EXHIBIT 10.x
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AGREEMENT AND PLAN OF MERGER
by and among
SUNBEAM CORPORATION
SENTINEL ACQUISITION CORP.
and
FIRST ALERT, INC.
dated as of
February 28, 1998
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TABLE OF CONTENTS
ARTICLE I
THE OFFER AND MERGER
Section 1.1 The Offer..............................................1
Section 1.2 Company Actions........................................3
Section 1.3 SEC Documents..........................................4
Section 1.4 Directors..............................................5
Section 1.5 The Merger.............................................7
Section 1.6 Effective Time.........................................8
Section 1.7 Closing................................................8
Section 1.8 Stockholders' Meeting..................................8
ARTICLE II
CONVERSION OF SECURITIES
Section 2.1 Conversion of Capital Stock...........................10
Section 2.2 Exchange of Certificates..............................11
Section 2.3 Dissenters' Rights....................................12
Section 2.4 Transfer of Shares After the
Effective Time..........................13
Section 2.5 Company Stock Plans...................................13
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.1 Representations and Warranties of
the Company.............................14
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
PARENT AND THE PURCHASER
Section 4.1 Representations and Warranties of
Parent and the Purchaser................31
ARTICLE V
COVENANTS
Section 5.1 Interim Operations of the
Company.................................33
Section 5.2 Access; Confidentiality...............................38
Section 5.3 Reasonable Efforts; Notification......................38
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Section 5.4 No Solicitation.......................................40
Section 5.5 Publicity.............................................42
Section 5.6 Transfer Taxes........................................42
Section 5.7 State Takeover Laws...................................42
Section 5.8 Indemnification and Insurance.........................42
ARTICLE VI
CONDITIONS
Section 6.1 Conditions to Each Party's Obligation
to Effect the Merger....................45
ARTICLE VII
TERMINATION
Section 7.1 Termination...........................................46
Section 7.2 Effect of Termination.................................48
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Fees and Expenses.....................................48
Section 8.2 Amendment and Modification............................49
Section 8.3 Nonsurvival of Representations and
Warranties..............................49
Section 8.4 Notices...............................................50
Section 8.5 Interpretation........................................50
Section 8.6 Counterparts..........................................51
Section 8.7 Entire Agreement; No Third Party
Beneficiaries; Rights of Ownership......51
Section 8.8 Severability..........................................51
Section 8.9 Governing Law.........................................51
Section 8.10 Assignment...........................................51
SECTION 8.11 Enforcement..........................................52
SECTION 8.12 Extension; Waiver....................................52
SECTION 8.13 Procedure for Termination,
Amendment, Extension or Waiver..........52
SECTION 8.14 Certain Undertakings of Parent.......................53
SECTION 8.15 Company Disclosure Schedule..........................53
SECTION 8.16 Definitions..........................................53
Annex A Certain Conditions of the Offer
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of February 28, 1998,
by and among SUNBEAM CORPORATION, a Delaware corporation ("Parent"), SENTINEL
ACQUISITION CORP., a Delaware corporation and a wholly-owned Subsid iary of
Parent (the "Purchaser"), and FIRST ALERT, INC., a Delaware corporation (the
"Company").
WHEREAS, the respective Boards of Directors of Parent, the
Purchaser and the Company have unanimously determined that it is fair to and in
the best interests of their respective stockholders for Parent to acquire the
Company pursuant to a Merger (as defined below) in which Purchaser (or a
wholly-owned Subsidiary thereof) shall be merged with and into the Company upon
the terms and subject to the conditions set forth in this Agree ment;
WHEREAS, in furtherance thereof, Parent pro poses that the
Purchaser make an offer to purchase for cash the outstanding Shares (as defined
below) at a price of $5.25 per Share, net to the seller;
WHEREAS, concurrently with the execution and delivery of this
Agreement, certain stockholders of the Company have entered into a Stock Sale
Agreement (the "Stock Sale Agreement") with Parent pursuant to which, subject to
the terms and conditions specified therein, such stockholders are willing to pay
to Purchaser the proceeds upon the sale of certain Shares owned by such
stockholders after the date of this Agreement;
NOW, THEREFORE, in consideration of the forego ing and the
covenants and agreements set forth herein, the parties hereto agree as follows:
ARTICLE I
THE OFFER AND MERGER
Section 1.1 THE OFFER. Subject to this Agree ment not having
been terminated in accordance with the provisions of Section 7.1 hereof, as
promptly as practi cable (but in no event later than five business days after
the public announcement of the execution hereof), the Purchaser shall commence
(within the meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) a tender offer (the "Of fer") for all of the
outstanding shares of Common Stock, par value $.01 per share (the "Shares"), of
the Company at a price of $5.25 per Share, net to the seller in cash (such
price, or such higher price per Share as may be paid in the Offer, being
referred to herein as the "Offer Price"), subject to the conditions set forth in
Annex A hereto.
The obligations of the Purchaser to commence the Offer and to
accept for payment and to pay for any Shares validly tendered on or prior to the
expiration of the Offer and not withdrawn shall be subject only to the
conditions set forth in Annex A hereto. The Offer shall be made by means of an
offer to purchase (the "Offer to Purchase") containing the terms set forth in
this Agree ment and the conditions set forth in Annex A hereto.
The Purchaser shall not decrease the Offer Price or decrease
the number of Shares sought or amend any other condition of the Offer in any
manner adverse to the holders of the Shares (other than with respect to
insignificant changes or amendments and subject to the penultimate sentence of
this Section 1.1) or impose additional conditions without the written consent of
the Company, PROVIDED, HOWEVER, that if on the initial sched uled expiration
date of the Offer, which shall be 20 business days after the date the Offer is
commenced, all conditions to the Offer shall not have been satisfied or waived,
the Purchaser may, from time to time, in its sole discretion, extend the
expiration date PROVIDED, HOWEVER, that the expiration date of the Offer may not
be extended beyond June 1, 1998. In addition, the Offer Price may be increased,
and the Offer may be extended to the extent required by law in connection with
such increase in each case without the consent of the Company. The Purchaser
shall, on the terms and subject to the prior satisfaction or waiver of the
conditions of the Offer, accept for payment and pay for Shares validly tendered
as promptly as practicable; provided, however, that if, immediately prior to the
initial expiration date of the Offer, the Shares validly tendered and not
withdrawn pursuant to the Offer equal less than 90% of the outstanding Shares,
the Purchaser may extend the Offer for a period not to exceed ten business days,
notwithstanding that all conditions to the Offer are satisfied as of such
expiration date of the Offer. The Purchaser agrees that if all conditions set
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forth in Annex A are not satisfied on the initial expira tion date of the Offer,
the Purchaser shall extend (and re-extend) the Offer through April 30, 1998 to
provide time to satisfy such conditions.
Section 1.2 COMPANY ACTIONS.
(a) The Company hereby approves of and consents to the
Offer and represents that the Board of Directors, at a meeting duly called and
held, has (i) unanimously determined that each of the Agreement, the Offer and
the Merger (as defined in Section 1.5) are fair to and in the best interests of
the stockholders of the Company, (ii) unanimously approved the Stock Sale Agree
ment, the Offer, the acquisition of Shares pursuant to the Offer and the Merger
for purposes of Section 203 of the DGCL (the "Section 203 Approval"), (iii)
received the opinions of ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ and NationsBanc Montgom ery
Securities, financial advisors to the Company, to the effect that the Offer
Price to be received by holders of Shares pursuant to the Offer and the Merger
is fair to the stockholders of the Company from a financial point of view, (iv)
approved this Agreement and the transactions contemplated hereby, including the
Offer and the Merger (collectively, the "Transactions") and (v) resolved to
recommend that the stockholders of the Company accept the Offer, tender their
Shares thereunder to the Purchaser and approve and adopt this Agreement and the
Merger. The Company has been advised by each of its directors and by each
executive officer who as of the date hereof is actually aware (to the knowledge
of the Company) of the Transactions contemplated hereby that each such Person
either intends to tender pursuant to the Offer all Shares owned by such Person
or vote all Shares owned by such Person in favor of the Merger.
(b) In connection with the Offer, the Company will
promptly furnish or cause to be furnished to the Purchaser mailing labels,
security position listings and any available listing or computer file containing
the names and addresses of all holders of record of the Shares as of a recent
date, and shall furnish the Pur chaser with such additional information
(including, but not limited to, updated lists of holders of the Shares and their
addresses, mailing labels and lists of security positions) and assistance as the
Purchaser or its agents may reasonably request in communicating the Offer to the
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record and beneficial holders of the Shares. Subject to the requirements of
applicable Law, and except for such steps as are necessary to disseminate the
Offer Documents and any other documents necessary to consummate the Merger,
Purchaser and its affiliates and associates shall hold in confidence the
information contained in any such labels, listings and files, will use such
information only in connection with the Offer and the Merger, and, if this
Agreement shall be terminated, will deliver to the Company all copies of such
information in their posses sion.
Section 1.3 SEC DOCUMENTS.
(a) As soon as practicable on the date the Offer is
commenced, Parent and the Purchaser shall file with the United States Securities
and Exchange Commission (the "SEC") a Tender Offer Statement on Sched ule 14D-1
in accordance with the Exchange Act with re spect to the Offer (together with
all amendments and supplements thereto and including the exhibits thereto, the
"Schedule 14D-1" and the Schedule 14D-1 together with all amendments,
supplements and exhibits thereto, includ ing the Offer to Purchase, being
collectively the "Offer Documents"). Concurrently with the commencement of the
Offer, the Company shall file with the SEC a Solicita tion/Recommendation
Statement on Schedule 14D-9 in accor dance with the Exchange Act (together with
all amendments and supplements thereto and including the exhibits thereto, the
"Schedule 14D-9"), which shall, subject to the fiduciary duty of the Board under
applicable law, contain the recommendation referred to in clause (iv) of Section
1.2(a) hereof.
(b) Parent and the Purchaser will take all steps necessary
to ensure that the Offer Documents, and the Company will take all steps
necessary to ensure that the Schedule 14D-9, will comply in all material
respects with the provisions of applicable Federal and state securities Laws
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 Parent and
the Purchaser make no representa-
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tion with respect to information furnished by the Company for inclusion in the
Offer Documents and the Company makes no representation with respect to
information furnished by Parent or the Purchaser for inclusion in the Schedule
14D-9. The information supplied in writing by the Company for inclusion in the
Offer Documents and by Parent or the Purchaser for inclusion in the Schedule
14D-9 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 light of the circumstances under which they were
made, not misleading. Each of Parent and the Purchaser will take all steps
necessary to cause the Offer Documents, and the Company will take all steps
necessary to cause the Schedule 14D-9, to be filed with the SEC and to be
disseminated to holders of the Shares, in each case as and to the extent
required by applicable Federal and state securities Laws. Each of Parent and the
Purchaser, on the one hand, and the Company, on the other hand, will promptly
correct any information provided by it for use in the Offer Documents and the
Schedule 14D-9 if and to the extent that it shall have become false and
misleading in any material respect and the Purchaser will take all steps
necessary to cause the Offer Documents, and the Company will take all steps
necessary to cause the Schedule 14D-9, as so corrected to be filed with the SEC
and to be disseminated to holders of the Shares, in each case as and to the
extent required by applicable Federal and state securities Laws. Parent and its
counsel shall be given a reasonable opportunity to review and comment upon the
Schedule 14D-9 and all amendments and supplements thereto prior to their filing
with the SEC or dissemination to stockholders of the Company. The Company agrees
to provide in writing Parent and its counsel 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 and shall provide Parent and
its counsel an opportunity to participate, including by way of discussions with
the SEC or its staff, in the response of the Company to such comments.
Section 1.4 DIRECTORS.
(a) Promptly upon the purchase of and payment for any
Shares by Parent or any of its Subsidiaries pursuant to the Offer, Parent shall
be entitled to
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designate such number of directors, rounded up to the next whole number, on the
Board of Directors such that the percentage of its designees on the Board shall
equal the percentage of the outstanding Shares beneficially owned by Parent and
its affiliates. In furtherance thereof, the Company shall, upon request of the
Purchaser, use its best efforts promptly to cause Parent's designees to be so
elected to the Company's Board, and in furtherance thereof, to the extent
necessary, increase the size of the Board of Directors. At such time, the
Company shall also cause Persons designated by Parent to constitute at least the
same percentage (rounded up to the next whole number) as is on the Company's
Board of Directors of (i) each committee of the Company's Board of Directors,
and (ii) each committee (or similar body) of the Board of Directors.
Notwithstanding the provisions of this Section 1.4, the parties hereto shall use
their respective reasonable best efforts to ensure that at least two of the
members of the Board shall, at all times prior to the Effective Time (as defined
in Section 1.6 hereof) be, Continuing Directors (as defined below). For purposes
hereof, the term "Continuing Director" shall mean (i) any member of the Board as
of the date hereof, (ii) any member of the Board who is unaffiliated with, and
not a designee or nominee of Parent or Purchaser, or (iii) any successor of a
Continuing Director who is (A) unaffiliated with, and not a designee or nominee,
of Parent or Purchaser, and (B) recommended to succeed a Continuing Director by
a majority of the Continuing Directors then on the Board, and in each case under
clause (iii), who is not an employee of the Company. The Company shall promptly
take all actions required pursuant to Section 14(f) of the Exchange Act and Rule
14f-1 promulgated thereunder in order to fulfill its obligations under this
Section 1.4(a), including mailing to stockholders the information required by
such Section 14(f) and Rule 14f-1 (or, at Parent's request, furnishing such
information to Parent for inclusion in the Offer Documents initially filed with
the SEC and distributed to the stockholders of the Company) as is necessary to
enable Parent's designees to be elected to the Company's Board of Directors.
