Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
Between
LUXOTTICA GROUP S.p.A.
XXXXX ACQUISITION CORP.
and
OAKLEY, INC.
Dated as of June 20, 2007
Table of Contents
ARTICLE I THE MERGER ...................................................... 1
Section 1.01. The Merger ............................................... 2
Section 1.02. Effective Time; Closing .................................. 2
Section 1.03. Effects of the Merger .................................... 2
Section 1.04. Articles of Incorporation and By-Laws of the Surviving
Corporation ........................................... 2
Section 1.05. Directors ................................................ 2
Section 1.06. Officers ................................................. 3
Section 1.07. Conversion of Shares; Cancellation of Shares ............. 3
Section 1.08. Conversion of Merger Sub Common Stock .................... 3
Section 1.09. Dissenting Shares ........................................ 3
Section 1.10. Company Stock-Based Arrangements ......................... 4
ARTICLE II PAYMENT FOR SHARES ............................................. 5
Section 2.01. Payment for Shares ....................................... 5
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY ................. 7
Section 3.01. Organization and Qualification; Subsidiaries ............. 8
Section 3.02. Articles of Incorporation and By-Laws .................... 9
Section 3.03. Capitalization ........................................... 9
Section 3.04. Authority Relative to this Agreement ..................... 10
Section 3.05. No Conflict; Required Filings and Consents ............... 11
Section 3.06. Compliance with Agreements ............................... 12
Section 3.07. SEC Reports and Financial Statements ..................... 12
Section 3.08. Off-Balance Sheet Arrangements ........................... 14
Section 3.09. Information .............................................. 14
Section 3.10. Litigation ............................................... 15
Section 3.11. Compliance with Applicable Laws .......................... 15
Section 3.12. Internal Controls ........................................ 15
Section 3.13. Employee Benefit Plans and Arrangements .................. 16
Section 3.14. Intellectual Property .................................... 19
Section 3.15. Environmental Matters .................................... 21
Section 3.16. Taxes .................................................... 22
Section 3.17. Absence of Certain Material Adverse Changes .............. 24
Section 3.18. Affiliate Transactions ................................... 24
Section 3.19. Real Property ............................................ 24
Section 3.20. Labor Matters ............................................ 25
Section 3.21. Material Contracts ....................................... 26
Section 3.22. Opinion of Financial Advisor ............................. 26
Section 3.23. Relationships with Customers and Others .................. 27
Section 3.24. Brokers .................................................. 27
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND THE MERGER SUB .... 27
Section 4.01. Organization and Qualification ........................... 27
Section 4.02. Authority Relative to this Agreement ..................... 28
Section 4.03. No Conflict; Required Filings and Consents ............... 28
Section 4.04. Information .............................................. 29
Section 4.05. Financing ................................................ 30
Section 4.06. Ownership of Shares ...................................... 30
Section 4.07. Brokers .................................................. 30
ARTICLE V COVENANTS ....................................................... 30
Section 5.01. Conduct of Business of the Company ....................... 30
Section 5.02. Access to Information; No Control of Operations .......... 34
Section 5.03. Further Assurances; Reasonable Best Efforts .............. 35
Section 5.04. Filings; Consents ........................................ 36
Section 5.05. Public Announcements ..................................... 38
Section 5.06. Indemnification; Employees and Employee Benefits ......... 38
Section 5.07. No Solicitation .......................................... 41
Section 5.08. Preparation of the Proxy Statement ....................... 44
Section 5.09. Shareholders' Meeting .................................... 45
Section 5.10. Notification of Certain Matters .......................... 45
Section 5.11. State Takeover Laws ...................................... 45
Section 5.12. Shareholder Litigation ................................... 46
Section 5.13. Merger Sub ............................................... 46
Section 5.14. Compliance with Export, Embargo and Defense Controls ..... 46
Section 5.15. CFIUS Notice ............................................. 46
ARTICLE VI CONDITIONS TO CONSUMMATION OF THE MERGER ....................... 46
Section 6.01. Conditions to the Obligations of Each Party .............. 46
Section 6.02. Conditions to the Obligations of Parent and Merger Sub ... 47
Section 6.03. Conditions to the Obligations of the Company ............. 48
ARTICLE VII TERMINATION; AMENDMENTS; WAIVER ............................... 48
Section 7.01. Termination .............................................. 48
Section 7.02. Effect of Termination .................................... 50
Section 7.03. Fees and Expenses ........................................ 50
Section 7.04. Amendment ................................................ 52
Section 7.05. Extension; Waiver ........................................ 52
ARTICLE VIII MISCELLANEOUS ................................................ 52
Section 8.01. Non-Survival of Representations and Warranties ........... 52
Section 8.02. Entire Agreement; Assignment ............................. 52
Section 8.03. Validity ................................................. 53
Section 8.04. Notices .................................................. 53
Section 8.05. Governing Law; Jurisdiction .............................. 54
Section 8.06. Waiver of Jury Trial ..................................... 54
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Section 8.07. Descriptive Headings, etc ................................ 55
Section 8.08. Counterparts; Effectiveness .............................. 55
Section 8.09. Parties in Interest; No Third Party Beneficiaries ........ 55
Section 8.10. Certain Definitions ...................................... 55
Section 8.11. Specific Performance ..................................... 56
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INDEX OF DEFINED TERMS
Articles of Merger ........................................... Section 1.02
Acquisition Agreement ........................................ Section 5.07(c)
Acquisition Proposal ......................................... Section 5.07(d)
Agreement .................................................... Recitals
Antitrust Regulatory Conditions .............................. Section 7.01(b)
Board ........................................................ Recitals
Change of Board Recommendation ............................... Section 5.07(c)
CFIUS ........................................................ 0
CFIUS Notice ................................................. 0
Closing Consents ............................................. Section 6.02
Closing Date ................................................. Section 1.02
Code ......................................................... Section 2.01(f)
Company ...................................................... Recitals
Company Disclosure Schedule .................................. ARTICLE III
Company Options .............................................. Section 1.10(a)
Company Representatives ...................................... Section 5.02(a)
Company Stock-Based Awards ................................... Section 1.10(b)
Confidentiality Agreements ................................... Section 5.02(a)
Consent ...................................................... Section 3.05(b)
Continuation Period .......................................... Section 5.06(d)
Contracts .................................................... Section 3.21(b)
Controlled Group Liability ................................... Section 3.13(a)
Dissenting Shares ............................................ Section 1.09
Divestiture .................................................. Section 5.04(b)
Effective Time ............................................... Section 1.02
Employee Benefit Arrangement ................................. Section 5.01(f)
Employees .................................................... Section 5.06(d)
Environmental Law ............................................ Section 3.15
ERISA ........................................................ Section 3.13(a)
ERISA Affiliate .............................................. Section 3.13(a)
Exchange Act ................................................. Section 3.05(a)
Exchange Fund ................................................ Section 2.01(a)
Extended Termination Date .................................... Section 7.01(b)
Filed Contracts .............................................. Section 3.21(b)
Final Termination Date ....................................... Section 7.01(b)
Foreign Plan ................................................. Section 3.13(a)
Founder ...................................................... Recitals
Founder Voting Agreement ..................................... Recitals
GAAP ......................................................... Section 3.07(b)
Governmental Entity .......................................... Section 3.05(b)
Hazardous Substance .......................................... Section 3.15
HSR Act ...................................................... Section 3.05(a)
Income Tax ................................................... Section 3.16(p)
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Indemnified Parties .......................................... Section 5.06(a)
Initial Termination Date ..................................... Section 7.01(b)
Intellectual Property ........................................ Section 3.14
IRS .......................................................... Section 3.13(b)
Lien ......................................................... Section 8.10(c)
LTIP Performance Units ....................................... Section 1.10(b)
Material Adverse Effect ...................................... Section 3.01
Measurement Date ............................................. Section 3.03
Merger ....................................................... Recitals
Merger Price ................................................. Recitals
Merger Fees .................................................. Section 3.24
Merger Sub ................................................... Recitals
Necessary 23B.19 Actions ..................................... Section 3.05(c)
New Plans .................................................... Section 5.06(f)
NYSE ......................................................... Section 3.05(a)
Old Plans .................................................... Section 5.06(f)
Option Plans ................................................. Section 1.10(a)
Other Filings ................................................ Section 3.09
Parent ....................................................... Recitals
Parent Representatives ....................................... Section 5.02(a)
Parent Termination Fee ....................................... Section 7.03(b)
Paying Agent ................................................. Section 2.01(a)
Permitted Issuances .......................................... Section 5.01(c)
Plans ........................................................ Section 3.13(a)
Preferred Stock .............................................. Section 3.03
Proxy Statement .............................................. Section 5.08(a)
Qualified Plans .............................................. Section 3.13(c)
Registered Intellectual Property ............................. Section 3.14(a)
Release ...................................................... Section 3.15
Required Shareholder Approval ................................ Section 6.01(a)
Restricted Share ............................................. Section 1.10(c)
Revised Parent Proposal ...................................... Section 5.07(c)
Xxxxxxxx-Xxxxx Act ........................................... Section 3.11
SEC .......................................................... Section 3.07(a)
SEC Reports .................................................. Section 3.07(a)
Share ........................................................ Recitals
Share Certificates ........................................... Section 2.01(a)
Shares ....................................................... Recitals
Sole Shareholder ............................................. Section 4.02
Special Meeting .............................................. Section 5.09
Specified Assets ............................................. Section 5.04(a)
Specified Change of Board Recommendation ..................... Section 5.07(c)
Subsidiary ................................................... Section 3.01
Superior Acquisition Proposal ................................ Section 5.07(d)
Surviving Corporation ........................................ Section 1.01
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Takeover Statute ............................................. Section 5.11
Tax .......................................................... Section 3.16(n)
Tax Return ................................................... Section 3.16(o)
Termination and Expense Reimbursement Fee .................... Section 7.03(c)
Transaction Agreements ....................................... Section 4.02
U.S. Plan .................................................... Section 3.13(a)
U.S. Subsidiary Plan ......................................... Section 3.13(b)
Voting Agreement ............................................. Section 4.02
Voting Debt .................................................. Section 3.03
WBCA ......................................................... Recitals
1995 Stock Plan .............................................. Section 1.10(a)
EXHIBITS
Exhibit A Amended and Restated Articles of Incorporation of the Company
Exhibit B Amended and Restated By-laws of the Company
Exhibit C Form of Non-Foreign Affidavit
Exhibit D Guarantee
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of June 20, 2007 (this "AGREEMENT"),
by and among Luxottica Group S.p.A., an Italian corporation ("PARENT"), Xxxxx
Acquisition Corp., a Washington corporation and an indirect wholly owned
subsidiary of Parent ("MERGER SUB"), and Oakley, Inc., a Washington corporation
(the "COMPANY").
WHEREAS, the respective Boards of Directors of Parent, Merger Sub and the
Company have approved and declared advisable this Agreement, which contemplates
the merger of Merger Sub with and into the Company, as set forth below (the
"MERGER"), in accordance with the Washington Business Corporation Act (the
"WBCA") and upon the terms and subject to the conditions set forth in this
Agreement;
WHEREAS, upon the consummation of the Merger, each issued and outstanding
share of common stock, $0.01 par value per share, of the Company (each a "SHARE"
and, collectively, the "SHARES") will be converted into the right to receive
$29.30 per share in cash (without interest) (the "MERGER PRICE"), upon the terms
and subject to the limitations and conditions of this Agreement;
WHEREAS, as an inducement to Parent and Merger Sub to enter into this
Agreement, concurrently herewith, Xxxxx X. Xxxxxxx (the "FOUNDER") has entered
into an agreement (the "FOUNDER VOTING AGREEMENT") with Parent and Merger Sub to
vote his Shares in favor of this Agreement and the Merger on the terms and
subject to the conditions specified therein;
WHEREAS, as a further inducement to Parent and Merger Sub to enter into
this Agreement, concurrently herewith, the Founder has entered into a
non-competition agreement with Parent and Merger Sub (the "PS NON-COMPETITION
AGREEMENT"), effective as of the Effective Time of the Merger, with the rights
and obligations thereunder of Merger Sub to be rights and obligations of the
Surviving Corporation by virtue of the Merger, and on the terms and subject to
the conditions specified therein;
WHEREAS, the Board of Directors of the Company (the "BOARD") has approved
the terms of the Founder Voting Agreement;
WHEREAS, the Board is recommending, subject to the terms hereof, that the
Company's shareholders approve this Agreement and the Merger;
WHEREAS, Parent, Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, Parent,
Merger Sub and the Company agree as follows:
ARTICLE I
THE MERGER
Section 1.01. The Merger. Upon the terms and subject to the satisfaction or
waiver of the conditions hereof, and in accordance with the applicable
provisions of this Agreement and the WBCA, at the Effective Time (as defined in
Section 1.02), Merger Sub shall be merged with and into the Company. Following
the Merger, the separate corporate existence of Merger Sub shall cease and the
Company shall continue as the surviving corporation (the "SURVIVING
CORPORATION") and an indirect wholly owned subsidiary of Parent.
Section 1.02. Effective Time; Closing. The closing (the "CLOSING") will be
held at the offices of Winston & Xxxxxx LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
at 10:00 A.M., New York, New York time, on the fifth business day following the
date of the satisfaction or waiver of the conditions set forth in Article VI
(other than those conditions that by their nature are to be satisfied or waived
at the Closing, but subject to the satisfaction or waiver of those conditions),
or such other place and time as Parent and the Company may agree in writing (the
"CLOSING DATE"). On the Closing Date, the parties hereto shall cause the Merger
to be consummated by filing articles of merger (the "ARTICLES OF MERGER") with
the Secretary of State of the State of Washington, in such form as is required
by, and executed in accordance with, the relevant provisions of Washington law.
The Merger shall become effective at such time at which such Articles of Merger
shall be duly filed with the Secretary of State of the State of Washington, or
at such later time reflected in such Articles of Merger as shall be agreed by
Parent and the Company in writing (the time that such Merger becomes effective,
the "EFFECTIVE TIME").
Section 1.03. Effects of the Merger. The effect of the Merger shall be as
provided in this Agreement and the applicable provisions of the WBCA. Without
limiting the generality of the foregoing, and subject thereto, at the Effective
Time, all the properties, rights, privileges, powers and franchises of the
Company and Merger Sub shall vest in the Surviving Corporation, and all debts,
liabilities and duties of the Company and Merger Sub shall become the debts,
liabilities and duties of the Surviving Corporation.
Section 1.04. Articles of Incorporation and By-Laws of the Surviving
Corporation.
(a) At the Effective Time, the amended and restated articles of
incorporation of the Company, as in effect immediately prior to the Effective
Time, shall be amended and restated to read in its entirety as set forth in
Exhibit A and, as so amended and restated, shall be the articles of
incorporation of the Surviving Corporation, until thereafter amended in
accordance with the provisions thereof and hereof and applicable law.
(b) At the Effective Time, the by-laws of the Company, as in effect
immediately prior to the Effective Time, shall be amended and restated to read
in their entirety as set forth in Exhibit B and, as so amended and restated,
shall be the by-laws of the Surviving Corporation, until thereafter amended in
accordance with the provisions thereof and hereof and applicable law.
Section 1.05. Directors. Subject to applicable law, the directors of Merger
Sub immediately prior to the Effective Time shall be the initial directors of
the Surviving Corporation and shall hold office until their respective
successors are duly elected and qualified, or their earlier death, resignation
or removal in accordance with the articles of incorporation or by-laws of the
Surviving Corporation.
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Section 1.06. Officers. Subject to applicable law and any obligation of the
Company under any employment agreement with the relevant person that is in
effect as of the Effective Time, the individuals specified by Parent in writing
to the Company at least two business days prior to the Closing Date shall be the
initial officers of the Surviving Corporation and shall hold office until their
respective successors are duly elected and qualified, or their earlier death,
resignation or removal in accordance with the articles of incorporation or
by-laws of the Surviving Corporation.
Section 1.07. Conversion of Shares; Cancellation of Shares. At the
Effective Time, by virtue of the Merger and without any action on the part of
the holders thereof, each Share issued and outstanding immediately prior to the
Effective Time (other than any Shares held by Parent, Merger Sub or any wholly
owned Subsidiary of Parent or Merger Sub, in the treasury of the Company or by
any wholly owned Subsidiary of the Company, which Shares, by virtue of the
Merger and without any action on the part of the holder thereof, shall each be
cancelled and shall cease to exist with no payment being made with respect
thereto and, other than any Shares constituting Dissenting Shares (as defined
below)), shall be converted into and represent the right to receive in cash the
Merger Price from Parent or Merger Sub (through the Paying Agent as provided in
Section 2.01). At the Effective Time, all Shares that have been converted into
the right to receive the Merger Price as provided in this Section 1.07 shall be
automatically cancelled and shall cease to exist and the holders of certificates
which immediately prior to the Effective Time represented such Shares shall
cease to have any rights with respect to such Shares other than the right to
receive the Merger Price, without interest thereon, upon surrender of such
certificates in accordance with Article II hereof.
Section 1.08. Conversion of Merger Sub Common Stock. At the Effective Time,
by virtue of the Merger and without any action on the part of the holder
thereof, each share of common stock, par value $0.01 per share, of Merger Sub
issued and outstanding immediately prior to the Effective Time shall be
converted into and become one validly issued, fully paid and nonassessable share
of common stock, par value $0.01 per share, of the Surviving Corporation and
shall constitute the only outstanding shares of capital stock of the Surviving
Corporation.
Section 1.09. Dissenting Shares. Notwithstanding anything contained in this
Agreement to the contrary and to the extent provided under applicable law,
Shares issued and outstanding immediately prior to the Effective Time as to
which the holder takes, or forbears from taking, such actions as required to
satisfy the requirements for perfecting dissenters' rights set forth in Chapter
23B.13 of the WBCA and has not effectively withdrawn, waived or lost its
dissenters' rights (the "DISSENTING SHARES"), shall not be converted into the
right to receive the Merger Price. At the Effective Time, by virtue of the
Merger and without any action on the part of the holder thereof, all Dissenting
Shares shall be cancelled and shall cease to exist and shall represent the right
to receive only those rights provided under the WBCA. If, after the Effective
Time, any holder of Dissenting Shares is not entitled to payment under Chapter
23B.13, then each Dissenting Share owned by such holder shall be treated as if
it had been converted into the
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right to receive the Merger Price as of the Effective Time. The Company shall
promptly notify Parent upon the receipt of any written demands for appraisal
under Chapter 23B.13 of the WBCA and any withdrawals of such demands or any
actions or failure to take actions that result in the loss or waiver of
dissenters' rights, and Parent shall have the right to participate in all
negotiations and proceedings with respect to such demands. The Company shall not
settle, offer to settle or make any payment with respect to such demands unless
it receives prior written consent from Parent, not to be unreasonably withheld,
conditioned or delayed, or unless it is required to do so under the WBCA. Any
amount payable to any holder of Dissenting Shares shall be paid in accordance
with the WBCA solely by the Surviving Corporation out of its own funds.
Section 1.10. Company Stock-Based Arrangements.
(a) Company Options. Subject to Section 2.01(f), at the Effective
Time, by virtue of the Merger and without any action on the part of the holder
thereof, all outstanding and unexpired options and similar rights to acquire
Shares (other than Company Stock-Based Awards, as such term is defined in
Section 1.10(b) below), regardless of whether or not such options or rights have
vested (the "COMPANY OPTIONS"), including, without limitation, Company Options
granted pursuant to the Company's 1995 Stock Incentive Plan, as amended (the
"1995 STOCK PLAN"), and option agreements with individuals thereunder
(collectively, the "OPTION PLANS"), shall be cancelled and each holder of a
cancelled Company Option shall be entitled to receive, at the Effective Time, in
consideration for the cancellation of each such Company Option, an amount in
cash equal to the product of (x) the number of Shares subject to such Company
Option immediately prior to the Effective Time (assuming full vesting of each
such Company Option whether or not it has vested in accordance with its terms)
and (y) the excess, if any, of the Merger Price over the exercise price per
Share subject to such Company Option, without interest thereon.
(b) Company Stock-Based Awards. Subject to Section 2.01(f), at the
Effective Time, by virtue of the Merger and without any action on the part of
the holder thereof, all performance shares, stock appreciation rights and
deferred stock, if any, outstanding immediately prior to the Effective Time
under the 1995 Stock Plan that shall not yet have been replaced by issued Shares
upon the lapse of the applicable forfeiture condition, including, without
limitation, all performance units ("LTIP PERFORMANCE UNITS") outstanding under
the LTIP (as defined in Section 5.06(g)) ("COMPANY STOCK-BASED AWARDS"), shall
be cancelled.
(c) Restricted Stock Awards. Any restrictions on each Share
("RESTRICTED SHARE") issued under the 1995 Stock Plan or under any of the Plans
(as defined in Section 3.13(a) below) or otherwise shall lapse immediately prior
to, and effective upon the occurrence of, the Effective Time, and each
Restricted Share shall be fully vested in each holder thereof at such time, and
each such Restricted Share will be treated at the Effective Time the same as,
and have the same rights and be subject to the same conditions (including the
condition set forth in Section 2.01(f)) as, each Share not subject to any
restrictions. All dividend equivalents, if any, credited to the account of each
holder of a Restricted Share as of the Effective Time shall be
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distributed to the holder of such Restricted Share at the Effective Time,
without interest thereon.
(d) Actions. Prior to the Effective Time, the Company shall deliver to
the holders of Company Options and Company Stock-Based Awards appropriate
notices, in form and substance reasonably acceptable to Parent, setting forth
such holders' rights pursuant to this Agreement. The Company shall take all
action as is necessary prior to the Effective Time to terminate all Option Plans
(including such actions as are necessary to amend each Option Plan to cancel the
Company Options, Company Stock-Based Awards and other rights granted pursuant to
such Option Plan) so that at and after the Effective Time, no current or former
employee, director, consultant or other person shall have any option to purchase
or right to receive any Company Options or Company Stock-Based Awards for his or
her benefit. Not more than ten nor less than three business days prior to the
anticipated Effective Time, the Company shall, to the fullest extent permitted
by applicable law, deliver to Parent a list, in form reasonably acceptable to
Parent, of the number of Company Options and Company Stock-Based Awards expected
to be outstanding immediately prior to the Effective Time, and the names of the
holders thereof and in each case together with the applicable mailing addresses,
tax identification numbers and other information relating to such holders and
participants as Parent may reasonably require in connection with the payments to
be made pursuant to this Section 1.10. Parent may take such actions, as promptly
as practicable, prior to making any payment under this Section 1.10, as are
reasonably necessary and appropriate in order to verify the right of any person
to receive such a payment hereunder, the identifying information relating to
such person and whether any withholding is required with respect thereto and, if
so, the amount thereof.
ARTICLE II
PAYMENT FOR SHARES
Section 2.01. Payment for Shares.
(a) From and after the Effective Time, a bank or trust company
mutually acceptable to Parent and the Company shall act as paying agent (the
"PAYING AGENT") in effecting the payment of the Merger Price in respect of
certificates (the "SHARE CERTIFICATES") that, prior to the Effective Time,
represented Shares entitled to payment of the Merger Price pursuant to Section
1.07. Prior to the Effective Time, Parent shall enter into a paying agent
agreement with the Paying Agent in form and substance reasonably acceptable to
the Company. At or prior to the Effective Time, Parent or Merger Sub shall
deposit, or cause to be deposited, in trust with the Paying Agent the aggregate
Merger Price to which holders of Shares shall be entitled at the Effective Time
pursuant to Section 1.07 plus the aggregate consideration payable pursuant to
Section 1.10 in exchange for Company Options, Company Stock-Based Awards and
Restricted Shares (such funds collectively being hereinafter referred to as the
"EXCHANGE FUND"). Parent shall be obligated to, from time to time, deposit any
additional funds necessary to pay the aggregate Merger Price with respect to
Shares outstanding at the Effective Time.
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(b) Promptly after the Effective Time, the Paying Agent shall, and
Parent shall cause the Paying Agent to, mail to each record holder of Share
Certificates that immediately prior to the Effective Time represented Shares
(other than Share Certificates representing Shares held by Parent, Merger Sub or
any wholly owned Subsidiary of Parent or Merger Sub, in the treasury of the
Company or by any wholly owned Subsidiary of the Company, and other than
Dissenting Shares) a form of letter of transmittal, in form and substance
reasonably satisfactory to Parent, which shall specify that delivery shall be
effected, and risk of loss and title to the Share Certificates shall pass, only
upon proper delivery of the Share Certificates to the Paying Agent, and
instructions for use in surrendering such Share Certificates and receiving the
aggregate Merger Price in respect thereof. Upon the surrender of each such Share
Certificate for cancellation to the Paying Agent or to such additional agent or
agents as may be appointed by Parent, together with such letter of transmittal,
duly executed, and such other documents as may reasonably be required by the
Paying Agent, the holder of such Share Certificate shall be paid the Merger
Price multiplied by the number of Shares formerly represented by such Share
Certificate in consideration therefor, and such Share Certificate shall
forthwith be cancelled. Until so surrendered, each such Share Certificate (other
than Share Certificates representing Shares held by Parent, Merger Sub or by any
wholly owned Subsidiary of Parent or Merger Sub, in the treasury of the Company
or by any wholly owned Subsidiary of the Company, and other than Dissenting
Shares) shall represent solely the right to receive the aggregate Merger Price
relating thereto. No interest or dividends shall be paid or accrued on the
Merger Price. If the Merger Price (or any portion thereof) is to be delivered to
any person other than the person in whose name the Share Certificate formerly
representing Shares surrendered therefor is registered, it shall be a condition
to such right to receive such Merger Price that the Share Certificate so
surrendered shall be properly endorsed or otherwise be in proper form for
transfer and that the person surrendering such Share Certificate shall pay to
the Paying Agent any transfer or other taxes required by reason of the payment
of the Merger Price to a person other than the registered holder of the Share
Certificate surrendered, or shall establish to the reasonable satisfaction of
the Paying Agent that such tax has been paid or is not applicable. Promptly
after the Effective Time, the Paying Agent shall, and Parent shall cause the
Paying Agent to, mail to the persons entitled to receive such payment, as
verified by Parent pursuant to Section 1.10(d), checks in payment of the
consideration payable to such persons pursuant to Section 1.10 in exchange for
Company Options, Company Stock-Based Awards and Restricted Shares.
