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EXHIBIT 10.1
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AGREEMENT AND PLAN OF MERGER
AMONG
BEC GROUP, INC.,
BILC ACQUISITION CORP.
AND
ILC TECHNOLOGY, INC.
DATED AS OF OCTOBER 30, 1997
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TABLE OF CONTENTS
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ARTICLE I
THE MERGER . . . . . . . . . . . . . . 2
1.1. The Merger . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2. Effective Time; Closing . . . . . . . . . . . . . . . . . . 2
1.3. Effect of the Merger . . . . . . . . . . . . . . . . . . . . 3
1.4. Certificate of Incorporation; By-laws . . . . . . . . . . . 3
1.5. Directors and Officers . . . . . . . . . . . . . . . . . . . 3
1.6. Conversion of Securities . . . . . . . . . . . . . . . . . . 3
1.7. Stock Options . . . . . . . . . . . . . . . . . . . . . . . 4
1.8. Dissenting Shares . . . . . . . . . . . . . . . . . . . . . 5
1.9. Surrender of Shares; Stock Transfer Books . . . . . . . . . 6
1.10. No Fractional Shares . . . . . . . . . . . . . . . . . . . . 7
1.11. Subsequent Actions . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF BEC . . . . . . . . 8
2.1. Corporate Organization . . . . . . . . . . . . . . . . . . . 8
2.2. Certificate of Incorporation and By-laws . . . . . . . . . . 8
2.3. Capitalization . . . . . . . . . . . . . . . . . . . . . . . 9
2.4. Authority Relative to this Agreement . . . . . . . . . . . . 9
2.5. No Conflict; Required Filings and Consents . . . . . . . . . 10
2.6. SEC Filings; Financial Statements . . . . . . . . . . . . . 11
2.7. Absence of Certain Changes or Events . . . . . . . . . . . . 12
2.8. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.9. Employee Benefit Plans . . . . . . . . . . . . . . . . . . . 14
2.10. Labor Matters . . . . . . . . . . . . . . . . . . . . . . . 14
2.11. Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.12. Products Liability . . . . . . . . . . . . . . . . . . . . . 15
2.13. Conduct of Business . . . . . . . . . . . . . . . . . . . . 15
2.14. Joint Proxy Statement-Prospectus . . . . . . . . . . . . . . 16
2.15. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.16. BEC Properties and Leases . . . . . . . . . . . . . . . . . 17
2.17. Environmental Matters. . . . . . . . . . . . . . . . . . . . 18
2.18. Material Agreements. . . . . . . . . . . . . . . . . . . . . 18
2.19. Insider Interests.. . . . . . . . . . . . . . . . . . . . . . 19
2.20. BEC Board. . . . . . . . . . . . . . . . . . . . . . . . . 19
2.21. Fairness Opinion. . . . . . . . . . . . . . . . . . . . . . . 19
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2.22. Trademarks, Patents and Copyrights. . . . . . . . . . . . . . 19
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . . 20
3.1. Corporate Organization. . . . . . . . . . . . . . . . . . . 20
3.2. Certificate of Incorporation and By-Laws. . . . . . . . . . 20
3.3. Capitalization . . . . . . . . . . . . . . . . . . . . . . . 20
3.4. Authority Relative to this Agreement . . . . . . . . . . . . 21
3.5. No Conflict; Required Filings and Consents . . . . . . . . . 21
3.6. SEC Filings; Financial Statements . . . . . . . . . . . . . 22
3.7. Absence of Certain Changes or Events . . . . . . . . . . . . 24
3.8. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.9. Employee Benefit Plans . . . . . . . . . . . . . . . . . . . 25
3.10. Labor Matters . . . . . . . . . . . . . . . . . . . . . . . 26
3.11. Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.12. Products Liability . . . . . . . . . . . . . . . . . . . . . 26
3.13. Conduct of Business . . . . . . . . . . . . . . . . . . . . 27
3.14. Joint Proxy Statement-Prospectus . . . . . . . . . . . . . . 27
3.15. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
3.16. Property and Leases . . . . . . . . . . . . . . . . . . . . 28
3.17. Environmental Matters. . . . . . . . . . . . . . . . . . . . 29
3.18. Material Agreements. . . . . . . . . . . . . . . . . . . . . 30
3.19. Insider Interests. . . . . . . . . . . . . . . . . . . . . . 30
3.20. Board Approval. . . . . . . . . . . . . . . . . . . . . . . 30
3.21. Fairness Opinion. . . . . . . . . . . . . . . . . . . . . . 30
3.22. Trademarks, Patents and Copyrights. . . . . . . . . . . . . 30
3.23. No Dividends, etc.. . . . . . . . . . . . . . . . . . . . . 31
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
4.1. Acquisition Proposals . . . . . . . . . . . . . . . . . . . 31
4.2. Conduct of Business by the Company and BEC Pending the
Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
4.3. No Shopping. . . . . . . . . . . . . . . . . . . . . . . . . 34
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ARTICLE V
ADDITIONAL AGREEMENTS . . . . . . . . . . . . 36
5.1. Joint Proxy Statement/Prospectus; Registration Statement;
Other Filings; Board Recommendations. . . . . . . . . . . . . 36
5.2. Meetings of Shareholders and Stockholders . . . . . . . . . 37
5.5. Additional Agreements . . . . . . . . . . . . . . . . . . . 38
5.6. Notification of Certain Matters . . . . . . . . . . . . . . 38
5.7. Access to Information . . . . . . . . . . . . . . . . . . . 38
5.8. Public Announcements . . . . . . . . . . . . . . . . . . . . 39
5.9. Best Efforts; Cooperation . . . . . . . . . . . . . . . . . 39
5.10. Agreement to Defend and Indemnify . . . . . . . . . . . . . 39
5.11. Action by the Officers, Directors, etc. . . . . . . . . . . 40
5.13. Post Merger Directors and Officers BEC . . . . . . . . . . . 40
5.14. Increase in Authorized Shares and Reverse Stock Split. . . . 41
5.15. BEC Name Change. . . . . . . . . . . . . . . . . . . . . . . 41
5.16. Capital Structure . . . . . . . . . . . . . . . . . . . . . 41
5.17. Audited Company Financial Statements. . . . . . . . . . . . 41
ARTICLE VI
CONDITIONS OF MERGER . . . . . . . . . . . . 42
6.2. Additional Conditions to Obligations of BEC . . . . . . . . 43
6.3. Additional Conditions to Obligations of the Company . . . . 43
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER . . . . . . . . . 44
7.1. Termination . . . . . . . . . . . . . . . . . . . . . . . . 44
7.2. Effect of Termination . . . . . . . . . . . . . . . . . . . 46
7.3. Termination Fees and Expenses . . . . . . . . . . . . . . . 46
ARTICLE VIII
GENERAL PROVISIONS . . . . . . . . . . . . 48
8.1. Non-Survival of Representations, Warranties and Agreements . 48
8.2. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 48
8.3. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 49
8.4. Certain Definitions . . . . . . . . . . . . . . . . . . . . 49
8.5. Heading . . . . . . . . . . . . . . . . . . . . . . . . . . 51
8.6. Severability . . . . . . . . . . . . . . . . . . . . . . . . 51
8.7. Entire Agreement; No Third Party Beneficiaries . . . . . . . 51
8.8. Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
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8.9. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . 52
8.10. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . 52
8.11. Governing Law . . . . . . . . . . . . . . . . . . . . . . . 52
8.12. Counterparts; Telecopier . . . . . . . . . . . . . . . . . . 52
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ANNEX A
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ANNEX B
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ANNEX C
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ANNEX D
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ANNEX E
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ANNEX F
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ANNEX G
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of October 30, 1997 (the
"Agreement"), among BEC GROUP, INC., a Delaware corporation ("BEC"), BILC
Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of BEC
("Purchaser"), and ILC TECHNOLOGY, INC. a California corporation (the
"Company").
W I T N E S S E T H :
WHEREAS, the Boards of Directors of BEC, Purchaser and the
Company have each determined that it is in the best interests of their
respective shareholders for Purchaser and the Company to merge upon the terms
and subject to the conditions set forth herein to enter into a business
combination under which the Company will merge with and into Purchaser pursuant
to the terms and conditions hereof (the "Merger"); and
WHEREAS, in furtherance of such merger, the Boards of Directors
of BEC, Purchaser and the Company have each approved the Merger of the Company
with and into Purchaser in accordance with the Corporations Code of the State
of California ("California Law") and the General Corporation Law of the State
of Delaware ("Delaware Law"), respectively, upon the terms and subject to the
conditions set forth in this Agreement; and
WHEREAS, the Board of Directors of the Company (the "Company
Board") has (i) determined that the consideration to be paid for each share of
common stock, no par value per share, of the Company (the "Company Common
Stock") in the Merger is fair to the shareholders of the Company and (ii)
resolved and agreed to recommend the Merger to holders of shares of Company
Common Stock; and
WHEREAS, the Board of Directors of BEC (the "BEC Board") has (i)
determined that the Merger is fair to and in the best interests of the
stockholders of BEC and (ii) resolved and agreed to recommend the Merger to
holders of shares of common stock of BEC, par value $.01 per share, (the "BEC
Common Stock"); and
WHEREAS, concurrently with the execution of this Agreement, and
as a condition and inducement to the Company's willingness to enter into this
Agreement, the Chief Executive Officer of BEC in his capacity as a shareholder
of BEC shall enter into a Voting Agreement in substantially the form attached
hereto as Annex E (the "BEC Voting Agreement"); and concurrently with the
execution of this Agreement and as a condition and inducement to BEC's
willingness to enter into this Agreement, the Chief Executive Officer of the
Company in his capacity as a shareholder of the Company shall enter into a
Voting Agreement in substantially the form attached hereto as Annex F (the
"Company Voting Agreement"); and
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WHEREAS, the Company understands that at or prior to the
Effective Time (as defined below), BEC intends (i) to transfer (the "Asset
Transfer") to Bolle, Inc., or to the wholly-owned subsidiaries of Bolle, Inc.
(collectively, the "Bolle Group") all of its business, assets and liabilities
(other than those relating to the ORC Business (as defined below))
(collectively, the "Non-ORC Business") all as more fully set forth in and
pursuant to a Contribution Agreement, a Management Services Agreement and an
Indemnity Agreement and related documents (collectively, the "Transfer
Agreements"), and (ii) to distribute all of the issued and outstanding shares
of common stock of Bolle, Inc. (the "Spinoff") to BEC's stockholders; and
WHEREAS, following such Asset Transfer and Spinoff, BEC shall
retain all of the ORC Business (as hereinafter defined).
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, BEC, Purchaser and the Company hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1. The Merger. Upon the terms and subject to the
conditions set forth in Article VI, and in accordance with Delaware Law and
California Law, at the Effective Time (as defined below) the Company shall be
merged with and into the Purchaser. As a result of the Merger, the separate
corporate existence of the Company shall cease and the Purchaser shall continue
as the surviving corporation of the Merger (the "Surviving Corporation").
SECTION 1.2. Effective Time; Closing. As promptly as
practicable after the satisfaction or, if permissible, waiver of the conditions
set forth in Article VI, the parties hereto shall cause the Merger to be
consummated by filing this Agreement or a certificate of merger (in any case,
the "Certificate of Merger") with the Secretary of State of the State of
Delaware and the Secretary of State of the State of California, in such form as
is required by, and executed in accordance with the relevant provisions of,
Delaware Law and California Law (the date and time of such filing (or such
later time as may be agreed in writing by the parties and specified in the
Certificate of Merger) being the "Effective Time"). Prior to such filing, a
closing ("Closing") shall be held at the offices of Xxxx Xxxxxxx, P.C., 1350
Avenue of the Americas - 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, or such other
place as the parties shall agree, for the purpose of confirming the
satisfaction or waiver, as the case may be, of the conditions set forth in
Article VI. The parties agree that it is anticipated that the Closing shall be
held immediately (or as soon as practicable thereafter) following the
shareholders meeting at which the Company's shareholders are to vote on the
Merger (the "Company Shareholders Meeting") and the stockholders meeting at
which BEC's shareholders are to vote on the Merger (the "BEC Stockholders
Meeting").
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SECTION 1.3. Effect of the Merger. At the Effective Time, the
effect of the Merger shall be as provided in the applicable provisions of
Delaware Law and California Law. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time all the property, rights,
privileges, powers and franchises of the Company and Purchaser shall vest in
the Surviving Corporation, and all debts, liabilities, obligations,
restrictions, and duties of the Company and Purchaser shall become the debts,
liabilities, obligations, restrictions, and duties of the Surviving
Corporation.
SECTION 1.4. Certificate of Incorporation; By-laws.
(a) Unless otherwise mutually agreed by each of BEC and the
Company, prior to the Effective Time, at the Effective Time, the Certificate of
Incorporation of Purchaser as the Surviving Corporation, shall be the
Certificate of Incorporation of Purchaser, as in effect immediately prior to
the Effective Time, a copy of which is attached hereto as Annex A, until
thereafter amended as provided by law and such Certificate of Incorporation;
provided, however, that, at the Effective Time, Article I of the Certificate of
Incorporation of the Surviving Corporation shall be amended to read as follows:
"The name of the corporation is ILC Technology, Inc."
(b) Unless otherwise mutually agreed by each of the Company
and Purchaser prior to the Effective Time, the By-laws of Purchaser, as in
effect immediately prior to the Effective Time, shall become the By-laws of the
Surviving Corporation until thereafter amended as provided by law; provided,
however, that, at the Effective Time, the title thereof shall be amended to
read as follows: "By-laws of ILC Technology, Inc."
SECTION 1.5. Directors and Officers. At the Effective Time, the
directors of the Surviving Corporation shall be comprised of the directors of
Purchaser immediately prior to the Effective Time each to hold office in
accordance with the Certificate of Incorporation and By-laws of the Surviving
Corporation. Messrs. Xxxxxx Xxxxxxxx, Xxxxxxx Xxxxx and Xxx Xxxxxx, shall be
the initial officers of the Surviving Corporation, serving as Chairman of the
Board, Chief Executive Officer and Chief Financial Officer, respectively, in
each case until their resignation or their respective successors are duly
elected or appointed and qualified.
SECTION 1.6. Conversion of Securities. At the Effective Time,
by virtue of the Merger and except as may be provided in this Section 1.6,
without any action on the part of the Purchaser, the Company or the holders of
any of the following securities:
(a) Each share of Company Common Stock (sometimes hereinafter
referred to as "Shares") issued and outstanding
immediately prior to the Effective Time (other than any
shares of Company Common Stock to be cancelled pursuant to
Section 1.6(b) and any Dissenting Shares (as defined in
and to the extent provided in Section 1.8(a)) shall be
cancelled and extinguished and shall be converted
automatically (subject to Section 1.6(d) and (e) into the
right to
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receive upon surrender of the certificate or certificates
representing such shares, 4.36 shares (the "Exchange
Ratio") of BEC Common Stock (the "Merger Consideration")
issued to the holder of such shares of Company Common
Stock in the manner provided in Section 1.9;
(b) Each share of Company Common Stock held in the treasury of
the Company and each share owned by the Company or any
direct or indirect subsidiary of the Company immediately
prior to the Effective Time shall be cancelled and
extinguished without any conversion thereof and no payment
or distribution shall be made with respect thereto; and
(c) Each share of Common Stock, par value $.01 per share, of
Purchaser issued and outstanding immediately prior to the
Effective Time shall remain outstanding as one (1) validly
issued, fully paid and nonassessable share of Common
Stock, par value $.01 per share, of the Surviving
Corporation. Each certificate evidencing ownership of
shares of common stock of the Purchaser shall continue to
evidence ownership of such shares of common stock of the
Surviving Corporation.
(d) In the event of the Reverse Stock Split (as hereinafter
defined) at or prior to the Effective Time, the Exchange
Ratio shall be adjusted to 2.18 shares of BEC Common
Stock.
(e) In the event that any of the Convertible Note are
outstanding as of the Effective Time (the "Outstanding
Convertible Notes") the Merger Consideration shall be
adjusted and calculated in accordance with the following
formula:
Merger Consideration = 17,631,102+X+Y
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4,879,811
where X represents the maximum number of shares of BEC
Common Stock into which the Outstanding Convertible Notes
are convertible and Y represents the number of shares of
BEC Common Stock issued upon conversion of the Convertible
Notes prior to the Effective Time.
SECTION 1.7. Stock Options.
(a) Prior to the Effective Time, BEC, the Company and the
Stock Option Committees of their respective Boards of Directors shall effect
the conversion of all unexercised options outstanding under the Company's
Employee Stock Purchase Plan, the 1983 Employee Incentive Stock Option Plan and
the 1992 Stock Option Plan (collectively, the "Company Plans") at the Effective
Time for such number of options pursuant to BEC's 1996 Stock Incentive Plan
(the
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"BEC 1996 Plan"), as provided below, to purchase shares of BEC Common Stock at
such exercise price, as provided below, and exercise period as applicable to
the options outstanding under the Company Plans.
(i) the number of shares of BEC Common Stock to be subject
to the new option shall be equal to the product of (x) the number
of shares of the Company Common Stock subject to the original
option and (y) the Exchange Ratio;
(ii) the exercise price per share of BEC Common Stock
under the new option shall be equal to (x) the exercise price per
share of the Company Common stock under the original option
divided by (y) the Exchange Ratio; and
(iii) upon each exercise of options by a holder thereof,
the aggregate number of shares of BEC Common Stock deliverable
upon such exercise shall be rounded down, if necessary, to the
nearest whole share and the aggregate exercise price shall be
rounded up, if necessary, to the nearest cent.
