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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
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Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
/X/ 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)
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Payment of Filing Fee (Check the appropriate box):
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/ / 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 the
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.
Check box if any part of the fee is offset as provided by
/X/ 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.
30 Community Drive
South Burlington, Vermont 05403-6828
July 5, 2000
Dear Shareholder:
You are cordially invited to attend a Special Meeting of Shareholders, which
will be held on August 3, 2000 at the Grand Hyatt New York, Park Avenue at Grand
Central, New York, New York 10017 at 10:00 a.m., local time.
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, and as amended and restated as of July 5, 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,
/s/ PERRY D. ODAK
Perry D. Odak
President and CEO
THIS PROXY STATEMENT IS DATED JULY 5, 2000, AND IS BEING FIRST MAILED TO BEN &
JERRY'S SHAREHOLDERS ON OR ABOUT JULY 6, 2000.
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[LOGO]
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 the Grand Hyatt New
York, Park Avenue at Grand Central, New York, New York 10017, on August 3, 2000,
at 10:00 a.m., local time, 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 (as
amended and restated as of July 5, 2000, 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 July 5, 2000 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,
/s/ FRANCES G. RATHKE
Frances G. Rathke
Secretary
July 5, 2000
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.
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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
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DATE, PLACE AND TIME: The special meeting will be held at 10:00 a.m., local time,
on August 3, 2000, at the Grand Hyatt New York, Park Avenue
at Grand Central, New York, New York 10017.
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 and
as amended and restated as of July 5, 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
July 5, 2000, 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 will 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:
- delivering a written notice of revocation of proxy prior
to the special meeting to Frances G. Rathke, Secretary, Ben
& Jerry's
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Homemade, Inc., 30 Community Drive, South Burlington,
Vermont 05403-6828;
- delivering to Ben & Jerry's a duly executed proxy bearing
a later date prior to the special meeting; or
- 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 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. 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 &
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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 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
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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). As a
result of its ownership 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.
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 Corporation 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
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certain other customary closing conditions, including the
absence of any preliminary or permanent injunction or other
order, decree or ruling of, or 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 approximately $27
million. 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.
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TABLE OF CONTENTS
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SUMMARY TERM SHEET.......................................... i
The Special Meeting................................. i
The Parties......................................... ii
The Merger and Related Transactions................. ii
PROXY STATEMENT............................................. 1
Introduction........................................ 1
Securities.......................................... 1
Questions and Answers about the Merger.............. 1
Cautionary Statement Concerning Forward-Looking 5
Information.........................................
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............................................. 6
THE PARTIES................................................. 7
Ben & Jerry's Homemade, Inc......................... 7
Vermont All Natural Expansion Company............... 7
Conopco, Inc........................................ 7
THE MERGER AND RELATED TRANSACTIONS......................... 8
General............................................. 8
Conversion of Securities............................ 8
Vote Required to Approve the Merger................. 8
Recommendations of the Board of Directors........... 8
Background of the Merger............................ 9
Reasons for the Board of Directors' Recommendations; 15
Factors Considered..................................
Opinion of the Company's Financial Advisor.......... 18
Change of Control................................... 20
Conditions to the Merger............................ 21
Termination of the Merger Agreement................. 21
Takeover Proposals.................................. 22
Fees and Expenses................................... 23
Intercompany Loan................................... 23
The Board of Directors.............................. 23
Stock Options....................................... 24
Benefit Plans....................................... 24
Employment/Severance Agreements..................... 25
Indemnification and Insurance....................... 26
Best Efforts; Notification.......................... 26
Representations and Warranties...................... 27
Procedure for Termination, Amendment, Extension or 27
Waiver..............................................
Rights Agreements................................... 27
Confidentiality Agreement........................... 27
License Agreement................................... 27
Stock Option Agreement.............................. 29
Third-Party Beneficiaries........................... 29
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PLANS FOR THE COMPANY....................................... 30
The Surviving Corporation Board..................... 30
Ineligible Directors................................ 30
Operations of the Surviving Corporation............. 31
Social Mission...................................... 31
The Foundation...................................... 31
Certain Federal Income Tax Consequences............. 32
Method of Accounting................................ 33
Regulatory and Other Approvals...................... 33
Source and Amount of Funds.......................... 33
DISSENTERS' RIGHTS.......................................... 34
Overview............................................ 34
Dissenters' Rights.................................. 34
STOCK OWNERSHIP............................................. 37
Security Ownership of Certain Beneficial Owners and 37
Management..........................................
