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SCHEDULE 14A
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
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Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_]Preliminary Proxy Statement
[_]Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[X]Definitive Proxy Statement
[_]Definitive Additional Materials
[_]Soliciting Material Pursuant to Sec.240.14a-11(c) or Sec.240.14a-12
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TAMBRANDS INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
TAMBRANDS INC.
(NAME OF PERSON(S) FILING PROXY STATEMENT)
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Payment of Filing Fee (Check the appropriate box):
[X]No fee required.
[_]Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11:
1) Title of each class of securities to which transaction applies: Common
Stock, par value $0.25 per share, of Tambrands Inc.
2) Aggregate number of securities to which transaction applies: 36,968,381
shares of Tambrands Inc. Common Stock, being the total number of shares
of Tambrands Inc. Common Stock outstanding as of April 14, 1997
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: $50.00
4) Proposed maximum aggregate value of transaction: $1,848,419,050.00,
determined by multiplying $50.00 per share times 36,968,381, the total
number of shares of Tambrands Inc., Common Stock outstanding as of April
14, 1997
5) Total fee paid: $369,683.81
[X] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid: $369,683.81
2) Form, Schedule or Registration Statement No.: Schedule 14A
3) Filing Party: Tambrands Inc.
4) Date Filed: April 17, 1997
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TAMBRANDS INC.
777 WESTCHESTER AVENUE
WHITE PLAINS, NEW YORK 10604
May 30, 1997
Dear Stockholder:
You are cordially invited to attend a Special Meeting of Stockholders of
Tambrands Inc. (the "Company"), to be held at the Company's corporate
headquarters, 777 Westchester Avenue, White Plains, New York, on July 2, 1997
at 9:30 a.m.
At the Special Meeting, you will be asked to approve and adopt an Agreement
and Plan of Merger (the "Merger Agreement"), dated as of April 8, 1997, by and
among the Company, The Procter & Gamble Company ("P&G") and C.R. MacIntosh,
Inc. ("Merger Sub"), a direct or indirect wholly-owned subsidiary of P&G,
pursuant to which Merger Sub will be merged (the "Merger") with and into the
Company, and the Company will become a subsidiary of P&G. If the Merger is
consummated, each share of the Company's common stock, par value $0.25 per
share (the "Common Stock") (other than shares of Common Stock held in the
treasury of the Company or owned or held by the Company, P&G or any of their
respective subsidiaries, which will be canceled without payment, and other
than shares of Common Stock in respect of which dissenters' rights have been
properly exercised) will be converted into the right to receive $50.00, in
cash, without interest.
Enclosed with this letter is a Notice of Special Meeting, Proxy Statement,
Proxy Card and return envelope. I urge you to read the enclosed material
carefully.
YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER, AND RECOMMENDS
THAT YOU VOTE FOR APPROVAL AND ADOPTION OF THE MERGER AND THE MERGER
AGREEMENT.
In arriving at its recommendation, your Board of Directors gave careful
consideration to a number of factors described in the attached Proxy
Statement, including, among other things, the opinion of its financial
advisor, Morgan Stanley & Co. Incorporated, that, as of the date thereof, the
$50.00 in cash per share to be received by the holders of Common Stock
pursuant to the Merger Agreement is fair from a financial point of view to
such holders. The full text of the opinion, including information with respect
to assumptions made and matters considered, is attached as Annex B to the
Proxy Statement and stockholders are urged to read it in its entirety.
Your vote is important. Whether or not you plan to attend the Special
Meeting, please complete, sign and date the accompanying Proxy Card and return
it in the enclosed prepaid envelope as soon as possible. If you attend the
Special Meeting, you may vote your shares in person, even if you have
previously submitted a Proxy Card. Approval of the Merger requires the
affirmative vote of a majority of the outstanding shares of the Company's
capital stock entitled to vote thereon and, as a result, a failure to vote
will have the same effect as a vote against the Merger.
Your continued support of and interest in Tambrands is greatly appreciated.
Sincerely,
/s/ Edward T. Fogarty
Edward T. Fogarty
Chairman, President and
Chief Executive Officer
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TAMBRANDS INC.
777 WESTCHESTER AVENUE
WHITE PLAINS, NEW YORK 10604
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 2, 1997
May 30, 1997
To the Stockholders of
Tambrands Inc.:
Notice is hereby given that a Special Meeting of Stockholders (the "Special
Meeting") of Tambrands Inc. (the "Company") will be held at the Company's
corporate headquarters, 777 Westchester Avenue, White Plains, New York, on
July 2, 1997 at 9:30 a.m. for the following purposes:
1. To consider and vote upon a proposal (the "Proposal") to approve and
adopt the Agreement and Plan of Merger, dated as of April 8, 1997 (the
"Merger Agreement"), among the Company, The Procter & Gamble Company
("P&G") and C.R. MacIntosh, Inc., a direct or indirect wholly-owned
subsidiary of P&G ("Merger Sub"), providing for the merger (the "Merger")
of Merger Sub with and into the Company, pursuant to which the Company will
become a wholly-owned subsidiary of P&G and as a result of which each
outstanding share (other than shares of Common Stock held in the treasury
of the Company or owned or held by the Company, P&G or any of their
respective subsidiaries, which will be canceled without payment, and other
than shares of Common Stock in respect of which dissenters' rights have
been properly exercised) of common stock, par value $0.25 per share, of the
Company (the "Common Stock"), will be converted into the right to receive
$50.00, in cash, without interest, and to approve and adopt the Merger. A
copy of the Merger Agreement is included as Annex A to the attached Proxy
Statement and is incorporated herein by reference.
2. To transact such other business as may properly be brought before the
Special Meeting or at any adjournments thereof.
The proposed Merger and other related matters are more fully described in
the attached Proxy Statement and the Annexes thereto.
The close of business on May 28, 1997 has been fixed as the record date for
the determination of stockholders entitled to notice of, and to vote at, the
Special Meeting and any adjournments or postponements thereof. Only holders of
record of Common Stock on the record date are entitled to vote at the Special
Meeting.
If the Merger is consummated, holders of Common Stock who comply with the
requirements of Section 262 of the Delaware General Corporation Law (the
"DGCL"), a copy of which is included as Annex C to the attached Proxy
Statement, will be entitled to seek an appraisal of their shares of Common
Stock. For a discussion of the procedures to be followed in asserting
appraisal rights under Section 262 of the DGCL in connection with the proposed
Merger, see "THE MERGER--Dissenters' Rights" in the accompanying Proxy
Statement.
The affirmative vote of a majority of the outstanding shares of Common Stock
is required to approve the Proposal.
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YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN. WHETHER
OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE SIGN, DATE AND RETURN
THE ENCLOSED PROXY CARD IN THE ENCLOSED PREPAID ENVELOPE WITHOUT DELAY. ANY
STOCKHOLDER PRESENT AT THE SPECIAL MEETING MAY VOTE PERSONALLY ON EACH MATTER
BROUGHT BEFORE THE SPECIAL MEETING AND ANY PROXY GIVEN BY A STOCKHOLDER MAY BE
REVOKED AT ANY TIME BEFORE IT IS EXERCISED. PLEASE DO NOT SEND ANY
CERTIFICATES FOR YOUR SHARES AT THIS TIME.
By Order of the Board of Directors,
SUSAN J. RILEY
Senior Vice President
Chief Financial Officer
May 30, 1997
--IMPORTANT--
If your shares are held in "street name," only your bank or broker can vote
your shares. Please contact the person responsible for your account and
instruct him or her to complete, sign, date and return the enclosed proxy card
as soon as possible.
If you have any questions or need further assistance in voting your shares,
please call D.F. King & Co., Inc., which is assisting the Company in
soliciting proxies, at (800) 488-8075.
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TAMBRANDS INC.
777 WESTCHESTER AVENUE
WHITE PLAINS, NEW YORK 10604
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PROXY STATEMENT
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SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 2, 1997
This Proxy Statement is being furnished to the stockholders of Tambrands
Inc., a Delaware corporation ("Tambrands" or the "Company"), in connection
with the solicitation of proxies by the Board of Directors of the Company (the
"Board of Directors") from holders of outstanding shares of common stock, par
value $0.25 per share, of the Company (the "Common Stock") for use at the
Special Meeting of Stockholders to be held at the Company's corporate
headquarters, 777 Westchester Avenue, White Plains, New York, on July 2, 1997
at 9:30 a.m., and at any adjournments thereof (the "Special Meeting"). This
Proxy Statement and the related proxy card are first being mailed to
stockholders on or about May 30, 1997.
At the Special Meeting, holders (the "Stockholders") of the Common Stock
will consider and vote upon a proposal (the "Proposal") to approve and adopt
the Agreement and Plan of Merger, dated as of April 8, 1997 (the "Merger
Agreement"), among the Company, The Procter & Gamble Company, an Ohio
corporation ("P&G"), and C.R. MacIntosh, Inc., a Delaware corporation and a
direct or indirect wholly-owned subsidiary of P&G ("Merger Sub"), pursuant to
which: (a) Merger Sub will be merged with and into the Company (the "Merger"),
and the Company, as the surviving corporation in the Merger, will become a
wholly-owned subsidiary of P&G; and (b) each share of Common Stock that is
issued and outstanding at the effective time of the Merger (the "Effective
Time") will be converted into the right to receive $50.00 in cash, without
interest (the "Merger Consideration"), other than shares of Common Stock held
in the treasury of the Company or owned or held by the Company, P&G or any of
their respective subsidiaries, which will be canceled without payment, and
other than shares of Common Stock in respect of which dissenters' rights have
been properly exercised.
Consummation of the Merger is conditioned upon, among other things, approval
and adoption of the Merger Agreement by the requisite vote of the Stockholders
and the receipt of certain regulatory approvals and consents. The Special
Meeting may be postponed or adjourned until the requisite vote is obtained.
There can be no assurance that the conditions to the Merger will be satisfied
or, where permissible, waived or that the Merger will be consummated. For
further information concerning the terms and conditions of the Merger, see
"THE MERGER--The Merger Agreement."
A copy of the Merger Agreement is attached hereto as Annex A and is
incorporated herein by reference. The summaries of the portions of the Merger
Agreement set forth in this Proxy Statement do not purport to be complete and
are subject to, and are qualified in their entirety by reference to, the text
of the Merger Agreement.
THE BOARD OF DIRECTORS, AFTER CAREFUL CONSIDERATION, HAS UNANIMOUSLY
APPROVED THE MERGER AGREEMENT AND DETERMINED THAT THE MERGER IS FAIR TO AND IN
THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS, AND RECOMMENDS THAT
YOU VOTE FOR APPROVAL AND ADOPTION OF THE MERGER AND THE MERGER AGREEMENT. In
reaching its determination, the Board of Directors considered, among other
things, the opinion of Morgan Stanley & Co. Incorporated ("Morgan Stanley"),
financial advisor to the Company, as to the fairness of the $50.00 in cash to
be received by the holders of shares of Common Stock pursuant to the Merger.
The opinion of Morgan Stanley is included as Annex B hereto and is
incorporated herein by reference. Stockholders are urged to read the opinion
in its entirety for further information with respect to the assumptions made,
matters considered and limitations on the review undertaken by Morgan Stanley.
See "THE MERGER--Opinion of the Company's Financial Advisor."
In connection with the Merger, appraisal rights will be available to those
Stockholders who meet and comply with the requirements of Section 262 of the
Delaware General Corporation Law (the "DGCL"). A copy of Section 262 of the
DGCL is attached as Annex C hereto. For a discussion of the procedures to be
followed in asserting appraisal rights under Section 262 of the DGCL in
connection with the Merger, see "THE MERGER--Dissenters' Rights."
NO PERSONS HAVE BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROXY STATEMENT IN
CONNECTION WITH THE SOLICITATION OF PROXIES MADE HEREBY, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY OR ANY OTHER PERSON.
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The date of this Proxy Statement is May 30, 1997
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SUMMARY.................................................................... 3
The Parties.............................................................. 3
The Special Meeting...................................................... 3
The Merger............................................................... 4
The Merger Agreement..................................................... 5
Conditions to the Merger; Regulatory Approvals........................... 5
Rights Agreement......................................................... 6
No Solicitation; Fiduciary Duties........................................ 6
Termination.............................................................. 6
Fees and Expenses........................................................ 7
Interests of Certain Persons in the Merger............................... 7
Certain Tax Consequences of the Merger................................... 8
Dissenters' Rights....................................................... 8
Certain Financial Information............................................ 8
Market Prices............................................................ 8
VOTING AND PROXIES......................................................... 9
Record Date; Solicitation of Proxies..................................... 9
Vote Required............................................................ 9
THE MERGER................................................................. 10
General.................................................................. 10
Background of and Reasons for the Merger................................. 11
Recommendation of the Board of Directors of the Company.................. 13
Opinion of the Company's Financial Advisor............................... 14
The Merger Agreement..................................................... 16
Interests of Certain Persons in the Merger............................... 28
Regulatory Approvals..................................................... 29
Certain Tax Consequences to Stockholders................................. 30
Accounting Treatment..................................................... 31
Dissenters' Rights....................................................... 31
Certain Litigation....................................................... 33
SELECTED CONSOLIDATED FINANCIAL INFORMATION................................ 34
MARKET PRICES AND DIVIDENDS................................................ 35
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT............. 35
Security Ownership of Directors and Executive Officers................... 35
Other Ownership of Common Stock.......................................... 37
AVAILABLE INFORMATION...................................................... 38
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............................ 38
EXPERTS.................................................................... 38
INDEPENDENT PUBLIC ACCOUNTANTS............................................. 39
STOCKHOLDER PROPOSALS...................................................... 39
OTHER MATTERS.............................................................. 39
</TABLE>
Annex A--Agreement and Plan of Merger, dated as of April 8, 1997, by and among
The Procter & Gamble Company, C.R. MacIntosh, Inc. and Tambrands Inc.
Annex B--Opinion of Morgan Stanley & Co. Incorporated, financial advisor to
the Company.
Annex C--Section 262 of the Delaware General Corporation Law.
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SUMMARY
THE FOLLOWING IS A SUMMARY OF CERTAIN INFORMATION CONTAINED ELSEWHERE IN THIS
PROXY STATEMENT. REFERENCE IS MADE TO, AND THIS SUMMARY IS QUALIFIED IN ITS
ENTIRETY BY, THE MORE DETAILED INFORMATION CONTAINED ELSEWHERE IN THIS PROXY
STATEMENT, IN THE ATTACHED ANNEXES AND IN THE DOCUMENTS INCORPORATED HEREIN BY
REFERENCE. STOCKHOLDERS ARE URGED TO READ CAREFULLY THIS PROXY STATEMENT,
INCLUDING THE ANNEXES HERETO, IN ITS ENTIRETY.
THE PARTIES
Tambrands Inc. The Company's executive offices are located at 777 Westchester
Avenue, White Plains, New York 10604, and its telephone number is (914) 696-
6000.
The Procter & Gamble Company. P&G markets more than 300 brands to nearly five
billion consumers in over 140 countries. Its products fall into five business
segments: laundry and cleaning, paper, beauty care, food and beverage, and
health care. P&G has on the ground operations in over 60 countries and employs
more than 103,000 people worldwide. In the fiscal year ending June 30, 1996,
P&G had worldwide sales of more than $35 billion. The principal executive
offices of P&G are located at One Procter & Gamble Plaza, Cincinnati, Ohio
45202-3315, and its telephone number is (513) 983-1100.
C.R. MacIntosh, Inc. Merger Sub is a special purpose Delaware corporation
created solely for the purpose of consummating the Merger and is a direct or
indirect wholly-owned subsidiary of P&G. The principal executive offices of
Merger Sub are located at c/o The Procter & Gamble Company, One Procter &
Gamble Plaza, Cincinnati, Ohio 45202-3315, and its telephone number is (513)
983-1100.
THE SPECIAL MEETING
Purpose of the Special Meeting; Date, Time and Place. The Special Meeting of
Stockholders will be held at the Company's corporate headquarters, 777
Westchester Avenue, White Plains, New York, on July 2, 1997 at 9:30 a.m. At the
Special Meeting, the holders of shares of Common Stock will consider and vote
upon the approval and adoption of the Merger Agreement.
In the Merger, each share of Common Stock issued and outstanding at the
Effective Time (as defined herein), (other than shares of Common Stock held in
the treasury of the Company or owned or held by the Company, P&G or any of
their respective subsidiaries, which will be canceled without payment, and
other than shares of Common Stock in respect of which dissenters' rights have
been properly exercised) (see "Dissenters' Rights"), will be canceled,
extinguished and converted automatically into the right to receive $50.00 in
cash, without interest (the "Merger Consideration").
Vote Required; Voting Procedures; Record Date. The close of business on May
28, 1997 has been fixed as the record date (the "Record Date") for the
determination of Stockholders entitled to notice of, and to vote at, the
Special Meeting. Only holders of record of Common Stock at the close of
business on the Record Date will be entitled to vote at the Special Meeting. At
the Record Date, 36,990,124 shares of Common Stock were issued and outstanding,
each of which will be entitled to one vote on each matter to be acted upon at
the Special Meeting.
A majority of the outstanding shares of Common Stock entitled to vote,
represented in person or by proxy, is required for a quorum at the Special
Meeting. Approval and adoption of the Merger Agreement requires the affirmative
vote of the holders of a majority of the outstanding shares of Common Stock as
of the Record Date. Abstentions may be specified with respect to the approval
and adoption of the Merger Agreement and will be counted as present for the
purpose of determining the existence of a quorum but will have the effect of a
negative vote due to the requirement of affirmative votes described in the
preceding sentence.
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Shares of Common Stock which are represented by properly executed proxies,
unless such proxies shall have previously been properly revoked, will be voted
in accordance with the instructions indicated in such proxies. If no contrary
instructions are indicated, such shares will be voted FOR approval and adoption
of the Merger Agreement, and in the discretion of the persons named in the
proxy as proxy appointees, as to any other matter which may properly come
before the Special Meeting. Under the rules of the New York Stock Exchange,
Inc. (the "NYSE"), while brokers who hold shares of Common Stock in "street
name" have the authority to vote on certain items when they have not received
instructions from beneficial owners, brokers will not be entitled to vote on
the Merger Agreement absent instructions. Shares of Common Stock held by
brokers who do not receive instructions but which are reported as "instructions
withheld" will be treated as present, in person or by proxy, at the Special
Meeting and counted as present for quorum purposes. Under applicable Delaware
law, a failure by a broker to vote will have the effect of a negative vote on
the approval and adoption of the Merger Agreement.
It is not expected that any matters other than those referred to in this
Proxy Statement will be brought before the Special Meeting. If, however, other
matters are properly presented, including, among other things, a motion to
adjourn or postpone the Special Meeting to another time and/or place for the
purpose of, among other things, soliciting additional proxies in favor of
approval and adoption of the Merger Agreement, one or more of the persons named
as proxy appointees will vote in accordance with their best judgment on such
matters and consistent with the voting rights of such shares as provided by the
Company's By-laws and the DGCL; provided, however, that no proxy that is voted
or is treated as voted against approval and adoption of the Merger Agreement
will be voted in favor of any adjournment or postponement for the purpose of
soliciting additional proxies. At any subsequent reconvening of the Special
Meeting, all proxies will be voted in the same manner as such proxies would
have been voted at the original convening of the Special Meeting, except for
proxies that have been effectively revoked prior to such reconvened meeting.
The grant of a proxy will also confer discretionary authority on the persons
named in the proxy to vote in accordance with their best judgment on matters
incident to the conduct of the Special Meeting. See "VOTING AND PROXIES--Vote
Required."
Any Stockholder may revoke a proxy at any time before it is voted by filing
with the Secretary or the Assistant Secretary of the Company, at the offices of
the Company, an instrument revoking the proxy or by returning a duly executed
proxy bearing a later date, or by attending the Special Meeting and voting in
person. Any such filing should be sent to Tambrands Inc., 777 Westchester
Avenue, White Plains, New York 10604, attention: Secretary or Assistant
Secretary. Attendance at the Special Meeting will not by itself constitute
revocation of a proxy. See "VOTING AND PROXIES."
In addition to the solicitation of proxies by use of the mails, proxies may
also be solicited by the Company and its directors, officers and employees (who
will receive no additional compensation therefor) by telephone, telegram,
facsimile transmission and other electronic communication methods or personal
interview. The Company has engaged D. F. King & Co., Inc. to assist in the
solicitation of proxies for an estimated fee of $10,000 plus expenses. The
Company will reimburse banks, brokerage houses, custodians and other
fiduciaries who hold shares of Common Stock in their name or custody, or in the
name of nominees for others, for their out-of-pocket expenses incurred in
forwarding copies of the proxy materials to those persons for whom they hold
such shares. The Company will bear the costs of the Special Meeting and of
soliciting proxies therefor, except that if the Merger Agreement is terminated
under circumstances in which the Company is not required to reimburse P&G for
its expenses, then P&G will reimburse the Company for the filing fees payable
to the Securities and Exchange Commission (the "SEC") relating to this Proxy
Statement. See "VOTING AND PROXIES" and "THE MERGER--The Merger Agreement--Fees
and Expenses."
THE MERGER
Recommendation of the Board of Directors and Reasons for the Merger. The
Board of Directors of the Company, at a special meeting held on April 8, 1997,
unanimously approved the Merger Agreement and directed that the Merger
Agreement be submitted to the holders of Common Stock for approval and
adoption. The Board
4
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of Directors has determined that the Merger is fair to and in the best
interests of the Company and its Stockholders, and recommends that the
Stockholders vote FOR approval and adoption of the Merger Agreement. In
reaching its decision to approve the Merger Agreement, the Company's Board of
Directors considered a number of factors. For a discussion of the factors
considered by the Board in reaching its determination, see "THE MERGER--
Background and Reasons for the Merger" and "--Recommendation of the Board of
Directors of the Company."
Opinion of the Company's Financial Advisor. Morgan Stanley has delivered its
written opinion to the Board of Directors of the Company that, as of the date
thereof, the $50.00 per share in cash to be received by the holders of shares
of Common Stock in the Merger is fair from a financial point of view to such
holders. The full text of the written opinion of Morgan Stanley, which sets
forth information with respect to assumptions made, matters considered and
limitations on the review undertaken in connection with the opinion, is
attached hereto as Annex B. Stockholders are urged to, and should, read such
opinion in its entirety. See "THE MERGER--Opinion of the Company's Financial
Advisor."
Accounting Treatment. The Merger will be treated as a "purchase" for
accounting purposes.
THE MERGER AGREEMENT
Effective Time of the Merger; Payment for the Common Stock. As soon as
practicable after the satisfaction or waiver of the conditions set forth in
Article 9 of the Merger Agreement, the Company and Merger Sub will file with
the Secretary of State of the State of Delaware (the "Delaware Secretary of
State") a certificate of merger (the "Certificate of Merger"), executed in
accordance with the relevant provisions of the DGCL. The date and time of the
filing of the Certificate of Merger with the Delaware Secretary of State (or
such later time as is agreed to in writing by the parties to the Merger
Agreement and is specified in the Certificate of Merger) will be the "Effective
Time."
Detailed instructions with regard to the surrender of certificates formerly
evidencing shares of Common Stock, to be accompanied by a letter of
transmittal, will be forwarded to holders of such certificates as promptly as
practicable following the Effective Time by a paying agent to be designated by
P&G (and reasonably satisfactory to the Company) in accordance with the Merger
Agreement (the "Paying Agent"). Payment will be made to such former holders of
shares of Common Stock as promptly as practicable following receipt by the
Paying Agent of certificates formerly evidencing their shares of Common Stock
and other required documents. No interest will be paid or accrued on the cash
payable upon the surrender of certificates.
STOCK CERTIFICATES SHOULD NOT BE SENT WITH THE ENCLOSED PROXY CARD. IF THE
MERGER IS CONSUMMATED, STOCKHOLDERS WILL BE FURNISHED INSTRUCTIONS FOR
EXCHANGING THEIR SHARES OF COMMON STOCK FOR CASH.
CONDITIONS TO THE MERGER; REGULATORY APPROVALS
The obligations of P&G, Merger Sub and the Company to consummate the Merger
are subject to the satisfaction or waiver of certain conditions, including
obtaining requisite Stockholder and certain regulatory approvals and the
absence of a material adverse change affecting the Company.
One of the conditions to the Merger is expiration or termination of the
waiting period applicable to consummation of the Merger under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"). Another
is the making of antitrust filings and the obtaining of antitrust consents, and
the expiration of waiting periods, under non-U.S. antitrust laws, to the extent
that the failure to make or obtain such filings or consents or of the waiting
period to have expired is reasonably likely to have a material adverse effect
on Tambrands or on its business in certain jurisdictions.
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Other conditions include those relating to: representations or warranties
made by Tambrands in the Merger Agreement; the compliance by Tambrands with its
obligations under the Merger Agreement; the resolution to P&G's reasonable
satisfaction of certain non-compete provisions; the absence of any change by
the Company's Board of Directors in its recommendation of the Merger; and the
absence of any pending or threatened governmental litigation related to the
Merger which challenges the Merger or which is reasonably likely to have a
material adverse effect on the business of the Company or P&G in certain
jurisdictions. See "THE MERGER--The Merger Agreement--Conditions to the
Merger", "--Certain Additional Conditions" "--Conduct of Business Pending
Merger," "--Other Agreements" and "--Regulatory Approvals."
RIGHTS AGREEMENT
The Company has amended the Rights Agreement, dated as of October 24, 1989
(the "Rights Agreement"), between the Company and First Chicago Trust Company
of New York, as rights agent, to make the Rights Agreement inapplicable to P&G
and the Merger through the Effective Time and to provide that the rights to
purchase Common Stock pursuant to the Rights Agreement will expire and be
canceled immediately prior to the Effective Time without payment.
NO SOLICITATION; FIDUCIARY DUTIES
The Company has agreed in the Merger Agreement that neither it nor any of its
subsidiaries, nor any of their respective officers, directors, employees,
representatives, agents or affiliates, shall, directly or indirectly,
encourage, solicit, initiate or, except as is required in the exercise of the
fiduciary duties of the Company's directors to the Company or its Stockholders
after consultation with outside counsel to the Company, participate in any way
in any discussions or negotiations with, or provide any information to, or
afford any access to the properties, books or records of the Company or any of
its subsidiaries to, or otherwise assist, facilitate or encourage, any
corporation, partnership, person or other entity or group (other than P&G or
any affiliate or associate of P&G) concerning any merger, consolidation,
business combination, liquidation, reorganization, sale of substantial assets,
sale of shares of capital stock or similar transactions involving the Company
or any subsidiary or any division of any thereof (an "Alternative Proposal"),
and, except as contemplated by the Merger Agreement, shall immediately cease
and cause to be terminated any existing activities, discussions or negotiations
with any parties conducted theretofore with respect to any of the foregoing;
provided, however, that nothing contained in the Merger Agreement shall
prohibit the Company or its Board of Directors from taking and disclosing to
the Stockholders a position with respect to a tender offer by a third party
pursuant to Rules 14d-9 and Rule 14e-2(a) under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), or from making such disclosure to the
Stockholders which, in the judgment of the Board of Directors with the advice
of outside counsel, may be required under applicable law. The Company will
promptly notify P&G if any such information is requested from it or any such
negotiations or discussions are sought to be initiated with the Company, and
will promptly communicate to P&G the terms of any proposal or inquiry which it
may receive in respect of any such transaction. See "THE MERGER--The Merger
Agreement--No Solicitation; Fiduciary Duties."
TERMINATION
The Merger Agreement may be terminated at any time prior to the Effective
Time:
(i) by mutual consent of the parties;
(ii) by P&G or the Company if (A) the Stockholders shall have voted on
and not approved the Merger, (B) the Merger shall not have occurred by
September 30, 1997 (unless extended), or (C) consummation of the Merger is
barred by law or by final court order;
(iii) by P&G under certain circumstances if (A) Tambrands' Board of
Directors, in the exercise of its fiduciary duties, withdraws or modifies
its approval of the Merger, or recommends any Alternative Proposal
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or (B) upon the failure of any condition set forth in paragraphs (e)
(except as it relates to a breach of the Company's representations and
warranties with respect to non-competition agreements), (f) and (g)
described herein under "THE MERGER--The Merger Agreement--Certain
Additional Conditions"; or
(iv) by the Company, before Stockholder approval of the Merger and
subject to certain limitations, if the Board of Directors of the Company
terminates the Agreement, in the exercise of its fiduciary duties, in
connection with a superior Alternative Proposal.
See "THE MERGER--The Merger Agreement--Termination."
FEES AND EXPENSES
Under the Merger Agreement, Tambrands is required to pay to P&G a fee of $50
million (less the amount of reimbursable expenses described under "THE MERGER--
The Merger Agreement--Fees and Expenses"), if the Merger Agreement is
terminated:
(a) by Tambrands in connection with a superior Alternative Proposal under
the circumstances described in paragraph (d) under "THE MERGER--The Merger
Agreement--Termination",
(b) by P&G because the Board of the Company has withdrawn or amended its
recommendation of the Merger or recommended an Alternative Proposal, except
as a result of P&G's willful breach of its representations, warranties or
obligations under the Merger Agreement, or
(c) by P&G if the Stockholders have not approved the Merger at the
Special Meeting, provided that (x) prior to the failure of the Stockholders
to approve the Merger, an Alternative Proposal with another party shall
have been publicly announced or known and (y) during the term of the Merger
Agreement or within six months after termination of the Merger Agreement,
the Board of the Company approves an Alternative Proposal with another
party or enters into an agreement with another party.
Each party is to pay its own costs and expenses, except that the Company
shall reimburse P&G for reasonable out-of-pocket expenses in connection with
the Merger, not to exceed $10 million, if the Merger Agreement is terminated
under certain circumstances, including those in which the fee referred to in
the previous paragraph would become payable, and also if the Merger Agreement
is terminated by P&G due to the failure to satisfy the condition relating to
the accuracy of the Company's representations and warranties and the
performance by the Company of its obligations as described in paragraph (e)
under "THE MERGER--The Merger Agreement--Certain Additional Conditions". If the
Merger Agreement is terminated under circumstances in which the Company is not
required to reimburse P&G for expenses, then P&G will reimburse the Company for
$1 million plus the filing fees payable to the SEC relating to this Proxy
Statement. See "THE MERGER--The Merger Agreement--Fees and Expenses."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Each of the executive officers is a party to an agreement that will assure
such officer continued employment for a period of two years following the
Effective Time, or, if any such executive officer's employment is involuntarily
or constructively terminated within such two years following the Effective
Time, a minimum amount of severance payable in a lump sum. Each such agreement
also provides that the Company will make additional payments, if and as
necessary, to compensate an affected executive for any additional taxes that
may become payable by reason of the imposition of the so-called golden
parachute excise tax.
A number of the Company's employee benefit plans and programs have provisions
that will provide for accelerated vesting of outstanding rights and awards,
and/or enhanced benefits to the participants in such programs, including the
executive officers. Two of the Company's directors will vest in their stock
units upon the Effective Time under such a provision. In addition, under
certain bonus arrangements, each of the executive officers will be entitled to
receive certain additional compensation for 1997 based on the performance of
the Company, but subject to a minimum payment based on a pro-rated portion of
the annual target bonus that
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otherwise would have been payable to each such officer under the Company's
Annual Incentive Plan. See "THE MERGER--Interests of Certain Persons in the
Merger."
CERTAIN TAX CONSEQUENCES OF THE MERGER
The receipt of cash for shares of Common Stock in the Merger or pursuant to
the exercise of dissenters' appraisal rights will be a taxable transaction for
federal income tax purposes and may also be a taxable transaction under
applicable state, local, foreign or other tax laws. Stockholders are urged to
consult their own tax advisors as to the particular tax consequences of the
Merger, including the applicability and effect of state, local, foreign and
other taxes. See "THE MERGER--Certain Tax Consequences to Stockholders."
DISSENTERS' RIGHTS
Subject to compliance with the procedures set forth in Section 262 of the
DGCL, the full text of which is included as Annex C to this Proxy Statement,
Stockholders are entitled to appraisal rights in connection with the Merger.
Any demand for appraisal must be made prior to the Stockholder vote on the
Merger Agreement at the Special Meeting. Holders of shares of Common Stock who,
prior to the Stockholder vote on the Merger Agreement at the Special Meeting,
properly demand and perfect their right to appraisal of such shares (and do not
withdraw such demand or lose such right) and who do not vote in favor of the
approval and adoption of the Merger Agreement, will have the right to obtain a
cash payment for the "fair value" of such shares (excluding any element of
value arising from the accomplishment or expectation of the Merger), together
with a fair rate of interest, if any, to be paid upon the amount determined to
be the fair value. Such "fair value" would be determined in judicial
proceedings, the result of which cannot be predicted. The Delaware Supreme
Court has stated that "proof of value by any techniques or methods which are
generally considered acceptable in the financial community and otherwise
admissible in court" should be considered in the appraisal proceedings. In
addition, Delaware courts have decided that the statutory appraisal remedy,
depending on factual circumstances, may or may not be a stockholder's exclusive
remedy. The Delaware Court of Chancery will also determine the amount of
interest, if any, to be paid upon the amounts to be received by persons whose
shares of Common Stock have been appraised. The costs of the action may be
determined by such court and taxed upon the parties as the court deems
equitable. The court may also order that all or a portion of the expenses
incurred by any holder of shares of Common Stock in connection with an
appraisal, including, without limitation, reasonable attorneys' fees and the
fees and expenses of experts utilized in the appraisal proceeding, be charged
pro rata against the value of all of the shares of Common Stock entitled to
appraisal. Failure to take any of the steps required under Section 262 of the
DGCL on a timely basis may result in the loss of appraisal rights. Holders
considering seeking appraisal should be aware that the fair value of their
shares of Common Stock as determined under Section 262 could be more than, the
same as or less than the value of the Merger Consideration that they would
otherwise receive in the Merger if they did not seek appraisal of their shares
of Common Stock. See "THE MERGER--Dissenters' Rights."
CERTAIN FINANCIAL INFORMATION
See "SELECTED CONSOLIDATED FINANCIAL INFORMATION" and "INCORPORATION OF
CERTAIN DOCUMENTS BY REFERENCE" for certain financial information with respect
to the Company and its subsidiaries.
MARKET PRICES
Shares of Common Stock are listed and traded on the NYSE. On April 8, 1997,
the date preceding public announcement of the signing of the Merger Agreement,
the high, low and closing sales prices of a share of Common Stock on the NYSE
Composite Transactions Tape were $48 1/8, $45 1/8 and $46 1/8, respectively. On
May 28, 1997, the latest practicable trading day before the printing of this
Proxy Statement, the high, low and closing sales prices of a share of Common
Stock on the NYSE Composite Transactions Tape were $48 1/4, $47 7/8 and $48
1/8, respectively.
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VOTING AND PROXIES
This Proxy Statement is being furnished to Stockholders in connection with
the solicitation of proxies by or on behalf of the Board of Directors for use
at the Special Meeting.
RECORD DATE; SOLICITATION OF PROXIES
The close of business on May 28, 1997 has been fixed as the Record Date for
the determination of Stockholders entitled to notice of and to vote at the
Special Meeting. At the Record Date, there were 36,990,124 shares of Common
Stock issued and outstanding and entitled to vote at the Special Meeting.
Holders of shares of Common Stock are entitled to one vote at the Special
Meeting for each share of Common Stock held of record by them at the Record
Date.
In addition to the solicitation of proxies by use of the mails, proxies may
also be solicited by the Company and its directors, officers and employees
(who will receive no additional compensation therefor) by telephone, telegram,
facsimile transmission and other electronic communication methods or personal
interview. The Company will reimburse banks, brokerage houses, custodians and
other fiduciaries who hold shares of Common Stock in their name or custody, or
in the name of nominees for others, for their out-of-pocket expenses incurred
in forwarding copies of the proxy materials to those persons for whom they
hold such shares. The Company will bear the costs of the Special Meeting and
of soliciting proxies therefor, except that if the Merger Agreement is
terminated under circumstances in which the Company is not required to
reimburse P&G for its expenses, P&G will reimburse the Company for the SEC
filing fee relating to this Proxy Statement. The Company's proxy solicitor,
D.F. King & Co., Inc. ("D.F. King"), has agreed to assist the Company in
connection with the tabulation of proxies. Pursuant to the Company's agreement
with D.F. King, D.F. King will provide various proxy services for the Company
in connection with the Special Meeting at a cost of approximately $10,000,
plus reasonable out-of-pocket expenses. Any questions or requests for
assistance regarding this Proxy Statement and related proxy materials may be
directed to D.F. King by telephone at (800) 488-8075.
