<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act
of 1934 for the Quarterly Period Ended September 30, 1995
-----------------------------------------
Commission File No. 1-2300
------------------------------------------------------------
Scott Paper Company
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania 23-1065080
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Scott Center, 2650 N. Military Trail, Suite 300, Boca Raton, Florida 33431
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(407) 989-2300
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
None
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at November 3, 1995
- --------------------------- --------------------------------
Common Shares, no par value 152,189,647 shares
---------------
<PAGE>
SCOTT PAPER COMPANY
INDEX
<TABLE>
<C> <S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated statement of earnings for the three
month and nine month periods ended September 30,
1995 and September 24, 1994......................... 3
Consolidated balance sheet at September 30, 1995,
December 31, 1994 and September 24, 1994............ 4
Consolidated statement of changes in common
shareholders' equity for the three month period
ended December 31, 1994 and the nine month period
ended September 30, 1995............................ 5
Consolidated statement of cash flows (condensed)
for the nine month periods ended September 30, 1995
and September 24, 1994.............................. 6
Notes to Consolidated Financial Statements........... 7
Item 2. Management's Discussion and Analysis................. 9
PART II. OTHER INFORMATION....................................... 13
Item 1. Legal Proceedings................................... 13
Item 6. Exhibits and Reports on Form 8-K.................... 13
Signatures................................................... 15
Exhibit Index................................................ 16
</TABLE>
<PAGE>
SCOTT PAPER COMPANY
-------------------
CONSOLIDATED STATEMENT OF EARNINGS
----------------------------------
(Millions, Except on a Per Share Basis)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
--------------------------------- --------------------------------
September 30, September 24, September 30, September 24,
------------- ------------- ------------- -------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Sales $1,093.4 $877.2 $3,154.2 $2,620.2
-------- ------ -------- --------
Costs and expenses
Product costs 724.0 609.2 2,120.4 1,835.3
Marketing and distribution 123.2 114.5 374.2 362.0
Research, administration and general 38.6 47.1 125.0 152.4
Other (16.9) (0.9) (66.9) 0.6
-------- ------ -------- --------
868.9 769.9 2,552.7 2,350.3
======== ====== ======== ========
Income from operations 224.5 107.3 601.5 269.9
Interest expense 23.0 31.9 71.0 92.3
Other income and (expense) 2.3 1.8 11.3 4.1
-------- ------ -------- --------
Income before taxes 203.8 77.2 541.8 181.7
Taxes on income 61.1 29.0 176.1 68.2
-------- ------ -------- --------
Income before share of earnings of
international equity affiliates 142.7 48.2 365.7 113.5
Share of earnings of
international equity affiliates 12.7 6.3 32.1 19.8
-------- ------ -------- --------
Income from continuing operations 155.4 54.5 397.8 133.3
Discontinued operation - printing and
publishing papers:
Income (loss) from operations, net of
income tax benefit -- 6.1 -- (7.3)
-------- ------ -------- --------
Net income $ 155.4 $ 60.6 $ 397.8 $ 126.0
======== ====== ======== ========
Earnings per share:
Income from continuing operations $1.02 $ .37 $2.62 $ .90
Earnings (loss) from discontinued -- .04 -- (.05)
operation ----- ----- ----- -----
Net income $1.02 $ .41 $2.62 $ .85
===== ===== ===== =====
Dividends per share $ .10 $ .10 $ .30 $ .30
Average shares outstanding 151.8 149.6 151.5 148.9
</TABLE>
The accompanying notes are an integral part of these financial statements
3
<PAGE>
SCOTT PAPER COMPANY
-------------------
CONSOLIDATED BALANCE SHEET
--------------------------
(Millions)
<TABLE>
<CAPTION>
September 30, 1995 December 31, 1994 September 24, 1994
-------------------- --------------------- --------------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Assets
- ------
Current assets
Cash and cash equivalents $ 196.4 $1,114.0 $ 106.1
Receivables 779.6 592.2 602.1
Inventories
Finished products $ 142.9 $ 150.6 $ 189.5
Work in process 75.8 56.0 86.0
Raw materials and other 236.3 455.0 195.3 401.9 222.9 498.4
--------- --------- ---------
Deferred income taxes 108.7 146.6 223.2
Prepaid items and other 79.2 53.8 68.9
-------- -------- --------
1,618.9 2,308.5 1,498.7
Plant assets at cost 4,668.6 4,625.0 7,592.4
Accumulated depreciation (2,142.9) 2,525.7 (2,143.0) 2,482.0 (3,477.5) 4,114.9
--------- --------- ---------
Timber resources 84.6 84.2 112.8
Investments in and advances
to affiliates 179.0 227.3 310.4
Construction funds held by trustees 53.8 79.5 91.4
Notes receivable 220.0 220.0 220.0
Goodwill and other assets 221.4 224.6 247.8
-------- -------- --------
Total $4,903.4 $5,626.1 $6,596.0
======== ======== ========
Liabilities and Shareholders' Equity
- ------------------------------------
Current liabilities
Payable to suppliers and others $ 745.2 $ 810.8 $ 779.5
Accruals for restructuring programs 35.4 108.6 418.2
Current maturities of long-term debt 38.6 764.8 108.1
Accrued taxes on income 86.4 254.7 51.6
-------- -------- --------
905.6 1,938.9 1,357.4
Long-term debt 1,190.9 1,093.1 2,518.1
Deferred income taxes and
other liabilities 747.4 841.7 1,004.6
-------- -------- --------
2,843.9 3,873.7 4,880.1
Preferred shares 7.1 7.1 7.1
Common shareholders' equity 2,052.4 1,745.3 1,708.8
-------- -------- --------
Total $4,903.4 $5,626.1 $6,596.0
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
SCOTT PAPER COMPANY
-------------------
CONSOLIDATED STATEMENT OF CHANGES IN COMMON SHAREHOLDERS' EQUITY
----------------------------------------------------------------
(Millions)
(UNAUDITED)
<TABLE>
<CAPTION>
Cumulative
Reinvested Common Treasury Translation
Earnings Shares Shares Adjustment Total
----------- ------ --------- ------------ ---------
<S> <C> <C> <C> <C> <C>
Balance at September 24, 1994 $1,439.2 $482.6 $ (11.0) $(202.0) $1,708.8
Net Income 83.8 83.8
Dividends
Common shares (15.0) (15.0)
Preferred shares (.1) (.1)
Shares issued for the
exercise of stock options,
stock awards, and
restricted stock grants 23.5 (.2) 23.3
Foreign currency
translation adjustment (57.2) (57.2)
Minimum pension liability charge 1.7 1.7
- ---------------------------------------------------------------------------------------------------------
Balance at December 31, 1994 1,509.6 506.1 (11.2) (259.2) 1,745.3
Net income 397.8 397.8
Dividends
Common shares (45.5) (45.5)
Preferred shares (.2) (.2)
Shares issued for the
exercise of stock options,
stock awards, and
restricted stock grants 95.6 0.5 96.1
Purchase of shares by the Company (127.5) (127.5)
Foreign currency
translation adjustment (13.6) (13.6)
- ---------------------------------------------------------------------------------------------------------
Balance at September 30, 1995 $1,861.7 $601.7 $(138.2) $(272.8) $2,052.4
======== ====== ======= ======= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
SCOTT PAPER COMPANY
-------------------
CONSOLIDATED STATEMENT OF
-------------------------
CASH FLOWS (Condensed)
----------------------
(Millions)
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
---------------------------------
September 30, September 24,
-------------- -------------
1995 1994
-------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
- ------------------------------------
Net income $ 397.8 $ 126.0
Adjustments to reconcile net income to
net cash (used for) provided by
operating activities:
Share of earnings of affiliates, net
of distributions (33.0) (15.0)
Depreciation, cost of timber
harvested and amortization 163.4 230.7
Deferred income taxes and other expenses 28.2 41.3
(Gains) on asset sales (72.3) (.3)
Postretirement benefits, net (funds) (85.7) (9.9)
Net changes in current assets and
current liabilities, net of
effects of businesses divested (517.5) (170.2)
-------- -------
Net cash (used for) provided by
operating activities (119.1) 202.6
-------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
- ------------------------------------
Investments in plant assets, timber
resources and other assets (226.0) (276.1)
Advances to affiliates, net (2.1) (1.8)
Proceeds from asset sales 171.7 14.0
Decrease (increase) in construction
funds held by trustees 25.7 (4.3)
Other investing (10.5) (1.1)
-------- -------
Net cash (used for) investing activities (41.2) (269.3)
-------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
- ------------------------------------
Dividends paid (45.7) (44.9)
Proceeds from issuance of long-term debt 235.3 537.7
Treasury stock purchases (127.5) --
Repayments of long-term debt (816.3) (466.8)
Proceeds from exercise of stock options 74.4 32.2
Net (decrease) in short-term borrowings (53.6) (10.6)
Other financing (21.9) (11.7)
-------- -------
Net cash (used for) provided by
financing activities (755.3) 35.9
-------- -------
Effect of exchange rate changes on cash (2.0) 3.3
-------- -------
NET DECREASE IN CASH AND CASH
EQUIVALENTS (917.6) (27.5)
Cash and cash equivalents at beginning
of period 1,114.0 133.6
-------- -------
Cash and cash equivalents at end of $ 196.4 $ 106.1
period ======== =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- ------------------------------------------
1. Statement of Information Furnished
----------------------------------
The accompanying financial statements have been prepared by the Company
pursuant to the rules and regulations of the Securities and Exchange
Commission. In the opinion of management these consolidated financial
statements give effect to all adjustments (consisting of only normal
recurring adjustments) necessary to present fairly the financial position of
Scott Paper Company and its subsidiaries as of September 30, 1995, December
31, 1994 and September 24, 1994, and the earnings and cash flows for the
nine month periods ended September 30, 1995 and September 24, 1994.
The Company presumes that users of this Quarterly Report on Form 10-Q have
read or have access to the audited financial statements contained in the
Company's Annual Report on Form 10-K for the year ended December 31, 1994.
Accordingly, footnote disclosures which would substantially duplicate the
disclosures contained therein have been omitted.
2. Supplemental Cash Flow Information
----------------------------------
Cash payments for interest, net of amounts capitalized, were $76.4 million
and $129.2 million during the first nine months of 1995 and 1994,
respectively. Cash payments for income taxes were $305.3 million (including
approximately $200 million related to 1994 asset sales) and $30.6 million
during the first nine months of 1995 and 1994, respectively.
3. Restructuring and Productivity Improvement
------------------------------------------
At year end 1994, the Company had accruals for restructuring programs of
$108.6 million recorded in its balance sheet including the 1993 charges for
restructuring and productivity improvement programs. During the first nine
months of 1995, $73.2 million was charged to these reserves primarily for
continued severance payments associated with the 1994 work force reductions.
4. Stock Split
-----------
On April 18, 1995, the Board of Directors authorized a two-for-one stock
split of common shares. The additional common shares were issued on May 12,
1995 to shareholders of record on April 28, 1995. Accordingly, earnings per
share, cash dividends per share, and weighted average common shares
outstanding for all periods presented have been restated to reflect the
stock split.
5. Proposed Merger with Kimberly-Clark Corporation
-----------------------------------------------
On July 17, 1995, the Company and Kimberly-Clark Corporation announced the
signing of a definitive merger agreement that will create a global consumer
products company operating under the Kimberly-Clark name. Under the merger
agreement, the Company will become a wholly-owned subsidiary of Kimberly-
Clark and Scott shareholders will receive .78 of a share of Kimberly-Clark
common stock for each Scott common share. Although the merger agreement
provides for a conversion number of .765 if the record date for Kimberly-
Clark's spinoff of its specialty products business occurs after the
effective time of the merger, the Kimberly-Clark Board of Directors has
fixed such record date at the close of business on November 13, 1995.
Accordingly, the conversion number is expected to be .78.
The merger agreement has been unanimously approved by the boards of
directors of both companies. The merger is expected to be completed in late
1995 and is subject to certain conditions, including regulatory clearances
and approval by the shareholders of both companies.
7
<PAGE>
6. Subsequent Event - Redemption of Preferred Shares
-------------------------------------------------
On October 2, 1995, the Company redeemed all of its outstanding cumulative
senior preferred shares, $3.40 series and $4.00 series, at a price of
103.5% of par and 102.5% of par, respectively, plus accumulated and unpaid
dividends.
8
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
Results of Operations -
- -----------------------
Third Quarter 1995 Compared with Third Quarter 1994
- ---------------------------------------------------
The Company's third quarter 1995 net income increased 157% to $155.4 million
from $60.6 million for the same period in 1994. Reported earnings for the third
quarter of 1994 included the results of the Company's former printing and
publishing subsidiary, S.D. Warren, which was sold in December 1994 and is
reflected as a discontinued operation. Earnings per share for the third quarter
of 1995 increased 149% to $1.02 from $.41 in 1994. Dollar sales in the third
quarter of 1995 increased 25% to $1.1 billion.
Excluding net special items of $.07 per share, primarily from asset sales, third
quarter earnings for 1995 of $.95 per share were 157% higher than the $.37
earned from continuing operations in the third quarter of 1994.
The quarter represented the Company's fourth consecutive all-time record
quarterly earnings and reflected significant increases in sales, income from
operations and margins from the company's core tissue business.
Income from operations for the consolidated global tissue business increased 84%
compared to the same period last year. All regions reported increased sales
revenue and significantly higher earnings. The overall operating margin for the
tissue business increased to a new record level of 20.4%, primarily due to
higher selling prices, mix improvements and reduced manufacturing costs
resulting from the 1994 restructuring. These positive factors more than offset
higher pulp prices and other inflationary pressures. Additional price increases
have been announced in selected markets, which, if successful, would help offset
increased pulp prices.
Income from operations for the U.S. tissue business increased approximately 50%
from the same quarter in 1994, while sales revenue increased 24%. Earnings of
the European tissue business were nearly triple the 1994 level. Sales revenue
increased 27% compared with 1994, primarily due to higher selling prices.
During the quarter, volumes (as measured in tons) in the U.S. and Europe were
somewhat constrained due to the Company's price increases noted above, the
rationalization of nonstrategic brands, new product initiatives and product
structure changes. In future periods, volume will be dependent, in part, on the
continued favorable market reaction to the Company's numerous product
initiatives as well as a timely closure of the proposed merger with Kimberly-
Clark.
In the combined Pacific and Latin American area, income from operations
increased more than 50% over the 1994 level, with sales revenue increasing by
approximately 20%.
Scott's share of earnings of its equity affiliates was $12.7 million compared
with $6.3 million in 1994. The Company's Mexican affiliate reported
substantially higher earnings as price increases and cost reductions more than
offset the impacts of a worsening economy and the continuing devaluation of the
peso. The earnings for the Company's Canadian affiliate were also higher as
improved product prices and the initial effects of its restructuring program
more than offset higher pulp prices and other inflationary pressures.
The special items recorded in the third quarter of 1995, including the gains on
the sales of the Company's former headquarters complex in Philadelphia,
Pennsylvania and other miscellaneous assets, resulted in a net gain of $10.9
million, or $.07 per share.
9
<PAGE>
Results of Operations
- ---------------------
Nine Months 1995 Compared With Nine Months 1994
- -----------------------------------------------
For the first nine months of 1995, net income increased 216% to $397.8 million
from $126.0 million of reported earnings for the same period in 1994. Earnings
per share for the first nine months of 1995 increased 208% to $2.62 compared to
$.85 for the prior year period. Dollar sales for the first nine months of 1995
increased approximately 20% to $3.2 billion.
Excluding net special items of $.23 per share, primarily from asset sales,
earnings for the first nine months of 1995 of $2.39 were 166% higher than the
$.90 earned from continuing operations for the first nine months of 1994.
Income from operations for the consolidated global tissue business was up more
than 90% in the first nine months of 1995. All regions reported higher earnings,
with higher selling prices and reduced manufacturing costs resulting from the
1994 restructuring more than offsetting higher pulp prices and other
inflationary pressures.
Income from operations for the U.S. tissue business increased 75% in the first
nine months of 1995 versus the same period in 1994, due to higher selling prices
and increased volumes as well as reduced manufacturing costs. Sales revenue was
up 19% with volume increasing approximately 3%.
Outside the U.S., income from operations for the European tissue business
increased 159%. Sales revenue increased more than 24%, primarily due to higher
selling prices. In the combined Pacific and Latin America area, income from
operations increased approximately 47%. Sales revenue increased approximately
19%, with volumes increasing approximately 9%.
Scott's share of earnings from its equity affiliates increased more than 60% in
the first nine months of 1995 from $19.8 million in the prior year to $32.1
million, primarily due to higher selling prices and cost reductions. Results for
1995 included charges for the restructuring of the Company's Canadian affiliate
and a charge related to the impact of the devaluation of the Mexican peso.
10
<PAGE>
Financial Condition
- -------------------
Liquidity and Capital Resources
- -------------------------------
Cash used for operations during the first nine months of 1995 was $119.1 million
compared with cash provided by operations of $202.6 million in the first nine
months of 1994. The cash used by operations was due to higher net income being
more than offset by increased postretirement benefits funding and higher working
capital. The increase in working capital was due to a reduction in accrued taxes
on income due to tax payments of approximately $200 million related to the 1994
sale of S.D. Warren and other non-core assets as well as higher receivables
balances due to increased sales and decreases in payables to suppliers and
others. Accruals for restructuring programs also decreased primarily due to the
continuation of severance payments related to the work force reductions made as
part of the 1994 restructuring program.
Capital expenditures were $226.0 million during the first nine months of 1995
compared with $276.1 million during the same period in 1994. During 1995 and
1996, capital spending is projected at $550-650 million on a variety of projects
including continued spending on the tissue mill in Owensboro, Kentucky, the new
converting facility in Arizona, and other projects designed to sustain existing
operations and reduce costs. The Company expects to finance this spending
primarily from internally generated funds.
In the third quarter of 1995, the Company's former headquarters complex in
Philadelphia, Pennsylvania was sold, along with various other assets. During the
second quarter of 1995, the Company completed the sale of its 20 percent
interest in a pulp mill and timberland acreage in Chile, its 50 percent interest
in timberland and other property in southeastern Georgia, and certain mineral
interests. During the first quarter of 1995, the Company's foodservice
businesses in the U.S. and U.K. and its remaining 1% interest in Scott Health
Care were also sold.
As a result of the definitive merger agreement between Scott and Kimberly-Clark
announced on July 17, 1995, the Company has suspended its efforts to sell its
global pulp operations and timberlands. In addition, the letter of intent signed
by the Company for the sale of the Chester, Pa. cogeneration facility has
expired without an agreement to sell, and the Company has decided to terminate
further discussions on the sale.
Total debt at September 30, 1995 was $1,229.5 million compared with $2,626.2
million at September 24, 1994 and $1,857.9 million at December 31, 1994. During
the first nine months of 1995, the Company's financing activities included the
retirement of $816.3 million in debt, primarily related to the Company's debt
retirement program. In addition, as part of the Company's share repurchase plan,
prior to its discontinuance, approximately 3 million shares were repurchased at
a cost of $127.5 million.
To maintain financing flexibility, the Company maintains two long-term revolving
credit agreements totaling $775 million, all unused at September 30, 1995.
The Company's debt to equity ratios at September 30, 1995, December 31, 1994 and
September 24, 1994 are set forth below:
<TABLE>
<CAPTION>
September 30, 1995 December 31, 1994 September 24, 1994
------------------- ------------------ -------------------
<S> <C> <C> <C>
Debt to equity 60% 106% 153%
</TABLE>
11
<PAGE>
September 30, 1995 Compared with September 24, 1994
- ---------------------------------------------------
Total assets of $4,903.4 million at September 30, 1995 decreased $1,692.6
million or 26% compared with total assets of $6,596.0 million at September 24,
1994. The decrease was primarily due to the 1994 sale of S.D. Warren and other
non-core businesses.
Total liabilities of $2,843.9 million at September 30, 1995 decreased $2,036.2
million or 42% compared with total liabilities of $4,880.1 million at September
24, 1994. The decrease was primarily due to the 1994 sales of S.D. Warren and
other non-core assets, and the use of asset sale proceeds to reduce the
Company's debt.
Common shareholders' equity at September 30, 1995 of $2,052.4 million increased
$343.6 million compared with the September 24, 1994 balance of $1,708.8 million
due primarily to net income and the issuance of shares related to the exercise
of stock options, which were partially offset by the share repurchase program,
foreign currency translation adjustments and dividends paid.
September 30, 1995 Compared with December 31, 1994
- --------------------------------------------------
Total assets at September 30, 1995 of $4,903.4 million decreased $722.7 million
or 13% compared with total assets of $5,626.1 million at December 31, 1994. This
was primarily due to the use of cash and cash equivalents to retire debt and
income tax payments made related to the 1994 sale of S.D. Warren and other non-
core assets, more than offsetting increases in accounts receivable due to higher
sales and increases in net plant assets due to capital spending.
Total liabilities of $2,843.9 million at September 30, 1995 decreased $1,029.8
million or 27% compared with total liabilities of $3,873.7 million at December
31, 1994. The decrease was primarily due to significantly lower debt levels and
reductions in balances of accrued taxes on income due to tax payments.
Common shareholders' equity at September 30, 1995 of $2,052.4 million was $307.1
million higher than the balance at December 31, 1994 of $1,745.3 million due
primarily to net income and the issuance of shares related to the exercise of
stock options, which were partially offset by the Company's previously announced
share repurchase program, foreign currency translation adjustments and dividends
paid.
Proposed Merger with Kimberly-Clark
- -----------------------------------
On July 17, 1995, the Company and Kimberly-Clark Corporation announced the
signing of a definitive merger agreement. Under the merger agreement, the
Company will become a wholly-owned subsidiary of Kimberly-Clark and Scott
shareholders will receive .78 of a share of Kimberly-Clark common stock for each
Scott common share. Although the merger agreement provides for a conversion
number of .765 if the record date for Kimberly-Clark's spinoff of its specialty
products business occurs after the effective time of the merger, the Kimberly-
Clark Board of Directors has fixed such record date at the close of business on
November 13, 1995. Accordingly, the conversion number is expected to be .78.
12
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
The Company, Kimberly-Clark Corporation ("Kimberly-Clark") and Rifle Merger
Co., a wholly-owned subsidiary of Kimberly-Clark ("Sub") entered into an
Agreement and Plan of Merger dated as of July 16, 1995 (the "Merger Agreement")
which provides for the merger (the "Merger") of Sub with and into Scott, with
Scott surviving as a wholly-owned subsidiary of Kimberly-Clark.
On July 17, 1995, a complaint was filed by Harry Lewis and Albert Ominsky,
Trustee (the "Lewis Complaint") on behalf of a putative class of the public
shareholders of Scott in the Court of Common Pleas, Philadelphia County,
Pennsylvania (Case No. 95-07-SD-0079) against Scott, the members of the Board of
Directors of Scott (the "Scott Board") and Kimberly-Clark. The Lewis Complaint
alleges, among other things, that the terms of the Merger are fundamentally
unfair to Scott shareholders, the members of the Scott Board acted in disregard
of their fiduciary duties to Scott shareholders in agreeing to the Merger and
Kimberly-Clark aided and abetted in such alleged breach. The Lewis Complaint
seeks, among other things, to have the Merger enjoined and to recover
unspecified damages.
On July 17, 1995, a complaint was filed by Edith Citron and Lynn Robbins
(the "Citron Complaint") on behalf of a putative class of the public
shareholders of Scott in the Court of Common Pleas, Philadelphia County,
Pennsylvania (Case No. 95-07-SD-0080) against Scott, the members of the Scott
Board and Kimberly-Clark. The Citron Complaint alleges, among other things, that
the terms of the Merger are fundamentally unfair to Scott shareholders, the
members of the Scott Board failed to properly inform themselves of Scott's
highest transactional value prior to agreeing to the Merger and in so doing
breached their duties of due care and loyalty to the Scott shareholders and
Kimberly-Clark aided and abetted such alleged breaches. The Citron Complaint
seeks, among other things, to enjoin the Merger and to recover unspecified
damages.
On October 13, 1995, the proceedings under the Lewis and Citron Complaints
were dismissed without prejudice.
On July 18, 1995, a complaint was filed by Dores I. Fish and Debra Smilow
(the "Fish Complaint") on behalf of a putative class of the public shareholders
of Scott in the Circuit Court for the Fifteenth Judicial Circuit, Palm Beach
County, Florida (Case No. CL 95-5691 AD) against Scott, certain former and
present members of the Scott Board and certain officers of Scott. The Fish
Complaint alleges, among other things, that the members of the Scott Board acted
in disregard of their fiduciary duties to Scott shareholders in agreeing to the
Merger. The Fish Complaint seeks, among other things, to enjoin the Merger and
to cover unspecified damages.
On July 21, 1995, a complaint was filed by Louis Agnes (the "Agnes
Complaint") on behalf of a putative class of the public shareholders of Scott
and derivatively on behalf of Scott in the Circuit Court for the Fifteenth
Judicial Circuit, Palm Beach County, Florida (Case No. CL 95-5757 AH) against
Scott, the members of the Scott Board and Kimberly-Clark. The Agnes Complaint
alleges, among other things, that the terms of the Merger are fundamentally
unfair to Scott shareholders, the members of the Scott Board acted in disregard
of their fiduciary duties to Scott shareholders in agreeing to the Merger and
Kimberly-Clark aided and abetted such alleged breach. The Agnes Complaint seeks,
among other things, to enjoin the Merger and to recover unspecified damages.