Shareholder Litigation.............................. 38
Shareholder Proposals for Next Annual Meeting....... 38
Other Matters....................................... 38
Incorporation of Certain Documents by Reference..... 38
Available Information............................... 39
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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
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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 (as amended and restated as of July 5, 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 30, 2000, there were 7,244,989 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.
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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. VERMONT ALL NATURAL EXPANSION COMPANY OWNS A
SUFFICIENT NUMBER OF SHARES TO ASSURE APPROVAL OF THE MERGER AGREEMENT AT THE
SPECIAL MEETING AND WILL 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. 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.
WHAT IF I TENDERED MY SHARES AFTER THE EXPIRATION OF THE TENDER OFFER?
The tender offer by Vermont All Natural Expansion Company expired at
midnight on May 15, 2000. Some shareholders submitted share certificates for
shares of Company Common Stock following expiration of the tender offer.
Assuming your share certificates were properly tendered, no further action is
required on your part to receive $43.60 per share for your tendered shares once
the merger is consummated. Shareholders who so desire may request return of
share certificates tendered after the expiration of the tender offer by
contacting Morgan Guaranty Trust Company of New York at (888) 444-6789.
Shareholders who tendered after the expiration of the tender offer and wish to
exercise dissenters' rights in connection with the merger must request return of
share certificates and 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.
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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 the Grand Hyatt New York, on August 3, 2000, 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,
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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 American
Stock Transfer & Trust Company at (800) 937-5449.
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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, contains 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: (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.
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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:
<TABLE>
<S> <C>
August 3, 2000
10:00 a.m., local time
Grand Hyatt New York
Park Avenue at Grand Central
New York, New York 10017
</TABLE>
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 July 5, 2000 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
7,244,989 shares of Class A Common Stock outstanding (exclusive of 328,090
treasury shares), held by approximately 7,800 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. VERMONT ALL NATURAL EXPANSION
COMPANY OWNS A SUFFICIENT NUMBER OF SHARES TO ASSURE APPROVAL OF THE MERGER
AGREEMENT AT THE SPECIAL MEETING AND WILL 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.
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
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should be voted will be voted in favor of approval of the Merger Agreement and
will be deemed a waiver of dissenters' rights.
You may revoke your proxy at any time before it is voted by:
- 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;
- delivering to the Company a duly executed proxy bearing a later date prior
to the Special Meeting; or
- 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 share certificates with your proxy. A transmittal
form with instructions for the surrender of share 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.
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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:
- 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;
- 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;
- 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 such
shares of Class A Common Stock; and
- 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.
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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.
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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.
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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
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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.
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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
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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
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 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 Class A Common Stock and 714,003 shares of Class B Common
Stock, par value $.033 per share, 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 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.
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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.
On July 5, the Board of Directors approved an amendment to, and the
restatement of, the Merger Agreement, intended to clarify the arrangements to be
made after the Effective Time with respect to the Social Venture Fund (as
defined below).
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 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.
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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
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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
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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 Merger.
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
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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.
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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 Class A Common Stock and 714,003 shares of 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
outstanding Class A Common Stock and approximately 90% of the 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".
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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).
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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").
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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.
INTERCOMPANY 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, and payment for, any shares of 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, 2000, the actions of the Board of Directors discussed in the
preceding paragraph became effective.
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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
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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
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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
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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
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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
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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
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"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's Articles of
Association and the Company's by-laws shall be amended to the extent necessary
to implement the foregoing. On July 5, 2000, the Board of Directors was
presented with a form of Amended and Restated Articles of Incorporation of the
Surviving Corporation, containing close corporation provisions, and a form of
Shareholders Agreement between Conopco and the Surviving Corporation, which
together implement the foregoing. The Board of Directors adopted a resolution
(i) recommending that Conopco, as sole shareholder of the Surviving Corporation,
approve such Amended and Restated Articles of Incorporation after the Effective
Time of the Merger and (ii) authorizing specified persons to enter into on
behalf of the Surviving Corporation such Shareholders Agreement after the
Effective Time.
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
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<PAGE>
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.
On June 20, 2000, Conopco, the Purchaser and Jennifer Henderson, a director
of the Company, entered into a Waiver Agreement, pursuant to which Conopco and
the Purchaser waived the requirement under the Merger Agreement that any member
of the Board of Directors on the date of the Merger Agreement must tender his or
her shares of Company Common Stock pursuant to the Offer in order to serve on
the Surviving Corporation Board with respect to Ms. Henderson's failure to
tender shares of Company Common Stock owned by her.