(c) Promptly following the date which is 12 months after the Effective
Time, the Paying Agent shall deliver to the Surviving Corporation all cash,
Share Certificates and other documents in its possession relating to the
transactions described in this Agreement, and the Paying Agent's duties shall
terminate. Thereafter, each holder of a Share Certificate formerly representing
a Share may surrender such Share Certificate to the Surviving Corporation and,
subject to the applicable abandoned property, escheat and similar laws, receive
in exchange therefor the aggregate consideration relating thereto, without any
interest or dividends thereon, as provided in this Agreement.
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(d) After the Effective Time, the stock transfer books of the Company
shall be closed and there shall be no transfers on the stock transfer books of
the Company of any Shares which were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Share Certificates formerly
representing Shares are presented to the Surviving Corporation or the Paying
Agent, they shall be surrendered and cancelled in exchange for the payment of
the aggregate consideration as provided in this Agreement.
(e) None of Parent, Merger Sub, the Company nor the Surviving
Corporation shall be liable to any holder of the Shares, Company Options,
Company Stock-Based Awards or other securities for any consideration to be paid
in the Merger delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
(f) Each of the Company, Surviving Corporation, Parent and the Paying
Agent shall be entitled to deduct and withhold from any payment hereunder to
Parent or to any holder of Shares, Company Options, Company Stock-Based Awards
or other securities such amounts as it is required to deduct and withhold with
respect to the making of such payment under the Internal Revenue Code of 1986,
as amended (the "CODE"), or any provision of state, local or foreign tax law. To
the extent that amounts are so withheld by the Company, Surviving Corporation,
Parent or the Paying Agent, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the recipient in respect of
which such deduction and withholding was made by the Surviving Corporation,
Parent or the Paying Agent, as the case may be. In the case of any holder of
more than 5% of the Shares who is a "United States person" for United States
federal income tax purposes, such holder shall deliver, on the Closing Date, a
properly executed non-foreign affidavit substantially in the form attached
hereto as Exhibit C. In the case of any holder of more than 5% of the Shares who
is not a "United States person," for United States federal income tax purposes,
and who acquired its shares on or after January 1, 2007, the Company shall
certify, to the extent it is able to do so, that it was at no time since January
1, 2007, a United States real property holding corporation.
(g) If any Share Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Share Certificate to be lost, stolen or destroyed and, if required by
Parent or the Surviving Corporation, the posting by such person of a bond, in
such reasonable amount as Parent or the Surviving Corporation may direct, as
indemnity against any claim that may be made against it with respect to the
alleged loss, theft or destruction of such Share Certificate, the Paying Agent
will issue in exchange for such lost, stolen or destroyed Share Certificate, the
Merger Price, without any interest thereon.
(h) The Paying Agent shall invest the funds constituting the Exchange
Fund as directed by Parent. Any interest or other income resulting from such
investment shall be paid to Parent. The Exchange Fund shall not be used for any
other purpose except as provided in this Agreement.
-7-
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Merger Sub that,
except (i) as set forth in the disclosure schedule dated the date of this
Agreement and delivered by the Company to Parent and Merger Sub prior to the
execution and delivery of this Agreement and identified as such by the Company
(the "COMPANY DISCLOSURE SCHEDULE") (it being understood that any information
set forth in a particular section or subsection of the Company Disclosure
Schedule shall be deemed to be disclosed in each other section or subsection
thereof to which the relevance of such information is reasonably apparent on its
face), (ii) as may be disclosed in any of the SEC Reports (as defined below)
filed prior to the date of this Agreement and publicly available, excluding any
disclosure in any such SEC Report set forth in any risk factor section and in
any section relating to forward-looking statements other than factual
disclosures therein that are set forth elsewhere in such SEC Report, or (iii) as
arising after the date of this Agreement from any actions taken by the Company
or any of its Subsidiaries after the date hereof at, and in accordance with, the
specific written request of Parent or Merger Sub:
Section 3.01. Organization and Qualification; Subsidiaries. The Company is
a corporation duly organized and validly existing under the laws of the State of
Washington. Section 3.01 of the Company Disclosure Schedule sets forth the
percentage of all of the issued and outstanding shares of capital stock or other
equity interests owned by the Company and its Subsidiaries in its Subsidiaries.
Each of the Company's Subsidiaries is duly organized, validly existing and in
good standing (where applicable) under the laws of the jurisdiction of its
incorporation or organization, except where the failure to be so organized,
validly existing or in good standing would not, individually or in the
aggregate, have a Material Adverse Effect (as defined below). The Company and
each of its Subsidiaries has the requisite power (corporate or otherwise) and
authority to own, operate or lease its properties and to carry on its business
as it is now being conducted, and is duly qualified or licensed to do business,
and is in good standing, in each jurisdiction in which the nature of its
business or the properties owned, operated or leased by it makes such
qualification, licensing or good standing necessary, except where the failure to
have such power or authority or to be so qualified, licensed or in good standing
would not, individually or in the aggregate, have a Material Adverse Effect. The
term "SUBSIDIARY," as used in this Agreement, means, with respect to any entity,
any corporation, partnership, limited liability company or other organization,
whether incorporated or unincorporated, which is consolidated with such entity
for financial reporting purposes. Section 3.01 of the Company Disclosure
Schedule sets forth the name, jurisdiction of incorporation and principal line
of business of each Subsidiary of the Company. The term "MATERIAL ADVERSE
EFFECT," as used in this Agreement, means any change or effect that is or could
reasonably be expected to be materially adverse to the business, assets, results
of operations or financial condition of the Company and its Subsidiaries, taken
as a whole, except for any such change or effect arising out of or relating to
(i) the announcement of the transactions contemplated by this Agreement or
actions by Parent, Merger Sub or the Company required to be taken pursuant to
this Agreement or the failure to take any actions that are prohibited by this
Agreement, (ii) changes in general economic, regulatory or political conditions
or changes affecting the economy or the securities or financial markets in
general, except to the extent that any such change or effect disproportionately
affects the Company when compared to other members of the Company's industry,
(iii) changes in laws, rules, regulations or orders of any Governmental Entity
(as defined herein) or interpretations thereof by any Governmental Entity or
changes in accounting
-8-
rules, except to the extent that any such change or effect disproportionately
affects the Company when compared to other members of the Company's industry,
(iv) changes affecting generally the industry in which the Company conducts
business, except to the extent that any such change or effect disproportionately
affects the Company when compared to other members of the Company's industry,
(v) a material worsening of current conditions caused by an act of terrorism or
war (whether declared or not declared) occurring after the date of this
Agreement or any natural disasters or any national or international calamity
affecting the United States or (vi) any change in the market price or trading
volume of the Company's securities, including as a result of the failure of the
Company to meet analysts' expectations, provided that the exception in this
clause (vi) shall not prevent or otherwise affect a determination that any cause
underlying such change has resulted in or contributed to the occurrence of a
Material Adverse Effect as defined without reference to this clause (vi).
Section 3.02. Articles of Incorporation and By-Laws. The Company has
heretofore made available to Parent and Merger Sub an accurate and complete copy
of the articles of incorporation or certificate of formation and the by-laws or
operating agreement, or other similar organizational documents, each as amended
to the date hereof, of the Company and each Subsidiary of the Company. Such
articles of incorporation or certificate of formation and by-laws or operating
agreement or such other organizational documents are in full force and effect.
The Company is not in violation of, and none of its Subsidiaries is in violation
in any material respect of, any provision of its articles of incorporation or
certificate of formation or by-laws or operating agreement, or other similar
organizational document.
Section 3.03. Capitalization. Section 3.03 of the Company Disclosure
Schedule sets forth (i) as of the close of business on June 18, 2007 (the
"MEASUREMENT DATE"), the number of authorized and outstanding Shares and the
number of authorized and outstanding shares of preferred stock ("PREFERRED
STOCK") of the Company, (ii) as of the Measurement Date, the number of Shares
for which the Company Options are exercisable and the related exercise prices,
(iii) the number of Shares reserved for issuance pursuant to the Option Plans,
(iv) as of the Measurement Date, the number of outstanding Company Stock-Based
Awards in the form of restricted stock units which have not yet been replaced by
issued Shares, (v) the number of Shares originally made subject to the 1995
Stock Plan, (vi) the number of Shares that, as of the Measurement Date, had been
issued pursuant to the 1995 Stock Plan and (vii) the number of Shares that, as
of the date of this Agreement, remain issuable pursuant to the 1995 Stock Plan.
The Company's procedures with respect to the granting of all Company Options
provided for the specification of an exercise price that is no less than the
market price for the Shares on the date of the grant. The Company complied in
all material respects with such procedures with respect to the granting of the
Company Options. The Founder is the record and, to the knowledge of the Company,
the beneficial owner, as beneficial ownership is defined in the Exchange Act (as
defined below), of 44,426,400 of the outstanding Shares. There are no bonds,
debentures, notes or other indebtedness having general voting rights (or
convertible into, or exchangeable for, securities having such rights) ("VOTING
DEBT") of the Company or any of its Subsidiaries issued and outstanding. Except
for the Company Options, the Company Stock-Based Awards, and options,
subscriptions or other rights issued and outstanding which are held by the
Company or any Subsidiary in any other Subsidiary and except as set forth in
Section 3.03 of the Company
-9-
Disclosure Schedule, there are no existing options, warrants, calls,
subscriptions or other rights, agreements, arrangements or commitments of any
character, relating to the issued or unissued capital stock of the Company or
any of its Subsidiaries, obligating the Company or any of its Subsidiaries to
issue, transfer or sell or cause to be issued, transferred or sold any shares of
capital stock or Voting Debt of, or other equity interest in, the Company or any
of its Subsidiaries or securities convertible into or exchangeable for such
shares or equity interests, nor are there any obligations of the Company or any
of its Subsidiaries to grant, extend or enter into any such option, warrant,
call, subscription or other right, agreement, arrangement or commitment. There
are no outstanding contractual obligations of the Company or any of its
Subsidiaries to any third-party to repurchase, redeem or otherwise acquire any
Shares or other capital stock of the Company or any of its Subsidiaries. Except
for the Founder Voting Agreement, to the knowledge of the Company, as of the
date of this Agreement, there are no voting agreements with respect to the
Shares which affect or relate to the voting of, or the execution of written
consents with respect to, or the solicitation of proxies relating to the voting
of, any security of the Company or any of its Subsidiaries. Each of the
outstanding shares of capital stock of each of the Company's Subsidiaries is
validly issued, fully paid and nonassessable, and such shares of the Company's
Subsidiaries are owned, beneficially and of record, by the Company or by a
Subsidiary of the Company, in each case, free and clear of any Lien, other than
Liens imposed by or arising under applicable law. There are no outstanding
contractual obligations of the Company or any of its Subsidiaries to make an
investment (in the form of a loan, capital contribution or otherwise) in any
entity other than a Subsidiary.
Section 3.04. Authority Relative to this Agreement. Except for the Required
Shareholder Approval (as defined in Section 6.01(a)), the Company has all
necessary corporate power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly and validly authorized, approved and declared
advisable by the Board and no other corporate proceedings on the part of the
Company are necessary to authorize or approve this Agreement (other than, with
respect to the Merger, the adoption of this Agreement by holders of two-thirds
of the outstanding Shares and the filing of the Articles of Merger as required
by the WBCA). This Agreement has been duly and validly executed and delivered by
the Company and, assuming the due and valid authorization, execution and
delivery of this Agreement by Parent and Merger Sub, constitutes a legally valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except that such enforceability may be limited by (i)
bankruptcy, insolvency, moratorium or other similar laws affecting or relating
to the enforcement of creditors' rights generally, (ii) general principles of
equity and (iii) the remedies of specific performance and injunctive relief and
other forms of equitable relief being subject to the discretion of the
Governmental Entity (as defined below) before which any enforcement proceeding
therefor may be brought. The Board, at a meeting duly called and held on June
20, 2007, prior to the execution and delivery of this Agreement, by adopting
resolutions that, as of the time of execution and delivery of this Agreement,
are in full force and effect and have not been in any way modified or rescinded,
has duly taken all actions necessary under the WBCA and the Company's articles
of incorporation to (a) approve and adopt this Agreement and the transactions
contemplated hereby
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(including the Merger), (b) determine that this Agreement and the transactions
contemplated hereby (including the Merger) are advisable and fair to and in the
best interests of the Company and its shareholders, (c) direct that this
Agreement be submitted to the Company shareholders for adoption, (d) resolve to
recommend that the shareholders of the Company approve this Agreement and the
transactions contemplated hereby and (e) approve the Founder Voting Agreement.
As a result of the foregoing actions, the only vote required to authorize and
approve the Merger is the affirmative vote of the holders of two-thirds of the
Shares.
Section 3.05. No Conflict; Required Filings and Consents.
(a) Assuming (i) compliance with any requirements of the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and any requirements of any foreign, supranational or other antitrust or
similar laws, (ii) compliance with the requirements of the Securities Exchange
Act of 1934, as amended, and the rules and regulations promulgated thereunder
(the "EXCHANGE ACT") and any applicable state securities or "blue sky" laws are
met, (iii) the filing of the Articles of Merger and other appropriate
instruments, if any, as required by the WBCA, is made, (iv) compliance with any
applicable requirements of the 1988 Exon-Xxxxxx provision of the Defense
Production Act of 1950, as amended, (v) the filing of the Proxy Statement (as
defined in Section 5.08 below) and receipt of the Required Shareholder Approval,
(vi) compliance with any requirements of The New York Stock Exchange (the
"NYSE") and (vii) the Consents referred to in Section 3.05(b) of the Company
Disclosure Schedule are obtained or made, none of the execution and delivery of
this Agreement by the Company, the performance or consummation by the Company of
the transactions contemplated hereby or compliance by the Company with any of
the provisions hereof will (w) conflict with or violate the articles of
incorporation or by-laws of the Company or the comparable organizational
documents of any of its Subsidiaries, (x) conflict with or violate any law,
statute, ordinance, rule, regulation, order, judgment, decree, injunction or
other binding action or requirement of any Governmental Entity (as defined in
Section 3.05(b) below) applicable to the Company or any of its Subsidiaries, or
by which any of them or any of their respective properties or assets may be
bound or affected, (y) other than the accelerated vesting of Company Options,
Company Stock-Based Awards and Restricted Shares, result in a breach or
violation of, a default under (or an event which with notice or lapse of time or
both would become a default), or the triggering of any payment or other
obligations to any of the Company's or any of its Subsidiaries' present or
former employees pursuant to, any of the Company's or any of its Subsidiaries'
existing Employee Benefit Arrangements (as defined in Section 5.01(f) below) or
any grant or award made under any of the foregoing, or (z) result in a violation
or breach of or constitute a default (or an event which with notice or lapse of
time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in any loss
of any benefit under, or the creation of any Lien on any of the property or
assets of the Company or any of its Subsidiaries pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which the Company or any of its Subsidiaries
is a party or by which the Company or any of its Subsidiaries or any of their
respective assets or properties may be bound or affected, except, with respect
to clauses (x), (y) and (z), as would not, individually or in the aggregate,
have a Material Adverse Effect or prevent the consummation of the Merger.
-11-
(b) None of the execution and delivery of this Agreement by the
Company, the performance or consummation by the Company of the transactions
contemplated hereby or compliance by the Company with any of the provisions
hereof will require any consent, waiver, approval, authorization, order, decree,
license, or permit of, or registration or filing with or notification to (any of
the foregoing being a "CONSENT"), any government or subdivision thereof,
domestic, foreign or supranational, or any administrative, governmental or
regulatory authority, agency, commission, tribunal or body, domestic, foreign or
supranational (a "GOVERNMENTAL ENTITY") or any third party, except for (i)
compliance with any applicable requirements of the Exchange Act, (ii) the filing
of the Articles of Merger pursuant to the WBCA, (iii) compliance with any
requirements of the HSR Act and any requirements of any foreign, supranational
or other antitrust or similar laws, (iv) compliance with the requirements of the
NYSE, (v) compliance with any applicable requirements of the 1988 Exon-Xxxxxx
provision of the Defense Production Act of 1950, as amended, (vi) the Consents
referred to in Section 3.05(b) of the Company Disclosure Schedule and (vii)
Consents the failure of which to obtain or make would not, individually or in
the aggregate, have a Material Adverse Effect.
(c) The Board has taken all actions necessary for the Company to take
in order to ensure that the restrictions applicable to business combinations
contained in Chapter 23B.19 of the WBCA are, and will be, inapplicable to the
execution, delivery and performance of this Agreement (such actions by the
Board, the "NECESSARY 23B.19 ACTIONS"), including but not limited to ensuring
that the Board approve the significant business transaction before an acquiring
person's share acquisition time. No other state takeover statute or similar
legal requirement applies or purports to apply to the Company with respect to
the Agreement or the agreements contemplated herein. No representation is made
by the Company with respect to the application of Chapter 23B.19 of the WBCA or
any similar statute as a result of actions by Parent or its affiliates taken
prior to the time that the Board took the Necessary 23B.19 Actions; provided,
however, that, to the Company's knowledge, Chapter 23B.19 of the WBCA will not
apply to Parent or its affiliates.
Section 3.06. Compliance with Agreements. Except as disclosed in the SEC
Reports (as defined in Section 3.07(a)) filed and publicly available prior to
the date of this Agreement, neither the Company nor any of its Subsidiaries is
in conflict with, or in default or violation of, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Company or any of its Subsidiaries is a
party or by which the Company or any of its Subsidiaries, or any property or
asset of the Company or any of its Subsidiaries is bound or affected, including,
without limitation, any Contract (as defined in Section 3.21 below), except for
such conflicts, defaults and violations which would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
-12-
Section 3.07. SEC Reports and Financial Statements.
(a) The Company has filed with the United States Securities and
Exchange Commission (the "SEC") all forms, reports, schedules, registration
statements, definitive proxy statements and other documents required to be filed
by the Company with the SEC since March 31, 2006 (as they have been amended
since the time of their filing and including any current report on Form 8-K that
has been filed with or furnished to the SEC and any documents filed, furnished
or incorporated by reference as exhibits to any such filing, collectively, the
"SEC REPORTS"). As of their respective dates, except as and to the extent
modified or superseded in any subsequent SEC Report that is filed prior to the
Effective Time, each SEC Report, including, without limitation, any financial
statements or schedules included or incorporated by reference therein, in the
case of SEC Reports filed on or prior to the date of this Agreement, complied,
and in the case of SEC Reports filed after the date of this Agreement and prior
to the Effective Time, will have complied, in all material respects with the
requirements of the Exchange Act or the Securities Act, and the rules and
regulations of the SEC promulgated thereunder, that were or are applicable to
such SEC Report, and none of the SEC Reports contained, or will contain, when
filed any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances under which they were made, not
misleading. Since March 31, 2006, no Subsidiary of the Company is or has been
required to file any form, report or other document with the SEC.
(b) The consolidated balance sheets as of December 31, 2006 and 2005,
and the related consolidated statements of income, shareholders' equity and cash
flows for each of the three fiscal years in the period ended December 31, 2006
(including the related notes and schedules thereto) of the Company contained in
the Company's annual report on Form 10-K for the fiscal year ended December 31,
2006 included in the SEC Reports present fairly, in all material respects, the
consolidated financial position and the consolidated results of operations and
cash flows of the Company and its consolidated Subsidiaries as of the dates or
for the periods presented therein in accordance with United States generally
accepted accounting principles ("GAAP") applied on a consistent basis during the
periods involved except as otherwise noted therein.
(c) Except as reflected, reserved against or otherwise disclosed in
the financial statements dated as of December 31, 2006 (including the related
notes and schedules thereto) of the Company included in the SEC Reports filed
and publicly available prior to the date of this Agreement, or disclosed in the
Company Disclosure Schedule, neither the Company nor any of its Subsidiaries has
any liabilities or obligations (absolute, accrued, fixed, contingent or
otherwise) required to be set forth in a consolidated balance sheet of the
Company and its Subsidiaries under GAAP, other than (i) liabilities incurred in
the ordinary course of business, (ii) liabilities or obligations that the
Company is expressly permitted to incur pursuant to Section 5.01 or that are
incurred pursuant to, and in accordance with the terms of, Contracts listed in
Section 3.21(b) of the Company Disclosure Schedule (as in effect on the date
hereof, without amendment or modification), (iii) liabilities for fees and
expenses actually incurred by the Company in connection with the transactions
contemplated by this Agreement or (iv) which would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
-13-
(d) The unaudited consolidated balance sheet as of March 31, 2007 and
the related unaudited consolidated statement of income, shareholders' equity and
cash flows of the Company for the fiscal quarter ended March 31, 2007 (including
the related notes and schedules thereto) of the Company contained in the
Company's quarterly report on Form 10-Q for the fiscal quarter ended March 31,
2007 present fairly, in all material respects, the consolidated financial
position and the consolidated results of operations and cash flows of the
Company and its consolidated Subsidiaries as of the date or for the period
presented therein in accordance with GAAP applied on a consistent basis during
the period involved, except as otherwise noted therein, subject to the absence
of footnotes and to year-end audit adjustments, none of which adjustments would
be material.
(e) The Company has heretofore furnished to Parent an accurate and
complete copy of all material agreements, documents or other instruments
required to be, but which have not yet been, filed with the SEC and any
amendments or modifications which have not yet been filed with the SEC to
agreements, documents or other instruments which previously had been filed by
the Company with the SEC pursuant to the Securities Act and the rules and
regulations promulgated thereunder or the Exchange Act and the rules and
regulations promulgated thereunder.
Section 3.08. Off-Balance Sheet Arrangements. Section 3.08 of the Company
Disclosure Schedule describes, and the Company has made available to Parent
accurate and complete copies of the documentation creating or governing, all
securitization transactions and other "off-balance sheet arrangements" (as
defined in Item 303(c) of Regulation S-K under the Securities Act) to which the
Company or any of its Subsidiaries is a party and has any continuing liability
and which would be required to be disclosed pursuant to the Exchange Act in an
annual or quarterly report required to be filed with the SEC.
Section 3.09. Information.
None of the information supplied by the Company specifically for inclusion
or incorporation by reference in (i) the Proxy Statement (as defined in Section
5.08 below) or (ii) any other document filed or to be filed with the SEC in
connection with the transactions contemplated by this Agreement (the "OTHER
FILINGS") will, at the respective times filed with the SEC and, in addition, in
the case of the Proxy Statement, at the date it or any amendment or supplement
is mailed to shareholders of the Company, and at the time of the Special Meeting
(as defined in Section 5.09 below), contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading, provided that no
representation is made by the Company with respect to information furnished by
Parent or Merger Sub specifically for inclusion therein. The Proxy Statement and
the Other Filings made by the Company will, at the respective times filed with
the SEC and mailed to the shareholders, comply in all material respects with the
provisions of the Exchange Act and the rules and regulations thereunder, if
applicable, except that no representation is made by the Company with respect to
statements made therein based on information supplied by Parent or Merger Sub in
writing specifically for inclusion in the Proxy Statement.
-14-
Section 3.10. Litigation. There is no legal action, suit, claim or legal,
administrative or other proceeding or, to the knowledge of the Company,
investigation that is pending or, to the knowledge of the Company, threatened
against the Company or any of its Subsidiaries that would, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect or
prevent or materially delay the consummation of the Merger, nor is there any
judgment, decree, injunction or order of any Governmental Entity or arbitrator
outstanding against the Company or any of its Subsidiaries that would,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect or prevent the consummation of the Merger.
Section 3.11. Compliance with Applicable Laws. The Company and its
Subsidiaries hold all permits, licenses, registrations, variances, exemptions,
orders and approvals of all Governmental Entities required in connection with
the ownership or occupancy of their respective properties and assets and the
operation of their respective businesses, including, without limitation, all
necessary permits for export transactions and registrations with Governmental
Entities as required under applicable export control laws, except for such
permits, licenses, variances, exemptions, orders and approvals the failure of
which to hold would not, individually or in the aggregate, have a Material
Adverse Effect. Except as referred to in the SEC Reports filed and publicly
available prior to the date hereof, the Company and its Subsidiaries are not in
violation of any law, rule, regulation or order of any Governmental Entity or
arbitrator applicable to the Company or its Subsidiaries or by which any
property or asset of the Company or any of its Subsidiaries is bound or
affected, including, without limitation, the Xxxxxxxx-Xxxxx Act of 2002 (the
"XXXXXXXX-XXXXX ACT"), the Foreign Corrupt Practices Act, all applicable United
States export control laws and regulations, and all applicable trade sanctions
and embargoes (except that no representation or warranty is made in this Section
3.11 with respect to Environmental Laws or Taxes, which are exclusively the
subject of Section 3.15 and Section 3.16, respectively, or the matters
specifically covered by Section 3.13), except for violations or possible
violations that would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
Section 3.12. Internal Controls.
(a) The Company has established and maintains internal controls over
financial reporting and disclosure controls and procedures (as such terms are
defined in Rule 13a-15 and Rule 15d-15 under the Exchange Act). Such disclosure
controls and procedures are reasonably designed to ensure that material
information relating to the Company, including its consolidated Subsidiaries,
required to be disclosed by the Company in the reports that it files or submits
under the Exchange Act is accumulated and communicated to the Company's senior
management, including its chief executive officer and chief financial officer,
as appropriate to allow timely decisions regarding required disclosure and to
make the certifications required pursuant to Sections 302 and 906 of the
Xxxxxxxx-Xxxxx Act. Such internal controls over financial reporting are
sufficient to provide reasonable assurance that (i) transactions are executed in
accordance with management's authorization, (ii) transactions are recorded as
necessary to permit preparation of financial statements in conformity with GAAP
and to maintain accountability for assets and liabilities, (iii) access to
assets or incurrence of liability is permitted only in accordance with
management's authorization and (iv) the recorded accountability for assets and
liabilities is compared with the existing assets and liabilities at reasonable
intervals and appropriate action is taken with respect to any differences.
-15-
(b) The Company's management has disclosed, based on its most recent
evaluation of internal controls over financial reporting prior to the date of
this Agreement, to the Company's auditors and the audit committee of the board
of directors of the Company (i) any significant deficiencies and material
weaknesses in the design or operation of internal controls over financial
reporting that are reasonably likely to adversely affect in any material respect
the Company's ability to record, process, summarize and report financial
information or (ii) any fraud, whether or not material, that involves management
or other employees who have a significant role in the Company's internal
controls. Neither the Company nor any of its Subsidiaries has received or
otherwise had or obtained knowledge of any material complaint, allegation,
assertion or claim, whether written or oral, regarding the accounting or
auditing practices, procedures, methodologies or methods of the Company or any
of its Subsidiaries or their respective internal accounting controls, including
any material complaint, allegation, assertion or claim that the Company or any
of its Subsidiaries has engaged in questionable accounting or auditing
practices.
