AGREEMENT AND PLAN OF MERGER
DATED AS OF NOVEMBER 24, 1999
BY AND AMONG
WORLDWIDE SPORTS AND RECREATION, INC.,
SHADE ACQUISITION, INC.
AND
BOLLE INC.
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of November 24, 1999, is by
and among Worldwide Sports and Recreation, Inc., a Delaware corporation
("PURCHASER"), Shade Acquisition, Inc., a newly formed Delaware corporation and
a wholly owned Subsidiary of Purchaser ("ACQUISITION SUB"), and Bolle Inc., a
Delaware corporation (the "COMPANY").
WHEREAS, the Board of Directors of each of Purchaser, Acquisition Sub
and the Company has approved, and deems it advisable and in the best interests
of its respective stockholders to consummate, the acquisition of the Company by
Purchaser, upon the terms and subject to the conditions set forth herein; and
WHEREAS, in furtherance thereof, it is proposed that Acquisition Sub
make a cash tender offer (the "Offer") to acquire all of the issued and
outstanding shares of common stock, par value $0.01 per share (the "COMPANY
COMMON STOCK"), of the Company and all associated rights (the "SHARES") for
$5.25 per Share, net to the seller in cash, without interest thereon (such
price, as it may be modified as provided herein from time to time being referred
to herein as the "PER SHARE AMOUNT"), upon the terms and subject to the
conditions of this Agreement and the Offer; and
WHEREAS, also in furtherance of such acquisition, the Board of
Directors of each of Purchaser, Acquisition Sub and the Company has approved the
merger of Acquisition Sub with and into the Company (the "Merger") following the
consummation of the Offer in accordance with the General Corporation Law of the
State of Delaware (the "DGCL") and upon the terms and subject to the conditions
set forth herein; and
WHEREAS, also in furtherance of such acquisition, concurrently with the
execution of this Agreement and as an inducement for Purchaser and Acquisition
Sub to enter into this Agreement, Purchaser, Acquisition Sub and each of the
stockholders of the Company listed on Exhibit A attached hereto (the "TENDERING
STOCKHOLDERS") are entering into a Tender and Voting Agreement of even date
herewith (the "TENDER AND VOTING AGREEMENTS"), pursuant to which each of the
Tendering Stockholders has agreed, upon the terms and subject to the conditions
set forth therein, to tender all of the Shares owned by each such Tendering
Stockholder to Acquisition Sub pursuant to the Offer and to approve this
Agreement, the Offer, the Merger and each of the transactions contemplated
hereby (collectively, the "TRANSACTIONS"); and
WHEREAS, the Board of Directors of the Company (the "BOARD") has, in
light of and subject to the terms and conditions set forth herein, (i)
determined that the consideration to be paid for each Share in the Offer and the
Merger is fair to the holders of such Shares and in the best interests of such
stockholders, (ii) approved and adopted this Agreement and the transactions
contemplated hereby, and (iii) resolved to recommend that the holders of such
Shares accept the Offer and approve this Agreement, the Merger and each of the
transactions contemplated hereby, upon the terms and subject to the conditions
set forth herein; and
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WHEREAS, Purchaser, Acquisition Sub and the Company desire to make
certain representations, warranties, covenants and agreements in connection with
the Offer and Merger.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, Purchaser, Acquisition Sub and the Company
hereby agree as follows:
ARTICLE I
THE OFFER
SECTION 1.1 The Offer.
(a) Provided that this Agreement shall not have been terminated in
accordance with SECTION 8.1 and subject to the other provisions of this
Agreement, as promptly as practicable but in no event later than five (5)
Business Days after the date of the public announcement by Purchaser and the
Company of this Agreement, Acquisition Sub shall, and Purchaser shall cause
Acquisition Sub to, commence the Offer. The obligation of Acquisition Sub to,
and of Purchaser to cause Acquisition Sub to, commence the Offer and accept for
payment, and pay for, any Shares of Company Common Stock properly tendered
pursuant to the Offer shall be subject only to the conditions set forth in Annex
A attached hereto (the "OFFER CONDITIONS"), any of which may be waived, in whole
or in part, by Acquisition Sub, in its sole discretion. Acquisition Sub
expressly reserves the right to modify the terms of the Offer in a manner not
inconsistent with this Agreement, except that, without the prior written consent
of the Company, Acquisition Sub shall not (i) waive or otherwise modify the
Minimum Condition so as to reduce the minimum number of Shares that Acquisition
Sub will accept in the Offer to an amount constituting less than fifty-one
percent (51%) of the aggregate outstanding Shares (assuming the exercise of all
options to purchase, and the conversion or exchange of all securities
convertible or exchangeable into, Shares outstanding as of the consummation of
the Offer), (ii) reduce the Per Share Amount, (iii) impose any conditions to the
Offer in addition to the Offer Conditions or modify the Offer Conditions (other
than to waive any Offer Conditions to the extent permitted by this Agreement),
(iv) except as provided in the next sentence, extend the Offer, (v) change the
form of consideration payable in the Offer or (vi) accept for payment or pay for
any Shares pursuant to the Offer prior to January 4, 2000. Notwithstanding the
foregoing, Acquisition Sub may, without the consent of the Company, (i) extend
the Offer if, at the scheduled or extended expiration date of the Offer, any of
the Offer Conditions shall not be satisfied or waived, until such time as such
conditions are satisfied or waived but, in any event, Acquisition Sub shall not,
without the prior written consent of the Company, extend the Offer beyond the
Cut-Off Date (as defined in SECTION 8.1(B) hereof), (ii) extend the Offer for
any period required by any rule, regulation, interpretation or position of the
SEC or the staff thereof applicable to the Offer but, in any event, Acquisition
Sub shall not, without the prior written consent of the Company, extend the
Offer beyond the Cut-Off Date, or (iii) extend the Offer for a period of up to
five (5) Business Days if, on any scheduled expiration date on which the Offer
Conditions shall have been satisfied or waived, the number of Shares which have
been validly tendered and not withdrawn represent more than 50% of the aggregate
outstanding Shares (assuming the exercise of all options to purchase, and the
conversion or exchange of all securities convertible or exchangeable into Shares
which are outstanding as of the consummation of the Offer), but less than 90% of
the then issued and outstanding Shares. Purchaser and Acquisition Sub each agree
that Acquisition Sub will not terminate the Offer between scheduled expiration
dates (except in the event that this Agreement is terminated) and that, in the
event that Acquisition Sub will otherwise be entitled to terminate the Offer at
any scheduled expiration date thereof due to the failure of one or more of the
Offer Conditions, unless this Agreement shall have been terminated, Acquisition
Sub shall, and Purchaser shall cause Acquisition Sub to, extend the Offer until
such date as the Offer Conditions have been satisfied or such later date as
required by applicable federal securities law; provided however, that nothing
herein shall require Acquisition Sub to extend the Offer beyond the Cut-Off Date
(as defined in SECTION 8.1(B) hereof). Subject to the terms and conditions of
the Offer in this Agreement, Acquisition Sub shall, and Purchaser shall cause
Acquisition Sub to, accept for payment all Shares validly
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tendered and not withdrawn pursuant to the Offer as soon as Acquisition Sub is
permitted to accept such Shares for payment pursuant to the Offer, and then pay
for such Shares within two (2) Business Days thereafter. The Per Share Amount
shall, subject to all applicable withholding of taxes, be paid net to the seller
in cash, without interest thereon, upon the terms and subject to the conditions
of the Offer and this Agreement. If this Agreement is terminated by either
Purchaser or Acquisition Sub or by the Company, Acquisition Sub shall, and
Purchaser shall cause Acquisition Sub to, terminate promptly the Offer. The
Company agrees that no Shares held by the Company or any of its Subsidiaries
will be tendered in the Offer.
(b) As soon as reasonably practicable on the date of commencement of
the Offer, Purchaser and Acquisition Sub shall file with the Securities and
Exchange Commission (the "SEC") a Tender Offer Statement on Schedule 14D-1
(together with any supplements or amendments thereto, the "SCHEDULE 14D-1") with
respect to the Offer, which shall contain an offer to purchase (the "OFFER TO
PURCHASE") and a related letter of transmittal, summary advertisement and
related documents (such Schedule 14D-1 and the documents included therein
pursuant to which the Offer would be made, together with any supplements or
amendments thereto, the "OFFER DOCUMENTS"), and Purchaser and Acquisition Sub
shall cause the Offer Documents to be disseminated to holders of Shares as and
to the extent required by SEC Rule 14d-5 and other applicable federal and state
securities laws and the rules of any stock exchange or stock market in which the
Shares are then traded. Purchaser, Acquisition Sub, and the Company each agree
promptly to correct any information provided by it for use in the Offer
Documents if and to the extent that such information shall have become false or
misleading in any material respect, and Purchaser and Acquisition Sub further
agree to take all steps necessary to cause the Schedule 14D-1 as so corrected to
be promptly filed with the SEC and the other Offer Documents as so corrected to
be promptly disseminated to holders of the Shares, in each case as and to the
extent required by applicable federal and state securities laws and the rules of
any stock exchange or stock market in which the Shares are then traded. The
Company and its counsel shall be given reasonable opportunity to review and
comment upon the Offer Documents prior to their filing with the SEC or
dissemination to the stockholders of the Company. Purchaser and Acquisition Sub
agree to provide the Company and its counsel any comments Purchaser, Acquisition
Sub or their counsel may receive from the SEC or its staff with respect to the
Offer Documents promptly after the receipt of such comments.
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1.2 Company Actions.
(a) Subject to the terms and conditions set forth herein (including,
but not limited to, the Offer Conditions), the Company hereby approves of and
consents to the Offer and represents and warrants that the Board, at a meeting
duly called and held, in which a quorum of directors were present, duly adopted
by the resolutions set forth as Exhibit B attached hereto, which in the manner
set forth therein, approve this Agreement, the Offer and the Merger, determine
that, in the opinion of the Board, the Offer, the Merger and the Transactions
contemplated herein are in the best interests of the Company and its
stockholders and are fair to the stockholders and recommend that the holders of
the Shares accept the Offer and, if required by applicable law, approve the
Merger. The Company hereby consents to the inclusion in the Offer Documents and
in the Schedule 14D-9 referred to below of the recommendation of the Company's
Board of Directors described in this SECTION 1.2. The Company represents and
warrants that the Board has received the written opinion of Bank of America
Securities LLC (the "FINANCIAL ADVISOR"), the form of which is attached as
Exhibit C attached hereto. The Company has been authorized by the Financial
Advisor, to permit, subject to prior review and consent by the Financial Advisor
(such consent not to be unreasonably withheld), the inclusion of such fairness
opinion (or a reference thereto) in the Offer Documents and in the Schedule
14D-9 referred to below.
(b) As soon as reasonably practicable after the Offer Documents are
filed with the SEC and as otherwise required by applicable law, the Company
shall, pursuant to SEC Rule 14d-9, file with the SEC a
Solicitation/Recommendation Statement on Schedule 14D-9 with respect to the
Offer (such Schedule 14D-9, as amended or supplemented from time to time, the
"SCHEDULE 14D-9") containing the recommendation of the Board described in
SECTION 1.2(A) and a copy of the written opinion of the Financial Advisor
described in SECTION 1.2(a) and shall mail a copy of Schedule 14D-9 to the
stockholders of the Company. The Company shall cooperate with Purchaser in
mailing or otherwise disseminating the Schedule 14D-9 with the appropriate Offer
Documents to the Company's stockholders. Each of the Company, Purchaser and
Acquisition Sub agrees promptly to correct any information provided by it for
use in the Schedule 14D-9 if and to the extent that such information shall
become false or misleading in any material respect, and the Company further
agrees to take all steps necessary to amend or supplement the Schedule 14D-9 and
to cause the Schedule 14D-9 as so amended or supplemented to be promptly filed
with the SEC and promptly disseminated to the Company's stockholders, in each
case as and to the extent required by applicable federal and state securities
laws and the rules of any stock exchange or stock market in which the Shares are
then traded. Purchaser and its counsel shall be given reasonable opportunity to
review and comment upon the Schedule 14D-9 prior to its filing with the SEC or
dissemination to the Company's stockholders. The Company agrees to provide
Purchaser and its counsel any comments the Company or its counsel may receive
from the SEC or its staff with respect to the Schedule 14D-9 promptly after the
receipt of such comments.
(c) In connection with the Offer, the Company shall cause its transfer
agent to furnish Acquisition Sub promptly with mailing labels containing the
names and addresses of the recordholders of Shares as of a recent date and of
those persons becoming recordholders
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subsequent to such date, together with copies of all lists indicating current
stockholders, security position listings and related computer files, if
available, and all information in the Company's possession or control regarding
the names, addresses and holdings of beneficial owners of Shares, and shall
furnish to Acquisition Sub such information and assistance (including updated
lists of stockholders, security position listings and computer files) as
Purchaser or Acquisition Sub may reasonably request in communicating the Offer
to the Company's stockholders. The Company represents that the information
provided to Purchaser or Acquisition Sub pursuant to this SECTION 1.2(C) shall
be true and correct as of its respective dates. Subject to the requirements of
applicable law and except for such steps as are necessary to disseminate the
Offer Documents and any other documents necessary to consummate the Offer and
the Merger, Purchaser and Acquisition Sub and their officers, agents, employees
and advisors shall hold in confidence the information contained in any such
labels, listings and files, will use such information only in connection with
the Offer and the Merger and, if this Agreement shall be terminated, will
promptly, upon request, deliver to the Company or destroy, and will use their
commercially reasonable efforts to cause their officers, agents, employees,
advisors, associates and agents to deliver or destroy, all copies of such
information then in their possession or control.
1.3 Directors. (a) Effective upon the acceptance for payment by Acquisition
Sub of Shares constituting fifty-one percent (51%) of the aggregate outstanding
Shares (assuming the exercise of all options to purchase, and the conversion or
exchange of all securities convertible or exchangeable into, Shares outstanding
as of the consummation of the Offer) pursuant to the Offer, Purchaser shall be
entitled to designate the number of directors, rounded up to the next whole
number, on the Board that equals the product of (i) the total number of
directors on the Board (after giving effect to the election of any additional
directors pursuant to this SECTION 1.3) and (ii) the percentage that the number
of Shares owned by Purchaser or Acquisition Sub (including Shares accepted for
payment) bears to the total number of shares of Company Common Stock
outstanding, and the Company shall take all action necessary to cause the
Company's designees to be elected or appointed to the Board, including, without
limitation, increasing the number of directors, or seeking and accepting
resignations of incumbent directors, or both. At such times, the Company will
use its best efforts to cause individuals designated by Purchaser to constitute
the same percentage as such individuals represent on the Board of (x) each
committee of the Board, (y) each board of directors of each Subsidiary of the
Company and (z) each committee of each such board.
(b) The Company's obligations to appoint designees to the Board shall
be subject to Section 14(f) of the Securities Exchange Act of 1934, as amended
(the "EXCHANGE ACT") and Rule 14f-1 promulgated thereunder. The Company shall
promptly take all actions required pursuant to Section 14(f) and Rule 14f-1 in
order to fulfill its obligations under this Section 1.3 and shall include in the
Schedule 14D-9 such information with respect to the Company and its officers and
directors as is required under Section 14(f) and Rule 14f-1 to fulfill its
obligations under this SECTION 1.3. Purchaser will supply to the Company in
writing and be solely responsible for any information with respect to itself and
its nominees, officers, directors and affiliates required by Section 14(f) and
Rule 14f-1.
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1.4 Consummation Of Merger. From the date of acceptance for payment by
Acquisition Sub of Shares satisfying the Minimum Condition (as defined in Annex
A attached hereto) pursuant to the Offer, the Company shall take all actions
necessary to consummate the Merger as soon thereafter as reasonably practicable.
ARTICLE II
THE MERGER
SECTION 2.1 The Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time (as hereinafter defined), the Company and
Acquisition Sub shall consummate the Merger in accordance with the DGCL pursuant
to which (i) Acquisition Sub shall merge with and into the Company and the
separate corporate existence of Acquisition Sub shall thereupon cease, (ii) the
Company shall be the successor or the surviving corporation in the Merger
(sometimes hereinafter referred to as the "SURVIVING CORPORATION"), shall
continue to be governed by the laws of the State of Delaware and shall be a
wholly-owned Subsidiary of Purchaser, and (iii) the corporate existence of the
Company with all of its rights, privileges, immunities, powers and franchises
shall continue unaffected by the Merger. Purchaser may, upon notice to the
Company, modify the structure of the Merger if Purchaser determines it advisable
to do so because of tax or other considerations, and the Company shall promptly
enter into any amendments to this Agreement necessary or desirable to accomplish
such structure modification, provided that no such amendments shall reduce the
Merger Consideration or otherwise adversely affect the non-affiliated
stockholders of the Company.
