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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
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SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D) (4) OF
THE SECURITIES EXCHANGE ACT OF 1934
HELENE CURTIS INDUSTRIES, INC.
(Name of Subject Company)
HELENE CURTIS INDUSTRIES, INC.
(Name of Person(s) Filing Statement)
COMMON STOCK, $0.50 PAR VALUE
(Title of Class of Securities)
423236108
(CUSIP Number of Class of Securities)
ROY A. WENTZ
VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
HELENE CURTIS INDUSTRIES, INC.
325 NORTH WELLS STREET
CHICAGO, ILLINOIS 60610
(312) 661-0222
(Name, Address, and Telephone Number of Person
Authorized to Receive Notices and Communications
on Behalf of the Person(s) Filing Statement)
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COPIES TO:
THOMAS A. COLE ROBERT F. WALL
LARRY A. BARDEN TERRENCE R. BRADY
SIDLEY & AUSTIN WINSTON & STRAWN
ONE FIRST NATIONAL PLAZA 35 W. WACKER DRIVE
CHICAGO, ILLINOIS 60603 CHICAGO, ILLINOIS 60601
(312) 853-7000 (312) 558-5600
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ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is Helene Curtis Industries, Inc., a
Delaware corporation (the "Company"), and the address of its principal executive
offices is 325 North Wells Street, Chicago, Illinois 60610. The title of the
class of equity securities to which this statement relates is the Company's
Common Stock, $0.50 par value per share (the "Shares").
ITEM 2. TENDER OFFER OF THE BIDDER.
This statement relates to the tender offer by Conopco Acquisition Company,
Inc. (the "Offeror"), a Delaware corporation and a wholly owned subsidiary of
Conopco, Inc., a New York corporation ("Parent"), which is indirectly owned 75%
by Unilever N.V., a Dutch Corporation ("Unilever"), and 25% by Unilever PLC, a
company organized under the laws of England and Wales, to purchase all
outstanding Shares at $70.00 per Share (the "Offer Price"), net to the seller in
cash without interest, upon the terms and subject to the conditions set forth in
the Offer to Purchase, dated February 20, 1996 (the "Offer to Purchase"), and
the related Letter of Transmittal (which together with the Offer to Purchase and
any amendments or supplements thereto constitute the "Offer"). The Offer is
disclosed in the Tender Offer Statement on Schedule 14D-1 dated February 20,
1996 (the "Schedule 14D-1"), as filed by the Offeror, Parent and Unilever with
the Securities and Exchange Commission (the "Commission"). The Schedule 14D-1
states that the address of the principal executive offices of the Offeror and
Parent is 390 Park Avenue, New York, New York 10022, and the address and
principal executive office of Unilever is Weena 455, 3013 AL, Rotterdam, The
Netherlands.
The Offer is being made pursuant to the terms of an Agreement and Plan of
Merger (the "Merger Agreement"), dated as of February 13, 1996, among Parent,
the Offeror and the Company, which provides that, following completion of the
Offer, the Offeror will be merged with and into the Company upon the terms and
subject to the conditions set forth in the Merger Agreement (the "Merger"), with
the Company surviving the Merger (as such, the "Surviving Corporation") as a
wholly owned subsidiary of Parent. As an inducement to Parent to enter into the
Merger Agreement, certain stockholders of the Company have, concurrently with
the execution of the Merger Agreement, granted to the Offeror an irrevocable
option to purchase, and, upon the purchase of any Shares in the Offer the
Offeror has agreed to purchase, shares of the Company's Class B Common Stock,
$.50 par value per share ("Class B Common Stock") upon the terms and subject to
the conditions of the Stockholder Agreement (the "Stockholder Agreement"), dated
as of February 13, 1996, among Parent, the Offeror, Ronald J. Gidwitz, HCI
Partnership, and the Gidwitz Family Partnership (collectively, the
"Stockholders"). Pursuant to the Stockholder Agreement, the Stockholders have
also agreed that, among other things, until February 13, 1997, such Stockholders
will not transfer the shares of Class B Common Stock subject to the Stockholder
Agreement and will vote such shares in favor of the Merger and against certain
competing transactions. Each share of Class B Common Stock is presently entitled
to 10 votes per share while each Share is entitled to one vote per Share. The
shares of Class B Common Stock subject to the Stockholder Agreement represent
approximately 72% of the total combined voting power of the Shares and the
shares of Class B Common Stock that were issued and outstanding as of February
5, 1996 on a fully diluted basis. The Merger Agreement and the Stockholder
Agreement are more fully described below in Item 3. Copies of the Merger
Agreement and the Stockholder Agreement are filed as Exhibits hereto and are
incorporated herein by reference. A copy of the press release issued by the
Company and Unilever on February 13, 1996 is filed as an Exhibit hereto and
incorporated herein by reference.
ITEM 3. IDENTITY AND BACKGROUND
(a) The name and business address of the Company, which is the person filing
this statement, are set forth in Item 1 above, which information is incorporated
herein by reference.
(b)(1) Certain contracts, agreements, arrangements and understandings
between the Company and certain of its directors and executive officers are
described in the Company's Information Statement
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pursuant to Section 14(f) of the Securities Exchange Act of 1934 and Rule 14f-1
thereunder (the "Information Statement") dated the date hereof under
"Information Concerning the Board of Directors," "Executive Officer
Compensation," "Option/SAR Grants in the 1995 Fiscal Year," "Aggregate
Option/SAR Exercises in 1995 Fiscal Year and 1995 Fiscal Year-End Option/SAR
Values," "Executive Pension Plan Benefits," "Principal Security Holders,"
"Security Ownership of Management," and "Change of Control Provisions of Stock
Option Plans and Stock Appreciation Right Plan." The Information Statement is
attached hereto as Schedule I, filed as an Exhibit hereto and incorporated
herein by reference. In addition, certain contracts, agreements, arrangements
and understandings relating to the Company and/or the Company's directors and
executive officers are contained in the Merger Agreement and are described below
under "Merger Agreement."
(b)(2) Certain Background Information.
From time to time, the Company has studied the possibility of joint
ventures, strategic alliances and other business combinations which would
enhance its ability to compete on a global basis. Such studies have occasionally
involved conversations with other parties, but none led to any proposal of
sufficient merit to be recommended by management to the Company's Board of
Directors. These conversations included certain previous discussions from time
to time with representatives of Unilever, none of which discussions resulted in
negotiations with respect to a possible transaction.
On September 27, 1995, Charles G. Cooper, Senior Vice President of the
Company, wrote to Robert M. Phillips, Personal Products Coordinator of Unilever,
suggesting that their respective companies meet to discuss possible cooperative
arrangements between the companies. This contact led to a meeting on November
10, 1995 among John Rothenberg and Paul Dolan, Senior Commercial Member and
Senior Sourcing and Supply Member, respectively, of Unilever's Personal Products
Coordination, and Mr. Cooper, at which meeting the parties discussed possible
cooperative arrangements, including an equity investment by Unilever in the
Company, joint venture arrangements and marketing and development alliances. On
November 21, 1995, Ronald J. Gidwitz, the President and Chief Executive Officer
of the Company, and Mr. Phillips met to continue the earlier discussions and
agreed that the Company and Unilever should exchange certain confidential
information. On November 30, 1995, a confidentiality agreement was executed, and
the Company and Unilever began to exchange information.
On December 4, 1995, representatives of the Company met with representatives
of Unilever to discuss possible transaction structures in more detail and
certain financial and other operating information, including the possible
synergies that might result from a joint venture or strategic alliance between
the parties. This meeting was followed by a telephone call from Mr. Phillips to
Mr. Gidwitz during which Mr. Phillips indicated that Unilever was interested in
pursuing a transaction with the Company, including a possible acquisition of the
Company.
In light of the favorable reactions of both managements to the discussions
at the previous meetings, a meeting was scheduled in Chicago on January 5, 1996.
In the interim, Messrs. Phillips and Cooper had various conversations while both
were vacationing in Colorado.
At the January 5, 1996 meeting, representatives of the Company, Unilever and
certain of their respective advisors discussed the terms of an acquisition of
the Company by Unilever, including price and other principal terms and
post-acquisition organizational philosophy and structure. The possible terms of
an agreement with certain holders of shares of Class B Common Stock, including
Mr. Gidwitz, were also discussed.
The discussion between the Company and Unilever centered on an acquisition
of the Company for $78.00 per share. The price discussed was subject to
Unilever's detailed due diligence investigation of the Company (including a
review of certain additional requested financial and operating information), the
negotiation of definitive documentation, including an agreement with certain
holders of the shares of Class B Common Stock along the lines discussed, and
board approval. On the morning of January 6, prior to the commencement of its
detailed due diligence investigation, Unilever advised the Company
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that Unilever needed both additional time and additional information before
finalizing the financial terms of any transaction. Accordingly, arrangements
were made to provide additional financial and operating information to
Unilever's senior management beginning the week of January 8, 1996.
On January 7, 1996, the Board of Directors of the Company held a special
meeting at which the directors of the Company were apprised of the events of
January 5-6 and the discussions and meetings which had preceded them. In
addition, management reviewed with the directors the Company's current
projections and the directors were briefed by legal and financial advisors.
Lazard Freres & Co. LLC, the Company's financial advisor ("Lazard"), also
presented a preliminary valuation to the Board of Directors.
During the period from January 7 to February 8, 1996, the Company furnished
certain requested financial and operating information to Unilever and various
conversations between the Company's and Unilever's advisors occurred. Unilever
also furnished the Company with draft documentation for a proposed transaction.
Following the January 7, 1996 meeting of the Board of Directors of the
Company, contact was also made by the Company with another large personal care
company (the "Second Personal Care Company"). A confidentiality agreement with
the Second Personal Care Company was signed on January 10, 1996, information was
supplied to that company on January 11, 1996 and a meeting between managements
and financial advisors of the Company and the Second Personal Care Company was
held on January 12, 1996. From time to time between January 12, 1996 and
February 12, 1996, contacts continued between the Company and the Second
Personal Care Company.
On January 16, 1996, the Company received a letter from Shamrock Holdings of
California, Inc., a stockholder of the Company ("Shamrock"), suggesting that the
Company's Board of Directors consider (i) taking action, as permitted under the
Company's certificate of incorporation, to convert the shares of Class B Common
Stock into Shares (as described under Item 8) and/or (ii) selling the Company.
The Shamrock letter was publicly disclosed by an amendment to Shamrock's
Schedule 13D filed with the Commission on January 17, 1996. The Company
responded with a letter to Shamrock which read as follows:
"January 16, 1996
Mr. Stanley P. Gold
Shamrock Holdings of California, Inc.
4444 Lakeside Drive
P.O. Box 7774
Burbank, CA 91510-7774
Dear Stanley:
I have received your letter dated January 16, 1996 relating to the "sunset"
of certain provisions in the Helene Curtis Industries, Inc. corporate
charter and/or a possible sale of Helene Curtis. For obvious reasons, I have
referred your letter to our Board of Directors which will consider it in due
course. As appropriate, we will then respond to you.
Very truly yours,
Ronald J. Gidwitz
President"
The Company's response was disclosed in a press release issued by the
Company on January 17, 1996.
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Following January 17, 1996, trading in the Shares became quite active,
and news stories about the Company and the consolidation within its industry
became more frequent. During this period, Joh. A. Benckiser G.m.b.H., a
German personal care company, publicly announced a proposed bid to acquire
Maybelline Inc., which at the time was party to an acquisition agreement
with L'Oreal S.A., a French personal care company. The Company and Lazard
also received telephone calls from one large and two small industry
participants and various investment bankers inquiring whether the Company
would be interested in exploring some form of transaction.
By January 23, 1996, the closing market price for the Shares on the NYSE
had increased to $53 1/8 per Share from $31 1/4 on January 5, 1996. Before
the opening of trading on the NYSE on January 24, 1996, the Company issued
the following press release:
"CHICAGO, January 24, 1996--Helene Curtis Industries, Inc. (NYSE-HC)
announced today that the company is in contact with one or more parties
who have expressed an interest in a possible business combination. As
previously disclosed, the company's Board of Directors will be
considering a proposal made in a letter from Shamrock Holdings of
California, Inc., that the Board "sunset" certain voting provisions in
the company's corporate charter and/or sell the company.
Since the receipt of that letter, the company has had no further
communication with Shamrock Holdings and the Board has not met to
consider the proposal. There can be no assurance that any transaction
involving the company will occur or that the Board will act to "sunset"
the voting provision.
Helene Curtis Industries, Inc. is one of the nation's major producers
of brand-name personal care products. The company markets its products to
consumers through supermarkets, mass merchandisers and drug stores, and
to beauty salons through distributors. Helene Curtis products are sold in
more than 100 countries."
On January 24, 1996, the closing market price for the Shares on the NYSE had
increased to $65 7/8 per Share.
From and after January 24, 1996, the Company authorized Lazard to
contact additional potentially interested parties. Lazard contacted seven
such parties. Five of the parties contacted expressed no interest and a
sixth expressed limited interest at a price below the then-market price of
the Shares. One of the seven parties contacted, a large personal care
company (the "Third Personal Care Company"), expressed interest and executed
a confidentiality agreement and began receiving information on January 31,
1996.
On February 1, 1996, Unilever advised the Company that it would be
prepared to meet in London on February 8, 1996 or in New York on February
13, 1996 to continue discussion of a possible transaction between Unilever
and the Company. Unilever also advised the Company that the $78.00 per Share
price previously discussed would not be within its indicated range, after
having obtained a fuller understanding of the Company's business.
On February 2, 1996, the Board of Directors of the Company held a
telephonic meeting, and the directors were provided an update of recent
events. Following that meeting, the Company confirmed a meeting date of
February 9, 1996 with Unilever. A management presentation to the Third
Personal Care Company was also scheduled for and held on February 8, 1996.
At the February 9, 1996 meeting, representatives of the Company,
Unilever and their respective legal and financial advisors discussed a range
of prices (centering on a price of $70.00 per share) and certain issues
raised by the draft documentation. The terms of an agreement with certain
holders of the shares of Class B Common Stock were again discussed. Unilever
requested that the Company negotiate with Unilever on an exclusive basis, a
request which was declined. Contemporaneously with the February 9, 1996
meeting, the Company's financial advisors informed the Second Personal Care
Company and the Third Personal Care Company that
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developments with respect to a possible transaction with the Company had
accelerated and that they should expedite their consideration of a
transaction. Due diligence and contract negotiations with Unilever were
scheduled for, and were conducted over, the following weekend.
Later on the day of February 9, 1996, the Third Personal Care Company
requested the opportunity to conduct further due diligence. In response to
an inquiry from the Company, the Third Personal Care Company indicated a
range of $65.00 to $70.00 per Share as the possible consideration it would
pay in a stock-for-stock merger to be accounted for as a pooling of
interests transaction. Arrangements were made for the Third Personal Care
Company to conduct further due diligence on a parallel track with Unilever
over the weekend of February 10-11, 1996. Copies of the additional due
diligence materials furnished by the Company to Unilever were made available
to the management and legal and financial advisors of the Third Personal
Care Company over the weekend and draft documentation was supplied to the
Third Personal Care Company on February 11, 1996. To facilitate the due
diligence investigation by the Third Personal Care Company, the Company also
offered to make its management available over the weekend to meet with
representatives of the Third Personal Care Company. This offer resulted in a
visit by representatives of the Third Personal Care Company to certain of
the Company's manufacturing and development facilities and a dinner meeting
on the evening of February 11, 1996 between Mr. Gidwitz and a representative
of the Third Personal Care Company, with representatives of their respective
financial advisors also in attendance.
On the morning of February 12, 1996, the Company held a
regularly-scheduled Board of Directors meeting. The directors were updated
on recent events, received a second preliminary valuation report from
Lazard, received a report from Lazard regarding the Third Personal Care
Company, including a comparison of the trading multiples of the Third
Personal Care Company with the trading multiples of other companies in lines
of businesses Lazard believed to be comparable, in whole or in part, to the
business of the Third Personal Care Company, and reviewed in detail the
then-current drafts of the Unilever documentation. During the course of the
meeting, the Second Personal Care Company informed the Company by telephone
that it was not interested in proceeding in light of the recent trading
prices of the Shares and the competitive nature of the bidding process.
Later that day, due diligence by Unilever and the Third Personal Care
Company continued and negotiations among legal advisors to Unilever, the
Company and certain holders of shares of Class B Common Stock continued. On
the evening of February 12, 1996, the Third Personal Care Company advised
the Company that it remained very interested in pursuing a stock-for-stock
merger, but that its further analysis had led to a range below the $65.00 to
$70.00 per share range which it indicated late in the day on February 9,
1996.
Due diligence by Unilever and negotiations among legal advisors
continued throughout the evening of February 12, 1996 and most of the
morning and afternoon of February 13, 1996. In the late afternoon of
February 13, 1996, Mr. Gidwitz met with Messrs. Phillips and Rothenberg,
with representatives of the Company's and Unilever's legal and financial
advisors in attendance, to finalize price and contract terms. During this
meeting, Mr. Phillips confirmed Unilever's offer of $70.00 per Share and Mr.
Gidwitz agreed to recommend such offer to the Company's Board of Directors.
Mr. Gidwitz and counsel for certain holders of shares of Class B Common
Stock then met with various holders of shares of Class B Common Stock to
discuss Unilever's offer and the terms of the Stockholder Agreement.
On the evening of February 13, 1996, the Company held a Board of
Directors meeting. The directors were updated on recent events and reviewed
the Merger Agreement and the Stockholder Agreement. Lazard also delivered
its opinion as to the fairness, from a financial point of view, of the
consideration to be received by the Company's stockholders in the Offer and
the Merger. After discussion, the Board of Directors approved the
Stockholder Agreement, the Merger Agreement, the Offer and the Merger. Later
that evening, following approval of the transactions by the Boards
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of Directors of Parent and the Offeror, the Stockholder Agreement and Merger
Agreement were executed and delivered. The transaction was publicly
announced prior to the opening of trading of the Shares on the NYSE on
February 14, 1996.
(b)(3) Merger Agreement.
The following summary of the Merger Agreement does not purport to be
complete and is qualified in its entirety by reference to the complete text
of the Merger Agreement, which is filed as an Exhibit hereto and
incorporated by reference herein.
The Offer. Pursuant to the Merger Agreement, the Offeror was required to
commence the Offer no later than February 20, 1996. The obligation of the
Offeror to, and of Parent to cause the Offeror to, commence the Offer and
accept for payment, and pay for, any Shares tendered pursuant to the Offer
will be subject only to the conditions (the "Offer Conditions") (any of
which may be waived in whole or in part by the Offeror in its sole
discretion, except that, unless a Takeover Proposal (as defined below) shall
have been made after the date hereof, the Offeror may not waive the Minimum
Condition (as defined below) without the consent of the Company) that (i)
there shall have been validly tendered and not withdrawn prior to the
expiration of the Offer such number of Shares that, together with the shares
of Class B Common Stock subject to the Stockholder Agreement, would
constitute a majority of the combined voting power of the Shares and the
shares of Class B Common Stock (determined on a fully diluted basis for all
outstanding stock options and any other rights to acquire Shares) assuming
for such determination that each share of Class B Common Stock subject to
the Stockholder Agreement is only entitled to one vote per share (the
"Minimum Condition"), (ii) any waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), applicable
to the purchase of Shares pursuant to the Offer shall have expired or been
terminated (the "HSR Condition") and (iii) none of the following conditions
exists (other than as a result of any action or inaction of Parent or any of
its subsidiaries that constitutes a breach of the Merger Agreement):
(a) there shall be threatened or pending by any Governmental Entity
(as defined below) any suit, action or proceeding (i) challenging the
acquisition by Parent or the Offeror of any shares under the Offer or
pursuant to the Stockholder Agreement, seeking to restrain or prohibit
the making or consummation of the Offer or the Merger or the performance
of any of the other transactions contemplated by the Merger Agreement or
the Stockholder Agreement (including the voting provisions thereunder),
or seeking to obtain from the Company, Parent or the Offeror any damages
that are material in relation to the Company and its subsidiaries taken
as a whole, (ii) seeking to prohibit or materially limit the ownership or
operation by the Company, Parent or any of their respective subsidiaries
of a material portion of the business or assets of the Company and its
subsidiaries, taken as a whole, or Parent and its subsidiaries, taken as
a whole, or to compel the Company or Parent to dispose of or hold
separate any material portion of the business or assets of the Company
and its subsidiaries, taken as a whole, or Parent and its subsidiaries,
taken as a whole, as a result of the Offer or any of the other
transactions contemplated by the Merger Agreement or the Stockholder
Agreement, (iii) seeking to impose material limitations on the ability of
Parent or the Offeror to acquire or hold, or exercise full rights of
ownership of, any Shares to be accepted for payment pursuant to the Offer
or purchased under the Stockholder Agreement including, without
limitation, the right to vote such Shares on all matters properly
presented to the stockholders of the Company, (iv) seeking to prohibit
Parent or any of its subsidiaries from effectively controlling in any
material respect any material portion of the business or operations of
the Company or its subsidiaries or (v) which otherwise is reasonably
likely to have a material adverse effect on the business, properties,
assets, financial condition, results of operations or prospects of the
Company and its subsidiaries taken as a whole; or there shall be pending
by any other person any suit, action or proceeding which is reasonably
likely to have material adverse effect on the business, properties,
assets, financial condition, results of operations or prospects of the
Company and its subsidiaries taken as a whole.
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(b) there shall be enacted, entered, enforced, promulgated or deemed
applicable to the Offer or the Merger by any Governmental Entity any
statute, rule, regulation, judgement, order or injunction, other than the
application to the Offer or the Merger of applicable waiting periods under
the HSR Act, that is reasonably likely to result, directly or indirectly, in
any of the consequences referred to in clauses (i) through (v) of paragraph
(a) above;
(c) there shall have occurred any material adverse change with respect
to the Company;
(d) (i) the Board of Directors of the Company or any committee thereof
shall have withdrawn or modified in a manner adverse to Parent or the
Offeror its approval or recommendation of the Offer, the Merger or the
Merger Agreement, or approved or recommended any Takeover Proposal or (ii)
the Board of Directors of the Company or any committee thereof shall have
resolved to take any of the foregoing actions;
(e) any of the representations and warranties of the Company set forth
in the Merger Agreement that are qualified as to materiality shall not be
true and correct or any such representations and warranties that are not so
qualified shall not be true and correct in any material respect, in each
case at the date of the Merger Agreement and at the scheduled or extended
expiration of the Offer;
(f) the Company shall have failed to perform in any material respect any
material obligation or to comply in any material respect with any material
agreement or covenant of the Company to be performed or complied with by it
under the Merger Agreement;
(g) there shall have occurred and continued to exist for not less than
three business days (i) any general suspension of trading in, or limitation
on prices for, securities on a national securities exchange in the United
States (excluding any coordinated trading halt triggered solely as a result
of a specified decrease in a market index), (ii) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States, (iii) any limitations (whether or not mandatory) by any Governmental
Entity on, or other event that materially adversely affects, the extension
of credit by banks or other lending institutions, (iv) a commencement of a
war or armed hostilities or other national or international calamity
directly or indirectly involving the United States which in any case is
reasonably expected to have a material adverse effect on the Company or to
materially adversely affect Parent's or the Offeror's ability to complete
the Offer and/or the Merger or materially delay the consummation of the
Offer and/or the Merger; or
(h) the Merger Agreement shall have been terminated in accordance with
its terms.
As used in paragraphs (c) and (g) above, the phrase "material adverse change
with respect to the Company" or "material adverse effect on the Company" means
any change or effect (or development that, in so far as can reasonably be
foreseen, is likely to result in any change or effect) or fact or condition
that, individually or in the aggregate with any such other changes or effects,
is materially adverse to the business, properties, assets, financial condition
or results of operations of the Company and its subsidiaries taken as a whole
(other than certain specified changes, effects, facts and conditions previously
disclosed to Parent).
The Merger Agreement provides that, without the written consent of the
Company, the Offeror may not (i) reduce the number of Shares subject to the
Offer, (ii) reduce the Offer Price, (iii) add to the Offer Conditions, (iv)
except as provided in the next sentence, extend the Offer, (v) change the form
of consideration payable in the Offer or (vi) amend the Offer Conditions or any
other term of the Offer in any manner adverse to the holders of Shares.
Notwithstanding the foregoing, the Offeror may, without the consent of the
Company, (i) extend the Offer, if at the scheduled or extended expiration date
of the Offer any of the Offer Conditions shall not be satisfied or waived, until
such time as such conditions are satisfied or waived, (ii) extend the Offer for
any period required by any rule, regulation, interpretation or position of the
Commission or the staff thereof applicable to the Offer and (iii) extend the
Offer for any reason on one or more occasions for an aggregate period of not
more than 15 business days beyond
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the latest expiration date that would otherwise be permitted under clause (i) or
(ii) of this sentence, in each case subject to the right of Parent, the Offeror
or the Company to terminate the Merger Agreement pursuant to the terms thereof.
Parent and the Offeror have agreed that if at any scheduled expiration date of
the Offer, the Minimum Condition, the HSR Condition or either of the conditions
set forth in paragraphs (e) or (f) above shall not have been satisfied, but at
such scheduled expiration date all the conditions set forth above in paragraphs
(a), (b), (c), (d), and (g) shall then be satisfied, at the request of the
Company (confirmed in writing), the Offeror shall extend the Offer from time to
time, subject to the right of Parent, the Offeror or the Company to terminate
the Merger Agreement pursuant to its terms. Subject to the terms and conditions
of the Offer and the Merger Agreement, the Offeror has agreed to, and Parent is
required to cause the Offeror to, accept for payment, and pay for, all Shares
validly tendered and not withdrawn pursuant to the Offer that the Offeror
becomes obligated to accept for payment, and pay for, pursuant to the Offer as
soon as practicable after the expiration of the Offer.
Company Actions. Pursuant to the Merger Agreement, the Company has agreed
that on the date of the commencement of the Offer, the Company will file with
the Commission a Solicitation/Recommendation Statement on Schedule 14D-9 with
respect to the Offer containing the recommendation of the Board of Directors
that holders of Shares accept the Offer and that the Company's stockholders
approve and adopt the Merger Agreement (subject to the right of the Board of
Directors of the Company to withdraw or modify its approval or recommendation of
the Offer, the Merger and the Merger Agreement in the event that prior to the
acceptance for payment of Shares pursuant to the Offer the Board of Directors of
the Company determines in good faith, after consultation with outside counsel,
that it is necessary to do so in order to comply with its fiduciary duties to
the Company's stockholders under applicable law).
The Merger Agreement. The Merger Agreement provides that following the
satisfaction or waiver of the conditions described below under "Conditions to
the Merger", the Offeror will be merged with and into the Company, and each then
outstanding Share and share of Class B Common Stock (other than Shares and
shares of Class B Common Stock owned by the Company, any subsidiary of the
Company, Parent, the Offeror, any other subsidiary of Parent or by stockholders,
if any, who are entitled to and who properly exercise dissenters' rights under
Delaware law) will be converted into the right to receive an amount in cash
equal to the price per Share paid pursuant to the Offer.
Vote Required To Approve Merger. The Delaware General Corporation Law
(the "DGCL") requires, among other things, that the adoption of any plan of
merger or consolidation of the Company must be approved by the Board of
Directors and generally by the holders of the Company's outstanding voting
securities. The Board of Directors of the Company has approved the Offer and the
Merger; consequently, the only additional action of the Company that may be
necessary to effect the Merger is approval by the Company's stockholders if the
"short-form" merger procedure described below is not available. Under the DGCL,
the affirmative vote of holders of a majority of the combined voting power of
the then outstanding Shares and shares of Class B Common Stock (including any
Shares and shares of Class B Common Stock owned by the Offeror) is generally
required to approve the Merger. If the Offeror acquires, through the Offer, the
Stockholder Agreement or otherwise, a majority of the combined voting power of
the outstanding Shares and shares of Class B Common Stock (which would be the
case if the Minimum Condition were satisfied, the Offeror were to accept for
payment Shares tendered pursuant to the Offer and the Offeror were to purchase
shares of Class B Common Stock subject to the Stockholder Agreement), it would
have sufficient voting power to effect the Merger without the vote of any other
stockholder of the Company.
Under the DGCL, if a corporation owns 90% or more of each outstanding
class of capital stock of another corporation, it can effect a "short-form"
merger with such corporation without prior notice to, or any other action by,
any other stockholder of such corporation. Pursuant to the Company's certificate
of incorporation, at any time when the number of issued and outstanding shares
of Class B Common Stock falls below 10% of the aggregate number of issued and
outstanding Shares, shares of Class B Common Stock and shares of preferred stock
of the Company (which would be the case if the
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Offeror exercises its option under the Stockholder Agreement), then, the
outstanding shares of Class B Common Stock shall immediately and automatically
be converted into Shares. As a result, assuming no stock options to purchase
Shares are exercised following February 5, 1996, if the Offeror were to acquire
ownership of 6,138,261 Shares pursuant to the Offer, and the Offeror were to
exercise its option to purchase the 2,774,106 shares of Class B Common Stock
subject to the Stockholder Agreement, then, the automatic conversion provision
described above would cause the conversion of all then outstanding shares of
Class B Common Stock into Shares. In such event, the Offeror would own more than
90% of the only class of capital stock of the Company then outstanding and would
be able to effect the Merger pursuant to the "short-form" merger provisions of
the DGCL. See Item 8.
Conditions to the Merger. The Merger Agreement provides that the Merger
is subject to the satisfaction of certain conditions, including the following:
(a) if required by applicable law, the Merger Agreement and the transactions
contemplated thereby shall have been approved by the affirmative vote of the
holders of a majority of the combined voting power of the then outstanding
Shares and shares of Class B Common Stock; (b) no statute, rule, regulation,
executive order, decree, temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or other
Federal, state or local government or any court, tribunal, administrative agency
or commission or other governmental or other regulatory authority or agency,
domestic, foreign or supranational (a "Governmental Entity") preventing the
consummation of the Merger shall be in effect; provided, however, that each of
the Company, the Offeror and Parent shall have used reasonable efforts to
prevent the entry of any such injunction or other order and to appeal as
promptly as possible any injunction or other order that may be entered; and (c)
the Offeror shall have previously accepted for payment and paid for Shares
pursuant to the Offer.
Termination of the Merger Agreement. The Merger Agreement may be
terminated at any time prior to the effective time of the Merger, whether before
or after approval of the terms of the Merger Agreement by the stockholders of
the Company:
(1) by mutual written consent of Parent and the Company;
(2) by either Parent or the Company if (a)(i) as a result of the failure
of any of the conditions to the Offer, the Offer shall have terminated or
expired in accordance with its terms without the Offeror having accepted for
payment any Shares pursuant to the Offer or (ii) the Offeror shall not have
accepted for payment any Shares pursuant to the Offer prior to September 30,
1996, provided, however, that the right to terminate the Merger Agreement
pursuant to either clause (2)(a)(i) or (2)(a)(ii) shall not be available to
any party whose failure to perform any of its obligations under the Merger
Agreement results in the failure of any such condition or if the failure of
such condition results from facts or circumstances that constitute a breach
of representation or warranty under the Merger Agreement by such party; or
(b) any Governmental Entity shall have issued an order, decree or ruling or
taken any other action permanently enjoining, restraining or otherwise
prohibiting the acceptance for payment of, or payment for, Shares pursuant
to the Offer or Shares or shares of Class B Common Stock pursuant to the
Merger and such order, decree or ruling or other action shall have become
final and nonappealable;
(3) by Parent or the Offeror (a) prior to the purchase of Shares
pursuant to the Offer in the event of a breach by the Company of any
representation, warranty, covenant or other agreement contained in the
Merger Agreement which (i) would give rise to the failure of a condition set
forth in paragraph (e) or (f) of "Merger Agreement--The Offer" and (ii)
cannot be or has not been cured within 20 days after the giving of written
notice to the Company; or (b)(i) if either Parent or the Offeror is entitled
to terminate the Offer as a result of (A) the Board of Directors of the
Company or any committee thereof having withdrawn or modified in a manner
adverse to Parent or the Offeror its approval or recommendation of the
Offer, the Merger or the Merger Agreement, or approved or recommended any
Takeover Proposal (as defined below) or (B) the Board of Directors of the
Company or any committee thereof having resolved to take any of the actions
described in
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clause (3)(b)(i)(A) or (ii) if the Board of Directors of the Company or any
committee thereof takes action pursuant to the Company's certificate of
incorporation to terminate the supervoting rights of the shares of Class B
Common Stock (as described in Item 8); or
(4) by the Company (a) in the exercise of its fiduciary duties as
described below under "Takeover Proposal", provided it has complied with all
provisions thereof, including the notice provisions therein, and that it
complies with applicable requirements relating to the payment (including the
timing of any payment) of Expenses and the Termination Fee (each as defined
below under "Fees and Expenses") or (b) if Parent or the Offeror shall have
breached in any material respect any of their respective representations,
warranties, covenants or other agreements contained in the Merger Agreement,
which breach or failure to perform is incapable of being cured or has not
been cured within 20 days after the giving of written notice to Parent or
the Offeror.
Takeover Proposals. The Merger Agreement provides that the Company will
not, nor will it permit any of its subsidiaries to, nor shall it authorize or
permit any of its officers, directors or employees or any investment banker,
financial advisor, attorney, accountant or other representative retained by it
or any of its subsidiaries to, directly or indirectly, (1) solicit, initiate or
knowingly encourage (including by way of furnishing information), or take any
other action designed or reasonably likely to facilitate, any inquiries or the
making of any proposal which constitutes, or may reasonably be expected to lead
to, any Takeover Proposal or (2) participate in any discussions or negotiations
regarding any Takeover Proposal; provided, however, that if, at any time prior
to the acceptance for payment of Shares pursuant to the Offer, the Board of
Directors of the Company determines in good faith, after consultation with
outside counsel, that it is necessary to do so in order to comply with its
fiduciary duties to the Company's stockholders under applicable law, the Company
may, in response to a Takeover Proposal which was not solicited subsequent to
the date hereof, and subject to compliance with the notification provisions
discussed below, (i) furnish information with respect to the Company to any
person pursuant to a customary confidentiality agreement (as determined by the
Company after consultation with its outside counsel) and (ii) participate in
negotiations regarding such Takeover Proposal. The Merger Agreement defines
"Takeover Proposal" as any inquiry, proposal or offer from any person relating
to any direct or indirect acquisition or purchase of 20% or more of the assets
of the Company and its subsidiaries or 20% or more of any class of equity
securities of the Company or any of its subsidiaries, any tender offer or
exchange offer that if consummated would result in any person beneficially
owning 20% or more of any class of equity securities of the Company or any of
its subsidiaries, any merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving the
Company or any of its subsidiaries, other than the transactions contemplated by
the Merger Agreement, or any other transaction the consummation of which could
reasonably be expected to impede, interfere with, prevent or materially delay
the Offer and/or the Merger or which would reasonably be expected to dilute
materially the benefits to Parent of the transactions contemplated by the Merger
Agreement and the Stockholder Agreement.
The Merger Agreement provides further that, except as described below,
neither the Board of Directors of the Company nor any committee thereof shall
(i) withdraw or modify, or propose publicly to withdraw or modify, in a manner
adverse to Parent, the approval or recommendation by such Board of Directors or
such committee of the Offer, the Merger Agreement or the Merger, (ii) approve or
recommend, or propose publicly to approve or recommend, any Takeover Proposal or
(iii) cause the Company to enter into any letter of intent, agreement in
principle, acquisition agreement or other similar agreement (each, an
"Acquisition Agreement") related to any Takeover Proposal. Notwithstanding the
foregoing, in the event that prior to the acceptance for payment of Shares
pursuant to the Offer the Board of Directors of the Company determines in good
faith, after consultation with outside counsel, that it is necessary to do so in
order to comply with its fiduciary duties to the Company's stockholders under
applicable law, such Board of Directors may (subject to the other provisions
regarding Takeover Proposals) (A) withdraw or modify its approval or
recommendation of the Offer, the Merger Agreement or the Merger or (B) approve
or recommend a Superior Proposal (as defined
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below) or terminate the Merger Agreement (and concurrently with or after such
termination, if it so chooses, cause the Company to enter into an Acquisition
Agreement with respect to any Superior Proposal), but in each of the cases
described in this clause (B), only at a time after the second business day
following Parent's receipt of written notice (a "Notice of Superior Proposal")
advising Parent that the Board of Directors of the Company has received a
Superior Proposal, specifying the material terms and conditions of such Superior
Proposal and identifying the person making such Superior Proposal. For purposes
of the Merger Agreement, a "Superior Proposal" means any bona fide proposal made
by a third party to acquire, directly or indirectly, for consideration
consisting of cash and/or securities, more than 50% of the combined voting power
of the Shares and shares of Class B Common Stock then outstanding or all or
substantially all the assets of the Company and otherwise on terms which the
Board of Directors of the Company determines in its good faith judgment (based
on the advice of a financial advisor of nationally recognized reputation) to be
more favorable to the Company's stockholders than the Offer and the Merger and
for which financing, to the extent required, is then committed or which, in the
good faith judgment of the Board of Directors of the Company, is reasonably
capable of being financed by such third party.
In addition to the obligations of the Company described in the preceding
two paragraphs, the Merger Agreement provides that the Company shall immediately
advise Parent orally and in writing of any request for information or of any
Takeover Proposal, the material terms and conditions of such request or Takeover
Proposal and the identity the person making any such request or Takeover
Proposal. The Company is further required under the terms of the Merger
Agreement to keep Parent fully informed of the status and details (including
amendments or proposed amendments) of any such request or Takeover Proposal.
The Merger Agreement provides that nothing contained therein shall
prohibit the Company from taking and disclosing to its stockholders a position
contemplated by Rule 14e-2(a) promulgated under the Exchange Act or from making
any disclosure to the Company's stockholders if, in the good faith judgment of
the Board of Directors of the Company, after consultation with outside counsel,
failure so to disclose would be inconsistent with its fiduciary duties to the
Company's stockholders under applicable law; provided, however, that neither the
Company nor its Board of Directors nor any committee thereof shall, except as
permitted by the provisions described in the second preceding paragraph,
withdraw or modify, or propose publicly to withdraw or modify, its position with
respect to the Offer, the Merger Agreement or the Merger or approve or
recommend, or propose publicly to approve or recommend, a Takeover Proposal.
Fees and Expenses. The Merger Agreement provides that the Company will
pay, or cause to be paid, in same day funds to Parent (a) the Expenses in an
amount up to but not to exceed $5,000,000 and (b) $15,000,000 (the "Termination
Fee") under the circumstances and at the times set forth as follows: (i) if
Parent or the Offeror terminates the Merger Agreement in accordance with the
provision described in clause (b) of paragraph (3) under "Termination of the
Merger Agreement" above and at the time of such termination there is no pending
Takeover Proposal, the Company shall pay the Expenses and the Termination Fee
upon demand; (ii) if Parent or the Offeror terminates the Merger Agreement in
accordance with the provision described in clause (b) of paragraph (3) under
"Termination of the Merger Agreement" above and at the time of such termination
a Takeover Proposal shall then be pending, the Company shall pay the Expenses
upon demand; in addition, if within 18 months after such termination, the
Company shall enter into an Acquisition Agreement providing for a Takeover
Proposal or a Takeover Proposal shall be consummated, the Company shall pay the
Termination Fee concurrently with the earlier of the entering into of such
Acquisition Agreement or the consummation of such Takeover Proposal; (iii) if
the Company terminates the Merger Agreement in accordance with the provision
described in clause (a) of paragraph (4) under "Termination of the Merger
Agreement" above, the Company shall pay the Expenses concurrently therewith; in
addition, if within 18 months after such termination, the Company shall enter
into an Acquisition Agreement providing for a Takeover Proposal or a Takeover
Proposal shall be consummated, the Company shall
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pay the Termination Fee concurrently with the earlier of the entering into of
such Acquisition Agreement or the consummation of such Takeover Proposal; and
(iv) if, at the time of any other termination of the Merger Agreement (other
than by the Company in accordance with the provision described in clause (b) of
paragraph (4) under "Termination of the Merger Agreement" above), a Takeover
Proposal shall have been made (other than a Takeover Proposal made prior to
February 13, 1996), the Company shall pay the Expenses, if terminated by the
Company, concurrently therewith or, if terminated by Parent, upon demand; in
addition, if within 18 months of such termination, the Company shall enter into
an Acquisition Agreement providing for a Takeover Proposal or a Takeover
Proposal shall be consummated, the Company shall pay the Termination Fee
concurrently with the earlier of the entering into of such Acquisition Agreement
or the consummation of such Takeover Proposal. For purposes of the Merger
Agreement, "Expenses" means documented out-of-pocket fees and expenses incurred
or paid by or on behalf of Parent in connection with the Offer, the Merger or
the consummation of any of the transactions contemplated by the Merger
Agreement, including all fees and expenses of law firms, commercial banks,
investment banking firms, accountants, experts and consultants to Parent.