Parent or the Purchaser will supply the Company any information with respect to
either of them and their nominees, officers, directors and affiliates required
by such Section 14(f) and Rule 14f-1. The provisions of this Section 1.4(a) are
in addition to and shall not limit any rights which the Purchaser, Parent or
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any of their affiliates may have as a holder or beneficial owner of Shares as a
matter of law with respect to the election of directors or otherwise.
(b) From and after the time, if any, that Parent's
designees constitute a majority of the Company's Board of Directors, any
amendment or modification of this Agreement, any amendment to the Certificate of
Incorporation or Bylaws inconsistent with this Agreement, any termination of
this Agreement by the Company, any extension of time for performance of any of
the obligations of Parent or the Purchaser hereunder, any waiver of any
condition to the Company's obligations hereunder or any of the Company's rights
hereunder or other action by the Company hereunder may be effected only by the
action of a majority of the Continuing Directors of the Company, which action
shall be deemed to constitute the action of any committee specifically
designated by the Board of Directors to approve the actions and Transactions
contemplated hereby and the full Board of Directors.
Section 1.5 THE MERGER. Subject to the terms and conditions of
this Agreement, at the Effective Time (as defined in Section 1.6 hereof), the
Company and the Purchaser shall consummate a merger (the "Merger") pursuant to
which (a) the Purchaser (or a wholly-owned Subsidiary thereof) shall be merged
with and into the Company and the separate corporate existence of the Purchaser
(or a wholly-owned Subsidiary thereof) shall thereupon cease and (b) the Company
shall be the surviving corporation in the Merger (sometimes hereinafter referred
to as the "Surviving Corporation") and shall continue to be governed by the Laws
of the State of Delaware. In the event a wholly-owned Subsidiary of the
Purchaser rather than the Purchaser is merged with and into the Company in the
Merger, references herein to the Purchaser with respect to the Merger shall be
deemed to be references to such wholly-owned Subsidiary of the Purchaser.
Pursuant to the Merger, (x) the Restated Certificate of
Incorporation of the Company (the Certificate of Incorporation"), as in effect
immediately prior to the Effective Time, shall be the initial certificate of
incorporation of the Surviving Corporation and (y) the by-laws of the Company
(the "By-laws"), as in effect immediately prior to the Effective Time, shall be
the initial By-laws of the Surviving Corporation, each until
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thereafter changed or amended as provided therein or by applicable law. The
Merger shall have the effects specified in the Delaware General Corporation Law
(the "DGCL").
The directors and officers of the Purchaser at the Effective
Time shall be the initial directors and officers, respectively, of the Surviving
Corporation, in each case until their respective successors are duly elected and
qualified.
Section 1.6 EFFECTIVE TIME. Parent, the Purchaser and the
Company will cause a certificate of merger, or, if applicable, a certificate of
ownership and merger (as applicable, the "Certificate of Merger"), to be
executed and filed on the date of the Closing (as defined in Section 1.7) (or on
such other date as Parent and the Company may agree) with the Secretary of State
of Delaware (the "Secretary of State") as provided in the DGCL. The Merger shall
become effective on the date on which the Certificate of Merger has been duly
filed with the Secretary of State or such time as is agreed upon by the parties
and specified in the Certificate of Merger, and such time is hereinafter
referred to as the "Effective Time."
Section 1.7 CLOSING. The closing of the Merger (the "Closing")
shall take place at 10:00 a.m., local time, on a date to be specified by the
parties, which shall be no later than the second business day after satisfaction
or waiver of all of the conditions set forth in Article VI hereof and, in the
event that Purchaser determines to extend the Offer for up to ten business days
as provided for in Section 1.1 hereof, no later than the second business day
after the earlier of the completion of such ten business day period or 90% of
the outstanding Shares have been validly tendered and not withdrawn pursuant to
the Offer (the "Closing Date"), at the offices of Skadden, Arps, Slate, ▇▇▇▇▇▇▇
& ▇▇▇▇ LLP, New York, New York, unless another date or place is agreed to in
writing by the parties hereto.
Section 1.8 STOCKHOLDERS' MEETING.
(a) If required by applicable law in order to consummate
the Merger, the Company, acting
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through its Board of Directors, shall, in accordance with applicable law:
(i) duly call, give notice of, convene and hold a
special meeting of its stockholders (the "Special Meeting") as promptly
as practicable following the acceptance for payment and purchase of
Shares by the Purchaser pursuant to the Offer for the purpose of
considering and taking action upon the approval of the Merger and the
adoption of this Agreement;
(ii) prepare and file with the SEC a preliminary proxy
or information statement in accordance with the Exchange Act relating
to the Merger and this Agreement and use its best efforts (x) to obtain
and furnish the information required to be included by the Exchange Act
and the SEC in the Proxy Statement (as hereinafter defined) and, after
consultation with Parent, to respond promptly to any comments made by
the SEC with respect to the preliminary proxy or information statement
and cause a definitive proxy or information statement, including any
amendment or supplement thereto (the "Proxy Statement") to be mailed to
its stockholders, provided that no amendment or supplement to the Proxy
Statement will be made by the Company without consultation with Parent
and its counsel and (y) to obtain the necessary approvals of the Merger
and this Agreement by its stockholders; and
(iii) include in the Proxy Statement the
recommendation of the Board that stockholders of the Company vote in
favor of the approval of the Merger and the adoption of this Agreement.
(b) Parent shall vote, or cause to be voted, all of the
Shares then owned by it, the Purchaser or any of its other Subsidiaries and
affiliates in favor of the approval of the Merger and the adoption of this
Agreement.
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ARTICLE II
CONVERSION OF SECURITIES
Section 2.1 CONVERSION OF CAPITAL STOCK. As of the Effective
Time, by virtue of the Merger and without any action on the part of the holders
of any Shares or any shares of capital stock of the Purchaser:
(a) PURCHASER CAPITAL STOCK. Each issued and outstanding
share of capital stock of the Purchaser shall be converted into and become one
fully paid and nonassessable share of common stock of the Surviving Corporation.
(b) CANCELLATION OF TREASURY STOCK AND PURCHASER-OWNED
STOCK. All Shares that are owned by the Company or any Subsidiary of the Company
and any Shares owned by Parent, the Purchaser or any Subsidiary of Parent or the
Purchaser shall be cancelled and retired and shall cease to exist and no
consideration shall be delivered in exchange therefor.
(c) EXCHANGE OF SHARES. Each issued and outstanding Share
(other than Shares to be cancelled in accordance with Section 2.1(b) and any
Shares which are held by stockholders exercising appraisal rights pursuant to
Section 262 of the DGCL ("Dissenting Stockholders")) shall be converted into the
right to receive the Offer Price in cash, payable to the holder thereof, without
interest (the "Merger Consideration"), upon surrender of the certificate
formerly representing such Share in the manner provided in Section 2.2. All such
Shares, when so converted, shall no longer be outstanding and shall
automatically be cancelled and retired and shall cease to exist, and each holder
of a certificate representing any such Shares shall cease to have any rights
with respect thereto, except the right to receive the Merger Consideration
therefor upon the surrender of such certificate in accordance with Section 2.2,
without interest, or the right, if any, to receive payment from the Surviving
Corporation of the "fair value" of such Shares as determined in accordance with
Section 262 of the DGCL.
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Section 2.2 EXCHANGE OF CERTIFICATES.
(a) PAYING AGENT. Prior to the Effective Time, Parent
shall designate a bank or trust company to act as agent for the holders of the
Shares in connection with the Merger (the "Paying Agent") to receive the funds
to which holders of the Shares shall become entitled pursuant to Section 2.1(c).
Parent shall, from time to time, make available to the Paying Agent funds in
amounts and at times necessary for the payment of the Merger Consideration as
provided herein. All interest earned on such funds shall be paid to Parent.
(b) EXCHANGE PROCEDURES. As soon as reasonably practicable
after the Effective Time, the Paying Agent shall mail to each holder of record
of a certificate or certificates, which immediately prior to the Effective Time
represented outstanding Shares (the "Certificates"), whose Shares were converted
pursuant to Section 2.1 into the right to receive the Merger Consideration (i) a
letter of transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Paying Agent and shall be in such form and have such other
provisions as Parent and the Company may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for payment of the Merger Consideration. Upon surrender of a Certificate for
cancellation to the Paying Agent or to such other agent or agents as may be
appointed by Parent, together with such letter of transmittal, duly executed,
the holder of such Certificate shall be entitled to receive in exchange therefor
the Merger Consideration for each Share formerly represented by such Certificate
and the Certificate so surrendered shall forthwith be cancelled. If payment of
the Merger Consideration is to be made to a Person other than the Person in
whose name the surrendered Certificate is registered, it shall be a condition of
payment that the Certificate so surrendered shall be properly endorsed or shall
be otherwise in proper form for transfer and that the Person requesting such
payment shall have paid any transfer and other taxes required by reason of the
payment of the Merger Consideration to a Person other than the registered holder
of the Certificate surrendered or shall have established to the satisfaction of
the Surviving Corporation that such tax either has been paid
or is not appli-
11
cable. Until surrendered as contemplated by this Section 2.2, each Certificate
shall be deemed at any time after the Effective Time to represent only the right
to receive the Merger Consideration in cash as contemplated by this Section 2.2.
The right of any stockholder to receive the Merger Consideration shall be
subject to and reduced by any applicable withholding obligation.
(c) TRANSFER BOOKS; NO FURTHER OWNERSHIP RIGHTS IN THE
SHARES. At the Effective Time, the stock transfer books of the Company shall be
closed and thereafter there shall be no further registration of transfers of the
Shares on the records of the Company. From and after the Effective Time, the
holders of Certificates evidencing ownership of the Shares outstanding
immediately prior to the Effective Time shall cease to have any rights with
respect to such Shares, except as otherwise provided for herein or by applicable
law. If, after the Effective Time, Certificates are presented to the Surviving
Corporation for any reason, they shall be cancelled and exchanged as provided in
this Article II.
(d) TERMINATION OF FUND; NO LIABILITY. At any time
following six months after the Effective Time, the Surviving Corporation shall
be entitled to require the Paying Agent to deliver to it any funds (including
any interest received with respect thereto) which had been made available to the
Paying Agent and which have not been disbursed to holders of Certificates, and
thereafter such holders shall be entitled to look to the Surviving Corporation
(subject to abandoned property, escheat or other similar Laws) only as general
creditors thereof with respect to the Merger Consideration payable upon due
surrender of their Certificates, without any interest thereon. Notwithstanding
the foregoing, none of Parent, the Surviving Corporation or the Paying Agent
shall be liable to any holder of a Certificate for Merger Consideration
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law.
Section 2.3 DISSENTERS' RIGHTS. Notwithstanding anything in
this Agreement to the contrary, if any Dissenting Stockholder shall demand to be
paid the "fair value" of such holder's Shares, as provided in Section 262 of the
DGCL, such Shares shall not be converted into or be exchangeable for the right
to receive the Merger
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Consideration except as provided in this Section 2.3 and the Company shall give
the Parent notice thereof and the Parent shall have the right to participate in
all negotiations and proceedings with respect to any such demands. Neither the
Company nor the Surviving Corporation shall, except with the prior written
consent of the Parent, voluntarily make any payment with respect to, or settle
or offer to settle, any such demand for payment. If any Dissenting Stockholder
shall fail to perfect or shall have effectively withdrawn or lost the right to
dissent, the Shares held by such Dissenting Stockholder shall thereupon be
treated as though such Shares had been converted into the Merger Consideration
pursuant to Section 2.1.
Section 2.4 TRANSFER OF SHARES AFTER THE EFFECTIVE TIME. No
transfer of Shares shall be made on the stock transfer books of the Surviving
Corporation at or after the Effective Time.
Section 2.5 COMPANY STOCK PLANS. Immediately prior to the
Effective Time, each then outstanding option to purchase shares (in each case,
an Option), whether or not then exercisable, shall be cancelled by the Company
and in consideration of such cancellation and except to the extent that Parent
or the Purchaser and the holder of any such Option otherwise agree, the Company
(or, at Parent's option, the Purchaser) shall pay to such holders of Options an
amount in respect thereof equal to the product of (A) the excess, if any, of the
Offer Price over the exercise price of each such Option and (B) the number of
Shares previously subject to the Option immediately prior to its cancellation
(such payment to be net of withholding taxes and without interest). If required,
the Company shall cause the Company's employees and directors to consent to the
transactions contemplated by this Section 2.5, no later than the Effective Time.
(b) All stock option or other equity based plans
maintained with respect to the Shares ("Option Plans") shall terminate as of the
Effective Time and the provisions in any other Benefit Plan providing for the
issuance, transfer or grant of any capital stock
of the Company or any interest in respect of any capital stock of the Company
shall be deleted as of the Effective Time, and the Company shall use its best
efforts to ensure that following the Effective Time no holder of an
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Option or any participant in any Option Plan shall have any right thereunder to
acquire any capital stock of the Company, Parent or the Surviving Corporation.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company represents and warrants to Parent and the Purchaser as follows:
(a) ORGANIZATION, STANDING AND CORPORATE POWER. Each of
the Company and each of its Subsidiaries is a corporation duly organized,
validly existing and in good standing under the Laws of the jurisdiction in
which it is organized and has the requisite corporate power and authority to
carry on its business as now being conducted. Each of the Company and its
Subsidiaries is duly qualified as a foreign corporation or licensed to do
business and is in good standing in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such qualification
or licensing necessary, other than in such jurisdictions where the failure to be
so qualified or licensed (individually or in the aggregate) would not have a
Material Adverse Effect on the Company. The Company has made available to Parent
complete and correct copies of the Certificate of Incorporation of the Company
and By-laws of the Company, in each case as amended to the date of this
Agreement, and has delivered the certificates of incorporation and by-laws or
other organizational documents of its Subsidiaries, in each case as amended to
the date of this Agreement, other than Subsidiaries which are incorporated in a
jurisdiction other than a State of the United States. The respective
certificates of incorporation and by-laws or other organizational documents of
the Subsidiaries of the Company do not contain any provision limiting or
otherwise restricting the ability of the Company to control such Subsidiaries.