VOTE REQUIRED
A majority of the outstanding shares of Common Stock entitled to vote as of
the Record Date, represented in person or by proxy, is required for a quorum
at the Special Meeting. The affirmative vote of a majority of the shares of
outstanding Common Stock as of the Record Date is required for approval and
adoption of the Merger Agreement. Abstentions may be specified with respect to
the approval and adoption of the Merger Agreement and will be counted as
present for the purpose of determining the existence of a quorum but will have
the effect of a negative vote due to the requirement of affirmative votes
described in the preceding sentence.
Shares of Common Stock which are represented by properly executed proxies,
unless such proxies shall have previously been properly revoked, will be voted
in accordance with the instructions indicated in such proxies. If no contrary
instructions are indicated, such shares will be voted FOR approval and
adoption of the Merger Agreement, and in the discretion of the persons named
in the proxy as proxy appointees, as to any other matter which may properly
come before the Special Meeting.
Under the rules of the NYSE, while brokers who hold shares of Common Stock
in street name have the authority to vote on certain items when they have not
received instructions from beneficial owners, brokers will not be entitled to
vote on the Merger Agreement absent instructions. Shares of Common Stock held
by brokers who do not receive instructions but which are reported as
"instructions withheld" will be treated as present, in person or by proxy, at
the Special Meeting and counted as present for quorum purposes. Under
applicable Delaware law, a failure by a broker to vote will have the effect of
a negative vote on the approval of the Merger Agreement.
Under the Company's By-laws, the business which may be transacted at the
Special Meeting is limited to the purpose stated in the Notice of Meeting.
Accordingly, it is not expected that any matters other than those
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referred to in this Proxy Statement will be brought before the Special
Meeting. If, however, other matters are properly presented, including, among
other things, a motion to adjourn or postpone the Special Meeting to another
time and/or place for the purpose of, among other things, soliciting
additional proxies in favor of approval and adoption of the Merger Agreement,
one or more of the persons named as proxy appointees will vote in accordance
with their best judgment on such matters and consistent with the voting rights
of such shares as provided by the Company's By-laws and the DGCL; provided,
however, that no proxy that is voted or is treated as voted against approval
and adoption of the Merger Agreement will be voted in favor of any adjournment
or postponement for the purpose of soliciting additional proxies. At any
subsequent reconvening of the Special Meeting, all proxies will be voted in
the same manner as such proxies would have been voted at the original
convening of the Special Meeting, except for proxies that have been
effectively revoked prior to such reconvened meeting. The grant of a proxy
will also confer discretionary authority on the persons named as proxy
appointees to vote in accordance with their best judgment on matters incident
to the conduct of the Special Meeting.
Any holder of shares of Common Stock may revoke a proxy at any time before
it is voted by filing with the Secretary or the Assistant Secretary of the
Company an instrument revoking the proxy or by returning a duly executed proxy
bearing a later date, or by attending the Special Meeting and voting in
person. Any such filing should be sent to Tambrands Inc., 777 Westchester
Avenue, White Plains, N.Y. 10604; Attention: Secretary or Assistant Secretary.
Attendance at the Special Meeting will not by itself constitute revocation of
a proxy.
Holders of shares of Common Stock have the right to demand appraisal rights
in connection with the Merger and, subject to certain conditions provided
under the DGCL, to receive payment for the fair value of such shares. See "THE
MERGER--Dissenters' Rights."
The Merger Agreement to be considered at the Special Meeting involves a
matter of great importance to the Stockholders. Accordingly, holders of shares
of Common Stock are urged to read and carefully consider the information
presented in this Proxy Statement and are urged to complete, date, sign and
promptly return the enclosed proxy card in the accompanying prepaid envelope.
STOCK CERTIFICATES SHOULD NOT BE SENT WITH THE ENCLOSED PROXY CARD. IF THE
MERGER IS CONSUMMATED, STOCKHOLDERS WILL BE FURNISHED INSTRUCTIONS FOR
EXCHANGING THEIR SHARES OF COMMON STOCK FOR CASH.
THE MERGER
GENERAL
The following information with respect to the Merger is qualified in its
entirety by reference to the complete text of the Merger Agreement, a copy of
which is included in this Proxy Statement as Annex A. The Merger Agreement
sets forth the terms and conditions upon which the Merger is to be effected.
If the Merger Agreement is approved and adopted by the holders of a majority
of the outstanding shares of Common Stock at the Special Meeting, and all
other conditions to the obligations of the parties thereto are satisfied or
waived, the Merger will be consummated and Merger Sub will merge with and into
the Company at the Effective Time. The Company will be the Surviving
Corporation in the Merger.
Pursuant to the Merger, each share of Common Stock issued and outstanding at
the Effective Time, other than shares of Common Stock held in the treasury of
the Company or owned or held by the Company, P&G or any of their respective
subsidiaries, which will be canceled without payment, and other than shares of
Common Stock in respect of which dissenters' rights have been properly
exercised, will be canceled, extinguished and converted automatically into the
right to receive the Merger Consideration. As a result of the Merger, holders
of shares of Common Stock will cease to have an equity interest in, or possess
any rights as stockholders of, the Surviving Corporation.
Pursuant to the Merger Agreement, immediately prior to the Effective Time,
each outstanding Option (as defined below), whether or not then exercisable,
shall be canceled and each holder of an Option will be entitled to receive,
for each share of Common Stock subject to an Option, an amount in cash equal
to the excess, if any,
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of the Merger Consideration per share of Common Stock over the per share
exercise price of such Option, without interest. As used in the Merger
Agreement, an "Option" refers to each option outstanding immediately prior to
the Effective Time under any Company stock option plan.
BACKGROUND OF AND REASONS FOR THE MERGER
Background. The terms of the Merger Agreement are the result of arm's-length
negotiations between representatives, legal advisors and financial advisors of
the Company and of P&G. The following is a brief discussion of the background
of those negotiations.
In December 1996, the Company's Board of Directors completed a detailed
review of the Company's strategic plan. The Board concluded that the Company
had a sound and achievable plan for future growth in revenues and earnings as
a stand-alone company, given, among other things, the strength of the
Company's brand name. The Board also believed, however, that the Company was
likely to be worth more as part of a larger multinational organization which
could realize synergies in distributing the Company's products with its own
products, and which would be well equipped to make the significant investment
necessary to increase the development of new products and the distribution of
the Company's products globally.
Morgan Stanley, which has been the Company's financial advisor for several
years, advised the Board that a sale of the Company was likely to be the best
way to maximize value for Stockholders. This advice was based on historical
and projected financial information provided by the Company, which indicated,
based on certain assumptions, modest growth in revenues and net income over
the next several years, as well as the fact that a sale to a major consumer
products company was likely to result in significant synergies. Morgan Stanley
also advised that the Company should be worth more to a strategic buyer who
could realize appreciable synergies through a business combination with the
Company, than to a financial buyer, and that the number of companies likely to
be interested in a business combination with the Company was probably limited,
given among other things the Company's size, the goodwill that could be
associated with an acquisition, and the nature of its products and markets.
The Board on December 19, 1996 authorized Morgan Stanley to contact another
company, which the Company and Morgan Stanley believed was likely to have a
strategic interest in exploring the possibility of a business combination with
the Company, to see if that company were interested in acquiring the Company.
The other company entered into a confidentiality agreement with the Company
and, during late December and the first half of January, met with
representatives of the Company and conducted a due diligence review of the
Company. The other company thereafter advised Morgan Stanley and the Company
that it had decided not to make an offer for the Company at that time.
On January 28, 1997, the Board authorized Morgan Stanley to contact P&G.
Morgan Stanley did so on February 4, 1997. P&G on February 7 advised Morgan
Stanley that it was interested in considering a possible business combination
with the Company and in undertaking a due diligence review of the Company for
that purpose.
On February 19, P&G entered into a confidentiality agreement with the
Company. Representatives of P&G thereafter undertook an initial due diligence
review of certain aspects of the Company's business. On March 11,
representatives of P&G advised representatives of the Company that P&G's board
had authorized continued exploration of the possibility of a mutually
agreeable business combination with the Company. This was reported to the
Company's Board at an informational Board meeting on March 14. Representatives
of P&G in the following weeks undertook an extensive business and documentary
due diligence review of the Company.
On March 28, counsel to P&G delivered to the Company's counsel a draft of a
merger agreement. Representatives of the parties discussed the draft agreement
in person and by telephone from April 1 through April 8. The draft Merger
Agreement contemplated the acquisition of the Company by P&G in a one-step
merger but gave P&G the option, prior to consummation of the merger, of
effecting the acquisition in two steps, namely, the commencement of a tender
offer (the "Offer") for all outstanding shares of Common Stock followed by a
second step cash merger at the same price per share for shares of Common Stock
not acquired in the Offer.
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The initial draft of the contract contemplated that the Company would not be
permitted to pay any dividends between signing and closing, and also
contemplated that P&G would receive an option to buy shares of Common Stock.
On April 2, representatives of P&G indicated that, if a mutually acceptable
contract were negotiated, P&G would be prepared to pay $48 per share for the
Company. P&G proposed at that time to drop its request for an option on shares
of Common Stock, and that the termination fee be $75 million. After
negotiations, P&G agreed to increase the proposed purchase price to $50 per
share, to permit the Company to continue to pay regular quarterly dividends of
$.46 per share pending closing of the Merger, and to reduce the amount of the
termination fee to $50 million.
On April 3, in a telephone conversation between John E. Pepper, Chairman and
Chief Executive of P&G, and Edward T. Fogarty, Chairman, President and Chief
Executive Officer of the Company, Mr. Pepper indicated that P&G was not
prepared to pay more than $50 per share. Mr. Pepper noted his belief that it
was a very fair price, particularly in light of the investments P&G believed
to be necessary to realize the Company's full potential. In a telephone
conversation later that day between the parties' financial advisers, P&G's
financial adviser also said that P&G was not prepared to increase the proposed
per share price. In a call from Mr. Pepper to Mr. Fogarty on Friday, April 4,
Mr. Pepper noted that $50 per share represented a substantial premium over the
price at which the Company's shares of Common Stock had been trading when the
Company had contacted P&G in February. (On February 3, 1997, the day before a
representative of the Company contacted P&G, the closing price of the
Company's shares of Common Stock was $41.50).
Also on Friday, April 4, 1997, at a special meeting of the Board, the Board
reviewed the status of discussions with P&G and were advised of the
negotiations with P&G as to the price and structure of the transaction.
Final contract negotiations continued during the night of April 7 and
through the day of April 8. On the afternoon of April 8, the Company was
informed that P&G's board of directors had approved the proposed transaction,
and that P&G was formally offering to acquire the Company for $50 per share
pursuant to the proposed Merger Agreement. Also on the afternoon of April 8,
the Board of the Company met to review P&G's offer and the definitive Merger
Agreement. At the meeting, the Board reviewed in detail the offer from P&G,
the terms of the Merger Agreement, regulatory issues raised by the
transaction, and the Company's operating results, and received a presentation
from Morgan Stanley as to the financial terms of the transaction. Morgan
Stanley advised the Board, orally and later that day in writing, that it was
of the opinion that the consideration to be received by holders of shares of
Common Stock in the Merger was fair from a financial point of view to such
holders. See "Opinion of the Company's Financial Advisor" and Annex B (which
is the full text of Morgan Stanley's opinion, and which sets forth information
with respect to assumptions made, matters considered and limitations on the
review undertaken in connection with the opinion). The Board then unanimously
approved and adopted the Merger Agreement, determined that the terms of the
Merger and the Merger Agreement were fair and in the best interests of the
Stockholders, and recommended that the Stockholders approve the Merger and
approve and adopt the Merger Agreement.
The Merger Agreement was signed on the evening of April 8, 1997. A press
release announcing the signing of the Merger Agreement was issued on the
morning of April 9, 1997.
Reasons for the Merger. In determining to approve the Merger and the Merger
Agreement and to recommend that Stockholders approve the Merger and the Merger
Agreement, the Board of Directors considered a number of factors, including
the following:
(i) historical trading prices for shares of Common Stock, the price per
share offered by P&G, and the fact that such price represented a premium of
more than 8% over the closing market price per share of Common Stock on
April 8, 1997, the last trading day before announcement of the Merger and
of more than 20% over the closing market price per share of Common Stock on
February 3, 1997, the day before a representative of the Company first
contacted P&G;
(ii) information regarding the Company's strategic plan, the earnings
achievable under that plan, the risks and uncertainties in achieving that
plan, and the fact that P&G was able to pay more for the Company than the
trading value of the shares of Common Stock as a stand-alone company,
because of the greater
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earnings that should be achievable by P&G from the Company's business, in
light of the likely synergies from the business combination;
(iii) the inherent risks to the Company in being a company that is
essentially a maker of one line of closely related products;
(iv) the fact that, although the Company is by far the largest seller of
tampons in the United States, its share of the tampon market in the United
States has declined over the past several years;
(v) P&G's business reputation and global activities, together with its
distribution capabilities, which the Board believed place P&G in a strong
position to optimize the value of the Company's business and to reflect
that value in the price paid to Stockholders in the Merger;
(vi) P&G's financial strength and the fact that the Merger is not
conditioned on the availability of financing;
(vii) the fact that the other company that had undertaken a due diligence
investigation of the Company in December and January had declined to submit
an offer to acquire the Company;
(viii) the risk, including antitrust regulatory risk, that the Merger
would not be consummated, and the possible damage to the Company if that
were to be the case;
(ix) the terms and conditions of the Merger Agreement, including the
ability of the Company (if required in the exercise of the directors'
fiduciary duties to the Company or its Stockholders after consultation with
outside counsel) to engage in discussions and to provide information to
other companies with respect to an alternative business combination
proposal, and the ability of the Company prior to Stockholder approval of
the Merger to terminate the Merger Agreement and to enter into an agreement
with another buyer if the Company's directors determine the alternative
transaction represents a superior transaction to Stockholders, and also
determine that failure to terminate the Merger Agreement would be
inconsistent with their fiduciary duties to Stockholders, and if the
Company has paid the termination fee and expenses provided in the Merger
Agreement;
(x) the fact that the Merger Agreement requires the approval of holders
of a majority of the Common Stock; and
(xi) the opinion of Morgan Stanley that, as of April 8, 1997, based on
and subject to certain matters set forth in the opinion, the $50 in cash
per share to be received by the holders of the Common Stock in the Merger
is fair to such holders from a financial point of view.
Based on this analysis, the Company's Board unanimously determined that the
Merger is fair to, and in the best interests of, the Stockholders. The
foregoing discussion of the information and factors considered by the
Company's Board is not intended to be exhaustive, and such information and
factors were considered collectively by the Company's Board in connection with
its review of the Merger Agreement and the proposed transactions. In view of
the variety of factors considered in connection with its evaluation of the
Merger, the Company's Board did not find it practicable to, and did not,
quantify or otherwise assign relative weights to the specific factors
considered in reaching its determination. In addition, individual members of
the Company's Board may have given different weights to different factors. For
a discussion of the interests of certain members of the Company's management
and directors in the Merger, which interests were considered by the Company's
Board, see "Interests of Certain Persons in the Merger."
RECOMMENDATION OF THE BOARD OF DIRECTORS OF THE COMPANY
The Board of Directors of the Company has determined that the Merger and the
Merger Agreement are advisable and in the best interests of the Company and
its Stockholders and has unanimously approved the Merger Agreement.
ACCORDINGLY, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS
VOTE FOR APPROVAL OF THE MERGER AND THE MERGER AGREEMENT.
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OPINION OF THE COMPANY'S FINANCIAL ADVISOR
The Company retained Morgan Stanley to act as its financial advisor in
connection with the Merger and related matters based upon Morgan Stanley's
qualifications, experience and expertise. At the April 8, 1997 meeting of the
Board of Directors, Morgan Stanley rendered to the Company's Board of
Directors an oral opinion, confirmed in writing as of such date, to the effect
that, as of such date and based on and subject to certain matters stated
therein, the consideration to be received by the holders of shares of Common
Stock pursuant to the Merger Agreement was fair from a financial point of view
to the holders of shares of Common Stock.
THE FULL TEXT OF THE MORGAN STANLEY OPINION DATED APRIL 8, 1997, WHICH SETS
FORTH THE ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITATIONS ON THE REVIEW
UNDERTAKEN, IS ATTACHED AS ANNEX B TO THIS PROXY STATEMENT AND IS INCORPORATED
HEREIN BY REFERENCE. HOLDERS OF COMMON STOCK ARE URGED TO, AND SHOULD, READ
THE MORGAN STANLEY OPINION CAREFULLY AND IN ITS ENTIRETY. THE MORGAN STANLEY
OPINION IS DIRECTED TO THE COMPANY'S BOARD OF DIRECTORS AND ADDRESSES THE
FAIRNESS OF THE CONSIDERATION PURSUANT TO THE MERGER AGREEMENT FROM A
FINANCIAL POINT OF VIEW TO THE HOLDERS OF SHARES OF COMMON STOCK AND IT DOES
NOT ADDRESS ANY OTHER ASPECT OF THE MERGER NOR DOES IT CONSTITUTE A
RECOMMENDATION TO ANY HOLDER OF COMMON STOCK AS TO HOW TO VOTE AT THE SPECIAL
MEETING. THE SUMMARY OF THE MORGAN STANLEY OPINION SET FORTH IN THIS PROXY
STATEMENT IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF SUCH
OPINION.
In arriving at its opinion, Morgan Stanley (i) reviewed certain publicly
available financial statements and other information of the Company; (ii)
reviewed certain internal financial statements and other financial and
operating data concerning the Company prepared by the management of the
Company; (iii) analyzed certain financial projections prepared by the
management of the Company; (iv) discussed the past and current operations and
financial condition and the prospects of the Company with senior executives of
the Company; (v) reviewed the reported prices and trading activity for the
Common Stock; (vi) compared the financial performance of the Company and the
prices and trading activity of the Common Stock with that of certain other
comparable publicly-traded companies and their securities; (vii) reviewed the
financial terms, to the extent publicly available, of certain comparable
acquisition transactions; (viii) participated in discussions and negotiations
among representatives of the Company and P&G and their financial and legal
advisors; (ix) reviewed the Merger Agreement and certain related documents;
and (x) performed such other analyses and considered such other factors as
Morgan Stanley deemed appropriate.
In rendering its opinion, Morgan Stanley assumed and relied upon without
independent verification the accuracy and completeness of the information
reviewed by Morgan Stanley for purposes of its opinion. With respect to
financial projections, Morgan Stanley assumed that they had been reasonably
prepared on bases reflecting the best currently available estimates and
judgments of the future financial performance of the Company. Morgan Stanley
did not make any independent valuation or appraisal of the assets or
liabilities of the Company, nor was Morgan Stanley furnished with any such
appraisals. Morgan Stanley's opinion is necessarily based on economic, market
and other conditions as in effect on, and the information made available to
Morgan Stanley as of, the date thereof.
In arriving at its opinion, Morgan Stanley was not authorized to solicit,
and did not solicit, interest from a broad number of parties with respect to
the acquisition of the Company.
The following is a brief summary of the analyses performed by Morgan Stanley
and reviewed with the Company's Board of Directors in connection with the
preparation of the Morgan Stanley opinion dated April 8, 1997 and with its
oral presentation to the Company's Board of Directors on such date.
Historical Public Market Stock Performance. Morgan Stanley's analysis of the
Common Stock consisted of a review of the closing price of the shares of the
Common Stock for the latest twelve months ("LTM"), historical and forward
trading multiples and market value of the Company. The stock performance
review indicated that for the LTM ended April 7, 1997, the high and low
closing prices for the Common Stock were $50.25 and $36.63, respectively.
Morgan Stanley observed that the consideration payable pursuant to the Merger
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of $50.00 per share of Common Stock represented a premium of 36.5% to the LTM
low closing price, and a discount of 0.5% to the LTM high closing price.
Discounted Cash Flow Analysis. Morgan Stanley performed a discounted cash
flow analysis to determine a range of present values per share of Common Stock
based on certain financial projections prepared by management of the Company
for the fiscal years 1997 through 2002. Morgan Stanley discounted the
unlevered free cash flows of the Company (net income available to Stockholders
plus depreciation and amortization plus deferred taxes plus after-tax net
interest expense less capital expenditures less investment in working capital
plus or minus any other changes in liabilities or assets) over the forecast
period at a range of discount rates of 12.5% to 13.5%, which Morgan Stanley
viewed as the estimated weighted average cost of capital range for the
Company. The present value of such free cash flows was then added to the
present value of the Company's terminal value, computed using a range of
terminal earnings before interest and taxes ("EBIT") multiples from 11.0x to
13.0x (implying a 5.8% to 6.9% perpetual growth rate of free cash flows) and
discounted at the aforementioned range of discount rates. Based on this
analysis and the assumptions set forth above, Morgan Stanley calculated a
range of per share values for the Company of between $44.62 and $50.77.
Comparable Company Trading Analysis. Morgan Stanley performed a comparable
company trading analysis pursuant to which it compared certain publicly
available financial and operating data, projections of future financial
performance and market statistics (based upon closing stock prices on April 7,
1997) of Carter Wallace Incorporated, Colgate Palmolive Company, Dial
Corporation, Gillette Company, Kimberly-Clark Corporation, Playtex Products
Incorporated and P&G (the "Selected Comparable Companies"). Morgan Stanley
compared (i) the closing stock price of the Selected Comparable Companies as a
multiple of estimated 1997 earnings per share ("EPS") based upon information
from Institutional Brokers Estimate System ("I/B/E/S") and (ii) the closing
stock price of the Selected Comparable Companies as a multiple of estimated
1997 EPS divided by the five year estimated I/B/E/S growth rate.
For the Selected Comparable Companies, such analysis indicated: (i) median
price to estimated 1997 EPS multiple of 20.0x and (ii) median price to
estimated 1997 EPS divided by the five year estimated I/B/E/S growth rate of
1.5x. Morgan Stanley noted that, as of April 7, 1997, the Company was trading
within the range of the Selected Comparable Companies based on its median
price to estimated 1997 EPS of 18.2x, and above the range of the Selected
Comparable Companies based on its median price to estimated 1997 EPS divided
by the five year estimated I/B/E/S growth rate of 2.1x.
Precedent Transaction Analysis. Morgan Stanley reviewed certain publicly
available information regarding transactions from 1988 to 1996 involving the
acquisition of companies determined by Morgan Stanley to be comparable to the
Company. For each transaction Morgan Stanley calculated and analyzed where
available a variety of acquisition multiples, but focused its analysis on (i)
the equity value as a multiple of LTM earnings and (ii) the aggregate value as
a multiple of LTM sales. In these transactions, Morgan Stanley observed a wide
dispersion of multiples of equity value to LTM earnings and multiples of
aggregate value to LTM sales. However, the majority of the applicable
transactions were within a range of 2x to 3x LTM sales and 20x to 30x LTM
earnings. Morgan Stanley noted that the multiples of LTM sales and earnings of
3.0x and 22.3x, respectively, implied by the consideration pursuant to the
Merger falls within both of these ranges. Morgan Stanley also observed that
the Merger represents a premium to the Common Stock's market price
approximately two months prior to April 7, 1997 of 20.5%.
No company used as a comparison in the comparable companies analysis is
identical to the Company, and no transaction utilized in the comparable
transaction analysis is identical to the Merger. In evaluating the comparable
companies and the comparable transactions, Morgan Stanley made judgments and
assumptions with regard to industry performance, general business, economic,
market and financial conditions and other matters, many of which are beyond
the Company's control, such as the impact of competition on the Company's
business and the industry generally, industry growth and the absence of any
adverse material change in the financial condition and the prospects of the
Company or the industry or in financial markets in general. Mathematical
analysis (such as determining the average or median) is not in itself a
meaningful method of using comparable transaction data.
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The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to a partial analysis or summary description. In
arriving at its opinion, Morgan Stanley considered the results of all of its
analyses as a whole and did not attribute any particular weight to any
particular analysis or factor considered by it. Furthermore, Morgan Stanley
believes that selecting any portion of Morgan Stanley's analyses, without
considering all analyses, would create an incomplete view of the process
underlying the Morgan Stanley opinion. In addition, Morgan Stanley may have
deemed various assumptions more or less probable than other assumptions, so
that the ranges of valuations resulting from any particular analysis described
above should not be taken to be Morgan Stanley's view of the actual sale of
the Company.
In performing its analyses, Morgan Stanley made numerous judgments and
assumptions with regard to industry performance, general business, economic,
market and financial conditions and other matters, many of which are beyond
the Company's control, such as the impact of competition on the Company's
business and the industry generally, industry growth and the absence of any
adverse material change in the financial condition and prospects of the
Company or the industry or in financial markets in general. The analyses
performed by Morgan Stanley are not necessarily indicative of actual values,
which may be significantly more or less favorable than suggested by such
analyses. Such analyses were prepared solely as a part of Morgan Stanley's
analysis of the fairness of the consideration pursuant to the Merger from a
financial point of view to the holders of shares of Common Stock and were
provided to the Company's Board of Directors in connection with the delivery
of the Morgan Stanley opinion. The analyses do not purport to be appraisals or
to reflect the prices at which the Company might actually be sold.
As described above, the Morgan Stanley opinion, including Morgan Stanley's
presentation to the Company's Board of Directors, was one of many factors
taken into consideration by the Company's Board of Directors in making its
determination to approve the Merger. Consequently, the Morgan Stanley analysis
described above should not be viewed as determinative of the opinion of the
Company's entire Board of Directors or the view of management with respect to
the value of the Company.
The Company's Board of Directors retained Morgan Stanley based upon Morgan
Stanley's qualifications, experience and expertise. Morgan Stanley is an
internationally recognized investment banking and financial advisory firm.
Morgan Stanley, as part of its investment banking business, is regularly
engaged in the valuation of businesses and securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for corporate and other purposes. Morgan Stanley is a full-
service securities firm engaged in securities trading and brokerage
activities, as well as providing investment banking and financial advisory
services. In the ordinary course of its trading and brokerage activities,
Morgan Stanley or its affiliates may at any time hold long or short positions,
and may trade or otherwise effect transactions, for its own account or the
accounts of customers, in securities of the Company and P&G. In the past,
Morgan Stanley and its affiliates have provided financial advisory and
financing services to the Company and to P&G and have received customary fees
for the rendering of those services.
Pursuant to a letter agreement dated December 10, 1996, the Company has
agreed to pay Morgan Stanley (i) an advisory fee estimated to be between
$100,000 and $300,000 which is payable if the Merger is not consummated and
(ii) a transaction fee equal to $8.09 million which is payable upon
consummation of the Merger. Any advisory fee paid will be credited against the
transaction fee. In addition to the foregoing compensation, the Company has
agreed to reimburse Morgan Stanley for its expenses, including fees and
expenses of its counsel should they be engaged, and to indemnify Morgan
Stanley for certain liabilities and expenses arising out of the engagement and
the transactions in connection therewith, including liabilities under federal
securities laws.
THE MERGER AGREEMENT
The following is a summary of the material terms of the Merger Agreement, a
copy of which is attached hereto as Annex A. The summary of the Merger
Agreement contained herein is not a complete description of the
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terms and conditions thereof and is qualified in its entirety by reference to
the Merger Agreement. Stockholders are urged to review the Merger Agreement
carefully.
Consideration to be Paid in the Merger. The Merger Agreement provides that
upon the terms (and subject to the conditions) set forth in the Merger
Agreement, Merger Sub will be merged with and into the Company and the
separate existence of Merger Sub will cease, and the Company shall be the
Surviving Corporation and shall be a wholly owned subsidiary of P&G. As a
result of the Merger, each share of common stock, par value $1.00 per share,
of Merger Sub outstanding immediately prior to the Effective Time, shall be
converted into and exchanged for one validly issued, fully paid and non-
assessable share of common stock, par value $1.00 per share, of the Company
(sometimes hereinafter referred to as the "Surviving Corporation"). As a
result of the Merger, each share of Common Stock issued and outstanding
immediately prior to the Effective Time (other than shares of Common Stock
held in the treasury of the Company or owned or held by the Company, P&G or
any of their respective subsidiaries, which will be canceled without payment,
and other than shares of Common Stock in respect of which dissenters' rights
have been properly exercised) shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into the right to
receive the Merger Consideration or, with respect to Common Stock held by
Stockholders who perfect appraisal rights under Delaware law, payment of the
appraised value of such shares. The Merger Agreement provides that (subject to
the provisions of the Merger Agreement) the closing of the Merger shall occur
as soon as practicable following the satisfaction or, to the extent permitted
under the Merger Agreement, waiver of the conditions to the Merger set forth
in Article 9 of the Merger Agreement.
Treatment of Stock Options. The Merger Agreement provides that all options
(individually, an "Option" and collectively, the "Options") under the
Company's stock option plans outstanding immediately prior to the Effective
Time, whether or not then exercisable, shall be canceled and each holder of an
Option will be entitled to receive from the Surviving Corporation, for each
share of Common Stock subject to an Option, an amount in cash equal to the
excess, if any, of the Merger Consideration over the per share exercise price
of such Option, without interest. All amounts payable in respect of Options
shall be subject to all applicable withholding of taxes. The Company has
agreed to use its reasonable best efforts to obtain all necessary consents of
the holders of Options to the cancellation of the options in accordance with
the Merger Agreement.
The Offer. Subject to the provisions of the Merger Agreement, P&G has the
option, but not the obligation, at any time prior to the mailing of the Proxy
Statement to the Stockholders pursuant to the Merger Agreement and provided
Merger Sub has given the Company at least five business days' prior written
notice thereof, to cause Merger Sub to commence, within the meaning of Rule
14d-2 under the Exchange Act, an offer to purchase all of the outstanding
shares of Common Stock, together with the associated rights to purchase Common
Stock pursuant to the Rights Agreement, at a price per share equal to the
Merger Consideration, net to the seller in cash (the "Offer"). P&G intends to
cause the Offer to be commenced if P&G concludes that it is reasonably likely
that the Offer can be completed before the Closing of the Merger. If Merger
Sub so commences the Offer, the obligation of Merger Sub to accept for
payment, and pay for, any shares of Common Stock tendered pursuant to the
Offer shall be subject only to the conditions to the Offer below.
If Merger Sub commences the Offer, without prior written consent of the
Company, Merger Sub has agreed not to (i) waive the Minimum Condition (as
defined under Certain Additional Conditions below), (ii) reduce the number of
shares of Common Stock subject to the Offer, (iii) reduce the price per share
of Common Stock to be paid pursuant to the Offer, (iv) extend the Offer if all
of the Offer conditions are satisfied or waived, (v) change the form of
consideration payable in the Offer, or (vi) amend or modify any term or
condition of the Offer in any manner adverse to the holders of shares of
Common Stock. Notwithstanding anything in the Merger Agreement to the
contrary, Merger Sub may, in its sole discretion without the consent of the
Company, extend the Offer at any time and from time to time (A) if at the then
scheduled expiration date of the Offer any of the conditions to Merger Sub's
obligation to accept for payment and pay for shares of Common Stock shall not
have been satisfied or waived; (B) for any period required by any rule,
regulation, interpretation or position of the SEC or its staff applicable to
the Offer; (C) for any period required by applicable law in connection with an
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increase in the consideration to be paid pursuant to the Offer; and (D) if all
of the Offer conditions are satisfied or waived but the number of shares of
Common Stock tendered is less than 90% of the then outstanding number of
shares of Common Stock, for an aggregate period of not more than 10 business
days (for all such extensions under this clause (D)) beyond the latest
expiration date that would be permitted under clause (A), (B) or (C) of this
sentence. If the Offer has been commenced, P&G has agreed that, so long as the
Merger Agreement is in effect and the Offer conditions have not been satisfied
or waived, P&G will cause Merger Sub to cause the Offer not to expire.
Board Representation. The Merger Agreement provides that, promptly upon the
purchase of shares of Common Stock pursuant to the Offer (if any), P&G shall
be entitled to designate such number of directors, rounded up to the next
whole number, as will give P&G representation on the Board of Directors equal
to the product of (i) the number of directors on the Board of Directors and
(ii) the percentage that the number of shares of Common Stock purchased by
Merger Sub or P&G or any affiliate bears to the number of shares of Common
Stock outstanding, and the Company will, upon request by P&G, promptly
increase the size of the Board of Directors and/or exercise its reasonable
best efforts to secure the resignations of such number of directors as is
necessary to enable P&G's designees to be elected to the Board of Directors
and will cause P&G's designees to be so elected; provided, however, that until
the Effective Time, the Board of Directors will have at least one director not
designated by P&G (a "Continuing Director"). At the request of P&G, the
Company will use its reasonable best efforts to cause such individuals
designated by P&G to constitute the same percentage of (i) each committee of
the Board of Directors, (ii) the board of directors of each subsidiary of the
Company, and (iii) the committees of each such board of directors. The
Company's obligations to appoint designees to the Board of Directors are
subject to Section 14(f) of the Exchange Act.
Following the election or appointment of P&G's designees pursuant to the
preceding paragraph and prior to the Effective Time, the approval of a
majority of the Continuing Directors will be required to authorize (and such
authorization will constitute the authorization of the Board of Directors and
no other action on the part of the Company, including any action by any other
director of the Company, will be required to authorize) any termination of the
Merger Agreement by the Company, any amendment of the Merger Agreement
requiring action by the Board of Directors, any extension of time for the
performance of any of the obligations or other acts of P&G or Merger Sub, and
any waiver of compliance with any of the agreements or conditions contained in
the Merger Agreement for the benefit of the Company.
Stockholders Meeting. The Merger Agreement provides that, if required by
applicable law, the Company, acting through the Board of Directors, shall (i)
call a meeting of the Stockholders for the purpose of voting on the Merger,
(ii) hold such meeting of the Stockholders as soon as practicable following
the date of the Merger Agreement and (iii) subject to its fiduciary duties
under applicable law as advised by outside counsel, recommend to the
Stockholders the approval of the Merger. The Merger Agreement provides that,
notwithstanding the foregoing, if Merger Sub, or any other direct or indirect
subsidiary of P&G, shall acquire at least 90% of the outstanding shares of
Common Stock pursuant to the Offer, the parties thereto shall take all
necessary and appropriate action to cause the Merger to become effective as
soon as practicable after the expiration of the Offer without a meeting of
Stockholders, in accordance with Section 253 of the DGCL.
Representations and Warranties. The Merger Agreement contains various
representations and warranties of the parties thereto. These include
representations and warranties by the Company, subject to exceptions, with
respect to, among other things, (i) the due incorporation, good standing,
qualification, corporate power and authority of the Company and its
significant subsidiaries; (ii) the due authorization, execution, and delivery
of the Merger Agreement and the consummation of transactions contemplated
thereby, and the validity and enforceability thereof; (iii) compliance with
laws; (iv) capitalization; (v) subsidiaries; (vi) consents and approvals and
absence of any violations, breaches or defaults; (vii) compliance with the
Securities Act of 1933, as amended and the Exchange Act, in connection with
documents filed by the Company with the SEC since December 31, 1994; (viii)
pending or (to the knowledge of the Company) threatened litigation which
individually or in the aggregate would have a material adverse effect on the
business, operations, results of operations, assets, financial condition or
prospects of the Company and its subsidiaries taken as a whole ("Material
Adverse Effect") and
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governmental investigations; (ix) certain changes since December 31, 1996; (x)
certain tax matters; (xi) certain employee benefit and ERISA matters; (xii)
certain labor and employment matters; (xiii) brokers or finders fees; (xiv)
receipt of a fairness opinion; (xv) maintenance of certain licenses and
permits; (xvi) certain environmental matters; (xvii) material contracts;
(xviii) intellectual property rights; (xix) required vote of Stockholders; and
(xx) absence of any material misstatement or omission.
