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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 14D-9
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Solicitation/Recommendation Statement
Pursuant to Section 14(d)(4) of the
Securities Exchange Act of 1934
BOLLE INC.
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(Name of Subject Company)
BOLLE INC.
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(Name of Person(s) Filing Statement)
Common Stock, Par Value $0.01 Per Share
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(Title of Class of Securities)
097937 10 6
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(CUSIP Number of Class of Securities)
Martin E. Franklin
Chairman of the Board
Bolle Inc.
555 Theodore Fremd Avenue, Suite B 302
Rye, New York 10580
(914) 967-9475
(Name, Address and Telephone Number of Person Authorized to
Receive Notice and Communications on Behalf of the Person(s) Filing Statement)
Copies to:
William J. Grant, Jr., Esq.
Willkie Farr & Gallagher
787 Seventh Avenue
New York, New York 10019
(212) 728-8000
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Item 1. Security and Subject Company.
The name of the subject company is Bolle Inc., a Delaware corporation (the
"Company"), and the address of the principal executive offices of the Company
is 555 Theodore Fremd Avenue, Suite B302, Rye, New York 10580. The title of the
class of equity securities to which this Statement relates is the common stock,
par value $0.01 per share (the "Common Stock"), of the Company.
Item 2. Tender Offer of Acquisition Sub.
This Statement relates to the tender offer disclosed in a Tender Offer
Statement on Schedule 14D-1 dated December 2, 1999 (the "Schedule 14D-1") of
Worldwide Sports and Recreation, Inc., a Delaware corporation ("Purchaser"),
and its wholly owned subsidiary, Shade Acquisition, Inc., a Delaware
corporation ("Acquisition Sub"), to purchase all of the outstanding shares of
Common Stock (the "Shares") at a price of $5.25 per Share (the "Per Share
Amount"), net to the Seller in cash upon the terms and subject to the
conditions set forth in the Offer to Purchase dated December 2, 1999 (the
"Offer to Purchase") and the related Letter of Transmittal and any supplement
thereto (which together constitute the "Offer"). The Offer is being made
pursuant to an Agreement and Plan of Merger dated as of November 24, 1999 (the
"Merger Agreement") among the Company, Purchaser and Acquisition Sub.
According to the Schedule 14D-1, the address of the principal executive
offices of Purchaser is 9200 CODY, Overland Park, Kansas 66214 and the address
of the principal executive offices of Acquisition Sub is c/o Wind Point
Partners, 675 North Michigan Avenue, Suite 3300 Chicago, Illinois 60611.
Item 3. Identity and Background.
(a) The name and business address of the Company, which is the person
filing this Statement, are set forth in Item 1 above.
(b)(i) Certain contracts, agreements, arrangements or understandings
between the Company or its affiliates and certain of its directors and
executive officers are, except as noted below, described in the section
entitled "Certain Relationships and Related Transactions" in the Company's
Annual Report on Form 10-K (the "1998 Form 10-K") for the fiscal year ended
December 31, 1998 and in the section entitled "Certain Relationships and
Related Transactions" in the Company's Proxy Statement for its Annual Meeting
of Stockholders (the "Proxy Statement") filed with the Commission on May 26,
1999. A copy of the relevant sections of the 1998 Form 10-K and the Proxy
Statement has been filed with the Securities and Exchange Commission (the
"Commission") as Exhibit 1 to this Statement and is incorporated herein by
reference. In addition, the Company, in connection with the Merger Agreement,
entered into a letter agreement with Marlin Holdings, Inc. ("Marlin") dated
November 24, 1999, attached hereto as Exhibit 2 and incorporated herein by
reference (the "Management Services Amendment"). Pursuant to the Management
Services Amendment, which amends the Management Services Agreement between the
Company and Marlin, Marlin agreed to subordinate any amounts due under the
Management Services Agreement to the Company's Aggregate Funded Debt (as
defined in the Management Services Amendment). Furthermore, Martin E. Franklin
("Mr. Franklin") and Ian Ashken ("Mr. Ashken") signed a Director Letter
Agreement dated November 24, 1999 with Bolle Inc. and Shade Acquisition,
Inc.(the "Director Letter Agreement"), whereby, if requested by the Company,
either Mr. Franklin or Mr. Ashken will continue to perform as Directors of the
Company for a specified period of time. The Director Letter Agreement is
attached hereto as Exhibit 3 and incorporated herein by reference. Except as
described herein (including in Schedule II hereto) or incorporated by reference
herein, to the knowledge of the Company, as of the date hereof there exists no
material contract, agreement, arrangement or understanding and no actual or
potential conflict of interest between the Company or its affiliates and (i)
the Company's executive officers, directors or affiliates or (ii) Acquisition
Sub or Acquisition Sub's executive officers, directors or affiliates.
(ii) The Merger Agreement. The summary of the Merger Agreement contained
in the Offer to Purchase, which has been filed with the Commission as an
exhibit to the Schedule 14D-1, a copy of which is enclosed with this Schedule
14D-9, is incorporated herein by reference. Such summary should be read in its
entirety for a more complete description of the terms and provisions of the
Merger Agreement. A copy of the Merger Agreement has been filed as Exhibit 4
hereto and is incorporated herein by reference.
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Item 4. The Solicitation or Recommendation.
(a) RECOMMENDATION OF THE BOARD OF DIRECTORS
At a meeting held on November 24, 1999, the Board of Directors (the "Board")
approved the Offer and adopted the Merger Agreement and determined that the
terms of the Offer and the Merger are fair to, and in the best interests of,
the Company and its stockholders, and recommended that the Company's Common
Stockholders accept the Offer and tender their shares pursuant to the Offer.
A letter to the Company's stockholders communicating the Board's
recommendation and the press releases announcing the Merger Agreement and
related transactions are filed herewith as Exhibits 5, 6 and 7, respectively,
and are incorporated herein by reference.
(b)(i) BACKGROUND OF THE OFFER; CONTACTS WITH PURCHASER
During the summer of 1999, the Board of Directors of the Company had a
number of meetings to discuss strategies to enhance stockholder value. As part
of its strategy to enhance stockholder value, the Board from time to time
discussed the short term and long term prospects of the vertical integration of
its business and the Company's short and long term projected financial outlook.
As a result of these discussions, the Board of Directors authorized Martin E.
Franklin, Chairman of the Board of Directors, to pursue strategic alternatives,
including a possible sale of the Company.
In August, 1999, the Company retained Banc of America Securities LLC ("Banc
of America") to act as its financial advisor and to assist the Company in its
review of strategic alternatives. During September and October, 1999, Banc of
America, on behalf of the Company contacted a number of parties, including
Purchaser, and informed such parties that the Board of Directors of the Company
was considering various options available to the Company including a possible
sale of the Company. At a meeting of the Board on October 27, 1999, it was
reported by Banc of America that nine of these parties, including Purchaser,
had executed confidentiality agreements and received a Confidential Descriptive
Memorandum regarding the Company. The Confidentiality Agreement between the
Company and the Purchaser is attached hereto as Exhibit 9 and incorporated
herein by reference.
During October, 1999, various telephone conversations took place between
representatives of Wind Point Partners and the Company. On October 28, 1999,
Mr. Franklin participated in a Bolle management presentation to Joseph Messner,
President and Chief Executive Officer of Bushnell, Inc., a wholly owned
subsidiary of Purchaser, and Richard R. Kracum, the Chairman of Purchaser in
Denver.
On November 3, 1999, Mr. Kracum contacted Mr. Franklin by telephone and made
an offer to purchase the Company. Purchaser offered an all cash purchase price
of $5.25 per share, subject to Purchaser completing due diligence, obtaining
financing, and other customary closing conditions.
On November 5, 1999, the Company received a draft Letter of Intent from
Purchaser. On November 10, 1999, the Company and Purchaser entered into a non-
binding letter of intent regarding a possible business combination. At this
time the Purchaser continued its due diligence review of the Company's records
and material contracts. The parties also began to negotiate the terms of the
Merger Agreement.
On November 12, 1999, the Board of Directors of the Company met and among
other things, unanimously ratified the signing of the Letter of Intent and
authorized the appropriate directors and officers to pursue the negotiations
with Purchaser. On November 18, 1999, representatives of the Company and
Purchaser, and their attorneys, met in New York to negotiate the terms of the
definitive Merger Agreement. Following the meeting, numerous telephone calls
took place between the parties.
On November 22, 1999 the Board of Directors of the Company met to discuss
the current state of negotiations with Purchaser. At this meeting, Banc of
America made a financial presentation to the Board of Directors as to the
fairness, from a financial point of view, of the $5.25 per Share cash
consideration to be
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received in the Offer and the Merger by the holders of Shares (other than
Shares held by Purchaser, Acquisition Sub or any of their affiliates). The
Company's counsel reviewed the terms of the Merger Agreement and reminded the
members of the Board of Directors of their fiduciary duties as previously
described at the meeting held on November 12, 1999. A vote regarding the
transaction was postponed until November 24, 1999 to give board members time
to fully review the material provided.
On November 24, 1999, the Board of Directors met to review the Merger
Agreement, receive Banc of America's fairness opinion and discuss whether to
recommend the Offer. The Board of Directors received an oral opinion (which
opinion was subsequently confirmed by delivery of a written opinion dated
November 24, 1999, the date of execution of the Merger Agreement) from Banc of
America as to the fairness, from a financial point of view, of the
consideration to be received in the Offer and the Merger by the holders of
Shares (other than Shares held by Purchaser, Acquisition Sub or any of their
affiliates). The opinion is based upon the procedures and subject to the
assumptions, qualifications and limitations described therein. Accordingly,
the opinion may not be relied upon by any person other than the directors in
their capacity as members of the Company's Board of Directors and in
connection with their review and evaluation of the Offer and the Merger
without the prior written consent of Banc of America. After a discussion, the
Board of Directors approved, among other things, the Merger Agreement and the
transactions contemplated thereby. Following the meeting, the parties entered
into the Merger Agreement, and certain of the parties and affiliates thereof
entered into the Tender Agreements (as defined below), the Director Letter
Agreement and the Management Services Amendment.
(b)(ii) REASONS FOR THE RECOMMENDATION BY THE BOARD OF DIRECTORS
In reaching its conclusions and recommendation described above, the Board
considered a number of factors, including without limitation the following:
(a) The financial and other terms and conditions of the Offer, the
Merger and the Merger Agreement.
(b) The financial analysis and presentation of Banc of America to the
Board of Directors on November 22, 1999 and November 24, 1999, and the oral
opinion of Banc of America on November 24, 1999 (which opinion was
subsequently confirmed by delivery of a written opinion dated November 24,
1999, the date of execution of the Merger Agreement) as to the fairness,
from a financial point of view, of the consideration to be received in the
Offer and the Merger by the holders of Shares (other than Shares held by
Purchaser, Acquisition Sub or any of their affiliates). The opinion is
based upon the procedures and subject to the assumptions, qualifications
and limitations described in the opinion letter. In accordance with its
engagement letter, the opinion of Banc of America is addressed solely to
the Company's Board of Directors for the use of the directors in their
capacity as members of the Company's Board of Directors in connection with
their review and evaluation of the Offer and the Merger. The opinion is
directed only to the fairness, from a financial point of view, of the cash
consideration to be received in the Offer and the Merger by holders of
Shares (other than Shares held by Purchaser, Acquisition Sub or any of
their affiliates) and is not intended, and does not constitute, a
recommendation as to whether any shareholder should tender Shares pursuant
to the Offer. A copy of the opinion is set forth in Schedule I. Holders of
Shares are urged to read such opinion carefully in its entirety.
(c) The process undertaken by the Company to solicit third party
indications of interest in the possible acquisition of, or business
combination with, the Company.
(d) The fact that the structure of the acquisition of the Company by
Purchaser as provided for in the Merger Agreement involves a cash tender
offer for all outstanding Shares to be commenced within five business days
of the public announcement of the Merger Agreement to be followed as
promptly as practicable by a merger for the same consideration, thereby
enabling the Company's stockholders to obtain cash for their Shares at the
earliest possible time.
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(e) The fact that the Merger Agreement, which prohibits the Company and
any of its subsidiaries from, directly or indirectly, through any officer,
director, employee, agent or otherwise, from soliciting, initiating or
encouraging the submission of any Acquisition Proposal (as defined in the
Merger Agreement) or participating in any negotiations regarding any
Acquisition Proposal, does permit the Company to furnish non-public
information to, and participate in negotiations with, any person that makes
an unsolicited Acquisition Proposal 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.
(f) The fact that Mr. Franklin and Mr. Ashken, the beneficial owners of
approximately 10% and 3% of the outstanding Shares respectively, were each
willing to enter into a Tender and Voting Agreement (together, the "Tender
and Voting Agreements") pursuant to which each agreed to tender all of his
Shares pursuant to the Offer and, in the event a stockholder vote is
required, to vote his Shares in favor of the Merger.
The summary of the Tender and Voting Agreements contained in the Offer
to Purchase, which has been filed with the Commission as an exhibit to the
Schedule 14D-1, a copy of which is enclosed with this Schedule 14D-9, is
incorporated herein by reference. Such summary should be read in its
entirety for a more complete description of the terms and provisions of the
Tender and Voting Agreements. A copy of the Tender and Voting Agreement of
each of Mr. Franklin and Mr. Ashken has been filed as Exhibit 8 hereto and
is incorporated herein by reference.
(g) The historical market price of, and recent trading activity in, the
Shares, particularly the fact that the Offer and the Merger will enable the
stockholders of the Company to realize a premium of approximately 58% over
the closing price of the Shares on the last trading day prior to the public
announcement on November 15, 1999 of the signing of a non-binding letter of
intent for $5.25 per Share, and a premium of approximately 14% over the
closing price of the Shares on the last trading day prior to the public
announcement on November 26, 1999 of the Merger Agreement.
(h) The familiarity of the Board with the business, results of
operations, properties and financial condition of the Company, the
competitive nature of the industry in which it operates and the prospects
of the Company if it were to remain independent.
(i) The regulatory approvals required to consummate the Merger,
including, among others, antitrust approvals, and the prospects for
receiving such approvals.
The foregoing discussion of the information and factors considered and given
weight by the Board is not intended to be exhaustive. The Board did not
quantify or otherwise assign relative weights to the specific factors
considered in reaching its determination.
Item 5. Persons Retained, Employed or to be Compensated.
The Company has retained Banc of America as its financial advisor in
connection with the Offer and the Merger. Pursuant to the terms of Banc of
America's engagement, the Company has agreed to pay Banc of America a fee equal
to $1,000,000 in connection with the consummation of the Offer. The engagement
letter also calls for the Company to reimburse Banc of America for its
reasonable out-of-pocket costs and expenses, and to indemnify Banc of America
and certain related parties against certain liabilities, including liabilities
under the federal securities laws.
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Except as disclosed herein, neither the Company nor any person acting on its
behalf currently intends to employ, retain or compensate any other person to
make solicitations or recommendations to security holders on its behalf
concerning the Offer or the Merger.
Item 6. Recent Transactions and Intent with Respect to Securities.
(a) Except for the issuance of Shares upon exercise of outstanding options,
no transactions in Shares have been effected during the past 60 days by the
Company or, to the best of the Company's knowledge, by an executive officer,
director, subsidiary or affiliate of the Company.
(b) To the best of the Company's knowledge, each executive officer, director
and affiliate of the Company currently intends to tender all Shares to
Acquisition Sub over which he or she has sole dispositive power as of the
expiration date of the Offer.
Item 7. Certain Negotiations and Transactions by the Subject Company.
(a) Except as set forth in this Schedule 14D-9, no negotiation is being
undertaken or is underway by the Company in response to the Offer which relates
to or would result in: (1) an extraordinary transaction such as a merger or
reorganization involving the Company or any subsidiary of the Company; (2) a
purchase, sale or transfer of a material amount of assets by the Company or any
subsidiary of the Company; (3) a tender offer for or other acquisition of
securities by or of the Company; or (4) any material change in the present
capitalization or dividend policy of the Company.
(b) Except as described in Item 3(b) or 4 above (the provisions of which are
hereby incorporated by reference), there are no transactions, Board
resolutions, agreements in principle or signed contracts in response to the
Offer that relate to or would result in one or more of the events referred to
in Item 7(a) above.
Item 8. Additional Information to be Furnished.
(a) The Information Statement attached as Schedule II hereto is being
furnished in connection with the possible designation by Purchaser, pursuant to
the Merger Agreement, of certain persons to be appointed to the Board other
than at a meeting of the Company's stockholders as described in Item 3 above.
(b) Section 203 of the Delaware General Corporation Law
As a Delaware corporation, the Company is subject to Section 203 ("Section
203") of the Delaware General Corporation Law. Under Section 203, certain
"business combinations" between a Delaware corporation whose stock is publicly
traded or held of record by more than 2,000 stockholders and an "interested
stockholder" are prohibited for a three-year period following the date that
such a stockholder became an interested stockholder, unless (i) the corporation
has elected in its original certificate of incorporation not to be governed by
Section 203 (the Company did not make such an election), (ii) the transaction
in which the stockholder became an interested stockholder or the business
combination was approved by the Board of Directors of the corporation before
the other party to the business combination became an interested stockholder,
(iii) upon consummation of the transaction that made it an interested
stockholder, the interested stockholder owned at least 85% of the voting stock
of the corporation outstanding at the commencement of the transaction
(excluding voting stock owned by directors who are also officers or held in
employee benefit plans in which the employees do not have a confidential right
to tender or vote stock held by the plan) or (iv) the business combination was
approved by the Board of Directors of the corporation and ratified by 66 2/3%
of the voting stock which the interested stockholder did not own. The term
"business combination" is defined generally to include mergers or
consolidations between a Delaware corporation and an "interested stockholder,"
transactions with an "interested stockholder" involving the assets or stock of
the corporation or its majority-owned subsidiaries and transactions which
increase an "interested stockholder's" percentage ownership of stock. The term
"interested stockholder" is defined generally as a stockholder who, together
with affiliates and associates, owns (or, within three years prior, did own)
15% or more of a Delaware corporation's voting stock.
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In accordance with the Merger Agreement and Section 203, the Board approved
the Offer, the Merger, the Tender and Voting Agreement and the other
transactions contemplated by the Merger Agreement and, therefore, the
restrictions of Section 203 are inapplicable to the Offer, the Merger and the
related transactions.
(c) Antitrust
Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
(the "HSR Act") and the rules that have been promulgated thereunder by the
Federal Trade Commission ("FTC"), certain acquisition transactions may not be
consummated unless certain information has been furnished to the Antitrust
Division of the Department of Justice (the "Antitrust Division") and the FTC
and certain waiting period requirements have been satisfied. The acquisition of
Shares pursuant to the Offer is subject to such requirements. There may be
similar antitrust requirements in other jurisdictions.