(b) SUBSIDIARIES. The list of Subsidiaries of the Company
filed by the Company with its
most recent Report on Form 10-K is a true and accurate list of all the
Subsidiaries of the Company which are required to be set forth therein. All the
outstanding shares of capital stock of each Subsidiary are owned by the Company
14
or by another wholly owned Subsidiary of the Company, free and clear of all
Liens, except as set forth in Schedule 3.1(b) of the Company Disclosure
Schedule. There are no other companies in which the Company has a direct or
indirect ownership interest.
(c) CAPITAL STRUCTURE. The authorized capital stock of the
Company consists of 30,000,000 Shares and 1,000,000 shares of preferred stock,
par value $.01 per share (the Preferred Shares"). As of the date hereof, (i)
24,335,112 Shares and no Preferred Shares were issued and outstanding and (ii)
1,929,698 shares were reserved for issuance upon exercise of outstanding
Options. Except as set forth above, as of the date of this Agreement: (i) no
shares of capital stock or other voting securities of the Company are issued,
reserved for issuance or outstanding; (ii) there were no stock appreciation
rights, restricted stock grant or contingent stock grants and there are no other
outstanding contractual rights to which the Company is a party the value of
which is based on the value of Shares; (iii) all outstanding shares of capital
stock of the Company are, and all shares which may be issued will be, when
issued, duly authorized, validly issued, fully paid and nonassessable and not
subject to preemptive rights; and (iv) there are no bonds, debentures, notes or
other indebtedness of the Company having the right to vote (or convertible into,
or exchangeable for, securities having the right to vote) on any matters on
which stockholders of the Company may vote. Except as set forth above, as of the
date of this Agreement, there are no outstanding securities, options, warrants,
calls, rights, commitments, agreements, arrangements or undertakings of any kind
to which the Company or any of its Subsidiaries is a party or by which any of
them is bound obligating the Company or any of its Subsidiaries to issue,
deliver or sell, or cause to be issued, delivered or sold, additional shares of
capital stock or other voting securities of the Company or of any of its
Subsidiaries or obligating the Company or any of its Subsidiaries to issue,
grant, extend or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking. There are not any outstanding
contractual obligations of the Company or any of its Subsidiaries to repurchase,
redeem or otherwise acquire any shares of capital stock of the Company or any of
its Subsidiaries.
15
(d) AUTHORITY; NONCONTRAVENTION; COMPANY ACTION. The
Company has the requisite corporate power and authority to enter into this
Agreement and, subject to approval of this Agreement by the holders of a
majority of the outstanding Shares, to consummate the Merger contemplated by
this Agreement. The execution and delivery of this Agreement by the Company and
the consummation by the Company of the Transactions contemplated by this
Agreement have been duly authorized by all necessary corporate action on the
part of the Company, subject, in the case of the Merger, to approval of this
Agreement by the holders of a majority of the outstanding Shares. This Agreement
has been duly executed and delivered by the Company and, assuming this Agreement
constitutes the valid and binding obligation of Parent and the Purchaser,
constitutes the valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms, except that (i) such enforcement may
be subject to bankruptcy, insolvency, reorganization, moratorium or other
similar Laws now or hereafter in effect relating to creditors' rights generally
and (ii) the remedy of specific performance and injunctive relief may be subject
to equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought. Except as set forth in Schedule 3.1(d) of
the Company Disclosure Schedule, the execution and delivery of this Agreement do
not, and the consummation of the Transactions contemplated by this Agreement
(including the changes in the composition of the Board of Directors of the
Company) and compliance with the provisions of this Agreement will not, conflict
with, or result in any violation of, or default (with or without notice or lapse
of time, or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a material benefit under, or result
in the creation of any lien or other encumbrance upon any of the properties or
assets of the Company or any of its Subsidiaries under, (i) the Certificate of
Incorporation, as amended, or By-laws of the Company or the comparable charter
or organizational documents of any of its Subsidiaries, (ii) any loan or credit
agreement note, bond, mortgage, indenture, lease or other agreement, instrument,
permit, concession, franchise or license applicable to the Company or any of its
Subsidiaries or their respective properties or assets (including all agreements
described pursuant to Section 3.1(t)) or (iii) any judgment, order, decree,
statute, law, ordinance, rule or
16
regulation applicable to the Company or any of its Subsidiaries or their
respective properties or assets, other than, in the case of clauses (ii) or
(iii), any such conflicts, violations, defaults, rights or Liens that
individually or in the aggregate would not (x) impair in any material respect
the ability of the Company to perform its obligations under this Agreement, (y)
prevent or impede, in any material respect, the consummation of any of the
Transactions contemplated by this Agreement or (z) impair, prevent or impede
materially the conduct of the Company's business substantially as now conducted.
No consent, approval, order or authorization of, or registration, declaration or
filing with, any Federal, state or local government or any court, administrative
or regulatory agency or commission or other governmental authority or agency,
domestic or foreign (a "Governmental Entity") or any other party, is required by
the Company or any of its Subsidiaries in connection with the execution and
delivery of this Agreement by the Company or the consummation by the Company of
the Transactions contemplated by this Agreement, except for (i) if required, the
filing of a premerger notification and report form by the Company under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (ii) the filing with the SEC of (x) the Schedule 14D-9, (y) a Proxy
Statement and (z) such reports under Section 13(a) of the Exchange Act as may be
required in connection with this Agreement and the Transactions contemplated by
this Agreement, (iii) the filing of the Certificate of Merger with the Secretary
of State and appropriate documents with the relevant authorities of other states
in which the Company is qualified to do business, (iv) as may be required by any
applicable state securities or "blue sky" Laws, and (v) such other consents,
approvals, orders, authorizations, registrations, declarations and filings the
failure of which to be obtained or made would not, individually or in the
aggregate, (x) impair, in any material respect, the ability of the Company to
perform its obligations under this Agreement, (y) prevent or significantly delay
the consummation of the Transactions contemplated by this Agreement or (z)
impair, prevent or impede materially the conduct of the Company's business
substantially as now conducted.
(e) SEC DOCUMENTS; FINANCIAL STATEMENTS. The Company has
filed all reports, proxy statements, forms, and other documents required to be
filed with the
17
SEC under the Securities Act and the Exchange Act since December 31, 1995 (the
"SEC Documents"). As of their respective dates, (i) the SEC Documents complied
in all material respects with the requirements of the Securities Act of 1933
(the "Securities Act"), or the Exchange Act, as the case may be, and the rules
and regulations of the SEC promulgated thereunder applicable to such SEC
Documents, and (ii) none of the SEC Documents contained any untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC Documents are true and complete
and comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods involved (except as
may be indicated in the notes thereto) and fairly present the consolidated
financial position of the Company and its consolidated Subsidiaries as of the
dates thereof and the consolidated results of their operations and cash flows
for the periods then ended (subject, in the case of unaudited statements, to
normal year-end audit adjustments). Except as set forth in Schedule 3.1(e) of
the Company Disclosure Schedule and except as set forth in the SEC Documents
filed and publicly available prior to the date of this Agreement, and except for
liabilities and obligations incurred in the ordinary course of business
consistent with past practice since the date of the most recent consolidated
balance sheet included in the SEC Documents filed and publicly available prior
to the date of this Agreement, neither the Company nor any of its Subsidiaries
has any liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) required by generally accepted accounting principles to
be set forth on a consolidated balance sheet of the Company and its consolidated
Subsidiaries or in the notes thereto.
(f) INFORMATION SUPPLIED. None of the information supplied
or to be supplied by the Company expressly for inclusion or incorporation by
reference in (i) the Offer Documents or (ii) the Proxy Statement, will, and in
the case of the Offer Documents, at the time the Offer Documents are filed with
the SEC and first
18
published, sent or given to the Company's stockholders, or, in the case of the
Proxy Statement, on the date the Proxy Statement is first mailed to the
Company's stockholders and at the time of the meeting of the Company's
stockholders held to vote on approval and adoption of this Agreement, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not false or
misleading. The Proxy Statement will comply as to form in all material respects
with the Exchange Act and the rules and regulations thereunder, except that no
representation or warranty is made by the Company with respect to statements
made or incorporated by reference therein based on information supplied by
Parent or the Purchaser for inclusion or incorporation by reference therein.
(g) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set
forth in SEC Documents or Schedule 3.1(g) of the Company Disclosure Schedule,
since September 28, 1997, the Company and its Subsidiaries have conducted their
respective businesses only in the ordinary course, and (i) there has not been
any Material Adverse Change in the Company and (ii) neither the Company nor any
of its Subsidiaries has taken any of the actions contemplated by Section 5.1.
(h) LITIGATION. Except as set forth in SEC documents or
Schedules 3.1(h) and 3.1(x) of the Company Disclosure Schedule or to the extent
reserved for as reflected on the Company's financial statements for the year
ended December 31, 1996, there are (i) no suits, actions or proceedings pending
or, to the knowledge of the Company, threatened against the Company or any of
its Subsidiaries that, individually or in the aggregate, would reasonably be
expected to have a Material Adverse
Effect, (ii) no complaints, lawsuits, charges or other proceedings pending or,
to the knowledge of the Company, threatened in any forum by or on behalf of any
present or former employee of the Company or any of its Subsidiaries, any
applicant for employment or classes of the foregoing alleging breach of any
express or implied contract of employment, any law or regulation governing
employment or the termination thereof or other discriminatory, wrongful or
tortious conduct in connection with the employment relationship that,
individually or in the
19
aggregate, would reasonably be expected to have a Material Adverse Effect, (iii)
no judgments, decrees, injunctions or orders of any Governmental Entity or
arbitrator outstanding against the Company that, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect on the
Company; and (iv) none of the Intellectual Property is subject to any order,
writ, judgment, injunction, decree, determination or award that has, or would
reasonably be expected to have a Material Adverse Effect on the Company.
(i) ABSENCE OF CHANGES IN BENEFIT PLANS; SEC DISCLOSURE.
Except as disclosed in Schedule 3.1(i) of the Company Disclosure Schedule, there
has not been any adoption or amendment by the Company or any of its Subsidiaries
or any ERISA Affiliate (as defined in Section 3.1(j) hereof) of any Benefit Plan
(as defined in Section 3.1(j) hereof) since September 28, 1997. Except as
disclosed in Schedule 3.1(i) of the Company Disclosure Schedule, neither the
Company nor any of its Subsidiaries has any formal plan or commitment to create
any additional Benefit Plan or modify or change any existing Benefit Plan that
would affect any employee or terminated employee of the Company or a Subsidiary
of the Company. All employment, consulting, severance, termination, change in
control or indemnification agreements, arrangements or understandings between
the Company or any of its Subsidiaries and any current or former officer or
director of the Company or any of its Subsidiaries which are required to be
disclosed in the SEC Documents have been disclosed therein.
(j) EMPLOYEE BENEFITS; ERISA. Schedule 3.1(j) of the
Company Disclosure Schedule contains a true and complete list of each material
bonus, deferred compensation, incentive compensation, stock
purchase, stock option, severance or termination pay, health insurance,
supplemental unemployment benefits, profit-sharing, pension, or retirement plan,
program, agreement or arrangement, and each other employee benefit plan,
program, agreement or arrangement, other than a non-material fringe benefit
plan, sponsored, maintained or contributed to or required to be contributed to
(at any time during the past six years) by the Company or any of its
Subsidiaries or by any trade or business, whether or not incorporated (an "ERISA
Affiliate"), that is a member of a "controlled group" within the meaning of
20
section 4001 of the Employee Retirement Income Security Act of 1974, as amended,
and the rules and regulations promulgated thereunder ("ERISA") of which the
Company or a Subsidiary is a member or which is under "common control" within
the meaning of Section 4001 of ERISA, with the Company or a Subsidiary, for the
benefit of any employee or terminated employee of the Company, its Subsidiaries
or any ERISA Affiliate, whether formal or informal (the "Benefit Plans").
(ii) With respect to each Benefit Plan, the Company has
delivered a true and complete copy thereof (including all amendments thereto),
as well as true and complete copies of the two most recent annual reports, if
required under ERISA, with respect thereto; the two most recent actuarial
reports, if required under ERISA, with respect thereto; the two most recent
reports prepared with respect thereto in accordance with Statement of Financial
Accounting Standards No. 87, Employer's Accounting for Pensions; the most recent
Summary Plan Description, together with each Summary of Material Modifications,
if required under ERISA with respect thereto; if the Benefit Plan is funded
through a trust or any third party funding vehicle, the trust or other funding
agreement (including all amendments thereto) and the latest financial statements
thereof; and the most recent determination letter received from the Internal
Revenue Service with respect to each Benefit Plan that is intended to be
qualified under section 401 of the Internal Revenue Code of 1986, as from time
to time amended (the "Code").
