stockholder of Merger Sub in accordance with
applicable law and the certificate of incorporation and by-laws of each such
corporation.
(b) NYSE Listing. The shares of Parent Common Stock deliverable to the
Company stockholders pursuant to this Agreement shall have been authorized for
listing on the NYSE upon official notice of issuance.
(c) Regulatory Consents. The waiting period applicable to the consummation
of the Merger under the HSR Act shall have expired or been terminated and, other
than the filing provided for in Section 1.3, all notices, reports and other
filings required to be made prior to the Effective Time by the Company or Parent
or any of their respective Subsidiaries with, and all consents, registrations,
approvals, permits and authorizations required to be obtained prior to the
Effective Time by the Company or Parent or any of their respective
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Subsidiaries from, any Governmental Entity (collectively, "Governmental
Consents") in connection with the execution and delivery of this Agreement and
the consummation of the Merger and the other transactions contemplated hereby by
the Company, Parent and Merger Sub shall have been made or obtained (as the case
may be), except those that the failure to make or to obtain are not,
individually or in the aggregate, reasonably likely to have a Company Material
Adverse Effect or a Parent Material Adverse Effect.
(d) Litigation. No court or Governmental Entity of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any law, statute,
ordinance, rule, regulation, judgment, decree, injunction or other order
(whether temporary, preliminary or permanent) that is in effect and restrains,
enjoins or otherwise prohibits consummation of the Merger (collectively, an
"Order").
(e) S-4. The S-4 Registration Statement shall have become effective under
the Securities Act. No stop order suspending the effectiveness of the S-4
Registration Statement shall have been issued, and no proceedings for that
purpose shall have been initiated or be threatened, by the SEC.
(f) Blue Sky Approvals. Parent shall have received all state securities and
"blue sky" permits and approvals, if any, necessary to consummate the
transactions contemplated hereby.
7.2. Conditions to Obligations of Parent and Merger Sub. The obligations of
Parent and Merger Sub to effect the Merger are also subject to the satisfaction
or waiver by Parent at or prior to the Effective Time of the following
conditions:
(a) Representations and Warranties. Each of the representations and
warranties of the Company contained in this Agreement that is qualified by
materiality shall have been true and correct when made and shall be true and
correct at and as of the Closing Date as if made at and as of the Closing Date
and each of such representations and warranties that is not so qualified shall
have been true and correct in all material respects when made and shall be true
and correct in all material respects at and as of the Closing Date as if made at
and as of the Closing Date, in each case except as contemplated or permitted by
this Agreement; and Parent shall have received a certificate signed on behalf of
the Company by its Chief Executive Officer and its Chief Financial Officer to
such effect.
(b) Performance of Obligations of the Company. The Company shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date and Parent shall have
received a certificate signed on behalf of the Company by its Chief Executive
Officer and its Chief Financial Officer to such effect.
(c) Consents Under Agreements. The Company shall have obtained the consent
or approval of each Person whose consent or approval shall be required under any
Debt Contract or Other Contract to which the Company or any of its Subsidiaries
is a party, except those for which the failure to obtain such consent or
approval, individually or in the aggregate, is not reasonably likely to have a
Company Material Adverse Effect.
(d) Tax Opinion. Parent shall have received an opinion of Sidley & Austin,
dated the Closing Date, in form and substance reasonably satisfactory to Parent,
substantially to the effect that, for federal income tax purposes;
(i) The Merger will constitute a "reorganization" within the meaning of
Section 368(a) of the Code, and the Company, Merger Sub and Parent will each be
a party to such reorganization within the meaning of Section 368(b) of the Code.
(ii) No gain or loss will be recognized by Parent or the Company as a
result of the Merger.
(iii) No gain or loss will be recognized by the stockholders of the Company
upon the exchange of their Shares solely for shares of Parent Common Stock
pursuant to the Merger, except with respect to cash, if any, received in lieu of
fractional shares of Parent Common Stock.
(iv) The aggregate tax basis of the shares of Parent Common Stock received
by a stockholder solely in exchange for Shares pursuant to the Merger (including
fractional shares of Parent Common Stock for which cash is received) will be the
same as the aggregate tax basis of the Shares exchanged therefor.
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(v) The holding period for shares of Parent Common Stock received by a
stockholder in exchange for Shares pursuant to the Merger will include the
holding period that such Shares were held by the stockholder, provided such
Shares were held as capital assets by such stockholder at the Effective Time.
(vi) A stockholder of the Company who receives cash in lieu of a fractional
share of Parent Common Stock will recognize gain or loss equal to the
difference, if any, between such stockholder's basis in such fractional share
and the amount of cash received.
In rendering such opinion, Sidley & Austin may receive and rely upon
representations contained in a certificate of Parent (the "Parent Tax
Certificate") substantially in the form attached to the Parent Disclosure
Letter, a certificate of the Company (the "Company Tax Certificate")
substantially in the form attached to the Company Disclosure Letter and other
appropriate certificates of Parent, the Company and others.
7.3. Conditions to Obligation of the Company. The obligation of the Company
to effect the Merger is also subject to the satisfaction or waiver by the
Company at or prior to the Effective Time of the following conditions:
(a) Representations and Warranties. Each of the representations and
warranties of Parent and Merger Sub contained in this Agreement that is
qualified by materiality shall have been true and correct when made and shall be
true and correct at and as of the Closing Date as if made at and as of the
Closing Date and each of such representations and warranties that is not so
qualified shall have been true and correct in all material respects when made
and shall be true and correct in all material respects at and as of the Closing
Date as if made at and as of the Closing Date, in each case except as
contemplated or permitted by this Agreement; and the Company shall have received
a certificate signed on behalf of Parent by its Chief Executive Officer and its
Chief Financial Officer.
(b) Performance of Obligations of Parent and Merger Sub. Each of Parent and
Merger Sub shall have performed in all material respects all obligations
required to be performed by it under this Agreement at or prior to the Closing
Date and the Company shall have received a certificate signed on behalf of
Parent by its Chief Executive Officer and its Chief Financial Officer to such
effect.
(c) Consents Under Agreements. Parent shall have obtained the consent or
approval of each Person whose consent or approval shall be required in order to
consummate the transactions contemplated by this Agreement under any Debt
Contract or Other Contract to which Parent or any of its Subsidiaries is a
party, except those for which failure to obtain such consents and approvals,
individually or in the aggregate, is not reasonably likely to have a Parent
Material Adverse Effect.
(d) Tax Opinion. The Company shall have received an opinion of Carrington,
Coleman, Sloman & Blumenthal, L.L.P., dated the Closing Date, in form and
substance reasonably satisfactory to the Company, substantially to the effect
that, for federal income tax purposes;
(i) The Merger will constitute a "reorganization" within the meaning of
Section 368(a) of the Code, and the Company, Merger Sub and Parent will each be
a party to such reorganization within the meaning of Section 368(b) of the Code.
(ii) No gain or loss will be recognized by Parent or the Company as a
result of the Merger.
(iii) No gain or loss will be recognized by the stockholders of the Company
upon the exchange of their Shares solely for shares of Parent Common Stock
pursuant to the Merger, except with respect to cash, if any, received in lieu of
fractional shares of Parent Common Stock.
(iv) The aggregate tax basis of the shares of Parent Common Stock received
by a stockholder solely in exchange for Shares pursuant to the Merger (including
fractional shares of Parent Common Stock for which cash is received) will be the
same as the aggregate tax basis of the Shares exchanged therefor.
(v) The holding period for shares of Parent Common Stock received by a
stockholder in exchange for Shares pursuant to the Merger will include the
holding period that such Shares were held by the stockholder, provided such
Shares were held as capital assets by such stockholder at the Effective Time.
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(vi) A stockholder of the Company who receives cash in lieu of a fractional
share of Parent Common Stock will recognize gain or loss equal to the
difference, if any, between such stockholder's basis in such fractional share
and the amount of cash received.
In rendering such opinion, Carrington, Coleman, Sloman & Blumenthal, L.L.P.
may receive and rely upon representations contained in a certificate of Parent
substantially in the form of the Parent Tax Certificate, a certificate of the
Company substantially in the form of the Company Tax Certificate and other
appropriate certificates of Parent, the Company and others.
ARTICLE VIII
TERMINATION
8.1. Termination. This Agreement may be terminated, and the Merger
abandoned, at any time prior to the Effective Time, whether before or after any
approval by the stockholders of Merger Sub or the Company of the matters
presented in connection with the Merger:
(a) by mutual written consent of Parent and the Company;
(b) by Parent, by written notice to the Company, if (i) the Company shall
have failed to comply in any material respect with any of its covenants or
agreements contained in this Agreement required to be complied with prior to the
date of such termination, which failure to comply has not been cured within
fifteen business days after receipt by the Company of written notice of such
failure to comply or (ii) the stockholders of the Company shall not approve the
Merger at the Stockholder Meeting or any adjournment thereof;
(c) by the Company, by written notice to Parent, if (i) Parent or Merger
Sub shall have failed to comply in any material respect with any of its
respective covenants or agreements contained in this Agreement required to be
complied with prior to the date of such termination, which failure to comply has
not been cured within fifteen business days after receipt by Parent of written
notice of such failure to comply or (ii) the stockholders of the Company shall
not approve the Merger at the Stockholder Meeting or any adjournment thereof;
(d) by either Parent or the Company, by written notice from the terminating
party to the other parties, if there has been (i) a breach by the other (or
Merger Sub if the Company is the terminating party) of any representation or
warranty made as of the date hereof that is not qualified by reference to a
Material Adverse Effect, the effect of which has a Company Material Adverse
Effect or a Parent Material Adverse Effect, as the case may be, or (ii) a breach
by the other (or Merger Sub if the Company is the terminating party) of any
representation or warranty made as of the date hereof that is qualified by
reference to a Material Adverse Effect, in each case, which breach has not been
cured (if capable of being cured) within fifteen business days after receipt by
the breaching party of written notice of the breach;
(e) by either Parent or the Company, by written notice from the terminating
party to the other parties, if: (i) the Merger has not been effected on or prior
to the close of business on February 28, 1998, whether such date is before or
after the date of approval by the stockholders of the Company; provided,
however, that the right to terminate this Agreement pursuant to this clause (e)
shall not be available to any party whose failure to fulfill any obligation of
this Agreement has been the cause of, or resulted in, the failure of the Merger
to have occurred on or prior to such date; or (ii) any court or other
Governmental Entity having jurisdiction over a party hereto shall have issued an
order, decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the transactions contemplated by this
Agreement and such order, decree, ruling or other action shall have become final
and nonappealable;
(f) by the Company, by written notice to Parent, if the Board of Directors
of the Company shall determine in good faith that a Takeover Proposal
constitutes a Superior Proposal; provided, however, that the Company may not
terminate this Agreement pursuant to this clause (f) unless (i) five business
days shall have elapsed after delivery to Parent of a written notice of such
determination by such Board of Directors and at all reasonable times during such
five business-day period the Company shall have provided Parent a reasonable
opportunity, during such five business-day period, to propose a modification of
the terms and
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conditions of this Agreement so that a business combination between the Company
and Parent (or an Affiliate of Parent) may be effected, and (ii) at the end of
such five business-day period such Board of Directors shall continue to believe
in good faith that such Takeover Proposal constitutes a Superior Proposal and
simultaneously therewith the Company shall enter into a definitive acquisition,
merger or similar agreement to effect such Superior Proposal;
(g) by Parent, by written notice to the Company, if (i) the Board of
Directors of the Company shall not have recommended the Merger to Company's
stockholders, or shall have resolved not to make such recommendation, or shall
have modified in a manner adverse to Parent or rescinded its recommendation of
the Merger to the Company's stockholders as being advisable and fair to and in
the best interests of the Company and its stockholders, or shall have modified
or rescinded its approval of the Agreement, or shall have resolved to do any of
the foregoing, (ii) the Board of Directors of the Company shall have recommended
to the stockholders of the Company any Takeover Proposal (other than by Parent
or an Affiliate of Parent) or shall have resolved to do so, (iii) a tender offer
or exchange offer for 20% or more of the outstanding shares of capital stock of
the Company is commenced, and the Board of Directors of the Company fails to
recommend against acceptance of such tender offer or exchange offer by its
stockholders within the ten business day period (or such shorter period)
required by Section 14e-2 of the Exchange Act (the taking of no position by the
expiration of such ten business day period (or such shorter period) with respect
to the acceptance of such tender offer or exchange offer by its stockholders
constituting such a failure), or (iv) the Company or any of its Subsidiaries,
without having received prior written consent from Parent, shall have entered
into, authorized, recommended, proposed, or publicly announced its intention to
enter into, authorize, recommend or propose to its shareholders an agreement,
arrangement, understanding or letter of intent with any Person (other than
Parent or any of its Affiliates) to (A) effect a merger or consolidation or
similar transaction involving the Company or any of its Subsidiaries, (B)
purchase, lease, or otherwise acquire all or a substantial portion of the assets
of the Company or any of its Subsidiaries or (C) purchase or otherwise acquire
(including by way of merger, consolidation, share exchange or similar
transaction) Beneficial Ownership (as defined in the Company Option Agreement)
of securities representing 20% or more of the voting power of the Company (in
each case other than any such merger, consolidation, purchase, lease or other
transaction involving only the Company and one or more of its Subsidiaries or
involving only any two or more of its Subsidiaries); and
(h) by Parent or the Company, by written notice to the other party, if ten
business days elapse after all the conditions set forth in Article VII (other
than conditions that by their nature are to be satisfied at the Closing) shall
be satisfied or waived and the Closing shall not have occurred through no fault
of the terminating party.
The right of Parent or the Company to terminate this Agreement pursuant to
this Section 8.1 shall remain operative and in full force and effect regardless
of any investigation made by or on behalf of such party, whether prior to or
after the execution of this Agreement.
8.2. Effect of Termination. In the event of the termination of this
Agreement by either Parent or the Company as provided in Section 8.1, this
Agreement shall forthwith become void without any liability hereunder on the
part of the Company, Parent, Merger Sub or their respective directors or
officers, except for the last sentence of Section 6.7 and the entirety of
Section 6.12, which shall survive any such termination; provided, however, that
nothing contained in this Section 8.2 shall relieve any party hereto from any
liability for any breach of this Agreement.
