EXHIBIT 4
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
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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
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.
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(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
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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.
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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 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.
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(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
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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
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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 subsequent to such date,
together with copies of all lists indicating current stockholders, security
4
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
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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.
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
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A attached
-
5
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
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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
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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 ▇▇▇▇▇▇ ▇▇▇▇▇▇ &
▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, 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").
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.
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Section 2.4 Certificate of Incorporation; Certificate of Designation and
------------------------------------------------------------
By-Laws.
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(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
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Time (which shall include ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇) 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
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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
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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.
Section 2.8 Conversion of Shares. As of the Effective Time, by virtue of
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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.
7
(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.
(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.
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(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:
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(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
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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 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.
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ARTICLE III
DISSENTING SHARES; EXCHANGE OF SHARES
Section 3.1 Dissenting Shares.
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(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.
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 ▇▇▇▇▇'▇ 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
10
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.
(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.
11
(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
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
12
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.
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
13
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/▇▇▇▇▇▇ ▇▇▇▇▇, 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.
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 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ 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.
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
14
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 ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇, Ian ▇.▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇, or ▇▇▇ D'Arcy, and (ii) the actual
knowledge, after reasonable inquiry, of ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ as of the date of this
Agreement but not as of dates after the date of this Agreement.
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 "▇▇▇▇▇"
(the "Non-▇▇▇▇▇ 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-
▇▇▇▇▇ 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 "▇▇▇▇▇", 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 "▇▇▇▇▇", 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
15
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 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.
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
16
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 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
17
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.
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
18
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.
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 ▇▇▇▇) 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
19
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.
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
20
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 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
21
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. (S) 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.
(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.
22
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.
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
23
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.
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
24
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.
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.
25
ARTICLE VI
COVENANTS
Section 6.1 Conduct of Business of the Company and its Subsidiaries. (1)
-------------------------------------------------------
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 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
26
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 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;
27
(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 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
28
(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.
Section 6.2 Acquisition Proposals. (1) 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
29
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 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
30
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
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.
31
(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 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.
32
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.
33
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 ▇▇▇▇▇▇▇▇▇ 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 ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇▇") pursuant to which ▇▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇▇ 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 "▇▇▇▇▇▇▇▇▇ 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 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇. 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
Purchaser; the Company and Purchaser shall cause their ultimate parents to
request early termination of the
34
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 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
35
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.
36
(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
37
(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
38
(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.
39
(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.
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
40
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.
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:
41
(a) If to Purchaser:
Worldwide Sports and Recreation, Inc.
c/o Wind Point Partners
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile Number: ▇▇▇-▇▇▇-▇▇▇▇
and
Worldwide Sports and Recreation, Inc.
c/o Wind Point Partners
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Salam Chaudhary
Facsimile Number: ▇▇▇-▇▇▇-▇▇▇▇
With a copy, which will not constitute notice, to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
Facsimile Number: 312-902-1061
(b) If to the Company:
Bolle Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇-▇▇▇
▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile Number: 914-967-9405
With a copy, which will not constitute notice, to:
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., Esq.
Facsimile Number: ▇▇▇-▇▇▇-▇▇▇▇
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
42
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.
43
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 ▇. ▇. ▇▇▇▇▇▇
-----------------------------------
Name: Ian ▇. ▇. ▇▇▇▇▇▇
----------------------------
Title: Vice Chairman and Secretary
----------------------------
WORLDWIDE SPORTS AND RECREATION, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
Title: Chairman
-----------------------------
SHADE ACQUISITION, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------
Title: President
------------------------------
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 ▇▇▇▇▇▇▇▇▇ 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 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 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)
2
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 ▇▇▇▇▇
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 ▇▇▇▇▇▇ 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 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
3
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.
4
ANNEX B
Section 1. Tax Issues.
----------
A. Federal and state tax income returns for ▇▇▇▇▇▇ 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.
EXHIBIT A
---------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇ ▇. ▇. ▇▇▇▇▇▇
2