SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Definitive Proxy Statement
/ / Confidential, For Use of the Commission Only
(as permitted by Rule14a-6(e)(2))
/ / Definitive Additional Materials
/ / Soliciting Material Under Rule 14a-12
SOLA INTERNATIONAL INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / No fee required.
/X/ Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
Common stock, par value $0.01 per share, of SOLA International Inc.
(2) Aggregate number of securities to which transaction applies:
32,231,930 shares of common stock
1,608,603 options to purchase shares of common stock
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
$28.00 per share of common stock
$28.00 minus weighted average exercise price of $15.33 for 1,608,603
options
(4) Proposed maximum aggregate value of transaction: $922,875,040 (a)
(5) Total fee paid: $108,622.39(a)
(a) As of December 6, 2004, there were 32,231,930 shares of common stock
outstanding and 1,608,603 options to purchase shares of common stock
outstanding. In the merger described in the accompanying proxy statement,
each share of common stock will (subject to appraisal rights) be converted
into the right to receive $28.00 in cash and each holder of any option will
receive an amount in cash determined by multiplying the excess of $28.00
per share over the applicable exercise price of such option by the number
of shares the holder could have purchased had the holder exercised that
option in full. The filing fee of $108,622.39 was calculated pursuant to
applicable rules and orders of the Commission and is equal to $117.70 per
$1,000,000 of the proposed aggregate merger consideration of $922,875,040,
which represents the sum of (a) the product of 32,231,930 issued and
outstanding shares of common stock and merger consideration of $28.00 per
share and (b) the product of (i) 1,608,603 shares of common stock
underlying options and (ii) the difference between $28.00 per share and the
weighted average exercise price of such options of $15.33 per share.
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Dear Stockholder:
On December 5, 2004, we entered into a merger agreement with Sun
Acquisition, Inc. and Carl Zeiss TopCo GmbH, the parent of Sun Acquisition.
If the merger is completed, holders of SOLA's common stock will receive
$28.00 in cash, without interest, for each share of SOLA's common stock they
own.
Stockholders of SOLA will be asked, at a special meeting of SOLA's
stockholders, to approve and adopt the merger agreement and the merger. The
board of directors has unanimously approved and declared the merger, the merger
agreement and the transactions contemplated by the merger agreement advisable,
and has declared that it is in the best interests of SOLA's stockholders that
SOLA enter into the merger agreement and consummate the merger on the terms and
conditions set forth in the merger agreement. The board of directors unanimously
recommends that SOLA's stockholders vote FOR approval and adoption of the merger
agreement and the merger.
The time, date and place of the special meeting to consider and vote upon a
proposal to approve and adopt the merger agreement and the merger are as
follows:
[ ] a.m. local time, [ ], 2005
[ ]
[ ]
[ ]
[ ], California [ ]
The proxy statement attached to this letter provides you with information
about the proposed merger and the special meeting of SOLA's stockholders. We
encourage you to read the entire proxy statement carefully. You may also obtain
more information about SOLA from documents we have filed with the Securities and
Exchange Commission.
YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES OF SOLA'S COMMON
STOCK YOU OWN. BECAUSE APPROVAL AND ADOPTION OF THE MERGER AGREEMENT AND THE
MERGER REQUIRES THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF OUR ISSUED
AND OUTSTANDING SHARES OF COMMON STOCK ENTITLED TO VOTE THEREON, A FAILURE TO
VOTE WILL COUNT AS A VOTE AGAINST THE MERGER. ACCORDINGLY, YOU ARE REQUESTED TO
PROMPTLY VOTE YOUR SHARES BY COMPLETING, SIGNING AND DATING THE ENCLOSED PROXY
CARD AND RETURNING IT IN THE ENVELOPE PROVIDED, WHETHER OR NOT YOU PLAN TO
ATTEND THE SPECIAL MEETING.
Voting by proxy will not prevent you from voting your shares in person if
you subsequently choose to attend the special meeting.
Thank you for your cooperation and continued support.
Very truly yours,
Maurice J. Cunniffe
Chairman
THIS PROXY STATEMENT IS DATED [ ], 2005,
AND IS FIRST BEING MAILED TO STOCKHOLDERS ON OR ABOUT [ ], 2005.
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SOLA INTERNATIONAL INC.
10590 West Ocean Air Drive
Suite 300
San Diego, California 92130
Telephone: (858) 509-9899
Internet Site: www.sola.com
___________________
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD [ ], 2005
To the stockholders of SOLA International Inc.:
A special meeting of stockholders of SOLA International Inc., a Delaware
corporation, will be held on [ ], 2005, at [ ] a.m., local time, at [ ], [ ],
California [ ], for the following purposes:
1. To consider and vote on a proposal to approve and adopt the
Agreement and Plan of Merger dated as of December 5, 2004, by and among
SOLA, Sun Acquisition, Inc. and Carl Zeiss TopCo GmbH, the parent of Sun
Acquisition, and the merger contemplated thereby, pursuant to which, upon
the merger becoming effective, each share of common stock, par value $0.01
per share, of SOLA International Inc. will be converted into the right to
receive $28.00 in cash, without interest; and
2. To transact such other business as may properly come before the
special meeting or any adjournment or postponement thereof.
Only stockholders of record on [ ], 2005 are entitled to notice of and to
vote at the special meeting and at any adjournment or postponement of the
special meeting. All stockholders of record are cordially invited to attend the
special meeting in person. To assure your representation at the meeting in case
you cannot attend, however, you are urged to vote your shares by marking,
signing, dating and returning the enclosed proxy card as promptly as possible in
the postage prepaid envelope enclosed for that purpose. Any stockholder
attending the special meeting may vote in person even if he or she has returned
a proxy card.
Holders of SOLA's common stock have the right to dissent from the merger
and obtain payment in cash of the fair value of their common stock as appraised
by the Delaware Court of Chancery under applicable provisions of Delaware law.
This amount could be more, the same or less than the value a stockholder would
be entitled to receive under the terms of the merger agreement. In order to
perfect and exercise their appraisal rights, stockholders must give written
demand for appraisal of their shares before the taking of the vote on the merger
at the special meeting and must not vote in favor of the merger. A copy of the
applicable Delaware statutory provisions is included as Annex D to the
accompanying proxy statement, and a summary of these provisions can be found
under "Dissenters' Rights of Appraisal" in the accompanying proxy statement.
The approval and adoption of the merger agreement and the merger requires
the approval of the holders of a majority of the outstanding shares of SOLA's
common stock entitled to vote thereon. Even if you plan to attend the special
meeting in person, we request that you complete, sign, date and return the
enclosed proxy and thus ensure that your shares will be represented at the
special meeting if you are unable to attend. If you sign, date and mail your
proxy card without indicating how you wish to vote, your vote will be counted as
a vote in favor of approval and adoption of the merger agreement and the merger.
If you fail to return your proxy card, the effect will be that your shares will
not be counted for purposes of
determining whether a quorum is present at the special meeting and will
effectively be counted as a vote against approval and adoption of the merger
agreement and the merger. If you do attend the special meeting and wish to vote
in person, you may withdraw your proxy and vote in person.
By order of the board of directors,
JEREMY C. BISHOP
President and Chief Executive Officer
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TABLE OF CONTENTS
Page
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QUESTIONS AND ANSWERS ABOUT THE MERGER........................................1
SUMMARY.......................................................................4
The Proposed Transaction..................................................4
Board Recommendation......................................................4
Reasons for the Merger....................................................4
Opinion of Our Financial Advisor..........................................4
Financing.................................................................5
Voting and Support Agreement..............................................5
Material United States Federal Income Tax Consequences....................5
The Special Meeting of Our Stockholders...................................6
Dissenters' Rights of Appraisal...........................................6
Our Stock Price...........................................................7
When the Merger Will be Completed.........................................7
Non-Solicitation of Other Offers..........................................7
Conditions to Completing the Merger.......................................7
Termination of the Merger Agreement.......................................9
Termination Fee and Expenses.............................................10
Employee Benefits Matters; Stock Options.................................10
Interests of Our Directors and Executive Officers in the Merger..........10
Shares Held by Directors and Executive Officers..........................11
Procedure for Receiving Merger Consideration.............................11
Questions................................................................11
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION..................12
THE PARTIES TO THE MERGER....................................................13
THE SPECIAL MEETING OF SOLA'S STOCKHOLDERS...................................14
Time, Place and Purpose of the Special Meeting...........................14
Who Can Vote at the Special Meeting......................................14
Vote Required; Quorum....................................................14
Voting By Proxy..........................................................15
Solicitation of Proxies..................................................15
THE MERGER...................................................................15
Background of the Merger.................................................15
Reasons for the Merger...................................................18
Recommendation of Our Board of Directors.................................20
Interests of Our Directors and Executive Officers in the Merger..........20
Opinion of Our Financial Advisor.........................................23
Financial Projections....................................................28
Financing for the Merger.................................................29
Voting and Support Agreement.............................................30
Amendment to the Rights Agreement........................................31
Material United States Federal Income Tax Consequences...................31
Required Regulatory Approvals and Other Matters..........................32
THE MERGER AGREEMENT.........................................................33
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General .................................................................33
Consideration to be Received by Our Stockholders.........................33
Exchange of Certificates.................................................33
Representations and Warranties...........................................34
Covenants Relating to the Conduct of Our Business........................36
Special Meeting; Proxy Statement.........................................36
Access to Information....................................................36
No Solicitation of Other Offers..........................................36
Financing Cooperation....................................................38
Reasonable Efforts.......................................................38
Publicity................................................................39
Indemnification and Insurance............................................39
Employee Benefits Matters................................................39
Conditions to the Merger.................................................40
Termination of the Merger Agreement......................................42
Termination Fee and Expenses.............................................43
Amendment and Waiver.....................................................44
MARKET PRICE OF OUR COMMON STOCK.............................................44
SECURITY OWNERSHIP BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT...............46
DISSENTERS' RIGHTS OF APPRAISAL..............................................49
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS FOR 2005 ANNUAL MEETING........52
HOUSEHOLDING INFORMATION.....................................................52
WHERE YOU CAN FIND MORE INFORMATION..........................................53
ANNEX A - Agreement and Plan of Merger
ANNEX B - Voting and Support Agreement
ANNEX C - Opinion of UBS Securities LLC
ANNEX D - Section 262 of the Delaware General Corporation Law
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QUESTIONS AND ANSWERS ABOUT THE MERGER
Q: What is the proposed transaction?
A: The proposed transaction is the acquisition of SOLA International Inc.
("SOLA") by Carl Zeiss TopCo GmbH ("Carl Zeiss TopCo") pursuant to an
Agreement and Plan of Merger (the "merger agreement") dated as of December
5, 2004 by and among SOLA, Sun Acquisition, Inc. ("merger sub") and Carl
Zeiss TopCo. Once the merger agreement has been approved and adopted by our
stockholders and the other closing conditions under the merger agreement
have been satisfied or waived, merger sub will merge with and into SOLA.
SOLA will be the surviving corporation in the merger (the "surviving
corporation") and will become a wholly-owned subsidiary of Carl Zeiss
TopCo.
Q: What will our stockholders receive in the merger?
A: After completion of the merger, our stockholders will receive $28.00 in
cash, without interest, for each share of our common stock that they own.
For example, if you own 100 shares of our common stock, you will receive
$2,800.00 in cash in exchange for your SOLA shares.
Q: Where and when is the special meeting?
A: The special meeting will take place at [ ], [ ], California [ ], on [ ],
2005, at [ ] a.m. local time.
Q: What vote of our stockholders is required to approve and adopt the merger
agreement and the merger?
A: For us to complete the merger, stockholders holding at least a majority of
the shares of our common stock outstanding at the close of business on the
record date must vote "FOR" the approval and adoption of the merger
agreement and the merger.
Q: How does our board of directors recommend that I vote?
A: Our board of directors unanimously recommends that our stockholders vote
"FOR" the proposal to approve and adopt the merger agreement and the
merger. You should read "The Merger--Reasons for the Merger" for a
discussion of the factors that our board of directors considered in
deciding to unanimously recommend the approval and adoption of the merger
agreement and the merger.
Q: What do I need to do now?
A: We urge you to read this proxy statement carefully, including its annexes,
and to consider how the merger affects you. Then just mail your completed,
dated and signed proxy card in the enclosed return envelope as soon as
possible so that your shares can be voted at the special meeting of our
stockholders.
Q: Why is my vote important?
A: Whether or not you vote for the merger, if the merger is approved, you will
be paid the merger consideration for your shares of our common stock upon
completion of the merger, unless you exercise your appraisal rights.
However, because approval of the merger proposal requires the af-
firmative vote of holders of record on the record date of a majority of our
common stock outstanding, not just the common stock voting, if you do not
vote, it will have the same effect as a vote against the merger proposal.
Q: What happens if I do not return a proxy card?
A: Because the required vote of our stockholders is based upon the number of
outstanding shares of our common stock, rather than upon the shares
actually voted, the failure to return your proxy card will have the same
effect as voting against the merger.
Q: If my shares are held in "street name" by my broker, will my broker vote my
shares for me?
A: Yes, but only if you provide instructions to your broker on how to vote.
You should follow the directions provided by your broker regarding how to
instruct your broker to vote your shares. Without such instructions, your
shares will not be voted, which will have the same effect as voting against
the merger. See "The Special Meeting of SOLA's Stockholders--Voting
Required; Quorum."
Q: May I vote in person?
A: Yes. If your shares are not held in "street name" through a broker, you may
attend the special meeting of our stockholders and vote your shares in
person, rather than signing and returning your proxy card. If your shares
are held in "street name," you must first get a proxy card from your broker
in order to attend the special meeting and vote.
Q: Am I entitled to appraisal rights?
A: Yes. Under the General Corporation Law of the State of Delaware, holders of
our common stock who do not vote in favor of approving and adopting the
merger agreement and the merger will have the right to seek appraisal of
the fair value of their shares as determined by the Delaware Court of
Chancery if the merger is completed, but only if they submit a written
demand for an appraisal prior to the vote on the approval and adoption of
the merger agreement and the merger and they comply with the Delaware law
procedures explained in this proxy statement.
Q: Is the merger expected to be taxable to me?
A: Generally, yes. The receipt of $28.00 in cash for each share of our common
stock pursuant to the merger will be a taxable transaction for U.S. federal
income tax purposes. For U.S. federal income tax purposes, generally you
will recognize gain or loss as a result of the merger measured by the
difference, if any, between $28.00 per share and your adjusted tax basis in
that share. You should read "The Merger--Material United States Federal
Income Tax Consequences" for a more complete discussion of the federal
income tax consequences of the merger. Tax matters can be complicated and
the tax consequences of the merger to you will depend on your particular
tax situation. You should also consult your tax advisor on the tax
consequences of the merger to you.
Q: When do you expect the merger to be completed?
A: We are working toward completing the merger as quickly as possible, and we
anticipate that it will be completed in the first quarter of 2005. In order
to complete the merger, we must obtain stockholder approval and satisfy a
number of other closing conditions under the merger agree-
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ment. See "The Merger Agreement--General" and "The Merger
Agreement--Conditions to the Merger."
Q: Should I send in my stock certificates now?
A: No. Shortly after the merger is completed, each holder of record will
receive a letter of transmittal with instructions informing you how to send
in your stock certificates in order to receive the merger consideration.
You should use the letter of transmittal to exchange stock certificates for
the merger consideration to which you are entitled as a result of the
merger. DO NOT SEND ANY STOCK CERTIFICATES WITH YOUR PROXY.
Q: What will I receive for my stock options in the merger?
A: Your stock options will be "cashed out," meaning that you will receive cash
payments for each share underlying your options equal to the excess, if
any, of $28.00 per share over the exercise price per share of your options,
subject to any required withholding of taxes.
Q: Who can help answer my other questions?
A: If you have more questions about the merger, you should contact our proxy
solicitation agent:
Georgeson Shareholder Services
219 Murray Hill Parkway
East Rutherford, NJ 07073
Telephone: (800) [ ]
Fax: [ ]
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SUMMARY
This summary does not contain all of the information that is important to
you. You should carefully read the entire proxy statement to fully understand
the merger. The merger agreement is attached as Annex A to this proxy statement.
We encourage you to read the merger agreement because it is the legal document
that governs the merger.
The Proposed Transaction
Stockholder Vote
o You are being asked to vote to approve and adopt a merger agreement
with respect to a merger in which merger sub will merge with and into
SOLA. As a result of the merger, SOLA will become a wholly owned
subsidiary of Carl Zeiss TopCo.
Price for Your Stock
o Upon completion of the merger, you will receive $28.00 in cash,
without interest, for each of your shares of our common stock.
The Acquiror
o Sun Acquisition, Inc. is a Delaware corporation formed for the purpose
of effecting the acquisition by Carl Zeiss TopCo of all of the
outstanding shares of SOLA. The capital stock of Sun Acquisition is
indirectly held by Carl Zeiss TopCo, a Germany company. Carl Zeiss
TopCo is currently an indirect wholly owned subsidiary of Carl Zeiss
AG ("Carl Zeiss"). Upon completion of the merger and the transactions
set forth in the master agreement described under "The Parties to the
Merger," Carl Zeiss TopCo will be owned equally by Carl Zeiss and the
EQT III funds. Carl Zeiss is an international group of companies
operating worldwide in the optical and opto-electronic industry. EQT
is a European private equity company with equity commitments exceeding
(euro)5 billion. Unless context indicates otherwise, references to EQT
are references to the EQT III funds. See "The Parties to the Merger."
Board Recommendation
Our board of directors, by the unanimous vote of the directors, has
determined that the merger agreement is advisable, has approved and adopted the
merger agreement and the merger and unanimously recommends that our stockholders
vote "FOR" approval and adoption of the merger agreement and the merger. See
"The Merger--Recommendation of Our Board of Directors."
Reasons for the Merger
Our board of directors carefully considered the terms of the proposed
transaction and approved the merger based on a number of factors. For a
discussion of these reasons, see "The Merger--Our Reasons for the Merger."
Opinion of Our Financial Advisor
In connection with the merger, our board of directors received a written
opinion from UBS Securities LLC, our financial advisor, as to the fairness, from
a financial point of view, of the merger consideration to be received by holders
of our common stock (other than our affiliates). The full text of UBS's
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written opinion, dated December 5, 2004, is attached to this proxy statement as
Annex C. Holders of our common stock are encouraged to read this opinion
carefully in its entirety for a description of the assumptions made, procedures
followed, matters considered and limitations on the review undertaken. UBS'
opinion was provided to our board of directors in its evaluation of the merger
consideration. UBS' opinion does not address any other aspect of the merger and
does not constitute a recommendation to any stockholder as to how to vote or act
with respect to any matters relating to the proposed merger.
Financing
In connection with the merger, Carl Zeiss TopCo has informed us that it
will cause approximately $920 million in cash to be paid to our stockholders and
holders of stock options, that our credit agreement will be repaid at the
effective time for the merger and that our 6 7/8% Senior Notes and 11% Senior
Notes will be repaid after the effective time for the merger. As of November 30,
2004, $170.6 million is outstanding under our credit facility and $94.9 million
of our 6 7/8% Senior Notes and $9.1 million of our 11% Senior Notes are
outstanding. Carl Zeiss TopCo has informed us that these payments are expected
to be funded by a combination of equity contributions to Carl Zeiss TopCo by
Carl Zeiss and EQT and a debt financing. Carl Zeiss TopCo has also informed us
that a subsidiary of Carl Zeiss TopCo has received a commitment letter from
Credit Suisse First Boston International and Deutsche Bank AG London, as
mandated lead arrangers, for senior facilities, second lien facilities and
mezzanine facilities totaling $615.7 million and (euro)443 million.
Voting and Support Agreement
As a condition to entering into the merger agreement, Carl Zeiss TopCo and
merger sub required our directors and executive officers who own our shares to
enter into a voting and support agreement under which each has agreed, among
other things, to (1) vote his shares in favor of adoption of the merger
agreement, (2) vote his shares against any action or agreement that would
reasonably be expected to result in a breach of any representation, warranty,
covenant or agreement of SOLA under the merger agreement; and (3) vote his
shares against any action or agreement that would reasonably be expected to
prevent, impede, interfere with, delay or postpone the consummation of the
merger, including, without limitation any (a) acquisition proposal, (b)
reorganization, recapitalization, liquidation or winding-up of SOLA or any other
extraordinary transaction involving SOLA or (c) corporate action the
consummation of which would frustrate the purposes, or prevent or delay the
consummation, of the transactions contemplated by the merger agreement.
As of the record date, the parties to the voting and support agreement held
an aggregate of 294,100 shares of our common stock, representing approximately
0.9% of the votes eligible to be cast at the special meeting. See "The
Merger--Voting and Support Agreement" and the voting and support agreement
attached as Annex B to this proxy statement.
Material United States Federal Income Tax Consequences
The merger will be a taxable transaction to you. For United States federal
income tax purposes, your receipt of cash in exchange for your shares of our
common stock generally will cause you to recognize a gain or loss measured by
the difference, if any, between the cash you receive in the merger and your tax
basis in your shares of our common stock. You should consult your own tax
advisor for a full understanding of how the merger will affect your taxes. See
"The Merger--Material United States Federal Income Tax Consequences."
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The Special Meeting of Our Stockholders
Place, Date and Time
The special meeting will be held at [ ] a.m., local time, on [ ], 2005 at
the [ ], [ ], California [ ].
What Vote is Required for Approval and Adoption of the Merger Agreement and
the Merger
The approval and adoption of the merger agreement and the merger requires
the approval of the holders of a majority of the outstanding shares of our
common stock entitled to vote at the special meeting. The failure to vote has
the same effect as a vote against approval and adoption of the merger agreement
and the merger. Stockholders who together own approximately 0.9% of the
outstanding shares of our common stock have already agreed to vote in favor of
approval and adoption of the merger agreement and approval of the merger. See
"The Merger--Voting and Support Agreement."
Who Can Vote at the Meeting
You can vote at the special meeting all of the shares of our common stock
you own of record as of [ ], 2005, which is the record date for the special
meeting. If you own shares that are registered in someone else's name, for
example, a broker, you need to direct that person to vote those shares or obtain
an authorization from them and vote the shares yourself at the meeting. As of [
], 2005, there were [ ] shares of our common stock outstanding held by
approximately [ ] holders of record.
Procedure for Voting
You can vote shares you hold of record by attending the special meeting and
voting in person or by mailing the enclosed proxy card. If your shares are held
in "street name" by your broker, you should instruct your broker on how to vote
your shares using the instructions provided by your broker. If you do not
instruct your broker to vote your shares, your shares will not be voted, which
will have the same effect as a vote "AGAINST" approval and adoption of the
merger agreement and approval of the merger. See "The Special Meeting of SOLA's
Stockholders--Vote Required; Quorum."
How to Revoke Your Proxy
You may revoke your proxy at any time before the vote is taken at the
meeting. To revoke your proxy, you must either advise our Secretary in writing,
deliver a proxy dated after the date of the proxy you wish to revoke, or attend
the meeting and vote your shares in person. Merely attending the special meeting
will not constitute revocation of your proxy. If you have instructed your broker
to vote your shares, you must follow the directions provided by your broker to
change these instructions.
Dissenters' Rights of Appraisal
Delaware law provides you with appraisal rights in the merger. This means
that if you are not satisfied with the amount you are receiving in the merger,
you are entitled to have the value of your shares determined by the Delaware
Court of Chancery and to receive payment based on that valuation. The ultimate
amount you receive as a dissenting stockholder in an appraisal proceeding may be
more or less than, or the same as, the amount you would have received under the
merger agreement.
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To exercise your appraisal rights, you must deliver a written objection to
the merger to SOLA at or before the special meeting and you must not vote in
favor of approval and adoption of the merger agreement and the merger. Your
failure to follow exactly the procedures specified under Delaware law will
result in the loss of your appraisal rights. See "Dissenters' Rights of
Appraisal."
Our Stock Price
Shares of our common stock are listed on the New York Stock Exchange
("NYSE") under the trading symbol "SOL." On December 3, 2004, which was the last
trading day before we announced the merger, our common stock closed at $22.11
per share. On [ ], 2005, which was the last practicable trading day before this
proxy statement was printed, our common stock closed at $[ ] per share. See
"Market Price of Our Common Stock."
When the Merger Will be Completed
We are working to complete the merger as soon as possible. We anticipate
completing the merger in the first quarter of 2005, subject to receipt of
stockholder approval and satisfaction of other requirements, including the
conditions described below. See "The Merger Agreement--General."
Non-Solicitation of Other Offers
The merger agreement contains restrictions on our ability to solicit or
engage in discussions or negotiations with a third party regarding a proposal to
acquire a significant interest in our company. Notwithstanding these
restrictions, under certain circumstances, our board of directors may engage in
discussions with a party that makes a written bona fide proposal for an
alternative acquisition proposal that the board of directors determines is a
superior proposal and may modify its recommendation to stockholders with respect
to the merger agreement and merger. See "The Merger Agreement--No Solicitation
of Other Offers." As of the date of this proxy statement, we have not received
any other proposals.
Conditions to Completing the Merger
Our, Carl Zeiss TopCo's and merger sub's respective obligations to
consummate the merger are subject to the satisfaction of the following
conditions:
o approval and adoption of the merger agreement by our stockholders in
accordance with Delaware law;
o no provision of any applicable law and no judgment, injunction, order
or decree shall prohibit the consummation of the merger;
o all applicable waiting periods have expired or been terminated under
applicable antitrust statutes of, and all necessary consents and
approvals have been received from, the relevant competition
authorities of Australia, the European Union and Switzerland relating
to the transactions contemplated by the merger agreement and the
master agreement; and
o any applicable waiting periods under the Hart-Scott-Rodino Antitrust
Improvement Act of 1976 ("HSR Act") relating to the transactions
contemplated by the merger agreement and the master agreement shall
have expired or been terminated.
Carl Zeiss TopCo and merger sub are not obligated to consummate the merger
unless a number of additional conditions are satisfied, including:
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o we shall have performed in all material respects all of our
obligations under the merger agreement required to be performed by us
at or prior to the effective time;
o our representations and warranties contained in the merger agreement
and in any certificate or other writing delivered by us pursuant to
the merger agreement: (1) that are qualified by materiality or
material adverse effect shall be true at and as of the effective time
as if made at and as of such time (except that those representations
and warranties which address matters only as of a particular date need
only be true and correct as of such date) and (2) that are not
qualified by materiality or material adverse effect shall be true in
all material respects at and as of the effective time as if made at
and as of such time (except that those representations and warranties
that are not qualified by materiality or material adverse effect which
address matters only as of a particular date need only be true and
correct in all material respects as of such date);
o Carl Zeiss TopCo shall have received a certificate signed by our chief
executive officer or chief financial officer to the effect of the
foregoing two sentences;
o there shall not have been instituted or pending any action or
proceeding (or any investigation or other inquiry that might result in
such action or proceeding) by any government or governmental authority
(1) challenging the consummation of the merger or seeking to obtain
material damages and (2) seeking to restrain or prohibit Carl Zeiss
TopCo's ownership or operation of all or any material portion of the
business or assets of SOLA, which, in the case of clause (2) only,
have had or would reasonably be expected to have a material adverse
effect on SOLA;
o no action shall have been taken, and no law, statute, rule,
regulation, injunction, order or decree shall have been proposed or
deemed applicable to the merger, by any court, government or
governmental authority or agency, other than the application of the
waiting period provisions of the HSR Act and the applicable antitrust
or merger control statutes of Australia, the European Union and
Switzerland, to the transactions contemplated by the merger agreement
and the master agreement, that, in the judgment of Carl Zeiss TopCo,
is likely, directly or indirectly, to result in any of the
consequences referred to in clauses (1) and (2) of the foregoing
sentence;
o the holders of not more than 10% of the total outstanding shares shall
have demanded appraisal of their shares in accordance with Delaware
law;
o the lenders under the commitment letter delivered to a subsidiary of
Carl Zeiss TopCo (or in the commitment letter related to any
alternative financing) shall be ready and willing to fund the amounts
contemplated by the commitment letter on the terms set forth therein
(or in the commitment letters related to any alternative financing)
(including, in each case "flex" provisions in any fee letter or
otherwise) sufficient to consummate the merger, refinance the debt of
SOLA and its subsidiaries and pay related fees and expenses; and
o we shall have obtained the consent or approval to the transactions
contemplated hereby of a contractual counterparty identified in the
merger agreement.