P&G and Merger Sub have also made certain representations and warranties,
including with respect to (i) the due incorporation, existence, good standing,
corporate power and authority of P&G and Merger Sub; (ii) the due
authorization, execution and delivery of the Merger Agreement and the
consummation of the transactions contemplated thereby, and the validity and
enforceability thereof; (iii) consents and approvals and absence of any
violation, breach or default; (iv) sufficiency of funds available to P&G and
Merger Sub for the consummation of the Offer and the Merger; and (v) brokers
and finders fees.
Conduct of Business Pending Merger. The Company has agreed that from the
date of the Merger Agreement to the Effective Time, with certain exceptions,
unless P&G has consented in writing thereto, the Company will, and will cause
each of its subsidiaries to: (i) conduct its operations according to its
ordinary course of business consistent with past practice; (ii) use its
reasonable best efforts to preserve intact its business organizations and
goodwill, to maintain in effect all existing qualifications, licenses,
permits, approvals and other authorizations, to keep available the services of
its officers and employees and to maintain satisfactory relationships with
customers, suppliers, distributors and all other persons having business
relationships with it; (iii) promptly notify P&G upon becoming aware of any
material breach of any representation, warranty or covenant contained in the
Merger Agreement or the occurrence of any event that would cause any such
representation, warranty or covenant no longer to be true and correct in all
material respects or any breach of the representations and warranties with
respect to contracts containing covenants by the Company or any subsidiary
restricting its ability or the ability of any of its affiliates or any of its
subsidiaries to compete; (iv) promptly deliver to P&G true and correct copies
of any document filed with the SEC subsequent to the date of the Merger
Agreement, and any internal monthly reports prepared for or delivered to the
Board of Directors after the date of the Merger Agreement; and (v) deliver
monthly consolidated financial statements for the Company and its
subsidiaries.
The Company has agreed that from the date of the Merger Agreement to the
Effective Time, with certain exceptions, unless P&G has consented in writing
thereto, the Company shall not, and shall not permit any of its subsidiaries
to: (i) amend its charter or by-laws; (ii) issue, sell, pledge, or otherwise
dispose of any shares of, or any securities convertible into or exchangeable
for, or any rights, warrants or options to acquire or with respect to, capital
stock of the Company or its subsidiaries; (iii) effect any split, combination,
reclassification or similar transaction; (iv) grant or amend any option,
warrant, convertible security or other right to acquire any shares of its
capital stock or take any action to cause to be exercisable any otherwise
unexercisable option under any existing stock option plan or restricted stock
plan; (v) declare or pay any dividend (other than regular quarterly cash
dividends at a rate not in excess of $.46 per Share); (vi) redeem or otherwise
acquire any share of its capital stock; (vii) sell, lease or otherwise dispose
of any of its property, business or assets; (viii) settle or compromise
certain pending or threatened litigation without P&G's consent (which consent
will not be unreasonably withheld or delayed); (ix) make any loan to or
investments in any person; (x) make any capital expenditures in excess of
budgeted amounts, or otherwise acquire assets having an aggregate value in
excess of $500,000 not in the ordinary course of business; (xi) incur, assume
or create any indebtedness for borrowed money or the deferred purchase price
for property or services or pursuant to any capital lease or other financing,
except indebtedness incurred in the ordinary course of business consistent
with past practice for working capital purposes pursuant to the Company's
existing credit facilities or commercial paper program; (xii) assume,
guarantee or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person except
wholly-owned subsidiaries of the Company and except for certain obligations in
the ordinary course of business consistent with past practice; (xiii) make any
material tax election (unless required by law or unless consistent with prior
practice) or settle or compromise any material income tax liability except, in
each case, if P&G is given reasonable prior notice thereof; (xiv) waive or
amend any term or condition of any confidentiality or "standstill" agreement
to which the Company is a party and which relates to a business combination
with the Company or a purchase of the Company's assets or the Common Stock;
(xv) grant or amend any stock-related
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or performance awards; (xvi) except with respect to agreements which are
terminable at will by the Company without any material penalty to the Company,
enter into or amend any legally binding employment, severance, consulting or
salary continuation agreements or grant any increases in compensation or
benefits to employees other than increases in the ordinary course of business
consistent with past practice; (xvii) adopt, amend or terminate any employee
benefit plan or arrangement (except as expressly contemplated by the Merger
Agreement); (xviii) enter into (a) any agreements with distributors or sales
agents other than agreements terminable without penalty on less than 30 days'
notice, (b) any agreements to distribute products for others or non-compete
agreements or (c) any other agreements, other than agreements relating to
product promotions, that would constitute material contracts; or amend any of
the foregoing agreements as exist on the date of the Merger Agreement; (xix)
amend or waive the Rights Agreement, except in connection with the exercise of
its fiduciary duties by the Board of Directors and except as contemplated by
the Merger Agreement; (xx) make any material changes in the type or amount of
their insurance coverages; (xxi) except as may be required by law or generally
acceptable accounting principles, change any material accounting principles or
practices; (xxii) effect any material change in, or commit to any significant
new, advertising, product promotion or brand support policies or programs,
except for matters in the ordinary course of business consistent with past
practice; (xxiii) effect any material change with respect to billing
practices, manufacture, shipment or sale of inventory, the collection or
payment of accounts or notes, except in the ordinary course of business
consistent with past practice; (xxiv) enter into any contracts for
derivatives, except for spot, option and forward contracts entered into in the
ordinary course of business consistent with past practice and policies; (xxv)
waive, release or terminate any right or claim, except in the ordinary course
of business consistent with past practice; (xxvi) apply for, consent to, or
acquiesce in, the appointment of a trustee, receiver, sequestrator or other
custodian for any substantial part of the property of the Company or any
significant subsidiary, or make a general assignment for the benefit of
creditors, or permit or suffer to exist the commencement of any bankruptcy,
reorganization, debt arrangement or other case or proceeding under any
bankruptcy or insolvency law, or any dissolution, winding up or liquidation
proceeding, in respect of the Company or any significant subsidiary; (xxvii)
take any action to cause the shares of Common Stock to be delisted from the
New York Stock Exchange prior to the completion of the Offer or (if no Offer
is made) the Merger; or (xxviii) agree in writing or otherwise to take any of
the foregoing actions.
The Company will use reasonable best efforts to (i) complete its
restructuring announced during the third quarter of fiscal 1996 (the
"Restructuring") in a manner and on a schedule materially consistent with its
plans, including the sale of its manufacturing facilities in Rutland, Vermont
and Tipperary, Ireland and (ii) to acquire, for a purchase price not to exceed
$1,000,000 and on other terms reasonably acceptable to P&G, the minority
interest held by the Company's joint venture partner in China. The Company
will cooperate with P&G to minimize the possible impact on P&G and/or its
subsidiaries of any non-compete covenants to which the Company or any of its
subsidiaries or affiliates may be subject following the closing of the Merger.
Access to Information. Under the Merger Agreement, from the date of the
Merger Agreement to the closing of the Merger, upon reasonable notice, the
Company shall, and shall cause its subsidiaries to, subject to the compliance
with applicable laws and confidentiality obligations to third parties, (i)
give P&G and its authorized representatives reasonable access during normal
business hours to all books, records, personnel, research and other
consultants, offices and other facilities and properties of the Company and
its subsidiaries and their accountants and accountants' work papers, (ii)
permit P&G to make such copies and inspections thereof as P&G may reasonably
request and (iii) furnish P&G with such financial and operating data and other
information with respect to the business and properties of the Company and its
subsidiaries as P&G may reasonably request; provided that no investigation or
information furnished pursuant to the Merger Agreement shall affect any
representations or warranties made by the Company therein or the conditions to
the obligations of P&G to consummate the transactions contemplated thereby.
All such information and access shall be subject to the provisions of the
letter agreement between P&G and the Company relating to confidential
treatment of certain information.
No Solicitation; Fiduciary Duties. The Company has agreed in the Merger
Agreement that neither it nor any of its subsidiaries, nor any of their
respective officers, directors, employees, representatives, agents or
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affiliates, shall, directly or indirectly, encourage, solicit, initiate or,
except as is required in the exercise of the fiduciary duties of the Company's
directors to the Company or its Stockholders after consultation with outside
counsel to the Company, participate in any way in any discussions or
negotiations with, or provide any information to, or afford any access to the
properties, books or records of the Company or any of its subsidiaries to, or
otherwise assist, facilitate or encourage, any corporation, partnership,
person or other entity or group (other than P&G or any affiliate or associate
of P&G) concerning any merger, consolidation, business combination,
liquidation, reorganization, sale of substantial assets, sale of shares of
capital stock or similar transactions involving the Company or any subsidiary
or any division of any thereof (an "Alternative Proposal"), and shall
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted prior to the date of
the Merger Agreement with respect to any of the foregoing other than with
respect to the Restructuring; provided, however, that nothing contained in the
Merger Agreement shall prohibit the Company or its Board of Directors from
taking and disclosing to the Stockholders a position with respect to a tender
offer by a third party pursuant to Rules 14d-9 and Rule 14e-2(a) under the
Exchange Act or from making such disclosure to the Stockholders which, in the
judgment of the Board of Directors with the advice of outside counsel, may be
required under applicable law. The Company will promptly notify P&G if any
such information is requested from it or any such negotiations or discussions
are sought to be initiated with the Company, and will promptly communicate to
P&G the terms of any proposal or inquiry which it may receive in respect of
any such transaction.
Fees and Expenses. Except as provided in the Merger Agreement, whether or
not the Offer or the Merger is consummated, all costs and expenses incurred in
connection with the transactions contemplated by the Merger Agreement shall be
paid by the party incurring such expenses; provided, however, that if the
Merger Agreement is terminated by P&G or the Company other than in the
circumstances described in the immediately succeeding paragraphs, P&G will (i)
pay the Company $1,000,000 for reimbursement of expenses plus (ii) reimburse
the Company for the SEC filing fees relating to the Proxy Statement.
The Merger Agreement provides that, under certain circumstances, the Company
will pay to P&G and its affiliates an aggregate amount equal to $50,000,000
less any Expenses (as defined below) for which the Company reimburses P&G
pursuant to the terms of the Merger Agreement (the "Commitment Amount") as
compensation for entering into the Merger Agreement and incurring the costs
and expenses related thereto, including the forgoing of other opportunities.
The Company is obligated to pay the Commitment Amount under the following
circumstances: (i) the Company terminates the Merger Agreement because of an
Alternative Proposal which the Board of Directors in good faith determines
represents a superior transaction for the Stockholders as compared to the
Offer and/or the Merger and the Board of Directors determines, after
consultation with its outside counsel, Debevoise & Plimpton, that failure to
terminate the Merger Agreement would be inconsistent with the compliance by
the Board of Directors with its fiduciary duties; (ii) P&G terminates the
Merger Agreement because the Board of Directors withdraws, modifies or amends
in any material respect, its approval or recommendation of the Offer or the
Merger, or recommends acceptance of any Alternative Proposal, or resolves to
do any of the foregoing (unless the foregoing occurs solely as a result of
P&G's willful breach in any material respect of its representations,
warranties or obligations under the Merger Agreement); (iii) P&G terminates
the Merger Agreement upon termination of the Offer as a result of the failure
of the Minimum Condition at any time after all conditions are satisfied or
waived or because of the failure of the Stockholders to approve the Merger,
provided that in any case specified in this clause (iii) (I) prior to the time
the Offer was terminated or otherwise expired or the time of the Stockholders'
meeting, as the case may be, an Alternative Proposal with a party other than
P&G shall have been publicly announced or shall have become publicly known and
(II) during the term of the Merger Agreement or within six months after the
termination of the Merger Agreement, the Board of Directors recommends an
Alternative Proposal with another party or the Company enters into an
agreement providing for an Alternative Proposal with another party or an
Alternative Proposal with another party occurs.
The Commitment Amount shall be payable (x) at the time of termination if
such amount becomes payable pursuant to clause (i) above, (y) on the next
business day following termination if such amount becomes payable pursuant to
clause (ii) above, and (z) on the next business day following the earliest of
the recommendation of
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an Alternative Proposal, the entering into of an agreement providing for an
Alternative Proposal or the occurrence of an Alternative Proposal, if such
amount becomes payable pursuant to clause (iii) above.
The Company has agreed that under certain circumstances it will reimburse
P&G and its affiliates for their documented reasonable out-of-pocket expenses,
but not in excess of $10,000,000 in the aggregate, incurred in connection with
or arising out of the Offer, the Merger, the Merger Agreement and the
transactions contemplated thereby (including amounts paid or payable to
investment bankers, fees and expenses of counsel, accountants and consultants,
and printing expenses) regardless of when those expenses are incurred
(collectively, the "Expenses"). The Company will pay the Expenses in the event
the Merger Agreement is terminated under circumstances in connection with
which the Commitment Amount is payable. In addition, the Company will pay the
Expenses if (i) any of the representations or warranties made by the Company
in the Merger Agreement shall not have been true and correct in all respects
when made, or shall thereafter have ceased to be true and correct in all
respects as if made as of such later date (other than representations and
warranties made as of a specified date), except where the failure to be so
true and correct (without giving effect to any materiality qualifications or
thresholds contained in such representations and warranties), individually and
in the aggregate, would not have a Material Adverse Effect or materially
adversely affect the business of P&G in relation to its decision to consummate
the transactions contemplated under the Merger Agreement, or (ii) the Company
shall have breached or failed to comply in any material respect with any of
its obligations under the Merger Agreement, which untruth or inaccuracy or
breach, in the case of clauses (i) or (ii), is not curable or, if curable, is
not cured within 10 business days after written notice thereof has been given
by P&G to the Company.
Other Agreements. The Merger Agreement provides that, subject to the terms
and conditions provided in the Merger Agreement, the Company, P&G, and Merger
Sub shall: (a) promptly make their respective filings and thereafter make any
other required submissions under the HSR Act with respect to the Merger and,
if applicable, the Offer; (b) cooperate and consult with one another in (i)
determining which HSR Act filings, Exchange Act filings, Other Antitrust
Filings (as defined below), Other Antitrust Consents (as defined below) and
filings in connection with the maintenance of qualification to do business in
other jurisdictions (collectively, the "Regulatory Filings") are required or,
in the case of Other Antitrust Filings, permitted to be made prior to the
Effective Time with, and which consents, approvals, Permits, authorizations or
waivers (collectively, "Consents") are required or, in the case of Other
Antitrust Consents, permitted to be obtained prior to the Effective Time from
Governmental Entities or other third parties in connection with the execution
and delivery of the Merger Agreement and the consummation of the transactions
contemplated thereby, including, without limitation, (x) all such Regulatory
Filings (the "Other Antitrust Filings") and Consents (the "Other Antitrust
Consents"), respectively (collectively, the "Other Antitrust Filings and
Consents"), as relate to antitrust laws of any foreign jurisdiction ("Foreign
Antitrust Laws") and (y) all Consents required to transfer to the Company any
Permits or registrations held on behalf of the Company or any of its
subsidiaries by or in the name of distributors, brokers or sales agents; (ii)
preparing all Regulatory Filings and all other filings, submissions and
presentations required or prudent to obtain all Consents, including by
providing to the other party drafts of such material reasonably in advance of
the anticipated filing or submission dates; and (iii) timely making all such
Regulatory Filings and timely seeking all such Consents (it being understood
that the parties will make or seek to obtain all Other Antitrust Filings and
Consents, whether mandatory or voluntary); and (c) use their reasonable best
efforts to take, or cause to be taken, all other action and do, or cause to be
done, all other things necessary, proper or appropriate to consummate and make
effective the transactions contemplated by the Merger Agreement. Each of P&G
and the Company shall use its reasonable best efforts to contest any
proceeding seeking a preliminary injunction or other legal impediment to, and
to resolve any objections as may be asserted by any governmental entity with
respect to, the Offer and/or the Merger under the HSR Act or Foreign Antitrust
Laws; provided that the foregoing shall not require P&G to take any action
that could directly or indirectly (x) impose limitations on the ability of P&G
or Merger Sub (or any of their affiliates or subsidiaries) effectively to
acquire, operate or hold, or require P&G, Merger Sub or the Company or any of
their respective affiliates or subsidiaries to dispose of or hold separate,
any portion of their respective assets or business that is (I) either material
to the business of P&G or its subsidiaries or material to the business of the
Company or its subsidiaries, in each case, conducted in (A) any Category 1 Key
Jurisdiction (namely, the United States, the United Kingdom, Canada,
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France, Spain and Italy), (B) any two or more Category 2 Key Jurisdictions
(namely, Austria, Belgium, Denmark, Finland, Germany, Greece, Ireland,
Netherlands, Portugal and Sweden), or (C) any three or more Category 2 and
Category 3 Key Jurisdictions (Category 3 Key Jurisdictions being Australia,
Brazil, Mexico, New Zealand and Venezuela), or (II) reasonably likely to have
a Material Adverse Effect, (y) restrict any future business activity by P&G,
Merger Sub, the Company or any of their affiliates or subsidiaries that (I) is
either material to the business of P&G or its subsidiaries or material to the
business of the Company and its subsidiaries, in each case, conducted in (A)
any Category 1 Key Jurisdiction, (B) any two or more Category 2 Key
Jurisdictions, or (C) any three or more Category 2 and Category 3 Key
Jurisdictions, or (II) is reasonably likely to have a Material Adverse Effect,
including, without limitation, requiring the prior consent of any governmental
entity to future transactions by P&G, Merger Sub, the Company or any of their
affiliates or subsidiaries, or (z) otherwise adversely affect P&G, Merger Sub,
the Company or any of their respective affiliates or subsidiaries in a manner
that (I) is either material to the business of P&G and its subsidiaries or
material to the business of the Company and its subsidiaries, in each case,
conducted in (A) any Category 1 Key Jurisdiction, (B) any two or more Category
2 Key Jurisdictions, or (C) any three or more Category 2 and Category 3 Key
Jurisdictions, or (II) is reasonably likely to have a Material Adverse Effect.
If, at any time after the Effective Time, any further action is necessary or
desirable to carry out the purpose of the Merger Agreement, the proper
officers and directors of P&G and the Surviving Corporation shall take all
such necessary action.
Conditions to the Merger. The respective obligations of each party to effect
the Merger are subject to the satisfaction or waiver, where permissible, prior
to the Effective Time, of the following conditions: (i) the waiting period
applicable to the consummation of the Merger under the HSR Act shall have
expired or been terminated; (ii) none of the parties to the Merger Agreement
shall be subject to any order or injunction of a court of competent
jurisdiction which prohibits the consummation of the transactions contemplated
by the Merger Agreement; and (iii) if required by applicable law, the Merger
Agreement and the Merger shall have been approved by the Stockholders in
accordance with the DGCL and the Company's Certificate of Incorporation and
By-Laws.
Certain Additional Conditions. If the Offer is made, notwithstanding any
other term of the Offer or the Merger Agreement, Merger Sub shall not be
required to accept for payment or pay for, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) of the Exchange Act, any
shares of Common Stock not theretofore accepted for payment or paid for and
may terminate or amend the Offer as to such shares unless (i) there shall have
been validly tendered and not withdrawn prior to the expiration of the Offer
that number of shares of Common Stock which would represent at least a
majority of the outstanding shares of Common Stock on a fully diluted basis
(the "Minimum Condition") and (ii) any waiting period under the HSR Act
applicable to the purchase of shares of Common Stock pursuant to the Offer
shall have expired or been terminated. Furthermore, if the Offer is made,
notwithstanding any other term of the Offer or the Merger Agreement, Merger
Sub shall not be required to accept for payment or, subject as aforesaid,
unless otherwise waived by P&G, to pay for any shares of Common Stock not
theretofore accepted for payment or paid for, and may terminate or amend the
Offer if at any time on or after the date of the Merger Agreement and before
the acceptance of such shares of Common Stock for payment or the payment
therefor, and, if the Offer is not made or no shares of Common Stock are
purchased pursuant to the Offer, unless otherwise waived by P&G, Merger Sub
need not consummate the Merger if, at the time the Merger is otherwise to
become effective, any of the following conditions exist or shall occur:
(a) there shall have been instituted or pending or specifically
threatened any litigation by any governmental entity which is related to
the Merger or the Offer and which seeks to or, if successful, would (i)
challenge or restrict the acquisition by P&G or Merger Sub (or any of its
affiliates or subsidiaries) of shares of Common Stock pursuant to the Offer
or the Merger, restrain, prohibit or delay the making or consummation of
the Offer or the Merger, or obtain damages in connection therewith, (ii)
make the purchase of or payment for some or all of the shares of Common
Stock pursuant to the Offer or the Merger illegal or otherwise restrict or
prohibit consummation of the Offer or the Merger, (iii) impose limitations
on the ability of P&G or Merger Sub (or any of their subsidiaries)
effectively to acquire, operate or hold, or require P&G, Merger Sub or the
Company or any of their respective subsidiaries to dispose of or hold
separate, any portion of their respective assets or business that (I) is
either material to the business of P&G and its
23
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subsidiaries or material to the business of the Company and its
subsidiaries conducted, in each case, in (A) any Category 1 Key
Jurisdiction, (B) any two or more Category 2 Key Jurisdictions, or (C) any
three or more Category 2 and Category 3 Key Jurisdictions, or (II) is
reasonably likely to have a Material Adverse Effect, (iv) impose
limitations on the ability of P&G, Merger Sub or their subsidiaries to
exercise full rights of ownership of the shares of Common Stock acquired by
it pursuant to the Offer or the Merger, including, without limitation, the
right to vote the shares acquired by it on all matters properly presented
to the Stockholders, (v) restrict any future business activity by P&G,
Merger Sub, the Company or any of their subsidiaries that (I) is either
material to the business of P&G and its subsidiaries or material to the
business of the Company and its subsidiaries conducted, in each case, in
(A) any Category 1 Key Jurisdiction, (B) any two or more Category 2 Key
Jurisdictions, or (C) any three or more Category 2 and Category 3 Key
Jurisdictions, or (II) is reasonably likely to have a Material Adverse
Effect, including, without limitation, requiring the prior consent of any
governmental entity to future transactions by P&G, Merger Sub, the Company
or any of their affiliates or subsidiaries, or (vi) otherwise adversely
affect P&G, Merger Sub, the Company or any of their respective affiliates
or subsidiaries in a manner that (I) is either material to the business of
P&G and its subsidiaries or material to the business of the Company and its
subsidiaries conducted, in each case, in (A) any Category 1 Key
Jurisdiction, (B) any two or more Category 2 Key Jurisdictions, or (C) any
three or more Category 2 and Category 3 Key Jurisdictions, or (II) is
reasonably likely to have a Material Adverse Effect;
(b) there shall have been promulgated or enacted by any governmental
entity, any law that is reasonably likely, directly or indirectly, to
result in any of the consequences referred to in clauses (i) through (vi)
of subsection (a) above;
(c) any of the Regulatory Filings or Consents (including the Other
Antitrust Filings and Consents) shall not have been made or obtained, or
any waiting period (whether requisite or voluntary) under any Foreign
Antitrust Laws shall not have expired, in each case, to the extent that the
failure to make or obtain such Regulatory Filings or Consents or of the
waiting period to have expired, in the aggregate, is reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect or to
materially adversely affect the business of the Company or its subsidiaries
conducted in (A) any Category 1 Key Jurisdiction, (B) any two or more
Category 2 Key Jurisdictions, or (C) any three or more Category 2 and
Category 3 Key Jurisdictions;
(d) the Merger Agreement shall have been terminated in accordance with
its terms;
(e)(i) any of the representations or warranties made by the Company in
the Merger Agreement shall not have been true and correct in all respects
when made, or shall thereafter have ceased to be true and correct in all
respects as if made as of such later date (other than representations and
warranties made as of a specified date), except where the failure to be so
true and correct (without giving effect to any materiality qualifications
or thresholds contained in such representations and warranties),
individually and in the aggregate, would not have a Material Adverse Effect
or materially adversely affect the business of P&G in relation to its
decision to consummate the transactions contemplated under the Merger
Agreement, or (ii) the Company shall have breached or failed to comply in
any material respect with any of its obligations under the Merger
Agreement, which untruth or inaccuracy or breach, in the case of clauses
(i) or (ii), is not curable or, if curable, is not cured within 10 business
days after written notice thereof has been given by P&G to the Company;
(f) the Board of Directors shall have modified or amended its
recommendation of the Offer or the Merger in any manner adverse to P&G or
Merger Sub or shall have withdrawn its recommendation of the Offer or the
Merger or shall have recommended acceptance of any Alternative Proposal or
shall have resolved to do any of the foregoing;
(g) any corporation, entity, "group" or "person" (as defined in the
Exchange Act), other than P&G or Merger Sub, shall have acquired beneficial
ownership of more than 20% of the outstanding shares of Common Stock, or
(ii) any person (other than P&G, Merger Sub or one or more of their
affiliates) shall have entered into an agreement in principle or definitive
agreement with the Company with respect to a tender or exchange offer for
any shares of Common Stock or a merger, consolidation or other business
combination with or involving the Company;
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(h) P&G shall have become aware of any fact relating to the Company or
any of its subsidiaries which P&G neither knew nor should have known as of
the date of the Merger Agreement, which has a Material Adverse Effect on
the Company and its subsidiaries;
(i) there shall have occurred (i) any general suspension of, or
limitation on prices for, trading in securities on the New York Stock
Exchange and national securities exchanges generally, (ii) a declaration of
any general banking moratorium by federal or New York or Ohio state
authorities or any suspension of payments in respect of money center banks
or any limitation (whether or not mandatory) imposed by federal or state
authorities on the extension of credit by money center banks in the United
States, (iii) a commencement of a war, armed hostilities or any other
international or national calamity directly or indirectly involving the
United States, or (iv) any limitation (whether or not mandatory) by any
United States governmental entity on, or any other event which could
materially affect, the extension of credit by banks or other United States
financial institutions; or
(j) Any Designated Contract Provision shall be in effect and shall not
have been resolved in a manner reasonably satisfactory to P&G. The term
"Designated Contract Provision" shall mean the provisions of any contract
to which the Company or any of its subsidiaries is a party, or by which the
Company or any of its subsidiaries or any of their respective properties or
assets are bound, which restricts the ability of any of the affiliates of
the Company or any of its subsidiaries to conduct business in a line of
business in which P&G or any of its subsidiaries is currently engaged;
provided, however, that other than certain Designated Contract Provisions
relating to a past sale of a business by the Company, the provisions of the
other contracts disclosed to P&G which otherwise would constitute
Designated Contract Provisions shall not be deemed Designated Contract
Provisions for the purposes of the Merger Agreement; and provided, further,
that the provisions of certain other contracts which otherwise constitute
Designated Contract Provisions shall only be deemed Designated Contract
Provisions for the purposes of the Merger Agreement if within 2 business
days after the date on which the Company notifies P&G of the existence of
such Designated Contract Provisions (accompanied by a copy of such Contract
(and the related Designated Contract Provisions)), P&G notifies the Company
that in its reasonable judgment such Designated Contract Provision is, or
is likely to be, adverse to P&G or any of its subsidiaries. P&G will use
reasonable best efforts to assist the Company in causing the foregoing
condition not to exist at the time of the Merger (and the purchase of
shares of Common Stock pursuant to the Offer, if applicable) is otherwise
to be consummated (unless P&G waives such condition).
The foregoing conditions are for the sole benefit of P&G and Merger Sub and
may be asserted by P&G or Merger Sub with respect to the consummation of the
Offer or the Merger (as applicable) regardless of the circumstances (including
any action or inaction by P&G or the Company) giving rise to any such
condition and may be waived by P&G or Merger Sub, in whole or in part, at any
time and from time to time, in the sole discretion of P&G. The failure by P&G
or Merger Sub at any time to exercise any of the foregoing rights will not be
deemed a waiver of any right, the waiver of such right with respect to any
particular facts or circumstances shall not be deemed a waiver with respect to
any other facts or circumstances, and each right will be deemed an ongoing
right which may be asserted at any time and from time to time, provided, that
the Minimum Condition may not be waived or modified without the prior written
consent of the Company.
Should the Offer be terminated pursuant to the foregoing provisions, all
tendered shares of Common Stock not therefore accepted for payment shall
forthwith be returned by the Paying Agent to the tendering Stockholders.
Rights Agreement. The Company has amended the Rights Agreement, dated as of
October 24, 1989 (the "Rights Agreement"), between the Company and First
Chicago Trust Company of New York, as rights agent, to make the Rights
Agreement inapplicable to P&G and the Merger through the Effective Time and to
provide that the rights to purchase Common Stock pursuant to the Rights
Agreement will expire and be canceled immediately prior to the Effective Time
without payment.
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Termination. The Merger Agreement may be terminated and the Merger
contemplated thereby may be abandoned at any time notwithstanding approval
thereof by the Stockholders, but prior to the Effective Time:
(a) by mutual written consent of the Board of Directors of P&G and the
Company (which consent will require the approval of a majority of the
Continuing Directors if such termination occurs following the election or
appointment of P&G's designees, if applicable);
(b) by P&G or the Company:
(i) if the Effective Time shall not have occurred on or before
September 30, 1997 (provided that the right to terminate the Merger
Agreement pursuant to this clause (i) shall not be available to any
party whose failure to fulfill any obligation under the Merger
Agreement has been the cause of or resulted in the failure of the
Effective Time to occur on or before such date, provided, further that,
to the extent the Company's cure period would, pursuant to paragraph
(e) under Certain Additional Conditions, extend beyond such date, such
date shall be extended by the additional length of the cure period);
and provided, further, that if the Effective Time shall not occur on or
before September 30, 1997 as a result of the existence or occurrence of
the condition specified in paragraph (j) under Certain Additional
Conditions above, at the option of the Company, such date shall be
extended until November 15, 1997).
(ii) if there shall be any statute, law, rule or regulation that
makes consummation of the Offer or the Merger illegal or prohibited or
if any court of competent jurisdiction in the United States or any
other Key Jurisdiction (as defined below) shall have issued an order,
judgment, decree or ruling, or taken any other action restraining,
enjoining or otherwise prohibiting the Merger and such order, judgment,
decree, ruling or other action shall have become final and non-
appealable; or
(iii) upon a vote at a duly held meeting or upon any adjournment
thereof, the Stockholders shall have failed to give any approval
required by applicable law;
(c) by P&G upon (x) termination of the Offer as a result of the failure
of the Minimum Condition at any time after all other conditions to the
Offer set forth under Certain Additional Conditions above shall have been
satisfied or waived or (y) the failure of the conditions set forth in
paragraphs (e) (subject to certain exceptions), (f) and (g) of Certain
Additional Conditions, prior to P&G having purchased any shares of Common
Stock under the Offer (provided that the right to terminate the Merger
Agreement pursuant to this clause (c) shall not be available to P&G if
P&G's failure to fulfill any obligation under the Merger Agreement has been
the cause of or resulted in the failure of any such condition);
(d) by the Company, at any time prior to the earlier of (x) the purchase
of shares of Common Stock by Merger Sub pursuant to the Offer and (y) the
approval of the Merger by the Stockholders in accordance with applicable
law, if there is an Alternative Proposal which the Board of Directors in
good faith determines represents a superior transaction for the
Stockholders as compared to the Offer and/or the Merger, and the Board of
Directors determines, after consultation with Debevoise & Plimpton, that
failure to terminate the Merger Agreement would be inconsistent with the
compliance by the Board of Directors with its fiduciary duties to
Stockholders imposed by law; provided, however, that the right to terminate
the Merger Agreement in such event shall not be available (i) if the
Company has breached in any material respect its obligations not to solicit
Alternative Proposals, or (ii) if the Alternative Proposal is subject to a
financing condition, unless the Board of Directors is of the opinion, after
consultation with Morgan Stanley or another nationally recognized
investment banking firm, that the Alternative Proposal is financeable, or
(iii) if, prior to or concurrently with any purported termination pursuant
to this clause (d), the Company shall not have paid the Commitment Amount
and Expenses, if applicable, or (iv) if the Company has not provided P&G
and Merger Sub with five business days' prior notice of its intent to so
terminate the Merger Agreement together with a summary of the material
terms and conditions of such Alternative Proposal; and
(e) by P&G if the Board of Directors of the Company shall have withdrawn,
modified or amended in any material respect its approval or recommendation
of the Offer or Merger, or shall have recommended acceptance of any
Alternative Proposal, or shall have resolved to do any of the foregoing.
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Indemnification. The Merger Agreement provides that, for a period of six
years after the Effective Time, P&G will cause to be maintained directors' and
officers' liability insurance covering the parties who are currently covered,
in their capacities as officers and directors, by the Company's existing
officers' and directors' liability insurance policies (the "Current Policies")
on terms substantially no less advantageous to such parties than such Current
Policies; provided, however, that P&G shall not be required, in order to
maintain or procure such coverage, to pay annual premiums in excess of 200% of
the aggregate annual premiums paid by the Company for the Current Policies
during 1996 (the "Cap") and provided, further, that if equivalent coverage
cannot be obtained, or can be obtained only by paying an amount in excess of
the Cap, P&G shall only be required to obtain such coverage for such six-year
period as can be obtained by paying annual premiums equal to the Cap.
The Merger Agreement also provides that from and after the Effective Time,
the Surviving Corporation shall indemnify and hold harmless, to the fullest
extent permitted under applicable law, each person who is, or has been at any
time prior to the date of the Merger Agreement or who becomes prior to the
Effective Time, an officer or director of the Company or any of its
subsidiaries against all losses, claims, damages, liabilities, costs or
expenses (including attorneys' fees), judgments, fines, penalties and amounts
paid in settlement (collectively "Losses") in connection with any litigation
arising out of or pertaining to acts or omissions, or alleged acts or
omissions, by them in their capacities as such, which acts or omissions
occurred prior to the Effective Time. Without limiting the foregoing, the
Company and, after the Effective Time, the Surviving Corporation shall
periodically advance expenses as incurred with respect to the foregoing to the
fullest extent permitted under applicable law provided that the person to whom
the expenses are advanced provides an undertaking to repay such advance if it
is ultimately determined that such person is not entitled to indemnification.
If the Merger is consummated, the Surviving Corporation shall, to the fullest
extent permitted under applicable law, indemnify and hold harmless P&G and any
person or entity who was an officer, director or affiliate of P&G prior to the
Effective Time against any Losses in connection with any litigation arising
out of or pertaining to any of the transactions contemplated by the Merger
Agreement.
The Surviving Corporation will control the defense, through its counsel, of
any action brought against any person seeking indemnification pursuant to the
preceding two paragraphs (an "Indemnified Party"). Counsel for the Indemnified
Party shall be selected by the Indemnified Party and will be permitted to
participate in the defense of such action at the Surviving Corporation's
expense.
Certain Employee Matters. The Merger Agreement provides that, from and after
the Effective Time, P&G will cause the Surviving Corporation and any of its
subsidiaries, except as otherwise provided in the Merger Agreement, to honor
in accordance with their terms and the past practice of the Company all
existing employment agreements and severance plans and agreements between the
Company or any of its subsidiaries, on the one hand, and any officer, director
or employee of the Company or any of its subsidiaries, on the other hand, so
long as such plans and agreements shall have been identified to P&G and to the
extent such terms are in effect on the date of the Merger Agreement or as
otherwise provided in the Merger Agreement or as disclosed to P&G. To the
extent any such employment agreements or severance plans or agreements can be
unilaterally amended by the Company, P&G agrees not to amend any such plan or
agreement prior to the first anniversary of the Closing in a manner that will
reduce or otherwise impair the benefits that would be payable thereunder to
any employee who is covered thereby and who is terminated on or before the
first anniversary of the Closing.
Prior to the earlier of the purchase of shares of Common Stock by Merger Sub
pursuant to the Offer and the Effective Time, the Company shall have taken all
such action, including approval of the Board of Directors, as may be necessary
in order to amend (i) the Pension Plan for the Employees of the Company and
(ii) the Company's Executive Severance Program to reduce the period following
the Effective Time during which each such plan cannot be amended from two
years to one year.
