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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) November 17, 1996
Tyco Toys, Inc.
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(Exact name of Registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation)
001-09357 13-3319358
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(Commission File Number) (I.R.S. Employer Identification No.)
6000 Midatlantic Drive, Mt. Laurel, NJ 08054-1516
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (609) 234-7400
Not Applicable
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(Former name or former address, if changed since last report.)
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Item 5. Other Events.
On November 17, 1996, Tyco Toys, Inc., a Delaware corporation ("Tyco"),
entered into an Agreement and Plan of Merger (the "Merger Agreement"), by and
among Tyco, Mattel, Inc., a Delaware corporation ("Mattel") and Truck
Acquisition Corp. a Delaware corporation and wholly owned subsidiary of Mattel
("Sub"). On November 22, 1996, Tyco, Mattel and Sub entered into an Amendment
to Agreement and Plan of Merger (together with the Merger Agreement, the
"Amended Merger Agreement"). Pursuant to the Amended Merger Agreement, Tyco will
be merged with and into Mattel, and Sub will not be involved in the transaction.
The Merger Agreement and the Amendment to Agreement and Plan of Merger are
attached hereto as Exhibits 2.1 and 2.2, respectively.
As a result of the Merger, (i) each outstanding share of common stock,
par value $0.01 per share, of Tyco ("Tyco Common Stock") will be converted
into the right to receive $12.50 worth of common stock, par value $1.00 per
share, of Mattel ("Mattel Common Stock") (or cash in lieu of fractional shares
otherwise deliverable in respect thereof); (ii) each outstanding share of
Series C Mandatory Convertible Redeemable Preferred Stock, par value $0.10 per
share, of Tyco ("Tyco Series C Preferred Stock") will be exchanged for the
same number of shares of Series C Mandatory Convertible Redeemable Preferred
Stock of Mattel, par value $0.10 per share ("Mattel Series C Preferred
Stock"), having substantially the same rights and preferences as the Tyco
Series C Preferred Stock; and (iii) each outstanding share of Series B
Preferred Stock, par value $0.10 per share, of Tyco ("Tyco Series B Preferred
Stock"), will be exchanged for one share of Series B Preferred Stock, par
value $1.00 per share, of Mattel ("Mattel Series B Preferred Stock") with
economic terms as nearly equivalent as possible to, and with the same voting
and other rights as correspond to, Tyco Series B Preferred Stock.
The Merger is conditioned upon, among other things, approval by holders
of Tyco Common Stock, Tyco Series C Preferred Stock and Tyco Series B
Preferred Stock voting together as a class, and upon receipt of certain
governmental and regulatory approvals and certain tax documents.
The Amended Merger Agreement contains covenants regarding the
activities of the parties pending consummation of the Merger. Generally, each
of the parties must conduct its business in the ordinary course consistent
with past practice.
The forgoing is qualified in its entirety by reference to the Merger
Agreement and the Amended Merger Agreement, copies of which are filed herewith
as Exhibits 2.1 and 2.2, respectively, and are hereby incorporated by
reference to this Item 5.
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Item 7. Financial Statements and Exhibits.
(c) Exhibits
2.1 Agreement and Plan of Merger dated as of November 17, 1996
among Mattel, Inc., a Delaware corporation, Truck
Acquisition Corp., a Delaware corporation, and Tyco Toys,
Inc., a Delaware corporation.
2.2 Amendment to Agreement and Plan of Merger dated as of
November 22, 1996 among Mattel, Inc., a Delaware
corporation, Truck Acquisition Corp., a Delaware corporation,
and Tyco Toys, Inc., a Delaware corporation.
99.1 Stockholders Agreement, dated as of November 17, 1996,
among Mattel, Inc., a Delaware corporation, Corporate
Partners, L.P., a Delaware Limited Partnership, Corporate
Offshore L.P., a Bermuda Limited Partnership, The State
Board of Administration of Florida, a body corporate
organized under the constitution of the State of Florida,
and Corporate Advisors, L.P.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Tyco Toys, Inc.
(Registrant)
Date: November 22, 1996 By: /s/ Harry J. Pearce
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Harry J. Pearce
Vice Chairman, Chief Financial Officer
and Director
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AGREEMENT AND PLAN
OF MERGER
DATED AS OF
NOVEMBER 17, 1996
AMONG
MATTEL, INC.,
TRUCK ACQUISITION CORP.
AND
TYCO TOYS, INC.
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TABLE OF CONTENTS
ARTICLE I
THE MERGER
Section 1.1 The Merger.................................................. 1
Section 1.2 Effective Date of the Merger................................ 2
ARTICLE II
THE SURVIVING CORPORATION
Section 2.1 Certificate of Incorporation................................ 2
Section 2.2 By-Laws..................................................... 2
Section 2.3 Board of Directors; Officers................................ 2
Section 2.4 Effects of Merger........................................... 2
ARTICLE III
CONVERSION OF SHARES
Section 3.1 Exchange Ratio.............................................. 2
Section 3.2 Parent to Make Certificates Available....................... 4
Section 3.3 Dividends; Transfer Taxes................................... 5
Section 3.4 No Fractional Shares........................................ 5
Section 3.5 Company Shareholders' Meeting............................... 6
Section 3.6 Closing of the Company's Transfer Books..................... 6
Section 3.7 Assistance in Consummation of the Merger.................... 7
Section 3.8 Closing..................................................... 7
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
Section 4.1 Organization and Qualification ............................. 7
Section 4.2 Capitalization ............................................. 8
Section 4.3 Subsidiaries ............................................... 8
Section 4.4 Authority Relative to this Merger
Agreement ................................................ 9
Section 4.5 Reports and Financial Statements ........................... 10
Section 4.6 Absence of Certain Changes or Events ....................... 11
Section 4.7 Litigation ................................................. 11
Section 4.8 Information in Disclosure Documents,
Registration Statements, Etc. ............................ 12
Section 4.9 Employee Benefit Plans ..................................... 12
Section 4.10 ERISA ...................................................... 13
Section 4.11 Takeover Provisions Inapplicable ........................... 13
Section 4.12 Parent Action .............................................. 14
Section 4.13 Compliance with Applicable Laws ............................ 14
Section 4.14 Liabilities ................................................ 14
Section 4.15 Taxes ...................................................... 15
Section 4.16 Certain Agreements ......................................... 15
Section 4.17 Patents, Trademarks, Etc. .................................. 16
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Section 4.18 Product Liability .......................................... 16
Section 4.19 Environment ................................................ 16
Section 4.20 Title to Assets; Liens ..................................... 17
Section 4.21 Parent Ownership of Stock .................................. 17
Section 4.22 [Reserved] ................................................. 17
Section 4.23 Accounting Matters ......................................... 17
Section 4.24 No Material Adverse Effect ................................. 17
ARTICLE IV-A
REPRESENTATIONS AND WARRANTIES REGARDING SUB
Section 4A.1 Organization ............................................... 18
Section 4A.2 Capitalization ............................................. 18
Section 4A.3 Authority Relative to this Merger
Agreement ................................................ 18
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 5.1 Organization and Qualification.............................. 19
Section 5.2 Capitalization.............................................. 19
Section 5.3 Subsidiaries................................................ 20
Section 5.4 Authority Relative to this Merger
Agreement................................................. 21
Section 5.5 Reports and Financial Statements............................ 22
Section 5.6 Absence of Certain Changes or Events........................ 22
Section 5.7 Litigation.................................................. 23
Section 5.8 Information in Disclosure Documents......................... 23
Section 5.9 Employee Benefit Plans...................................... 24
Section 5.10 ERISA....................................................... 24
Section 5.11 Takeover Provisions Inapplicable............................ 25
Section 5.12 Company Action.............................................. 25
Section 5.13 Fairness Opinion............................................ 26
Section 5.14 Financial Advisor........................................... 26
Section 5.15 Compliance with Applicable Laws............................. 26
Section 5.16 Liabilities................................................. 27
Section 5.17 Taxes....................................................... 27
Section 5.18 Certain Agreements.......................................... 27
Section 5.19 Accounts Receivable......................................... 28
Section 5.20 Inventory................................................... 28
Section 5.21 Patents, Trademarks, Etc.................................... 29
Section 5.22 Product Liability........................................... 29
Section 5.23 Environment................................................. 29
Section 5.24 Title to Assets; Liens...................................... 29
Section 5.25 Accounting Matters.......................................... 30
Section 5.26 No Material Adverse Effect.................................. 30
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ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.1 Conduct of Business by the Company
Pending the Merger........................................ 30
Section 6.2 Conduct of Business by Parent and Sub
Pending the Merger........................................ 33
Section 6.3 Notice of Breach............................................ 33
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Access and Information ..................................... 33
Section 7.2 Registration Statement/Proxy Statement ..................... 34
Section 7.3 Compliance with the Securities Act ......................... 34
Section 7.4 Stock Exchange Listing ..................................... 35
Section 7.5 Employment Arrangements .................................... 35
Section 7.6 Indemnification ............................................ 36
Section 7.7 Antitrust Filings; Best Efforts;
Notification ............................................. 36
Section 7.8 Additional Agreements ...................................... 38
Section 7.9 No Solicitation ............................................ 40
Section 7.10 Dividend Adjustment ........................................ 41
Section 7.11 Takeover Provisions Inapplicable ........................... 42
ARTICLE VIII
CONDITIONS PRECEDENT
Section 8.1 Conditions to Each Party's Obligation to
Effect the Merger ........................................ 42
Section 8.2 Conditions to Obligation of the Company
to Effect the Merger ..................................... 43
Section 8.3 Conditions to Obligations of Parent
and Sub to Effect the Merger ............................. 44
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination................................................. 45
Section 9.2 Effect of Termination....................................... 46
Section 9.3 Amendment................................................... 48
Section 9.4 Waiver...................................................... 48
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Non-Survival of Representations,
Warranties and Agreements................................. 48
Section 10.2 Notices..................................................... 48
Section 10.3 Fees and Expenses........................................... 49
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Section 10.4 Publicity................................................... 50
Section 10.5 Specific Performance........................................ 50
Section 10.6 Interpretation.............................................. 50
Section 10.7 Miscellaneous............................................... 50
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Merger Agreement"), dated as
of November 17, 1996, by and among Mattel, Inc., a Delaware corporation
("Parent"), Truck Acquisition Corp., a Delaware corporation and a wholly owned
subsidiary of Parent ("Sub"), and Tyco Toys, Inc., a Delaware corporation (the
"Company"):
W I T N E S S E T H:
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WHEREAS, the Boards of Directors of Parent, Sub and the Company have
approved the acquisition of the Company by Parent;
WHEREAS, the Boards of Directors of Parent, Sub and the Company have
approved the merger of Sub into the Company (the "Merger"), upon the terms and
subject to the conditions set forth herein;
WHEREAS, certain significant stockholders of the Company have entered
into a support agreement, dated as of the date hereof, pursuant to which such
stockholders have agreed to vote in favor of the transaction and to consent to
the treatment of the Company Series B Preferred Stock (as defined below) as
contemplated by this Agreement;
WHEREAS, for federal income tax purposes, it is intended that the
Merger shall qualify as a "reorganization" within the meaning of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, for accounting purposes, it is intended that the Merger shall
be accounted for as a "pooling of interests";
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties and agreements contained herein, the parties hereto
agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the conditions
hereof, on the Effective Date (as defined below in Section 1.2), Sub shall be
merged into the Company and the separate existence of Sub shall thereupon
cease, and the name of the Company, as the surviving corporation in the Merger
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(the "Surviving Corporation"), shall by virtue of the Merger remain "Tyco Toys,
Inc."
Section 1.2 Effective Date of the Merger. The Merger shall become
effective when a properly executed Certificate of Merger is duly filed with the
Secretary of State of the State of Delaware, which filing shall be made as soon
as practicable after the closing of the transactions contemplated by this
Merger Agreement in accordance with Section 3.8. When used in this Merger
Agreement, the term "Effective Date" shall mean the date and time at which such
filing shall have been made.
ARTICLE II
THE SURVIVING CORPORATION
Section 2.1 Certificate of Incorporation. The Certificate of
Incorporation of Sub shall be the Certificate of Incorporation of the Surviving
Corporation after the Effective Date, and thereafter may be amended in
accordance with its terms and as provided by law and this Merger Agreement.
Section 2.2 By-Laws. The By-laws of Sub as in effect on the Effective
Date shall be the By-laws of the Surviving Corporation.
Section 2.3 Board of Directors; Officers. The directors of Sub
immediately prior to the Effective Date shall be the directors of the Surviving
Corporation and the officers of the Company immediately prior to the Effective
Date shall be the officers of the Surviving Corporation, in each case until
their respective successors are duly elected and qualified.
Section 2.4 Effects of Merger. The Merger shall have the effects set
forth in Section 259 of the Delaware General Corporation Law (the "DGCL").
ARTICLE III
CONVERSION OF SHARES
Section 3.1 Exchange Ratio. As of the Effective Date, by virtue of the
Merger and without any action on the part of any holder of any capital stock of
the Company:
(a) All shares of capital stock of the Company which are held by the
Company or any subsidiary of the Company, and
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any shares of capital stock of the Company owned by Parent, Sub or any other
subsidiary of Parent, shall be cancelled.
(b) Subject to Section 3.4, each remaining outstanding share of common
stock, $0.01 par value, of the Company ("Company Common Stock") issued and
outstanding immediately prior to the Effective Date shall be converted into a
number of fully paid and nonassessable shares of the common stock, $1.00 par
value, of Parent ("Parent Common Stock") equal to the Exchange Ratio. The
"Exchange Ratio" shall mean the quotient (rounded to the nearest 1/100,000)
obtained by dividing (i) $12.50 by (ii) the average of the high and low sales
prices of Parent Common Stock as reported on the New York Stock Exchange, Inc.
("NYSE") Composite Tape on each of the ten consecutive trading days immediately
preceding the fifth trading date prior to the Effective Date, but in no event
shall the Exchange Ratio be more than .51129 or less than .37791. One nonvoting
preference share purchase right issuable pursuant to the Rights Agreement dated
as of February 7, 1992 between Parent and The First National Bank of Boston or
any other purchase right issued in substitution thereof (the "Parent Rights")
shall be issued together with and shall attach to each share of Parent Common
Stock issued pursuant to Sections 3.1(b), (c), (g) and (h) or upon conversion
of the Parent Series B Preferred Stock (as defined below) issued pursuant to
Section 3.1(d).
(c) Subject to Section 3.4, each remaining outstanding share of Series
C Mandatorily Convertible Redeemable Preferred Stock, par value $.10 per share,
of the Company (the "Company Series C Preferred Stock") issued and outstanding
immediately prior to the Effective Date shall be converted into a number of
fully paid and nonassessable shares of Parent Common Stock equal to the product
of (i) 20.4925 and (ii) the Exchange Ratio.
(d) Subject to Section 3.4, each of the remaining outstanding shares
of Series B Preferred Stock, par value $.10 per share, of the Company (the
"Company Series B Preferred Stock"), issued and outstanding immediately prior
to the Effective Date shall each be converted into a share of Series B
Preferred Stock, par value $1.00 per share, of Parent (the "Parent Series B
Preferred Stock"), with economic terms as nearly equivalent as possible to, and
with the same voting and other rights as correspond to the Company Series B
Preferred Stock.
(e) In the event of any stock dividend, stock split, reclassification,
recapitalization, combination or exchange of shares with respect to, or rights
issued in respect of, Parent Common Stock after the date it is calculated and
prior to the
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Effective Date, the Exchange Ratio shall be adjusted accordingly.
(f) Each issued and outstanding share of capital stock of Sub shall be
converted into and become one fully paid and nonassessable share of common
stock, $.01 par value, of the Surviving Corporation.
(g) Subject to Section 3.4, each of the outstanding rights with
respect to Company Common Stock pursuant to stock options ("Company Stock
Options") granted under the Company Benefit Plans (as defined herein) shall be
converted into and become the right to receive a number of shares of Parent
Common Stock equal to its fair value as of the Effective Date as mutually
agreed between Parent and the Company.
(h) Subject to Section 3.4, each vested Restricted Stock Unit as of
the Effective Date under the Company's Deferred Stock Unit Plan shall be
converted into and become the right to receive a number of shares of Parent
Common Stock equal to the Exchange Ratio, which the parties have determined to
be the "fair value" of such unit. Subject to Section 3.4, each unvested
Restricted Stock Unit as of the Effective Date under the Company's Deferred
Stock Unit Plan shall be converted into and become the right to receive a
number of shares of Parent Common Stock equal to .3272 multiplied by the
Exchange Ratio, which the parties have determined to be the "fair value" of
such unit.
Section 3.2 Parent to Make Certificates Available. Prior to the
Effective Date, Parent shall select The First National Bank of Boston or such
other person or persons reasonably satisfactory to the Company to act as
Exchange Agent for the Merger (the "Exchange Agent"). As soon as practicable
after the Effective Date, Parent shall make available, and each holder of
Company Common Stock, Company Series B Preferred Stock, Company Series C
Preferred Stock, Company Stock Options or Company Restricted Stock Units to be
converted pursuant to Section 3.1 (each, a "Company Holder") will be entitled
to receive, upon surrender to the Exchange Agent of one or more certificates
representing such stock (or in the case of Company Restricted Stock Units and
Company Stock Options, the relevant agreement or other evidence of right and
interest in such Restricted Stock Units or Company Stock Options)
("Certificates") for cancellation, certificates representing the number of
shares of Parent Common Stock or Parent Series B Preferred Stock, as the case
may be, into which such shares or options are converted in the Merger and cash
in consideration of fractional shares as provided in Section 3.4. Such shares
of Parent Common Stock or Parent Series B Preferred Stock
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issued in the Merger shall each be deemed to have been issued at the Effective
Date.