The adjustments provided herein with respect to any options which
are "incentive stock options" (as defined in Section 422 of the Internal
Revenue Code of 1986, as amended, the "Code") shall be effected in a manner
consistent with Section 424(a) of the Code. Upon such conversion, the options
granted under the BEC 1996 Plan to the former holders of options pursuant to
the Company Plan shall, except to the extent provided above or as may be
required to maintain the status of such options as "incentive stock options",
in all respects be subject to the terms, provisions and conditions of the 1996
BEC Plan and the standard form of stock option agreement relating to such 1996
BEC Plan; provided, however, such holders shall be deemed to have been granted
such options as of the date the original options were granted under the Company
Plans.
(b) The options outstanding under the Company Plans, shall be
vested pursuant to the terms of such Company Plans, except to the extent that,
prior to the Effective Time, the Company, with the consent of the holder of any
such options, may determine otherwise.
SECTION 1.8. Dissenting Shares.
(a) Notwithstanding any provision of this Agreement to the
contrary, the shares of any holder of Company Common Stock who has demanded and
perfected appraisal rights for such shares in accordance with California Law
and who, as of the Effective Time, has not effectively withdrawn or lost such
appraisal rights ("Dissenting Shares"), shall not be converted into or
represent a right to receive BEC Common Stock pursuant to Section 1.6, but the
holder thereof shall only be entitled to such appraisal rights as are granted
by California Law. Notwithstanding the foregoing, if any holder of shares of
Company Common Stock who demands appraisal of such shares under California Law
shall effectively withdraw or lose (through failure to perfect or otherwise)
the right to appraisal, then, as of the later of the Effective Time or the
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occurrence of such event, such holder's shares shall automatically be converted
into and represent only the right to receive the Merger Consideration in
accordance with Section 1.6 hereof, without interest thereon, upon surrender of
the certificate representing such shares of Company Common Stock in the manner
provided in Section 1.9.
(b) The Company shall give BEC (i) prompt notice of any
demands for appraisal of any shares of Company Common stock received by the
Company, withdrawals of such demands, and any other instruments served pursuant
to California Law and received by the Company, and (ii) the opportunity to
participate in all negotiations and proceedings with respect to demands for
appraisal under California Law. The Company shall not, except with the prior
written consent of BEC, make any payment with respect to any demands for
appraisal or offer to settle or settle any such demands. Any payments made in
respect of Dissenting Shares shall be made by the Company or the Surviving
Corporation, as the case may be.
SECTION 1.9. Surrender of Shares; Stock Transfer Books.
(a) Prior to the Effective Time, Purchaser shall designate a
bank or trust company to act as agent (the "Exchange Agent") for the holders of
shares of Company Common Stock in connection with the Merger to receive the
shares of BEC Common Stock to which holders of shares of Company Common Stock
shall become entitled pursuant to Section 1.6(a) (without assuming that any
holder of Shares will perfect its right to an appraisal of such holder's
Shares) or otherwise pursuant to this Agreement and shall deposit such shares
of BEC Common Stock at or prior to the Effective Time with the Exchange Agent
and cash in an amount sufficient for payment in lieu of fractional shares
pursuant to Section 1.10.
(b) Promptly after the Effective Time, the Surviving
Corporation shall cause the Exchange Agent to be mailed to each person who was,
at the Effective Time, a holder of record of shares of Company Common Stock
entitled to receive the Merger Consideration pursuant to Section 1.6(a) a form
of letter of transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the certificates evidencing such shares of
Company Common Stock (the "Certificates") shall pass, only upon proper delivery
of the Certificates to the Exchange Agent) and instructions for use in
effecting the surrender of the Certificates pursuant to such letter of
transmittal. Upon surrender to the Exchange Agent of a Certificate, together
with such letter of transmittal, duly completed and validly executed in
accordance with the instructions thereto, and such other documents as may be
required pursuant to such instructions, the holder of such Certificates shall
be entitled to receive in exchange therefor the Merger Consideration for each
share of Company Common Stock formerly evidenced by such Certificates, and such
Certificates shall then be cancelled. No interest shall accrue or be paid on
the Merger Consideration payable upon the surrender of any Certificate for the
benefit of the holder of such Certificate. If payment of the Merger
Consideration is to be made to a person other than the person in whose name the
surrendered Certificate is registered on the stock transfer books of the
Company, it shall be a condition of payment that the Certificate so surrendered
shall be endorsed properly or otherwise be in proper form for transfer and that
the person requesting such payment shall have paid all
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transfer and other taxes required by reason of the payment of the Merger
Consideration to a person other than the registered holder of the Certificate
surrendered or shall have established to the satisfaction of the Surviving
Corporation that such taxes either have been paid or are not applicable.
(c) At the close of business on the day of the Effective
Time, the stock transfer books of the Company shall be closed and thereafter
there shall be no further registration of transfers of shares of Company Common
Stock on the records of the Company. From and after the Effective Time, the
holders of shares of Company Common Stock outstanding immediately prior to the
Effective Time shall cease to have any rights with respect to such shares of
Company Common Stock except as otherwise provided herein or by applicable law.
(d) In the event any Certificates shall have been lost, stolen
or destroyed, the Exchange Agent shall issue in exchange for such lost, stolen
or destroyed Certificates, upon the making of an affidavit of that fact by the
holder thereof, such shares of BEC Common Stock, cash for fractional shares, if
any, as may be required pursuant to section 1.6; provided, however, that BEC
may, in its discretion and as a condition precedent to the issuance thereof,
require the owner of such lost, stolen or destroyed Certificates to deliver a
bond in such sum as it may reasonably direct as indemnity against any claim
that may be made against BEC, the Company or the Exchange Agent with respect to
the Certificates alleged to have been lost, stolen or destroyed.
(e) Any shares of BEC Common Stock made available to the
Exchange Agent pursuant to subsection (a) hereof to exchange for Shares for
which appraisal rights have been perfected shall be returned to BEC, upon BEC's
demand.
SECTION 1.10. No Fractional Shares. No fraction of a share of
BEC Common Stock will be issued by virtue of the Merger, but in lieu thereof
each holder of shares of Company Common Stock who would otherwise be entitled
to a fraction of a share of BEC Common Stock (after aggregating all fractional
shares of BEC Common Stock to be received by such holder) shall receive from
BEC an amount of cash (rounded to the nearest whole cent) equal to the product
of (i) such fraction, multiplied by (ii) the average closing price of one share
of BEC Common Stock for the ten most recent days that BEC Common Stock has
traded ending on the trading day immediately prior to the Effective Time, as
reported on the New York Stock Exchange, Inc. (the "NYSE"). Immediately prior
to the Effective Time BEC shall deposit with this Exchange Agent sufficient
funds in cash to pay for all fractional shares. As soon as practicable after
the determination of the amount of cash to be paid to former shareholders of
the Company in lieu of any fractional interests, the Exchange Agent shall make
available in accordance with this Agreement such amounts to such former
shareholders. All remaining cash held by the Exchange Agent shall then be
immediately repaid to BEC.
SECTION 1.11. Subsequent Actions. If, at any time after the
Effective Time, the Surviving Corporation shall consider or be advised that any
deeds, bills of sale, assignments, assurances or any other actions or things
are necessary or desirable to vest, perfect or confirm of
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record or otherwise in the Surviving Corporation its right, title or interest
in, to or under any of the rights, properties or assets of either the Company
or Purchaser acquired or to be acquired by the Surviving Corporation as a
result of, or in connection with, the Merger or otherwise to carry out this
Agreement, the officers and directors of the Surviving Corporation shall be
authorized to execute and deliver, in the name and on behalf of either the
Company or Purchaser, all such deeds, bills of sale, assignments and assurances
and to take and do, in the name and on behalf of each of such corporations or
otherwise, all such other actions and things as may be necessary or desirable
to vest, perfect or confirm any and all right, title and interest in, to and
under such rights, properties or assets in the Surviving Corporation or
otherwise to carry out this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF BEC AND PURCHASER
BEC and Purchaser each represent and warrant to the Company as
follows (it being understood that the representations and warranties made by
BEC and Purchaser in this Agreement are being made only in respect of the ORC
Business unless otherwise specifically provided):
SECTION 2.1. Corporate Organization. Each of BEC, ORC and
Purchaser is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has the
requisite corporate power and authority and any necessary governmental
authority and approvals to own, operate or lease the properties that it
purports to own, operate or lease and to carry on its business as it is now
being conducted, and 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, operated or leased or the nature of its activities makes such
qualification necessary, except for such failure which, when taken together
with all other such failures, would not have a Material Adverse Effect (as
defined below). For purposes of this Agreement, "Subsidiary" or "Subsidiaries"
of BEC means any corporation or other legal entity of which BEC (either alone
or through or together with any other Subsidiary of BEC) owns more than fifty
per cent (50%) of the stock or other equity interests the holders of which are
generally entitled to vote for the election of the board of directors or other
governing body of, or otherwise control or direct, such corporation or other
legal entity, with the exception of any subsidiary being transferred to the
Bolle Group at or prior to the Effective Time and Voltarc Technologies, Inc.
When used in connection with BEC or any of its Subsidiaries, the term "Material
Adverse Effect" means any change in or effect that, when taken together with
all other adverse changes and effects, on the ORC Business that is, or is
reasonably likely to be, materially adverse to the business, results of
operations or condition (financial or otherwise), liabilities or regulatory
status of BEC and its Subsidiaries taken as a whole. Except as disclosed in
Schedule 2.1 hereto, BEC does not directly or indirectly own any equity or
similar interest in, or any interest convertible into or exchangeable or
exercisable for, any equity or similar interest in, any corporation,
partnership, joint venture or other business association or entity. Set forth
on Schedule 2.1 is a list of the subsidiaries of ORC Technologies, Inc.
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SECTION 2.2. Certificate of Incorporation and By-laws. BEC has
heretofore furnished to the Company complete and correct copies of the
Certificate of Incorporation and By-laws of each of BEC and the Purchaser, each
as amended to the date hereof. Such Certificate of Incorporation and By-laws
are in full force and effect. Neither BEC nor any of its Subsidiaries is in
violation of any of the provisions of its Certificate of Incorporation or By-
laws or equivalent organizational documents.
SECTION 2.3. Capitalization. As of the date hereof, the
authorized capital stock of BEC consists of 50,000,000 shares of common stock,
having a par value of $.01 per share and 500,000 shares of preferred stock
having a par value of $1.00 per share. As of the date hereof, (i) 17,631,102
shares of BEC Common Stock are issued (including 21,500 treasury shares of BEC
Common Stock), (ii) 10,000 shares of BEC Preferred Stock are issued and
outstanding, all of which are validly issued, fully paid and nonassessable, and
(iii) there are 4,950,000 shares of BEC Common Stock reserved for issuance
under the BEC 1996 Plan pursuant to which 3,335,978 options have been granted
and are outstanding, 238,812 shares of BEC Common Stock have been purchased and
2,000 shares of restricted stock have been issued. All outstanding shares of
the BEC Common Stock have been duly authorized and validly issued and are fully
paid and nonassessable and free of preemptive rights. Except as set forth in
this Section 2.3 or on Schedule 2.3, there are not, as of the date hereof, any
outstanding or authorized subscriptions, options, warrants, convertible
securities, calls, rights, commitments or any other agreements of any character
relating to the issued or unissued capital stock or other securities of BEC to
which BEC is a party or by which BEC is bound obligating BEC to issue, deliver,
or sell, or cause to be issued, delivered or sold, additional shares of capital
stock of BEC or obligating BEC to grant, extend or enter into any subscription,
option, warrant, call, right, commitment or other such agreement.
The authorized capital stock of Purchaser consists solely of
1,000 shares of common stock, par value $.01 per share. All shares of capital
stock of Purchaser that are issued and outstanding are directly owned by BEC.
Except as set forth on Schedule 2.3, all the outstanding capital
stock of each of the Subsidiaries is duly authorized, validly issued, fully
paid and nonassessable and is owned by BEC or a Subsidiary of BEC free and
clear of any liens, security interests, pledges, agreements, claims, charges or
encumbrances of any nature whatsoever. There are no existing options, calls or
commitments of any character relating to the issued or unissued capital stock
or other securities of any Subsidiary of BEC. Except as set forth in Schedule
2.3, there are no outstanding contractual obligations of BEC or any Subsidiary
of BEC to repurchase, redeem or otherwise acquire any shares of BEC Common
Stock or any capital stock of any Subsidiary of BEC or to provide funds to, or
make any investment (in the form of a loan, capital contribution or otherwise)
in, any Subsidiary of BEC or any other person.
Set forth on Schedule 2.3 is the number of options granted under
the BEC 1996 Plan to employees and other participants in respect of each of the
ORC Business and the Bolle
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Group and the average exercise price relating to the outstanding options
granted under the BEC 1996 Plan.
SECTION 2.4. Authority Relative to this Agreement. Each of BEC
and Purchaser has all necessary corporate power and authority to enter into
this Agreement, subject to obtaining all necessary approvals by BEC's
shareholders, to perform its obligations hereunder and to consummate the
Transactions (as defined below). The execution and delivery of this Agreement
by BEC and Purchaser and the consummation by BEC and Purchaser of the
Transactions have been duly authorized by all necessary corporate action on the
part of BEC and Purchaser and by BEC as the sole shareholder of Purchaser,
subject to obtaining all necessary approvals by BEC's shareholders. This
Agreement has been duly executed and delivered by BEC and Purchaser and
constitutes a legal, valid and binding obligation of each such corporation,
enforceable against each of them in accordance with its terms.
SECTION 2.5. No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by BEC and do
not, and the performance of this Agreement by BEC and the Purchaser will not,
(i) conflict with or violate any law, regulation, court order, judgment or
decree applicable to BEC or Purchaser or by which any of their property or
assets is bound or affected, (ii) violate or conflict with either the
Certificate of Incorporation or By-laws of either BEC or any Subsidiary of BEC,
or (iii) other than as set forth on Schedule 2.5, result in any breach of or
constitute a default (or any event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
acceleration or cancellation of any right or obligation of BEC or any
Subsidiary of BEC, or result in the creation of a Lien (as hereinafter defined)
on any of the properties or assets of BEC or any BEC subsidiary pursuant to,
any note, bond, mortgage, indenture, contract, agreement, lease, instrument,
permit, license or franchise to which BEC or any Subsidiary of BEC is a party
or by which BEC or any Subsidiary of BEC or any of their property is bound or
affected, except in the case of (i) or (iii) for conflicts, violations,
breaches or defaults which, in the aggregate, would not have a Material Adverse
Effect.
(b) Except for applicable requirements, if any, of the
Securities Act of 1933, as amended (the "Securities Act"), Securities Exchange
Act of 1934, as amended (the "Exchange Act"), "takeover" or "blue sky" laws of
various states, the pre-merger notification requirements of the Xxxx-Xxxxx-
Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and
filing and recordation of appropriate merger documents as required by Delaware
Law and California Law, and the listing agreement with or the rules and
regulations of The New York Stock Exchange, neither BEC nor Purchaser is
required to submit any notice, report or other filing with any governmental
authority, domestic or foreign, in connection with the execution, delivery or
performance of this Agreement or the consummation of the transactions
contemplated hereby. Except as aforesaid, no waiver, consent, approval or
authorization of any governmental or regulatory authority, domestic or foreign,
is required to be obtained or made by BEC or Purchaser in connection with its
execution, delivery or performance of this Agreement.
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(c) Except as set forth on Schedule 2.5, neither BEC nor any
Subsidiary is in conflict with, or in default or violation of, (i) any law,
rule, regulation, order, judgment or decree applicable to BEC or any Subsidiary
or by which any property or asset of BEC or any Subsidiary is bound or
affected, or (ii) any note, bond, mortgage, indenture, contracts, agreement,
lease, license, permit, franchise or other instrument or obligation to which
BEC or any Subsidiary is a party or by which BEC or any Subsidiary or any
property or asset of BEC or any Subsidiary is bound or affected, except for any
such conflicts, defaults or violations that would not, individually or in the
aggregate, have a Material Adverse Effect.
SECTION 2.6. SEC Filings; Financial Statements.
(a) BEC has filed all forms, reports and documents required to
be filed with the Securities and Exchange Commission (the "SEC") since December
31, 1996, and has heretofore delivered to the Company in the form filed with
the SEC, its (i) Annual Report on Form 10-K for the year ended December 31,
1996, (ii) Quarterly Reports on Form 10-Q for the quarters ended March 31, 1997
and June 30, 1997 and (iii) all other reports or registration statements filed
by BEC with the SEC since January 1, 1997 (collectively, the "BEC SEC
Reports"). As of their respective filing dates (or, with respect to
registration statements, their respective effective dates), the BEC SEC Reports
(i) were prepared in all material respects in accordance with the requirements
of the Securities Act or the Exchange Act, as the case may be, and (ii) did not
at the time they were filed contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(b) The consolidated financial statements contained in the BEC
SEC Reports (in each case, including any notes thereto) comply in all material
respects with the requirements of the Exchange Act and the rules and
regulations promulgated thereunder by the SEC and have been prepared in
accordance with generally accepted accounting principles ("GAAP") applied on a
consistent basis throughout the periods involved (except as may be indicated in
the notes thereto) and fairly present the consolidated financial position of
BEC and its Subsidiaries as at the respective dates thereof and the
consolidated results of operations and changes in financial position of BEC and
its Subsidiaries for the periods indicated, except that the unaudited interim
financial statements were or are subject to normal and recurring year-end
adjustments which were not or are not expected to be material in amount.