For a period of one year following the closing of the Merger, P&G will
provide employees and former employees of the Company with benefits that, at
P&G's sole option, are either (i) in the aggregate at least as favorable as
the benefits they were entitled to receive immediately prior to the Closing or
(ii) generally the same as the benefits that P&G makes available to its
employees generally, except that P&G shall provide severance benefits to
employees as described above.
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The Company will use its reasonable best efforts consistent with past
practice to enforce any existing non-compete and confidentiality provisions
contained in agreements with employees and former employees.
Pursuant to the Merger Agreement, effective as of the date of the Merger
Agreement, the Company has amended the 1991 Employee Stock Purchase Plan to
preclude any increase in the level of contribution made by any eligible
employee thereunder, whether by reason of commencing participation or
increasing the level of contribution (other than increases as to which
notification had been given prior to the date of the Merger Agreement).
Transfer Taxes. Any liability for New York State Real Property Transfer Tax
and similar real property transfer taxes and real property gains taxes imposed
by any other state with respect to the transactions contemplated by the Merger
Agreement, together with applicable interest, penalties and additions thereto,
if any, shall be paid or caused to be paid by P&G.
Amendment. To the extent permitted by applicable law, the Merger Agreement
may be amended by action taken by or on behalf of the Board of Directors of
the Company (by action of a majority of the Continuing Directors if such
amendment occurs following the election or appointment of P&G's designees, if
applicable) and P&G at any time before or after adoption of the Merger
Agreement by the Stockholders but, after any such Stockholder approval, no
amendment shall be made which decreases the Merger Consideration or which
adversely affects the rights of the Stockholders hereunder without the
approval of such Stockholders. The Merger Agreement may not be amended except
by an instrument in writing signed on behalf of all of the parties.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Each executive officer is a party to an agreement with the Company that will
provide for his or her continued employment for a period of two years
following the Merger. Under these agreements, if his or her employment is
terminated by the Company without Cause or is terminated by the executive for
Good Reason (such as a material diminution in responsibilities or a relocation
of his or her place of employment more than 50 miles from his or her principal
residence), an affected executive will receive a payment equal to three times,
in the case of Mr. Fogarty and Thomas J. Mason (Executive Vice President-Chief
Operating Officer), and two times, in all other cases, the sum of the
executive's annual base salary, the present value of the annual cost of
continued benefit coverage for such executive and the executive's last annual
bonus award. For 1996, the bonus award for each executive officer was zero. In
addition, to the extent that any such executive receives any payment (whether
under these agreements or otherwise, including each of the benefits and
payments described below) that is subject to the golden parachute excise tax,
the Company is required to make an additional payment to such executive in an
amount which, after taking into account the amount of any such excise tax and
the income, employment and excise taxes payable in respect of this additional
payment, will place the executive in the same net after tax position as though
no excise tax were payable.
All unvested options will become exercisable under the 1991 Stock Option
Plan and all outstanding shares of restricted stock under the 1989 Restricted
Stock Plan held by each of the executive officers will become fully vested
upon the consummation of the Merger, regardless of the service that would
otherwise have been required to have become vested in such awards.
Under the terms of the Company's Supplemental Executive Retirement Plan (the
"SERP"), each participant whose employment is involuntarily or constructively
terminated within two years following the consummation of the Merger will
become fully vested in his or her accrued benefits and be given credit for two
additional years of service for purposes of calculating such benefits.
Different vesting schedules apply under the SERP in respect of different
benefit formulas. Some executive officers have vested in the benefits
available under certain of the SERP formulas, but all but one executive
officer will receive additional benefits by reason of the accelerated vesting
provision.
The Company has revised its annual bonus programs to help assure the
continued service of its employees through the consummation of the Merger by
providing that all bonuses for 1997 will be payable at least at target
28
<PAGE>
levels (regardless of the level of actual performance). Each executive officer
will receive a bonus for services through the closing of the Merger at least
equal to the annual bonus that would have been payable at 100% of target
performance, pro-rated to the date the Merger is consummated. In addition,
executive officers will also receive an additional bonus, if certain
performance objectives related to earnings per share and shipment targets are
met or exceeded, based on performance and service completed through the
closing of the Merger (and adjusted to exclude the costs associated with the
Merger). Assuming that the Merger is consummated on or before September 30,
1997, the gross amount that would be payable under these two bonus
arrangements in respect of the executive officers, assuming that target levels
of performance are achieved, would not exceed $1,500,000. While the assurances
regarding the standard bonus arrangements will remain in effect in the event
the Merger does not occur (so that 1997 bonuses will be payable at least at
target levels in all events), the special performance based bonus will only
apply if the Merger is consummated.
Special arrangements have also been approved for certain executive officers
other than Mr. Fogarty. One executive officer, who is currently 58 years of
age, will be entitled, if he retires prior to age 62, to receive a special
retirement benefit following his termination until age 62 in order to enable
him to bridge the period from such termination until he can commence receipt
of his retirement and Social Security benefits without undue penalty. The
present value of such additional benefits is less than $100,000.
Another executive officer was made a participant in the mid-career benefit
under the Corporation's SERP and given service credit thereunder back to such
officer's original date of hire. The present value of such designation is
approximately $80,000. In addition, that executive officer has been designated
for a special one-time nonrecurring bonus of $200,000 to be paid upon
consummation of the Merger, so long as that officer has not voluntarily
terminated employment prior to such time. Another executive officer has been
designated for a special one-time nonrecurring bonus of $50,000 to be paid
upon consummation of the Merger, so long as that officer has not voluntarily
terminated employment prior to such time.
At the Effective Time, directors Anne M. Busquet and Janet Hill, who were
elected to the Board in early 1996, will become fully vested in the 1,000
stock units that were awarded to them upon their election to the Board of
Directors (and any dividend equivalents accrued thereon) under the Company's
1996 Non-Employee Director Stock Unit Plan. Each other director (other than
Mr. Fogarty, who is not eligible to participate in such plan) is already fully
vested in his or her rights and benefits thereunder.
REGULATORY APPROVALS
U.S. Antitrust Matters. Under the provisions of the HSR Act applicable to
the Merger, the Merger may be consummated only following the expiration of a
30-calendar day waiting period following the filing by the Company and by P&G
of Notification and Report Forms with respect to the Merger, unless P&G or the
Company receives a formal request for additional information or documentary
material from the Antitrust Division or the FTC or unless early termination of
the waiting period is granted. P&G and the Company submitted their
Notification and Report Forms with respect to the Merger on April 9, 1997. The
Antitrust Division has assumed responsibility for reviewing the Merger; and,
pursuant to discussions with the Antitrust Division, P&G refiled in connection
with the Merger on May 9, 1997, thereby starting a new 30-calendar day waiting
period. If, within the new 30-day waiting period, the Antitrust Division
requests additional information or material from P&G or the Company concerning
the Offer, the waiting period will be extended and would expire at 11:59 p.m.,
New York City time, on the twentieth calendar day after the date of
substantial compliance by P&G and the Company with such request. Only one
extension of the waiting period pursuant to a request for additional
information is authorized by the HSR Act. Thereafter, unless P&G and the
Company consent to a further extension of the waiting period, the Antitrust
Division must obtain a court order to require further delay in consummation of
the transaction. In practice, complying with a request for additional
information or material can take a significant amount of time. In addition, if
the Antitrust Division raises substantive issues in connection with the
proposed transaction, the parties may engage in negotiations with the
Antitrust Division concerning possible means of addressing those issues and
may agree to delay consummation of the transaction while such negotiations
continue. Expiration or termination of the applicable waiting period under the
HSR Act is a condition to the obligations of P&G, Merger Sub and the Company
to effect the Merger.
29
<PAGE>
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the Merger. At any time before or
after the Effective Time, the Antitrust Division or the FTC could take such
action under the antitrust laws as it deems necessary or desirable in the
public interest, including seeking to enjoin the consummation of the Merger or
seeking the divestiture of shares of Common Stock acquired by the Purchaser or
the divestiture of substantial assets of the Company or its subsidiaries or
P&G or its subsidiaries. Private parties may also bring legal action under the
antitrust laws under certain circumstances. There can be no assurance that a
challenge to the Merger on antitrust grounds will not be made or, if such a
challenge is made, of the result thereof.
Foreign Antitrust Matters. Under the provisions of the competition laws of
many foreign jurisdictions applicable to the Merger, filings will be required
or permitted; and mandatory waiting periods for antitrust review will also be
applicable in some jurisdictions. P&G and the Company have made or will
promptly make all required filings and such voluntary filings as P&G or the
Company deems appropriate. The period within which the relevant national
authority must or may reach a preliminary decision on the Merger and the
length of time available to such national authority if it decides to commence
a full investigation of the transaction vary from jurisdiction to
jurisdiction. Where a full inquiry into a transaction is undertaken, the
detailed investigations may take several months or longer. The relevant
national authorities are in many cases empowered to take a range of actions
designed to modify or prevent the implementation of transactions that do not
fulfill the criteria for approval under or are inconsistent with the relevant
national laws. P&G has informed the Company that it has made or intends to
make antitrust filings in a substantial number of jurisdictions outside of the
U.S., including among others Australia, Brazil, Canada, a number of European
Union member countries (it appearing that notification under EEC Regulation
4064/89 (the "Merger Regulation") will not be required), New Zealand, and
Venezuela. The Canadian filing has been completed, and the parties were
advised on May 20, 1997, through the issuance of an Advance Ruling Request,
that the Canadian antitrust authorities had completed their inquiry and would
not oppose the Merger. On May 23, 1997, the Belgian Competition Counsel, after
reviewing the filings that had been made and after a hearing, issued a formal
decision not to oppose the Merger. The New Zealand Commerce Commission has
also made a determination not to oppose the Merger. In many instances, the
obtaining of the applicable Other Antitrust Consents and the absence of
pending or specifically threatened litigation by the relevant government
challenging the Merger or seeking to impose specified limitations or
conditions on the Merger or on P&G is a condition to P&G's obligation to
consummate the Merger. See "The Merger Agreement--Conditions to the Merger"
and "--Certain Additional Conditions."
There can be no assurance that a challenge to the Merger will not be made
pursuant to the merger control regimes of one or more of various countries or
by legal action brought by private parties or, if such a challenge is made,
what the outcome would be.
CERTAIN TAX CONSEQUENCES TO STOCKHOLDERS
The following is a summary of certain United States income tax consequences
of the Merger to Stockholders.
The receipt of cash in exchange for Common Stock pursuant to the Merger or
pursuant to the exercise of dissenters' appraisal rights will be a taxable
transaction for U.S. federal income tax purposes and may also be a taxable
transaction under applicable state, local and foreign tax laws. A Stockholder
will generally recognize gain or loss for U.S. federal income tax purposes in
an amount equal to the difference between such Stockholder's adjusted tax
basis in such Stockholder's Common Stock and the cash received by such
Stockholder. Such gain or loss will be a capital gain or loss if such Common
Stock is held as a capital asset and will be long-term capital gain or loss
if, at the Effective Time, such Common Stock has been held for more than one
year.
As a result of the Merger, certain U.S. state real property transfer and
real property gains taxes ("Transfer Taxes") may be imposed on Stockholders.
P&G has agreed to pay such Transfer Taxes, if any, directly to state taxing
authorities on behalf of Stockholders. For federal income tax purposes, any
such payments made on behalf of a Stockholder should result in the deemed
receipt of additional consideration by such Stockholder in proportion to the
number of shares of Common Stock owned by such Stockholder. In such event,
such Stockholder should be deemed to have paid such tax on its own behalf and
therefore such Stockholder should be
30
<PAGE>
permitted to reduce such Stockholder's gain (or increase such Stockholder's
loss) on the sale by the amount of the tax.
The receipt of consideration pursuant to the Merger or the exercise of
dissenters' appraisal rights may be subject, under certain circumstances, to
"backup withholding" at a 31% rate. This withholding generally applies only if
the Stockholder (i) fails to furnish his or her social security or other
taxpayer identification number ("TIN") within a reasonable time after the
request therefor, (ii) furnishes an incorrect TIN, (iii) is notified by the
Internal Revenue Service that he or she has failed to report properly interest
or dividends, or (iv) fails, under certain circumstances, to provide a
certified statement, signed under penalty of perjury, that the TIN provided is
the correct number and that he or she is not subject to backup withholding.
The foregoing discussion may not apply to Stockholders who acquired their
Common Stock pursuant to the exercise of employee stock options or other
compensation arrangements with the Company, who are not citizens or residents
of the United States or who are otherwise subject to special tax treatment.
EACH STOCKHOLDER IS URGED TO CONSULT HIS, HER OR ITS TAX ADVISOR WITH RESPECT
TO THE TAX CONSEQUENCES OF THE MERGER, INCLUDING THE EFFECTS OF APPLICABLE
STATE, LOCAL OR OTHER TAX LAWS.
ACCOUNTING TREATMENT
The Merger will be treated as a "purchase" for accounting purposes.
DISSENTERS' RIGHTS
Record holders of shares of Common Stock who follow the appropriate
procedures are entitled to appraisal rights under Section 262 of the DGCL in
connection with the Merger. The following discussion is not a complete
statement of the law pertaining to appraisal rights under the DGCL and is
qualified in its entirety by the full text of Section 262 of the DGCL which is
reprinted in its entirety as Annex C to this Proxy Statement. Except as set
forth herein, Stockholders will not be entitled to appraisal rights in
connection with the Merger.
Under Section 262 of the DGCL, record holders of shares of Common Stock who
follow the procedures set forth in Section 262 of the DGCL and who have not
voted in favor of the Merger will be entitled to have their shares of Common
Stock appraised by the Delaware Court of Chancery and to receive payment of
the "fair value" of such shares, exclusive of any element of value arising
from the accomplishment or expectation of the Merger, together with a fair
rate of interest, as determined by such court.
Under Section 262 of the DGCL, where a merger agreement is to be submitted
for approval and adoption at a meeting of Stockholders, as in the case of the
Special Meeting, not less than 20 days prior to the meeting, the Company must
notify each of the holders of shares of Common Stock at the close of business
on the Record Date that such appraisal rights are available and include in
each such notice a copy of Section 262 of the DGCL. This Proxy Statement
constitutes such notice. Any such Stockholder who wishes to exercise appraisal
rights should review the following discussion and Annex C carefully because
failure to timely and properly comply with the procedures specified in Section
262 of the DGCL will result in the loss of appraisal rights under the DGCL.
A holder of shares of Common Stock wishing to exercise appraisal rights must
deliver to the Company, before the vote on the approval and adoption of the
Merger Agreement at the Special Meeting, a written demand for appraisal of
such holder's shares of Common Stock. A vote against the Merger will not
satisfy this requirement. In addition, a holder of shares of Common Stock
wishing to exercise appraisal rights must hold of record such shares on the
date the written demand for appraisal is made and must continue to hold such
shares through the Effective Time.
Only a holder of record of shares of Common Stock is entitled to assert
appraisal rights for the shares of Common Stock registered in that holder's
name. A demand for appraisal should be executed by or on behalf of the holder
of record fully and correctly, as the holder's name appears on the stock
certificates.
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<PAGE>
If the shares of Common Stock are owned of record in a fiduciary capacity,
such as by a trustee, guardian or custodian, execution of the demand should be
made in that capacity, and if the shares of Common Stock are owned of record
by more than one person, as in a joint tenancy or tenancy in common, the
demand should be executed by or on behalf of all joint owners. An authorized
agent, including one or more joint owners, may execute a demand for appraisal
on behalf of a holder of record; however, the agent must identify the record
owner or owners and expressly disclose the fact that, in executing the demand,
the agent is agent for such owner or owners. A record holder such as a broker
who holds shares of Common Stock as nominee for several beneficial owners may
exercise appraisal rights with respect to the shares of Common Stock held for
one or more beneficial owners while not exercising such rights with respect to
the shares of Common Stock held for other beneficial owners; in such case, the
written demand should set forth the number of shares as to which appraisal is
sought and where no number of shares is expressly mentioned the demand will be
presumed to cover all shares of Common Stock held in the name of the record
owner. Holders of shares of Common Stock who hold their shares in brokerage
accounts or other nominee forms and who wish to exercise appraisal rights are
urged to consult with their brokers to determine the appropriate procedures
for the making of a demand for appraisal by such nominee. All written demands
for appraisal of shares of Common Stock should be mailed or delivered to
Tambrands Inc., 777 Westchester Avenue, White Plains, N.Y. 10604, Attention:
Secretary or Assistant Secretary so as to be received before the vote on the
approval and adoption of the Merger Agreement at the Special Meeting.
Within 10 days after the Effective Time, the Company, as the surviving
corporation in the Merger, must send a notice as to the effectiveness of the
Merger to each person who has satisfied the appropriate provisions of Section
262 of the DGCL. Within 120 days after the Effective Time, but not thereafter,
the Company, or any holder of shares of Common Stock entitled to appraisal
rights under Section 262 of the DGCL and who has complied with the foregoing
procedures, may file a petition in the Delaware Court of Chancery demanding a
determination of the fair value of such shares. The Company is not under any
obligation, and has no present intention, to file a petition with respect to
the appraisal of the fair value of the shares of Common Stock. Accordingly, it
is the obligation of the Stockholders to initiate all necessary action to
perfect their appraisal rights within the time prescribed in Section 262 of
the DGCL.
Within 120 days after the Effective Time, any record holder of shares of
Common Stock who has complied with the requirements for exercise of appraisal
rights will be entitled, upon written request, to receive from the Company a
statement setting forth the aggregate number of shares of Common Stock with
respect to which demands for appraisal have been received and the aggregate
number of holders of such shares. Such statements must be mailed within 10
days after a written request therefor has been received by the Company.
If a petition for an appraisal is timely filed, after a hearing on such
petition, the Delaware Court of Chancery will determine the holders of shares
of Common Stock entitled to appraisal rights and will appraise the "fair
value" of the shares of Common Stock, exclusive of any element of value
arising from the accomplishment or expectation of the Merger, together with a
fair rate of interest, if any, to be paid upon the amount determined to be the
fair value. Holders considering seeking appraisal should be aware that the
fair value of their shares of Common Stock as determined under Section 262 of
the DGCL could be more than, the same as or less than the value of the Merger
Consideration that they would otherwise receive if they did not seek appraisal
of their shares of Common Stock. The Delaware Supreme Court has stated that
"proof of value by any techniques or methods which are generally considered
acceptable in the financial community and otherwise admissible in court"
should be considered in the appraisal proceedings. More specifically, the
Delaware Supreme Court has stated that: "Fair value, in an appraisal context,
measures 'that which has been taken from the shareholder, viz., his
proportionate interest in a going concern.' In the appraisal process the
corporation is valued 'as an entity,' not merely as a collection of assets or
by the sum of the market price of each share of its stock. Moreover, the
corporation must be viewed as an on-going enterprise, occupying a particular
market position in the light of future prospects." In addition, Delaware
courts have decided that the statutory appraisal remedy, depending on factual
circumstances, may or may not be a stockholder's exclusive remedy. The
Delaware Court of Chancery will also determine the amount of interest, if any,
to be paid upon the amounts to be received by persons whose shares of Common
32
<PAGE>
Stock have been appraised. The costs of the action may be determined by the
such court and taxed upon the parties as the court deems equitable. The court
may also order that all or a portion of the expenses incurred by any holder of
shares of Common Stock in connection with an appraisal, including, without
limitation, reasonable attorneys' fees and the fees and expenses of experts
utilized in the appraisal proceeding, be charged pro rata against the value of
all of the shares of Common Stock entitled to appraisal.
Any holder of shares of Common Stock who has duly demanded an appraisal in
compliance with Section 262 of the DGCL will not, after the Effective Time, be
entitled to vote the shares of Common Stock subject to such demand for any
purpose or be entitled to the payment of dividends or other distributions on
those shares (except dividends or other distributions payable to holders of
record of shares of Common Stock as of a date prior to the Effective Time).
If any holder of shares of Common Stock who demands appraisal of shares
under Section 262 of the DGCL fails to perfect, or effectively withdraws or
loses, the right to appraisal, as provided in the DGCL, the shares of Common
Stock of such holder will be converted into Merger Consideration without
interest in accordance with the Merger Agreement. A holder of shares of Common
Stock will fail to perfect, or will effectively lose, the right to appraisal
if no petition for appraisal is filed within 120 days after the Effective
Time. A holder may withdraw a demand for appraisal by delivering to the
Company a written withdrawal of the demand for appraisal and acceptance of the
Merger, except that any such attempt to withdraw made more than 60 days after
the Effective Time will require the written approval of the Company.
Failure to follow the steps required by Section 262 of the DGCL for
perfecting appraisal rights may result in the loss of such rights.
The foregoing is a summary of certain of the provisions of Section 262 of
the DGCL and is qualified in its entirety by reference to the full text of
such Section, a copy of which is attached hereto as Annex C.
CERTAIN LITIGATION
On April 9, 1997, the Company and ten of its directors and P&G were named as
defendants in each of the following five complaints filed in the Court of
Chancery in the State of Delaware: Klein v. Affinito et al. (Civ. Act. No.
15648 NC); Priest v. Affinito et al. (Civ. Act. No. 15652 NC); Krouner v.
Affinito et al. (Civ. Act. No. 15653 NC); Ominsky v. Affinito et al. (Civ.
Act. No. 15654 NC); and Katz v. Affinito et al. (Civ. Act. No. 15655 NC)
(together, the "Complaints"). Each of the Complaints was brought by an alleged
Stockholder, individually and purportedly as a class action on behalf of all
other Stockholders. In general, each of the Complaints alleges that the
defendant directors of the Company breached their fiduciary duties by
undertaking the sale of the Company to P&G without an auction process or
active market check with respect to the Company's value. Each of the
Complaints also alleges that P&G knowingly aided and abetted the breaches of
fiduciary duty purportedly committed by the director defendants. The
Complaints seek, among other things, injunctive relief prohibiting the Company
from consummating the Merger and requiring the director defendants to put the
Company up for auction and/or to conduct a market check. The Complaints also
seek damages. Plaintiffs' counsel have indicated their intent to consolidate
these actions into a single consolidated action.
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<PAGE>
SELECTED CONSOLIDATED FINANCIAL INFORMATION
The historical consolidated statement of income data and balance sheet data
for each year ended December 31 and as of December 31 in each year in the
five-year period ended December 31, 1996, included in the following table,
have been derived from the Company's consolidated financial statements,
audited by KPMG Peat Marwick LLP, independent certified public accountants.
The financial data as of and for the three months ended March 31, 1997 and
1996 were derived from the Company's unaudited quarterly financial statements,
which in the opinion of the Company's management, reflect all adjustments
necessary for a fair presentation of such data. The data for the three months
ended March 31, 1997 and 1996 are not necessarily indicative of results of
operations for the entire year. The selected financial data presented in the
table should be read in conjunction with the consolidated financial
statements, related notes and other financial information included herein or
incorporated herein by reference. All data are in thousands except per share
information and dividends declared.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31, YEAR ENDED DECEMBER 31,
------------------ ------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Net sales............... $168,157 $168,989 $662,112 $683,092 $644,513 $611,465 $684,113
Costs and expenses
Cost of products sold.. 59,419 55,841 226,348 231,625 206,111 201,706 228,081
-------- -------- -------- -------- -------- -------- --------
Gross profit........... 108,738 113,148 435,764 451,467 438,402 409,759 456,032
Marketing, selling and
administrative........ 68,795 73,935 297,269 291,104 286,787 263,409 216,300
Restructuring charge... -- -- 46,221 -- -- 30,042 --
-------- -------- -------- -------- -------- -------- --------
Operating income........ $ 39,943 $ 39,213 $ 92,274 $160,363 $151,615 $116,308 $194,732
Interest, net and
other.................. (1,752) (2,117) (8,949) (9,632) (9,864) 2,344 (2,869)
Litigation charge....... -- -- -- (11,396) -- -- --
-------- -------- -------- -------- -------- -------- --------
Earnings before
provision for income
taxes and cumulative
effect of accounting
change................. 38,191 37,096 83,325 139,335 141,751 118,652 191,863
Provision for income
taxes.................. 13,940 13,466 37,522 53,813 52,022 44,950 69,454
-------- -------- -------- -------- -------- -------- --------
Earnings before
cumulative effect of
accounting change...... 24,251 23,630 45,803 85,522 89,729 73,702 122,409
Cumulative effect of
accounting change...... -- -- -- -- -- (10,252) (1,009)
-------- -------- -------- -------- -------- -------- --------
Net earnings............ $ 24,251 $ 23,630 $ 45,803 $ 85,522 $ 89,729 $ 63,450 $121,400
======== ======== ======== ======== ======== ======== ========
PER SHARE DATA
Earnings before
cumulative effect of
accounting change...... 0.66 0.64 1.24 2.33 2.43 1.91 3.09
Dividends............... 0.46 0.46 1.84 1.78 1.70 1.56 1.40
OTHER DATA
Stockholders' equity.... 96,913 111,239 94,688 102,972 82,014 115,025 168,206
Capital expenditures.... 13,557 7,200 39,007 44,778 38,470 45,636 55,125
Advertising
expenditures........... 10,783 13,171 55,953 63,272 66,484 48,309 37,980
Depreciation............ 6,240 6,379 27,013 25,127 23,545 17,570 15,749
Medium-term
obligations............ 68,569 70,458 69,205 80,889 59,983 30,000 --
Total assets............ 420,249 430,121 409,966 422,049 379,075 362,398 372,981
Average number of common
shares outstanding..... 36,944 36,775 36,842 36,671 36,992 38,632 39,640
FINANCIAL RATIOS
Return on average
stockholders'
equity(a).............. 25.3% 22.1% 46.3% 92.5% 91.1% 52.0% 62.6%
Net earnings before
cumulative effect of
accounting change as a
percent of sales(b).... 14.4% 14.0% 12.5% 13.8% 13.9% 15.4% 17.9%
Gross profit as a
percent of sales....... 64.7% 67.0% 65.8% 66.1% 68.0% 67.0% 66.7%
Effective tax rate(b)... 36.5% 36.3% 36.1% 37.5% 36.7% 36.8% 36.2%
</TABLE>
- --------
(a)Based on Earnings before cumulative effect of accounting change.
(b)Excludes Restructuring charges in 1996 and 1993 and the Litigation charge
in 1995.
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<PAGE>
MARKET PRICES AND DIVIDENDS
Shares of Common Stock are listed and traded on the NYSE. On April 8, 1997,
the date preceding public announcement of the signing of the Merger Agreement,
the high, low and closing sales prices of a share of Common Stock on the NYSE
Composite Transactions Tape were $48 1/8, $45 1/8 and $46 1/8, respectively.
On May 28, 1997, the latest practicable trading day before the printing of
this Proxy Statement, the high, low and closing sales prices of a share of
Common Stock on the NYSE Composite Transactions Tape were $48 1/4, $47 7/8 and
$48 1/8, respectively.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table gives information concerning the beneficial ownership of
Common Stock as of May 19, 1997 by (i) all directors, (ii) the five most
highly compensated executive officers as of December 31, 1996 and (iii) a
former executive officer (such executive officers being collectively referred
to as the "Named Executives"), and all directors, Named Executives and other
executive officers as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP(1)
---------------------------------------------------
TOTAL SHARES
BENEFICIALLY DIRECT RIGHT TO PERCENT OF
BENEFICIAL OWNERS OWNED(2) OWNERSHIP(3) ACQUIRE(4) CLASS(5)
- ----------------- ------------ ------------ ---------- ----------
<S> <C> <C> <C> <C>
Lilyan H. Affinito........ 35,052(6) 8,031(7) 26,721 0.09
Anne M. Busquet........... 3,920 1,995(8) 1,925 0.01
Paul S. Doherty........... 21,602 13,902(9) 7,700 0.06
Edward T. Fogarty......... 246,811(10) 27,353(11) 215,763 0.66
Janet Hill................ 3,557 1,632(12) 1,925 0.01
Robert P. Kiley........... 32,201(13) 14,761(14) 16,672 0.09
John Loudon............... 17,670 2,865(15) 14,805 0.05
H. L. Tower............... 38,754 13,977(16) 24,777 0.10
Howard B. Wentz, Jr. ..... 26,732 24,532(17) 2,200 0.07
Robert M. Williams........ 56,934(18) 15,073(19) 26,721 0.15
Michael S. Krause......... 19,431(20) 1,120(21) 18,282 0.05
Michael K. Lorelli........ 0 0 0 0.00
Thomas J. Mason........... 46,653(22) 6,112(23) 40,438 0.13
Susan J. Riley............ 40,593(24) 1,848(25) 37,858 0.11
Thomas Soper, III......... 30,201(26) 2,434(27) 26,724 0.08
All directors, Named
Executives and other
executive officers as a
group.................... 742,879(28) 137,059(29) 575,991 1.98
</TABLE>
- --------
(1) The information as to beneficial ownership is based on statements
furnished to the Company by the Named Executives, its other executive
officers and directors. The directors and Named Executives have sole
voting and sole investment power with respect to all shares listed above
except as indicated in the footnotes which follow.
(2) Includes shares listed under the captions "Direct Ownership" and "Right
to Acquire."
(3) The information as to shares of Common Stock owned under the Employee
Stock Purchase Plan is as of April 30, 1997.
(4) Individuals currently have the right to acquire these shares within 60
days of May 19, 1997 by the exercise of stock options. For purposes of
the above table, it has been assumed that the Effective Time will occur
more than 60 days after May 19, 1997.
(5) For the purposes of this table, the percent of the issued and outstanding
shares of Common Stock held by each individual or group has been
calculated on the basis of 36,989,177 shares of Common Stock issued and
outstanding (excluding treasury shares) on May 19, 1997 and assuming that
all shares of Common
35
<PAGE>
(Footnotes continued from preceding page)
Stock subject to stock options exercisable within 60 days of May 19, 1997
held by that individual or group are owned thereby.
(6) Includes 300 shares held by a self-directed SEP established by Ms.
Affinito.
(7) Includes 1,728 shares credited to the benefit of Ms. Affinito under the
deferred compensation component of the Directors Plan and 2,803 shares
credited to her benefit under the Phantom Plan, in each case held in a
grantor trust, and as to which Ms. Affinito has the right to direct the
trustee as to how to vote such shares, but no investment power.
(8) Includes 951 shares credited to the benefit of Mrs. Busquet under the
deferred compensation component of the Directors Plan and 1,044 shares
credited to her benefit under the Phantom Plan, in each case held in a
grantor trust, and as to which Mrs. Busquet has the right to direct the
trustee as to how to vote such shares, but no investment power.
(9) Includes 2,194 shares credited to the benefit of Mr. Doherty under the
Phantom Plan and held in a grantor trust, as to which Mr. Doherty has the
right to direct the trustee as to how to vote such shares, but no
investment power.
(10) Includes 3,695 shares vested in the Company's Savings Plan as of April
30, 1997 with respect to which Mr. Fogarty has sole voting but, as to 148
shares, has no investment power.
(11) Includes 18,940 shares awarded under the 1989 Restricted Stock Plan (the
"1989 Plan") with respect to which Mr. Fogarty has sole voting but no
investment power.
(12) Includes 1,044 shares credited to the benefit of Mrs. Hill under the
Phantom Plan and held in a grantor trust, as to which Mrs. Hill has the
right to direct the trustee as to how to vote such shares, but no
investment power.
(13) Includes 768 shares vested in the Company's Savings Plan as of April 30,
1997 with respect to which Mr. Kiley has sole voting but no investment
power.
(14) Includes 2,023 shares credited to the benefit of Mr. Kiley under the
Phantom Plan and held in a grantor trust, as to which Mr. Kiley has the
right to direct the trustee as to how to vote such shares, but no
investment power.
(15) Includes 1,865 shares credited to the benefit of Mr. Loudon under the
Phantom Plan and held in a grantor trust, as to which Mr. Loudon has the
right to direct the trustee as to how to vote such shares, but no
investment power.
(16) Includes 2,584 shares credited to the benefit of Mr. Tower under the
Phantom Plan and held in a grantor trust, as to which Mr. Tower has the
right to direct the trustee as to how to vote such shares, but no
investment power.
(17) Includes 2,778 shares credited to the benefit of Mr. Wentz under the
Phantom Plan and held in a grantor trust, as to which Mr. Wentz has the
right to direct the trustee as to how to vote such shares, but no
investment power.
(18) Includes 3,360 shares held by a trust of which Mr. Williams is the
beneficiary, 11,280 shares held by trusts of which Mr. Williams is a
trustee and 500 shares held by Mr. Williams's wife.
(19) Includes 1,728 shares credited to the benefit of Mr. Williams under the
deferred compensation component of the Directors Plan and 1,345 shares
credited to his benefit under the Phantom Plan, in each case held in a
grantor trust, and as to which Mr. Williams has the right to direct the
trustee as to how to vote such shares, but no investment power.
(20) Includes 29 shares vested in the Company's Savings Plan as of April 30,
1997 with respect to which Mr. Krause has sole voting but no investment
power.
(21) Includes 1,020 shares awarded under the 1989 Plan with respect to which
Mr. Krause has sole voting but no investment power.
(22) Includes 103 shares vested in the Company's Savings Plan as of April 30,
1997 with respect to which Mr. Mason has sole voting but no investment
power.
(23) Includes 3,170 shares awarded under the 1989 Plan with respect to which
Mr. Mason has sole voting but no investment power.
(24) Includes 887 shares vested in the Company's Savings Plan as of April 30,
1997 with respect to which Ms. Riley has sole voting but no investment
power.
(Footnotes continued on following page)
36
<PAGE>
(Footnotes continued from preceding page)
(25) Includes 1,020 shares awarded under the 1989 Plan with respect to which
Ms. Riley has sole voting but no investment power.
(26) Includes 1,043 shares vested in the Company's Savings Plan as of April
30, 1997 with respect to which Mr. Soper has sole voting, but, as to 112
shares, has no investment power.
(27) Includes 1,720 shares awarded under the 1989 Plan with respect to which
Mr. Soper has sole voting but no investment power.
(28) Includes 10,027 shares vested in the Company's Savings Plan as of April
30, 1997 with respect to which this group has sole voting but, as to
4,198 shares, has no investment power.
(29) Includes 26,921 shares awarded under the 1989 Plan with respect to which
this group has sole voting but no investment power.
OTHER OWNERSHIP OF COMMON STOCK
Set forth below is certain information concerning those persons who, to the
Company's knowledge, are beneficial owners of more than 5% of the Common
Stock.
<TABLE>
<CAPTION>
SHARES OF PERCENT OF
NAME AND ADDRESS COMMON STOCK CLASS
---------------- ------------ ----------
<S> <C> <C>
Delaware Management Holdings, Inc.
2005 Market Street
Philadelphia, PA 19103............................... 3,676,204(1) 9.96
The Capital Group Companies, Inc.
333 South Hope Street
Los Angeles, CA 90071................................ 3,349,000(2) 9.10
</TABLE>
- --------
(1) Based solely on a Schedule 13G dated December 31, 1996 filed with the SEC
jointly by Delaware Management Holdings, Inc. ("Holdings") and Delaware
Management Company, Inc. ("Management"). Holdings reported sole voting
power with respect to 265,710 shares of Common Stock, sole dispositive
power with respect to 3,562,204 shares and shared dispositive power with
respect to 114,000 shares. Management reported beneficial ownership of
3,676,029 shares of Common Stock, and that it had sole voting power with
respect to 265,710 shares, sole dispositive power with respect to
3,562,029 shares and shared dispositive power with respect to 114,000
shares.
(2) Based solely on a Schedule 13G dated February 12, 1997 filed with the SEC
jointly by The Capital Group Companies, Inc. ("Capital Group") and Capital
Research and Management Company ("Research"). Capital Group reported sole
voting power with respect to 386,500 shares of Common Stock and sole
dispositive power with respect to 3,349,000 shares. Research reported sole
dispositive power with respect to 2,817,800 shares or 7.6% of the Common
Stock.
Each of the above beneficial owners stated in its Schedule 13G that these
shares were acquired in the ordinary course of business and not for the
purpose of changing or influencing the control of the Company.
To the best knowledge of the Company's management, there is no other
beneficial owner of more than 5% of the single class of voting security of the
Company.