(c) The chief executive officer and chief financial officer of the
Company have made all certifications required by the Xxxxxxxx-Xxxxx Act, the
Exchange Act and any related rules and regulations promulgated by the SEC with
respect to the Company SEC Documents, and, as of the date of such
certifications, the statements contained in such certifications were complete
and correct. The management of the Company has completed its assessment of the
effectiveness of the Company's internal controls over financial reporting in
compliance with the requirements of Section 404 of the Xxxxxxxx-Xxxxx Act for
the year ended December 31, 2006, and such assessment concluded that such
controls were effective in all material respects, and the Company's independent
registered public accountant has issued (and not subsequently withdrawn or
qualified) an attestation report concluding that the Company maintained
effective internal control over financial reporting as of December 31, 2006.
Section 3.13. Employee Benefit Plans and Arrangements.
(a) "PLANS" means all severance, pension, benefit, deferred
compensation, incentive compensation, stock option, bonus, welfare benefit and
other employee benefit plans, programs and policies that provide benefits (other
than benefits that do not, for any plan, exceed $100,000 in the aggregate) to
any present or former director, officer or employee of the Company or any of its
Subsidiaries, or any beneficiary or dependent of any such person (whether or not
written), sponsored or maintained by the Company or any of its Subsidiaries to
which the Company or any of its Subsidiaries contributes or is obligated to
contribute. Without limiting the generality of the foregoing, the term "Plans"
includes all employee welfare benefit plans within the meaning of Section 3(1)
of the Employee Retirement Income Security Act of 1974, as amended, and the
regulations thereunder ("ERISA") and all employee pension benefit plans within
the meaning of Section 3(2) of ERISA. An "ERISA AFFILIATE" means, with respect
to the Company, any corporation, person or trade or business
-16-
which is a member of the group which is under common control with the Company,
and which together with the Company is treated as a single employer within the
meaning of Section 414(b), (c), (m) or (o) of the Code. "CONTROLLED GROUP
LIABILITY" means any and all liabilities (i) under Title IV of ERISA, (ii) under
Section 302 of ERISA, (iii) under Sections 412 and 4971 of the Code, (iv)
arising as a result of a failure to comply with the continuation coverage
requirements of Section 601 et seq. of ERISA and Section 4980B of the Code, and
(v) under corresponding or similar provisions of foreign laws or regulations.
"U.S. PLAN" means any Plan that covers any present or former director, officer
or employee located in the United States. "FOREIGN PLAN" means any Plan that is
subject to the laws of any jurisdiction outside the United States.
(b) Section 3.13(b) of the Company Disclosure Schedule includes a
complete list of all U.S. Plans. With respect to each written U.S. Plan, other
than a U.S. Subsidiary Plan (as defined below), the Company has made available
to Parent a true, correct and complete copy of: (i) all plan documents and trust
agreements; (ii) the most recent Annual Report (Form 5500 Series) and
accompanying schedule, if any; (iii) the current summary plan description, if
any; (iv) the most recent annual financial report, if any; (v) the most recent
actuarial report, if any; and (vi) if the Plan is intended to be a "qualified
plan" within the meaning of Section 401(a) of the Code (a "QUALIFIED PLAN"), the
most recent determination letter from the Internal Revenue Service (the "IRS").
With respect to each written U.S. Plan maintained by any Subsidiary (a "U.S.
SUBSIDIARY PLAN"), the Company has made available to Parent a true, correct and
complete copy of all Plan documents. With respect to each material unwritten
U.S. Plan, the Company has made available to Parent a summary in reasonable
detail of such U.S. Plan.
(c) Except as set forth in Section 3.13(c) of the Company Disclosure
Schedule, each Plan currently complies in all material respects, and has
materially complied in the past, both in form and operation, with its terms and
with all applicable provisions of all laws and regulations applicable to it,
including, in the case of the U.S. Plans, with the applicable provisions of
ERISA and the Code. With respect to each Qualified Plan, the IRS has issued a
favorable determination letter evidencing the U.S. Plan's compliance with the
GUST amendment or an application for a favorable determination letter has been
or will be filed with the IRS within the applicable remedial amendment period
under Code Section 401(b) and nothing has occurred or, to the knowledge of the
Company, is expected to occur that would adversely affect the qualified status
of such U.S. Plan or any related trust. Notwithstanding the foregoing, to the
Company's knowledge, all reports, notices and other disclosure relating to any
Plan required to be filed with, or furnished to, governmental entities, Plan
participants or Plan beneficiaries have been timely filed and furnished in
accordance with applicable law, including, but not limited to, notices required
to be furnished to employees under the Consolidated Omnibus Budget
Reconciliation Act of 1985 upon the occurrence of a "qualifying event," as
defined in Section 4980B of the Code.
(d) With respect to each U.S. Plan and, to the Company's knowledge,
each Foreign Plan, all contributions required to be made to such Plan by
applicable law or regulation or by any applicable Plan document, and all
premiums due or payable with respect to insurance
-17-
policies funding any such Plan, have been timely made or paid in full or, to the
extent not required to be made or paid on or before the date hereof, have been
fully reflected in the financial statements of the Company included in the SEC
Reports to the extent required under GAAP. There does not now exist nor, to the
knowledge of the Company, do any circumstances exist that would result in, any
Controlled Group Liability that would be a material liability of the Company or
its Subsidiaries, taken as a whole (other than routine claims for benefits),
following the Closing.
(e) As of the date hereof, (i) each U.S. Plan that is subject to
Section 302 of ERISA and Section 412 of the Code meets the minimum funding
standards of Section 302 of ERISA and Section 412 of the Code (without regard to
any funding waiver); and (ii) neither the Company nor any of its ERISA
Affiliates is required to provide security to such U.S. Plan pursuant to Section
307 of ERISA or Section 501(a)(29) of the Code; and since its last valuation
date, there have been no amendments to such U.S. Plan that materially increase
the present value of accrued benefits.
(f) No U.S. Plan is a multiemployer plan, as defined in Section 3(37)
of ERISA. With respect to each U.S. Plan and, to the Company's knowledge, each
Foreign Plan, no claims are pending against any such Plan, or the Company or any
of its Subsidiaries with respect to such Plan, except in respect of benefit
payments in the normal course of business, and, to the Company's knowledge, no
employee, beneficiary, dependent, or governmental agency has threatened any
appeal or litigation regarding any matter with respect to the Plans. Except as
set forth in Section 3.13(f) of the Company Disclosure Schedule, no U.S. Plan
provides benefits, including without limitation death or medical benefits
(whether or not insured), with respect to current or former employees (or their
beneficiaries or dependents) of the Company or its Subsidiaries after retirement
or other termination of service (other than (i) as required by Section 601 et
seq. of ERISA, (ii) death benefits or retirement benefits under any Qualified
Plan or (iii) deferred compensation benefits accrued as liabilities on the books
of the Company or any of its Subsidiaries).
(g) No prohibited transaction has occurred with respect to any U.S.
Plan that is not exempt under Section 4975 of the Code and Section 406 of ERISA,
and neither the Company nor any of its Subsidiaries has engaged in any
transaction with respect to any U.S. Plan that could subject it to either a
material civil penalty assessed pursuant to Section 409, 502(i) or 502(l) of
ERISA or a material tax imposed pursuant to Section 4975 or 4976 of the Code.
(h) Except as set forth in Section 3.13(h) of the Company Disclosure
Schedule, no U.S. Plan has any interest in any annuity contract or other
investment or insurance contract issued by an insurance company that is the
subject of bankruptcy, conservatorship, rehabilitation or similar proceeding.
(i) None of the persons performing services for the Company or its
Subsidiaries has been improperly classified as an independent contractor or, in
the case of employees, as being exempt from the payment of wages for overtime,
except for such improper classifications that would not, individually or in the
aggregate, reasonably be expected to have created or to create
-18-
after the date of this Agreement any liability of the Company or any Subsidiary
that exceeds or would exceed, together with any liability referred to in the
last sentence of Section 3.20, $5,000,000 in the aggregate.
(j) With respect to each Foreign Plan: (i) if intended to be funded or
book-reserved, the fair market value of the assets of each funded Foreign Plan,
the liability of each insurer for any Foreign Plan funded through insurance, or
the reserve shown on the financial statements of the Company for any unfunded
Foreign Plan, together with any accrued contributions, is sufficient to procure
or provide for the projected benefit obligations, as of the Effective Time, with
respect to all current and former participants in such plan based on reasonable,
country-specific actuarial assumptions and valuations, and no transaction
contemplated by this Agreement shall cause such assets or insurance obligations
or book reserve to be less than such projected benefit obligations; (ii) each
Foreign Plan is in material compliance with all registration requirements and
has been maintained in good standing with the appropriate regulatory
authorities; and (iii) each Foreign Plan intended to qualify for special tax
treatment is in material compliance with all requirements for such treatment. To
the knowledge of the Company, with respect to employees outside the United
States, none of the Company or any Subsidiary has made any ex-gratia or
voluntary payment to any such employee by way of superannuation, pension
allowance or otherwise.
(k) Each of the Company's "nonqualified deferred compensation plans"
within the meaning of Code Section 409A (and associated Treasury Department
guidance) has been operated in good faith compliance (as determined in
accordance with applicable Treasury Department guidance) with Code Section 409A
(l) Except as set forth in Section 3.13(l) of the Company Disclosure
Schedule: (i) there is no contract, agreement, plan or arrangement covering any
employee, former employee, independent contractor or former independent
contractor of the Company or any of its Subsidiaries that, individually or
collectively could give rise to (or already has resulted in) a payment by the
Company (or the provision by the Company of any other benefit such as
accelerated vesting) that would not be deductible by reason of Code Section 280G
or subject to an excise tax under Code Section 4999; (ii) neither the Company
nor any of its Subsidiaries has any indemnity obligation for any excise Taxes
imposed under Code Section 4999; and (iii) neither the Company nor any of its
Subsidiaries has made any payments (or is required to make any payments pursuant
to the terms of an existing contract) that are not deductible under Code Section
162(m).
Section 3.14. Intellectual Property. "INTELLECTUAL PROPERTY" shall mean all
intellectual property, including (a) patents and applications therefor,
including all continuations, divisionals, continuations-in-part, provisionals,
reissues, reexaminations, substitutions and extensions thereof, (b) trademarks,
service marks, trade names, trade dress, logos, corporate names and other source
or business identifiers, together with the goodwill symbolized by any of the
foregoing, and all applications, registrations, renewals and extensions thereof,
(c) all Internet domain names, (d) copyrights, and all registrations,
applications, renewals, extensions and reversions thereof, (e) trade secret
rights in information, including trade secret rights in any
-19-
formula, pattern, compilation, program, device, method, technique, or process,
that (i) derives independent economic value, actual or potential, from not being
generally known to, and not being readily ascertainable by proper means by,
other persons who can obtain economic value from its disclosure or use, and (ii)
is the subject of efforts that are reasonable under the circumstances to
maintain its secrecy and (f) all other intellectual property or proprietary
rights in discoveries, know-how, inventions, processes and techniques, and other
proprietary or confidential information.
(a) Section 3.14(a) of the Company Disclosure Schedule sets forth an
accurate and complete list as of the date of this Agreement of all issued
patents and pending patent applications, registered trademarks, pending
trademark applications for registration of trademarks, service xxxx
registrations and service xxxx applications, registered copyrights, and pending
applications for registration of copyrights owned by the Company or any of its
Subsidiaries ("REGISTERED INTELLECTUAL PROPERTY"). Section 3.14(a) of the
Company Disclosure Schedule lists (i) the jurisdictions in which each such item
of Registered Intellectual Property has been issued or registered or in which
any such application for issuance or registration has been filed, (ii) the
registration or application date, as applicable, for each such item of
Registered Intellectual Property and (iii) the registration or application
number, as applicable, for each such item of Registered Intellectual Property.
(b) The Company or any of its Subsidiaries is (i) the sole and
exclusive owner of all right, title and interest in and to all of the Registered
Intellectual Property listed or required to be listed in Section 3.14(b) of the
Company Disclosure Schedule free and clear of all Liens and (ii) licensed or
otherwise has a valid right to use all material Intellectual Property used in or
necessary for the conduct of its business as currently conducted.
(c) To the knowledge of the Company, the conduct of the business of
the Company and its Subsidiaries as currently conducted does not infringe,
constitute an unauthorized use or misappropriation of, or violate any
Intellectual Property or privacy or publicity right of any person, in each of
the foregoing cases, in any material respect.
(d) Except as set forth in Section 3.14(d) of the Company Disclosure
Schedule, to the knowledge of the Company, no person is infringing, violating,
or misappropriating any Company-owned Intellectual Property, in each of the
foregoing cases, in any material respect, and no written claims or, to the
knowledge of the Company, unwritten claims alleging such infringement, violation
or misappropriation have been made since January 1, 2005 against any person by
the Company or any of its Subsidiaries.
(e) The Company and the Subsidiaries have taken commercially
reasonable measures to protect the confidentiality of all material trade secrets
and any other material confidential information of the Company and its
Subsidiaries (and any material confidential information owned by a third person
to whom the Company or any of its Subsidiaries has a confidentiality
obligation).
(f) Except as set forth in Section 3.14(f) of the Company Disclosure
Schedule, as of the date hereof neither the Company nor any of its Subsidiaries
is the subject of any pending
-20-
legal proceeding that (i) alleges a claim of infringement, misappropriation,
dilution or violation by the Company or any of its Subsidiaries of any
Intellectual Property rights of a third person or alleges a violation of any
right of privacy or publicity of any person by the Company or any of its
Subsidiaries, and no such written claim has been asserted (or, to the knowledge
of the Company, threatened in writing) against the Company or its Subsidiaries
at any time during the twelve (12) month period immediately prior to the date
hereof, or (ii) challenges the ownership or validity of any material
Company-owned Intellectual Property.
(g) As of the date hereof, all necessary registration, maintenance,
renewal and other relevant filing fees in connection with any of the Registered
Intellectual Property have been timely paid, and all necessary documents,
certificates and other relevant filings in connection with such Registered
Intellectual Property have been timely filed with the relevant Governmental
Entities and Internet domain name registrars in the United States or foreign
jurisdictions, as the case may be, to the extent required to be paid or filed
prior to the date hereof, for the purpose of maintaining the issuances,
registrations or applications for such Registered Intellectual Property except
where the Company has, in its reasonable business judgment, decided to abandon
or cancel such Registered Intellectual Property, or except as could not
reasonably be expected to have a Material Adverse Effect.
(h) The consummation of the transactions contemplated hereby will not,
pursuant to any contract to which the Company or any of its Subsidiaries is a
party, result in the loss or impairment of the Surviving Corporation's right to
own or use any Company-owned Intellectual Property, except as would not have a
Material Adverse Effect.
Section 3.15. Environmental Matters. Except for matters that would not,
individually or in the aggregate, have a Material Adverse Effect: (i) there has
been no Release of Hazardous Substances by the Company or any of its
Subsidiaries that remains outstanding on any real property currently or, to the
knowledge of the Company, formerly owned, leased or operated by the Company or
any of its Subsidiaries requiring notice or remedial action by the Company or
any of its Subsidiaries under applicable Environmental Law and no real property
currently or, to the knowledge of the Company, formerly owned, leased or
operated by the Company or any Subsidiary thereof is contaminated with any
Hazardous Substances requiring notice or remedial action by the Company or any
of its Subsidiaries under Environmental Law; (ii) no judicial or administrative
proceeding, order, judgment, decree, settlement or, to the knowledge of the
Company, investigation is pending or, to the knowledge of the Company,
threatened against the Company or its Subsidiaries alleging violations of
Environmental Laws; (iii) the Company and its Subsidiaries have not received in
writing any claims, notices or correspondence that remains outstanding alleging
liability of the Company or any Subsidiary under any Environmental Law for
Releases or threatened Releases of Hazardous Substances on real property
currently or formerly owned, leased or operated by the Company or any of its
Subsidiaries, or liability for any off-site disposal of Hazardous Substances or
contamination by the Company or any Subsidiary; and (iv) the business and
operations of the Company and its Subsidiaries comply in all material respects
with applicable Environmental Laws and the Company and its Subsidiaries have
obtained all material permits, authorizations and licenses relating to
Environmental Laws necessary for the operation of their businesses; all such
permits, authorizations and licenses are
-21-
in full force and effect and the Company and its Subsidiaries are in compliance,
in all material respects, with the terms and conditions of such permits.
"ENVIRONMENTAL LAW" means any applicable federal, state or local law,
regulation, permit, order, decree or judicial opinion or other agency
requirement having the force and effect of law and governing Hazardous
Substances or protection of the environment or human health as it relates to the
environment. "HAZARDOUS SUBSTANCE" means any toxic or hazardous substance or
waste that is regulated under Environmental Law, including any petroleum
products, asbestos or polychlorinated biphenyls. "RELEASE" means spill,
emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal,
leaching or migration of a Hazardous Substance into the environment, including
the abandonment or discarding of barrels, containers, and other closed
receptacles containing any Hazardous Substance.
Section 3.16. Taxes.
(a) The Company and each of its Subsidiaries has complied in all
material respects with all laws relating to Taxes and has filed all material Tax
Returns required to be filed by the Company and each of its Subsidiaries in
accordance with applicable laws. All such Tax Returns are true, correct and
complete in all material respects.
(b) All material Taxes of the Company and each of its Subsidiaries due
and payable (whether or not shown as due on a Tax Return) have been paid. There
are no unpaid assessments for additional material Taxes of the Company or any of
its Subsidiaries for any period.
(c) Reserves (excluding any reserve established to reflect timing
differences between book and Tax items) have been established on the books and
records of the Company and each of its Subsidiaries (in accordance with GAAP)
for the unpaid material Taxes of the Company and each of its Subsidiaries. Since
the date of the most recent balance sheet contained in the SEC Reports, neither
the Company nor any of its Subsidiaries has incurred any material Taxes arising
from transactions occurring outside the ordinary course of business consistent
with past practices and customs.
(d) No federal, state, local or foreign audits or other administrative
proceedings, discussions or court proceedings are presently in progress or
pending with regard to any material Taxes or Tax Returns of the Company or any
of its Subsidiaries.
(e) Neither the Company nor any of its Subsidiaries has executed or
filed with any taxing authority (whether federal, state, local or foreign) any
agreement or other document extending or having the effect of extending the
period for assessment, reassessment or collection of any material Taxes, and no
power of attorney granted by the Company or any of its Subsidiaries with respect
to material Taxes is currently in force.
(f) The Company has made available to Parent copies that are true and
materially correct and complete of (i) all Tax Returns relating to material
Income Taxes of the Company and its Subsidiaries and other material Tax Returns
of the Company and its Subsidiaries for the preceding three (3) taxable years
and (ii) all material written assessments or proposed
-22-
assessments received from the IRS in the last three (3) years that have not been
previously resolved. No claim that has not been previously resolved has been
made in the last three (3) years that the Company or any of its Subsidiaries has
not properly paid Taxes or filed Tax Returns in a jurisdiction in which the
Company or any of its Subsidiaries does not file a Tax Return.
(g) Neither the Company nor any of its Subsidiaries has been a member
of any consolidated, combined or unitary group for federal, state, local or
foreign Tax purposes (other than the group for which the Company is the parent)
since January 1, 2004. Neither the Company nor any of its Subsidiaries is (or
has ever been) a party to any material tax sharing or similar arrangement for
the sharing of Tax liabilities that will remain in effect after the Closing,
other than customary property Tax obligations in respect of leased premises.
(h) There are no material Liens for Taxes on any assets of the Company
or any of its Subsidiaries, other than Liens for Taxes not yet due and payable.
(i) As of the date hereof, neither the Company nor any of its
Subsidiaries is a partner in a partnership for federal income tax purposes other
than a partnership among or between the Company and any of its Subsidiaries.
(j) With respect to national jurisdictions outside of the United
States, since January 1, 2005, the Company and each of its Subsidiaries has been
resident in its jurisdiction of incorporation for corporation tax purposes and
is not and has not been treated as resident in or belonging to, or subject to
Tax in, any other jurisdiction for any material Tax purpose.
(k) Neither the Company nor any of its Subsidiaries has been, in the
past five years, a party to a transaction reported or intended to qualify as a
reorganization under Code Section 368.
(l) Neither the Company nor any of its Subsidiaries has engaged in a
transaction that could affect the Income Tax liability for any taxable year not
closed by the applicable statute of limitations which (i) is a "reportable
transaction," as defined in the Treasury Regulations promulgated under Code
Section 6011 that were in effect at the time of such transaction, or (ii) is the
same as or substantially similar to one of the types of tax avoidance
transactions that the IRS identified by notice, regulation or other form of
published guidance as a "listed transaction," as set forth in Treasury
Regulation Section 1.6011-4(b)(2).
(m) Neither the Company nor any of its Subsidiaries is a party to a
"gain recognition agreement" under Code Section 367.
(n) The term "TAX," as used in this Agreement, means any net income,
capital gains, gross income, gross receipts, sales, use, transfer, ad valorem,
franchise, profits, license, capital, withholding, payroll, estimated,
employment, excise, goods and services, severance, stamp, occupation, premium,
property, social security, environmental (including Code Section 59A),
alternative or add-on, value added, registration, windfall profits or other tax,
charge, fee, levy, customs duties, or other similar charge imposed by a taxing
authority of the United States or
-23-
any state, local, or foreign government or agency or subdivision thereof,
including any interest, penalties, additions to tax, or additional amounts
incurred or accrued under applicable law or charged by any taxing authority.
(o) The term "TAX RETURN," as used in this Agreement, means any
return, declaration, report, claim for refund, or information return or other
statement (including any schedule or attachment thereto or amendment thereof) to
be supplied to a taxing authority or a third party in connection with Taxes.
(p) The term "INCOME TAX" means any Tax imposed on, or measured by,
net income or net worth (including any penalties or interest or other additional
amounts imposed thereon).
Section 3.17. Absence of Certain Material Adverse Changes. Since December
31, 2006, (i) there has not occurred or failed to occur any change, event or
development that, individually or in the aggregate, has had or would reasonably
be expected to have a Material Adverse Effect and (ii) the business of the
Company and its Subsidiaries has been conducted in the ordinary course of
business in all material respects. In addition, except as set forth in Section
3.17 of the Company Disclosure Schedule, no actions have been taken or have been
agreed to be taken by the Company or its Subsidiaries between January 1, 2007
and the date of this Agreement that, if taken after the date of this Agreement
without Parent's consent, would be proscribed by Xxxxxxx 0.00(x), (x), (x), (x),
(x), (x), (x), (x), (x), (x) or (r), but in the case of (r), only to the extent
as it applies to the other subsections of Section 5.01 specifically referred to
in this sentence.
Section 3.18. Affiliate Transactions.
(a) Except for the employment Contracts entered into in the ordinary
course of business since January 1, 2006, there have been no transactions,
agreements, arrangements or understandings between the Company or any of its
Subsidiaries, on the one hand, and any affiliate thereof, on the other hand,
that would be required to be disclosed under Item 404 of Regulation S-K under
the Securities Act and have not been so disclosed.
(b) Section 3.18(b) of the Company Disclosure Schedule lists all loans
to any executive officer or director of the Company or any of its Subsidiaries,
other than loans in connection with cashless exercises of stock options, tax
obligations upon vesting of restricted stock, or advancements of relocation,
travel or other business expenses, including the date of the loan, the amount of
the loan and the date of any amendment to the terms of the loan. Neither the
Company nor any of its Subsidiaries has extended or maintained credit, arranged
for the extension of credit, or renewed any extension of credit in the form of a
personal loan to or for any director or executive officer of the Company in
violation of the Xxxxxxxx-Xxxxx Act.
Section 3.19. Real Property.
(a) Except for the real property listed in Section 3.19(a) of the
Company Disclosure Schedule, neither the Company nor any of its Subsidiaries
owns any real property.
-24-
(b) Section 3.19(b) of the Company Disclosure Schedule lists all
retail space leases in the United States to which the Company or any
Subsidiary is a party as a lessee, and specifies (i) the store number, if
applicable, (ii) the location of the real property, (iii) the name of the
lessor, (iv) the remaining lease term with renewal options, if applicable,
(v) whether the lessee's obligations are guaranteed and, if so, by whom and
(vi) whether the lessee or, to the knowledge of the Company, the lessor is
currently in default pursuant to such lease.
(c) Section 3.19(c) of the Company Disclosure Schedule lists leases
for office space and distribution centers, each having an aggregate annual
net rent of $500,000 or greater, to which the Company or any Subsidiary is
a party as a lessee, and specifies (i) the location of the real property,
(ii) the name of the lessor, (iii) the remaining lease term with renewal
options, if applicable, (iv) the fixed rent for the remaining term, (v)
whether the lessee's obligations are guaranteed and, if so, by whom, (vi)
whether the transactions contemplated by this Agreement require the consent
of the lessor under such lease and (vii) whether the lessee or, to the
knowledge of the Company, the lessor is currently in default pursuant to
such lease.
(d) With respect to each lease listed in Section 3.19(b) and Section
3.19(c) of the Company Disclosure Schedule: (i) the Company or one of its
Subsidiaries is the tenant named under the lease and has a valid leasehold
interest in each parcel of leased real property that is subject to the
lease; and (ii) except as disclosed in such Section 3.19(b) or Section
3.19(c), neither the Company nor any of its Subsidiaries has assigned,
sublet or encumbered any interest in the lease and, to the knowledge of the
Company, there are no Liens thereon.
Section 3.20. Labor Matters. Except as set forth in Section 3.20 of the
Company Disclosure Schedule, no employee of the Company or of any of its
Subsidiaries is represented by any labor union, any collective bargaining
organization or any labor organization in connection with such employee's
employment with the Company or any of its Subsidiaries. Except as set forth in
Section 3.20 of the Company Disclosure Schedule, to the knowledge of the
Company, no labor organization or group of employees of the Company or any of
its Subsidiaries has made a pending demand for recognition or certification,
and, to the knowledge of the Company, there are no representation or
certification proceedings or petitions seeking a representation or certification
proceeding pending or threatened to be brought or filed, with the National Labor
Relations Board or any other labor relations tribunal or authority. Neither the
Company nor any of its Subsidiaries has experienced any actual or, to the
knowledge of the Company, threatened employee lockouts, strikes, material work
stoppages, or material slowdowns within the two-year period immediately prior to
the date of this Agreement. Section 3.20 of the Company Disclosure Schedule
lists all employment agreements or consulting agreements covering employees or
individual consultants of the Company or any of its Subsidiaries in connection
with their employment or consultancy with the Company or any of its Subsidiaries
that provide for annual salaries or annual consulting fees of more than $150,000
for any employee or consultant working in the United States or $200,000 for any
employee or consultant working outside the United States. To the Company's
knowledge, neither the Company nor any of its Subsidiaries has been subject to
any wage and hour investigation or complaint by any Governmental Entity nor is
any such investigation or complaint pending or threatened that, if adversely
determined, would reasonably be expected to result, after the date of this
Agreement, in the creation of any liability of the Company or any Subsidiary
that exceeds, individually or in the aggregate, together with any liability
referred to in Section 3.13(i), $5,000,000.