(c) Except as reflected or reserved against in the consolidated
financial statements contained in the BEC SEC Reports or set forth on Schedule
2.6, BEC and its Subsidiaries have no liabilities of any nature (whether
accrued, absolute, contingent or otherwise) which, in the aggregate, could have
a Material Adverse Effect, except for liabilities incurred since June 30, 1997,
in the ordinary course of business and consistent with past practice. Since
June 30, 1997, neither BEC nor any of its Subsidiaries has incurred any
liabilities material to BEC and the Subsidiaries taken as a whole, except (i)
liabilities incurred in the ordinary course of business and consistent with
past practice, (ii) liabilities incurred in connection with or as a result of
the
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Merger, the Asset Transfer, or the Spinoff or the other transactions
contemplated hereby (the "Transactions") or (iii) liabilities disclosed on
Schedule 2.7.
(d) BEC has heretofore furnished to the Company complete and
correct copies of all material amendments and modifications that have not been
filed by BEC with the SEC to all material agreements, documents and other
instruments that previously had been filed by BEC with the SEC and are
currently in effect.
(e) Set forth in Schedule 2.6 is a copy of the unaudited
consolidated pro forma balance sheet (the "BEC Balance Sheet") as at September
30, 1997 and a consolidated pro forma statement of income (the "BEC Income
Statements"), for the nine months ended September 30, 1997 of BEC reflecting
the ORC Business as if the Asset Transfer and the Spinoff had been consummated
as of such date and for such period, as the case may be. The BEC Balance Sheet
fairly presents in all material respects the consolidated financial position of
BEC on a pro forma basis based upon the assumptions set forth in the notes
thereto and the BEC Income Statements fairly present in all material respects
the consolidated results of operations prior to interest and taxes of BEC on a
pro forma basis as of their respective dates based upon the assumptions set
forth in the notes thereto.
(f) Set forth in Schedule 2.6 is a copy of the unaudited
consolidated balance sheet (the "ORC Balance Sheet") as at September 30, 1997
and the related consolidated statement of income (the "ORC Income Statement"),
for the nine months ended September 30, 1997 of ORC Technologies, Inc. The ORC
Balance Sheet fairly presents in all material respects the consolidated
financial position of ORC Technologies, Inc. as at its respective date and the
ORC Income Statement fairly present in all material respects the consolidated
results of operations prior to interest and taxes of ORC Technologies, Inc. as
of their respective dates.
(g) BEC has heretofore furnished to the Company a copy of the
balance sheet as at August 31, 1997 and the related statement of income for the
eight month period ended August 31, 1997 of Voltarc Technologies, Inc.
("Voltarc"), in the same form as provided to BEC by Voltarc and certain of the
stockholders of Voltarc.
(h) The BEC Balance Sheet and the ORC Balance Sheet will
reflect the financial position of BEC and the financial position of ORC,
respectively, as of the Effective Time, except for changes arising as a result
of actions or events permitted under Section 4.2 hereof or Schedule 4.2 thereto
and the BEC investment in Voltarc (as hereinafter defined).
SECTION 2.7. Absence of Certain Changes or Events. Since
September 30, 1997, except as contemplated in this Agreement or as previously
disclosed in the BEC SEC Reports or as appears on Schedule 2.7, there has not
been and no agreement has been entered into by BEC or any Subsidiary of BEC to
effect:
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(a) any change in the business, operations, properties,
condition (financial or otherwise), assets or liabilities
(including, without limitation, contingent liabilities) of
BEC or any Subsidiary of BEC having, individually or in
the aggregate, a Material Adverse Effect;
(b) any damage, destruction or loss (whether or not covered by
insurance) affecting the business or the assets of BEC or
any of its Subsidiaries which individually or in the
aggregate has had or would reasonably be expected to have
a Material Adverse Effect;
(c) any redemption, repurchase or other acquisition by BEC or
any of the Subsidiaries of any outstanding share of
capital stock or other securities of, or ownership
interests in, BEC or any Subsidiary of BEC or any
declaration or payment of any dividend or other
distribution in cash, stock or property with respect to
any share of capital stock of BEC;
(d) any entry into or relinquishment of any material
commitment or transaction (including, without limitation,
any borrowing or capital expenditure) other than as
contemplated by this Agreement or the Transfer Agreements,
except as permitted by Section 4.2 hereof;
(e) any mortgage, pledge, security interest or imposition of
Lien or other encumbrance on any asset of BEC or any of
the Subsidiaries that is material to the business,
financial condition or operations of BEC and the
Subsidiaries taken as a whole, except as permitted by
Section 4.2 hereof;
(f) any change by BEC in accounting principles or methods,
except insofar as may have been required by a change in
generally accepted accounting principles and disclosed in
BEC SEC Reports;
(g) any revaluation by BEC of any asset (including, without
limitation, any writing down of the value of inventory or
writing off of notes or accounts receivable), other than
in the ordinary course of business consistent with past
practice; or
(h) any amendment of any material term of any outstanding
security of BEC or any of its Subsidiaries; or
(i) any incurrence or assumption or guarantee by BEC or any
Subsidiary of BEC of any indebtedness for borrowed money
other than in the ordinary course of business and in
amounts and on terms consistent with past practice, it
being understood that as of the Effective Time the amount
of senior bank indebtedness of BEC and its Subsidiaries
shall not exceed
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$33,000,000 in the aggregate, excluding any funds borrowed
for the purposes of lending amounts to Voltarc under the
Voltarc Facility and any expenses in connection with the
Transactions other than the Spinoff paid prior to the
Effective Time that do not exceed the amount set forth in
Section 2.11 hereof.
Except as set forth in Schedule 2.7, since September 30, 1997,
BEC and its Subsidiaries have conducted their business only in the ordinary
course and in a manner consistent with past practice and have not made any
material change in the conduct of the business or operations of BEC and its
Subsidiaries taken as a whole. Without limiting the generality of the
foregoing, neither BEC nor any Subsidiary of BEC have, since such date, except
for the contracts referred to in the BEC SEC Reports or as disclosed on
Schedule 2.7, made any changes in executive compensation levels or in the
manner in which other key employees of BEC or the Subsidiaries are compensated
or agreed to pay any pension, retirement allowance or other employee benefit
not required or permitted by any plan or arrangement existing on such date to
any director, officer or employee, whether past or present, or committed itself
to any collective bargaining agreement or to any additional pension, profit-
sharing, bonus, incentive, deferred compensation, stock purchase, stock option,
stock appreciation rights, group insurance, severance pay, retirement or other
employee benefit plan or arrangement, or to any employment or consulting
agreement or to amend any of such plans or any of such agreements in existence
on such date.
SECTION 2.8. Litigation. Except as disclosed in the BEC SEC
Reports or set forth on Schedule 2.8 hereto, there are no actions, suits,
investigations, claims or proceedings pending or, to the knowledge of BEC,
threatened against BEC, or any of its Subsidiaries, or any of their respective
properties, which (i) individually or in the aggregate are reasonably likely to
have a Material Adverse Effect, or (ii) seek to delay or prevent the
consummation of the Merger or the Transactions. As of the date hereof, neither
BEC nor any of its Subsidiaries nor any of their property is subject to any
judgment, injunction or decree which individually or in the aggregate are
reasonably likely to have a Material Adverse Effect.
SECTION 2.9. Employee Benefit Plans. Schedule 2.9 lists all the
employee benefit plans, programs, arrangements and contracts maintained for the
benefit of any current or former employee, officer or director of BEC or any
Subsidiary or with respect to which BEC or any Subsidiary could incur liability
(the "BEC Plans"), and the Company has been furnished with a copy of each BEC
Plan and each material document prepared in connection with each BEC Plan.
Except as set forth in Schedule 2.9, (i) none of the BEC Plans are intended to
be qualified under Section 401(a) of the Internal Revenue Code of 1986, as
amended (the "Code"); (ii) none of the BEC Plans promise or provide retiree
medical or life insurance benefits to any person; (iii) none of the Plans
promise or provide severance benefits or benefits contingent upon a change in
ownership or control, within the meaning of Section 280G of the Code nor create
any entitlement to receive any payment benefit or amount which may constitute
"Excess Parachute Payments" under the Code; (iv) each BEC Plan has been
operated in all material respects in accordance with
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its terms and the requirements of applicable law; (v) with respect to each BEC
Plan which is a defined benefit plan, the aggregate accumulated benefit
obligations of such BEC Plan (as of the date of the most recent actuarial
valuation prepared for such BEC Plan) do not exceed the fair market value of
the assets of such BEC Plan (as of the date of such valuation); (vi) none of
the BEC Plans provide, has provided or agreed to provide, any post-retirement
benefits which are required to be reported on BEC's financial statements under
Financial Accounting Standards Board Statement of Financial Accounting
Standards No. 106; and (vii) neither BEC nor any Subsidiary of the Company nor
any of their respective affiliates has received a notice of deficiency from the
United States Department of Labor or Internal Revenue Service.
SECTION 2.10. Labor Matters. Except as set forth in Schedule
2.10, (i) there are no controversies pending or, to the best knowledge of BEC,
threatened between BEC or any Subsidiary and any of their respective employees;
(ii) neither BEC nor any Subsidiary is a party to any collective bargaining
agreement or other labor union contract applicable to persons employed by BEC
or any Subsidiary, nor, to the best knowledge of BEC, are there any activities
or proceedings of any labor union to organize any such employees; (iii) there
are no unfair labor practice complaints pending against BEC or any Subsidiary
before the National Labor Relations Board or other governmental or
administrative body involving employees of BEC or any Subsidiary; and (iv)
there is no strike, slowdown, work stoppage or lockout, or, to the best
knowledge of BEC, threat thereof, by or with respect to any employees of the
Company or any Subsidiary.
SECTION 2.11. Brokers. No broker, finder or investment banker
(other than Xxxxxxx, Xxxxx Inc.) is entitled to any brokerage, finder's or
other fee or commission in connection with the Transactions based upon
arrangements made by and on behalf of BEC. The details of BEC's arrangements
with Xxxxxxx Xxxxx & Associates Inc. ("Xxxxxxx Xxxxx") are set forth on
Schedule 2.11. The fees and expenses to be incurred by BEC with respect to the
Transactions (other than the Spinoff) are estimated to be approximately
$1,250,000, absent extraordinary and unusual circumstances assuming counsel for
BEC will draft the Joint Proxy Statement-Prospectus other than the sections
applicable to ILC and that BEC will bear printing costs of same. BEC will use
its reasonable best efforts to minimize such costs, obtain back-up for all
bills submitted for professional services and submit such invoices to the
Company for approval prior to payment, which approval will not be unreasonably
withheld or delayed.
SECTION 2.12. Products Liability. Except as disclosed on
Schedule 2.12, there is no notice or claim involving any product manufactured,
produced, distributed or sold by or on behalf of BEC or its Subsidiaries
resulting from an alleged defect in design, manufacture, materials or
workmanship, failure to perform for the use intended or any alleged failure to
warn, or from any breach of express or implied warranties or representations,
which, individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect on BEC and its Subsidiaries taken as a whole, without
regard to any insurance coverage. The product liability insurance policies
maintained by BEC are in full force and effect and are adequate for the
business
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conducted by BEC. BEC has not received any notice from any insurance carrier
declining coverage of any claim or cancelling or threatening to cancel any such
policy.
SECTION 2.13. Conduct of Business. The business of BEC and each
of its Subsidiaries is not being conducted in default or violation of any term,
condition or provision of (i) its respective Certificate of Incorporation or
By-laws or similar organizational documents, or (ii) any note, bond, mortgage,
indenture, contract, lease or other instrument or agreement to which BEC or any
of its Subsidiaries is now a party or by which BEC or any of its material
Subsidiaries or any of their respective properties or assets may be bound, or
(iii) to the best of its knowledge, any federal, state, local or foreign
statute, law, ordinance, rule, regulation, judgment, decree, order, concession,
grant, franchise, permit or license or other governmental authorization or
approval applicable to BEC or any of its Subsidiaries, except, with respect to
the foregoing clauses (ii) and (iii), defaults or violations that would not,
individually or in the aggregate, have a Material Adverse Effect.
SECTION 2.14. Joint Proxy Statement-Prospectus. None of the
information supplied in writing by BEC, its affiliates, officers, directors,
representatives, financial advisors, agents or employees (collectively,
"Representatives"), for inclusion in the joint proxy statement-prospectus (such
joint proxy statement-prospectus, as amended or supplemented, is herein
referred to as the "Joint Proxy Statement-Prospectus") will, on the date the
Joint Proxy Statement-Prospectus is filed with the SEC, first mailed to
shareholders of the Company and BEC, at the time of the meeting of BEC's
stockholders to consider the issuance of BEC Common Stock in the Merger (the
"BEC Stockholders Meeting"), at the time of the Company Shareholders Meeting or
at the Effective Time, contain any statement which, at such time and in light
of the circumstances under which it will be made, will be false or misleading
with respect to any material fact, or will omit to state any material fact
necessary in order to make the statements therein not false or misleading. To
the extent it contains information or statements pertaining to BEC or its
Subsidiaries, the Joint Proxy Statement-Prospectus will, when filed, comply as
to form in all material respects with the requirements of the Securities Act
and the Exchange Act. Notwithstanding the foregoing, BEC does not make any
representation or warranty with respect to any information that has been
supplied by the Company or its accountants, counsel or other authorized
representatives for use in the Joint Proxy Statement-Prospectus.
SECTION 2.15. Taxes.
(a) Except as set forth in Schedule 2.15, (i) all tax returns
required to be filed by, or with respect to, BEC and each of its Subsidiaries
has been timely filed by, or with respect to, BEC and each of its Subsidiaries;
(ii) BEC and each of its Subsidiaries has timely paid all Taxes shown as due on
all Tax Returns filed; (iii) as of the time of filing, the Tax Returns filed
by, or with respect to BEC and each of its Subsidiaries correctly reflected the
facts regarding the income, business, assets, operations, activities and the
status of BEC and each of its Subsidiaries in all material respects; (iv) BEC
and each of its Subsidiaries has made adequate provision for all taxes payable
by them for which no tax return has yet been filed; (v) the charges, accruals
and
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reserves for taxes with respect to BEC and each of its Subsidiaries are
adequate under GAAP to cover the tax liabilities accruing through the date
thereof; (vi) no material deficiencies for any Taxes have been proposed,
asserted or assessed against or with respect to, BEC or any of its
Subsidiaries, and no requests for waivers of time to assess any Taxes are
pending; (vii) the United States federal income Tax Returns filed by or on
behalf of, BEC and each of its Subsidiaries consolidated in such Tax Returns
through December 31, 1993 are Tax Returns with respect to which the applicable
periods for assessment under applicable law after giving effect to extensions
or waivers, has expired; (viii) income Tax Returns are required to be filed by
or on behalf of, BEC and each of its Subsidiaries in each of the jurisdictions
set forth in Schedule 2.15 and such income Tax Returns have been examined by
and settled with the relevant taxing authority through the date shown opposite
such jurisdiction in Schedule 2.15; (ix) there is no pending or, to the
knowledge of BEC or each of its Subsidiaries, threatened action or proceeding
for the assessment or collection of Taxes against BEC or with respect to, or
each of its Subsidiaries; (x) no extensions for filing of any Tax Return have
been requested by BEC which Tax Return has not since been timely filed nor any
waiver of any statute with limitations been granted by BEC to any taxing
authority; (xi) there are no material tax Liens (as hereinafter defined in
Section 2.16(b) hereof) or charges on any assets of BEC or each of its
Subsidiaries, except Liens or charges for Taxes that are not yet due and
payable; (xii) neither BEC nor any of its Subsidiaries owes any amount pursuant
to any tax sharing or indemnification agreement or arrangement on pursuant to
any agreement or arrangement for the surrender of losses or other reliefs and
will not have any liability (including liabilities arising by reason of the
transactions contemplated by this Agreement) after the date hereof in respect
of any such agreement or arrangement executed or agreed to prior to the date
hereof; (xiii) the transactions contemplated in this Agreement will not result
in the payment by BEC or any BEC Subsidiary of any "excess parachute payment"
within the meaning of Section 280G of the Code; and (xiv) no acceleration of
the vesting schedule for any property that is substantially nonvested within
the meaning of the regulations under Section 83 of the Code will occur in
connection with the transactions contemplated by this Agreement.
(b) Notwithstanding anything to the contrary, for purposes of
this Section 2.15 the term "Subsidiary" or "Subsidiaries" shall be deemed to
include the Bolle Group.
SECTION 2.16. BEC Properties and Leases.
(a) BEC and the Subsidiaries have sufficient title to all
their properties and assets and have been issued all related permits, consents
and permissions necessary or appropriate to enable them to conduct their
respective businesses as currently conducted or as contemplated to be
conducted. Except as set forth on Schedule 2.16, all such properties and
assets which are reflected on the ORC Balance Sheet as of September 30, 1997
are sufficient to conduct the business of ORC Technologies, Inc. as currently
conducted.
(b) Except as set forth on Schedule 2.16, each parcel of real
property owned or leased by BEC or any Subsidiary (i) is owned or leased free
and clear of all mortgages, pledges, liens, security interests, conditional and
installment sale agreements, encumbrances, charges or
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other claims of third parties of any kind (collectively, "Liens"), other than
(A) Liens for current taxes and assessments not yet past due, (B) inchoate
mechanics' and materialmen's Liens for construction in progress, (C) workmen's,
repairmen's, warehousemen's and carriers' Liens arising in the ordinary course
of business of BEC or such Subsidiary consistent with past practice, and (D)
all matters of record, Liens and other imperfections of title and encumbrances
which, individually or in the aggregate, would not have a Material Adverse
Effect (collectively, "Permitted Liens"), and (ii) is neither subject to any
governmental decree or order to be sold nor is being condemned, expropriated or
otherwise taken by any public authority with or without payment of compensation
therefor, nor, to the best knowledge of BEC, has any such condemnation,
expropriation or taking been proposed.
