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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
(RULE 14A-101)
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registran[X]
Filed by a Party other than the Regi[ ]nt
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, For Use of
the Commission Only (as
permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Under Rule 14a-12
BEN & JERRY'S HOMEMADE, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth amount on
which the filing fee is calculated and state how it was
determined): (4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[X] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
$72,828
(2) Form, Schedule or Registration Statement No.:
Schedule TO and Amendment No. 1 to Schedule 13D
(3) Filing Party:
Vermont All Natural Expansion Company
Conopco, Inc.
Unilever N.V.
(4) Date Filed:
April 18, 2000
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[LOGO BEN & JERRY'S HOMEMADE, INC.]
Ben & Jerry's Homemade, Inc.
30 Community Drive
South Burlington, Vermont 05403-6828
[INSERT DATE]
Dear Shareholder:
You are cordially invited to attend a Special Meeting of
Shareholders, which will be held on [INSERT DATE] at [INSERT LOCATION] at
10:00 a.m.
As described in the enclosed Proxy Statement, at the Special
Meeting you will be asked to consider and vote upon the merger of Vermont
All Natural Expansion Company, a wholly-owned subsidiary of Conopco, Inc.,
an indirect subsidiary of Unilever N.V. and Unilever PLC, with and into Ben
& Jerry's Homemade, Inc. (the "Company"), pursuant to an Agreement and Plan
of Merger, dated as of April 11, 2000. Upon consummation of the merger,
each outstanding share of Class A Common Stock will be converted into the
right to receive $43.60 in cash, without interest, upon surrender of
certificates formerly representing such shares.
The merger is the second and final step in the acquisition of the
Company by Unilever. The first step was a tender offer by Vermont All
Natural Expansion Company for all of the outstanding shares of the
Company's common stock at a price of $43.60 per share. Vermont All Natural
Expansion Company purchased 6,621,944 shares pursuant to the tender offer
and now owns approximately 91% of the outstanding shares of the Company.
The affirmative vote of holders of a majority of the shares of the
Company's common stock outstanding and entitled to vote at the Special
Meeting is necessary to approve the Agreement and Plan of Merger. Vermont
All Natural Expansion Company owns a sufficient number of shares to assure
approval of the Agreement and Plan of Merger at the Special Meeting and
will vote all of its shares in favor of the Agreement and Plan of Merger.
As a result, the affirmative vote of any other shareholder will not be
required to approve the Agreement and Plan of Merger.
YOUR BOARD OF DIRECTORS HAS DETERMINED THAT THE TERMS OF THE MERGER
ARE FAIR TO AND IN THE BEST INTERESTS OF BEN & JERRY'S SHAREHOLDERS. THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT BEN & JERRY'S SHAREHOLDERS
VOTE "FOR" APPROVAL OF THE MERGER AGREEMENT AND THE MERGER.
Among the factors considered by the Board of Directors in
evaluating the merger was the opinion dated April 11, 2000 of Gordian
Group, L.P., the Company's financial advisor, which provides that as of
such date, the cash consideration to be received by the shareholders of the
Company pursuant to the tender offer and the merger was fair from a
financial point of view to such shareholders. The written opinion of
Gordian Group, L.P. is attached as Annex D to the enclosed Proxy Statement
and should be read carefully and in its entirety by shareholders.
On the following pages, you will find a Notice of the Special
Meeting and a Proxy Statement, which provides you with detailed information
concerning the proposed merger. I urge you to read the enclosed materials
carefully and request that you promptly complete and return the enclosed
proxy. If you attend the Special Meeting, you may vote in person even if
you have previously returned your proxy. Your vote is important regardless
of the number of shares you own.
Sincerely,
Perry D. Odak
President and CEO
[LOGO BEN & JERRY'S HOMEMADE, INC.]
Ben & Jerry's Homemade, Inc.
30 Community Drive
South Burlington, Vermont 05403-6828
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To the Shareholders of Ben & Jerry's Homemade, Inc.:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders of
Ben & Jerry's Homemade, Inc., (the "Company") will be held at [INSERT
LOCATION], on [INSERT DATE], at 10:00 a.m., for the following purposes:
1. To consider and vote upon a proposal to approve the Agreement
and Plan of Merger, dated as of April 11, 2000, among Conopco, Inc, Vermont
All Natural Expansion Company, a wholly-owned subsidiary of Conopco, and
the Company (the "Merger Agreement"). The Merger Agreement provides, among
other things, that in accordance with the relevant provisions of the
Vermont Business Corporation Act, Vermont All Natural Expansion Company
will be merged with and into the Company. Following the effective time of
the merger, the Company will continue as the surviving corporation and a
wholly-owned subsidiary of Conopco and each share of the Company's Class A
Common Stock, par value $.033 per share, will be automatically converted
into the right to receive an amount in cash equal to $43.60, without
interest, upon surrender of certificates formerly representing such shares.
2. To transact such other business as may properly come before the
Special Meeting or any adjournments or postponements thereof.
The Board of Directors has specified [INSERT DATE] as the record
date for the purpose of determining the shareholders who are entitled to
receive notice of and to vote at the Special Meeting. Only holders of Class
A Common Stock (the only class of stock now outstanding) of record at the
close of business on that date will be entitled to notice of and to vote at
the Special Meeting or any adjournments or postponements thereof.
Shareholders who do not vote in favor of approving the Merger
Agreement and who otherwise comply with the requirements of Vermont law
will be entitled to dissenters' rights. A summary of the applicable
provisions of Vermont law, including the requirements a shareholder must
follow in order to exercise his, her or its dissenters' rights, is
contained in the accompanying Proxy Statement.
By order of the Board of Directors,
Frances G. Rathke
Secretary
[INSERT DATE]
THE AFFIRMATIVE VOTE OF A MAJORITY OF THE OUTSTANDING SHARES OF THE COMPANY
COMMON STOCK ENTITLED TO VOTE THEREON IS REQUIRED TO APPROVE THE MERGER
AGREEMENT.
PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED PROXY (FOR CLASS A COMMON STOCK
AND RETURN IT PROMPTLY IN THE ENCLOSED SELF-ADDRESSED ENVELOPE. NO POSTAGE
IS NECESSARY IF THE PROXY IS MAILED IN THE UNITED STATES OF AMERICA. YOU
MAY REVOKE A PROXY AT ANY TIME PRIOR TO ITS EXERCISE IN THE MANNER
DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT. ANY SHAREHOLDER PRESENT AT
THE SPECIAL MEETING, INCLUDING ANY ADJOURNMENTS OR POSTPONEMENTS THEREOF,
MAY REVOKE SUCH HOLDER'S PROXY AND VOTE PERSONALLY ON THE PROPOSAL TO
APPROVE THE MERGER AGREEMENT AT THE SPECIAL MEETING.
PLEASE DO NOT SEND ANY SHARE CERTIFICATES REPRESENTING YOUR SHARES
AT THIS TIME.
SUMMARY TERM SHEET
This summary term sheet highlights selected information from this
proxy statement and may not contain all information that is important to
you. To understand the merger fully and for a more complete description of
the legal terms of the merger, you should carefully read this entire proxy
statement and the documents to which it refers. The merger agreement is
attached as Annex A to this proxy statement. We encourage you to read the
merger agreement. It is the legal document that governs the merger.
THE SPECIAL MEETING
DATE, PLACE AND TIME: The special meeting will be held at
10:00 a.m., local time, on
[INSERT DATE], at [INSERT LOCATION].
PURPOSE OF THE SPECIAL MEETING: At the special meeting, you will be
asked to approve the Agreement and Plan
of Merger, dated as of April 11, 2000,
among Conopco, Inc., Vermont All
Natural Expansion Company, a
wholly-owned subsidiary of Conopco, and
Ben & Jerry's Homemade, Inc. If the
merger is completed, Ben & Jerry's will
become a wholly-owned subsidiary of
Conopco and you will be entitled to
receive $43.60 in cash, without
interest, for each share of Ben &
Jerry's common stock that you own. See
"The Special Meeting".
RECORD DATE: The Board of Directors has fixed the
close of business on [INSERT DATE] as
the record date for determination of
the Ben & Jerry's shareholders entitled
to notice of the special meeting and
entitled to vote at the special
meeting. See "The Special Meeting".
VOTE REQUIRED TO APPROVE
THE MERGER AGREEMENT: The holders of a majority of the
outstanding shares of Ben & Jerry's
common stock must approve the merger
agreement. You are entitled to one vote
for each share of Ben & Jerry's common
stock that you owned on the record
date. VERMONT ALL NATURAL EXPANSION
COMPANY OWNS A SUFFICIENT NUMBER OF
SHARES TO ASSURE APPROVAL OF THE MERGER
AGREEMENT AT THE SPECIAL MEETING AND
INTENDS TO VOTE ALL OF ITS SHARES IN
FAVOR OF THE MERGER AGREEMENT. AS A
RESULT, THE MERGER AGREEMENT WILL BE
APPROVED EVEN IF NO SHAREHOLDERS OTHER
THAN VERMONT ALL NATURAL EXPANSION
COMPANY VOTE TO APPROVE IT. See "The
Special Meeting".
PROXIES: Because approval of the merger
agreement requires the affirmative vote
of the holders of a majority of the
outstanding shares of Ben & Jerry's
common stock as of the record date,
abstentions, failures to vote and
broker non-votes will have the same
effect as a vote against approval of
the merger agreement.
You may revoke your proxy at any time
before it is voted by:
o delivering a written notice of
revocation of proxy prior to
the special meeting to Frances
G. Rathke, Secretary, Ben &
Jerry's Homemade, Inc., 30
Community Drive, South
Burlington, Vermont 05403-6828;
o delivering to Ben & Jerry's a
duly executed proxy bearing a
later date prior to the special
meeting; or
o attending the special meeting
and voting in person.
If you own your shares of Ben & Jerry's
common stock in "street name," you
should follow your broker's
instructions concerning how to change
your vote. See "The Special Meeting".
You should not send any share
certificates with your proxy. A
transmittal form with instructions for
the surrender of share certificates
formerly representing Ben & Jerry's
common stock will be mailed to you as
soon as practicable after completion of
the merger. See "The Special Meeting".
THE PARTIES
BEN & JERRY'S: Ben & Jerry's Homemade, Inc., a
corporation formed under the laws of
the State of Vermont, is a leading
manufacturer of super premium ice
cream, frozen yogurt and sorbet in
unique and regular flavors. Ben &
Jerry's also manufactures ice cream
novelty products. Ben & Jerry's is
committed to using milk and cream that
have not been treated with the
synthetic hormone rBGH. Ben & Jerry's
uses natural ingredients in its
products. Ben & Jerry's believes that
it has maintained a reputation for
producing gourmet- quality natural ice
cream and frozen desserts, and for
sponsoring or creating light-hearted
promotions that foster an image as an
independent socially conscious Vermont
company. See "The Parties".
VERMONT ALL NATURAL
EXPANSION COMPANY: Vermont All Natural Expansion Company,
a corporation formed under the laws of
the State of Vermont and a wholly-owned
subsidiary of Conopco, was organized to
acquire shares of Ben & Jerry's common
stock and merge with and into Ben &
Jerry's and has not conducted any
unrelated activities since its
organization. See "The Parties".
CONOPCO: Conopco, Inc., a corporation formed
under the laws of the State of New
York, is a wholly-owned subsidiary of
Unilever United States, Inc. Unilever
United States, Inc. is a holding
company for all of Unilever's principal
operations in the United States.
Conopco's operating divisions consist
of most of the consumer products
operations of Unilever conducted in the
United States. See "The Parties".
THE MERGER AND RELATED TRANSACTIONS
OVERVIEW: Pursuant to the merger agreement,
Vermont All Natural Expansion Company
will be merged with and into Ben &
Jerry's, with Ben & Jerry's surviving.
As a result of the merger, Ben &
Jerry's will become a wholly-owned
subsidiary of Conopco and each then-
outstanding share of Ben & Jerry's
common stock, other than shares held by
Ben & Jerry's and its subsidiaries,
Conopco and its subsidiaries, Vermont
All Natural Expansion Company and
dissenting shareholders who perfect
their dissenters' rights, will, by
virtue of the merger and without any
further action on the part of the
holder of such share, be converted
automatically into the right to receive
$43.60 in cash, without interest.
After the consummation of the merger,
you will have no continuing equity
interest in, and will not share in
future earnings, dividends or growth,
if any, of Ben & Jerry's.
RECOMMENDATION OF
THE BOARD OF DIRECTORS: After an evaluation of business,
financial and market factors and
consultation with its legal and
financial advisors, at a meeting of the
Board of Directors held on April 11,
2000, prior to the commencement and
consummation of the tender offer by
Vermont All Natural Expansion Company,
Conopco and Unilever N.V., the Board of
Directors (all of whose members were
unaffiliated with Conopco and Vermont
All Natural Expansion Company on that
date) determined that the merger was
fair to and in the best interests of
Ben & Jerry's and its shareholders,
unanimously approved and declared the
advisability of the merger agreement
and the transactions contemplated
thereby and unanimously voted to
recommend that Ben & Jerry's
shareholders approve the merger
agreement. See "The Merger and Related
Transactions - Recommendations of the
Board of Directors" and "The Merger and
Related Transactions - Reasons for the
Board of Directors' Recommendations;
Factors Considered".
OPINION OF FINANCIAL ADVISOR: On April 11,
2000, Gordian Group, L.P. delivered its
written opinion to the Board of
Directors that, as of such date, the
$43.60 per share in cash to be received
by holders of shares in the tender
offer and the merger was fair from a
financial point of view to such
holders.
THE FULL TEXT OF THE WRITTEN OPINION OF
GORDIAN, GROUP, L.P. DATED APRIL 11,
2000, WHICH SETS FORTH ASSUMPTIONS
MADE, MATTERS CONSIDERED AND
LIMITATIONS ON THE REVIEW UNDERTAKEN IN
CONNECTION WITH THE OPINION, IS
ATTACHED AS ANNEX D TO THIS PROXY
STATEMENT. THE OPINION OF GORDIAN
GROUP, L.P. DOES NOT CONSTITUTE A
RECOMMENDATION AS TO HOW YOU SHOULD
VOTE WITH RESPECT TO THE MERGER
AGREEMENT. YOU SHOULD READ THE OPINION
IN ITS ENTIRETY. See "The Merger and
Related Transactions - Opinion of the
Company's Financial Advisor".
UNILEVER'S OWNERSHIP OF BEN &
JERRY'S COMMON STOCK: After consummation of the tender offer
and the cashing out of certain employee
stock options by Ben & Jerry's, Vermont
All Natural Expansion Company owns
6,621,944 shares of Ben & Jerry's
common stock (or approximately 91% of
the outstanding shares of Ben & Jerry's
common stock). Vermont All Natural
Expansion Company can approve the
merger agreement without the
affirmative vote of any other Ben &
Jerry's shareholder as a result of its
ownership of Ben & Jerry's common
stock.
DISSENTERS' RIGHTS: Under Vermont law, shareholders who do
not vote in favor of the merger
agreement will be entitled to exercise
dissenters' rights in connection with
the merger. Shareholders desiring to
exercise such dissenters' rights will
have the rights and duties and must
follow the procedures set forth in
Chapter 13 of the Vermont Business
Corporation Act, the full text of which
is attached to this proxy statement as
Annex E. Shareholders who wish to
exercise dissenters' rights must
carefully follow the procedures
described therein and are urged to read
Annex E in its entirety. See Annex E.
METHOD OF ACCOUNTING: The merger will be accounted for under
the purchase method of accounting.
EFFECTIVE TIME: The merger will become
effective as of the date and
time that the Articles of
Merger are filed with the
Secretary of State of the State
of Vermont in accordance with
the Vermont Business
Corporations Act, which is
expected to occur as soon as
practicable after the special
meeting.
EXCHANGE OF CERTIFICATES: Pursuant to the merger agreement,
Vermont All Natural Expansion Company
will deposit with Morgan Guaranty Trust
Company of New York, an amount of cash
equal to the product of the shares
outstanding immediately prior to the
effective time of the merger, other
than shares held by Ben & Jerry's and
its subsidiaries, Conopco and its
subsidiaries, Vermont All Natural
Expansion Company and dissenting
shareholders who perfect their
dissenters' rights, and $43.60.
Promptly after the effective time of
the merger, Morgan Guaranty Trust
Company of New York will send to each
shareholder of record, as of
immediately prior to the effective time
of the merger, a letter of transmittal
and detailed instructions specifying
the procedures to be followed in
surrendering certificates. SHARE
CERTIFICATES SHOULD NOT BE FORWARDED TO
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK UNTIL RECEIPT OF THE LETTER
OF TRANSMITTAL. Upon the surrender of a
share certificate, Morgan Guaranty
Trust Company of New York will issue to
the surrendering holder a check
representing an amount of cash equal to
$43.60 per share of common stock
formerly represented by the share
certificates surrendered to Morgan
Guaranty Trust Company of New York.
CONDITIONS TO THE MERGER: The consummation of the
merger is subject only to the prior
approval of the merger agreement by the
holders of a majority of the shares
outstanding and entitled to vote on the
matter and certain other customary
closing conditions, including:
o no preliminary or permanent
injunction or other order,
decree or ruling of, nor any
statute, rule, regulation or
executive order promulgated or
enacted by, any governmental
authority that would make the
consummation of the merger
illegal, or otherwise restrict,
prevent or prohibit the
consummation of the merger.
All other conditions to the merger have
been satisfied.
TERMINATION AND AMENDMENT
OF THE MERGER AGREEMENT: The merger agreement may be terminated
at any time prior to the effective time
of the merger by, among other things,
the mutual agreement of the parties or,
after the occurrence of certain events
or actions, by one of the parties
acting independently. The merger
agreement may be amended by the parties
at any time, but after the merger
agreement has been approved by the
shareholders, no amendment may be made
which by law requires further approval
of the shareholders without obtaining
such approval.
FEDERAL INCOME TAX CONSEQUENCES: If the merger
is consummated, the exchange of shares
by a holder for the merger
consideration will be a taxable
transaction under the Internal Revenue
Code of 1986, as amended. Because of
the complexities of the tax laws, you
are advised to consult your own tax
advisors concerning the applicable
federal, state, local, foreign and
other tax consequences resulting from
the merger.
REGULATORY AND OTHER APPROVALS: There are no U.S. federal or state
regulatory requirements which remain to
be complied with in order to consummate
the merger (other than the filing of
articles of merger with the Secretary
of State of the State of Vermont).
SOURCE AND AMOUNT OF FUNDS: The total amount of funds required by
Vermont All Natural Expansion Company
to purchase all shares tendered
pursuant to and to pay all related fees
and expenses in connection with the
tender offer was approximately $291
million. The amount of funds required
by Ben & Jerry's to make all payments
to participants in Ben & Jerry's stock
option plans pursuant to the merger
agreement was $27,315,923. The total
amount of funds required by Vermont All
Natural Expansion Company to consummate
and to pay all related fees and
expenses in connection with the merger
is estimated to be approximately $31
million. Vermont All Natural Expansion
Company will obtain the necessary funds
to consummate the merger and to pay
related fees and expenses from Conopco,
which in turn will obtain such funds
from intercompany loans of available
cash from and proceeds of sale of
commercial paper by Unilever and its
subsidiaries.
TABLE OF CONTENTS
SUMMARY TERM SHEET...........................................................i
The Special Meeting.................................................i
The Parties........................................................ii
The Merger and Related Transactions...............................iii
PROXY STATEMENT..............................................................1
Questions and Answers about the Merger..............................2
Cautionary Statements concerning
Forward-Looking Information........................................6
THE SPECIAL MEETING..........................................................6
General Information.................................................6
Purpose of the Special Meeting......................................6
Record Date.........................................................6
Vote Required to Approve the Merger Agreement.......................6
Proxies.............................................................7
THE PARTIES..................................................................7
Ben & Jerry's Homemade, Inc........................................7
Vermont All Natural Expansion Company...............................7
Conopco, Inc........................................................8
THE MERGER AND RELATED TRANSACTIONS..........................................9
General.............................................................9
Conversion of Securities............................................9
Vote Required to Approve the Merger................................10
Recommendations of the Board of Directors..........................10
Background of the Merger...........................................10
Reasons for the Board of Directors'
Recommendations; Factors Considered...............................17
Opinion of the Company's Financial Advisor.........................21
Change of Control..................................................24
Conditions to the Merger...........................................24
Termination of the Merger Agreement................................24
Takeover Proposals.................................................25
Fees and Expenses..................................................26
Inter-company Loan.................................................26
The Board of Directors.............................................26
Stock Options......................................................27
Benefit Plans......................................................28
Employment/Severance Agreements....................................28
Indemnification and Insurance......................................29
Best Efforts; Notification.........................................30
Representations and Warranties.....................................30
Procedure for Termination, Amendment, Extension or Waiver..........30
Rights Agreements..................................................30
Confidentiality Agreement..........................................31
License Agreement..................................................31
Stock Option Agreement.............................................32
Third-Party Beneficiaries..........................................33
PLANS FOR THE COMPANY......................................................33
The Surviving Corporation Board....................................33
Ineligible Directors...............................................33
Operations of the Surviving Corporation............................34
Social Mission.....................................................34
The Foundation.....................................................34
Certain Federal Income Tax Consequences............................35
Method of Accounting...............................................36
Regulatory and Other Approvals.....................................36
Source and Amount of Funds.........................................36
DISSENTERS' RIGHTS..........................................................37
Overview...........................................................37
Dissenters' Rights.................................................37
STOCK OWNERSHIP.............................................................40
Security Ownership of Certain Beneficial
Owners and Management..............................................40
Shareholder Litigation..............................................41
Shareholder Proposals for Next Annual Meeting.......................41
Other Matters.......................................................41
Incorporation of Certain Documents by Reference.....................41
Available Information...............................................42
Annex A ----- Merger Agreement
Annex B ----- License Agreement
Annex C ----- Stock Option Agreement
Annex D ----- Opinion of Gordian Group, L.P.
Annex E ----- Dissenters' Rights
PROXY STATEMENT
INTRODUCTION
This Proxy Statement ("Proxy Statement") pursuant to Section 14(a)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is
being filed by Ben & Jerry's Homemade, Inc. (the "Company") in connection
with the proposed merger of Vermont All Natural Expansion Company (the
"Purchaser"), a wholly-owned subsidiary of Conopco, Inc. ("Conopco"), an
indirect subsidiary of Unilever N.V. and Unilever PLC (collectively,
"Unilever"), with and into the Company (the "Merger") pursuant to an
Agreement and Plan of Merger dated as of April 11, 2000 (the "Merger
Agreement"). Following the effective time (the "Effective Time") of the
Merger, the Company will continue as the surviving corporation (the
"Surviving Corporation") and a wholly-owned subsidiary of Conopco.
The Merger is the second and final step in the acquisition of the
Company by Unilever. The first step was the tender offer by the Purchaser,
Conopco and Unilever N.V. to purchase all the outstanding shares of the
Company's common stock (including the associated common stock purchase
rights) at a purchase price of $43.60 per share, net to the seller in cash,
without interest (the "Offer Price"), upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated April 18, 2000 (the
"Offer to Purchase") and the related Letter of Transmittal (together with
the Offer to Purchase, the "Offer").
In connection with the Merger Agreement, the Company entered into a
License Agreement, dated as of April 11, 2000, among the Company, Ben &
Jerry's Homemade Holdings, Inc., a corporation formed under the laws of the
State of Vermont and a wholly-owned subsidiary of the Company, on the one
hand, and Unilever, on the other hand (as such agreement may be amended
from time to time, the "License Agreement") and a Stock Option Agreement,
dated as of April 11, 2000, between the Company and Conopco (as such
agreement may be amended from time to time, the "Stock Option Agreement").
Copies of the Merger Agreement, the License Agreement and the Stock
Option Agreement (collectively, the "Transaction Agreements") are filed
herewith as Annex A, B and C, respectively, and are incorporated herein by
reference.
SECURITIES
The title of the class of securities to which this Proxy Statement
relates is the Class A common stock, par value $.033 per share, of the
Company ("Class A Common Stock"), including the associated common stock
purchase rights (the "Class A Rights") issued pursuant to the Rights
Agreements dated as of July 30, 1998, as amended from time to time (the
"Company Rights Agreement"). As of June [INSERT DATE], 2000, there were
[INSERT NUMBER] shares of Class A Common Stock and no shares of Class B
common stock, par value $.033 per share, of the Company ( "Class B Common
Stock" and together with Class A Common Stock, the "Company Common Stock")
outstanding.
QUESTIONS AND ANSWERS ABOUT THE MERGER
WHAT WILL HAPPEN IN THE MERGER?
Upon consummation of the Merger, the Purchaser will be merged with
and into the Company and shareholders who surrender their share
certificates, other than the Company and its subsidiaries, Conopco and its
subsidiaries, the Purchaser and dissenting shareholders who perfect their
dissenters' rights, will receive a cash payment of $43.60, without
interest, for each of their shares of Class A Common Stock.
WHO WILL OWN THE COMPANY AFTER THE MERGER?
After the Merger, Conopco will own all of the outstanding shares of
Class A Common Stock.
WHY HAS THE MERGER BEEN PROPOSED?
The Merger is the second step in a two-part transaction, the
purpose of which is the acquisition by Conopco of the entire equity
interest in the Company. The first step was a tender offer for all of the
outstanding shares of the Company's common stock which was consummated by
the Purchaser on May 16, 2000. Pursuant to the Offer, the Purchaser
purchased 6,621,944 shares of Company Common Stock and owns approximately
91% of the outstanding shares of Class A Common Stock.
WHAT VOTE IS REQUIRED TO APPROVE THE MERGER AGREEMENT?
Approval of the Merger Agreement requires the affirmative vote of
holders of a majority of the shares of Class A Common Stock outstanding and
entitled to vote at the Special Meeting. THE PURCHASER ALREADY OWNS A
SUFFICIENT NUMBER OF SHARES OF CLASS A COMMON STOCK TO ASSURE APPROVAL OF
THE MERGER AGREEMENT AND WILL VOTE ALL OF ITS SHARES OF CLASS A COMMON
STOCK IN FAVOR OF THE MERGER AGREEMENT. AS A RESULT, NO OTHER SHAREHOLDER
WILL NEED TO VOTE "FOR" THE PROPOSAL FOR THE MERGER AGREEMENT TO BE
APPROVED. Nevertheless, we urge you to complete the enclosed proxy card to
assure the representation of your shares of Class A Common Stock at the
Special Meeting.
WHAT WILL I RECEIVE IN THE MERGER?
As a shareholder of the Company, you will receive $43.60 in cash,
without interest, for each share of Class A Common Stock that you validly
surrender for payment. This is the "Merger Consideration." For example, if
you own 100 shares of Class A Common Stock, upon consummation of the
Merger, you will receive $4,360.00 in cash.
ARE DISSENTERS' RIGHTS AVAILABLE?
Yes. Under Vermont law, shareholders who do not vote in favor of
the merger agreement will be entitled to exercise dissenters' rights in
connection with the merger. Shareholders desiring to exercise such
dissenters' rights will have the rights and duties and must follow the
procedures set forth in Chapter 13 of the Vermont Business Corporation Act,
the full text of which is attached to this proxy statement as Annex E.
Shareholders who wish to exercise dissenters' rights must carefully follow
the procedures described therein and are urged to read Annex E in its
entirety.
IF THE MERGER IS CONSUMMATED, WHEN CAN I EXPECT TO RECEIVE THE MERGER
CONSIDERATION FOR MY SHARES OF COMPANY COMMON STOCK?
Promptly after the Merger is consummated, you will receive detailed
instructions regarding the surrender of your share certificates. You should
not send your share certificates to the Company or anyone else until you
receive these instructions. Conopco will send payment of the Merger
Consideration to you as promptly as practicable following receipt of your
share certificates and other required documents.
WHEN DO YOU EXPECT THE MERGER TO BE COMPLETED?
We expect the Merger to be consummated as soon as reasonably
practicable after the date of the Special Meeting.
WHAT ARE THE TAX CONSEQUENCES OF THE MERGER TO ME?
The receipt of the Merger Consideration by you will be a taxable
transaction for U.S. federal income tax purposes. To review the tax
consequences to you in greater detail, see "Certain Federal Income Tax
Consequences". Your tax consequences will depend on your personal
situation. You should consult your tax advisors for a full understanding of
the tax consequences of the Merger to you.
UPON WHAT AM I BEING ASKED TO VOTE?
Notwithstanding the fact that the Purchaser owns a sufficient
number of shares of Class A Common Stock to approve the Merger Agreement
without your vote, you are being asked to approve the Merger Agreement,
which provides for, among other things, the Merger. After the Merger, the
Company, as the Surviving Corporation, will be a wholly-owned subsidiary of
Conopco, and you will no longer own an equity interest in the Surviving
Corporation. The Board of Directors has unanimously approved the Merger
Agreement and recommends that you vote "FOR" the approval of the Merger
Agreement.
WHAT DO I NEED TO DO NOW?
This Proxy Statement contains important information regarding the
Merger and the Merger Agreement, as well as information about the Company
and Conopco. It also contains important information about what the Board of
Directors considered in evaluating the Offer and the Merger. We urge you to
read this Proxy Statement carefully, including its Appendices and Exhibits.
You may also want to review the documents referenced under "Where You Can
Find More Information."
HOW DO I VOTE?
Just indicate on your proxy card how you want to vote, and sign and
mail it in the enclosed envelope as soon as possible, so that your shares
of Class A Common Stock will be represented at the Special Meeting. The
Special Meeting will take place at [INSERT LOCATION], on [INSERT DATE], at
10:00 a.m., local time. You may attend the Special Meeting and vote your
shares of Class A Common Stock in person, rather than voting by proxy. In
addition, you may withdraw your proxy at any time up to and including the
day of the Special Meeting and either change your vote or attend the
Special Meeting and vote in person.
IF MY SHARES OF COMPANY COMMON STOCK ARE HELD IN "STREET NAME" BY MY
BROKER, WILL MY BROKER VOTE MY SHARES OF COMPANY COMMON STOCK FOR ME?
Your broker will vote your shares of Class A Common Stock only if
you provide instructions on how to vote. You should instruct your broker
how to vote your shares of Class A Common Stock, following the directions
your broker provides. If you do not provide instructions to your broker,
your shares of Class A Common Stock will not be voted and they will be
counted as votes against the proposal to approve the Merger Agreement.
WHAT IF I OWN CONVERTED SHARES OF CLASS B COMMON STOCK?
Pursuant to the Notice of Conversion dated May 15, 2000, from and
after May 25, 2000, each outstanding share of Class B Common Stock is
deemed to be a share of Class A Common Stock for all purposes and
certificates for shares of Class B Common Stock represent shares of Class A
Common Stock.
You should consider your converted share certificates for Class B Common
Stock as shares of Class A Common Stock for all purposes.
TO WHOM CAN I TALK IF I HAVE QUESTIONS?
If you would like additional copies of this document, or if you
would like to ask any additional questions about the Merger, you should
contact:
MORROW & CO., INC.
445 Park Avenue, 5th Floor
New York, NY 10022
Call Collect (212) 754-8000
Banks and Brokerage Firms, Please Call: (800) 662-5200
SHAREHOLDERS, PLEASE CALL (800) 566-9061
CAUTIONARY STATEMENT CONCERNING
FORWARD-LOOKING INFORMATION
This Proxy Statement, including through the incorporation by
reference of certain documents and other statements made from time to time
by the Company, Unilever, Conopco, the Purchaser, or their respective
affiliates or representatives contain certain forward-looking statements.
Those forward-looking statements include statements regarding the intent,
belief or current expectations of the Company, Unilever, Conopco and the
Purchaser and members of their respective management teams, as well as the
assumptions on which such statements are based. Such forward-looking
statements are not guarantees of future performance and involve risks and
uncertainties, and actual results may differ materially from those
contemplated by such forward-looking statements. Important factors
currently known to management of the Company, Unilever, Conopco and the
Purchaser that could cause actual results to differ materially from those
contained in forward- looking statements include, but are not limited to,
the risks discussed herein and: (i) the ability to successfully negotiate
long-term contracts with distributors and raw materials suppliers at
favorable prices and on other acceptable terms; (ii) the ability to obtain
required raw materials to supply customers on a timely basis; (iii) the
seasonal nature of the ice cream industry; (iv) the relative success of
entry into new markets; (v) competitive pricing; (vi) relations with
employees; (vii) the ability to manage operating costs; (viii) governmental
regulations and environmental matters; (ix) risks associated with
international operations and world economies; and (x) implementation of new
technologies. The Company, Unilever, Conopco and the Purchaser undertake no
obligation to update or revise forward-looking statements to reflect
changes in assumptions, the occurrence of unanticipated events, or changes
in future operating results over time.
THE SPECIAL MEETING
GENERAL INFORMATION
This Proxy Statement is being provided by, and the enclosed proxy
is solicited by and on behalf of, the Board of Directors for use at the
Special Meeting of the holders of Class A Common Stock.
The Special Meeting is scheduled to be held as follows:
[INSERT DATE]
10:00 a.m., local time
[INSERT LOCATION]
PURPOSE OF THE SPECIAL MEETING
The Special Meeting is being held so that shareholders of the
Company may consider and vote upon a proposal to approve the Merger
Agreement and to transact any other business that is properly brought
before the Special Meeting or any postponement or adjournment thereof.
Approval of the Merger Agreement will constitute approval of the Merger and
the other transactions contemplated by the Merger Agreement.
If the Merger Agreement is approved and the Merger becomes
effective, the Purchaser will merge with and into the Company, and the
Company will become a wholly-owned subsidiary of Conopco. You will receive
$43.60 in cash for each share of Class A Common Stock that you own. The
Merger Consideration will not be paid in exchange for shares of Class A
Common Stock that are held in the treasury of the Company, owned by
Conopco, its subsidiaries or the Purchaser or held by dissenting
shareholders who seek appraisal of the fair value of their shares of Class
A Common Stock and comply with all of the Vermont law procedures in Annex
E.
RECORD DATE
The Board of Directors of the Company (the "Board of Directors")
has fixed the close of business on [INSERT DATE] as the record date for
determination of shareholders of the Company entitled to notice of the
Special Meeting and entitled to vote at the Special Meeting. On the record
date, there were [INSERT NUMBER] shares of Class A Common Stock outstanding
(inclusive of [INSERT NUMBER] treasury shares), held by approximately
[INSERT NUMBER] holders of record.
VOTE REQUIRED TO APPROVE THE MERGER AGREEMENT
The holders of a majority of the outstanding shares of Class A
Common Stock must approve the Merger. You are entitled to one vote for each
share of Class A Common Stock that you owned on the record date. THE
PURCHASER OWNS A SUFFICIENT NUMBER OF SHARES OF CLASS A COMMON STOCK TO
ASSURE APPROVAL OF THE MERGER AGREEMENT AT THE SPECIAL MEETING AND WILL
VOTE ALL OF ITS SHARES OF CLASS A COMMON STOCK IN FAVOR OF THE MERGER
AGREEMENT. AS A RESULT, THE MERGER AGREEMENT WILL BE APPROVED WITHOUT THE
AFFIRMATIVE VOTE OF ANY OTHER SHAREHOLDER.
PROXIES
Because approval of the Merger Agreement requires the affirmative
vote of the holders of a majority of the outstanding shares of Class A
Common Stock as of the record date, abstentions, failures to vote and
broker non-votes will have the same effect as a vote against approval of
the Merger Agreement. A signed proxy that is returned but which does not
contain any instructions as to how it should be voted will be voted in
favor of approval of the Merger and will be deemed a waiver of dissenters'
rights.
You may revoke your proxy at any time before it is voted by:
o delivering a written notice of revocation of proxy prior to
the Special Meeting to Frances G. Rathke, Secretary, Ben &
Jerry's Homemade, Inc., 30 Community Drive, South
Burlington, Vermont 05403-6828;
o delivering to the Company a duly executed proxy bearing a
later date prior to the Special Meeting; or
o attending the Special Meeting and voting in person.
If you own your shares of Class A Common Stock in "street name,"
you should follow your broker's instructions concerning how to change your
vote.
You should not send any stock certificates with your proxy. A
transmittal form with instructions for the surrender of stock certificates
for Class A Common Stock will be mailed to you as soon as practicable after
completion of the Merger.
THE PARTIES
BEN & JERRY'S HOMEMADE, INC.
The Company, a corporation formed under the laws of the State of
Vermont, is a leading manufacturer of super premium ice cream, frozen
yogurt and sorbet in unique and regular flavors. The Company also
manufactures ice cream novelty products. The Company is committed to using
milk and cream that have not been treated with the synthetic hormone rBGH.
The Company uses natural ingredients in its products. The Company believes
that it has maintained a reputation for producing gourmet-quality natural
ice cream and frozen desserts, and for sponsoring or creating light-hearted
promotions that foster an image as an independent socially conscious
Vermont company.
The principal executive offices of the Company are located at 30
Community Drive, South Burlington, Vermont 05403-6828. The telephone number
is (802) 846-1500.
VERMONT ALL NATURAL EXPANSION COMPANY
Vermont All Natural Expansion Company, a corporation formed under
the laws of the State of Vermont, is a wholly-owned subsidiary of Conopco.
The Purchaser was organized to conduct the Offer and to merge with Ben &
Jerry's in the Merger and has not conducted any unrelated activities since
its organization.
The principal executive offices of the Purchaser are located at 390
Park Avenue, New York, New York 10022. The telephone number is (212)
888-1260.
CONOPCO, INC.
Conopco, Inc., a corporation formed under the laws of the State of
New York, is a direct subsidiary of Unilever United States, Inc. Unilever
United States, Inc. is a holding company for all of Unilever's principal
operations in the United States. Conopco's operating divisions consist of
most of the consumer products operations of Unilever conducted in the
United States.
The principal executive offices of Conopco are located at 390 Park
Avenue, New York, New York 10022. The telephone number is (212) 888-1260.
THE MERGER AND RELATED TRANSACTIONS
GENERAL
The Merger Agreement provides that, at the Effective Time, the
Purchaser will be merged with and into the Company. At the Effective Time,
the Company will continue as the surviving corporation (the "Surviving
Corporation") and the separate existence of the Purchaser will cease.
Pursuant to the provisions of the Merger Agreement, the Merger will
become effective when articles of merger executed in accordance with the
Vermont Business Corporation Act (the "VBCA") are filed with the Secretary
of State of the State of Vermont, or at such other time as the Purchaser
and the Company agree and specify in such articles.
CONVERSION OF SECURITIES
As of the Effective Time, without any further action on the part of
the Purchaser, the Company or holders of securities of the Purchaser or the
Company:
o Each issued and outstanding share of common stock of the
Purchaser will be converted into ten thousand shares of
common stock of the Surviving Corporation;
o All shares of Class A Common Stock owned by the Company and
its subsidiaries, Conopco and its subsidiaries or by the
Purchaser will be cancelled and no consideration will be
delivered for such shares of Class A Common Stock; and
o Each other share of Class A Common Stock issued and
outstanding prior to the Effective Time (other than shares
of Company Common Stock as to which dissenters' rights have
been perfected) will be converted into the right to receive
from the Surviving Corporation $43.60 in cash, without
interest. These shares of Class A Common Stock will no
longer be outstanding and will automatically be cancelled
and retired and each holder of a certificate formerly
representing any of these shares of Class A Common Stock
shall cease to have any rights except the right to receive
the Merger Consideration, less any applicable withholding
taxes, upon surrender of the share certificate that formerly
evidenced shares of Class A Common Stock.
o Shares of Company Common Stock as to which dissenters'
rights have been properly perfected will be converted into
the right to receive from the Surviving Corporation the fair
value of such shares as determined by the Superior Court of
Chittenden County, Vermont in accordance with the VBCA. In
no event will dissenters be entitled to any on-going
interest in the Surviving Corporation.
As a result of the actions described above, at the Effective Time, the
Company will become a wholly-owned subsidiary of Conopco.
VOTE REQUIRED TO APPROVE THE MERGER
The VBCA requires, among other things, that the adoption of any
plan of merger by the Board of Directors must be approved by a majority of
all the votes entitled to be cast on the plan (including the votes
attributable to any shares of Class A Common Stock owned by the Purchaser).
The Board of Directors has approved the Offer, the Merger and the Merger
Agreement; consequently, the only additional action of the Company
necessary to effect the Merger is approval of the Merger Agreement by the
Company's shareholders.
RECOMMENDATIONS OF THE BOARD OF DIRECTORS
At a meeting held on April 11, 2000, the Board of Directors (i)
determined that the Offer, the Merger and the Merger Agreement are
advisable, fair to, and in the best interests of, the Company shareholders,
(ii) approved the Merger Agreement and the transactions contemplated
thereby, including the Merger and the Offer, and (iii) determined to
recommend that the Company shareholders accept the Offer and tender their
shares of Company Common Stock pursuant thereto and approve the Merger
Agreement.
BACKGROUND OF THE MERGER
On August 4, 1999, a representative of Gordian Group, L.P.
("Gordian"), the Company's financial advisor, returned a telephone call
from Unilever's financial advisor pertaining to Unilever's general interest
in a business combination with the Company. Prior to that call, Perry D.
Odak, President and CEO of the Company, had been contacted from time to
time by various parties interested in business transactions with the
Company. Mr. Odak was contacted during the summer of 1999 by
representatives of Unilever pertaining to Unilever's general interest in a
business combination with the Company, in response to which Mr. Odak
requested, in light of the nature of that contact, that the substance of
such general interest on the part of Unilever be set forth in writing and
delivered to the Company. In addition, in early 1998 Dreyer's Grand Ice
Cream, Inc. ("Dreyer's") made overtures to Messrs. Cohen and Greenfield to
obtain their support for an offer that Dreyer's would make to acquire the
Company. Messrs. Cohen and Greenfield rejected these overtures.
On or about August 18, 1999, The Pillsbury Company ("Pillsbury"),
one of the Company's two principal distributors along with Dreyer's,
advised Mr. Odak of the formation of Ice Cream Partners USA LLC ("Ice Cream
Partners"), an ice cream joint venture of Pillsbury and Nestle, USA
("Nestle").
During the remainder of August, the Company reviewed the impact of
the formation of Ice Cream Partners on the Company and, on August 31,
representatives of the Company met with representatives of Dreyer's to
explore the possibility of a distribution joint venture relating to the
U.S. out-of-home market (i.e., non-grocery store distribution) between
Dreyer's and the Company.
On September 8, the Company received a letter from Conopco that
expressed Unilever's general interest in a possible business combination
between Unilever and the Company but did not specify a proposed value for
the Company.
On September 12 and September 13, the Board of Directors held a
retreat during which the Board of Directors discussed the Unilever
expression of interest of September 8 and management's analysis of the
potential impact of the formation of Ice Cream Partners on the ice cream
industry and the distribution arrangements available to the Company. The
Board of Directors authorized Mr. Odak and the Company's senior management
to continue or commence discussions with both Dreyer's and Conopco.
During the period from the latter part of September through
October, the Company met separately with Dreyer's and Unilever to discuss
possible transactions. The Dreyer's discussions focused on a possible
distribution joint venture, with discussion of related changes to the
existing grocery trade distribution agreement between the two companies.
The Unilever discussions focused on the September 8 letter from Unilever
and transactions in which Unilever might be interested, including a
business combination between the Company and Unilever and possible
distribution joint ventures between the Company and Unilever or among the
Company, Unilever and Dreyer's.
On October 19, the Board of Directors held a meeting in which it
reviewed the status of the Unilever and Dreyer's discussions, the Company's
distribution issues, including those relating to Ice Cream Partners, and
the ability of the Company to maintain its independence given the
significance of the Company's distribution issues and changes in the ice
cream industry.
At the end of October, the Company's senior management concluded
that a distribution joint venture with Dreyer's was not economically
feasible and briefly explored with Dreyer's whether Dreyer's had an
interest in starting discussions regarding a possible business combination
between the two companies. Dreyer's did not express an interest in
commencing such discussions on a basis satisfactory to the Company.
The Company continued discussions with Unilever until October 28,
when Unilever indicated that it was not interested in pursuing further
discussions concerning a distribution joint venture but remained interested
in exploring a business combination with the Company.
On November 4, the Company's senior management and other
representatives met with Unilever's representatives to discuss a structure
proposed by Unilever for a possible cash acquisition by Unilever of the
Company and certain other related matters. Discussions were held between
representatives of Unilever and the Company throughout the remainder of
November concerning the possible terms of the acquisition and the subject
of the autonomy of the Company as a wholly-owned subsidiary within the
Unilever corporate structure following such an acquisition, including
discussions of draft agreements relating to the proposed acquisition
proposed by Unilever. At a meeting on November 30, representatives of
Unilever suggested a cash price for the acquisition of $33.00 to $35.00 per
share.
On November 17, the Company received a letter from Roncadin, S.p.a.
("Roncadin") which proposed a cash acquisition of the Company by Roncadin
at a price per share of $32.00 to $35.00. During the remainder of November
until December 3, when Roncadin advised the Company that it did not intend
to pursue an acquisition of the Company, there were discussions between
representatives of the Company and Roncadin concerning this proposal and
Roncadin's related due diligence requirements. An advisor to Roncadin also
contacted the Company in early January to determine the Company's
willingness to pursue acquisition discussions with Roncadin on an exclusive
basis, which the Company declined to do.
On November 18, the Board of Directors met and reviewed the status
of the Unilever, Roncadin and Dreyer's discussions and matters relating to
the continued independence of the Company.
On November 30, the Company received a letter from Dreyer's
proposing commencement of discussions of a strategic merger between the two
companies or, if this was not of interest to the Company, renewal of
discussions regarding a possible distribution joint venture or other
arrangement.
On December 1, the Board of Directors received presentations
relating to the status of discussions with Dreyer's, Unilever and Roncadin.
At the same meeting, the Board of Directors authorized a Special Committee
of the Board of Directors with two members (the "Two Member Special
Committee") to engage advisors to assist the Two Member Special Committee
in exploring alternatives which might permit the Company to remain
independent. Throughout the months of December and January, the Two Member
Special Committee, working with its various advisors, reviewed alternatives
that included the Company remaining independent under a revised business
plan or pursuing acquisitions of other companies with complementary
businesses and social missions.
Also on December 1, in response to heavy trading and a significant
price increase in the Class A Common Stock traded on the NASDAQ National
Market, the Company prepared a press release that was issued the next
morning indicating that it had received indications of interest to acquire
the Company at prices significantly above the previous day's closing price
of $21.00. The press release indicated that each of the indications of
interest was subject to conditions and that the indications were being
considered by the Board of Directors. The press release noted that no
decision had been made by the Board with respect to any of the indications
of interest or as to any sale of the Company, and that no implications
should be drawn from the press release as to what definitive decision would
be reached by the Board after it had concluded its deliberations or as to
the timing of any decision.
In early December, Dreyer's proposed to the Company a strategic
merger in which the Company Common Stock would be exchanged for Dreyer's
common stock at an exchange ratio that would value the shares of Company
Common Stock at $31 per share and would value the shares of common stock of
Dreyer's at the average price over a specified trading period preceding
execution of the merger agreement. From time to time from early December
through February 1, representatives of the Company met with representatives
of Dreyer's to discuss the terms of a proposed strategic merger between the
two companies, including draft agreements proposed by Dreyer's, and to
conduct reciprocal due diligence investigations of the two companies. There
were also discussions during this period between representatives of
Unilever and the Company concerning Unilever's continued interest in
acquiring the Company.
In early December, the Company entered into an agreement with
Pillsbury, a subsidiary of Nestle and Ice Cream Partners to assign to Ice
Cream Partners, and amend in certain respects, the existing distribution
agreement between the Company and Pillsbury.
On December 8, the Company sent a letter to Pillsbury temporarily
lowering the standstill provisions of the distribution agreement between
the two companies to allow Pillsbury to express any interest it may have
had in a transaction between Pillsbury and the Company. Pillsbury did not
communicate any such indication of interest.
On December 15, the Board of Directors authorized a second Special
Committee of the Board of Directors consisting of four members (the "Four
Member Special Committee"), among other reasons, to review indications of
interest and offers to acquire the Company and other strategic alternatives
that might be available to the Company.
On January 25 and 26, the Company received letters from Unilever
reiterating Unilever's interest in a business combination and outlining
Unilever's proposed terms. Representatives of Unilever also communicated to
representatives of the Company a cash price of $36.00 per share.
Also on January 26, following discussions with the Two Member
Special Committee, Chartwell Investments II LLC ("Chartwell") and
Meadowbrook Lane, Inc. ("Meadowbrook") made separate proposals to the
Company, each of which was subject to an extended due diligence period and
financing contingencies and each of which proposed negotiations with the
Company on an exclusive basis. The Chartwell proposal contemplated a $30-50
million convertible preferred equity investment in the Company by
Chartwell, with Chartwell obtaining majority representation on the Board of
Directors. The Meadowbrook proposal contemplated an acquisition of a
majority ownership interest in the Company by a tender offer to the
Company's shareholders.
On January 27, the Board of Directors held a meeting. Following a
discussion of the Unilever, Dreyer's, Chartwell and Meadowbrook proposals,
the Board voted by majority action to proceed with negotiations with
Dreyer's on a strategic merger or alternative transaction in which the
Company would remain independent. Thereafter, representatives of the
Company notified Dreyer's of the decision, including the fact that neither
Mr. Cohen nor Mr. Greenfield would agree to support an acquisition of the
Company by Dreyer's as shareholders or agree to be neutral in any public
statements they might make about any transaction with Dreyer's.
Representatives of the Company also notified representatives of Unilever,
Chartwell and Meadowbrook that their proposals had not been approved by the
Board of Directors.
On January 28, the Company received a letter from Unilever
indicating that it had increased its cash offer to acquire the Company to
$40.00 per share, but was also interested in exploring alternatives to a
full acquisition of the Company.
On January 31 and February 1, representatives of the Company met
with representatives of Dreyer's to proceed to negotiate the terms of the
agreements providing for the strategic merger with Dreyer's that had been
proposed by Dreyer's. In these meetings, representatives of the Company
emphasized again the fact that any agreements would need to take account of
the fact that neither Mr. Cohen nor Mr. Greenfield would agree to support
an acquisition of the Company by Dreyer's as shareholders or agree to be
neutral in any public statements they might make about any transaction with
Dreyer's. There were also discussions of distribution arrangements and
other potential transactions in which the Company would remain independent.