Section 3.3 Dividends; Transfer Taxes. No dividends or other
distributions that are declared or made on Parent Common Stock will be paid to
persons entitled to receive certificates representing Parent Common Stock
pursuant to this Merger Agreement until such persons surrender their
Certificates representing Company Common Stock, Company Series C Preferred
Stock, Company Stock Options or Company Restricted Stock Units, as the case may
be. Upon such surrender, there shall be paid to the person in whose name the
certificates representing such Parent Common Stock shall be issued any
dividends or other distributions which shall have become payable with respect
to such Parent Common Stock in respect of a record date after the Effective
Date. In no event shall the person entitled to receive such dividends be
entitled to receive interest on such dividends. In the event that any
certificates for any shares of Parent Common Stock or Parent Series B Preferred
Stock, as the case may be, are to be issued in a name other than that in which
the Certificates representing shares of Company Common Stock, Company Series B
Preferred Stock, Company Series C Preferred Stock, Company Stock Options or
Company Restricted Stock Units, as the case may be, surrendered in exchange
therefor are registered, it shall be a condition of such exchange that the
person requesting such exchange shall pay to the Exchange Agent any transfer or
other taxes required by reason of the issuance of certificates for such shares
of Parent Common Stock or Parent Series B Preferred Stock, as the case may be
in a name other than that of the registered holder of the Certificate
surrendered, or shall establish to the satisfaction of the Exchange Agent that
such tax has been paid or is not applicable. Notwithstanding the foregoing,
neither the Exchange Agent nor any party hereto shall be liable to a Company
Holder for any shares of Parent Common Stock or dividends thereon or any shares
of Parent Series B Preferred Stock, as the case may be, delivered to a public
official pursuant to any applicable escheat laws.
Section 3.4 No Fractional Shares. No certificates or scrip
representing less than one full share of Parent Common Stock shall be issued
upon the surrender for exchange of Certificates representing Company Common
Stock, Company Series C Preferred Stock, Company Stock Options or Company
Restricted Stock Units pursuant to Section 3.1(b), (c), (g) or (h). In lieu of
any such fractional share, each Company Holder who would otherwise have been
entitled to a fraction of a share of Parent Common Stock upon surrender of
Certificates for exchange pursuant to Section 3.1(b), (c), (g) or (h) shall be
paid upon such surrender cash (without interest) in an amount equal to
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such holder's proportionate interest in the net proceeds from the sale or sales
in the open market by the Exchange Agent, on behalf of all such holders, of the
aggregate fractional Parent Common Stock issued pursuant to this Section 3.4.
As soon as practicable following the Effective Date, the Exchange Agent shall
determine the excess of (i) the number of full shares of Parent Common Stock
delivered to the Exchange Agent by Parent over (ii) the aggregate number of
full shares of Parent Common Stock to be distributed to holders of Company
Common Stock, Company Series C Preferred Stock, Company Stock Options or
Company Restricted Stock Units (such excess being herein called the "Excess
Shares"), and the Exchange Agent, as agent for the former Company Holders,
shall sell the Excess Shares at the prevailing prices on the NYSE. The sale of
the Excess Shares by the Exchange Agent shall be executed on the NYSE through
one or more member firms of the NYSE and shall be executed in round lots to the
extent practicable. Parent shall pay all commissions, transfer taxes and other
out-of-pocket transaction costs, including the expenses and compensation of the
Exchange Agent, incurred in connection with such sale of Excess Shares. Until
the net proceeds of such sale have been distributed to the former Company
Holders, the Exchange Agent will hold such proceeds in trust for such former
stockholders (the "Fractional Securities Fund"). As soon as practicable after
the determination of the amount of cash to be paid to former Company Holders in
lieu of any fractional interests, the Exchange Agent shall make available in
accordance with this Merger Agreement such amounts to such former stockholders.
Section 3.5 Company Shareholders' Meeting. The Company shall take all
action necessary, in accordance with applicable law and its Restated
Certificate of Incorporation and Bylaws, to convene a special meeting of the
holders of capital stock of the Company entitled to vote thereat (the "Company
Meeting") as promptly as practicable for the purpose of considering and taking
action upon this Merger Agreement. Subject to Section 7.9 hereof, the Board of
Directors of the Company will recommend that holders of any capital stock of
the Company entitled to vote thereon vote in favor of and approve the Merger
and the adoption of the Merger Agreement at the Company Meeting. At the Company
Meeting, all of the shares of Company Common Stock, Company Series B Preferred
Stock and Company Series C Preferred Stock then owned by Parent, Sub, or any
other subsidiary of Parent, or with respect to which Parent, Sub, or any other
subsidiary of Parent holds the power to direct the voting, will be voted in
favor of approval of the Merger and adoption of this Merger Agreement.
Section 3.6 Closing of the Company's Transfer Books. At the close of
business on the Effective Date, the stock
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transfer books of the Company shall be closed and no transfer of any shares of
capital stock of the Company shall be made thereafter. In the event that, after
the Effective Date, Certificates are presented to the Surviving Corporation,
they shall be cancelled and exchanged for the securities of Parent and/or cash
as provided in Sections 3.1(b), (c), (d), (g) or (h) and 3.4.
Section 3.7 Assistance in Consummation of the Merger. Each of Parent,
Sub and the Company shall provide all reasonable assistance to, and shall
cooperate with, each other to bring about the consummation of the Merger as
soon as possible in accordance with the terms and conditions of this Merger
Agreement. Parent shall cause Sub to perform all of its obligations in
connection with this Merger Agreement.
Section 3.8 Closing. The closing of the transactions contemplated by
this Merger Agreement shall take place (i) at the offices of Wachtell, Lipton,
Rosen & Katz, 51 West 52nd Street, New York, New York 10019, at 9:00 A.M. local
time on the day which is at least one business day after the day on which the
last of the conditions set forth in Article VIII is fulfilled or waived or (ii)
at such other time and place as Parent and the Company shall agree in writing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to the Company, except as set forth in
a disclosure schedule delivered by Parent concurrently herewith (the "Parent
Disclosure Schedule"), as follows:
Section 4.1 Organization and Qualification. Parent is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has the corporate power to carry on its business as it is
now being conducted or currently proposed to be conducted. Parent is duly
qualified as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of its properties owned or held under
lease or the nature of its activities make such qualification necessary, except
where the failure to be so qualified will not, individually or in the
aggregate, have a Parent Material Adverse Effect. As used in this Agreement,
"Parent Material Adverse Effect" shall mean a material adverse effect on the
business, properties, assets, financial condition, or results of operations of
Parent and its subsidiaries taken as a whole, except for (i) adverse changes
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resulting from general economic, financial or market conditions, (ii) adverse
changes resulting from conditions or circumstances generally affecting the toy
industry, or (iii) adverse changes resulting from the announcement or pendency
of this Merger Agreement or the Merger.
Section 4.2 Capitalization. The authorized capital stock of Parent
consists of 600,000,000 shares of Parent Common Stock, 3,000,000 shares of
preferred stock, $1.00 par value, and 20,000,000 shares of preference stock,
$0.01 par value. As of November 11, 1996, 279,057,614 shares of Parent Common
Stock were validly issued and outstanding, fully paid and nonassessable and
7,223,289 shares of Parent Common Stock were held in treasury. As of November
11, 1996, no shares of preferred stock or preference stock were issued and
outstanding. As of November 11, 1996, there were no bonds, debentures, notes or
other indebtedness having the right to vote on any matters on which the
Parent's shareholders may vote issued or outstanding. As of November 11, 1996,
except for employee stock options to acquire 14,088,204 shares of Parent Common
Stock, the award of an aggregate of 683,593 shares of restricted stock to
certain executive officers of Parent (the "Restricted Stock Issuance") and the
Parent Rights and, except as set forth on Schedule 4.2 and as provided herein,
there are no options, warrants, calls or other rights, agreements or
commitments presently outstanding obligating Parent to issue, deliver or sell
shares of its capital stock or debt securities, or obligating Parent to grant,
extend or enter into any such option, warrant, call or other such right,
agreement or commitment. All of the shares of Parent Common Stock issuable in
accordance with this Merger Agreement in exchange for Company Common Stock at
the Effective Date in accordance with this Merger Agreement will be, when so
issued, duly authorized, validly issued, fully paid and non-assessable.
Section 4.3 Subsidiaries. The only "Significant Subsidiaries" (as such
term is defined in Rule 1-02 of Regulation S-X of the Securities and Exchange
Commission (the "Commission")) ("Significant Subsidiaries") of Parent are those
set forth on Schedule 4.3. Each Significant Subsidiary is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has the corporate power to carry on its
business as it is now being conducted or currently proposed to be conducted.
Each Significant Subsidiary is duly qualified as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character of
its properties owned or held under lease or the nature of its activities makes
such qualification necessary except where the failure to be so qualified will
not have a Parent Material Adverse Effect. All the outstanding shares
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of capital stock of each Significant Subsidiary are validly issued, fully paid
and nonassessable and those owned by Parent or by a Significant Subsidiary of
Parent are owned free and clear of any liens, claims or encumbrances. There are
no existing options, warrants, calls or other rights, agreements or commitments
of any character relating to the issued or unissued capital stock or other
securities of any of the Significant Subsidiaries of Parent. Except as set
forth in Parent's Annual Report on Form 10-K for the fiscal year ended December
31, 1995 and except for wholly owned subsidiaries which are formed after the
date hereof in the ordinary course of business, Parent does not directly or
indirectly own any interests in any other corporation, partnership, joint
venture or other business association or entity which are material to Parent
and its subsidiaries taken as a whole.
Section 4.4 Authority Relative to this Merger Agreement. Parent has
the corporate power to enter into this Merger Agreement and to carry out its
obligations hereunder. The execution and delivery of this Merger Agreement and
the consummation of the transactions contemplated hereby have been duly
authorized by Parent's Board of Directors. This Merger Agreement constitutes a
valid and binding obligation of Parent enforceable in accordance with its terms
except as enforcement may be limited by bankruptcy, insolvency or other similar
laws affecting the enforcement of creditors' rights generally and except that
the availability of equitable remedies, including specific performance, is
subject to the discretion of the court before which any proceeding therefor may
be brought. No other corporate proceedings on the part of Parent are necessary
to authorize the Merger Agreement and the transactions contemplated hereby.
Parent is not subject to or obligated under (i) any charter, by-law, indenture
or other loan document provision (other than the Credit Agreement dated as of
March 10, 1995, among Parent, the Banks named therein and Bank of America
National Trust and Savings Association, as amended (the "Parent Credit
Agreement")) or (ii) any other contract, license, franchise, permit, order,
decree, concession, lease, instrument, judgment, statute, law, ordinance, rule
or regulation applicable to Parent or any of its subsidiaries or their
respective properties or assets, which would be breached or violated, or under
which there would be a default (with or without notice or lapse of time, or
both), or under which there would arise a right of termination, cancellation or
acceleration of any obligation or the loss of a material benefit, by its
executing and carrying out this Merger Agreement other than, in the case of
clause (ii) only, (A) any breaches, violations, defaults, terminations,
cancellations, accelerations or losses which, either singly or in the
aggregate, will not have a Parent Material Adverse Effect or prevent the
consummation of the transactions
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contemplated hereby and (B) the laws and regulations referred to in the next
sentence. Except as referred to herein or in connection, or in compliance, with
the provisions of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), the Securities Act of 1933, as amended (the
"Securities Act"), the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and other governmental approvals required under the applicable
laws of any foreign jurisdiction ("Foreign Laws") and the environmental,
corporation, securities or blue sky laws or regulations of the various states,
no filing or registration with, or authorization, consent or approval of, any
public body or authority is necessary for the consummation by Parent of the
Merger or the other transactions contemplated by this Merger Agreement, other
than filings, registrations, authorizations, consents or approvals the failure
of which to make or obtain would not have a Parent Material Adverse Effect or
prevent the consummation of the transactions contemplated hereby.
Section 4.5 Reports and Financial Statements. Parent has, to the
extent such documents were requested by the Company, previously furnished the
Company with true and complete copies of its (i) Annual Reports on Form 10-K
for the three fiscal years ended December 31, 1995, as filed with the
Commission, (ii) Quarterly Reports on Form 10-Q for the quarters ended March
31, 1996, June 30, 1996 and September 30, 1996, as filed with the Commission,
(iii) proxy statements related to all meetings of its shareholders (whether
annual or special) since December 31, 1994, and (iv) all other reports or
registration statements filed by Parent with the Commission since December 31,
1994, except registration statements on Form S-8 relating to employee benefit
plans, which are all the documents (other than preliminary material) that
Parent was required to file with the Commission since that date (clauses (i)
through (iv) being referred to herein collectively as the "Parent SEC
Reports"). As of their respective dates, the Parent SEC Reports complied in all
material respects with the requirements of the Securities Act or the Exchange
Act, as the case may be, and the rules and regulations of the Commission there-
under applicable to such Parent SEC Reports. As of their respective dates, the
Parent SEC Reports did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading. The audited consolidated financial statements and
unaudited interim financial statements of Parent included in the Parent SEC
Reports comply as to form
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in all material respects with applicable accounting requirements and with the
published rules and regulations of the Commission with respect thereto, and the
financial statements included in the Parent SEC Reports have been prepared in
accordance with United States generally accepted accounting principles ("GAAP")
applied on a consistent basis (except as may be indicated therein or in the
notes thereto or in Schedule 4.5 to the Parent Disclosure Schedule) and fairly
present the financial position of Parent and its subsidiaries as at the dates
thereof and the results of their operations and changes in financial position
for the periods then ended subject, in the case of the unaudited interim
financial statements, to normal year-end audit adjustments and any other
adjustments described therein.
Section 4.6 Absence of Certain Changes or Events. Except as disclosed
in the Parent SEC Reports, since September 30, 1996, there has not been (i) any
transaction, commitment, dispute or other event or condition (financial or
otherwise) of any character (whether or not in the ordinary course of
business), individually or in the aggregate, having a Parent Material Adverse
Effect (other than as a result of changes in laws or regulations of general
applicability); (ii) any damage, destruction or loss, whether or not covered by
insurance, which, insofar as reasonably can be foreseen, in the future would
have a Parent Material Adverse Effect; (iii) any declaration, setting aside or
payment of any dividend or other distribution (whether in cash, stock or
property) with respect to the capital stock of Parent (except for regularly
scheduled cash dividends out of current earnings at a rate not greater than the
rate in effect on September 30, 1996); or (iv) any entry into any commitment or
transaction material to Parent and its subsidiaries taken as a whole
(including, without limitation, any borrowing or sale of assets) except in the
ordinary course of business consistent with past practice.
Section 4.7 Litigation. Except as disclosed in the Parent SEC Reports,
there is no suit, action or proceeding pending or, to the knowledge of Parent,
threatened against or affecting Parent or any of its subsidiaries which, alone
or in the aggregate, is likely, insofar as Parent reasonably foresees, to have
a Parent Material Adverse Effect, nor is there any judgment, decree,
injunction, rule or order of any court, governmental department, commission,
agency, instrumentality or arbitrator outstanding against Parent or any of its
subsidiaries having, or which, insofar as Parent reasonably foresees, in the
future could have, either alone or in the aggregate, any such Parent Material
Adverse Effect.
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Section 4.8 Information in Disclosure Documents, Registration
Statements, Etc. None of the information with respect to Parent or Sub to be
included or incorporated by reference in (i) the Registration Statement to be
filed with the Commission by Parent on Form S-4 under the Securities Act for
the purpose of registering the shares of Parent Common Stock to be issued in
the Merger (the "Registration Statement") and (ii) the proxy statement of the
Company (the "Proxy Statement") required to be mailed to the shareholders of
the Company in connection with the Merger will, in the case of the Proxy
Statement or any amendments or supplements thereto, at the time of the mailing
of the Proxy Statement and any amendments or supplements thereto, and at the
time of the Company Meeting to be held in connection with the Merger, or, in
the case of the Registration Statement, at the time it becomes effective and at
the Effective Date, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading. The Registration Statement will comply as to form in all
material respects with the provisions of the Securities Act, and the rules and
regulations promulgated thereunder.
Section 4.9 Employee Benefit Plans. Except as disclosed in the Parent
SEC Reports, there are no material employee benefit or compensation plans,
agreements or arrangements, including "employee benefit plans," as defined in
Section 3 (3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and including, but not limited to, plans, agreements or
arrangements relating to former employees, including, but not limited, to
retiree medical plans, maintained by Parent or any of its subsidiaries or
material collective bargaining agreements to which Parent or any of its
subsidiaries is a party (together, the "Benefit Plans"). To the best knowledge
of Parent, no default exists with respect to the obligations of Parent or any
of its subsidiaries under any such Benefit Plan, which default, alone or in the
aggregate, would have a Parent Material Adverse Effect. Since January 1, 1996,
there have been no disputes or grievances subject to any grievance procedure,
unfair labor practice proceedings, arbitration or litigation under such Benefit
Plans, which have not been finally resolved, settled or otherwise disposed of,
nor is there any default, or any condition which, with notice or lapse of time
or both, would constitute such a default, under any such Benefit Plans, by
Parent or its subsidiaries or, to the best knowledge of Parent and its
subsidiaries, any other party thereto, which failure to resolve, settle or
otherwise dispose of or default, alone or in the aggregate, would have a Parent
Material Adverse Effect. Since January 1, 1996, there have been no strikes,
lockouts or work stoppages or slowdowns, or to
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the best knowledge of Parent and its subsidiaries, jurisdictional disputes or
organizing activity occurring or threatened with respect to the business or
operations of Parent or its subsidiaries which have had or would have a Parent
Material Adverse Effect.
Section 4.10 ERISA. All Benefit Plans have been administered in
accordance, and are in compliance with the applicable provisions of ERISA,
except where such failures to administer or comply would not have a Parent
Material Adverse Effect. Each of the Benefit Plans which is intended to meet
the requirements of Section 401(a) of the Code has been determined by the
Internal Revenue Service to be "qualified," within the meaning of such section
of the Code, and Parent knows of no fact which is likely to have an adverse
effect on the qualified status of such plans. None of the Benefit Plans which
are defined benefit pension plans have incurred any "accumulated funding
deficiency" (whether or not waived) as that term is defined in Section 412 of
the Code and the fair market value of the assets of each such plan equals or
exceeds the accrued liabilities of such plan. To the best knowledge of Parent,
there are not now nor have there been any non-exempt "prohibited transactions,"
as such term is defined in Section 4975 of the Code or Section 406 of ERISA,
involving Parent's Benefit Plans which could subject Parent or its subsidiaries
to the penalty or tax imposed under Section 502(i) of ERISA or Section 4975 of
the Code. No Benefit Plan which is subject to Title IV of ERISA has been
completely or partially terminated; no proceedings to completely or partially
terminate any Benefit Plan have been instituted within the meaning of Subtitle
C of said Title IV of ERISA; and no reportable event within the meaning of
Section 4043(c) of said Subtitle C for which the 30 day notice requirement has
been waived of ERISA has occurred with respect to any Benefit Plan. Neither the
Parent nor any of its subsidiaries has made a complete or partial withdrawal,
within the meaning of Section 4201 of ERISA, from any multiemployer plan which
has resulted in, or is reasonably expected to result in, any withdrawal
liability to the Parent or any of its subsidiaries except for any such
liability which would not have a Parent Material Adverse Effect. Neither the
Parent nor any of its subsidiaries has engaged in any transaction described in
Section 4069 of ERISA within the last five years except for any such
transaction which would not have a Parent Material Adverse Effect.