(iii) No liability to the Pension Benefit Guaranty
Corporation ("PBGC") under Title IV of ERISA has been incurred by the Company,
its Subsidiaries or any ERISA Affiliate since the effective date of ERISA that
has not been satisfied in full, and no condition exists that presents a material
risk to the Company, its Subsidiaries or any ERISA Affiliate of incurring a
liability under such Title, other than liability for premiums due the PBGC
(which premiums have been paid when due). Each Benefit Plan has been operated
and administered in all material respects in accordance with its terms and
applicable law, including but not limited to ERISA and the Code.
21
(iv) The PBGC has not instituted proceedings to terminate
any Benefit Plan and no condition exists that presents a material risk that such
proceedings will be instituted.
(v) With respect to each Benefit Plan that is subject to
Section 302 of the Code or Title IV of ERISA, the present value of accrued
benefits under such plan, based upon the actuarial assumptions used for funding
purposes in the most recent actuarial report prepared by such plan's actuary
with respect to such plan did not exceed, as of its latest valuation date, the
then current value of the assets of such plan allocable to such accrued
benefits.
(vi) Neither the Company, nor any Subsidiary of the
Company, nor any trust created thereunder, nor any trustee or administrator
thereof has engaged in a transaction in connection with which the Company or any
Subsidiary of the Company, any such trust, or any trustee or administrator
thereof, or any party dealing with any Benefit Plan or any such trust could be
subject to either a civil penalty assessed pursuant to section 409 or 502(i) of
ERISA or a tax imposed pursuant to section 4975 or 4976 of the Code.
(vii) No Benefit Plan is a "multiemployer pension plan,"
as such term is defined in section 3(37) of ERISA.
(viii) Each Benefit Plan which is intended to be
"qualified" within the meaning of section 401(a) of the Code is so qualified and
the trusts maintained thereunder are exempt from taxation under section 501(a)
of the Code and, to the knowledge of the Company, no event has occurred to cause
the loss of such qualified or exempt status.
(ix) No Benefit Plan provides health, death or medical
benefits (whether or not insured) with respect to current or former employees of
the Company or its Subsidiaries beyond their retirement or other termination of
service (other than (a) coverage mandated by applicable law or (b) benefits the
full cost of which is borne by the current or former employee (or his
beneficiary).
22
(x) Except as set forth in Section 3.1(j) of the Company
Disclosure Schedule, the consummation of the Transactions contemplated by this
Agreement, alone, will not (a) entitle any current or former employee or officer
of the Company or any Subsidiary to severance pay, unemployment compensation or
any other payment, (b) accelerate the time of payment or vesting, or increase
the amount of compensation due any such employee or officer, (c) result in any
prohibited transaction described in section 406 of ERISA or section 4975 of the
Code for which an exemption is not available, or (d) require the Company or any
ERISA Affiliate to fund or make any payments to any trust or other funding
vehicle in respect of any Benefit Plan.
(xi) There are no pending, threatened or, to the knowledge
of the Company, anticipated claims by or on behalf of any Benefit Plan, by any
employee or beneficiary covered under any such Benefit Plan, or otherwise
involving any such Benefit Plan (other than routine claims for benefits).
(xii) No Benefit Plan of the Company or its Subsidiaries
or other arrangement authorizes grants of either stock appreciation rights or
restricted stock of the Company and there are no outstanding stock appreciation
rights or restricted stock of the Company.
(xiii) Except as set forth in Schedule 3.1(j) of the
Company Disclosure Schedule, no material Benefit Plan is not subject to ERISA
pursuant to Section 4(b)(4) of ERISA.
(k) TAXES. Each of the Company and each of its
Subsidiaries has timely filed (or has had timely filed on its behalf) all Tax
Returns required to be filed by it, and all such Tax Returns are true, complete
and correct in all material respects. Each of the Company and each of its
Subsidiaries has paid (or has had paid on its behalf) all Taxes (whether or not
shown as due on such Tax Returns), or the most recent financial statements
contained in the SEC Documents reflect adequate reserves in accordance with
generally accepted accounting principles for all Taxes not yet paid.
(ii) Except as set forth in Schedule 3.1(k) of the Company
Disclosure Schedule, (A) no defi-
23
ciencies for any Taxes have been threatened, proposed, asserted or assessed
against the Company or any of its Subsidiaries, (B) no governmental authority is
conducting an audit with respect to Taxes or any Tax Return of the Company or
any of its Subsidiaries, (C) no extension or waiver of the statute of
limitations with respect to Taxes or any Tax Return has been granted by the
Company or any of its Subsidiaries, which remains in effect, (D) none of the
Company or any of its Subsidiaries is a party to any arrangement to allocate,
share or indemnify another party for Taxes, and (E) there are no liens for
material Taxes upon the assets of the Company or any of its Subsidiaries, except
for liens for Taxes not yet due.
(iii) As used in this Agreement, "Taxes" shall include (A)
any Federal, state, local or foreign net income, gross income, receipts,
windfall profit, severance, property, production, sales, use, license, excise,
franchise, employment, payroll, withholding, alternative or add-on minimum, ad
valorem, transfer, stamp or environmental 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, addition to tax or additional amount
imposed by any governmental authority, and (B) any liability for the payment of
amounts with respect to payments of a type described in clause (A) as a result
of being a member of an affiliated, consolidated, combined or unitary group, or
as a result of any obligation under a Tax sharing arrangement or a Tax indemnity
arrangement. As used in this Agreement, "Tax Returns" shall mean all returns,
reports, or statements required to be filed with respect to any Tax (including
any attachments thereto), including, without limitation, any information return,
claim for refund, amended return or declaration of estimated Tax.
(l) NO EXCESS PARACHUTE PAYMENTS. Except as set forth in
Section 3.1(l) of the Company Disclosure Schedule, no amounts payable as a
result of the Transactions contemplated by this Agreement under the Benefit
Plans or any other plans or arrangements will constitute a "parachute payment"
to a "disqualified individual" as those terms are defined in section 280G of the
Code, without regard to whether such payment is reasonable
24
compensation for personal services performed or to be performed in the future.
(m) COMPLIANCE WITH APPLICABLE LAWS. Except as set forth
in Schedule 3.1(m) of the Company Disclosure Schedule, to the knowledge of the
Company, the Company and each of its Subsidiaries have complied and are
presently complying in all material respects with all applicable laws (whether
statutory or otherwise), rules, regulations, orders, ordinances, judgments or
decrees of all governmental authorities (Federal, state, local or otherwise)
(collectively, "Laws"), including, but not limited to, the Federal Occupational
Safety and Health Act, the Federal Consumer Product Safety Act, the rules and
regulations of the Nuclear Regulatory Commission, and all Laws relating to the
safe conduct of business and environmental protection and conservation, the
Civil Rights Act of 1964 and Executive Order 11246 concerning equal employment
opportunity obligations of Federal contractors and any applicable health,
sanitation, fire, safety, labor, zoning and building Laws and ordinances, and
neither the Company nor any of its Subsidiaries has received notification of any
asserted present or past failure to so comply, except such non-compliance that
has not and will not prevent the Company from carrying on its business
substantially as now conducted or might reasonably be expected to result in a
Material Adverse Effect.
(ii) Each of the Company and its Subsidiaries has in
effect all material Federal, state, local and foreign governmental approvals,
authorizations, certificates, filings, franchises, licenses, notices, permits
and rights, including all authorizations under Environmental Laws ("Permits"),
necessary for it to own, lease or operate its properties and assets and to carry
on its business substantially as now conducted, there are no appeals nor any
other actions pending to revoke any such Permits, and there has occurred no
material default or violation under any such Permits.
(iii) To the knowledge of the Company, each of the Company
and its Subsidiaries is, and has been, and each of the Company's former
Subsidiaries, while a Subsidiary of the Company, was in compliance in all
material respects with all applicable Environmental Laws, except such
non-compliance that has not and will
25
not prevent the Company from carrying on its business substantially as now
conducted or might reasonably be expected to result in a Material Adverse
Effect. To the knowledge of the Company, as of the date of this Agreement, there
are no circumstances or conditions that would be reasonably likely to prevent or
interfere with compliance by the Company or its Subsidiaries in the future with
Environmental Laws (or Permits issued thereunder) in effect as of the date of
this Agreement, except such circumstances or conditions that have not and will
not prevent the Company from carrying on its business substantially as now
conducted or might reasonably be expected to result in a Material Adverse
Effect.
(iv) Except as set forth on Schedule 3.1(m)(iv) of the
Company Disclosure Schedule, neither the Company nor any Subsidiary of the
Company has received any written claim, demand, notice, complaint, court order,
administrative order or request for information from any Governmental Entity or
private party, alleging violation of, or asserting any noncompliance with or
liability under or potential liability under, any Environmental Laws, except for
matters which are no longer threatened or pending and for which the Company or
its Subsidiaries are not subject to further requirements pursuant to an
administrative or court order, judgment, or a settlement agreement.
(v) To the knowledge of the Company, during the period of
ownership or operation by the Company and its Subsidiaries of any of their
respective current or previously owned or leased properties, there have been no
Releases of Hazardous Material in, on, under or affecting such properties and
none of the Company or its Subsidiaries have disposed of any Hazardous Material
or any other substance in a manner that has led, or could reasonably be
anticipated to lead to a Release except in each case for those which
individually or in the aggregate are not reasonably likely to have a Material
Adverse Effect. Prior to the period of ownership or operation by the Company and
its Subsidiaries of any of their respective current or previously owned or
leased properties, to the knowledge of the Company, no Hazardous Material was
generated, treated, stored, disposed of, used, handled or manufactured at, or
transported shipped or disposed of from, such current or previously owned or
leased properties, and there were no Releases of Hazardous Material
26
in, on, under or affecting any such property, except in each case for those
which individually or in the aggregate would not be reasonably likely to have a
Material Adverse Effect.
(vi) Except for leases entered into in the ordinary course
of business, as to which no notice of a claim for indemnity or reimbursement has
been received by the Company, and except as set forth on Schedule 3.1(m)(vii) of
the Company Disclosure Schedule, to the knowledge of the Company, neither the
Company nor any of its Subsidiaries has entered into any agreement that may
require it to pay to, reimburse, guarantee, pledge, defend, indemnify, or hold
harmless any Person for or against any Environmental Liabilities and Costs.
(vii) Neither the Company nor any of its Subsidiaries has
treated, stored or disposed of "hazardous waste", as that term is defined in the
Resource Conservation and Recovery Act, 42 U.S.C. ss. 6901 ET SEQ., analogous
state Laws, or the regulations promulgated thereunder, such that the Company or
any of its Subsidiaries would be required to obtain a permit under said Laws for
such treatment, storage or disposal and the failure to obtain such permit would
have a Material Adverse Effect.
(n) The Section 203 Approval is valid and in full force
and effect. Section 203 of the DGCL will not apply to the Stock Sale Agreement,
the Offer, the acquisition of Shares pursuant to the Offer or the Merger. No
other state takeover statute or similar statute or regulation applies or
purports to apply to the Offer, the Merger or the other Transactions
contemplated hereby.
(o) VOTING REQUIREMENTS. The affirmative vote of the
holders of a majority of all the Shares entitled to vote approving this
Agreement is the only vote of the holders of any class or series of the
Company's capital stock necessary to approve this Agreement and the Transactions
contemplated by this Agreement.
(p) BROKERS. No broker, investment banker, financial
advisor or other Person, other than ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ and NationsBanc
▇▇▇▇▇▇▇▇▇▇ Securities, the fees and expenses of which will be paid by the
27
Company, is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the Transactions contemplated by
this Agreement based upon arrangements made by or on behalf of the Company. The
Company has provided Parent true and correct copies of all agreements between
the Company and each of ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ and NationsBanc ▇▇▇▇▇▇▇▇▇▇
Securities, including, without limitations, any fee arrangements.
(q) OPINION OF FINANCIAL ADVISOR. The Company has received
an opinions of ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ and NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities, to
the effect that, as of the date of this Agreement, the consideration to be
received in the Offer and the Merger by the Company's stockholders is fair to
the Company's stockholders from a financial point of view, and a complete and
correct signed copy of such opinion has been, or promptly upon receipt thereof
will be, delivered to Parent. Company has been authorized by ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ and NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities to permit the inclusion of such
opinion in its entirety in the Offer Documents and the Schedule 14D-9 and the
Proxy Statement, so long as such inclusion is in form and substance reasonably
satisfactory to ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities and
their respective counsel.
(r) INTELLECTUAL PROPERTY. Except as set forth on Schedule
3.1(r) of the Company Disclosure Schedule, the Company and/or its Subsidiaries
owns, or is licensed or otherwise possesses legally enforceable rights to use
all patents, trademarks (registered or unregistered), trade names, service marks
and copyrights and applications therefor (collectively, "Intellectual Property
Rights") that are used in the business of the Company and its Subsidiaries as
currently conducted except as would not have a Material Adverse Effect. Each of
the Company and each of its Subsidiaries owns or has sufficient unrestricted
right to use the Intellectual Property Rights in order to allow it to conduct,
and continue to conduct, its business as currently conducted in all material
respects, and the consummation of the Transactions contemplated hereby will not
alter or impair such ability in any respect. To the knowledge of the Company,
there are no pending oppositions, cancellations, invalidity proceedings,
interferences or re-examination proceedings with respect to the Intellectual
Property
28
Rights that are reasonably likely to have a Material Adverse Effect. Neither the
Company nor any of its Subsidiaries has received any written notice from any
other Person pertaining to or challenging the right of the Company or any of its
Subsidiaries to use any of the Intellectual Property Rights. Except as set forth
in Section 3.1(r) of the Company Disclosure Schedule, neither the Company nor
any of its Subsidiaries has made any claim of a violation or infringement by
others of its rights to or in connection with the Intellectual Property Rights
which is still pending.