On December 3, 1999 or shortly thereafter, Purchaser will file with the FTC
and the Antitrust Division a Premerger Notification and Report Form in
connection with the purchase of Shares pursuant to the Offer. Under the
provisions of the HSR Act applicable to the Offer, the purchase of Shares
pursuant to the Offer may not be consummated until the expiration of a 15-
calendar day waiting period following the filing by Purchaser, unless both the
Antitrust Division and the FTC terminate the waiting period prior thereto. If,
within such 15-calendar day waiting period, either the Antitrust Division or
the FTC requests additional information or documentary material from Purchaser,
the waiting period would be extended for an additional 10 calendar days
following substantial compliance by Purchaser with such request. Thereafter,
the waiting period could be extended only by court order. Only one extension of
such waiting period pursuant to a request for additional information is
authorized by the HSR Act and the rules promulgated thereunder, except by court
order. Any such extension of the waiting period will not give rise to any
withdrawal rights not otherwise provided for by applicable law.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the proposed acquisition of Shares
by Acquisition Sub pursuant to the Offer. At any time before or after the
purchase by Acquisition Sub of Shares pursuant to the Offer, either of the FTC
or the Antitrust Division could take such action under the antitrust laws as it
deems necessary or desirable in the public interest, including seeking to
enjoin the purchase of Shares pursuant to the Offer or seeking the divestiture
of Shares purchased by Acquisition Sub or the divestiture of substantial assets
of Purchaser, its subsidiaries or the Company. Private parties and state
attorneys general may also bring legal action under federal or state antitrust
laws under certain circumstances.
Although the Company believes that the Acquisition Sub's acquisition of
Shares pursuant to the Offer would not violate the antitrust laws, there can be
no assurance that a challenge to the Offer on antitrust grounds will not be
made or, if such challenge is made, what the outcome will be. See Item 3(b) for
certain conditions to the Offer, including conditions with respect to
litigation and certain government actions.
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Item 9. Material to be Filed as Exhibits.
Exhibit 1 Excerpts from the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1998 and from the Company's Proxy
Statement for its Annual Meeting of Stockholders as filed with the
Commission on May 26, 1999.
Exhibit 2 Letter Agreement dated as of November 24, 1999 by and among the
Company, Martin Holdings, Inc. and Wind Point Partners amending the
Management Services Agreement.
Exhibit 3 Letter Agreement, dated as of November 24, 1999 by and between the
Company, Acquisition Sub and each of Messrs. Franklin and Ashken
relating to Board membership of Surviving Corporation.
Exhibit 4 Agreement and Plan of Merger, dated as of November 24, 1999, among
the Company, Purchaser and Acquisition Sub.
Exhibit 5 Letter to Stockholders of the Company from the Chairman of the Board
dated December 2, 1999.
Exhibit 6 Press Release dated November 15, 1999.
Exhibit 7 Press Release dated November 26, 1999.
Exhibit 8 Tender and Voting Agreements, dated as of November 24, 1999, by and
between the Company, Acquisition Sub and each of Martin E. Franklin
and Ian G. H. Ashken.
Exhibit 9 Confidentiality Agreement between the Company and the Purchaser.
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Bolle Inc.
/s/ Martin E. Franklin
By: _____________________________
Name: Martin E. Franklin
Title: Chairman of the Board
Dated: December 2, 1999
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[LETTERHEAD OF BANK OF AMERICA]
November 24, 1999
Board of Directors
Bolle Inc.
555 Theodore Fremd Ave
Suite B-320
Rye, New York 10580
Members of the Board of Directors:
You have requested our opinion as to the fairness from a financial point of
view to the Common Stockholders (as defined below) of Bolle' Inc. (the
"Company") of the consideration proposed to be received by the Common
Stockholders provided for in connection with the proposed tender offer (the
"Tender Offer") for all of the outstanding shares of Common Stock, par value
$0.01 per share, of the Company (the "Company Common Stock") and the merger (the
"Merger") of the Company with a wholly owned subsidiary of Worldwide Sports &
Recreation, Inc. (the "Purchaser"). Pursuant to the terms of the Agreement and
Plan of Merger, to be dated as of November 24, 1999 (the "Agreement"), among the
Company, the Purchaser and Shade Acquisition, Inc., a wholly owned subsidiary of
the Purchaser ("Acquisition Sub"), Acquisition Sub will pay $5.25 per share in
cash for each share of Company Common Stock accepted in the Tender Offer. The
Agreement further provides that following completion of the Tender Offer, the
Company will become a wholly owned subsidiary of the Purchaser, and holders of
the Company Common Stock (the "Common Stockholders") will receive for each share
of Company Common Stock, held by them, other than shares held in treasury or
held by the Purchaser or any affiliate of the Purchaser or as to which
dissenters' rights have been perfected, consideration equal to $5.25 per share.
The terms and conditions of the Tender Offer and the Merger are more fully set
out in the Agreement.
For purposes of the opinion set forth herein, we have:
(i) reviewed certain publicly available financial statements and other
business and financial information of the Company;
(ii) reviewed certain internal financial statements and other financial and
operating data concerning the Company;
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(iii) analyzed certain financial forecasts prepared by the management of
the Company:
(iv) discussed the past the current operations, financial condition and
prospects of the Company with senior executives of the Company;
(v) reviewed an discussed with senior executives of the Company
information relating to certain strategic, financial and operational
benefits anticipated from the Merger;
(vi) reviewed the reported prices and trading activity for the Company
Common Stock;
(vii) compared the financial performance of the Company and the prices and
trading activity of the Company Common Stock with that of certain
other publicly traded companies we deemed relevant;
(viii) compared certain financial terms to financial terms, to the extent
publicly available, of certain other business combination
transactions we deemed relevant;
(ix) participated in discussions and negotiations among representatives of
the Company and the Purchaser, the Purchaser's financial advisor and
their respective legal advisors;
(x) reviewed the November 22, 1999 draft of the Agreement and certain
related documents; and
(xi) performed such other analyses and considered such other factors as we
have deemed appropriate.
We have assumed and relied upon, without independent verification, the
accuracy and completeness of the financial and other information reviewed by us
for the purposes of this opinion. With respect to the financial forecasts, we
have assumed that they have been reasonably prepared on bases reflecting the
best currently available estimates and good faith judgments of the future
financial performance of the Company. We have not made any independent valuation
or appraisal of the assets or liabilities of the Company, nor have we been
furnished with any such appraisals.
We note that on the date hereof the Purchaser does not have a commitment for
the financing necessary to close the transactions contemplated by the Agreement
(the "Transactions"), and we further note that, under the terms of the
Agreement, if the financing condition or any of the other conditions set forth
in the Agreement are not satisfied or waived, and the Transactions are not
completed, the Company could be adversely impacted from a financial point of
view.
We have acted as sole financial advisor to the Board of Directors of the
Company in connection with this transaction and will receive a fee for our
services, which is contingent upon the consummation of the Tender Offer and the
Merger. In the past, Banc of America Securities LLC or its affiliates have
provided financial advisory and financing services for the Company and the
Purchaser and its affiliates and received fees for the rendering of these
services. Currently, our
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affiliates provide financing services with respect to the Company's credit
facility and with respect to credit facilities of affiliates of the Purchaser.
In the ordinary course of our businesses, we and our affiliates may actively
trade the debt and equity securities of the Company or affiliates of the
Purchaser for our own account or for the accounts of customers and accordingly,
we or our affiliates may at any time hold long or short positions in such
securities. As of the date hereof, one of our affiliates has committed to make
an equity investment as a limited partner in a fund that is providing a portion
of the financing for the Purchaser.
It is understood that his letter is for the benefit and use of the Board of
Directors of the Company in connection with and for purpose of its evaluation of
the Transactions and is not on behalf of, and shall not confer rights or
remedies upon, any person other than the Board of Directors. This opinion may
not be disclosed, referred to, or communicated (in whole or in part) to any
third party for any purpose whatsoever except with our prior written consent in
each instance. However, this opinion may be included in its entirety in any
filing made by the Company in respect of the Transactions with the Securities
and Exchange Commission, so long as this opinion is reproduced in such filing in
full and any description of or reference to us or summary of this opinion and
the related analysis in such filing is in a form reasonably acceptable to us and
our counsel. Our opinion is necessarily based on economic, market and other
conditions as in effect on, and the information made available to us as of the
date hereof. It should be understood that subsequent developments may affect
this opinion and we do not have any obligation to update, revise, or reaffirm
this opinion. In addition, BAS expresses no opinion or recommendation as to
whether or not the Common Stockholders should tender their shares of Company
Common Stock in connection with the Tender Offer.
Based upon and subject to the foregoing, including the various assumptions
and limitations set forth herein, we are of the opinion on the date hereof that
the consideration to be received by the Common Stockholders in the proposed
Tender Offer and the proposed Merger is fair from a financial point of view to
the Common Stockholders.
Very truly yours,
BANC OF AMERICA SECURITIES LLC
By: /s/ David M. Jacquin
------------------------------
Name: David M. Jacquin
Title: Managing Director
3
<PAGE>
Schedule II
BOLLE INC.
555 THEODORE FREMD AVENUE, SUITE B 302
RYE, NEW YORK 10180
Information Pursuant to Section 14(f)
of the Securities Exchange Act of 1934
And Rule 14f-1 Thereunder
The following information is being furnished to holders of the common stock,
par value $0.01 per share ("Common Stock" or the "Shares"), of Bolle Inc., a
Delaware corporation (the "Company"), in connection with the possible
designation by Worldwide Sports and Recreation, Inc., a Delaware corporation
("Purchaser"), of at least a majority of the board of directors of the Company
pursuant to the terms of an Agreement and Plan of Merger, dated as of November
24, 1999 (the "Merger Agreement"), by and among the Company, Purchaser, and
Shade Acquisition, Inc., a Delaware corporation and wholly owned subsidiary of
Purchaser ("Acquisition Sub"). THIS INFORMATION IS BEING PROVIDED SOLELY FOR
INFORMATIONAL PURPOSES AND NOT IN CONNECTION WITH A VOTE OF THE COMPANY'S
STOCKHOLDERS.
The Merger Agreement provides that, effective upon the acceptance for
payment by Acquisition Sub of Shares constituting fifty-one percent (51%) of
the aggregate outstanding Shares (assuming the exercise of all options to
purchase, and the conversion or exchange of all securities convertible or
exchangeable into, Shares outstanding as of the consummation of the Offer)
pursuant to the Offer, Purchaser shall be entitled to designate the number of
directors, rounded up to the next whole number, on the Board that equals the
product of (i) the total number of directors on the Board (after giving effect
to the election of any additional directors pursuant to the Merger Agreement)
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. The Company is obligated
under the Merger Agreement to take all action necessary to cause the
Purchaser's designees (the "Purchaser 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. The
Company is also obligated to 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.
The information contained in this Schedule II concerning the Purchaser or
Acquisition Sub has been furnished to the Company by the Purchaser, and the
Company assumes no responsibility for the accuracy or completeness of any such
information.
VOTING SECURITIES OF THE COMPANY
As of December 1, 1999, there were issued and outstanding 7,091,774 shares
of Common Stock, each of which entitles the holder to one vote.
<PAGE>
ACQUISITION DESIGNEES, BOARD OF DIRECTORS
AND EXECUTIVE OFFICERS
Purchaser Designee Biographical Information
The Purchaser has informed the Company that it will choose the Purchaser
Designees from the individuals shown in the table below to serve on the Board.
Each of the following individuals has consented to serve as a director of the
Company if appointed or elected. None of Purchaser Designees currently is a
director of, or holds any position with, the Company. To the best of
Purchaser's knowledge, except as set forth below and in the Offer to Purchase,
none of Purchaser Designees or any of their associates beneficially owns any
equity securities or rights to acquire securities of the Company, nor has any
such person been involved in any transaction with the Company or any of its
directors, executive officers or affiliates that are required to be disclosed
pursuant to the rules and regulations of the Commission.
The following table sets forth the name, business address, present principal
occupation and material positions held within the past five years of each
director and executive officer of Purchaser and Acquisition Sub. Each person
listed below is a citizen of the United States of America.
PURCHASER AND ACQUISITION SUB
<TABLE>
<CAPTION>
Present Principal Occupation or
Employment,
Name and Material Positions Held During the Past
Business Address Five Years
- -------------------------------------------------------------------------------
<C> <S>
Richard R. Kracum.................... Chairman of Board of Directors of
Wind Point Partners Purchaser since August 1999 and of
676 N. Michigan Avenue, Suite 3300 Acquisition Sub since November 1999.
Chicago, IL 60611 Managing Director of Wind Point
Partners, a private equity fund
headquartered in Chicago, Illinois
("Wind Point") since 1986. A founder of
Wind Point Partners III, L.P., a
$215 million private equity fund in 1997
and a founder of Wind Point Partners IV,
L.P., a private equity fund with
approximately $290 million in committed
capital.
B. Joseph Messner.................... President and Chief Executive Officer of
Worldwide Sports & Recreation Purchaser since August 1999 and of
9200 Cody Acquisition Sub since November 1999.
Overland Park, KS 66214 From 1996 to 1997, Mr. Messner was the
CEO of First Alert, a publicly held
manufacturer of smoke alarms. Prior to
this position, Mr. Messner was President
of Bushnell, a division of Bausch & Lomb
from 1989 to 1995.
Norman Singer........................ Director of Purchaser since August 1999
460 S. Marion Street and Acquisition Sub since November 1999.
#1504C Mr. Singer served as Chairman of the
Denver, CO 80209 Board of Directors of Purchaser from
1997 to 1999. He is also a licensed
attorney and in his capacity as a
Director also represents the remaining
minority interests of a predecessor of
Purchaser.
Salam Chaudhary...................... Secretary of Acquisition Sub since
Worldwide Sports and Recreation, Inc. August 1999. Mr. Chaudhary joined Wind
c/o Wind Point Partners Point as an Associate in 1997 and is
One Towne Square, Suite 780 currently a Vice-President. Prior to
Southfield, MI 48076 working at Wind Point Partners, he was
an analyst at First of Michigan
Corporation, an investment bank, from
1996 to 1997 and the head analyst at
Health Care REIT, a publicly traded real
estate investment trust, from 1995 to
1996.
</TABLE>
2
<PAGE>
Board Biographical Information
The persons named below are the current members of the Board. The following
sets forth, as to each director, his age (as of December 1, 1999), and
principal occupation and business experience, the period during which each has
served as a director, any family relationship with any other director or
executive officer of the Company and the directorships currently held by him in
corporations whose shares are publicly registered.
<TABLE>
<CAPTION>
Principal Occupation or
Name Age Occupations and Directorships
- -------------------------------------------------------------------------------
<C> <C> <S>
Martin E. Franklin(1)(2).. 35 Mr. Franklin has been Chairman of the Company's
Board of Directors since February 1997. Mr.
Franklin has been Chairman and Chief Executive
Officer of Marlin Holdings, Inc., the general
partner of Marlin Capital, L.P., a private
investment partnership, since October 1996.
From May 1996 until March 1998, Mr. Franklin
served as Chairman and Chief Executive Officer
of Lumen Technologies, Inc. ("Lumen"), and
served as Executive Chairman from March 1998
until December 1998. Mr. Franklin was Chairman
of the Board and Chief Executive Officer of
Lumen's predecessor, Benson Eyecare Corporation
("Benson"), from October 1992 to May 1996 and
President from November 1993 until May 1996.
Mr. Franklin was non-executive Chairman and a
director of Eyecare Products plc from December
1993 until February 1999. In addition, Mr.
Franklin has served as a director of Specialty
Catalog Corp. since 1994 and as a director of
Corporate Express, Inc. since April 1999. Mr.
Franklin also serves on the boards of a number
of privately held companies and charitable
organizations.
Gary A. Kiedaisch(1)...... 53 Mr. Kiedaisch has been a director of the
Company since July 1997. From July 1997 to
November 1999, Mr. Kiedaisch was also the
Company's President and Chief Executive
Officer. From 1989 until his appointment as the
Chief Executive Officer of the Company, Mr.
Kiedaisch had been President and Chief
Executive Officer of the Mt. Mansfield Company
d/b/a Stowe Mountain Resort, a wholly owned
subsidiary of multi-national insurance and
financial services conglomerate American
International Group.
Ian G. H. Ashken(1)(2).... 39 Mr. Ashken has been Vice-Chairman and Secretary
and a director of the Company since December
1998. From February 1997 until his appointment
as Vice-Chairman, Mr. Ashken was Executive Vice
President, Chief Financial Officer, Assistant
Secretary and a Director of the Company. Mr.
Ashken was Executive Vice President, Chief
Financial Officer, Assistant Secretary and a
Director of Lumen from December 1995 to
December 1998. Mr. Ashken was Chief Financial
Officer of Benson and a director of Benson from
October 1992 to May 1996. Mr. Ashken also
served as Benson's Executive Vice President
from October 1994 to May 1996; Secretary from
October 1992 to December 1993; and Assistant
Secretary from December 1993 to May 1996. Since
October 1996, Mr. Ashken has been Vice Chairman
of Marlin Holdings, Inc., the general partner
of Marlin Capital, L.P. Mr. Ashken was a
director of Eyecare Products plc from August
1994 to February 1999.
Franck Bolle(1)........... 43 Mr. Bolle has been a director of the Company
since July 1997. Mr. Bolle was appointed
President and Director of International
Operations of Bolle France, the Company's
French subsidiary group, in July 1997. Mr.
Bolle has been a member of the executive
management of Bolle France since 1984.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Principal Occupation or
Name Age Occupations and Directorships
- -------------------------------------------------------------------------------
<C> <C> <S>
Patricia Bolle Passaquay.. 44 Ms. Bolle Passaquay has been a director of the
Company since July 1997. From July 1997 to June
1999, Ms. Passaquay served as the Director of
Export Operations of Bolle France. Ms.
Passaquay was a member of the executive
management of Bolle France from 1981 to June
1999.
David L. Moore(2)(3)(4)... 43 Mr. Moore has been a director of the Company
since March 1998. He is Chairman and Chief
Executive Officer of Garden State Brickface,
Windows and Siding, a New York metropolitan
area residential and commercial remodeling
firm. Mr. Moore is also Chairman of Paradigm
Direct, a direct marketing firm, and is
Chairman of Ventures, a venture capital and
investment firm headquartered in Westchester,
New York.
David S. Moross(3)(4)..... 40 Mr. Moross became a director of the Company in
March 1998. Mr. Moross is the Managing Partner
of IMG/Chase Sports Capital, L.P., a global
private equity investment fund. Prior to
establishing this fund, Mr. Moross was Vice
Chairman of Whitehall Financial Group, where he
was actively involved in direct equity
investments and debt financings. Mr. Moross was
also Chairman of Insco, Inc., a Whitehall
affiliate which provided management consulting
services. In addition, he served as Chief
Executive Officer of Kalvin-Miller
International, Inc., a national insurance
broker. He currently is a member of Whitehall's
Board of Directors and serves as a Governor of
the Dana-Farber Cancer Institute.