Section 4.11 Takeover Provisions Inapplicable. As of the date hereof
and at all times on or prior to the Effective Date, Section 203 of the DGCL and
the Parent Rights are, and shall be, inapplicable to the Merger and the
transactions contemplated by this Merger Agreement.
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Section 4.12 Parent Action. The Board of Directors of Parent (at a
meeting duly called and held) has by the requisite vote of directors (a)
approved the Merger in accordance with the DGCL, (b) taken any necessary steps
to render Section 203 of the DGCL and the Parent Rights inapplicable to the
Merger and the transactions contemplated by this Merger Agreement, and (c)
adopted any necessary resolution having the effect of causing Parent not to be
subject, to the extent permitted by applicable law, to any state takeover law
that may purport to be applicable to the Merger and the transactions
contemplated by this Merger Agreement.
Section 4.13 Compliance with Applicable Laws. Parent and its
subsidiaries hold all permits, licenses, variances, exemptions, orders and
approvals of all courts, administrative agencies or commissions or other
governmental authorities or instrumentalities, domestic or foreign (each, a
"Governmental Entity"), except for such permits, licenses, variances,
exemptions, orders and approvals the failure of which, individually or in the
aggregate, to hold would not have a Parent Material Adverse Effect (the "Parent
Permits"). To the knowledge of Parent, Parent and its subsidiaries are in
compliance with the terms of the Parent Permits, except for such failures to
comply, which singly or in the aggregate, would not have a Parent Material
Adverse Effect. To the knowledge of Parent, except as disclosed in the Parent
SEC Reports filed prior to the date of this Merger Agreement, the businesses of
Parent and its subsidiaries are not being conducted in violation of any law,
ordinance or regulation of any Governmental Entity, except for possible
violations which individually or in the aggregate do not and would not have a
Parent Material Adverse Effect. To the knowledge of Parent, except as disclosed
in the Parent SEC Reports, no investigation or review by any Governmental
Entity with respect to Parent or any of its subsidiaries is pending, or, to the
knowledge of Parent, threatened, nor has any Governmental Entity indicated an
intention to conduct the same, other than those the outcome of which would not
have a Parent Material Adverse Effect.
Section 4.14 Liabilities. As of September 30, 1996, neither Parent nor
any of its subsidiaries has any material liabilities or obligations (absolute,
accrued, contingent or otherwise) of a nature required to be disclosed on a
balance sheet or in the related notes to the consolidated financial statements
prepared in accordance with GAAP which are not disclosed or provided for in the
most recent Parent SEC Reports. To the best knowledge of Parent, there was no
basis, as of September 30, 1996, for any claim or liability (absolute, accrued,
contingent or otherwise) of a nature required to be disclosed on a
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balance sheet or in the related notes to the consolidated financial statements
prepared in accordance with GAAP which is or would have a Parent Material
Adverse Effect, not reflected in the Parent SEC Reports.
Section 4.15 Taxes. Each of Parent and its subsidiaries has filed all
tax returns required to be filed by any of them and has paid (or Parent has
paid on its behalf), or has set up an adequate reserve for the payment of, all
taxes required to be paid in respect of the periods covered by such returns.
The information contained in such tax returns are true, complete and accurate
in all respects. Neither Parent nor any subsidiary of Parent is delinquent in
the payment of any tax, assessment or governmental charge. No deficiencies for
any taxes have been proposed, asserted or assessed against Parent or any of its
subsidiaries that have not been finally settled or paid in full and no requests
for waivers of the time to assess any such tax are pending. The federal income
tax returns of Parent and each of its subsidiaries consolidated in such returns
have been examined by and settled with the Internal Revenue Service for all
years through December 31, 1991. For the purposes of this Merger Agreement, the
term "tax" shall include all federal, state, local and foreign income, profits,
franchise, gross receipts, payroll, sales, employment, use, property,
withholding, excise and other taxes, duties and assessments of any nature
whatsoever together with all interest, penalties and additions imposed with
respect to such amounts. No representation contained in this Section 4.15
(each, a "Parent Relevant Representation") shall be deemed to be untrue unless
all untruths of Parent Relevant Representations cumulatively would be expected
to have a Parent Material Adverse Effect.
Section 4.16 Certain Agreements. Except as disclosed on the Parent
Disclosure Schedule or in the Parent SEC Reports filed prior to the date of
this Merger Agreement, neither Parent nor any of its subsidiaries is a party to
any oral or written (i) agreement, contract, indenture or other instrument
relating to Indebtedness (as defined below) in an amount exceeding $10,000,000
or (ii) other contract, agreement or commitment (except those entered into in
the ordinary course of business) having a Parent Material Adverse Effect.
"Indebtedness" means any liability in respect of (A) borrowed money, (B)
capitalized lease obligations, (C) the deferred purchase price of property or
services (other than trade payables in the ordinary course of business) and (D)
guarantees of any of the foregoing incurred by any person other than the
Parent, as appropriate, or any of their respective subsidiaries, except that
Indebtedness shall not include short term credit facilities entered into in the
ordinary course of business. Neither the
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Parent nor any of its subsidiaries is in default (with or without notice or
lapse of time, or both) under any indenture, note, credit agreement, loan
document, lease, license or other agreement including, but not limited to, any
Benefit Plan, whether or not such default has been waived, which default, alone
or in the aggregate with other such defaults, would have a Parent Material
Adverse Effect.
Section 4.17 Patents, Trademarks, Etc. To the knowledge of Parent,
Parent and its subsidiaries have all patents, trademarks, trade names, service
marks, trade secrets, copyrights and other proprietary intellectual property
rights and licenses as are necessary in connection with the businesses of
Parent and its subsidiaries, the lack of which would have a Parent Material
Adverse Effect, and Parent does not have any knowledge of any conflict with the
rights of Parent and its subsidiaries therein or any knowledge of any conflict
by them with the rights of others therein which, insofar as reasonably can be
foreseen, could, individually or in the aggregate, have a Parent Material
Adverse Effect.
Section 4.18 Product Liability. Parent is not aware of any claim, or
the basis of any claim, against Parent or any of its subsidiaries for injury to
person or property of employees or any third parties suffered as a result of
the sale of any product or performance of any service by Parent or any of its
subsidiaries, including claims arising out of the defective or unsafe nature of
its products or services, which could, individually or in the aggregate, have a
Parent Material Adverse Effect. Parent and its subsidiaries have, and on the
Effective Date will have, full and adequate insurance coverage for potential
product liability claims against it.
Section 4.19 Environment. (i) As used herein, the term "Environmental
Laws" means all federal, state, local or Foreign Laws relating to pollution or
protection of human health or the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface strata),
including, without limitation, laws relating to emissions, discharges, releases
or threatened releases of chemicals, pollutants, contaminants, or industrial,
toxic or hazardous substances or wastes into the environment, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of chemicals, pollutants, contaminants, or
industrial, toxic or hazardous substances or wastes, as well as all
authorizations, codes, decrees, demands or demand letters, injunctions,
judgments, licenses, notices or notice letters, orders, permits, plans or
regulations issued, entered, promulgated or approved thereunder.
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(ii) To the knowledge of Parent, except as set forth in the Parent SEC
Reports and except as set forth on Schedule 4.19, there are, with respect to
Parent or any of its subsidiaries, no past or present violations of
Environmental Laws, releases of any material into the environment, actions,
activities, circumstances, conditions, events, incidents, or contractual
obligations which may give rise to any common law environmental liability or
any liability under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 ("CERCLA") or similar state or local laws, which
liabilities, either individually or in the aggregate, would have a Parent
Material Adverse Effect.
Section 4.20 Title to Assets; Liens. Except as disclosed in the Parent
SEC Reports, to the extent material to the business or operations of Parent and
its subsidiaries, taken as a whole, Parent has good and marketable title to all
of its inventory, accounts receivable, property, equipment and other assets,
and such assets are free and clear of any material mortgages, liens, charges,
encumbrances, or title defects of any nature whatsoever, except for such
mortgages, liens, charges, encumbrances or title defects which would not
materially and adversely affect the value of such property as carried on the
Parent's financial statements contained in the Parent SEC Reports or would not
have a Parent Material Adverse Effect. Parent and its subsidiaries have valid
and enforceable leases for the premises and the equipment, furniture and
fixtures purported to be leased by them except for leases, the failure of which
to have or be enforceable, would not have a Parent Material Adverse Effect.
Section 4.21 Parent Ownership of Stock. As of the date hereof Parent
does not beneficially own any shares of Company Common Stock other than
pursuant to the terms of this Merger Agreement.
Section 4.22 [Reserved]
Section 4.23 Accounting Matters. Except as set forth on Schedule 4.23,
neither Parent nor, to its best knowledge, any of its affiliates, has through
the date hereof, taken or agreed to take any action nor are they aware of any
circumstances which currently exist that would prevent Parent from accounting
for the business combination to be effected by the Merger as a "pooling of
interests."
Section 4.24 No Material Adverse Effect. Except as disclosed in the
Parent SEC Reports, Parent is not aware of any fact which, alone or together
with another fact, is likely to result in a Parent Material Adverse Effect.
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ARTICLE IV-A
REPRESENTATIONS AND WARRANTIES REGARDING SUB
Parent and Sub jointly and severally represent and warrant to the
Company as follows:
Section 4A.1 Organization. Sub is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Sub has not engaged in any business (other than certain organizational matters)
since it was incorporated.
Section 4A.2 Capitalization. The authorized capital stock of Sub
consists of 1,000 shares of common stock, par value $0.01 per share, 1,000
shares of which are validly issued and outstanding, fully paid and
nonassessable and are owned by Parent free and clear of all liens, claims and
encumbrances.
Section 4A.3 Authority Relative to this Merger Agreement. Sub has the
corporate power to enter into this Merger Agreement and to carry out its
obligations hereunder. The execution and delivery of this Merger Agreement and
the consummation of the transactions contemplated hereby have been duly
authorized by its Board of Directors and sole shareholder, and no other
corporate proceedings on the part of Sub are necessary to authorize this Merger
Agreement and the transactions contemplated hereby. Except as referred to
herein or in connection, or in compliance, with the provisions of the HSR Act,
the Securities Act, the Exchange Act, the Foreign Laws and the environmental,
corporation, securities or blue sky laws or regulations of the various states,
no filing or registration with, or authorization, consent or approval of, any
public body or authority is necessary for the consummation by Sub of the Merger
or the transactions contemplated by this Merger Agreement, other than filings,
registrations, authorizations, consents or approvals the failure to make or
obtain would not prevent the consummation of the transactions contemplated
hereby. The Merger Agreement constitutes a valid and binding obligation of Sub
enforceable in accordance with its terms except as enforcement may be limited
by bankruptcy, insolvency or other similar laws affecting the enforcement of
creditors' rights generally and except that the availability of equitable
remedies, including specific performance, is subject to the discretion of the
court before which any proceeding therefor may be brought.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent, except as set forth in
a disclosure schedule delivered by the Company concurrently herewith (the
"Company Disclosure Schedule"), as follows:
Section 5.1 Organization and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has the corporate power to carry on its
business as it is now being conducted or currently proposed to be conducted.
The Company is duly qualified as a foreign corporation to do business, and is
in good standing, in each jurisdiction where the character of its properties
owned or held under lease or the nature of its activities makes such
qualification necessary, except where the failure to be so qualified will not
have a Company Material Adverse Effect. As used in this Agreement, "Company
Material Adverse Effect" shall mean a material adverse effect on the business,
properties, assets, financial condition, or results of operations of the
Company and its subsidiaries taken as a whole, except for (i) adverse changes
resulting from general economic, financial or market conditions, (ii) adverse
changes resulting from conditions or circumstances generally affecting the toy
industry, or (iii) adverse changes resulting from the announcement or pendency
of this Merger Agreement or the Merger. Complete and correct copies as of the
date hereof of the Articles of Incorporation and By-laws of the Company and
each of its Significant Subsidiaries have, to the extent requested, been
delivered to Parent as part of the Company Disclosure Schedule.
Section 5.2 Capitalization. The authorized capital stock of the
Company consists of 75,000,000 shares of Company Common Stock, 1,000,000 shares
of Company Series B Preferred Stock, and 772,800 shares of Company Series C
Preferred Stock. As of November 11, 1996, 34,826,668 shares of Company Common
Stock, 53,631 shares of Company Series B Preferred Stock and 772,800 shares of
Company Series C Preferred Stock were validly issued and outstanding, fully
paid and nonassessable, and 190,490 shares of Company Common Stock were held in
treasury and there have been no material changes in such numbers of shares
through the date hereof. As of the date hereof, there are no bonds, debentures,
notes or other indebtedness having the right to vote on any matters on which
the Company's shareholders may vote issued or outstanding. As of November 11,
1996, except for (i) employee stock options to acquire 1,749,306 shares of
Company Common Stock, (ii) the rights (the
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"Company Rights") issued pursuant to the Rights Agreement dated as of September
8, 1988, between the Company and Manufacturers Hanover Trust Company, as Rights
Agent, (the "Company Rights Agreement"), (iii) 5,631,255 shares of capital
stock of the Company issuable upon conversion of the Company Series B Preferred
Stock, up to 21,464,520 shares of capital stock of the Company issuable upon
conversion of the Company Series C Preferred Stock and 1,603,400 shares of
capital stock of the Company issuable upon conversion of any Indebtedness
convertible into shares of capital stock of the Company there are no options,
warrants, calls or other rights, agreements or commitments presently
outstanding obligating the Company to issue, deliver or sell shares of its
capital stock or debt securities, or obligating the Company to grant, extend or
enter into any such option, warrant, call or other such right, agreement or
commitment, and there have been no material changes in such numbers through the
date hereof. As of the date hereof the conversion ratio for the Company Series
C Preferred Stock is 20.4925.
Section 5.3 Subsidiaries. Except for wholly owned subsidiaries which
were formed after the date hereof in the ordinary course of business, the only
Significant Subsidiaries of the Company are those named in the Company SEC
Reports. Each Significant Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and has the corporate power to carry on its business as it is now
being conducted or currently proposed to be conducted. Each Significant
Subsidiary is duly qualified as a foreign corporation to do business, and is in
good standing, in each jurisdiction where the character of its properties owned
or held under lease or the nature of its activities makes such qualification
necessary except where the failure to be so qualified will not have a Company
Material Adverse Effect. All the outstanding shares of capital stock of each
Significant Subsidiary are validly issued, fully paid and nonassessable and
those owned by the Company or by a subsidiary of the Company are owned free and
clear of any liens, claims or encumbrances. There are no existing options,
warrants, calls or other rights, agreements or commitments of any character
relating to the issued or unissued capital stock or other securities of any of
the Significant Subsidiaries of the Company. Except as set forth in the
Company's Annual Report on Form 10-K for the year ended December 31, 1995 and
except for wholly owned subsidiaries which are formed after the date hereof in
the ordinary course of business, the Company does not directly or indirectly
own any interest in any other corporation, partnership, joint venture or other
business association or entity.
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Section 5.4 Authority Relative to this Merger Agreement. The Company
has the corporate power to enter into this Merger Agreement, subject to the
requisite approval of this Merger Agreement by the holders of (i) Company
Common Stock, Company Series B Preferred Stock and Company Series C Preferred
Stock voting together as a single class and (ii) Company Series C Preferred
Stock voting separately as a class, and to carry out its obligations hereunder.
The execution and delivery of this Merger Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by the Company's
Board of Directors. This Merger Agreement constitutes a valid and binding
obligation of the Company enforceable in accordance with its terms except as
enforcement may be limited by bankruptcy, insolvency or other similar laws
affecting the enforcement of creditors' rights generally and except that the
availability of equitable remedies, including specific performance, is subject
to the discretion of the court before which any proceeding therefor may be
brought. Except for the requisite approval of the holders of (i) Company Common
Stock, Company Series B Preferred Stock and Company Series C Preferred Stock
voting together as a class and (ii) Company Series C Preferred stock voting
separately as a class, no other corporate proceedings on the part of the
Company are necessary to authorize this Merger Agreement and the transactions
contemplated hereby. The Company is not subject to or obligated under (i) any
charter, by-law, indenture or other loan document provision (other than as set
forth in the Company Disclosure Schedule) or (ii) any other contract, license,
franchise, permit, order, decree, concession, lease, instrument, judgment,
statute, law, ordinance, rule or regulation applicable to the Company or any of
its subsidiaries or their respective properties or assets which would be
breached or violated, or under which there would be a default (with or without
notice or lapse of time, or both), or under which there would arise a right of
termination, cancellation or acceleration of any obligation or the loss of a
material benefit, by its executing and carrying out this Merger Agreement,
other than, in the case of clause (ii) only, (A) any breaches, violations,
defaults, terminations, cancellations, accelerations or losses which, either
singly or in the aggregate, will not have a Company Material Adverse Effect or
prevent the consummation of the transactions contemplated hereby and (B) the
laws and regulations referred to in the next sentence. Except as referred to
herein or, with respect to the Merger or the transactions contemplated thereby,
in connection, or in compliance, with the provisions of the HSR Act, the
Securities Act, the Exchange Act, the Foreign Laws and the environmental,
corporation, securities or blue sky laws or regulations of the various states,
no filing or registration with, or authorization, consent or approval of, any
public body or authority is necessary for the consummation by the Company of
the
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Merger or the other transactions contemplated hereby, other than filings,
registrations, authorizations, consents or approvals the failure of which to
make or obtain would not have a Company Material Adverse Effect or prevent the
consummation of the transactions contemplated hereby and thereby.
