STOCKHOLDER AGREEMENT
STOCKHOLDER AGREEMENT (this "AGREEMENT"), dated as of November 26, 1996, by
and among The Clorox Company, a Delaware corporation ("PURCHASER"), Shield
Acquisition Corporation, a Delaware corporation and a wholly owned subsidiary of
Purchaser ("SUB"), and McKesson Corporation, a Delaware corporation
("STOCKHOLDER").
WHEREAS, Stockholder is, as of the date hereof, the record and beneficial
owner of 11,624,900 shares of common stock, par value $0.01 per share (the
"COMMON STOCK") of Armor All Products Corporation, a Delaware corporation (the
"COMPANY"); and
WHEREAS, Purchaser, Sub and the Company concurrently herewith are entering
into an Agreement and Plan of Merger, dated as of the date hereof (the "MERGER
AGREEMENT"), which provides, among other things, for the acquisition of the
Company by Purchaser by means of a cash tender offer (the "OFFER") for any and
all of the outstanding shares of Common Stock and for the subsequent merger (the
"MERGER") of Sub with and into the Company upon the terms and subject to the
conditions set forth in the Merger Agreement; and
WHEREAS, Stockholder and the Company are parties to a Services Agreement
dated as of July 1, 1986 between the Company and Stockholder, as amended through
April 1, 1996 (the "SERVICES AGREEMENT"), under which Stockholder provides
certain corporate support, employee benefit and other services to the Company
and a Tax Allocation Agreement dated as of July 1, 1986 whereby, among other
things, Stockholder was permitted to file consolidated income tax returns in
which the Company was included for certain tax years of the Company (the "TAX
ALLOCATION AGREEMENT"); and
WHEREAS, certain employees of the Company are participants in Plans (as that
term is defined in the Merger Agreement) maintained by Stockholder for the
benefit of such employees and identified in the Merger Agreement (the
"STOCKHOLDER PLANS");
WHEREAS, as a condition to the willingness of Purchaser and Sub to enter
into the Merger Agreement, and in order to induce Purchaser and Sub to enter
into the Merger Agreement, Stockholder has agreed, to enter into this Agreement.
NOW, THEREFORE, in consideration of the execution and delivery by Purchaser
and Sub of the Merger Agreement and the foregoing and the mutual
representations, warranties, covenants and agreements set forth herein and
therein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
Section 1. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER. Stockholder
hereby represents and warrants to Purchaser and Sub as follows:
(a) Stockholder is the record and beneficial owner of 11,624,900 shares of
Common Stock (as may be adjusted from time to time pursuant to Section 6 hereof
the "SHARES"), of which 6,939,759 shares (the "EXCHANGE SHARES") are deposited
with The First National Bank of Chicago ("FNB"), as Exchange Agent, pursuant to
that certain Exchange Agent Agreement, dated as of March 14, 1994, between
Stockholder and FNB, as Exchange Agent (the "EXCHANGE AGENT AGREEMENT"), and
that certain Indenture, dated March 14, 1994, between Stockholder and FNB, as
Trustee (the "INDENTURE").
(b) Stockholder is a corporation duly organized, validly existing and in
good standing under the laws of Delaware, has all requisite corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby, and has taken all necessary corporate action
to authorize the execution, delivery and performance of this Agreement.
(c) This Agreement has been duly authorized, executed and delivered by
Stockholder and constitutes the legal, valid and binding obligation of
Stockholder, enforceable against Stockholder in accordance with its terms,
except (i) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other
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laws of general application affecting enforcement of creditors' rights
generally, and (ii) the availability of the remedy of specific performance or
injunctive or other forms of equitable relief may be subject to equitable
defenses and would be subject to the discretion of the court before which any
proceeding therefor may be brought.
(d) Neither the execution and delivery of this Agreement nor the
consummation by Stockholder of the transactions contemplated hereby will result
in a violation of, or a default under, or conflict with, any contract, trust,
commitment, agreement, understanding, arrangement or restriction of any kind to
which Stockholder is a party or bound or to which the Shares are subject. To the
best of Stockholder's knowledge, consummation by Stockholder of the transactions
contemplated hereby will not violate, or require any consent, approval, or
notice under, any provision of any judgment, order, decree, statute, law, rule
or regulation applicable to Stockholder or the Shares, except for any necessary
filing under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended (the "HSR ACT"), or state takeover laws.
(e) The Shares and the certificates representing Shares are now and at all
times during the term hereof will be held by Stockholder, or by a nominee or
custodian for the benefit of Stockholder, free and clear of all liens, claims,
security interests, proxies, voting trusts or agreements, understandings or
arrangements or any other encumbrances whatsoever, except for (i) the Exchange
Shares, which are subject to the terms and provisions of the Indenture and the
Exchange Agent Agreement providing for the exchange of Debentures (as defined in
the Indenture) for the Exchange Shares by the holders of Debentures upon the
circumstances and subject to the terms set forth therein, and (ii) any such
encumbrances or proxies arising hereunder.
