SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 6, 1996
SOLA INTERNATIONAL INC.
(Exact name of registrant as specified in its charter)
Delaware 1-13606 94-3189941
(State or other jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification
Number)
2420 Sand Hill Road, Suite 200 Menlo Park, CA 94025
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (415) 324-6868
Exhibit Index is on page 4.
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ITEM 5. OTHER EVENTS
Sola International Inc., a Delaware corporation (the "Company"),
has entered into a Purchase Agreement (the "Purchase Agreement")
dated as of May 6, 1996, between the Company and American Optical
Corporation ("AO") providing for the acquisition of substantially all
of AO's worldwide ophthalmic business for cash consideration of
$107,000,000 (together with the assumption of certain liabilities),
subject to post closing adjustments.
The foregoing description of the terms and provisions of
the Purchase Agreement is qualified in its entirety by reference to
the Purchase Agreement, filed as Exhibit 2 to this report on Form 8-K
and hereby incorporated by reference.
The Company issued a press release on May 6, 1996,
announcing the execution of the Purchase Agreement. The press
release is incorporated by reference to Exhibit 99 to this report on
Form 8-K
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits:
---------
See the Exhibit Index following the signature page of this
Report, which is incorporated herein by reference.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
SOLA INTERNATIONAL INC.
Date: May 13, 1996 By: /s/ John E. Heine
-----------------
John E. Heine
President and Chief Executive Officer
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SOLA INTERNATIONAL INC.
EXHIBIT INDEX
to
FORM 8-K CURRENT REPORT
Date of Report: May 6, 1996
Exhibit
Number Description
2 Purchase Agreement between
Sola International Inc.
and American Optical
Corporation, dated as of
May 6, 1996.
99 Press Release issued on
behalf of Sola
International Inc.
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PURCHASE AGREEMENT
between
Sola International Inc.
and
American Optical Corporation
Dated as of May 6, 1996
<PAGE>
PURCHASE AGREEMENT
TABLE OF CONTENTS
Page
SECTION 1. Assets to Be Acquired ............................ 2
SECTION 2. The Purchase Price ............................... 7
SECTION 3. Assumption of Liabilities ........................ 14
SECTION 4. Representations and Warranties of
Seller ........................................... 17
(a) Corporate Organization ..................... 18
(b) Charter Documents, Etc. .................... 19
(c) Corporate Authority ........................ 19
(d) No Violation ............................... 20
(e) Consents and Approvals of Govern-
mental Authorities and Others .............. 22
(f) Financial Statements ....................... 23
(g) Equipment, Etc. ............................ 27
(h) Title to Assets, Etc. ...................... 27
(i) Contracts and Other Agreements ............. 31
(j) Litigation ................................. 39
(k) Taxes ...................................... 40
(1) Patents, Copyrights, Trademarks,
Etc. ....................................... 45
(m) Compensation and Benefit Plans ............. 48
(n) Certain Fees ............................... 77
(o) Insurance .................................. 78
(p) Assets ..................................... 78
(q) Certain Payments ........................... 79
(r) Environmental Matters ...................... 80
(s) Transferred Subsidiaries ................... 85
(t) Compliance with Applicable Laws ............ 87
(u) Related Assets ............................. 87
(v) Disclosure ................................. 88
(w) Reorganizations ............................ 88
SECTION 5. Representations and Warranties of
Buyer ............................................ 89
(a) Corporate Organization ..................... 89
(b) Charter Documents, Etc. .................... 90
(c) Corporate Authority ........................ 90
(d) Financing .................................. 91
(e) No Violation ............................... 91
(f) Certain Fees ............................... 92
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Page
(g) No Adverse Claims or Intent to
Distribute ................................. 92
SECTION 6. Additional Covenants ............................. 92
(a) Further Assurances ......................... 92
(b) Access to Company .......................... 93
(c) Tangible Net Worth ......................... 94
(d) License and Assignment Agreements .......... 96
(e) Agreement To Cooperate ..................... 97
(f) Transition Services and Supply
Agreements ................................. 98
(g) Southbridge Lease .......................... 99
(h) HSR Act and Certain Other Filings .......... 99
(i) Tax Matters ................................ 100
(j) No-Shop .................................... 122
(k) Assignment of Contracts, Rights and
Obligations ................................ 122
(l) Required Notices ........................... 124
(m) Software ................................... 126
(n) Consents and Conditions .................... 126
(o) Constitutional Documents, Liquidation
and Dissolution ............................ 126
(p) Interim Financial Statements ............... 127
(q) U.K. Title Documents ....................... 128
(r) Tijuana Facility ........................... 128
(s) Trademark Security Agreement ............... 129
(t) Singapore Funds ............................ 129
(u) Canadian Release ........................... 129
(v) Amendment to Command License Agreement ..... 130
SECTION 7. The Closing ...................................... 130
SECTION 8. Conditions Precedent to the Obligations of
Buyer ............................................ 130
(a) Corporate Action ........................... 131
(b) Representations and Warranties ............. 131
(c) Performance of Obligations ................. 133
(d) Instruments of Conveyance, Etc. ............ 133
(e) Opinion of Counsel ......................... 135
(f) Governmental Approvals ..................... 135
(g) Litigation ................................. 135
(h) Filings .................................... 136
(i) Other Agreements ........................... 137
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Page
(j) Notices and Other Formalities .............. 137
(k) Certificates ............................... 138
(l) Tax Affidavits ............................. 138
(m) Consents and Approvals of Government
Authorities and Others ..................... 139
(n) Singapore Net Worth Certificate ............ 140
SECTION 9. Conditions Precedent to the Obligations of
Seller ........................................... 140
(a) Corporate Action ........................... 140
(b) Representations and Warranties ............. 141
(c) Performance of Obligations ................. 141
(d) Payment .................................... 141
(e) Opinion of Counsel ......................... 142
(f) Filings .................................... 142
(g) Litigation ................................. 142
(h) Other Agreements ........................... 142
SECTION 10. Conduct of Business Prior to Closing ............. 143
SECTION 11. Employees; Employee Benefit Plans ................ 150
(a) New Employment ............................. 150
(b) Retirement Plans ........................... 151
(c) Thrift Plan Rollover ....................... 151
(d) Qualified Plan Past Service ................ 151
(e) Medical and Dental Coverage ................ 152
(f) Release of Welfare Plan Information ........ 152
(g) No Obligation to Provide Benefits .......... 152
(h) Post-Closing Benefits and Severance ........ 153
(i) Management Incentive Plan .................. 154
SECTION 12. Waiver of Compliance with Bulk Transfer Laws ..... 154
SECTION 13. Survival of Representations and Warranties ....... 155
SECTION 14. Indemnification .................................. 157
(a) Seller's Indemnification ................... 157
(b) Time Limitation on Indemnities ............. 159
(c) Buyer's Indemnification .................... 161
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Page
(d) Monetary Limitation on Indemnification ..... 163
(e) Losses Net of Insurance, Etc. .............. 165
(f) Benefit Plans .............................. 165
(g) Third Party Actions ........................ 167
(h) Exclusive Remedy ........................... 169
(i) Survival of Certain Indemnities;
Monetary Limitations........................ 170
(j) Old Plans .................................. 171
SECTION 15. Procedures for Environmental Claims .............. 171
SECTION 16. Termination, Modification or Waiver .............. 180
(a) Termination ................................ 180
(b) Modification; Supplemental
Disclosure ................................. 181
(c) Waiver ..................................... 182
SECTION 17. Costs Incident to Preparation of Agreement
and Certain Taxes ................................ 182
SECTION 18. Parties in Interest and Assignment ............... 183
SECTION 19. Investigation by Buyer; Confidentiality .......... 184
SECTION 20. Miscellaneous .................................... 185
SIGNATURES .................................................. 190
Schedules
Exhibits
iv
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Cross-reference Table for Definitions*
The terms set forth below are defined in the sections indicated
below.
Term: Section:
ACM Section 4(r)
Adjustment Section 6(i)
Affiliate Section 4(i)
Agreement Introduction
Allocation Section 6(i)
Allocation Agreement Section 6(i)
Antitrust Division Section 6(h)
AO Singapore Introduction
AO Singapore Balance Sheet Section 2(d)
AO Singapore Certificate Section 2(d)
AO Switzerland Section 4(m)
AOI Section 1(a)
Assets Introduction
Assumed Liabilities Section 3
Benefit Plan Section 4(m)
Business Introduction
Business Employee Section 4(m)
Buyer Introduction
Buyer's Accountants Section 2(c)
Certificate Section 6(i)
Closing Section 7
Closing Balance Sheet Section 2(c)
Closing Date Section 7
Code Section 4(k)
Collective Subsidiaries Section 2(c)
Consolidated Group Section 6(i)
Consolidated Return Section 6(i)
Contracts Section 4(i)
Contributions Section 4(m)
December Balance Sheet Section 4(f)
Designated Representative Section 15(k)
Designated Subsidiary Introduction
Employee Agreement Section 4(m)
Employees Section 4(m)
Environmental Indemnification Claims Section 15(a)
Environmental Laws Section 4(r)
ERISA Affiliate Section 4(m)
_________________________
* This table is provided for convenience only and does not constitute a
part of the Purchase Agreement dated as of May 6, 1996 between
American Optical Corporation and Sola International Inc.
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Term: Section:
Excluded Arrangement Section 14(f)
Excluded Assets Section 1(b)
Excluded Singapore Business Section 2(d)
Express Disclosure Section 20(b)
Final Determination Section 6(i)
Financial Statements Section 4(f)
French Plans Section 4(m)
FTC Section 6(h)
Fund Section 4(m)
GAAP Section 2(c)
Hazardous Materials Section 4(r)
HSR Act Section 6(h)
Implementing Law Section 4(r)
Income Tax Section 6(i)
Indemnification Payment Section 6(i)
Indemnified Tax Liability Section 6(i)
Knowledge of Seller/Buyer Section 20(c)
Leased Property Section 4(h)
License and Assignment Agreements Section 6(d)
Lien Section 4(h)
Losses Section 14(a)
March Singapore Financial Statements Section 6(p)
material Section 14(a)
Material Adverse Effect Section 4(a)
Material Subsidiaries Section 4(a)
Mexican Plans Section 4(m)
Net Worth Section 2(c)
Non-ADC Transferred Assets Introduction
On-Site Claim Section 15(d)
Other Party Section 15(g)
Owned Property Section 4(h)
PCB Section 4(r)
Permitted Liens Section 4(h)
Post-Closing Period Section 6(i)
Post-Closing Portion Section 6(i)
Pre-Closing Income Taxes Section 6(i)
Pre-Closing Period Section 6(i)
Pre-Closing Portion Section 6(i)
Pre-Closing Taxes Section 6(i)
Proceeding Section 6(i)
Purchase Price Section 2(a)
Purchase Price Adjustment Section 2(c)
Purchase Price Adjustment Report Section 2(c)
Real Property and Tangible Assets Section 4(r)
Required Action Section 15(b)
Required On-Site Action Section 15(f)
Reserved Claims Section 14(b)
Retained Liabilities Section 3
vi
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Term: Section:
Return/Tax Return Section 6(i)
Sale Balance Sheet Section 4(f)
Section 116 Certificate Section 8(l)
Seller Introduction
Seller Benefit Plans Section 4(m)
Seller's Accountants Section 2(c)
September Balance Sheet Section 4(f)
Shares Introduction
Singapore Business Section 2(c)
Singapore Schemes Section 4(m)
Singapore Subsidiaries Section 4(m)
Southbridge Facility Section 15(c)
Southbridge Lease Section 6(f)
Special Claim Section 13
Straddle Period Section 6(i)
Supply Agreement Section 6(f)
Supporting Documentation Section 2(c)
Tangible Net Worth Section 6(c)
Tax Affiliate Section 6(i)
Tax Claim Notice Section 6(i)
Tax Representations Section 14(b)
Taxes Section 6(i)
Timing Increase Section 6(i)
Trademark Security Agreement Section 6(s)
Transaction Costs Section 6(i)
Transferred Employees Section 11(a)
Transferred Subsidiaries Introduction
Transition Services Agreement Section 6(f)
vii
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THIS PURCHASE AGREEMENT dated as of May 6, 1996 ("Agreement")
between American Optical Corporation, a Delaware corporation ("Seller"),
and Sola International Inc., a Delaware corporation ("Buyer").
W I T N E S S E T H :
WHEREAS, Seller is engaged in the business of manufacturing,
processing, marketing, distributing and selling ophthalmic lenses and
eyeglass frames in the United States and, through certain of its direct and
indirect subsidiaries, in certain other countries (excluding the businesses
and locations listed on Schedule A hereto, the "Business"); and
WHEREAS, Seller desires to sell or otherwise transfer the
benefits of, and Buyer desires to acquire (either directly or through one
or more corporations all of the outstanding shares of common stock of which
are owned by Buyer as set forth on Schedule C (each, a "Designated
Subsidiary")), (i) all of Seller's assets, properties, operations and
rights of every kind and nature (whether real, personal or mixed, tangible
or intangible, known or unknown, and whether or not reflected on the Sale
Balance Sheet (as defined below)) used or held for use primarily in or
pertaining primarily to or necessary to the ongoing conduct of the
Business, including, without limitation, the $1.1 million Note Payable from
American Optical Lensmex,
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S.A. de C.V. to American Optical Corporation, dated February 28, 1984
(other than (a) such assets, properties, operations or rights as are
specified herein as Excluded Assets (as defined below), (b) all of the
outstanding shares of capital stock or other evidence of ownership of any
corporation or other entity and (c) the assets, properties, operations and
rights of the Collective Subsidiaries (as defined below)) (collectively,
the "Assets") and (ii) the shares of capital stock (the "Shares") of the
corporations listed on Exhibit A hereto (the "Transferred Subsidiaries"),
and Seller and Buyer desire that Buyer or a Designated Subsidiary assume
the liabilities and obligations of the Business specified herein, for the
Purchase Price set forth in Section 2 hereof;
NOW, THEREFORE, in consideration of the premises and of the
respective representations and warranties hereinafter set forth, and the
covenants and agreements herein contained and the payment of the purchase
price hereinafter provided, the parties hereto do hereby represent,
warrant, covenant and agree as follows:
SECTION 1. Assets to Be Acquired.
(a) Subject to the terms and conditions of this Agreement, and
in reliance on the representations and
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warranties contained herein, on and as of the Closing Date (as defined in
Section 7 hereof) Seller will and, in the case of Shares not owned by it,
will cause its subsidiaries to, sell, convey, assign, transfer, deliver or,
to the extent contemplated by Section 6(d) hereof, license to Buyer and, in
the case of the patents held by Seller's subsidiary A.O., Inc. ("AOI"),
cause AOI to assign, transfer or, to the extent contemplated by Section
6(d) hereof, license to Buyer, and Buyer will, or will cause one or more of
its Designated Subsidiaries to, purchase and acquire, (A) the Assets, to
the extent such Assets exist on the Closing Date and (B) the Shares. The
term "Assets" refers only to assets, properties, operations and rights of
Seller and shall not be deemed to refer to the Shares (or any other
evidence of ownership of any corporation or other entity) or the assets,
properties, operations and rights of any Collective Subsidiary. The Assets
to be sold, conveyed, assigned, transferred and delivered include without
limitation all of Seller's right, title and interest in the following,
(x) to the extent used or held for use primarily in connection with the
Business and (y) to the extent not an Excluded Asset:
(i) all accounts receivable, including without limitation
trade accounts receivable, notes receivable from
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customers, vendor credits (if any) and accounts receivable from
employees;
(ii) all inventories, including, without limitation,
inventories consigned or in transit to customers and office and plant
supplies;
(iii) prepaid and deferred expenses which relate to liabilities
and obligations assumed by Buyer;
(iv) all fixtures, building improvements, machinery, equipment,
vehicles, furniture and other fixed assets and all interests in real
property except real property subject to the lease described in
Section 6(g) hereof;
(v) subject to Section 6(k) hereof, all right, title and
interest of Seller to and in any and all leases, including without
limitation all tenant improvements and fixtures, and all contracts,
purchase and sale orders, consignment agreements with suppliers and
customers, distribution and agency agreements and other agreements of
Seller;
(vi) all right, title and interest in and to all customer and
supplier lists, accounting and other books and records of the
Business (except Seller's payroll and
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personnel books and records (of which copies shall be provided to
Buyer at the Buyer's request), general ledger, Income Tax returns,
corporate minute books and stock books). Buyer agrees that, unless
otherwise provided under Section 6(i)(xi)(B) hereof, without the
prior consent of Seller, Buyer shall not dispose of or destroy any of
such documents prior to the date six years following the Closing Date
without having first tendered possession thereof to Seller;
(vii) subject to Section 6(k) hereof, all permits, licenses and
other authorizations;
(viii) subject to Section 6(k) hereof, copies of all computer
software;
(ix) all right, title and interest in and to any insurance
claim, except to the extent relating to (x) a Retained Liability,
(y) an Asset (A) which has already been repaired, replaced or
otherwise made whole or (B) the reduced value of which as a result of
the occurrence giving rise to such claim has been reflected in the
Closing Balance Sheet or (z) any and all claims (including property
and business interruption claims) arising from the
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January 3, 1994 fire which occurred at Calle 2 Oriente 133, Ciudad
Industrial Nueva, Tijuana, Mexico;
(x) those patents and trademarks being assigned or licensed
pursuant to the patent and trademark agreements referred to in
Section 6(d) and associated trade secrets, know-how and copyrights
being transferred or licensed pursuant thereto; and
(xi) the litigation claim described on Schedule 1(a) hereto.
(b) The Assets to be sold to Buyer do not include the
following ("Excluded Assets"), which shall not be considered to be
"Assets": (1) cash held by Seller and on hand at the Closing Date, (2) the
receivables described on Schedule 1(b)(A) hereto, (3) patents and trade
names, trademarks and trademark applications and registrations, except to
the extent that rights thereto are conveyed or required to be conveyed
under the License and Assignment Agreements referred to in Section 6(d)
hereof, (4) all tangible property located in the spaces identified on
Schedule 1(b)(B) hereto, and (5) those items listed on Schedule 1(b)(C)
hereto.
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SECTION 2. The Purchase Price.
(a) In consideration for the sale, conveyance, assignment,
transfer, delivery and license of the Assets and the Shares, and in
addition to the assumption of certain liabilities as set forth in Section 3
hereof, Buyer agrees to pay and deliver, or cause to be paid and delivered,
to Seller, on the Closing Date (as hereinafter defined), the purchase price
(the "Purchase Price") in the amount of one hundred and seven million
dollars ($107,000,000), less the amount paid to Maurice J. Cunniffe
pursuant to (b) below, by certified or bank check or wire transfer in
immediately available funds.
(b) Subject to Section 6(i)(viii), Buyer shall pay and
deliver, on the Closing Date, to Maurice J. Cunniffe, $1,500,000 as
consideration for the Agreement Not to Compete referred to in Section 8(i)
hereof.
(c) As promptly as practicable following the Closing, Seller
shall prepare and deliver the balance sheet of the Business as of the
Closing Date, which shall include the Assets being sold to Buyer under
Section 1 hereof and the assets of each Transferred Subsidiary and of each
direct and indirect subsidiary of such Transferred Subsidiary
(collectively, the "Collective Subsidiaries") other than American Optical
(S) Co.
8
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Pte. Ltd. ("AO Singapore") and reflect the liabilities being assumed by
Buyer pursuant to Section 3 hereof and the liabilities of the Collective
Subsidiaries other than AO Singapore (the "Closing Balance Sheet"),
prepared in accordance with United States generally accepted accounting
principles ("GAAP") consistent with the principles used in the preparation
of the audited balance sheet at March 31, 1995, except as set forth on or
contemplated by Schedule 2(c), which shall be completed and furnished to
Buyer and Buyer's independent public accountants ("Buyer's Accountants")
within 60 days following the Closing Date. In addition, Seller's
nationally recognized independent public accountants ("Seller's
Accountants") will deliver a Report (the "Purchase Price Adjustment
Report") to Buyer and Buyer's Accountants within sixty (60) days following
the Closing Date setting forth such Accountants' opinion as to whether the
Purchase Price Adjustment (as defined below) has been calculated in
conformity with this Section 2(c).
Buyer and Buyer's Accountants shall have the right to review
any and all workpapers, schedules, analyses and other documents used in
connection with the preparation of the Closing Balance Sheet and the
computation of the Purchase Price Adjustment and Seller shall instruct
Seller's Accountants to make available for review by Buyer's Accountants
any and all
9
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workpapers prepared by Seller's Accountants in their examination of the
Closing Balance Sheet and in their preparation of the Purchase Price
Adjustment Report (all collectively referred to as the "Supporting
Documentation"). The Closing Balance Sheet shall use the same foreign
exchange rates as were used in preparation of the Sale Balance Sheet (as
defined in Section 4(f) hereof). For purposes of determining inventory
values to be used in preparation of the Closing Balance Sheet, Seller will
perform a physical inventory of all inventories as at May 24, 1996 using
generally accepted inventory-taking procedures, which physical inventory
will serve as the basis for establishing inventory values to be included in
the Closing Balance Sheet; provided that, to the extent the Closing occurs
prior to the completion of such inventory, Buyer's employees shall carry
out such inventory under the direction of Seller's Accountants. At Buyer's
election, Buyer's Accountants may observe the performing of such physical
inventory. Within 15 business days following delivery of the Closing
Balance Sheet and the Supporting Documentation, Buyer's Accountants shall
identify specifically in a written report the basis for any proposed
adjustments or revisions to the Closing Balance Sheet. Within 10 business
days following receipt of such written report, Seller's Accountants shall
respond to any such proposed adjustments and revisions. Buyer and Seller
shall cause their
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respective accountants to cooperate and make available to each other
reasonable supporting documentation.
If the Net Worth (as defined below) of the Business (excluding
that portion of the Business conducted through AO Singapore (the "Singapore
Business")) reflected on the Closing Balance Sheet is less than or greater
than $34,849,000, the Purchase Price shall be decreased or increased by the
amount of such deficiency or excess, as the case may be, unless such excess
or deficiency is less than $250,000, in which case no adjustment shall be
made. For purposes of this Agreement "Net Worth" means the excess of all
assets over all liabilities; provided that for purposes of any calculation
of Net Worth reflected on the Closing Balance Sheet pursuant to this
Section 2(c), the aggregate amount of current maturities of long-term debt
and capital lease obligations plus notes payable plus long-term debt and
capital lease obligations less cash, in each case of the Collective
Subsidiaries, other than AO Singapore, shall be deemed to be $2,647,000.
In addition, to the extent that the aggregate amount of current maturities
of long-term debt and capital lease obligations plus notes payable plus
long-term debt and capital lease obligations less cash, in each case of the
Collective Subsidiaries, other than AO Singapore, reflected on the Closing
Balance Sheet (without
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giving effect to the proviso of the immediately preceding sentence) is less
than or greater than $2,647,000, the Purchase Price shall be increased or
decreased by the amount of such deficiency or excess, as the case may be.
The aggregate of the adjustments made, if any, pursuant to the first and
third sentences of this paragraph is referred to herein as the "Purchase
Price Adjustment." If the parties are in agreement with respect to any
Purchase Price Adjustment (or the absence thereof), the Purchase Price
Adjustment, if any, shall be paid within 3 business days following such
agreement and such Closing Balance Sheet and computations of Net Worth
shall be final and binding on the parties. In the event that the parties
are in disagreement with respect to a Purchase Price Adjustment and are
unable to agree on a resolution of any dispute as to the amount of the
Purchase Price Adjustment within 30 business days of the delivery of the
Closing Balance Sheet, the parties, within 5 business days after such
period, shall jointly instruct Coopers & Lybrand to resolve such dispute,
which determination shall be final and binding upon the parties. Coopers &
Lybrand shall have 20 business days to make a determination with respect to
the Purchase Price Adjustment. The fees and related costs incurred by
Buyer's Accountants shall be borne by Buyer. Fees and related costs
incurred by Seller's Accountants shall be borne by Seller. The fees and
related
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costs of Coopers & Lybrand shall be split equally by Buyer and Seller. The
Purchase Price Adjustment, if any, shall be paid within 3 business days
following the determination of the Purchase Price Adjustment by Coopers &
Lybrand in the event of a dispute. Any payments pursuant to this Section
2(c) shall be made by causing such payments to be credited in immediately
available funds to such account or accounts as may be designated by the
party entitled to receive such funds. The amount of any payment to be made
pursuant to this Section 2(c) shall bear interest from and including the
date on which the parties agree as to the amount, if any, of any Purchase
Price Adjustment, or, if the parties do not so agree, the date on which
Coopers & Lybrand makes a determination with respect to the Purchase Price
Adjustment, in each case to but excluding the date of payment at a rate per
annum equal to twelve percent (12.0%). Such interest shall be payable at
the same time as the payment to which it relates and shall be calculated on
the basis of a year of 365 days and the actual number of days for which
due.
(d) Prior to the Closing, Seller shall deliver to Buyer a
certificate (the "AO Singapore Certificate") certified by the Chief
Financial Officer of Seller which shall set forth (i) whether the Net Worth
of AO Singapore (excluding the assets
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and liabilities (the "Excluded Singapore Business") listed on Schedule B
hereto) is less than U.S. $500,000 as of the Closing Date, together with
an estimated balance sheet (the "AO Singapore Balance Sheet") prepared no more
than 20 days prior to the Closing Date setting forth the estimated assets
and liabilities of AO Singapore (excluding the Excluded Singapore Business)
as of the date of its preparation, and (ii) the amount (if any) of cash
removed from AO Singapore since February 29, 1996, other than in the
ordinary course of business (which shall be consistent with the
restrictions contained in Section 10(15)) or as described on Schedule B
hereto. If Buyer elects to waive the condition set forth in Section 8(n)
and to proceed with the Closing, the Purchase Price shall be reduced by the
amount by which the AO Singapore Balance Sheet reflects Net Worth of less
than U.S. $500,000. The AO Singapore Balance Sheet shall be prepared on a
basis consistent with the February 23, 1996 pro forma balance sheet of AO
Singapore set forth on Schedule 2(d). Promptly following the Closing,
Buyer shall review the accounts of AO Singapore as of the Closing Date to
confirm that the AO Singapore Certificate properly reflects the Net Worth
of, and the amount, if any, of cash removed from AO Singapore as of the
Closing Date. The dispute resolution procedures established in Section
2(c) shall apply mutatis mutandis if Buyer's review indicates that the Net
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Worth of AO Singapore as of the Closing Date was less than U.S. $500,000 or
that the amount of cash removed (calculated as described above) differed
from the amount indicated on the AO Singapore Certificate and, upon
resolution of such dispute, payments of such differences, taking into
account the provisions of this Section 2(d) and Section 6(t), if any, shall
be made in the same manner and on the same terms set forth in Section 2(c).