ARTICLE IX
MISCELLANEOUS AND GENERAL
9.1. Survival. This Article IX and the agreements of the Company, Parent
and Merger Sub contained in Sections 6.6 (Taxation and Accounting), 6.9 (Stock
Exchange Listing and De-listing), 6.11 (Options and Benefits), 6.12 (Expenses)
and 6.13 (Indemnification; Directors' and Officers' Insurance) shall survive the
consummation of the Merger. This Article IX, the agreements of the Company,
Parent and Merger Sub contained in Section 6.12 (Expenses), Section 8.2 (Effect
of Termination and Abandonment), the Company
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Confidentiality Agreement and the Confidentiality Agreement dated August 15,
1997, between Parent and the Company (the "Parent Confidentiality Agreement")
shall survive the termination of this Agreement. All other representations,
warranties, covenants and agreements in this Agreement shall not survive the
consummation of the Merger or the termination of this Agreement.
9.2. Modification or Amendment. Subject to the provisions of the applicable
law, at any time prior to the Effective Time, the parties hereto may modify or
amend this Agreement, by written agreement executed and delivered by duly
authorized officers of the respective parties.
9.3. Waiver of Conditions. The conditions to each of the parties'
obligations to consummate the Merger are for the sole benefit of such party and
may be waived by such party in whole or in part to the extent permitted by
applicable law.
9.4. Counterparts. This Agreement may be executed in any number of
counterparts, each such counterpart being deemed to be an original instrument,
and all such counterparts shall together constitute the same agreement.
9.5. GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL. THIS AGREEMENT SHALL BE
DEEMED TO BE MADE IN AND IN ALL RESPECTS SHALL BE INTERPRETED, CONSTRUED AND
GOVERNED BY AND IN ACCORDANCE WITH THE LAW OF THE STATE OF DELAWARE WITHOUT
REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF. The parties hereby irrevocably
submit to the jurisdiction of the courts of the State of Delaware and the
Federal courts of the United States of America located in the State of Delaware
solely in respect of the interpretation and enforcement of the provisions of
this Agreement and of the documents referred to in this Agreement, and in
respect of the transactions contemplated hereby, and hereby waive, and agree not
to assert, as a defense in any action, suit or proceeding for the interpretation
or enforcement hereof or of any such document, that it is not subject thereto or
that such action, suit or proceeding may not be brought or is not maintainable
in said courts or that the venue thereof may not be appropriate or that this
Agreement or any such document may not be enforced in or by such courts, and the
parties hereto irrevocably agree that all claims with respect to such action or
proceeding shall be heard and determined in such a Delaware State or Federal
court. The parties hereby consent to and grant any such court jurisdiction over
the person of such parties and over the subject matter of such dispute and agree
that mailing of process or other papers in connection with any such action or
proceeding in the manner provided in Section 9.6 or in such other manner as may
be permitted by law shall be valid and sufficient service thereof.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE
UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND
THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY
RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH PARTY
MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH PARTY HAS BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 9.5.
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9.6. Notices. Any notice, request, instruction or other document to be
given hereunder by any party to the others shall be in writing and delivered
personally or sent by registered or certified mail, postage prepaid, or by
facsimile:
if to Parent or Merger Sub:
Kimberly-Clark Corporation
351 Phelps Drive
Irving, Texas 75038
Attention: Senior Vice President -- Law and Government Affairs
fax: (972) 281-1492
(with a copy to Dennis V. Osimitz, Esq.
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
fax: (312) 853-7036)
if to the Company:
7201 Industrial Park Blvd.
Fort Worth, Texas 76180
Attention: David Radunsky, Chief Operating Officer and General Counsel
fax: (817) 577-6599
(with a copy to George Sampas, Esq.
Sullivan & Cromwell
125 Broad Street
New York, NY 10004
fax: (212) 558-3299)
or to such other persons or addresses as may be designated in writing by the
party to receive such notice as provided above.
9.7. Entire Agreement; No Other Representations. This Agreement (including
any exhibits hereto), the Company Option Agreement, the Company Disclosure
Letter, the Parent Disclosure Letter, the Confidentiality Agreement, dated April
15, 1997, between Parent and the Company (the "Company Confidentiality
Agreement"), and the Parent Confidentiality Agreement constitute the entire
agreement, and supersede all other prior agreements, understandings,
representations and warranties both written and oral, among the parties, with
respect to the subject matter hereof. EACH PARTY HERETO AGREES THAT, EXCEPT FOR
THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS AGREEMENT, NEITHER PARENT
AND MERGER SUB NOR THE COMPANY MAKES ANY OTHER REPRESENTATIONS OR WARRANTIES,
AND EACH HEREBY DISCLAIMS ANY OTHER REPRESENTATIONS OR WARRANTIES MADE BY ITSELF
OR ANY OF ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, FINANCIAL AND LEGAL
ADVISORS OR OTHER REPRESENTATIVES, WITH RESPECT TO THE EXECUTION AND DELIVERY OF
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, NOTWITHSTANDING THE
DELIVERY OR DISCLOSURE TO THE OTHER OR THE OTHER'S REPRESENTATIVES OF ANY
DOCUMENTATION OR OTHER INFORMATION WITH RESPECT TO ANY ONE OR MORE OF THE
FOREGOING.
9.8. No Third Party Beneficiaries. Except as provided in Section 6.13
(Indemnification; Directors' and Officers' Insurance), this Agreement is not
intended to confer upon any Person other than the parties hereto any rights or
remedies hereunder.
9.9. Obligations of Parent and of the Company. Whenever this Agreement
requires a Subsidiary of Parent to take any action, such requirement shall be
deemed to constitute an undertaking on the part of Parent
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to cause such Subsidiary to take such action. Whenever this Agreement requires a
Subsidiary of the Company to take any action, such requirement shall be deemed
to constitute an undertaking on the part of the Company to cause such Subsidiary
to take such action and, after the Effective Time, on the part of the Surviving
Corporation to cause such Subsidiary to take such action.
9.10. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability or the other provisions hereof. If any
provision of this Agreement, or the application thereof to any Person or any
circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
9.11. Interpretation. The table of contents and headings herein are for
convenience of reference only, do not constitute part of this Agreement and
shall not be deemed to limit or otherwise affect any of the provisions hereof.
Where a reference in this Agreement is made to a Section or Exhibit, such
reference shall be to a Section of or Exhibit to this Agreement unless otherwise
indicated. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation."
9.12. Assignment. This Agreement shall not be assignable by operation of
law or otherwise; provided, however, that Parent may designate, by written
notice to the Company, another wholly-owned direct Subsidiary to be a
Constituent Corporation in lieu of Merger Sub, in which event all references
herein to Merger Sub shall be deemed references to such other Subsidiary, except
that all representations and warranties made herein with respect to Merger Sub
as of the date of this Agreement shall be deemed representations and warranties
made with respect to such other Subsidiary as of the date of such designation.
9.13. Specific Performance. The parties hereto agree that irreparable
damage would occur in the event that any of the terms or provisions of this
Agreement were not performed in accordance with their specific wording or were
otherwise breached. It is accordingly agreed that each of the parties hereto
shall be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in any
court of the United States of America or any state having jurisdiction, such
remedy being in addition to any other remedy to which any party may be entitled
at law or in equity.
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the duly authorized officers of the parties hereto as of the date first written
above.
KIMBERLY-CLARK CORPORATION
By: /s/ ROBERT E. ABERNATHY
----------------------------------
Name: Robert E. Abernathy
Title: Group President
TECNOL MEDICAL PRODUCTS, INC.
By: /s/ VANCE M. HUBBARD
----------------------------------
Name: Vance M. Hubbard
Title: Chief Executive Officer &
President
VANGUARD ACQUISITION CORP.
By: /s/ ROBERT E. ABERNATHY
----------------------------------
Name: Robert E. Abernathy
Title: Vice President
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ANNEX II
COMPANY OPTION AGREEMENT
COMPANY OPTION AGREEMENT ("Option Agreement") dated as of September 4,
1997, between Kimberly-Clark Corporation, a Delaware corporation
("Kimberly-Clark"), and Tecnol Medical Products, Inc., a Delaware corporation
("Tecnol").
WITNESSETH:
WHEREAS, the respective Boards of Directors of Kimberly-Clark and Tecnol
have approved an Agreement and Plan of Merger dated as of even date herewith
(the "Merger Agreement") providing for the merger of a wholly-owned subsidiary
of Kimberly-Clark ("Newco") with and into Tecnol with Tecnol being the Surviving
Corporation;
WHEREAS, as a condition to Kimberly-Clark's willingness to enter into the
Merger Agreement, Tecnol has agreed to grant to Kimberly-Clark the option set
forth herein to purchase 3,982,142 authorized but previously unissued shares of
the Common Stock, par value $.001 per share, of Tecnol ("Tecnol Common Stock");
and
WHEREAS, contemporaneously herewith, Kimberly-Clark, Newco and Tecnol are
entering into the Merger Agreement.
NOW, THEREFORE, in consideration of the premises herein contained, the
parties agree as follows:
1. DEFINITIONS.
Capitalized terms used but not defined herein shall have the same meanings
as set forth in the Merger Agreement.
2. GRANT OF OPTION.
On the terms and subject to the conditions set forth herein, Tecnol hereby
grants to Kimberly-Clark an irrevocable option (the "Option") to purchase up to
3,982,142 authorized but previously unissued shares of Tecnol Common Stock at a
price of $22.00 per share (the "Purchase Price") payable in cash as provided in
Section 4 hereof.
3. EXERCISE OF OPTION.
(a) Kimberly-Clark may exercise the Option, in whole or in part, at any
time or from time to time after a Purchase Event (as defined below) shall have
occurred; provided, however, that (i) to the extent the Option shall not have
been exercised, it shall terminate and be of no further force and effect upon
the earlier to occur of (A) the Effective Time of the Merger; or (B) the
termination of the Merger Agreement in accordance with its terms; provided,
however, that if the Merger Agreement is terminated by Tecnol pursuant to
Section 8.1(f) thereof or, after a Takeover Proposal by any Person (other than
Kimberly-Clark or an Affiliate of Kimberly-Clark), by Kimberly-Clark pursuant to
Section 8.1(g) thereof, the Option shall remain exercisable until the date which
is 180 days after such termination; and further provided, however, that, if
prior to the termination of the Merger Agreement in accordance with its terms, a
Takeover Proposal by any Person (other than Kimberly-Clark or an Affiliate of
Kimberly-Clark) shall have been publicly announced, the Option shall not
terminate until the earlier of (x) the date a Purchase Event can no longer occur
and (y) 180 days after the occurrence of a Purchase Event, except that if the
Purchase Event is of the type described in clause (ii) of the definition
thereof, the Option shall not terminate until 180 days after the termination of
the Merger Agreement; (ii) if the Option cannot be exercised immediately prior
to its expiration date because of an injunction, order or similar restraint
issued by a court of competent jurisdiction, the Option shall expire on the 30th
business day after such injunction, order or restraint shall have been dissolved
or when such injunction, order or restraint shall have become permanent and no
longer subject to appeal, as the case may be; and (iii) if the Option cannot be
exercised immediately prior to its expiration date because any applicable
waiting
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periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR
Act") shall not have expired or been terminated, the Option shall expire on the
30th business day after such expiration or termination.
(b) As used herein, a "Purchase Event" shall be deemed to have occurred if
(i) the Merger Agreement is terminated in accordance with Section 8.1(f)
thereof; (ii) after a Takeover Proposal shall have been publicly announced by
any Person (other than Kimberly-Clark or an Affiliate of Kimberly-Clark),
Kimberly-Clark has the right to terminate the Merger Agreement pursuant to
Section 8.1(g) thereof; or (iii) all of the following occur: (A) prior to the
Stockholder Meeting the Merger Agreement shall not have been terminated and
there shall have been publicly announced a Takeover Proposal by any Person
(other than Kimberly-Clark or an Affiliate of Kimberly-Clark), (B) after such
public announcement the stockholders of Tecnol shall not approve the Merger at
the Stockholder Meeting or any adjournment thereof, (C) within twelve months
after the Stockholder Meeting or the last adjournment thereof Tecnol shall enter
into any written letter of intent (whether or not binding), acquisition
agreement, merger agreement or other similar agreement or agreement in principle
in respect of a Takeover Proposal with any Person contemplated by clause (A)
above or such Person shall commence any tender or exchange offer for the Shares,
and (D) upon, or at any time within twelve months after, such entry into any
letter of intent, agreement or such commencement of any tender or exchange offer
such Person shall consummate a transaction similar to that contemplated by such
Takeover Proposal or any tender or exchange offer for Beneficial Ownership of at
least 20% of the Shares.
(c) As used herein, the terms "Beneficial Ownership" and "Beneficially Own"
shall have the meanings ascribed to them in Rule 13d-3 under the Exchange Act.
(d) In the event Kimberly-Clark wishes to exercise the Option, it shall
deliver to Tecnol a written notice (the date of which being herein referred to
as the "Notice Date") specifying (i) the total number of shares it intends to
purchase pursuant to such exercise and (ii) a place and date not earlier than
three business days nor later than 10 business days (or, in the event approval
under the HSR Act is required, 60 calendar days) from the Notice Date for the
closing of such purchase (the "Closing Date").
4. PAYMENT AND DELIVERY OF CERTIFICATES.
(a) At any closing referred to in Section 3 hereof, Kimberly-Clark shall
pay to Tecnol the aggregate purchase price for the shares of Tecnol Common Stock
purchased pursuant to the exercise of the Option in immediately available funds
by wire transfer to a bank account designated by Tecnol.
(b) At any such closing, simultaneously with the delivery of cash as
provided in Section 4(a), Tecnol shall deliver to Kimberly-Clark a certificate
or certificates representing the number of shares of Tecnol Common Stock
purchased by Kimberly-Clark, registered in the name of Kimberly-Clark or a
nominee designated in writing by Kimberly-Clark, and Kimberly-Clark shall
deliver to Tecnol a letter agreeing that Kimberly-Clark shall not offer to sell,
pledge or otherwise dispose of such shares in violation of applicable law or the
provisions of this Option Agreement.
(c) If at the time of issuance of any Tecnol Common Stock pursuant to any
exercise of the Option, Tecnol shall have issued any share purchase rights or
similar securities to holders of Tecnol Common Stock, then each such share of
Tecnol Common Stock shall also represent rights with terms substantially the
same as and at least as favorable to Kimberly-Clark as those issued to other
holders of Tecnol Common Stock.