</TABLE>
- --------
(1) Member of Executive Committee
(2) Member of Nominating Committee
(3) Member of Audit Committee
(4) Member of Compensation/Stock Option Committee
Board Committees and Meetings
The Company has an Audit Committee, which is currently composed of Messrs.
David L. Moore and David S. Moross. During the fiscal year ended December 31,
1998, the Audit Committee met on two occasions for the purpose of selecting the
Company's independent auditors for the year ended December 31, 1999.
The Company has a Compensation Committee, which is currently composed of
Messrs. David L. Moore and David S. Moross. During the fiscal year ended
December 31, 1998, the Compensation Committee met on three occasions for the
purpose of determining participation in the Company's 1998 Stock Incentive
Plan.
The Company has an Executive Committee, which is currently composed of
Messrs. Martin E. Franklin, [Gary A. Kiedaisch,] Ian G.H. Ashken, Franck Bolle
and Patricia Bolle Passaquay. The Executive Committee did not meet during the
fiscal year ended December 31, 1998.
The Company has a Nominating Committee, which is currently composed of
Messrs. Martin E. Franklin, Ian G.H. Ashken, and David L. Moore. The Nominating
Committee did not meet during the fiscal year ended December 31, 1998.
The Board of Directors of the Company held six meetings and executed three
unanimous written consents in lieu of a meeting during the fiscal year ended
December 31, 1998. In 1998, all of the directors attended and executed 75% or
more of the aggregate meetings and written consents of the Board and all
committees thereof on which they served.
After the consummation of the Merger, it is expected that the Company's
Board will act to appoint new members to the Audit, Compensation, Executive and
Nominating committees. To the Company's knowledge,
4
<PAGE>
no decision has been made by the Purchaser Designees regarding the membership
of any such committees of the Board. In addition, pursuant to a letter
agreement by and among Acquisition Sub and Martin E. Franklin and Ian G.H.
Ashken, dated November 24, 1999 (the "Director Agreement"), Messrs. Franklin
and Ashken agreed that, for a period of one year following the consummation of
the Offer, Mr. Franklin or, in the event of his death or disability, Mr.
Ashken, will serve on the Company's Board of Directors, but may resign upon the
occurrence of certain events. [The Director Agreement (the terms of which are
incorporated by reference herein) has been filed with the Securities and
Exchange Commission as Exhibit [ ] to the Schedule 14D-9 to which this
information statement pursuant to Rule 14f-1 is attached as Schedule II.]
Directors' Compensation
In fiscal 1998, members of the Company's Board of Directors, other than
those who were officers or employees of the Company and the Chairman of the
Board, received an annual fee of $11,250 for their services as directors and as
members of any committees of the Company's Board of Directors on which they
served. For 1999, this annual fee will be $15,000. Directors who are not
officers or employees of the Company also receive automatic stock option grants
under the Company's 1998 Stock Incentive Plan.
Executive Officers
Executive officers serve at the discretion of the Board. The following table
sets forth certain information concerning the executive officers of the Company
(as of December 1, 1999) who are expected to serve in such capacity until the
consummation of the Merger (none of whom has a family relationship with another
executive officer):
<TABLE>
<CAPTION>
Name Position Age
---- -------- ---
<S> <C> <C>
Martin E. Franklin Chairman of the Board, since February 1997. 35
Ian G.H. Ashken Vice-Chairman and Secretary, since December 1998. 39
Thomas R. Reed Chief Financial Officer, since January 1999. 39
</TABLE>
Business Experience
For biographical information regarding of each executive officer other than
Thomas R. Reed, please see the table entitled "Board Biographical Information."
Mr. Reed has been Chief Financial Officer of the Company since January 1999.
From June 1997 until his appointment as Chief Financial Officer of the Company,
Mr. Reed was Chief Financial Officer and Chief Operating Officer of Bolle
America, Inc. ("Bolle America"). Mr. Reed was Vice President of Finance and
Administration of Bolle America from November 1996 until his appointment as
Chief Financial Officer and Chief Operating Officer of Bolle America. From
December 1994 until his appointment as Vice President of Finance and
Administration of Bolle America Mr. Reed was the Controller of Bolle America,
Inc.
5
<PAGE>
STOCK OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS, DIRECTORS AND MANAGEMENT
The following table sets forth as of December 1, 1999 (a) the name, address
and holdings as to each person (including any "group" as defined in Section
13(d) of the Securities Exchange Act of 1934, as amended) known by the Company
to be the beneficial owner of more than five percent of the Common Stock, and
(b) the beneficial ownership of Common Stock of each of the executive officers
and directors of the Company and all executive officers and directors of the
Company as a group. Unless otherwise indicated, the business address of each of
the following persons is c/o Bolle Inc., 555 Theodore Fremd Avenue, Suite B-
302, Rye, New York 10580.
<TABLE>
<CAPTION>
Amount and Nature of Percentage of
Name and Address of Beneficial Owner Beneficial Ownership (1) Class Owned
- ------------------------------------ ----------------------- -------------
<S> <C> <C>
Martin E. Franklin (2)................. 746,506 10.1%
Gary A. Kiedaisch (3).................. 110,333 1.5%
Ian G.H. Ashken (4).................... 177,082 2.5%
Franck Bolle (5)....................... 203,477 2.8%
Patricia Bolle Passaquay (6)........... 203,477 2.8%
David L. Moore (7)..................... 5,949 *
David S. Moross (8).................... 833 *
Thomas Reed (9)........................ 11,848 *
All Executive Officers and Directors as
a group (9 persons)................... 1,459,505 18.4%
Millbrook Partners, L.P. (10) ......... 1,020,865 14.4%
2102 Sawgrass Village Drive
Ponte Vedra Beach, Florida 32082
Marvin Schwartz (11)................... 463,157 6.5%
605 Third Avenue
New York, New York 10158
OZ Management, L.L.C. (12) ............ 1,821,388 21.6%
153 East 53rd Street
New York, New York 10022
Wynnefield Partners Small Cap Value,
L.P., Wynnefield Partners Small
Cap Value, L.P.--I, and Wynnefield
Small Cap Value Offshore Fund, Ltd.
(13).................................. 391,064 5.5%
One Penn Plaza, Suite 4720
New York, NY 10119
</TABLE>
- --------
*Less than 1%.
(1) Shares not outstanding but deemed beneficially owned by virtue of the
right of an individual to acquire them within sixty (60) days upon the
exercise of an option or warrant are treated as outstanding for purposes
of determining beneficial ownership and the percent beneficially owned by
such individual and for the executive officers and directors as a group.
(2) Includes 5,127 shares of Common Stock held in trust for Mr. Franklin's
minor children as to which shares Mr. Franklin disclaims beneficial
ownership and 300,208 shares which Mr. Franklin has the right to acquire
within 60 days of the date hereof upon the exercise of options.
(3) Includes 108,333 shares which Mr. Kiedaisch has the right to acquire
within 60 days of the date hereof upon the exercise of options.
6
<PAGE>
(4) Includes 8,333 shares of Common Stock held in trust for Mr. Ashken's minor
children, as to which shares Mr. Ashken disclaims beneficial ownership and
102,082 shares which Mr. Ashken has the right to acquire within 60 days of
the date hereof upon the exercise of options.
(5) Includes 147,730 shares which Mr. Bolle has the right to acquire within 60
days of the date hereof upon the exercise of options and warrants.
(6) Includes 147,730 shares which Ms. Bolle Passaquay has the right to acquire
within 60 days of the date hereof upon the exercise of options and
warrants.
(7) Includes 833 shares which Mr. Moore has the right to acquire within 60
days of the date hereof upon the exercise of options.
(8) Includes 833 shares which Mr. Moross has the right to acquire within 60
days of the date hereof upon the exercise of options.
(9) Includes 11,848 shares which Mr. Reed has the right to acquire within 60
days of the date hereof upon the exercise of options.
(10) Based on Schedule 13D filing, dated June 11, 1998. 991,199 of these
shares, or 13.9% of the Common Stock, are beneficially held by Millbrook
Partners, L.P. ("Millbrook"), and the remaining 29,666 shares are
beneficially held by Millbrook's general partner, Mark M. Mathes.
(11) In a Schedule 13D filing dated March 26, 1998, Marvin Schwartz, acting in
his personal capacity and not as a principal of Neuberger & Berman,
reported beneficial ownership of these shares.
(12) 1,333,333 shares issuable at any time at the option of OZ Master Fund,
Ltd. upon conversion of $7,000,000 aggregate principal amount of certain
Convertible Notes issued to OZ Master Fund, Ltd. by the Company in May
1998, subject to the provisions of the Convertible Note Purchase
Agreement. Includes 248,055 additional shares held by OZ Master Fund, Ltd.
and 240,000 shares held by its affiliate Och-Ziff Capital Management,
L.P., over which OZ Management, L.L.C., the investment manager to the
foregoing entities, may be deemed to have investment power.
(13) Wynnefield Partners Small Cap Value, L.P., Wynnefield Partners Small Cap
Value, L.P.--I and Wynnefield Small Cap Value Offshore Fund, Ltd.
collectively reported beneficial ownership of these shares in a Schedule
13G filed on May 18, 1999.
Pursuant to the terms of letter agreements by and among each of Martin E.
Franklin and Ian G.H. Ashken and the Purchaser dated as of November 24, 1999
(the "Tender and Voting Agreement"), each of Messrs. Franklin and Ashken has
agreed to tender all of the Shares owned by him pursuant to the Offer and to
vote the Shares owned by him in favor of the Offer, the Merger, the Merger
Agreement and each of the transactions contemplated thereby at any meeting or
by written action of the stockholders of the Company. The Tender and Voting
Agreements (the terms of which are incorporated by reference herein) have been
filed with the Securities and Exchange Commission as Exhibit 8 to the Schedule
14D-9 to which this information statement pursuant to Rule 14f-1 is attached as
Schedule II.
7
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information concerning cash and certain other
compensation paid or accrued by the Company in the fiscal years ended December
31, 1998 and 1997 for the Chief Executive Officer of the Company in all
capacities in which he served. The table also sets forth cash and certain other
compensation paid to or accrued by the Company for the Chairman of the Board.
Other than Gary A. Kiedaisch and Martin E. Franklin (collectively, the "Named
Executive Officers"), no executive officer of the Company received total salary
and bonus during fiscal year 1998 in excess of $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
---------------------- ------------
Number Of
Securities All Other
Salary Bonus Underlying Compensation
Name And Principal Position Year ($) ($) Option/ SARs ($)
- --------------------------- ---- ------- ------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Gary A. Kiedaisch 1998 223,077 -- 100,000 --
President and Chief Executive
Officer...................... 1997(2) 103,846 37,500 166,667 --
Martin E. Franklin(1) 1998 -- -- -- 150,000
Chairman..................... 1997 -- -- -- --
</TABLE>
- --------
(1) Mr. Franklin is not paid a salary by the Company. He provides services
pursuant to a Management Services Agreement by and among the Company and
Marlin Holdings, Inc., for which the Company pays Marlin Holdings $50,000
per month.
(2) From his date of hire in July 1997.
OPTION GRANTS IN 1998
The following table sets forth information regarding new options currently
held by the executive officers which were granted by the Company in 1998. The
table excludes options issued in conjunction with the Company's spinoff from
Lumen in 1998 (the "Spinoff") for Lumen options held, because those options
were issued as substitutes for Lumen options outstanding before the Spinoff. In
accordance with the rules of the Securities and Exchange Commission, the table
sets forth the hypothetical gains or "option spreads" that would exist for the
options at the end of their terms. These gains are based on assumed rates of
annual compound stock price appreciation of the Common Stock of 5% and 10% from
the date the options were granted to the end of the option terms.
<TABLE>
<CAPTION>
Individual Grants
---------------------
Potential
Realizable Value
Percent at Assumed Annual
of Total Rates of Stock
Number of Options Price
Securities Granted To Appreciation for
Underlying Employees Exercise Option Term
Options in Fiscal Price Per -----------------
Name Granted 1998 Share Expiration Date 5% 10%
- ---- ---------- ---------- --------- ------------------ -------- --------
<S> <C> <C> <C> <C> <C> <C>
Gary A.
Kiedaisch(1)(2)........ 100,000 26% $3.75 September 23, 2005 $127,628 $161,051
Martin E. Franklin(3)... -- -- -- -- -- --
</TABLE>
- --------
(1) 25,000 of Mr. Kiedaisch's options will vest on each of September 23, 1999,
2000, 2001 and 2002.
(2) Mr. Kiedaisch was issued Company options during 1998 in connection with the
replacement of his previously issued Lumen options held at the time of the
Spinoff. Mr. Kiedaisch was thereby issued 166,667 options at an average
exercise price of $.76 with expiration dates from July 1998 through July
20, 2001.
8
<PAGE>
(3) Mr. Franklin was not issued any new Company options during 1998. Mr.
Franklin was issued Company options during 1998 for the equivalent value of
his Lumen options held at the time of the Spinoff. Lumen was required to
take a compensation charge for this issuance. Mr. Franklin was thereby
issued 339,167 options at an average exercise price $1.81 with expiration
dates from May 3, 2003 through March 25, 2004.
OPTIONS EXERCISED IN LAST FISCAL YEAR;
FISCAL YEAR ENDED OPTION VALUES
The following table summarizes certain information regarding certain option
values as of the end of fiscal 1998 of options currently held by the named
executive officers.
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised
Options at FY-End In-The-Money Options At FY-End ($)
--------------------- ----------------------------------
Exercisable/ Exercisable/
Name Unexercisable Unexercisable
- ---- --------------------- ----------------------------------
<S> <C> <C>
Gary A. Kiedaisch..... 41,666/225,001 $51,665/$155,001
Martin E. Franklin.... 261,249/77,918 $274,082/$11,918
</TABLE>
Employment Agreement
Prior to November 30, 1999, Mr. Kiedaisch was employed full time pursuant to
an employment agreement with the Company, which as amended during 1998 provided
for a term ending on December 31, 2001, unless earlier terminated by either
party. Mr. Kiedaisch's employment agreement provided for annual base
compensation of $275,000 and entitled Mr. Kiedaisch to a bonus each year which
varied based on the Company's annual earnings reaching certain milestones. Mr.
Kiedaisch also received a grant of Lumen options which were exchanged upon the
completion of the Spinoff for 166,667 options to purchase shares of Common
Stock. During 1998, Mr. Kiedaisch received a grant of 100,000 options to
purchase Common Stock. Pursuant to a separate Memorandum of Understanding, Mr.
Kiedaisch will be entitled to a cash payment from the Company if the value of
the nominal gains on the options (the "Nominal Gain") at the close of business
on July 6, 2001 falls below certain levels as follows: If Mr. Kiedaisch's
employment has been terminated prior to July 6, 2001 other than without cause,
and the Nominal Gain is less than $338,000, the Company shall pay to Mr.
Kiedaisch the difference between $338,000 and the Nominal Gain. The employment
agreement restricts Mr. Kiedaisch from competing against the Company and its
affiliates in the United States or any other territory where the Company does
business or in which the Company's products are marketed for a period of one
year following the expiration of the employment agreement and further contains
certain anti-solicitation and confidentiality provisions. The Company may
terminate the employment agreement without cause upon paying Mr. Kiedaisch a
severance indemnity equal to one year's base compensation or all remaining base
compensation due thereunder for the remainder of the term, whichever is
greater, plus the pro rata portion of his bonus for the then current year. In
the event of any termination without cause, all options granted to Mr.
Kiedaisch which were not then vested would vest automatically. Mr. Kiedaisch's
employment with the Company was terminated as of November 30, 1999, and Mr.
Kiedaisch agreed to remain a non-executive director of the Company. On December
2, 1999, Mr. Kiedaisch executed a written consent and waiver pursuant to which
Mr. Kiedaisch waived any and all rights or claims that he may have under the
employment agreement and Memorandum of Understanding to severance or separation
pay or a sale or success bonus in connection with his departure from the
Company or the Transactions completed by the Merger Agreement.
1998 Stock Incentive Plan
In January 1998, the Company's Board of Directors adopted the 1998 Stock
Incentive Plan (the "Plan") under which 2,500,000 shares of Common Stock are
reserved for issuance pursuant to the grant of stock-based awards under the
Plan. Pursuant to the Plan, employees, officers, directors and consultants of
the Company and
9
<PAGE>
its subsidiaries and affiliates (other than employees subject to a collective
bargaining agreement) are eligible to be selected by the Compensation Committee
as participants to receive discretionary awards of various forms of equity-
based incentive compensation, including stock options, stock appreciation
rights, restricted stock awards, performance share unit awards and phantom
stock unit awards, and awards consisting of any combination of such equity-
based incentives as set forth below.
The Plan is administered by the full Board of Directors of the Company or a
committee thereof, including the Compensation Committee (the entity
administering the Plan, hereafter referred to as the "Committee"). The
Committee, in its sole discretion, will determine which eligible officers,
employees and consultants of the Company and its subsidiaries may participate
in the Plan and the type, extent and terms of the equity-based awards to be
granted to them. Members of the Committee who are Non-Employee Directors will
receive automatic non-discretionary annual grants of stock options pursuant to
the Plan.
Each Non-Employee Director has been granted an option to purchase 3,333
shares of Common Stock in connection with the Spinoff. On the date that a
person first becomes a Non-Employee Director, he or she will automatically be
granted an option to purchase 3,333 shares of Common Stock. Thereafter,
beginning in 1999, on the date of each annual meeting of stockholders of the
Company, each Non-Employee Director will automatically be granted an option to
purchase 1,000 shares of Common Stock. All such automatic grants to Non-
Employee Directors are hereafter called "Director Options." Each Director
Option has an exercise price per share equal to the fair market value of one
share of Common Stock on the date of grant and vests and becomes exercisable
over a four year period beginning on the first anniversary of the date of grant
at the rate of 25% of each Director Option on each of the four years
immediately following the date of grant. All Director Options will be NQSO's
(as defined below).
Stock options granted by the Committee under the Plan may be "incentive
stock options" ("ISOs"), within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended, or "non qualified stock options" ("NQSO's").
The exercise price of the options will be determined by the Committee when the
options are granted, subject to a minimum price of the fair market value of the
Common Stock on the date of grant in the case of ISOs and the par value in the
case of NQSOs. The option exercise price for all options granted under the Plan
may be paid in cash or in shares of Common Stock having a fair market value on
the date of exercise equal to the exercise price or, in the discretion of the
Committee, by delivery to the Company of (i) other property having a fair
market value on the date of exercise equal to the option exercise price, or
(ii) a copy of irrevocable instructions to a stockbroker to deliver promptly to
the Company an amount of sale or loan proceeds sufficient to pay the exercise
price.