The merger agreement provides that a "material adverse effect," as to any
person, means a material adverse effect on the financial condition, business,
assets or results of operations of such person and its subsidiaries, taken as a
whole.
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We are not obligated to consummate the merger unless the following
conditions have been satisfied:
o each of Carl Zeiss TopCo and merger sub shall have performed in all
material respects all of its obligations hereunder required to be
performed by it at or prior to the effective time
o the representations and warranties of Carl Zeiss TopCo contained in
the merger agreement and in any certificate or other writing delivered
by Carl Zeiss TopCo pursuant thereto shall be true in all material
respects at and as of the effective time as if made at and as of such
time; and
o we shall have received a certificate signed by an officer of Carl
Zeiss TopCo to the effect of the foregoing two bullet points.
Either SOLA or Carl Zeiss TopCo and merger sub could choose to waive any
condition to its respective obligation to complete the merger even though that
condition has not been satisfied. See "The Merger Agreement--Conditions to the
Merger."
Termination of the Merger Agreement
The merger agreement may be terminated, and the merger contemplated thereby
may be abandoned, at any time prior to the effective time, whether before or
after our stockholders have approved and adopted the merger agreement and the
merger:
o by either us or Carl Zeiss TopCo if:
(a) the merger has not been consummated on or before April 30, 2005;
provided that this right to terminate the merger agreement will not be
available to any party whose breach of any provision of the merger
agreement results in the failure of the merger to be consummated by such
time;
(b) (1) there shall be any law that makes consummation of the merger
illegal or otherwise prohibited or (2) any judgment, injunction, order or
decree of any court or governmental body having competent jurisdiction
enjoining us or Carl Zeiss TopCo from consummating the merger is entered
and such judgment, injunction, order or decree shall have become final and
nonappealable; or
(c) the merger agreement shall not have been approved and adopted in
accordance with Delaware law by our stockholders at the special meeting (or
any adjournment thereof);
o by Carl Zeiss TopCo if:
(a) at any time prior to the adoption and approval of the merger
agreement by our stockholders, our board of directors shall (1) have
withdrawn, or modified in a manner adverse to Carl Zeiss TopCo, its
approval or recommendation of the merger agreement or the merger, as
permitted by the merger agreement or (2) have approved, recommended or
endorsed any alternative acquisition proposal; or
(b) we shall have breached certain of our obligations with respect to
our agreement not to solicit other offers, or, after receipt of an
alternative acquisition proposal, shall have breached any of our
obligations under the merger agreement; or
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o by us, in accordance with the terms of the merger agreement after our
receipt of a superior proposal; provided, that (1) we have not
willfully and materially breached certain of our obligations under our
agreement not to solicit other offers and we have paid any termination
fee payable to Carl Zeiss and (2) Carl Zeiss TopCo does not make,
within three business days of receipt of written notification of a
superior proposal, an offer that our board of directors determines in
good faith, after consultation with its financial advisors, is at
least as favorable to our stockholders as the superior proposal.
See "The Merger Agreement--Termination of the Merger Agreement" and "The
Merger Agreement--Termination Fee and Expenses."
Termination Fee and Expenses
We have agreed to pay Carl Zeiss TopCo a termination fee of $22,200,000 if
any of certain payment events occurs.
We will reimburse Carl Zeiss TopCo, EQT and Carl Zeiss for 100% of their
reasonable out-of-pocket fees and expenses (including reasonable fees and
expenses of their counsel) actually incurred by any of them in connection with
the merger agreement and the master agreement and the transactions contemplated
thereby (including the arrangement of, obtaining the commitment to provide or
obtaining any financing for such transactions and any currency and interest rate
swaps or other hedging arrangements) up to $10,000,000 for Carl Zeiss TopCo, EQT
and Carl Zeiss in the aggregate upon certain termination events described in the
merger agreement.
See "The Merger Agreement--Termination Fee and Expenses."
Employee Benefits Matters; Stock Options
The merger agreement contains a number of provisions relating to the
benefits that our employees will receive in connection with and following the
merger. In particular, under the merger agreement:
o for not less than twelve months following the effective time of the
merger, Carl Zeiss TopCo and the surviving corporation will provide
benefits that are no less favorable in the aggregate than as provided
under our employee plans on the date of the merger agreement for each
employee of SOLA as of the closing date and will provide certain other
benefits to our employees as described under "The Merger
Agreement--Employee Benefits Matters"; and
o our directors, executive officers, employees and consultants will have
their unvested stock options effectively accelerated and their vested
and unvested stock options "cashed out" in connection with the merger,
meaning that they will receive cash payments for each share underlying
their options equal to the excess, if any, of $28.00 per share over
the exercise price per share of their options, subject to any required
withholding for taxes.
See "The Merger Agreement--Employee Benefits Matters."
Interests of Our Directors and Executive Officers in the Merger
When considering the unanimous recommendation by our board of directors in
favor of the merger, you should be aware that our directors and executive
officers have interests in the merger that are different from, or in addition
to, yours, including the following:
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o our directors, executive officers, employees and consultants will have
their unvested stock options effectively accelerated and their vested
and unvested stock options "cashed out" in connection with the merger,
meaning that they will receive cash payments for each share underlying
their options equal to the excess, if any, of $28.00 per share over
the exercise price per share of their options, subject to any required
withholding for taxes;
o certain of our executive officers will be entitled to benefits under
their employment agreements, which provide for various lump sum
payments upon closing of the merger, and in one case will provide an
additional "gross-up" lump sum payment to cover the costs of any
excise taxes to which the executive officer may be subject;
o certain of our executive officers will receive payments under the
management incentive plan in an amount equal to a pro rata portion of
the full amount payable under such program based on the fiscal year
ending on the last day of the last fiscal month ended prior to the
merger; and
o certain indemnification and insurance arrangements for our current and
former directors and officers will be continued for six years
following the closing date of the merger if the merger is completed.
See "The Merger--Interests of Our Directors and Executive Officers in the
Merger."
Shares Held by Directors and Executive Officers
We expect all of the outstanding shares owned by our directors and
executive officers to be voted in favor of the proposal to approve and adopt the
merger agreement and the merger. Pursuant to the voting and support agreement,
certain of our directors and executive officers have agreed with Carl Zeiss
TopCo and merger sub to vote their shares in favor of approval and adoption of
the merger agreement and the merger. As of the close of business on the record
date, the parties to the voting and support agreement held an aggregate of
294,100 shares of our common stock, representing approximately 0.9% of the votes
eligible to be cast at the special meeting. See "Security Ownership by Certain
Beneficial Owners and Management" and "The Merger--Voting and Support
Agreement."
Procedure for Receiving Merger Consideration
We will appoint a paying agent to coordinate the payment of the cash merger
consideration following the merger. The paying agent will send you written
instructions for surrendering your certificates and obtaining the cash merger
consideration after we have completed the merger. DO NOT SEND IN YOUR SOLA SHARE
CERTIFICATES NOW. See "The Merger Agreement--Exchange of Certificates."
Questions
If you have additional questions about the merger or other matters
discussed in this proxy statement after reading this proxy statement, you should
contact our proxy solicitation agent:
Georgeson Shareholder Services
219 Murray Hill Parkway
East Rutherford, NJ 07073
Telephone: (800) [ ]
Fax: [ ]
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CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION
Certain of the matters discussed in this proxy statement may constitute
forward-looking statements within the meaning of the U.S. Private Securities
Litigation Reform Act of 1995. Forward-looking statements can generally be
identified by the use of forward-looking terminology such as "believes,"
"expects," "may," will," "should," "seeks," "approximately," "intends," "plans,"
"estimates," or "anticipates" or the negative of these terms or other comparable
terminology, or by discussions of strategy, plans or intentions. Statements
contained in this proxy statement that are not historical facts are
forward-looking statements. Without limiting the generality of the preceding
statement, all statements in this proxy statement concerning or relating to
estimated and projected earnings, margins, costs, expenditures, cash flows,
growth rates and financial results are forward-looking statements.
Forward-looking statements also include those statements relating to the
expected completion and timing of the merger and other information related to
the merger. In addition, we, through our senior management, from time to time
make forward-looking public statements concerning our expected future operations
and performance and other developments. These forward-looking statements are
necessarily estimates reflecting our best judgment based upon current
information and involve a number of risks and uncertainties. Other factors may
affect the accuracy of these forward-looking statements and our actual results
may differ materially from the results anticipated in these forward-looking
statements. While it is impossible to identify all relevant factors, factors
that could cause actual results to differ materially from those estimated by us
include, but are not limited to:
o operating in the highly competitive spectacle lens industry and the
inability to compete effectively with entities with more established
operating histories and greater financial resources;
o legal and logistical risks associated with our foreign operations;
o an inability to continually reduce manufacturing costs;
o the concentration of a large part of our manufacturing operations in
Tijuana, Mexico;
o our financial performance through the completion of the merger;
o the timing of, and regulatory and other conditions associated with,
the completion of the merger;
o an inability to develop new and value-added products;
o competition against alternative technologies and treatments that
provide a substitute for spectacle lenses;
o the restriction of the payment of dividends by our foreign
subsidiaries in certain jurisdictions that subject such payments to
legal restrictions;
o our dependence on a small number of suppliers for raw materials;
o the need from time to time to record special charges;
o our dependence upon the North American chain retail channel;
-12-
o non-compliance with the environmental and safety regulations to which
we are subject;
o the departure of key personnel and our ability to retain sufficient
qualified personnel;
o our substantial level of indebtedness;
o our inability to effectively and efficiently implement our plan to
improve our internal control over financial reporting; and
o potential impairment of certain assets.
All subsequent written and oral forward-looking statements attributable to
SOLA International Inc. and persons acting on our behalf are qualified in their
entirety by the cautionary statements contained in this proxy statement.
THE PARTIES TO THE MERGER
SOLA designs, manufactures and distributes a broad range of eyeglass
lenses, primarily focusing on the faster-growing plastic lens segment of the
global lens market, and particularly on higher-margin value-added products. Our
strong global presence includes manufacturing and distribution sites in three
major regions: North America, Europe and Rest of World (primarily Australia,
Asia and South America) and approximately 6,600 employees in 27 countries
servicing customers in over 50 markets worldwide. For additional information,
visit our web site at www.sola.com.
Merger sub is a Delaware corporation formed for the purpose of effecting
the acquisition by Carl Zeiss TopCo of all of the outstanding shares of SOLA.
The capital stock of merger sub is indirectly held by Carl Zeiss TopCo, a
Germany company.
Carl Zeiss TopCo is currently an indirect wholly owned subsidiary of Carl
Zeiss. Pursuant to a master agreement (the "master agreement") between Carl
Zeiss, EQT III Limited, the EQT III funds, and the other persons named therein,
subject to the conditions for the merger being satisfied, Carl Zeiss has agreed
to contribute its optical lens business, and Carl Zeiss and the EQT III funds
have agreed to make capital contributions to Carl Zeiss TopCo. Carl Zeiss has
also agreed to make a shareholder loan to Carl Zeiss TopCo. Upon completion of
the Merger and the transactions set forth in the master agreement, Carl Zeiss
TopCo will be owned equally by Carl Zeiss and the EQT III funds. The EQT III
funds may transfer all rights and obligations of the EQT III funds pursuant to
the master agreement to the EQT IV funds.
The mailing address for merger sub and Carl Zeiss TopCo is Turnstrasse 27,
73430 Aalen, Germany.
Carl Zeiss is an international group of companies operating worldwide in
the optical and opto-electronic industry. Carl Zeiss is headquartered in
Oberkochen, Germany. Carl Zeiss is structured as six business groups and offers
products and services for biomedical research and medical technology, system
solutions for the semiconductor, automotive and mechanical engineering
industries, as well as high quality consumer goods such as eyeglass lenses,
camera lenses and binoculars. Carl Zeiss is represented in more than 30
countries and operates production facilities in Europe, America and Asia.
EQT is a European private equity company with equity commitments exceeding
(euro)5 billion. The EQT III fund was launched by EQT in 2001.
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THE SPECIAL MEETING OF SOLA'S STOCKHOLDERS
Time, Place and Purpose of the Special Meeting
The special meeting will be held on [ ], 2005, at [ ] a.m. local time, at
the [ ], [ ], California [ ]. The purpose of the special meeting is to consider
and vote on the proposal to approve and adopt the merger agreement and the
merger. Our board of directors has unanimously determined that the merger
agreement is advisable, has approved and adopted the merger agreement and the
merger and recommends that our stockholders vote "FOR" approval and adoption of
the merger agreement and the merger.
Who Can Vote at the Special Meeting
Only holders of record of our common stock as of [ ], 2005, which is the
record date for the special meeting, are entitled to receive notice of and to
vote at the special meeting. If you own shares that are registered in someone
else's name, for example, a broker, you need to direct that person to vote those
shares or obtain an authorization from them and vote the shares yourself at the
meeting. On [ ], 2005, there were [ ] shares of our common stock outstanding
held by approximately [ ] holders of record.
Vote Required; Quorum
The approval and adoption of the merger agreement and the merger requires
the affirmative vote of the holders of a majority of the outstanding shares of
our common stock entitled to vote at the special meeting. Each share of common
stock is entitled to one vote. Because the required vote of stockholders is
based upon the number of outstanding shares of our common stock, rather than
upon the shares actually voted, failure to submit a proxy or to vote in person
will have the same effect as a vote "AGAINST" approval and adoption of the
merger agreement and the merger.
If your shares are held in "street name" by your broker, you should
instruct your broker how to vote your shares using the instructions provided by
your broker. Under the rules of the NYSE, brokers who hold shares in "street
name" for customers may not exercise their voting discretion with respect to
non-routine matters such as the approval and adoption of the merger agreement
and the merger. As a result, if you do not instruct your broker to vote your
shares, it will have the same effect as a vote "AGAINST" approval and adoption
of the merger agreement and the merger.
Pursuant to the voting and support agreement, certain stockholders who
together own approximately 0.9% of the outstanding shares of our common stock as
of the close of business on the record date have already agreed to vote in favor
of approval and adoption of the merger agreement and the merger. The parties to
the voting and support agreement are certain of our directors and executive
officers. See "The Merger--Voting and Support Agreement."
The holders of a majority of the outstanding shares of our common stock
entitled to be cast as of the record date, represented in person or by proxy,
will constitute a quorum for purposes of the special meeting. A quorum is
necessary to hold the special meeting. Once a share is represented at the
special meeting, it will be counted for the purpose of determining a quorum and
any adjournment of the special meeting, unless the holder is present solely to
object to the special meeting. However, if a new record date is set for an
adjourned meeting, a new quorum will have to be established.
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Voting By Proxy
This proxy statement is being sent to you on behalf of the board of
directors of SOLA for the purpose of requesting that you allow your shares of
our common stock to be represented at the special meeting by the persons named
in the enclosed proxy card. All shares of our common stock represented at the
meeting by properly executed proxy cards will be voted in accordance with the
instructions indicated on that proxy. If you sign and return a proxy card
without giving voting instructions, your shares will be voted as recommended by
our board of directors. The board unanimously recommends a vote "FOR" approval
and adoption of the merger agreement and the merger.
We do not expect that any matter other than the proposal to approve and
adopt the merger agreement and the merger will be brought before the special
meeting. If, however, such a matter is properly presented at the special
meeting, the persons named in the proxy card will use their own judgment to
determine how to vote your shares.
You may revoke your proxy at any time before the vote is taken at the
special meeting. To revoke your proxy, you must either advise our Secretary in
writing, deliver a proxy dated after the date of the proxy you wish to revoke or
attend the special meeting and vote your shares in person. Attendance at the
special meeting will not by itself constitute revocation of a proxy. If you have
instructed your broker to vote your shares, you must follow the directions
provided by your broker to change these instructions.
Solicitation of Proxies
We will pay the cost of this proxy solicitation. In addition to soliciting
proxies by mail, directors, officers and employees of SOLA may solicit proxies
personally and by telephone, e-mail or otherwise. None of these persons will
receive additional or special compensation for soliciting proxies. We will, upon
request, reimburse brokers, banks and other nominees for their expenses in
sending proxy materials to their customers who are beneficial owners and
obtaining their voting instructions.
SOLA has engaged Georgeson Shareholder Services to assist in the
solicitation of proxies for the special meeting and will pay Georgeson
Shareholder Services a fee of $[ ], plus reimbursement of out-of-pocket
expenses. The address of Georgeson Shareholder Services is 219 Murray Hill
Parkway, East Rutherford, NJ 07073. Georgeson Shareholder Services' telephone
number is (800) [ ].
THE MERGER
The discussion of the merger in this proxy statement is qualified by
reference to the merger agreement and the voting and support agreement, which
are attached to this proxy statement as Annexes A and B, respectively. You
should read each agreement carefully.
Background of the Merger
In 2002, a representative of Carl Zeiss and members of our management had
preliminary discussions about a business combination of Carl Zeiss's optical
lens business and us. The parties decided not to proceed with a transaction at
that time.
At board meetings held on July 20, 2004 and July 21, 2004, our management
updated our board of directors on the status of various possible acquisitions
and other transactions by us as part of our regular acquisition strategy, which
would not include a change of control of us.
-15-
On July 29, 2004, representatives of Carl Zeiss advised a member of our
management that Carl Zeiss was interested, together with EQT, in acquiring SOLA
and combining SOLA with Carl Zeiss's optical lens business. The member of our
management stated that we were not for sale, and the representatives of Carl
Zeiss also advised the member of our management that Carl Zeiss and EQT would
not participate in a public auction process.
On August 5, 2004, representatives of EQT met with a member of our
management, provided the member of our management with an overview of the EQT
funds and requested access to preliminary company data.
On August 11, 2004, representatives of Carl Zeiss and EQT described to a
member of our management the information and access they would need to establish
a valuation of SOLA and an offer price for our stockholders.
On August 16, 2004, our management held further discussions with
representatives of Carl Zeiss and EQT. Also, on August 16, 2004, a member of our
management provided an update to our board of directors with respect to various
mergers and acquisition opportunities. Our board of directors considered and
approved a request from representatives of Carl Zeiss and EQT who had expressed
their desire to proceed with preliminary due diligence. Our board of directors
formed a merger and acquisition subcommittee for reasons of efficiency and ease
of communications to advise management between meetings of our board of
directors. The subcommittee's function was to provide an initial evaluation of
acquisition opportunities--either a single major acquisition or a series of
small acquisitions that would in the aggregate be material. The subcommittee
consisted of three directors, all of whom were independent directors.
On August 18, 2004, we signed a confidentiality agreement with EQT, which
Carl Zeiss signed soon after, and, on August 19, 2004, we responded to EQT's
August 5, 2004 request for data.
On August 27, 2004, representatives of The Boston Consulting Group, an
advisor to Carl Zeiss and EQT, reviewed with a member of our management an
executive summary of their market and company specific data and some general
initial synergy conclusions.
On September 7, 2004, we received from representatives of Carl Zeiss and
EQT an oral, non-binding expression of interest in acquiring us at a per share
price of $26.00 plus or minus $2.00. This represented a premium of 22.5% to
41.8% over the closing price of $19.75 for our shares on September 7, 2004.
On September 9, 2004, representatives of Carl Zeiss and EQT repeated their
oral, non-binding expression of interest in acquiring us at a per share price of
$26.00 plus or minus $2.00 to the Chairman of our merger and acquisition
subcommittee and the Chairman refused to allow due diligence to proceed on that
basis.
Between September 9, 2004 and September 15, 2004, our management had
further discussions with representatives of Carl Zeiss and EQT and, on September
15, 2004, representatives of Carl Zeiss and EQT advised a member of our
management that it might be possible to offer $28.00 per share, subject to
confirmatory due diligence, internal approvals, obtaining financing and us not
exploring other alternatives. This represented a premium of 43.2% over the
closing price of $19.55 for our shares on September 15, 2004.
On September 21, 2004, on a monthly conference call, our board of directors
was updated on the status of a possible transaction with Carl Zeiss and EQT. The
board of directors discussed the proposal
-16-
from Carl Zeiss and EQT and reviewed alternatives to a transaction with Carl
Zeiss and EQT, including remaining independent and other potential transactions.
On September 30, 2004, the merger and acquisition subcommittee, with two
additional independent directors participating, recommended to the board of
directors that Carl Zeiss and EQT could commence due diligence and in September
and early October 2004, our management held further discussions with
representatives of Carl Zeiss and EQT.
On October 5, 2004, a member of our management updated our board of
directors on the status of discussions with Carl Zeiss and EQT. Our board of
directors determined that, although SOLA was not for sale, Carl Zeiss and EQT
could commence due diligence as recommended by the mergers and acquisitions
subcommittee. Our board of directors also rejected a request from Carl Zeiss and
EQT that we enter into an agreement to negotiate exclusively with them. However,
our board of directors understood that Carl Zeiss and EQT would be unwilling to
proceed if we began exploring other alternatives with third parties.
On October 11, 2004, representatives of Carl Zeiss and EQT and their
advisors commenced due diligence.
On October 17, 2004, members of our management met with representatives of
Carl Zeiss and EQT and their advisors in connection with Carl Zeiss' and EQT's
due diligence.
On October 20, 2004, our board of directors held a meeting with members of
our management and UBS Securities LLC, our financial advisor, to review the
expression of interest submitted by Carl Zeiss and EQT. At this meeting, UBS
discussed with our board of directors financial and related matters with respect
to a potential transaction with Carl Zeiss and EQT. Also at this meeting a
representative of Gardner Carton & Douglas LLP, our outside legal counsel,
advised the board with respect to its fiduciary duties.
On October 25, 2004, we retained Cahill Gordon & Reindel LLP to act as our
special outside counsel in connection with the proposed transaction.
On November 4, 2004, The Boston Consulting Group reviewed with a member of
our management an extract of some of their updated findings with respect to
their market and company specific data and synergy conclusions.
On November 20, 2004, Carl Zeiss and EQT advised us in writing that they
were proposing a merger at $28.00 per share, that they had received internal
approvals to proceed at that price, that they had received a commitment letter
to provide financing for the merger and that the proposal would be deemed
automatically withdrawn unless a definitive merger agreement was signed by
December 5, 2004, upon a public announcement or disclosure to a third party of
the terms of the proposal or upon any exploration by us or our representatives
of other strategic alternatives. A draft merger agreement was also provided. A
member of our management and our advisors had discussions with Carl Zeiss and
EQT and their advisors over the next few days in which Carl Zeiss and EQT made
clear that $28.00 per share was their last and final offer based on all
information received and discussions with our management to date.
On November 23, 2004, our board of directors held a meeting, together with
members of our management and our legal and financial advisors, to review Carl
Zeiss' and EQT's November 20, 2004 proposal. Following the meeting, our board of
directors instructed our management to continue to explore the proposed
transaction with Carl Zeiss and EQT.
-17-
During the period beginning on November 26, 2004 and concluding on December
5, 2004, we, Carl Zeiss, EQT and our respective representatives and advisors
negotiated the terms of the merger agreement and voting and support agreement.
We also reviewed the master agreement and the commitment letter received by a
subsidiary of Carl Zeiss TopCo. On each of November 30, 2004 and December 2,
2004, a member of our management reviewed with our mergers and acquisitions
subcommittee the progress of negotiations on the proposed transaction.
On December 4, 2004 and December 5, 2004, our board of directors held
special meetings that were attended by our chief executive officer ("CEO") and
representatives of our outside legal counsel, Cahill Gordon, and our financial
advisor, UBS Securities. A representative of Cahill Gordon updated the board of
directors on the status of negotiations with Carl Zeiss and EQT. The
representative of Cahill Gordon then summarized the terms of the merger
agreement and the voting and support agreement, including the resolution of
final issues related to each agreement. The representative of Cahill Gordon also
advised our board of directors with respect to the fiduciary duties applicable
to our directors, both generally and within the specific context of a
transaction involving the exchange of our outstanding equity securities for
cash. Also at these meetings, UBS reviewed with our board of directors its
financial analysis of the merger consideration and, at the December 5, 2004
meeting, delivered to our board of directors an oral opinion, which opinion was
confirmed by delivery of a written opinion dated December 5, 2004, to the effect
that, as of that date and based on and subject to various assumptions, matters
considered and limitations described in its opinion, the merger consideration
was fair, from a financial point of view, to holders of our common stock (other
than our affiliates). Our board of directors discussed the proposed transaction,
including the benefits of the transaction against the advantages and
disadvantages of remaining independent and other potential transactions, and
posed various questions to our CEO and our legal and financial advisors. After
extensive discussion, our board of directors unanimously (1) approved and
declared the merger, the merger agreement and the transactions contemplated by
the merger agreement advisable, (2) declared that it was in the best interests
of our stockholders that we enter into the merger agreement and consummate the
merger on the terms and conditions set forth in the merger agreement, (3)
resolved to recommend that our stockholders approve and adopt the merger
agreement and the merger, (4) approved an amendment to our Rights Agreement
dated August 27, 1998 with BankBoston, N.A. (as predecessor in interest to
EquiServe Trust Company, N.A.), rendering it inapplicable to the merger
agreement, the merger and the other transactions contemplated by the merger
agreement, (5) exempted the merger agreement, the voting and support agreement
and the transactions contemplated thereby from Section 203 of the Delaware
General Corporation Law and any other applicable state antitakeover law and (6)
authorized execution of the merger agreement.
On December 5, 2004, the parties executed the merger agreement.
Prior to the commencement of trading on December 6, 2004, we issued a press
release announcing the execution of the merger agreement.
Reasons for the Merger
Our board of directors consulted with senior management and our legal and
financial advisors and considered a number of factors, including those set forth
below, in reaching its decision to approve the merger agreement and the
transactions contemplated by the merger agreement, and to recommend that our
stockholders vote "FOR" approval and adoption of the merger agreement and the
merger.
Merger Consideration
Our board of directors considered the fact that the $28.00 per share cash
consideration to be received by our stockholders if the merger is consummated
was higher than the trading prices of our com-
-18-
mon stock at any time over the last three years and represents a 26.6% premium
to the closing price of $22.10 on December 3, 2004, the last trading day prior
to the public announcement of the execution of the merger agreement. Our board
of directors also considered Carl Zeiss' and EQT's statement that $28.00 per
share was the highest price they would pay based on their strategy for SOLA. In
addition, our board of directors considered that Carl Zeiss and EQT were
offering all cash for the SOLA shares, rather than stock or a combination of
stock and cash. Our board of directors also considered the fact that it believed
most of our employees would be retained after the merger.
Review of Prospects in Remaining Independent
Our board of directors considered our financial condition, results of
operations and business, including prospects of increased competition from
commodity manufacturers, particularly in Asia, and prospects for making suitable
affordable acquisitions. In addition, our board of directors considered our
earnings prospects if we were to remain independent.
Opinion of Our Financial Advisor
Our board considered the financial presentation of UBS, including its
opinion, dated December 5, 2004, to our board of directors as to the fairness,
from a financial point of view and as of the date of the opinion, of the merger
consideration to be received by holders of our common stock (other than our
affiliates), as more fully described below under the caption "The Merger --
Opinion of Our Financial Advisor."
Terms of the Merger Agreement
Our board of directors considered the terms of the merger agreement, which
was a product of arms' length negotiations, including the parties' respective
representations, warranties and covenants, the conditions to their respective
obligations to complete the merger and the ability of the respective parties to
terminate the merger agreement. Our board of directors also considered the terms
of the voting and support agreement. Our board of directors noted that the
voting and support agreement and the termination fee provisions of the merger
agreement could have the effect of discouraging alternative proposals for a
business combination between us and a third party, but that such provisions are
customary for transactions of this size and type. Our board of directors also
noted that the merger agreement permits us and our board to respond to a bona
fide acquisition proposal that the board determines is a superior proposal,
subject to certain restrictions imposed by the merger agreement and the
requirement that we pay Carl Zeiss and EQT a $22,200,000 termination fee in the
event that we terminate the merger agreement to enter into an alternative
acquisition with respect to such superior proposal. Our board of directors also
considered that Carl Zeiss and EQT would withdraw their offer if we began
exploring alternative transactions.