SECTION 3. Assumption of Liabilities.
As part of the consideration for the sale, conveyance,
assignment, transfer and delivery referred to in Section 1 hereof, on and
as of the Closing Date, Buyer will, or, to the extent assets, properties,
operations or benefits relating to such debt, liability or obligation are
assigned, transferred or licensed to any Designated Subsidiary, will cause
such Designated Subsidiary (with the guarantee of Buyer if, after making
reasonable commercial efforts (at no expense to Seller), Seller is unable
to obtain a consent to transfer and assign such liability without the
guarantee of Buyer) to, assume and undertake to pay and perform in
accordance with and subject to their respective terms only the following
debts, liabilities and executory obligations of Seller (which term, when
used here or elsewhere in this Agreement, shall not
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include the Collective Subsidiaries) to the extent incurred in or
pertaining to the Business or to the extent otherwise related to the Assets
(collectively, the "Assumed Liabilities"):
(a) liability for trade accounts payable incurred through the
Closing Date solely to the extent the liability for such accounts
payable is reflected on the Closing Balance Sheet and remains unpaid
on the Closing Date or to the extent such liability relates to an
Asset which Asset was not included on the Closing Balance Sheet
provided the liability does not exceed the value of the Asset to
which it relates;
(b) liability for employee wages, salaries, payroll taxes and
accrued, earned and deferred vacations incurred in the Business
through the Closing Date solely to the extent such liability is
reflected on the Closing Balance Sheet and remains unpaid on the
Closing Date;
(c) debts, liabilities and obligations under the leases,
contracts, purchase and sale orders, consignment agreements with
suppliers and customers, distribution and agency agreements and other
agreements to which Seller is a party, including without limitation
those set forth in
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Schedule 4(i) hereto, and under any such additional leases,
contracts, purchase and sale orders, consignment agreements with
suppliers and customers, distribution and agency agreements and other
agreements entered into by Seller in accordance with the provisions
of this Agreement after the date hereof;
(d) product liability claims (including consequential,
punitive or other damages) (i) made more than 180 days after the
Closing Date and (ii) made prior to the Closing Date, but in the case
of this clause (ii), solely to the extent a reserve has been
established on the Closing Balance Sheet for such claims;
(e) liability for workers' compensation claims arising out of
accidents or injuries occurring after the Closing Date;
(f) liabilities associated with or related to the litigation
claim described on Schedule 1(a);
(g) liabilities under the Management Incentive Plan for the
fiscal year beginning April 1, 1996 (but excluding any liabilities
which arise as a result of a change of ownership of the Business),
to the extent
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reflected on the Closing Balance Sheet or the AO Singapore Balance
Sheet; and
(h) other debts, liabilities and obligations solely to the
extent reflected on the Closing Balance Sheet and solely to the
extent unpaid on the Closing Date, provided that such debts,
liabilities and obligations are incurred in the ordinary course of
business.
Buyer does not assume or undertake to perform any liabilities
or obligations of Seller ("Retained Liabilities") not set forth above in
this Section 3. The parties hereto acknowledge that after the Closing
Buyer will be responsible for certain other liabilities in accordance with
Sections 6, 13 and 14 hereof. Buyer does not assume or undertake to
perform any liabilities of any subsidiary of Seller pursuant to this
Agreement; provided, without limiting the representations, warranties and
indemnities contained in this Agreement, that this sentence shall not limit
the fact that each Collective Subsidiary shall remain subject to all of its
liabilities and obligations. For the avoidance of doubt, Assumed
Liabilities does not include any liabilities of Seller for Income Taxes.
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SECTION 4. Representations and Warranties of Seller.
Seller hereby represents and warrants to Buyer as follows:
(a) Corporate Organization. Seller and each of the Collective
Subsidiaries which are identified on Schedule 4(a) (the "Material
Subsidiaries") is a corporation duly incorporated, validly existing
and in good standing under the laws of its jurisdiction of
incorporation with full corporate power and authority to carry on the
Business as presently conducted by it and to own, lease and operate
the properties of the Business where such properties are now owned,
leased or operated, and is qualified to do business in all foreign
jurisdictions where the failure to be so qualified individually or in
the aggregate would have a material adverse effect on the condition
(financial or otherwise), properties, assets and operations of the
Business, taken as a whole, or on the ability of Seller to consummate
the transactions contemplated by this Agreement on a timely basis (a
"Material Adverse Effect"). Each Collective Subsidiary which is not
a Material Subsidiary (i) is duly incorporated and validly existing
under the laws of its jurisdiction of incorporation, (ii) is dormant
and not engaged in the conduct of business, (iii) taken
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together with all other such Collective Subsidiaries, does not own
assets or have liabilities or commitments, in each case, which are
material to the Business and (iv) is not party to any contracts or
commitments involving current or future liabilities or obligations
and is not subject to any other obligation or liability of any type.
(b) Charter Documents, Etc. Seller previously has delivered
to Buyer true and accurate copies of the Certificate of Incorporation
(or other instrument of incorporation), By-laws (if any) and other
constitutional documents as of the date hereof of Seller and each
Collective Subsidiary.
(c) Corporate Authority. Seller has full corporate power and
authority to execute and deliver this Agreement, and Seller, AOI and
(to the extent relevant to the transactions contemplated hereby)
Seller's subsidiaries each have, or will have at the Closing, full
corporate power and authority to execute and deliver the instruments
of transfer and other documents delivered or to be delivered pursuant
hereto and to consummate the transactions contemplated hereby and
thereby. This Agreement has been and all other documents delivered
or to be delivered by Seller, AOI or (to the extent relevant to the
transactions
20
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contemplated hereby) Seller's subsidiaries in connection with this
Agreement will have been duly authorized and approved by all
necessary and proper corporate action of Seller, AOI and (to the
extent relevant to the transactions contemplated hereby) any of
Seller's subsidiaries (in each case, to the extent a party thereto) and
constitutes, and will constitute when executed and delivered, the
valid and binding obligations of Seller, AOI and (to the extent rel-
evant to the transactions contemplated hereby) Seller's subsidiaries
(in each case, to the extent a party thereto) enforceable in
accordance with their respective terms, except as such enforceability
may be limited by bankruptcy, insolvency, reorganization or similar
laws relating to or affecting the enforcement of creditors' rights
generally and by general equity principles, regardless of whether
such enforceability is considered in a proceeding in equity or at
law.
(d) No Violation. Except as disclosed in Schedule 4(d)
hereto, neither the execution and delivery of this Agreement by
Seller and the performance by Seller hereunder, nor the consummation
of the transactions contemplated hereby, will (A) violate, conflict
with, result in the breach of or default under or accelerate the
21
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performance required by any of the terms, conditions or provisions of
(i) the Certificate of Incorporation, By-laws or other constitutional
documents of Seller or AOI or any Collective Subsidiary or (to the
extent relevant to the transactions contemplated hereby) Seller's
subsidiaries, (ii) any order, ruling, decree, judgment, arbitration
award or stipulation to which Seller or AOI or any Collective
Subsidiary or (to the extent relevant to the transactions
contemplated hereby) any of Seller's subsidiaries is subject,
(iii) any agreement, obligation or commitment to which Seller or AOI
or any Material Subsidiary is a party or by which Seller or AOI or
any Material Subsidiary is bound, or to which any of their properties
or assets is subject, or (iv) any provision of any applicable law,
rule or regulation to which Seller or AOI or any Collective
Subsidiary or (to the extent relevant to the transactions
contemplated hereby) any of Seller's subsidiaries is subject or
(B) result in the creation or imposition of any lien, charge or
encumbrance under the terms, conditions or provisions of the items
listed in subclause (i), (ii), (iii) or (iv) of clause (A) above upon
any of the Assets, the Shares or any assets of any Material
Subsidiary, or terminate any lease of real property included in the
Assets or lease of any Collective Subsidiary, which
22
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violations, conflicts, breaches, defaults, liens, charges or
encumbrances or terminations, individually or in the aggregate,
would, in the case of clause (A)(ii), (A)(iv) or (B), have a Material
Adverse Effect or have a material adverse effect on the ability of
Seller to consummate on a timely basis the transactions contemplated
by this Agreement or materially and adversely affect the right of
Buyer to conduct the Business substantially in the manner presently
conducted, and substantially on the terms presently enjoyed or, in
the case of clause (A)(iii), would have a Material Adverse Effect.
(e) Consents and Approvals of Governmental Authorities and
Others. Except as set forth in Schedule 4(e) hereto, no consent,
approval or authorization of, filing or registration with, or
notification to, any governmental or regulatory authority (domestic
or foreign) or other person is required to be obtained or made by
Seller, AOI or any Material Subsidiary or, solely to the extent mate-
rial to any such execution, delivery, performance or consummation,
any of their respective Affiliates (as defined below), in connection
with the execution and delivery of this Agreement by Seller, the
performance of its obligations hereunder or the consummation by
Seller or (to the
23
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extent material to the transactions contemplated by this Agreement)
its subsidiaries of the transactions contemplated hereby or for the
prevention of any termination of any right, privilege, license or
agreement of the Business. Subject to Section 6(n), all such
approvals, authorizations, filings, registrations and notifications
set forth on Schedule 4(e) hereto have been or will be obtained on or
prior to the Closing Date. Each of Seller and the Material
Subsidiaries currently has and will maintain in effect until the
Closing Date such licenses, permits and other authorizations from all
domestic, foreign, federal, state and local authorities the failure
of Seller or a Material Subsidiary to have obtained or maintained
which would, individually or in the aggregate, have a Material
Adverse Effect. No suspension or cancellation of any such license,
permit or other authorization is, to the knowledge of Seller,
threatened and none of such licenses, permits and authorizations,
individually or in the aggregate, will be affected to the material
detriment of the Business by consummation of the transactions
contemplated in this Agreement.
(f) Financial Statements. Schedule 4(f) sets forth (i) the
unaudited balance sheet of the Business (excluding
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the Singapore Business) as of September 29, 1995 (the "September
Balance Sheet") and the unaudited statements of income and cash flows
of the Business (excluding the Singapore Business) for the six-month
period ended September 29, 1995, together with the notes thereto, if
any, (ii) the unaudited balance sheet of the Business (excluding the
Singapore Business) as of December 29, 1995 (the "December Balance
Sheet") and the unaudited statements of income and cash flows of the
Business (excluding the Singapore Business) for the nine-month period
ended December 29, 1995, together with the notes thereto, if any, and
(iii) the audited balance sheets of the Business (excluding the
Singapore Business) for the years ended March 31, 1995 and April 1,
1994, and the audited statements of income and cash flows of the
Business (excluding the Singapore Business) for the years ended
March 31, 1995 and April 1, 1994 together with the notes to such
financial statements, accompanied in each case by an unqualified
opinion of Ernst & Young (the financial statements described above,
together with the notes thereto, collectively, the "Financial
Statements"). Schedule 4(f)-1 sets forth the September Balance
Sheet, adjusted to reflect the Business (excluding the Singapore
Business) as held for sale, together with notes indicating such
adjustments (the
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<PAGE>
"Sale Balance Sheet"). The Financial Statements have been prepared
in conformity with GAAP consistently applied (except (A) in each case
as (x) described on Schedule 4(f) or (y) described in the notes
thereto and (B) for the unaudited September Balance Sheet and the
unaudited December Balance Sheet and the unaudited statements of
income and cash flows for the six months ended September 29, 1995 and
for the nine months ended December 29, 1995, in each case, which may
be subject to normal recurring year end adjustments) and fairly
present the assets and liabilities and results of operations of the
Business as of the dates thereof and for the periods indicated.
Since the date of the September Balance Sheet (or, in the case of AO
Singapore, February 23, 1996), and except as set forth in Schedule
4(f) or otherwise contemplated in this Agreement with respect to AO
Singapore, the Business has been conducted in the ordinary course
consistent with historical practices and there have not been (1) any
changes in the business, assets or liabilities of the Business, the
Assets or the operations of the Business which have had, individually
or in the aggregate, a Material Adverse Effect; (2) any actual or, to
the knowledge of Seller, threatened damages, losses, conversions,
terminations, cancellations, defaults or takings by eminent domain or
26
<PAGE>
other actions by governmental authority to which Seller, any Material
Subsidiary or any of their respective properties is subject which,
individually or in the aggregate, have had a Material Adverse Effect;
or (3) any other occurrences which, individually or in the aggregate,
have had a Material Adverse Effect. All accounts receivable
reflected on the Sale Balance Sheet, and to be reflected on the books
and records of the Business as of the Closing Date, are and will be
bona fide and arose in the ordinary course of business at the
aggregate amounts thereof less the reserve for doubtful accounts with
respect thereto in the Financial Statements or the Closing Balance
Sheet and are presented on a consistent basis in accordance with
GAAP. On the Closing Date, no person will have any lien on such
receivables, or any part thereof. No agreement for deduction, free
goods, discount or other material deferred price or quantity
adjustment has been made with respect to any of such receivables
other than in the ordinary course of the Business and consistent with
the historical practice of the Business. The inventory of materials
and supplies as reflected on the Sale Balance Sheet, and to be
reflected on the books and records of the Business as of the Closing
Date, is and will be in good condition and not in excess of the
reasonable requirements of
27
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the Business. All obsolete or otherwise unusable inventory of
materials and supplies (including obsolete or otherwise unusable
consignment inventory) has been written off or reserved against,
where appropriate, in accordance with GAAP. Neither Seller (to the
extent any such liability or obligation is an Assumed Liability) nor
any Collective Subsidiary has any liabilities or obligations of any
nature (whether accrued, absolute, contingent, unasserted, known or
unknown) in excess of $100,000 on an individual basis (or with
respect to any series of related liabilities or obligations), except
(x) as set forth in the Financial Statements, the Sale Balance Sheet,
the Closing Balance Sheet or the AO Singapore Balance Sheet,
(y) liabilities or obligations arising since the date of the December
Balance Sheet in the ordinary course of business consistent with past
practice and (z) for items set forth on Schedule 4(f).
(g) Equipment, Etc. The list of material items of machinery
and equipment and of vehicles set forth in Schedule 4(g) hereto is a
complete and accurate list in all material respects of all such items
owned by Seller or the Material Subsidiaries as of the date of the
Sale Balance Sheet and included in the Sale Balance Sheet except
28
<PAGE>
for dispositions and acquisitions in the ordinary course of the
Business since the date of the Sale Balance Sheet.
(h) Title to Assets, Etc. Seller and each Material Subsidiary
have good and marketable title to or valid leasehold interests in or
the right to use the assets reflected on the Sale Balance Sheet or
the February 23, 1996 pro forma balance sheet of AO Singapore or
thereafter acquired, except those sold or otherwise disposed of since
the date of such balance sheet in the ordinary course of business
consistent with past practice, in each case free and clear of all
Liens (as defined below) other than those reflected on Schedule 4(h)
hereto and other than (i) Liens for taxes, assessments, governmental
charges or claims, which taxes, assessments, governmental charges or
claims are not yet due or which are being contested in good faith by
appropriate proceedings; (ii) statutory Liens of landlords and
carriers', warehousemen's, mechanics', suppliers', materialmen's,
repairmen's or other like Liens arising in the ordinary course of
business, deposits made to obtain the release of such Liens, with
respect to amounts being contested in good faith by appropriate
proceedings; (iii) Liens incurred or deposits made in the ordinary
course of business in connection with workers'
29
<PAGE>
compensation, unemployment insurance and other types of social
security; (iv) Liens incurred or deposits made to secure the
performance of tenders, bids, leases, statutory obligations, surety
and appeal bonds, government contracts, performance and return of
money bonds and other obligations of a like nature incurred in the
ordinary course of business (exclusive of obligations for the payment
of borrowed money); (v) easements, rights-of-way, zoning or other
restrictions, minor defects or irregularities in title and other
similar charges or encumbrances not materially reducing the value of
or materially interfering with the use of any material property to
which it relates, incurred in the ordinary course of business;
(vi) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with
the importation of goods; (vii) subleases under leases of real
property (where the annual rental payments payable pursuant to any
such lease for such real property does not exceed $50,000) granted to
others not interfering in any material respect with the Business;
(viii) Liens encumbering deposits made to secure obligations arising
from statutory, regulatory or contractual requirements of the
Business; (ix) Liens arising out of consignment or similar
arrangements for the sale of
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goods entered into in the ordinary course of business; (x) any
interest or title of a lessor in the property subject to any capital
lease obligations or operating leases; and (xi) Liens between
Collective Subsidiaries (collectively, "Permitted Liens"). Except as
set forth on Schedule 4(h), the tangible property (other than real
property) of Seller (solely to the extent included in the Assets) and
of each Material Subsidiary has been maintained in a commercially
reasonable manner. Set forth in Schedule 4(h) is a true and correct
list of all real property and interests in real property (i) owned in
fee by Seller (solely to the extent included in the Assets) and each
Material Subsidiary (the "Owned Property") and (ii) leased by Seller
(solely to the extent included in the Assets) and each Material
Subsidiary, solely to the extent annual rental payments for such
property exceed $50,000) (the "Leased Property"). Except as
disclosed in Schedule 4(h) hereto, Seller and each Material
Subsidiary have good and marketable title to the Owned Property and
valid leasehold interests in or the right to use the Leased Property,
in each case, free and clear of all Liens other than Permitted Liens.
Except as set forth on Schedule 4(h) and except as relates to
Environmental Laws or Hazardous Materials, which are dealt with
exclusively in
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Section 4(r), all Owned Property and all Leased Property have been
maintained in a commercially reasonable manner. On the Closing Date,
Seller will transfer and convey, or cause to be transferred or
conveyed, the Assets and the Shares to Buyer (or to a Designated
Subsidiary of Buyer) free and clear (assuming, with respect to the
Shares, the accuracy of Buyer's representation and warranty in
Section 5(g) hereof) of all mortgages, liens, pledges, charges, title
retention or security agreements claims, restrictions, leases,
options, rights of first refusal, defects of title or other
encumbrances or rights of others (each a "Lien") other than Liens
which (x) are disclosed on Schedule 4(h) or (y) with respect to Liens
on the Assets, are Permitted Liens.
(i) Contracts and Other Agreements. Except as listed on
Schedule 4(i), neither Seller (solely with respect to a contract,
commitment or agreement used or held for use primarily in or
pertaining primarily to or necessary to the ongoing conduct of the
Business) nor any Material Subsidiary is a party to or bound by, and
none of the properties, assets or operations of the Business is
currently subject to, any of the following written contracts,
commitments or agreements:
32
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(i) any covenant of Seller or any Material Subsidiary
not to compete or other covenant of Seller or any Material
Subsidiary restricting the development, manufacture, marketing
or distribution of the products and services of Seller or any
Material Subsidiary, in each case, other than any such covenant
(other than a covenant not to compete) that can be terminated
without penalty within 90 days of the Closing Date;
(ii) any agreement, contract or other arrangement with
(x) Seller or any Affiliate of Seller (other than a Collective
Subsidiary) or (y) any current or former officer, director or
employee of Seller or any Material Subsidiary;
(iii) any lease, sublease or similar agreement with any
person under which either Seller or any Material Subsidiary is
a lessor or sublessor of, or makes available for use to any
person, (x) any real property or (y) any portion of any
premises otherwise occupied by Seller or any Material
Subsidiary;
(iv) any lease or similar agreement with any person under
which (x) Seller or any Material
33
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Subsidiary is lessee of, or holds or uses, any machinery,
equipment, vehicle or other tangible personal property or
(y) Seller or any Material Subsidiary is a lessor or sublessor
of, or makes available for use by any person, any tangible
personal property, in each case, other than leases entered into
in the ordinary course of business and providing for payment of
not more than $100,000 per year;
(v) any license, option or other agreement relating in
whole or in part to any intellectual property set forth in
Schedule 4(l) (including any license or other agreement under
which Seller or any Material Subsidiary is a licensee or
licensor of any such intellectual property);
(vi) any agreement, contract or other instrument under
which Seller or any Material Subsidiary has borrowed any money
from, or issued any note, bond, debenture or other evidence of
indebtedness to (which obligation remains outstanding), any
person or any other note, bond, debenture or other evidence of
currently outstanding indebtedness issued to any person;
34
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(vii) any agreement, contract or other instrument
(including so-called take-or-pay or keepwell agreements) under
which (x) any person has, directly or indirectly, guaranteed
indebtedness, liabilities or other obligations of Seller or any
Material Subsidiary or (y) Seller or any Material Subsidiary
has, directly or indirectly, guaranteed indebtedness, lia-
bilities or other obligations of any person (in each case other
than endorsements for the purpose of collection in the ordinary
course of business), in each case, to the extent the aggregate
amount of all such guarantees does not exceed $100,000 in the
case of clause (x) or in the case of clause (y), respectively;
(viii) any agreement, contract or other instrument under
which Seller or any Material Subsidiary has, directly or
indirectly, made any advance, loan, extension of credit or
capital contribution to, or other investment in, any person
(other than any such investment in or between Seller or any
Collective Subsidiary) to the extent that the amount of all
such investments, in the aggregate, exceeds $100,000;
35
<PAGE>
(ix) any mortgage, pledge, security agreement, deed of
trust or other instrument granting a Lien upon any material
Asset or any of the material assets or properties of any
Material Subsidiary;
(x) any agreement or instrument providing for
indemnification of any person with respect to liabilities of
Seller or any Material Subsidiary, or any Affiliate of Seller
or any Material Subsidiary or any predecessor person to the
extent the aggregate of such indemnification obligations could
exceed $100,000;
(xi) any sales order or other agreement, or group of
related sales orders or other agreements, for the sale of
goods, materials, supplies, machinery, capital assets or
services in excess of $100,000 in any year, except for sales
orders or other agreements for the sale of finished goods
entered into in the ordinary course of business consistent with
past practice and required to be performed within a period of
one year;
(xii) any purchase order or other agreement, or group of
related purchase orders or other agreements,
36
<PAGE>
for the purchase of goods, materials, supplies, machinery,
capital assets or services in excess of $100,000, in the
current or any future year, which did not arise in the ordinary
course of business consistent with past practice and is
required to be performed within a period of one year;
(xiii) any agreement not covered in clause (xi) above with
any distributor, dealer, sales agent or representative
providing for payments to any person in excess of $100,000 in
the current or any future year;
(xiv) any agreement granting to any person a right at such
person's option to purchase or acquire any asset or property
relating to Seller's or any Material Subsidiary's business (or
any interest therein) (other than inventory in the ordinary
course of business) with a value in excess of $100,000;
(xv) any agreement relating to the acquisition or
disposition of stock, assets or any business or division with a
value in excess of $100,000 (by way of merger, consolidation,
purchase, sale or otherwise);
37
<PAGE>
(xvi) any agreement relating to a joint venture or
partnership; or
(xvii) any other agreement (x) of Seller being assigned to
and assumed by Buyer or a Designated Subsidiary or (y) of a
Material Subsidiary, in each case, which provides for aggregate
current or future payments, rights or obligations in excess of
$250,000, except for any such agreement which falls into a
general category identified in clauses (i) through (xvi) above
but is not required to be disclosed pursuant to such clauses
because of a dollar threshold or other limitation set forth
within such clause (including, but not limited to, agreements
described as being entered into or arising in the ordinary
course of business).
For purposes of this Agreement, "Affiliate" of any person shall
mean, with respect to a corporation, any person (including any member
of the immediate family of any such person) which directly or
indirectly beneficially owns or controls 10% or more of the total
voting power of shares of capital stock of such corporation having
the right to vote for directors under ordinary circumstances, any
person controlling, controlled by or under common
38
<PAGE>
control with any such person (within the meaning of Rule 405 under
the Securities Act of 1933, as amended).
Except as set forth in Schedule 4(i) hereto and subject to
clause (b) of the following sentence, all agreements, contracts,
leases, licenses, commitments or instruments of Seller (solely to the
extent included in the Assets) and each Material Subsidiary listed,
or which are (A) being assumed by Buyer or a Designated Subsidiary or
(B) agreements, contracts, leases, licenses, commitments or
instruments of a Material Subsidiary and, in each case, should have
been listed, in Schedule 4(i) (collectively, the "Contracts") are
valid, binding and in full force and effect and are enforceable in
accordance with their terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization or similar laws
relating to or affecting the enforcement of creditors' rights
generally and by general equity principles, regardless of whether
such enforceability is considered in equity or at law. Except as set
forth in Schedule 4(i) and except as would not have a Material
Adverse Effect, (a) Seller and each Material Subsidiary have
performed all obligations required to be performed by each of them to
date under the Contracts, and are not (with or without the lapse of
time
39
<PAGE>
or the giving of notice, or both) in breach or default in any
material respect thereunder and (b) to the knowledge of Seller, no
other party to any of the Contracts is (with or without the lapse of
time or the giving of notice, or both) in breach or default in any
respect thereunder. Correct and complete copies of all Contracts
have been made available to Buyer prior to the date hereof or, to the
extent not previously provided and added to Schedule 4(i) in
accordance with this Agreement after the date hereof, prior to the
Closing.
(j) Litigation. Except as set forth on Schedule 4(j) and
except where the obligations with respect thereto will be retained by
Seller, (i) there is no suit, arbitration or legal action pending
against Seller or, to the extent process has been served on Seller or
Seller otherwise has knowledge, administrative action pending against
Seller or, to the extent such suit, arbitration, legal action or
administrative action seeks or could reasonably be expected to result
in injunctive relief or damages in excess of $50,000, any Affiliate
of Seller in connection with the Business, (ii) to the knowledge of
Seller, there is no investigation of or threatened litigation against
Seller or any Affiliate thereof in connection
40
<PAGE>
with the Business or any Material Subsidiary and (iii) as of the date
hereof, there is no material order, decree or judgment of any
governmental, judicial, regulatory or public agency or authority,
domestic or foreign, binding on Seller in connection with the
Business or on any Material Subsidiary which, in the case of clause
(ii), if determined adversely to Seller or such Affiliate would have
a Material Adverse Effect. Except as set forth on Schedule 4(j),
neither Seller nor any Collective Subsidiary is the subject of
bankruptcy, insolvency, liquidation, receivership, reorganization or
similar proceedings, and, to the knowledge of Seller, no such
proceedings are currently threatened with respect to any of them.