(c) All leases of real property leased for the use or benefit
of BEC or any Subsidiary to which BEC or any Subsidiary is a party requiring
rental payments in excess of $50,000 during the period of the lease and all
amendments and modifications thereto are in full force and effect and have not
been modified or amended, and there exists no default under any such lease by
BEC or any Subsidiary, nor any event which with notice or lapse of time or both
would constitute a default thereunder by BEC or any Subsidiary.
SECTION 2.17. Environmental Matters. (a) Except as set forth on
Schedule 2.17, BEC and each Subsidiary is in compliance in all material
respects with all applicable Environmental Laws and has been issued and
currently maintains all required federal, state and local permits, licenses,
certificates and approvals. Neither BEC nor any Subsidiary has been notified
of any pending or threatened action, suit, proceeding or investigation and
neither BEC nor any Subsidiary is aware of any facts, which (a) calls into
question, or would reasonably be expected to call into question, compliance by
BEC or any Subsidiary with any Environmental Laws, (b) seeks, or would
reasonably be expected to form the basis of a meritorious proceeding to seek,
to suspend, revoke or terminate any license, permit or approval necessary for
the operation of BEC's or any Subsidiary's business or facilities, or (c) seeks
to cause, or would reasonably be expected to form the basis of a meritorious
proceeding to cause, any property of BEC or any Subsidiary to be subject to any
restrictions on ownership, use, occupancy or transferability under any
Environmental Law, any of which would reasonably be expected to have a Material
Adverse Effect. Except as set forth on Schedule 2.17, to the best knowledge of
BEC, neither BEC nor any of its Subsidiaries has caused or permitted its
business or property (whether real or personal, owned or leased and whether or
not currently owned or occupied by any such entity) to be used to generate,
manufacture, refine, transport, treat, store, handle, dispose, transfer,
produce, or process Hazardous Materials, except in material compliance with all
applicable Environmental Laws.
(b) Except as set forth in Schedule 2.17, BEC and each
of its Subsidiaries is and has been in compliance in all material respects with
all Environmental Laws, except to the extent such non-compliance would not,
singly or in the aggregate, reasonably be expected to have a Material Adverse
Effect.
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(c) Except as set forth on Schedule 2.17, neither BEC
nor any Subsidiaries has received notice of any violation or notice of
regulatory requirements or has been notified of any threatened or pending
action, suit, proceeding or investigation which calls into question compliance
by BEC or any of the BEC Subsidiaries with any Environmental Laws or suggests
that BEC or any of the its Subsidiaries is a potentially responsible party with
regard to any release or threatened release of Hazardous Materials, or which
seeks to suspend, revoke or terminate any license, permit or approval necessary
for the operation of any facility of BEC or any of its Subsidiaries or for the
generation, handling, storage, treatment or disposal of any Hazardous
Materials, which would reasonably be expected to have a Material Adverse
Effect.
(d) Except as set forth on Schedule 2.17, none of BEC
nor any of its Subsidiaries has any liability of any kind whatsoever, whether
accrued, contingent, absolute, determined, determinable or otherwise, arising
under or relating to any Environmental Law, which liability would have a
Material Adverse Effect.
SECTION 2.18. Material Agreements. Except as set forth in
Schedule 2.18 to the best knowledge of BEC, there is no breach or default and
there are no facts which with notice or the passage of time would constitute a
breach or default under, or give rise to any right of termination, amendment,
cancellation or acceleration under, whether as a result of the consummation of
the Transactions or otherwise, any obligation to be performed by any party to
an agreement to which BEC or any Subsidiary is a party.
SECTION 2.19. Insider Interests. Except as set forth in the BEC
SEC Reports filed prior to the date hereof or listed in Schedule 2.9, Schedule
2.19 sets forth all material contracts and agreements of BEC with and other
obligations of BEC to any officer or director of BEC or any of its Subsidiaries
or with the Bolle Group or Voltarc or any of their respective officers or
directors. Except as set forth in Schedule 2.19, no officer or director of BEC
or any of its Subsidiaries and, to the knowledge of BEC, no entity controlled
by any such officer or director and no relative or spouse who resides with any
such officer or director (i) owns, directly or indirectly, any material
interest in any person that is, or is engaged in business as, a competitor,
lessor, lessee, customer or supplier of BEC or any of its Subsidiaries or (ii)
owns, in whole or in part, any tangible or intangible property that BEC or any
of its Subsidiaries or the Bolle Group or Voltarc uses in the conduct of the
business of BEC or any such Subsidiary.
SECTION 2.20. BEC Board. The Board of Directors of BEC has, as
of the date of this Agreement, determined (i) that the Merger is fair to, and
in the best interests of BEC and its stockholders, and (ii) to recommend that
the stockholders of BEC approve and adopt this Agreement and approve the
Merger.
SECTION 2.21. Fairness Opinion. BEC's Board has received a
written opinion from Xxxxxxx, Xxxxx Inc. to the effect that as of the date
hereof, the Exchange Ratio is fair to BEC's shareholders from a financial point
of view and has delivered to the Company a copy of such opinion.
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SECTION 2.22. Trademarks, Patents and Copyrights. BEC and its
Subsidiaries own or possess adequate licenses or other valid rights to use all
patents, patent rights, trademarks, trademark rights, trade names, trade name
rights, copyrights, service marks, trade secrets, applications for trademarks
and for service marks, know-how and other proprietary rights and information
(collectively, "BEC Intellectual Property") used or held for use in connection
with the business of BEC and its Subsidiaries as currently conducted or as
contemplated to be conducted, and BEC is unaware of any assertion or claim
challenging the validity of any of the foregoing which, individually or in the
aggregate, could have a Material Adverse Effect. BEC and its Subsidiaries own
or have valid licenses to all of the BEC Intellectual Property in each case,
free and clear of any Lien. The conduct of the business of BEC and its
Subsidiaries as currently conducted and as contemplated to be conducted does
not and will not conflict in any way with any BEC Intellectual Property of any
third party that, individually or in the aggregate, could have a Material
Adverse Effect. To the knowledge of BEC, there are no infringements of any
proprietary rights of BEC Intellectual Property owned by or licensed by or to
BEC or any Subsidiary which, individually or in the aggregate, could have a
Material Adverse Effect. Neither BEC nor any Subsidiary has licensed or
otherwise permitted the use by any third party of any BEC Intellectual Property
or proprietary information on terms or in a manner which, individually or in
the aggregate, could have a Material Adverse Effect.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to BEC as follows:
SECTION 3.1. Corporate Organization. Each of the Company and
its Subsidiaries (as hereinafter defined) is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation and has the requisite corporate power and authority and any
necessary governmental authority and approvals to own, operate or lease the
properties that it purports to own, operate or lease and to carry on its
business as it is now being conducted, and 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, operated or leased or the nature of its
activities makes such qualification necessary, except for such failure which,
when taken together with all other such failures, would not have a Material
Adverse Effect (as defined below). The term "Subsidiary" or "Subsidiaries"
when used in connection with the Company means any corporation or other legal
entity of which the Company (either alone or through or together with any other
Subsidiary) owns more than fifty per cent (50%) of the stock or other equity
interests the holders of which are generally entitled to vote for the election
of the board of directors or other governing body of such corporation or other
legal entity. When used in connection with the Company or any of its
Subsidiaries, the term "Material Adverse Effect" means any change in or effect
that, when taken together with all other adverse changes and effects, on the
business of the Company and its Subsidiaries that is, or is reasonably likely
to be, materially
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adverse to the business, results of operations or condition (financial or
otherwise), liabilities or regulatory status of the Company and its
Subsidiaries taken as a whole. Except as disclosed in Schedule 3.1 hereto, the
Company does not directly or indirectly own any equity or similar interest in,
or any interest convertible into or exchangeable or exercisable for, any equity
or similar interest in, any corporation, partnership, joint venture or other
business association or entity.
SECTION 3.2. Certificate of Incorporation and By-Laws. The
Company has furnished to BEC complete and correct copies of the Certificate of
Incorporation and the By-laws of the Company and its Subsidiaries, each as
amended to the date hereof. Such Certificate of Incorporation, By-laws and the
equivalent organizational documents of its Subsidiaries are in full force and
effect. Neither the Company nor any Subsidiary is in violation of any of the
provisions of its Certificate of Incorporation or By-laws or equivalent
organizational documents.
SECTION 3.3. Capitalization. As of the date hereof, the
authorized capital stock of the Company consists of 10,000,000 shares, no par
value, of common stock. As of the date hereof, (i) 4,879,811 shares of Company
Common Stock are issued and outstanding, all of which are validly issued, fully
paid and nonassessable, and (ii) there are 901,299 shares of Company Common
Stock reserved for issuance pursuant to options granted or available for grant
under the Company Plans pursuant to which 849,000 options have been granted and
are outstanding (457,499 options are outstanding under the 1983 Employee
Incentive Stok Option Plan and 391,501 options are outstanding under the 1992
Stock Option Plan), and 350,000 shares of the Company Common Stock have been
reserved for issuance under the Company Stock Purchase Plan, of which 272,738
shares have been purchased and 77,262 shares are available to purchase as of
the date hereof. Schedule 3.3 identifies, as of the date hereof the option
holders, the number of shares of the Company Common Stock subject to each
option held, the exercise prices, vesting schedules and expiration dates of the
outstanding options granted under the Company Plan, and any other plan, or
otherwise granted. Except for the Company Plan, the Company does not maintain
any other plan relating to the issuance, granting or selling of securities of
the Company. All outstanding shares of the Company Common Stock have been duly
authorized and validly issued and are fully paid and nonassessable and free of
preemptive rights. Except as set forth in this Section 3.3 or on Schedule 3.3,
there are not, as of the date hereof, any outstanding or authorized
subscriptions, options, warrants, convertible securities, calls, rights,
commitments or any other agreements of any character relating to the issued or
unissued capital stock or other securities of the Company to which the Company
is a party or by which the Company is bound obligating the Company to issue,
deliver, or sell, or cause to be issued, delivered or sold, additional shares
of capital stock of the Company or obligating the Company to grant, extend or
enter into any subscription, option, warrant, call, right, commitment or other
such agreement.
All the outstanding capital stock of each of the Subsidiaries of
the Company is duly authorized, validly issued, fully paid and nonassessable
and is owned by the Company or a Subsidiary free and clear of any liens,
security interests, pledges, agreements, claims, charges or encumbrances of any
nature whatsoever. There are no existing options, calls or commitments of
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any character relating to the issued or unissued capital stock or other
securities of any such Subsidiary. There are no outstanding contractual
obligations of the Company or any Subsidiary to repurchase, redeem or otherwise
acquire any shares of the Company Common Stock or any capital stock of any
Subsidiary or to provide funds to, or make any investment (in the form of a
loan, capital contribution or otherwise) in, any Subsidiary or any other
person.
SECTION 3.4. Authority Relative to this Agreement. The Company
has the necessary corporate power and authority to enter into this Agreement
and, subject to obtaining any necessary shareholder approval of the Merger, to
carry out its obligations hereunder and to consummate the Transactions. The
execution and delivery of this Agreement by the Company and the consummation by
the Company of the Transactions have been duly authorized by all necessary
corporate action on the part of the Company, subject to the approval of the
Merger by the Company's shareholders in accordance with California Law. This
Agreement has been duly executed and delivered by the Company and constitutes a
legal, valid and binding obligation of the Company, enforceable against it in
accordance with its terms. All restrictions on business combinations contained
in the California Law have been satisfied with respect to the Merger and all
Transactions contemplated by this Agreement.
SECTION 3.5. No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by the Company
does not, and the performance of this Agreement by the Company will not, (i)
conflict with or violate any law, regulation, court order, judgment or decree
applicable to the Company or any of the Subsidiaries or by which they or any of
their property is bound or affected, (ii) violate or conflict with the
Certificate of Incorporation or By-laws or equivalent organizational documents
of the Company or any of its Subsidiaries, or (iii) result in any breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
acceleration or cancellation of any right or obligation of the Company or any
of its Subsidiaries, or result in the creation of a Lien on any of the
properties or assets of the Company or any of the Subsidiaries pursuant to, any
note, bond, mortgage, indenture, contract, agreement, lease, instrument,
permit, license or franchise to which the Company or any of the Subsidiaries is
a party or by which the Company or any of the Subsidiaries or they or any of
their property is bound or affected, except in the case of (i) or (iii) for
conflicts, violations, breaches or defaults which, in the aggregate, would not
have a Material Adverse Effect.
(b) Except for applicable requirements, if any, of the
Securities Act, Exchange Act, the pre-merger notification requirements of the
HSR Act, and filing and recordation of appropriate merger or other documents as
required by Delaware Law, California Law, "takeover" or "blue sky" laws of
various states and the listing agreement with or rules and regulations of The
NASDAQ Stock Market, the Company is not required to submit any notice, report
or other filing with any governmental authority, domestic or foreign, in
connection with the execution, delivery or performance of this Agreement or the
consummation of the transactions contemplated hereby. Except as aforesaid, no
waiver, consent, approval or authorization of any governmental or
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regulatory authority, domestic or foreign, is required to be obtained or made
by the Company in connection with its execution, delivery or performance of
this Agreement.
(c) Neither the Company nor any of its Subsidiaries is in
conflict with, or in default or violation of, (i) any law, rule, regulation,
order, judgment or decree applicable to the Company or any of its Subsidiaries
or by which any property or asset of the Company or any of its Subsidiaries is
bound or affected, or (ii) any note, bond, mortgage, indenture, contracts,
agreement, lease, license, permit, franchise or other instrument or obligation
to which the Company or any of its Subsidiaries is a party or by which the
Company or any of its Subsidiaries or any property or asset of the Company or
any of its Subsidiaries is bound or affected, except for any such conflicts,
defaults or violations that would not, individually or in the aggregate, have a
Material Adverse Effect.
SECTION 3.6. SEC Filings; Financial Statements.
(a) The Company has filed all forms, reports and documents
required to be filed with the SEC since September 30, 1993, and has heretofore
delivered to BEC, in the form filed with the SEC, its (i) Annual Reports on
Form 10-K for the fiscal year ended September 30, 1994, 1995 and 1996, (ii)
Quarterly Reports on Form 10-Q for the quarters ended December 31, 1996, March
31, 1997, and June 30, 1997 and (iii) all other reports or registration
statements filed by the Company with the SEC since September 30, 1996
(collectively, the "Company SEC Reports"). As of their respective filing dates
(or, with respect to registration statements, their respective effective
dates), the Company SEC Reports (i) were prepared in all material respects in
accordance with the requirements of the Securities Act, or the Exchange Act, as
the case may be, and (ii) did not at the time they were filed contain any
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
None of the Subsidiaries is required to file any statements or reports with the
SEC pursuant to Sections 13(a) or 15(d) of the Exchange Act.
(b) The consolidated financial statements contained in the
Company SEC Reports (in each case, including any notes thereto) comply in all
material respects with the requirements of the Exchange Act and the rules and
regulations promulgated thereunder by the SEC and have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto) and fairly present
the consolidated financial position of the Company and its Subsidiaries as at
the respective dates thereof and the consolidated results of operations and
changes in financial position of the Company and its Subsidiaries for the
periods indicated, except that the unaudited interim financial statements were
or are subject to normal and recurring year-end adjustments which were not or
are not expected to be material in amount.
(c) Except as reflected or reserved against in the consolidated
financial statements contained in the Company SEC Reports or set forth on
Schedule 3.6, the Company and its
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Subsidiaries have no liabilities of any nature (whether accrued, absolute,
contingent or otherwise) which, in the aggregate, could have a Material Adverse
Effect, except for liabilities incurred since June 30, 1997 in the ordinary
course of business and consistent with past practice. Since June 30, 1997,
neither the Company nor any of its Subsidiaries has incurred any liabilities
material to the Company and the Subsidiaries taken as a whole, except (i)
liabilities incurred in the ordinary course of business and consistent with
past practice, (ii) liabilities incurred in connection with or as a result of
the Transactions, (iii) liabilities disclosed on Schedule 3.7.
(d) The Company has heretofore furnished to BEC complete and
correct copies of all material amendments and modifications that have not been
filed by the Company with the SEC to all material agreements, documents and
other instruments that previously had been filed by the Company with the SEC
and are currently in effect.
(e) Set forth in Schedule 3.7 is a true and complete copy of
the unaudited balance sheet (the "Company Balance Sheet") as at September 28,
1997 and the related statements of operations and cash flows (the "Company
Income Statements"), for the year ended September 28, 1997 of the Company. The
Company Balance Sheet fairly presents in all material respects the financial
position of the Company as of its respective date and the Company Income
Statements fairly present in all material respects the results of operations of
the Company as of their respective dates.
(f) The Company Balance Sheet will reflect the consolidated
financial position of the Company, as of the Effective Time, except for changes
arising as a result of actions or events permitted under Section 4.2 hereof or
Schedule 4.2 thereto.