On February 2, Dreyer's submitted for consideration by the Board of
Directors a proposal for a strategic merger that valued the Company Common
Stock at $31.00 per share but did not directly address the issues raised by
the Company concerning the expressed positions of Messrs. Cohen and
Greenfield.
Beginning on February 2 and continuing through early March,
representatives of the Company met with representatives of Unilever to
discuss a possible transaction in which Unilever would acquire up to a 20%
equity stake in the Company either directly from the Company or from its
shareholders at $32 per share, would enter into an exclusive license of the
Ben & Jerry's trademarks and related intellectual property rights for the
manufacture and sale of ice cream products having super premium status
outside the U.S. and enter into a joint venture to address the Company's
and Unilever's distribution requirements in the U.S. out-of-home market for
frozen desserts. Throughout this period, the Board of Directors held
several meetings to review the status of these negotiations as well as
other alternatives available to the Company.
On February 4, the Company received a proposal from Meadowbrook
which contemplated a leveraged recapitalization of the Company in which an
investor group led by Meadowbrook and Chartwell would acquire for $32 per
share all of the outstanding shares of Company Common Stock, other than
shares representing $12 million in value, which would be "rolled over" into
equity of the acquiring Company. This proposal was subject to an extended
due diligence period and financing contingencies and proposed negotiations
with the Company on an exclusive basis. Following a Board meeting on
February 7, the Company responded that it would not accept the proposal but
would continue to work with the investor group on a non- exclusive basis if
the investor group wanted to improve its proposed price and resolve the
various contingencies to its proposal.
On March 7, the Company received from Meadowbrook a proposal
pursuant to which Meadowbrook would make a $25-40 million convertible
preferred investment in the Company and would have the right to designate
20% of the members of the Board of Directors and voting rights on other
matters submitted to shareholders.
On March 9, the Board of Directors held a meeting at which the
Board determined not to pursue further the negotiations with Unilever
concerning the proposed Unilever minority equity investment, international
exclusive license and U.S. distribution joint venture. Following this
determination, no further discussions were held between the parties
concerning this proposed transaction.
Following the March 9 meeting of the Board of Directors and
continuing until early April, representatives of the Company held a series
of discussions with representatives of Unilever and Meadowbrook (and in
certain cases Chartwell) to determine the feasibility of a transaction in
which the Company would be acquired by an investor group with a $25-50
million equity investment by Meadowbrook, at least $25-40 million in value
of shares of Company Common Stock being "rolled over" by existing
shareholders, including Messrs. Cohen and Greenfield, who would agree to
meet this "roll over" commitment to the extent that other shareholders
elected not to do so, and with a common equity investment by Unilever of
28% and a convertible preferred equity investment and secured loans by
Unilever sufficient to provide all additional financing. Although Chartwell
was involved in certain of these discussions, it ultimately determined not
to participate as part of the investor group.
These discussions resulted in a proposed acquisition of the Company
by the investor group including Unilever and Meadowbrook at $38.00 per
share in which Mr. Cohen (but not Mr. Greenfield) would agree to "roll
over" at least $25 million in value of his shares. This proposed
acquisition was approved in principle by majority action of the Board of
Directors on March 23, subject to completion of the necessary agreements,
including resolution of a number of significant issues, for presentation to
the Board of Directors for subsequent definitive action. Negotiations
concerning this proposed transaction recommenced the following week and
continued through April 2, but a number of significant structural and other
issues remained unresolved among the parties.
On March 28 and again on March 30, the Company received letters
from Dreyer's indicating that it remained interested in a possible
transaction with the Company. On March 29 and again on March 31 following a
conference call among members of the Board of Directors, the Company sent
letters to Dreyer's indicating that if Dreyer's had any specific terms to
communicate that were different from its February 2 proposal, then it
should do so.
On March 29, an article was published in The New York Times, which
prompted a Company press release, reporting that there were ongoing
discussions between representatives of the Company, Unilever, Meadowbrook
and Mr. Cohen, and that a "going private" transaction had been presented to
the Board of Directors on March 23.
On April 2, the Company received a response from Dreyer's to the
Company's March 31 letter proposing an exchange ratio of 1.5 shares of
Dreyer's stock for each share of Company Common Stock, with a collar that
capped the maximum value at $40.00 per share and held the minimum value at
$35.00 per share.
On April 3, following discussions among the Company's legal
advisors and the legal advisors to certain of the individual members of the
Board of Directors, a telephone call was placed to Unilever's legal advisor
indicating that, because of a development, the proposed transaction among
Unilever, Meadowbrook and Mr. Cohen would likely no longer receive majority
support by the Board of Directors at the proposed price of $38.00 per share
of Company Common Stock.
On April 5, the Board of Directors held a meeting at which it was
determined that best and final offers should be requested from Unilever,
Dreyer's and, should they determine to continue to work together, the
investor group of Unilever, Meadowbrook and Mr. Cohen, for consideration at
a meeting of the Board of Directors to be held on April 11. As had been the
case at many of the meetings of the Board of Directors beginning in the
fall of 1999, presentations were made to the Board of Directors by the
Company's financial and legal advisors. Representatives of Unilever,
Dreyer's, Meadowbrook and Mr. Cohen were promptly advised of this
determination and told that the forms of agreements proposed would need to
be submitted by April 10.
On April 6 and again on April 8, representatives of the Company met
with representatives of Unilever to discuss the forms of agreements for
Unilever's acquisition proposal and to update Unilever's due diligence on
the Company. Also on April 6, the representatives of the Company were
advised that the investor group of Unilever, Meadowbrook and Mr. Cohen
would not be continuing to work together to make an acquisition proposal.
On April 7, representatives of the Company met with representatives
of Dreyer's to discuss the forms of agreements for Dreyer's strategic
merger proposal and to update due diligence.
On April 10, management of the Company and the members of the Board
of Directors became aware that three purported class action law suits had
been filed against the Company and the members of the Board of Directors
alleging, among other things, that the directors had breached their
fiduciary duties in connection with the proposed transaction with Unilever,
Meadowbrook and Mr. Cohen, as more fully described in this Proxy Statement.
On April 10, the Company notified Unilever and Dreyer's that the
forms of the proposed merger agreements should be submitted to the Company
by that evening but that the financial terms of their proposals could be
submitted at the presentations to be made by them at the April 11 meeting
of the Board of Directors. Later that evening, each of Unilever and
Dreyer's submitted their proposed forms of agreements.
In the morning of April 11, the Board of Directors met and received
separate presentations from each of Dreyer's and Unilever concerning their
proposals and discussed various matters relating to these presentations
with the representatives of Dreyer's and Unilever. At this meeting,
Unilever increased the cash price per share offered to $43.60 and offered
various financial and other commitments, including commitments for the
benefit of the Company's employees and The Ben & Jerry's Foundation, Inc.
(the "Foundation"). Also at this meeting, Dreyer's increased its proposed
exchange ratio to 1.6 shares of Dreyer's common stock for each share of
Company Common Stock (but without a collar) and offered certain other
commitments. Following discussion among the members of the Board of
Directors and the presentations from the Company's financial and legal
advisors, the Board of Directors determined by unanimous consensus with all
directors present that the acquisition proposal from Unilever should be
approved provided that various issues in the proposed agreements could be
satisfactorily resolved with Unilever. Following discussions between
representatives of the Company and Unilever at which these issues were
resolved, the Board of Directors reconvened later that afternoon after a
recess with all present but Mr. Cohen, who had left to fulfill a speaking
engagement, and unanimously approved by the vote of all those present the
terms of Unilever's proposed acquisition, subject to completion, in a
manner satisfactory to the officers authorized to act by the Board, of the
negotiations between representatives of the Company and Unilever concerning
the definitive agreements.
Following further discussions among representatives of the Company
and Unilever to complete the definitive agreements, the parties executed
the Transaction Agreements. On the morning of April 12, Unilever and the
Company issued a joint press release announcing the transaction.
On April 18, in accordance with the Merger Agreement, the Purchaser
commenced the Offer.
On April 24, the Company filed, pursuant to the Merger Agreement, a
Notification and Report Form for Certain Mergers and Acquisitions, which
was required to be submitted under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), with the Department
of Justice and the Federal Trade Commission.
On May 10, at a meeting of the Board of Directors: (i) the size of
the Board of Directors was increased from eight directors to twelve
directors; (ii) the Company accepted the resignations of the following
directors: Jerry Greenfield, Henry Morgan and Perry D. Odak; and (iii) the
following seven designees of Conopco were elected to the Board: Peter J.
Allcox, Thomas H. Floyd, Richard A. Goldstein, A. Peter Harwich, Mart
Laius, Ronald M. Soiefer and Eric Walsh, in each case effective upon the
date of the acceptance for payment of, and the payment by the Purchaser
for, any shares of Company Common Stock pursuant to the Tender Offer.
On May 11, the applicable waiting period under the HSR Act expired.
On May 15, each of the Company and Unilever filed a Merger Notice
with the Controller of Restrictive Trade Practices of the State of Israel
in connection with the Offer and the Merger.
On May 15, the Company received from Conopco, pursuant to the
Merger Agreement, a Qualified Notice (the "Qualified Notice") that stated
as of the time of such notice Conopco had no reason to believe that any
condition to the Offer would not be satisfied at the then-scheduled
expiration of the Offer.
Upon receipt of the Qualified Notice, the Company, pursuant to the
Merger Agreement, instructed its transfer agent to mail a notice dated May
15, 2000, to all holders of shares of Class B Common Stock, which specified
that, in accordance with the Articles of Association of the Company, all
shares of Class B Common Stock would be automatically converted into shares
of Class A Common Stock effective as of May 25, 2000. From and after May
25, 2000, each outstanding share of Class B Common Stock automatically will
be deemed to be a share of Class A Common Stock for all purposes and
certificates for shares of Class B Common Stock will represent shares of
Class A Common Stock.
On May 15, the Company, pursuant to the Merger Agreement, delivered
notice to the Foundation, the sole holder of shares of the Company's $1.20
Class A Preferred Stock, par value $1.00 per share (the "Company Preferred
Stock"), which specified that, in accordance with the Articles of
Association of the Company, all shares of the Company Preferred Stock would
be redeemed on May 16, 2000 at a redemption price of $43.60 per share of
the Company Preferred Stock.
On May 15, the Tender Offer expired at 12:00 midnight, New York
City time.
On May 16, the Company redeemed the Company Preferred Stock.
On May 16, the Purchaser accepted for payment at a price of $43.60
per share 5,718,650 shares of the Class A Common Stock and 714,003 shares
of the Class B Common Stock, $.033 par value per share, which were validly
tendered and not properly withdrawn pursuant to the Tender Offer. As of
such date, such number of shares equaled approximately 89% of the
outstanding Class A Common Stock and approximately 90% of the outstanding
Class B Common Stock.
On May 18, the Purchaser accepted for payment 172,619 shares of
Class A Common Stock and 16,672 shares of Class B Common Stock tendered
pursuant to Notices of Guaranteed Delivery.
From and after May 25, each outstanding share of Class B Common
Stock is deemed to be a share of Class A Common Stock for all purposes and
certificates for shares of Class B Common Stock represent shares of Class A
Common Stock.
REASONS FOR THE BOARD OF DIRECTORS' RECOMMENDATIONS; FACTORS CONSIDERED
In approving the Transaction Agreements and the transactions
contemplated thereby, including the Offer and the Merger, and recommending
that all holders of Company Common Stock accept the Offer and tender their
shares of Company Common Stock pursuant to the Offer, approve the Merger
and approve and adopt the Merger Agreement, the Board of Directors
considered a number of factors including:
1. The historical market prices, price to earnings ratios, EBITDA and
other multiples, recent trading activity and trading range of the
Company Common Stock, including the fact that the Offer Price
represents (i) a premium of approximately 25% over the $34 15/16
closing price of the Company Common Stock on the NASDAQ National
Market on April 11, 2000, the last full trading day prior to the
announcement of the Offer and the Merger, (ii) a premium of
approximately 115% over the $20 1/4 closing price of the Company
Common Stock on the NASDAQ National Market on August 4, 1999, the
date on which the investment banker for Unilever discussed with the
Company's financial advisor Unilever's interest in a business
combination with the Company and (iii) a premium of approximately
176% over the $15 13/16 closing price of the Company Common Stock
on the NASDAQ National Market on November 9, 1999, the date in 1999
on which the shares of the Company Common Stock had their lowest
closing price.
2. The financial condition, results of operations and cash flows of
the Company, including the Company's prospects as an independent
company in light of its dependence on significant competitors to
distribute the Company's products and increased competition levels
in the ice cream industry.
3. The fairness opinion of Gordian rendered at the meeting of the
Board of Directors held on April 11, 2000 as well as the valuation
analyses performed by Gordian and presented to the Board of
Directors. The full text of the written opinion dated as of April
11, 2000 of Gordian, which sets forth the assumptions made, matters
considered and limitations on the review undertaken, is attached to
this Proxy Statement and is filed as Annex D hereto and is
incorporated herein by reference. Holders of shares of Company
Common Stock are urged to read such opinion carefully in its
entirety.
4. The results of the discussions with Dreyer's, Chartwell, Roncadin,
Meadowbrook and others regarding a possible strategic alliance,
partnership, business combination, acquisition, leveraged
recapitalization, leveraged buyout, or similar transaction with the
Company and the results of the exploration by the Company,
including consultants engaged by the Company, of possible strategic
alliance or "stand alone" opportunities for the Company as an
ongoing independent, publicly held corporation.
5. The fact that since the Company announcement on December 2, 1999
that it had received several indications of interest in acquiring
the Company and subsequent publicity in newspaper articles, no
other party had presented the Company with an acquisition proposal
that, taken as a whole, would be more favorable to the Company and
its shareholders than the Offer and the Merger or that would be as
certain to be consummated within the same time frame as the Offer
and the Merger.
6. The fact that the Offer and the Merger provide for a prompt cash
tender offer for all shares of Company Common Stock to be followed
by the Merger for the same consideration, thereby enabling the
Company's shareholders, at the earliest possible time, to obtain
the benefits of the transaction in exchange for their shares of
Company Common Stock.
7. The fact that Conopco's and the Purchaser's obligations under the
Offer were not subject to any financing condition and the financial
strength of Unilever.
8. The limited ability of Conopco or the Purchaser to terminate the
Offer or the Merger Agreement.
9. The fact that, pursuant to the Merger Agreement, the Company and
its representatives may not (i) furnish to a third party who has
submitted an unsolicited Company Takeover Proposal (as defined in
the Merger Agreement) (a "Third Party Acquirer") information
concerning the Company's business properties or assets, or (ii)
participate in discussions or negotiations with such Third Party
Acquirer concerning an unsolicited Company Takeover Proposal,
unless in each case (A) the Board of Directors reasonably
determines, after consultation with its financial advisor and
counsel that such Company Takeover Proposal is a Superior Company
Proposal (as defined in the Merger Agreement), and (B) the Board of
Directors determines in good faith (based on the advice of its
financial advisor and counsel) that it is required to take such
actions in order to discharge properly its fiduciary duties.
10. The fact that, pursuant to the Merger Agreement, the Board of
Directors had the right, prior to the purchase of shares of Company
Common Stock pursuant to the Offer, to terminate the Merger
Agreement in order to accept a Superior Company Proposal, if (i)
the Board of Directors has determined, based upon the advice of
legal counsel, that it is required to accept such proposal to
discharge properly its fiduciary duties under applicable law, (ii)
the Company gives Conopco five business days advance notice of the
Company's intention to accept such Superior Proposal, and (iii) the
Company, prior to termination, pays to Conopco a $11.4 million
termination fee.
11. The fact that a business combination with Conopco does not
currently address the Company's reliance on certain competitors,
including Dreyer's and Ice Cream Partners, for distribution of the
Company's products in the United States.
12. That, while the Offer gave the Company shareholders the opportunity
to realize a premium over the price at which the shares of Common
Stock traded immediately prior to the public announcement of the
execution of the Merger Agreement, the consummation of the Offer
and the Merger would eliminate the opportunity for the Company
shareholders to participate in any future growth in the profits and
equity valuation of the Company or, if the Dreyer's transaction had
been approved and competed, in any future growth in the profits and
equity valuation of the combined Company and Dreyer's.
13. Conopco's commitment to sign on, enthusiastically, to pursue and
expand the social mission of the Company.
14. The composition of the Board of Directors of the Surviving
Corporation, including majority representation by continuing
directors of the Company or their designees and representation of
the socially responsible investment community by Meadowbrook.
15. The power of the Board of the Surviving Corporation to oversee the
social mission of the Company and the "essential integrity of the
Ben & Jerry's brand."
16. The commitment of Conopco to provide to the Foundation at the time
of completion of the Merger $5 million and to also fund the
Foundation at a minimum level of $1.1 million (as indexed) per year
for ten years.
17. The commitment of Conopco to make available to the Surviving
Corporation six months following the time of completion of the
Merger a $5 million employee special bonus to be available to
full-time employees of the Company on a per capita basis below the
Office of the Chief Executive Officer (the "OCEO") or, at the
election of the Board of Directors, to the Foundation.
18. The commitment of Conopco to create and fund the Social Venture
Fund in a foundation independent of the Foundation and the
Surviving Corporation with aggregate funding of $5.0 million to
provide venture financing to (i) vendors owned by women, minorities
or indigenous people, (ii) vendors which give priority to a social
change mission, and (iii) such other third party entrepreneurial
businesses within the scope of the Company's Social Mission
Priorities, disbursement of the funds to be directed by the Social
Venture Committee to be designated by Mr. Cohen and another member
of the Surviving Corporation Board.
19. The commitment of Conopco to not make a material headcount
reduction for two years, to maintain employee benefits at a level
not materially less favorable in the aggregate than those currently
offered by the Company for five years, to honor all employment,
severance, termination, consulting and retirement agreements, to
establish an appropriate long-term incentive plan to properly
incentivize the Company's employees, to maintain the Company's
"livable wage" policy, to tie a significant amount of management
incentive-based compensation to the Company's social performance
and to maintain its corporate presence and substantial operations
in Vermont for at least five years.
20. The commitment of Conopco to indemnify the Board of Directors
against all claims made within the applicable statute of
limitations, subject to limitations under Vermont law.
21. The provision of third-party beneficiary enforcement rights on
behalf of the intended beneficiaries of specified provisions to two
current members of the Board of Directors.
22. The benefit to the State of Vermont and the local communities where
the Company operates of continued operations by the Surviving
Corporation in the State of Vermont.
23. The benefit to the suppliers of the Company, including the St.
Albans Cooperative Creamery, of the intention of the Surviving
Corporation to continue using such suppliers.
24. The benefits to franchisees of the Company and consumers of the
Company's products of the Surviving Corporation Board having power
over the social mission of the Company and the essential integrity
of the Ben & Jerry's brand.
25. The preferences of the Co-Founders of the Company, Messrs. Cohen
and Greenfield, for the Company to have remained independent.
26. The preferences of the Company's management regarding the future
direction of the Company.
The foregoing discussion of information and factors considered and given
weight by the Board of Directors is not intended to be exhaustive, but is
believed to include all of the material factors, both positive and
negative, considered by the Board of Directors. In view of the variety of
factors considered in connection with its evaluation of the Offer and the
Merger, the Board of Directors did not find it practicable to, and did not,
quantify or otherwise assign relative weights to the specific factors
considered in reaching its determinations and recommendations. In addition,
individual members of the Board of Directors may have given different
weights to different factors.
In connection with the announcement of the transaction, Messrs.
Cohen and Greenfield made the following statement:
"Neither of us could have anticipated, twenty years ago, that a
major multinational would some day sign on, enthusiastically, to pursue and
expand the social mission that continues to be an essential part of Ben &
Jerry's and a driving force behind our many successes. But today, Unilever
has done just that. While we and others certainly would have preferred to
pursue our mission as an independent enterprise, we hope that, as part of
Unilever, Ben & Jerry's will continue to expand its role in society."
The following day Mr. Cohen also issued the following additional
statement:
"Once in a while you get shown the light, In the strangest of
places if you look at it right."--"Scarlet Begonias" by the Grateful Dead.
"Under this new arrangement, Ben and Jerry's will be independently
operated, our values will continue and we hope our efforts to make positive
change will even expand. Unilever has contractually agreed to increasing
socially beneficial activities as a percentage of sales--every year. Ben
and Jerry's will be doing more good than it does today.
"Specifically, Unilever supports Ben & Jerry's maintaining our
Vermont employment and manufacturing base, paying our workers a livable
wage with complete benefits, buying our milk from Vermont family-farmers
who agree not to use growth hormones on their cows, contributing 7.5% of
pre-tax profits to the Company's philanthropic Foundation, and opening more
PartnerShops owned by non-profit organizations that provide job training
and employment opportunities to disadvantaged people.
"To maintain and build that social mission, I'll continue to work
with Ben & Jerry's to develop new products which will be manufactured by
businesses owned by minorities, low income people and non-profits. Unilever
has committed at least $5 million to help finance these new social
ventures. With these new products and the distribution avenues available
through Unilever, the ability of Ben & Jerry's to benefit the community
will increase.
"And Unilever has agreed to a social audit of their worldwide
operations. They've made concrete progress in the past on environmental
values, and social responsibility is the next frontier.
"While I would have preferred for Ben & Jerry's to remain
independent, I'm excited about this next chapter in the life of the
business, and look forward to using the power of Ben & Jerry's to benefit
our customers, employees, Scoop Shop owners, suppliers and neighbors."
OPINION OF THE COMPANY'S FINANCIAL ADVISOR
Pursuant to letter agreements dated August 25, 1999 and March 3,
2000, the Company formally retained Gordian to act as its financial advisor
in connection with one or more financial transactions, including a possible
acquisition, sale, merger, joint venture or business combination, and to
render an opinion (the "Opinion") to the Board of Directors regarding the
fairness, from a financial point of view, to the holders of Company Common
Stock of the cash consideration (the "Consideration") to be received by the
holders of Company Common Stock in the Transaction.
At the meeting of the Board of Directors held on April 11, 2000,
Gordian delivered to the Company board an oral Opinion, which opinion was
subsequently confirmed by delivery of a written Opinion dated April 11,
2000, stating that the Consideration to be received in the Offer and the
Merger was fair, from a financial point of view, to the holders of Company
Common Stock. In arriving at the Opinion, over a period of months prior to
and leading up to the April 11, 2000 meeting of the Board of Directors,
Gordian (i) reviewed the drafts dated April 10, 2000 of the Merger
Agreement, License Agreement, and Stock Option Agreement, (ii) reviewed
certain publicly available information concerning the Company including the
Annual Reports on Form 10-K for the years ended 1996, 1997, 1998 and 1999
and the Quarterly Reports on Form 10- Q of the Company for the quarters
ended March, June and September 1999, (iii) reviewed certain operating and
internal information of the Company, provided to Gordian by the management
of the Company, including financial projections for various periods ended
December 31, 2004, under a variety of assumptions, including both with and
without giving effect to the Offer and the Merger, (iv) reviewed certain
internal analyses concerning alternatives to the Offer and the Merger,
provided to Gordian by the management of the Company, (v) reviewed certain
publicly available information with respect to certain other companies that
Gordian believed to be comparable, in certain respects, to the Company,
(vi) reviewed certain publicly available information concerning the nature
and terms of certain other transactions that Gordian considered relevant to
its inquiry, and (vii) met (in person or telephonically) with certain
officers and employees of the Company and with its legal advisors to
discuss aspects of the foregoing as well as the business, prospects, future
cash flows, forecasts and operating condition of the Company.
In arriving at the Opinion, Gordian performed a variety of
financial analyses, the material portions of which are summarized below.
This summary does not purport to be a complete description of the analyses
performed by Gordian. In addition, Gordian's analyses must be considered as
a whole and selecting portions of its analysis or the factors considered by
it, without considering all such factors and analyses, could create a
misleading view of the process underlying its analyses. Gordian did not
draw any specific conclusions from or with regard to any one method of
analysis in isolation. Arriving at a fairness opinion is a complex process
not necessarily susceptible to partial or summary description. The matters
considered by Gordian in arriving at the Opinion are based on numerous
macroeconomic, operating and financial assumptions with respect to industry
performance, general business, economic and market conditions and other
matters, many of which are beyond the Company's control. The analyses
performed by Gordian are not necessarily indicative of actual values, which
may be significantly more or less favorable than suggested by such
analyses. Because such analyses are inherently subject to uncertainty, none
of the Company or Gordian or any other person assumes responsibility if
future events do not conform to the judgments reflected in the Opinion.
In rendering the Opinion, Gordian assumed and relied, without
independent verification, upon the accuracy and completeness of all
financial and other information publicly available or furnished to or
otherwise reviewed by or discussed with Gordian as well as certain
representations from the Company and its management. With respect to
financial forecasts and other information provided to or otherwise reviewed
by or discussed with Gordian, the management of the Company advised Gordian
that such forecasts were reasonably prepared on bases reflecting the best
currently available estimates and judgments of the management of the
Company as to the future financial performance of the Company and the
forecasts and other information were true, complete and accurate in all
material respects and not misleading. Gordian did not make or obtain an
independent evaluation or appraisal of the assets, or reserves of the
Company nor did Gordian make any physical inspection of the properties or
assets of the Company.
The Opinion dated April 11, 2000, which sets forth the assumptions
made, matters considered and limitations on the review undertaken, is
attached hereto as Annex D and is incorporated herein by reference. Company
shareholders are urged to read the Opinion carefully in its entirety. The
Opinion is directed only to the fairness of the Consideration to the
holders of Company Common Stock from a financial point of view. The Opinion
was furnished solely to the Board of Directors and is not to be relied upon
by any other person, including any shareholder, creditor of the Company or
other interested party. The summary of the Opinion of Gordian set forth in
this Proxy Statement is qualified in its entirety by reference to the full
text of such Opinion.
The following is a summary of the analyses prepared by Gordian and
presented by Gordian to the Company and the Board of Directors in a series
of meetings preceding and including the April 11, 2000 meeting at which
Gordian delivered the Opinion:
Stock Trading History. Gordian reviewed the history of the trading
prices of the Company Common Stock during the period from and including
April 7, 1995 to April 10, 2000.
Comparable Company Analysis. Gordian analyzed certain publicly
available financial information, operating data and projected financial
performance (per research analyst estimates) of the following group of six
publicly traded ice cream and frozen yogurt companies Gordian believed to
be appropriate for comparison with that of the Company: Dreyer's Grand Ice
Cream, Inc., Eskimo Pie Corp., Friendly Ice Cream Corp., TCBY Enterprises,
Inc., Yocream International and Yogen Fruz World-Wide Inc.
Comparable Acquisition Analysis. Gordian also reviewed the
consideration paid or proposed to be paid in other acquisitions of
companies in the food industry. Specifically, Gordian analyzed the
financial terms, to the extent publicly available, of over 80 transactions
(some of which were not consummated) involving food industry companies that
were announced since December 1996.
Premiums Paid Analysis. Gordian determined the premium over market
price paid for publicly-traded companies in over 20 selected transactions
announced since December 1996.
Other Analyses. Gordian performed a variety of additional analyses,
including but not limited to, recapitalization analyses and purchase
analysis at various prices and other sensitivity analyses.
No company or transaction used in the comparable company analysis
or comparable acquisition analysis summarized above is identical to the
Company or the Offer and the Merger. Accordingly, any such analysis of the
fairness of the Consideration involves complex considerations and judgments
concerning differences in the potential financial and operating
characteristics of the comparable companies and other factors in relation
to the trading, premiums and acquisition values of the comparable companies
and publicly announced transactions.
The Board of Directors retained Gordian based upon Gordian's
qualifications, experience and expertise. Gordian is a nationally
recognized investment banking and advisory firm. Gordian, as part of its
investment banking and financial advisory business, is continuously engaged
in the valuation of businesses and securities in connection with various
transactions and for corporate and other purposes. Gordian and one of its
officers held equity securities of the Company, including Company Common
Stock and a warrant to purchase shares of Company Common Stock. Gordian has
had, and continues to have, significant business relationships with Mr.
Odak. Moreover, in the ordinary course of business, Gordian has had or may
have dealings with certain other holders of the Company's securities, in
matters unrelated to the Company. Gordian has and has had numerous clients
in a wide variety of industries. It is possible that some of these past or
present Gordian clients may have some connection to the Company or to
holders of its securities.
Pursuant to the Gordian engagement letters (including an earlier
advisory agreement, dated August 1, 1997), the Company agreed to pay
Gordian advisory fees consisting of both warrants to purchase 125,000
shares of Class A Common Stock at $14.00 per share and cash fees. Gordian
received the warrants, which fully vested, effected a cashless exercise of
such warrants, tendered the resulting shares of Class A Common Stock
pursuant to the Offer and received approximately $3.7 million in cash
pursuant to the Offer. Prior to delivering its Opinion, Gordian had
received cash fees aggregating approximately $750,000. As of the date of
this Proxy Statement, Gordian has received, or is owed, additional fees
aggregating approximately $2.6 million. Gordian also will receive a net
additional cash fee of approximately $330,000 if the Company consummates
the transaction described in this Proxy Statement. The Company has also
agreed to reimburse Gordian for certain costs and expenses. In addition,
the Company has agreed to indemnify Gordian against certain liabilities and
expenses, including certain liabilities under the federal securities laws,
arising out of Gordian's engagement or, if such indemnification is
unavailable to Gordian or insufficient to hold it harmless, then the
Company has agreed to contribute to the amount paid or payable by Gordian
as a result of such occurrence.
Except as described above, 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 shareholders on
its behalf concerning the Merger.
CHANGE OF CONTROL
On May 16, the Purchaser accepted for payment at a price of $43.60
per share 5,718,650 shares of the Class A Common Stock and 714,003 shares
of the Class B Common Stock, which were validly tendered and not properly
withdrawn pursuant to the Offer. As of such date, such number of shares
equaled approximately 89% of the Company's outstanding Class A Common Stock
and approximately 90% of the Company's outstanding Class B Common Stock.
The Offer expired at 12:00 midnight, New York City time, on Monday, May 15,
2000.
On May 18, the Purchaser accepted for payment 172,619 shares of
Class A Common Stock and 16,672 shares of Class B Common Stock tendered
pursuant to Notices of Guaranteed Delivery.
As a result, the Purchaser owns approximately 91% of the
outstanding shares of Class A Common Stock. See also "The Merger and
Related Transactions - The Board of Directors", "- Stock Options",
"-Benefit Plans" and "- Employment/Severance Agreements".
CONDITIONS TO THE MERGER
The Merger Agreement provides that the respective obligations of
each party to effect the Merger are subject to the satisfaction or waiver
of certain conditions, including the following: (a) the Company shall have
obtained the approval of the Merger Agreement by a majority of all the
votes attributable to the outstanding shares of Company Common Stock; (b)
the waiting period (and any extension thereof) applicable to the Merger
under the HSR Act shall have been terminated or shall have expired, and (c)
no temporary restraining order, preliminary or permanent injunction or
other order issued by any court of competent jurisdiction or other legal
restraint or prohibition preventing the consummation of the Merger shall be
in effect; provided, however, that prior to asserting the condition set
forth in this clause (c), each of the Company, Conopco and the Purchaser
shall have used its best efforts to prevent the entry of any such
injunction or other order and to appeal as promptly as possible any such
injunction or other order that may be entered.
On April 18, 2000, the Company filed, pursuant to the Merger
Agreement, a Notification and Report Form for Certain Mergers and
Acquisitions, which was required to be submitted under the HSR Act, with
the Department of Justice and the Federal Trade Commission. The applicable
waiting period under the HSR Act expired on May 11, 2000, thereby
satisfying condition (b) above. The Purchaser owns a sufficient number of
shares of Class A Common Stock to ensure the satisfaction of condition (a)
above.
TERMINATION OF THE MERGER AGREEMENT
The Merger Agreement may be terminated at any time prior to the
Effective Time, whether before or after approval of the Merger Agreement by
the shareholders of the Company: (a) by mutual written consent of Conopco,
the Purchaser and the Company; (b) by either Conopco or the Company if any
governmental entity issues an order, decree or ruling or takes any other
action permanently enjoining, restraining or otherwise prohibiting the
Merger and such order, decree, ruling or other action shall have become
final and nonappealable; (c) by Conopco, if the Company breaches or fails
to perform in any material respect any of its representations, warranties
or covenants contained in any Transaction Agreement, which breach or
failure to perform (i) would give rise to the failure of a condition set
forth in Section 7.01 of the Merger Agreement, and (ii) has not been cured
within 30 days after the giving of written notice to the Company of such
breach (provided that Conopco is not then in willful and material breach of
any representation, warranty or covenant contained in any Transaction
Agreement); (d) by Conopco: (i) if the Board of Directors or any committee
thereof withdraws or modifies, or publicly proposes to withdraw or modify,
in a manner adverse to Conopco, its approval or recommendation of the
Merger Agreement, the Offer or the Merger, fails to recommend to the
Company's shareholders that they accept the Offer and approve the Merger
Agreement or approves or recommends, or publicly proposes to approve or
recommend, any Company Takeover Proposal (as defined below); provided,
however, that any public statement by the Company that (A) it has received
a Company Takeover Proposal, (B) it has given Conopco the notice required
by Section 5.02(b) of the Merger Agreement in connection with the
withdrawal of its recommendation or (C) otherwise only describes the
technical operation of Sections 5.02, 6.07 and 7.01(d)(ii) of the Merger
Agreement and the provisions contained in clause (d) of this paragraph
shall not be deemed to be a public proposal to withdraw or modify the Board
of Directors' recommendation for the purposes of this clause (i) or (ii) if
the Company or any of its officers, directors, employees, representatives
or agents takes any of the actions described below under "Takeover
Proposals"; (e) by the Company, if the Board of Directors withdraws its
recommendation of the Offer in accordance with the second paragraph under
"Takeover Proposals"; and (f) by the Company, if Conopco breaches or fails
to perform in any material respect any of its representations, warranties
or covenants contained in any Transaction Agreement, which breach or
failure to perform cannot be or has not been cured within 30 days after the
giving of written notice to Conopco of such breach (provided that the
Company is not then in wilful and material breach of any representation,
warranty or covenant contained in any Transaction Agreement).
TAKEOVER PROPOSALS
The Merger Agreement provides that the Company will not, nor will
it permit any of its subsidiaries to, nor will it authorize any officer,
director or employee of, or any investment banker, attorney or other
advisor or representative of, the Company or any of its subsidiaries to,
(a) directly or indirectly solicit, initiate or encourage the submission
of, any Company Takeover Proposal, (b) enter into any agreement with
respect to any Company Takeover Proposal or (c) 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 Company Takeover Proposal.
Without limiting the foregoing, it is agreed that any violation of the
restrictions set forth in the preceding sentence by any representative or
affiliate of the Company or any subsidiary of the Company, whether or not
such person is purporting to act on behalf of the Company or any subsidiary
of the Company or otherwise, shall be deemed to be a breach of the
provisions set forth in this paragraph by the Company. Subject to the
foregoing, the Company shall, and shall cause its representatives to, cease
immediately all discussions and negotiations regarding any proposal that
constitutes, or may reasonably be expected to lead to, a Company Takeover
Proposal.
The Merger Agreement further provides that, except as described
below, neither the Board of Directors nor any committee thereof may (a)
withdraw or modify, or propose to withdraw or modify, in a manner adverse
to Conopco or the Purchaser, the approval or recommendation by the Board of
Directors or any such committee of the Merger Agreement, the Offer or the
Merger, (b) approve any letter of intent, agreement in principle,
acquisition agreement or similar agreement relating to any Company Takeover
Proposal or (c) approve or recommend, or propose to approve or recommend,
any Company Takeover Proposal.
In addition to the obligations of the Company described in the
preceding two paragraphs, the Merger Agreement provides that the Company
promptly will advise Conopco orally and in writing of any Company Takeover
Proposal or any inquiry with respect to or that could lead to any Company
Takeover Proposal, the identity of the person or group making any such
Company Takeover Proposal or inquiry and the material terms of any such
Company Takeover Proposal or inquiry. The Company shall (a) keep Conopco
fully informed of the status, including any change to the details, of any
such Company Takeover Proposal or inquiry and (b) provide to Conopco as
soon as practicable after receipt or delivery thereof with copies of all
correspondence and other written material sent or provided to the Company
from any third party in connection with any Company Takeover Proposal or
sent or provided by the Company to any third party in connection with any
Company Takeover Proposal.
The provisions described in the three preceding paragraphs do not
prohibit the Company from taking and disclosing to its shareholders a
position contemplated by Rule 14e-2(a) promulgated under the Exchange Act
or from making any required disclosure to the Company's shareholders if, in
the good faith judgment of the Board of Directors, after consultation with
outside counsel, failure so to disclose would be inconsistent with its
obligations under applicable law.
"Company Takeover Proposal" means (a) any proposal or offer for a
merger, consolidation, dissolution, recapitalization or other business
combination involving the Company or any subsidiary of the Company, (b) any
proposal for the issuance by the Company of a material amount of its equity
securities as consideration for the assets or securities of another person
or (c) any proposal or offer to acquire in any manner, directly or
indirectly, a material equity interest in any voting securities of, or a
substantial portion of the assets of, the Company or any subsidiary of the
Company, in each case other than the Offer, the Merger and the other
transactions contemplated by the Merger Agreement (the "Transactions").
FEES AND EXPENSES
All fees and expenses incurred in connection with the Merger
Agreement, the Offer, the Merger and the other Transactions will be paid by
the party incurring such fees or expenses, whether or not the Offer or the
Merger is consummated.
INTER-COMPANY LOAN
On May 17, 2000, the Company and Conopco entered into a five year
intercompany facility agreement (the "Facility"). Under the Facility, the
Company will borrow (or lend) funds to satisfy cash shortfalls (or
surpluses) from operational activities of business and Conopco will lend
(or borrow) to (from) the Company. Pursuant to the terms of the Facility,
both the Company and Conopco have the option to call or put the outstanding
balance plus accrued interest at any time. Interest under the Facility will
be calculated by applying Conopco's average cost of funds for the fiscal
month to the Company's average deficit (or surplus) balance during the same
fiscal month.
THE BOARD OF DIRECTORS
The Merger Agreement provides that promptly upon the acceptance for
payment of, and payment by the Purchaser for, any shares of Company Common
Stock pursuant to the Offer, the Purchaser was entitled to designate a
majority of the directors, which designees of the Purchaser shall remain on
the Board of Directors until the Effective Time, on the Board of Directors,
subject to compliance with Section 14(f) of the Exchange Act and the VBCA;
provided, however, that in the event that the Purchaser's designees are
appointed or elected to the Board of Directors, until the Effective Time
the Board of Directors 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"); provided, further, that, in such
event, if the number of Independent Directors shall be reduced below three
for any reason whatsoever, any remaining Independent Directors (or
Independent Director, if there shall be only one remaining) shall be
entitled to designate persons to fill such vacancies who shall be deemed to
be Independent Directors 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 are not officers, shareholders or
affiliates of the Company, Conopco or the Purchaser, and such persons shall
be deemed to be Independent Directors for purposes of the Merger Agreement.
Subject to applicable law, the Company was required to take all action
requested by Conopco necessary to effect any such election, including
mailing to its shareholders the information statement containing the
information required by Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder (the "Information Statement"), which Information
Statement was attached to the Company's Schedule 14D-9 mailed to
shareholders on or about April 18, 2000. In connection with the foregoing,
the Company agreed to promptly, at the option of the Purchaser, either
increase the size of the Board of Directors or obtain the resignation of
such number of its current directors as is necessary to enable the
Purchaser's designees to be elected or appointed to the Board of Directors
as provided above.
On May 10, 2000, upon the request of the Purchaser and pursuant to
the Merger Agreement, the Board of Directors increased the size of the
Board of Directors from eight to twelve and accepted the resignations of
Messrs. Greenfield, Morgan and Odak, in each case effective upon the date
of acceptance for payment of the Company Common Stock pursuant to the
Offer, and elected to the Board of Directors, effective upon the date of
acceptance for payment of, and payment for, any shares of Company Common
Stock pursuant to the Offer, the designees specified in the Information
Statement.
On May 17, the actions of the Board of Directors discussed in the
preceding paragraph became effective.
STOCK OPTIONS
Pursuant to the Merger Agreement, the Board of Directors adopted
such resolutions and took such other actions as required to effect the
following: (a) adjust the terms of all outstanding Company Stock Options
(as defined below), whether vested or unvested, as necessary to provide
that each Company Stock Option (and any Company SAR (as defined below)
related thereto) outstanding immediately prior to the acceptance for
payment of Class A Common Stock pursuant to the Offer, including all vested
and unvested Company Stock Options, shall be canceled effective immediately
prior to the acceptance for payment of Class A Common Stock pursuant to the
Offer, with the holder thereof becoming entitled to receive an amount in
cash equal to (i) the excess, if any, of (A) $43.60 over (B) the exercise
price per share of the Class A Common Stock subject to such Company Stock
Option or Company SAR, multiplied by (ii) the number of Class A Common
Stock for which such Company Stock Option shall not theretofore have been
exercised; provided, however, that no cash payment shall be made with
respect to any Company SAR that is related to any Company Stock Option in
respect of which such a cash payment is made; provided, further, that all
amounts payable pursuant to this clause (a) shall be subject to any
required withholding of taxes or proof of eligibility of exemption
therefrom and to receipt of the written consent of the holder thereof and
shall be paid at or as soon as practicable following the acceptance for
payment of Class A Common Stock pursuant to the Offer, without interest;
and (b) make such other changes to the Company Stock Plans as the Company
and Conopco may agree are appropriate to give effect to the Offer and the
Merger.
On April 11, 2000, the Board of Directors voted to accelerate the
vesting of all unvested Company Stock Options. As of May 16, 2000, all
outstanding Company Stock Options (other than options to purchase shares
under the 1986 Employee Stock Purchase Plan (the "1986 ESPP")) had either
been exercised or "cashed out" pursuant to clause (a) of the foregoing
paragraph. There are no outstanding Company Stock Options other than under
the 1986 ESPP. See "Benefit Plans".
The Merger Agreement provides that, after the Effective Time, the
Company shall establish an appropriate long-term incentive plan to properly
incentivize its employees.
"Company Stock Option" means any option to purchase Company Common
Stock granted under any Company Stock Plan. "Company SAR" means any stock
appreciation right or other award linked to the price of the Company Common
Stock and granted under any Company Stock Plan. "Company Stock Plans" means
the Company's 1995 Equity Incentive Plan, 1999 Equity Incentive Plan, 1985
Stock Option Plan, 1986 ESPP, 1992 Non-Employee Directors' Restricted Stock
Plan, 1995 Non-Employee Directors' Plan for Stock in Lieu of Director's
Cash Retainer, all separate stock options agreements under which options
were issued since January 1, 1999 and the provisions of the employment
agreements for officers that include certain terms of options granted under
the Company's 1985 Stock Option Plan and 1995 Equity Incentive Plan and
certain separate stock option agreements entered into in 1999.
BENEFIT PLANS
The Merger Agreement provides that except as set forth above or in
the following paragraph, the Company shall maintain for a period of five
years after the Effective Time the Company's benefit plans (other than
equity or equity-based programs), except to the extent provided above under
"Stock Options" in effect on the date of the Merger Agreement or to provide
benefits to each current employee of the Company and its subsidiaries that
are not materially less favorable in the aggregate to such employees than
those in effect on the date of the Merger Agreement (other than equity or
equity-based programs), except to the extent provided above under "Stock
Options".
As soon as practicable following the date of the Merger Agreement,
the Board of Directors (or, if appropriate, any committee administering the
1986 ESPP) shall take or cause to be taken such actions as may be necessary
to provide that (i) no options shall be granted and no payroll deductions
accepted after the earlier of June 30, 2000, or the date on which falls the
Effective Time; (ii) if the Effective Time falls on a date prior to June
30, 2000, the exercise date in respect of the offering (option) period
under the 1986 ESPP that commenced January 1, 2000 shall be accelerated,
and all unexercised rights granted in respect of such offering (option)
period shall be exercised immediately prior to the Effective Time (iii) all
holding periods with respect to shares of Company Common Stock under the
1986 ESPP shall be waived; and (iv) the 1986 ESPP shall terminate as of the
Effective Time of the Merger.
Six months following the Effective Time, Conopco shall make
available to the Company the sum of $5 million to be distributed on a per
capita basis to the then full-time employees of the Company below the OCEO
as a special bonus or, at the election of the Board of Directors, to the
Foundation.
EMPLOYMENT/SEVERANCE AGREEMENTS
The purchase of shares of Company Common Stock pursuant to the
Offer constituted a "change of control" for purposes of the employment and
severance agreements the Company has entered into with Mr. Odak, Bruce
Bowman, Senior Director of Operations; Charles Green, Senior Director of
Sales & Distribution; Frances Rathke, Chief Financial Officer; Michael
Sands, Chief Marketing Officer and certain other key employees, including
all of the other officers of the Company. As a result of the "change of
control", the unvested Employee Stock Options held by all officers vested.
Under the terms of the Company's 1995 Equity Incentive Plan, the Company's
1999 Equity Incentive Plan and the terms of options granted since January
1, 1999 under separate option agreements, all options thereunder vested
upon the "change of control." In addition, if Messrs. Bowman, Green and
Sands, Ms. Rathke, and three other officers (but not Mr. Odak), are (1)
terminated by the Company other than for cause, death or disability within
the first two years following a change of control or (2) choose to
terminate for "good reason" within the first two years following a change
of control, then such officers will receive increased severance equal to
the sum of one and half times annual base salary plus one and a half times
their 1999 cash bonuses paid in early 2000. The cash severance payable to
these individuals, assuming that these individuals' employment is
terminated under circumstances entitling them to severance payments, would
be: Mr. Bowman, $465,000; Mr. Green, $465,000; Mr. Sands, $382,000; Ms.
Rathke, $378,000 and the three other officers as a group, $890,000. Such
officer also will have the right to extended health, life and other welfare
benefits, including contribution to such officer's 401(k) account.
The Company, Conopco and Mr. Odak intend to enter into a restated
employment agreement pursuant to which Mr. Odak will remain as President
and Chief Executive Officer of the Company for an initial term of six
months commencing on May 16, 2000. The agreement will continue thereafter
until terminated by any party on 30 days' notice. The restated employment
agreement will provide for an annual base salary of not less than $315,000
and an annual bonus of not less than $185,000, and a continuation of Mr.
Odak's benefits and perquisites. In the event Mr. Odak's employment is
terminated by Mr. Odak for any reason after the expiration of the initial
six month term, or by the Company other than "for cause" (as defined in Mr.
Odak's present employment agreement), the Company shall continue to pay Mr.
Odak his base salary and an annual bonus for two years (provided, that Mr.
Odak may elect to receive such compensation in a lump sum), and shall
continue for twelve months to provide Mr. Odak with medical and hospital
benefits and pay all expenses relating to Mr. Odak's automobile. During his
term of employment and for two years thereafter, Mr. Odak has agreed not to
compete with the Company, not to solicit or hire any of the Company's
employees and not to solicit any of the Company's customers. In addition,
it is contemplated that certain executive officers of the Company,
including Messrs. Bowman, Green, Sands and Ms. Rathke, will each be
eligible to receive a retention bonus ranging from $125,000 to $300,000
each for "Tier I" managers, from $85,000 to $200,000 each for "Tier II"
managers, from $50,000 for $150,000 each for "Tier III" managers, and
discretionary amounts from a discretionary pool of $200,000, which amounts
to $1,850,000 in the aggregate, as an incentive to continue in their
current positions with the Surviving Corporation. It is anticipated that a
portion of any such retention bonus will be conditioned on the executive
serving for a minimum of six months following the Effective Time, with the
balance of any such retention bonus available at the end of twelve months
of service following the Effective Time. The continued employment of any
executive following such twelve-month period would be conditioned on such
executive renegotiating certain terms of employment agreements with the
Surviving Corporation. Presently, the Company has not determined the
specific amount to be received by any particular manager as a retention
bonus.
INDEMNIFICATION AND INSURANCE
In the Merger Agreement, Conopco and the Purchaser have agreed 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 or
officers of the Company and its subsidiaries (each, an "Indemnified Party")
as provided in their respective articles of incorporation or by-laws shall
survive the Merger and shall continue in full force and effect in
accordance with their terms until the expiration of the applicable statute
of limitations (provided, that in the event any claim or claims are
asserted or made prior to the expiration of all applicable statutes of
limitation, all rights to indemnification in respect of any such claim or
claims shall continue until disposition of any and all such claims), and
Conopco shall cause the Company to honor all such rights. Without
limitation of the foregoing, in the event any such Indemnified Party is or
becomes involved in any capacity in any action, proceeding or investigation
in connection with any matter, including the transactions contemplated by
the Merger Agreement, occurring prior to, and including, the Effective
Time, Conopco shall, or shall cause the Company to, pay as incurred such
Indemnified Party's reasonable legal and other expenses (including the cost
of any investigation and preparation) incurred in connection therewith
(subject to receipt by the Company of the undertaking from such Indemnified
Party to repay advances if it is subsequently determined that such
Indemnified Party is not entitled to indemnification). Conopco shall pay
all expenses, including reasonable attorneys' fees, that may be incurred by
any Indemnified Party in successfully enforcing the indemnity and other
obligations provided for in this paragraph. Conopco will cause to be
maintained for a period of not less than six years from the Effective Time
the Company's current directors' and officers' insurance and
indemnification policy to the extent that it provides coverage for events
occurring prior to the Effective Time ("D&O Insurance") for all persons who
are directors and officers of the Company on the date of the Merger
Agreement, so long as the annual premium therefor would not be in excess of
200% of the last annual premium paid prior to the date of the Merger
Agreement (such 200% amount, the "Maximum Premium"). If the existing D&O
Insurance expires, is terminated or canceled during such six-year period,
Conopco will use all reasonable efforts to cause to be obtained as much D&O
Insurance as can be obtained for the remainder of such period for an
annualized premium not in excess of the Maximum Premium, on terms and
conditions no less advantageous than the existing D&O Insurance. The
Company has represented that the Maximum Premium is $228,000.