(k) Taxes. Except as disclosed on Schedule 4(k):
(i) Each of the Collective Subsidiaries and each Tax
Affiliate thereof has timely filed all material Tax Returns
required to be filed by it and has paid or provided on the Sale
Balance Sheet for all Taxes due with respect to such Collective
Subsidiary or Tax Affiliate; Seller has timely filed all mate-
rial Tax Returns required to be filed by it with respect to the
Business and has paid all Taxes shown as due on such returns.
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(ii) With respect to each Collective Subsidiary, each Tax
Affiliate and Seller (but in the case of Seller only to the
extent related to the Business and only with respect to Taxes
other than Income Taxes), (A) there are no pending requests for
rulings from any Taxing authority, (B) there are no outstanding
subpoenas or requests for information by any Taxing authority
with respect to any material Taxes, and (C) to the knowledge of
Seller, there are no material proposed reassessments by any
Taxing authority of any property owned or leased by Seller or
any Collective Subsidiary.
(iii) The Income Tax Returns of each Collective Subsidiary
(including any Consolidated Return in which any Collective
Subsidiary is included) for the periods set forth on
Schedule 4(k) have been examined by the relevant Taxing
authority or the periods covered by such Income Tax Returns
have been closed by an applicable statute of limitations.
(iv) There are no agreements in effect to extend (A) the
time to file any Tax Return of any Collective Subsidiary or any
Tax Affiliate, or (B) the period of limitations for the
assessment or collection of any
42
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Taxes for which any Collective Subsidiary or any Tax Affiliate
would be liable.
(v) All material deficiencies of Taxes asserted or
proposed in writing or, to the actual knowledge of Seller or
any Collective Subsidiary, otherwise asserted or proposed with
respect to any Collective Subsidiary, any Tax Affiliate or
Seller as a result of any audit, examination, investigation or
similar proceeding by any Taxing authority have been paid or
adequate provision therefor has been made on the Sale Balance
Sheet.
(vi) There is no pending Tax audit, examination,
investigation or similar proceeding involving any material
liability for Taxes relating to any Collective Subsidiary, any
Tax Affiliate or Seller (but in the case of Seller, only to the
extent related to the Business and other than with respect to
Income Taxes), nor has any Collective Subsidiary, any Tax
Affiliate or Seller (but in the case of Seller, only to the
extent related to the Business and other than with respect to
Income Taxes) entered into any closing agreement (within the
meaning of Section 7121 of the Internal Revenue Code of 1986,
as amended (the
43
<PAGE>
"Code"), or any analogous provision of applicable tax law).
(vii) All material amounts required to be withheld or
collected by each Collective Subsidiary, each Tax Affiliate and
Seller (but, in the case of Seller, only to the extent related
to the Business) with respect to Taxes have been duly collected
or withheld, and any such amounts that were required to be
remitted to any Taxing authority have been duly remitted or
provided for.
(viii) Prior to the date hereof, Seller has provided (or
caused to be provided) to Buyer copies of all revenue agent's
reports and other written assertions of Tax deficiencies of
each Collective Subsidiary, each Tax Affiliate and Seller (but,
in the case of Seller, only to the extent related to the Busi-
ness) with respect to each taxable year of each of such
entities for which an applicable statute of limitations has not
closed. Seller will provide (or cause to be provided) to Buyer
copies of any such reports or written assertions received after
the date hereof and before the Closing Date within fifteen
44
<PAGE>
business days of their first being received by Seller or any
Collective Subsidiary.
(ix) No Transferred Subsidiary is or was a member of a
U.S. Consolidated Group.
(x) No Collective Subsidiary has or could reasonably be
expected to have any material liability in respect of Taxes,
under an indemnification agreement or on a transferee liability
theory, of any person or entity (other than such Collective
Subsidiary or any other Collective Subsidiary), which
indemnification agreement or application of a transferee
liability theory relates to an acquisition, disposition or sim-
ilar transaction occurring on or prior to the date hereof.
(xi) Schedule 4(k) sets forth a list of states,
territories and other jurisdictions (whether foreign or
domestic) in which Seller and each Collective Subsidiary have
filed Income, franchise and sales and use Tax Returns for
taxable periods ending after March 31, 1991. No Taxing
authority in a jurisdiction where Seller (with respect to the
Business) or any Collective Subsidiary does not file Tax
Returns
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<PAGE>
has made a claim or assertion that Seller (with respect to the
Business) or such Collective Subsidiary is subject to Taxation
by such jurisdiction.
(xii) The representations and warranties set forth in
Exhibit B hereto (relating to Tax matters applicable in
specific countries other than the United States) are
incorporated herein by this reference as if set forth in this
Section 4(k) in their entirety.
(xiii) No Collective Subsidiary has granted any power of
attorney in relation to a material liability for Taxes (other
than any such powers of attorney granted to another Collective
Subsidiary).
Notwithstanding anything contained in this Agreement, Seller
does not make any representation or warranty that the ability of any
Collective Subsidiary to utilize, in a Post-Closing Period or the
Post-Closing Portion of a Straddle Period (as those terms are
hereinafter defined), any net operating loss or other Tax attribute
of any Collective Subsidiary will not be affected by the purchase and
sale of the Assets and Shares pursuant to this Agreement, or by any
event or circumstance arising in a Post-
46
<PAGE>
Closing Period or the Post-Closing Portion of a Straddle Period.
(l) Patents, Copyrights, Trademarks, Etc. All patents, patent
applications, copyrights, trademark registrations, trademark
applications, trade names, service mark registrations, service mark
applications and other material intellectual property which are owned
or controlled by Seller, AOI or any Material Subsidiary and which are
used by it in the Business are listed on Schedule 4(1) hereto. All
license agreements relating to the use of the names "AO" and
"American Optical" have been delivered to Buyer or its
representatives. Except as set forth on Schedule 4(l), neither
Seller nor AOI has granted any licenses with respect to any material
trademarks set forth on Schedule 4(l). Except as set forth in
Schedule 4(j) or 4(1) hereto, (i) Seller, AOI or a Collective
Subsidiary has and owns all right, title and interest to the patents,
patent applications, copyrights, trademark registrations, trademark
applications, trade names, service mark registrations, service mark
applications and other intellectual property listed on Schedule 4(l),
(ii) neither Seller nor AOI nor any Collective Subsidiary has granted
any release, covenant not to sue or non-assertion to any third party
47
<PAGE>
with respect to any part of such intellectual property which could
reasonably be expected to materially adversely affect the use or
value of the intellectual property, (iii) there are no claims,
actions, suits, interferences, oppositions, cancellations or other
proceedings pending or, to the knowledge of Seller, threatened
against Seller, AOI or any Material Subsidiary asserting that the use
of any of the aforementioned properties or rights listed on Schedule
4(1) infringes the rights of any other person or challenging or
questioning the legality, validity, enforceability or ownership of
such intellectual property, (iv) to the knowledge of Seller, neither
Seller (to the extent such action results in a liability which is an
Assumed Liability) nor any Material Subsidiary has infringed,
interfered with, misappropriated or is infringing, and neither Seller
nor any Material Subsidiary has received notice of claim of
infringement, in each case with respect to, any patent, trademark,
copyright, trade dress, trade secret or related right of others and,
to the knowledge of Seller, no third party has asserted a right
superior to any intellectual property and any other rights owned by
Seller or AOI (in each case, to the extent such right is included in
the Assets) or any Material Subsidiary, (v) except as set forth in
Schedule 4(l), neither
48
<PAGE>
Seller nor any Material Subsidiary has received written notice that,
or is actually aware that, any of such intellectual property rights
is being infringed upon by third parties in a manner which could
reasonably be expected to have a Material Adverse Effect, and
(vi) except as disclosed on Schedule 4(j), Seller has no reason to
believe that any material trademarks set forth on Schedule 4(l) are
invalid, or except to the extent that pending trademark applications
in their current forms may now be under rejections, Seller has no
reason to believe that such material applications as set forth on
Schedule 4(l) represent unissuable applications. Seller or a
Collective Subsidiary owns or has adequate licenses or other rights
to use all material patents, patent applications, inventions, know-
how and technical information used in the conduct of the Business.
Except as set forth on Schedule 4(j) or 4(l) hereto, to the knowledge
of Seller, no goods or articles manufactured or sold by Seller or a
Material Subsidiary and no method or process employed by Seller or a
Material Subsidiary infringe any patents, trademarks, registered
designs, copyrights or other industrial or commercial monopoly rights
of any third party, other than infringement, in the case of Seller,
which would not result in a liability that is an Assumed Liability.
49
<PAGE>
(m) Compensation and Benefit Plans. (i) Schedule 4(m)(i)
sets forth a list of all material Benefit Plans (as defined below)
and material Employee Agreements (as defined below) which are or have
been entered into, sponsored, maintained, contributed to, or required
to be maintained or contributed to, by Seller, any Collective Sub-
sidiary or any ERISA Affiliate (as defined below) for the benefit of
Business Employees (as defined below) ("Seller Benefit Plans").
Except as set forth on Schedule 4(m)(i), true and complete copies of
all documents as currently in effect providing for the Seller Benefit
Plans have been provided to Buyer. For purposes of this Agreement,
"Benefit Plan" means each plan, program, policy, payroll practice,
contract, agreement or other arrangement providing for compensation,
severance, termination pay, performance awards, stock or stock-
related awards, fringe benefits or other employee benefits of any
kind, whether formal or informal, funded or unfunded, written or
oral, and whether or not legally binding, including, without
limitation, each "employee benefit plan" within the meaning of
Section 3(3) of ERISA and each "multi-employer plan" within the
meaning of Section 3(37) or 4001(a)(3) of ERISA. For purposes of
this Agreement, "ERISA Affiliate" means each business or entity which
is a member of a controlled group
50
<PAGE>
of corporations," under "common control" or a member of an
"affiliated service group" with Seller within the meaning of Sec-
tion 414(b), (c) or (m) of the Code, or is required to be aggregated
with Seller under Section 414(o) of the Code, or is under "common
control" with Seller, within the meaning of Section 4001(a)(14) of
ERISA; "Business Employee" means each current, former or retired
employee, consultant or other service provider of a Collective Sub-
sidiary or of Seller or any of its ERISA Affiliates with respect to
the Business; and "Employee Agreement" means each management,
employment, severance, consulting, non-compete, confidentiality or
similar agreement or contract between Seller, any Collective
Subsidiary or any of their ERISA Affiliates and any Business
Employee.
(ii) Except as set forth on Schedule 4(m)(ii), no payment or
benefit which will or may be made with respect to any Business
Employee pursuant to any Seller Benefit Plan in effect on or before
the Closing Date will be characterized as an "excess parachute
payment," within the meaning of Section 280G(b)(1) of the Code.
(iii) Except as set forth on Schedule 4(m)(iii), no work
stoppage or labor strike by Business Employees is pending or, to the
knowledge of Seller, threatened.
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<PAGE>
Except as set forth on Schedule 4(m)(iii), neither Seller (to the
extent related to the Business) nor any Collective Subsidiary nor any
Affiliate of the foregoing (with respect to the Business) (i) is
involved in or, to the knowledge of Seller, threatened with any
material labor dispute, grievance, or litigation relating to labor
matters; (ii) has engaged in any unfair labor practices covered by
the National Labor Relations Act or the Railway Labor Act; or (iii)
is presently, or has been in the past, a party to, or bound by, any
collective bargaining agreement or other contract with any labor
union with respect to Business Employees and no such agreement or
contract is currently being negotiated.
(iv) Each of the Collective Subsidiaries (A) has withheld all
amounts required by law or by agreement to be withheld from wages,
salaries and other payments; (B) is not liable for any arrears of
wages or any taxes or any penalty for failure to comply with any of
the foregoing; and (C) is not in arrears for any payment to any trust
or other fund or to any governmental or administrative authority,
with respect to unemployment compensation benefits, social security
or other benefits, except for instances of noncompliance with (A),
(B) or (C) that,
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<PAGE>
individually or in the aggregate, do not have a Material Adverse
Effect.
(v) Seller has delivered to Buyer copies of the savings plans
of American Optical de Mexico, S.A. de C.V. and American Optical
Lensmex, S.A. de C.V. (the "Mexican Plans"). The Mexican Plans
benefit only the current employees of such entities. The Mexican
Plans establish that all the benefits granted thereby will be
terminated automatically whenever their beneficiaries are no longer
employees of such entities. Apart from the benefits granted to the
employees under the Mexican Plans, and the benefits for which the
employees of American Optical de Mexico, S.A. de C.V. and American
Optical Lensmex, S.A. de C.V. may be eligible under certain insurance
policies purchased by such companies, as described in Schedule
4(m)(i) hereto, present or former employees of American Optical de
Mexico, S.A. de C.V. and American Optical Lensmex, S.A. de C.V. have
no rights to any kind of employee benefits whatsoever. The Mexican
Plans comply with all Mexican tax, labor and other applicable laws
and regulations and have been managed and supervised in accordance
with such laws and regulations, as well as in compliance with the
Mexican Plans' terms and conditions.
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<PAGE>
(vi) Seller has delivered to Buyer copies and descriptions of
all pension and benefit plans of American Optical Company
International A.G. ("AO Switzerland"). There are no covenants toward
former or present employees of AO Switzerland regarding pensions or
similar benefits not properly reflected in such material. The
pension fund(s) or pension arrangements of AO Switzerland (the
"Fund") comply with the applicable legal provisions and have been
administered in conformity with applicable law and the Fund's
articles and regulations. AO Switzerland has no outstanding dues
against the Fund. All pension benefits and other obligations of the
Fund and/or of AO Switzerland toward beneficiaries are sufficiently
covered by funds set aside, insurance agreements, mathematical
reserves in the Fund's balance sheets or other reserves.
(vii) Except as set out in Schedule 4(m)(i), with respect to any
present or former director, agent, employee or consultant of AO
Singapore or AO Pacific Distribution Pte Ltd. (the "Singapore
Subsidiaries"):
(A) There are not in existence any contracts with
directors, employees, agents or consultants which cannot be
lawfully terminated by three months' notice or less without
giving rise to any claim for
54
<PAGE>
damages or compensation (other than any claim for unfair
dismissal).
(B) No director, employee, agent or consultant of the
Singapore Subsidiaries has ceased to be employed by or to be
under contract to the Singapore Subsidiaries in circumstances
in which he or it could claim damages or compensation or has
given or is under notice of resignation, dismissal or
termination or is to the best of the knowledge, information and
belief of Seller contemplating leaving the Singapore
Subsidiaries or under threat of dismissal or termination.
(C) Complete and accurate particulars (including copies
of all relevant documents) of Seller's and the Singapore
Subsidiaries' obligations (whether legally enforceable or not)
to provide or increase or amend any life assurance, retirement,
redundancy, termination, pension, death, health or disability
benefit or payment to any present or former director, employee,
agent or consultant of the Singapore Subsidiaries or any spouse
or dependent of any thereof (together "Singapore Schemes") have
(together with full details of all actual and proposed
55
<PAGE>
contributions) been specified. Each Singapore Scheme has been
operated at all times in accordance with the documents
establishing the same (as lawfully amended from time to time)
and complies with (and has been operated in accordance with),
and has been granted all appropriate approvals and certificates
under, all legislation and regulations applicable thereto and
is fully and sufficiently funded both on the basis of current
salaries, staff and benefits and on the basis of all proposed
and likely increases in salaries and/or staff and benefits; all
premiums, contributions, costs and expenses in respect thereof
have been promptly paid to the date hereof; no contribution
"holiday" or reduction has obtained during the three years
ending on the date hereof; and no claims or proceedings are
threatened in relation thereto. Save as aforesaid Seller and
the Singapore Subsidiaries, as the case may be, have no
liability to provide for the benefit of any Singapore Scheme or
any such benefit or payment to any person.
(D) There are no amounts owing to any present or former
director, employee or member of the Singapore Subsidiaries
other than for remuneration
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<PAGE>
and pension contributions accrued due in respect of the current
month or for reimbursements of business expenses properly
incurred during the two weeks before the date hereof.
(E) Each of the employees of the Singapore Subsidiaries
who is by law subject to immigration control has been granted
leave to remain in the country in which he/she is employed and
has a valid work permit issued in relation to his/her
employment with Seller or the Singapore Subsidiaries.
(F) There are not and have not been any training
schemes, arrangements or proposals in respect of which a levy
may become payable by the Singapore Subsidiaries under the
relevant country of incorporation.
(G) The Singapore Subsidiaries take and have taken all
appropriate precautions to ensure that their employees have a
working environment and working practices which are not
injurious to their health and safety.
(H) Neither of the Singapore Subsidiaries uses the
services of any person who whilst not formally
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<PAGE>
treated as an employee thereof could be regarded by any
taxation authority as an employee of Seller or the Singapore
Subsidiaries, as the case may be.
(viii) Set forth in Schedule 4(m)(i) is a true and complete list
(and, in the case of any "change of control" provisions, a
description in all material respects) of all employee benefit, bonus,
deferred compensation, pension, retirement, profit-sharing, thrift,
savings, employee stock ownership, stock bonus, stock purchase,
restricted stock and stock option plans and other employee benefit
plans, including, but not limited to, welfare arrangements,
unemployment or severance benefits, health or other employee
insurance plans, employee training programs and other similar
arrangements (collectively, the "French Plans") maintained by AO
Ouest Optique SA in favor of any employees, officers or members of
the board of directors of AO Ouest Optique SA (collectively, the
"French Employees"). Each of the French Plans conforms in all
respects to all applicable laws and regulations (including, without
limitation, the provisions adopted by the Decree No. 94-761 of August
31, 1994 pursuant to EU Directive No. 91-533 of October 14, 1991; the
French Labor Code (Code du Travail); and the collective bargaining
agreement of the
58
<PAGE>
metallurgical, electrical and electronic industries (Convention
Collective des Industries Metallurgiques, Electriques et
Electroniques) of the Ile-et-Vilaine and Morbihan regions). AO Ouest
Optique SA has paid, or specifically reserved for in the Financial
Statements, all Contributions, dismissal indemnities, paid vacation
allowances or other benefits accrued or payable as of the Closing
Date to any French Employee or former Employee. Except as set forth
in Schedule 4(j), there are no actions, suits or claims which have
been instituted or asserted, or which could reasonably be expected by
Seller or AO Ouest Optique SA to be instituted or asserted, against
or relating to any of the French Plans, by or on behalf of any such
French Employee or former French Employee. AO Ouest Optique SA does
not have any liability under any French Plan which is not fully
funded or fully and specifically reserved for in the Financial
Statements. As used herein, "Contributions" means all permanent or
exceptional deductions, charges or other contributions required to be
made or paid pursuant to any social security regime, unemployment
benefit or severance plan, welfare arrangement, retirement or pension
plan, health or other employee insurance plan, employee training
program, profit-sharing plan or any other employee benefit or
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<PAGE>
labor-related plan pursuant to any applicable law and for which AO
Ouest Optique SA or any of its predecessors may be liable.
(ix) (A) "AOCO Employees" means employees of AOCO Limited who
provide services to the Canadian Transferred Subsidiary pursuant to
the Management Services Renewal Agreement and who are set forth on
Schedule 4(m)(i) and employees of AOCO Limited who are hired as
replacements for persons on said Schedule and who provide services to
the Canadian Transferred Subsidiary. "Canadian Benefit Plans" means
each plan, program, policy, payroll practice, contract, agreement,
course of conduct or other arrangement providing for compensation,
severance, termination pay, performance awards, stock or
stock-related awards, welfare, bonus, pension, profit sharing,
deferred compensation, retirement, hospitalization, medical,
eyeglass, dental, disability or other employee benefit, income secu-
rity or savings benefit of any kind, whether formal or informal,
funded or unfunded, written or oral and whether or not legally
binding, in which the AOCO Employees now participate or are or may
become eligible to participate prior to the Closing. "Canadian
Transferred Employees" means those AOCO Employees who accept
employment with the
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Canadian Transferred Subsidiary. "Canadian Transferred Subsidiary"
means 1132786 Ontario, Inc. "Management Services Renewal Agreement"
means the Management Services Renewal Agreement between AOCO Limited
and 1132786 Ontario, Inc. made as of January 1, 1996.
(B) Schedule 4(m)(i) includes a true and complete list
of AOCO Employees including the current annual salary paid to
each such employee. Neither AOCO Limited nor the Canadian
Transferred Subsidiary is a party to any written contract or
arrangement with any AOCO Employee, including without
limitation (a) any contract or arrangement for the employment
or compensation of an AOCO Employee except the Management
Services Renewal Agreement; (b) any contract or arrangement to
provide employment benefits except as set forth in Schedule
4(m)(i); or (c) any collective bargaining agreement with, or
any other obligation or commitments to, any trade union or
employee organization or group. Neither AOCO Limited nor the
Canadian Transferred Subsidiary is currently engaged in any
labor negotiation and neither AOCO Limited nor the Canadian
Transferred Subsidiary is the subject of any union organization
effort. Schedule 4(m)(i) sets
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forth all material Canadian Benefit Plans. All Canadian
Benefit Plans are and have been established, registered,
qualified, invested and administered, in all material respects,
in accordance with all laws, regulations, orders or other
legislative, administrative or judicial promulgations
applicable to the Canadian Benefit Plans ("Applicable Canadian
Benefit Laws"). All obligations regarding the Canadian Benefit
Plans have been satisfied in all material respects, there are
no outstanding defaults or violations of a material nature by
any party to any Canadian Benefit Plan and no taxes, penalties
or fees are owing or exigible under any of the Canadian Benefit
Plans. Should any matter arise prior to the Closing which
could affect the registration of any registered Canadian
Benefit Plan, the Seller will or will cause all such steps to
be taken as may be required to ensure registration is not
affected. All contributions or premiums required to be made
under the terms of each Canadian Benefit Plan or by Applicable
Canadian Benefit Laws have been made and as of the Closing Date
there will be no unfunded liability and Seller shall or shall
cause all premiums to be paid on an accrual basis for the
period up to the Closing
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Date even though not otherwise required to be made until a
later date. No amendments have been made to any Canadian
Benefit Plan and no improvements to any Canadian Benefit Plan
will be made or promised before the Closing Date. Seller or
its affiliate shall furnish or have made available to Buyer on
or before Closing true, correct and complete copies of all
Canadian Benefit Plans as amended as of the date hereof
together with all related material documentation. All employee
data necessary to administer each Canadian Benefit Plan as it
relates to the AOCO Employees shall be provided by Seller to
Buyer prior to the Closing and to the best of the knowledge of
the responsible persons at AOCO Limited shall be true and
correct as of the date thereof and Seller shall promptly notify
Buyer of any changes thereto of which such responsible persons
have knowledge. No insurance policy or any other contract or
agreement affecting any Canadian Benefit Plan requires or per-
mits a retroactive increase in premiums or payments due
thereunder. The level of insurance reserves under each insured
Canadian Benefit Plan is reasonable and sufficient to provide
for all incurred but unreported claims. Except as disclosed in
Schedule
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4(m)(i), none of the Canadian Benefit Plans provides benefits
to the AOCO Employees after their retirement or to their
beneficiaries or dependents after such retirement, and none of
the Canadian Benefit Plans is a multi-employer pension plan.
(C) Effective as of the Closing, Buyer shall cause the
Canadian Transferred Subsidiary to offer to employ the AOCO
Employees in the Canadian Transferred Subsidiary on terms and
conditions substantially comparable in the aggregate to those
in effect immediately before the Closing but only if
immediately before the Closing such person is employed by AOCO
Limited, has not met the requirements for receiving benefits
under AOCO Limited's long-term disability policy and, if not
actively employed at such time, is expected to return to active
employment within 90 days after the Closing Date or, if later,
within 180 days after the disability commenced. Seller shall
cooperate in all reasonable respects in connection therewith.
Buyer shall cause the Canadian Transferred Subsidiary to
recognize the length of service of Canadian Transferred
Employees with AOCO Limited and its predecessors for purposes
of eligibility and
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vesting of benefits under the plans established by Buyer to the
extent such service was recognized under the applicable
Canadian Benefit Plans, but not for purposes of determining the
quantum of benefits accrued under the plans established by the
Buyer. For purposes of determining the severance benefits of
the Canadian Transferred Employees, Buyer shall give credit, or
cause the Canadian Transferred Subsidiary to give credit, for
any service with AOCO Limited or its predecessors prior to the
Closing to the extent such credit is required by Canadian
statutory or common law. Seller shall cause AOCO Limited to
amend the Management Services Renewal Agreement as requested by
Buyer to reflect the employment of the Canadian Transferred
Employees by the Canadian Transferred Subsidiary on and after
the Closing.
(D) As of the Closing Date, Buyer shall cause the
Canadian Transferred Subsidiary to provide medical and dental
benefits to the Canadian Transferred Employees under
arrangements (including under the Canadian Benefit Plans
pursuant to the provisions below) which are substantially
comparable to those currently offered by AOCO Limited to its
employees
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immediately prior to the Closing. Such arrangements shall
provide medical and dental coverage for the Canadian
Transferred Employees in respect of medical or dental services
provided on or after the Closing Date. At the written request
of Buyer, Seller shall extend or shall cause to be extended
continued coverage to the Canadian Transferred Employees after
the Closing under such of the Canadian Benefit Plans which
provide medical, dental, disability or life insurance benefits
as Buyer may request (which request must be given to Seller a
sufficient amount of time before the Closing to enable such
coverage to be continued without interruption) for such period
not exceeding 90 days as Buyer may request to permit Buyer
sufficient time to establish or cause to be established its own
plans or arrangements in respect of the Canadian Transferred
Employees and the representations and warranties in respect of
the Canadian Benefit Plans set out above shall continue to
apply throughout such extended coverage period. Buyer shall
cause the Canadian Transferred Subsidiary to pay to AOCO
Limited prior to the beginning of each month falling within
such period of extended coverage an amount equal to the
estimated premium cost of such
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coverage for such month as determined in good faith by AOCO
Limited, and, to the extent the actual premium cost differs
from such estimated premium cost, Seller shall cause AOCO
Limited to pay to the Canadian Transferred Subsidiary any
excess and Buyer shall cause the Canadian Transferred
Subsidiary to pay to AOCO Limited any shortfall, as the case
may be, as soon as administratively practicable after the end
of such month. Buyer shall indemnify and hold Seller and AOCO
Limited harmless from and against any and all Losses arising
out of or resulting from such extended coverage, except to the
extent such Losses result from a failure of AOCO Limited to
make required premium payments in a case where the Canadian
Transferred Subsidiary has satisfied its obligation to make
payments as described above.