Conduct of Business by the Company. The Merger Agreement provides that,
except as otherwise expressly contemplated by the Merger Agreement or to the
extent that Parent shall otherwise consent in writing, until such time as
Parent's designees constitute a majority of the Board of Directors of the
Company, (a) the Company and its subsidiaries will carry on their respective
businesses in the usual, regular and ordinary course in substantially the same
manner as theretofore conducted and use all reasonable efforts to preserve
intact their current business organizations, keep available the services of
their current officers and employees and preserve their relationships with
customers, suppliers and others having business dealings with them; (b) the
Company will not, and will not permit any of its subsidiaries to, (i) declare or
pay any dividends on, or make other distributions in respect of, any of its
capital stock (other than regular quarterly cash dividends not in excess of $.08
per Share or $.08 per share of Class B Common Stock with usual record and
payment dates and in accordance with the Company's current dividend policy),
(ii) split, combine or reclassify any of its capital stock or issue or authorize
or propose the issuance of any other securities in respect of, in lieu of or in
substitution for shares of capital stock of the Company or (iii) repurchase,
redeem or otherwise acquire any shares of capital stock of the Company or its
subsidiaries or any other securities thereof or any rights, warrants or options
to acquire any such shares or other securities; (c) the Company will not, and
will not permit any of it subsidiaries to, issue, deliver, sell, pledge or
encumber, or authorize or propose the issuance, delivery, sale, pledge or
encumbrance of, any shares of its capital stock of any class or any securities
convertible into, or rights, warrants, calls, subscriptions or options to
acquire, any such shares or convertible securities, or any other ownership
interest in the Company, other than (i) the issuance of Shares upon the exercise
of stock options to purchase Shares outstanding on the date of the Merger
Agreement in accordance with their terms and (ii) the issuance of Shares upon
the conversion of shares of Class B Common Stock; (d) the Company will not, and
will not permit any of its subsidiaries to, amend or propose to amend its
certificate of incorporation or its by-laws (or similar organizational
documents); (e) the Company will not, and will not permit any of its
subsidiaries to, acquire or agree to acquire (i) (by merger, consolidation,
acquisition of stock or assets or by any other manner) any business,
corporation, partnership, joint venture, association or other business
organization or division thereof or (ii) any assets that are material,
individually or in the aggregate, to the Company and its subsidiaries taken as a
whole, except purchases of inventory in the ordinary course of business
consistent with past practice and expenditures consistent with the Company's
current capital budget; (f) the Company will not, and will not permit any of its
subsidiaries to, sell, lease, license, encumber or otherwise dispose of, or
agree to sell, lease, license, encumber or otherwise dispose of, any of its
assets, other than sales of its products to customers and immaterial
dispositions of personal property, in each case in the ordinary course of
business consistent with past practice; (g) the Company will not, and will not
permit any of its subsidiaries to, (i) incur or guarantee indebtedness for
borrowed money or issue or sell any debt securities or warrants or rights to
acquire any debt securities of the Company (or any of its
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subsidiaries), guarantee any debt securities of others, enter into any
"keep-well" or other agreement to maintain any financial statement condition of
another person or enter into any arrangement having the economic effect of any
of the foregoing, except for working capital borrowings incurred in the ordinary
course of business consistent with past practice or (ii) make any loans,
advances or capital contributions to, or investments in, any other person, other
than (A) with respect to both of the foregoing clauses (i) and (ii), to the
Company or any direct or indirect wholly owned subsidiary of the Company or (B)
any advances to employees (1) in accordance with the terms of the Company's
Stock Option Plans (as defined below) at a rate not less than the Company's cost
of funds for short-term borrowings and payable within 12 business days following
the borrowing or (2) in accordance with past practice; (h) the Company will
confer with Parent on a regular basis with respect to operational matters and
promptly advise Parent orally and in writing of any material adverse change with
respect to the Company and will promptly provide to Parent (or its counsel)
copies of all filings made by the Company with any Governmental Entity in
connection with the Merger Agreement and the transactions contemplated thereby;
(i) the Company will not make any tax election that would have a material
adverse effect on the tax liability of the Company or any of its subsidiaries or
settle or compromise any tax liability of the Company or any of its subsidiaries
that would materially affect the aggregate tax liability of the Company or any
of its subsidiaries; (j) neither the Company nor any of its subsidiaries will
make or agree to make any new capital expenditure or expenditures other than
expenditures consistent with the Company's current capital budget; (k) the
Company will not, and will not permit any of its subsidiaries to (i) discharge
any claims, liabilities or obligations, other than the discharge (A) in the
ordinary course of business consistent with past practice or in accordance with
their terms, of claims, liabilities or obligations recognized or disclosed in
the most recent consolidated financial statements (or the notes thereto) of the
Company included in the Company's documents filed with the Commission or
incurred since the date of such financial statements in the ordinary course of
business consistent with past practice or (B) of claims, liabilities or
obligations to the extent they are less than $10,000 and unrelated to the
Company's stockholders or the transactions contemplated by the Merger Agreement
and the Stockholder Agreement, or (ii) waive the benefits of, or agree to modify
in any manner, any confidentiality, standstill or similar agreement to which the
Company or any of its subsidiaries is a party; (l) the Company will not, and
will not permit any of its subsidiaries to, modify, amend or terminate any
material contract or agreement to which the Company or such subsidiary is a
party, or waive, release or assign any material rights or claims; and (m)
neither the Company nor any of its subsidiaries will authorize any of, or commit
or agree to take any of, the foregoing actions.
In addition to the foregoing, the Company has agreed that, except as
expressly contemplated or permitted by the Merger Agreement, it will not take
any action, or permit any of its subsidiaries to take any action, that would, or
could reasonably be expected to, result in (a) any of the representations and
warranties of the Company set forth in the Merger Agreement that are qualified
as to materiality becoming untrue, (b) any of such representations and
warranties that are not so qualified becoming untrue in any material respect or
(c) any of the Offer Conditions not being satisfied.
Board of Directors. The Merger Agreement provides that promptly upon the
Offeror having acquired a majority of the combined voting power of the Shares
and shares of Class B Common Stock, the Offeror shall be entitled to designate,
subject to compliance with Section 14(f) of the Exchange Act, a majority of the
directors on the Company's Board of Directors, and the Company and its Board of
Directors shall, at such time, cause the Offeror's designees to be appointed to,
and to constitute a majority of, the Company's Board of Directors. Subject to
applicable law, the Company has agreed to take all action requested by Parent
necessary to effect any such election, including mailing to its stockholders the
Information Statement containing the information required by Section 14(f) of
the Exchange Act and Rule 14f-1 promulgated thereunder, which Information
Statement is attached as Schedule I hereto.
Stock Options. Pursuant to the Merger Agreement, the Board of Directors
of the Company may adopt such resolutions or take such other actions as are
required to provide that (a) each stock
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option to purchase Shares heretofore granted under any stock option plan, stock
appreciation right plan or stock purchase plan of the Company (collectively, the
"Stock Option Plans") outstanding immediately prior to the consummation of the
Offer, whether or not then exercisable, shall become fully exercisable
immediately following the acceptance for payment of Shares pursuant to the Offer
(the "Acceleration Time"); (b) each stock appreciation right heretofore granted
under any Stock Option Plan outstanding immediately prior to the Offer, whether
or not then exercisable, shall become fully exercisable at the Acceleration
Time; and (c) all restrictions applicable to any restricted stock award granted
prior to February 13, 1996, under any Stock Option Plan outstanding immediately
prior to the Offer shall lapse at the Acceleration Time.
The Merger Agreement also provides that, at the effective time of the
Merger, each award then outstanding under any Stock Option Plan, other than an
award held by an officer (as such term is defined in Rule 16a-1(f) under the
Exchange Act) or director of the Company, shall be canceled and the holder
thereof shall have no further rights in respect thereof other than the right to
receive in consideration for the cancelation thereof an amount of cash equal to
the product of (a) the number of Shares subject to such stock option or stock
appreciation right and (b) the excess of the price paid in the Offer over the
per share exercise price, in the case of any such stock option, or the excess of
the price paid in the Offer over the per share base price, in the case of any
such stock appreciation right, in each such case minus all applicable taxes
required to be withheld by the Company; provided, however, that no such cash
payment shall be made with respect to any stock appreciation right that is
related to a stock option in respect of which such a cash payment shall be made.
Pursuant to the Merger Agreement, such payment to each such holder shall be made
as soon as practicable following the effective time of the Merger upon the
delivery by such holder of a signed statement in a form satisfactory to Parent
acknowledging that such holder waives any claims against Parent, the Offeror or
the Company for any other consideration in respect of such stock option or stock
appreciation right.
Benefits. The Merger Agreement provides that, during the period from the
effective time of the Merger until the first anniversary thereof, Parent will
(a) maintain or cause to be maintained the Company's employee benefit plans that
are in effect as of the effective time of the Merger, other than any benefit
plan providing benefits based on equity securities or any equivalent thereof or
any incentive-based compensation, bonus or other similar arrangement, and (b)
provide each person employed by the Surviving Corporation and its subsidiaries
compensation (including salary, bonus and incentive compensation) that is in the
aggregate substantially comparable to that enjoyed by such employee at the
effective time of the Merger, other than as referred to in clause (a) above
(taking into account salary, bonus and equity-based and incentive-based
benefits). The Merger Agreement further provides that from and after the first
anniversary of the effective time of the Merger, Parent will continue the
employment arrangements described in the preceding sentence or will offer to
each person then employed by the Surviving Corporation and its subsidiaries,
compensation and benefits substantially comparable to those then enjoyed by
other similarly situated employees of Parent and its affiliates. For purposes of
eligibility to participate in and vesting in benefits provided under employee
benefit plans maintained by Parent and its affiliates (but not for purposes of
determining benefits (or accruals thereof) under such plans), the Merger
Agreement provides that all persons previously employed by the Company and then
employed by Parent or its affiliates shall be credited with their years of
service with the Company and its subsidiaries and years of service with prior
employers to the extent service with prior employers is taken into account under
the Company's benefit plans.
Pursuant to the Merger Agreement, the Company has agreed that it will take
any action necessary to terminate the Helene Curtis Industries, Inc. Employee
Stock Ownership Plan and Trust (the "ESOP") as of the Effective Time and will
cause the ESOP to make lump sum distributions to ESOP participants within a
reasonable period of time following the effective time of the Merger pursuant to
the terms of the ESOP and applicable law.
Indemnification and Insurance. In the Merger Agreement, Parent and the
Offeror have agreed that all rights to indemnification for acts or omissions
occurring prior to the effective time of the
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Merger that are in existence as of the date of the Merger Agreement in favor of
the current or former directors, officers, employees and agents (the
"Indemnified Parties") of the Company and its subsidiaries as provided in their
respective certificates of incorporation or by-laws shall survive the Merger and
shall continue in full force and effect in accordance with their terms. The
Merger Agreement provides that, from and after the effective time of the Merger,
Parent will, and will cause the Surviving Corporation to, indemnify and hold
harmless any and all Indemnified Parties to the full extent such persons may be
indemnified by the Company or such subsidiaries, as the case may be, pursuant to
their respective certificates of incorporation or by-laws or pursuant to
indemnification agreements as in effect on the date of the Merger Agreement for
acts or omissions occurring at or prior to the effective time of the Merger, and
Parent will, or will cause the Surviving Corporation to, advance litigation
expenses incurred by such persons in connection with defending any action
arising out of such acts or omissions to the extent provided by and pursuant to
the respective terms and provisions of such certificates of incorporation,
by-laws, similar documents or indemnification agreements. In addition, pursuant
to the Merger Agreement, Parent will, for a period of six years from the
effective time of the Merger, maintain in effect the Company's current
directors' and officers' liability insurance covering those persons who are
currently covered by the Company's directors' and officers' liability insurance
policy except that, to the extent that such coverage is not obtainable at a
premium not in excess of $360,000, Parent will be obligated to purchase only so
much coverage as may then be obtained for such amount.
Reasonable Efforts. The Merger Agreement provides that, except as
otherwise contemplated therein, each of the parties will use its reasonable
efforts to take, or cause to be taken, all actions necessary to comply promptly
with all legal requirements that may be imposed on itself with respect to the
Offer and the Merger and will promptly cooperate with and furnish information to
each other in connection with any such requirements imposed upon any of them or
any of their subsidiaries in connection with the Offer and the Merger and will,
and will cause its subsidiaries to, use its reasonable efforts to take all
reasonable actions necessary to obtain (and will cooperate with each other in
obtaining) any consent, authorization, order or approval of, or any exemption
by, any Governmental Entity or other public or private third party required to
be obtained or made by any of them or any of their subsidiaries in connection
with the Offer and the Merger or the taking of any action contemplated thereby
or by the Merger Agreement, except that no party need waive any substantial
rights or agree to any substantial limitation on its operations or to dispose of
any assets.
Representations and Warranties. The Merger Agreement contains various
customary representations and warranties.
Procedure for Termination, Amendment, Extension or Waiver. The Merger
Agreement provides that in the event the Offeror's designees are appointed or
elected to the Board of Directors of the Company as described above under "Board
of Directors", after the acceptance for payment of Shares pursuant to the Offer
and prior to the effective time of the Merger, the affirmative vote of a
majority of the directors of the Company not designated by Parent or Offeror is
required for the Company to amend or terminate the Merger Agreement, exercise or
waive any of its rights or remedies under the Merger Agreement, extend the time
for performance of the Offeror's and Parent's respective obligations under the
Merger Agreement or take any action to amend or otherwise modify the Company's
certificate of incorporation or by-laws.
(b)(4) Stockholder Agreement.
The following summary of the Stockholder Agreement does not purport to be
complete and is qualified in its entirety by reference to the complete text of
the Stockholder Agreement, which is filed as an Exhibit hereto and incorporated
by reference herein.
Grant of Options. Concurrently with the execution of the Merger Agreement,
Parent and the Offeror entered into the Stockholder Agreement with the
Stockholders. Pursuant to the terms and conditions of the Stockholder Agreement,
the Stockholders granted to the Offeror an irrevocable option (collectively, the
"Option") to purchase, in whole but not in part, all shares of the Class B
Common Stock owned of record by the Stockholders (the "Option Shares") at a
price per share of $70.00 in cash (the "Option Purchase Price").
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Exercisability. The Option may be exercised at any time on or prior to
February 13, 1997 (the "Option Expiration Date") in the event that (i) a
Specified Event shall have occurred on or prior to the Option Expiration Date
and (ii) the waiting period under the HSR Act with respect to the exercise of
the Option shall have expired or been terminated. For purposes of the
Stockholder Agreement, the term "Specified Event" means any of the following
events: (i) Parent or the Offeror shall have terminated the Merger Agreement in
accordance with the provisions described in clause (b) of paragraph (3) under
"Merger Agreement--Termination of the Merger Agreement" above, (ii) the Company
shall have terminated the Merger Agreement in accordance with the provisions
described in clause (a) of paragraph (4) under "Merger Agreement--Termination of
the Merger Agreement" above, (iii) prior to termination of the Merger Agreement
(other than by the Company in accordance with the provisions described in clause
(b) of paragraph (4) under "Merger Agreement--Termination of the Merger
Agreement" above), a Takeover Proposal shall have been commenced or the Company
shall have entered into an agreement with respect to, approved or recommended or
taken any action to facilitate, a Takeover Proposal or (iv) the Offeror shall
have accepted for payment, and paid for, Shares in the Offer. Under the
Stockholder Agreement, the Offeror has agreed to exercise the Option in the
event that the Offeror accepts for payment, and pays for, any Shares pursuant to
the Offer.
Adjustments. The Stockholder Agreement provides that in the event of any
change in the Option Shares by reason of conversion into Shares or 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, other than the payment of regular cash dividends consistent with
past practice, the Option Purchase Price shall be adjusted appropriately to
reflect such event.
Certain Exercise Transactions. Each Stockholder has agreed that in the event
that a Specified Event shall have occurred and during the period from February
13, 1997 to and including February 13, 1998, such Stockholder sells, transfers,
assigns or otherwise disposes of (including by conversion or exchange in a
merger, exchange offer or the like) any of the Option Shares for value in a bona
fide arm's length transaction, such Stockholder shall pay to Parent an amount in
cash equal to one-half of the excess, if any, of the per share cash
consideration or the per share fair market value of any non-cash consideration,
as the case may be, received by such Stockholder as a result of such disposition
less (B) the Option Purchase Price, multiplied by the number of such Option
Shares; provided, that no such payment is required to be made in the event the
Company shall have terminated the Merger Agreement in accordance with the
provisions described in clause (b) of paragraph (4) under "Merger Agreement--
Termination of the Merger Agreement" above or Parent or the Offeror shall be in
material breach of the Stockholder Agreement.
Parent and the Offeror have agreed that in the event that the Offeror shall
have exercised the Option and, on or prior to February 13, 1998, the Offeror
shall sell, transfer, assign or otherwise dispose of (including by conversion or
exchange in a merger, exchange offer or the like) any Option Shares for value in
a bona fide arm's length transaction, the Offeror shall pay to the subject
Stockholders an amount in cash equal to one-half of the excess, if any, of the
per share cash consideration or the per share fair market value of any non-cash
consideration, as the case may be, received by the Offeror as a result of such
disposition less the Option Purchase Price, multiplied by the number of such
Option Shares; provided, that no such payment shall be required to be made to
any Stockholder in the event such Stockholder shall be in material breach of the
Stockholder Agreement.
Representations and Warranties. The Stockholders have made certain customary
representations and warranties as to requisite power and authority,
enforceability, absence of conflicts, title to the Option Shares and absence of
liens. Parent and the Offeror have made certain customary representations and
warranties as to requisite power and authority, enforceability, compliance with
laws and availability of funds.
Covenants of Stockholders. In the Stockholder Agreement, each Stockholder
has agreed that, until the Option Expiration Date (a) such Stockholder shall
vote its Class B Common Stock in favor of
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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 such Stockholder; (b) such Stockholder shall
vote its Class B Common Stock against (i) any other merger agreement or merger,
consolidation, combination, sale of substantial assets, reorganization,
recapitalization, dissolution, liquidation or winding up of or by the Company or
any other Takeover Proposal 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; and (c) such Stockholder shall not (i) other than by
operation of law, 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 Class B Common Stock
to any person other than to the Offeror or the Offeror's designee, (ii) enter
into any voting arrangement, whether by proxy, voting agreement or otherwise, in
connection, directly or indirectly, with any Takeover Proposal or (iii) convert
such Class B Common Stock into Shares except as required to effect the exercise
of the Option.
In the Stockholder Agreement, each Stockholder has further agreed that,
until the Merger is consummated or the Merger Agreement is terminated, such
Stockholder shall not, and shall not permit any investment banker, attorney or
other adviser or representative of such Stockholder to, (i) directly or
indirectly solicit, initiate or 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 take any other action to facilitate any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead to, any
Takeover Proposal.
Termination. The Stockholder Agreement terminates upon the earlier of
February 13, 1998 and the disposition by each Stockholder of all the Option
Shares in one or more bona fide arm's length transactions for value.
Expenses. Each party to the Stockholder Agreement has agreed to bear its own
expenses in connection with the Stockholder Agreement.
(b)(5) Confidentiality Agreement.
The following summary of the Confidentiality Agreement between the Company
and Unilever PLC dated November 30, 1995 (the "Confidentiality Agreement") does
not purport to be complete and is qualified in its entirety by reference to the
complete text of the Confidentiality Agreement, which is filed as an Exhibit
hereto and incorporated by reference herein.
The Confidentiality Agreement provides that Unilever and the Company will
each disclose to the other certain confidential information to be kept in strict
confidence and not disclosed and to be used solely in connection with
discussions between the parties concerning opportunities of mutual interest. The
Confidentiality Agreement further provides, among other things, that (i) such
confidential information shall remain the property of the party providing such
information, (ii) such confidential information shall only be made available to
employees, attorneys or financial advisors of the party receiving such
information on a need to know basis, (iii) each party shall not disclose such
confidential information to any other person, firm or corporation without the
prior written permission of the party providing such information, and (iv) the
obligations set forth therein shall remain in force for a period of five years
from the date thereof.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) The Board of Directors of the Company, at a meeting held on February 13,
1996, determined that the Merger is advisable and that the terms of the Offer
and the Merger are fair to, and in the best interests of, the Company's
stockholders. At such meeting, the Board of Directors acted unanimously to
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approve the Offer and the Merger and the execution and delivery of the Merger
Agreement. The Board of Directors also approved the Stockholder Agreement and
the Merger Agreement for all purposes under Section 203 of the DGCL and under
Article Tenth of the Company's certificate of incorporation. In addition, the
Board of Directors of the Company recommended that the Company's stockholders
accept the Offer and (if required by applicable law or otherwise) approve the
Merger Agreement and the Merger. A copy of the Company's letter to stockholders
dated February 20, 1996, is filed as an Exhibit hereto and incorporated herein
by reference.
(b) In reaching the determinations described in paragraph (a) above, the
Board of Directors of the Company considered a number of factors, including the
following:
(1) The current and historical financial condition and results of
operations of the Company.
(2) The projected financial condition, results of operations, prospects
and strategic objectives of the Company, as well as the risks involved in
achieving those prospects and objectives in the personal care products
industry with the current economic and market conditions.
(3) The presentation of Lazard to the Board of Directors of the Company
at its meeting on February 12, 1996 and confirmed by Lazard to the Board of
Directors of the Company at its meeting on February 13, 1996, as to various
financial matters deemed relevant to the Board of Directors' consideration,
including, among other things, (a) an analysis of certain historical
business and financial information relating to the Company, (b) a review of
public information with respect to certain other companies in lines of
businesses Lazard believed to be generally comparable, in whole or in part,
to the business of the Company, (c) a review of various financial forecasts
and other data provided to Lazard by the Company relating to its business,
(d) a review of the historical stock prices and trading volumes of the
Shares, (e) a hypothetical private market valuation of the Company, (f) a
discounted cash flow valuation of the Company, and (g) an analysis of the
Offer Price as a multiple of various measures of the Company's operating
performance.
(4) The fact that the $70.00 per Share to be received by the Company's
stockholders in both the Offer and Merger represents a substantial premium
over the closing market price of $59.00 per Share on February 13, 1996 (the
last trading day prior to the Board of Directors meeting referred to in
paragraph (a) of this Item 4); and the fact that the $70.00 per Share to be
received by the Company's stockholders in both the Offer and the Merger
represents an approximately 50% premium over the highest per share market
price of the Shares for the five year period ending December 31, 1995 and an
approximately 124% premium over the market price of the Shares on January 5,
1996 (the day negotiations commenced between the Company and Unilever with
respect to the Offer and the Merger).
(5) The relationship of the Offer Price to the respective historical
market prices of the Shares and to the Company's book value and the
respective net asset values per share of the Shares and Class B Common
Stock.
(6) Discussions (described in Item 3 above under "Certain Background
Information") with, and financial terms of expressions of interest received
from, other parties as to possible transactions both as a result of contacts
initiated by the Company and as a result of unsolicited contacts received by
the Company.
(7) The Board's view, after consultation with management, counsel to the
Company and Lazard, regarding the likelihood of the existence of other
viable purchasers on terms as favorable as those in the Offer and Merger.
(8) Developments relating to the consolidation in the personal care
products industry and the need for the Company to have access to additional
resources in the future to remain competitive in such industry.
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(9) The written opinion, dated February 13, 1996, of Lazard to the Board
of Directors of the Company that, based upon and subject to various
considerations and assumptions set forth therein, the proposed consideration
to be received by the stockholders of the Company in connection with the
Offer and the Merger is fair to the stockholders of the Company (other than
Parent and its affiliates) from a financial point of view. A copy of the
opinion rendered by Lazard to the Company's Board of Directors, setting
forth the procedures followed, the matters considered, the scope of the
review undertaken and the assumptions made by Lazard in arriving at its
opinion, is attached as an Exhibit hereto and incorporated herein by
reference. THE COMPANY'S STOCKHOLDERS ARE URGED TO READ THIS OPINION IN ITS
ENTIRETY.
(10) The availability of appraisal rights under Section 262 of the DGCL
for Dissenting Shares.
(11) The terms and conditions of the Merger Agreement and the course of
the negotiations resulting in the execution thereof (including the terms of
the Merger Agreement that permit the Company's Board of Directors, in the
exercise of its fiduciary duties, (a) to furnish information to or
participate in negotiations with any third party that requests such
information or initiates such discussions or negotiations, pursuant to
appropriate confidentiality agreements, in connection with any inquiry,
proposal or offer relating to any direct or indirect acquisition or purchase
of 20% or more of any class of equity securities of the Company or any of
its subsidiaries, any tender offer or exchange offer that if consummated
would result in any person beneficially owning 20% or more of any class of
equity securities of the Company or any of its subsidiaries, any merger,
consolidation, business combination, liquidation, dissolution or similar
transaction involving the Company or any of its subsidiaries (although the
Company is not permitted by the Merger Agreement to initiate, solicit or
knowingly encourage any such third party inquiry, proposal or offer or
negotiations regarding the same), (b) to terminate the Merger Agreement in
certain circumstances and (c) to adopt the resolution contemplated by the
Company's certificate of incorporation providing for a "sunset" of the Class
B Common Stock). The Company's directors noted that the Merger Agreement
provides that, in certain circumstances, the Company would be obligated to
pay Parent a Termination Fee of $15 million and Expenses of up to $5
million. The Board also considered the interplay between such provisions of
the Merger Agreement and various provisions of the Stockholder Agreement.
(12) The requirement by Unilever, as a condition to a transaction, that
the Stockholders enter into the Stockholder Agreement providing the Offeror
with an irrevocable option to purchase their shares of Class B Common Stock
in certain circumstances and committing the Stockholders to certain other
actions; the requirement by Unilever that the Company's Board of Directors
approve such agreement; the stated desire of the Stockholders to proceed
with the Merger; the decision of the Stockholders to enter into the
Stockholder Agreement; and the possible effect of the Stockholder Agreement
on any other third party proposal.
(13) The likelihood that the proposed acquisition would be consummated,
including the likelihood of satisfaction of the regulatory approvals
required pursuant to, and the other conditions to, the Offer and the Merger
contained in the Merger Agreement, the experience, reputation and financial
condition of Unilever and the risks to the Company if the acquisition were
not consummated.
(14) Unilever's stated present intention that the Company will remain
headquartered in Chicago, will maintain manufacturing and product
development facilities in the United States, will operate under its present
corporate name, will have primary responsibility for the haircare operations
of Unilever in the United States, will have global responsibilities as an
innovation center for haircare and will operate in other personal care
categories.
(15) The recommendation of the Company's management with respect to the
proposed transaction.
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ITEM 5. PERSON RETAINED, EMPLOYED OR TO BE COMPENSATED.
Pursuant to a letter agreement dated as of December 19, 1995 between the
Company and Lazard, the Company has agreed to pay Lazard (i) $1 million upon
announcement of the execution of the Merger Agreement and (ii) upon consummation
of the Offer and the Merger, .80% of the aggregate consideration paid to the
Company and its stockholders in connection therewith (with the payment of the
amount set forth in clause (i) above being credited against the fee payable
pursuant to clause (ii)). Assuming the purchase of all Shares at a price of
$70.00 per Share and the purchase of all shares of Class B Common Stock at a
price of $70.00 per share, Lazard will receive fees aggregating approximately
$6.95 million. The Company has also agreed to reimburse Lazard for certain
out-of-pocket expenses. In addition, the Company has agreed to indemnify and
hold harmless Lazard and its members, employees, agents, affiliates and
controlling persons against certain liabilities and expenses, including
liabilities under the Federal securities laws, arising out of or in connection
with its engagement pursuant to such letter.
Neither the Company nor any person acting on its behalf currently intends to
employ, retain or compensate any other person to make solicitations or
recommendations to security holders on its behalf concerning the Offer.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) To the best of the Company's knowledge, no transactions in Shares or
shares of Class B Common Stock have been effected during the past 60 days by the
Company or by any executive officer, director, affiliate or subsidiary of the
Company except as follows: (i) pursuant to the Stockholder Agreement described
in Item 3 above under "Stockholder Agreement," Ronald J. Gidwitz and certain
partnerships with Gidwitz family members as general partners have agreed to sell
their shares of Class B Common Stock (constituting, in the aggregate,
approximately 72% of the total voting power of the Company on a fully diluted
basis) and have granted an option to the Offeror to purchase such shares; (ii)
Ronald J. Gidwitz made gifts of partnership interests in the Gidwitz Family
Partnership and HCI Partnership to certain Gidwitz family members and trusts for
the benefit of certain Gidwitz family members representing an aggregate of
91,130 shares of Class B Common Stock, Charles G. Cooper made gifts of an
aggregate of 2,140 Shares to family members and Gilbert P. Smith made gifts of
an aggregate of 1,900 Shares to family members and (iii) certain executive
officers of the Company participate in the Company's Employee Stock Purchase
Plan.
(b) To the best of the Company's knowledge, all of its executive officers
and directors currently intend to (i) tender to the Offeror, pursuant to the
Offer, all Shares which are held of record or beneficially owned by such
persons, including Shares purchasable upon exercise of options, and (ii) sell to
the Company in accordance with the Merger Agreement and the terms of the
Company's 1979 Stock Option Plan certain Shares issued pursuant to the Company's
1979 Stock Option Plan.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
(a) Except as set forth in Items 3 and 4, none.
(b) None.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
(a) Delaware General Corporation Law.
As a Delaware corporation, the Company is subject to Section 203 ("Section
203") of the DGCL. Section 203 would prevent an "Interested Stockholder"
(generally defined as a person beneficially owning 15% or more of a
corporation's voting stock) from engaging in a "Business Combination" (as
defined in Section 203) with a Delaware corporation for three years following
the date such person became an Interested Stockholder unless: (i) before such
person became an Interested Stockholder, the
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board of directors of the corporation approved the "Business Combination," (ii)
upon consummation of the transaction which resulted in the Interested
Stockholder becoming an Interested Stockholder, the Interested Stockholder owned
at least 85% of the voting stock of the corporation outstanding at the time the
transaction commenced (excluding for purposes of determining the number of
shares, shares of outstanding stock held by directors who are also officers and
by employee stock ownership plans that do not allow plan participants to
determine confidentially whether to tender shares), or (iii) following the
transaction in which such person became an Interested Stockholder, the "Business
Combination" is (x) approved by the board of directors of the corporation and
(y) authorized at a meeting of stockholders by the affirmative vote of the
holders of at least 66 2/3% of the outstanding voting stock of the corporation
not owned by the Interested Stockholder. The transactions contemplated by the
Merger Agreement and the Stockholder Agreement would result in a "Business
Combination" for purposes of Section 203. In accordance with the provisions of
Section 203, the Board of Directors of the Company has approved the Merger
Agreement, the Stockholder Agreement, the Offeror's acquisition of Shares
pursuant to the Offer and the Merger and the transactions contemplated thereby,
and the Offeror's acquisition of shares of Class B Common Stock pursuant to the
Stockholder Agreement and the transactions contemplated thereby. Accordingly,
the restrictions of Section 203 are inapplicable to the Offer, the Merger, the
purchase of shares of Class B Common Stock pursuant to the Stockholder Agreement
and the related transactions.
Holders of Shares and shares of Class B Common Stock do not have appraisal
rights as a result of the Offer. However, if the Merger is consummated, holders
of Shares and shares of Class B Common Stock at the effective time of the Merger
will have certain rights pursuant to the provisions of Section 262 of the DGCL
("Section 262") to dissent and demand appraisal of their Shares and shares of
Class B Common Stock. Under Section 262, dissenting stockholders who comply with
the applicable statutory procedures will be entitled to receive a judicial
determination of the fair value of their Shares and/or shares of Class B Common
Stock (the "Dissenting Shares") (exclusive of any element of value arising from
the accomplishment or expectation of the Merger) and to receive payment of such
fair value in cash, together with a fair rate of interest, if any. Any such
judicial determination of the fair value of Shares and/or shares of Class B
Common Stock could be based upon factors other than, or in addition to, the
price per Share and share of Class B Common Stock to be paid in the Merger or
the market value of the Shares and/or shares of Class B Common Stock. The value
so determined could be more or less than the price per Share and share of Class
B Common Stock to be paid in the Merger.
The foregoing summary of Section 262 does not purport to be complete and is
qualified in its entirety by reference to Section 262. Failure to follow the
steps required by Section 262 for perfecting appraisal rights may result in the
loss of such rights.
(b) Charter Provisions.
Article Tenth of the Company's certificate of incorporation provides that
the affirmative vote of the holders of at least 80% of the outstanding voting
shares of the Company (and 80% of each class of voting shares of the Company if
class voting rights are in effect) shall be required for the approval or
authorization of any "Business Combination" (as defined in the Company's
certificate of incorporation) with any "Related Person" (generally defined as
the beneficial owner of 10% or more of the Company's outstanding voting shares).
This provision shall not be applicable (i) if such "Business Combination" shall
have been approved by a majority of the continuing directors of the Company or
(ii) such "Business Combination" shall involve solely the Company and a 50% or
greater owned subsidiary of the Company in which the Related Person has no
direct or indirect interest (other than an interest arising solely due to
control of the Company). The transactions contemplated by the Merger Agreement
and the Stockholder Agreement would result in a "Business Combination" for
purposes of the Company's certificate of incorporation. In accordance with the
Company's certificate of incorporation, the Board of Directors of the Company
has approved the Merger Agreement and the Stockholder Agreement, and the
transactions contemplated thereby, and therefore the restrictions of Article
Tenth of the Company's
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certificate of incorporation are inapplicable to the Offer, the Merger, the
purchase of shares of Class B Common Stock pursuant to the Stockholder Agreement
and the related transactions.
Article Fourth of the Company's certificate of incorporation provides that,
among other things, a transfer of shares of Class B Common Stock to any person
(other than certain "Permitted Transferees" (as defined therein)) would result
in the automatic conversion of such shares of Class B Common Stock into Shares.
The Offeror is not a "Permitted Transferee" and, therefore, the purchase by the
Offeror of the shares of Class B Common Stock that are subject to the
Stockholder Agreement would result in the conversion of such shares of Class B
Common Stock into Shares. Article Fourth of the Company's certificate of
incorporation also provides that if at any time the number of issued and
outstanding shares of Class B Common Stock as reflected on the stock transfer
books of the Company falls below 10% of the aggregate number of issued and
outstanding Shares, shares of Class B Common Stock and shares of preferred stock
of the Company, then, the outstanding shares of Class B Common Stock shall
immediately and automatically be converted into Shares. Based upon the number of
Shares and shares of Class B Common Stock issued and outstanding as of February
5, 1996, in the event that the Offeror purchases the shares of Class B Common
Stock that are subject to the Stockholder Agreement (thereby converting such
Class B Shares into Shares), the remaining shares of Class B Common Stock would
represent less than 10% of the total number of outstanding Shares, shares of
Class B Common Stock and shares of preferred stock of the Company, and such
shares of Class B Common Stock would automatically convert into Shares.
In addition, Article Fourth of the Company's certificate of incorporation
provides that if, during the period beginning January 1, 1996 and ending June
30, 1996, a committee of the Board of Directors of the Company consisting only
of outside directors then in office should adopt a resolution, and such
resolution is thereafter approved by a majority of the directors then in office
not owning shares of Class B Common Stock, directing that the shares of Class B
Common Stock be converted into Shares at the end of such period, then, the
shares of Class B Common Stock shall automatically convert into Shares at the
end of such period. If the Board of Directors does not take such action during
such period, Article Fourth provides that the term of the shares of Class B
Common Stock shall be renewed for an additional five year period.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
EXHIBIT NO.
1. Agreement and Plan of Merger, dated as of February 13, 1996, among
Conopco, Inc., Conopco Acquisition Company, Inc. and Helene Curtis
Industries, Inc.
2. Stockholder Agreement, dated as of February 13, 1996, among Conopco, Inc.,
Conopco Acquisition Company, Inc., Ronald J. Gidwitz, HCI Partnership and
Gidwitz Family Partnership.
3. Confidentiality Agreement between Helene Curtis Industries, Inc. and
Unilever PLC dated November 30, 1995.
4. Helene Curtis Industries, Inc. Information Statement pursuant to
Section 14(f) of the Securities Exchange Act of 1934 and Rule 14f-1
thereunder.*
5. Press Release of Unilever N.V. and Helene Curtis Industries, Inc. issued
on February 13, 1996.
6. Letter to Stockholders of Helene Curtis Industries, Inc. dated
February 20, 1996.*
7. Opinion of Lazard Freres & Co. LLC.*
- ------------
* Included in copies mailed to stockholders.
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete, and
correct.
HELENE CURTIS INDUSTRIES, INC.
By /s/ RONALD J. GIDWITZ
...................................
Ronald J. Gidwitz
President and Chief Executive
Officer
Dated: February 20, 1996
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SCHEDULE I
HELENE CURTIS INDUSTRIES, INC.
325 NORTH WELLS STREET
CHICAGO, ILLINOIS 60610
-------------------
INFORMATION STATEMENT PURSUANT TO
SECTION 14(F) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 14F-1 THEREUNDER
This Information Statement is being mailed on or about February 20, 1996 as
part of the Solicitation/Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9") to holders of the Common Stock, $.50 par value per share (the
"Shares"), of Helene Curtis Industries, Inc. ("the Company"). Capitalized terms
used and not otherwise defined herein shall have the meaning set forth in the
Schedule 14D-9. You are receiving this Information Statement in connection with
the possible election of persons designated by Conopco Acquisition Company, Inc.
(the "Offeror"), a Delaware corporation and a wholly owned subsidiary of
Conopco, Inc., a New York corporation ("Parent"), which is indirectly owned 75%
by Unilever N.V., a Dutch corporation, and 25% by Unilever PLC, a company
organized under the laws of England and Wales, to a majority of the seats on the
Board of Directors of the Company (the "Board").
Pursuant to the Merger Agreement, the Offeror commenced the Offer on
February 20, 1996. The Offer is scheduled to expire at 12:00 Midnight, New York
City time, on March 18, 1996, unless extended.
This Information Statement is required by Section 14(f) of the Securities
Exchange Act of 1934 (the "Exchange Act") and Rule 14f-1 thereunder. You are
urged to read this Information Statement carefully. You are not, however,
required to take any action.
The information contained in this Information Statement (including
information incorporated by reference) concerning Parent and the Offeror and the
Designees (as defined herein) has been furnished to the Company by Parent and
the Offeror and the Company assumes no responsibility for the accuracy or
completeness of such information.