SECTION 2.2 Effective Time. As soon as practicable after the satisfaction
or waiver of the conditions set forth in ARTICLE VII, the parties hereto shall
cause (i) a Certificate of Merger to be executed and filed on the Merger Closing
Date (as hereinafter defined) (or on such other date as Purchaser and the
Company may agree) with the Secretary of State of the State of Delaware in such
form as required by, and executed in accordance with the relevant provisions of
the DGCL, and (ii) all other filings or recordings required by the DGCL in
connection with the Merger. Prior to the filing referred to in this SECTION 2.2,
a closing (the "MERGER CLOSING") will be held at the offices of Xxxxxx Xxxxxx &
Xxxxx, 000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000, at 9:00 a.m.
Chicago time (or such other place as the parties may agree). The date on which
the Merger Closing occurs is referred to herein as the "MERGER CLOSING DATE").
The Merger shall become effective at such time as such Certificate of Merger is
duly filed with the Secretary of State of the State of Delaware, or at such
later time specified in such Certificate of Merger (the time the Merger becomes
effective being referred to herein as the "EFFECTIVE TIME").
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SECTION 2.3 Effects of the Merger. At the Effective Time, the Merger shall
have the effects as set forth in the applicable provisions of the DGCL. Without
limiting the generality of the foregoing, and subject thereto, at the Effective
Time, all the properties, rights, privileges, powers and franchises of the
Company and Acquisition Sub shall vest in the Surviving Corporation, and all
debts, liabilities and duties of the Company and Acquisition Sub shall become
the debts, liabilities and duties of the Surviving Corporation.
SECTION 2.4 Certificate of Incorporation; Certificate of Designation and
By-Laws.
(a) The Certificate of Incorporation of Acquisition Sub in effect at
the Effective Time shall be amended as of the Effective Time in order to change
the name of Acquisition Sub to "Bolle Inc." and such Certificate of
Incorporation, as so amended, shall be the Certificate of Incorporation of the
Surviving Corporation until amended in accordance with applicable law and such
Certificate of Incorporation.
(b) The By-laws of Acquisition Sub in effect at the Effective Time
shall be the By-laws of the Surviving Corporation until amended in accordance
with applicable law, the Certificate of Incorporation of the Surviving
Corporation and such By-laws.
SECTION 2.5 Directors. The directors of Acquisition Sub at the Effective
Time (which shall include Xxxxxx X. Xxxxxxxx) shall be the initial directors of
the Surviving Corporation, each to hold office in accordance with the
Certificate of Incorporation and By-laws of the Surviving Corporation until such
director's successor is duly elected or appointed and qualified. The Company
shall cause each director of the Company's Subsidiaries which are corporations
to tender his or her resignation prior to the Effective Time, with each such
resignation to be effective as of the Effective Time.
SECTION 2.6 Officers. The officers of Acquisition Sub at the Effective Time
shall be the initial officers of the Surviving Corporation, each to hold office
in accordance with the Certificate of Incorporation and By-laws of the Surviving
Corporation until such officer's successor is duly elected or appointed and
qualified.
SECTION 2.7 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 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 of the Company or Acquisition Sub 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 Acquisition Sub, 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
rights, title and interest in, to and under such rights, properties or assets in
the Surviving Corporation or otherwise to carry out this Agreement.
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SECTION 2.8 Conversion of Shares. As of the Effective Time, by virtue of
the Merger and without any action on the part of any holder of Shares or any
shares of common stock of Acquisition Sub:
(a) Each issued and outstanding share of common stock of Acquisition
Sub shall be converted into and become one validly issued, fully paid and
non-assessable share of Common Stock of the Surviving Corporation.
(b) Subject to SECTIONS 2.8(D) AND 3.1, each issued and outstanding
Share (other than Shares to be canceled in accordance with SECTION 2.8(C)) shall
be canceled and become the right to receive in cash, without interest, the Per
Share Amount set forth in the Offer (the "MERGER CONSIDERATION"). As of the
Effective Time, all such Shares shall be canceled in accordance with this
SECTION 2.8(B), and when so canceled, shall no longer be outstanding and shall
automatically be retired and shall cease to exist, and each holder of a
certificate representing any such Shares shall cease to have any rights with
respect thereto, except the right to receive the Merger Consideration, without
interest.
(c) Each share of Company Common Stock (including, without limitation,
the Shares purchased pursuant to the Offer) owned by the Company, any Company
Subsidiary, Purchaser, or Acquisition Sub shall automatically be canceled and
retired and shall cease to exist, and no consideration shall be delivered in
exchange therefor.
(d) Each option granted to an employee, consultant or director of the
Company or its Subsidiaries to acquire Shares ("Option") that is outstanding as
of the Effective Time, whether or not then vested or exercisable, shall be
terminated and canceled. At the Effective Time, all holders of canceled Options,
whether or not then vested or exercisable, having an exercise price per share
that is less than the Per Share Price shall be canceled in exchange for a single
lump sum cash payment equal to the product of (1) the number of Shares subject
to such Option and (2) the excess of the Per Share Price over the exercise price
per share of such Option.
(e) Each share of Company Series A Stock (as hereinafter defined) and
Company Series B Stock (as hereinafter defined) that is outstanding as of the
Effective Time shall be redeemed and canceled and become the right to receive in
cash, without interest, a single lump sum cash payment equal to its respective
Liquidation Preference (as defined in the Company's Certificate of Incorporation
as in effect on the date of this Agreement).
(f) Each Company Warrant that is outstanding as of the Effective Time,
and whether or not then exercisable, shall, effective as of the Effective Time,
automatically be canceled, and the holder thereof shall cease to have any rights
with respect thereto, except the right to receive in cash, without interest, a
single lump sum cash payment equal to the product of the number of Shares
subject to such Company Warrant, times the Per Share Amount, provided that such
holder shall have first paid to the Company, in cash, the aggregate exercise
price payable for such Shares based upon the exercise price per share as of the
date of this Agreement.
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(g) Each Zero Coupon Subordinated Note issued by the Company on May 29,
1998 (each, a "ZERO COUPON NOTE") that is outstanding as of the Effective Time
shall be redeemed in full and canceled, without any premium or prepayment
penalty, in accordance with its terms.
SECTION 2.9 Stockholders' Meetings.
(a) In order to consummate the Merger, the Company, acting through the
Board, Purchaser and Acquisition Sub shall, in accordance with applicable legal,
regulatory and stock exchange or stock market requirements and subject to their
fiduciary duties and obligations:
(i) duly call, give notice of, convene and hold an annual or special
meeting of its stockholders (the "STOCKHOLDERS' MEETING") to be held as soon
as practicable following the acceptance for payment and purchase of Shares
pursuant to the Offer for the purpose of considering and taking action upon
the approval of the Merger;
(ii) include in the Merger Proxy Statement (as hereinafter defined) (i)
the recommendation of the Board that the stockholders of the Company vote in
favor of the approval of the Merger and (ii) the written opinion of the
Financial Advisor that the consideration to be received by the stockholders
of the Company pursuant to the Merger is fair to such stockholders from a
financial point of view;
(iii) prepare and file with the SEC a preliminary proxy or information
statement relating to this Agreement and the Merger and use its best efforts
(A) to obtain and furnish the information required to be included by it in
the Merger Proxy Statement and, after consultation with Purchaser, respond
promptly to any comments made by the SEC with respect to the preliminary
proxy or information statement, and cause a definitive proxy or information
statement, including any amendments or supplements thereto (the "MERGER
PROXY STATEMENT"), to be mailed to its stockholders at the earliest
practicable time following the expiration or termination of the Offer;
provided, however, that no amendment or supplement to the Merger Proxy
Statement will be made by the Company without consultation with Purchaser
and its counsel, and (B) subject to its fiduciary duties as unanimously
determined in good faith by the Board, based as to legal matters on the
advice of legal counsel, to obtain the necessary approvals by its
stockholders of this Agreement, the Merger and the Transactions. At such
meeting, Purchaser and its affiliates shall vote, or cause to be voted, all
Shares owned by them in favor of approval and adoption of the Merger; and
(iv) Purchaser will provide the Company with the information concerning
Purchaser required to be included in the Merger Proxy Statement.
(b) Notwithstanding anything herein to the contrary, Purchaser, the
Company and Acquisition Sub agree that, in lieu of holding the Stockholders'
Meeting, the Company may
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obtain the approval and adoption of this Agreement, the Merger and the other
Transactions by the holders of a majority of the outstanding Shares, by written
consent pursuant to SECTION 228 of the DGCL ("APPROVAL BY CONSENT"). In
addition, the Company agrees with and covenants to Purchaser and Acquisition Sub
that the Company shall use all reasonable efforts to permit Company's
stockholders to effect Approvals by Consent to adopt and approve, for purposes
of SECTION 251 of the DGCL, this Agreement, the Merger and the other
Transactions and to comply with and satisfy as promptly as practicable any
applicable legal, regulatory or stock exchange or stock market requirements that
apply to approving this Agreement, the Merger and the other Transactions by way
of Approval by Consent. If Company stockholder approval and adoption is obtained
by Approval by Consent, the Company shall not be required to call the
Stockholders' Meeting.
ARTICLE III
DISSENTING SHARES; EXCHANGE OF SHARES
SECTION 3.1 Dissenting Shares.
(a) Notwithstanding anything in this Agreement to the contrary (except
for the provisions of SECTION 3.1(B)), any Shares held by a holder who has
demanded and perfected his demand for appraisal of his Shares in accordance with
the DGCL (including, but not limited to, SECTION 262 thereof) and as of the
Effective Time has neither withdrawn nor lost his, her or its right to such
appraisal ("DISSENTING SHARES") shall not be converted into or represent a right
to receive the Merger Consideration pursuant to SECTION 2.8, but the holder
thereof shall be entitled to only such rights as are granted by the DGCL.
(b) Notwithstanding the provisions of SECTION 3.1(A), if any holder of
Shares who demands appraisal of his Shares under the DGCL effectively withdraws
or loses (through failure to perfect or otherwise) his, her or its right to
appraisal, then as of the Effective Time or the occurrence of such event,
whichever later occurs, such holder's Shares shall automatically be converted
into and represent only the right to receive the Merger Consideration as
provided in SECTION 3.1(A), without interest thereon, upon surrender of the
certificate or certificates representing such Shares pursuant to SECTION 3.2
hereof.
(c) If applicable, the Company shall give Purchaser (i) prompt notice
of any demands for appraisal or payment of the fair value of any Shares,
withdrawals of such demands, and any other instruments served pursuant to the
DGCL received by the Company and (ii) the opportunity to direct all negotiations
and proceedings with respect to demands for appraisal under the DGCL. The
Company shall not voluntarily make any payment with respect to any demands for
appraisal and shall not, except with the prior written consent of Purchaser,
settle or offer to settle any such demands.
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SECTION 3.2 Exchange of Certificates.
(a) Prior to the Effective Time, Purchaser shall designate a bank or
trust company who shall be reasonably satisfactory to the Company to act as
paying agent in the Merger (the "EXCHANGE AGENT"), and on or prior to the
Effective Time, Purchaser shall make available, or cause the Surviving
Corporation to make available, to the Exchange Agent, cash in an amount
necessary for the payment of the Merger Consideration as provided in SECTION 2.8
upon surrender of certificates representing Shares (the "CERTIFICATES") as part
of the Merger. Funds made available to the Exchange Agent shall be invested by
the Exchange Agent as directed by Acquisition Sub or, after the Effective Time,
the Surviving Corporation, provided that such investments shall only be in
obligations of or guaranteed by the United States of America, in commercial
paper obligations rated A-1 or P-1 or better by Xxxxx'x Investors Service, Inc.
or Standard & Poor's Corporation, respectively, or in certificates of deposit,
bank repurchase agreements or banker's acceptances of commercial banks with
capital exceeding $1 billion (it being understood that any and all interest or
income earned on funds made available to the Exchange Agent pursuant to this
Agreement shall be turned over to Purchaser).
(b) As soon as practicable after the Effective Time, the Exchange Agent
shall mail to each holder of record of a Certificate a letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and title
to the Certificates shall pass, only upon actual and proper delivery of the
Certificates to the Exchange Agent, shall contain instructions for use in
effecting the surrender of the Certificates in exchange for payment of the
Merger Consideration and shall be in such form and contain such other provisions
as Purchaser and the Company may reasonably specify (together, the "TRANSMITTAL
DOCUMENTS")). Upon surrender of a Certificate for cancellation to the Exchange
Agent, together with duly executed Transmittal Documents, the holder of such
Certificate shall be entitled to receive in exchange therefor (as promptly as
practicable) the Merger Consideration in respect of all Shares formerly
represented by such Certificate which such holder has the right to receive, as
set forth in SECTION 2.8. The Certificate(s) so surrendered shall forthwith be
canceled. All cash paid upon the surrender of Certificates in accordance with
the terms of this Article III shall be deemed to have been paid in full
satisfaction of all rights pertaining to the Shares theretofore represented by
such Certificates. Until surrendered in accordance with the provisions of and as
contemplated by this SECTION 3.2, any Certificate (other than Certificates
representing Shares subject to Sections 2.8(c) and other than Dissenting Shares,
if applicable) shall be deemed at any time after the Effective Time to represent
only the right to receive the Merger Consideration.
(c) At the Effective Time, the stock transfer books of the Company
shall be closed and there shall not be any further registration of transfers of
any shares of capital stock thereafter on the records of the Company. If, after
the Effective Time, Certificates are presented to the Surviving Corporation or
its transfer agent, they shall be canceled and exchanged for the consideration
provided for, and in accordance with the procedures set forth, in this ARTICLE
III. No interest shall accrue or be paid on any cash payable upon the surrender
of a Certificate or Certificates which immediately before the Effective Time
represented outstanding Shares.
11
(d) From and after the Effective Time, the holders of Certificates
evidencing ownership of Shares outstanding immediately prior to the Effective
Time shall cease to have any rights with respect to such Shares except as
otherwise provided herein or by applicable law.
(e) If any Certificate shall have been lost, stolen or destroyed, upon
the making of an affidavit of that fact by the person claiming such Certificate
to be lost, stolen or destroyed, the Surviving Corporation shall pay or cause to
be paid in exchange for such lost, stolen or destroyed Certificate the Merger
Consideration, in accordance with SECTION 2.8, for Shares represented thereby.
When authorizing such payment of any portion of the Merger Consideration in
exchange therefor, the Board of Directors of the Surviving Corporation may, in
its discretion and as a condition precedent to the payment thereof, require the
owner of such lost, stolen or destroyed Certificate to execute and deliver to
the Surviving Corporation an indemnity agreement, in a form acceptable to the
Surviving Corporation, pursuant to which such owner agrees to indemnify the
Surviving Corporation against any claim that may be made against the Surviving
Corporation with respect to the Certificate alleged to have been lost, stolen or
destroyed.
(f) Promptly following the date which is six months after the Effective
Time, the Surviving Corporation shall be entitled to require the Exchange Agent
to deliver to it any cash (including any interest received with respect
thereto), Certificates and other documents in its possession relating to the
Transactions, which had been made available to the Exchange Agent and which have
not been disbursed to holders of Certificates, and thereafter such holders shall
be entitled to look to the Surviving Corporation (subject to abandoned property,
escheat or similar laws) only as general creditors thereof with respect to any
portion of the Merger Consideration payable upon due surrender of their
Certificates, without any interest thereon.
(g) Subject to ARTICLE II, the Merger Consideration paid in the Merger,
if any, shall be net to the holder of Shares in cash, subject to reduction only
for any applicable Federal withholding taxes or stock transfer taxes payable by
such holder.