A stock appreciation right (a "SAR"), may be granted by the Committee as a
supplement to a related stock option or may be granted independently of any
option. SARs granted in connection with an option will become exercisable and
lapse according to the same vesting schedule and lapse rules that are
established for the corresponding option. SARs granted independently of any
option will vest and lapse according to the terms and conditions set by the
Committee. A SAR will entitle its holder to be paid an amount equal to the
excess of the fair market value of the Common Stock subject to the SAR on the
date of exercise over the exercise price of the related stock options, in the
case of a SAR granted in connection with an option, or the fair market value of
Common Stock on the date of grant in the case of a SAR granted independently of
an option.
Shares of Common Stock covered by a restricted stock award may, in the
discretion of the Committee, be issued to the recipient at the time the award
is granted or may be deposited with an escrow agent until the end of the
restricted period set by the Committee. During the restricted period,
restricted stock will be subject to transfer restrictions and forfeiture in the
event of termination of employment with the Company or a subsidiary and other
restrictions and conditions established by the Committee at the time the award
is granted.
A phantom stock unit award will provide for the future payment of cash or
the issuance of shares Common Stock to the recipient if continued employment or
other conditions established by the Committee at the time of grant are
attained.
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A performance share unit award will provide for the future payment of cash
or the issuance of shares of the Common Stock to the recipient upon the
attainment of certain corporate performance goals established by the Committee
over performance award periods. At the end of each performance award period,
the Committee decides the extent to which the corporate performance goals have
been attained and the amount of cash or Common Stock to be distributed to the
participant.
During the year ended December 31, 1998, the Company granted 385,500 options
under the Plan, and also granted 829,164 replacement options of equivalent
Lumen options which were canceled in connections with the Spinoff. Of the new
options granted, 28% were granted to named executive officers and directors of
the Company.
Other Compensation Arrangements
The Company does not maintain a pension plan or other actuarial retirement
plan for its named executive officers. The Company does not maintain any long
term incentive plans. The Company's named executive officers are eligible to
participate in benefit plans which are generally available to the Company's
employees, including a 401(k) savings plan and the health and life insurance
programs.
Compensation Committee Report on Executive Compensation
This report is made by the Compensation Committee of the Board of Directors
(the "Committee"). The Committee is currently composed of David L. Moore
(Chairman) and David S. Moross. The Committee is responsible for setting and
administering the Company's policies governing annual compensation of key
employees, managers, officers and executive officers, including setting
individual annual base salaries or salary guidelines, annual bonus plans and
individual participation levels, and participation in the Plan. See "Director
Compensation." Compensation of executive officers, including compensation of
the Chief Executive Officer, is subject to approval of the Board of Directors.
The proposed compensation of any member of the Committee who also is an
executive officer would be subject to ratification by the disinterested members
of the Board of Directors; none of the present members of the committee are or
have been executive officers of the Company, and it is the Company's policy to
appoint only disinterested directors as members of the Committee.
Compliance with Federal Tax Law
The Committee has considered the potential impact of Section 162(m) (the
"Section") of the Internal Revenue Code, as amended. The Section disallows a
tax deduction for any publicly-held corporation for individual compensation
exceeding $1 million in any tax year for any executive officer, unless
compensation is based on performance. The Company maintains executive cash
compensation significantly below the $1 million threshold, and the Company
believes that any options granted under the Plan to any of its executive
officers will qualify as performance-based compensation, to the extent that any
of the same may result in compensation in excess of the threshold.
Consequently, the Committee does not believe that the Section will have any
impact on the deductibility to the Company of any compensation paid to
executive officers.
Overview
The Company's executive compensation program currently includes the
following key elements: base salary, cash bonuses and awards of stock options.
The Company's general executive officer compensation policy is intended to: (i)
support achievement of the Company's strategic goals; (ii) retain and reward
sufficiently committed and talented individuals prepared to invest their
talents for long term rather than short term gain and (iii) tie executive
officers' interests to stockholder interests.
The Committee determines base salaries for new executive officers and base
salary adjustments for current executive officers by evaluating the
responsibilities of the position held, the experience of the individual and
individual performance. It determines stock option awards based on the same
factors. In reviewing executive
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compensation matters, the committee may consult with the Company's human
resources professionals and/or independent compensation consultants. The
Committee also may make use of independently available compensation survey data
and other publicly available information, including publicly-disclosed
compensation information of other companies of comparable size engaged in
similar industries, as well as information gained through their experience as
directors of other publicly and privately held corporations. The Committee's
determinations also are made with reference to the Company's available
financial resources.
While the Company may make use of publicly available data and other surveys
in setting its general compensation policies, the Company is relatively young
and has experiences a period of rapid change. Consequently, it is not possible
to compare the Company or its compensation policies directly with more
established companies, and the Company's executive officer compensation is not
rigidly dominated by a lock-step approach to keeping executive compensation
competitive with compensation levels of companies of similar size or in
comparable industries. Additionally, the Company's brief history has rendered
financial results difficult to compare from one period to another. Therefore,
achievement of financial goals set by the Board on an annual basis is only one
of the factors considered in setting the Company's compensation policy;
successful implementation of the Company's more broadly-based strategic goals
also is considered an important factor. Moreover, the Company's focus on rapid
internal growth and expansion through acquisitions further affects its
executive compensation policy by causing the Company carefully to husband its
resources. The Committee believes that annual cash compensation of its
executive officers is below that which executives of comparable ability and
talent could receive competitively elsewhere.
It is the policy of the Committee and the Company that a portion of an
executive officer's compensation be composed of long-term performance-based
compensation. In this way, the Company can conserve its financial resources
while aligning the executive group's interests more strongly with the interests
of the Company's Stockholders; at the same time, the Company thereby attracts
executives of proven skill and ability who are prepared to invest their talents
over the long term. In furtherance of this policy, the Company adopted, and the
Committee has made awards and grants pursuant to, the Plan. In determining the
number of stock options granted during 1998, the Committee considered the same
criteria discussed above with respect to base salaries.
Chief Executive Officer Compensation
Mr. Kiedaisch, the Company's former President and Chief Executive Officer,
received an annual base salary for 1998 in the amount of $223,077 pursuant to
his employment agreement with the Company. From July 1, 1998 until the end of
fiscal 1998, Mr. Kiedaisch's base salary was set at $275,000. Mr. Kiedaisch
resigned from his position as of November 30, 1999. Pursuant to the terms of
the Merger Agreement, Mr. Kiedaisch has signed a waiver and consent confirming
that he is not entitled to any severance or separation pay or a sale or success
bonus in connection with his voluntary departure from the Company or the
transactions contemplated by the Merger Agreement. During his employment, Mr.
Kiedaisch was eligible to participate in the bonus program for executive
officers. See "Executive Compensation--Employment Agreements." No bonus was
paid to Mr. Kiedaisch for services rendered in 1998. The Committee believes
that Mr. Kiedaisch's compensation under his employment agreement was consistent
with the general policies described above. Mr. Kiedaisch's compensation was
determined in recognition of his accomplishments and efforts in building the
Company's world wide organization.
Compensation Committee
David L. Moore
David S. Moross
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Committee was comprised of the following members during fiscal year 1998:
David L. Moore, David S. Moross and Nora A. Bailey.
STOCK PERFORMANCE GRAPH
The graph below compares the cumulative total shareholder return on the
Common Stock since the Spinoff of the Common Stock with the cumulative total
return on the Russell 1000 Index and the Wilshire Small Cap Index over the same
period (assuming the investment of $100 in the Common Stock, the Russell 1000
Index and the Wilshire Small Cap on March 11, 1998, and the reinvestment of all
dividends).
Bolle Russell Wilshire
----------------------------------
03/12/98 Number of shares
----------------------------------
Investment 12.50 0.18 0.15
----------------------------------
Value
-----------------------
Mar-98 81.25 102.86 102.60
Apr-98 66.41 103.77 104.58
May-98 65.63 101.42 97.82
Jun-98 68.75 105.03 96.56
Jul-98 64.06 103.69 88.58
Aug-98 49.22 88.03 69.83
Sep-98 46.88 93.79 74.64
Oct-98 43.75 101.15 79.09
Nov-98 40.63 107.29 83.70
Dec-98 25.00 113.95 88.59
Jan-99 25.78 117.99 93.02
Feb-99 39.84 114.09 85.99
Mar-99 35.94 118.32 87.84
Apr-99 36.72 123.23 96.74
May-99 37.50 120.37 96.91
Jun-99 34.38 126.49 103.12
Jul-99 35.55 122.39 100.67
Aug-99 32.81 121.11 97.29
Sep-99 35.94 117.67 97.97
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Management Services Agreement
In connection with the Spinoff in March 1998, the Company entered into a
Management Services Agreement with Lumen. Pursuant to the Management Services
Agreement, Lumen agreed to provide certain management services to the Company,
including services relating to overall management and strategic planning and
direction, banking negotiations, treasury functions, investor relations,
securities regulatory compliance, employee and general business insurance
programs and asset acquisitions and sales. Pursuant to the Management Services
Agreement, Lumen also agreed to make available to the Company the services of
Mr. Martin E. Franklin and Mr. Ian G. H. Ashken, both of whom are also members
of the Company's Board of Directors. As compensation for its services, Lumen
was entitled to receive a monthly fee of $60,000 and reimbursement for its
identifiable reasonable out-of-pocket expenses incurred in connection with the
performance of services under the Management Services Agreement. On September
23, 1998, the Company entered into Amendment No. 1 to Management Services
Agreement, among the Company, Lumen and Marlin Holdings, Inc., of which Mr.
Franklin is the Chairman, Chief Executive Officer and a principal stockholder
and Mr. Ashken is the Vice Chairman and a principal stockholder, pursuant to
which, in effect, Lumen assigned its rights and obligations under the
Management Services Agreement to Marlin, which assumed Lumen's obligation
thereunder, and the monthly management fee payable by the Company was reduced
from $60,000 to $50,000. The Management Services Agreement was also amended to
have an initial term of four years, and will thereafter be automatically
renewed for successive one-year periods until terminated by either party upon
90 days' written notice. In connection with entering into such amendment, (i)
the Company consented to the assignment and released Lumen from its obligations
pursuant to the Management Services Agreement arising from October 1998 through
the remainder of the term and (ii) Lumen assigned to the Company any and all
claims it has or may have relating to certain litigation and the Company agreed
to defend, indemnify and hold Lumen harmless against all claims, damages,
losses, liabilities, cost and expenses incurred in connection with such
litigation, including without limitation defending any counter-claims. On
November 24, 1999, the Management Services Agreement was further amended by a
Letter Agreement, pursuant to which, among other things, Marlin Management
agreed to subordinate payments due under the Management Agreement to any bank
debt or other indebtedness incurred by the Company in connection with the
consummation of the Offer or the related Merger.
Contribution Agreement and Indemnification Agreement
Pursuant to a Contribution Agreement entered into by Lumen and the Company
in connection with the Spinoff, Lumen assigned to the Company all of Lumen's
assets other than those related to the ORC Business, which was the business
continued by Lumen after the Spinoff, and certain other specified assets
retained by Lumen, and the Company assumed all of Lumen's liabilities prior to
the Spinoff other than those related to the ORC Business. In addition, pursuant
to an Indemnification Agreement between Lumen, ILC Technology, Inc. (a business
purchased by Lumen after the Spinoff) and the Company, the Company is required
to indemnify Lumen against all of Lumen's liabilities prior to the Spinoff
other than substantially all liabilities related to the ORC Business.
Relationships with Directors
Employment Agreements
Mr. Franck Bolle, a director of the Company, is employed full-time by
Societe Bolle SNC, an indirectly wholly owned subsidiary of the Company, as
Director of International Operations, pursuant to an employment agreement with
Bolle SNC. This agreement was originally entered into in July 1997 and was
amended effective January 1, 1999. During 1998, the Company was committed to
pay basic annual gross base remuneration in the French Franc equivalent of
approximately $280,000, to be increased by a minimum of 3% annually after the
first year. In addition, Franck Bolle is entitled to a bonus for 1999 of 25% to
50% of his annual salary if the Company meets or exceeds its annual budgetary
objectives. The agreement shall continue until terminated by either party upon
three-months prior written notice, provided, however, that if the Company
terminates the agreement before July 9, 2000 for any reason other than gross or
willful misconduct, the employee will be
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entitled to compensation equal to the salary that he or she would have received
from the date of termination to July 9, 2000. The agreement provides that if
the employee terminates his or her employment, he will be restricted from
competing against Bolle SNC for a period of up to three years following such
termination and will be entitled to an additional monthly compensation equal to
eight to ten percent of his last monthly salary during such period. An
amendment, effective January 1, 1999, reduced the annual salary of Mr. Franck
Bolle to a level commensurate with his current duties of approximately $168,000
per year, leaving the other terms of the agreements the same. The difference
between the originally agreed salary level and the new salary for the remainder
of the term of the agreement was to be paid in cash in 1999.
On July 7, 1997, Ms. Patricia Bolle Passaquay entered into an employment
agreement with the Company providing for substantially the same terms as that
of Mr. Franck Bolle. Ms. Bolle Passaquay left the employment of the Company
effective June 30, 1999. Pursuant to the terms of her separation agreement she
received compensation for the remainder of her contract term (through July
2000).
Bolle Preferred Stock and Warrants
Each of Mr. Franck Bolle and Ms. Patricia Bolle Passaquay holds 12,614
shares of Series A preferred stock and 1,975 shares of Series B preferred stock
of the Company ("Series A Preferred Stock" and "Series B Preferred Stock,"
respectively), and warrants for the purchase of up to 132,724 shares of Common
Stock ("Warrants"), all of which were issued as partial consideration for the
Bolle France acquisition described below. Mr. Bolle and Ms. Bolle Passaquay may
not sell their Series B preferred stock without the prior written consent of at
least 90% of the then outstanding shares of the Series B preferred stock until
the Company has redeemed all the shares of the Series B preferred stock or the
subordinated debt (as defined below). As of the Effective Time of the Merger,
each of the Warrants will 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 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 the Merger Agreement. As of the
Effective Time, each share of Series A Preferred Stock and Series B Preferred
Stock that is outstanding 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 the Merger Agreement).
Certain Transactions
Bolle France Acquisition
On July 10, 1997, Lumen acquired and contributed to the Company all of the
issued and outstanding share capital of Bolle France, pursuant to the terms of
a Share Purchase Agreement (the "Share Purchase Agreement") by and among the
Company, Mr. Franck Bolle, Ms. Patricia Bolle Passaquay, Ms. Christelle Roche,
Ms. Brigitte Bolle, Mr. Robert Bolle and Mr. Maurice Bolle (collectively, the
"Sellers"). Pursuant to the terms of the Share Purchase Agreement, the Company
acquired from the Sellers all of the issued and outstanding share capital of
Bolle France, Bolle Diffusion Sarl and the related land, in exchange for
approximately $54,700,000 consisting of the following, not including
transaction expenses of approximately $3,600,000: (a) $31,000,000 in cash (the
"Cash Consideration"); (b) warrants to the Sellers to purchase Lumen common
stock which have since been exchanged for Warrants to purchase an aggregate of
663,618 shares of Common Stock with an exercise price of $9.95 per share; (c)
ten thousand (10,000) shares of Lumen Series A Preferred Stock having an
aggregate liquidation preference of approximately $9,300,000 issued pursuant to
the terms of the Certificate of Designations of Lumen Series A Preferred Stock;
(d) one hundred (100) shares of Common Stock valued at approximately
$3,300,000, being the minimum value of the Common Stock to be issued to the
Sellers pursuant to the Share Purchase Agreement; and (e) sixty-four thousand
one hundred twenty (64,120) shares of Series A Preferred Stock having an
aggregate liquidation preference of approximately $11,100,000 issued pursuant
to the terms of the Certificate of Designations of the Series A Preferred Stock
of the Company. On July 10, 1997, Lumen borrowed approximately $32,000,000, for
the purpose of paying the Cash Consideration and certain transaction expenses
in connection with the purchase of Bolle France.
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The Share Purchase Agreement provides that none of the Sellers may dispose
of their shares of Common Stock until July 9, 2000. If, on that date, the
closing market price of the total number of shares then held by the Sellers is
less than $3,301,500 (the "Minimum Value"), the Company shall pay on such date
in cash or freely tradable stock the difference between the actual value of the
shares and the Minimum Value. In addition, pursuant to letters dated July 9,
1997 and December 4, 1997 from Martin Franklin to the Sellers, including Mr.
Franck Bolle and Ms. Patricia Bolle Passaquay, Mr. Franklin will refrain from
selling any shares of Common Stock which he received pursuant to the Spinoff
for so long as the Series B Preferred Stock shall not have been redeemed in
full by the Company. In connection with the Spinoff, each of Mr. Franck Bolle,
Ms. Patricia Bolle Passaquay, Ms. Christelle Roche and Ms. Brigitte Bolle were
issued approximately 55,000 shares of Common Stock and each of Mr. Robert Bolle
and Mr. Maurice Bolle were issued approximately 27,500 shares of Common Stock.
All of the shares of Common Stock received by the Sellers, including Mr. Franck
Bolle and Ms. Patricia Bolle Passaquay, pursuant to the Share Purchase
Agreement and this dividend, bear the rights and obligations described above.
In connection with the closing of the Offer, the Company intends to waive the
restrictions on transfer on the shares of Common Stock held by the Sellers set
forth above.
Under the Share Purchase Agreement, each of the Sellers on the one hand, and
the Company and Lumen on the other hand, are liable to fully reimburse and
indemnify the other for any expense, damage, loss or liability arising from any
breach of the terms of the Share Purchase Agreement by the indemnifying party,
subject to certain minimum claim amounts which must be met for the
indemnification provisions to take effect. In connection with the Spinoff, the
Company agreed to assume all obligations and liabilities of Lumen to each
Seller, including Mr. Franck Bolle and Ms. Patricia Bolle Passaquay, incurred
by Lumen in connection with the purchase of Bolle France and Lumen shall then
be released from all such obligations and liabilities. As a result, the Company
became solely responsible for Lumen's indemnification obligations for breach of
its representations and warranties made to the Sellers, including Mr. Franck
Bolle and Ms. Patricia Bolle Passaquay, in the Share Purchase Agreement.
Indebtedness to related parties
During the year ended December 31, 1997 and the interim period ended March
12, 1998, the Company was party to a revolving intercompany credit arrangement
with Lumen. In connection with the Spinoff, Lumen repurchased all the shares of
Lumen preferred stock held by the Company in exchange for the cancellation of
intercompany debt owed by the Company to Lumen. At the time of the Spinoff, the
Company entered into a credit agreement with Bank of America, National
Association, as agent, and the other lenders parties thereto (the "Credit
Agreement"), and there are no further credit arrangements between Lumen and the
Company. Upon the consummation of the Offer, the Purchaser shall either pay in
full the indebtedness owed by the Company under the Credit Agreement or obtain
from Bank of America a waiver of the default thereunder caused by the
consummation of the Offer.
