EXHIBIT 99.2
VOTING AND OPTION AGREEMENT
BY AND AMONG
DESA INTERNATIONAL, INC.,
FMI ACQUISITION, INC.
AND
CERTAIN
SECURITYHOLDERS OF
FIREPLACE MANUFACTURERS, INC.
Dated as of May 13, 1998
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS.....................................................2
1.1 Definitions...............................................2
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF THE SECURITYHOLDERS...........2
2.1 Representations and Warranties of the
Securityholders.......................................2
ARTICLE 3 COVENANTS.......................................................2
3.1 No Disposition of Securities..............................2
3.2 Voting Arrangements.......................................3
3.3 Satisfaction of Conditions to the Merger..................3
3.4 Surrender of Company Option Securities....................4
ARTICLE 4 PROXY; CONVERSION; ELECTIONS; WAIVER OF RIGHTS..................4
4.1 Proxy.....................................................4
4.2 Waiver of Appraisal Rights................................5
4.3 Waiver of Certain Rights..................................6
ARTICLE 5 OPTION..........................................................6
5.1 Grant of Option; Price....................................6
5.2 Exercise of Option; Duration..............................6
5.3 Manner of Exercise; Closing...............................7
ARTICLE 6 MISCELLANEOUS...................................................8
6.1 Termination...............................................8
6.2 Amendment.................................................8
6.3 Notices...................................................8
6.4 Counterparts..............................................8
6.5 Applicable Law............................................8
6.6 Severability; Enforcement.................................8
6.7 Further Assurances........................................8
6.8 Parties in Interest; Assignment...........................9
6.9 Entire Agreement..........................................9
6.10 Specific Performance......................................9
6.11 Headings; References......................................9
VOTING AND OPTION AGREEMENT
THIS VOTING AND OPTION AGREEMENT (this "Agreement"), is dated as of May
13, 1998, by and among each of the undersigned securityholders (individually, a
"Securityholder" and collectively, the "Securityholders") of Fireplace
Manufacturers, Inc., a California corporation ("Company"), Desa International,
Inc., a Delaware corporation ("Parent"), and FMI Acquisition, Inc., a Delaware
corporation ("Acquiror").
RECITALS
A. Each Securityholder is the beneficial and record owner of the number
of shares, if any, of common stock, par value $.01 per share, of Company
("Company Common Stock") set forth opposite such Securityholder's name on
Schedule A hereto.
B. Each Securityholder is the beneficial and record owner of the
Company Option Securities, if any,(which under existing circumstances may be
exercised for the number of shares of Company Common Stock set forth opposite
each such Securityholder's name on Schedule A hereto) set forth opposite such
Securityholder's name on Schedule A hereto.
C. Parent, Acquiror, Company and the Securityholders have concurrently
herewith entered into an Agreement and Plan of Reorganization (the "Merger
Agreement"), pursuant to which Company will be merged with Acquiror (the
"Merger").
D. The Board of Directors of Company has approved the Merger Agreement
and this Agreement.
E. In order to induce Parent and Acquiror to enter into the Merger
Agreement, the Securityholders wish to make certain representations, warranties,
covenants and agreements in connection with the Merger.
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual covenants hereinafter set forth, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions. Terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa. The reference to any gender
shall be deemed to include all genders. Capitalized terms used herein but not
otherwise defined herein shall have the respective meanings ascribed thereto in
the Merger Agreement. The following terms shall have the following meanings:
"beneficially own" shall have the meaning set forth in Rule
13d-3 under the Securities Exchange Act of 1934, as amended.
"Option" shall have the meaning set forth in Section 5.1.
hereof
"Representatives" shall mean in respect of a person, any of
its partners, officers, affiliates, employees, agents, investment
bankers, attorneys, financial advisors or other representatives.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
OF THE SECURITYHOLDERS
2.1 Representations and Warranties of the Securityholders. The
provisions of Article 5 of the Merger Agreement are incorporated herein in their
entirety.