(h) Notwithstanding anything to the contrary in this SECTION 3.2, none
of the Exchange Agent, Purchaser or the Surviving Corporation shall be liable to
any holder of a Certificate formerly representing Shares for any amount properly
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in that certain Company Disclosure Schedule dated the
date hereof and delivered to Purchaser prior to the execution hereof (the
"SCHEDULE"), The Company represents and warrants the following to Purchaser and
Acquisition Sub. Any information disclosed in any Section of the Schedule, if
reasonably related to any other Section or Sections of the Schedule and
described in reasonable detail so as to allow a reasonable person to make the
12
applicable cross-reference or connection, shall be deemed disclosed in reference
to all applicable Sections of the Schedule.
SECTION 4.1 Organization, Good Standing, etc. The Company and each of its
Subsidiaries are corporations duly organized, validly existing and in good
standing under the laws of the respective states of their incorporation, have
all requisite power to own their properties and to carry on their businesses as
now being conducted and are duly qualified to do business and are in good
standing in all other jurisdictions in which qualification as a foreign
corporation is required, except for such failure to be qualified and in good
standing, if any, which when taken together with all other such failures of the
Company and its Subsidiaries would not in the aggregate have a Company Material
Adverse Effect, as defined below. Each such corporation, state of incorporation
and jurisdiction is set forth in SECTION 4.1 of the Schedule. As used herein,
the term "SUBSIDIARY" shall mean, with respect to any party, any corporation or
other organization, whether incorporated or unincorporated or domestic or
foreign to the United States of which (i) such party or any other Subsidiary of
such party is a general partner (excluding such partnerships where such party or
any Subsidiary of such party do not have a majority of the voting interest in
such partnership) or (ii) at least a majority of the securities or other
interests having by their terms ordinary voting power to elect a majority of the
Board or others performing similar functions with respect to such corporation or
other organization is directly or indirectly owned or controlled by such party
or by any one or more of its Subsidiaries, or by such party and one or more of
its Subsidiaries. As used herein, "COMPANY MATERIAL ADVERSE EFFECT" means (i)
any events, changes in or effects on the business of the Company or its
Subsidiaries that individually or in the aggregate is or are, as the case may
be, materially adverse to the business, assets, results of operations or
financial condition of the Company and its Subsidiaries, taken as a whole; or
(ii) materially impairs the ability of the Company to consummate the Merger or
the other Transactions contemplated by this Agreement; provided, however, that a
Company Material Adverse Effect of the type described in clause (i) above shall
not include changes resulting from changes in general economic conditions or in
economic conditions generally affecting the industry in which the Company
operates.
13
SECTION 4.2 Authorized Shares, Absence of Options, Warrants, etc. The
authorized capital stock of the Company consists of 30,000,000 Shares, and
200,000 shares of Preferred Stock of which 64,120 shares are designated as
Series A Preferred Stock of the Company ("Company Series A Stock") and 10,000
shares are designated as Series B Preferred Stock of the Company ("Company
Series B Stock"). As of the close of business on the day immediately prior to
the date of this Agreement, 7,091,774 Shares were issued and outstanding, and as
of the date of this Agreement, (i) all of the shares of Company Series A Stock
are issued and outstanding, (ii) 9,625 shares of Company Series B Stock are
issued and outstanding and (iii) no shares of capital stock are held in the
Company's treasury. As of the date of this Agreement, there are no other
outstanding shares of capital stock or voting securities of the Company and no
outstanding commitments to issue any shares of capital stock or voting
securities of the Company after the date of this Agreement other than pursuant
to the exercise of options outstanding as of the date of this Agreement under
the Plans, or warrants outstanding as of the date of this Agreement and held by
members of the Bolle family to purchase 663,618 shares of Company Common Stock
(the "COMPANY WARRANTS"). A true, accurate and complete list of all of such
options and the Company Warrants (including the exercise prices thereof) is
included on SECTION 4.2 of the Schedule. All of the outstanding Shares are, and
all Shares issuable upon due exercise of the securities listed below will be,
when issued in accordance with the terms of such securities, duly authorized,
validly issued, fully paid and nonassessable by the Company and are free of any
Liens (as hereinafter defined) other than Liens created or imposed upon by the
holders thereof. Except as set forth in SECTION 4.2 of the Schedule, there are
no voting trusts or other agreements or understandings with respect to the
voting of any such Shares known to the Company; and there are no outstanding
preemptive rights, calls, rights of conversion or exchange or other rights,
commitments or agreements of any character relating to the authorized or issued
Shares known to the Company. Except for the Liens set forth in SECTION 4.2 of
the Schedule, all of which shall be released as a condition to the consummation
of the Offer (the "PERMITTED LIENS"), and Liens arising by operation of law in
the ordinary course of business, none of which has had or could reasonably be
expected to have a Company Material Adverse Effect, the Company is the owner of
all outstanding equity securities of each of its Subsidiaries, free and clear of
any Liens; no equity securities of any of such Subsidiaries are held in the
treasury of any of such Subsidiaries; there are no other equity securities of
any class of any of such Subsidiaries reserved for issuance as of the date of
this Agreement; there are no voting trusts or other agreements or understandings
with respect to the voting of any of the equity securities of such Subsidiaries;
and, except as set forth on SECTION 4.2 of the Schedule, there are no
outstanding options, warrants, preemptive rights, calls, rights of conversion or
exchange or other rights, commitments or agreements of any character relating to
equity securities of any of such Subsidiaries. SECTION 4.2 of the Schedule lists
all stocks, bonds, debentures and other interests in or securities of such
Subsidiaries and of other business enterprises owned by the Company or any of
its Subsidiaries. The securities of AAi/Xxxxxx Xxxxx, Inc. listed on SECTION 4.2
of the Schedule and held by the Company (the "AAI Securities") are scheduled for
redemption on their terms in February, 2000 for $1,000,000. For purposes of this
Agreement, "LIEN" means, with respect to any asset (including, without
limitation, any security, any option, claim, mortgage, lien, pledge, charge,
security interest or encumbrance or restrictions of any kind in respect of such
asset.
14
SECTION 4.3 Effect of Agreement. The execution and delivery of this
Agreement by the Company and the consummation of the Merger have been duly
authorized by the Board, do not require the consent, approval or authorization
of or filing with any person or any Federal, state or local government or any
court, administrative agency or commission or other governmental entity or
agency or foreign government, court, administrative agency or commission or
other governmental authority or agency (a "GOVERNMENTAL ENTITY") (i) except in
connection with the applicable requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), (ii) pursuant to the
applicable requirements of the Exchange Act and the SEC's rules and regulations
promulgated thereunder, (iii) the filing and, if applicable, recordation of the
Certificate of Merger pursuant to the DGCL and (iv) and the consents, waivers or
approvals from persons to specified contracts listed in SECTION 4.3 of the
Schedule and will not, subject to obtaining the aforesaid consents, waivers or
approvals and making the aforesaid filings, violate any material law, statute,
regulation, injunction, order or decree of any Governmental Entity, or conflict
with or result in a material breach of or constitute a material default under
any of the terms or provisions of, or give any person the right to terminate,
any mortgage, note, bond or indenture or material obligation to which the
Company or any of its Subsidiaries is a party or by which it or any of its or
their properties may be bound. Subject to securing the consents, waivers and
approvals set forth in SECTION 4.3 of the Schedule, the execution and delivery
of this Agreement by the Company and the consummation of the Merger will not
give to others any interests or rights, including rights of termination or
cancellation, in or with respect to any material property, asset, contract,
agreement, license or other commitment or instrument of the Company or any of
its Subsidiaries.
15
SECTION 4.4 Contracts and Commitments. Neither the Company nor any of its
Subsidiaries is in breach or violation of or in default (i) under any of the
terms or provisions of any mortgages, leases, notes, bonds, indentures,
commitments, contracts, agreements, licenses or other instruments to which such
corporation is a party or by which it or any of its properties is bound and
which singularly is or in the aggregate are material to the business,
properties, financial condition or operations of such corporation, (ii) under
any material law, judgment or decree, or any order, rule or regulation
applicable to such corporation or to any of its properties or (iii) in the
payment of any of its material obligations for borrowed funds, and there exists
no known condition or known event which, after notice or lapse of time or both,
would constitute a default in connection with any of the foregoing. SECTION 4.4
of the Schedule contains a correct and complete list of every Material Contract
(as hereinafter defined) to which the Company or any of its Subsidiaries is a
party or by which any of the Company's or any of its Subsidiaries' assets or
properties are bound, including all amendments and other modifications thereto.
For purposes of this Agreement, "MATERIAL CONTRACT" means any contract,
agreement, lease or commitment, written or oral, (i) involving annual payments
of $100,000 or more, (ii) involving an obligation, whether contingent or
otherwise, in excess of $100,000, or (iii) if breached, canceled or terminated
could reasonably be expected to have a Company Material Adverse Effect. The
Company has provided Purchaser with a true and complete copy of all Material
Contracts. Each Material Contract is a valid and binding obligation of the
Company or its Subsidiaries, as applicable, enforceable in accordance with its
terms, and is in full force and effect, subject to bankruptcy, reorganization,
receivership and other laws affecting creditors' rights generally. No other
party to any Material Contract, is (with or without the lapse of time or the
giving of notice, or both) in material breach or default in any material respect
thereunder and there exists no condition which would constitute a material
breach or default by any other party thereunder. To the Company's Knowledge (as
defined in this SECTION 4.4), none of the Company or any of its Subsidiaries has
been notified that any other party to any Material Contract intends to cancel,
terminate, not renew or exercise an option under any Material Contract, whether
in connection with the transactions contemplated hereby or otherwise. For
purposes of this Agreement, "Company's Knowledge" means (i) the actual
knowledge, after reasonable inquiry, of Xxxxxx X. Xxxxxxxx, Ian X.X. Xxxxxx,
Xxxxxx X. Xxxx, or Xxx D'Arcy, and (ii) the actual knowledge, after reasonable
inquiry, of Xxxx Xxxxxxxxx as of the date of this Agreement but not as of dates
after the date of this Agreement.
16
SECTION 4.5 SEC Documents; Financial Statements. The Company has
furnished or made available to Purchaser a true and complete copy of each
statement, report, registration statement (with the prospectus in the form filed
pursuant to Rule 424(b) under the Securities Act of 1933, as amended (the
"SECURITIES ACT")), definitive proxy statement and other filings filed with the
SEC by the Company since November 14, 1997, and not available through "XXXXX"
(THE "NON-XXXXX COMPANY SEC DOCUMENTS") and, prior to the Effective Time, the
Company will have furnished Purchaser with true and complete copies of any
additional documents filed with the SEC by the Company prior to the Effective
Time (THE "POST-EXECUTION COMPANY SEC DOCUMENTS", and together with the
Non-XXXXX Company SEC Documents and any such statements, reports, registration
statements, prospectuses, proxy statements and other filings filed by the
Company since November 14, 1997 which are available through "XXXXX", the
"COMPANY SEC DOCUMENTS"). In addition, the Company has made available to
Purchaser all exhibits (including those exhibits incorporated by reference) to
the Company SEC Documents filed prior to the date hereof which are not available
through "XXXXX", and will promptly make available to Purchaser all exhibits to
any additional Company SEC Documents filed prior to the Effective Time. The
Company has filed with the SEC all reports and registration statements and other
filings required to be filed with the SEC under the rules and regulations of the
SEC. All material documents required to be filed as exhibits to the Company SEC
Documents have been so filed. As of their respective filings dates, the Company
SEC Documents complied in all material respects with the requirements of the
Exchange Act and the Securities Act, and none of the Company SEC Documents
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances under which they were made and at the
time, not misleading, except to the extent corrected by a subsequently filed the
Company SEC Document. The financial statements of the Company (including, but
not limited to, the financial statements of the Company through the period ended
September 30, 1999 (the "SEPTEMBER 1999 BALANCE SHEET")), including any
amendments or restatements thereof prior to the date hereof and the notes
thereto, included in the Company SEC Documents filed prior to the date hereof
(the "COMPANY FINANCIAL STATEMENTS"), copies of which have been delivered to the
Purchaser by the Company prior to the date of this Agreement, complied as to
form in all material respects with applicable accounting requirements and with
the published rules and regulations of the SEC with respect thereto as of their
respective dates, and were prepared in accordance with generally accepted
accounting principles applied on a basis consistent throughout the periods
indicated and consistent with each other ("GAAP") (except as may be indicated in
the notes thereto or, in the case of unaudited statements included in Quarterly
Reports on Form 10-Q, as permitted by Form 10-Q of the SEC). The Company
Financial Statements fairly present the consolidated financial condition,
operating results, and cash flows of the Company and its Subsidiaries at the
dates and during the periods indicated therein (subject, in the case of
unaudited statements, to normal, recurring year-end adjustments which are not
material). There has been no change in the Company's accounting policies except
as described in the notes to the Company Financial Statements. The Company has
not received from its independent auditors, either in connection with the
preparation and audit of the Company's Financial Statements for the period ended
December 31, 1998 or at any time since December 31, 1998, a letter or any other
written notice stating that the auditors' review of the Company's system of
internal accounting controls or any of its Subsidiaries' systems of internal
accounting controls, to the extent the auditors deemed
17
such a review necessary in establishing the scope of their examinations of the
Company's consolidated financial statements since such date, disclosed any
weakness in internal controls that the auditors considered a material weakness.
SECTION 4.6 Absence of Liabilities. Neither the Company nor any of its
Subsidiaries has any material liabilities or obligations, either accrued,
absolute, contingent or otherwise, which have not been (i) reflected in the
Company's Annual Report on Form 10-K for the period ended December 31, 1998
(including the Company's Balance Sheet as of December 31, 1998 included in the
Company Financial Statements (the "DECEMBER 1998 BALANCE SHEET")) and filed with
the SEC, (ii) specifically described in SECTION 4.6 of the Schedule, (iii)
incurred in the ordinary course of the Company's business since December 31,
1998, none of which have had or could reasonably be expected to have a Company
Material Adverse Effect or (iv) incurred under or in connection with this
Agreement.
18
SECTION 4.7 Absence of Certain Changes or Events. Since September 30, 1999,
except as set forth in SECTION 4.7 of the Schedule, the Company and its
Subsidiaries have conducted their business in the ordinary course, consistent
with past practice. Without limiting the generality of the foregoing, since
September 30, 1999, except as disclosed in SECTION 4.7 of the Schedule, (i)
neither the Company nor any of its Subsidiaries has sustained any damage,
destruction or loss by reason of fire, flood, accident or other calamity
(whether or not covered by insurance) that would reasonably be expected to have
a Company Material Adverse Effect; (ii) there have been no changes in the
condition (financial or otherwise), business, net worth, assets, properties,
obligations or liabilities (fixed or otherwise) of the Company or any of its
Subsidiaries that would reasonably be expected to have a Company Material
Adverse Effect; (iii) neither the Company nor any of its Subsidiaries has
incurred any material obligation for the payment of money extending more than
one year, except for operating leases entered into in the ordinary course of
business; (iv) neither the Company nor any of its Subsidiaries has paid any
obligation or liability (fixed or contingent) except current liabilities
included in the September 1999 Balance Sheet and current liabilities incurred
since September 30, 1999 in the ordinary course of business or pursuant to the
terms of this Agreement; (v) the Company has not declared any other dividend or
other distribution on or with respect to any Shares or other securities of the
Company; (vi) the Company has not purchased, redeemed or otherwise acquired for
consideration, directly or indirectly, any Shares or other securities of the
Company; (vii) neither the Company nor any of its Subsidiaries has disposed of,
or agreed to dispose of, any material property or asset, other than in the
ordinary course of business and for a consideration at least equal to the fair
market value of such property or asset; (viii) neither the Company nor any of
its Subsidiaries has made any expenditures or commitments for the purchase,
acquisition, construction or improvement of a capital asset except in the
ordinary course of business and in an aggregate amount not exceeding $100,000;
(ix) neither the Company nor any of its Subsidiaries has repaid Indebtedness (as
hereinafter defined) of the Company to any affiliates of the Company or any of
its Subsidiaries; (x) neither the Company nor any of its Subsidiaries has
amended its Certificate of Incorporation or By-Laws; and (xi) except as set
forth above, neither the Company nor any of its Subsidiaries has entered into
any other transaction or contract other than in the ordinary course of business.