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Section 3.21. Material Contracts.
(a) As of the date of this Agreement, there does not exist any
violation or default under (nor does there exist any condition which upon
the passage of time or the giving of notice or both would cause or result
in a violation or default under) any material contract (as such term is
defined in Item 601(b)(10) of Regulation S-K under the Securities Act) to
which the Company or any of its Subsidiaries is a party or by which any of
them or any of their properties or assets is bound, except for such
violations or defaults as have been waived or which would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse
Effect.
(b) Other than those contracts that are filed as exhibits to the SEC
Reports filed and publicly available prior to the date of this Agreement
(the "FILED CONTRACTS"), Section 3.21(b) of the Company Disclosure Schedule
lists all written and oral contracts, agreements, guarantees, leases, and
executory contracts that exist as of the date hereof to which the Company
or any of its Subsidiaries is a party or by which it is bound that (i) are
required to be filed as an exhibit to an SEC Report, (ii) materially
restrict or would materially restrict the ability of the Company, Parent
(after giving effect to the consummation of the Merger) or any of their
respective Subsidiaries from competing or otherwise conducting their
respective businesses substantially as such businesses are conducted on the
date of this Agreement, or (iii) contain minimum annual requirements of the
Company or its Subsidiaries to make or become liable to make payments of
$1,000,000 or more in any 12-month period, and, with respect to (ii) and
(iii), which have a term of more than one year and cannot be cancelled on
less than 90 days' notice without a material penalty or other material
financial cost to the Company or any of its Subsidiaries (the contracts so
described and the Filed Contracts are referred to herein collectively as
the "CONTRACTS").
(c) Except as set forth in Section 3.21(c) of the Company Disclosure
Schedule and except for open purchase orders entered into in the ordinary
course of business for materials or supplies, there does not exist any
contract to which the Company or any of its Subsidiaries is a party
providing for its purchase from a third party, at a cost of $1,000,000 or
more in any twelve-month period, of products for resale by the Company or
any of its Subsidiaries at retail: (i) under which a violation or default
would be caused by the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby; or (ii) that cannot
by virtue of its terms be cancelled or terminated by the Company or any of
its Subsidiaries, without a material penalty or other material financial
cost to the Company or any of its Subsidiaries, on less than ninety (90)
days' notice to the other party to such Contract.
Section 3.22. Opinion of Financial Advisor. The Board received, at its
meeting held on June 20, 2007, the opinion, dated June 20, 2007, of Xxxxxxx,
Xxxxx & Co. that, as of such date and subject to the assumptions, qualifications
and limitations set forth in such opinion, the $29.30 in cash per Share to be
received by the holders of the Shares pursuant to this Agreement
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is fair to such holders from a financial point of view. The Company will provide
a true, complete and correct copy of such opinion to Parent solely for
informational purposes promptly after receipt thereof by the Company.
Section 3.23. Relationships with Customers and Others. Prior to the date
hereof, neither the Company nor any of its Subsidiaries has received notice that
any customer (including, without limitation, any governmental agency), retailer,
insurer, supplier, distributor or sales representative intends to cancel,
terminate or otherwise modify any Contract or agreement with the Company or any
of its Subsidiaries in any manner adverse to the Company or any of its
Subsidiaries, except as would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.
Section 3.24. Brokers. Except for the engagement of Xxxxxxx, Sachs & Co.,
whose fees will be paid by the Company, none of the Company, any of its
Subsidiaries, or any of their respective officers, directors, or employees has
employed any broker or finder or incurred any liability for any investment
banking or brokerage fees, commissions or finder's fees in connection with the
transactions contemplated by this Agreement for which the Company or any of its
Subsidiaries is responsible. The Company has heretofore delivered to Parent
accurate and complete copies of all written agreements, and summaries in
reasonable detail of all oral agreements, between the Company and any
accountants, investments bankers, financial advisors, public relations
consultants, proxy solicitation firms and other experts and non-legal advisors
entered into on or prior to the date of this Agreement pursuant to which any
such person would be entitled to any payment of any Merger Fees, including,
without limitation, the agreement with Xxxxxxx, Xxxxx & Co. "MERGER FEES" means
all fees and expenses paid or payable by or on behalf of the Company or any of
its Subsidiaries to all accountants, investment bankers, financial advisors,
public relations consultants, proxy solicitation firms and other experts and
non-legal advisors incident to the negotiation, preparation and execution of
this Agreement and the consummation of the transactions contemplated hereby.
When used in this Article III, references to the "knowledge of the Company"
shall mean to the actual knowledge of the Chairman of the Board, the Chief
Executive Officer, the Chief Financial Officer, the Chief Operating Officer, the
Vice President of Business Development, the senior officer in charge of human
resources, or any other person who is a Senior Vice President of the Company,
after reasonable inquiry.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND MERGER SUB
Parent and Merger Sub represent and warrant to the Company that:
Section 4.01. Organization and Qualification. Parent is a corporation duly
organized, validly existing and in good standing under the laws of Italy. Merger
Sub is a corporation duly organized, validly existing and in good standing under
the laws of the State of Washington. Each of Parent and Merger Sub has the
requisite corporate power and authority to own, operate
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or lease its properties and to carry on its business as it is now being
conducted, and is duly qualified or licensed as a foreign corporation to do
business, and is in good standing, in each jurisdiction in which the nature of
its business or the properties owned, operated or leased by it makes such
qualification, licensing or good standing necessary, except where the failure to
be so qualified, licensed or in good standing, would not, individually or in the
aggregate, prevent or materially impair or delay the consummation of the Merger
or the other transactions contemplated by this Agreement or Parent or Merger Sub
from satisfying their respective obligations under this Agreement.
Section 4.02. Authority Relative to this Agreement. Each of Parent and
Merger Sub has all necessary corporate power and authority to execute and
deliver this Agreement, the Founder Voting Agreement and the Founder
Non-Competition Agreement (collectively, the "TRANSACTION AGREEMENTS"), to
perform its obligations hereunder and thereunder, and to consummate the
transactions contemplated hereby and thereby. The execution, delivery and
performance of the Transaction Agreements by Parent and Merger Sub and the
consummation by Parent and Merger Sub of the transactions contemplated thereby
have been duly and validly authorized, approved and declared advisable by the
Boards of Directors of Parent and Merger Sub, and approved by Luxottica U.S.
Holdings Corp., a Delaware corporation and the sole shareholder of Merger Sub
(the "SOLE SHAREHOLDER"), and no other corporate proceedings on the part of
Parent or Merger Sub are necessary to authorize or approve the Transaction
Agreements or to consummate the transactions contemplated thereby (other than,
with respect to the Merger, the filing of the Articles of Merger or other
instruments as required by the WBCA). Each of the Transaction Agreements has
been duly and validly executed and delivered by each of Parent and Merger Sub
and, assuming the due and valid authorization, execution and delivery by the
Company, constitutes a legally valid and binding obligation of each of Parent
and Merger Sub, enforceable against each of them in accordance with its terms,
except that such enforceability may be limited by (i) bankruptcy, insolvency,
moratorium or other similar laws affecting or relating to the enforcement of
creditors' rights generally, (ii) general principles of equity and (iii) the
remedies of specific performance and injunctive relief and other forms of
equitable relief being subject to the discretion of the Governmental Entity
before which any enforcement proceeding therefor may be brought.
Section 4.03. No Conflict; Required Filings and Consents.
(a) Assuming (i) compliance with any requirements of the HSR Act and
any requirements of any foreign, supranational or other antitrust laws,
(ii) the requirements of the Exchange Act and any applicable state
securities or "blue sky" laws are met and (iii) the filing of the Articles
of Merger and other appropriate instruments, if any, as required by the
WBCA is made, none of the execution and delivery of the Transaction
Agreements by Parent or Merger Sub, the performance or consummation by
Parent or Merger Sub of the transactions contemplated thereby or compliance
by Parent or Merger Sub with any of the provisions thereof will (x)
conflict with or violate the organizational documents of Parent or Merger
Sub, (y) conflict with or violate any law, statute, ordinance, rule,
regulation, order, judgment, decree, injunction or other binding action or
requirement of any Governmental Entity applicable to Parent or Merger Sub,
or any of their Subsidiaries, or by which any of them or
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any of their respective properties or assets may be bound or affected, (z)
result in a violation or breach of or constitute a default (or an event
which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in any loss of any benefit under, or the
creation of any Lien on any of the property or assets of Parent, Merger
Sub, or any of their respective Subsidiaries pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise
or other instrument or obligation to which Parent or Merger Sub or any of
their respective Subsidiaries is a party or by which Parent, Merger Sub, or
any of their respective Subsidiaries or any of their respective assets or
properties may be bound or affected, except with respect to clauses (y) and
(z), as would not, individually or in the aggregate, prevent or materially
impair or delay the consummation of the Merger or the other transactions
contemplated by the Transaction Agreements or Parent or Merger Sub from
satisfying their respective obligations under the Transaction Agreements.
(b) None of the execution and delivery of the Transaction Agreements
by Parent and Merger Sub, the performance or consummation by Parent and
Merger Sub of the transactions contemplated thereby or compliance by Parent
and Merger Sub with any of the provisions hereof will require Parent or
Merger Sub to obtain any Consent of any Governmental Entity or any third
party, except for (i) compliance with any applicable requirements of the
Exchange Act, (ii) the filing of the Articles of Merger pursuant to the
WBCA, (iii) compliance with any requirements of the HSR Act and any
requirements of any foreign, supranational or other antitrust or similar
laws, (iv) compliance with the requirements of the NYSE, (v) compliance
with any applicable requirements of the 1988 Exon-Xxxxxx provision of the
Defense Production Act of 1950, as amended, and (vi) Consents the failure
of which to obtain or make would not, individually or in the aggregate,
prevent or materially impair or delay the consummation of the Merger or the
other transactions contemplated by this Agreement or Parent or Merger Sub
from satisfying their respective obligations under this Agreement.
Section 4.04. Information. None of the information supplied or to be
supplied by Parent or Merger Sub in writing specifically for inclusion or
incorporation by reference in (i) the Proxy Statement or (ii) the Other Filings
will, at the respective times filed with the SEC or any Governmental Entity with
regulatory jurisdiction over enforcement of any applicable antitrust or similar
laws and, in addition, in the case of the Proxy Statement, at the date it or any
amendment or supplement is mailed to shareholders, and at the time of the
Special Meeting and the Effective Time, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements made therein, in light of the
circumstances under which they are made, not misleading, provided that no
representation is made by either Parent or the Merger Sub with respect to
information furnished by the Company specifically for inclusion therein. The
Other Filings made by Parent or Merger Sub will, at the respective times filed
with the SEC, comply as to form in all material respects with the provisions of
the Exchange Act and the rules and regulations thereunder, if applicable, except
that no representation is made by Parent or Merger Sub with respect to
statements made therein based on information supplied by the Company in writing
specifically for inclusion in the Other Filings.
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Section 4.05. Financing. Parent will have, prior to the Effective Time, the
funds necessary to pay, or cause Merger Sub to pay, the Merger Consideration
with respect to the Shares outstanding immediately prior to the Effective Time,
to fund payments contemplated hereby with respect to the Company Options and
Company Stock-Based Awards, and to pay all fees and expenses related to the
transactions contemplated by this Agreement to be paid by it. Parent will
provide such funds to Merger Sub or the Paying Agent at or prior to the
Effective Time.
Section 4.06. Ownership of Shares. As of the date hereof, Parent and its
affiliates and Subsidiaries do not beneficially own any Shares. As of the date
hereof, to the knowledge of Parent and except as contemplated in connection with
this Agreement, the Voting Agreement and agreements contemplated herein and
therein, neither Parent nor any of its affiliates or Subsidiaries has entered
into any agreement, arrangement, or understanding, whether or not in writing,
for the purpose of acquiring, holding, voting, or disposing of any Shares with
any other person who beneficially owns, or whose affiliates or associates
beneficially own, directly or indirectly, such Shares, in each case, which would
result in Parent or any of its affiliates or Subsidiaries being an "acquiring
person" under chapter 23B.19 of the WBCA.
Section 4.07. Brokers. Except for the engagement of Rothschild Inc. and
Rothschild S.p.A., whose fees will be paid by Parent, none of Parent, Merger Sub
or any of their respective Subsidiaries, officers, directors or employees, has
employed any broker or finder or incurred any liability for any investment
banking or brokerage fees, commissions or finder's fees in connection with the
transactions contemplated by this Agreement for or with respect to which the
Company is or might be liable prior to the Effective Time.
ARTICLE V
COVENANTS
Section 5.01. Conduct of Business of the Company. Except as contemplated by
this Agreement (including, without limitation, the activities expressly
permitted by this Section 5.01), by Section 5.01 of the Company Disclosure
Schedule, as required by law or with the prior written consent of Parent, during
the period from the date of this Agreement to the earlier of (x) such time as
this Agreement is terminated in accordance with Section 7.01, and (y) the
Effective Time, the Company will, and will cause each of its Subsidiaries to,
(i) conduct its operations only in the ordinary course of business, (ii) use its
commercially reasonable efforts to preserve intact the business or organization
of the Company and each of its Subsidiaries, taken as a whole, and to keep
available the services of its and their present officers and key employees,
generally, and (iii) use its commercially reasonable efforts to preserve the
goodwill of those having material business relationships with it. Without
limiting the generality of the foregoing and except as otherwise contemplated by
this Agreement or as set forth in Section 5.01 of the Company Disclosure
Schedule, the Company will not, and will not permit any of its Subsidiaries to,
prior to the earlier of the Effective Time and the termination of this Agreement
in accordance with Section 7.01, without the prior written consent of Parent
(not to be unreasonably withheld, conditioned or delayed):
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(a) adopt any amendment to the articles of incorporation or by-laws or
comparable organizational documents in effect on the date hereof of the
Company or any Subsidiary;
(b) sell, pledge, encumber or dispose of any shares owned by it in any
of its Subsidiaries, except to a wholly owned Subsidiary of the Company and
except for pledges to lenders solely as collateral security under any
borrowing arrangement in existence on the date hereof, or under any
permitted amendments thereto or any new arrangements permitted hereunder;
(c) except for (i) issuances of capital stock of the Company's
Subsidiaries to the Company or a wholly owned Subsidiary of the Company and
(ii) issuances of Shares with respect to the Company Options or Company
Stock-Based Awards outstanding as of the date hereof (collectively, clauses
(i) and (ii), the "PERMITTED ISSUANCES"), issue, reissue, sell, or convey,
or authorize the issuance, reissuance, sale or conveyance of (x) shares of
capital stock (or other ownership interests) of any class (including shares
held in treasury), or securities convertible or exchangeable into capital
stock (or other ownership interests) of any class, or any rights, warrants
or options to acquire any such convertible or exchangeable securities or
capital stock (or other ownership interests), or any Voting Debt or (y) any
other securities in respect of, in lieu of, or in substitution for, Shares
outstanding on the date hereof;
(d) declare, set aside or pay any dividend or other distribution
(whether in cash, securities or property or any combination thereof) in
respect of any class or series of its capital stock or otherwise make any
payments to shareholders in their capacity as shareholders, other than: (i)
a single dividend in respect of the Shares, payable in cash, declared on or
after February 29, 2008, and payable on the earlier of: (x) a date in March
2008, as determined by the Board, or (y) one business day prior to the
Effective Time, in an amount not to exceed $0.16 per Share; and (ii) any
distribution by a Subsidiary of the Company to the Company or a wholly
owned Subsidiary of the Company;
(e) other than in connection with the Permitted Issuances or in
connection with cashless exercises of Company Options or repurchases of
restricted stock from employees upon termination of any such employee's
employment pursuant to the terms of the award agreement under which such
restricted stock was granted, split, combine, subdivide, reclassify or
redeem, purchase or otherwise acquire, or propose to redeem or purchase or
otherwise acquire, directly or indirectly, any shares of its capital stock,
or any of its other securities;
(f) (i) increase the compensation, in whatever form (other than
severance), including salaries, hourly wages, commissions, bonuses,
temporary employee commissions, overtime pay, vacation, sick time, holiday
and other paid time off, and employer paid health and welfare benefits
(collectively, "COMPENSATION") payable or to become payable to any of its
present or former directors, officers or employees (whether from the
Company or any of its Subsidiaries), or incur any obligation to pay any
Compensation, except for increases and incurrences that are in the ordinary
course of business consistent with past practice and that would not, after
giving effect thereto, result in the aggregate Compensation expense of the
Company and its Subsidiaries being in excess of: (x) $310 million for the
year ended December 31, 2007; or (y)
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$174 million for the six-month period ending June 30, 2008; provided,
however, that, in determining compliance with this Section 5.01(f)(i), any
Compensation expense attributable to employees of any entity or entities
acquired in compliance with Section 5.01(p) shall be disregarded, (ii)
grant any stock appreciation rights, phantom stock, or performance units
pursuant to the Option Plans or otherwise, it being understood that the
granting of any stock options or restricted stock is governed by Section
5.01(c) above, or make or agree to make, any severance or termination
payments to any former, existing or new director, officer or employee of
the Company or any of its Subsidiaries, except for such payments made in
the ordinary course of business either (x) pursuant to a Plan or contract
in effect as of the date of this Agreement or (y) that are not in excess of
$500,000 in the aggregate, (iii) enter into any employment, severance or
other compensation agreement with, any former, existing or new director,
officer or employee of the Company or any of its Subsidiaries providing for
base Compensation or severance Compensation in excess of $150,000 per
annum, other than renewals of existing agreements for up to one year on
substantially similar terms (allowing for customary merit increases
consistent with past practice), or (iv) establish, adopt, enter into, or
materially amend or waive any material performance or vesting criteria, or
accelerate vesting or exercisability under, any collective bargaining,
bonus, profit sharing, thrift, compensation, stock option, restricted
stock, pension, retirement, savings, welfare, deferred compensation,
employment, termination, severance or other employee benefit plan,
agreement, trust, fund, policy or arrangement for the benefit or welfare of
any former, existing or new director, officer or employee (any of the
foregoing being an "EMPLOYEE BENEFIT ARRANGEMENT") or otherwise amend or
modify the terms of any Employee Benefit Arrangement, except (1) amendments
of employment agreements for Non-U.S. Employees (as defined below) that
provide for customary merit increases or other changes to terms of
employment (other than an extension of the term of employment) consistent
with past practice and (2) as to clauses (i) through (iv): (A) as may be
required to comply with any applicable law or any existing Plan or
agreement; (B) for any technical amendment or modification of the terms of
an Employee Benefit Arrangement that would not impose on the Company or any
of its Subsidiaries any material new or amended obligation thereunder; (C)
that the foregoing shall not apply to the issuance of offer letters for "at
will" employment agreements and arrangements that do not provide for
severance following termination of employment for any reason; and (D) that,
if the Effective Time occurs on or prior to February 15, 2008, the
Compensation Committee of the Board shall be entitled to determine, in good
faith, in accordance with standards applicable thereto that are applied
consistently with past practice, the amounts of bonuses payable to
participants in the Company's Officer Bonus Plan and to other employees of
the Company and its Subsidiaries under the Company's bonus program in
respect of 2007 and to cause such bonuses to be paid within five (5)
business days prior to the Effective Time;
(g) mortgage, encumber, license, sell, lease or dispose of any assets
(other than inventory) or securities (other than those referred to in
Section 5.01(b), which shall govern in respect thereof) which are material
to the Company and its Subsidiaries, taken as a whole, in each case outside
the ordinary course of business;
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(h) other than guarantees of leases, obligations of wholly owned
Subsidiaries or pursuant to existing agreements or commitments in the
ordinary course of business or amendments thereto enacted in the ordinary
course of business, or to lenders under any borrowing arrangement in
existence on the date hereof or entered into the ordinary course of
business, (i) incur, assume, guarantee or pre-pay any indebtedness for
borrowed money, except that the Company and its Subsidiaries may incur or
assume indebtedness for borrowed money to finance acquisitions made in
compliance with Section 5.01(p) and may incur, assume or pre-pay
indebtedness for borrowed money under existing revolving credit agreements
and lines of credit described in Section 5.01(h) of the Company Disclosure
Schedule or under amendments thereto or replacements thereof enacted in the
ordinary course of business which amendments do not, singly or in the
aggregate, increase the principal amount or interest rate or other fees and
expenses payable thereunder and that do not otherwise impose any new or
amended obligation on the Company or any of its Subsidiaries, (ii) assume,
guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for any obligations of any other
person (other than the Company or a wholly owned Subsidiary of the Company)
in excess of $50,000, except in the ordinary course of business and except
in connection with acquisitions permitted by Section 5.01(p), (iii) pay,
discharge or satisfy any claims, liabilities or obligations (absolute,
accrued, contingent or otherwise) in excess of $200,000, other than the
payment, discharge or satisfaction of liabilities or obligations in the
ordinary course of business or those reflected or reserved against in the
most recent financial statements, (iv) make any loans, advances or capital
contributions to, or investments in, any other person in excess of
$100,000, except in the ordinary course of business and except for loans,
advances, capital contributions or investments between any Subsidiary of
the Company and the Company or another Subsidiary of the Company or (v)
authorize or make capital expenditures other than in accordance with the
purposes, amounts and time periods specified in Section 5.01(h) of the
Company Disclosure Schedule (provided that the aggregate amount of capital
expenditures permitted to be made in the first half of 2008 as set forth in
Section 5.01(h) of the Company Disclosure Schedule shall be increased by an
amount equal to the excess, if any, of (1) the amount of capital
expenditures permitted to be made in the second half of 2007 as set forth
in Section 5.01(h) of the Company Disclosure Schedule over (2) the amount
of capital expenditures actually made during the second half of 2007);
(i) except as set forth in Section 5.01(i) of the Disclosure Schedule,
settle or compromise any suit or claim or threatened suit or claim where
the amount to be paid is greater than $500,000;
(j) authorize, recommend, propose or announce an intention to adopt a
plan of complete or partial liquidation or dissolution of the Company or
any of its Subsidiaries that, in the full fiscal year of the Company next
preceding such intended action, had a shareholders' equity in excess of
$100,000 or revenues in excess of $1,000,000;
(k) change any material election with respect to Taxes, change any Tax
accounting period or change any material method of Tax accounting, if any
such change would reasonably be expected to have a material adverse effect
on the Tax position of the Company and its Subsidiaries taken as a whole;
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(l) other than in the ordinary course of business, (i) expressly waive
any material rights or (ii) cancel or forgive any indebtedness for borrowed
money in excess of $100,000 owed to the Company or any of its Subsidiaries
other than indebtedness of the Company or a wholly owned Subsidiary of the
Company;
(m) voluntarily permit any material insurance policy naming the
Company or any of its Subsidiaries as a beneficiary or a loss payee to be
canceled or terminated, except in the ordinary course of business;
(n) enter into or amend, or agree to the renewal of, any contract or
agreement that would be a "Contract" as defined in Section 3.21 or any
contract or agreement providing for payment by a third party of more than
$1,000,000 in any 12-month period, in each case for a term in excess of one
(1) year and that cannot be terminated by the Company or one of its
Subsidiaries on less than 90 days' notice without material penalty or other
material financial costs to the Company or any of its Subsidiaries, other
than (i) amendments or waivers that are required by applicable law or
regulations, (ii) renewals of Contracts, leases (including store leases) or
agreements or contracts in accordance with the terms thereof or on market
terms in the ordinary course of business or on terms not materially less
favorable in the aggregate to the Company than those in effect immediately
prior to the renewal or (iii) new store leases entered into, or
modifications or terminations of, or amendments to, existing store leases
made, in the ordinary course of business and in compliance with the terms
set forth in Section 5.01(n) of the Company Disclosure Schedule; or agree
to an amendment or modification of any agreement involving the payment of
any Merger Fees to Xxxxxxx, Xxxxx & Co. or any of its affiliates in amounts
in excess of those provided for in the agreements delivered pursuant to
Section 3.24 above;
(o) except as may be required as a result of a change in law or under
GAAP, make any material change in its methods, principles and practices of
accounting;
(p) acquire (by merger, consolidation or acquisition of stock or
assets) any corporation, partnership or other business organization or
division thereof or acquire any material assets of any such entity or of
any other person, other than any such acquisitions related to optics or
optical retail operations, provided that the total consideration, including
assumed debt paid or payable by the Company and its Subsidiaries, does not
exceed $20 million in the aggregate for all such acquisitions;
(q) enter into any joint venture, partnership or similar agreement,
other than in respect of airport retail stores in the ordinary course of
business as required by the lessors thereof; or
(r) agree in writing or otherwise to take any of the foregoing
prohibited actions.
Section 5.02. Access to Information; No Control of Operations.
(a) From the date hereof until the Effective Time, subject to
reasonable restrictions imposed from time to time after consultation with
counsel, the Company shall, and shall cause its Subsidiaries, and shall use
its reasonable efforts to cause each of their respective officers,
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employees, and past and present counsel, accountants, tax advisors,
financial advisors, representatives and agents (collectively, the "COMPANY
REPRESENTATIVES") to provide Parent and Merger Sub and their respective
officers, employees, counsel, advisors, accountants, financial advisors,
financial sources and representatives (collectively, the "PARENT
REPRESENTATIVES"), at Parent's expense, reasonable access during normal
business hours and upon reasonable notice, to the offices and other
facilities and to the books and records of the Company and its
Subsidiaries, as will permit Parent and Merger Sub to make inspections of
such as either of them may reasonably require, and shall use its reasonable
efforts to cause the Company Representatives and the Company's Subsidiaries
to furnish Parent, Merger Sub and Parent Representatives to the extent
reasonably available with such financial and operating data and other
information with respect to the business and operations of the Company and
its Subsidiaries as Parent and Merger Sub may from time to time reasonably
request and subject to the Company's existing written policies with respect
to the protection of employee privacy and protection of attorney-client
privilege and attorney work product; provided that such access and
inspections shall not unreasonably disrupt the operations of the Company or
its Subsidiaries or the performance of their duties. Parent, Merger Sub and
the Parent Representatives shall maintain the confidentiality of any
information obtained pursuant to this Section or otherwise in accordance
with the terms of the Confidentiality Agreements dated July 25, 2006 and
October 12, 2006 between Parent and the Company (the "CONFIDENTIALITY
AGREEMENTS"). Notwithstanding anything to the contrary in this Agreement,
the Company shall not be required to provide any information or access that
it reasonably believes would violate applicable law, rules or regulations
or the terms of any confidentiality agreement by which it is bound;
provided that, in any case where the Company is relying on this sentence in
not providing all or any of the information or access requested by Parent,
it shall promptly inform Parent and/or the relevant Parent Representative
of its reliance on this exception and indicate in such notice the specific
reason for such reliance.