ARTICLE 3
COVENANTS
3.1 No Disposition of Securities. Each Securityholder agrees that such
Securityholder shall not, except pursuant to the Merger Agreement or this
Agreement, sell, transfer, pledge, hypothecate, encumber or otherwise dispose
of, or enter into any
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contract, option or other arrangement or understanding with respect to the sale,
transfer, pledge, hypothecation, encumbrance or other disposition of, any of or
any interest in any of the shares of Company Common Stock or Company Option
Securities, or shares of Company Common Stock issuable upon exercise of any such
Company Option Securities, set forth opposite such Securityholder's name on
Schedule A or hereafter owned beneficially or of record by such Securityholder.
Each Securityholder agrees that (a) at the request of the Parent, the
certificates representing the shares of Company Common Stock and Company Option
Securities owned by such Securityholder, and the certificates and other
instruments representing any shares of Company Common Stock or Company Option
Securities hereafter owned by such Securityholder, shall bear the following
legend:
"The securities represented by this certificate are subject to the
terms of that certain Voting and Option Agreement, dated May 13, 1998,
by and among DESA International, Inc., FMI Acquisition, Inc. and
certain securityholders of Fireplace Manufacturers, Inc. This legend
shall terminate upon the termination of such Voting and Option
Agreement."
(b) that any attempted or purported transfer of Company Common Stock or Company
Option Securities in violation of this Section 3.1 shall be null and void and
without effect, and (c) Company shall not be required to enter in its stock or
other records, or reflect, recognize or give effect to for any purpose, any
transfer of securities of Company in violation of this Agreement.
3.2 Voting Arrangements. Each Securityholder agrees that, except
pursuant to this Agreement, it shall not grant any proxies, deposit any shares
of Company Common Stock into a voting trust or enter into any voting agreement
with respect to any shares of Company Common Stock now or hereafter owned
beneficially or of record by such Securityholder, other than proxies to vote
such shares at any annual or special meeting of stockholders of Company on
matters unrelated to the matters set forth in Section 4.1 hereof.
3.3 Satisfaction of Conditions to the Merger. Each Securityholder
agrees that, subject to its fiduciary duty as a director of Company, such
Securityholder, in its capacity as such, shall assist and cooperate with the
parties to the Merger Agreement
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in doing all things necessary, proper or advisable under Applicable Laws as
promptly as practicable to consummate and make effective the Merger and the
other transactions contemplated by the Merger Agreement. Each Securityholder
agrees that it shall not take any action in its capacity as such Securityholder
that would or is reasonably likely to result in any of its representations and
warranties set forth in this Agreement being untrue as of the date made or in
any of the conditions set forth in the Merger Agreement not being satisfied.
3.4 Surrender of Company Option Securities. Each Securityholder hereby
agrees, at and subject to the Closing, to deliver to, and surrender for
cancellation by, Company all Company Option Securities legally or beneficially
owned by such Securityholder on the Closing Date, and acknowledges and agrees
that such Securityholder shall not be entitled to any payment of monies or any
other consideration in connection with the delivery and surrender of such
Company Option Securities.
ARTICLE 4
PROXY; CONVERSION;
ELECTIONS; WAIVER OF RIGHTS
4.1 Proxy.
(a) Each Securityholder hereby agrees that, during the term of
this Agreement, at any meeting of the stockholders of Company, however called,
and at every adjournment thereof, and in any action by written consent of the
stockholders of Company, to (i) vote all of the shares of Company Common Stock
then owned by such Securityholder in favor of the adoption of the Merger
Agreement as in effect on the date hereof (as such agreement may be amended) and
each of the other transactions contemplated thereby and any action required in
furtherance thereof, (ii) vote such shares against any action or agreement that
would result in a breach in any material respect of any covenant, representation
or warranty or any other obligation of Company under the Merger Agreement, and
(iii) vote such shares against any Other Transaction or any other action or
agreement that, directly or indirectly, is inconsistent with or that would, or
is reasonably likely to, directly or indirectly, impede, interfere with or
attempt to
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discourage the Merger or any other transaction contemplated by the Merger
Agreement, including but not limited to (I) any extraordinary corporate
transaction (other than the Merger), such as a merger, consolidation, business
combination, reorganization, recapitalization or liquidation involving Company
or any of its Subsidiaries, (II) a sale or transfer of a material amount of
assets of Company and its Subsidiaries taken as a whole, (III) any redemption of
securities of Company, or (IV) any material change in Company's capitalization,
corporate structure or business; provided, however, that, if such Securityholder
is a director of Company, nothing herein shall be construed to obligate such
Securityholder to act in his capacity as a director in any manner which
conflicts with such Person's fiduciary duties as a director of Company.
