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EXHIBIT 10.2
AGREEMENT OF AMENDMENT, TERMINATION AND MODIFICATION
This AGREEMENT OF AMENDMENT, TERMINATION AND MODIFICATION, dated as of
June ___, 1998, is by and among BOLLE INC. (as assignee of BEC GROUP, INC.), a
Delaware corporation with offices at 000 Xxxxxxxx Xxxxx Xxxxxx, Xxx, Xxx Xxxx
00000 ("Bolle"), XXXXXX XXXXX GROUP, L.P., a Delaware limited partnership with
offices at 0000 Xxxxxx Xxxx Xxxx, Xxxxxx, Xxxxx 00000 ("FGG"), XXXXXX XXXXX
HOLDINGS, INC., a Delaware corporation with offices at 0000 Xxxxxx Xxxx Xxxx,
Xxxxxx, Xxxxx 00000 ("FGH") and AAi.FOSTERGRANT, INC. (fka ACCESSORIES
ASSOCIATES, INC.), a Rhode Island corporation with offices at 000 Xxxxxx
Xxxxxxxxxx Xxxxxxx, Xxxxxxxxxx, Xxxxx Xxxxxx 00000 ("AAi").
WHEREAS, Bolle, FGG, FGH, and AAi entered into that certain Stock
Purchase Agreement dated as of November 13, 1996 (the "Agreement");
WHEREAS, in conjunction with the Agreement, FGH issued 100 shares of
FGH Series A Preferred Stock to Bolle;
WHEREAS, in conjunction with Bolle's purchase of FGH Series A Preferred
Stock, AAi and Bolle entered into that certain Exchange and Registration Rights
Agreement dated as of December 11, 1996 (the "Rights Agreement");
WHEREAS, the parties now desire to amend the Agreement, terminate the
Rights Agreement, and modify certain rights, preferences and privileges
concerning the AAi Series A Redeemable Convertible Preferred Stock.
NOW THEREFORE, the parties hereto, intending to be legally bound
hereby, in consideration of the mutual promises and agreements contained herein,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, agree as follows:
1. THE AGREEMENT. Bolle, FGG, FGH, and AAi hereby agree that effective as
of the date hereof the Agreement is amended as set forth below. All terms used
herein and defined in the Agreement have the same meaning herein as provided in
the Agreement except as otherwise specified.
(a) Section 1 of the Agreement is hereby amended to add a new
definition as follows:
"Effective Date" means June 24, 1998.
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(b) Section 2.4 of the Agreement is hereby amended and restated in
its entirety as follows:
"2.4 LITIGATION LIABILITIES.
(a) In connection with the Purchaser's purchase of the Shares, the
Purchaser will, subject to Section 2.4(b) below, assume any and all
liabilities of the Xxxxxx Xxxxx Group and/or the Partnership other than
the Excluded Liabilities, including (without limitation) liabilities
arising out of any litigation pending, threatened or commenced against
any member of the Xxxxxx Xxxxx Group or the Partnership or pending,
threatened or commenced against the Seller and relating to the Xxxxxx
Xxxxx Group or its business and not referred to in Section 2.3
hereinabove, including any litigation or administrative or governmental
proceeding (i) pending prior to the Closing Date or (ii) arising out of
or relating to any events occurring prior to the Closing Date,
including, without limitation, liabilities resulting from any past or
present violation of any environmental laws (the liabilities described
in this Section 2.4(a) are referred to as the "Litigation
Liabilities"). No such assumption of liability shall release Seller
from any breach of any representations or warranties made by Seller
herein. Without limiting the generality of the foregoing, Purchaser,
and after the Closing, the members of the Xxxxxx Xxxxx Group and the
Partnership, shall, subject to Section 2.4(c) below, be solely
responsible for defending against any such Litigation Liabilities and
shall have sole direction of any defense thereof; provided, that
Purchaser shall consult periodically with Seller and its counsel
regarding the status of individual claims or cases and the Purchaser
shall not enter into any settlement agreement or otherwise compromise
or settle any Litigation Liability, claim or case without the prior
written consent of Seller, which approval shall not be withheld or
delayed unreasonably.