Section 5.5 Reports and Financial Statements. The Company has
previously furnished Parent with true and complete copies of its (i) Annual
Report on Form 10-K for the year ended December 31, 1995, as filed with the
Commission, (ii) Quarterly Reports on Form 10-Q for the quarters ended March
31, 1996, June 30, 1996 and September 30, 1996, as filed with the Commission,
(iii) proxy statements related to all meetings of its shareholders (whether
annual or special) since December 31, 1994 and (iv) all other reports or
registration statements filed by the Company with the Commission since December
31, 1994, except registration statements on Form S-8 relating to employee
benefit plans, which are all the documents (other than preliminary material)
that the Company was required to file with the Commission since that date
(clauses (i) through (iv) being referred to herein collectively as the "Company
SEC Reports"). As of their respective dates, the Company SEC Reports complied
in all material respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, and the rules and regulations of the
Commission thereunder applicable to such Company SEC Reports. As of their
respective dates, the Company SEC Reports did not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The audited
consolidated financial statements and unaudited interim financial statements of
the Company included in the Company SEC Reports comply as to form in all
material respects with applicable accounting requirements and with the
published rules and regulations of the Commission with respect thereto, and the
financial statements included in the Company SEC Reports, have been prepared in
accordance with GAAP applied on a consistent basis (except as may be indicated
therein or in the notes thereto) and fairly present the financial position of
the Company and its subsidiaries as at the dates thereof and the results of
their operations and changes in financial position for the periods then ended
subject, in the case of the unaudited interim financial statements, to normal
year-end audit adjustments and any other adjustments described therein.
Section 5.6 Absence of Certain Changes or Events. Except as disclosed
in the Company SEC Reports or as set forth on Schedule 5.6 of the Company
Disclosure Schedule, since September 30, 1996, there has not been (i) any
transaction, commitment, dispute or other event or condition (financial or
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otherwise) of any character (whether or not in the ordinary course of business)
individually or in the aggregate having a Company Material Adverse Effect
(other than as a result of changes in laws or regulations of general
applicability); (ii) any damage, destruction or loss, whether or not covered by
insurance, which, insofar as reasonably can be foreseen, in the future would
have a Company Material Adverse Effect; (iii) any declaration, setting aside or
payment of any dividend or other distribution (whether in cash, stock or
property) with respect to the capital stock of the Company (except for required
dividends on the Company Series C Preferred Stock at the rate of 8.25%, payable
in cash and required dividends on the Company Series B Preferred Stock at the
rate of 6.00% payable in cash (the "Regular Company Dividends") in effect on
September 30, 1996), or (iv) any entry into any commitment or transaction
material to the Company and its subsidiaries taken as a whole (including,
without limitation, any borrowing or sale of assets) except in the ordinary
course of business consistent with past practice.
Section 5.7 Litigation. Except as disclosed in the Company's SEC
Reports or as set forth on Schedule 5.7 of the Company Disclosure Schedule,
there is no suit, action or proceeding pending or, to the knowledge of the
Company, threatened against or affecting the Company or any of its subsidiaries
which, either alone or in the aggregate, is likely, insofar as the Company
reasonably foresees, to have a Company Material Adverse Effect, nor is there
any judgment, decree, injunction, rule or order of any court, governmental
department, commission, agency, instrumentality or arbitrator outstanding
against the Company or any of its subsidiaries having, or which, insofar as the
Company reasonably foresees, in the future could have, either alone or in the
aggregate, any such Company Material Adverse Effect.
Section 5.8 Information in Disclosure Documents. None of the
information with respect to the Company or its subsidiaries to be included or
incorporated by reference in the Proxy Statement or the Registration Statement
will, in the case of the Proxy Statement or any amendments or supplements
thereto, at the time of the mailing of the Proxy Statement and any amendments
or supplements thereto, and at the time of the Company Meeting to be held in
connection with the Merger, or, in the case of the Registration Statement, at
the time it becomes effective and at the Effective Date, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they are made, not misleading. The Proxy
Statement will comply
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as to form in all material respects with the provisions of the Exchange Act and
the rules and regulations thereunder.
Section 5.9 Employee Benefit Plans. Except as disclosed in the Company
SEC Reports or as set forth on Schedule 5.9, there are no material employee
benefit or compensation plans, agreements or arrangements, including "employee
benefit plans," as defined in Section 3(3) of ERISA, and including, but not
limited to, plans, agreements or arrangements relating to former employees,
including, but not limited to, retiree medi-cal plans, maintained by the
Company or any of its subsidiaries or material collective bargaining agreements
to which the Company or any of its subsidiaries is a party (together, the
"Company Benefit Plans"). To the best knowledge of the Company, no default
exists with respect to the obligations of the Company or any of its
subsidiaries under such Company Benefit Plan, which default, alone or in the
aggregate, would have a Company Material Adverse Effect. Since January 1, 1996,
there have been no disputes or grievances subject to any grievance procedure,
unfair labor practice proceedings, arbitration or litigation under such Company
Benefit Plans, which have not been finally resolved, settled or otherwise
disposed of, nor is there any default, or any condition which, with notice or
lapse of time or both, would constitute such a default, under any such Company
Benefit Plans, by the Company or its subsidiaries or, to the best knowledge of
the Company and its subsidiaries, any other party thereto, which failure to
resolve, settle or otherwise dispose of or default, alone or in the aggregate,
would have a Company Material Adverse Effect. Since December 31, 1995, there
have been no strikes, lockouts or work stoppages or slowdowns, or to the best
knowledge of the Company and its subsidiaries, jurisdictional disputes or
organizing activity occurring or threatened with respect to the business or
operations of the Company or its subsidiaries which have had or would have a
Company Material Adverse Effect. Except as set forth on Schedule 5.9, neither
the execution of the Merger Agreement nor the consummation of the transactions
contemplated hereby will (either alone or upon the occurrence of additional
events or acts) result in, cause the accelerated vesting or delivery of, or
increase the amount or value of, any payment or benefit to any employee of the
Company or any of its subsidiaries.
Section 5.10 ERISA. All Company Benefit Plans have been administered
in accordance, and are in compliance, with the applicable provisions of ERISA,
except where such failures to administer or comply would not have a Company
Material Adverse Effect. Each of the Company Benefit Plans which is intended to
meet the requirements of Section 401(a) of the Code
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has been determined by the Internal Revenue Service to be "qualified," within
the meaning of such section of the Code, and the Company knows of no fact which
is likely to have an adverse effect on the qualified status of such plans. None
of the Company Benefit Plans which are defined benefit pension plans have
incurred any "accumulated funding deficiency" (whether or not waived) as that
term is defined in Section 412 of the Code and the fair market value of the
assets of each such plan equal or exceed the accrued liabilities of such plan.
To the best knowledge of the Company, there are not now nor have there been any
non-exempt "prohibited transactions," as such term is defined in Section 4975
of the Code or Section 406 of ERISA, involving the Company's Benefit Plans
which could subject the Company, its subsidiaries or Parent to the penalty or
tax imposed under Section 502(i) of ERISA or Section 4975 of the Code. No
Company Benefit Plan which is subject to Title IV of ERISA has been completely
or partially terminated; no proceedings to completely or partially terminate
any Company Benefit Plan have been instituted within the meaning of Subtitle C
of said Title IV of ERISA; and no reportable event within the meaning of
Section 4043(c) of said Subtitle C for which the 30-day notice requirement has
been waived of ERISA has occurred with respect to any Company Benefit Plan.
Neither the Company nor any of its subsidiaries has made a complete or partial
withdrawal, within the meaning of Section 4201 of ERISA, from any multiemployer
plan which has resulted in, or is reasonably expected to result in, any
withdrawal liability to the Company or any of its subsidiaries except for any
such liability which would not have a Company Material Adverse Effect. Neither
the Company nor any of its subsidiaries has engaged in any transaction
described in Section 4069 of ERISA within the last five years except for any
such transaction which would not have a Company Material Adverse Effect.
Section 5.11 Takeover Provisions Inapplicable. As of the date hereof
and at all times on or prior to the Effective Date, Section 203 of the DGCL,
the Company Rights Agreement and Article IX of the Company's Restated
Certificate of Incorporation are, and shall be, inapplicable to the Merger and
the transactions contemplated by this Merger Agreement.
Section 5.12 Company Action. The Board of Directors of the Company (at
a meeting duly called and held) has by the requisite vote of directors (a)
determined that the Merger is advisable and fair and in the best interests of
the Company and its shareholders, (b) approved the Merger in accordance with
the provisions of Section 251 of the DGCL, (c) recommended the approval of this
Merger Agreement and the Merger by the holders of the Company Common Stock,
Company Series B Preferred Stock and Company Series C Preferred Stock and
directed that the
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Merger be submitted for consideration by the Company's shareholders entitled to
vote thereon at the Company Meeting, (d) taken all necessary steps to render
Article IX of the Company's Restated Certificate of Incorporation inapplicable
to the Merger and the transactions contemplated by this Merger Agreement, (e)
taken all necessary steps to render the Company Rights Agreement inapplicable
to the Merger and the transactions contemplated by this Merger Agreement, (f)
taken all necessary steps to approve any actions necessary or appropriate to
consummate the transactions contemplated by this Merger Agreement with respect
to the GECC Debt and the 2002 Indenture (each as defined herein) and (g)
adopted any necessary resolution having the effect of causing the Company not
to be subject, to the extent permitted by applicable law, to any state takeover
law that may purport to be applicable to the Merger and the transactions
contemplated by this Merger Agreement.
Section 5.13 Fairness Opinion. The Company has received the opinion of
Allen & Company, financial advisors to the Company, dated the date hereof, to
the effect that the consideration to be received by the Company's shareholders
in the Merger is fair to the shareholders of the Company from a financial point
of view.
Section 5.14 Financial Advisor. Except for Allen & Company, no broker,
finder or investment banker is entitled to any brokerage, finder's or other fee
or commission in connection with the Merger or the transactions contemplated by
this Merger Agreement based upon arrangements made by or on behalf of the
Company, and the fees and commissions payable to Allen & Company as
contemplated by this Section will be the amount set forth in that certain
letter, dated November 17, 1996, from Allen & Company to the Company.
Section 5.15 Compliance with Applicable Laws. The Company and its
subsidiaries hold all permits, licenses, variances, exemptions, orders and
approvals of all Governmental Entities, except for such permits, licenses,
variances, exemptions, orders and approvals the failure of which, individually
or in the aggregate, to hold would not have a Company Material Adverse Effect
(the "Company Permits"). To the knowledge of the Company, the Company and its
subsidiaries are in compliance with the terms of the Company Permits, except
for such failures to comply which, singly or in the aggregate, would not have a
Company Material Adverse Effect. To the knowledge of the Company, except as
disclosed in the Company SEC Reports filed prior to the date of this Merger
Agreement, the businesses of the Company and its subsidiaries are not being
conducted in
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violation of any law, ordinance or regulation of any Governmental Entity,
except for possible violations which individually or in the aggregate do not
and would not have a Company Material Adverse Effect. To the knowledge of the
Company, no investigation or review by any Governmental Entity with respect to
the Company or any of its subsidiaries is pending, or, to the knowledge of the
Company, threatened, nor has any Governmental Entity indicated an intention to
conduct the same, other than those the outcome of which would not have a
Company Material Adverse Effect.
Section 5.16 Liabilities. As of September 30, 1996, neither the
Company nor any of its subsidiaries has any material liabilities or obligations
(absolute, accrued, contingent or otherwise) of a nature required to be
disclosed on a balance sheet or in the related notes to the consolidated
financial statements prepared in accordance with GAAP which are not disclosed
or provided for in the most recent Company SEC Reports. To the best knowledge
of the Company, there was no basis, as of September 30, 1996, for any claim or
liability (absolute, accrued, contingent or otherwise) of a nature required to
be disclosed on a balance sheet or in the related notes to the consolidated
financial statements prepared in accordance with GAAP which is or would have a
Company Material Adverse Effect, not reflected in the Company SEC Reports.
Section 5.17 Taxes. Each of the Company and its subsidiaries has filed
all tax returns required to be filed by any of them and has paid (or the
Company has paid on its behalf), or has set up an adequate reserve for the
payment of, all taxes required to be paid in respect of the periods covered by
such returns. The information contained in such tax returns is true, complete
and accurate. Neither the Company nor any subsidiary of the Company is
delinquent in the payment of any tax, assessment or governmental charge. No
deficiencies for any taxes have been proposed, asserted or assessed against the
Company or any of its subsidiaries that have not been finally settled or paid
in full and no requests for waivers of the time to assess any such tax are
pending. No representation contained in this Section 5.17 (each, a "Relevant
Representation") shall be deemed to be untrue unless all untruths of Relevant
Representations cumulatively would be expected to have a Company Material
Adverse Effect.
Section 5.18 Certain Agreements. Except as disclosed on the Company
Disclosure Schedule or in the Company SEC Reports filed prior to the date of
this Merger Agreement, neither the Company nor any of its subsidiaries is a
party to any oral or written (i) agreement, contract, indenture or other
instrument relating to Indebtedness in an amount exceeding
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$2,000,000, (ii) agreement which, after giving effect to the transactions
contemplated by this Merger Agreement, purports to restrict or bind Parent or
any of its subsidiaries other than the Surviving Corporation and its
subsidiaries in any respect that could have a Parent Material Adverse Effect or
(iii) contract, agreement or commitment (except those entered into in the
ordinary course of business) having a Company Material Adverse Effect. Neither
the Company nor any of its subsidiaries is in default (or would be in default
with notice or lapse of time, or both) under any indenture, note, credit
agreement, loan document, lease, license or other agreement including, but not
limited to, any Company Benefit Plan, whether or not such default has been
waived, which default, alone or in the aggregate with other such defaults,
would have a Company Material Adverse Effect. Except as set forth on Schedule
5.18, none of the Company or any of its subsidiaries is a party to and bound by
any contract, agreement, commitment, plan, arrangement or other understanding
which upon execution of this Merger Agreement or consummation of the
transactions contemplated hereby will (either alone or upon the occurrence of
additional acts or events) result in any material payment becoming due from the
Company or Parent or any of their subsidiaries.
Section 5.19 Accounts Receivable. As of the date hereof, the accounts
receivable of the Company and its subsidiaries as reflected in the most recent
financial statements contained in the Company SEC Reports, to the extent
uncollected on the date hereof, and the accounts receivable reflected on the
books of the Company and its subsidiaries as of the date hereof are valid and
existing and represent monies due, and the Company as of the date hereof, has
made reserves reasonably considered adequate for receivables not collectible in
the ordinary course of business, and (subject to the aforesaid reserves) are
subject to no refunds or other adjustments and to no defenses, rights of
setoff, assignments, restrictions, encumbrances or conditions enforceable by
third parties on or affecting any thereof, except for such refunds,
adjustments, defenses, rights of setoff, assignments, restrictions,
encumbrances or conditions as would not, individually or in the aggregate, have
a Company Material Adverse Effect.
Section 5.20 Inventory. As of the date hereof, the inventories of the
Company and its subsidiaries as reflected in the most recent financial
statements contained in the Company SEC Reports except for normal year-end
adjustments made in accordance with GAAP applied consistently with prior
periods, (i) are carried as provided in the Company SEC Reports not in excess
of the lower of cost or net realizable value and (ii) do not include any
inventory which is obsolete, surplus or not
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usable or saleable in the lawful and ordinary course of business of the Company
and its subsidiaries as heretofore conducted, in each case net of reserves
provided therefor.
Section 5.21 Patents, Trademark, Etc. To the knowledge of the Company,
the Company and its subsidiaries have all patents, trademarks, trade names,
service marks, trade secrets, copyrights and licenses and other proprietary
intellectual property rights and licenses as are necessary in connection with
the businesses of the Company and its subsidiaries, the lack of which would
have a Company Material Adverse Effect, and the Company does not have any
knowledge of any conflict with the rights of the Company and its subsidiaries
therein or any knowledge of any conflict by them with the rights of others
therein which, insofar as reasonably can be foreseen, could, individually or in
the aggregate, have a Company Material Adverse Effect.
Section 5.22 Product Liability. The Company is not aware of any claim,
or the basis of any claim, against the Company or any of its subsidiaries for
injury to person or property of employees or any third parties suffered as a
result of the sale of any product or performance of any service by the Company
or any of its subsidiaries, including claims arising out of the defective or
unsafe nature of its products or services, which could, individually or in the
aggregate, have a Company Material Adverse Effect. The Company and its
subsidiaries have, and on the Effective Date will have, full and adequate
insurance coverage for potential product liability claims against it.
Section 5.23 Environment. To the knowledge of the Company, there are,
except as set forth in the Company SEC Reports, with respect to the Company or
any of its subsidiaries, no past or present violations of Environmental Laws,
releases of any material into the environment, actions, activities,
circumstances, conditions, events, incidents, or contractual obligations which
may give rise to any common law liability or any liability under CERCLA or
similar state or local laws, which liabilities, either individually or in the
aggregate, would have a Company Material Adverse Effect.
Section 5.24 Title to Assets; Liens. To the extent material to the
business or operations of the Company and its subsidiaries, taken as a whole,
the Company has good and marketable title to all of its inventory, accounts
receivable, property, equipment and other assets, and except as disclosed in
the Company's SEC Reports such assets are free and clear of any material
mortgages, liens, charges, encumbrances, or title defects of any nature
whatsoever, except for such mortgages,
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liens, charges, encumbrances or title defects which would not materially and
adversely affect the value of such property as carried on the Company's
financial statements contained in the Company SEC Reports or would not have a
Company Material Adverse Effect. The Company and its subsidiaries have valid
and enforceable leases for the premises and the equipment, furniture and
fixtures purported to be leased by them, except for leases, the failure of
which to have or be enforceable, would not have a Company Material Adverse
Effect.
Section 5.25 Accounting Matters. Neither the Company nor, to its best
knowledge, any of its affiliates, has through the date hereof, taken or agreed
to take any action nor are they aware of any circumstances which currently
exist that would prevent Parent from accounting for the business combination to
be effected by the Merger as a "pooling of interests."
Section 5.26 No Material Adverse Effect. Except as disclosed in the
Company SEC Reports, the Company is not aware of any fact which, alone or
together with another fact, is likely to result in a Company Material Adverse
Effect.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.1 Conduct of Business by the Company Pending the Merger.