(b) In furtherance of the foregoing, (i) each Securityholder
hereby appoints Parent and the proper officers of Parent, and each of them, with
full power of substitution in the premises, its proxies to vote all such
Securityholder's shares of Company Common Stock now or hereafter owned
beneficially or of record by such Securityholder at any meeting, general or
special, of the stockholders of Company, and to execute one or more written
consents or other instruments from time to time in order to take such action
without the necessity of a meeting of the stockholders of Company, in accordance
with the provisions of the preceding paragraph and (ii) Parent hereby agrees to
vote such shares or execute written consents or other instruments in accordance
with the provisions of the preceding paragraph.
(c) The proxy and power of attorney granted herein shall be
irrevocable during the term of this Agreement, shall be deemed to be coupled
with an interest and shall revoke all prior agreements to vote and proxies
granted by such Securityholder. Such Securityholder shall not grant any proxy to
any person which conflicts with the proxy granted herein, and any attempt to do
so shall be void. The power of attorney granted herein is a durable power of
attorney and shall survive the disability or incompetence of such
Securityholder.
4.2 Waiver of Appraisal Rights. Each Securityholder hereby waives its
dissenters' rights under Chapter 13 of the CGCL with respect to any shares of
Company Common Stock owned by it or issuable to it in connection with the
transactions contemplated by
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the Merger Agreement.
4.3 Waiver of Certain Rights. Each Securityholder hereby waives and
agrees not to assert any claims or rights it may have against any director of
Company in respect of approval or adoption of the Merger Agreement or the
consummation of the Merger or the other transactions contemplated thereby.
ARTICLE 5
OPTION
5.1 Grant of Option; Price. Each Securityholder hereby grants to
Acquiror the unconditional, irrevocable (during the term of this Agreement)
option (the "Option") to purchase from such Securityholder all Company Common
Stock and Company Option Securities beneficially owned by such Securityholder at
the time of exercise of the Option, as provided below. The Option granted
hereunder may be exercised for all, but not less than all, Company Common Stock
and Company Option Securities beneficially owned by all such Securityholders at
the time of exercise. The price for Company Common Stock purchased by Acquiror
hereunder shall be $7.14 per share and the price for Company Option Securities
shall be the product of (x) the number of shares of Company Common Stock with
respect to which such Company Option Securities are vested at the time of
exercise and (y) the excess, if any, of $7.14 over the per share exercise price
of such Company Option Securities.
5.2 Exercise of Option; Duration.
(a) The Acquiror may exercise the Option in the event that (i)
Parent has the right to terminate the Merger Agreement pursuant to Section
8.1(D)(i) or 8.1(E) thereof (irrespective of whether it actually terminates the
Merger Agreement); or (ii) if any Securityholder shall breach the terms of this
Agreement in any material respect or seeks to rescind or revoke any material
provision hereof.
(b) The Option will terminate automatically if it is not
exercised by the later of 120 days after the date of the Voting and Option
Agreement and Buyer's receipt of requisite governmental approvals under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvement Act of
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1976, as amended, and in any event it will terminate if not exercised within 180
days after the date hereof.
(c) The terms and provisions of this Article 5 shall survive
any termination of this Agreement triggered by the Termination of the Merger
Agreement by Parent pursuant to Section 8.1(D) or (E) thereof.
5.3 Manner of Exercise; Closing. In the event that the Acquiror is
entitled to and wishes to exercise the Option, it shall send to the
Securityholders a written notice specifying a place and time, not more than
thirty (30) business days after the date of such notice, for the closing of such
purchase. At the closing, the Acquiror shall pay the Securityholders the
aggregate purchase price specified above for Company Common Stock and Company
Option Securities in immediately available funds by wire transfer to bank
accounts designated by the Securityholders. At the closing, each Securityholder
shall deliver to the Acquiror (i) a certificate or certificates representing all
of the shares of Company Common Stock held by such Securityholder together with
stock powers duly executed, with signatures guaranteed, and endorsed in blank;
and (ii) duly executed instruments of assignment in form reasonably satisfactory
to Acquiror in respect of all Company Option Securities held by such
Securityholder. The Acquiror shall deliver to each Securityholder a written
undertaking that it will not sell or offer to sell or otherwise dispose of any
Company Common Stock and Company Option Securities in violation of Applicable
Law.