(E) The Canadian Benefit Plans permit or shall be
amended to permit each Canadian Transferred Employee to require
the commuted value of any accrued benefit under a deferred
profit sharing plan, retirement savings plan or pension plan or
other retirement or deferred income arrangement registered or
defined in the Income Tax Act (Canada) to be forthwith paid
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in a lump sum without tax withholding where permitted under the
Income Tax Act (Canada) to any similar arrangement established
by Buyer for Canadian Transferred Employees.
(x) (A) Complete and accurate particulars (including copies
of all relevant documents) of the UK Collective Subsidiaries'
obligations (whether legally enforceable or not) to provide or
increase or amend any life assurance, retirement, pension rights on
termination, pension or death benefit or payment to any present or
former director, employee, agent or consultant of the UK Collective
Subsidiaries or any spouse or dependent of any thereof (together "UK
Plans") (together with full details of all actual and proposed
contributions) have, except in relation to the Old Plans and any
plans of M. Wiseman and Company (Zimbabwe) Limited, been disclosed to
the Buyer and, save as aforesaid, the UK Collective Subsidiaries have
no liability (except in relation to the M. Wiseman and Company
(Zimbabwe) plans) (whether or not legally binding) to provide for the
benefit of any scheme or any such benefit or payment to any person.
In relation to the Old Plans, Seller has disclosed all particulars,
and copies of all relevant documents, of which it has knowledge.
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(B) The "Main Scheme" means the UK Optical Limited
Pension Scheme. The "Old Plans" means: The M. Wiseman and
Company Limited Schemes numbered one, two, three, four, five,
six, seven, eight, nine, ten and eleven; The M. Wiseman and
Company Limited Scheme constituted 21 December 1951; The
British American Optical Company Limited Pension Scheme; The
British American Optical Pension Fund for Kidwelley employees;
The UKO International Pension Scheme; UKO International
Superannuation Fund; The Willesden Optical Works Limited
Pension Fund; The WM Still and Son Scheme; The Hadley Company
Limited Superannuation Fund; The Hadley Company Limited Life
Assurance Scheme; The Alfa Lens Company Limited Scheme; Joint
Annuity for Mr. and Mrs. Bartlem; The M. Wiseman SA Pension
Plan; Willmotts Limited Pension Plan; M. Wiseman & Company Pty.
Scheme, South Africa; M. Wiseman & Company Pension Fund South
Africa; and M. Wiseman & Company South Africa Pension Fund.
"Participating Companies" means UKO International Limited, UK
Optical Limited, UKO International (Overseas Holdings) Limited,
UKO Limited and UKO (Export) Limited.
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(C) The Main Scheme has exempt approved status under
Chapter I of Part XIV of the Income and Corporation Taxes Act
1988 and neither Seller nor the principal executive officers of
the Participating Companies are aware of any ground on which
such approval could be withdrawn or could cease to apply.
(D) All taxation of any nature whatsoever whether of the
United Kingdom or elsewhere for which the trustees and
administrators of the Main Scheme are liable, or liable to
account, has been duly paid.
(E) To the knowledge of Seller and the principal
executive officers of the Participating Companies, no claim has
been made or threatened against the UK Collective Subsidiaries
or the trustees or administrators of the Main Scheme, or
against any person whom the UK Collective Subsidiaries or
Seller is or may be liable to indemnify or compensate, in
connection with the Main Scheme (other than routine claims for
benefits), and to the knowledge of the principal executive
officers of the Participating Companies and Seller there are no
circumstances which may give rise to any such claim and to the
knowledge of Seller and the principal executive officers of the
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Participating Companies neither of them has given an indemnity
to any person in connection with the Main Scheme.
(F) No payment or repayment of any of the assets of the
Main Scheme has been made to the UK Collective Subsidiaries or
any other person, firm or company participating in the Main
Scheme.
(G) Except as disclosed in relation to Mr. Boyle in a
letter dated 12th May 1993, no discretion or power has been
exercised in the last three years under the Main Scheme to
augment benefits thereunder and no promise, assurance or
undertaking (whether legally binding or not) has been given in
the last three years to any employee as to any such augmenta-
tion, provision or payment or as to the continuance of the Main
Scheme following Closing.
(H) Except as disclosed in Schedule 4(t), the UK
Collective Subsidiaries have complied fully with all equal pay,
equal entitlement, sex and other discrimination legislation
including Article 119 of the Treaty of Rome except for
instances of non-compliance
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that individually or in the aggregate do not have a Material
Adverse Effect.
(I) The employments to which the Main Scheme relate are
contracted out of the State Earnings Related Pension Scheme
within the meaning of the Pension Schemes Act 1993 and there is
in force a contracting-out certificate in relation to those
employments and to the knowledge of Seller and the principal
executive officers of the Participating Companies there is no
ground on which such certificate could be withdrawn.
(J) The records of the Main Scheme have been properly
and accurately maintained and will, if such is not the case, be
brought up to date (at the cost of Seller) as at Closing or
within two months of Closing.
(K) Other than Participating Companies, no other company
or firm participates in the Main Scheme.
(L) Except in relation to those employees listed on an
internal UKO Limited memorandum dated 19th June 1984, all lump
sum benefits (other than a
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refund of members' contributions with interest where
appropriate) payable under the Main Scheme on death before
normal pension age in respect of any person whilst in
employment to which the Main Scheme relates are fully insured
under a policy with an insurance company of good repute. All
contracts of insurance relating to the Main Scheme are
enforceable and to the knowledge of the principal executive
officers of the Participating Companies and Seller there is no
ground on which the insurers might avoid liability.
(M) The assets of the Main Scheme are sufficient to meet
the aggregate of the benefits payable to or in respect of the
members of the Main Scheme based on pensionable service up to
Closing, calculated on the basis of the actuarial assumptions
set out in the latest actuarial valuation (as at 1 April 1994)
of the Main Scheme, and including allowance on the basis of
such assumptions for projected increases in the rate of
pensionable salaries for each of such members from the date of
Closing to pensionable age under the Main Scheme or the earlier
assumed date of death or leaving service and any increases in
pensions in payment and deferred pensions.
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(N) All active members of the Main Scheme are employed
by UK Optical Limited.
(O) M. Wiseman and Company (Zimbabwe) Limited has no
liability (or potential liability) in respect of any benefits
accrued but unfunded as of the Closing Date under any UK Plans.
(P) Seller undertakes to use its best endeavors to
secure from the Occupational Pensions Board a Contracting-out
Certificate (within the meaning of the Pension Schemes Act
1993) in respect of all employments with UK Optical Limited.
(Q) "UK Business Employees" means all current employees
of any UK Collective Subsidiary except that, for purposes of
the warranties in (R)(iii) and (vii) below, "UK Business
Employees" means all current or former employees of any UK
Collective Subsidiary. UK Collective Subsidiaries warrant that
there are no other persons engaged by or working for and that
no other person has or has been offered a contract of
employment or any contract for services with any UK Collective
Subsidiary on the date hereof other than the UK Business
Employees whose names have been
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disclosed by Seller under cover of the letter from Lovell White
Durrant to Denton Hall dated 16 April 1996. "UK Collective
Subsidiaries" means any Collective Subsidiary incorporated in
the UK.
(R) UK Collective Subsidiaries hereby warrant that,
except as expressly disclosed to Buyer in the Schedules and
under cover of the letter from Lovell White Durrant to Denton
Hall dated 16 April 1996, the following facts or matters set
out below are correct:
(i) all material facts and matters relating to or
concerning the employment of any UK Business Employees
(including but not limited to their length of service,
relevant service with previous employers, dates of birth,
notice periods, any stock-option or profit-share entitle-
ments or rights) have been disclosed to Buyer under cover
of the letter from Lovell White Durrant to Denton Hall
dated 16 April 1996 and no variation of terms and
conditions of employment or rights have been offered,
promised or agreed for the future in respect of any UK
Business Employees;
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(ii) all material obligations and duties arising
under contract and required to be performed by UK
Collective Subsidiaries in relation to UK Business
Employees have been discharged to the extent that,
insofar as the obligation requires the payment of money,
that money has become due and payable under contract;
(iii) to the best of the knowledge, information and
belief of the principal executive officers of the UK
Collective Subsidiaries, having exercised due care in
making all reasonable and relevant enquiries, no UK
Business Employee has ceased to be employed by or to be
under contract to any UK Collective Subsidiary in circum-
stances in which he or she could claim damages or
compensation or has given or is under notice of
resignation, dismissal or termination or is to the best
of the knowledge, information and belief of the principal
executive officers of the UK Collective Subsidiaries
contemplating leaving any UK Collective Subsidiary or
under threat of dismissal or termination;
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(iv) no trade union, staff association or other
body representing employees in respect of all or any of
the UK Business Employees is recognized by any UK
Collective Subsidiary (either expressly or impliedly)
other than as disclosed under Schedule 4(m)(i);
(v) to the best of the knowledge, information and
belief of the principal executive officers of the UK
Collective Subsidiaries having exercised due care in
making all reasonable and relevant internal enquiries,
there are no enquiries or investigations existing,
pending or threatened into the business carried out by
any UK Collective Subsidiary by the Equal Opportunities
Commission or the Commission for Racial Equality or other
similar authorities;
(vi) to the best of the knowledge, information and
belief of the principal executive officers of the UK
Collective Subsidiaries, having exercised due care in
making all reasonable and relevant enquiries, there are
no claims pending or threatened or any circumstances
which may give rise to such a claim by any of the UK
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Business Employees against Seller and/or any of the UK
Collective Subsidiaries in respect of any accident,
injury, debility or ill-health, other than those
employer's liability claims pending against UK Optical
Limited details of which have been disclosed in Schedule
4(j) to Buyer.
(vii) to the best of the knowledge, information and
belief of the principal executive officers of the UK
Collective Subsidiaries, having exercised due care in
making all reasonable and relevant enquiries, there is no
threatened in writing, existing or pending litigation
against Seller and/or any of the UK Collective
Subsidiaries in respect of or concerning the UK Business
Employees and/or any matter which is likely to give rise
to any legal claim in respect of the UK Business
Employees other than those matters expressly disclosed to
Buyer in Schedule 4(j).
(n) Certain Fees. Except for any fees and disbursements that
may be due and payable to Bowles Hollowell Conner & Co. (which will
be paid by Seller), neither Seller nor any Collective Subsidiary nor
any of their
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respective officers, directors, employees or Affiliates has incurred
any claims for any brokerage fees, commissions or finders' fees in
connection with the transactions contemplated hereby.
(o) Insurance. Schedule 4(o) hereto contains a complete and
accurate list of all policies of insurance currently in force with
respect to the Business (including with respect to the Assets and the
Material Subsidiaries and their assets), including without limitation
such policies covering its public and product liability and its
personnel, properties, buildings, machinery, equipment, furniture,
fixtures and operations. All such policies and other instruments are
and will be in full force and effect up to the Closing Date. Except
as set forth in Schedule 4(o), there are no material claims by Seller
or any of its Affiliates (including the Collective Subsidiaries)
relating to the Business under any of such policies as to which any
insurance company is denying liability or defending under a
reservation of rights or similar clause where such denial or defense
relates to a material portion of such claim.
(p) Assets. All of the assets of Seller and its subsidiaries
used or held for use primarily in or
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pertaining primarily to or necessary to the ongoing conduct of the
Business (other than (a) such assets as are specified herein as
Excluded Assets, (b) all of the outstanding shares of capital stock
or other evidence of ownership of any corporation or other entity and
(c) the assets and properties of the Collective Subsidiaries) are
included in the assets being conveyed pursuant to this Agreement.
(q) Certain Payments. Neither Seller nor any Collective
Subsidiary nor, to the knowledge of Seller, any of their respective
directors, officers, agents, employees or persons acting on their
behalf has, in connection with the conduct of the Business, directly
or indirectly, given or agreed to give any significant gift or
similar benefit to any supplier, customer, governmental employee or
other person who was, is or may be in a position to help or hinder
the Business (or assist in connection with any actual or proposed
transaction) which (A) could subject Buyer or any Material Subsidiary
or the Business to any material damage or penalty in any civil,
criminal or governmental litigation or proceeding, domestic or
foreign, or (B) could have a Material Adverse Effect on the Business.
To the knowledge of Seller, neither Seller nor any
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Collective Subsidiary nor any of their respective directors,
officers, agents, employees or persons acting on their behalf has
unlawfully accepted or received any significant gifts or similar
benefits with respect to the Business.
(r) Environmental Matters. Except as disclosed in Schedule
4(r), Seller (to the extent related to the Business) and each
Collective Subsidiary are not in violation of any Environmental Law
except as would not result in a Material Adverse Effect. Except as
set forth in Schedule 4(r) or as would not have a Material Adverse
Effect, there are no claims, notices of violation, civil, criminal or
administrative actions, suits, hearings or proceedings pending nor,
to the knowledge of Seller, are there any investigations threatened
against Seller (to the extent related to the Business) or any
Collective Subsidiary that are based on any Environmental Law.
Except as set forth in Schedule 4(r), neither Seller (to the extent
related to the Business) nor any Collective Subsidiary has received
since 1986 any written notice or other written communication that it
is or may be a potentially responsible party or otherwise liable in
connection with any waste disposal site allegedly containing any
Hazardous Materials, or
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other location used for the disposal of any Hazardous Materials, or
written notice of any failure to comply in any respect with any
Environmental Law, in each case, except as would not result in a
Material Adverse Effect. Except as set forth on Schedule 4(r), to
the knowledge of Seller, neither Seller (to the extent related to the
Business) nor any Collective Subsidiary has, since 1986, disposed of
or arranged for the disposal or treatment of any Hazardous Materials
at any Third-Party Site except as could not reasonably be expected to
result in a Material Adverse Effect. The term "Third-Party Site"
shall mean any waste disposal site or facility used for the storage,
disposal or treatment of any Hazardous Materials other than any Real
Property and Tangible Assets. Schedule 4(r) sets forth a complete
list of all aboveground and underground storage tanks now used in the
Business that are subject to the Environmental Laws, and sets forth
their present contents. Except as disclosed in Schedule 4(r), Seller
(to the extent related to the Business) and each Collective
Subsidiary have obtained and are in compliance with all permits,
licenses, approvals or other authorizations required under the
Environmental Laws for the operation of the Business as now conducted
except as would not result in a Material Adverse Effect and have
filed such
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timely and complete renewal applications thereof as may be required
prior to the Closing Date. Except as set forth in Schedule 4(r), to
the knowledge of Seller there have been no releases of Hazardous
Materials by Seller or any Collective Subsidiary or any predecessor
of Seller or any Collective Subsidiary at, under or from any of the
Real Property and Tangible Assets which could reasonably be expected
to give rise to any liability under the Environmental Laws and which
would have a Material Adverse Effect. Except as set forth on
Schedule 4(r), neither Seller (to the extent related to the Business)
nor any Collective Subsidiary since 1986 has been or is currently
required by any governmental authority to perform any investigation
or remedial action under any Environmental Law. Except as set forth
on Schedule 4(r), no Lien pursuant to any Environmental Law exists on
any of the Real Property or Tangible Assets that are currently owned,
operated or leased by Seller (to the extent related to the Business)
or any Collective Subsidiary.
"Hazardous Materials" means any wastes, chemicals and
compounds, pollutants, contaminants, toxic or hazardous or extremely
hazardous substances (including without limitation petroleum or any
by-products or fractions thereof,
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any form of natural gas, lead, asbestos and asbestos-containing
materials ("ACM"), polychlorinated biphenyls ("PCB") and PCB-
containing equipment, radon and other radioactive elements, ionizing
and non-ionizing radiation, infectious, carcinogenic, mutagenic or
etiologic agents, pesticides, defoliants, explosives, flammables,
corrosives and urea formaldehyde foam insulation) regulated under any
applicable Environmental Laws.
"Environmental Laws" means the common law and any federal,
state, local, or foreign law, statute (including, without limitation,
the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. Sections 9601 et seq., the Emergency Planning and Community
Right-to-Know Act of 1986, 42 U.S.C. Sections 1101 et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. Sections 6901 et seq., the Toxic
Substances Control Act, 15 U.S.C. Sections 2601 et seq., the Federal
Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. Sections 136 et seq.
, the Clean Air Act, 42 U.S.C. Sections 7401 et seq., the Clean Water Act
(Federal Water Pollution Control Act), 33 U.S.C. Sections 1251 et seq.,
the Safe Drinking Water Act, 42 U.S.C. Sections 300f et seq., the
Occupational Safety and Health Act, 29 U.S.C. Sections 641 et seq., and
the Environment Act 1995 of the laws
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of the United Kingdom), ordinance, rule, regulation, treaty or
convention, applicable judicial and administrative decisions, orders
and decrees relating to occupational health and safety,
contamination, pollution or protection of the environment (including,
without limitation, ambient and indoor air, surface water,
groundwater, soil, land surface or subsurface), including, without
limitation, those relating to releases or threatened releases of or
treatment, storage and disposal of Hazardous Materials, and related
toxic tort claims for personal injury or property damage, in each
case, as in force and having binding effect on or prior to the
Closing Date; provided, however, that for purposes of clause (A)(ii)
of the definition of Special Claims in Section 13, Section 14(a)(ii),
Section 14(a)(iii) only with respect to the Southbridge Facility, and
Section 14(c)(ii), Environmental Laws shall include Environmental
Laws now or hereafter in effect; provided, further, however, that for
purposes of Section 14(a)(iii), Environmental Laws shall include the
Environment Act 1995 of the laws of the United Kingdom and any rules,
regulations or guidance promulgated thereunder by the Secretary of
State for the Environment (including, without limitation, any
subordinate legislation implementing the Environment Act 1995)
(collectively, "Implementing Law"), in
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each case, as in force and having legally binding effect on, and
enforceable against, private parties now and within two years
subsequent to the Closing Date, except to the extent that such
Implementing Law takes effect after the Closing Date and expands the
scope or basis for liability under the Environment Act 1995.
"Real Property and Tangible Assets" means all real property
currently or formerly owned, leased or operated by Seller (to the
extent related to the Business) or any Collective Subsidiary and any
buildings, facilities, equipment, structures, and other tangible
property located on, in or under such real property.
(s) Transferred Subsidiaries. Schedule 4(s) accurately sets
forth (x) the authorized capital of each Collective Subsidiary and
(y) the number of issued and outstanding shares of each class of
equity capital of each Collective Subsidiary and the ownership
thereof. All of the issued and outstanding shares of each class of
equity capital of each Collective Subsidiary have been duly
authorized and validly issued, are fully paid and non-assessable and
are owned beneficially and of record (except with respect to
directors' qualifying shares or similar shareholder requirements as
disclosed on Schedule
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4(s)) by Seller, a Transferred Subsidiary, or another Collective
Subsidiary (as the case may be), free and clear of any Lien. Other
than as set forth on Schedule 4(s), such shares are not subject to
any voting trust agreement or other contract, agreement, arrangement,
commitment or understanding restricting or otherwise relating to the
voting, dividend rights or disposition of such shares, except for
this Agreement. Other than as set forth on Schedule 4(s), there are
no outstanding securities convertible into or exchangeable for or
carrying the right to acquire any equity security of any of the
Collective Subsidiaries and no outstanding options, warrants or other
agreements or commitments that relate to or require the issuance,
sale or other disposition of any equity securities of any of the
Collective Subsidiaries, except for this Agreement. Other than as
set forth on Schedule 4(s), none of the Assets includes and none of
the Collective Subsidiaries owns or controls any equity interest or
shares or securities of, or any security interest in any shares of,
and none of the Collective Subsidiaries controls the management or
policies of, any entity (other than the Collective Subsidiaries).
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(t) Compliance with Applicable Laws. Except as specified in
Schedule 4(t) and except with respect to Environmental Laws, which
are dealt with exclusively in Section 4(r), Seller and each Material
Subsidiary are and have been in compliance with all applicable
federal, state, local and foreign treaties, directives, statutes,
laws, ordinances, rules, orders and regulations and codes of
practice, in each case, of any governmental entity having
jurisdiction over the Business or any Collective Subsidiary or the
assets or properties thereof (including, without limitation, E.C.
Directives and Regulations), except for instances of noncompliance
that, individually or in the aggregate, do not have a Material
Adverse Effect.
(u) Related Assets. Except as set forth in Schedule 4(u),
neither Seller (other than through its interest in the Assets) nor
any of its Affiliates (other than the Collective Subsidiaries)
(i) has any interest in any property (real or personal, tangible or
intangible) or contract used in or pertaining to the Business (other
than property or contracts being conveyed to Buyer or its Designated
Subsidiary pursuant to this Agreement), (ii) has any direct or
indirect interest in any person with which
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Seller (to the extent related to the Business) or any Collective
Subsidiary competes in any material product or service category or
has a material business relationship or (iii) provides material
services to the Business or any Collective Subsidiary.
(v) Disclosure. To the knowledge of Seller, none of (i) this
Agreement, (ii) the agreements and certificates executed pursuant to
this Agreement and (iii) the schedules hereto, including the
Financial Statements, taken as a whole, contains any materially
misleading statement or omits any material fact necessary to be
stated to make the statements herein or therein not inaccurate or
incomplete.
(w) Reorganizations. Seller has delivered to Buyer or its
representatives complete and accurate copies of all the material
documentation of the corporate reorganizations made with respect to
the Collective Subsidiaries in connection with the proposed sale
thereof. Other than as set forth on Schedule 4(w), all material
actions required to be taken in connection with such reorganizations
have been completed.
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SECTION 5. Representations and Warranties of Buyer.
Buyer hereby represents and warrants to Seller as follows:
(a) Corporate Organization. Each of Buyer and each Designated
Subsidiary is a corporation duly incorporated, validly existing and
in good standing under the laws of the jurisdiction of its
incorporation, with full corporate power and authority to carry on
its business, and each of Buyer and each Designated Subsidiary has
or, prior to the Closing, will have full corporate power and
authority, to the extent required, to carry on the Business as
presently conducted, own the Shares and to own, lease and operate the
properties of the Business where such properties are now owned,
leased or operated by Seller. Each of Buyer and each Designated
Subsidiary is, or prior to the Closing will be, duly qualified to do
business as a foreign corporation in all jurisdictions where the
failure to be so qualified, individually or in the aggregate, would
materially and adversely affect consummation on a timely basis of the
transactions contemplated by this Agreement by Buyer or a Designated
Subsidiary or the ability of Buyer and each Designated Subsidiary to
assume the liabilities herein on the terms set forth herein.
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(b) Charter Documents, Etc. The Certificate of Incorporation
(or other instrument of incorporation), By-laws (if any) and all
other constitutional documents of Buyer have been, and of each
Designated Subsidiary, at least ten days prior to the Closing Date,
will have been, delivered to Seller and are true and accurate copies
thereof as of the date hereof.
(c) Corporate Authority. Buyer has full corporate power and
authority to execute and deliver this Agreement, and each of Buyer
and each Designated Subsidiary has, or will have at the Closing, full
corporate power and authority to execute and deliver the instruments
of assumption and undertaking and the other instruments and documents
delivered or to be delivered by it pursuant to this Agreement and to
consummate the transactions contemplated hereby and thereby. This
Agreement has been, and the instruments of assumption and undertaking
and the other documents delivered or to be delivered by it pursuant
to this Agreement will have been, duly authorized and approved by all
necessary and proper corporate action of Buyer and each Designated
Subsidiary (to the extent a party thereto) and constitute, or will
constitute when executed and delivered, the valid and binding
obligations
91
of Buyer and each Designated Subsidiary (to the extent a party
thereto) enforceable in accordance with their respective terms,
except as such enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws relating to or affecting
the enforcement of creditors' rights generally and by general equity
principles, regardless of whether such enforceability is considered
in proceeding in equity or at law.
(d) Financing. Buyer will have, at the Closing Date,
sufficient funds available to it to pay the Purchase Price.
(e) No Violation. Neither the execution and delivery of this
Agreement, the instruments of assumption and undertaking and the
other documents delivered or to be delivered by Buyer or a Designated
Subsidiary pursuant hereto and the performance by Buyer or a
Designated Subsidiary hereunder and thereunder nor the consummation
of the transactions contemplated hereby and thereby will violate,
conflict with, result in the breach of or accelerate the performance
required by any of the terms, conditions or provisions of the
Certificate of Incorporation, By-laws or other constitutional
document of Buyer or a Designated Subsidiary or any order, ruling,
decree, judgment,
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arbitration award or stipulation to which Buyer or a Designated
Subsidiary is subject, or constitute a default thereunder.
(f) Certain Fees. Neither Buyer nor any Designated Subsidiary
nor any of their respective officers, directors, employees or
Affiliates has incurred any claims for any brokerage fees,
commissions or finders' fees in connection with the transactions
contemplated hereby.
(g) No Adverse Claims or Intent to Distribute. Neither Buyer
nor any Designated Subsidiary of Buyer (A) knows of any adverse
claims relating to the Shares other than as disclosed in this
Agreement, the Schedules hereto or any certificate delivered pursuant
hereto at the Closing or (B) is acquiring the Shares or the shares of
any Collective Subsidiary with the intent to transfer or distribute
them in violation of applicable securities laws.
SECTION 6. Additional Covenants.
(a) Further Assurances. From time to time after the Closing
Date, Seller will and will cause its subsidiaries to execute and deliver
such other and further instruments of conveyance, assignment and transfer
and take such other action as
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Buyer may reasonably request to consummate the transactions contemplated
under this Agreement.
(b) Access to Company. Prior to the Closing Date, Seller
shall provide Buyer and its counsel, accountants and other representatives
reasonable access, during regular business hours and upon reasonable
advance notice, to the properties, books and records and management
employees of Seller and the Collective Subsidiaries, and shall furnish, or
cause to be furnished, to Buyer any financial, legal and operating data and
other information with respect to the business and properties of Seller and
the Collective Subsidiaries as Buyer shall from time to time reasonably
request including, without limitation, reasonable access to Seller's
workpapers relating to financial statements delivered or to be delivered to
Buyer. From time to time after the Closing Date, Seller and Buyer shall,
at the reasonable request of such parties and, with respect to
out-of-pocket expenses, at the expense of the requesting party, make
available its employees, books and records during normal business hours for
the purpose of preparing financial statements for periods which are, in
whole or in part, prior to the Closing Date or in connection with general
audits or asserting, prosecuting or defending claims and litigation or to
the extent otherwise reasonably required. In addition, each of Buyer and
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Seller covenants that the other party and its independent public
accountants and its counsel shall have the right to inspect and copy such
documents after the Closing, including but not limited to invoices, expense
account records, cost accounting records and inventory valuations, and to
make available for review the originals of such documents from time to
time, during normal business hours, for the purposes of preparing financial
statements or in connection with general audits or asserting, prosecuting
or defending claims and litigation or to the extent otherwise reasonably
required by such party. Notwithstanding anything contained in this
Section 6(b), access to any documents or other information that relates to
Taxes shall be governed exclusively by Section 6(i)(xi) hereof.