37
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Exchange
Act, and in accordance therewith, files reports, proxy statements and other
information with the SEC. Copies of such reports, proxy statements and other
information can be inspected and copied at the public reference facilities
maintained by the SEC at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the following Regional Offices of the SEC: Seven
World Trade Center, 13th Floor, New York, New York 10048 and Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
material can be obtained at prescribed rates from the Public Reference Section
of the SEC, 450 Fifth Street, N.W., Washington, D.C. 20549. The SEC also
maintains a Web Site at http://www.sec.gov. that contains reports and other
information regarding registrants that file electronically with the SEC. In
addition, materials filed by the Company may be inspected at the offices of
the NYSE, 20 Broad Street, New York, New York 10005 and the Pacific Stock
Exchange, Incorporated, 301 Pine Street, San Francisco, California 94104.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the SEC are incorporated
into this Proxy Statement by reference:
1. The Company's Annual Report on Form 10-K for the year ended December
31, 1996;
2. The Company's report on Form 8-K, dated April 10, 1997;
3. The Company's report on Form 8-A/A, dated April 14, 1997;
4. The Company's report on Form 8-K, dated April 18, 1997; and
5. The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997.
All documents or reports subsequently filed by the Company pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date hereof
and prior to the date of the Special Meeting shall be deemed to be
incorporated by reference into this Proxy Statement and to be a part of this
Proxy Statement from the date of filing of such document. Any statement
contained herein, or in a document all or a portion of which is incorporated
or deemed to be incorporated by reference herein, shall be deemed to be
modified or superseded for purposes of this Proxy Statement to the extent that
a statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of
this Proxy Statement.
The Company will provide without charge to any person to whom this Proxy
Statement is delivered, on the written or oral request of such person, a copy
of any or all of the foregoing documents incorporated by reference (other than
exhibits not specifically incorporated by reference into the texts of such
documents). Requests for such documents should be directed to: 777 Westchester
Avenue, White Plains, New York 10604, Attention: Kathy Makrakis, Director of
Investor Relations and Shareholder Communications (telephone: (914) 696-6509).
To assure timely delivery of such documents, requests for such documents
should be made no later than June 20, 1997.
EXPERTS
The consolidated financial statements and schedules of the Company and its
subsidiaries as of December 31, 1996 and 1995 and for each of the years in the
three-year period ended December 31, 1996 that are incorporated by reference
in this Proxy Statement have been incorporated by reference herein in reliance
upon the report of KPMG Peat Marwick LLP, independent certified public
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing.
38
<PAGE>
INDEPENDENT PUBLIC ACCOUNTANTS
KPMG Peat Marwick LLP serves as the Company's independent certified public
accountants. A representative of KPMG Peat Marwick LLP will be at the Special
Meeting to answer questions by Stockholders and will have the opportunity to
make a statement if so desired.
STOCKHOLDER PROPOSALS
In accordance with regulations issued by the SEC, Stockholder proposals
intended for presentation at the 1998 Annual Meeting of Stockholders must be
received by the Secretary or Assistant Secretary of the Corporation no later
than November 17, 1997 if such proposals are to be considered for inclusion in
the Company's Proxy Statement. In accordance with the Company's By-Laws,
Stockholder proposals intended for presentation at the 1998 Annual Meeting of
Stockholders that are not intended to be considered for inclusion in the
Company's Proxy Statement must be received by the Secretary or Assistant
Secretary of the Company not earlier than January 22, 1998 and not later than
February 21, 1998.
OTHER MATTERS
The Board of Directors of the Company does not intend to bring any other
matters before the Special Meeting and as of the date hereof does not know of
any other matters that may be brought before the Special Meeting by others. If
any other matter should properly come before the Special Meeting, the persons
named in the enclosed proxy as proxy appointees will have discretionary
authority to vote the shares of Common Stock thereby represented in accordance
with their best judgment.
By Order of the Board of Directors,
SUSAN J. RILEY
Senior Vice President
Chief Financial Officer
777 Westchester Avenue
White Plains, New York 10604
May 30, 1997
39
<PAGE>
ANNEX A
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
THE PROCTER & GAMBLE COMPANY,
C.R. MACINTOSH, INC.
AND
TAMBRANDS INC.
DATED AS OF APRIL 8, 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<C> <C> <S> <C>
ARTICLE 1.............................................................. 1
1. The Merger....................................................... 1
1.1. The Merger............................................... 1
1.2. The Closing.............................................. 1
1.3. Effective Time........................................... 1
ARTICLE 2.............................................................. 1
2. Certificate of Incorporation and Bylaws of the Surviving
Corporation..................................................... 1
2.1. Certificate of Incorporation............................. 1
2.2. Bylaws................................................... 2
ARTICLE 3.............................................................. 2
3. Directors and Officers of the Surviving Corporation.............. 2
3.1. Directors................................................ 2
3.2. Officers................................................. 2
ARTICLE 4.............................................................. 2
4. Effect of the Merger on Securities of Merger Sub and the
Company......................................................... 2
4.1. Merger Sub Stock......................................... 2
4.2. Company Securities....................................... 2
4.3. Exchange of Certificates Representing Common Stock....... 3
4.4. Adjustment of Merger Consideration....................... 4
4.5. Dissenting Company Stockholders.......................... 4
4.6. Merger Without Meeting of Stockholders................... 4
ARTICLE 5.............................................................. 4
5. The Offer........................................................ 4
5.1. The Offer................................................ 4
5.2. Actions by Purchaser and Merger Sub...................... 5
5.3. Actions by the Company................................... 6
5.4. Directors................................................ 7
ARTICLE 6.............................................................. 7
6. Representations and Warranties of the Company.................... 7
6.1. Existence; Good Standing; Corporate Authority............ 8
6.2. Authorization, Validity and Effect of Agreements......... 8
6.3. Compliance with Laws..................................... 8
6.4. Capitalization........................................... 8
6.5. Subsidiaries............................................. 9
6.6. No Violation............................................. 9
6.7. Company Reports; Offer Documents......................... 10
6.8. Litigation............................................... 11
6.9. Absence of Certain Changes............................... 11
6.10. Taxes.................................................... 11
6.11. Employee Benefit Plans................................... 12
6.12. Labor and Employment Matters............................. 12
6.13. Brokers and Finders...................................... 12
6.14. Fairness Opinion......................................... 12
6.15. Licenses and Permits..................................... 12
6.16. Environmental Compliance and Disclosure.................. 13
6.17. Material Contracts....................................... 14
6.18. Intellectual Property Rights............................. 15
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<C> <C> <S> <C>
6.19. Required Vote of Company Stockholders................. 15
6.20. Disclosures........................................... 15
ARTICLE 7............................................................ 15
7. Representations and Warranties of Purchaser and Merger Sub.... 15
7.1. Existence; Good Standing; Corporate Authority......... 15
7.2. Authorization, Validity and Effect of Agreements...... 15
7.3. Offer Documents....................................... 16
7.4. No Violation.......................................... 16
7.5. Financing............................................. 16
7.6. Brokers and Finders................................... 16
ARTICLE 8............................................................ 16
8. Covenants..................................................... 16
8.1. No Solicitation....................................... 16
8.2. Interim Operations.................................... 17
8.3. Company Stockholder Approval; Proxy Statement......... 20
8.4. Filings; Other Action................................. 21
8.5. Access to Information................................. 22
8.6. Publicity............................................. 22
8.7. Further Action........................................ 22
8.8. Insurance; Indemnity.................................. 22
8.9. Restructuring of Merger............................... 23
8.10. Employees and Employee Benefit Plans.................. 23
8.11. Transfer Taxes........................................ 24
ARTICLE 9............................................................ 24
9. Conditions.................................................... 24
9.1. Conditions to Each Party's Obligation to Effect the
Merger............................................... 24
9.2. Additional Conditions to Obligations of Purchaser and
Merger Sub to Effect the Merger...................... 24
ARTICLE 10........................................................... 24
10. Termination; Amendment; Waiver................................ 24
10.1. Termination........................................... 24
10.2. Effect of Termination................................. 25
10.3. Amendment............................................. 26
10.4. Extension; Waiver..................................... 26
ARTICLE 11........................................................... 26
11. General Provisions............................................ 26
11.1. Nonsurvival of Representations and Warranties......... 26
11.2. Notices............................................... 26
11.3. Assignment; Binding Effect............................ 27
11.4. Entire Agreement...................................... 27
11.5. Fees and Expenses..................................... 27
11.6. Governing Law......................................... 28
11.7. Headings.............................................. 28
11.8. Interpretation........................................ 28
11.9. Investigations........................................ 28
11.10. Severability.......................................... 28
11.11. Enforcement of Agreement.............................. 29
11.12. Counterparts.......................................... 29
</TABLE>
<PAGE>
DEFINITIONS
<TABLE>
<CAPTION>
DEFINED TERM SECTION REFERENCE
------------ -----------------
<S> <C>
"Acquisition Date"........................................... Section 8.10(b)
"Action"..................................................... Section 8.8(d)
"affiliate".................................................. Section 11.8
"Agreement".................................................. First Paragraph
"Alternative Proposal"....................................... Section 8.1
"associate".................................................. Section 11.8
"Board" or "Board of Directors".............................. Section 5.3(a)
"Cap"........................................................ Section 8.8(a)
"Category A Key Jurisdiction"................................ Section 6.17
"Certificate"................................................ Section 4.2(b)
"Closing".................................................... Section 1.2
"Closing Date"............................................... Section 1.2
"Commitment Amount".......................................... Section 11.5(b)
"Common Stock"............................................... Section 4.2(a)
"Company".................................................... First Paragraph
"Company Benefit Plans"...................................... Section 6.11
"Company Reports"............................................ Section 6.7(a)
"Confidentiality Agreement".................................. Section 8.5(b)
"Consents"................................................... Section 8.4
"Continuing Directors"....................................... Section 5.4(b)
"Contract" or "Contracts".................................... Section 6.6
"Current Policies"........................................... Section 8.8(a)
"Delaware Courts"............................................ Section 11.6
"Derivative" or "Derivatives"................................ Section 6.17
"Designated Contract Provision".............................. Exhibit A
"DGCL"....................................................... Section 4.5
"Disclosure Letter".......................................... Section 6
"Dissenting Common Stock".................................... Section 4.5
"Effective Time"............................................. Section 1.3
"Employee Agreements"........................................ Section 6.11
"Encumbrances"............................................... Section 6.5
"Environmental Costs"........................................ Section 6.16(a)
"Environmental Laws"......................................... Section 6.16(a)
"Environmental Matters"...................................... Section 6.16(a)
"excess parachute payment"................................... Section 6.11
"Exchange Act"............................................... Section 5.1(a)
"Exchange Fund".............................................. Section 4.3(a)
"Fairness Opinion"........................................... Section 5.3(a)
"Financial Advisor".......................................... Section 5.3(a)
"Foreign Antitrust Laws"..................................... Section 6.6
"Governmental Entity"........................................ Section 6.3
"group"...................................................... Exhibit A
"Hazardous Materials"........................................ Section 6.16(a)
"HSR Act".................................................... Section 6.6
"Indemnified Party".......................................... Section 8.8(d)
"Information"................................................ Section 8.5(b)
"Information Statement"...................................... Section 6.7(b)
"Intellectual Property"...................................... Section 6.18
"Key Jurisdiction"........................................... Section 6.17
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DEFINED TERM SECTION REFERENCE
------------ -----------------
<S> <C>
"Laws"....................................................... Section 6.3
"Litigation"................................................. Section 6.8
"Losses"..................................................... Section 8.8(b)
"Material Adverse Effect".................................... Section 6.1
"Material Contracts"......................................... Section 6.17
"Merger"..................................................... Section 1.1
"Merger Consideration"....................................... Section 4.2(a)
"Merger Sub"................................................. First Paragraph
"Minimum Condition".......................................... Exhibit A
"Minority JV Interest"....................................... Section 8.2(c)
"Offer"...................................................... Section 5.1(a)
"Offer Documents"............................................ Section 5.2(a)
"Option" or "Options"........................................ Section 4.2(d)
"Other Antitrust Consents"................................... Section 8.4
"Other Antitrust Filings".................................... Section 8.4
"Paying Agent"............................................... Section 4.3(a)
"Percentage"................................................. Section 5.4(a)
"Permits".................................................... Section 6.15
"person"..................................................... Exhibit A
"Proxy Statement"............................................ Section 8.3(b)
"Purchaser".................................................. First Paragraph
"Regulatory Filings"......................................... Section 6.6
"Restricted Stock"........................................... Section 6.4
"Restructuring".............................................. Section 8.2(c)
"Rights"..................................................... Section 6.4
"Rights Agreement"........................................... Section 5.3(a)
"Schedule 14D-9"............................................. Section 5.3(b)
"SEC"........................................................ Section 5.1(b)
"Securities Act"............................................. Section 6.7(a)
"Significant Subsidiary"..................................... Section 6.1
"Stock Option Plans"......................................... Section 4.2(d)
"Stockholders Meeting"....................................... Section 8.3(a)
"Subsidiary"................................................. Section 11.8
"Surviving Corporation"...................................... Section 1.1
"Tax" or "Taxes"............................................. Section 6.10
"Tax Return"................................................. Section 6.10
</TABLE>
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of April 8, 1997 (this "Agreement"),
between THE PROCTER & GAMBLE COMPANY, an Ohio corporation ("Purchaser"), C.R.
MACINTOSH, INC., a Delaware corporation and a wholly owned subsidiary of
Purchaser ("Merger Sub"), and TAMBRANDS INC., a Delaware corporation (the
"Company").
RECITALS
WHEREAS, the Boards of Directors of Purchaser and the Company each have
determined that it is in the best interests of their respective companies and
stockholders for Purchaser to acquire the Company upon the terms and subject
to the conditions set forth herein.
WHEREAS, the parties hereto desire to make certain representations,
warranties, covenants and agreements in connection herewith.
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE 1
The Merger
1.1. The Merger. Subject to the terms and conditions of this Agreement, at
the Effective Time (defined terms used herein not previously defined having
the meanings as hereinafter defined), Merger Sub shall be merged with and into
the Company in accordance with this Agreement, and the separate corporate
existence of Merger Sub shall thereupon cease (the "Merger"). The Company
shall be the surviving corporation in the Merger (sometimes hereinafter
referred to as the "Surviving Corporation"). The Merger shall have the effects
specified in the DGCL.
1.2. The Closing. Subject to the terms and conditions of this Agreement, the
closing of the Merger (the "Closing") shall take place at the offices of
Fried, Frank, Harris, Shriver & Jacobson, One New York Plaza, New York, New
York, at 10:00 a.m., local time, as soon as practicable following the
satisfaction (or waiver if permissible) of the conditions set forth in Article
9 or at such other time, date or place as Purchaser and the Company may agree.
The date on which the Closing occurs is hereinafter referred to as the
"Closing Date."
1.3. Effective Time. If all the conditions to the Merger set forth in
Article 9 shall have been fulfilled or waived in accordance herewith and this
Agreement shall not have been terminated as provided in Article 10, the
parties hereto shall cause a Certificate of Merger meeting the requirements of
Sections 103 and 251 of the DGCL to be properly executed and filed in
accordance with such Sections on the Closing Date. The Merger shall become
effective at the time of filing of the Certificate of Merger with the
Secretary of State of the State of Delaware in accordance with the DGCL or at
such later time which the parties hereto shall have agreed upon and designated
in such filing as the effective time of the Merger (the "Effective Time").
ARTICLE 2
Certificate of Incorporation and Bylaws of the Surviving Corporation
2.1. Certificate of Incorporation. The Certificate of Incorporation of
Merger Sub in effect immediately prior to the Effective Time in the form
attached hereto as Exhibit B shall be adopted as the Certificate of
Incorporation of the Surviving Corporation, until duly amended in accordance
with applicable law, except that the name of Merger Sub as set forth in the
Certificate of Incorporation shall be changed to Tambrands Inc.
A-1
<PAGE>
2.2. Bylaws. The Bylaws of Merger Sub in effect immediately prior to the
Effective Time shall be adopted as the Bylaws of the Surviving Corporation,
until duly amended in accordance with applicable law.
ARTICLE 3
Directors and Officers of the Surviving Corporation
3.1. Directors. The directors of Merger Sub immediately prior to the
Effective Time shall be the directors of the Surviving Corporation as of the
Effective Time and until their successors are duly appointed or elected in
accordance with applicable law.
3.2. Officers. The officers of the Company immediately prior to the
Effective Time, together with such additions thereto as Merger Sub shall
designate, shall be the officers of the Surviving Corporation as of the
Effective Time and until their successors are duly appointed or elected in
accordance with applicable law.
ARTICLE 4
Effect of the Merger on Securities
of Merger Sub and the Company
4.1. Merger Sub Stock. At the Effective Time, each share of common stock,
$1.00 par value per share, of Merger Sub outstanding immediately prior to the
Effective Time shall be converted into and exchanged for one validly issued,
fully paid and non-assessable share of common stock, $1.00 par value per
share, of the Surviving Corporation.
4.2. Company Securities.
(a) At the Effective Time, each share of Common Stock, par value $.25 per
share (the "Common Stock") of the Company, together with the associated
Rights, issued and outstanding immediately prior to the Effective Time (other
than shares of Common Stock owned by Purchaser or Merger Sub or held by the
Company or owned or held by any of their respective Subsidiaries, all of which
shall be canceled as provided in Section 4.2(c), and other than shares of
Dissenting Common Stock) shall, by virtue of the Merger and without any action
on the part of the holder thereof, be converted into the right to receive cash
in the amount of $50.00 per share, without interest (the "Merger
Consideration"). Except where the context otherwise requires, all references
herein to shares of Common Stock shall include the associated Rights.
(b) As a result of the Merger and without any action on the part of the
holders thereof, at the Effective Time, all shares of Common Stock shall cease
to be outstanding and shall be canceled and retired and shall cease to exist,
and each holder of shares of Common Stock (other than Merger Sub, Purchaser,
the Company and each of their respective Subsidiaries) shall thereafter cease
to have any rights with respect to such shares of Common Stock, except the
right to receive, without interest, the Merger Consideration in accordance
with Section 4.3 upon the surrender of a certificate or certificates (a
"Certificate") representing such shares of Common Stock or, with respect to
shares of Dissenting Common Stock, payment of the appraised value of shares of
Dissenting Common Stock in accordance with Section 4.5.
(c) Each share of Common Stock issued and owned or held by Purchaser, Merger
Sub, the Company or any of their respective Subsidiaries at the Effective Time
shall, by virtue of the Merger, cease to be outstanding and shall be canceled
and retired without payment of any consideration therefor.
(d) All options (individually, an "Option" and collectively, the "Options")
outstanding immediately prior to the Effective Time under any Company stock
option plan (the "Stock Option Plans"), whether or not then exercisable, shall
be canceled and each holder of an Option will be entitled to receive, for each
share of Common
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Stock subject to an Option, an amount in cash equal to the excess, if any, of
the Merger Consideration over the per share exercise price of such Option,
without interest. The amounts payable pursuant to this Section 4.2(d) shall be
subject to all applicable withholding of taxes. The Company shall use its
reasonable best efforts to obtain all necessary consents of the holders of
Options to the cancellation of the Options in accordance with this
Section 4.2(d).
4.3. Exchange of Certificates Representing Common Stock
(a) Prior to the Effective Time, Purchaser shall appoint a commercial bank
or trust company having net capital of not less than $100,000,000 and which is
reasonably satisfactory to the Company, to act as paying agent hereunder for
payment of the Merger Consideration upon surrender of Certificates (the
"Paying Agent"). Purchaser shall, or shall cause the Surviving Corporation to,
provide the Paying Agent with cash in amounts necessary to pay for all the
shares of Common Stock pursuant to Section 4.2(a) and to make all payments in
connection with the Options pursuant to Section 4.2(d), as and when such
amounts are needed by the Paying Agent. Such amounts shall hereinafter be
referred to as the "Exchange Fund."
(b) Promptly after the Effective Time, Purchaser shall cause the Paying
Agent to mail to each holder of record of shares of Common Stock immediately
prior to the Effective Time (i) a letter of transmittal which shall specify
that delivery shall be effected, and risk of loss and title to such
Certificates shall pass, only upon delivery of the Certificates to the Paying
Agent and which letter shall be in customary form and have such other
provisions as Purchaser may reasonably specify and (ii) instructions for
effecting the surrender of such Certificates in exchange for the Merger
Consideration. Upon surrender of a Certificate to the Paying Agent together
with such letter of transmittal, duly executed and completed in accordance
with the instructions thereto, and such other documents as may reasonably be
required by the Paying Agent, the holder of such Certificate shall be entitled
to receive in exchange therefor the amount of cash into which shares of Common
Stock theretofore represented by such Certificate shall have been converted
pursuant to Section 4.2, and the shares represented by the Certificate so
surrendered shall forthwith be canceled. No interest will be paid or will
accrue on the cash payable upon surrender of any Certificate. In the event of
a transfer of ownership of Common Stock which is not registered in the
transfer records of the Company, payment may be made with respect to such
Common Stock to such a transferee if the Certificate representing such shares
of Common Stock is presented to the Paying Agent, accompanied by all documents
required to evidence and effect such transfer and to evidence that any
applicable stock transfer taxes have been paid.
(c) At and after the Effective Time, there shall be no transfers on the
stock transfer books of the Company of the shares of Common Stock which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation, they shall be
canceled and exchanged as provided in this Article 4.
(d) Any portion of the Exchange Fund (including the proceeds of any interest
and other income received by the Paying Agent in respect of all such funds)
that remains unclaimed by the former stockholders of the Company six months
after the Effective Time shall be delivered to the Surviving Corporation. Any
former stockholders of the Company who have not theretofore complied with this
Article 4 shall thereafter look only to the Surviving Corporation for payment
of any Merger Consideration that may be payable upon surrender of any
Certificates such stockholder holds, as determined pursuant to this Agreement,
without any interest thereon.
(e) None of Purchaser, the Company, the Surviving Corporation, the Paying
Agent or any other person shall be liable to any former holder of shares of
Common Stock for any amount properly delivered to a public official pursuant
to applicable abandoned property, escheat or similar laws.
(f) If any Certificate shall have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the person claiming such Certificate to
be lost, stolen or destroyed and, if required by the Surviving Corporation,
the posting by such person of a bond in such reasonable amount as the
Surviving Corporation may direct as indemnity against any claim that may be
made against it with respect to such Certificate, the Paying
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Agent will issue in exchange for such lost, stolen or destroyed Certificate
the Merger Consideration payable in respect thereof pursuant to this
Agreement.
4.4. Adjustment of Merger Consideration. If, subsequent to the date of this
Agreement but prior to the Effective Time, the outstanding shares of Common
Stock shall have been changed into a different number of shares or a different
class as a result of a stock split, reverse stock split, stock dividend,
subdivision, reclassification, split, combination, exchange, recapitalization
or other similar transaction, the Merger Consideration shall be appropriately
adjusted.
4.5. Dissenting Company Stockholders. Notwithstanding any provision of this
Agreement to the contrary, if required by the DGCL but only to the extent
required thereby, shares of Common Stock which are issued and outstanding
immediately prior to the Effective Time and which are held by holders of such
shares of Common Stock who have properly exercised appraisal rights with
respect thereto (the "Dissenting Common Stock") in accordance with Section 262
of the Delaware General Corporation Law ("DGCL") will not be exchangeable for
the right to receive the Merger Consideration, and holders of such shares of
Dissenting Common Stock will be entitled to receive payment of the appraised
value of such shares of Dissenting Common Stock in accordance with the
provisions of such Section 262 unless and until such holders fail to perfect
or effectively withdraw or lose their rights to appraisal and payment under
the DGCL. If, after the Effective Time, any such holder fails to perfect or
effectively withdraws or loses such right, such shares of Dissenting Common
Stock will thereupon be treated as if they had been converted into and to have
become exchangeable for, at the Effective Time, the right to receive the
Merger Consideration, without any interest thereon. Notwithstanding anything
to the contrary contained in this Section 4.5, if (i) the Merger is rescinded
or abandoned or (ii) the stockholders of the Company revoke the authority to
effect the Merger, then the right of any stockholder to be paid the fair value
of such stockholder's Dissenting Common Stock pursuant to Section 262 of the
DGCL shall cease. The Company will give Purchaser prompt notice of any demands
and withdrawals of such demands received by the Company for appraisals of
shares of Dissenting Common Stock. The Company shall not, except with the
prior written consent of Purchaser, make any payment with respect to any
demands for appraisal or offer to settle or settle any such demands.
4.6. Merger Without Meeting of Stockholders. Notwithstanding the foregoing,
if Merger Sub, or any other direct or indirect subsidiary of Purchaser, shall
acquire at least 90 percent of the outstanding shares of Common Stock pursuant
to the Offer, the parties hereto shall take all necessary and appropriate
action to cause the Merger to become effective as soon as practicable after
the expiration of the Offer without a meeting of stockholders of the Company,
in accordance with Section 253 of the DGCL.
ARTICLE 5
The Offer
5.1 The Offer.
(a) Subject to the provisions of this Agreement, Purchaser shall have the
option, but not the obligation, at any time prior to the mailing of the Proxy
Statement to the stockholders of the Company pursuant to Section 8.3(b) and
provided Merger Sub has given the Company at least five business days' prior
written notice thereof, to cause Merger Sub to commence, within the meaning of
Rule 14d-2 under the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder (the "Exchange Act"), an offer to
purchase all of the outstanding shares of Common Stock of the Company,
together with the associated Rights, at a price per share equal to the Merger
Consideration, net to the seller in cash (the "Offer"). Purchaser intends to
cause the Offer to be commenced if Purchaser concludes that it is reasonably
likely that the Offer can be completed before the Closing of the Merger. If
Merger Sub so commences the Offer, the obligation of Merger Sub to accept for
payment, and pay for, any shares of Common Stock tendered pursuant to the
Offer shall be subject only to the conditions set forth in Exhibit A. Subject
to the provisions of this Agreement, the Offer shall expire 20
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business days after the date of its commencement (provided that in no event
shall the Offer expire earlier than 30 calendar days after the date of this
Agreement), unless this Agreement is terminated in accordance with Article 10,
in which case the Offer (whether or not previously extended in accordance with
the terms hereof) shall expire on such date of termination.
(b) Without the prior written consent of the Company, Merger Sub shall not
(i) waive the Minimum Condition (as defined in Exhibit A), (ii) reduce the
number of shares of Common Stock subject to the Offer, (iii) reduce the price
per share of Common Stock to be paid pursuant to the Offer, (iv) extend the
Offer if all of the Offer conditions are satisfied or waived, (v) change the
form of consideration payable in the Offer, or (vi) amend or modify any term
or condition of the Offer (including the conditions set forth on Exhibit A) in
any manner adverse to the holders of Common Stock. Notwithstanding anything
herein to the contrary, Merger Sub may, in its sole discretion without the
consent of the Company, extend the Offer at any time and from time to time (i)
if at the then scheduled expiration date of the Offer any of the conditions to
Merger Sub's obligation to accept for payment and pay for shares of Common
Stock shall not have been satisfied or waived; (ii) for any period required by
any rule, regulation, interpretation or position of the Securities and
Exchange Commission (the "SEC") or its staff applicable to the Offer; (iii)
for any period required by applicable law in connection with an increase in
the consideration to be paid pursuant to the Offer; and (iv) if all Offer
conditions are satisfied or waived but the number of shares of Common Stock
tendered is less than 90% of the then outstanding number of shares of Common
Stock, for an aggregate period of not more than 10 business days (for all such
extensions under this clause (iv)) beyond the latest expiration date that
would be permitted under clause (i), (ii) or (iii) of this sentence. So long
as this Agreement is in effect and the Offer conditions have not been
satisfied or waived, Merger Sub shall, and Purchaser shall cause Merger Sub
to, cause the Offer not to expire. Subject to the terms and conditions of the
Offer and this Agreement (but subject to the right of termination in
accordance with Article 10), Merger Sub shall, and Purchaser shall cause
Merger Sub to, accept for payment, in accordance with the terms of the Offer,
all shares of Common Stock validly tendered and not withdrawn pursuant to the
Offer as soon as practicable after the expiration of the Offer.
5.2. Actions by Purchaser and Merger Sub.
(a) On the date of commencement of the Offer, Purchaser and Merger Sub shall
file with the SEC a Tender Offer Statement on Schedule 14D-1 with respect to
the Offer, which shall contain an offer to purchase and a related letter of
transmittal (such Schedule 14D-1 and the documents therein pursuant to which
the Offer will be made, together with any supplements or amendments thereto,
the "Offer Documents"). The Company and its counsel shall be given an
opportunity to review and comment upon the Offer Documents (and shall provide
any comments thereon as soon as practicable) prior to the filing thereof with
the SEC. The Offer Documents shall comply as to form in all material respects
with the requirements of the Exchange Act, and on the date filed with the SEC
and on the date first published, sent or given to the Company's stockholders,
the Offer Documents shall not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading, except that no representation is made by
Purchaser or Merger Sub with respect to information supplied by the Company
for inclusion in the Offer Documents. Each of Purchaser, Merger Sub and the
Company agrees promptly to correct any information provided by it for use in
the Offer Documents if and to the extent that such information shall have
become false or misleading in any material respect, and each of Purchaser,
Merger Sub and the Company further agrees to take all steps necessary to cause
the Offer Documents as so corrected to be filed with the SEC and to be
disseminated to holders of shares of Common Stock, in each case as and to the
extent required by applicable federal securities laws. Purchaser and Merger
Sub agree to provide the Company and its counsel in writing with any comments
Purchaser, Merger Sub or their counsel may receive from the SEC or its staff
with respect to the Offer Documents promptly after receipt of such comments.
(b) Purchaser shall provide or cause to be provided to Merger Sub all of the
funds necessary to purchase any shares of Common Stock that Merger Sub becomes
obligated to purchase pursuant to the Offer.
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5.3. Actions by the Company.
(a) The Company hereby approves of and consents to the Offer and represents
and warrants that the Board of Directors of the Company (the "Board of
Directors" or the "Board") at a meeting duly called and held has duly adopted
resolutions (i) approving this Agreement, the Offer (if made) and the Merger,
determining that the Merger is advisable and that the terms of the Offer (if
made) and the Merger are fair to, and in the best interests of, the Company
and the Company's stockholders and recommending that the Company's
stockholders accept the Offer (if made) and approve the Merger and this
Agreement, and (ii) taking all action necessary so that Section 203 of the
DGCL and the Company's Rights Agreement, dated as of October 24, 1989, between
the Company and First Chicago Trust Company of New York, as rights agent (the
"Rights Agreement"), are and, through the Effective Time, will be inapplicable
to, and have no adverse effect on, Purchaser and Merger Sub, the Offer, the
Merger, this Agreement, or any of the transactions contemplated hereby. The
Company further represents and warrants that the Board of Directors has
received the written opinion of Morgan Stanley & Co. Inc. (the "Financial
Advisor") that the proposed consideration to be received by the holders of
shares of Common Stock pursuant to the Offer (if made) and the Merger is fair
to such holders from a financial point of view (the "Fairness Opinion"). The
Company hereby consents to the inclusion in the Offer Documents of the
recommendation of the Board of Directors described in the first sentence of
this Section 5.3(a). The Company hereby represents and warrants that it has
been authorized by the Financial Advisor to permit the inclusion of the
Fairness Opinion and references thereto, subject to prior review and consent
by the Financial Advisor (such consent not to be unreasonably withheld), in
the Offer Documents, the Schedule 14D-9 and the Proxy Statement.
(b) On the date the Offer Documents are filed with the SEC, the Company
shall file with the SEC a Solicitation/Recommendation Statement on Schedule
14D-9 with respect to the Offer (such Schedule 14D-9, as amended from time to
time, the "Schedule 14D-9") containing the recommendations described in
Section 5.3(a) and shall disseminate the Schedule 14D-9 to the stockholders of
the Company as required by Rule 14d-9 promulgated under the Exchange Act. To
the extent practicable, the Company shall cooperate with Purchaser in mailing
or otherwise disseminating the Schedule 14D-9 with the appropriate Offer
Documents to the Company's stockholders. Purchaser and its counsel shall be
given an opportunity to review and comment upon the Schedule 14D-9 (and shall
provide any comments thereon as soon as practicable) prior to the filing
thereof with the SEC. The Schedule 14D-9 shall comply as to form in all
material respects with the requirements of the Exchange Act and, on the date
filed with the SEC and on the date first published, sent or given to the
Company's stockholders, shall not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that no
representation is made by the Company with respect to information supplied by
Purchaser or Merger Sub for inclusion in the Schedule 14D-9. Each of the
Company, Purchaser and Merger Sub agrees promptly to correct any information
provided by it for use in the Schedule 14D-9 if and to the extent that such
information shall have become false or misleading in any material respect, and
the Company further agrees to take all steps necessary to cause the Schedule
14D-9 as so corrected to be filed with the SEC and to be disseminated to the
holders of shares of Common Stock, in each case as and to the extent required
by applicable federal securities laws. The Company agrees to provide Purchaser
and Merger Sub and their counsel in writing with any comments the Company or
its counsel may receive from the SEC or its staff with respect to the Schedule
14D-9 promptly after the receipt of such comments.
(c) In connection with the Offer, the Company shall cause its transfer agent
to furnish Merger Sub with mailing labels containing the names and addresses
of the record holders of Common Stock as of a recent date and of those persons
becoming record holders subsequent to such date, together with copies of all
lists of stockholders, security position listings and computer files and all
other information in the Company's possession or control regarding the
beneficial owners of Common Stock, and shall furnish to Merger Sub such
information and assistance (including updated lists of stockholders, security
position listings and computer files) as Merger Sub may reasonably request in
communicating the Offer to the Company's stockholders. Subject to the
requirements of law, and except for such steps as are necessary to disseminate
the Offer Documents and any other documents necessary to consummate the Offer
and the Merger, Purchaser and Merger Sub and each of
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their affiliates and associates shall hold in confidence the information
contained in any of such labels, lists and files, shall use such information
only in connection with the Offer and the Merger, and, if this Agreement is
terminated, shall promptly deliver to the Company all copies of such
information then in their possession or under their control.
(d) Subject to the terms and conditions of this Agreement, if there shall
occur a change in law or in a binding judicial interpretation of existing law
which would, in the absence of action by the Company or the Board, prevent
Merger Sub, were it to acquire a specified percentage of the shares of Common
Stock then outstanding, from approving and adopting this Agreement by its
affirmative vote as the holder of a majority of shares of Common Stock and
without the affirmative vote of any other stockholder, the Company will use
its reasonable best efforts to promptly take or cause such action to be taken.
5.4. Directors.
(a) Promptly upon the purchase of shares of Common Stock pursuant to the
Offer, and from time to time thereafter, Purchaser shall be entitled to
designate such number of directors, rounded up to the next whole number, as
will give Purchaser representation on the Board of Directors equal to the
product of (i) the number of directors on the Board of Directors and (ii) the
percentage that the number of shares of Common Stock purchased by Merger Sub
or Purchaser or any affiliate bears to the number of shares of Common Stock
outstanding (the "Percentage"), and the Company shall, upon request by
Purchaser, promptly increase the size of the Board of Directors and/or
exercise its reasonable best efforts to secure the resignations of such number
of directors as is necessary to enable Purchaser's designees to be elected to
the Board of Directors and shall cause Purchaser's designees to be so elected;
provided, however, that until the Effective Time, the Board of Directors will
have at least one Continuing Director. At the request of Purchaser, the
Company will use its reasonable best efforts to cause such individuals
designated by Purchaser to constitute the same Percentage of (i) each
committee of the Board, (ii) the board of directors of each Subsidiary and
(iii) the committees of each such board of directors. The Company's
obligations to appoint designees to the Board of Directors shall be subject to
Section 14(f) of the Exchange Act. The Company shall take, at its expense, all
action necessary to effect any such election, and shall include in the
Schedule 14D-9 the information required by Section 14(f) of the Exchange Act
and Rule 14f-1 promulgated thereunder. Purchaser will supply to Company in
writing and be solely responsible for any information with respect to itself
and its nominees, directors and affiliates required by Section 14(f) and
Rule 14f-1.