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") to
be administered by a committee of the Surviving Corporation Board that shall
oversee the Social Venture Fund (the "Social Venture Committee"), 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 Surviving Corporation shall fund such
entity pursuant to an agreement to be made between the Surviving Corporation and
the Social Venture Fund after the Effective Time on such terms and conditions as
they and the Social Venture Committee shall approve. 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.
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
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<PAGE>
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
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<PAGE>
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
approximately $27 million. 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.
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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. SectionSection 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
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<PAGE>
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 Section 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
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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.
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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.
<TABLE>
<CAPTION>
ALL PERSONS CLASS A COMMON STOCK
----------- --------------------
<S> <C>
Vermont All Natural Expansion
Company and Conopco......................................... 6,621,944
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.......................................... 614
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:...................... 614
</TABLE>
(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
disclaims any such beneficial ownership.
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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 15(th) 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 5(th) 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:
- 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
38
<PAGE>
- 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 July 27, 2000.
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).
39
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ANNEX A
CONFORMED COPY
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
Dated as of April 11, 2000
As Amended and Restated as of July 5, 2000
Among
CONOPCO, INC.,
VERMONT ALL NATURAL EXPANSION COMPANY
And
BEN & JERRY'S HOMEMADE, INC.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
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<S> <C> <C>
ARTICLE I
THE OFFER AND THE MERGER
SECTION 1.01. The Offer................................................... 2
SECTION 1.02. Company Actions............................................. 3
SECTION 1.03. The Merger.................................................. 3
SECTION 1.04. Closing..................................................... 3
SECTION 1.05. Effective Time.............................................. 4
SECTION 1.06. Effects..................................................... 4
SECTION 1.07. Articles of Incorporation and By-laws....................... 4
SECTION 1.08. Directors................................................... 4
SECTION 1.09. Officers.................................................... 4
ARTICLE II
EFFECT ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 2.01. Effect on Capital Stock..................................... 4
SECTION 2.02. Exchange of Certificates.................................... 5
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.01. Organization, Standing and Power............................ 6
SECTION 3.02. Company Subsidiaries; Equity Interests...................... 7
SECTION 3.03. Capital Structure........................................... 7
SECTION 3.04. Authority; Execution and Delivery; Enforceability........... 9
SECTION 3.05. No Conflicts; Consents...................................... 9
SECTION 3.06. SEC Documents; Undisclosed Liabilities...................... 10
SECTION 3.07. Information Supplied........................................ 11
SECTION 3.08. Absence of Certain Changes or Events........................ 11
SECTION 3.09. Taxes....................................................... 12
SECTION 3.10. Absence of Changes in Benefit Plans......................... 13
SECTION 3.11. ERISA Compliance; Excess Parachute Payments................. 13
SECTION 3.12. Litigation.................................................. 15
SECTION 3.13. Compliance with Applicable Laws............................. 15
SECTION 3.14. Environmental Matters....................................... 15
SECTION 3.15. Contracts; Debt Instruments................................. 16
SECTION 3.16. Intellectual Property....................................... 16
SECTION 3.17. Labor Matters............................................... 16
SECTION 3.18. Title to Properties......................................... 16
SECTION 3.19. Equipment................................................... 17
SECTION 3.20. Suppliers................................................... 17
SECTION 3.21. Brokers; Schedule of Fees and Expenses...................... 17
SECTION 3.22. Opinion of Financial Advisor................................ 17
</TABLE>
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<TABLE>
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<S> <C> <C>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CONOPCO AND SUB
SECTION 4.01. Organization, Standing and Power............................ 18
SECTION 4.02. Sub......................................................... 18
SECTION 4.03. Authority; Execution and Delivery; Enforceability........... 18
SECTION 4.04. Consents.................................................... 18
SECTION 4.05. Information Supplied........................................ 18
SECTION 4.06. Brokers..................................................... 19
SECTION 4.07. Conopco Plans............................................... 19
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 5.01. Conduct of Business......................................... 19
SECTION 5.02. No Solicitation............................................. 21
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Preparation of Proxy Statement; Shareholders Meeting........ 23
SECTION 6.02. Access to Information; Confidentiality...................... 24
SECTION 6.03. Best Efforts; Notification.................................. 24
SECTION 6.04. Stock Options............................................... 25
SECTION 6.05. Benefit Plans and Special Bonus Program..................... 25
SECTION 6.06. Indemnification............................................. 26
SECTION 6.07. Fees and Expenses; Liquidated Damages....................... 27
SECTION 6.08. Public Announcements........................................ 27
SECTION 6.09. Transfer Taxes.............................................. 27
SECTION 6.10. Interim Directors........................................... 27
SECTION 6.11. Company Capital Stock....................................... 28
SECTION 6.12. Rights Agreements; Consequences if Rights Triggered......... 28
SECTION 6.13. Shareholder Litigation...................................... 28
SECTION 6.14. Operations of the Surviving Corporation..................... 29
SECTION 6.15. The Foundation.............................................. 31
SECTION 6.16. Certain Employee Matters.................................... 31
SECTION 6.17. Social Milestones........................................... 31
SECTION 6.18. The Social Venture Fund..................................... 31