(c) Tangible Net Worth. At all times on and after the Closing
Date and until such time as the obligations of Seller under Section
14(a)(i) and (iii) shall have terminated in accordance with the provisions
hereof, Seller's Tangible Net Worth shall be greater than $20,000,000. As
used herein, the term "Tangible Net Worth" means the net worth of Seller
determined in accordance with generally accepted accounting principles
minus (i) the total book value of all assets of Seller properly classified
as intangible assets in accordance with generally accepted accounting
principles and (ii) except for
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write-ups of tangible assets permitted under generally accepted accounting
principles, all amounts representing any write-up in the book value of any
existing assets of Seller or any of its subsidiaries resulting from a
reevaluation thereof subsequent to the Closing Date. Neither Seller nor
any of its subsidiaries will (i) redeem, repurchase, retire or acquire any
of Seller's capital stock, (ii) make any dividend or distribution with
respect to any of its capital stock unless the entire amount of such
dividend or distribution is made to Seller or a subsidiary of Seller, (iii)
merge or consolidate with or into any other person (other than with or into
Seller or a subsidiary of Seller), (iv) transfer, sell, dividend,
distribute or otherwise dispose of its assets other than sales of inventory
in the ordinary course of business unless the entire amount of such
transfer, sale, dividend, distribution or other disposition is made to
Seller or a subsidiary of Seller or (v) pay salaries, bonuses, consulting
or advisory fees or other similar payments to any stockholders or former
stockholders of Seller or to any former stockholders of its subsidiaries,
or their relatives or affiliates, in excess of reasonable amounts and on
other than arms' length terms and conditions, in the case of each of
clauses (i) through (v), so long as the Tangible Net Worth of Seller is, or
if the effect of any such transaction would be to cause the Tangible Net
Worth of Seller to be, less than
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$20,000,000. Seller shall provide annually (and no later than 90 days
after the end of Seller's most recent fiscal year) to Buyer a certificate
setting forth Seller's Tangible Net Worth as of the last day of Seller's
fiscal year as well as reasonable supporting documentation.
(d) License and Assignment Agreements. On or prior to the
Closing Date, Seller shall enter into a Global Trademark Assignment
Agreement with an appropriate subsidiary of Seller with respect to the
assignment of the tradenames and trademarks listed on Schedule 6(d)(ii) on
substantially the terms set forth on Schedule 6(d)(i). On the Closing
Date, Buyer and Seller and/or a wholly-owned subsidiary of Seller
designated by Seller prior to Closing, provided that such assignment shall
not relieve Seller of its obligations thereunder, shall enter into one or
more Trademark Assignment and License Agreements for the benefit of Buyer
with respect to the assignment or licensing of the trade names and
trademarks listed on Schedule 6(d)(1), on substantially the same terms and
conditions set forth in Schedule 6(d)(1). On the Closing Date, Buyer,
Seller, AOI or a wholly-owned subsidiary of Seller designated by Seller
prior to Closing, provided that such assignment shall not relieve Seller of
its obligations thereunder, shall also enter into one or more Patent
Assignment Agreements,
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including a Global Patent Assignment Agreement (together with the Global
Trademark Assignment and the Trademark Assignment and License Agreement,
the "License and Assignment Agreements"), on substantially the same terms
and conditions set forth in Schedule 6(d)(2), with respect to the
assignment of the patents, unpatented inventions, trade secrets, and know-
how currently used by the Business listed on Schedule 6(d)(2).
(e) Agreement To Cooperate. Buyer agrees to take all
reasonable measures to cooperate fully with Seller (at Seller's expense) in
Seller's pursuit or defense of any claims or existing or future litigation
arising out of, resulting from or relating to the Business (other than
claims or litigation by or against Buyer, a Designated Subsidiary or, after
the Closing, a Collective Subsidiary), including, without limitation, those
arising out of or resulting from employee claims and product liability not
assumed by Buyer pursuant to Sections 3(d) and (e) hereof. For the
avoidance of doubt, the preceding sentence shall not create any implication
that Seller has the right to pursue any claim or litigation which has been
or should have been conveyed to Buyer or a Designated Subsidiary pursuant to
the terms of this Agreement. In connection therewith, Buyer agrees to
execute and deliver to Seller any and all documents or other instruments as
may be reasonably requested by Seller in
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connection therewith and Buyer will make available to the Seller, at
Seller's request (at reasonable times and upon reasonable notice),
appropriate employees of the Business (taking into account the ongoing needs
of the Business) in connection with asserting, prosecuting or defending any
such claims or litigation. Notwithstanding anything contained in this
Section 6(e), access to any documents or other information that relates to
Taxes shall be governed exclusively by Section 6(i)(xi) hereof.
(f) Transition Services and Supply Agreements. Seller shall
cause (i) the Management Services Renewal Agreement dated as of January 1,
1996 between AOCO Limited and 1132782 Ontario Inc. (the "Transition
Services Agreement") and (ii) the Lens Supply Agreement dated as of
September 1, 1995 between AOCO Limited and 1132782 Ontario Inc. (the
"Supply Agreement") to be amended to reflect substantially the modified or
additional terms and conditions set forth in Schedule 6(f). Seller shall
allow Buyer or its Designated Subsidiary occupying property pursuant to the
Southbridge Lease to utilize Seller's telephone system in place at such
property at Buyer's expense until the earlier of 180 days after the Closing
Date and the date on which Buyer, after using commercially reasonable
efforts to obtain a separate telephone system, obtains a
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separate telephone system. Buyer shall pay costs allocated to its portion
of such system, which costs shall be allocated on a basis consistent with
the historical allocation of costs to the Business at such property.
(g) Southbridge Lease. Buyer and Seller agree to enter into a
sublease (the "Southbridge Lease") of the facilities of the Business
located in Southbridge, Massachusetts leased from Southbridge Associates
Limited Partnership, substantially on the terms and conditions set forth in
Schedule 6(g) hereto.
(h) HSR Act and Certain Other Filings. Seller and Buyer have
filed Notification and Report Forms under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations
promulgated thereunder (the "HSR Act") with the Federal Trade Commission
(the "FTC") and the Antitrust Division of the Department of Justice (the
"Antitrust Division") and shall use all reasonable efforts to respond as
promptly as practicable to all inquiries received from the FTC or the
Antitrust Division for additional information or documentation. Each of
Seller and Buyer, to the extent required by law or regulation, shall make
such other filings, domestic or foreign, including filings in the United
Kingdom, within 5 days after the date hereof (or sooner if so required) and
shall use
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all reasonable efforts to respond as promptly as practicable to all
inquiries received from any governmental authority having authority in
connection with any such filing for additional information or
documentation.
(i) Tax Matters.
(i) Defined Terms. For purposes of this Agreement, the
following terms, as used herein, shall have the following meanings:
(A) "Consolidated Group" shall mean an affiliated group of
corporations (within the meaning of Section 1504(a) of the Code)
filing a consolidated U.S. federal Income Tax Return, and a group of
corporations filing a consolidated or combined Tax Return for state,
local or foreign Tax purposes.
(B) "Consolidated Return" shall mean a consolidated U.S.
federal Income Tax Return, and a consolidated or combined Tax Return
for state, local or foreign Tax purposes.
(C) "Final Determination" shall mean (I) a decision of the
United States Tax Court, or a judgment, decree, or other order by
another court of competent jurisdiction, which has become final; (II)
a closing agreement under
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Section 7121 of the Code or comparable provision of state, local or
foreign law; (III) any disallowance of a claim for refund or credit
in respect of an overpayment of Tax unless a suit is filed on a
timely basis; or (IV) any final disposition by reason of the
expiration of an applicable statute of limitations.
(D) "Income Tax" shall mean any federal, state, local or
foreign Tax (I) based upon, measured by or calculated with respect to
net income, profits or receipts (including, but not limited to,
capital gains Taxes, minimum Taxes and Taxes on items of Tax
preference), or (II) based upon, measured by or calculated with
respect to multiple bases (including, but not limited to, corporate
franchise Taxes) if one or more of the bases on which such Tax may be
based, measured by or calculated with respect to is described in
clause (I). For the avoidance of doubt, Income Tax shall include
interest, penalties and additions to Income Tax.
(E) "Pre-Closing Period" shall mean any taxable period that
ends on or before the Closing Date.
(F) "Pre-Closing Taxes" shall mean (I) Income Taxes
attributable to a Pre-Closing Period; (II) in the case of
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Income Taxes attributable to any Straddle Period, an amount equal to
the hypothetical Income Tax for the portion of such Straddle Period
that ends on the Closing Date (the "Pre-Closing Portion"), determined
on the basis of an interim closing of the books (for the avoidance of
doubt, a short period resulting from such interim closing shall not
be treated as a full year for purposes of determining depreciation
and other cost recovery deductions); (III) in the case of any sales
or use Tax or value added tax, the Tax arising with respect to
property sold or acquired in a Pre-Closing Period or in the Pre-
Closing Portion of any Straddle Period; (IV) in the case of customs
duties, the amount of such duties arising with respect to goods that
are subjected to customs duties on or prior to the Closing Date;
(V) in the case of Taxes that are imposed on a periodic basis (such
as real property Taxes), the amount of such Taxes attributable to a
Pre-Closing Period or, if attributable to a Straddle Period, the
amount of such Taxes for the entire Straddle Period multiplied by a
fraction, the numerator of which is the number of days in the Pre-
Closing Portion of such period and the denominator of which is the
number of days in the entire period; and (VI) in the case of Taxes
not described in clauses (I) through (V) of this sentence, the amount
of such Taxes
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attributable to a Pre-Closing Period or the Pre-Closing Portion of a
Straddle Period, determined on the basis of an interim closing of the
books. For purposes of this definition, (w) a Tax described in any
of clauses (III) through (VI) of the preceding sentence shall
constitute a Pre-Closing Tax only if the amount of such Tax exceeds
U.S.$5,000; (x) the hypothetical Tax described in clause (II) of the
preceding sentence for any period shall be zero (in the case where no
Tax is due) or a positive amount; (y) any credits against Tax (other
than credits for payments of estimated taxes, foreign tax credits and
credit carryovers to the Straddle Period) shall be prorated (1) with
respect to clauses (II) and (VI) of the preceding sentence, based
upon the ratio of the liability for Taxes attributable to the Pre-
Closing Portion of any Straddle Period, as tentatively determined
under such clause, to the total Taxes for such period (without regard
to the credits being allocated), and (2) with respect to clause (V)
of the preceding sentence, based upon the fraction employed in such
clause; and (z) for purposes of clauses (I) and (II) of the preceding
sentence, the taxable year of any partnership or other pass-through
entity in which Seller or any Collective Subsidiary is a partner or
other beneficial interest-holder shall be deemed to
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terminate at the close of business on the Closing Date.
Notwithstanding anything contained herein, Pre-Closing Taxes shall
not include any Taxes attributable to actions taken by or at the
direction of Buyer on the Closing Date that are out of the ordinary
course of business.
Notwithstanding anything to the contrary in this definition of
Pre-Closing Taxes, the amount of a Timing Increase (as defined below)
that shall be treated as a Pre-Closing Tax for purposes of this
Agreement shall be the amount of such Timing Increase reduced by the
Adjustment (as defined below) with respect to such Timing Increase.
For purposes of this paragraph, the term "Timing Increase" shall mean
that portion of an increase in the amount of any Pre-Closing Tax
(determined without regard to the application of the preceding
sentence and excluding any interest on, penalties with respect to and
other additions to such increase all of which interest, penalties and
other additions shall nonetheless constitute Pre-Closing Taxes)
arising by reason of an adjustment to an item made as a result of a
Tax audit, examination or administrative or judicial proceeding, if
the adjustment to such item results in (1) an increase in the tax
basis of any asset, the benefit of all or some portion of which
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may under applicable law then in effect be realized in a Post-Closing
Period or the Post-Closing Portion of a Straddle Period or (2) the
time in which such item (a "Shifted Item") is deductible, includible,
creditable or otherwise taken into account being shifted between a
Pre-Closing Period or the Pre-Closing Portion of a Straddle Period,
on the one hand, and a Post-Closing Period or the Post-Closing
Portion of a Straddle Period, on the other hand, in a manner that may
under applicable law then in effect result in a tax benefit being
realized in a Post-Closing Period or the Post-Closing Portion of a
Straddle Period. For purposes of this paragraph, the "Adjustment"
with respect to a Timing Increase shall be an amount equal to 50% of
the product of the Timing Increase and a fraction, the numerator of
which is the portion of the tax basis increase referred to in clause
(1), the recovery of which would be allowable in a Post-Closing
Period or the Post-Closing Portion of a Straddle Period, or the
portion of the Shifted Item that would be taken into account in a
Post-Closing Period or the Post-Closing Portion of a Straddle Period,
and the denominator of which is the full amount of such tax basis
increase or Shifted Item. For purposes of the preceding sentence, in
the case of a Straddle Period, the determination of the extent to
which
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a recovery of a tax basis increase or the taking into account of a
Shifted Item is allowable with respect to the Post-Closing Portion of
such Straddle Period shall be made by applying the principles set
forth in the first paragraph of this definition of Pre-Closing Taxes.
If Buyer and Seller are unable to agree as to whether the circum-
stances described in clauses (1) or (2) of this paragraph exist, or
as to the portion of a tax basis increase or Shifted Item referred to
in such clause the recovery or taking into account of which would be
allowable in a Post-Closing Period or the Post-Closing Portion of a
Straddle Period, the parties shall instruct Coopers & Lybrand to
resolve such dispute, and such resolution shall be final and binding
on the parties. The fees and expenses of Coopers & Lybrand shall be
borne equally by Buyer and Seller.
(G) "Straddle Period" shall mean any taxable period that
begins before the Closing Date and ends after the Closing Date.
(H) "Taxes" (or "Tax" where the context requires) shall mean
(i) all federal, state, county, local, foreign and other taxes and
similar governmental charges, customs duties or assessments
(including, without limitation, net income, alternative or add-on
minimum tax, profits,
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premium, estimated, net worth, social security, workers and
unemployment compensation, gains, excise, sales, use, occupancy,
gross income, gross receipts, franchise, ad valorem, stamp,
severance, capital levy, production, transfer, withholding, license,
employment and payroll, and property taxes (real or personal),
environmental or windfall profits taxes and import duties (and
further including, without limitation, in the case of Switzerland and
any political subdivision thereof or therein, WUST, AHV, IV, ALV and
EO)) imposed by any governmental authority responsible for the
imposition of any such tax, whether attributable to statutory or
nonstatutory rules and whether or not measured in whole or in part by
net income, and including interest, penalties, additions to tax, and
interest on penalties or additions to tax and (ii) liability for the
payment of any amounts described in clause (i) as a result of being a
member of a Consolidated Group for periods prior to or including the
Closing Date, including any liability pursuant to Treasury Regulation
{ 1.1502-6 or any analogous provision of state, local or foreign law
(but without duplication of any Taxes described in clause (i)).
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(I) "Return" or "Tax Return" shall mean any report, return or
other information, including any supporting schedules, required to be
supplied to a governmental entity with respect to Taxes including,
where required or actually filed, a Consolidated Return.
(J) "Tax Affiliate" shall mean any entity that is a member of
a Consolidated Group that includes any Collective Subsidiary, if any
Collective Subsidiary may be held liable for the Taxes of such entity
or of such Consolidated Group.
(K) "Post-Closing Period" shall mean any taxable period that
begins on or after the Closing Date.
(L) "Post-Closing Portion" shall mean the portion of a
Straddle Period that is not the Pre-Closing Portion of such Straddle
Period.
(M) "Pre-Closing Income Taxes" shall mean Pre-Closing Taxes
that are Income Taxes.
(ii) Seller Indemnification. (A) Seller agrees to indemnify
and hold harmless Buyer, each Collective Subsidiary, their respective
officers, directors, successors and permitted transferees and assigns from
and against any and all Losses (as
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defined in Section 14(a) hereof), without duplication, with respect to
(I) the amount, if any, by which (w) the aggregate amount of Pre-Closing
Income Taxes exceeds (x) the sum of the amounts reserved for Income Taxes
on the Closing Balance Sheet and the AO Singapore Balance Sheet and
(II) the amount, if any, by which (y) the aggregate amount of Pre-Closing
Taxes other than Pre-Closing Income Taxes exceeds (z) the sum of the
amounts reserved for Taxes other than Income Taxes on the Closing Balance
Sheet and the AO Singapore Balance Sheet. For the avoidance of doubt, for
purposes of this Section 6(i)(ii), the sum of the amounts reserved on the
Closing Balance Sheet and the AO Singapore Balance Sheet for Taxes (whether
Income Taxes or Taxes other than Income Taxes) shall not include any
reserve or accrual for "deferred taxes," but shall include, without
limitation, that portion of the lines labeled "Accrued Expenses" and
"Accrued Salaries and Related Items" that reflect a liability for Taxes.
(B) For the avoidance of doubt, for purposes of paragraph (A),
Pre-Closing Taxes includes any Tax incurred or arising in connection with
(I) the restructuring involving one or more of the Collective Subsidiaries
in the United Kingdom, which restructuring was effected in anticipation of
the purchase and sale of the Assets and the Shares pursuant to this
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Agreement, (II) the restructuring involving one or more of the Collective
Subsidiaries in Canada, which restructuring was effected in anticipation of
the purchase and sale of the Assets and the Shares pursuant to this
Agreement, and (III) the restructuring involving AO Singapore, which
restructuring will be effected in anticipation of the purchase and sale of
the Assets and the Shares pursuant to this Agreement.
(C) Payment by Seller of any amount due under this
Section 6(i)(ii) (an "Indemnification Payment") shall be made by the later
of (I) five (5) business days after written request therefor by Buyer and
(II) five (5) business days prior to the date that payment is due of the
amount with respect to which the Indemnification Payment is owed. In the
case of a Tax that is contested in accordance with the provisions of Sec-
tion 6(i)(x) hereof, payment of that Tax to the appropriate Tax authority
will not be considered to be due earlier than (x) the time of a Final
Determination with respect to such Tax or (y) an actual payment of such
Tax, whether or not under protest, provided that such payment under clause
(y) is authorized by Seller. Where appropriate, the term "payment"
includes the reduction of amounts owed to Buyer or any affiliate of Buyer
by any Tax authority with respect to any Tax that relates to a
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Post-Closing Period or the post-closing portion of any Straddle Period.
(iii) Buyer Indemnification. Buyer agrees to indemnify and hold
harmless Seller, its officers, directors, successors and permitted
transferees and assigns from and against any and all Losses with respect to
Taxes relating to the Assets, the Collective Subsidiaries or any Tax
Affiliate, which Taxes are attributable to (A) the Post-Closing Portion of
a Straddle Period (determined in accordance with the principles of Section
6(i)(i)(F)) or (B) a Post-Closing Period.
(iv) Intentionally omitted.
(v) Refunds. (A) The portion of any refund of Tax (inclusive
of interest) that is attributable to Pre-Closing Taxes (to the extent such
refund (inclusive of interest) exceeds any amount with respect thereto
reflected as an asset on the Closing Balance Sheet or the AO Singapore
Balance Sheet), net of any Taxes imposed on the receipt of such refund (and
any interest thereon), shall be the property of Seller; provided, however,
that (I) any such refund that is attributable to the carryback of a loss,
deduction or credit generated in a Post-Closing Period or the Post-Closing
Portion of any Straddle Period shall be the property of Buyer and (II) in
the
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event that, in a Tax audit, examination or administrative or judicial
proceeding with respect to a Collective Subsidiary for a Post-Closing
Period, an adjustment is made that results in an increase to the taxable
income of such Collective Subsidiary with respect to a Post-Closing Period
and a refund to such Collective Subsidiary with respect to a Pre-Closing
Period, such refund shall be the property of Buyer.
(B) The portion of any refund of Tax (inclusive of interest)
that is not attributable to Pre-Closing Taxes (including, for the avoidance
of doubt, any refund of a Tax to the extent that such Tax would have
constituted a Pre-Closing Tax for purposes of this Agreement if the second
paragraph of the definition of Pre-Closing Taxes were not contained in this
Agreement), or that is attributable to Pre-Closing Taxes but is shown as an
asset on the Closing Balance Sheet, shall be the property of Buyer.
(C) For purposes of this Section 6(i)(v), a refund of Tax
includes the application of an amount otherwise refundable as a reduction
of amounts owed or to be owed.
(D) Upon the reasonable request of Seller, and with the
consent of Buyer, which consent shall not be unreasonably withheld, Buyer
shall file (or shall cause the appropriate
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Collective Subsidiary to file) a claim for refund, in such form as Seller
may reasonably request, of any Tax relating to any Pre-Closing Period or
any Pre-Closing Portion of a Straddle Period, which refund is the property
of Seller under Section 6(i)(v)(A) hereof. Buyer shall pay, or shall cause
the appropriate Collective Subsidiary to pay, to Seller any such refund
(together with any interest thereon received by such Collective Subsidiary)
within five (5) business days of receipt thereof. Buyer shall use
commercially reasonable efforts to cause such claim for refund to be
prosecuted (by suit or otherwise), including, without limitation, taking
into account in good faith Seller's comments, suggestions or requests with
respect thereto, and shall use counsel of Seller's choice, reasonably
acceptable to Buyer, at Seller's sole cost and expense. Seller shall
reimburse Buyer or the appropriate Collective Subsidiary for any third-
party costs incurred in obtaining any such refund.
(vi) Preparation and Filing of Returns. (A) Seller shall
cause to be prepared and filed any Returns of the Collective Subsidiaries
(including any Consolidated Returns that include any Collective Subsidiary)
that are due prior to the Closing Date (taking into account proper
extensions), and shall
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pay (or cause the appropriate Collective Subsidiary to pay) all Taxes shown
as due on such Returns.
(B) Seller shall cause to be prepared and delivered to Buyer
all required federal, state, local and foreign Income Tax Returns
(including any Consolidated Returns that include any Collective Subsidiary)
of the Collective Subsidiaries (other than those that Seller is obligated
to file or cause to be filed pursuant to paragraph (A)) for any Pre-Closing
Period, for which Returns are not due (taking into account proper
extensions) prior to the Closing Date. Seller shall also cause to be
prepared and delivered to Buyer all other required Tax Returns of the
Collective Subsidiaries not required to be filed pursuant to paragraph (A)
for any Pre-Closing Period if such Returns have customarily been prepared
by personnel of Seller (and not personnel of the Collective Subsidiaries)
and such Returns have a due date (including proper extensions) not more
than 30 days following the Closing Date. Buyer shall cause such Returns to
be filed, and the Tax shown as due thereon to be paid, no later than the
due date for such Returns (including proper extensions).
(C) The Returns referred to in paragraphs (A) and (B) above
shall be prepared in a manner consistent with past practice (including any
Tax elections and methods of
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accounting), unless (x) there has been a Final Determination that such past
practice is incorrect or (y) a contrary treatment is required by an
intervening change in law (or the judicial or administrative interpretation
thereof). Seller shall cause to be made available for inspection such
Returns (together with all appropriate workpapers and information) of the
Collective Subsidiaries to Buyer for its approval no later than thirty
business days prior to the due date for the filing of such Returns (taking
into account proper extensions).
(D) Except as otherwise provided in paragraph (B) above, Buyer
shall be responsible for preparing and filing all Returns required to be
filed by or on behalf of the Collective Subsidiaries after the Closing
Date.
(E) With respect to any Return required to be filed by any
Collective Subsidiary for a Straddle Period, Buyer shall provide to Seller
a copy of such completed Return and a certificate (the "Certificate")
signed by the appropriate Collective Subsidiary's chief financial officer,
setting forth the amount of Tax shown on such Return that is allocable to
Seller (in accordance with this Section 6(i)) at least 30 days prior to the
due date (including any extension thereof) for the filing of such Return,
and Seller shall have the right to review such Return and Certificate prior
to the filing of such Return.
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Buyer agrees to make all its appropriate Tax Return preparation workpapers
and information available to Seller for purposes of such review. Seller
and Buyer agree to consult and attempt to resolve in good faith any issues
arising as a result of the review of such Return and Certificate by Seller
and mutually to consent to the filing of such Return. In the event the
parties are unable to resolve any dispute by the date 15 days prior to the
due date for filing of the Return in question (including any extension
thereof), the parties jointly shall instruct Coopers & Lybrand to resolve
any issue in dispute as promptly as possible, which resolution shall be
final and binding upon the parties. If Coopers & Lybrand is unable to make
a prompt determination with respect to any disputed issue prior to the due
date (including any extension thereof) for filing the Return in question,
then Buyer may file such Return on the due date therefor (including any
extension thereof) without such determination having been made and without
Seller's consent. Notwithstanding the filing of such Return, Coopers &
Lybrand shall make a prompt determination with respect to any disputed
issue, and the amount of Taxes allocated to Seller shall be the lower of
(I) the Taxes shown on the Certificate and (II) the Taxes allocable to
Seller for the taxable period in question as determined by Coopers &
Lybrand. Cooper & Lybrand's fees and expenses shall be divided equally
between Buyer and Seller.
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(vii) Intentionally Omitted.
(viii) Purchase Price Allocation. The Purchase Price and the
Assumed Liabilities shall be allocated among the Assets (in the aggregate)
and the Shares as provided on Schedule 6(i)(viii) hereto. Provided that
Seller delivers to Buyer within 90 days of Closing a report from a
nationally-recognized appraisal firm reasonably satisfactory to Buyer
stating that the Agreement Not to Compete delivered by Maurice J. Cuniffe
is worth not less than U.S.$1,500,000, of the amount set forth on Schedule
6(i)(viii) as allocable to the Assets, U.S.$1,500,000 shall be allocated to
such Agreement Not to Compete. The parties shall make all Tax reports,
returns and other statements, including Internal Revenue Service Form 8594
or any equivalent statements, consistent with the allocation set forth on
Schedule 6(i)(viii), except to the extent otherwise required by law. Each
party shall notify the other if the Internal Revenue Service or any other
Taxing authority purposes to reallocate the Purchase Price.