(s) TITLE TO PROPERTIES. Each of the Company and each of
its Subsidiaries has sufficiently good and valid title to, or an adequate
leasehold interest in, its material properties and assets (including the real
property) in order to allow it to conduct, and continue to conduct, its business
as currently conducted in all material respects.
(t) CONTRACTS; DEBT INSTRUMENTS. Except as set forth in
the SEC Documents or Schedule 3.1(t) of the Company Disclosure Schedule, there
are no (i) agreements of the Company or any of its Subsidiaries containing an
unexpired covenant not to compete or similar restriction applying to the Company
or any of its Subsidiaries, (ii) interest rate, currency or commodity hedging,
swap or similar derivative transactions to which the Company is a party or (iii)
other contracts or amendments thereto that would be required to be filed as an
exhibit to a Form 10-K filed by the Company with the SEC as of the date of this
Agreement. Except to the extent set forth in the SEC Documents or Schedule
3.1(t) of the Company Disclosure Schedule, to the knowledge of the Company,
there are no existing defaults (or circumstances or events that, with the giving
of notice or lapse of time or both would become defaults) of the Company or any
of its Subsidiaries (or, to the knowledge of the Company, any other party
thereto) under any of the agreements set forth in Schedule 3.1(t) of the Company
Disclosure Schedule.
(u) LABOR RELATIONS. Except to the extent set forth in the
SEC Documents or Schedule 3.1(u) of the Company Disclosure Schedule, (i) to the
knowledge of the Company, the Company and each of its Subsidiaries is, and has
at all times been, in material compliance
29
with all applicable Laws respecting employment and employment practices, terms
and conditions of employment, wages, hours of work and occupational safety and
health, and are not engaged in any unfair labor practices as defined in the
National Labor Relations Act or other applicable law, ordinance or regulation,
except where the failure to comply would not be reasonably likely to cause a
Material Adverse Effect on the Company; (ii) there is no labor strike, slowdown,
stoppage or lockout actually pending, or to the knowledge of the Company
threatened against or affecting the Company or any of its Subsidiaries; (iii)
the Company or any of its Subsidiaries is not a party to or bound by any
collective bargaining or similar agreement with any labor organization. There
are no employment contracts or severance agreements with any employees of the
Company or any of its Subsidiaries, except as set forth in the SEC Documents or
in Schedule 3.1(j) of the Company Disclosure Schedule.
(v) PRODUCTS LIABILITY. As used in this subsection 3.1(v),
the term "Product" shall mean any product designed, manufactured, shipped, sold,
marketed, distributed and/or otherwise introduced into the stream of commerce by
or on behalf of the Company or any of its Subsidiaries, including, without
limitation, any product sold in the United States by the Company or any of its
Subsidiaries as the distributor, agent, or pursuant to any other contractual
relationship with a non-U.S. manufacturer; and the term "Defect" shall mean a
defect or impurity of any kind, whether in design, manufacture, processing, or
otherwise, including, without limitation, any dangerous propensity associated
with any reasonably foreseeable use of a Product, or the failure to warn of the
existence of any defect, impurity, or dangerous propensity. Except as set forth
in Schedule 3.1(v) of the Company Disclosure Schedule, (i) as of the date of
this Agreement, there is no claim, action, suit or proceeding pending before any
Governmental Entity in which a Product is alleged to have a Defect; (ii) nor, to
the knowledge of the Company and its Subsidiaries, as of the date of this
Agreement, is any such claim, action, suit or proceeding threatened or is there
any valid basis for any such claim, action, suit or inquiry, proceeding; (iii)
nor, to the knowledge of the Company and its Subsidiaries, would any such claim,
action, suit or proceeding referred to in clause (i) or (ii) of this Section
3.1(v), if adversely determined, have, individually or in
30
the aggregate, a Material Adverse Effect on the Company or any of its
Subsidiaries.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
PARENT AND THE PURCHASER
Section 4.1 REPRESENTATIONS AND WARRANTIES OF PARENT AND THE
PURCHASER. Parent and the Purchaser represent and warrant to the Company as
follows:
(a) ORGANIZATION, STANDING AND CORPORATE POWER. Each of
Parent and the Purchaser is a corporation duly organized, validly existing and
in good standing under the Laws of the jurisdiction in which each is
incorporated and has the requisite corporate power and authority to carry on its
business as now being conducted. Each of Parent and the Purchaser is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification or licensing necessary, other than in
such jurisdictions where the failure to be so qualified or licensed
(individually or in the aggregate) would not have a Material Adverse Effect on
Parent.
(b) AUTHORITY; NONCONTRAVENTION. Parent and the Purchaser
have the requisite corporate power and authority to enter into this Agreement
and to consummate the Transactions contemplated by this Agreement. The execution
and delivery of this Agreement by Parent and the Purchaser and the consummation
by Parent and the Purchaser of the Transactions contemplated by this Agreement
have been duly authorized by all necessary corporate action on the part of
Parent and the Purchaser, as applicable. This Agreement has been duly executed
and delivered by Parent and the Purchaser and, assuming this Agreement
constitutes the valid and binding obligation of the Company, constitutes a valid
and binding obligation of each such party, enforceable against each such party
in accordance with its terms, except that (i) such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar Laws now or
hereafter in effect relating to creditors' rights generally and (ii) the remedy
of specific performance and
31
injunctive relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought. The execution and
delivery of this Agreement do not, and the consummation of the Transactions
contemplated by this Agreement will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation or to loss of a material benefit under, or result in the creation
of any lien upon any of the properties or assets of Parent under, (i) the
certificate of incorporation or by-laws of Parent or the Purchaser, (ii) any
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to Parent or the Purchaser or their respective properties or assets, other than,
in the case of clause (ii), any such conflicts, violations, defaults, rights or
Liens that individually or in the aggregate would not (x) impair in any material
respect the ability of Parent and the Purchaser to perform their respective
obligations under this Agreement or (y) prevent or impede the consummation of
any of the Transactions contemplated by this Agreement. No consent, approval,
order or authorization of, or registration, declaration or filing with, any
Governmental Entity is required by Parent or the Purchaser in connection with
the execution and delivery of this Agreement or the consummation by Parent or
the Purchaser, as the case may be, of any of the Transactions contemplated by
this Agreement, except for (i) if required, the filing of a premerger
notification and report form under the HSR Act, (ii) the filing with the SEC of
(x) the Offer Documents and (y) such reports under the Exchange Act as may be
required in connection with this Agreement and the Transactions contemplated by
this Agreement, (iii) the filing of the Certificate of Merger with the Secretary
of State and appropriate documents with the relevant authorities of other states
in which the Company is qualified to do business, (iv) as may be required by an
applicable state securities or "blue sky" Laws, and (v) such other consents,
approvals, orders, authorizations, registrations, declarations and filings the
failure of which to be obtained or made would not, individually or in the
aggregate, (x) impair, in any material respect, the ability of Parent to perform
its obligations under this Agreement or (y) prevent or significantly delay the
consummation of the Transactions contemplated by this Agreement.
32
(c) INFORMATION SUPPLIED. None of the information supplied
or to be supplied by Parent or the Purchaser expressly for inclusion or
incorporation by reference in the Offer Documents, the Schedule 14D-1, the
Schedule 14D-9 or the Proxy Statement will, in the case of the Offer Documents,
the Schedule 14D-1 or the Schedule 14D-9, at the time they are filed with the
SEC and first published, sent or given to the Company's stockholders or, in the
case of the Proxy Statement, on the date the Proxy Statement is first mailed to
the Company's stockholders and at the time of the meeting of the Company's
stockholders held to vote on approval and adoption of this Agreement, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading.
(d) INTERIM OPERATIONS OF THE PURCHASER. The Purchaser was
formed solely for the purpose of engaging in the Transactions contemplated
hereby and has not engaged in any business activities or conducted any
operations other than in connection with the Transactions contemplated hereby.
(e) FINANCING. Prior to the expiration of the Offer,
Purchaser will have all funds necessary for the purchase of the Shares pursuant
to the Offer. Prior to the Effective Time, Purchaser will have all funds
necessary to consummate the Merger and to consummate all other transactions
contemplated hereunder.
(f) BROKERS. No broker, investment banker, financial
advisor or other Person, other than ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated, the fees
and expenses of which will be paid by the Parent, is entitled to any broker's,
finder's, financial advisor's or other similar fee or commission in connection
with the Transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Parent or the Purchaser.
ARTICLE V
COVENANTS
Section 5.1 (a) INTERIM OPERATIONS OF THE COMPANY. Until the
acquisition of the Shares pursuant
33
to the Offer, except as specifically contemplated by this Agreement, the Company
shall and shall cause its Subsidiaries to carry on their respective businesses
in the ordinary course and use all reasonable best efforts consistent with good
business judgment to preserve intact their current business organizations, keep
available the services of their current officers and key employees and preserve
their relationships consistent with past practice with desirable customers,
suppliers, licensors, licensees, distributors and others having business
dealings with them to the end that their goodwill and ongoing businesses shall
be unimpaired in all material respects at the Effective Time. Without limiting
the generality of the foregoing, the Company covenants and agrees that, except
(i) as expressly contemplated by this Agreement, (ii) as set forth in Section
5.1 of the Company Disclosure Schedule or (iii) as agreed in writing by Parent,
after the date hereof and prior to the Effective Date:
(i) neither the Company nor any of its Subsidiaries shall,
directly or indirectly, amend its Certificate of Incorporation or By-laws or
similar organizational documents;
(ii) neither the Company nor any of its Subsidiaries
shall: (i)(A) declare, set aside or pay any dividend or other distribution
payable in cash, stock or property with respect to the Company's capital stock
or that of its Subsidiaries, except that a wholly-owned Subsidiary of the
Company may declare and pay a dividend or make advances to its parent or the
Company or (B) redeem, purchase or otherwise acquire directly or indirectly any
of the Company's capital stock or that of its Subsidiaries; (ii) issue, sell,
pledge, dispose of or encumber any additional shares of, or securities
convertible into or exchangeable for, or options, warrants, calls, commitments
or rights of any kind to acquire, any shares of capital stock of any class of
the Company or its Subsidiaries, other than Shares issued upon the exercise of
Options outstanding on the date hereof in accordance with the Option Plans as in
effect on the date hereof; or (iii) split, combine or reclassify the outstanding
capital stock of the Company or of any of the Subsidiaries of the Company;
(iii) except as permitted by this Agreement, neither the
Company nor any of its Subsidiaries
34
shall acquire or agree to acquire (A) by merging or consolidating with, or by
purchasing a substantial portion of the assets of, or by any other manner, any
business or any corporation, partnership, joint venture, association or other
business organization or division thereof (including entities which are
Subsidiaries of the Company or any of the Company's Subsidiaries) or (B) any
assets, including real estate, except (x) purchases in the ordinary course of
business consistent with past practice or (y) expenditures consistent with the
Company's current capital budget previously provided to Parent (the "Capital
Budget");
(iv) neither the Company nor any of its Subsidiaries shall
make any new capital expenditure or expenditures, other than capital
expenditures not to exceed, in the aggregate, the amounts provided for capital
expenditures in the Capital Budget;
(v) neither the Company nor any of its Subsidiaries shall,
except in the ordinary course of business and except as otherwise permitted by
this Agreement, amend or terminate any material contract or agreement set forth
in the SEC Documents to which the Company or any Subsidiary is a party where
such amendment or termination would have a Material Adverse Affect, or waive,
release or assign any material rights or claims;
(vi) neither the Company nor any of its Subsidiaries shall
transfer, lease, license, sell, mortgage, pledge, dispose of, or encumber any
property or assets other than in the ordinary course of business and consistent
with past practice;
(vii) neither the Company nor any of its Subsidiaries
shall: (i) enter into any employment or severance agreement with or, except in
accordance with the existing written policies of the Company, grant any
severance or termination pay to any officer, director or key employee of the
Company or any its Subsidiaries; or (ii) hire or agree to hire any new or
additional key employees or officers;
(viii) neither the Company nor any of its Subsidiaries
shall, except as required to comply with applicable law or expressly provided in
this Agreement, (A) adopt, enter into, terminate or amend any Benefit
35
Plan or other arrangement for the current or future benefit or welfare of any
director, officer or current or former employee, except to the extent necessary
to coordinate any such Benefit Plans with the terms of this Agreement, (B)
increase in any manner the compensation or fringe benefits of, or pay any bonus
to, any director, officer or employee (except for normal increases or bonuses in
the ordinary course of business consistent with past practice to employees other
than directors, officers or senior management personnel and that, in the
aggregate, do not result in a significant increase in benefits or compensation
expense to the Company and its Subsidiaries relative to the level in effect
prior to such action (but in no event shall the aggregate amount of all such
increases exceed 3% of the aggregate annualized compensation expense of the
Company and its Subsidiaries reported in the most recent audited financial
statements of the Company included in the SEC Documents)), (C) pay any benefit
not provided for under any Benefit Plan, (D) grant any awards under any bonus,
incentive, performance or other compensation plan or arrangement or Benefit Plan
(including the grant of stock options, stock appreciation rights, stock based or
stock related awards, performance units or restricted stock, or the removal of
existing restrictions in any Benefit Plans or agreements or awards made
thereunder) or (E) take any action to fund or in any other way secure the
payment of compensation or benefits under any employee plan, agreement, contract
or arrangement or Benefit Plan;
(ix) neither the Company nor any of its Subsidiaries
shall: (i) incur or assume any long-term debt, or except in the ordinary course
of business, incur or assume any short-term indebtedness in amounts not
consistent with past practice; (ii) incur or modify any material indebtedness or
other liability except as set forth in Schedule 5.1 of the Company Disclosure
Schedule; (iii) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the obligations of
any other Person, except in the ordinary course of business and consistent with
past practice; (iv) make any loans, advances or capital contributions to, or
investments in, any other Person (other than to wholly owned Subsidiaries of the
Company or customary loans or advances to employees in accordance with past
practice); (v) settle any claims other than in the ordinary course of business,
in accor-
36
dance with past practice, and without admission of liability; or (vi) enter into
any material commitment or transaction;
(x) neither the Company nor any of its Subsidiaries shall
change any of the accounting methods used by it unless required by GAAP;
(xi) neither the Company nor any of its Subsidiaries shall
make any Tax election or settle or compromise any material Tax liability;
(xii) neither the Company nor any of its Subsidiaries
shall pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction of any such claims, liabilities or
obligations, in the ordinary course of business and consistent with past
practice, of claims, liabilities or obligations reflected or reserved against
in, or contemplated by, the consolidated financial statements (or the notes
thereto) of the Company and its consolidated subsidiaries; or, except in the
ordinary course of business consistent with past practice, waive the benefits
of, or agree to modify in any manner, any confidentiality, standstill or similar
agreement to which the Company or any of its Subsidiaries is a party; and
(xiii) neither the Company nor any of its Subsidiaries
will enter into an agreement, contract, commitment or arrangement to do any of
the foregoing, or to authorize, recommend, propose or announce an intention to
do any of the foregoing.