Scott believes that the claims asserted in the Fish and Agnes Complaint are
without merit and intends to vigorously defend against such actions.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits:
13
<PAGE>
<TABLE>
<CAPTION>
Number Description
- ------ -----------
<C> <S>
10.1 Termination Letter dated July 16, 1995 between the Company and
Albert J. Dunlap
10.2 Mutual Release Agreement dated July 16, 1995 among the Company,
Kimberly-Clark Corporation ("Kimberly-Clark") and Albert J. Dunlap
10.3 Rescission Agreement dated July 16, 1995 between the Company and
Albert J. Dunlap
10.4 Stock Option Exchange Agreement dated July 16, 1995 among the Company,
Kimberly-Clark and Albert J. Dunlap
10.5 Consulting Agreement dated July 16, 1995 among the Company,
Kimberly-Clark and Albert J. Dunlap
10.6 Noncompetition Agreement dated July 16, 1995 among the Company,
Kimberly-Clark and Albert J. Dunlap
10.7 Termination Letter dated July 16, 1995 between the Company and
John P. Murtagh
10.8 Stock Option Exchange Agreement dated July 16, 1995 among the Company,
Kimberly-Clark and John P. Murtagh
10.9 Severance Agreement and Release dated July 16, 1995 among the Company,
Kimberly-Clark and John P. Murtagh
10.10 Termination Letter dated July 16, 1995 between the Company and
Basil L. Anderson
10.11 Stock Option Exchange Agreement dated July 16, 1995 among the Company,
Kimberly-Clark and Basil L. Anderson
10.12 Severance Agreement and Release dated July 16, 1995 among the Company,
Kimberly-Clark and Basil L. Anderson
10.13 Restricted Stock Exchange Agreement dated July 16, 1995 among the
Company, Kimberly-Clark and Basil L. Anderson
10.14 Termination Letter dated July 16, 1995 between the Company and
Russell A. Kersh
10.15 Stock Option Exchange Agreement dated July 16, 1995 among the Company,
Kimberly-Clark and Russell A. Kersh
10.16 Severance Agreement and Release dated July 16, 1995 among the Company,
Kimberly-Clark and Russell A. Kersh
10.17 Termination Letter dated July 16, 1995 between the Company and
Richard R. Nicolosi
10.18 Stock Option Exchange Agreement dated July 16, 1995 among the Company,
Kimberly-Clark and Richard R. Nicolosi
10.19 Severance Agreement and Release dated July 16, 1995 among the Company,
Kimberly-Clark and Richard R. Nicolosi
10.20 Termination Letter dated July 16, 1995 between the Company and
P. Newton White
10.21 Stock Option Exchange Agreement dated July 16, 1995 among the Company,
Kimberly-Clark and P. Newton White
10.22 Severance Agreement and Release dated July 16, 1995 among the Company,
Kimberly-Clark and P. Newton White
10.23 Restricted Stock Exchange Agreement dated July 16, 1995 among the
Company, Kimberly-Clark and P. Newton White
10.24 Form of General Release dated July 16, 1995 between the Company and each
of John P. Murtagh, Basil L. Anderson, Russell A. Kersh,
Richard R. Nicolosi and P. Newton White
10.25 Form of Rescission Agreement dated July 16, 1995 between the Company and
each of John P. Murtagh, Basil L. Anderson, Russell A. Kersh,
Richard R. Nicolosi and P. Newton White
10.26 Form of Noncompetition Agreement dated July 16, 1995 between the Company
and each of John P. Murtagh, Basil L. Anderson, Russell A. Kersh,
Richard R. Nicolosi and P. Newton White
</TABLE>
(b) Reports on Form 8-K:
1. Form 8-K dated July 16, 1995, reporting under Item 5 the execution of a
Merger Agreement between the Company and Kimberly-Clark Corporation.
14
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Scott Paper Company
----------------------------------
(Registrant)
DATE: November 13, 1995 /s/ Edward B. Betz
--------------------- ----------------------------------
Edward B. Betz
Vice President & Controller
(Authorized Signer and
Chief Accounting Officer)
15
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Number Description
- ------ -----------
<C> <S>
10.1 Termination Letter dated July 16, 1995 between the Company and Albert J.
Dunlap
10.2 Mutual Release Agreement dated July 16, 1995 among the Company,
Kimberly-Clark Corporation ("Kimberly-Clark") and Albert J. Dunlap
10.3 Rescission Agreement dated July 16, 1995 between the Company and
Albert J. Dunlap
10.4 Stock Option Exchange Agreement dated July 16, 1995 among the Company,
Kimberly-Clark and Albert J. Dunlap
10.5 Consulting Agreement dated July 16, 1995 among the Company,
Kimberly-Clark and Albert J. Dunlap
10.6 Noncompetition Agreement dated July 16, 1995 among the Company,
Kimberly-Clark and Albert J. Dunlap
10.7 Termination Letter dated July 16, 1995 between the Company and
John P. Murtagh
10.8 Stock Option Exchange Agreement dated July 16, 1995 among the Company,
Kimberly-Clark and John P. Murtagh
10.9 Severance Agreement and Release dated July 16, 1995 among the Company,
Kimberly-Clark and John P. Murtagh
10.10 Termination Letter dated July 16, 1995 between the Company and
Basil L. Anderson
10.11 Stock Option Exchange Agreement dated July 16, 1995 among the Company,
Kimberly-Clark and Basil L. Anderson
10.12 Severance Agreement and Release dated July 16, 1995 among the Company,
Kimberly-Clark and Basil L. Anderson
10.13 Restricted Stock Exchange Agreement dated July 16, 1995 among the
Company, Kimberly-Clark and Basil L. Anderson
10.14 Termination Letter dated July 16, 1995 between the Company and
Russell A. Kersh
10.15 Stock Option Exchange Agreement dated July 16, 1995 among the Company,
Kimberly-Clark and Russell A. Kersh
10.16 Severance Agreement and Release dated July 16, 1995 among the Company,
Kimberly-Clark and Russell A. Kersh
10.17 Termination Letter dated July 16, 1995 between the Company and
Richard R. Nicolosi
10.18 Stock Option Exchange Agreement dated July 16, 1995 among the Company,
Kimberly-Clark and Richard R. Nicolosi
10.19 Severance Agreement and Release dated July 16, 1995 among the Company,
Kimberly-Clark and Richard R. Nicolosi
10.20 Termination Letter dated July 16, 1995 between the Company and
P. Newton White
10.21 Stock Option Exchange Agreement dated July 16, 1995 among the Company,
Kimberly-Clark and P. Newton White
10.22 Severance Agreement and Release dated July 16, 1995 among the Company,
Kimberly-Clark and P. Newton White
10.23 Restricted Stock Exchange Agreement dated July 16, 1995 among the
Company, Kimberly-Clark and P. Newton White
10.24 Form of General Release dated July 16, 1995 between the Company and each
of John P. Murtagh, Basil L. Anderson, Russell A. Kersh, Richard R.
Richard R. Nicolosi and P. Newton White
10.25 Form of Rescission Agreement dated July 16, 1995 between the Company and
each of John P. Murtagh, Basil L. Anderson, Russell A. Kersh, Richard R.
Nicolosi and P. Newton White
10.26 Form of Noncompetition Agreement dated July 16, 1995 between the Company
and each of John P. Murtagh, Basil L. Anderson, Russell A. Kersh, Richard
R. Nicolosi and P. Newton White
</TABLE>
16
<PAGE>
EXHIBIT 10.1
SCOTT PAPER COMPANY
150 E. Palmetto Park
Suite 415
Boca Raton, FL 33432
July 16, 1995
Mr. Albert J. Dunlap
Chairman of the Board and
Chief Executive Officer
Scott Paper Company
150 E. Palmetto Park
Suite 415
Boca Raton, FL 33432
Dear Mr. Dunlap:
This letter will advise you that your employment with Scott Paper Company
("Scott") will terminate immediately following the Effective Time. This letter
will acknowledge that under your Employment Agreement with Scott dated April 19,
1994, your termination of employment entitles you to receive at the Effective
Time the cash payments and benefits set forth on Schedule A to this letter and
that the 80,000 shares of restricted stock held by you under the Company's 1994
Long Term Incentive Plan will vest upon the Effective Time.
Terms used in this letter and in Schedule A hereto which are defined in the
Agreement and Plan of Merger among Kimberly-Clark Corporation, a newly formed
Pennsylvania wholly owned subsidiary of Kimberly-Clark Corporation, and Scott,
dated as of July 16, 1995 (the "Merger Agreement"), shall have the meanings set
forth in the Merger Agreement.
Very truly yours,
Scott Paper Company
By:_____________________________
<PAGE>
SCHEDULE A
TO LETTER TO ALBERT J. DUNLAP
DATED JULY 16, 1995
Section references below are to the Employment Agreement between Albert J.
Dunlap and Scott Paper Company ("Scott") dated as of April 19, 1994 (the
"Employment Agreement"). The payments set forth below are determined pursuant
to Section 9(d) of the Employment Agreement./1/
<TABLE>
<CAPTION>
Section No. Description Amount
----------- ----------- ------
<S> <C> <C>
4(a) Salary $3,500,000/2/
4(c) Termination Bonus $7,500,000
4(e), (h), Benefits $ 285,000
(i) and (j)
4(f) Vacation $ 153,846
4(g) Automobile In kind
</TABLE>
- ------------------
/1/ All amounts payable to Mr. Dunlap under Scott's 401(k) plan, savings plans,
retirement plan, deferred compensation plans, and other plans under which he is
a participant, and which are not otherwise referred to in this Schedule, shall
be paid to Mr. Dunlap according to their respective terms.
/2/ Assumes an Effective Time of October 19, 1995; such amount will be
appropriately adjusted if the Effective Time is on a date other than October 19,
1995 in accordance with the terms of the Employment Agreement.
<PAGE>
EXHIBIT 10.2
MUTUAL RELEASE AGREEMENT
------------------------
This Mutual Release Agreement (this "Agreement") is entered into as of July
16, 1995 between Scott Paper Company, a Pennsylvania corporation ("Scott"),
Kimberly-Clark Corporation, a Delaware Corporation ("Kimberly-Clark"), and
Albert J. Dunlap (the "Executive").
WHEREAS, the Executive is presently a director of Scott, and is presently
employed by Scott in the capacity of Chairman of the Board and Chief Executive
Officer;
WHEREAS, Kimberly-Clark, Rifle Merger Co. and Scott have entered into an
Agreement and Plan of Merger dated as of July 16, 1995 (the "Merger Agreement"),
pursuant to which Rifle Merger Co. will merge with and into Scott and Scott will
thereby become a wholly-owned subsidiary of Kimberly-Clark;
WHEREAS, the parties hereto have entered into a Consulting Agreement, a
Noncompetition Agreement, a Rescission Agreement and a Stock Option Exchange
Agreement (the "Other Agreements") as of the date hereof;
WHEREAS, as of the Effective Time of the Merger (as such terms are defined
in the Merger Agreement), the Executive will cease to be a director, officer and
employee of Scott and its subsidiaries and affiliates; and
WHEREAS, Scott, Kimberly-Clark and the Executive desire to make appropriate
arrangements for the release by the Executive of any and all outstanding claims
he may have against Scott and Kimberly-Clark and for the release by Scott and
Kimberly-Clark of any and all outstanding claims they may have against the
Executive;
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein, the adequacy and sufficiency of which are hereby acknowledged,
Scott, Kimberly-Clark and the Executive hereby agree as follows:
1. Voluntary Act. The Executive hereby represents to Scott and Kimberly-
-------------
Clark that this Agreement is entered into voluntarily, and with a full
understanding of and agreement with its terms, for the purpose of releasing all
claims the Executive may have against Scott and Kimberly-Clark.
2. Cessation of Employment. The Executive's employment with Scott and
-----------------------
with all subsidiaries and affiliates thereof will cease as of the Effective Time
of the Merger, as of which date he will be retained by Scott as a consultant.
<PAGE>
3. Agreements and Acknowledgment of Executive. As of the Effective Time
------------------------------------------
of the Merger, the Executive hereby releases and forever discharges Scott and
Kimberly-Clark, their respective subsidiaries and affiliates and the
predecessors, successors or assigns of any thereof, and their respective
officers, directors, agents and employees (collectively, the "Company Related
Persons") of and from all actions, causes of action, suits, debts, contracts,
promises, damages, claims and demands, whether known or unknown, asserted or
unasserted, including but not limited to all rights or claims under the Age
Discrimination in Employment Act, which he, his past, present or future
attorneys, authorized representatives, heirs, executors, administrators, spouses
and family and the successors or assigns of any thereof (collectively, the
"Executive Related Persons") ever had, may have in the future or now have
against the Company Related Persons; provided, however, that nothing contained
herein shall relieve Scott or Kimberly-Clark from any obligation under (i) this
Agreement; (ii) any employee benefit plan, stock option plan or the like that
the Executive is a participant in or entitled to the benefits of; (iii)
compensation for services previously provided; or (iv) the Other Agreements.
4. Agreement of Scott and Kimberly-Clark. Effective as of the Effective
-------------------------------------
Time of the Merger, Scott and Kimberly-Clark and their respective subsidiaries
and affiliates and the predecessors, successors or assigns of any thereof
(collectively, the "Company Related Releasing Persons") hereby release the
Executive Related Persons from all claims, whether known or unknown, which any
of the Company Related Releasing Persons may currently have, have in the past
had or may in the future have against the Executive for or in connection with
any act or failure to act occurring prior to the Effective Time of the Merger
with respect to the Executive's employment with Scott or any of its subsidiaries
or affiliates. No legal action or other proceeding shall be initiated by any
Company Related Releasing Person with respect to any claim hereby released.
5. Consultation with Attorney. The Executive represents that he was
--------------------------
advised to consult with an attorney before signing this Agreement, and that he
has consulted with an attorney and/or other persons to the extent the Executive
desired to do so before signing this Agreement.
6. No Representations or Inducements. The Executive agrees that no
---------------------------------
promises, representations or inducements have been made which caused the
Executive to sign this Agreement other than those expressly set forth above.
7. Successors; Binding Agreement. This Agreement shall inure to the
-----------------------------
benefit of and be enforceable by the Executive and by his personal or legal
representatives, executors, administrators, heirs, distributees, devisees and
legatees, and
2
<PAGE>
by Scott and Kimberly-Clark, and their respective successors and assigns.
8. Notices. All notices and other communications required or permitted
-------
under this Agreement shall be in writing and shall be deemed to have been duly
given when personally delivered, when delivered by courier or overnight express
service or five days after having been sent by certified or registered mail,
postage prepaid, addressed (a) if to the Executive, to the Executive's address
set forth in the records of the Company, or if to Scott or Kimberly-Clark, to
Wayne R. Sanders, Chairman of the Board and Chief Executive Officer, 351 Phelps
Drive, Irving, Texas 75038, with a copy to O. George Everbach, Senior Vice
President - Law and Government Affairs, 351 Phelps Drive, Irving, Texas 75038,
or (b) to such other address as any party may have furnished to the other
parties in writing in accordance herewith, except that notices of change of
address shall be effective only upon receipt.
9. Governing Law; Validity. The interpretation, construction and
-----------------------
performance of this Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of Delaware without regard to the
applicable principles of conflicts of laws. The invalidity or unenforceability
of any provision of this Agreement shall not affect the validity or
enforceability of any of the other provisions of this Agreement, which other
provisions shall remain in full force and effect.
10. Review Period. Executive represents that he was given at least forty-
-------------
five (45) days to consider the terms of this Agreement.
11. Revocation. Executive has seven (7) days from the signing of this
----------
Agreement to revoke this Agreement. If Executive does not revoke this Agreement
within seven (7) days of the date of this Agreement, this Agreement will become
final and binding.
12. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument.
13. Miscellaneous. No provision of this Agreement may be modified or
-------------
waived unless such modification or waiver is agreed to in writing and executed
by the Executive and by a duly authorized officer of Scott and Kimberly-Clark.
No waiver by any party hereto at any time of any breach by another party hereto
of, or failure to comply with, any condition or provision of this Agreement to
be performed or complied with by such other party shall be deemed a waiver of
any similar or dissimilar conditions or provisions at the same or at any prior
or subsequent time.
3
<PAGE>
Failure by the Executive, Scott or Kimberly-Clark to insist upon strict
compliance with any provision of this Agreement or to assert any right which the
Executive, Scott or Kimberly-Clark may have hereunder shall not be deemed to be
a waiver of such provision or right or any other provision of or right under
this Agreement.
14. Effectiveness. The provisions of Section 2, 3 and 4 hereof shall be
-------------
effective only upon the Effective Time of the Merger and shall be null and void
if the Merger is not consummated.
IN WITNESS WHEREOF, each of Scott and Kimberly-Clark has caused this
Agreement to be executed by its duly authorized officer and the Executive has
executed this Agreement as of the day and year first above written.
Scott Paper Company
By
----------------------------------
Kimberly-Clark Corporation
By
----------------------------------
Executive
__________________________________
Albert J. Dunlap
4
<PAGE>
EXHIBIT 10.3
RESCISSION AGREEMENT
--------------------
This Rescission Agreement is entered into as of July 16, 1995 between Scott
Paper Company, a Pennsylvania corporation (the "Company"), and Albert J. Dunlap
(the "Executive").
WHEREAS, pursuant to an Amendment to Employment Agreement dated as of
February 24, 1995 (the "Amendment"), the Company and the Executive amended the
Employment Agreement dated as of April 19, 1994; and
WHEREAS, concurrently herewith, Kimberly-Clark Corporation, a Delaware
corporation ("Kimberly-Clark"), Rifle Merger Co. and the Company are entering
into an Agreement and Plan of Merger (the "Merger Agreement"), pursuant to which
Rifle Merger Co. is merging (the "Merger") with and into the Company and the
Company is becoming a wholly-owned subsidiary of Kimberly-Clark;
WHEREAS, in order for the Merger to be accounted for as a pooling of
interests, the Company and the Executive desire to rescind the Amendment prior
to the Effective Time;
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein, the adequacy and sufficiency of which are hereby acknowledged,
the Company and the Executive hereby agree as follows:
1. Rescission of Amendment. At the Effective Time, the Amendment shall be
-----------------------
rescinded and shall be of no further force or effect whatsoever.
2. Termination of Agreement. This Agreement shall terminate and shall be
------------------------
of no further force or effect if the Merger Agreement shall be terminated and
the Merger shall not become effective pursuant to the terms thereof.
3. Successors; Binding Agreement. This Agreement shall inure to the
-----------------------------
benefit of and be enforceable by the Executive and by his personal or legal
representatives, executors, administrators, heirs, distributees, devisees and
legatees and by the Company and its successors and assigns.
4. Notices. All notices and other communications required or permitted
-------
under this Agreement shall be in writing and shall be deemed to have been duly
given when personally delivered, when delivered by courier or overnight express
service or five days after having been sent by certified or registered
<PAGE>
mail, postage prepaid, addressed (a) if to the Executive, to the Executive's
address set forth in the records of the Company, or if to the Company, to O.
George Everbach, Senior Vice President and General Counsel, Kimberly-Clark
Corporation, 351 Phelps Drive, Irving, Texas 75038, with a copy to Thomas A.
Cole, Sidley & Austin, One First National Plaza, Chicago, Illinois 60603, or (b)
to such other address as either party may have furnished to the other party in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
5. Governing Law; Validity. The interpretation, construction and
-----------------------
performance of this Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of Delaware without regard to the
applicable principles of conflicts of laws. The invalidity or unenforceability
of any provision of this Agreement shall not affect the validity or
enforceability of any of the other provisions of this Agreement, which other
provisions shall remain in full force and effect.
6. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument.
7. Miscellaneous. No provision of this Agreement may be modified or
-------------
waived unless such modification or waiver is agreed to in writing and executed
by the Executive and by a duly authorized officer of the Company. No waiver by
either party hereto at any time of any breach by the other party hereto of, or
failure to comply with, any condition or provision of this Agreement to be
performed or complied with by such other party shall be deemed a waiver of any
similar or dissimilar conditions or provisions at the same or at any prior or
subsequent time. Failure by the Executive or the Company to insist upon strict
compliance with any provision of this Agreement or to assert any right which the
Executive or the Company may have hereunder shall not be deemed to be a waiver
of such provision or right or any other provision of or right under this
Agreement.
2
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by
its duly authorized officer and the Executive has executed this Agreement as of
the day and year first above written.
SCOTT PAPER COMPANY
By:
----------------------------
EXECUTIVE:
________________________________
Albert J. Dunlap
3
<PAGE>
EXHIBIT 10.4
STOCK OPTION EXCHANGE AGREEMENT
-------------------------------
This Stock Option Exchange Agreement is entered into as of July 16, 1995
among Scott Paper Company, a Pennsylvania corporation (the "Company"), Kimberly-
Clark Corporation, a Delaware corporation ("Kimberly-Clark"), and Albert J.
Dunlap (the "Optionee").
WHEREAS, pursuant to an Employment Agreement and a Stock Option Agreement,
each dated as of April 19, 1994, the Company has granted to the Optionee options
(the "Options") to purchase the number of common shares of the Company ("Company
Common Shares") set forth on Schedule A hereto at the exercise price or prices
set forth opposite such number of Company Common Shares, giving effect to the
two for one stock split of the Company Common Shares declared on April 18, 1995;
WHEREAS, pursuant to an Amendment to Stock Option Agreement dated December
21, 1994 (the "Stock Option Amendment") Options which are not exercisable become
immediately exercisable in the event of a change in control of the Company;
WHEREAS, concurrently herewith, Kimberly-Clark, Rifle Merger Co. and the
Company are entering into an Agreement and Plan of Merger (the "Merger
Agreement"), pursuant to which Rifle Merger Co. is merging (the "Merger") with
and into the Company and the Company is becoming a wholly-owned subsidiary of
Kimberly-Clark;
WHEREAS, pursuant to the terms of the Stock Option Amendment, the Options
designated on Schedule A as unexercisable (the "Unexercisable Options") are to
become exercisable at the Effective Time (as such term is defined in the Merger
Agreement);
WHEREAS, in order for the Merger to be accounted for as a pooling of
interests, the Company and the Optionee desire to rescind the Stock Option
Amendment prior to the Effective Time so that the Unexercisable Options remain
unexercisable at the Effective Time;
WHEREAS, the Company, the Optionee and Kimberly-Clark desire to enter into
this Agreement to provide that at the Effective Time the Unexercisable Options
shall be cancelled and exchanged for shares of common stock of Kimberly-Clark
("Kimberly-Clark Common Stock") having a market value at the Effective Time
equal to the value (the "Unexercisable Option Value") of the Unexercisable
Options, as shall be determined by Hewitt Associates at the time and in the
manner set forth on Schedule B hereto; and
<PAGE>
WHEREAS, in accordance with Section 5.8 of the Merger Agreement, the
Options designated on Schedule A as exercisable at the Effective Time (the
"Exercisable Options") will, at the Effective Time, become options to purchase
shares of Kimberly-Clark Common Stock upon the terms and subject to the
conditions set forth in the Merger Agreement.
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein, the adequacy and sufficiency of which are hereby acknowledged,
the Company, Kimberly-Clark and the Optionee hereby agree as follows:
1. Rescission of Stock Option Amendment. At the Effective Time, the Stock
------------------------------------
Option Amendment shall be rescinded and shall be of no further force or effect
whatsoever.
2. Exchange of Unexercisable Options. At the Effective Time, the
---------------------------------
Unexercisable Options which are outstanding immediately prior to the Effective
Time shall be cancelled and exchanged for the number of shares of Kimberly-Clark
Common Stock, decreased to the nearest whole share, having an aggregate market
value at the Effective Time equal to the Unexercisable Option Value. Kimberly-
Clark shall pay cash to the Optionee in lieu of issuing fractional shares of
Kimberly-Clark Common Stock, unless in the reasonable judgment of Kimberly-
Clark, based on the advice of its independent accountants, such payment would
adversely affect the ability to account for the Merger as a pooling of interests
in accordance with generally accepted accounting principles. For purposes of
this Section 2, the market value of a share of Kimberly-Clark Common Stock at
the Effective Time shall be equal to the closing price of the Kimberly-Clark
Common Stock on the business day next preceding the Effective Time, as reported
in The Wall Street Journal as New York Stock Exchange Composite Transactions.
-----------------------
Kimberly-Clark shall register under the Securities Act of 1933, as amended (the
"Securities Act"), on the appropriate form all shares of Kimberly-Clark Common
Stock issuable pursuant to this Section 2.
3. Exchange of Exercisable Options. In accordance with Section 5.8 of the
-------------------------------
Merger Agreement, at the Effective Time, each Exercisable Option which is
outstanding immediately prior to the Effective Time shall become and represent a
fully exercisable option to purchase the number of shares of Kimberly-Clark
Common Stock (a "Substitute Option"), decreased to the nearest whole share,
determined by multiplying (i) the number of Company Common Shares subject to
such Exercisable Option immediately prior to the Effective Time by (ii) the
Conversion Number (as such term is defined in the Merger Agreement), at an
exercise price per share of Kimberly-Clark Common Stock (increased to the
nearest whole cent) equal to the exercise price per Company Common Share
immediately prior to the Effective Time divided by the Conversion Number.
Kimberly-Clark shall pay cash to the Optionee in lieu of issuing fractional
shares of Kimberly-Clark Common Stock upon the
-2-
<PAGE>
exercise of a Substitute Option unless in the reasonable judgment of Kimberly-
Clark, based on the advice of its independent accountants, such payment would
adversely affect the ability to account for the Merger as a pooling of interests
in accordance with generally accepted accounting principles. After the
Effective Time, except as provided by Section 5.8 of the Merger Agreement, each
Substitute Option shall be exercisable upon the same terms and conditions as
were applicable to the related Exercisable Option immediately prior to the
Effective Time. Kimberly-Clark shall register under the Securities Act on Form
S-8 or another appropriate form all Substitute Options and all shares of
Kimberly-Clark Common Stock issuable pursuant to all Substitute Options.
4. Termination of Agreement. This Agreement shall terminate and shall be
------------------------
of no further force or effect if the Merger Agreement shall be terminated and
the Merger shall not become effective pursuant to the terms thereof.
5. Successors; Binding Agreement. This Agreement shall inure to the
-----------------------------
benefit of and be enforceable by the Optionee and by his personal or legal
representatives, executors, administrators, heirs, distributees, devisees and
legatees and by the Company and Kimberly-Clark and their respective successors
and assigns.
6. Notices. All notices and other communications required or permitted
-------
under this Agreement shall be in writing and shall be deemed to have been duly
given when personally delivered, when delivered by courier or overnight express
service or five days after having been sent by certified or registered mail,
postage prepaid, addressed (a) if to the Optionee, to the Optionee's address set
forth in the records of the Company, or if to the Company or Kimberly-Clark, to
O. George Everbach, Senior Vice President and General Counsel, Kimberly-Clark
Corporation, 351 Phelps Drive, Irving, Texas 75038, with a copy to Thomas A.
Cole, Sidley & Austin, One First National Plaza, Chicago, Illinois 60603, or (b)
to such other address as any party may have furnished to the other parties in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
7. Governing Law; Validity. The interpretation, construction and
-----------------------
performance of this Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of Delaware without regard to the
applicable principles of conflicts of laws. The invalidity or unenforceability
of any provision of this Agreement shall not affect the validity or
enforceability of any of the other provisions of this Agreement, which other
provisions shall remain in full force and effect.
-3-
<PAGE>
8. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument.