(b) Nothing contained in this Agreement shall give to Parent or Merger
Sub, directly or indirectly, the right to control or direct the Company's
or its Subsidiaries' operations prior to the Effective Time.
(c) No investigation by any of the parties or their respective
Representatives shall affect the representations, warranties, covenants or
agreements of the other parties set forth herein. The Company makes no
representation or warranty as to the accuracy of any information provided
pursuant to Section 5.02(a), and neither Merger Sub nor Parent may rely on
the accuracy of any such information, in each case other than as expressly
set forth in the Company's representations and warranties contained in the
Transaction Agreements.
Section 5.03. Further Assurances; Reasonable Best Efforts.
(a) Subject to the terms and conditions herein provided and to
applicable legal requirements, each of the Company, Parent and Merger Sub
shall, and shall cause its respective Subsidiaries to, cooperate and use
its reasonable best efforts to take, or cause to be taken, all action, and
to do, or cause to be done, in the case of the Company, consistent with the
fiduciary duties of the Board with the advice of the Company's outside
legal counsel, and
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to assist and cooperate with the other parties hereto in doing, as promptly
as practicable, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement.
(b) If at any time prior to the Effective Time any material event or
circumstance relating to either the Company or Parent or Merger Sub, or any
of their respective Subsidiaries, is discovered by the Company or Parent,
as the case may be, and which should be set forth in an amendment to the
Proxy Statement, the discovering party will promptly inform the other party
of such event or circumstance. If at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement, including the execution of additional instruments, the proper
officers and directors of each party to this Agreement shall take all such
necessary or desirable action as is reasonable under the circumstances.
(c) Each of the parties agrees to cooperate with each other in taking,
or causing to take, at the direction of Parent, all actions necessary to
delist the Shares from the NYSE and deregister the shares under the
Exchange Act as soon as practicable following the Effective Time.
Section 5.04. Filings; Consents.
(a) Upon the terms and conditions hereof each of the parties hereto
shall, and shall cause its Subsidiaries to, use its reasonable best efforts
to obtain as promptly as practicable all material Consents of any
Governmental Entity or any other person required in connection with, and
waivers of any material breaches or material violations of any material
Contracts, permits, licenses or other material agreements that may be
caused by, the consummation of the transactions contemplated by this
Agreement, including, without limitation, by (i) filing, or causing to be
filed, any Notification and Report Form and related material required under
the HSR Act as soon as reasonably practicable after the date of this
Agreement but, in any event, unless specifically agreed otherwise by the
Company and Parent, no later than thirty (30) calendar days after the date
of this Agreement, and by using its reasonable best efforts to be able to
certify, and to certify, as soon as reasonably practicable, its substantial
compliance with any such requests for additional information or documentary
material that may be made under the HSR Act, unless Parent and the Company
mutually determine that it is reasonable under the circumstances not to
comply substantially with any requests for additional information and
documentary material under the HSR Act, (ii) promptly making all other
required filings or submissions to Governmental Entities, (iii) cooperating
and consulting with one another in (A) determining whether any other
filings are required, or are deemed advisable, to be made with, or
Consents, permits, authorizations or approvals are required, or are deemed
advisable, to be obtained from, any third party, the United States
government or any other Governmental Entity in connection with the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby and (B) timely making all such filings and
timely seeking all such Consents, permits, authorizations, approvals or
waivers and (iv) generally, taking, or causing to be taken, all other
actions necessary to avoid or eliminate each and every impediment under any
antitrust, competition or trade regulation law that may be asserted by any
Governmental Entity with respect to the Merger so as to enable the Closing
to occur as
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soon as reasonably possible, and in any event no later than the Extended
Termination Date (as defined in Section 7.01(b)) or, if applicable, the
Final Termination Date (as defined in Section 7.01(b)), provided that the
Company shall not be required to obtain any Consent from any person other
than Governmental Entities unless Parent reimburses the Company for all
reasonable out-of-pocket expenses incurred in obtaining such Consent;
provided, however, that the Company shall not pay or agree to pay any fee
or other similar charge to any such person in order to obtain its Consent
without the prior written approval of Parent not to be unreasonably
withheld.
In furtherance of the foregoing, Parent shall, and shall cause its
Subsidiaries to, take all such actions, including, without limitation, (x)
proposing, negotiating, committing to and effecting, by consent decree,
hold separate order, or otherwise, the sale, divestiture or disposition of
such assets or businesses of Parent or any of its Subsidiaries or, after
the Effective Time, of the Company or of any of its Subsidiaries and (y)
otherwise taking or committing to take actions that limit or would limit
Parent's or its Subsidiaries' (including, after the Effective Time, the
Company's and its Subsidiaries' as Subsidiaries of Parent) freedom of
action with respect to, or its ability to retain, one or more of their
respective businesses, product lines or assets, in each case as may be
required in order to avoid the entry of any order, judgment, decree,
injunction, temporary restraining order, or ruling of a court of competent
jurisdiction or any Governmental Entity in any suit or proceeding, which
would otherwise have the effect of preventing or materially delaying the
Closing; provided further, however, that Parent shall not be required to
take any such action, and the failure to do so shall not be deemed to be a
failure to exercise its reasonable best efforts as required by this Section
5.04(a), if such actions, individually or in the aggregate, would require
the sale, divestiture, licensing or other disposition in any form
(collectively, a "DIVESTITURE") of any one or more businesses or assets,
including without limitation, product lines, brands, or other particular
types or groups of assets (collectively, the "SPECIFIED ASSETS") and: (A)
in the case of one or more required Divestitures of Specified Assets of
Parent or one or more of its Subsidiaries, and/or the Company and or one or
more of its Subsidiaries, that are sold at wholesale, such Specified Assets
accounted for more than $85 million in the worldwide consolidated net sales
of Parent or the Company, as the case may be, to all customers, including
the amount of the intercompany sales of such Specified Assets by each party
to its own retail division or retail segment, as the case may be; or (B)
without limiting the applicability of clause (A) above, in the case of one
or more required Divestitures of Specified Assets of Parent or one or more
of its Subsidiaries, and/or the Company and one or more of its
Subsidiaries, that are not sold at wholesale, including, without
limitation, Specified Assets consisting of retail assets, such Specified
Assets accounted for more than $100 million in the worldwide consolidated
net sales of Parent or the Company, as the case may be; with, in each such
case, consolidated net sales to be determined for the four most recently
completed consecutive fiscal quarters of Parent and/or the Company, as the
case may be. Neither the Company nor any of its Subsidiaries shall propose,
negotiate, or commit to any such sale, divestiture or disposition of any of
its assets, businesses or product lines without Parent's prior written
consent.
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(b) Each of the Company and Parent shall, without limitation: (i)
promptly notify the other of, and if in writing, furnish the other with
copies of (or, in the case of oral communications, advise the other of) any
communications from or with any Governmental Entity with respect to the
transactions contemplated by this Agreement; (ii) permit the other to
review and discuss in advance, and consider in good faith the views of the
other in connection with, any proposed written or any oral communication
with any such Governmental Entity; (iii) not participate in any meeting or
have any communication with any such Governmental Entity unless it has
given the other an opportunity to consult with it in advance and, to the
extent permitted by such Governmental Entity, give the other party the
opportunity to attend and participate therein; and (iv) furnish the other
party with copies of all filings and communications between it (or its
advisors) and any such Governmental Entity with respect to the transactions
contemplated by this Agreement; provided, however, that, notwithstanding
the foregoing, the rights of the Company and Parent under this Section
5.04(b) may be exercised on their behalf by their respective outside
counsel.
Section 5.05. Public Announcements. The initial press release announcing
the terms of this Agreement shall be a joint press release. Thereafter, other
than in connection with reasonable responses to questions in quarterly earnings
conference calls, Parent, Merger Sub and the Company each agree to consult with
each other before issuing any press release or otherwise making any public
statement with respect to the transactions contemplated by this Agreement, agree
to provide to the other party for review a copy of any such press release or
public statement, and shall not issue any such press release or make any such
public statement prior to such consultation and review, unless required by
applicable law or any listing agreement with a securities exchange.
Section 5.06. Indemnification; Employees and Employee Benefits.
(a) Parent agrees that all rights to indemnification and advancement
of expenses now existing in favor of any individual who at or prior to the
Effective Time was a director, officer, employee or agent of the Company or
any of its Subsidiaries or who, at the request of the Company or any of its
Subsidiaries, served as a director, officer, member, trustee or fiduciary
of another corporation, partnership, joint venture, trust, pension or other
employee benefit plan or enterprise (together with such individual's heirs,
executors or administrators, the "INDEMNIFIED PARTIES") as provided by
applicable law and/or in the articles of incorporation and by-laws of the
Company and its Subsidiaries existing and in effect on the date hereof
and/or indemnification agreements existing and in effect on the date
hereof, shall survive the Merger, and shall continue in full force and
effect for a period of not less than six years from the Effective Time (or,
with respect to any indemnification agreement, the term of such
indemnification agreement, if such term is less than six years) unless
otherwise required by applicable law, and the indemnification and
advancement of expenses provisions of the articles of incorporation and
by-laws of the Surviving Corporation and the Subsidiaries of the Company
and such indemnification agreements, indemnification and advancement of
expenses provisions shall not be amended, repealed or otherwise modified,
provided that in the event any claim or claims are asserted or made within
such six-year period, all rights to indemnification and advancement of
expenses in respect of any such claim or claims shall continue until final
disposition of any and all such claims. From and after the Effective Time,
Parent shall cause the Sole Shareholder to assume, be jointly and severally
liable for, and honor, guarantee and stand surety for, and shall cause the
Surviving Corporation to honor, in accordance with their respective terms,
each of the covenants contained in this Section 5.06.
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(b) Parent agrees that, from and after the Effective Time, the
Surviving Corporation shall cause to be maintained in effect for not less
than six years (except as provided in the last proviso of this Section
5.06(b)) from the Effective Time the current policies of directors' and
officers' liability insurance maintained by the Company; provided, however,
that the Surviving Corporation may substitute therefor policies of at least
the same coverage containing terms and conditions which are not materially
less advantageous to the beneficiaries of the current policies and with
carriers having an A.M. Best "key rating" of AX or better, provided that
such substitution shall not result in any gaps or lapses in coverage with
respect to matters occurring prior to the Effective Time, and provided
further, that the Surviving Corporation shall first use its reasonable best
efforts to obtain from such carriers a so-called "tail" policy providing
such coverage and being effective for the full six year period referred to
above, and shall be entitled to obtain such coverage in annual policies
from such carriers only if it is unable, after exerting such efforts for a
reasonable period of time, to obtain such a "tail" policy; and provided
further, that the Surviving Corporation shall not be required to pay an
annual premium in excess of 250% of the last annual premium paid by the
Company prior to the date hereof as set forth in Section 5.06(b) of the
Company Disclosure Schedule (or, in the case of a "tail" policy obtained
pursuant to the preceding proviso, shall not be required to pay an
aggregate premium therefor in excess of an amount equal to six times 250%
of such last annual premium) and, if the Surviving Corporation is unable to
obtain the insurance required by this Section 5.06(b), it shall obtain as
much comparable insurance as possible for an annual premium (or an
aggregate premium, as the case may be) equal to such maximum amount.
(c) In the event that Parent, the Surviving Corporation or any of
their respective successors or assigns (i) consolidates with or merges into
any other person and shall not be the continuing or surviving corporation
or entity in such consolidation or merger or (ii) transfers all or
substantially all of its properties and assets to any person, then and in
either such case, proper provision shall be made so that the successors and
assigns of Parent or the Surviving Corporation, as the case may be, shall
assume the obligations set forth in this Section. It is expressly agreed
that the Indemnified Parties shall be third party beneficiaries of Section
5.06(a) and Section 5.06(b) above, and of this Section 5.06(c).
(d) For the period beginning on the Closing Date and ending on
December 31, 2008 (the "CONTINUATION PERIOD"), Parent shall cause the
Surviving Corporation to provide U.S. Employees with compensation and
benefits that are no less favorable in the aggregate, determined on an
individual basis, than those provided to such individual under the
Company's Employee Benefit Arrangements applicable to U.S. Employees in
effect at the Effective Time or otherwise (exclusive of benefits related to
the equity securities of the Company); provided, however, that nothing
herein shall prevent the Surviving Corporation from amending or terminating
any specific plan, program, policy, practice or arrangement, or require
that the Surviving Corporation provide or permit investment in the
securities of Parent or the Surviving Corporation, or interfere with the
Surviving Corporation's obligation to make such changes as are necessary to
comply with applicable law, or preclude the Surviving
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Corporation from terminating the employment of any Employee for any reason
for which the Company could have terminated the employment of such person
or that was not prohibited prior to the Effective Time. During the
Continuation Period, Parent shall cause the Surviving Corporation to
provide Non-U.S. Employees with compensation and benefits that are no less
favorable in the aggregate, determined, with respect to each separate
country in which such Non-U.S. Employees work, on a group basis rather than
on an individual basis for such country, than the less favorable of: (i)
those provided under the Company's Employee Benefit Arrangements for the
Non-U.S. Employees in such country; or (ii) those provided by the Company's
Employee Benefit Arrangements for its U.S. Employees, in each case, as in
effect as of the Effective Time, but exclusive of benefits related to the
equity securities of the Company; provided that, in any event, benefits
provided to the Non-U.S. Employees that are immaterial, but customary and
reasonable in the local jurisdiction, shall be continued during the
Continuation Period. "U.S. EMPLOYEES" means employees and former employees
of the Company and its Subsidiaries who work or worked in the United
States. "NON-U.S. EMPLOYEES" means employees and former employees of the
Company and its Subsidiaries who work or worked outside the United States.
(e) Parent and its affiliates (including the Surviving Corporation)
shall honor all Employee Benefit Arrangements (including, without
limitation, any severance, change of control and similar plans and
agreements) in accordance with their terms as in effect immediately prior
to the Effective Time (except for such changes made to any Employee Benefit
Arrangement between the date hereof and the Effective Time that are not
made in compliance with the terms of this Agreement), subject to any
amendment or termination thereof after the Effective Time that may be
permitted by the terms thereof, and except that Parent and its affiliates
shall be permitted to amend or terminate any plan, program, policy,
practice or arrangement as permitted pursuant to the proviso in the first
sentence in Section 5.06(d) above.
(f) For all purposes under the employee benefit plans of Parent and
its affiliates providing benefits to any Employees after the Effective Time
(the "NEW PLANS"), each Employee shall be credited with his or her years of
service with the Company and its Subsidiaries prior to the Effective Time
(including predecessor or acquired entities or any other entities for which
the Company and its Subsidiaries have given credit for prior service), to
the same extent as such Employee was entitled, as at the Effective Time, to
credit for such service under any similar or comparable plans (except to
the extent such credit would result in a duplication of accrual of benefits
in whole or in part). In addition, and without limiting the generality of
the foregoing: (i) each Employee immediately shall be eligible to
participate, without any waiting time, in any and all New Plans to the
extent coverage under such New Plan replaces coverage under a similar or
comparable plan in which such Employee participated immediately before the
Effective Time (such plans, collectively, the "OLD PLANS"); and (ii) for
purposes of each New Plan providing medical, dental, pharmaceutical and/or
vision benefits to any Employee, Parent shall with respect to fully insured
programs use its best efforts to, and with respect to self-insured programs
shall, cause all pre-existing condition exclusions and actively-at-work
requirements of such New Plan to be waived for such Employee and his or her
covered dependents, and Parent shall cause any eligible
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expenses incurred by such Employee and his or her covered dependents during
the portion of the plan year of the Old Plan ending on the date such
Employee's participation in the corresponding New Plan begins to be taken
into account under such New Plan for purposes of satisfying all deductible,
coinsurance and maximum out-of-pocket requirements, as well as all maximums
or caps with respect to number of visits or annual or lifetime dollar
limitations, applicable to such Employee and his or her covered dependents
for the applicable plan year as if such amounts had been paid or such
visits occurred in accordance with such New Plan. Notwithstanding the
foregoing provisions of this Section 5.01(f) or any other term or provision
of this Agreement to the contrary, subject to the requirements, if any, of
applicable law, in no event shall any Employee be credited with such years
of service in connection with vesting rights under, or be entitled to be a
beneficiary under, any pension plan now or hereafter established by Parent
or any of its Subsidiaries.
(g) Section 5.06(g) of the Company Disclosure Schedule sets forth a
description of the Company's Long-Term Incentive Plan (the "LTIP") as in
effect as of the date of this Agreement and includes a list of the
Employees of the Company who are, as of the date of this Agreement,
grantees of any benefit under the LTIP, specifying for each the particular
target benefit held by such person. Notwithstanding anything in this
Agreement to the contrary, the LTIP shall be modified by the Company prior
to, but effective as of, the Effective Time, in all material respects, in
accordance with the terms of such modification set forth in Section 5.06(g)
of the Company Disclosure Schedule, and pursuant to such instruments,
documents and resolutions of the Board (or a committee thereof) as shall be
reasonably satisfactory in form and substance to Parent.
(h) Parent shall cause the Surviving Corporation to continue
arrangements with a service provider to the Company on the terms set forth
in Section 5.06(h) of the Company Disclosure Schedule.
Section 5.07. No Solicitation.
(a) The Company shall, and shall cause its Subsidiaries, the Company
Representatives and its directors to, immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any Acquisition Proposal. The
Company also will promptly request each person that has heretofore executed
a confidentiality agreement in connection with its consideration of an
Acquisition Proposal and in connection with which discussions are taking
place, or have taken place during the twelve (12) month period preceding
the date of this Agreement with respect to an Acquisition Proposal, to
return or destroy all confidential information heretofore furnished to such
person by the Company or on the Company's behalf.
(b) The Company agrees that, prior to the Effective Time, it shall
not, directly or indirectly, and shall not permit or cause any of its
Subsidiaries to, nor shall it authorize or permit any Company
Representatives or any of its directors to, directly or indirectly, (i)
initiate, solicit or knowingly encourage (including by way of furnishing
non-public information) the making of any proposal or offer concerning an
Acquisition Proposal or (ii)
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engage in any discussions or negotiations concerning, or provide any
non-public information or data to any person relating to, an Acquisition
Proposal, whether made before or after the date of this Agreement unless,
after the date hereof, (A) the Company receives a bona fide written
proposal not initiated, solicited or knowingly encouraged in violation of
this Agreement that constitutes an Acquisition Proposal, (B) the Board in
good faith determines, after consultation with its outside legal counsel
and independent financial advisors, that such Acquisition Proposal may
reasonably be expected to result in a Superior Acquisition Proposal, (C)
the Company (x) shall have provided at least 48 hours advance written
notice to Parent that it intends to take such action, which shall also set
forth the identity of the person making the Acquisition Proposal, all of
the terms and conditions of such Acquisition Proposal and delivery of
complete copies of all documents reflecting or related to the Acquisition
Proposal, and (y) shall have received from such person an executed
customary confidentiality agreement containing terms no less stringent in
all material respects, than those terms contained in the Confidentiality
Agreements, including, in any event, a prohibition on such person from
purchasing or otherwise acquiring any capital stock of the Company while
such person is engaged in negotiations with the Company, provided that the
Company shall promptly notify Parent if and when such prohibition is no
longer in effect; provided that such confidentiality agreement shall not
contain any exclusivity provision or other term that would prevent the
Company from consummating the transactions contemplated by this Agreement,
and (D) the Company shall have made available to Parent (or Parent's
counsel pursuant to a joint defense agreement) the same nonpublic
information being furnished to such person. The Company shall promptly
notify Parent of any material amendments or revisions to any such
Acquisition Proposal.
(c) The Board (or any committee thereof) shall not (i) except as
permitted by this Section 5.07, withdraw, modify or change, or propose
publicly to withdraw, modify or change, in a manner adverse to Parent, the
Company Board Recommendation (as defined in Section 5.08) (a "CHANGE OF
BOARD RECOMMENDATION"), (ii) except as permitted by this Section 5.07,
approve or recommend, or propose publicly to approve or recommend, any
Acquisition Proposal, or (iii) cause the Company or any of its Subsidiaries
to enter into or approve any letter of intent, agreement in principle,
acquisition agreement or similar agreement relating to any Acquisition
Proposal (an "ACQUISITION AGREEMENT"), unless (with respect to taking any
action described in (i), (ii) or (iii)), prior to the date on which the
Required Shareholder Approval has been obtained, (A) subject to clause (B)
below, the Board has received an Acquisition Proposal theretofore described
to Parent as required by Section 5.07(b) which it has determined in good
faith (after having consulted with outside legal counsel and its
independent financial advisors) is a Superior Acquisition Proposal and has
determined that the failure of the Board to terminate this Agreement or
withdraw, modify or change the Company Board Recommendation would be
inconsistent with the fiduciary duties of the directors and (B) the Company
has notified Parent in writing of all of the terms and conditions of the
Superior Acquisition Proposal together with delivery to Parent of complete
copies of all documents reflecting or related to such Superior Acquisition
Proposal and of the determinations described in clause (A) above and of its
intent to take such action, and has taken into account any revised proposal
made by Parent to the Company (a "REVISED PARENT PROPOSAL") within five (5)
business days after Parent's receipt of such notice and again has
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determined in good faith after consultation with its outside legal counsel
and independent financial advisors that such Acquisition Proposal (as the
same may have been modified or amended) remains a Superior Acquisition
Proposal; provided, however, that if a Revised Parent Proposal has been
made, and the Acquisition Proposal has been modified or amended after the
Revised Parent Proposal was made, then the Company shall promptly notify
Parent in writing of all of the terms and conditions of such modification
or amendment together with delivery of complete copies of all documents
reflecting or related to such modification or amendment, and any such
modification or amendment to such Acquisition Proposal shall be deemed to
be a new Acquisition Proposal for purposes of re-starting, as of the date
of Parent's receipt of such notice, the five (5) business day period
described above in this clause (B). Notwithstanding the foregoing, if the
Board (or any committee thereof) makes a Change of Board Recommendation
that is either (a) made in connection with a Superior Acquisition Proposal
that is an Acquisition Proposal described in clause (ii) of the definition
of Acquisition Proposal or (b) made pursuant to Section 5.07(e) (either
such Change of Board Recommendation described in clauses (a) or (b), a
"SPECIFIED CHANGE OF BOARD RECOMMENDATION"), then, to the extent permitted
under the WBCA (including pursuant to subsection (2)(a) of Section
23B.11.030 of the WBCA), the Company shall take all actions as necessary to
call, give notice of, convene and hold the Special Meeting so as to permit
the Special Meeting to be held in compliance with Section 5.09 without a
recommendation of the Board.
(d) The term "ACQUISITION PROPOSAL" shall mean any offer or proposal
(whether or not in writing and whether or not delivered to the Company's
shareholders generally), from any person to acquire, in a single
transaction or series of transactions, by merger, tender offer, stock
acquisition, asset acquisition, consolidation, liquidation, business
combination or otherwise (i) at least 50% of any class of equity securities
of the Company, or (ii) assets of the Company and/or one or more of its
Subsidiaries which in the aggregate constitutes 35% or more of the net
revenues, net income or assets of the Company and its Subsidiaries, taken
as a whole, other than the transactions contemplated by this Agreement. The
term "SUPERIOR ACQUISITION PROPOSAL" shall mean any bona fide unsolicited
written Acquisition Proposal on terms more favorable to the holders of
Shares than the transactions contemplated by this Agreement, taking into
account all of the terms and conditions of such proposal and this Agreement
(including any proposal by Parent to amend the terms of the transactions
contemplated by this Agreement), as well as the anticipated timing,
conditions and prospects for completion of such Acquisition Proposal;
provided further, that if any negotiations with a third party related to an
Acquisition Proposal that are not initiated, solicited or knowingly
encouraged in violation of this Section 5.07 in compliance with subsection
(b) above result in a revised bona fide Acquisition Proposal from such
third party being made to the Company, then such revised Acquisition
Proposal shall also be considered a bona fide Acquisition Proposal not
initiated, solicited or knowingly encouraged in violation of this Section
5.07.
(e) Nothing in this Agreement shall prohibit or restrict the Board, in
circumstances not involving an Acquisition Proposal, from effecting a
Change of Board Recommendation to the extent that the Board determines in
good faith (after consultation with outside legal counsel) that such action
is necessary under applicable law in order for the directors to comply
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with their fiduciary duties to the Company's shareholders. The Company
shall give Parent and Merger Sub written notice of any such action taken by
the Board not later than the business day next succeeding the day on which
such action is taken, setting forth in reasonable detail the action taken
and the basis therefore.
(f) Nothing contained in this Section 5.07 or elsewhere in this
Agreement shall prohibit the Company from (i) taking and disclosing to its
shareholders a position contemplated by Rule 14d-9 and 14e-2(a) promulgated
under the Exchange Act or (ii) making any disclosure to the Company's
shareholders if, in the good faith judgment of the Board, after
consultation with its outside counsel, failure so to disclose would be
inconsistent with its fiduciary duties under applicable law or such
disclosure would be necessary to comply with the Company's obligations
under federal securities laws or the rules of the NYSE; provided that any
such disclosure made pursuant to clause (i) or (ii) (other than a "stop,
look and listen" letter or similar communication of the type contemplated
by Rule 14d-9(f) under the Exchange Act) shall be deemed to be a Change of
Board Recommendation unless the Board expressly reaffirms to the Company's
shareholders in such disclosure the Company Board Recommendation.
Section 5.08. Preparation of the Proxy Statement.