(d) Certificates for Tecnol Common Stock delivered at any closing hereunder
shall be endorsed with a restrictive legend which shall read substantially as
follows:
The transfer of the shares represented by this certificate is subject to
certain provisions of an agreement between the registered holder hereof and
Tecnol Medical Products, Inc. ("Tecnol"), a copy of which is on file at the
principal office of Tecnol, and to resale restrictions arising under the
Securities Act of 1933 and any applicable state securities laws. A copy of such
agreement will be provided to the holder hereof without charge upon receipt by
Tecnol of a written request therefor.
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It is understood and agreed that the above legend shall be removed by
delivery of substitute certificate(s) without such legend if Kimberly-Clark
shall have delivered to Tecnol an opinion of counsel reasonably acceptable to
Tecnol, in form and substance reasonably satisfactory to Tecnol and its counsel,
to the effect that such legend is not required for purposes of the Securities
Act and any applicable state securities laws.
5. AUTHORIZATION, ETC.
(a) Tecnol hereby represents and warrants to Kimberly-Clark that:
(i) Tecnol has full corporate authority to execute and deliver this
Option Agreement and to consummate the transactions contemplated hereby;
(ii) such execution, delivery and consummation have been authorized by
the Board of Directors of Tecnol, and no other corporate proceedings are
necessary therefor;
(iii) this Option Agreement has been duly and validly executed and
delivered and represents a valid and legally binding obligation of Tecnol,
enforceable against Tecnol in accordance with its terms, except that
enforceability may be limited by the Bankruptcy Exception and is subject to
the Equity Exception;
(iv) Tecnol has taken all necessary corporate action to authorize and
reserve and permit it to issue and, at all times from the date hereof
through the date of the exercise in full or the expiration or termination
of the Option, shall have reserved for issuance upon exercise of the
Option, 3,982,142 shares of Tecnol Common Stock (as such number may be
adjusted pursuant to Section 6 hereof), all of which, upon issuance
pursuant hereto, shall be duly authorized, validly issued, fully paid and
nonassessable, and shall be delivered free and clear of all claims, liens,
encumbrances, restrictions, security interests and preemptive rights; and
(v) except as otherwise required by the HSR Act and other than any
filings required under applicable securities and blue sky laws, the
execution and delivery of this Option Agreement by Tecnol and the
consummation by it of the transactions contemplated hereby do not require
the consent, waiver, approval or authorization of or any filing with any
person or public authority and will not violate, result in a breach of or
the acceleration of any obligation under, or constitute a default under,
any provision of any charter or bylaw, indenture, mortgage, lien, lease,
agreement, contract, instrument, order, law, rule, regulation, judgment,
ordinance, or decree, or restriction by which Tecnol or any of its
Subsidiaries or any of their respective properties or assets is bound.
(b) Kimberly-Clark hereby represents and warrants to Tecnol that:
(i) Kimberly-Clark has full corporate authority to execute and deliver
this Option Agreement and to consummate the transactions contemplated
hereby;
(ii) such execution, delivery and consummation have been authorized by
all requisite corporate action by Kimberly-Clark, and no other corporate
proceedings are necessary therefor;
(iii) this Option Agreement had been duly and validly executed and
delivered and represents a valid and legally binding obligation of
Kimberly-Clark, enforceable against Kimberly-Clark in accordance with its
terms, except that enforcement may be limited by the Bankruptcy Exception
and is subject to the Equity Exception;
(iv) any Tecnol Common Stock or other securities acquired by
Kimberly-Clark upon exercise of the Option will not be taken with a view to
the public distribution thereof and will not be transferred or otherwise
disposed of except in compliance with the Securities Act; and
(v) except as otherwise required by the HSR Act and other than any
filings required under applicable securities and blue sky laws, the
execution and delivery of this Option Agreement by Kimberly-Clark and the
consummation by it of the transactions contemplated hereby do not require
the consent, waiver, approval or authorization of or any filing with any
person or public authority and will not violate, result in a breach of or
the acceleration of any obligation under, or constitute a default under,
any provision of any charter or by-law, indenture, mortgage, lien, lease,
agreement, contract, instrument,
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order, law, rule, regulation, judgment, ordinance, or decree, or
restriction by which Kimberly-Clark or any of its Subsidiaries or any of
their respective properties or assets is bound.
6. ADJUSTMENT UPON CHANGES IN CAPITALIZATION.
In the event of any change in Tecnol Common Stock by reason of stock
dividends, stock splits, split-ups, reclassifications, recapitalizations or the
like, the type and number of shares subject to the Option, and the purchase
price per share, as the case may be, shall be adjusted appropriately. In the
event that any additional shares of Tecnol Common Stock are issued or
transferred from the Company's treasury stock account after August 31, 1997
(other than pursuant to an event described in the preceding sentence or pursuant
to this Option Agreement), the number of shares of Tecnol Common Stock subject
to the Option shall be adjusted so that, after such issuance, it equals at least
19.9% of the number of shares of Tecnol Common Stock then issued and outstanding
(without considering as outstanding any shares subject to or issued pursuant to
the Option).
7. REPURCHASE.
(a) At the request of Kimberly-Clark at any time after the occurrence of a
Purchase Event but prior to the second anniversary of such Purchase Event (the
"Repurchase Period"), if a Put Event has occurred, Tecnol (or any successor
entity thereof) shall repurchase the Option from Kimberly-Clark together with
all (but not less than all, subject to Section 10) shares of Tecnol Common Stock
subject thereto or purchased by Kimberly-Clark pursuant thereto and with respect
to which Kimberly-Clark then has Beneficial Ownership, at a price per share (the
"Per Share Repurchase Price") equal to the greater of:
(i) The per share exercise price paid by Kimberly-Clark for any shares
of Tecnol Common Stock acquired pursuant to the Option;
(ii) The "Market Price" per share of Tecnol Common Stock (defined as
the average of the closing sales price per share for the ten trading days
prior to the date of such request for Tecnol Common Stock on the National
Association of Securities Dealers Automated Quotation System Stock Market
("NASDAQ Stock Market") (as reported in the Wall Street Journal or other
authoritative source); and
(iii) The highest price per share paid in any transaction triggering a
Put Event pursuant to Section 7(c) hereof or at which a tender or exchange
offer which led to a Put Event was made for shares of Tecnol Common Stock.
In determining such price, the value of any consideration other than cash
shall be determined by an independent nationally recognized investment
banking firm selected by Kimberly-Clark and reasonably acceptable to
Tecnol.
(b) In the event Kimberly-Clark exercises its rights under this Section 7,
Tecnol shall, within 10 business days thereafter, pay the required amount to
Kimberly-Clark by wire transfer of immediately available funds to an account
designated by Kimberly-Clark and Kimberly-Clark shall surrender to Tecnol the
Option and the certificates evidencing any shares of Tecnol Common Stock
purchased thereunder with respect to which Kimberly-Clark then has Beneficial
Ownership, and Kimberly-Clark shall warrant that it has sole record and
Beneficial Ownership of such shares and that the same are free and clear of all
liens, claims, charges, restrictions and encumbrances of any kind whatsoever.
(c) For purposes of this Section 7, a Put Event shall be deemed to have
occurred (i) upon the consummation of any merger, consolidation or any similar
transaction involving Tecnol or any purchase, lease or other acquisition of all
or substantially all of the assets of Tecnol and its Subsidiaries considered as
a whole or (ii) upon the acquisition by any person of Beneficial Ownership of
50% or more of the then outstanding shares of Tecnol Common Stock, provided that
no such event shall constitute a Put Event unless a Purchase Event shall have
occurred prior to expiration or termination of the Option.
8. REPURCHASE AT OPTION OF TECNOL AND FIRST REFUSAL.
(a) Except to the extent that Kimberly-Clark shall have previously
exercised its rights under Section 7, at the request of Tecnol from and after
the date which is the later of (x) six months after a Purchase Event
4
<PAGE> 103
has occurred and (y) six months after the termination of the Merger Agreement,
Tecnol may repurchase from Kimberly-Clark, and Kimberly-Clark shall sell to
Tecnol, the Option together with all (but not less than all, subject to Section
10) shares of Tecnol Common Stock subject thereto or purchased by Kimberly-Clark
pursuant hereto and with respect to which Kimberly-Clark then has Beneficial
Ownership at a price per share equal to the greater of (i) the Market Price per
share of Tecnol Common Stock (less the exercise price per share for any
unexercised shares of Tecnol Common Stock subject to the Option) and (ii) the
per share exercise price paid by Kimberly-Clark for any shares of Tecnol Common
Stock acquired pursuant to the Option. Any repurchase under this Section 8(a)
shall be consummated in accordance with the procedures set forth in Section
7(b).
(b) If, at any time after the occurrence of a Purchase Event and prior to
the third anniversary of the date of such occurrence, Kimberly-Clark shall
desire to sell, assign, transfer or otherwise dispose of the Option or all or
any of the shares of Tecnol Common Stock acquired by it pursuant to the Option,
it shall give Tecnol written notice of the proposed transaction (an "Offeror's
Notice"), identifying the proposed transferee, and setting forth the terms of
the proposed transaction. An Offeror's Notice shall be deemed an offer by
Kimberly-Clark to Tecnol, which may be accepted within 10 business days after
its receipt of such Offeror's Notice, to purchase such Option or shares on the
same terms and conditions and at the same price at which Kimberly-Clark is
proposing to transfer the Option or such shares to a third party. The purchase
of the Option or such shares by Tecnol shall be closed within 10 business days
of the date of the acceptance of the offer and the purchase price shall be paid
to Kimberly-Clark by wire transfer of immediately available funds to an account
designated by Kimberly-Clark. In the event of the failure or refusal of Tecnol
to purchase the Option or shares in each case as and to the extent covered by
the Offeror's Notice or if the Board of Directors of Tecnol does not approve
Tecnol's proposed purchase of the Option or such shares, Kimberly-Clark may,
within 60 days from the date of the Offeror's Notice, sell all, but not less
than all, of the Option or such shares in each case as and to the extent covered
by the Offeror's Notice to such third party at no less than the price specified
and on terms no more favorable to the purchaser than those set forth in the
Offeror's Notice. These requirements shall not apply to any disposition of
Tecnol Common Stock by a Person to whom Kimberly-Clark has sold shares of Tecnol
Common Stock issued upon exercise of the Option in compliance with the terms
hereof.
9. REGISTRATION RIGHTS; APPROVAL.
(a) For three years after a Purchase Event, Tecnol shall, if requested by
any holder or beneficial owner (each a "Holder") of more than 1,000,000 shares
(subject to adjustment in the event of any stock dividend, stock split,
split-up, reclassification, recapitalization or the like) of Tecnol Common Stock
issued pursuant to this Option Agreement, file a registration statement on a
form for general use under the Securities Act if necessary in order to permit
the sale or other disposition of the shares of Tecnol Common Stock that have
been acquired upon exercise of the Option in accordance with the intended method
of sale or other disposition requested by such Holder (it being understood and
agreed that any such sale or other disposition shall be effected on a widely
distributed basis so that, upon consummation thereof, no purchaser or transferee
shall Beneficially Own more than 2% of the shares of Tecnol Common Stock then
outstanding). Each such Holder shall provide all information reasonably
requested by Tecnol for inclusion in any registration statement to be filed
hereunder. Tecnol shall use its reasonable commercial efforts to cause such
registration statement first to become effective and then to remain effective
for such period not in excess of 90 days from the day such registration
statement first becomes effective as may be reasonably necessary to effect such
sales or other dispositions. The registration effected under this Section 9
shall be at Tecnol's expense except for underwriting commissions and the fees
and disbursements of such Holder's counsel attributable to the registration of
such Tecnol Common Stock. In no event shall Tecnol be required to effect more
than one registration hereunder. The filing of the registration statement
hereunder may be delayed for up to 120 days if such filing would require
premature disclosure of any material corporate development or otherwise
interfere with or adversely affect any proposed distribution by Tecnol of Tecnol
Common Stock or if a special audit of Tecnol would otherwise be required in
connection therewith. If requested by any such Holder in connection with such
registration, Tecnol shall become a party to any underwriting agreement relating
to the sale of such shares, but only to the extent of obligating itself in
respect of the representations, warranties, indemnities and other agreements
customarily included in such underwriting agreements for parties similarly
situated. Upon
5
<PAGE> 104
receiving any request for registration under this Section 9 from any Holder
entitled to such registration, Tecnol agrees to send a copy thereof to any other
person known to Tecnol to be entitled to registration rights under this Section
9, in each case by promptly mailing the same, postage prepaid, to the address of
record of the persons entitled to receive such copies entitled to such
registration.
(b) Subject to applicable law and the rules and regulations of the NASDAQ
National Market, Tecnol shall promptly file an application to list the shares
subject to the Option on the NASDAQ National Market and will use its
commercially reasonable efforts to obtain approval of such listing and to effect
all necessary filings by Tecnol under the HSR Act in connection with the
transactions contemplated hereby. Each of the parties hereto will use its
commercially reasonably efforts to obtain consents of all third parties and
governmental authorities, if any, necessary for the consummation of the
transactions contemplated.
10. SEVERABILITY.
Any term, provision, covenant or restriction contained in this Option
Agreement held by a court of competent jurisdiction to be invalid, void or
unenforceable, shall be ineffective to the extent of such invalidity, voidness
or unenforceability, but neither the remaining terms, provisions, covenants or
restrictions contained in this Option Agreement nor the validity or
enforceability thereof in any other jurisdiction shall be affected or impaired
thereby. Any term, provision, covenant or restriction contained in this Option
Agreement that is so found to be so broad as to be unenforceable shall be
interpreted to be as broad as is enforceable. If for any reason such court
determines that applicable law will not permit Kimberly-Clark or any other
person to acquire, or Tecnol to repurchase or purchase, the full number of
shares of Tecnol Common Stock provided in Section 2 hereof (as adjusted pursuant
to Section 6 hereof), it is the express intention of the parties hereto to allow
Kimberly-Clark or such other person to acquire, or Tecnol to repurchase or
purchase, such lesser number of shares as may be permissible, without any
amendment or modification hereof.