SECTION 3.7. Absence of Certain Changes or Events. Since June
30, 1997, except as contemplated in this Agreement or as previously disclosed
in the Company SEC Reports or as appears on Schedule 3.7, there has not been
and no agreement has been entered into by the Company or any of its
Subsidiaries to effect:
(a) any change in the business, operations, properties,
condition (financial or otherwise), assets or liabilities
(including, without limitation, contingent liabilities) of
the Company or any of its Subsidiaries having,
individually or in the aggregate, a Material Adverse
Effect;
(b) any damage, destruction or loss (whether or not covered by
insurance) affecting the business or the assets of the
Company or any of its Subsidiaries which individually or
in the aggregate has had or would reasonably be expected
to have a Material Adverse Effect;
(c) any redemption, repurchase or other acquisition by the
Company or any of the Subsidiaries of any outstanding
share of capital stock or other securities of, or
ownership interests in, the Company or any of its
Subsidiaries or any
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declaration or payment of any dividend or other
distribution in cash, stock or property with respect to
any share of capital stock of the Company;
(d) any entry into or relinquishment of any material
commitment or transaction (including, without limitation,
any borrowing or capital expenditure) other than as
contemplated by this Agreement or the Transfer Agreements,
except as permitted by Section 4.2 hereof;
(e) any mortgage, pledge, security interest or imposition of
Lien or other encumbrance on any asset of the Company or
any of the Subsidiaries that is material to the business,
financial condition or operations of the Company and the
Subsidiaries taken as a whole, except as permitted by
Section 4.2 hereof;
(f) any change by the Company in accounting principles or
methods, except insofar as may have been required by a
change in generally accepted accounting principles and
disclosed in the Company SEC Reports;
(g) any revaluation by the Company of any asset (including,
without limitation, any writing down of the value of
inventory or writing off of notes or accounts receivable),
other than in the ordinary course of business consistent
with past practice; or
(h) any amendment of any material term of any outstanding
security of the Company or any of its Subsidiaries; or
(i) any incurrence or assumption or guarantee by the Company
or any of its Subsidiaries of any indebtedness for
borrowed money other than in the ordinary course of
business and in amounts and on terms consistent with past
practice, it being understood that as of the Effective
Time the amount of senior bank indebtedness of the Company
and its Subsidiaries shall not exceed $5,000,000 in the
aggregate, excluding (i) any expenses in connection with
the Transactions paid prior to the Effective Time that do
not exceed the amount set forth in Section 3.11 hereof and
(ii) bonuses awarded to Messrs. Xxxxxxxxxx and Xxxxx as
provided in the term sheet set forth on Annex G hereto.
Since June 30, 1997, the Company and its Subsidiaries have
conducted their business only in the ordinary course and in a manner consistent
with past practice and have not made any material change in the conduct of the
business or operations of the Company and its Subsidiaries taken as a whole.
Without limiting the generality of the foregoing neither the Company nor its
Subsidiaries has since such date, except for the contracts referred to in the
Company SEC Reports or as disclosed on Schedule 3.7, made any changes in
executive
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compensation levels or in the manner in which other key employees of the
Company or the Subsidiaries are compensated or agreed to pay any pension,
retirement allowance or other employee benefit not required or permitted by any
plan or arrangement existing on such date to any director, officer or employee,
whether past or present, or committed itself to any collective bargaining
agreement or to any additional pension, profit-sharing, bonus, incentive,
deferred compensation, stock purchase, stock option, stock appreciation rights,
group insurance, severance pay, retirement or other employee benefit plan or
arrangement, or to any employment or consulting agreement or to amend any of
such plans or any of such agreements in existence on such date.
SECTION 3.8. Litigation. Except as disclosed in the Company SEC
Reports or on Schedule 3.8 hereto, there are no actions, suits, investigations,
claims or proceedings pending or, to the knowledge of the Company, threatened
against the Company or any of its Subsidiaries, or any of their respective
properties, which (i) individually or in the aggregate are reasonably likely to
have a Material Adverse Effect, or (ii) seek to delay or prevent the
consummation of the Merger or the Transactions. As of the date hereof, neither
the Company nor any of its Subsidiaries nor any of their property is subject to
any judgment, injunction or decree which individually or in the aggregate are
reasonably likely to have a Material Adverse Effect, except as disclosed on
Schedule 3.8 or in the Company SEC Reports.
SECTION 3.9. Employee Benefit Plans. Schedule 3.9 lists all the
employee benefit plans, programs, arrangements and contracts maintained for the
benefit of any current or former employee, officer or director of the Company
or any Subsidiary or with respect to which the Company or any Subsidiary could
incur liability (the "Plans"), and BEC has been furnished with a copy of each
Plan and each material document prepared in connection with each Plan. Except
as set forth in Schedule 3.9, (i) none of the Plans are intended to be
qualified under Section 401(a) of the Internal Revenue Code of 1986, as amended
(the "Code"); (ii) none of the Plans promise or provide retiree medical or life
insurance benefits to any person; (iii) none of the Plans promise or provide
severance benefits or benefits contingent upon a change in ownership or
control, within the meaning of Section 280G of the Code nor create any
entitlement to receive any payment benefit or amount which may constitute
"Excess Parachute Payments" under the Code; (iv) each Plan has been operated in
all material respects in accordance with its terms and the requirements of
applicable law; (v) with respect to each Plan which is a defined benefit plan,
the aggregate accumulated benefit obligations of such Plan (as of the date of
the most recent actuarial valuation prepared for such Plan) do not exceed the
fair market value of the assets of such Plan (as of the date of such
valuation); (vi) none of the Plans provide, has provided or agreed to provide,
any post-retirement benefits which are required to be reported on the Company's
financial statements under Financial Accounting Standards Board Statement of
Financial Accounting Standards No. 106; and (vii) neither the Company nor any
Subsidiary of the Company nor any of their respective affiliates has received a
notice of deficiency from the United States Department of Labor or Internal
Revenue Service.
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SECTION 3.10. Labor Matters. Except as set forth in Schedule
3.10, (i) there are no controversies pending or, to the best knowledge of the
Company, threatened between the Company or any Subsidiary and any of their
respective employees; (ii) neither the Company nor any Subsidiary is a party to
any collective bargaining agreement or other labor union contract applicable to
persons employed by the Company or any Subsidiary, nor, to the best knowledge
of the Company, are there any activities or proceedings of any labor union to
organize any such employees; (iii) there are no unfair labor practice
complaints pending against the Company or any Subsidiary before the National
Labor Relations Board or other governmental or administrative body involving
employees of the Company or any Subsidiary; and (iv) there is no strike,
slowdown, work stoppage or lockout, or, to the best knowledge of the Company,
threat thereof, by or with respect to any employees of the Company or any
Subsidiary.
SECTION 3.11. Brokers. No broker, finder or investment banker
other than Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation ("DLJ") is
entitled to any brokerage, finder's or other fee or commission in connection
with the Transactions based upon arrangements made by and on behalf of the
Company. The details of the Company's arrangements with DLJ are set forth on
Schedule 3.11. The fees and expenses to be incurred by the Company with
respect to the Transactions are estimated to be approximately $1,250,000,
absent extraordinary and unusual circumstances assuming counsel for the Company
will draft the portion of the Joint Proxy Statement-Prospectus applicable to
the Company and that BEC will bear printing costs of same. The Company will
use its reasonable best efforts to minimize such costs, obtain back-up for all
bills submitted for professional services and submit such invoices to BEC for
approval prior to payment, which approval will not be unreasonably withheld or
delayed.
SECTION 3.12. Products Liability. Except as disclosed on
Schedule 3.12, there is no notice or claim involving any product manufactured,
produced, distributed or sold by or on behalf of the Company or its
Subsidiaries resulting from an alleged defect in design, manufacture, materials
or workmanship, failure to perform for the use intended or any alleged failure
to warn, or from any breach of express or implied warranties or
representations, which, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect on the Company and its Subsidiaries
taken as a whole, without regard to any insurance coverage. The products
liability insurance policies maintained by the Company, are in full force and
effect and are adequate for the business conducted by the Company. The Company
has not received any notice from any insurance carrier declining coverage of
any claim or cancelling or threatening to cancel any such policy.
SECTION 3.13. Conduct of Business. The business of the Company
and each of the Subsidiaries is not being conducted in default or violation of
any term, condition or provision of (i) its respective Certificate of
Incorporation or By-laws or similar organizational documents, or (ii) any note,
bond, mortgage, indenture, contract, lease or other instrument or agreement of
any kind to which the Company or any of the Subsidiaries is now a party or by
which the Company or any of the Subsidiaries or any of their respective
properties or assets may be bound, or (iii) to the best of its knowledge any
federal, state, local or foreign statute, law,
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ordinance, rule, regulation, judgment, decree, order, concession, grant,
franchise, permit or license or other governmental authorization or approval
applicable to the Company or any of the Subsidiaries, except with respect to
the foregoing clauses (ii) and (iii), defaults or violations that would not,
individually or in the aggregate, have a Material Adverse Effect.
SECTION 3.14. Joint Proxy Statement-Prospectus. None of the
information supplied in writing by the Company, its affiliates, officers,
directors or its Representatives, for inclusion in the Joint Proxy Statement-
Prospectus will on the date the Joint Proxy Statement-Prospectus is filed with
the SEC, first mailed to shareholders in connection with the Company
Shareholders Meeting, at the time of the Company Shareholders Meeting or the
BEC Stockholders Meeting or at the Effective Time, contain any statement, which
at such time and in light of the circumstances under which it will be made,
will be false or misleading with respect to a material fact, or will omit to
state any material fact necessary in order to make the statements therein not
false or misleading. To the extent it contains information or statements
pertaining to the Company or its Subsidiaries, the Joint Proxy Statement-
Prospectus will, when filed, comply as to form in all material respects with
the requirements of the Securities Act and the Exchange Act. Notwithstanding
the foregoing, the Company does not make any representation or warranty with
respect to any information that has been supplied by BEC or its accountants,
counsel or other authorized representatives for use in the Joint Proxy
Statement-Prospectus.
SECTION 3.15. Taxes.
(a) Except as set forth in Schedule 3.15, (i) the Company and
each of its Subsidiaries timely filed all Tax Returns required to be filed by,
or with respect to the Company and each of its Subsidiaries; (ii) the Company
and each Subsidiary has timely paid all Taxes shown as due on all Tax Returns
filed; (iii) as of the time of filing, the Tax Returns filed by, or with
respect to the Company and each Subsidiary of the Company correctly reflected
the facts regarding the income, business, assets, operations, activities and
the status of the Company and each Subsidiary of the Company in all material
respects; (iv) the Company and each of its Subsidiaries has made adequate
provision for all taxes payable by them for which no tax return has yet been
filed; (v) the charges, accruals and reserves for taxes with respect to the
Company and each Subsidiary of the Company are adequate under GAAP to cover the
tax liabilities accruing through the date thereof; (vi) no material
deficiencies for any Taxes have been proposed, asserted or assessed against or
with respect to, the Company or any of its Subsidiaries, and no requests for
waivers of time to assess any Taxes are pending; (vii) the United States
federal income Tax Returns filed by or on behalf of, the Company and each
Subsidiary consolidated in such Tax Returns through September 30, 1995 are Tax
Returns with respect to which the applicable periods for assessment under
applicable law after giving effect to extensions or waivers, has expired;
(viii) the income Tax Returns filed by or on behalf of, the Company and any of
its Subsidiaries required to file such income Tax Returns in any of the
jurisdictions set forth in Schedule 3.15 have been examined by and settled with
the relevant taxing authority through the date shown opposite such jurisdiction
in Schedule 3.15; (ix) there is no pending or, to the knowledge of the Company
or any of its Subsidiaries, threatened action or proceeding for the assessment
or collection of Taxes
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against the Company or with respect to, or any Subsidiary; (x) no extensions
for filing of any Tax Return have been requested by the Company which Tax
Return has not since been timely filed nor any waiver of any statute with
limitations has been granted by the Company to any taxing authority; (xi) there
are no material tax Liens or charges on any assets of the Company or any
Subsidiary, except Liens or charges for Taxes that are not yet due and payable;
(xii) neither the Company nor any Subsidiary owes any amount pursuant to any
tax sharing or indemnification agreement or arrangement on pursuant to any
agreement or arrangement for the surrender of losses or other reliefs and will
not have any liability (including liabilities arising by reason of the
transactions contemplated by this Agreement) after the date hereof in respect
of any such agreement or arrangement executed or agreed to prior to the date
hereof; (xiii) the transactions contemplated in this Agreement will not result
in the payment by the Company or any Subsidiary of any "excess parachute
payment" within the meaning of Section 280G of the Code; and (xiv) no
acceleration of the vesting schedule for any property that is substantially
nonvested within the meaning of the regulations under Section 83 of the Code
will occur in connection with the transactions contemplated by this Agreement.
SECTION 3.16. Property and Leases.
(a) The Company and its Subsidiaries have sufficient title to
all their properties and assets and have been issued all related permits,
consents and permissions necessary or appropriate to enable them to conduct
their respective businesses as currently conducted or as contemplated to be
conducted. Except as set forth on Schedule 3.16, all such properties and
assets which are reflected on the Company Balance Sheet as of September 30,
1997 are sufficient to conduct the business of the Company.
(b) Each parcel of real property owned or leased by the
Company or any of its Subsidiaries (i) is owned or leased free and clear of all
Liens, other than Permitted Liens, and (ii) is neither subject to any
governmental decree or order to be sold nor is being condemned, expropriated or
otherwise taken by any public authority with or without payment of compensation
therefor, nor, to the best knowledge of the Company, has any such condemnation,
expropriation or taking been proposed.
(c) All leases of real property leased for the use or benefit
of the Company or any Subsidiary to which the Company or any Subsidiary is a
party requiring rental payments in excess of $50,000 during the period of the
lease and all amendments and modifications thereto are in full force and effect
and have not been modified or amended, and there exists no default under any
such lease by the Company or any Subsidiary, nor any event which with notice or
lapse of time or both would constitute a default thereunder by the Company or
any Subsidiary.
SECTION 3.17. Environmental Matters. Except as set forth in
Schedule 3.17:
(a) Except as set forth on Schedule 3.17, the Company and each
Subsidiary is in compliance in all material respects with all applicable
Environmental Law and has been issued
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and currently maintains all required federal, state and local permits,
licenses, certificates and approvals. Neither the Company nor any Subsidiary
has been notified of any pending or threatened action, suit, proceeding or
investigation and neither the Company nor any Subsidiary is aware of any facts,
which (a) calls into question, or would reasonably be expected to call into
question, compliance by the Company or any Subsidiary with any Environmental
Law, (b) seeks, or would reasonably be expected to form the basis of a
meritorious proceeding to seek, to suspend, revoke or terminate any license,
permit or approval necessary for the operation of the Company's or any
Subsidiary's business or facilities, or (c) seeks to cause, or would reasonably
be expected to form the basis of a meritorious proceeding to cause, any
property of the Company or any Subsidiary to be subject to any restrictions on
ownership, use, occupancy or transferability under any Environmental Law, any
of which would reasonably be expected to have a Material Adverse Effect. To
the best knowledge of the Company, neither the Company nor any of its
Subsidiaries has caused or permitted its business or property (whether real or
personal, owned or leased and whether or not currently owned or occupied by any
such entity) to be used to generate, manufacture, refine, transport, treat,
store, handle, dispose, transfer, produce, or process Hazardous Materials,
except in material compliance with all applicable Environmental Laws.
(b) Except as set forth in Schedule 3.17, the Company and each
of its Subsidiaries is and has been in compliance in all material respects with
all Environmental Laws, except to the extent such non-compliance would not,
singly or in the aggregate, reasonably be expected to have a Material Adverse
Effect.
(c) Except as set forth on Schedule 3.17, neither the Company
nor any Subsidiaries has received notice of any violation or notice of
regulatory requirements or has been notified of any threatened or pending
action, suit, proceeding or investigation which calls into question compliance
by the Company or any of the BEC Subsidiaries with any Environmental Laws or
suggests that the Company or any of its Subsidiaries is a potentially
responsible party with regard to any release or threatened release of Hazardous
Materials, or which seeks to suspend, revoke or terminate any license, permit
or approval necessary for the operation of any facility of the Company or any
of its Subsidiaries or for the generation, handling, storage, treatment or
disposal of any Hazardous Materials, which would reasonably be expected to have
a Material Adverse Effect.
(d) Except as set forth on Schedule 3.17, none of the Company
nor any of its Subsidiaries has any liability of any kind whatsoever, whether
accrued, contingent, absolute, determined, determinable or otherwise, arising
under or relating to any Environmental Law, which liability would have a
Material Adverse Effect.
SECTION 3.18. Material Agreements. Except as set forth in
Schedule 3.18 to the best knowledge of the Company, there is no breach or
default and there are no facts which with notice or the passage of time would
constitute a breach or default under, or give rise to any right of termination,
amendment, cancellation or acceleration under, whether as a result of the
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consummation of the Transactions or otherwise, any obligation to be performed
by any party to an agreement to which the Company or any Subsidiary is a party.
SECTION 3.19. Insider Interests. Except as set forth in the
Company SEC Reports filed prior to the date hereof or listed in Schedule 3.9,
Schedule 3.19 sets forth all material contracts, agreements of the Company with
and other obligations of the Company to any officer or director of the Company
or any of its Subsidiaries. Except as set forth in Schedule 3.19, no officer
or director of the Company or any of its Subsidiaries and, to the knowledge of
the Company, no entity controlled by any such officer or director and no
relative or spouse who resides with any such officer or director (i) owns,
directly or indirectly, any material interest in any person that is, or is
engaged in business as, a competitor, lessor, lessee, customer or supplier of
the Company or any of its Subsidiaries or (ii) owns, in whole or in part, any
tangible or intangible property that the Company or any of its Subsidiaries
uses in the conduct of the business of the Company or any such Subsidiary.