(a) As soon as reasonably practicable following the date of this
Agreement, the Company shall prepare a preliminary proxy statement relating
to the meeting of the Company's shareholders to be held in connection with
the Merger (together with any amendments thereof or supplements thereto, in
each case in the form or forms mailed to the Company's shareholders, the
"PROXY STATEMENT") and file the Proxy Statement with the SEC. Parent and
Merger Sub shall cooperate with the Company in the preparation and filing
of the Proxy Statement. The Proxy Statement shall include a recommendation
of the Board (the "COMPANY BOARD RECOMMENDATION") that its shareholders
vote in favor of the Merger and this Agreement (subject to Section 5.07
hereof). The Company shall use its reasonable best efforts to have the
Proxy Statement cleared by the SEC as promptly as practicable after such
filing. The Company shall use its reasonable best efforts to cause the
Proxy Statement to be mailed to the Company's shareholders as promptly as
practicable and, in any event, within five (5) business days after the
Proxy Statement is cleared by the SEC.
(b) If at any time prior to the Effective Time any event shall occur
that should be set forth in an amendment of or a supplement to the Proxy
Statement, the Company shall prepare and file with the SEC such amendment
or supplement as soon thereafter as is reasonably practicable. Parent,
Merger Sub and the Company shall cooperate with each other in the
preparation of the Proxy Statement, and the Company shall notify Parent of
the receipt of any comments of the SEC with respect to the Proxy Statement
and of any requests by the SEC for any amendment or supplement thereto or
of additional requests by the SEC for any amendment or supplement thereto
or for additional information, and shall provide to Parent promptly copies
of all correspondence between the Company or any representative of the
Company and the SEC with respect to the Proxy Statement. The Company shall
give Parent and its counsel the opportunity to review the Proxy Statement
and all responses to requests for additional
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information by, and replies to comments of, the SEC before their being
filed with, or sent to, the SEC. Each of the Company, Parent and Merger Sub
shall use its reasonable best efforts after consultation with the other
parties hereto, to respond promptly to all such comments of and requests by
the SEC.
Section 5.09. Shareholders' Meeting. The Company shall, through its Board,
take all action necessary, in accordance with and subject to the WBCA and its
articles of incorporation and bylaws, to duly call, give notice of and convene
and hold a special meeting of its shareholders not earlier than thirty (30)
calendar days, but in no event later than fifty (50) calendar days, after the
Proxy Statement is first mailed to shareholders, to consider and vote upon the
adoption and approval of this Agreement and the Merger (such special shareholder
meeting, the "SPECIAL MEETING"), provided, that such later date may be extended
to the extent reasonably necessary to permit the Company to file and distribute
any material amendment to the Proxy Statement as is required by applicable law.
The Company shall include in the Proxy Statement the Company Board
Recommendation and the Board shall use its reasonable best efforts to obtain the
approval of the Merger and this Agreement, subject to the duties of the Board to
make any further disclosure to the shareholders (which shall not, unless
expressly stated, constitute a withdrawal or adverse modification of such
recommendation) and subject to the right to withdraw, modify or change such
recommendation in accordance with Section 5.07 hereof. Notwithstanding the
foregoing, if a Change of Board Recommendation (other than a Specified Change of
Board Recommendation) occurs, the Company shall not be obligated to call, give
notice of, convene and hold the Special Meeting.
Section 5.10. Notification of Certain Matters. Parent and the Company shall
use their reasonable best efforts to promptly notify each other of: (a) any
notice or other communication from any person alleging that the Consent of such
person is or may be required in connection with the transactions contemplated by
this Agreement if such Consent would be material to the transactions; (b) any
material notice or other communication from any governmental or regulatory
agency or authority in connection with the transactions contemplated by this
Agreement or regarding any violation, or alleged violation, of law; (c) any
actions, suits, claims, investigations or proceedings in connection with the
transactions contemplated by this Agreement commenced or, to the best of its
knowledge, threatened against or involving or otherwise affecting the Company or
any of its Subsidiaries; or (d) the occurrence or non-occurrence of any fact or
event which would be reasonably likely to cause any condition set forth in
Article VI not to be satisfied; provided, however, that no such notification,
nor the obligation to make such notification, shall affect the representations,
warranties or covenants of any party or the conditions to the obligations of any
party hereunder.
Section 5.11. State Takeover Laws. If any "fair price," "moratorium,"
"control share acquisition," "interested shareholder" or other similar
anti-takeover statute or regulation (each a "TAKEOVER STATUTE") other than those
contained in Chapter 23B.19 of the WBCA is or may become applicable to the
Merger or the other transactions contemplated by this Agreement, each of Parent,
Merger Sub and the Company and their respective boards shall grant such
approvals and take such actions as are necessary so that such transactions may
be consummated as promptly as practicable on the terms contemplated by this
Agreement, and otherwise act to eliminate or minimize the effects of such
Takeover Statutes.
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Section 5.12. Shareholder Litigation. The Company shall give Parent the
opportunity to participate in the defense of any shareholder litigation against
the Company and/or its officers or directors relating to the transactions
contemplated by this Agreement.
Section 5.13. Merger Sub. Parent will take all action necessary to cause
Merger Sub to perform its obligations under this Agreement and to consummate the
Merger on the terms and conditions set forth in this Agreement.
Section 5.14. Compliance with Export, Embargo and Defense Controls. The
Company shall take all actions, including the adoption of a Company-wide
compliance policy that is reasonably acceptable to the Purchaser, as may be
reasonably necessary to ensure that, from and after the Effective Time, the
operation and governance of the Company and its Subsidiaries will comply with
and be permissible under (i) the Export Administration Regulations (as set forth
in 15 C.F.R. Part 730 et seq.), (ii) Executive Orders of the President and
implementing regulations regarding embargoes administered by the United States
Office of Foreign Assets Control under 31 C.F.R. Chapter V and (iii) the
International Traffic in Arms Regulations.
Section 5.15. CFIUS Notice. Each of Parent and the Company shall use its
reasonable best efforts to obtain as promptly as reasonably practicable a
written notification issued by the Committee on Foreign Investment in the United
States ("CFIUS") that CFIUS has concluded a review of a notification voluntarily
filed jointly by Parent and the Company pursuant to the requirements of the 1988
Exon-Xxxxxx provision of the Defense Production Act of 1950, as amended, and has
determined not to conduct a full investigation or, if a full investigation is
deemed to be required, notification that the United States government will not
take action to prevent the consummation of the transactions contemplated by this
Agreement (such determination or notification, the "CFIUS NOTICE").
ARTICLE VI
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 6.01. Conditions to the Obligations of Each Party. The respective
obligations of Parent, Merger Sub and the Company to consummate the Merger are
subject to the satisfaction or waiver, on or prior to the Closing Date, of each
of the following conditions:
(a) Shareholder Approval. The shareholders of the Company shall have
duly adopted this Agreement, pursuant to the requirements of the Company's
articles of incorporation and by-laws and applicable law (the "REQUIRED
SHAREHOLDER APPROVAL").
(b) Injunctions; Illegality. The consummation of the Merger shall not
be restrained, enjoined or prohibited by any order, judgment, decree,
injunction or ruling of a court of
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competent jurisdiction or any Governmental Entity and there shall not have
been any statute, rule or regulation enacted, promulgated or deemed
applicable to the Merger by any Governmental Entity which prevents the
consummation of the Merger or has the effect of making the Merger illegal.
(c) HSR and Other Antitrust Regulatory Clearances. (i) Any applicable
waiting period (or any extension thereof), filings or approvals under the
HSR Act that are required in order to permit the consummation of the Merger
under the HSR Act shall have expired, been terminated, been made or been
obtained and (ii) any applicable waiting period (or any extension thereof),
filings or approvals under any of the applicable statutes or regulations
identified in Section 6.01(c)(ii) of the Company Disclosure Schedule that
are required in order to permit the consummation of the Merger thereunder,
or that otherwise shall have been agreed by Parent and the Company to be
specified therein, shall have expired, been terminated, been made or been
obtained.
(d) Government Consents or Filings. The Consents of Governmental
Entities, including filings, if any, with Governmental Entities set forth
in Section 6.01(d) of the Company Disclosure Schedule shall have been
obtained or made.
Section 6.02. Conditions to the Obligations of Parent and Merger Sub. The
obligations of Parent and Merger Sub to consummate the Merger are subject to the
satisfaction or waiver by Parent on or prior to the Closing Date of the
following further conditions:
(a) Performance. The Company shall have performed in all material
respects its covenants and obligations under this Agreement required to be
performed by it on or prior to the Closing Date.
(b) Representations and Warranties. (i) The representations and
warranties of the Company contained in Section 3.01 (Organization and
Qualification; Subsidiaries), Section 3.02 (Articles of Incorporation and
By-Laws), Section 3.03 (Capitalization), Section 3.04 (Authority Relative
to this Agreement), Section 3.05 (No Conflict; Required Filings and
Consents) and Section 3.22 (Opinion of Financial Advisor) of this Agreement
shall be true and correct in all material respects, and the representations
and warranties of the Company contained in the first sentence of Section
3.17 (Absence of Certain Material Adverse Changes) shall be true and
correct, in each case both when made and as of the Closing Date, as if made
at and as of such time (except to the extent expressly made as of an
earlier date, in which case as of such date) and (ii) all other
representations and warranties of the Company contained in this Agreement
shall be true and correct (without giving effect to any qualification as to
materiality or Material Adverse Effect contained in any specific
representation or warranty) as of the Closing Date as if made on and as of
the Closing Date, except (A) for changes contemplated or permitted by this
Agreement, (B) that the accuracy of representations and warranties that by
their terms speak as of another date will be determined as of such date and
(C) where any failures of any such representations and warranties to be so
true and correct at and as of the Closing Date, or such other date, as
applicable, would not, individually or in the aggregate, have a Material
Adverse Effect. Parent shall have received a certificate of the Company,
executed by the Chief Executive Officer and Chief Financial Officer of the
Company, as to the satisfaction of the conditions set forth in Sections
6.02(a) and (b).
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(c) Founder Non-Competition Agreement. No actions shall have been
taken by the Founder that would constitute a breach of his obligations
under the Founder Non-Competition Agreement upon its effectiveness.
(d) Resignations. Parent shall have received evidence reasonably
satisfactory to it that, effective as of the Effective Time, all of the
members of the Board of Directors and officers of the Company shall have
resigned from the Board of Directors of, and from their positions as
officers of, the Company.
Section 6.03. Conditions to the Obligations of the Company. The obligations
of the Company to consummate the Merger are subject to the satisfaction or
waiver by the Company on or prior to the Closing Date of the following further
conditions:
(a) Performance. Each of Parent and the Merger Sub shall have
performed in all material respects its covenants and obligations under this
Agreement required to be performed by it on or prior to the Closing Date.
(b) Representations and Warranties. The representations and warranties
of Parent and the Merger Sub contained in this Agreement, to the extent
qualified with respect to materiality, shall be true and correct in all
respects, and, to the extent not so qualified, shall be true and correct in
all material respects, at and as of the Closing Date as if made at and as
of such time, except that the accuracy of representations and warranties
that by their terms speak as of the date of this Agreement or some other
date will be determined as of such date. The Company shall have received
certificates of each of Parent and Merger Sub, executed by their respective
Chief Executive Officer and Chief Financial Officer, as to the satisfaction
of the conditions set forth in Sections 6.03(a) and (b).
ARTICLE VII
TERMINATION; AMENDMENTS; WAIVER
Section 7.01. Termination. This Agreement may be terminated and the Merger
contemplated hereby may be abandoned at any time prior to the Effective Time,
notwithstanding approval thereof by the shareholders of the Company:
(a) by the mutual written consent of Parent and the Company;
(b) by Parent or the Company, if the Effective Time shall not have
occurred on or prior to March 20, 2008 (as extended pursuant to the
following proviso, the "INITIAL TERMINATION DATE"); provided that if the
Company does not file a Notification and Report Form, including required
exhibits and schedules, relating to the Merger and the transactions
contemplated by this Agreement, as required by the HSR Act within thirty
(30) calendar days after the date of this Agreement, or within such longer
period as may have been agreed to
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pursuant to Section 5.04(a), the Initial Termination Date shall be extended
by the number of calendar days in excess of thirty (30) (or, if applicable,
the number of days in such longer period) that elapse after the date of
this Agreement prior to the date on which the Company makes such filing;
provided further, that if all of the conditions set forth in Article VI
have been satisfied as of the Initial Termination Date other than (x) the
conditions (the "ANTITRUST REGULATORY CONDITIONS") set forth in Section
6.01(b) (to the extent that the order, judgment, decree, injunction or
ruling relates to a violation or alleged violation of antitrust, trade
regulation or competition laws) or Section 6.01(c), (y) the last sentence
of Section 6.02(b) and (z) the last sentence of Section 6.03(b), the
Initial Termination Date shall be automatically extended to June 20, 2008
(except that such date shall be deemed to have been extended by the same
number of days, if any, as the Initial Termination Date shall have been
extended pursuant to the first proviso set forth above) (the "EXTENDED
TERMINATION DATE") and Parent, Merger Sub or the Company shall be entitled
to terminate this Agreement under this Section 7.01(b) only if the
Effective Time shall not have occurred on or prior to the Extended
Termination Date; provided further, that if all of the conditions set forth
in Article VI have been satisfied as of the Extended Termination Date other
than (1) the conditions (the "FOREIGN ANTITRUST REGULATORY CONDITIONS") set
forth in Section 6.01(b) (to the extent that the order, judgment, decree,
injunction or ruling relates to a violation or alleged violation of
antitrust, trade regulation or competition laws of the United Kingdom,
Australia, Germany or South Africa (the "FOREIGN REGULATORY
JURISDICTIONS")) or Section 6.01(c)(ii), (2) the last sentence of Section
6.02(b) and (3) the last sentence of Section 6.03(b), the Extended
Termination Date shall be automatically extended to September 20, 2008
(except that such date shall be deemed to have been extended by the same
number of days, if any, as the Initial Termination Date shall have been
extended pursuant to the first proviso set forth above) (the "FINAL
TERMINATION DATE") and Parent, Merger Sub or the Company shall be entitled
to terminate this Agreement under this Section 7.01(b) only if the
Effective Time shall not have occurred on or prior to the Final Termination
Date; provided further, that the right to terminate this Agreement pursuant
to this Section 7.01(b) shall not be available to any party whose breach of
the covenants set forth in Sections 5.03(a), 5.04, 5.08 or 5.09 has been
the cause of, or resulted in, the failure of the Merger to be consummated
by the Initial Termination Date or the Final Termination Date, as
applicable;
(c) by Parent or the Company if any court of competent jurisdiction or
other Governmental Entity shall have issued, enacted, entered, promulgated
or enforced any law, order, judgment, decree, injunction or ruling or taken
any other action (that has not been vacated, withdrawn or overturned)
restraining, enjoining or otherwise prohibiting the Merger and such law,
order, judgment, decree, injunction, ruling or other action shall have
become final and nonappealable; provided that the party seeking to
terminate pursuant to this Section 7.01(c) shall have used its reasonable
best efforts to challenge such law, order, judgment, decree, injunction or
ruling;
(d) by the Company, (i) if there shall have occurred, on the part of
Parent or Merger Sub, a breach of any representation, warranty, covenant or
agreement contained in this Agreement that (x) would result in a failure of
a condition set forth in Section 6.03(a) or Section 6.03(b) and (y) which
is not curable or, if curable, is not cured within thirty (30)
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calendar days after written notice of such breach is given by the Company
to Parent, or (ii) if a third party, including any group, shall have made a
Superior Acquisition Proposal and the Board has taken any of the actions
referred to in clauses (i), (ii) or (iii) of Section 5.07(c) (but only
after compliance by the Board and the Company (1) with the requirements of
clauses (A) and (B) thereof and (2) with the last sentence of Section
5.07(c));
(e) by Parent, if there shall have occurred, on the part of the
Company, a breach of any representation, warranty, covenant or agreement
contained in this Agreement that (x) would result in a failure of a
condition set forth in Section 6.02(a) or Section 6.02(b) to be satisfied
and (y) which is not curable or, if curable, is not cured within thirty
(30) calendar days after written notice of such breach is given by Parent
to the Company;
(f) by Parent if the Special Meeting has been duly held and the
Required Shareholder Approval referred to in Section 6.01(a) shall not have
been obtained by reason of the failure to obtain the requisite vote at such
Special Meeting or at any adjournment or postponement thereof; or
(g) by Parent, if any of the following shall have occurred: (i) the
Board (or any committee thereof) shall have failed to recommend that the
Company's shareholders vote to adopt this Agreement and approve the Merger;
(ii) a Change of Board Recommendation; (iii) the Company shall have failed
to include in the Proxy Statement the Company Board Recommendation or a
statement to the effect that the Board has determined and believes that the
Merger is in the best interests of the Company's shareholders; (iv) the
Company shall have entered into any Acquisition Agreement relating to any
Acquisition Proposal or there shall have been consummated a transaction
with respect to an Acquisition Proposal; (v) a tender or exchange offer
relating to Shares shall have been commenced and the Company shall not have
published or sent to its shareholders, on or before the later of: (x) one
business day following the expiration of any outstanding five business-day
period for receipt of a Revised Acquisition Proposal pursuant to Section
5.07(c) or (y) fifteen business days after the commencement of such tender
or exchange offer, a statement disclosing that the Board recommends
rejection of such tender or exchange offer; or (vi) the Board shall have
recommended acceptance of a third party tender or exchange offer relating
to Shares; provided that any termination pursuant to clause (i) or (ii)
above shall have occurred prior to the Special Meeting.
Section 7.02. Effect of Termination. In the event of the termination of
this Agreement pursuant to Section 7.01, this Agreement shall forthwith become
void and have no effect, without any liability on the part of any party or its
respective former, current or future general or limited partners, managers,
members, directors, officers or shareholders, affiliates or agents, other than
pursuant to the provisions of this Section 7.02, Section 7.03, Article VIII
(excluding Section 8.01 and Section 8.11) and the confidentiality obligations
set forth in Section 5.02, which shall survive any such termination. Nothing
contained in this Section 7.02 shall relieve any party from liability for any
breach of this Agreement.
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Section 7.03. Fees and Expenses.
(a) Whether or not the Merger is consummated, except as otherwise
provided herein, all costs and expenses incurred in connection with the
Merger, this Agreement and the transactions contemplated by this Agreement
shall be paid by the party incurring such expenses.
(b) In the event that (x) the Company shall have terminated this
Agreement pursuant to Section 7.01(d)(ii), (y) Parent shall have terminated
this Agreement pursuant to Section 7.01(g) or (z) Parent shall have
terminated this Agreement pursuant to Section 7.01(f) and, after the date
of this Agreement but prior to the date of the Special Meeting, any person
(other than Parent, Merger Sub or their respective affiliates) has made to
the Company an Acquisition Proposal or shall have publicly announced an
intention (whether or not conditional) to make a proposal or offer relating
to an Acquisition Proposal and, within twelve (12) months following such
termination, the Company or any of its Subsidiaries, directly or
indirectly, (i) enters into a definitive agreement for an Acquisition
Proposal with any person who has made an Acquisition Proposal or any
affiliate of such person between the date of this Agreement and the date of
such termination or (ii) consummates a transaction with respect to an
Acquisition Proposal with any person, then the Company shall promptly (and,
in any event, within three business days after the later of such
termination by Parent, the execution of a definitive agreement for an
Acquisition Proposal or the consummation of such Acquisition Proposal, as
applicable, or in the case of such termination by the Company, immediately
upon such termination) pay to Parent a termination fee of $69 million (the
"PARENT TERMINATION FEE"). The Company shall not withhold any amount from
the Parent Termination Fee so long as Parent shall have delivered to the
Company a duly signed and completed IRS Form W-8BEN (or any successor form
thereto) claiming its entitlement as a resident of Italy to an exemption
from U.S. federal withholding tax with respect to the Parent Termination
Fee pursuant to the income tax treaty between Italy and the United States.
The Parent Termination Fee shall be payable by wire transfer of immediately
available funds.
(c) In the event that this Agreement is terminated pursuant to Section
7.01(b) or Section 7.01(c) as a result of the failure to satisfy the
Antitrust Regulatory Conditions and provided that the condition set forth
in Section 6.01(a) and all conditions to the obligations of Parent and
Merger Sub set forth in Section 6.02 have been satisfied on the date this
Agreement is terminated (other than the conditions set forth in the last
sentence of Section 6.02(b)), Merger Sub shall, and Parent shall cause
Merger Sub to, promptly (and, in any event, within three business days
after such termination) pay to the Company $80 million (the "TERMINATION
AND EXPENSE REIMBURSEMENT FEE") as promptly as practicable following such
termination of this Agreement. The Termination and Expense Reimbursement
Fee shall be payable by wire transfer of immediately available funds. The
Termination and Expense Reimbursement Fee shall be unconditionally
guaranteed by Parent pursuant to that certain Guarantee, in the form
attached hereto as Exhibit D, executed and delivered by it concurrently
herewith.
(d) The parties hereto agree that the provisions contained in this
Section 7.03 are an integral part of the transactions contemplated by this
Agreement, that the damages resulting from the termination of this
Agreement as set forth in Sections 7.03(b) and (c) of this
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Agreement are uncertain and incapable of accurate calculation and that the
amounts payable pursuant to Sections 7.03(b) and (c) hereof are reasonable
forecasts of the actual damages which may be incurred by the parties under
such circumstances. The amounts payable pursuant to Sections 7.03(b) and
(c) hereof constitute liquidated damages and not a penalty and shall be the
sole monetary remedy in the event of termination of this Agreement on the
bases specified in such Sections. If either party fails to pay to the other
party any amounts due under Sections 7.03(b) and (c) in accordance with the
terms hereof, the breaching party shall pay the costs and expenses
(including legal fees and expenses) of the other party in connection with
any action, including the filing of any lawsuit or other legal action,
taken to collect payment.
(e) Any amounts not paid when due pursuant to this Section 7.03 shall
bear interest from the date such payment is due until the date paid at a
rate equal to the prime rate of Citibank N.A. in effect on the date such
payment was required to be made.
Section 7.04. Amendment. This Agreement may be amended by the Company,
Parent and Merger Sub at any time prior to the Effective Time, whether before or
after any approval of this Agreement by the shareholders of the Company, but,
after any such approval, no amendment shall be made which decreases the Merger
Price or which adversely affects the rights of the Company's shareholders
hereunder without the approval of such shareholders. This Agreement may not be
amended except by an instrument in writing signed on behalf of all the parties.
Section 7.05. Extension; Waiver. Subject to the express limitations herein,
at any time prior to the Effective Time, Parent, on the one hand, and the
Company, on the other hand, may (i) extend the time for the performance of any
of the obligations or other acts of any other party hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein by any other
party or in any document, certificate or writing delivered pursuant hereto by
any other party or (iii) unless prohibited by applicable laws, waive compliance
with any of the covenants or conditions contained in this Agreement. Any
agreement on the part of any party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party. The failure of any party to assert any of its rights under this Agreement
or otherwise will not constitute a waiver of such rights.
ARTICLE VIII
MISCELLANEOUS
Section 8.01. Non-Survival of Representations and Warranties. The
representations and warranties made in this Agreement shall not survive beyond
the Effective Time. Notwithstanding the foregoing, the agreements set forth in
Section 1.09, Section 1.10, Section 2.01, Section 5.03(c), Section 5.06 and this
Article VIII shall survive the Effective Time for the applicable statute of
limitations (except to the extent a shorter period of time is explicitly
specified therein).
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Section 8.02. Entire Agreement; Assignment.
(a) This Agreement (including the documents and the instruments
referred to herein) together with the Confidentiality Agreements
constitutes the entire agreement and supersedes all prior agreements,
understandings, representations and warranties, both written and oral,
among the parties to this Agreement with respect to the subject matter
hereof and thereof. No representation, warranty, inducement, promise,
understanding or condition not set forth in this Agreement has been made or
relied upon by any of the parties.
(b) Neither this Agreement nor any of the rights, interests or
obligations hereunder will be assigned by any of the parties hereto
(whether by operation of law or otherwise) without the prior written
consent of the other party. Any purported assignment not permitted under
this Section 8.02(b) will be null and void ab initio. Subject to the
preceding sentence, this Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective
successors and assigns.
Section 8.03. Validity. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, each of which shall remain in full force and
effect.
Section 8.04. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered in person, by overnight courier or facsimile to the
respective parties as follows:
If to Parent or Merger Sub:
Luxottica Group S.p.A.
Xxx X. Xxxxx 0
00000 Xxxxx, Xxxxx
Facsimile: 011 39 02 8699 6550
Attention: Xxxxxx Xxxxxxxxx,
Chief Financial Officer
with a copy to:
Winston & Xxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: 212 294 4700
Attention: Xxxxxxxx Xxxxxxxxx
If to the Company:
Oakley, Inc.
One Icon
Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000
Facsimile: 000 000 0000
Attention: Cos Lykos,
Vice President of Business Development
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with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile: 213 687 5600
Attention: Xxxxxx X. Xxxxx and Xxxxxxx X. Xxxxx
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
Section 8.05. Governing Law; Jurisdiction.
(a) This Agreement shall be governed by and construed in accordance
with the laws of the State of New York, regardless of the laws that might
otherwise govern under applicable principles of conflicts of laws thereof,
except that the laws of the State of Washington shall govern the provisions
of Sections 1.01 through 1.09, 5.06(a) and (c), 5.07 and 5.09 hereof to the
extent that such provisions are specifically applicable to the Merger, its
authorization and the fiduciary duties of directors of the Company relating
thereto. In furtherance of the foregoing, and subject to the exception set
forth in the preceding sentence, the internal law of the State of New York
shall control the interpretation and construction of this Agreement, even
if, under such jurisdiction's choice of law or conflict of law analysis,
the substantive law of some other jurisdiction ordinarily would apply.
(b) Each of the Parties hereto irrevocably consents to the exclusive
jurisdiction and venue of the United States District Court for the Southern
District of New York or any New York State court located in New York
County, State of New York, in connection with any matter based upon or
arising out of this Agreement or the matters contemplated herein, agrees
that process may be served upon them in any manner authorized by the laws
of the State of New York for such Persons and waives and covenants not to
assert or plead any objection that they might otherwise have to such
jurisdiction, venue and process.
Section 8.06. Waiver of Jury Trial. EACH PARTY ACKNOWLEDGES AND AGREES THAT
ANY CONTROVERSY OR DISPUTE THAT MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO
INVOLVE COMPLICATED AND DIFFICULT ISSUES AND THEREFORE EACH SUCH PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY
CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
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NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH
SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii)
EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY AND (iv) EACH SUCH PARTY HAS BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION 8.06.