Simultaneously with the exercise of the Option, Parent shall cause the
Company (then its subsidiary) to enter into Non- Competition Agreements, in the
Form of Exhibit B to the Merger Agreement, with those Securityholders named
Section 7.2(M) of the Merger Agreement. Upon full execution of such
Non-Competition Agreements the Parent shall pay the amounts, by wire transfer,
provided for in Section 7.2(M) of the Merger Agreement to the Securityholders.
The refusal of any Securityholder to enter into any such Non-Competition
Agreement shall not prevent the exercise of the Option under the terms of this
Agreement.
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ARTICLE 6
MISCELLANEOUS
6.1 Termination. This Agreement shall terminate upon the earlier to
occur of (a) the mutual consent of Parent, Acquiror and each of the
Securityholders, (b) the termination of the Merger Agreement and (c) the
Effective Time of the Merger.
6.2 Amendment. This Agreement may be amended only by a written
instrument executed by the parties or their respective successors or assigns.
6.3 Notices. The notice provisions of Section 10.1 of the Merger
Agreement are hereby incorporated herein by reference in their entirety.
6.4 Counterparts. This Agreement may be executed in one or more
counterparts and each counterpart shall be deemed to be an original, but all of
which shall constitute one and the same original.
6.5 Applicable Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of California without reference to
choice of law principles, including all matters of construction, validity and
performance.
6.6 Severability; Enforcement. The invalidity of any portion hereof
shall not affect the validity, force or effect of the remaining portions hereof.
If it is ever held that any restriction hereunder is too broad to permit
enforcement of such restriction to its fullest extent, each party agrees that a
court of competent jurisdiction may enforce such restriction to the maximum
extent permitted by law, and each party hereby consents and agrees that such
scope may be judicially modified accordingly in any proceeding brought to
enforce such restriction.
6.7 Further Assurances. Each party hereto shall execute and deliver
such additional documents as may be necessary or desirable to consummate the
transactions contemplated by this Agreement.
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6.8 Parties in Interest; Assignment. Neither this Agreement nor any of
the rights, interest or obligations hereunder shall be assigned by any of the
parties hereto without the prior written consent of the other parties; provided,
however, that the Acquiror may assign the Option to an Affiliate.
6.9 Entire Agreement. This Agreement and the Merger Agreement contain
the entire understanding of the parties hereto and thereto with respect to the
subject matter contained herein and therein, and supersede and cancel all prior
agreements, negotiations, correspondence, undertakings and communications of the
parties, oral or written, respecting such subject matter. There are no
restrictions, promises, representations, warranties, agreements or undertakings
of any party hereto or to the Merger Agreement with respect to the transactions
contemplated by this Agreement and the Merger Agreement other than those set
forth herein or therein or made hereunder or thereunder.
6.10 Specific Performance. The parties hereto agree that the remedy at
law for any breach of this Agreement will be inadequate and that any party by
whom this Agreement is enforceable shall be entitled to specific performance or
injunctive relief in addition to any other appropriate relief or remedy. Such
party may, in its sole discretion, apply to a court of competent jurisdiction
for specific performance or injunctive relief or such other relief as such court
may deem just and proper in order to enforce this Agreement or prevent any
violation hereof and, to the extent permitted by applicable law, each party
waives any objection to the imposition of such relief or any requirement for the
posting of a bond or other collateral in connection therewith.
6.11 Headings; References. The section and paragraph headings contained
in this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement. All references herein to
"Sections" or "Exhibits" shall be deemed to be references to Articles or
Sections hereof or Exhibits hereto unless otherwise indicated.
[remainder of page intentionally left blank]
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed and delivered as of the day and year first above
written.
PARENT:
DESA INTERNATIONAL, INC.
By: /s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title: Chairman and CEO
ACQUIROR:
FMI ACQUISITION, INC.
By: /s/ Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx
Title: President
SECURITYHOLDERS:
/s/ Xxxxxxxx X. Xxxxxx
Name: Xxxxxxxx X. Xxxxxx
/s/ Xxxxxxx X. Xxxxxx, Xx.
Name: Xxxxxxx X. Xxxxxx, Xx.