(b) Following the election or appointment of Purchaser's designees pursuant
to this Section 5.4 and prior to the Effective Time, the approval of a
majority of the directors of the Company then in office who are not designated
by Purchaser (the "Continuing Directors") shall be required to authorize (and
such authorization shall constitute the authorization of the Board of
Directors and no other action on the part of the Company, including any action
by any other director of the Company, shall be required to authorize) any
termination of this Agreement by the Company, any amendment of this Agreement
requiring action by the Board of Directors, any extension of time for the
performance of any of the obligations or other acts of Purchaser or Merger
Sub, and any waiver of compliance with any of the agreements or conditions
contained herein for the benefit of the Company.
ARTICLE 6
Representations and Warranties of the Company
The Company hereby represents and warrants to Purchaser and Merger Sub as
follows, except as specifically disclosed in the writing from the Company to
Purchaser and Merger Sub that is dated the date of this Agreement and that is
identified by the Company to Purchaser as the disclosure letter to this
Agreement (the "Disclosure Letter"):
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6.1. Existence; Good Standing; Corporate Authority. Each of the Company and
its Significant Subsidiaries (as such term is defined in Rule 1-02(w) of
Regulation S-X of the Securities Act) is (i) a corporation duly incorporated,
validly existing and in good standing under the laws of its jurisdiction of
incorporation and (ii) is duly licensed or qualified to do business as a
foreign corporation and is in good standing under the laws of any other state
of the United States or any other jurisdiction in which the character of the
properties owned or leased by it or in which the transaction of its business
makes such licensure, qualification or good standing necessary, except where
the failure to be so in good standing or to be so licensed or qualified,
individually or in the aggregate, would not have a material adverse effect on
the business, operations, results of operations, assets, financial condition
or prospects of the Company and its Subsidiaries taken as a whole (a "Material
Adverse Effect," it being understood and agreed that for the purpose of this
Agreement, adverse events or circumstances which result from general economic
conditions shall not constitute a Material Adverse Effect). Each of the
Company and its Significant Subsidiaries has the requisite corporate power and
authority in all material respects to own, operate and lease its properties
and carry on its business as now conducted. The Company has heretofore
delivered to Purchaser true and correct copies of the Certificate of
Incorporation and Bylaws of the Company as currently in effect.
6.2. Authorization, Validity and Effect of Agreements. The Company has the
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement by the Company and the consummation by the Company
of the transactions contemplated hereby have been duly and validly authorized
by the Board of Directors, and no other corporate proceedings on the part of
the Company are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby (other than the approval of this Agreement by
the holders of a majority of the shares of Common Stock, if required by
applicable law). This Agreement has been duly and validly executed and
delivered by the Company, and (assuming this Agreement constitutes a valid and
binding obligation of Purchaser and Merger Sub) constitutes the valid and
binding obligation of the Company, enforceable against the Company in
accordance with its terms, subject to applicable bankruptcy, insolvency,
moratorium or other similar laws relating to creditors' rights and general
principles of equity.
6.3. Compliance with Laws. Except as set forth in the Disclosure Letter,
neither the Company nor any of its Subsidiaries is in violation of any
foreign, federal, state or local law, statute, ordinance, rule, regulation,
order, judgment, ruling or decree ("Laws") of any foreign, federal, state or
local judicial, legislative, executive, administrative or regulatory body or
authority or any court, arbitration, board or tribunal (each such entity, a
"Governmental Entity") applicable to the Company or any of its Subsidiaries or
any of their respective properties or assets, except for violations which,
individually or in the aggregate, would not have a Material Adverse Effect.
6.4. Capitalization. The authorized capital stock of the Company consists of
300,000,000 shares of Common Stock. As of April 7, 1997, (a) 36,964,587 shares
of Common Stock were issued and outstanding, (b) 36,964,587 shares of Common
Stock were subject to Common Stock Purchase Rights ("Rights") issued pursuant
to the Company's Rights Agreement, (c) Options to purchase an aggregate of
2,600,882 shares of Common Stock were outstanding, 2,600,882 shares of Common
Stock were reserved for issuance upon the exercise of outstanding Options and
2,506,802 shares were reserved for future grants under the Stock Option Plans,
and there were no stock appreciation rights or limited stock appreciation
rights outstanding other than those attached to such Options, (d) 46,351
shares of Common Stock ("Restricted Stock") issued under the Company's 1989
Restricted Stock Plan were outstanding, (e) 6,583,351 shares of Common Stock
were held by the Company in its treasury, and (f) no shares of Common Stock of
the Company were held by the Company's Subsidiaries. Except for the Rights,
the Company has no outstanding bonds, debentures, notes or other obligations
or securities entitling the holders thereof to vote (or which are convertible
into or exercisable for securities having the right to vote) with the
stockholders of the Company on any matter. Since January 1, 1997, the Company
(i) has not issued any shares of Common Stock other than (w) upon the exercise
of Options, (x) the issuance of 14,011 shares of Restricted Stock under the
Company's 1989 Restricted Stock Plan, (y) the issuance of 14,602 shares of
Common Stock under the Company's savings plan and the 1991 Employee Stock
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Purchase Plan and (z) pursuant to the terms of any compensation plan for the
benefit of non-employee directors (the "Directors Plans"), representing in the
aggregate, for the programs specified in clauses (w), (x), (y) and (z), no
more than 33,753 shares of Common Stock, (ii) has granted Options to purchase
an aggregate of 3,200 shares of Common Stock under the Stock Option Plans, and
(iii) has not split, combined or reclassified any of its shares of capital
stock. All issued and outstanding shares of Common Stock are duly authorized,
validly issued, fully paid, nonassessable and free of preemptive rights.
Except for the Rights and except as set forth in this Section 6.4 or in the
Disclosure Letter, there are no other shares of capital stock of the Company,
no securities of the Company convertible or exchangeable for shares of capital
stock or voting securities of the Company, and no existing options, warrants,
calls, subscriptions, convertible securities, or other rights, agreements or
commitments which obligate the Company or any of its Subsidiaries to issue,
transfer or sell any shares of capital stock of, or equity interests in, the
Company or any of its Subsidiaries. There are no outstanding obligations of
the Company or any Subsidiaries to repurchase, redeem or otherwise acquire any
shares of capital stock of the Company and, other than outstanding Options,
awards under the Company's 1989 Restricted Stock Plan, purchase rights under
the 1991 Employee Stock Purchase Plan, or rights under the Directors Plans,
there are no awards outstanding under the Stock Option Plans or the Company's
1989 Restricted Stock Plan or any other outstanding stock-related awards.
After the Effective Time, the Surviving Corporation will have no obligation to
issue, transfer or sell any shares of capital stock of the Company or the
Surviving Corporation pursuant to any Options or any Company Benefit Plan.
Except as set forth in the Disclosure Letter, there are no voting trusts or
other agreements or understandings to which the Company or any of its
Subsidiaries is a party with respect to the voting of capital stock of the
Company or any of its Subsidiaries.
6.5. Subsidiaries. Except as set forth in the Disclosure Letter, (i) the
Company owns, directly or indirectly through a Subsidiary, all of the
outstanding shares of capital stock (or other ownership interests having by
their terms ordinary voting power to elect directors or others performing
similar functions with respect to such Subsidiary) of each of the Company's
Subsidiaries, and (ii) each of the outstanding shares of capital stock of each
of the Company's Subsidiaries is duly authorized, validly issued, fully paid
and nonassessable, and is owned, directly or indirectly, by the Company free
and clear of all liens, pledges, security interests, claims or other
encumbrances ("Encumbrances"). The Disclosure Letter sets forth for each
Subsidiary of the Company: (i) its name and jurisdiction of incorporation or
organization; (ii) to the knowledge of the Company, its authorized capital
stock or share or equity capital; (iii) to the knowledge of the Company, the
number of issued and outstanding shares of capital stock or share or equity
capital; and (iv) to the knowledge of the Company, the holder or holders of
such shares. Except for interests in the Company's Subsidiaries or as set
forth in the Disclosure Letter, neither the Company nor any of its
Subsidiaries owns directly or indirectly any interest or investment (whether
equity or debt) in any corporation, partnership, joint venture, business,
trust or other entity.
6.6. No Violation. Except as set forth in the Disclosure Letter, neither the
execution and delivery by the Company of this Agreement nor the consummation
by the Company of the transactions contemplated hereby will: (i) violate,
conflict with or result in a breach of any provisions of the Certificate of
Incorporation or Bylaws (or comparable constituent documents) of the Company
or any of its Subsidiaries; (ii) violate, conflict with, result in a breach of
any provision of, constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, result in the
termination or in a right of termination of, accelerate the performance
required by or benefit obtainable under, result in the triggering of any
payment or other obligations pursuant to, result in the creation of any
Encumbrance upon any of the properties of the Company or its Subsidiaries
under, or result in there being declared void, voidable, subject to
withdrawal, or without further binding effect, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust or any
license, franchise, Permit, lease, contract, agreement or other instrument,
commitment or obligation to which the Company or any of its Subsidiaries is a
party, by which the Company or any of its Subsidiaries or any of their
respective properties is bound, or under which the Company or any of its
Subsidiaries or any of their respective properties is entitled to a benefit
(each of the foregoing, to the extent the same have any continuing force or
effect, a "Contract" and collectively, "Contracts"), except for any of the
foregoing matters which individually or in the aggregate would not have a
Material Adverse Effect or prevent or delay the consummation of the
transactions contemplated hereby; (iii) other than the filings provided for in
Section 1.3, the filings required
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under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR
Act"), the Exchange Act, or filings in connection with the maintenance of
qualification to do business in other jurisdictions (the filings disclosed in
the Disclosure Letter in response to this clause (iii), the other filings
referred to in this clause (iii) and the Other Antitrust Filings and Consents
required or permitted to be made or obtained, collectively, the "Regulatory
Filings"), require any consent, approval or authorization of, or declaration,
filing or registration with, any Governmental Entity, including, but only to
the knowledge of the Company, any such consent, approval, authorization,
declaration, filing or registration under any Laws of any foreign jurisdiction
relating to antitrust matters or competition ("Foreign Antitrust Laws") or any
other Law of any foreign jurisdiction, except for those consents, approvals,
authorizations, declarations, filings or registrations the failure of which to
obtain or make individually or in the aggregate would not have a Material
Adverse Effect; or (iv) violate any Laws applicable to the Company, any of its
Subsidiaries or any of their respective assets, except for violations which
individually or in the aggregate would not have a Material Adverse Effect.
6.7. Company Reports; Offer Documents.
(a) The Company has made available to Purchaser each registration statement,
report, proxy statement or information statement (as defined under the
Exchange Act) prepared by it for filing with the SEC since December 31, 1994,
each in the form (including exhibits and any amendments thereto) filed with
the SEC (collectively, the "Company Reports"). As of their respective dates,
the Company Reports (i) complied as to form in all material respects with the
applicable requirements of the Securities Act of 1933, as amended, and the
rules and regulations thereunder (the "Securities Act") and the Exchange Act
and (ii) did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements made therein, in the light of the circumstances under which they
were made, not misleading. Each of the consolidated balance sheets of the
Company included in or incorporated by reference into the Company Reports
(including the related notes and schedules) fairly presents the consolidated
financial position of the Company and its consolidated Subsidiaries as of its
date, and each of the consolidated statements of earnings and cash flows of
the Company included in or incorporated by reference into the Company Reports
(including any related notes and schedules) fairly presents the results of
operations, earnings or cash flows, as the case may be, of the Company and its
Subsidiaries for the periods set forth therein, in each case in accordance
with generally accepted accounting principles consistently applied during the
periods involved, except as may be noted therein. Except as set forth in the
Disclosure Letter, neither the Company nor any of its Subsidiaries has any
liabilities or obligations, contingent or otherwise, except (i) liabilities
and obligations in the respective amounts reflected or reserved against in the
Company's consolidated balance sheet as of December 31, 1996 included in the
Company Reports or (ii) liabilities and obligations incurred in the ordinary
course of business since that date which individually or in the aggregate
would not have a Material Adverse Effect.
(b) None of the information contained in the Schedule 14D-9, the information
statement, if any, filed by the Company in connection with the Offer pursuant
to Rule 14f-1 under the Exchange Act (the "Information Statement"), or any
amendment or supplement thereto, at the respective times such documents are
filed with the SEC or first published, sent or given to the Company's
stockholders, contain or will contain any untrue statement of a material fact
or omit or will omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading, except that no
representation is made by the Company with respect to information supplied by
Purchaser or Merger Sub specifically for inclusion in the Schedule 14D-9 or
Information Statement or any amendment or supplement. None of the information
supplied or to be supplied by the Company for inclusion or incorporation by
reference in the Offer Documents will, at the date of filing with the SEC,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. If at any time prior to the Effective Time the Company shall
obtain knowledge of any facts with respect to itself, any of its officers and
directors or any of its Subsidiaries that would require the supplement or
amendment to any of the foregoing documents in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, or to comply with applicable Laws, such amendment or supplement
shall be
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promptly filed with the SEC and, as required by Law, disseminated to the
stockholders of the Company, and in the event Purchaser shall advise the
Company as to its obtaining knowledge of any facts that would make it
necessary to supplement or amend any of the foregoing documents, the Company
shall promptly amend or supplement such document as required and distribute
the same to its stockholders.
6.8. Litigation. Except as set forth in the Disclosure Letter, there are no
claims, actions, suits, proceedings, arbitrations, investigations or audits
(collectively, "Litigation") by a third party (including a Governmental
Entity) pending or, to the knowledge of the Company, threatened against the
Company or any of its Subsidiaries, at law or in equity, other than those
which individually or in the aggregate would not have a Material Adverse
Effect. Except as set forth in the Disclosure Letter, to the knowledge of the
Company, no Governmental Entity has indicated an intention to conduct any
audit, investigation or other review with respect to the Company or any of its
Subsidiaries, except for those investigations or reviews, which if adversely
determined, individually or in the aggregate, would not have a Material
Adverse Effect.
6.9. Absence of Certain Changes. Except as set forth in the Disclosure
Letter, since December 31, 1996, the Company and its Significant Subsidiaries
have conducted their business only in the ordinary course of such business
consistent with past practices, and there has not been (i) any Material
Adverse Effect suffered by the Company or any of its Subsidiaries; (ii) any
declaration, setting aside or payment of any dividend (other than regular
quarterly cash dividends at a rate not in excess of $.46 per share of Common
Stock) or other distribution with respect to the capital stock of the Company
or its Subsidiaries (other than wholly-owned Subsidiaries) or any repurchase,
redemption or any other acquisition by the Company or its Subsidiaries of any
outstanding shares of capital stock or other securities of, or other ownership
interests in, the Company or its Subsidiaries; (iii) any material change in
accounting principles, practices or methods; (iv) any entry into or amendment
of any employment agreement with, or any increase in the rate or terms
(including, without limitation, any acceleration of the right to receive
payment) of compensation payable or to become payable by the Company or any of
its Subsidiaries to, their respective directors, officers or employees, except
increases in the ordinary course of business in accordance with the past
practice of the Company; (v) any increase in the rate or terms (including,
without limitation, any acceleration of the right to receive payment) of any
bonus, insurance, pension or other employee benefit plan or arrangement
covering any such directors, officers or employees, except increases in the
ordinary course of business in accordance with the past practice of the
Company; or (vi) any material revaluation by the Company or any of its
Subsidiaries of any of their respective assets, including, without limitation,
write-downs of inventory or write-offs of accounts receivable.
6.10. Taxes. The Company and each of its Subsidiaries have timely filed all
material Tax Returns required to be filed by any of them. All such Tax Returns
are true, correct and complete, except for such instances which individually
or in the aggregate would not have a Material Adverse Effect. All material
Taxes of the Company and its Subsidiaries which are (i) shown as due on such
Returns, (ii) otherwise due and payable or (iii) claimed or asserted by any
Taxing authority to be due, have been paid, except for those Taxes being
contested in good faith and for which adequate reserves have been established
in the financial statements included in the Company Reports in accordance with
generally accepted accounting principles. The Company does not know of any
proposed or threatened Tax claims or assessments which, if upheld, would
individually or in the aggregate have a Material Adverse Effect. Except as set
forth in the Disclosure Letter, the Company and each Subsidiary has withheld
and paid over to the relevant Taxing authority all Taxes required to have been
withheld and paid in connection with payments to employees, independent
contractors, creditors, stockholders or other third parties, except for such
Taxes which individually or in the aggregate would not have a Material Adverse
Effect. For purposes of this Agreement, (a) "Tax" (and, with correlative
meaning, "Taxes") means any federal, state, local or foreign income, gross
receipts, property, sales, use, license, excise, franchise, employment,
payroll, premium, withholding, alternative or added minimum, ad valorem,
transfer or excise tax, or any other tax, custom, duty, governmental fee or
other like assessment or charge of any kind whatsoever, together with any
interest or penalty, imposed by any Governmental Entity, and (b) "Tax Return"
means any return, report or similar statement required to be filed with
respect to any Tax (including any attached schedules), including, without
limitation, any information return, claim for refund, amended return or
declaration of estimated Tax.
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6.11. Employee Benefit Plans. All employee benefit plans and other benefit
arrangements covering employees of the Company or any of its Subsidiaries (the
"Company Benefit Plans") and all employee agreements providing compensation,
severance or other benefits to any employee or former employee of the Company
or any of its Subsidiaries, other than agreements which have been satisfied in
full (the "Employee Agreements") are set forth in the Disclosure Letter. True
and complete copies of the Company Benefit Plans and the Employee Agreements
have been made available to Purchaser. Any Company Benefit Plan intended to be
qualified under Section 401(a) of the Code has received a determination letter
and, to the knowledge of the Company, continues to satisfy the requirements
for such qualification. No Company Benefit Plan nor the Company nor any
Subsidiary has incurred any material liability or penalty under Section 4975
of the Code or Section 502(i) of ERISA or engaged in any transaction that is
reasonably likely to result in any such material liability or penalty. Each
Company Benefit Plan has been maintained and administered in compliance with
its terms and with ERISA and the Code to the extent applicable thereto, except
for such non-compliance which individually or in the aggregate would not have
a Material Adverse Effect. There is no pending or, to the knowledge of the
Company, threatened Litigation against or otherwise involving any of the
Company Benefit Plans and no Litigation has been brought against or with
respect to any such Company Benefit Plan, except for any of the foregoing
which individually or in the aggregate would not have a Material Adverse
Effect. Except as described in the Company Reports and except for matters
which would not have a Material Adverse Effect, neither the Company nor any of
its Subsidiaries maintains or contributes to any plan or arrangement which
provides or has any liability to provide life insurance or medical or other
employee welfare benefits to any employee or former employee upon his or her
retirement or termination of employment, and neither the Company nor any of
its Subsidiaries has ever represented, promised or contracted (whether in oral
or written form) to any employee or former employee that such benefits would
be provided. Except as set forth in the Disclosure Letter, (i) the execution
of, and performance of the transactions contemplated in, this Agreement will
not (either alone or upon the occurrence of any additional or subsequent
events) constitute an event under any benefit plan, policy, arrangement or
agreement or any trust or loan that will or may result in any payment (whether
of severance pay or otherwise), acceleration, forgiveness of indebtedness,
vesting, distribution, increase in benefits or obligation to fund benefits
with respect to any employee and (ii) no payment or benefit which will or may
be made by the Company, any of its Subsidiaries, or Purchaser or Merger Sub
with respect to any employee will constitute an "excess parachute payment"
within the meaning of Section 280G(b)(1) of the Code.
6.12. Labor and Employment Matters. Except as set forth in the Disclosure
Letter, (a) neither the Company nor any of its Subsidiaries is a party to, or
bound by, any collective bargaining agreement or other Contracts or
understanding with a labor union or labor organization; and (b) except as
would not, individually or in the aggregate, have a Material Adverse Effect,
there is no (i) unfair labor practice, labor dispute (other than routine
individual grievances) or labor arbitration proceeding pending or, to the
knowledge of the Company, threatened against the Company or its Subsidiaries,
(ii) activity or proceeding by a labor union or representative thereof to
organize any employees of the Company or any of its Subsidiaries, or (iii)
lockouts, strikes, slowdowns, work stoppages or threats thereof by or with
respect to such employees. The Company and its Subsidiaries each is in
compliance with all Laws regarding employment, employment practices, terms and
conditions of employment and wages, except for such noncompliance which
individually or in the aggregate would not have a Material Adverse Effect.
6.13. Brokers and Finders. Except for Morgan Stanley & Co. Inc. pursuant to
an engagement letter, a true and complete copy of which has previously been
delivered to Purchaser, no broker, dealer or financial advisor is entitled to
receive from the Company or any of its Subsidiaries any broker's, finder's or
investment banking fee in connection with this Agreement or the transactions
contemplated hereby.
6.14. Fairness Opinion. The Company has received the opinion of Morgan
Stanley & Co. Inc., to the effect that, as of the date of this Agreement, the
terms of the Offer (if made) and the Merger are fair from a financial point of
view to the holders of Common Stock.
6.15. Licenses and Permits. Except as set forth in the Disclosure Letter,
the Company and its Subsidiaries have, and/or have caused to be maintained,
all necessary licenses, permits, certificates of need,
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approvals and authorizations (collectively, "Permits") from all Governmental
Entities required to lawfully conduct their respective businesses as presently
conducted, except for those Permits the lack of which individually or in the
aggregate would not have a Material Adverse Effect, and (a) no Permit is
subject to revocation or forfeiture by virtue of any existing circumstances,
(b) there is no Litigation pending or, to the knowledge of the Company,
threatened to modify or revoke any Permit, and (c) no Permit is subject to any
outstanding order, decree, judgment, stipulation, or investigation that would
be likely to affect such Permit, except for instances of any of the foregoing
items (a) through (c) which individually or in the aggregate would not have a
Material Adverse Effect.
6.16. Environmental Compliance and Disclosure.
(a) For the purposes of this Agreement:
"Environmental Matters" means any matter arising out of, relating to, or
resulting from, pollution, protection of the environment and human health
or safety, health or safety of employees, sanitation, and any matters
relating to emissions, discharges, releases or threatened releases of
Hazardous Materials or otherwise arising out of, resulting from, or
relating to, the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Materials.
"Environmental Costs" means, without limitation, any actual or potential
cleanup costs, remediation, removal, or other response costs (which,
without limitation, shall include costs necessary to cause compliance with
any and all Environmental Laws), investigation costs (including without
limitation, fees of consultants, counsel, and other experts in connection
with any environmental investigation, testing, audits or studies), losses,
liabilities or obligations (including, without limitation, liabilities or
obligations under any lease or other contract), payments, damages
(including, without limitation, any actual, punitive or consequential
damages under any statutory law, common law cause of action or contractual
obligation, including, without limitation, damages (a) of third parties for
personal injury or property damage, or (b) to natural resources), civil or
criminal fines or penalties, judgments, and amounts paid in settlement
arising out of or relating to or resulting from any Environmental Matter.
"Environmental Laws" means, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act, 42 U.S.C. Sections
9601 et seq., the Emergency Planning and Community Right-to-Know Act of
1986, 42 U.S.C. Sections 11001 et seq., the Resource Conservation and
Recovery Act, 42 U.S.C. Sections 6901 et seq., the Toxic Substances Control
Act, 15 U.S.C. Sections 2601 et seq., the Federal Insecticide, Fungicide,
and Rodenticide Act, 7 U.S.C. Sections 136 et seq., the Clean Air Act, 42
U.S.C. Sections 7401 et seq., the Clean Water Act (Federal Water Pollution
Control Act), 33 U.S.C. Sections 1251 et seq., the Safe Drinking Water Act,
42 U.S.C. Sections 300f et seq., the Occupational Safety and Health Act, 29
U.S.C. Sections 651 et seq., the Hazardous Materials Transportation Act, 49
U.S.C. Sections 1801 et seq., as any of the above statutes have been or may
be amended from time to time, all rules and regulations promulgated
pursuant to any of the above statutes, and any other foreign, federal,
state or local law, statute, ordinance, rule or regulation governing
Environmental Matters, as the same have been or may be amended from time to
time, including any common law cause of action providing any right or
remedy with respect to Environmental Matters, and all applicable judicial
and administrative decisions, orders, and decrees relating to Environmental
Matters.
"Hazardous Materials" means any pollutants, contaminants, toxic or
hazardous or extremely hazardous substances, materials, wastes,
constituents, elements, forces, or chemicals that are regulated by, or may
form the basis for liability under, any Environmental Laws.
(b) Except as set forth in the Disclosure Letter and except for any matters
which individually or in the aggregate would not have a Material Adverse
Effect,
(i) there are no Hazardous Materials in amounts required to be remediated
under applicable Environmental Laws at, on, under or within any real
property owned, leased or occupied by the Company or any of its
Subsidiaries;
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(ii) there are no claims, notices, civil, criminal or administrative
actions, suits, hearings, investigations, inquiries or proceedings pending
or, to the knowledge of the Company, threatened that are based on or relate
to any Environmental Matters or the failure to have any Permits required to
be obtained by the Company and each of its Subsidiaries under applicable
Environmental Laws for the use, storage, treatment, transportation,
release, emission and disposal of raw materials, by-products, wastes and
other substances used or produced by or otherwise relating to its business;
(iii) neither the Company nor any of its Subsidiaries has used any waste
disposal site, or otherwise disposed of, transported, or arranged for the
transportation of, any Hazardous Materials to any place or location, nor in
violation of any Environmental Laws;
(iv) there are no underground storage tanks or surface impoundments at,
on, under or within any of real property owned, leased or occupied by the
Company or any of its Subsidiaries, or any portion thereof;
(v) none of the Company or its Subsidiaries has received any notice
asserting that it may be a potentially responsible party at any waste
disposal site or other location used for the disposal of any Hazardous
Materials;
(vi) none of the Company or its Subsidiaries has been requested or
required by any Governmental Entity to perform any investigatory or
remedial activity or other action in connection with any actual or alleged
release of Hazardous Materials or any other Environmental Matter; and
(vii) there are no past or present conditions, events, circumstances,
facts, activities, practices, incidents, actions, omissions, or plans that
may form the basis of any claim, action, suit, proceeding, hearing,
investigation, or inquiry against or involving the Company nor any of its
Subsidiaries allegedly or actually based on or related to any Environmental
Matter or that is reasonably likely to require the Company or any of its
Subsidiaries to incur any Environmental Costs.
6.17. Material Contracts. The Disclosure Letter sets forth a list as of the
date hereof of all (i) Contracts for borrowed money or guarantees thereof,
other than Contracts entered into in the ordinary course of business
consistent with the past practice of the Company involving less than
$2,000,000 individually or $10,000,000 in the aggregate or Contracts between
the Company and any of its wholly owned Subsidiaries or between any of the
Company's wholly owned Subsidiaries, (ii) Contracts involving any rate swap
transaction, basis swap, forward rate transaction, commodity swap, commodity
option, equity or equity index swap, equity or equity index option, bond
option, interest rate option, foreign exchange transaction, cap transaction,
floor transaction, collar transaction, currency swap transaction, cross-
currency rate swap transaction, currency option or any other similar
transaction (including any option with respect to any of these transactions),
or any combination of these transactions (each a "Derivative" and
collectively, "Derivatives"), other than Derivatives entered into in the
ordinary course of business consistent with the past practice of the Company
and with the Company's policies regarding Derivatives as previously disclosed
to Purchaser, (iii) Contracts containing covenants by the Company or any
Subsidiary restricting its ability or the ability of any of the affiliates of
the Company or any of its Subsidiaries to engage in any line of business, (iv)
Contracts to purchase materials, supplies or other assets, other than purchase
orders entered into in the ordinary course of business consistent with the
past practice of the Company and other Contracts involving obligations of less
than $2,000,000 individually and $10,000,000 in the aggregate, (v) Contracts
to purchase or acquire advertising or other product promotion or brand support
other than spot orders purchased in the ordinary course of business or
involving commitments by the Company of less than $1,000,000, (vi) Contracts
with distributors, brokers or sales agents for the distribution of the
products of the Company in any of the Key Jurisdictions identified as Category
A Key Jurisdictions in the Disclosure Letter or in which the Company acts as
distributor, broker or sales agent for others in any Key Jurisdiction, other
than Contracts involving or likely to involve payments of less than $200,000
per year, (vii) Contracts entered into by the Company since January 1, 1986
and in which the Company's surviving liability (including indemnities) could
reasonably be expected to exceed $1,000,000 and involving the sale or other
disposition by the Company of one or more business units, divisions or
entities (including former Subsidiaries), (viii) Contracts involving the
investment, including by way of capital contribution, loan or advance, by the
Company or any of its Subsidiaries of more than $1,000,000 in any other
person, firm or entity (other than wholly-owned Subsidiaries), other than
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investments no longer owned by the Company or its Subsidiaries, (ix) other
Contracts under which the obligation of the Company and its Subsidiaries is
$1,000,000 or more, and (x) promotion Contracts in the United States with the
Company's ten largest customers having a term of longer than three (3) months
(all Contracts described in each of the categories (i) through (x) above,
"Material Contracts"). For the purposes of this Agreement, "Key Jurisdiction"
shall mean each of the countries identified as such in the Disclosure Letter.
"Category A Key Jurisdiction" shall mean each of the countries identified as
such in the Disclosure Letter. All Contracts to which the Company or any of
its Subsidiaries is a party or by which any of their respective assets are
bound are valid and binding, in full force and effect and enforceable against
the parties thereto in accordance with their respective terms, except where
the failure to be so valid and binding, in full force and effect or
enforceable would not individually or in the aggregate have a Material Adverse
Effect. There is not under any such Contract, any existing default, or event,
which after notice or lapse of time, or both, would constitute a default, by
the Company or any of its Subsidiaries, or to the Company's knowledge, any
other party, other than any such defaults or events which, individually or in
the aggregate, would not have a Material Adverse Effect.
6.18. Intellectual Property Rights. Except as disclosed in the Disclosure
Letter, (i) each of the Company and its Subsidiaries owns or has the right to
use pursuant to license, sublicense, agreement or permission all of the
Intellectual Property used by it in the conduct of its businesses as presently
conducted, except where the absence of any thereof, individually or in the
aggregate, would not have a Material Adverse Effect, and (ii) neither the
Company nor any of its Subsidiaries has interfered with, infringed upon or
misappropriated any Intellectual Property rights of third parties which
interference, infringement or misappropriation individually or in the
aggregate would have a Material Adverse Effect. "Intellectual Property" means
all patents, patent applications, trademarks, service marks, logos, trade
names and corporate names, copyrights, computer software, management
information systems and other intellectual property and proprietary rights.
6.19. Required Vote of Company Stockholders. Unless the Merger may be
consummated in accordance with Section 253 of the DGCL, the only vote of the
stockholders of the Company required to adopt this Agreement and approve the
Merger is the affirmative vote of the holders of a majority of the outstanding
shares of Common Stock. No greater or other vote of the stockholders of the
Company is required by Law or the Certificate of Incorporation or By-Laws of
the Company to adopt this Agreement and approve the Merger.
6.20. Disclosures. This Agreement and the Disclosure Letter furnished by the
Company or any of its Subsidiaries pursuant hereto, taken as a whole, do not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the
statements contained herein, in the light of the circumstances under which
they were made, not misleading.
ARTICLE 7
Representations and Warranties of Purchaser and Merger Sub
Purchaser and Merger Sub hereby represent and warrant to the Company as
follows:
7.1. Existence; Good Standing; Corporate Authority. Each of Purchaser and
Merger Sub is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation.
7.2. Authorization, Validity and Effect of Agreements. Each of Purchaser and
Merger Sub has the requisite corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation by Purchaser
and Merger Sub of the transactions contemplated hereby have been duly and
validly authorized by the respective Boards of Directors of Purchaser and
Merger Sub, as applicable, and by Purchaser as the sole stockholder of Merger
Sub and no other corporate proceedings on the part of Purchaser or Merger Sub
are necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by Purchaser and Merger Sub, and (assuming this Agreement
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constitutes a valid and binding obligation of the Company) constitutes the
valid and binding obligation of each of Purchaser and Merger Sub, enforceable
against Purchaser and Merger Sub in accordance with its respective terms,
subject to applicable bankruptcy, insolvency, moratorium or other similar laws
relating to creditors' rights and general principles of equity.
7.3. Offer Documents. None of the information contained in the Offer
Documents or any schedule thereto required to be filed with the SEC or in any
amendment or supplement thereto will contain, on the date of filing with the
SEC, any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
made therein, in light of the circumstances under which they are made, not
misleading, except that no representation is made by Purchaser or Merger Sub
with respect to information supplied by the Company specifically for inclusion
in the Offer Documents or any schedule thereto required to be filed with the
SEC or in any amendment or supplement thereto. None of the information
supplied by Purchaser or Merger Sub specifically for inclusion in the Schedule
14D-9 will, at the date of filing with the SEC, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
7.4. No Violation. Neither the execution and delivery of this Agreement by
Purchaser and Merger Sub nor the consummation by them of the transactions
contemplated hereby will (i) violate, conflict with or result in any breach of
any provision of the Certificate of Incorporation or By-Laws of Merger Sub or
the Articles of Incorporation Regulations or By-Laws, in each case as amended,
of Purchaser; (ii) other than the Regulatory Filings and pursuant to the
Foreign Antitrust Laws, require any consent, approval or authorization of, or
declaration, filing or registration with, any Governmental Entity, the lack of
which individually or in the aggregate would have a material adverse effect on
the ability of Purchaser or Merger Sub to consummate the transactions
contemplated hereby and (iii) violate any Laws applicable to Purchaser or
Merger Sub or any of their respective assets, except for violations which
individually or in the aggregate would not have a material adverse effect on
the ability of Purchaser or Merger Sub to consummate the transactions
contemplated hereby.
7.5. Financing. At the consummation of the Offer and at the Effective Time,
Purchaser will cause Merger Sub to have funds available to it sufficient to
consummate the Offer and the Merger on the terms contemplated hereby.
7.6. Brokers and Finders. No actions by Purchaser or Merger Sub or by anyone
acting on behalf of either of them has given rise to any valid claim against
the Company for any broker's, finder's or investment banking fee in connection
with this Agreement or the transactions contemplated hereby. Purchaser is to
be solely responsible for any fee payable to Goldman, Sachs & Co. in
connection with the transactions contemplated by this Agreement.
ARTICLE 8
Covenants
8.1. No Solicitation. Neither the Company nor any of its Subsidiaries, nor
any of their respective officers, directors, employees, representatives,
agents or affiliates, shall, directly or indirectly, encourage, solicit,
initiate or, except as is required in the exercise of the fiduciary duties of
the Company's directors to the Company or its stockholders after consultation
with outside counsel to the Company, participate in any way in any discussions
or negotiations with, or provide any information to, or afford any access to
the properties, books or records of the Company or any of its Subsidiaries to,
or otherwise assist, facilitate or encourage, any corporation, partnership,
person or other entity or group (other than Purchaser or any affiliate or
associate of Purchaser) concerning any merger, consolidation, business
combination, liquidation, reorganization, sale of substantial assets, sale of
shares of capital stock or similar transactions involving the Company or any
Subsidiary or any division of any thereof (an "Alternative Proposal"), and
shall immediately cease and cause to be terminated any
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existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any of the foregoing (other than in connection with
the Restructuring as contemplated by Section 8.2(c)(i)) and take the necessary
steps to inform such parties of the obligations undertaken in this Section
8.1; provided, however, that nothing contained in this Section 8.1 shall
prohibit the Company or its Board of Directors from taking and disclosing to
the Company's stockholders a position with respect to a tender offer by a
third party pursuant to Rules 14d-9 and 14e-2(a) promulgated under the
Exchange Act or from making such disclosure to the Company's stockholders
which, in the judgment of the Board of Directors with the advice of outside
counsel, may be required under applicable law. The Company will promptly
notify Purchaser if any such information is requested from it or any such
negotiations or discussions are sought to be initiated with the Company and
will promptly communicate to Purchaser the terms of any proposal or inquiry
which it may receive in respect of any such transaction.