Except as set forth in SECTION 4.7 of the Schedule, there are no scheduled, and
the Company does not expect to make any, dividends on other distributions
(whether cash, stock or otherwise) on or respect to any Shares or other
securities of the Company between the date of the Agreement and the Cut-Off
Date. For purposes of this Agreement, "INDEBTEDNESS" means any liability,
whether or not contingent, (i) in respect of borrowed money or evidenced by
bonds, notes, debentures, or similar instruments, (ii) representing the balance
deferred and unpaid of the purchase price of any property (including pursuant to
capital leases) but excluding trade payables, if and to the extent any of the
foregoing indebtedness would appear as a liability upon a balance sheet prepared
on a consolidated basis in accordance with GAAP, and (iii) guaranties, direct or
indirect, in any manner, of all or any part of any Indebtedness of any person.
SECTION 4.8 Tax and Other Returns. Except as set forth in SECTION 4.8 of
the Schedule (i) all federal tax returns and tax reports required to be filed by
the Company and its Subsidiaries have been timely filed with the appropriate
Governmental Entities where such returns and reports are required to be filed
and all such tax returns were true, accurate and complete in all
19
material respects; (ii) all material foreign, state and local tax returns and
tax reports required to be filed by the Company or any of its Subsidiaries in
those jurisdictions where either the Company or any of its Subsidiaries have
qualified to do business, and which relate to income, profits, franchise or
property taxes, have been filed with the appropriate Governmental Entity in such
jurisdiction, and all such tax returns were true, accurate and complete in all
material respects; (iii) all federal, state, local and foreign income, profits
and franchise taxes (including interest and penalties) shown due on the tax
returns and tax reports referred to in (i) and (ii) of this SECTION 4.8 were
timely and fully paid; (iv) the Company and its Subsidiaries have provided in
its Company Financial Statements, and at the Effective Time will have provided
in its financial statements for periods through the Effective Time , adequate
accruals in accordance with GAAP for all taxes that have been, or will have
been, incurred but have not been paid, whether or not shown as being due on any
tax returns; (v) no waivers of statutes of limitation have been given or
requested; (vi) there is no dispute or claim concerning any additional tax
liability of the Company or any of its Subsidiaries made by any taxing authority
with respect to the returns and reports filed by the Company or its Subsidiaries
referred to in (i) and (ii) of this SECTION 4.8 and (vii) neither the Company
nor its Subsidiaries expect any taxing authority to assess any additional tax
liability for any tax return or report filed by the Company or its Subsidiaries
referred to in (i) and (ii) of this SECTION 4.8. No power of attorney has been
executed or filed by or on behalf of the Company or its Subsidiaries with
respect to taxes.
SECTION 4.9 Employment Arrangements. Except as disclosed in SECTION 4.9 of
the Schedule, neither the Company nor any of its Subsidiaries is a party to any
employment, agency, commission or consultant contract, written or oral, with any
present or former officer, director or employee, consultant or agent, or any
collective bargaining agreement, nor does the Company or any of its Subsidiaries
have any Company Plan (as defined in SECTION 4.17 below). Except as disclosed in
SECTION 4.9 of the Schedule, since December 31, 1998, there has been no change
in any such plan or arrangement or in compensation to any director or officer,
or any change, either material in amount or other than in the ordinary course of
business, in compensation to any other employee of the Company or any of its
Subsidiaries. Except as disclosed in SECTION 4.9 of the Schedule, since December
31, 1998, there have been no bonus, profit sharing, incentive, pension or
similar payments made to any employee, consultant or agent by the Company or any
of its Subsidiaries, nor has the Company or any of its Subsidiaries committed to
make any such payments. Except as set forth in SECTION 4.9 of the Schedule, no
director, officer, employee or agent of the Company or any of its Subsidiaries
is entitled to receive, or has any claim with respect to, a bonus, "success
fee", severance or separation payment or other payment as a result of the
Transactions contemplated by this Agreement.
20
SECTION 4.10 Property. The Company and each of its Subsidiaries have good
and marketable title in fee simple to all of the real property respectively
owned by them, and good and marketable title to all of the other tangible
properties and assets respectively owned by them, free and clear of all Liens
except (i) Liens for taxes not yet delinquent; (ii) Liens being contested in
good faith by appropriate proceedings (which Liens are described in SECTION 4.10
of the Schedule); (iii) such imperfections of title and encumbrances, if any, as
do not materially detract from the value of, or materially interfere with the
present use of, such property; and (iv) for those listed in SECTION 4.10 of the
Schedule, all of which will be released at or prior to the Merger Closing.
Neither the Company nor any of its Subsidiaries has received notice of violation
of any zoning regulation, ordinance or other law, order, regulation or
requirement relating to real property owned or leased by it which violation
would reasonably be expected to have a Company Material Adverse Effect. The
tangible personal property of the Company and its Subsidiaries that is material
to the operation of the business of the Company and its Subsidiaries is fit for
the use which is intended, free from any material defects and is in good
operating condition and repair (ordinary wear and tear excepted). None of such
material tangible personal property requires any repair or replacement except
for maintenance or replacement in the ordinary course of business or replacement
in accordance with the normal useful life for such tangible personal property.
None of the Company or any of its Subsidiaries owns any material amounts of
personal property that are obsolete or of below standard quality. None of the
material tangible personal property is located other than at the locations of
the Company or any of its Subsidiaries set forth on SECTION 4.10 of the
Schedule. No portion of the real property owned or leased by the Company or any
of its Subsidiaries is subject to any pending condemnation proceeding or
proceeding by any Governmental Entity materially adverse to such property, and,
none of the Company or any of its Subsidiaries knows of any threatened
condemnation proceeding with respect to such property. The buildings, plants,
improvements, structures and fixtures on the real property owned or leased by
the Company or any of its Subsidiaries, including, without limitation, heating,
ventilation, mechanical, electrical, sewer, sprinkler and air conditioning
systems, roof, foundation and floors, (i) have been properly maintained in all
material respects, (ii) are in good operating condition in all material
respects, ordinary wear and tear excepted, and are fit for the purposes for
which they are being utilized, and (iii) are in accordance with all applicable
laws, ordinances, rules and regulations applicable to the Company or any of its
Subsidiaries or such property (including those relating to building, zoning,
fire or health codes), except for such failures to be in accordance with such
laws, ordinances, rules or regulations which have not had or could not
reasonably be expected to have a Company Material Adverse Effect, and neither
the Company nor any of its Subsidiaries has received any notice alleging any
such violation or requiring or calling attention to the need for any work,
repairs, construction, alteration or installation on or in connection with such
real property which has not been heretofore been complied with by the Company or
its Subsidiaries.
21
SECTION 4.11 Patents, Trademarks, etc. (a) SECTION 4.11 of the Schedule
correctly lists all domestic and foreign letters patent, patent applications,
patent, technology and know-how licenses and royalty agreements, trade names,
trademark (including service xxxx) registrations and applications, common law
trademarks, trademark licenses and royalty agreements, copyrights, copyright
registrations and applications and copyright licenses and royalty agreements
("INTELLECTUAL PROPERTY") used or held by the Company or any of its
Subsidiaries. Unless otherwise indicated in SECTION 4.11 of the Schedule, the
Company or such Subsidiary either owns or has the right to use (in the manner
presently being used by the Company or such Subsidiary) by license, sublicense,
agreement, or permission all of the Intellectual Property set forth on SECTION
4.11 of the Schedule. Except as otherwise set forth in SECTION 4.11 of the
Schedule, the Company has not granted a license, nor reached an understanding
with any person, nor entered into a written agreement, relating in whole or in
part, to any of the Intellectual Property used in connection with the conduct of
the Company's business, and there has been no assertion thereof by any Person.
To the Company's Knowledge, there is no infringement or other adverse claim
against the rights of the Company with respect to any of the Intellectual
Property used or owned by the Company in connection with the conduct of its
business. None of the Intellectual Property is subject to any pending or, to the
Company's Knowledge, threatened litigation or other adverse claims except as set
forth in SECTION 4.11 of the Schedule. Neither the Company nor any of its
Subsidiaries has received notice that the use by it of such Intellectual
Property may infringe upon or conflict with any intellectual property rights of
any person. Subject to securing the consents, waivers and approvals set forth in
SECTION 4.11 of the Schedule, the execution and delivery of this Agreement by
the Company and the consummation of the Merger will not give to any person any
interests or rights, including rights of termination or cancellation, in or with
respect to any of the Intellectual Property owned, used or held by the Company
or any of its Subsidiaries in connection with the conduct of the Company's
business.
SECTION 4.12 Absence of Defaults by Others. To the Company's Knowledge, no
party with whom the Company or any of its Subsidiaries has an agreement which is
of material importance to the business, properties, financial condition or
operations of the Company or any of its Subsidiaries is in material default
thereunder.
SECTION 4.13 Litigation. Except as disclosed in SECTION 4.13 of the
Schedule, neither the Company nor any of its Subsidiaries is a party to or
threatened with any litigation, governmental or other proceeding, investigation,
strike or other labor dispute or other controversy which might affect the
validity of this Agreement or which, individually or in the aggregate, through
settlement or judgement, might reasonably be expected to result in damages and
expenses to the Company in excess of $100,000, and there is no outstanding
order, writ, injunction or decree of any Governmental Entity against or
affecting the Company or any of its Subsidiaries or a material portion of their
respective businesses, properties, assets or goodwill.
22
SECTION 4.14 Disclosure Documents. Each document required to be filed by
the Company with the SEC in connection with the transactions contemplated by
this Agreement will, when filed, comply as to form in all material respects with
the applicable requirements of the Exchange Act, and none of the information
supplied or to be supplied by the Company for inclusion in (i) the Schedule
14D-1 and the Schedule 14D-9 and (ii) insofar as it relates to the Company, the
Offer, will contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein, in light of the circumstances under
which they were made, not misleading.
SECTION 4.15 Brokers' and Finders' Fees. Except as disclosed in SECTION
4.15 of the Schedule, no agent, broker, person or firm acting on behalf of the
Company or under its authority has claimed or is or will be entitled to any
commission or broker's or finder's fee from the Company in connection with the
transactions contemplated by this Agreement.
SECTION 4.16 Insurance. SECTION 4.16 of the Schedule correctly lists all
policies of fire, liability, workmen's compensation, life, business interruption
and other types of insurance held by the Company or any of its Subsidiaries and
indicates for each such policy the carrier, risks insured, amounts of coverage,
deductible and expiration date. All such insurance policies are in full force
and effect. The consummation of the transactions contemplated by this Agreement
(including, but not limited to, the Offer and the Merger) does not constitute a
breach of, or give the insurer thereunder or other party thereto a right of
termination with respect to, such policies or bonds.
SECTION 4.17 Pension, Retirement and Profit Sharing Plans. SECTION 4.17 of
the Schedule lists each pension, profit sharing, stock-bonus, thrift or other
retirement plan, employee stock ownership plan, deferred compensation, stock
purchase, performance share, bonus or other incentive plan, severance plan,
health or welfare plan or other similar plan, agreement, arrangement or
understanding, whether or not reduced to writing, whether or not terminated and
whether or not such plan is or is intended to be qualified under Section 401(a)
of the Internal Revenue Code or any similar provision of applicable foreign
laws, including, without limitation, any employee welfare benefit plan or
employee pension benefit plan within the meaning of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") and any similar plans under
applicable foreign laws ("COMPANY PLAN"), maintained or sponsored, or with
respect to which there may be any liability (contingent or otherwise), by the
Company or any of its current or former Plan Affiliates (as hereinafter
defined). Each Company Plan is in full force and effect and is and has been
administered in all material respects in accordance with its terms and is and
has been, and, to the Company's Knowledge, each plan administrator and fiduciary
of a Company Plan are and have been, in compliance in all material respects with
all applicable requirements of ERISA (including the funding, reporting and
disclosure and prohibited transaction provisions thereof) and other applicable
laws, regulations and rulings. Each Company Plan intended to qualify under
Section 401(a) of the Internal Revenue Code of 1986, as amended (the "CODE") and
has received a determination letter from the IRS to the effect that such Company
Plan is qualified under Section 401(a) of the Code as to form, and no event has
occurred, and no condition exists, which has resulted could reasonably be
expected to result in the revocation of such determination. No Company Plan is a
"multiemployer plan" (within the
23
meaning of Section 3(37) of ERISA) or a "defined benefit plan" or is subject to
the provisions of Title IV of ERISA. The Company or one of its Subsidiaries has
made, accrued or provided for all contributions required under each Company
Plan. No Company Plan provides for post-retirement "welfare-type" benefits
except as may be required under COBRA. For purposes of the foregoing, the term
"PLAN AFFILIATE" means any other person or entity with whom the Company or any
of its Subsidiaries or their respective predecessors and successors constitute
or have constituted all or part of a controlled group, or which would be treated
or have been treated with the Company or any of its Subsidiaries or their
respective predecessors and successors as under common control or whose
employees would be treated or have been treated as employed by the Company or
any of its Subsidiaries or their respective predecessors and successors, under
Section 414 of the Code or Section 4001(b) of ERISA and any regulations,
administrative rulings and case law interpreting the foregoing. For purposes of
the foregoing representation, information about Company Plans of Plan Affiliates
shall be limited to Company Plans for which the Company or any of its
Subsidiaries may have any potential liability, including contingent liability,
arising under law, pursuant to any indemnification agreement or otherwise.
SECTION 4.18 Environmental.
(a) Except as disclosed in SECTION 4.18.1 of the Schedule, the Company
and its Subsidiaries have complied, and the Company and its Subsidiaries and all
properties owned or leased by the Company and its Subsidiaries, either currently
or in the past (collectively, "REAL ESTATE") are in compliance with all
applicable environmental and health and safety laws and all federal, foreign,
state and local laws, ordinances, orders, rules, and regulations relating to the
operation and occupancy of the Company's and its Subsidiaries business and the
Real Estate.
(b) Except as disclosed in SECTION 4.18.2 of the Schedule, none of the
Company or any of its Subsidiaries has any liability, responsibility or
obligation, whether fixed, unliquidated, absolute, contingent or otherwise,
under any federal, foreign, state or local environmental laws or regulations,
including any liability, responsibility, or obligation for fines or penalties,
or for investigation, expense, removal, or response action to effect compliance
with or discharge any duty, obligation, or claim under any such laws or
regulations, and, to the Company's Knowledge, there is no reason to believe that
any such claims, actions, suits, proceedings, or investigations under such laws
or regulations exist or may be brought or threatened.
(c) Except as disclosed in SECTION 4.18.3 of the Schedule, there never
has been any and there is no past or continuing release or threat of release of
any hazardous or toxic substance, including, but not limited to, a "hazardous
substance" as defined in 42 U.S.C. ss. 9601(14) and oil, gasoline and other
petroleum-based substances (each, a "HAZARDOUS SUBSTANCE"), into the environment
at, on or from the Real Estate.
(d) Except as disclosed in SECTION 4.18.4 of the Schedule, there have
been no Hazardous Substances used or generated by the Company or any of its
Subsidiaries that have been disposed of or come to rest at any site that has
been included in any published federal, state or local "Superfund" site list or
any other list of hazardous or toxic waste sites.
24
(e) Except as disclosed in SECTION 4.18.5 of the Schedule, there never
have been any and there are no underground or above-ground storage tanks located
on, no polychlorinated biphenyls ("PCBS") or PCB-containing equipment used or
stored on, and no hazardous waste, as defined by the RCRA or comparable state or
local laws, treated, stored, or disposed on, the Real Estate or other real
property previously owned, leased or used by the Company or any of its
Subsidiaries.
(f) Except as disclosed in SECTION 4.18.6 of the Schedule, there is no
Hazardous Substance or other condition or use of the Real Estate or their
vicinities, whether natural or man-made, which poses a present or potential
threat of damage to the health of persons, to property, to natural resources, or
to the environment.
SECTION 4.19 Schedule 14D-9. The Schedule 14D-9 at the time filed with the
SEC will not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading. The Schedule 14D-9 will, when filed by the Company with
the SEC, comply as to form in all material respects with the applicable
provisions of the Exchange Act and the SEC rules and regulations promulgated
thereunder. Notwithstanding the foregoing, the Company makes no representation
or warranty with respect to the statements made in any of the foregoing
documents based on written information supplied by or on behalf of Purchaser or
any of its affiliates specifically for inclusion therein.