(f) Except as set forth in the Company Disclosure Letter of the Merger
Agreement, the representations and warranties of the Company in Section 4.10 of
the Merger Agreement, to the extent that they relate to any Stockholder Plan,
are true and accurate as of the date of this Agreement.
Section 2. REPRESENTATIONS AND WARRANTIES OF PURCHASER AND SUB. Each of
Purchaser and Sub hereby, jointly and severally, represents and warrants to
Stockholder as follows:
(a) Each of Purchaser and Sub is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, has all requisite corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby,
and has taken all necessary corporate action to authorize the execution,
delivery and performance of this Agreement.
(b) This Agreement has been duly authorized, executed and delivered by each
of Purchaser and Sub and constitutes the legal, valid and binding obligation of
each of Purchaser and Sub, enforceable against each of them in accordance with
its terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors' rights generally and (ii) the availability of the
remedy of specific performance or injunctive or other forms of equitable relief
may be subject to equitable defenses and would be subject to the discretion of
the court before which any proceeding therefor may be brought.
(c) Neither the execution and delivery of this Agreement nor the
consummation by each of Purchaser and Sub of the transactions contemplated
hereby will result in a violation of, or a default under, or conflict with, any
contract, trust, commitment, agreement, understanding, arrangement or
restriction of any kind to which each of Purchaser and Sub is a party or bound.
To the best knowledge of each of Purchaser and Sub, consummation by each of
Purchaser and Sub of the transactions contemplated hereby will not violate, or
require any consent, approval, or notice under, any provision of any judgment,
order, decree, statute, law, rule or regulation applicable to each of Purchaser
and Sub except for any necessary filing under the HSR Act or state takeover
laws.
Section 3. PURCHASE AND SALE OF SHARES. Stockholder hereby agrees that it
shall, and direct the Exchange Agent pursuant to Section 15.8 of the Indenture
and pursuant to the Exchange Agent
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Agreement to, tender the Shares into the Offer and that it shall not, nor direct
the Exchange Agent to, withdraw any Shares so tendered. Sub hereby agrees to
purchase all the Shares so tendered at a price per Share equal to $19.09 or such
higher price per Share as may be offered by Sub in the Offer; PROVIDED that
Sub's obligation to accept for payment and pay for the Shares in the Offer is
subject to all the terms and conditions of the Offer set forth in the Merger
Agreement and Annex A thereto. Simultaneously with or prior to its tender of the
Shares into the Offer Stockholder shall deliver to Sub an affidavit stating,
under penalty of perjury, the Seller's U.S. taxpayer identification number and
that the Stockholder is not a foreign person, pursuant to Section 1445(b)(2) of
the Internal Revenue Code of 1986, as amended.
Section 4. TRANSFER OF SHARES. Prior to the termination of this Agreement,
except as otherwise provided herein and in the Indenture and the Exchange Agent
Agreement, Stockholder shall not: (i) transfer (which term shall include,
without limitation, for the purposes of this Agreement, any sale, gift, pledge
or other disposition), or consent to any transfer of, any or all of the Shares
or any interest therein; (ii) enter into any contract, option or other agreement
or understanding with respect to any transfer of any or all of the Shares or any
interest therein; (iii) grant any proxy, power-of-attorney or other
authorization or consent in or with respect to the Shares; (iv) deposit the
Shares into a voting trust or enter into a voting agreement or arrangement with
respect to the Shares; or (v) take any other action that would in any way
restrict, limit or interfere with the performance of its obligations hereunder
or the transactions contemplated hereby.
Section 5. GRANT OF IRREVOCABLE PROXY; APPOINTMENT OF PROXY.
(a) Stockholder hereby irrevocably grants to, and appoints, Purchaser and
any nominee thereof, Stockholder's proxy and attorney-in-fact (with full power
of substitution), for and in the name, place and stead of Stockholder, to vote
the Shares, or grant a consent or approval in respect of the Shares, in
connection with any meeting of the stockholders of the Company (i) in favor of
the Merger, and (ii) against any action or agreement which would impede,
interfere with or prevent the Merger, including any other extraordinary
corporate transaction, such as a merger, reorganization or liquidation involving
the Company and a third party or any other proposal of a third party to acquire
the Company.
(b) Stockholder represents that any proxies heretofore given in respect of
the Shares are not irrevocable, and that such proxies are hereby revoked.
(c) Stockholder hereby affirms that the irrevocable proxy set forth in this
Section 5 is given in connection with the execution of the Merger Agreement, and
that such irrevocable proxy is given to secure the performance of the duties of
Stockholder under this Agreement. Stockholder hereby further affirms that the
irrevocable proxy is coupled with an interest and, except as set forth in
Section 8 hereof, is intended to be irrevocable in accordance with the
provisions of Section 212(e) of the Delaware General Corporation Law (the
"DGCL").