Section 8.07. Descriptive Headings, etc. The descriptive headings herein
are inserted for convenience of reference only and are not intended to be part
of or to affect the meaning or interpretation of this Agreement. All references
herein to "Articles," "Sections" and "Paragraphs" shall refer to corresponding
provisions of this Agreement unless otherwise expressly noted.
Section 8.08. Counterparts; Effectiveness. This Agreement may be executed
in two or more identical counterparts, all of which shall be considered one and
the same agreement and shall become effective when counterparts have been signed
by each party and delivered to each other party. In the event that any signature
to this Agreement or any amendment hereto is delivered by facsimile transmission
or by e-mail delivery of a "pdf" format data file, such signature shall create a
valid and binding obligation of the party executing (or on whose behalf such
signature is executed) with the same force and effect as if such facsimile or
".pdf" signature page were an original thereof. No party hereto shall raise the
use of a facsimile machine or e-mail delivery of a ".pdf" format data file to
deliver a signature to this Agreement or any amendment hereto or the fact that
such signature was transmitted or communicated through the use of a facsimile
machine or e-mail delivery of a ".pdf" format data file as a defense to the
formation or enforceability of a contract and each party hereto forever waives
any such defense.
Section 8.09. Parties in Interest; No Third Party Beneficiaries. This
Agreement shall be binding upon and inure solely to the benefit of the parties
hereto and their successors and permitted assigns, and, except as set forth in
Sections 5.06(a), (b) and (c), nothing in this Agreement, express or implied, is
intended to confer upon any other person any rights or remedies of any nature
whatsoever under or by reason of this Agreement.
Section 8.10. Certain Definitions. Certain terms used in this Agreement are
defined as follows:
(a) the term "affiliate," as applied to any person, shall mean any
other person directly or indirectly controlling, controlled by, or under
common control with, that person. For the purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with"), as applied to any person,
means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of that person, whether
through the ownership of voting securities, by contract or otherwise, and a
person shall be deemed to control another person if the controlling person
owns 25% or more of any class of voting securities (or other ownership
interest) of the controlled person;
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(b) the term "business day" shall mean each day other than a Saturday,
Sunday or a day on which commercial banks and national stock exchanges
located in New York, New York, or Milan, Italy are closed or authorized by
law to close;
(c) the term "Lien" shall mean a lien, claim, option, charge, security
interest or encumbrance (other than licenses or other agreements related to
Intellectual Property which are not intended to secure an obligation); and
(d) the term "person" shall include individuals, corporations,
partnerships, trusts, other entities and groups (which term shall include a
"group" as such term is defined in Section 13(d)(3) of the Exchange Act).
Section 8.11. Specific Performance. The parties hereto agree that
irreparable damage would occur and that the parties would not have any adequate
remedy at law in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof, this being in addition to any other remedy to
which they are entitled at law or in equity, except as otherwise provided in
Section 7.03(d).
-56-
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its respective officer thereunto duly authorized, all
as of the day and year first above written.
LUXOTTICA GROUP S.P.A.
By:
------------------------------------
Name: Xxxxxx Xxxxxx
Title: Chief Executive Officer
XXXXX ACQUISITION CORP.
By:
------------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: President
OAKLEY, INC.
By:
------------------------------------
Name: D. Xxxxx Xxxxxx
Title: Chief Executive Officer
-57-
SCHEDULE 6.01(C)(II)
ANTITRUST AND COMPETITION LAW CLEARANCES
The applicable anti-trust, competition or other similar laws or regulations of:
1. Australia
2. Germany
3. South Africa
4. United Kingdom
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
OAKLEY, INC.
ARTICLE I
The name of the Corporation is Oakley, Inc. (the "Corporation").
ARTICLE II
1. The Corporation shall have authority to issue one thousand (1,000)
shares of common stock, each having a par value of one xxxxx ($.01) (the "Common
Stock").
2. The shares of the Common Stock of this Corporation may be issued by the
Corporation from time to time for such consideration as from time to time may be
fixed by the Board of Directors of the Corporation; and all issued shares of the
Common Stock of the Corporation shall be deemed fully paid and non-assessable.
ARTICLE III
The street address of the registered office of the Corporation in the State
of Washington is 5000 Columbia Seafirst Center, 000 Xxxxx Xxxxxx, Xxxxxxx,
Xxxxxxxxxx 00000-0000 and the name of the registered agent of the Corporation at
such address is PTSGE Corp.
ARTICLE IV
A director of the Corporation shall not be personally liable to the
Corporation or its shareholders for monetary damages for conduct as a director,
except for:
a. Acts or omissions involving intentional misconduct by the director or a
knowing violation of law by the director;
b. Conduct violating RCW 23B.08.310 of the Washington Business Corporation
Act, as amended from time to time (the "Act")(which involves certain
distributions by the Corporation);
c. Any transaction from which the director will personally receive a
benefit in money, property, or services to which the director is not legally
entitled.
If the Act is amended to authorize corporate action further
eliminating or limiting the personal liability of directors or officers, then
the liability of a director or officer of the Corporation shall be eliminated or
limited to the fullest extent permitted by the Act, as so amended. The
provisions of this Article IV shall be deemed to be a contract with each
director
and officer of the Corporation who serves as such at any time while such
provisions are in effect, and each director and officer entitled to the benefits
hereof shall be deemed to be serving as such in reliance on the provisions of
this Article IV. Any repeal or modification of this Article IV by the
shareholders of the Corporation shall not adversely affect any right or
protection of a director or officer of the Corporation with respect to any acts
or omissions of such director or officer occurring prior to such repeal or
modification.
ARTICLE V
1. The Corporation shall indemnify its directors and officers to the full
extent permitted by applicable law. The Corporation shall advance expenses for
such persons pursuant to the terms set forth in the Bylaws, or in a separate
directors' resolution or contract.
2. The Board of Directors may take such action as is necessary to carry out
these indemnification and expense advancement provisions. It is expressly
empowered to adopt, approve and amend from time to time such Bylaws,
resolutions, contracts or further indemnification and expense advancement
arrangements implementing these provisions as may be permitted by law, including
the purchase and maintenance of insurance. Such Bylaws, resolutions, contracts
or further arrangements shall include but not be limited to implementing the
manner in which determinations as to any indemnity or advancement of expenses
shall be made.
3. No amendment or repeal of this Article V shall apply to or have any
effect on any right to indemnification provided hereunder with respect to acts
or omissions occurring prior to such amendment or repeal.
ARTICLE VI
1. The number of directors of the Corporation shall be specified in the
Bylaws, and such number may from time to time be increased or decreased in such
manner as may be prescribed in the Bylaws.
2. Any director or the entire Board of Directors may be removed from office
at any time, at a duly called meeting of shareholders, by the affirmative vote
of shareholders which satisfied the requirements of Article IX applicable to
amendment, modification, or repeal of these Articles.
3. Vacancies in the Board of Directors, including vacancies resulting from
an increase in the number of directors, shall be filled by a majority of the
directors then in office, though less than a quorum, by the sole remaining
director or by action of the shareholders. All directors elected to fill
vacancies shall hold office for a term expiring at the annual meeting of
shareholders at which the term of the class to which they have been elected
expires and until his or her successor shall have been elected qualified. No
decrease in the number of directors constituting the Board of Directors shall
shorten or eliminate the term of any incumbent director.
2
ARTICLE VII
1. Any action required or permitted to be taken at a shareholders' meeting
may be taken without a meeting or a vote if either: (i) the action is taken by
written consent of all shareholders entitled to vote on the action; or (ii) for
so long as the Corporation is not a public company, the action is taken by
written consent of shareholders holding of record, or otherwise entitled to
vote, in the aggregate not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote on the action were present and voted.
2. To the extent that the Act requires prior notice of any such action to
be given to nonconsenting or nonvoting shareholders, such notice shall be given
at least one (1) day prior to the date on which the action becomes effective (or
such longer period as required by law, in the case of a significant business
transaction under RCW 23B.19.020(15)). The form of notice shall be sufficient to
apprise the nonconsenting or nonvoting shareholder of the nature of the action
to be effected in a manner approved by the Board of Directors or by the
committee or officers to whom the Board of Directors has delegated that
responsibility.
3. Unless these Articles of Incorporation provide for a greater voting
requirement for any voting group of shareholders, the affirmative vote or
written consent of a majority of all of the votes entitled to be cast by a
voting group shall be sufficient, valid and effective to approve and authorize
any acts of the Corporation that, under the Act, would otherwise require the
approval of two-thirds (2/3) of all of the votes entitled to be cast, including,
without limitation: (i) an amendment to these Articles of Incorporation; (ii)
the merger of the Corporation into another corporation or the merger of one or
more other corporations into the Corporation; (iii) the acquisition by another
corporation of all of the outstanding shares of one or more classes or series of
capital stock of the Corporation; (iv) the sale, lease, exchange or other
disposition by the Corporation of all or substantially all of its property
otherwise than in the usual and regular course of business; or (v) the
dissolution of the Corporation.
4. No class or series of shares shall be entitled to vote as a voting group
on the matters set forth in subsections 1(a), (e) or (f) of RCW 23B.10.040, or
any successor provisions thereto. No class or series of shares shall be entitled
to vote as a voting group on a merger or share exchange as otherwise provided
for in RCW 23B.11.035, or any successor provision thereto.
5. In furtherance and not in limitation of the powers conferred by the Act,
the Board of Directors is expressly authorized to make, adopt, repeal, alter,
amenda and rescind the Bylaws of the Corporation by a resolution adopted by a
majority of the directors. The shareholders shall also have the power to adopt,
amend or repeal the Bylaws of the Corporation as set forth therein.
6. Special meetings of the shareholders of the Corporation for any purpose
may be called at any time by the Board of Directors or an authorized committee
of the Board of Directors, or by written demand to the Corporation's Secretary
by shareholders representing at least ten percent (10%) of the shares entitled
to vote on any issue proposed to be considered at such proposed special meeting.
7. For purposes of these Articles, the following capitalized terms shall
have the meaning
3
set forth below. "Subsidiary" means any Corporation or other entity of which a
majority of the voting power of the capital shares entitled to vote generally in
the election of Directors is owned, directly or indirectly, by the Corporation.
"Voting Shares" shall mean all Common Stock and any other shares entitled to
vote for the election of directors as of the date on which a determination of
the number of outstanding Voting Shares is being made under these Articles of
Incorporation.
4
AMENDED AND RESTATED BYLAWS
OF
OAKLEY, INC.
ARTICLE I
SHAREHOLDERS
Section 1. Annual Meeting. An annual meeting of the shareholders for
the election of directors and for the transaction of such other business as may
properly come before the meeting shall be held each year on the date and at the
time determined by the Board of Directors. The failure to hold an annual meeting
at the time stated in these Bylaws does not affect the validity of any corporate
action.
Section 2. Special Meetings. Except as otherwise provided by law,
special meetings of shareholders of this Corporation shall be held whenever
called by the Board of Directors or an authorized committee of the Board of
Directors in accordance with the provisions of these Bylaws.
Section 3. Place of Meetings. Meeting of shareholders shall be held at
such place within or without the State of Washington as determined by the Board
of Directors, pursuant to proper notice.
Section 4. Notice. Written notice of each shareholders' meeting
stating the date, time, and place and, in case of a special meeting, the
purpose(s) for which such meeting is called, shall be given by the Corporation
not less than ten (10) (unless a greater period of notice is required by law in
a particular case) nor more than sixty (60) days prior to the date of the
meeting, to each shareholder of record entitled to vote at such meeting unless
required by law to send notice to all shareholders regardless of whether or not
such shareholders are entitled to vote, to the shareholder's address as it
appears on the current record of shareholders of this Corporation.
Section 5. Waiver of Notice. A shareholder may waive any notice
required to be given by these Bylaws, the Articles of Incorporation of this
Corporation, as amended and restated from time to time (the "Articles of
Incorporation"), or the Washington Business Corporation Act, as amended from
time to time (the "Act"), before or after the meeting that is the subject of
such notice. A valid waiver is created by any of the following three methods:
(a) in writing, signed by the shareholder entitled to the notice and delivered
to the Corporation for inclusion in its corporate records; (b) attendance at the
meeting, unless the shareholder at the beginning of the meeting objects to
holding the meeting or transacting business at the meeting; or (c) as to the
consideration of a particular matter that is not within the purpose or purposes
described in the meeting notice, the shareholders' failure to object at the time
of presentation of such matter for consideration.
Section 6. Quorum of Shareholders. At any meeting of the shareholders,
holders of a majority of the votes of all the shares entitled to vote on a
matter, represented by shareholders of record in person or by proxy, shall
constitute a quorum.
Once a share is represented at a meeting, other than to object to
holding the meeting or transacting business, it is deemed to be present for
quorum purposes for the remainder of the meeting and for any adjournment of that
meeting unless a new record date is or must be set for the adjourned meeting. At
such reconvened meeting, any business may be transacted that might have been
transacted at the meeting as originally noticed.
Section 7. Proxies. Shareholders of record may vote at any meeting
either in person or by proxy executed in writing. A proxy is effective when
received by the Secretary of the Corporation or another officer or agent of the
Corporation authorized to tabulate votes for the Corporation. A proxy is valid
for eleven (11) months unless a longer period is expressly provided in the
proxy.
Section 8. Voting. Subject to the provisions of the laws of the State
of Washington, and unless otherwise provided in the Articles of Incorporation,
each outstanding share is entitled to one (1) vote on each matter voted on at a
shareholders' meeting, with all shares voting together as a single class.
Section 9. Action by shareholders. Except as otherwise provided for in
the Articles of Incorporation of the Corporation and if a quorum exists, the
affirmative vote of a majority of all of the votes cast by a voting group shall
be sufficient, valid and effective to approve and authorize any acts of the
Corporation that, under the Act, would otherwise require the approval of
two-thirds (2/3) of all of the votes entitled to be cast, including, without
limitation: (i) an amendment to the Articles of Incorporation; (ii) the merger
of the Corporation into another corporation or the merger of one or more other
corporations into the Corporation; (iii) the acquisition by another corporation
of all of the outstanding shares of one or more classes or series of capital
stock of the Corporation; (iv) the sale, lease, exchange or other disposition by
the Corporation of all or substantially all of its property otherwise than in
the usual and regular course of business; or (v) the dissolution of the
Corporation.
Section 10. Adjournment. A majority of the shares represented at the
meeting, even if less than a quorum, may adjourn any meeting of the shareholders
from time to time. At a reconvened meeting at which a quorum is present, any
business may be transacted at the meeting as originally noticed. If a meeting is
adjourned to a different date, time or place, notice need not be given of the
new date, time or place if a new date, time or place is announced at the meeting
before adjournment; however, if a new record date of the adjourned meeting is or
must be fixed in accordance with the corporate laws of the State of Washington,
notice of the adjourned meeting must be given to persons who are shareholders as
of the new record date.
Section 11. Advance Notice Requirements for Shareholder Proposals and
Director Nominations. Any shareholder seeking to bring business before or to
nominate a
2
director or directors at any meeting of shareholders, must provide written
notice thereof in accordance with this Section 11 The notice must be delivered
to, or mailed and received at, the principal executive offices of the
Corporation not less than (i) with respect to an annual meeting of shareholders,
one hundred twenty (120) calendar days in advance of the date that the
Corporation's proxy statement was released to shareholders in connection with
the previous year's annual meeting, except that if no annual meeting of
shareholders was held in the previous year or if the date of the annual meeting
has been changed by more than thirty (30) calendar days from the date
contemplated at the time of the previous year's proxy statement, such notice
must be received by the Corporation a reasonable time before the Corporation's
proxy statement is to be released, and (ii) with respect to a special meeting of
shareholders, a reasonable time before the Corporation's proxy statement is to
be released. The Board of Directors may waive this advance notice requirement at
its discretion, and shall be deemed to have so waived such notice requirement if
it does not object to a shareholder proposal or director nomination presented
without adequate notice at the time it is made.
ARTICLE II
BOARD OF DIRECTORS
Section 1. Powers of Directors. All corporate powers shall be
exercised by or under the authority of, and the business and affairs of the
Corporation shall be managed under the direction of, the Board of Directors,
except as otherwise provided by the Articles of Incorporation.
Section 2. Number and Qualifications. The number of directors shall be
fixed from time to time by resolution of a majority of the Board of Directors or
by action of the shareholders taken in accordance with Article I, Section 9 of
these Bylaws. Directors must have reached the age of majority. Until modified in
accordance with the provisions of these Bylaws, the Board of Directors shall
consist of three (3) directors.
Section 3. Election - Term of Office. Except as otherwise provided in
these Bylaws, the Board of Directors shall be elected by the shareholders at the
annual meeting of shareholders. Nominations of candidates for election as
directors at an annual meeting of shareholders may only be made (a) by, or at
the direction of, the Board of Directors or (b) by any shareholder of the
Corporation who is entitled to vote at the meeting and who complies with the
procedures set forth in Article I, Section 11 of these Bylaws. Each director
shall hold office for the term for which elected and until his or her successor
shall have been elected and qualified. If, for any reason, the directors shall
not have been elected at the designated annual meeting, they may be elected at a
special meeting of shareholders called for that purpose in the manner provided
by these Bylaws.
Section 4. Regular Meetings. Regular meetings of the Board of
Directors shall be held immediately following each annual meeting of
shareholders and at such other times and at such places as the Board may
determine, and no notice thereof need be given.
3
Section 5. Special Meetings. Special meetings of the Board of
Directors may be held at any time, whenever called by the Chairman of the Board,
President or Chief Executive Officer, with notice thereof being given to each
director by the officer calling or directed to call the meeting.
Section 6. Notice. No notice is required for regular meetings of the
Board of Directors. Notice of special meetings of the Board of Directors,
stating the date, time, and place thereof, shall be given, where practicable, at
least two (2) days prior to the date of the meeting. The purpose of the meeting
need not be given in the notice. Such notice shall be given in the manner
provided by Section 3 of Article III of these Bylaws.
Section 7. Waiver of Notice. A director may waive notice of a special
meeting of the Board either before or after the meeting, and such waiver shall
be deemed to be the equivalent of giving notice. Attendance of a director at a
meeting shall constitute waiver of notice of that meeting unless said director,
at the beginning of the meeting, or promptly upon such director's arrival,
objects to holding the meeting or transacting business at the meeting and does
not thereafter vote for or assent to action taken at the meeting. Any waiver by
a non-attending director must be in writing, signed by the director entitled to
the notice and delivered to the Corporation for inclusion in its corporate
records.
Section 8. Quorum of Directors. A majority of the members of the Board
of Directors shall constitute a quorum for the transaction of business. When a
quorum is present at any meeting, a majority of the members present thereat
shall decide any question brought before such meeting, except as otherwise
provided by the Articles of Incorporation or by these Bylaws.
Section 9. Adjournment. A majority of the directors present, even if
less than a quorum, may adjourn a meeting and continue it to a later time.
Notice of the adjourned meeting or of the business to be transacted thereat,
other than by announcement, shall not be necessary. At any adjourned meeting at
which a quorum is present, any business may be transacted which could have been
transacted at the meeting as originally called.
Section 10. Resignation and Removal. Any director of this Corporation
may resign at any time by giving written notice to the Board of Directors, its
Chairman, or the President or Secretary of this Corporation. Any such
resignation is effective when the notice is delivered, unless the notice
specifies a later effective date. A director, any class of directors, or the
entire Board of Directors may be removed as prescribed in the Articles of
Incorporation.
Section 11. Vacancies. Unless otherwise provided by law, vacancies in
the Board of Directors shall be filled by a majority of the directors then in
office, though less than a quorum, by the sole remaining director or by action
of the shareholders taken in accordance with Article I, Section 9 of these
Bylaws.
Section 12. Compensation. By resolution of the Board of Directors,
each director may be paid expenses, if any, of attendance at each meeting of the
Board of Directors
4
(and each meeting of any committees thereof), and may be paid a stated salary as
director, or a fixed sum for attendance at each meeting of the Board of
Directors (and each meeting of any committee thereof), or both. No such payment
shall preclude any director from serving this Corporation in any other capacity
and receiving compensation therefor.
Section 13. Presumption of Assent. A director of this Corporation who
is present at a meeting of the Board of Directors at which action on any
corporate matter is taken shall be presumed to have assented to the action taken
unless:
a. The director objects at the beginning of the meeting, or promptly
upon the director's arrival, to holding it or transacting business at the
meeting;
b. The director's dissent or abstention from the action taken is
entered in the minutes of the meeting; or
c. The director delivers written notice of dissent or abstention to
the presiding officer of the meeting before its adjournment or to the
Corporation within a reasonable time after adjournment.
The right of dissent or abstention is not available to a director who votes in
favor of the action taken.
Section 14. Committees of the Board of Directors. The Board of
Directors is expressly authorized to create one or more committees of directors
in accordance with the provisions of Section 23B.08.250 of the Act. Each
committee must have two or more members, who serve at the pleasure of the Board
of Directors. The creation of a committee and appointment of members to it must
be approved by a majority of all the directors in office when such action is
taken or such other number of directors as may be required by Section
23B.08.250(2) of the Act. To the extent specified by the Board of Directors or
in the Articles of Incorporation or these Bylaws, each committee may exercise
the authority of the Board of Directors under Section 23B.08.010 of the Act;
provided, however, a committee may not: (a) authorize or approve a distribution
except according to a general formula or method prescribed by the Board of
Directors, (b) approve or propose to shareholders action that is required by the
Act to be approved by shareholders; (c) fill vacancies on the Board of Directors
or on any of its committees, (d) amend the Articles of Incorporation pursuant to
Section 23B.10.020 of the Act, (e) adopt, amend or repeal these Bylaws, (f)
approve a plan of merger not requiring shareholder approval, or (g) authorize or
approve the issuance or sale or contract for sale of shares, or determine the
designation and relative rights, preferences, and limitations of a class or
series of shares, except that, in the case of this cause (g), the Board of
Directors may authorize a committee, or a senior executive officer of the
Corporation, to do so within limits specifically prescribed by the Board of
Directors.
5
ARTICLE III
SPECIAL MEASURES APPLYING TO
SHAREHOLDER AND/OR DIRECTOR ACTIONS
Section 1. Action by Written Consent. Any action required or permitted
to be taken at an annual, regular or special meeting of the shareholders or the
Board of Directors may be accomplished without a meeting if the action is taken
by all the shareholders entitled to vote thereon, or all the members of the
Board, as the case may be. Unless otherwise prohibited by the Articles of
Incorporation, action may also be taken by less than unanimous consent where
such consent has been signed by, as the case may be, shareholders representing
not less than the number of shares otherwise necessary to authorize such action
at a meeting at which all shares entitled to vote thereon were present and
voted, or by the majority (or such other number as may otherwise be required by
the Articles of Incorporation or these Bylaws for authorizing such action) of
the members of the Board of Directors. An action taken by unanimous or less than
unanimous consent must be evidenced by one or more written consents describing
the action taken, signed by the number of shareholders or directors required
above, as the case may be, either before or after the action is taken, and
delivered to the Corporation for inclusion in the minutes or filing with the
Corporation's records.
Action taken by written consent of the shareholders is effective when
all consents are in the possession of the Corporation, unless the consent
specifies a later effective date. Action taken by written consent of the Board
of Directors is effective when the last director signs the consent, unless the
consent specifies a later effective date.
Section 2. Telephonic Meeting. Meetings of the shareholders and Board
of Directors may be effectuated by means of a conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other during the meeting. Participation by such means
shall constitute presence in person at such meeting.
Section 3. Oral and Written Notice. Oral notice of a meeting of the
Board of Directors may be communicated in person or by telephone, email, wire or
wireless equipment that does not transmit a facsimile of the notice. Oral notice
is effective when communicated.
Written notice may be transmitted by mail, reputable overnight or
express delivery service, or personal delivery; telegraph or teletype; or
telephone, email, wire, or wireless equipment that transmits a facsimile of the
notice. Written notice is effective at the earliest of the following:
a. when dispatched by telegraph, teletype or facsimile equipment,
if such notice is sent to the person's address, telephone number or other number
appearing on the records of the Corporation;
b. when received;
6
c. five (5) days after its deposit in the U.S. mail if mailed
with first class postage;
d. the day of delivery as shown on the delivery receipt or
acknowledgment if delivered by reputable overnight or express delivery service;
or
e. on the date shown on the return receipt, if sent by registered
or certified mail, return receipt requested, and the receipt is signed by or on
behalf of the addressee.
ARTICLE IV
OFFICERS
Section 1. Positions. The officers of the Corporation shall be a Chief
Executive Officer, President and a Secretary. In addition, the Board of
Directors may appoint a Chairman of the Board of Directors, Vice Chairman of the
Board of Directors, a Chief Financial Officer, one or more Vice Presidents and
such other officers and assistant officers to perform such duties as from time
to time it may deem appropriate. The Board of Directors may also delegate to any
other officer or officers of the Corporation the power to choose such other
officers and assistant officers and to prescribe their respective duties and
powers. No officer need be a shareholder or a director of this Corporation. Any
two or more offices may be held by the same person.
Section 2. Appointment and Term of Office. The officers of this
Corporation shall be appointed annually by the Board of Directors at the first
meeting of the Board of Directors held after each annual meeting of the
shareholders. If officers are not appointed at such meeting, such appointment
shall occur as soon as possible thereafter. Each officer shall hold office until
a successor shall have been appointed and qualified or until said officer's
earlier death, resignation or removal.
Section 3. Powers and Duties. If the Board of Directors appoints
persons to fill the following officer positions, such officer shall have the
powers and duties, as the Board of Directors in its sole discretion may amend
from time to time, set forth below:
a. Chairman of the Board of Directors. The Chairman of the Board
of Directors shall preside at all meetings of the shareholders and of the Board
of Directors. The Chairman of the Board of Directors shall possess the same
power as the Chief Executive Officer and the President to sign all bonds, deeds,
mortgages and any other agreements, and such signature shall be sufficient to
bind this Corporation. The Chairman of the Board of Directors shall, subject to
the direction and control of the Board of Directors, have general supervision of
the business of the Corporation. The Chairman of the Board of Directors shall
also perform such other duties as the Board of Directors shall designate.
b. Vice Chairman of the Board of Directors. The Vice Chairman of
the Board of Directors shall possess the same power as the Chief Executive
Officer and the
7
President to sign all bonds, deeds, mortgages and any other agreements, and such
signature shall be sufficient to bind this Corporation. Unless the Chairman of
the Board of Directors has been appointed and is present, the Vice Chairman of
the Board of Directors shall preside at meetings of the shareholders and the
Board of Directors. The Vice Chairman of the Board of Directors shall also
perform such other duties as the Board of Directors, the Chairman of the Board
of Directors or the Chief Executive Officer shall designate.
c. Chief Executive Officer. The Chief Executive Officer shall,
together with the Chairman of the Board of Directors, if any, and subject to the
direction and control of the Board of Directors, have general supervision of the
business of the Corporation. The Chief Executive Officer shall, in the absence
of the Chairman of the Board of Directors and the Vice Chairman of the Board of
Directors, if any, preside at all meetings of the shareholders and the Board of
Directors.