Sale of Eyecare Products Investment
On February 26, 1998, as a part of a tender offer, the Company sold its
investment in Eyecare Products plc. for (Pounds)3.1 million, resulting in a
nominal gain on the sale. $3 million of the proceeds were used to repay
outstanding bank debt. Both Mr. Franklin and Mr. Ashken were directors of
Eyecare Products.
Non-Compete Agreement
In connection with the Spinoff, pursuant to the transfers made from Lumen to
the Company under the Contribution Agreement, the Company became party to a
non-compete agreement entered into with Steve N. Haber, the former Chairman of
the Board, Chief Executive Officer and President of Bolle America in November
1995. Mr. Haber agreed, on January 1, 1997 and continuing through December 31,
2005, not to compete against the Company in the eyewear or optical, opthalmic
or optometric businesses in any geographic area in which the Company does
business. As compensation for this noncompete agreement, Mr. Haber
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received an initial payment of $800,000 and will receive a payment of $100,000
per year commencing January 1, 1997 through December 31, 2005. Mr. Haber
furthermore agreed not to disclose any of the Company's confidential
information.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, (the "Exchange Act")
requires the Company's directors and executive officers, and persons who own
more than ten percent (10%) of a registered class of the Company's equity
securities, to file with the Securities and Exchange Commission ("SEC") and the
stock exchange upon which the Company's stock is listed, initial reports of
ownership and reports of changes in ownership of common stock and other equity
securities of the Company. Officers, directors and greater than ten-percent
shareholders are required to furnish the Company with copies of all Section
16(a) forms they file. The Company's securities did not trade publicly until
March 12, 1998; consequently, no persons described above were subject to
Section 16(a) reporting requirements prior to that date. To the Company's
knowledge, based solely on review of the copies of such reports furnished to
the Company, during the fiscal year ended December 31, 1998, all Section 16(a)
filing requirements applicable to its officers, directors and greater than ten
percent (10%) beneficial owners were complied with.
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EXHIBIT 1
Excerpt from Bolle's 1998 Annual Report on Form 10-K (SEC File# 000-23899):
"ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
MANAGEMENT SERVICES AGREEMENT
In connection with the Spinoff, the Company entered into a Management
Services Agreement with Lumen (the "Management Services Agreement"). Pursuant to
the Management Services Agreement, Lumen agreed to provide certain management
services to the Company, including services relating to overall management and
strategic planning and direction, banking negotiations, treasury functions,
investor relations, securities regulatory compliance, employee and general
business insurance programs and asset acquisitions and sales. Pursuant to the
Management Services Agreement, Lumen also agreed to make available to the
Company the services of Mr. Martin E. Franklin and Mr. Ian G. H. Ashken. As
compensation for its services, Lumen was entitled to receive a monthly fee of
$60,000 and reimbursement for its identifiable reasonable out-of-pocket expenses
incurred in connection with the performance of services under the Management
Services Agreement. On September 23, 1998, the Company entered into Amendment
No. 1 to Management Services Agreement, among the Company, Lumen and Marlin
Holdings, Inc. ("Marlin"), of which Mr. Franklin is the Chairman, Chief
Executive Officer and a principal stockholder and Mr. Ashken is the Vice
Chairman and a principal stockholder, pursuant to which, in effect, Lumen
assigned its rights and obligations under the Management Services Agreement to
Marlin, which assumed Lumen's obligation thereunder, and the monthly management
fee payable by the Company was reduced from $60,000 to $50,000. The Management
Services Agreement was also amended to have an initial term of four years, and
will thereafter be automatically renewed for successive one-year periods until
terminated by either party upon 90 days' written notice. In connection with
entering into such amendment, (i) the Company consented to the assignment and
released Lumen from its obligations pursuant to the Management Services
Agreement arising from October 1998 through the remainder of the term and (ii)
Lumen assigned to the Company any and all claims it has or may have relating to
certain litigation and the Company agreed to defend, indemnify and hold Lumen
harmless against all claims, damages, losses, liabilities, cost and expenses
incurred in connection with such litigation, including without limitation
defending any counter-claims.
CONTRIBUTION AGREEMENT AND INDEMNIFICATION AGREEMENT
In connection with the Spinoff, Lumen assigned to the Company all of
Lumen's assets other than those related to the ORC Business (as defined in the
Contribution Agreement) and certain other specified assets retained by Lumen,
and the Company assumed all of Lumen's liabilities prior to the Spinoff other
than those related to the ORC Business. In addition, pursuant to an
Indemnification Agreement between Lumen, ILC Technology, Inc. and the Company
(the "Bolle Indemnification Agreement") the Company is required to indemnify
Lumen against all of Lumen's liabilities prior to the Spinoff other than
substantially all liabilities related to the ORC Business. In October 1998, the
Company entered into Amendment No. 1 to the Bolle Indemnification Agreement
pursuant to which, among other things, the Bolle Indemnification Agreement was
amended to clarify that the Company was not required to indemnify and hold Lumen
harmless from and against losses incurred or arising from any environmental laws
relating to Voltarc Technologies, Inc.
<PAGE>
RELATIONSHIPS WITH DIRECTORS
Employment Agreements.
Each of Mr. Franck Bolle and Ms. Patricia Bolle Passaquay, both
directors of the Company, is employed full-time by Societe Bolle SNC ("Bolle
SNC"), an indirectly wholly owned subsidiary of the Company, as Director of
International Operations and Director of Export Sales, respectively, pursuant to
employment agreements with Bolle SNC. These agreements were originally entered
into in July 1997 and were amended effective January 1, 1999. During 1998, the
Company was committed to pay basic annual gross base remuneration in the French
Franc equivalent of approximately $280,000, to be increased by a minimum of 3%
annually after the first year. In addition, each of Mr. Franck Bolle and Ms.
Patricia Bolle Passaquay is entitled to bonuses for the years 1997, 1998 and
1999 of 25% to 50% of his or her annual salary if the Company meets or exceeds
its annual budgetary objectives. Each agreement shall continue until terminated
by either party upon three-months prior written notice, provided, however, that
if the Company terminates either agreement before July 9, 2000 for any reason
other than gross or willful misconduct, the employee will be entitled to
compensation equal to the salary that he or she would have received from the
date of termination to July 9, 2000. Each agreement provides that if the
employee terminates his or her employment, he or she will be restricted from
competing against Bolle SNC for a period of up to three years following such
termination and will be entitled to an additional monthly compensation equal to
eight to ten percent of his or her last monthly salary during such period. The
amendment, effective January 1, 1999, reduced the annual salaries of Mr. Franck
Bolle and Ms, Patricia Bolle Passaquay to a level commensurate with their
current duties of approximately $168,000 per year leaving the other terms of the
agreements the same. The difference between the originally agreed salary levels
and the new salaries for the remainder of the term of the agreements will be
paid in cash in 1999.
Mr. Kiedaisch, the Chief Executive Officer and a director of the
Company, is employed full time pursuant to an employment agreement with the
Company. See "EXECUTIVE COMPENSATION--Employment Agreement."
Bolle Preferred Stock and Warrants. Each of Mr. Franck Bolle and Ms.
Patricia Bolle Passaquay holds 12,614 shares of Series A Preferred Stock and
1,975 shares of Series B Preferred Stock, and Bolle Warrants for the purchase of
up to 132,724 shares of Common Stock. Mr. Bolle and Ms. Bolle Passaquay may not
sell their Series B Preferred Stock without the prior written consent of at
least 90% of the then outstanding shares of the Series B Preferred Stock until
the Company has redeemed all the shares of the Series B Preferred Stock or the
Subordinated Debt (as defined below). For a description of the rights and
preferences of the Bolle Series A and Series B Preferred Stock and a description
of the Bolle Warrants, see "DESCRIPTION OF CAPITAL STOCK."
CERTAIN TRANSACTIONS
Bolle France Acquisition. On July 10, 1997, Lumen acquired and
contributed to the Company all of the issued and outstanding share capital of
Bolle France, pursuant to the terms of the Share Purchase Agreement. Pursuant to
the terms of the Share Purchase Agreement, Bolle acquired from the Sellers all
of the issued and outstanding share capital of Bolle France, Bolle Diffusion
Sarl and the related land, in exchange for approximately $54,700,000 consisting
of the following, not including transaction expenses of approximately
$3,600,000: (a) $31,000,000 in cash (the "Cash Consideration"); (b) warrants to
the Sellers to purchase Lumen common stock which have since been exchanged for
Bolle Warrants to purchase an aggregate of 663,618 shares of Common Stock with
an exercise price of $9.95 per share; (c) ten thousand (10,000) shares of Lumen
Series A Preferred Stock having an aggregate liquidation preference of
approximately $9,300,000 issued pursuant to the terms of the Certificate of
Designations of Lumen Series A Preferred Stock; (d) one hundred (100) shares of
Common Stock valued at approximately $3,300,000, being the minimum value of the
Common Stock to be issued to the Sellers pursuant to the Share Purchase
Agreement; and (e) sixty-four thousand one hundred twenty (64,120) shares of
Series A Preferred Stock having an aggregate liquidation preference of
approximately $11,100,000 issued pursuant to the terms of the Certificate of
Designations of the Series A Preferred Stock of the Company. On July 10, 1997,
Lumen borrowed approximately $32,000,000, for the purpose of paying the Cash
Consideration and certain"
<PAGE>
transaction expenses in connection with the purchase of Bolle France, pursuant
to the terms of the Credit Agreement.
The Share Purchase Agreement provides that none of the Sellers may
dispose of their shares of Common Stock until July 9, 2000. If, on that date,
the closing market price of the total number of shares then held by the Sellers
is less than $3,301,500 (the "Minimum Value"), the Company shall pay on such
date in cash or freely tradable stock the difference between the actual value of
the shares and the Minimum Value. In addition, pursuant to letters dated July 9,
1997 and December 4, 1997 from Martin Franklin to the Sellers, including Mr.
Franck Bolle and Ms. Patricia Bolle Passaquay, Mr. Franklin will refrain from
selling any shares of Common Stock which he received pursuant to the Spinoff for
so long as the Series B Preferred Stock shall not have been redeemed in full by
the Company. In connection with the Spinoff, each of Mr. Franck Bolle, Ms.
Patricia Bolle Passaquay, Ms. Christelle Roche and Ms. Brigitte Bolle were
issued approximately 55,000 shares of Common Stock and each of Mr. Robert Bolle
and Mr. Maurice Bolle were issued approximately 27,500 shares of Common Stock.
All of the shares of Common Stock received by the Sellers, including Mr. Franck
Bolle and Ms. Patricia Bolle Passaquay, pursuant to the Share Purchase Agreement
and this dividend will bear the rights and obligations described above.
Under the Share Purchase Agreement, each of the Sellers on the one
hand, and the Company and Lumen on the other hand, are liable to fully reimburse
and indemnify the other for any expense, damage, loss or liability arising from
any breach of the terms of the Share Purchase Agreement by the indemnifying
party, subject to certain minimum claim amounts which must be met for the
indemnification provisions to take effect. In connection with the Spinoff, the
Company agreed to assume all obligations and liabilities of Lumen to each
Seller, including Mr. Franck Bolle and Ms. Patricia Bolle Passaquay, incurred by
Lumen in connection with the purchase of Bolle France and Lumen shall then be
released from all such obligations and liabilities. As a result, the Company
became solely responsible for Lumen's indemnification obligations for breach of
its representations and warranties made to the Sellers, including Mr. Franck
Bolle and Ms. Patricia Bolle Passaquay, in the Share Purchase Agreement.
Indebtedness to related parties. During the year ended December 31,
1997 and the interim period ended March 12, 1998, the Company was party to a
revolving intercompany credit arrangement with Lumen. In connection with the
Spinoff, Lumen repurchased all the shares of Lumen preferred stock held by the
Company in exchange for the cancellation of intercompany debt owed by the
Company to Lumen. At the time of the Spinoff the Company entered into the Credit
Agreement and there are no further intercompany credit arrangements between
Lumen and the Company.
Consulting and Non-Compete Agreement. In connection with the
Spinoff, pursuant to the transfers made from Lumen to the Company under the
Contribution Agreement, the Company became party to the consulting and
non-compete agreement entered into with Steve N. Haber, the former Chairman of
the Board, Chief Executive Officer and President of Bolle America in November
1995. The following description refers to the parties' respective duties giving
effect to the assignment of the consulting agreement to the Company. Pursuant to
the agreement, as of January 1, 1997, Mr. Haber was hired as a consultant to the
Company for annual compensation of $155,000 plus health and life insurance
benefits for a period ending on December 31, 2000, extendible for an additional
five years by mutual agreement of the parties. Such consulting agreement was
terminated as of December 31, 1998 and during the first quarter of 1999, the
Company paid the remaining amount due under the agreement to Mr. Haber. Mr.
Haber also agreed, commencing on the effective date of the consulting agreement
and continuing through December 31, 2005, not to compete against the Company in
the eyewear or optical, opthalmic or optometric businesses in any geographic
area in which the Company does business. As compensation for this noncompete
agreement, Mr. Haber received an initial payment of $800,000 and will receive a
payment of $100,000 per year commencing January 1, 1997 through December 31,
2005. Mr. Haber furthermore agreed not to disclose any of the Company's
confidential information. The non-compete agreement remains in effect."
<PAGE>
Excerpt from Bolle's Proxy Statement for its 1999 Annual Meeting of Stockholders
(SEC File# 000-23899):
"CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS
MANAGEMENT SERVICES AGREEMENT
In connection with the Spinoff, the Company entered into a Management
Services Agreement with Lumen (the "Management Services Agreement"). Pursuant to
the Management Services Agreement, Lumen agreed to provide certain management
services to the Company, including services relating to strategic planning and
direction, banking negotiations, treasury functions, investor relations,
securities regulatory compliance, insurance programs and asset acquisitions and
sales. Pursuant to the Management Services Agreement, Lumen also agreed to make
available to the Company the services of Mr. Martin E. Franklin and Mr. Ian G.
H. Ashken. As compensation for its services, Lumen was entitled to receive a
monthly fee of $60,000 and reimbursement for its identifiable reasonable
out-of-pocket expenses incurred in connection with the performance of services
under the Management Services Agreement. On September 23, 1998, the Company
entered into Amendment No. 1 to Management Services Agreement, among the
Company, Lumen and Marlin Holdings, Inc. ("Marlin"), of which Mr. Franklin is
the Chairman, Chief Executive Officer and a principal stockholder and Mr. Ashken
is the Vice Chairman and a principal stockholder, pursuant to which, in effect,
Lumen assigned its rights and obligations under the Management Services
Agreement to Marlin, which assumed Lumen's obligation thereunder, and the
monthly management fee payable by the Company was reduced from $60,000 to
$50,000. The Management Services Agreement was also amended to have an initial
term of four years, and will thereafter be automatically renewed for successive
one-year periods until terminated by either party upon 90 days' written notice.
In connection with entering into such amendment, the Company consented to the
assignment and released
<PAGE>
Lumen from its obligations pursuant to the Management Services Agreement arising
from October 1998 through the remainder of the term.
CONTRIBUTION AGREEMENT AND INDEMNIFICATION AGREEMENT
In connection with the Spinoff, Lumen assigned to the Company all of
Lumen's assets other than those related to the ORC Business (as defined in the
Contribution Agreement) and certain other specified assets retained by Lumen,
and the Company assumed all of Lumen's liabilities prior to the Spinoff other
than those related to the ORC Business. In addition, pursuant to an
Indemnification Agreement between Lumen, ILC Technology, Inc. and the Company
(the "Bolle Indemnification Agreement") the Company is required to indemnify
Lumen against all of Lumen's liabilities prior to the Spinoff other than
substantially all liabilities related to the ORC Business. In October 1998, the
Company entered into Amendment No. 1 to the Bolle Indemnification Agreement
pursuant to which, among other things, the Bolle Indemnification Agreement was
amended to clarify that the Company was not required to indemnify and hold Lumen
harmless from and against losses incurred or arising from any environmental laws
relating to Voltarc Technologies, Inc.
RELATIONSHIPS WITH DIRECTORS
Employment Agreements.
Each of Mr. Franck Bolle and Ms. Patricia Bolle Passaquay, both
directors of the Company, is employed by Societe Bolle SNC ("Bolle SNC"), an
indirectly wholly owned subsidiary of the Company, as Director of International
Operations and Director of Export Sales, respectively, pursuant to employment
agreements with Bolle SNC. These agreements were originally entered into in July
1997. During 1998, the Company was committed to pay basic annual gross base
remuneration in the French Franc equivalent of approximately $280,000, to be
increased by a minimum of 3% annually after the first year. In addition, each of
Mr. Franck Bolle and Ms. Patricia Bolle Passaquay is entitled to bonuses for the
years 1997, 1998 and 1999 of 25% to 50% of his or her annual salary if the
Company meets or exceeds its annual budgetary objectives. Each agreement shall
continue until terminated by either party upon three-months prior written
notice, provided, however, that if the Company terminates either agreement
before July 9, 2000 for any reason other than gross or willful misconduct, the
employee will be entitled to compensation equal to the salary that he or she
would have received from the date of termination to July 9, 2000. Each agreement
provides that if the employee terminates his or her employment, he or she will
be restricted from competing against Bolle SNC for a period of up to three years
following such termination and will be entitled to an additional monthly
compensation equal to eight to ten percent of his or her last monthly salary
during such period. Mr. Frank Bolle employment agreement was amended effective
January 1, 1999, reducing his annual salary to a level commensurate with his
current duties of approximately $168,000 per year leaving the other terms of the
agreements the same. The difference between the originally agreed salary level
and the new salary for the remainder of the term of the agreement will be paid
<PAGE>
in cash in 1999. Ms. Patricia Bolle Passaquay's employment is currently under
review for possible amendment.
Mr. Kiedaisch, the Chief Executive Officer and a director of the
Company, is employed full time pursuant to an employment agreement with the
Company.
Bolle Preferred Stock and Warrants. Each of Mr. Franck Bolle and Ms.
Patricia Bolle Passaquay holds 12,614 shares of Series A Preferred Stock and
1,975 shares of Series B Preferred Stock, and Bolle Warrants for the purchase of
up to 132,724 shares of Common Stock. Mr. Bolle and Ms. Bolle Passaquay may not
sell their Series B Preferred Stock without the prior written consent of at
least 90% of the then outstanding shares of the Series B Preferred Stock until
the Company has redeemed all the shares of the Series B Preferred Stock or the
Subordinated Debt (as defined below). For a description of the rights and
preferences of the Bolle Series A and Series B Preferred Stock and a description
of the Bolle Warrants.