SECTION 3.20. Board Approval. The Board of Directors of the
Company has, as of the date of this Agreement, determined (i) that the Merger
is fair to, and in the best interests of the Company and its shareholders, and
(ii) to recommend that the shareholders of the Company approve and adopt this
Agreement and approve the Merger.
SECTION 3.21. Fairness Opinion. The Company's Board of Directors
has received a written opinion from DLJ dated as of the date hereof, to the
effect that as of the date hereof, the Exchange Ratio is fair to the Company's
shareholders from a financial point of view and has delivered to BEC a copy of
such opinion.
SECTION 3.22. Trademarks, Patents and Copyrights. The Company
and the Subsidiaries own or possess adequate licenses or other valid rights to
use all patents, patent rights, trademarks, trademark rights, trade names,
trade name rights, copyrights, service marks, trade secrets, applications for
trademarks and for service marks, know-how and other proprietary rights and
information (collectively, "Intellectual Property") used or held for use in
connection with the business of the Company and the Subsidiaries as currently
conducted or as contemplated to be conducted, and the Company is unaware of any
assertion or claim challenging the validity of any of the foregoing which,
individually or in the aggregate, could have a Material Adverse Effect. The
Company and the Subsidiaries own or have valid licenses to all of the
Intellectual Property in each case, free and clear of any Lien. The conduct
of the business of the Company and the Subsidiaries as currently conducted and
as contemplated to be conducted does not and will not conflict in any way with
any Intellectual Property of any third party that, individually or in the
aggregate, could have a Material Adverse Effect. To the knowledge of the
Company, there are no infringements of any proprietary rights of Intellectual
Property owned by or licensed by or to the Company or any Subsidiary which,
individually or in the aggregate, could have a Material Adverse Effect.
Neither the Company nor any Subsidiary has licensed or otherwise permitted the
use by any third party of any Intellectual Property or proprietary information
on terms or in a manner which, individually or in the aggregate, could have a
Material Adverse Effect.
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SECTION 3.23. No Dividends, etc. Neither the Company nor any of
its Subsidiaries has (i) declared, paid or effected any extraordinary dividend,
distribution or redemption regarding shares of Company Common Stock that would
prevent the Merger from being treated for federal income tax purposes as a
reorganization qualifying under the provisions of Section 368(a) of the Code or
(ii) sold, disposed of or otherwise transferred such amount of assets that
would prevent the Merger from being treated for federal income tax purposes as
a reorganization qualifying under the provisions of Section 368(a) of the Code.
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 4.1. Acquisition Proposals. The Company and BEC will
notify the other immediately if any inquiries or proposals including a Superior
Proposal (as defined below) are received by, any information is requested from,
or any negotiations or discussions are sought to be initiated or continued with
the Company or BEC, as the case may be, in each case in connection with any
Acquisition Transaction (as defined below) with the Company or BEC, as the case
may be, or any of their respective Subsidiaries and shall identify such third
party making such inquiry or proposal. Any such notice to the Company or BEC,
as the case may be, shall indicate in reasonable detail the identity of the
person making such proposal, offer, inquiry or contact and the terms and
conditions of such proposal, offer, inquiry or contact. As of the date hereof,
neither BEC nor the Company are participating in discussions or negotiating
with any other entity or group in respect of a bona fide proposal relating to
an Acquisition Transaction (as defined below). Nothing contained herein, shall
preclude the Company or BEC from responding to a bona fide proposal in
accordance with and pursuant to the provisions of Section 4.3. The Company or
BEC, as the case may be, agrees not to release any third party from, or waive
any provision of, any confidentiality or standstill agreement to which the
Company is a party.
SECTION 4.2. Conduct of Business by the Company and BEC Pending
the Merger. Each of the Company and BEC covenants and agrees that, between the
date of this Agreement and the Effective Time, unless BEC or the Company, as
the case may be, shall otherwise consent in writing and except as set forth in
Schedule 4.2, the businesses of the Company and its Subsidiaries and BEC and
its Subsidiaries shall be conducted only in, and the Company and its
Subsidiaries and BEC and its Subsidiaries shall not take any action, except in
the ordinary course of business and in a manner consistent with past practice
and except as set forth in Schedule 4.2, each of the Company and BEC will use
its respective best efforts to preserve substantially intact the business
organization of the Company and its Subsidiaries and BEC and its Subsidiaries,
as the case may be, to keep available the services of their respective present
officers, employees and consultants and to preserve their respective present
relationships with customers, suppliers and other persons with which they or
any of their respective Subsidiaries has significant business relations. By
way of amplification and not limitation, except as contemplated by this
Agreement or the Transactions as set forth in Schedule 4.2, neither the
Company, BEC nor
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any of their respective Subsidiaries shall, between the date of this Agreement
and the Effective Time, directly or indirectly, do any of the following without
the prior written consent of the other:
(a) (i) issue, sell, pledge, grant, dispose of, distribute,
encumber, authorize, or propose the issuance, sale,
pledge, grant, disposition, distribution, encumbrance or
authorization of any shares of capital stock of any class,
or any options, warrants, convertible securities or other
rights of any kind to acquire any shares of capital stock,
or any other ownership interest, of the Company or BEC or
any of their respective Subsidiaries, other than pursuant
to options granted prior to the date hereof and exercised
in accordance with their terms, as in effect prior to such
date; (ii) other than as required to change the name of
BEC, or to increase the number of authorized shares of BEC
Common Stock, or to effect the Reverse Stock Split, amend
or propose to amend the Certificate of Incorporation or
By-laws or equivalent organizational documents of the
Company, BEC or any of their respective Subsidiaries;
(iii) split, combine or reclassify any outstanding shares
of Company Common Stock or BEC Common Stock (except as set
forth in Schedule 4.2), or declare, set aside or pay any
dividend or distribution payable in cash, stock, property
or otherwise with respect to the shares of Company Common
Stock or BEC Common Stock (except as set forth in Schedule
4.2); (iv) redeem, purchase or otherwise acquire or offer
to redeem, purchase or otherwise acquire any shares of its
capital stock, except in the performance of its
obligations under existing employee plans; or (v)
authorize or propose or enter into any contract,
agreement, commitment or arrangement with respect to any
of the matters set forth in this Section 4.2(a);
(b) (i) acquire (by merger, consolidation, or acquisition
of stock or assets) any corporation, partnership or other
business organization or division thereof; (ii) sell,
pledge, dispose of, or encumber or authorize or propose
the sale, pledge, disposition or encumbrance of any
material assets of the Company, BEC or any of their
respective Subsidiaries (except as set forth in Schedule
4.2); (iii) incur any indebtedness for borrowed money, or
enter into any contract or agreement, except in the
ordinary course of business incurred for working capital
on a short-term basis (except as set forth in Schedule
4.2); (iv) make or commit to any capital expenditure which
exceeds $50,000 or make or commit to make aggregate
capital expenditures in excess of $200,000 without first
notifying and obtaining the written approval of BEC or the
Company, or (v) enter into or amend any contract,
agreement, commitment or arrangement with respect to any
of the matters set forth in this Section 4.2(b);
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(c) take any action other than pursuant to disclosed contracts
(none of which actions shall be unreasonable or unusual)
to grant any severance or termination pay (otherwise than
pursuant to policies of the Company, BEC or any of their
respective Subsidiaries in effect on the date hereof) or
to increase benefits payable under their respective
severance or termination pay policies in effect on the
date hereof;
(d) make any payments (except in the ordinary course of
business and in amounts and in a manner consistent with
past practice or pursuant to disclosed contracts) to any
employee of, or independent contractor or consultant to,
the Company, BEC or any of their respective Subsidiaries,
increase the compensation payable to their respective
officers or employees, salaries or wages of the Company or
BEC who are not officers of the Company, BEC or any of
their respective Subsidiaries, as the case may be, except
for increases in the ordinary course of business,
consistent with past practice, enter into any new employee
plan, any new employment or consulting agreement, grant or
establish any new awards under such plan or agreement, or
adopt or otherwise amend any of the foregoing otherwise
than in the ordinary course consistent with past practice;
(e) take any action to change accounting policies or
procedures (including, without limitation, its procedures
with respect to the payment of accounts payable and
collection of accounts receivable);
(f) take any action to cause the shares of (i) Company Common
Stock to cease to be listed on the NASDAQ Stock Market, or
(ii) BEC Common Stock to cease to be listed on either the
New York Stock Exchange or nationally recognized stock
exchange or The NASDAQ Stock Market;
(g) make or change any tax election or settle or compromise
any material federal, state, local or foreign income tax
liability;
(h) pay, discharge or satisfy any claim, liability or
obligation (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment,
discharge or satisfaction, in the ordinary course of
business and consistent with past practice, of liabilities
reflected or reserved against in the Company Balance Sheet
or in the BEC Balance Sheet or in either case subsequently
incurred in the ordinary course of business and consistent
with past practice;
(i) settle or compromise any pending or threatened suit,
action or claim against the Company or BEC or any of their
respective directors by any shareholder of the Company or
BEC, as the case may be, relating to the
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Merger, the Transactions or this Agreement, or voluntarily
cooperate with any third party which has sought or may
hereafter seek to restrain or prohibit or otherwise oppose
the Merger subject to the Company's right to cooperate
with third parties in accordance with Section 4.3 hereof.
(j) adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization of the Company,
BEC or any of their respective Subsidiaries (other than as
set forth on Schedule 4.2 or the Merger); or
(k) take, or offer or propose to take, or agree to take in
writing or otherwise, any of the actions described in
Section 4.2(a) through 4.2(j) or any action which would
make any of the representations or warranties of the
Company or BEC, as the case may be, contained in this
Agreement untrue or incorrect as of the date when made if
such action had then been taken, or would result in any of
the conditions set forth in Article VI not being
satisfied.
SECTION 4.3. No Shopping. Each of the Company, BEC and their
respective Subsidiaries will not, directly or indirectly, through any officer,
director, employee, representative, agent, financial adviser or otherwise,
solicit, initiate or encourage inquiries or submission of proposals or offers
from any person relating to any sale of all or a portion of the assets,
business, properties of (other than immaterial or insubstantial assets or
inventory in the ordinary course of business), or any equity interest in, the
Company, BEC or any of their respective Subsidiaries, as the case may be, or
any business combination with the Company or any of their respective
Subsidiaries, as the case may be, whether by merger, consolidation, sale of
assets, tender offer or otherwise (collectively, an "Acquisition Transaction")
or participate in any negotiation regarding, or furnishing to any other person
any information (except information which has been previously publicly
disseminated by the Company or BEC, as the case may be, in the ordinary course
of business) with respect to, or otherwise cooperate in any way with, or assist
in, facilitate or encourage, any effort or attempt by any other person to do or
seek to do any of the foregoing. Notwithstanding the foregoing, the Company or
BEC, as the case may be, may furnish any information (subject to the execution
of a confidentiality agreement substantially similar to that then in effect
between Company and BEC) and participate in discussions and negotiate with any
such entity or group concerning any potential Acquisition Transaction involving
the Company, BEC or any of their respective Subsidiaries, as the case may be,
if such entity or group has submitted a bona fide proposal to its Board of
Directors, relating to any such transaction which the Company's or BEC's Board
of Directors, as the case may be, reasonably determines would represent a
Superior Proposal (as defined below) to the Merger to the holders of Company
Common Stock or BEC Common Stock, as the case may be. If the Board of the
Company or BEC, as the case may be, after duly considering advice, written or
otherwise, of their respective outside counsel and financial advisors,
determines in good faith that it would be inconsistent with its fiduciary
responsibilities not to approve or recommend a Superior Proposal, then (A) the
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Company or BEC, as the case may be, shall not enter into any agreement with
respect to the Superior Proposal and (B) any other obligation of the Company or
BEC, as the case may be, under this Agreement shall not be affected unless this
Agreement is terminated pursuant to Section 7.1(c)(ii) or 7.1(d)(ii), as the
case may be, and all amounts payable pursuant to Section 7.3 are paid to the
Company or BEC, as the case may be, prior to or concurrently with such
termination. As used herein the term "Superior Proposal" means a bona fide
proposal made by a third party to acquire the Company or BEC, as the case may
be, pursuant any Acquisition Transaction that the respective Board determines
in its good faith judgment to be more favorable to the Company's or BEC's
shareholders, as the case may be, than the Merger (after considering the
advice, written or otherwise, of their outside counsel and financial advisor).
The Company or BEC, as the case may be shall use their respective best efforts
to cause all confidential materials previously furnished to any third parties
to be promptly returned to the Company and shall cease any negotiations
conducted in connection therewith or otherwise conducted with any such parties.
SECTION 4.4. Tax Reorganization. Prior to the Effective Time,
each party shall use its reasonable best efforts to cause the Merger to qualify
as a reorganization under the provisions of Section 368(a)(2)(D) of the Code.
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ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.1. Joint Proxy Statement/Prospectus; Registration
Statement; Other Filings; Board Recommendations.
(a) As promptly as practicable after the execution of this
Agreement, the Company and BEC will prepare, and file with the SEC, the Joint
Proxy Statement and BEC will prepare and file with the SEC the Registration
Statement in which the Joint Proxy Statement will be included as a prospectus.
Each of the Company and BEC will cooperate in coordinating a response to any
comments of the SEC, will use its respective reasonable best efforts to have
the Registration Statement declared effective under the Securities Act as
promptly as practicable after such filing and will cause the Joint Proxy
Statement to be mailed to their respective stockholders at the earliest
practicable time. As promptly as practicable after the date of this Agreement,
the Company and BEC will prepare and file any other filings required under the
Exchange Act, the Securities Act or any other Federal, foreign or Blue Sky laws
relating to the Merger and the transactions contemplated by this Agreement (the
"Other Filings"). Each of the Company and BEC will notify the other promptly
upon the receipt of any comments from the SEC or its staff and of any request
by the SEC or its staff or any other government officials for amendments of
supplements to the Registration Statement, the Joint Proxy Statement or any
Other Filing or for additional information and will supply the other with
copies of all correspondence between such party or any of its representatives,
on the one hand, and the SEC, or its staff or any other government official, on
the other hand, with respect to the Registration Statement, the Joint Proxy
Statement, the Merger or any Other Filing. The Proxy Statement, the
Registration Statement and the Other Filings will comply in all material
respects with all applicable requirements of law and the rules and regulations
promulgated thereunder. Whenever any event occurs which is required to be set
forth in an amendment or supplement to the Joint Proxy Statement, the
Registration Statement or any Other Filings, the Company of BEC, as the case
may be, will promptly inform the other of such occurrence and cooperate in the
filing with the SEC or its staff or any other government officials, and/or
mailing to shareholders of the Company or stockholders of BEC, such amendment
or supplement.
(b) The Joint Proxy Statement will include the recommendation of
the Company Board in favor of adoption and approval of this Agreement and
approval of the Merger; except that the Company Board may withdraw, modify or
refrain from making such recommendation to the extent that the Company Board
determined to accept a Superior Proposal or determined, in good faith, after
consultation with outside legal counsel, that compliance with the Board's
fiduciary duties under applicable law would require it to do so, each pursuant
to and in accordance with Section 4.3 and/or 7.1(d), as the case may be. In
addition, the Proxy Statement will include the recommendations of the BEC Board
in favor of (i) the adoption and approval of the Merger Agreement (including
the issuance of shares of BEC Common Stock), (ii) the amendment of BEC's
Certificate of Incorporation to increase its authorized share capital, (iii)
the amendment of
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BEC's certificate of Incorporation to change the name of BEC (iv) amendment to
the 1996 Plan to increase the number of shares available for issuance
thereunder and (v) the election of new directors (collectively, the "BEC
Stockholders' Proposals" except that the BEC Board may withdraw, modify or
refrain from making such recommendation to the extent that the BEC Board
determined to accept a Superior Proposal or determined, in good faith, after
consultation with outside legal counsel, that compliance with the Board's
fiduciary duties under applicable law would require it to do so, each pursuant
to and in compliance with Section 4.3 and/or 7.1(c), as the case may be.
SECTION 5.2. Meetings of Shareholders and Stockholders.
Promptly after the date hereof, the Company will take all action necessary in
accordance with California Law and its Articles of Incorporation and Bylaws to
convene the Company Shareholders' Meeting to be held as promptly as
practicable, and in any event (to the extent permissible under applicable law)
within 45 days after the declaration of effectiveness of the Registration
Statement, for the purpose of voting upon this Agreement. The Company will
consult with BEC and use its reasonable best efforts to hold the Company
Shareholders' Meeting on the same day as the BEC Stockholders' Meeting.
Promptly after the date hereof, BEC will take all action necessary in
accordance with the Delaware Law and its Certificate of Incorporation and
Bylaws to convene the BEC Stockholders' Meeting to be held as promptly as
practicable, and in any event (to the extent permissible under applicable law)
within 45 days after the declaration of effectiveness of the Registration
Statement. BEC will consult with the Company and will use its best efforts to
hold the BEC Stockholders' Meeting on the same day as the Company Shareholders'
Meeting. For so long as the Board of Directors of the Company continues to
make the recommendation set forth in Section 5.1, the Company will use its
reasonable best efforts to solicit from its shareholders proxies in favor of
the adoption and approval of this Agreement and the approval of the Merger and
will take all other action necessary or advisable to secure the vote or consent
of its shareholders required by the rules of the National Association of
Securities Dealers, Inc. and California Law to obtain such approvals. For so
long as the Board of Directors of BEC continues to make the recommendations set
forth in Section 5.1, BEC will use its best efforts to solicit from its
stockholders proxies in favor of each of the BEC Stockholders' Proposals.