11. MISCELLANEOUS.
(a) Expenses. Each of the parties hereto shall pay all costs and expenses
incurred by it or on its behalf in connection with the transactions contemplated
hereunder, including fees and expenses of its own financial consultants,
investment bankers, accountants and counsel, except as otherwise provided
herein.
(b) Entire Agreement. Except as otherwise expressly provided herein or
therein, this Option Agreement and the Merger Agreement contain the entire
agreement between the parties with respect to the transactions contemplated
hereunder and supersedes all prior arrangements or understandings with respect
thereto, written or oral.
(c) Successors; No Third Party Beneficiaries. The terms and conditions of
this Option Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and permitted assigns. Nothing in
this Option Agreement, expressed or implied, is intended to confer upon any
party, other than the parties hereto and any Holder, and their respective
successors and assigns, any rights, remedies, obligations, or liabilities under
or by reason of this Option Agreement, except as expressly provided herein.
(d) Assignment. Other than as provided in Sections 8 and 9 hereof, neither
of the parties hereto may sell, transfer, assign or otherwise dispose of any of
its rights or obligations under this Option Agreement or the Option created
hereunder to any other person (whether by operation of law or otherwise),
without the express written consent of the other party. Any purported assignment
in violation hereof shall be null and void.
(e) Notices. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered in
accordance with Section 9.6 of the Merger Agreement (which is incorporated
herein by reference).
(f) Counterparts. This Option Agreement may be executed in counterparts,
and each such counterpart shall be deemed to be an original instrument, but both
such counterparts together shall constitute but one agreement.
6
<PAGE> 105
(g) Specific Performance. The parties hereto agree that if for any reason
Kimberly-Clark or Tecnol shall have failed to perform its obligations under this
Option Agreement, then either party hereto seeking to enforce this Option
Agreement against such non-performing party shall be entitled to specific
performance and injunctive and other equitable relief, and the parties hereto
further agree to waive any requirement for the securing or posting of any bond
in connection with the obtaining of any such injunctive or other equitable
relief. This provision is without prejudice to any other rights that either
party hereto may have against the other party hereto for any failure to perform
its obligations under this Option Agreement.
(h) Governing Law. This Option Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware applicable to agreements
made and entirely to be performed within such state. Nothing in this Option
Agreement shall be construed to require any party (or any subsidiary or
affiliate or any party) to take any action or fail to take any action in
violation of applicable law, rule or regulation.
(i) Waiver and Amendment. Any provision of this Option Agreement may be
waived at any time by the party that is entitled to the benefits of such
provision. This Option Agreement may not be modified, amended, altered or
supplemented except upon the execution and delivery of a written agreement
executed by the parties hereto.
IN WITNESS WHEREOF, each of the parties hereto has executed this Option
Agreement as of the date first written above.
KIMBERLY-CLARK CORPORATION
By: /s/ ROBERT E. ABERNATHY
----------------------------------
Name: Robert E. Abernathy
Title: Group President
TECNOL MEDICAL PRODUCTS, INC.
By: /s/ VANCE M. HUBBARD
----------------------------------
Name: Vance M. Hubbard
Title: Chief Executive Officer
and President
7
<PAGE> 106
ANNEX III
AGREEMENT TO BE EXECUTED BY EACH
STOCKHOLDER LISTED ON SCHEDULE A
ATTACHED HERETO
COMPANY STOCKHOLDER AGREEMENT
STOCKHOLDER AGREEMENT dated as of September 4, 1997 by the undersigned
stockholder (the "Stockholder") of Tecnol Medical Products, Inc., a Delaware
corporation (the "Company"), for the benefit of Kimberly-Clark Corporation, a
Delaware corporation ("Parent").
WHEREAS Parent, Vanguard Acquisition Corp., a Delaware corporation and a
wholly-owned subsidiary of Parent ("Sub"), and the Company are entering into an
Agreement and Plan of Merger of even date herewith (as the same may be amended
or supplemented, the "Merger Agreement") providing for the merger of Sub with
and into the Company (the "Merger");
WHEREAS, the Stockholder has sole voting and dispositive power and/or full
voting power as to the aggregate number of shares of Common Stock, par value
$0.001 per share, of the Company (the "Company Common Stock") set forth opposite
his name on Schedule A attached hereto; such shares of Company Common Stock, as
such shares may be adjusted by any stock dividend, stock split,
recapitalization, combination or exchange of shares, merger, consolidation,
reorganization or other change or transaction of or by the Company, being
referred to herein as the "Subject Shares"; and
WHEREAS, as a condition to its willingness to enter into the Merger
Agreement, Parent has requested that the Stockholder enter into this Agreement.
NOW, THEREFORE, to induce Parent to enter into, and in consideration of its
entering into, the Merger Agreement, and in consideration of the premises and
the representations, warranties and agreements contained herein, the parties
agree as follows:
1. Representations and Warranties of the Stockholder. The Stockholder
hereby represents and warrants to Parent as follows:
(a) Authority. This Agreement has been duly executed and delivered by the
Stockholder and constitutes a valid and binding obligation of the Stockholder
enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency, moratorium or other similar laws relating to creditors' rights
generally and to general principles of equity. The execution and delivery of
this Agreement does not, and the consummation of the transactions contemplated
hereby and compliance with the terms hereof will not, conflict with, or result
in any violation of, or default (with or without notice or lapse of time or
both) under any provision of, any trust agreement, loan or credit agreement,
note, bond, mortgage, indenture, lease or other agreement, instrument, permit,
concession, franchise, license, judgment, order, notice, decree, statute, law,
ordinance, rule or regulation applicable to the Stockholder or to the
Stockholder's property or assets, the effect of which would be material and
adverse to the ability of the Stockholder to perform his obligations under this
Agreement.
(b) The Subject Shares. Except as noted on Schedule A, the Stockholder
represents that he beneficially owns and has sole voting and dispositive power
over the number of shares of Company Common Stock set forth opposite his name on
Schedule A hereto, and that his beneficial ownership of such shares is free and
clear of all liens, charges and encumbrances, agreements and commitments of
every kind. The representations set forth in this Agreement shall not survive
the consummation of the Merger. The Subject Shares do not include: (i) shares
held by the Stockholder in his capacity as trustee of the ESOP (as defined in
the Merger Agreement), and (ii) shares owned of record by the Stockholder's
spouse in which he may have a community interest.
2. Representations and Warranties of Parent. Parent hereby represents and
warrants to the Stockholder that Parent has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by Parent, and
the
<PAGE> 107
consummation of the transactions contemplated hereby, have been duly authorized
by all necessary corporate action on the part of Parent. This Agreement has been
duly executed and delivered by Parent and constitutes a valid and binding
obligation of Parent enforceable in accordance with its terms.
3. Covenants of the Stockholder.
(a) At any meeting of stockholders of the Company called to vote upon the
Merger or the Merger Agreement or at any adjournment thereof or in any other
circumstances upon which a vote, consent or other approval with respect to the
Merger or the Merger Agreement is sought, the Stockholder shall vote (or cause
to be voted) the Subject Shares, and any other voting securities of the Company,
whether issued heretofore or hereafter, that such person has the right to vote
(other than in his capacity as trustee of the ESOP), in favor of the Merger, the
adoption by the Company of the Merger Agreement and the approval of the terms
thereof and each of the other transactions contemplated by the Merger Agreement,
provided that the terms of the Merger Agreement shall not have been amended to
adversely affect the Stockholder.
(b) At any meeting of stockholders of the Company or at any adjournment
thereof or in any other circumstances upon which the Stockholder's vote, consent
or other approval is sought, the Stockholder shall vote (or cause to be voted)
the Subject Shares, and any other voting securities of the Company, whether
issued heretofore or hereafter, that such person has the right to vote (other
than in his capacity as trustee of the ESOP), against (i) any merger agreement
or merger (other than the Merger Agreement and the Merger), consolidation,
combination, sale of substantial assets, reorganization, recapitalization,
dissolution, liquidation or winding up of or by the Company or any other
Takeover Proposal (as defined in the Merger Agreement), or (ii) any amendment of
the Company's certificate of incorporation or by-laws or other proposal or
transaction involving the Company or any of its Subsidiaries, which amendment or
other proposal or transaction would in any manner impede, frustrate, prevent or
nullify the Merger, the Merger Agreement or any of the other transactions
contemplated by the Merger Agreement or which is reasonably likely to result in
any of the conditions to the Company's obligations under the Merger Agreement
not being fulfilled.
(c) The Stockholder agrees not to sell, transfer, pledge, assign or
otherwise dispose of, or enter into any contract, option or other arrangement
with respect to the sale, transfer, pledge, assignment or other disposition of,
the Subject Shares or any other voting securities of the Company, whether issued
heretofore or hereafter, that such person has the right to vote (other than in
his capacity as trustee of the ESOP) to any person; provided, that (i) the
Stockholder may sell up to a maximum of (x) 100,000 Subject Shares minus (y) any
shares of Company Common Stock sold by Kirk Brunson from and after the date
hereof; and (ii) the Stockholder may surrender to the Company Subject Shares in
payment of the exercise price of Company Options (as defined in the Merger
Agreement) exercised by the Stockholder in accordance with the Stock Plan (as
defined in the Merger Agreement).
(d) The Stockholder agrees not to enter into any voting arrangement with
respect to the Subject Shares, whether by proxy, voting arrangement, voting
agreement or otherwise.
(e) The Stockholder shall not, and shall use his best efforts to cause any
investment banker, attorney or other adviser or representative of the
Stockholder not to, (i) directly or indirectly solicit, initiate or knowingly
encourage the submission of, any Takeover Proposal or (ii) directly or
indirectly participate in any discussions or negotiations regarding, or furnish
to any person any information with respect to, or knowingly take any other
action to facilitate any inquiries or the making of any proposal that
constitutes, or would reasonably be expected to lead to, any Takeover Proposal.
4. Affiliates Letter. The Stockholder agrees to execute and deliver on a
timely basis a letter agreement in the form of Exhibit D to the Merger
Agreement, when and if requested by Parent prior to the effectiveness of the
Merger.
5. Further Assurances. The Stockholder will, from time to time, execute and
deliver, or cause to be executed and delivered, such additional or further
transfers, assignments, endorsements, consents and other instruments as Parent
may reasonably request for the purpose of effectively carrying out the
transactions contemplated by this Agreement.
2
<PAGE> 108
6. Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by the parties without the prior written
consent of the other party. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the
Stockholder, his personal or legal representatives, executors, administrators,
heirs, distributors, devisees and legatees and by the Parent, its successors and
assigns.
7. Termination. This Agreement shall terminate upon the earliest of (i) the
close of business on August 31, 1998, (ii) the Effective Time (as defined in the
Merger Agreement), (iii) the termination of the Merger Agreement in accordance
with its terms; provided, that (x) if the Merger Agreement is terminated
pursuant to Sections 8.1(f) or 8.1(g) of the Merger Agreement or; (y) if any
Takeover Proposal shall have been made prior to termination of this Agreement,
Sections 3(b), 3(c) and 3(d) hereof shall survive for 180 days after the
termination of this Agreement. The termination of this Agreement or any
provision hereof shall not relieve either party hereto from any liability for
any breach of this Agreement or such provision prior to such termination.
8. General Provisions.
(a) Amendments. This Agreement may not be amended except by an instrument
in writing signed by each of the parties hereto.
(b) Notice. Any notice, request, instruction or other document to be given
hereunder by any party to the others shall be in writing and delivered
personally or sent by registered or certified mail, postage prepaid, or by
facsimile:
(i) if to Parent, to:
Kimberly-Clark Corporation
351 Phelps Drive
Irving, Texas 75038
Facsimile: (972) 281-1492
Attention: Senior Vice President -- Law and
Government Affairs
with a copy to:
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Facsimile: (312) 853-7036
Attention: Dennis V. Osimitz, Esq.
(ii) if to the Stockholder, to
Van Hubbard
104 Quail Run
Bedford, TX 76021
with a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Facsimile: (212) 558-3299
Attention: George Sampas, Esq.
or to such other persons or addresses as may be designated in writing by the
party to receive such notice as provided above.
3
<PAGE> 109
(c) Interpretation. When a reference is made in this Agreement to Sections,
such reference shall be to a Section to this Agreement unless otherwise
indicated. The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Wherever the words "include," "includes," or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation." Capitalized terms used herein but not otherwise defined herein
shall have the meanings set forth in the Merger Agreement.
(d) Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more of the counterparts have been signed by
each of the parties and delivered to the other party, it being understood that
each party need not sign the same counterpart.
(f) Entire Agreement; No Third-Party Beneficiaries. This Agreement
(including the documents and instruments referred to herein) (i) constitutes the
entire agreement and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof
and (ii) is not intended to confer upon any person other than the parties hereto
any rights or remedies hereunder.
(g) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.
9. Stockholder Capacity. The Stockholder signs solely in his capacity as
the record holder and/or beneficial owner of the Subject Shares and nothing
herein shall limit, impose any obligation on, or affect any actions taken by the
Stockholder in his capacity as an officer or director of the Company.
10. Enforcement. The parties hereto acknowledge that damages would be an
inadequate remedy for any breach of the provisions of this Agreement and agree
that the obligations of the parties hereunder shall be specifically enforceable.
It is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of Delaware or in a Delaware state court, this being in
addition to any other remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (i) consents to submit such party to the
personal jurisdiction of any Federal court located in the State of Delaware or
any Delaware state court in the event any dispute arises out of this Agreement
or any of the transactions contemplated hereby, (ii) agrees that such party will
not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court, (iii) agrees that such party will not
bring any action relating to this Agreement or any of the transactions
contemplated hereby in any court other than a Federal court sitting in the State
of Delaware or a Delaware state court and (iv) waives any right to trial by jury
with respect to any claim or proceeding related to or arising out of this
Agreement or any of the transactions contemplated hereby.
4
<PAGE> 110
IN WITNESS WHEREOF, Parent has caused this Agreement to be signed by its
respective officers thereunto duly authorized and the Stockholder has signed
this Agreement, all as of the date first written above.