BEST EFFORTS; NOTIFICATION
The Merger Agreement provides that: upon the terms and subject to
the conditions set forth in the Merger Agreement, and subject to the
provisions of the Merger Agreement described above under "Company Takeover
Proposals," each of the Company, Conopco and the Purchaser will use its
best efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, and to assist and cooperate with the other parties in
doing, all things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the Offer, the
Merger and the other Transactions, including (a) the obtaining of all
necessary actions, waivers, consents and approvals from governmental
entities and the making of all necessary registrations and filings
(including filings with governmental entities, if any) and the taking of
all reasonable steps as may be necessary to obtain an approval or waiver
from, or to avoid an action or proceeding by, any governmental entity, (b)
the obtaining of all necessary consents, approvals or waivers from third
parties, (c) the defending of any lawsuits or other legal proceedings,
whether judicial or administrative, challenging the Merger Agreement or any
other Transaction Agreement or the consummation of the Transactions,
including seeking to have any stay or temporary restraining order entered
by any court or other governmental entity vacated or reversed and (d) the
execution and delivery of any additional instruments necessary to
consummate the Transactions and to fully carry out the purposes of the
Transaction Agreements; provided, however, that neither the Company nor
Conopco shall be required to consent to any action described in paragraph
(a) of Section 7.01 of the Merger Agreement. In connection with and without
limiting the foregoing, the Company and the Board of Directors shall (i)
take all action necessary to ensure that no state takeover statute or
similar statute or regulation becomes applicable to any Transaction or the
Merger Agreement or any other Transaction Agreement and (ii) if any state
takeover statute or similar statute or regulation becomes applicable to the
Merger Agreement or any other Transaction Agreement, take all action
necessary to ensure that the Merger and the other Transactions may be
consummated as promptly as practicable on the terms contemplated by the
Transaction Agreements and otherwise to minimize the effect of such statute
or regulation on the Merger and the other Transactions. Nothing in the
Merger Agreement shall be deemed to require any party to waive any
substantial rights or agree to any substantial limitation on its operations
or to dispose of any significant asset or collection of 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 a termination of the Merger
Agreement pursuant to the provisions under "Termination of the Merger
Agreement", an amendment of the Merger Agreement pursuant to the provisions
for an amendment thereof or an extension or waiver pursuant to the
provisions thereof, in order to be effective, require in the case of
Conopco, the Purchaser or the Company, action by its Board of Directors or
the duly authorized designee of its Board of Directors.
The foregoing summary of the Merger Agreement is qualified in its
entirety by reference to the Merger Agreement, a copy of which is filed as
Annex A hereto. The Merger Agreement should be read in its entirety for a
more complete description of the matters summarized above.
RIGHTS AGREEMENTS
The Rights Agreements were amended as of April 11, 2000, to render
the Rights inapplicable to the Offer, the Merger and the other
Transactions.
CONFIDENTIALITY AGREEMENT
Pursuant to the Mutual Non-Disclosure Agreement dated September 27,
1999, between Conopco and the Company (the "Confidentiality Agreement"),
the Company and Conopco agreed to keep confidential certain information
exchanged between such parties. The Merger Agreement provides that all
information exchanged pursuant to Section 6.02 of the Merger Agreement
concerning "Access to Information" shall be subject to the Confidentiality
Agreement.
LICENSE AGREEMENT
Contemporaneously with the execution of the Merger Agreement, the
Company, its wholly-owned subsidiary, Ben & Jerry's Homemade Holdings, Inc.
("Holdings"), and Unilever entered into a License Agreement dated as of
April 11, 2000 (the "License Agreement"), pursuant to which the Company and
Holdings granted to Unilever an exclusive worldwide license, other than the
United States (and territories and commonwealths thereof), Japan and the
Caribbean and subject to the Company's existing license arrangements
(collectively, the "Territory"), to use (i) the "Ben & Jerry's" trademark,
(ii) trademarks owned by the Company and Holdings, or licensed to the
Company and Holdings, associated with certain Ben & Jerry's flavor names
and (iii) proprietary technology of the Company used in making super
premium ice cream (the "Licensed Technology") in connection with the
manufacture, marketing, distribution and sale (wholesale and retail) of
super premium ice cream under the Ben & Jerry's trademark by Unilever and
its affiliated companies (collectively, the "Unilever Affiliates"). Because
Holdings and the Company have already granted an exclusive license to a
third party with respect to Canada, Unilever will not be able to use the
Ben & Jerry's brand in Canada. Unilever has agreed to pay to the Company 5%
of the net sales of frozen dessert products under the Ben & Jerry's
trademark by the Unilever Affiliates, 5% of the net sales of promotional
items by the Unilever Affiliates and 5% of up-front franchise fees paid to
the Unilever Affiliates by Ben & Jerry's franchisees. The Company has the
right to approve the countries in which the Unilever Affiliates uses the
Ben & Jerry's trademark (and the related flavor names) and the marketing of
products under the Ben & Jerry's trademark. The Company and Holdings also
agreed to cooperate with Unilever in developing a plan for the geographic
expansion of the Ben & Jerry's brand internationally. Unilever has agreed
in the License Agreement to purchase from the Company, and the Company and
Holdings have agreed to sell the assets, at the net book value of such
assets pursuant to a mutually satisfactory purchase agreement, of the
Company's subsidiaries in the United Kingdom and France.
Pursuant to the License Agreement, the Company and Holdings have
agreed not to compete in frozen dessert products in the Territory during
the term of the License Agreement, except in countries where Unilever has
irrevocably indicated it does not wish to sell products under the Ben &
Jerry's trademark. Unilever has agreed that in the Territory they will sell
super premium products only under the Ben & Jerry's trademark. Unilever
further agreed to use the Licensed Technology only in connection with
frozen dessert products bearing the Ben & Jerry's trademark. Except with
respect to countries with respect to which Unilever has given notice of
intent not to enter and regions in which the License Agreement has been
terminated for a Material Default (as defined below) in such region, the
Company and Holdings may not grant another license in connection with
frozen dessert products in the Territory during the term of the License
Agreement.
Subject to termination, the License Agreement has a term of ten
years and is renewable at the option of Unilever for additional five-year
terms. The Company and Holdings may terminate the License Agreement in the
event of a Material Default by Unilever that is not cured within 60 days of
a satisfactory written notice from the Company and Holdings. The License
Agreement defines "Material Default" as a material breach of (A) a covenant
that relates to the payment of money by Unilever, (B) a covenant that
directly and substantially affects the Essential Integrity of the Principal
Licensed Mark (as defined in the License Agreement) or (C) certain other
specified covenants contained in the License Agreement. The License
Agreement automatically terminates upon the termination of the Merger
Agreement for breach by Conopco and/or the Purchaser.
Upon a Change of Control (as defined below) of the Company, the
obligation of Unilever to obtain the approval of the Company or Holdings
under the License Agreement is deemed to be an obligation to keep such
parties informed as to Unilever's actions under the License Agreement prior
to such action being taken, except with respect to the ability of the
Company and Holdings to prevent Unilever to act under the License Agreement
in countries in which significant human rights abuses are occurring. The
License Agreement defines a "Change of Control" of a party to the License
Agreement as (A) the acquisition by any person or group of persons acting
in concert of beneficial ownership of such party's securities, or any other
transaction with respect to beneficial ownership of such party or such
party's securities, that involves or results in either (x) the acquisition
of beneficial ownership of securities representing 20% or more of the
voting power of such party's outstanding equity securities or (y) the
merger or consolidation of such party with any person in which the
shareholders of such party would not, immediately after such merger or
consolidation, own securities representing at least 20% of the voting power
of the person issuing the cash or securities in such merger or
consolidation, and (B) the sale of all or substantially all of the assets
of such party to one or more Persons; provided, however, that a Change of
Control shall not be deemed to occur in the case of clause (A) or (B) above
if (x) a named founder of the Company is the resulting controlling person
or a member of the resulting controlling group of persons and (y) all other
members of such group of persons, if any, are charitable organizations.
In the License Agreement, Unilever has agreed to undertake
activities related to the "social mission" of the Company in connection
with the Unilever Affiliates' activities under the Ben & Jerry's trademark,
including, among others, a commitment to purchase "fair trade" products to
the extent available at commercially reasonable prices, a commitment to
open scoop shops in the Company's PartnerShop format in partnership with
non-profit organizations, a commitment to use unbleached paper to the
extent available at commercially reasonable prices and a commitment to
purchase, if commercially feasible, a portion of its ingredients from
not-for-profit suppliers and suppliers from economically disadvantaged
groups and to provide assistance to such suppliers. The License Agreement
provides that a material breach by Unilever of one of the covenants
contained in the preceding sentence with respect to a country is not
Material Default but will result in an increased royalty rate of 8% with
respect to the region in which such country is located for so long as such
breach is uncured following a 90-day cure period. Upon a Material Default
by Unilever of its duties under the social mission commitments contained in
the first sentence of this paragraph, the royalty rate will be increased to
8% worldwide for so long as such Material Default is uncured during a
one-year cure period. Following the expiration of such one-year cure
period, the Company and Holdings may terminate the License Agreement if
such Material Default is continuing.
The License Agreement also provides that the parties thereto will
negotiate a mutually satisfactory master franchising agreement within 12
months of the date of the License Agreement. See Annex B.
STOCK OPTION AGREEMENT
On April 11, 2000, the Company and Conopco entered into a Stock
Option Agreement (the "Stock Option Agreement"). Pursuant to the Stock
Option Agreement, the Company granted to Conopco an irrevocable option (the
"Option") to purchase up to 1,219,986 shares of Class A Common Stock
(equivalent to 19.9% of the then-outstanding shares of Company Common
Stock) at a purchase price of $43.60 per share. The Option is exercisable
(in whole or in part) at any one time either (i) after the expiration of
the Offer and the acceptance of shares of Company Common Stock for payment
pursuant thereto or (ii) after the termination of the Merger Agreement in
circumstances in which Conopco is entitled to receive the Termination Fee
(each, a "Purchase Event"). The Option terminates upon the earliest to
occur of (i) the effective date of the Merger, (ii) 180 days after the
first occurrence of a Purchase Event and (iii) termination of the Merger
Agreement in accordance with its terms prior to and without the occurrence
of a Purchase Event. After the occurrence of a Purchase Event, Conopco may
elect to receive a cash payment from the Company in lieu of exercising the
Option, which cash payment will be equal to (A) the aggregate market value
of the shares of Class A Common Stock underlying the Option minus (B) the
aggregate exercise price of the Option, subject to a cap of $500,000. In
addition, pursuant to the Stock Option Agreement, the Company granted
registration rights to Conopco with respect to shares of Class A Common
Stock purchased upon exercise of the Option. See Annex C.
THIRD-PARTY BENEFICIARIES
The Transaction Agreements are not intended to confer upon any
person other than the parties any rights or remedies, except that (i)
provisions discussed under the headings "Stock Options," "Benefit Plans,"
"Employment/Severance Agreements," "Indemnification and Insurance," and
"The Foundation" are enforceable by the parties thereto; (ii) provisions
discussed under the headings "Operations of the Surviving Corporation" and
"Social Mission" are enforceable by Henry Morgan and Jeffrey Furman,
members of the Board of Directors, acting jointly; and (iii) provisions
discussed under the heading "The Surviving Corporation Board" are
enforceable by nominees thereto.
PLANS FOR THE COMPANY
THE SURVIVING CORPORATION BOARD
In the Merger Agreement, Conopco has agreed following the Effective
Time to maintain a board of directors of the Company (the "Surviving
Corporation Board") composed of (i) seven directors from among the current
members of the Board of Directors and persons nominated by such continuing
directors (collectively, from time to time, the "Class I Directors"), (ii)
two members to be appointed by Meadowbrook (the "Class M Directors"), (iii)
one member to be appointed by Conopco and (iv) the Chief Executive Officer
of the Surviving Corporation; provided, however, that Ineligible Directors
(as defined below) may not serve on the Surviving Corporation Board. The
Merger Agreement provides that the Surviving Corporation Board shall have
primary responsibility with respect to the enhancement of the Social
Mission Priorities (as defined below) of the Company, as they may evolve,
and the preservation of the essential integrity of the Ben & Jerry's
brand-name. Conopco shall have primary responsibility in the area of
financial and operational aspects of the Surviving Corporation and in all
areas not allocated to the Surviving Corporation Board. The Chief Executive
Officer of the Surviving Corporation shall manage the affairs of the
Company pursuant to an annual delegation of authority and within the scope
of an annual business plan approved by Conopco following good faith
discussions with the Surviving Corporation Board. The Chief Executive
Officer of the Surviving Corporation shall be designated by Conopco, after
good faith consultation with, and the participation in discussions of, the
Appointment Committee of the Surviving Corporation Board (consisting of Ben
Cohen and Jerry Greenfield, unless they are not directors, in which case
such committee shall include one or two directors, as the case may be, from
among the Class I Directors and Class M Directors). The Merger Agreement
provides that the Company Charter and Company By-laws shall be amended to
the extent necessary to implement the foregoing.
As of the date of this Proxy Statement, individual directors
serving on the Board of Directors as of the date of the Merger Agreement
have not disclosed to the Company their decisions as to whether to serve on
the Surviving Corporation Board as a Class I Director, except that Henry
Morgan and Jerry Greenfield have informed the Company that they will not
continue as directors of the Surviving Corporation. It is expected that the
Surviving Corporation Board will continue to be compensated at levels
consistent with such compensation applicable to the Board of Directors.
INELIGIBLE DIRECTORS
Conopco has acknowledged in the Merger Agreement that no Ineligible
Director is acting as a representative of the Company in connection with
the Transaction Agreements and the transactions contemplated thereby and
that any action or failure to act on the part of any Ineligible Director
shall not be deemed to be an action or failure to act on the part of the
Company, except to the extent that such Ineligible Director's action or
failure to act is taken under the instruction of, or with the cooperation
or the concurrence of, the Board of Directors. The Merger Agreement defines
an "Ineligible Director" as any member on the Board of Directors on the
date of the Merger Agreement who (i) fails to tender his or her shares of
Company Common Stock pursuant to the Offer, (ii) makes any public statement
disparaging Unilever, Conopco, the Company, any Transaction Agreement or
any transaction contemplated thereby, (iii) takes any action that, but for
the preceding sentence would constitute a breach of the Merger Agreement by
the Company or (iv) takes any other action which is intended to cause any
transaction contemplated thereby to fail to be completed.
OPERATIONS OF THE SURVIVING CORPORATION
The parties have agreed in the Merger Agreement that the Surviving
Corporation will not initiate any material headcount reductions for two
years following the Effective Time and to maintain for at least five years
its corporate presence and substantial operations in Vermont. In addition,
the parties have agreed to continue the Company's liveable wage policy
following the Effective Time and that a significant amount of the
incentive-based compensation of members of the OCEO shall be based on the
social performance of the Surviving Corporation.
SOCIAL MISSION
The parties have agreed in the Merger Agreement that the Surviving
Corporation Board will have primary responsibility for preserving and
enhancing the objectives of the historical social mission of the Company as
they may evolve from time to time consistent therewith (the "Social Mission
Priorities"). The Company and Conopco also have agreed that following the
Effective Time, they will work together in good faith to develop a set of
social metrics to measure the social performance of the Surviving
Corporation. The parties also have agreed that the Surviving Corporation
will seek to have the rate of increase of such social metrics exceed the
rate of increase of sales. The parties have agreed in the Merger Agreement
that the Surviving Corporation will establish a new product development
unit responsible for special products to be headed by Ben Cohen for so long
as he is an employee of the Surviving Corporation.
The parties have agreed in the Merger Agreement that the Surviving
Corporation will establish a social venture fund (the "Social Venture
Fund") and agreed to fund such entity pursuant to an agreement to be made
between the Surviving Corporation and the Foundation after the Effective
Time on such terms and conditions as they and a committee of the Surviving
Corporation Board that shall oversee the Social Venture Fund (the "Social
Venture Committee") shall approve to provide venture financing to (i)
vendors owned by women, minorities or indigenous people, (ii) vendors which
give priority to a social change mission, and (iii) such other third-party
entrepreneurial businesses within the scope of the Company's social mission
priorities. The Company shall make available to the Social Venture Fund an
aggregate amount of $5 million. The terms of any agreement relating to the
Social Venture Fund shall limit the financial responsibility of the
Surviving Corporation to the foregoing cash contributions.
THE FOUNDATION
The parties have agreed in the Merger Agreement that, immediately
prior to the Effective Time, the Surviving Corporation shall, and Conopco
shall cause the Surviving Corporation to, make a one-time contribution of
not less than $5 million to the Foundation so long as (i) the Foundation
does not significantly change its charitable purpose, (ii) none of the
trustees of the Foundation disparages the Surviving Corporation, its
products or its management and (iii) any replacement or additional trustee
of the Foundation appointed before the date of payment is reasonably
satisfactory to Conopco. The parties have also agreed to continue following
the Effective Time the Company's practice of making charitable
contributions by making contributions, for a minimum of ten years, of $1.1
million per year adjusted annually (i) by multiplying such amount by the
ratio of the U.S. Producer Price Index for the month of December of the
year in which the determination is made to the U.S. Producer Price Index
for December 1999 and (ii) by multiplying the product of such calculation
by the ratio of the equivalent gallon sales of frozen dessert products
bearing the Ben & Jerry's brand-name sold by any person in such year to the
equivalent gallon sales of such products sold in 1999; provided, however,
that such ratio shall never be less than one. The Surviving Corporation
Board shall have the responsibility for allocating annual contributions
among the Foundation, local community charitable initiatives (with the
support and oversight of employee Community Action Teams) and charitable
institutions selected by the OCEO. The Surviving Corporation Board may
allocate a portion of such contributions to the Foundation so long as (i)
the Foundation does not significantly change its charitable purpose, (ii)
none of the trustees of the Foundation disparages the Surviving
Corporation, its products or its management and (iii) any replacement or
additional trustee of the Foundation is reasonably satisfactory to Conopco.
After such ten-year period, the Surviving Corporation shall continue to
make contributions as calculated in accordance with the first sentence of
this paragraph unless the activities and performance of the Foundation
cease to be reasonably acceptable to Unilever, and provided that the
Foundation meets the other requirements set out in the previous sentence.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion describes certain United States federal
income tax consequences of the merger. The discussion is based upon the
Internal Revenue Code of 1986, as amended (the "Code"), existing and
proposed treasury regulations, rulings, administrative pronouncements and
judicial decisions, changes to which could materially affect the tax
consequences described in this Proxy Statement and could be made on a
retroactive basis. This discussion does not address all aspects of federal
income taxation that may be important to you based on your particular
circumstances and does not address any aspect of state, local or foreign
tax laws. This summary generally considers only shares of Class A Common
Stock that are held as capital assets (generally, assets held for
investment) and may not apply to holders who acquired shares of Class A
Common Stock pursuant to the exercise of employee stock options or other
compensation arrangements with the Company, holders that are subject to
special tax treatment, holders that hold shares of Class A Common Stock as
part of a "straddle", "hedge", or "conversion transaction", or holders the
functional currency of which is not the U.S. dollar. Holders that may be
subject to special tax treatment include broker- dealers, insurance
companies, tax-exempt organizations, financial institutions, and regulated
investment companies.
Consequences to Holders of Class A Common Stock. A holder of Class
A Common Stock will recognize gain or loss equal to the difference between
the amount of cash received in the merger and the holder's adjusted tax
basis in the shares of Class A Common Stock exchanged. Such gain or loss
will generally be capital gain or loss and will be long-term capital gain
or loss if at the Effective Time the holder has a holding period for the
Class A Common Stock of more than one year.
Backup Withholding and Information Reporting. Payments of cash to a
holder surrendering shares of Class A Common Stock will be subject to
information reporting and "backup" withholding at a rate of 31% of the cash
payable to the holder, unless the holder furnishes its taxpayer
identification number in the manner prescribed in applicable treasury
regulations, certifies that such number is correct, certifies as to no loss
of exemption from backup withholding and meets certain other conditions.
Any amounts withheld from payments to a holder under the backup withholding
rules generally will be allowed as a credit against the holder's United
States federal income tax liability, which may entitle such holder to a
refund provided the required information is furnished to the Internal
Revenue Service.
The preceding discussion does not purport to be a complete analysis
or discussion of all potential tax effects relevant to the Merger. Thus,
shareholders are urged to consult their own tax advisors as to the specific
tax consequences to them of the merger, including tax return reporting
requirements, the applicability and effect of federal, state, local,
foreign and other applicable tax laws and the effect of any proposed
changes in the tax laws.
METHOD OF ACCOUNTING
The Merger will be accounted for under the purchase method of
accounting.
REGULATORY AND OTHER APPROVALS
There are no U.S. federal or state regulatory requirements which
remain to be complied with in order to consummate the Merger (other than
the filing of articles of merger with the Secretary of State of the State
of Vermont).
SOURCE AND AMOUNT OF FUNDS
The total amount of funds required by Vermont All Natural Expansion
Company to purchase all shares tendered pursuant to and to pay all related
fees and expenses in connection with the tender offer was approximately
$291 million. The amount of funds required by Ben & Jerry's to make all
payments to participants in Ben & Jerry's stock option plans pursuant to
the merger agreement was $27,315,923. The total amount of funds required by
Vermont All Natural Expansion Company to consummate and to pay all related
fees and expenses in connection with the merger is estimated to be
approximately $31 million. The Purchaser will obtain the necessary funds to
consummate the Merger and to pay related fees and expenses from Conopco,
which in turn will obtain such funds from intercompany loans of available
cash from and proceeds of sale of commercial paper by Unilever and its
subsidiaries.
DISSENTERS' RIGHTS
OVERVIEW
The holders of shares of Class A Common Stock at the effective time
of the Merger will have certain rights pursuant to the provisions of
Chapter 13 of the VBCA, Title 11A, V.S.A. ss.ss. 13.01 et. seq. ("Chapter
13") to dissent and obtain payment of fair value for their shares of Class
A Common Stock. Under Chapter 13, dissenting shareholders who comply with
the applicable statutory procedures will be entitled to receive a judicial
appraisal of the fair value of their shares of Class A Common Stock
(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 accrued interest, if any. Any such judicial
determination of the fair value of shares of Class A Common Stock could be
based upon factors other than, or in addition to, the price per Share to be
paid in the Merger or the market value of the shares of Class A Common
Stock. The value so determined could be more or less than the price per
Share to be paid in the Merger. The foregoing summary of Chapter 13 does
not purport to be complete and is qualified in its entirety by reference to
Chapter 13. FAILURE TO FOLLOW THE STEPS REQUIRED BY CHAPTER 13 OF THE VBCA
FOR PERFECTING DISSENTERS' RIGHTS MAY RESULT IN THE LOSS OF SUCH RIGHTS.
DISSENTERS' RIGHTS
Pursuant to Chapter 13, any holder of shares of Class A Common
Stock who objects to the Merger is entitled to dissent from the Merger and
to have the fair value of such shares of Class A Common Stock ("Dissenting
Stock") as determined by the Company, or if necessary, judicially
determined, paid to him or her, by complying with the provisions of Chapter
13. Failure to take any steps set forth in Chapter 13 in connection with
the exercise of such rights may result in termination or waiver thereof.
The following is a summary of the statutory procedures required to
be followed by a holder of Dissenting Stock (a "dissenting shareholder") in
order to exercise his or her rights under Vermont law. This summary is
qualified in its entirety by reference to Chapter 13, the text of which is
attached as Annex E to this Proxy Statement.
If a shareholder elects to exercise dissenters' rights with respect
to the Merger, such shareholder must (i) file with the Company prior to the
vote on the approval of the Merger Agreement at the Special Meeting a
written notice of intention to demand payment for his or her shares of
Class A Common Stock if the Merger is effectuated and (ii) not vote in
favor of approval of the Merger Agreement. The written notice required to
be delivered to the Company by a dissenting shareholder is in addition to
and separate from any proxy or vote against the Merger. Neither voting
against nor failure to vote for the Merger will constitute the written
notice required to be filed by a dissenting shareholder. Failure to vote
against the Merger, however, will not constitute a waiver of rights under
Chapter 13, provided that a written objection has been properly filed. A
signed proxy that is returned but which does not contain any instructions
as to how it should be voted will be voted in favor of approval of the
Merger and will be deemed a waiver of dissenters' rights. See "The Special
Meeting - Proxies".
A beneficial shareholder may assert dissenters' rights as to shares
of Class A Common Stock held on his or her behalf only if (i) such
shareholder submits to the Company the record shareholder's written consent
to the dissent not later than the time the beneficial shareholder asserts
dissenters' rights and (ii) such shareholder does so with respect to all
shares of Class A Common Stock of which he or she is the beneficial owner
or over which he or she has the power to direct the vote. A record holder
of shares of Class A Common Stock may dissent on behalf of any beneficial
owner with respect to all but not less than all the shares of Class A
Common Stock of such owner if the record holder notifies the Company in
writing of the name and address of each such person on whose behalf such
record holder asserts dissenters' rights. All notices of intention to
demand payment should be addressed to: Frances G. Rathke, Secretary, Ben &
Jerry's Homemade, Inc., 30 Community Drive, South Burlington, Vermont
05403-6828.
If the Merger Agreement is approved, the Company is obligated to
give written notice to each dissenting shareholder who timely filed a
notice of intention to demand payment and who did not vote in favor of
approval of the Merger Agreement no later than 10 days after the Effective
Date. The notice must be accompanied by a copy of Chapter 13 and must (i)
state where a demand for payment must be sent and where and when
Certificates representing Dissenting Stock must be deposited in order to
obtain payment, (ii) inform holders of uncertificated shares of Class A
Common Stock to what extent transfer of the shares of Class A Common Stock
will be restricted after the payment demand is received, (iii) be
accompanied by a form demanding payment that includes the date of the first
announcement to news media or to shareholders of the terms of the proposed
Merger (April 12, 2000) and requires that the person asserting dissenters'
rights certify whether or not he or she acquired beneficial ownership of
the Dissenting Stock before that date and (iv) set a date by which the
Company must receive the payment demand, which date shall not be less than
30 days nor more than 60 days after the date the notice is delivered.
A dissenting shareholder who fails to demand payment or to deposit
Certificates for Dissenting Stock as required shall have no right under
Chapter 13 to receive payment for the Dissenting Stock.
Unless the Merger has been effected within 60 days after the date
for demanding payment and depositing Certificates for Dissenting Stock
(such 60 day period is hereinafter referred to as "Demand Period"), the
Company shall return any Certificates for Dissenting Stock so deposited and
release any transfer restrictions imposed on uncertificated shares of Class
A Common Stock. If certificates for such Dissenting Stock have been
returned and such transfer restrictions have been released by the Company,
the Company must at a later time send a new notice conforming to the
requirements herein described if the merger is effected after the Demand
Period.
Upon consummation of the Merger, the obligations of the Company
under Chapter 13 will be assumed by the Surviving Corporation.
As soon as the Merger has been consummated, or upon receipt of
demand for payment if the Merger has already been consummated, except as
set forth in the immediately following sentence, the Company shall remit to
each dissenting shareholder who has made proper demand and deposited his or
her Certificates with the Company the amount which the Company deems to be
the fair value of his or her Dissenting Stock, with accrued interest, if
any, accompanied by (i) the Company's balance sheet as of the end of a
fiscal year ending not more than 16 months before the date of payment, (ii)
an income statement and a statement of changes in shareholders' equity for
such fiscal year, (iii) the Company's latest available interim financial
statements, if any, (iv) a statement of the Company's estimate of the fair
value of the Dissenting Stock and how such estimate was calculated, (v) an
explanation of how interest (if any) was calculated and (vi) a statement of
the dissenting shareholders' right to demand payment pursuant to ss. 13.28
of Chapter 13, together with a copy of Chapter 13. To the extent that a
dissenting shareholder acquired Dissenting Shares after April 12, 2000
(shares so acquired are hereinafter referred to as the "After Acquired
Shares"), the Company may offer to pay its estimate of the fair value of
After Acquired Shares, plus accrued interest, to each dissenting
shareholder who agrees to accept it in full satisfaction of his or her
demand instead of immediately paying such amount. "Fair value" of
Dissenting Stock means the value of such stock immediately before the
Effective Time, excluding any change in value in anticipation of the Merger
unless such exclusion would be inequitable (which fair value may be more,
less, or the same as the Merger Consideration).
If (i) the Company fails to remit such fair value to a dissenting
shareholder or offer to pay Fair Value to a dissenting shareholders with
respect to After Acquired Shares within 60 days after the date set for
demanding payment, (ii) a dissenting shareholder believes the amount so
remitted or offered to be less than fair value of such holder's Dissenting
Stock (or that the interest, if any, is not correct), or (iii) the Company
does not complete the Merger and fails to return any deposited Certificates
for Dissenting Stock or release any transfer restrictions imposed on
uncertificated shares of Class A Common Stock, the affected dissenting
shareholder may reject the Company's offer and send the Company such
shareholder's own estimate of fair value (and interest, if any) and demand
payment of the deficiency. If the dissenting shareholder does not file
the estimate within 30 days of when the Company made or offered payment for
the Dissenting Stock, such shareholder shall be entitled to no more than
the amount remitted or offered.
Within 60 days after a demand for payment of a deficiency, if the
demand remains unsettled, the Company shall commence a proceeding in the
Superior Court of Chittenden County, Vermont (the "Court") and petition the
Court to determine the fair value of the Dissenting Stock and accrued
interest. The Company shall make all dissenting shareholders whose demands
have not been settled parties to such action, and all parties shall be
served a copy of the complaint. The Court shall determine the fair value of
the Dissenting Stock and each dissenting shareholder shall be entitled to
judgment for the amount, if any, by which the amount previously remitted by
the Company is exceeded by the Court's determination of fair value, plus
interest or for judgment equal to the value of the After Acquired Shares,
plus interest. If the Company does not file a petition within 60 days, each
dissenting shareholder who has made demand and who has not settled his or
her claim shall be entitled to receive the amount demanded with interest.
There are no specific valuation methods prescribed under Vermont
law to which the Court would be bound in determining fair value. The Court
would consider the evidence which it deemed relevant and material and
render its decision based on that evidence.
The Company may elect to withhold remittances to any dissenting
shareholder who did not own his or her shares of Class A Common Stock
before April 12, 2000, the day the Merger was announced. With respect to
these shares of Class A Common Stock, upon consummation of the Merger, the
Company shall give its fair value estimate and explain the basis thereof
and offer to pay the amount plus accrued interest to such holders who agree
to accept it in full satisfaction of their demands. If the dissenting
shareholder disagrees, he or she may within 30 days mail the Company his or
her estimate and demand payment. If the dissenting shareholder fails to
mail such a response, he or she is entitled only to the Company's offer. If
demand is made and remains unsettled, further proceedings shall follow the
procedures for judicial appraisal of shares of Class A Common Stock set
forth above.
Costs of an appraisal proceeding, including costs and expenses of
appraisers appointed by the Court, shall be determined by the Court and
assessed against the Company, except that the Court may assess any part of
such costs and expenses to all or some of the dissenting shareholders who
are parties and whose action the court finds to be arbitrary, vexatious, or
not in good faith in demanding payment under Section 13.28 of Chapter 13.
Fees and expenses of counsel and experts for the respective parties may be
assessed against the Company if the Court finds it failed to comply
substantially with the requirements of Chapter 13 or may be assessed
against the Company or all or some of the dissenting shareholders if such
party acted arbitrarily, vexatiously, or not in good faith with respect to
the rights provided by Chapter 13. If the Court finds that the services of
counsel for any dissenting shareholder are of substantial benefit to other
dissenting shareholders similarly situated and that the fees for those
services should not be assessed against the Company, the Court may award to
those counsel reasonable fees to be paid out of the amounts awarded the
dissenting shareholders who were benefitted.
STOCK OWNERSHIP
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of the date
of this Proxy Statement with respect to the beneficial ownership of the
outstanding shares of Class A Common Stock by (i) all persons owning of
record, or beneficially to the knowledge of the Company, more than five
percent of the outstanding shares of any class, (ii) each director and
executive officer of the Company individually, and (iii) all directors and
officers of the Company as a group. Unless otherwise indicated, the mailing
address of each of the persons shown is c/o Ben & Jerry's Homemade, Inc.,
30 Community Drive, South Burlington, Vermont 05403-6828.
ALL PERSONS CLASS A COMMON STOCK
Vermont All Natural Expansion 6,621,944
Company and Conopco
390 Park Avenue
New York, New York 10022
OFFICERS:
Perry Odak 0
Bruce Bowman 0
Charles Green 0
Michael Sands 0
Frances Rathke 0
DIRECTORS:
Ben Cohen 0
Jeff Furman 0
Pierre Ferrari 0
Jennifer Henderson 0
Frederick Miller 0
Peter Allcox 0
Thomas Floyd 1 0
Richard Goldstein 0
Peter Harwich 1 0
Mart Laius 1 0
Ronald Soiefer 1 0
Eric Walsh 0
All Directors and Officers as a
Group: 0
1 Does not include 6,621,944 shares of Class A Common Stock beneficially
owned by Vermont All Natural Expansion Company and Conopco, which such
Directors of the Company may be deemed to beneficially own by virtue of
their positions with Conopco. Each of Thomas Floyd, Peter Harwich, Mart
Laius and Ronald Soiefer disclaim any such beneficial ownership.
SHAREHOLDER LITIGATION
The Company and the members of the Board of Directors (as of March
29, 2000) have been named in three purported class action suits in
connection with the proposed transaction with Unilever, Meadowbrook and Mr.
Cohen, which was never approved by the Board of Directors. The first
purported class action was filed by Lisbeth Greenfeld and Howard Weisburgh
as custodian for Rachel Weisburgh and alleges that the Board of Directors
breached its fiduciary duties in connection with the proposed "going
private" transaction by failing to disclose information as to the value of
the Company as well as alleging violations of the Vermont Consumer Fraud
Act (the "VCFA"). The second purported class action was filed by Barry Wohl
as custodian for Rebecca Wohl and Alyssa Wohl and contains the same
allegations as the Greenfeld class action described above. The third class
action was filed by James Georgetti and alleges that the Board of Directors
in "approving" the "going private" transaction engaged in self-dealing and
breached their fiduciary duties as well as violating the VCFA. All of these
actions seek injunctive relief and monetary damages. In view of the fact
that the proposed "going private" transaction was never definitively
approved by the Board of Directors and is not being pursued, the Company
believes that these allegations are unfounded and it intends to vigorously
defend all of these actions.
SHAREHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
Upon the consummation of the Merger, all of the outstanding shares
of Class A Common Stock will be held and voted by Conopco. As a result, the
Company will not solicit proxies in connection with an annual meeting of
shareholders. If the Merger is not consummated, then, according to the
rules of the Securities and Exchange Commission (the "Commission"), all
proposals of shareholders to be presented at the annual meeting would be
required to be received by the Secretary of the Company a reasonable time
before the Company begins to print and mail its proxy materials. These
proposals would also need to comply with the rules of the Commission
governing the form and content of proposals in order to be included in the
Company's proxy statement and form of proxy.
In addition, the Company's By-laws provide that, to be timely, a
notice must be delivered not less than 75 days nor more than 120 days prior
to the meeting; provided, however, that (i) in the event that less than 75
days' notice or prior public disclosure of the date of the meeting is given
or made to shareholders, notice by the shareholder to be timely must be so
received not later than the close of business on the 15th day following the
day on which such notice of the date of the annual meeting was mailed or
such public disclosure was made (whichever first occurs), or (ii) in the
event that less than 30 days' notice or prior public disclosure of the date
of the meeting is given or made to shareholders, notice by the shareholder
to be timely must be so received not later than the close of business on
the 5th day following the day on which such notice of the date of the
annual meeting was mailed or such public disclosure was made (whichever
first occurs).
OTHER MATTERS
Management knows of no other business to be presented at the
Special Meeting. If other matters do properly come before the Special
Meeting, or any adjournment or postponement thereof, it is the intention of
the persons named in the proxy to vote on such matters according to their
best judgment unless the authority to do so is withheld in such proxy.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by the Company (File No.
001-14401) with the Commission are incorporated by reference in this Proxy
Statement:
o The Company's Annual Report on Form 10-K for the fiscal year
ended December 25, 1999, previously filed with the
Commission on March 22, 2000; and
o The Company's Quarterly Report on Form 10-Q for the
quarterly period ended March 25, 2000, previously filed with
the Commission on May 9, 2000.
All documents filed by the Company with the Commission pursuant to
Section 13(a), 13(c), 14 and 15(d) of the Exchange Act after the date
hereof and prior to the date of the Special Meeting shall be deemed to be
incorporated by reference herein and shall be a part hereof from the date
of filing of such documents. Any statements contained in a document
incorporated by reference herein or contained in this Proxy Statement shall
be deemed to be modified or superseded for purposes hereof to the extent
that a statement contained herein (or in any other subsequently filed
document which also is incorporated by reference herein) modified or
superseded such statement. Any statement so modified or superseded shall
not be deemed to constitute a part hereof except as so modified or
superseded.
This Proxy Statement incorporates documents by reference that are
not presented in or delivered with this Proxy Statement. These documents
are available upon request from Frances G. Rathke, Secretary, Ben & Jerry's
Homemade, Inc., 30 Community Drive, South Burlington, Vermont 05403-6828.
In order to ensure timely delivery, any request should be made by [INSERT
DATE].
AVAILABLE INFORMATION
The Company files annual, quarterly and special reports, proxy
statements and other information with the Commission. You may read and copy
any reports, statements or other information the Company files at the
Public Reference Section of the Commission located at 450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549 and at the following regional
offices of the Commission: 7 World Trade Center, 13th Floor, Suite 1300,
New York, New York 10004; and Suite 1400, Citicorp Center, 500 West Madison
Street, Chicago, Illinois 60661. You may obtain copies of all or any
portion of the material by mail from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed
rates. Please call the Commission at (800) SEC-0330 for further information
on the public reference rooms. The Company's filings are also available to
the public at the web site maintained by the Commission at
<http://www.sec.gov>.
ANNEX A
CONFORMED COPY
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AGREEMENT AND PLAN OF MERGER
Dated as of April 11, 2000
Among
CONOPCO, INC.,
VERMONT ALL NATURAL EXPANSION COMPANY
And
BEN & JERRY'S HOMEMADE, INC.
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TABLE OF CONTENTS
Page
ARTICLE I
The Offer and the Merger
SECTION 1.01. The Offer ...................................................2
SECTION 1.02. Company Actions..............................................4
SECTION 1.03. The Merger...................................................5
SECTION 1.04. Closing ...................................................5
SECTION 1.05. Effective Time...............................................5
SECTION 1.06. Effects ...................................................6
SECTION 1.07. Articles of Incorporation and By-laws........................6
SECTION 1.08. Directors ...................................................6
SECTION 1.09. Officers ...................................................6
ARTICLE II
Effect on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 2.01. Effect on Capital Stock......................................6
SECTION 2.02. Exchange of Certificates.....................................8
ARTICLE III
Representations and Warranties of the Company
SECTION 3.01. Organization, Standing and Power............................10
SECTION 3.02. Company Subsidiaries; Equity Interests......................11
SECTION 3.03. Capital Structure...........................................11
SECTION 3.04. Authority; Execution and Delivery; Enforceability...........14
SECTION 3.05. No Conflicts; Consents......................................15
SECTION 3.06. SEC Documents; Undisclosed Liabilities......................16
SECTION 3.07. Information Supplied........................................17
SECTION 3.08. Absence of Certain Changes or Events........................18
SECTION 3.09. Taxes ..................................................20
SECTION 3.10. Absence of Changes in Benefit Plans.........................21
SECTION 3.11. ERISA Compliance; Excess Parachute Payments.................21
SECTION 3.12. Litigation..................................................24
SECTION 3.13. Compliance with Applicable Laws.............................24
SECTION 3.14. Environmental Matters.......................................24
SECTION 3.15. Contracts; Debt Instruments.................................26
SECTION 3.16. Intellectual Property.......................................26
SECTION 3.17. Labor Matters...............................................27
SECTION 3.18. Title to Properties.........................................27
SECTION 3.19. Equipment ..................................................28
SECTION 3.20. Suppliers ..................................................28
SECTION 3.21. Brokers; Schedule of Fees and Expenses......................28
SECTION 3.22. Opinion of Financial Advisor................................29
ARTICLE IV
Representations and Warranties of Conopco and Sub
SECTION 4.01. Organization, Standing and Power............................29
SECTION 4.02. Sub ..................................................29
SECTION 4.03. Authority; Execution and Delivery; Enforceability...........29
SECTION 4.04. Consents ..................................................30
SECTION 4.05. Information Supplied........................................30
SECTION 4.06. Brokers ..................................................31
SECTION 4.07. Conopco Plans...............................................31
ARTICLE V
Covenants Relating to Conduct of Business
SECTION 5.01. Conduct of Business.........................................31
SECTION 5.02. No Solicitation.............................................35
ARTICLE VI
Additional Agreements
SECTION 6.01. Preparation of Proxy Statement; Shareholders Meeting........38
SECTION 6.02. Access to Information; Confidentiality......................39
SECTION 6.03. Best Efforts; Notification..................................40
SECTION 6.04. Stock Options...............................................41
SECTION 6.05. Benefit Plans...............................................42
SECTION 6.06. Indemnification.............................................43
SECTION 6.07. Fees and Expenses; Liquidated Damages.......................44
SECTION 6.08. Public Announcements........................................45
SECTION 6.09. Transfer Taxes..............................................46
SECTION 6.10. Interim Directors...........................................46
SECTION 6.11. Company Capital Stock.......................................47
SECTION 6.12. Rights Agreements; Consequences if Rights Triggered.........47
SECTION 6.13. Shareholder Litigation......................................48
SECTION 6.14. Operations of the Surviving Corporation.....................48
SECTION 6.15. The Foundation..............................................52
SECTION 6.16. Certain Employee Matters....................................52
SECTION 6.17. Social Milestones...........................................52
SECTION 6.18. The Social Venture Fund.....................................53
ARTICLE VII
SECTION 7.01. Conditions to the Offer.....................................53
SECTION 7.02. Conditions to the Merger....................................56
ARTICLE VIII
Termination, Amendment and Waiver
SECTION 8.01. Termination.................................................57
SECTION 8.02. Effect of Termination.......................................59
SECTION 8.03. Amendment ..................................................59
SECTION 8.04. Extension; Waiver...........................................60
SECTION 8.05. Procedure for Termination, Amendment, Extension or Waiver...60
ARTICLE IX
General Provisions
SECTION 9.01. Nonsurvival of Representations and Warranties...............61
SECTION 9.02. Notices ..................................................61
SECTION 9.03. Definitions.................................................62
SECTION 9.04. Interpretation; Disclosure Letters..........................63
SECTION 9.05. Severability................................................63
SECTION 9.06. Counterparts................................................63
SECTION 9.07. Entire Agreement; No Third-Party Beneficiaries..............63
SECTION 9.08. GOVERNING LAW...............................................64
SECTION 9.09. Assignment..................................................64
SECTION 9.10. Enforcement.................................................65
SECTION 9.11. Separate Parties............................................65
EXHIBIT A Articles of Incorporation
EXHIBIT B Form of Delegation of Authority
AGREEMENT AND PLAN OF MERGER, dated as of
April 11, 2000, among CONOPCO, INC., a New York
corporation ("Conopco"), VERMONT ALL NATURAL
EXPANSION COMPANY, a Vermont corporation ("Sub"), and
BEN & JERRY'S HOMEMADE, INC., a Vermont corporation
(the "Company").
WHEREAS Conopco believes that it is uniquely positioned to
further the Company's three- part mission through a business combination
that leverages the strengths of both Conopco and the Company;
WHEREAS the respective Boards of Directors of Conopco, Sub
and the Company have approved the acquisition of the Company by Conopco on
the terms and subject to the conditions set forth in this Agreement;
WHEREAS, in furtherance of such acquisition, Conopco
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
all the outstanding shares of Class A Common Stock of the Company, par
value $.033 per share (the "Class A Common Stock"), including the
associated Class A Rights (as defined in Section 3.03), and all the
outstanding shares of Class B Common Stock of the Company, par value $.033
per share (the "Class B Common Stock", and together with the Class A Common
Stock, the "Company Common Stock"), including the associated Class B Rights
(as defined in Section 3.03), at a price per share of Company Common Stock
(including the associated Company Right (as defined in Section 3.03)) of
$43.60, net to the seller in cash, on the terms and subject to the
conditions set forth in this Agreement;
WHEREAS the respective Boards of Directors of Conopco, Sub
and the Company have approved the merger (the "Merger") of Sub into the
Company, or (at the election of Conopco) the Company into Sub, on the terms
and subject to the conditions set forth in this Agreement, whereby (a) each
issued share of Company Common Stock not owned by Conopco, Sub or the
Company, and (b) each share of Company Common Stock, not owned directly or
indirectly by Conopco or the Company, shall be converted into the right to
receive $43.60 in cash;
WHEREAS, immediately following the acceptance for payment of
shares of Company Common Stock pursuant to the Offer, the Company shall
cause the outstanding shares of the Company's $1.20 Class A Preferred
Stock, par value $1.00 per share (the "Company Preferred Stock" and,
together with the Company Common Stock, the "Company Capital Stock"), to be
redeemed;
WHEREAS simultaneously with the execution and delivery of
this Agreement Ben & Jerry's Homemade Holdings, Inc. and the Company are
granting an international license to Unilever N.V. and Unilever PLC
pursuant to a License Agreement (the "License Agreement");
WHEREAS simultaneously with the execution and delivery of
this Agreement the Company and Conopco are entering into a stock option
agreement (the "Stock Option Agreement" and, together with this Agreement
and the License Agreement, the "Transaction Agreements"), pursuant to which
the Company is granting Conopco an option to purchase shares of Class A
Common Stock on the terms and subject to the conditions set forth therein;
and
WHEREAS Conopco, 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, the parties hereto agree as follows:
ARTICLE I
The Offer and the Merger
SECTION 1.01. The Offer. (a) Subject to the conditions of
this Agreement, as promptly as practicable but in no event later than five
business days after the date of this Agreement, Sub shall, and Conopco
shall cause Sub to, commence the Offer within the meaning of the applicable
rules and regulations of the Securities and Exchange Commission (the
"SEC"). The obligation of Sub to, and of Conopco to cause Sub to, commence
the Offer and accept for payment, and pay for, any shares of Company Common
Stock tendered pursuant to the Offer are subject to the conditions set
forth in Section 7.01. The initial expiration date of the Offer shall be
the 20th business day following the commencement of the Offer (determined
using Rule 14d-2 of the SEC). Sub expressly reserves the right to modify
the terms of the Offer or waive any condition to the Offer, except that,
without the consent of the Company, Sub shall not (i) reduce the number of
shares of Company Common Stock subject to the Offer, (ii) reduce the price
per share of Company Common Stock to be paid pursuant to the Offer, (iii)
reduce or waive the Minimum Tender Condition (as defined in Section 7.01),
(iv) modify, in any manner adverse to the holders of Company Common Stock,
or add to, the conditions set forth in Section 7.01, (v) extend the Offer
or (vi) change the form of consideration payable in the Offer.
Notwithstanding the foregoing, Sub may, without the consent of the Company,
(i) extend the Offer in increments of not more than five business days
each, if at the scheduled expiration date of the Offer any of the
conditions to Sub's obligation to purchase shares of Company Common Stock
are not satisfied, 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 SEC or the staff thereof
applicable to the Offer and (iii) make available a subsequent offering
period (within the meaning of Rule 14d-11 of the SEC). Without limiting the
right of Sub to extend the Offer, in the event that any condition set forth
in paragraph (a) of Section 7.01 is not satisfied or waived at the
scheduled expiration date of the Offer, at the request of the Company Sub
shall, and Conopco shall cause Sub to, extend the expiration date of the
Offer in increments of five business days each until the earliest to occur
of (w) the satisfaction or waiver of such condition, (x) Conopco reasonably
determines that such condition to the Offer is not capable of being
satisfied on or prior to September 30, 2000, (y) the termination of this
Agreement in accordance with its terms and (z) September 30, 2000. In
addition, on the terms and subject to the conditions of the Offer and this
Agreement, Sub shall pay for all shares of Company Common Stock validly
tendered and not withdrawn pursuant to the Offer that Sub becomes obligated
to purchase pursuant to the Offer as soon as practicable after the
expiration of the Offer.
(b) On the date of commencement of the Offer, Conopco and
Sub shall file with the SEC a Tender Offer Statement on Schedule TO with
respect to the Offer, which shall contain an offer to purchase and a
related letter of transmittal and summary advertisement (such Schedule TO
and the documents included therein pursuant to which the Offer will be
made, together with any supplements or amendments thereto, the "Offer
Documents"). Each of Conopco, Sub and the Company shall promptly 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 each of Conopco and Sub shall take all steps
necessary to amend or supplement the Offer Documents and to cause the Offer
Documents as so amended or supplemented to be filed with the SEC and to be
disseminated to the Company's shareholders, in each case as and to the
extent required by applicable Federal securities laws. Conopco and Sub
shall provide the Company and its counsel in writing with any comments
Conopco, 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.
SECTION 1.02. Company Actions. (a) Subject to the right of
the Board of Directors of the Company (the "Company Board", which term
shall mean, after the Effective Time (as defined in Section 1.05), the
board of directors of the Surviving Corporation (as defined in Section
1.03)) to take action permitted by Section 5.02(b), the Company hereby
approves of and consents to the Offer, the Merger and the other
transactions contemplated by the Transaction Agreements (collectively, the
"Transactions").