ARTICLE VII
SECTION 7.01. Conditions to the Offer..................................... 32
SECTION 7.02. Conditions to the Merger.................................... 34
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. Termination................................................. 34
SECTION 8.02. Effect of Termination....................................... 35
SECTION 8.03. Amendment................................................... 35
SECTION 8.04. Extension; Waiver........................................... 35
SECTION 8.05. Procedure for Termination, Amendment, Extension or Waiver... 36
</TABLE>
iii
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<CAPTION>
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ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Nonsurvival of Representations and Warranties............... 36
SECTION 9.02. Notices..................................................... 36
SECTION 9.03. Definitions................................................. 37
SECTION 9.04. Interpretation; Disclosure Letters.......................... 37
SECTION 9.05. Severability................................................ 38
SECTION 9.06. Counterparts................................................ 38
SECTION 9.07. Entire Agreement; No Third-Party Beneficiaries.............. 38
SECTION 9.08. GOVERNING LAW............................................... 38
SECTION 9.09. Assignment.................................................. 38
SECTION 9.10. Enforcement................................................. 39
SECTION 9.11. Separate Parties............................................ 39
</TABLE>
<TABLE>
<S> <C>
EXHIBIT A Articles of Incorporation
EXHIBIT B Form of Delegation of Authority
</TABLE>
iv
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AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER, dated as of April 11,
2000, as amended and restated as of July 5, 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, Sub and the Company entered into an Agreement and Plan of
Merger, dated as of April 11, 2000 (the "Original Merger Agreement"), and they
now desire to amend and restate the Original Merger Agreement to make certain
modifications to Section 6.18 of the Original Merger Agreement (it being
understood that all references herein to this "Agreement" refer to the Original
Merger Agreement as amended and restated hereby and that all references herein
to the date hereof or the date of this agreement refer to April 11, 2000);
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.
<PAGE>
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.
2
<PAGE>
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".
3
<PAGE>
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.
4
<PAGE>
(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
5
<PAGE>
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
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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
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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.
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"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,
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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
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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;
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(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.
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(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
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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
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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
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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
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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.
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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.
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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
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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;
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(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
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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.
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(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.
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(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
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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".
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(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
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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
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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.
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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
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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
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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. SOCIAL VENTURE FUND. Following the Effective Time, the
Surviving Corporation shall establish a fund (the "SOCIAL VENTURE FUND"), to be
administered by the Social Venture Committee, 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
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entrepreneurial businesses within the scope of the Company's Social Mission
Priorities. The Surviving Corporation shall fund such entity pursuant to an
agreement to be made between the Surviving Corporation and the Social Venture
Fund after the Effective Time on such terms and conditions as they and the
Social Venture Committee shall approve. The Surviving Corporation shall make
available to the Social Venture Fund an aggregate amount of $5 million. The
terms of all venture financings approved by the Social Venture Committee to be
made by the Social Venture Fund shall limit the financial responsibility of the
Surviving Corporation in the aggregate to the foregoing cash contribution.
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;
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(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
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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;
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(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
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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
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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
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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
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<PAGE>
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
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The undersigned, jointly entitled to enforce Section 6.18 hereof, consent to
the amendment of such section, as required by Section 8.03 hereof.
<TABLE>
<S> <C>
/s/ JEFFERY FURMAN /s/ HENRY MORGAN
-------------------------------------------- --------------------------------------------
Jeffery Furman Henry Morgan
</TABLE>
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<PAGE>
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.