SECTION 4.20 Opinions of Financial Advisors. The Financial Advisor has
delivered its written opinion, dated the date of this Agreement, to the Board to
the effect that, as of such date, the consideration to be received in the Offer
and the Merger by the holders of Shares (other than Purchaser and its
affiliates) is fair from a financial point of view to such holders and such
opinion has not been withdrawn or modified in any material respect prior to
consummation of the Offer, or prior to the Effective Time, a copy of which
opinion has been delivered to Purchaser.
25
SECTION 4.21 Certain Business Practices. Neither the Company nor any of its
Subsidiaries nor any of their respective directors, officers, agents,
representatives or employees (in their capacity as directors, officers, agents,
representatives or employees) has: (a) used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses relating to
political activity; (b) directly or indirectly, paid or delivered any fee,
commission or other sum of money or item of property, however characterized, to
any finder, agent, or other party acting on behalf of or under the auspices of a
governmental official or party acting on behalf of or under the auspices of a
governmental official or Governmental Entity, in the United States or any other
country, which is in any manner related to the business or operations of the
Company or any of its Subsidiaries, that was illegal under any federal, state or
local laws of the United States or any other country having jurisdiction; or (c)
made any payment to any customer or supplier of the Company or any of its
Subsidiaries or any officer, director, partner, employee or agent of any such
customer or supplier for the unlawful sharing of fees or to any such customer or
supplier or any such officer, director, partner, employee or agent for the
unlawful rebating of charges, or engaged in any other unlawful reciprocal
practice, or made any other unlawful payment or given any other unlawful
consideration to any such customer or supplier or any such officer, director,
partner, employee or agent, in respect of the business of the Company and its
Subsidiaries.
SECTION 4.22 Compliance with Applicable Law. Except as set forth in SECTION
4.22 of the Schedule, the Company and its Subsidiaries hold all material
permits, licenses, variances, exemptions, orders and approvals of all
Governmental Entities necessary for the lawful conduct of their respective
businesses (the "COMPANY PERMITS"), except where the failure to have any such
Company Permit has not had and could not reasonably be expected to have a
Company Material Adverse Effect. Except as set forth in SECTION 4.22 of the
Schedule, the Company and its Subsidiaries are in compliance in all material
respects with the terms of the Company Permits. Except as set forth in SECTION
4.22 of the Schedule, the businesses of the Company and its Subsidiaries are not
being, and have not been, conducted in violation of any material law, ordinance
or regulation of any Governmental Entity. Except as set forth in SECTION 4.22 of
the Schedule, no investigation or review by any Governmental Entity with respect
to the Company or any of its Subsidiaries is pending or, to the Company's
Knowledge, threatened nor, to the Company's Knowledge, has any Governmental
Entity indicated an intention to conduct the same.
SECTION 4.23 Affiliate Agreements. Except as set forth on SECTION 4.23 of
the Schedule, there are no material written or oral contracts, agreements,
arrangements or understandings between the Company or its Subsidiaries and/or
their affiliates in connection with its business, including, without limitation,
any such contracts, agreements, arrangements or understandings relating to the
provision of any products or services by the Company or its Subsidiaries to any
such affiliate, or by any such affiliate to the Company or its Subsidiaries.
26
SECTION 4.24 Labor Relations. Except as set forth on SECTION 4.24 of the
Schedule, there are no controversies or unfair labor practice proceedings
pending or, to the Company's Knowledge, threatened against the Company or its
Subsidiaries by any of their current or former employees or any labor or other
collective bargaining unit representing any current or former employees of the
Company or its Subsidiaries that would likely result in a labor strike or work
stoppage or otherwise have a Company Material Adverse Effect. Except as set
forth on SECTION 4.24 of the Schedule, no organizational effort is presently
being made or, to the Company's Knowledge, threatened by or on behalf of any
labor union with respect to employees of the Company or its Subsidiaries which
(a) with respect to efforts commenced on or prior to the date hereof, if
successful, would have a Company Material Adverse Effect or (b) with respect to
efforts commenced after the date hereof would have a Company Material Adverse
Effect. As of the date of this Agreement, to the Company's Knowledge, except as
set forth on SECTION 4.24 of the Schedule, no officer of the Company or any of
its Subsidiaries has any announced plan to terminate employment with the Company
or any of its Subsidiaries.
SECTION 4.25 [INTENTIONALLY OMITTED]
SECTION 4.26 Minute Books. The minute books of the Company and its
Subsidiaries have been made available to Purchaser and contain all minutes of
meetings of directors and stockholders or actions by written consent since the
date of incorporation of the Company and the respective Subsidiaries through the
date of this Agreement, except for minutes of meetings of directors held on
October 27, 1999, November 12, 1999 and November 23, 1999, none of which Recent
Minutes shall reflect, or involve discussions regarding, a Company Material
Adverse Effect (the "RECENT MINUTES").
SECTION 4.27 Complete Copies Of Materials. The Company has delivered or
made available true, accurate and complete copies of each document described or
identified in the Schedule.
SECTION 4.28 Customers and Suppliers. As of the date hereof, no customer
which individually accounted for more than 5% of the gross revenues of the
Company or its Subsidiaries during the 12-month period preceding the date hereof
has indicated to the Company or its Subsidiaries that it will stop, or decrease
the rate of, buying services or products from the Company or its Subsidiaries.
As of the date hereof, no material supplier of the Company or its Subsidiaries
has indicated to the Company or its Subsidiaries that it will stop, or decrease
the rate of, supplying materials, products or services to the Company or its
Subsidiaries. Neither the Company nor any of its Subsidiaries has knowingly
breached any agreement with, or engaged in any fraudulent conduct with respect
to, any supplier of the Company or its Subsidiaries.
27
SECTION 4.29 Year 2000 Compliance. All of the material computer
hardware and software systems of the Company and its Subsidiaries (including,
without limitation, those related to their facilities, equipment manufacturing
processes, quality control activities, accounting and bookkeeping records and
record keeping activities) are expected to be Year 2000 Compliant by December
31, 1999, except for such noncompliance which has not had or could not
reasonably be expected to have a Company Material Adverse Effect. As used in
this Agreement, the phrase "Year 2000 Compliant" shall mean with respect to the
Company's and its Subsidiaries' material hardware and software systems, that
such hardware and software is designed to be used prior to, during, and after
the calendar Year 2000 A.D., and such hardware and software used during each
such time period will accurately receive, provide and process date/time data
from, into and between the twentieth and twenty-first centuries, and will not
malfunction, cease to function, or provide invalid or incorrect results as a
result of date/time data, provided that the Company makes no representations as
to compliance of systems owned or operated by its customers or suppliers.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants as follows:
SECTION 5.1 Organization, Good Standing, etc. Each of Purchaser and
Acquisition Sub is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware and has all requisite corporate
power and authority to own its properties and to carry on its business as now
being conducted thereby.
SECTION 5.2 Authorization of Agreement. The execution and delivery of this
Agreement by Purchaser and Acquisition and the Transactions contemplated hereby
have been duly authorized by the Board of Directors of each of Purchaser and
Acquisition Sub and do not require the consent, approval or authorization of or
filing with any person or public authority other than the filings under and
pursuant to the HSR Act contemplated by SECTION 4.3 and will not violate any
law, statute, regulation, injunction, order or decree of any Governmental Entity
or conflict with or result in a breach of or constitute a default under any of
the terms or provisions of any material mortgage, note, bond or indenture or
obligation to which Purchaser is a party or by which it or any of its properties
may be bound.
SECTION 5.3 Disclosure Documents. Each document required to be filed by the
Purchaser with the SEC in connection with the transactions contemplated by this
Agreement will, when filed, comply as to form in all material respects with the
applicable requirements of the Exchange Act, and none of the information
supplied or to be supplied by the Purchaser for inclusion in (i) the Offer and
(ii) insofar as it relates to the Purchaser, the Schedule 14D-1 or the Schedule
14D-9 will contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
28
SECTION 5.4 Brokers and Finders. Except as disclosed to the Company in
writing, no agent, broker, person or firm acting on behalf of Purchaser or
Acquisition Sub or under its authority has claimed or is or will be entitled to
any commission or broker's or finder's fee from Purchaser or Acquisition Sub in
connection with the transactions contemplated by this Agreement.
SECTION 5.5 Financing. After preliminary discussions with its lenders and
other financing sources, Purchaser believes, in good faith, that Purchaser will
be able to obtain sufficient financing, on terms and conditions satisfactory to
Purchaser, to enable the consummation of the Offer and the Merger.
ARTICLE VI
COVENANTS
SECTION 6.1 Conduct of Business of the Company and its Subsidiaries. (a)
Except as expressly contemplated by this Agreement, during the period from the
date hereof until such time as Purchaser's designees shall constitute a majority
of the Board, the Company shall, and the Company shall cause each of its
Subsidiaries to: (i) conduct its business only in the ordinary course consistent
with past practice in all material respects; (ii) use commercially reasonable
efforts to preserve, maintain, and protect its assets and the business of the
Company and each of its Subsidiaries; (iii) use commercially reasonable efforts
to preserve intact the business organization of the business of the Company and
each of its Subsidiaries, to keep available the services of the employees of its
business, and to maintain existing relationships with licensors, licensees,
suppliers, contractors, distributors, customers, and others having business
relationships with its business; and (iv) comply in all material respects with
all applicable laws, including all applicable federal and state securities laws,
rules and regulations and including, without limitation, the timely filing of
all periodic reports with the SEC required to be filed pursuant to the Exchange
Act.
(b) Without limiting the generality of the foregoing, and except as
otherwise expressly provided in this Agreement, prior to the time persons
designated or elected by Purchaser or any of its affiliates shall constitute a
majority of the Board, the Board will not, without the prior written consent of
Purchaser, permit the Company or any of its Subsidiaries to:
(i) amend or propose to amend its certificate of incorporation or
by-laws;
(ii) authorize for issuance, issue, sell, deliver, or agree or commit
to issue, sell or deliver, dispose of, encumber or pledge any stock of any
class, options, warrants, commitments, subscriptions, rights to purchase,
stock appreciation rights, restricted stock, performance units, stock
equivalents or other securities, except as required by agreements with the
Company's employees or Company Plans, in either case
29
in effect as of the date of this Agreement, or amend any of the terms
of any such securities or agreements outstanding as of the date of this
Agreement;
(iii) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its
capital stock other than as set forth in SECTION 6.1 of the Schedule, or
redeem or otherwise acquire any of its securities or any securities of its
Subsidiaries;
(iv) (A) incur or assume any long-term or short-term Indebtedness or
issue any debt securities except for borrowings under existing lines of
credit in the ordinary course of business and in amounts not material to the
Company and its Subsidiaries taken as a whole; (B) assume, guarantee,
endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person except in
the ordinary course of business consistent with past practice and in amounts
not material to the Company and its Subsidiaries, taken as a whole, and
except for obligations of wholly owned Subsidiaries of the Company to the
Company or to other wholly owned Subsidiaries of the Company; (C) make any
loans, advances or capital contributions to, or investments in, any other
person (other than to wholly owned Subsidiaries of the Company or customary
loans or advances to employees in the ordinary course of business consistent
with past practice and in amounts not material to the maker of such loan or
advance) or make any change in its existing borrowing or lending
arrangements for or on behalf of any such person, whether pursuant to an
employee benefit plan or otherwise; (D) pledge or otherwise encumber shares
of capital stock of the Company or any of its Subsidiaries; or (E) mortgage
or pledge any of its material assets, tangible or intangible, or create or
suffer to exist any material Lien thereupon;
(v) except as set forth on SECTION 6.1(B)(V) of the Schedule with
respect to certain proposed reorganizations of Holdings BF, S.A. and Bolle
Asia, Ltd., which restructuring shall be subject to Purchaser's prior
written consent, adopt a plan of complete or partial liquidation or adopt
resolutions providing for the complete or partial liquidation, dissolution,
consolidation, merger, restructuring or recapitalization of the Company or
any of its Subsidiaries;
(vi) (A) except as may be required by law or as contemplated by this
Agreement, or as required under any agreement or Company Plan as in effect
on the date of this Agreement, enter into, adopt or pay, agree to pay,
grant, issue, accelerate or accrue salary or other payments or benefits
pursuant to, or amend or terminate any bonus, profit sharing, compensation,
severance, termination, pension, retirement, deferred compensation,
employment, severance, welfare, insurance or other employee benefit
agreement, trust, plan, fund or other arrangement for the benefit or welfare
of any director, officer or employee in any manner; or (B) except for normal
increases in the ordinary course of business consistent with past practice
that, in the aggregate, do not result in a material increase in benefits or
compensation expense to the Company or its Subsidiaries, and as required
under existing agreements or in the ordinary course of
30
business consistent with past practice, increase in any manner the
compensation or fringe benefits of any director, officer or employee or pay
any benefit not required by any plan and arrangement as in effect as of the
date hereof (including, without limitation, the granting of stock
appreciation rights or performance units);
(vii) acquire, sell, transfer, lease, encumber or dispose of any assets
outside the ordinary course of business or any assets which in the aggregate
are material to the Company and its Subsidiaries, taken as a whole, or enter
into any commitment or transaction outside the ordinary course of business
consistent with past practice which would be material to the Company and its
Subsidiaries, taken as a whole;
(viii) except as may be required as a result of a change in law or in
GAAP, change any of the accounting principles or practices used by it;
(ix) revalue in any material respect any of its assets, including,
without limitation, writing down the value of inventory or writing-off notes
or accounts receivable other than in the ordinary course of business;
(x) (A) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business organization or
division thereof or any equity interest therein; (B) enter into any contract
or agreement other than in the ordinary course of business consistent with
past practice which would be material to the Company and its Subsidiaries,
taken as a whole; (C) authorize any new capital expenditure or expenditures
which, individually, is in excess of $50,000 or, in the aggregate, are in
excess of $200,000; or (D) enter into or amend any contract, agreement,
commitment or arrangement (including any Material Contract) providing for
the taking of any action that would be prohibited hereunder;
(xi) make any tax election (unless required by law) or settle or
compromise any income tax liability of the Company or any of its
Subsidiaries, except if such action is taken in the ordinary course of
business, and, in any event, the Company shall consult with Purchaser before
filing or causing to be filed any tax return of the Company or its
Subsidiaries or before executing or causing to be executed any agreement or
waiver extending the period for assessment or collection of any taxes of the
Company or its Subsidiaries;
(xii) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction in the ordinary course of
business of liabilities reflected or reserved against in, or contemplated
by, the consolidated financial statements (or the notes thereto) of the
Company and its Subsidiaries or incurred in the ordinary course of business
consistent with past practice;
(xiii) permit any insurance policy naming the Company or any of its
Subsidiaries as a beneficiary or a loss payable payee to be canceled or
terminated without
31
notice to Purchaser except in the ordinary course of business and
consistent with past practice unless the Company or such Subsidiary shall
have obtained a comparable replacement policy;
(xiv) settle or compromise any pending or threatened suit, action or
claim relating to the Transactions;
(xv) amend, modify, or change in any material respect any existing
Material Contract relating to the business of the Company or its
Subsidiaries, other than in the ordinary course of business consistent with
past practice;
(xvi) waive, release, grant, or transfer any rights of material value
relating to the business of the Company or its Subsidiaries, other than in
the ordinary course of business consistent with past practice; or
(xvii) take, or agree in writing or otherwise to take, any of the
actions described in SECTIONS 6.1(B)(I) through 6.1(B)(XVI) or any action
which would make any of the representations or warranties of the Company
contained in this Agreement untrue or incorrect as of the date when made or
would result in any of the Offer Conditions set forth in Annex A not being
satisfied.
(c) Until Purchaser's designees constitute a majority of the Board, the
Company will deliver to Purchaser accurate and complete copies of all documents
filed with the SEC or any exchange on which the Shares are listed for trading.