(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, including an appropriate
information statement (the "Information Statement") under Rule 14f-1 (such
Schedule 14D-9 and Information Statement, as amended from time to time, the
"Schedule 14D-9") and shall mail the Schedule 14D-9 to the holders of Class
A Common Stock. The Schedule 14D-9 shall contain the recommendation
described in Section 3.04(b), unless such recommendation has been withdrawn
or modified in accordance with Section 5.02(b). Each of the Company,
Conopco and Sub shall promptly 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
shall 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 the Company's shareholders, in each case
as and to the extent required by applicable Federal securities laws. The
Company shall provide Conopco and its counsel in writing with 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, the Company shall cause
its transfer agent to furnish Sub promptly with mailing labels containing
the names and addresses of the record holders of Company Common Stock as of
a recent date and of those persons becoming record holders of Company
Common Stock subsequent to such date, together with copies of all lists of
shareholders, security position listings and computer files and all other
information in the Company's possession or control regarding the beneficial
owners of Company Common Stock, and shall furnish to Sub such information
and assistance (including updated lists of shareholders, security position
listings and computer files) as Conopco may reasonably request in
communicating the Offer to the Company's shareholders. Subject to the
requirements of applicable Law (as defined in Section 3.05), and except for
such steps as are necessary to disseminate the Offer Documents and any
other documents necessary to consummate the Transactions, Conopco and Sub
shall hold in confidence the information contained in any such labels,
listings and files, shall use such information only in connection with the
Offer and the Merger and, if this Agreement shall be terminated, shall,
upon request, deliver to the Company all copies of such information then in
their possession.
SECTION 1.03. The Merger. On the terms and subject to the
conditions set forth in this Agreement, and in accordance with the Vermont
Business Corporation Act (the "VBCA"), Sub shall be merged with and into
the Company at the Effective Time (as defined in Section 1.05). At the
Effective Time, the separate corporate existence of Sub shall cease and the
Company shall continue as the surviving corporation (the "Surviving
Corporation"). At the election of Conopco, any direct or indirect wholly
owned subsidiary of Conopco may be substituted for Sub as a constituent
corporation in the Merger. In such event, the parties shall execute an
appropriate amendment to this Agreement in order to reflect the foregoing.
SECTION 1.04. Closing. The closing (the "Closing") of the
Merger shall take place at the offices of Cravath, Swaine & Moore, 825
Eighth Avenue, New York, New York 10019 at 10:00 a.m. on the second
business day following the satisfaction (or, to the extent permitted by
Law, waiver by all parties) of the conditions set forth in Section 7.02, or
at such other place, time and date as shall be agreed in writing between
Conopco and the Company. The date on which the Closing occurs is referred
to in this Agreement as the "Closing Date".
SECTION 1.05. Effective Time. Prior to the Closing, the
Company shall prepare, and on the Closing Date or as soon as practicable
thereafter the Surviving Corporation shall file with the Secretary of State
of the State of Vermont, articles of merger or other appropriate documents
(in any such case, the "Articles of Merger") executed in accordance with
the relevant provisions of the VBCA and shall make all other filings or
recordings required under the VBCA. The Merger shall become effective at
such time as the Articles of Merger are duly filed with such Secretary of
State, or at such other later time as Conopco and the Company shall agree
and specify in the Articles of Merger (the time the Merger becomes
effective being the "Effective Time").
SECTION 1.06. Effects. The Merger shall have the effects set
forth in Section 11.06 of the VBCA.
SECTION 1.07. Articles of Incorporation and By-laws. (a) The
Articles of Incorporation of the Surviving Corporation shall be amended at
the Effective Time to read in the form of Exhibit A and, as so amended,
such Articles of Incorporation shall be the Articles 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.
SECTION 1.08. Directors. The directors of the Company
immediately prior to the Effective Time shall be the directors of the
Surviving Corporation who elect to remain on or rejoin the Company Board,
together with such other individuals appointed to the Company Board, all in
accordance with the provisions of Section 6.14(a).
SECTION 1.09. 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 or appointed and
qualified, as the case may be.
ARTICLE II
Effect on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 2.01. Effect on Capital Stock. At the Effective
Time, by virtue of the Merger and without any action on the part of the
holder of any shares of Company Common Stock 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 ten thousand
fully paid and nonassessable shares of common stock, par value $0.01 per
share, of the Surviving Corporation.
(b) Cancelation of Treasury Stock and Conopco- Owned Stock.
Each share of Company Common Stock that is owned by the Company, Conopco or
Sub shall no longer be outstanding and shall automatically be canceled and
retired and shall cease to exist, and no consideration shall be delivered
or deliverable in exchange therefor. Each share of Company Common Stock
that is owned by any subsidiary of the Company or Conopco (other than Sub)
shall automatically be converted into one fully paid and nonassessable
share of common stock, par value $0.01 per share, of the Surviving
Corporation.
(c) Conversion of Company Common Stock. (1) Subject to
Sections 2.01(b) and 2.01(d), each issued and outstanding share of Company
Common Stock shall be converted into the right to receive $43.60 in cash.
(2) The cash payable upon the conversion of shares of
Company Common Stock pursuant to this Section 2.01(c) is referred to
collectively as the "Merger Consideration". As of the Effective Time, all
such shares of Company Common Stock 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 of Company Common
Stock shall cease to have any rights with respect thereto, except the right
to receive Merger Consideration upon surrender of such certificate in
accordance with Section 2.02, without interest.
(d) Dissenters Rights. Notwithstanding anything in this
Agreement to the contrary, shares ("Dissenters Shares") of Company Common
Stock that are outstanding immediately prior to the Effective Time and that
are held by any person who is entitled to demand and properly demands
payment of the fair value of such Dissenters Shares pursuant to, and who
complies in all respects with, Chapter 13 of the VBCA ("Chapter 13") shall
not be converted into Merger Consideration as provided in Section 2.01(c),
but rather the holders of Dissenters Shares shall be entitled to payment of
the fair value of such Dissenters Shares in accordance with Chapter 13 of
the VBCA; provided, however, that if any such holder shall fail to perfect
or otherwise lose such holder's right to receive payment of fair value
under Chapter 13, then the right of such holder to be paid the fair value
of such holder's Dissenters Shares shall cease and such Dissenters Shares
shall be deemed to have been converted as of the Effective Time into, and
to have become exchangeable solely for the right to receive, Merger
Consideration as provided in Section 2.01(c). The Company shall serve
prompt notice to Conopco of any demands received by the Company for
appraisal of any shares of Company Common Stock. Prior to the Effective
Time, the Company shall not, without the prior written consent of Conopco,
participate in negotiations or proceedings with respect to such demands or
make any payment with respect to, or settle or offer to settle, any such
demands, or agree to do any of the foregoing.
SECTION 2.02. Exchange of Certificates. (a) Paying Agent.
Prior to the Effective Time, Conopco and the Company shall select a bank or
trust company to act as paying agent (the "Paying Agent") for the payment
of Merger Consideration upon surrender of certificates representing Company
Common Stock. Concurrently with the Effective Time, the Company shall
provide to the Paying Agent the amount of cash required to pay the
aggregate Merger Consideration (such cash being hereinafter referred to as
the "Exchange Fund").
(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 (the "Certificates") that
immediately prior to the Effective Time represented outstanding shares of
Company Common Stock whose shares were converted into the right to receive
Merger Consideration pursuant to Section 2.01, (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 such form and have such
other provisions as Conopco and the Company may reasonably specify) and
(ii) instructions for use in effecting the surrender of the Certificates in
exchange for 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 Conopco, 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 of Company
Common Stock theretofore represented by such Certificate shall have been
converted pursuant to Section 2.01, and the Certificate so surrendered
shall forthwith be canceled. In the event of a transfer of ownership of
Company Common Stock that is not registered in the 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 Conopco that
such tax has been paid or is not applicable. Until surrendered as
contemplated by this Section 2.02, 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
of Company Common Stock theretofore represented by such Certificate have
been converted pursuant to Section 2.01. No interest shall be paid or shall
accrue on the cash payable upon surrender of any Certificate.
(c) No Further Ownership Rights in Company Common Stock. The
Merger Consideration paid in accordance with the terms of this Article II
upon conversion of any shares of Company Common Stock shall be deemed to
have been paid in full satisfaction of all rights pertaining to such shares
of Company Common Stock, subject, however, to the Surviving Corporation's
obligation to pay any dividends or make any other distributions with a
record date prior to the Effective Time that may have been declared or made
by the Company on such shares of Company Common Stock in accordance with
the terms of this Agreement or prior to the date of this Agreement and
which remain unpaid at the Effective Time, and after the Effective Time
there shall be no further registration of transfers on the stock transfer
books of the Surviving Corporation of shares of Company Common Stock that
were outstanding immediately prior to the Effective Time. If, after the
Effective Time, any certificates formerly representing shares of Company
Common Stock are presented to the Surviving Corporation or the Paying Agent
for any reason, they shall be canceled and exchanged as provided in this
Article II.
(d) Termination of Exchange Fund. Any portion of the
Exchange Fund that remains undistributed to the holders of Company Common
Stock for six months after the Effective Time shall be delivered to
Conopco, upon demand, subject to compliance with any applicable abandoned
property, escheat or similar Law.
(e) No Liability. To the extent permitted by applicable Law,
none of Sub, Conopco, the Company or the Paying Agent shall be liable to
any person in respect of any cash from the Exchange Fund delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar Law. If any Certificate has not been surrendered prior to five
years after the Effective Time (or immediately prior to such earlier date
on which Merger Consideration in respect of such Certificate would
otherwise escheat to or become the property of any Governmental Entity (as
defined in Section 3.05)), any such shares, cash, dividends or
distributions 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 interest of any person previously entitled
thereto.
(f) Investment of Exchange Fund. The Paying Agent shall
invest any cash included in the Exchange Fund, as directed by Conopco, on a
daily basis. Any interest and other income resulting from such investments
shall be paid to Conopco.
(g) Withholding Rights. The Surviving Corporation shall be
entitled to deduct and withhold from the consideration otherwise payable to
any holder of Company Common Stock pursuant to this Agreement such amounts
as may be required to be deducted and withheld with respect to the making
of such payment under the Code (as defined in Section 3.11), or under any
provision of state, local or foreign tax Law.
ARTICLE III
Representations and Warranties of the Company
The Company represents and warrants to Conopco and Sub as
follows:
SECTION 3.01. Organization, Standing and Power. Each of the
Company and each of its subsidiaries (the "Company Subsidiaries") is duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized and has full corporate power and
authority and possesses all governmental franchises, licenses, permits,
authorizations and approvals necessary to enable it to own, lease or
otherwise hold its properties and assets and to conduct its businesses as
presently conducted. The Company and each Company Subsidiary is duly
qualified to do business in each jurisdiction where the nature of its
business or their ownership or leasing of its properties make such
qualification necessary or the failure to so qualify has had or would
reasonably be expected to have a material adverse effect on the Company, a
material adverse effect on the ability of the Company to perform its
obligations under the Transaction Agreements or a material adverse effect
on the ability of the Company to consummate the Offer, the Merger and the
other Transactions (a "Company Material Adverse Effect"). The Company has
delivered to Conopco true and complete copies of the Articles of
Incorporation of the Company, as amended to the date of this Agreement (as
so amended, the "Company Charter"), and the By-laws of the Company, as
amended to the date of this Agreement (as so amended, the "Company
By-laws"), and the comparable charter and organizational documents of each
Company Subsidiary, in each case as amended through the date of this
Agreement.
SECTION 3.02. Company Subsidiaries; Equity Interests. (a)
The letter, dated as of the date of this Agreement, from the Company to
Conopco and Sub (the "Company Disclosure Letter") lists each Company
Subsidiary and its jurisdiction of organization. All the outstanding shares
of capital stock of each Company Subsidiary have been validly issued and
are fully paid and nonassessable and, except as set forth in the Company
Disclosure Letter, are owned by the Company, by another Company Subsidiary
or by the Company and another Company Subsidiary, free and clear of all
pledges, liens, charges, mortgages, encumbrances and security interests of
any kind or nature whatsoever (collectively, "Liens").
(b) Except for its interests in the Company Subsidiaries and
except for the ownership interests set forth in the Company Disclosure
Letter, the Company does not own, directly or indirectly, any capital
stock, membership interest, partnership interest, joint venture interest or
other equity interest in any person.
SECTION 3.03. Capital Structure. (a) The authorized capital
stock of the Company consists of 20,000,000 shares of Class A Common Stock
and 3,000,000 shares of Class B Common Stock, as well as 900 shares of
Company Preferred Stock. The Board of Directors of the Company has duly
authorized the conversion of each issued and outstanding share of Class B
Common Stock into one share of Class A Common Stock and has authorized the
mailing of a notice of conversion pursuant to the Company Charter, upon
receipt of the notice from Conopco contemplated by Section 6.11(b), to all
the holders of Class B Common Stock. At the close of business on March 31,
2000, (i) 6,130,582 shares of Class A Common Stock, 793,729 shares of Class
B Common Stock and 900 shares of Company Preferred Stock were issued and
outstanding, (ii) 644,606 shares of Class A Common Stock and 1,092 shares
of Class B Common Stock were held by the Company in its treasury, (iii)
1,298,627 shares of Class A Common Stock were subject to outstanding
Company Stock Options (as defined below) and 160,185 additional shares of
Class A Common Stock were reserved for issuance pursuant to the Company
Stock Plans (as defined below) (assuming for such purpose that, with
respect to the offering period in effect on the date hereof under the
Company's 1986 Employee Stock Purchase Plan (the "1986 ESPP"), (A) all
current participants continue to contribute at current levels and (B) the
purchase price of the shares purchasable in respect of such offering period
is determined to be 85% of the fair market value of shares of Class A
Common Stock on the first day of such offering period, and giving effect to
such offering period), (iv)(A) 7,400,000 shares of Class A Common Stock
were reserved for issuance in connection with the rights (the "Class A
Rights") issued pursuant to the Rights Agreement dated as of July 30, 1998,
as amended from time to time (the "Class A Rights Agreement"), between the
Company and American Stock Transfer & Trust Company, and (B) 900,000 shares
of Class B Common Stock were reserved for issuance in connection with the
rights (the "Class B Rights" and, together with the Class A Rights, the
"Company Rights") issued pursuant to the Rights Agreement dated as of July
30, 1998, as amended from time to time (together with the Class A Rights
Agreement, the "Company Rights Agreements"), between the Company and
American Stock Transfer & Trust Company and (v) 125,000 shares of Class A
Common Stock reserved for issuance under the warrants held by Gordian
Group, L.P. (the "Gordian Group Warrants"). Except as set forth above and
except for the shares of Class A Common Stock reserved for issuance upon
either (i) the exercise of the option granted to Conopco pursuant to the
Stock Option Agreement or (ii) the conversion of shares of Class B Common
Stock, at the close of business on March 31, 2000, no shares of capital
stock or other voting securities of the Company were issued, reserved for
issuance or outstanding. There are no outstanding Company SARs (as defined
below) that were not granted in tandem with a related Company Stock Option.
All outstanding shares of Company Capital Stock are, and all such shares
that may be issued prior to the Effective Time (including shares of Company
Capital Stock that shall be deemed to be shares of Class A Common Stock
upon the automatic conversion of shares of Class B Common Stock) will be
when issued, duly authorized, validly issued, fully paid and nonassessable
and not subject to or issued in violation of any purchase option, call
option, right of first refusal, preemptive right, subscription right or any
similar right under any provision of the VBCA, the Company Charter, the
Company By-laws or any Contract (as defined in Section 3.05) to which the
Company is a party or otherwise bound. There are not any 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 holders of Company Common Stock may vote ("Voting
Company Debt"). Except as set forth above or in Section 3.03(b), as of the
date of this Agreement, there are not any options, warrants, rights,
convertible or exchangeable securities, "phantom" stock rights, stock
appreciation rights, stock-based performance units, commitments, Contracts,
arrangements or undertakings of any kind to which the Company or any
Company Subsidiary is a party or by which any of them is bound (i)
obligating the Company or any Company Subsidiary to issue, deliver or sell,
or cause to be issued, delivered or sold, additional shares of capital
stock or other equity interests in, or any security convertible or
exercisable for or exchangeable into any capital stock of or other equity
interest in, the Company or any Company Subsidiary or any Voting Company
Debt, (ii) obligating the Company or any Company Subsidiary to issue,
grant, extend or enter into any such option, warrant, call, right,
security, commitment, Contract, arrangement or undertaking or (iii) that
give any person the right to receive any economic benefit or right similar
to or derived from the economic benefits and rights accruing to holders of
Company Capital Stock. Except as set forth in Section 6.11, as of the date
of this Agreement, there are not any outstanding contractual obligations of
the Company or any Company Subsidiary to repurchase, redeem or otherwise
acquire any shares of capital stock of the Company or any Company
Subsidiary. The Company has delivered to Conopco complete and correct
copies of the Company Rights Agreements, as amended to the date of this
Agreement.
(b) The authorized capital stock of The American Company for
Ice Cream Manufacturing E.I. Ltd. ("ACICM") consists of 18,000 Ordinary
Shares (the "Subsidiary Ordinary Shares") and 18,000 Preferred Shares (the
"Subsidiary Preferred Shares"), each with a nominal value of 1.00 NIS. At
the close of business on March 31, 2000, 12,000 Subsidiary Ordinary Shares
and 18,000 Subsidiary Preferred Shares were issued and outstanding, and
3,333 Subsidiary Ordinary Shares reserved for issuance under options and
1,200 Subsidiary Ordinary Shares were subject to outstanding options to
purchase Subsidiary Ordinary Shares and Subsidiary Preferred Shares,
respectively, and no other Subsidiary Ordinary Shares or Subsidiary
Preferred Shares were issued, outstanding or reserved for issuance. As of
such date, Ben & Jerry's Homemade, B.V., a wholly owned subsidiary of the
Company, owned 18,000 Subsidiary Preferred Shares.
(c) For purposes of this Agreement:
"Company Stock Option" means any option to purchase Company
Common Stock granted under any Company Stock Plan.
"Company SAR" means any stock appreciation right or other
award linked to the price of Company Common Stock and granted under
any Company Stock Plan.
"Company Stock Plans" means the Company's 1995 Equity
Incentive Plan, 1999 Equity Incentive Plan, 1985 Stock Option Plan,
1986 Employee Stock Purchase Plan, 1992 Non-Employee Directors'
Restricted Stock Plan and 1995 Non-Employee Directors' Plan for
Stock in Lieu of Director's Cash Retainer, all separate stock
option agreements under which options were issued in 1999 (the form
of which is set forth in the Company Disclosure Letter) and the
provisions of employment agreements for officers (disclosed in the
Company Disclosure Letter) that include certain terms of options
granted under the Company's 1985 Stock Option Plan and 1995 Equity
Incentive Plan.
SECTION 3.04. Authority; Execution and Delivery;
Enforceability. (a) The Company has all requisite corporate power and
authority to execute and deliver each Transaction Agreement to which it is
a party and, subject, in the case of the Merger, to receipt of the Company
Shareholder Approval (as defined in Section 3.04(c)), to consummate the
Transactions. The execution and delivery by the Company of the Transaction
Agreements to which it is a party and the consummation by the Company of
the Transactions have been duly authorized by all necessary corporate
action on the part of the Company, subject, in the case of the Merger, to
receipt of the Company Shareholder Approval. The Company has duly executed
and delivered each Transaction Agreement to which it is a party, and each
Transaction Agreement to which it is a party constitutes its legal, valid
and binding obligation, enforceable against it in accordance with its
terms, subject, in the case of the Merger, to receipt of the Company
Shareholder Approval.
(b) The Company Board, at a meeting duly called and held,
duly adopted resolutions (i) adopting this Agreement, (ii) approving the
other Transaction Agreements, the Offer, the Merger and the other
Transactions, (iii) determining that the terms of the Offer and the Merger
are fair to and in the best interests of the shareholders of the Company,
(iv) recommending that the holders of Company Common Stock accept the Offer
and tender their shares of Company Common Stock pursuant to the Offer and
(v) recommending that the Company's shareholders approve this Agreement. No
state takeover statute or similar statute or regulation applies or purports
to apply to the Company with respect to this Agreement and the other
Transaction Agreements, the Offer, the Merger or any other Transaction.
(c) The only vote of holders of any class or series of
Company Capital Stock necessary to approve this Agreement and the Merger is
the approval, by person or proxy, of this Agreement by the holders of a
majority of the outstanding shares of Class A Common Stock (the "Company
Shareholder Approval"). The affirmative vote of the holders of Company
Capital Stock, or any of them, is not necessary to approve any Transaction
Agreement other than this Agreement or consummate the Offer or any
Transaction other than the Merger.
SECTION 3.05. No Conflicts; Consents. (a) Except as set
forth in the Company Disclosure Letter, the execution and delivery by the
Company of each Transaction Agreement to which it is a party do not, and
the consummation of the Offer, the Merger and the other Transactions and
compliance with the terms hereof and thereof will not, conflict with, or
result in any violation of or default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination, cancelation
or acceleration of any obligation or to loss of a material benefit under,
or to increased, additional, accelerated or guaranteed rights or
entitlements of any person under, or result in the creation of any Lien
upon any of the properties or assets of the Company or any Company
Subsidiary under, any provision of (i) the Company Charter, the Company By-
laws or the comparable charter or organizational documents of any Company
Subsidiary, (ii) any contract, lease, license, indenture, note, bond,
agreement, permit, concession, franchise or other instrument (a "Contract")
to which the Company or any Company Subsidiary is a party or by which any
of their respective properties or assets is bound or (iii) subject to the
filings and other matters referred to in Section 3.05(b), any judgment,
order or decree ("Judgment") or statute, law (including common law),
ordinance, rule or regulation ("Law") applicable to the Company or any
Company Subsidiary or their respective properties or assets, other than, in
the case of clause (iii) above, any such items that, individually or in the
aggregate, have not had and would not reasonably be expected to have a
Company Material Adverse Effect or result in a liability to the Company and
the Company Subsidiaries, taken as a whole, in excess of $1,000,000.
(b) No consent, approval, license, permit, order or
authorization ("Consent") of, or registration, declaration or filing with,
or permit from, any Federal, state, local or foreign government or any
court of competent jurisdiction, administrative agency or commission or
other governmental authority or instrumentality, domestic or foreign (a
"Governmental Entity") is required to be obtained or made by or with
respect to the Company or any Company Subsidiary in connection with the
execution, delivery and performance of any Transaction Agreement to which
it is a party or the consummation of the Transactions, other than (i)
compliance with and filings under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), (ii) the filing with
the SEC of (A) the Schedule 14D-9, (B) a proxy or information statement
relating to the approval of this Agreement by the Company's shareholders
(the "Proxy Statement"), (C) the Information Statement and (D) such reports
under Section 13 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") as may be required in connection with this Agreement and
the other Transaction Agreements, the Offer, the Merger and the other
Transactions, (iii) the filing of the Articles of Merger with the Secretary
of State of the State of Vermont and appropriate documents with the
relevant authorities of the other jurisdictions in which the Company is
qualified to do business, (iv) compliance with and such filings as may be
required under applicable Environmental Laws (as defined in Section 3.14),
(v) such filings as may be required in connection with the Taxes described
in Section 6.09, (vi) as may be required under any state securities laws
and (vii) such other items as are set forth in the Company Disclosure
Letter.
(c) The Company Board has taken all action necessary to (i)
render the Company Rights inapplicable to this Agreement and the other
Transaction Agreements, the Offer, the Merger and the other Transactions
and (ii) ensure that (A) neither Conopco nor Sub nor any of its affiliates
or associates is or will become an "Acquiring Person" (as defined in each
of the Company Rights Agreements) by reason of any Transaction Agreement,
the Offer, the Merger or any other Transaction, and (B) a "Distribution
Date" (as defined in each of the Company Rights Agreements) shall not occur
by reason of any Transaction Agreement, the Offer, the Merger or any other
Transaction.
SECTION 3.06. SEC Documents; Undisclosed Liabilities. The
Company has filed all reports, schedules, forms, statements and other
documents required to be filed by the Company with the SEC since December
28, 1997 (the "Company SEC Documents"). As of its respective date, each
Company SEC Document complied in all material respects with the
requirements of the Exchange Act or the Securities Act of 1933, as amended
(the "Securities Act"), as the case may be, and the rules and regulations
of the SEC promulgated thereunder applicable to such Company SEC Document,
and 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. Except to the extent that information
contained in any Company SEC Document has been revised or superseded by a
later filed Company SEC Document, none of the Company SEC Documents
contains any untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading. The consolidated financial statements of the Company
included in the Company SEC Documents comply as to form in all material
respects with applicable accounting requirements and the published rules
and regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles ("GAAP") (except,
in the case of unaudited statements, as permitted by Form 10-Q of the SEC)
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto) and fairly present the consolidated
financial position of the Company and its consolidated subsidiaries as of
the dates thereof and the consolidated results of their operations and cash
flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments). Except as set forth on
the face of, or in the notes to, the most recent balance sheet of the
Company included in the Filed Company SEC Documents (as defined in Section
3.08), neither the Company nor any Company Subsidiary had, as of such date,
any liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) required by GAAP to be set forth on a consolidated
balance sheet or in the notes thereto.
SECTION 3.07. Information Supplied. None of the information
supplied or to be supplied by the Company for inclusion or incorporation by
reference in (i) the Offer Documents, the Schedule 14D-9 or the Information
Statement will, at the time such document is filed with the SEC, at any
time it is amended or supplemented or at the time it is first published,
sent or given to the Company's shareholders, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, or (ii)
the Proxy Statement will, at the date it is first mailed to the Company's
shareholders or at the time of the Company Shareholders Meeting (as defined
in Section 6.01), 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 Conopco or Sub in writing
specifically for inclusion or incorporation by reference therein.
SECTION 3.08. Absence of Certain Changes or Events. Except
as disclosed in the Company SEC Documents filed and publicly available on
or prior to April 7, 2000 (the "Filed Company SEC Documents") or in the
Company Disclosure Letter, from the date of the most recent audited
financial statements included in the Filed Company SEC Documents to the
date of this Agreement, the Company has conducted its business only in the
ordinary course consistent with recent past practice, and during such
period there has not been:
(i) any event, change, effect or development that,
individually or in the aggregate, has had or would reasonably be
expected to have a Company Material Adverse Effect;
(ii) any declaration, setting aside or payment of any
dividend or other distribution (whether in cash, stock or property)
with respect to any Company Capital Stock or any repurchase for
value by the Company of any Company Capital Stock;
(iii) any split, combination or reclassification of any
Company 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 Company Capital Stock, other than the
authorization by the Company Board to convert all the outstanding
shares of Class B Common Stock into shares of Class A Common Stock
and to redeem the Company Preferred Stock;
(iv) (A) any granting by the Company or any Company
Subsidiary to any director or officer of the Company or any Company
Subsidiary of any increase in compensation, except in the ordinary
course of business consistent with prior practice or as was
required under employment or consulting agreements in effect as of
the date of the most recent audited financial statements included
in the Filed Company SEC Documents, (B) any granting by the Company
or any Company Subsidiary to any such director or officer of any
increase in severance or termination pay, except as was required
under any employment, consulting, severance or termination
agreements in effect as of the date of the most recent audited
financial statements included in the Filed Company SEC Documents,
or (C) any entry by the Company or any Company Subsidiary into, or
any amendment of, any employment, consulting, deferred
compensation, indemnification, severance or termination agreement
with any such director or officer;
(v) any change in accounting methods, principles or
practices by the Company or any Company Subsidiary materially
affecting the consolidated assets, liabilities or results of
operations of the Company, except insofar as may have been required
by a change in GAAP;
(vi) any material elections with respect to Taxes by the
Company or any Company Subsidiary or settlement or compromise by
the Company or any Company Subsidiary of any material Tax liability
or refund;
(vii) (A) any acquisition by the Company or any Company
Subsidiary 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 (B) any acquisition by the
Company or any Company Subsidiary of any assets (other than
inventory) that are material, individually or in the aggregate, to
the Company and the Company Subsidiaries;
(viii) any sale, lease, license, encumbrance or other
disposition of assets of the Company or any Company Subsidiary in
excess of $500,000 in the aggregate, other than sales of products
to customers and immaterial dispositions of personal property and
other than any encumbrance created in connection with financing the
purchase of equipment and other property, in each case in the
ordinary course of business consistent with past practice;
(ix) any incurrence of capital expenditures by the Company
or any Company Subsidiary in excess of $500,000 individually, or
in excess of $1 million in the aggregate; or
(x) any other transaction, contract or commitment of the
Company or any Company Subsidiary other than in the ordinary course
of business, consistent with past practice and on an arms' length
basis.
SECTION 3.09. Taxes. (a) Except as disclosed in the Company
Disclosure Letter, each of the Company and each Company Subsidiary has
timely filed, or has caused to be timely filed on its behalf, all Tax
Returns required to be filed by it, and all such Tax Returns are true,
complete and accurate. All Taxes shown to be due on such Tax Returns, or
otherwise owed, have been timely paid.
(b) Except as disclosed in the Company Disclosure Letter,
the most recent financial statements contained in the Filed Company SEC
Documents reflect an adequate reserve (in addition to any reserve for
deferred Taxes established to reflect timing differences between book and
tax income) for all Taxes payable by the Company and the Company
Subsidiaries for all Taxable periods and portions thereof through the date
of such financial statements. No deficiency with respect to any Taxes has
been proposed, asserted or assessed against the Company or any Company
Subsidiary, and no requests for waivers of the time to assess any such
Taxes are pending.
(c) Except as disclosed in the Company Disclosure Letter,
the Federal income Tax Returns of the Company and each Company Subsidiary
consolidated in such Returns have been examined by and settled with the
United States Internal Revenue Service for all years through 1997. All
material assessments for Taxes due with respect to such completed and
settled examinations or any concluded litigation have been fully paid.
(d) Except as disclosed in the Company Disclosure Letter,
there are no material Liens for Taxes (other than for current Taxes not yet
due and payable) on the assets of the Company or any Company Subsidiary.
Neither the Company nor any Company Subsidiary is bound by any agreement
with respect to Taxes.
(e) Except as disclosed in the Company Disclosure Letter, no
claim has been made in the past five years by any authority in a
jurisdiction within which the Company or any Company Subsidiary does not
file Tax Returns that it is, or may be, subject to taxation by that
jurisdiction.
(f) For purposes of this Agreement:
"Taxes" includes all forms of taxation, whenever created or
imposed, and whether of the United States or elsewhere, and whether imposed
by a local, municipal, governmental, state, foreign, Federal or other
Governmental Entity, or in connection with any agreement with respect to
Taxes, including all interest, penalties and additions imposed with respect
to such amounts.
"Tax Return" means all Federal, state, local, provincial and
foreign Tax returns, declarations, claims for refunds, statements, reports,
schedules, forms and information returns and any amended Tax return
relating to Taxes.
SECTION 3.10. Absence of Changes in Benefit Plans. Except as
disclosed in the Company Disclosure Letter, from the date of the most
recent audited financial statements included in the Filed Company SEC
Documents to the date of this Agreement, there has not been any adoption or
amendment in any material respect by the Company or any Company Subsidiary
of any collective bargaining agreement or any bonus, pension, profit
sharing, deferred compensation, incentive compensation, stock ownership,
stock purchase, stock option, phantom stock, retirement, thrift, savings,
stock bonus, restricted stock, cafeteria, paid time off, perquisite, fringe
benefit, vacation, severance, disability, death benefit, hospitalization,
medical or other plan, arrangement or understanding (whether or not legally
binding) maintained, sponsored or funded, in whole or in part, by the
Company or any Company Subsidiary providing benefits to any current or
former employee, consultant, officer or director of the Company or any
Company Subsidiary (collectively, "Company Benefit Plans"). Except as
disclosed in the Filed Company SEC Documents or in the Company Disclosure
Letter, as of the date of this Agreement there are not any consulting
arrangements or agreements involving payments by the Company of more that
$50,000 per year or any employment, indemnification, severance or
termination agreements or arrangements between the Company or any Company
Subsidiary and any current or former employee, consultant, officer or
director of the Company or any Company Subsidiary (collectively, "Company
Benefit Agreements").
SECTION 3.11. ERISA Compliance; Excess Parachute Payments.
(a) The Company Disclosure Letter contains a list and brief description 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 "Company Pension Plans"), "employee
welfare benefit plans" (as defined in Section 3(1) of ERISA) and all other
Company Benefit Plans and Company Benefit Agreements maintained, or
contributed to, by the Company or any Company Subsidiary or to which the
Company or any Company Subsidiary is a party, for the benefit of any
current or former employees, consultants, officers or directors of the
Company or any Company Subsidiary. The Company has delivered to Conopco
true, complete and correct copies of (i) each Company Benefit Plan and
Company Benefit Agreement (or, in the case of any unwritten Company Benefit
Plan or Company Benefit Agreement, a description thereof), (ii) the most
recent annual report on Form 5500 filed with the Internal Revenue Service
with respect to each Company Benefit Plan (if any such report was
required), (iii) the most recent summary plan description for each Company
Benefit Plan for which such summary plan description is required and (iv)
each trust agreement and group annuity contract relating to any Company
Benefit Plan.
(b) Except as disclosed in the Company Disclosure Letter,
all Company Pension Plans that are intended to be qualified under Section
401(a) of the Internal Revenue Code of 1986, as amended (the "Code"), have
received favorable determination letters from the Internal Revenue Service
with respect to "TRA" (as defined in Section 1 of Rev. Proc. 93-39), to the
effect that such Company Pension Plans are qualified and exempt from
Federal income taxes under Sections 401(a) and 501(a), respectively, of the
Code, and no such determination letter has been revoked nor, to the
knowledge of the Company, has revocation been threatened, nor has any such
Company Pension Plan been amended since the date of its most recent
determination letter or application therefor in any respect that would
adversely affect its qualification or materially increase its costs. All
Company Benefit Plans have been operated in all material respects in
accordance with their terms and in substantial compliance with all
applicable laws, including ERISA and the Code. There is no material pending
or, to the knowledge of the Company, threatened litigation relating to the
Company Benefit Plans.
(c) None of the Company, any Company Subsidiary or any
entity that is considered one employer with the Company under Section 4001
of ERISA or Section 414 of the Code contributes or has ever contributed or
been obligated to contribute to any "multiemployer plan" within the meaning
of Section 4001(a)(3) of ERISA or to any defined benefit pension plan
subject to Title IV of ERISA or to Part 3 of Subpart B of Title I of ERISA.
Neither the Company nor any Company Subsidiary, nor to the knowledge of the
Company or any Company Subsidiary, any officer of the Company or any of its
Company Subsidiary or any of the Company Benefit Plans which are subject to
ERISA, including the Company Pension Plans, any trusts created thereunder
or any trustee or administrator thereof, has engaged in a "prohibited
transaction" (as such term is defined in Section 406 of ERISA or Section
4975 of the Code) or any other breach of fiduciary responsibility that
could subject the Company, any Company Subsidiary or any officer of the
Company or any Company Subsidiary to the tax or penalty on prohibited
transactions imposed by such Section 4975 or to any liability under Section
502(i) or 502(1) of ERISA. All contributions and premiums required to be
made under the terms of any Company Benefit Plan as of the date hereof have
been timely made or have been reflected on the most recent consolidated
balance sheet filed or incorporated by reference in the Filed Company SEC
Documents.
(d) With respect to any Company Benefit Plan that is an
employee welfare benefit plan, except as disclosed in the Company
Disclosure Letter, (i) no such Company Benefit Plan is unfunded or funded
through a "welfare benefits fund" (as such term is defined in Section
419(e) of the Code), (ii) each such Company 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) in all
material respects of the Code and (iii) each such Company Benefit Plan
(including any such Plan covering retirees or other former employees) may
be amended or terminated without material liability to the Company and the
Company Subsidiary on or at any time after the Effective Time. Neither the
Company nor any Company Subsidiary has any obligations for retiree health
and life benefits under any Company Benefit Plan or Company Benefit
Agreement.
(e) Except as disclosed in the Company Disclosure Letter,
the consummation of the Offer and the Merger or any of the other
Transactions will not (i) entitle any employee, consultant, officer or
director of the Company or any Company Subsidiary to severance pay, (ii)
accelerate the time of payment or vesting or trigger any payment or funding
(through a grantor trust or otherwise) of compensation or benefits under,
increase the amount payable or trigger any other material obligation
pursuant to, any of the Company Benefit Plans or Company Benefit Agreements
or (iii) result in any breach or violation of, or a default under, any of
the Company Benefit Plans or Company Benefit Agreements.
(f) Other than payments that may be made to the persons
listed in the Company Disclosure Letter (the "Primary Company Executives"),
any amount or economic benefit that could be received (whether in cash or
property or in respect of the vesting of property) as a result of the Offer
and the Merger or any other Transaction (including as a result of
termination of employment on or following the Effective Time) 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 Company Benefit Plan or
Company Benefit Agreement or otherwise would not be characterized as an
"excess parachute payment" (as defined in Section 280G(b)(1) of the Code),
and no disqualified individual is entitled to receive any additional
payment from the Company or any Company Subsidiary or any other person in
the event that the excise tax under Section 4999 of the Code is imposed on
such disqualified individual. Set forth in the Company Disclosure Letter is
(i) the estimated maximum amount that could be paid to each Primary Company
Executive as a result of the Merger and the other Transactions under all
Company Benefit Plans and Company Benefit Agreements and (ii) the "base
amount" (as defined in Section 280G(b)(3) of the Code) for each Primary
Company Executive calculated as of the date of this Agreement.
SECTION 3.12. Litigation. Except as disclosed in the Company
Disclosure Letter, there is no suit, action or proceeding pending or, to
the knowledge of the Company, threatened against or affecting the Company
or any Company Subsidiary (and the Company is not aware of any basis for
any such suit, action or proceeding) that, individually or in the
aggregate, has resulted in or would reasonably be expected to result in a
Company Material Adverse Effect or in a liability to the Company and the
Company Subsidiaries, taken as a whole, in excess of $1,000,000, nor is
there any Judgment outstanding against the Company or any Company
Subsidiary that, individually or in the aggregate, has resulted in or would
reasonably be expected to result in a Company Material Adverse Effect or in
a liability to the Company and the Company Subsidiaries, taken as a whole,
in excess of $1,000,000.
SECTION 3.13. Compliance with Applicable Laws. Except as
disclosed in the Company Disclosure Letter, the Company and the Company
Subsidiaries are in compliance in all material respects with all applicable
Laws, including those relating to occupational health and safety. Except as
set forth in the Company Disclosure Letter, neither the Company nor any
Company Subsidiary has received any written communication during the past
two years from a Governmental Entity that alleges that the Company or a
Company Subsidiary is not in compliance with any applicable Law. This
Section 3.13 does not relate to matters with respect to Taxes, which are
the subject of Section 3.09, or to environmental matters, which are the
subject of Section 3.14.
SECTION 3.14. Environmental Matters. (a) Except as set forth
in the Company Disclosure Letter, neither the Company nor any Company
Subsidiary 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 Company Subsidiary's properties or any other
properties, except for those actions that individually or in the aggregate
have not resulted in, or would not reasonably be expected to result in,
material liability to the Company and the Company Subsidiaries, (ii) any
knowledge or reason to know of the presence of any Hazardous Substances on,
under or at any Company Subsidiary's properties or any other property but
arising from the Company's or any Company Subsidiary's properties, other
than a reason to know of such presences that individually or in the
aggregate have not resulted in, or would not reasonably be expected to
result in, material liability to the Company and the Company Subsidiaries,
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 or under any of the Company's or any Company Subsidiary's
properties or any other properties (collectively, "Environmental Laws"),
(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 Company Subsidiary's properties or any other properties, or (D)
demanding payment for response to or remediation of Hazardous Substances at
or arising from any of the Company's or any Company Subsidiary's properties
or any other properties. 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 the Company Disclosure Letter, no
Environmental Law imposes any obligation upon the Company or any Company
Subsidiary arising out of or as a condition to any Transaction, including,
without limitation, 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 provision of notice
under any agreement, consent order or consent decree. No Lien has been
placed upon any of the Company's or its subsidiaries' properties under any
Environmental Law.
SECTION 3.15. Contracts; Debt Instruments. (a) Except as
disclosed in the Company Disclosure Letter, (i) there is no Contract that
has a future liability to the Company and the Company Subsidiaries, taken
as a whole, in excess of $200,000 per annum or $500,000 over the lifetime
of such Contract (a "Material Contract"), and (ii) neither the Company nor
any Company Subsidiary is the lessee under any lease (whether of real or
personal property) that requires annual payments in excess of $200,000 or
$500,000 over the lifetime of such lease. Neither the Company nor any
Company Subsidiary is in violation in any material respect of or in default
in any material respect 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) any Material Contract to which it is a party
or by which it or any of its properties or assets is bound, and, to the
knowledge of the Company, no other party to any such Material Contract is
(with or without the lapse of time or the giving of notice, or both) in
breach or default in any material respect thereunder.
(b) The Company Disclosure Letter sets forth (i) a list of
all loan or credit agreements, notes, bonds, mortgages, indentures and
other agreements and instruments pursuant to which any indebtedness of the
Company or any Company Subsidiary in an aggregate principal amount in
excess of $100,000 is outstanding or may be incurred and (ii) the
respective principal amounts currently outstanding thereunder.
(c) The Company Filed SEC Documents include as exhibits
thereto all Contracts that are required to be filed by the Company under
the Exchange Act.
SECTION 3.16. Intellectual Property. The Company Disclosure
Letter sets forth a summary description of all patents, patent rights,
trademarks, trademark rights, trade names, trade name rights, service
marks, service mark rights, copyrights and other proprietary intellectual
property rights and proprietary computer programs necessary to produce the
products of the Company and the Company Subsidiaries and to conduct the
business of the Company and the Company Subsidiaries as currently conducted
(collectively, "Intellectual Property Rights"). The Company and the Company
Subsidiaries own, or are validly licensed or otherwise have the right to
use, all Intellectual Property Rights necessary to conduct their respective
businesses as currently conducted with no infringement of, or conflict
with, the rights of any others. Except as set forth in the Company
Disclosure Letter, no claims are pending or, to the knowledge of the
Company, threatened that the Company or any Company Subsidiary is
infringing or otherwise adversely affecting the rights of any person with
regard to any Intellectual Property Right. Except as set forth in the
Company Disclosure Letter, neither the Company nor any Company Subsidiary
has granted to any third party a license or other right to any Intellectual
Property Right. To the knowledge of the Company, except as set forth in the
Company Disclosure Letter, no person is infringing the rights of the
Company or any Company Subsidiary with respect to any Intellectual Property
Right.
SECTION 3.17. Labor Matters. Except as set forth in the
Company Disclosure Letter, there are no collective bargaining or other
labor union agreements to which the Company or any Company Subsidiary is a
party or by which any of them is bound. Since December 31, 1996, neither
the Company nor any Company Subsidiary has encountered any labor union
organizing activity, or had any actual or threatened employee strikes, work
stoppages, slowdowns or lockouts.
SECTION 3.18. Title to Properties. (a) Except as set forth
in the Company Disclosure Letter, each of the Company and each Company
Subsidiary has good and marketable title to, or valid leasehold interests
in, all its respective real properties except for such as are no longer
used or useful in the conduct of its respective business or as have been
disposed of in the ordinary course of business and assets which are
material to the conduct of the business of the Company and the Company
Subsidiaries ("Material Assets"). All such properties and Material Assets,
other than properties and Material Assets in which the Company or any
Company Subsidiary has leasehold interests, are free and clear of all Liens
other than (i) Liens imposed by Law that were incurred in the ordinary
course of business such as carrier's, warehousemen's and mechanic's Liens,
which Liens do not materially detract from the value of such properties and
Material Assets or materially impair the use thereof in the operation of
the respective businesses of the Company and the Company Subsidiaries, (ii)
Liens arising pursuant to purchase money security interests relating to
indebtedness representing an amount no greater than the purchase price of
such properties or Material Assets, (iii) Liens for Taxes and assessments
not yet due and payable or Liens for Taxes being contested in good faith
and by appropriate proceedings for which adequate reserves have been
established, or (iv) Liens set forth in the Company Disclosure Letter. The
Company Disclosure Letter sets forth a complete list of all real property
owned by the Company or any Company Subsidiary.
(b) Except as set forth in the Company Disclosure Letter,
each of the Company and each Company Subsidiary has complied in all
material respects with the terms of all leases with annual payments in
excess of $50,000 to which it is a party and under which it is in
occupancy, and all such leases are in full force and effect. Each of the
Company and each Company Subsidiary enjoys peaceful and undisturbed
possession under all such leases. To the knowledge of the Company, no other
party to any of such leases is (with or without the lapse of time or the
giving of notice, or both) in breach or default in any material respect
thereunder.
SECTION 3.19. Equipment. Except as set forth in the Company
Disclosure Letter, all (i) the material equipment of the Company and the
Company Subsidiaries, and (ii) the equipment currently in use that, in the
aggregate, is necessary to produce the products of the Company and the
Company Subsidiaries (other than the Company's novelty product line and
related equipment) or otherwise necessary to conduct the business of the
Company and the Company Subsidiaries as currently conducted, is in good
operating condition and repair (ordinary wear and tear excepted), taking
into account its age and use, and is available for immediate use in the
business of the Company and the Company Subsidiaries.
SECTION 3.20. Suppliers. Except as set forth in the Company
Disclosure Letter, since January 1, 2000, there has not been (i) any
material adverse change in the business relationship of the Company or any
Company Subsidiary with any of their top 20 suppliers or (ii) any material
adverse change in the terms of the supply agreements or related
arrangements with any such supplier. Except as set forth in the Company
Disclosure Letter, to the knowledge of the Company, the Transactions will
not adversely affect its or any Company Subsidiary's business relationship
with any of their top 20 suppliers, other than as a result of a
pre-existing relationship with Conopco or Sub.
SECTION 3.21. Brokers; Schedule of Fees and Expenses. No
broker, investment banker, financial advisor or other person, other than
Gordian Group, L.P., the fees and expenses of which will be paid by the
Company, is entitled to any broker's, finder's, financial advisor's or
other similar fee or commission in connection with the Transactions 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
the Offer, the Merger and the other Transactions (including the fees of
Gordian Group, L.P. and the fees of the Company's legal counsel) are set
forth in the Company Disclosure Letter. The Company has furnished to
Conopco a true and complete copy of all agreements between the Company and
Gordian Group, L.P. relating to the Offer, the Merger and the other
Transactions.
SECTION 3.22. Opinion of Financial Advisor. The Company has
received the opinion of Gordian Group, L.P., dated the date of this
Agreement, to the effect that, as of such date, the consideration to be
received in the Offer and the Merger by the holders of Company Common Stock
is fair from a financial point of view, a signed copy of which opinion has
been or promptly upon receipt will be, delivered to Conopco.
ARTICLE IV
Representations and Warranties of Conopco and Sub
Conopco and Sub jointly and severally represent and warrant
to the Company as follows:
SECTION 4.01. Organization, Standing and Power. Each of
Conopco and Sub is duly organized, validly existing and in good standing
under the laws of the jurisdiction in which it is organized and has full
corporate power and authority to conduct its businesses as presently
conducted.
SECTION 4.02. Sub. (a) Since the date of its incorporation,
Sub has not carried on any business or conducted any operations other than
the execution of the Transaction Agreements to which it is a party, the
performance of its obligations hereunder and thereunder and matters
ancillary thereto. Sub was incorporated solely for the consummation of the
Transactions.
(b) The authorized capital stock of Sub consists of 1,000
shares of common stock, par value $0.01 per share, all of which have been
validly issued, are fully paid and nonassessable and are owned by Conopco
free and clear of any Lien.
SECTION 4.03. Authority; Execution and Delivery;
Enforceability. Each of Conopco and Sub has all requisite corporate power
and authority to execute and deliver each Transaction Agreement to which it
is a party and to consummate the Transactions. The execution and delivery
by each of Conopco and Sub of each Transaction Agreement to which it is a
party and the consummation by it of the Transactions have been duly
authorized by all necessary corporate action on the part of Conopco and
Sub. Conopco, as sole shareholder of Sub, has approved this Agreement. No
vote of Conopco's shareholders is required to approve this Agreement or the
transactions contemplated hereby. Each of Conopco and Sub has duly executed
and delivered each Transaction Agreement to which it is a party, and each
Transaction Agreement to which it is a party constitutes its legal, valid
and binding obligation, enforceable against it in accordance with its
terms.
SECTION 4.04. Consents. No Consent of, or registration,
declaration or filing with, any Governmental Entity is required to be
obtained or made by or with respect to Conopco or any of its subsidiaries
in connection with the execution, delivery and performance of any
Transaction Agreement to which Conopco or Sub is a party or the
consummation of the Transactions, other than (i) compliance with and
filings under the HSR Act, (ii) the filing with the SEC of (A) the Offer
Documents and (B) such reports under Sections 13 and 16 of the Exchange Act
as may be required in connection with this Agreement, and the other
Transaction Agreements, the Offer, the Merger and the other Transactions,
(iii) the filing of the Articles of Merger with the Secretary of State of
the State of Vermont, (iv) compliance with and such filings as may be
required under applicable Environmental Laws and (v) such filings as may be
required in connection with the Taxes described in Section 6.09.
SECTION 4.05. Information Supplied. (a) None of the
information supplied or to be supplied by Conopco or Sub for inclusion or
incorporation by reference (i) in the Offer Documents, the Schedule 14D-9
or the Information Statement will, at the time such document is filed with
the SEC, at any time it is amended or supplemented or at the time it is
first published, sent or given to the Company's shareholders, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading, or (ii) in the Proxy Statement will, at the date it is
first mailed to the Company's shareholders or at the time of the Company
Shareholders 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.
(b) 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 is made by
Conopco or Sub with respect to statements made or incorporated by reference
therein based on information supplied by the Company for inclusion or
incorporation by reference therein.
SECTION 4.06. Brokers. Except as set forth in the letter,
dated as of the date of this Agreement, from Conopco to the Company (the
"Conopco Disclosure Letter") 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 Conopco, is entitled to any
broker's, finder's, financial advisor's or other similar fee or commission
in connection with the Transactions based upon arrangements made by or on
behalf of Conopco.