KIMBERLY-CLARK CORPORATION
By:
----------------------------------
Name:
Title:
[STOCKHOLDER]
By:
----------------------------------
Name:
Title:
5
<PAGE> 111
SCHEDULE A
<TABLE>
<CAPTION>
NUMBER OF ADDRESS AND
NAME OF STOCKHOLDER SUBJECT SHARES CONTACT PERSON
------------------- -------------- --------------
<S> <C> <C>
Van Hubbard................................... 2,454,462(1) Van Hubbard
Chairman of the Board, 104 Quail Run
CEO and President Bedford, TX 76021
Kirk Brunson.................................. 1,580,182(2) Kirk Brunson
Vice Chairman of the Board 605 Hurst Drive
Executive Bedford, TX 76021
Vice President
</TABLE>
- ---------------
(1) Includes 2,401,272 shares over which Mr. Hubbard has sole voting and
dispositive power and 53,190 shares that have been allocated to his ESOP
account over which Mr. Hubbard has full voting power. Mr. Hubbard does not
have sole dispositive power over the 53,190 shares that have been allocated
to his ESOP account.
(2) Includes 1,554,807 shares over which Mr. Brunson has sole voting and
dispositive power and 23,375 shares that have been allocated to his ESOP
account over which Mr. Brunson has full voting power. Mr. Brunson does not
have sole dispositive power over the 23,375, shares that have been allocated
to his ESOP account.
<PAGE> 112
[Goldman Sachs Letterhead]
ANNEX IV
PERSONAL AND CONFIDENTIAL
November 12, 1997
Board of Directors
Tecnol Medical Products, Inc.
7201 Industrial Park Boulevard
Fort Worth, TX 76180
Gentlemen and Madame:
You have requested our opinion as to the fairness to the holders (the "Holders")
of the outstanding shares of Common Stock, par value $.001 per share (the
"Shares"), of Tecnol Medical Products, (the "Company") of the Exchange Ratio (as
hereinafter defined) to be received by the Holders pursuant to the Agreement and
Plan of Merger dated as of September 4, 1997 among Kimberly-Clark Corporation
("Kimberly-Clark"), Vanguard Acquisition Corp., a wholly-owned subsidiary of
Kimberly-Clark ("Merger Sub") and the Company (the "Merger Agreement"). The
Merger Agreement provides for the merger (the "Merger") of the Merger Sub with
and into the Company and the separate corporate existence of the Merger Sub
shall thereupon cease. As a result of the Merger, each Share outstanding
immediately prior to the effective time of the Merger (other than Shares owned
by Kimberly-Clark or any of its subsidiaries) will be converted into the right
to receive 0.42 shares of Common Stock, par value $1.25 per share, of
Kimberly-Clark ("Kimberly-Clark Common Stock") for each Share (the "Exchange
Ratio").
Goldman, Sachs & Co., as part of its investment banking business, is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for estate, corporate and other purposes. We are familiar with
the Company having provided certain investment banking services to the Company
from time to time, including having acted as managing underwriter of the
Company's initial public offering of shares in September 1991 and having acted
as financial advisor to the Company in connection with, and having participated
in certain of the negotiations leading to, the Merger Agreement. We also have
provided certain investment banking services from time to time to Kimberly-Clark
in the past, and Goldman Sachs may provide investment banking services to
Kimberly-Clark and its subsidiaries in the future. Goldman Sachs is a full
service securities firm and, in the course of normal trading activities may from
time to time effect transactions and hold positions in the securities of the
Company and Kimberly-Clark for its own account or for the accounts of customers.
As of November 10, 1997, Goldman Sachs, for its own account, had a long position
of 203,922 shares of Kimberly-Clark Common Stock and a short position of 89,006
shares of Kimberly-Clark Common Stock.
[Goldman Sachs Letterhead]
<PAGE> 113
In connection with this opinion, we have reviewed, among other things, the
Registration Statement, including the Proxy Statement/Prospectus relating to the
Special Meeting of Stockholders of the Company to be held in connection with the
Merger Agreement; the Merger Agreement; the Company Option Agreement; each of
the Company Stockholder Agreements; Annual Reports to Stockholders and Annual
Reports on Form 10-K of the Company for the five fiscal years ended November 30,
1996; certain interim reports to stockholders and Quarterly Reports on Form
10-Q; certain other communications from the Company to its stockholders; and
certain internal financial analyses and forecasts for the Company prepared by
its management. With respect to Kimberly-Clark, we have also reviewed Annual
Reports to Stockholders and Annual Reports on Form 10-K of Kimberly-Clark for
the five years ended December 31, 1996 and certain interim reports to
stockholders and Quarterly Reports on Form 10-Q. We also have held discussions
with members of the senior managements of the Company and Kimberly-Clark
regarding the Merger and the past and current business operations, financial
condition and future prospects of their respective companies. In addition, we
have reviewed the reported price and trading activity for the Shares and the
Kimberly-Clark Common Stock, compared certain financial and stock market
information for the Company and Kimberly-Clark with similar information for
certain other companies the securities of which are publicly traded, reviewed
the financial terms of certain recent business combinations in the medical
devices industry specifically and in other industries generally and performed
such other studies and analyses as we considered appropriate.
We have relied upon the accuracy and completeness of all of the financial and
other information reviewed by us and have assumed such accuracy and completeness
for purpose of rendering this opinion. With respect to the financial projections
for the Company prepared by its management, you have informed us of your point
of view regarding the risks and uncertainties inherent in achieving management's
projections. As you are aware, Kimberly-Clark did not make available to us its
projections of expected future performance. Accordingly, we note that our review
with respect to such information was limited to discussions with management of
Kimberly-Clark of research analysts' estimates for 1997 and 1998 and the
expected growth in earnings per share through 2000. In addition, we have not
made an independent evaluation or appraisal of the assets and liabilities of the
Company or Kimberly-Clark or any of their respective subsidiaries, and we have
not been furnished with any such evaluation or appraisal. Our advisory services
and the opinion expressed herein are provided for the information and assistance
of the Board of Directors of the Company in connection with its consideration of
the transaction contemplated by the Merger Agreement and such opinion does not
constitute a recommendation as to how any Holder of Shares should vote with
respect to the Merger. Based upon and subject to the foregoing and based upon
such other matters as we consider relevant, it is our opinion that as of the
date hereof the Exchange Ratio pursuant to the Merger Agreement is fair to the
Holders of Shares.
Very truly yours,
/s/ GOLDMAN, SACHS & CO.
<PAGE> 114
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Kimberly-Clark By-Laws provide, among other things, that Kimberly-Clark
shall (i) indemnify any person who was or is a party or is threatened to be made
a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of Kimberly-Clark) by reason of the fact that he is or was a
Director or officer of Kimberly-Clark, or is or was serving at the request of
Kimberly-Clark as a Director or officer of another corporation, or in the case
of an officer or Director of Kimberly-Clark is or was serving as an employee or
agent of a partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of
Kimberly-Clark, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful, and (ii) indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of
Kimberly-Clark to procure a judgment in its favor by reason of the fact that he
is or was a Director or officer of Kimberly-Clark, or is or was serving at the
request of Kimberly-Clark as a director or officer of another corporation, or in
the case of an officer or director of Kimberly-Clark is or was serving as an
employee or agent of a partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of Kimberly-Clark and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to Kimberly-Clark unless
and only to the extent that the Court of Chancery or the court in which such
action or suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such expenses which
the Court of Chancery or such other court shall deem proper. The Kimberly-Clark
By-Laws further provide that the indemnification provided therein shall not be
deemed exclusive of any other rights to which those seeking indemnification may
be entitled.
Section 145 of the DGCL authorizes indemnification by Kimberly-Clark of
Directors and officers under the circumstances provided in the provisions of the
Kimberly-Clark By-Laws described above, and requires such indemnification for
expenses actually and reasonably incurred to the extent a Director or officer is
successful in the defense of any action, or any claim, issue or matter therein.
Kimberly-Clark has purchased insurance which purports to insure
Kimberly-Clark against certain costs of indemnification which may be incurred by
it pursuant to the Kimberly-Clark By-Laws and to insure the officers and
Directors of Kimberly-Clark, and of its subsidiary companies, against certain
liabilities incurred by them in the discharge of their functions as such
officers and directors except for liabilities resulting from their own
malfeasance.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) The following is a list of Exhibits included as part of this
Registration Statement. Kimberly-Clark agrees to furnish supplementally a copy
of any omitted schedule to the SEC upon request. Items marked with an asterisk
are filed herewith.
<TABLE>
<CAPTION>
<C> <S>
2.1 -- Agreement and Plan of Merger dated as of September 4,
1997 among Kimberly-Clark Corporation, Vanguard
Acquisition Corp. and Tecnol Medical Products, Inc.
(included as Annex I to the Proxy Statement/Prospectus).
4.1 -- Restated Certificate of Incorporation of Kimberly-Clark
Corporation, dated April 16, 1987, is hereby incorporated
by reference to Exhibit No. 3 of Kimberly-Clark's
Quarterly Report on Form 10-Q for the quarter ended June
30, 1997.
</TABLE>
II-1
<PAGE> 115
<TABLE>
<C> <S>
4.2 -- By-Laws of Kimberly Clark Corporation, as amended November 22, 1996, are hereby
incorporated by reference to Exhibit No. 4.2 to the Registration Statement on Form S-8
filed with the SEC on December 6, 1996 (Registration No. 33-17367).
4.3 -- The instruments defining the rights of holders of long-term debt securities of
Kimberly-Clark and its subsidiaries are omitted pursuant to Item 601(b)(4)(iii)(A) of
Regulation S-K. Kimberly-Clark hereby agrees to furnish copies of these instruments to
the SEC upon request.
*5.1 -- Opinion of O. George Everbach, Senior Vice President -- Law and Government Affairs of
Kimberly-Clark, as to the legality of the securities being registered.
*8.1 -- Opinion of Sidley & Austin, as to certain United States federal income tax consequences
of the Merger.
*8.2 -- Opinion of Carrington, Coleman, Sloman & Blumenthal, L.L.P., as to certain United
States federal income tax consequences of the Merger.
*23.1 -- Consent of Deloitte & Touche L.L.P.
*23.2 -- Consent of Arthur Andersen LLP.
*23.3 -- Consent of Coopers & Lybrand L.L.P.
*23.4 -- Consent of Goldman, Sachs & Co.
23.5 -- Consent of O. George Everbach (included in Exhibit 5.1 to this Registration Statement).
23.6 -- Consent of Sidley & Austin (included in Exhibit 8.1 to this Registration Statement).
23.7 -- Consent of Carrington, Coleman, Sloman & Blumenthal (included in Exhibit 8.2 to this
Registration Statement).
*24.1 -- Powers of Attorney.
*99.1 -- Form of proxy card to be mailed to holders of Tecnol Common Stock.
*99.2 -- Form of instruction card to be mailed to participants of Tecnol's Employee Stock
Ownership Plan.
</TABLE>
(b) Not applicable.
(c) The opinion of Goldman, Sachs & Co. is included as Annex IV to the
Proxy Statement/Prospectus.
ITEM 22. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes: (1) to file, during any
period in which offers or sales are being made, a post-effective amendment to
this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933.
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar amount of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated offering range may be
reflected in the form of prospectus filed with the SEC pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price represent no
more than a 20 percent change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the effective
registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
II-2
<PAGE> 116
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remains unsold at the termination of
the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at the time shall be deemed to be the initial bona fide offering thereof.
(c) (1) The undersigned Registrant hereby undertakes as follows: that prior
to any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other Items of the applicable form.
(2) The Registrant undertakes that every prospectus (i) that is filed
pursuant to the paragraph immediately preceding, or (ii) that purports to meet
the requirements of section 10(a)(3) of the Securities Act and is used in
connection with an offering of securities subject to Rule 415, will be filed as
a part of an amendment to the registration statement and will not be used until
such amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(d) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
(e) The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of this Form S-4, within one business day of receipt
of such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(f) The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-3
<PAGE> 117
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Irving,
State of Texas, on November 12, 1997.
Kimberly-Clark Corporation
By: WAYNE R. SANDERS
----------------------------------
Wayne R. Sanders
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
--------- -------- ----
<C> <S> <C>
WAYNE R. SANDERS Chairman of the Board November 12, 1997
- ----------------------------------------------------- and Chief Executive
Wayne R. Sanders Officer and Director
(principal executive
officer)
JOHN W. DONEHOWER Senior Vice President November 12, 1997
- ----------------------------------------------------- and Chief Financial
John W. Donehower Officer (principal
financial officer)
RANDY J. VEST Vice President and November 12, 1997
- ----------------------------------------------------- Controller (principal
Randy J. Vest accounting officer)
</TABLE>
DIRECTORS
<TABLE>
<CAPTION>
SIGNATURE SIGNATURE
--------- ---------
<C> <C>
* *
- -------------------------------------------- --------------------------------------------
John F. Bergstrom Pastora San Juan Cafferty
* *
- -------------------------------------------- --------------------------------------------
Paul J. Collins Robert W. Decherd
* *
- -------------------------------------------- --------------------------------------------
William O. Fifield Claudio X. Gonzalez
* *
- -------------------------------------------- --------------------------------------------
Louis E. Levy Frank A. McPherson
* *
- -------------------------------------------- --------------------------------------------
Linda Johnson Rice Wolfgang R. Schmitt
*
- --------------------------------------------
Randall L. Tobias
November 12, 1997
*By: O. GEORGE EVERBACH
- --------------------------------------------
O. George Everbach
Attorney-in-Fact
</TABLE>
II-4
<PAGE> 118
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
2.1 -- Agreement and Plan of Merger dated as of September 4,
1997 among Kimberly-Clark Corporation, Vanguard
Acquisition Corp. and Tecnol Medical Products, Inc.
(included as Annex I to the Proxy Statement/Prospectus).
4.1 -- Restated Certificate of Incorporation of Kimberly-Clark
Corporation, dated April 16, 1987, is hereby incorporated
by reference to Exhibit No. 3 of Kimberly-Clark's
Quarterly Report on Form 10-Q for the quarter ended June
30, 1997.
4.2 -- By-Laws of Kimberly Clark Corporation, as amended
November 22, 1996, are hereby incorporated by reference
to Exhibit No. 4.2 to the Registration Statement on Form
S-8 filed with the SEC on December 6, 1996 (Registration
No. 33-17367).
4.3 -- The instruments defining the rights of holders of
long-term debt securities of Kimberly-Clark and its
subsidiaries are omitted pursuant to Item
601(b)(4)(iii)(A) of Regulation S-K. Kimberly-Clark
hereby agrees to furnish copies of these instruments to
the SEC upon request.