Prior to the Effective Date, unless Parent shall otherwise agree in writing:
(i) the Company shall, and shall cause its subsidiaries to, carry on
their respective businesses in the usual, regular and ordinary course in
substantially the same manner as heretofore conducted, and shall, and shall
cause its subsidiaries to, use their diligent efforts to preserve intact
their present business organizations, keep available the services of their
present officers and employees and preserve their relationships with
customers, suppliers and others having business dealings with them to the
end that their goodwill and ongoing businesses shall be unimpaired at the
Effective Date. The Company shall, and shall cause its subsidiaries to, (A)
maintain insurance coverages and its books, accounts and records in the
usual manner consistent with prior practices; (B) comply in all material
respects with all laws, ordinances and regulations of Governmental Entities
applicable to the Company and its subsidiaries; (C) maintain and keep its
properties and equipment in good repair, working order and
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condition, ordinary wear and tear excepted; and (D) perform in all material
respects its obligations under all contracts and commitments to which it is
a party or by which it is bound, in each case other than where the failure
to so maintain, comply or perform, either individually or in the aggregate,
would not result in a Company Material Adverse Effect;
(ii) except as required by this Merger Agreement or as permitted
pursuant to Section 7.10 hereof, the Company shall not and shall not
propose to (A) sell or pledge or agree to sell or pledge any capital stock
owned by it in any of its subsidiaries, (B) amend its Restated Certificate
of Incorporation or Bylaws, (C) split, combine or reclassify its
outstanding capital stock or issue or authorize or propose the issuance of
any other securities in respect of, in lieu of or in substitution for
shares of capital stock of the Company, or declare, set aside or pay any
dividend or other distribution payable in cash, stock or property (other
than Regular Company Dividends), or (D) directly or indirectly redeem,
purchase or otherwise acquire or agree to redeem, purchase or otherwise
acquire any shares of Company capital stock;
(iii) the Company shall not, nor shall it permit any of its
subsidiaries to, (A) except as required by this Merger Agreement, issue,
deliver or sell or agree to issue, deliver or sell any additional shares
of, or rights of any kind to acquire any shares of, its capital stock of
any class, any Indebtedness or any option, rights or warrants to acquire,
or securities convertible into, shares of capital stock other than
issuances of Company Common Stock pursuant to the exercise of employee
stock options outstanding on the date hereof or the conversion of Company
Series C Preferred Stock, Company Series B Preferred Stock or Indebtedness
of the Company; (B) acquire, lease or dispose or agree to acquire, lease or
dispose of any capital assets or any other assets other than in the
ordinary course of business, (C) incur additional Indebtedness or encumber
or grant a security interest in any asset or enter into any other material
transaction other than in each case in the ordinary course of business; (D)
acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial equity interest in, or by any other manner, any
business or any corporation, partnership, association or other business
organization or division thereof, in each case in this Clause (D) which are
material, individually or in the aggregate, to the Company and its
subsidiaries taken as a whole, except that the Company may create new
wholly owned subsidiaries in the
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ordinary course of business; or (E) enter into any contract, agreement,
commitment or arrangement with respect to any of the foregoing;
(iv) except as set forth in the Company Disclosure Schedule, the
Company shall not, nor shall it permit, any of its subsidiaries to, except
as required to comply with applicable law and except as provided in Section
7.5 hereof, (A) adopt, enter into, terminate or amend any bonus, profit
sharing, compensation, severance, termination, stock option, pension,
retirement, deferred compensation, employment or other Company Benefit
Plan, agreement, trust, fund or other arrangement for the benefit or
welfare of any director, officer or current or former employee, (B)
increase in any manner the compensation or fringe benefit of any director,
officer or employee (except for normal increases in the ordinary course of
business that are consistent with past practice and that, in the aggregate,
do not result in a material increase in benefits or compensation expense to
the Company and its subsidiaries relative to the level in effect prior to
such amendment), (C) pay any benefit not provided under any existing plan
or arrangement, (D) grant any awards under any bonus, incentive,
performance or other compensation plan or arrangement or Company Benefit
Plan (including, without limitation, 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), (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 Company Benefit
Plan other than in the ordinary course of business consistent with past
practice, or (F) adopt, enter into, amend or terminate any contract,
agreement, commitment or arrangement to do any of the foregoing;
(v) the Company shall not, nor shall it permit any of its
subsidiaries to, make any investments in non-investment grade securities
provided, however, that the Company will be permitted to create new wholly
owned subsidiaries in the ordinary course of business; and
(vi) the Company shall not, nor shall it permit any of its
subsidiaries to, take or cause to be taken any action, whether before or
after the Effective Date, which would disqualify the Merger as a "pooling
of interests" for accounting purposes or as a "reorganization" within the
meaning of Section 368(a) of the Code.
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Section 6.2 Conduct of Business by Parent and Sub Pending the Merger.
(a) Parent. Prior to the Effective Date, unless the Company shall otherwise
agree in writing or except as otherwise required by this Merger Agreement: (i)
Parent shall, and shall cause its subsidiaries to, carry on their respective
businesses in the usual, regular and ordinary course in substantially the same
manner as heretofore conducted, and shall, and shall cause its material
subsidiaries to, use their best efforts to preserve intact their present
business organizations, keep available the services of their present officers
and employees and preserve their relationships with customers, suppliers and
others having business dealings with them to the end that their goodwill and
ongoing businesses shall be unimpaired at the Effective Date, provided,
however, that nothing contained herein shall prevent Parent from creating new
wholly owned subsidiaries in the ordinary course of business as long as the
creation of such subsidiaries (either alone or in the aggregate) will not have
a Parent Material Adverse Effect; and (ii) the Parent shall not, nor shall it
permit any of its subsidiaries to, take or cause to be taken any action,
whether before or after the Effective Date, which would disqualify the Merger
as a "pooling of interests" for accounting purposes or as a reorganization
within the meaning of Section 368(a) of the Code.
(b) Sub. During the period from the date of this Merger Agreement to
the Effective Date, Sub shall not engage in any activities of any nature except
as provided in or contemplated by this Merger Agreement.
Section 6.3 Notice of Breach. Each party shall promptly give written
notice to the other party upon becoming aware of the occurrence or, to its
knowledge, impending or threatened occurrence, of any event which would cause
or constitute a breach of any of its representations, warranties or covenants
contained or referenced in this Merger Agreement and will use its best efforts
to prevent or promptly remedy the same. Any such notification shall not be
deemed an amendment of the Company Disclosure Schedule or the Parent Disclosure
Schedule.
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Access and Information. Each of the Company and Parent and
their respective subsidiaries shall afford to the other and to the other's
accountants, counsel and other representatives full access during normal
business hours
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(and at such other times as the parties may mutually agree) throughout the
period prior to the Effective Date to all of its properties, books, contracts,
commitments, records and personnel and, during such period, each shall furnish
promptly to the other (i) a copy of each report, schedule and other document
filed or received by it pursuant to the requirements of federal or state
securities laws, and (ii) all other information concerning its business,
properties and personnel as the other may reasonably request. Each of the
Company and Parent shall hold, and shall cause their respective employees and
agents to hold, in confidence all such information in accordance with the terms
of the Confidentiality Agreements, dated September 28, 1995 (as extended by
letter agreement, dated October 14, 1996) and November 8, 1996 between Parent
and the Company (the "Confidentiality Agreements").
Section 7.2 Registration Statement/Proxy Statement. (a) As promptly as
practicable after the execution of this Merger Agreement, the Company and
Parent shall prepare and the Company shall file with the Commission preliminary
proxy materials which shall constitute the preliminary Proxy Statement and a
preliminary prospectus with respect to the Parent Common Stock to be issued in
connection with the Merger. As promptly as practicable after comments are
received from the Commission with respect to the preliminary proxy materials
and after the furnishing by the Company and Parent of all information required
to be contained therein, the Company shall file with the Commission the
definitive Proxy Statement and Parent shall file with the Commission the
Registration Statement and Parent and the Company shall use all reasonable
efforts to cause the Registration Statement to become effective as soon
thereafter as practicable.
(b) Parent and the Company shall make all necessary filings with
respect to the Merger, under the Securities Act and the Exchange Act and the
rules and regulations thereunder, under applicable blue sky or similar
securities laws and shall use all reasonable efforts to obtain required
approvals and clearances with respect thereto.
Section 7.3 Compliance with the Securities Act. (a) Prior to the
Effective Date the Company shall cause to be delivered to Parent an opinion
(satisfactory to counsel for Parent) of the general counsel of the Company or
such law firm as may be reasonably satisfactory to Parent, identifying all
persons who were, in his or its opinion, at the time of the Company Meeting
convened in accordance with Section 3.5, "affiliates" of the Company as that
term is used in paragraphs (c) and (d) of Rule 145 under the Securities Act
(the "Affiliates").
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(b) The Company shall use its diligent efforts to obtain a written
agreement from each person who is identified as a possible Affiliate in the
opinion referred to in clause (a) above, in the form previously approved by the
parties, that he or she will not offer to sell, sell or otherwise dispose of
any of the capital stock of Parent issued to him or her pursuant to the Merger,
except in compliance with Rule 145 or another exemption from the registration
requirements of the Securities Act. The Company shall deliver such written
agreements to Parent on or prior to the Effective Date. The Company shall use
its diligent efforts to cause each person who is identified as an Affiliate in
such opinion to deliver to Parent, on or prior to the earlier of (i) the
mailing of the Proxy Statement/ Prospectus or (ii) the thirtieth day prior to
the Effective Date, a written agreement, in the form to be approved by the
parties hereto, that such Affiliate will not thereafter sell or in any other
way reduce such Affiliate's risk relative to any Parent Common Stock received
in the Merger (within the meaning of the Commission's Financial Reporting
Release No. 1, "Codification of Financing Reporting Policies," Section 201.01
(47 F.R. 21030) (April 15, 1982)), until such time as financial results
(including combined sales and net income) covering at least 30 days of
post-merger operations have been published, except as permitted by Staff
Accounting Bulletin No. 76 issued by the Commission. As soon as is reasonably
practicable but in no event later than 45 days after the end of the first month
ending at least 30 days after the Effective Date, Parent will publish results
including at least 30 days of combined operations of Parent and the Company as
referred to in the written agreements provided for by this Section 7.3(b).
Section 7.4 Stock Exchange Listing. Parent shall use its best efforts
to list on the NYSE, upon official notice of issuance, the shares of Parent
Common Stock to be issued pursuant to the Merger.
Section 7.5 Employment Arrangements. (a) After the Effective Date,
Parent shall, or shall cause the Surviving Corporation to, honor in accordance
with their terms, all employment, severance, consulting and other compensation
contracts between the Company or any of its subsidiaries and any current or
former director, officer or employee thereof, and all provisions for vested
benefits or other vested amounts earned or accrued through the Effective Date
under any Company Benefit Plan, each as of the date hereof except for changes
thereto which are (i) not material, (ii) permitted by this Merger Agreement,
(iii) set forth on Schedule 7.5 hereto, or (iv) otherwise agreed to by the
parties hereto.
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(b) For a period of six months after the Effective Date, Parent shall
provide, or shall cause the Surviving Corporation to provide, generally to the
officers and employees of the Surviving Corporation and its subsidiaries
employee benefits, including, without limitation, pension benefits, health and
welfare benefits, and severance arrangements, on terms and conditions in the
aggregate that are no less favorable as those provided under the Company
Benefit Plans as of the date hereof.
Section 7.6 Indemnification. (a) From and after the Effective Date,
Parent shall indemnify, defend and hold harmless the officers, directors and
employees of the Company (the "Indemnified Parties") against all losses,
expenses, claims, damages or liabilities arising out of the transactions
contemplated by this Merger Agreement to the fullest extent permitted or
required under applicable law. Parent agrees that all rights to indemnification
existing in favor of the directors, officers or employees of the Company as
provided in the Company's Restated Certificate of Incorporation or By-Laws, as
in effect as of the date hereof, with respect to matters occurring through the
Effective Date, shall survive the Merger and shall continue in full force and
effect for a period of not less than six years from the Effective Date. Parent
agrees to cause Surviving Corporation to maintain in effect for not less than
two years after the Effective Date the current policies of directors' and
officers' liability insurance maintained by the Company with respect to matters
occurring prior to the Effective Date; provided, however, that Surviving
Corporation shall not be required to pay an annual premium for such insurance
in excess of $410,000, but in such case shall purchase as much coverage as
possible for such amount.
(b) In the event that any action, suit, proceeding or investigation
relating hereto or to the transactions contemplated by this Merger Agreement is
commenced, whether before or after the Effective Date, the parties hereto agree
to cooperate and use their respective reasonable efforts to vigorously defend
against and respond thereto.
Section 7.7 Antitrust Filings; Best Efforts; Notification. (a) The
Company and Parent shall use their best efforts to file in connection with the
Merger and the transactions contemplated hereby as soon as practicable (i)
notifications under the HSR Act, and (ii) such notifications and filings as may
be required under any Antitrust Laws (as defined below). The Company and Parent
shall use their best efforts to take all action necessary, proper and advisable
under applicable laws and regulations with respect to the following: (x) to
cause the expiration or termination of the applicable waiting periods under the
HSR Act as soon as practicable, including,
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without limitation, by responding as promptly as practicable to any inquiries
received from the Federal Trade Commission (the "FTC") or the Antitrust
Division of the Department of Justice (the "Antitrust Division") or any state
or local governmental entity for additional information or documentation, (y)
with regards to the proper national and multinational authorities to cause the
expiration or termination of applicable waiting periods, the satisfaction of
such other filing requirements, or the issuance of such approvals, consents or
authorizations as may be required with respect to the Antitrust Laws of any
foreign jurisdiction, and (z) to avoid the entry of any decree, judgment,
injunction or other order, whether temporary, preliminary or permanent, under
any Antitrust Law, that would have the effect of prohibiting, preventing or
restricting consummation of the transactions contemplated by this Merger
Agreement or of imposing any material limitation on the conduct of the
businesses of the Company or Parent following consummation of such
transactions; provided, however, that Parent shall not be required to take any
action if Parent determines, in its sole discretion, that it is not in its best
interest to do so.
(b) The Company and Parent shall, in connection with the efforts
referenced in the foregoing paragraph to obtain all requisite approvals and
authorizations for the transactions contemplated by this Merger Agreement under
Antitrust Laws, (i) cooperate in all respects with each other in connection
with any filing or submission and in connection with any investigation or other
inquiry; (ii) promptly inform the other party of any communication to it from
any Governmental Entity and permit the other party to review in advance any
proposed communication from it to any Governmental Entity or third party; and
(iii) not arrange for or participate in any meeting with any Governmental
Entity in respect of any filings, investigation or other inquiry without
consulting with each other in advance, and, to the extent permitted by such
Governmental Entity, giving the other party the opportunity to attend and
participate thereat. The Company shall not enter into any proposed
understanding, undertaking, or agreement with any Governmental Entity in
connection with the transactions contemplated by this Merger Agreement without
the prior written consent of Parent. Parent shall keep the Company reasonably
informed of determinations made pursuant to the proviso of the last sentence of
Section 7.7(a), Section 7.7(c) and of Section 7.7(d).
(c) In connection with the foregoing, if any administrative or
judicial action or proceeding is instituted (or threatened to be instituted)
challenging any transaction contemplated by this Merger Agreement as violative
of any Antitrust Law, each of Parent and the Company shall cooperate and use
its respective best efforts to contest and resist any such
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action or proceeding and to have vacated, lifted, reversed or overturned any
decree, judgment, injunction or other order, whether temporary, preliminary or
permanent, that is in effect and that prohibits, prevents, or restricts
consummation of the transactions contemplated by this Merger Agreement or
imposes any material limitation on the conduct of the businesses of the Company
or Parent following consummation of such transactions, unless and until Parent,
in its sole discretion, determines that to contest or litigate such matters is
not in its best interest.
(d) If any objections are asserted with respect to the transactions
contemplated hereby under any Antitrust Law or if any suit is instituted
challenging any of the transactions contemplated hereby as violative of any
Antitrust Law or regulation, Parent and the Company, if requested by Parent,
shall take such action as may be required or proposed (i) by the applicable
Governmental Entity in order to resolve any such objections as such
Governmental Entity may have to such transactions under such Antitrust Law, or
(ii) by any domestic or foreign court or similar tribunal, in any suit brought
by a private party or Governmental Entity challenging the transactions
contemplated hereby as violative of any Antitrust Law, in order to avoid the
entry of, or to effect the dissolution of, any injunction, temporary
restraining order or other order that has the effect of preventing the
consummation of any of such transactions or would otherwise deprive Parent or
any of its affiliates of any material benefit of the ownership and control its
assets or operations after the Effective Date; provided, however, that the
Company shall not be required to commit to or to implement any action that is
to be consummated prior to the Effective Date; and provided, further, that,
other provisions of this Section 7.7 notwithstanding, Parent shall not be
required to take any action pursuant to this Section 7.7(d) if Parent
determines, in its sole discretion, that it is not in Parent's best interest to
do so.
(e) "Antitrust Law" means the Sherman Act, as amended, the Clayton
Act, as amended, the HSR Act, the Federal Trade Commission Act, as amended, all
other federal, state, or foreign statutes, rules, regulations, orders, decrees,
administrative and judicial doctrines, and other laws that are designed or
intended to prohibit, restrict or regulate actions having the purpose or effect
of monopolization, restraint of trade or lessening of competition through
merger or acquisition.
Section 7.8 Additional Agreements. (a) Subject to the terms and
conditions herein provided (including, without limitation, Section 7.7), each
of the parties hereto agrees to use all reasonable efforts to take, or cause to
be taken, all
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actions and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Merger Agreement, including
using all reasonable efforts to obtain all necessary waivers, consents and
approvals, to effect all necessary registrations and filings (including, but
not limited to, filings with all applicable Governmental Entities) and to lift
any injunction or other legal bar to the Merger (and, in such case, to proceed
with the Merger as expeditiously as possible), subject to the appropriate vote
of the shareholders of the Company. Notwithstanding the foregoing, but subject
to Section 7.7, there shall be no action required to be taken and no action
will be taken in order to consummate and make effective the transactions
contemplated by this Merger Agreement if such action, either alone or together
with another action, would result in a Company Material Adverse Effect or a
Parent Material Adverse Effect.
(b) In case at any time after the Effective Date any further action is
necessary or desirable to carry out the purposes of this Merger Agreement, the
proper officers and/or directors of Parent, the Company and the Surviving
Corporation shall take all such necessary action.
(c) Following the Effective Date, Parent shall use its best efforts to
conduct the business, and shall cause the Surviving Corporation to use its best
efforts to conduct its business, except as otherwise contemplated by this
Merger Agreement, in a manner which would not jeopardize the characterization
of the Merger as a reorganization within the meaning of Section 368(a) of the
Code.
(d) (i) The Company shall, effective at the Effective Date, repay all
obligations of it and its subsidiaries under the credit agreements, revolving
credit facilities and receivable funding facilities with General Electric
Capital Corporation set forth on Schedule 7.8(d) (the "GECC Debt") and obtain a
release of all obligations, liens and security interests thereunder (and Parent
shall use reasonable efforts to cooperate with the Company with respect to the
foregoing and shall provide funding with respect thereto, to the extent the
Company does not have sufficient cash as of the Effective Date to repay all
such obligations), and (ii) Parent shall cause the Company to comply with its
obligations under that certain Indenture dated as of August 15, 1992 pursuant
to which the Company issued its 10 1/8% Senior Subordinated Notes due August
2002 (the "2002 Indenture") pursuant to Article 5 thereof and (iii) Parent will
cause the Company to comply with the covenants and obligations set forth in the
Company's Convertible
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Subordinated Notes, dated September 30, 1991 in the aggregate amount of
$16,034,000.