SECTION 4.07. Conopco Plans. Conopco has previously
disclosed to the Company or its counsel each agreement or understanding
between Conopco or its affiliates, on the one hand, and any member of the
Company Board or of the Company's Office of the Chief Executive Officer
(the "OCEO") or the Chief Executive Officer of the Company (the "CEO"), on
the other hand, regarding (i) any plans that Conopco or its affiliates may
have to cause to be terminated the employment, or cause to be changed the
responsibilities, of the CEO or of any member of the OCEO, (ii) any plans
that Conopco or its affiliates may have to cause to be terminated the
directorship of any member of the Company Board, and (iii) any financial or
other matter concerning support of the Transactions or directorship,
employment or other arrangements with Conopco or the Company following the
Effective Time.
ARTICLE V
Covenants Relating to Conduct of Business
SECTION 5.01. Conduct of Business. (a) Conduct of Business
by the Company. Except for matters set forth in the Company Disclosure
Letter or otherwise expressly permitted by the Transaction Agreements, from
the date of this Agreement to the earlier of Conopco having designated a
majority of the Company Board pursuant to Section 6.10 and the Effective
Time the Company shall, and shall cause each Company Subsidiary to, conduct
the business of the Company and the Company Subsidiaries, taken as a whole,
in the usual, regular and ordinary course in substantially the same manner
as previously conducted and use all reasonable efforts to preserve intact
its current business organization, keep available the services of its
current officers and employees and keep its relationships with customers,
suppliers, licensors, licensees, distributors and others having business
dealings with them to the end that its goodwill and ongoing business shall
be unimpaired, in all material respects, at the Effective Time. In
addition, and without limiting the generality of the foregoing, except for
matters set forth in the Company Disclosure Letter or otherwise expressly
permitted by the Transaction Agreements, from the date of this Agreement to
the earlier of Conopco having designated a majority of the Company Board
pursuant to Section 6.10 and the Effective Time, the Company shall not, and
shall not permit any Company Subsidiary to, do any of the following without
the prior written consent of Conopco:
(i) (A) declare, set aside or pay any dividends on, or make
any other distributions in respect of, any of its capital stock,
other than dividends and distributions by a direct or indirect
wholly owned subsidiary of the Company to its parent, (B) split,
combine or reclassify any of its capital stock or issue or
authorize the issuance of any other securities in respect of, in
lieu of or in substitution for shares of its capital stock (other
than upon the conversion of shares of Class B Common Stock into
shares of Class A Common Stock in accordance with the Company
Charter), or (C) purchase, redeem or otherwise acquire any shares
of capital stock of the Company or any Company Subsidiary or any
other securities thereof or any rights, warrants or options to
acquire any such shares or other securities;
(ii) issue, deliver, sell or grant (A) any shares of its
capital stock, (B) any Voting Company Debt or other voting
securities, (C) any securities convertible into or exchangeable
for, or any options, warrants or rights to acquire, any such
shares, Voting Company Debt, voting securities or convertible or
exchangeable securities or (D) any "phantom" stock, "phantom" stock
rights, stock appreciation rights or stock-based performance units,
other than (x) the issuance of Class A Common Stock (and associated
Class A Rights) (1) upon the exercise of Company Stock Options
outstanding on the date of this Agreement and in accordance with
their present terms, (2) pursuant to the Stock Option Agreement,
(3) upon the conversion of shares of Class B Common Stock into
shares of Class A Common Stock in accordance with the Company
Charter, (4) upon exercise of Gordian Warrants or (5) pursuant to
the 1986 ESPP (subject to Section 6.05(c)) and (y) the issuance of
capital stock of ACICM upon the exercise of options to purchase
such capital stock that are outstanding on the date of this
Agreement and in accordance with their present terms;
(iii) amend its articles of incorporation, by-laws or
other comparable charter or organizational documents;
(iv) acquire or agree to acquire (A) by merging or
consolidating with, or by purchasing a substantial equity interest
in or 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
(B) any assets that are material, individually or in the aggregate,
to the Company and the Company Subsidiaries, taken as a whole,
except purchases of inventory in the ordinary course of business
consistent with past practice or in the fulfillment of Contracts in
existence on the date hereof and copies of which have been made
available to Conopco;
(v) (A) grant to any employee, officer or director of the
Company or any Company Subsidiary any increase in compensation,
except in the ordinary course of business consistent with prior
practice or to the extent required under employment or consulting
agreements in effect as of the date of the most recent audited
financial statements included in the Filed Company SEC Documents,
(B) grant to any employee, officer or director of the Company or
any Company Subsidiary any increase in severance or termination
pay, except to the extent required under any employment,
consulting, severance or termination agreement in effect as of the
date of the most recent audited financial statements included in
the Filed Company SEC Documents, (C) establish, adopt, enter into
or amend any Company Benefit Agreement, (D) establish, adopt, enter
into or amend in any material respect any collective bargaining
agreement or Company Benefit Plan or (E) take any action to
accelerate any rights or benefits, or make any material
determinations not in the ordinary course of business consistent
with prior practice, under any collective bargaining agreement or
Company Benefit Plan or Company Benefit Agreement;
(vi) make any change in accounting methods, principles or
practices materially affecting the reported consolidated assets,
liabilities or results of operations of the Company, except insofar
as may have been required by a change in GAAP;
(vii) sell, lease (as lessor), license or otherwise dispose
of or subject to any Lien any properties or assets, except for
leases and disposals of trucks and trailers and sales of inventory
and excess or obsolete assets, in all cases in the ordinary course
of business consistent with past practice;
(viii) (A) incur any indebtedness for borrowed money or
guarantee any such indebtedness of another person, issue or sell
any debt securities or warrants or other rights to acquire any debt
securities of the Company or any Company Subsidiary, guarantee any
debt securities of another person, enter into any "keep well" or
other agreement to maintain any financial statement condition of
another person or enter into any arrangement having the economic
effect of any of the foregoing, except for short-term borrowings
incurred in the ordinary course of business consistent with past
practice, or (B) make any loans, advances or capital contributions
to, or investments in, any other person, other than to or in the
Company or any direct or indirect wholly owned subsidiary of the
Company;
(ix) make or agree to make any new capital expenditure or
expenditures that, individually, is in excess of $500,000 or, in
the aggregate, are in excess of $1,000,000; provided, however, that
with respect to proposed capital expenditures the written consent
of Conopco shall not unreasonably be withheld;
(x) make or change any material Tax election or settle or
compromise any material Tax liability or refund;
(xi) (A) pay, discharge or satisfy any claims, liabilities
or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise) in excess of $100,000, other than the
payment, discharge or satisfaction, in the ordinary course of
business consistent with past practice or in accordance with their
terms, of liabilities reflected or reserved against in, or
contemplated by, the most recent consolidated financial statements
(or the notes thereto) of the Company included in the Filed Company
SEC Documents or incurred in the ordinary course of business
consistent with past practice, (B) cancel any material indebtedness
(individually or in the aggregate) or waive any claims or rights of
substantial value or (C) waive the benefits of, or agree to modify
in any manner, any confidentiality, standstill or similar agreement
to which the Company or any Company Subsidiary is a party; or
(xii) authorize any of, or commit or agree to take any of,
the foregoing actions.
(b) Other Actions. Subject to Section 5.02(b), the Company
shall not, and shall not permit any Company Subsidiary to, take any action
that would, or that would reasonably be expected to, result in (A) any of
the representations and warranties of the Company set forth in any
Transaction Agreement to which it is a party that is qualified as to
Company Material Adverse Effect becoming untrue, (B) the representations
and warranties that are not so qualified as to Company Material Adverse
Effect becoming untrue where the failure of the representations and
warranties referred to in this clause (B) to be so true, when taken
together, would reasonably be expected to have a Company Material Adverse
Effect, or (C) any condition to the Offer set forth in Section 7.01, or any
condition to the Merger set forth in Section 7.02, not being satisfied.
Conopco shall not, and shall not permit its subsidiaries to, take any
action that would, or would reasonably be expected to, result in any
condition to the Offer set forth in Section 7.01, or any condition to the
Merger set forth in Section 7.02, not being satisfied.
(c) Advice of Changes. The Company shall promptly advise
Conopco orally and in writing of any change or event that has or would
reasonably be expected to have a Company Material Adverse Effect. The
Company shall promptly provide to Conopco (or its counsel) copies of all
filings made by the Company with any Governmental Entity in connection with
this Agreement and the Transactions, except with respect to the disclosure
in Item 4(c) and any related materials in the Company's filing under the
HSR Act.
(d) Continuation of Contracts. The Company shall use its
best efforts to take such actions necessary to ensure the continuation of
the contracts referred to in Section 3.05 of the Company Disclosure Letter;
provided, however, that this Section 5.01(d) shall not require the payment
by the Company of any consent or other similar fee under any such contract.
SECTION 5.02. No Solicitation. (a) The Company shall not,
nor shall it authorize or permit any Company Subsidiary to, nor shall it
authorize or permit any officer, director or employee of, or any investment
banker, attorney or other advisor or representative (collectively,
"Representatives") of, the Company or any Company Subsidiary to, (i)
directly or indirectly solicit, initiate or encourage the submission of,
any Company Takeover Proposal (as defined in Section 5.02(e)), (ii) enter
into any agreement with respect to any Company Takeover Proposal or (iii)
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
Company Takeover Proposal; provided, however, that prior to the acceptance
for payment of shares of Class A Common Stock pursuant to the Offer the
Company may, to the extent required by the fiduciary obligations of the
Company Board, as determined in good faith by a majority of the
disinterested members thereof after consultation with outside counsel, in
response to a Company Takeover Proposal that was made by a person whom the
Company Board determines, in good faith after consultation with outside
counsel and an independent financial advisor, to be reasonably capable of
making a Superior Company Proposal (as defined in Section 5.02(e)), that
was not solicited by the Company and that did not otherwise result from a
breach or a deemed breach of this Section 5.02(a), (x) furnish information
with respect to the Company to the person or group making such Company
Takeover Proposal and its Representatives pursuant to a customary
confidentiality agreement not less restrictive of the other party than the
Confidentiality Agreement (as defined in Section 6.02) and (y) participate
in discussions and negotiations with such person or group and its
Representatives to the extent required regarding such Company Takeover
Proposal. Without limiting the foregoing, it is agreed that any violation
of the restrictions set forth in the preceding sentence by any
Representative or affiliate of the Company or any Company Subsidiary,
whether or not such person is purporting to act on behalf of the Company or
any Company Subsidiary or otherwise, shall be deemed to be a breach of this
Section 5.02(a) by the Company. Subject to the foregoing provisions of this
Section 5.02, the Company shall, and shall cause its Representatives to,
cease immediately all discussions and negotiations regarding any proposal
that constitutes, or may reasonably be expected to lead to, a Company
Takeover Proposal.
(b) Neither the Company Board nor any committee thereof
shall (i) withdraw or modify, or propose to withdraw or modify, in a manner
adverse to Conopco or Sub, the approval or recommendation by the Company
Board or any such committee of this Agreement, the Offer or the Merger,
(ii) approve any letter of intent, agreement in principle, acquisition
agreement or similar agreement relating to any Company Takeover Proposal or
(iii) approve or recommend, or propose to approve or recommend, any Company
Takeover Proposal. Notwithstanding the foregoing, if, prior to the
acceptance for payment of shares of Class A Common Stock pursuant to the
Offer, the Company Board receives a Superior Company Proposal and a
majority of the disinterested directors of the Company determine in good
faith, after consultation with outside counsel, that it is necessary to do
so in order to comply with their fiduciary obligations, the Company Board
may withdraw its approval or recommendation of the Offer, the Merger and
this Agreement and, in connection therewith, approve or recommend such
Superior Company Proposal, provided, that the Company Board shall give
Conopco five business days' notice prior to withdrawing its recommendation.
(c) The Company promptly shall advise Conopco orally and in
writing of any Company Takeover Proposal or any inquiry with respect to or
that could lead to any Company Takeover Proposal, the identity of the
person or group making any such Company Takeover Proposal or inquiry and
the material terms of any such Company Takeover Proposal or inquiry. The
Company shall (i) keep Conopco fully informed of the status, including any
change to the details, of any such Company Takeover Proposal or inquiry and
(ii) provide to Conopco as soon as practicable after receipt or delivery
thereof with copies of all correspondence and other written material sent
or provided to the Company from any third party in connection with any
Company Takeover Proposal or sent or provided by the Company to any third
party in connection with any Company Takeover Proposal.
(d) Nothing contained in this Section 5.02 shall prohibit
the Company from taking and disclosing to its shareholders a position
contemplated by Rule 14e-2(a) promulgated under the Exchange Act or from
making any required disclosure to the Company's shareholders if, in the
good faith judgment of the Company Board, after consultation with outside
counsel, failure so to disclose would be inconsistent with its obligations
under applicable Law.
(e) For purposes of this Agreement:
"Company Takeover Proposal" means (i) any proposal or offer
for a merger, consolidation, dissolution, recapitalization or other
business combination involving the Company or any Company
Subsidiary, (ii) any proposal for the issuance by the Company of a
material amount of its equity securities as consideration for the
assets or securities of another person or (iii) any proposal or
offer to acquire in any manner, directly or indirectly, a material
equity interest in any voting securities of, or a substantial
portion of the assets of, the Company or any Company Subsidiary, in
each case other than the Transactions.
"Superior Company Proposal" means any proposal made by a
third party to acquire all or substantially all the equity
securities or assets of the Company, pursuant to a tender or
exchange offer, a merger, a consolidation, a liquidation or
dissolution, a recapitalization or a sale of all or substantially
all its assets, (i) on terms which a majority of the disinterested
directors of the Company determines in its good faith judgment (A)
to represent superior value for the holders of Company Common Stock
than the Transactions (based on the written opinion, with only
customary qualifications, of Gordian Group, L.P. or another
independent financial advisor as to such proposal's financial
superiority), taking into account all the terms and conditions of
such proposal and this Agreement (including any proposal by Conopco
to amend the terms of the Transactions), and (B) to be no less
favorable to the Company's stakeholders (not including its
shareholders), taken as a whole, than the Transactions, taking into
account all the terms and conditions of such proposal and this
Agreement (including any proposal by Conopco to amend the terms of
the Transactions) and (ii) that is reasonably capable of being
completed, taking into account all financial, regulatory, legal and
other aspects of such proposal.
ARTICLE VI
Additional Agreements
SECTION 6.01. Preparation of Proxy Statement; Shareholders
Meeting. (a) The Company shall, as soon as practical following the
expiration of the Offer, prepare and file with the SEC the Proxy Statement
in preliminary form, and the Company and each of Conopco and Sub shall use
its best efforts to respond as promptly as practicable to any comments of
the SEC with respect thereto. The Company shall notify Conopco 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 shall supply Conopco 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. If at any time prior to receipt of the Company Shareholder
Approval 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 shareholders such an amendment or supplement. The
Company shall not mail any Proxy Statement, or any amendment or supplement
thereto, to which Conopco reasonably objects. The Company shall use its
best efforts to cause the Proxy Statement to be mailed to the Company's
shareholders as promptly as reasonably practicable after filing with the
SEC.
(b) The Company shall, as soon as reasonably practical
following the expiration of the Offer, duly call, give notice of, convene
and hold a meeting of its shareholders (the "Company Shareholders Meeting")
for the purpose of seeking the Company Shareholder Approval. Without
limiting the generality of the foregoing, the Company agrees that, unless
this Agreement shall have been terminated, its obligations pursuant to the
first sentence of this Section 6.01(b) shall not be affected by (i) the
commencement, public proposal, public disclosure or communication to the
Company of any Company Takeover Proposal or (ii) the withdrawal or
modification by the Company Board of its approval or recommendation of this
Agreement, the Offer or the Merger.
(c) Conopco shall cause all shares of Class A Common Stock
purchased by Sub pursuant to the Offer and all other shares of Class A
Common Stock owned by Sub or any other direct or indirect subsidiary of
either Parent to be represented at the Company Shareholders Meeting and to
be voted in favor of obtaining the Company Shareholder Approval.
SECTION 6.02. Access to Information; Confidentiality. (a)
The Company shall, and shall cause each Company Subsidiary to, afford to
Conopco, and to Conopco's officers, employees, accountants, counsel,
financial advisors and other representatives, upon reasonable notice
reasonable access during normal business hours during the period prior to
the Effective Time to all their respective properties, books, contracts,
commitments, personnel and records and, during such period, the Company
shall, and shall cause each Company Subsidiary to, furnish promptly to
Conopco (a) a copy of each report, schedule, registration statement and
other document filed by it during such period pursuant to the requirements
of Federal or state securities laws and (b) all other information
concerning its business, properties and personnel as Conopco may reasonably
request; provided, however, that the Company may withhold (i) any document
or information that is subject to the terms of a confidentiality agreement
with a third party or (ii) such portions of documents or information
relating to pricing or other matters that are highly sensitive and the
exchange of such documents (or portions thereof) or information, as
determined by the Company's outside counsel, might reasonably result in
antitrust difficulties between the Company and Conopco (or any of its
affiliates). If any material is withheld from Conopco pursuant to the
proviso to the preceding sentence, the Company shall inform Conopco as to
what is being withheld. Without limiting the generality of the foregoing,
the Company shall, within two business days of request therefor, provide to
Conopco the information described in Rule 14a-7(a)(2)(ii) under the
Exchange Act and any information to which a holder of Company Common Stock
would be entitled under Section 16.02 of the VBCA (assuming such holder met
the requirements of such section).
(b) The Company shall, as soon as practicable and in any
event by the end of the third week of each month, furnish to Conopco such
financial information for the previous month in such form as is provided to
the Company Board.
(c) All information exchanged pursuant to this Section 6.02
shall be subject to the confidentiality agreement dated September 27, 1999
between the Company and Conopco (the "Confidentiality Agreement").
SECTION 6.03. Best Efforts; Notification. (a) Upon the terms
and subject to the conditions set forth in this Agreement, and subject to
Section 5.02 and the Company's right to make the disclosures to its
shareholders permitted under Section 5.02(d), each of the parties shall use
its best efforts to take, or cause to be taken, all appropriate actions,
and to do, or cause to be done, and to assist and cooperate with the other
parties in doing, all things necessary, proper or advisable to consummate
and make effective, in the most expeditious manner practicable, the Offer,
the Merger and the other Transactions, including (i) the obtaining of all
necessary actions, waivers, consents and approvals from Governmental
Entities and the making of all necessary registrations and filings
(including filings with Governmental Entities, if any) and the taking of
all reasonable steps as may be necessary to obtain an approval or waiver
from, or to avoid an action or proceeding by, any Governmental Entity, (ii)
the obtaining of all necessary consents, approvals or waivers from third
parties, (iii) the defending of any lawsuits or other legal proceedings,
whether judicial or administrative, challenging this Agreement or any other
Transaction Agreement or the consummation of the Transactions, including
seeking to have any stay or temporary restraining order entered by any
court or other Governmental Entity vacated or reversed and (iv) the
execution and delivery of any additional instruments necessary to
consummate the Transactions and to fully carry out the purposes of the
Transaction Agreements; provided, however, that neither the Company nor
Conopco shall be required to consent to any action described in Section
7.01(a). In connection with and without limiting the foregoing, the Company
and the Company Board shall (i) take all action necessary to ensure that no
state takeover statute or similar statute or regulation becomes applicable
to any Transaction or this Agreement or any other Transaction Agreement and
(ii) if any state takeover statute or similar statute or regulation becomes
applicable to this Agreement or any other Transaction Agreement, take all
action necessary to ensure that the Offer, the Merger and the other
Transactions may be consummated as promptly as practicable on the terms
contemplated by the Transaction Agreements and otherwise to minimize the
effect of such statute or regulation on the Offer, the Merger and the other
Transactions. Nothing in this Section 6.03 shall be deemed to require any
party to waive any substantial rights or agree to any substantial
limitation on its operations or to dispose of any significant asset or
collection of assets.
(b) The Company shall give prompt notice to Conopco, and
Conopco shall give prompt notice to the Company, of (i) any representation
or warranty made by it contained in any Transaction Agreement that is
qualified as to materiality being untrue or inaccurate in any respect when
given or any such representation or warranty that is not so qualified being
untrue or inaccurate in any material respect when given or (ii) the failure
by it to comply with or satisfy in any material respect any covenant,
condition or agreement to be complied with or satisfied by it under any
Transaction Agreement; provided, however, that no such notification shall
affect the representations, warranties, covenants or agreements of the
parties or the conditions to the obligations of the parties under the
Transaction Agreements.
SECTION 6.04. Stock Options. (a) As soon as reasonably
practicable following the date of this Agreement, the Company Board (or, if
appropriate, any committee administering the Company Stock Plans) shall
adopt resolutions or take such other actions as may be required to effect
the following:
(i) adjust the terms of all outstanding Company Stock
Options, whether vested or unvested, as necessary to provide that
each Company Stock Option (and any Company SAR related thereto)
outstanding immediately prior to the acceptance for payment of
shares of Class A Common Stock pursuant to the Offer, including all
vested and unvested Company Stock Options, shall be canceled
effective immediately prior to the acceptance for payment of Class
A Common Stock pursuant to the Offer, with the holder thereof
becoming entitled to receive an amount in cash equal to (A) the
excess, if any, of (1) $43.60 over (2) the exercise price per share
of the Class A Common Stock subject to such Company Stock Option or
Company SAR, multiplied by (B) the number of shares of the Class A
Common Stock for which such Company Stock Option shall not
theretofore have been exercised; provided, however, that no cash
payment shall be made with respect to any Company SAR that is
related to any Company Stock Option in respect of which such a cash
payment is made; provided, further, that all amounts payable
pursuant to this Section 6.04(a)(i) shall be subject to any
required withholding of Taxes or proof of eligibility of exemption
therefrom and to receipt of the written consent of the holder
thereof and shall be paid at or as soon as practicable following
the acceptance for payment of shares of Class A Common Stock
pursuant to the Offer, without interest; and
(ii) make such other changes to the Company Stock Plans as
the Company and Conopco may agree are appropriate to give effect to
the Offer and the Merger.
(b) After the Effective Time, the Surviving Corporation
shall establish an appropriate long-term incentive plan to properly
incentivise its employees.
SECTION 6.05. Benefit Plans and Special Bonus Program. (a)
Except as set forth in Section 6.04 and this Section 6.05, Conopco agrees
that after the consummation of the Offer the Company shall honor, and, on
and after the Effective Time, Conopco shall cause the Surviving Corporation
to honor, all employment, severance, termination, consulting and retirement
agreements to which the Company or any Company Subsidiary is presently a
party and which have been disclosed in the Company Disclosure Letter,
including all "constructive termination" provisions therein. Conopco
confirms that, for purposes of such agreements, the acceptance for payment,
and purchase, of the Company Common Stock pursuant to the Offer shall
constitute a "change in control".
(b) Except as set forth in Sections 6.04 and 6.05(c), the
Surviving Corporation shall maintain for a period of five years after the
Effective Time the Company Benefit Plans (other than equity or equity-
based programs), except to the extent provided in Section 6.04, in effect
on the date of this Agreement or provide benefits to each current employee
of the Company and the Company Subsidiaries that are not materially less
favorable in the aggregate to such employees than those in effect on the
date of this Agreement (other than equity or equity-based programs), except
to the extent provided in Section 6.04.
(c) As soon as practicable following the date of this
Agreement, the Company Board (or, if appropriate, any committee
administering the 1986 ESPP) shall take or cause to be taken such actions
as may be necessary to provide that (i) no options shall be granted and no
payroll deductions accepted after the earlier of June 30, 2000 or the date
in which falls the Effective Time; (ii) if the Effective Time falls on a
date prior to June 30, 2000, the exercise date in respect of the offering
(option) period under the 1986 ESPP that commenced January 1, 2000 shall be
accelerated, and all unexercised rights granted in respect of such offering
(option) period shall be exercised immediately prior to the Effective Time;
(iii) all holding periods with respect to shares under the ESPP shall be
waived; and (iv) the 1986 ESPP shall terminate as of the Effective Time.
(d) Six months following the Effective Time, Conopco shall
make available to the Surviving Corporation the sum of $5 million to be
distributed on a per capita basis to the then full-time employees of the
Company below the OCEO as a special bonus unless the Company Board
determines in its sole discretion that all or a portion of such amount
should be contributed to the Foundation (as defined in Section 6.14) in
which case the balance shall be distributed on a per capita basis to the
then full-time employees of the Company below the OCEO and the amount not
so distributed shall be contributed to the Foundation.
SECTION 6.06. Indemnification. (a) Conopco and Sub agree
that all rights to indemnification under the Company Charter, the Company
By-laws, the Company's indemnification or other agreements or by Law for
acts or omissions occurring prior to the Effective Time now existing in
favor of the current or former directors or officers of the Company and its
subsidiaries (the "Indemnified Parties") as provided in their respective
articles of incorporation, by-laws or indemnification agreements shall
survive the Merger and shall continue in full force and effect in
accordance with their terms until the expiration of the applicable statute
of limitations (provided, that in the event any claim or claims are
asserted or made prior to the expiration of all applicable statutes of
limitation, all rights to indemnification in respect of any such claim or
claims shall continue until disposition of any and all such claims), and
Conopco shall cause the Surviving Corporation to honor all such rights.
Without limitation of the foregoing, in the event any such Indemnified
Party is or becomes involved in any capacity in any action, proceeding or
investigation in connection with any matter, including the transactions
contemplated by this Agreement, occurring prior to, and including, the
Effective Time, Conopco shall, or shall cause the Surviving Corporation to,
pay as incurred such Indemnified Party's reasonable legal and other
expenses (including the cost of any investigation and preparation) incurred
in connection therewith (subject to receipt by the Surviving Corporation of
an undertaking from such Indemnified Party to repay advances if it is
subsequently determined that such Indemnified Party is not entitled to
indemnification). Conopco shall pay all expenses, including reasonable
attorneys' fees, that may be incurred by any Indemnified Party in
successfully enforcing the indemnity and other obligations provided for in
this Section 6.06(a).
(b) Conopco shall cause to be maintained for a period of not
less than six years from the Effective Time the Company's current
directors' and officers' insurance and indemnification policies to the
extent that they provide coverage for events occurring prior to the
Effective Time (the "D&O Insurance") for all persons who are directors and
officers of the Company on the date of this Agreement, so long as the
annual premium therefor would not be in excess of 200% of the last annual
premiums paid prior to the date of this Agreement (such 200% amount, the
"Maximum Premium"). If the existing D&O Insurance expires, is terminated or
canceled during such six-year period, Conopco shall use all reasonable
efforts to cause to be obtained as much D&O Insurance as can be obtained
for the remainder of such period for an annualized premium not in excess of
the Maximum Premium, on terms and conditions no less advantageous than the
existing D&O Insurance. The Company represents to Conopco that the Maximum
Premium is $228,000.
SECTION 6.07. Fees and Expenses; Liquidated Damages. (a)
Except as provided below, all fees and expenses incurred in connection with
the Merger shall be paid by the party incurring such fees or expenses,
whether or not the Merger is consummated.
(b) The Company shall pay to Conopco a fee of $11.4 million
if: (i) this Agreement is terminated pursuant to Section 8.01(b)(iii) as a
result of the failure of the condition set forth in paragraph (d) of
Section 7.01; (ii) Conopco terminates this Agreement pursuant to Section
8.01(d) or the Company terminates this Agreement pursuant to Section
8.01(e); (iii) after the date of this Agreement any person makes or
consummates a Company Takeover Proposal or amends a Company Takeover
Proposal made prior to the date of this Agreement, and (A) the Offer
remains open for at least five business days following the first public
announcement of the making, consummation or amendment, as the case may be,
of such Company Takeover Proposal, (B) the Minimum Tender Condition is not
satisfied at such expiration date and (C) this Agreement is terminated
pursuant to Section 8.01(b)(iii); or (iv) this Agreement is terminated
(other than termination pursuant to Section 8.01(b)(iv) or 8.01(f)) and
within 12 months of such termination the Company enters into a definitive
agreement to consummate, or consummates, the transactions contemplated by a
Company Takeover Proposal. Any fee due under this Section 6.07(b) shall be
paid by wire transfer of same-day funds on the date of termination of this
Agreement (except that in the case of termination pursuant to clause (iv)
above such payment shall be made on the date of execution of such
definitive agreement or, if earlier, consummation of such transactions).
Conopco shall only be entitled to one fee under this Section 6.07(b).
(c) The parties acknowledge that Conopco's damages in the
event that this Agreement is breached by the Company would be extremely
costly and impractical to calculate. Conopco and the Company have expressly
negotiated this provision, and have agreed that in light of the
circumstances existing at the time of execution of this Agreement, an
amount equal to $11.9 million represents a reasonable estimate of the harm
likely to be suffered by Conopco in the event this Agreement is terminated
pursuant to Section 8.01(c) or pursuant to Section 8.01(b)(iii) as a result
of the failure of a condition set forth in paragraph (e) or (f) of Section
7.01. Accordingly, in the event this Agreement is terminated under such
circumstances, Conopco shall be entitled to receive $11.9 million from the
Company as its sole remedy and as liquidated damages.
SECTION 6.08. Public Announcements. Each of Conopco and Sub,
on the one hand, and the Company, on the other hand, shall consult with
each other before issuing, and provide each other the opportunity to review
and comment upon, any press release or other public statements with respect
to the Offer and the Merger and the other Transactions and shall not issue
any such press release or make any such public statement prior to such
consultation, except as may be required, as determined by outside counsel,
by applicable Law, court process or by obligations pursuant to any listing
agreement with any national securities exchange.
SECTION 6.09. Transfer Taxes. All stock transfer, real
estate transfer, documentary, stamp, recording and other similar Taxes
(including interest, penalties and additions to any such Taxes) ("Transfer
Taxes") incurred in connection with the Transactions shall be paid by
either Sub or the Surviving Corporation, and the Company shall cooperate
with Sub and Conopco in preparing, executing and filing any Tax Returns
with respect to such Transfer Taxes.
SECTION 6.10. Interim Directors. Promptly upon the
acceptance for payment of, and payment by Sub for, any shares of Class A
Common Stock pursuant to the Offer, Sub shall be entitled to designate, for
election by the Company Board, such number of directors on the Company
Board as will give Sub, subject to compliance with Section 14(f) of the
Exchange Act and the VBCA, majority representation on the Company Board;
provided, however, that in the event that Sub's designees are appointed or
elected to the Company Board, until the Effective Time the Company Board
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"); provided, further, that, in such event, if the number of
Independent Directors shall be reduced below three for any reason
whatsoever, any remaining Independent Directors (or Independent Director,
if there shall be only one remaining) shall be entitled to designate
persons to fill such vacancies who shall be deemed to be Independent
Directors for purposes of this Agreement or, if no Independent Directors
then remain, the other directors shall designate three persons to fill such
vacancies who are not officers, shareholders or affiliates of the Company,
Conopco or Sub, 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 Conopco necessary to effect any
such election, including mailing to its shareholders the Information
Statement containing the information required by Section 14(f) of the
Exchange Act and Rule 14f-1 promulgated thereunder, and the Company shall
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 shall promptly,
at the option of Sub, either increase the size of the Company Board 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 the
Company Board as provided above.
SECTION 6.11. Company Capital Stock. (a) Immediately
following the consummation of the Offer, the Company Board shall authorize
the Company to redeem all of the outstanding shares of Company Preferred
Stock, at a price per share that would have been received by a holder of
Company Preferred Stock if paid as Merger Consideration in the Merger,
prior to the record date for the Company Shareholder Meeting and deliver to
all holders of Company Preferred Stock the notice of redemption required by
the Company Charter. The Company shall redeem all outstanding shares of
Company Preferred Stock prior to the Effective Time.
(b) Upon receipt of a Qualified Notice (as defined below)
from Conopco, and in accordance with the Company Charter, the Company shall
mail a notice to all the holders of Class B Common Stock, which notice
shall specify that all outstanding shares of Class B Common Stock will be
automatically converted into shares of Class A Common Stock effective ten
days from the date of such mailing. The Company shall not take any action
to rescind, revoke, retrieve or otherwise impair the effectiveness of such
notice of conversion or prevent the automatic conversion of the outstanding
shares of Class B Common Stock. A "Qualified Notice" shall mean a written
notice that (i) is delivered by Conopco to the Company not earlier than the
business day immediately prior to the then scheduled expiration date of the
Offer and not later than 2 p.m. Eastern Time on the then scheduled
expiration date of the Offer and (ii) states that, as of the time of such
notice, Conopco has no reason to believe that any condition set forth in
Section 7.01 will not be satisfied at the then scheduled expiration time of
the Offer (assuming compliance by the Company with this Section 6.11(b)).
SECTION 6.12. Rights Agreements; Consequences if Rights
Triggered. The Company Board shall take all further action (in addition to
that referred to in Section 3.05(c)) requested in writing by Conopco in
order to render the Company Rights inapplicable to the Offer, the Merger
and the other Transactions. Except as approved in writing by Conopco, the
Company Board shall not (i) amend either of the Company Rights Agreements,
(ii) redeem the Company Rights or (iii) take any action with respect to, or
make any determination under, the Company Rights Agreements.
SECTION 6.13. Shareholder Litigation. After the Closing
Date, the Company shall give Conopco the opportunity to participate in the
defense or settlement of any shareholder litigation against the Company or
its directors relating to any Transaction.
SECTION 6.14. Operations of the Surviving Corporation. (a)
The Company Board immediately following the Effective Time shall consist
of: (i) the CEO; (ii) seven members to be composed of (A) such members of
the Company Board (other than the current CEO and Ineligible Directors (as
defined in Section 9.03)) as of the date hereof who wish to continue or
rejoin as members of the Company Board following the Effective Time and (B)
such other persons as may be necessary to fill any vacancies in the seven
members as shall be designated for election by a majority of the persons
specified in clause (A) (the "Class I Directors"); (iii) two members (the
"Class M Directors") to be designated by Meadowbrook Lane, Inc.
("Meadowbrook"); and (iv) one member (together with any alternate that
Conopco may from time to time designate, the "Class U Director") to be
designated by Conopco. The size of the Company Board shall be fixed at 11.
Directors shall be elected for one year terms (subject to earlier removal,
death or resignation), and a majority of directors then in office in each
Class shall designate the candidates for election to the Company Board in
such Class each year, and Conopco shall cause the election of such
candidates and the CEO to the Company Board. Vacancies on the Company Board
shall be filled in a like manner. Conopco, as sole shareholder of the
Surviving Corporation, shall remove any director of any Class at the
written request of at least a majority of the directors of such Class then
in office and shall not otherwise remove any member of the Company Board
after the Effective Time, other than a Class U Director or the CEO
following termination of his or her employment. No Ineligible Director
shall be permitted at any time to be elected to the Company Board.
(b) Immediately following the Effective Time, the Surviving
Corporation shall delegate authority to the CEO to manage the affairs of
the Company, substantially in the form of Exhibit B, appropriately adjusted
for inflation and other relevant factors. The Surviving Corporation, with
the consent of Conopco, shall review on an annual basis the proper scope of
such delegation and shall make a new delegation to the CEO as of January 1
of each year. Within the scope of the authority delegated by the Surviving
Corporation to the CEO, the CEO may act without obtaining the prior
approval of Conopco or the Company Board. The Company Board shall not alter
or challenge in any way the scope of any delegation of authority by the
Surviving Corporation to the CEO.
(c) Decisions with respect to the appointment, compensation
and removal of the CEO shall be made by Conopco after good faith
consultation with, and the participation in discussions of, an advisory
committee of the Company Board (the "Appointment Committee") consisting of
Ben Cohen ("B.C.") and Jerry Greenfield ("J.G."); provided, however, that,
if from time to time one or both of B.C. or J.G. is not a member of the
Company Board, then a majority of the Class I Directors then in office
shall appoint one or two, as the case may be, Class I Directors or Class M
Directors to the Appointment Committee.
(d) Subject to Sections 6.14(e) and 6.14(f), which place
primary responsibility for Social Mission Priorities and the Essential
Integrity of the Brand (each as defined below) with the Company Board, the
Surviving Corporation shall be managed by the CEO in accordance with an
annual business plan. Each year the CEO shall present a business plan for
the following year to Conopco and the Company Board. Conopco and the
Company Board, in good faith consultation with each other, shall review the
proposal and Conopco, the Company Board and the CEO shall use good faith
efforts to reach agreement on the annual business plan. If such parties are
unable to reach agreement on the annual business plan, the ultimate
determination of such plan shall be by Conopco. The annual business plan
may be modified following the principles set out in the previous two
sentences.
(e) The Company Board shall have primary responsibility for
preserving and enhancing the objectives of the historical social mission of
the Company as they may evolve from time to time consistent therewith
("Social Mission Priorities"). The Company Board shall work together with
the CEO to integrate Social Mission Priorities into the business of the
Surviving Corporation. The Company Board shall have a committee (the
"Social Venture Committee") that shall oversee the Social Venture Fund (as
defined below) consisting of one Class M Director, appointed by a majority
of the Class M Directors then in office, and B.C., or, if B.C. is not a
member of the Company Board, J.G., or, if neither B.C. nor J.G. is a member
of the Company Board, a Class I Director appointed by a majority of the
Class I Directors. Schedule 6.14 contains an illustrative list of Social
Mission Priorities of the Company as of the date hereof.
(f) The Company Board shall be the custodians of the Ben &
Jerry's-brand image and shall have primary responsibility for safeguarding
the integrity of the essential elements of the Ben & Jerry's brand-name
(the "Essential Integrity of the Brand"). The Company Board shall work
together with the CEO to provide that the business of the Surviving
Corporation is conducted in a manner that preserves and enhances the
Essential Integrity of the Brand. As part of this responsibility, the
Company Board may prevent any action by the CEO in the areas of new product
introduction, the changing of product standards and specifications, the
approval of the content of marketing materials and the licensing or other
use of the Ben & Jerry's trademark that, in each case, a majority of the
Company Board reasonably determines to be inconsistent with the Essential
Integrity of the Brand.
(g) The Company and Conopco shall work together to develop
and mutually agree to a set of measures of the social performance of the
Surviving Corporation ("Social Metrics"). The Surviving Corporation, under
the direction of the Company Board, shall seek to have the Social Metrics
of the Surviving Corporation increase at a rate in excess of the rate of
sales increases of the Surviving Corporation.
(h) The Surviving Corporation shall continue the Company's
practice of making charitable contributions by making contributions, for a
minimum of ten years, of $1.1 million per year adjusted annually (i) by
multiplying such amount by the ratio of the U.S. Producer Price Index for
the month of December of the year in which the determination is made to the
U.S. Producer Price Index for December 1999 and (ii) by multiplying the
product of such calculation by the ratio of the equivalent gallon sales of
Products bearing the Principal Licensed Mark (each as defined in the
License Agreement) sold by any person in such year to the equivalent gallon
sales of Products sold in 1999; provided, however, that such ratio shall
never be less than one. To the extent that a material portion of the
Company's business consists of activities other than the manufacture and
sale of Products, Conopco and the Surviving Corporation shall agree on an
appropriate equivalent measure of sales volume for clause (ii) with respect
to such non-Product activities. The Company Board shall have the
responsibility for allocating annual contributions among The Ben & Jerry's
Foundation, Inc. (the "Foundation"), local community charitable initiatives
with the support and oversight of employee Community Action Teams and
charitable institutions selected by the OCEO. The Company Board may
allocate a portion of such contributions to the Foundation so long as (i)
the Foundation does not significantly change its charitable purpose, (ii)
none of the trustees of the Foundation disparages the Surviving
Corporation, its products or its management and (iii) any replacement or
additional trustee of the Foundation is reasonably satisfactory to Conopco.
After such ten year period, the Surviving Corporation shall continue to
make contributions as calculated in accordance with the first sentence of
this Section 6.14(h) unless the activities and performance of the
Foundation cease to be reasonably acceptable to Unilever, and provided that
the Foundation meets the other requirements set out in the previous
sentence. The Company Board shall also be responsible for making the
determination referred to in Section 6.05(d).
(i) Conopco shall not prevent the Surviving Corporation from
fulfilling its obligations under this Section 6.14.
(j) Conopco shall have primary responsibility for the
financial and operational aspects of the Surviving Corporation and the
other aspects of the Surviving Corporation not allocated to the Company
Board pursuant to this Section 6.14. Each member of the Company Board after
the Effective Time and all employees of the Surviving Corporation shall
agree to abide by the Unilever Code of Business Conduct, and all employees
of the Surviving Corporation shall agree to abide by Unilever's financial,
accounting and legal procedures.
(k) Following the Effective Time, the Surviving Corporation
shall establish a new product development unit responsible for special
projects to be headed by B.C., for so long as B.C. is a member of the
Company Board and an employee of the Surviving Corporation. The role of
such unit shall include the test-marketing of new products to a reasonable
extent, provided that such test-marketing is performed in conjunction with
the Surviving Corporation's marketing department to ensure that proper
measures are utilized to determine the success or failure of such
test-marketing.
(l) The parties agree that the Company Charter and the
Company By-laws shall be amended after the Effective Time to the extent
necessary to implement the provisions contained in this Section 6.14,
including if necessary the Surviving Corporation electing to become a close
corporation in accordance with the provisions of the VBCA.
SECTION 6.15. The Foundation. Immediately prior to the
Effective Time, the Surviving Corporation shall, and Conopco shall cause
the Surviving Corporation to, make a one-time contribution of not less than
$5 million to the Foundation so long as (i) the Foundation does not
significantly change its charitable purpose, (ii) none of the trustees of
the Foundation disparages the Surviving Corporation, its products or its
management and (iii) any replacement or additional trustee of the
Foundation appointed before the date of payment is reasonably satisfactory
to Conopco.
SECTION 6.16. Certain Employee Matters. (a) The Surviving
Corporation shall not, for a period of at least two years following the
Effective Time, initiate any material headcount reduction of the employees
of the Company, such headcount to be measured on a seasonal basis taking
into account past employment practice by the Company.
(b) The Surviving Corporation shall maintain for a period of
at least five years following the Effective Time its corporate presence and
substantial operations in Vermont.
(c) The Surviving Corporation shall maintain the Company's
current "liveable wage" policy in respect of employees of the Surviving
Corporation.
(d) Following the Effective Time, a significant amount of
the incentive-based compensation of the OCEO shall be based on the social
performance of the Surviving Corporation, and the Company Board shall be
primarily responsible for the award of such social performance based
amounts.
SECTION 6.17. Social Milestones. Following the Effective
Time, Conopco shall cause the Parents to, and the Company shall, appoint
John Elkington (or such other person as the parties may agree from time to
time) (the "Social Advisor") to work with the Parents and the Company to
develop a program of social milestones for the assessment of the Parents'
efforts to incorporate socially responsible practices into their
businesses, based on the Parents' social audit to be completed in the year
2000 (the "Parents Social Audit"), which will set out five-year performance
goals with interim annual targets (the "Social Milestones"), each of the
Social Milestones to be agreed between the Parents and the Company. The
Social Advisor shall carry out an annual audit of the Parents' performance
in relation to the Social Milestones, such audit to be publicly
disseminated to the extent consistent with the dissemination of the Parents
Social Audit, or, if the Parents Social Audit is not publicly disseminated,
on a time frame and in a manner reasonably acceptable to the Parents and
the Company Board, which manner shall include publication on the Parents'
website. The reasonable fees of John Elkington shall be borne by Conopco or
its affiliates.
SECTION 6.18. The Social Venture Fund. Following the
Effective Time, the Surviving Corporation shall establish an entity (the
"Social Venture Fund") independent from the Foundation and the Surviving
Corporation, such entity to be beneficially owned by the Foundation or
another charitable foundation to be established by the Surviving
Corporation (so long as such other charitable foundation constitutes an
entity to which donations would be tax deductible under the U.S. Income Tax
Code). The Surviving Corporation shall fund such entity pursuant to an
agreement to be made between the Surviving Corporation and the Foundation
after the Effective Time on such terms and conditions as they and the
Social Venture Committee shall approve to provide venture financing to (a)
vendors owned by women, minorities or indigenous people, (b) vendors which
give priority to a social change mission, and (c) such other third-party
entrepreneurial businesses within the scope of the Company's Social Mission
Priorities. The Surviving Corporation shall make available to the Social
Venture Fund an aggregate amount of $5 million. The terms of any agreement
relating to the Social Venture Fund shall limit the financial
responsibility of the Surviving Corporation to the foregoing cash
contributions.
ARTICLE VII
SECTION 7.01. Conditions to 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-l(c) under the Exchange Act (relating to Sub's
obligation to pay for or return tendered shares of Company Common Stock
promptly after the termination or withdrawal of the Offer), to pay for any
shares of Company Common Stock 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 of Company Common Stock that,
taking into account the conversion of the Class B Common Stock to Class A
Common Stock, would constitute a majority of the combined voting power of
the Company Common Stock (determined on a fully diluted basis, after giving
effect to the exercise or conversion of all options, rights and securities
exercisable or convertible into voting securities) (the "Minimum Tender
Condition"), (ii) the waiting period (and any extension thereof) under the
HSR Act applicable to the purchase of shares of Company Common Stock
pursuant to the Offer shall have expired or been terminated and (iii) the
Company shall have mailed the notice of conversion described in Section
6.11(b) to all holders of Class B Common Stock following receipt of the
notice specified in Section 6.11(b) and shall not have taken any action in
violation of Section 6.11(b). 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 of Company Common
Stock not theretofore accepted for payment or paid for, and may terminate
or amend the Offer, with the consent of the Company, or 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:
(a) there shall be threatened by any Governmental Entity, or
there shall be initiated or pending any suit, action, proceeding,
application or counterclaims by any Governmental Entity or any
other person, or before any court or governmental authority, agency
or tribunal, domestic or foreign in each case that has a reasonable
likelihood of success, (i) challenging the acquisition by Conopco
or Sub of any Class A Common Stock, seeking to restrain or prohibit
the making or consummation of the Offer or the Merger or any other
Transaction, or seeking to obtain from the Company, Conopco or Sub
any damages that are material in relation to the Company and its
subsidiaries taken as whole, (ii) seeking to prohibit or limit the
ownership or operation by the Company, Conopco or any of their
respective subsidiaries of any material portion of the business or
assets of the Company, Conopco or any of their respective
subsidiaries, or to compel the Company, Conopco or any of their
respective subsidiaries to dispose of or hold separate any material
portion of the business or assets of the Company, Conopco or any of
their respective subsidiaries, as a result of the Offer, the Merger
or any other Transaction, (iii) seeking to impose limitations on
the ability of Conopco or Sub to acquire or hold, or exercise full
rights of ownership of, any shares of Company Common Stock,
including the right to vote the Company Common Stock purchased by
it on all matters properly presented to the shareholders of the
Company, (iv) seeking to prohibit or limit Conopco or any of its
subsidiaries from effectively controlling in any material respect
the business or operations of the Company and the Company
Subsidiaries, or (v) which otherwise, individually or in the
aggregate, would reasonably be expected to have a Company Material
Adverse Effect;
(b) any Law shall be threatened, proposed, sought, or any
Law or Judgment shall be enacted, entered, enforced, promulgated,
amended or issued with respect to, or deemed applicable to, or any
Consent withheld with respect to (i) Conopco, the Company or any of
their respective subsidiaries or (ii) the Offer, the Merger or any
other Transaction, by any Governmental Entity that would reasonably
be expected to result directly or indirectly, in any of the
consequences referred to in paragraph (a) above;
(c) since the date of this Agreement, there shall have
occurred (i) any material damage to any material property in which
the Company or any Company Subsidiary has any interest, (ii) any
suit, action or proceeding threatened against or affecting the
Company or any Company Subsidiary or any significant development in
any existing suit, action or proceeding involving or affecting the
Company or any Company Subsidiary, (iii) any challenge to the use
by the Company of any material intellectual property rights used in
its business at the date hereof or (iv) any event, change, effect
or development adversely affecting the integrity of the trademarks
or trade names under which the Company conducts its business, that,
in any case under each of clause (i), (ii), (iii) and (iv),
individually or in the aggregate, have had or would reasonably be
expected to have, a Company Material Adverse Effect;
(d)(i) it shall have been publicly disclosed or Conopco
shall have otherwise learned that beneficial ownership (determined
for the purposes of this paragraph as set forth in Rule 13d-3
promulgated under the Exchange Act) of more than 50% of the
outstanding shares of the Company Common Stock has been acquired by
another person or (ii) the Company Board or any committee thereof
shall have withdrawn or modified in a manner adverse to Conopco or
Sub, its approval or recommendation of this Agreement, the Offer or
the Merger, failed to recommend to the Company's shareholders that
they accept the Offer and give the Company Shareholder Approval or
approved or recommended any Company Takeover Proposal;
(e)(i) any representation and warranty of the Company in
this Agreement that is qualified as to Company Material Adverse
Effect shall not be true and correct as of the date of this
Agreement, except to the extent such representation and warranty
expressly relates to an earlier date (in which case on and as of
such earlier date), and (ii) the representations and warranties of
the Company that are not so qualified as to Company Material
Adverse Effect shall not be true or correct in all respects as of
the date of this Agreement, except to the extent such
representations and warranties expressly relate to an earlier date
(in which case on and as of such earlier date), unless the failure
of all such representations and warranties in this clause (ii) to
be true and correct in aggregate, has had or would reasonably be
expected to have a Company Material Adverse Effect;
(f) the Company shall have failed to perform in any material
respect any obligation or to comply in any material respect with
any agreement or covenant of the Company to be performed or
complied with by it under this Agreement; or
(g) this Agreement shall have been terminated in accordance
with its terms;
which, in any such case, and regardless of the circumstances giving rise to
any such condition (including any action or inaction by Conopco or any of
its affiliates), makes it inadvisable, in the sole judgment of Sub or
Conopco, to proceed with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Sub and
Conopco and, subject to Section 1.01(a), may be asserted by Sub or Conopco
regardless of the circumstances giving rise to such conditions or may be
waived by Sub and Conopco in whole or in part at any time and from time to
time in their sole discretion. The failure by Conopco, Sub or any other
affiliate of Conopco 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.
SECTION 7.02. Conditions to the Merger. The respective
obligation of each party to effect the Merger is subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Shareholder Approval. The Company shall have obtained
the Company Shareholder Approval.
(b) Antitrust. The waiting period (and any extension
thereof) applicable to the Merger under the HSR Act shall have been
terminated or shall have expired.