Likelihood of Closing
Our board of directors considered the limited nature of the closing
conditions included in the merger agreement, including the likelihood that the
merger would be approved by requisite regulatory authorities and that the merger
agreement would be approved and adopted by our stockholders. Our board of
directors also considered that Carl Zeiss TopCo had received a commitment letter
for financing and that the financing was not subject to any significant
conditions other than those set forth in the merger agreement.
-19-
Employee Compensation and Benefits
Our board of directors considered that certain of our directors and
officers may receive certain benefits different from, and in addition to, those
of other stockholders as described under "--Interests of Our Directors and
Executive Officers in the Merger."
Taxability; No Participation in Future Growth
Our board of directors also considered that the merger will be a taxable
transaction to our stockholders and that because our stockholders are receiving
cash for their stock, they will not participate in our future growth.
The foregoing discussion of the information and factors considered by our
board of directors, while not exhaustive, includes the material factors
considered by our board of directors, and contains both factors that support the
merger and factors that may weigh against it. In view of the variety of factors
considered in connection with its evaluation of the merger, our board of
directors did not find it practicable to, and did not, quantify or otherwise
assign relative or specific weight or values to any of these factors, and
individual directors may have given different weights to particular factors. In
addition, our board of directors did not make any specific determination of
whether any particular factor, or any aspect of any particular factor, was
favorable or unfavorable to its ultimate determination, and individual directors
may have had different views on the favorability of particular factors.
Recommendation of Our Board of Directors
After careful consideration, our board of directors, by a unanimous vote,
has determined that the merger agreement is advisable, has approved and adopted
the merger agreement and approved the merger and unanimously recommends that our
stockholders vote "FOR" approval and adoption of the merger agreement and
approval of the merger.
Interests of Our Directors and Executive Officers in the Merger
Stock Options
Under the terms of the merger agreement and our stock option agreements
with our directors, officers and employees, all of the stock options granted to
such individuals will be canceled immediately prior to the effective time of the
merger. The merger agreement provides that, in consideration for such
cancellation we will pay to the holder of each such option, regardless of
whether such option is vested or unvested, an amount in cash determined by
multiplying (1) the excess, if any, of $28.00 per share over the applicable
exercise price of such option by (2) the number of shares such holder could have
purchased (assuming full vesting of all options) had such holder exercised such
option in full immediately prior to the effective time.
The holders of all options which are "in the money," meaning that they have
exercise prices below $28.00 per share, immediately prior to the effective time
of the merger will be entitled to receive such cash payments. This includes our
executive officers and our non-employee directors, each of whom holds
outstanding options. The following table summarizes the vested and unvested
options held by our executive officers and directors as of the record date, and
the consideration that each of them will receive pursuant to the merger
agreement in connection with the cancellation of their options:
-20-
No. of Shares
Underlying Weighted Average
Vested and Exercise Price of
Unvested Vested and Resulting
Options Unvested Options Consideration
------- ---------------- -------------
Jeremy C. Bishop 389,800 $10.49 $6,824,795
Maurice J. Cunniffe 69,709 $13.89 $ 983,765
Andrew Feshbach 3,753 $18.48 $ 35,729
Robert A. Muh 31,440 $14.22 $ 433,107
Colombe Nicholas 8,000 $18.71 $ 74,300
Jackson L. Schultz 38,916 $15.86 $ 472,504
Charles F. Smith 14,530 $17.53 $ 152,138
Barry J. Packham 39,000 $13.10 $ 581,050
Mark Ashcroft 120,000 $12.48 $1,862,625
Ronald F. Dutt 85,000 $19.18 $ 749,500
David A. Cross 64,270 $19.14 $ 569,605
Douglas D. Danforth 0 $0.00 $ 0.00
Employment Agreements
Five of our executive officers -- Jeremy C. Bishop, Mark Ashcroft, David
Cross, Ronald Dutt and Barry Packham -- have previously entered into employment
agreements with us that contain provisions that entitle them to termination
benefits. Pursuant to the employment agreements, upon a termination of the
executive's employment by the company other than for cause or by the executive
for good reason, the executive is entitled to receive certain severance
payments. In the case of Mr. Bishop, these severance payments would equal
eighteen months' salary and 150% of the average annual compensation paid under
our management incentive plan for the three years prior to such termination. In
the case of Mr. Ashcroft, these payments would equal six months' salary and 50%
of the average annual compensation paid under our management incentive plan for
the three years immediately prior to such termination. Mr. Cross would receive
six months' base salary or base salary for a period that is customary practice
in SOLA Australia at the time of termination and the average annual compensation
received under our management incentive plan for the three years prior to the
date of termination for the period of time for which he receives his salary
following termination. Mr. Dutt would receive payments equal to his base salary
for a period of six months and a pro rated bonus based upon the compensation
paid to him under our management incentive plan for the three years immediately
prior to such termination. If terminated prior to September 30, 2005, Mr.
Packham would receive eighteen months' base salary and 150% of the average
annual compensation paid under our management incentive plan for the three years
prior to such termination. Each executive would also receive continued benefits
under our employee benefit plans and outplacement assistance for periods ranging
from six to eighteen months. Prior to EQT's and Carl Zeiss's July 29, 2004
indication of interest in SOLA, our board of directors approved certain
amendments to each of the employment agreements (collectively, the "employment
agreement amendments") to provide for, among other things, a change of control
payment and a gross-up payment, if circumstances warrant, in the event the
merger or another change of control transaction is consummated. However, upon
the insistence of EQT and Carl Zeiss, the execution of the employment agreement
amendments was deferred until the signing of the merger agreement.
Pursuant to the terms of these employment agreement amendments, upon
consummation of the merger and without regard to the effect of the merger on the
status of the executive's employment by the surviving corporation, each
executive will be entitled to receive an amount equal to one and a half times
and, in the case of Mr. Bishop, three times the sum of (1) the annual base
salary of the executive as in ef-
-21-
fect immediately prior to the occurrence of the merger plus (2) the annual
average of the amount of earnings accrued by the executive pursuant to our
management incentive plan in each of the last three fiscal years completed
immediately prior to the occurrence of the merger. Assuming the merger is
completed on or about February 15, 2005, the approximate aggregate amount of the
cash severance that would be paid to the five executive officers as a group is
estimated to be $4.7 million (including the excise tax gross up payable to Mr.
Bishop as described in the paragraph below). If the executive receives the
foregoing change of control payment following the merger and a termination of
the executive's employment were to occur during the twelve month period
following consummation of the merger, the executive would not be entitled to
receive the continuation of salary payments and payments equal to a percentage
of average annual compensation paid under the management incentive plan, but
would still receive the other benefits described above.
Pursuant to the employment agreements with the executive officers, if any
amounts or benefits received under the agreements or otherwise are subject to
the excise tax imposed under Section 4999 of the Internal Revenue Code, payments
under the employment agreement will be reduced to the extent necessary to make
no excise tax payable. In connection with the merger, the employment agreements
with Messrs. Bishop, Dutt and Packham were amended to delete this restriction
and to provide instead for a gross-up payment to be made to the executive if he
is subject to the excise tax to restore him to the after-tax position that he
would have been in if the excise tax had not been imposed. We expect that only
Mr. Bishop will receive a gross-up payment in connection with the merger.
Management Incentive Plan
In connection with entering into the merger agreement, we amended our
management incentive program to provide that a pro rata portion of the full
amount payable under such program based on the fiscal year ending on the last
day of the last fiscal month ended prior to the merger would be paid in full at
the merger. Calculations of the aggregate amount to be paid under such program
would be in a manner consistent with past practices. We reasonably anticipate
such amounts to be consistent with amounts paid thereunder with respect to the
2004 fiscal year, except: (1) as may be impacted by any increase (or decrease)
in profit/(loss) for such period and (2) that the composition thereof with
respect to individuals and/or geographic regions may be subject to variation.
Indemnification and Insurance
The merger agreement provides that, upon completion of the merger, for a
period of six years, Carl Zeiss TopCo and the surviving corporation will
indemnify and hold harmless all of our past and present officers and directors
to the fullest extent permitted by applicable laws and our certificate of
incorporation and bylaws as in effect on the date of the merger.
The merger agreement also provides that the surviving corporation will
maintain for a period of six years after completion of the merger directors' and
officers' liability insurance policies maintained by SOLA on terms with respect
to coverage in an amount no less favorable than those of such policy in effect
on the date of the merger agreement, although the surviving corporation will not
be required to make annual premium payments in excess of 250% of the annual
premiums paid by the surviving corporation for directors' and officers'
liability insurance in the last full fiscal year prior to the effective date of
the merger. In the event that the surviving corporation is unable to maintain or
obtain such insurance, the surviving corporation will obtain a policy with the
greatest coverage available for an amount not to exceed 250% of the annual
premiums paid by the surviving corporation for directors' and officers'
liability insurance in the last full fiscal year. In lieu of such insurance
coverage, if the premium and terms are acceptable to Carl Zeiss TopCo, we may
purchase a six year "tail" policy covering directors' and officers' liability,
and covering each person presently covered.
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Future Employment Arrangements
Subsequently to the announcement of the definitive merger agreement,
certain of our executive officers (including our CEO) have held (or are expected
to have) discussions with Carl Zeiss TopCo regarding future employment by Carl
Zeiss TopCo or one of its subsidiaries (including the surviving corporation)
following the effective date of the merger. Although no agreement, arrangement
or understanding currently exists, some members of our existing management may
be employed by Carl Zeiss TopCo or its subsidiaries (including the surviving
corporation) after the acquisition is completed, which means that members of our
existing management may, prior to the completion of the acquisition, enter into
new arrangements with Carl Zeiss TopCo or its subsidiaries regarding employment
with, or the right to purchase and participate in the equity of, Carl Zeiss
TopCo.
Opinion of Our Financial Advisor
On December 5, 2004, at a meeting of our board of directors held to approve
the proposed merger, UBS delivered to our board of directors an oral opinion,
confirmed by delivery of a written opinion dated December 5, 2004, to the effect
that, as of that date and based on and subject to various assumptions, matters
considered and limitations described in its opinion, the merger consideration
was fair, from a financial point of view, to holders of our common stock (other
than our affiliates).
The full text of UBS' opinion describes the assumptions made, procedures
followed, matters considered and limitations on the review undertaken by UBS.
This opinion is attached as Annex C and is incorporated into this proxy
statement by reference. UBS' opinion is directed only to the fairness, from a
financial point of view, of the merger consideration to be received by holders
of SOLA common stock (other than our affiliates) and does not address any other
aspect of the merger. The opinion does not address the relative merits of the
merger as compared to other business strategies or transactions that might be
available with respect to SOLA or the underlying business decision of SOLA to
effect the merger. The opinion does not constitute a recommendation to any
stockholder as to how to vote or act with respect to any matters relating to the
proposed merger. Holders of SOLA common stock are encouraged to read this
opinion carefully in its entirety. The summary of UBS' opinion described below
is qualified in its entirety by reference to the full text of its opinion.
In arriving at its opinion, UBS:
o reviewed publicly available business and historical financial
information relating to SOLA;
o reviewed internal financial information and other data relating to our
business and financial prospects that were provided to UBS by our
management and not publicly available, including financial forecasts
and estimates prepared by our management;
o conducted discussions with members of our senior management concerning
our business and financial prospects;
o reviewed current and historical market prices of our common stock;
o reviewed publicly available financial and stock market data with
respect to companies in lines of businesses which UBS believed to be
generally comparable to those of SOLA;
o compared the financial terms of the merger with publicly available
financial terms of other transactions which UBS believed to be
generally relevant;
-23-
o reviewed the merger agreement and related documents; and
o conducted other financial studies, analyses and investigations, and
considered other information, as UBS deemed necessary or appropriate.
In connection with its review, with our consent, UBS did not assume any
responsibility for independent verification of any of the information that UBS
was provided or reviewed for the purpose of its opinion and, with our consent,
UBS relied on that information being complete and accurate in all material
respects. In addition, at our direction, UBS did not make any independent
evaluation or appraisal of any of the assets or liabilities, contingent or
otherwise, of SOLA, and was not furnished with any evaluation or appraisal. With
respect to the financial forecasts referred to above, UBS assumed, at our
direction, that they were reasonably prepared on a basis reflecting the best
currently available estimates and judgments of our management as to the future
financial performance of SOLA. UBS' opinion was necessarily based on economic,
monetary, market and other conditions as in effect on, and information made
available to UBS as of, the date of its opinion.
UBS was not asked to, and it did not, offer any opinion as to the terms of
the merger agreement or the form of the merger. UBS assumed, with our consent,
that each of SOLA, Carl Zeiss TopCo and merger sub would comply with all
material terms of the merger agreement and that the merger would be consummated
in accordance with its terms without waiver, modification or amendment of any
material term, condition or agreement. UBS also assumed, with our consent, that
all governmental, regulatory or other consents and approvals necessary for the
consummation of the merger would be obtained without any adverse effect on SOLA
or the merger. In connection with its engagement, UBS was not requested to, and
it did not, solicit third party indications of interest in the possible
acquisition of all or a part of SOLA. Except as described above, we imposed no
other instructions or limitations on UBS with respect to the investigations made
or the procedures followed by UBS in rendering its opinion.
In connection with rendering its opinion to our board of directors, UBS
performed a variety of financial and comparative analyses which are summarized
below. The following summary is not a complete description of all analyses
performed and factors considered by UBS in connection with its opinion. The
preparation of a financial opinion is a complex process involving subjective
judgments and is not necessarily susceptible to partial analysis or summary
description. With respect to the selected public companies analysis and the
selected precedent transactions analysis summarized below, no company or
transaction used as a comparison is either identical or directly comparable to
SOLA or the merger. These analyses necessarily involve complex considerations
and judgments concerning financial and operating characteristics and other
factors that could affect the public trading or acquisition values of the
companies concerned.
UBS believes that its analyses and the summary below must be considered as
a whole and that selecting portions of its analyses and factors or focusing on
information presented in tabular format, without considering all analyses and
factors or the narrative description of the analyses, could create a misleading
or incomplete view of the processes underlying UBS' analyses and opinion. None
of the analyses performed by UBS was assigned greater significance or reliance
by UBS than any other. UBS arrived at its ultimate opinion based on the results
of all analyses undertaken by it and assessed as a whole. UBS did not draw, in
isolation, conclusions from or with regard to any one factor or method of
analysis for purposes of its opinion.
The estimates of our future performance provided by our management in or
underlying UBS' analyses are not necessarily indicative of future results or
values, which may be significantly more or less favorable than those estimates.
In performing its analyses, UBS considered industry performance, general
-24-
business and economic conditions and other matters, many of which are beyond our
control. Estimates of the financial value of companies do not necessarily
purport to be appraisals or reflect the prices at which companies actually may
be sold.
The merger consideration was determined through negotiation between SOLA,
Carl Zeiss and EQT and the decision to enter into the merger was solely that of
our board of directors. UBS' opinion and financial analyses were only one of
many factors considered by our board of directors in its evaluation of the
merger and should not be viewed as determinative of the views of our board of
directors or management with respect to the merger or the merger consideration.
The following is a brief summary of the material financial analyses
performed by UBS and reviewed with our board of directors in connection with its
opinion relating to the proposed merger. The financial analyses summarized below
include information presented in tabular format. In order to fully understand
UBS' financial analyses, the tables must be read together with the text of each
summary. The tables alone do not constitute a complete description of the
financial analyses. Considering the data below without considering the full
narrative description of the financial analyses, including the methodologies and
assumptions underlying the analyses, could create a misleading or incomplete
view of UBS' financial analyses.
Selected Public Companies Analysis
UBS compared selected financial information for SOLA with corresponding
financial information of the following 10 publicly traded companies in the
ophthalmic sector of the healthcare industry, referred to below as the
"Ophthalmic Companies," and six publicly traded companies in the medical
technology sector of the healthcare industry, referred to below as the "Mature
Medtech Companies":
Ophthalmic Companies Mature Medtech Companies
-------------------- ------------------------
o Alain Afflelou S.A. o Getinge AB
o De Rigio S.p.A. o Huntleigh Technology PLC
o Fielmann AG o Invacare Corporation
o Indo Internacional S.A. o STERIS Corporation
o Luxottica Group S.p.A. o Viasys Healthcare Inc.
o Marcolin S.p.A. o Vital Signs, Inc.
o Moulin International Holdings Limited
o Essilor International, S.A.
o Hoya Corporation
o Bausch & Lomb Incorporated
UBS reviewed, among other things, enterprise values, calculated as equity value,
plus debt, less cash, as multiples of latest 12 months revenue and earnings
before interest, taxes, depreciation and amortization, commonly known as EBITDA,
and calendar years 2004 and 2005 estimated EBITDA. UBS also reviewed equity
values as a multiple of calendar years 2004 and 2005 estimated earnings per
share, commonly known as EPS. In addition, UBS reviewed calendar year 2005
estimated revenue growth and EBITDA margins. UBS then compared the multiples and
percentages derived for the selected companies with corresponding multiples and
percentages for SOLA based on the closing price of our common stock on December
2, 2004 as well as corresponding multiples and percentages implied for SOLA
based on the merger consideration of $28.00 per share. Financial data for the
selected companies were based on closing stock prices on December 2, 2004.
Estimated financial data for the selected companies were based on publicly
available research analysts' estimates. Estimated financial data for SOLA were
based on internal estimates of our management, referred to in the table below as
"Management Forecasts," as well as publicly available research analysts'
estimates, referred to in the table below as "Street Forecasts." This analysis
indicated the following implied low, mean, median and high multiples and
percentages for the
-25-
selected companies, as compared to corresponding multiples and percentages
implied for SOLA based both on the closing price of our common stock on December
2, 2004 and the merger consideration of $28.00 per share:
Implied Data for SOLA Implied Data for SOLA
Implied Data Based on Closing Stock Based on Merger
for Ophthalmic Companies Price on 12/2/04 Consideration
------------------------ ---------------- -------------
Management Street Management Street
Enterprise Value as Multiples of: Low Mean Median High Forecasts Forecasts Forecasts Forecasts
--------------------------------- --- ---- ------ ---- --------- --------- --------- ---------
Revenue
Latest 12 months.............. 0.5x 1.8x 1.7x 3.9x 1.3x 1.3x 1.6x 1.6x
EBITDA
Latest 12 months.............. 4.2x 8.7x 9.1x 11.3x 7.3x 7.3x 9.1x 9.1x
Calendar year 2004............ 4.6x 9.2x 9.7x 13.2x 7.5x 7.8x 9.3x 9.7x
Calendar year 2005............ 4.1x 8.0x 8.2x 11.1x 6.0x 7.2x 7.5x 8.9x
Equity Value as Multiple of:
EPS
Calendar year 2004............ 12.5x 21.6x 21.5x 44.8x 15.1x 15.1x 19.5x 19.4x
Calendar year 2005............ 9.3x 15.8x 18.4x 20.4x 11.1x 13.4x 14.3x 17.2x
Operational Metrics:
Calendar year 2005 revenue growth 3.6% 10.0% 7.8% 26.4% 12.0%* 5.5% 12.0%* 5.5%
Calendar year 2005 EBITDA margins 11.3% 20.9% 18.9% 36.9% 19.1% 17.2% 19.1% 17.2%
* Reflects both growth from acquisitions and organic growth of 4.0%.
Implied Data for SOLA Implied Data for SOLA
Implied Data Based on Closing Stock Based on Merger
for Mature Medtech Companies Price on 12/2/04 Consideration
---------------------------- ---------------- -------------
Management Street Management Street
Enterprise Value as Multiples of: Low Mean Median High Forecasts Forecasts Forecasts Forecasts
--------------------------------- --- ---- ------ ---- --------- --------- --------- ---------
Revenue
Latest 12 months.............. 1.3x 1.7x 1.6x 2.3x 1.3x 1.3x 1.6x 1.6x
EBITDA
Latest 12 months.............. 8.9x 11.0x 10.9x 14.2x 7.3x 7.3x 9.1x 9.1x
Calendar year 2004............ 8.8x 10.3x 9.7x 13.0x 7.5x 7.8x 9.3x 9.7x
Calendar year 2005............ 8.2x 8.9x 8.9x 9.6x 6.0x 7.2x 7.5x 8.9x
Equity Value as Multiple of:
EPS
Calendar year 2004............ 18.0x 21.6x 20.3x 31.6x 15.1x 15.1x 19.5x 19.4x
Calendar year 2005............ 16.2x 18.0x 17.4x 22.2x 11.1x 13.4x 14.3x 17.2x
Operational Metrics:
Calendar year 2005 revenue growth 4.6% 7.8% 6.4% 16.0% 12.0%* 5.5% 12.0%* 5.5%
Calendar year 2005 EBITDA margins 12.5% 17.4% 18.8% 19.6% 19.1% 17.2% 19.1% 17.2%
* Reflects both growth from acquisitions and organic growth of 4.0%.
Selected Precedent Transactions Analysis
UBS reviewed implied enterprise values in the following 12 selected
transactions involving companies in the ophthalmic sector of the healthcare
industry announced between March 3, 1995 and December 2, 2004:
-26-
Acquiror Target
-------- ------
o Moulin International Holdings Limited & Golden o Eye Care Centers of America, Inc.
Gate Capital
o Advanced Medical Optics, Inc. o Pfizer Inc. (Ophthalmic Surgical Business)
o Luxottica Group S.p.A. o Cole National Corporation
o Permira Advisers Limited o Rodenstock GmbH
o Investor Group o Safilo S.p.A.
o Hoya Corporation o Optical Resources Group, Inc.
o BMC Industries, Inc. o Monsanto Company (Orcolite Eyeglass Lens Unit)
o Bausch & Lomb Incorporated o Storz Instrument Co.
o Bausch & Lomb Incorporated o Chiron Corporation (Vision Unit)
o SOLA o American Optical Corporation (Ophthalmic Lens
Division)
o Essilor International, S.A. o Benson Eyecare Corporation (Omega Group)
o Luxottica Group S.p.A. o United States Shoe Corporation
UBS reviewed enterprise values as multiples of latest 12 months revenue, EBITDA
and earnings before taxes and interest, commonly known as EBIT. UBS then
compared the multiples derived from the selected transactions with corresponding
data implied in the merger for SOLA based on the merger consideration of $28.00
per share. Multiples for the selected transactions were based on publicly
available information at the time of announcement of the relevant transaction.
This analysis indicated the following implied low, mean, median and high
multiples for the selected transactions, as compared to corresponding multiples
implied in the merger for SOLA based on the merger consideration of $28.00 per
share:
Implied Multiples for SOLA
Implied Multiples for Selected Transactions Based on Merger Consideration
------------------------------------------- -----------------------------
Enterprise Value
as Multiples of: Low Mean Median High
---------------- --- ---- ------ ----
Latest 12 months revenue...... 0.5x 1.5x 1.4x 3.1x 1.6x
Latest 12 months EBITDA....... 8.0x 9.2x 9.3x 10.4x 9.1x
Latest 12 months EBIT......... 11.3x 16.7x 13.5x 28.0x 11.6x
Premiums Paid Analysis
UBS reviewed the premiums paid in selected transactions involving companies
in the healthcare industry announced between January 1, 2001 and December 2,
2004 with transaction values of $250 million to $2.0 billion. UBS reviewed the
purchase prices paid in the selected transactions relative to the target
company's closing stock prices one day, one week and one month prior to public
announcement of the transaction. UBS then compared the premiums implied in the
selected transactions over these specified periods with the premiums implied in
the merger based on the merger consideration and the closing prices of our
common stock one day, one week and one month prior to December 2, 2004. This
analysis indicated the following implied low, mean, median and high premiums
paid in the selected transactions, as compared to the premiums implied in the
merger:
Percentage Premiums Paid Premiums Implied in Merger
in Selected Transactions Based on Merger Consideration
------------------------ -----------------------------
Specified Period: Low Mean Median High
----------------- --- ---- ------ ----
One day.......................... 0.1% 33.0% 26.6% 122.0% 28.8%
One week......................... 3.8% 35.6% 28.0% 122.9% 33.9%
One month........................ (5.0)% 37.8% 31.2% 167.2% 40.0%
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Discounted Cash Flow Analysis
UBS performed a discounted cash flow analysis to calculate the estimated
present value of the stand-alone unlevered, after-tax free cash flows that SOLA
could generate over fiscal years 2005 through 2008. Estimated financial data
were based on internal estimates of our management and reflected estimated
earn-out payments to be made by SOLA in fiscal years 2009 and 2010, assuming
execution of our acquisition strategy, as a result of acquisitions occurring in
fiscal years 2007 and 2008. UBS applied perpetuity growth rates ranging from
3.0% to 5.0% to our fiscal year 2008 estimated EBITDA, after adjustment to
reflect the potential for an increase in capital expenditures, decrease in
working capital and elimination of acquisition expenditures beyond fiscal year
2008. The cash flows and perpetuity growths were then discounted to present
value using discount rates ranging from 11.0% to 13.0%. This analysis indicated
the following approximate implied per share equity reference range for SOLA, as
compared to the merger consideration:
Implied Per Share Equity Per Share
Reference Range for SOLA Merger Consideration
------------------------ --------------------
$18.27 - $35.81 $28.00
Miscellaneous
Under the terms of its engagement, we have agreed to pay UBS customary fees
for its financial advisory services in connection with the merger, a significant
portion of which is contingent upon completion of the merger and a portion of
which was payable in connection with UBS' opinion. In addition, we have agreed
to reimburse UBS for its reasonable expenses, including fees, disbursements and
other charges of counsel, and to indemnify UBS and related parties against
liabilities, including liabilities under federal securities laws, relating to,
or arising out of, its engagement. UBS in the past has provided services to SOLA
unrelated to the proposed merger, for which services UBS has received
compensation, and is an agent for, and lender under, one of our credit
facilities, which will be repaid in connection with the merger. In addition, UBS
currently is providing services to certain portfolio companies of EQT's
affiliates, for which services UBS expects to receive compensation, and an
affiliate of UBS is an investor in a fund managed by an affiliate of EQT. In the
ordinary course of business, UBS, its successors and affiliates may hold or
trade securities of SOLA and affiliates of Carl Zeiss and EQT for their own
accounts and accounts of customers and, accordingly, may at any time hold a long
or short position in such securities.
We selected UBS as our financial advisor in connection with the merger
because UBS is an internationally recognized investment banking firm with
substantial experience in similar transactions and is familiar with SOLA and its
business. UBS is continually engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions, leveraged buyouts,
negotiated underwritings, competitive bids, secondary distributions of listed
and unlisted securities and private placements.
Financial Projections
In connection with Carl Zeiss's and EQT's due diligence review and during
the course of our negotiations with Carl Zeiss and EQT in connection with the
proposed merger, we provided Carl Zeiss and EQT with our internal projections of
our future operating performance. These projections, which we do not ordinarily
make available to the public, included the following forecasts of our net sales,
gross profit, total operating expenses, earnings before interest and taxes
("EBIT") and earnings before interest, taxes, depreciation and amortization
("EBITDA"), respectively (in thousands): $692,000, $284,000, $182,000, $102,000
and $130,000 for calendar year 2004; $788,000, $330,000, $198,000, $132,000 and
$164,000 for calendar year 2005; $874,000, $378,000, $210,000, $168,000 and
$204,000 for calendar year 2006; and $967,000, $426,000, $224,000, $203,000 and
$243,000 for calendar year 2007.
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These projections are included in this proxy statement only because we made
them available to Carl Zeiss and EQT, and we and Carl Zeiss and EQT wish to make
the same information available to our stockholders. The inclusion of the
projections should not be interpreted as suggesting that Carl Zeiss and EQT
relied on the projections in evaluating the merger. The projections involve
risks and are based upon a variety of assumptions relating to our business,
industry performance, general business and economic conditions and other matters
and are subject to significant uncertainties and contingencies, many of which
are beyond our and Carl Zeiss's and EQT's control. Projections of this nature
are inherently imprecise, and actual results may be materially greater or less
than those contained in the projections. The projections should be read together
with our financial statements that can be obtained from the Securities and
Exchange Commission, as described in "Where You Can Find More Information."