The Chief Executive Officer may sign all bonds, deeds, mortgages,
and any other agreements, and such signature shall be sufficient to bind this
Corporation. The Chief Executive Officer shall perform such other duties as the
Board of Directors or the Chairman of the Board of Directors, if any, shall
designate.
d. President. The President shall possess the power to sign all
bonds, deeds, mortgages and any other agreements, and such signatures shall be
sufficient to bind this Corporation. The President shall perform such other
duties as the Board of Directors, the Chairman of the Board of Directors, if
any, or the Chief Executive Officer shall designate.
e. Chief Operating Officer. The Chief Operating Officer shall
possess the same power as the President and the Chief Executive Officer to sign
all bonds, deeds, mortgages and any other agreements, and such signature shall
be sufficient to bind this Corporation. The Chief Operating Officer shall also
perform such other duties as the Board of Directors, the Chairman of the Board
of Directors, if any, or the Chief Executive Officer shall designate.
f. Vice Presidents. Each Vice President shall have such powers
and discharge such duties as may be assigned from time to time to such Vice
President by the Board of Directors, the Chairman of the Board of Directors, if
any, the Chief Executive Officer or the President. The Board of Directors may
select a specific title for a Vice President of this Corporation which such
title shall include the words "Vice President" together with such other term or
terms which may generally indicate such Vice President's rank and/or duties.
During the absence or disability of the Chairman of the Board of Directors (if
one has been elected), the Chief Executive Officer and the President, the Vice
President (or in the event that there be more than one Vice President, the Vice
Presidents in the order designated by the Board of Directors) shall exercise all
functions of the Chairman of the Board of Directors, if any, the Chief Executive
Officer and the President, except as limited by resolution of the Board of
Directors.
g. Secretary. The Secretary shall:
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(1) Prepare minutes of the directors' and shareholders'
meetings and keep them in one or more books provided for that purpose;
(2) Authenticate records of the Corporation;
(3) See that all notices are duly given in accordance with
the provisions of these Bylaws or as required by law;
(4) Be custodian of the corporate records and of the seal of
the Corporation (if any), and affix the seal of the Corporation to all
documents as may be required;
(5) Keep a register of the post office address of each
shareholder which shall be furnished to the Secretary by such shareholder;
(6) Sign, with the Chairman of the Board of Directors, if
any, the President, the Chief Executive Officer or a Vice President,
certificates for shares of the Corporation, the issuance of which shall
have been authorized by resolution of the Board of Directors;
(7) Have general charge of the stock transfer books of the
Corporation; and
(8) In general perform all the duties incident to the office
of Secretary and such other duties as from time to time may be assigned to
him or her by the Board of Directors, the Chairman of the Board of
Directors, if any, the President or the Chief Executive Officer. In the
Secretary's absence, the Board of Directors may appoint an assistant
secretary to perform the Secretary's duties.
h. Chief Financial Officer. The Chief Financial Officer shall
have custody of the funds and securities of the Corporation, shall keep full and
accurate accounts of receipts and disbursements of the Corporation in books
belonging to the Corporation and shall deposit all moneys and other valuable
effects of the Corporation in the name and to the credit of the Corporation in
such depositories as may be designated by the Board of Directors. The Chief
Financial Officer shall disburse the funds of the Corporation as may be ordered
by the Board of Directors, taking proper vouchers for such disbursements, and
shall render to the Chairman of the Board of Directors, if any, the President,
the Chief Executive Officer and the Board of Directors at its regular meetings,
or when the Chairman of the Board of Directors, if any, the President, the Chief
Executive Officer or the Board of Directors so requires, an account of all of
his or her transactions as Chief Financial Officer and of the financial
condition of the Corporation. If required by the Board of Directors, the Chief
Financial Officer shall give the Corporation a bond in such sum and with such
surety or sureties as shall be satisfactory to the Board of Directors for the
faithful performance of the duties of his or her office and for the restoration
to the Corporation, in case of his or her death, resignation, retirement or
removal from office, of all books, papers, vouchers, money and other property of
whatever kind in his or her possession or under his or her control belonging to
the Corporation.
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Section 4. Salaries and Contract Rights. The Salaries, if any, of the
officers shall be fixed from time to time by the Board of Directors. The
appointment of an officer shall not of itself create a contract right.
Section 5. Resignation or Removal. Any officer of this Corporation may
resign at any time by giving written notice to the Board of Directors. Any such
resignation is effective when the notice is delivered, unless the notice
specifies a later date, and shall be without prejudice to the contract rights,
if any, of such officer.
The Board of Directors, by majority vote, may remove any officer or
agent appointed by it, with or without cause. The removal shall be without
prejudice to the contract rights, if any, of the person so removed.
Section 6. Vacancies. If any office becomes vacant by any reason, the
directors may appoint a successor or successors who shall hold office for the
unexpired term.
ARTICLE V
CERTIFICATES OF SHARES AND THEIR TRANSFER;
UNCERTIFICATED SHARES
Section 1. Issuance of Shares. No shares of this Corporation shall be
issued unless authorized by the Board of Directors. Such authorization shall
include the maximum number of shares to be issued and the consideration to be
received. A good faith determination by the Board that the consideration
received or to be received for the shares to be issued is adequate is conclusive
insofar as the adequacy of consideration relates to whether the shares are
validly issued, fully paid and nonassessable.
Section 2. Issuance of Certificated Shares. Unless the Board of
Directors determines that the Corporation's shares are to be uncertificated,
certificates for shares of the Corporation shall be in such form as is
consistent with the provisions of the Act. The certificate shall be signed by
original or facsimile signature of two officers of the Corporation, and the seal
of the Corporation may be affixed thereto.
Section 3. Transfer of Certificated Stock. Certificated shares of
stock may be transferred by delivery of the certificate accompanied by either an
assignment in writing on the back of the certificate or by a written power of
attorney to assign and transfer the same on the books of the Corporation, signed
by the record holder of the certificate. Shares shall be transferable on the
books of this Corporation, upon surrender thereof so assigned or endorsed.
Section 4. Loss or Destruction of Certificates. In case of the loss,
mutilation or destruction of a certificate of stock, a duplicate certificate may
be issued upon such terms as the Board of Directors shall prescribe.
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Section 5. Issuance of Uncertificated Shares. The Board of Directors
may authorize the issue of some or all of the shares of any or all of the
Corporation's classes or series of stock without certificates; provided,
however, that such authorization shall not affect shares already represented by
certificates until they are surrendered to the Corporation. Within a reasonable
time after the issue or transfer of shares without certificates, the Corporation
shall send the shareholders, a written statement of the information required on
certificates by the Act. Said statement shall be informational to the
shareholder and not incontrovertible evidence of stock ownership.
The statement shall be signed by original or facsimile signature of
two officers of the Corporation, and the seal of the Corporation may be affixed
thereto.
Section 6. Transfer of Uncertificated Stock. Transfer of
uncertificated shares of stock may be accomplished by delivery of an assignment
in writing or by a written power of attorney to assign and transfer the same on
the books of the Corporation, signed by the record holder of the shares.
Surrender of the written statement shall not be a requirement for transfer of
the shares so represented.
Section 7. Record Date and Transfer Books. For the purpose of
determining shareholders who are entitled to notice of or to vote at any meeting
of shareholders or any adjournment thereof, or entitled to receive payment of
any dividend, or in order to make a determination of shareholders for any other
proper purpose, the Board of Directors may fix in advance a record date for any
such determination of shareholders, such date in any case to be not more than
seventy (70) days and, in case of a meeting of shareholders, not less than ten
(10) days prior to the date on which the particular action, requiring such
determination of shareholders, is to be taken.
If no record date is fixed for such purposes, the date on which notice
of the meeting is mailed or the date on which the resolution of the Board of
Directors declaring such dividend is adopted, as the case may be, shall be the
record date for such determination of shareholders.
When a determination of shareholders entitled to vote at any meeting
of shareholders has been made as provided in this section, such determination
shall apply to any adjournment thereof, unless the Board of Directors fixes a
new record date, which it must do if the meeting is adjourned more than one
hundred twenty (120) days after the date fixed for the original meeting.
Section 8. Voting Record. The officer or agent having charge of the
stock transfer books for shares of this Corporation shall make at least ten (10)
days before each meeting of shareholders a complete record of the shareholders
entitled to vote at such meeting or any adjournment thereof, arranged in
alphabetical order, with the address of and the number of shares held by each.
Such record shall be produced and kept open at the time and place of the meeting
and shall be subject to the inspection of any shareholder during the whole time
of the meeting for the purposes thereof.
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ARTICLE VI
BOOKS AND RECORDS
Section 1. Books of Accounts, Minutes and Share Register. The
Corporation:
a. Shall keep as permanent records minutes of all meetings of its
shareholders and Board of Directors, a record of all actions taken by the
shareholders or Board of Directors without a meeting, and a record of all
actions taken by a committee of the Board of Directors exercising the
authority of the Board of Directors on behalf of the Corporation;
b. Shall maintain appropriate accounting records;
c. Or its agent shall maintain a record of its shareholders, in a
format that permits preparation of a list of the names and addresses of all
shareholders, in alphabetical order by class of shares showing the number
and class of shares held by each; and
d. Shall keep a copy of the following records at its principal
office:
(1) The Articles of Incorporation;
(2) The Bylaws or Restated Bylaws and all amendments to them
currently in effect;
(3) The minutes of all shareholders' meetings, and records
of all actions taken by shareholders without a meeting, for the past three
(3) years;
(4) Its financial statements for the past three (3) years,
including balance sheets showing in reasonable detail the financial
condition of the Corporation as of the close of each fiscal year, and an
income statement showing the results of its operations during each fiscal
year;
(5) All written communications to shareholders generally
within the past three (3) years;
(6) A list of the names and business addresses of its
current directors and officers; and
(7) Its most recent annual report delivered to the Secretary
of Sate of Washington.
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Section 2. Copies of Resolutions. Any person dealing with the
Corporation may rely upon a copy of any of the records of the proceedings,
resolutions or votes of the Board of Directors or shareholders, when certified
by the President or Secretary.
ARTICLE VII
INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS
Section 1. Indemnification Rights of Directors, Officers, Employees
and Agents. The Corporation shall indemnify its directors and officers and may
indemnify its employees and agents (each an "Indemnified Party") to the full
extent permitted by the Act or other applicable law, as then in effect, and the
Articles of Incorporation, against liability arising out of a proceeding to
which each such Indemnified Party was made a party because the Indemnified Party
is or was a director, officer, employee or agent of the Corporation. The
Corporation shall advance expenses incurred by each such Indemnified Party who
is a party to a proceeding in advance of final disposition of the proceeding, as
provided by applicable law, the Articles of Incorporation or by written
agreement, which written agreement may allow any required determinations to be
made by any appropriate person or body consisting of a member or members of the
Board of Directors, or any other person or body appointed by the Board of
Directors, who is not a party to the particular claim for which an Indemnified
Party is seeking indemnification, or independent legal counsel.
The Corporation is not obligated to indemnify an Indemnified Party for
any amounts paid in settlement of any proceeding without the Corporation's prior
written consent to such settlement and payment. The Corporation shall not settle
any proceeding in any manner which would impose any penalty or limitation on an
Indemnified Party without such Indemnified Party's prior written consent.
Neither the Corporation nor an Indemnified Party may unreasonably withhold its
consent to a proposed settlement.
Section 2. Contract and Related Rights.
a. Contract Rights. The right of an Indemnified Party to
indemnification and advancement of expenses is a contract right upon which the
Indemnified Party shall be presumed to have relied in determining to serve or to
continue to serve in his or her capacity with the Corporation. Such right shall
continue as long as the Indemnified Party shall be subject to any possible
proceeding. Any amendment to or repeal of this Article shall not adversely
affect any right or protection of an Indemnified Party with respect to any acts
or omissions of such Indemnified Party occurring prior to such amendment or
repeal.
b. Optional Insurance, Contracts and Funding. The Corporation
may:
(1) Maintain insurance, at its expense, to protect itself
and any Indemnified Party against any liability, whether or not the
Corporation would have power to indemnify the Indemnified Party against the
same liability under Sections 23B.08.510 or .520 of the Act, or a
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successor section or statute;
(2) Enter into contracts with any Indemnified Party in
furtherance of this Article and consistent with the Act; and
(3) Create a trust fund, grant a security interest, or use
other means (including without limitation a letter of credit) to ensure the
payment of such amounts as may be necessary to effect indemnification
provided in this Article.
Section 3. Exceptions. Any other provision herein to the contrary
notwithstanding, the Corporation shall not be obligated pursuant to the terms of
these Bylaws to indemnify or advance expenses to an Indemnified Party with
respect to any proceeding:
a. initiated or brought voluntarily by an Indemnified Party and
not by way of defense, except with respect to proceedings brought to
establish or enforce a right to indemnification under these Bylaws, the
Articles of Incorporation or any statute or law; but such indemnification
or advancement of expenses may be provided by the Corporation in specific
cases if the Board of Directors finds it to be appropriate;
b. instituted by an Indemnified Party to enforce or interpret the
provisions hereof or the Articles of Incorporation, if a court of competent
jurisdiction determines that each of the material assertions made by such
Indemnified Party in such proceeding was not made in good faith or was
frivolous;
c. to the extent such Indemnified Party has otherwise actually
received payment (under any insurance policy or otherwise) of the amounts
otherwise indemnifiable hereunder; or
d. if the Corporation is prohibited by the Articles of
Incorporation, the Act or other applicable law as then in effect from
paying such indemnification and/or advancement of expenses.
ARTICLE VIII
AMENDMENT OF BYLAWS
Section 1. By the Shareholders. These Bylaws may be amended or
repealed by a resolution duly adopted by not less than a majority of the shares
entitled to vote thereon.
Section 2. By the Board of Directors. These Bylaws may be amended or
repealed, or new Bylaws may be adopted, by a resolution duly adopted by a
majority of the whole Board of Directors.
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EXHIBIT C
CERTIFICATE OF NON-FOREIGN STATUS - ENTITY
Section 1445 of the Internal Revenue Code of 1986, as amended,
provides that a transferee of a U.S. real property interest must withhold tax if
the transferor is a foreign person. For U.S. tax purposes (including Section
1445), the owner of a disregarded entity (which has legal title to a U.S. real
property interest under local law) will be the transferor of the property and
not the disregarded entity. To inform the transferee that withholding of tax is
not required, the undersigned hereby certifies the following on behalf of [NAME
OF TRANSFEROR]:
1. [NAME OF TRANSFEROR] is not a foreign corporation, foreign
partnership, foreign trust, or foreign estate (as those terms are
defined in the Internal Revenue Code and Income Tax Regulations);
2. [NAME OF TRANSFEROR] is not a disregarded entity as defined in
Treasury Regulation Section 1.1445-2(b)(2)(iii);
3. [NAME OF TRANSFEROR]'s U.S. employer identification number is
_________________; and
4. [NAME OF TRANSFEROR]'s office address is:
[ADDRESS]
[NAME OF TRANSFEROR] understands that this certification may be
disclosed to the Internal Revenue Service by the transferee and that any false
statement contained herein could be punished by fine, imprisonment, or both.
Under penalties of perjury I declare that I have examined this
certification and to the best of my knowledge and belief it is true, correct and
complete, and I further declare that I have authority to sign this document on
behalf of [NAME OF TRANSFEROR].
----------------------------------------
Name of Transferor:
--------------------
Title:
---------------------------------
Date:
----------------------------------
EXHIBIT C
CERTIFICATE OF NON-FOREIGN STATUS - INDIVIDUAL
Section 1445 of the Internal Revenue Code of 1986, as amended,
provides that a transferee of a U.S. real property interest must withhold tax if
the transferor is a foreign person. To inform the transferee that withholding of
tax is not required, I, [NAME OF TRANSFEROR], hereby certify:
1. I am not a nonresident alien for purposes of U.S. income
taxation;
2. My U.S. taxpayer identifying number (Social Security number) is
_________________________; and
3. My home address is:
[ADDRESS]
I understand that this certification may be disclosed to the Internal
Revenue Service by the transferee and that any false statement I have made here
could be punished by fine, imprisonment, or both.
Under penalties of perjury I declare that I have examined this
certification and to the best of my knowledge and belief it is true, correct and
complete.
----------------------------------------
Date:
----------------------------------
GUARANTEE
This Guarantee is made as of the 20th day of June, 2007 by LUXOTTICA
GROUP S.P.A., an Italian corporation (the "GUARANTOR"), in favor and for the
benefit of OAKLEY, INC., a Washington corporation ("OAKLEY").
WITNESSETH
WHEREAS, the Guarantor beneficially indirectly owns all of the issued
and outstanding stock of Xxxxx Acquisition Corp., a Washington corporation (the
"PAYOR"); and
WHEREAS, the Payor has entered into that certain Agreement and Plan of
Merger, dated as of the date hereof (as the same may be amended, supplemented or
otherwise modified from time to time, the "MERGER AGREEMENT"), with Oakley and
the Guarantor, pursuant to which the Guarantor has agreed to acquire all of the
outstanding shares of capital stock of Oakley through the merger (the "MERGER")
of the Payor with and into Oakley; and
WHEREAS, pursuant to Section 7.03(c) of the Merger Agreement, if the
Merger Agreement is terminated under certain circumstances, Payor has agreed to
pay to Oakley the Termination and Expense Reimbursement Fee; and
WHEREAS, as an inducement to Oakley to enter into the Merger
Agreement, Guarantor has agreed to guarantee Payor's obligation to pay the
Termination and Expense Reimbursement Fee;
NOW, THEREFORE, in consideration of the foregoing premises and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Guarantor hereby agrees as follows:
1. DEFINED TERMS.
(a) Unless otherwise defined herein, terms defined in the Merger Agreement
and used herein shall have the meanings given to them in the Merger
Agreement.
(b) The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Guarantee shall refer to this Guarantee as a
whole and not to any particular provision of this Guarantee, and
Section and paragraph references are to this Guarantee unless
otherwise specified.
(c) The meanings given to terms defined herein shall be equally applicable
to both the singular and plural forms of such terms.
2. GUARANTEE. Subject to the provisions hereof, the Guarantor hereby
unconditionally guarantees to Oakley the due and punctual payment of the
Termination and Expense Reimbursement Fee by Payor when the same shall
become due and payable. Guarantor's liability hereunder shall be and is
specifically limited to payment of the Termination and Expense
Reimbursement Fee required to be made in accordance with the terms of the
1
Merger Agreement. The Guarantor and Oakley agree that this Guarantee
constitutes a guarantee of payment and not of collection. The Guarantor
agrees to pay, on demand, and to save Oakley harmless against liability
for, any and all costs and expenses (including fees and disbursements of
counsel) incurred or expended by or on behalf of Oakley in connection with
the enforcement of or preservation of any rights under this Guarantee.
3. GUARANTEE ABSOLUTE AND UNCONDITIONAL. (a) The Guarantor hereby agrees that
its obligations hereunder shall be unconditional, irrevocable, and
absolute, irrespective of (i) the validity or enforceability of the Merger
Agreement, (ii) any amendment to or modification of any of the terms or
provisions of the Merger Agreement, (iii) the absence of any action to
enforce the Merger Agreement against the Payor, (iv) any waiver or consent
by Oakley with respect to any provisions of the Merger Agreement, or (v)
any other act or thing or omission, or delay to do any other act or thing,
which may or might in any manner or to any extent either vary the risk of
the Guarantor as an obligor in respect of the obligations provided for in
this Guarantee or otherwise operate as a discharge of the Guarantor as a
matter of law or equity (other than the indefeasible payment in full in
cash of all of its obligations under this Guarantee). The Guarantor hereby
waives demand of and protest of the Termination and Expense Reimbursement
Fee and also waives notice of protest for nonpayment, any right to require
a proceeding first against the Payor, and all demands whatsoever and
covenants that this Guarantee will not be discharged except by complete
performance of the obligation to pay the Termination and Expense
Reimbursement Fee in accordance with the Merger Agreement.
4. TERMINATION. This Guarantee shall remain in full force and effect until the
earliest to occur of: (i) the indefeasible payment in full of the entire
Termination and Expense Reimbursement Fee, (ii) termination of the Merger
Agreement in accordance with its terms without any obligation on the part
of Payor to pay the Termination and Expense Reimbursement Fee, or (iii)
consummation of the Merger. Thereafter, Oakley shall take such action and
execute such documents as the Guarantor may request in order to evidence
the termination of this Guarantee.
5. REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants to, and
agrees with, Oakley that:
(a) Guarantor is duly organized and validly existing as a corporation
under the laws of Italy;
(b) Guarantor has duly taken all necessary corporate action to authorize,
and has all necessary corporate power and authority to execute and
deliver, this Guarantee and to perform the obligations of Guarantor
pursuant to this Guarantee. This Guarantee has been duly executed and
delivered by Guarantor and is the valid, binding and enforceable
obligation of Guarantor, enforceable against Guarantor in accordance
with its terms, except as such enforcement may be limited by (i)
bankruptcy, insolvency or similar laws affecting creditors' rights
generally or (ii) general principles of equity, whether considered in
a proceeding in equity or at law; and
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(c) The execution and delivery of this Guarantee by Guarantor, and its
performance of its obligations under this Guarantee, do not and will
not (i) violate or conflict with any provision of the charter
documents or bylaws of Guarantor or (ii) violate or conflict with, or
constitute a breach of, any law, rule or regulation, order, writ,
injunction, decree, award, or any agreement, instrument, indenture,
deed or any other restriction, to which Guarantor is subject or a
party.
6. SUBROGATION. The Guarantor shall be subrogated to all rights of Oakley
against the Payor in respect of any amounts paid by the Guarantor pursuant
to the provisions of this Guarantee; PROVIDED, HOWEVER, that so long as any
of the Termination and Expense Reimbursement Fee shall remain unsatisfied,
all rights of the Guarantor against the Payor based upon such right of
subrogation shall in all respects be subordinate and junior in right of
payment to the prior indefeasible payment in full of the Termination and
Expense Reimbursement Fee to Oakley.
7. REINSTATEMENT. This Guarantee shall continue to be effective, or be
reinstated, as the case may be, if at any time payment, or any part
thereof, of any of the Termination and Expense Reimbursement Fee is
rescinded or must otherwise be restored or returned by Oakley upon the
insolvency, bankruptcy, dissolution, liquidation or reorganization of the
Payor or upon or as a result of the appointment of a receiver, intervenor
or conservator of, or trustee or similar officer for, the Payor or any
substantial part of its property, or otherwise, all as though such payments
had not been made.
8. PAYMENTS. The Guarantor hereby agrees that if it is required hereunder to
pay the Termination and Expense Reimbursement Fee, it will be paid to
Oakley, by wire transfer of immediately available funds, to the wire
transfer address specified in a notice given by Oakley to it.
9. NOTICES. All notices, requests, claims, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given
when delivered in person, by overnight courier or facsimile to the
respective parties as follows:
If to Guarantor:
Luxottica Group, S.p.A.
Xxx Xxxxx, 0
00000 Xxxxx
Xxxxx
Facsimile: 011-39-02-8699-6550
Attention: Xxxxxx Xxxxxxxxx
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with a copy to:
Winston & Xxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxxx Xxxxxxxxx
If to Oakley:
Oakley, Inc.
One Icon
Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: D. Xxxxx Xxxxxx, Chief Executive Officer
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx, LLP
000 X. Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxx and Xxxxxxx X. Xxxxx
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
10. SEVERABILITY. Any provision of this Guarantee which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
11. INTEGRATION. This Guarantee represents the entire agreement of the
Guarantor with respect to the subject matter hereof and there are no
promises or representations, written or oral, by Oakley relative to the
subject matter hereof not reflected herein.
12. AMENDMENTS IN WRITING; NO WAIVER; CUMULATIVE REMEDIES.
(a) None of the terms or provisions of this Guarantee may be waived,
amended, supplemented or otherwise modified except by a written
instrument executed by the Guarantor and Oakley; PROVIDED that any
provision of this Guarantee may be waived by Oakley in a letter or
agreement executed by Oakley and delivered to Guarantor pursuant
hereto.
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(b) Oakley shall not by any act (except by a written instrument pursuant
to paragraph 12(a) hereof), be deemed to have agreed to any delay,
indulgence, omission or otherwise be deemed to have waived any right
or remedy hereunder or to have acquiesced in any default or in any
breach of any of the terms and conditions hereof. No failure to
exercise, nor any delay in exercising, on the part of Oakley, any
right, power or privilege hereunder shall operate as a waiver thereof.
No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. A waiver by Oakley of
any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which Oakley would otherwise
have on any future occasion.
(c) The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any other
rights or remedies provided by law.
13. SECTION HEADINGS. The section headings used in this Guarantee are for
convenience of reference only and are not to affect the construction hereof
or be taken into consideration in the interpretation hereof.
14. SUCCESSORS AND ASSIGNS. This Guarantee shall be binding upon the successors
and assigns of the Guarantor and shall inure to the benefit of Oakley and
its successors and assigns; provided that the Guarantor may not assign or
delegate any of its rights or obligations hereunder without the express
prior written consent of Oakley, which Oakley may grant or withhold in its
sole and absolute discretion.
15. GOVERNING LAW. This Guarantee shall be governed by and construed in
accordance with the laws of the State of New York, regardless of the laws
that might otherwise govern under applicable principles of conflicts of
laws thereof.
IN WITNESS WHEREOF, the undersigned has caused this Guarantee to be
executed on its behalf by its officer thereunto duly authorized, all as of the
day and year first above written.
LUXOTTICA GROUP S.P.A.
By:
------------------------------------
NAME: XXXXXX XXXXXX
TITLE: CHIEF EXECUTIVE OFFICER
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