8.2. Interim Operations.
(a) From the date of this Agreement to the Effective Time, except as set
forth in the Disclosure Letter or as otherwise required pursuant to this
Agreement, unless Purchaser has consented in writing thereto, the Company
shall, and shall cause each of its Subsidiaries to:
(i) conduct its operations according to its usual, regular and ordinary
course of business consistent with past practice;
(ii) use its reasonable best efforts to preserve intact their business
organizations and goodwill, to maintain in effect all existing
qualifications, licenses, Permits, approvals and other authorizations
referred to in Sections 6.1 and 6.15, to keep available the services of
their officers and employees and to maintain satisfactory relationships
with customers, suppliers, distributors, brokers, sales agents and all
other persons having business relationships with them, including through
the payment of additional compensation reasonably acceptable to Purchaser
to such distributors, brokers and sales agents reasonably calculated to
maintain at least the current level of merchandising, distribution and
shelving;
(iii) promptly notify Purchaser upon becoming aware of any material
breach of any representation, warranty or covenant contained in this
Agreement, the occurrence of any event that would cause any representation,
warranty or covenant contained in this Agreement no longer to be true and
correct in all material respects or any breach of the representations and
warranties specified in Section 6.17(iii);
(iv) promptly deliver to Purchaser true and correct copies of any report,
statement or schedule filed with the SEC subsequent to the date of this
Agreement and any internal monthly reports prepared for or delivered to the
Board of Directors after the date hereof; and
(v) deliver, within 20 business days after the end of each accounting
month, monthly consolidated financial statements, in the same format as
heretofore furnished to Purchaser, for the Company and its Subsidiaries for
and as of the end of each such month.
(b) From the date of this Agreement to the Effective Time, except as set
forth in the Disclosure Letter, unless Purchaser has consented in writing
thereto, the Company shall not, and shall not permit any of its Subsidiaries
to:
(i) amend its Certificate of Incorporation or Bylaws or comparable
governing instruments;
(ii) except with respect to the issuance of treasury stock under the
Company's savings plan, the Directors' Plans and the 1991 Employee Stock
Purchase Plan in the ordinary course of business consistent with the terms
of the governing documents, or where the documents do not govern such
issuances, in accordance with the past practice of the Company representing
in the aggregate no more than 40,000 shares of Common Stock, issue, sell,
pledge or otherwise dispose of any shares of its capital stock or other
ownership interest in the Company (other than issuances of Common Stock in
respect of any exercise of Options outstanding on the date hereof and
disclosed in the Disclosure Letter) or any of the Subsidiaries, or any
securities convertible into or exchangeable for any such shares or
ownership interest, or any rights, warrants or options to acquire or with
respect to any such shares of capital stock, ownership interest, or
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convertible or exchangeable securities; or accelerate any right to convert
or exchange or acquire any securities of the Company or any of its
Subsidiaries for any such shares or ownership interest;
(iii) effect any stock split, reverse stock split, stock dividend,
subdivision, reclassification or similar transaction, or otherwise change
its capitalization as it exists on the date hereof;
(iv) grant, confer, award or amend any option, warrant, convertible
security or other right to acquire any shares of its capital stock or take
any action to cause to be exercisable any otherwise unexercisable option
under any stock option plan or restricted stock plan;
(v) declare, set aside or pay any dividend (other than regular quarterly
cash dividends at a rate not in excess of $.46 per share of Common Stock)
or make any other distribution or payment with respect to any shares of
Common Stock or other capital stock or ownership interests (other than such
payments by a wholly-owned Subsidiary to the Company or another wholly-
owned Subsidiary);
(vi) directly or indirectly redeem, purchase or otherwise acquire any
shares of its capital stock or the capital stock of any of its
Subsidiaries;
(vii) sell, lease, assign, transfer or otherwise dispose of (by merger or
otherwise) any of its property, business or assets (including, without
limitation, receivables, leasehold interests or Intellectual Property and
including any sale leaseback transaction) except for (i) the sale of
inventory in the ordinary course of business, (ii) the disposition of
assets pursuant to the Restructuring as contemplated by Section 8.2(c)(i)
and (iii) other asset sales for fair value in the ordinary course of
business provided that the proceeds of such other asset sales do not exceed
$2,000,000 in any single transaction or $10,000,000 in the aggregate prior
to the Effective Time;
(viii) settle or compromise any pending or threatened Litigation without
Purchaser's consent (which consent will not be unreasonably withheld or
delayed), other than settlements (a) of product liability Litigation in the
ordinary course of business consistent with the Company's past practice of
settling similar product liability claims, provided, in the case of
settlements of product liability Litigations in excess of $100,000 only (I)
the Company has kept Purchaser reasonably apprised of the status of such
Litigation and has provided Purchaser with reasonable advance notice of its
intention to settle any such Litigation and (II) the settlement would not
have a Material Adverse Effect, (b) of other Litigations which involve
solely the payment of money (without admission of liability) not to exceed
$200,000 in any one case and (c) of Tax Litigation, which is governed by
paragraph (xiii);
(ix) make any advance, loan, extension of credit or capital contribution
to, or purchase or acquire (by merger or otherwise) any stock, bonds,
notes, debentures or other securities of, or any assets constituting a
business unit of, or make any other investment in, any person, firm or
entity, except (a) extensions of trade credit and endorsements of
negotiable instruments and other negotiable documents in the ordinary
course of business, (b) investments in cash and cash equivalents, (c)
payroll and travel advances in the ordinary course of business, (d)
investments in wholly owned Subsidiaries, and (e) the acquisition by the
Company of the Minority JV Interest as contemplated by Section 8.2(c)(ii);
(x) make any capital expenditures in the aggregate for the Company and
its Subsidiaries in excess of the amounts specified in the Company's budget
for capital expenditures, a true and complete copy of which has previously
been delivered to Purchaser, or otherwise acquire assets having a value, in
the aggregate, in excess of $500,000 not in the ordinary course of
business;
(xi) incur, assume or create any indebtedness for borrowed money or the
deferred purchase price for property or services or pursuant to any capital
lease or other financing, except indebtedness incurred in the ordinary
course of business consistent with past practice for working capital
purposes pursuant to the Company's existing credit facilities or commercial
paper program as disclosed in the Disclosure Letter and except for the
incurrence, assumption or creation of indebtedness in the ordinary course
of business consistent with the past practice of the Company not exceeding
$2,000,000 in any one instance or $10,000,000 in the aggregate at any one
time outstanding; or amend in a manner materially adverse to the Company,
any of the Company's existing credit facilities;
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(xii) assume, guarantee or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any
other person except wholly-owned Subsidiaries of the Company and except for
obligations in the ordinary course of business consistent with the past
practice of the Company not exceeding $1,000,000 individually and
$5,000,000 in the aggregate;
(xiii) make any material Tax election (unless required by law or unless
consistent with prior practice) or settle or compromise any material income
tax liability except, in each case, if Purchaser is given reasonable prior
notice thereof;
(xiv) waive or amend any term or condition of any confidentiality or
"standstill" agreement to which the Company is a party and which relates to
a business combination with the Company or the purchase of shares or assets
of the Company;
(xv) grant or amend any stock-related or performance awards;
(xvi) except with respect to agreements which are terminable at will by
the Company without any material penalty to the Company, enter into or
amend any legally binding employment, severance, consulting or salary
continuation agreements with any officers, directors or employees or grant
any increases in compensation or benefits to employees other than increases
to officers and employees in the ordinary course of business consistent
with the past practice of the Company;
(xvii) adopt, amend or terminate any employee benefit plan or arrangement
(except as expressly contemplated by this Agreement);
(xviii) enter into (a) any agreements with distributors or sales agents
other than agreements terminable without penalty on less than 30 days'
notice, (b) any agreements to distribute products for others or which
restrict the ability of the Company or its Subsidiaries or affiliates to
compete or (c) any other agreements, other than agreements relating to
product promotions, that would constitute Material Contracts; or amend any
of the foregoing agreements as exist on the date hereof;
(xix) amend, change or waive (or exempt any person or entity from the
effect of) the Rights Agreement, except in connection with the exercise of
its fiduciary duties by the Board of Directors as set forth in Section 8.1
of this Agreement or in connection with the transactions contemplated under
this Agreement;
(xx) make any material changes in the type or amount of their insurance
coverages;
(xxi) except as may be required by law or generally acceptable accounting
principles and with prior written notice to the Purchaser, change any
material accounting principles or practices used by the Company or its
Subsidiaries;
(xxii) effect any material change in the Company's advertising, product
promotion or brand support policies or programs or commit to any
significant new product promotion or advertising campaign except, in each
case, for matters in the ordinary course of business consistent with the
past practice of the Company;
(xxiii) effect any material change in the Company's billing practices or
sales terms, or cause a material acceleration or delay in the manufacture,
shipment or sale of inventory, the collection of accounts or notes
receivable or the payment of accounts or notes payable except, in each
case, for matters in the ordinary course of business consistent with the
past practice of the Company;
(xxiv) enter into any Contracts for Derivatives, except for spot, option
and forward Contracts entered into in the ordinary course of business
consistent with the past practice of the Company and with the Company's
policies regarding Derivatives as previously disclosed to Purchaser;
(xxv) waive, relinquish, release or terminate any right or claim,
including any such right or claim under any Material Contract or permit any
rights of material value to use any Intellectual Property to lapse or be
forfeited, in each case, except in the ordinary course of business
consistent with the past practice of the Company;
(xxvi) apply for, consent to, or acquiesce in, the appointment of a
trustee, receiver, sequestrator or other custodian for any substantial part
of the property of the Company or any Significant Subsidiary, or
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make a general assignment for the benefit of creditors, or permit or suffer
to exist the commencement of any bankruptcy, reorganization, debt
arrangement or other case or proceeding under any bankruptcy or insolvency
law, or any dissolution, winding up or liquidation proceeding, in respect
of the Company or any Significant Subsidiary;
(xxvii) take any action to cause the Common Stock to be delisted from the
New York Stock Exchange prior to the completion of the Offer or (if no
Offer is made) the Merger; or
(xxviii) agree in writing or otherwise to take any of the foregoing
actions.
(c) The Company will use reasonable best efforts to (i) carry out its
restructuring announced during the third quarter of fiscal 1996 as described
in the Disclosure Letter (the "Restructuring") in a manner and on a schedule
materially consistent with its plans as previously disclosed to Purchaser,
including the sale of its manufacturing facilities in Rutland, Vermont and
Tipperary, Ireland and (ii) to acquire, for a purchase price not to exceed
$1,000,000 and on other terms reasonably acceptable to Purchaser, the minority
interest (the "Minority JV Interest") held by its joint venture partner
(Northeast No. 6 Pharmaceutical Factory of China) in the Company's Chinese
joint venture subsidiary. At Purchaser's request, the Company will cooperate
with Purchaser (including, by conducting mutual negotiations or by seeking
declaratory relief) to minimize the possible impact on Purchaser and/or its
Subsidiaries of any non-compete covenants to which the Company or any of its
Subsidiaries or affiliates may be subject or may be parties following the
Closing. The Company shall keep Purchaser reasonably apprised of the status of
each of the matters referred to in this Section 8.2(c).
8.3. Company Stockholder Approval; Proxy Statement.
(a) Subject to Section 4.6, the Company shall (i) call a meeting of its
stockholders (the "Stockholders Meeting") for the purpose of voting upon the
Merger, (ii) hold the Stockholder Meeting as soon as practicable following the
date of this Agreement, and (iii) subject to its fiduciary duties under
applicable law as advised by outside counsel, recommend to its stockholders
the approval of the Merger through its Board of Directors. If Merger Sub
purchases shares of Common Stock pursuant to the Offer prior to the mailing of
the Proxy Statement, the record date for the Stockholders Meeting shall be a
date subsequent to the date Purchaser or Merger Sub becomes a record holder of
Common Stock purchased pursuant to the Offer.
(b) The Company will, as soon as practicable following the date of this
Agreement, prepare and file a preliminary Proxy Statement or, if applicable
following the purchase by Merger Sub of shares of Common Stock pursuant to the
Offer, an information statement (such proxy or information statement, and any
amendments or supplements thereto, the "Proxy Statement"), with the SEC with
respect to the Stockholders Meeting and will use its reasonable best efforts
to respond to any comments of the SEC or its staff and to cause the Proxy
Statement to be cleared by the SEC. The Company will notify Purchaser of the
receipt of any comments from the SEC or its staff and of any request by the
SEC or its staff for amendments or supplements to the Proxy Statement or for
additional information and will supply Purchaser with copies of all
correspondence between the Company or any of its representatives, on the one
hand, and the SEC or its staff, on the other hand, with respect to the Proxy
Statement or the Merger. The Company shall give Purchaser and its counsel (who
shall provide any comments thereon as soon as practicable) the opportunity to
review the Proxy Statement prior to its being filed with the SEC and shall
give Purchaser and its counsel (who shall provide any comments thereon as soon
as practicable) the opportunity to review all amendments and supplements to
the Proxy Statement and all responses to requests for additional information
and replies to comments prior to their being filed with, or sent to, the SEC.
Each of the Company and Purchaser agrees to use its reasonable best efforts,
after consultation with the other parties hereto, to respond promptly to all
such comments of and requests by the SEC. As promptly as practicable after the
Proxy Statement has been cleared by the SEC, the Company shall mail the Proxy
Statement to the stockholders of the Company. If at any time prior to the
approval of this Agreement by the Company's stockholders there shall occur any
event that should be set forth in an amendment or supplement to the Proxy
Statement, the Company will prepare and mail to its stockholders such an
amendment or supplement.
(c) The Company represents and warrants that the Proxy Statement will comply
as to form in all material respects with the Exchange Act and, at the
respective times filed with the SEC and distributed to stockholders of
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the Company, will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided, that the Company makes no
representation or warranty as to any information included in the Proxy
Statement which was provided by Purchaser or Merger Sub. Purchaser represents
and warrants that none of the information supplied by Purchaser or Merger Sub
for inclusion in the Proxy Statement will, at the respective times filed with
the SEC and distributed to stockholders of the Company, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(d) Subject to the fiduciary duties of the Board of Directors as advised by
counsel, the Company shall use its reasonable best efforts to obtain the
necessary approvals by its stockholders of the Merger, this Agreement and the
transactions contemplated hereby.
(e) Purchaser agrees, subject to applicable law, to cause all shares of
Common Stock purchased by Merger Sub pursuant to the Offer and all other
shares of Common Stock owned by Purchaser, Merger Sub or any other subsidiary
or affiliate of Purchaser to be voted in favor of the approval of the Merger.
8.4. Filings; Other Action. Subject to the terms and conditions herein
provided, the Company, Purchaser, and Merger Sub shall: (a) promptly make
their respective filings and thereafter make any other required submissions
under the HSR Act with respect to the Merger and, if applicable, the Offer;
(b) cooperate and consult with one another in (i) determining which Regulatory
Filings are required or, in the case of Other Antitrust Filings, permitted to
be made prior to the Effective Time with, and which consents, approvals,
Permits, authorizations or waivers (collectively, "Consents") are required or,
in the case of Other Antitrust Consents, permitted to be obtained prior to the
Effective Time from Governmental Entities or other third parties in connection
with the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, including, without limitation, (x) all such
Regulatory Filings and Consents as relate to Foreign Antitrust Laws (the
"Other Antitrust Filings" and the "Other Antitrust Consents," respectively;
collectively, the "Other Antitrust Filings and Consents") and (y) all Consents
required to transfer to the Company any Permits or registrations held on
behalf of the Company or any of its Subsidiaries by or in the name of
distributors, brokers or sales agents; (ii) preparing all Regulatory Filings
and all other filings, submissions and presentations required or prudent to
obtain all Consents, including by providing to the other party drafts of such
material reasonably in advance of the anticipated filing or submission dates;
and (iii) timely making all such Regulatory Filings and timely seeking all
such Consents (it being understood that the parties will make or seek to
obtain all Other Antitrust Filings and Consents, whether mandatory or
voluntary); and (c) use their reasonable best efforts to take, or cause to be
taken, all other action and do, or cause to be done, all other things
necessary, proper or appropriate to consummate and make effective the
transactions contemplated by this Agreement. Each of Purchaser and the Company
shall use its reasonable best efforts to contest any proceeding seeking a
preliminary injunction or other legal impediment to, and to resolve any
objections as may be asserted by any Governmental Entity with respect to, the
Offer and/or the Merger under the HSR Act or Foreign Antitrust Laws; provided
that the foregoing shall not require Purchaser to take any action that could
directly or indirectly (x) impose limitations on the ability of Purchaser or
Merger Sub (or any of their affiliates or Subsidiaries) effectively to
acquire, operate or hold, or require Purchaser, Merger Sub or the Company or
any of their respective affiliates or Subsidiaries to dispose of or hold
separate, any portion of their respective assets or business that (I) is
either material to the business of Purchaser and its Subsidiaries or material
to the business of the Company and its Subsidiaries, in each case, conducted
in (A) any Category 1 Key Jurisdiction, (B) any two or more Category 2 Key
Jurisdictions, or (C) any three or more Category 2 and Category 3 Key
Jurisdictions, or (II) is reasonably likely to have a Material Adverse Effect,
(y) restrict any future business activity by Purchaser, Merger Sub, the
Company or any of their affiliates or Subsidiaries that (I) is either material
to the business of Purchaser and its Subsidiaries or material to the business
of the Company and its Subsidiaries, in each case, conducted in (A) any
Category 1 Key Jurisdiction, (B) any two or more Category 2 Key Jurisdictions,
or (C) any three or more Category 2 and Category 3 Key Jurisdictions, or (II)
is reasonably likely to have a
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Material Adverse Effect, including, without limitation, requiring the prior
consent of any Governmental Entity to future transactions by Purchaser, Merger
Sub, the Company or any of their affiliates or Subsidiaries, or (z) otherwise
adversely affect Purchaser, Merger Sub, the Company or any of their respective
affiliates or Subsidiaries in a manner that (I) is either material to the
business of Purchaser and its Subsidiaries or material to the business of the
Company and its Subsidiaries, in each case, conducted in (A) any Category 1
Key Jurisdiction, (B) any two or more Category 2 Key Jurisdictions, or (C) any
three or more Category 2 and Category 3 Key Jurisdictions, or (II) is
reasonably likely to have a Material Adverse Effect. If, at any time after the
Effective Time, any further action is necessary or desirable to carry out the
purpose of this Agreement, the proper officers and directors of Purchaser and
the Surviving Corporation shall take all such necessary action.
8.5. Access to Information.
(a) From the date of this Agreement to the Closing, upon reasonable notice,
the Company shall, and shall cause its Subsidiaries to, subject to the
compliance with applicable laws and confidentiality obligations to third
parties, (i) give Purchaser and its authorized representatives reasonable
access during normal business hours to all books, records, personnel, research
and other consultants, offices and other facilities and properties of the
Company and its Subsidiaries and their accountants and accountants' work
papers, (ii) permit Purchaser to make such copies and inspections thereof as
Purchaser may reasonably request and (iii) furnish Purchaser with such
financial and operating data and other information with respect to the
business and properties of the Company and its Subsidiaries as Purchaser may
from time to time reasonably request; provided that no investigation or
information furnished pursuant to this Section 8.5 shall affect any
representations or warranties made by the Company herein or the conditions to
the obligations of Purchaser to consummate the transactions contemplated
hereby.
(b) All such information and access shall be subject to the provisions of
the letter agreement between Purchaser and the Company (the "Confidentiality
Agreement") relating to the confidential treatment of "Information" (as
defined therein).
8.6. Publicity. The initial press release relating to this Agreement shall
be a joint press release and thereafter the Company and Purchaser shall,
subject to their respective legal obligations, obtain the prior consent of the
other party (which consent will not be unreasonably withheld or delayed)
before issuing any such press release or otherwise making public statements
with respect to the transactions contemplated hereby and in making any filings
with any national securities exchange with respect thereto.
8.7. Further Action. Each party hereto shall, subject to the fulfillment at
or before the Effective Time of each of the conditions of performance set
forth herein or the waiver thereof, perform such further acts and execute such
documents as may be reasonably required to effect the Merger. Purchaser shall
use reasonable best efforts to assist the Company in causing the condition
specified in subsection (j) of Exhibit A not to exist at the time the Merger
(and the purchase of Common Stock pursuant to the Offer, if applicable) is
otherwise to be consummated (unless Purchaser waives such condition).
8.8. Insurance; Indemnity.
(a) For a period of six years after the Effective Time, Purchaser shall
cause to be maintained officers' and directors' liability insurance covering
the parties who are currently covered, in their capacities as officers and
directors, by the Company's existing officers' and directors' liability
insurance policies (the "Current Policies") on terms substantially no less
advantageous to such parties than such Current Policies; provided, however,
that Purchaser shall not be required, in order to maintain or procure such
coverage, to pay annual premiums in excess of 200% of the aggregate annual
premiums paid by the Company for the Current Policies during 1996 (the "Cap");
and provided, further, that if equivalent coverage cannot be obtained, or can
be obtained only by paying an amount in excess of the Cap, Purchaser shall
only be required to obtain such coverage for such six-year period as can be
obtained by paying annual premiums equal to the Cap.
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(b) From and after the Effective Time, the Surviving Corporation shall
indemnify and hold harmless, to the fullest extent permitted under applicable
law, each person who is, or has been at any time prior to the date hereof or
who becomes prior to the Effective Time, an officer or director of the Company
or any of its Subsidiaries against all losses, claims, damages, liabilities,
costs or expenses (including attorneys' fees), judgments, fines, penalties and
amounts paid in settlement (collectively, "Losses") in connection with any
Litigation arising out of or pertaining to acts or omissions, or alleged acts
or omissions, by them in their capacities as such, which acts or omissions
occurred prior to the Effective Time. Without limiting the foregoing, the
Company and after the Effective Time the Surviving Corporation shall
periodically advance expenses as incurred with respect to the foregoing to the
fullest extent permitted under applicable law provided that the person to whom
the expenses are advanced provides an undertaking to repay such advance if it
is ultimately determined that such person is not entitled to indemnification.
(c) If the Merger shall have been consummated, the Surviving Corporation
shall, to the fullest extent permitted under applicable law, indemnify and
hold harmless Purchaser and any person or entity who was an officer, director
or affiliate of Purchaser prior to the Effective Time against any Losses in
connection with any Litigation arising out of or pertaining to any of the
transactions contemplated by this Agreement.
(d) If any Litigation described in paragraph (b) or (c) of this Section 8.8
(each, an "Action") arises or occurs, the Surviving Corporation shall control
the defense of such Action with counsel selected by the Surviving Corporation,
which counsel shall be reasonably acceptable to the party seeking
indemnification pursuant to paragraph (b) or (c) of this Section 8.8 (each, an
"Indemnified Party"); provided that the Indemnified Party shall be permitted
to participate in the defense of such Action through counsel selected by the
Indemnified Party, which counsel shall be reasonably acceptable to the
Surviving Corporation, at the Indemnified Party's expense. Notwithstanding the
foregoing, if there is any conflict between the Surviving Corporation and any
Indemnified Parties or there are additional defenses available to any
Indemnified Parties, the Indemnified Parties shall be permitted to participate
in the defense of such Action with counsel selected by the Indemnified
Parties, which counsel shall be reasonably acceptable to the Surviving
Corporation, and the Surviving Corporation shall pay all reasonable fees and
expenses of such counsel for the Indemnified Parties promptly as statements
therefor are received; provided that the Surviving Corporation shall not be
obligated to pay the reasonable fees and expenses of more than one counsel for
all Indemnified Parties in any single Action except to the extent that, in the
opinion of counsel for the Indemnified Parties, two or more of such
Indemnified Parties have conflicting interests in the outcome of such Action.
The Surviving Corporation shall not be liable for any settlement effected
without its written consent, which consent shall not unreasonably be withheld.
8.9. Restructuring of Merger. Upon the mutual agreement of Purchaser and the
Company, the Merger shall be restructured in the form of a forward subsidiary
merger of the Company into Merger Sub, with Merger Sub being the surviving
corporation, or as a merger of the Company into Purchaser, with Purchaser
being the surviving corporation. In such event, this Agreement shall be deemed
appropriately modified to reflect such form of merger.
8.10. Employees and Employee Benefit Plans.
(a) From and after the Effective Time, Purchaser shall cause the Surviving
Corporation and any of its Subsidiaries to honor in accordance with their
terms and the past practice of the Company all existing employment agreements
and severance plans and agreements between the Company or any of its
Subsidiaries, except as otherwise provided herein, and any officer, director,
or employee of the Company or any of its Subsidiaries so long as such plans
and agreements shall have been identified to Purchaser in the Disclosure
Letter and to the extent such terms are in effect on the date hereof or as
otherwise provided hereunder or in the Disclosure Letter. To the extent any
such employment agreements or severance plans or agreements can be
unilaterally amended by the Company, Purchaser agrees not to amend any such
plan or agreement prior to the first anniversary of the Closing in a manner
that will reduce or otherwise impair the benefits that would be payable
thereunder to any employee who is covered thereby and who is terminated on or
before the first anniversary of the Closing.
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(b) Prior to the earlier of the purchase of shares of Common Stock by Merger
Sub pursuant to the Offer and the Effective Time (the "Acquisition Date"), the
Company shall have taken all such action, including approval of the Board of
Directors, as may be necessary in order to amend (i) the Pension Plan for the
Employees of the Company and (ii) the Executive Severance Program in the
manner set forth in the Disclosure Letter.
(c) For a period of one year following the Closing, Purchaser will provide
employees and former employees of the Company with benefits that, at
Purchaser's sole option, are either (x) in the aggregate at least as favorable
as the benefits they were entitled to receive immediately prior to the Closing
or (y) generally the same as the benefits that Purchaser makes available to
its employees generally, except that Purchaser shall provide severance
benefits to employees in accordance with the provision of Section 8.10(a).
(d) The Company will use its reasonable best efforts consistent with past
practice to enforce any existing non-compete and confidentiality provisions
contained in agreements with employees and former employees.
(e) Effective as of the date hereof, the Company shall amend the 1991
Employee Stock Purchase Plan to preclude any increase in the level of
contribution made by any eligible employee thereunder, whether by reason of
commencing participation or increasing the level of contribution (other than
increases as to which notification had been given prior to the date hereof).
8.11 Transfer Taxes. Any liability for New York State Real Property Transfer
Tax and similar real property transfer taxes and real property gains taxes
imposed by any other state with respect to the transactions contemplated by
this Agreement, together with applicable interest, penalties and additions
thereto, if any, shall be paid or caused to be paid by the Purchaser.
ARTICLE 9
Conditions
9.1. Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger shall be subject to
the satisfaction or waiver, where permissible, prior to the Effective Time, of
the following conditions:
(a) The waiting period applicable to the consummation of the Merger under
the HSR Act shall have expired or been terminated.
(b) None of the parties hereto shall be subject to any order or
injunction of a court of competent jurisdiction which prohibits the
consummation of the transactions contemplated by this Agreement.
(c) If required by applicable law, this Agreement and the Merger shall
have been approved by the stockholders of the Company in accordance with
the DGCL and the Company's Certificate of Incorporation and By-laws.
9.2. Additional Conditions to Obligations of Purchaser and Merger Sub to
Effect the Merger. Notwithstanding anything to the contrary contained herein,
if the Offer shall not have been made or Merger Sub shall not have purchased
any shares of Common Stock pursuant to the Offer, unless otherwise waived by
Purchaser, Purchaser and Merger Sub shall not be required to effect the
Merger, if at the time the Merger is otherwise to be effected, any of the
conditions set forth in subsections (a) through (j) of Exhibit A exist or
shall occur.
ARTICLE 10
Termination; Amendment; Waiver
10.1. Termination. This Agreement may be terminated and the Merger
contemplated hereby may be abandoned at any time notwithstanding approval
thereof by the stockholders of the Company, if any, but prior to the Effective
Time:
(a) by mutual written consent of the Board of Directors of the Company
(subject to Section 5.4) and Purchaser;
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(b) by Purchaser or the Company:
(i) if the Effective Time shall not have occurred on or before
September 30, 1997 (provided that the right to terminate this Agreement
pursuant to this clause (i) shall not be available to any party whose
failure to fulfill any obligation under this Agreement has been the
cause of or resulted in the failure of the Effective Time to occur on
or before such date; provided, further, that, to the extent the
Company's cure period under paragraph (e) of Exhibit A would extend
beyond such date, such date shall be extended by the additional length
of the cure period; and provided, further, that if the Effective Time
shall not occur on or before September 30, 1997 as a result of the
existence or occurrence of the condition specified in subsection (j) of
Exhibit A, at the option of the Company, such date shall be extended
until November 15, 1997).
(ii) if there shall be any statute, law, rule or regulation that
makes consummation of the Offer or the Merger illegal or prohibited or
if any court or other Governmental Entity of competent jurisdiction in
the United States or any other Key Jurisdiction shall have issued an
order, judgment, decree or ruling, or taken any other action
restraining, enjoining or otherwise prohibiting the Merger and such
order, judgment, decree, ruling or other action shall have become final
and non-appealable; or
(iii) upon a vote at a duly held meeting or upon any adjournment
thereof, the stockholders of the Company shall have failed to give any
approval required by applicable law;
(c) by Purchaser upon (x) termination of the Offer as a result of the
failure of the Minimum Condition at any time after all other conditions to
the Offer set forth in Exhibit A shall have been satisfied or waived or (y)
the failure of any condition specified in subsections (e) (other than to
the extent it relates to a breach of the representations and warranties
specified in Section 6.17(iii)), (f) or (g) of Exhibit A prior to Purchaser
having purchased any shares of Common Stock under the Offer, regardless of
whether the Offer is made (provided that the right to terminate this
Agreement pursuant to this clause (c) shall not be available to Purchaser
if Purchaser's failure to fulfill any obligation under this Agreement has
been the cause of or resulted in the failure of any such condition);
(d) by the Company, at any time prior to the earlier of (x) the purchase
of shares of Common Stock by Merger Sub pursuant to the Offer and (y) the
approval of the Merger by the stockholders of the Company in accordance
with applicable law, if there is an Alternative Proposal which the Board of
Directors in good faith determines represents a superior transaction for
the stockholders of the Company as compared to the Offer and/or the Merger,
and the Board of Directors determines, after consultation with Debevoise &
Plimpton, that failure to terminate this Agreement would be inconsistent
with the compliance by the Board of Directors with its fiduciary duties to
stockholders imposed by law; provided, however, that the right to terminate
this Agreement pursuant to this Section 10.1(d) shall not be available (i)
if the Company has breached in any material respect its obligations under
Section 8.1, or (ii) if the Alternative Proposal is subject to a financing
condition, unless the Board of Directors is of the opinion, after
consultation with the Financial Advisor or another nationally recognized
investment banking firm, that the Alternative Proposal is financeable, or
(iii) if, prior to or concurrently with any purported termination pursuant
to this Section 10.1(d), the Company shall not have paid the fees and
expenses contemplated by Section 11.5, or (iv) if the Company has not
provided Purchaser and Merger Sub with five business days' prior written
notice of its intent to so terminate this Agreement together with a summary
of the material terms and conditions of such offer; and
(e) by Purchaser if the Board of Directors of the Company shall have
withdrawn, modified or amended in any material respect its approval or
recommendation of the Offer or the Merger, or shall have recommended
acceptance of any Alternative Proposal, or shall have resolved to do any of
the foregoing.
10.2. Effect of Termination. If this Agreement is terminated and the Merger
is abandoned pursuant to Section 10.1 hereof, this Agreement, except for the
provisions of Sections 8.5(b), 8.6 and 11.5, shall terminate, without any
liability on the part of any party or its directors, officers or stockholders.
Nothing herein shall relieve any party to this Agreement of liability for
breach of this Agreement or prejudice the ability of the non-breaching party
to seek damages from any other party for any breach of this Agreement,
including without limitation, attorneys' fees and the right to pursue any
remedy at law or in equity.
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10.3. Amendment. To the extent permitted by applicable law, this Agreement
may be amended by action taken by or on behalf of the Board of Directors of
the Company (subject to Section 5.4) and Purchaser at any time before or after
adoption of this Agreement by the stockholders of the Company but, after any
such stockholder approval, no amendment shall be made which decreases the
Merger Consideration or which adversely affects the rights of the Company's
stockholders hereunder without the approval of such stockholders. This
Agreement may not be amended except by an instrument in writing signed on
behalf of all of the parties.
10.4. Extension; Waiver. At any time prior to the Effective Time, the
parties hereto, by action taken by or on behalf of the Board of Directors
(subject to Section 5.4) and Purchaser, may (i) extend the time for the
performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein by any other applicable party or in any document, certificate
or writing delivered pursuant hereto by any other applicable party or (iii)
waive compliance with any of the agreements or conditions contained herein.
Any agreement on the part of any party to any such extension or waiver shall
be valid only if set forth in an instrument in writing signed on behalf of
such party.
ARTICLE 11
General Provisions
11.1. Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time.
11.2. Notices. Any notice required to be given hereunder shall be sufficient
if in writing, and sent by facsimile transmission (with a confirmatory copy
sent by overnight courier), by courier service (with proof of service), hand
delivery or certified or registered mail (return receipt requested and first-
class postage prepaid), addressed as follows:
If to Purchaser or Merger Sub: If to the Company:
The Procter & Gamble Company Tambrands Inc.
One Procter & Gamble Plaza 777 Westchester Avenue
Cincinnati, OH 45202-3315 White Plains, NY 10604
Telephone: (513) 983-5940 Telephone: (914) 696-6000
Facsimile: (513) 983-4274 Facsimile: (914) 696-6761
Attention: Gary Hagopian, Attention: General Counsel
Vice President and
General Counsel--
North America
With a copy to: With a copy to:
Fried, Frank, Harris, Debevoise & Plimpton
Shriver & Jacobson 875 Third Avenue
One New York Plaza New York, New York 10022
New York, New York 10004 Telephone: (212) 909-6000
Telephone: (212) 859-8000 Facsimile: (212) 909-6836
Facsimile: (212) 859-4000 Attention: Meredith M. Brown, Esq.
Attention: Stephen Fraidin, P.C.
or to such other address as any party shall specify by written notice so
given, and such notice shall be deemed to have been delivered as of the date
so telecommunicated, personally delivered or mailed.
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11.3. Assignment; Binding Effect. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties; provided, however, that either Purchaser
or Merger Sub (or both) may assign its rights hereunder (including without
limitation the right to make the Offer and/or to purchase shares of Common
Stock in the Offer) to an affiliate but nothing shall relieve the assignor
from its obligations hereunder. Subject to the preceding sentence, this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns. Notwithstanding anything
contained in this Agreement to the contrary, except for the provisions of
Sections 8.8 and 8.11, nothing in this Agreement, expressed or implied, is
intended to confer on any person other than the parties hereto or their
respective heirs, successors, executors, administrators and assigns any
rights, remedies, obligations or liabilities under or by reason of this
Agreement.
11.4. Entire Agreement. This Agreement, the Disclosure Letter, the
Schedules, the Exhibits and any other documents delivered by the parties in
connection herewith constitute the entire agreement among the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings among the parties with respect thereto.
11.5 Fees and Expenses.
(a) Except as provided in Section 11.5(b), whether or not the Offer or the
Merger is consummated, all costs and expenses incurred in connection with the
transactions contemplated by this Agreement shall be paid by the party
incurring such expenses; provided, however, that if this Agreement is
terminated by the Purchaser or the Company other than in circumstances in
which Section 11.5(b)(2) is applicable, the Purchaser shall (i) pay the
Company $1,000,000 for reimbursement of expenses plus (ii) pay or reimburse
the Company for the SEC filing fees relating to the Proxy Statement.