The projections were prepared by us for internal use only and were not
prepared with a view to public disclosure or compliance with published
guidelines of the Securities and Exchange Commission or the guidelines
established by the American Institute of Certified Public Accountants regarding
projections and forecasts. The projections were not intended to be a forecast of
financial results and are not guarantees of performance. The projections do not
purport to present operations in accordance with generally accepted accounting
principles, and our independent auditors have not examined or compiled the
projections.
Our projections are subjective in many respects and thus susceptible to
interpretations and periodic revision based on actual experience and business
developments. There can be no assurance that the assumptions made in preparing
the projections will prove accurate. It is expected that there will be
differences between actual and projected results. None of us, Carl Zeiss or EQT
or any of our or their affiliates or representatives has updated or otherwise
revised or intends, except to the extent required by applicable federal
securities laws, to update or otherwise revise the projections to reflect
circumstances existing after the date when made or to reflect the occurrence of
future events even in the event that any or all of the assumptions underlying
the projections are shown to be in error.
Financing for the Merger
In connection with the merger, Carl Zeiss TopCo has informed us that it
will cause approximately $920 million in cash to be paid to our shareholders and
holders of stock options, that our credit agreement will be repaid at the
effective time for the merger and that the 6 7/8% Senior Notes and 11% Senior
Notes will be repaid after the effective time for the merger. As of November 30,
2004, $170.6 million is outstanding under our credit facility and $94.9 million
of our 6 7/8% Senior Notes and $9.1 million of our 11% Senior Notes are
outstanding. Carl Zeiss TopCo has also informed us that these payments are
expected to be funded by a combination of equity contributions to Carl Zeiss
TopCo by Carl Zeiss and EQT and a debt financing. Under the terms of the merger
agreement, one of the conditions of Carl Zeiss TopCo to consummating the merger
is that the lenders under the commitment letter referred to above (or in the
commitment letter related to any alternative financing) shall be ready and
willing to fund the amounts contemplated by the commitment letter on the terms
set forth therein (or in the commitment letters related to any alternative
financing) (including, in each case "flex" provisions in any fee letter or
otherwise) sufficient to consummate the merger, refinance the debt of SOLA and
its subsidiaries and pay related fees and expenses.
Carl Zeiss TopCo has also informed us that pursuant to the master
agreement, Carl Zeiss and EQT have agreed to contribute approximately (euro) 50
million and (euro) 150 million, respectively, to Carl Zeiss TopCo. Carl Zeiss
has also agreed to transfer its optical lens business divisions and make a
shareholder loan of (euro) 70 million to Carl Zeiss TopCo. The proceeds from
these contributions can be used for general purposes, including payment of the
merger consideration, but (euro)24.6 million can only be used for post-
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merger integration activities relating to Carl Zeiss's contributed assets. The
transactions under the master agreement will be completed once the conditions
for the merger have been satisfied.
Carl Zeiss TopCo has also informed us that, in addition, a subsidiary of
Carl Zeiss TopCo has received a commitment letter from Credit Suisse First
Boston International and Deutsche Bank AG London, as mandated lead arrangers,
for senior facilities, second lien facilities and mezzanine facilities totaling
$615.7 million and (euro) 443 million. Carl Zeiss TopCo has informed us that the
availability of these commitments to finance the payment to our shareholders and
option holders of the merger consideration expires on April 19, 2005 and is
subject to the completion of definitive documentation and other customary
conditions. Carl Zeiss TopCo's subsidiary has received a letter from the
mandated lead arrangers agreeing that various of these conditions have been
satisfied. As a result, we believe that the financing under these commitment
letters is not subject to any significant conditions other than those set forth
in the merger agreement. However, under the terms of the merger agreement, one
of the conditions of Carl Zeiss TopCo to consummating the merger is that the
lenders under the commitment letter referred to above (or in the commitment
letter related to any alternative financing) shall be ready and willing to fund
the amounts contemplated by the commitment letter on the terms set forth therein
(or in the commitment letters related to any alternative financing) (including,
in each case "flex" provisions in any fee letter or otherwise) sufficient to
consummate the merger, refinance the debt of SOLA and its subsidiaries and pay
related fees and expenses. See "The Merger Agreement--Conditions to the Merger."
Carl Zeiss TopCo has agreed to use commercially reasonable efforts to
obtain and effectuate the financing under the commitment letter. In the event
any portion of the financing becomes unavailable on the terms and conditions
contemplated in the commitment letter (including any "flex" provisions in any
fee letter or otherwise), Carl Zeiss TopCo has agreed to use its commercially
reasonable efforts to arrange to obtain any such portion from alternative
sources at rates and on terms and conditions to Carl Zeiss TopCo that are not,
in the reasonable judgment of Carl Zeiss TopCo, materially less favorable, when
taken as a whole, to Carl Zeiss TopCo than set forth in the commitment letter
(including any "flex" provisions in any fee letter or otherwise) and related
documentation.
Voting and Support Agreement
As a condition to entering into the merger agreement, Carl Zeiss and merger
sub required each of our directors and executive officers who beneficially own
our common stock to enter into a voting and support agreement under which each
has agreed, among other things, to:
o vote his shares in favor of adoption of the merger agreement
o vote his shares against any action or agreement that would reasonably
be expected to result in a breach of any representation, warranty,
covenant or agreement of SOLA under the merger agreement; and
o vote his shares against any action or agreement that would reasonably
be expected to prevent, impede, interfere with, delay or postpone the
consummation of the merger, including, without limitation any (1)
acquisition proposal (as defined in the merger agreement), (2)
reorganization, recapitalization, liquidation or winding-up of SOLA or
any other extraordinary transaction involving SOLA or (3) corporate
action the consummation of which would frustrate the purposes, or
prevent or delay the consummation, of the transactions contemplated by
the merger agreement.
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Each director and executive officer who entered into the voting and support
agreement made no agreement or understanding therein in his capacity as a
director, officer or employee of SOLA and entered into the voting and support
agreement solely in his capacity as an owner of shares.
The directors and executive officers who are party to the voting and
support agreement are:
o Jeremy C. Bishop, Barry J. Packham, Mark Ashcroft, Ronald F. Dutt and
David A. Cross, each of whom is an executive officer of SOLA; and
o Maurice J. Cunniffe, Andrew Feshbach, Robert A. Muh, Colombe Nicholas,
Jackson L Schultz and Charles F. Smith, each of whom is a member of
our board of directors.
As of the record date, the parties to the voting and support agreement held
an aggregate of 294,100 shares of our common stock, representing approximately
0.9% of the votes eligible to be cast at the special meeting. For additional
information, see the complete copy of the voting and support agreement attached
to this proxy statement as Annex B.
Amendment to the Rights Agreement
SOLA is a party to a Rights Agreement dated August 27, 1998 with
BankBoston, N.A. (as predecessor in interest to EquiServe Trust Company, N.A.),
which we refer to as the rights agreement. The rights agreement has the effect
of making an acquisition of our company prohibitively expensive for any
potential acquiror not approved by our board of directors. As a condition to its
entering into the merger agreement, Carl Zeiss TopCo and merger sub required us
to amend the rights agreement to render it inapplicable to the merger, the
merger agreement, the voting and support agreement and other transactions
contemplated by the merger agreement and the voting and support agreement. On
December 5, 2004, we amended the rights agreement in accordance with the merger
agreement.
Material United States Federal Income Tax Consequences
The following describes the material U.S. federal income tax consequences
to holders of our common stock whose shares are converted to cash in the merger,
but does not purport to be a complete analysis of all potential tax
considerations for all holders. This summary does not address the consequences
of the merger under the tax laws of any state, local, or foreign jurisdiction
and does not address tax considerations applicable to holders of stock options
or restricted stock. In addition, this summary does not describe all of the tax
consequences that may be relevant to particular classes of taxpayers, including
persons who are not citizens or residents of the United States, who acquired
their shares of our common stock through the exercise of an employee stock
option or otherwise as compensation, who hold their shares as part of a hedge,
straddle or conversion transaction, whose shares are not held as a capital asset
for tax purposes or who are otherwise subject to special tax treatment under the
Code.
This discussion is based on the Code, administrative pronouncements,
judicial decisions and final, temporary and proposed Treasury regulations, all
as currently in effect. These laws are subject to change, possibly on a
retroactive basis. Any such change could alter the tax consequences to you as
described herein.
The receipt of cash for our common stock pursuant to the merger will be a
taxable transaction for federal income tax purposes. In general, if you receive
cash in exchange for your shares of our common stock pursuant to the merger, you
will recognize capital gain or loss equal to the difference between the cash
received and your adjusted tax basis in the shares surrendered. Your adjusted
tax basis is generally
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equal to the amount you paid for your shares. Such gain or loss will be
long-term capital gain or loss if your holding period for such shares is more
than one year at the time of the consummation of the merger.
You may be subject to backup withholding tax at a 28% rate on the receipt
of cash pursuant to the merger. In general, backup withholding will only apply
if you fail to furnish a correct taxpayer identification number, or otherwise
fail to comply with applicable backup withholding rules and certification
requirements. Backup withholding is not an additional tax. Any amounts withheld
under the backup withholding rules will be allowable as a refund or credit
against your U.S. federal income tax liability provided you timely furnish the
required information to the Internal Revenue Service.
THE FOREGOING TAX DISCUSSION IS INCLUDED FOR GENERAL INFORMATION ONLY AND
IS BASED UPON CURRENT LAW (WHICH IS SUBJECT TO CHANGE, POSSIBLY WITH RETROACTIVE
EFFECT). DUE TO THE INDIVIDUAL NATURE OF TAX CONSEQUENCES, YOU SHOULD CONSULT
YOUR OWN TAX ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES OF THE MERGER TO YOU,
INCLUDING THE EFFECT OF APPLICABLE STATE, LOCAL, AND OTHER TAX LAWS.
Required Regulatory Approvals and Other Matters
Under the HSR Act, and the rules promulgated thereunder, Carl Zeiss TopCo,
merger sub and SOLA cannot complete the merger until they notify and furnish
information to the Federal Trade Commission and the Antitrust Division of the
U.S. Department of Justice, and the expiration or termination of the waiting
period under the HSR Act. Carl Zeiss TopCo, merger sub and SOLA filed
notification and report forms under the HSR Act with the Federal Trade
Commission and the Antitrust Division on December 17, 2004.
In addition to the expiration or termination of the waiting period under
the HSR Act, Carl Zeiss TopCo, merger sub and SOLA also cannot complete the
merger until all applicable waiting periods, and any extensions thereof, have
expired or terminated under the pre-merger notification requirements in
Australia, the European Union and Switzerland or, to the extent applicable, any
necessary approvals under such notification requirements have been obtained.
Carl Zeiss TopCo, merger sub and SOLA will submit regulatory filings in
Australia, Brazil, the European Union, Switzerland and Mexico.
Under the merger agreement, we and Carl Zeiss TopCo have each agreed to use
commercially reasonable efforts to take all actions to obtain all necessary
regulatory and governmental approvals necessary to complete the merger. However,
Carl Zeiss TopCo is not obligated to agree: to (1) any restraint or prohibition
on Carl Zeiss TopCo's ownership or operation (or that of its affiliates) of all
or any material portion of the business or assets of SOLA or of Carl Zeiss
TopCo, (2) any disposal by Carl Zeiss TopCo or any of its affiliates of, or
requirement to hold separate, all or any material portion of the business or
assets of SOLA or of Carl Zeiss TopCo, (3) any material limitations on the
ability of Carl Zeiss TopCo, merger sub or any of Carl Zeiss TopCo's other
affiliates effectively to exercise full rights of ownership of the shares,
including the right to vote any shares acquired or owned by Carl Zeiss TopCo,
merger sub or any of Carl Zeiss TopCo's other Affiliates on all matters properly
presented to our stockholders, (4) any divestiture by Carl Zeiss TopCo, merger
sub or any of Carl Zeiss TopCo's other affiliates of any shares or (5) any other
material restrictions on the conduct of the business of Carl Zeiss TopCo or any
of its affiliates after the effective time of the merger. In addition, Carl
Zeiss TopCo is not obligated to undertake any litigation as a result of a
decision by a governmental authority.
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THE MERGER AGREEMENT
The following is a summary of the material terms of the merger agreement.
This summary is qualified in its entirety by reference to the merger agreement,
which is attached to this proxy statement as Annex A and incorporated by
reference in this section of the proxy statement. We urge you to read carefully
the full text of the merger agreement.
General
The merger agreement provides that, following its approval and adoption by
our stockholders and the satisfaction or waiver of the other conditions to the
merger, merger sub will be merged with and into SOLA, and the surviving
corporation will be a wholly-owned subsidiary of Carl Zeiss TopCo. The effective
time of the merger will occur following the satisfaction or waiver of these
conditions upon the filing of a certificate of merger with the Secretary of
State of the State of Delaware, or at such other time as we and Carl Zeiss TopCo
may agree as specified in the certificate of merger.
The merger agreement also provides that the directors of merger sub
immediately prior to the effective time will be the directors of the surviving
corporation, until the earlier of their resignation or removal or until their
respective successors are duly elected and qualified. Our officers immediately
prior to the effective time will be the officers of the surviving corporation
(other than the Chairman, who shall be appointed by the directors of the
surviving corporation), until the earlier of their resignation or removal or
until their respective successors are duly elected or appointed and qualified.
Consideration to be Received by Our Stockholders
At the effective time of the merger, each issued and outstanding share of
our common stock will be converted into the right to receive $28.00 in cash,
without interest, except for shares held by us as treasury shares (other than
shares, if any, in an employee plan of SOLA) and shares held by Carl Zeiss TopCo
or any of its subsidiaries or shares held by stockholders properly exercising
dissenters' rights. As a result, after the merger is completed, our stockholders
will have only the right to receive this consideration, and will no longer have
any rights as our stockholders, including voting or other rights with respect to
the shares. Shares of common stock held as treasury stock or owned by SOLA
(other than shares, if any, in any employee plan of SOLA), or by Carl Zeiss
TopCo or it subsidiaries will be cancelled at the effective time of the merger.
Dissenting shares for which a stockholder has properly exercised
dissenters' rights will not be converted into a right to receive the merger
consideration, but will instead entitle their holders to receive such
consideration as shall be determined pursuant to the Delaware General
Corporation Law. However, if after the effective time a holder of dissenting
shares fails to perfect or withdraws or loses its right to appraisal, such
shares will be treated as if they had converted as of the effective time into a
right to receive the merger consideration, without interest, and will no longer
be dissenting shares.
Exchange of Certificates
Prior to the effective time, we will select a paying agent, subject to Carl
Zeiss TopCo's reasonable approval of the terms and conditions of such
appointment, which will be our transfer agent, for the payment of the merger
consideration upon surrender of certificates representing our common stock.
Promptly after the effective time, Carl Zeiss TopCo will send, or will cause the
paying agent to send, to each former holder of record of our common stock a
letter of transmittal and instructions on how to exchange stock certificates for
payment of the merger consideration.
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Representations and Warranties
The merger agreement contains various representations and warranties with
respect to us. The representations and warranties are subject, in some cases, to
specified exceptions and qualifications. All of the representations and
warranties will expire at the effective time of the merger. These
representations and warranties relate to, among other things:
o our and our subsidiaries' proper organization, good standing and
corporate power to operate their businesses;
o our corporate power and authority to enter into the merger agreement
and to consummate the transactions contemplated by the merger
agreement;
o the unanimous approval by our board of directors of the merger
agreement, the merger, the transactions under the voting and support
agreement and related matters;
o the absence of any violation of or conflict with our organizational
documents, applicable law or certain agreements as a result of
entering into the merger agreement and consummating the merger;
o required consents and approvals of governmental entities as a result
of the merger;
o our capitalization, including in particular the number of shares of
our common stock and stock options outstanding;
o the filing of appropriate documents with the Securities and Exchange
Commission, the accuracy of the financial statements and other
information contained in such documents;
o the accuracy and completeness of information supplied by us in this
proxy statement;
o the absence of certain changes or events since March 31, 2004,
including the conduct of our business in the ordinary course of
business consistent with past practices and the absence of any
material adverse effect on us;
o the absence of loss of certain customer and suppliers;
o the absence of undisclosed material liabilities;
o our compliance with applicable laws, court orders and governmental
permits;
o possession of authorizations, licenses, permits, certifications,
registrations approvals and clearances;
o the absence of litigation or outstanding court orders against us;
o the significant contractual agreements to which we are a party;
o outstanding indebtedness;
o the absence of non-compete agreements binding on us;
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o real property owned and leased by us;
o the absence of undisclosed broker's fees;
o our receipt of an opinion of our financial advisor;
o tax matters with respect to us;
o employment and labor matters affecting us, including matters relating
to the Employee Retirement Income Security Act and our employee
benefit plans;
o environmental matters with respect to us;
o our intellectual property;
o the applicability of certain state anti-takeover statutes to the
merger agreement, the merger and the voting and support agreement; and
o the amendment of our rights agreement to render it inapplicable to the
merger agreement, the voting and support agreement and the merger and
any other transactions contemplated by such agreements.
The merger agreement also contains representations and warranties by Carl
Zeiss TopCo relating to, among other things:
o its and merger sub's proper organization, good standing and corporate
power to operate their businesses;
o its and merger sub's corporate power and authority to enter into the
merger agreement and to consummate the transactions contemplated by
the merger agreement;
o required consents and approvals of governmental entities as a result
of the merger;
o the absence of any violation of or conflict with their organizational
documents, applicable law or certain agreements as a result of
entering into the merger agreement and consummating the merger;
o the accuracy and completeness of information it and merger sub have
supplied for inclusion in this proxy statement;
o the absence of undisclosed broker's fees; and
o its receipt of a commitment letter with respect to the debt financing
and agreements with respect to the equity financing, the aggregate
proceeds of which are sufficient to acquire all the shares in the
merger, to effect all necessary refinancing of our indebtedness and to
pay all related fees and expenses.
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Covenants Relating to the Conduct of Our Business
Under the merger agreement, we have agreed that between December 5, 2004
and the completion of the merger we and our subsidiaries will conduct our
business in the ordinary course consistent with past practice and shall use our
commercially reasonable efforts to preserve intact their business organizations
and relationships with third parties and to keep available the services of our
present officers and employees. We have also agreed that during the same time
period, and subject to certain exceptions, we and our subsidiaries will not:
o amend our certificate of incorporation or by-laws;
o merge or consolidate or allow our subsidiaries to do the same with any
other person or acquire any amount of stock or assets of another
person;
o sell, lease, license or otherwise dispose of subsidiaries or assets;
or
o agree or commit to take any of the foregoing actions or allow any of
our subsidiaries to do the same.
Special Meeting; Proxy Statement
We have agreed to call and hold the special meeting described above and
that our board of directors will, subject to its fiduciary duties and to the
exceptions described below under "--No Solicitation of Other Offers," recommend
that our stockholders approve and adopt the merger agreement and the merger at
the special meeting. We have also agreed that, after any public disclosure of an
acquisition proposal or a material development with respect to an acquisition
proposal, if requested to do so by Carl Zeiss TopCo, we will affirm the
recommendation of the board of directors.
Access to Information
We have agreed that from December 5, 2004 to the effective date of the
merger we will
o give Carl Zeiss, EQT and Carl Zeiss TopCo and their respective
counsel, financial advisors, auditors and lenders reasonable access
during normal business hours to our offices, properties and books and
records;
o furnish to Carl Zeiss, EQT and Carl Zeiss TopCo and their respective
counsel, financial advisors and auditors such financial and operating
data and other information as such persons may reasonable request; and
o instruct our employees, counsel, financial advisors, auditors and
other authorized representatives to cooperate with Carl Zeiss, EQT and
Carl Zeiss TopCo in their investigation of us and our subsidiaries.
No Solicitation of Other Offers
Upon signing the merger agreement we agreed that neither we nor our
subsidiaries or representatives will, directly or indirectly:
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o solicit, initiate or take any action to facilitate or encourage the
submission of any acquisition proposal;
o enter into or participate in any discussions or negotiations with,
furnish any information relating to SOLA or afford access to the
business, properties, assets, books or records of SOLA or to otherwise
cooperate in any way with, or knowingly assist, participate in,
facilitate or encourage any effort by any third party that is seeking
to make, or has made, an acquisition proposal;
o grant any waiver or release under any standstill or similar agreement
with respect to any class of equity securities of us or our
subsidiaries;
o amend or grant any waiver or release or approve any transactions or
redeem rights under our rights agreement; or
o enter into any agreement with respect to any acquisition proposal
other than a confidentiality agreement as described below.
The merger agreement provides that the term "acquisition proposal" means,
other than the transactions contemplated by the merger agreement, any third
party offer, proposal or inquiry relating to, or any third party indication of
interest in: (1) any acquisition or purchase, direct or indirect, of 20% or more
of the consolidated assets of SOLA and its subsidiaries or over 20% of any class
of equity or voting securities of SOLA or any of its subsidiaries whose assets,
individually or in the aggregate, constitute more than 20% of the consolidated
assets of SOLA, (2) any tender offer (including a self-tender offer) or exchange
offer that, if consummated, would result in any third party's beneficially
owning 20% or more of any class of equity or voting securities of SOLA or any of
its subsidiaries whose assets, individually or in the aggregate, constitute more
than 20% of the consolidated assets of SOLA, (3) a merger, consolidation, share
exchange, business combination, sale of substantially all the assets,
reorganization, recapitalization, liquidation, dissolution or other similar
transaction involving SOLA or any of its subsidiaries whose assets, individually
or in the aggregate, constitute more than 20% of the consolidated assets of SOLA
or (4) any other transaction the consummation of which would reasonably be
expected to impede, prevent or materially delay the merger or that would
reasonably be expected to dilute materially the benefits to Carl Zeiss TopCo of
the transactions contemplated by the merger agreement.
Notwithstanding our obligations relating to non-solicitation, but subject
to the provision of notice to Carl Zeiss TopCo, the board of directors, directly
or indirectly through advisors, agents or other intermediaries, at any time
prior to the adoption and approval of the merger by our stockholders, may (1)
engage in negotiations or discussions with any third party that, subject to our
compliance with the paragraphs above, has made a bona fide written acquisition
proposal that the board of directors determines in good faith by a majority vote
constitutes or is reasonably expected to result in a superior proposal, (2)
furnish to such third party and its auditors, advisors and lenders nonpublic
information relating to, and afford such third party access to, the business,
properties, assets, books and records of SOLA pursuant to a confidentiality
agreement with terms no less favorable to SOLA than those contained in the
confidentiality agreement with Carl Zeiss and EQT including the standstill and
no hire provisions in that confidentiality agreement, (3) following receipt of
such superior proposal, withdraw, or modify in a manner adverse to Carl Zeiss
its recommendation to its stockholders and/or (4) take any action that any court
of competent jurisdiction orders SOLA to take, but in each case referred to in
the foregoing clauses (1) through (3) only if the board of directors determines
in good faith by a majority vote, after considering the advice from the outside
legal counsel to SOLA, that it should take such action to comply with its
fiduciary duties under applicable law. Nothing contained in the merger agreement
shall prevent the board of
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directors from complying with Rule 14e-2(a) under the 1934 Act with regard to an
acquisition proposal; provided that if such disclosure has the effect of
withdrawing, modifying or qualifying the recommendation to our stockholders in a
manner adverse to Carl Zeiss, merger sub or the approval of the merger agreement
by our board of directors, Carl Zeiss shall have the right to terminate the
merger agreement as described under "--Termination of the Merger Agreement."
The merger agreement provides that the term "superior proposal" means any
bona fide, written acquisition proposal made in compliance with the terms of the
merger agreement for at least a majority of the outstanding shares or all or
substantially all of the assets of SOLA, which is reasonably capable of being
consummated on the terms proposed, and which our board of directors determines
in good faith by a majority vote, after consultation with outside legal counsel
and a financial advisor of nationally recognized reputation and taking into
account all the terms and conditions of the acquisition proposal (including any
break-up fees, expense reimbursement provisions and conditions to consummation
and such other facts as the board of directors deems in good faith are
appropriate) is more favorable and provides greater value to all our
stockholders than as provided hereunder and for which financing, to the extent
required, is then fully committed and subject to no conditions other than those
set forth in the financing commitment letter provided to Carl Zeiss referred to
under "The Merger Agreement--Conditions to the Merger."
Financing Cooperation
Under the merger agreement, we agreed to provide, cause our officers,
directors, employees, accountants, auditors, consultants, legal counsel,
financing sources, agents and other representatives to provide, all reasonable
cooperation in connection with the arrangement by Carl Zeiss TopCo of the
financing referred to under "The Merger Agreement--Conditions to the Merger,"
the consummation of the financing and the refinancing of our indebtedness,
including (1) participation in meetings, drafting sessions, due diligence
sessions, management presentation sessions, road shows and sessions with rating
agencies; (2) preparation of business projections, financial statements,
offering and/or information memoranda, private placement memoranda, prospectuses
and similar documents and (3) execution and delivery of certificates and
documents; provided that the financing may not require the payment of any
commitment or other similar fee or impose any other liability on SOLA prior to
the effective time of the merger.
Reasonable Efforts
We, Carl Zeiss TopCo and merger sub have agreed, and Carl Zeiss and EQT
have separately agreed, that each of us will use commercially reasonable efforts
to take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary, proper or advisable under applicable law to consummate the
transactions contemplated by the merger agreement, including the following:
o preparing and filing as promptly as practicable with any governmental
authority or other third party all documentation to effect all
necessary filings, notices, petitions, statements, registrations,
submissions of information, applications and other documents; and
o obtaining and maintaining all approvals, consents, registrations,
permits, authorizations and other confirmations required to be
obtained from any governmental authority or other third party that are
necessary, proper or advisable to consummate the transactions
contemplated by the merger agreement.
However, Carl Zeiss TopCo is not obligated to agree to (1) any restraint or
prohibition on Carl Zeiss TopCo's ownership or operation (or that of its
affiliates) of all or any material portion of the business or assets of SOLA or
of Carl Zeiss TopCo, (2) any disposal by Carl Zeiss TopCo or any of its
affili0
-38-
ates of or requirement to hold separate all or any material portion of the
business or assets of SOLA or of Carl Zeiss TopCo, (3) any material limitations
on the ability of Carl Zeiss TopCo, merger sub or any of Carl Zeiss TopCo's
other affiliates effectively to exercise full rights of ownership of the shares,
including the right to vote any shares acquired or owned by Carl Zeiss TopCo,
merger sub or any of Carl Zeiss TopCo's other affiliates on all matters properly
presented to our stockholders, (4) any divestiture by Carl Zeiss TopCo, merger
sub or any of Carl Zeiss TopCo's other affiliates of any shares or (5) any other
material restrictions on the conduct of the business of Carl Zeiss TopCo or any
of its affiliates after the effective time of the merger. In addition, Carl
Zeiss TopCo is not obligated to undertake any litigation as a result of a
decision by a governmental authority.
Publicity
Carl Zeiss TopCo and merger sub, on the one hand, and we, on the other
hand, have agreed to consult with each other before issuing any press release or
making any other public statement, or scheduling any press conference or
conference call with investors or analysts, with respect to the merger agreement
or the transactions contemplated thereby.
Indemnification and Insurance
The merger agreement provides that, upon completion of the merger, Carl
Zeiss TopCo and the surviving corporation will indemnify and hold harmless all
or our past and present officers and directors to the fullest extent permitted
by applicable laws and our certificate of incorporation and bylaws as in effect
on the date of the merger.
The merger agreement also provides that the surviving corporation will
maintain for a period of six years after completion of the merger directors' and
officers' liability insurance policies maintained by SOLA on terms with respect
to coverage and amount no less favorable than those of such policy in effect on
the date of the merger agreement, although the surviving corporation will not be
required to make annual premium payments in excess of 250% of the annual
premiums paid by the surviving corporation for directors' and officers'
liability insurance in the last full fiscal year. In the event that the
surviving corporation is unable to maintain or obtain such insurance, the
surviving corporation will obtain a policy with the greatest coverage available
for an amount not to exceed 250% of the annual premiums paid by the surviving
corporation for directors' and officers' liability insurance in the last full
fiscal year. In lieu of such insurance coverage, if the premium and terms are
acceptable to Carl Zeiss TopCo, we may purchase a six year "tail" policy
covering directors' and officers' liability, and covering each person presently
covered.