Section 6. CERTAIN EVENTS. In the event of any stock split, stock
dividend, merger, reorganization, recapitalization or other change in the
capital structure of the Company affecting the Common Stock, or the acquisition
of additional shares of Common Stock or other securities or rights of the
Company by Stockholder, the number of Shares shall be adjusted appropriately,
and this Agreement and the obligations hereunder shall attach to any additional
shares of Common Stock or other securities or rights of the Company issued to or
acquired by Stockholder.
Section 7. FURTHER ASSURANCES. Stockholder shall, upon request of
Purchaser or Sub, execute and deliver any additional documents and take such
further actions as may reasonably be deemed by Purchaser or Sub to be necessary
or desirable to carry out the provisions hereof and to vest the power to vote
the Shares as contemplated by Section 5 hereof in Purchaser.
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Section 8. COVENANTS.
(a) At the Effective Time Sub shall transfer to Stockholder (i) $265,000 as
a contribution to the ESOP and PSIP plans maintained by Stockholder and (ii) an
additional amount not to exceed $130,000 reasonably determined by Stockholder in
accordance with past practice, representing a quarterly contribution to
Stockholder's Retirement Plan in respect of the 1996 plan year in full
satisfaction of all obligations of the Company to contribute to such Stockholder
Plans, which exclude all plans sponsored or maintained solely by the Company
(the "CONTRIBUTION OBLIGATION"). Stockholder shall cause an amount equal to such
contribution to be distributed to, or for the benefit of, employees of the
Company and the Subsidiaries in accordance with the provisions of such
Stockholder Plans.
(b) Stockholder shall pay all expenses for any medical, dental, disability
or life insurance claim incurred by or on behalf of any current or former
employee of the Company or the Subsidiaries prior to the Effective Time whether
or not such claim is submitted or paid prior to the Effective Time. Stockholder
will continue to provide benefits under its retiree medical plan to those
persons receiving benefits at the Effective Time.
(c) From and after the date hereof to the Effective Time, Stockholder shall
not, and shall not permit the Company to, make any elections, or change any
existing elections, with respect to Taxes (as that term is defined in the Merger
Agreement), without the prior written consent of Purchaser.
(d) From and after the date that Sub shall have purchased and paid for all
of the Shares of Stockholder pursuant to Section 3 hereof, Stockholder shall
make available to Purchaser any and all records and other materials in
Stockholder's possession or control that relate to any of the Company's filings
or returns relating to Taxes, Tax audits affecting the Company, or any other
records relating to Taxes of the Company or for which the Company may be
responsible.
(e) Stockholder shall continue to reimburse the Company for any foregone
federal tax deductions relating to state income or franchise taxes for any
period ending on or before the Effective Time during which the Company was part
of a California unitary tax filing with Stockholder or any Affiliate of
Stockholder.
(f) At or prior to the Effective Time, Stockholder shall enter into an
amendment to the Services Agreement pursuant to which Stockholder shall provide
to the Company consultation services with respect to legal, tax, personnel,
information systems, risk management and insurance matters relating to the
Company on terms and conditions no less favorable to the Company than provided
in the Services Agreement prior to such amendment for a period not to exceed six
months after the Effective Time; PROVIDED, HOWEVER, that such consultation
services shall be provided to the Company at an hourly rate of $135, and
expenses and third party costs incurred in providing such consultation services
shall be approved prior to such incurrence.
Section 9. INDEMNIFICATION. From and after the Closing Date, Stockholder
shall protect, defend, indemnify and hold harmless Purchaser and Company from
any claims, liabilities, costs or expenses arising out of (i) any breach or
inaccuracy of the representation set forth in Section 1(f) of this Agreement and
(ii) all Taxes (including without limitation any obligation to contribute to the
payment of any Taxes determined on a consolidated, combined or unitary basis
with respect to a group of corporations that includes or included the Company to
the extent that such obligation to contribute exceeds an amount attributable to
Taxes of or attributable to the Company or its Subsidiaries) which are imposed
on the Stockholder or any member (other than the Company or its Subsidiaries) of
the consolidated, unitary or combined group which includes or included the
Company or its Subsidiaries that Purchaser or the Company or its Subsidiaries
pay, or otherwise satisfy in whole or in part, or that result in liens or
encumbrances on any assets of the Company or its Subsidiaries or Purchaser.