GENERAL
The Shares and the Class B Common Stock are the only classes of voting
securities of the Company outstanding. Each Share has one vote. Each share of
Class B Common Stock has 10 votes. As of February 5, 1996, (i) there were
6,857,801 Shares outstanding, (ii) 3,044,829 shares of Class B Common Stock
outstanding and (iii) 1,190,258 Shares reserved for issuance pursuant to
outstanding stock options.
The Board currently consists of ten members and there are currently no
vacancies on the Board. Each director serves a term of three years or until his
successor is duly elected and qualified or until his earlier death, resignation
or removal. The Board is staggered and divided into three classes so that no
more than one-third of the Board is up for election at each annual meeting of
the Company.
RIGHT TO DESIGNATE DIRECTORS
Pursuant to the Merger Agreement, upon the Offeror having acquired a
majority of the combined voting power of the Shares and the Class B Common
Stock, the Offeror shall be entitled to designate such number of directors on
the Board as will give the Offeror, subject to compliance with Section 14(f) of
the Exchange Act, a majority of such directors (the "Designees"), and the
Company shall, at such
I-1
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time, cause the Designees to be so elected by its existing Board, provided,
however, that in the event that the Designees are elected to the Board, until
the effective time of the Merger such Board shall have at least three directors
who are directors on the date of the Merger Agreement and who are not officers
of the Company (the "Independent Directors"); and provided, further that, in
such event, if the number of Independent Directors shall be reduced below three
for any reason whatsoever, the remaining Independent Directors shall designate a
person to fill such vacancy who shall be deemed to be an Independent Director
for purposes of the Merger Agreement or, if no Independent Directors then
remain, the other directors shall designate three persons to fill such vacancies
who shall not be officers or affiliates of the Company or any of its
subsidiaries, and such persons shall be deemed to be Independent Directors for
purposes of the Merger Agreement. Pursuant to the Merger Agreement, subject to
applicable law, the Company agreed to take all action requested by Parent that
is reasonably necessary to effect any such election, including mailing to its
stockholders the Information Statement containing the information required by
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, and the
Company agreed to make such mailing with the mailing of the Schedule 14D-9
(provided that the Offeror shall have provided to the Company on a timely basis
all information required to be included in the Information Statement with
respect to the Designees). In connection with the foregoing, the Company will
promptly, at the option of Parent, either increase the size of the Board and/or
obtain the resignation of such number of its current directors as is necessary
to enable the Designees to be elected or appointed to, and to constitute a
majority of the directors on, the Board.
INFORMATION WITH RESPECT TO DESIGNEES
Set forth below is the name, age, business address, principal occupation or
employment and five year employment history of the persons who will be the
Designees, such information being furnished by the Parent. Unless otherwise
indicated, the business address of all persons listed below is 390 Park Avenue,
New York, New York 10022. Unless otherwise indicated, all persons listed below
are citizens of the United States of America.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DURING
NAME OF DESIGNEES AGE THE PAST FIVE YEARS
- ------------------------------------------ --- ------------------------------------------
<S> <C> <C>
Richard Goldstein......................... 54 President and CEO of Unilever United
States, Inc. and Chairman and CEO of
Unilever Canada Ltd. since September 1989;
Chairman and CEO of Unilever North
American Regional Management since May
1992.
Robert Phillips........................... 57 Director of Unilever N.V. and Unilever PLC
since 1995 and Personal Products
Coordinator of Unilever since 1994;
Chairman and CEO, Unilever Prestige
Products from 1992 to 1994; President of
Chesebrough-Pond's from 1986 to 1992; CEO
of Chesebrough-Pond's from 1988 to 1992.
Paul Dolan................................ 56 Senior Sourcing and Supply Member-Personal
Products Coordination of Unilever PLC
since 1995; prior thereto, Senior Vice
President of Operations of
Chesebrough-Pond's.
Mart Laius................................ 49 Vice President, Corporate Development and
Administrative Services, Unilever United
States, Inc. since 1995; prior thereto,
Director, Corporate Development, Unilever
United States, Inc.
</TABLE>
It is expected that the Designees may assume office at any time following
the purchase by the Offeror of a majority of the combined voting power of the
Shares and the Class B Common Stock pursuant to the Offer and the Stockholder
Agreement and that upon assuming office, the Designees will thereafter
constitute at least a majority of the Board. Parent has informed the Company
that, to the
I-2
<PAGE>
best of the Parent's knowledge, none of the Designees beneficially own any
equity securities, or rights to acquire any equity securities of the Company, or
has been involved in any transactions with the Company or any of its directors,
executive officers or affiliates which are required to be disclosed pursuant to
the rules of the Commission.
BOARD OF DIRECTORS OF THE COMPANY
Listed below are the names, ages, principal occupations, five year
employment histories and public directorships, if any, of all current directors
of the Company.
<TABLE><CAPTION>
POSITION WITH THE COMPANY OR
YEAR FIRST ELECTED PRINCIPAL OCCUPATION DURING
NAME OF DIRECTOR AGE A DIRECTOR THE PAST FIVE YEARS
- --------------------------- --- ------------------ ----------------------------------------------
<S> <C> <C> <C>
Marshall L. Burman......... 65 1980 Mr. Burman is counsel to the law firm of
Wildman, Harrold, Allen & Dixon, which
provided legal services to the Company
during the fiscal year ended February 28,
1995. Until January 1, 1992, he was a senior
partner in the law firm of Arvey, Hodes,
Costello & Burman. Mr. Burman is also
Chairman of the Board of Directors of The
Illinois State Board of Investments, a
director of CFI Industries, Inc., and a
director of Safecard Services, Inc.
Frank W. Considine......... 74 1988 Mr. Considine is Honorary Chairman of the
Board of Directors and Chairman of the
Executive Committee of American National Can
Company, a company engaged in the
manufacture and sale of packaging products,
from which the Company has purchased
packaging materials in the ordinary course
of business. From 1983 to 1990, he was
Chairman of the Board of Directors and from
1973 to 1988, he was President and Chief
Executive Officer of American National Can
Company and was Vice Chairman of the Board
of Directors of Triangle Industries, Inc.
from 1985 to 1988. He is a director of IMC
Global, Inc., Pechiney International, S.A.,
and Scotsman Industries, Inc.
Charles G. Cooper.......... 67 1984 Mr. Cooper is Senior Vice President of the
Company, responsible for business
development. He previously served as
Executive Vice President and Chief Operating
Officer of the Company. Mr. Cooper has been
employed by the Company for more than 40
years. He is also a director of Sportmart,
Inc.
Gerald S. Gidwitz.......... 89 1928 Mr. Gidwitz is Chairman of the Board of
Directors of the Company.
Michael Goldman............ 58 1989 Mr. Goldman is Executive Vice President and
Chief Operating Officer of the Company. He
has been employed by the Company for more
than 30 years.
</TABLE>
I-3
<PAGE>
<TABLE><CAPTION>
POSITION WITH THE COMPANY OR
YEAR FIRST ELECTED PRINCIPAL OCCUPATION DURING
NAME OF DIRECTOR AGE A DIRECTOR THE PAST FIVE YEARS
- --------------------------- --- ------------------ ----------------------------------------------
<S> <C> <C> <C>
Betsy R. Gidwitz........... 55 1995 Dr. Gidwitz was formerly a faculty member at
the Massachusetts Institute of Technology.
Ronald J. Gidwitz.......... 50 1974 Mr. Gidwitz is President and Chief Executive
Officer of the Company. Mr. Gidwitz is a
director of Continental Materials
Corporation, a director of American National
Can Company and he is the Chairman of the
Board of Trustees of the City Colleges of
Chicago. He is the son of Gerald S. Gidwitz.
John C. Stetson............ 74 1982 Mr. Stetson is President of J.C. Stetson,
Inc., a private venture capital firm. Mr.
Stetson was Secretary of the Air Force from
1977 to 1979 and prior to his government
assignment, was President of AB Dick
Company. Mr. Stetson is also a director of
Laser Technology, Inc., NIBCO, Inc., Chicago
Tube and Iron Company and Madison-Kipp
Corporation, and a director emeritus of
Kemper Corporation and Kemper National
Insurance Co.
Abbie J. Smith............. 42 1990 Dr. Smith is Professor of Accounting at the
Graduate School of Business of the
University of Chicago, a position she has
held since 1989. She was previously
Associate Professor of Accounting at the
University.
Gilbert P. Smith........... 58 1989 Mr. Smith is Executive Vice President of the
Company and President of the Company's North
American business unit. He has been employed
by the Company for more than 15 years.
</TABLE>
Each of the directors has been engaged in the principal occupation(s)
described above during the past five (5) years. Ronald J. Gidwitz is the son of
Gerald S. Gidwitz. Betsy R. Gidwitz is the niece of Gerald S. Gidwitz.
INFORMATION CONCERNING THE BOARD OF DIRECTORS
During fiscal 1995, there were seven meetings of the Board. The Board has
Audit, Executive, and Compensation and Stock Option Committees. The Board does
not have a standing nominating committee, but acts as a whole with respect to
nominees for the Board. Each director, except for John C. Stetson, was present
at more than seventy-five percent of the aggregate number of Board meetings and
the total number of meetings held by committees of the Board on which such
director served.
I-4
<PAGE>
The Audit Committee, consisting of Messrs. Burman and Stetson and Dr. Smith,
met four times during the fiscal year ended February 28, 1995. The function of
the Audit Committee is to review and make recommendations regarding: engagement
of an independent public accounting firm; the scope of the independent
accountants' audit procedures; the adequacy and implementation of internal audit
controls; regulatory compliance procedures; and such other matters relating to
the Company's financial affairs and accounts as the Audit Committee deems
desirable.
The Executive Committee, consisting of Messrs. Gerald S. Gidwitz, Joseph L.
Gidwitz and Ronald J. Gidwitz, met three times during the fiscal year ended
February 28, 1995. The Executive Committee, during the interval between meetings
of the Board of Directors, may exercise all of the authority of the Board in the
management of the Company, except as otherwise provided in the Company's By-Laws
or by applicable law. It is also responsible for administering the Directors
Stock Option Plan. No director was elected to the Executive Committee to succeed
Joseph L. Gidwitz after his death in August 1995.
The Compensation and Stock Option Committee, consisting of Messrs. Burman,
Considine and Stetson, is responsible for determining salary and other
compensation of the principal officers of the Company and for administering
certain of the Company's incentive plans including the Company's executive
management incentive, stock option and stock appreciation right plans. The
Committee met four times during the fiscal year ended February 28, 1995.
Directors who are not Company employees receive an annual fee of $14,000 and
a fee of $2,000 for each Board meeting attended and $1,000 for each committee
meeting attended, plus travel expenses. In addition, each non-employee director
is a participant in the Company's Directors Stock Option Plan, which was
approved by the stockholders at the 1988 Annual Meeting. Under this Plan, each
such director at the time of the Plan's adoption or who was subsequently elected
to the Board was granted an option to purchase 8,000 Shares, exercisable in five
equal annual installments commencing one year after the date of grant. The
exercise price for such options is the fair market value of the Shares on the
date of grant. All options expire ten years from the date of grant or earlier in
the event a director ceases to serve in that capacity or becomes an employee of
the Company.
I-5
<PAGE>
EXECUTIVE OFFICERS OF THE COMPANY
The following provides certain information regarding the executive officers
of the Company, who are appointed by the Board:
<TABLE><CAPTION>
TITLE NAME AGE
- ------------------------------------------------------- ----------------------------- ---
<S> <C> <C>
Chairman of the Board.................................. Gerald S. Gidwitz 89
President and Chief Executive Officer.................. Ronald J. Gidwitz 50
Executive Vice President and Chief Operating Officer... Michael Goldman 58
Executive Vice President............................... Gilbert P. Smith 58
Senior Vice President.................................. Charles G. Cooper 67
Senior Vice President.................................. Robert K. Niles 50
Senior Vice President.................................. Eugene Zeffren 54
Vice President and Chief Information Officer........... Thomas J. Gildea 52
Vice President and Chief Financial Officer............. Lawrence A. Gyenes 45
Vice President......................................... V. James Marino 45
Vice President and Corporate Controller................ Mary J. Oyer 46
Vice President......................................... Robert Sack 59
Vice President, Secretary and General Counsel.......... Roy A. Wentz 46
Treasurer.............................................. Arthur A. Schneider 49
Foreign-Based Officers:
President, Helene Curtis Ltd. (Canada) and Vice
President of the Company............................... Jack D. Pogue 62
President and Managing Director,
Helene Curtis United Kingdom and Vice President of
the Company............................................ Robert G. Kelly 52
</TABLE>
Ronald J. Gidwitz is the son of Gerald S. Gidwitz.
All executives have served in the capacities shown for the last five years
except as follows: Charles G. Cooper, Michael Goldman, Robert G. Kelly, V. James
Marino, Mary J. Oyer, Jack D. Pogue, Arthur A. Schneider, Gilbert P. Smith, Roy
A. Wentz and Eugene Zeffren, all of whom have been employed by the Company in
other executive capacities for at least five years and were elected to the
positions shown during this five-year period. Prior to joining the Company in
1991, Robert K. Niles served in various capacities for The Quaker Oats Company,
most recently as Vice President, Human Resources for its Breakfast Division.
Prior to joining the Company in 1994, Lawrence A. Gyenes served in various
capacities for G.D. Searle & Co., most recently as Corporate Vice President of
Finance.
I-6
<PAGE>
EXECUTIVE OFFICER COMPENSATION
The following tables and notes present the compensation provided by the
Company during fiscal 1995 to its Chief Executive Officer and the Company's four
next most highly compensated executive officers who served as executive officers
at the end of fiscal 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
---------------------------------------
AWARDS PAYOUTS
ANNUAL COMPENSATION ------------------------- ---------
--------------------------------------- SECURITIES LONG-
OTHER RESTRICTED UNDERLYING TERM
ANNUAL STOCK OPTIONS/ INCENTIVE ALL OTHER
NAME/PRINCIPAL SALARY(7) BONUS COMPENSATION(2) AWARDS SARS(8) PAYOUTS COMPENSATION(4)
POSITION/YEAR(1) $ $ $ $ # $ $
- -------------------- --------- -------- --------------- ---------- ---------- --------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Ronald J. Gidwitz
President and Chief
Executive Officer
1995............... $ 750,750 $320,750 -- $ 0 126,906(3) $ 0 $ 67,965
1994............... 715,000 0 -- 0 0 0 123,268
1993............... 575,000 366,300 -- 0 21,100(3) 526,500(5) 97,564
Charles G. Cooper
Senior Vice
President
1995............... $ 357,000 $ 0(6) -- $ 0 38,993 $ 0 $ 41,856
1994............... 347,000 0 -- 0 0 0 86,789
1993............... 415,000 257,000 -- 0 15,300 415,350(5) 81,925
Michael Goldman
Executive Vice
President and Chief
Operating Officer
1995............... $ 412,500 $227,700 -- $ 0 63,643 $ 0 $ 41,506
1994............... 371,000 0 -- 0 0 0 69,557
1993............... 310,000 178,400 -- 0 8,900 310,050(5) 58,075
Gilbert P. Smith
Executive Vice
President
1995............... $ 378,000 $209,600 -- $ 0 41,287 $ 0 $ 39,601
1994............... 357,000 0 -- 832,500(9) 0 0 69,723
1993............... 310,000 180,900 -- 0 8,900 310,050(5) 59,318
Eugene Zeffren
Senior Vice
President
1995............... $ 258,300 $138,100 -- $ 0 23,292 $ 0 $ 26,599
1994............... 246,000 0 -- 416,250(10) 0 0 48,856
1993............... 230,000 123,100 -- 0 6,600 238,095(5) 38,807
</TABLE>
- ------------
(1) All information is provided for each of the last three fiscal years ending
on the last day of February for the year indicated.
(2) The only type of Other Annual Compensation for each of the named officers
was in the form of perquisites, and was less than the level required for
reporting.
(3) Includes stock appreciation rights issued in tandem with grant of stock
options, as well as grants of free-standing stock appreciation rights.
(4) Consists of the following: (a) contributions by the Company to the
executives' accounts under the Company's Profit Sharing Retirement Savings
and Supplemental Profit Sharing and Retirement Savings Plans and (b)
premiums paid pursuant to the Company's Executive Death Benefit Agreement.
The values for each of the two component amounts for fiscal 1995 for each
executive officer are as follows: Mr. Gidwitz, (a) $65,080 and (b) $2,885;
Mr. Cooper, (a) $31,642 and (b) $10,214; Mr. Goldman, (a) $36,326 and (b)
$5,180; Mr. Smith, (a) $33,425 and (b) $6,176; and Mr. Zeffren, (a) $23,260
and (b) $3,339.
(5) Stockholder Value Creation Plan award granted in 1991 and earned over the
three-year performance period from fiscal 1991 through fiscal 1993. Awards
under the Stockholder Value Creation Plan were discontinued in 1994.
(6) Mr. Cooper's bonus is contingent on his achievement of certain long-term
objectives related to business development, rather than on the Company's
annual pre-tax earnings performance.
(Footnotes continued on following page)
I-7
<PAGE>
(Footnotes continued from preceding page)
(7) The salaries for each of the named executive officers for the 1996 fiscal
year were the following: $815,000, $357,000, $454,000, $416,000, $300,000,
respectively.
(8) Each of the named executive officers received the following SAR awards on
March 1, 1995: 31,785, 15,114, 17,464, 16,003, 10,936, respectively. Mr.
Goldman was granted 30,000 shares of restricted stock on May 1, 1995.
(9) Net value of 20,000 shares of restricted stock based on the market price of
the Shares on the date granted. As of February 28, 1995, Mr. Smith held
16,000 restricted shares with a value of $464,000 based on the market price
on that date. Mr. Smith has the right to receive dividends on the
restricted shares.
(10) Net value of 10,000 shares of restricted stock based on the market price of
the Shares on the date granted. As of February 28, 1995, Mr. Zeffren held
8,000 shares of restricted stock with a value of $232,000 based on the
market price on that date. Mr. Zeffren has the right to receive dividends
on the restricted shares.
OPTION/SAR GRANTS IN THE 1995 FISCAL YEAR
The following table sets forth certain information with respect to stock
options and stock appreciation rights granted during the 1995 fiscal year to the
executive officers named in the Summary Compensation Table. Using a range of 0%
to 10% in assumed rates of stock price appreciation (compounded annually) for
the option or SAR term indicated, the table also shows the potential realizable
value of the stock options and stock appreciation rights.
<TABLE><CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS/SARS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION/SAR TERM(3)
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION ---------------------------
NAME GRANTED(1)(2) FISCAL YEAR ($/SH) DATE 0% 5% 10%
- -------------------------- ------------ ------------ ----------- ---------- --- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Ronald J. Gidwitz......... 39,039 7.3 $27.375 3/14/04 $0 $672,095 $1,703,221
30,381 5.7 30.625 2/13/05 0 585,135 1,482,847
57,486 35.9 25.250 2/28/99 0 401,028 886,168
Charles G. Cooper......... 14,280 2.7 $27.375 3/14/04 0 $245,844 $ 623,018
11,113 2.1 30.625 2/13/05 0 214,035 542,407
13,600 8.5 25.250 2/28/99 0 94,875 209,649
Michael Goldman........... 21,450 4.0 $27.375 3/14/04 0 $369,283 $ 935,836
16,693 3.1 30.625 2/13/05 0 321,505 814,758
25,500 15.9 25.250 2/28/99 0 177,891 393,092
Gilbert P. Smith.......... 15,120 2.8 $27.375 3/14/04 0 $260,306 $ 659,666
11,767 2.2 30.625 2/13/05 0 226,631 574,328
14,400 9.0 25.250 2/28/99 0 100,456 221,981
Eugene Zeffren............ 10,332 1.9 $27.375 3/14/04 0 $177,875 $ 450,772
8,040 1.5 30.625 2/13/05 0 154,849 392,419
4,920 3.1 25.250 2/28/99 0 34,322 75,844
</TABLE>
- ------------
(1) In fiscal 1995, the Company made two grants of stock options under the 1992
Stock Option Plan (with exercise prices of $27.375 and $30.625) and one
stock appreciation rights grant under the 1994 Stock Appreciation Right Plan
(with an exercise price of $25.25) to the named executives. The stock
options expire ten years from the date of grant, vest in four annual
installments beginning one year after the date of grant and have an exercise
price equal to the fair market value of the Shares on the date of grant.
Options granted to Mr. Gidwitz were granted in tandem with stock
appreciation rights. The free-standing stock appreciation rights granted to
each of the named executives are exercisable for cash only, expire five
years from the date of grant, vest in four annual installments beginning one
year after the date of grant and have an exercise price equal to the fair
market value of the Shares on the date of grant.
(2) Each of the named executive officers received the following SAR awards on
March 1, 1995: 31,785, 15,114, 17,464, 16,003, 10,936, respectively.
(3) The values in these columns are the result of calculations required by the
Securities and Exchange Commission rules, and, therefore, are not intended
to forecast possible future appreciation of the stock price.
I-8
<PAGE>
AGGREGATE OPTION/SAR EXERCISES IN 1995 FISCAL YEAR AND 1995 FISCAL YEAR-END
OPTION/SAR VALUES
The following table sets forth the number of Shares for which stock options
were exercised during the 1995 fiscal year, the value realized, the number of
Shares for which options were outstanding and the value of those options as of
the 1995 fiscal year-end.
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
SECURITIES IN-THE-MONEY
UNDERLYING OPTIONS/SARS
OPTIONS/SARS AT FY-END
AT FY-END (#) ($)
-------------- ----------
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) REALIZED $ UNEXERCISABLE UNEXERCISABLE(*)
- -------------------------------------- --------------- ---------- -------------- ----------
<S> <C> <C> <C> <C>
Ronald J. Gidwitz..................... 15,600 $ 19,500 27,650/143,156 $0/279,011
Charles G. Cooper..................... 853 1,066 20,100/ 50,793 0/ 74,205
Michael Goldman....................... 7,200 9,000 11,650/ 70,493 0/130,481
Gilbert P. Smith...................... 0 0 11,650/ 48,137 0/ 78,570
Eugene Zeffren........................ 0 0 8,700/ 28,392 0/ 35,240
</TABLE>
- ------------
(*) These columns represent the difference between the market price of the
Shares on February 28, 1995 and the exercise prices of the individual stock
options and appreciation rights. The exercise price of all exercisable
options exceeded the market price of the Shares on February 28, 1995, and
therefore the options had no value.
EXECUTIVE PENSION BENEFITS
The table shown below identifies estimated benefits which would be payable
annually at age 65 under a straight life annuity option:
PENSION PLAN TABLE
<TABLE><CAPTION>
YEARS OF SERVICE
--------------------------------------------------------
REMUNERATION 15 20 25 30 35
- --------------------------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$200,000............................... $ 40,020 $ 53,360 $ 66,700 $ 80,040 $ 93,380
250,000............................... 50,025 66,700 83,375 100,050 116,725
300,000............................... 60,030 80,040 100,050 120,060 140,070
350,000............................... 70,035 93,380 116,725 140,070 163,415
400,000............................... 80,040 106,720 133,400 160,080 186,760
450,000............................... 90,045 120,060 150,075 180,090 210,105
500,000............................... 100,050 133,400 166,750 200,100 233,450
550,000............................... 110,055 146,740 183,425 220,110 256,795
600,000............................... 120,060 160,080 200,100 240,120 280,140
650,000............................... 130,065 173,420 216,775 260,130 303,485
</TABLE>
Benefits are payable under the Executive Pension Plan to executive officers
who are employed by the Company or its subsidiaries for 10 or more years who
retire at age 65 or over, with partial benefits available upon early retirement
for service of between 15 and 35 years. Pension benefits are determined by the
average of each executive officer's highest consecutive five years' salaries
over the last ten years, excluding bonuses, insurance premiums which constitute
taxable income for federal income tax purposes and deferred compensation. As of
February 16, 1996, the executive officers named in the Summary Compensation
Table have the following years of credited service for pension plan purposes:
Charles G. Cooper, 42 years; Ronald J. Gidwitz, 28 years; Michael Goldman, 33
years; Gilbert P. Smith, 20 years; and Eugene Zeffren, 16 years. Benefits under
the plan are not subject to deduction for
I-9
<PAGE>
Social Security, but are offset for certain amounts payable under the Company's
Profit Sharing and Retirement Savings Plan and a former plan which was
terminated as to future contributions.
PRINCIPAL SECURITY HOLDERS
COMMON STOCK. The following table sets forth the only persons known by the
Company to be the beneficial owners of more than 5% of the Shares as of the
dates indicated based solely on filings made with the Securities and Exchange
Commission:
<TABLE><CAPTION>
SHARES
BENEFICIALLY OWNED
NAME AND ADDRESS OF ---------------------------
BENEFICIAL OWNER NUMBER PERCENT OF CLASS
- -------------------------------------------------------------------- ------- ----------------
<S> <C> <C>
Southeastern Asset Management, Inc.(1).............................. 531,000 7.8%
6075 Poplar Ave., Suite 900
Memphis, TN 38119
Shamrock Holdings of California, Inc.(2)............................ 514,600 7.6
4444 Lakeside Drive
P.O. Box 7774
Burbank, CA 91510
</TABLE>
- ------------
(1) Information indicated is based entirely on Amendment Number 2 to Schedule
13D filed by Southeastern Asset Management, Inc. on or about February 6,
1996. Southeastern Asset Management, Inc. has shared voting and shared
dispositive power with respect to 197,000 shares, sole voting power with
respect to 310,000 shares, no voting power with respect to 24,000 shares and
sole dispositive power with respect to 334,000 shares.
(2) Information indicated is based entirely on Amendment Number 2 to Schedule
13D filed by Shamrock Holdings of California, Inc. on December 15, 1994.
Shamrock Holdings of California, Inc. has sole voting and dispositive power
with respect to 514,600 shares.
CLASS B COMMON STOCK. The following table sets forth the only persons known
by the Board to be the beneficial owners of more than 5% of the Company's Class
B Common Stock as of May 3, 1995:
<TABLE><CAPTION>
CLASS B COMMON SHARES
BENEFICIALLY OWNED
AS OF MAY 3, 1995
NAME AND ADDRESS OF -----------------------------
BENEFICIAL OWNER NUMBER PERCENT OF CLASS
- ------------------------------------------------------------------ --------- ----------------
<S> <C> <C>
Gidwitz Family Group*............................................. 3,017,567 98.9%
325 N. Wells St.
Chicago, Illinois 60610
</TABLE>
- ------------
* The Gidwitz Family Group consists of (i) Gerald S. Gidwitz, his children,
their spouses, his grandchildren and various trusts, partnerships and other
entities holding shares for the benefit of members of the Gerald S. Gidwitz
Family, and (ii) the children of Joseph L. Gidwitz, their spouses, their
children and various trusts, partnerships and other entities holding shares
for the benefit of members of the Joseph L. Gidwitz Family. The Gidwitz Family
Group has shared voting and shared dispositive power with respect to all
reported shares which are held of record as follows:
(a) 2,087,397 shares are owned of record by the Gidwitz Family
Partnership, an Illinois general partnership. Certain members of the Gidwitz
Family Group contributed these shares to the partnership in 1991 in exchange
for a pro rata interest in the partnership. Under the terms of the
partnership agreement, five partners are designated as managing partners,
and, by their majority vote, have the dispositive and voting rights to such
shares. Two of the managing partners, Gerald S. Gidwitz and Ronald J.
Gidwitz, who own interests in the partnership of 5.8% and 15.1%,
respectively, are directors of the Company.
(b) 569,909 shares are owned of record by HCI Partnership, an Illinois
general partnership. Certain members of the Gidwitz Family Group contributed
these shares to the partnership in 1988 and 1991 in exchange for a pro rata
share interest in the partnership. Management of the
(Footnotes continued on following page)
I-10
<PAGE>
(Footnotes continued from preceding page)
partnership is identical to that of the Gidwitz Family Partnership. Gerald
S. Gidwitz and Ronald J. Gidwitz own interests in the partnership of .04%
and 12.2%, respectively.
(c) 181,133 shares are owned by various trusts for the benefit of the
children and grandchildren of Gerald S. Gidwitz and Joseph L. Gidwitz.
(d) 120,000 shares are owned of record and beneficially by Ronald J.
Gidwitz, which shares are set forth under "Security Ownership of
Management."
(e) 59,128 shares are owned by family members of Gerald S. Gidwitz and
Joseph L. Gidwitz.
The Gidwitz Family Group may cast 81% of the total votes represented by all
the outstanding Shares and Class B Common Stock as of May 3, 1995. Betsy R.
Gidwitz owns 7.26% and 36.05% of the Gidwitz Family Partnership and the HCI
Partnership, respectively, and is a beneficiary of trusts holding 35,500 shares
of Class B Common Stock as of February 16, 1996.
Members of the Gidwitz Family Group own 84,611 Shares, including the Shares
set forth under "Security Ownership of Management". Assuming that all Class B
Common Stock owned by the Gidwitz Family Group was converted to Shares and that
no other Class B Common Stock was so converted, the percentage ownership of
Shares by the Gidwitz Family Group would be 31.46%.
SECURITY OWNERSHIP OF MANAGEMENT
As set forth under "Principal Security Holders", as of May 3, 1995, the
Gidwitz Family Group, which includes partnerships of, and trusts for the benefit
of, Gerald S. Gidwitz, Joseph L. Gidwitz and members of their respective
families, including Ronald J. Gidwitz, owned an aggregate of 3,017,567 shares of
Class B Common Stock. The following table excludes the shares held by such
partnerships and trusts as well as shares allocated to each individual's account
pursuant to the Company's Employee Stock Ownership and Employee Stock Purchase
Plans, but otherwise shows the shares held beneficially at that date by each
director, by the named executive officers, and by all directors and executive
officers as a group.
<TABLE>
<CAPTION>
SHARES OF
COMPANY SHARES OF
COMMON PERCENT OF CLASS B PERCENT
NAME STOCK* CLASS (1) COMMON STOCK OF CLASS
- -------------------------------------------- --------- ---------- ------------ --------
<S> <C> <C> <C> <C>
Marshall L. Burman.......................... 7,200(2) -- -- --
Frank W. Considine.......................... 400(2) -- -- --
Charles G. Cooper........................... 72,575(3) 1.06% -- --
Gerald S. Gidwitz........................... -- -- -- (4) --
Joseph L. Gidwitz........................... -- (6) -- -- (4)(5) --
Ronald J. Gidwitz........................... 25,551(7) -- 120,000(4) 3.93%
Michael Goldman............................. 52,962(8) -- -- --
Abbie J. Smith.............................. 500(9) -- -- --
Gilbert P. Smith............................ 49,233(10) -- -- --
John C. Stetson............................. 2,000(2) -- -- --
Eugene Zeffren.............................. 37,252(11) -- -- --
All executive officers and directors as a
group (20 persons)........................ 357,412(12)(13) 5.22% 120,000 3.93%
</TABLE>
- ------------
* The beneficial ownership (including percent of class) shown in the table with
respect to Company Common Stock does not reflect the shares of Company Common
Stock that could be acquired upon the conversion of shares of Class B Common
Stock into shares of Company Common Stock.
(Footnotes continued on following page)
I-11
<PAGE>
(Footnotes continued from preceding page)
(1) The shares owned, in each case except as otherwise indicated, constitute
less than 1% of the outstanding shares of the Company Common Stock.
(2) Excludes 16,000 shares acquirable as of May 3, 1995 pursuant to options
granted under the Company's Directors Stock Option Plan, as adjusted for a
stock split in 1989.
(3) Excludes 20,888 shares acquirable by Mr. Cooper as of May 3, 1995 pursuant
to options granted under the Company's 1983 and 1992 Stock Option Plans.
(4) Excludes shares attributable to ownership interest in the Gidwitz Family
Partnership and the HCI Partnership as set forth in "Principal Security
Holders".
(5) Excludes 37,732 shares held as trustee for the benefit of Mr. Gidwitz's
children and grandchildren.
(6) Excludes 34,211 shares held as trustee for the benefit of Mr. Gidwitz's
children and grandchildren. Mr. Gidwitz passed away in August 1995.
(7) Excludes 43,110 shares acquirable as of May 3, 1995 by Mr. Gidwitz pursuant
to options granted under the Company's 1983 and 1992 Stock Options Plans.
(8) Excludes 19,413 shares acquirable by Mr. Goldman as of May 3, 1995 pursuant
to options granted under the Company's 1983 and 1992 Stock Option Plans and
30,000 shares of restricted Company Common Stock issued under the 1992
Stock Option Plan which were restricted as of May 3, 1995 in compliance
with that plan.
(9) Excludes 8,000 shares acquirable as of May 3, 1995 pursuant to options
granted under the Company's Directors Stock Option Plan.
(10) Excludes 17,830 shares acquirable as of May 3, 1995 by Mr. Smith pursuant
to options granted under the Company's 1983 and 1992 Stock Option Plans and
12,000 shares of restricted Company Common Stock issued under the 1992
Stock Option Plan which were restricted as of May 3, 1995 in compliance
with that plan.
(11) Excludes 13,083 shares acquirable as of May 3, 1995 by Mr. Zeffren pursuant
to options granted under the Company's 1983 and 1992 Stock Plans and 6,000
shares of restricted Common Stock issued under the 1992 Stock Option Plan
which were restricted as of May 3, 1995 in compliance with that plan.
(12) Excludes 651 and 3,022 shares credited to all members of the group under
the Company's Employee Stock Ownership and Employee Stock Purchase Plans,
respectively, 242,110 shares acquirable as of May 3, 1995 by members of the
group pursuant to options granted under the Company's 1983, 1991 and 1992
Stock Option Plans and 48,000 shares of restricted Company Common Stock
issued under the 1992 Stock Option Plan which remain restricted in
compliance with that plan.
(13) Excludes Betsy R. Gidwitz, who succeeded Joseph L. Gidwitz as director
after his death in August 1995, and shares attributable to her ownership
interests in the Gidwitz Family Partnership and the HCI Partnership.
CHANGE OF CONTROL PROVISIONS OF STOCK OPTION PLANS AND STOCK APPRECIATION RIGHT
PLAN
The Company's 1983 Stock Option Plan, as amended, Directors Stock Option
Plan, the 1991 Stock Option Plan, 1992 Stock Option Plan and the All-Employee
Stock Option Program contain provisions providing that if the Company shall be a
party to a transaction involving a sale of substantially all its assets, merger
or a consolidation, any stock option granted thereunder shall pertain to and
apply to the securities to which a holder of the number of Shares subject to
such stock option would have been entitled if such holder actually owned the
stock subject to such stock option immediately prior to the time any such
transaction became effective; provided, however, that all unexercised stock
options under such plans may be cancelled by the Company as of the effective
date of any such transaction, by giving notice to the holders thereof of its
intention to do so and by permitting the exercise of stock options with respect
to all Shares covered thereby, whether or not, by its terms such stock option is
then exercisable and without regard to any installment exercise provisions
therein or in such plans. Under the Company's 1994 Stock Appreciation Right
Plan, in the case of any of the above-referenced transaction, any SAR may be
cancelled by the Company as of the effective date of any such transaction, by
giving 30 days prior written notice to the holders thereof and allowing such
holders to exercise all SARs whether or not such SARs are then exercisable by
their terms and without regard to any installment exercise provisions in such
plan.
I-12
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION*
The Compensation and Stock Option Committee (the "Committee") of the Board
of Directors, is composed of three directors of the Company who are not current
or former employees or officers of the Company and are "disinterested persons"
within the meaning of the Securities and Exchange Commission rules. The
Committee is generally responsible for administering the Company's executive
compensation programs. In particular, the Committee reviews and approves the
compensation of the Company's most highly compensated executives, including the
named executive officers whose compensation is detailed in this Proxy Statement.
Compensation Philosophy
The Company's executive compensation program is intended to attract,
develop, reward and retain the highest quality management talent. It is the
philosophy of the Company that executive compensation should recognize an
individual's contribution to the Company and be competitive with compensation
offered by other major consumer packaged goods companies. At the same time, the
Company believes that executive compensation should also be closely linked to
the Company's financial performance. Accordingly, a significant portion of each
executive's total compensation is dependent upon achieving objective,
pre-determined financial goals. Therefore, in years in which these performance
goals are achieved or exceeded, executive compensation will be higher than in
years in which the performance is below expectations. In fiscal 1995, almost 30%
of total cash compensation (consisting of salary and bonus) of the named
executive officers was contingent on achieving corporate performance goals. In
addition, to further align executive compensation program utilizes awards of
stock options and stock appreciation rights tied to increases in stockholder
value.
Compensation Components
Working with outside consultants on a biennial basis and with the Company's
Human Resources Department, the Committee conducts comprehensive annual
evaluations of the Company's executive compensation program. The components of
the Company's executive compensation program are as follows: base salary, annual
incentive cash bonuses and awards of stock options, stock appreciation rights
and restricted stock.
Base Salary. The Committee establishes annually the base salaries to be paid
to the Company's executive officers for the coming fiscal year. In setting each
salary, the Committee takes into account several factors, including competitive
compensation data and qualitative factors such as an individual's experience,
responsibilities, management and leadership abilities and job performance in the
prior year. In evaluating competitive data, the Committee generally strives to
set salaries competitive with other consumer packaged goods companies, including
many of the companies contained in the peer group used for the performance graph
in this Proxy Statement.
Annual Incentive Program. Each year, the Committee establishes minimum
performance thresholds under the Executive Incentive Plan for key executives,
including most of the named executive officers, for any bonuses to be paid.
Based on the participant's salary range, this program provides for target
bonuses for executive officers, excluding the Chief Executive Officer, of
approximately 45% to 63%of base salary based on the attainment of annual
corporate performance goals (55% to 82% of bonus) and individual goals and
objectives (18% to 45% of bonus). The individual's personal contribution to the
achievement of corporate financial goals is assessed in determining the
individual's bonus range. The Company achieved its internal pre-tax earnings
target for the fiscal year ending February 28, 1995. At last year's Annual
Meeting, the stockholders approved the Executive Management
- ------------
* This report of the Compensation and Stock Option Committee of the Board of
Directors appeared in the Proxy Statement for the Company's Annual Meeting of
Stockholders held on June 27, 1995.
I-13
<PAGE>
Incentive Plan. The Executive Management Incentive Plan is substantially similar
to the Executive Incentive Plan except that it complies with Section 162(m) of
the Internal Revenue Code of 1986, as amended, and the proposed regulations
thereunder. The Executive Management Incentive Plan was adopted to preserve the
Company's tax deduction for annual bonus compensation paid to an individual in
excess of $1 million. The maximum bonus payable under the Executive Management
Incentive Plan in any fiscal year is $1.3 million. Currently, the only
participant under the Executive Management Incentive Plan is Mr. Gidwitz, whose
compensation is discussed later in this report.
Stock Options, Stock Appreciation Rights and Restricted Stock. Stock
options, stock appreciation rights and restricted stock awards are focused to
encourage outstanding future performance over a longer term than the annual
incentive program. Therefore, stock options, appreciation rights and restricted
stock awards become exercisable or vest based on continued employment with the
Company and, in the case of stock options and appreciation rights, generally
remain exercisable for a period of ten years and five years, respectively. The
Committee believes such awards are a key long-term incentive vehicle because
they provide executives with the opportunity to share in the appreciation of the
value of its Common Stock, and in the case of stock options and restricted
stock, to acquire an equity interest in the Company. These awards, therefore,
directly align the executive's interest with those of the stockholders.
In making stock option and appreciation right grants, the Committee reviews
alternative exercise pricing formulas and other methods for correlating the
exercise price of options and appreciation rights to Company performance.
Generally, stock options and appreciation rights are not fully exercisable until
four years following the date of grant to reinforce a long-term perspective and
to help retain valued executives. Further, stock options and appreciation rights
are granted at the fair market value of the Company's Common Stock on the date
of grant. Therefore, the Company's Common Stock must increase in value in order
for the executive to realize any benefit from the option or appreciation right.