(b) Notwithstanding the provisions of Section 2.4(a) above, from
and after the last to occur of (x) the Effective Date, or (y) the
payment by Purchaser of $100,000 to Seller, Seller will undertake and
defend AAi, Purchaser, the members of the Xxxxxx Xxxxx Group and/or the
Partnership against any Litigation Liabilities, and will pay directly
any costs or expenses relating to or arising from Litigation
Liabilities (including, without limitation, defense costs, attorneys'
fees, amounts assessed as damages and settlement costs) ("Litigation
Costs"), except to the extent Litigation Costs were, in fact, paid by
Xxxxxx Xxxxx, AAi or Purchaser prior to the Effective Date; provided,
however, that Purchaser and AAi will, at its expense, cooperate fully
with Seller in the defense of any such Litigation Liabilities, shall
make available any books or records useful for the defense of any such
Litigation Liabilities and shall be solely responsible for accounts
payable together with interest thereon for goods sold and delivered to
the Partnership and its affiliates by Dioptics, Inc. From and after the
date, Seller shall be responsible for all Litigation Liabilities and
Litigation Costs pursuant to this Section 2.4(b).
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Seller shall have the right to compromise and settle any Litigation
Liability without the consent of Purchaser; provided, however, that no
such settlement or compromise shall include an injunction or any court
order affecting the conduct of Purchaser's business unless Purchaser
shall have given its prior written consent which consent may be
withheld in Purchaser's sole discretion. To the extent such Litigation
Liabilities are indemnified against by applicable insurance policies,
Seller shall be released of liability to the extent any such Litigation
Liability is paid by the insurance company issuing any such policy.
(c) Any other provision of this Section 2.4 notwithstanding, AAi
and Purchaser will have sole responsibility for defending against
litigation claims arising out of or relating to the Al-Site/Magnivision
litigation, Civil Action No. 97-8351, brought in the United States
District Court for the Central District of California (the "Magnivision
Litigation"), and AAi, Purchaser and Seller will use their best efforts
to cooperatively share any direct out-of-pocket costs and expenses
incurred by the law firm of Lyon & Lyon LLP relating to the Magnivision
Litigation and related litigation described in Section 2.3(b) hereof."
(c) A new sentence is hereby added at the end of Section 8.1 to
read as follows:
"Provided, however, that on and after the Effective Date,
Purchaser and AAi waive any claim for indemnification pursuant to this
Section 8.1 whenever arising, other than indemnification claims based
upon Litigation Liabilities and Litigation Costs defined in Section 2.4
hereof, and indemnification claims based upon Income Tax liabilities of
the Xxxxxx Xxxxx Group, with respect to which the Seller's obligation
to indemnify shall extend until the applicable statutes of limitations
on enforcement thereof has expired, but in no event more than seven (7)
years after the Closing Date, or until the conclusion of any proceeding
commenced within such period."
(d) The first sentence of sub-section (a) of Section 8.3 of the
Agreement is hereby amended and restated in its entirety as follows:
"No indemnification shall be payable by either party with
respect to claims asserted by an Indemnified Party on or after the
Effective Date, and AAi and Purchaser hereby waive any claims asserted
on or before the Effective Date, other than Litigation Liabilities and
Litigation Costs defined in Section 2.4 hereof, and indemnification
claims based upon Income Tax liabilities of the Xxxxxx Xxxxx Group,
with respect to which the Seller's obligation to indemnify shall extend
until the applicable statutes of limitations on enforcement thereof has
expired, but in no event more than seven (7) years after the Closing
Date, or until the conclusion of any proceeding commenced within such
period."
(e) Except as modified herein, the Agreement is hereby ratified
and affirmed.
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2. PAYMENT PURSUANT TO SECTION 2.4 OF THE AGREEMENT. On the execution
hereof, AAi has paid to Bolle, and Bolle acknowledges the receipt of $100,000,
said payment thereby satisfying the obligation of AAi pursuant to Section 2.4(b)
of the Agreement, as amended hereby.
3. FGH SERIES A PREFERRED STOCK. AAi and Bolle hereby agree as follows:
(a) That effective as of the date hereof, that certain Exchange
and Registration Rights Agreement dated December 11, 1996 by and between AAi and
Bolle granting to Bolle certain registration and exchange rights with regard to
shares of FGH Series A Preferred Stock issued by FGH to Bolle pursuant to the
Agreement is null and void and of no further force and effect.