(c) No Injunctions or Restraints. No temporary restraining
order, preliminary or permanent injunction or other order issued by any
court of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Merger shall be in effect; provided,
however, that prior to asserting this condition each of the parties shall
have used its best efforts to prevent the entry of any such injunction or
other order and to appeal as promptly as possible any such injunction or
other order that may be entered.
ARTICLE VIII
Termination, Amendment and Waiver
SECTION 8.01. Termination. This Agreement may be terminated
at any time prior to the Effective Time, whether before or after receipt of
Company Shareholder Approval:
(a) by mutual written consent of Conopco, Sub and the Company;
(b) by either Conopco or the Company:
(i) if the Merger is not consummated on or before
September 30, 2000, unless the failure to consummate the
Merger is the result of a material breach of any Transaction
Agreement by the party seeking to terminate this Agreement;
provided, however, that (A) the passage of such period shall
be tolled for any part thereof during which any party shall
be subject to a nonfinal order, decree, ruling or action
restraining, enjoining or otherwise prohibiting the
consummation of the Merger, (B) this Agreement may not be
terminated pursuant to this clause (i) after Sub accepts
shares of Company Common Stock for payment pursuant to the
Offer and (C) such September 30, 2000 date may be extended
to a date not later than November 30, 2000, by Conopco or
the Company prior to termination of this Agreement, by
notice in writing to the other, if on September 30, 2000,
the Offer has not been consummated because of the failure of
the condition in clause (ii) of the lead-in paragraph in
Section 7.01 or the condition in paragraph (a) in Section
7.01;
(ii) if any Governmental Entity issues an order,
decree or ruling or takes any other action permanently
enjoining, restraining or otherwise prohibiting the Offer or
the Merger and such order, decree, ruling or other action
shall have become final and nonappealable;
(iii) if as the result of the failure of any of the
conditions set forth in Section 7.01 to this Agreement, the
Offer shall have terminated or expired in accordance with
its terms without Conopco having purchased any shares of
Company Common Stock pursuant to the Offer; or
(iv) if, upon a vote at a duly held meeting to obtain
the Company Shareholder Approval, the Company Shareholder
Approval is not obtained; provided, however, that Conopco
may not terminate this Agreement under this Section
8.01(b)(iv) if the Company Common Stock owned by Sub,
Conopco or any affiliate of Conopco shall not have been
voted in favor of obtaining the Company Shareholder
Approval;
(c) by Conopco, if the Company breaches or fails to perform
in any material respect any of its representations, warranties or
covenants contained in any Transaction Agreement, which breach or
failure to perform (i) would give rise to the failure of a
condition set forth in Section 7.01, and (ii) has not been cured
within 30 days after the giving of written notice to the Company of
such breach (provided that Conopco is not then in wilful and
material breach of any representation, warranty or covenant
contained in any Transaction Agreement);
(d) by Conopco:
(i) if the Company Board or any committee thereof
withdraws or modifies, or publicly proposes to withdraw or
modify, in a manner adverse to Conopco, its approval or
recommendation of this Agreement, the Offer or the Merger,
fails to recommend to the Company's shareholders that they
accept the Offer and give the Company Shareholder Approval
or approves or recommends, or publicly proposes to approve
or recommend, any Company Takeover Proposal; provided,
however, that any public statement by the Company that (A)
it has received a Company Takeover Proposal, (B) it has
given Conopco the notice required by Section 5.02(b) in
connection with the withdrawal of its recommendation or (C)
otherwise only describes the technical operation of Sections
5.02, 6.07 and 7.01(d)(ii) and this Section 8.01 shall not
be deemed to be a public proposal to withdraw or modify the
Company Board's recommendation for the purposes of this
clause (i) or Section 7.01(d)(ii); or
(ii) if the Company or any of its officers,
directors, employees, representatives or agents takes any of
the actions that are proscribed by Section 5.02;
(e) by the Company if the Company Board withdraws its
recommendation of the Offer in accordance with Section 5.02(b); and
(f) by the Company, if Conopco breaches or fails to perform
in any material respect any of its representations, warranties or
covenants contained in any Transaction Agreement, which breach or
failure to perform cannot be or has not been cured within 30 days
after the giving of written notice to Conopco of such breach
(provided that the Company is not then in wilful and material
breach of any representation, warranty or covenant contained in any
Transaction Agreement).
SECTION 8.02. Effect of Termination. In the event of
termination of this Agreement by either the Company or Conopco as provided
in Section 8.01, this Agreement shall forthwith become void and have no
effect, without any liability or obligation on the part of Conopco, Sub or
the Company, other than Section 3.21, Section 4.06, Section 6.02(c),
Section 6.07, this Section 8.02 and Article IX, which provisions shall
survive such termination, and except to the extent that such termination
results from the wilful and material breach by a party of any
representation, warranty or covenant set forth in any Transaction
Agreement.
SECTION 8.03. Amendment. This Agreement may be amended by
the parties at any time before or after receipt of the Company Shareholder
Approval; provided, however, that after receipt of the Company Shareholder
Approval, there shall be made no amendment that by Law requires further
approval by the shareholders of the Company without the further approval of
such shareholders. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties and, where
any amendment relates to a provision of this Agreement in respect of which
any third party beneficiary is entitled to an enforcement right pursuant to
Section 9.07, an instrument in writing must be signed by the person
entitled to such enforcement right.
SECTION 8.04. Extension; Waiver. At any time prior to the
Effective Time, the parties may (a) extend the time for the performance of
any of the obligations or other acts of the other parties, (b) waive any
inaccuracies in the representations and warranties contained in this
Agreement or in any document delivered pursuant to this Agreement or (c)
subject to the proviso of Section 8.03, waive compliance with any of the
agreements or conditions contained in this Agreement. Any agreement on the
part of a party to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party and, where
any waiver relates to a provision of this Agreement in respect of which any
third party beneficiary is entitled to an enforcement right pursuant to
Section 9.07, an instrument in writing must be signed by the person
entitled to such enforcement right. 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 such rights.
SECTION 8.05. Procedure for Termination, Amendment,
Extension or Waiver. A termination of this Agreement pursuant to Section
8.01, an amendment of this Agreement pursuant to Section 8.03 or an
extension or waiver pursuant to Section 8.04 shall, in order to be
effective, require (a) in the case of Conopco, Sub or the Company, action
by its Board of Directors or the duly authorized designee of its Board of
Directors and (b) in the case of the Company, action by a majority of the
members of the Company Board who were members thereof on the date of this
Agreement and remain as such hereafter or the duly authorized designee of
such members; provided, however, that in the event that Sub's designees are
appointed or elected to the Company Board as provided in Section 6.10,
after the acceptance for payment of Company Common Stock pursuant to the
Offer and prior to the Effective Time, the affirmative vote of the majority
of the Independent Directors, in lieu of the vote required pursuant to
clause (a) above, shall be required by the Company to (i) amend or
terminate this Agreement, (ii) exercise or waive any of the Company's
rights or remedies under this Agreement or (iii) extend the time for
performance of Conopco's or Sub's respective obligations under this
Agreement.
ARTICLE IX
General Provisions
SECTION 9.01. Nonsurvival of Representations and Warranties.
None of the representations and warranties in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective
Time. This Section 9.01 shall not limit any covenant or agreement of the
parties which by its terms contemplates performance after the Effective
Time.
SECTION 9.02. Notices. All notices, requests, claims,
demands and other communications under this Agreement shall be in writing
and shall be deemed given upon receipt by the parties at the following
addresses (or at such other address for a party as shall be specified by
like notice):
(a) if to Conopco or Sub, to
Conopco, Inc.
390 Park Avenue, 21st Floor
New York, NY 10022
Attention: Ronald Soiefer
Facsimile: (212) 688-3411
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Attention: Richard Hall
Facsimile: (212) 474-3700
(b) if to the Company, to
Ben & Jerry's Homemade, Inc.
30 Community Drive
South Burlington, VT 05403
Attention: Chief Executive Officer
Facsimile (508) 230-5579
with a copy to:
Ropes & Gray
One International Place
Boston, MA 02110
Attention: Howard K. Fuguet
Facsimile: (617) 951-7050
and:
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036
Attention: Randall H. Doud
Facsimile: (917) 777-2524
SECTION 9.03. Definitions. For purposes of this Agreement:
"affiliate" and "associate", when used with reference to any
person, shall have the respective meanings ascribed to such terms in Rule
12b-2 of the Exchange Act, as in effect on the date of this Agreement. In
the case of Conopco, "affiliate" shall include, without limitation, either
Parent, and any entity a majority of the voting control of which is owned,
directly or indirectly, by either Parent or both of them together.
A "material adverse effect" means, when used in connection
with the Company or Conopco, any change or effect that is materially
adverse to the business, properties, assets, condition (financial or
otherwise), or results of operations of such party and its subsidiaries,
taken as a whole, except (in the case of the Company) as expressly set
forth in the Company Disclosure Letter.
An "Ineligible Director" means any member of the Company
Board at the date hereof who (a) fails to tender his or her shares of
Company Common Stock pursuant to the Offer, (b) makes any public statement
disparaging either Parent, Conopco, the Company, any Transaction Agreement
or any Transaction, (c) takes any action that, but for Section 9.11, would
constitute a breach of this Agreement by the Company or (d) takes any other
action which is intended to cause any of the Transactions to fail to be
completed.
"Parent" means either of Unilever N.V. or Unilever PLC and
"Parents" shall mean both of them.
A "person" means any individual, firm, corporation,
partnership, company, limited liability company, trust, joint venture,
association, Governmental Entity or other entity.
A "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.
SECTION 9.04. Interpretation; Disclosure Letters. When a
reference is made in this Agreement to a Section, Exhibit or Schedule such
reference shall be to 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". Any matter disclosed in
any section of the Company Disclosure Letter shall be deemed disclosed only
for the purposes of the specific Sections of this Agreement to which such
section relates.
SECTION 9.05. Severability. If any term or other provision
of this Agreement is invalid, illegal or incapable of being enforced by any
rule or Law, or public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party. Upon such
determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that
transactions contemplated hereby are fulfilled to the extent possible.
SECTION 9.06. Counterparts. This Agreement may be executed
in one or more counterparts, all of which shall be considered one and the
same agreement and shall become effective when one or more counterparts
have been signed by each of the parties and delivered to the other parties.
SECTION 9.07. Entire Agreement; No Third-Party
Beneficiaries. The Transaction Agreements, taken together with the Company
Disclosure Letter and the Conopco Disclosure Letter, (a) constitute the
entire agreement, and supersede all prior agreements and understandings,
both written and oral, among the parties with respect to the Transactions,
and (b) except for the provisions of Article II and Sections 6.04(a), 6.05,
6.06, 6.15, 6.16 and 6.18 are not intended to confer upon any person other
than the parties any rights or remedies. The provisions of Section 6.04(a)
are enforceable by the holders of the Company Stock Options. The provisions
of Section 6.05(a) are enforceable by the parties to those agreements
referred to in Section 6.05(a). The provisions of Sections 6.05(b),
6.05(c), 6.05(d), 6.16 and 6.18 are enforceable by Henry Morgan and Jeffrey
Furman acting jointly. Conopco shall reimburse the reasonable legal fees
and expenses of Henry Morgan and Jeff Furman in bringing any litigation, or
taking any other action, in good faith to enforce the third-party
beneficiary rights granted to them under this Section 9.07. The provisions
of Section 6.06 are enforceable by the directors and officers referred to
in Section 6.06. Until such time as the Company Board is constituted in
accordance with Section 6.14(a), the provisions of Section 6.14(a) are
enforceable by any individual who is a member of the Company Board at the
date of this Agreement. Thereafter, (i) the provisions of Section 6.14(a)
relating to the removal of directors may be enforced by any individual who
was a member of the Company Board immediately prior to the alleged breach
of Section 6.14(a) and (ii) the provisions of Section 6.14(a) relating to
the appointment of a director may be enforced by any individual who was a
member of the Company Board immediately prior to the alleged breach of
Section 6.14(a) or by any individual nominated for appointment in
accordance with the provisions of Section 6.14(a) but not so appointed by
the Surviving Corporation. The provisions of Section 6.15 are enforceable
by the Foundation.
SECTION 9.08. GOVERNING LAW. THIS AGREEMENT AND ANY DISPUTE
ARISING OUT OF OR RELATING TO THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK, REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE
GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS THEREOF, EXCEPT TO
THE EXTENT THE LAWS OF THE STATE OF VERMONT ARE MANDATORILY APPLICABLE TO
THE MERGER.
SECTION 9.09. Assignment. Neither this Agreement nor any of
the rights, interests or obligations under this Agreement shall be
assigned, in whole or in part, by operation of law or otherwise by any of
the parties without the prior written consent of the other parties except
that Sub may assign, in its sole discretion, any of or all its rights,
interests and obligations under this Agreement to Conopco or to any direct
or indirect wholly owned subsidiary of Conopco, but no such assignment
shall relieve Sub of any of its obligations under this Agreement. Any
purported assignment without such consent shall be void. Subject to the
preceding sentences, this Agreement will be binding upon, inure to the
benefit of, and be enforceable by, the parties and their respective
successors and assigns.
SECTION 9.10. Enforcement. The parties agree that
irreparable damage would occur in the event that any of the provisions of
any Transaction 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 any Transaction Agreement and to enforce specifically the terms
and provisions of each Transaction Agreement in any New York state court or
any Federal court located in the State of New York, this being in addition
to any other remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (a) consents to submit itself to the
personal jurisdiction of any New York state court or any Federal court
located in the State of New York in the event any dispute arises out of any
Transaction Agreement or any Transaction, (b) agrees that it will not
attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court, (c) agrees that it will not bring
any action relating to any Transaction Agreement or any Transaction in any
court other than any New York state court or any Federal court sitting in
the State of New York and (d) waives any right to trial by jury with
respect to any action related to or arising out of any Transaction
Agreement or any Transaction.
SECTION 9.11. Separate Parties. Each of the parties to this
Agreement acknowledges and agrees that each party is responsible for its
own performance of its obligations hereunder and that no other party shall
be liable for a failure of another party to perform its obligations.
Without limiting the foregoing, it is acknowledged by Conopco that no
Ineligible Director is acting as a representative of the Company in
connection with the Transaction Agreements or the Transactions and that any
action or failure to act on the part of any Ineligible Director shall not
be deemed to be an action or failure to act on the part of the Company,
including under Section 5.02, 6.07 or 8.01, except to the extent that such
Ineligible Director's action or failure to act is taken under the
instruction of, or with the cooperation or the concurrence of, the Company
Board.
IN WITNESS WHEREOF, Conopco, Sub and the Company have duly
executed this Agreement, all as of the date first written above.
CONOPCO, INC.,
by
/s/ MART LAIUS
Name: Mart Laius
Title: Vice President
VERMONT ALL NATURAL EXPANSION COMPANY,
by
/s/ MART LAIUS
Name: Mart Laius
Title: Vice President
BEN & JERRY'S HOMEMADE, INC.,
by
/s/ PERRY D. ODAK
Name: Perry D. Odak
Title: Chief Executive Officer
EXHIBIT A
ARTICLES OF INCORPORATION
OF
SURVIVING CORPORATION
ARTICLE I
The name of the corporation (hereinafter called the
"Corporation") is BEN & JERRY'S HOMEMADE, INC.
ARTICLE II
The address of the Corporation's registered office in the
State of Vermont is 148 College Street, Burlington, Vermont. The name of
the registered agent at such address is The Corporation Trust Company.
ARTICLE III
The Corporation has the following Mission Statement: We have
a progressive, nonpartisan, social mission that seeks to meet human needs
and eliminate injustices in our local, national and international
communities by integrating these concerns into our business activities. Our
focus is on children and families, and the environment.
o The gap between the rich and the poor is wide. We strive to create
economic opportunities for those who have been denied them.
o Capitalism and the wealth it produces does not create opportunity
for everyone equally. We practice caring capitalism by integrating
concern for the disadvantaged in our day-to-day business
activities, and by advancing new models of economic justice that
can become sustainable and replicable.
o Manufacturing by definition creates waste. We strive to minimize
our negative impact on the environment.
o The growing of food sometimes uses toxic chemicals. We support
socially and environmentally sustainable methods of food production
and family farming.
The U.S. continues to spend significantly more on its military each year
than the combined spending on: child health, welfare, education, nutrition,
housing, job training and environment. We seek and support nonviolent ways
to achieve peace and justice.
We strive to manifest a deep respect for human beings inside and outside
our Corporation and for the communities of which they live.
ARTICLE IV
The total number of shares of all classes of stock that the
Corporation shall have authority to issue is 10,000,000 shares of Common
Stock having the par value of $0.01 per share.
ARTICLE V
The number of directors of the Corporation shall be fixed
from time to time by the Board of Directors of the Corporation.
ARTICLE VI
In furtherance and not in limitation of the powers conferred
upon it by law, the Board of Directors of the Corporation is expressly
authorized to adopt, amend or repeal the By-laws of the Corporation.
ARTICLE VII
Unless and except to the extent that the By-laws of the
Corporation so require, the election of directors of the Corporation need
not be by written ballot.
ARTICLE VIII
To the fullest extent from time to time permitted by law, no
director of the Corporation shall be personally liable to any extent to the
Corporation or its shareholders for monetary damages for breach of his
fiduciary duty as a director.
ARTICLE IX
Each person who is or was or had agreed to become a director
or officer of the Corporation, and each such person who is or was serving
or who had agreed to serve at the request of the Corporation as a director,
officer, partner, member, employee or agent of another corporation,
partnership, limited liability company, joint venture, trust or other
enterprise (including the heirs, executor, administrators or estate of such
person), shall be indemnified by the Corporation to the fullest extent
permitted from time to time by applicable law.
ARTICLE X
The purpose of the Corporation is to engage in any lawful
act or activity for which corporations may be organized under the Vermont
Business Corporation Act.
EXHIBIT B
Form of Delegation of Authority
A. Conopco and the Company Board retain authority with regard to the
following matters, among others; as between Conopco and the Company
Board the allocation of responsibility between them shall be as
provided in Section 6.14:
1. Approval on an annual basis for the upcoming year of:
a. the Company's Strategic and Operating Plan to include:
Marketing, Sales and Social Mission
b. the Financial Plan/Budget to include: Statement of
Income, Balance Sheet and Statements of Cash Flows (including an Operating
Budget, Statement of Projected Financial Positions, Balance Sheet and Flow
of Funds Forecasts)
c. the Capital Expenditure Budget and Operating Lease Budget
d. the Company's draft and final audited financial
statements
e. Trade Credit Policy: Conopco approval for Trade Credit
extended to any customer in excess of $1 million
2. Selection of
a. Corporate Counsel
b. Independent Auditors
2.1. Approval of
a. the principal Banking Institution(s) with which the
Company maintains deposit, borrowing or other relationships
c. any Investment Banking Institution
d. Public Relations and Advertising Agencies
e. Consultants with a contract value in excess of $175,000
or to whom payments are expected to exceed $175,000 in the aggregate
f. any insurance agent, broker or similar party
3. Any transaction involving
a. the sale or encumbrance of assets with a book value over
$100,000
b. the sale of stock or assets of a subsidiary
c. the acquisition of stock or assets of another company
d. loans in excess of $30,000 made outside the ordinary
course of business not to exceed $150,000 outstanding at any time
e. a single purchase of Inventory in excess of $5 million or
any opening of Letters of Credit in excess of $2 million (in the aggregate
of excess over and above $2 million or singular opening of Letter of Credit
above $2 million)
f. transactions with any parties related to any officer of
the Company
g. the sale or purchase of the Company's capital stock
h. the declaration and payment of dividends
i. the approval of any other contract (including all real
property leases, joint venture, partnership or similar contracts with
vendors) with a value in excess of $250,000 per year with terms not to
exceed five years or any other non-ordinary course payment or purchase
orders (including the settlement of litigation claims involving payments by
the Company) in excess of $250,000
4. Total compensation (including Bonuses) of any employees at
or above the level of Officer and/or any other employees exceeding $200,000
annually.
5. Employment termination or appointments of any employee with
a base salary at or above $200,000.
6. Any change in employee benefit plans with an annual
aggregate cost increase in excess of $300,000.
7. Any amendments of the By-laws of the Company.
8. Any amendment or alteration of the borrowing authority of
the Company or renegotiation, prepayment of or amendment to any lending
arrangement.
9. Approval of authorized signatures and signing authorities on
all bank accounts for check signing, money transfer authorities, etc.
10. The delegation of authority to individuals other than
officers (e.g., buyers) of the Company to execute contracts or other
agreements on behalf of the Company.
11. Any amendment or new collective bargaining or other labor
agreements.
12. all matters not covered by the delegation in B and any
matters requiring, as a matter of law, a specific vote of the Board of
Directors in addition to the votes establishing the below delegation.
B. The Surviving Corporation delegates to the Chief Executive Officer
the authority to set upon the following matters with the required
written concurrence of the Chief Financial Officer:
1. Capital Expenditures within the Capital Budget up to $700,000
per project; provided, that the total value of capital expenditures does
not exceed the amount authorized in the Budget.
2. Capital Expenditures not in the Capital Budget up to $350,000
per project, but not over $750,000 in the aggregate. In no event will total
capital expenditures exceed the total value of capital expenditures
authorized in the Capital Budget.
3. Disposal or encumbrance of assets with a book or fair market
value of no more than $150,000 per transaction.
4. Operating Leases within Operating Lease Budget up to a total
commitment of $500,000 per transaction.
5. Operating Leases not in Operating Lease Budget, with a total
commitment of $150,000 per year in total commitment per lease with a term
not to exceed five years, but not over $450,000 annually in the aggregate.
6. Administration of the details of the Company's Compensation
Program (applying its general compensation philosophy as previously
developed) for all employees (other than those covered in A.3 above).
7. Administration of the Employees Benefit Program, including
approval of changes with an aggregate annual cost up to $300,000.
8. a. Execution of contracts within the ordinary course with
an individual value of up to $500,000 that do not
require special approval by A.3 above.
b. Other non-ordinary payments in an amount up to $150,000
that also do not require special approval by A.3 above.
C. Conopco and the Surviving Corporation will be provided with a
comprehensive review of the following matters by the Chief
Executive Officer, or other members of the management on a regular
basis, or more often if issues create the need:
1. As soon as practical:
a. Status of material tax matters as they arise.
b. Status of material legal matters as they arise.
c. Any material change in vendor relations.
d. Any material change in the operating or financial
performance of the Company.
e. Any contact made by potential buyers who may be
interested in purchasing the Company and/or its assets.
f. Notices of default or acceleration under loan agreements,
notes or significant contract.
2. Monthly:
a. Financial and operating results, including managements
analysis in writing
b. Update/reconciliation of actual vs. budgeted Capital
expenditures.
3. Quarterly:
a. Status of legal matters
b. Competition update
c. Information systems
d. Report on all banking relationships
e. Product Quality
4. Annually:
a. Independent accountant management letters
b. Other tax matters
c. Officers salary, bonus and wages adjustment
recommendations
d. Property/Casualty and employee benefit insurance programs
e. Advertising and Public Relations programs
f. Officer performance appraisals
g. Union relationships
Schedule 6.14
Ben & Jerry's Social Mission Priorities
The following list contains certain Social Mission Priorities of the
Company as of the date hereof. Following each priority is an example of the
Company's current activities and views.
1. CONTINUE PACKAGING IMPROVEMENT EFFORTS WITH THE ULTIMATE OBJECTIVE
OF ACHIEVING A COMPOSTABLE PINT.
Early in 1999 the Company launched the eco-pint. The Company has
transitioned one-third of its pint packaging to "unbleached" kraft
paper with a nontoxic coating on the outside. With paper bleaching
being one of the largest causes of dioxins and toxic water
pollution in the United States this initiative is a step in the
right direction. The packaging, which is brown inside has been well
received. The Company will continue to seek to create the economic
and market conditions for suppliers to cost effectively produce
this packaging. Efforts will also continue to research other
technologies to achieve a fully compostable package (e.g., starch
based packaging, alterative glues and inks).
2. CONTINUE THE ONGOING COMPLIANCE WITH CERES PRINCIPLES AND EFFORTS
TOWARD CREATION OF A SUSTAINABILITY "FOOTPRINT" FOR THE BUSINESS.
The Company was the first public company to adopt the CERES
principles ("Coalition for Environmentally Responsible Economies").
It has filed an annual, public environmental report with CERES. At
the present time the Company is reviewing CERES compliance with our
manufacturing operations in Canada and Israel.
The Company is engaged in a process of documenting its
environmental "footprint". Simply stated, this is a process of
analyzing hat we take, what we make, and what we waste. We have a
strong environmental ethic across the Company that will continue to
be encouraged and supported. Specific and continual improvement
goals in wastewater, solid waste and energy use reduction are a
regular part of our annual planning process. We compost dairy
waste, recycle shrink wrap and cardboard and recently initiated an
innovative program with a few of our suppliers to receive
ingredients in returnable totes.
3. CONTINUE SUSTAINABLE AGRICULTURE EFFORTS.
We define sustainable agriculture as a continuum of agricultural
production practices that meet the objectives of reducing
environmental degradation, maintaining the productivity of the land
over time and promoting economic viability for the farm and rural
communities.
We have determined that as a food business, reliant on dairy
farming, our priority must be to reduce adverse impacts on water
from farm run-off. Struck by the polar debate between outmoded,
traditional farming methods on one end and organic farming on the
other, we have launched an innovative project to provide greater
sustainability gains at the farm level, especially through reduced
phosphorous and nitrogen run-off, through a Whole Farm Nutrient
Management Program. We are using a model developed at Cornell
University that has proven to yield both environmental and
economic gains. Planning for a pilot project with the St. Albans
Cooperative, Cornell University, the University of Vermont and the
State Agriculture Department is underway.
4. CONTINUE THE LONG-TERM RELATIONSHIP WITH THE ST. ALBANS COOPERATIVE.
All our milk and cream is provided by the 500+ family farm members
of the St. Albans Cooperative. Vermont has been losing dairy farms
at an alarming rate. Farming is a cornerstone of the Vermont
economy. Many of the farms of the St. Albans Cooperative surround
St. Albans Bay, an environmentally fragile part of Lake Champlain.
5. CONTINUE THE BRAND'S POSITION OF OPPOSING THE USE OF RBGH AND
CONTINUE THE "WE OPPOSE RBGH" PLEDGE AND PREMIUM.
The Company opposes the use of rBGH (recombinant bovine growth
hormone) which is injected in cows to increase milk production.
With no shortage in the milk supply, rBGH is in our view a
biotechnological solution to a problem that does not exist. In
addition, as the manufacturer's production information notes rBGH
causes increased mastitis and other health problems for cows.
When the FDA approved rBGH they allowed voluntary labeling but left
the issue of a labeling standard and decision to the states. Our
label says: "We oppose recombinant bovine growth hormone. The
family farmers who supply our milk and cream pledge not to treat
their cows with rBGH. The FDA has said no significant difference
has been shown and no test can distinguish between milk from rBGH
treated and untreated cows." Despite our use of the FDA disclaimer,
four states refused our label (Illinois, Nevada, Hawaii and
Oklahoma). Because we felt strongly that our customers had a right
to know how our products are produced and because we were making a
truthful statement on our label, we brought a First Amendment
commercial free speech lawsuit against the State of Illinois. This
suit was eventually settled in our favor, and we have carried the
above-noted label on our products since 1997.
6. SUPPORT THE BRAND'S POSITION TO HAVE GMO FREE PRODUCTS AVAILABLE.
We believe being GMO free is consistent with our brand image and
values. We have been following the backlash against GMO food that
is occurring around the world and view this as much as a political
movement as a scientific one. We believe there should be more
public input into GMO food policy issues, and impacts on ecosystems
need to be more fully studied. We also recognize that biotechnology
could be used to help feed desolate parts of the world. We are
working on reformulating an alternative sourcing for potential GMO
corn or soy ingredients in our products starting with products for
international markets. Consistent with our activities around rBGH,
we support labeling and consumers right to know how their food is
produced.
7. CONTINUE TO EXPAND AND SUPPORT THE COMPANY'S UNIQUE PARTNERSHOP
PROGRAM.
We have eight existing PartnerShops. We intend to greatly expand
this program under which Ben & Jerry's ScoopShops are owned and
operated by nonprofits. In general, the model works best with
programs that serve youth. The most celebrated of our stores is the
PartnerShop in Times Square. It is owned and operated by Common
Ground, a New York City nonprofit organization focused on housing
and training for people without homes or needing support. The store
played a role in the renovation of Times Square to a more family
friendly neighborhood and has been featured on "60 Minutes" and in
numerous other media outlets. In the PartnerShop Program the
Company waives the franchise fee and allocates more staffing and
resources.
8. CONTINUATION OF INNOVATIVE PURCHASING RELATIONSHIPS AS WELL AS
CONSIDERATION OF FURTHER DEVELOPMENT OF SOURCING RELATIONSHIPS
CONSISTENT WITH OUR SOCIAL MISSION AND GOALS.
We have used procurement and licensing agreements to further social
and environmental goals. Since 1988, the Greyston Bakery in
Yonkers, New York, has been a supplier of brownies. The bakery is
owned by the Greyston Foundation, a provider of numerous social
services in Yonkers, New York. These include housing for homeless
people and for people with AIDS, day care and work programs. We are
consulting with the bakery in the relocation and expansion of its
operating facility and in developing additional customers for its
products. Aztec Harvest Cooperative, a worker-owned cooperative,
provides our coffee extract. In conjunction with our vanilla
supplier, the Virginia Dare Company, we use a blended vanilla
extract that includes vanilla beans from a Costa Rican organization
that works on rain forest renewal. In addition to other social and
environmental usefulness, these relationships usually create
stories that enhance the brand image of the Company.
We also see licensing as an opportunity to fulfill a social
purpose. For example, we pay a licensing fee to the band Phish for
Phish Food with the fee directed to a foundation that supports
projects to cleanup Lake Champlain. We seek to source both licensed
and other products that we sell in our stores in a socially
responsible manner.
9. PROVIDE ONGOING SUPPORT FOR PARTNERSHIPS WITH NON-PROFITS.
In the past we have worked with The Children's Defense Fund and
Greenpeace. We tend to work with groups that are not likely
corporate partners whose focus is on issues of environmental
degradation or social injustice and poverty.
10. CONTINUE ONGOING CONTRIBUTION FOR PHILANTHROPY AND SUPPORT FOR SITE
COMMUNITY PROJECTS.
The Company currently donates a portion of its pre-tax profits
through employee-led philanthropy to non-profit organizations
committed to positive social change. This contribution was $1.1
million in the aggregate in 1999.
11. CONTINUE THE SOCIAL AUDIT/ASSESSMENT AND REPORTING.
The Company sets annual social mission goals as part of the annual
planning process and conducts a social audit around its
performance. The audit is completed internally with an outside
auditor retained to review and report on results. The complete
social performance assessment is published in our annual report. We
have for the past 11 years conducted social performance
assessments.
ADDENDUM
The following list contains certain further aims. It is the current
intention of Conopco, subject to economic viability, to conduct the
business of the Surviving Corporation in a manner consistent with the
following aims. Economic viability shall be as mutually agreed in good
faith by the Company Board and Conopco.
(i) significant women and minority representation on the Company Board;
(ii) affirmative programs to identify and provide technical
assistance to vendors owned by minorities and indigenous peoples;
(iii) affirmative programs to identify and to provide financial and
technical assistance to vendors which give priority to a social
change mission;
(iv) the expansion of the number of PartnerShops and franchises
owned by women, minorities and indigenous peoples;
(v) the Company's headquarters and primary production facilities
remaining in Vermont;
(vi) the purchase of non-RBGH milk and cream primarily from Vermont
farms;
(vii) the use of unbleached and recyclable packaging, to the extent
available at commercially reasonable prices;
(viii) the purchase of key commodities (such as vanilla, coffee and
cocoa) according to fair trade practices, to the extent available
at commercially reasonable prices; and
(ix) the continued advocation of positive social changes on
packaging, such as non-partisan campaign finance reform, national
budget priorities, sustainable energy etc.
ANNEX B
CONFORMED COPY
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LICENSE AGREEMENT
Dated as of April 11, 2000,
By and between
BEN & JERRY'S HOMEMADE HOLDINGS, INC.
and
BEN & JERRY'S HOMEMADE, INC., on the one hand,
And
UNILEVER N.V.
and
UNILEVER PLC, on the other hand.
------------------------------------------------------------------------------
LICENSE AGREEMENT
THIS AGREEMENT, made as of April 11, 2000 by and between (i)
BEN & JERRY'S HOMEMADE HOLDINGS, INC., a Vermont corporation, and BEN &
JERRY'S HOMEMADE, INC., a Vermont corporation (together, "Licensor"), on
the one hand, and (ii) UNILEVER N.V., a corporation formed under the laws
of The Netherlands, and UNILEVER PLC, an English public limited company
(together, "Licensee"), on the other hand.
W I T N E S S E T H
WHEREAS Licensee wishes to obtain a License (the "License"),
with the right to grant sublicenses to its Affiliates so long as they
remain Affiliates (as hereinafter defined), to use the Licensed Mark and
Licensed Technology (each, as hereinafter defined) in connection with the
development, manufacture, marketing, marketing, distribution, promotion and
sale of Products having Super Premium Status (each, as hereinafter defined)
in all countries throughout the world, subject to Section 9 and with the
exception of (i) the United States (including the territories and
commonwealths thereof), (ii) the Caribbean as outlined on the map attached
as Annex A hereto, (iii) countries designated by Licensee pursuant to
Section 2(a)(ii)(C) or otherwise becoming available exclusively to Licensor
pursuant to Section 2 or Section 18 and (iv) Japan (collectively from time
to time, the "Territory");
WHEREAS, in connection with such development, manufacture,
marketing, distribution, promotion and sale of Products under the Licensed
Mark, Licensee views as essential the furtherance of the essential
integrity of the Principal Licensed Mark (as hereinafter defined); and
WHEREAS Licensor is willing to grant such a License on the
terms and conditions hereinafter appearing.
NOW, THEREFORE, in consideration of these recitals, of the
following covenants and other good and valuable consideration, Licensor and
Licensee hereby agree as follows:
1. Definitions
(a) "Affiliate" shall mean any person or entity controlling,
controlled by, or under common control with such party, and in the case of
Licensee, includes, without limitation, any entity a majority of the voting
control of which is owned, directly or indirectly, by Unilever N.V. or
Unilever PLC, or both of them together.
(b) "Bankruptcy Code" shall have the meaning assigned to it in
Section 18(b).
(c) "Business" shall have the meaning assigned to it in Section
2(a)(i).
(d) "Change of Control" shall have the meaning assigned to it in
Section 18(c)(ii).
(e) "Committee on Joint Planning" shall have the meaning assigned
to it in Section 5(b).
(f) "Confidential Information" shall have the meaning assigned to
it in Section 17.
(g) "Contract Year" shall mean a calendar year (January 1-December
31), except that the first Contract Year shall commence on the date hereof
and end on and include December 31, 2000.
(h) "Cure" shall have the meaning assigned to it in Section
18(a)(iii).
(i) "Designate" shall have the meaning assigned to it in Section
2(a)(ii)(C).
(j) "Essential Integrity of the Principal Licensed Mark" shall mean
the essential integrity of the Principal Licensed Mark that has been used
by Licensor, including the essential "social mission" of Licensor, to
market Products throughout the Territory, including the essential "social
mission" of Licensor (certain objectives of which are set forth in the
"Statement of Leading with Progressive Values Across our Business",
attached as Exhibit A hereto) that is one of three parts of Licensor's
corporate mission.
(k) "Initial Term" shall have the meaning assigned to it in Section
3.
(l) "Licensed Mark" shall mean the trademarks, logos, slogans and
names owned by Licensor, including, without limitation, those listed in
Schedule 10, including all registrations therefor for marks covering
Products including, without limitation, those listed on Schedule 10 (but
subject to limitations thereon, including disclosures on Schedule 10) and
all variations or derivatives thereof, designs associated therewith,
whether or not registered as trademarks, and such other names, symbols,
initials or marks as may be added to the coverage of the License pursuant
to the provisions of Sections 11 and 13, whether contained on Schedule 10,
but, in every case, including only items pertaining to Licensor's conduct
of the Business in the Territory.
(m) "Licensed Technology" shall mean the patents (if any),
inventions, discoveries, trade secrets, improvements, formulae, practices,
processes, methods, technology, know-how, including, without limitation,
any of the foregoing in the process of development, and similar proprietary
rights owned by Licensor, including, without limitation, those material
items which will be listed on Schedule 10, which Licensee shall provide
within 60 days after the date hereof, and such other technology as may be
added to the coverage of the License by agreement of the parties, but, in
every case, (i) including only items pertaining to Licensee's conduct of
the Business in the Territory and (ii) excluding any of the foregoing that
Licensee has independently developed and any of the foregoing that are in
the public domain other than by a breach of this Agreement by Licensee.
(n) "Licensor's Group" shall have the meaning assigned to it in
Section 15(a).
(o) "Losses" shall have the meaning assigned to it in Section
15(a).
(p) "Manufactured Products" shall have the meaning assigned to it
in Section 5(d).
(q) "Material Default" shall have the meaning assigned to it in
Section 18(a)(ii).
(r) "Material Licensed Technology" shall have the meaning assigned
to it in Section 22(a).
(s) "Net Sales" shall mean the gross invoiced amount for Products
bearing the Licensed Mark shipped and invoiced by Licensee or any of its
Affiliates to third party customers (including sales through Licensee-owned
retail stores and to franchisees) less: (i) actual or accrued discounts;
(ii) temporary price reductions, including off-invoice price reductions,
trade expenses, rebates and customer allowances; (iii) returns; (iv)
freight charges paid by customers for delivery of such Products; (v) sales
taxes, excise taxes and duties which are billed to customers and collected
by Licensee or its Affiliates for submission to a taxing authority; and
(vi) value added, excise or sales taxes incorporated into the sales price
pursuant to governmental requirement (i.e., the net invoice price to
customers). For the purposes of this Agreement, a sale shall not be deemed
to have occurred when Products bearing the Licensed Mark are transferred or
"sold" by Licensee or its permitted sublicensees to their respective
Affiliates for resale, but only upon the resale by Licensee or any
Affiliate to a third party. Licensee represents that this Section 1(s) is
the definition of "Net Sales" used by Licensee in its business.
(t) "Partner Shop" shall have the meaning assigned to it in Section
7(e)(ii).
(u) "Percentage Royalty" shall have the meaning assigned to it in
Section 6(a).
(v) "person" shall mean any individual, firm, corporation,
partnership, limited liability company, trust, joint venture, governmental
entity or other entity.
(w) "Principal Licensed Mark" shall mean the "BEN & JERRY'S" trade
name.
(x) "Products" shall mean ice cream, frozen yogurt, sorbet,
novelties, flavored ice products and any frozen dessert (including low-fat
frozen desserts) of similar type.
(y) "Region" shall mean each of Unilever's business regions,
namely, each of Europe, North America, Africa, Central Asia and Middle
East, Central and Eastern Europe, East Asia Pacific (including China) and
Latin America.
(z) "Social Mission Default" shall have the meaning assigned to it
in Section 7(e)(x)(A).
(aa) "Social Mission Material Default" shall have the meaning
assigned to it in Section 7(e)(x)(B).
(bb) "Section 7 Default" shall have the meaning assigned to it in
Section 7(e)(x)(B).
(cc) "Super Premium Products" shall mean the following Products
(other than novelty Products and cake Products): (i) full-fat ice cream
that (A) does not exceed 40% overrun, (B) is produced with a mix base that
exceeds 14.0% butterfat, is sweetened only with sucrose, and uses only
cream as a source of butterfat, and skim milk or condensed milk solids as a
source of non-fat milk solids and (C) to the extent applicable, contains
inclusions and/or variegates that displace more than 20% of the total,
saleable volume in a product container; (ii) frozen yogurt that (A) does
not exceed 40% overrun and (B) is produced with a mix base that is flavored
with a minimum of 10% cultured yogurt, made only with cream and fluid milk
or condensed milk solids, and is sweetened with only sucrose and/or corn
sweeteners; (iii) low fat ice cream that (A) does not exceed 40% overrun,
(B) is produced with a mix base made only with cream and fluid milk or
condensed milk solids, and is sweetened with only sucrose and/or corn
sweeteners and (C) to the extent applicable, contains inclusions and/or
variegates that displace more than 20% of the total, saleable volume in a
product container; and (iv) sorbet or frozen fruit desserts that (A) do not
exceed 40% overrun, (B) in the case of frozen fruit desserts and sorbet,
the total fruit content (by weight) of which exceeds 20% and (C) produced
with a mix base that is sweetened with only sucrose and/or corn sweeteners.
(dd) "Super Premium Status" shall mean Super Premium Products that
are sold at a recognized market price premium to premium products in the
category.
(ee) "Territory" shall have the meaning assigned to it in the
Preamble.
(ff) "Values Partnership Committee" shall have the meaning assigned
to it in Section 7(b).
2. Grant of License
(a) (i) Subject to Section 9 and except as disclosed on Schedule
10, Licensor hereby grants to Licensee a license throughout the Territory
to use both the Licensed Mark and the Licensed Technology in connection
with the development, manufacture, marketing, promotion, distribution
(wholesale and retail) and sale (including Licensee-owned and
franchisee-owned retail store services in compliance with Section 7(e)(ii))
of Products having Super Premium Status under the Licensed Mark
(collectively, the "Business").
(ii) During the term of this Agreement, Licensor shall not,
and shall not grant a license to any other Person to, develop, manufacture,
market, distribute (wholesale and retail) or sell Products (including
novelties) in the Territory (including for purposes of this Section
2(a)(ii) Canada and the Benelux countries), except (A) if Licensee is in
Material Default, which Material Default has not been Cured within 60 days
following receipt of written notice from Licensor that complies with the
requirements of Section 18(a), (B) as to a particular Region, if Licensee
is in Regional Default with respect to such Region, which Regional Default
has not been Cured within 60 days following receipt of written notice from
Licensor that complies with the requirements of Section 18(d) or (C) as to
any particular country, if Licensee has provided written notice to Licensor
that Licensee does not intend to conduct the Business ("Designate") in such
country or Region. The foregoing shall not apply to sales of Products
having Super Premium Status bearing the Principal Licensed Mark (x) in
Canada by Delicious Alternative Desserts, Ltd. or (y) in the Benelux
countries by Sfeerbeheer B.V.
(b) Licensee may use the Licensed Mark in connection with the
Business throughout the Territory; provided, however, that Licensee may
only use the Licensed Mark together with Licensee's other trademarks with
Licensor's written approval, which approval may be withheld in Licensor's
sole discretion; provided, further, that Licensor's approval shall not
unreasonably be withheld if the requirements of applicable law require such
use.
(c) (i) Licensee shall use commercially reasonable efforts to
exploit fully the rights herein granted throughout the Territory and to
sell under the Licensed Mark the maximum quantity in each Contract Year of
Products having Super Premium Status therein, in each case in a manner
consistent with Products having Super Premium Status, good business
practice, with the standards hereinafter provided and with all appropriate
long-term brand-building philosophy.
(ii) As provided in Section 5(c), the Committee on Joint
Planning shall meet on a regular basis to develop collaboratively a plan
for the phased geographic expansion of the Business in the Territory that
will maximize the quantity in each Contract Year of Products having Super
Premium Status sold under the Licensed Mark, consistent with good business
practice, the Essential Integrity of the Principal Licensed Mark and with
an appropriate long-term brand-building philosophy.
(d) The License hereby granted includes the right of Licensee to
use promotional items with the Licensed Mark (except as disclosed on
Schedule 10) in the Territory that are given away or sold solely in an
ancillary promotion to the marketing, promotion, distribution and sales of
Products, including accessories, T- shirts and caps, to the extent they are
approved by Licensor, which approval shall not unreasonably be withheld or
delayed. Licensee agrees that all such promotional items shall be
manufactured in accordance with fair labor standards, as such standards (to
the extent such standards are applicable to international manufacture) are
used from time to time by Licensor in the manufacture of its promotional
items.
(e) The License hereby granted includes the right of Licensee to
use the Licensed Mark in connection with Products having Super Premium
Status in all media and shall also include the right to use the Licensed
Mark as part of, or as the name of, any division or business unit, but not
as the name of a corporation or similar entity, which Licensee may organize
for the purposes of manufacturing and distributing for sale Products
bearing the Licensed Mark.
(f) Licensor reserves all rights to the Licensed Mark and Licensed
Technology except as specifically granted herein to Licensee. Without
limiting the first sentence of this Section 2(f), Licensor reserves the
right to use, and to grant to any other person the right to use, the
Licensed Mark in the Territory on or in connection with goods and services
other than Products (it being the intent of the parties, however, to avoid
any confusion, mistake or deception in the marketplace as between Products
sold by Licensee hereunder and other Products bearing the Licensed Mark),
subject to Section 2(d). Licensor reserves the right to use, and to grant
to any other person, a right to use, the Licensed Mark outside the
Territory on or in connection with goods and services, including Products.
(g) Licensee agrees to grant to Licensor for use only in connection
with Products, on a non-exclusive basis, a license, which Licensor may not
sublicense (except to its Affiliates), for the use outside the Territory of
(i) names and formulae relating to new flavors of Products developed by
Licensee bearing the Licensed Mark, (ii) enhancements to the Licensed
Technology, other than those enhancements that (A) are derived in
significant part from technology developed by Licensee in connection with
Products of Licensee other than Products bearing the Licensed Mark or (B)
have a primary application to Products of Licensee other than Products
bearing the Licensed Mark and (iii) innovations in marketing and
promotional techniques that are developed by Licensee (or jointly in
collaboration with Licensor hereunder) in its conduct of the Business in
the Territory. The license granted pursuant to this Section 2(g) shall be
royalty free, non-exclusive and shall survive the termination or expiration
of this Agreement. Use of information licensed to Licensor pursuant to this
Section 2(g) by suppliers of Licensor in providing supplies and/or
materials for use on Products shall not require a sublicense.
(h) The parties agree that (i) the Licensed Technology may be used
only in connection with Products bearing the Licensed Mark and (ii)
Licensee and its Affiliates will not during the term of this Agreement
manufacture, market, distribute or sell Products having Super Premium
Status in any country in the Territory other than Products bearing the
Licensed Mark, except that Licensee shall not in any way be restricted from
further developing, manufacturing, marketing, distributing or selling
Products having Super Premium Status that Licensee is currently developing,
manufacturing, marketing, distributing or selling and any modifications
(including any new flavor variations or any uses of such Products) thereof.
The parties agree that this Section 2(h)(ii) shall be deemed not to be
breached by reason of the acquisition by Licensee or any of its Affiliates
of any business that, in the last full fiscal year prior to execution of
the acquisition agreement derived less than 40% of its consolidated
revenues from any of the development, manufacture, marketing, distribution
(wholesale and retail) or sales of Products having Super Premium Status;
provided, however, that Licensee or its Affiliate, as applicable, will sell
or close such business within 18 months of being requested to do so by
Licensor. The parties further agree that Licensee will not engage in any
activity that would otherwise be prohibited by clause (ii) of this Section
2(h) for (x) one year after the expiration of this Agreement pursuant to
notice given in accordance with Section 3 and (y) three years following
termination of this Agreement, in its entirety, pursuant to Section 18(a)
by reason of Licensee's Material Default.
3. Term.
This Agreement shall commence on the date hereof and end on and
include December 31, 2010 (the "Initial Term"). Thereafter, this Agreement
shall be extended automatically for successive terms, each of which shall
be for a five-year period, unless Licensee shall give notice of termination
not less than one year prior to the end of the Initial Term or any
successive term, as the case may be.
4. Standard of Quality.
(a) Licensee shall ensure that Products bearing the Licensed Mark
and their manufacture, distribution and packaging shall be of a high
standard and of such style, appearance and quality as shall be suited to
the protection of the good will pertaining thereto, and shall conform to
Licensor's manufacturing and packaging standards as set forth on Exhibit B
hereto (which shall be provided within 60 days of the date hereof). All
such Products shall be manufactured, sold, labeled, packaged, distributed
and marketed in accordance, in all material respects, with all applicable
laws concerning Products in the Territory.
(b) Licensee specifically acknowledges that the product development
process is a collaborative process and that it will actively and timely
seek to obtain Licensor's creative input, including input relating to the
social mission requirements contained in Section 7, with respect to the
styles, designs, containers, packaging contents and quality of all
Licensee's Products bearing the Licensed Mark and creative marketing.
Before selling or distributing any such Product, Licensee shall deliver to
Licensor for its approval two samples of each such Product together with
its containers, labels and packaging as well as proposed marketing
materials, which approval shall not unreasonably be withheld or delayed.
The foregoing approval process shall also apply to changes in the formula
for any Product with respect to a given country. Licensee shall bear the
cost of any and all such changes.
(c) Licensor and its authorized representatives shall have the
right, during normal business hours and upon reasonable prior notice, for
the duration of the Agreement, (i) to inspect all facilities utilized by
Licensee in connection with its manufacture of Products pursuant hereto and
to examine Products in process of manufacture, and (ii) to gain reasonable
access to the records of Licensee relating to quality control, in each case
so long as Licensor does not unreasonably disrupt the normal operations of
Licensee. Licensee and its Affiliates shall maintain, at their respective
main offices, books and records regarding customers, permitted co- packers
and sublicensees, product complaints and claims and all other particulars
necessary for verifying compliance with the terms of this Agreement.
Licensee and its Affiliates shall make such books and records available to
Licensor and its designated representatives, from time to time, during
normal business hours and upon reasonable prior notice. Such records shall
be maintained by Licensee and its Affiliates for a period of 24 months
after expiration or termination of this Agreement; provided, however, that
such books and records need not be retained longer than four years
following the end of the year to which such books and records relate.
Licensor shall be entitled to make copies, at its expense, of any such
records.
(d) Sections 4(a) and 4(c), the first sentence of each of Section
4(e)(i) and 7(e)(i), and the first sentence of Section 7(e)(iv) and Exhibit
B shall apply equally to any co-packer (or manufacturing sublicensee).