32
SECTION 6.2 Acquisition Proposals. (a) The Company and each of its
Subsidiaries shall, and shall direct and use its commercially reasonable efforts
to cause its officers, directors, employees, agents and other representatives
to, immediately cease any discussions, negotiations or contacts with any Persons
that may be ongoing with respect to an Acquisition Proposal (as hereinafter
defined). With respect to any Person or Persons with whom the Company or any of
its Subsidiaries has been discussing any Acquisition Proposal prior to the date
hereof, the Company and its Subsidiaries shall promptly following the execution
of this Agreement request each such Person who has heretofore entered into a
confidentiality agreement with the Company or any of its Subsidiaries regarding
an Acquisition Proposal to return to the Company all confidential information
heretofore furnished to such Person or Persons by or on behalf of the Company or
its Subsidiaries. Neither the Company nor any of its Subsidiaries shall,
directly or indirectly, through any officer, director, employee, agent or
otherwise, solicit, initiate or encourage the submission of any proposal or
offer from any Person (as hereinafter defined) relating to any acquisition or
purchase of all or (other than in the ordinary course of business) any portion
of the assets of, or any equity interest in, the Company or any of its
Subsidiaries or any recapitalization, business combination or similar
transaction with the Company or any of its Subsidiaries (any communication with
respect to the foregoing being an "ACQUISITION PROPOSAL") or participate in any
negotiations regarding, or furnish to any other Person any information with
respect to, or otherwise cooperate in any way with, or assist or participate in,
facilitate or encourage any effort or attempt by any other Person to do or seek
any of the foregoing; provided, however, that, at any time prior to the purchase
of Shares by Acquisition Sub pursuant to the Offer, the Company may furnish
information to, and negotiate or otherwise engage in discussions with, any party
who delivers a written Acquisition Proposal which was not solicited or
encouraged after the date of this Agreement if the Board by majority vote
determines in good faith (i) after consultation with and receipt of advice from
its outside legal counsel, that failing to take such action may reasonably be
determined to constitute a breach of the fiduciary duties of the Board under
applicable law, (ii) that commitments (financing and other) of substantially the
same sufficiency and firmness as those then obtained by Purchaser have been
obtained with respect to such Acquisition Proposal that the Board reasonably
expects a transaction pursuant to such Acquisition Proposal could be consummated
and (iv) that such Acquisition Proposal is not subject to any regulatory
approvals that could reasonably be expected to prevent consummation. In
connection with the Acquisition Proposal of a party that satisfies the criteria
set forth in the proviso to the preceding sentence, the Company will enter into
a confidentiality agreement with such party, which confidentiality agreement
shall have terms and conditions that will be no less favorable to the Company
than the terms and provisions relating to confidentiality contained in that
certain Letter of Intent dated November 10, 1999 by and between the Company and
Purchaser.
(b) From and after the execution of this Agreement, the Company shall
promptly give Purchaser written notice of the receipt, directly or indirectly,
of any inquiries, discussions, negotiations, or proposals relating to an
Acquisition Proposal (including the material terms thereof and the identity of
the other party or parties involved) and furnish to Purchaser as soon as
reasonably practicable and in any event no later than 24 hours after such
receipt an accurate description of all material terms (including any changes or
adjustments to such terms as a result of negotiations or otherwise) of any such
written proposal. The Company shall promptly
33
provide to Purchaser any non-public information regarding the Company provided
to any other party, which information was not previously provided to Purchaser.
In addition, the Company shall promptly advise Purchaser, in writing, if the
Board shall make any determination as to any Acquisition Proposal as
contemplated by the proviso to the first sentence of this SECTION 6.2. The
Company agrees that it shall keep Purchaser informed, on a current basis, of the
status of any Acquisition Proposal. Notwithstanding the foregoing, the Company
shall be permitted to take such actions as may be required to comply with Rule
14e-2 of the Exchange Act. It is understood and agreed that any violation of
this SECTION 6.2 by any officer, director, employee, agent or other
representative of the Company, whether or not such Person is purporting to act
on behalf of the Company, shall be deemed a breach of this SECTION 6.2 by the
Company. For purposes of this Agreement, "PERSON" means a natural person,
partnership, corporation, limited liability company, business trust, joint stock
company, trust, unincorporated association, joint venture, Governmental Entity
or other entity or organization.
(c) Except as set forth in this SECTION 6.2, neither the Board nor any
committee thereof shall (i) withdraw or modify, or propose publicly to withdraw
or modify, in a manner adverse to Purchaser, the approval or recommendation by
such Board or such committee of the Offer, the Merger or this Agreement;
provided, however, that the Board may (A) in respect to any takeover or
Acquisition Proposal, suspend such recommendation for a period of up to five (5)
days pending its analysis of such Acquisition Proposal, or (B) at any time prior
to consummation of the Offer, modify or withdraw such recommendation if the
Board determines in good faith, after consultation with and the advice of
outside counsel, that it would be consistent with its fiduciary responsibilities
to so modify or withdraw such recommendation; provided, further that, unless
this Agreement shall have been terminated, any such suspension, modification or
withdrawal shall not prevent Purchaser and Acquisition Sub, in its or their
discretion, from consummating the Offer and shall not affect any of the actions
taken by the Company pursuant to this Agreement, (ii) approve or recommend, or
propose publicly to approve or recommend, any Acquisition Proposal, or (iii)
cause the Company to enter into any letter of intent, agreement in principle,
acquisition or other similar agreement (each, an "Acquisition Agreement")
related to any Acquisition Proposal. Notwithstanding the foregoing, in the event
that prior to the acceptance for payment of Shares pursuant to the Offer, the
Board determines in good faith, after consultation with and the advice of
outside counsel, that it would be consistent with its fiduciary responsibilities
to the Company's shareholders under applicable law, the Board may (subject to
this and the following provisions of this SECTION 6.2) (i) withdraw or modify
its approval or recommendation of the Offer, the Merger and this Agreement, (ii)
approve or recommend a Superior Proposal (as defined below), (iii) cause the
Company to enter into an Acquisition Agreement related to any Superior Proposal
or (iv) terminate this Agreement, but in each case, only at a time that is after
the second Business Day following Purchaser's receipt of written notice (or such
earlier time as is necessary for the Board to comply with its fiduciary duties)
(a "NOTICE OF SUPERIOR PROPOSAL"), which obligation shall be satisfied by
delivery by facsimile transmission and by overnight delivery by Federal Express
or other nationally recognized overnight carrier as well as by delivery of the
notice required by SECTION 6.2(B) advising Purchaser that the Board has received
an Acquisition Proposal that may constitute a Superior Proposal, subject to the
fiduciary duties of the Board, specifying the material terms and conditions of
such Superior Proposal and identifying the Person making such
34
Superior Proposal. For purposes of this Agreement, a "Superior Proposal" means
any Acquisition Proposal determined by the Board in good faith, after
consultation with and advice from outside counsel, to be a bona fide proposal
and made by a third party for consideration consisting of cash, property and/or
securities, for more than a substantial minority (on an as-converted basis or
otherwise) of the combined voting power of the shares of Company Common Stock
then outstanding or all or substantially all of the assets of the Company or its
Subsidiaries and otherwise on terms which the Board determines in its good faith
judgment, after consultation with outside counsel, to be more favorable to the
Company's stockholders than the Offer and the Merger.
(d) During the period from the date of this Agreement until such time
as Purchaser's designees shall constitute a majority of the Board, the Company
shall not terminate, amend, modify or waive any provision of any confidentiality
or standstill agreement to which the Company or any of its Subsidiaries is a
party (other than any involving Purchaser) unless the Board shall have
determined in good faith, in reliance upon advice from its outside counsel, that
failing to release any third party or to amend, modify or waive such provisions
would not be consistent with the Board's fiduciary responsibilities under
applicable law.
SECTION 6.3 Access to Information.
(a) Between the date hereof and the consummation of the Offer and/or
Effective Time, as the case may be, the Company will give Purchaser and its
authorized representatives and Persons providing or committed to provide
Purchaser with financing for the Transactions and their representatives,
reasonable access to all management, plants, offices, warehouses and other
facilities and properties and to all books and records of the Company and its
Subsidiaries, will permit Purchaser to make such inspections (including an
environmental audit and assessment of the Company's facility in France (the
"French Environmental Audit") and any physical inspections or soil or
groundwater investigations) as they may reasonably request and will cause the
Company's officers and those of its Subsidiaries to furnish Purchaser with such
financial and operating data and other information with respect to the business
and properties of the Company and any of its Subsidiaries as Purchaser may from
time to time reasonably request; provided, however, that no investigation
pursuant to this SECTION 6.3 shall affect any representation or warranty of any
party contained in this Agreement or in any agreement, instrument, or document
delivered pursuant hereto or in connection herewith; and provided further that
the Company shall have the right to have a representative present at all times.
(b) Purchaser will hold and will cause its consultants and advisors to
hold in confidence, unless compelled to disclose by judicial or administrative
process or, in the opinion of its or their legal counsel, by other requirements
of law, all documents and information concerning the Company and its
Subsidiaries furnished to Purchaser in connection with the Transactions (except
to the extent that such information can be shown to have been (i) previously
known by Purchaser from sources other than the Company, or its directors,
officers, representatives or affiliates, (ii) in the public domain through no
fault of Purchaser or (iii) later lawfully acquired by Purchaser on a non-
confidential basis from other sources who are not
35
known by Purchaser to be bound by a confidentiality agreement or otherwise
prohibited from transmitting the information to Purchaser by a contractual,
legal or fiduciary obligation) and will not release or disclose such information
to any other Person, except its auditors, attorneys, financial advisors and
other consultants and advisors (including financing sources) in connection with
this Agreement who need to know such information. If the Transactions are not
consummated, such confidence shall be maintained and, if requested by or on
behalf of the Company, Purchaser will, and will use all reasonable efforts to
cause their auditors, attorneys, financial advisors and other consultants,
agents and representatives to, return to the Company or destroy all copies of
written information or copies thereof furnished by the Company to Purchaser or
its agents, representatives or advisors. It is understood that Purchaser shall
be deemed to have satisfied their obligation to hold such information
confidential if they exercise the same care as they take to preserve
confidentiality for their own similar information.
(c) If Purchaser requests, the Company and each of its Subsidiaries
will cooperate, and will cause its accountants to cooperate, in all material
respects with any financing efforts of Purchaser or its affiliates. If Purchaser
requests, the Company (a) shall furnish to Purchaser's independent accountants
such customary management representation letters as Purchaser's accountants may
reasonably require of Purchaser, the Company or their Subsidiaries as a
condition to its execution of any required accountants' consents necessary in
connection with the delivery of any customary "comfort" letters reasonably
requested by financing sources of Purchaser or its affiliates, and (b) shall
furnish to Purchaser all financial statements (audited and unaudited) and other
information in the possession of the Company or its Subsidiaries or their
representatives or agents as Purchaser shall reasonably determine as necessary
or appropriate in connection with such financing. Without limiting the
generality of the foregoing, the Company and each of its Subsidiaries agrees to
cooperate with Purchaser's and Acquisition Sub's efforts to secure any
financing, such cooperation to include providing such information to Purchaser's
and Acquisition Sub's financing sources as Purchaser or Acquisition Sub may
reasonably request and making available to such financing sources senior
officers and such other employees of the Company or its Subsidiaries as
Purchaser and Acquisition Sub may reasonably request to assist in the
preparation of financing documents and otherwise participate in efforts relating
to obtaining such financing as Purchaser and Acquisition Sub may reasonably
request upon reasonable notice and consistent with such officers' and employees'
other business responsibilities to the Company or its Subsidiaries.
36
SECTION 6.4 Additional Agreements; Reasonable Efforts.
(a) Prior to the consummation of the last to occur of any of the
Transactions, upon the terms and subject to the conditions of this Agreement,
each of Purchaser and the Company agrees to use its reasonable 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 under any applicable laws to consummate
and make effective the Transactions as promptly as practicable including, but
not limited to (i) the preparation and filing of all forms, registrations and
notices required to be filed to consummate the Transactions and the taking of
such actions as are necessary to obtain any requisite approvals, consents,
orders, exemptions or waivers by any third party or Governmental Entity, (ii)
the preparation of any financing documents requested by Purchaser, (iii) the
satisfaction of the other parties' conditions to the consummation of the Offer
or the Merger and (iv) the cure of any breaches (whether material or immaterial)
of such party's representations, warranties, covenants or agreements in this
Agreement of which such party receives notice. In addition, no party hereto
shall take any action after the date hereof that would reasonably be expected to
materially delay the obtaining of, or result in not obtaining, any permission,
approval or consent from any Governmental Entity necessary to be obtained prior
to the consummation of the Offer or the Merger.
(b) Prior to the consummation of the Offer or the Merger, each party
shall promptly consult with the other parties hereto with respect to, provide
any necessary information with respect to and provide the other (or its counsel)
copies of, all filings made by such party with any Governmental Entity or any
other information supplied by such party to a Governmental Entity in connection
with this Agreement and the Transactions. Each party hereto shall promptly
inform the other of any communication from any Governmental Entity regarding any
of the Transactions. If any party hereto or affiliate thereof receives a request
for additional information or documentary material from any such Governmental
Entity with respect to the Transactions, then such party will endeavor in good
faith to make, or cause to be made, as soon as reasonably practicable and after
consultation with the other party, an appropriate response in compliance with
such request. To the extent that transfers of Company Permits are required as a
result of execution of this Agreement or consummation of the Transactions, the
Company shall use its best efforts to effect such transfers.
(c) Notwithstanding the foregoing, nothing in this Agreement shall be
deemed to require Purchaser to (i) enter into any agreement with any
Governmental Entity or to consent to any order, decree or judgment requiring
Purchaser to hold separate or divest, or to restrict the dominion or control of
Purchaser or any of its affiliates over, any of the assets, properties of
businesses of Purchaser, its affiliates or the Company, in each case as in
existence on the date hereof, or (ii) defend against any litigation brought by
any Governmental Entity seeking to prevent the consummation of the Transactions.
SECTION 6.5 Consents. Purchaser and the Company each will use all
reasonable efforts to obtain consents of all third parties and Governmental
Entities necessary, proper or advisable for the consummation of the
Transactions.
37
SECTION 6.6 Public Announcements. Purchaser and the Company will consult
with each other before issuing any press releases or otherwise making any public
statements with respect to this Agreement, the Offer and the Merger, and shall
not issue any such press release or make any such public statement without the
prior consent of the other party (which consent shall not be unreasonably
withheld or delayed) except as may be required by law or by obligations pursuant
to any listing agreement with any national securities exchange or as may be
advised by counsel, in writing, to be necessary.
SECTION 6.7 Company Actions Regarding Options, Company Warrants, Convertible
Notes and Xxxxxxxxx Success Fee. (A) PRIOR TO THE CONSUMMATION OF THE OFFER, THE
COMPANY SHALL TAKE ALL ACTIONS REASONABLY NECESSARY (INCLUDING, BUT NOT LIMITED
TO, THE GIVING OF NOTICES) TO EFFECTUATE SECTION 2.8 hereof. Without limiting
the generality of the foregoing, prior to the consummation of the Offer, the
Company shall use reasonable efforts to obtain written agreements, in forms
acceptable to Purchaser and Acquisition Sub, from each of the holders of the
Company Warrants pursuant to which such holders shall agree that the Company
Warrants held thereby shall become the right, following the Merger, upon payment
by such holder of the aggregate exercise price payable on the Company Warrants
held by such holder at the exercise price in effect immediately prior to the
Merger, to receive from Acquisition Sub the consideration which such holder
would have received from Acquisition Sub in connection with the Offer had such
holder exercised its Company Warrants immediately prior to the consummation of
the Offer, and that, upon consummation of the Merger, this right shall be the
sole right of such holders with respect to the Company Warrants held thereby.
(b) Prior to the consummation of the Offer, the Company shall obtain a
written consent and waiver, in a form acceptable to Purchaser and Acquisition
Sub, from Xxxx Xxxxxxxxx ("Xxxxxxxxx") pursuant to which Xxxxxxxxx shall waive
any and all rights or claims that he may have under that certain Employment
Agreement and a Memorandum of Understanding, each dated as of July 17, 1997,
between the Company and Xxxxxxxxx or otherwise to severance or separation pay or
a sale or success bonus in connection with his departure from the Company or the
Transactions completed hereby (the "Xxxxxxxxx Consent and Waiver").
SECTION 6.8 Post-Execution Due Diligence Deliveries. As soon as reasonably
practicable after the date of this Agreement, the Company shall deliver, or
cause to be delivered, to Purchaser and its authorized representatives and
Persons providing or committing to provide Purchaser with financing for the
Transactions and their representatives true, correct and complete photocopies of
the contracts, agreements, tax returns, environmental audits and other materials
identified on Annex B attached hereto (the "POST-EXECUTION DOCUMENTS").