(b) OTHER ACTIONS. The Company shall not, and shall not
permit any of its Subsidiaries to, take any action that would result in (i) any
of its representations and warranties set forth in this Agreement that are
qualified as to materiality becoming untrue, (ii) any of such representations
and warranties that are not so qualified becoming untrue in any material respect
or (iii) any of the conditions to the Offer set forth in Annex A not being
satisfied (subject to the Company's right to take action specifically permitted
by Section 5.4).
37
Section 5.2 ACCESS; CONFIDENTIALITY. Upon reasonable notice,
the Company shall (and shall cause each of its Subsidiaries to) afford to the
officers, employees, accountants, counsel, financing sources and other
representatives of Parent, access, during normal business hours during the
period prior to the Effective Time, to all its properties, books, contracts,
commitments and records, and, during such period, the Company shall (and shall
cause each of its Subsidiaries to) furnish promptly to the Parent (a) a copy of
each report, schedule, registration statement and other document filed or
received by it during such period pursuant to the requirements of Federal or
state securities Laws and (b) all other information concerning its business,
properties and personnel as Parent may reasonably request. Except as otherwise
agreed to by the Company, unless and until Parent and the Purchaser shall have
purchased at least a majority of the outstanding Shares pursuant to the Offer,
Parent will be bound by the terms of a confidentiality agreement with the
principal stockholders of the Company, dated February 16, 1998 (the
"Confidentiality Agreement").
Section 5.3 REASONABLE EFFORTS; NOTIFICATION. Upon the terms
and subject to the conditions set forth in this Agreement, each of the parties
agrees to use all reasonable efforts to take, or cause to be taken, all actions,
and to do, or cause to be done, and to assist and cooperate with the other
parties in doing, all things necessary, proper or advisable to consummate and
make effective, in the most expeditious manner practicable, the Offer and the
Merger, and the other Transactions contemplated by this Agreement, including (i)
the obtaining of all necessary actions or nonactions, waivers, consents and
approvals from any Governmental Entity and the making of all necessary
registrations and filings (including filings with any Governmental Entity, if
any) and the taking of all reasonable steps as may be necessary to obtain an
approval or waiver from, or to avoid an action or proceeding by, any
Governmental Entity, (ii) the obtaining of all necessary consents, approvals or
waivers from third parties, (iii) the defending of any lawsuits or other legal
proceedings, whether judicial or administrative, challenging this Agreement or
the consummation of any of the Transactions contemplated by this Agreement,
including seeking to have any stay or temporary restraining order entered by any
court or other
38
Governmental Entity vacated or reversed, and (iv) the execution and delivery of
any additional instruments necessary to consummate the Transactions contemplated
by, and to fully carry out the purposes of, this Agreement; PROVIDED, HOWEVER,
that in connection with any filing or submission or other action required to be
made or taken by any Party to effect the Merger and all other Transactions
contemplated hereby, the Company shall not without the prior written consent of
Parent commit to any divestiture transaction and Parent shall not be required to
divest or hold separate or otherwise take or commence to take any action that,
in the reasonable discretion of Parent, limits its freedom of action with
respect to, or its ability to retain, the Company or any of its affiliates or
any material portion of the assets of the Company. In connection with and
without limiting the foregoing, the Company and its Board of Directors shall (i)
take all action necessary to ensure that no state takeover statute or similar
statute or regulation is or becomes applicable to the Offer, the Merger, this
Agreement or any of the other Transactions contemplated by this Agreement and
(ii) if any state takeover statute or similar statute or regulation becomes
applicable to the Offer, the Merger or this Agreement or any other transaction
contemplated by this Agreement, take all action necessary to ensure that the
Offer, the Merger and the other Transactions contemplated by this Agreement may
be consummated as promptly as practicable on the terms contemplated by this
Agreement and otherwise to minimize the effect of such statute or regulation on
the Offer, the Merger, this Agreement and the other Transactions contemplated by
this Agreement.
(b) Each of the Company, Parent and Purchaser shall give
prompt notice to the other of (i) any of their representations or warranties
contained in this Agreement becoming untrue or inaccurate in any respect
(including in the case of representations or warranties receiving knowledge of
any fact, event or circumstance which may cause any representation qualified as
to the knowledge to be or become untrue or inaccurate in any respect) or (ii)
the failure by them to comply with or satisfy in any material respect any
covenant, condition or agreement to be complied with or satisfied by them under
this Agreement; PROVIDED, HOWEVER, that no such notification shall affect the
representations, warranties, covenants or agreements of the parties or the
39
conditions to the obligations of the parties under this Agreement.
Section 5.4 NO SOLICITATION. The Company shall not, nor shall
it permit any of its Subsidiaries to, nor shall it authorize (and shall use its
best efforts not to permit) any officer, director or employee of, or any
investment banker, attorney or other advisor or representative of, the Company
or any of its Subsidiaries to, (i) solicit or initiate, or knowingly encourage
the submission of, any Takeover Proposal or (ii) participate in any discussions
or negotiations regarding, or furnish to any Person any information with respect
to, or take any other action to knowingly facilitate the making of any proposal
that constitutes, or may reasonably be expected to lead to, any Takeover
Proposal; PROVIDED, HOWEVER, that, prior to the acceptance for payment of Shares
pursuant to the Offer, if in the reasonable determination of the Board of
Directors, after receiving advice from outside legal counsel to the Company,
such failure to act would be inconsistent with its fiduciary duties to the
Company's stockholders under applicable law, the Company may, in response to an
unsolicited Takeover Proposal, and subject to compliance with Section 5.4(c),
(A) furnish information with respect to the Company to any Person pursuant to a
confidentiality agreement with terms and conditions similar to the
Confidentiality Agreement and (B) participate in negotiations regarding such
Takeover Proposal. For purposes of this Agreement, "Takeover Proposal" means (i)
any bona fide proposal or offer from any Person relating to any direct or
indirect acquisition or purchase of all or a substantial part of the assets of
the Company or any of its Subsidiaries or of any class of equity securities of
the Company or any of its Subsidiaries or any tender offer or exchange offer
that if consummated would result in any Person beneficially owning shares of any
class of equity securities of the Company or any of its Subsidiaries, or any
merger, consolidation, business combination, sale of substantially all of the
assets, recapitalization, liquidation, dissolution or similar transaction
involving the Company or any of its Subsidiaries other than the Transactions
contemplated by this Agreement, or any other transaction the consummation of
which would reasonably be expected to impede, interfere with, prevent or
materially delay the Offer or the Merger or which would reasonably be expected
to dilute materially the benefits to Parent
40
of the Transactions contemplated hereby which (ii) the Company's Board of
Directors reasonably determines in good faith (based on advice of its financial
advisors) is more favorable to all of the Company's stockholders from a
financial point of view than the Offer and the Merger (taking into account any
improvements to the Offer and the Merger proposed in writing by Parent).
(b) Except as set forth in this Section 5.4(b), neither
the Board of Directors of the Company nor any committee thereof shall (i)
withdraw or modify, or propose to withdraw or modify, in a manner adverse to
Parent or the Purchaser, the approval or recommendation by the Board of
Directors or any such committee of the Offer, this Agreement or the Merger, (ii)
approve or recommend, or propose to approve or recommend, any Takeover Proposal
or (iii) enter into any agreement with respect to any Takeover Proposal.
Notwithstanding the foregoing, in the event that prior to the time of acceptance
by the Purchaser for payment of Shares in the Offer if in the reasonable
determination of the Board of Directors, and after receiving advice from outside
legal counsel to the Company, failure to do so would be inconsistent with its
fiduciary duties to the Company's stockholders under applicable law, the Board
of Directors may (subject to the terms of this and the following sentences)
withdraw or modify its approval or recommendation of the Offer, this Agreement
or the Merger, approve or recommend a Takeover Proposal, or enter into an
agreement with respect to a Takeover Proposal, in each case at any time
following delivery by the Company to Parent of written notice (a "Notice of
Takeover Proposal") advising Parent that the Board of Directors has received a
Takeover Proposal, and specifying the material terms and conditions of such
Takeover Proposal and identifying the Person making such Takeover Proposal
unless the Takeover Proposal by its terms prohibits disclosure.
(c) In addition to the obligations of the Company set
forth in paragraph (b) (i) the Company shall advise Parent of any request for
information, and the material terms and conditions of such request and the
identity of the Person making any such Takeover Proposal if allowed by the
Takeover Proposal or inquiry, and (ii) the Company will keep Parent fully
informed of the status and details (including amendments or proposed amendments)
of any such request or inquiry.
41
Section 5.5 PUBLICITY. The initial press release with respect
to the execution of this Agreement shall be a joint press release acceptable to
Parent and the Company. Thereafter, so long as this Agreement is in effect,
neither the Company, Parent nor any of their respective affiliates shall issue
or cause the publication of any press release or other announcement with respect
to the Merger, this Agreement or the other Transactions contemplated hereby
without the prior consultation of the other party.
Section 5.6 TRANSFER TAXES. All liability for transfer or
other similar Taxes arising out of or related to the Offer and the Merger or the
consummation of any other transaction contemplated by this Agreement, and due to
the property owned by the Company or any of its Subsidiaries or affiliates
("Transfer Taxes") shall be borne by the Company, and the Company shall file or
cause to be filed all Tax Returns relating to such Transfer Taxes which are due,
and, to the extent appropriate or required by law, the stockholders of the
Company shall cooperate with respect to the filing of such Tax Returns.
Section 5.7 STATE TAKEOVER LAWS. Notwithstanding any other
provision in this Agreement, in no event shall the Section 203 Approval be
withdrawn, revoked or modified by the Board of Directors of the Company. If any
state takeover statute other than Section 203 of the DGCL becomes or is deemed
to become applicable to the Stock Sale Agreement, the Offer, the acquisition of
Shares pursuant to the Offer or the Merger, the Company shall take all action
necessary to render such statute inapplicable to all of the foregoing.
Section 5.8 INDEMNIFICATION AND INSURANCE.
(a) The Certificate of Incorporation and By-Laws of the
Surviving Corporation shall contain the provisions with respect to
indemnification and exculpation set forth in the Certificate of Incorporation
and By-Laws of the Company, which provisions shall not be amended, repealed or
otherwise modified for a period of six years from the Effective Time in any
manner that would adversely affect the rights thereunder of individuals who at
the Effective Time were directors, officers, employees or agents of the Company,
unless such modification is required by law.
42
(b) The Company shall, to the fullest extent permitted
under applicable law or under the Company's Certificate of Incorporation or
By-Laws and regardless of whether the Merger becomes effective, indemnify and
hold harmless, and, after the Effective Time, the Surviving Corporation shall,
to the fullest extent permitted under applicable law or under the Surviving
Corporation's Certificate of Incorporation or By-Laws, indemnify and hold
harmless, each present and former director, officer or employee of the Company
or any of its Subsidiaries (collectively, the "Indemnified Parties") against any
costs or expenses (including attorneys' fees), judgments, fines, losses, claims,
damages and liabilities incurred in connection with, and amounts paid in
settlement of, any claim, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative and wherever asserted, bought
or filed, (x) arising out of or pertaining to the transactions contemplated by
this Agreement or (y) otherwise with respect to any acts or omissions or alleged
acts or omissions occurring at or prior to the Effective Time, to the same
extent as provided in the respective Certificate of Incorporation or By-Laws of
the Company or the Subsidiaries as in effect on the date hereof, in each case
for a period of six years after the date hereof. In the event of any such claim,
action, suit, proceeding or investigation (whether arising before or after the
Effective Time), (i) any counsel retained by the Indemnified Parties for any
period after the Effective Time must be reasonably satisfactory to the Surviving
Corporation, (ii) after the Effective Time, the Surviving Corporation shall pay
the reasonable fees and expenses of such counsel, promptly after statements
therefor are received, and (iii) the Surviving Corporation will cooperate in the
defense of any such matter; PROVIDED, HOWEVER, that the Surviving Corporation
shall not be liable for any settlement effected without its written consent
(which consent shall not be unreasonably withheld or delayed); and PROVIDED,
FURTHER, that, in the event that any claim or claims for indemnification are
asserted or made within such six-year period, all rights to indemnification in
respect of any such claim or claims shall continue until the disposition of any
and all such claims. The Indemnified Parties as a group may retain only one law
firm to represent them with respect to any single action unless there is, under
applicable standards of professional conduct, a conflict on any significant
issue between the
43
positions of any two or more Indemnified Parties. The indemnity agreements of
Parent and the Surviving Corporation in this Section 5.8(b) shall extend, on the
same terms to, and shall inure to the benefit of and shall be enforceable by,
each person or entity who controls, or in the past controlled, any present or
former director, officer or employee of the Company or any of its Subsidiaries.