(ix) Section 338 Election. Following the Closing, Buyer may
make an election under Section 338(g) of the Code with respect to one or
more of the Collective Subsidiaries; provided, however, that if Buyer makes
such an election with respect to any Collective Subsidiary, it shall also
make such
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an election for each Collective Subsidiary the stock of which is held,
directly or indirectly, by the former Collective Subsidiary. In the event
that any such election is made, Buyer will timely provide Seller with all
information required to be provided to Seller under Section 338 and the
Treasury Regulations thereunder.
(x) Audits, Proceedings, etc. (A) Upon receipt by Buyer, the
Collective Subsidiaries or any affiliate thereof of a notice of any pending
or threatened Tax audit of or assessment against the Assets, Buyer or any
Collective Subsidiary for a taxable period which could give rise to a claim
for indemnity under Section 6(i)(ii) or 14 hereof (an "Indemnified Tax Lia-
bility"), Buyer shall promptly give reasonably detailed notice thereof (the
"Tax Claim Notice") to Seller. To the extent available, the Tax Claim
Notice shall contain all pertinent information describing the Indemnified
Tax Liability, and shall include a copy of any audit report, deficiency
assessment or other document provided by any Tax authority. Any failure by
Buyer to provide the Tax Claim Notice or the information referred to in the
preceding sentence on a timely basis shall excuse Seller from liability
hereunder, but only to the extent that Seller is prejudiced by such
failure.
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(B) Except as otherwise provided in this sentence, Seller and
its representatives shall have the sole right (but not the obligation) to
represent the Buyer or any Collective Subsidiary's interests in any Tax
inquiry, investigation, audit or administrative or court proceeding
(collectively, a "Proceeding") relating to an Indemnified Tax Liability,
including the right to employ counsel of its choice, at its expense, and to
control the conduct of such Proceeding, including settlement or other
disposition thereof; provided, however, that (I) no settlement or
disposition shall be made without Buyer's consent (which shall not be
unreasonably withheld) if the same reasonably could be expected (x) to
affect materially Buyer's or any Collective Subsidiary's liability for Tax
in a Post-Closing Period or (y) to result in any liability for Tax not
being considered a Pre-Closing Tax by reason of the second paragraph of the
definition of Pre-Closing Taxes, (II) Buyer shall have the right to observe
the conduct of any Proceeding, including through separate counsel of its
own choosing at its sole cost and expense and (III) Buyer and Seller shall
jointly control any Proceeding relating to a Straddle Period.
(xi) Cooperation. (A) Buyer, the Collective Subsidiaries and
Seller will provide each other with such full and complete cooperation and
information as each may request of the
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other (x) in filing any Return, amended Return or claim for refund; (y) in
determining a liability for Taxes or a right to a refund of Taxes; or (z)
in connection with any investigation, audit or other Proceeding in respect
of Taxes. Such cooperation shall include, but shall not be limited to,
(I) making the necessary employees available on reasonable notice during
regular business hours, to provide explanations of any documents or
information provided hereunder; (II) signing Returns, claims for refund and
other relevant documents; (III) granting powers of attorney, when
reasonably requested, with respect to matters relating to a liability for
Taxes; (IV) using reasonable efforts to make available persons to serve as
witnesses under oath regarding matters relating to any Tax liability; and
(V) providing photocopies (or originals, when reasonably requested) of
relevant documents. Each party shall reimburse the other for any out-of-
pocket costs incurred in complying with this Section 6(i)(xi).
(B) Buyer and the Collective Subsidiaries will retain all
information, Returns, schedules and work papers and all material books,
records or other documents relating to Seller's and each Collective
Subsidiary's liability for Taxes (but, in the case of Seller, only with
respect to Taxes that are Assumed Liabilities) with respect to a taxable
period for
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one year following the later of (x) the expiration of all applicable
statutes of limitation and extensions thereof with respect to such period
and (y) a Final Determination with respect to Taxes for such period. At
the expiration of such period, Buyer and the Collective Subsidiaries shall
have the right to dispose of any such Returns or other documents after
providing 30 days' notice to Seller. Any information obtained under this
paragraph shall be kept confidential, except as may be otherwise necessary
in connection with the filing of a Return (including an amended Return) or
claim for refund or in conducting a Proceeding.
(xii) Stamp Duty Covenant. Seller shall cause the Intra-Group
Business Transfer Agreement dated 15th December 1995 between UKO Limited
(formerly UK Optical Limited, registered in England No. 192618) and UK
Optical Limited (formerly UKO Limited, registered in England No. 3136026),
the Rectification Agreement dated 8th March 1996 between the same parties
and all transfers, assignments and novations executed pursuant to such
Agreements to be duly stamped by the Closing Date and shall pay all stamp
duty (and any associated interest or penalties) payable in respect of such
instruments by the Closing Date.
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(xiii) Tax Sharing Agreements; Powers of Attorney. Any Tax
sharing contracts or agreements between (A) any Collective Subsidiary and
(B) Seller (or any Affiliate of Seller other than another Collective
Subsidiary) shall be terminated on the Closing Date, and no Person shall
have any rights or obligations under such Tax sharing contracts or
agreements after such termination, and no such rights or obligations shall
be included in the Closing Balance Sheet.
(j) No-Shop. For the period from the date hereof through the
earlier to occur of (i) the Closing and (ii) such date as this Agreement is
terminated pursuant to Section 16, Seller will not, and will cause its
respective direct and indirect subsidiaries, officers, employees, and
representatives not to, solicit offers, inquiries or proposals from or
negotiate or participate in discussions with, or disclose confidential,
non-public information to, other persons for the purpose of seeking the
sale or other disposition of all or, except in the ordinary course of the
operation of the Business, any portion of the Business to such persons.
(k) Assignment of Contracts, Rights and Obligations. Anything
in this Agreement to the contrary notwithstanding, this Agreement shall not
constitute an agreement to assign or transfer any leases, contracts,
orders, agreements, licenses,
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permits or authorizations if an attempted assignment thereof, without the
consent of a third party thereto, would (i) constitute a breach thereof or
default thereunder, cause or permit the acceleration or termination thereof
or in any way materially and adversely affect the rights of Buyer or Seller
thereunder or the right of Buyer to conduct all or part of the Business in
the manner and on the terms presently enjoyed thereunder by Seller or
(ii) not be permitted or effective under the terms thereof. If such third
party consent is not obtained, Seller shall use reasonable efforts and
cooperate with Buyer in any reasonable arrangements, to the extent
permitted by such leases, contracts, orders, agreements, licenses, permits
or authorizations, designed to provide Buyer the benefits under any such
leases, licenses, agreements, permits or authorizations, including, without
limitation, (A) compliance by Seller on Buyer's behalf and at Buyer's
expense with any such leases, contracts, orders, agreements, licenses,
permits or authorizations and (B) enforcement for the benefit of Buyer of
any of the rights of Seller against a third party thereto arising out of
the breach or cancellation by such third party or otherwise, provided,
however, that Seller shall not be required to incur any costs in connection
with any such arrangements or enforcement. This Section 6(k) shall not
relieve Seller of any obligation to advise Buyer of the requirement to
obtain any consent
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(without regard to this Section) or limit or impair Buyer's rights with
respect to the representations of Seller contained in this Agreement
relating to such matters or obligate Seller to consummate the transactions
contemplated by this Agreement if the conditions set forth in Section 8
relating to such consents are not satisfied. The parties agree, to the
extent that any consent, permit, authorization, approval or waiver neces-
sary in connection with the transactions contemplated by this Agreement is
necessary because an asset or liability has been transferred as
contemplated by this Agreement to a Designated Subsidiary rather than to
Buyer, Seller will use commercially reasonable efforts to obtain such
consent, permit, authorization, approval or waiver. If, after using such
efforts, Seller is unable to obtain such consent, permit, authorization,
approval or waiver, Buyer will use commercially reasonable efforts to
establish a different transferee (to the extent permitted pursuant to this
Agreement) of such asset or liability or otherwise make arrangements
reasonably acceptable to Seller so that such consent, permit,
authorization, approval or waiver is either obtained or no longer required.
(l) Required Notices. At all times prior to the Closing Date,
promptly upon obtaining knowledge thereof, Seller shall give written notice
to Buyer of (i) any facts or
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circumstances or the occurrence of any event or the failure of any event to
occur which has resulted in (x) a Material Adverse Effect, (y) a material
adverse effect on Seller's ability to consummate the transactions
contemplated hereby or to satisfy its obligations hereunder, or (z) a
material breach of any representation or warranty made by Seller in this
Agreement, (ii) any failure by Seller to comply in all material respects
with any material covenant, condition or agreement contained in this
Agreement, (iii) any complaints, investigations, proceedings or hearings of
any governmental authority against Seller or any of its Affiliates (in each
case, in connection with the Business) which, if adversely determined,
would materially adversely affect this Agreement, the Business or the
transactions contemplated hereby, (iv) the institution of any material
litigation or similar action against Seller or any of its Affiliates (in
each case, in connection with the Business), (v) the occurrence of any
event which will result in the failure by Seller to satisfy any conditions
set forth in Section 8, (vi) any facts or circumstances or the occurrence
of any event or the failure of any event to occur which could reasonably be
expected to result in the occurrence of one of the events set forth in
clause (x), (y) or (z) above, and (vii) the occurrence of any event which
could reasonably be expected to result in the failure by Seller to satisfy
any condition set forth in
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Section 8. Other than with respect to an intentional breach thereof,
Seller shall have no liability whatsoever under the covenants set forth in
clauses (vi) and (vii) of this Section 8(l) after the Closing.
(m) Software. Buyer shall not resell, license, transfer or
otherwise make available any computer software included in the Assets to
any person (other than an Affiliate of Buyer) in contravention of any
licensing agreement therefor.
(n) Consents and Conditions. Each of Buyer and Seller will
make every reasonable effort to obtain written consents or take such
measures and action as may be necessary or appropriate to allow the
consummation of the transactions contemplated hereby, and will use its
reasonable efforts to satisfy all the conditions applicable to it to be
satisfied to effect the transactions contemplated hereby.
(o) Constitutional Documents, Liquidation and Dissolution.
Between the date hereof and the Closing Date, except as set forth in
Schedule 6(o) and except as will not adversely affect the Buyer, its
ability to own or operate the Business or the utility or value of the
Business, neither Seller nor any Material Subsidiary shall authorize any
action to amend the Certificate of Incorporation, By-laws or other
constitutional
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documents of any Material Subsidiary, in each case, without the prior
written consent of Buyer. Notwithstanding the foregoing, in the event any
such amendment or action is proposed, Seller shall provide reasonable
advance notice thereof to Buyer.
(p) Interim Financial Statements. Between the date of this
Agreement and the Closing Date, Seller shall prepare and deliver to Buyer,
(i) the monthly unaudited statements of income for the Business (excluding
the Singapore Business) on the same basis as delivered prior to the date of
this Agreement, (ii) the audited balance sheet and statement of income and
cash flows for the year ended March 30, 1996 for the Business (excluding
the Singapore Business) and (iii) the balance sheet and statement of income
and cash flows for the year ended March 30, 1996 for AO Singapore (the
"March Singapore Financial Statements") (in the case of clause (iii) on an
unaudited basis, promptly, when available and on an audited basis, if and
when available), in each case together with the notes to such financial
statements; provided that if the items noted in clauses (ii) and (iii) are
not complete as of the Closing Date, Seller shall (with the assistance of
and access to Buyer and the Collective Subsidiaries) complete and deliver
such items as soon as practicable after the Closing Date. Such financial
statements shall be prepared in conformity with GAAP,
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consistently applied (except, in each case, as described in the notes to
such financial statements) and, with respect to such financial statements
of the Business, shall fairly present (subject to normal, recurring year-
end audit adjustments) the financial condition and results of operations of
the Business as of the date thereof and for the period indicated. Between
the date of this Agreement and the Closing Date, Seller shall prepare and
deliver to Buyer promptly following the end of the relevant month, the
monthly unaudited statements of AO Singapore, prepared on a basis
consistent with past practice.
(q) U.K. Title Documents. Seller shall use its reasonable
efforts up to 180 days following the Closing Date to obtain and deliver to
Buyer all original title deeds and related documents relating to the real
property owned or leased by the Collective Subsidiaries which are
incorporated in the United Kingdom.
(r) Tijuana Facility. Seller shall, as promptly as possible,
whether before or after the Closing, cause the title to lot 19 of Block 27
of the facility located in Tijuana to be registered in the name of American
Optical Lensmex S.A. de C.V. and Seller shall be responsible for all costs
and expenses in relation thereto.
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(s) Trademark Security Agreement. On the Closing Date, Seller
shall cause its appropriate subsidiaries to enter into and Seller shall
enter into a trademark security agreement (the "Trademark Security
Agreement") on substantially the same terms and conditions set forth in
Schedule 6(s).
(t) Singapore Funds. To the extent, if any, that the AO
Singapore Certificate indicates that cash has been removed from AO
Singapore since February 29, 1996, other than in the ordinary course of
business (which shall be consistent with the restrictions contained in
Section 10(15)) or as described in the last paragraph of Section 10, Seller
shall or shall cause one of its Affiliates (other than a Collective Sub-
sidiary) to pay such amounts to AO Singapore on or prior to the Closing.
The amount of such payment shall be included in any calculation of Net
Worth of AO Singapore for purposes of this Agreement.
(u) Canadian Release. Seller shall or shall cause its
subsidiaries to take all actions necessary to cause Bank of Nova Scotia to
release its security interest in the assets of AOCO Limited, but only to
the extent any such assets have been transferred to 1132782 Ontario, Inc.
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(v) Amendment to Command License Agreement. Prior to Closing
Seller shall cause the License Agreement between Seller and Command
Marketing Corporation to be amended so that the Trademark License Agreement
will not be in conflict with it.
SECTION 7. The Closing.
Subject to the terms and conditions of this Agreement and
unless this Agreement has been previously terminated pursuant to
Section 16(a) hereof, the consummation of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of Cahill
Gordon & Reindel, 80 Pine Street, New York, New York 10005, at 10:00 a.m.,
local time, on the fifth business day immediately following the day on
which the last to be fulfilled or waived of the conditions set forth in
Sections 8 and 9 shall be fulfilled or waived in accordance herewith (or,
if contemplated to be satisfied simultaneously with the Closing, are
capable of being satisfied). The date on which the Closing shall occur is
referred to herein as the "Closing Date."
SECTION 8. Conditions Precedent to the Obligations of Buyer.
The obligation of Buyer to acquire or cause its Designated
Subsidiaries to acquire the Assets and the Shares as
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provided hereunder is subject to the satisfaction, or waiver in writing by
Buyer, on or prior to the Closing Date of each of the following conditions:
(a) Corporate Action. All corporate and other actions of
Seller or any Affiliate of Seller necessary to authorize and
effectuate the consummation of the transactions contemplated hereby
by any of Seller or its Subsidiaries shall have been duly taken prior
to the Closing, and Seller shall have delivered to Buyer a
certificate of Seller signed by an executive officer of Seller to
that effect, dated the Closing Date, together with a certified copy
of resolutions of the Board of Directors of Seller and of its
Shareholders, authorizing the execution and delivery of this
Agreement and the consummation of the transactions contemplated
hereby.
(b) Representations and Warranties. The representations and
warranties of Seller set forth in this Agreement shall be true and
correct in all material respects on and as of the Closing Date with
the same effect as though all such representations and warranties had
been made on and as of such date and there shall have been delivered
to Buyer certificates of Seller signed by an executive officer of
Seller to that effect, dated the Closing Date.
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Buyer hereby agrees to waive any obligations relating to the accuracy
of the representation and warranty contained in Section 4(j) with
respect to any suit, arbitration, legal action or administrative
action not known and not disclosed by Seller on the date of this
Agreement but disclosed prior to the Closing; provided that Seller
and Buyer enter into arrangements satisfactory to Buyer in its
reasonable judgment (taking into account the nature and magnitude of
the matter and taking into account Seller's ability to satisfy any
indemnification obligation it may have with respect thereto)
providing for indemnification of Buyer and its Affiliates with
respect thereto. Buyer hereby agrees that it shall negotiate in good
faith to enter into such satisfactory arrangements proposed by
Seller. Notwithstanding anything to the contrary contained in the
first sentence of this Section 8(b), Buyer hereby agrees to waive any
obligations relating to the accuracy of any representation or
warranty contained in Section 4(k) with respect to any matter
referred to in Section 4(k) which is not known and not disclosed by
Seller on the date of this Agreement but is disclosed prior to the
Closing, provided that Seller and Buyer enter into arrangements
(which may include provision for such matter on the Closing Balance
Sheet) satisfactory to Buyer
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in its reasonable judgment (taking into account the nature and
magnitude of the matter and taking into account Seller's ability to
satisfy any indemnification obligation it may have with respect
thereto) providing for indemnification of (or, if a balance sheet
provision, economic compensation to) Buyer with respect thereto.
Buyer hereby agrees that it shall negotiate in good faith to enter
into such satisfactory arrangements proposed by Seller.
(c) Performance of Obligations. Each and all of the covenants
and agreements of Seller to be performed or complied with on or prior
to the Closing Date pursuant to this Agreement shall have been duly
performed and complied with in all material respects or duly waived
by Buyer and there shall have been delivered to Buyer certificates of
Seller signed by an executive officer of Seller to that effect, dated
the Closing Date.
(d) Instruments of Conveyance, Etc. Seller shall have
delivered or caused to be delivered to Buyer such bills of sale,
assignments, instruments of transfer and conveyance, duly endorsed
share transfer orders and stock powers as shall be reasonably
required by Buyer for the transfer to Buyer or Designated
Subsidiaries of all of Seller's right, title and interest to and in
the Assets
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and all right, title and interest to and in the Shares, in each case,
free and clear of all Liens other than, in the case of the Assets
only, Permitted Liens (assuming the accuracy of Section 5(g) to the
extent related to the Shares). Buyer shall have received, or
simultaneously with the Closing, shall receive possession or control
of all of the statutory corporate, share registry, share transfer,
minute and other books and records of each of the Collective
Subsidiaries and all books, registers and other records related to
the Shares. Seller shall have obtained all consents necessary to
assign all contracts, leases, licenses and agreements set forth on
Schedule 8(d); provided that if after using commercially reasonable
efforts (at no additional expense to Seller), Seller is unable to
obtain a consent to assign any such agreement, Seller and Buyer shall
negotiate in good faith to establish arrangements of the nature
described in Section 6(k) on terms reasonably acceptable to Buyer and
Seller and, if such arrangements on such terms are established,
Seller and Buyer shall enter into such arrangements, which shall be
deemed to satisfy the requirements of this condition with respect to
such consent.
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(e) Opinion of Counsel. Buyer shall have been furnished
opinions, dated the Closing Date, of counsel indicated in Exhibit C
hereto, substantially to the effect as set forth in Exhibit C hereto.
(f) Governmental Approvals. All approvals and authorizations
of, filings and registrations with, and notifications to, any
domestic or foreign governmental or regulatory authority required for
the execution and delivery of this Agreement by the parties hereto,
the performance of their obligations hereunder or the consummation of
the transactions contemplated by this Agreement, and for the
preventing of any termination of any right, privilege, license or
agreement of the Business, shall have been duly obtained or made and
shall be in full force and effect. Seller and Buyer shall negotiate
in good faith to establish arrangements reasonably satisfactory to
both if, because of the existence of a Designated Subsidiary, any
such Governmental Approval is not available.
(g) Litigation. There shall not be pending or threatened in
any domestic or foreign jurisdiction any suit, action or proceeding
(which, in the case of a suit, action or proceeding brought by any
person other than a governmental entity, has a reasonable likelihood
of
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success) (i) challenging or seeking to restrain or prohibit the
transactions contemplated by this Agreement or seeking to obtain from
Buyer or its Affiliates in connection therewith any material damages,
(ii) seeking to prohibit or limit the ownership or operation by Buyer
of any material portion of the Business or any of the Material
Subsidiaries, or to compel Buyer to dispose of or hold separate any
material portion of the Business or any of the Material Subsidiaries,
in each case, as a result of the transactions contemplated by this
Agreement, (iii) seeking to impose limitations on the ability of
Buyer, in any material respect, to acquire or hold, or exercise full
rights of ownership of, the Shares, including the right to vote the
Shares on all matters properly presented to stockholders, or
(iv) seeking to prohibit Buyer from effectively controlling in any
material respect the Business or the Material Subsidiaries.
(h) Filings. Seller shall have made all filings required and
satisfied all requests for additional information under the HSR Act
and the required statutory periods under such Act shall have expired
and neither the Antitrust Division nor the FTC shall have indicated
its objection to, or its intent to challenge as violative of
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any Federal laws, any of the transactions contemplated by this
Agreement. Buyer shall be reasonably assured that the transactions
contemplated by this Agreement will not be referred to the Monopolies
and Mergers Commission of the United Kingdom.
(i) Other Agreements. At or prior to the Closing, Maurice J.
Cunniffe shall have executed and delivered to Buyer an Agreement Not
to Compete in the form of Exhibit E hereto. At or prior to the
Closing, Seller and/or its appropriate subsidiaries shall have
executed and delivered the License and Assignment Agreements and the
Trademark Security Agreement referred to in Sections 6(d) and 6(s)
hereof, respectively. At or prior to the Closing, each of the
Transition Services Agreement and the Supply Agreement shall have
been amended as provided in Section 6(f). At or prior to the
Closing, Seller shall have executed and delivered the Southbridge
Lease referred to in Section 6(g) hereof. Such agreements and
amendments will be effective as part of the Closing.
(j) Notices and Other Formalities. Seller shall have
delivered to Buyer all evidence reasonably requested by Buyer, in
form and substance reasonably satisfactory to Buyer, that all
material notices required to be given by
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Seller or any Transferred Subsidiary under all applicable laws by
Seller or any Transferred Subsidiary with respect to the transactions
to be consummated under this Agreement, including, without
limitation, notices to any Transferred Subsidiary's workers councils
or committees, shall have been given in accordance with such laws and
regulations.
(k) Certificates. Buyer shall have received copies, in form
and substance reasonably satisfactory to it, of such certificates of
good standing, board resolutions, officers and secretaries
certificates, resignations of officers and directors, revocations of
powers of attorney and other documents with respect to Seller and the
Transferred Subsidiaries as Buyer or its counsel shall reasonably
request.
(l) Tax Affidavits. Seller shall have delivered to Buyer an
affidavit, in form reasonably satisfactory to Buyer, described in
Section 1445(b)(2) of the Code. Seller shall have delivered to Buyer
a duly executed and valid certificate, in form and substance
satisfactory to Buyer, issued by the Minister of National Revenue of
Canada pursuant to subsection 116(2) of the Income Tax Act (Canada)
(a "Section 116 Certificate"), in respect of the
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proposed disposition by Seller of the Shares of Transferred
Subsidiaries that constitute taxable Canadian Property (as defined in
the Income Tax Act (Canada)) and any other taxable Canadian property
used in connection with the Business. The Section 116 Certificate
shall specify as a "certificate limit" an amount no less than the
amount of the Purchase Price to be allocated to the Shares of the
Transferred Subsidiaries that constitute taxable Canadian property
and any such other taxable Canadian property.
(m) Consents and Approvals of Government Authorities and
Others. All third party consents, permits, authorizations, approvals
and waivers which are listed on Schedule 8(m) shall have been
obtained; provided that if, after using commercially reasonable
efforts (at no additional expense to Seller), Seller is unable to
obtain any such consent, permit, authorization, approval or waiver,
Seller and Buyer shall negotiate in good faith to establish
arrangements of the nature described in Section 6(k) on terms
reasonably acceptable to Buyer and Seller and, if such arrangements
on such terms are established, Seller and Buyer shall enter into such
arrangements, which shall be deemed to satisfy the requirements of
this condition
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with respect to such consent, permit, authorization, approval or
waiver.
(n) Singapore Net Worth Certificate. The AO Singapore
Certificate shall have been delivered to Buyer and shall indicate
that the Net Worth of AO Singapore as of the Closing Date is not less
than U.S.$500,000.
SECTION 9. Conditions Precedent to the Obligations of Seller.
The obligation of Seller to sell or otherwise transfer the
benefits of the Assets and the Shares hereunder is subject to the
satisfaction, or waiver in writing by Seller, on or prior to the Closing
Date of each of the following conditions:
(a) Corporate Action. All corporate and other actions of
Buyer or any Affiliate of Buyer necessary to authorize and effectuate
the consummation of the transactions contemplated hereby by Buyer
shall have been duly taken prior to the Closing, and Buyer shall have
delivered to Seller a certificate of Buyer signed by an executive
officer of Buyer to that effect, together with certified copies of
resolutions of its Board of Directors authorizing the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby.
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(b) Representations and Warranties. The representations and
warranties of Buyer set forth in this Agreement shall be true and
correct in all material respects on and as of the Closing Date with
the same effect as though all such representations and warranties had
been made on and as of that date and there shall have been delivered
to Seller certificates of Buyer to that effect signed by an executive
officer of Buyer, dated the Closing Date.
(c) Performance of Obligations. Each and all of the covenants
and agreements of Buyer to be performed or complied with on or prior
to the Closing Date pursuant to this Agreement shall have been duly
performed and complied with in all material respects or duly waived
by Seller and there shall have been delivered to Seller certificates
of Buyer to that effect signed by an executive officer of Buyer,
dated the Closing Date.
(d) Payment. Buyer and/or a Designated Subsidiary shall have
paid to Seller the Purchase Price and shall have executed, issued and
delivered to Seller such instruments of assumption and undertaking as
shall be reasonably required by Seller for the effectuation of the
transactions contemplated by this Agreement.
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(e) Opinion of Counsel. Seller shall have been furnished an
opinion, dated the Closing Date, of Fried, Frank, Harris, Shriver &
Jacobson, counsel for Buyer, or of other counsel reasonably
satisfactory to Seller, substantially to the effect set forth in
Exhibit E hereto.
(f) Filings. Buyer shall have made all filings required and
satisfied all requests for additional information under the HSR Act
and the required statutory periods under such Act shall have expired
and neither the Antitrust Division nor the FTC shall have indicated
its objection to, or its intent to challenge as violative of any
Federal laws, any of the transactions contemplated by this Agreement.
(g) Litigation. At the Closing Date, there shall be no
litigation pending or threatened (which, in the case of litigation
brought by any person other than a governmental entity, has a
reasonable likelihood of success) in which any injunction or material
damages are sought against or from Seller in connection with the
transaction contemplated hereby.