SECTION 6.9 Xxxx-Xxxxx-Xxxxxx. As promptly as practicable, and in any event
within ten (10) Business Days following the execution and delivery of this
Agreement by the parties, to the extent required by the HSR Act, the Company and
Purchaser shall each prepare and file, or shall cause its "ultimate parents" (as
defined in the HSR Act) to prepare and file, any required notification and
report form under the HSR Act, in connection with the transactions contemplated
hereby, the filing fees for which shall be shared equally by the Company and
38
Purchaser; the Company and Purchaser shall cause their ultimate parents to
request early termination of the waiting period thereunder; and the Company and
Purchaser shall cause their ultimate parents to respond with reasonable
diligence to any request for additional information made in response to such
filings. As promptly as practicable, and in any event within ten (10) Business
Days following the execution and delivery of this Agreement by the parties, the
Company and Purchaser shall prepare and file any other application, report, or
other filing required to be submitted to any other Governmental Entity in
connection with the transactions contemplated hereby.
SECTION 6.10 Indemnification.
(a) Purchaser agrees that all rights to indemnification or exculpation
now existing in favor of the directors, officers, employees and agents of the
Company and its Subsidiaries (the "INDEMNIFIED PARTIES") as provided in their
respective charters or by-laws or otherwise in effect as of the date hereof with
respect to matters occurring prior to the Effective Time shall survive such
Effective Time and shall continue in full force and effect for six (6) years
after the Effective Time; provided that such indemnification shall be subject to
any limitations imposed from time to time under applicable law.
(b) Purchaser shall cause the Company or the Surviving Corporation, as
the case may be, to maintain in effect for not less than three (3) years after
the Effective Time, the policies of the directors' and officers' liability and
fiduciary insurance most recently maintained by the Company (provided that the
Surviving Corporation may substitute therefor policies of at least the same
coverage containing terms and conditions which are no less advantageous to the
beneficiaries thereof so long as such substitution does not result in gaps or
lapses in coverage) with respect to matters occurring prior to the consummation
of the Merger to the extent available, provided that in no event shall the
Company or the Surviving Corporation, as the case may be, be required to expend
more than an amount per year equal to 200% of the current annual premiums paid
by the Company (the "PREMIUM AMOUNT") to maintain or procure insurance coverage
pursuant hereto and further provided that if the Surviving Corporation is unable
to obtain the insurance called for by this SECTION 6.10(B), the Surviving
Corporation will obtain as much comparable insurance as is available for the
Premium Amount per year.
SECTION 6.11 Financial Statements. The Company shall prepare in the
ordinary course, consistent with past practice, at the end of each month and
promptly deliver to Purchaser upon completion the balance sheet, income
statement and statement of cash flows prepared in accordance with GAAP of the
Company and its Subsidiaries for each month ended between the date of this
Agreement and the Merger Closing Date, as the case may be. The Company shall
promptly prepare all reasonably requested financial statements required to be
included in Purchaser's financing documents.
SECTION 6.12 Notification of Certain Matters. The Company shall give prompt
notice to Purchaser of any breach by the Company, either individually or in the
aggregate with other breaches, of (i) any representation or warranty of the
Company contained in Article IV of this Agreement which has had or could
reasonably be expected to have a Company Material Adverse
39
Effect, or (ii) any covenant, condition, or agreement to be complied with or
satisfied by the Company hereunder which has had or could reasonably be expected
to have a Company Material Adverse Effect. The Company shall give prompt notice
to Purchaser if there occurs any event which has resulted in or is reasonably
likely to result in a Company Material Adverse Effect or, subject to the
fiduciary duties of the Board, will prevent or result in a third party
materially delaying the consummation of the Offer or the Merger. Purchaser shall
give prompt notice to the Company of any breach by Purchaser or Acquisition Sub,
either individually or in the aggregate with other breaches, of (i) any
representation or warranty of Purchaser or Acquisition Sub contained in Article
V of this Agreement which has had or could reasonably be expected to have a
Company Material Adverse Effector, or (ii) any covenant, condition, or agreement
to be complied with or satisfied by Purchaser hereunder. The delivery of any
notice pursuant to this Section shall not be deemed to (i) modify the
representations or warranties hereunder of the party delivering such notice,
(ii) modify the conditions set forth in Article VII, or (iii) limit or otherwise
affect the remedies available hereunder to the party receiving such notice.
SECTION 6.13 Bank of America. Upon the consummation of the Offer, Purchaser
shall (i) pay in full the Indebtedness owed by the Company to Bank of America,
National Association ("Bank of America") under that certain Credit Agreement,
dated March 11, 1998, between the lenders party thereto and the Company, as
amended, or (ii) have obtained from Bank of America a waiver of the default
thereunder caused by the consummation of the Offer.
SECTION 6.14 Recent Minutes. As soon as reasonably practicable after the
date of this Agreement, the Company shall deliver to Purchaser and Acquisition
Sub the Recent Minutes.
SECTION 6.15 401(K) Plan. If reasonably requested by the Purchaser, the
Company shall terminate its 401(K) Plan effective immediately prior to the
consummation of the Offer.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 7.1 Conditions to the Merger. The obligation of the Company,
Purchaser and Acquisition Sub to effect the Merger is subject to the
satisfaction (or waiver) at or prior to the Merger Closing Date of each of the
following conditions:
(i) Stockholder Approval; Purchase of Shares.
(A) This Agreement and the Merger shall have been approved and
adopted by the affirmative vote of the stockholders of the Company by the
requisite vote or by the Approved Consent; provided, however, that Purchaser
and Acquisition Sub shall vote all of their shares of Company Common Stock
entitled to vote thereon in favor of the Merger; and
(B) Acquisition Sub shall have previously accepted for payment and
paid for Shares pursuant to the Offer.
40
(ii) Legal Proceedings. There shall not be any statute, rule or
regulation that makes consummation of the transactions contemplated
hereby illegal or otherwise prohibited and no Governmental Entity shall
have issued an order, decree, or ruling or taken any other action
permanently restraining, enjoining or otherwise prohibiting the
consummation of the transactions contemplated hereby, and such order,
decree, ruling, or other action shall have become final and
nonappealable.
(iii) HSR Act. All applicable waiting periods (and any extensions
thereof) under the HSR Act shall have expired or otherwise been
terminated without objection from any of the relevant federal
authorities.
ARTICLE VIII
TERMINATION; APPROVALS; WAIVER
SECTION 8.1 Termination. This Agreement may be terminated and the
Transactions may be abandoned at any time prior to the Effective Time
notwithstanding any requisite approval and adoption of this Agreement and the
Transactions by the stockholders of the Company:
(a) by mutual written consent of the Company, Purchaser and Acquisition
Sub; or
(b) either by the Company or Purchaser, if the Offer shall not have
been consummated on or before February 28, 2000 (the "CUT-OFF DATE") unless such
failure to consummate the Offer shall be due to a breach of this Agreement by
the party or parties seeking to terminate this Agreement pursuant to this
SECTION 8.1(B); or
(c) either by the Company or by Purchaser, if there shall be any
statute, rule, or regulation that makes consummation of the transactions
contemplated hereby illegal or otherwise prohibited; a Governmental Entity shall
have issued an order, decree, or ruling or taken any other action permanently
restraining, enjoining, or otherwise prohibiting the consummation of the
transactions contemplated hereby, and such order, decree, ruling, or other
action shall have become final and nonappealable; or the waiting period under
the HSR Act has not expired or been terminated prior to the Cut-Off Date; or
(d) either by Purchaser or by Acquisition Sub if as a result of the
failure of any of the Offer Conditions set forth in Annex A (including, but not
limited to, the Minimum Condition but excluding the Offer Conditions described
in SECTIONS 8.1(E), 8.1(F) and 8.1(G)), the Offer shall have been terminated or
expired in accordance with its terms without Acquisition Sub having accepted for
payment of any Shares pursuant to the Offer consistent with Acquisition Sub's
obligations under SECTION 1.1 of this Agreement; provided, however, that the
right to terminate this Agreement pursuant to this SECTION 8.1(D) shall not be
available to any party whose failure to perform any of its obligations under
this Agreement results in the failure of any such Offer Condition; or
41
(e) either by Purchaser or by Acquisition Sub prior to the purchase of
Shares pursuant to the Offer in the event: (i) Purchaser, in its good faith
belief, determines that the facts or conditions disclosed in the French
Environmental Audit have or could reasonably be expected to have a Company
Material Adverse Effect but only if Purchaser terminates this Agreement as a
result of such determination on or prior to December 15, 1999; (ii) Purchaser
has failed to satisfy the Financing Condition on or prior to the Financing
Condition Termination Date but only if Purchaser terminates this Agreement as a
result thereof within two (2) Business Days after such date; or (iii) the
Company fails to satisfy the Transaction Fee Condition; or
(f) either by Purchaser or by Acquisition Sub prior to the purchase of
Shares pursuant to the Offer in the event of a breach by the Company of: (i)
SECTION 6.2 hereof in any respect in connection with the non-solicitation
agreements and covenants contained in SECTION 6.2 and in any material respect in
connection with any of the other agreements and covenants contained in SECTION
6.2 or (ii) any representation, warranty, covenant or other agreement contained
in this Agreement (other than Section 6.2) which (A) would give rise to the
failure of the Offer Condition set forth in paragraph (d) or (e) of Annex A and
(B) cannot reasonably be or has not been cured within fifteen (15) Business Days
after the giving of written notice thereof to the Company; or
(g) either by Purchaser or by Acquisition Sub if either Purchaser or
Acquisition Sub is entitled to terminate the Offer as a result of the occurrence
of any event set forth in paragraph (c) of Annex A to this Agreement; provided
that the temporary suspension of the recommendation of the Company's Board
referred to herein in accordance with SECTION 6.2 shall not give rise to a right
of termination pursuant to this SECTION 8.1(G); or
(h) by the Company in accordance with SECTION 6.2; provided, however,
that the Company has complied with all provisions thereof, including the notice
provisions therein, and that the Company complies with the requirements of
SECTION 8.3 relating to the payment (including the timing of any payment) of the
Termination Fee; or
(i) by the Company, if (i) there shall have occurred and be continuing
a breach of one or more of the representations or warranties of Purchaser or
Acquisition Sub set forth in this Agreement which (A) either individually or in
the aggregate, have resulted or could reasonably be expected to result in a
Purchaser Material Adverse Effect (as hereinafter defined) and (B) cannot
reasonably be or has not been cured within fifteen (15) Business Days after the
giving of written notice thereof to the Company, or (ii) Purchaser or
Acquisition Sub shall have failed to perform or to comply with one or more
obligations, covenants or agreements set forth in this Agreement to be performed
or complied with by it under the Agreement prior to the commencement of the
Offer which, either individually or in the aggregate, have resulted or could
reasonably be expected to result in a Purchaser Material Adverse Effect. For
purposes of this Agreement, "Purchaser Material Adverse Effect" means any
events, changes in or effects on the business of Purchaser or its Subsidiaries
that individually or in the aggregate materially impairs the ability of the
Purchaser to consummate the Merger or the other Transactions contemplated by
this Agent; or
42
(j) by the Company, prior to the commencement of the Offer if
Acquisition Sub for any reason shall have failed to commence the Offer in
accordance with SECTION 1.1 within five (5) Business Days after the date of this
Agreement.
SECTION 8.2 Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to SECTION 8.1, written notice thereof
shall forthwith be given to the other party or parties specifying the provision
hereof pursuant to which such termination is made, and this Agreement shall
forthwith become void and have no effect, without any liability on the part of
any party hereto or its affiliates, directors, officers or stockholders, other
than the provisions of SECTION 6.2, this SECTION 8.2 and 8.3 hereof. Nothing
contained in this SECTION 8.2 shall relieve any party from liability for any
breach of this Agreement.
SECTION 8.3 Fees and Expenses.
(a) Except as otherwise provided in this Agreement, Purchaser,
Acquisition Sub and Company shall each be responsible for their own fees and
expenses incurred in connection with the transactions contemplated by this
Agreement, whether the Offer or Merger is consummated.
(b) The Company shall pay, or cause to be paid to Purchaser, in
immediately available funds, $4,000,000.00 (less any Purchaser Reimbursement
previously paid to Purchaser under SECTION 8.3(C))(the "TERMINATION FEE") under
the circumstances and at the times set forth as follows:
(i) Upon demand, if Purchaser or Acquisition Sub terminates this
Agreement under SECTION 8.1(G); or
(ii) Upon demand, if the Company terminates this Agreement under
SECTION 8.1(H); or
(iii) If Purchaser terminates this Agreement under (A) SECTION
8.1(D) in connection with, or as a result of, the failure to satisfy or the
Indebtedness Condition or the occurrence of a Company Material Adverse
Effect, or (B) SECTION 8.1(F) and, in connection with a termination under
and pursuant to clause (A) or (B) and prior to such termination or within
six (6) months thereafter, an Acquisition Proposal shall have been made and
accepted by the Company with respect to a Superior Proposal or a Superior
Proposal is consummated, then the Company shall pay to Purchaser the
Termination Fee upon the earlier of the acceptance of such Superior
Proposal, the execution of an agreement (including, without limitation, a
letter of intent) in connection therewith or upon consummation of such
Superior Proposal; provided, however, for purposes of this SECTION 8.3, if a
dispute exists between the Company and Purchaser concerning whether such
transaction constitutes a Superior Proposal, an independent investment
banking firm mutually acceptable to the Company and Purchaser shall
determine whether the proposal is more favorable to the Company's
stockholders than the Offer and the Merger.
43
(c) If Purchaser terminates this Agreement under (A) SECTION 8.1(D) in
connection with, or as a result of, the failure to satisfy the Minimum Condition
(provided that Purchaser has previously announced publicly (at least twenty (20)
days prior to the scheduled or extended expiration of the Offer) that it has
satisfied the Financing Condition), or the Indebtedness Condition or the
occurrence of a Company Material Adverse Effect, or (B) SECTION 8.1(F) then and
in any of such events, the Company shall pay, or cause to be paid, to Purchaser,
on demand, in immediately available funds, an amount equal to the actual
out-of-pocket expenses actually incurred by Purchaser and Acquisition Sub in an
amount not to exceed $1,000,000 (the "EXPENSE REIMBURSEMENT"); provided, if
Purchaser pays a commitment or similar fee with respect to financing the Offer,
the Company shall pay Purchaser, upon demand, an amount equal to such commitment
or similar fee not to exceed an additional $500,000 (the "COMMITMENT FEE
REIMBURSEMENT" and, together with the Expense Reimbursement, the "PURCHASER
REIMBURSEMENT"). Upon receipt of the Purchaser Reimbursement , Purchaser and
Acquisition Sub shall terminate the Agreement. Notwithstanding the foregoing,
Purchaser and Acquisition Sub shall not be required to terminate this Agreement
pursuant to this SECTION 8.3(C) or accept the Purchaser Reimbursement if any of
the foregoing conditions exist as a result of the following with respect to the
Company: (i) an intentional or willful breach of a representation or warranty,
(ii) intentional or willful failure to perform a covenant or (iii) fraud.
(d) If Purchaser terminates this Agreement as a result of its failure
to satisfy the Financing Condition, Purchaser shall pay, or cause to be paid, to
the Company, on demand, in immediately available funds, an amount equal to the
actual-out-of-pocket expenses actually incurred by the Company in an amount not
to exceed $1,000,000 unless: (i) Purchaser has terminated this Agreement under
and in accordance with SECTION 8.1(E)(I), SECTION 8.1(E)(II) or SECTION
8.1(E)(IV); or (ii) there is or has occurred a (A) Company Material Adverse
Effect, (B) a breach by the Company of one or more representations, warranties,
covenants or other agreements contained in this Agreement under which Purchaser
could terminate this Agreement under SECTION 8.1(F) hereof or (C) an
identifiable event or circumstance occurring after the date of this Agreement
that has had or could reasonably be expected to have in the future a Company
Material Adverse Effect, in any which case Purchaser shall not be obligated to
pay for, or cause to be paid, to the Company any such expenses.
SECTION 8.4 Amendments. Subject to applicable law, this Agreement may be
amended by action taken by the Company and Purchaser at any time before or after
approval of the Merger by the stockholders of the Company (if required by
applicable law) but, after any such approval, no amendments shall be made which
require the approval of such stockholders under applicable law. This Agreement
may not be amended except by an instrument in writing signed on behalf of the
parties hereto.