Section 10. TERMINATION. This Agreement, and all rights and obligations of
the parties hereunder, shall terminate immediately upon the earlier of (a) the
date upon which the Merger Agreement is
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terminated in accordance with its terms (i) by either Purchaser and Sub, on the
one hand, or the Company, on the other hand, or (ii) by mutual written consent
of Purchaser, Sub and the Company, or (b) the date that Sub shall have purchased
and paid for all of the Shares of Stockholder pursuant to Section 3 hereof;
PROVIDED, HOWEVER, that (A) the indemnification obligation set forth in clauses
(i) and (ii) of Section 9 hereof shall survive for a period equal to (i) three
years following the Effective Time and (ii) the applicable statute of
limitations, respectively and (B) the covenants set forth in Section 8(a)
through (e) shall survive without limitation and the covenant set forth in
Section 8(f) shall survive for the period specified therein. The proxy given
pursuant to Section 5 hereof shall be automatically revoked and be of no further
force or effect, without further action on the part of any party hereto,
immediately upon the termination of this Agreement.
Section 11. EXPENSES. All fees and expenses incurred by any one party
hereto shall be borne by the party incurring such fees and expenses.
Section 12. PUBLIC ANNOUNCEMENTS. Each of Purchaser, Sub and the Company
agrees that it will not issue any press release or otherwise make any public
statement with respect to this Agreement or the transactions contemplated hereby
without the prior consent of the other party, which consent shall not be
unreasonably withheld or delayed; PROVIDED, HOWEVER, that such disclosure can be
made without obtaining such prior consent if (i) the disclosure is required by
law or by obligations imposed pursuant to any listing agreement with the Nasdaq
National Market and (ii) the party making such disclosure has first used its
best efforts to consult with the other party about the form and substance of
such disclosure.
Section 13. MISCELLANEOUS.
(a) Capitalized terms used and not otherwise defined in this Agreement shall
have the respective meanings assigned to such terms in the Merger Agreement.
(b) All notices and other communications hereunder shall be in writing and
shall be deemed given upon (i) transmitter's confirmation of a receipt of a
facsimile transmission, (ii) confirmed delivery by a standard overnight carrier
or when delivered by hand or (iii) the expiration of five business days after
the day when mailed in the United States by certified or registered mail,
postage prepaid, addressed at the following addresses (or at such other address
for a party as shall be specified by like notice):
(A) if to Stockholder, to:
McKesson Corporation
Xxx Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: General Counsel
with a copy to:
Skadden, Arps, Slate, Xxxxxxx
& Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxxx
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and
(B) if to Purchaser or Sub, to:
The Clorox Company
0000 Xxxxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: General Counsel
with a copy to:
Xxxxxxxx & Xxxxxxxx LLP
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxxxx
(c) The headings contained in this Agreement are for reference purposes only
and shall not affect in any way the meaning or interpretation of this Agreement.
(d) This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which shall be considered one and
the same agreement.
(e) This Agreement (including the Merger Agreement and any other documents
and instruments referred to herein) constitutes the entire agreement, and
supersedes all prior agreements and understandings, whether written and oral,
among the parties hereto with respect to the subject matter hereof.
(f) This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Delaware without giving effect to the principles of
conflicts of laws thereof.
(g) 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.
Subject to the preceding sentence, this Agreement will be binding upon, inure to
the benefit of and be enforceable by, the parties and their respective
successors and assigns, and the provisions of this Agreement are not intended to
confer upon any person other than the parties hereto any rights or remedies
hereunder.
(h) If any term, provision, covenant or restriction herein is held by a
court of competent jurisdiction or other authority to be invalid, void or
unenforceable or against its regulatory policy, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated.
(i) Each of the parties hereto acknowledges and agrees that in the event of
any breach of this Agreement, each non-breaching party would be irreparably and
immediately harmed and could not be made whole by monetary damages. It is
accordingly agreed that the parties hereto (i) will waive, in any action for
specific performance, the defense of adequacy of a remedy at law and (ii) shall
be entitled, in addition to any other remedy to which they may be entitled at
law or in equity, to compel specific performance of this Agreement in any action
instituted in any state or federal court sitting in Orange County. The parties
hereto consent to personal jurisdiction in any such action brought in any state
or federal court sitting in Orange County and to service of process upon it in
the manner set forth in Section 11(b) hereof.
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(j) No amendment, modification or waiver in respect of this Agreement shall
be effective against any party unless it shall be in writing and signed by such
party.
IN WITNESS WHEREOF, Purchaser, Sub and Stockholder have caused this
Agreement to be duly executed and delivered as of the date first written above.
THE CLOROX COMPANY
By /s/ XXXXXX X. CUTTER
------------------------------------
Name: Xxxxxx X. Cutter
Title: Senior Vice
President--General
Counsel and Secretary
SHIELD ACQUISITION CORPORATION
By /s/ XXXXXX X. CUTTER
------------------------------------
Name: Xxxxxx X. Cutter
Title: Vice President and Secretary
MCKESSON CORPORATION
By /s/ XXXXXXX X. XXXXXXXXX
------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Vice President Human
Resources and Administration
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