SECTION 5.3. Third Party Consents. BEC and the Company, as the
case may be, shall obtain all material third party consents required in
connection with the consummation of the Merger pursuant to this Agreement
including, but not limited to, in the case of BEC, any consent required
pursuant to the Amended and Restated Credit Agreement dated as of July 9, 1997.
SECTION 5.4. HSR Act. The Company and BEC shall use their best
efforts to file as soon as practicable notifications under the HSR Act in
connection with the Merger and the Transactions contemplated hereby and to
respond as promptly as practicable to any inquires received from the Federal
Trade Commission and the Antitrust Division of the United States Department of
Justice for additional information or documentation and to respond as promptly
as practicable to all inquiries and requests received from any state Attorney
General or other
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governmental authority in connection with antitrust matters. Each party agrees
not to, and will cause its representatives not to, initiate substantive
discussions with representatives of the applicable antitrust regulatory
authorities concerning their review of the Merger and the Transactions under
the HSR Act without the prior consent of the other party hereto, and will not
engage in substantive discussions with such authorities without notifying the
other party hereto promptly thereafter of the substance and content of such
discussions.
SECTION 5.5. Additional Agreements. The Company, BEC and
Purchaser will each comply in all material respects with all applicable laws
and with all applicable rules and regulations of any governmental authority in
connection with its execution, delivery and performance of this Agreement, the
Merger and the Transactions contemplated hereby.
SECTION 5.6. Notification of Certain Matters. Each of the
Company and BEC shall give prompt notice to the other of (i) the occurrence, or
non-occurrence of any event whose occurrence, or non-occurrence would be likely
to cause any representation or warranty contained in this Agreement to be
untrue or inaccurate in any material respect at any time from the date hereof
to the Effective Time and (ii) any material failure of the Company, BEC or
Purchaser, as the case may be, or any officer, director, employee or agent
thereof, to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder; provided, however, that the
delivery of any notice pursuant to this Section 5.6 shall not limit or
otherwise affect the remedies available hereunder to the party receiving such
notice. Failure to provide notice under this Section 5.6 shall not increase
the liability of the party who failed to send or delayed in sending such notice
except to the extent such failure or delay increased the harm or disadvantage
to the party to which the notification should have been provided.
SECTION 5.7. Access to Information.
(a) From the date hereof to the Effective Time, (i) the
Company shall, and shall cause its Subsidiaries, officers, directors,
employees, auditors and agents to, afford the officers, employees and agents of
BEC and Purchaser complete access at all reasonable times to their officers,
employees, agents, accountants, properties, offices and other facilities and to
all books and records, and shall furnish BEC and Purchaser with all financial,
operating and other data and information as BEC and Purchaser, through their
officers, employees, agents or accountants, may reasonably request and (ii) BEC
shall, and shall cause its Subsidiaries, officers, directors, employees,
auditors and agents to, afford the officers, employees and agents of the
Company complete access at all reasonable times to their officers, employees,
agents, accountants, properties, offices and other facilities and to all books
and records, and shall furnish the Company with all financial, operating and
other data and information as the Company, through their officers, employees,
agents or accountants, may reasonably request.
(b) BEC and the Company agree that each shall, and shall cause
their respective Representatives, to hold in strict confidence all data and
information obtained by them from the
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other or the other's Subsidiaries pursuant to the terms of the Reciprocal
Confidentiality Agreement (the "Confidentiality Agreement"), dated October 19,
1997, between BEC and the Company.
(c) Each of the Company and BEC shall have an opportunity
after the date of this agreement through the Effective Time to conduct further
due diligence investigations in respect of the other and their respective
Subsidiaries.
SECTION 5.8. Public Announcements. BEC and the Company shall
consult with each other before issuing any press release or otherwise making
any public statements with respect to the Merger and shall not issue any such
press release or make any such public statement before such consultation,
except as may be required by law or any listing agreement with or the rules and
regulations of any securities exchange or the over-the-counter market, as the
case may be, on which any of the securities of BEC or the Company are listed.
SECTION 5.9. Best Efforts; Cooperation. Upon the terms and
subject to the conditions hereof, each of the parties hereto agrees to use its
best efforts to take or cause to be taken all actions and to do or cause to be
done all things necessary, proper or advisable to consummate the Transactions
contemplated by this Agreement and shall use its best efforts to obtain on a
timely manner all necessary waivers, consents, licenses, permits and approvals,
and to effect all necessary registrations and filings, including the filings
required by the Securities Act, the Exchange Act and the HSR Act. The parties
shall cooperate in responding to inquires from, and making presentation to,
regulatory authorities.
SECTION 5.10. Agreement to Defend and Indemnify.
(a) The Company shall, to the fullest extent permitted under
applicable law and regardless of whether the Merger becomes effective,
indemnify and hold harmless, and, after the Effective Time, the Surviving
Corporation (each of the Surviving Corporation and the Company being referred
to in this Section 5.10 as an "Indemnifying Party") shall, to the fullest
extent permitted under applicable law, indemnify and hold harmless, each
director, officer, employee, fiduciary and agent of the Company and each
Subsidiary and their respective subsidiaries and affiliates, including without
limitation, officers and directors serving as such on the date hereof
(collectively, the "Indemnified Parties") against all costs and expenses
(including attorneys' fees), judgments, fines, losses, claims, damages,
liabilities and settlement amounts paid in connection with any claim, action,
suit, proceeding or investigation (whether arising before or after the
Effective Time), arising out of or pertaining to any of the transactions
contemplated hereby, including without limitation, liabilities arising under
the Securities Act or the Exchange Act in connection with the Merger and in the
event of any such claim, action, suit, proceeding or investigation, (i) the
Company or the Surviving Corporation, as the case may be, shall advance the
reasonable fees and expenses of counsel selected by the Indemnified Parties,
which counsel shall be reasonably satisfactory to the Indemnifying Party
promptly after statements therefor are received, provided, however, that
neither the Company nor the Surviving Corporation shall have any obligation
under this clause (i) unless they shall have received an undertaking from the
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Indemnified Party to promptly return any amounts paid by the Company or the
Surviving Corporation in the event that it shall ultimately have been
determined that the Indemnified Party is not entitled to be indemnified under
applicable law or any indemnification agreement with the Company to which he is
a party, and (ii) the Indemnifying Party, Company and the Surviving Corporation
shall cooperate in the defense of any such matter and shall provide access to
all documents necessary or beneficial to the defense of any such matter;
provided, however, that neither the Company nor the Surviving Corporation shall
be liable for any settlement effected without its written consent (which
consent shall not be unreasonably withheld, delayed or conditioned); and
provided, further, that neither the Company nor the Surviving Corporation shall
be obligated pursuant to this Section 5.10 to pay the fees and expenses of more
than one counsel for all Indemnified Parties in any single action except to the
extent that in the written opinion of counsel for the Indemnified Parties, two
or more of such Indemnified Parties shall have conflicting interests in the
outcome of such action.
(b) BEC agrees to cause the Surviving Corporation to use its
best efforts to purchase "tail" coverage under the Company's current directors'
and officers' liability insurance policies for the Company's officers and
directors in office prior to the Effective Time, covering claims made during
the two (2) year period following the Effective Time, for actions taken prior
to the Effective Time, the premium for which shall be paid in full as of the
Effective Time. BEC shall cause the Surviving Corporation to continue in
effect the indemnification provisions currently provided by the Certificate of
Incorporation and By-laws or any written indemnification agreement of the
Company in effect prior to the date hereof for a period of not less than three
(3) years following the Effective Time. This Section shall survive the
consummation of the Merger. Notwithstanding Section 8.7 hereof, this Section
is intended to be for the benefit of and to grant third party rights to
Indemnified Parties whether or not parties to this Agreement, and each of the
Indemnified Parties shall be entitled to enforce the covenants contained
herein.
(c) Except as provided in Section 5.12 hereof, if BEC, the
Surviving Corporation or any of either of its successor or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger
or (ii) transfers all or substantially all of its properties and assets to any
person, then and in each such case, proper provision shall be made so that the
successors and assigns of BEC or Surviving Corporation assume the obligations
set forth in this Section 5.10.
SECTION 5.11. Action by the Officers, Directors, etc. The
Company and BEC shall use their respective best efforts to cause their
respective directors and executive officers to vote any shares held by them in
favor of the Merger.
SECTION 5.12. Spinoff Agreement. BEC shall use its commercially
reasonable efforts to do such acts as are necessary to effectuate the Asset
Transfer in accordance with the Transfer Agreements and to effect the Spinoff
so that the ORC Business, as a going concern, and all of the properties and
assets comprising the ORC Business shall be fully vested in BEC and its
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Subsidiaries and that the Non-ORC Business shall be transferred to and assumed
by Bolle Inc. at or prior to the Effective Time.
SECTION 5.13. Post Merger Directors and Officers BEC. The Board
of Directors of BEC will take all actions necessary to cause the Board of
Directors of BEC as of the Effective Time to be comprised of three designees of
BEC (the "BEC Nominees"), three designees of the Company (the "Company
Nominees") and one designee selected jointly by BEC and the Company, each to
hold office in accordance with the Certificate of Incorporation and By-laws of
BEC. In addition, for a period of two years following the Effective Time, BEC
shall take such actions as may be necessary to cause the BEC Nominees, or their
designees, on the one hand, and the Company Nominees, or their designees, on
the other hand, to be elected or appointed as directors of the Board of
Directors of BEC. Messrs. Xxxxxx Xxxxxxxx, Xxxxxxx Xxxxx and Xxx Xxxxxx, shall
be the initial officers of BEC, serving as Chairman of the Board, Chief
Executive Officer and Chief Financial Officer, respectively, in each case until
their resignation or their respective successors are duly elected or appointed
and qualified. Except for the foregoing officers, none of the other directors
of BEC shall be employees of the Surviving Corporation and the directors shall
be named five days (5) prior to the mailing of the Joint Proxy Statement-
Prospectus to the stockholders of BEC and the shareholders of the Company.
SECTION 5.14. Increase in Authorized Shares and Reverse Stock
Split. Subject to the terms hereof, at the BEC Stockholders Meeting, BEC (i)
shall propose and recommend that its Certificate of Incorporation be amended to
increase the authorized number of shares of BEC Common Stock thereunder
(provided that such number is not less than the number required to issue shares
by virtue of the Merger and the Transactions); and (ii) intends to propose and
recommend to the stockholders of BEC that the number of shares of the
outstanding BEC Common Stock be subject to a reverse share for two shares split
(the "Reverse Stock Split") so that the number of shares of BEC Common Stock
outstanding immediately after such split shall be 50% of the number of shares
outstanding immediately prior to such split.
SECTION 5.15. BEC Name Change. The Proxy Statement shall include
a proposal to change the name of BEC to Lumen Technologies, Inc. or another
name to be mutually determined by BEC and the Company.
SECTION 5.16. Capital Structure. As of or prior to the Effective
Time, BEC shall cause (i) the conversion of more than 50% of the aggregate
principal amount of the Convertible Notes into common stock, and (ii) each of
the BEC Warrants, the Bolle Options, the BEC Preferred Stock and the Xxxxxx
Notes to no longer be outstanding in respect of BEC or any of its Subsidiaries
following the Spinoff.
SECTION 5.17. Audited Company Financial Statements. On or before
November 30, 1997, the Company shall furnish BEC with a copy of the Company's
audited consolidated balance sheet as at September 28, 1997, and the related
audited consolidated statements of operations and cash flows for the year ended
September 28, 1997 (including any
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related notes and schedules) (the "Audited Company Financial Statements"). The
Audited Company Financial Statements shall be substantially the same in all
material respects as the Company Balance Sheet and the Company Income
Statements, which are set forth in Schedule 3.7.
SECTION 5.18. Rights Agreement. None of the common share
purchase rights issued pursuant to and in connection with the Rights Agreement
dated as of September 29, 1989 between the Company and Security Pacific
National Bank, as amended, shall be exercised or triggered at or prior to the
Effective Time.
ARTICLE VI
CONDITIONS OF MERGER
SECTION 6.1. Conditions to Obligations of Each Party to Effect
the Merger. The respective obligations of each party to effect the Merger
shall be subject to the satisfaction at or prior to the Effective Time of the
following conditions; provided, however, that no party shall refuse to
consummate the Merger if a condition is not satisfied as a result of a breach
by such party of any agreement, representation, warranty or covenant of such
party under this Agreement:
(a) Shareholder Approval. The Merger and this Agreement shall
have been approved and adopted by the requisite vote of the shareholders of the
Company in accordance with California Law and the Certificate of Incorporation
of the Company and by the requisite vote of the stockholders of BEC in
accordance with Delaware Law, the Certificate of Incorporation of BEC and The
New York Stock Exchange; and an increase in the authorized number of shares of
BEC Common Stock shall have been duly approved by the requisite vote under
applicable law by the stockholders of BEC; and
(b) The Registration Statement-Prospectus. The Registration
Statement-Prospectus filed by BEC with respect to the BEC Common Stock to be
issued in the Merger shall have been declared effective by the SEC; and no stop
order suspending the effectiveness of the Registration Statement or any part
thereof shall have been issued and no proceeding for that purpose, and no
similar proceeding in respect of the Proxy Statement, shall have been initiated
or threatened by the SEC; and
(c) Listing of BEC Common Stock. The BEC Common Stock to be
issued in connection with the transactions contemplated by the Merger Agreement
shall have been authorized for listing on a nationally recognized stock
exchange or The NASDAQ Stock Market upon official notice of issuance;
(d) HSR Waiting Period. The waiting period applicable to the
consummation of the Merger under the HSR Act shall have expired or been
terminated;
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(e) No Prohibition. No preliminary or permanent injunction or
other order, decree or ruling issued by a court of competent jurisdiction or by
a governmental, regulatory or administrative agency or commission nor any
statute, rule, regulation or executive order promulgated or enacted by any
governmental authority shall be in effect (temporary, preliminary or permanent)
which is then in effect and has the effect of making the Merger or the
Transactions illegal or otherwise materially restricting, preventing or
prohibiting their consummation;
(f) No Material Adverse Effect. There shall have been no
event or events which have occurred which, individually or in the aggregate,
shall have had a Material Adverse Effect on the Company or BEC respectively;
and
(g) Consummation of the Asset Transfer and Bolle Spinoff. BEC
shall have executed the Transfer Agreements and the Employment Agreements and
consummated the Asset Transfer in accordance with the terms of the Transfer
Agreements and shall have consummated the Spinoff.
SECTION 6.2. Additional Conditions to Obligations of BEC. The
obligations of BEC and Purchaser to effect the Merger is also subject to the
fulfillment of the following conditions unless waived by BEC:
(a) Representations and Warranties. The representations and
warranties of the Company contained in this Agreement shall have been true and
correct in all material respects as of the date of this Agreement. In
addition, the representations and warranties of the Company contained in this
Agreement shall be true and correct in all material respects on and as of the
Effective Time except for changes contemplated by this Agreement and except for
those representations and warranties which address matters only as of a
particular date (which shall remain true and correct as of such particular
date), with the same force and effect as if made on and as of the Effective
Time.
(b) Agreements, Conditions and Covenants. The Company shall
have complied in all material respects with all agreements, conditions and
covenants required by this Agreement to be performed or complied with by it on
or before the Effective Time.
(c) Demand for Appraisal Rights. Holders of not more than
4.9% of the shares of Company Common Stock shall have made a demand for payment
pursuant to appraisal, dissenters' or similar rights under California Law or
other applicable law by the conclusion of the Company Shareholders Meeting.
SECTION 6.3. Additional Conditions to Obligations of the
Company. The obligations of the Company to effect the Merger is also subject
to the fulfillment of the following conditions unless waived by the Company:
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(a) Representations and Warranties. The representations and
warranties of BEC and Purchaser contained in this Agreement shall have been
true and correct in all material respects as of the date of this Agreement. In
addition, the representations and warranties of BEC and the Purchaser of the
Company contained in this Agreement shall be true and correct in all material
respects on and as of the Effective Time except for changes contemplated by
this Agreement and except for those representations and warranties which
address matters only as of a particular date (which shall remain true and
correct as of such particular date), with the same force and effect as if made
on and as of the Effective Time.
(b) Agreements, Conditions and Covenants. BEC and the
Purchaser shall have complied in all material respects with all agreements,
conditions and covenants required by this Agreement to be performed or complied
with by them on or before the Effective Time.