CERTAIN TRANSACTIONS
Bolle France Acquisition. On July 10, 1997, Lumen acquired and
contributed to the Company all of the issued and outstanding share capital of
Bolle France, pursuant to the terms of the Share Purchase Agreement. Pursuant to
the terms of the Share Purchase Agreement, Bolle acquired from the Sellers all
of the issued and outstanding share capital of Bolle France, Bolle Diffusion
Sarl and the related land, in exchange for approximately $54,700,000 consisting
of the following, not including transaction expenses of approximately
$3,600,000: (a) $31,000,000 in cash (the "Cash Consideration"); (b) warrants to
the Sellers to purchase Lumen common stock which have since been exchanged for
Bolle Warrants to purchase an aggregate of 663,618 shares of Common Stock with
an exercise price of $9.95 per share; (c) ten thousand (10,000) shares of Lumen
Series A Preferred Stock having an aggregate liquidation preference of
approximately $9,300,000 issued pursuant to the terms of the Certificate of
Designations of Lumen Series A Preferred Stock; (d) one hundred (100) shares of
Common Stock valued at approximately $3,300,000, being the minimum value of the
Common Stock to be issued to the Sellers pursuant to the Share Purchase
Agreement; and (e) sixty-four thousand one hundred twenty (64,120) shares of
Series A Preferred Stock having an aggregate liquidation preference of
approximately $11,100,000 issued pursuant to the terms of the Certificate of
Designations of the Series A Preferred Stock of the Company. On July 10, 1997,
Lumen borrowed approximately $32,000,000, for the purpose of paying the Cash
Consideration and certain transaction expenses in connection with the purchase
of Bolle France, pursuant to the terms of the Credit Agreement.
The Share Purchase Agreement provides that none of the Sellers may
dispose of their shares of Common Stock until July 9, 2000. If, on that date,
the closing market price of the total number of shares then held by the Sellers
is less than $3,301,500 (the "Minimum Value"), the Company shall pay on such
date in cash or freely tradable stock the difference between the actual value of
the shares and the Minimum Value. In addition, pursuant to letters dated July 9,
1997 and December 4, 1997 from Martin Franklin to the Sellers, including Mr.
Franck Bolle and Ms. Patricia Bolle Passaquay, Mr. Franklin will refrain from
selling any shares of Common Stock
<PAGE>
which he received pursuant to the Spinoff for so long as the Series B Preferred
Stock shall not have been redeemed in full by the Company. In connection with
the Spinoff, each of Mr. Franck Bolle, Ms. Patricia Bolle Passaquay, Ms.
Christelle Roche and Ms. Brigitte Bolle were issued approximately 55,000 shares
of Common Stock and each of Mr. Robert Bolle and Mr. Maurice Bolle were issued
approximately 27,500 shares of Common Stock. All of the shares of Common Stock
received by the Sellers, including Mr. Franck Bolle and Ms. Patricia Bolle
Passaquay, pursuant to the Share Purchase Agreement and this dividend will bear
the rights and obligations described above.
Under the Share Purchase Agreement, each of the Sellers on the one
hand, and the Company and Lumen on the other hand, are liable to fully reimburse
and indemnify the other for any expense, damage, loss or liability arising from
any breach of the terms of the Share Purchase Agreement by the indemnifying
party, subject to certain minimum claim amounts which must be met for the
indemnification provisions to take effect. In connection with the Spinoff, the
Company agreed to assume all obligations and liabilities of Lumen to each
Seller, including Mr. Franck Bolle and Ms. Patricia Bolle Passaquay, incurred by
Lumen in connection with the purchase of Bolle France and Lumen shall then be
released from all such obligations and liabilities. As a result, the Company
became solely responsible for Lumen's indemnification obligations for breach of
its representations and warranties made to the Sellers, including Mr. Franck
Bolle and Ms. Patricia Bolle Passaquay, in the Share Purchase Agreement.
Consulting and Non-Compete Agreement. In connection with the
Spinoff, pursuant to the transfers made from Lumen to the Company under the
Contribution Agreement, the Company became party to the consulting and
non-compete agreement entered into with Steve N. Haber, the former Chairman of
the Board, Chief Executive Officer and President of Bolle America in November
1995. The following description refers to the parties' respective duties giving
effect to the assignment of the consulting agreement to the Company. Pursuant to
the agreement, as of January 1, 1997, Mr. Haber was hired as a consultant to the
Company for annual compensation of $155,000 plus health and life insurance
benefits for a period ending on December 31, 2000, extendible for an additional
five years by mutual agreement of the parties. Such consulting agreement was
terminated as of December 31, 1998 and during the first quarter of 1999, the
Company paid the remaining amount due under the agreement to Mr. Haber. Mr.
Haber also agreed, commencing on the effective date of the consulting agreement
and continuing through December 31, 2005, not to compete against the Company in
the eyewear or optical, opthalmic or optometric businesses in any geographic
area in which the Company does business. As compensation for this noncompete
agreement, Mr. Haber received an initial payment of $800,000 and will receive a
payment of $100,000 per year commencing January 1, 1997 through December 31,
2005. Mr. Haber furthermore agreed not to disclose any of the Company's
confidential information. The non-compete agreement remains in effect."
<PAGE>
EXHIBIT 2
BOLLE INC.
555 Theodore Fremd Avenue
Suite B-320
Rye, New York 10580
November 24, 1999
Marlin Holdings, Inc. Wind Point Partners
555 Theodore Fremd Avenue One Towne Square
Suite B-320 Suite 700
Rye, New York 10580 Southfield, Michigan 48076
Ladies and Gentlemen:
Reference is hereby made to that certain Management Services Agreement,
dated March 11, 1998 between Bolle Inc. ("Bolle") and Marlin Holdings, Inc.
("Marlin"), as amended by that certain Amendment No. 1, dated September 23, 1998
and as in full force and effect as of the date hereof (the "Management Services
Agreement"). Bolle and Marlin, intending to amend such agreement, hereby agree
that, effective upon consummation of the tender offer (the "Offer") pursuant to
that certain Agreement and Plan of Merger, dated as of the date hereof, by and
among and Worldwide Sports and Recreation, Inc., Shade Acquisition, Inc. ("Shade
Acquisition"), and Bolle, (i) the difference, if any, between $3,300,000 and the
Transaction Fees (as defined in the Merger Agreement) actually paid or incurred
by Bolle shall be paid to Marlin in a lump sum payment in payment of amounts
otherwise payable to Marlin under the Management Services Agreement, provided
that such lump sum payment shall not exceed $600,000 in the aggregate (the "Lump
Sum Payment"), (ii) the remaining amounts payable to Marlin under the Management
Services Agreement (after taking into account the payment of the Lump Sum
Payment) shall be payable to Marlin in installments of $50,000 per month for the
number of months necessary in order to pay such remaining amounts in full,
provided that, notwithstanding the foregoing, the last month's payment shall be
equal to such lesser amount as may be necessary in order to pay such remaining
amounts in full (the "Scheduled Marlin Payments"), and (iii) the Scheduled
Marlin Payments shall be subordinated to any bank and other indebtedness for
borrowed money incurred or assumed by Bolle in connection with, or as a result
of, the consummation of the Offer or the related merger and any indebtedness
which may thereafter replace or succeed to such indebtedness ("Aggregate Funded
Debt"). Accordingly, the Scheduled Marlin Payments shall only be paid to Marlin
if there is no default or continuing event of default (a "Aggregate Funded Debt
Default") by Bolle under any of the documents, agreements or other instruments
relating to the Aggregate Funded Debt (the "Aggregate Funded Debt Documents").
If requested by Bolle or Shade Acquisition, Marlin hereby agrees to execute and
deliver a Subordination Agreement, in such form as may be reasonably requested
by the Aggregate Funded Debt lenders, in order to more fully effectuate the
terms and conditions of this letter agreement.
<PAGE>
Upon curing any Aggregate Funded Debt Default, Bolle shall pay any deferred
Scheduled Marlin Payments which have not already been repaid by Wind Point
Partners, to the extent permitted by the Aggregate Funded Debt Documents. In the
absence of an Aggregate Funded Debt Default, management fees payable to Wind
Point Partners (the "Wind Point Fees") shall rank pari passu with the Scheduled
Marlin Payments. In the event of an Aggregate Funded Debt Default, the Wind
Point Fees shall be subordinate to the Scheduled Marlin Payments until such time
as the Aggregate Funded Debt Default is cured and Scheduled Marlin Payments
which have been deferred as a result of such Aggregate Funded Debt Default are
repaid in full at which time the Scheduled Marlin Payments shall again rank pari
passu with the Wind Point Fees. Upon an Aggregate Funded Debt Default, the Wind
Point Fees that have been paid to Wind Point Partners since the date of
consummation of the Offer shall be paid over to Marlin to the extent that
Scheduled Marlin Payments have not been paid. In lieu thereof, Wind Point
Partners may elect to obtain a letter of credit or other comparable form of
credit enhancement acceptable to Marlin securing the Scheduled Marlin Payments
until such Scheduled Marlin Payments have been paid in full.
Furthermore, the parties hereto agree that, effective upon consummation of
the Offer, Bolle Inc. shall assign and transfer, and Marlin shall assume, that
certain Lease Agreement for the Bolle offices located at 555 Theodore Fremd
Avenue, Rye, New York. Marlin hereby agrees to indemnify Bolle for, and hold
Bolle harmless from any liabilities, debts or other obligations arising under
such lease.
The parties hereto expressly acknowledge and agree that Shade Acquisition
is a third party beneficiary of this letter agreement and that this letter
agreement may not be amended, terminated, revoked or modified without the prior
written consent of Shade Acquisition. If it accurately reflect our agreements,
please so indicate by executing both counterparts hereof in the space provided
below, retaining one counterpart for your records and returning the other
counterpart to the undersigned. This letter agreement will then constitute a
binding agreement between us.
Very truly yours,
BOLLE INC.
By: /s/ Martin E. Franklin
-------------------------------
Title: Chairman of the Board
----------------------------
<PAGE>
Acknowledged, accepted
and agreed this _____
day of November, 1999.
MARLIN HOLDINGS, INC.
By: /s/ Martin E. Franklin
-----------------------------
Title: Chairman
--------------------------
WIND POINT PARTNERS
By: /s/ Jeffrey A. Gonyo
-----------------------------
Title: Managing Director
--------------------------
<PAGE>
EXHIBIT 3
SHADE ACQUISITION, INC.
c/o Wind Point Partner
One Towne Square, Suite 780
Southfield, Michigan 48076
November 24, 1999
Mr. Martin E. Franklin
Mr. Ian G.H. Ashken
Bolle Inc.
555 Theodore Fremd Avenue
Suite B-320
Rye, New York 10580
Dear Messrs. Franklin and Ashken:
This letter sets forth the terms and conditions upon which one of you will
continue to serve on the Board of Directors (the "Board") of Bolle Inc., a
Delaware corporation and the surviving corporation in a merger with Shade
Acquisition, Inc. ("Bolle"), following the consummation of the cash tender offer
to acquire Bolle's common stock (the "Offer") and related merger pursuant to the
Agreement and Plan of Merger, dated as of the date hereof, by and among
Worldwide Sports and Recreation, Inc., Shade Acquisition, Inc., and Bolle.
Martin E. Franklin hereby agrees, if requested by Bolle, to serve on the
Board for one year following the consummation of the Offer (the "Period");
provided, that he may resign from the Board upon the bankruptcy of Bolle or upon
another material adverse change in the business, assets, results of operation or
financial condition of Bolle and its subsidiaries, taken as a whole. In the
event that Martin E. Franklin is unable to serve on the Board during the Period
as a result of his death or permanent disability, Ian G.H. Ashken hereby agrees,
if requested by Bolle, to serve on the Board during the Period; provided, that
he may also resign from the Board upon any such bankruptcy, or other material
adverse change of Bolle, if requested by Bolle.
This letter agreement has been executed and delivered to you in duplicate.
If it accurately reflects our agreements, please so indicate by executing both
counterparts hereof in the space provided below, retaining one counterpart for
your records and returning the other counterpart to the undersigned. This letter
agreement will then constitute a binding agreement between us.
[Signature Page Follows]
<PAGE>
Mr. Martin E. Franklin
Mr. Ian G.H. Ashken
November 24, 1999
Page 2
Very truly yours,
SHADE ACQUISITION, INC.
By: /s/ Jeffrey A. Gonyo
----------------------------------
Title: Vice President
-------------------------------
Acknowledged, accepted
and agreed this 24th
day of November, 1999
BOLLE, INC.
By: /s/ Richard R. Kracum
-------------------------------
Title: Chairman
----------------------------
/s/ Martin E. Franklin
- --------------------------
Martin E. Franklin
/s/ Ian G.H. Ashken
- --------------------------
Ian G.H. Ashken
<PAGE>
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.
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of November 24, 1999, is by and
among Worldwide Sports and Recreation, Inc., a Delaware corporation
("Purchaser"), Shade Acquisition, Inc., a newly formed Delaware corporation and
a wholly owned Subsidiary of Purchaser ("Acquisition Sub"), and Bolle Inc., a
Delaware corporation (the "Company").
WHEREAS, the Board of Directors of each of Purchaser, Acquisition Sub and
the Company has approved, and deems it advisable and in the best interests of
its respective stockholders to consummate, the acquisition of the Company by
Purchaser, upon the terms and subject to the conditions set forth herein; and
WHEREAS, in furtherance thereof, it is proposed that Acquisition Sub make a
cash tender offer (the "Offer") to acquire all of the issued and outstanding
shares of common stock, par value $0.01 per share (the "Company Common Stock"),
of the Company and all associated rights (the "Shares") for $5.25 per Share, net
to the seller in cash, without interest thereon (such price, as it may be
modified as provided herein from time to time being referred to herein as the
"Per Share Amount"), upon the terms and subject to the conditions of this
Agreement and the Offer; and
WHEREAS, also in furtherance of such acquisition, the Board of Directors of
each of Purchaser, Acquisition Sub and the Company has approved the merger of
Acquisition Sub with and into the Company (the "Merger") following the
consummation of the Offer in accordance with the General Corporation Law of the
State of Delaware (the "DGCL") and upon the terms and subject to the conditions
set forth herein; and
WHEREAS, also in furtherance of such acquisition, concurrently with the
execution of this Agreement and as an inducement for Purchaser and Acquisition
Sub to enter into this Agreement, Purchaser, Acquisition Sub and each of the
stockholders of the Company listed on Exhibit A attached hereto (the "Tendering
---------
Stockholders") are entering into a Tender and Voting Agreement of even date
herewith (the "Tender and Voting Agreements"), pursuant to which each of the
Tendering Stockholders has agreed, upon the terms and subject to the conditions
set forth therein, to tender all of the Shares owned by each such Tendering
Stockholder to Acquisition Sub pursuant to the Offer and to approve this
Agreement, the Offer, the Merger and each of the transactions contemplated
hereby (collectively, the "Transactions"); and
WHEREAS, the Board of Directors of the Company (the "Board") has, in light
of and subject to the terms and conditions set forth herein, (i) determined that
the consideration to be paid for each Share in the Offer and the Merger is fair
to the holders of such Shares and in the best interests of such stockholders,
(ii) approved and adopted this Agreement and the transactions contemplated
hereby, and (iii) resolved to recommend that the holders of such Shares accept
the Offer and approve this Agreement, the Merger and each of the transactions
contemplated hereby, upon the terms and subject to the conditions set forth
herein; and
WHEREAS, Purchaser, Acquisition Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and Merger.
<PAGE>
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements herein contained, and intending to be
legally bound hereby, Purchaser, Acquisition Sub and the Company hereby agree as
follows:
ARTICLE I
THE OFFER
Section 1.1 The Offer.
---------
(a) Provided that this Agreement shall not have been terminated in
accordance with Section 8.1 and subject to the other provisions of this
Agreement, as promptly as practicable but in no event later than five (5)
Business Days after the date of the public announcement by Purchaser and the
Company of this Agreement, Acquisition Sub shall, and Purchaser shall cause
Acquisition Sub to, commence the Offer. The obligation of Acquisition Sub to,
and of Purchaser to cause Acquisition Sub to, commence the Offer and accept for
payment, and pay for, any Shares of Company Common Stock properly tendered
pursuant to the Offer shall be subject only to the conditions set forth in Annex
-----
A attached hereto (the "Offer Conditions"), any of which may be waived, in whole
- -
or in part, by Acquisition Sub, in its sole discretion. Acquisition Sub
expressly reserves the right to modify the terms of the Offer in a manner not
inconsistent with this Agreement, except that, without the prior written consent
of the Company, Acquisition Sub shall not (i) waive or otherwise modify the
Minimum Condition so as to reduce the minimum number of Shares that Acquisition
Sub will accept in the Offer to an amount constituting less than fifty-one
percent (51%) of the aggregate outstanding Shares (assuming the exercise of all
options to purchase, and the conversion or exchange of all securities
convertible or exchangeable into, Shares outstanding as of the consummation of
the Offer), (ii) reduce the Per Share Amount, (iii) impose any conditions to the
Offer in addition to the Offer Conditions or modify the Offer Conditions (other
than to waive any Offer Conditions to the extent permitted by this Agreement),
(iv) except as provided in the next sentence, extend the Offer, (v) change the
form of consideration payable in the Offer or (vi) accept for payment or pay for
any Shares pursuant to the Offer prior to January 4, 2000. Notwithstanding the
foregoing, Acquisition Sub may, without the consent of the Company, (i) extend
the Offer if, at the scheduled or extended expiration date of the Offer, any of
the Offer Conditions shall not be satisfied or waived, until such time as such
conditions are satisfied or waived but, in any event, Acquisition Sub shall not,
without the prior written consent of the Company, extend the Offer beyond the
Cut-Off Date (as defined in Section 8.1(b) hereof), (ii) extend the Offer for
any period required by any rule, regulation, interpretation or position of the
SEC or the staff thereof applicable to the Offer but, in any event, Acquisition
Sub shall not, without the prior written consent of the Company, extend the
Offer beyond the Cut-Off Date, or (iii) extend the Offer for a period of up to
five (5) Business Days if, on any scheduled expiration date on which the Offer
Conditions shall have been satisfied or waived, the number of Shares which have
been validly tendered and not withdrawn represent more than 50% of the aggregate
outstanding Shares (assuming the exercise of all options to purchase, and the
conversion or exchange of all securities convertible or exchangeable into Shares
which are outstanding as of the consummation of the Offer), but less than 90% of
the then issued and outstanding Shares.
2
<PAGE>
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.
3
<PAGE>
1.2 Company Actions.
---------------
(a) Subject to the terms and conditions set forth herein (including,
but not limited to, the Offer Conditions), the Company hereby approves of and
consents to the Offer and represents and warrants that the Board, at a meeting
duly called and held, in which a quorum of directors were present, duly adopted
by the resolutions set forth as Exhibit B attached hereto, which in the manner
---------
set forth therein, approve this Agreement, the Offer and the Merger, determine
that, in the opinion of the Board, the Offer, the Merger and the Transactions
contemplated herein are in the best interests of the Company and its
stockholders and are fair to the stockholders and recommend that the holders of
the Shares accept the Offer and, if required by applicable law, approve the
Merger. The Company hereby consents to the inclusion in the Offer Documents and
in the Schedule 14D-9 referred to below of the recommendation of the Company's
Board of Directors described in this Section 1.2. The Company represents and
warrants that the Board has received the written opinion of Bank of America
Securities LLC (the "Financial Advisor"), the form of which is attached as
Exhibit C attached hereto. The Company has been authorized by the Financial
- ---------
Advisor, to permit, subject to prior review and consent by the Financial Advisor
(such consent not to be unreasonably withheld), the inclusion of such fairness
opinion (or a reference thereto) in the Offer Documents and in the Schedule
14D-9 referred to below.