(e) After the date hereof, the Company shall establish a plan to
provide payments to employees who remain employed by the Company through the
Effective Date and, unless involuntarily terminated without cause by Parent
earlier, for six months thereafter. Payments under such plan shall be made by
the Company on the six month anniversary of the Effective Date or at such
earlier time after the Effective Date as an eligible employee's employment with
the Company or its affiliates shall be terminated involuntarily without cause.
The Company and Parent shall, in writing, mutually select Company employees
eligible to participate in the plan. In no event shall the aggregate payments
under the plan exceed $10,000,000.
Section 7.9 No Solicitation. Subject to the fiduciary duties of the
Board of Directors of the Company as advised by outside counsel, neither the
Company nor any of its subsidiaries shall, directly or indirectly, take (nor
shall the Company authorize or permit its subsidiaries, officers, directors,
employees, representatives, investment bankers, attorneys, accountants or other
agents or affiliates, to take) any action to (i) encourage, solicit or initiate
the submission of any Acquisition Proposal, (ii) enter into any agreement with
respect to any Acquisition Proposal or (iii) participate in any way in
discussions or negotiations with, or furnish any information to, any person in
connection with, or take any other action to facilitate any inquiries or the
making of any proposal that constitutes, or may reasonably be expected to lead
to, any Acquisition Proposal. The Company will promptly communicate to Parent
any solicitation received by the Company and the terms of any proposal or
inquiry, including the identity of the person and its affiliates making the
same, that it may receive in respect of any such transaction, or of any such
information requested from it or of any such negotiations or discussions being
sought to be initiated with it. "Acquisition Proposal" shall mean any proposed
(A) merger, consolidation or similar transaction involving the Company, (B)
sale, lease or other disposition directly or indirectly by merger,
consolidation, share exchange or otherwise of assets of the Company or its
subsidiaries representing 30% or more of the consolidated assets of the Company
and its subsidiaries, (C) issue, sale, or other disposition of (including by
way of merger, consolidation, share exchange or any similar transaction)
securities (or options, rights or warrants to purchase, or securities
convertible into, such securities) representing 30% or more of the voting power
of the Company or (D) transaction in which any person shall acquire beneficial
ownership (as such term is defined in Rule 13d-3 under the Exchange Act), or
the right to
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acquire beneficial ownership or any "group" (as such term is defined under the
Exchange Act) shall have been formed which beneficially owns or has the right
to acquire beneficial ownership of 15% or more of the outstanding Company
Common Stock.
Section 7.10 Dividend Adjustment. (a) Except in the circumstances
described in the next paragraph, prior to the Effective Date the Company and
Parent may, in lieu of their respective regular quarterly dividends covering
the period described in the next sentence, each declare a special dividend on
Company Common Stock and Parent Common Stock, respectively, to holders of
record of such shares as of the record date established therefor (which record
date shall be prior to the Effective Date) with a payment date which is the
same as the Effective Date. Such special dividend may be in an amount per share
not greater than the product of (A) a fraction, (i) the numerator of which
equals the number of days between the payment date with respect to the most
recent regular common stock dividend paid by the Company or Parent, as the case
may be, and the Effective Date and (ii) the denominator of which equals 91, and
(B) the amount of the regular quarterly cash dividend per share of Company
Common Stock or Parent Common Stock most recently paid by the Company or
Parent, as the case may be, prior to the Effective Date.
(b) If the Effective Date occurs after a regularly scheduled record
date for dividends on the Parent Common Stock and before the regularly
scheduled record date for dividends on Company Common Stock that next succeeds
such Parent record date, then the Company may declare a special dividend on the
Company Common Stock to holders of record of such shares as of the record date
established therefor (which record date shall be prior to the Effective Date)
with a payment date which is the same as the payment date for dividends on the
Parent Common Stock to which such Parent record date relates. Such special
dividend may be in an amount per share not greater than the product of (A) a
fraction, (i) the numerator of which equals the number of days between the
payment date with respect to the most recent regular common stock dividend paid
by the Company and such payment date for the Parent Common Stock and (ii) the
denominator of which equals 91, and (B) the amount of the regular quarterly
cash dividend per share of Company Common Stock most recently paid by the
Company prior to the Effective Date.
(c) This section shall be interpreted and, in circumstances where
necessary, appropriately modified so as to give effect to its intent, namely,
that dividends on the Company Common Stock and Parent Common Stock shall be
paid in such a manner as to result in the periods covered by such dividends,
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giving effect to the Merger and anticipated dividend payment dates thereafter,
being synchronous.
Section 7.11 Takeover Provisions Inapplicable. The Company shall (a)
take all action (including, if required, redeeming all of the outstanding
Company Rights or amending or terminating the Company Rights Agreement) so that
the entering into of this Agreement nor the consummation of the transactions
contemplated hereby shall not and will not result in the grant of any rights to
any person under the Company Rights Agreement to purchase or receive additional
shares of capital stock of the Company or enable or require the Company Rights
to be exercised, distributed or triggered in any way and (b) take all action as
may be necessary to render Article IX of the Company's Restated Certificate
of Incorporation inapplicable to this Merger Agreement and the transactions
contemplated hereby.
ARTICLE VIII
CONDITIONS PRECEDENT
Section 8.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Date of the following
conditions:
(a) This Merger Agreement and the transactions contemplated hereby
shall have been approved and adopted by the requisite vote of the holders of
(i) the Company Common Stock, the Company Series B Preferred Stock and the
Company Series C Preferred Stock voting together as a class and (ii) the
Company Series C Preferred Stock voting separately as a class.
(b) The Parent Common Stock issuable in the Merger shall have been
authorized for listing on the NYSE upon official notice of issuance.
(c) The waiting period applicable to the consummation of the Merger
under the HSR Act shall have expired or been terminated and any authorization,
consent or approval required under any Antitrust Law shall have been obtained
or any waiting period applicable to the review of the transactions contemplated
hereby shall have expired or been terminated.
(d) The Registration Statement shall have become effective in
accordance with the provisions of the Securities Act. No stop order suspending
the effectiveness of the Registration Statement shall have been issued by the
Commission and remain in effect.
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(e) No preliminary or permanent injunction or other order by any court
or other judicial or administrative body of competent jurisdiction which
prohibits or prevents the consummation of the Merger shall have been issued and
remain in effect (each party agreeing to use its best efforts to have any such
injunction lifted).
(f) Parent and the Company shall have received letters from Price
Waterhouse LLP and Deloitte & Touche LLP, respectively, to the effect that the
Merger qualifies for "pooling of interests" accounting treatment if consummated
in accordance with this Merger Agreement.
Section 8.2 Conditions to Obligation of the Company to Effect the
Merger. The obligation of the Company to effect the Merger shall be subject to
the fulfillment at or prior to the Effective Date of the additional following
conditions, unless waived by the Company:
(a) Parent and Sub shall have performed in all material respects their
agreements contained in this Merger Agreement required to be performed on or
prior to the Effective Date and the representations and warranties of Parent
and Sub contained in this Merger Agreement shall be true in all material
respects when made and on and as of the Effective Date as if made on and as of
such date, except (i) as contemplated or permitted by this Merger Agreement,
(ii) for representations and warranties which are by their express provisions
made as of a specific date or dates, which were or will be true in all material
respects at such time or times as stated therein, and (iii) that if the
Effective Date occurs after the nine month anniversary of the date hereof
pursuant to the second proviso of Section 9.1(b), then the representations and
warranties need only be true as of the nine month anniversary of the date of
this Merger Agreement, and the Company shall have received a certificate of the
President or Chief Executive Officer or a Vice President of Parent to that
effect.
(b) The Company shall have received a favorable opinion of Baer Marks
& Upham LLP, based upon certain factual representations of the Company, Parent
and Sub reasonably requested by such counsel, dated the Effective Date, to the
effect that the Merger will constitute a "reorganization" for federal income
tax purposes within the meaning of Section 368(a) of the Code.
(c) The consummation of the Merger and the other transactions
contemplated hereby shall not give rise to any Parent Right becoming
exercisable for any security or asset of any person.
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Section 8.3 Conditions to Obligations of Parent and Sub to Effect the
Merger. The obligations of Parent and Sub to effect the Merger shall be subject
to the fulfillment at or prior to the Effective Date of the additional
following conditions, unless waived by Parent:
(a) The Company shall have performed in all material respects its
agreements contained in this Merger Agreement required to be performed on or
prior to the Effective Date and the representations and warranties of the
Company contained in this Merger Agreement shall be true in all material
respects when made and on and as of the Effective Date as if made on and as of
such date, except (i) as contemplated or permitted by this Merger Agreement,
(ii) for representations and warranties which are by their express provisions
made as of a specific date or dates which were or will be true in all material
respects at such date or dates, and (iii) that if the Effective Date occurs
after the nine month anniversary of the date hereof pursuant to the second
proviso of Section 9.1(b), then the representations and warranties need only be
true as of the nine month anniversary of the date of this Merger Agreement, and
Parent and Sub shall have received a certificate of the President or Chief
Executive Officer or a Vice President of the Company to that effect.
(b) Parent shall have received a letter of Deloitte & Touche LLP, the
Company's independent auditors, dated a date within two business days before
the date on which the Registration Statement shall become effective and
addressed to Parent, in form and substance reasonably satisfactory to Parent
and customary in scope and substance for letters delivered by independent
public accountants in connection with registration statements similar to the
Registration Statement.
(c) Parent shall have received a favorable opinion of Wachtell,
Lipton, Rosen & Katz, based upon certain factual representations of the Company
and Parent reasonably requested by such counsel, to the effect that the Merger
will be treated for Federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code.
(d) [Reserved]
(e) Company shall have obtained all consents, appeals, releases or
authorizations from, and shall have made all filings and registrations
("Consents") to or with, any person, including but not limited to any
Governmental Entity necessary to be obtained or made in order to consummate the
transactions contemplated by this Agreement, unless the failure to obtain such
Consents would not, individually or in the aggregate, have
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a Company Material Adverse Effect, except as contemplated by Section 8.3(f).
(f) Parent shall have received the written opinion of Baer Marks &
Upham LLP, dated the Effective Date, to the effect that execution of this
Merger Agreement did not, and that consummation of the Merger will not, violate
any provision of or give any rise to any termination right or to other
additional rights to any person under, the agreement set forth on Schedule
8.3(f) hereto, unless written consent by the other party thereto in form and
substance reasonably satisfactory to Parent is obtained by the Company prior to
the Effective Date.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination. This Merger Agreement may be terminated at
any time prior to the Effective Date, whether before or after approval by the
shareholders of the Company:
(a) by mutual consent of the Board of Directors of Parent and the
Board of Directors of the Company;
(b) by either Parent or the Company if the Merger shall not have been
consummated on or before the nine month anniversary of the date hereof,
provided, that the terminating party is not otherwise in material breach of
its representations, warranties or obligations under this Merger Agreement,
and provided, further, that if the conditions set forth in Section 8.1(c)
or Section 8.1(f) shall not have been satisfied prior to the nine month
anniversary of the date hereof, then the Company may not terminate the
Merger Agreement until the one year anniversary of the date hereof;
(c) by the Company if any of the conditions specified in Sections 8.1
and 8.2 have not been met or waived by the Company at such time as such
condition is no longer capable of satisfaction;
(d) by Parent if any of the conditions specified in Sections 8.1 and
8.3 have not been met or waived by Parent at such time as such condition is
no longer capable of satisfaction;
(e) by Parent if (i) the Company's Board of Directors shall have
withdrawn, modified in a manner adverse to
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Parent, or refrained from making its recommendation concerning the Merger
referred to in Section 3.5 hereof, or shall have disclosed its intention to
change such recommendation, or (ii) the Company shall have entered into an
agreement with a third party (other than a customary confidentiality
agreement) with respect to an Acquisition Proposal;
(f) by the Company if, pursuant to Section 7.9, the Company shall have
entered into an agreement with respect to an Acquisition Proposal, provided
that prior to such termination the Company shall have paid to Parent the
Company Breakup Fee (as defined in Section 9.2); or
(g) by Parent if any requirements or conditions are imposed, or
proposed to be imposed, upon either Parent or the Company or any of their
respective affiliates by any Governmental Entity in connection with the
authorization, consent or approval of such Governmental Entity (or the
expiration or termination of any waiting period applicable to such
Governmental Entity's review of the transactions contemplated by this
Merger Agreement) under any Antitrust Law in connection with the
consummation of the transactions contemplated hereby, or by any domestic or
foreign court or similar tribunal in any suit brought by a private party or
Government Entity challenging the transactions contemplated hereby as
violative of any Antitrust Law, which, in the reasonable opinion of Parent,
would materially restrict or limit the operations of Parent or the Company
or any of their respective affiliates or otherwise deprive Parent or any of
its affiliates of any material benefit of the ownership and control of its
assets or operations after the Effective Date. For purposes of this
paragraph, the term "Governmental Entity" shall not include any foreign
governmental entity other than those of Canada and the European Community.
Section 9.2 Effect of Termination. (a) In the event of termination of
this Merger Agreement by either Parent or the Company, as provided above, this
Merger Agreement shall forthwith become void and (except for the willful breach
of this Merger Agreement by any party hereto) there shall be no liability on
the part of either the Company, Parent or Sub or their respective officers or
directors; provided that Sections 9.2, 10.3 and 10.7 shall survive the
termination.
(b) The Company shall make payment to Parent (by wire transfer or
cashiers check) of a breakup fee in the amount of $40,000,000 (the "Company
Breakup Fee") in the event this
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Merger Agreement is terminated and at the time of such termination Parent is
not in material breach of any representation, warranty or material covenant
contained herein (i) by either party pursuant to Section 9.1(c) or 9.1(d) if
the Company's shareholders shall not have approved and adopted the Merger and
this Merger Agreement and prior to the vote of the Company's shareholders an
Acquisition Proposal shall have been made and within one year of such
termination (x) the Company shall have entered into a definitive agreement with
a third party providing for the acquisition of the Company or a majority of the
Company's assets or voting securities by such third party or the consolidation
or merger of the Company pursuant to which the Company's stockholders will hold
less than a majority of the outstanding voting securities of the resulting
corporation immediately following consummation of such transaction or (y) any
third party shall have acquired beneficial ownership of more than 20% of the
outstanding voting securities of the Company (the "Threshold Amount") other
than an acquisition of securities from the Company in capital raising
transactions without the intention or effect of constituting a Change in
Control (as defined in the Credit Agreement, dated as of February 22, 1995
between the Company and certain of its subsidiaries and General Electric
Capital Corporation), provided, however that with respect to this clause (y) if
a third party acquires beneficial ownership of voting securities of the Company
in excess of the Threshold Amount without the approval of the Board of
Directors of the Company and the Company Rights are not redeemed, then the
Company Breakup Fee will not be payable unless and until a third party acquires
in excess of 50% of the outstanding voting securities of the Company or (ii) by
Parent pursuant to Section 9.1(e); or (iii) by the Company pursuant to Section
9.1(f).
(c) Parent shall make payment to the Company (by wire transfer or
cashiers check) in the amount of $15,000,000 (the "Parent Breakup Fee") in the
event this Merger Agreement is terminated by the Company or Parent under
Section 9.1(b) or by Parent under Section 9.1(g), if, in either case, (i) all
conditions to the obligations of Parent and the Company specified in Article
VIII have been satisfied (other than the condition specified in Section 8.1(c)
or the condition specified in Section 8.1(f), but only, in the case of the
condition specified in Section 8.1(c), if the failure of such condition to be
satisfied is in respect of injunctions or orders issued under the Antitrust
Laws of the United States, and only, in the case of the condition specified in
Section 8.1(f), if the failure of such condition to be satisfied is not related
to any terms or provisions of the Company's benefit plans or securities and not
caused by any action taken by the Company), (ii) the Company shall not be in
material breach of any representation, warranty
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or material covenant contained herein, and (iii) the Company shall have
satisfied its obligations pursuant to Section 3.5, Section 6.1(vi) (in the case
of the condition specified in Section 8.1(f)) and Section 7.7 (in the case of
the condition specified in Section 8.1(c)).
Section 9.3 Amendment. This Merger Agreement may be amended by the
parties hereto, by or pursuant to action taken by their respective Boards of
Directors, at any time before or after approval hereof by the shareholders of
the Company, but, after such approval, no amendment shall be made which changes
the ratios at which any class of capital stock of the Company is to be converted
into capital stock of Parent as provided in Section 3.1 or which in any way
materially adversely affects the rights of such shareholders, without the
further approval of such shareholders. This Merger Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto.
Section 9.4 Waiver. At any time prior to the Effective Date, the
parties hereto, by or pursuant to action taken by their respective Boards of
Directors, may (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
documents delivered pursuant hereto and (iii) waive compliance with any of the
agreements or conditions contained herein provided, however, that no such
waiver shall materially adversely affect the rights the shareholders of the
Company and Parent. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid if set forth in an instrument in writing
signed on behalf of such party.
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Non-Survival of Representations, Warranties and
Agreements. No representations, warranties or agreements in this Merger
Agreement shall survive the Merger, except for the agreements contained in
Sections 3.1, 3.2, 3.3, 3.4, 3.6, 3.7, the agreements referred to in Sections
7.5, 7.6, 7.7, 7.8, 10.1, 10.3 and 10.7 and in the last sentence of Section
7.3(b).
Section 10.2 Notices. All notices or other communications under this
Merger Agreement shall be in writing and shall be given (and shall be deemed to
have been duly given upon receipt) by delivery in person, by cable, telegram,
telex,
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<PAGE>
telecopy or other standard form of telecommunications, or by registered or
certified mail, postage prepaid, return receipt requested, addressed as
follows:
If to the Company:
Tyco Toys, Inc.
6000 Midlantic Drive
Mt. Laurel, New Jersey 08054
Attention: R. Michael Kennedy, Jr., Esq.
General Counsel
Telecopy No.: (609) 273-2885
With a copy to:
Baer Marks & Upham LLP
805 Third Avenue
20th Floor
New York, New York 10022
Attention: Joel M. Handel, Esq.