9. Miscellaneous. No provision of this Agreement may be modified or
-------------
waived unless such modification or waiver is agreed to in writing and executed
by the Optionee and by a duly authorized officer of the Company and of Kimberly-
Clark. No waiver by any party hereto at any time of any breach by another party
hereto of, or failure to comply with, any condition or provision of this
Agreement to be performed or complied with by such other party shall be deemed a
waiver of any similar or dissimilar conditions or provisions at the same or at
any prior or subsequent time. Failure by the Optionee, the Company or Kimberly-
Clark to insist upon strict compliance with any provision of this Agreement or
to assert any right which the Optionee, the Company or Kimberly-Clark may have
hereunder shall not be deemed to be a waiver of such provision or right or any
other provision of or right under this Agreement.
IN WITNESS WHEREOF, each of the Company and Kimberly-Clark has caused this
Agreement to be executed by its duly authorized officer and the Optionee has
executed this Agreement as of the day and year first above written.
SCOTT PAPER COMPANY
By: ___________________________
KIMBERLY-CLARK CORPORATION
By: ___________________________
OPTIONEE:
________________________________
-4-
<PAGE>
SCHEDULE A
----------
Schedule of Options
-------------------
Exercisable Options
- -------------------
Date of Grant Number of Shares Exercise Price
------------- ---------------- --------------
April 19, 1994 300,000 $19.00
Unexercisable Options
- ---------------------
Date of Grant Number of Shares Exercise Price
------------- ---------------- --------------
April 19, 1994 1,200,000 $19.00
Date of Vesting
---------------
April 19, 1996 - 300,000 Shares
April 19, 1997 - 300,000 Shares
April 19, 1998 - 300,000 Shares
April 19, 1999 - 300,000 Shares
<PAGE>
SCHEDULE B
----------
Determination of Unexercisable Option Value
-------------------------------------------
by Hewitt Associates
--------------------
Valuation Methodology
- ---------------------
Calculations will be based on the Black-Scholes option pricing model. To
the Black-Scholes formula outputs there shall be applied an Annual Turnover
discount as indicated below for the probability that an option holder will not
complete the vesting schedule as outlined, and thus not receive full ownership
of the entire option grant.
Valuation Assumptions
- ---------------------
Grant Price $_________
Stock Price on
Valuation Date $_________
Grant Date __________
Valuation Date Close of business on day preceding
the Effective Time
Annual Dividend $0.40
Interest Rate 7.00%
Volatility 24.30%
Annual Turnover 7.50%
Valuation Results
- -----------------
<TABLE>
<CAPTION>
Number of Vesting Current Total Current
Options Date Option Value Value
<S> <C> <C> <C> <C>
Unvested
Unvested
Unvested
Unvested
Total Unvested Value
</TABLE>
<PAGE>
EXHIBIT 10.5
CONSULTING AGREEMENT
--------------------
This Consulting Agreement (this "Agreement") is entered into as of July 16,
1995 among Scott Paper Company, a Pennsylvania corporation ("Scott"), Kimberly-
Clark Corporation, a Delaware corporation ("Kimberly-Clark"), and Albert J.
Dunlap (the "Consultant").
WHEREAS, the Consultant has acquired extensive knowledge of and experience
in the business conducted by Scott;
WHEREAS, Scott desires to obtain the benefit of the Consultant's knowledge
and experience by retaining the Consultant, and the Consultant desires to accept
such position, for the term and upon the other conditions hereinafter set forth;
WHEREAS, concurrently herewith, Kimberly-Clark, Rifle Merger Co. and Scott
are entering into an Agreement and Plan of Merger dated as of the date hereof
(the "Merger Agreement"), pursuant to which Rifle Merger Co. is merging with and
into Scott and Scott is becoming a wholly-owned subsidiary of Kimberly-Clark;
WHEREAS, the Consultant will cease to be a director and officer of Scott
and of all of its subsidiaries, effective as of the Effective Time of the Merger
(as such terms are defined in the Merger Agreement); and
WHEREAS, concurrently herewith, Scott, Kimberly-Clark and the Consultant
are entering into a Noncompetition Agreement dated as of the date hereof (the
"Noncompetition Agreement").
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein, the adequacy and sufficiency of which are hereby acknowledged,
Scott, Kimberly-Clark and the Consultant hereby agree as follows:
1. Term of Agreement. Scott hereby engages the Consultant as a
-----------------
consultant, subject to the terms and conditions hereof, for the period
commencing at the Effective Time of the Merger and ending on the date which is
the fifth one-year anniversary of the Effective Time of the Merger (the
"Consulting Period"), subject to earlier termination pursuant to Section 6
hereof; provided, however, that this Agreement shall terminate and shall be of
no further force or effect if the Merger Agreement shall be terminated and the
Merger shall not become effective pursuant to the terms thereof.
2. Consulting Services; Expenses. During the Consulting Period, the
-----------------------------
Consultant shall make himself available to
-1-
<PAGE>
perform consulting services with respect to the businesses conducted by Scott.
Such consulting services shall be related to such matters as the Chief Executive
Officer of Kimberly-Clark may designate from time to time, including consulting
services to Kimberly-Clark's Board of Directors with respect to the businesses
conducted by Scott. The Consultant shall accommodate to reasonable requests for
the Consultant's consulting services, and shall devote reasonable time and his
reasonable best efforts, skill and attention to the performance of such
consulting services, including travel reasonably required in the performance of
such consulting services. Scott shall reimburse the Consultant for all
necessary travel and other expenses incurred by the Consultant in providing such
consulting services. Scott shall also pay the Consultant, on the Effective Time
of the Merger and on each anniversary date of the Effective Time of the Merger
during the term hereof, the sum of twenty thousand dollars ($20,000), for office
expenses.
3. Independent Contractor. The Consultant shall perform the consulting
----------------------
services described in Section 2 hereof as an independent contractor without the
power to bind or represent Scott for any purpose whatsoever. The Consultant
shall not, by virtue of being a consultant hereunder, be eligible to receive any
benefits for which officers or other employees of Scott are eligible at any
time, such as insurance, participation in Company pension plans or other
employee benefits. The Consultant hereby acknowledges his separate
responsibility for all federal and state withholding taxes, Federal Insurance
Contribution Act taxes and workers' compensation and unemployment compensation
taxes, if applicable, and agrees to indemnify and hold Scott and Kimberly-Clark
harmless from any claim or liability therefor.
4. Compensation. As compensation for the consulting services to be
------------
performed by the Consultant hereunder, Scott and Kimberly-Clark shall deliver or
cause to be delivered to the Consultant at the Effective Time of the Merger and
on each of the first four one-year anniversary dates thereof five thousand
(5,000) shares of Common Stock, $1.25 par value, of Kimberly-Clark (the
"Stock"). Notwithstanding any disability of the Consultant resulting in his
inability to perform consulting services hereunder, the remaining undelivered
Stock payable pursuant to this Agreement shall be delivered by Scott and
Kimberly-Clark to the Consultant or to his legal representative designated in
writing by the Consultant on the dates such Stock would otherwise have been
delivered hereunder. In the event of the death of the Consultant during the
Consulting Period, the remaining undelivered Stock payable pursuant to this
Agreement shall be delivered by Scott and Kimberly-Clark within 90 days
following the date of such death as a death benefit to the beneficiary or
beneficiaries designated in writing by the Consultant or, if no beneficiary or
beneficiaries have been so designated, to the Consultant's estate. In the event
of any stock split, stock dividend, recapitalization, reorganization,
-2-
<PAGE>
merger, consolidation, combination, exchange of shares or other similar change
in capitalization, the number of shares of Stock thereafter payable pursuant to
this Agreement shall be appropriately adjusted. If any such adjustment would
result in a fractional security being payable pursuant to this Agreement, such
fractional security shall be paid in cash.
5. Registration of Stock. Kimberly-Clark shall file a registration
---------------------
statement with the Securities and Exchange Commission under the Securities Act
of 1933 (the "Securities Act") with respect to the Stock to be delivered
pursuant to this Agreement and shall use its best efforts to cause such
registration statement filed to be declared effective prior to, and remain
effective upon, the delivery of the Stock to the Consultant; provided, however,
-------- -------
that Kimberly-Clark may, in its sole discretion, satisfy its obligation pursuant
to this Section 5 by including such Stock within any other coincident
registration statement filed by Kimberly-Clark under the Securities Act and
which remains effective at the time of delivery of the stock to the Consultant.
All expenses of any registration of the Stock pursuant to this Section 5 shall
be paid by Scott or Kimberly-Clark.
6. Termination. (a) This Agreement may be terminated at any time by the
-----------
Consultant on thirty (30) days prior written notice to Scott and Kimberly-Clark.
In the event of such termination by the Consultant, the obligation of Scott and
Kimberly-Clark to deliver Stock to the Consultant pursuant to Section 4 hereof
shall cease, effective on the date of such termination.
(b) This Agreement may be terminated at any time by Scott or Kimberly-
Clark upon written notice to the Consultant in the event that the Consultant
shall breach any covenant contained in Section 2 hereof or in Section 2, 5(a) or
6 of the Noncompetition Agreement. In the event of such termination by Scott or
Kimberly-Clark, the obligation of Scott and Kimberly-Clark to deliver Stock to
the Consultant pursuant to Section 4 hereof shall cease, effective on the date
of such termination.
(c) At any time after the first one-year anniversary of the Effective Time
of the Merger, Scott or Kimberly-Clark may terminate this Agreement upon written
notice to the Consultant and upon delivery by Scott and Kimberly-Clark of all
undelivered Stock and a lump sum payment by Scott representing $20,000 for each
full year of the remaining portion of the Consulting Period and accrued expenses
if any.
(d) This Agreement may be terminated by the Consultant upon ten (10) days'
prior written notice to Scott and Kimberly-Clark in the event that Scott or
Kimberly-Clark shall breach any of its obligations under Section 2, 4, 5, 7 or 8
hereof or Section 3, 5(b) or 7 of the Noncompetition Agreement; provided,
--------
-3-
<PAGE>
however, that the Consultant shall not be entitled to terminate this Agreement
- -------
pursuant to this Section 6(d) in the event that Scott and Kimberly-Clark shall
cure any such breach within such ten (10) day period. In the event of such
termination by the Consultant, Scott and Kimberly-Clark shall deliver all
undelivered Stock payable during the term of this Agreement, and Scott shall pay
all accrued expenses and $20,000 for each full year of the remaining portion of
the Consulting Period, to the Consultant within five (5) business days of such
termination.
7. Expenses. Scott shall promptly pay or reimburse the Consultant for
--------
all costs and expenses (including, without limitation, court costs and
attorney's fees) incurred by the Consultant as a result of any claim, action or
proceeding (including, without limitation, a claim, action or proceeding by
Consultant against Scott or Kimberly-Clark to collect amounts due to Consultant
or to otherwise enforce this Agreement) arising out of, or challenging the
validity, advisability or enforceability of, this Agreement or any provision
hereof; provided, however, that no such payment or reimbursement shall be made
to Consultant if Consultant is the plaintiff in such claim, action or proceeding
and a final nonappealable judgment is rendered against Consultant with respect
to all his claims.
8. Indemnification. Scott and Kimberly-Clark shall defend, indemnify and
---------------
hold Consultant harmless from and against all damages, costs and expenses
(including attorneys' fees) as a result of claims made by third parties arising
out of Consultant's performance of services under this agreement; provided,
--------
however, that Scott and Kimberly-Clark shall not indemnify and hold Consultant
- -------
harmless for Consultant's own gross negligence or willful misconduct.
9. Successors; Binding Agreement. This Agreement shall inure to the
-----------------------------
benefit of and be enforceable by the Consultant and by his personal or legal
representatives, executors, administrators, heirs, distributees, devisees and
legatees and by Scott and Kimberly-Clark and their respective successors and
assigns.
10 . Notices. All notices and other communications required or permitted
-------
under this Agreement shall be in writing and shall be deemed to have been duly
given when personally delivered, when delivered by courier or overnight express
service or five days after having been sent by certified or registered mail,
postage prepaid, addressed (a) if to the Consultant, to the Consultant's address
set forth in the records of the Company, or if to Scott or Kimberly-Clark, to
Wayne R. Sanders, Chairman of the Board and Chief Executive Officer, 351 Phelps
Drive, Irving, Texas 75038, with a copy to O. George Everbach, Senior Vice
President - Law and Government Affairs, 351 Phelps Drive, Irving, Texas 75038,
or (b) to such other address as any party may have furnished to the other
parties in writing in accordance herewith,
-4-
<PAGE>
except that notices of change of address shall be effective only upon receipt.
11. Guaranty. Kimberly-Clark hereby guarantees the payment of all amounts
--------
payable by Scott pursuant to this Agreement.
12. Governing Law; Validity. The interpretation, construction and
-----------------------
performance of this Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of Delaware without regard to the
applicable principles of conflicts of laws. The invalidity or unenforceability
of any provision of this Agreement shall not affect the validity or
enforceability of any of the other provisions of this Agreement, which other
provisions shall remain in full force and effect.
13. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument.
14. Miscellaneous. No provision of this Agreement may be modified or
-------------
waived unless such modification or waiver is agreed to in writing and executed
by the Consultant and by a duly authorized officer of Scott and of Kimberly-
Clark. No waiver by any party hereto at any time of any breach by another party
hereto of, or failure to comply with, any condition or provision of this
Agreement to be performed or complied with by such other party shall be deemed a
waiver of any similar or dissimilar conditions or provisions at the same or at
any prior or subsequent time. Failure by the Consultant, Scott or Kimberly-
Clark to insist upon strict compliance with any provision of this Agreement or
to assert any right which the Consultant, Scott or Kimberly-Clark may have
hereunder shall not be deemed to be a waiver of such provision or right or any
other provision of or right under this Agreement.
-5-
<PAGE>
IN WITNESS WHEREOF, each of Scott and Kimberly-Clark has caused this
Agreement to be executed by its duly authorized officer and the Consultant has
executed this Agreement as of the day and year first above written.
Scott Paper Company
By
---------------------------------
Kimberly-Clark Corporation
By
--------------------------------
CONSULTANT:
----------------------------------
Albert J. Dunlap
-6-
<PAGE>
EXHIBIT 10.6
NONCOMPETITION AGREEMENT
------------------------
This Noncompetition Agreement (this "Agreement") is entered into as of July
16, 1995 among Scott Paper Company, a Pennsylvania corporation ("Scott"),
Kimberly-Clark Corporation, a Delaware corporation ("Kimberly-Clark"), and
Albert J. Dunlap (the "Executive").
WHEREAS, the Executive has acquired extensive knowledge of and experience
in the business conducted by Scott;
WHEREAS, concurrently herewith, Kimberly-Clark, Rifle Merger Co. and Scott
are entering into an Agreement and Plan of Merger dated as of the date hereof
(the "Merger Agreement"), pursuant to which Rifle Merger Co. is merging with and
into Scott and Scott is becoming a wholly-owned subsidiary of Kimberly-Clark;
WHEREAS, the Executive will cease to be a director and officer of Scott and
of all of its subsidiaries, effective as of the Effective Time of the Merger (as
such terms are defined in the Merger Agreement);
WHEREAS, concurrently herewith, Scott, Kimberly-Clark and the Executive are
entering into a Consulting Agreement (the "Consulting Agreement") dated as of
the date hereof; and
WHEREAS, Scott, Kimberly-Clark and the Executive desire to enter into a
noncompetition agreement upon the terms and subject to the conditions set forth
herein.
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein, the adequacy and sufficiency of which are hereby acknowledged,
Scott, Kimberly-Clark and the Executive hereby agree as follows:
1. Term of Agreement. The term of this Agreement shall commence at the
-----------------
Effective Time of the Merger and end on the date which is the fifth one-year
anniversary of the Effective Time of the Merger (the "Noncompetition Period");
provided, however, that this Agreement shall terminate and shall be of no
further force or effect if the Merger Agreement shall be terminated and the
Merger shall not become effective pursuant to the terms thereof.
2. Noncompetition. (a) During the Noncompetition Period, the Executive
--------------
shall not, directly or indirectly, own,
<PAGE>
manage, operate, control or participate in the ownership, management, operation
or control of, or be connected as an officer, employee, partner, or director
with, any business conducted anywhere in the world which, for the fiscal year of
such business immediately preceding the Executives' involvement with such
business derives at least twelve and one half percent (12 1/2%) or $250,000,000,
whichever is greater, of its total worldwide revenue from any business or
businesses which compete with any of the following business or businesses
conducted as of the Effective Time of the Merger by Scott or Kimberly-Clark, or
by any corporation in which Scott or Kimberly-Clark has, as of the Effective
Time of the Merger, a 40% or more equity investment: disposable diapers,
training pants, youth pants or baby wipes; disposable feminine hygiene products;
adult incontinence products; tissue products for household, commercial,
institutional or industrial uses; nonwoven and/or tissue based industrial or
commercial wipes; nonwoven and/or tissue based hospital/health care products for
use as surgical gowns, surgical packs, sterilization wrap and protective
hospital apparel; or premium uncoated writing, text and cover papers for use as
business, printing and correspondence papers (each such business, a "Competitive
Operation"). During the Noncompetition Period, the Executive shall not solicit
(1) any employee of Scott or Kimberly-Clark or any corporation in which Scott or
Kimberly-Clark has, as of the Effective Time of the Merger a 40% or more equity
investment, to leave such employment or (ii) any customer of Scott or Kimberly-
Clark or any corporation in which Scott or Kimberly-Clark has, as of the
Effective Time of the Merger, a 40% or more equity investment, if to do so could
reasonably be expected to result in a reduction of the business such customer
has with Scott or Kimberly-Clark or any corporation in which Scott or Kimberly-
Clark has, as of the Effective Time of the Merger, a 40% or more equity
investment; provided that an activity by a business which is not deemed to be a
Competitive Operation shall not be a violation of this sentence. During the
Noncompetition Period ownership by the Executive of not to exceed five percent
(5%) of the equity securities of any Competitive Operation shall not constitute
a violation of this Section 2.
(b) In the event any restriction against engaging in a competitive activity
contained in this Section 2 shall be determined by any court of competent
jurisdiction to be unenforceable by reason of its extending for too great a
period of time or over too great a geographical area or by reason of its being
too extensive in any other respect, it shall be interpreted to extend only over
the maximum period of time for which it may be enforceable, over the maximum
geographical area as to which it may be enforceable and to the maximum extent in
all other respects as to which it may be enforceable, all as determined by such
court in such action.
(c) The provisions of this Section 2 and of Section 5 hereof shall be in
lieu of Sections 6 and 7 of the Employment
-2-
<PAGE>
Agreement between Scott and the Executive dated as of April 19, 1994, as
amended, which sections of the Employment Agreement shall terminate and be of no
further force or effect after the Effective Time of the Merger.
(d) In the event that Executive desires to determine if a business meets
the definition of a Competitive Operation, Executive may request from Scott and
Kimberly-Clark information concerning the sale of their products in specific
countries or territories. Scott and Kimberly-Clark shall promptly respond to
such request by furnishing the information necessary for Executive to make his
determination.
3. Compensation. As compensation for the noncompetition covenants
------------
contained in Section 2 hereof, Scott shall pay to the Executive on the Effective
Time of the Merger the sum of six million dollars ($6,000,000) and on each
anniversary of the Effective Time of the Merger, during the term hereof, the
following sums:
<TABLE>
<S> <C> <C>
1st Anniversary five million dollars ($5,000,000)
2nd Anniversary four million dollars ($4,000,000)
3rd Anniversary three million dollars ($3,000,000)
4th Anniversary two million dollars ($2,000,000)
</TABLE>
(such payments, in the aggregate, being referred to herein as the
"Noncompetition Fee"). Notwithstanding any disability of the Executive during
the Noncompetition Period, the remaining unpaid installments of the
Noncompetition Fee payable pursuant to this Agreement shall be paid by Scott to
the Executive or to his legal representative designated in writing by the
Executive on the dates such Noncompetition Fee would otherwise have been paid
hereunder. In the event of the death of the Executive during the Noncompetition
Period, the remaining unpaid installments of the Noncompetition Fee payable
pursuant to this Agreement shall be paid by Scott within 90 days following the
date of such death as a death benefit to the beneficiary or beneficiaries
designated in writing by the Executive or, if no beneficiary or beneficiaries
have been so designated, to the Executive's estate.
4. Unauthorized Disclosure. (a) The Executive shall not, without the
-----------------------
written consent of the Chief Executive Officer of Kimberly-Clark, use other than
for Company purposes pursuant to Section 2 of the Consulting Agreement or
disclose to any person other than as required by law or court order or to a
person to whom disclosure is necessary or appropriate in connection with the
performance by the Executive of his duties pursuant to Section 2 of the
Consulting Agreement, any confidential information material in nature obtained
by him while in the employ of Scott or while a consultant pursuant to the
Consulting Agreement, including such information with respect to any products,
improvements, formulae, designs or styles, processes, services, customers,
suppliers, marketing techniques,
-3-
<PAGE>
methods, future plans or operating practices ("Confidential Information");
provided, however, that Confidential Information shall not include any
information known generally to the public or previously disclosed to the public
(other than as a result of unauthorized disclosure by the Executive) or any
specific information or type of information generally not considered
confidential by persons engaged in the same business as Scott or Kimberly-Clark,
or information disclosed by Scott or Kimberly-Clark by any member of its Board
of Directors or any officer thereof to a third party without restrictions on the
disclosure of such information.
(b) The Executive agrees that all documents, records, files, letters,
memoranda, reports, data, sketches, drawings, laboratory notebooks, program
listings or other written, electronic, photographic or other tangible material
("Tangible Property") containing Confidential Information, whether created by
the Executive or others, which have or shall come into his custody or possession
shall be and are the exclusive property of Scott and shall be used by the
Executive only in the performance of his duties pursuant to Section 2 of the
Consulting Agreement. The Executive agrees that upon the earlier of (i) a
request by Scott or Kimberly-Clark or (ii) the termination or cessation of his
consulting services pursuant to the Consulting Agreement for any reason, he
shall promptly deliver to Scott all Tangible Property in his possession or under
his control which contains Confidential Information. The Executive shall not
retain or deliver to any third person copies of such Tangible Property.
(c) The Executive agrees that his obligations not to disclose or use
information, knowhow, records or Tangible Property of the types set forth in
Section 4(a) or 4(b) hereof also extend to such types of information, knowhow,
records and Tangible Property of customers of Scott or any of its subsidiaries
or suppliers to Scott or any of its subsidiaries or other third parties who may
have disclosed or entrusted the same to Scott or any of its subsidiaries or to
the Executive in the course of Scott's business.
5. Public Announcements. (a) The Executive agrees that he shall not make
--------------------
or cause to be made any public statement, public announcement, press release or
other disclosure to the press which is intended, or could reasonably be
expected, to have a detrimental effect on Scott or Kimberly-Clark or their
respective businesses or operations, their public image or reputation or their
relations with customers, suppliers, employees, lenders or other business
associates.
(b) Scott and Kimberly-Clark agree that they shall not make or cause to be
made any public statement, public announcement, press release or other
disclosure to the press which is intended, or could reasonably be expected, to
have a
-4-
<PAGE>
detrimental effect on the Executive, his public image or reputation or his
relations with lenders or business associates.
6. Interests in Kimberly-Clark. The Executive agrees that he shall not at
---------------------------
any time during the Noncompetition Period (and shall not at any time during the
Noncompetition Period assist or encourage others to):
(a) acquire or agree, offer, seek or propose to acquire (or directly or
indirectly request permission to do so), directly or indirectly, alone or
in concert with any other Person (within the meaning of Section 3(a)(9) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act")), by
purchase or otherwise, any ownership, including, but not limited to,
beneficial ownership as defined in Rule 13d-3 under the Exchange Act, of
any of the assets, businesses or securities of Kimberly-Clark or any
subsidiary thereof, or any rights or options to acquire such ownership
(including from any third party);
(b) solicit proxies (as such terms are defined in Rule 14a-1 under the
Exchange Act), whether or not such solicitation is exempt under Rule 14a-2
under the Exchange Act, with respect to any matter from holders of any
shares of capital stock of Kimberly-Clark or any securities convertible
into or exchangeable for or exercisable (whether currently or upon the
occurrence of any contingency) for the purchase of capital stock of
Kimberly-Clark (such capital stock and such other securities being
hereinafter collectively called the "Voting Securities"), or make any
communication exempted from the definition of solicitation by Rule 14a-
1(l)(2)(iv) under the Exchange Act;
(c) initiate, or induce or attempt to induce any other Person, entity or
group (as defined in Section 13(d)(3) of the Exchange Act) to initiate, any
stockholder proposal or tender offer for any securities of Kimberly-Clark
or any subsidiary thereof, any change in control of Kimberly-Clark or any
subsidiary thereof or the convening of a stockholders' meeting of Kimberly-
Clark or any subsidiary thereof;
(d) otherwise seek or propose (or request permission to propose) to
influence or control the management or policies of Kimberly-Clark or any
subsidiary thereof;
(e) enter into any discussions, negotiations, arrangements or
understandings with any other Person with respect to any matter described
in the foregoing Subsections 6(a) through 6(d);
-5-
<PAGE>
(f) request Scott or its directors, officers, employees or agents,
directly or indirectly, to amend or waive any provision of this Section 6;
(g) take any action inconsistent with any of the foregoing Subsections 6(a)
through 6(f); or
(h) take any action with respect to any of the matters described in this
Section 6 that requires public disclosure.
Notwithstanding the foregoing provisions of this Section 6, the Executive may
beneficially own for his personal investment purposes up to two percent (2%) of
the outstanding Voting Securities of Kimberly-Clark.
7. Expenses. Scott shall promptly pay or reimburse the Consultant
--------
for all costs and expenses (including, without limitation, court costs and
attorney's fees) incurred by the Consultant as a result of any claim, action or
proceeding (including, without limitation, a claim, action or proceeding by
Consultant against Scott or Kimberly-Clark to collect amounts due to Consultant
or to otherwise enforce this Agreement) arising out of, or challenging the
validity, advisability or enforceability of, this Agreement or any provision
hereof; provided, however, that no such payment or reimbursement shall be made
to Consultant if Consultant is the plaintiff in such claim, action or proceeding
and a final, nonappealable judgment is rendered against Consultant with respect
to all of his claims.
8. Injunctive Relief. The Executive acknowledges that a breach of
-----------------
the restrictions contained in Section 2, 5 or 6 hereof shall cause irreparable
damage to Scott and Kimberly-Clark, the exact amount of which shall be difficult
to ascertain, and that the remedies at law for any such breach shall be
inadequate. Accordingly, the Executive agrees that, if the Executive breaches
any of the restrictions contained in Section 2, 5 or 6 hereof, then Scott and
Kimberly-Clark shall be entitled to injunctive relief, without posting bond or
other security in addition to any other remedy or remedies available to Company
or Kimberly-Clark at law or in equity.