In determining the number of stock options or appreciation rights to be awarded
to each individual, the Committee has utilized a formula based on a percentage
of the executive's base salary, taking into account the executive's level of
management responsibility and potential impact on the Company's profitability
and growth. Restricted stock awards are made in special limited circumstances,
primarily as a retention and performance incentive or as a recognition of
substantially increased executive responsibilities.
Stock options and appreciation rights are granted to executive officers
(including the named executive officers) by the Committee generally every 12
months and to other key managers every 18 months. During the fiscal year ended
February 28, 1995, stock options and appreciation rights were granted to the
named executive officers and other key management employees at an exercise price
equal to fair market value of the Company's stock on the date of grant. No
restricted stock awards were made during the 1995 fiscal year.
Tax Deduction of Executive Compensation
As part of the Omnibus Budget Reconciliation Act passed by Congress in 1993,
Section 162 (m) of the Internal Revenue Code of 1986, as amended, was
implemented to limit deductibility of compensation to the chief executive
officer and the next four most highly compensated executive officers. The limit
generally disallows a deduction to the Company for any compensation to these
officers in excess of $1,000,000 per year. The $1,000,000 limit on deductible
compensation does not, however, apply to certain performance-based pay that
meets the requirements of Section 162 (m) and the proposed regulations
thereunder. The Company has taken the necessary actions to preserve the
deductibility of payments made under performance-based plans based on the
proposed regulations issued by the Internal Revenue Service. When final
regulations are issued, further changes may be made to the executive
compensation program to the extent necessary and feasible in order to maintain
the deductibility of payments under performance-based plans.
I-14
<PAGE>
Chief Executive Officer Compensation
In determining the base salary for Ronald J. Gidwitz for the prior fiscal
year commencing March 1, 1994, the Committee considered the vase salaries of
chief executive officers of peer group companies within the consumer packaged
goods industry and Mr. Gidwitz's leadership and job performance. In evaluating
the Company's performance, the Committee considered numerous financial criteria
and ratios without assigning any precise weight to any of these factors. The
Committee also took into consideration the fact that the Company did not achieve
its targeted pre-tax earnings objective for the fiscal year ending February 28,
1994. Based on this review, Mr. Gidwitz's base salary was set at an annual rate
of $750,750 commencing on March 1, 1994, representing a 5% increase over his
salary for fiscal 1993.
After review of the Company's fiscal 1995 performance and the individual
objectives established under the Executive Management Incentive Plan for Mr.
Gidwitz at the beginning of the fiscal year, the Committee certified that the
Company met its internal financial objectives for fiscal 1995 (55.5% of his
bonus) and that Mr. Gidwitz accomplished 40% of his personal objectives (44.5%
of his bonus). As a result, Mr. Gidwitz earned a bonus of $320,750 in accordance
with the formula set forth in the Executive Management Incentive Plan, in
contrast to fiscal 1994 in which Mr. Gidwitz earned no bonus award due to the
Company's failure to achieve its threshold internal financial goals.
Accordingly, nearly 30% of Mr. Gidwitz's total cash compensation of $1,071,500
(consisting of salary and bonus) for fiscal 1995 was related to the Company's
fiscal 1995 performance. As of May 3, 1995, Mr Gidwitz held options to purchase
a total of 113,320 shares of Common Stock and 89,271 free-standing stock
appreciation rights and owned beneficially 25,551 shares of Common Stock and
120,00 shares of Class B Common Stock.
Conclusion
The Committee believes that the Company's policies and programs will be
effective over a period of years in achieving its goals of competitive executive
compensation and maximizing the return to shareholders.
Marshall L. Burman
Frank W. Considine
John C. Stetson
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Burman is of counsel to Wildman, Harrold, Allen & Dixon. During the 1995
fiscal year the firm rendered legal services to the Company.
I-15
<PAGE>
COMMON STOCK PERFORMANCE
The following graphs compare over the five year period ending February 28,
1995, the annual percentage change in the cumulative total returns on the
Shares, the S&P 500 Index, and a peer group of 10 major U.S. consumer packaged
goods companies selected by the Company. The peer group consists of
Alberto-Culver Company, Avon Products, Inc., Bristol-Myers Squibb Company,
Carter Wallace, Inc., Colgate-Palmolive Company, The Dial Corp., The Dow
Chemical Company, The Gillette Company, Johnson & Johnson and the Procter &
Gamble Company. For the purpose of calculating the peer group average, the
returns of each company have been weighted according to its stock market
capitalization as of the beginning of each fiscal year.
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG HELENE CURTIS INDUSTRIES, INC.,
S&P 500 INDEX AND PEER GROUP INDEX
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
Helene Curtis Ind. $100.00 $127.38 $185.10 $207.76 $124.00 $140.79
Peer Group $100.00 $133.39 $161.90 $151.41 $161.36 $195.37
Broad Market $100.00 $114.65 $133.00 $147.19 $159.47 $171.21
TRANSACTIONS WITH AFFILIATED PERSONS
During fiscal 1995, the Company leased office space in its headquarters
building at 325 N. Wells St., Chicago, Illinois, and provided miscellaneous
office supplies to Burnham Realty Company, Continental Materials Corporation and
other entities in which Gerald S. Gidwitz, Joseph L. Gidwitz and/or members of
their families have an interest. The rental amount and other terms and
conditions of the leases were established as fair rental value by an independent
appraiser and were approved by the Company's outside directors. Amounts received
by the Company pursuant to such leases and for miscellaneous supplies during
fiscal 1995 were as follows: Burnham Realty Company $16,802; Continental
Materials Corporation $81,189; and all others $7,389.
During fiscal 1995, McCord Group, Inc. provided certain travel agency
services to the Company. In the opinion of management, these services were
provided at rates equal to or less than those of competitive services. Members
of the families of Gerald S. Gidwitz and Joseph L. Gidwitz own substantially all
the capital stock of McCord Group, Inc. During the fiscal year the Company also
purchased office furniture form Continental Materials Corporation at fair market
value upon termination of its lease for $65,000.
I-16
<PAGE>
EXHIBIT INDEX
-------------
EXHIBIT
NO. DESCRIPTION
1. Agreement and Plan of Merger, dated as of February 13, 1996, among
Conopco, Inc., Conopco Acquisition Company, Inc. and Helene Curtis
Industries, Inc.
2. Stockholder Agreement, dated as of February 13, 1996, among Conopco, Inc.,
Conopco Acquisition Company, Inc., Ronald J. Gidwitz, HCI Partnership and
Gidwitz Family Partnership.
3. Confidentiality Agreement between Helene Curtis Industries, Inc. and
Unilever PLC dated November 30, 1995.
4. Helene Curtis Industries, Inc. Information Statement pursuant to
Section 14(f) of the Securities Exchange Act of 1934 and Rule 14f-1
thereunder.*
5. Press Release of Unilever N.V. and Helene Curtis Industries, Inc. issued
on February 13, 1996.
6. Letter to Stockholders of Helene Curtis Industries, Inc. dated
February 20, 1996.*
7. Opinion of Lazard Freres & Co. LLC.*
- ------------
* Included in copies mailed to stockholders.
Exhibit 1
CONFORMED COPY
=================================================================
AGREEMENT AND PLAN OF MERGER
Among
CONOPCO, INC.,
CONOPCO ACQUISITION COMPANY, INC.,
and
HELENE CURTIS INDUSTRIES, INC.
Dated as of February 13, 1996
=================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
The Offer
---------
SECTION 1.01. The Offer . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.02. Company Actions . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE II
The Merger
----------
SECTION 2.01. The Merger . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.02. Closing . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.03. Effective Time . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.04. Effects of the Merger . . . . . . . . . . . . . . . . . . 6
SECTION 2.05. Certificate of Incorporation and
By-laws . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.06. Directors . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.07. Officers . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE III
Effect of the Merger on the Capital Stock of the
------------------------------------------------
Constituent Corporations; Exchange of Certificates
--------------------------------------------------
SECTION 3.01. Effect on Capital Stock . . . . . . . . . . . . . . . . . 7
(a) Capital Stock of Sub . . . . . . . . . . . . . . . . 7
(b) Cancelation of Treasury Stock and
Parent Owned Stock . . . . . . . . . . . . . . . 7
(c) Conversion of Shares and Class B
Shares . . . . . . . . . . . . . . . . . . . . . 7
(d) Shares of Dissenting Stockholders . . . . . . . . . 7
SECTION 3.02 Exchange of Certificates . . . . . . . . . . . . . . . . 8
(a) Paying Agent . . . . . . . . . . . . . . . . . . . . 8
(b) Exchange Procedure . . . . . . . . . . . . . . . . . 8
(c) No Further Ownership Rights in
Shares or Class B Shares . . . . . . . . . . . . 9
(d) No Liability . . . . . . . . . . . . . . . . . . . . 9
-i-
<PAGE>
Page
----
ARTICLE IV
Representations and Warranties of the Company
---------------------------------------------
SECTION 4.01. Organization . . . . . . . . . . . . . . . . . . . . . 10
SECTION 4.02. Subsidiaries . . . . . . . . . . . . . . . . . . . . . 10
SECTION 4.03. Capitalization . . . . . . . . . . . . . . . . . . . . 10
SECTION 4.04. Authority . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 4.05. Consents and Approvals; No Violations . . . . . . . . . 12
SECTION 4.06. SEC Reports and Financial Statements . . . . . . . . . 13
SECTION 4.07. Absence of Certain Changes or Events . . . . . . . . . 13
SECTION 4.08. No Undisclosed Liabilities . . . . . . . . . . . . . . 14
SECTION 4.09. Information Supplied . . . . . . . . . . . . . . . . . 15
SECTION 4.10. Benefit Plans; Employees and
Employment Practices . . . . . . . . . . . . . . . . 15
SECTION 4.11. Contracts; Indebtedness . . . . . . . . . . . . . . . . 19
SECTION 4.12. Litigation . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 4.13. Compliance with Applicable Law . . . . . . . . . . . . 19
SECTION 4.14. Tax Matters . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 4.15. State Takeover Statutes; Charter
Provisions . . . . . . . . . . . . . . . . . . . . . 22
SECTION 4.16. Environmental Matters . . . . . . . . . . . . . . . . . 23
SECTION 4.17. Intellectual Property . . . . . . . . . . . . . . . . . 24
SECTION 4.18. Brokers; Schedule of Fees and Expenses . . . . . . . . 24
SECTION 4.19. Opinion of financial Advisor . . . . . . . . . . . . . 25
ARTICLE V
Representations and Warranties
------------------------------
of Parent and Sub
-----------------
SECTION 5.01. Organization . . . . . . . . . . . . . . . . . . . . . 25
SECTION 5.02. Authority . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 5.03. Consents and Approvals; No Violations . . . . . . . . . 26
SECTION 5.04. Information Supplied . . . . . . . . . . . . . . . . . 26
SECTION 5.05. Interim Operations of Sub . . . . . . . . . . . . . . . 27
SECTION 5.06. Brokers . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 5.07 Financing . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 5.08. Ownership of Shares . . . . . . . . . . . . . . . . . . 27
-ii-
<PAGE>
Page
----
ARTICLE VI
Covenants
---------
SECTION 6.01. Covenants of the Company . . . . . . . . . . . . . . . 27
(a) Ordinary Course . . . . . . . . . . . . . . . . . 27
(b) Dividends; Changes in Stock . . . . . . . . . . . 28
(c) Issuance of Securities . . . . . . . . . . . . . . 28
(d) Governing Documents . . . . . . . . . . . . . . . 28
(e) No Acquisitions . . . . . . . . . . . . . . . . . 28
(f) No Dispositions . . . . . . . . . . . . . . . . . 29
(g) Indebtedness . . . . . . . . . . . . . . . . . . . 29
(h) Advice of Changes; Filings . . . . . . . . . . . . 29
(i) Tax Matters . . . . . . . . . . . . . . . . . . . 29
(j) Capital Expenditures . . . . . . . . . . . . . . . 30
(k) Discharge of Liabilities . . . . . . . . . . . . . 30
(l) Material Contracts . . . . . . . . . . . . . . . . 30
(m) General . . . . . . . . . . . . . . . . . . . . . 30
SECTION 6.02. No Solicitation . . . . . . . . . . . . . . . . . . . . 30
SECTION 6.03. Other Actions . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE VII
Additional Agreements
---------------------
SECTION 7.01. Stockholder Approval; Preparation of
Proxy Statement . . . . . . . . . . . . . . . . . . 33
SECTION 7.02. Access to Information . . . . . . . . . . . . . . . . . 35
SECTION 7.03. Reasonable Efforts . . . . . . . . . . . . . . . . . . 35
SECTION 7.04. Directors . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 7.05. Fees and Expenses . . . . . . . . . . . . . . . . . . . 37
SECTION 7.06. Indemnification; Insurance . . . . . . . . . . . . . . 38
SECTION 7.07. Employee Benefits . . . . . . . . . . . . . . . . . . . 39
SECTION 7.08. Severance Policy and Other Agreements . . . . . . . . . 40
SECTION 7.09. Stock Options, SARs and Retricted Stock . . . . . . . . 40
SECTION 7.10. Certain Litigation . . . . . . . . . . . . . . . . . . 41
SECTION 7.11. Plans for the Company . . . . . . . . . . . . . . . . . 41
-iii-
<PAGE>
Page
----
ARTICLE VIII
Conditions
----------
SECTION 8.01. Conditions to Each Party's Obligation To
Effect the Merger . . . . . . . . . . . . . . . . . 42
(a) Company Stockholder approval . . . . . . . . . . . 42
(b) No Injunctions or Restraints . . . . . . . . . . . 42
(c) Purchase of Shares . . . . . . . . . . . . . . . . 42
ARTICLE IX
Termination and Amendment
-------------------------
SECTION 9.01. Termination . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 9.02. Effect of Termination . . . . . . . . . . . . . . . . . 44
SECTION 9.03. Amendment . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 9.04. Extension; Waiver . . . . . . . . . . . . . . . . . . . 44
ARTICLE X
Miscellaneous
-------------
SECTION 10.01. Nonsurvival of Representations,
Warranties and Agreements . . . . . . . . . . . . . . 45
SECTION 10.02. Notices . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 10.03. Interpretation . . . . . . . . . . . . . . . . . . . . 46
SECTION 10.04. Counterparts . . . . . . . . . . . . . . . . . . . . . 46
SECTION 10.05. Entire Agreement; No Third Party
Beneficiaries . . . . . . . . . . . . . . . . . . . . 46
SECTION 10.06. Governing Law . . . . . . . . . . . . . . . . . . . . . 47
SECTION 10.07. Publicity . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 10.08. Assignment . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 10.09. Enforcement . . . . . . . . . . . . . . . . . . . . . . 47
-iv-
<PAGE>
AGREEMENT AND PLAN OF MERGER dated as of February 13,
1996, among CONOPCO, INC., a New York corporation
("Parent"), CONOPCO ACQUISITION COMPANY, INC., a Delaware
corporation and a wholly owned subsidiary of Parent ("Sub"),
and HELENE CURTIS INDUSTRIES, INC., a Delaware corporation
(the "Company").
WHEREAS, the respective Boards of Directors of Parent, Sub and
the Company have approved the acquisition of the Company by Parent on the
terms and subject to the conditions set forth in this Agreement;
WHEREAS, in furtherance of such acquisition, Parent proposes to
cause Sub to make a tender offer (as it may be amended from time to time as
permitted under this Agreement, the "Offer") to purchase the shares of
Common Stock, par value $.50 per share, of the Company (the "Company Common
Stock"; the shares of Company Common Stock being hereinafter referred to as
the "Shares") at a purchase price of $70.00 per share (the "Offer Price"),
net to the seller in cash, without interest thereon, upon the terms and
subject to the conditions set forth in this Agreement; and the Board of
Directors of the Company has adopted resolutions approving the Offer and
the Merger (as defined below) and recommending that holders of Shares
accept the Offer and that the Company's stockholders approve and adopt this
Agreement;
WHEREAS, the respective Boards of Directors of Parent, Sub and
the Company have each approved the merger of Sub into the Company (the
"Merger"), upon the terms and subject to the conditions set forth in this
Agreement, whereby each Share and each share of Class B Common Stock, par
value $.50 per share, of the Company (the "Class B Common Stock"; the
shares of Class B Common Stock being hereinafter referred to as the
"Class B Shares"), other than the Shares and Class B Shares owned directly
or indirectly by Parent or the Company and Dissenting Shares (as defined in
Section 3.01(d)), will be converted into the right to receive the price per
share paid in the Offer;
<PAGE>
2
WHEREAS, the Board of Directors of the Company has approved the
terms of the Stockholder Agreement (the "Stockholder Agreement") to be
entered into by Parent, Sub and certain stockholders of the Company
concurrently with the execution of this Agreement as an inducement to
Parent to enter into this Agreement, pursuant to which such stockholders
have, among other things, granted to Sub the right to purchase, and in
certain circumstances Sub has agreed to purchase, such stockholders'
Class B Shares; and
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with
the Offer and the Merger and also to prescribe various conditions to the
Offer and the Merger.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally
bound hereby, Parent, Sub and the Company hereby agree as follows:
ARTICLE I
The Offer
---------
SECTION 1.01. The Offer. (a) Subject to the provisions of this
----------
Agreement, as promptly as practicable but in no event later than five
business days after the date of the public announcement by Parent and the
Company of this Agreement, Sub shall, and Parent shall cause Sub to,
commence the Offer. The obligation of Sub to, and of Parent to cause Sub
to, commence the Offer and accept for payment, and pay for, any Shares
tendered pursuant to the Offer shall be subject only to the conditions set
forth in Exhibit A (the "Offer Conditions") (any of which may be waived in
whole or in part by Sub in its sole discretion, except that, unless a
Takeover Proposal (as defined in Section 6.02(a)) shall have been made
after the date hereof, Sub shall not waive the Minimum Condition (as
defined in Exhibit A) without the consent of the Company). Sub expressly
reserves the right to modify the terms of the Offer, except that, without
the consent of the Company, Sub shall not (i) reduce
<PAGE>
3
the number of Shares subject to the Offer, (ii) reduce the Offer Price,
(iii) add to the Offer Conditions, (iv) except as provided in the next
sentence, extend the Offer, (v) change the form of consideration payable in
the Offer or (vi) amend the Offer Conditions or any other term of the Offer
in any manner adverse to the holders of Shares. Notwithstanding the
foregoing, Sub may, without the consent of the Company, (i) extend the
Offer, if at the scheduled or extended expiration date of the Offer any of
the Offer Conditions shall not be satisfied or waived, until such time as
such conditions are satisfied or waived, (ii) extend the Offer for any
period required by any rule, regulation, interpretation or position of the
Securities and Exchange Commission (the "SEC") or the staff thereof
applicable to the Offer and (iii) extend the Offer for any reason on one or
more occasions for an aggregate period of not more than 15 business days
beyond the latest expiration date that would otherwise be permitted under
clause (i) or (ii) of this sentence, in each case subject to the right of
Parent, Sub or the Company to terminate this Agreement pursuant to the
terms hereof. Parent and Sub agree that if at any scheduled expiration
date of the Offer, the Minimum Condition, the HSR Condition (as defined in
Exhibit A) or either of the conditions set forth in paragraphs (e) or (f)
of Exhibit A shall not have been satisfied, but at such scheduled
expiration date all the conditions set forth in paragraphs (a), (b), (c),
(d) and (g) shall then be satisfied, at the request of the Company
(confirmed in writing), Sub shall extend the Offer from time to time,
subject to the right of Parent, Sub or the Company to terminate this
Agreement pursuant to the terms hereof. Subject to the terms and
conditions of the Offer and this Agreement, Sub shall, and Parent shall
cause Sub to, accept for payment, and pay for, all Shares validly tendered
and not withdrawn pursuant to the Offer that Sub becomes obligated to
accept for payment, and pay for, pursuant to the Offer as soon as
practicable after the expiration of the Offer.
(b) On the date of commencement of the Offer, Parent and Sub
shall file with the SEC a Tender Offer Statement on Schedule 14D-1 (the
"Schedule 14D-1") with respect to the Offer, which shall contain an offer
to purchase and a related letter of transmittal and summary
<PAGE>
4
advertisement (such Schedule 14D-1 and the documents included therein
pursuant to which the Offer will be made, together with any supplements or
amendments thereto, the "Offer Documents"), and Parent and Sub shall cause
to be disseminated the Offer Documents to holders of Shares as and to the
extent required by applicable Federal securities laws. Parent, Sub and the
Company each agrees promptly to correct any information provided by it for
use in the Offer Documents if and to the extent that such information shall
have become false or misleading in any material respect, and Parent and Sub
further agree to take all steps necessary to cause the Schedule 14D-1 as so
corrected to be filed with the SEC and the other Offer Documents as so
corrected to be disseminated to holders of Shares, in each case as and to
the extent required by applicable Federal securities laws. The Company and
its counsel shall be given reasonable opportunity to review and comment
upon the Offer Documents prior to their filing with the SEC or
dissemination to the stockholders of the Company. Parent and Sub agree to
provide the Company and its counsel any comments Parent, Sub or their
counsel may receive from the SEC or its staff with respect to the Offer
Documents promptly after the receipt of such comments.
(c) Parent shall provide or cause to be provided to Sub on a
timely basis the funds necessary to accept for payment, and pay for, any
Shares that Sub becomes obligated to accept for payment, and pay for,
pursuant to the Offer.
SECTION 1.02. Company Actions. (a) The Company hereby approves
----------------
of and consents to the Offer and represents that the Board of Directors of
the Company, at a meeting duly called and held, at which all directors were
present and all of whom were Continuing Directors (as defined in
Article TENTH of the Certificate of Incorporation of the Company), duly and
unanimously adopted resolutions approving this Agreement, the Offer, the
Merger and the Stockholder Agreement, determining that the terms of the
Offer and the Merger are fair to, and in the best interests of, the
Company's stockholders and recommending that holders of Shares accept the
Offer and that the Company's stockholders approve and adopt this Agreement.
The Company represents that its Board of Directors has received the opinion
of Lazard Freres & Co. LLC that the proposed consideration to
<PAGE>
5
be received by holders of Shares pursuant to the Offer, and by holders of
Shares and Class B Shares pursuant to the Merger, is fair to such holders
from a financial point of view, and a complete and correct signed copy of
such opinion has been delivered by the Company to Parent. The Company has
been advised by each of its directors and executive officers that each such
person intends to tender all Shares (other than Shares issued under the
1979 Stock Option Plan (as defined in Section 4.10(i)) owned by such person
pursuant to the Offer.
(b) On the date the Offer Documents are filed with the SEC, the
Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 with respect to the Offer (such Schedule 14D-9, as amended
from time to time, the "Schedule 14D-9") containing the recommendation
described in paragraph (a) (subject to the right of the Board of Directors
of the Company to withdraw or modify its approval or recommendation of the
Offer, the Merger and this Agreement as set forth in Section 6.02(b)), and
the Company shall cause to be disseminated the Schedule 14D-9 to holders of
Shares as and to the extent required by applicable Federal securities laws.
Each of the Company, Parent and Sub agrees promptly to correct any
information provided by it for use in the Schedule 14D-9 if and to the
extent that such information shall have become false or misleading in any
material respect, and the Company further agrees to take all steps
necessary to amend or supplement the Schedule 14D-9 and to cause the
Schedule 14D-9 as so amended or supplemented to be filed with the SEC and
disseminated to holders of Shares, in each case as and to the extent
required by applicable Federal securities laws. Parent and its counsel
shall be given reasonable opportunity to review and comment upon the
Schedule 14D-9 prior to its filing with the SEC or dissemination to
stockholders of the Company. The Company agrees to provide Parent and its
counsel any comments the Company or its counsel may receive from the SEC or
its staff with respect to the Schedule 14D-9 promptly after the receipt of
such comments.
(c) In connection with the Offer and the Merger, the Company
shall cause its transfer agent to furnish Sub promptly with mailing labels
containing the names and addresses of the record holders of Shares and
Class B Shares
<PAGE>
6
as of a recent date and of those persons becoming record holders subsequent
to such date, together with copies of all lists of stockholders, security
position listings and computer files and all other information in the
Company's possession or control regarding the beneficial owners of Shares
and Class B Shares, and shall furnish to Sub such information and
assistance (including updated lists of stockholders, security position
listings and computer files) as Parent may reasonably request in
communicating the Offer to the Company's stockholders. Subject to the
requirements of applicable law, and except for such steps as are necessary
to disseminate the Offer Documents and any other documents necessary to
consummate the Merger, Parent and Sub and their agents shall hold in
confidence the information contained in any such labels, listings and
files, will use such information only in connection with the Offer and the
Merger and, if this Agreement shall be terminated, will, upon request,
deliver, and will use their best efforts to cause their agents to deliver,
to the Company all copies of such information then in their possession or
control.
ARTICLE II
The Merger
----------
SECTION 2.01. The Merger. Upon the terms and subject to the
-----------
conditions set forth in this Agreement, and in accordance with the Delaware
General Corporation Law (the "DGCL"), Sub shall be merged with and into the
Company at the Effective Time (as defined in Section 2.03). Following the
Effective Time, the separate corporate existence of Sub shall cease and the
Company shall continue as the surviving corporation (the "Surviving
Corporation") and shall succeed to and assume all the rights and
obligations of Sub in accordance with the DGCL. At the election of Parent,
any direct or indirect wholly owned subsidiary (as defined in
Section 10.03) of Parent may be substituted for Sub as a constituent
corporation in the Merger. In such event, the parties agree to execute an
appropriate amendment to this Agreement in order to reflect the foregoing.
SECTION 2.02. Closing. The closing of the Merger will take
--------
place at 10:00 a.m. on a date to be specified by
<PAGE>
7
Parent or Sub, which shall be no later than the second business day after
satisfaction or waiver of the conditions set forth in Article VIII (the
"Closing Date"), at the offices of Cravath, Swaine & Moore, Worldwide
Plaza, 825 Eighth Avenue, New York, New York 10019, unless another date,
time or place is agreed to in writing by the parties hereto.
SECTION 2.03. Effective Time. Subject to the provisions of this
---------------
Agreement, as soon as practicable on or after the Closing Date, the parties
shall file a certificate of merger or other appropriate documents (in any
such case, the "Certificate of Merger") executed in accordance with the
relevant provisions of the DGCL and shall make all other filings or
recordings required under the DGCL. The Merger shall become effective at
such time as the Certificate of Merger is duly filed with the Delaware
Secretary of State, or at such other time as Sub and the Company shall
agree should be specified in the Certificate of Merger (the time the Merger
becomes effective being hereinafter referred to as the "Effective Time").
SECTION 2.04. Effects of the Merger. The Merger shall have the
----------------------
effects set forth in Section 259 of the DGCL.
SECTION 2.05. Certificate of Incorporation and By-laws.
-----------------------------------------
(a) The Certificate of Incorporation of the Company, as in effect
immediately prior to the Effective Time, shall be amended as of the
Effective Time so that Article FOURTH of such certificate of incorporation
reads in its entirety as follows: "The total number of shares of all
classes of stock that the corporation shall have authority to issue is
1,000 shares of Common Stock, par value $.01 per share." and, as so
amended, such certificate of incorporation shall be the certificate of
incorporation of the Surviving Corporation until thereafter changed or
amended as provided therein or by applicable law.
(b) The By-laws of Sub as in effect immediately prior to the
Effective Time shall be the By-laws of the Surviving Corporation, until
thereafter changed or amended as provided therein or by applicable law.
<PAGE>
8
SECTION 2.06. Directors. The directors of Sub immediately prior
----------
to the Effective Time shall be the directors of the Surviving Corporation,
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
SECTION 2.07. Officers. The officers of the Company immediately
---------
prior to the Effective Time shall be the officers of the Surviving
Corporation, until the earlier of their resignation or removal or until
their respective successors are duly elected and qualified, as the case may
be.
ARTICLE III
Effect of the Merger on the Capital Stock of the
-------------------------------------------------
Constituent Corporations; Exchange of Certificates
--------------------------------------------------
SECTION 3.01. Effect on Capital Stock. As of the Effective
------------------------
Time, by virtue of the Merger and without any action on the part of the
holder of any Shares or Class B Shares or any shares of capital stock of
Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of
---------------------
capital stock of Sub shall be converted into and become one fully paid
and nonassessable shares of Common Stock, par value $.01 per share, of
the Surviving Corporation.
(b) Cancelation of Treasury Stock and Parent Owned Stock. Each
-----------------------------------------------------
Share and Class B Share that is owned by the Company or by any
subsidiary of the Company and each Share and Class B Share that is
owned by Parent, Sub or any other subsidiary of Parent shall
automatically be canceled and retired and shall cease to exist, and no
consideration shall be delivered in exchange therefor.
(c) Conversion of Shares and Class B Shares. Subject to
----------------------------------------
Section 3.01(d), each Share and Class B Share issued and outstanding
(other than Shares and Class B Shares to be canceled in accordance
with
<PAGE>
9
Section 3.01(b)) shall be converted into the right to receive from the
Surviving Corporation in cash, without interest, the price paid in the
Offer (the "Merger Consideration"). As of the Effective Time, all
such Shares and Class B Shares shall no longer be outstanding and
shall automatically be canceled and retired and shall cease to exist,
and each holder of a certificate representing any such Shares or
Class B Shares shall cease to have any rights with respect thereto,
except the right to receive the Merger Consideration, without
interest.
(d) Shares of Dissenting Stockholders. Notwithstanding anything
----------------------------------
in this Agreement to the contrary, any issued and outstanding Shares
or Class B Shares held by a person (a "Dissenting Stockholder") who
objects to the Merger and complies with all the provisions of Delaware
law concerning the right of holders of Shares and/or Class B Shares to
dissent from the Merger and require appraisal of their Shares and/or
Class B Shares ("Dissenting Shares") shall not be converted as
described in Section 3.01(c), but shall be converted into the right to
receive such consideration as may be determined to be due to such
Dissenting Stockholder pursuant to the laws of the State of Delaware.
If, after the Effective Time, such Dissenting Stockholder withdraws
his demand for appraisal or fails to perfect or otherwise loses his
right of appraisal, in any case pursuant to the DGCL, his Shares
and/or Class B Shares shall be deemed to be converted as of the
Effective Time into the right to receive the Merger Consideration.
The Company shall give Parent (i) prompt notice of any demands for
appraisal of Shares or Class B Shares received by the Company and
(ii) the opportunity to participate in and direct all negotiations and
proceedings with respect to any such demands. The Company shall not,
without the prior written consent of Parent, make any payment with
respect to, or settle, offer to settle or otherwise negotiate, any
such demands.
SECTION 3.02. Exchange of Certificates. (a) Paying Agent.
------------------------- -------------
Prior to the Effective Time, Parent shall designate a bank or trust company
to act as paying agent in
<PAGE>
10
the Merger (the "Paying Agent"), and, from time to time on, prior to or
after the Effective Time, Parent shall make available, or cause the
Surviving Corporation to make available, to the Paying Agent cash in
amounts and at the times necessary for the payment of the Merger
Consideration upon surrender of certificates representing Shares or Class B
Shares as part of the Merger pursuant to Section 3.01 (it being understood
that any and all interest earned on funds made available to the Paying
Agent pursuant to this Agreement shall be turned over to Parent).
(b) Exchange Procedure. As soon as reasonably practicable after
-------------------
the Effective Time, the Paying Agent shall mail to each holder of record of
a certificate or certificates that immediately prior to the Effective Time
represented Shares or Class B Shares (the "Certificates"), (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk
of loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Paying Agent and shall be in a form and have such other
provisions as Parent may reasonably specify) and (ii) instructions for use
in effecting the surrender of the Certificates in exchange for the Merger
Consideration. Upon surrender of a Certificate for cancelation to the
Paying Agent or to such other agent or agents as may be appointed by
Parent, together with such letter of transmittal, duly executed, and such
other documents as may reasonably be required by the Paying Agent, the
holder of such Certificate shall be entitled to receive in exchange
therefor the amount of cash into which the Shares or Class B Shares
theretofore represented by such Certificate shall have been converted
pursuant to Section 3.01, and the Certificate so surrendered shall
forthwith be canceled. In the event of a transfer of ownership of Shares
or Class B Shares that is not registered in the transfer records of the
Company, payment may be made to a person other than the person in whose
name the Certificate so surrendered is registered, if such Certificate
shall be properly endorsed or otherwise be in proper form for transfer and
the person requesting such payment shall pay any transfer or other taxes
required by reason of the payment to a person other than the registered
holder of such Certificate or establish to the satisfaction of the
Surviving Corporation that such tax has been paid or is not applicable.
Until surrendered
<PAGE>
11
as contemplated by this Section 3.02, each Certificate shall be deemed at
any time after the Effective Time to represent only the right to receive
upon such surrender the amount of cash, without interest, into which the
Shares or Class B Shares theretofore represented by such Certificate shall
have been converted pursuant to Section 3.01. No interest will be paid or
will accrue on the cash payable upon the surrender of any Certificate.
(c) No Further Ownership Rights in Shares or Class B Shares.
--------------------------------------------------------
All cash paid upon the surrender of Certificates in accordance with the
terms of this Article III shall be deemed to have been paid in full
satisfaction of all rights pertaining to the Shares and Class B Shares
theretofore represented by such Certificates. At the Effective Time, the
stock transfer books of the Company shall be closed, and there shall be no
further registration of transfers on the stock transfer books of the
Surviving Corporation of the Shares and the Class B Shares that were
outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation or
the Paying Agent for any reason, they shall be canceled and exchanged as
provided in this Article III.
(d) No Liability. None of Parent, Sub, the Company or the
-------------
Paying Agent shall be liable to any person in respect of any cash delivered
to a public official pursuant to any applicable abandoned property, escheat
or similar law. If any Certificates shall not have been surrendered prior
to seven years after the Effective Time (or immediately prior to such
earlier date on which any payment pursuant to this Article III would
otherwise escheat to or become the property of any Governmental Entity (as
defined in Section 4.05)), the cash payment in respect of such Certificate
shall, to the extent permitted by applicable law, become the property of
the Surviving Corporation, free and clear of all claims or interests of any
person previously entitled thereto.
<PAGE>
12
ARTICLE IV
Representations and Warranties of the Company
---------------------------------------------
The Company represents and warrants to Parent and Sub as follows:
SECTION 4.01. Organization. The Company and each of its
-------------
Significant Subsidiaries (as defined in Section 10.03) is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to carry on its business as now being conducted. The Company and
each of its Significant Subsidiaries is duly qualified or licensed to do
business and in good standing in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by
it makes such qualification or licensing necessary, except in such
jurisdictions where the failure to be so duly qualified or licensed and in
good standing would not have a material adverse effect (as defined in
Section 10.03) on the Company or prevent or materially delay the
consummation of the Offer and/or the Merger. The Company has delivered to
Parent complete and correct copies of its Certificate of Incorporation and
By-laws and the certificates of incorporation and by-laws (or similar
organizational documents) of its U.S. Significant Subsidiaries.
SECTION 4.02. Subsidiaries. Item 4.02 of the letter from the
-------------
Company to Parent dated the date hereof, which letter relates to this
Agreement and is designated therein as the Company Disclosure Letter (the
"Company Letter") lists each subsidiary of the Company. All the
outstanding shares of capital stock of each such subsidiary are owned by
the Company, by another wholly owned subsidiary of the Company or by the
Company and another wholly owned subsidiary of the Company, free and clear
of all pledges, claims, liens, charges, encumbrances and security interests
of any kind or nature whatsoever (collectively, "Liens"), and are duly
authorized, validly issued, fully paid and nonassessable. Except as set
forth in Item 4.02 of the Company Letter and except for the capital stock
of its subsidiaries, the Company does not own, directly or
<PAGE>
13
indirectly, any capital stock or other ownership interest in any
corporation, partnership, joint venture or other entity.
SECTION 4.03. Capitalization. The authorized capital stock of
---------------
the Company consists of 30,000,000 Shares, 15,000,000 Class B Shares and
5,000,000 shares of Preferred Stock, par value $.50 per share. At the
close of business on February 5, 1996, (i) 6,857,801 Shares were issued and
outstanding, (ii) 1,091,510 Shares were held by the Company in its
treasury, (iii) 1,190,258 Shares were reserved for issuance upon exercise
of options to purchase Shares ("Company Stock Options") issued pursuant to
the Company's stock option plans, (iv) 3,044,829 Class B Shares were issued
and outstanding and (v) no Class B Shares were held by the Company in its
treasury. Except as set forth above, as of the date of this Agreement, no
shares of capital stock or other voting securities of the Company were
issued, reserved for issuance or outstanding. All outstanding shares of
capital stock of the Company are, and all shares which may be issued will
be, when issued, duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights. There are no bonds,
debentures, notes or other indebtedness of the Company having the right to
vote (or convertible into, or exchangeable for, securities having the right
to vote) on any matters on which stockholders of the Company may vote.
Except as set forth above, as of the date of this Agreement, there are not
any securities, options, warrants, calls, rights, commitments, agreements,
arrangements or undertakings of any kind to which the Company or any of its
subsidiaries is a party or by which any of them is bound obligating the
Company or any of its subsidiaries to issue, deliver or sell, or cause to
be issued, delivered or sold, additional shares of capital stock or other
voting securities of the Company or of any of its subsidiaries or
obligating the Company or any of its subsidiaries to issue, grant, extend
or enter into any such security, option, warrant, call, right, commitment,
agreement, arrangement or undertaking. Except as set forth in Item 4.03 of
the Company Letter, as of the date of this Agreement, there are not any
outstanding contractual obligations of the Company or any of its
subsidiaries (i) to repurchase, redeem or otherwise acquire any shares of
capital stock of the Company or (ii) to vote or to dispose
<PAGE>
14
of any shares of the capital stock of any of the Company's subsidiaries.
SECTION 4.04. Authority. The Company has the requisite
----------
corporate power and authority to execute and deliver this Agreement and,
subject to the approval and adoption of this Agreement by the holders of a
majority of the combined voting power of the Shares and the Class B Shares
(the "Company Stockholder Approval"), to consummate the transactions
contemplated hereby. The execution, delivery and performance of this
Agreement and the consummation by the Company of the Merger and of the
other transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of the Company and no other
corporate proceedings on the part of the Company are necessary to authorize
this Agreement or to consummate the transactions so contemplated (in each
case, other than, with respect to the Merger, the Company Stockholder
Approval). This Agreement has been duly executed and delivered by the
Company and, assuming this Agreement constitutes a valid and binding
obligation of Parent and Sub, constitutes a valid and binding obligation of
the Company enforceable against the Company in accordance with its terms.
SECTION 4.05. Consents and Approvals; No Violations. Except as
--------------------------------------
set forth in Item 4.05 of the Company Letter, and except for filings,
permits, authorizations, consents and approvals as may be required under,
and other applicable requirements of, the Securities Exchange Act of 1934,
as amended (the "Exchange Act") (including the filing with the SEC of the
Schedule 14D-9 and a proxy statement relating to any required Company
Stockholder Approval (the "Proxy Statement")), the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), the DGCL,
the laws of other states in which the Company is qualified to do or is
doing business, state takeover laws and foreign and supranational laws
relating to antitrust and anticompetition clearances, neither the
execution, delivery or performance of this Agreement by the Company nor the
consummation by the Company of the transactions contemplated hereby will
(i) conflict with or result in any breach of any provision of the
Certificate of Incorporation or By-laws of the Company or of the similar
organizational documents of
<PAGE>
15
any of its Significant Subsidiaries, (ii) require any filing with, or
permit, authorization, consent or approval of, any Federal, state or local
government or any court, tribunal, administrative agency or commission or
other governmental or other regulatory authority or agency, domestic,
foreign or supranational (a "Governmental Entity") (except where the
failure to obtain such permits, authorizations, consents or approvals or to
make such filings would not have a material adverse effect on the Company
or prevent or materially delay the consummation of the Offer and/or the
Merger), (iii) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, amendment, cancelation or acceleration) under, any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
lease, license, contract, agreement or other instrument or obligation to
which the Company or any of its subsidiaries is a party or by which any of
them or any of their properties or assets may be bound or (iv) violate any
order, writ, injunction, decree, statute, rule or regulation applicable to
the Company, any of its subsidiaries or any of their properties or assets,
except in the case of clauses (iii) or (iv) for violations, breaches or
defaults that would not have a material adverse effect on the Company or
prevent or materially delay the consummation of the Offer and/or the
Merger.