(b) That Article Fourth of the Certificate of Incorporation of
Xxxxxx Xxxxx Holdings, Inc. shall be amended (the "FGH Amendment"), by deleting
Section 5 in its entirety and substituting the following therefor:
5. REDEMPTION RIGHTS
5.1 MANDATORY REDEMPTION. Except as otherwise provided in this
Certificate of Amendment, the Series A Preferred Shares shall be redeemed by the
Corporation in immediately available funds on February 28, 2000 (the "Redemption
Date") by payment of an amount determined by reference to the combined net sales
of sun glasses, reading glasses, and accessories by FGG and AAi for the year
ending January 1, 2000, determined in accordance with generally accepted
accounting principals consistently applied, and excluding an amount equal to the
net sales of AAi of sunglasses, reading glasses, and accessories for the year
ending December 31, 0000 (xxx "Xxxxxxxxxx Xxxxxx"). Xx or before February 28,
2000, the Holder shall deliver to AAi at its principal offices, all Series A
Preferred Shares owned by such Holder endorsed in blank for transfer or with
blank stock powers attached. The Redemption Amount per share shall be calculated
pursuant to the formula set forth below. The amounts payable to the Holder upon
redemption shall be pro-rated for net sales between the amounts specified below.
NET SALES REDEMPTION AMOUNT PER SHARE
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Less than $90,000,000 $10,000
$90,000,000 but
less than $110,000,000 $20,000
$110,000,000 or more $40,000
5.2 EARLY REDEMPTION. Subsection 5.1 notwithstanding, in the event
that at any time on or prior to the Redemption Date (i) AAi completes an initial
public offering of its
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common stock (an "IPO") where the Pre-Money Valuation (as hereinafter defined)
equals or exceeds $75,000,000 or (ii) a Transaction (as hereinafter defined) is
consummated where the Transaction Amount (as hereinafter defined) equals or
exceeds $75,000,000 (or $37,500,000 in the event of an Equity Transaction (as
hereinafter defined)) (both an IPO and a Transaction are sometimes referenced
herein as a "Redemption Event"), Subsection 5.1 shall not be operative, and the
Redemption Amount will be calculated as specified in this Subsection 5.2 (the
"Redemption Event Amount"). For purposes of this Section 5, "Transaction" shall
mean (x) AAi effects a capital reorganization or reclassification of its stock
(other than a change in par value or as a result of a stock dividend or
subdivision, split-up or combination of shares), or the consolidation or merger
of AAi with or into another person (other than a consolidation or merger in
which AAi is the continuing corporation and which does not result in any change
in the AAi common stock, or in change in ownership of the AAi common stock which
constitutes an Equity Transaction, or sells or otherwise disposes of all or
substantially all its properties and assets as an entirety to any other person
or persons or (y) at least 50% of the shares of AAi common stock is acquired by
any person or group (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended) (the "Exchange Act") who was not an
officer, director or shareholder of AAi on the effective date of the Certificate
of Amendment (a "New Investor") or (z) AAi issues additional equity securities,
or securities convertible into equity securities, other than in an IPO, which
results in any New Investor being the "beneficial owner" (as such term is
defined in Section 13(d)(3) of the Exchange Act) of more than 50% of the shares
of AAi common stock (an "Equity Transaction"). If the Redemption Event is an
IPO, the per share Redemption Event Amount will be based upon the Pre-Money
Valuation (as hereinafter defined) of AAi immediately prior to the IPO according
to the formula set forth below. For this purpose, "Pre-Money Valuation" shall be
calculated by dividing the gross IPO proceeds by the percentage of the total
issued and outstanding AAi common stock owned by the public immediately after
and as a result of such IPO, excluding, however, from such calculation any
common stock sold by persons who were holders of AAi common stock immediately
prior to the IPO. The amounts payable to the Holder upon redemption shall be
pro-rated for Pre-Money Valuations between the amounts specified below provided,
however, that in no event shall the Redemption Event Amount exceed $40,000 per
share.