(c) For a period of six years after the Effective Time,
Parent shall cause the Surviving Corporation to maintain in effect, if
available, directors' and officers' liability insurance covering those persons
who are currently covered by the Company's directors' and officers' liability
insurance policy (a copy of which has been made available to Parent) on terms
(including the amounts of coverage and the amounts of deductibles, if any) that
are comparable to the terms now applicable to directors and officers of Parent,
or, if more favorable to the Company's directors and officers, the terms now
applicable to them under the Company's current policies; PROVIDED, HOWEVER, that
in no event shall Parent or the Surviving Corporation be required to expend in
excess of 200% of the annual premium currently paid by the Company for such
coverage; and PROVIDED FURTHER, that if the premium for such coverage exceeds
such amount, Parent or the Surviving Corporation shall purchase a policy with
the greatest coverage available for such 200% of the annual premium.
(d) From and after the Effective Time, Parent shall
guarantee the obligations of the Surviving Corporation under this Section 5.8.
(e) This Section shall survive the consummation of the
Merger at the Effective Time, is intended to benefit the Company, the Surviving
Corporation and the Indemnified Parties, shall be binding on all successors and
assigns of the Surviving Corporation and shall be enforceable by the Indemnified
Parties. In the event that Parent or Surviving Corporation or any of their
successors or assigns (i) consolidates or merges into any other person or entity
and shall not be the continuing or surviving corporation or entity in such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any person or entity, then and in such case, proper
provisions shall be
44
made so that the successors and assigns of Parent or the Surviving Corporation
(as the case may be) assume the obligations of Parent and the Surviving
Corporation set forth in this Section.
ARTICLE VI
CONDITIONS
Section 6.1 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 on or prior to the Closing Date of each of the
following conditions, any and all of which may be waived in whole or in part by
the Company, Parent or the Purchaser, as the case may be, to the extent
permitted by applicable law:
(a) PRIOR PERFORMANCE. Each party shall have performed in all
material respects its respective obligations under this Agreement required to be
performed by it prior to the Effective Time;
(b) REPRESENTATIONS AND WARRANTIES. All representations and
warranties contained in this Agreement shall have been true and correct in all
material respects at the time made and shall be true and correct in all material
respects as of the Effective Time as though made on and as of such date;
(c) STOCKHOLDER APPROVAL. This Agreement shall have been
approved and adopted by the requisite vote of the stockholders of the Company,
if required by applicable law and the Certificate of Incorporation, in order to
consummate the Merger;
(d) STATUTES; CONSENTS. No statute, rule, order, decree or
regulation shall have been enacted or promulgated by any government or any
governmental agency or authority of competent jurisdiction which prohibits the
consummation of the Merger;
(e) INJUNCTIONS. There shall be no order or injunction of a
court or other governmental authority of competent jurisdiction in effect
precluding, restraining, enjoining or prohibiting consummation of the Merger;
45
(f) PURCHASE OF SHARES IN OFFER. Parent, Purchaser or their
affiliates shall have purchased Shares pursuant to the Offer; and
(g) OPTION PLAN. The employees and the directors of the
Company shall have consented to the transactions contemplated in Section 2.5.
ARTICLE VII
TERMINATION
Section 7.1 TERMINATION. This Agreement may be terminated and
the Merger contemplated herein may be abandoned at any time prior to the
Effective Time, whether before or after approval of matters presented in
connection with the Merger by the stockholders of the Company:
(a) By the mutual written consent of ent and the Company;
PROVIDED, HOWEVER, that if Parent shall have a majority of the directors
pursuant to Section 1.4, such consent of the Company may only be given if
approved by the Continuing Directors.
(b) By either of Parent or the Company:
(i) if the Offer shall have expired without any Shares being
purchased therein by June 1, 1998; PROVIDED, HOWEVER, that the right to
terminate this Agreement under this Section 7.1(b)(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
Parent or the Purchaser, as the case may be, to purchase the Shares
pursuant to the Offer on or prior to such date; or
(ii) if any Governmental Entity shall have issued an order,
decree or ruling or taken any other action (which order, decree, ruling
or other action the parties hereto shall use their reasonable efforts
to lift), in each case permanently restraining, enjoining or otherwise
prohibiting the Transactions contemplated by this Agreement and such
order,
46
decree, ruling or other action shall have become final and
non-appealable.
(c) By the Board of Directors of the Company:
(i) if the Company has approved a Takeover Proposal in
accordance with Section 5.4(b), provided the Company has complied with
all provisions thereof, including the notice provisions therein, and
that it makes simultaneous payment of the Expenses and the Termination
Fee; or
(ii) if, prior to the purchase of the Shares pursuant to the
Offer, Parent or the Purchaser breaches or fails in any material
respect to perform or comply with any of its covenants and agreements
contained herein or breaches its representations and warranties in any
material respect; or
(iii) if Parent or the Purchaser shall have terminated the
Offer or the Offer expires without Parent or the Purchaser, as the case
may be, purchasing any Shares pursuant thereto; provided that the
Company may not terminate this Agreement pursuant to this Section
7.1(c)(iii) if the Company is in material breach of this Agreement; or
(iv) if Parent, the Purchaser or any of their affiliates shall
have failed to commence the Offer on or prior to five business days
following the date of the initial public announcement of the Offer;
provided, that the Company may not terminate this Agreement pursuant to
this Section 7.1(c)(iv) if the Company is in material breach of this
Agreement.
(d) By Parent or the Purchaser:
(i) if prior to the purchase of the Shares pursuant to the
Offer, the Board of Directors of the Company shall have withdrawn, or
modified or changed in a manner adverse to Parent or the Purchaser its
approval or recommendation of the Offer, this Agreement or the Merger
or shall have approved
47
a Takeover Proposal in accordance with Section 5.4(b); or
(ii) if Parent or the Purchaser shall have terminated the
Offer without Parent or the Purchaser purchasing any Shares thereunder,
PROVIDED that Parent or the Purchaser may not terminate this Agreement
pursuant to this Section 7.1(d)(ii) if Parent or the Purchaser is in
material breach of this Agreement; or
(iii) if, due to an occurrence that if occurring after the
commencement of the Offer would result in a failure to satisfy any of
the conditions set forth in Annex A hereto, Parent, the Purchaser, or
any of their affiliates shall have failed to commence the Offer on or
prior to five business days following the date of the initial public
announcement of the Offer.
Section 7.2 EFFECT OF TERMINATION. In the event of termination
of this Agreement by either the Company or Parent or Purchaser as provided in
Section 7.1, this Agreement shall forthwith become void and have no effect,
without any liability or obligation on the part of Parent, the Purchaser or the
Company, other than the provisions of Section 3.1(p), 4.1(f), the last sentence
of Section 5.2, this Section 7.2 and Article VIII and except to the extent that
such termination results from the wilful and material breach by a party of any
of its representations, warranties, covenants or agreements set forth in this
Agreement.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 FEES AND EXPENSES. (a)Except as provided below,
all fees and expenses incurred in connection with the Offer, the Merger, this
Agreement and the Transactions contemplated hereby shall be paid by the party
incurring such fees or expenses, whether or not the Offer or the Merger is
consummated.
(b) The Company shall pay, or cause to be paid, in same day
funds to Parent the amount of
48
$3,750,000 (the "Termination Fee") upon demand if (i) Parent or the Purchaser
terminates this Agreement under Section 7.1(d)(i), (ii) the Company terminates
this Agreement pursuant to Section 7.1(c)(i) or (iii) prior to any termination
of this Agreement, a Takeover Proposal shall have been made and within nine
months after the termination of this Agreement a transaction constituting a
Takeover Proposal is consummated or the Company enters into an agreement with
respect to, or approves or recommends a Takeover Proposal (whether or not
related to a Takeover Proposal made prior to any termination of this Agreement),
PROVIDED, that no payment shall be made if this Agreement has been terminated
pursuant to Section 7.1(b)(i), 7.1(c)(ii), 7.1(c)(iii) or 7.1(c)(iv) hereof and;
provided, further, that if a Takeover Proposal (whether or not related to a
Takeover Proposal made prior to any termination of the Agreement) is made at a
lower price per share than the Offer Price, than the Company shall only pay in
same day funds to the Purchaser the amount of Parent's and Purchaser's
documented expenses (not to exceed $500,000) in connection with this Agreement
and the transactions contemplated thereby.
Section 8.2 AMENDMENT AND MODIFICATION. Subject to applicable
law, this Agreement may be amended, modified and supplemented in any and all
respects, whether before or after any vote of the stockholders of the Company
contemplated hereby, by written agreement of the parties hereto (which in the
case of the Company shall include approvals as contemplated in Section 1.4(b)),
at any time prior to the Closing Date with respect to any of the terms contained
herein; PROVIDED, HOWEVER, that after the approval of this Agreement by the
stockholders of the Company, no such amendment, modification or supplement shall
reduce the amount or change the form of the Merger Consideration or otherwise
adversely affect the rights of stockholders.
Section 8.3 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES.
None of the representations and warranties in this Agreement or in any schedule,
instrument or other document delivered pursuant to this Agreement shall survive
the Effective Time. This Section 8.3 shall not limit any covenant or agreement
of the parties which by its terms contemplates performance after the Effective
Date of the Merger.
49
Section 8.4 NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed given upon receipt, and shall
be given to the parties at the following addresses (or at such other address for
a party as shall be specified by like notice):
(a) if to Parent or the Purchaser, to:
Sunbeam Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
with a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
(b) if to the Company, to:
First Alert, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
with a copy to:
Ropes & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Section 8.5 INTERPRETATION. When a reference is made in this
Agreement to Sections, such reference shall be to a Section of this Agreement
unless otherwise indicated. 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 term
"affiliate(s)" shall have the meaning set forth in Rule l2b-2 of the Exchange
Act.
50
Section 8.6 COUNTERPARTS. This Agreement may be executed in
two or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when two or more counterparts have been
signed by each of the parties and delivered to the other parties.
Section 8.7 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES;
RIGHTS OF OWNERSHIP. This Agreement and the Confidentiality Agreement (including
the documents and the instruments referred to herein and therein): (a)
constitute the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, and (b) except as provided in Section 5.6 and Section 5.8
is not intended to confer upon any Person other than the parties hereto any
rights or remedies hereunder.
Section 8.8 SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void, 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 unless the economic or legal substance of the
Transactions is affected in an adverse way to any party.
Section 8.9 GOVERNING LAW. 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 law thereof.
Section 8.10 ASSIGNMENT. 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, except that the Purchaser may assign, in
its sole discretion, any or all of its rights, interests and obligations
hereunder to Parent or to any direct or indirect wholly owned Subsidiary of
Parent. 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.
51
SECTION 8.11 ENFORCEMENT. The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any court of the
United States located in the State of Delaware or in Delaware state court, this
being in addition to any other remedy to which they are entitled at law or in
equity. In addition, each of the parties hereto (a) consents to submit itself to
the personal jurisdiction of any Federal court located in the State of Delaware
or any Delaware state court in the event any dispute arises out of this
Agreement or any of the Transactions contemplated by this Agreement, (b) agrees
that it will not attempt to deny or defeat such personal jurisdiction by motion
or other request for leave from any such court and (c) agrees that it will not
bring any action relating to this Agreement or any of the Transactions
contemplated by this Agreement in any court other than a Federal or state court
sitting in the State of Delaware.
SECTION 8.12 EXTENSION; WAIVER. At any time prior to the
Effective Time, the parties may (a) extend the time for the performance of any
of the obligations or other acts of the other parties, (b) waive any
inaccuracies in the representations and warranties of the other parties
contained in this Agreement or in any document delivered pursuant to this
Agreement or (c) subject to the proviso of Section 8.2, waive compliance by the
other parties with any of the agreements or conditions contained in this
Agreement. Any agreement on the part of a party to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed on behalf of
such party. The failure of any party to this Agreement to assert any of its
rights under this Agreement or otherwise shall not constitute a waiver of those
rights.
SECTION 8.13 PROCEDURE FOR TERMINATION, AMENDMENT, EXTENSION
OR WAIVER. A termination of this Agreement pursuant to Section 7.1, an amendment
of this Agreement pursuant to Section 8.2 or an extension or waiver pursuant to
Section 8.12 shall, in order to be effective, require in the case of Parent, the
Purchaser or the Company, action by its Board of Directors or the duly
52
authorized designee of its Board of Directors; PROVIDED, HOWEVER, that in the
event that Purchaser's designees are appointed or elected to the Board of
Directors of the Company as provided in Section 1.4, after the acceptance for
payment of Shares pursuant to the Offer and prior to the Effective Time, except
as otherwise contemplated by this Agreement the affirmative vote of a majority
of the Continuing Directors of the Company shall be required by the Company to
amend this Agreement by the Company.