Telecopy No.: (212) 702-5797
If to Parent or Sub:
Mattel, Inc.
333 Continental Boulevard
El Segundo, California 90245-5012
Attention: Barnett Rosenberg, Esq.
General Counsel
Telecopy No.: (310) 252-2567
With a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Andrew R. Brownstein, Esq.
Telecopy No.: (212) 403-2000
or to such other address as any party may have furnished to the other parties
in writing in accordance with this Section.
Section 10.3 Fees and Expenses. Whether or not the Merger is
consummated, all costs and expenses incurred in connection with this Merger
Agreement and the transactions contemplated by this Merger Agreement shall be
paid by the party incurring such expenses, except that the Parent and Company
agree to each pay 50% of all printing expenses incurred by the parties hereto.
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<PAGE>
Section 10.4 Publicity. So long as this Merger Agreement is in effect,
Parent, Sub and the Company agree to consult with each other in issuing any
press release or otherwise making any public statement with respect to the
transactions contemplated by this Merger Agreement, and none of them shall
issue any press release or make any public statement prior to such
consultation, except as may be required by law or by obligations pursuant to
any listing agreement with any national securities exchange. The commencement
of litigation relating to this Merger Agreement or the transactions
contemplated hereby or any proceedings in connection therewith shall not be
deemed a violation of this Section 10.4.
Section 10.5 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Merger 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 Merger
Agreement and to enforce specifically the terms and provisions hereof in any
court of the United States or any state having jurisdiction, this being in
addition to any other remedy to which they are entitled at law or in equity.
Section 10.6 Interpretation. When a reference is made in this Merger
Agreement to subsidiaries of Parent or the Company, the word "subsidiaries"
means corporations more than 50% of whose outstanding voting securities are
directly or indirectly owned by Parent or the Company, as the case may be. The
headings contained in this Merger Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Merger
Agreement.
Section 10.7 Miscellaneous. This Merger Agreement (including the
documents and instruments referred to herein) (a) constitutes the entire
agreement and supersedes all other prior agreements and understandings, both
written and oral, among the parties, or any of them, with respect to the
subject matter hereof (other than as provided in the Confidentiality
Agreements, as the same may be amended); (b) except as provided in the last
sentence of Section 7.3(b), Sections 7.5 and 7.6, is not intended to confer
upon any other person any rights or remedies hereunder; (c) shall not be
assigned by operation of law or otherwise, except that Sub shall have the right
to assign to Parent or any direct wholly owned subsidiary of Parent any and all
rights and obligations of Sub under this Merger Agreement; and (d) shall be
governed in all respects, including validity, interpretation and effect, by the
laws of the State of Delaware (without giving effect to the provisions thereof
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<PAGE>
relating to conflicts of law). This Merger Agreement may be executed in two or
more counterparts which together shall constitute a single agreement.
[Remainder of Page Intentionally Blank]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Merger
Agreement to be signed by their respective officers thereunder duly authorized
all as of the date first written above.
MATTEL, INC.
By /s/ Harry J. Pearce
-------------------------
Name: Harry J. Pearce
Title: Vice Chairman
TRUCK ACQUISITION CORP.
By /s/ Ned Mansour
-------------------------
Name: Ned Mansour
Title: President
TYCO TOYS, INC.
By /s/ Ned Mansour
-------------------------
Name: Ned Mansour
Title: President of
Corporate
Operations
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<PAGE>
AMENDMENT TO AGREEMENT AND PLAN OF MERGER
THIS AMENDMENT TO AGREEMENT AND PLAN OF MERGER, dated as of
November 22, 1996 (the "Amendment Agreement"), is among Mattel, Inc., a
Delaware corporation ("Parent"), Truck Acquisition Corp., a Delaware
corporation and a wholly owned subsidiary of Parent ("Sub"), and Tyco Toys,
Inc., a Delaware corporation (the "Company").
WHEREAS, the parties hereto have previously entered into
that certain Agreement and Plan of Merger, dated as of November 17, 1996 (the
"Merger Agreement"); and
WHEREAS, Section 9.3 of the Merger Agreement provides that
the Merger Agreement may be amended, pursuant to action of the respective
Board of Directors of each of the parties thereto, by an instrument in writing
signed by each of the parties thereto; and
WHEREAS, the Board of Directors of each of the parties to
the Merger Agreement has authorized the amendment of the Merger Agreement in
the manner and subject to the conditions contemplated hereby; and
WHEREAS, the parties hereto have agreed to amend the Merger
Agreement in certain respects as specified in this Amendment Agreement;
NOW, THEREFORE, in consideration of the premises and
representations, warranties, covenants and agreements set forth herein, the
parties hereby amend and supplement the Merger Agreement as follows:
SECTION 1. Defined Terms. Except as otherwise set forth
herein, capitalized terms used herein and not defined shall have the meaning
provided in the Merger Agreement.
SECTION 2. Effectiveness of Amendments. The parties hereto
agree that the Merger Agreement shall be amended in the manner provided for
herein (the "Amendments"), which Amendments shall be effective upon execution
of this Amendment Agreement (the "Amendment Effective Time").
SECTION 3. The Merger. Section 1.1 of the Merger Agreement
is hereby amended and restated in its entirety to provide as follows:
Section 1.1 The Merger. Upon the terms and subject
to the conditions hereof, on the Effective Date (as defined below in
Section 1.2), the Company shall be merged into Parent and the
separate existence of the Company shall thereupon cease, and the name
of Parent, as the
<PAGE>
surviving corporation in the Merger (the "Surviving Corporation"),
shall remain "Mattel, Inc."
SECTION 4. The Surviving Corporation. Sections 2.1, 2.2 and
2.3 of the Merger Agreement are hereby amended and restated in their entirety
to provide as follows:
Section 2.1 Certificate of Incorporation. The
Certificate of Incorporation of Parent shall be the Certificate of
Incorporation of the Surviving Corporation after the Effective Date,
and thereafter may be amended in accordance with its terms and as
provided by law and this Merger Agreement.
Section 2.2 By-Laws. The By-laws of Parent as in
effect on the Effective Date shall be the By-laws of the Surviving
Corporation.
Section 2.3 Board of Directors; Officers. The
directors and officers of Parent immediately prior to the Effective
Date shall be the directors and officers of the Surviving Corporation
until their respective successors are duly elected and qualified.
SECTION 5. Conversion of Shares. Paragraph (c) of Section
3.1 of the Merger Agreement is hereby amended and restated in its entirety to
provide as follows:
(c) Each of the remaining outstanding shares of
Series C Mandatorily Convertible Redeemable Preferred Stock, par
value $.10 per share, of the Company (the "Company Series C Preferred
Stock") issued and outstanding immediately prior to the Effective
Date shall be converted into a share of Series C Mandatorily
Convertible Redeemable Preferred Stock, $1.00 par value, of Parent
("Parent Series C Preferred Stock"), with substantially the same
rights and preferences as correspond to the Company Series C
Preferred Stock as contemplated by Section III(E) of the Certificate
of Designations for the Company Series C Preferred Stock. Appropriate
alterations to reflect the transactions contemplated by this
Agreement will be made at the Effective Date to the depositary share
agreement relating to the Company Series C Preferred Stock.
SECTION 6. Conversion of Shares. Paragraph (f) of Section
3.1 of the Merger Agreement is hereby amended and restated in its entirety to
provide as follows:
(f) Each issued and outstanding share of capital
stock of Sub shall continue to be issued and outstanding and shall
in all respects be unaffected by the Merger.
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<PAGE>
SECTION 7. Issuance of Shares. Section 3.2 of the Merger
Agreement is hereby amended and restated in its entirety to provide as
follows:
Section 3.2. Parent to Make Certificates Available. Prior to
the Effective Date, Parent shall select The First National Bank of
Boston or such other person or persons reasonably satisfactory to the
Company to act as Exchange Agent for the Merger (the "Exchange
Agent"). As soon as practicable after the Effective Date, Parent
shall make available, and each holder of Company Common Stock,
Company Series B Preferred Stock, Company Series C Preferred Stock,
Company Stock Options or Company Restricted Stock Units to be
converted pursuant to Section 3.1 (each, a "Company Holder") will be
entitled to receive, upon surrender to the Exchange Agent of one or
more certificates representing such stock (or in the case of Company
Restricted Stock Units and Company Stock Options, the relevant
agreement or other evidence of right and interest in such Restricted
Stock Units or Company Stock Options) ("Certificates") for
cancellation, certificates representing the number of shares of
Parent Common Stock, Parent Series B Preferred Stock or Parent Series
C Preferred Stock, as the case may be, into which such shares or
options are converted in the Merger and cash in consideration of
fractional shares as provided in Section 3.4. Such shares of Parent
Common Stock, Parent Series B Preferred Stock or Parent Series C
Preferred Stock issued in the Merger shall each be deemed to have
been issued at the Effective Date.
SECTION 8. Dividends; Transfer Taxes. Section 3.3 of the
Merger Agreement is hereby amended and restated in its entirety to provide as
follows:
Section 3.3. Dividends; Transfer Taxes. No dividends or
other distributions that are declared or made on Parent Common Stock
will be paid to persons entitled to receive certificates representing
Parent Common Stock pursuant to this Merger Agreement until such
persons surrender their Certificates representing Company Common
Stock, Company Stock Options or Company Restricted Stock Units, as
the case may be. Upon such surrender, there shall be paid to the
person in whose name the certificates representing such Parent Common
Stock shall be issued any dividends or other distributions which
shall have become payable with respect to such Parent Common Stock in
respect of a record date after the Effective Date. In no event shall
the person entitled to receive such dividends be entitled to receive
interest on such dividends. In the event that any certificates for
any shares of Parent Common Stock, Parent Series C Preferred Stock or
Parent Series B Preferred Stock, as the case may be, are to be issued
in a name other than that in which the Certificates
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<PAGE>
representing shares of Company Common Stock, Company Series B
Preferred Stock, Company Series C Preferred Stock, Company Stock
Options or Company Restricted Stock Units, as the case may be,
surrendered in exchange therefor are registered, it shall be a
condition of such exchange that the person requesting such exchange
shall pay to the Exchange Agent any transfer or other taxes
required by reason of the issuance of certificates for such shares
of Parent Common Stock, Parent Series C Preferred Stock or Parent
Series B Preferred Stock, as the case may be in a name other than
that of the registered holder of the Certificate surrendered, or
shall establish to the satisfaction of the Exchange Agent that such
tax has been paid or is not applicable. Notwithstanding the
foregoing, neither the Exchange Agent nor any party hereto shall be
liable to a Company Holder for any shares of Parent Common Stock or
dividends thereon or any shares of Parent Series B Preferred Stock
or Parent Series C Preferred Stock, as the case may be, delivered
to a public official pursuant to any applicable escheat laws.
SECTION 9. No Fractional Shares. Section 3.4 of the Merger
Agreement is hereby amended and restated in its entirety to provide as
follows:
Section 3.4. No Fractional Shares. No certificates or scrip
representing less than one full share of Parent Common Stock shall be
issued upon the surrender for exchange of Certificates representing
Company Common Stock, Company Stock Options or Company Restricted
Stock Units pursuant to Section 3.1(b), (g) or (h). In lieu of any
such fractional share, each Company Holder who would otherwise have
been entitled to a fraction of a share of Parent Common Stock upon
surrender of Certificates for exchange pursuant to Section 3.1(b),
(g) or (h) shall be paid upon such surrender cash (without interest)
in an amount equal to such holder's proportionate interest in the net
proceeds from the sale or sales in the open market by the Exchange
Agent, on behalf of all such holders, of the aggregate fractional
Parent Common Stock issued pursuant to this Section 3.4. As soon as
practicable following the Effective Date, the Exchange Agent shall
determine the excess of (i) the number of full shares of Parent
Common Stock delivered to the Exchange Agent by Parent over (ii) the
aggregate number of full shares of Parent Common Stock to be
distributed to holders of Company Common Stock, Company Stock Options
or Company Restricted Stock Units (such excess being herein called
the "Excess Shares"), and the Exchange Agent, as agent for the former
Company Holders, shall sell the Excess Shares at the prevailing
prices on the NYSE. The sale of the Excess Shares by the Exchange
Agent shall be executed on the NYSE through one or more member firms
of the NYSE and shall be executed in round
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<PAGE>
lots to the extent practicable. Parent shall pay all commissions,
transfer taxes and other out-of-pocket transaction costs, including
the expenses and compensation of the Exchange Agent, incurred in
connection with such sale of Excess Shares. Until the net proceeds of
such sale have been distributed to the former Company Holders, the
Exchange Agent will hold such proceeds in trust for such former
stockholders (the "Fractional Securities Fund"). As soon as
practicable after the determination of the amount of cash to be paid
to former Company Holders in lieu of any fractional interests, the
Exchange Agent shall make available in accordance with this Merger
Agreement such amounts to such former stockholders.
SECTION 10. Representations and Warranties of the Company.
Section 5.4 of the Merger Agreement is hereby amended and restated in its
entirety to provide as follows:
Section 5.4 Authority Relative to this Merger
Agreement. The Company has the corporate power to enter into this
Merger Agreement, subject to the requisite approval of this Merger
Agreement by the holders of Company Common Stock, Company Series B
Preferred Stock and Company Series C Preferred Stock voting together
as a single class, and to carry out its obligations hereunder. The
execution and delivery of this Merger Agreement and the consummation
of the transactions contemplated hereby have been duly authorized by
the Company's Board of Directors. This Merger Agreement constitutes a
valid and binding obligation of the Company enforceable in accordance
with its terms except as enforcement may be limited by bankruptcy,
insolvency or other similar laws affecting the enforcement of
creditors' rights generally and except that the availability of
equitable remedies, including specific performance, is subject to the
discretion of the court before which any proceeding therefor may be
brought. Except for the requisite approval of the holders of Company
Common Stock, Company Series B Preferred Stock and Company Series C
Preferred Stock voting together as a class, no other corporate
proceedings on the part of the Company are necessary to authorize
this Merger Agreement and the transactions contemplated hereby. The
Company is not subject to or obligated under (i) any charter, by-law,
indenture or other loan document provision (other than as set forth
in the Company Disclosure Schedule) or (ii) any other contract,
license, franchise, permit, order, decree, concession, lease,
instrument, judgment, statute, law, ordinance, rule or regulation
applicable to the Company or any of its subsidiaries or their
respective properties or assets which would be breached or violated,
or under which there would be a default (with or without notice or
lapse of time, or both), or under which there would arise a right of
termination, cancellation or acceleration of any
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<PAGE>
obligation or the loss of a material benefit, by its executing and
carrying out this Merger Agreement, other than, in the case of clause
(ii) only, (A) any breaches, violations, defaults, terminations,
cancellations, accelerations or losses which, either singly or in the
aggregate, will not have a Company Material Adverse Effect or prevent
the consummation of the transactions contemplated hereby and (B) the
laws and regulations referred to in the next sentence. Except as
referred to herein or, with respect to the Merger or the transactions
contemplated thereby, in connection, or in compliance, with the
provisions of the HSR Act, the Securities Act, the Exchange Act, the
Foreign Laws and the environmental, corporation, securities or blue
sky laws or regulations of the various states, no filing or
registration with, or authorization, consent or approval of, any
public body or authority is necessary for the consummation by the
Company of the Merger or the other transactions contemplated hereby,
other than filings, registrations, authorizations, consents or
approvals the failure of which to make or obtain would not have a
Company Material Adverse Effect or prevent the consummation of the
transactions contemplated hereby and thereby.
SECTION 11. Conditions Precedent. Paragraph (a) of Section
8.1 of the Merger Agreement is hereby amended and restated in its entirety to
provide as follows:
(a) This Merger Agreement and the transactions
contemplated hereby shall have been approved and adopted by the
requisite vote of the holders of the Company Common Stock, the
Company Series B Preferred Stock and the Company Series C Preferred
Stock voting together as a class.
SECTION 12. Conditions Precedent. Paragraph (b) of Section
8.1 of the Merger Agreement is hereby amended and restated in its entirety to
provide as follows:
(b) The Parent Common Stock and the Parent Series C
Preferred Stock issuable in the Merger shall have been authorized for
listing on the NYSE upon official notice of issuance.
SECTION 13. Conditions Precedent. Paragraph (e) of Section
8.3 of the Merger Agreement is hereby amended by inserting a period after the
phrase "Company Material Adverse Effect" and deleting the remainder of the
such paragraph.
SECTION 14. Conditions Precedent. Paragraph (f) of Section
8.3 of the Merger Agreement is hereby amended and restated in its entirety to
provide as follows:
(f) Notwithstanding paragraph 8.3(e), the Company
shall not be required to obtain a Consent with respect to the
agreement set forth on Schedule 8.3(f).
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<PAGE>
SECTION 15. Conforming Changes. The parties hereto agree to
make such other conforming changes to the Merger Agreement as are necessary to
make each provision consistent with the amendments adopted in this Amendment
Agreement.
SECTION 16. Representations and Warranties of this Amendment
Agreement.
(a) Parent and Sub represent and warrant to the Company that, as to
the matters set forth in Sections 4.4 and 4A.3 of the Merger Agreement, such
matters, mutatis mutandis, are true and correct with respect to this Amendment
Agreement.
(b) The Company represents and warrants to Parent that, as to the
matters set forth in Sections 5.4 of the Merger Agreement, as amended hereby,
such matters, mutatis mutandis, are true and correct with respect to this
Amendment Agreement.
SECTION 17. Miscellaneous.
(a) This Amendment Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without regard to its rules
of conflict of laws.
(b) This Amendment Agreement may be executed by the parties hereto in
separate counterparts, each of which shall constitute one and the same
original.
(c) Except as provided in this Amendment Agreement, the Merger
Agreement remains in full force and effect without any amendment or
alteration.
(d) The provisions of Section 10.2, 10.4 and 10.5 contained in the
Merger Agreement are hereby incorporated herein by reference and made
applicable, mutatis mutandis, to this Amendment Agreement.
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amendment
Agreement and caused the same to be duly delivered on their behalf as of the
day and year first written above.
MATTEL, INC.
By /s/ Ned Mansour
-------------------------
Name: Ned Mansour
Title: President of
Corporate
Operations
TRUCK ACQUISITION CORP.
By /s/ Ned Mansour
-------------------------
Name: Ned Mansour
Title: President
TYCO TOYS, INC.