SECTION 4.06. SEC Reports and Financial Statements. The Company
-------------------------------------
and each of its subsidiaries has filed with the SEC, and has heretofore
made available to Parent true and complete copies of, all forms, reports,
schedules, statements and other documents required to be filed by it since
March 1, 1994, under the Exchange Act or the Securities Act of 1933 (the
"Securities Act") (such forms, reports, schedules, statements and other
documents, including any financial statements or schedules included
therein, are referred to as the "Company SEC Documents"). The Company SEC
Documents, at the time filed, (a) did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading and
(b) complied in all material respects with the applicable requirements of
the Exchange Act and the
<PAGE>
16
Securities Act, as the case may be, and the applicable rules and
regulations of the SEC thereunder. Except to the extent that information
contained in any Company SEC Document has been revised or superseded by a
subsequently filed Company Filed SEC Document (as defined in Section 4.07)
(a copy of which has been made available to Parent prior to the date
hereof), none of the Company SEC Documents contains an untrue statement of
a material fact or omits to state a material fact required to be stated or
incorporated by reference therein or necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading. The financial statements of the Company included in
the Company SEC Documents comply as to form in all material respects with
applicable accounting requirements and with the published rules and
regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis during the periods involved (except as may be indicated in
the notes thereto or, in the case of the unaudited statements, as permitted
by Form 10-Q of the SEC) and fairly present (subject, in the case of the
unaudited statements, to normal, recurring audit adjustments) the
consolidated financial position of the Company and its consolidated
subsidiaries as at the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended.
SECTION 4.07. Absence of Certain Changes or Events. Except as
-------------------------------------
disclosed in Item 4.07 of the Company Letter or in the Company SEC
Documents filed and publicly available prior to the date of this Agreement
(the "Company Filed SEC Documents"), since February 28, 1995, the Company
and its subsidiaries have conducted their respective businesses only in the
ordinary course, and there has not been (i) any material adverse change (as
defined in Section 10.03) with respect to the Company, (ii) any
declaration, setting aside or payment of any dividend or other distribution
with respect to its capital stock (other than regular quarterly cash
dividends not in excess of $.08 per Share and $.08 per Class B Share with
usual record and payment dates and in accordance with the Company's present
dividend policy) or any redemption, purchase or other acquisition of any of
its capital stock, (iii) any split,
<PAGE>
17
combination or reclassification of any of its capital stock or any issuance
or the authorization of any issuance of any other securities in respect of,
in lieu of or in substitution for shares of its capital stock, (iv) (x) any
granting by the Company or any of its subsidiaries to any officer of the
Company or any of its subsidiaries of any increase in compensation, except
in the ordinary course of business (including in connection with
promotions) consistent with past practice or as was required under
employment agreements in effect as of February 28, 1995, (y) any granting
by the Company or any of its subsidiaries to any such officer of any
increase in severance or termination pay, except as part of a standard
employment package to any person promoted or hired (but not including the
five most senior officers), or as was required under employment, severance
or termination agreements in effect as of February 28, 1995, or (z) except
employment agreements in the ordinary course of business consistent with
past practice with employees other than any executive officer of the
Company, any entry by the Company or any of its subsidiaries into any
employment, consulting, severance, termination or indemnification agreement
with any such employee or executive officer, (v) any damage, destruction or
loss, whether or not covered by insurance, that has or reasonably could be
expected to have a material adverse effect on the Company, (vi) any
revaluation by the Company of any of its material assets or (vii) any
material change in accounting methods, principles or practices by the
Company, except as described in Item 4.07 of the Company Letter.
SECTION 4.08. No Undisclosed Liabilities. Except as and to the
---------------------------
extent set forth in Item 4.08 of the Company Letter or in the Company's
Annual Report to Stockholders for the fiscal year ended February 28, 1995,
as of February 28, 1995, neither the Company nor any of its subsidiaries
had any liabilities or obligations of any nature, whether or not accrued,
contingent or otherwise, that would be required by generally accepted
accounting principles to be reflected on a consolidated balance sheet of
the Company and its subsidiaries (including the notes thereto). Since
February 28, 1995, except as and to the extent set forth in Item 4.08 of
the Company Letter or in the Company Filed SEC Documents, neither the
Company nor any of its subsidiaries
<PAGE>
18
has incurred any liabilities of any nature, whether or not accrued,
contingent or otherwise, that would be reasonably expected to have a
material adverse effect on the Company.
SECTION 4.09. Information Supplied. None of the information
---------------------
supplied or to be supplied by the Company specifically for inclusion or
incorporation by reference in (i) the Offer Documents, (ii) the
Schedule 14D-9, (iii) the information to be filed by the Company in
connection with the Offer pursuant to Rule 14f-1 promulgated under the
Exchange Act (the "Information Statement") or (iv) the Proxy Statement,
will, in the case of the Offer Documents, the Schedule 14D-9 and the
Information Statement, at the respective times the Offer Documents, the
Schedule 14D-9 and the Information Statement are filed with the SEC or
first published, sent or given to the Company's stockholders, or, in the
case of the Proxy Statement, at the time the Proxy Statement is first
mailed to the Company's stockholders or at the time of the Stockholders
Meeting (as defined in Section 7.01), contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. The
Schedule 14D-9, the Information Statement and the Proxy Statement will
comply as to form in all material respects with the requirements of the
Exchange Act and the rules and regulations thereunder, except that no
representation or warranty is made by the Company with respect to
statements made or incorporated by reference therein based on information
supplied by Parent or Sub specifically for inclusion or incorporation by
reference therein.
SECTION 4.10. Benefit Plans; Employees and Employment Practices.
--------------------------------------------------
(a) Except as disclosed in the Company Filed SEC Documents, since the date
of the most recent audited financial statements included in the Company
Filed SEC Documents, there has not been any adoption or amendment in any
material respect (including any increase or improvements in benefits or
coverage) by the Company or any of its subsidiaries of any collective
bargaining agreement or any bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock purchase,
stock option, phantom stock, retirement, vacation,
<PAGE>
19
severance, disability, death benefit, hospitalization, medical, fringe
benefit, excess, supplemental executive compensation, employee stock
purchase, stock appreciation, restricted stock or other material employee
benefit plan, policy, arrangement or understanding (whether or not in
writing) providing benefits to any current or former employee, officer or
director of the Company or any of its subsidiaries (collectively, "Benefit
Plans"). Except as disclosed in Item 4.10(a) of the Company Letter, there
exist no employment, consulting, severance, termination or indemnification
agreements, or any other similar arrangements or understandings (whether or
not in writing) between the Company or any of its subsidiaries and any
current or former employee, officer or director of the Company or any of
its subsidiaries.
(b) Item 4.10(b) of the Company Letter contains a list of all
"employee pension benefit plans" (as defined in Section 3(2) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"))
(sometimes referred to herein as "Pension Plans"), "employee welfare
benefit plans" (as defined in Section 3(1) of ERISA) and all other Benefit
Plans maintained, sponsored or contributed to, by the Company or any of its
U.S., Canadian or Japanese subsidiaries for the benefit of any current or
former employees, officers or directors of the Company or any of such
subsidiaries (the "Subject Benefit Plans"). The Company has delivered to
Parent true, complete and correct copies of (i) each Subject Benefit Plan
(or, in the case of any unwritten Subject Benefit Plans, descriptions
thereof), (ii) the most recent annual report on Form 5500 (and related
schedules and financial statements or opinions required in connection
therewith) filed with the Internal Revenue Service with respect to each
Subject Benefit Plan (if any such report was required), (iii) the most
recent actuarial report with respect to each Subject Benefit Plan, as
applicable, (iv) the most recent summary plan description (and a summary of
material modifications, if applicable) for each Subject Benefit Plan and
(v) each trust agreement and group annuity contract relating to any Subject
Benefit Plan. Any Benefit Plan that is not a Subject Benefit Plan is
either required by and maintained in accordance with applicable local law
or is immaterial to the applicable subsidiary.
<PAGE>
20
(c) Except as disclosed in Item 4.10(c) of the Company Letter,
all Pension Plans which are intended to be tax-qualified have been timely
amended to comply with ERISA and the Internal Revenue Code of 1986, as
amended (the "Code") and determination letters in respect of such Pension
Plans have been received from the Internal Revenue Service to the effect
that such Pension Plans are qualified and exempt from Federal income taxes
under Section 401(a) and 501(a), respectively, of the Code, and no such
determination letter has been revoked nor, to the best knowledge of the
Company, has revocation been threatened, nor has any such Pension Plan been
amended since the date of its most recent determination letter or
application therefor in any respect that would adversely affect its
qualification or materially increase its costs.
(d) Except as disclosed in Item 4.10(d) of the Company Letter,
each Benefit Plan has been administered in all material respects in
conformity with its terms and the applicable requirements of ERISA and the
Code and other applicable laws; and all contributions required to be made
have been made in accordance with the provisions of each such Benefit Plan
and with ERISA and the Code and other applicable laws.
(e) None of the Company or any of its subsidiaries, or any other
person or entity that, together with the Company, is treated as a single
employer under Section 414 of the Code, currently maintains or has
maintained during the five-year period preceding the date hereof any
"defined benefit plan" (within the meaning of Section 3(35) of ERISA) or
any "multiemployer plan" (within the meaning of Section 3(37) of ERISA), or
has incurred any liability under Title IV of ERISA or to the Pension
Benefit Guaranty Corporation that has not been fully paid as of the date
hereof. None of the Company, any of its subsidiaries, any officer of the
Company or any of its subsidiaries or any of the Benefit Plans which are
subject to ERISA, including the Pension Plans, any trusts created
thereunder or, to the knowledge of the Company, any trustee or
administrator thereof, has engaged in a "prohibited transaction" (as such
term is defined in Section 406 of ERISA or Section 4975 of the Code) or any
other breach of fiduciary responsibility that could reasonably be expected
to subject the Company,
<PAGE>
21
any of its subsidiaries or any officer of the Company or any of its
subsidiaries to any material tax or penalty on prohibited transactions
imposed by such Section 4975 or to any material liability under
Section 502(i) or (1) of ERISA.
(f) With respect to any Benefit Plan that is an employee welfare
benefit plan, except as disclosed in Item 4.10(f) of the Company Letter,
(i) no such Benefit Plan is funded through a "welfare benefits fund", as
such term is defined in Section 419(e) of the Code, (ii) each such Benefit
Plan that is a "group health plan", as such term is defined in
Section 5000(b)(1) of the Code, complies with the applicable requirements
of Section 4980B(f) of the Code and (iii) each such Benefit Plan (including
any such Plan covering retirees or other former employees) may be amended
or terminated without material liability to the Company or any of its
subsidiaries on or at any time after the consummation of the Offer.
(g) With respect to each Benefit Plan, all material reports and
information required to be filed with the U.S. Department of Labor, the
Internal Revenue Service or each Benefit Plan participant have been timely
filed.
(h) There is no dispute, arbitration, claim, suit or grievance,
pending or threatened, involving a Benefit Plan (other than routine claims
for benefits payable under any such plan), and, to the knowledge of the
Company, there is no basis for such a claim.
(i) Except as disclosed in Item 4.10(i) of the Company Letter,
there are no current or former employees holding Shares issued pursuant to
the Company's 1979 Non-Qualified Stock Option Plan (the "1979 Stock Option
Plan"). Each current or former employee holding any Shares issued pursuant
to the 1979 Stock Option Plan has executed on or prior to the date of this
Agreement a letter in the form set forth in Item 4.10(i) of the Company
Letter (the "Item 4.10(i) Letter").
(j) Item 4.10(j) of the Company Letter sets forth the names of
all current officers, directors and employees of the Company and its U.S.
subsidiaries, together with each
<PAGE>
22
employee's current salary, most recent bonus (excluding sales bonuses),
date of birth and date of employment. All salary and wages, vacation pay,
bonuses, commissions, sick pay and other benefits earned or due (including
contributions due to Benefit Plans) through the date hereof have been paid
to employees or former employees or to the Benefit Plans or have been
properly accrued in the financial statements of the Company included in the
most recent Company Filed SEC Documents.
(k) Except as disclosed in Item 4.10(k) of the Company Letter,
there are no material controversies, strikes, work stoppages or disputes
pending or threatened between the Company and any of its subsidiaries and
any current or former employees, no labor union or other collective
bargaining unit represents or has ever represented any employee of the
Company or any of its subsidiaries and no organizational effort by any
labor union or other collective bargaining unit currently is under way or
threatened with respect to any employee. A true, complete and correct copy
of any applicable collective bargaining agreement has been provided to
Parent, and the Company and its subsidiaries are in compliance in all
material respects with the terms thereof.
(l) The Board of Directors of the Company (or, if appropriate,
any committee of the Board of Directors administering the Stock Option
Plans (as defined in Section 7.09(a))) has taken such action as is
necessary so that, as of the Effective Time, no holder of any award under
any Stock Option Plan shall have the right upon exercise of any such award
to receive securities of the Company, Sub or Parent or any of its
affiliates.
SECTION 4.11. Contracts; Indebtedness. (a) Except as disclosed
------------------------
in Item 4.11 of the Company Letter or in the Company Filed SEC Documents,
there are no contracts or agreements that are material to the business,
properties, assets, financial condition or results of operations of the
Company and its subsidiaries taken as a whole. Neither the Company nor any
of its subsidiaries is in violation of or in default under (nor does there
exist any condition which upon the passage of time or the giving of notice
would cause such a violation of or default under)
<PAGE>
23
any loan or credit agreement, note, bond, mortgage, indenture, lease,
permit, concession, franchise, license or any other contract, agreement,
arrangement or understanding, to which it is a party or by which it or any
of its properties or assets is bound, except for violations or defaults
that could not reasonably be expected to result in a material adverse
effect on the Company.
(b) Item 4.11 of the Company Letter sets forth (i) a list of all
agreements, instruments and other obligations pursuant to which any
indebtedness of the Company or any of its subsidiaries in an aggregate
principal amount in excess of 150,000 is outstanding or may be incurred and
(ii) the respective principal amounts outstanding thereunder as of January
31, 1996, in the case of the Company and its U.S. and Canadian
subsidiaries, and November 30, 1995 with respect to all other subsidiaries.
SECTION 4.12. Litigation. Except as disclosed in Item 4.12 of
-----------
the Company Letter or in the Company Filed SEC Documents, as of the date of
this Agreement, there is no suit, claim, action, proceeding or
investigation pending or, to the knowledge of the Company, threatened
against the Company or any of its subsidiaries that could reasonably be
expected to have a material adverse effect on the Company or prevent or
materially delay the consummation of the Offer and/or the Merger. Except
as disclosed in Item 4.12 of the Company Letter or in the Company Filed SEC
Documents, as of the date of this Agreement, neither the Company nor any of
its subsidiaries is subject to any outstanding judgment, order, writ,
injunction or decree that could reasonably be expected to have a material
adverse effect on the Company or prevent or materially delay the
consummation of the Offer and/or the Merger.
SECTION 4.13. Compliance with Applicable Law. The Company and
-------------------------------
its subsidiaries hold all permits, licenses, variances, exemptions, orders
and approvals of all Governmental Entities necessary for the lawful conduct
of their respective businesses (the "Company Permits"), except for failures
to hold such permits, licenses, variances, exemptions, orders and approvals
that would not have a material adverse effect on the Company or prevent or
materially delay the consummation of the Offer and/or the
<PAGE>
24
Merger. The Company and its subsidiaries are in compliance with the terms
of the Company Permits, except where the failure so to comply would not
have a material adverse effect on the Company or prevent or materially
delay the consummation of the Offer and/or the Merger. Except as disclosed
in the Company Letter or in the Company Filed SEC Documents, to the
knowledge of the Company, the businesses of the Company and its
subsidiaries are not being conducted in violation of any law, ordinance or
regulation of any Governmental Entity, except for possible violations that
would not have a material adverse effect on the Company or prevent or
materially delay the consummation of the Offer and/or the Merger. To the
knowledge of the Company, except as set forth in the Company Filed SEC
Documents, as of the date of this Agreement, no investigation or review by
any Governmental Entity with respect to the Company or any of its
subsidiaries is pending or threatened, other than, in each case, those the
outcome of which would not be reasonably expected to have a material
adverse effect on the Company or prevent or materially delay the
consummation of the Offer and/or the Merger.
SECTION 4.14. Tax Matters. Except as set forth in Item 4.14 of
------------
the Company Letter:
(a) The Company and each of its subsidiaries has filed all
Federal income tax returns and all other material tax returns and reports
required to be filed by it. All such returns are complete and correct in
all material respects. The Company and each of its subsidiaries has paid
(or the Company has paid on its subsidiaries' behalf) all taxes shown as
due on such returns and all material taxes (as defined below) for which no
return was required to be filed, and the most recent financial statements
contained in the Company Filed SEC Documents reflect an adequate reserve
for all taxes payable by the Company and its subsidiaries for all taxable
periods and portions thereof through the date of such financial statements.
(b) Except as set forth below, no material tax return of the
Company or any of its subsidiaries is under audit or, to the knowledge of
the Company, examination by any taxing authority. Each material deficiency
resulting from any audit or examination relating to taxes by any
<PAGE>
25
taxing authority has been paid, except for deficiencies being contested in
good faith. No material issues relating to taxes were raised in writing by
the relevant taxing authority during any presently pending audit or examination,
and no material issues relating to taxes were raised in writing by the relevant
taxing authority in any completed audit or examination that can reasonably be
expected to recur in a later taxable period. The Federal income tax returns
of the Company and each of its subsidiaries consolidated in such returns have
been examined by and settled with the Internal Revenue Service for all years
through the taxable year ended February 28, 1989. The Federal income tax
return of the Company and its subsidiaries for the taxable year ended
February 29, 1990 has not been examined by the Internal Revenue Service,
but the statute of limitations under Section 6501(a) of the Code has
expired with respect to such return and the Internal Revenue Service has
neither proposed nor made any adjustments thereto. Field work has been
completed for the Federal income tax audit of the Company and its
subsidiaries for the taxable years ended February 28, 1991 through February
28, 1993, and the Company and the Internal Revenue Service have reached
oral agreement on all issues. The results of such oral agreement are
reflected in Item 4.14 of the Company Letter. An Internal Revenue Service
Form 870 reflecting such oral agreement is expected to be received within
two weeks after the date hereof.
(c) There is no agreement or other document extending, or having
the effect of extending, the period of assessment or collection of any
taxes and no power of attorney with respect to any taxes has been executed
or filed with any taxing authority.
(d) No material liens for taxes exist with respect to any assets
or properties of the Company or any of its subsidiaries, except for
statutory liens for taxes not yet due.
(e) Except as provided in Section 4.14(b) with respect to the
Federal income tax audit for the taxable years ended February 28, 1991
through February 28, 1993, none of the Company or any of its subsidiaries
is a party to or is bound by any tax sharing agreement, tax indemnity
<PAGE>
26
obligation or similar agreement, arrangement or practice with respect to
taxes (including any advance pricing agreement, closing agreement or other
agreement relating to taxes with any taxing authority).
(f) None of the Company or any of its subsidiaries shall be
required to include in a taxable period ending after the Effective Time
taxable income attributable to income that accrued in a prior taxable
period but was not recognized in any prior taxable period as a result of
the installment method of accounting, the completed contract method of
accounting, the long-term contract method of accounting, the cash method of
accounting or Section 481 of the Code or comparable provisions of state,
local or foreign tax law.
(g) The disallowance of a deduction under Section 162(m) of the
Code for employee remuneration will not apply to any amount paid or payable
by the Company or any of its subsidiaries under any contract, plan,
program, arrangement or understanding currently in effect.
(h) Any amount or other entitlement that could be received
(whether in cash or property or the vesting of property) as a result of any
of the transactions contemplated by this Agreement by any employee, officer
or director of the Company or any of its affiliates who is a "disqualified
individual" (as such term is defined in proposed Treasury Regulation
Section 1.280G-1) under any employment, severance or termination agreement,
other compensation arrangement or Company Benefit Plan currently in effect
would not be characterized as an "excess parachute payment" or a "parachute
payment" (as such terms are defined in Section 280G(b)(1) of the Code).
(i) The Japanese trademark registrations for "FINESSE" and
"SALON SELECTIVES" are owned by the Company or a U.S. subsidiary of the
Company. For greater certainty, such trademark registrations are not owned
by a Japanese subsidiary of the Company. The statute of limitations for
assessment and collection of Japanese income tax from Helene Curtis
Enterprises, Inc. and Helene Curtis Japan, Inc. has expired with respect to
all taxable years ended on or prior to December 15, 1991, and will expire
with respect to the
<PAGE>
27
taxable year ended December 15, 1992, on or before March 15, 1996. The
Japanese tax authorities have examined the income tax return filed by
Helene Curtis Japan, Inc. for its taxable year ended December 15, 1995,
specifically with respect to the issue of whether the 5% rate in the
Technical License Agreement dated January 1, 1993, as amended, between the
Company and Helene Curtis Japan, Inc. is at arm's-length and such tax
authorities have proposed no adjustment.
(j) As used in this Agreement, "taxes" shall include all
Federal, state, local and foreign income, property, sales, excise,
withholding and other taxes, tariffs or governmental charges of any nature
whatsoever.
SECTION 4.15. State Takeover Statutes; Charter Provisions. The
--------------------------------------------
action of the Board of Directors of the Company in approving the Offer, the
Merger, this Agreement and the Stockholder Agreement is sufficient to
render inapplicable to the Offer, the Merger, this Agreement and the
Stockholder Agreement and the transactions contemplated by this Agreement
and the Stockholder Agreement (a) the provisions of Section 203 of the DGCL
and (b) the supermajority voting provisions of Article TENTH of the
Company's Certificate of Incorporation. To the knowledge of the Company,
no other state takeover statute or similar statute or regulation applies or
purports to apply to the Offer, the Merger, this Agreement, the Stockholder
Agreement or any of the transactions contemplated by this Agreement or the
Stockholder Agreement.
SECTION 4.16. Environmental Matters. (a) Except as set forth in
----------------------
Item 4.16 of the Company Letter, neither the Company nor any of its
subsidiaries has (i) placed, held, located, released, transported or
disposed of any Hazardous Substances (as defined below) on, under, from or
at any of the Company's or any of its subsidiaries' properties or any other
properties, other than in a manner that could not, in all such cases taken
individually or in the aggregate, reasonably be expected to result in a
material adverse effect on the Company, (ii) any knowledge or reason to
know of the presence of any Hazardous Substances on, under or at any of the
Company's or any of its subsidiaries' properties or any other property but
arising from the Company's or any of its subsidiaries' properties, other
than in a manner that
<PAGE>
28
could not reasonably be expected to result in a material adverse effect on
the Company, or (iii) received any written notice (A) of any violation of
any statute, law, ordinance, regulation, rule, judgment, decree or order of
any Governmental Entity relating to any matter of pollution, protection of
the environment, environmental regulation or control or regarding Hazardous
Substances on, under or emanating from any of the Company's or any of its
subsidiaries' properties or any other properties (collectively,
"Environmental Laws") that has not been resolved or settled with the
relevant Governmental Entity, (B) of the institution or pendency of any
suit, action, claim, proceeding or investigation by any Governmental Entity
or any third party in connection with any such violation, (C) requiring the
response to or remediation of Hazardous Substances at or arising from any
of the Company's or any of its subsidiaries' properties or any other
properties, (D) alleging noncompliance by the Company or any of its
subsidiaries with the terms of any permit required under any Environmental
Law in any manner reasonably likely to require material expenditures or to
result in material liability or (E) demanding payment for response to or
remediation of Hazardous Substances at or arising from any of the Company's
or any of its subsidiaries' properties or any other properties, except in
each case for the notices set forth in Item 4.16 of the Company Letter.
For purposes of this Agreement, the term "Hazardous Substance" shall mean
any toxic or hazardous materials or substances, including asbestos, buried
contaminants, chemicals, flammable explosives, radioactive materials,
petroleum and petroleum products and any substances defined as, or included
in the definition of, "hazardous substances", "hazardous wastes,"
"hazardous materials" or "toxic substances" under any Environmental Law.
(b) Except as set forth in Item 4.16 of the Company Letter, no
Environmental Law imposes any obligation upon the Company or its
subsidiaries arising out of or as a condition to any transaction
contemplated by this Agreement or the Stockholder Agreement, including any
requirement to modify or to transfer any permit or license, any requirement
to file any notice or other submission with any Governmental Entity, the
placement of any notice, acknowledgment or covenant in any land records, or
the modification of or
<PAGE>
29
provision of notice under any agreement, consent order or consent decree,
except where any failure to notify or place any notice would not reasonably
be expected to result in a material adverse effect on the Company or
prevent or materially delay the consummation of the Offer and/or the
Merger. No Lien has been placed upon any of the Company's or its
subsidiaries' properties under any Environmental Law.
(c) None of the Company or any of its subsidiaries owns,
operates or leases any facility qualifying as an industrial establishment
under the New Jersey Industrial Site Recovery Act.
SECTION 4.17. Intellectual Property. The Company and its
----------------------
subsidiaries own, or are validly licensed or otherwise have the right to
use, all patents, patent rights, trademarks, trade names, service marks,
copyrights, know how and other proprietary intellectual property rights and
computer programs (collectively, "Intellectual Property Rights") that are
material to the conduct of the business of the Company and its subsidiaries
taken as a whole. Item 4.17 of the Company Letter sets forth a description
of all Intellectual Property Rights that are material to the conduct of the
business of the Company and its subsidiaries taken as a whole. Except as
set forth in Item 4.17 of the Company Letter, no claims are pending or, to
the knowledge of the Company, threatened that the Company or any of its
subsidiaries is infringing or otherwise adversely affecting the rights of
any person with regard to any Intellectual Property Right so as to
materially adversely affect any of the Company's material Intellectual
Property Rights, and the Company is not aware of any basis for any such
claims. To the knowledge of the Company, except as set forth in Item 4.17
of the Company Letter, no person is infringing the rights of the Company or
any of its subsidiaries with respect to any material Intellectual Property
Right so as to materially adversely effect such Intellectual Property
Right.
SECTION 4.18. Brokers; Schedule of Fees and Expenses. No
---------------------------------------
broker, investment banker, financial advisor or other person, other than
Lazard Freres & Co. LLC., the fees and expenses of which will be paid by
the Company, is entitled to any broker's, finder's, financial advisor's or
<PAGE>
30
other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf
of the Company. The estimated fees and expenses incurred and to be
incurred by the Company in connection with this Agreement and the
transactions contemplated by this Agreement (including the fees of the
Company's legal counsel and the legal counsel for its financial advisor)
are set forth in Item 4.18 of the Company Letter.
SECTION 4.19. Opinion of Financial Advisor. The Company has
-----------------------------
received the opinion of Lazard Freres & Co. LLC, dated the date of this
Agreement, to the effect that, as of the date of this Agreement, the
consideration to be received in the Offer and the Merger by the Company's
stockholders is fair to the Company's stockholders from a financial point
of view, and a complete and correct signed copy of such opinion has been,
or promptly upon receipt thereof will be, delivered to Parent.
ARTICLE V
Representations and Warranties
------------------------------
of Parent and Sub
-----------------
Parent and Sub represent and warrant to the Company as follows:
SECTION 5.01. Organization. Each of Parent and Sub is a
-------------
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has all requisite
corporate power and authority to carry on its business as now being
conducted.
SECTION 5.02. Authority. Parent and Sub have requisite
----------
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate
action on the part of Parent and Sub and no other corporate proceedings on
the part of Parent and Sub are necessary to authorize this Agreement or to
<PAGE>
31
consummate such transactions. No vote of Parent stockholders is required
to approve this Agreement or the transactions contemplated hereby. This
Agreement has been duly executed and delivered by Parent and Sub, as the
case may be, and, assuming this Agreement constitutes a valid and binding
obligation of the Company, constitutes a valid and binding obligation of
each of Parent and Sub enforceable against them in accordance with its
terms.
SECTION 5.03. Consents and Approvals; No Violations. Except for
--------------------------------------
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Exchange Act (including
the filing with the SEC of the Offer Documents), the HSR Act, the DGCL, the
laws of other states in which Parent is qualified to do or is doing
business, state takeover laws and foreign and supranational laws relating
to antitrust and anticompetition clearances, neither the execution,
delivery or performance of this Agreement by Parent and Sub nor the
consummation by Parent and Sub of the transactions contemplated hereby will
(i) conflict with or result in any breach of any provision of the
respective certificate of incorporation or by-laws of Parent and Sub,
(ii) require any filing with, or permit, authorization, consent or approval
of, any Governmental Entity (except where the failure to obtain such
permits, authorizations, consents or approvals or to make such filings
would not be reasonably expected to prevent or materially delay the
consummation of the Offer and/or the Merger), (iii) result in a violation
or breach of, or constitute (with or without due notice or lapse of time or
both) a default (or give rise to any right of termination, amendment,
cancelation or acceleration) under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, license, lease,
contract, agreement or other instrument or obligation to which Parent or
any of its subsidiaries is a party or by which any of them or any of their
properties or assets may be bound or (iv) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to Parent, any
of its subsidiaries or any of their properties or assets, except in the
case of clauses (iii) and (iv) for violations, breaches or defaults which
would not, individually or in the aggregate, be reasonably expected to
prevent or materially delay the consummation of the Offer and/or the
Merger.
<PAGE>
32
SECTION 5.04. Information Supplied. None of the information
---------------------
supplied or to be supplied by Parent or Sub specifically for inclusion or
incorporation by reference in (i) the Offer Documents, (ii) the
Schedule 14D-9, (iii) the Information Statement or (iv) the Proxy Statement
will, in the case of the Offer Documents, the Schedule 14D-9 and the
Information Statement, at the respective times the Offer Documents, the
Schedule 14D-9 and the Information Statement are filed with the SEC or
first published, sent or given to the Company's stockholders, or, in the
case of the Proxy Statement, at the time the Proxy Statement is first
mailed to the Company's stockholders or at the time of the Stockholders
Meeting, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
are made, not misleading. The Offer Documents will comply as to form in
all material respects with the requirements of the Exchange Act and the
rules and regulations thereunder, except that no representation or warranty
is made by Parent or Sub with respect to statements made or incorporated by
reference therein based on information supplied by the Company specifically
for inclusion or incorporation by reference therein.
SECTION 5.05. Interim Operations of Sub. Sub was formed solely
--------------------------
for the purpose of engaging in the transactions contemplated hereby, has
engaged in no other business activities and has conducted its operations
only as contemplated hereby.
SECTION 5.06. Brokers. No broker, investment banker, financial
--------
advisor or other person, other than Morgan Stanley & Co. Incorporated, the
fees and expenses of which will be paid by Parent, is entitled to any
broker's, finder's, financial advisor's or other similar fee or commission
in connection with the transactions contemplated by this Agreement based
upon arrangements made by or on behalf of Parent or Sub.
SECTION 5.07. Financing. Parent has sufficient funds available
----------
to purchase, or to cause Sub to purchase, on a fully diluted basis, all the
outstanding Shares and Class B Shares pursuant to the Offer and the Merger
and to
<PAGE>
33
pay all fees and expenses related to the transactions contemplated by this
Agreement.
SECTION 5.08. Ownership of Shares. As of the date of this
--------------------
Agreement, other than pursuant to the Stockholder Agreement or through
pension plan or similar fiduciary investment accounts, the investment
decisions of which are not controlled by Parent or its affiliates, neither
Parent nor any of its affiliates is the record owner of, or has any
beneficial interest in, any Shares.
ARTICLE VI
Covenants
---------
SECTION 6.01. Covenants of the Company. Until such time as
-------------------------
Parent's designees shall constitute a majority of the members of the Board
of Directors of the Company, the Company agrees as to itself and its
subsidiaries that (except as expressly contemplated or permitted by this
Agreement or except to the extent that Parent shall otherwise consent in
writing):
(a) Ordinary Course. The Company shall, and shall cause its
----------------
subsidiaries to, carry on their respective businesses in the usual, regular
and ordinary course in substantially the same manner as heretofore
conducted and shall use all reasonable efforts to preserve intact their
present business organizations, keep available the services of their
present officers and employees and preserve their relationships with
customers, suppliers and others having business dealings with the Company
and its subsidiaries.
(b) Dividends; Changes in Stock. The Company shall not, and
----------------------------
shall not permit any of its subsidiaries to, (i) declare or pay any
dividends on or make other distributions in respect of any of its capital
stock (other than regular quarterly cash dividends not in excess of $.08
per Share or $.08 per Class B Share with usual record and payment dates and
in accordance with the Company's present dividend policy), except for
dividends by a direct or indirect wholly owned subsidiary of the Company to
its parent, (ii) split, combine or reclassify any of its capital
<PAGE>
34
stock or issue or authorize or propose the issuance of any other securities
in respect of, in lieu of or in substitution for shares of its capital
stock or (iii) repurchase, redeem or otherwise acquire any shares of
capital stock of the Company or its subsidiaries or any other securities
thereof or any rights, warrants or options to acquire any such shares or
other securities.
(c) Issuance of Securities. The Company shall not, and shall
-----------------------
not permit any of its subsidiaries to, issue, deliver, sell, pledge or
encumber, or authorize or propose the issuance, delivery, sale, pledge or
encumbrance of, any shares of its capital stock of any class or any
securities convertible into, or any rights, warrants, calls, subscriptions
or options to acquire, any such shares or convertible securities, or any
other ownership interest (including stock appreciation rights or phantom
stock) other than (i) the issuance of Shares upon the exercise of Company
Stock Options outstanding on the date of this Agreement and in accordance
with the terms of such Company Stock Options and (ii) the issuance of
Shares upon the conversion of Class B Shares.
(d) Governing Documents. The Company shall not, and shall not
--------------------
permit any of its subsidiaries to, amend or propose to amend its
certificate of incorporation or by-laws (or similar organizational
documents).
(e) No Acquisitions. The Company shall not, and shall not
----------------
permit any of its subsidiaries to, acquire or agree to acquire (i) by
merging or consolidating with, or by purchasing a substantial equity
interest in or substantial portion of the assets of, or by any other
manner, any business or any corporation, partnership, joint venture,
association or other business organization or division thereof or (ii) any
assets that are material, individually or in the aggregate, to the Company
and its subsidiaries taken as a whole, except purchases of inventory in the
ordinary course of business consistent with past practice and expenditures
consistent with the Company's current capital budget previously furnished
to Parent.
(f) No Dispositions. Other than sales of its products to
----------------
customers and immaterial dispositions of
<PAGE>
35
personal property, in each case in the ordinary course of business
consistent with past practice, the Company shall not, and shall not permit
any of its subsidiaries to, sell, lease, license, encumber or otherwise
dispose of, or agree to sell, lease, license, encumber or otherwise dispose
of, any of its assets.
(g) Indebtedness. The Company shall not, and shall not permit
-------------
any of its subsidiaries to, (i) incur any indebtedness for borrowed money
or guarantee any such indebtedness or issue or sell any debt securities or
warrants or rights to acquire any debt securities of the Company or any of
its subsidiaries, guarantee any debt securities of others, enter into any
"keep-well" or other agreement to maintain any financial statement
condition of another person or enter into any arrangement having the
economic effect of any of the foregoing, except for working capital
borrowings incurred in the ordinary course of business consistent with past
practice, or (ii) make any loans, advances or capital contributions to, or
investments in, any other person, other than (A) to the Company or any
direct or indirect wholly owned subsidiary of the Company or (B) any
advances to employees (1) in accordance with the terms of the Stock Option
Plans at a rate not less than the Company's cost of funds for short-term
borrowings and payable within 12 business days following the borrowing or
(2) in accordance with past practice.
(h) Advice of Changes; Filings. The Company shall confer on a
---------------------------
regular basis with Parent with respect to operational matters and promptly
advise Parent orally and in writing of any material adverse change with
respect to the Company. The Company shall promptly provide to Parent (or
its counsel) copies of all filings made by the Company with any
Governmental Entity in connection with this Agreement and the transactions
contemplated hereby.
(i) Tax Matters. The Company shall not make any tax election
------------
that would have a material effect on the tax liability of the Company or
any of its subsidiaries or settle or compromise any tax liability of the
Company or any of its subsidiaries that would materially affect the
aggregate tax liability of the Company or any of its subsidiaries. The
Company shall, before filing or causing
<PAGE>
36
to be filed any material tax return of the Company or any of its
subsidiaries or settling any tax liability not described in the preceding
sentence, consult with Parent and its advisors as to the positions and
elections that may be taken or made with respect to such return or with
respect to such settlement.
(j) Capital Expenditures. Neither the Company nor any of its
---------------------
subsidiaries shall make or agree to make any new capital expenditure or
expenditures other than expenditures consistent with the Company's current
capital budget previously furnished to Parent.
(k) Discharge of Liabilities. The Company shall not, and shall
-------------------------
not permit any of its subsidiaries to, pay, discharge, settle or satisfy
any claims, liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the payment, discharge,
settlement or satisfaction, (i) in the ordinary course of business
consistent with past practice or in accordance with their terms, of claims,
liabilities or obligations recognized or disclosed in the most recent
consolidated financial statements (or the notes thereto) of the Company
included in the Company Filed SEC Documents or incurred since the date of
such financial statements in the ordinary course of business consistent
with past practice or (ii) of claims, liabilities or obligations to the
extent they are less than $10,000 and unrelated to the Company's
stockholders or the transactions contemplated by this Agreement and the
Stockholder Agreement, or waive the benefits of, or agree to modify in any
manner, any confidentiality, standstill or similar agreement to which the
Company or any of its subsidiaries is a party.
(l) Material Contracts. Except in the ordinary course of
-------------------
business, neither the Company nor any of its subsidiaries shall (i) modify,
amend or terminate any material contract or agreement to which the Company
or such subsidiary is a party or (ii) waive, release or assign any material
rights or claims.
(m) General. The Company shall not, and shall not permit any of
--------
its subsidiaries to, authorize any of, or
<PAGE>
37
commit or agree to take any of, the foregoing actions otherwise prohibited
by this Section 6.01.