(c) Tax Opinion. The Company shall have received an opinion
of Xxxxx Xxxx & Xxxxxxxx in form and substance reasonably satisfactory to the
Company, on the basis of certain facts, representations and assumptions set
forth in such opinion, dated the Effective Time, to the effect the Merger will
be treated for federal income tax purposes as a reorganization qualifying under
the provisions of Section 368(a) of the Code and that each of BEC, Purchaser
and the Company will be a party to the reorganization within the meaning of
Section 368(b) of the Code. In rendering such opinion, such counsel shall be
entitled to rely upon certain representations from the Company, certain
shareholders of the Company and BEC, in each case in the form and substance
reasonably satisfactory to such counsel.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.1. Termination. This Agreement may be terminated at
any time before the Effective Time:
(a) By mutual consent of the Boards of Directors of BEC and
the Company; or
(b) By either BEC or the Company if:
(i) the Merger shall not have been consummated by March
31, 1998, (unless extended by mutual consent of BEC and the Company) provided,
however, that the right to terminate this Agreement under this Section 7.1(b)
will not be available to any party whose failure to fulfill any obligation
under this Agreement has been the cause of, or resulted in, the failure of the
Merger to occur on or before such date;
(ii) if a court of competent jurisdiction or
governmental, regulatory or administrative agency or commission shall have
issued an order, decree or ruling or taken any
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other action (which order, decree or ruling the parties hereto shall use their
best efforts to lift), in each case permanently restraining, enjoining or
otherwise prohibiting the Transactions contemplated by this Agreement and such
order, decree, ruling or other action shall have become final and
nonappealable; or
(iii) if the other party shall have breached or failed to
perform in any material respect any of its material obligations, covenants or
agreements contained in this Agreement (other than with respect to Articles II
and III of this Agreement) and if curable, such other party shall have failed
to cure such breach within ten (10) Business Days after written notice of such
failure; or
(iv) if any of the material representations and
warranties of the other party as may be set forth in Article II of this
Agreement in respect of BEC and the Purchaser and Article III of this Agreement
in respect of the Company shall not have been true and correct in any material
respect when made or, except for any such representations and warranties made
as of a specific date, shall have ceased to be true and correct as of such date
in any material respect; or
(c) By BEC if:
(i) the Board of Directors of the Company (x) withdraws,
modifies or changes its recommendation of this Agreement or the Merger in a
manner adverse to BEC and Purchaser, (y) recommends to the holders of shares of
Company Common Stock any proposal with respect to a tender offer, merger,
consolidation, share exchange or similar transaction involving the Company or
any of its Subsidiaries, other than the Merger and the Transactions, or (z)
resolves to do any of the foregoing; or
(ii) prior to the Effective Time, a corporation,
partnership, person or other entity or group shall have made a bona fide offer
of an Acquisition Transaction that the Board of Directors of BEC reasonably
determines in its good faith judgment is a Superior Proposal, and if, in the
opinion of the Board of Directors of BEC, the failure to recommend or accept
such offer would violate the BEC Board of Directors' fiduciary duties to BEC's
stockholders under applicable law; provided that any such termination by BEC
shall not be effective until payment of the fees required by Section 7.3(a) and
Section 7.3(b);
(iii) the Chairman of the Board and all directors of the
Company fail to vote in favor of the Merger at the Company Shareholders
Meeting; or
(d) By the Company if:
(i) the Board of Directors of BEC (x) withdraws, modifies
or changes its recommendation of this Agreement or the Merger in a manner
adverse to the Company, (y) recommends to the holders of shares of BEC Common
Stock any proposal with respect to a tender offer, merger, consolidation, share
exchange or similar transaction involving BEC or any of its
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Subsidiaries, in lieu of the Merger and the Transactions contemplated by this
Agreement, or (z) resolves to do any of the foregoing;
(ii) prior to the Effective Time, a corporation,
partnership, person or other entity or group shall have made a bona fide offer
of an Acquisition Transaction that the Board of the Company reasonably
determines in its good faith judgment is a Superior Proposal and if, in the
opinion of the Board of Directors of the Company, the failure to recommend or
accept such offer would violate the Board's fiduciary duties to the Company's
shareholders under applicable law; provided that any such termination by the
Company shall not be effective until payment of the fees required by Section
7.3(a) and Section 7.3(b);
(iii) the Chairman of the Board, the Chief Executive
Officer and all directors of BEC fail to vote in favor of the Merger at the BEC
Stockholders' Meeting.
SECTION 7.2. Effect of Termination. In the event of termination
of this Agreement as provided in Section 7.1 hereof, this Agreement shall
forthwith become void and there shall be no liability on the part of BEC,
Purchaser or the Company, except (i) as set forth in Sections 7.3 and 8.1
hereof, and (ii) nothing herein shall relieve any party from liability for any
breach hereof.
SECTION 7.3. Termination Fees and Expenses.
(a) If this Agreement is terminated by the Company pursuant to
Section 7.1(d)(ii) hereof or by BEC pursuant to Sections 7.1(b)(iii) or (iv) or
7.1(c)(i) or (iii) hereof, the Company shall pay to BEC promptly (but in no
event later than one (1) business day following such termination) by certified
check or wire transfer to an account designated by BEC an amount equal to all
actual out-of-pocket costs and expenses of BEC up to a maximum of $1,500,000
incurred in connection with this Agreement and the transactions contemplated
hereby, including, without limitation, printing, legal, accounting, investment
banking, professional and service fees and expenses ("Expenses") which amount
shall be payable in same day funds. If this Agreement is terminated by BEC
pursuant to Section 7.1(c)(ii) hereof or by the Company pursuant to Sections
7.1(b)(iii) or (iv) or 7.1(d)(i) or (iii) hereof, BEC shall pay to the Company
promptly (but in no event later than one (1) business termination) by certified
check or wire transfer to an account designated by the Company an amount equal
to the Expenses incurred by the Company which shall be payable in same day
funds. Upon the occurrence of any event entitling a party to payment of their
Expenses, the party requesting Expenses shall promptly provide the other party
with invoices or other reasonable evidence of the Expenses upon request, and
the party shall forthwith return any portion of Expenses reimbursed by the
other party as to which such invoices or other evidence are not received.
(b) In addition to the payment of expenses, as provided in
Section 7.3(a), if this Agreement has been terminated: (x) either by the
Company pursuant to Section 7.1(d)(ii) hereof or by BEC pursuant to Sections
7.1(b)(iii) or 7.1(c)(i) or (iii) hereof; or (y) either by BEC
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pursuant to Section 7.1(c)(ii) hereof or by the Company pursuant to Sections
7.1(b)(iii) (other than as a result of a failure to comply with Sections 5.3 or
5.16) or 7.1(d)(i) or (iii) hereof, the Company shall pay to BEC, in the case
of clause (x) of this Section 7.3(b), or BEC shall pay to the Company, in the
case of clause (y) of this Section 7.3(b), a fee ("Fee") in the amount of
$3,000,000 by certified check or wire transfer to an account designated by BEC
or the Company, as the case may be, which amount shall be payable in same day
funds concurrently with the termination of this Agreement.
(c) In the event that:
(i) any person (a "Company Acquisition Person")
(including, without limitation, the Company or any affiliate
thereof), other than BEC, or any of its affiliates, shall have
become the beneficial owner of more than twenty per cent (20%) of
the then outstanding shares of Company Common Stock and the
Transactions shall not have been consummated (other than as a
result of termination of this Agreement in accordance with
Sections 7.1(a), (b), (c)(ii), (d)(i) or (d)(iii); and
(ii) any such Company Acquisition Person shall have
consummated an Acquisition Transaction with the Company within
twelve (12) months of the date hereof;
then, in the event of the occurrence of both (i) and (ii), the Company shall
promptly pay BEC (but in no event later than one (1) business day after the
occurrence of such events) the Expenses and Fee set forth in Section 7.3(a) and
(b) above, respectively, which amounts shall be payable in immediately
available funds.
(d) In the event that:
(i) any person (a "BEC Acquisition Person") (including,
without limitation, BEC or any affiliate thereof), other than the
Company, or any of its affiliates, shall have become the
beneficial owner of more than twenty per cent (20%) of the then
outstanding shares of BEC Common Stock and the Transactions shall
not have been consummated (other than as a result of a
termination of this Agreement in accordance with Sections 7.1(a),
(b), (c)(i), (c)(iii) or (d)(ii); and
(ii) any such BEC Acquisition Person shall have
consummated an Acquisition Transaction with BEC within twelve
(12) months of the date hereof;
then, in the event of the occurrence of both (i) and (ii), BEC shall promptly
pay the Company (but in no event later than on (1) business day after the
occurrence of such events) the Expenses and the Fee set forth in Sections
7.3(a) and (b) above, respectively, which amounts shall be payable in
immediately available funds.
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(e) Except as set forth in this Section 7.3 and in Section
8.3, all costs and expenses incurred in connection with this Agreement, the
Merger and the Transactions shall be paid by the party incurring such expenses,
whether or not the Merger is consummated.
(f) In the event that the Company or BEC, as the case may be,
shall fail to pay the Fee or any Expenses when due, the term "Expenses" shall
be deemed to include the costs and expenses actually incurred or accrued by
BEC, Purchaser or the Company, as the case may be, and their respective
shareholders and affiliates (including, without limitation, fees and expenses
of counsel) in connection with the collection under and enforcement of this
Section 7.3, together with interest on such unpaid Fees and Expenses,
commencing on the date that the Fees or such Expenses became due, at a rate
equal to the rate of interest publicly announced by Citibank, N.A., from time
to time, in the City of New York, as such bank's base rate plus three per cent
(3%).
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ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.1. Non-Survival of Representations, Warranties and
Agreements. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or the termination of this Agreement
pursuant to Section 7.1, as the case may be, except that the agreements set
forth in Article I and Section 5.10 shall survive the Effective Time
indefinitely and those set forth in Section 5.7(b), 5.7(c), 7.3 and Article
VIII shall survive termination indefinitely.
SECTION 8.2. Notices. All notices and other communications
given or made pursuant to hereto shall be in writing and shall be deemed to
have been duly given or made as of the date delivered or mailed if delivered
personally or mailed by registered or certified mail (postage prepaid, return
receipt requested) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice, except that notices
of changes of address shall be effective upon receipt):
(a) if to BEC or Purchaser:
BEC Group, Inc.
000 Xxxxxxxx Xxxxx Xxxxxx
Xxxxx X-000
Xxx, Xxx Xxxx 00000
Attention: Xx. Xxxxxx X. Xxxxxxxx.
with a copy to:
Xxxx Xxxxxxx, P.C.
1350 Avenue of the Americas - 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
(b) if to the Company:
ILC Technologies, Inc.
000 Xxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx
with a copy to:
Xxxxx Xxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxx
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SECTION 8.3. Expenses. Except as provided in Section 7.3
hereof, all costs and expenses incurred in connection with this Agreement and
the transactions contemplated hereby shall be paid by the party incurring such
costs and expenses; provided, however, that the filing fees with respect to the
notifications required under the HSR Act shall be borne equally by the Company
and BEC.
SECTION 8.4. Certain Definitions. For purposes of this
Agreement, the term:
(a) "affiliate" of a person means a person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, the first mentioned person;
(b) "BEC Warrants" means the warrants to purchase BEC Common
Stock issued in connection with the Share Purchase Agreement dated June 4,
1997, as amended, among BEC and Bolle, Inc., Xx. Xxxxxx Xxxxx, Xx. Xxxxxxx
Xxxxx, Xx. Xxxxxx Bolle, Xxx. Xxxxxxxx Xxxxx Passaquay, Xxx. Xxxxxxxx Xxxxx and
Xxx. Xxxxxxxxxx Xxxxx.
(c) "BEC Preferred Stock" shall mean the Series A Preferred
Stock of BEC.
(d) "Xxxxxx Notes" shall mean the 8% Convertible Subordinated
Notes due 2001 which were originally issued to Xxxxxx Eyecare Corporation.
(e) "Bolle Options" means options under the 1996 Plan granted
by BEC to participants who will be related to the Bolle Group.
(f) "Business Day" means any day on which the principal
offices of the SEC in Washington, D.C. are open to accept filings, or, in the
case of determining a date when any payment is due, any day on which banks are
not required or authorized to close in the City of New York.
(g) "Contribution Agreement" means the Xxxx of Sale and
Assignment Agreement to be entered into between Bolle, Inc. and BEC, in
substantially the form annexed hereto as Annex B.
(h) "control" (including the terms "controlled by" and "under
common control with") means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of a person,
whether through the ownership of stock, as trustee or executor, by contract or
credit arrangement or otherwise; and
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(i) "Convertible Notes" shall mean BEC's 8% Convertible
Subordinated Notes due 2002; and
(j) "Employment Agreements" means employment\consulting
agreements between Xxxxx X. Xxxxxxxxxx and Xxxxxxx X. Xxxxx and, in each case,
BEC in form and substance satisfactory to the parties to this Agreement and
substantially on the terms provided in the term sheet attached hereto as Annex
G, but in the standard form of BEC's employment or consulting agreements.
(k) "Environmental Laws" means any federal, state or local
statute, common law, ordinance, code, rule, regulation, order, decree,
injunction or permit regulating, relating to, or imposing liability or
standards of conduct concerning, any environmental matters or conditions,
environmental protection or conservation, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended; the Superfund Amendments and Reauthorization Act of 1986, as
amended; the Resource Conservation And Recovery Act, as amended; the Toxic
Substances Control Act, as amended; the Clean Air Act, as amended; the Clean
Water Act, as amended; together with all regulations promulgated thereunder,
and any other "Superfund" or "Superlien" law.
(l) "Hazardous Materials" means and includes any pollutant,
contaminant, or hazardous, toxic or dangerous waste, substance or material
(including without limitation petroleum products, asbestos-containing materials
and lead), the generation, handling, storage, transportation, disposal,
treatment, release, discharge or emission of which is subject to any
Environmental Law.
(m) "Indemnity Agreement" means the Indemnity Agreement to be
entered into among BEC, Purchaser and Bolle, Inc. in substantially the form
annexed hereto as Annex C.
(n) "Management Services Agreement" means the Management
Services Agreement to be entered into between Bolle, Inc. and BEC in
substantially the form annexed hereto as Annex D.
(o) "ORC" shall mean ORC Technologies, Inc.; and
(p) "ORC Business" means the businesses, assets and
liabilities of, or directly related to, ORC Technologies, Inc., ORC Caribe,
Optical Radiation Foreign Sales Corporation and Voltarc Technologies, Inc. and
including all assets and liabilities included in BEC's consolidated pro forma
balance sheet set forth in Schedule 2.6 to this Agreement; provided, that "ORC
Business" shall not include any items or matters identified in Schedule A or
Schedule B to the Contribution Agreement.
(q) "person" means an individual, corporation, partnership,
association, trust or any unincorporated organization.
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(r) "Sterling Note" means the Convertible Callable
Subordinated Debenture Due September 15, 2015, which is convertible into shares
of common stock of Sterling Vision, Inc.
(s) "Tax" or "Taxes" shall mean (i) any tax, governmental fee
or other like assessment or charge of any kind whatsoever (including, without
limitation, withholding on amounts paid to or by any person), together with any
interest, penalty, addition to tax or additional amount imposed by any
governmental authority responsible for the imposition of any such tax (domestic
or foreign), (ii) liability for the payment of any amounts of the type
described in (i) as a result of BEC or the Company, as the case may be, or
their respective Subsidiaries being a member of an affiliated, consolidated,
combined or unitary group, or being a party to any agreement or arrangement
whereby liability of the BEC or the Company, as the case may be, or their
respective Subsidiaries for payments of such amounts was determined or taken
into account with reference to the liability of any other person, and (iii)
liability of BEC or the Company, as the case may be, or their respective
Subsidiaries for the payment of any amounts as a result of being party to any
tax sharing agreement arrangement, or with respect to the payment of any
amounts of the type described in (i) or (ii) as a result of any express or
implied obligation to indemnify any other person.
(t) "Tax Returns" shall mean any and all returns, reports and
information statements with respect to Taxes paid or required to be paid with
any governmental entity, authority or agency, empowered to collect Taxes or
enforce laws relating thereto, whether domestic or foreign.
(u) "Voltarc" shall mean Voltarc Technologies, Inc.; and
(v) "Voltarc Facility" means the subordinated revolving credit
facility in the amount of $800,000 made available to Voltarc Technologies, Inc.
by BEC.
SECTION 8.5. Heading. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 8.6. Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule
of law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the Transactions contemplated hereby is not affected in any
manner adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner to the end that the Transactions contemplated hereby are fulfilled to
the maximum extent possible.
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SECTION 8.7. Entire Agreement; No Third Party Beneficiaries.
This Agreement will constitute a binding agreement only when executed and
delivered by the parties hereto and at such time will constitute the entire
agreement and will supersede any and all other prior agreements and
undertakings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof except with respect to the Confidentiality
Agreement and, except as otherwise expressly provided herein, is not intended
to confer upon any other person any rights or remedies hereunder.
SECTION 8.8. Waiver. At any time before the Effective Time, any
party hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (c) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a
party hereto to any such extension or waiver shall be valid only as against
such party and only if set forth in an instrument in writing signed by such
party.
SECTION 8.9. Amendment. Subject to applicable law, this
Agreement may be amended by the parties hereto by action taken by BEC and
Purchaser, and by action taken by or on behalf of the Company's Board at any
time before the Effective Time; provided, however, that, after approval of the
Merger by the shareholders of the Company, no amendment may be made which would
reduce the amount or change the type of consideration into which each share of
Company Common Stock will be converted upon consummation of the Merger. This
Agreement may not be amended except by an instrument in writing signed by the
parties hereto.
SECTION 8.10. Assignment. This Agreement shall not be assigned
by operation of law or otherwise, except that BEC and Purchaser may assign all
or any of its rights hereunder to any affiliate of BEC and Purchaser provided
that no such assignment shall relieve the assigning party of its obligations
hereunder.
SECTION 8.11. Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of New York, except
that Delaware Law shall apply with respect to the Merger in Delaware and
California Law shall apply with respect to the Merger in California, in each
case without regard to the principles of conflicts of law thereof.
SECTION 8.12. Counterparts; Telecopier. This Agreement may be
executed in one or more counterparts and by facsimile, and by the different
parties hereto in separate counterparts, each of which when executed shall be
deemed to be an original but all of which shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.
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IN WITNESS WHEREOF, BEC, Purchaser and the Company have caused
this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
BEC GROUP, INC.
Attest: By:
-------------------------- ---------------------------------
Name:
Title:
BILC ACQUISITION CORP.
Attest: By:
-------------------------- ---------------------------------
Name:
Title:
ILC TECHNOLOGY, INC.
Attest: By:
-------------------------- ---------------------------------
Name:
Title:
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