9. Termination. This Agreement may be terminated by the Executive
-----------
upon ten (10) day's prior written notice to Scott and Kimberly-Clark in the
event that Scott or Kimberly-Clark shall breach any of their obligations under
Section 3, 5(b) or 7 hereof, or Section 2, 4, 5 or 7 of the Consulting
Agreement; provided, however, that the Executive shall not be entitled to
-------- -------
terminate this Agreement pursuant to this Section 9 in the event that Scott and
Kimberly-Clark shall cure any such breach within such ten (10) day period. In
the event of such termination by the Executive, Scott shall pay to the Executive
all remaining payments due under this Agreement within five (5) business days of
such termination.
-6-
<PAGE>
10. Successors; Binding Agreement. This Agreement shall inure to the
-----------------------------
benefit of and be enforceable by the Executive and by his personal or legal
representatives, executors, administrators, heirs, distributees, devisees and
legatees and by Scott and Kimberly-Clark and their respective successors and
assigns.
11. Notices. All notices and other communications required or
-------
permitted under this Agreement shall be in writing and shall be deemed to have
been duly given when personally delivered, when delivered by courier or
overnight express service or five days after having been sent by certified or
registered mail, postage prepaid, addressed (a) if to the Executive, to the
Executive's address set forth in the records of the Company, or if to Scott or
Kimberly-Clark, to Wayne R. Sanders, Chairman of the Board and Chief Executive
Officer, 351 Phelps Drive, Irving, Texas 75038, with a copy to O. George
Everbach, Senior Vice President - Law and Government Affairs, 351 Phelps Drive,
Irving, Texas 75038, or (b) to such other address as any party may have
furnished to the other parties in writing in accordance herewith, except that
notices of change of address shall be effective only upon receipt.
12. Guaranty. Kimberly-Clark hereby guarantees the payment of all
--------
amounts payable by Scott pursuant to this Agreement.
13. Governing Law; Validity. The interpretation, construction and
-----------------------
performance of this Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of Delaware without regard to the
applicable principles of conflicts of laws. The invalidity or unenforceability
of any provision of this Agreement shall not affect the validity or
enforceability of any of the other provisions of this Agreement, which other
provisions shall remain in full force and effect.
14. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument.
15. Miscellaneous. No provision of this Agreement may be modified or
-------------
waived unless such modification or waiver is agreed to in writing and executed
by the Executive and by a duly authorized officer of Scott and of Kimberly-
Clark. No waiver by any party hereto at any time of any breach by another party
hereto of, or failure to comply with, any condition or provision of this
Agreement to be performed or complied with by such other party shall be deemed a
waiver of any similar or dissimilar conditions or provisions at the same or at
any prior or subsequent time. Failure by the Executive, Scott or Kimberly-Clark
to insist upon strict compliance with any provision of this
-7-
<PAGE>
Agreement or to assert any right which the Executive, Scott or Kimberly-Clark
may have hereunder shall not be deemed to be a waiver of such provision or right
or any other provision of or right under this Agreement.
IN WITNESS WHEREOF, each of Scott and Kimberly-Clark has caused this
Agreement to be executed by its duly authorized officer and the Executive has
executed this Agreement as of the day and year first above written.
Scott Paper Company
By
---------------------------------
Kimberly-Clark Corporation
By
--------------------------------
CONSULTANT:
-----------------------------------
Albert J. Dunlap
-8-
<PAGE>
EXHIBIT 10.7
SCOTT PAPER COMPANY
150 E. Palmetto Park
Suite 415
Boca Raton, FL 33432
July 16, 1995
John P. Murtagh, Esq.
Senior Vice President,
General Counsel and Secretary
Scott Paper Company
150 E. Palmetto Park
Suite 415
Boca Raton, FL 33432
Dear Mr. Murtagh:
This letter will advise you that your employment with Scott Paper Company
("Scott") will terminate immediately following the Effective Time. This letter
will acknowledge that under your letter agreement of employment with Scott dated
June 30, 1994, your termination of employment entitles you to receive at the
Effective Time the cash payments and benefits set forth on Schedule A to this
letter and that the 50,085 shares of restricted stock held by you under the
Company's 1994 Long Term Incentive Plan will vest upon the Effective Time.
Terms used in this letter and in Schedule A hereto which are defined in the
Agreement and Plan of Merger among Kimberly-Clark Corporation, a newly formed
Pennsylvania wholly owned subsidiary of Kimberly-Clark Corporation, and Scott,
dated as of July 16, 1995 (the "Merger Agreement"), shall have the meanings set
forth in the Merger Agreement.
Very truly yours,
Scott Paper Company
By:
-----------------------------
<PAGE>
SCHEDULE A
TO LETTER TO JOHN P. MURTAGH
DATED JULY 16, 1995
The payments set forth below are determined pursuant to the letter agreement of
employment between John P. Murtagh and Scott Paper Company ("Scott") dated as of
June 30, 1994 (the "Employment Agreement")./1/
<TABLE>
<CAPTION>
Description Amount
----------- ------
<S> <C>
Salary $214,000
Termination Bonus $202,400/2/
</TABLE>
- -------------------------
/1/ All amounts payable to Mr. Murtagh under Scott's 401(k) plan, savings
plans, retirement plan, deferred compensation plans, and other plans under which
he is a participant, and which are not otherwise referred to in this Schedule,
shall be paid to Mr. Murtagh according to their respective terms.
/2/ Assumes an Effective Time of October 19, 1995; such amount will be
appropriately adjusted if the Effective Time is on a date other than October 19,
1995 in accordance with the terms of the Employment Agreement.
<PAGE>
EXHIBIT 10.8
STOCK OPTION EXCHANGE AGREEMENT
-------------------------------
This Stock Option Exchange Agreement is entered into as of July 16, 1995
among Scott Paper Company, a Pennsylvania corporation (the "Company"), Kimberly-
Clark Corporation, a Delaware corporation ("Kimberly-Clark"), and John P.
Murtagh (the "Optionee").
WHEREAS, pursuant to stock option agreements, the Company has granted to
the Optionee options (the "Options") to purchase the number of common shares of
the Company ("Company Common Shares") set forth on Schedule A hereto at the
exercise price or prices set forth opposite such number of Company Common
Shares, giving effect to the two for one stock split of the Company Common
Shares declared on April 18, 1995;
WHEREAS, pursuant to an Amendment to Stock Option Agreement dated as of
February 24, 1995 (the "Stock Option Amendment"), Options which are not
exercisable become immediately exercisable in the event of a change in control
of the Company;
WHEREAS, concurrently herewith, Kimberly-Clark, Rifle Merger Co. and the
Company are entering into an Agreement and Plan of Merger (the "Merger
Agreement"), pursuant to which Rifle Merger Co. is merging (the "Merger") with
and into the Company and the Company is becoming a wholly-owned subsidiary of
Kimberly-Clark;
WHEREAS, pursuant to the terms of the Stock Option Amendment, the Options
designated on Schedule A as unexercisable (the "Unexercisable Options") are to
become exercisable at the Effective Time (as such term is defined in the Merger
Agreement);
WHEREAS, in order for the Merger to be accounted for as a pooling of
interests, the Company and the Optionee desire to rescind the Stock Option
Amendment prior to the Effective Time so that the Unexercisable Options remain
unexercisable at the Effective Time;
WHEREAS, the Company, the Optionee and Kimberly-Clark desire to enter into
this Agreement to provide that at the Effective Time the Unexercisable Options
shall be cancelled and exchanged for shares of common stock of Kimberly-Clark
("Kimberly-Clark Common Stock") having a market value at the Effective Time
equal to the value (the "Unexercisable Option Value") of the Unexercisable
Options, as shall be determined by Hewitt Associates at the time and in the
manner set forth on Schedule B hereto; and
<PAGE>
WHEREAS, in accordance with Section 5.8 of the Merger Agreement, the
Options designated on Schedule A as exercisable at the Effective Time (the
"Exercisable Options") will, at the Effective Time, become options to purchase
shares of Kimberly-Clark Common Stock upon the terms and subject to the
conditions set forth in the Merger Agreement.
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein, the adequacy and sufficiency of which are hereby acknowledged,
the Company, Kimberly-Clark and the Optionee hereby agree as follows:
1. Rescission of Stock Option Amendment. At the Effective Time, the Stock
------------------------------------
Option Amendment shall be rescinded and shall be of no further force or effect
whatsoever.
2. Exchange of Unexercisable Options. At the Effective Time, the
---------------------------------
Unexercisable Options which are outstanding immediately prior to the Effective
Time shall be cancelled and exchanged for the number of shares of Kimberly-Clark
Common Stock, decreased to the nearest whole share, having an aggregate market
value at the Effective Time equal to the Unexercisable Option Value. Kimberly-
Clark shall pay cash to the Optionee in lieu of issuing fractional shares of
Kimberly-Clark Common Stock, unless in the reasonable judgment of Kimberly-
Clark, based on the advice of its independent accountants, such payment would
adversely affect the ability to account for the Merger as a pooling of interests
in accordance with generally accepted accounting principles. For purposes of
this Section 2, the market value of a share of Kimberly-Clark Common Stock at
the Effective Time shall be equal to the closing price of the Kimberly-Clark
Common Stock on the business day next preceding the Effective Time, as reported
in The Wall Street Journal as New York Stock Exchange Composite Transactions.
-----------------------
Kimberly-Clark shall register under the Securities Act of 1933, as amended (the
"Securities Act"), on the appropriate form all shares of Kimberly-Clark Common
Stock issuable pursuant to this Section 2.
3. Exchange of Exercisable Options. In accordance with Section 5.8 of the
-------------------------------
Merger Agreement, at the Effective Time, each Exercisable Option which is
outstanding immediately prior to the Effective Time shall become and represent a
fully exercisable option to purchase the number of shares of Kimberly-Clark
Common Stock (a "Substitute Option"), decreased to the nearest whole share,
determined by multiplying (i) the number of Company Common Shares subject to
such Exercisable Option immediately prior to the Effective Time by (ii) the
Conversion Number (as such term is defined in the Merger Agreement), at an
exercise price per share of Kimberly-Clark Common Stock (increased to the
nearest whole cent) equal to the exercise price per Company Common Share
immediately prior to the Effective Time divided by the Conversion Number.
Kimberly-Clark shall pay cash to the Optionee in lieu of issuing fractional
shares of Kimberly-Clark Common Stock upon the
-2-
<PAGE>
exercise of a Substitute Option unless in the reasonable judgment of Kimberly-
Clark, based on the advice of its independent accountants, such payment would
adversely affect the ability to account for the Merger as a pooling of interests
in accordance with generally accepted accounting principles. After the
Effective Time, except as provided by Section 5.8 of the Merger Agreement, each
Substitute Option shall be exercisable upon the same terms and conditions as
were applicable to the related Exercisable Option immediately prior to the
Effective Time. Kimberly-Clark shall register under the Securities Act on Form
S-8 or another appropriate form all Substitute Options and all shares of
Kimberly-Clark Common Stock issuable pursuant to all Substitute Options.
4. Termination of Agreement. This Agreement shall terminate and shall be
------------------------
of no further force or effect if the Merger Agreement shall be terminated and
the Merger shall not become effective pursuant to the terms thereof.
5. Successors; Binding Agreement. This Agreement shall inure to the
-----------------------------
benefit of and be enforceable by the Optionee and by his personal or legal
representatives, executors, administrators, heirs, distributees, devisees and
legatees and by the Company and Kimberly-Clark and their respective successors
and assigns.
6. Notices. All notices and other communications required or permitted
-------
under this Agreement shall be in writing and shall be deemed to have been duly
given when personally delivered, when delivered by courier or overnight express
service or five days after having been sent by certified or registered mail,
postage prepaid, addressed (a) if to the Optionee, to the Optionee's address set
forth in the records of the Company, or if to the Company or Kimberly-Clark, to
O. George Everbach, Senior Vice President and General Counsel, Kimberly-Clark
Corporation, 351 Phelps Drive, Irving, Texas 75038, with a copy to Thomas A.
Cole, Sidley & Austin, One First National Plaza, Chicago, Illinois 60603, or (b)
to such other address as any party may have furnished to the other parties in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
7. Governing Law; Validity. The interpretation, construction and
-----------------------
performance of this Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of Delaware without regard to the
applicable principles of conflicts of laws. The invalidity or unenforceability
of any provision of this Agreement shall not affect the validity or
enforceability of any of the other provisions of this Agreement, which other
provisions shall remain in full force and effect.
-3-
<PAGE>
8. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument.
9. Miscellaneous. No provision of this Agreement may be modified or
-------------
waived unless such modification or waiver is agreed to in writing and executed
by the Optionee and by a duly authorized officer of the Company and of Kimberly-
Clark. No waiver by any party hereto at any time of any breach by another party
hereto of, or failure to comply with, any condition or provision of this
Agreement to be performed or complied with by such other party shall be deemed a
waiver of any similar or dissimilar conditions or provisions at the same or at
any prior or subsequent time. Failure by the Optionee, the Company or Kimberly-
Clark to insist upon strict compliance with any provision of this Agreement or
to assert any right which the Optionee, the Company or Kimberly-Clark may have
hereunder shall not be deemed to be a waiver of such provision or right or any
other provision of or right under this Agreement.
IN WITNESS WHEREOF, each of the Company and Kimberly-Clark has caused this
Agreement to be executed by its duly authorized officer and the Optionee has
executed this Agreement as of the day and year first above written.
SCOTT PAPER COMPANY
By:
---------------------------
KIMBERLY-CLARK CORPORATION
By:
---------------------------
OPTIONEE:
-------------------------------
-4-
<PAGE>
SCHEDULE A
----------
Schedule of Options
-------------------
<TABLE>
<CAPTION>
Exercisable Options
- ---------------------
Date of Grant Number of Shares Exercise Price
---------------- ---------------- --------------
<S> <C> <C>
6/13/94 20,000 24.938
9/16/94 300,000 31.875
</TABLE>
<TABLE>
<CAPTION>
Unexercisable Options
- ---------------------
Date of Date of
Grant Vesting Number of Shares Exercise Price
- ------- ------- ---------------- --------------
<S> <C> <C> <C>
6/13/94 6/13/96 20,000 24.938
</TABLE>
-5-
<PAGE>
SCHEDULE B
----------
Determination of Unexercisable Option Value
-------------------------------------------
by Hewitt Associates
--------------------
Valuation Methodology
- ---------------------
Calculations will be based on the Black-Scholes option pricing model. To
the Black-Scholes formula outputs there shall be applied an Annual Turnover
discount as indicated below for the probability that an option holder will not
complete the vesting schedule as outlined, and thus not receive full ownership
of the entire option grant.
<TABLE>
<CAPTION>
Valuation Assumptions
- ---------------------
<S> <C>
Grant Price $_________
Stock Price on
Valuation Date $_________
Grant Date __________
Valuation Date Close of business on day preceding
the Effective Time
Annual Dividend $0.40
Interest Rate 7.00%
Volatility 24.30%
Annual Turnover 7.50%
</TABLE>
<TABLE>
<CAPTION>
Valuation Results
- -----------------
Number of Vesting Current Total Current
Options Date Option Value Value
<S> <C> <C> <C> <C>
Unvested
Unvested
Unvested
Unvested
Total Unvested Value
</TABLE>
-6-
<PAGE>
EXHIBIT 10.9
SEVERANCE AGREEMENT AND RELEASE
-------------------------------
This Severance Agreement and Release (this "Agreement") is entered into as
of July 16, 1995 between Scott Paper Company, a Pennsylvania corporation
("Scott"), Kimberly-Clark Corporation, a Delaware Corporation ("Kimberly-
Clark"), and John P. Murtagh (the "Executive").
WHEREAS, Executive is presently an officer of, and is presently employed by
Scott in the capacity of Senior Vice President-General Counsel and Secretary;
WHEREAS, Kimberly-Clark, Rifle Merger Co. and Scott have entered into an
Agreement and Plan of Merger dated as of July 16, 1995 (the "Merger Agreement"),
pursuant to which Rifle Merger Co. will merge with and into Scott and Scott will
thereby become a wholly-owned subsidiary of Kimberly-Clark;
WHEREAS, as of the Effective Time of the Merger (as such terms are defined
in the Merger Agreement), the Executive will cease to be an officer and employee
of Scott;
WHEREAS, the parties hereto have entered into a Noncompetition Agreement, a
Restricted Stock Exchange Agreement, a Rescission Agreement and a Stock Option
Exchange Agreement (the "Other Agreements") as of the date hereof;
WHEREAS, Scott and the Executive desire to make appropriate arrangements
for the severance of the Executive from Scott and the release by the Executive
of any and all outstanding claims he may have against Scott;
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein, the adequacy and sufficiency of which are hereby acknowledged,
Scott and the Executive hereby agree as follows:
1. Voluntary Act. The Executive hereby represents to Scott that this
-------------
Agreement is entered into voluntarily, and with a full understanding of and
agreement with its terms, for the purpose of receiving additional benefits from
Scott and releasing all claims the Executive may have against Scott and
Kimberly-Clark.
2. Cessation of Employment. The Executive's employment with Scott will
-----------------------
cease as of the Effective Time of the Merger.
3. Additional Benefits. In consideration of the
-------------------
Executive's representations and releases in this Agreement, Scott
<PAGE>
will pay to the Executive, at the Effective Time of the Merger, the sum of
$595,000, plus the difference between $428,000 and the amount of Termination
Bonus paid to the Executive under the letter of employment between the Executive
and Scott dated June 30, 1994, to assist the Executive in making the transition
from his current position to future employment. These benefits are in addition
to the Executive's entitlements under other applicable employee benefit plans of
Scott and compensation for services rendered.
4. Agreements and Acknowledgment. In consideration of the additional
-----------------------------
benefits provided in Section 3 above, and effective as of the Effective Time of
the Merger, the Executive hereby releases and forever discharges Scott and
Kimberly-Clark, their officers, directors, agents, and employees of and from all
actions, causes of action, suits, debts, contracts, promises, damages, claims
and demands, whether known or unknown, asserted or unasserted, including,
without limitation, all rights or claims under the Age Discrimination in
Employment Act, which he or his heirs or assignee, ever had, may have in the
future, or now have, or which his heirs, executors, administrators and assigns
hereafter can, shall or may have, against Scott or Kimberly-Clark, their
officers, directors, agents and employees; provided, however, that nothing
contained herein shall relieve Scott or Kimberly-Clark from any obligation under
(i) this Agreement; (ii) any employee benefit plan, stock option plan or the
like that the officer is a participant in or entitled to the benefits of; (iii)
compensation for services previously provided; or (iv) the Other Agreements.
5. Consultation with Attorney. The Executive represents that he was
--------------------------
advised to consult with an attorney before signing this Agreement, and that he
has consulted with an attorney and/or other persons to the extent the Executive
desired to do so before signing this Agreement.
6. No Representations or Inducements. The Executive agrees that no
---------------------------------
promises, representations or inducements have been made which caused the
Executive to sign this Agreement other than those expressly set forth above.
7. Successors; Binding Agreement. This Agreement shall inure to the
-----------------------------
benefit of and be enforceable by the Executive and by his personal or legal
representatives, executors, administrators, heirs, distributees, devisees and
legatees, and by Scott, and their respective successors and assigns.
8. Notices. All notices and other communications required or permitted
-------
under this Agreement shall be in writing and shall be deemed to have been duly
given when personally delivered, when delivered by courier or overnight express
service or five days after having been sent by certified or registered
-2-
<PAGE>
mail, postage prepaid, addressed (a) if to the Executive, to the Executive's
address set forth in the records of the Company, or if to Scott or Kimberly-
Clark, to Wayne R. Sanders, Chairman of the Board and Chief Executive Officer,
351 Phelps Drive, Irving, Texas 75038, with a copy to O. George Everbach, Senior
Vice President - Law and Government Affairs, 351 Phelps Drive, Irving, Texas
75038, or (b) to such other address as either party may have furnished to the
other party in writing in accordance herewith, except that notices of change of
address shall be effective only upon receipt.
9. Guaranty. Kimberly-Clark hereby guarantees the payment of all amounts
--------
payable by Scott pursuant to this Agreement.
10. Governing Law; Validity. The interpretation, construction and
-----------------------
performance of this Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of Delaware without regard to the
applicable principles of conflicts of laws. The invalidity or unenforceability
of any provision of this Agreement shall not affect the validity or
enforceability of any of the other provisions of this Agreement, which other
provisions shall remain in full force and effect.
11. Review Period. Executive represents that he was given at least forty-
-------------
five (45) days to consider the terms of this Agreement.
12. Revocation. Executive has seven (7) days from the signing of this
----------
Agreement to revoke this Agreement. If Executive does not revoke this Agreement
within seven (7) days of the date of this Agreement, this Agreement will become
final and binding.
13. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument.
14. Miscellaneous. No provision of this Agreement may be modified or
-------------
waived unless such modification or waiver is agreed to in writing and executed
by the Executive and by a duly authorized officer of Scott. No waiver by either
party hereto at any time of any breach by the other party hereto of, or failure
to comply with, any condition or provision of this Agreement to be performed or
complied with by such other party shall be deemed a waiver of any similar or
dissimilar conditions or provisions at the same or at any prior or subsequent
time. Failure by the Executive or Scott to insist upon strict compliance with
any provision of this Agreement or to assert any right which the Executive or
Scott may have hereunder shall not be deemed to be a waiver of such provision or
right or any other provision of or
-3-
<PAGE>
right under this Agreement.
15. Effectiveness. The provisions of Section 2, 3 and 4 hereof shall be
-------------
effective only upon the Effective Time of the Merger and shall be null and void
if the Merger is not consummated.
IN WITNESS WHEREOF, each of Scott and Kimberly-Clark has caused this
Agreement to be executed by its duly authorized officer and the Executive has
executed this Agreement as of the day and year first above written.
Scott Paper Company
By_________________________________
Kimberly-Clark Corporation
By________________________________
Executive
__________________________________
John P. Murtagh
-4-
<PAGE>
EXHIBIT 10.10
SCOTT PAPER COMPANY
150 E. Palmetto Park
Suite 415
Boca Raton, FL 33432
July 16, 1995
Mr. Basil L. Anderson
Vice President - Chief
Financial Officer
Scott Paper Company
150 E. Palmetto Park
Suite 415
Boca Raton, FL 33432
Dear Mr. Anderson:
This letter will advise you that your employment with Scott Paper Company
("Scott") will terminate immediately following the Effective Time. This letter
will acknowledge that under Scott's Termination Pay Plan, your termination of
employment entitles you to receive at the Effective Time the cash payments and
benefits set forth on Schedule A to this letter and that the 28,800 shares of
restricted stock held by you under the Company's 1994 Long Term Incentive Plan
will vest upon the Effective Time.
Terms used in this letter and in Schedule A hereto which are defined in the
Agreement and Plan of Merger among Kimberly-Clark Corporation, a newly formed
Pennsylvania wholly owned subsidiary of Kimberly-Clark Corporation, and Scott,
dated as of July 16, 1995 (the "Merger Agreement"), shall have the meanings set
forth in the Merger Agreement.
Very truly yours,
Scott Paper Company
By:_____________________________
<PAGE>
SCHEDULE A
TO LETTER TO BASIL L. ANDERSON
DATED JULY 16, 1995
The payments set forth below are determined pursuant to the Company's
Termination Pay Plan including a proportionate share of your 1995 Bonus./1/
<TABLE>
<CAPTION>
Description Amount
----------- ------
<S> <C>
Salary $209,000
Termination Bonus $202,400/2/
</TABLE>
- ----------------------
/1/ All amounts payable to Mr. Anderson under Scott's 401(k) plan, savings
plans, retirement plan, deferred compensation plans, and other plans under which
he is a participant, and which are not otherwise referred to in this Schedule,
shall be paid to Mr. Anderson according to their respective terms.
/2/ Assumes an Effective Time of October 19, 1995; such amount will be
appropriately adjusted if the Effective Time is on a date other than October 19,
1995 in accordance with the terms of the Termination Pay Plan.
<PAGE>
EXHIBIT 10.11
STOCK OPTION EXCHANGE AGREEMENT
-------------------------------
This Stock Option Exchange Agreement is entered into as of July 16, 1995
among Scott Paper Company, a Pennsylvania corporation (the "Company"), Kimberly-
Clark Corporation, a Delaware corporation ("Kimberly-Clark"), and Basil L.
Anderson (the "Optionee").
WHEREAS, pursuant to stock option agreements, the Company has granted to
the Optionee options (the "Options") to purchase the number of common shares of
the Company ("Company Common Shares") set forth on Schedule A hereto at the
exercise price or prices set forth opposite such number of Company Common
Shares, giving effect to the two for one stock split of the Company Common
Shares declared on April 18, 1995;
WHEREAS, pursuant to an Amendment to Stock Option Agreement dated as of
February 24, 1995 (the "Stock Option Amendment"), Options which are not
exercisable become immediately exercisable in the event of a change in control
of the Company;
WHEREAS, concurrently herewith, Kimberly-Clark, Rifle Merger Co. and the
Company are entering into an Agreement and Plan of Merger (the "Merger
Agreement"), pursuant to which Rifle Merger Co. is merging (the "Merger") with
and into the Company and the Company is becoming a wholly-owned subsidiary of
Kimberly-Clark;
WHEREAS, pursuant to the terms of the Stock Option Amendment, the Options
designated on Schedule A as unexercisable (the "Unexercisable Options") are to
become exercisable at the Effective Time (as such term is defined in the Merger
Agreement);
WHEREAS, in order for the Merger to be accounted for as a pooling of
interests, the Company and the Optionee desire to rescind the Stock Option
Amendment prior to the Effective Time so that the Unexercisable Options remain
unexercisable at the Effective Time;
WHEREAS, the Company, the Optionee and Kimberly-Clark desire to enter into
this Agreement to provide that at the Effective Time the Unexercisable Options
shall be cancelled and exchanged for shares of common stock of Kimberly-Clark
("Kimberly-Clark Common Stock") having a market value at the Effective Time
equal to the value (the "Unexercisable Option Value") of the Unexercisable
Options, as shall be determined by Hewitt Associates at the time and in the
manner set forth on Schedule B hereto; and
<PAGE>
WHEREAS, in accordance with Section 5.8 of the Merger Agreement, the
Options designated on Schedule A as exercisable at the Effective Time (the
"Exercisable Options") will, at the Effective Time, become options to purchase
shares of Kimberly-Clark Common Stock upon the terms and subject to the
conditions set forth in the Merger Agreement.