SECTION 8.14 CERTAIN UNDERTAKINGS OF PARENT. Parent shall
perform, or cause to be performed, any obligation of Purchaser under this
Agreement which shall have been breached by Purchaser.
SECTION 8.15 COMPANY DISCLOSURE SCHEDULE. Notwithstanding
anything to the contrary contained herein, and without regard to the execution
of this Agreement by the parties hereto, this Agreement shall not be effective
and have no force and effect unless (i) within 12 hours of its execution by the
parties hereto, the definitive Company Disclosure Schedule is delivered by the
Company to Parent and (ii) Parent, within 12 hours after such delivery, delivers
written notice to the Company that it is satisfied with the matters contained
therein. Anything which is disclosed in one section of the Company Disclosure
Schedule shall be deemed disclosed for other sections thereof, as long as such
disclosure is reasonably apparent to a reader of the entire Company Disclosure
Schedule.
SECTION 8.16 DEFINITIONS. For purposes of this Agreement:
"Benefit Plans" has the meaning assigned thereto in Section 3.1(j).
"By-laws" means the by-laws of has the meaning assigned thereto in Section 1.5.
"Certificate of Incorporation" has the meaning assigned thereto in Section 1.5.
"Certificate of Merger" has the meaning assigned thereto in Section 1.6.
53
"Certificates" has the meaning assigned thereto in Section 2.2.
"Closing" has the meaning assigned thereto in Section 1.7.
"Closing Date" has the meaning assigned thereto in Section 1.7.
"Code" means the Internal Revenue Code of 1986.
"Company" means First Alert, Inc.
"Continuing Director" has the meaning assigned thereto in Section 1.4.
"Defect" has the meaning assigned thereto in Section 3.1(v).
"DGCL" means the Delaware General Corporation Law.
"Dissenting Stockholders" has the meaning assigned thereto in Section 2.1(c).
"Effective Time" has the meaning assigned thereto in Section 1.6.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended,
and the rules and regulations promulgated thereunder.
"Environmental Laws" means all foreign, Federal, state and local Laws,
regulations, rules and ordinances relating to pollution or protection of the
environment, including, without limitation, Laws relating to Releases or
threatened Releases of Hazardous Materials into the indoor or outdoor
environment (including, without limitation, ambient air, surface water,
groundwater, land, surface and subsurface strata) or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, Release,
transport or handling of Hazardous Materials, and all Laws and regulations with
regard to recordkeeping, notification, disclosure and reporting requirements
respecting Hazardous Materials, and all Laws relating to endangered or
threatened species of fish, wildlife and plants and the management or use of
natural resources.
54
"Environmental Liabilities and Costs" means all liabilities, obligations,
responsibilities, obligations to conduct cleanup, losses, damages, deficiencies,
punitive damages, consequential damages, treble damages, costs and expenses
(including, without limitation, all reasonable fees, disbursements and expenses
of counsel, expert and consulting fees and costs of investigations and
feasibility studies and responding to government requests for information or
documents), fines, penalties, restitution and monetary sanctions, interest,
direct or indirect, known or unknown, absolute or contingent, past, present or
future, resulting from any claim or demand, by any Person or entity, whether
based in contract, tort, implied or express warranty, strict liability, joint
and several liability, criminal or civil statute, including any Environmental
Law, or arising from environmental, health or safety conditions, or the Release
or threatened Release of Hazardous Materials into the environment.
"ERISA Affiliate" has the meaning assigned thereto in Section 3.1(j).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Financing Agreement" means the Financing and Security Agreement among First
Alert, Inc., BRK Brands, Inc., BRK Brands Europa LTD. and NationsBank, N.A.
dated May 14, 1997.
"Governmental Entity" has the meaning assigned thereto in Section 3.1(d).
"Hazardous Materials" means all substances defined as hazardous substances in
the National Oil and Hazardous Substances Pollution Contingency Plan, 40 C.F.R.
ss. 300.5, or substances defined as hazardous substances, hazardous materials,
toxic substances, hazardous wastes, pollutants or contaminants, under any
Environmental Law, or substances regulated under any Environmental Law,
including, but not limited to, petroleum (including crude oil or any fraction
thereof), asbestos, and polychlorinated biphenyls.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended.
55
"Indemnified Parties" has the meaning assigned thereto in Section 5.8(b).
"Intellectual Property Rights" has the meaning assigned thereto in Section
3.1(r).
"Laws" has the meaning assigned thereto in Section 3.1(m).
"Lien" means any conditional sale agreement, default of title, easement,
encroachment, encumbrance, hypothecation, infringement, lien, mortgage, pledge,
reservation, restriction, security interest, title retention or other security
arrangement, or any adverse right or interest, charge or claim of any nature
whatsoever of, on, or with respect to any asset, property or property interest;
PROVIDED, HOWEVER, that the term "Lien" shall not include
(i) liens for water and sewer charges and current Taxes not yet due and
payable or being contested in good faith;
(ii) mechanics', carriers', workers', repairers', materialmens',
warehousemens' and other similar liens arising or incurred in the ordinary
course of business; or
(iii) all liens approved in writing by the other party hereto.
"Material Adverse Change" or "Material Adverse Effect" means, when used in
connection with the Company or Parent, any change or effect (or any development
that, insofar as can reasonably be foreseen, is likely to result in any change
or effect) that is materially adverse to the business, properties, assets,
financial condition or results of operations of such party and its Subsidiaries
taken as a whole, other than any such changes or effects (i) set forth or
contemplated by the Company Disclosure Schedule (but not any supplement or
amendment thereto); or (ii) set forth or described in the SEC Documents.
"Merger" has the meaning assigned thereto in Section 1.5.
"Merger Consideration" has the meaning assigned thereto
in Section 2.1.
"Minimum Condition" has the meaning assigned thereto in
Annex A.
56
"Notice of Takeover Proposal" has the meaning assigned
thereto in Section 5.4(b).
"Offer" has the meaning assigned thereto in Section 1.1.
"Offer Documents" has the meaning assigned thereto in
Section 1.3.
"Offer Price" has the meaning assigned thereto in Section
1.1.
"Offer to Purchase" has the meaning assigned thereto in
Section 1.1.
"Option Plans" has the meaning assigned thereto in
Section 2.5(b).
"Option" has the meaning assigned thereto in Section 2.5.
"Parent" means Sunbeam Corporation.
"Paying Agent" has the meaning assigned thereto in
Section 2.2(a).
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permits" has the meaning assigned thereto in Section
3.1(m)(ii).
"Person" means an individual, corporation, partnership, joint venture,
association, trust, unincorporated organization or other entity.
"Product" has the meaning assigned thereto in Section
3.1(v).
"Proxy Statement" has the meaning assigned thereto in
Section 1.8.
"Purchaser" means Sentinel Acquisition, Inc.
"Release" means any release, spill, emission, discharge, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment (including, without limitation, ambient air,
surface water, groundwater, and surface or subsurface strata) or into or out of
any property, in-
57
cluding the movement of Hazardous Materials through or in the air, soil, surface
water, groundwater or property.
"Schedule 14D-1" has the meaning assigned thereto in Section 1.3.
"Schedule 14D-9" has the meaning assigned thereto in Section 1.3.
"SEC" means the United States Securities and Exchange Commission.
"SEC Documents" has the meaning assigned thereto in Section 3.1(e).
"Secretary of State" means the Secretary of State of Delaware.
"Securities Act" means the Securities Act of 1933, as amended.
"Shares" has the meaning assigned thereto in Section 1.1.
"Special Meeting" has the meaning assigned thereto in Section 1.8.
a "Subsidiary" of any Person means any corporation, partnership, joint venture
or other entity in which such Person (i) owns, directly or indirectly, 50% or
more of the outstanding voting securities or equity interests, (ii) is entitled
to elect at least a majority of the Board of Directors or similar governing
body, or (iii) is a general partner.
"Surviving Corporation" means First Alert, Inc. after the Merger.
"Takeover Proposal" has the meaning assigned thereto in Section 5.4(a).
"Tax Returns" has the meaning assigned thereto in Section 3.1(k)(iv).
"Taxes" has the meaning assigned thereto in Section 3.1(k)(iv).
58
"Termination Fee" has the meaning assigned thereto in Section 8.1(b).
"Transactions" has the meaning assigned thereto in Section 1.2(a).
"Transfer Taxes" has the meaning assigned thereto in Section 5.6.
59
IN WITNESS WHEREOF, Parent, the Purchaser and the Company have
caused this Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
SUNBEAM CORPORATION
By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Executive Vice President &
General Counsel
SENTINEL ACQUISITION CORP.
By:/S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Executive Vice President &
General Counsel
FIRST ALERT, INC.
By:/s/ B. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------
Name: B. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: President and Chief Executive
Officer
ANNEX A
CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other
provisions of the Offer, and in addition to (and not in limitation of) the
Purchaser's rights to extend and amend the Offer at any time in its sole
discretion (subject to the provisions of the Merger Agreement), the Purchaser
shall not be required to accept for payment or, subject to any applicable rules
and regulations of the SEC, including Rule 14e-1(c) under the Exchange Act
(relating to the Purchaser's obligation to pay for or return tendered Shares
promptly after termination or withdrawal of the Offer), pay for, and may delay
the acceptance for payment of or, subject to the restriction referred to above,
the payment for, any tendered Shares, and may terminate or amend the Offer as to
any Shares not then paid for, if (i) there shall not have been validly tendered
and not withdrawn prior to the expiration of the Offer such number of Shares
which, when added to the Shares, if any, beneficially owned by Parent, would
constitute at least 50.1% of the Shares outstanding on a fully diluted basis
(the "Minimum Condition"), (ii) any applicable waiting period under the HSR Act
has not expired or terminated, or (iii) at any time on or after the date of the
Merger Agreement and before the time of payment for any such Shares, any of the
following events shall occur and be continuing:
(a) there shall have been any action taken, or any statute, rule, regulation,
judgment, order or injunction promulgated, entered, enforced, enacted, issued or
deemed applicable to the Offer or the Merger by any domestic or foreign Federal
or state governmental regulatory or administrative agency or authority or court
or legislative body or commission which directly or indirectly (l) prohibits, or
imposes any material limitations on, Parent's or the Purchaser's ownership or
operation (or that of any of their respective Subsidiaries or affiliates) of all
or a material portion of their or the Company's businesses or assets, or compels
Parent or the Purchaser or their respective Subsidiaries and affiliates to
dispose of or hold separate any material portion of the business or assets of
the Company or Parent and their respective Subsidiaries, in each case taken as a
whole, (2) prohibits, or makes illegal, the acceptance for payment, payment for
or purchase of Shares or the consummation of the Offer, the Merger or the other
transactions
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contemplated by the Merger Agreement, (3) results in the delay in or restricts
the ability of the Purchaser, or renders the Purchaser unable, to accept for
payment, pay for or purchase some or all of the Shares, (4) imposes material
limitations on the ability of the Purchaser or Parent effectively to exercise
full rights of ownership of the Shares, including, without limitation, the right
to vote the Shares purchased by it on all matters properly presented to the
Company's stockholders, or (5) otherwise materially adversely affects the
consolidated financial condition, businesses or results of operations of the
Company and its Subsidiaries, taken as a whole;
(b) there shall have occurred (1) any general suspension of
trading in, or limitation on prices for, securities on the New York Stock
Exchange or in the NASDAQ National Market System, (2) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States (whether or not mandatory), (3) a commencement of a war, armed
hostilities or other international or national calamity directly or indirectly
involving the United States, (4) any material limitation (whether or not
mandatory) by any foreign or United States governmental authority on the
extension of credit by banks or other financial institutions, (5) a change in
general financial bank or capital market conditions which has a material adverse
effect the ability of financial institutions in the United States to extend
credit or syndicate loans, or (6) in the case of any of the foregoing existing
at the time of the commencement of the Offer, a material acceleration or
worsening thereof;
(c) (1) the representations and warranties of e Company set
forth in the Merger Agreement shall not be true and correct in any material
respect as of the date of the Merger Agreement and as of consummation of the
Offer as though made on or as of such date (unless made as of a certain date),
(2) the Company shall have failed to comply with its covenants and agreements
under the Merger Agreement in all material respects or (3) there shall have
occurred any events or changes which have had or which are reasonably likely to
have a Material Adverse Effect on the Company and its Subsidiaries taken as a
whole;
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(d) the Company's Board of Directors shall have withdrawn, or
modified or changed in a manner adverse to Parent or the Purchaser (including by
amendment of the Schedule 14D-9) its recommendation of the Offer, the Merger
Agreement, or the Merger, or recommended another proposal or offer, or the Board
of Directors of the Company, upon request of the Purchaser, shall fail to
reaffirm such approval or recommendation or shall have resolved to do any of the
foregoing;
(e) the Merger Agreement shall have terminated in accordance
with its terms; or
(f) the Company shall not have obtained a waiver to the
provision in its Financing Agreement that an event of default shall occur and
exist thereunder as a result of the purchase of the Shares in a number equal to
or greater than the Minimum Condition pursuant to the Offer.
which in the sole judgment of Parent or the Purchaser, in any such case, and
regardless of the circumstances (including any action or inaction by Parent or
the Purchaser) giving rise to such condition makes it inadvisable to proceed
with the Offer and/or with such acceptance for payment of or payments for
Shares.
The foregoing conditions are for the sole benefit of Parent
and the Purchaser may be waived by Parent or the Purchaser, in whole or in part
at any time and from time to time in the sole discretion of Parent or the
Purchaser. The failure by Parent or the Purchaser at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right and each
such right shall be deemed an ongoing right which may be asserted at any time
and from time to time.
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