- The gap between the rich and the poor is wide. We strive to create
economic opportunities for those who have been denied them.
- 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.
- Manufacturing by definition creates waste. We strive to minimize our
negative impact on the environment.
- 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.
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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.
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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
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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.
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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
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ANNEX B
CONFORMED COPY
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
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.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
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.
<PAGE>
(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.
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(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.
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<PAGE>
(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
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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
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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
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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
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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
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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.
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(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
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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
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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
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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.
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(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
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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
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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
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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.
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(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
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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
19
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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.
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(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)
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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.
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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
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<PAGE>
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.
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<PAGE>
IN WITNESS WHEREOF, the parties hereunto have duly executed this Agreement
as of the day and year first above written.
<TABLE>
<S> <C> <C>
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
</TABLE>
25
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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
<PAGE>
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
2
<PAGE>
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
3
<PAGE>
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
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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.
<TABLE>
<S> <C> <C>
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
</TABLE>
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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;
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(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
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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.
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ANNEX E
CHAPTER 13 DISSENTERS' RIGHTS
<TABLE>
<CAPTION>
SECTION
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<C> <S>
SUBCHAPTER 1. RIGHT TO DISSENT AND OBTAIN PAYMENT FOR SHARES
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.
</TABLE>
SUBCHAPTER 1. RIGHT TO DISSENT AND OBTAIN PAYMENT FOR SHARES
SECTION 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.
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(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.
SECTION 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.
SECTION 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
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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
SECTION 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.
SECTION 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.
SECTION 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
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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.
SECTION 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.
SECTION 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.
SECTION 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.
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SECTION 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.
SECTION 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.
SECTION 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
SECTION 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.
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(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.
SECTION 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.
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Please Detach and Mail in the Envelope Provided
-------------------------------------------------------------------------------
PROXY CARD
BEN & JERRY'S HOMEMADE, INC.
PROXY
PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD AT 10:00 A.M., LOCAL TIME, ON AUGUST 3, 2000 AT THE GRAND HYATT
NEW YORK
Mart Laius, Ronkald M. Soiefer and A. Peter Harwich and each of
them, with full power of substitution, are herby authorized to represent and
to vote and act with respect to all stock of the undersigned at the Special
Meeting of Shareholders of Ben & Jerry's Homemade, Inc. on August 3, 2000 and
any adjournments or postponements thereof, as designated herein upon the
proposal set forth herein, as set forth in the Proxy Statement, and, in their
discretion, upon such other matters as may be properly brought before the
Special Meeting.
CHANGE OF ADDRESS
-------------------------------
-------------------------------
-------------------------------
(If you have written in the
above space, please mark the
corresponding box on the
reverse side of this card)
SEE REVERSE SIDE
<PAGE>
Please Detach and Mail in the Envelope Provided
--------------------------------------------------------------------------------
/x/ PLEASE MARK YOUR
VOTES AS INDICATED
IN THIS EXAMPLE
<TABLE>
<S> <C>
PLEASE VOTE BY RETURNING The Board of Directors recommends a
THIS PROXY vote FOR proposal (1), the approval
of the merger agreement.
FOR ABSTAIN AGAINST
1. Approval of the Agreement and Plan / / / / / /
of Merger, dated as of April 11, 2000,
as amended and restated as of July 5,
2000, among Conopco, Inc., Vermont All
Natural Expansion Company, a wholly-
owned subsidiary of Conopco, and Ben &
Jerry's Homemade, Inc.
PLEASE SEND AN ADMITTANCE CARD / /
IF YOU PLAN TO ATTEND THE SPECIAL
MEETING IN PERSON, PLEASE CHECK THE
BOX ABOVE, AND AN ADMITTANCE CARD WILL
BE MAILED TO YOU.
CHANGE OF ADDRESS IN REVERSE SIDE / /
THIS PROXY IS SOLICITED BY THE BOARD
OF DIRECTORS OF BEN & JERRY'S
HOMEMADE, INC. When properly executed
it will be voted as directed by the
shareholder but, unless otherwise
specified, it will be voted FOR
proposal (1), the approval of the
merger agreement.
Vote, sign and date this Proxy and
return it promptly in the enclosed
envelope. No postage is required if
mailed in the United States.
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Signature (Title, if any)
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Signature, if held jointly
Date: , 2000
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Please sign exactly as name appears hereon.
Joint owners should each sign. When signing
as attorney or guardian, please give full
title as such.
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