Employee Benefits Matters
Under the merger agreement, Carl Zeiss TopCo and we have agreed:
o for not less than twelve months following the effective time of the
merger, Carl Zeiss TopCo and the surviving corporation will provide
benefits that are no less favorable in the aggregate than as provided
under our employee plans on the date of the merger agreement for each
employee of SOLA as of the closing date;
o employees will be given credit for all service with SOLA under all
employee benefit plans and arrangements currently maintained or
established in the future by Carl Zeiss TopCo in which they are or
become participants for purposes of participation eligibility and
vesting to the same extent as if rendered to Carl Zeiss TopCo;
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o the surviving corporation will waive or cause to be waived any
preexisting condition limitation applicable to an affected employee
other than any limitation already in effect with respect to such
affected employee that has not been satisfied as of the effective time
of the merger under the similar employee plan; and
o the surviving corporation will recognize (or cause to be recognized)
the dollar amount of all expenses incurred by affected employees
during the calendar year in which the effective time occurs for
purposes of satisfying the calendar year deductibles and co-payment
limitations for such year under the relevant benefit plans of the
surviving corporation.
In addition, under the merger agreement, we and Carl Zeiss TopCo have
agreed that all unvested stock options will be effectively accelerated and
vested and unvested stock options will be "cashed out" in connection with the
merger, meaning that holders of vested and unvested stock options will receive
cash payments for each share underlying their options equal to the excess, if
any, of $28.00 per share over the exercise price per share of their options,
subject to any required withholding for taxes.
Conditions to the Merger
Our, Carl Zeiss TopCo's and merger sub's respective obligations to
consummate the merger are subject to the satisfaction of the following
conditions:
o approval and adoption of the merger agreement by our stockholders in
accordance with Delaware law;
o no provision of any applicable law and no judgment, injunction, order
or decree shall prohibit the consummation of the merger;
o all applicable waiting periods have expired or been terminated under
applicable antitrust statutes of, and all necessary consents and
approvals have been received from the relevant competition authorities
of, Australia, the European Union and Switzerland relating to the
transactions contemplated by the merger agreement and the master
agreement; and
o any applicable waiting periods under the HSR Act relating to the
transactions contemplated by the merger agreement and the master
agreement shall have expired or been terminated.
Carl Zeiss and merger sub are not obligated to consummate the merger unless
a number of additional conditions are satisfied, including:
o we shall have performed in all material respects all of our
obligations under the merger agreement required to be performed by us
at or prior to the effective time;
o our representations and warranties contained in the merger agreement
and in any certificate or other writing delivered by us pursuant to
the merger agreement (1) that are qualified by materiality or material
adverse effect shall be true at and as of the effective time as if
made at and as of such time (except that those representations and
warranties which address matters only as of a particular date need
only be true and correct as of such date) and (2) that are not
qualified by materiality or material adverse effect shall be true in
all material respects at and as of the effective time as if made at
and as of such time (except that those representations and warranties
that are not qualified by materiality or material adverse effect which
ad-
-40-
dress matters only as of a particular date need only be true and
correct in all material respects as of such date);
o Carl Zeiss TopCo shall have received a certificate signed by our chief
executive officer or chief financial officer to the effect of the
foregoing two sentences;
o there shall not have been instituted or pending any action or
proceeding (or any investigation or other inquiry that might result in
such action or proceeding) by any government or governmental authority
or agency, domestic, foreign or supranational, before any court or
governmental authority or agency, domestic, foreign or supranational,
(1) challenging or seeking to make illegal, to delay materially or
otherwise directly or indirectly to restrain or prohibit the
consummation of the merger or seeking to obtain material damages and
(2) seeking to restrain or prohibit Carl Zeiss TopCo's ownership or
operation (or that of its subsidiaries or affiliates) of all or any
material portion of the business or assets of SOLA and its
subsidiaries, taken as a whole, or of Carl Zeiss TopCo and its
subsidiaries, taken as a whole, or to compel Carl Zeiss TopCo or any
of its subsidiaries or affiliates to dispose of or hold separate all
or any material portion of the business or assets of SOLA and its
subsidiaries, taken as a whole, or of Carl Zeiss TopCo and its
subsidiaries, taken as a whole, which, in the case of clause (2) only,
have had or would reasonably be expected to have a material adverse
effect on SOLA; and
o no action shall have been taken, and no law, statute, rule,
regulation, injunction, order or decree shall have been proposed,
enacted, enforced, promulgated, issued or deemed applicable to the
merger, by any court, government or governmental authority or agency,
domestic, foreign or supranational, other than the application of the
waiting period provisions of the HSR Act and the applicable antitrust
or merger control statutes of Australia, the European Union and
Switzerland, to the transactions contemplated by the merger agreement
and the master agreement, that, in the judgment of Carl Zeiss TopCo,
is likely, directly or indirectly, to result in any of the
consequences referred to in clauses (1) and (2) of the foregoing
sentence;
o the holders of not more than 10% of the total outstanding shares shall
have demanded appraisal of their shares in accordance with Delaware
law;
o the lenders under the commitment letter (or in the commitment letter
related to any alternative financing) shall be ready and willing to
fund the amounts contemplated by the commitment letter on the terms
set forth therein (or in the commitment letters related to any
alternative financing) (including, in each case "flex" provisions in
any fee letter or otherwise) sufficient to consummate the merger,
refinance the debt of SOLA and its subsidiaries and pay related fees
and expenses; and
o we shall have obtained the consent or approval to the transactions
contemplated hereby of a contractual counterparty identified in the
merger agreement.
The merger agreement provides that a "material adverse effect," as to any
person, means a material adverse effect on the financial condition, business,
assets or results of operations of such person and its subsidiaries, taken as a
whole.
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We are not obligated to consummate the merger unless the following
conditions have been satisfied:
o each of Carl Zeiss TopCo and merger sub shall have performed in all
material respects all of its obligations hereunder required to be
performed by it at or prior to the effective time
o the representations and warranties of Carl Zeiss TopCo contained in
the merger agreement and in any certificate or other writing delivered
by Carl Zeiss TopCo pursuant thereto shall be true in all material
respects at and as of the effective time as if made at and as of such
time; and
o we shall have received a certificate signed by an officer of Carl
Zeiss TopCo to the effect of the foregoing two sentences.
Either SOLA or Carl Zeiss TopCo and merger sub could choose to waive a
condition to its respective obligation to complete the merger even though that
condition has not been satisfied.
Termination of the Merger Agreement
The merger agreement may be terminated, and the merger contemplated thereby
may be abandoned, at any time prior to the effective time, whether before or
after our stockholders have approved and adopted the merger agreement and the
merger:
o by mutual written agreement of us and Carl Zeiss TopCo;
o by either us or Carl Zeiss TopCo if:
(a) the merger has not have been consummated on or before April 30,
2005; provided, that this right to terminate the merger agreement will not
be available to any party whose breach of any provision of the merger
agreement results in the failure of the merger to be consummated by such
time;
(b) (1) there shall be any law that makes consummation of the merger
illegal or otherwise prohibited or (2) any judgment, injunction, order or
decree of any court or governmental body having competent jurisdiction
enjoining us or Carl Zeiss TopCo from consummating the merger is entered
and such judgment, injunction, order or decree shall have become final and
nonappealable; or
(c) the merger agreement shall not have been approved and adopted in
accordance with Delaware law by our stockholders at the special meeting (or
any adjournment thereof).
o by Carl Zeiss TopCo if:
(a) at any time prior to the adoption and approval of the merger
agreement by our stockholders, our board of directors shall (1) have
withdrawn, or modified in a manner adverse to Carl Zeiss TopCo, its
approval or recommendation of the merger agreement or the merger, as
permitted by the merger agreement or (2) approved, recommended or endorsed
any alternative acquisition proposal; or
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(b) we shall have breached certain of our obligations with respect to
our agreement not to solicit other offers, or, after receipt of an
alternative acquisition proposal, shall have breached any of our
obligations under the merger agreement; or
o by us, in accordance with the terms of the merger agreement after our
receipt of a superior company proposal; provided, that (1) we have not
willfully and materially breached certain of our obligations under our
agreement not to solicit other offers and have paid any termination
fee payable to Carl Zeiss and (2) Carl Zeiss TopCo does not make,
within three business days of receipt of written notification of a
superior proposal, an offer that our board of directors determines in
good faith, after consultation with its financial advisors, is at
least as favorable to our stockholders as the superior proposal.
In the event that the merger agreement terminates, it will become void and
have no effect, without any liability or obligation on the part of any party,
except with respect to certain provisions that will survive such termination.
However, no such termination will relieve any party from any liability for
damages resulting from a willful failure of any party to perform a covenant
under the merger agreement.
Termination Fee and Expenses
We have agreed to pay Carl Zeiss TopCo a termination fee of $22,200,000 if
a payment event occurs.
A "payment event" means (1) the termination of the merger agreement
pursuant to the third or fourth bullet point under "--Termination of the Merger
Agreement" or (2) following any termination of the merger agreement pursuant to
the second bullet point under "--Termination of the Merger Agreement" if a bona
fide acquisition proposal shall have been made prior to, and not withdrawn by,
such termination pursuant to such provision and within 12 months of any such
termination pursuant to such provision, our stockholders receive, or we enter
into any agreement for our stockholders to receive, pursuant to any event
described in this paragraph below, cash, securities or other consideration
having an aggregate value, when taken together with the value of any securities
of SOLA or its subsidiaries otherwise held by such stockholders after such
event, in excess of $28.00 per Share (adjusted for any change in the outstanding
shares after the date hereof in a manner consistent with the merger agreement):
o we merge with or into, or are acquired, directly or indirectly, by
merger or otherwise by, a third party and our stockholders immediately
prior to such merger or acquisition own less than 50% of the capital
stock of to such third party;
o a third party, directly or indirectly, acquires more than 50% of the
total assets of SOLA and its subsidiaries, taken as a whole;
o a third party, directly or indirectly, acquires more than 50% of the
outstanding shares, other than a transaction which results in our
stockholders immediately prior to such transaction owning more than
50% of the outstanding capital stock of such third party; or
o we adopt or implement a plan of liquidation, recapitalization or share
repurchase relating to more than 50% of the outstanding shares or an
extraordinary dividend relating to more than 50% of the outstanding
shares or 50% of the assets of SOLA and its subsidiaries, taken as a
whole.
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We will reimburse Carl Zeiss TopCo, EQT and Carl Zeiss for 100% of their
reasonable out-of-pocket fees and expenses (including reasonable fees and
expenses of their counsel) actually incurred by any of them in connection with
the merger agreement and the master agreement and the transactions contemplated
thereby (including the arrangement of, obtaining the commitment to provide or
obtaining any financing for such transactions and currency and interest rate
swaps or other hedging arrangements) up to $10,000,000 for Carl Zeiss TopCo, EQT
and Carl Zeiss in the aggregate upon any termination of the merger agreement
pursuant to:
o clause (a) of the second bullet point under "--Termination of the
Merger Agreement" in connection with a failure to satisfy the
conditions to Carl Zeiss TopCo's and merger sub's obligations to
consummate the merger;
o the third or fourth bullet point under "--Termination of the Merger
Agreement"; or
o (in addition to the circumstances described in the second bullet point
of this paragraph but without duplication) the first bullet point
under "--Termination of the Merger Agreement," if a bona fide
acquisition proposal shall have been made prior to, and not withdrawn
by, such termination pursuant such section.
Upon termination of this Agreement pursuant to clause (a) of the second
bullet point under "--Termination of the Merger Agreement," if, at the time of
such termination, all other conditions set forth in the merger agreement have
been satisfied other than the financing condition, then Carl Zeiss TopCo shall
reimburse us for 100% of our reasonable out-of-pocket fees and expenses
(including reasonable fees and expenses of our counsel) actually incurred by us
in connection with the merger agreement and the transactions contemplated
thereby up to $1,750,000 in the aggregate.
Amendment and Waiver
The merger agreement may be amended or any provision thereof waived by the
parties thereto at any time before stockholder approval is obtained, but only by
a written instrument signed on behalf of each of the parties in the case of an
amendment or by the party against whom a waiver is to be effective in the case
of a waiver.
MARKET PRICE OF OUR COMMON STOCK
Our common stock is listed on the New York Stock Exchange ("NYSE") under
the trading symbol "SOL." The following table shows the high and low sale prices
of our common stock as reported on the NYSE for the periods indicated:
High Low
Fiscal Year Ended March 31, 2003
First Quarter $15.25 $8.90
Second Quarter $11.50 $7.61
Third Quarter $13.91 $8.81
Fourth Quarter $13.10 $10.10
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Fiscal Year Ended March 31, 2004
First Quarter $18.20 $12.22
Second Quarter $18.42 $15.40
Third Quarter $19.89 $15.82
Fourth Quarter $23.54 $18.68
Fiscal Year Ended March 31, 2005
First Quarter $23.60 $16.80
Second Quarter $19.98 $15.50
Third Quarter (though December 22, 2004) $27.75 $17.60
The closing sale price of our common stock on the NYSE on December 3, 2004,
which was the last trading day before we announced the merger, was $22.11. On [
], 2005, which is the latest practicable trading day before this proxy statement
was printed, the closing price for our common stock on the NYSE was $[ ].
We have not declared or paid cash dividends on our common stock since 1993.
We do not anticipate any cash dividends in the foreseeable future and intend to
retain future earnings for the development and expansion of our business.
As of [ ], 2005, there were [ ] shares of our common stock outstanding held
by approximately [ ] holders of record.
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SECURITY OWNERSHIP BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of our common stock as of December 6, 2004, by:
o each person who is known to us to be a beneficial owner, as defined in
Rule 13d-3 under the Securities Exchange Act of 1934, as amended, of
more than 5% of our outstanding common stock;
o each of our directors and executive officers; and
o all directors, director nominees and executive officers as a group.
Percentage of beneficial ownership is based on 32,231,930 shares of common
stock outstanding as of December 6, 2004.
Unless otherwise indicated in the footnotes below, the persons named in the
table have sole voting and investment power with respect to all shares of Common
Stock shown as beneficially owned by them, subject to community property laws
where applicable.
Additional Shares
Shares Beneficially Owned Underlying
No. of Shares No. of Options Unvested Options
Name and Address of Beneficial Owner (1) (1) Percent (2)
-------------------------------------------- --------------- ---------------- --------- -----------------
Five Percent Stockholders
Barclays plc (3) 3,423,575 10.62%
54 Lombard Street -
London, England EC3P3AH
Dimensional Fund Advisors Inc. 1,729,100 5.36% -
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
Directors and Named Executive Officers
Jeremy C. Bishop 10,000 367,800 1.16% 22,000
SOLA International Inc.
10590 West Ocean Air Dr.
Suite 300
San Diego, CA 92130
Maurice J. Cunniffe 272,600 68,022 1.05% 1,687
American Optical
80 Field Point Road
Greenwich, CT 06830
Andrew Feshbach 0 3,753 * -
Big Dog Holdings, Inc.
121 Gray Avenue
Santa Barbara, CA 93101
Robert A. Muh 3,000 31,440 * -
Sutter Securities Inc.
555 California Street
Suite 3330
San Francisco, CA 94104
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Additional Shares
Shares Beneficially Owned Underlying
No. of Shares No. of Options Unvested Options
Name and Address of Beneficial Owner (1) (1) Percent (2)
-------------------------------------------- --------------- ---------------- --------- -----------------
Colombe Nicholas 0 8,000 * -
55 Hudson Street
New York, NY 10013
Jackson L. Schultz 8,000 38,073 * 843
1780 Manor Drive
Hillsborough, CA 94010
Charles F. Smith 0 14,530 * -
505 Frontera Drive
Pacific Palisades, CA 90272
Barry J. Packham 0 15,000 * 24,000
SOLA International Inc.
10590 West Ocean Air Dr.
Suite 300
San Diego, CA 92130
Mark Ashcroft 0 101,000 * 19,000
SOLA International Inc.
1st Floor, 4 Oaks House
160 Lichfield Road
Sutton Coldfield
West Midlands,
B74 2TZ
United Kingdom
Ronald F. Dutt 500 29,000 * 56,000
SOLA International Inc.
10590 West Ocean Air Dr.
Suite 300
San Diego, CA 92130
David A. Cross 0 32,270 * 32,000
SOLA International
Sherriffs Road
Lonsdale
SA 5160
Australia
Directors and Executive Officers as a Group 294,100 704,888 3.03% 159,530
(11 persons)
________________________
*Less than one percent.
(1) This table is based on information supplied by directors, all executive
officers and principal stockholders of SOLA and on any Schedules 13D or 13G
filed with the Securities and Exchange Commission. Beneficial ownership is
determined in accordance with the rules of the Securities and Exchange
Commission. In computing the number of shares beneficially owned by a
person and the percentage ownership of that person, shares of common stock
subject to options or warrants held by that person that are currently
exercisable or will become exercisable within 60 days of December 6, 2004
are deemed outstanding, while such shares are not deemed outstanding for
purposes of computing percentage ownership of any other person.
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(2) The column labeled "Additional Shares Underlying Unvested Options"
represents shares of common stock subject to options or warrants that are
not currently exercisable and that would not become exercisable within 60
days of December 6, 2004 except in connection with the merger. Under the
terms of the merger agreement and our stock option agreements, our
directors, executive officers, employees and consultants will have their
unvested stock options effectively accelerated and their vested and
unvested options "cashed out" in connection with the merger, meaning that
they will receive cash payments for each share underlying their options
equal to the excess, if any, of $28.00 per share over the exercise price
per share of their options. Accordingly, the column labeled "additional
shares underlying unvested options" is intended to represent shares
underlying options that are not represented elsewhere in the above table
and for which our directors, executive officers or principal stockholders
will receive consideration pursuant to the merger agreement. See " The
Merger--Interests of Our Directors and Executive Officers in the Merger."
(3) Barclays Global Investors, N.A. has sole voting power as to 2,592,885 of
the shares and sole dispositive power as to 2,808,581 of the shares, and
Barclays Global Fund Advisors has sole voting and investment power as to
614,994 of the shares.
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DISSENTERS' RIGHTS OF APPRAISAL
Under the Delaware General Corporation Law, if you do not wish to accept
the cash payment provided for in the merger agreement, you have the right to
dissent from the merger and to receive payment in cash for the fair value of
your SOLA common stock. Our stockholders electing to exercise appraisal rights
must comply with the provisions of Section 262 of the Delaware General
Corporation Law in order to perfect their rights. We will require strict
compliance with the statutory procedures.
The following is intended as a brief summary of the material provisions of
the Delaware statutory procedures required to be followed by a stockholder in
order to dissent from the merger and perfect appraisal rights. This summary,
however, is not a complete statement of all applicable requirements and is
qualified in its entirety by reference to Section 262 of the Delaware General
Corporation Law, the full text of which appears in Annex D of this proxy
statement.
Section 262 requires that stockholders be notified that appraisal rights
will be available not less than 20 days before the special meeting to vote on
the merger. A copy of Section 262 must be included with such notice. This proxy
statement constitutes our notice to its stockholders of the availability of
appraisal rights in connection with the merger in compliance with the
requirements of Section 262. If you wish to consider exercising your appraisal
rights, you should carefully review the text of Section 262 contained in Annex D
since failure to timely and properly comply with the requirements of Section 262
will result in the loss of your appraisal rights under Delaware law.
If you elect to demand appraisal of your shares, you must satisfy each of
the following conditions:
o You must deliver to us a written demand for appraisal of your shares
before the vote with respect to the merger is taken. This written
demand for appraisal must be in addition to and separate from any
proxy or vote abstaining from or voting against approval and adoption
of the merger agreement and the merger. Voting against or failing to
vote for approval and adoption of the merger agreement and the merger
by itself does not constitute a demand for appraisal within the
meaning of Section 262.
o You must not vote in favor of approval and adoption of the merger
agreement and the merger. A vote in favor of the approval and adoption
of the merger agreement and the merger, by proxy or in person, will
constitute a waiver of your appraisal rights in respect of the shares
so voted and will nullify any previously filed written demands for
appraisal. If you fail to comply with either of these conditions and
the merger is completed, you will be entitled to receive the cash
payment for your shares of our common stock as provided for in the
merger agreement, but you will have no appraisal rights with respect
to your shares of our common stock.
All demands for appraisal should be addressed to SOLA International Inc.,
10590 West Ocean Air Drive, Suite 300, San Diego, CA 92130, Attention: Jeff
Cartwright, Director of Investor Relations before the vote on the merger is
taken at the special meeting, and should be executed by, or on behalf of, the
record holder of the shares of our common stock. The demand must reasonably
inform us of the identity of the stockholder and the intention of the
stockholder to demand appraisal of his, her or its shares.
To be effective, a demand for appraisal by a holder of our common stock
must be made by, or in the name of, such registered stockholder, fully and
correctly, as the stockholder's name appears on his or her stock certificate(s).
Beneficial owners who do not also hold the shares of record may not directly
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make appraisal demands to SOLA. The beneficial holder must, in such cases, have
the registered owner submit the required demand in respect of those shares. If
shares are owned of record in a fiduciary capacity, such as by a trustee,
guardian or custodian, execution of a demand for appraisal should be made in
that capacity; and if the shares are owned of record by more than one person, as
in a joint tenancy or tenancy in common, the demand should be executed by or for
all joint owners. An authorized agent, including an authorized agent for two or
more joint owners, may execute the demand for appraisal for a stockholder of
record; however, the agent must identify the record owner or owners and
expressly disclose the fact that, in executing the demand, he or she is acting
as agent for the record owner. A record owner, such as a broker, who holds
shares as a nominee for others, may exercise his or her right of appraisal with
respect to the shares held for one or more beneficial owners, while not
exercising this right for other beneficial owners. In that case, the written
demand should state the number of shares as to which appraisal is sought. Where
no number of shares is expressly mentioned, the demand will be presumed to cover
all shares held in the name of the record owner.
If you hold your shares of our common stock in a brokerage account or in
other nominee form and you wish to exercise appraisal rights, you should consult
with your broker or the other nominee to determine the appropriate procedures
for the making of a demand for appraisal by the nominee.
Within 10 days after the effective time of the merger, the surviving
corporation must give written notice that the merger has become effective to
each SOLA stockholder who has properly filed a written demand for appraisal and
who did not vote in favor of the merger. At any time within 60 days after the
effective time, any stockholder who has demanded an appraisal has the right to
withdraw the demand and to accept the cash payment specified by the merger
agreement for his or her shares of our common stock. Within 120 days after the
effective time, either the surviving corporation or any stockholder who has
complied with the requirements of Section 262 may file a petition in the
Delaware Court of Chancery demanding a determination of the fair value of the
shares held by all stockholders entitled to appraisal. The surviving corporation
has no obligation to file such a petition in the event there are dissenting
stockholders. Accordingly, the failure of a stockholder to file such a petition
within the period specified could nullify the stockholder's previously written
demand for appraisal.
If a petition for appraisal is duly filed by a stockholder and a copy of
the petition is delivered to the surviving corporation, the surviving
corporation will then be obligated, within 20 days after receiving service of a
copy of the petition, to provide the Chancery Court with a duly verified list
containing the names and addresses of all stockholders who have demanded an
appraisal of their shares. After notice to dissenting stockholders, the Chancery
Court is empowered to conduct a hearing upon the petition, and to determine
those stockholders who have complied with Section 262 and who have become
entitled to the appraisal rights provided thereby. The Chancery Court may
require the stockholders who have demanded payment for their shares to submit
their stock certificates to the Register in Chancery for notation thereon of the
pendency of the appraisal proceedings; and if any stockholder fails to comply
with that direction, the Chancery Court may dismiss the proceedings as to that
stockholder.
After determination of the stockholders entitled to appraisal of their
shares of our common stock, the Chancery Court will appraise the shares,
determining their fair value exclusive of any element of value arising from the
accomplishment or expectation of the merger, together with a fair rate of
interest. When the value is determined, the Chancery Court will direct the
payment of such value, with interest thereon accrued during the pendency of the
proceeding, if the Chancery Court so determines, to the stockholders entitled to
receive the same, upon surrender by such holders of the certificates
representing those shares.
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In determining fair value, the Chancery Court is required to take into
account all relevant factors. You should be aware that the fair value of your
shares as determined under Section 262 could be more, the same, or less than the
value that you are entitled to receive under the terms of the merger agreement.
Costs of the appraisal proceeding may be imposed upon the surviving
corporation and the stockholders participating in the appraisal proceeding by
the Chancery Court as the Chancery Court deems equitable in the circumstances.
Upon the application of a stockholder, the Chancery Court may order all or a
portion of the expenses incurred by any stockholder in connection with the
appraisal proceeding, including, without limitation, reasonable attorneys' fees
and the fees and expenses of experts, to be charged pro rata against the value
of all shares entitled to appraisal. Any stockholder who had demanded appraisal
rights will not, after the effective time, be entitled to vote shares subject to
that demand for any purpose or to receive payments of dividends or any other
distribution with respect to those shares, other than with respect to payment as
of a record date prior to the effective time; however, if no petition for
appraisal is filed within 120 days after the effective time of the merger, or if
the stockholder delivers a written withdrawal of his or her demand for appraisal
and an acceptance of the terms of the merger within 60 days after the effective
time of the merger, then the right of that stockholder to appraisal will cease
and that stockholder will be entitled to receive the cash payment for shares of
his, her or its SOLA common stock pursuant to the merger agreement. Any
withdrawal of a demand for appraisal made more than 60 days after the effective
time of the merger may only be made with the written approval of the surviving
corporation and must, to be effective, be made within 120 days after the
effective time.
No appraisal proceeding in the Chancery Court will be dismissed as to any
stockholder without the approval of the Chancery Court, and such approval may be
subject to such conditions as the Chancery Court deems just.
In view of the complexity of Section 262, our stockholders who may wish to
dissent from the merger and pursue appraisal rights should consult their legal
advisors.
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DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS FOR 2005 ANNUAL MEETING
If the merger is completed, there will be no public stockholders of
SOLA International Inc. and no public participation in any future meetings of
our stockholders. However, if the merger is not completed, we will hold a 2005
annual meeting of stockholders. In that event, in order to be included in the
proxy statement and related proxy card for our 2005 annual meeting, stockholder
proposals must have been received by us no later than March 2, 2005. The
proposal notice must also have been in accordance with the requirements set
forth in our amended and restated by-laws.
HOUSEHOLDING INFORMATION
The SEC has adopted rules that permit companies and intermediaries (e.g.,
brokers) to satisfy the delivery requirements for proxy statements with respect
to two or more stockholders sharing the same address by delivering a single
proxy statement addressed to those stockholders. This process, which is commonly
referred to as "householding," potentially means extra convenience for
stockholders and cost savings for companies. A number of brokers with account
holders who are stockholders will be "householding" our proxy materials. As
indicated in the notice previously provided by these brokers to stockholders, a
single proxy statement will be delivered to multiple stockholders sharing an
address unless contrary instructions have been received from an affected
stockholder. Once you have received notice from your broker or us that they will
be "householding" communications to your address, "householding" will continue
until you are notified otherwise or until you revoke your consent. If you were
sent a single proxy statement in a household with multiple stockholders, SOLA
will promptly deliver a separate copy of the proxy statement to you if you send
a written request to us at 10590 West Ocean Air Drive, Suite 300, San Diego, CA,
92130, Attention: Jeff Cartwright, Director of Investor Relations. Stockholders
who in the future wish to receive multiple copies can contact us at this same
address. If you hold your shares through a broker that is utilizing
"householding" and you want to receive separate copies of SOLA's annual report
and proxy statement in the future, you should contact your broker.
Stockholders who currently receive multiple copies of the proxy statement
at their address and would like to request "householding" of their
communications should contact their broker, or if such stockholder is a direct
holder of shares of our common stock, such stockholder should contact us at
10590 West Ocean Air Drive, Suite 300, San Diego, CA, 92130, Attention: Jeff
Cartwright, Director of Investor Relations.