Licensee shall use commercially reasonable efforts to cause any co-packer
or (manufacturing sublicensee) to give reasonable notice of any recall,
retrieval or withdrawal of which it becomes aware and to cease and desist
from the continued manufacture or labeling of Products in violation of the
standards contained in Exhibit B. Licensee shall not use any co-packer (or
manufacturing sublicensee) without the prior written consent of Licensor,
which consent shall not unreasonably be withheld or delayed. In requesting
such consent, Licensee shall concurrently furnish to Licensor an agreement
(in English) with such co-packer (or manufacturing sublicensee) reasonably
satisfactory to Licensor with respect to the applicable requirements
contained in this Section 4(d).
(e) (i) Licensee shall, upon written notice to Licensor in
accordance with notification procedures to be mutually agreed upon by the
parties, recall, retrieve or withdraw Licensee's Products bearing the
Licensed Mark in the Territory if required or requested to do so by any
governmental agency. In the event of a recall, retrieval or withdrawal
Licensee agrees to spend such monies as Licensee and Licensor mutually and
reasonably deem necessary in advertising and promotional activities to
protect the goodwill associated with the Licensed Mark.
(ii) If, in the absence of a government request or
requirement of a recall, retrieval or withdrawal, Licensor or Licensee
reasonably believes that a recall, retrieval or withdrawal of Licensee's
Products bearing the Licensed Mark in the Territory is necessary to protect
the Essential Integrity of the Principal Licensed Mark, Licensee and
Licensor shall work together to determine in good faith whether Licensee
should, at its own expense, recall, retrieve or withdraw such Products from
any applicable market in the Territory; provided, however, that in the
event that Products bearing the Licensed Mark are not manufactured in
compliance with the standards set forth in Exhibit B or are otherwise
manufactured or labeled in violation of this Agreement and such
manufacturing or labeling of the Products does not have a material effect
on the Principal Licensed Mark or on the Essential Integrity of the
Principal Licensed Mark, then Licensee shall not be obligated to recall,
retrieve or withdraw Licensee's Products bearing the Licensed Mark but
shall only be obligated to cease and desist from the continued
manufacturing or labeling of such non- compliant Products.
(iii) In the event a party becomes aware of any recall,
retrieval or withdrawal, or request for a recall, retrieval or withdrawal,
by any governmental body or regulatory authority, of Products bearing the
Licensed Mark, such party shall give telephonic notice (to be confirmed in
writing) to the other party within 48 hours of becoming aware of the
occurrence of such event. Additionally, in the event of any significant
accident involving the manufacture, distribution or sale of Products
bearing the Licensed Mark, each party shall provide the other party with
notice as set in the preceding sentence.
(iv) Sections 4(e)(i) and 4(e)(ii) shall survive termination
or expiration of this Agreement.
5. Business Operation.
(a) Licensor shall provide, without additional charge, to Licensee
all Licensed Technology owned by Licensor and its Affiliates for use under
this Agreement that relates to the Business. Licensor further agrees to
make available for consulting to Licensee such employees of Licensor or its
Affiliates as Licensee may reasonably request in connection with the
foregoing provision of information.
(b) Licensee agrees regularly to consult with Licensor concerning
Licensee's business plans, and the implementation thereof, for Products
having Super Premium Status in the Territory bearing the Licensed Mark, it
being agreed that there should be joint cooperation and consultation in
order for Licensee to consider Licensor's creative input. Licensee shall
present to Licensor a draft of its Annual Marketing Plan with respect to
Products bearing the Licensed Mark once a year for Licensor's qualitative
review and creative input prior to the implementation of such Annual
Marketing Plan.
(c) Licensee and Licensor agree to establish an advisory committee
(the "Committee for Joint Planning") composed of two representatives
designated from time to time by Licensor and two representatives designated
from time to time by Licensee in order to facilitate the cooperation and
consultation referred to in Section 5(b). Among other matters, the
Committee for Joint Planning shall also be responsible for establishing a
plan for the phased geographic expansion of the Business in the Territory,
as contemplated by Section 2(c), and shall oversee the consultation and
cooperation required under Sections 5 and 8. The Committee for Joint
Planning shall meet at least once each calendar quarter at such times and
places as it may designate.
(d) Subject to Licensor's capacity to manufacture the quantities
reasonably requested by Licensee within the requested time periods,
Licensor agrees to sell to Licensee quantities of Products bearing the
Licensed Mark ("Manufactured Products") necessary to meet Licensee's demand
in any country in the Territory to the extent that at such time Licensee is
not engaged in the Business in such country at a level sufficient to
manufacture such Products on commercially reasonable terms. To the extent
that Licensor is supplying quantities of Products to Licensee pursuant to
the preceding sentence, Licensee's obligations with respect to
manufacturing standards contained herein, including, without limitation,
the manufacturing standards in Section 4(a) and Exhibit B, shall have been
assumed to have been met. Licensee shall purchase such Manufactured
Products from Licensor at Licensor's ex-factory cost plus 8%, F.O.B.
Licensor's plant, and such purchases shall be subject to Licensor's
standard terms and conditions for sales to distributors and subject to a
mutually satisfactory co-packing agreement.
(e) Notwithstanding any other provision of this Agreement, Licensee
shall reimburse Licensor for out-of-pocket expenses and a pro rata (based
on actual service time) portion of applicable salaries (including
benefits), in each case without mark-up, in connection with all consulting,
assistance and other services provided by Licensor under this Agreement
within 30 days of receipt of an invoice from Licensor; provided, however,
that such expenses are approved in writing in advance by Licensee and
Licensor and, if applicable, its Affiliates, provide supporting
documentation reasonably satisfactory to Licensee. The foregoing shall not
require any reimbursement in connection with (i) the participation by any
Person on the Committee for Joint Planning or the Values Partnership
Committee or (ii) the exercise by Licensor of its rights under Section
4(c), other than in the case of an inspection or audit by Licensor that
uncovers or confirms a material breach of quality control standards in a
production run or a material breach of this Agreement by Licensee and in
such case Licensee shall reimburse Licensor pursuant to the first sentence
of this Section 5(e).
(f) Licensee shall have no obligation to conduct the Business
hereunder in any country in the Territory where the Principal Licensed Mark
or Material Licensed Technology infringes or interferes with the rights of
third parties; provided, however, that Licensee shall cooperate with
Licensor to conduct the Business in the Territory so as not to cause such
infringement or interference.
6. Payment of Royalty.
(a) (i) In consideration of the license granted hereunder, Licensee
shall pay to Licensor a royalty (the "Percentage Royalty") computed at the
rate of 5% of Net Sales of Products sold under the Licensed Mark (subject
to Section 7(e)(ix)) and 5% of Net Sales of promotional items sold
(including sales at retail where applicable) in accordance with Section
2(d)(subject to Section 7(e)(ix)) and 5% of all up-front franchise fees
collected by Licensee from its subfranchisees.
(ii) Licensee shall receive a credit against amounts payable
as the Percentage Royalty for each quarter in an amount equal to 8% of the
amount paid by Licensee to Licensor for Manufactured Products purchased by
Licensee from Licensor during such quarter. For purposes of determining
whether sales of Products bearing the Licensed Mark are sales of
Manufactured Products, the parties agree that Manufactured Products shall
be deemed to be the last Products bearing the Licensed Mark put into
Licensee's inventory and shall be deemed to be the first Products bearing
the Licensed Mark sold by Licensee to third parties.
(b) All payments of the Percentage Royalty by Licensee shall be
made to Licensor in New York, New York or such other country and city as
Licensor shall reasonably designate from time to time; provided, however,
that such designation must be in accordance with applicable law. The
Percentage Royalty shall be paid in U.S. Dollars. Where sales of Products
bearing the Licensed Mark are made in a currency other than U.S. Dollars,
the Percentage Royalty and other amounts shall be computed on the basis of
the conversion rate used by Licensee in its regular internal accounting
mechanisms.
(c) Licensee shall pay any withholding taxes that any governmental
authority may impose with respect to the payment of the Percentage Royalty.
The amount of such taxes shall be appropriately deducted from the amount of
Percentage Royalty otherwise payable to Licensor. Licensee shall furnish
Licensor with a copy of an official receipt promptly after each payment of
such taxes. Licensor may request Licensee not to withhold any specified
tax; provided, however, that (i) such request is reasonable and (ii) in any
such case, Licensor shall indemnify Licensee for all resulting liability
attributable to Licensor's request not to withhold.
(d) The Percentage Royalty payments hereunder shall be accounted
for and paid within 45 days following the close of each calendar quarter
and, subject to Section 6(a)(ii), shall be computed on the basis of Net
Sales during such quarter. The Percentage Royalty payable for each such
quarter shall be computed on the basis of Net Sales made for the Contract
Year through the end of such quarter with a credit for the Percentage
Royalty previously paid for such Contract Year. Licensee shall deliver to
Licensor at the time each payment of the Percentage Royalty is due a
written statement, indicating by year-to-date, the amount of Net Sales.
Such statement shall show the total amount of gross sales of all Products
bearing the Licensed Mark shipped during the period covered by such
payment, the Percentage Royalty and the amount of discounts and credits to
arrive at Net Sales. In the event that Licensee has not made its required
payments under this Section 6 within the specified time periods, Licensee
shall pay interest on such past due amounts at the 30-day London Interbank
Offered Rate plus 5%; provided, however, that the foregoing shall not apply
to any amounts withheld by Licensee as a result of a good faith dispute
regarding the amount owed to Licensor.
(e) Licensee shall furnish to Licensor, not later than 60 days
following the close of each Contract Year (or portion thereof in the event
of prior termination in accordance with this Agreement), a statement
containing the information required to be contained in the quarterly
statements referred to in Section 6(d), as well as a computation of the
Percentage Royalty earned by Licensor. Licensor shall be permitted, for a
period of two years after the receipt of each such annual accounting
statement, to object to such statement in writing, describing such
objections with specificity. If no such written objection is made, the said
annual statement shall be binding on both parties. If Licensor timely
objects in writing, the dispute shall be resolved in accordance with the
provisions of Section 27. This Section 6(e) shall survive the termination
or expiration of this Agreement.
(f) Licensee shall keep records adequate for verification of all
statements and payments made to Licensor hereunder. A certified public
accountant or other representative of Licensor's selection shall have
access upon reasonable notice and at reasonable business hours to those
records to the extent necessary to certify the statements and payments.
Such accountant or representative shall have the right to audit such
records for two years after the Contract Year to which they relate.
Licensor shall bear the cost of such audit unless such audit discloses a
variance of more than 10% from the amount due, in which event, Licensee
shall bear the full cost of such audit. All such books of account, records
and documents shall be kept available by Licensee for Licensor's inspection
for at least three years after the Contract Year to which they relate. This
Section 6(f) shall survive the termination or expiration of this Agreement.
(g) Licensee acknowledges that Licensor may have certain existing
royalty obligations to third parties relating to the Licensed Mark.
Accordingly, Licensee agrees to provide Licensor, upon Licensor's request
and within a time-period reasonably requested by Licensor, any and all
information required by Licensor in order to calculate such royalty
payments (as set forth in Exhibit C, which shall be provided within 60 days
following the date hereof). With respect to any third-party royalty
obligations on the part of Licensor arising after the date hereof, Licensor
agrees to provide promptly after Licensor agrees to such third-party
royalty obligations Licensee with written notice of the information
Licensor may reasonably require to make any such third-party royalty
payments. This Section 6(g) shall survive the termination or expiration of
this Agreement.
(h) If Licensee has either underpaid or overpaid Licensor amounts
payable as the Percentage Royalty under this Agreement, in the former case,
Licensee shall within 10 days of the discovery of such discrepancy pay to
Licensor the amount of such underpayment, and, in the later case, Licensor
shall within 10 days of the discovery of such discrepancy pay to Licensee
the amount of such overpayment, together, in each case, with interest on
the amount of the underpayment or overpayment, as applicable, at a rate
equal to the yield-to-maturity of U.S. treasury securities as published in
the Wall Street Journal with a maturity that most closely equals the period
of time beginning on the date of such underpayment or overpayment, as
applicable, and ending on the date such amount is paid to Licensor or
Licensee pursuant to this Section 6(h), as applicable.
7. Social Mission.
(a) Licensee agrees that the following will apply to its conduct of
the Business in the Territory. Products bearing the Licensed Mark shall be
developed, introduced, promoted and marketed by Licensee in a manner so as
to further the Essential Integrity of the Principal Licensed Mark, as such
Essential Integrity of the Principal Licensed Mark is now embodied in the
business conducted by Licensor in the United States (and certain countries
outside the United States), and as it may evolve hereafter in a manner
consistent with its current embodiment. Accordingly, Licensee shall
integrate sufficient aspects of Licensor's social mission into its conduct
of the Business in the Territory to preserve the Essential Integrity of the
Principal Licensed Mark in the Territory as it may evolve, as noted above.
(b) The parties further agree to establish a committee (the "Values
Partnership Committee") composed of (i) senior executives and members of
the board of directors of Licensor and (ii) senior executives of Licensee
engaged in its U.S. and its international ice cream businesses. Licensor
and Licensee shall each from time to time designate an equal number of
representatives to the Values Partnership Committee. The Values Partnership
Committee shall meet three times a year, or such other number of times a
year as the Values Partnership Committee shall determine, at such time and
place as may be designated by the Values Partnership Committee. The Values
Partnership Committee shall, in addition to any other responsibilities
conferred on it by any other provision of this Agreement, (i) find new
opportunities to develop and preserve the Essential Integrity of the
Principal Licensed Mark, (ii) monitor and oversee the performance by
Licensee of its obligations in this Section 7 in its conduct of the
Business in the Territory and (iii) monitor and oversee Licensor's
provision of assistance to Licensee in an effort to introduce from time to
time other applications of Licensor's social mission to Licensee's conduct
of the Business in the Territory.
(c) The parties acknowledge that, to the extent appropriate for
particular customs and market conditions, the promotion and marketing of
Products bearing the Licensed Mark will need to be adjusted for particular
countries in which Licensee will sell Products, but shall not be adjusted
in a way that, as a whole in any country, would compromise the Essential
Integrity of the Principal Licensed Mark. Accordingly, and without limiting
any other provision of this Agreement, Section 2(d) provides Licensor with
an approval right with respect to promotional items and Section 8(c)
provides Licensor with an approval right before Licensee may launch
Products in any country.
(d) The parties agree that the performance by Licensee of its
obligations in this Section 7 is a material and fundamental element of this
Agreement and is essential to preserve the Essential Integrity of the
Principal Licensed Mark.
(e) In connection with Licensee's commitment to preserve the
Essential Integrity of the Principal Licensed Mark, set forth below in
clauses (i) through (vi), as supplemented by clauses (vii) and (viii), are
certain elements of Licensor's social mission that Licensee has
specifically agreed to implement during the term of this Agreement in its
conduct of the Business in the Territory.
(i) With respect to certain raw materials used in the
manufacture of Products bearing the Licensed Mark (e.g., vanilla, coffee
and cocoa), Licensee agrees to purchase and use "fair trade" products, to
the extent available at commercially reasonable prices, when Licensee
commences production at each production facility in the Territory of
Products bearing the Licensed Mark. The determination as to whether a
product purchased and used by Licensee is a "fair trade" product shall be
made by reference to lists certified by The Max Havelaar Foundation, any
member of the Fairtrade Labeling Organizations International or any other
"fair trade" federation of similar reputable standing selected by Licensor,
subject to the reasonable approval of Licensee. As supplies of other "fair
trade" raw materials used in the manufacture of Products bearing the
Licensed Mark become available for purchase in appropriate quantities and
at commercially reasonable prices, Licensee agrees to expand its purchase
of "fair trade" products to include such additional raw materials. The
obligations contained in this Section 7(e)(i) shall be applied on a
country-by-country basis. The parties acknowledge that commercially
reasonable prices with respect to "fair trade" products in general may be
somewhat higher, but not significantly higher, than the price of non-"fair
trade" products.
(ii) In connection with the development of a plan for
Licensee's phased geographic expansion of the Business pursuant to Section
2(c), Licensor and Licensee shall jointly determine in which countries it
is commercially feasible for Licensee to franchise or operate scoop shops.
Once Licensee has established an economically successful scoop shop in a
country, it shall cooperate with Licensor to find an appropriate partner in
order to establish Licensee's next scoop shop in such country as a Partner
Shop; provided, however, that if Licensee opens several scoop shops in one
wave in such country (i.e., it opens several scoop shops contemporaneously
in such country), Licensee shall cooperate with Licensor to find a partner
to open a Partner Shop in the second wave of scoop shops in such country.
After the opening of the first Partner Shop in a country, Licensee shall
open up at least one new Partner Shop during each successive Contract Year
in such country with the objective of having Partner Shops constitute at
least 20% of the scoops shops in such country. "Partner Shop" shall mean a
franchised scoop shop that is awarded to a not-for-profit organization that
serves as an employment resource, and potentially a source of revenue, for
the not-for-profit organization, and that is exempted from payment of the
normal up-front franchise fee, and such term shall be modified from time to
time to reflect modifications made by Licensor in its practice of
franchising scoop shops to not-for-profit organizations in the United
States, provided that such modifications are reasonable, in terms of
commercial feasibility, for Licensee to adopt in countries outside the
United States. It being understood that the parties shall within 12 months
of the date hereof negotiate a master franchising agreement.
(iii) Commencing as of the date hereof, Licensee agrees to
explore in good faith, and in cooperation with Licensor, and both parties
agree to commit sufficient resources to, the development of a commercially
feasible organic line of Products bearing the Licensed Mark for sale in the
Territory. Once Licensee has successfully developed an organic line of
Products bearing the Licensed Mark to the mutual satisfaction of the
parties, Licensee shall make a commercially meaningful introduction within
12 months of such organic Products bearing the Licensed Mark in the
Territory.
(iv) Licensee agrees to use unbleached paper in the
packaging for Products bearing the Licensed Mark to the extent available at
commercially reasonable prices. To the extent unbleached paper is not so
available, Licensee shall use commercially reasonable efforts to encourage
suppliers to make unbleached paper available at commercially reasonable
prices. The parties acknowledge that commercially reasonable prices with
respect to unbleached paper in general may be somewhat higher, but not
significantly higher, than the prices of bleached paper. Licensee agrees to
continue the efforts of Licensor to make packaging for Products bearing the
Licensed Mark in the Territory more environmentally friendly. The foregoing
obligation shall be applied on a country-by-country basis.
(v) By the end of the first year of production at any
production facility in the Territory operated by Licensees (or its
permitted co-packers or manufacturing sublicensee), Licensee agrees, if
commercially feasible, to purchase a portion of the raw materials or other
ingredients used by it in Products bearing the Licensed Mark in such
production facility produced from suppliers owned by persons which
constitute not-for-profit entities (understanding that commercial
feasibility may require some managerial and other assistance, including
financial assistance, from Licensee to establish such supplier as a
reasonably suitable vendor to Licensee). It is understood by the parties
that use by Licensor of Greyston Bakery as a supplier in the United States
is an illustration of such practice. While the foregoing is primarily an
obligation of Licensee, Licensor shall work together with Licensee to
identify qualified suppliers under this clause (v). Licensee shall
increase, to the extent that it is commercially feasible, the amount of raw
materials or other ingredients purchased by Licensee (or its permitted
co-packers or manufacturing sublicensees) for use in Products bearing the
Licensed Mark from such suppliers each year. The parties acknowledge (A)
that in determining commercially feasibility with respect to increasing the
amount of raw materials and other ingredients purchased pursuant to this
Section 7(e)(v), Licensee may consider its dependence on each such supplier
as well as the ability of each such supplier to provide the raw materials
and other ingredients on a dependable basis and (B) that the prices of raw
materials or other ingredients from such suppliers may be somewhat higher,
but not significantly higher, than the prices from suppliers not owned by
not-for-profit entities. The foregoing obligation shall be applied on a
country-by-country basis.
(vi) By the end of the first year of production of Products
bearing the Licensed Mark at any production facility in the Territory
operated by Licensee (or its permitted co-packers or manufacturing
sublicensees), Licensee agrees, if commercially feasible, to purchase a
portion of the raw materials or other ingredients used by it in Products
bearing the Licensed Mark produced in such production facility from
suppliers owned by persons which constitute economically disadvantaged
groups (understanding that commercial feasibility may require some
managerial and other assistance, including financial assistance, from
Licensee to establish such supplier reasonably satisfactory to Licensee).
While the foregoing is primarily an obligation of Licensee, Licensor shall
work together with Licensee to identify qualified suppliers under this
clause (vi). Licensee shall increase, to the extent commercially feasible,
the amount of raw materials or other ingredients purchased by Licensee (or
its permitted co-packers or manufacturing sublicensees) for use in Products
bearing Licensed Mark from such suppliers each year. The parties
acknowledge (A) that in determining commercial feasibility with respect to
increasing the amount of raw materials and other ingredients purchased
pursuant to this Section 7(e)(vi), Licensee may consider its dependence on
each such supplier as well as the ability of each such supplier to provide
the raw materials and other ingredients on a dependable basis and (B) that
the prices of raw materials or other ingredients from such suppliers may be
somewhat higher, but not significantly higher, than the prices from
suppliers not owned by economically disadvantaged groups. The foregoing
obligation shall be applied on a country-by-country basis.
(vii) Licensee shall provide Licensor within 45 days
following the close of each calendar quarter (and 60 days following the
close of each calendar year) with a report detailing Licensee's performance
of its obligations under this Section 7 in its conduct of the Business in
the Territory. In the case of quarterly reports, such reports shall be
summary reports and, if applicable, comply substantially with the level of
detail provided in and the form of analogous quarterly reports produced by
Licensor as of the date hereof. In the case of annual reports, such reports
shall be formatted in substantially the same form as the "Social
Performance Reports" as it appears in Licensor's 1998 Annual Report.
(viii) Ben Cohen and Jerry Greenfield, individually, shall
have the right (but not the obligation) to participate, in a manner
mutually satisfactory to Licensor and Licensee (including by way of public
appearances), in Licensee's roll-out of Products bearing the Licensed Mark
in each country in the Territory. It is understood that, wherever this
Agreement calls for Licensor to provide consultation, services, promotional
activities or assistance, such requirement does not include consultation,
services or assistance from Ben Cohen or Jerry Greenfield, except at the
option of each of them. To the extent they are not as designees of Licensor
on any committee, they shall be entitled to such compensation/reimbursement
as shall be agreed between Licensor and Licensee.
(ix) (A) If Licensor notifies Licensee in writing with
reasonable specificity that Licensee has materially breached any of its
obligations under Sections 7(e)(i) through (e)(vi) with respect to a
country (a "Social Mission Default"), Licensee shall endeavor to Cure the
Social Mission Default. Subject to Section 7(e)(ix)(C), if after 90 days
from the date of receipt of such notice Licensee has not Cured the Social
Mission Default, the Percentage Royalty with respect to the Region which
includes the country in which such Social Mission Default occurred shall be
increased to 8% as provided in Section 7(e)(ix)(C).
(B) Subject to Section 7(e)(ix)(C), in the event that a
breach of this Section 7 constitutes a Material Default (a "Social Mission
Material Default" and, together with a Social Mission Default, a "Section 7
Default"), Licensee shall have one year after receipt by Licensee of
written notice from Licensor specifying the breach in reasonable detail to
Cure such Social Mission Material Default, and the Percentage Royalty shall
be increased to 8% and such increased rate shall continue to be in effect
for so long as such Social Mission Material Default is continuing and is
not Cured.
(C) Upon receipt of a notice pursuant to this Section
7(e)(ix), Licensee may within 20 days refer the determination of a Section
7 Default to an arbitrator in accordance with Section 27(b) of this
Agreement. In the event that arbitrator determines that the Section 7
Default is the result of Licensee's actions, or inaction, the Percentage
Royalty shall be increased to 8% effective as of the date of the Section 7
Default and such increased rate shall continue to be in effect for so long
as such Section 7 Default is continuing and is not Cured. If the arbitrator
determines that the Section 7 Default is not the result of Licensee's
actions, or inaction, no Section 7 Default shall be deemed to have
occurred.
8. Launch.
(a) Licensor acknowledges that the preparation to commence sales of
Products bearing the Principal Licensed Mark in any country where Licensor
is not currently manufacturing, marketing, distributing or selling such
Products is a time-consuming process. Accordingly, Licensee agrees to use
commercially reasonable efforts to commence sales of Products bearing the
Principal Licensed Mark in the Territory in conformity with the schedule to
be agreed upon by the Committee on Joint Planning.
(b) Licensor agrees to provide Licensee with a reasonable level of
technical and other assistance to enable Licensee to commence sales of
Products bearing the Principal Licensed Mark in any country in the
Territory as may be determined by the parties in accordance with Section
5(c).
(c) Licensor shall have the right to assist in the development of
and monitor the progress and implementation of Licensee's plans to commence
sales of Products bearing the Principal Licensed Mark in any country, and
Licensee shall seek Licensor's approval, which approval shall not be
unreasonably withheld or delayed (so long as Licensor cannot grant another
license with respect to a particular country in accordance with Section 2
or Section 18 or Licensee is not in Social Mission Material Default, which
Social Mission Material Default is not Cured within 60 days following
receipt of written notice from Licensor that complies with the requirements
of Section 18(a) in which event such approval may be withheld in Licensor's
sole discretion), prior to launching in any country in the Territory. For
purposes of the foregoing, Licensor reasonably may withhold its approval
under this Section 8(c) of Licensee's launch in any country deemed by both
Amnesty International and Freedom House to be engaged in significant human
rights abuses at such time.
9. Status of License in Certain Countries.
(a) UK. Licensee or one of its Affiliates agree to acquire, and
Licensor agrees to sell, at net book value (without assigning any value to
goodwill or transferable tax losses, if any) Licensor's assets and related
trade liabilities incurred in the ordinary course of business related to
the conduct of the Business in the United Kingdom pursuant to an asset
purchase agreement to be mutually agreed upon by the parties hereto.
Thereafter, Licensor shall supply Products to Licensee for Licensee's
conduct of the Business in the United Kingdom in accordance with Section
5(d).
(b) France. Licensee or one of its Affiliates agrees to acquire,
and Licensor agrees to sell, at net book value (without assigning any value
to goodwill or transferable tax losses, if any) Licensor's assets and
related trade liabilities incurred in the ordinary course of business
related to the conduct of the Business in the France pursuant to an asset
purchase agreement to be mutually agreed upon by the parties hereto.
Thereafter, Licensor shall supply Products to Licensee for Licensee's
conduct of the Business in the France in accordance with Section 5(d).
(c) Benelux. Licensor shall, at Licensee's request, assign to
Licensee all Licensor's rights under any and all licenses with respect to
the Netherlands, Luxembourg and Belgium.
(d) Israel. Licensor shall use commercially reasonable efforts to
obtain (at Licensor's expense) for Licensee the right to conduct all facets
of the Business in Israel.
(e) Canada. The parties acknowledge that Licensor has granted
previously a license for Canada to a third party and that Licensee will not
be able to conduct the Business in Canada on an exclusive basis until such
license expires or is terminated.
10. Representations and Warranties.
(a) Licensor represents and warrants that it has full right, power
and authority to enter into this Agreement and to grant the rights,
licenses and privileges hereby granted by Licensor to Licensee in Section
2, including acting as licensee of any Licensed Mark listed in Schedule 10,
and that no consent of any third party is required or that Licensor has
obtained all consents which may be required to permit Licensor to execute
this Agreement and to perform its obligations hereunder, or to permit
Licensee to exercise fully the rights granted hereunder. Licensor further
represents and warrants that (i) it is the owner, or licensee, of all
right, title and interest in and to the Licensed Mark and the Licensed
Technology for use in connection with Products and (ii) it, or owners of
trademarks licensed to Licensee, have in the Territory obtained
registrations for the Licensed Mark that are valid, subsisting and in full
force and effect in the jurisdictions, as listed in Schedule 10; and it, or
owners of trademarks licensed to Licensees, are owners of and have filed
trademark applications for the Licensed Mark in the jurisdictions, as
listed in Schedule 10. Licensor further represents and warrants that the
Principal Licensed Mark is in use or that Licensor otherwise has valid
rights in the Licensed Mark in the jurisdictions listed in Schedule 10 (the
"Existing Countries"), and together with the other intellectual property
owned by or licensed to Licensee, constitutes all of the intellectual
property necessary to conduct the Business in the Existing Countries.
Licensor represents, to the best of its knowledge, that Licensee's use of
the Principal Licensed Mark and Material Licensed Technology in the
Existing Countries will not infringe on or interfere with the rights of
third parties. With respect to the jurisdictions which are not identified
as the Existing Countries in Schedule 10, Licensor represents and warrants
that it has made no inquiry but it has no actual knowledge or basis to
believe Licensee's use of the Licensed Mark will infringe on or interfere
with the rights of third parties. Except as listed in Schedule 10, Licensor
is not aware of any infringements of the Licensed Mark or Licensed
Technology, and Licensor has no knowledge of any pending conflicts.
(b) Licensee represents and warrants that it has full power, right
and authority to enter into this Agreement and to perform all its
obligations hereunder.
(c) Licensor further represents and warrants that it has not, and
covenants that it shall not, except as permitted by this Agreement, (i)
grant to any person, any right to use the Licensed Mark in the Territory
for any Products or retail store services related to Products, nor shall
the Licensed Mark be so used by Licensor, or (ii) design, develop,
manufacture, market, distribute or sell any Products in the Territory or
assist anyone else to become so engaged.
(d) Licensor shall cause members of Licensor's or its Affiliates'
management team to be available to Licensee and its sublicensees at
mutually agreeable times and places for the purpose of consultation and
promotional activity.
(e) All representations and warranties contained in this Section 10
are qualified by reference to Schedule 10.
11. Ownership of Trademarks.
(a) Licensee acknowledges that Licensor (or its third-party
Licensor), and not Licensee, is the owner of all right, title and interest
in and to the Licensed Mark in the Territory under this Agreement and is
also the owner of the good will attached, or which shall become attached,
to the Licensed Mark. Licensee shall not, at any time, do any act or thing
which will materially impair the rights of Licensor (or its third-party
licensor) in and to the Licensed Mark or any registrations thereof or which
will materially depreciate the value of the Licensed Mark.
(b) Licensee shall cause to appear on all Products and on all
materials on or in connection with which the Licensed Mark is used, such
legends, markings and notices as may reasonably be necessary in order to
give appropriate notice of any trademark, trade name or other rights
therein or pertaining thereto, as instructed by Licensor, and Licensor
shall hold Licensee harmless in any action arising from such legend,
markings or notices.
12. Registration of Trademarks.
(a) Licensor shall file an application to register, or, if
applicable, shall, where appropriate under the relevant third-party
license, request that the relevant third-party licensor file an application
to register and maintain, at its own cost but subject to Section 12(c), the
Licensed Mark covering Products in the countries of Licensor's choice or in
such other countries as Licensee may reasonably request. Upon receipt of
Licensee's request, Licensor shall file and prosecute, or, if applicable,
where appropriate under the relevant third-party license request that the
relevant third-party licensor file and prosecute, one or more applications
for registration of the Licensed Mark in the name of Licensor or such other
name as Licensor, or, where appropriate under the relevant third-party
license, in the name of its third-party licensor, if applicable, may
determine, and Licensor shall maintain, or, if applicable, where
appropriate under the relevant third-party license shall request that the
relevant third-party licensor maintain, such registrations for the term of
this Agreement. In a case where, due to local regulations and, in
particular, restrictions regarding sublicenses or "registered users"
status, the registration may not be owned by Licensor, the registration
shall be completed in the name of Licensee or one of its Affiliates.
Licensee expressly agrees that, in the case of registration in the name of
Licensee or its Affiliate for the aforementioned reason, Licensee shall
thereby not acquire proprietary rights in respect to the Licensed Mark.
Upon termination of this Agreement, Licensee shall be deemed automatically
to have assigned, transferred and conveyed to Licensor for itself, and, if
appropriate, for relevant third-party licensors of Licensor, any and all
trademarks, rights, equities, good will and all other rights associated
therewith which may have been obtained by Licensee or which may have vested
in Licensee as a result of Licensee's actions under this Agreement, and
Licensee shall execute, and hereby irrevocably appoints Licensor its
attorney-in-fact to execute, if Licensee refuses to do so, any instruments
requested by Licensor, or, if applicable, by the relevant third-party
licensor, to accomplish or confirm the foregoing. Any such assignment,
transfer or conveyance shall be without consideration other than the mutual
covenants and consideration of this Agreement.
(b) Licensee shall cooperate with Licensor, or its third-party
licensor, as applicable, reasonably and in good faith in connection with
the filing and prosecution by Licensor, or the relevant third-party
licensor, as applicable, of any such applications, and the maintenance and
renewal of any registration for the Licensed Mark, and will supply
Licensor, or the relevant third-party licensor, as applicable, with such
samples of products, packaging and marketing materials bearing the Licensed
Mark and such evidence of other uses of the Licensed Mark, as may
reasonably be requested by Licensor or its relevant third-party licensor,
as applicable, in connection with trademark and service mark applications
or registrations. Licensee shall provide Licensor with 60 days' prior
written notice of its plans to begin conducting the Business in any country
in the Territory where no previous registration or application for
registration of the Licensed Mark has been obtained. Licensee shall execute
all documents which Licensor, or the relevant third-party licensor, as
applicable, may reasonably request in order to obtain or maintain a
registration or to establish or to maintain Licensor's or the relevant
third-party licensor's, as applicable, ownership of or rights in and to the
Licensed Mark. The first sentence of this Section 12(b) with respect to the
cooperation of Licensee shall survive the termination or expiration of this
Agreement.
(c) Licensee shall reimburse Licensor for all filing, registration
and renewal fees, including reasonable attorneys' fees, for registrations
and renewals requested by Licensee of the Licensed Mark other than the
Principal Licensed Mark.
13. New Intellectual Property.
(a) In the event that Licensor or its Affiliates should adopt
additional or new trademarks or trade names directly in its own name, or
indirectly through other business interests including, without limitation,
by license from a third party, in connection with Products having Super
Premium Status, Licensor shall promptly so notify Licensee, and Licensor
shall attempt, at Licensee's request, to extend such License and,
regardless of Licensor's success in such attempt, Licensor shall inform
Licensee of the results thereof so as to grant Licensee (on the same basis
that the trademarks or trade names are granted under Section 2 and subject
to any limitations on Licensor's rights to such additional trademarks or
trade names) the right in the Territory to those names in connection with
such Products and such additional names shall be included under the
definition of "Licensed Mark" in Section 1, and if Licensee elects, at its
sole option, such additional names may be used by Licensee and its
permitted sublicensees pursuant to the terms of this Agreement, subject to
the payment of the Percentage Royalty as provided for in Section 6.
Licensee shall bear the cost of any such extension.
(b) Licensee shall grant to Licensor a license as provided in
Section 2(g).
14. Infringement.
(a) Each of Licensee and Licensor shall promptly notify the other
party in writing of any use by any third party of a trade name or trademark
which might amount to infringement of the Licensed Mark that come to its
attention.
(b) Licensor may, in its sole discretion, take proceedings in
relation to any alleged infringement of any Licensed Mark. Each party shall
render all reasonable assistance to the other in connection with any such
proceeding.
(c) In the event that Licensee reasonably considers that any
infringement or alleged infringement of the Licensed Mark in the Territory
is causing detriment to its business and Licensor declines after reasonable
notice to promptly take proceedings in relation thereto, Licensee may file
actions, proceedings or suits against any third party in respect of such
infringement or alleged infringement in the Territory after first giving
Licensor reasonable notice of its intention to do so. Licensor shall, at
Licensee's request, render all reasonable assistance to Licensee in
connection therewith, and take such action as may be necessary to enable
Licensee to pursue the proceedings, including, if necessary, the grant of
an appropriate power of attorney with full power of substitution or
consenting to join in any such action as a party plaintiff.
(d) Neither party shall enter into any settlement or consent to any
judgment with respect to an infringement without the consent of the other
party, which consent shall not be unreasonably withheld or delayed. The
party initiating such infringement action and prosecution shall bear all
expenses incurred and shall receive all the proceeds (if any) recovered in
connection with such action, after reimbursement of all out- of-pocket
expenses of each party. If such expenses (including attorneys' fees) exceed
the amount of the proceeds recovered in connection with such action, then
such reimbursement shall be made pro rata (based on the out-of-pocket
expenses of each party).
(e) If either Licensee or Licensor becomes aware of any claim by
any third party that the use of any of the Licensed Mark in connection with
the sale of Products hereunder infringes the right of any third party, it
shall promptly notify the other party in writing. The provisions of
Sections 14(b), (c) and (d) shall apply to the conduct of the defense of
such claim in the same manner as to an infringement; provided, however,
that each party may, pending the other party's decision to defend such a
claim, act in a manner not prejudicial to the other party's interest in
preserving the validity of ownership of the Licensed Mark, to protect its
individual position.
(f) Licensor and Licensee shall, before taking any action pursuant
to Section 14(b), (c) or (e), consult each other as to the appropriate
steps in proceedings and by which party these should be taken; provided,
however, that this is without prejudice to the rights of the parties under
Section 14(b), (c) or (d).
(g) If any infringement action involving the Licensed Mark or the
Licensed Technology is in existence on the date of the termination or
expiration of this Agreement, each party shall render all reasonable
assistance required to be given pursuant to this Section 14 to the other
party in connection therewith. This Section 14(g) shall survive the
termination or expiration of this Agreement.
15. Indemnification.
(a) Licensee shall defend, indemnify and hold harmless Licensor and
its respective officers, directors and employees (collectively, the
"Licensor's Group") from and against any and all claims, losses, damages,
liabilities, obligations, costs and expenses, including reasonable
attorneys' fees (collectively, "Losses"), arising out of or resulting from
the conduct of the Business by Licensee, its Affiliates, agents,
representatives, contractors, co-packers, sublicensees or distributors, or
arising out of or resulting from a breach by Licensee of any provision of
this Agreement except in each case to the extent (but only to the extent)
arising out of or resulting from (A) Licensor's, or any member of the
Licensor Group's, negligence or breach of any provision of this Agreement,
or (B) infringement of trademark, trade dress, copyright and other
intellectual property rights relating to the Licensed Mark.
(b) Licensor shall defend, indemnify and hold harmless Licensee
from and against any and all Losses arising out of or resulting from breach
by Licensor or any member of the Licensor's Group of any provision of this
Agreement or arising out of or resulting from any infringement of
trademark, trade dress, copyright and other intellectual property rights
relating to the Licensed Mark or Licensed Technology, except in each case
to the extent (but only to the extent) arising out of or resulting from
Licensee's negligence or breach of any provision of this Agreement.
(c) If any party (the "indemnified party") receives written notice
of the commencement of any action or proceeding, the assertion of any claim
by a third party or the imposition of any penalty or assessment for which
indemnification may be sought pursuant to this Section 15 (a "third party
claim") and such indemnified party intends to seek indemnity pursuant to
this Section 15, such indemnified party shall promptly provide the other
party (the "indemnifying party") with notice of such third party claim,
provided that no failure to do so will limit rights hereunder except to the
extent the indemnifying party is prejudiced thereby. Except in the case of
claims seeking equitable relief from the indemnified party, the
indemnifying party shall be entitled to assume the defense, appeal or
settlement of such third party claim with counsel selected by the
indemnifying party and approved by the indemnified party, which approval
shall not be unreasonably withheld or delayed. The indemnified party shall
fully cooperate with the indemnifying party in connection therewith. In the
event that the indemnifying party fails to assume the defense, appeal or
settlement of any third party claim within twenty (20) days after receipt
of notice thereof from the indemnified party, such indemnified party shall
have the right to undertake the defense, appeal or settlement of such third
party claim at the expense and for the account of the indemnifying party.
The indemnifying party shall not settle any third party claim the defense,
appeal or settlement of which is controlled by it without the indemnified
party's prior written consent, unless the terms of such settlement or
compromise release such indemnified party from any and all liability or
obligation with respect to such third party claim. The provisions of this
Section shall survive expiration or termination of this Agreement.
16. Sales by Licensor's Customers.
Licensor agrees during the term of this Agreement to refrain, and
to cause its Affiliates to refrain, from engaging in any distribution
and/or sales of Licensor's Products having Super Premium Status to any
person that the Licensor knows or has reason to know is engaged in, or
intends to engage in, any manufacture, distribution and/or sale of such
Products having Super Premium Status in the Territory. In the event that
Licensor learns that it is selling to any person that is so engaged, or
intends to so engage, Licensor shall immediately notify Licensee and shall
use commercially reasonable efforts, subject to compliance with applicable
law, to prevent such resales from continuing. The parties acknowledge that
Licensor may continue to have its Products having Super Premium Status
distributed and sold to U.S. military post exchanges in the United States
(which may export to the Territory in some cases to some degree) but shall
not distribute or sell directly to U.S. military post exchanges in the
Territory.
17. Confidentiality.
Licensor and Licensee agree that all information which is
communicated from time to time by each party to the other pursuant to this
Agreement (both at the commencement of this Agreement and thereafter and
whether oral, electronic or written of any kind or nature), which are
confidential and proprietary to the person disclosing the same shall be
deemed secret and confidential ("Confidential Information"). Licensor and
Licensee agree that the Confidential Information received by them from the
other will be maintained in confidence and that the same will not be
disclosed to or used by any person, firm, or undertaking except their own
agents and employees or any permitted sublicensees, subcontractors or
distributors hereunder who need to know and/or use such Confidential
Information for the purposes of this Agreement. If either party is required
by law to disclose any Confidential Information it has received, it will
promptly inform the other party and will cooperate with the other party, at
the other party's expense, in seeking to maintain the confidentiality of
such Confidential Information. The provisions of this Section shall survive
expiration or termination of this Agreement.
18. Right to Terminate.
(a) Default
(i) Licensor and Licensee may, by giving written notice to
the other, terminate this Agreement and its obligations hereunder in the
event of a Material Default (other than a Social Mission Material Default)
by the other party that is not Cured within 60 days following receipt of
written notice from the non-defaulting party. In the case of a Social
Mission Material Default, Licensor may terminate this Agreement and its
obligations hereunder if such Social Mission Material Default is not Cured
within one year after the date of receipt of written notice from Licensor
by Licensee. Such written notice shall specifically describe the default.
Such termination will not be deemed a waiver of any damages or loss
suffered by the non-defaulting party as a result of the other's default,
and the non-defaulting party may bring the damage issue to arbitration for
settlement in accordance with the provisions of Section 27.
(ii) "Material Default" shall mean a material breach of (A)
a covenant that relates to the payment by Licensee of money, (B) directly
and substantially affects the Essential Integrity of the Principal Licensed
Mark or (C) any of the first sentence of Section 2(c) or Section 2(h)(ii),
4(a), 8(a) or 21(a).
(iii) "Cure" shall mean (A) in the case of a Social Mission
Material Default or Material Default resulting from an action by a party
hereto, such party ceasing to engage in such action, and (B) in the case of
a Social Mission Material Default or Material Default resulting from an
omission by a party hereto, such party taking such action as required under
this Agreement.
(b) Bankruptcy
(i) In the event that either Licensor or either Licensee
files a petition in bankruptcy, is adjudicated as bankrupt, goes into
liquidation, becomes insolvent, or makes an arrangement or assignment for
the benefit of its creditors, or any arrangement pursuant to bankruptcy
law, or if a custodian, receiver or trustee is appointed for it or a
substantial portion of its business or assets, then the other party to this
Agreement who is not the subject of such bankruptcy, receivership,
liquidation, insolvency or creditor arrangement, shall have the right to
immediately terminate this Agreement by written notice.
(ii) No assignee for the benefit of creditors, custodian,
receiver, trustee in bankruptcy, sheriff or any other officer of the court
or official charged with taking over custody of the bankrupt party's assets
or business, shall have any rights to continue this Agreement or to exploit
or in any way use the Licensed Mark pursuant hereto if this Agreement is
terminated by Licensor or Licensee, as the case may be, pursuant to this
Section 18(b).
(iii) Notwithstanding the provisions of this Section 18(b),
in the event that it is determined by any court or bankruptcy trustee that
this Agreement may be assumed or assigned in connection with a case
commenced by or against either party under the Title 11 of the United
States, as amended (the "Bankruptcy Code"), Licensor and Licensee hereby
acknowledge that "adequate assurance" of future performance under this
Agreement (within the meaning of the Bankruptcy Code) shall include, inter
alia adequate assurance: (A) that any and all amounts due from Licensee to
Licensor under or pursuant to this Agreement shall be duly and timely paid
and all breaches cured; (B) that the assumption or assignment of this
Agreement will not result in the breach by either party or its Affiliates
of any provision in any other license, contract or agreement relating to
the Licensed Mark or otherwise; (C) that any person or entity that assumes
this Agreement or to which this Agreement is assigned shall fully and
faithfully assume, observe and comply with all the covenants, requirements
and restrictions provided for under this Agreement and that termination
rights for breach of this Agreement shall continue to apply without change;
and (D) that the value of the Licensed Mark to Licensor shall not be
reasonably likely to diminish by reason of the assumption or assignment of
this Agreement. Any person or entity to which this Agreement is assigned
pursuant to the provisions of the Bankruptcy Code shall be deemed without
further act or deed to have assumed all of the obligations arising under
this Agreement on and after the date of such assignment. Any such assignee
shall upon demand execute and deliver to Licensor or Licensee, as the case
may be, an instrument confirming such assumption.
(c) Change of Control
(i) Upon a Change of Control of Licensor, Licensee's
obligations to obtain the approval of Licensor or the Committee on Joint
Planning, as applicable, under certain provisions of this Agreement,
including, without limitation, Sections 2(b), 4(b), 4(d) and 8(c), shall be
deemed to be an obligation to keep Licensor or the Committee on Joint
Planning, as applicable, informed as to its activities, plans and uses of
the Licensed Mark prior to commencing such activities, plans or uses;
provided, however, that Licensor shall retain the rights under the last
sentence of Section 8(c). The parties acknowledge that following such a
Change of Control Licensor shall no longer have the right to approve or
disapprove Licensee's actions but shall have an obligation to keep Licensor
informed as to its activities, plans and uses of the Licensed Mark prior to
commencing such activities, plans or uses pursuant to the aforementioned
sections.
(ii) A "Change of Control" of a party hereto means the
earlier to occur of (A) the acquisition by any Person or group of Persons
acting in concert of beneficial ownership of such party's securities, or
any other transaction with respect to beneficial ownership of such party or
such party's securities, that involves or results in either (x) the
acquisition of beneficial ownership of securities representing 20% or more
of the voting power of such party's outstanding equity securities or (y)
the merger or consolidation of such party with any Person in which the
shareholders of such party would not, immediately after such merger or
consolidation, own securities representing at least 20% of the voting power
of the Person issuing the cash or securities in such merger or
consolidation, and (B) the sale of all or substantially all of the assets
of such party to one or more Persons; provided, however, that a Change of
Control shall not be deemed to occur in the case of clause (A) or (B) above
if (x) a named founder of Licensor is the resulting controlling Person or a
member of the resulting controlling group of Persons and (y) all other
members of such group of Persons, if any, are charitable organizations.
"Beneficial ownership" of securities shall be determined in accordance with
Rule 13d-3 under the Securities Exchange Act of 1934, as amended, as in
effect on the date of this Agreement, except that any agreement not to
transfer securities and any agreement to vote or not vote in a particular
manner shall be deemed to convey "beneficial ownership" of the securities
subject thereto.
(d) Regional Default. Without limiting the right of the
parties to terminate this Agreement pursuant to Section 18(a), Licensor or
Licensee may, by giving written notice to the other, terminate this
Agreement and its obligations hereunder with respect to a Region in the
Territory in the event of a Material Default or a Social Mission Material
Default by the other party with respect to such defaulting party's
obligations hereunder in such Region that is not Cured within 60 days, in
the case of a Material Default, or one year, in the case of a Social
Mission Material Default, as applicable, following receipt of written
notice from the non-defaulting party. Such written notice shall
specifically describe the default in such Region. Such a termination shall
not be deemed a waiver of any damages or loss suffered by the
non-defaulting party as a result of the other's default, and the
non-defaulting party may bring the damages issue to arbitration for
settlement in accordance with the provisions of Section 27(b).
(e) Termination of the Merger Agreement. This Agreement
shall terminate upon the termination by Licensor of the Agreement and Plan
of Merger (the "Merger Agreement") dated as of April 11, 2000, among
Conopco, Inc. ("Conopco"), Vermont All Natural Expansion Company ("Sub")
and Licensor as a result of a material breach of the Merger Agreement by
Conopco or Sub.
19. Rights upon Termination.
(a) Except to the extent provided in Sections 19(b) and 19(c), upon
expiration or termination of this Agreement for any reason, neither
Licensee nor its Affiliates, receivers, representatives, agents, successors
or assigns shall have any rights to exploit or in any way use the Licensed
Mark and the Licensed Technology and shall forthwith discontinue all use of
the Licensed Mark and Licensed Technology in whole or, in the event of a
termination in part, in connection with such products, services or
territories as to which such termination pertains. In addition, Licensee
shall not thereafter, except as permitted in Section 19(b) or 19(c), use
the Licensed Technology or the Licensed Mark or any variation or simulation
thereof, or any mark which is or may be confusingly similar thereto, and
hereby irrevocably release and disclaim any right or interest in or to the
Licensed Mark and the Licensed Technology in whole or, in the event of a
termination in part, in connection with such products, services, or
territories as to whether such termination pertains.
(b) Upon any termination of this Agreement by Licensee pursuant to
Section 18, as to any plant in which Licensee or its permitted sublicensees
manufacture Products under the Licensed Mark, Licensor may, purchase all,
but not less than all, the inventories (including finished goods to
Products bearing the Licensed Mark (the "Inventories")), of Licensee or its
permitted sublicensees, as applicable, at such plant that are saleable and
in good condition; provided, however, that, if Licensor purchases the
Inventories of any plant, it shall purchase all the Inventories of all
plants in same country as such initial plant; provided, further, that if
Licensor purchases the Inventories at such plant, it shall have the right
but not the obligation to purchase all, but not less than all, of the
inventories of raw materials and packaging exclusive to Products bearing
the Licensed Mark ("Process Inventories") of Licensee or its permitted
sublicensees, as applicable, at all plants in the same country that are
saleable and in good condition. To consummate such a purchase, Licensor
shall tender to Licensee within 30 days following the effective date of
termination, a sum equal to the cost to Licensee of such Inventories
(together with a sum equal to Licensee's cost of Process Inventories, if
purchased). In such event, Licensee shall take commercially reasonable
steps to discontinue or cancel all marketing which references the Licensed
Marks as soon as possible. No amounts shall be paid or payable as the
Percentage Royalty with respect to such Inventories sold to Licensor.