By /s/ Harry J. Pearce
-------------------------
Name: Harry J. Pearce
Title: Vice Chairman
EXHIBIT 99.1
STOCKHOLDERS AGREEMENT
STOCKHOLDERS AGREEMENT, dated as of November 17, 1996, by
and among Mattel, Inc., a Delaware corporation ("Parent"), Corporate
Partners, L.P., a Delaware limited partnership ("Corporate
Partners"), Corporate Offshore Partners, L.P., a Bermuda limited
partnership ("Offshore Partners"), The State Board Administration of
Florida, a body corporate organized under the constitution of the
State of Florida (the "State Board", and together with Corporate
Partners and Offshore Partners, the "Stockholders"), and Corporate
Advisors, L.P., a Delaware limited partnership ("Corporate
Advisors").
WITNESSETH:
WHEREAS, the Stockholders collectively beneficially own
Shares of capital stock ("Company Shares") of Tyco Toys, Inc., a
Delaware corporation (the "Company"), as set forth on Schedule I
hereto; and
WHEREAS, Parent and Company have entered into an Agreement
and Plan of Merger, dated as of the date hereof (the "Merger
Agreement"), pursuant to which, among other things, a subsidiary of
Parent will be merged with and into the Company (the "Merger"); and
WHEREAS, as a condition to its willingness to enter into
the Merger Agreement, Parent has required that the Stockholders
agree, and the Stockholders have agreed, to enter into and abide by
the terms of this Stockholders Agreement;
NOW, THEREFORE, in consideration of the premises, the
mutual covenants and agreements set forth herein and other good and
valuable consideration, the sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. OWNERSHIP OF COMPANY SHARES. Each Stockholder
represents and warrants that such Stockholder has or shares the
right to vote and dispose of the number of Company Shares set
forth opposite such Stockholder's name on Schedule I hereto,
subject to such restrictions as may be applicable under law and
the Stock Purchase Agreement for Series B Voting Convertible
Exchangeable Preferred Stock dated April 15, 1994 between the
Stockholders and Tyco Toys, Inc. (the "Stock Purchase Agree-
ment").
<PAGE>
2. AGREEMENTS OF THE STOCKHOLDERS. Each Stock-
holder covenants and agrees that during the term of this Stock-
holders Agreement:
(a) such Stockholder shall, at any meeting of the
Company's stockholders called for such purpose (including
at any postponements and adjournments thereof), vote, or
cause to be voted, all Company Shares, together with any
other shares of capital stock of the Company acquired after
the date hereof and prior to the termination hereof, in
which such stockholder has the right to vote in favor of
approval and adoption of the Merger Agreement;
(b) except as otherwise expressly permitted hereby and
except as may be required by the Company Certificate of
Designation, such Stockholder shall not, prior to the
Effective Date (as defined in the Agreement) or the earlier
termination of the Merger Agreement in accordance with its
terms, sell, pledge, transfer or otherwise dispose of such
Stockholder's Company Shares; and
(c) such Stockholder shall not in its capacity as a
stockholder of the Company directly or indirectly encourage
or solicit or hold discussions or negotiations with, or
provide any information to, any person, entity or group
(other than Parent or an affiliate thereof) concerning any
Acquisition Proposal (as defined in the Merger Agreement)
(and other than Company in connection with the Merger);
provided that this clause (c) shall not be binding on the
State Board to the extent that Corporate Advisors does not
have the authority to act for the State Board with respect
to the subject matter of this clause (c).
3. TREATMENT OF SERIES B SHARES. (a) Subject to the terms
and conditions of this Stockholders Agreement, each Stockholder and
Parent agree that on the Effective Date as part of the Merger each
share of the Series B Voting Convertible Exchangeable Preferred
Stock, par value $.10 per share ("Series B Shares") beneficially
owned by such Stockholder shall be converted into or exchanged for
one share of a series of preferred stock of Parent having economic
terms as nearly equivalent as possible to, and with the same voting
and other rights as, the Series B Stock, including the right to
convert into common stock of Parent (the "Parent Series B Stock", and
such conversion or exchange hereby referred to as the "Series B
Shares Treatment"), and each Stockholder hereby waives any rights
such
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Stockholder might otherwise have pursuant to Section 3 or Section 4
of the Certificate of Designation for the Series B Shares in effect
as of the date hereof (the "Certificate of Designation") with respect
to such shares solely as a result of the Merger, other than to
receive such Parent Series B Stock.
(b) In the event that the Series B Treatment is deemed or
considered to be, or is determined to require, an amendment to the
Certificate of Designation or to the Restated Certificate of
Incorporation of Company, as amended as of the date hereof (the
"Certificate of Incorporation"), each Stockholder hereby agrees to
vote all of its Company Shares in favor of any amendment to the
Certificate of Designation or the Certificate of Incorporation as may
be necessary to effectuate the Series B Shares Treatment.
(c) From and after the Effective Date, Parent agrees to pay
any and all dividends and distributions on the Parent Series B Shares
(including accrued and unpaid dividends on the Series B Shares) when
due (or, if past due as of the Effective Date, then on the Effective
Date).
4. AUTHORITY OF CORPORATE ADVISORS TO ACT FOR THE STATE
BOARD. (a) Subject to Section 7(b), the State Board and Corporate
Advisors each represents to Parent that Corporate Advisors has full
power and authority, pursuant to the provisions of an Investment
Management Agreement, dated as of June 17, 1988 (the "Management
Agreement"), to act on behalf of the State Board in connection with
the transactions contemplated by this Stockholders Agreement (except
as set forth in the proviso in Section 2(c) hereof) and that Parent
can rely on any action taken by Corporate Advisors in connection
therewith as if such action were taken by the State Board.
(b) Subject to Section 7(b), so long as the Management
Agreement remains in effect without amendment of the provisions
granting Corporate Advisors the authority to act on behalf of the
State Board, any and all actions that are required or permitted to be
taken by the State Board pursuant to this Stockholders Agreement may
be taken by Corporate Advisors on behalf of the State Board and any
and all notices required to be given by Parent to the State Board
pursuant to this Stockholders Agreement may be given to Corporate
Advisors in lieu of giving such notice to the State Board; provided,
however, that the provisions of this sentence shall not relieve the
State Board of any of its obligations pursuant to this Stockholders
Agreement. Parent shall be entitled to assume that, and to act in
reliance on the assumption that, the Management Agreement remains in
effect without amendment of any
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<PAGE>
such provisions unless and until it receives written notice from the
State Board to the contrary.
5. SUCCESSORS AND ASSIGNS. A Stockholder may not sell,
pledge, transfer, convert or otherwise dispose of its Company Shares
except to another Stockholder without the prior written consent of
Parent, which consent shall be granted or withheld in Parent's sole
discretion.
6.(A) REPRESENTATIONS AND WARRANTIES OF PARENT. Par-
ent makes the following representations and warranties to each
Stockholder:
(i) Parent has all requisite corporate power and authority
to enter into this Stockholders Agreement and the Merger Agreement
and to consummate the transactions contemplated hereby and thereby.
The execution and delivery of this Stockholders Agreement and the
Merger Agreement and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by all
necessary corporate action on the part of Parent. Parent has duly
executed and delivered this Stockholders Agreement and the Merger
Agreement and this Stockholders Agreement and the Merger Agreement
constitute its legal, valid and binding obligations enforceable
against it in accordance with their respective terms except as may be
limited by bankruptcy, insolvency or other similar laws affecting the
enforcement of creditors' rights generally and except that the
availability of equitable remedies, including specific performance,
is subject to the discretion of the court before which any proceeding
therefor may be brought.
(ii) Parent is not subject to or obligated under (A) any
charter, by-law, indenture or other loan document provision (other
than the Credit Agreement dated as of March 10, 1995, among Parent,
the Banks named therein and Bank of America National Trust and
Savings Association, as amended (the "Parent Credit Agreement")) or
(B) any other contract, license, franchise, permit, order, decree,
concession, lease, instrument, judgment, statute, law, ordinance,
rule or regulation applicable to Parent or any of its subsidiaries or
their respective properties or assets, which would be breached or
violated, or under which there would be a default (with or without
notice or lapse of time, or both), or under which there would arise a
right of termination, cancellation or acceleration of any obligation
or the loss of a material benefit, by execution and delivery of this
Stockholders Agreement and the Merger Agreement, and the consummation
of the transactions contemplated hereby and thereby (including the
issuance of the Parent Series B Stock, the issuance of shares of
common stock of Parent upon the conversion and the compliance by
Parent with the terms of
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<PAGE>
such securities (collectively, the "Securities")) other than, in the
case of clause (B) only, (X) any breaches, violations, defaults,
terminations, cancellations, accelerations or losses which, either
singly or in the aggregate, will not have a Parent Material Adverse
Effect (as defined in the Merger Agreement) or prevent the
consummation of the transactions contemplated hereby or thereby,
including the issuance of such Securities and compliance by Parent
with the terms thereof and (Y) the laws and regulations referred to
in the next sentence. Except as referred to herein or in connection,
or in compliance, with the provisions of the Hart-Scott-Rodino
Antitrust Improvements Act of 1933, as amended (the "Securities
Act"), the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and other governmental approvals required under the applicable
laws of any foreign jurisdiction ("Foreign Laws") and the
environmental, corporation, securities or blue sky laws or
regulations of the various states, no filing or registration with, or
authorization, consent or approval of, any public body or authority
is necessary for the consummation by Parent of the Merger or the
other transactions contemplated by this Merger Agreement (including
the issuance of the Securities), other than filings, registrations,
authorizations, consents or approvals the failure of which to make or
obtain would not have a Parent Material Adverse Effect or prevent the
consummation of the transactions contemplated hereby or thereby,
including the issuance of the Securities and compliance by Parent
with the terms thereof.
(iii) Status of Shares. The shares of Parent Series B Stock
will be, prior to the Effective Date, duly authorized by all
necessary corporate action on the part of Parent and upon their
issuance will be validly issued and outstanding, fully paid and
nonassessable and free and clear of any liens. The shares of common
stock of Parent issuable upon conversion or exchange of the shares of
Parent Series B Stock or the Parent Notes will be, prior to the
Effective Date validly reserved for issuance, and upon issuance upon
such conversion or exchange will be validly issued and outstanding,
fully paid and nonassessable, and free and clear of any liens. The
notes of Parent issuable upon exchange of the Shares (the "Parent
Notes") will be, prior to issuance thereof, duly authorized by all
necessary corporate action on the part of Parent, and when issued and
exchanged for shares of Parent Series B Stock, will constitute valid
and binding obligations of Parent, enforceable in accordance with
their term except as may be limited by bankruptcy, insolvency or
other similar laws affecting the enforcement of creditors' rights
generally and except that the availability of equitable remedies,
including specific performance, is subject to the discretion of the
court before which any proceeding therefor may be brought. The shares
of common stock of
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<PAGE>
Parent issuable upon conversion or exchange of the Series B Shares
will be authorized for listing upon notice of issuance on the
principal trading market on which shares of common stock of Parent
are traded at such time. The issuance of the Parent Series B Shares
in the Merger will not be subject to any pre-emptive rights.
(B) REPRESENTATIONS OR WARRANTIES OF THE STOCKHOLD-
ERS. Each Stockholder makes the following representations, on
its own behalf, to Parent:
(i) Stockholder has all requisite power and authority to
enter into this Stockholders Agreement. The execution and delivery of
this Stockholders Agreement and the consummation of the transactions
contemplated hereby are duly authorized by all necessary partnership
or other action on the part of Stockholder. Stockholder has duly
executed and delivered this Stockholders Agreement and this
Stockholders Agreement constitutes its legal, valid and binding
obligations enforceable against it in accordance with their
respective terms except as may be limited by bankruptcy, insolvency
or other similar laws affecting the enforcement of creditors' rights
generally and except that the availability of equitable remedies,
including specific performance, is subject to the discretion of the
court before which any proceeding therefor may be brought.
(ii) Stockholder is not subject to or obligated under (A)
any charter, by-law, partnership agreement, indenture or other loan
document provision or (B) any other contract, license, franchise,
permit, order, decree, concession, lease, instrument, judgment,
statute, law, ordinance, rule or regulation applicable to Stockholder
or any of its affiliates or their respective properties or assets,
which would be breached or violated, or under which there would be a
default (with or without notice or lapse of time, or both), or under
which there would arise a right of termination, cancellation or
acceleration of any obligation or the loss of a material benefit, by
execution and delivery of this Stockholders Agreement and the
consummation of the transactions contemplated hereby other than, in
the case of clause (B) only, the Stock Purchase Agreement (for which
the Company has pursuant hereto given its consent to the execution of
and the consummation of the transactions contemplated by this
Stockholders Agreement) any breaches, violations, defaults,
terminations, cancellations, accelerations or losses which, either
singly or in the aggregate, will not prevent the consummation of the
transactions contemplated by this Stockholders Agreement.
7. OTHER AGREEMENTS. (a) Registration Rights.
Parent agrees with Stockholders that on the Effective Date,
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<PAGE>
Parent shall, pursuant to a writing satisfactory to the Stockholders,
assume and be bound by all obligations of the Company under the
Registration Rights Agreement dated April 15, 1994 between the
Stockholders and Company, and Parent and Stockholders agree that such
agreement shall be amended to pertain to the Parent Series B Stock
(and the securities which may be issued on conversion or exchange
thereof) in lieu of the Series B Stock.
(b) Exempt Voting Securities. Notwithstanding anything to
the contrary contained in this Agreement, Parent and Shareholder
agree that (i) the restrictions and obligations contained in Section
2 shall not apply to any voting securities of Company acquired or
held by the State Board with respect to which Corporate Advisors does
not have sole or shared voting or dispositive power with respect
thereto pursuant to the Management Agreement, which voting securities
shall include Company Shares if such Shares are released from the
custody account maintained by Corporate Advisors on behalf of the
State Board pursuant to the Management Agreement, and (ii) the State
Board shall not be bound by the obligations or prohibitions set forth
in Section 2(c); provided, however, that the foregoing shall not be
deemed to be a limitation of any of the obligations imposed by this
Agreement upon Corporate Advisors, acting on behalf of the State
Board.
8. TERMINATION. (a) The parties agree and intend that this
Stockholders Agreement be a valid and binding agreement enforceable
against the parties hereto and that damages and other remedies at law
for the breach of this Stockholders Agreement are inadequate. This
Stockholders Agreement may be terminated at any time prior to the
Closing Date by mutual written consent of the parties hereto and
shall be automatically terminated in the event that the Merger
Agreement is terminated in accordance with its terms.
(b) This Stockholders Agreement may also be terminated by
the Stockholders in their sole discretion in the event that (i) the
Effective Date shall not have occurred on or prior to the one year
anniversary of the date hereof, (ii) Section 3.1(d) of the Merger
Agreement shall have been amended or modified, without the prior
written consent of the Stockholders, if such amendment or
modification is adverse to the interests of the Stockholders or (iii)
any other amendment or modification of the Merger Agreement shall
have been made without the prior written consent of the Stockholders
which amendment is adverse to the interests of the Stockholders with
respect to the transactions contemplated hereby or by the Merger
Agreement.
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202456.1-KAR-11/21/96-1:30PM
<PAGE>
9. NOTICES, ETC. All notices required by or otherwise with
respect to this Stockholders Agreement shall be in writing and shall
be deemed to have been duly given to any party when delivered
personally (by courier service or otherwise), or when delivered by
telecopy and confirmed by return telecopy, in each case to the
applicable addresses set forth below:
(a) if to Parent:
Mattel, Inc.
333 Continental Boulevard
El Segundo, California 90245-5012
Attention: Barnett Rosenberg, Esq.
General Counsel
Telecopy: (310) 252-2567
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Andrew R. Brownstein
Telecopy: (212) 403-2000
Telephone: (212) 403-1000
(b) If to Corporate Partners, Offshore Partners,
Corporate Advisors or the State Board:
c/o Corporate Partners, L.P.
One Rockefeller Center
New York, New York 10020
Attention: Jonathan Kagan
Telecopy: (212) 332-5581
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019
Attention: Timothy G. Massad
Telecopy: (212) 474-3700
Telephone: (212) 474-1000
10. GOVERNING LAW. This Stockholders Agreement
shall be governed by the laws of the State of Delaware without
giving effect to the principles of conflicts of laws thereof.
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<PAGE>
11. COUNTERPARTS. This Stockholders Agreement may
be executed in one or more counterparts, all of which shall be
considered one and the same and each of which shall be deemed
an original.
12. HEADINGS. The Section headings contained herein
are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Stockholders Agreement.
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<PAGE>
IN WITNESS WHEREOF, each of the undersigned, intending to
be legally bound, has caused this Stockholders Agreement to be duly
executed and delivered on the date first set forth above.
MATTEL, INC.
By: /s/ Ned Mansour
Name: Ned Mansour
Title: President
CORPORATE PARTNERS, L.P.
CORPORATE OFFSHORE PARTNERS, L.P.
By: Corporate Advisors, L.P.,
General Partner
By: LFCP Corp., General Partner
By: /s/ David B. Golub
Name: David B. Golub
Title: Managing Director
THE STATE BOARD OF ADMINISTRATION
OF FLORIDA
By: Corporate Advisors, L.P.,
Attorney-in-Fact
By: LFCP Corp., General Partner
By: /s/ David B. Golub
Name: David B. Golub
Title: Managing Director
CORPORATE ADVISORS, L.P.
By: LFCP Corp., General Partner
By: /s/ David B. Golub
Name: David B. Golub
Title: Managing Director
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<PAGE>
By executing this Stockholders Agreement in the space provided below
the Company hereby consents to the execution, delivery and
performance of this Stockholders Agreement by each Stockholder and
agrees that the same shall not constitute a breach of any provision
of the Stock Purchase Agreement and acknowledges that the
Stockholders shall retain and be entitled to all rights under the
Certificate of Designation in the event of the termination of this
Stockholders Agreement prior to the occurrence of the Series B
Treatment.
TYCO TOYS, INC.
By: /s/ Harry J. Pearce
Name: Harry J. Pearce
Title: Vice Chairman
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<PAGE>
SCHEDULE 1
Number of Shares
Of Tyco Series B
Name Preferred Stock
Corporate Partners, LP. 45,617*
Corporate Offshore
Partners, L.P. 3,249*
State Board of Administration
of Florida 4,765*
Total 53,631
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* Notwithstanding the foregoing, Corporate Advisors as general
partner of Corporate Partners and Offshore Partners, and as
investment manager over the Shares owned by the State Board,
which are held in a custody account, may be deemed to have the
power to vote or to direct the vote, and to dispose or to direct
the disposition, of the Shares.
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