(b) (1) To compensate Purchaser and its affiliates for entering into this
Agreement and taking action to consummate the transactions hereunder and
incurring the costs and expenses related thereto and other losses and
expenses, including the foregoing by Purchaser of other opportunities, the
Company and Purchaser agree that the Company shall pay to Purchaser an
aggregate amount equal to $50,000,000 less any amount due pursuant to
paragraph (b)(2) below (the "Commitment Amount") if this Agreement is
terminated (i) by the Company pursuant to Section 10.1(d); (ii) by Purchaser
pursuant to Section 10.1(e) (unless the event described therein occurs solely
as a result of Purchaser's willful breach in any material respect of its
representations, warranties or obligations contained herein) or (iii) pursuant
to Section 10.1(c) if the Minimum Condition shall not have been satisfied at
the expiration date of the Offer or pursuant to Section 10.1(b)(iii), provided
that in either case specified in this clause (iii)(x) prior to the time the
Offer was terminated or otherwise expired or the time of the stockholders'
meeting, as the case may be, an Alternative Proposal with a party other than
Purchaser shall have been publicly announced or shall have become publicly
known and (y) during the term of this Agreement or within six months after the
termination of this Agreement, the Board of Directors recommends an
Alternative Proposal with a party other than Purchaser or the Company enters
into an agreement providing for an Alternative Proposal with a party other
than Purchaser or an Alternative Proposal with a party other than Purchaser
occurs.
The Commitment Amount shall be payable (x) at the time of termination if
such amount becomes payable pursuant to clause (i) above, (y) on the next
business day following termination if such amount becomes payable pursuant to
clause (ii) above, and (z) on the next business day following the earliest of
the recommendation of an Alternative Proposal, the entering into of an
agreement providing for an Alternative Proposal or the occurrence of an
Alternative Proposal, if such amount becomes payable pursuant to clause (iii)
above.
(2) The Company shall reimburse Purchaser and its affiliates for the
documented reasonable out-of-pocket expenses, not to exceed $10,000,000, of
Purchaser and its affiliates incurred in connection with or arising out of the
Offer, the Merger, this Agreement and the transactions contemplated hereby
(including, without limitation, amounts paid or payable to investment bankers,
fees and expenses of counsel, accountants and consultants, and printing
expenses), regardless of when those expenses are incurred, if this Agreement
is terminated (i) by the
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Company pursuant to Section 10.1(d); (ii) by Purchaser (x) pursuant to Section
10.1(e) (unless the event described therein occurs solely as a result of
Purchaser's willful breach in any material respect of its representations,
warranties or obligations contained herein) or (y) pursuant to Section 10.1(c)
because of the failure of the condition set forth in paragraph (e) of Exhibit
A, or (iii) pursuant to Section 10.1(c) if the Minimum Condition shall not
have been satisfied at the expiration date of the Offer or pursuant to Section
10.1(b)(iii), provided that in either case specified in this clause (iii) (x)
prior to the time the Offer was terminated or otherwise expired or the time of
the stockholders' meeting, as the case may be, an Alternative Proposal with a
party other than Purchaser shall have been publicly announced or otherwise
shall have become publicly known and (y) during the term of this Agreement or
within six months after the termination of this Agreement, the Board of
Directors recommends an Alternative Proposal with a party other than Purchaser
or the Company enters into an agreement providing for an Alternative Proposal
with a party other than Purchaser or an Alternative Proposal with a party
other than Purchaser occurs.
(3) The Company acknowledges that the agreements contained in this Section
11.5(b) are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, Purchaser would not enter into
this Agreement; accordingly, if the Company fails to promptly pay any amounts
owing pursuant to this Section 11.5(b) when due, the Company shall in addition
thereto pay to Purchaser all costs and expenses (including, pursuant to
Section 11.11(b), fees and disbursements of counsel) incurred in collecting
such amounts, together with interest on such amounts (or any unpaid portion
thereof) from the date such payment was required to be made until the date
such payment is received by Purchaser at the prime rate of Citibank, N.A. as
in effect from time to time during such period.
11.6. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without regard to its rules
of conflict of laws. Each of the Company, Purchaser and Merger Sub hereby
irrevocably and unconditionally consents to submit to the exclusive
jurisdiction of the courts of the State of Delaware and of the United States
of America located in the State of Delaware (the "Delaware Courts") for any
litigation arising out of or relating to this Agreement and the transactions
contemplated hereby (and agrees not to commence any litigation relating
thereto except in such courts), waives any objection to the laying of venue of
any such litigation in the Delaware Courts and agrees not to plead or claim in
any Delaware Court that such litigation brought therein has been brought in an
inconvenient forum.
11.7. Headings. Headings of the Articles and Sections of this Agreement are
for the convenience of the parties only, and shall be given no substantive or
interpretive effect whatsoever.
11.8. Interpretation. In this Agreement, unless the context otherwise
requires, words describing the singular number shall include the plural and
vice versa, and words denoting any gender shall include all genders and words
denoting natural persons shall include corporations and partnerships and vice
versa. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation." As used in this Agreement, the words "Subsidiary," "affiliate"
and "associate" shall have the meanings ascribed thereto in Rule 12b-2 under
the Exchange Act. For purposes of this Agreement, one party shall be
considered "wholly owned" by another party if all of the shares of its
outstanding capital stock, other than directors' qualifying shares, are
beneficially owned by such other party. As used in this Agreement, the words
"to the knowledge of the Company" shall mean the knowledge of the individuals
specified in the Disclosure Letter.
11.9. Investigations. No action taken pursuant to this Agreement, including,
without limitation, any investigation by or on behalf of any party, shall be
deemed to constitute a waiver by the party taking such action of compliance
with any representations, warranties, covenants or agreements contained in
this Agreement.
11.10. Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision
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of this Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.
11.11. Enforcement of Agreement. (a) The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in any Delaware
Court, this being in addition to any other remedy to which they are entitled
at law or in equity.
(b) The prevailing party in any judicial action shall be entitled to receive
from the other party reimbursement for the prevailing party's reasonable
attorneys' fees and disbursements, and court costs.
11.12. Counterparts. This Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be
an original, but all such counterparts shall together constitute one and the
same instrument. Each counterpart may consist of a number of copies hereof
each signed by less than all, but together signed by all, of the parties
hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement and caused the
same to be duly delivered on their behalf on the day and year first written
above.
Tambrands Inc.
/s/ Edward T. Fogarty
By:__________________________________
Name: Edward T. Fogarty
Title: Chairman, President and
Chief Executive Officer
The Procter & Gamble Company
/s/ John E. Pepper
By: _________________________________
Name: John E. Pepper
Title: Chairman of the Board and
Chief Executive Officer
C.R. Macintosh, Inc.
/s/ C.C. Daly, Jr.
By: _________________________________
Name: C.C. Daly, Jr.
Title: President and Treasurer
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EXHIBIT A
CONDITIONS OF THE OFFER
Notwithstanding any other term of the Offer or this Agreement, Merger Sub
shall not be required to accept for payment or pay for, subject to any
applicable rules and regulations of the SEC, including Rule 14e-1(c) of the
Exchange Act, any shares of Common Stock not theretofore accepted for payment
or paid for and may terminate or amend the Offer as to such shares of Common
Stock unless (i) there shall have been validly tendered and not withdrawn
prior to the expiration of the Offer that number of shares of Common Stock
which would represent at least a majority of the outstanding shares of Common
Stock on a fully diluted basis (the "Minimum Condition") and (ii) any waiting
period under the HSR Act applicable to the purchase of shares of Common Stock
pursuant to the Offer shall have expired or been terminated. Furthermore,
notwithstanding any other term of the Offer or this Agreement, Merger Sub
shall not be required to accept for payment or, subject as aforesaid, unless
otherwise waived by Purchaser, to pay for any shares of Common Stock not
theretofore accepted for payment or paid for, and may terminate or amend the
Offer if at any time on or after the date of this Agreement and before the
acceptance of such shares of Common Stock for payment or the payment therefor,
any of the following conditions exist or shall occur:
(a) there shall have been instituted or pending or specifically
threatened any litigation by any Governmental Entity which is related to
the Merger or the Offer and which seeks to or, if successful, would (i)
challenge or restrict the acquisition by Purchaser or Merger Sub (or any of
its affiliates or Subsidiaries) of shares of Common Stock pursuant to the
Offer or the Merger, restrain, prohibit or delay the making or consummation
of the Offer or the Merger, or obtain damages in connection therewith, (ii)
make the purchase of or payment for some or all of the shares of Common
Stock pursuant to the Offer or the Merger illegal or otherwise restrict or
prohibit consummation of the Offer or the Merger, (iii) impose limitations
on the ability of Purchaser or Merger Sub (or any of their Subsidiaries)
effectively to acquire, operate or hold, or require Purchaser, Merger Sub
or the Company or any of their respective Subsidiaries to dispose of or
hold separate, any portion of their respective assets or business that (I)
is either material to the business of Purchaser and its Subsidiaries or
material to the business of the Company and its Subsidiaries conducted, in
each case, in (A) any Category 1 Key Jurisdiction, (B) any two or more
Category 2 Key Jurisdictions, or (C) any three or more Category 2 and
Category 3 Key Jurisdictions, or (II) is reasonably likely to have a
Material Adverse Effect, (iv) impose limitations on the ability of
Purchaser, Merger Sub or their Subsidiaries to exercise full rights of
ownership of the shares of Common Stock acquired by it pursuant to the
Offer or the Merger, including, without limitation, the right to vote the
shares acquired by it on all matters properly presented to the stockholders
of the Company, (v) restrict any future business activity by Purchaser,
Merger Sub, the Company or any of their Subsidiaries that (I) is either
material to the business of Purchaser and its Subsidiaries or material to
the business of the Company and its Subsidiaries conducted, in each case,
in (A) any Category 1 Key Jurisdiction, (B) any two or more Category 2 Key
Jurisdictions, or (C) any three or more Category 2 and Category 3 Key
Jurisdictions, or (II) is reasonably likely to have a Material Adverse
Effect, including, without limitation, requiring the prior consent of any
Governmental Entity to future transactions by Purchaser, Merger Sub, the
Company or any of their affiliates or Subsidiaries, or (vi) otherwise
adversely affect Purchaser, Merger Sub, the Company or any of their
respective affiliates or Subsidiaries in a manner that (I) is either
material to the business of Purchaser and its Subsidiaries or material to
the business of the Company and its Subsidiaries conducted, in each case,
in (A) any Category 1 Key Jurisdiction, (B) any two or more Category 2 Key
Jurisdictions, or (C) any three or more Category 2 and Category 3 Key
Jurisdictions, or (II) is reasonably likely to have a Material Adverse
Effect;
(b) there shall have been promulgated or enacted by any Governmental
Entity, any Law that is reasonably likely, directly or indirectly, to
result in any of the consequences referred to in clauses (i) through (vi)
of subsection (a) above;
(c) any of the Regulatory Filings or Consents (including the Other
Antitrust Filings and Consents) shall not have been made or obtained, or
any waiting period (whether requisite or voluntary) under any Foreign
Antitrust Laws shall not have expired, in each case, to the extent that the
failure to make or obtain
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such Regulatory Filings or Consents or of the waiting period to have
expired, in the aggregate, is reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect or to materially adversely
affect the business of the Company or its Subsidiaries conducted in (A) any
Category 1 Key Jurisdiction, (B) any two or more Category 2 Key
Jurisdictions or (C) any three or more Category 2 and Category 3 Key
Jurisdictions;
(d) this Agreement shall have been terminated in accordance with its
terms;
(e) (i) any of the representations or warranties made by the Company in
this Agreement shall not have been true and correct in all respects when
made, or shall thereafter have ceased to be true and correct in all
respects as if made as of such later date (other than representations and
warranties made as of a specified date), except where the failure to be so
true and correct (without giving effect to any materiality qualifications
or thresholds contained in such representations and warranties),
individually and in the aggregate, would not have a Material Adverse Effect
or materially adversely affect the business of Purchaser in relation to its
decision to consummate the transactions contemplated hereby, or (ii) the
Company shall have breached or failed to comply in any material respect
with any of its obligations under this Agreement, which untruth or
inaccuracy or breach, in the case of clauses (i) or (ii), is not curable
or, if curable, is not cured within 10 business days after written notice
thereof has been given by Purchaser to the Company;
(f) the Board of Directors shall have modified or amended its
recommendation of the Offer or the Merger in any manner adverse to
Purchaser or Merger Sub or shall have withdrawn its recommendation of the
Offer or the Merger or shall have recommended acceptance of any Alternative
Proposal or shall have resolved to do any of the foregoing;
(g) any corporation, entity, "group" or "person" (as defined in the
Exchange Act), other than Purchaser or Merger Sub, shall have acquired
beneficial ownership of more than 20% of the outstanding shares of Common
Stock, or (ii) any person (other than Purchaser, Merger Sub or one or more
of their affiliates) shall have entered into an agreement in principle or
definitive agreement with the Company with respect to a tender or exchange
offer for any shares of Common Stock or a merger, consolidation or other
business combination with or involving the Company;
(h) Purchaser shall have become aware of any fact relating to the Company
or any of its Subsidiaries which Purchaser neither knew nor should have
known as of the date of this Agreement, which has a Material Adverse Effect
on the Company and its Subsidiaries; or
(i) there shall have occurred (i) any general suspension of, or
limitation on prices for, trading in securities on the New York Stock
Exchange and national securities exchanges generally, (ii) a declaration of
any general banking moratorium by federal or New York or Ohio state
authorities or any suspension of payments in respect of money center banks
or any limitation (whether or not mandatory) imposed by federal or state
authorities on the extension of credit by money center banks in the United
States, (iii) a commencement of a war, armed hostilities or any other
international or national calamity directly or indirectly involving the
United States, or (iv) any limitation (whether or not mandatory) by any
United States Governmental Entity on, or any other event which could
materially affect, the extension of credit by banks or other United States
financial institutions.
(j) Any Designated Contract Provision shall be in effect and shall not
have been resolved in a manner reasonably satisfactory to Purchaser. The
term "Designated Contract Provision" shall mean the provisions of any
Contract to which the Company or any of its Subsidiaries is a party, or by
which the Company or any of its Subsidiaries or any of their respective
properties or assets are bound, which restricts the ability of any of the
affiliates of the Company or any of its Subsidiaries to conduct business in
a line of business in which Purchaser or any of its Subsidiaries is
currently engaged; provided, however, that other than the Designated
Contract Provisions specified in the second bullet point of Section 6.17
(iii) of the Disclosure Letter, the provisions of the other Contracts
specified in Section 6.17 (iii) of the Disclosure Letter which otherwise
would constitute Designated Contract Provisions shall not be deemed
Designated Contract Provisions for the purposes of this Agreement; and
provided, further, that the provisions of Contracts not specified in
Section 6.17 (iii) of the Disclosure Letter which otherwise constitute
Designated Contract
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Provisions shall only be deemed Designated Contract Provisions for the
purposes of this Agreement if within 2 business days after the date on
which the Company notifies Purchaser of the existence of such Designated
Contract Provisions (accompanied by a copy of such Contract (and the
related Designated Contract Provisions)), Purchaser notifies the Company
that in its reasonable judgment such Designated Contract Provision is, or
is likely to be, adverse to Purchaser or any of its Subsidiaries.
The foregoing conditions are for the sole benefit of Purchaser and Merger
Sub and may be asserted by Purchaser or Merger Sub with respect to the
consummation of the Offer or the Merger (as applicable) regardless of the
circumstances (including any action or inaction by Purchaser or the Company)
giving rise to any such condition and may be waived by Purchaser or Merger
Sub, in whole or in part, at any time and from time to time, in the sole
discretion of Purchaser. The failure by Purchaser or Merger Sub at any time to
exercise any of the foregoing rights will not be deemed a waiver of any right,
the waiver of such right with respect to any particular facts or circumstances
shall not be deemed a waiver with respect to any other facts or circumstances,
and each right will be deemed an ongoing right which may be asserted at any
time and from time to time, provided, that the Minimum Condition may not be
waived or modified without the prior written consent of the Company.
Should the Offer be terminated pursuant to the foregoing provisions, all
tendered shares of Common Stock not theretofore accepted for payment shall
forthwith be returned by the Paying Agent to the tendering stockholders.
A-32
<PAGE>
EXHIBIT B
CERTIFICATE OF INCORPORATION
OF
C.R. MACINTOSH, INC.
Pursuant to Section 102 of the General Corporation Law of the State of
Delaware
The undersigned, in order to form a corporation pursuant to Section 102 of
the General Corporation Law of Delaware, does hereby certify:
FIRST: The name of the Corporation is C.R. MacIntosh, Inc.
SECOND: The address of the Corporation's registered office in the State of
Delaware is Corporation Trust Center, 1209 Orange Street in the City of
Wilmington, County of New Castle, Delaware 19801. The name of its registered
agent at such address is The Corporation Trust Company.
THIRD: the purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
FOURTH: The total number of shares which the Corporation shall have
authority to issue is one thousand (1000) shares of Common Stock, par value
$1.00 per share.
FIFTH: The name and mailing address of the Incorporator is as follows:
Name Mailing Address
Gil A. Raviv Fried, Frank, Harris, Shriver &
Jacobson
One New York Plaza
New York, New York 10004-1980
SIXTH: The Board of Directors is expressly authorized to adopt, amend, or
repeal the by-laws of the Corporation.
SEVENTH: Elections of directors need not be by written ballot unless the by-
laws of the Corporation shall otherwise provide.
EIGHTH: A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director; provided, however, that the foregoing shall not eliminate
or limit the liability of a director (i) for any breach of the director's duty
of loyalty to the Corporation or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the General Corporation Law of
Delaware, or (iv) for any transaction from which the director derived an
improper personal benefit. If the General Corporation Law of Delaware is
hereafter amended to permit further elimination or limitation of the personal
liability of directors, then the liability of a director of the Corporation
shall be eliminated or limited to the fullest extent permitted by the General
Corporation Law of Delaware as so amended. Any repeal or modification of this
Article EIGHTH by the stockholders of the Corporation or otherwise shall not
adversely affect any right or protection of a director of the Corporation
existing at the time of such repeal or modification.
NINTH: The Corporation reserves the right to amend, alter, change, or repeal
any provision contained in this Certificate of Incorporation, in the manner
now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
A-33
<PAGE>
IN WITNESS WHEREOF, I have hereunto set my hand this 4th day of April, 1997
and I affirm that the foregoing certificates is my act and deed and that the
facts stated therein are true.
/s/ Gil A. Raviv
_____________________________________
Gil A. Raviv, Incorporator
A-34
<PAGE>
ANNEX B
MORGAN STANLEY
MORGAN STANLEY & CO. INCORPORATED
1585 BROADWAY
NEW YORK, NEW YORK 10636
(212) 761-4000
April 8, 1997
Board of Directors
Tambrands Incorporated
777 Westchester Avenue
White Plains, NY 10604
Members of the Board:
We understand that Tambrands Incorporated ("Tambrands" or the "Company"),
Procter & Gamble Company ("Buyer" or "Procter & Gamble") and C.R. MacIntosh,
Inc., a wholly owned subsidiary of Procter & Gamble, ("Merger Sub" or "C.R.
MacIntosh") have entered into an Agreement and Plan of Merger, dated as of
April 8, 1997 (the "Merger Agreement"), which provides, among other things,
for the merger of C.R. MacIntosh with and into Tambrands (the "Merger").
Pursuant to the Merger, Tambrands will become a wholly owned subsidiary of
Procter & Gamble and each outstanding share of common stock, par value $.25
per share (the "Common Stock") of Tambrands, other than shares held in
treasury or held by Procter & Gamble or any affiliate of Procter & Gamble or
as to which dissenters' rights have been perfected, will be converted into the
right to receive $50.00 per share in cash (the "Merger Consideration"). The
Agreement also provides that prior to the mailing of the proxy statement in
connection with the Merger, Buyer may, at its option, commence an offer to
purchase the Common Stock at a price per share equal to the Merger
Consideration. The terms and conditions of the Merger are more fully set forth
in the Merger Agreement.
You have asked for our opinion as to whether the Merger Consideration to be
received by the holders of shares of Common Stock pursuant to the Merger
Agreement is fair from a financial point of view to such holders.
For purposes of the opinion set forth herein, we have:
(i) reviewed certain publicly available financial statements and other
information of the Company;
(ii) reviewed certain internal financial statements and other financial and
operating data concerning the Company prepared by the management of
the Company;
(iii) analyzed certain financial projections prepared by the management of
the Company;
(iv) discussed the past and current operations and financial condition and
the prospects of the Company with senior executives of the Company;
(v) reviewed the reported prices and trading activity for the Common Stock;
(vi) compared the financial performance of the Company and the prices and
trading activity of the Common Stock with that of certain other
comparable publicly-traded companies and their securities;
(vii) reviewed the financial terms, to the extent publicly available, of
certain comparable acquisition transactions;
(viii) participated in discussions and negotiations among representatives
of Tambrands and Procter & Gamble and their financial and legal
advisors;
(ix) reviewed the Merger Agreement and certain related documents; and
(x) performed such other analyses and considered such other factors as we
have deemed appropriate.
B-1
<PAGE>
We have assumed and relied upon without independent verification the
accuracy and completeness of the information reviewed by us for the purposes
of this opinion. With respect to the financial projections, we have assumed
that they have been reasonably prepared on bases reflecting the best currently
available estimates and judgments of the future financial performance of the
Company. We have not made any independent valuation or appraisal of the assets
or liabilities of the Company, nor have we been furnished with any such
appraisals. Our opinion is necessarily based on economic, market and other
conditions as in effect on, and the information made available to us as of,
the date hereof. In connection with the Merger, we were not authorized to
conduct a broad sale process.
We have acted as financial advisor to the Board of Directors of Tambrands in
connection with this transaction and will receive a fee for our services. In
the past, Morgan Stanley & Co. Incorporated and its affiliates have provided
financial advisory and financing services for the Company and Buyer and has
received fees for the rendering of those services.
It is understood that this letter is for the information of the Board of
Directors of the Company, except that this opinion may be included in its
entirety in any filing made by the Company in respect of the Merger with the
Securities and Exchange Commission. In addition, Morgan Stanley expresses no
opinion or recommendation as to how the shareholders of the Company should
vote at the shareholders' meeting held in connection with the Merger.
Based on the foregoing, we are of the opinion on the date hereof that the
Merger Consideration to be received by the holders of shares of Common Stock
pursuant to the Merger Agreement is fair from a financial point of view to
such holders.
Very truly yours,
MORGAN STANLEY & CO. INCORPORATED
/s/ David J. Topper
By: _________________________________
David J. Topper
Managing Director
B-2
<PAGE>
ANNEX C
SECTION 262 APPRAISAL RIGHTS.
(a) Any stockholder of a corporation of this State who holds shares of stock
on the date of the making of a demand pursuant to subsection (d) of this
section with respect to such shares, who continuously holds such shares
through the effective date of the merger or consolidation, who has otherwise
complied with subsection (d) of this section and who has neither voted in
favor of the merger or consolidation nor consented thereto in writing pursuant
to Section 228 of this title shall be entitled to an appraisal by the Court of
Chancery of the fair value of the stockholder's shares of stock under the
circumstances described in subsections (b) and (c) of this section. As used in
this section, the word "stockholder" means a holder of record of stock in a
stock corporation and also a member of record of a nonstock corporation; the
words "stock" and "share" mean and include what is ordinarily meant by those
words and also membership or membership interest of a member of a nonstock
corporation; and the words "depository receipt" mean a receipt or other
instrument issued by a depository representing an interest in one or more
shares, or fractions thereof, solely of stock of a corporation, which stock is
deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to
be effected pursuant to Section 251 (other than a merger effected pursuant to
Section 251(g) of this title), Sections 252, 254, 257, 258, 263 or 264 of this
title:
(1) Provided, however, that no appraisal rights under this section shall
be available for the shares of any class or series of stock, which stock,
or depository receipts in respect thereof, at the record date fixed to
determine the stockholders entitled to receive notice of and to vote at the
meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 holders; and further provided that no
appraisal rights shall be available for any shares of stock of the
constituent corporation surviving a merger if the merger did not require
for its approval the vote of the stockholders of the surviving corporation
as provided in subsection (f) of Section 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series
of stock of a constituent corporation if the holders thereof are required
by the terms of an agreement of merger or consolidation pursuant to
Sections 251, 252, 254, 257, 258, 263 and 264 of this title to accept for
such stock anything except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect
thereof;
b. Shares of stock of any other corporation, or depository receipts
in respect thereof, which shares of stock or depository receipts at the
effective date of the merger or consolidation will be either listed on
a national securities exchange or designated as a national market
system security on an interdealer quotation system by the National
Association of Securities Dealers, Inc. or held of record by more than
2,000 holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or
d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this
paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under Section 253 of this title is not owned by
the parent corporation immediately prior to the merger, appraisal rights
shall be available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
C-1
<PAGE>
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets
of the corporation. If the certificate of incorporation contains such a
provision, the procedures of this section, including those set forth in
subsections (d) and (e) of this section, shall apply as nearly as is
practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights are
provided under this section is to be submitted for approval at a meeting of
stockholders, the corporation, not less than 20 days prior to the meeting,
shall notify each of its stockholders who was such on the record date for
such meeting with respect to shares for which appraisal rights are
available pursuant to subsection (b) or (c) hereof that appraisal rights
are available for any or all of the shares of the constituent corporations,
and shall include in such notice a copy of this section. Each stockholder
electing to demand the appraisal of his shares shall deliver to the
corporation, before the taking of the vote on the merger or consolidation,
a written demand for appraisal of his shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the
appraisal of his shares. A proxy or vote against the merger or
consolidation shall not constitute such a demand. A stockholder electing to
take such action must do so by a separate written demand as herein
provided. Within 10 days after the effective date of such merger or
consolidation, the surviving or resulting corporation shall notify each
stockholder of each constituent corporation who has complied with this
subsection and has not voted in favor of or consented to the merger or
consolidation of the date that the merger or consolidation has become
effective; or
(2) If the merger or consolidation was approved pursuant to Sections 228
or 253 of this title, each constituent corporation, either before the
effective date of the merger or consolidation or within ten days
thereafter, shall notify each of the holders of any class or series of
stock of such constituent corporation who are entitled to appraisal rights
of the approval of the merger or consolidation and that appraisal rights
are available for any or all shares of such class or series of stock of
such constituent corporation, and shall include in such notice a copy of
this section; provided that, if the notice is given on or after the
effective date of the merger or consolidation, such notice shall be given
by the surviving or resulting corporation to all such holders of any class
or series of stock of a constituent corporation that are entitled to
appraisal rights. Such notice may, and, if given on or after the effective
date of the merger or consolidation, shall, also notify such stockholders
of the effective date of the merger or consolidation. Any stockholder
entitled to appraisal rights may, within 20 days after the date of mailing
of such notice, demand in writing from the surviving or resulting
corporation the appraisal of such holder's shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the
appraisal of such holder's shares. If such notice did not notify
stockholders of the effective date of the merger or consolidation, either
(i) each such constituent corporation shall send a second notice before the
effective date of the merger or consolidation notifying each of the holders
of any class or series of stock of such constituent corporation that are
entitled to appraisal rights of the effective date of the merger or
consolidation or (ii) the surviving or resulting corporation shall send
such a second notice to all such holders on or within 10 days after such
effective date; provided, however, that if such second notice is sent more
than 20 days following the sending of the first notice, such second notice
need only be sent to each stockholder who is entitled to appraisal rights
and who has demanded appraisal of such holder's shares in accordance with
this subsection. An affidavit of the secretary or assistant secretary or of
the transfer agent of the corporation that is required to give either
notice that such notice has been given shall, in the absence of fraud, be
prima facie evidence of the facts stated therein. For purposes of
determining the stockholders entitled to receive either notice, each
constituent corporation may fix, in advance, a record date that shall be
not more than 10 days prior to the date the notice is given, provided, that
if the notice is given on or after the effective date of the merger or
consolidation, the record date shall be such effective date. If no record
date is fixed and the notice is given prior to the effective date, the
record date shall be the close of business on the day next preceding the
day on which the notice is given.
C-2
<PAGE>
(e) Within 120 days after the effective date of the merger or consolidation,
the surviving or resulting corporation or any stockholder who has complied
with subsections (a) and (d) hereof and who is otherwise entitled to appraisal
rights, may file a petition in the Court of Chancery demanding a determination
of the value of the stock of all such stockholders. Notwithstanding the
foregoing, at any time within 60 days after the effective date of the merger
or consolidation, any stockholder shall have the right to withdraw his demand
for appraisal and to accept the terms offered upon the merger or
consolidation. Within 120 days after the effective date of the merger or
consolidation, any stockholder who has complied with the requirements of
subsections (a) and (d) hereof, upon written request, shall be entitled to
receive from the corporation surviving the merger or resulting from the
consolidation a statement setting forth the aggregate number of shares not
voted in favor of the merger or consolidation and with respect to which
demands for appraisal have been received and the aggregate number of holders
of such shares. Such written statement shall be mailed to the stockholder
within 10 days after his written request for such a statement is received by
the surviving or resulting corporation or within 10 days after expiration of
the period for delivery of demands for appraisal under subsection (d) hereof,
whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a copy
thereof shall be made upon the surviving or resulting corporation, which shall
within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the
addresses therein stated. Such notice shall also be given by 1 or more
publications at least 1 week before the day of the hearing, in a newspaper of
general circulation published in the City of Wilmington, Delaware or such
publication as the Court deems advisable. The forms of the notices by mail and
by publication shall be approved by the Court, and the costs thereof shall be
borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled
to appraisal rights. The Court may require the stockholders who have demanded
an appraisal for their shares and who hold stock represented by certificates
to submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as
to such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any
element of value arising from the accomplishment or expectation of the merger
or consolidation, together with a fair rate of interest, if any, to be paid
upon the amount determined to be the fair value. In determining such fair
value, the Court shall take into account all relevant factors. In determining
the fair rate of interest, the Court may consider all relevant factors,
including the rate of interest which the surviving or resulting corporation
would have had to pay to borrow money during the pendency of the proceeding.
Upon application by the surviving or resulting corporation or by any
stockholder entitled to participate in the appraisal proceeding, the Court
may, in its discretion, permit discovery or other pretrial proceedings and may
proceed to trial upon the appraisal prior to the final determination of the
stockholder entitled to an appraisal. Any stockholder whose name appears on
the list filed by the surviving or resulting corporation pursuant to
subsection (f) of this section and who has submitted his certificates of stock
to the Register in Chancery, if such is required, may participate fully in all
proceedings until it is finally determined that he is not entitled to
appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to
the stockholders entitled thereto. Interest may be simple or compound, as the
Court may direct. Payment shall be so made to each such stockholder, in the
case of holders of uncertificated stock forthwith, and the case of holders of
shares represented by certificates upon the surrender to the corporation of
the certificates representing such stock. The Court's decree may be enforced
as other decrees in the Court of
C-3
<PAGE>
Chancery may be enforced, whether such surviving or resulting corporation be a
corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded his appraisal rights as provided in subsection
(d) of this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation);
provided, however, that if no petition for an appraisal shall be filed within
the time provided in subsection (e) of this section, or if such stockholder
shall deliver to the surviving or resulting corporation a written withdrawal
of his demand for an appraisal and an acceptance of the merger or
consolidation, either within 60 days after the effective date of the merger or
consolidation as provided in subsection (e) of this section or thereafter with
the written approval of the corporation, then the right of such stockholder to
an appraisal shall cease. Notwithstanding the foregoing, no appraisal
proceeding in the Court of Chancery shall be dismissed as to any stockholder
without the approval of the Court, and such approval may be conditioned upon
such terms as the Court deems just.
(l) The shares of the surviving or resulting corporation to which the shares
of such objecting stockholders would have been converted had they assented to
the merger or consolidation shall have the status of authorized and unissued
shares of the surviving or resulting corporation.
C-4
<PAGE>
SPECIAL MEETING OF STOCKHOLDERS, JULY 2, 1997
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
[Tambrands Logo] OF TAMBRANDS INC.
P R O X Y
The undersigned hereby (a) appoints LILYAN H. AFFINITO, PAUL S. DOHERTY
and HOWARD B. WENTZ, JR., and each of them, the proxies of the undersigned,
with power of substitution to each, to vote all the shares of Common Stock
of Tambrands Inc. (the "Company") that the undersigned is entitled to vote
at the Special Meeting of Stockholders of the Company to be held at the
Company's corporate headquarters, 777 Westchester Avenue, White Plains, New
York, on July 2, 1997 at 9:30 a.m., and at any adjournment thereof (the
"Special Meeting"), on all matters coming before the Special Meeting as
indicated on the reverse side hereof, and (b) if applicable, instructs
Putnam Fiduciary Trust Company, as trustee (the "Trustee") of the Tambrands
Savings Plan (the "Plan"), (i) to vote, in the manner indicated in this
Proxy, all shares of Common Stock of the Company credited to the account of
the undersigned as of May 28, 1997 under the Plan which the Trustee is
entitled to vote at the Special Meeting, on all matters coming before the
Special Meeting as indicated on the reverse side hereof and (ii) to appoint
the foregoing proxies in accordance with clause (a) hereof to so vote such
shares.
PLEASE MARK, SIGN AND DATE THIS PROXY ON THE REVERSE
SIDE AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
(Continued on reverse side)
<PAGE>
[ X ] PLEASE MARK YOUR
VOTE AS IN THIS
EXAMPLE.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF CONTRARY INSTRUCTIONS ARE NOT INDICATED,
THIS PROXY WILL BE VOTED FOR THE PROPOSED APPROVAL AND ADOPTION OF THE
AGREEMENT AND PLAN OF MERGER, EXCEPT THAT ANY SHARES CREDITED TO THE ACCOUNT OF
THE UNDERSIGNED UNDER THE PLAN AS TO WHICH NO SPECIFIED INSTRUCTIONS ARE
INDICATED ON THIS PROXY WILL BE VOTED IN THE SAME PROPORTION AS ALL OTHER SHARES
HELD UNDER THE PLAN AS TO WHICH TIMELY INSTRUCTIONS HAVE BEEN RECEIVED ARE
VOTED.
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL AND ADOPTION OF THE
AGREEMENT AND PLAN OF MERGER.
- --------------------------------------------------------------------------------
1. Approval and adoption of the Agreement and Plan of Merger, dated as of April
8, 1997, by and among The Procter & Gamble Company, C.R. MacIntosh, Inc. and
the Company.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. In their discretion, the proxies are authorized to vote upon such other
matters as may properly come before the Special Meeting or any adjournment
thereof.
- --------------------------------------------------------------------------------
Do you plan to attend the [ ]
Special Meeting?
Please sign name(s) exactly as printed
hereon. Joint owners should each sign.
When signing as attorney, executor,
administrator, trustee or guardian, give
full title as such. If a corporation,
sign in full corporate name by President
or other authorized officer. If a
partnership, sign in partnership name by
authorized person.
----------------------------------------
----------------------------------------
SIGNATURE(S) DATE
PLEASE MARK, SIGN AND DATE THIS
PROXY AND RETURN IT PROMPTLY IN
THE ENCLOSED ENVELOPE.
- --------------------------------------------------------------------------------
<PAGE>
Exhibit 1
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders
Tambrands Inc.:
We have audited the accompanying consolidated balance sheets of Tambrands Inc.
and subsidiaries as of December 31, 1996 and 1995 and the related consolidated
statements of earnings and cash flows for each of the years in the three-year
period ended December 31, 1996. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Tambrands Inc. and
subsidiaries as of December 31, 1996 and 1995 and the results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 1996, in conformity with generally accepted accounting
principles.
/s/ KPMG Peat Marwick LLP
Stamford, Connecticut
January 23, 1997
1
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Tambrands Inc.:
Under date of January 23, 1997, we reported on the consolidated balance sheets
of Tambrands Inc. and subsidiaries as of December 31, 1996 and 1995, and the
related consolidated statements of earnings and cash flows for each of the years
in the three-year period ended December 31, 1996, as contained in the annual
report on Form 10-K for the year 1996. In connection with our audits of the
aforementioned consolidated financial statements, we also have audited the
related financial statement schedule as listed in Item 14(a)2 of the annual
report on Form 10-K for the year 1996. This financial statement schedule is the
responsibility of the Company's management. Our responsibility is to express an
opinion on this financial statement schedule based on our audits.
In our opinion, the financial statement schedule, when considered in relation to
the basic consolidated financial statements taken as a whole, presents fairly,
in all material respects, the information set forth therein.
KPMG Peat Marwick LLP
/s/ KPMG Peat Marwick LLP
Stamford, Connecticut
January 23, 1997
2