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein, the adequacy and sufficiency of which are hereby acknowledged,
the Company, Kimberly-Clark and the Optionee hereby agree as follows:
1. Rescission of Stock Option Amendment. At the Effective Time, the Stock
------------------------------------
Option Amendment shall be rescinded and shall be of no further force or effect
whatsoever.
2. Exchange of Unexercisable Options. At the Effective Time, the
---------------------------------
Unexercisable Options which are outstanding immediately prior to the Effective
Time shall be cancelled and exchanged for the number of shares of Kimberly-Clark
Common Stock, decreased to the nearest whole share, having an aggregate market
value at the Effective Time equal to the Unexercisable Option Value. Kimberly-
Clark shall pay cash to the Optionee in lieu of issuing fractional shares of
Kimberly-Clark Common Stock, unless in the reasonable judgment of Kimberly-
Clark, based on the advice of its independent accountants, such payment would
adversely affect the ability to account for the Merger as a pooling of interests
in accordance with generally accepted accounting principles. For purposes of
this Section 2, the market value of a share of Kimberly-Clark Common Stock at
the Effective Time shall be equal to the closing price of the Kimberly-Clark
Common Stock on the business day next preceding the Effective Time, as reported
in The Wall Street Journal as New York Stock Exchange Composite Transactions.
-----------------------
Kimberly-Clark shall register under the Securities Act of 1933, as amended (the
"Securities Act"), on the appropriate form all shares of Kimberly-Clark Common
Stock issuable pursuant to this Section 2.
3. Exchange of Exercisable Options. In accordance with Section 5.8 of the
-------------------------------
Merger Agreement, at the Effective Time, each Exercisable Option which is
outstanding immediately prior to the Effective Time shall become and represent a
fully exercisable option to purchase the number of shares of Kimberly-Clark
Common Stock (a "Substitute Option"), decreased to the nearest whole share,
determined by multiplying (i) the number of Company Common Shares subject to
such Exercisable Option immediately prior to the Effective Time by (ii) the
Conversion Number (as such term is defined in the Merger Agreement), at an
exercise price per share of Kimberly-Clark Common Stock (increased to the
nearest whole cent) equal to the exercise price per Company Common Share
immediately prior to the Effective Time divided by the Conversion Number.
Kimberly-Clark shall pay cash to the Optionee in lieu of issuing fractional
shares of Kimberly-Clark Common Stock upon the
-2-
<PAGE>
exercise of a Substitute Option unless in the reasonable judgment of Kimberly-
Clark, based on the advice of its independent accountants, such payment would
adversely affect the ability to account for the Merger as a pooling of interests
in accordance with generally accepted accounting principles. After the
Effective Time, except as provided by Section 5.8 of the Merger Agreement, each
Substitute Option shall be exercisable upon the same terms and conditions as
were applicable to the related Exercisable Option immediately prior to the
Effective Time. Kimberly-Clark shall register under the Securities Act on Form
S-8 or another appropriate form all Substitute Options and all shares of
Kimberly-Clark Common Stock issuable pursuant to all Substitute Options.
4. Termination of Agreement. This Agreement shall terminate and shall be
------------------------
of no further force or effect if the Merger Agreement shall be terminated and
the Merger shall not become effective pursuant to the terms thereof.
5. Successors; Binding Agreement. This Agreement shall inure to the
-----------------------------
benefit of and be enforceable by the Optionee and by his personal or legal
representatives, executors, administrators, heirs, distributees, devisees and
legatees and by the Company and Kimberly-Clark and their respective successors
and assigns.
6. Notices. All notices and other communications required or permitted
-------
under this Agreement shall be in writing and shall be deemed to have been duly
given when personally delivered, when delivered by courier or overnight express
service or five days after having been sent by certified or registered mail,
postage prepaid, addressed (a) if to the Optionee, to the Optionee's address set
forth in the records of the Company, or if to the Company or Kimberly-Clark, to
O. George Everbach, Senior Vice President and General Counsel, Kimberly-Clark
Corporation, 351 Phelps Drive, Irving, Texas 75038, with a copy to Thomas A.
Cole, Sidley & Austin, One First National Plaza, Chicago, Illinois 60603, or (b)
to such other address as any party may have furnished to the other parties in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
7. Governing Law; Validity. The interpretation, construction and
-----------------------
performance of this Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of Delaware without regard to the
applicable principles of conflicts of laws. The invalidity or unenforceability
of any provision of this Agreement shall not affect the validity or
enforceability of any of the other provisions of this Agreement, which other
provisions shall remain in full force and effect.
-3-
<PAGE>
8. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument.
9. Miscellaneous. No provision of this Agreement may be modified or
-------------
waived unless such modification or waiver is agreed to in writing and executed
by the Optionee and by a duly authorized officer of the Company and of Kimberly-
Clark. No waiver by any party hereto at any time of any breach by another party
hereto of, or failure to comply with, any condition or provision of this
Agreement to be performed or complied with by such other party shall be deemed a
waiver of any similar or dissimilar conditions or provisions at the same or at
any prior or subsequent time. Failure by the Optionee, the Company or Kimberly-
Clark to insist upon strict compliance with any provision of this Agreement or
to assert any right which the Optionee, the Company or Kimberly-Clark may have
hereunder shall not be deemed to be a waiver of such provision or right or any
other provision of or right under this Agreement.
IN WITNESS WHEREOF, each of the Company and Kimberly-Clark has caused this
Agreement to be executed by its duly authorized officer and the Optionee has
executed this Agreement as of the day and year first above written.
SCOTT PAPER COMPANY
By:
------------------------------------
KIMBERLY-CLARK CORPORATION
By:
------------------------------------
OPTIONEE:
----------------------------------------
-4-
<PAGE>
SCHEDULE A
----------
Schedule of Options
-------------------
Exercisable Options
- ---------------------
<TABLE>
<CAPTION>
Date of Grant Number of Shares Exercise Price
------------- ---------------- --------------
<S> <C> <C>
5/19/87 6,000 17.219
2/16/88 12,000 17.594
2/21/89 8,000 19.813
2/20/90 8,000 21.750
2/19/91 24,000 22.969
2/18/92 12,000 21.750
2/16/93 9,000 19.281
2/15/94 7,500 22.500
9/16/94 200,000 31.875
</TABLE>
Unexercisable Options
- ---------------------
<TABLE>
<CAPTION>
Date of Grant Date of Vesting Number of Shares Exercise Price
- ------------- --------------- ---------------- --------------
<S> <C> <C> <C>
2/15/94 2/15/96 7,500 22.500
</TABLE>
<PAGE>
SCHEDULE B
----------
Determination of Unexercisable Option Value
-------------------------------------------
by Hewitt Associates
--------------------
Valuation Methodology
- ---------------------
Calculations will be based on the Black-Scholes option pricing model.
To the Black-Scholes formula outputs there shall be applied an Annual Turnover
discount as indicated below for the probability that an option holder will not
complete the vesting schedule as outlined, and thus not receive full ownership
of the entire option grant.
Valuation Assumptions
- ---------------------
<TABLE>
<S> <C>
Grant Price $_________
Stock Price on
Valuation Date $_________
Grant Date __________
Valuation Date Close of business on day preceding the Effective
Time
Annual Dividend $0.40
Interest Rate 7.00%
Volatility 24.30%
Annual Turnover 7.50%
</TABLE>
Valuation Results
- -----------------
<TABLE>
<CAPTION>
Number of Vesting Current Total Current
Options Date Option Value Value
<S> <C> <C> <C> <C>
Unvested
Unvested
Unvested
Unvested
Total Unvested Value
</TABLE>
<PAGE>
EXHIBIT 10.12
SEVERANCE AGREEMENT AND RELEASE
-------------------------------
This Severance Agreement and Release (this "Agreement") is entered into as
of July 16, 1995 between Scott Paper Company, a Pennsylvania corporation
("Scott"), Kimberly-Clark Corporation, a Delaware Corporation ("Kimberly-
Clark"), and Basil L. Anderson (the "Executive").
WHEREAS, Executive is presently an officer of, and is presently employed by
Scott in the capacity of Vice President-Treasurer and Chief Financial Officer;
WHEREAS, Kimberly-Clark, Rifle Merger Co. and Scott have entered into an
Agreement and Plan of Merger dated as of July 16, 1995 (the "Merger Agreement"),
pursuant to which Rifle Merger Co. will merge with and into Scott and Scott will
thereby become a wholly-owned subsidiary of Kimberly-Clark;
WHEREAS, the parties hereto have entered into a Noncompetition Agreement, a
Restricted Stock Exchange Agreement, a Rescission Agreement and a Stock Option
Exchange Agreement (the "Other Agreements") as of the date hereof;
WHEREAS, as of the Effective Time of the Merger (as such terms are defined
in the Merger Agreement), the Executive will cease to be an officer and employee
of Scott;
WHEREAS, Scott and the Executive desire to make appropriate arrangements
for the severance of the Executive from Scott and the release by the Executive
of any and all outstanding claims he may have against Scott;
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein, the adequacy and sufficiency of which are hereby acknowledged,
Scott and the Executive hereby agree as follows:
1. Voluntary Act. The Executive hereby represents to Scott that this
-------------
Agreement is entered into voluntarily, and with a full understanding of and
agreement with its terms, for the purpose of receiving additional benefits from
Scott and releasing all claims the Executive may have against Scott and
Kimberly-Clark.
2. Cessation of Employment. The Executive's employment with Scott will
-----------------------
cease as of the Effective Time of the Merger.
3. Additional Benefits. In consideration of the Executive's
-------------------
representations and releases in this Agreement, Scott
<PAGE>
will pay to the Executive, at the Effective Time of the Merger, the sum of
$621,000, plus the difference between $418,000 and the amount of Termination
Bonus paid to the Executive pursuant to the letter delivered to the Executive of
even date to assist the Executive in making the transition from his current
position to future employment. These benefits are in addition to the
Executive's entitlements under other applicable employee benefit plans of Scott
and compensation for services rendered.
4. Agreements and Acknowledgment. In consideration of the additional
-----------------------------
benefits provided in Section 3 above, and effective as of the Effective Time of
the Merger, the Executive hereby releases and forever discharges Scott and
Kimberly-Clark, their officers, directors, agents, and employees of and from all
actions, causes of action, suits, debts, contracts, promises, damages, claims
and demands, whether known or unknown, asserted or unasserted, including,
without limitation, all rights or claims under the Age Discrimination in
Employment Act, which he or his heirs or assignee, ever had, may have in the
future, or now have, or which his heirs, executors, administrators and assigns
hereafter can, shall or may have, against Scott or Kimberly-Clark, their
officers, directors, agents and employees; provided, however, that nothing
contained herein shall relieve Scott or Kimberly-Clark from any obligation under
(i) this Agreement; (ii) any employee benefit plan, stock option plan or the
like that the officer is a participant in or entitled to the benefits of; (iii)
compensation for services previously provided; or (iv) the Other Agreements.
5. Consultation with Attorney. The Executive represents that he was
--------------------------
advised to consult with an attorney before signing this Agreement, and that he
has consulted with an attorney and/or other persons to the extent the Executive
desired to do so before signing this Agreement.
6. No Representations or Inducements. The Executive agrees that no
---------------------------------
promises, representations or inducements have been made which caused the
Executive to sign this Agreement other than those expressly set forth above.
7. Successors; Binding Agreement. This Agreement shall inure to the
-----------------------------
benefit of and be enforceable by the Executive and by his personal or legal
representatives, executors, administrators, heirs, distributees, devisees and
legatees, and by Scott, and their respective successors and assigns.
8. Notices. All notices and other communications required or permitted
-------
under this Agreement shall be in writing and shall be deemed to have been duly
given when personally delivered, when delivered by courier or overnight express
service or five days after having been sent by certified or registered mail,
postage prepaid, addressed (a) if to the Executive, to the
-2-
<PAGE>
Executive's address set forth in the records of the Company, or if to Scott or
Kimberly-Clark, to Wayne R. Sanders, Chairman of the Board and Chief Executive
Officer, 351 Phelps Drive, Irving, Texas 75038, with a copy to O. George
Everbach, Senior Vice President - Law and Government Affairs, 351 Phelps Drive,
Irving, Texas 75038, or (b) to such other address as either party may have
furnished to the other party in writing in accordance herewith, except that
notices of change of address shall be effective only upon receipt.
9. Guaranty. Kimberly-Clark hereby guarantees the payment of all amounts
--------
payable by Scott pursuant to this Agreement.
10. Governing Law; Validity. The interpretation, construction and
-----------------------
performance of this Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of Delaware without regard to the
applicable principles of conflicts of laws. The invalidity or unenforceability
of any provision of this Agreement shall not affect the validity or
enforceability of any of the other provisions of this Agreement, which other
provisions shall remain in full force and effect.
11. Review Period. Executive represents that he was given at least forty-
-------------
five (45) days to consider the terms of this Agreement.
12. Revocation. Executive has seven (7) days from the signing of this
----------
Agreement to revoke this Agreement. If Executive does not revoke this Agreement
within seven (7) days of the date of this Agreement, this Agreement will become
final and binding.
13. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument.
14. Miscellaneous. No provision of this Agreement may be modified or
-------------
waived unless such modification or waiver is agreed to in writing and executed
by the Executive and by a duly authorized officer of Scott. No waiver by either
party hereto at any time of any breach by the other party hereto of, or failure
to comply with, any condition or provision of this Agreement to be performed or
complied with by such other party shall be deemed a waiver of any similar or
dissimilar conditions or provisions at the same or at any prior or subsequent
time. Failure by the Executive or Scott to insist upon strict compliance with
any provision of this Agreement or to assert any right which the Executive or
Scott may have hereunder shall not be deemed to be a waiver of such provision or
right or any other provision of or right under this Agreement.
-3-
<PAGE>
15. Effectiveness. The provisions of Section 2, 3 and 4 hereof shall be
-------------
effective only upon the Effective Time of the Merger and shall be null and void
if the Merger is not consummated.
IN WITNESS WHEREOF, each of Scott and Kimberly-Clark has caused this
Agreement to be executed by its duly authorized officer and the Executive has
executed this Agreement as of the day and year first above written.
Scott Paper Company
By_________________________________
Kimberly-Clark Corporation
By________________________________
Executive
__________________________________
Basil L. Anderson
-4-
<PAGE>
EXHIBIT 10.13
RESTRICTED STOCK EXCHANGE AGREEMENT
-----------------------------------
This Restricted Stock Exchange Agreement is entered into as of July 16,
1995 among Scott Paper Company, a Pennsylvania corporation (the "Company"),
Kimberly-Clark Corporation, a Delaware corporation ("Kimberly-Clark"), and Basil
L. Anderson (the "Grantee").
WHEREAS, pursuant to restricted stock agreements, the Company has granted
to the Grantee shares of restricted stock of the Company ("Restricted Stock");
WHEREAS, pursuant to an Amendment to Restricted Stock Agreement dated
January 17, 1995 (the "Restricted Stock Amendment"), shares of Restricted Stock
which are not vested become immediately vested in the event of a change in
control of the Company;
WHEREAS, concurrently herewith, Kimberly-Clark, Rifle Merger Co. and the
Company are entering into an Agreement and Plan of Merger (the "Merger
Agreement"), pursuant to which Rifle Merger Co. is merging (the "Merger") with
and into the Company and the Company is becoming a wholly-owned subsidiary of
Kimberly-Clark;
WHEREAS, pursuant to the terms of the Restricted Stock Amendment, the
shares of Restricted Stock designated on Schedule A as unvested (the "Unvested
Restricted Stock"), giving effect to the two for one stock split of the Company
Common Shares declared on April 18, 1995, are to become vested at the Effective
Time (as such term is defined in the Merger Agreement);
WHEREAS, in order for the Merger to be accounted for as a pooling of
interests, the Company and the Grantee desire to rescind the Restricted Stock
Amendment prior to the Effective Time so that the shares of Unvested Restricted
Stock remain unvested at the Effective Time; and
WHEREAS, the Company, the Grantee and Kimberly-Clark desire to enter into
this Agreement to provide that at the Effective Time the shares of Unvested
Restricted Stock shall be cancelled and exchanged for shares of common stock of
Kimberly-Clark ("Kimberly-Clark Common Stock") having a market value at the
Effective Time equal to the value (the "Unvested Restricted Stock Value") of the
Unvested Restricted Stock, as shall be determined by Hewitt Associates in the
manner set forth on Schedule B hereto as of the Effective Time.
-1-
<PAGE>
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein, the adequacy and sufficiency of which are hereby acknowledged,
the Company, Kimberly-Clark and the Optionee hereby agree as follows:
1. Rescission of Restricted Stock Amendment. At the Effective Time, the
----------------------------------------
Restricted Stock Amendment shall be rescinded and shall be of no further force
or effect whatsoever.
2. Exchange of Unvested Restricted Stock. At the Effective Time, the
-------------------------------------
shares of Unvested Restricted Stock which are outstanding immediately prior to
the Effective Time shall be cancelled and exchanged for the number of shares of
Kimberly-Clark Common Stock, decreased to the nearest whole share, having an
aggregate market value at the Effective Time equal to the Unvested Restricted
Stock Value. Kimberly-Clark shall pay cash to the Grantee in lieu of issuing
fractional shares of Kimberly-Clark Common Stock, unless in the reasonable
judgment of Kimberly-Clark, based on the advice of its independent accountants,
such payment would adversely affect the ability to account for the Merger as a
pooling of interests in accordance with generally accepted accounting
principles. For purposes of this Section 2, the market value of a share of
Kimberly-Clark Common Stock at the Effective Time shall be equal to the closing
price of the Kimberly-Clark Common Stock on the business day next preceding the
Effective Time, as reported in The Wall Street Journal as New York Stock
-----------------------
Exchange Composite Transactions. Kimberly-Clark shall register under the
Securities Act of 1933, as amended (the "Securities Act"), on the appropriate
form all shares of Kimberly-Clark Common Stock issuable pursuant to this Section
2.
3. Termination of Agreement. This Agreement shall terminate and shall be
------------------------
of no further force or effect if the Merger Agreement shall be terminated and
the Merger shall not become effective pursuant to the terms thereof.
4. Successors; Binding Agreement. This Agreement shall inure to the
-----------------------------
benefit of and be enforceable by the Grantee and by his personal or legal
representatives, executors, administrators, heirs, distributees, devisees and
legatees and by the Company and Kimberly-Clark and their respective successors
and assigns.
5. Notices. All notices and other communications required or permitted
-------
under this Agreement shall be in writing and shall be deemed to have been duly
given when personally delivered, when delivered by courier or overnight express
service or five days after having been sent by certified or registered mail,
postage prepaid, addressed (a) if to the Grantee, to the Grantee's address set
forth in the records of the Company, or if to the Company or Kimberly-Clark, to
O. George Everbach, Senior Vice President and General Counsel, Kimberly-Clark
Corporation,
-2-
<PAGE>
351 Phelps Drive, Irving, Texas 75038, with a copy to Thomas A. Cole, Sidley &
Austin, One First National Plaza, Chicago, Illinois 60603, or (b) to such other
address as any party may have furnished to the other parties in writing in
accordance herewith, except that notices of change of address shall be effective
only upon receipt.
6. Governing Law; Validity. The interpretation, construction and
-----------------------
performance of this Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of Delaware without regard to the
applicable principles of conflicts of laws. The invalidity or unenforceability
of any provision of this Agreement shall not affect the validity or
enforceability of any of the other provisions of this Agreement, which other
provisions shall remain in full force and effect.
7. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument.
8. Miscellaneous. No provision of this Agreement may be modified or
-------------
waived unless such modification or waiver is agreed to in writing and executed
by the Grantee and by a duly authorized officer of the Company and of Kimberly-
Clark. No waiver by any party hereto at any time of any breach by another party
hereto of, or failure to comply with, any condition or provision of this
Agreement to be performed or complied with by such other party shall be deemed a
waiver of any similar or dissimilar conditions or provisions at the same or at
any prior or subsequent time. Failure by the Grantee, the Company or Kimberly-
Clark to insist upon strict compliance with any provision of this Agreement or
to assert any right which the Grantee, the Company or Kimberly-Clark may have
hereunder shall not be deemed to be a waiver of such provision or right or any
other provision of or right under this Agreement.
-3-
<PAGE>
IN WITNESS WHEREOF, each of the Company and Kimberly-Clark has caused this
Agreement to be executed by its duly authorized officer and the Grantee has
executed this Agreement as of the day and year first above written.
SCOTT PAPER COMPANY
By:
---------------------------
KIMBERLY-CLARK CORPORATION
By:
---------------------------
GRANTEE:
--------------------------------
Basil L. Anderson
-4-
<PAGE>
SCHEDULE A
----------
Schedule of Unvested Restricted Stock
-------------------------------------
<TABLE>
<CAPTION>
Date of Grant Number of Shares Vesting Date
- --------------- ---------------- ------------
<S> <C> <C>
2/16/93 3,000 2/16/96
3/15/94 10,000 3/15/97
</TABLE>
<PAGE>
SCHEDULE B
----------
Determination of Unvested Restricted Stock Value
------------------------------------------------
by Hewitt Associates
--------------------
Valuation Methodology
- ---------------------
Calculations will be based on the market price of the Scott stock as of the
close of business on the day preceding the Effective Time. To this market price
will be applied an Annual Turnover discount as indicated below for the
probability that a holder of Restricted Stock will not complete the vesting
schedule as outlined, and thus not receive full ownership of the entire grant
share.
Valuation Assumptions
- ---------------------
Stock Price on Valuation Date $_________
Grant Date __________
Valuation Date Close of business on day preceding
the Effective Time
Annual Turnover 7.50%
Dividends Paid during restriction period on a
current basis.
Valuation Results
- -----------------
Number of Unvested Shares __________
Vesting Date __________
Per Share Value __________
Total Unvested Value __________ (Number of Shares x Per
Share Value)
<PAGE>
EXHIBIT 10.14
SCOTT PAPER COMPANY
150 E. Palmetto Park
Suite 415
Boca Raton, FL 33432
July 16, 1995
Mr. Russell A. Kersh
Senior Vice President -
Finance and Administration
Scott Paper Company
150 E. Palmetto Park
Suite 415
Boca Raton, FL 33432
Dear Mr. Kersh:
This letter will advise you that your employment with Scott Paper Company
("Scott") will terminate immediately following the Effective Time. This letter
will acknowledge that under your letter agreement of employment with Scott dated
June 30, 1994, your termination of employment entitles you to receive at the
Effective Time the cash payments and benefits set forth on Schedule A to this
letter and that the 48,000 shares of restricted stock held by you under the
Company's 1994 Long Term Incentive Plan will vest upon the Effective Time.
Terms used in this letter and in Schedule A hereto which are defined in the
Agreement and Plan of Merger among Kimberly-Clark Corporation, a newly formed
Pennsylvania wholly owned subsidiary of Kimberly-Clark Corporation, and Scott,
dated as of July 16, 1995 (the "Merger Agreement"), shall have the meanings set
forth in the Merger Agreement.
Very truly yours,
Scott Paper Company
By:
-----------------------------
<PAGE>
SCHEDULE A
TO LETTER TO RUSSELL A. KERSH
DATED JULY 16, 1995
The payments set forth below are determined pursuant to the letter agreement of
employment between Russell A. Kersh and Scott Paper Company ("Scott") dated as
of June 30, 1994 (the "Employment Agreement")./1/
<TABLE>
<CAPTION>
Description Amount
----------- ------
<S> <C>
Salary $316,000
Termination Bonus $258,400/2/
</TABLE>
- ----------------------
/1/ All amounts payable to Mr. Kersh under Scott's 401(k) plan, savings plans,
retirement plan, deferred compensation plans, and other plans under which he is
a participant, and which are not otherwise referred to in this Schedule, shall
be paid to Mr. Kersh according to their respective terms.
/2/ Assumes an Effective Time of October 19, 1995; such amount will be
appropriately adjusted if the Effective Time is on a date other than October 19,
1995 in accordance with the terms of the Employment Agreement.
<PAGE>
EXHIBIT 10.15
STOCK OPTION EXCHANGE AGREEMENT
-------------------------------
This Stock Option Exchange Agreement is entered into as of July 16, 1995
among Scott Paper Company, a Pennsylvania corporation (the "Company"), Kimberly-
Clark Corporation, a Delaware corporation ("Kimberly-Clark"), and Russell A.
Kersh (the "Optionee").
WHEREAS, pursuant to stock option agreements, the Company has granted to
the Optionee options (the "Options") to purchase the number of common shares of
the Company ("Company Common Shares") set forth on Schedule A hereto at the
exercise price or prices set forth opposite such number of Company Common
Shares, giving effect to the two for one stock split of the Company Common
Shares declared on April 18, 1995;
WHEREAS, pursuant to an Amendment to Stock Option Agreement dated as of
February 24, 1995 (the "Stock Option Amendment"), Options which are not
exercisable become immediately exercisable in the event of a change in control
of the Company;
WHEREAS, concurrently herewith, Kimberly-Clark, Rifle Merger Co. and the
Company are entering into an Agreement and Plan of Merger (the "Merger
Agreement"), pursuant to which Rifle Merger Co. is merging (the "Merger") with
and into the Company and the Company is becoming a wholly-owned subsidiary of
Kimberly-Clark;
WHEREAS, pursuant to the terms of the Stock Option Amendment, the Options
designated on Schedule A as unexercisable (the "Unexercisable Options") are to
become exercisable at the Effective Time (as such term is defined in the Merger
Agreement);
WHEREAS, in order for the Merger to be accounted for as a pooling of
interests, the Company and the Optionee desire to rescind the Stock Option
Amendment prior to the Effective Time so that the Unexercisable Options remain
unexercisable at the Effective Time;
WHEREAS, the Company, the Optionee and Kimberly-Clark desire to enter into
this Agreement to provide that at the Effective Time the Unexercisable Options
shall be cancelled and exchanged for shares of common stock of Kimberly-Clark
("Kimberly-Clark Common Stock") having a market value at the Effective Time
equal to the value (the "Unexercisable Option Value") of the Unexercisable
Options, as shall be determined by Hewitt Associates at the time and in the
manner set forth on Schedule B hereto; and
<PAGE>
WHEREAS, in accordance with Section 5.8 of the Merger Agreement, the
Options designated on Schedule A as exercisable at the Effective Time (the
"Exercisable Options") will, at the Effective Time, become options to purchase
shares of Kimberly-Clark Common Stock upon the terms and subject to the
conditions set forth in the Merger Agreement.