SECTION 6.02. No Solicitation. (a) The Company shall, and
----------------
shall direct and use reasonable efforts to cause its officers, directors,
employees, representatives and agents to, immediately cease any discussions
or negotiations with any parties that may be ongoing with respect to a
Takeover Proposal (as hereinafter defined). The Company shall not, nor
shall it permit any of its subsidiaries to, nor shall it authorize or
permit any of its officers, directors or employees or any investment
banker, financial advisor, attorney, accountant or other representative
retained by it or any of its subsidiaries to, directly or indirectly,
(i) solicit, initiate or knowingly encourage (including by way of
furnishing information), or take any other action designed or reasonably
likely to facilitate, any inquiries or the making of any proposal which
constitutes, or may reasonably be expected to lead to, any Takeover
Proposal or (ii) participate in any discussions or negotiations regarding
any Takeover Proposal; provided, however, that if, at any time prior to the
-------- -------
acceptance for payment of Shares pursuant to the Offer, the Board of
Directors of the Company determines in good faith, after consultation with
outside counsel, that it is necessary to do so in order to comply with its
fiduciary duties to the Company's stockholders under applicable law, the
Company may, in response to a Takeover Proposal which was not solicited
subsequent to the date hereof, and subject to compliance with
Section 6.02(c), (x) furnish information with respect to the Company to any
person pursuant to a customary confidentiality agreement (as determined by
the Company after consultation with its outside counsel) and
(y) participate in negotiations regarding such Takeover Proposal. Without
limiting the foregoing, it is understood that any violation of the
restrictions set forth in the preceding sentence by any director or
executive officer of the Company or any of its subsidiaries, whether or not
such person is purporting to act on behalf of the Company or any of its
subsidiaries or otherwise, shall be deemed to be a breach of this
Section 6.02(a) by the Company. For purposes of this Agreement, "Takeover
Proposal" means any inquiry, proposal or offer from any person relating to
any direct or indirect acquisition or purchase of 20% or more of the
<PAGE>
38
assets of the Company and its subsidiaries or 20% or more of any class of
equity securities of the Company or any of its subsidiaries, any tender
offer or exchange offer that if consummated would result in any person
beneficially owning 20% or more of any class of equity securities of the
Company or any of its subsidiaries, any merger, consolidation, business
combination, recapitalization, liquidation, dissolution or similar
transaction involving the Company or any of its subsidiaries, other than
the transactions contemplated by this Agreement, or any other transaction
the consummation of which could reasonably be expected to impede, interfere
with, prevent or materially delay the Offer and/or the Merger or which
would reasonably be expected to dilute materially the benefits to Parent of
the transactions contemplated by this Agreement and the Stockholder
Agreements
(b) Except as set forth in this Section 6.02, neither the Board
of Directors of the Company nor any committee thereof shall (i) withdraw or
modify, or propose publicly to withdraw or modify, in a manner adverse to
Parent, the approval or recommendation by such Board of Directors or such
committee of the Offer, the Merger or this Agreement, (ii) approve or
recommend, or propose publicly to approve or recommend, any Takeover
Proposal or (iii) cause the Company to enter into any letter of intent,
agreement in principle, acquisition agreement or other similar agreement
(each, an "Acquisition Agreement") related to any Takeover Proposal.
Notwithstanding the foregoing, in the event that prior to the acceptance
for payment of Shares pursuant to the Offer the Board of Directors of the
Company determines in good faith, after consultation with outside counsel,
that it is necessary to do so in order to comply with its fiduciary duties
to the Company's stockholders under applicable law, the Board of Directors
of the Company may (subject to this and the following sentences)
(x) withdraw or modify its approval or recommendation of the Offer, the
Merger and this Agreement or (y) approve or recommend a Superior Proposal
(as defined below) or terminate this Agreement (and concurrently with or
after such termination, if it so chooses, cause the Company to enter into
any Acquisition Agreement with respect to any Superior Proposal), but in
each of the cases set forth in this clause (y), only at a time that is
after the second business
<PAGE>
39
day following Parent's receipt of written notice (a "Notice of Superior
Proposal") advising Parent that the Board of Directors of the Company has
received a Superior Proposal, specifying the material terms and conditions
of such Superior Proposal and identifying the person making such Superior
Proposal. For purposes of this Agreement, a "Superior Proposal" means any
bona fide proposal made by a third party to acquire, directly or
indirectly, for consideration consisting of cash and/or securities, more
than 50% of the combined voting power of the shares of Company Common Stock
and Class B Common Stock then outstanding or all or substantially all the
assets of the Company and otherwise on terms which the Board of Directors
of the Company determines in its good faith judgment (based on the advice
of a financial advisor of nationally recognized reputation) to be more
favorable to the Company's stockholders than the Offer and the Merger and
for which financing, to the extent required, is then committed or which, in
the good faith judgment of the Board of Directors of the Company, is
reasonably capable of being financed by such third party.
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 6.02, the Company shall immediately
advise Parent orally and in writing of any request for information or of
any Takeover Proposal, the material terms and conditions of such request or
Takeover Proposal and the identity of the person making such request or
Takeover Proposal. The Company will keep Parent fully informed of the
status and details (including amendments or proposed amendments) of any
such request or Takeover Proposal.
(d) Nothing contained in this Section 6.02 shall prohibit the
Company from taking and disclosing to its stockholders a position
contemplated by Rule 14e-2(a) promulgated under the Exchange Act or from
making any disclosure to the Company's stockholders if, in the good faith
judgment of the Board of Directors of the Company, after consultation with
outside counsel, failure so to disclose would be inconsistent with its
fiduciary duties to the Company's stockholders under applicable law;
provided, however, neither the Company nor its Board of Directors nor any
- -------- -------
committee thereof shall, except as permitted by
<PAGE>
40
Section 6.02(b), withdraw or modify, or propose publicly to withdraw or
modify, its position with respect to the Offer, this Agreement or the
Merger or approve or recommend, or propose publicly to approve or
recommend, a Takeover Proposal.
SECTION 6.03. Other Actions. (a) Except as expressly
--------------
contemplated or permitted by this Agreement, the Company shall not, and
shall not permit any of its subsidiaries to, take any action that would, or
that could reasonably be expected to, result in (i) any of the
representations and warranties of the Company set forth in this Agreement
that are qualified as to materiality becoming untrue, (ii) any of such
representations and warranties that are not so qualified becoming untrue in
any material respect or (iii) any of the Offer Conditions not being
satisfied (subject to the Company's right to take actions specifically
permitted by Section 6.02).
(b) Nothing contained in this Section 6.03 or elsewhere in this
Agreement shall be deemed to prohibit the Board of Directors of the Company
from adopting a resolution contemplated by subparagraph (9) of
paragraph (D) of Article FOURTH of the Company's Certificate of
Incorporation in the event that the Board determines in good faith, after
consultation with outside counsel, that the failure to do so would be
inconsistent with its fiduciary duties under applicable law, subject to the
right of Parent or Sub to terminate this Agreement pursuant to the terms
hereof.
ARTICLE VII
Additional Agreements
---------------------
SECTION 7.01. Stockholder Approval; Preparation of Proxy
------------------------------------------
Statement. (a) If the Company Stockholder Approval is required by law,
- ----------
the Company shall, as soon as practicable following the expiration of the
Offer, duly call, give notice of, convene and hold a meeting of its
stockholders (the "Stockholders Meeting") for the purpose of obtaining the
Company Stockholder Approval. The Company shall, through its Board of
Directors (but subject to the right of its Board of Directors to withdraw
or modify its
<PAGE>
41
approval or recommendation of the Offer, the Merger and this Agreement as
set forth in Section 6.02(b)), recommend to its stockholders that the
Company Stockholder Approval be given. Notwithstanding the foregoing, if
Sub or any other subsidiary of Parent shall acquire at least 90% of the
outstanding Shares and at least 90% of the outstanding Class B Shares, the
parties shall, at the request of Parent, take all necessary and appropriate
action to cause the Merger to become effective as soon as practicable after
the expiration of the Offer without a Stockholders Meeting in accordance
with Section 253 of the DGCL. Without limiting the generality of the
foregoing, the Company agrees that its obligations pursuant to the first
sentence of this Section 7.01(a) shall not be affected by (i) the
commencement, public proposal, public disclosure or communication to the
Company of any Takeover Proposal or (ii) the withdrawal or modification by
the Board of Directors of the Company of its approval or recommendation of
the Offer, this Agreement or the Merger.
(b) If the Company Stockholder Approval is required by law, the
Company shall, at Parent's request, as soon as practicable following the
expiration of the Offer, prepare and file a preliminary Proxy Statement
with the SEC and shall use its best efforts to respond to any comments of
the SEC or its staff and to cause the Proxy Statement to be mailed to the
Company's stockholders as promptly as practicable after responding to all
such comments to the satisfaction of the staff. The Company shall notify
Parent promptly of the receipt of any comments from the SEC or its staff
and of any request by the SEC or its staff for amendments or supplements to
the Proxy Statement or for additional information and will supply Parent
with copies of all correspondence between the Company or any of its
representatives, on the one hand, and the SEC or its staff, on the other
hand, with respect to the Proxy Statement or the Merger. If at any time
prior to the Stockholders Meeting there shall occur any event that should
be set forth in an amendment or supplement to the Proxy Statement, the
Company shall promptly prepare and mail to its stockholders such an
amendment or supplement. The Company shall not mail any Proxy Statement,
or any amendment or supplement thereto, to which Parent reasonably objects.
Parent shall cooperate
<PAGE>
42
with the Company in the preparation of the Proxy Statement or any amendment
or supplement thereto.
(c) Parent agrees to cause all Shares accepted for payment
pursuant to the Offer and all other Shares owned by Parent or any
subsidiary of Parent to be voted in favor of the Company Stockholder
Approval.
SECTION 7.02. Access to Information. Upon reasonable notice and
----------------------
subject to restrictions contained in confidentiality agreements to which
the Company is subject (from which it shall use reasonable efforts to be
released), the Company shall, and shall cause each of its subsidiaries to,
afford to Parent and to the officers, employees, accountants, counsel and
other representatives of Parent all reasonable access, during normal
business hours during the period prior to the Effective Time, to all their
respective properties, books, contracts, commitments and records and,
during such period, the Company shall (and shall cause each of its
subsidiaries to) furnish promptly to Parent (a) a copy of each report,
schedule, registration statement and other document filed or received by it
during such period pursuant to the requirements of the Federal or state
securities laws or the Federal tax laws and (b) all other information
concerning its business, properties and personnel as Parent may reasonably
request. In no event shall the Company be required to supply to Parent or
its officers, employees, accountants, counsel and other representatives any
information relating to indications of interest from, or discussions with,
any other potential acquirors of the Company which were received or
conducted prior to the date hereof, except to the extent necessary for use
in the Offer Documents, the Schedule 14D-9 or the Proxy Statement. Except
as otherwise agreed to by the Company, unless and until Parent and Sub
shall have purchased Shares having a majority of the outstanding voting
power of the Company pursuant to the Offer or otherwise, and
notwithstanding termination of this Agreement, the terms of the
Confidentiality Agreement dated as of November 30, 1995, shall apply to all
information about the Company that has been furnished under this Agreement
by the Company to Parent or Sub.
<PAGE>
43
SECTION 7.03. Reasonable Efforts. Except as otherwise
-------------------
contemplated in this Agreement, each of the Company, Parent and Sub agree
to use its reasonable efforts to take, or cause to be taken, all actions
necessary to comply promptly with all legal requirements that may be
imposed on itself with respect to the Offer and the Merger (which actions
shall include furnishing all information required under the HSR Act and in
connection with approvals of or filings with any other Governmental Entity)
and shall promptly cooperate with and furnish information to each other in
connection with any such requirements imposed upon any of them or any of
their subsidiaries in connection with the Offer and the Merger. Except as
otherwise contemplated in this Agreement, each of the Company, Parent and
Sub shall, and shall cause its subsidiaries to, use its reasonable efforts
to take all reasonable actions necessary to obtain (and shall cooperate
with each other in obtaining) any consent, authorization, order or approval
of, or any exemption by, any Governmental Entity or other public or private
third party required to be obtained or made by Parent, Sub, the Company or
any of their subsidiaries in connection with the Offer and the Merger or
the taking of any action contemplated thereby or by this Agreement, except
that no party need waive any substantial rights or agree to any substantial
limitation on its operations or to dispose of any assets.
SECTION 7.04. Directors. Promptly upon Sub having acquired a
----------
majority of the combined voting power of the Shares and Class B Shares, Sub
shall be entitled to designate such number of directors on the Board of
Directors of the Company as will give Sub, subject to compliance with
Section 14(f) of the Exchange Act, a majority of such directors, and the
Company shall, at such time, cause Sub's designees to be so elected by its
existing Board of Directors; provided, however, that in the event that
-------- -------
Sub's designees are elected to the Board of Directors of the Company, until
the Effective Time such Board of Directors shall have at least three
directors who are directors on the date of this Agreement and who are not
officers of the Company (the "Independent Directors"); and provided further
-------- -------
that, in such event, if the number of Independent Directors shall be
reduced below three for any reason whatsoever, the remaining Independent
Directors or Director shall designate
<PAGE>
44
a person or persons to fill such vacancy or vacancies, each of whom shall
be deemed to be an Independent Director for purposes of this Agreement or,
if no Independent Directors then remain, the other directors shall
designate three persons to fill such vacancies who shall not be officers or
affiliates of the Company or any of its subsidiaries, or officers or
affiliates of Parent or any of its subsidiaries, and such persons shall be
deemed to be Independent Directors for purposes of this Agreement. Subject
to applicable law, the Company shall take all action requested by Parent
that is reasonably necessary to effect any such election, including mailing
to its stockholders the Information Statement containing the information
required by Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder, and the Company agrees to make such mailing with the mailing of
the Schedule 14D-9 (provided that Sub shall have provided to the Company on
a timely basis all information required to be included in the Information
Statement with respect to Sub's designees). In connection with the
foregoing, the Company will promptly, at the option of Parent, either
increase the size of the Company's Board of Directors and/or obtain the
resignation of such number of its current directors as is necessary to
enable Sub's designees to be elected or appointed to, and to constitute a
majority of the directors on, the Company's Board of Directors as provided
above.
SECTION 7.05. Fees and Expenses. (a) Except as provided below
------------------
in this Section 7.05, all fees and expenses incurred in connection with the
Offer, the Merger, this Agreement and the transactions contemplated by this
Agreement shall be paid by the party incurring such fees or expenses,
whether or not the Offer or the Merger is consummated.
(b) The Company shall pay, or cause to be paid, in same day
funds to Parent (x) the Expenses (as hereinafter defined) in an amount up
to but not to exceed $5,000,000 and (y) $15,000,000 (the "Termination Fee")
under the circumstances and at the times set forth as follows:
(i) if Parent or Sub terminates this Agreement under
Section 9.01(d) and at the time of such termination there is no
pending Takeover Proposal, the
<PAGE>
45
Company shall pay the Expenses and the Termination Fee upon demand;
(ii) if Parent or Sub terminates this Agreement under
Section 9.01(d) and at the time of such termination a Takeover
Proposal shall then be pending, the Company shall pay the Expenses
upon demand; in addition, if within 18 months after such termination,
the Company shall enter into an Acquisition Agreement providing for a
Takeover Proposal or a Takeover Proposal shall be consummated, the
Company shall pay the Termination Fee concurrently with the earlier of
the entering into of such Acquisition Agreement or the consummation of
such Takeover Proposal;
(iii) if the Company terminates this Agreement under
Section 9.01(e), the Company shall pay the Expenses concurrently
therewith; in addition, if within 18 months after such termination,
the Company shall enter into an Acquisition Agreement providing for a
Takeover Proposal or a Takeover Proposal shall be consummated, the
Company shall pay the Termination Fee concurrently with the earlier of
the entering into of such Acquisition Agreement or the consummation of
such Takeover Proposal; and
(iv) if, at the time of any other termination of this Agreement
(other than by the Company pursuant to Section 9.01(f) or 9.01(g)), a
Takeover Proposal shall have been made (other than a Takeover Proposal
made prior to the date hereof), the Company shall pay the Expenses, if
terminated by the Company, concurrently therewith or, if terminated by
Parent, upon demand; in addition, if within 18 months of such
termination, the Company shall enter into an Acquisition Agreement
providing for a Takeover Proposal or a Takeover Proposal shall be
consummated, the Company shall pay the Termination Fee concurrently
with the earlier of the entering into of such Acquisition Agreement or
the consummation of such Takeover Proposal.
"Expenses" shall mean documented out-of-pocket fees and expenses incurred
or paid by or on behalf of Parent in connection with the Offer, the Merger
or the consummation of
<PAGE>
46
any of the transactions contemplated by this Agreement, including all fees
and expenses of law firms, commercial banks, investment banking firms,
accountants, experts and consultants to Parent.
SECTION 7.06. Indemnification; Insurance. (a) Parent and Sub
---------------------------
agree that all rights to indemnification for acts or omissions occurring
prior to the Effective Time now existing in favor of the current or former
directors, officers, employees and agents (the "Indemnified Parties") of
the Company and its subsidiaries as provided in their respective
certificates of incorporation or by-laws (or similar organizational
documents) shall survive the Merger and shall continue in full force and
effect in accordance with their terms. From and after the Effective Time,
Parent shall, and shall cause the Surviving Corporation to, indemnify and
hold harmless any and all Indemnified Parties to the full extent such
persons may be indemnified by the Company or such subsidiaries, as the case
may be, pursuant to their respective certificates of incorporation or by-
laws (or similar organizational documents) or pursuant to indemnification
agreements as in effect on the date of this Agreement for acts or omissions
occurring at or prior to the Effective Time, and Parent shall, or shall
cause the Surviving Corporation to, advance litigation expenses incurred by
such persons in connection with defending any action arising out of such
acts or omissions to the extent provided by with the respective terms and
provisions of such certificates of incorporation, by-laws, similar
documents or indemnification agreements.
(b) For six years from the Effective Time, Parent shall maintain
in effect the Company's current directors' and officers' liability
insurance covering those persons who are currently covered by the Company's
directors' and officers' liability insurance policy (a copy of which has
been heretofore delivered to Parent); provided, however, that in no event
-------- -------
shall Parent be required to pay a premium in any one year in an amount in
excess of $360,000; and, provided, further, that if the annual premiums of
-------- -------
such insurance coverage exceed such amount, Parent shall be obligated to
obtain a policy with the greatest coverage available for a cost not
exceeding such amount.
<PAGE>
47
(c) This Section 7.06 shall survive the consummation of the
Merger at the Effective Time, is intended to benefit the Company, Parent,
the Surviving Corporation and the Indemnified Parties, and shall be binding
on all successors and assigns of Parent and the Surviving Corporation.
SECTION 7.07. Employee Benefits. (a) During the period from the
Effective Time until the first anniversary thereof, Parent shall (i)
maintain or cause to be maintained the Benefit Plans that are in effect as
of the Effective Time, other than any Benefit Plan providing benefits based
on equity securities or any equivalent thereof or any incentive-based
compensation, bonus or other similar arrangement, and (ii) provide each
person employed by the Surviving Corporation and its subsidiaries
compensation (including salary, bonus and incentive compensation) that is
in the aggregate substantially comparable to that enjoyed by such employee
at the Effective Time, other than as referred to in clause (i) above
(taking into account salary, bonus and equity-based and incentive-based
benefits). From and after the first anniversary of the Effective Time,
Parent shall continue the employment arrangements described in the
preceding sentence or shall offer to each person then employed by the
Surviving Corporation and its subsidiaries, compensation and benefits
substantially comparable to those then enjoyed by other similarly situated
employees of Parent and its affiliates. For purposes of eligibility to
participate in and vesting in benefits provided under employee benefit
plans maintained by Parent and its affiliates (but not for purposes of
determining benefits (or accruals thereof) under such plans), all persons
previously employed by the Company and then employed by Parent or its
affiliates shall be credited with their years of service with the Company
and its subsidiaries and years of service with prior employers to the
extent service with prior employers is taken into account under the Benefit
Plans.
(b) On or before the Effective Time, the Company shall take any
action necessary to terminate the Helene Curtis Industries, Inc. Employee
Stock Ownership Plan and Trust (the "ESOP") as of the Effective Time and
shall cause the ESOP to make lump sum distributions to ESOP participants
<PAGE>
48
within a reasonable period of time following the Effective Time pursuant to
the terms of the ESOP and applicable law.
(c) The foregoing shall not constitute any commitment, contract,
understanding or guarantee (express or implied) on the part of the Parent
or Sub of a post-Effective Time employment relationship of any term of
duration or on any terms other than those the Parent or Sub may establish.
Employment of any of the employees by Parent or Sub shall be "at will" and
may be terminated by Parent or Sub at any time for any reason (subject to
any legally binding agreement other than this Agreement, or any applicable
laws or collective bargaining agreement, or any other arrangement or
commitment).
SECTION 7.08. Severance Policy and Other Agreements. (a) With
--------------------------------------
respect to any officer who is covered by a severance policy separate from
the standard severance policy for the Company's employees (which separate
severance policy is described in the Company Letter), Parent shall maintain
(or shall cause Sub to maintain) such separate policy as in effect as of
the Effective Time until the first anniversary of the Effective Time, and,
as to all other officers and employees, Parent shall maintain (or shall
cause to be maintained) the Company's standard severance policy as in
effect as of the Effective Time for a period of at least six months from
the Effective Time.
(b) Parent shall honor or cause to be honored all severance
agreements, employment agreements and death benefit agreements with the
Company's officers and employees to the extent disclosed in the Company
Letter.
(c) Parent and its subsidiaries shall, until the first
anniversary of the Effective Time, provide reasonable and customary
outplacement services ("Outplacement Services") to officers of the Company
and its subsidiaries whose employment is terminated without cause, which
Outplacement Services provided to such officer shall include one-on-one
counseling and assistance.
SECTION 7.09. Stock Options, SARs and Restricted Stock. (a) As
-----------------------------------------
soon as practicable following the date of this Agreement, the Board of
Directors of the Company (or,
<PAGE>
49
if appropriate, any committee of the Board of Directors administering the
Stock Option Plans (as defined below)) may adopt such resolutions or take
such other actions as are required to provide that (i) each stock option to
purchase shares of Company Common Stock heretofore granted under any stock
option, stock appreciation rights or stock purchase plan of the Company
(collectively, the "Stock Option Plans") outstanding immediately prior to
the consummation of the Offer, whether or not then exercisable, shall
become fully exercisable immediately following the acceptance for payment
of Shares pursuant to the Offer (the "Acceleration Time"); (ii) each stock
appreciation right heretofore granted under any Stock Option Plan
outstanding immediately prior to the Offer, whether or not then
exercisable, shall become fully exercisable at the Acceleration Time; and
(iii) all restrictions applicable to any restricted stock award heretofore
granted under any Stock Option Plan outstanding immediately prior to the
Offer shall lapse at the Acceleration Time.
(b) At the Effective Time, each award then outstanding under any
Stock Option Plan, other than an award held by an officer (as such term is
defined in Rule 16a-1(f) under the Exchange Act) or director of the
Company, shall be canceled and the holder thereof shall have no further
rights with respect thereof other than the right to receive in
consideration for the cancelation thereof an amount of cash equal to the
product of (i) the number of Shares subject to such stock option or stock
appreciation right and (ii) the excess of the price paid in the Offer over
the per share exercise price, in the case of any such stock option, or the
excess of the price paid in the Offer over the per share base price, in the
case of any such stock appreciation right, in each such case minus all
applicable taxes required to be withheld by the Company; provided, however,
that no such cash payment shall be made with respect to any stock
appreciation right which is related to a stock option in respect of which
such a cash payment shall be made. Such payment to each such holder shall
be made as soon as practicable following the Effective Time upon the
delivery by such holder of a signed statement in a form satisfactory to
Parent acknowledging that such holder waives any claims against Parent, Sub
or the Company for any other consideration in respect of such stock option
or stock
<PAGE>
50
appreciation right.
(c) As soon as practicable following the Acceleration Time, but
prior to the Effective Time, the Company shall purchase each Share issued
pursuant to the 1979 Stock Option Plan in accordance with the Item 4.10(i)
Letter.
SECTION 7.10. Certain Litigation. The Company agrees that it
-------------------
shall not settle any litigation commenced after the date hereof against the
Company or any of its directors by any stockholder of the Company relating
to the Offer, the Merger, this Agreement or the Stockholder Agreements,
without the prior written consent of Parent. In addition, the Company
shall not voluntarily cooperate with any third party that may hereafter
seek to restrain or prohibit or otherwise oppose the Offer or the Merger
and shall cooperate with Parent and Sub to resist any such effort to
restrain or prohibit or otherwise oppose the Offer or the Merger.
SECTION 7.11. Plans for the Company. Parent and its affiliates
----------------------
presently intend, among other things, that the Company will be
headquartered in Chicago, will maintain manufacturing and product
development facilities in the United States and will continue to operate
under its present corporate name. In addition, Parent and its affiliates
presently intend that the Company will have primary responsibility for the
haircare operations of Parent and its affiliates in the United States and
global responsibilities as an innovation center for haircare and will
operate in other personal care categories.
ARTICLE VIII
Conditions
----------
SECTION 8.01. Conditions to Each Party's Obligation To Effect
-----------------------------------------------
the Merger. The respective obligation of each party to effect the Merger
- -----------
shall be subject to the satisfaction (or waiver by each party) prior to the
Closing Date of the following conditions:
<PAGE>
51
(a) Company Stockholder Approval. If required by applicable
-----------------------------
law, the Company Stockholder Approval shall have been obtained.
(b) No Injunctions or Restraints. No statute, rule, regulation,
-----------------------------
executive order, decree, temporary restraining order, preliminary or
permanent injunction or other order issued by any court of competent
jurisdiction or other Governmental Entity preventing the consummation
of the Merger shall be in effect; provided, however, that each of the
-------- -------
parties shall have used reasonable efforts to prevent the entry of any
such injunction or other order and to appeal as promptly as possible
any injunction or other order that may be entered.
(c) Purchase of Shares. Sub shall have previously accepted for
-------------------
payment and paid for Shares pursuant to the Offer.
ARTICLE IX
Termination and Amendment
-------------------------
SECTION 9.01. Termination. This Agreement may be terminated at
------------
any time prior to the Effective Time, whether before or after approval of
the terms of this Agreement by the stockholders of the Company:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company:
(i) if (x) as a result of the failure of any of the Offer
Conditions the Offer shall have terminated or expired in
accordance with its terms without Sub having accepted for payment
any Shares pursuant to the Offer or (y) Sub shall not have
accepted for payment any Shares pursuant to the Offer prior to
September 30, 1996; provided, however, that the right to
-------- -------
terminate this Agreement pursuant to this Section 9.01(b)(i)
<PAGE>
52
shall not be available to any party whose failure to perform any
of its obligations under this Agreement results in the failure of
any such condition or if the failure of such condition results
from facts or circumstances that constitute a breach of
representation or warranty under this Agreement by such party; or
(ii) if any Governmental Entity shall have issued an order,
decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the acceptance for payment
of, or payment for, shares of Company Common Stock pursuant to
the Offer or shares of Company Common Stock or Class B Common
Stock pursuant to the Merger and such order, decree or ruling or
other action shall have become final and nonappealable;
(c) by Parent or Sub prior to the purchase of Shares pursuant to
the Offer in the event of a breach by the Company of any
representation, warranty, covenant or other agreement contained in
this Agreement which (i) would give rise to the failure of a condition
set forth in paragraph (e) or (f) of Exhibit A and (ii) cannot be or
has not been cured within 20 days after the giving of written notice
to the Company;
(d) by Parent or Sub if (i) either Parent or Sub is entitled to
terminate the Offer as a result of the occurrence of any event set
forth in paragraph (d) of Exhibit A to this Agreement or (ii) the
Board of Directors of the Company (or any authorized committee
thereof) takes the action referred to in Section 6.03(b);
(e) by the Company in accordance with Section 6.02(b), provided
that it has complied with all provisions thereof, including the notice
provisions therein, and that it complies with applicable requirements
relating to the payment (including the timing of any payment) of
Expenses and the Termination Fee;
<PAGE>
53
(f) by the Company, if Sub or Parent shall have breached in any
material respect any of their respective representations, warranties,
covenants or other agreements contained in this Agreement, which
breach or failure to perform is incapable of being cured or has not
been cured within 20 days after the giving of written notice to Parent
or Sub, as applicable; or
(g) by the Company, if the Offer has not been timely commenced
in accordance with Section 1.01.
SECTION 9.02. Effect of Termination. In the event of a
----------------------
termination of this Agreement by either the Company or Parent as provided
in Section 9.01, this Agreement shall forthwith become void and there shall
be no liability or obligation on the part of Parent, Sub or the Company or
their respective officers or directors, except with respect to the last
sentence of Section 1.02(c), Section 4.18, Section 5.06, the last sentence
of Section 7.02, Section 7.05, this Section 9.02 and Article X; provided,
--------
however, that nothing herein shall relieve any party for liability for any
- -------
breach hereof.
SECTION 9.03. Amendment. This Agreement may be amended by the
----------
parties hereto, by action taken or authorized by their respective Boards of
Directors, at any time before or after obtaining the Company Stockholder
Approval (if required by law), but, after the purchase of Shares pursuant
to the Offer, no amendment shall be made which decreases the Merger
Consideration and, after the Company Stockholder Approval, no amendment
shall be made which by law requires further approval by such shareholders
without obtaining such further approval. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto. Following the election or appointment of the Sub's designees
pursuant to Section 7.04 and prior to the Effective Time, the affirmative
vote of a majority of the Independent Directors then in office shall be
required by the Company to (i) amend or terminate this Agreement by the
Company, (ii) exercise or waive any of the Company's rights or remedies
under this Agreement, (iii) extend the time for performance of Parent and
Sub's respective obligations under this Agreement or (iv) take any action
to
<PAGE>
54
amend or otherwise modify the Company's Certificate of Incorporation or By-
Laws.
SECTION 9.04. Extension; Waiver. At any time prior to the
------------------
Effective Time, the parties hereto, by action taken or authorized by their
respective Boards of Directors, may, to the extent legally allowed,
(i) subject to the provisions of Section 9.03, extend the time for the
performance of any of the obligations or other acts of the other parties
hereto, (ii) subject to the provisions of Section 9.03, waive any
inaccuracies in the representations and warranties contained herein or in
any document delivered pursuant hereto or (iii) subject to the provisions
of Section 9.03, waive compliance with any of the agreements or conditions
contained herein. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in a written
instrument signed on behalf of such party. The failure of any party to
this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of those rights.
ARTICLE X
Miscellaneous
-------------
SECTION 10.01. Nonsurvival of Representations, Warranties and
----------------------------------------------
Agreements. None of the representations and warranties in this Agreement
- -----------
or in any instrument delivered pursuant to this Agreement shall survive the
Effective Time or, in the case of the Company, shall survive the acceptance
for payment of, and payment for, Shares by Sub pursuant to the Offer. This
Section 10.01 shall not limit any covenant or agreement of the parties
which by its terms contemplates performance after the Effective Time of the
Merger.
SECTION 10.02. Notices. All notices and other communications
--------
hereunder shall be in writing and shall be deemed given if delivered
personally, telecopied (which is confirmed), sent by overnight courier
(providing proof of delivery) or mailed by registered or certified mail
(return receipt requested) to the parties at the following addresses
<PAGE>
55
(or at such other address for a party as shall be specified by like
notice):
(a) if to Parent or Sub, to
Conopco, Inc.
390 Park Avenue
New York, New York 10022
Attention: Ronald M. Soiefer, Esq.
Telecopy No.: (212) 688-3411
and
(b) if to the Company, to
Helene Curtis Industries, Inc. 325
North Wells Street
Chicago, Illinois 60610
Attention: Roy A. Wentz
Telecopy No.: (312) 527-5103
SECTION 10.03. Interpretation. When a reference is made in this
---------------
Agreement to an Article or a Section, such reference shall be to an Article
or a Section of this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation
of this Agreement. Whenever the words "include", "includes" or "including"
are used in this Agreement, they shall be deemed to be followed by the
words "without limitation". The phrase "made available" in this Agreement
shall mean that the information referred to has been made available if
requested by the party to whom such information is to be made available.
As used in this Agreement, the term "subsidiary" of any person means
another person, an amount of the voting securities, other voting ownership
or voting partnership interests of which is sufficient to elect at least a
majority of its Board of Directors or other governing body (or, if there
are no such voting interests, 50% or more of the equity interests of which)
is owned directly or indirectly by such first person. As used in this
Agreement, (a) "Significant Subsidiary" of any person means any Significant
Subsidiary of such person within the meaning of Rule 1-02 of Regulation S-X
of the SEC
<PAGE>
56
and (b) "material adverse change" or "material adverse effect" means, when
used in connection with the Company, any change or effect (or any
development that, insofar as can reasonably be foreseen, is likely to
result in any change or effect) or fact or condition that, individually or
in the aggregate with any such other changes or effects, is materially
adverse to the business, properties, assets, financial condition or results
of operations of the Company and its subsidiaries taken as a whole (other
than any such change, effect, fact or condition that shall have been
disclosed under Item 4.08 of the Company Letter).
SECTION 10.04. Counterparts. This Agreement may be executed in
-------------
two or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when two or more counterparts have
been signed by each of the parties and delivered to the other parties, it
being understood that all parties need not sign the same counterpart.
SECTION 10.05. Entire Agreement; No Third Party Beneficiaries.
-----------------------------------------------
This Agreement (including the documents and the instruments referred to
herein) (a) constitutes the entire agreement and supersede all prior
agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof, and (b) except as provided in
Section 7.06 is not intended to confer upon any person other than the
parties hereto any rights or remedies hereunder.
SECTION 10.06. Governing Law. This Agreement shall be governed
--------------
and construed in accordance with the laws of the State of Delaware without
regard to any applicable conflicts of law.
SECTION 10.07. Publicity. Except as otherwise required by law,
----------
court process or the rules of the NYSE, for so long as this Agreement is in
effect, neither the Company nor Parent shall, or shall permit any of its
subsidiaries to, issue or cause the publication of any press release or
other public announcement with respect to the transactions contemplated by
this Agreement without prior consultation with the other party, which
consent shall not be unreasonably withheld.
<PAGE>
57
SECTION 10.08. Assignment. Neither this Agreement nor any of
-----------
the rights, interests or obligations hereunder shall be assigned by any of
the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other parties, except that Sub may assign, in
its sole discretion, any or all of its rights, interests and obligations
hereunder to Parent or to any direct or indirect wholly owned subsidiary of
Parent. Subject to the preceding sentence, this Agreement will be binding
upon, inure to the benefit of and be enforceable by the parties and their
respective successors and assigns.
SECTION 10.09. Enforcement. The parties agree that irreparable
------------
damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall
be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions of this
Agreement in any court of the United States located in the State of
Delaware or in 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
<PAGE>
58
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.
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
CONOPCO, INC.,
by
/s/ Mart Laius
-----------------------------
Name: Mart Laius
Title: Vice President
CONOPCO ACQUISITION COMPANY, INC.,
by
/s/ Mart Laius
--------------------------
Name: Mart Laius
Title: President
HELENE CURTIS INDUSTRIES, INC.,
by
/s/ Ronald J. Gidwitz
---------------------------
Name: Ronald J. Gidwitz
Title: Executive Officer
<PAGE>
EXHIBIT A
Conditions of the Offer
-----------------------
Notwithstanding any other term of the Offer or this Agreement,
Sub shall not be required to accept for payment or, subject to any
applicable rules and regulations of the SEC, including Rule 14e-1(c) under
the Exchange Act (relating to Sub's obligation to pay for or return
tendered Shares after the termination or withdrawal of the Offer), to pay
for any Shares tendered pursuant to the Offer unless (i) there shall have
been validly tendered and not withdrawn prior to the expiration of the
Offer such number of Shares that, together with the Class B Shares subject
to the Stockholder Agreement, would constitute a majority of the combined
voting power of the Shares and Class B Shares (determined on a fully
diluted basis for all outstanding stock options and any other rights to
acquire Shares) assuming for such determination that each Class B Share
subject to the Stockholder Agreement is only entitled to one vote per
share (the "Minimum Condition") and (ii) any waiting period under the HSR
Act applicable to the purchase of Shares pursuant to the Offer shall have
expired or been terminated (the "HSR Condition"). Furthermore,
notwithstanding any other term of the Offer or this Agreement, Sub shall
not be required to accept for payment or, subject as aforesaid, to pay for
any Shares not theretofore accepted for payment or paid for, and may
terminate the Offer if, at any time on or after the date of this Agreement
and before the acceptance of such Shares for payment or the payment
therefor, any of the following conditions exists (other than as a result of
any action or inaction of Parent or any of its subsidiaries that
constitutes a breach of this Agreement):
(a) there shall be threatened or pending by any Governmental
Entity any suit, action or proceeding (i) challenging the acquisition
by Parent or Sub of any Shares under the Offer or pursuant to the
Stockholder Agreement, seeking to restrain or prohibit the making or
consummation of the Offer or the Merger or the performance of any of
the other transactions contemplated by this Agreement or the
Stockholder Agreement (including the voting provisions thereunder),
or seeking to obtain from the Company, Parent or Sub any damages that
are material in relation to the Company and its subsidiaries taken as
a whole, (ii) seeking to prohibit or materially limit the
<PAGE>
ownership or operation by the Company, Parent or any of their
respective subsidiaries of a material portion of the business or
assets of the Company and its subsidiaries, taken as a whole, or
Parent and its subsidiaries, taken as a whole, or to compel the
Company or Parent to dispose of or hold separate any material portion
of the business or assets of the Company and its subsidiaries, taken
as a whole, or Parent and its subsidiaries, taken as a whole, as a
result of the Offer or any of the other transactions contemplated by
this Agreement or the Stockholder Agreement, (iii) seeking to impose
material limitations on the ability of Parent or Sub to acquire or
hold, or exercise full rights of ownership of, any Shares to be
accepted for payment pursuant to the Offer or purchased under the
Stockholder Agreement including, without limitation, the right to vote
such Shares on all matters properly presented to the stockholders of
the Company, (iv) seeking to prohibit Parent or any of its
subsidiaries from effectively controlling in any material respect any
material portion of the business or operations of the Company or its
subsidiaries or (v) which otherwise is reasonably likely to have a
material adverse effect on the business, properties, assets, financial
condition, results of operations or prospects of the Company and its
subsidiaries taken as a whole; or there shall be pending by any other
person any suit, action or proceeding which is reasonably likely to
have a material adverse effect on the business, properties, assets,
financial condition, results of operations or prospects of the Company
and its subsidiaries taken as a whole.
(b) there shall be enacted, entered, enforced, promulgated or
deemed applicable to the Offer or the Merger by any Governmental
Entity any statute, rule, regulation, judgment, order or injunction,
other than the application to the Offer or the Merger of applicable
waiting periods under the HSR Act, that is reasonably likely to
result, directly or indirectly, in any of the consequences referred to
in clauses (i) through (v) of paragraph (a) above;
(c) there shall have occurred any material adverse change with
respect to the Company;
(d) (i) the Board of Directors of the Company or any committee
thereof shall have withdrawn or modified in a manner adverse to Parent
or Sub its approval or
<PAGE>
recommendation of the Offer, the Merger or this Agreement, or approved
or recommended any Takeover Proposal or (ii) the Board of Directors of
the Company or any committee thereof shall have resolved to take any
of the foregoing actions;
(e) any of the representations and warranties of the Company set
forth in this Agreement that are qualified as to materiality shall not
be true and correct or any such representations and warranties that
are not so qualified shall not be true and correct in any material
respect, in each case at the date of this Agreement and at the
scheduled or extended expiration of the Offer;
(f) the Company shall have failed to perform in any material
respect any material obligation or to comply in any material respect
with any material agreement or covenant of the Company to be performed
or complied with by it under this Agreement;
(g) there shall have occurred and continued to exist for not less
than three business days (i) any general suspension of trading in, or
limitation on prices for, securities on a national securities exchange
in the United States (excluding any coordinated trading halt triggered
solely as a result of a specified decrease in a market index), (ii) a
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States, (iii) any limitation (whether
or not mandatory) by any Governmental Entity on, or other event that
materially adversely affects, the extension of credit by banks or
other lending institutions, (iv) a commencement of a war or armed
hostilities or other national or international calamity directly or
indirectly involving the United States which in any case is reasonably
expected to have a material adverse effect on the Company or to
materially adversely affect Parent's or Sub's ability to complete the
Offer and/or the Merger or materially delay the consummation of the
Offer and/or the Merger; or
(h) this Agreement shall have been terminated in accordance with
its terms.