PRE-MONEY VALUATION REDEMPTION EVENT AMOUNT PER SHARE
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$75,000,000 $35,000
More than $75,000,000 $35,000, plus an additional
$0.025 for each dollar that
the Pre-Money Valuation is in
excess of $75,000,000
If the Redemption Event is a Transaction, the Redemption Event Amount
will be based on the gross dollar value of the consideration (the "Transaction
Consideration") (i) received in the Transaction (other than an Equity
Transaction) by holders of the common
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and convertible preferred stock of AAi or (ii) by AAi in the event the
Transaction involves an Equity Transaction . In the event of a Transaction, the
per share Redemption Event Amount will be calculated according to the formula
set forth below. The amounts payable to the Holder upon redemption shall be
pro-rated for Transaction Consideration that is between the amounts specified
below provided, however, that in no event shall the Redemption Event Amount
exceed $40,000 per share.
Transaction Consideration Redemption Event Amount Per Share
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$75,000,000 ($37,500,000 $35,000
in the event of an Equity
Transaction)
More than $75,000,000 $35,000, plus an additional $0.025
(more than $37,5000,000 in the for each dollar that the Transaction
event of an Equity Transaction) Consideration is in excess of
$75,000,000 (or in the event of an
Equity Transaction, $35,000, plus an
additional $0.50 for each dollar
that the Transaction Consideration
is in excess of $37,500,00)
On or before the tenth day following notice delivered in accordance
with Subsection 5.6 hereof, the Holder shall deliver to AAi at its principal
offices, all Series A Preferred Shares owned by such Holder endorsed in blank
for transfer or with blank stock powers attached. The Redemption Event Amount
pursuant to this Subsection 5.2 shall be payable by AAi in immediately available
funds within ten (10) days of the later of (i) the completion of a Redemption
Event, or (ii) delivery by Holder of all of its Series A Preferred Shares.
5.3 SUPPLEMENTAL PAYMENT. Subsection 5.2 notwithstanding, if (i) a
Redemption Event occurs after the Redemption Date, and (ii) the per share
Redemption Amount received by the Holder pursuant to Section 5.1 was less than
the per share Redemption Event Amount that would have been received had the
Redemption Event occurred on or prior to the Redemption Date pursuant to Section
5.2, the Corporation shall pay the persons who were Holders on the Redemption
Date an amount equal to the difference, if any, between the per share Redemption
Amount paid to such Holders on the Redemption Date and the per share Redemption
Event Amount that would have been received had the Redemption Event occurred on
or prior to the Redemption Date (the "Supplemental Payment"). The Corporation's
obligation to pay the Supplemental Payment shall survive the redemption of the
Series A Preferred Shares pursuant to Subsection 5.1, and shall be payable in
immediately available funds within ten (10) days following the completion of a
Redemption Event pursuant to this Subsection 5.3.
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5.4 RIGHT OF INSPECTION. On request, the Corporation will provide
Holder with an opportunity at Holder's sole cost and expense to inspect the
Corporation's books and records upon reasonable notice during normal business
hours and for a reasonable period of time in order to determine the accuracy of
the Corporation's determination of the Redemption Amount or the Redemption Event
Amount. In the event of any dispute over the Redemption Amount or the Redemption
Event Amount, the parties shall first attempt to resolve such dispute through
mutual consultation. If such dispute cannot be resolved within thirty (30) days
of the Holder's written notice, the dispute shall be submitted to an independent
certified accountant acceptable to the parties for resolution. The determination
of such accountant shall be final and binding on the parties.
5.5 NOTICE OF REDEMPTION. Written notice of Redemption pursuant to
Subsection 5.1 shall be given by the Corporation not fewer than thirty (30) days
prior to the Redemption Date by first class mail, postage prepaid, to each
Holder of record of Series A Preferred Shares at the address of such Holder on
the books of the Corporation. Each such notice shall state: (a) the Redemption
Date; (b) the number of shares of the Series A Preferred Stock to be redeemed;
(c) the Redemption Amount; and (d) the place or places where certificates for
such shares are to be surrendered for payment of the Redemption Amount.
5.6 NOTICE OF EARLY REDEMPTION. Written notice of a Redemption
Event pursuant to Subsection 5.2 shall be given by the Corporation not more than
ten (10) days following the completion of the Redemption Event by first class
mail, postage prepaid, to each Holder of record of Series A Preferred Shares at
the address of such Holder on the books of the Corporation. Each such notice
shall state: (a) the date of the Redemption Event; (b) the number of shares of
the Series A Preferred Stock to be redeemed; (c) the Redemption Event Amount;
and (d) the place or places where certificates for such shares are to be
surrendered for payment of the Redemption Event Amount.