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other
information with the SEC. You may read and copy this information at the
following location of the SEC:
Public Reference Room
450 Fifth Street, N.W.
Room 1024
Washington, D.C. 20549
Please call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms. You may also obtain copies of this information by mail from the
Public Reference Section of the SEC, 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, at prescribed rates. Our public filings are also
available to the public from document retrieval services and the Internet
website maintained by the SEC at www.sec.gov.
No persons have been authorized to give any information or to make any
representations other than those contained in this proxy statement and, if given
or made, such information or representations must not be relied upon as having
been authorized by us or any other person. This proxy statement is dated [ ],
2005. You should not assume that the information contained in this proxy
statement is accurate as of any date other than that date, and the mailing of
this proxy statement to stockholders shall not create any implication to the
contrary.
-53-
Annex A
AGREEMENT AND PLAN OF MERGER
dated as of
December 5, 2004
among
SOLA INTERNATIONAL INC.,
CARL ZEISS TOPCO GMBH
and
SUN ACQUISITION, INC.
TABLE OF CONTENTS
Page
ARTICLE 1
DEFINITIONS
Section 1.01. Definitions...............................................1
Section 1.02. Other Definitional and Interpretative Provisions..........6
ARTICLE 2
THE MERGER
Section 2.01. The Merger................................................6
Section 2.02. Consummation..............................................7
Section 2.03. Conversion Of Shares......................................7
Section 2.04. Surrender And Payment.....................................7
Section 2.05. Dissenting Shares.........................................8
Section 2.06. Stock Options.............................................9
Section 2.07. Adjustments...............................................9
Section 2.08. Withholding Rights........................................9
Section 2.09. Lost Certificates.........................................9
ARTICLE 3
THE SURVIVING CORPORATION
Section 3.01. Merger Subsidiary.........................................9
Section 3.02. Certificate of Incorporation.............................10
Section 3.03. Bylaws...................................................10
Section 3.04. Directors and Officers...................................10
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 4.01. Corporate Existence and Power............................10
Section 4.02. Corporate Authorization..................................10
Section 4.03. Governmental Authorization...............................11
Section 4.04. Non-contravention........................................11
Section 4.05. Capitalization...........................................11
Section 4.06. Subsidiaries.............................................12
Section 4.07. SEC Filings and the Sarbanes-Oxley Act...................12
Section 4.08. Financial Statements.....................................13
Section 4.09. Disclosure Documents.....................................13
Section 4.10. Absence of Certain Changes...............................14
Section 4.11. Customers and Suppliers..................................15
-i-
Section 4.12. No Undisclosed Material Liabilities......................16
Section 4.13. Compliance with Laws and Court Orders....................16
Section 4.14. Permits..................................................16
Section 4.15. Litigation...............................................16
Section 4.16. Company Material Contracts...............................16
Section 4.17. Indebtedness.............................................18
Section 4.18. Non-Compete and Other Restrictions.......................18
Section 4.19. Property and Leases......................................18
Section 4.20. Finders' Fees............................................18
Section 4.21. Opinion of Financial Advisor.............................19
Section 4.22. Taxes....................................................19
Section 4.23. Employee Benefit Plans...................................20
Section 4.24. Environmental Matters....................................22
Section 4.25. Intellectual Property....................................22
Section 4.26. Antitakeover Statutes and Rights Agreement...............23
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PARENT
Section 5.01. Corporate Existence and Power............................23
Section 5.02. Corporate Authorization..................................24
Section 5.03. Governmental Authorization...............................24
Section 5.04. Non-contravention........................................24
Section 5.05. Disclosure Documents.....................................24
Section 5.06. Finders' Fees............................................25
Section 5.07. Financing; Contribution to Parent........................25
ARTICLE 6
COVENANTS OF THE COMPANY
Section 6.01. Conduct of the Company...................................25
Section 6.02. Stockholder Meeting; Proxy Material......................26
Section 6.03. Access to Information....................................26
Section 6.04. No Solicitation; Other Offers............................26
Section 6.05. Notices of Certain Events................................28
Section 6.06. Financing Cooperation....................................28
ARTICLE 7
COVENANTS OF PARENT
Section 7.01. Obligations of Merger Subsidiary.........................29
Section 7.02. Director and Officer Liability...........................29
Section 7.03. Financing................................................30
Section 7.04. Access to Employees......................................30
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ARTICLE 8
COVENANTS OF PARENT AND THE COMPANY
Section 8.01. Commercially Reasonable Efforts..........................30
Section 8.02. Certain Filings..........................................31
Section 8.03. Public Announcements.....................................31
Section 8.04. Further Assurances.......................................31
Section 8.05. Benefits Continuation; Severance.........................32
ARTICLE 9
CONDITIONS TO THE MERGER
Section 9.01. Conditions to Obligations of Each Party..................32
Section 9.02. Conditions to the Obligations of Parent and Merger
Subsidiary.............................................33
Section 9.03. Conditions to the Obligations of the Company.............34
ARTICLE 10
TERMINATION
Section 10.01. Termination..............................................34
Section 10.02. Effect of Termination....................................35
ARTICLE 11
MISCELLANEOUS
Section 11.01. Notices..................................................35
Section 11.02. Survival of Representations and Warranties...............37
Section 11.03. Amendments and Waivers...................................37
Section 11.04. Expenses.................................................37
Section 11.05. Binding Effect; Benefit; Assignment......................38
Section 11.06. Governing Law............................................38
Section 11.07. Jurisdiction.............................................39
Section 11.08. WAIVER OF JURY TRIAL.....................................39
Section 11.09. Counterparts; Effectiveness..............................39
Section 11.10. Entire Agreement.........................................39
Section 11.11. Severability.............................................39
Section 11.12. Specific Performance.....................................39
-iii-
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of December 5, 2004, among SOLA
International Inc., a Delaware corporation (the "Company"), Carl Zeiss TopCo
GmbH, a German company ("Parent"), and Sun Acquisition, Inc., a Delaware
corporation and an indirect wholly-owned subsidiary of Parent ("Merger
Subsidiary").
WHEREAS, the respective boards of directors of the Company, Parent and
Merger Subsidiary have approved and deemed it advisable that the respective
stockholders of Merger Subsidiary and the Company approve and adopt this
Agreement pursuant to which, among other things, Parent would acquire the
Company by means of a merger of Merger Subsidiary with and into the Company on
the terms and subject to the conditions set forth in this Agreement;
WHEREAS, on the date hereof, the members of the board of directors and each
executive officer of the Company have entered into a Voting and Support
Agreement (the "Voting and Support Agreement") pursuant to which they have
agreed to vote all shares of common stock of the Company owned by them to
approve and adopt this Agreement, the Merger and any actions related thereto;
and
WHEREAS, on the date hereof, the Company, Zeiss (as defined herein) and EQT
III (as defined herein) have entered into a letter agreement pursuant to which
Zeiss and EQT III have each agreed, subject to the terms set forth in such
letter agreement, to use commercially reasonable efforts to consummate the
transactions contemplated by this Agreement and the Master Agreement (as defined
herein).
NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements herein contained, the sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.01. Definitions. (a) The following terms, as used herein, have
the following meanings:
"Acquisition Proposal" means, other than the transactions contemplated by
this Agreement, any Third Party offer, proposal or inquiry relating to, or any
Third Party indication of interest in, (i) any acquisition or purchase, direct
or indirect, of 20% or more of the consolidated assets of the Company and its
Subsidiaries or over 20% of any class of equity or voting securities of the
Company or any of its Subsidiaries whose assets, individually or in the
aggregate, constitute more than 20% of the consolidated assets of the Company,
(ii) any tender offer (including a self-tender offer) or exchange offer that, if
consummated, would result in any Third Party's beneficially owning 20% or more
of any class of equity or voting securities of the Company or any of its
Subsidiaries whose assets, individually or in the aggregate, constitute more
than 20% of the consolidated assets of the Company, (iii) a merger,
consolidation, share exchange, business combination, sale of substantially all
the assets, reorganization, recapitalization, liquidation, dissolution or other
similar transaction involving the Company or any of its Subsidiaries whose
assets, individually or in the aggregate, constitute more than 20% of the
consolidated assets of the Company or (iv) any other transaction the
consummation of which would reasonably be expected to impede, prevent or
materially delay the Merger or that would reasonably be expected to dilute
materially the benefits to Parent of the transactions contemplated hereby.
"Affiliate" means, with respect to any Person, any other Person directly or
indirectly controlling, controlled by or under common control with such Person.
"Board of Directors" means the board of directors of the Company.
"Business Day" means a day other than Saturday, Sunday or other day on
which commercial banks in New York, New York are authorized or required by law
to close.
"Code" means the Internal Revenue Code of 1986.
"Company Balance Sheet" means the consolidated balance sheet of the Company
as of March 31, 2004, and the footnotes thereto set forth in the Company 10-K.
"Company Balance Sheet Date" means March 31, 2004.
"Company 10-K" means the Company's annual report on Form 10-K for the
fiscal year ended March 31, 2004.
"Confidentiality Agreement" means the Confidentiality Agreement dated
August 18, 2004 between the Company, EQT III and Zeiss.
"Delaware Law" means the General Corporation Law of the State of Delaware.
"Employee Plan" means each "employee benefit plan," as defined in Section
3(3) of ERISA, each employment, severance or similar contract, plan, arrangement
or policy and each other plan or arrangement (written or oral) providing for
compensation, bonuses, profit-sharing, stock option or other stock related
rights or other forms of incentive or deferred compensation, vacation benefits,
insurance (including any self-insured arrangements), health or medical benefits,
employee assistance program, disability or sick leave benefits, workers'
compensation, supplemental unemployment benefits, severance benefits and
post-employment or retirement benefits (including compensation, pension, health,
medical or life insurance benefits) which is maintained, administered or
contributed to by the Company or any ERISA Affiliate and covers any U.S.
employee or former U.S. employee of the Company or any of its Subsidiaries, or
with respect to which the Company or any of its Subsidiaries has any liability
relating to benefits provided to any U.S. employee.
"Environmental Laws" means any federal, state, local or foreign law
(including common law), treaty, judicial decision, regulation, rule, judgment,
order, decree, permit or injunction relating to the pollution or protection of
the environment (including, without limitation, those relating to human exposure
to or the use, distribution, disposal, treatment, storage or release or
threatened release of pollutants, contaminants, wastes or chemicals or otherwise
hazardous substances, wastes or materials) including, without limitation, the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980
(42 U.S.C. ss.ss. 9601 et seq.); the Hazardous Materials Transportation
Authorization Act of 1994 (49 U.S.C. ss.ss. 5101 et seq.); the Federal
Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. ss.ss. 136 et seq.); the
Solid Waste Disposal Act (42 U.S.C. ss.ss. 6901 et seq.); the Toxic Substances
Control Act (15 U.S.C. ss.ss. 2601 et seq.); the Clean Air Act (42 U.S.C. ss.ss.
7401 et seq.); the Federal Water Pollution Control Act (33 U.S.C. ss.ss. 1251 et
seq.); and the Safe Drinking Water Act (42 U.S.C. ss.ss. 300(f) et seq.), and
any and all regulations promulgated thereunder, and all state, local and foreign
counterparts or equivalents.
-2-
"Environmental Permits" means all permits, licenses, franchises,
certificates, approvals and other authorizations of governmental authorities
required by Environmental Laws for ownership or operation of, the business or
assets of the Company or any of its Subsidiaries as currently conducted.
"EQT" means EQT III and EQT IV.
"EQT III" means EQT III Limited, a limited liability company organized
under the laws of the Bailiwick of Guernsey, with registered offices at East
Wing, Trafalgar Court, Admiral Park, St Peter Port, Guernsey GY1 6HJ, Channel
Islands, in its capacity as (i) General Partner of EQT III UK No. 1 Limited
Partnership, EQT III UK No. 2 Limited Partnership, EQT III UK No. 3 Limited
Partnership, EQT III UK No. 4 Limited Partnership, EQT III UK No. 5 Limited
Partnership, EQT III UK No. 6 Limited Partnership, EQT III UK No. 7 Limited
Partnership, EQT III UK No. 8 Limited Partnership, EQT III UK No. 9 Limited
Partnership, EQT III US No. 1 Limited Partnership, EQT III US No. 2 Limited
Partnership and EQT III US No. 3 Limited Partnership, (ii) Managing Limited
Partner of EQT III GmbH & Co. KG and (iii) Manager of the EQT III Co-Investment
Scheme.
"EQT IV" means EQT IV Limited, a limited liability company organized under
the laws of the Bailiwick of Guernsey, with registered office at East Wing,
Trafalgar Court, Admiral Court, St Peter Port, Guernsey GY1 6HJ, Channel
Islands, in its capacity as (i) General Partner of the EQT IV (General Partner)
Limited Partnership in its capacity as General Partner of the EQT IV (No. 1)
Limited Partnership and EQT IV (No. 2) Limited Partnership, (ii) Managing
Limited Partner of the EQT IV GmbH & Co. KG, and (iii) Manager of the EQT IV
Co-Investment Scheme.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"ERISA Affiliate" of any entity means any other entity that, together with
such entity, would be treated as a single employer under Section 414 of the
Code.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
"Intellectual Property Rights" means (i) inventions, whether or not
patentable, reduced to practice or made the subject of one or more pending
patent applications, (ii) national and multinational statutory invention
registrations, patents and patent applications (including all reissues,
divisions, continuations, continuations-in-part, extensions and reexaminations
thereof) registered or applied for in the United States and all other nations
throughout the world, all improvements to the inventions disclosed in each such
registration, patent or patent application, (iii) trademarks, service marks,
trade dress, logos, domain names, trade names and corporate names (whether or
not registered) in the United States and all other nations throughout the world,
including all variations, derivations, combinations, registrations and
applications for registration of the foregoing and all goodwill associated
therewith, (iv) copyrights (whether or not registered) and registrations and
applications for registration thereof in the United States and all other nations
throughout the world, including all derivative works, moral rights, renewals,
extensions, reversions or restorations associated with such copyrights, now or
hereafter provided by law, regardless of the medium of fixation or means of
expression, (v) computer software (including source code, object code, firmware,
operating systems and specifications), (vi) trade secrets and, other than
information generally available to the public, business information (including
pricing and cost information, business and marketing plans and customer and
supplier lists) and know-how (including manufacturing and production processes
and techniques and research and development information), (vii) industrial
designs (whether or not registered), (viii) databases and data collections, (ix)
copies and tangible embodiments of any of the foregoing, in whatever form or
medium, (x) all rights to obtain and rights to apply for patents, and to
register trademarks and copyrights, (xi) all rights in all of the foregoing
provided by treaties, con-
-3-
ventions and common law and (xii) all rights to sue or recover and retain
damages and costs and attorneys' fees for past, present and future infringement
or misappropriation of any of the foregoing.
"International Plan" means any employment, severance or similar contract or
arrangement (whether or not written) or any plan, policy, fund, program or
arrangement or contract providing for severance, insurance coverage (including
any self-insured arrangements), workers' compensation, disability benefits,
supplemental unemployment benefits, vacation benefits, pension or retirement
benefits or for deferred compensation, profit-sharing, bonuses, stock options,
stock appreciation rights or other forms of incentive compensation or
post-retirement insurance, compensation or benefits that (i) is not an Employee
Plan, (ii) is entered into, maintained, administered or contributed to by the
Company or any of its Affiliates and (iii) covers any employee or former
employee of the Company or any of its Subsidiaries, or with respect to which the
Company or any of its Subsidiaries has any liability relating to benefits
provided to any non-US. employee.
"Knowledge" of any Person that is not an individual means the knowledge of
such Person's officers after reasonable inquiry.
"Lien" means, with respect to any property or asset, any mortgage, lien,
pledge, charge, security interest, encumbrance or other adverse claim of any
kind in respect of such property or asset. For purposes of this Agreement, a
Person shall be deemed to own subject to a Lien any property or asset that it
has acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement
relating to such property or asset.
"Material Adverse Effect" means, with respect to any Person, a material
adverse effect on the financial condition, business, assets or results of
operations of such Person and its Subsidiaries, taken as a whole.
"1933 Act" means the Securities Act of 1933, as amended.
"1934 Act" means the Securities Exchange Act of 1934, as amended.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permitted Liens" means (i) Liens disclosed or reserved against on the
Company Balance Sheet (or notes thereto) or securing liabilities reflected on
the Company Balance Sheet (or notes thereto), (ii) Liens for taxes, assessments
and similar charges not yet due or payable or being contested in good faith for
which adequate accruals or reserves have been established on the Company Balance
Sheet, or (iii) mechanic's, materialman's, carrier's, repairer's and other
similar Liens arising in the ordinary course of business, provided that in no
event shall a Permitted Lien include any lien in favor of the PBGC or any
Employee Plan.
"Person" means an individual, corporation, partnership, limited liability
company, association, trust or other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"Rights" has the meaning given to such term in the Rights Agreement.
"Rights Agreement" means the Rights Agreement dated as of August 27, 1998
between the Company and BankBoston, N.A.
"Sarbanes-Oxley Act" means the Sarbanes-Oxley Act of 2002.
-4-
"SEC" means the Securities and Exchange Commission.
"Shares" means the shares of common stock, $0.01 par value, of the Company.
"Subsidiary" means, with respect to any Person, any entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are at any time directly or indirectly owned by such Person.
"Third Party" means any Person as defined in this Agreement or in Section
13(d) of the 1934 Act, other than Parent or any of its Affiliates.
"Zeiss" means Carl Zeiss AG.
Any reference in this Agreement to a statute shall be to such statute, as
amended from time to time, and to the rules and regulations promulgated
thereunder.
(b) Each of the following terms is defined in the Section set forth
opposite such term:
Term Section
---- -------
Affected Employees 8.05
Certificates 2.04
Commitment Letter 5.07
Company Preamble
Company Disclosure Documents 4.09
Company Disclosure Schedule Article 4
Company Permits 4.14
Company Proxy Statement 4.09
Company SEC Documents 4.07
Company Securities 4.05
Company Subsidiary Securities 4.06
Company Stockholder Meeting 6.02
Effective Time 2.01
e-mail 11.01
Exchange Agent 2.04
Financing 5.07
Financing Agreements 5.07
GAAP 4.08
Indemnified Person 7.02
internal controls 4.07
Liabilities 4.12
Lead Banks 5.07
Major Supplier 4.11
Master Agreement 5.07
Maximum Annual Premium 7.02
Merger 2.01
Merger Consideration 2.03
Merger Subsidiary Preamble
Multiemployer Plan 4.23
Parent Preamble
Payment Event 11.04
-5-
Term Section
---- -------
Post-Employment Benefits 4.23
Superior Proposal 6.04
Surviving Corporation 2.01
Tax 4.22
Taxing Authority 4.22
Tax Return 4.22
Tax Sharing Agreement 4.22
Title IV Plan 4.23
Uncertificated Shares 2.04
Voting and Support Agreement Recitals
Section 1.02. Other Definitional and Interpretative Provisions. The words
"hereof", "herein" and "hereunder" and words of like import used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof. References to Articles, Sections, Exhibits and Schedules are to
Articles, Sections, Exhibits and Schedules of this Agreement unless otherwise
specified. All Exhibits and Schedules annexed hereto or referred to herein are
hereby incorporated in and made a part of this Agreement as if set forth in full
herein. Any capitalized terms used in any Exhibit or Schedule but not otherwise
defined therein, shall have the meaning as defined in this Agreement. Any
singular term in this Agreement shall be deemed to include the plural, and any
plural term the singular. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation", whether or not they are in fact followed by
those words or words of like import. "Writing", "written" and comparable terms
refer to printing, typing and other means of reproducing words (including
electronic media) in a visible form. References to any specific agreement or
contract are to that agreement or contract as amended, modified or supplemented
prior to the date hereof in accordance with the terms thereof; provided that
with respect to any agreement or contract listed on the Company Disclosure
Schedule, all such amendments modifications or supplements must be listed in the
Company Disclosure Schedule. References to any Person include the successors and
permitted assigns of that Person. References from or through any date mean,
unless otherwise specified, from and including or through and including,
respectively. References to "law", "laws" or to a particular statute or law
shall be deemed also to include any and all related rules, regulations,
ordinances, directives, treaties and judicial or administrative decisions,
judgments, decrees or injunctions of any U.S. or non-U.S. federal, state, local
or foreign governmental authority and any amendments thereto.
ARTICLE 2
THE MERGER
Section 2.01. The Merger.
(a) At the Effective Time, Merger Subsidiary shall be merged (the "Merger")
with and into the Company in accordance with Delaware Law, whereupon the
separate existence of Merger Subsidiary shall cease, and the Company shall be
the surviving corporation (the "Surviving Corporation").
(b) As soon as practicable after satisfaction or, to the extent permitted
hereunder, waiver of all conditions to the Merger, the Company and Merger
Subsidiary shall file a certificate of merger with the Delaware Secretary of
State and make all other filings or recordings required by Dela-
-6-
ware Law in connection with the Merger. The Merger shall become effective at
such time (the "Effective Time") as the certificate of merger is duly filed with
the Delaware Secretary of State or at such later time as agreed to by the
Company and the Parent and as is specified in the certificate of merger.
(c) From and after the Effective Time, the Surviving Corporation shall
possess all the rights, powers, privileges and franchises and be subject to all
of the obligations, liabilities, restrictions and disabilities of the Company
and Merger Subsidiary, all as provided under Delaware Law.
Section 2.02. Consummation. Unless this Agreement shall have been
terminated and the Merger all have been abandoned pursuant to Section 10.01, and
subject to the satisfaction or waiver of the conditions set forth in Article 9,
the consummation of the Merger shall take place at 10:00 a.m., New York City
time, at the offices of Davis Polk & Wardwell, 450 Lexington Avenue, New York,
New York, as soon as possible, but in no event later than 5 Business Days, after
satisfaction or waiver of the conditions set forth in Article 9, or at such
other time or place as Parent and the Company may agree; provided that the
consummation of the Merger shall not take place prior to January 31, 2005,
without the prior written consent of Parent.
Section 2.03. Conversion Of Shares. At the Effective Time:
(a) except as otherwise provided in Section 2.03(b), Section 2.3(c) or
Section 2.05, each Share outstanding immediately prior to the Effective Time
shall be converted into the right to receive $28.00 in cash, without interest
(the "Merger Consideration");
(b) each Share held by the Company as treasury stock (other than Shares, if
any, in an Employee Plan of the Company) or owned by Parent or any of its
Subsidiaries immediately prior to the Effective Time shall be canceled, and no
payment shall be made with respect thereto;
(c) each Share held by any wholly owned Subsidiary of the Company
immediately prior to the Effective Time shall remain outstanding; and
(d) each share of common stock of Merger Subsidiary outstanding immediately
prior to the Effective Time shall be converted into and become one share of
common stock of the Surviving Corporation with the same rights, powers and
privileges as the shares so converted and shall constitute the only outstanding
shares of capital stock of the Surviving Corporation.
Section 2.04. Surrender And Payment.
(a) Prior to the Effective Time, the Company shall appoint an agent,
subject to Parent's approval of the terms and conditions of such appointment
(such approval not to be unreasonably withheld), which shall be the Company's
transfer agent (the "Exchange Agent") for the purpose of exchanging for the
Merger Consideration (i) certificates representing Shares (the "Certificates")
or (ii) uncertificated Shares (the "Uncertificated Shares"). At the Effective
Time, Parent shall deposit with the Exchange Agent an amount in immediately
available funds equal to the aggregate Merger Consideration to be paid in
respect of the Certificates and the Uncertificated Shares. Promptly after the
Effective Time, Parent shall send, or shall cause the Exchange Agent to send, to
each holder of Shares at the Effective Time a letter of transmittal and
instructions (which shall specify that the delivery shall be effected, and risk
of loss and title shall pass, only upon proper delivery of the Certificates or
transfer of the Uncertificated Shares to the Exchange Agent) for use in such
exchange.
(b) Each holder of Shares that have been converted into the right to
receive the Merger Consideration shall be entitled to receive, upon (i)
surrender to the Exchange Agent of a Certifi-
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cate, together with a properly completed letter of transmittal, or (ii) receipt
of an "agent's message" by the Exchange Agent (or such other evidence, if any,
of transfer as the Exchange Agent may reasonably request) in the case of a
book-entry transfer of Uncertificated Shares, the Merger Consideration payable
for each Share represented by a Certificate or for each Uncertificated Share.
Until so surrendered or transferred, as the case may be, each such Certificate
or Uncertificated Share shall represent after the Effective Time for all
purposes only the right to receive such Merger Consideration.
(c) If any portion of the Merger Consideration is to be paid to a Person
other than the Person in whose name the surrendered Certificate or the
transferred Uncertificated Share is registered, it shall be a condition to such
payment that (i) either such Certificate shall be properly endorsed or shall
otherwise be in proper form for transfer or such Uncertificated Share shall be
properly transferred and (ii) the Person requesting such payment shall pay to
the Exchange Agent any transfer or other taxes required as a result of such
payment to a Person other than the registered holder of such Certificate or
Uncertificated Share or establish to the satisfaction of the Exchange Agent that
such tax has been paid or is not payable.
(d) After the Effective Time, there shall be no further registration of
transfers of Shares. If, after the Effective Time, Certificates or
Uncertificated Shares are presented to the Surviving Corporation, they shall be
canceled and exchanged for the Merger Consideration provided for, and in
accordance with the procedures set forth, in this Article 2.
(e) Any portion of the Merger Consideration deposited with the Exchange
Agent pursuant to Section 2.04(a) (and any interest or other income earned
thereon) that remains unclaimed by the holders of Shares six months after the
Effective Time shall be returned to Parent, upon demand, and any such holder who
has not exchanged such Shares for the Merger Consideration in accordance with
this Section 2.04 prior to that time shall thereafter look only to Parent and
the Surviving Corporation for payment of the Merger Consideration in respect of
such Shares without any interest thereon. Notwithstanding the foregoing, Parent
and the Surviving Corporation shall not be liable to any holder of Shares for
any amount paid to a public official pursuant to applicable abandoned property,
escheat or similar laws. Any amounts remaining unclaimed by holders of Shares
two years after the Effective Time (or such earlier date immediately prior to
such time when the amounts would otherwise escheat to or become property of any
governmental authority) shall become, to the extent permitted by applicable law,
the property of Parent free and clear of any claims or interest of any Person
previously entitled thereto.
(f) Any portion of the Merger Consideration deposited with the Exchange
Agent pursuant to Section 2.04(a) to pay for Shares, for which appraisal rights
have been perfected and have not been withdrawn or lost 30 days after the
Effective Time, shall be returned to Parent, upon demand.
Section 2.05. Dissenting Shares. Notwithstanding Section 2.03, Shares
outstanding immediately prior to the Effective Time and held by a holder who has
not voted in favor of the Merger or consented thereto in writing and who has
demanded appraisal for such Shares in accordance with Delaware Law shall not be
converted into a right to receive the Merger Consideration, unless such holder
fails to perfect, withdraws or otherwise loses the right to appraisal. If, after
the Effective Time, such holder fails to perfect, withdraws or loses the right
to appraisal, such Shares shall be treated as if they had been converted as of
the Effective Time into a right to receive the Merger Consideration. The Company
shall give Parent prompt notice of any demands received by the Company for
appraisal of Shares, and Parent shall have the right to participate in all
negotiations and proceedings with respect to such demands. Except with the prior
written consent of Parent, the Company shall not make any payment with respect
to, or offer to settle or settle, any such demands.
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Section 2.06. Stock Options.
(a) At or immediately prior to the Effective Time, each employee and
director stock option to purchase Shares outstanding under any stock option or
compensation plan or arrangement of the Company, whether or not vested or
exercisable, shall be canceled, and the Company shall pay each holder of any
such option at or promptly after the Effective Time for each such option
surrendered an amount in cash determined by multiplying (i) the excess, if any,
of the Merger Consideration over the applicable exercise price of such option by
(ii) the number of Shares such holder could have purchased (assuming full
vesting of all options) had such holder exercised such option in full
immediately prior to the Effective Time.
(b) Prior to the Effective Time, the Company shall (i) use its commercially
reasonable efforts to obtain any consents from holders of options to purchase
Shares granted under the Company's stock option or compensation plans or
arrangements and (ii) make any amendments to the terms of such stock option or
compensation plans or arrangements that, in the case of either clauses (i) or
(ii), are necessary to give effect to the transactions contemplated by Section
2.06(a). Notwithstanding any other provision of this Section, payment may be
withheld in respect of any employee stock option until such necessary consents
are obtained.