(h) Other Agreements. At or prior to the Closing, Buyer shall
have executed and delivered the Agreement Not
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to Compete, the License and Assignment Agreements, the Trademark
Security Agreement and the Southbridge Lease referred to in Sections
8(i), 6(d), 6(s) and 6(g) hereof, respectively. Such agreements will
be effective as part of the Closing.
SECTION 10. Conduct of Business Prior to Closing.
From the date hereof through the Closing Date, Seller will, and
will cause each Material Subsidiary to, (i) conduct the Business for its
own account in the ordinary course and consistent with historical
practices, (ii) preserve and maintain the Business, the Assets and each
Material Subsidiary and its material assets and properties intact,
(iii) maintain in force and effect all insurance policies listed in
Schedule 4(o) hereto (or replacements thereof), (iv) consistent with effi-
cient and economical management and with past practice, use reasonable
commercial efforts to retain the services of the present officers, managers
and agents of the Business, and will use reasonable commercial efforts to
retain the services of other employees similarly situated and similar in
number to other present employees, to the end that the goodwill of the
Business will be retained and its business relationships with customers,
suppliers and others will be preserved, and to maintain in effect all
existing qualifications, business permits,
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licenses, registrations and authorizations relating to the Business,
(v) maintain its books and records in the usual, regular and ordinary
manner, on a basis consistent with prior years, (vi) perform and comply in
all material respects with its obligations under all material contracts and
leases and other material agreements to which it is a party and (vii) manu-
facture, ship and sell inventory, collect accounts and notes receivable and
pay accounts and notes payable, in each case, in the ordinary course of
business consistent with historical practice; provided that in no event
will Seller have any obligation to retain the services of the employees or
agents listed in Schedule 10(1). Prior to the Closing Date, Seller will
not change the accounting policies or procedures affecting the Business
from those used in prior years, except as required by GAAP. From the date
hereof through the Closing Date, Seller (to the extent relating to the
Business) will not and will cause the Collective Subsidiaries not to,
without the consent of Buyer:
(1) incur any material obligation or liability (absolute or
contingent) relating to the Business, except obligations or
liabilities incurred under leases, contracts and other agreements
listed in Schedule 4(i) hereto or under purchase and sale contracts
and orders entered
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into in the ordinary course of business and consistent with
historical practice;
(2) except as contemplated by Schedule 4(h), mortgage, pledge
or subject to (or suffer to be subject to) any Lien (other than
Permitted Liens) or lease or place under option or right of first
refusal any of the material Assets, the shares of any Collective
Subsidiary or the material assets of the Collective Subsidiaries;
(3) otherwise sell, transfer or dispose of any of the material
Assets, the shares of any Collective Subsidiary or the material
assets of the Transferred Subsidiaries or cancel any debts or claims
relating to the Business, except in the ordinary course of business
and consistent with historical practice, or cancel or terminate any
real property lease which is part of the material Assets or the
material assets of the Material Subsidiaries;
(4) except as set forth in Schedule 10(4), grant any general
increase in wage or salary rates or in employee benefits for
employees of the Business, or grant any material increase in salary
or in employment, retirement or other benefits to any employee of the
Business other than
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periodic increases granted in the ordinary course of the Business and
consistent with its historical practices or such changes in
retirement or other benefits which are deemed necessary or
appropriate in order to comply with applicable requirements of law,
or enter into any employment contract with any person providing for
the continued employment of such person in excess of one month or
make any extraordinary payment to employees;
(5) waive any rights or claims of substantial value relating
to the Business, any of the Assets or any of the Shares;
(6) offer any material discounts, terms, free goods, other
price adjustments or returns, rebilling, or other trade practices to
customers of the Business inconsistent with its normal historical
business practice;
(7) make any capital expenditures or additions relating to the
Business in excess of $250,000, individually, or $1,000,000 in the
aggregate;
(8) acquire, by merger, consolidation, purchase or otherwise,
a corporation or other business entity or otherwise acquire a
business or, except in the ordinary
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course of business consistent with past practice, a material amount
of assets;
(9) enter into, materially modify, terminate or materially
amend or grant any material waiver in respect of any Contract (or any
contract which, if in effect on the date hereof, would be a Contract)
except in the ordinary course of business;
(10) transfer or knowingly terminate any of its rights under
any of the material patents and copyrights or trademarks, except in
the ordinary course of business;
(11) discharge or satisfy any material encumbrance or material
liability or material obligation (fixed or contingent), other than in
the ordinary course of business or in accordance with the existing
terms thereof;
(12) except as required under GAAP, change its accounting
principles or policies;
(13) except as set forth in Schedule 10(13), enter into any
material transaction or agreement of any kind with any Affiliate,
including the making of any loans, advances or investments to or in
such entity other than in
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the ordinary course of business consistent with past practice;
(14) compromise, settle or otherwise adjust any claim or
litigation which is (or if in existence on the date hereof, would
have been) required to be set forth on Schedule 4(j) hereto without
the consent Buyer, which consent shall not be unreasonably withheld;
(15) other than with respect to Seller or the Excluded
Singapore Business and except as set forth in Schedule 10(15),
declare, set aside, make or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in
respect of its capital stock or purchase or redeem, directly or indi-
rectly, any shares of its capital stock;
(16) make any material tax election or compromise any material
national, federal, state, provincial, local, foreign or other Tax
liability of any Collective Subsidiary or Seller (but, in the case of
Seller, other than any such election or compromise with respect to
any Tax that is not an Assumed Liability); or
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(17) agree or otherwise commit to take any of the actions set
forth in the foregoing subparagraphs (1) through (16).
Nothing in this Agreement shall prevent Seller from causing the
Excluded Singapore Business to be transferred out of AO Singapore by means
of a dividend of inventory and U.S.$253,000 in cash to an entity that is
not a Collective Subsidiary or, if on terms reasonably acceptable to Buyer,
by other means. Buyer acknowledges that it shall, at Seller's request,
allow the frames inventory of the Excluded Singapore Business to remain on
the property of AO Singapore for a reasonable period of time after the
Closing Date and, at Seller's expense, shall dispose of such frames
inventory as Seller requests. In addition, nothing in this Agreement shall
prevent Seller or its subsidiaries, prior to the Closing Date, from causing
a license or sublicense (as Buyer and Seller shall mutually agree) of the
names "AO" or "American Optical" in the retail sale of finished reading
spectacles by Magnavision, in connection with which license or sublicense
Buyer and Seller shall agree to cooperate with respect to matters of
quality control and administration and to share the proceeds of such
license or sublicense on the terms previously agreed between them. Such
license or sublicense shall be on terms acceptable
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to Seller, in its sole discretion, provided that Seller shall keep Buyer
informed on a reasonably current basis of the status of negotiations
relating thereto.
SECTION 11. Employees; Employee Benefit Plans.
(a) New Employment. Buyer shall, or shall cause a Designated
Subsidiary to, offer to employ, effective as of the Closing, on terms and
conditions substantially comparable in the aggregate to those in effect
immediately before the Closing, those employees of Seller set forth on
Schedule 11(a), as well as employees of the Business hired in the ordinary
course after the execution of this Agreement (but excluding any employee so
hired at a base salary in excess of $50,000 unless Buyer consents, which
consent shall not be unreasonably withheld), but only if immediately before
the Closing such person is employed by Seller, has not met the requirements
for receiving benefits under Seller's long-term disability policy and, if
not actively employed at such time, is expected to return to active
employment within 90 days of the Closing Date or, if later, within 180 days
after the disability commenced (such employees, the "Transferred
Employees"). Seller shall cooperate in all reasonable respects in
connection therewith.
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(b) Retirement Plans. As soon as practical following the
Closing Date, Seller shall cause the American Optical Corporation
Retirement Plan and the American Optical/M&R Industries Thrift Plan to
provide that all benefits accrued thereunder through the Closing Date by
the Transferred Employees shall become fully vested.
(c) Thrift Plan Rollover. Buyer shall permit Transferred
Employees with account balances under the American Optical/M&R Industries
Thrift Plan to make direct rollovers (including direct rollovers of
outstanding loans) to a plan qualifying under Section 401(a) of the Code
maintained by Buyer. Prior to such direct rollovers, Seller shall furnish
to Buyer and Buyer shall furnish to Seller the most recent favorable
determination letter under Section 401(a) of the Code received from the
Internal Revenue Service with respect to their respective plans involved in
such direct rollover.
(d) Qualified Plan Past Service. Buyer shall cause any tax-
qualified pension, profit sharing, and stock bonus plans maintained with
respect to the Business to give credit to the Transferred Employees for
eligibility and vesting purposes for any periods of service prior to the
Closing Date that counted for the same purpose under the tax-qualified
plans of
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the Seller and its ERISA Affiliates immediately prior to the Closing Date.
(e) Medical and Dental Coverage. As of the Closing Date,
Buyer shall, or shall cause a Designated Subsidiary to, provide medical and
dental benefits to the Transferred Employees pursuant to arrangements which
contain industry standard replacement and discontinuance provisions for
insurance and HMO contracts. Such arrangements shall provide medical and
dental coverage for covered claims of the Transferred Employees in respect
of services provided on or after the Closing Date.
(f) Release of Welfare Plan Information. Seller shall, at the
request of Buyer, provide Buyer or its designated agents the authority to
obtain from those insurance companies, HMOs and third party administrators
who provide welfare benefits or related services to the employees listed on
Schedule 11(a) such contractual and financial information regarding such
employees as Buyer shall reasonably request.
(g) No Obligation to Provide Benefits. Except as expressly
provided in subsections (e) and (h) of this Section 11, nothing in this
Agreement shall (1) require Buyer or any of its Affiliates (including the
Collective Subsidiaries after the Closing) to continue the employment of
any Business
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Employee or establish or continue any particular employee benefit plan,
practice, program or policy for any particular period of time after the
Closing or (2) prohibit or in any way limit Buyer's ability to amend or
terminate any such plan, practice, program or policy. Buyer and its
Affiliates (including the Collective Subsidiaries after the Closing) shall
not assume any obligation to Transferred Employees that is not expressly
provided for herein. Notwithstanding anything in this Agreement, nothing
in this Agreement shall require Buyer or any of its Affiliates (including
the Collective Subsidiaries after the Closing) to provide retiree medical
benefits. Buyer shall have no obligation to employees of Seller other than
the Transferred Employees, whether or not such employees received salary
continuation or other payments or benefits under any plan or policy of
Seller.
(h) Post-Closing Benefits and Severance. The post-closing
benefits and severance rights provided by Buyer, any Designated
Subsidiaries and the Collective Subsidiaries in respect of the Transferred
Employees and the employees of the Collective Subsidiaries, in each case,
for a period of at least 12 months beginning on the Closing Date will be
substantially comparable in the aggregate to those currently offered by the
Business to its employees immediately prior to the Closing.
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For purposes of determining the severance benefits of the Transferred
Employees and the employees of the Collective Subsidiaries on and after the
Closing, Buyer, any Designated Subsidiary and the Collective Subsidiaries
will give credit for any service prior to the Closing that counted under
the severance programs of Seller and the Collective Subsidiaries immedi-
ately prior to the Closing.
(i) Management Incentive Plan. Seller shall pay all amounts
payable in respect of Business Employees under its Management Incentive
Plan for its fiscal year ended March 31, 1996 and, to the extent not
already paid, for any prior fiscal years, together with any amounts payable
as a result of a change in ownership of the Business under Seller's
Management Incentive Plan, on or about the same time amounts are paid under
said Management Incentive Plan in respect of other employees of Seller or
its Affiliates. Buyer shall reimburse Seller promptly for any payments
actually made by Seller pursuant to the preceding sentence but only to the
extent amounts in respect of such payments are reflected as liabilities on
the Closing Balance Sheet or the AO Singapore Balance Sheet.
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SECTION 12. Waiver of Compliance with Bulk Transfer Laws.
Buyer hereby waives compliance with the provisions of any bulk
transfer or similar laws applicable to the transactions contemplated by
this Agreement. Without duplication of any right of indemnity provided for
elsewhere in this Agreement, Seller shall indemnify Buyer and the
Collective Subsidiaries for any Losses suffered by reason of the waiver
provided for in the preceding sentence.
SECTION 13. Survival of Representations and Warranties.
All representations and warranties made by Buyer or Seller as
to any fact or condition existing on or before the Closing Date in this
Agreement, in any Schedule hereto, or in any certificate delivered pursuant
hereto, and all covenants and agreements of Buyer or Seller, shall survive
the Closing for the periods set forth in Section 14(b) below, and (subject
to such exceptions) actions for indemnification or holding harmless from
any breach of any such representation or warranty or failure to perform any
covenant or agreement contemplated by this Agreement to be performed on or
prior to the Closing Date may be instituted only prior to the expiration,
if any, provided with respect to such periods. For purposes of this
Agreement, "Special Claim" shall mean claims of Losses arising
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out of or resulting from (A) with respect to claims of Buyer, (i) any
Retained Liability, (ii) a claim by any third party (including, without
limitation, any governmental authority) pursuant to any Environmental Law
relating to Hazardous Materials generated by Seller or any Collective
Subsidiary or their agents, representatives or permitted transferees or
assigns or the alleged disposal or alleged arranging for the disposal or
treatment of Hazardous Materials by Seller or any Collective Subsidiary or
their agents, representatives or permitted transferees or assigns, in each
case, at any Third-Party Site at or prior to the Closing, except to the
extent attributable to any Hazardous Materials generated by Buyer (and,
after the Closing Date, any Collective Subsidiary) or their agents,
representatives or permitted transferees or assigns or the alleged disposal
or alleged arranging for the disposal or treatment of Hazardous Materials
by any of them, in each case, at any Third-Party Site, (iii) the failure of
Seller to satisfy its obligations under the first sentence of Section 1(a)
of this Agreement, (iv) corporate reorganizations consummated by or
involving Collective Subsidiaries in connection with organizing the
Business for transfer to Buyer, (v) the claims identified on Schedule 13
hereto (subject to any additional terms set forth on such Schedule),
(vi) the activities or liabilities of corporations all or a majority of the
shares of capital stock
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of which are owned by Seller, directly or indirectly, and which are not
Collective Subsidiaries, (vii) any liability arising out of a breach of the
representation and warranty set forth in Schedule 4(q) which representation
and warranty shall, for the purposes of Sections 13 and 14, be read without
giving effect to the words "to the knowledge of Seller," (viii) the breach
or failure to be true or correct of the representation of Seller in Section
4(p) hereof, (ix) the agreement identified on Schedule 13, but only to the
extent arising out of activities prior to the Closing Date and not
reflected on the Closing Balance Sheet and (x) the breach of Section 6(a),
and (B) with respect to claims of Seller, (i) the failure of Buyer to sat-
isfy its obligations under the first sentence of Section 3 of this
Agreement and (ii) the indemnification provisions in clauses (i), (ii) and
(iv) of Section 14(c) of this Agreement.
SECTION 14. Indemnification.
(a) Seller's Indemnification. From and after the Closing,
Seller will, subject to Section 13 hereof, indemnify and hold Buyer,
Buyer's subsidiaries, each Collective Subsidiary and their respective
officers, directors, successors and permitted transferees and assigns
harmless from and against all damages, civil or criminal fines or
penalties, losses, liabilities, judgments, costs and expenses (including,
without
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limitation, reasonable attorneys' fees and disbursements) (hereinafter
referred to collectively as "Losses") (i) arising out of or resulting from
(A) the breach or failure to be true and correct of any representation or
warranty or certification of Seller contained herein, in any Schedule
hereto or in any certificate delivered pursuant hereto, or (B) the failure
by Seller to perform any of its covenants or agreements contained in this
Agreement, (ii) arising out of or resulting from any Special Claim of Buyer
and (iii) except to the extent covered by the preceding clause (ii),
relating to the operations of the Business or conditions existing at any of
the Real Property and Tangible Assets, in the case of both (A) and (B) of
this clause (iii), on or prior to the Closing Date arising from (A) any
third party claim under the Environmental Laws or (B) in the absence of a
third party claim, any action by Buyer that is required under Environmental
Law (including, without limitation, any notification requirement with
respect to a Governmental Authority) to the extent that such action is
commercially reasonable, determined without regard to the availability of
indemnification hereunder but with regard to local custom and practice, in
each case under this clause (iii), except to the extent attributable to or
based on (y) acts or omissions after the Closing Date of Buyer or any
Collective Subsidiary or any of their permitted assignees, agents or
representatives or
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(z) any action or decision after the Closing Date by Buyer or any
Collective Subsidiary to cease, close or otherwise change the operations of
the Business or any Real Property or Tangible Assets transferred to Buyer
hereunder (but excluding any action or decision to cease or close in whole
or in part the operations at the Southbridge Facility), or, in the case of
clause (i)(A), to the extent a reserve has been established on the Closing
Balance Sheet or the AO Singapore Balance Sheet; provided, however, that
for purposes of determining whether there has been a breach or failure of
any representation or warranty for purposes of clause (i)(A) of this
Section 14(a) whenever the term "material" is used in this Agreement with
respect to representations and warranties (otherwise than in the definition
of "Material Subsidiaries"), such representations and warranties shall be
interpreted without giving effect to the words "materially" or "material",
individually or as it appears in the phrase "Material Adverse Effect" (and
such phrase, as so interpreted, shall not be deemed to refer to the
definition of "Material Adverse Effect"). With respect to indemnifiable
Losses of Buyer or Seller relating to environmental matters, the term
Losses shall include (without limiting in any way the general definition of
Losses contained in Section 14(a) hereof), investigation, remediation,
removal or other response costs and reasonable fees and disbursements of
consultants and
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other experts related thereto in addition to other Losses as defined above.
(b) Time Limitation on Indemnities. Notwithstanding the
foregoing, no claim may be made or suit instituted under the provisions of
this Section 14 referenced in this sentence after (i) three years following
the Closing Date with respect to all matters arising under clause (i)(A) of
Section 14(a) or clause (iii)(A) of Section 14(c) hereof; (ii) four years
following the Closing Date with respect to all matters arising under clause
(i)(B) of Section 14(a) or clause (iii)(B) of Section 14(c) hereof, in each
case, where such covenant or agreement is contemplated by this Agreement to
be performed at or prior to the Closing, or under Section 14(j) hereof;
(iii) six years following the Closing Date with respect to all matters
arising under clause (iii) of Section 14(a) hereof, except such matters
relating to the Southbridge Facility which shall not be limited as to time;
and (iv) six years following the termination of the tenancy to which such
claim relates pursuant to the Southbridge Lease with respect to all matters
at the Southbridge Facility arising under clause (ii) of Section 14(c)
during and attributable to such tenancy. Notwithstanding anything
contained in the foregoing to the contrary, with respect to the
representations and warranties contained in Section 4(k)
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hereof and in Schedule 4(k) hereto (the "Tax Representations"), (I) as to
matters covered by the Tax Representations that could result in a Loss with
respect to Pre-Closing Taxes described in Sections 6(i)(ii)(A)(I)(w) and
6(i)(ii)(A)(II)(y) hereof, the Tax Representations shall not survive the
Closing, and no claim may be made or suit instituted after the Closing with
respect thereto, and (II) as to matters covered by the Tax Representations
that could not result in a Loss with respect to Pre-Closing Taxes described
in Sections 6(i)(ii)(A)(I)(w) and 6(i)(ii)(A)(II)(y) hereof, the Tax
Representations shall survive the Closing, but no claim may be made or suit
instituted with respect thereto after the date which is 60 days after the
expiration of the relevant statute of limitations. Reserved Claims and
Special Claims shall survive without any limitation on time. The term
"Reserved Claims" shall mean all claims as to which a reasonably detailed
notice has been given, setting forth with reasonable specificity the basis
for such claim on or prior to the end of the time periods applicable to
such claims, as set forth in this subsection (b). Unless specifically
noted in this Agreement, nothing in this Agreement is intended to impose
any time limitations in connection with covenants or agreements which are
not to be performed at or prior to the Closing.
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(c) Buyer's Indemnification. From and after the Closing,
Buyer will indemnify and hold Seller, its subsidiaries and their respective
officers, directors, successors and permitted transferees and assigns
harmless from and against all Losses (i) arising out of or resulting from
any Assumed Liability; (ii) relating to the operations of the Business or
conditions arising at any of the Real Property and Tangible Assets after
the Closing Date (including, without limitation, the alleged disposal or
alleged arranging for disposal or treatment of any Hazardous Materials
after the Closing Date at any Third-Party Site), in each case, except to
the extent attributable to operation of the Business or conditions at any
Real Property or Tangible Assets prior to the Closing Date; (iii) arising
out of or resulting from (A) the breach or failure to be true and correct
of any representation or warranty or certification of Buyer contained
herein, in any Schedule hereto or in any certificate delivered pursuant
hereto, or (B) the failure by Buyer to perform (or by a Designated
Subsidiary, to the extent permitted hereunder, to perform) any of its
covenants or agreements contained in this Agreement; and (iv) arising out
of or resulting from claims by Transferred Employees or employees of the
Collective Subsidiaries of wrongful termination, redundancy or severance
claims to the extent that such termination, redundancy or event giving rise
to the severance claim occurs on or
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after the Closing Date (it being understood that (A) Buyer does not assume
any liability to Transferred Employees who do not accept or commence
employment with Buyer, and (B) Buyer does not assume any liabilities to
Business Employees arising in whole or in part out of the transactions
contemplated by this Agreement, including any deemed termination, except
where such liability arises out of Buyer's failure to offer employment to
the Transferred Employees as provided by Section 11(a)). To the extent
Losses arise under the Environmental Laws for indemnification claims under
clause (ii), such Losses shall be limited to those Losses arising from any
third party claim; provided, however, that this limitation shall not apply
to any response by Seller to any Environmental Indemnification Claim.
(d) Monetary Limitation on Indemnification. An indemnifying
party shall only indemnify an indemnified party to the extent that the
Losses claimed pursuant to this Agreement by such indemnified party, other
than with respect to (i) Special Claims of such party and (ii) claims
arising out of the failure of Seller, Buyer or a Designated Subsidiary to
perform (x) any of its respective covenants or agreements contained in
Section 6 (other than Section 6(l)) or (y) any other of its respective
covenants or agreements contained in this Agreement where (in the case of
this clause (y)), to the knowledge of
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Seller (with respect to covenants or agreements of Seller) or Buyer or a
Designated Subsidiary (with respect to covenants or agreements of Buyer or
a Designated Subsidiary), an act or omission results or will result in any
such failure to perform, exceed $1,000,000 in the aggregate, in which case
the indemnifying party shall be responsible for the amount indemnifiable in
excess of $1,000,000. In addition, an indemnifying party's liabilities to
an indemnified party under this Agreement shall be limited to $20,000,000
in the aggregate. The monetary limitations set forth in the preceding two
sentences shall not apply to (i) Special Claims (except as otherwise set
forth on Schedule 13) or (ii) claims under Section 14(f). Furthermore,
(i) a party shall not be liable for any individual claims (or series of
claims arising from or relating to the same facts or events) under, this
Section 14 (other than with respect to Special Claims or claims under
Section 14(f), which shall not be subject to the limitations of this clause
(i)) that do not exceed $50,000 ($5,000 in the case of claims with respect
to the representations and warranties contained in Section 4(k) hereof or
in Schedule 4(k) hereto) and (ii) no party shall be entitled to assert a
claim for a loss alleged to arise out of the actual or alleged failure to
make accurate or complete disclosure (or any related or similar claim) to
any third party under federal or state securities laws, provided, however,
that
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this clause (ii) shall not in any other respect impair or limit Buyer's
rights under this Agreement to recover from Seller for other Losses
resulting from the matters giving rise to the actual or alleged failure to
make accurate and complete disclosure.
(e) Losses Net of Insurance, Etc. The amount of any Losses
for which indemnification is provided under this Section 14 shall be net of
any amounts recovered by the indemnified party under insurance policies
with respect to such Losses. Such indemnified party shall make
commercially reasonable efforts to effect recovery of available insurance
claims in connection with indemnified Losses. Any indemnity payment
pursuant to this Agreement will be treated as an adjustment to the Purchase
Price for tax purposes, unless a Final Determination with respect to the
indemnified party causes any such payment to not constitute an adjustment
to the Purchase Price for United States Federal income tax purposes.
If the amount of any payment under Section 14(a) or (c), as the
case may be, is subsequently reduced under this paragraph (e), the
indemnified party shall return the amount of such reduction, net of
collection costs, to the indemnifying party.
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(f) Benefit Plans. Seller shall indemnify and hold Buyer,
Buyer's subsidiaries, each Collective Subsidiary and their respective
officers, directors, successors and permitted transferees and assigns
harmless from and against any and all Losses arising out of or resulting
from any Benefit Plan or Employee Agreement other than an Excluded
Arrangement (as defined below) which is now or previously has been entered
into, established, maintained or contributed to, or required to be entered
into, sponsored, maintained or contributed to, by Seller, a Subsidiary (as
defined below), a Collective Subsidiary or any ERISA Affiliate, whether
arising out of or relating to any event or state of facts occurring or
existing before, on or after the Closing Date, and including, without
limitation, any liabilities arising under Title IV of ERISA, Section 302 of
ERISA and Section 412 or 4971 of the Code; provided, however, that Seller
shall not indemnify or hold Buyer harmless under this Section 14(f) from
and against any debts, liabilities and obligations to the extent of the
amount thereof reflected on the Closing Balance Sheet. A "Subsidiary"
shall mean any entity other than Seller in an unbroken chain of entities
beginning with Seller if each of the entities other than the last entity in
the unbroken chain owns stock possessing 50 percent or more of the total
combined voting power of all classes of stock in one of the other entities
in such chain. An
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"Excluded Arrangement" shall mean any Benefit Plan or Employee Agreement
which is now or previously has been entered into, sponsored, maintained or
contributed to or required to be entered into, sponsored, maintained or
contributed to by any Collective Subsidiary (other than 1132786 Ontario,
Inc.), but only in respect of the participation therein by current, former
or retired employees of the Collective Subsidiary (in their capacity as
such). Notwithstanding anything in this Agreement, the indemnification
provided by this Section 14(f) shall not be limited as to amount or time.
Nothing in this Section 14(f) shall in any way limit Buyer's rights to
indemnification under any other provisions of Section 14.