The foregoing conditions are for the sole benefit of Parent and
Sub and may, subject to the terms of this Agreement, be waived by Parent
and Sub in whole or in part at any time and
<PAGE>
from time to time in their sole discretion. The failure by Parent or Sub
at any time to exercise any of the foregoing rights shall not be deemed a
waiver of any such right, the waiver of any such right with respect to
particular facts and circumstances shall not be deemed a waiver with
respect to any other facts and circumstances and each such right shall be
deemed an ongoing right that may be asserted at any time and from time to
time. Terms used but not defined herein shall have the meanings assigned
to such terms in the Agreement to which this Exhibit A is a part.
Exhibit 2
CONFORMED COPY
STOCKHOLDER AGREEMENT, dated as of February 13, 1996,
among CONOPCO, INC., a New York corporation ("Parent"),
CONOPCO ACQUISITION COMPANY, INC., a Delaware corporation
and a wholly owned subsidiary of Parent ("Sub"), and the
individual and partnerships listed on Schedule A hereto
(each a "Stockholder" and, collectively, the
"Stockholders").
WHEREAS, Parent, Sub and Helene Curtis Industries, Inc., a
Delaware corporation (the "Company"), propose to enter 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 making of a cash
tender offer (as such offer may be amended from time to time, the "Offer")
by Sub for any and all shares of Common Stock, par value $.50 per share, of
the Company (the "Common Stock") and the merger of the Company and Sub (the
"Merger"); and
WHEREAS, each Stockholder owns the number of shares of Class B
Common Stock, par value $.50 per share, of the Company (the "Class B Common
Stock") set forth opposite his or its name on Schedule A hereto; such
shares of Class B Common Stock, as such shares may be adjusted by
conversion into shares of Common Stock or 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, other than the payment of regular cash dividends consistent with
past practice (each, an "Adjustment Event"), being referred to herein as
the "Subject Shares"; and
WHEREAS, as a condition to their willingness to enter into the
Merger Agreement, Parent and Sub have requested that the Stockholders enter
into this Agreement;
NOW, THEREFORE, to induce Parent and Sub to enter into, and in
consideration of their entering into, the Merger Agreement, and in
consideration of the premises and
<PAGE>
the representations, warranties and agreements contained herein, the
parties agree as follows:
1. Purchase of Subject Shares.
---------------------------
(a) Each Stockholder hereby grants Sub an irrevocable option
(the "Option") to purchase all of the Subject Shares owned by him or
it for a purchase price per share equal to $70.00 (as such amount may
be adjusted to appropriately reflect any Adjustment Events, the
"Original Offer Price"). The Option may be exercised in whole (but
not in part) at any time after the date hereof and on or prior to the
first anniversary of the date hereof (such first anniversary, the
"Option Expiration Date") in the event that (i) a Specified Event (as
defined in Section 1(b) below) shall have occurred on or prior to the
Option Expiration Date and (ii) the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act")
with respect to the exercise of the Option shall have expired or been
terminated.
(b) The term "Specified Event" shall mean (i) Parent or Sub
shall have terminated the Merger Agreement under Section 9.01(d)
thereof, (ii) the Company shall have terminated the Merger Agreement
under Section 9.01(e) thereof, (iii) prior to termination of the
Merger Agreement (other than by the Company pursuant to
Section 9.01(f) or 9.01(g)), a Takeover Proposal (as defined in the
Merger Agreement) shall have been commenced or the Company shall have
entered into an agreement with respect to, approved or recommended or
taken any action to facilitate, a Takeover Proposal or (iv) Sub shall
have accepted for payment, and paid for, shares of Common Stock in the
Offer.
(c) In the event that Sub wishes to exercise the Option, Sub may do
so by giving written notice (the date of such notice being herein called
the "Notice Date") to each of the Stockholders specifying that all the
Subject Shares are to be purchased and specifying the place, time and
date (not earlier than two trading days, nor later than 10 trading days,
from the Notice
<PAGE>
Date) for the closing of the purchase by Sub pursuant to such
exercise. In the event that any share of Common Stock is accepted for
payment, and paid for, by Sub pursuant to the Offer, Sub shall be
obligated to exercise the Option no later than two trading days
following the date of such payment and close the purchase of and pay
for such Subject Shares within two trading days following the date of
such exercise. A "trading day" shall mean any date on which the New
York Stock Exchange shall be open for business.
2. Payments to Parent or Stockholders.
-----------------------------------
(a) In the event that a Specified Event shall have occurred and
during the period from the first anniversary of the date hereof to and
including the second anniversary of the date hereof, the Stockholder
sells, transfers, assigns or otherwise disposes of (including by
conversion or exchange in a merger, exchange offer or the like) any of
the Subject Shares for value in a bona fide arm's length transaction,
the Stockholder shall pay to Parent an amount in cash equal to the
product of (i) the number of Subject Shares disposed of by the
Stockholder and (ii) 50% of the excess, if any, of (A) the per share
cash consideration or the per share fair market value of any non-cash
consideration, as the case may be, received by the Stockholder as a
result of such disposition less (B) the Original Offer Price;
provided, however, that no such payment shall be required to be made
-------- -------
in the event the Company shall have terminated the Merger Agreement
pursuant to Section 9.01(f) or 9.01(g) thereof or Parent or Sub shall
be in material breach of this Agreement (and such breach shall not
have been cured within 10 days following receipt by Parent or Sub of
written notice of such breach).
(b) In the event that Sub shall have exercised the Option
pursuant to Section 1 with respect to the Subject Shares and, on or
prior to the second anniversary of the date hereof, Sub shall sell,
transfer, assign or otherwise dispose of (including by conversion or
exchange in a merger, exchange offer or the like) any of such Subject
Shares for value in a
<PAGE>
bona fide arm's length transaction, Sub shall pay to the Stockholder
an amount in cash equal to the product of (i) the number of such
Subject Shares disposed of by Sub and (ii) 50% of the excess, if any,
of (A) the per share cash consideration or the per share fair market
value of any non-cash consideration, as the case may be, received by
Sub as a result of such disposition less (B) the Original Offer Price;
provided, however, that no such payment shall be required to be made
-------- -------
to any Stockholder in the event such Stockholder shall be in material
breach of this Agreement (and such breach shall not have been cured
within 10 days following receipt by such Stockholder of written notice
of such breach).
(c) For purposes of Section 2 of this Agreement, the fair market
value of any non-cash consideration consisting of:
(i) securities listed on a national securities exchange or
traded on the NASDAQ/NMS shall be equal to the average
closing price per share of such security as reported on
such exchange or NASDAQ/NMS for the five trading days
after the date of disposition; and
(ii) consideration which is other than cash or securities of
the form specified in clause (i) of this Section 2(c)
shall be determined by a nationally recognized
independent investment banking firm mutually agreed
upon by the parties within 10 business days of the
selection of such banking firm; provided, however, that
-------- -------
if the parties are unable to agree within two business
days after the date of disposition as to the investment
banking firm, then the parties shall draw lots to
select the investment banking firm from among the
following three firms: Goldman Sachs & Co., CS First
Boston Corporation and Salomon Brothers Inc; provided
--------
further, that the
-------
<PAGE>
fees and expenses of such investment banking firm shall
be borne equally by Parent and the Stockholder. The
determination of the investment banking firm shall be
binding upon the parties.
(d) Any payment required to be made pursuant to Section 2 of
this Agreement shall be made two trading days after the later of
(i) the fifth trading day after settlement of any disposition or
(ii) the date on which the investment banking firm delivers to the
parties its determination of the per share value of any non-cash
consideration received by the Stockholder or Sub, as the case may be,
pursuant to any disposition. In the event that Sub or any Stockholder
shall sell, transfer, assign or otherwise dispose of any Subject
Shares, other than for value in a bona fide arm's length transaction,
the obligation of Sub or such Stockholder, as the case may be, to make
payments pursuant to this Section 2 shall continue until and apply to
any subsequent disposition of such Subject Shares in a bona fide arm's
length transaction for value.
3. Representations and Warranties of the Stockholder. Each
--------------------------------------------------
Stockholder hereby, severally and not jointly, represents and warrants to
Parent in respect of himself or itself as follows:
(a) Authority. The Stockholder has all requisite power and
----------
authority to enter into this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly
authorized, executed and delivered by the Stockholder and constitutes
a valid and binding obligation of the Stockholder enforceable in
accordance with its terms. 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,
<PAGE>
statute, law, ordinance, rule or regulation applicable to the
Stockholder or to the Stockholder's property or assets. Except for
the expiration or termination of the waiting period under the HSR Act
and informational filings with the SEC, no consent, approval, order or
authorization of, or registration, declaration or filing with, any
court, administrative agency or commission or other governmental
authority or instrumentality, domestic, foreign or supranational, is
required by or with respect to the Stockholder in connection with the
execution and delivery of this Agreement or the consummation by the
Stockholder of the transactions contemplated hereby.
(b) The Subject Shares. The Stockholder has good and marketable
-------------------
title to the Subject Shares, free and clear of any claims, liens,
encumbrances and security interests whatsoever. The Stockholder owns
no shares of Class B Common Stock other than the Subject Shares.
4. Representations and Warranties of Parent and Sub.
-------------------------------------------------
(a) Parent and Sub hereby represent and warrant to the Stockholder that
each of Parent and Sub 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 Sub,
and the consummation of the transactions contemplated hereby, have been
duly authorized by all necessary corporate action on the part of Parent and
Sub. This Agreement has been duly executed and delivered by Parent and Sub
and constitutes a valid and binding obligation of Parent and Sub
enforceable in accordance with its terms.
(b) Securities Act. The Subject Shares will be acquired in
---------------
compliance with, and Sub will not offer to sell or otherwise dispose of any
Subject Shares so acquired by it in violation of any of, the registration
requirements of the Securities Act of 1933, as amended.
(c) Financing. Sub has, or will have at the time that any
----------
payment is required to be made to any Stockholder hereunder, the funds
necessary to make such payment to such Stockholder.
<PAGE>
5. Covenants of the Stockholder. Up to and including the
-----------------------------
Option Expiration Date, each Stockholder, severally and not jointly, agrees
as follows:
(a) At any meeting of stockholders of the Company called to vote
upon the Merger and 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 and the Merger Agreement is
sought, the Stockholder shall vote (or cause to be voted) the Subject
Shares 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
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 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.
(c) The Stockholder agrees not to (i) other than by operation of
law, sell, transfer, pledge, assign or otherwise dispose of, or enter
into any contract, option or other arrangement (including any profit
sharing arrangement) with respect to the sale, transfer, pledge,
assignment or other disposition of, the Subject Shares to any person
other than Sub or
<PAGE>
Sub's designee, (ii) enter into any voting arrangement, whether by
proxy, voting agreement or otherwise, in connection, directly or
indirectly, with any Takeover Proposal or (iii) convert the Subject
Shares into Common Stock (except as required to effect the transaction
contemplated by Section 1 of this Agreement).
(d) Until the Merger is consummated or the Merger Agreement is
terminated, the Stockholder shall not, nor shall it permit any
investment banker, attorney or other adviser or representative of the
Stockholder to, (i) directly or indirectly solicit, initiate or
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 take any
other action to facilitate any inquiries or the making of any proposal
that constitutes, or may reasonably be expected to lead to, any
Takeover Proposal.
6. Further Assurances. Each 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 or Sub may reasonably request for the purpose
of effectively carrying out the transactions contemplated by this
Agreement.
7. Assignment. Neither this Agreement nor any of the rights,
-----------
interests or obligations hereunder shall be assigned by any of the parties
without the prior written consent of the other parties, except that Sub may
assign, in its sole discretion, any or all of its rights, interests and
obligations hereunder to Parent or to any direct or indirect wholly owned
subsidiary of Parent. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the
parties and their respective successors and assigns.
8. Termination. Except as provided otherwise herein, this
------------
Agreement shall terminate upon the earlier of (i) the close of business on
the second anniversary of the date hereof and (ii) the disposition by each
Stockholder of
<PAGE>
all the Subject Shares in one or more bona fide arm's length transactions
for value; provided, however, that to the extent any Stockholder or Sub, as
-------- -------
the case may be, shall be required to make payment to the other pursuant to
Section 2, this Agreement shall not terminate until all such payments shall
have been made.
9. General Provisions.
-------------------
(a) Payments. All payments required to be made to any party to
--------
this Agreement shall be made by wire transfer of immediately available
funds to an account designated by such party within one trading day
prior to such payment.
(b) Specific Performance. 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.
(c) Expenses. Except as set forth in Section 1 of this
---------
Agreement, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by
the party incurring such expense.
(d) Amendments. This Agreement may not be amended except by an
-----------
instrument in writing signed by each of the parties hereto.
(e) Notice. All notices and other communications hereunder
-------
shall be in writing and shall be deemed given if delivered personally
or sent by overnight courier (providing proof of delivery) to the
parties at the following addresses (or at such other address for a
party as shall be specified by like notice):
(i) if to Parent, to
Conopco, Inc.
390 Park Avenue
New York, New York 10022
Facsimile: (212) 688-3411
<PAGE>
Attention: Ronald M. Soiefer, Esq.
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019
Facsimile: (212) 474-3700
Attention: Allen Finkelson, Esq., and
(ii) if to a Stockholder, to the address set forth under the name
of such Stockholder on Schedule A hereto
with a copy to:
Winston & Strawn
35 Wacker Drive
Chicago, Illinois 60601
Facsimile: (312) 558-5700
Attention: Robert F. Wall, Esq.
(e) 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".
(f) 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
counterparties 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.
(g) Entire Agreement; No Third-Party Beneficiaries. This
-----------------------------------------------
Agreement (including the documents and instruments referred to herein)
(i) constitutes the
<PAGE>
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.
(h) Governing Law. This Agreement shall be governed by and
--------------
construed in accordance with the laws of the State of Delaware without
regard to any applicable conflicts of law.
10. Stockholder Capacity. No person executing this Agreement
---------------------
who is or becomes during the term hereof a director or officer of the
Company makes any agreement or understanding herein in his or her capacity
as such director or officer. Each Stockholder signs solely in his or her
capacity as the record holder and beneficial owner of, or the trustee of a
trust whose beneficiaries are the beneficial owners of, such Stockholder's
Subject Shares and nothing herein shall limit or affect any actions taken
by a Stockholder in its capacity as an officer or director of the Company
to the extent specifically permitted by the Merger Agreement.
11. Performance by Sub. Parent covenants and agrees for the
-------------------
benefit of the Stockholders that it shall cause Sub to perform in full each
obligation of Sub set forth in this Agreement.
12. Enforcement. The parties agree that irreparable damage
------------
would occur in the event that any of the provisions of this Agreement were
not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to
an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions of this Agreement in any
court of the United States located in the State of Delaware or in 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
<PAGE>
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.
<PAGE>
IN WITNESS WHEREOF, each of Parent and Sub has caused this
Agreement to be signed by its officer thereunto duly authorized and each
Stockholder has signed this Agreement or has caused this Agreement to be
signed by its managing general partners, all as of the date first written
above.
CONOPCO, INC.
By: /s/ Mart Laius
---------------------------
Name: Mart Laius
Title: Vice President
CONOPCO ACQUISITION COMPANY, INC.
By: /s/Mart Laius
---------------------------
Name: Mart Laius
Title: President
/s/Ronald J. Gidwitz
--------------------------------
Ronald J. Gidwitz
GIDWITZ FAMILY PARTNERSHIP
By: /s/Gerald S. Gidwitz
---------------------------
Name: Gerald S. Gidwitz
Title: Managing General
Partner
By: /s/Ronald J. Gidwitz
---------------------------
Name: Ronald J. Gidwitz
Title: Managing General
Partner
<PAGE>
By: /s/James G. Gidwitz
---------------------------
Name: James G. Gidwitz
Title: Managing General
Partner
By: /s/Ralph W. Gidwitz
---------------------------
Name: Ralph W. Gidwitz
Title: Managing General
Partner
By: /s/Betsy R. Gidwitz
---------------------------
Name: Dr. Betsy R. Gidwitz
Title: Managing General
Partner
HCI PARTNERSHIP
By: /s/Gerald S. Gidwitz
---------------------------
Name: Gerald S. Gidwitz
Title: Managing General
Partner
By: /s/Ronald J. Gidwitz
---------------------------
Name: Ronald J. Gidwitz
Title: Managing General
Partner
By: /s/James G. Gidwitz
---------------------------
Name: James G. Gidwitz
Title: Managing General
Partner
<PAGE>
By: /s/Ralph W. Gidwitz
---------------------------
Name: Ralph W. Gidwitz
Title: Managing General
Partner
By: /s/Betsy R. Gidwitz
---------------------------
Name: Dr. Betsy R. Gidwitz
Title: Managing General
Partner
SCHEDULE A
----------
Number of
Class B Shares
Owned of Record
---------------
Ronald J. Gidwitz 120,000
c/o Helene Curtis Industries, Inc.
325 North Wells Street
Chicago, Illinois 60610
HCI Partnership 569,909
c/o Helene Curtis Industries, Inc.
325 North Wells Street
Chicago, Illinois 60610
Gidwitz Family Partnership 2,084,197
c/o Helene Curtis Industries, Inc.
325 North Wells Street
Chicago, Illinois 60610
Exhibit 3
[Helene Curtis Inc. Letterhead]
November 30, 1995
Mr. Paul V. Dolan
Senior Sourcing and Supply Member
Unilever PLC
Unilever House
P.O. Box 68, Blackfriars
London EC4P 4BQ
England
Dear Mr. Dolan:
Unilever PLC and Helene Curtis Industries, Inc. have been and expect to engage
in discussions concerning opportunities of mutual interest. During the course
of such discussions, each party may disclose to the other certain Confidential
Information. This letter agreement will set forth the terms and conditions
pursuant to which such disclosure will be made:
1. All Information (whether written or oral) furnished under this Agreement
("Confidential Information") by one party ("Information Provider") to the
other party ("Information Recipient") shall be kept in strict confidence
and not disclosed or used for any purpose except as required or
contemplated by this Letter Agreement.
2. All Confidential Information disclosed by the Information Provider shall
remain the property of the Information Provider.
3. All Confidential Information furnished under the Agreement shall be used
solely for the purpose of this Agreement and shall only be made available
to employees, attorneys or financial advisors of the Information Recipient
on a need to know basis. All employees, attorneys or financial advisors of
the Information Recipient who have access to or utilize any Confidential
Information shall be advised of and provided a copy of this Agreement.
Confidential Information shall not be disclosed to any other person,
firm or corporation without the prior written permission of the Information
Provider.
4. The Information Recipient shall not make any copies of Confidential
Information received under this Agreement except as agreed to by the
Information Provider.
<PAGE>
Page Two
Paul V. Dolan
November 30, 1995
5. The obligations and limitations set forth herein regarding the Confidential
Information shall not apply to information which:
(a) is generally available to the public at the time of disclosure by the
Information Provider or thereafter becomes generally available to the
public by publication or otherwise other than by a breach of this
Agreement;
(b) at any time is rightfully received from a third party which has the
right to furnish it without restrictions on disclosure or use;
(c) is rightfully known to a party without any restriction on disclosure
or use prior to its receipt; or
(d) is generally made available to third parties by the parties without
any restriction on disclosure or use.
6. The obligation set forth herein regarding disclosure and use of
Confidential Information shall survive the expiration, termination or
cancellation of this Agreement and shall remain in force for a period of
five (5) years from the date of this Letter Agreement.
7. The Information Recipient shall promptly cease using and shall return or
destroy (and certify destruction of) all Confidential Information which it
receives from the Information Provider including all copies which it may
have made, whether tangible or stored in any computer memory or storage
medium, when it no longer has need thereof for the purpose set forth in
this Agreement or upon the request of the Information Provider, whichever
is the earlier to occur.
8. This Agreement is not included to and shall not be construed as creating a
joint venture, partnership, or other form of business association between
the parties, and, except for the use of Confidential Information for the
purpose set forth in this Agreement, no other rights, licenses, trademarks,
inventions, copyrights or patents are implied or granted under this
Agreement.
<PAGE>
Page Three
Paul V. Dolan
November 30, 1995
9. This Agreement states the entire agreement and supersedes all prior
agreements, written or oral, between the parties hereto with respect to the
subject matter hereof and may not be amended except in writing signed by a
duly authorized representative of the respective parties.
If the foregoing confirms your understanding, please sign as indicated below.
HELENE CURTIS, INC.
By /s/ Ronald J. Gidwitz
-----------------------------
Accepted and Agreed to:
UNILEVER PLC
By /s/
-----------------------------
Exhibit 4
SCHEDULE I
HELENE CURTIS INDUSTRIES, INC.
325 NORTH WELLS STREET
CHICAGO, ILLINOIS 60610
-------------------
INFORMATION STATEMENT PURSUANT TO
SECTION 14(F) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 14F-1 THEREUNDER
This Information Statement is being mailed on or about February 20, 1996 as
part of the Solicitation/Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9") to holders of the Common Stock, $.50 par value per share (the
"Shares"), of Helene Curtis Industries, Inc. ("the Company"). Capitalized terms
used and not otherwise defined herein shall have the meaning set forth in the
Schedule 14D-9. You are receiving this Information Statement in connection with
the possible election of persons designated by Conopco Acquisition Company, Inc.
(the "Offeror"), a Delaware corporation and a wholly owned subsidiary of
Conopco, Inc., a New York corporation ("Parent"), which is indirectly owned 75%
by Unilever N.V., a Dutch corporation, and 25% by Unilever PLC, a company
organized under the laws of England and Wales, to a majority of the seats on the
Board of Directors of the Company (the "Board").
Pursuant to the Merger Agreement, the Offeror commenced the Offer on
February 20, 1996. The Offer is scheduled to expire at 12:00 Midnight, New York
City time, on March 18, 1996, unless extended.
This Information Statement is required by Section 14(f) of the Securities
Exchange Act of 1934 (the "Exchange Act") and Rule 14f-1 thereunder. You are
urged to read this Information Statement carefully. You are not, however,
required to take any action.
The information contained in this Information Statement (including
information incorporated by reference) concerning Parent and the Offeror and the
Designees (as defined herein) has been furnished to the Company by Parent and
the Offeror and the Company assumes no responsibility for the accuracy or
completeness of such information.
GENERAL
The Shares and the Class B Common Stock are the only classes of voting
securities of the Company outstanding. Each Share has one vote. Each share of
Class B Common Stock has 10 votes. As of February 5, 1996, (i) there were
6,857,801 Shares outstanding, (ii) 3,044,829 shares of Class B Common Stock
outstanding and (iii) 1,190,258 Shares reserved for issuance pursuant to
outstanding stock options.
The Board currently consists of ten members and there are currently no
vacancies on the Board. Each director serves a term of three years or until his
successor is duly elected and qualified or until his earlier death, resignation
or removal. The Board is staggered and divided into three classes so that no
more than one-third of the Board is up for election at each annual meeting of
the Company.
RIGHT TO DESIGNATE DIRECTORS
Pursuant to the Merger Agreement, upon the Offeror having acquired a
majority of the combined voting power of the Shares and the Class B Common
Stock, the Offeror shall be entitled to designate such number of directors on
the Board as will give the Offeror, subject to compliance with Section 14(f) of
the Exchange Act, a majority of such directors (the "Designees"), and the
Company shall, at such
I-1
<PAGE>
time, cause the Designees to be so elected by its existing Board, provided,
however, that in the event that the Designees are elected to the Board, until
the effective time of the Merger such Board shall have at least three directors
who are directors on the date of the Merger Agreement and who are not officers
of the Company (the "Independent Directors"); and provided, further that, in
such event, if the number of Independent Directors shall be reduced below three
for any reason whatsoever, the remaining Independent Directors shall designate a
person to fill such vacancy who shall be deemed to be an Independent Director
for purposes of the Merger Agreement or, if no Independent Directors then
remain, the other directors shall designate three persons to fill such vacancies
who shall not be officers or affiliates of the Company or any of its
subsidiaries, and such persons shall be deemed to be Independent Directors for
purposes of the Merger Agreement. Pursuant to the Merger Agreement, subject to
applicable law, the Company agreed to take all action requested by Parent that
is reasonably necessary to effect any such election, including mailing to its
stockholders the Information Statement containing the information required by
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, and the
Company agreed to make such mailing with the mailing of the Schedule 14D-9
(provided that the Offeror shall have provided to the Company on a timely basis
all information required to be included in the Information Statement with
respect to the Designees). In connection with the foregoing, the Company will
promptly, at the option of Parent, either increase the size of the Board and/or
obtain the resignation of such number of its current directors as is necessary
to enable the Designees to be elected or appointed to, and to constitute a
majority of the directors on, the Board.
INFORMATION WITH RESPECT TO DESIGNEES
Set forth below is the name, age, business address, principal occupation or
employment and five year employment history of the persons who will be the
Designees, such information being furnished by the Parent. Unless otherwise
indicated, the business address of all persons listed below is 390 Park Avenue,
New York, New York 10022. Unless otherwise indicated, all persons listed below
are citizens of the United States of America.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DURING
NAME OF DESIGNEES AGE THE PAST FIVE YEARS
- ------------------------------------------ --- ------------------------------------------
<S> <C> <C>
Richard Goldstein......................... 54 President and CEO of Unilever United
States, Inc. and Chairman and CEO of
Unilever Canada Ltd. since September 1989;
Chairman and CEO of Unilever North
American Regional Management since May
1992.
Robert Phillips........................... 57 Director of Unilever N.V. and Unilever PLC
since 1995 and Personal Products
Coordinator of Unilever since 1994;
Chairman and CEO, Unilever Prestige
Products from 1992 to 1994; President of
Chesebrough-Pond's from 1986 to 1992; CEO
of Chesebrough-Pond's from 1988 to 1992.
Paul Dolan................................ 56 Senior Sourcing and Supply Member-Personal
Products Coordination of Unilever PLC
since 1995; prior thereto, Senior Vice
President of Operations of
Chesebrough-Pond's.
Mart Laius................................ 49 Vice President, Corporate Development and
Administrative Services, Unilever United
States, Inc. since 1995; prior thereto,
Director, Corporate Development, Unilever
United States, Inc.
</TABLE>
It is expected that the Designees may assume office at any time following
the purchase by the Offeror of a majority of the combined voting power of the
Shares and the Class B Common Stock pursuant to the Offer and the Stockholder
Agreement and that upon assuming office, the Designees will thereafter
constitute at least a majority of the Board. Parent has informed the Company
that, to the
I-2
<PAGE>
best of the Parent's knowledge, none of the Designees beneficially own any
equity securities, or rights to acquire any equity securities of the Company, or
has been involved in any transactions with the Company or any of its directors,
executive officers or affiliates which are required to be disclosed pursuant to
the rules of the Commission.
BOARD OF DIRECTORS OF THE COMPANY
Listed below are the names, ages, principal occupations, five year
employment histories and public directorships, if any, of all current directors
of the Company.
<TABLE><CAPTION>
POSITION WITH THE COMPANY OR
YEAR FIRST ELECTED PRINCIPAL OCCUPATION DURING
NAME OF DIRECTOR AGE A DIRECTOR THE PAST FIVE YEARS
- --------------------------- --- ------------------ ----------------------------------------------
<S> <C> <C> <C>
Marshall L. Burman......... 65 1980 Mr. Burman is counsel to the law firm of
Wildman, Harrold, Allen & Dixon, which
provided legal services to the Company
during the fiscal year ended February 28,
1995. Until January 1, 1992, he was a senior
partner in the law firm of Arvey, Hodes,
Costello & Burman. Mr. Burman is also
Chairman of the Board of Directors of The
Illinois State Board of Investments, a
director of CFI Industries, Inc., and a
director of Safecard Services, Inc.
Frank W. Considine......... 74 1988 Mr. Considine is Honorary Chairman of the
Board of Directors and Chairman of the
Executive Committee of American National Can
Company, a company engaged in the
manufacture and sale of packaging products,
from which the Company has purchased
packaging materials in the ordinary course
of business. From 1983 to 1990, he was
Chairman of the Board of Directors and from
1973 to 1988, he was President and Chief
Executive Officer of American National Can
Company and was Vice Chairman of the Board
of Directors of Triangle Industries, Inc.
from 1985 to 1988. He is a director of IMC
Global, Inc., Pechiney International, S.A.,
and Scotsman Industries, Inc.
Charles G. Cooper.......... 67 1984 Mr. Cooper is Senior Vice President of the
Company, responsible for business
development. He previously served as
Executive Vice President and Chief Operating
Officer of the Company. Mr. Cooper has been
employed by the Company for more than 40
years. He is also a director of Sportmart,
Inc.
Gerald S. Gidwitz.......... 89 1928 Mr. Gidwitz is Chairman of the Board of
Directors of the Company.
Michael Goldman............ 58 1989 Mr. Goldman is Executive Vice President and
Chief Operating Officer of the Company. He
has been employed by the Company for more
than 30 years.
</TABLE>
I-3
<PAGE>
<TABLE><CAPTION>
POSITION WITH THE COMPANY OR
YEAR FIRST ELECTED PRINCIPAL OCCUPATION DURING
NAME OF DIRECTOR AGE A DIRECTOR THE PAST FIVE YEARS
- --------------------------- --- ------------------ ----------------------------------------------
<S> <C> <C> <C>
Betsy R. Gidwitz........... 55 1995 Dr. Gidwitz was formerly a faculty member at
the Massachusetts Institute of Technology.
Ronald J. Gidwitz.......... 50 1974 Mr. Gidwitz is President and Chief Executive
Officer of the Company. Mr. Gidwitz is a
director of Continental Materials
Corporation, a director of American National
Can Company and he is the Chairman of the
Board of Trustees of the City Colleges of
Chicago. He is the son of Gerald S. Gidwitz.
John C. Stetson............ 74 1982 Mr. Stetson is President of J.C. Stetson,
Inc., a private venture capital firm. Mr.
Stetson was Secretary of the Air Force from
1977 to 1979 and prior to his government
assignment, was President of AB Dick
Company. Mr. Stetson is also a director of
Laser Technology, Inc., NIBCO, Inc., Chicago
Tube and Iron Company and Madison-Kipp
Corporation, and a director emeritus of
Kemper Corporation and Kemper National
Insurance Co.
Abbie J. Smith............. 42 1990 Dr. Smith is Professor of Accounting at the
Graduate School of Business of the
University of Chicago, a position she has
held since 1989. She was previously
Associate Professor of Accounting at the
University.
Gilbert P. Smith........... 58 1989 Mr. Smith is Executive Vice President of the
Company and President of the Company's North
American business unit. He has been employed
by the Company for more than 15 years.
</TABLE>
Each of the directors has been engaged in the principal occupation(s)
described above during the past five (5) years. Ronald J. Gidwitz is the son of
Gerald S. Gidwitz. Betsy R. Gidwitz is the niece of Gerald S. Gidwitz.
INFORMATION CONCERNING THE BOARD OF DIRECTORS
During fiscal 1995, there were seven meetings of the Board. The Board has
Audit, Executive, and Compensation and Stock Option Committees. The Board does
not have a standing nominating committee, but acts as a whole with respect to
nominees for the Board. Each director, except for John C. Stetson, was present
at more than seventy-five percent of the aggregate number of Board meetings and
the total number of meetings held by committees of the Board on which such
director served.
I-4
<PAGE>
The Audit Committee, consisting of Messrs. Burman and Stetson and Dr. Smith,
met four times during the fiscal year ended February 28, 1995. The function of
the Audit Committee is to review and make recommendations regarding: engagement
of an independent public accounting firm; the scope of the independent
accountants' audit procedures; the adequacy and implementation of internal audit
controls; regulatory compliance procedures; and such other matters relating to
the Company's financial affairs and accounts as the Audit Committee deems
desirable.
The Executive Committee, consisting of Messrs. Gerald S. Gidwitz, Joseph L.
Gidwitz and Ronald J. Gidwitz, met three times during the fiscal year ended
February 28, 1995. The Executive Committee, during the interval between meetings
of the Board of Directors, may exercise all of the authority of the Board in the
management of the Company, except as otherwise provided in the Company's By-Laws
or by applicable law. It is also responsible for administering the Directors
Stock Option Plan. No director was elected to the Executive Committee to succeed
Joseph L. Gidwitz after his death in August 1995.
The Compensation and Stock Option Committee, consisting of Messrs. Burman,
Considine and Stetson, is responsible for determining salary and other
compensation of the principal officers of the Company and for administering
certain of the Company's incentive plans including the Company's executive
management incentive, stock option and stock appreciation right plans. The
Committee met four times during the fiscal year ended February 28, 1995.
Directors who are not Company employees receive an annual fee of $14,000 and
a fee of $2,000 for each Board meeting attended and $1,000 for each committee
meeting attended, plus travel expenses. In addition, each non-employee director
is a participant in the Company's Directors Stock Option Plan, which was
approved by the stockholders at the 1988 Annual Meeting. Under this Plan, each
such director at the time of the Plan's adoption or who was subsequently elected
to the Board was granted an option to purchase 8,000 Shares, exercisable in five
equal annual installments commencing one year after the date of grant. The
exercise price for such options is the fair market value of the Shares on the
date of grant. All options expire ten years from the date of grant or earlier in
the event a director ceases to serve in that capacity or becomes an employee of
the Company.
I-5
<PAGE>
EXECUTIVE OFFICERS OF THE COMPANY
The following provides certain information regarding the executive officers
of the Company, who are appointed by the Board:
<TABLE><CAPTION>
TITLE NAME AGE
- ------------------------------------------------------- ----------------------------- ---
<S> <C> <C>
Chairman of the Board.................................. Gerald S. Gidwitz 89
President and Chief Executive Officer.................. Ronald J. Gidwitz 50
Executive Vice President and Chief Operating Officer... Michael Goldman 58
Executive Vice President............................... Gilbert P. Smith 58
Senior Vice President.................................. Charles G. Cooper 67
Senior Vice President.................................. Robert K. Niles 50
Senior Vice President.................................. Eugene Zeffren 54
Vice President and Chief Information Officer........... Thomas J. Gildea 52
Vice President and Chief Financial Officer............. Lawrence A. Gyenes 45
Vice President......................................... V. James Marino 45
Vice President and Corporate Controller................ Mary J. Oyer 46
Vice President......................................... Robert Sack 59
Vice President, Secretary and General Counsel.......... Roy A. Wentz 46
Treasurer.............................................. Arthur A. Schneider 49
Foreign-Based Officers:
President, Helene Curtis Ltd. (Canada) and Vice
President of the Company............................... Jack D. Pogue 62
President and Managing Director,
Helene Curtis United Kingdom and Vice President of
the Company............................................ Robert G. Kelly 52
</TABLE>
Ronald J. Gidwitz is the son of Gerald S. Gidwitz.
All executives have served in the capacities shown for the last five years
except as follows: Charles G. Cooper, Michael Goldman, Robert G. Kelly, V. James
Marino, Mary J. Oyer, Jack D. Pogue, Arthur A. Schneider, Gilbert P. Smith, Roy
A. Wentz and Eugene Zeffren, all of whom have been employed by the Company in
other executive capacities for at least five years and were elected to the
positions shown during this five-year period. Prior to joining the Company in
1991, Robert K. Niles served in various capacities for The Quaker Oats Company,
most recently as Vice President, Human Resources for its Breakfast Division.
Prior to joining the Company in 1994, Lawrence A. Gyenes served in various
capacities for G.D. Searle & Co., most recently as Corporate Vice President of
Finance.
I-6
<PAGE>
EXECUTIVE OFFICER COMPENSATION
The following tables and notes present the compensation provided by the
Company during fiscal 1995 to its Chief Executive Officer and the Company's four
next most highly compensated executive officers who served as executive officers
at the end of fiscal 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
---------------------------------------
AWARDS PAYOUTS
ANNUAL COMPENSATION ------------------------- ---------
--------------------------------------- SECURITIES LONG-
OTHER RESTRICTED UNDERLYING TERM
ANNUAL STOCK OPTIONS/ INCENTIVE ALL OTHER
NAME/PRINCIPAL SALARY(7) BONUS COMPENSATION(2) AWARDS SARS(8) PAYOUTS COMPENSATION(4)
POSITION/YEAR(1) $ $ $ $ # $ $
- -------------------- --------- -------- --------------- ---------- ---------- --------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Ronald J. Gidwitz
President and Chief
Executive Officer
1995............... $ 750,750 $320,750 -- $ 0 126,906(3) $ 0 $ 67,965
1994............... 715,000 0 -- 0 0 0 123,268
1993............... 575,000 366,300 -- 0 21,100(3) 526,500(5) 97,564
Charles G. Cooper
Senior Vice
President
1995............... $ 357,000 $ 0(6) -- $ 0 38,993 $ 0 $ 41,856
1994............... 347,000 0 -- 0 0 0 86,789
1993............... 415,000 257,000 -- 0 15,300 415,350(5) 81,925
Michael Goldman
Executive Vice
President and Chief
Operating Officer
1995............... $ 412,500 $227,700 -- $ 0 63,643 $ 0 $ 41,506
1994............... 371,000 0 -- 0 0 0 69,557
1993............... 310,000 178,400 -- 0 8,900 310,050(5) 58,075
Gilbert P. Smith
Executive Vice
President
1995............... $ 378,000 $209,600 -- $ 0 41,287 $ 0 $ 39,601
1994............... 357,000 0 -- 832,500(9) 0 0 69,723
1993............... 310,000 180,900 -- 0 8,900 310,050(5) 59,318
Eugene Zeffren
Senior Vice
President
1995............... $ 258,300 $138,100 -- $ 0 23,292 $ 0 $ 26,599
1994............... 246,000 0 -- 416,250(10) 0 0 48,856
1993............... 230,000 123,100 -- 0 6,600 238,095(5) 38,807
</TABLE>
- ------------
(1) All information is provided for each of the last three fiscal years ending
on the last day of February for the year indicated.
(2) The only type of Other Annual Compensation for each of the named officers
was in the form of perquisites, and was less than the level required for
reporting.
(3) Includes stock appreciation rights issued in tandem with grant of stock
options, as well as grants of free-standing stock appreciation rights.
(4) Consists of the following: (a) contributions by the Company to the
executives' accounts under the Company's Profit Sharing Retirement Savings
and Supplemental Profit Sharing and Retirement Savings Plans and (b)
premiums paid pursuant to the Company's Executive Death Benefit Agreement.
The values for each of the two component amounts for fiscal 1995 for each
executive officer are as follows: Mr. Gidwitz, (a) $65,080 and (b) $2,885;
Mr. Cooper, (a) $31,642 and (b) $10,214; Mr. Goldman, (a) $36,326 and (b)
$5,180; Mr. Smith, (a) $33,425 and (b) $6,176; and Mr. Zeffren, (a) $23,260
and (b) $3,339.
(5) Stockholder Value Creation Plan award granted in 1991 and earned over the
three-year performance period from fiscal 1991 through fiscal 1993. Awards
under the Stockholder Value Creation Plan were discontinued in 1994.
(6) Mr. Cooper's bonus is contingent on his achievement of certain long-term
objectives related to business development, rather than on the Company's
annual pre-tax earnings performance.
(Footnotes continued on following page)
I-7
<PAGE>
(Footnotes continued from preceding page)
(7) The salaries for each of the named executive officers for the 1996 fiscal
year were the following: $815,000, $357,000, $454,000, $416,000, $300,000,
respectively.
(8) Each of the named executive officers received the following SAR awards on
March 1, 1995: 31,785, 15,114, 17,464, 16,003, 10,936, respectively. Mr.
Goldman was granted 30,000 shares of restricted stock on May 1, 1995.
(9) Net value of 20,000 shares of restricted stock based on the market price of
the Shares on the date granted. As of February 28, 1995, Mr. Smith held
16,000 restricted shares with a value of $464,000 based on the market price
on that date. Mr. Smith has the right to receive dividends on the
restricted shares.
(10) Net value of 10,000 shares of restricted stock based on the market price of
the Shares on the date granted. As of February 28, 1995, Mr. Zeffren held
8,000 shares of restricted stock with a value of $232,000 based on the
market price on that date. Mr. Zeffren has the right to receive dividends
on the restricted shares.