*5.1 -- Opinion of O. George Everbach, Senior Vice
President -- Law and Government Affairs of
Kimberly-Clark, as to the legality of the securities
being registered.
*8.1 -- Opinion of Sidley & Austin, as to certain United States
federal income tax consequences of the Merger.
*8.2 -- Opinion of Carrington, Coleman, Sloman & Blumenthal,
L.L.P., as to certain United States federal income tax
consequences of the Merger.
*23.1 -- Consent of Deloitte & Touche LLP
*23.2 -- Consent of Arthur Andersen LLP
*23.3 -- Consent of Coopers & Lybrand L.L.P.
*23.4 -- Consent of Goldman, Sachs & Co.
23.5 -- Consent of O. George Everbach (included in Exhibit 5.1 to
this Registration Statement)
23.6 -- Consent of Sidley & Austin (included in Exhibit 8.1 to
this Registration Statement)
23.7 -- Consent of Carrington, Coleman, Sloman & Blumenthal
(included in Exhibit 8.2 to this Registration Statement)
*24.1 -- Powers of Attorney.
*99.1 -- Form of proxy card to be mailed to holders of Tecnol
Common Stock.
*99.2 -- Form of instruction card to be mailed to participants of
Tecnol's Employee Stock Ownership Plan.
</TABLE>
<PAGE> 1
EXHIBIT 5.1
[KIMBERLY-CLARK CORPORATION LETTERHEAD]
November 12, 1997
Kimberly-Clark Corporation
351 Phelps Drive
Irving, Texas 75038
Re: Registration of 8,925,742 Shares of Common Stock and
Associated Series A Junior Participating Preferred Stock
Purchase Rights
Ladies and Gentlemen:
I have acted as counsel to Kimberly-Clark Corporation, a Delaware
corporation (the "Company"), in connection with the preparation and filing with
the Securities and Exchange Commission (the "Commission") under the Securities
Act of 1933, as amended (the "Securities Act"), of the Company's registration
statement on Form S-4 (the "Registration Statement") relating to the
registration of 8,925,742 shares of Common Stock, $1.25 par value, of the
Company, together with 8,925,742 rights to purchase shares of Series A Junior
Participating Preferred Stock of the Company (the "Rights") associated
therewith, to be issued pursuant to: (a) the terms of the Agreement and Plan
of Merger dated as of September 4, 1997 among the Company, Vanguard Acquisition
Corp., a Delaware corporation and a wholly-owned subsidiary of the Company
("Sub"), and Tecnol Medical Products, Inc., a Delaware corporation ("Tecnol"),
which provides for the merger (the "Merger") of Sub with and into Tecnol, with
Tecnol surviving as a wholly-owned subsidiary of the Company (the "Merger
Shares"). The terms of the Rights are set forth in the Rights Agreement dated
as of June 21, 1988, as amended and restated as of June 8, 1995 (the "Rights
Agreement"), between the Company and Boston EquiServe, as Rights Agent.
I have examined such corporate and other documents and records, and
certificates of public officials and officers of the Company, as I have deemed
necessary for purposes of this opinion. In stating my opinion I have assumed the
genuineness of all signatures of, and the authority of, persons signing any
documents or records on behalf of parties other than the Company, the
authenticity of all documents submitted to me as originals and the conformity to
authentic original documents of all documents submitted to me as certified or
photostatic copies.
Based on the foregoing, it is my opinion that:
1. The Company is duly incorporated and validly existing
under the laws of the State of Delaware.
2. The Merger Shares will be legally issued, fully paid and
non-assessable and no personal liability will attach to the ownership
thereof, except with respect to non-assessability as provided by
Section 180.0622 (2)(b) of the Wisconsin Business Corporation Law,
when: (i) the Registration Statement, as finally amended, shall have
become effective under the Securities Act; and (ii) the Merger shall
have become effective under the General Corporation Law of the State
of Delaware.
3. Each Right associated with a Merger Share will be legally
issued when: (i) the Registration Statement, as finally amended,
shall have become effective under the Securities Act; (ii) such Right
shall have been duly issued in accordance with the terms of the Rights
Agreement; and (iii) the associated Merger Share shall have been duly
issued as set forth in paragraph 2.
The foregoing opinions are limited to the federal laws of the United
States of America and the General Corporation Law of the State of Delaware. I
express no opinion as to the application of the securities or blue sky laws of
the various states to the sale of the Merger Shares or the issuance of the
Rights.
<PAGE> 2
I hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement and to all references to me included in or made part of
the Registration Statement.
Very truly yours,
/s/ O. GEORGE EVERBACH
--------------------------------
O. George Everbach
Senior Vice President
Law and Government Affairs
Kimberly-Clark Corporation
<PAGE> 1
EXHIBIT 8.1
[Sidley & Austin Letterhead]
November 12, 1997
Kimberly-Clark Corporation
351 Phelps Drive
Irving, Texas 75038
Ladies and Gentlemen:
We refer to the Agreement and Plan of Merger dated as of
September 4, 1997 (the "Merger Agreement") among Kimberly-Clark Corporation, a
Delaware corporation ("Parent"), Vanguard Acquisition Corp., a Delaware
corporation and a direct wholly-owned subsidiary of Parent ("Sub"), and Tecnol
Medical Products, Inc., a Delaware corporation (the "Company"), which provides
for the merger (the "Merger") of Sub with and into the Company on the terms and
conditions therein set forth, the time at which the Merger becomes effective
being hereinafter referred to as the "Effective Time." Capitalized terms used
but not defined herein have the meanings specified in the Merger Agreement.
As provided in the Merger Agreement, at the Effective Time, by
reason of the Merger: (i) all outstanding Shares then owned by the Company or
any direct or indirect subsidiary of the Company and all outstanding shares
then owned by Parent, Sub or any other direct or indirect subsidiary of Parent
(which, in each case described in clause (i), are not held on behalf of third
parties) will be cancelled, and no capital stock of Parent or other
consideration will be delivered in exchange therefor; (ii) each then
outstanding share of capital stock of Sub will be converted into one share of
common stock of the Surviving Corporation; and (iii) each then outstanding
Share (other than Shares cancelled as described in clause (i) above) will be
converted into, and become exchangeable for, 0.42 of a validly issued, fully
paid and nonassessable share of Parent Common Stock (subject to adjustment in
certain circumstances), including the corresponding percentage of Parent
Rights, with cash being paid in lieu of fractional shares of Parent Common
Stock. Accordingly, immediately following the Merger, the former holders of
Shares (other than Shares described in clause (i) above) will hold Parent
Common Stock issued in the Merger (and Parent Rights and cash in lieu of any
fractional shares of Parent Common Stock) and the Company, as the surviving
corporation, will be a wholly- owned subsidiary of Parent. The Merger and the
Merger Agreement are more fully described in Parent's Registration Statement on
Form S-4 (the "Registration Statement") which is being filed by Parent with the
Securities and
<PAGE> 2
Kimberly-Clark Corporation
November 12, 1997
Page 2
Exchange Commission pursuant to the Securities Act of l933, as amended. The
Registration Statement includes the Proxy Statement/Prospectus (the
"Prospectus") of Parent and the Company.
In rendering the opinions expressed below, we have relied upon
the accuracy and completeness of the facts, information and representations,
and the completeness of the covenants, contained in the Merger Agreement, the
Prospectus and such other documents as we have deemed relevant and necessary.
Such opinions are conditioned, among other things, not only upon the accuracy
and completeness thereof as of the date hereof, but also the continuing
accuracy and completeness thereof as of the Effective Time. Moreover, we have
assumed the absence of any change to any of such instruments between the date
hereof and the Effective Time.
We have assumed the authenticity of all documents submitted to
us as originals, the genuineness of all signatures, the legal capacity of all
natural persons and the conformity with original documents of all copies
submitted to us for our examination. We have also assumed: (i) that the
transactions related to the Merger or contemplated by the Merger Agreement will
be consummated (A) in accordance with the Merger Agreement and (B) as described
in the Prospectus; (ii) that the Merger will qualify as a statutory merger
under the laws of the State of Delaware; and (iii) the accuracy as of the date
hereof, and the continuing accuracy as of the Effective Time, of the written
statements made by executives of Parent and the Company contained in the Parent
Tax Certificate and the Company Tax Certificate, respectively, and the written
statements made by certain stockholders of the Company.
In rendering the opinions expressed below, we have considered
the applicable provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), Regulations promulgated thereunder by the United States Treasury
Department (the "Regulations"), pertinent judicial authorities, rulings of the
Internal Revenue Service and such other authorities as we have considered
relevant. It should be noted that the Code, the Regulations and such judicial
authorities, rulings and other authorities are subject to change at any time
and, in some circumstances, with retroactive effect; and any such change could
affect the opinions stated herein.
<PAGE> 3
Kimberly-Clark Corporation
November 12, 1997
Page 3
Based upon and subject to the foregoing, it is our opinion, as
counsel for Kimberly-Clark Corporation, that for federal income tax purposes:
(1) The Merger will constitute a "reorganization"
within the meaning of Section 368(a) of the Code, and the Company, Sub
and Parent will each be a party to such reorganization within the
meaning of Section 368(b) of the Code.
(2) No gain or loss will be recognized by Parent or
the Company as a result of the Merger.
(3) No gain or loss will be recognized by the
stockholders of the Company upon the exchange of their Shares solely
for shares of Parent Common Stock pursuant to the Merger, except with
respect to cash, if any, received in lieu of fractional shares of
Parent Common Stock.
(4) The aggregate tax basis of the shares of Parent
Common Stock received by a stockholder solely in exchange for Shares
pursuant to the Merger (including fractional shares of Parent Common
Stock for which cash is received) will be the same as the aggregate
tax basis of the Shares exchanged therefor.
(5) The holding period for shares of Parent Common
Stock received by a stockholder in exchange for Shares pursuant to the
Merger will include the holding period that such Shares were held by
the stockholder, provided such Shares were held as capital assets by
such stockholder at the Effective Time.
(6) A stockholder of the Company who receives
cash in lieu of a fractional share of Parent Common Stock will
recognize gain or loss equal to the difference, if any, between such
stockholder's tax basis in such fractional share and the amount of cash
received.
Except as expressly set forth in paragraphs (1) through (6),
inclusive, you have not requested, and we do not herein express, any opinion
concerning the tax consequences of, or any other matters related to, the
Merger.
The opinions set forth above may not be applicable to
stockholders of the Company that received their Shares as compensation or that
are foreign corporations, foreign partnerships or other foreign entities or
individuals who are not citizens or residents of the United States.
We assume no obligation to update or supplement this letter to
reflect any facts or circumstances which may hereafter come to our attention
with respect to the opinions expressed above, including any changes in
applicable law which may hereafter occur.
<PAGE> 4
Kimberly-Clark Corporation
November 12, 1997
Page 4
We hereby consent to the filing of this letter as an Exhibit
to the Registration Statement and to all references to our Firm included in or
made a part of the Registration Statement.
Very truly yours,
/s/ SIDLEY & AUSTIN
<PAGE> 1
EXHIBIT 8.2
[Carrington, Coleman, Sloman & Blumenthal, L.L.P. Letterhead]
November 12, 1997
Tecnol Medical Products, Inc.
7201 Industrial Park Blvd.
Fort Worth, Texas 76180
Ladies and Gentlemen:
We refer to the Agreement and Plan of Merger dated as of September 4,
1997 (the "Merger Agreement") among Kimberly-Clark Corporation, a Delaware
corporation ("Parent"), Vanguard Acquisition Corp., a Delaware corporation and
a direct wholly-owned subsidiary of Parent ("Sub"), and Tecnol Medical
Products, Inc., a Delaware corporation (the "Company"), which provides for the
merger (the "Merger") of Sub with and into the Company on the terms and
conditions therein set forth, the time at which the Merger becomes effective
being hereinafter referred to as the "Effective Time." Capitalized terms used
but not defined herein have the meanings specified in the Merger Agreement.
As provided in the Merger Agreement, at the Effective Time, by reason
of the Merger: (i) all outstanding Shares then owned by the Company or any
direct or indirect subsidiary of the Company and all outstanding Shares then
owned by Parent, Sub or any other direct or indirect subsidiary of Parent
(which, in each case described in clause (i), are not held on behalf of third
parties) will be canceled, and no capital stock of Parent or other
consideration will be delivered in exchange thereof; (ii) each then outstanding
share of capital stock of Sub will be converted into one share of common stock
of the Surviving Corporation; and (iii) each then outstanding Share (other than
Shares canceled as described in clause (i) above) will be converted into, and
become exchangeable for, 0.42 of a validly issued, fully paid and nonassessable
share of Parent Common Stock (subject to adjustment in certain circumstances),
including the corresponding percentage of Parent Rights, with cash being paid
in lieu of fractional shares of Parent Common Stock. Accordingly, immediately
following the Merger, the former holders of Shares (other than Shares described
in clause (i) above) will hold Parent Common Stock issued in the Merger (and
Parent Rights and cash in lieu of any fractional shares of Parent Common Stock)
and the Company, as the surviving corporation, will be a wholly-owned
subsidiary of Parent. The Merger and the Merger Agreement are more fully
described in Parent's Registration Statement on Form S-4 (the "Registration
Statement") which is being filed by Parent with the Securities and Exchange
Commission pursuant to the Securities Act of 1933, as
<PAGE> 2
Tecnol Medical Products, Inc.
November 12, 1997
Page 2
amended. The Registration Statement includes the Proxy Statement/Prospectus
(the "Prospectus") of Parent and the Company.
In rendering the opinions expressed below, we have relied upon the
accuracy and completeness of the facts, information and representations, and
the completeness of the covenants, contained in the Merger Agreement, the
Prospectus and such other documents as we have deemed relevant and necessary.
Such opinions are conditioned, among other things, not only upon the accuracy
and completeness thereof as of the date hereof, but also the continuing
accuracy and completeness thereof as of the Effective Time. Moreover, we have
assumed the absence of any change to any of such instruments between the date
hereof and the Effective Time.