(g) Third Party Actions. In the event any claim is made, suit
is brought or other proceeding instituted against an indemnified party
which involves or appears reasonably likely to involve a Loss for purposes
of this Section 14, the indemnified party will, promptly after receipt of
notice of any such claim, suit or proceeding for which indemnification may
be sought, notify the indemnifying party of the commencement thereof. The
failure to so notify the indemnifying party of the commencement of any such
claim, suit or proceeding will relieve the indemnifying party from
liability under Section 14 hereof only to the extent that such failure
materially
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adversely affects the ability of the indemnifying party to defend its
interest in such claim, action or proceeding. The indemnifying party may,
but shall not be required to, assume the defense of any such claim, suit or
proceeding, including its compromise or settlement, and the indemnifying
party shall pay all costs and expenses thereof and shall be fully responsi-
ble for the outcome thereof. The indemnified party (at its expense) shall
have the right and shall be given the opportunity to associate with an
indemnifying party in the defense of such claim, suit or proceeding,
provided that counsel for the indemnifying party shall act as lead counsel
in all matters pertaining to the defense or settlement of such claim, suit
or proceeding. No compromise or settlement in respect to any such claim,
suit or proceeding may be effected by the indemnifying party without the
indemnified party's prior written consent (which consent shall not be
unreasonably withheld or delayed), unless the sole relief is monetary
damages that are paid in full by the indemnifying party. The indemnifying
party shall give notice to the indemnified party as to its intention to
assume the defense of any such claim, suit or proceeding within thirty (30)
days after the date of receipt of notice of any such claim. If an
indemnifying party does not, within thirty (30) days after the indemnified
party's notice is given, give notice to the indemnified party of its
assumption of the
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defense of such claim, suit or proceeding, the indemnifying party shall be
deemed to have waived its rights to control the defense thereof. If the
indemnified party assumes the defense of any such claim, suit or proceeding
because of the failure of the indemnifying party to do so in accordance
with this Section 14(g), it may do so in such reasonable manner as it may
deem appropriate, and the indemnifying party shall pay all reasonable costs
and expenses of such defense. The indemnifying party shall have no
liability (which shall include having no indemnification obligation with
respect to the relevant claim, suit or proceeding) with respect to any
compromise or settlement effected without its prior written consent (which
consent shall not be unreasonably withheld or delayed). If both the
indemnified party and the indemnifying party are named as defendants in or
are the subject of any such claim, suit or proceeding, and counsel selected
by the indemnifying party determines that there would be an actual conflict
of interest in such counsel's representing both the indemnifying party and
the indemnified party in such claim, suit or proceeding, then the
indemnifying party shall pay the reasonable costs and expenses of a
separate counsel for the indemnified party in connection with such claim,
suit or proceeding. This paragraph (g) shall not apply to (i) any matter
to which Section 6(i)(x) applies, (ii) any claim for breach of a
representation or
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warranty contained in Section 4(k) or in Schedule 4(k) (to which
Section 6(i)(x) shall apply in lieu of this Section 14(g)) and (iii) any
Environmental Indemnification Claim.
(h) Exclusive Remedy. In the absence of fraud, and
notwithstanding any law, rule, regulation or common law to the contrary and
any rights which may be available thereunder, the indemnification
provisions of this Agreement shall constitute the sole and exclusive remedy
(other than equitable remedies which compel performance of any obligation
set forth in this Agreement but which shall not include the payment of
damages in connection therewith) of an indemnified party for all matters
subject to or within the scope of such indemnity, including, without
limitation, a breach by an indemnifying party of a representation, warranty
or certification made by an indemnifying party in this Agreement and each
indemnified party hereby waives any other rights or remedies with respect
to matters subject to or within the scope of such indemnity.
(i) Survival of Certain Indemnities; Monetary Limitations.
Notwithstanding anything to the contrary in this Agreement, the provisions
of Sections 13 and 14(d) shall not apply to the covenants and other
agreements of the parties set forth in Section 6(i) hereof, and all such
covenants and other agreements shall survive the Closing until the date 60
days
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following the date upon which the statute of limitations relevant to the
Tax in question has expired. No action for indemnity or holding harmless
pursuant to Section 6(i) hereof may be instituted after the date which is
60 days after the date upon which the statute of limitations relevant to
the Tax in question has expired.
(j) Old Plans. Seller shall indemnify and hold Buyer, the UK
Collective Subsidiaries and their respective officers, directors,
successors, and permitted transferees and assigns harmless from and against
any and all Losses arising out of the Old Plans, provided, however, that
(i) such indemnification shall be subject to the limitations on amount set
forth in Section 14(d) hereof and shall be combined with any other amounts
subject to such limitations and (ii) if Buyer or any UK Collective
Subsidiary shall actually receive the economic benefit of any overfunding
that existed as of the Closing Date under any of the Old Plans, Seller's
obligation to indemnify hereunder shall be offset by the amount of the
economic benefit so received (or, with respect to payment or payments by
Seller to Buyer or a UK Collective Subsidiary pursuant to this provision
prior to receipt of any such economic benefit, Buyer or such UK Collective
Subsidiary shall promptly pay to Seller, to the extent received prior to
the eighth anniversary of the
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execution of this Agreement, the amount that would otherwise have
constituted an offset).
SECTION 15. Procedures for Environmental Claims.
(a) This Section 15 shall be the exclusive provision governing
the procedures relating to: (i) any claim asserted under Section
14(a)(i)(A) for breach of representation under Section 4(r), (ii) any
Special Claim relating to environmental matters asserted under Section
14(a)(ii), and (iii) any claim asserted under Section 14(a)(iii), in each
case, for which Buyer seeks indemnification pursuant to this Agreement
(collectively, "Environmental Indemnification Claims"); provided, however,
that the provisions of Section 6(e) shall be incorporated by reference in
this Section 15 and shall apply with respect to the procedures provided for
in this Section 15.
(b) After Buyer receives notice of any Environmental
Indemnification Claim, Buyer shall give prompt written notice thereof to
Seller reasonably indicating (to the extent known) the nature and cost of
such Environmental Indemnification Claim and the basis thereof; provided,
however, that failure of Buyer to give Seller prompt notice as provided
herein shall not relieve Seller of any of its obligations hereunder unless
and
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only to the extent that Seller shall have been prejudiced thereby.
(c) Seller shall control the defense or negotiation of any
Environmental Indemnification Claim for which Buyer is entitled to
indemnification hereunder with respect to any Third-Party Site, any Real
Property and Tangible Assets not transferred to Buyer under this Agreement
(excluding any Real Property and Tangible Assets owned or leased by the
Collective Subsidiaries as of the Closing Date), and any claim relating to
any operations, property or assets in or involving Southbridge,
Massachusetts (the "Southbridge Facility"), including its compromise or
settlement, with counsel selected by Seller reasonably acceptable to Buyer.
No compromise or settlement of any such claim may be reached by Seller
without Buyer's prior written consent (which consent shall not be
unreasonably withheld or delayed) in those instances, if any, that (i)
Buyer is named as a party in the claim which is the subject of the
compromise or settlement, and (ii) Buyer is not fully and effectively
released in writing by the party bringing such claim. Seller shall control
all required action pursuant to any Environmental Indemnification Claim
with respect to any Third-Party Site, the Southbridge Facility, and any
Real Property and Tangible Assets not transferred to Buyer under this
Agreement (excluding any
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Real Property and Tangible Assets owned or leased by the Collective
Subsidiaries as of the Closing Date), including, without limitation,
required investigatory, response and remedial action ("Required Action").
(d) Buyer shall control the defense or negotiation of any
Environmental Indemnification Claim for which Buyer is entitled to
indemnification hereunder concerning the Real Property and Tangible Assets
currently owned, operated or leased by Seller (to the extent related to the
Business) or by any Collective Subsidiary other than the Southbridge
Facility ("On-Site Claim"), including its compromise or settlement, with
counsel selected by Buyer reasonably acceptable to Seller, unless, within
45 days of providing notice thereof to Seller, Buyer offers control thereof
to Seller and Seller agrees to assume control. No compromise or settlement
in respect of any such On-Site Claim may be reached by Seller without
Buyer's prior written consent (which consent shall not be unreasonably
withheld or delayed).
(e) If Buyer and Seller are both named as defendants in or are
the subject of any Environmental Indemnification Claim and counsel selected
by the party controlling such claim notifies such party that there would be
an actual conflict of interest in such counsel's representing both Seller
and Buyer
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in such Environmental Indemnification Claim, then Seller shall pay the
reasonable costs and expenses of separate counsel for Buyer in connection
with such Environmental Indemnification Claim.
(f) Buyer shall control each required action for On-Site
Claims, including, without limitation, required investigatory, response and
remedial actions ("Required On-Site Action"). Each Required On-Site Action
shall be conducted by Buyer in accordance in all material respects with any
applicable Environmental Law. Unless otherwise agreed to by Seller and
Buyer, and to the extent permitted under any applicable Environmental Law,
with respect to any On-Site Claim Buyer shall (to the extent such approval
is required) propose and seek approval for any Required On-Site Action from
governmental entities or any other third party pursuing such On-Site Claim
and, in any event, shall conduct any such Required On-Site Action, in each
case with the objective of accomplishing it in the most cost effective and
commercially reasonable manner (without regard to the availability of
indemnification hereunder), taking into account the cost of alternative
cleanup technologies, the likelihood of success of the chosen technology
and whether the chosen technology will accomplish cleanup in a reasonable
period of time. For purposes of this Section 15(f),
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"the most cost effective and commercially reasonable manner" shall be
deemed to include, without limitation, any specific work to implement a
Required On-Site Action to the extent and in the manner such work is
required to be performed by the environmental authority (or authorities)
with jurisdiction over such work following consultation with Seller and
reasonable efforts by Buyer to achieve the cost effective and commercially
reasonable objective set forth in this Section 15(f).
(g) (i) Buyer agrees that it will contact Seller at the same
time, or as soon thereafter as is reasonably practicable, that it contacts
any third party (including, without limitation, any governmental authority,
but excluding any counsel, consultants or other experts retained by Buyer)
(collectively, "Other Party") with respect to a problem that might result
in a Loss under clause (iii) of Section 14(a) or Special Claims relating to
environmental matters under Section 14(a)(ii) hereof, but the failure to so
notify Seller will relieve Seller from liability under Section 14 only to
the extent that Seller shall have been prejudiced thereby.
(ii) To the extent not prohibited by a governmental authority,
Seller shall have the right to participate fully in any negotiations
between Buyer and any Other Party regarding
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any Required On-Site Action, including without limitation, its scope,
nature and schedule for implementation.
(iii) Buyer shall make all reasonable efforts to consult with
Seller prior to submitting to any Other Party any proposed or final work
plan, material report, compliance schedule, compliance or consent order,
decree or agreement. Buyer and Seller shall promptly provide each other
with final copies of all reports, work plans and other material documents
received from or provided to any Other Party with respect to any
Environmental Indemnification Claim (A) relating to any Required On-Site
Action or (B) the compromise or settlement of which requires the consent of
Buyer pursuant to Section 15(c) hereof.
(iv) Buyer shall not enter into any agreement with any Other
Party regarding any On-Site Claim including, without limitation, any
Required On-Site Action including, without limitation, any work plan,
schedule, compliance or consent order or decree, or any compromise or
settlement agreement, without the prior written consent of Seller, which
consent shall not to be unreasonably withheld or delayed.
(v) Nothing herein shall limit Seller's right to submit
written comments (with a copy to Buyer) to any Other
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Party regarding any On-Site Claim or to comment upon any proposed Required
On-Site Action, and Seller's exercise of its rights hereunder shall not
affect Buyer's obligations under this Agreement.
(vi) Buyer and Seller shall keep each other advised in a timely
manner of the conduct of all Required On-Site Actions.
(h) Buyer agrees to take all reasonable measures to minimize
any Losses and to cooperate with Seller in its efforts in respect thereof.
With respect to any matter which may result in a Loss under this Agreement,
Buyer shall make reasonable efforts to cooperate fully with Seller
including, but not limited to, participating in discussions with government
officials, providing factual background and data with respect to any such
matter and sharing the results of any tests or other information with
respect to any such matter which results are available to Buyer.
(i) Seller and Seller's representatives shall have the right,
upon reasonable prior notice, to enter any property, facility or site which
is the subject of an On-Site Claim for the purposes of understanding and
observing all activities related to any Required On-Site Action and
obtaining, at
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Seller's sole cost and expense, split or duplicate samples of any testing
conducted in connection with a Required On-Site Action. In undertaking the
foregoing, Seller shall make all reasonable efforts to minimize
interference with Buyer's ability to conduct its business.
(j) In undertaking the defense or negotiation of any
Environmental Indemnification Claim hereunder, Seller shall at all times
make all reasonable efforts to minimize interference with Buyer's ability
to conduct its business.
(k) Within 15 business days of Seller's receipt of a notice
from Buyer with respect to any Environmental Indemnification Claim, Seller
and Buyer shall each designate one representative ("Designated
Representative") to represent them in their dealings with each other
respecting such claim. Within the same period, the parties shall notify
each other of the name, title, address, telephone and facsimile numbers of
each Designated Representative.
(l) In the event that a dispute concerning whether (i) any
Required Action is being pursued or performed in accordance with Section
15(f), or (ii) any action by Buyer satisfies the requirements of Section
14(a)(iii)(B) arises between Seller's and Buyer's Designated
Representatives which cannot be
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resolved by them after 30 business days, such dispute shall promptly be
referred to an independent third party having expertise in the matter at
issue, mutually acceptable to the parties (or if the parties cannot agree,
the CPR Institute for Dispute Resolution, New York, New York shall select
or designate a recognized environmental expert who shall be independent
from each of the parties) and whose fees and expenses shall be borne
equally by the parties (it being understood that it is the intention of the
parties, where practicable, to resolve issues related to any particular
Environmental Indemnification Claim in one proceeding with due regard to
any applicable standards hereunder). The designated expert shall evaluate
the facts and circumstances at issue and shall recommend a course of action
which such expert believes in its good faith judgment satisfies the
requirements of this Agreement and applicable Environmental Law (but who
shall not itself perform such course of action). Such recommendation shall
be final and binding on the parties. The parties agree to act as promptly
as practicable in implementing the foregoing procedures, and further agree
that, in the event that actions are required to be taken by a governmental
authority or in an emergency to avoid imminent and substantial harm to
health or the environment before the foregoing procedures can be
implemented, either party may undertake such actions at its own expense
without prejudice to their
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respective rights hereunder to seek indemnification for covered Losses.
SECTION 16. Termination, Modification or Waiver.
(a) Termination. This Agreement may be terminated at any time
prior to the Closing:
(i) by mutual written agreement of Buyer and Seller;
(ii) by Buyer or Seller, by notice to the other party, if the
Closing shall not have taken place prior to June 12, 1996 or, to the
extent the waiting period under the HSR Act has not previously
terminated, June 30, 1996 (or, in either case, such later date as
agreed to by the parties in writing), subject to any rights accruing
to the date of such notice on account of any breach of this Agreement
by the opposite party hereto; or
(iii) by Buyer or Seller, if an order is issued by any court,
agency, governmental body or public authority to restrain, enjoin or
prohibit the consummation of the transactions contemplated by this
Agreement.
(b) Modification; Supplemental Disclosure. This Agreement may
be amended, modified or supplemented only by written agreement of the
parties hereto. Seller shall have the
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right from time to time prior to the Closing to supplement the Schedules
attached hereto with respect to any matter hereafter arising which, if
existing or known as of the date of this Agreement, would have been
required to be set forth or described in such Schedule. Any such
supplemental disclosure will be deemed to have cured any breach of any
representation or warranty made in this Agreement, but will not be deemed
to have been disclosed for purposes of determining whether or not the
conditions set forth in Section 8 hereof have been satisfied, taking into
account the aggregate effect of all such supplemental disclosure.
(c) Waiver. Any failure of Seller, on the one hand, or Buyer,
on the other, to comply with any obligation, covenant, agreement or
condition contained herein may be expressly waived in writing by Buyer in
the case of any such failure by Seller or by Seller in the case of any such
failure by Buyer, but such waiver or failure to insist upon strict
compliance shall not operate as a waiver of, or estoppel with respect to,
any subsequent or other failure. Whenever this Agreement requires or
permits consent by or on behalf of any party hereto, such consent shall be
given in writing in a manner consistent with the requirements for a waiver
of compliance as set forth in this Section 16(c).
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SECTION 17. Costs Incident to Preparation
of Agreement and Certain Taxes.
(a) Each of the parties hereto shall pay, without right or
reimbursement from the others, all costs incurred by it (including, to the
extent not reflected on the Closing Balance Sheet or the AO Singapore
Balance Sheet, out-of-pocket costs incurred by its subsidiaries for the
purpose of effecting the sale of the Assets and the Shares hereunder)
incident to the preparation, execution and delivery of this Agreement and
the performance of its obligations hereunder, whether or not the
transactions contemplated by this Agreement shall be consummated, including
without limitation fees and disbursements of legal counsel, accountants,
investment bankers and consultants employed by the respective parties
hereto in connection with the transactions contemplated by this Agreement.
(b) Buyer and Seller shall each pay half of all transfer and
similar taxes in connection with the consummation of the transactions
contemplated by this Agreement. For purposes of the preceding sentence,
capital gains taxes incurred in connection with the sale of assets and
property in Tijuana, Mexico shall be deemed to be "transfer and similar
taxes" to the extent such capital gains taxes do not exceed $30,000.
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SECTION 18. Parties in Interest and Assignment.
(a) This Agreement shall be binding upon, and inure to the
benefit of, the parties hereto and their respective successors and
permitted assigns. This Agreement is not made for the benefit of any
person, firm, corporation or other entity not a party hereto, and nothing
in this Agreement will be construed as giving any person, firm, corporation
or other entity, other than the parties hereto and their respective
successors and permitted assigns, any right, remedy or claim under or in
respect of this Agreement, or any provision hereof.
(b) This Agreement may not be assigned by any party hereto
without the prior written consent of all of the other parties hereto.
SECTION 19. Investigation by Buyer; Confidentiality.
(a) Until the Closing Date or the date this Agreement is
terminated pursuant to Section 16 hereof, if earlier, Buyer, through its
agents and employees, may conduct an investigation of the Business and the
financial condition of the Business. During the course of such
investigation, Seller agrees to cause the facilities, books, records,
personnel and accountants of the Business to be made available for review
(or interviews in the case of personnel) by such agents and
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employees and to cause to be provided to Buyer such other information with
respect to the Business as it shall reasonably request, at reasonable times
and upon reasonable notice. In the event that the transactions
contemplated by this Agreement are not consummated, Buyer shall return to
Seller all copies of documents furnished to or obtained by them in the
course of such investigation.
(b) Buyer shall promptly disclose in writing to Seller if such
investigation shall have revealed any material adverse change since the
dates of the last Financial Statements in the Assets or in the Business
that was not disclosed to Buyer prior to the execution and delivery of this
Agreement or if Buyer shall discover a material inaccuracy in any of the
representations and warranties of Seller.
(c) Any information provided or obtained pursuant to clause
(a) above shall be held by Buyer in accordance with, and shall be subject
to, the Confidentiality Agreement effective as of August 10, 1995 between
Buyer and Seller.
SECTION 20. Miscellaneous.
(a) Any notice, request, consent, waiver or other
communication required or permitted to be given hereunder shall be
effective only if in writing and shall be deemed
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sufficiently given only if delivered in person or sent by telegram, cable,
telecopy or certified or registered mail, postage prepaid, return receipt
requested, addressed as follows:
If to Seller:
American Optical Corporation
80 Fieldpoint Road
Greenwich, Connecticut 06830
Attention: General Counsel
with a copy to:
Roger Andrus, Esq.
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
If to Buyer:
Sola International Inc.
2420 Sand Hill Road
Suite 200
Menlo Park, California
Attention: John E. Heine
with a copy to:
Frederick H. Fogel, Esq.
Fried, Frank, Harris, Shriver &
Jacobson
One New York Plaza
New York, New York 10004
or to such other person or address as either such party may have specified
in a notice duly given to the sender as provided herein. Such notice or
communication shall be deemed to have been given as of the date so
delivered, telegraphed, telecopied or cabled or, if mailed, three days
after being mailed.
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(b) Any information disclosed in any schedule to this
Agreement shall be deemed disclosed in all other schedules hereto (other
than Schedule 4(r)) without the necessity of any specific incorporation by
reference, provided that any disclosure under one schedule (the "Express
Disclosure") shall not be deemed disclosed with respect to any other
schedule unless sufficient information is given in the Express Disclosure
to reasonably enable Buyer to determine its applicability to such other
schedule. It is understood and agreed that the specification of any dollar
amount in the representations and warranties contained in this Agreement or
the inclusion of any specific item in the Schedules is not intended to
imply that such amounts or higher or lower amounts, or the items so
included or other items, are or are not material, and no party shall use
the fact of the setting of such amounts or the fact of the inclusion of any
such item in the Schedules in any dispute or controversy between the
parties as to whether any obligation, item or matter not described herein
or included in a Schedule is or is not material for purposes of this
Agreement.
(c) Whenever used in this Agreement, (i) "to Seller's
knowledge" or "to the knowledge of Seller" or similar language shall mean
the actual knowledge of the persons listed on Schedule 20(A) hereto and
(ii) "to Buyer's knowledge" or "to
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the knowledge of Buyer" or similar language shall mean the actual knowledge
of the persons listed on Schedule 20(B) hereto.
(d) This Agreement shall not create or be deemed to create or
permit any personal liability on the part of any shareholder (direct or
indirect), officer, employee, agent, representative or investor of Buyer or
Seller or any Affiliate thereof for any matter whatsoever.
(e) This Agreement (including the Exhibits and Schedules
attached hereto) and the documents referred to herein as having been
entered into by any of the parties hereto or delivered by a party hereto to
another party hereto constitute the entire agreement and understanding of
the parties relating to the subject matter hereof and supersede all prior
and contemporaneous agreements and understandings, representations and
warranties, whether oral or written, relating to the subject matter hereof.
The terms of this Agreement cannot be changed, modified, released or
discharged orally.
(f) No delay or failure on the part of any party in exercising
any rights hereunder, and no partial or single exercise thereof, will
constitute a waiver of such rights or of any other rights hereunder.
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(g) THIS AGREEMENT SHALL BE CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICTS OF LAWS.
(h) The unenforceability or invalidity of any Section or
subsection or provision of this Agreement shall not affect the
enforceability or validity of the balance of this Agreement.
(i) The headings of the Sections and subsections contained in
this Agreement are for reference purposes only and shall not in any way
affect the meaning, interpretation, enforceability or validity of this
Agreement.
(j) This Agreement may be executed in any number of
counterparts, each of which so executed will be deemed to be an original,
but all of which together will constitute one and the same agreement.
(k) Unless required by law, no public disclosure pertaining to
this Agreement or the transaction contemplated hereby shall be made by any
party unless approved by the other party prior to release, which approval
shall not be unreasonably withheld.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first above written.
AMERICAN OPTICAL CORPORATION SOLA INTERNATIONAL INC.
By: _________________________ By:
Schedules
A - Excluded Businesses
B - Singapore Excluded Businesses
C - Designated Subsidiaries
1(a) - Rights to Litigation Claims
1(b)(A) - Excluded Receivables
1(b)(B) - Excluded Asset Locations
1(b)(C) - Exclusions
2(c) - Closing Balance Sheet
2(d) - AO Singapore Pro Forma Balance Sheet
4(a) - Material Subsidiaries
4(d) - No Violation of Existing Agreements
4(e) - Consents/Approvals Required
4(f) - Financial Statements
4(f)-1 - Sale Balance Sheet
4(g) - Machinery, Equipment and Vehicles
2
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4(h) - Properties, Mortgages, Liens, Pledges, etc.
4(i) - Contracts and Other Agreements
4(j) - Orders or Judgments
4(k) - Defaults in Tax Filings
4(1) - Patents, Copyrights, Trademarks, etc.
4(m)(i) - Employee Benefit Plans
4(m)(ii) - Excess Payments
4(m)(iii) - Work Stoppages and Labor Notices
4(m)(v) - Mexican Employee Insurance Plans
4(m)(vii) - Singapore Benefits Matters
4(m)(viii)- French Benefits Matters
4(o) - Insurance Policies
4(r) - Environmental Matters
4(s) - Stock of Transferred Subsidiaries
4(t) - Compliance with Law
4(u) - Related Assets
3
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4(w) - Requirements to Complete Reorganizations
6(d)(1) - Trademark License Agreement
6(d)(2) - Patent License Agreement
6(f) - Amendments to Transition Services and Supply Agreements
6(i)(viii) - Allocation of Purchase Price
6(h) - Southbridge Lease
6(o) - Changes to Constitutional Documents
6(s) - Trademark Security Agreement
8(d) - Consents Required for Assignments
8(m) - Consents and Approvals of Government Authorities and Others
10(1) - Certain Officers and Managers
10(4) - Compensation Changes
10(13) - Material Transactions or Agreements
10(15) - Permitted Distributions
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13 - Certain Special Claims
20(A) - Seller's Knowledge
20(B) - Buyer's Knowledge
Exhibits
A - Transferred Subsidiaries
B - Tax Representations
C - Opinion of Seller's Counsel
D - Omitted
E - Agreement Not to Compete (M.J. Cunniffe)
F - Opinion of Buyer's Counsel
SOLA SIGNS PURCHASE AGREEMENT
TO ACQUIRE AMERICAN OPTICAL OPHTHALMIC BUSINESS
Menlo Park, CA May 6, 1996. Sola International Inc. (NYSE: SOL)
today announced that the company has signed a definitive purchase
agreement for the acquisition of substantially all of the
worldwide ophthalmic group of American Optical Corporation, for a
cash consideration of $107 million (together with the assumption
of certain liabilities), subject to post closing adjustments.
Completion of the transaction is subject to receipt of customary
government approvals. The company currently anticipates funding
the transaction with cash borrowings, which may be refinanced in
part with additional equity issuances.
American Optical's ophthalmic lens division, with headquarters in
Southbridge, MA has its principal operations in the United
States, Mexico, the United Kingdom, France, Switzerland and
Singapore, and had revenues of approximately $79 million for the
twelve months ended March 31, 1995.
"I am delighted that we have now concluded this agreement," said
Sola CEO John Heine. "The strategic benefits of this acquisition
remain strongly attractive," continued Heine. Heine also
commented that, subject to receiving needed governmental
consents, the transaction was expected to close by the end of
June.
Sola International Inc. designs, manufactures and distributes a
broad range of eyeglass lenses, primarily focusing on the faster
growing plastic lens segment of the global lens market. The
Company has manufacturing operations in ten countries and employs
5,500 people worldwide.
For further information, please contact: John Heine, President
and CEO, 415-324-6868.