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein, the adequacy and sufficiency of which are hereby acknowledged,
the Company, Kimberly-Clark and the Optionee hereby agree as follows:
1. Rescission of Stock Option Amendment. At the Effective Time, the Stock
------------------------------------
Option Amendment shall be rescinded and shall be of no further force or effect
whatsoever.
2. Exchange of Unexercisable Options. At the Effective Time, the
---------------------------------
Unexercisable Options which are outstanding immediately prior to the Effective
Time shall be cancelled and exchanged for the number of shares of Kimberly-Clark
Common Stock, decreased to the nearest whole share, having an aggregate market
value at the Effective Time equal to the Unexercisable Option Value. Kimberly-
Clark shall pay cash to the Optionee in lieu of issuing fractional shares of
Kimberly-Clark Common Stock, unless in the reasonable judgment of Kimberly-
Clark, based on the advice of its independent accountants, such payment would
adversely affect the ability to account for the Merger as a pooling of interests
in accordance with generally accepted accounting principles. For purposes of
this Section 2, the market value of a share of Kimberly-Clark Common Stock at
the Effective Time shall be equal to the closing price of the Kimberly-Clark
Common Stock on the business day next preceding the Effective Time, as reported
in The Wall Street Journal as New York Stock Exchange Composite Transactions.
-----------------------
Kimberly-Clark shall register under the Securities Act of 1933, as amended (the
"Securities Act"), on the appropriate form all shares of Kimberly-Clark Common
Stock issuable pursuant to this Section 2.
3. Exchange of Exercisable Options. In accordance with Section 5.8 of the
-------------------------------
Merger Agreement, at the Effective Time, each Exercisable Option which is
outstanding immediately prior to the Effective Time shall become and represent a
fully exercisable option to purchase the number of shares of Kimberly-Clark
Common Stock (a "Substitute Option"), decreased to the nearest whole share,
determined by multiplying (i) the number of Company Common Shares subject to
such Exercisable Option immediately prior to the Effective Time by (ii) the
Conversion Number (as such term is defined in the Merger Agreement), at an
exercise price per share of Kimberly-Clark Common Stock (increased to the
nearest whole cent) equal to the exercise price per Company Common Share
immediately prior to the Effective Time divided by the Conversion Number.
Kimberly-Clark shall pay cash to the Optionee in lieu of issuing fractional
shares of Kimberly-Clark Common Stock upon the
-2-
<PAGE>
exercise of a Substitute Option unless in the reasonable judgment of Kimberly-
Clark, based on the advice of its independent accountants, such payment would
adversely affect the ability to account for the Merger as a pooling of interests
in accordance with generally accepted accounting principles. After the Effective
Time, except as provided by Section 5.8 of the Merger Agreement, each Substitute
Option shall be exercisable upon the same terms and conditions as were
applicable to the related Exercisable Option immediately prior to the Effective
Time. Kimberly-Clark shall register under the Securities Act on Form S-8 or
another appropriate form all Substitute Options and all shares of Kimberly-Clark
Common Stock issuable pursuant to all Substitute Options.
4. Termination of Agreement. This Agreement shall terminate and shall be
------------------------
of no further force or effect if the Merger Agreement shall be terminated and
the Merger shall not become effective pursuant to the terms thereof.
5. Successors; Binding Agreement. This Agreement shall inure to the
-----------------------------
benefit of and be enforceable by the Optionee and by his personal or legal
representatives, executors, administrators, heirs, distributees, devisees and
legatees and by the Company and Kimberly-Clark and their respective successors
and assigns.
6. Notices. All notices and other communications required or permitted
-------
under this Agreement shall be in writing and shall be deemed to have been duly
given when personally delivered, when delivered by courier or overnight express
service or five days after having been sent by certified or registered mail,
postage prepaid, addressed (a) if to the Optionee, to the Optionee's address set
forth in the records of the Company, or if to the Company or Kimberly-Clark, to
O. George Everbach, Senior Vice President and General Counsel, Kimberly-Clark
Corporation, 351 Phelps Drive, Irving, Texas 75038, with a copy to Thomas A.
Cole, Sidley & Austin, One First National Plaza, Chicago, Illinois 60603, or (b)
to such other address as any party may have furnished to the other parties in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
7. Governing Law; Validity. The interpretation, construction and
-----------------------
performance of this Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of Delaware without regard to the
applicable principles of conflicts of laws. The invalidity or unenforceability
of any provision of this Agreement shall not affect the validity or
enforceability of any of the other provisions of this Agreement, which other
provisions shall remain in full force and effect.
-3-
<PAGE>
8. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument.
9. Miscellaneous. No provision of this Agreement may be modified or
-------------
waived unless such modification or waiver is agreed to in writing and executed
by the Optionee and by a duly authorized officer of the Company and of Kimberly-
Clark. No waiver by any party hereto at any time of any breach by another party
hereto of, or failure to comply with, any condition or provision of this
Agreement to be performed or complied with by such other party shall be deemed a
waiver of any similar or dissimilar conditions or provisions at the same or at
any prior or subsequent time. Failure by the Optionee, the Company or Kimberly-
Clark to insist upon strict compliance with any provision of this Agreement or
to assert any right which the Optionee, the Company or Kimberly-Clark may have
hereunder shall not be deemed to be a waiver of such provision or right or any
other provision of or right under this Agreement.
IN WITNESS WHEREOF, each of the Company and Kimberly-Clark has caused this
Agreement to be executed by its duly authorized officer and the Optionee has
executed this Agreement as of the day and year first above written.
SCOTT PAPER COMPANY
By:
------------------------------------
KIMBERLY-CLARK CORPORATION
By:
------------------------------------
OPTIONEE:
----------------------------------------
-4-
<PAGE>
SCHEDULE A
----------
Schedule of Options
-------------------
Exercisable Options
- ---------------------
<TABLE>
<CAPTION>
Date of Grant Number of Shares Exercise Price
------------- ---------------- --------------
<S> <C> <C>
6/13/94 20,000 24.938
9/16/94 300,000 31.875
</TABLE>
Unexercisable Options
- ---------------------
<TABLE>
<CAPTION>
Date of Date of
Grant Vesting Number of Shares Exercise Price
- ------- ------- ---------------- --------------
<S> <C> <C> <C>
6/13/94 6/13/96 20,000 24.938
</TABLE>
<PAGE>
SCHEDULE B
----------
Determination of Unexercisable Option Value
-------------------------------------------
by Hewitt Associates
--------------------
Valuation Methodology
- ---------------------
Calculations will be based on the Black-Scholes option pricing model.
To the Black-Scholes formula outputs there shall be applied an Annual Turnover
discount as indicated below for the probability that an option holder will not
complete the vesting schedule as outlined, and thus not receive full ownership
of the entire option grant.
Valuation Assumptions
- ---------------------
<TABLE>
<S> <C>
Grant Price $_________
Stock Price on
Valuation Date $_________
Grant Date __________
Valuation Date Close of business on day preceding
the Effective Time
Annual Dividend $0.40
Interest Rate 7.00%
Volatility 24.30%
Annual Turnover 7.50%
</TABLE>
Valuation Results
- -----------------
<TABLE>
<CAPTION>
Number of Vesting Current Total Current
Options Date Option Value Value
<S> <C> <C> <C> <C>
Unvested
Unvested
Unvested
Unvested
Total Unvested Value
</TABLE>
<PAGE>
EXHIBIT 10.16
SEVERANCE AGREEMENT AND RELEASE
-------------------------------
This Severance Agreement and Release (this "Agreement") is entered into as
of July 16, 1995 between Scott Paper Company, a Pennsylvania corporation
("Scott"), Kimberly-Clark Corporation, a Delaware Corporation ("Kimberly-
Clark"), and Russell A. Kersh (the "Executive").
WHEREAS, Executive is presently an officer of, and is presently employed by
Scott in the capacity of Senior Vice President-Finance and Administration;
WHEREAS, Kimberly-Clark, Rifle Merger Co. and Scott have entered into an
Agreement and Plan of Merger dated as of July 16, 1995 (the "Merger Agreement"),
pursuant to which Rifle Merger Co. will merge with and into Scott and Scott will
thereby become a wholly-owned subsidiary of Kimberly-Clark;
WHEREAS, as of the Effective Time of the Merger (as such terms are defined
in the Merger Agreement), the Executive will cease to be an officer and employee
of Scott;
WHEREAS, the parties hereto have entered into a Noncompetition Agreement, a
Restricted Stock Exchange Agreement, a Rescission Agreement and a Stock Option
Exchange Agreement (the "Other Agreements") as of the date hereof;
WHEREAS, Scott and the Executive desire to make appropriate arrangements
for the severance of the Executive from Scott and the release by the Executive
of any and all outstanding claims he may have against Scott;
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein, the adequacy and sufficiency of which are hereby acknowledged,
Scott and the Executive hereby agree as follows:
1. Voluntary Act. The Executive hereby represents to Scott that this
-------------
Agreement is entered into voluntarily, and with a full understanding of and
agreement with its terms, for the purpose of receiving additional benefits from
Scott and releasing all claims the Executive may have against Scott and
Kimberly-Clark.
2. Cessation of Employment. The Executive's employment with Scott will
-----------------------
cease as of the Effective Time of the Merger.
3. Additional Benefits. In consideration of the Executive's
-------------------
representations and releases in this Agreement, Scott
-1-
<PAGE>
will pay to the Executive, at the Effective Time of the Merger, the sum of
$815,000 plus the difference between $632,000 and the amount of Termination
Bonus paid to the Executive under the letter of employment between the Executive
and Scott dated June 30, 1994, to assist the Executive in making the transition
from his current position to future employment. These benefits are in addition
to the Executive's entitlements under other applicable employee benefit plans of
Scott and compensation for services rendered.
4. Agreements and Acknowledgment. In consideration of the additional
-----------------------------
benefits provided in Section 3 above, and effective as of the Effective Time of
the Merger, the Executive hereby releases and forever discharges Scott and
Kimberly-Clark, their officers, directors, agents, and employees of and from all
actions, causes of action, suits, debts, contracts, promises, damages, claims
and demands, whether known or unknown, asserted or unasserted, including,
without limitation, all rights or claims under the Age Discrimination in
Employment Act, which he or his heirs or assignee, ever had, may have in the
future, or now have, or which his heirs, executors, administrators and assigns
hereafter can, shall or may have, against Scott or Kimberly-Clark, their
officers, directors, agents and employees; provided, however, that nothing
contained herein shall relieve Scott or Kimberly-Clark from any obligation under
(i) this Agreement; (ii) any employee benefit plan, stock option plan or the
like that the officer is a participant in or entitled to the benefits of; (iii)
compensation for services previously provided; or (iv) the Other Agreements.
5. Consultation with Attorney. The Executive represents that he was
--------------------------
advised to consult with an attorney before signing this Agreement, and that he
has consulted with an attorney and/or other persons to the extent the Executive
desired to do so before signing this Agreement.
6. No Representations or Inducements. The Executive agrees that no
---------------------------------
promises, representations or inducements have been made which caused the
Executive to sign this Agreement other than those expressly set forth above.
7. Successors; Binding Agreement. This Agreement shall inure to the
-----------------------------
benefit of and be enforceable by the Executive and by his personal or legal
representatives, executors, administrators, heirs, distributees, devisees and
legatees, and by Scott, and their respective successors and assigns.
8. Notices. All notices and other communications required or permitted
-------
under this Agreement shall be in writing and shall be deemed to have been duly
given when personally delivered, when delivered by courier or overnight express
service or five days after having been sent by certified or registered
-2-
<PAGE>
mail, postage prepaid, addressed (a) if to the Executive, to the Executive's
address set forth in the records of the Company, or if to Scott or Kimberly-
Clark, to Wayne R. Sanders, Chairman of the Board and Chief Executive Officer,
351 Phelps Drive, Irving, Texas 75038, with a copy to O. George Everbach, Senior
Vice President - Law and Government Affairs, 351 Phelps Drive, Irving, Texas
75038, or (b) to such other address as either party may have furnished to the
other party in writing in accordance herewith, except that notices of change of
address shall be effective only upon receipt.
9. Guaranty. Kimberly-Clark hereby guarantees the payment of all amounts
--------
payable by Scott pursuant to this Agreement.
10. Governing Law; Validity. The interpretation, construction and
-----------------------
performance of this Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of Delaware without regard to the
applicable principles of conflicts of laws. The invalidity or unenforceability
of any provision of this Agreement shall not affect the validity or
enforceability of any of the other provisions of this Agreement, which other
provisions shall remain in full force and effect.
11. Review Period. Executive represents that he was given at least forty-
-------------
five (45) days to consider the terms of this Agreement.
12. Revocation. Executive has seven (7) days from the signing of this
----------
Agreement to revoke this Agreement. If Executive does not revoke this Agreement
within seven (7) days of the date of this Agreement, this Agreement will become
final and binding.
13. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument.
14. Miscellaneous. No provision of this Agreement may be modified or
-------------
waived unless such modification or waiver is agreed to in writing and executed
by the Executive and by a duly authorized officer of Scott. No waiver by either
party hereto at any time of any breach by the other party hereto of, or failure
to comply with, any condition or provision of this Agreement to be performed or
complied with by such other party shall be deemed a waiver of any similar or
dissimilar conditions or provisions at the same or at any prior or subsequent
time. Failure by the Executive or Scott to insist upon strict compliance with
any provision of this Agreement or to assert any right which the Executive or
Scott may have hereunder shall not be deemed to be a waiver of such provision or
right or any other provision of or
-3-
<PAGE>
right under this Agreement.
15. Effectiveness. The provisions of Section 2, 3 and 4 hereof shall be
-------------
effective only upon the Effective Time of the Merger and shall be null and void
if the Merger is not consummated.
IN WITNESS WHEREOF, each of Scott and Kimberly-Clark has caused this
Agreement to be executed by its duly authorized officer and the Executive has
executed this Agreement as of the day and year first above written.
Scott Paper Company
By
---------------------------------
Kimberly-Clark Corporation
By
--------------------------------
Executive
----------------------------------
Russell A. Kersh
-4-
<PAGE>
EXHIBIT 10.17
SCOTT PAPER COMPANY
150 E. Palmetto Park
Suite 415
Boca Raton, FL 33432
July 16, 1995
Mr. Richard R. Nicolosi
Senior Vice President -
Consumer Products
Scott Paper Company
150 E. Palmetto Park
Suite 415
Boca Raton, FL 33432
Dear Mr. Nicolosi:
This letter will advise you that your employment with Scott Paper Company
("Scott") will terminate immediately following the Effective Time. This letter
will acknowledge that under your letter agreement of employment with Scott dated
September 15, 1994, your termination of employment entitles you to receive at
the Effective Time the cash payments and benefits set forth on Schedule A to
this letter and that the 48,000 shares of restricted stock held by you under the
Company's 1994 Long Term Incentive Plan will vest upon the Effective Time.
Terms used in this letter and in Schedule A hereto which are defined in the
Agreement and Plan of Merger among Kimberly-Clark Corporation, a newly formed
Pennsylvania wholly owned subsidiary of Kimberly-Clark Corporation, and Scott,
dated as of July 16, 1995 (the "Merger Agreement"), shall have the meanings set
forth in the Merger Agreement.
Very truly yours,
Scott Paper Company
By:
-----------------------------
<PAGE>
SCHEDULE A
TO LETTER TO RICHARD R. NICOLOSI
DATED JULY 16, 1995
The payments set forth below are determined pursuant to the letter agreement of
employment between Richard R. Nicolosi and Scott Paper Company ("Scott") dated
September 15, 1994, (the "Employment Agreement")./1/
<TABLE>
<CAPTION>
Description Amount
----------- ------
<S> <C>
Salary $350,000
Termination Bonus $306,250/2/
</TABLE>
- ----------------------------
/1/ All amounts payable to Mr. Nicolosi under Scott's 401(k) plan, savings
plans, retirement plan, deferred compensation plans, and other plans under which
he is a participant, and which are not otherwise referred to in this Schedule,
shall be paid to Mr. Nicolosi according to their respective terms.
/2/ Assumes an Effective Time of October 19, 1995; such amount will be
appropriately adjusted if the Effective Time is on a date other than October 19,
1995 in accordance with the terms of the Employment Agreement.
<PAGE>
EXHIBIT 10.18
STOCK OPTION EXCHANGE AGREEMENT
-------------------------------
This Stock Option Exchange Agreement is entered into as of July 16, 1995
among Scott Paper Company, a Pennsylvania corporation (the "Company"), Kimberly-
Clark Corporation, a Delaware corporation ("Kimberly-Clark"), and Richard R.
Nicolosi (the "Optionee").
WHEREAS, pursuant to stock option agreements, the Company has granted to
the Optionee options (the "Options") to purchase the number of common shares of
the Company ("Company Common Shares") set forth on Schedule A hereto at the
exercise price or prices set forth opposite such number of Company Common
Shares, giving effect to the two for one stock split of the Company Common
Shares declared on April 18, 1995;
WHEREAS, pursuant to an Amendment to Stock Option Agreement dated as of
February 24, 1995 (the "Stock Option Amendment"), Options which are not
exercisable become immediately exercisable in the event of a change in control
of the Company;
WHEREAS, concurrently herewith, Kimberly-Clark, Rifle Merger Co. and the
Company are entering into an Agreement and Plan of Merger (the "Merger
Agreement"), pursuant to which Rifle Merger Co. is merging (the "Merger") with
and into the Company and the Company is becoming a wholly-owned subsidiary of
Kimberly-Clark;
WHEREAS, pursuant to the terms of the Stock Option Amendment, the Options
designated on Schedule A as unexercisable (the "Unexercisable Options") are to
become exercisable at the Effective Time (as such term is defined in the Merger
Agreement);
WHEREAS, in order for the Merger to be accounted for as a pooling of
interests, the Company and the Optionee desire to rescind the Stock Option
Amendment prior to the Effective Time so that the Unexercisable Options remain
unexercisable at the Effective Time;
WHEREAS, the Company, the Optionee and Kimberly-Clark desire to enter into
this Agreement to provide that at the Effective Time the Unexercisable Options
shall be cancelled and exchanged for shares of common stock of Kimberly-Clark
("Kimberly-Clark Common Stock") having a market value at the Effective Time
equal to the value (the "Unexercisable Option Value") of the Unexercisable
Options, as shall be determined by Hewitt Associates at the time and in the
manner set forth on Schedule B hereto; and
<PAGE>
WHEREAS, in accordance with Section 5.8 of the Merger Agreement, the
Options designated on Schedule A as exercisable at the Effective Time (the
"Exercisable Options") will, at the Effective Time, become options to purchase
shares of Kimberly-Clark Common Stock upon the terms and subject to the
conditions set forth in the Merger Agreement.
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein, the adequacy and sufficiency of which are hereby acknowledged,
the Company, Kimberly-Clark and the Optionee hereby agree as follows:
1. Rescission of Stock Option Amendment. At the Effective Time, the Stock
------------------------------------
Option Amendment shall be rescinded and shall be of no further force or effect
whatsoever.
2. Exchange of Unexercisable Options. At the Effective Time, the
---------------------------------
Unexercisable Options which are outstanding immediately prior to the Effective
Time shall be cancelled and exchanged for the number of shares of Kimberly-Clark
Common Stock, decreased to the nearest whole share, having an aggregate market
value at the Effective Time equal to the Unexercisable Option Value. Kimberly-
Clark shall pay cash to the Optionee in lieu of issuing fractional shares of
Kimberly-Clark Common Stock, unless in the reasonable judgment of Kimberly-
Clark, based on the advice of its independent accountants, such payment would
adversely affect the ability to account for the Merger as a pooling of interests
in accordance with generally accepted accounting principles. For purposes of
this Section 2, the market value of a share of Kimberly-Clark Common Stock at
the Effective Time shall be equal to the closing price of the Kimberly-Clark
Common Stock on the business day next preceding the Effective Time, as reported
in The Wall Street Journal as New York Stock Exchange Composite Transactions.
-----------------------
Kimberly-Clark shall register under the Securities Act of 1933, as amended (the
"Securities Act"), on the appropriate form all shares of Kimberly-Clark Common
Stock issuable pursuant to this Section 2.
3. Exchange of Exercisable Options. In accordance with Section 5.8 of the
-------------------------------
Merger Agreement, at the Effective Time, each Exercisable Option which is
outstanding immediately prior to the Effective Time shall become and represent a
fully exercisable option to purchase the number of shares of Kimberly-Clark
Common Stock (a "Substitute Option"), decreased to the nearest whole share,
determined by multiplying (i) the number of Company Common Shares subject to
such Exercisable Option immediately prior to the Effective Time by (ii) the
Conversion Number (as such term is defined in the Merger Agreement), at an
exercise price per share of Kimberly-Clark Common Stock (increased to the
nearest whole cent) equal to the exercise price per Company Common Share
immediately prior to the Effective Time divided by the Conversion Number.
Kimberly-Clark shall pay cash to the Optionee in lieu of issuing fractional
shares of Kimberly-Clark Common Stock upon the
-2-
<PAGE>
exercise of a Substitute Option unless in the reasonable judgment of Kimberly-
Clark, based on the advice of its independent accountants, such payment would
adversely affect the ability to account for the Merger as a pooling of interests
in accordance with generally accepted accounting principles. After the
Effective Time, except as provided by Section 5.8 of the Merger Agreement, each
Substitute Option shall be exercisable upon the same terms and conditions as
were applicable to the related Exercisable Option immediately prior to the
Effective Time. Kimberly-Clark shall register under the Securities Act on Form
S-8 or another appropriate form all Substitute Options and all shares of
Kimberly-Clark Common Stock issuable pursuant to all Substitute Options.
4. Termination of Agreement. This Agreement shall terminate and shall be
------------------------
of no further force or effect if the Merger Agreement shall be terminated and
the Merger shall not become effective pursuant to the terms thereof.
5. Successors; Binding Agreement. This Agreement shall inure to the
-----------------------------
benefit of and be enforceable by the Optionee and by his personal or legal
representatives, executors, administrators, heirs, distributees, devisees and
legatees and by the Company and Kimberly-Clark and their respective successors
and assigns.
6. Notices. All notices and other communications required or permitted
-------
under this Agreement shall be in writing and shall be deemed to have been duly
given when personally delivered, when delivered by courier or overnight express
service or five days after having been sent by certified or registered mail,
postage prepaid, addressed (a) if to the Optionee, to the Optionee's address set
forth in the records of the Company, or if to the Company or Kimberly-Clark, to
O. George Everbach, Senior Vice President and General Counsel, Kimberly-Clark
Corporation, 351 Phelps Drive, Irving, Texas 75038, with a copy to Thomas A.
Cole, Sidley & Austin, One First National Plaza, Chicago, Illinois 60603, or (b)
to such other address as any party may have furnished to the other parties in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
7. Governing Law; Validity. The interpretation, construction and
-----------------------
performance of this Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of Delaware without regard to the
applicable principles of conflicts of laws. The invalidity or unenforceability
of any provision of this Agreement shall not affect the validity or
enforceability of any of the other provisions of this Agreement, which other
provisions shall remain in full force and effect.
-3-
<PAGE>
8. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument.
9. Miscellaneous. No provision of this Agreement may be modified or
-------------
waived unless such modification or waiver is agreed to in writing and executed
by the Optionee and by a duly authorized officer of the Company and of Kimberly-
Clark. No waiver by any party hereto at any time of any breach by another party
hereto of, or failure to comply with, any condition or provision of this
Agreement to be performed or complied with by such other party shall be deemed a
waiver of any similar or dissimilar conditions or provisions at the same or at
any prior or subsequent time. Failure by the Optionee, the Company or Kimberly-
Clark to insist upon strict compliance with any provision of this Agreement or
to assert any right which the Optionee, the Company or Kimberly-Clark may have
hereunder shall not be deemed to be a waiver of such provision or right or any
other provision of or right under this Agreement.
IN WITNESS WHEREOF, each of the Company and Kimberly-Clark has caused this
Agreement to be executed by its duly authorized officer and the Optionee has
executed this Agreement as of the day and year first above written.
SCOTT PAPER COMPANY
By: ___________________________
KIMBERLY-CLARK CORPORATION
By: ___________________________
OPTIONEE:
________________________________
-4-
<PAGE>
SCHEDULE A
----------
Schedule of Options
-------------------
<TABLE>
<CAPTION>
Exercisable Options
- ---------------------
Date of Grant Number of Shares Exercise Price
------------- ---------------- --------------
<S> <C> <C>
9/15/94 90,000 32.000
9/16/94 300,000 31.875
<CAPTION>
Unexercisable Options
- ---------------------
Date of Grant Number of Shares Exercise Price
------------- ---------------- --------------
<S> <C> <C>
NONE
</TABLE>
-5-
<PAGE>
SCHEDULE B
----------
Determination of Unexercisable Option Value
-------------------------------------------
by Hewitt Associates
--------------------
Valuation Methodology
- ---------------------
Calculations will be based on the Black-Scholes option pricing model. To
the Black-Scholes formula outputs there shall be applied an Annual Turnover
discount as indicated below for the probability that an option holder will not
complete the vesting schedule as outlined, and thus not receive full ownership
of the entire option grant.
Valuation Assumptions
- ---------------------
Grant Price $_________
Stock Price on
Valuation Date $_________
Grant Date __________
Valuation Date Close of business on day preceding the Effective
Time
Annual Dividend $0.40
Interest Rate 7.00%
Volatility 24.30%
Annual Turnover 7.50%
Valuation Results
- -----------------
<TABLE>
<CAPTION>
Number of Vesting Current Total Current
Options Date Option Value Value
<S> <C> <C> <C> <C>
Unvested
Unvested
Unvested
Unvested
Total Unvested Value
</TABLE>
-6-
<PAGE>
EXHIBIT 10.19
SEVERANCE AGREEMENT AND RELEASE
-------------------------------
This Severance Agreement and Release (this "Agreement") is entered into as
of July 16, 1995 between Scott Paper Company, a Pennsylvania corporation
("Scott"), Kimberly-Clark Corporation, a Delaware Corporation ("Kimberly-
Clark"), and Richard R. Nicolosi (the "Executive").