OPTION/SAR GRANTS IN THE 1995 FISCAL YEAR
The following table sets forth certain information with respect to stock
options and stock appreciation rights granted during the 1995 fiscal year to the
executive officers named in the Summary Compensation Table. Using a range of 0%
to 10% in assumed rates of stock price appreciation (compounded annually) for
the option or SAR term indicated, the table also shows the potential realizable
value of the stock options and stock appreciation rights.
<TABLE><CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS/SARS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION/SAR TERM(3)
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION ---------------------------
NAME GRANTED(1)(2) FISCAL YEAR ($/SH) DATE 0% 5% 10%
- -------------------------- ------------ ------------ ----------- ---------- --- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Ronald J. Gidwitz......... 39,039 7.3 $27.375 3/14/04 $0 $672,095 $1,703,221
30,381 5.7 30.625 2/13/05 0 585,135 1,482,847
57,486 35.9 25.250 2/28/99 0 401,028 886,168
Charles G. Cooper......... 14,280 2.7 $27.375 3/14/04 0 $245,844 $ 623,018
11,113 2.1 30.625 2/13/05 0 214,035 542,407
13,600 8.5 25.250 2/28/99 0 94,875 209,649
Michael Goldman........... 21,450 4.0 $27.375 3/14/04 0 $369,283 $ 935,836
16,693 3.1 30.625 2/13/05 0 321,505 814,758
25,500 15.9 25.250 2/28/99 0 177,891 393,092
Gilbert P. Smith.......... 15,120 2.8 $27.375 3/14/04 0 $260,306 $ 659,666
11,767 2.2 30.625 2/13/05 0 226,631 574,328
14,400 9.0 25.250 2/28/99 0 100,456 221,981
Eugene Zeffren............ 10,332 1.9 $27.375 3/14/04 0 $177,875 $ 450,772
8,040 1.5 30.625 2/13/05 0 154,849 392,419
4,920 3.1 25.250 2/28/99 0 34,322 75,844
</TABLE>
- ------------
(1) In fiscal 1995, the Company made two grants of stock options under the 1992
Stock Option Plan (with exercise prices of $27.375 and $30.625) and one
stock appreciation rights grant under the 1994 Stock Appreciation Right Plan
(with an exercise price of $25.25) to the named executives. The stock
options expire ten years from the date of grant, vest in four annual
installments beginning one year after the date of grant and have an exercise
price equal to the fair market value of the Shares on the date of grant.
Options granted to Mr. Gidwitz were granted in tandem with stock
appreciation rights. The free-standing stock appreciation rights granted to
each of the named executives are exercisable for cash only, expire five
years from the date of grant, vest in four annual installments beginning one
year after the date of grant and have an exercise price equal to the fair
market value of the Shares on the date of grant.
(2) Each of the named executive officers received the following SAR awards on
March 1, 1995: 31,785, 15,114, 17,464, 16,003, 10,936, respectively.
(3) The values in these columns are the result of calculations required by the
Securities and Exchange Commission rules, and, therefore, are not intended
to forecast possible future appreciation of the stock price.
I-8
<PAGE>
AGGREGATE OPTION/SAR EXERCISES IN 1995 FISCAL YEAR AND 1995 FISCAL YEAR-END
OPTION/SAR VALUES
The following table sets forth the number of Shares for which stock options
were exercised during the 1995 fiscal year, the value realized, the number of
Shares for which options were outstanding and the value of those options as of
the 1995 fiscal year-end.
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
SECURITIES IN-THE-MONEY
UNDERLYING OPTIONS/SARS
OPTIONS/SARS AT FY-END
AT FY-END (#) ($)
-------------- ----------
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) REALIZED $ UNEXERCISABLE UNEXERCISABLE(*)
- -------------------------------------- --------------- ---------- -------------- ----------
<S> <C> <C> <C> <C>
Ronald J. Gidwitz..................... 15,600 $ 19,500 27,650/143,156 $0/279,011
Charles G. Cooper..................... 853 1,066 20,100/ 50,793 0/ 74,205
Michael Goldman....................... 7,200 9,000 11,650/ 70,493 0/130,481
Gilbert P. Smith...................... 0 0 11,650/ 48,137 0/ 78,570
Eugene Zeffren........................ 0 0 8,700/ 28,392 0/ 35,240
</TABLE>
- ------------
(*) These columns represent the difference between the market price of the
Shares on February 28, 1995 and the exercise prices of the individual stock
options and appreciation rights. The exercise price of all exercisable
options exceeded the market price of the Shares on February 28, 1995, and
therefore the options had no value.
EXECUTIVE PENSION BENEFITS
The table shown below identifies estimated benefits which would be payable
annually at age 65 under a straight life annuity option:
PENSION PLAN TABLE
<TABLE><CAPTION>
YEARS OF SERVICE
--------------------------------------------------------
REMUNERATION 15 20 25 30 35
- --------------------------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$200,000............................... $ 40,020 $ 53,360 $ 66,700 $ 80,040 $ 93,380
250,000............................... 50,025 66,700 83,375 100,050 116,725
300,000............................... 60,030 80,040 100,050 120,060 140,070
350,000............................... 70,035 93,380 116,725 140,070 163,415
400,000............................... 80,040 106,720 133,400 160,080 186,760
450,000............................... 90,045 120,060 150,075 180,090 210,105
500,000............................... 100,050 133,400 166,750 200,100 233,450
550,000............................... 110,055 146,740 183,425 220,110 256,795
600,000............................... 120,060 160,080 200,100 240,120 280,140
650,000............................... 130,065 173,420 216,775 260,130 303,485
</TABLE>
Benefits are payable under the Executive Pension Plan to executive officers
who are employed by the Company or its subsidiaries for 10 or more years who
retire at age 65 or over, with partial benefits available upon early retirement
for service of between 15 and 35 years. Pension benefits are determined by the
average of each executive officer's highest consecutive five years' salaries
over the last ten years, excluding bonuses, insurance premiums which constitute
taxable income for federal income tax purposes and deferred compensation. As of
February 16, 1996, the executive officers named in the Summary Compensation
Table have the following years of credited service for pension plan purposes:
Charles G. Cooper, 42 years; Ronald J. Gidwitz, 28 years; Michael Goldman, 33
years; Gilbert P. Smith, 20 years; and Eugene Zeffren, 16 years. Benefits under
the plan are not subject to deduction for
I-9
<PAGE>
Social Security, but are offset for certain amounts payable under the Company's
Profit Sharing and Retirement Savings Plan and a former plan which was
terminated as to future contributions.
PRINCIPAL SECURITY HOLDERS
COMMON STOCK. The following table sets forth the only persons known by the
Company to be the beneficial owners of more than 5% of the Shares as of the
dates indicated based solely on filings made with the Securities and Exchange
Commission:
<TABLE><CAPTION>
SHARES
BENEFICIALLY OWNED
NAME AND ADDRESS OF ---------------------------
BENEFICIAL OWNER NUMBER PERCENT OF CLASS
- -------------------------------------------------------------------- ------- ----------------
<S> <C> <C>
Southeastern Asset Management, Inc.(1).............................. 531,000 7.8%
6075 Poplar Ave., Suite 900
Memphis, TN 38119
Shamrock Holdings of California, Inc.(2)............................ 514,600 7.6
4444 Lakeside Drive
P.O. Box 7774
Burbank, CA 91510
</TABLE>
- ------------
(1) Information indicated is based entirely on Amendment Number 2 to Schedule
13D filed by Southeastern Asset Management, Inc. on or about February 6,
1996. Southeastern Asset Management, Inc. has shared voting and shared
dispositive power with respect to 197,000 shares, sole voting power with
respect to 310,000 shares, no voting power with respect to 24,000 shares and
sole dispositive power with respect to 334,000 shares.
(2) Information indicated is based entirely on Amendment Number 2 to Schedule
13D filed by Shamrock Holdings of California, Inc. on December 15, 1994.
Shamrock Holdings of California, Inc. has sole voting and dispositive power
with respect to 514,600 shares.
CLASS B COMMON STOCK. The following table sets forth the only persons known
by the Board to be the beneficial owners of more than 5% of the Company's Class
B Common Stock as of May 3, 1995:
<TABLE><CAPTION>
CLASS B COMMON SHARES
BENEFICIALLY OWNED
AS OF MAY 3, 1995
NAME AND ADDRESS OF -----------------------------
BENEFICIAL OWNER NUMBER PERCENT OF CLASS
- ------------------------------------------------------------------ --------- ----------------
<S> <C> <C>
Gidwitz Family Group*............................................. 3,017,567 98.9%
325 N. Wells St.
Chicago, Illinois 60610
</TABLE>
- ------------
* The Gidwitz Family Group consists of (i) Gerald S. Gidwitz, his children,
their spouses, his grandchildren and various trusts, partnerships and other
entities holding shares for the benefit of members of the Gerald S. Gidwitz
Family, and (ii) the children of Joseph L. Gidwitz, their spouses, their
children and various trusts, partnerships and other entities holding shares
for the benefit of members of the Joseph L. Gidwitz Family. The Gidwitz Family
Group has shared voting and shared dispositive power with respect to all
reported shares which are held of record as follows:
(a) 2,087,397 shares are owned of record by the Gidwitz Family
Partnership, an Illinois general partnership. Certain members of the Gidwitz
Family Group contributed these shares to the partnership in 1991 in exchange
for a pro rata interest in the partnership. Under the terms of the
partnership agreement, five partners are designated as managing partners,
and, by their majority vote, have the dispositive and voting rights to such
shares. Two of the managing partners, Gerald S. Gidwitz and Ronald J.
Gidwitz, who own interests in the partnership of 5.8% and 15.1%,
respectively, are directors of the Company.
(b) 569,909 shares are owned of record by HCI Partnership, an Illinois
general partnership. Certain members of the Gidwitz Family Group contributed
these shares to the partnership in 1988 and 1991 in exchange for a pro rata
share interest in the partnership. Management of the
(Footnotes continued on following page)
I-10
<PAGE>
(Footnotes continued from preceding page)
partnership is identical to that of the Gidwitz Family Partnership. Gerald
S. Gidwitz and Ronald J. Gidwitz own interests in the partnership of .04%
and 12.2%, respectively.
(c) 181,133 shares are owned by various trusts for the benefit of the
children and grandchildren of Gerald S. Gidwitz and Joseph L. Gidwitz.
(d) 120,000 shares are owned of record and beneficially by Ronald J.
Gidwitz, which shares are set forth under "Security Ownership of
Management."
(e) 59,128 shares are owned by family members of Gerald S. Gidwitz and
Joseph L. Gidwitz.
The Gidwitz Family Group may cast 81% of the total votes represented by all
the outstanding Shares and Class B Common Stock as of May 3, 1995. Betsy R.
Gidwitz owns 7.26% and 36.05% of the Gidwitz Family Partnership and the HCI
Partnership, respectively, and is a beneficiary of trusts holding 35,500 shares
of Class B Common Stock as of February 16, 1996.
Members of the Gidwitz Family Group own 84,611 Shares, including the Shares
set forth under "Security Ownership of Management". Assuming that all Class B
Common Stock owned by the Gidwitz Family Group was converted to Shares and that
no other Class B Common Stock was so converted, the percentage ownership of
Shares by the Gidwitz Family Group would be 31.46%.
SECURITY OWNERSHIP OF MANAGEMENT
As set forth under "Principal Security Holders", as of May 3, 1995, the
Gidwitz Family Group, which includes partnerships of, and trusts for the benefit
of, Gerald S. Gidwitz, Joseph L. Gidwitz and members of their respective
families, including Ronald J. Gidwitz, owned an aggregate of 3,017,567 shares of
Class B Common Stock. The following table excludes the shares held by such
partnerships and trusts as well as shares allocated to each individual's account
pursuant to the Company's Employee Stock Ownership and Employee Stock Purchase
Plans, but otherwise shows the shares held beneficially at that date by each
director, by the named executive officers, and by all directors and executive
officers as a group.
<TABLE>
<CAPTION>
SHARES OF
COMPANY SHARES OF
COMMON PERCENT OF CLASS B PERCENT
NAME STOCK* CLASS (1) COMMON STOCK OF CLASS
- -------------------------------------------- --------- ---------- ------------ --------
<S> <C> <C> <C> <C>
Marshall L. Burman.......................... 7,200(2) -- -- --
Frank W. Considine.......................... 400(2) -- -- --
Charles G. Cooper........................... 72,575(3) 1.06% -- --
Gerald S. Gidwitz........................... -- -- -- (4) --
Joseph L. Gidwitz........................... -- (6) -- -- (4)(5) --
Ronald J. Gidwitz........................... 25,551(7) -- 120,000(4) 3.93%
Michael Goldman............................. 52,962(8) -- -- --
Abbie J. Smith.............................. 500(9) -- -- --
Gilbert P. Smith............................ 49,233(10) -- -- --
John C. Stetson............................. 2,000(2) -- -- --
Eugene Zeffren.............................. 37,252(11) -- -- --
All executive officers and directors as a
group (20 persons)........................ 357,412(12)(13) 5.22% 120,000 3.93%
</TABLE>
- ------------
* The beneficial ownership (including percent of class) shown in the table with
respect to Company Common Stock does not reflect the shares of Company Common
Stock that could be acquired upon the conversion of shares of Class B Common
Stock into shares of Company Common Stock.
(Footnotes continued on following page)
I-11
<PAGE>
(Footnotes continued from preceding page)
(1) The shares owned, in each case except as otherwise indicated, constitute
less than 1% of the outstanding shares of the Company Common Stock.
(2) Excludes 16,000 shares acquirable as of May 3, 1995 pursuant to options
granted under the Company's Directors Stock Option Plan, as adjusted for a
stock split in 1989.
(3) Excludes 20,888 shares acquirable by Mr. Cooper as of May 3, 1995 pursuant
to options granted under the Company's 1983 and 1992 Stock Option Plans.
(4) Excludes shares attributable to ownership interest in the Gidwitz Family
Partnership and the HCI Partnership as set forth in "Principal Security
Holders".
(5) Excludes 37,732 shares held as trustee for the benefit of Mr. Gidwitz's
children and grandchildren.
(6) Excludes 34,211 shares held as trustee for the benefit of Mr. Gidwitz's
children and grandchildren. Mr. Gidwitz passed away in August 1995.
(7) Excludes 43,110 shares acquirable as of May 3, 1995 by Mr. Gidwitz pursuant
to options granted under the Company's 1983 and 1992 Stock Options Plans.
(8) Excludes 19,413 shares acquirable by Mr. Goldman as of May 3, 1995 pursuant
to options granted under the Company's 1983 and 1992 Stock Option Plans and
30,000 shares of restricted Company Common Stock issued under the 1992
Stock Option Plan which were restricted as of May 3, 1995 in compliance
with that plan.
(9) Excludes 8,000 shares acquirable as of May 3, 1995 pursuant to options
granted under the Company's Directors Stock Option Plan.
(10) Excludes 17,830 shares acquirable as of May 3, 1995 by Mr. Smith pursuant
to options granted under the Company's 1983 and 1992 Stock Option Plans and
12,000 shares of restricted Company Common Stock issued under the 1992
Stock Option Plan which were restricted as of May 3, 1995 in compliance
with that plan.
(11) Excludes 13,083 shares acquirable as of May 3, 1995 by Mr. Zeffren pursuant
to options granted under the Company's 1983 and 1992 Stock Plans and 6,000
shares of restricted Common Stock issued under the 1992 Stock Option Plan
which were restricted as of May 3, 1995 in compliance with that plan.
(12) Excludes 651 and 3,022 shares credited to all members of the group under
the Company's Employee Stock Ownership and Employee Stock Purchase Plans,
respectively, 242,110 shares acquirable as of May 3, 1995 by members of the
group pursuant to options granted under the Company's 1983, 1991 and 1992
Stock Option Plans and 48,000 shares of restricted Company Common Stock
issued under the 1992 Stock Option Plan which remain restricted in
compliance with that plan.
(13) Excludes Betsy R. Gidwitz, who succeeded Joseph L. Gidwitz as director
after his death in August 1995, and shares attributable to her ownership
interests in the Gidwitz Family Partnership and the HCI Partnership.
CHANGE OF CONTROL PROVISIONS OF STOCK OPTION PLANS AND STOCK APPRECIATION RIGHT
PLAN
The Company's 1983 Stock Option Plan, as amended, Directors Stock Option
Plan, the 1991 Stock Option Plan, 1992 Stock Option Plan and the All-Employee
Stock Option Program contain provisions providing that if the Company shall be a
party to a transaction involving a sale of substantially all its assets, merger
or a consolidation, any stock option granted thereunder shall pertain to and
apply to the securities to which a holder of the number of Shares subject to
such stock option would have been entitled if such holder actually owned the
stock subject to such stock option immediately prior to the time any such
transaction became effective; provided, however, that all unexercised stock
options under such plans may be cancelled by the Company as of the effective
date of any such transaction, by giving notice to the holders thereof of its
intention to do so and by permitting the exercise of stock options with respect
to all Shares covered thereby, whether or not, by its terms such stock option is
then exercisable and without regard to any installment exercise provisions
therein or in such plans. Under the Company's 1994 Stock Appreciation Right
Plan, in the case of any of the above-referenced transaction, any SAR may be
cancelled by the Company as of the effective date of any such transaction, by
giving 30 days prior written notice to the holders thereof and allowing such
holders to exercise all SARs whether or not such SARs are then exercisable by
their terms and without regard to any installment exercise provisions in such
plan.
I-12
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION*
The Compensation and Stock Option Committee (the "Committee") of the Board
of Directors, is composed of three directors of the Company who are not current
or former employees or officers of the Company and are "disinterested persons"
within the meaning of the Securities and Exchange Commission rules. The
Committee is generally responsible for administering the Company's executive
compensation programs. In particular, the Committee reviews and approves the
compensation of the Company's most highly compensated executives, including the
named executive officers whose compensation is detailed in this Proxy Statement.
Compensation Philosophy
The Company's executive compensation program is intended to attract,
develop, reward and retain the highest quality management talent. It is the
philosophy of the Company that executive compensation should recognize an
individual's contribution to the Company and be competitive with compensation
offered by other major consumer packaged goods companies. At the same time, the
Company believes that executive compensation should also be closely linked to
the Company's financial performance. Accordingly, a significant portion of each
executive's total compensation is dependent upon achieving objective,
pre-determined financial goals. Therefore, in years in which these performance
goals are achieved or exceeded, executive compensation will be higher than in
years in which the performance is below expectations. In fiscal 1995, almost 30%
of total cash compensation (consisting of salary and bonus) of the named
executive officers was contingent on achieving corporate performance goals. In
addition, to further align executive compensation program utilizes awards of
stock options and stock appreciation rights tied to increases in stockholder
value.
Compensation Components
Working with outside consultants on a biennial basis and with the Company's
Human Resources Department, the Committee conducts comprehensive annual
evaluations of the Company's executive compensation program. The components of
the Company's executive compensation program are as follows: base salary, annual
incentive cash bonuses and awards of stock options, stock appreciation rights
and restricted stock.
Base Salary. The Committee establishes annually the base salaries to be paid
to the Company's executive officers for the coming fiscal year. In setting each
salary, the Committee takes into account several factors, including competitive
compensation data and qualitative factors such as an individual's experience,
responsibilities, management and leadership abilities and job performance in the
prior year. In evaluating competitive data, the Committee generally strives to
set salaries competitive with other consumer packaged goods companies, including
many of the companies contained in the peer group used for the performance graph
in this Proxy Statement.
Annual Incentive Program. Each year, the Committee establishes minimum
performance thresholds under the Executive Incentive Plan for key executives,
including most of the named executive officers, for any bonuses to be paid.
Based on the participant's salary range, this program provides for target
bonuses for executive officers, excluding the Chief Executive Officer, of
approximately 45% to 63%of base salary based on the attainment of annual
corporate performance goals (55% to 82% of bonus) and individual goals and
objectives (18% to 45% of bonus). The individual's personal contribution to the
achievement of corporate financial goals is assessed in determining the
individual's bonus range. The Company achieved its internal pre-tax earnings
target for the fiscal year ending February 28, 1995. At last year's Annual
Meeting, the stockholders approved the Executive Management
- ------------
* This report of the Compensation and Stock Option Committee of the Board of
Directors appeared in the Proxy Statement for the Company's Annual Meeting of
Stockholders held on June 27, 1995.
I-13
<PAGE>
Incentive Plan. The Executive Management Incentive Plan is substantially similar
to the Executive Incentive Plan except that it complies with Section 162(m) of
the Internal Revenue Code of 1986, as amended, and the proposed regulations
thereunder. The Executive Management Incentive Plan was adopted to preserve the
Company's tax deduction for annual bonus compensation paid to an individual in
excess of $1 million. The maximum bonus payable under the Executive Management
Incentive Plan in any fiscal year is $1.3 million. Currently, the only
participant under the Executive Management Incentive Plan is Mr. Gidwitz, whose
compensation is discussed later in this report.
Stock Options, Stock Appreciation Rights and Restricted Stock. Stock
options, stock appreciation rights and restricted stock awards are focused to
encourage outstanding future performance over a longer term than the annual
incentive program. Therefore, stock options, appreciation rights and restricted
stock awards become exercisable or vest based on continued employment with the
Company and, in the case of stock options and appreciation rights, generally
remain exercisable for a period of ten years and five years, respectively. The
Committee believes such awards are a key long-term incentive vehicle because
they provide executives with the opportunity to share in the appreciation of the
value of its Common Stock, and in the case of stock options and restricted
stock, to acquire an equity interest in the Company. These awards, therefore,
directly align the executive's interest with those of the stockholders.
In making stock option and appreciation right grants, the Committee reviews
alternative exercise pricing formulas and other methods for correlating the
exercise price of options and appreciation rights to Company performance.
Generally, stock options and appreciation rights are not fully exercisable until
four years following the date of grant to reinforce a long-term perspective and
to help retain valued executives. Further, stock options and appreciation rights
are granted at the fair market value of the Company's Common Stock on the date
of grant. Therefore, the Company's Common Stock must increase in value in order
for the executive to realize any benefit from the option or appreciation right.
In determining the number of stock options or appreciation rights to be awarded
to each individual, the Committee has utilized a formula based on a percentage
of the executive's base salary, taking into account the executive's level of
management responsibility and potential impact on the Company's profitability
and growth. Restricted stock awards are made in special limited circumstances,
primarily as a retention and performance incentive or as a recognition of
substantially increased executive responsibilities.
Stock options and appreciation rights are granted to executive officers
(including the named executive officers) by the Committee generally every 12
months and to other key managers every 18 months. During the fiscal year ended
February 28, 1995, stock options and appreciation rights were granted to the
named executive officers and other key management employees at an exercise price
equal to fair market value of the Company's stock on the date of grant. No
restricted stock awards were made during the 1995 fiscal year.
Tax Deduction of Executive Compensation
As part of the Omnibus Budget Reconciliation Act passed by Congress in 1993,
Section 162 (m) of the Internal Revenue Code of 1986, as amended, was
implemented to limit deductibility of compensation to the chief executive
officer and the next four most highly compensated executive officers. The limit
generally disallows a deduction to the Company for any compensation to these
officers in excess of $1,000,000 per year. The $1,000,000 limit on deductible
compensation does not, however, apply to certain performance-based pay that
meets the requirements of Section 162 (m) and the proposed regulations
thereunder. The Company has taken the necessary actions to preserve the
deductibility of payments made under performance-based plans based on the
proposed regulations issued by the Internal Revenue Service. When final
regulations are issued, further changes may be made to the executive
compensation program to the extent necessary and feasible in order to maintain
the deductibility of payments under performance-based plans.
I-14
<PAGE>
Chief Executive Officer Compensation
In determining the base salary for Ronald J. Gidwitz for the prior fiscal
year commencing March 1, 1994, the Committee considered the vase salaries of
chief executive officers of peer group companies within the consumer packaged
goods industry and Mr. Gidwitz's leadership and job performance. In evaluating
the Company's performance, the Committee considered numerous financial criteria
and ratios without assigning any precise weight to any of these factors. The
Committee also took into consideration the fact that the Company did not achieve
its targeted pre-tax earnings objective for the fiscal year ending February 28,
1994. Based on this review, Mr. Gidwitz's base salary was set at an annual rate
of $750,750 commencing on March 1, 1994, representing a 5% increase over his
salary for fiscal 1993.
After review of the Company's fiscal 1995 performance and the individual
objectives established under the Executive Management Incentive Plan for Mr.
Gidwitz at the beginning of the fiscal year, the Committee certified that the
Company met its internal financial objectives for fiscal 1995 (55.5% of his
bonus) and that Mr. Gidwitz accomplished 40% of his personal objectives (44.5%
of his bonus). As a result, Mr. Gidwitz earned a bonus of $320,750 in accordance
with the formula set forth in the Executive Management Incentive Plan, in
contrast to fiscal 1994 in which Mr. Gidwitz earned no bonus award due to the
Company's failure to achieve its threshold internal financial goals.
Accordingly, nearly 30% of Mr. Gidwitz's total cash compensation of $1,071,500
(consisting of salary and bonus) for fiscal 1995 was related to the Company's
fiscal 1995 performance. As of May 3, 1995, Mr Gidwitz held options to purchase
a total of 113,320 shares of Common Stock and 89,271 free-standing stock
appreciation rights and owned beneficially 25,551 shares of Common Stock and
120,00 shares of Class B Common Stock.
Conclusion
The Committee believes that the Company's policies and programs will be
effective over a period of years in achieving its goals of competitive executive
compensation and maximizing the return to shareholders.
Marshall L. Burman
Frank W. Considine
John C. Stetson
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Burman is of counsel to Wildman, Harrold, Allen & Dixon. During the 1995
fiscal year the firm rendered legal services to the Company.
I-15
<PAGE>
COMMON STOCK PERFORMANCE
The following graphs compare over the five year period ending February 28,
1995, the annual percentage change in the cumulative total returns on the
Shares, the S&P 500 Index, and a peer group of 10 major U.S. consumer packaged
goods companies selected by the Company. The peer group consists of
Alberto-Culver Company, Avon Products, Inc., Bristol-Myers Squibb Company,
Carter Wallace, Inc., Colgate-Palmolive Company, The Dial Corp., The Dow
Chemical Company, The Gillette Company, Johnson & Johnson and the Procter &
Gamble Company. For the purpose of calculating the peer group average, the
returns of each company have been weighted according to its stock market
capitalization as of the beginning of each fiscal year.
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG HELENE CURTIS INDUSTRIES, INC.,
S&P 500 INDEX AND PEER GROUP INDEX
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
Helene Curtis Ind. $100.00 $127.38 $185.10 $207.76 $124.00 $140.79
Peer Group $100.00 $133.39 $161.90 $151.41 $161.36 $195.37
Broad Market $100.00 $114.65 $133.00 $147.19 $159.47 $171.21
TRANSACTIONS WITH AFFILIATED PERSONS
During fiscal 1995, the Company leased office space in its headquarters
building at 325 N. Wells St., Chicago, Illinois, and provided miscellaneous
office supplies to Burnham Realty Company, Continental Materials Corporation and
other entities in which Gerald S. Gidwitz, Joseph L. Gidwitz and/or members of
their families have an interest. The rental amount and other terms and
conditions of the leases were established as fair rental value by an independent
appraiser and were approved by the Company's outside directors. Amounts received
by the Company pursuant to such leases and for miscellaneous supplies during
fiscal 1995 were as follows: Burnham Realty Company $16,802; Continental
Materials Corporation $81,189; and all others $7,389.
During fiscal 1995, McCord Group, Inc. provided certain travel agency
services to the Company. In the opinion of management, these services were
provided at rates equal to or less than those of competitive services. Members
of the families of Gerald S. Gidwitz and Joseph L. Gidwitz own substantially all
the capital stock of McCord Group, Inc. During the fiscal year the Company also
purchased office furniture form Continental Materials Corporation at fair market
value upon termination of its lease for $65,000.
I-16
Exhibit 5
[LOGO]
Unilever
NEWS RELEASE
Released on behalf of Unilever
by John T. Gould, Jr.
390 Park Avenue
New York, NY 10022 FOR IMMEDIATE RELEASE
(212) 906-4694
TUESDAY, FEBRUARY 13, 1996
Contact at Helene Curtis:
Kristina Tober
(312) 661-2056
UNILEVER TO ACQUIRE HELENE CURTIS
Unilever and Helene Curtis jointly announced today that a subsidiary of Unilever
United States, Inc. has signed a definitive merger agreement to acquire all the
outstanding shares of Helene Curtis Industries, Inc. for a cash price of $70 per
share. Approximately 11 million shares are outstanding on a fully diluted
basis, resulting in a total equity value for the transaction of $770 million.
A tender offer to acquire all of the outstanding common stock of Helene Curtis
is expected to commence by February 20, 1996, and it is anticipated that the
transaction will close by the end of March. The merger agreement has been
approved by the Helene Curtis Board of Directors which has recommended that
Helene Curtis shareholders accept the offer.
In connection with the merger agreement, the Unilever United States subsidiary
has entered into an agreement with Ronald J. Gidwitz, president and CEO of
Helene Curtis, and certain partnerships owning Class B shares of Helene Curtis
representing approximately 29 percent of the outstanding shares and
approximately 75 percent of the voting power of Helene Curtis. This agreement
provides, among other things, for the grant to the Unilever United States
subsidiary of an option to purchase the shares subject to the agreement for $70
per share. The Unilever United States subsidiary has agreed to exercise the
option following the closing of the tender offer.
The closing of the tender offer is subject to the tender of a sufficient number
of shares of Helene Curtis, such that, when taken together with the shares
subject to the above agreement, the Unilever United States subsidiary will have
acquired a majority of the outstanding shares on a fully diluted basis. The
transaction is subject to normal regulatory approvals. The merger agreement
provides that Helene Curtis is obligated to pay a termination fee and expenses
to the Unilever United States subsidiary in the event of termination of the
merger agreement in certain circumstances.
Helene Curtis is a leading manufacturer and marketer of haircare products, such
as shampoos, conditioners and styling aids, as well as deodorant and other
skincare products. Its sales are primarily in the U.S., which represents two-
thirds of total sales. In the U.S., Helene Curtis sells retail and professional
haircare products under such brands as Suave, Salon Selectives, Finesse and
Quantum. Its deodorant brand names are Degree and Suave. Outside the U.S.,
Helene Curtis' major affiliates are in Japan, Canada, the U.K. and Australia.
The business will continue to use its current company name.
-more-
<PAGE>
-2-
Helene Curtis had sales of $1.27 billion, a pre-tax profit of $36.2 million, and
net income of $19.2 million in the fiscal year ending February 28, 1995. The
company employs approximately 3,300 people worldwide with approximately 2,200 of
these in the U.S. Its products are distributed through grocery, mass
merchandise and drug stores, and through professional channels to salons. Its
tangible net asset value at February 28, 1995 was $220.4 million.
Unilever operates a mass market personal care business which has leading
positions in hair, skin and oral care and deodorants on a global basis and
represents 15 percent of Unilever's annual sales. Personal care is one of its
core consumer categories with such brand names as Pond's, Organics, Sunsilk and
Rexona. In the U.S., its mass market products are sold through Chesebrough-
Pond's USA and include such brands as Pond's, Vaseline and Mentadent.
Robert M. Phillips, a Unilever director and spokesman, said: "The acquisition
of Helene Curtis is a further expansion of our presence in the important mass
market personal care category. Helene Curtis has strong brands in the North
American haircare and deodorant markets and this acquisition will improve our
position which has been underrepresented in comparison with our international
presence."
"After having built this company over the last 65 years, this has not been an
easy decision for my family," said Ronald J. Gidwitz, Helene Curtis' president
and CEO, whose family is the controlling shareholder of Helene Curtis. "We are
confident, however, that it is the right one as it provides significant value to
our shareholders and enhances the future prospects of the company. In the last
few years, it has become clear that if we are to remain successful, we must seek
partnerships that offer us the additional resources necessary to stay
competitive in an industry that is consolidating rapidly to a few, very powerful
players. We believe our union with Unilever will provide such resources, and
will prove beneficial to the future growth and success of Helene Curtis and its
people."
# # #
Background: With sales reaching $45 billion in 1994, Unilever is one of the
world's largest consumer products companies. It produces and markets a wide
range of foods and beverages, soaps and detergents, personal care products and
specialty chemicals. Unilever operates through some 500 companies in 80
countries around the globe, and employs more than 300,000 people.
In the United States, Unilever's sales exceeded $9 billion in 1994. It employs
24,000 people and has 108 offices and manufacturing sites in 26 states.
Unilever's major U.S. operating companies include Thomas J. Lipton, Good Humor-
Breyers Ice Cream, Van den Bergh Foods, Gorton's, Lever Brothers, Chesebrough-
Pond's, Elizabeth Arden, Calvin Klein Cosmetics and National Starch and
Chemical.
Exhibit 6
[LOGO]
Helene Curtis Industries, Inc.
325 N. Wells Street
Chicago, Illinois 60610
- --------------------------------------------------------------------------------
February 20, 1996
Dear Fellow Stockholder:
We are pleased to inform you that Helene Curtis Industries, Inc. has entered
into an Agreement and Plan of Merger with Conopco, Inc., a subsidiary of
Uniliver N.V. and Unilever PLC, pursuant to which a wholly owned subsidiary of
Conopco has commenced a tender offer to purchase all of the outstanding shares
of Common Stock of Helene Curtis for $70.00 per share in cash. The consummation
of the tender offer will be followed by the purchase, for $70.00 per share, of
shares of Class B Common Stock of Helene Curtis held by certain stockholders and
by a merger in which any shares of Common Stock not tendered pursuant to the
tender offer and any shares of Class B Common Stock not previously purchased
will receive $70.00 per share in cash or the highest price paid per share
pursuant to the tender offer. As a result of the merger, Helene Curtis will
become a wholly owned subsidiary of Conopco.
The Board of Directors of Helene Curtis has determined that the Conopco
tender offer and the merger are fair to and in the best interests of Helene
Curtis and its stockholders and recommends that stockholders accept the Conopco
offer and tender their shares of Common Stock pursuant to it.
Enclosed are the Conopco Offer to Purchase, dated February 20, 1996, Letter
of Transmittal and other related documents. These documents set forth the terms
and conditions of the tender offer. Attached is a copy of the Company's Schedule
14D-9, as filed with the Securities and Exchange Commission. The Schedule 14D-9
describes in more detail the reasons for the Board's conclusions and contains
other important information relating to the tender offer. We urge you to
consider this information carefully.
The Board of Directors and the management and employees of Helene Curtis
thank you for your support.
Sincerely,
/s/ Gerald S. Gidwitz /s/ Ronald J. Gidwitz
Gerald S. Gidwitz Ronald J. Gidwitz
Chairman President and Chief
Executive Officer
Exhibit 7
Lazard Freres & Co. LLC
200 West Madison Street
Suite 2200
Chicago, Illinois 60606-3416
-------
Telephone (312) 407-6600
Facsimile (312) 407-6620
February 13, 1996
Members of the Board of Directors
Helene Curtis Industries, Inc.
325 North Wells Street
Chicago, IL 60610
Members of the Board:
We understand that Conopco, Inc. ("Parent", an affiliate of Unilever Group),
a wholly-owned subsidiary of Parent ("Merger Sub") and Helene Curtis Industries,
Inc. (the "Company") propose to enter into an Agreement and Plan of Merger,
dated as of the date hereof (the "Merger Agreement"), pursuant to which Merger
Sub will offer to acquire all of the outstanding Common Stock of the Company,
par value $.50 per share (the "Common Stock"), in a tender offer at a price
equal to $70.00 per share in cash (the "Offer"). The Merger Agreement provides
that, following the consummation of the Offer, Merger Sub and the Company will
be merged (the "Merger"), with all remaining shares of Common Stock and all
shares of Class B Common Stock, par value $.50 per share of the Company (the
"Class B Common Stock"), (other than any shares of Common Stock or Class B
Common Stock owned directly or indirectly by Parent or the Company and other
than shares held by stockholders of the Company who dissent from the Merger and
require appraisal of their shares under Delaware law) being converted into the
right to receive $70.00 per share in cash. The proposed Offer and Merger
collectively are referred to herein as the "Transaction". We understand that in
connection with the Transaction, certain stockholders of the Company will,
following consummation of the Offer, sell to Merger Sub, at a price of $70.00
per share in cash, such stockholders' Class B Common Stock pursuant to a
Stockholder Agreement (the "Stockholder Agreement") to be entered into with
Parent and Merger Sub by such stockholders.
You have requested our opinion as to the fairness, from a financial point of
view, to the stockholders of the Company (other than Parent and its affiliates)
of the consideration to be received by such stockholders in connection with the
Transaction.
In connection with this opinion, we have:
(i) Reviewed the financial terms of the Merger Agreement and the
Stockholder Agreement;
(ii) Analyzed certain historical business and financial information
relating to the Company;
(iii) Reviewed various financial forecasts and other data provided to us
by the Company relating to its business;
(iv) Held discussions with members of senior management of the Company
with respect to the past and current operations and financial condition of
the Company and the business, prospects and strategic objectives of the
Company;
(v) Reviewed public information with respect to certain other companies
in lines of businesses we believe to be generally comparable, in whole or in
part, to the business of the Company;
<PAGE>
Lazard Freres & Co. LLC
Members of the Board of Directors
Helene Curtis Industries, Inc.
Page Two
(vi) Reviewed the financial terms of certain business combinations
involving companies in lines of businesses which we believe to be generally
comparable to those of the Company, and in other industries generally;
(vii) Reviewed historical stock prices and trading volumes of the Common
Stock; and
(viii) Conducted such other financial studies, analyses, and
investigations as we deemed appropriate.
In rendering our opinion, we have assumed and relied upon the accuracy and
the completeness of the financial and other information provided to us by the
Company and have not assumed responsibility for any independent verification of
such information or any independent valuation or appraisal of the assets or
liabilities of the Company. With respect to financial forecasts, we have assumed
that such forecasts were reasonably prepared on a basis reflecting the best
currently available estimates and judgments of management of the Company. We
assume no responsibility for, and express no view as to, such forecasts or the
assumptions on which they are based.
In rendering our opinion, we have also assumed that the Offer and Merger
will each be consummated on the terms contained in the Merger Agreement, without
any waiver of any material terms or conditions by the Company. We have not
reviewed any tender offer documents, proxy or information statements or similar
documents that may be prepared for use in connection with the Transaction.
Further, our opinion is necessarily based on economic, monetary, market and
other conditions as in effect on, and the other information made available to us
as of, the date hereof.
Our opinion is directed to the Board of Directors of the Company and does
not constitute a recommendation to any stockholder of the Company as to whether
or not such stockholder should tender his or her shares pursuant to the Offer or
as to how such stockholder should vote at the stockholders' meeting held in
connection with the Merger. It is understood that, except for inclusion in its
entirety in a Schedule 14D-9 relating to the Offer and in a proxy or information
statement of the Company relating to the Merger, this letter may not be
disclosed or otherwise referred to without our prior written consent, except as
may otherwise be required by law or by a court of competent jurisdiction.
We have acted as financial advisor to the Company in connection with the
Transaction. We will receive fees for such services. Such fees are contingent
upon the Transaction and will be earned partially upon announcement of the
Transaction and partially upon consummation of the Transaction. Our firm has in
the past provided investment banking and financial advisory services to the
Company and has received customary investment banking and financial advisory
fees for rendering such services.
Based on and subject to the foregoing, we are of the opinion that the
consideration to be received by the stockholders of the Company in connection
with the Transaction is fair to the stockholders of the Company (other than
Parent and its affiliates) from a financial point of view.
Very truly yours,
LAZARD FRERES & CO. LLC
By /s/ Jeffrey A. Golman
...................................
Managing Director
2