44
SECTION 8.5 Waiver. At any time prior to the Effective Time, any party
hereto may (i) extend the time for the performance of any of the obligations or
other acts of the other party, (ii) waive any inaccuracies in the
representations and warranties of the other party contained herein or in any
document, certificate or writing delivered pursuant hereto, or (iii) waive
compliance by the other party with any of the agreements or conditions contained
herein. Any agreement on the part of any party hereto to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party. The failure of either party hereto to assert any of its
rights hereunder shall not constitute a waiver of such rights.
ARTICLE IX
FINANCING CONDITION
SECTION 9.1 Financing Condition. The Company acknowledges and agrees that
the obligation of Purchaser and Acquisition Sub to consummate the Offer is
subject to, in addition to the other Offer Conditions set forth in Annex A,
Purchaser obtaining, prior to January 15, 2000 (the "FINANCING CONDITION
TERMINATION Date"), sufficient financing, on terms and conditions satisfactory
to Purchaser to enable consummation of the Offer and the Merger (the "FINANCING
CONDITION"). If Purchaser fails to satisfy the Financing Condition on or prior
to the Financing Condition Termination Date but fails to terminate this
Agreement under and pursuant to SECTION 8.1(E) within two (2) Business Days
after the Financing Condition Termination Date, the Financing Condition shall
thereafter cease to be an Offer Condition. Purchaser agrees to use its good
faith, reasonable best efforts to satisfy the Financing Condition.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 Nonsurvival of Representations and Warranties. The
representations and warranties made herein shall not survive beyond the
consummation of the Offer.
SECTION 10.2 Entire Agreement; Assignment. This Agreement (a) constitutes
the entire agreement between the parties hereto with respect to the subject
matter hereof and supersedes all other prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter hereof,
and (b) shall not be assigned by operation of law or otherwise; provided,
however, that Purchaser may assign any or all of its rights and obligations
under this Agreement to any Subsidiary or affiliate of Purchaser, but no such
assignment shall relieve Purchaser of its obligations hereunder if such assignee
does not perform such obligations.
SECTION 10.3 Validity. If any provision of this Agreement, or the
application thereof to any person or circumstance, is held invalid or
unenforceable, the remainder of this Agreement, and the application of such
provision to other persons or circumstances, shall not be affected thereby, and
to such end, the provisions of this Agreement are agreed to be severable.
45
SECTION 10.4 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing (including by facsimile with
written confirmation thereof) and unless otherwise expressly provided herein,
shall be delivered during normal business hours by hand, by Federal Express,
United Parcel Service or other nationally recognized overnight commercial
delivery service, or by facsimile notice, confirmation of receipt received,
addressed as follows, or to such other address as may be hereafter notified by
the respective parties hereto:
(a) If to Purchaser:
Worldwide Sports and Recreation, Inc.
c/o Wind Point Partners
000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx Xxxxxx
Facsimile Number: 000-000-0000
and
Worldwide Sports and Recreation, Inc.
c/o Wind Point Partners
Xxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Salam Chaudhary
Facsimile Number: 000-000-0000
With a copy, which will not constitute notice, to:
Xxxxxx Xxxxxx & Xxxxx
000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxxx, Esq.
Facsimile Number: 312-902-1061
(b) If to the Company:
Bolle Inc.
000 Xxxxxxxx Xxxxx Xxxxxx, Xxxxx X-000
Xxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxx
Facsimile Number: 000-000-0000
46
With a copy, which will not constitute notice, to:
Xxxxxxx Xxxx & Xxxxxxxxx
000 Xxxxxxx Xxx.
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxxx X. Xxxxx, Xx., Esq.
Facsimile Number: 000-000-0000
SECTION 10.5 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to the principles of conflicts of law thereof. The parties hereto hereby agree
and consent to be subject to the exclusive jurisdiction of the United States
District Court for the District of Delaware in any suit, action or proceeding
seeking to enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement or the Transactions. Each party hereto hereby
irrevocably waives, to the fullest extent permitted by law, (i) any objection
that it may now or hereafter have to laying venue of any suit, action or
proceeding brought in such courts, and (ii) any claim that any suit, action or
proceeding brought in such courts has been brought in an inconvenient forum.
SECTION 10.6 Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
SECTION 10.7 Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto and its successors and
permitted assigns, and except as provided in SECTION 10.2, nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any rights, benefits or remedies of any nature whatsoever under or by
reason of this Agreement.
SECTION 10.8 Assignment of Standstill Agreements. The Company hereby
assigns to Purchaser all of the Company's rights, powers and privileges under
each Standstill Agreement (including, without limitation, the right to enforce
the terms thereof).
SECTION 10.9 Equitable Remedies. The parties agree that the assets and
business of the Company and its Subsidiaries as a going concern constitute a
unique property and, accordingly, Purchaser shall be entitled, at its option and
in addition to any other remedies available as herein provided, to the remedy of
specific performance, to effect the transactions described in this Agreement.
SECTION 10.10 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
47
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be duly executed on its behalf as of the day and year first above written.
BOLLE INC.
By: /s/ Ian X. X. Xxxxxx
----------------------------------
Name: Ian X. X. Xxxxxx
Title: Vice Chairman and Secretary
WORLDWIDE SPORTS AND RECREATION, INC.
By: /s/ Xxxxxxx Xxxxxx
----------------------------------
Name: Xxxxxxx Xxxxxx
Title: Chairman
SHADE ACQUISITION, INC.
By: /s/ Xxxxxxx Xxxxxx
----------------------------------
Name: Xxxxxxx Xxxxxx
Title: President
48
ANNEX A
OFFER CONDITIONS
Notwithstanding any other term of the Offer, but subject, in all cases to
Purchaser's and Acquisition Sub's obligations set forth under the Agreement,
including, without limitation, under Section 1.1, Acquisition Sub shall not be
required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the 1934 Act (relating to
Acquisition Sub's obligation to promptly pay for or return tendered Shares after
the termination or withdrawal of the Offer), to pay for any Shares tendered
pursuant to the Offer unless (i) there shall have been validly tendered and not
withdrawn prior to the expiration of the Offer such number of Shares that would
when combined with any Shares held by the Purchaser, Acquisition Sub or any of
their affiliates, would constitute ninety percent (90%) of the aggregate
outstanding Shares (including any Shares outstanding as of the consummation of
the Offer that have been issued upon the exercise of options to purchase, and
the conversion or exchange of all securities convertible or exchangeable into,
Shares) (the "Minimum Condition"), (ii) any waiting period under the HSR Act
applicable to the Offer shall have expired or been terminated prior to the
expiration of the Offer, (iii) the Financing Condition shall have been
satisfied, (iv) the Company shall have delivered to Purchaser a fully-executed
original of the Xxxxxxxxx Consent and Waiver, and (v) the Company shall have
delivered, or caused to be delivered, to Purchaser a pay-off letter, in form
acceptable to Purchaser, from Bank of America with respect to the Company Credit
Facility. Furthermore, notwithstanding any other term of the Offer, but subject,
in all cases, to Purchaser's and Acquisition Sub's obligations set forth in the
Agreement, including, without limitation, under Section 1.1, Acquisition Sub
shall not be required to accept for payment or, to pay for any Shares not
theretofore accepted for payment or paid for, and may terminate the Offer at any
time if, at any time on or after the date of the Agreement and before the
acceptance of such Shares for payment or the payment therefor, any of the
following conditions exists (other than as a result of any action or inaction of
Purchaser or any of its Subsidiaries that constitutes a breach of this
Agreement):
(a) there shall be instituted or pending by any governmental agency or
similar authority in any United States federal or state court or administrative
agency any suit, action, Proceeding, application or counterclaim which would
reasonably be expected to (i) restrain or prohibit the acquisition by Purchaser
or Acquisition Sub of the Shares pursuant to the Offer, the consummation of the
Offer or the Merger, or require the Company, Purchaser or Acquisition Sub to pay
any damages that are material in relation to the Company and its Subsidiaries,
or Purchaser and its Subsidiaries, taken as a whole, (ii) prohibit or limit in
any material respect the ownership or operation of any business or assets of the
Company or its Subsidiaries or Purchaser or its Subsidiaries, as they are
presently being operated, or to compel the Company or Purchaser to dispose of or
hold separate any material business or assets of the Company and its
Subsidiaries or Purchaser and its Subsidiaries, as a result of the Offer, or the
Merger, (iii) impose material limitations on the ability of Purchaser or
Acquisition Sub to acquire or hold, to exercise full rights of ownership of, any
Shares to be accepted for payment pursuant to the Offer, including, without
limitation, the right to vote such Shares on all matters properly presented to
the
49
shareholders of the Company, (iv) prohibit Purchaser or any of its
Subsidiaries from effectively controlling any material business or operations of
the Company or its Subsidiaries, or (v) which otherwise is reasonably likely to
have a Company Material Adverse Effect on the Business, properties, assets,
financial condition or results of operations of the Company and its Subsidiaries
taken as a whole;
(b) there shall be enacted, entered, enforced, promulgated or deemed
applicable to the Offer or the Merger by any United States federal or state
governmental agency, court or similar authority, any statute, rule, regulation,
judgment, order of injunction, other than the application to the Offer or the
Merger of applicable waiting periods under the HSR Act, that would reasonably be
expected to result in any of the consequences referred to in clauses (i) through
(v) of paragraph (a) above (other than any state law, statute, rule or
regulation whose applicability can be avoided by not extending the Offer to
residents of such state provided that in the aggregate not more than 5% of the
outstanding Shares as of the consummation of the Offer shall be owned of record
by residents of all such states);
(c) (i) the Board or any committee thereof shall have and be continuing
to have suspended (in excess of three days), withdrawn or modified in a manner
adverse to Purchaser or Acquisition Sub its approval or recommendation of the
Offer, the Merger or this Agreement, or approved or recommended any Acquisition
Proposal, or shall have resolved to take any of the foregoing actions or (ii)
the Company enters into an agreement regarding an Acquisition Proposal;
(d) there shall have occurred and be continuing a breach of one or more
representations or warranties of the Company set forth in the Agreement which
for purposes of this paragraph (d) shall be read without giving any effect to
any Company Material Adverse Effect or other materiality qualifiers contained in
any such representation and warranty and which, either individually or in the
aggregate, have resulted or could reasonably be expected to result in a Company
Material Adverse Effect, and the Company shall have executed and delivered to
Purchaser and Acquisition Sub a certificate, dated the date of consummation of
the Offer, executed by the Company's Secretary that no such breach has occurred;
(e) the Company shall have and be continuing to have failed to perform
or to comply with: Section 6.2 hereof in any respect in connection with the
non-solicitation agreements and covenants contained in SECTION 6.2 and in any
material respect in connection with any of the other agreements and covenants
contained in SECTION 6.2; or one or more obligations, covenants or agreements
set forth in this Agreement to be performed or complied with by it under the
Agreement prior to the consummation of the Offer which, either individually or
in the aggregate, have resulted in or could reasonably be expected to result in
a Company Material Adverse Effect, and the Company shall have executed and
delivered to Purchaser and Acquisition Sub a certificate, dated the date of
consummation of the Offer, executed by the Company's Secretary that no such
breach has occurred;
(f) there shall have occurred and be continuing (i) any general
suspension of trading in, or limitation on prices for, securities on a national
securities exchange in the United
50
States (excluding any coordinated trading halt triggered solely as a result of a
specified increase or decrease in a market index or similar "circuit breaker"
process), (ii) a declaration of a banking moratorium or any general suspension
of payments in respect of or operations by banks in the United States, whether
as a result of their failure to be Year 2000 Compliant or otherwise, (iii) any
material limitation (whether or not mandatory) by any Governmental Entity on, or
other similar event that materially adversely affects, the extension of credit
in the United States by banks or other lending institutions, (iv) a commencement
of a war or armed hostilities or other national or international calamity
directly or indirectly involving the United States which materially adversely
affects the extension of credit in the United States by banks or other lending
institutions, or (v) from the date of this Agreement through the date of
termination or expiration, a decline of at least 25% in either the Dow Xxxxx
Industrial Average or the Standard & Poor's 500 Index;
(g) there shall have occurred and be continuing a Company Material
Adverse Effect with respect to the Company;
(h) the aggregate outstanding Indebtedness of the Company and its
Subsidiaries and the aggregate Liquidation Preference payable upon the Company
Series A Stock and the Company Series B Stock under SECTION 6.7 shall exceed $48
million (the "Indebtedness Condition"); or
(i) the aggregate Transaction Fees (as hereinafter defined) shall
exceed $3,300,000. For purposes of this Agreement, "TRANSACTION FEES" shall mean
all fees and expenses paid or incurred by the Company or any of its Subsidiaries
as a result of or in connection with the Offer, the Merger and the Transactions
contemplated by this Agreement (including legal, accounting and investment
banking fees and expenses as well as any and all payments made or to be made
pursuant to any change in control, severance or other agreements to which the
Company or any of its Subsidiaries is a party and excluding amounts payable to
Bank of America or with respect to the Options, Company Series A Stock, Company
Series B Stock, Zero Coupon Notes and the Management Services Agreement, dated
March 11, 1998, between the Company and Xxxxxx Holdings, Inc., as amended and as
in effect on the date hereof);
which, in the judgment of Purchaser or Acquisition Sub with respect to each and
every matter referred to above and regardless of the circumstances (including
any action or inaction by Acquisition Sub or any of its Affiliates not
inconsistent with the terms hereof) giving rise to any such condition, makes it
inadvisable to proceed with the Offer or with such acceptance for payment of or
payment for Shares.
If the Agreement is terminated by Purchaser or Acquisition Sub or by the
Company in accordance with its terms, Acquisition Sub shall, and Purchaser shall
cause Acquisition Sub to, terminate promptly the Offer.
The foregoing conditions are for the benefit of Purchaser and Acquisition
Sub and may, subject to the terms and conditions of the Agreement, be waived by
Purchaser and Acquisition
51
Sub in whole or in part at any time and from time to time in their sole
discretion; provided, however, that the Minimum Condition must be satisfied
prior to acceptance of any Shares for purchase pursuant to the Offer. The
failure by Purchaser or Acquisition Sub at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right, the waiver of
any such right with respect to particular facts and circumstances shall not be
deemed a waiver with respect to any other facts and circumstances and each such
right shall be deemed an ongoing right that may be asserted at any time and from
time to time. Notwithstanding the fact that Acquisition Sub reserves the right
to assert the occurrence or non-occurrence of an Offer Condition following
acceptance for payment but prior to payment in order to delay or cancel its
obligation to pay for properly tendered Shares, Acquisition Sub shall either
promptly pay for such Shares or promptly return such Shares.
Each term which is defined in the Agreement has the same meaning wherever it
is used in this Annex A as the meaning given in the Agreement.
52
ANNEX B
Section 1. Tax Issues.
A. Federal and state tax income returns for Xxxxxx Eyecare Corporation and its
Subsidiaries for tax year 1996 relating to the period prior to the Spin-off of
BEC Group, Inc.
B. Federal and state income tax returns for BEC Group, Inc. and its Subsidiaries
for the following tax years: (1) for the post spin-off portion of tax year 1996,
tax year 1997 and the pre-spin-off portion of tax year 1998.
C. Federal and state income tax returns for Bolle Inc. and its Subsidiaries for
the post spin-off portion of tax year 1998.
Section 2. Environmental Issues.
A. All environmental studies and related documentation (including EPA
"no-action" letters) regarding the real property with respect to which BEC
Group, Inc. and Bolle Inc. has agreed to indemnify others under Indemnification
Agreements, dated February 11, 1996 and March 11, 1998 (the "Indemnification
Agreements").
Section 3. ERISA Issues.
A. Form 5500's for all Company Plans (which include those of ERISA Affiliates)
for tax years 1995 - present.
Section 4. Contract Indemnity Issues.
A. All material contracts and agreements that relate to or are referred to or
disclosed in the Indemnification Agreements, the Agreement and Plan of Merger,
dated July 11, 1996, and the Agreement and Plan of Merger dated, as March 11,
1998.
53
EXHIBIT A
---------
Xxxxxx X. Xxxxxxxx
Xxx X. X. Xxxxxx