(c) To the extent that Licensor does not purchase all the
Inventories and Process Inventories of Licensee and pursuant to Section
19(b), Licensee shall have the right, on a non-exclusive basis, to continue
to sell, market and promote Products bearing the Licensed Mark for a
six-month period following the effective termination date, or for such
shorter period as is necessary to dispose of all remaining Inventories and
Process Inventories. During any such period, Licensee shall pay the
Percentage Royalty pursuant to Section 6. Licensee's rights under this
Section 19(c) shall be subject to Licensee's continuing to manufacture,
market, distribute and sell the Inventories in a manner consistent with
good business practice, Products bearing the Licensed Mark having Super
Premium Status, with all appropriate long-term, brand-building philosophy,
and in accordance with the provisions of this Agreement, including Section
7.
(d) In the event that Licensee or any of its permitted sublicensees
have utilized any Licensed Mark in the name of a business unit or division
thereof, the name of such business unit or division shall be changed upon
any termination or expiration of this Agreement so that the Licensed Mark
shall no longer form part of the business unit or division name; provided,
however, that if Licensee continues to conduct the Business in the
Territory pursuant to Section 19(c), the Licensed Mark shall no longer form
part of the business unit or division name, as applicable, at the
expiration of the six-month period provided for in Section 19(c).
(e) Upon termination or expiration of this Agreement, Licensee
shall, within 30 days of such termination or expiration (or such longer
period as may be necessary to permit Licensee to exercise its applicable
rights under Section 19(c)), return in accordance with Licensor's
reasonable instructions all Licensed Technology provided to Licensee
pursuant to this Agreement.
20. Notices.
All notices, request, claims, demands and other communications
under this Agreement shall be in writing and shall be deemed given upon
receipt by the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
If received by Licensee, to:
Unilever PLC
Unilever House
Blackfriars, London, EC4P 4BQ
Attention: Mr. Stephen J. Williams,
Joint Secretary
Facsimile: 011-44-207-822-6108
with a copy to:
Unilever United States
390 Park Avenue, 21st Floor
New York, NY 10022
Facsimile: (212) 688-3411
Attention: Ronald M. Soiefer, Esq.
If received by Licensor, to:
Ben & Jerry's Homemade, Inc.
30 Community Drive
South Burlington, VT 05403
Facsimile: (802) 846-1558
Attention: Chief Executive Officer
with a copy to:
Ropes & Gray
One International Place
Boston, MA 02110
Facsimile: (617) 951-7050
Attention: Howard K. Fuguet, Esq.
21. Non-Assignability.
(a) This Agreement and the rights and obligations hereunder may not
be sold, transferred, assigned, pledged, mortgaged or otherwise disposed of
by the parties hereto except as is specifically herein provided or as may
be expressly consented to in writing; provided, however, that this
Agreement and the rights and obligations hereunder may be assigned in
connection with a merger or sale of all or substantially all the assets of
Ben & Jerry's Homemade Holdings, Inc. or Ben & Jerry's Homemade, Inc. or a
merger or sale of all or substantially all the assets of Licensee;
provided, further, that the Licensor's right to receive monies hereunder
may be pledged or mortgaged. It is expressly provided that Licensee may
assign or sublicense any or all its rights and obligations under this
Agreement (i) without Licensor's consent, to any Affiliate so long as it
remains an Affiliate; provided, however, that such Affiliate agrees in
writing to be bound by the terms and conditions of this Agreement and
Licensee agrees to cause any and all such Affiliates to comply with such
terms and conditions or (ii) with Licensor's consent, which consent may be
withheld in Licensor's sole discretion, to any third party, including,
without limitation, co-packers and manufacturing sublicensees. Any
attempted assignment or sublicense in violation hereof, whether voluntary
or by operation of law, directly or indirectly, shall be void and of no
force and effect.
(b) It is understood that any person who is a distributor of
Licensee (i.e., purchases and resells but does not manufacture Products
bearing the Licensed Mark or have such Products manufactured) whether or
not an Affiliate of Licensee, is not a sublicensee for such purchase and
resale and does not require a sublicense hereunder in order to be able to
sell Products under the Licensed Mark.
22. Material Licensed Technology.
(a) Prior to or promptly after the provision of the Licensed
Technology by Licensor to Licensee pursuant to Section 5(a), the parties
shall reasonably agree to a written schedule of items of Licensed
Technology ("Schedule 22"), which may by mutual agreement be supplemented
from time to time, that they deem to be essential to the manufacture of
Licensor's Products ("Material Licensed Technology"). Licensee shall within
90 days after the parties agree Schedule 22 provide Licensor with notice of
the Material Licensed Technology that Licensee has independently developed
or had knowledge of prior to the provision of the Licensed Technology by
Licensor. To the extent that Licensee does not provide such notice,
Licensee shall be deemed not to have independently developed or had
knowledge of such Material Licensed Technology prior to the expiration of
such 90-day period; provided, however, that if a failure by Licensee to
provide notice that such Material Licensed Technology was independently
developed or known by Licensee is the result of a good-faith mistake, and
Licensee provides such notice prior to the time that such Material Licensed
Technology is commercially applied by Licensee, then such notice shall be
deemed to have been given by Licensor during such 90-day period.
(b) Subject to Section 2(h)(ii), after the expiration or
termination of this Agreement, Licensee shall be permitted to use the
Licensed Technology to the extent necessary to enable Licensee to use
enhancements to the Licensed Technology developed by Licensee.
(c) In the event of a dispute as to whether Licensee had knowledge
of or independently developed such Material Licensed Technology, the burden
of proof shall be on Licensee with respect to this Section 22.
23. No Agency or Joint Venture.
Nothing herein contained shall be construed to constitute the
parties hereto as partners or as joint venturers, or either as agent or
employee of the other, and neither party shall have any power to obligate
or bind the other in any manner whatsoever.
24. Force Majeure.
If any event beyond the reasonable control of either party,
including, without limitation, an act of God, war or war condition, civil
disorder, government regulation or embargo, should impede the performance
by a party of all or part of its obligations under this Agreement, such
nonperformance shall be excused during and for a reasonable period after
the continuance of such event.
25. Governing Law.
This Agreement shall be considered as having been entered into in
the State of New York and this Agreement, and any disputes or actions
relating thereto (whether in contract, tort or otherwise), shall be
governed in accordance with the laws of the State of New York applicable to
agreements made and to be performed in New York, without regard to
conflicts of law. However, any and all disputes, controversies and claims
pertaining to Licensor's ownership of or the validity of any patent or
application therefor or the Licensed Mark or any registration thereof or
any application for registration thereof shall be construed and interpreted
in accordance with the federal patent or trademark laws, as applicable, and
related laws, statutes, rules and regulations of the United States unless
there are no federal laws, statutes, rules or regulations dispositive of
such disputes, controversies and claims, in which case any and all
disputes, controversies and claims shall be construed and interpreted in
accordance with the laws of the State of New York.
26. No Waiver; Consent.
(a) The failure by any party hereto to enforce, at any period of
time, one or more of the terms and conditions of this Agreement shall not
constitute a waiver of such terms or conditions, or of the party's right
thereafter to enforce each and every term and condition of this Agreement.
Neither tender of payment by Licensee nor acceptance of payment by Licensor
shall be deemed a waiver of any violation of or default in any of the
provisions of this Agreement. No waiver shall be effective unless in
writing and signed by the party intended to be bound thereby.
(b) Whenever this Agreement requires the consent or approval of
Licensor or Licensee, such consent or approval shall be deemed to have been
given upon the expiration of 14 days from the date the written request for
such consent or approval has actually been received by Licensor or
Licensee, as the case may be, unless Licensor or Licensee, as the case may
be, delivers notice of disapproval or non-consent to Licensee or Licensor,
as the case may be, within said 14-day period.
27. Arbitration and Consent to Jurisdiction.
(a) The parties hereto recognize that disputes as to certain
matters may from time to time arise during the term of this Agreement that
relate to either party's rights and/or obligations hereunder. It is the
objective of the parties to establish procedures to facilitate the
resolution of disputes arising under or in connection with this Agreement,
including without limitation all financial disputes (except as set forth in
Section 9(f)) and any disputes as to the validity, construction,
performance, default, or breach hereof, in an expedient manner by mutual
cooperation and without resort to litigation. To accomplish this objective,
the parties agree to follow the procedures set forth in this Section 27 if
and when such disputes arise under or in connection with this Agreement
between the parties. If the parties cannot resolve a dispute within fifteen
(15) days of formal request by either party to the other, any party may, by
written notice to the other, have such dispute referred to (i) in the case
of Licensor, the Chief Executive Officer of Licensor and (ii) in the case
of Licensee, the President of Unilever Foods North America, for attempted
resolution by good faith negotiations. If such personnel are unable to
resolve such dispute within fifteen (15) days after such notice is
received, then such dispute shall be finally resolved, but only if written
notice is thereafter served by one party on the other party specifically
requesting binding arbitration pursuant to Section 27(b).
(b) Except as specifically set forth in this Agreement any and all
disputes, controversies and claims arising out of or relating to this
Agreement, or with respect to the construction of this Agreement, or
concerning the respective rights or obligations hereunder of the parties
hereto and their respective successors and permitted assigns, whether by
operation of law or otherwise (except disputes, controversies and claims
relating to or affecting in any way Licensor's ownership of or the validity
of the Licensed Mark or any registration thereof, or any application for
registration thereof, as to which the parties hereto hereby confer and
agree to submit to the exclusive (both subject-matter and personal)
jurisdiction of the federal courts of the State of New York), shall be
settled and determined by arbitration in Boston, Massachusetts, in
accordance with and pursuant to the then existing rules of the American
Arbitration Association. The parties agree that the arbitrators shall have
the power to award specific performance or injunctive relief and reasonable
attorneys' fees and expenses to any party in any such arbitration and that
the courts shall have similar power with regard to that injunctive relief
sought by either party pursuant to this Agreement. The arbitrator shall
provide a reasoned, written decision. The arbitration award shall be final
and binding upon the parties and judgment thereon may be entered in the
courts of the State of New York and the federal courts in said State, the
jurisdiction of which courts is hereby consented to by the parties for such
purposes. Any judgment on an award may be enforced in the State of New York
as well as any other appropriate jurisdiction. The service of any notice,
process, motion or other document in connection with any other action or
proceeding, may be effectuated by either personal service upon a party or
designated agent or by certified or registered mail to the party at its
address hereinabove provided. Each of the parties agrees to appoint an
agent to receive service of process on its behalf, such agent to be
appointed in New York within thirty (30) days of the commencement of the
Initial Term of this Agreement. Consistent with the foregoing, the parties
hereto irrevocably and unconditionally consent to the jurisdiction of, and
waive any objection to the laying of venue in the courts and arbitral
forums (as set forth above) located in New York City (both federal and
state).
28. Publicity
Any announcements concerning this Agreement or the License shall be
in a form approved by Licensor and Licensee.
29. Counterparts.
This Agreement may be executed in counterparts, each of which shall
be deemed an original, but all of which together shall constitute a single
instrument.
30. Severability.
In the event that any provision of this Agreement as applied to any
party or to any circumstance, shall be adjudged by a court of competent
jurisdiction to be void, invalid, unenforceable or inoperative as a matter
of law, then the same shall in No way affect any other provision in this
Agreement, the application of such provision in any other circumstance or
with respect to any other party, or the validity or enforceability of the
Agreement as a whole and to the extent permitted by applicable law, any
such provision shall be restricted in applicability or reformed to the
minimum extent required for such to be enforceable. This provision shall be
interpreted and enforced to give effect to the original written intent of
the parties hereto prior to the determination of such invalidity,
unenforceability or inoperability.
31. Entire Agreement.
This Agreement contains the complete understanding of the parties
with respect to the subject matter hereof, supersedes all prior oral or
written understandings and agreements relating thereto and may not be
modified, discharged or terminated except by a written instrument signed by
both Licensee and Licensor.
IN WITNESS WHEREOF, the parties hereunto have duly executed this
Agreement as of the day and year first above written.
BEN & JERRY'S HOMEMADE, INC.,
By: /s/ PERRY D. ODAK
Name: Perry D. Odak
Title: Chief Executive Officer
BEN & JERRY'S HOMEMADE HOLDINGS, INC.,
By: /s/ PERRY D. ODAK
Name: Perry D. Odak
Title: Vice President
UNILEVER N.V.,
By: /s/ R. W. CHAMBERLIN
--------------------
Name: R. W. Chamberlin
Title: Attorney A
UNILEVER N.V.,
By: /s/ G. DIJKSTRA
Name: G. Dijkstra
Title: Attorney B
UNILEVER PLC,
By: /s/ STEPHEN J. WILLIAMS
Name: Stephen J. Williams
Title: Joint Secretary
ANNEX C
CONFORMED COPY
STOCK OPTION AGREEMENT dated as of April 11, 2000,
between BEN & JERRY'S HOMEMADE, INC., a Vermont corporation
("Issuer"), and CONOPCO, INC., a New York corporation ("Grantee").
WHEREAS Issuer and Grantee are parties to an Agreement and
Plan of Merger, dated as of the date hereof (the "Merger Agreement";
defined terms used but not defined herein have the meanings set forth in
the Merger Agreement); and
WHEREAS as a condition and inducement to Grantee's
willingness to enter into the Merger Agreement, Grantee has requested that
Issuer agree, and Issuer has agreed, to grant Grantee the Option (as
defined below).
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Grant of Option. Issuer hereby grants to Grantee
an irrevocable option (the "Option") to purchase up to 1,219,986 (as
adjusted as set forth herein) shares (the "Option Shares") of Class A
Common Stock at a purchase price of $43.60 (as adjusted as set forth
herein) per Option Share (the "Purchase Price").
SECTION 2. Exercise of Option. (a) Grantee may exercise the
Option, with respect to any of or all the Option Shares at any one time
after the termination of the Merger Agreement in circumstances in which the
Grantee is entitled to receive a termination fee pursuant to Section 6.07
of the Merger Agreement (a "Purchase Event"); provided, however, that (i)
except as provided in the last sentence of this Section 2(a), the Option
shall terminate and be of no further force and effect upon the earliest to
occur of (A) the Effective Time, (B) 180 days after the first occurrence of
a Purchase Event, and (C) termination of the Merger Agreement in accordance
with its terms prior to and without the occurrence of a Purchase Event, and
(ii) any purchase of Option Shares upon exercise of the Option shall be
subject to compliance with the HSR Act and the obtaining or making of any
consents, approvals, orders, notifications or authorizations, the failure
of which to have obtained or made would have the effect of making the
issuance of Option Shares illegal. Notwithstanding the termination of the
Option, Grantee shall be entitled to purchase the Option Shares if it has
exercised the Option in accordance with the terms hereof prior to the
termination of the Option and the termination of the Option shall not
affect any rights hereunder that by their terms do not terminate or expire
prior to or as of such termination.
(b) The exercise of the Option shall be effected by Grantee
sending to Issuer a written notice (an "Exercise Notice"; the date of which
being herein referred to as the "Notice Date") to that effect. An Exercise
Notice shall specify the number of Option Shares, if any, Grantee wishes to
purchase pursuant to the Option, the number of Option Shares, if any, with
respect to which Grantee wishes to exercise its Cash-Out Right (as defined
in Section 6(c)), the denominations of the certificate or certificates
evidencing the Option Shares that Grantee wishes to purchase pursuant to
the Option and a date not earlier than three business days
nor later than 20 business days from the Notice Date for the closing of
such purchase (the "Option Closing Date"). Any Option Closing will be at an
agreed location and time in New York, New York on the applicable Option
Closing Date or at such later date as may be necessary so as to comply with
Section 2(a).
SECTION 3. Payment and Delivery of Certificates. (a) At any
Option Closing, Grantee shall pay to Issuer in immediately available funds
by wire transfer to a bank account designated in writing by Issuer an
amount equal to the Purchase Price multiplied by the number of Option
Shares to be purchased at such Option Closing.
(b) At any Option Closing, simultaneously with the delivery
of immediately available funds as provided in Section 3(a), Issuer shall
deliver to Grantee a certificate or certificates representing the Option
Shares to be purchased at such Option Closing, which Option Shares shall be
free and clear of all Liens.
(c) Certificates for the Option Shares delivered at an
Option Closing shall have typed or printed thereon a restrictive legend,
which will read substantially as follows:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE
REOFFERED OR SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM
SUCH REGISTRATION IS AVAILABLE."
It is understood and agreed that the reference to restrictions arising
under the Securities Act in the above legend will be removed by delivery of
substitute certificate(s) without such reference if such Option Shares have
been registered and sold pursuant to the Securities Act, such Option Shares
have been sold in a transaction in reliance on and in accordance with Rule
144 under the Securities Act or Grantee has delivered to Issuer a copy of a
letter from the staff of the SEC, or an opinion of counsel in form and
substance reasonably satisfactory to Issuer and its counsel, to the effect
that such legend is not required for purposes of the Securities Act.
SECTION 4. Representations and Warranties of Issuer. Issuer
hereby represents and warrants to Grantee as follows:
Issuer has taken all necessary corporate and other action to
authorize and reserve and, subject to the expiration or termination
of any required waiting period under the HSR Act, to permit it to
issue, and, at all times from the date hereof until the obligation
to deliver Option Shares upon the exercise of the Option
terminates, shall have reserved for issuance, upon exercise of the
Option, shares of Class A Common Stock sufficient for Grantee to
exercise the Option in full, and Issuer shall take all necessary
corporate action to authorize and reserve for issuance all
additional shares of Class A Common Stock or other securities which
may be issued pursuant to Section 6 upon exercise of the Option.
The shares of Class A Common Stock to be issued upon due exercise
of the Option, including all additional shares of Class A Common
Stock or other securities which may be issuable upon exercise of
the Option or any other securities which may be issued pursuant to
Section 6, upon issuance pursuant hereto, will be duly and validly
issued, fully paid and nonassessable, and will be delivered free
and clear of all Liens, including any preemptive rights of any
shareholder of Issuer.
SECTION 5. Representations and Warranties of Grantee.
Grantee hereby represents and warrants to Issuer that any Option Shares or
other securities acquired by Grantee upon exercise of the Option
will not be transferred or otherwise disposed of except in a transaction
registered, or exempt from registration, under the Securities Act.
SECTION 6. Adjustment upon Changes in Capitalization, Etc.
(a) In the event of any change in Class A Common Stock by reason of a stock
dividend, split-up, merger, recapitalization, combination, exchange or
conversion of shares, or similar transaction, the type and number of shares
or securities subject to the Option, and the Purchase Price thereof, shall
be adjusted appropriately, and proper provision will be made in the
agreements governing such transaction, so that Grantee shall receive upon
exercise of the Option the number and class of shares or other securities
or property that Grantee would have received in respect of Class A Common
Stock if the Option had been exercised immediately prior to such event or
the record date therefor, as applicable. Subject to Section 1, and without
limiting the parties' relative rights and obligations under the Merger
Agreement, if any additional shares of Class A Common Stock are issued
after the date of this Agreement (other than pursuant to an event described
in the first sentence of this Section 6(a)), the number of shares of Class
A Common Stock subject to the Option shall be adjusted so that, after such
issuance, it equals 19.9% of the number of shares of Class A Common Stock
then issued and outstanding, without giving effect to any shares subject to
or issued pursuant to the Option.
(b) Without limiting the parties' relative rights and
obligations under the Merger Agreement, in the event that Issuer enters
into an agreement (i) to consolidate with or merge into any person, other
than Grantee or one of its subsidiaries, and Issuer will not be the
continuing or surviving corporation in such consolidation or merger, (ii)
to permit any person, other than Grantee or one of its subsidiaries, to
merge into Issuer and Issuer will be the continuing or surviving
corporation, but in connection with such merger, the shares of Class A
Common Stock outstanding immediately prior to the consummation of such
merger will be changed into or exchanged for stock or other securities of
Issuer or any other person or cash or any other property, or the shares of
Class A Common Stock outstanding immediately prior to the consummation of
such merger will, after such merger, represent less than 50% of the
outstanding voting securities of the merged company, or (iii) to sell or
otherwise transfer all or substantially all its assets to any person, other
than Grantee or one of its subsidiaries, then, and in each such case, the
agreement governing such transaction will make proper provision so that the
Option will, upon the consummation of any such transaction and upon the
terms and conditions set forth herein, be converted into, or exchanged for,
an option with identical terms appropriately adjusted to acquire the number
and class of stock or other securities or cash or other property that
Grantee would have received in respect of Class A Common Stock if the
Option had been exercised immediately prior to such consolidation, merger,
sale, or transfer, or the record date therefor, as applicable and make any
other necessary adjustments.
(c) If, at any time during the period commencing on a
Purchase Event and ending on the termination of the Option in accordance
with Section 2, Grantee sends to Issuer an Exercise Notice indicating
Grantee's election to exercise its right (the "Cash-Out Right") pursuant to
this Section 6(c), then Issuer shall pay to Grantee, on the Option Closing
Date, in exchange for the cancelation of the Option with respect to such
number of Option Shares as Grantee specifies in the Exercise Notice, an
amount in cash equal to the greater of (i) $1.00 per Option Share the
subject of such Exercise Notice and (ii) such number of Option Shares
multiplied by the difference between (A) the average closing price, for the
ten trading days commencing on the 12th trading day immediately preceding
the Notice Date, per share of Class A Common Stock as reported on the
NASDAQ, as reported in The Wall Street Journal (Northeast edition), or, if
not reported thereby, any other authoritative source (the "Closing Price")
and (B) the Purchase Price. Notwithstanding the termination of the Option,
Grantee shall be entitled to exercise its rights under this Section 6(c) if
it has exercised such rights in accordance with the terms hereof prior to
the termination of the Option. Notwithstanding anything herein to
the contrary, the aggregate amount payable by Issuer to Grantee pursuant to
this Section 6(c) shall not exceed $500,000.
SECTION 7. Registration Rights. Issuer shall, if requested
by Grantee at any time and from time to time within three years of the
exercise of the Option, as expeditiously as possible prepare and file up to
three registration statements under the Securities Act if such registration
is necessary in order to permit the sale or other disposition of any or all
shares of securities that have been acquired by or are issuable to Grantee
upon exercise of the Option in accordance with the intended method of sale
or other disposition stated by Grantee, including a "shelf" registration
statement under Rule 415 under the Securities Act or any successor
provision, and Issuer shall use its best efforts to qualify such shares or
other securities under any applicable state securities laws. Issuer shall
use reasonable efforts to cause each such registration statement to become
effective, to obtain all consents or waivers of other parties which are
required therefor, and to keep such registration statement effective for
such period not in excess of 180 calendar days from the day such
registration statement first becomes effective as may be reasonably
necessary to effect such sale or other disposition. The obligations of
Issuer hereunder to file a registration statement and to maintain its
effectiveness may be suspended for up to 60 calendar days in the aggregate
if the Board of Directors of Issuer shall have determined that the filing
of such registration statement or the maintenance of its effectiveness
would require premature disclosure of material nonpublic information that
would materially and adversely affect Issuer or otherwise interfere with or
adversely affect any pending or proposed offering of securities of Issuer
or any other material transaction involving Issuer. Any registration
statement prepared and filed under this Section 7, and any sale covered
thereby, shall be at Issuer's expense except for underwriting discounts or
commissions, brokers' fees and the fees and disbursements of Grantee's
counsel related thereto. Grantee will provide all information reasonably
requested by Issuer for inclusion in any registration statement to be filed
hereunder. If, during the time periods referred to in the first sentence of
this Section 7, Issuer effects a registration under the Securities Act of
Class A Common Stock for its own account or for any other shareholders of
Issuer (other than on Form S-4 or Form S-8, or any successor form), it
shall allow Grantee the right to participate in such registration, and such
participation shall not affect the obligation of Issuer to effect demand
registration statements for Grantee under this Section 7; provided,
however, that, if the managing underwriters of such offering advise Issuer
in writing that in their opinion the number of shares of Class A Common
Stock requested to be included in such registration exceeds the number
which can be sold in such offering, Issuer shall include the shares
requested to be included therein by Grantee pro rata with the shares
intended to be included therein by Issuer. In connection with any
registration pursuant to this Section 7, Issuer and Grantee shall provide
each other and any underwriter of the offering with customary
representations, warranties, covenants, indemnification, and contribution
in connection with such registration.
SECTION 8. Loss or Mutilation. Upon receipt by Issuer of
evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Agreement, and (in the case of loss, theft or
destruction) of reasonably satisfactory indemnification, and upon surrender
and cancelation of this Agreement, if mutilated, Issuer will execute and
deliver a new Agreement of like tenor and date. Any such new Agreement
executed and delivered will constitute an additional contractual obligation
on the part of Issuer, whether or not the Agreement so lost, stolen,
destroyed, or mutilated shall at any time be enforceable by anyone.
SECTION 9. Miscellaneous. (a) Expenses. Except as otherwise
provided in the Merger Agreement, each of the parties hereto will bear and
pay all costs and expenses incurred by it or on its behalf in connection
with the transactions contemplated hereunder, including fees and expenses
of its own financial consultants, investment bankers, accountants, and
counsel.
(b) Amendment. This Agreement may not be amended, except by
an instrument in writing signed on behalf of each of the parties.
(c) Extension; Waiver. Any agreement on the part of a party
to waive any provision of this Agreement, or to extend the time for
performance, will be valid only if set forth in an instrument in writing
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 will not
constitute a waiver of such rights.
(d) No Third-Party Beneficiaries. This Agreement is not
intended to confer upon any person other than the parties and their
successors and permitted assigns any rights or remedies.
(e) Governing Law. This Agreement will be governed by, and
construed in accordance with, the laws of the State of New York, regardless
of the laws that might otherwise govern under applicable principles of
conflict of laws thereof.
(f) Notices. All notices, requests, claims, demands, and
other communications under this Agreement shall be given in accordance with
Section 9.02 of the Merger Agreement.
(g) Assignment. Neither this Agreement, the Option nor any
of the rights, interests, or obligations under this Agreement may be
assigned or delegated, in whole or in part, by operation of law or
otherwise, by Issuer or Grantee without the prior written consent of the
other, except that Grantee may assign all its rights under Section 7 to any
person who acquires from Grantee any Option Shares. Any assignment or
delegation in violation of the preceding sentence shall be void. Subject to
the first and second sentences of this Section 9(g), this Agreement shall
be binding upon, inure to the benefit of, and be enforceable by, the
parties and their respective successors and permitted assigns.
(h) Further Assurances. In the event of any exercise of the
Option by Grantee, Issuer and Grantee shall execute and deliver all other
documents and instruments and take all other actions that may be reasonably
necessary in order to consummate the transactions provided for by such
exercise.
IN WITNESS WHEREOF, Issuer and Grantee have duly executed
this Agreement, all as of the day and year first written above.
CONOPCO, INC.,
by /s/ MART LAIUS
Name: Mart Laius
Title: Vice President
BEN & JERRY'S HOMEMADE, INC.,
by /s/ PERRY D. ODAK
------------------
Name: Perry D. Odak
Title: Chief Executive Officer
ANNEX D
April 11, 2000
Members of the Board of Directors
Ben & Jerry's Homemade, Inc.
30 Community Drive
South Burlington, Vermont 05403-6828
Lady and Gentlemen:
We are writing this letter to confirm our opinion (the "Opinion"), as
investment bankers, previously expressed orally to you on April 11, 2000,
as to the fairness, from a financial point of view, to the holders (the
"Stockholders") of the Class A common stock, par value $0.033 per share
(the "Class A Stock"), of Ben & Jerry's Homemade, Inc., a Vermont
corporation (the "Company"), and of the Class B common stock, par value
$0.033 per share (the "Class B Stock," and collectively with the Class A
Stock, the "Company Common Stock"), of the Company, of the Consideration to
be received in the Transaction (as such terms are defined below). The
Transaction provides for Conopco, Inc., a New York corporation ("Conopco"),
and Vermont All Natural Expansion Company, a Vermont corporation ("VANEC"),
to enter into an Agreement and Plan of Merger with the Company (the
"Agreement"), pursuant to which (i) VANEC will make a cash tender offer
(the "Tender Offer") for shares of Company Common Stock at $43.60 per share
and (ii) following consummation of the Tender Offer, VANEC will be merged
with and into the Company (the "Merger") and each remaining holder of
shares of Company Common Stock will receive $43.60 for each share of
Company Common Stock owned by such holder. (The Tender Offer and the Merger
are referred to collectively as the "Transaction," and the cash
consideration of $43.60 per share is referred to as the "Consideration.")
The Tender Offer will be conditioned upon the tender and nonwithdrawal
pursuant to the Tender Offer of not less than a majority of the shares of
outstanding shares of Class A Stock, determined on a fully diluted basis.
The Merger will be consummated as soon as practicable after completion of
the Tender Offer. As you are aware, Gordian Group, L.P. ("Gordian") has
been engaged by the Company to provide this Opinion, and the terms of such
engagement are applicable to the delivery of this Opinion. In this regard,
Gordian will receive a $400,000 fee. In addition, since 1997 Gordian has
been retained to provide various financial advisory services to the
Company, and we have received cash fees in connection therewith aggregating
approximately $630,000, and will receive a net additional fee of
approximately $3,000,000 if the Company consummates the Transaction.
Gordian is also entitled to reimbursement of certain costs and expenses and
indemnification against certain liabilities in connection with all of the
foregoing arrangements. Gordian and one of its officers hold equity
securities of the Company, including Company Common Stock and warrants that
we have received from the Company to purchase Company Common Stock. We have
had, and continue to have, significant business relationships with Perry D.
Odak, the President and Chief Executive Officer of the Company. Moreover,
in the ordinary course of business, Gordian has had or may have had
dealings with certain other holders of the Company's securities, in matters
unrelated to the Company. Gordian has and has had numerous clients in a
wide variety of industries. It is possible that some of these past or
present Gordian clients may have some connection to the Company or to
holders of its securities.
In connection with rendering this Opinion, we have reviewed and considered
such financial and other factors as we have deemed appropriate under the
circumstances, including, among other things, the following:
(1) The draft dated April 10, 2000 of the Agreement and Plan of
Merger, among Conopco, VANEC and the Company;
(2) The draft dated April 10, 2000 of the License Agreement,
among Ben & Jerry's Homemade Holdings, Inc., a Vermont
corporation, the Company, Unilever N.V., a corporation
formed under the laws of The Netherlands ("UNV"), and
Unilever PLC, an English public limited company (together
with UNV, "Unilever");
(3) The draft dated April 10, 2000 of the Stock Option
Agreement, between the Company and Conopco;
(4) Certain publicly available information concerning the
Company, including the Annual Report on Form 10-K of the
Company for the years ended December 31, 1996, 1997, 1998,
1999 and the Quarterly Reports on Form 10-Q of the Company
for the quarters ended March 31, 1999, June 30, 1999 and
September 30, 1999, respectively;
(5) Certain operating and internal information of the Company,
provided to us for purposes of our analysis by the
management of the Company. Such information includes various
financial projections for various periods ended December 31,
2004. These projections were made under a variety of
assumptions, including both with and without giving effect
to the Transaction (collectively, the "Projections");
(6) Certain internal analyses concerning certain alternatives to
the Transaction, provided to us by the management of the
Company for purposes of our analysis;
(7) Certain publicly available information with respect to
certain other companies that we believe to be comparable, in
certain respects, to the Company; and
(8) Certain publicly available information concerning the nature
and terms of certain other transactions that we considered
relevant to our inquiry.
We have also met separately (in person or telephonically) with certain
officers and employees of the Company and with its legal advisors to
discuss aspects of the foregoing as well as the business, prospects, future
cash flows, forecasts and operating condition of the Company (both with and
without giving effect to the Transaction), as well as certain legal, tax,
accounting and other matters we believe relevant to our inquiry, and have
relied on certain representations from the Company.
In our review and analysis and in arriving at this Opinion, we have, at
your direction, assumed and relied upon, without independent verification
and without assuming the responsibility for an independent verification,
the accuracy and completeness of all of the financial and other information
provided to us or publicly available. At your direction, we have not made,
nor assumed any responsibility to make, any independent appraisal of any of
the assets or liabilities of the Company. We have further assumed that each
of the Projections of the Company provided to us are based on reasonable
assumptions, have been reasonably prepared and reflected the best currently
available estimates and judgments of the Company's management
as to the future financial results and condition of the Company giving
effect to the various scenarios under which they were prepared. In
connection with our engagement, we were not requested to actively solicit
expressions of interest in the Company from a broad group of potential
investors. However, we did have extensive discussions with various third
parties, including Unilever and its affiliates, at the direction of the
Company.
We have relied, among other things, on your representations that the
Company has investigated the alternatives that it believes are reasonably
available to it. In addition, we have relied on your representation that
the Company's Board of Directors will, in connection with the Merger,
convert Class B Stock into Class A Stock, and redeem the Company's $1.20
Class A Preferred Stock, par value $1.00 per share (the "Preferred Stock").
We are not offering any opinion with regard to any transaction other than
the Transaction, including without limitation any merger and acquisition
alternatives, any sale of substantial assets of the Company, any
refinancing of the Company or any other extraordinary corporate
transaction. We are addressing only the fairness of the Consideration to be
received in the Transaction from a financial point of view. This Opinion
does not address the relative merits of the Transaction and the other
business strategies considered by the Company's Board of Directors or the
merits of the Board's decision to proceed with the Transaction. This
Opinion specifically excludes addressing the fairness of the Transaction to
the holders of the Preferred Stock.
This Opinion speaks only as of the date hereof and we expressly disclaim
any obligation to update or revise this Opinion based upon circumstances or
events occurring after the consummation of the Transaction. We have assumed
that the final versions of any draft documents we have reviewed will not
differ in any material respects from such drafts. We have also assumed that
the terms of the Transaction, when consummated, will not differ in any
material respect from the terms and conditions described in the documents
governing the Transaction that we have reviewed. We have further assumed
that each of the parties to the Agreement will comply with all material
terms of the Agreement, as applicable, and that the Transaction will be
validly consummated in accordance with its terms. This Opinion is
necessarily based upon business, economic, market and other conditions as
they exist and can be evaluated on the date hereof.
Based upon and subject to the foregoing, it is our opinion as investment
bankers, as of the date hereof, that the Consideration to be received in
the Transaction is fair, from a financial point of view, to the holders of
the Company Common Stock.
This Opinion is furnished solely to the Board of Directors for its benefit
and is not to be relied upon by any other person, including any
shareholder, creditor of the Company or other interested party. This
Opinion speaks only as of the date hereof, and Gordian expressly disclaims
any obligation to update or revise this Opinion based upon circumstances or
events occurring, or information obtained, subsequent to such date. This
Opinion is delivered to you subject to the express understanding that in no
event shall any of Gordian, its affiliates, or the officers, directors,
employees, agents, partners or controlling persons of Gordian or its
affiliates, have any liability whatsoever other than any such liability to
the Company of Gordian which is finally and judicially determined to have
been caused solely by the gross negligence or willful misconduct of
Gordian.
Without our prior written consent, this Opinion may not be used,
circulated, quoted or otherwise referred to, in whole or in part, nor this
Opinion stated herein publicly disclosed, nor any other reference to
Gordian publicly made; provided, that we hereby consent to the inclusion of
this Opinion in documents provided by the Company to its shareholders in
connection with the Tender Offer and the Merger and to disclosure of this
Opinion therein in such form and substance as is reasonably satisfactory to
us.
Very truly yours,
/s/ GORDIAN GROUP, L.P.
Gordian Group, L. P.
ANNEX E
Chapter 13 Dissenters' Rights
SUBCHAPTER 1. RIGHT TO DISSENT AND OBTAIN PAYMENT FOR SHARES
SECTION
13.01. Definitions
13.02. Right to dissent.
13.03. Dissent by nominees and beneficial owners.
SUBCHAPTER 2. PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS
13.20. Notice of dissenters' rights.
13.21. Notice of intent to demand payment.
13.22. Dissenters' notice.
13.23. Duty to demand payment.
13.24. Share restrictions.
13.25. Payment.
13.26. Failure to take action.
13.27. After-acquired shares.
13.28. Procedure if shareholder dissatisfied with payment or offer.
SUBCHAPTER 3. JUDICIAL APPRAISAL OF SHARES
13.30. Court action.
13.31. Court costs and counsel fees.
Subchapter 1. Right to Dissent and Obtain Payment for Shares
SS. 13.01. DEFINITIONS
In this chapter:
(1) "Corporation" means the issuer of the shares held by a
dissenter before the corporate action, or the surviving or acquiring
corporation by merger or share exchange of that issuer.
(2) "Dissenter" means a shareholder who is entitled to dissent from
corporate action under section 13.02 of this title and who exercises that
right when and in the manner required by sections 13.02 through 13.28 of
this title.
(3) "Fair value," with respect to a dissenter's shares, means the
value of the shares immediately before the effectuation of the corporate
action to which the dissenter objects, excluding any appreciation or
depreciation in anticipation of the corporate action unless exclusion would
be inequitable.
(4) "Interest" means interest from the effective date of the
corporate action until the date of payment, at the average rate currently
paid by the corporation on its principal bank loans, or, if none, at a rate
that is fair and equitable under all the circumstances.
(5) "Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of
shares to the extent of the rights granted by a nominee certificate on file
with a corporation.
(6) "Beneficial shareholder" means the person who is a beneficial
owner of shares held by a nominee as the record shareholder.
(7) "Shareholder" means the record shareholder or the beneficial
shareholder.
SS. 13.02. RIGHT TO DISSENT
(a) A shareholder is entitled to dissent from, and obtain payment
of the fair value of his or her shares in the event of, any of the
following corporate actions:
(1) MERGER. Consummation of a plan of merger to which the
corporation is a party
(A) if shareholder approval is required for the
merger by section 11.03 of this title or the articles of
incorporation and the shareholder is entitled to vote on the
merger; or
(B) if the corporation is a subsidiary that is merged
with its parent under section 11.04 of this title; (2) SHARE
EXCHANGE. Consummation of a plan of share exchange to which
the corporation is a party as the corporation whose shares will be
acquired, if the shareholder is entitled to vote on the plan;
(3) SALE OF ASSETS. Consummation of a sale or exchange of
all, or substantially all, of the property of the corporation other
than in the usual and regular course of business, if the
shareholder is entitled to vote on the sale or exchange, including
a sale in dissolution, but not including a sale pursuant to court
order or a sale for cash pursuant to a plan by which all or
substantially all of the net proceeds of the sale will be
distributed to the shareholders within one year after the date of
sale;
(4) AMENDMENT TO ARTICLES. An amendment of the articles of
incorporation that materially and adversely affects rights in
respect of a dissenter's shares because it:
(A) alters or abolishes a preferential right of the
shares;
(B) creates, alters, or abolishes a right in
respect of redemption,
including a provision respecting a sinking fund for the
redemption or repurchase, of the shares;
(C) alters or abolishes a preemptive right of the
holder of the shares to acquire shares or other securities;
(D) excludes or limits the right of the shares to
vote on any matter, or to cumulate votes, other than a
limitation by dilution through issuance of shares or other
securities with similar voting rights; or
(E) reduces the number of shares owned by the
shareholder to a fraction of a share if the fractional share
so created is to be acquired for cash under section 6.04 of
this title; or (5) MARKET EXCEPTION. Any corporate action
taken pursuant to a shareholder
vote to the extent the articles of incorporation, bylaws, or a
resolution of the board of directors provides that voting or
nonvoting shareholders are entitled to dissent and obtain payment
for their shares.
(b) A shareholder entitled to dissent and obtain payment for his or
her shares under this chapter may not challenge the corporate action
creating his or her entitlement unless the action is unlawful or fraudulent
with respect to the shareholder or the corporation.
SS. 13.03. DISSENT BY NOMINEES AND BENEFICIAL OWNERS
(a) A record shareholder may assert dissenters' rights as to fewer
than all the shares registered in his or her name only if he or she
dissents with respect to all shares beneficially owned by any one person
and notifies the corporation in writing of the name and address of each
person on whose behalf he or she asserts dissenters' rights. The rights of
a partial dissenter under this subsection are determined as if the shares
as to which the shareholder dissents and the shareholder's other shares
were registered in the names of different shareholders.
(b) A beneficial shareholder may assert dissenters' rights as to
shares held on his or her behalf only if:
(1) he or she submits to the corporation the record
shareholder's written consent to the dissent not later than the
time the beneficial shareholder asserts dissenters' rights; and
(2) he or she does so with respect to all shares of which he
or she is the beneficial shareholder or over which he or she has
power to direct the vote.
Subchapter 2. Procedure for Exercise of Dissenters' Rights
SS. 13.20. NOTICE OF DISSENTERS' RIGHTS
(a) If proposed corporate action creating dissenters' rights, under
section 13.02 of this title is submitted to a vote at a shareholders'
meeting, the meeting notice must state that shareholders are or may be
entitled to assert dissenters' rights under this chapter and be accompanied
by a copy of this chapter.
(b) If corporate action creating dissenters' rights under section
13.02 of this title is taken without a vote of shareholders, the
corporation shall notify in writing all shareholders entitled to assert
dissenters' rights that the action was taken and send them the dissenters'
notice described in section 13.22 of this title.
SS. 13.21. NOTICE OF INTENT TO DEMAND PAYMENT
(a) If proposed corporate action creating dissenters' rights under
section 13.02 of this title is submitted to a vote at a shareholders'
meeting, a shareholder who wishes to assert dissenter's rights
(1) must deliver to the corporation before the vote is taken
written notice of his or her intent to demand payment for his or
her shares if the proposed action is effectuated; and
(2) must not vote his or her shares in favor of the
proposed action.
(b) A shareholder who does not satisfy the requirements of
subsection (a) of this section is not entitled to payment for his or her
shares under this chapter.
SS. 13.22. DISSENTERS' NOTICE
(a) If proposed corporate action creating dissenters' rights under
section 13.02 of this title is authorized at a shareholders' meeting, the
corporation shall deliver a written dissenter's notice to all shareholders
who satisfied the requirements of section 13.21 of this title.
(b) The dissenters' notice must be sent no later than ten days
after the corporate action was taken, and must:
(1) state where the payment demand must be sent and where
and when certificates for certificated shares must be deposited;
(2) inform holders of uncertificated shares to what extent
transfer of the shares will be restricted after the payment demand
is received;
(3) supply a form for demanding payment that includes the
date of the first announcement to news media or to shareholders of
the terms of the proposed corporate action and requires that the
person asserting dissenters' rights certify whether or not the
person acquired beneficial ownership of the shares before that
date;
(4) set a date by which the corporation must receive the
payment demand, which date may not be fewer than 30 nor more than
60 days after the date the subsection (a) notice is delivered; and
(5) be accompanied by a copy of this chapter.
SS. 13.23. DUTY TO DEMAND PAYMENT
(a) A shareholder sent a dissenters' notice described in section
13.22 of this title must demand payment, certify whether he or she acquired
beneficial ownership of the shares before the date required to be set forth
in the dissenters' notice pursuant to section 13.22(b)(3) of this title,
and deposit his or her certificates in accordance with the terms of the
notice.
(b) The shareholder who demands payment and deposits his or her
share certificates under subsection (a) of this section retains all other
rights of a shareholder until these rights are cancelled or modified by the
taking of the proposed corporate action.
(c) A shareholder who does not demand payment or deposit his or her
share certificates where required, each by the date set in the dissenters'
notice, is not entitled to payment for his or her shares under this
chapter.
SS. 13.24. SHARE RESTRICTIONS
(a) The corporation may restrict the transfer of uncertificated
shares from the date the demand for their payment is received until the
proposed corporate action is taken or the restrictions released under
section 13.26 of this title.
(b) The person for whom dissenters' rights are asserted as to
uncertificated shares retains all other rights of a shareholder until these
rights are cancelled or modified by the taking of the proposed corporate
action.
SS. 13.25. PAYMENT
(a) Except as provided in section 13.27 of this title, as soon as
the proposed corporate action is taken, or upon receipt of a payment
demand, the corporation shall pay each dissenter who complied with section
13.23 of this title the amount the corporation estimates to be the fair
value of his or her shares, plus accrued interest.
(b) The payment must be accompanied by:
(1) the corporation's balance sheet as of the end of a
fiscal year ending not more than 16 months before the date of
payment, an income statement for that year, a statement of changes
in shareholders' equity for that year, and the latest available
interim financial statements, if any;
(2) a statement of the corporation's estimate of the
fair value of the shares and how such estimate was calculated;
(3) an explanation of how the interest was calculated;
(4) a statement of the dissenter's right to demand payment
under section 13.28 of this title; and
(5) a copy of this chapter.
SS. 13.26. FAILURE TO TAKE ACTION
(a) If the corporation does not take the proposed action within 60
days after the date set for demanding payment and depositing share
certificates, the corporation shall return the deposited certificates and
release the transfer restrictions imposed on uncertificated shares.
(b) If after returning deposited certificates and releasing
transfer restrictions, the corporation takes the proposed action, it must
send a new dissenters' notice under section 13.22 of this title and repeat
the payment demand procedure.
SS. 13.27. AFTER-ACQUIRED SHARES
(a) A corporation may elect to withhold payment required by section
13.25 of this title from a dissenter unless the dissenter was the
beneficial owner of the shares before the date set forth in the dissenters'
notice as the date of the first announcement to news media or to
shareholders of the terms of the proposed corporate action.
(b) To the extent the corporation elects to withhold payment under
subsection (a) of this section, after taking the proposed corporate action,
it shall estimate the fair value of the shares, plus accrued interest, and
shall pay this amount to each dissenter who agrees to accept it in full
satisfaction of his or her demand. The corporation shall send with its
offer a statement of its estimate and calculation of the fair value of the
shares, an explanation of how the interest was calculated, and a statement
of the dissenter's right to demand payment under section 13.28 of this
title.
SS.13.28. PROCEDURE IF SHAREHOLDER DISSATISFIED WITH PAYMENT OR OFFER
(a) A dissenter may notify the corporation in writing of his or her
own estimate of the fair value of his or her shares and amount of interest
due, and demand payment of his or her estimate (less any payment under
section 13.25 of this title), or reject the corporation's offer under
section 13.27 of this title and demand payment of the fair value of his or
her shares and interest due, if:
(1) the dissenter believes that the amount paid under
section 13.25 or offered under section 13.27 is less than the fair
value of his or her shares or that the interest due is incorrectly
calculated;
(2) the corporation fails to make payment under section
13.25 within 60 days after the date set for demanding payment; or
(3) the corporation, having failed to take the proposed
action, does not return the deposited certificates or release the
transfer restrictions imposed on uncertificated shares within 60
days after the date set for demanding payment. (b) A dissenter
waives his or her right to demand payment under this section unless
he or she notifies the corporation of his or her demand in writing
under subsection (a) of this section within 30 days after the
corporation made or offered payment for his or her shares.
Subchapter 3. Judicial Appraisal of Shares
SS. 13.30. COURT ACTION
(a) If a demand for payment under section 13.28 of this title
remains unsettled, the corporation shall commence a proceeding within 60
days after receiving the payment demand and petition the court to determine
the fair value of the shares and accrued interest. If the corporation does
not commence the proceeding within the 60-day period, it shall pay each
dissenter whose demand remains unsettled the amount demanded.
(b) The corporation shall commence the proceeding in the superior
court of the county where the corporation's principal office (or, if none
in this state, its registered office) is located. If the corporation is a
foreign corporation without a registered office in this state, it shall
commence the proceeding in the county in this state where the registered
office of the domestic corporation merged with or whose shares were
acquired by the foreign corporation was located.
(c) The corporation shall make all dissenters (whether or not
residents of this state) whose demands remain unsettled parties to the
proceeding as in an action against their shares and all parties must be
served with a copy of the complaint. Nonresidents may be served by
registered or certified mail or by publication as provided by law.
(d) The jurisdiction of the court in which the proceeding is
commenced under subsection (b) of this section is plenary and exclusive.
The court may appoint one or more persons as appraisers to receive evidence
and recommend decision on the question of fair value. The appraisers have
the powers described in the order appointing them, or in any amendment to
it. The dissenters are entitled to the same discovery rights as parties in
other civil proceedings.
(e) Each dissenter made a party to the proceeding is entitled to
judgment (1) for the amount, if any, by which the court finds the fair
value of his or her shares, plus interest, exceeds the amount paid by the
corporation; or (2) for the fair value, plus accrued interest, of his or
her after-acquired shares for which the corporation elected to withhold
payment under section 13.27 of this title.
SS. 13.31. COURT COSTS AND COUNSEL FEES
(a) The court in an appraisal proceeding commenced under section
13.30 of this title shall determine all costs of the proceeding, including
the reasonable compensation and expenses of appraisers appointed by the
court. The court shall assess the costs against the corporation, except
that the court may assess costs against all or some of the dissenters, in
amounts the court finds equitable, to the extent the court finds the
dissenters acted arbitrarily, vexatiously, or not in good faith in
demanding payment under section 13.28 of this title.
(b) The court may also assess the fees and expenses of counsel and
experts for the respective parties, in amounts the court finds equitable:
(1) against the corporation and in favor of any or all
dissenters if the court finds the corporation did not substantially
comply with the requirements of sections 13.20 through 13.28 of
this title; or
(2) against either the corporation or a dissenter, in favor
of any other party, if the court finds that the party against whom
the fees and expenses are assessed acted arbitrarily, vexatiously,
or not in good faith with respect to the rights provided by this
chapter.
(c) If the court finds that the services of counsel for any
dissenter were of substantial benefit to other dissenters similarly
situated, and that the fees for those services should not be assessed
against the corporation, the court may award to these counsel reasonable
fees to be paid out of the amounts awarded the dissenters who were
benefitted.