We have assumed the authenticity of all documents submitted to us as
originals, the genuineness of all signatures, the legal capacity of all natural
persons and the conformity with original documents of all copies submitted to
us for our examination. We have also assumed: (i) that the transactions
related to the Merger or contemplated with the Merger Agreement will be
consummated (A) in accordance with the Merger Agreement and (B) as described in
the Prospectus; (ii) that the Merger will qualify as a statutory merger under
the laws of the State of Delaware; and (iii) the accuracy as of the date
hereof, and the continuing accuracy as of the Effective Time, of the written
statements made by executives of Parent and the Company contained in the Parent
Tax Certificate and the Company Tax Certificate, respectively, and the written
statements made by certain stockholders of the Company.
In rendering the opinions expressed below, we have considered the
applicable provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), Regulations promulgated thereunder by the United States Treasury
Department (the "Regulations"), pertinent judicial authorities, rulings of the
Internal Revenue Service and such other authorities as we have considered
relevant. It should be noted that the Code, the Regulations and such judicial
authorities, rulings and other authorities are subject to change at any time
and, in some circumstances, with retroactive effect; and any such change could
affect the opinions stated herein.
Based upon and subject to the foregoing, it is our opinion, as counsel
for Tecnol Medical Products, Inc., that for federal income tax purposes:
(1) The Merger will constitute a "reorganization" within
the meaning of Section 368(a) of the Code, and the Company, Sub and
Parent will each be a party to such reorganization within the meaning
of Section 368(b) of the Code.
(2) No gain or loss will be recognized by Parent or the
Company as a result of the Merger.
<PAGE> 3
Tecnol Medical Products, Inc.
November 12, 1997
Page 3
(3) No gain or loss will be recognized by the stockholders
of the Company upon the exchange of their Shares solely for shares of
Parent Common Stock pursuant to the Merger, except with respect to
cash, if any, received in lieu of fractional shares of Parent Common
Stock.
(4) The aggregate tax basis of the shares of Parent Common
Stock received by a stockholder solely in exchange for Shares pursuant
to the Merger (including fractional shares of Parent Common Stock for
which cash is received) will be the same as the aggregate tax basis of
the Shares exchanged therefor.
(5) The holding period for shares of Parent Common Stock
received by a stockholder in exchange for Shares pursuant to the
Merger will include the holding period that such Shares were held by
the stockholder, provided such Shares were held as capital assets by
such stockholder at the Effective Time.
(6) A stockholder of the Company who receives cash in lieu
of a fractional share of Parent Common Stock will recognize gain or
loss equal to the difference, if any, between such stockholder's tax
basis in such fractional share and the amount of cash received.
Except as expressly set forth in paragraphs (1) through (6), inclusive,
you have not requested, and we do not herein express, any opinion concerning
the tax consequences of, or any other matters related to, the Merger.
The opinions set forth above may not be applicable to stockholders of
the Company that received their Shares as compensation or that are foreign
corporations, foreign partnerships or other foreign entities or individuals who
are not citizens or residents of the United States.
We assume no obligation to update or supplement this letter to reflect
any facts or circumstances which may hereafter come to our attention with
respect to the opinions expressed above, including any changes in applicable
law which may hereafter occur.
We hereby consent to the filing of this letter as an Exhibit to the
Registration Statement and to all references to our Firm included in or made a
part of the Registration Statement.
Very truly yours,
/s/ CARRINGTON, COLEMAN, SLOMAN &
BLUMENTHAL, A Registered Limited
Liability Partnership
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this
Registration Statement of Kimberly-Clark Corporation on Form S-4 of our reports
dated January 27, 1997, appearing in and incorporated by reference in the
Annual Report on Form 10-K of Kimberly-Clark Corporation for the year ended
December 31, 1996 and to the reference to us under the heading "Experts" in the
Prospectus, which is part of this Registration Statement.
/s/ DELOITTE & TOUCHE LLP
Deloitte & Touche LLP
Dallas, Texas
November 12, 1997
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this Registration Statement of our report dated January 14,
1997 included in Tecnol Medical Products, Inc.'s Form 10-K for the year ended
November 30, 1996, and to all references to our firm included in the Proxy
Statement/Prospectus which is a part of this Registration Statement.
/s/ ARTHUR ANDERSEN LLP
Fort Worth, Texas
November 10, 1997
<PAGE> 1
EXHIBIT 23.3
[Coopers & Lybrand Letterhead]
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this
Registration Statement on Form S-4 and in the related Prospectus of
Kimberly-Clark Corporation of our report dated January 30, 1996, which makes
reference to the Company adopting the provisions of Statement of Financial
Accounting Standards No. 121 in 1995 and that our audit did not include the
1995 provisions for restructuring and other unusual charges which were audited
by other auditors, on our audits of the consolidated financial statements and
financial statement schedule of Scott Paper Company and subsidiaries as of
December 30, 1995 and December 31, 1994 and for the years then ended, appearing
in and incorporated by reference in the Annual Report on Form 10-K under the
Securities Exchange Act of 1934 of Kimberly-Clark Corporation for the year
ended December 31, 1996.
/s/ COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, PA
November 12, 1997
<PAGE> 1
EXHIBIT 23.4
[GOLDMAN, SACHS & CO. LETTERHEAD]
CONFIDENTIAL
November 12, 1997
Board of Directors
Tecnol Medical Products, Inc.
7201 Industrial Park Boulevard
Fort Worth, Texas 78180
Re: Tecnol Medical Products, Inc. Proxy Statement/Kimberly-Clark Corporation
Prospectus ("Proxy Statement/Prospectus")
Gentlemen and Madame:
Reference is made to our opinion letter dated November 12, 1997 with respect to
the fairness to the holders (the "Holders") of the outstanding shares of Common
Stock, par value $.001 (the "Shares"), of Tecnol Medical Products, Inc. (the
"Company") of the Exchange Ratio (as hereinafter defined) to be received by the
Holders pursuant to the Agreement and Plan of Merger dated as of September 4,
1997 among Kimberly-Clark Corporation ("Kimberly-Clark"), Vanguard Acquisition
Corp., a wholly-owned subsidiary of Kimberly-Clark ("Merger Sub") and the
Company (the "Merger Agreement"). The Merger Agreement provides for the merger
(the "Merger") of the Merger Sub with and into the Company and the separate
corporate existence of the Merger Sub shall thereupon cease. As a result of the
Merger, each Share outstanding immediately prior to the effective time of the
Merger (other than Shares owned by Kimberly-Clark or any of its subsidiaries)
will be converted into the right to receive 0.42 shares of Common Stock, par
value $1.25 per share, of Kimberly-Clark ("Kimberly-Clark Common Stock") for
each Share (the "Exchange Ratio").
The foregoing opinion letter is provided for the information and assistance of
the Board of Directors of the Company in connection with its consideration of
the transaction contemplated therein and is not to be used, circulated, quoted
or otherwise referred to for any other purpose, nor is it to be filed with,
included in or referred to in whole or in part in any registration statement,
proxy statement or any other document, except in accordance with our prior
written consent. We understand that the Company has determined to include our
opinion in the above-referenced Proxy Statement/Prospectus.
<PAGE> 2
Tecnol Medical Products, Inc.
November 12, 1997
Page Two
In that regard, we hereby consent to the reference to the opinion of our Firm
under the captions "Summary -- The Merger and the Merger Agreement -- Opinion
of Tecnol's Financial Advisor," "The Merger -- Tecnol's Reasons for the Merger;
Recommendation of its Board of Directors," and "The Merger -- Opinion of
Tecnol's Financial Advisor" and to the inclusion of the foregoing opinion in
the above-referenced Proxy Statement/Prospectus, which is a part of the
Registration Statement on Form S-4 relating to the Merger. In giving such
consent, we do not thereby admit that we come within the category of persons
whose consent is required under Section 7 of the Securities Act of 1933 or the
rules and regulations of the Securities and Exchange Commission thereunder.
Very truly yours,
/s/ GOLDMAN, SACHS & CO.
<PAGE> 1
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a Director
and/or Officer of Kimberly-Clark Corporation, a Delaware corporation (the
"Company"), does hereby constitute and appoint John W. Donehower, Randy J. Vest
and O. George Everbach, and each of them, with full power to act alone, his
true and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign on behalf of the undersigned a Registration Statement on
Form S-4 under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the registration under the Securities Act of the shares of
Common Stock, $1.25 par value, of the Company together with the Preferred Stock
Purchase Rights associated therewith to be issued pursuant to: the terms of
the Agreement and Plan of Merger dated as of September 4, 1997 among the
Company, Vanguard Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of the Company ("Sub"), and Tecnol Medical Products, Inc., a
Delaware corporation ("Tecnol"), which provides for the merger of Sub with and
into Tecnol, with Tecnol surviving as a wholly-owned subsidiary of the Company;
and to execute any and all amendments to such Registration Statement, whether
filed prior or subsequent to the time such Registration Statement becomes
effective, including amendments filed thereto, granting unto said attorneys-in-
fact and agents, and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done, as fully to
all intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any one
of them, or his substitute or their substitutes, lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 20th day of
October, 1997.
/s/ WAYNE R. SANDERS
----------------------
Wayne R. Sanders
<PAGE> 2
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a Director
and/or Officer of Kimberly-Clark Corporation, a Delaware corporation (the
"Company"), does hereby constitute and appoint John W. Donehower, Randy J. Vest
and O. George Everbach, and each of them, with full power to act alone, his
true and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign on behalf of the undersigned a Registration Statement on
Form S-4 under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the registration under the Securities Act of the shares of
Common Stock, $1.25 par value, of the Company together with the Preferred Stock
Purchase Rights associated therewith to be issued pursuant to: the terms of
the Agreement and Plan of Merger dated as of September 4, 1997 among the
Company, Vanguard Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of the Company ("Sub"), and Tecnol Medical Products, Inc., a
Delaware corporation ("Tecnol"), which provides for the merger of Sub with and
into Tecnol, with Tecnol surviving as a wholly-owned subsidiary of the Company;
and to execute any and all amendments to such Registration Statement, whether
filed prior or subsequent to the time such Registration Statement becomes
effective, including amendments filed thereto, granting unto said attorneys-in-
fact and agents, and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done, as fully to
all intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any one
of them, or his substitute or their substitutes, lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 20th day of
October, 1997.
/s/ JOHN F. BERGSTROM
-----------------------
John F. Bergstrom
<PAGE> 3
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a Director
and/or Officer of Kimberly-Clark Corporation, a Delaware corporation (the
"Company"), does hereby constitute and appoint John W. Donehower, Randy J. Vest
and O. George Everbach, and each of them, with full power to act alone, his
true and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign on behalf of the undersigned a Registration Statement on
Form S-4 under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the registration under the Securities Act of the shares of
Common Stock, $1.25 par value, of the Company together with the Preferred Stock
Purchase Rights associated therewith to be issued pursuant to: the terms of
the Agreement and Plan of Merger dated as of September 4, 1997 among the
Company, Vanguard Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of the Company ("Sub"), and Tecnol Medical Products, Inc., a
Delaware corporation ("Tecnol"), which provides for the merger of Sub with and
into Tecnol, with Tecnol surviving as a wholly-owned subsidiary of the Company;
and to execute any and all amendments to such Registration Statement, whether
filed prior or subsequent to the time such Registration Statement becomes
effective, including amendments filed thereto, granting unto said attorneys-in-
fact and agents, and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done, as fully to
all intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any one
of them, or his substitute or their substitutes, lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 20th day of
October, 1997.
/s/ PASTORA SAN JUAN CAFFERTY
-------------------------------
Pastora San Juan Cafferty
<PAGE> 4
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a Director
and/or Officer of Kimberly-Clark Corporation, a Delaware corporation (the
"Company"), does hereby constitute and appoint John W. Donehower, Randy J. Vest
and O. George Everbach, and each of them, with full power to act alone, his
true and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign on behalf of the undersigned a Registration Statement on
Form S-4 under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the registration under the Securities Act of the shares of
Common Stock, $1.25 par value, of the Company together with the Preferred Stock
Purchase Rights associated therewith to be issued pursuant to: the terms of
the Agreement and Plan of Merger dated as of September 4, 1997 among the
Company, Vanguard Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of the Company ("Sub"), and Tecnol Medical Products, Inc., a
Delaware corporation ("Tecnol"), which provides for the merger of Sub with and
into Tecnol, with Tecnol surviving as a wholly-owned subsidiary of the Company;
and to execute any and all amendments to such Registration Statement, whether
filed prior or subsequent to the time such Registration Statement becomes
effective, including amendments filed thereto, granting unto said attorneys-in-
fact and agents, and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done, as fully to
all intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any one
of them, or his substitute or their substitutes, lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 22nd day of
October, 1997.
/s/ PAUL J. COLLINS
---------------------
Paul J. Collins
<PAGE> 5
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a Director
and/or Officer of Kimberly-Clark Corporation, a Delaware corporation (the
"Company"), does hereby constitute and appoint John W. Donehower, Randy J. Vest
and O. George Everbach, and each of them, with full power to act alone, his
true and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign on behalf of the undersigned a Registration Statement on
Form S-4 under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the registration under the Securities Act of the shares of
Common Stock, $1.25 par value, of the Company together with the Preferred Stock
Purchase Rights associated therewith to be issued pursuant to: the terms of
the Agreement and Plan of Merger dated as of September 4, 1997 among the
Company, Vanguard Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of the Company ("Sub"), and Tecnol Medical Products, Inc., a
Delaware corporation ("Tecnol"), which provides for the merger of Sub with and
into Tecnol, with Tecnol surviving as a wholly-owned subsidiary of the Company;
and to execute any and all amendments to such Registration Statement, whether
filed prior or subsequent to the time such Registration Statement becomes
effective, including amendments filed thereto, granting unto said attorneys-in-
fact and agents, and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done, as fully to
all intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any one
of them, or his substitute or their substitutes, lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 20th day of
October, 1997.