(b) As soon as reasonably practicable after the Offer Documents are
filed with the SEC and as otherwise required by applicable law, the Company
shall, pursuant to SEC Rule 14d-9, file with the SEC a
Solicitation/Recommendation Statement on Schedule 14D-9 with respect to the
Offer (such Schedule 14D-9, as amended or supplemented from time to time, the
"Schedule 14D-9") containing the recommendation of the Board described in
Section 1.2(a) and a copy of the written opinion of the Financial Advisor
described in Section 1.2(a) and shall mail a copy of Schedule 14D-9 to the
stockholders of the Company. The Company shall cooperate with Purchaser in
mailing or otherwise disseminating the Schedule 14D-9 with the appropriate Offer
Documents to the Company's stockholders. Each of the Company, Purchaser and
Acquisition Sub agrees promptly to correct any information provided by it for
use in the Schedule 14D-9 if and to the extent that such information shall
become false or misleading in any material respect, and the Company further
agrees to take all steps necessary to amend or supplement the Schedule 14D-9 and
to cause the Schedule 14D-9 as so amended or supplemented to be promptly filed
with the SEC and promptly disseminated to the Company's stockholders, in each
case as and to the extent required by applicable federal and state securities
laws and the rules of any stock exchange or stock market in which the Shares are
then traded. Purchaser and its counsel shall be given reasonable opportunity to
review and comment upon the Schedule 14D-9 prior to its filing with the SEC or
dissemination to the Company's stockholders. The Company agrees to provide
Purchaser and its counsel any comments the Company or its counsel may receive
from the SEC or its staff with respect to the Schedule 14D-9 promptly after the
receipt of such comments.
(c) In connection with the Offer, the Company shall cause its
transfer agent to furnish Acquisition Sub promptly with mailing labels
containing the names and addresses of the recordholders of Shares as of a recent
date and of those persons becoming recordholders subsequent to such date,
together with copies of all lists indicating current stockholders, security
4
<PAGE>
position listings and related computer files, if available, and all information
in the Company's possession or control regarding the names, addresses and
holdings of beneficial owners of Shares, and shall furnish to Acquisition Sub
such information and assistance (including updated lists of stockholders,
security position listings and computer files) as Purchaser or Acquisition Sub
may reasonably request in communicating the Offer to the Company's stockholders.
The Company represents that the information provided to Purchaser or Acquisition
Sub pursuant to this Section 1.2(c) shall be true and correct as of its
respective dates. Subject to the requirements of applicable law and except for
such steps as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Offer and the Merger, Purchaser and
Acquisition Sub and their officers, agents, employees and advisors shall hold in
confidence the information contained in any such labels, listings and files,
will use such information only in connection with the Offer and the Merger and,
if this Agreement shall be terminated, will promptly, upon request, deliver to
the Company or destroy, and will use their commercially reasonable efforts to
cause their officers, agents, employees, advisors, associates and agents to
deliver or destroy, all copies of such information then in their possession or
control.
1.3 Directors. (a) Effective upon the acceptance for payment by
---------
Acquisition Sub of Shares constituting fifty-one percent (51%) of the aggregate
outstanding Shares (assuming the exercise of all options to purchase, and the
conversion or exchange of all securities convertible or exchangeable into,
Shares outstanding as of the consummation of the Offer) pursuant to the Offer,
Purchaser shall be entitled to designate the number of directors, rounded up to
the next whole number, on the Board that equals the product of (i) the total
number of directors on the Board (after giving effect to the election of any
additional directors pursuant to this Section 1.3) and (ii) the percentage that
the number of Shares owned by Purchaser or Acquisition Sub (including Shares
accepted for payment) bears to the total number of shares of Company Common
Stock outstanding, and the Company shall take all action necessary to cause the
Company's designees to be elected or appointed to the Board, including, without
limitation, increasing the number of directors, or seeking and accepting
resignations of incumbent directors, or both. At such times, the Company will
use its best efforts to cause individuals designated by Purchaser to constitute
the same percentage as such individuals represent on the Board of (x) each
committee of the Board, (y) each board of directors of each Subsidiary of the
Company and (z) each committee of each such board.
(b) The Company's obligations to appoint designees to the Board shall
be subject to Section 14(f) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") and Rule 14f-1 promulgated thereunder. The Company shall
promptly take all actions required pursuant to Section 14(f) and Rule 14f-1 in
order to fulfill its obligations under this Section 1.3 and shall include in the
Schedule 14D-9 such information with respect to the Company and its officers and
directors as is required under Section 14(f) and Rule 14f-1 to fulfill its
obligations under this Section 1.3. Purchaser will supply to the Company in
writing and be solely responsible for any information with respect to itself and
its nominees, officers, directors and affiliates required by Section 14(f) and
Rule 14f-1.
1.4 Consummation Of Merger. From the date of acceptance for payment by
----------------------
Acquisition Sub of Shares satisfying the Minimum Condition (as defined in Annex
-----
A attached
- -
5
<PAGE>
hereto) pursuant to the Offer, the Company shall take all actions necessary to
consummate the Merger as soon thereafter as reasonably practicable.
ARTICLE II
THE MERGER
Section 2.1 The Merger. Subject to the terms and conditions of this
----------
Agreement, at the Effective Time (as hereinafter defined), the Company and
Acquisition Sub shall consummate the Merger in accordance with the DGCL pursuant
to which (i) Acquisition Sub shall merge with and into the Company and the
separate corporate existence of Acquisition Sub shall thereupon cease, (ii) the
Company shall be the successor or the surviving corporation in the Merger
(sometimes hereinafter referred to as the "Surviving Corporation"), shall
continue to be governed by the laws of the State of Delaware and shall be a
wholly-owned Subsidiary of Purchaser, and (iii) the corporate existence of the
Company with all of its rights, privileges, immunities, powers and franchises
shall continue unaffected by the Merger. Purchaser may, upon notice to the
Company, modify the structure of the Merger if Purchaser determines it advisable
to do so because of tax or other considerations, and the Company shall promptly
enter into any amendments to this Agreement necessary or desirable to accomplish
such structure modification, provided that no such amendments shall reduce the
Merger Consideration or otherwise adversely affect the non-affiliated
stockholders of the Company.
Section 2.2 Effective Time. As soon as practicable after the satisfaction
--------------
or waiver of the conditions set forth in Article VII, the parties hereto shall
cause (i) a Certificate of Merger to be executed and filed on the Merger Closing
Date (as hereinafter defined) (or on such other date as Purchaser and the
Company may agree) with the Secretary of State of the State of Delaware in such
form as required by, and executed in accordance with the relevant provisions of
the DGCL, and (ii) all other filings or recordings required by the DGCL in
connection with the Merger. Prior to the filing referred to in this Section 2.2,
a closing (the "Merger Closing") will be held at the offices of Katten Muchin &
Zavis, 525 West Monroe Street, Suite 1600, Chicago, Illinois 60661, 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.
6
<PAGE>
Section 2.4 Certificate of Incorporation; Certificate of Designation and
------------------------------------------------------------
By-Laws.
- -------
(a) The Certificate of Incorporation of Acquisition Sub in effect
at the Effective Time shall be amended as of the Effective Time in order to
change the name of Acquisition Sub to "Bolle Inc." and such Certificate of
Incorporation, as so amended, shall be the Certificate of Incorporation of the
Surviving Corporation until amended in accordance with applicable law and such
Certificate of Incorporation.
(b) The By-laws of Acquisition Sub in effect at the Effective Time
shall be the By-laws of the Surviving Corporation until amended in accordance
with applicable law, the Certificate of Incorporation of the Surviving
Corporation and such By-laws.
Section 2.5 Directors. The directors of Acquisition Sub at the Effective
---------
Time (which shall include Martin E. Franklin) shall be the initial directors of
the Surviving Corporation, each to hold office in accordance with the
Certificate of Incorporation and By-laws of the Surviving Corporation until such
director's successor is duly elected or appointed and qualified. The Company
shall cause each director of the Company's Subsidiaries which are corporations
to tender his or her resignation prior to the Effective Time, with each such
resignation to be effective as of the Effective Time.
Section 2.6 Officers. The officers of Acquisition Sub at the Effective
--------
Time shall be the initial officers of the Surviving Corporation, each to hold
office in accordance with the Certificate of Incorporation and By-laws of the
Surviving Corporation until such officer's successor is duly elected or
appointed and qualified.
Section 2.7 Subsequent Actions. If at any time after the Effective Time
------------------
the Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of either of the Company or Acquisition Sub acquired or to
be acquired by the Surviving Corporation as a result of, or in connection with
the Merger or otherwise to carry out this Agreement, the officers and directors
of the Surviving Corporation shall be authorized to execute and deliver, in the
name and on behalf of either the Company or Acquisition Sub, all such deeds,
bills of sale, assignments and assurances and to take and do, in the name and on
behalf of each of such corporations or otherwise, all such other actions and
things as may be necessary or desirable to vest, perfect or confirm any and all
rights, title and interest in, to and under such rights, properties or assets in
the Surviving Corporation or otherwise to carry out this Agreement.
Section 2.8 Conversion of Shares. As of the Effective Time, by virtue of
--------------------
the Merger and without any action on the part of any holder of Shares or any
shares of common stock of Acquisition Sub:
(a) Each issued and outstanding share of common stock of
Acquisition Sub shall be converted into and become one validly issued, fully
paid and non-assessable share of Common Stock of the Surviving Corporation.
7
<PAGE>
(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.
----------------------
(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:
8
<PAGE>
(i) duly call, give notice of, convene and hold an annual or
special meeting of its stockholders (the "Stockholders' Meeting") to be
held as soon as practicable following the acceptance for payment and
purchase of Shares pursuant to the Offer for the purpose of considering and
taking action upon the approval of the Merger;
(ii) include in the Merger Proxy Statement (as hereinafter
defined) (i) the recommendation of the Board that the stockholders of the
Company vote in favor of the approval of the Merger and (ii) the written
opinion of the Financial Advisor that the consideration to be received by
the stockholders of the Company pursuant to the Merger is fair to such
stockholders from a financial point of view;
(iii) prepare and file with the SEC a preliminary proxy or
information statement relating to this Agreement and the Merger and use its
best efforts (A) to obtain and furnish the information required to be
included by it in the Merger Proxy Statement and, after consultation with
Purchaser, respond promptly to any comments made by the SEC with respect to
the preliminary proxy or information statement, and cause a definitive
proxy or information statement, including any amendments or supplements
thereto (the "Merger Proxy Statement"), to be mailed to its stockholders at
the earliest practicable time following the expiration or termination of
the Offer; provided, however, that no amendment or supplement to the Merger
-------- -------
Proxy Statement will be made by the Company without consultation with
Purchaser and its counsel, and (B) subject to its fiduciary duties as
unanimously determined in good faith by the Board, based as to legal
matters on the advice of legal counsel, to obtain the necessary approvals
by its stockholders of this Agreement, the Merger and the Transactions. At
such meeting, Purchaser and its affiliates shall vote, or cause to be
voted, all Shares owned by them in favor of approval and adoption of the
Merger; and
(iv) Purchaser will provide the Company with the information
concerning Purchaser required to be included in the Merger Proxy Statement.
(b) Notwithstanding anything herein to the contrary, Purchaser,
the Company and Acquisition Sub agree that, in lieu of holding the Stockholders'
Meeting, the Company may 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.
9
<PAGE>
ARTICLE III
DISSENTING SHARES; EXCHANGE OF SHARES
Section 3.1 Dissenting Shares.
-----------------
(a) Notwithstanding anything in this Agreement to the contrary
(except for the provisions of Section 3.1(b)), any Shares held by a holder who
has demanded and perfected his demand for appraisal of his Shares in accordance
with the DGCL (including, but not limited to, Section 262 thereof) and as of the
Effective Time has neither withdrawn nor lost his, her or its right to such
appraisal ("Dissenting Shares") shall not be converted into or represent a right
to receive the Merger Consideration pursuant to Section 2.8, but the holder
thereof shall be entitled to only such rights as are granted by the DGCL.
(b) Notwithstanding the provisions of Section 3.1(a), if any
holder of Shares who demands appraisal of his Shares under the DGCL effectively
withdraws or loses (through failure to perfect or otherwise) his, her or its
right to appraisal, then as of the Effective Time or the occurrence of such
event, whichever later occurs, such holder's Shares shall automatically be
converted into and represent only the right to receive the Merger Consideration
as provided in Section 3.1(a), without interest thereon, upon surrender of the
certificate or certificates representing such Shares pursuant to Section 3.2
hereof.
(c) If applicable, the Company shall give Purchaser (i) prompt
notice of any demands for appraisal or payment of the fair value of any Shares,
withdrawals of such demands, and any other instruments served pursuant to the
DGCL received by the Company and (ii) the opportunity to direct all negotiations
and proceedings with respect to demands for appraisal under the DGCL. The
Company shall not voluntarily make any payment with respect to any demands for
appraisal and shall not, except with the prior written consent of Purchaser,
settle or offer to settle any such demands.
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 Moody's 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
<PAGE>
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
<PAGE>
(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
<PAGE>
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
<PAGE>
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/Foster Grant, 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 Hart-Scott-Rodino 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
<PAGE>
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 Martin
E. Franklin, Ian G.H. Ashken, Thomas R. Reed, or Ken D'Arcy, and (ii) the actual
knowledge, after reasonable inquiry, of Gary Kiedaisch 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 "EDGAR"
(the "Non-EDGAR 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-
EDGAR 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 "EDGAR", 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 "EDGAR", 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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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 mark) 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
<PAGE>
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
<PAGE>
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
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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.
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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
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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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
(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
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(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
<PAGE>
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
<PAGE>
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.
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(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.
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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.
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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 Kiedaisch 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 Gary Kiedaisch ("Kiedaisch") pursuant to which Kiedaisch 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 Kiedaisch 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 "Kiedaisch 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 Hart-Scott-Rodino. 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
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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
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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
<PAGE>
(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
<PAGE>
(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
<PAGE>
(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.
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<PAGE>
(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
<PAGE>
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
<PAGE>
(a) If to Purchaser:
Worldwide Sports and Recreation, Inc.
c/o Wind Point Partners
675 North Michigan Avenue, Suite 3300
Chicago, Illinois 60611
Attention: Richard Kracum
Facsimile Number: 312-255-4820
and
Worldwide Sports and Recreation, Inc.
c/o Wind Point Partners
One Towne Square, Suite 780
Southfield, Michigan 48076
Attention: Salam Chaudhary
Facsimile Number: 248-945-7220
With a copy, which will not constitute notice, to:
Katten Muchin & Zavis
525 West Monroe Street, Suite 1600
Chicago, Illinois 60661
Attention: Steven V. Napolitano, Esq.
Facsimile Number: 312-902-1061
(b) If to the Company:
Bolle Inc.
555 Theodore Fremd Avenue, Suite B-320
Rye, New York 10580
Attention: Martin E. Franklin
Facsimile Number: 914-967-9405
With a copy, which will not constitute notice, to:
Willkie Farr & Gallagher
787 Seventh Ave.
New York, New York 10019-6099
Attention: William J. Grant, Jr., Esq.
Facsimile Number: 212-728-8111
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
<PAGE>
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
<PAGE>
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 G. H. Ashken
-----------------------------------
Name: Ian G. H. Ashken
----------------------------
Title: Vice Chairman and Secretary
----------------------------
WORLDWIDE SPORTS AND RECREATION, INC.
By: /s/ Richard Kracum
------------------------------------
Name: Richard Kracum
-----------------------------
Title: Chairman
-----------------------------
SHADE ACQUISITION, INC.
By: /s/ Richard Kracum
-------------------------------------
Name: Richard Kracum
------------------------------
Title: President
------------------------------
<PAGE>
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 Kiedaisch 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
<PAGE>
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
<PAGE>
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 Jones
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 Marlin 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
<PAGE>
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
<PAGE>
ANNEX B
Section 1. Tax Issues.
----------
A. Federal and state tax income returns for Benson 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.
<PAGE>
EXHIBIT A
---------
Martin E. Franklin
Ian G. H. Ashken
2
<PAGE>
EXHIBIT 5
December 2, 1999
Bolle Inc.
555 Theodore Fremd Avenue
Suite B 302
Rye, New York 10580
To Our Stockholders:
We are pleased to inform you that on November 24, 1999, Bolle Inc. (the
"Company") entered into an Agreement and Plan of Merger (the "Merger
Agreement") with Worldwide Sports and Recreation. ("Purchaser") and Shade
Acquisition, Inc., a wholly owned subsidiary of Purchaser ("Acquisition Sub"),
pursuant to which Acquisition Sub has commenced a tender offer (the "Offer") to
purchase all of the outstanding shares of the Company's common stock, par value
$0.01 per share (the "Shares"), for a cash price of $5.25 per Share. The Offer
is conditioned upon, among other things, the tender of over 90% of the number
of Shares outstanding on a fully diluted basis (assuming the exercise of all
outstanding options and warrants) and the Purchaser having obtained sufficient
financing, on terms and conditions satisfactory to the Purchaser, to enable
consummation of the Offer and the Merger (as defined below). The Merger
Agreement provides that following consummation of the Offer, Acquisition Sub
will be merged (the "Merger") with and into the Company and those Shares that
are not acquired in the Offer will be converted into the right to receive $5.25
per Share in cash.
The Board of Directors has approved the Offer and adopted the Merger
Agreement and determined that the terms of the Offer and the Merger (as defined
in the enclosed Schedule 14D-9) are fair to, and in the best interests of, the
Company and its stockholders, and recommends that the Company's stockholders
accept the Offer and tender their Shares pursuant to the Offer. In arriving at
its recommendation, the Board of Directors considered the factors described in
the accompanying Schedule 14D-9, including the opinion of the Company's
financial advisor, Banc of America Securities, LLC ("Banc of America"), to the
effect that the consideration to be received by the stockholders of the Company
pursuant to the Offer and the Merger is fair to the Common Stockholders from a
financial point of view. A copy of Banc of America's written opinion, which
sets forth the assumptions, qualifications and limitations described in the
opinion, is attached to the Schedule 14D-9 as Schedule I.
The accompanying Offer to Purchase sets forth all of the terms of the Offer.
Additionally, the enclosed Schedule 14D-9 sets forth additional information
regarding the Offer and the Merger relevant to making an informed decision. We
urge you to read these materials carefully and in their entirety.