Section 2.07. Adjustments. If, during the period between the date of this
Agreement and the Effective Time, any change in the outstanding Shares shall
occur, including by reason of any reclassification, recapitalization, stock
split or combination or exchange of Shares, or stock dividend thereon with a
record date during such period or issuer tender or exchange offer or similar
transaction (excluding any such change as a result of any exercise of options
outstanding as of the date hereof to purchase Shares granted under the Company's
stock option or compensation plans or arrangements), the Merger Consideration
and any other amounts payable pursuant to this Agreement shall be appropriately
adjusted.
Section 2.08. Withholding Rights. Each of the Surviving Corporation and
Parent shall be entitled to deduct and withhold from the consideration otherwise
payable to any Person pursuant to this Article 2 such amounts as it is required
to deduct and withhold with respect to the making of such payment under any
provision of tax law. If the Surviving Corporation or Parent, as the case may
be, so withholds amounts, such amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the Shares in respect of which
the Surviving Corporation or Parent, as the case may be, made such deduction and
withholding.
Section 2.09. Lost Certificates. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the Person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the posting by such Person of a bond, in such
reasonable amount as the Surviving Corporation may direct, as indemnity against
any claim that may be made against it with respect to such Certificate, the
Exchange Agent shall pay, in exchange for such lost, stolen or destroyed
Certificate, the Merger Consideration to be paid in respect of the Shares
represented by such Certificate, as contemplated by this Article 2.
ARTICLE 3
THE SURVIVING CORPORATION
Section 3.01. Merger Subsidiary. At its election, Parent may substitute any
of its direct or indirect wholly-owned Delaware subsidiaries for Merger
Subsidiary as a constituent corporation in
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the Merger. In such an event, the parties agree to execute an appropriate
amendment to this Agreement in order to reflect such substitution.
Section 3.02. Certificate of Incorporation. The certificate of
incorporation of the Company in effect at the Effective Time shall be the
certificate of incorporation of the Surviving Corporation until amended in
accordance with applicable law.
Section 3.03. Bylaws. The bylaws of Merger Subsidiary in effect at the
Effective Time shall be the bylaws of the Surviving Corporation until amended in
accordance with applicable law.
Section 3.04. Directors and Officers. From and after the Effective Time,
until successors are duly elected or appointed and qualified in accordance with
applicable law, (a) the directors of Merger Subsidiary at the Effective Time
shall be the directors of the Surviving Corporation and (b) the officers of the
Company at the Effective Time shall be the officers of the Surviving Corporation
(other than the Chairman, who shall be appointed by the directors of the
Surviving Corporation).
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Disclosure Schedule delivered by the Company to
Parent contemporaneously with the execution and delivery of this Agreement (the
"Company Disclosure Schedule"), which sets forth disclosure by specific
reference to Sections of this Agreement, the Company represents and warrants to
Parent that:
Section 4.01. Corporate Existence and Power. The Company is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware and has all corporate powers and all governmental licenses,
authorizations, permits, consents and approvals required to carry on its
business as now conducted, except for those licenses, authorizations, permits,
consents and approvals the absence of which would not have, individually or in
the aggregate, a Material Adverse Effect on the Company. The Company is duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction where such qualification is necessary, except for those
jurisdictions where failure to be so qualified would not have, individually or
in the aggregate, a Material Adverse Effect on the Company. The Company has
heretofore delivered to Parent true and complete copies of the certificate of
incorporation and bylaws of the Company as currently in effect.
Section 4.02. Corporate Authorization.
(a) The execution, delivery and performance by the Company of this
Agreement and the consummation by the Company of the transactions contemplated
hereby are within the Company's corporate powers and, except for the affirmative
vote of the holders of a majority of the outstanding Shares in connection with
the consummation of the Merger, have been duly authorized by all necessary
corporate action on the part of the Company. The affirmative vote of the holders
of a majority of the outstanding Shares is the only vote of the holders of any
of the Company's capital stock necessary in connection with the consummation of
the Merger. This Agreement constitutes a valid and binding agreement of the
Company.
(b) At a meeting duly called and held, the Company's Board of Directors has
(i) unanimously determined that this Agreement and the transactions contemplated
hereby are fair to and in the best interests of the Company's stockholders, (ii)
unanimously approved and adopted this Agreement and the transactions
contemplated hereby, (iii) approved and adopted an amendment to the Rights
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Agreement to render the Rights inapplicable to this Agreement and the
transactions contemplated hereby, (iv) approved this Agreement and the
transactions contemplated hereby for purposes of Section 203 of Delaware Law,
and (v) unanimously resolved to recommend approval and adoption of this
Agreement by its stockholders.
Section 4.03. Governmental Authorization. The execution, delivery and
performance by the Company of this Agreement and the consummation by the Company
of the transactions contemplated hereby require no action by or in respect of,
or filing with, any governmental body, agency, official or authority, domestic,
foreign or supranational, other than (a) the filing of a certificate of merger
with respect to the Merger with the Delaware Secretary of State and appropriate
documents with the relevant authorities of other states in which the Company is
qualified to do business, (b) compliance with any applicable requirements of the
HSR Act and the applicable requirements of laws, rules and regulations in
Australia, Brazil, the European Union, Mexico and Switzerland governing
antitrust or merger control matters, (c) compliance with any applicable
requirements of the 1933 Act, the 1934 Act and any other applicable securities
or takeover laws, and (d) any actions or filings the absence of which would be
reasonably expected not to have, individually or in the aggregate, a Material
Adverse Effect on the Company.
Section 4.04. Non-contravention. The execution, delivery and performance by
the Company of this Agreement and the consummation by the Company of the
transactions contemplated hereby do not and will not (a) contravene, conflict
with, or result in any violation or breach of any provision of the certificate
of incorporation or bylaws of the Company, (b) assuming compliance with the
matters referred to in Section 4.03, contravene, conflict with, or result in a
violation or breach of any provision of any applicable law, (c) require any
consent or other action by any Person under, constitute a default, or an event
that, with or without notice or lapse of time or both, would become a default,
under, or cause or permit the termination, cancellation, acceleration or other
change of any right or obligation or the loss of any benefit to which the
Company or any of its Subsidiaries is entitled under any provision of any
agreement, lease or other instrument binding upon the Company or any of its
Subsidiaries or any license, franchise, permit, certificate, approval or other
similar authorization affecting, or relating in any way to, the assets or
business of the Company and its Subsidiaries or (d) result in the creation or
imposition of any Lien on any asset of the Company or any of its Subsidiaries,
except for such contraventions, conflicts, violations and breaches referred to
in clause (b) and for such failures to obtain any such consent or other action,
defaults, terminations, cancellations, accelerations, changes, losses or Liens
referred to in clauses (c) and (d) that would be reasonably expected not to
have, individually or in the aggregate, a Material Adverse Effect on the
Company.
Section 4.05. Capitalization.
(a) The authorized capital stock of the Company consists of 50,000,000
Shares and 5,000,000 shares of preferred stock, $0.01 par value, of the Company.
As of November 30, 2004, there were outstanding 32,225,830 Shares and employee
and director stock options to purchase an aggregate of 1,614,703 Shares (of
which options to purchase an aggregate of 1,329,973 Shares were exercisable).
All outstanding shares of capital stock of the Company have been, and all shares
that may be issued pursuant to the Company's 1998 Stock Option Plan will be,
when issued in accordance with the respective terms thereof, duly authorized and
validly issued and are fully paid and nonassessable. No Company Subsidiary or
Affiliate owns any shares of capital stock of the Company.
(b) Except for the Rights, which are not exercisable, and as set forth in
this Section 4.05 and for changes since November 30, 2004 resulting from the
exercise of employee and director stock options outstanding on such date, there
are no outstanding (i) shares of capital stock of or other voting securities or
ownership interests in the Company, (ii) securities of the Company convertible
into or ex-
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changeable for shares of capital stock or other voting securities or ownership
interests in the Company or (iii) options or other rights to acquire from the
Company, or other obligation of the Company to issue, any capital stock or other
voting securities or ownership interests in or any securities convertible into
or exchangeable for capital stock or other voting securities or ownership
interests in the Company (the items in clauses (i), (ii) and (iii) being
referred to collectively as the "Company Securities"). There are no outstanding
obligations of the Company or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any of the Company Securities.
Section 4.06. Subsidiaries.
(a) Each Subsidiary of the Company is a corporation or limited liability
company duly formed, validly existing and in good standing under the laws of its
jurisdiction of formation, has all corporate or limited liability company powers
and all governmental licenses, authorizations, permits, consents and approvals
required to carry on its business as now conducted, except for those licenses,
authorizations, permits, consents and approvals the absence of which would not
have, individually or in the aggregate, a Material Adverse Effect on the
Company. Each such Subsidiary is duly qualified to do business as a foreign
corporation or limited liability company and is in good standing in each
jurisdiction where such qualification is necessary, except for those
jurisdictions where failure to be so qualified would not have, individually or
in the aggregate, a Material Adverse Effect on the Company. All Subsidiaries of
the Company required to be listed in the Company 10-K and their respective
jurisdictions of incorporation are identified in the Company 10-K.
(b) All of the outstanding capital stock of or other voting securities or
ownership interests in each Subsidiary of the Company is owned by the Company,
directly or indirectly, free and clear of any Lien and free of any other
limitation or restriction (including any restriction on the right to vote, sell
or otherwise dispose of such capital stock or other voting securities or
ownership interests). There are no outstanding (i) securities of the Company or
any of its Subsidiaries convertible into or exchangeable for shares of capital
stock of or other voting securities or ownership interests in any Subsidiary of
the Company or (ii) options or other rights to acquire from the Company or any
of its Subsidiaries, or other obligation of the Company or any of its
Subsidiaries to issue, any capital stock of or other voting securities or
ownership interests in, or any securities convertible into or exchangeable for
any capital stock of or other voting securities or ownership interests in, any
Subsidiary of the Company (the items in clauses (i) and (ii) being referred to
collectively as the "Company Subsidiary Securities"). There are no outstanding
obligations of the Company or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any of the Company Subsidiary Securities.
Section 4.07. SEC Filings and the Sarbanes-Oxley Act. (a) (i) The Company's
annual reports on Form 10-K for its fiscal years ended March 31, 2002, 2003 and
2004, (ii) its quarterly reports on Form 10-Q for its fiscal quarters ending
June 30, 2004 and September 30, 2004, (iii) its proxy or information statements
relating to meetings of the stockholders of the Company held (or actions taken
without a meeting by such stockholders) since March 31, 2004, (iv) the Company's
registration statement filed with the SEC on October 2, 2003, and (v) all of its
other reports, statements, schedules and registration statements filed with the
SEC since March 31, 2004 are referred to collectively as the "Company SEC
Documents". The Company has filed all reports, schedules, forms, statements and
other documents (including exhibits, material agreements and other information
incorporated therein) required to be filed by the Company with the SEC since
March 31, 2002.
(b) As of its filing date (or, if amended or superceded by a filing prior
to the date hereof, on the date of such filing), each Company SEC Document
complied, and each such Company SEC Document filed subsequent to the date hereof
will comply, as to form in all material respects with the applicable
requirements of the 1933 Act and the 1934 Act, as the case may be.
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(c) As of its filing date (or, if amended or superceded by a filing prior
to the date hereof, on the date of such filing), each Company SEC Document filed
pursuant to the 1934 Act did not, and each such Company SEC Document filed
subsequent to the date hereof will not, contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading.
(d) Each registration statement, as amended or supplemented, if applicable,
filed pursuant to the 1933 Act since March 31, 2002, as of the date such
statement or amendment became effective, did not contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading.
(e) The Company has established and maintains disclosure controls and
procedures (as defined in Rule 13a-15 under the 1934 Act). Such disclosure
controls and procedures are designed to ensure that material information
relating to the Company, including its consolidated Subsidiaries, is made known
to the Company's principal executive officer and its principal financial officer
by others within those entities, particularly during the periods in which the
periodic reports required under the 1934 Act are being prepared. Except as
disclosed in the Company SEC Documents filed prior to the date hereof, such
disclosure controls and procedures are effective.
(f) The Company and its Subsidiaries have established and maintain a system
of internal control over financial reporting (as defined in Rule 13a-15 under
the 1934 Act) ("internal controls"). Except as set forth in the Company SEC
Documents filed prior to the date hereof, such internal controls are sufficient
to provide reasonable assurance regarding the reliability of the Company's
financial reporting and the preparation of Company financial statements for
external purposes in accordance with GAAP. The Company has disclosed, based on
its most recent evaluation of internal controls over financial reporting prior
to the date hereof, to the Company's auditors and audit committee (x) any
significant deficiencies and material weaknesses in the design or operation of
internal controls which are reasonably likely to adversely affect the Company's
ability to record, process, summarize and report financial information and (y)
any fraud, whether or not material, that involves management or other employees
who have a significant role in the Company's internal control over financial
reporting. The Company's quarterly report for the fiscal quarter ended September
30, 2004 filed on Form 10-Q includes a summary of any such disclosure made by
management to the Company's auditors and audit committee since March 31, 2003.
(g) There are no outstanding loans made by the Company or any of its
Subsidiaries to any executive officer (as defined in Rule 3b-7 under the 1934
Act) or director of the Company. The Company has not since the enactment of the
Sarbanes-Oxley Act, taken any action prohibited by Section 402 of the
Sarbanes-Oxley Act.
Section 4.08. Financial Statements. The audited consolidated financial
statements and unaudited consolidated interim financial statements of the
Company included in the Company SEC Documents fairly present, in conformity with
generally accepted accounting principles ("GAAP") applied on a consistent basis
(except as may be indicated in the notes thereto), the consolidated financial
position of the Company and its consolidated Subsidiaries as of the dates
thereof and their consolidated results of operations and cash flows for the
periods then ended (subject to normal year-end adjustments in the case of any
unaudited interim financial statements).
Section 4.09. Disclosure Documents.
(a) Each document required to be filed by the Company with the SEC or
required to be distributed or otherwise disseminated to the Company's
stockholders in connection with the transac-
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tions contemplated by this Agreement (the "Company Disclosure Documents"),
including the proxy or information statement of the Company (the "Company Proxy
Statement"), and any amendments or supplements thereto, when filed, distributed
or disseminated, as applicable, will comply as to form in all material respects
with the applicable requirements of the 1934 Act.
(b) The Company Proxy Statement, as supplemented or amended, if applicable,
at the time such Company Proxy Statement or any amendment or supplement thereto
is first mailed to stockholders of the Company and at the time such stockholders
vote on adoption of this Agreement, and any Company Disclosure Document (other
than the Company Proxy Statement), at the time of the filing of such Company
Disclosure Document or any supplement or amendment thereto and at the time of
any distribution or dissemination thereof, will not contain any untrue statement
of a material fact or omit to state any material fact necessary in order to make
the statements made therein, in the light of the circumstances under which they
were made, not misleading. The representations and warranties contained in this
Section 4.09 will not apply to statements or omissions included in the Company
Disclosure Documents based upon information furnished to the Company in writing
by Parent and its Affiliates specifically for use therein.
Section 4.10. Absence of Certain Changes. Since the Company Balance Sheet
Date, the business of the Company and its Subsidiaries has been conducted in the
ordinary course consistent with past practices and there has not been:
(a) any event, occurrence, development or state of circumstances or
facts that has had or would reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect on the Company;
(b) any declaration, setting aside or payment of any dividend or other
distribution with respect to any shares of capital stock of the Company, or
any repurchase, redemption or other acquisition by the Company or any of
its Subsidiaries of any outstanding shares of capital stock or other
securities of, or other ownership interests in, the Company or any of its
Subsidiaries;
(c) except as contemplated by this Agreement, any amendment of any
material term of any outstanding security of the Company or any of its
Subsidiaries;
(d) any incurrence, assumption or guarantee by the Company or any of
its Subsidiaries of any indebtedness for borrowed money other than (i)
trade payables, (ii) loans between the Company and a wholly owned
Subsidiary of the Company or between wholly owned Subsidiaries of the
Company or (iii) borrowings for working capital purposes by foreign
Subsidiaries of the Company pursuant to existing overdraft facilities
incurred, assumed or guaranteed in the ordinary course of business and in
amounts and on terms consistent with past practices;
(e) any creation or other incurrence by the Company or any of its
Subsidiaries of any Lien on any material asset other than Permitted Liens
in the ordinary course of business consistent with past practices;
(f) any making of any material loan, advance or capital contributions
to or investment in any Person, other than loans, advances or capital
contributions to or investments in its wholly-owned Subsidiaries made in
the ordinary course of business consistent with past practices;
(g) any damage, destruction or other casualty loss (whether or not
covered by insurance) affecting the business or assets of the Company or
any of its Subsidiaries that has had or
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would reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Company;
(h) any transaction or commitment made, or any contract or agreement
entered into, by the Company or any of its Subsidiaries relating to its
assets or business (including the acquisition or disposition of any assets)
or any relinquishment by the Company or any of its Subsidiaries of any
contract or other right, in either case, material to the Company and its
Subsidiaries, taken as a whole, other than transactions and commitments in
the ordinary course of business consistent with past practices and, after
the date hereof, to the extent not prohibited by this Agreement and
contemplated by this Agreement;
(i) any change in any method of accounting or accounting principles or
practice by the Company or any of its Subsidiaries, except for any such
change required by reason of a concurrent change in GAAP or Regulation S-X
under the 1934 Act;
(j) any (i) grant of any severance, change of control or termination
pay to (or amendment to any existing arrangement with) any director,
officer or employee of the Company or any of its Subsidiaries, (ii)
increase in benefits payable under any existing severance or termination
pay policies or employment agreements, (iii) entering into any employment,
deferred compensation or other similar agreement (or any amendment to any
such existing agreement) with any director, officer or, other than in the
ordinary course of business consistent with past practices, employee of the
Company or any of its Subsidiaries, (iv) establishment, adoption or
amendment (except as required by applicable law) of any collective
bargaining, bonus, profit-sharing, thrift, pension, retirement, deferred
compensation, compensation, stock option, restricted stock or other benefit
plan or arrangement covering any director, officer or, other than in the
ordinary course of business consistent with past practices, employee of the
Company or any of its Subsidiaries or (v) increase in compensation, bonus
or other benefits payable to any director, officer or employee of the
Company or any of its Subsidiaries, other than increases in base pay,
bonuses or changes in broad-based benefits affecting employees (who are not
an officer or director of the Company or its Subsidiaries) in the ordinary
course of business consistent with past practice;
(k) any labor dispute, other than routine individual grievances, or
any activity or proceeding by a labor union or representative thereof to
organize any employees of the Company or any of its Subsidiaries, which
employees were not subject to a collective bargaining agreement at the
Company Balance Sheet Date, or any lockouts, strikes, slowdowns, work
stoppages or threats thereof by or with respect to such employees; or
(l) any Tax election made or changed, any annual tax accounting period
changed, any method of tax accounting adopted or changed, any amended Tax
Returns or claims for Tax refunds filed, any closing agreement entered
into, any Tax claim, audit or assessment settled, or any right to claim a
Tax refund, offset or other reduction in Tax liability surrendered.
Section 4.11. Customers and Suppliers. As of the date hereof, to the
Knowledge of the Company, no customer which individually and with its Affiliates
accounted for more than $2,500,000 in revenues of the Company and its
Subsidiaries during the six months ended September 30, 2004 is reasonably likely
to decrease its purchases by more than 25% in revenues of the Company and its
Subsidiaries for the 12-month period following the date hereof (not including
any decrease as a result of currency fluctuations). As of the date hereof, no
supplier of the Company or its Subsidiaries to whom the Company or its
Subsidiaries made aggregate payments in excess of $10,000,000 in the fiscal year
ended March 31, 2004 or a single source supplier to the Company or its
Subsidiaries (in each case, a "Major Supplier") has indicated to the Company or
its Subsidiaries that it will stop, or decrease the rate of, sup-
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plying materials, products or services to the Company or its Subsidiaries. In
the event an agreement with a Major Supplier would expire or terminate in
accordance with its terms within the next 18 months, the Company is able to
either renew such agreement or obtain similar products covered by such agreement
from alternative sources under substantially similar terms, except where the
failure to renew or obtain would be reasonably expected not to have a Material
Adverse Effect on the Company. Neither the Company nor any of its Subsidiaries
has knowingly breached any agreement with, or engaged in any fraudulent conduct
with respect to, any supplier of the Company or its Subsidiaries.
Section 4.12. No Undisclosed Material Liabilities. There are no liabilities
or obligations of the Company or any of its Subsidiaries of any kind whatsoever,
whether accrued, contingent, absolute, determined, determinable or otherwise
("Liabilities"), other than:
(a) Liabilities disclosed and provided for in the Company Balance Sheet or
in the notes thereto or in the Company SEC Documents filed prior to the date
hereof, and
(b) Liabilities incurred in the ordinary course of business consistent with
past practices that would reasonably be expected not to have, individually or in
the aggregate, a Material Adverse Effect on the Company.
Section 4.13. Compliance with Laws and Court Orders. The Company and each
of its Subsidiaries is and has been in compliance with, and to the Knowledge of
the Company is not under investigation with respect to and has not been
threatened to be charged with or given notice of any violation of, any
applicable law, except for failures to comply or violations that have not had
and would reasonably be expected not to have, individually or in the aggregate,
a Material Adverse Effect on the Company.
Section 4.14. Permits. The Company and each of its Subsidiaries is in
possession of all authorizations, licenses, permits, certificates,
registrations, approvals and clearances of any governmental authority, and has
made all filings, applications and registrations with any governmental authority
necessary for the Company and its Subsidiaries to own, lease and/or operate its
properties or other assets under local law (whether in the United States of
America or elsewhere), or to carry on its business in the manner as presently
conducted, including, the testing, manufacturing, storing, packaging, labeling
and distributing of any product of the Company or any of its Subsidiaries (the
"Company Permits"), and all such Company Permits are valid, and in full force
and effect, except where the failure to have, or the suspension or cancellation
of, or failure to be valid or in full force and effect of, any of the Company
Permits, or the failure to have made such filings, applications and/or
registrations, have not had and would reasonably be expected not to have,
individually or in the aggregate, a Material Adverse Effect on the Company.
Section 4.15. Litigation. There is no action, suit, investigation or
proceeding pending against, or, to the Knowledge of the Company, threatened
against or affecting, the Company, any of its Subsidiaries, any present or
former officer, director or employee of the Company or any of its Subsidiaries
or any other Person for whom the Company or any of such Subsidiary may be liable
or any of their respective properties before any court or arbitrator or before
or by any governmental body, agency or official, domestic, foreign or
supranational, that, if determined or resolved adversely in accordance with the
plaintiff's demands, would reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect on the Company, or that, as of the date
hereof, in any manner challenges or seeks to prevent, enjoin, alter or
materially delay the Merger or any of the other transactions contemplated
hereby.
Section 4.16. Company Material Contracts.
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(a) Except as disclosed in Section 4.16(a) of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries is a party to or bound
by:
(i) except for any acquisition agreement entered into after the date
hereof permitted by Section 6.01(b), any agreement for the purchase of
materials, supplies, goods, services, equipment or other assets (other than
freight orders or purchase orders) providing for either (a) annual payments
by the Company and its Subsidiaries of $500,000 or more or (b) aggregate
payments by the Company and its Subsidiaries of $1,000,000 or more;
(ii) any sales, distribution or other similar agreement providing for
the sale by the Company or any of its Subsidiaries of materials, supplies,
goods, services, equipment or other assets (other than freight orders or
purchase orders) that provides for either (a) annual payments to the
Company and its Subsidiaries of $500,000 or more or (b) aggregate payments
to the Company and its Subsidiaries of $1,000,000 or more;
(iii) any requirements contract that (a) the Company has budgeted or
reasonably anticipates aggregate purchases by the Company and its
Subsidiaries of $1,000,000 or more or (b) is applicable to the Company's
Affiliates other than the Company and its Subsidiaries;
(iv) any partnership, joint venture or other similar agreement or
arrangement;
(v) except any acquisition agreement entered into after the date
hereof permitted by Section 6.01(b), any agreement relating to the
acquisition or disposition of any business (whether by merger, sale of
stock, sale of assets or otherwise) entered into by the Company in the past
three years or, if entered into by the Company more than three years ago,
under which the Company or any of its Subsidiaries still has an outstanding
Liability;
(vi) any franchise or similar agreement;
(vii) any agency, dealer, sales representative, marketing or other
similar agreement;
(viii) any agreement with any Person to the Knowledge of the Company
directly or indirectly owning, controlling or holding with power to vote,
5% or more of the outstanding voting securities of the Company or any of
its Affiliates;
(ix) any agreement with any director or officer of the Company or any
of its Subsidiaries or with any "associate" or any member of the "immediate
family" (as such terms are respectively defined in Rules 12b-2 and 16a-1 of
the 1934 Act) of any such director or officer; or
(x) any other agreement, commitment, arrangement or plan not made in
the ordinary course of business that is material to the Company and its
Subsidiaries, taken as a whole.
(b) Each agreement, contract, plan, lease, arrangement or commitment
disclosed in any Schedule to this Agreement or required to be disclosed pursuant
to this Section is a valid and binding agreement of the Company or its
Subsidiary, as the case may be, and is in full force and effect, and none of the
Company, any of its Subsidiaries or, to the Knowledge of the Company, any other
party thereto is in default or breach in any material respect under the terms of
any such agreement, contract, plan, lease, arrangement or commitment, and, to
the Knowledge of the Company, no event or circumstance has occurred that, with
notice or lapse of time or both, would constitute any event of default
thereunder, except for defaults, breaches and events of default which,
individually and in the aggregate, would reasonably be
-17-
expected not to have a Material Adverse Effect on the Company. True and complete
copies of each such agreement, contract, plan, lease, arrangement or commitment
have been delivered to the Parent.
Section 4.17. Indebtedness. Except as set forth on Section 4.17 of the
Company Disclosure Schedule, neither the Company nor any of its Subsidiaries is
a party to or bound by any agreement relating to indebtedness for borrowed money
or the deferred purchase price of property (in either case, whether incurred,
assumed, guaranteed or secured by any asset).
Section 4.18. Non-Compete and Other Restrictions. Neither the Company nor
any of its Subsidiaries is a party to, or bound by, any agreement or arrangement
that (a) expressly limits or otherwise restricts the ability of the Company or
such Subsidiary to compete in, or conduct, any line of business or to compete
with any Person, in each case in any geographic area or during any period of
time, or (b) would materially restrict, after the Effective Time, the conduct of
the Company's or its Subsidiaries' business, taken as a whole, as presently
conducted.
Section 4.19. Property and Leases.
(a) The real property assets which are listed on Section 4.19 of the
Company Disclosure Schedule constitute all of the principal real property owned,
leased, subleased or used by the Company and its Subsidiaries. The Company has
made available to Parent true and complete copies of all the leases, including
any amendments thereto, any assignments thereof and all non-disturbance
agreements related thereto, with respect to the leased properties listed in
Section 4.19 of the Company Disclosure Schedule, and such documents are listed
in Section 4.19 of the Company Disclosure Schedule.
(b) The Company or one of its Subsidiaries has in the case of real property
owned in the United States insurable fee simple title to, in the case of real
property owned outside of the United States fee simple title to, or in the case
of leased property has valid leasehold interests in, all real property assets
listed on Section 4.19 of the Company Disclosure Schedule, and good title to all
other assets, in each case, reflected in the Company Balance Sheet or
represented to Parent as being owned by the Company or one of its Subsidiaries
or acquired after the date thereof, free and clear of all Liens of any nature
whatsoever other than Permitted Liens and, with respect to such real property
assets, Liens which would not materially and adversely effect the current use of
such real property assets.
(c) The Company or one of its Subsidiaries is in possession of all leased
real property listed in Section 4.19 of the Company Disclosure Schedule and,
with respect to such leased property and with respect to all other leased real
property of the Company or any of its Subsidiaries, (i) all leases of such real
property are in good standing and are valid, binding and enforceable in
accordance with their respective terms and (ii) there does not exist under any
such lease any default or any event which with notice or lapse of time or both
would constitute a default, except to the extent any unenforceability, default
or event, individually or in the aggregate, would reasonably be expected not to
have a Material Adverse Effect on the Company.