/s/ ROBERT W. DECHERD
-----------------------
Robert W. Decherd
<PAGE> 6
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a Director
and/or Officer of Kimberly-Clark Corporation, a Delaware corporation (the
"Company"), does hereby constitute and appoint John W. Donehower, Randy J. Vest
and O. George Everbach, and each of them, with full power to act alone, his
true and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign on behalf of the undersigned a Registration Statement on
Form S-4 under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the registration under the Securities Act of the shares of
Common Stock, $1.25 par value, of the Company together with the Preferred Stock
Purchase Rights associated therewith to be issued pursuant to: the terms of
the Agreement and Plan of Merger dated as of September 4, 1997 among the
Company, Vanguard Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of the Company ("Sub"), and Tecnol Medical Products, Inc., a
Delaware corporation ("Tecnol"), which provides for the merger of Sub with and
into Tecnol, with Tecnol surviving as a wholly-owned subsidiary of the Company;
and to execute any and all amendments to such Registration Statement, whether
filed prior or subsequent to the time such Registration Statement becomes
effective, including amendments filed thereto, granting unto said attorneys-in-
fact and agents, and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done, as fully to
all intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any one
of them, or his substitute or their substitutes, lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 20th day of
October, 1997.
/s/ WILLIAM O. FIFIELD
------------------------
William O. Fifield
<PAGE> 7
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a Director
and/or Officer of Kimberly-Clark Corporation, a Delaware corporation (the
"Company"), does hereby constitute and appoint John W. Donehower, Randy J. Vest
and O. George Everbach, and each of them, with full power to act alone, his
true and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign on behalf of the undersigned a Registration Statement on
Form S-4 under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the registration under the Securities Act of the shares of
Common Stock, $1.25 par value, of the Company together with the Preferred Stock
Purchase Rights associated therewith to be issued pursuant to: the terms of
the Agreement and Plan of Merger dated as of September 4, 1997 among the
Company, Vanguard Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of the Company ("Sub"), and Tecnol Medical Products, Inc., a
Delaware corporation ("Tecnol"), which provides for the merger of Sub with and
into Tecnol, with Tecnol surviving as a wholly-owned subsidiary of the Company;
and to execute any and all amendments to such Registration Statement, whether
filed prior or subsequent to the time such Registration Statement becomes
effective, including amendments filed thereto, granting unto said attorneys-in-
fact and agents, and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done, as fully to
all intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any one
of them, or his substitute or their substitutes, lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 21st day of
October, 1997.
/s/ CLAUDIO X. GONZALEZ
-------------------------
Claudio X. Gonzalez
<PAGE> 8
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a Director
and/or Officer of Kimberly-Clark Corporation, a Delaware corporation (the
"Company"), does hereby constitute and appoint John W. Donehower, Randy J. Vest
and O. George Everbach, and each of them, with full power to act alone, his
true and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign on behalf of the undersigned a Registration Statement on
Form S-4 under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the registration under the Securities Act of the shares of
Common Stock, $1.25 par value, of the Company together with the Preferred Stock
Purchase Rights associated therewith to be issued pursuant to: the terms of
the Agreement and Plan of Merger dated as of September 4, 1997 among the
Company, Vanguard Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of the Company ("Sub"), and Tecnol Medical Products, Inc., a
Delaware corporation ("Tecnol"), which provides for the merger of Sub with and
into Tecnol, with Tecnol surviving as a wholly-owned subsidiary of the Company;
and to execute any and all amendments to such Registration Statement, whether
filed prior or subsequent to the time such Registration Statement becomes
effective, including amendments filed thereto, granting unto said attorneys-in-
fact and agents, and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done, as fully to
all intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any one
of them, or his substitute or their substitutes, lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 21st day of
October, 1997.
/s/ LOUIS E. LEVY
--------------------
Louis E. Levy
<PAGE> 9
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a Director
and/or Officer of Kimberly-Clark Corporation, a Delaware corporation (the
"Company"), does hereby constitute and appoint John W. Donehower, Randy J. Vest
and O. George Everbach, and each of them, with full power to act alone, his
true and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign on behalf of the undersigned a Registration Statement on
Form S-4 under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the registration under the Securities Act of the shares of
Common Stock, $1.25 par value, of the Company together with the Preferred Stock
Purchase Rights associated therewith to be issued pursuant to: the terms of
the Agreement and Plan of Merger dated as of September 4, 1997 among the
Company, Vanguard Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of the Company ("Sub"), and Tecnol Medical Products, Inc., a
Delaware corporation ("Tecnol"), which provides for the merger of Sub with and
into Tecnol, with Tecnol surviving as a wholly-owned subsidiary of the Company;
and to execute any and all amendments to such Registration Statement, whether
filed prior or subsequent to the time such Registration Statement becomes
effective, including amendments filed thereto, granting unto said attorneys-in-
fact and agents, and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done, as fully to
all intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any one
of them, or his substitute or their substitutes, lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 20th day of
October, 1997.
/s/ FRANK A. MCPHERSON
-------------------------
Frank A. McPherson
<PAGE> 10
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a Director
and/or Officer of Kimberly-Clark Corporation, a Delaware corporation (the
"Company"), does hereby constitute and appoint John W. Donehower, Randy J. Vest
and O. George Everbach, and each of them, with full power to act alone, his
true and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign on behalf of the undersigned a Registration Statement on
Form S-4 under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the registration under the Securities Act of the shares of
Common Stock, $1.25 par value, of the Company together with the Preferred Stock
Purchase Rights associated therewith to be issued pursuant to: the terms of
the Agreement and Plan of Merger dated as of September 4, 1997 among the
Company, Vanguard Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of the Company ("Sub"), and Tecnol Medical Products, Inc., a
Delaware corporation ("Tecnol"), which provides for the merger of Sub with and
into Tecnol, with Tecnol surviving as a wholly-owned subsidiary of the Company;
and to execute any and all amendments to such Registration Statement, whether
filed prior or subsequent to the time such Registration Statement becomes
effective, including amendments filed thereto, granting unto said attorneys-in-
fact and agents, and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done, as fully to
all intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any one
of them, or his substitute or their substitutes, lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 28th day of
October, 1997.
/s/ LINDA JOHNSON RICE
-------------------------
Linda Johnson Rice
<PAGE> 11
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a Director
and/or Officer of Kimberly-Clark Corporation, a Delaware corporation (the
"Company"), does hereby constitute and appoint John W. Donehower, Randy J. Vest
and O. George Everbach, and each of them, with full power to act alone, his
true and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign on behalf of the undersigned a Registration Statement on
Form S-4 under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the registration under the Securities Act of the shares of
Common Stock, $1.25 par value, of the Company together with the Preferred Stock
Purchase Rights associated therewith to be issued pursuant to: the terms of
the Agreement and Plan of Merger dated as of September 4, 1997 among the
Company, Vanguard Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of the Company ("Sub"), and Tecnol Medical Products, Inc., a
Delaware corporation ("Tecnol"), which provides for the merger of Sub with and
into Tecnol, with Tecnol surviving as a wholly-owned subsidiary of the Company;
and to execute any and all amendments to such Registration Statement, whether
filed prior or subsequent to the time such Registration Statement becomes
effective, including amendments filed thereto, granting unto said attorneys-in-
fact and agents, and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done, as fully to
all intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any one
of them, or his substitute or their substitutes, lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 21st day of
October, 1997.
/s/ WOLFGANG R. SCHMITT
-------------------------
Wolfgang R. Schmitt
<PAGE> 12
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a Director
and/or Officer of Kimberly-Clark Corporation, a Delaware corporation (the
"Company"), does hereby constitute and appoint John W. Donehower, Randy J. Vest
and O. George Everbach, and each of them, with full power to act alone, his
true and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign on behalf of the undersigned a Registration Statement on
Form S-4 under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the registration under the Securities Act of the shares of
Common Stock, $1.25 par value, of the Company together with the Preferred Stock
Purchase Rights associated therewith to be issued pursuant to: the terms of
the Agreement and Plan of Merger dated as of September 4, 1997 among the
Company, Vanguard Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of the Company ("Sub"), and Tecnol Medical Products, Inc., a
Delaware corporation ("Tecnol"), which provides for the merger of Sub with and
into Tecnol, with Tecnol surviving as a wholly-owned subsidiary of the Company;
and to execute any and all amendments to such Registration Statement, whether
filed prior or subsequent to the time such Registration Statement becomes
effective, including amendments filed thereto, granting unto said attorneys-in-
fact and agents, and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done, as fully to
all intents and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any one
of them, or his substitute or their substitutes, lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 20th day of
October, 1997.
/s/ RANDALL L. TOBIAS
-------------------------
Randall L. Tobias
<PAGE> 1
EXHIBIT 99.1
TECNOL MEDICAL PRODUCTS, INC.
SPECIAL MEETING OF STOCKHOLDERS - DECEMBER 18, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The stockholder of Tecnol Medical Products, Inc., a Delaware corporation
("Tecnol"), whose name and signature appear on the reverse side of this card,
having received the Notice of Special Meeting of Stockholders and the related
Proxy Statement/Prospectus for Tecnol's special meeting of stockholders to be
held at The Hotel Crescent Court, Crescent Ballroom, 400 Crescent Court, Dallas,
Texas, on Thursday, December 18, 1997, at 10:30 a.m., hereby appoints Van
Hubbard and Kirk Brunson, or either of them, the proxies of the stockholder,
each with full power of substitution, to vote at such special meeting, and at
any adjournments of such meeting, all shares of Tecnol common stock, par value
$.001 per share, that the stockholder is entitled to vote, in the manner shown
on the reverse side of this card.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS AND THE SHARES REPRESENTED
HEREBY WILL BE VOTED IN ACCORDANCE WITH THE STOCKHOLDER'S DIRECTIONS ON THE
REVERSE SIDE OF THIS CARD. IF NO DIRECTION IS GIVEN, THEN THE SHARES
REPRESENTED BY THIS PROXY WILL BE VOTED FOR PROPOSAL 1 AND IN THE PROXIES'
DISCRETION ON ANY OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE SPECIAL
MEETING OR ANY ADJOURNMENTS THEREOF, SUBJECT TO LIMITATIONS SET FORTH IN
APPLICABLE REGULATIONS UNDER THE SECURITIES EXCHANGE ACT OF 1934.
PLEASE MARK, SIGN, DATE, AND RETURN THIS PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE. IF YOU PLAN TO ATTEND THE
MEETING, PLEASE SO INDICATE IN THE SPACE PROVIDED ON THE REVERSE SIDE.
SEE REVERSE
SIDE
TECNOL MEDICAL PRODUCTS, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [ ]
THIS PROXY, WHEN PROPERLY EXECUTED AND DELIVERED, WILL BE VOTED AS SPECIFIED
BELOW. IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSAL 1.
THE PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 1.
1. Approval and adoption of the Agreement and Plan of Merger, dated as of
September 4, 1997, among Tecnol Medical Products, Inc., Kimberly-Clark
Corporation, and Vanguard Acquisition Corp. and the transactions
contemplated thereby.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
2. I authorize the aforementioned proxies to vote in their discretion on
any other matters that may properly come before the special meeting or any
adjournments thereof, subject to limitations set forth in applicable
regulations under the Securities Exchange Act of 1934.
MARK HERE IF YOU PLAN TO ATTEND THE MEETING. [ ]
The undersigned hereby revokes any proxy heretofor given to vote with
respect to the Tecnol common stock and hereby ratifies and confirms all
that the proxies, their substitutes or any of them may lawfully do by
virtue hereof.
----------------------------------------------------------------------------
Signature Date
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Signature Date
NOTE: PLEASE SIGN EXACTLY AS NAME(S) APPEAR(S) ON THIS CARD. WHEN SHARES
ARE HELD JOINTLY, BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. WHEN
EXECUTED BY A CORPORATION OR PARTNERSHIP, PLEASE SIGN IN FULL CORPORATE OR
PARTNERSHIP NAME BY A DULY AUTHORIZED OFFICER OR PARTNER, GIVING TITLE.
PLEASE SIGN, DATE AND MAIL THIS PROXY PROMPTLY WHETHER OR NOT YOU EXPECT TO
ATTEND THE MEETING. YOU MAY NEVERTHELESS VOTE IN PERSON IF YOU DO ATTEND.
SEE REVERSE SIDE
<PAGE> 1
EXHIBIT 99.2
PARTICIPANTS IN TECNOL MEDICAL PRODUCTS, INC. EMPLOYEE STOCK OWNERSHIP PLAN
SPECIAL MEETING OF STOCKHOLDERS OF TECNOL MEDICAL PRODUCTS, INC. - December 18,
1997
The participant in the Tecnol Medical Products, Inc. Employee Stock
Ownership Plan (the "Plan"), whose name and signature appear on the reverse
side of this card, having received the Notice of Special Meeting of
Stockholders and the related Proxy Statement/Prospectus for the special meeting
of stockholders of Tecnol Medical Products, Inc., a Delaware corporation
("Tecnol"), to be held at The Hotel Crescent Court, Crescent Ballroom, 400
Crescent Court, Dallas, Texas, on December 18, 1997, at 10:30 a.m., hereby
directs the trustees of the Plan (the "Trustees") or any two of them, to vote
at such special meeting, and at any adjournments of such meeting, all shares
of Tecnol common stock, par value $.001 per share, that have been allocated to
the participant's Plan account, in the manner shown on the reverse side of
this card.
PLEASE MARK, DATE, SIGN EXACTLY AS NAME APPEARS ON THE REVERSE SIDE OF THIS
INSTRUCTION CARD AND RETURN THE CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
(Continued and to be signed on reverse side.)
PARTICIPANTS IN TECNOL MEDICAL PRODUCTS, INC. EMPLOYEE STOCK OWNERSHIP PLAN
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [ ]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 1. I DIRECT THE
AFOREMENTIONED TRUSTEES TO VOTE ALL SHARES OF TECNOL COMMON STOCK ALLOCATED TO
MY PLAN ACCOUNT AS FOLLOWS:
1. Approval and adoption of the Agreement and Plan of Merger, dated as of
September 4, 1997, among Tecnol Medical Products, Inc., Kimberly-Clark
Corporation, and Vanguard Acquisition Corp. and the transactions
contemplated thereby.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
2. I authorize the aforementioned Trustees to vote in their discretion on any
other matters that may properly come before the special meeting or any
adjournments thereof, subject to limitations set forth in applicable
regulations under the Securities Exchange Act of 1934.
The undersigned hereby revokes any direction heretofore given to vote with
respect to the shares of Tecnol common stock allocated to the undersigned's
Plan account and hereby ratifies and confirms all that the aforementioned
trustees may lawfully do by virtue hereof.
----------------------------------------------------------------------------
Signature Date
NOTE: PLEASE SIGN NAME EXACTLY AS NAME APPEARS ON THIS INSTRUCTION CARD.
SEE REVERSE SIDE