Very truly yours,
Martin E. Franklin
Chairman of the Board
<PAGE>
Exhibit 6
FOR: Bolle Inc.
APPROVED BY: Martin E. Franklin
Chairman of the Board
Ian Ashken
Vice Chairman
914-967-9400
FOR IMMEDIATE RELEASE CONTACT: Investor Relations:
Shannon Moody/Natasha Boyden
Press: David Nugent
Morgen-Walke Associates
212-850-5600
BOLLE INC. RETAINS FINANCIAL ADVISOR
TO REVIEW STRATEGIC ALTERNATIVES AND ANNOUNCES MANAGEMENT CHANGES
DENVER, Colorado - November 15, 1999 - Bolle Inc. (Amex: BLE), one of
the world's leading eyewear brands, today announced that is has engaged Banc of
America Securities to advise its Board of Directors on strategic alternatives.
Martin E. Franklin, Chairman of Bolle Inc. commented, "While Bolle's
operating performance has improved significantly over the last several quarters,
our stock price has not reflected these accomplishments. Therefore, we felt it
necessary to retain Banc of America Securities to advise the Board on a number
of strategic alternatives. We have signed a non-binding letter of intent with a
private company who has offered $5.25 per share in cash to acquire Bolle Inc. We
anticipate that by the end of the month this will become a definitive agreement,
which would be subject to various conditions including financing, or that we
will be free to pursue other strategic alternatives at the time. Importantly,
management will continue to focus on operating the business and building the
Bolle brand worldwide, as we conclude our review of the various options."
Additionally, the Company announced that Gary Kiedaisch has tendered his
resignation as President and Chief Executive Officer of the Bolle Inc.,
effective November 30th, 1999, to become President and Chief Executive Officer
of Bauer Nike Hockey, Inc. Upon Mr. Kiedaisch's departure, the Office of the
Chairman will assume all CEO responsibilities on an interim basis, while current
senior management will continue to operate the business on a day-to-day basis.
Mr. Kiedaisch will continue to serve on Bolle Inc.'s Board of Directors.
Mr. Franklin concluded, "During his tenure as Chief Executive Officer
and President, Gary has been instrumental in implementing a strategic growth
plan that has positioned the Bolle brand at the forefront of active lifestyle
eyewear. Equally important has been Gary's ability to select, develop and lead
an outstanding team of senior management. He leaves the Company in a very solid
position, both financially and managerially. We thank him for his dedication
over the years and wish him well in his new position."
Bolle Inc. (Amex: BLE), is a vertically integrated designer,
manufacturer and marketer of Bolle/TM/ branded eyewear, including Bolle/TM/
premium sunglasses, goggles, and tactical and safety eyewear. Bolle is also the
exclusive North American distributor of the Reusch line of winter gloves for
sports.
Forward-looking statements (statements which are not historical facts) in this
release are made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Bolle Inc.'s actual results could
differ materially from those expressed or indicated by forward-looking
statements. Factors that could cause or contribute to such differences include,
but are not limited to, changes in fashion trends, risks relating to the retail
industry, use of contract manufacturing and foreign sourcing, import
restrictions, competition, seasonality and other factors. Investors are
cautioned that all forward-looking statements involve risks and uncertainties,
including those risks and uncertainties detailed in the Company's filings with
the Securities and Exchange Commission.
<PAGE>
Exhibit 7
FOR: Bolle Inc.
APPROVED BY: Martin E. Franklin
Chairman of the Board
Ian Ashken
Vice Chairman
914-967-9400
CONTACT: Investor Relations:
Shannon Moody/Natasha Boyden
Press: David Nugent/Ellen Paz
Morgen-Walke Associates
212-850-5600
BOLLE INC. SIGNS DEFINITIVE AGREEMENT WITH
WORLDWIDE SPORTS & RECREATION, INC. TO BE ACQUIRED
FOR $5.25 PER SHARE
DENVER, Colorado - November 26, 1999 - Bolle Inc. (Amex: BLE), one of
the world's leading eyewear brands, today announced the signing of a definitive
agreement with Worldwide Sports & Recreation, Inc., a privately-held company
funded primarily by Wind Point Partners, a private equity investment firm, under
which Worldwide Sports & Recreation, Inc. will acquire Bolle Inc. for $5.25 per
share in cash, via a tender offer and merger. The completion of the transaction
is subject to various conditions, including Hart-Scott-Rodino clearance and the
purchaser obtaining financing no later than January 15, 2000. The total value of
the transaction, including assumed indebtedness, is approximately $85 million.
The tender offer is expected to close during January, 2000.
Martin E. Franklin, Chairman of Bolle Inc. commented, "Through this
agreement, we believe that we will not only be delivering significant value to
our shareholders, but also that the Company will be able to continue to
implement its current growth strategies. Worldwide Sports & Recreation Inc.
manages a strong portfolio of brand names, including Bushnell and Voit, and
enjoys an outstanding reputation for high quality products. We are confident
that they will continue to develop Bolle into a globally recognized active
lifestyle brand."
Mr. Franklin concluded, "Worldwide Sports & Recreation's proposal
represented a 62% premium over the Company's share price on the day prior to the
initial announcement of the transaction. In the board's opinion, and that of its
financial advisor, Banc of America Securities, who rendered a fairness opinion
on the transaction, this represents a fair valuation for the business today."
Joe Messner, Chief Executive Officer of Worldwide Sports & Recreation
added, "This is a significant first step towards building a portfolio of highly
recognized worldwide sports brands. Bolle, founded over 100 years ago, has a
heritage throughout the world for innovative high-quality optical products
favored by active sports enthusiasts. Both Bushnell and Bolle target the same
active lifestyle consumer, and together, we will be able to leverage our
distribution strengths around the world. We welcome the management and employees
of Bolle and value their participation in this exciting opportunity."
Bolle Inc. (Amex: BLE), is a vertically integrated designer,
manufacturer and marketer of Bolle/TM/ branded eyewear, including Bolle/TM/
premium sunglasses, goggles, and tactical and safety eyewear. Bolle is also the
exclusive North American distributor of the Reusch line of winter gloves for
sports.
Worldwide Sports & Recreation Inc. ("WSR") is a branded durable consumer
products company based in Kansas City, Kansas. WSR is a leading supplier of high
quality sports optics including binoculars, telescopes, riflescopes and laser
range finders marketed under the Bushnell, Voit and Bausch & Lomb brand names.
Wind Point Partners is a private equity investment firm with offices in
Chicago and Southfield, Michigan, that has successfully invested growth capital
in more than 70 privately-held companies. Wind Point Partners focuses on
partnering with experienced executives to buy private companies with significant
growth opportunities across a variety of industries.
Forward-looking statements (statements which are not historical facts) in this
release are made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Bolle Inc.'s actual results could
differ materially from those expressed or indicated by forward-looking
statements. Factors that could cause or contribute to such differences include,
but are not limited to, changes in fashion trends, risks relating to the retail
industry, use of contract manufacturing and foreign sourcing, import
restrictions, competition, seasonality and other factors. Investors are
cautioned that all forward-looking statements involve risks and uncertainties,
including those risks and uncertainties detailed in the Company's filings with
the Securities and Exchange Commission.
<PAGE>
EXHIBIT 8
November 24, 1999
Worldwide Sports and Recreation, Inc. Worldwide Sports and Recreation, Inc.
c/o Wind Point Partners c/o Wind Point Partners
675 North Michigan Avenue One Towne Square
Suite 3300 Suite 780
Chicago, Illinois 60611 Southfield, Michigan 48076
Attention: Richard Kracum Attention: Salam Chaudhary
Re: Tender and Voting Agreement
---------------------------
Gentlemen:
Bolle, Inc., a Delaware corporation (the "Company"), Worldwide Sports and
Recreation, Inc., a Delaware corporation (the "Purchaser") and Shade
Acquisition, Inc., a newly formed Delaware corporation and a wholly-owned
subsidiary of the Purchaser ("Acquisition Sub"), intend to enter an Agreement
and Plan of Merger, dated on or about November 24, 1999 (the "Merger
Agreement"), pursuant to which, Acquisition Sub will make a cash tender offer
(the "Offer") to acquire all of the issued and outstanding shares of common
stock of the Company and all associated rights (the "Shares"). In order to
induce the Purchaser to enter into the Agreement, the undersigned hereby agrees
to tender all of the Shares owned by the undersigned to Acquisition Sub pursuant
to the Offer and to vote the Shares owned by the undersigned in favor of the
Offer, the Merger, the Merger Agreement and each of the transactions
contemplated thereby at any meeting (whether special or annual, and whether or
not adjourned) or by written action of stockholders of the Company. Further, the
undersigned hereby confirms his intention to recommend the Merger to the
Company's stockholders, subject to the exercise of applicable fiduciary duties
as determined by the undersigned in good faith after consultation with, and
based upon the advice of, outside counsel. Capitalized terms used, but not
otherwise defined, herein shall have the meanings ascribed to them in the Merger
Agreement.
The term of this letter agreement shall be until the first to occur of (i)
the termination of the Merger Agreement, (ii) the closing of the Merger, or
(iii) February 28, 2000.
Very truly yours,
/s/ Martin E. Franklin
--------------------------------
Martin E. Franklin
<PAGE>
Worldwide Sports and Recreation, Inc.
November 24, 1999
Page 2
ACCEPTED AND AGREED:
Worldwide Sports and Recreation, Inc.
By: /s/ Richard R. Kracum
-------------------------------
Title: Chairman
----------------------------
<PAGE>
November 24, 1999
Worldwide Sports and Recreation, Inc. Worldwide Sports and Recreation, Inc.
c/o Wind Point Partners c/o Wind Point Partners
675 North Michigan Avenue One Towne Square
Suite 3300 Suite 780
Chicago, Illinois 60611 Southfield, Michigan 48076
Attention: Richard Kracum Attention: Salam Chaudhary
Re: Tender and Voting Agreement
---------------------------
Gentlemen:
Bolle, Inc., a Delaware corporation (the "Company"), Worldwide Sports and
Recreation, Inc., a Delaware corporation (the "Purchaser") and Shade
Acquisition, Inc., a newly formed Delaware corporation and a wholly-owned
subsidiary of the Purchaser ("Acquisition Sub"), intend to enter an Agreement
and Plan of Merger, dated on or about November 24, 1999 (the "Merger
Agreement"), pursuant to which, Acquisition Sub will make a cash tender offer
(the "Offer") to acquire all of the issued and outstanding shares of common
stock of the Company and all associated rights (the "Shares"). In order to
induce the Purchaser to enter into the Agreement, the undersigned hereby agrees
to tender all of the Shares owned by the undersigned to Acquisition Sub pursuant
to the Offer and to vote the Shares owned by the undersigned in favor of the
Offer, the Merger, the Merger Agreement and each of the transactions
contemplated thereby at any meeting (whether special or annual, and whether or
not adjourned) or by written action of stockholders of the Company. Further, the
undersigned hereby confirms his intention to recommend the Merger to the
Company's stockholders, subject to the exercise of applicable fiduciary duties
as determined by the undersigned in good faith after consultation with, and
based upon the advice of, outside counsel. Capitalized terms used, but not
otherwise defined, herein shall have the meanings ascribed to them in the Merger
Agreement.
The term of this letter agreement shall be until the first to occur of (i)
the termination of the Merger Agreement, (ii) the closing of the Merger, or
(iii) February 28, 2000.
Very truly yours,
/s/ Ian G.H. Ashken
--------------------------------
Ian G.H. Ashken
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Worldwide Sports and Recreation, Inc.
November 24, 1999
Page 2
ACCEPTED AND AGREED:
Worldwide Sports and Recreation, Inc.
By: /s/ Richard R. Kracum
-------------------------------
Title: Chairman
----------------------------
<PAGE>
EXHIBIT 9
WIND POINT PARTNERS
One Towne Square
Suite 780
Southfield, MI 48076
CONFIDENTIALITY AGREEMENT
September 1, 1999
PERSONAL AND CONFIDENTIAL
Dear Sirs:
In connection with our interest in a possible transaction involving us and
Bolle Inc. (the "Company"), the Company is furnishing us with certain
information which is either non-public, confidential or proprietary in nature.
All information furnished to us, our directors, officers, employees, agents or
representatives, including without limitation attorneys, accountants,
consultants and financial advisors (collectively, "representatives"), by the
Company, or any of their respective representatives, and all analyses,
compilations, data, studies or other documents prepared by us or our
representatives containing or based in whole or in part on any such furnished
information or reflecting our review of, or interest in, the Company is
hereinafter referred to as the "Information." In consideration of our being
furnished with the Information, we agree that:
1. The Information will be kept confidential. and will not, without the
prior written consent of the Company, be disclosed by us or our representatives
to any other person, in any manner whatsoever, in whole or in part, and will not
be used by us or our representatives directly or indirectly for any purpose
other than evaluating the transaction referred to above. Moreover, we agree to
transmit the Information only to those representatives who need to know the
Information for the purpose of evaluating the transaction referred to above, who
are informed by us of the confidential nature of the Information and who agree
to be bound by the terms of this Agreement. We agree to notify the Company prior
to the delivery or disclosure of any Information to our representatives, as to
the identity of such representatives. We will be responsible for any breach of
this Agreement by our representatives,
2. Without the prior written consent of the Company, except to the extent
provided by this Agreement, we and our representatives will not disclose to any
other person the fact that the Information has been made available, that
discussions or negotiations are taking place concerning a possible transaction
involving us and the Company, or any of the terms, conditions or other facts
with respect to any such possible transaction, including the status thereof,
except as required by law and then only with proper written notice as soon as
possible to the Company. The term "person" as used in this letter shall be
broadly interpreted to include without limitation any corporation, company,
group, partnership or individual.
<PAGE>
3. We shall keep a record of each location of the Information. The
Information and all copies thereof will be destroyed or returned immediately
without retaining any copies thereof, if we do not within a reasonable time
proceed with a transaction involving the Company, or upon request. However, our
attorneys shall be allowed to retain a copy of the Information until the
expiration of this Agreement.
4. This Agreement shalt be inoperative as to such portions of the
Information which (i) are or become generally available to the public other than
as a result of a disclosure by us or our representatives; (ii) become available
to us on a non-confidential basis from a source other than the Company or one of
their representatives which has represented to us (and which we have no reason
to disbelieve after due inquiry) is entitled to disclose it; or (iii) were known
to us on a non-confidential basis prior to their disclosure to us by the Company
or one of their representatives.
5. For a period of three years from the date of this Agreement, we and
our affiliates (including any person or entity directly or indirectly, through
one or more intermediaries, controlling us or controlled by or under common
control with us) will not (and we and they will not assist or encourage others
to), directly or indirectly, (i) purchase or agree or offer to purchase any
securities or assets of the Company or any rights or options to acquire the same
(including from a third party); (ii) enter into, or offer or agree to enter into
an acquisition or other business combination transaction relating to the Company
(including with a third party); or (iii) propose any of the foregoing, unless
and until such offer or proposal shall have been specifically invited in writing
by the Company or through its authorized representatives acting as agents on
behalf of the Company. If at any time during such period, we are approached by
any third party concerning our or their participation in a transaction involving
the Company's securities or assets, we will promptly inform the Company of the
nature of each contact and the parties thereto.
6. Until the earliest of (i) a definitive agreement regarding the
acquisition of substantially all of the assets or stock of the Company by us has
been executed; (ii) an acquisition of substantially all of the assets or stock
of the Company by a third party bu been consummated; or (iii) three years from
the date of this Agreement, we agree not to initiate or maintain contact (except
for those contacts made in the ordinary course of our business) with any
officer, director or employee of the Company regarding the Company's business,
prospects, operations or finances, except with the express permission of the
Company acting through its authorized representative or by Banc of America
Securities LLC, acting on behalf of the Company. It is understood that the
Company or its authorized agents will arrange for appropriate contacts for due
diligence purposes. All (i) communications regarding this possible transaction,
(ii) requests for additional information, (iii) requests for facility tours or
management meetings, and (iv) discussions or questions regarding procedures,
will be submitted or directed to the Company's agents.
7. We understand that the Company has endeavored to include in the
Information those materials which it believes to be reliable and relevant for
the purpose of our evaluation, but we acknowledge that neither the Company nor
any of its representatives or advisors makes any
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<PAGE>
representation or warranty as to the accuracy or completeness of the
Information. We agree that neither the Company nor any of its representatives or
advisors shall have any liability to us or to any of our representatives as a
result of the use of the Information by us and our representatives, and we
understand that only those particular representations and warranties which may
be made by the Company to the purchaser of the assets, stock or business of the
Company in a definitive agreement when, as and if it is executed, and subject to
such limitations and restrictions as may be specified in such definitive
agreement, shall have any legal effect.
8. We agree that, without the Company's prior written consent, we will
not, for a period of two years from the date of this Agreement, directly or
indirectly, (i) solicit the employment of any key employee, officer or senior
manager of the Company or (ii) hire any key employee, officer or senior manager
employed by the Company or any former key employee, officer or senior manager
whose employment with the Company has ceased within 90 days of such solicitation
or hire.
9. In the event that we or anyone to whom we transmit the Information
pursuant to this Agreement are requested or become legally compelled (by oral
questions, interrogatories, request for information or documents, subpoena,
civil investigative demand or similar process) to disclose any of the
Information, we will provide the Company with prompt written notice so that the
Company may seek a protective order or other appropriate remedy and/or waive
compliance with the provisions of this Agreement. In the event that such
protective order or other remedy is not obtained, or that the Company waives
compliance with the provisions of this Agreement, we will furnish only that
portion of the Information which is legally required and will exercise our best
efforts to obtain reliable assurance that confidential treatment will be
accorded the Information.
10. We agree that money damages would not be a sufficient remedy for any
breach of this Agreement by us or our directors, officers, employees and agents,
and the Company shall be entitled to equitable relief, including injunction and
specific performance, in the event of any breach of the provisions of paragraphs
1, 2, 3, 5, 6 or 8 of this Agreement. Such remedies shall not be deemed to be
the exclusive remedies for a breach of this Agreement by us or our
representatives but shall be in addition to all other remedies available at law
or equity. We agree to waive and to use our best efforts to cause our directors,
officers, employees or agents to waive, any requirement for the securing or
posting of any bond in connection with such remedy. We understand and agree that
in the event that there is a sale or a controlling interest in the Company, the
acquiror of such interest shall, should the Company so elect, also acquire all
rights of the Company pursuant to this Agreement including without limitation,
the right to enforce all terms of this Agreement. We understand that this
Agreement is for the benefit of the Company and the Company shall have the right
to enforce all the terms of this Agreement.
11. It is further understood and agreed that no failure or delay by the
Company in exercising any right, power or privilege under this Agreement shall
operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise of any right, power or privilege
hereunder.
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<PAGE>
12. This Agreement shall be governed and construed in accordance with the
laws of the State of California applicable to agreements made and to be
performed within such state.
Very truly yours,
Wind Point Partners
Salam Chaudhary
Vice President
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