/s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
/s/ Xxxx X. Xxxxxxx
Name: Xxxx X. Xxxxxxx
/s/ Xxxxx X. Xxxxxxx
Name: Xxxxx X. Xxxxxxx
/s/ Xxxxx Xxxxxxx
Name: Xxxxx Xxxxxxx
/s/ Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
/s/ Xxxxxxx X. Xxxxxx
By: Xxxxxxx X. Xxxxxx
Title: Custodian
Xxxxxxx X. Xxxxxx, Xx.
/s/ Xxxxxxx X. Xxxxxx
By: Xxxxxxx X. Xxxxxx
Title: Custodian
Xxxxxx-Xxxxxx Family Trust
/s/ Xxxxxxxx X. Xxxxxx
By: Xxxxxxxx X. Xxxxxx
Title:
Xxxxxx-Xxxxxx Family Trust
/s/ Xxxxxxx X. Xxxxxx
By: Xxxxxxx X. Xxxxxx
Title: President
Xxxxxxx Family Trust
/s/ Xxxx Xxxxxxx
By: Xxxx Xxxxxxx
Title: Trustee
Whittier College
-----------------------------
By:
Title:
Prentice School
-----------------------------
By:
Title:
Fireplace Manufacturers, Inc, a California corporation ("Company")
hereby approves and consents to the foregoing Voting and Option Agreement and
hereby agrees that it will not enter in its stock or other records, or reflect,
recognize or give effect to for any purpose, any transfer of securities of
Company in violation of Section 3.1 of the foregoing Voting and Option
Agreement. Company hereby waives any and all transfer restrictions applicable to
any and all Company Common Stock and Company Option Securities held by any of
the Securityholders in connection with the transfer thereof to Acquiror pursuant
to the Option (as defined in the foregoing Voting and Option Agreement).
FIREPLACE MANUFACTURERS, INC.
By: /s/ Xxxxxxx X. Xxxxxx, Xx.
Name: Xxxxxxx X. Xxxxxx, Xx.
Title: Chairman of the Board-FMI
SCHEDULE A
Number of
Shares of
Company Company
Common Option
Stock Securities
Name and Address of Securityholder Owned Owned
Xxxxxxxx X. Xxxxxx 225,250 0
0000 Xxxxxxxxxxx Xxxxxx
Xxxxxxx Xxxxx, XX 00000
Xxxxxxx X. Xxxxxx, Xx. 340,780 250,000
0000 Xxxxxxx Xxxxx
Xxxxxx Xxx Xxx, XX 00000
Xxxxxxx X. Xxxxxx 352,992 250,000
00 Xxxxx Xxxx Xxxx
Xxxxxxx Xxxxxx, XX 00000
Xxxxxx X. Xxxxxx 50,000 0
00 Xxxxx Xxxx Xxxx
Xxxxxxx Xxxxxx, XX 00000
Xxxxxx X. Xxxxxx 5,200 0
00 Xxxxx Xxxx Xxxx
Xxxxxxx Xxxxxx, XX 00000
Xxxxxxx X. Xxxxxx, Xx. 5,200 0
00 Xxxxx Xxxx Xxxx
Xxxxxxx Xxxxxx, XX 00000
Xxxx X. Xxxxxxx 380,748 250,000
00000 Xxxxxx Xxxxx
Xxxxx, XX 00000
Xxxx and Xxxxx Xxxxxxx 50,000 0
00000 Xxxxxx Xxxxx
Xxxxx, XX 00000
Xxxxxxx Family Trust 50,000 0
c/o Xxxx X. Xxxxxxx
00000 Xxxxxx Xxxxx
Xxxxx, XX 00000
Xxxxx X. Xxxxxxx 101,252 50,000
00000 Xxxxxxx 00
Xxxxxx Xxxxxxx, XX 00000
Xxxxxx-Xxxxxx Family Trust 34,000 0
c/o Xxxxxxxx X. Xxxxxx
0000 Xxxxxxxxxxx Xxxxxx
Xxxxxxx Xxxxx, XX 00000
Xxxxxx-Xxxxxx Family Trust 28,000 0
c/o Xxxxxxx X. Xxxxxx, Xx.
0000 Xxxxxxx Xxxxx
Xxxxxx Xxx Xxx, XX 00000
Prentice School 3,000 0
Whittier College 31,333 0