WHEREAS, Executive is presently an officer of, and is presently employed by
Scott in the capacity of Senior Vice President-Worldwide Consumer Business;
WHEREAS, Kimberly-Clark, Rifle Merger Co. and Scott have entered into an
Agreement and Plan of Merger dated as of July 16, 1995 (the "Merger Agreement"),
pursuant to which Rifle Merger Co. will merge with and into Scott and Scott will
thereby become a wholly-owned subsidiary of Kimberly-Clark;
WHEREAS, as of the Effective Time of the Merger (as such terms are defined
in the Merger Agreement), the Executive will cease to be an officer and employee
of Scott;
WHEREAS, the parties hereto have entered into a Noncompetition Agreement, a
Restricted Stock Exchange Agreement, a Rescission Agreement and a Stock Option
Exchange Agreement (the "Other Agreements") as of the date hereof;
WHEREAS, Scott and the Executive desire to make appropriate arrangements
for the severance of the Executive from Scott and the release by the Executive
of any and all outstanding claims he may have against Scott;
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein, the adequacy and sufficiency of which are hereby acknowledged,
Scott and the Executive hereby agree as follows:
1. Voluntary Act. The Executive hereby represents to Scott that this
-------------
Agreement is entered into voluntarily, and with a full understanding of and
agreement with its terms, for the purpose of receiving additional benefits from
Scott and releasing all claims the Executive may have against Scott and
Kimberly-Clark.
2. Cessation of Employment. The Executive's employment with Scott will
-----------------------
cease as of the Effective Time of the Merger.
3. Additional Benefits. In consideration of the Executive's
representations and releases in this Agreement, Scott
<PAGE>
will pay to the Executive, at the Effective Time of the Merger, the sum of
$875,000, plus the difference between $700,000 and the amount of Termination
Bonus paid to the Executive under the letter of employment between the Executive
and Scott dated June 30, 1994, to assist the Executive in making the transition
from his current position to future employment. These benefits are in addition
to the Executive's entitlements under other applicable employee benefit plans of
Scott and compensation for services rendered.
4. Agreements and Acknowledgment. In consideration of the additional
-----------------------------
benefits provided in Section 3 above, and effective as of the Effective Time of
the Merger, the Executive hereby releases and forever discharges Scott and
Kimberly-Clark, their officers, directors, agents, and employees of and from all
actions, causes of action, suits, debts, contracts, promises, damages, claims
and demands, whether known or unknown, asserted or unasserted, including,
without limitation, all rights or claims under the Age Discrimination in
Employment Act, which he or his heirs or assignee, ever had, may have in the
future, or now have, or which his heirs, executors, administrators and assigns
hereafter can, shall or may have, against Scott or Kimberly-Clark, their
officers, directors, agents and employees; provided, however, that nothing
contained herein shall relieve Scott or Kimberly-Clark from any obligation under
(i) this Agreement; (ii) any employee benefit plan, stock option plan or the
like that the officer is a participant in or entitled to the benefits of; (iii)
compensation for services previously provided; or (iv) the Other Agreements.
5. Consultation with Attorney. The Executive represents that he was
--------------------------
advised to consult with an attorney before signing this Agreement, and that he
has consulted with an attorney and/or other persons to the extent the Executive
desired to do so before signing this Agreement.
6. No Representations or Inducements. The Executive agrees that no
---------------------------------
promises, representations or inducements have been made which caused the
Executive to sign this Agreement other than those expressly set forth above.
7. Successors; Binding Agreement. This Agreement shall inure to the
-----------------------------
benefit of and be enforceable by the Executive and by his personal or legal
representatives, executors, administrators, heirs, distributees, devisees and
legatees, and by Scott, and their respective successors and assigns.
8. Notices. All notices and other communications required or permitted
-------
under this Agreement shall be in writing and shall be deemed to have been duly
given when personally delivered, when delivered by courier or overnight express
service or five days after having been sent by certified or registered
-2-
<PAGE>
mail, postage prepaid, addressed (a) if to the Executive, to the Executive's
address set forth in the records of the Company, or if to Scott or Kimberly-
Clark, to Wayne R. Sanders, Chairman of the Board and Chief Executive Officer,
351 Phelps Drive, Irving, Texas 75038, with a copy to O. George Everbach, Senior
Vice President - Law and Government Affairs, 351 Phelps Drive, Irving, Texas
75038, or (b) to such other address as either party may have furnished to the
other party in writing in accordance herewith, except that notices of change of
address shall be effective only upon receipt.
9. Guaranty. Kimberly-Clark hereby guarantees the payment of all amounts
--------
payable by Scott pursuant to this Agreement.
10. Governing Law; Validity. The interpretation, construction and
-----------------------
performance of this Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of Delaware without regard to the
applicable principles of conflicts of laws. The invalidity or unenforceability
of any provision of this Agreement shall not affect the validity or
enforceability of any of the other provisions of this Agreement, which other
provisions shall remain in full force and effect.
11. Review Period. Executive represents that he was given at least forty-
-------------
five (45) days to consider the terms of this Agreement.
12. Revocation. Executive has seven (7) days from the signing of this
----------
Agreement to revoke this Agreement. If Executive does not revoke this Agreement
within seven (7) days of the date of this Agreement, this Agreement will become
final and binding.
13. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument.
14. Miscellaneous. No provision of this Agreement may be modified or
-------------
waived unless such modification or waiver is agreed to in writing and executed
by the Executive and by a duly authorized officer of Scott. No waiver by either
party hereto at any time of any breach by the other party hereto of, or failure
to comply with, any condition or provision of this Agreement to be performed or
complied with by such other party shall be deemed a waiver of any similar or
dissimilar conditions or provisions at the same or at any prior or subsequent
time. Failure by the Executive or Scott to insist upon strict compliance with
any provision of this Agreement or to assert any right which the Executive or
Scott may have hereunder shall not be deemed to be a waiver of such provision or
right or any other provision of or
-3-
<PAGE>
right under this Agreement.
15. Effectiveness. The provisions of Section 2, 3 and 4 hereof shall be
-------------
effective only upon the Effective Time of the Merger and shall be null and void
if the Merger is not consummated.
IN WITNESS WHEREOF, each of Scott and Kimberly-Clark has caused this
Agreement to be executed by its duly authorized officer and the Executive has
executed this Agreement as of the day and year first above written.
Scott Paper Company
By_________________________________
Kimberly-Clark Corporation
By________________________________
Executive
__________________________________
Richard R. Nicolosi
-4-
<PAGE>
EXHIBIT 10.20
SCOTT PAPER COMPANY
150 E. Palmetto Park
Suite 415
Boca Raton, FL 33432
July 16, 1995
Mr. P. Newton White
Senior Vice President -
Worldwide Away from Home
Scott Paper Company
150 E. Palmetto Park
Suite 415
Boca Raton, FL 33432
Dear Mr. White:
This letter will advise you that your employment with Scott Paper Company
("Scott") will terminate immediately following the Effective Time. This letter
will acknowledge that under Scott's Termination Pay Plan, your termination of
employment entitles you to receive at the Effective Time the cash payments and
benefits set forth on Schedule A to this letter and that the 48,000 shares of
restricted stock held by you under the Company's 1994 Long Term Incentive Plan
will vest upon the Effective Time.
Terms used in this letter and in Schedule A hereto which are defined in the
Agreement and Plan of Merger among Kimberly-Clark Corporation, a newly formed
Pennsylvania wholly owned subsidiary of Kimberly-Clark Corporation, and Scott,
dated as of July 16, 1995 (the "Merger Agreement"), shall have the meanings set
forth in the Merger Agreement.
Very truly yours,
Scott Paper Company
By:_____________________________
<PAGE>
SCHEDULE A
TO LETTER TO P. NEWTON WHITE
DATED JULY 16, 1995
The payments set forth below are determined pursuant to the Company's
Termination Pay Plan including a proportionate share of your 1995 Bonus./1/
<TABLE>
<CAPTION>
Description Amount
----------- ------
<S> <C>
Salary $316,000
Termination Bonus $258,400/2/
</TABLE>
- ---------------------
/1/ All amounts payable to Mr. White under Scott's 401(k) plan, savings plans,
retirement plan, deferred compensation plans, and other plans under which he is
a participant, and which are not otherwise referred to in this Schedule, shall
be paid to Mr. White according to their respective terms.
/2/ Assumes an Effective Time of October 19, 1995; such amount will be
appropriately adjusted if the Effective Time is on a date other than October 19,
1995 in accordance with the terms of the Termination Pay Plan.
<PAGE>
EXHIBIT 10.21
STOCK OPTION EXCHANGE AGREEMENT
-------------------------------
This Stock Option Exchange Agreement is entered into as of July 16, 1995
among Scott Paper Company, a Pennsylvania corporation (the "Company"), Kimberly-
Clark Corporation, a Delaware corporation ("Kimberly-Clark"), and P. Newton
White (the "Optionee").
WHEREAS, pursuant to stock option agreements, the Company has granted to
the Optionee options (the "Options") to purchase the number of common shares of
the Company ("Company Common Shares") set forth on Schedule A hereto at the
exercise price or prices set forth opposite such number of Company Common
Shares, giving effect to the two for one stock split of the Company Common
Shares declared on April 18, 1995;
WHEREAS, pursuant to an Amendment to Stock Option Agreement dated as of
February 24, 1995 (the "Stock Option Amendment"), Options which are not
exercisable become immediately exercisable in the event of a change in control
of the Company;
WHEREAS, concurrently herewith, Kimberly-Clark, Rifle Merger Co. and the
Company are entering into an Agreement and Plan of Merger (the "Merger
Agreement"), pursuant to which Rifle Merger Co. is merging (the "Merger") with
and into the Company and the Company is becoming a wholly-owned subsidiary of
Kimberly-Clark;
WHEREAS, pursuant to the terms of the Stock Option Amendment, the Options
designated on Schedule A as unexercisable (the "Unexercisable Options") are to
become exercisable at the Effective Time (as such term is defined in the Merger
Agreement);
WHEREAS, in order for the Merger to be accounted for as a pooling of
interests, the Company and the Optionee desire to rescind the Stock Option
Amendment prior to the Effective Time so that the Unexercisable Options remain
unexercisable at the Effective Time;
WHEREAS, the Company, the Optionee and Kimberly-Clark desire to enter into
this Agreement to provide that at the Effective Time the Unexercisable Options
shall be cancelled and exchanged for shares of common stock of Kimberly-Clark
("Kimberly-Clark Common Stock") having a market value at the Effective Time
equal to the value (the "Unexercisable Option Value") of the Unexercisable
Options, as shall be determined by Hewitt Associates at the time and in the
manner set forth on Schedule B hereto; and
<PAGE>
WHEREAS, in accordance with Section 5.8 of the Merger Agreement, the
Options designated on Schedule A as exercisable at the Effective Time (the
"Exercisable Options") will, at the Effective Time, become options to purchase
shares of Kimberly-Clark Common Stock upon the terms and subject to the
conditions set forth in the Merger Agreement.
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein, the adequacy and sufficiency of which are hereby acknowledged,
the Company, Kimberly-Clark and the Optionee hereby agree as follows:
1. Rescission of Stock Option Amendment. At the Effective Time, the Stock
------------------------------------
Option Amendment shall be rescinded and shall be of no further force or effect
whatsoever.
2. Exchange of Unexercisable Options. At the Effective Time, the
---------------------------------
Unexercisable Options which are outstanding immediately prior to the Effective
Time shall be cancelled and exchanged for the number of shares of Kimberly-Clark
Common Stock, decreased to the nearest whole share, having an aggregate market
value at the Effective Time equal to the Unexercisable Option Value. Kimberly-
Clark shall pay cash to the Optionee in lieu of issuing fractional shares of
Kimberly-Clark Common Stock, unless in the reasonable judgment of Kimberly-
Clark, based on the advice of its independent accountants, such payment would
adversely affect the ability to account for the Merger as a pooling of interests
in accordance with generally accepted accounting principles. For purposes of
this Section 2, the market value of a share of Kimberly-Clark Common Stock at
the Effective Time shall be equal to the closing price of the Kimberly-Clark
Common Stock on the business day next preceding the Effective Time, as reported
in The Wall Street Journal as New York Stock Exchange Composite Transactions.
-----------------------
Kimberly-Clark shall register under the Securities Act of 1933, as amended (the
"Securities Act"), on the appropriate form all shares of Kimberly-Clark Common
Stock issuable pursuant to this Section 2.
3. Exchange of Exercisable Options. In accordance with Section 5.8 of the
-------------------------------
Merger Agreement, at the Effective Time, each Exercisable Option which is
outstanding immediately prior to the Effective Time shall become and represent a
fully exercisable option to purchase the number of shares of Kimberly-Clark
Common Stock (a "Substitute Option"), decreased to the nearest whole share,
determined by multiplying (i) the number of Company Common Shares subject to
such Exercisable Option immediately prior to the Effective Time by (ii) the
Conversion Number (as such term is defined in the Merger Agreement), at an
exercise price per share of Kimberly-Clark Common Stock (increased to the
nearest whole cent) equal to the exercise price per Company Common Share
immediately prior to the Effective Time divided by the Conversion Number.
Kimberly-Clark shall pay cash to the Optionee in lieu of issuing fractional
shares of Kimberly-Clark Common Stock upon the
-2-
<PAGE>
exercise of a Substitute Option unless in the reasonable judgment of Kimberly-
Clark, based on the advice of its independent accountants, such payment would
adversely affect the ability to account for the Merger as a pooling of interests
in accordance with generally accepted accounting principles. After the Effective
Time, except as provided by Section 5.8 of the Merger Agreement, each Substitute
Option shall be exercisable upon the same terms and conditions as were
applicable to the related Exercisable Option immediately prior to the Effective
Time. Kimberly-Clark shall register under the Securities Act on Form S-8 or
another appropriate form all Substitute Options and all shares of Kimberly-Clark
Common Stock issuable pursuant to all Substitute Options.
4. Termination of Agreement. This Agreement shall terminate and shall be
------------------------
of no further force or effect if the Merger Agreement shall be terminated and
the Merger shall not become effective pursuant to the terms thereof.
5. Successors; Binding Agreement. This Agreement shall inure to the
-----------------------------
benefit of and be enforceable by the Optionee and by his personal or legal
representatives, executors, administrators, heirs, distributees, devisees and
legatees and by the Company and Kimberly-Clark and their respective successors
and assigns.
6. Notices. All notices and other communications required or permitted
-------
under this Agreement shall be in writing and shall be deemed to have been duly
given when personally delivered, when delivered by courier or overnight express
service or five days after having been sent by certified or registered mail,
postage prepaid, addressed (a) if to the Optionee, to the Optionee's address set
forth in the records of the Company, or if to the Company or Kimberly-Clark, to
O. George Everbach, Senior Vice President and General Counsel, Kimberly-Clark
Corporation, 351 Phelps Drive, Irving, Texas 75038, with a copy to Thomas A.
Cole, Sidley & Austin, One First National Plaza, Chicago, Illinois 60603, or (b)
to such other address as any party may have furnished to the other parties in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
7. Governing Law; Validity. The interpretation, construction and
-----------------------
performance of this Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of Delaware without regard to the
applicable principles of conflicts of laws. The invalidity or unenforceability
of any provision of this Agreement shall not affect the validity or
enforceability of any of the other provisions of this Agreement, which other
provisions shall remain in full force and effect.
-3-
<PAGE>
8. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument.
9. Miscellaneous. No provision of this Agreement may be modified or
-------------
waived unless such modification or waiver is agreed to in writing and executed
by the Optionee and by a duly authorized officer of the Company and of Kimberly-
Clark. No waiver by any party hereto at any time of any breach by another party
hereto of, or failure to comply with, any condition or provision of this
Agreement to be performed or complied with by such other party shall be deemed a
waiver of any similar or dissimilar conditions or provisions at the same or at
any prior or subsequent time. Failure by the Optionee, the Company or Kimberly-
Clark to insist upon strict compliance with any provision of this Agreement or
to assert any right which the Optionee, the Company or Kimberly-Clark may have
hereunder shall not be deemed to be a waiver of such provision or right or any
other provision of or right under this Agreement.
IN WITNESS WHEREOF, each of the Company and Kimberly-Clark has caused this
Agreement to be executed by its duly authorized officer and the Optionee has
executed this Agreement as of the day and year first above written.
SCOTT PAPER COMPANY
By:
------------------------------------
KIMBERLY-CLARK CORPORATION
By:
------------------------------------
OPTIONEE:
----------------------------------------
-4-
<PAGE>
SCHEDULE A
----------
Schedule of Options
-------------------
Exercisable Options
- ---------------------
<TABLE>
<CAPTION>
Date of Grant Number of Shares Exercise Price
------------- ---------------- --------------
<S> <C> <C>
2/16/88 4,000 17.594
2/21/89 8,000 19.813
2/20/90 16,000 21.750
2/19/91 40,000 22.969
2/18/92 36,000 21.750
2/16/93 36,000 19.281
2/15/94 20,000 22.500
9/16/94 300,000 31.875
</TABLE>
Unexercisable Options
- ---------------------
<TABLE>
<CAPTION>
Date of Grant Date of Vesting Number of Shares Exercise Price
------------- --------------- ---------------- --------------
<S> <C> <C> <C>
2/15/94 2/15/96 20,000 22.500
</TABLE>
<PAGE>
SCHEDULE B
----------
Determination of Unexercisable Option Value
-------------------------------------------
by Hewitt Associates
--------------------
Valuation Methodology
- ---------------------
Calculations will be based on the Black-Scholes option pricing model.
To the Black-Scholes formula outputs there shall be applied an Annual Turnover
discount as indicated below for the probability that an option holder will not
complete the vesting schedule as outlined, and thus not receive full ownership
of the entire option grant.
Valuation Assumptions
- ---------------------
<TABLE>
<S> <C>
Grant Price $_________
Stock Price on Valuation Date $_________
Grant Date __________
Valuation Date Close of business on day preceding
the Effective Time
Annual Dividend $0.40
Interest Rate 7.00%
Volatility 24.30%
Annual Turnover 7.50%
</TABLE>
Valuation Results
- -----------------
<TABLE>
<CAPTION>
Number of Vesting Current Total Current
Options Date Option Value Value
<S> <C> <C> <C> <C>
Unvested
Unvested
Unvested
Unvested
Total Unvested Value
</TABLE>
<PAGE>
EXHIBIT 10.22
SEVERANCE AGREEMENT AND RELEASE
-------------------------------
This Severance Agreement and Release (this "Agreement") is entered into as
of July 16, 1995 between Scott Paper Company, a Pennsylvania corporation
("Scott"), Kimberly-Clark Corporation, a Delaware Corporation ("Kimberly-
Clark"), and P. Newton White (the "Executive").
WHEREAS, Executive is presently an officer of, and is presently employed by
Scott in the capacity of Senior Vice President-Worldwide Away-from-Home
Business;
WHEREAS, Kimberly-Clark, Rifle Merger Co. and Scott have entered into an
Agreement and Plan of Merger dated as of July 16, 1995 (the "Merger Agreement"),
pursuant to which Rifle Merger Co. will merge with and into Scott and Scott will
thereby become a wholly-owned subsidiary of Kimberly-Clark;
WHEREAS, as of the Effective Time of the Merger (as such terms are defined
in the Merger Agreement), the Executive will cease to be an officer and employee
of Scott;
WHEREAS, the parties hereto have entered into a Noncompetition Agreement, a
Restricted Stock Exchange Agreement, a Rescission Agreement and a Stock Option
Exchange Agreement (the "Other Agreements") as of the date hereof;
WHEREAS, Scott and the Executive desire to make appropriate arrangements
for the severance of the Executive from Scott and the release by the Executive
of any and all outstanding claims he may have against Scott;
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein, the adequacy and sufficiency of which are hereby acknowledged,
Scott and the Executive hereby agree as follows:
1. Voluntary Act. The Executive hereby represents to Scott that this
-------------
Agreement is entered into voluntarily, and with a full understanding of and
agreement with its terms, for the purpose of receiving additional benefits from
Scott and releasing all claims the Executive may have against Scott and
Kimberly-Clark.
2. Cessation of Employment. The Executive's employment with Scott will
-----------------------
cease as of the Effective Time of the Merger.
3. Additional Benefits. In consideration of the Executive's
-------------------
representations and releases in this Agreement, Scott
<PAGE>
will pay to the Executive, at the Effective Time of the Merger, the sum of
$803,000, plus the difference between $632,000 and the amount of Termination
Bonus paid to the Executive pursuant to the letter delivered to the Executive of
even date, to assist the Executive in making the transition from his current
position to future employment. These benefits are in addition to the
Executive's entitlements under other applicable employee benefit plans of Scott
and compensation for services rendered.
4. Agreements and Acknowledgment. In consideration of the additional
-----------------------------
benefits provided in Section 3 above, and effective as of the Effective Time of
the Merger, the Executive hereby releases and forever discharges Scott and
Kimberly-Clark, their officers, directors, agents, and employees of and from all
actions, causes of action, suits, debts, contracts, promises, damages, claims
and demands, whether known or unknown, asserted or unasserted, including,
without limitation, all rights or claims under the Age Discrimination in
Employment Act, which he or his heirs or assignee, ever had, may have in the
future, or now have, or which his heirs, executors, administrators and assigns
hereafter can, shall or may have, against Scott or Kimberly-Clark, their
officers, directors, agents and employees; provided, however, that nothing
contained herein shall relieve Scott or Kimberly-Clark from any obligation under
(i) this Agreement; (ii) any employee benefit plan, stock option plan or the
like that the officer is a participant in or entitled to the benefits of; (iii)
compensation for services previously provided; or (iv) the Other Agreements.
5. Consultation with Attorney. The Executive represents that he was
--------------------------
advised to consult with an attorney before signing this Agreement, and that he
has consulted with an attorney and/or other persons to the extent the Executive
desired to do so before signing this Agreement.
6. No Representations or Inducements. The Executive agrees that no
---------------------------------
promises, representations or inducements have been made which caused the
Executive to sign this Agreement other than those expressly set forth above.
7. Successors; Binding Agreement. This Agreement shall inure to the
-----------------------------
benefit of and be enforceable by the Executive and by his personal or legal
representatives, executors, administrators, heirs, distributees, devisees and
legatees, and by Scott, and their respective successors and assigns.
8. Notices. All notices and other communications required or permitted
-------
under this Agreement shall be in writing and shall be deemed to have been duly
given when personally delivered, when delivered by courier or overnight express
service or five days after having been sent by certified or registered mail,
postage prepaid, addressed (a) if to the Executive, to the
-2-
<PAGE>
Executive's address set forth in the records of the Company, or if to Scott or
Kimberly-Clark, to Wayne R. Sanders, Chairman of the Board and Chief Executive
Officer, 351 Phelps Drive, Irving, Texas 75038, with a copy to O. George
Everbach, Senior Vice President - Law and Government Affairs, 351 Phelps Drive,
Irving, Texas 75038, or (b) to such other address as either party may have
furnished to the other party in writing in accordance herewith, except that
notices of change of address shall be effective only upon receipt.
9. Guaranty. Kimberly-Clark hereby guarantees the payment of all amounts
--------
payable by Scott pursuant to this Agreement.
10. Governing Law; Validity. The interpretation, construction and
-----------------------
performance of this Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of Delaware without regard to the
applicable principles of conflicts of laws. The invalidity or unenforceability
of any provision of this Agreement shall not affect the validity or
enforceability of any of the other provisions of this Agreement, which other
provisions shall remain in full force and effect.
11. Review Period. Executive represents that he was given at least forty-
-------------
five (45) days to consider the terms of this Agreement.
12. Revocation. Executive has seven (7) days from the signing of this
----------
Agreement to revoke this Agreement. If Executive does not revoke this Agreement
within seven (7) days of the date of this Agreement, this Agreement will become
final and binding.
13. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument.
14. Miscellaneous. No provision of this Agreement may be modified or
-------------
waived unless such modification or waiver is agreed to in writing and executed
by the Executive and by a duly authorized officer of Scott. No waiver by either
party hereto at any time of any breach by the other party hereto of, or failure
to comply with, any condition or provision of this Agreement to be performed or
complied with by such other party shall be deemed a waiver of any similar or
dissimilar conditions or provisions at the same or at any prior or subsequent
time. Failure by the Executive or Scott to insist upon strict compliance with
any provision of this Agreement or to assert any right which the Executive or
Scott may have hereunder shall not be deemed to be a waiver of such provision or
right or any other provision of or right under this Agreement.
-3-
<PAGE>
15. Effectiveness. The provisions of Section 2, 3 and 4 hereof shall be
-------------
effective only upon the Effective Time of the Merger and shall be null and void
if the Merger is not consummated.
IN WITNESS WHEREOF, each of Scott and Kimberly-Clark has caused this
Agreement to be executed by its duly authorized officer and the Executive has
executed this Agreement as of the day and year first above written.
Scott Paper Company
By_________________________________
Kimberly-Clark Corporation
By________________________________
Executive
__________________________________
P. Newton White
-4-
<PAGE>
EXHIBIT 10.23
RESTRICTED STOCK EXCHANGE AGREEMENT
-----------------------------------
This Restricted Stock Exchange Agreement is entered into as of July 16,
1995 among Scott Paper Company, a Pennsylvania corporation (the "Company"),
Kimberly-Clark Corporation, a Delaware corporation ("Kimberly-Clark"), and P.
Newton White (the "Grantee").
WHEREAS, pursuant to restricted stock agreements, the Company has granted
to the Grantee shares of restricted stock of the Company ("Restricted Stock");
WHEREAS, pursuant to an Amendment to Restricted Stock Agreement dated
January 17, 1995 (the "Restricted Stock Amendment"), shares of Restricted Stock
which are not vested become immediately vested in the event of a change in
control of the Company;
WHEREAS, concurrently herewith, Kimberly-Clark, Rifle Merger Co. and the
Company are entering into an Agreement and Plan of Merger (the "Merger
Agreement"), pursuant to which Rifle Merger Co. is merging (the "Merger") with
and into the Company and the Company is becoming a wholly-owned subsidiary of
Kimberly-Clark;
WHEREAS, pursuant to the terms of the Restricted Stock Amendment, the
shares of Restricted Stock designated on Schedule A as unvested (the "Unvested
Restricted Stock"), giving effect to the two for one stock split of the Company
Common Shares declared on April 18, 1995, are to become vested at the Effective
Time (as such term is defined in the Merger Agreement);
WHEREAS, in order for the Merger to be accounted for as a pooling of
interests, the Company and the Grantee desire to rescind the Restricted Stock
Amendment prior to the Effective Time so that the shares of Unvested Restricted
Stock remain unvested at the Effective Time; and
WHEREAS, the Company, the Grantee and Kimberly-Clark desire to enter into
this Agreement to provide that at the Effective Time the shares of Unvested
Restricted Stock shall be cancelled and exchanged for shares of common stock of
Kimberly-Clark ("Kimberly-Clark Common Stock") having a market value at the
Effective Time equal to the value (the "Unvested Restricted Stock Value") of the
Unvested Restricted Stock, as shall be determined by Hewitt Associates in the
manner set forth on Schedule B hereto as of the Effective Time.