5.7 NOTICE OF SUPPLEMENTAL PAYMENT. Written notice of the
completion of Redemption Event pursuant to Subsection 5.3 shall be given by the
Corporation not more than five (5) days following the completion of the
Redemption Event by first class mail, postage prepaid to each former Holder of
Series A Preferred Shares on the Redemption Date at the last known address of
such Holder on the books of the Corporation. Such notice shall state: (a) the
date of the completion of the Redemption Event; (b) the number of Series A
Preferred Shares previously redeemed; (c) the Redemption Amount; (e) the
Redemption Event Amount; and (f) the Supplemental Payment, if any.
5.8 SPECIFIC PERFORMANCE If any Holder becomes obligated so to
deliver any shares of Series A Preferred Shares to the Corporation upon any
redemption under Section 5 hereof and fails to deliver the certificate therefor
in accordance with this Certificate of Amendment, the Corporation may, at its
option, irrevocably deposit or set aside funds sufficient to pay (i) the
Redemption Amount (if such redemption is pursuant to Section 5.1 hereof) or (ii)
the Redemption Event Amount (if such redemption is pursuant to Section 5.2
hereof) against delivery of such certificates and in addition to all other
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remedies it may have, cancel on its books such certificate representing such
shares to be redeemed."
(c) Bolle hereby consents to the approval of the FGH Amendment as
set forth in Section (b) hereof and agrees that in any circumstance upon which a
vote, consent or other approval of the FGH Amendment as set forth in Section (b)
hereof is sought, Bolle will vote, or cause to be voted, its FGH Series A
Preferred Stock in favor the FGH Amendment, and does hereby irrevocably grant to
and appoint, AAi and Xxxxxx X. Xxxxx, President of AAi, and Xxxxx X. XxXxxxx,
Chief Financial Officer of AAi, in their respective capacities as officers of
AAi, and any individual who shall hereafter succeed to any such office of AAi,
and each of them individually, Bolle's proxy and attorney-in-fact (with full
power of substitution), for and in the name, place and stead of Bolle, to vote
Bolle's FGH Series A Preferred Stock, or grant a consent or approval in respect
of such shares in favor of the FGH Amendment. Bolle hereby affirms that this
irrevocable proxy is coupled with an interest and may not be revoked.
(d) That the FGH Amendment shall take effect immediately upon
filing said FGH Amendment with the Secretary of State of Delaware which filing
shall take place immediately following approval of said FHG Amendment by the
Board of Directors and stockholders of FGH in accordance with Delaware law.
4. COMPLETE AGREEMENT. This Agreement contains the entire agreement and
understanding of the parties with respect to its subject matter. There are no
agreements, premises, warranties, covenants, or undertakings other than those
expressly set forth herein. This Agreement supersedes all prior agreements and
understandings between and among the parties, both oral and written, with
respect to its subject matter.
5. COUNTERPARTS. This Agreement may be executed in one or more
counterparts all of which shall be considered one and the same agreement and
each of which shall be deemed an original.
6. GOVERNING LAW. This Agreement shall be governed in accordance with the
laws of the State of Rhode Island.
7. HEADINGS. The Section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
8. CONSENT TO ASSIGNMENT. AAi and FGH hereby acknowledge and agree that
they have consented to the assignment by BEC Group, Inc. to Bolle of all of its
rights, duties and obligations under the Agreement and any ancillary agreements,
and to the assumption by Bolle of all such rights, duties and obligations. AAi
and FGH further acknowledge and agree that they have released BEC Group, Inc.
from any and all liabilities or claims related to or arising from the Agreement
and any such ancillary agreements.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
BOLLE INC.
By: /s/ Xxxx Xxxxxxxxx
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Name: Xxxx Xxxxxxxxx
Title: Chief Executive Officer
XXXXXX XXXXX GROUP, L.P.
By: /s/ Xxxxxx X. Xxxxx
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Name: Xxxxxx X. Xxxxx
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Title: Chairman
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XXXXXX XXXXX HOLDINGS, INC.
By: /s/ Xxxxxx X. Xxxxx
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Name: Xxxxxx X. Xxxxx
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Title: Chairman
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AAI.FOSTERGRANT, INC.
By: /s/ Xxxxxx X. Xxxxx
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Name: Xxxxxx X. Xxxxx
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Title: Chairman
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