<PAGE>
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein, the adequacy and sufficiency of which are hereby acknowledged,
the Company, Kimberly-Clark and the Optionee hereby agree as follows:
1. Rescission of Restricted Stock Amendment. At the Effective Time, the
----------------------------------------
Restricted Stock Amendment shall be rescinded and shall be of no further force
or effect whatsoever.
2. Exchange of Unvested Restricted Stock. At the Effective Time, the
-------------------------------------
shares of Unvested Restricted Stock which are outstanding immediately prior to
the Effective Time shall be cancelled and exchanged for the number of shares of
Kimberly-Clark Common Stock, decreased to the nearest whole share, having an
aggregate market value at the Effective Time equal to the Unvested Restricted
Stock Value. Kimberly-Clark shall pay cash to the Grantee in lieu of issuing
fractional shares of Kimberly-Clark Common Stock, unless in the reasonable
judgment of Kimberly-Clark, based on the advice of its independent accountants,
such payment would adversely affect the ability to account for the Merger as a
pooling of interests in accordance with generally accepted accounting
principles. For purposes of this Section 2, the market value of a share of
Kimberly-Clark Common Stock at the Effective Time shall be equal to the closing
price of the Kimberly-Clark Common Stock on the business day next preceding the
Effective Time, as reported in The Wall Street Journal as New York Stock
-----------------------
Exchange Composite Transactions. Kimberly-Clark shall register under the
Securities Act of 1933, as amended (the "Securities Act"), on the appropriate
form all shares of Kimberly-Clark Common Stock issuable pursuant to this
Section 2.
3. Termination of Agreement. This Agreement shall terminate and shall be
------------------------
of no further force or effect if the Merger Agreement shall be terminated and
the Merger shall not become effective pursuant to the terms thereof.
4. Successors; Binding Agreement. This Agreement shall inure to the
-----------------------------
benefit of and be enforceable by the Grantee and by his personal or legal
representatives, executors, administrators, heirs, distributees, devisees and
legatees and by the Company and Kimberly-Clark and their respective successors
and assigns.
5. Notices. All notices and other communications required or permitted
-------
under this Agreement shall be in writing and shall be deemed to have been duly
given when personally delivered, when delivered by courier or overnight express
service or five days after having been sent by certified or registered mail,
postage prepaid, addressed (a) if to the Grantee, to the Grantee's address set
forth in the records of the Company, or if to the Company or Kimberly-Clark, to
O. George Everbach, Senior Vice President and General Counsel, Kimberly-Clark
Corporation,
-2-
<PAGE>
351 Phelps Drive, Irving, Texas 75038, with a copy to Thomas A. Cole, Sidley &
Austin, One First National Plaza, Chicago, Illinois 60603, or (b) to such other
address as any party may have furnished to the other parties in writing in
accordance herewith, except that notices of change of address shall be effective
only upon receipt.
6. Governing Law; Validity. The interpretation, construction and
-----------------------
performance of this Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of Delaware without regard to the
applicable principles of conflicts of laws. The invalidity or unenforceability
of any provision of this Agreement shall not affect the validity or
enforceability of any of the other provisions of this Agreement, which other
provisions shall remain in full force and effect.
7. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument.
8. Miscellaneous. No provision of this Agreement may be modified or
-------------
waived unless such modification or waiver is agreed to in writing and executed
by the Grantee and by a duly authorized officer of the Company and of Kimberly-
Clark. No waiver by any party hereto at any time of any breach by another party
hereto of, or failure to comply with, any condition or provision of this
Agreement to be performed or complied with by such other party shall be deemed a
waiver of any similar or dissimilar conditions or provisions at the same or at
any prior or subsequent time. Failure by the Grantee, the Company or Kimberly-
Clark to insist upon strict compliance with any provision of this Agreement or
to assert any right which the Grantee, the Company or Kimberly-Clark may have
hereunder shall not be deemed to be a waiver of such provision or right or any
other provision of or right under this Agreement.
-3-
<PAGE>
IN WITNESS WHEREOF, each of the Company and Kimberly-Clark has caused this
Agreement to be executed by its duly authorized officer and the Grantee has
executed this Agreement as of the day and year first above written.
SCOTT PAPER COMPANY
By:
------------------------------------
KIMBERLY-CLARK CORPORATION
By:
------------------------------------
GRANTEE:
----------------------------------------
P. Newton White
-4-
<PAGE>
SCHEDULE A
----------
Schedule of Unvested Restricted Stock
-------------------------------------
<TABLE>
<CAPTION>
Date of Grant Number of Shares Vesting Date
- --------------- ---------------- ------------
<S> <C> <C>
2/16/93 10,000 2/16/96
2/15/94 20,000 2/15/97
</TABLE>
<PAGE>
SCHEDULE B
----------
Determination of Unvested Restricted Stock Value
------------------------------------------------
by Hewitt Associates
--------------------
Valuation Methodology
- ---------------------
Calculations will be based on the market price of the Scott stock as of the
close of business on the day preceding the Effective Time. To this market price
will be applied an Annual Turnover discount as indicated below for the
probability that a holder of Restricted Stock will not complete the vesting
schedule as outlined, and thus not receive full ownership of the entire grant
share.
Valuation Assumptions
- ---------------------
<TABLE>
<S> <C>
Stock Price on Valuation Date $_________
Grant Date __________
Valuation Date Close of business on day preceding
the Effective Time
Annual Turnover 7.50%
Dividends Paid during restriction period on a
current basis.
</TABLE>
Valuation Results
- -----------------
<TABLE>
<S> <C>
Number of Unvested Shares __________
Vesting Date __________
Per Share Value __________
Total Unvested Value __________ (Number of Shares x Per
Share Value)
</TABLE>
<PAGE>
EXHIBIT 10.24
GENERAL RELEASE
---------------
Scott Paper Company, a Pennsylvania corporation ("Scott"), and Kimberly-
Clark Corporation, a Delaware corporation ("Kimberly-Clark"), together with
their respective subsidiaries and affiliates and the predecessors, successors or
assigns of any thereof (collectively, the "Releasing Persons"), hereby release
(NAME) (the "Executive"), his past, present or future attorneys, authorized
representatives, heirs, executors, administrators, spouses and family and the
successors or assigns of any thereof (collectively, the "Released Persons"),
from all claims, whether known or unknown, which any of the Releasing Persons
may currently have, have in the past had or may in the future have against the
Executive for or in connection with any act or failure to act occurring prior to
the effective time of the merger of Rifle Merger Co. into Scott with respect to
the Executive's employment with Scott or any of its subsidiaries or affiliates.
No legal action or other proceeding shall be initiated by any Releasing Person
with respect to any claim hereby released.
This General Release shall become operative at the effective time of such
merger.
Dated: July 16, 1995.
KIMBERLY-CLARK CORPORATION SCOTT PAPER COMPANY
By:____________________________ By:____________________________
<PAGE>
EXHIBIT 10.25
RESCISSION AGREEMENT
--------------------
This Rescission Agreement is entered into as of July 16, 1995 between Scott
Paper Company, a Pennsylvania corporation (the "Company"), and (NAME) (the
"Executive").
WHEREAS, the Company and the Executive have entered into an Agreement dated
as of February 24, 1995 and a letter agreement dated March 6, 1995
(collectively, the "Agreements") which provide specified benefits to the
Executive upon his termination of employment with the Company; and
WHEREAS, concurrently herewith, Kimberly-Clark Corporation, a Delaware
corporation ("Kimberly-Clark"), Rifle Merger Co. and the Company are entering
into an Agreement and Plan of Merger (the "Merger Agreement"), pursuant to which
Rifle Merger Co. is merging (the "Merger") with and into the Company and the
Company is becoming a wholly-owned subsidiary of Kimberly-Clark;
WHEREAS, in order for the Merger to be accounted for as a pooling of
interests, the Company and the Executive desire to rescind the Agreements prior
to the Effective Time;
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein, the adequacy and sufficiency of which are hereby acknowledged,
the Company and the Executive hereby agree as follows:
1. Rescission of Agreements. At the Effective Time, the Agreements shall
------------------------
be rescinded and shall be of no further force or effect whatsoever.
2. Termination of Agreement. This Agreement shall terminate and shall be
------------------------
of no further force or effect if the Merger Agreement shall be terminated and
the Merger shall not become effective pursuant to the terms thereof.
3. Successors; Binding Agreement. This Agreement shall inure to the
-----------------------------
benefit of and be enforceable by the Executive and by his personal or legal
representatives, executors, administrators, heirs, distributees, devisees and
legatees and by the Company and its successors and assigns.
4. Notices. All notices and other communications required or permitted
-------
under this Agreement shall be in writing and shall be deemed to have been duly
given when personally delivered, when delivered by courier or overnight express
service or five days after having been sent by certified or registered
<PAGE>
mail, postage prepaid, addressed (a) if to the Executive, to the Executive's
address set forth in the records of the Company, or if to the Company, to O.
George Everbach, Senior Vice President and General Counsel, Kimberly-Clark
Corporation, 351 Phelps Drive, Irving, Texas 75038, with a copy to Thomas A.
Cole, Sidley & Austin, One First National Plaza, Chicago, Illinois 60603, or (b)
to such other address as either party may have furnished to the other party in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
5. Governing Law; Validity. The interpretation, construction and
-----------------------
performance of this Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of Delaware without regard to the
applicable principles of conflicts of laws. The invalidity or unenforceability
of any provision of this Agreement shall not affect the validity or
enforceability of any of the other provisions of this Agreement, which other
provisions shall remain in full force and effect.
6. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument.
7. Miscellaneous. No provision of this Agreement may be modified or
-------------
waived unless such modification or waiver is agreed to in writing and executed
by the Executive and by a duly authorized officer of the Company. No waiver by
either party hereto at any time of any breach by the other party hereto of, or
failure to comply with, any condition or provision of this Agreement to be
performed or complied with by such other party shall be deemed a waiver of any
similar or dissimilar conditions or provisions at the same or at any prior or
subsequent time. Failure by the Executive or the Company to insist upon strict
compliance with any provision of this Agreement or to assert any right which the
Executive or the Company may have hereunder shall not be deemed to be a waiver
of such provision or right or any other provision of or right under this
Agreement.
-2-
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by
its duly authorized officer and the Executive has executed this Agreement as of
the day and year first above written.
SCOTT PAPER COMPANY
By:
---------------------------
EXECUTIVE:
--------------------------------
-3-
<PAGE>
EXHIBIT 10.26
NONCOMPETITION AGREEMENT
------------------------
This Noncompetition Agreement (this "Agreement") is entered into as of July
16, 1995 among Scott Paper Company, a Pennsylvania corporation ("Scott"),
Kimberly-Clark Corporation, a Delaware corporation ("Kimberly-Clark"), and
(NAME) (the "Executive").
WHEREAS, the Executive has acquired extensive knowledge of and experience
in the business conducted by Scott;
WHEREAS, concurrently herewith, Kimberly-Clark, Rifle Merger Co. and Scott
are entering into an Agreement and Plan of Merger dated as of the date hereof
(the "Merger Agreement"), pursuant to which Rifle Merger Co. is merging with and
into Scott and Scott is becoming a wholly-owned subsidiary of Kimberly-Clark;
WHEREAS, the Executive will cease to be an officer of Scott and of all of
its subsidiaries, effective as of the Effective Time of the Merger (as such
terms are defined in the Merger Agreement);
WHEREAS, Scott, Kimberly-Clark and the Executive desire to enter into a
noncompetition agreement upon the terms and subject to the conditions set forth
herein.
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein, the adequacy and sufficiency of which are hereby acknowledged,
Scott, Kimberly-Clark and the Executive hereby agree as follows:
1. Term of Agreement. The term of this Agreement shall commence at the
-----------------
Effective Time of the Merger and end on the date which is the fourth one-year
anniversary of the Effective Time of the Merger (the "Noncompetition Period");
provided, however, that this Agreement shall terminate and shall be of no
further force or effect if the Merger Agreement shall be terminated and the
Merger shall not become effective pursuant to the terms thereof.
2. Noncompetition. (a) During the Noncompetition Period, the Executive
--------------
shall not, directly or indirectly, own, manage, operate, control or participate
in the ownership, management, operation or control of, or be connected as an
officer, employee, partner, or director with, any business conducted anywhere in
the world which, for the fiscal year of
<PAGE>
such business immediately preceding the Executives' involvement with such
business derives at least twelve and one half percent (12 1/2%) or $250,000,000,
whichever is greater, of its total worldwide revenue from any business or
businesses which compete with any of the following business or businesses
conducted as of the Effective Time of the Merger by Scott or Kimberly-Clark, or
by any corporation in which Scott or Kimberly-Clark has, as of the Effective
Time of the Merger, a 40% or more equity investment: disposable diapers,
training pants, youth pants or baby wipes; disposable feminine hygiene products;
adult incontinence products; tissue products for household, commercial,
institutional or industrial uses; nonwoven and/or tissue based industrial or
commercial wipes; nonwoven and/or tissue based hospital/health care products for
use as surgical gowns, surgical packs, sterilization wrap and protective
hospital apparel; or premium uncoated writing, text and cover papers for use as
business, printing and correspondence papers (a "Competitive Operation").
During the Noncompetition Period, the Executive shall not solicit (1) any
employee of Scott or Kimberly-Clark or any corporation in which Scott or
Kimberly-Clark has, as of the Effective Time of the Merger a 40% or more equity
investment, to leave such employment or (ii) any customer of Scott or Kimberly-
Clark or any corporation in which Scott or Kimberly-Clark has, as of the
Effective Time of the Merger, a 40% or more equity investment, if to do so could
reasonably be expected to result in a reduction of the business such customer
has with Scott or Kimberly-Clark or any corporation in which Scott or Kimberly-
Clark has, as of the Effective Time of the Merger, a 40% or more equity
investment; provided that an activity by a business which is not deemed to be a
Competitive Operation shall not be a violation of this sentence. During the
Noncompetition Period ownership by the Executive of not to exceed five percent
(5%) of the equity securities of any Competitive Operation shall not constitute
a violation of this Section 2.
(b) In the event any restriction against engaging in a competitive activity
contained in this Section 2 shall be determined by any court of competent
jurisdiction to be unenforceable by reason of its extending for too great a
period of time or over too great a geographical area or by reason of its being
too extensive in any other respect, it shall be interpreted to extend only over
the maximum period of time for which it may be enforceable, over the maximum
geographical area as to which it may be enforceable and to the maximum extent in
all other respects as to which it may be enforceable, all as determined by such
court in such action.
(c) In the event that Executive desires to determine if a business meets
the definition of a Competitive Operation, Executive may request from Scott and
Kimberly-Clark information concerning the sale of their products in specific
countries or territories. Scott and Kimberly-Clark shall promptly respond to
-2-
<PAGE>
such request by furnishing the information necessary for Executive to make his
determination.
3. Compensation. As compensation for the noncompetition covenants
------------
contained in Section 2 hereof, Scott shall pay to the Executive on the Effective
Time of the Merger the sum of one million six hundred thousand dollars
($1,600,000) and on each anniversary of the Effective Time of the Merger, during
the term hereof, the following sums:
<TABLE>
<S> <C> <C>
1st Anniversary one million dollars ($1,000,000)
2nd Anniversary eight hundred thousand dollars ($800,000)
3rd Anniversary eight hundred thousand dollars ($800,000)
</TABLE>
(such payments, in the aggregate, being referred to herein as the
"Noncompetition Fee"). Notwithstanding any disability of the Executive during
the Noncompetition Period, the remaining unpaid installments of the
Noncompetition Fee payable pursuant to this Agreement shall be paid by Scott to
the Executive or to his legal representative designated in writing by the
Executive on the dates such Noncompetition Fee would otherwise have been paid
hereunder. In the event of the death of the Executive during the Noncompetition
Period, the remaining unpaid installments of the Noncompetition Fee payable
pursuant to this Agreement shall be paid by Scott within 90 days following the
date of such death as a death benefit to the beneficiary or beneficiaries
designated in writing by the Executive or, if no beneficiary or beneficiaries
have been so designated, to the Executive's estate.
4. Unauthorized Disclosure. (a) The Executive shall not, without the
-----------------------
written consent of the Chief Executive Officer of Kimberly-Clark, use other than
for Company purposes or disclose to any person other than as required by law or
court order, any confidential information material in nature obtained by him
while in the employ of Scott, including such information with respect to any
products, improvements, formulae, designs or styles, processes, services,
customers, suppliers, marketing techniques, methods, future plans or operating
practices ("Confidential Information"); provided, however, that Confidential
Information shall not include any information known generally to the public or
previously disclosed to the public (other than as a result of unauthorized
disclosure by the Executive) or any specific information or type of information
generally not considered confidential by persons engaged in the same business as
Scott or Kimberly-Clark, or information disclosed by Scott or Kimberly-Clark by
any member of its Board of Directors or any officer thereof to a third party
without restrictions on the disclosure of such information.
(b) The Executive agrees that all documents, records, files, letters,
memoranda, reports, data, sketches, drawings, laboratory notebooks, program
listings or other written, electronic, photographic or other tangible material
("Tangible
-3-
<PAGE>
Property") containing Confidential Information, whether created by the Executive
or others, which have or shall come into his custody or possession shall be and
are the exclusive property of Scott. The Executive agrees that, upon the
request by Scott or Kimberly-Clark, he shall promptly deliver to Scott all
Tangible Property in his possession or under his control which contains
Confidential Information. The Executive shall not retain or deliver to any
third person copies of such Tangible Property.
(c) The Executive agrees that his obligations not to disclose or use
information, knowhow, records or Tangible Property of the types set forth in
Section 4(a) or 4(b) hereof also extend to such types of information, knowhow,
records and Tangible Property of customers of Scott or any of its subsidiaries
or suppliers to Scott or any of its subsidiaries or other third parties who may
have disclosed or entrusted the same to Scott or any of its subsidiaries or to
the Executive in the course of Scott's business.
5. Public Announcements. (a) The Executive agrees that he shall not make
--------------------
or cause to be made any public statement, public announcement, press release or
other disclosure to the press which is intended, or could reasonably be
expected, to have a detrimental effect on Scott or Kimberly-Clark or their
respective businesses or operations, their public image or reputation or their
relations with customers, suppliers, employees, lenders or other business
associates.
(b) Scott and Kimberly-Clark agree that they shall not make or cause to be
made any public statement, public announcement, press release or other
disclosure to the press which is intended, or could reasonably be expected, to
have a detrimental effect on the Executive, his public image or reputation or
his relations with lenders or business associates.
6. Interests in Kimberly-Clark. The Executive agrees that he shall not at
---------------------------
any time during the Noncompetition Period (and shall not at any time during the
Noncompetition Period assist or encourage others to):
(a) acquire or agree, offer, seek or propose to acquire (or directly or
indirectly request permission to do so), directly or indirectly, alone or
in concert with any other Person (within the meaning of Section 3(a)(9) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act")), by
purchase or otherwise, any ownership, including, but not limited to,
beneficial ownership as defined in Rule 13d-3 under the Exchange Act, of
any of the assets, businesses or securities of Kimberly-Clark or any
subsidiary thereof, or any rights or options to acquire such ownership
(including from any third party);
-4-
<PAGE>
(b) solicit proxies (as such terms are defined in Rule 14a-1 under the
Exchange Act), whether or not such solicitation is exempt under Rule 14a-2
under the Exchange Act, with respect to any matter from holders of any
shares of capital stock of Kimberly-Clark or any securities convertible
into or exchangeable for or exercisable (whether currently or upon the
occurrence of any contingency) for the purchase of capital stock of
Kimberly-Clark (such capital stock and such other securities being
hereinafter collectively called the "Voting Securities"), or make any
communication exempted from the definition of solicitation by Rule 14a-
1(l)(2)(iv) under the Exchange Act;
(c) initiate, or induce or attempt to induce any other Person, entity or
group (as defined in Section 13(d)(3) of the Exchange Act) to initiate, any
stockholder proposal or tender offer for any securities of Kimberly-Clark
or any subsidiary thereof, any change in control of Kimberly-Clark or any
subsidiary thereof or the convening of a stockholders' meeting of Kimberly-
Clark or any subsidiary thereof;
(d) otherwise seek or propose (or request permission to propose) to
influence or control the management or policies of Kimberly-Clark or any
subsidiary thereof;
(e) enter into any discussions, negotiations, arrangements or
understandings with any other Person with respect to any matter described
in the foregoing Subsections 6(a) through 6(d);
(f) request Scott or its directors, officers, employees or agents,
directly or indirectly, to amend or waive any provision of this Section 6;
(g) take any action inconsistent with any of the foregoing Subsections 6(a)
through 6(f); or
(h) take any action with respect to any of the matters described in this
Section 6 that requires public disclosure.
Notwithstanding the foregoing provisions of this Section 6, the Executive may
beneficially own for his personal investment purposes up to two percent (2%) of
the outstanding Voting Securities of Kimberly-Clark.
7. Expenses. Scott shall promptly pay or reimburse the Executive
--------
for all costs and expenses (including, without limitation, court costs and
attorney's fees) incurred by the Executive as a result of any claim, action or
proceeding (including, without limitation, a claim, action or proceeding by
Executive against Scott or Kimberly-Clark to collect amounts due to Executive or
to otherwise enforce this Agreement) arising out
-5-
<PAGE>
of, or challenging the validity, advisability or enforceability of, this
Agreement or any provision hereof; provided, however, that no such payment or
reimbursement shall be made to Executive if Executive is the plaintiff in such
claim, action or proceeding and a final, nonappealable judgment is rendered
against Executive with respect to all of his claims.
8. Injunctive Relief. The Executive acknowledges that a breach of
-----------------
the restrictions contained in Section 2, 5 or 6 hereof shall cause irreparable
damage to Scott and Kimberly-Clark, the exact amount of which shall be difficult
to ascertain, and that the remedies at law for any such breach shall be
inadequate. Accordingly, the Executive agrees that, if the Executive breaches
any of the restrictions contained in Section 2, 5 or 6 hereof, then Scott and
Kimberly-Clark shall be entitled to injunctive relief, without posting bond or
other security in addition to any other remedy or remedies available to Company
or Kimberly-Clark at law or in equity.
9. Termination. This Agreement may be terminated by the Executive
-----------
upon ten (10) day's prior written notice to Scott and Kimberly-Clark in the
event that Scott or Kimberly-Clark shall breach any of their obligations under
Section 3, 5(b) or 7 hereof; provided, however, that the Executive shall not be
-------- -------
entitled to terminate this Agreement pursuant to this Section 9 in the event
that Scott and Kimberly-Clark shall cure any such breach within such ten (10)
day period. In the event of such termination by the Executive, Scott shall pay
to the Executive all remaining payments due under this Agreement within five (5)
business days of such termination.
10. Successors; Binding Agreement. This Agreement shall inure to the
-----------------------------
benefit of and be enforceable by the Executive and by his personal or legal
representatives, executors, administrators, heirs, distributees, devisees and
legatees and by Scott and Kimberly-Clark and their respective successors and
assigns.
11. Notices. All notices and other communications required or
-------
permitted under this Agreement shall be in writing and shall be deemed to have
been duly given when personally delivered, when delivered by courier or
overnight express service or five days after having been sent by certified or
registered mail, postage prepaid, addressed (a) if to the Executive, to the
Executive's address set forth in the records of the Company, or if to Scott or
Kimberly-Clark, to Wayne R. Sanders, Chairman of the Board and Chief Executive
Officer, 351 Phelps Drive, Irving, Texas 75038, with a copy to O. George
Everbach, Senior Vice President - Law and Government Affairs, 351 Phelps Drive,
Irving, Texas 75038, or (b) to such other address as any party may have
furnished to the other parties in writing in accordance herewith, except that
notices of change of address shall be effective only upon receipt.
-6-
<PAGE>
12. Guaranty. Kimberly-Clark hereby guarantees the payment of all
--------
amounts payable by Scott pursuant to this Agreement.
13. Governing Law; Validity. The interpretation, construction and
-----------------------
performance of this Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of Delaware without regard to the
applicable principles of conflicts of laws. The invalidity or unenforceability
of any provision of this Agreement shall not affect the validity or
enforceability of any of the other provisions of this Agreement, which other
provisions shall remain in full force and effect.
14. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument.
15. Miscellaneous. No provision of this Agreement may be modified or
-------------
waived unless such modification or waiver is agreed to in writing and executed
by the Executive and by a duly authorized officer of Scott and of Kimberly-
Clark. No waiver by any party hereto at any time of any breach by another party
hereto of, or failure to comply with, any condition or provision of this
Agreement to be performed or complied with by such other party shall be deemed a
waiver of any similar or dissimilar conditions or provisions at the same or at
any prior or subsequent time. Failure by the Executive, Scott or Kimberly-Clark
to insist upon strict compliance with any provision of this Agreement or to
assert any right which the Executive, Scott or Kimberly-Clark may have hereunder
shall not be deemed to be a waiver of such provision or right or any other
provision of or right under this Agreement.
-7-
<PAGE>
IN WITNESS WHEREOF, each of Scott and Kimberly-Clark has caused this
Agreement to be executed by its duly authorized officer and the Executive has
executed this Agreement as of the day and year first above written.
Scott Paper Company
By
---------------------------------
Kimberly-Clark Corporation
By
---------------------------------
EXECUTIVE:
-----------------------------------
-8-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-30-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 196
<SECURITIES> 0
<RECEIVABLES> 704
<ALLOWANCES> 29
<INVENTORY> 455
<CURRENT-ASSETS> 1,619
<PP&E> 4,669
<DEPRECIATION> (2,143)
<TOTAL-ASSETS> 4,903
<CURRENT-LIABILITIES> 906
<BONDS> 1,191
<COMMON> 602
0
7
<OTHER-SE> 1,450
<TOTAL-LIABILITY-AND-EQUITY> 4,903
<SALES> 3,154
<TOTAL-REVENUES> 3,154
<CGS> 2,120
<TOTAL-COSTS> 2,120
<OTHER-EXPENSES> (67)
<LOSS-PROVISION> 54
<INTEREST-EXPENSE> 71
<INCOME-PRETAX> 542
<INCOME-TAX> 176
<INCOME-CONTINUING> 398
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 398
<EPS-PRIMARY> 2.62
<EPS-DILUTED> 2.62
</TABLE>