(d) The material plants, buildings, structures and equipment owned or
leased and currently used by the Company have been reasonably maintained
consistent with standards generally followed in the industry (giving due account
to the age and length of use of same, ordinary wear and tear excepted), are
adequate and suitable for their present and intended uses and, in the case of
plants, buildings and other structures (including the roofs thereof), are
structurally sound.
Section 4.20. Finders' Fees. Except for UBS Securities LLC, a copy of whose
engagement agreement has been provided to Parent, and the fees and expenses of
which will be paid by the Company on or prior to the Effective Time, there is no
investment banker, broker, finder or other inter-
-18-
mediary that has been retained by or is authorized to act on behalf of the
Company or any of its Subsidiaries who might be entitled to any fee or
commission from the Company or any of its Affiliates in connection with the
transactions contemplated by this Agreement.
Section 4.21. Opinion of Financial Advisor. The Board of Directors has
received the opinion of UBS Securities LLC, financial advisor to the Company, to
the effect that, as of the date of such opinion the Merger Consideration is fair
from a financial point of view to the holders of Shares (other than Affiliates
of the Company).
Section 4.22. Taxes.
(a) All material Tax Returns required by applicable law to be filed with
any Taxing Authority by, or on behalf of, the Company or any of its Subsidiaries
have been filed when due in accordance with all applicable laws, and all such
Tax Returns are, or will be at the time of filing, true and complete in all
material respects.
(b) The Company and each of its Subsidiaries has paid (or has had paid on
its behalf) or has withheld and remitted to the appropriate Taxing Authority all
material Taxes due and payable, and, where payment is not yet due, has
established (or has had established on its behalf and for its sole benefit and
recourse) in accordance with GAAP an adequate accrual for all Taxes.
(c) The income and franchise Tax Returns of the Company and its
Subsidiaries through the Tax year ended March 31, 2001 have been examined and
closed or are Tax Returns with respect to which the applicable period for
assessment under applicable law, after giving effect to extensions or waivers,
has expired.
(d) There is no claim, audit, action, suit, proceeding or investigation now
pending or, to the Knowledge of the Company, threatened against or with respect
to the Company or any of its Subsidiaries in respect of any Tax or Tax asset.
(e) During the five-year period ending on the date hereof, neither the
Company nor any of its Subsidiaries was a distributing corporation or a
controlled corporation in a transaction intended to be governed by Section 355
of the Code.
(f) As of the end of the Company's most recent fiscal year on March 31,
2004, the Company's unused net operating losses for U.S. federal income tax
purposes were not less than $189 million. No portion of such net operating
losses is subject to any limitation under Section 382 of the Code.
(g) "Tax" means (i) any tax, governmental fee or other like assessment or
charge of any kind whatsoever (including withholding on amounts paid to or by
any Person), together with any interest, penalty, addition to tax or additional
amount imposed by any governmental authority (a "Taxing Authority") responsible
for the imposition of any such tax (domestic or foreign), and any liability for
any of the foregoing as transferee, (ii) in the case of the Company or any of
its Subsidiaries, liability for the payment of any amount of the type described
in clause (i) as a result of being or having been before the Effective Time a
member of an affiliated, consolidated, combined or unitary group, or a party to
any agreement or arrangement, as a result of which liability of the Company or
any of its Subsidiaries to a Taxing Authority is determined or taken into
account with reference to the activities of any other Person, and (iii)
liability of the Company or any of its Subsidiaries for the payment of any
amount as a result of being party to any Tax Sharing Agreement (as defined
below) or with respect to the payment of any amount imposed on any person of the
type described in (i) or (ii) as a result of any existing express or implied
agreement or arrangement (including an indemnification agreement or
arrangement). "Tax Re-
-19-
turn" means any report, return, document, declaration or other information or
filing required to be supplied to any Taxing Authority with respect to Taxes,
including information returns, and any documents with respect to or accompanying
payments of estimated Taxes, or with respect to or accompanying requests for the
extension of time in which to file any such report, return, document,
declaration or other information. "Tax Sharing Agreements" means all existing
agreements or arrangements (whether or not written) binding the Company or any
of its Subsidiaries that provide for the allocation, apportionment, sharing or
assignment of any Tax liability or benefit, or the transfer or assignment of
income, revenues, receipts, or gains for the purpose of determining any Person's
Tax liability excluding any indemnification agreement or arrangement pertaining
to the sale or lease of assets or subsidiaries).
Section 4.23. Employee Benefit Plans. (a) Section 4.23(a) of the Company
Disclosure Schedule contains a correct and complete list identifying each
material Employee Plan (including, without limitation, each employment,
severance or other agreement with any executive officer or other key employees
of the Company or any of its Subsidiaries) or a summary thereof. Copies of such
plans or summaries (and, if applicable, related trust or funding agreements or
insurance policies) and all amendments thereto have been furnished to Parent
together with the most recent annual report (Form 5500 including, if applicable,
Schedule B thereto), if any, and tax return (Form 990), if any, prepared in
connection with each such plan or trust.
(b) Section 4.23(b) of the Company Disclosure Schedule lists the most
recent actuarial report for each Employee Plan subject to Title IV of ERISA
(other than a "multiemployer plan," as defined below) (a "Title IV Plan"), a
copy of which has been provided to Parent. To the Knowledge of the Company,
there has been no event which would reasonably be expected to result in a
material change in the funded status of any such Employee Plan since the date of
valuation reflected in such report. No "accumulated funding deficiency," as
defined in Section 412 of the Code, has been incurred with respect to any
Employee Plan subject to such Section 412, whether or not waived. No "reportable
event," within the meaning of Section 4043 of ERISA, other than a "reportable
event" that will not have, and would be reasonably expected not to have, a
Material Adverse Effect on the Company, and no event described in Section 4062
or 4063 of ERISA, has occurred in connection with any Title IV Plan. Neither the
Company nor any ERISA Affiliate of the Company has (i) engaged in, or is a
successor or parent corporation to an entity that has engaged in, a transaction
described in Sections 4069 or 4212(c) of ERISA or (ii) incurred, or reasonably
expects to incur prior to the Effective Time, (A) any liability under Title IV
of ERISA arising in connection with the termination of, or a complete or partial
withdrawal from, any plan covered or previously covered by Title IV of ERISA or
(B) any liability under Section 4971 of the Code that in either case could
become a liability of the Company or any of its Subsidiaries or Parent or any of
its ERISA Affiliates after the Effective Time.
(c) Neither the Company nor any ERISA Affiliate nor any predecessor thereof
contributes to, or has in the past contributed to, any multiemployer plan, as
defined in Section 3(37) of ERISA (a "Multiemployer Plan").
(d) Each Employee Plan that is intended to be qualified under Section
401(a) of the Code has received a favorable determination letter, or has pending
or has time remaining in which to file, an application for such determination
from the Internal Revenue Service, and the Company is not aware of any reason
why any such determination letter should be revoked or not be issued. The
Company has made available to Parent copies of the most recent Internal Revenue
Service determination letters with respect to each such Employee Plan. Each
Employee Plan has been maintained in material compliance with its terms and with
the requirements prescribed by any and all statutes, orders, rules and
regulations, including ERISA and the Code, which are applicable to such Employee
Plan. No material events have occurred with respect to any Employee Plan that
could result in payment or assessment by or against the
-20-
Company of any material excise taxes under Sections 4972, 4975, 4976, 4977,
4979, 4980B, 4980D, 4980E or 5000 of the Code.
(e) The consummation by the Company of the transactions contemplated by
this Agreement will not (either alone or together with any other event) entitle
any employee or independent contractor of the Company or any of its Subsidiaries
to severance pay or accelerate the time of payment or vesting or trigger any
payment or funding (through a grantor trust or otherwise) of compensation,
benefits, grants or awards under, increase the amount payable or trigger any
other material obligation pursuant to, any Employee Plan. There is no contract,
plan or arrangement (written or otherwise) covering any employee or former
employee of the Company or any of its Subsidiaries that, individually or
collectively, would entitle any employee or former employee to any severance or
other payment, benefit or accelerated vesting of any benefit, grant or award
contingent upon the transactions contemplated hereby which is reasonably
expected to give rise to the amounts that would not be deductible pursuant to
the terms of Section 280G of the Code.
(f) Neither the Company nor any of its Subsidiaries has any liability in
respect of post-retirement health, medical or life insurance benefits for
retired, former or current employees of the Company or its Subsidiaries except
as required to avoid excise tax under Section 4980B of the Code.
(g) There has been no amendment to, written interpretation or announcement
(whether or not written) by the Company or any of its Affiliates relating to, or
change in employee participation or coverage under, an Employee Plan which would
increase materially the expense of maintaining such Employee Plan above the
level of the expense incurred in respect thereof for the fiscal year ended March
31, 2004.
(h) Neither the Company nor any of its Subsidiaries is a party to or
subject to, or is currently negotiating in connection with entering into, any
collective bargaining agreement or other contract or understanding with a labor
union or organization.
(i) All contributions and payments accrued under each Employee Plan,
determined in accordance with prior funding and accrual practices, have been
discharged and paid on or prior to the date hereof except to the extent
reflected as a liability on the Company Balance Sheet.
(j) There is no action, suit, investigation, audit or proceeding pending
against or involving or, to the Knowledge of the Company, threatened against or
involving, any Employee Plan or Employee Plan administrator or fiduciary before
any court or arbitrator or any state, federal or local governmental body, agency
or official.
(k) Section 4.23(k) of the Company Disclosure Schedule contains a correct
and complete list identifying each material International Plan or a summary
thereof. Each International Plan has been maintained in substantial compliance
with its terms and with the requirements prescribed by any and all applicable
statutes, orders, rules and regulations (including any special provisions
relating to qualification or registration) and has been maintained in good
standing with applicable regulatory authorities. There has been no amendment to
or announcement (whether or not written) by the Company or any Subsidiary of any
amendment to any International Plan that is reasonably expected to increase
materially the expense of maintaining such International Plan above the level of
expense incurred in respect thereof for the most recent fiscal year ended prior
to the date hereof. With respect to the International Plans which provide for
payment of pension, severance, termination indemnity, retirement or other
post-retirement or post-employment benefits (collectively, "Post-Employment
Benefits"), the liabilities under all such International Plans (as determined in
accordance with U.S. GAAP using reasonable rates and assumptions) are accurately
reflected in the Company's financial statements for the fiscal year ended March
31, 2004
-21-
contained in the Company 10-K. To the Knowledge of the Company, there has been
no event which would reasonably be expected to result in a material change in
the funded status of any such International Plan since March 31, 2004, or, if an
actuarial report exists, the date of valuation reflected in each such report.
Assuming a termination as of the Effective Time of employment of all employees
of the Company working in Mexico, the costs and liabilities of the Company and
its Subsidiaries in respect of Post-Employment Benefits for all such employees
on and after such termination would not exceed $1,000,000. The consummation by
the Company of the transactions contemplated by this Agreement (either alone or
together with any other event) will not entitle any current or former employee,
director or independent contractor of the Company or any of its Subsidiaries to
severance pay or accelerate the time of payment or vesting or trigger any
payment or funding (through a grantor trust or otherwise) of compensation,
benefits, grants or awards under, increase the amount payable or trigger any
other material obligation pursuant to, any International Plan. No notice,
notification or other announcement is required to be given under any
International Plan to any current or former employee, director or independent
contractor of the Company or any of its Subsidiaries as a result of the
transactions contemplated by this Agreement (either alone or together with any
other event). From and after the Effective Time, Parent and its Affiliates will
get the full benefit of any funds, accruals or reserves under such International
Plans.
Section 4.24. Environmental Matters.
(a) Except as set forth in the Company SEC Documents filed prior to the
date hereof and except as would not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect on the Company:
(i) no notice, notification, demand, request for information,
citation, summons, complaint or order has been received, no penalty has
been assessed, and no action, claim, suit or proceeding is pending and none
of them and no investigation is, to the Knowledge of the Company,
threatened, by any governmental entity or other Person alleging liability
of the Company or any Subsidiary under, or violation by the Company or any
of its Subsidiaries of, any Environmental Law;
(ii) the Company and its Subsidiaries are in compliance with all
applicable Environmental Laws and all Environmental Permits; and
(iii) there are no events, conditions or activities that would
reasonably be expected to result in or be the basis for any liability of
the Company or any of its Subsidiaries under any Environmental Law.
(iv) Neither the Company nor any of its Subsidiaries is currently
conducting any response or other corrective action, including under or
pursuant to any voluntary action or third party claim, at any site under
any Environmental Law.
(b) There is no material written investigation, study, audit, test, or
other analysis conducted which is in the possession of the Company regarding the
current or prior business of the Company or any of its Subsidiaries or any
predecessor of the Company or any of its Subsidiaries or any property or
facility now or previously owned or leased by the Company or any of its
Subsidiaries addressing actual or potential liability of the Company or any
Subsidiary under, or any violation by the Company or any Subsidiary of, any
Environmental Law that has not been made available to Parent at least five
Business Days prior to the date hereof.
Section 4.25. Intellectual Property.
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(a) The Company and its Subsidiaries own or possess adequate licenses or
other rights to use all Intellectual Property Rights necessary to conduct the
business as currently conducted, except where the failure to own or possess such
licenses or rights has not had and would not be reasonably likely to have a
Material Adverse Effect on the Company. None of the Company or any of its
Subsidiaries has infringed, misappropriated or otherwise violated any
Intellectual Property Right of any other Person, except for such infringements,
misappropriations or violations that, individually or in the aggregate, would
not be reasonably likely to have a Material Adverse Effect on the Company. No
Person has infringed, misappropriated or otherwise violated any Intellectual
Property Right of the Company or any of its Subsidiaries, except for such
infringements, misappropriations or violations that, individually or in the
aggregate, would not be reasonably likely to have a Material Adverse Effect on
the Company.
(b) Section 4.25(b)(i) of the Company Disclosure Schedule contains a true
and complete list as of the date hereof of all patents and patent applications,
registered copyrights and copyright applications, registered trademarks and
trademark applications that is the subject of an application, certificate,
filing, registration or other document issued by, filed with, or recorded by,
any private, state, government or other public legal authority owned by or
registered to the Company or any of its Subsidiaries, specifying as to each such
Intellectual Property Right, as applicable, (i) the owner of such Intellectual
Property Right, (ii) the jurisdictions by or in which such Intellectual Property
Right has been issued or registered or in which an application for such issuance
or registration has been filed and (iii) the registration or application numbers
thereof. Section 4.25(b)(ii) of the Company Disclosure Schedule contains a true
and complete list of all material written agreements (including license
agreements, research agreements, development agreements, distribution
agreements, settlement agreements, consent to use agreements and covenants not
to sue, but excluding licenses for computer software that are generally
available) to which the Company or any of its Subsidiaries is a party or
otherwise bound and granting or restricting any right to use, exploit or
practice any Intellectual Property Rights.
Section 4.26. Antitakeover Statutes and Rights Agreement.
(a) The Company has taken all action necessary to exempt the Merger, this
Agreement and the Voting and Support Agreement and the transactions contemplated
hereby and thereby from the provisions of Section 203 of Delaware Law, and,
accordingly, no such Section nor other antitakeover or similar statute or
regulation applies or purports to apply to any such transactions. No other
"control share acquisition," "fair price," "moratorium" or other antitakeover
laws enacted under U.S. state or federal laws apply to this Agreement and the
Voting and Support Agreement or any of the transactions contemplated hereby and
thereby.
(b) The Company has taken all action necessary to render the rights issued
pursuant to the terms of the Rights Agreement inapplicable to the Merger, this
Agreement and the Voting and Support Agreement and the transactions contemplated
hereby and thereby.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to the Company that:
Section 5.01. Corporate Existence and Power. Each of Parent and Merger
Subsidiary is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has all
corporate powers and all governmental licenses, authorizations, permits,
consents and approvals required to carry on its business as now conducted,
except for those licenses, authorizations, permits, consents and approvals the
absence of which would not have, individually or in the ag-
-23-
gregate, a Material Adverse Effect on Parent. Since the date of its
incorporation, Merger Subsidiary has not engaged in any activities other than in
connection with or as contemplated by this Agreement, the Master Agreement or in
connection with arranging any financing required to consummate the transactions
contemplated hereby.
Section 5.02. Corporate Authorization. The execution, delivery and
performance by Parent and Merger Subsidiary of this Agreement and the
consummation by Parent and Merger Subsidiary of the transactions contemplated
hereby are within the corporate powers of Parent and Merger Subsidiary and have
been duly authorized by all necessary corporate action. This Agreement
constitutes a valid and binding agreement of each of Parent and Merger
Subsidiary.
Section 5.03. Governmental Authorization. The execution, delivery and
performance by Parent and Merger Subsidiary of this Agreement and the
consummation by Parent and Merger Subsidiary of the transactions contemplated
hereby require no action by or in respect of, or filing with, any governmental
body, agency, official or authority, domestic, foreign or supranational, other
than (a) the filing of a certificate of merger with respect to the Merger with
the Delaware Secretary of State and appropriate documents with the relevant
authorities of other states in which Parent is qualified to do business, (b)
compliance with any applicable requirements of the HSR Act and the applicable
requirements of laws, rules and regulations in Australia, Brazil, the European
Union, Mexico and Switzerland governing antitrust or merger control matters, (c)
compliance with any applicable requirements of the 1933 Act, the 1934 Act and
any other applicable securities or takeover laws and (d) any actions or filings
the absence of which would be reasonably expected not to have, individually or
in the aggregate, a Material Adverse Effect on Parent.
Section 5.04. Non-contravention. The execution, delivery and performance by
Parent and Merger Subsidiary of this Agreement and the consummation by Parent
and Merger Subsidiary of the transactions contemplated hereby do not and will
not (a) contravene, conflict with, or result in any violation or breach of any
provision of the certificate of incorporation or bylaws of Parent or Merger
Subsidiary, (b) assuming compliance with the matters referred to in Section
5.03, contravene, conflict with, or result in any violation or breach of any
provision of any law or (c) require any consent or other action by any Person
under, constitute a default, or an event that, with or without notice or lapse
of time or both, would become a default, under, or cause or permit the
termination, cancellation, acceleration or other change of any right or
obligation or the loss of any benefit to which Parent or Merger Subsidiary is
entitled under any provision of any agreement, lease or other instrument binding
upon Parent or Merger Subsidiary, except for such contraventions, conflicts,
violations and breaches referred to in clause (b) and for such failures to
obtain consent or other action, defaults, terminations, cancellations,
accelerations, changes or losses referred to in clause (c) that would be
reasonably expected not to have, individually or in the aggregate, a Material
Adverse Effect on Parent.
Section 5.05. Disclosure Documents. The information with respect to Parent
and any of its Subsidiaries that Parent furnishes to the Company in writing
specifically for use in any Company Disclosure Document will not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading (a) in the case of the Company Proxy
Statement, as supplemented or amended, if applicable, at the time such Company
Proxy Statement or any amendment or supplement thereto is first mailed to
stockholders of the Company and at the time such stockholders vote on adoption
of this Agreement and at the Effective Time, and (b) in the case of any Company
Disclosure Document other than the Company Proxy Statement, at the time of the
filing of such Company Disclosure Document or any supplement or amendment
thereto and at the time of any distribution or dissemination thereof.
-24-
Section 5.06. Finders' Fees. Except for Deutsche Bank Securities Inc.,
whose fees will be paid by Parent, there is no investment banker, broker, finder
or other intermediary that has been retained by or is authorized to act on
behalf of Parent who might be entitled to any fee or commission from the Company
or any of its Affiliates upon consummation of the transactions contemplated by
this Agreement.
Section 5.07. Financing; Contribution to Parent. (a) Parent has received
and furnished copies to the Company of a commitment letter (and related
documents and supplements) from Credit Suisse First Boston International and
Deutsche Bank AG London (the "Lead Banks") dated as of December 1, 2004, which
will be executed by a Subsidiary of Parent, pursuant to which the Lead Banks
have committed, subject to the terms and conditions thereof, to enter into a
credit agreement with Parent to provide financing (the "Commitment Letter") and
(b) Parent has furnished a copy to the Company of the English translation of the
Master Agreement (including relevant annexes) dated as of December 3, 2004
between Zeiss, EQT III and the other Persons name therein (the "Master
Agreement"), pursuant to which (x) EQT III (on behalf of certain funds managed
by it or other funds managed by EQT IV substituted for such funds at the sole
discretion of EQT III) and Zeiss have committed, subject to the terms and
conditions stated therein, to contribute to the equity capital of Parent and its
Subsidiaries in the manner set forth therein and (y) Zeiss has committed,
subject to the terms and conditions stated therein, to make a shareholder loan
to Parent in the amount set forth therein. The bank credit agreement referred to
in clause (a) above and the Master Agreement referred to in clause (b) above are
referred to herein as the "Financing Agreements," and the financing to be
provided thereunder or under any alternative arrangements made by Parent is
referred to herein as the "Financing." The aggregate proceeds of the Financing
shall be in an amount sufficient to acquire all the Shares in the Merger, to
effect all necessary refinancing of the Company's indebtedness and to pay all
related fees and expenses. As of the date hereof, Parent knows of no facts or
circumstances that are reasonably likely to result in any of the conditions set
forth in the Financing Agreements not being satisfied.
ARTICLE 6
COVENANTS OF THE COMPANY
The Company agrees that:
Section 6.01. Conduct of the Company. From the date hereof until the
Effective Time, the Company and its Subsidiaries shall conduct their business in
the ordinary course consistent with past practice and shall use their
commercially reasonable efforts to preserve intact their business organizations
and relationships with third parties and to keep available the services of their
present officers and employees. Without limiting the generality of the
foregoing, from the date hereof until the Effective Time:
(a) the Company shall not adopt or propose any change to its
certificate of incorporation or bylaws;
(b) except as provided on Section 6.01(b) of the Company Disclosure
Schedule, the Company shall not, and shall not permit any of its
Subsidiaries to, merge or consolidate with any other Person or acquire any
amount of stock or assets of another Person;
(c) the Company shall not, and shall not permit any of its
Subsidiaries to, sell, lease, license or otherwise dispose of any material
Subsidiary or any amount of assets, securities or property except the
disposal of immaterial assets and securities held for investment purposes
in the ordinary course of business consistent with past practice; and
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(d) the Company shall not, and shall not permit any of its
Subsidiaries to, agree or commit to do any of the foregoing.
Section 6.02. Stockholder Meeting; Proxy Material. The Company shall cause
a meeting of its stockholders (the "Company Stockholder Meeting") to be duly
called and held as soon as reasonably practicable for the purpose of voting on
the approval and adoption of this Agreement and the Merger. The Board of
Directors, subject to its fiduciary duties under applicable law and, if an
Acquisition Proposal is received, Section 6.04, shall recommend approval and
adoption of this Agreement and the Merger by the Company's stockholders. After
any public disclosure of an Acquisition Proposal having been received by the
Company or of a material development with respect to an Acquisition Proposal,
the Company agrees to publicly affirm the recommendation of the Board of
Directors within 3 Business Days of a written request by Parent. In connection
with such meeting, the Company shall (a) promptly prepare and file with the SEC
(in no event later than 15 Business Days of the date hereof), shall use its
commercially reasonable efforts to have cleared by the SEC and shall thereafter
mail to its stockholders as promptly as practicable the Company Proxy Statement
and all other proxy materials for such meeting (and any other Company Disclosure
Document required by the 1934 Act), (b) use its commercially reasonable efforts
to obtain the necessary approvals by its stockholders of this Agreement and the
transactions contemplated hereby and (c) otherwise comply with all legal
requirements applicable to such meeting; provided that such proxy materials may
include a statement that the Board of Directors has withdrawn or modified in a
manner adverse to Parent its recommendation for approval and adoption of this
Agreement and the Merger by the Company's stockholders if the Board of Directors
has done so in compliance with Sections 6.02 and 6.04. The Company has been
advised that all of its directors and executive officers who own Shares have
agreed to vote in favor of the Merger. Except as otherwise specifically
indicated in this Section, the Company's obligations under this Section shall
not be limited in any respect as a result of the occurrence of any of the events
described in Section 6.04(b).
Section 6.03. Access to Information. From the date hereof until the
Effective Time and subject to applicable law, the Company shall (a) give Parent,
Zeiss, EQT and their counsel, financial advisors, auditors and lenders
reasonable access during normal business hours to the offices, properties, books
and records of the Company and the Subsidiaries (not including access to perform
physical examinations or to take samples of the soil, groundwater, air, products
or other areas as desired by Parent in its sole discretion), (b) furnish to
Parent, Zeiss, EQT, and its and their counsel, financial advisors and auditors
such financial and operating data and other information as such Persons may
reasonably request and (c) instruct the employees, counsel, financial advisors,
auditors and other authorized representatives of the Company and its
Subsidiaries to cooperate with Parent, Zeiss and EQT in their investigation of
the Company and its Subsidiaries. Any investigation pursuant to this Section
shall be conducted in such manner as not to interfere with the conduct of the
business of the Company and its Subsidiaries. No information or knowledge
obtained by Parent, Zeiss, EQT or their Affiliates in any investigation pursuant
to this Section shall affect or be deemed to modify any representation or
warranty made by the Company hereunder. Parent, Zeiss, EQT and its and their
Affiliates shall, and shall cause its and their respective counsel, financial
advisors, auditors, lenders and other authorized representatives, to hold any
such information obtained pursuant to this Section 6.03 in confidence in
accordance with and subject to the provisions of the Confidentiality Agreement.
Section 6.04. No Solicitation; Other Offers.
(a) Neither the Company nor any of its Subsidiaries shall, nor shall the
Company or any of its Subsidiaries authorize or permit any of its or their
officers, directors, employees, investment bankers, attorneys, accountants,
consultants or other agents or advisors to, directly or indirectly, (i) solicit,
initiate or take any action to facilitate or encourage the submission of any
Acquisition Proposal, (ii) enter into or participate in any discussions or
negotiations with, furnish any information relating to the Com-
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pany or any of its Subsidiaries or afford access to the business, properties,
assets, books or records of the Company or any of its Subsidiaries to, otherwise
cooperate in any way with, or knowingly assist, participate in, facilitate or
encourage any effort by any Third Party that is seeking to make, or has made, an
Acquisition Proposal, (iii) grant any waiver or release under any standstill or
similar agreement with respect to any class of equity securities of the Company
or any of its Subsidiaries, (iv) amend or grant any waiver or release or approve
any transactions or redeem Rights under the Rights Agreement (except as
contemplated herein with respect to the Merger) or (v) enter into any agreement
with respect to an Acquisition Proposal other than a confidentiality agreement
as permitted by Section 6.04(b).
(b) Notwithstanding the foregoing, but subject to the provisions of Section
6.04(c), the Board of Directors, directly or indirectly through advisors, agents
or other intermediaries, at any time prior to the adoption and approval of the
Merger by the Company's stockholders, may (i) engage in negotiations or
discussions with any Third Party that, subject to the Company's compliance with
Section 6.04(a), has made a bona fide written Acquisition Proposal that the
Board of Directors determines in good faith by a majority vote constitutes or is
reasonably expected to result in a Superior Proposal, (ii) furnish to such Third
Party and its auditors, advisors and lenders nonpublic information relating to,
and afford such Third Party access to, the business properties, assets, books
and records of, the Company or any of its Subsidiaries pursuant to a
confidentiality agreement with terms no less favorable to the Company than those
contained in the Confidentiality Agreement including the standstill and no hire
provisions in the Confidentiality Agreement (a copy of which shall be provided
for informational purposes only to Parent), (iii) following receipt of such
Superior Proposal, fail to make, withdraw, or modify in a manner adverse to
Parent its recommendation to its stockholders referred to in Section 6.02 hereof
and/or (iv) take any action that any court of competent jurisdiction orders the
Company to take, but in each case referred to in the foregoing clauses (i)
through (iii) only if the Board of Directors determines in good faith by a
majority vote, after considering the advice from the outside legal counsel to
the Company, that it should take such action to comply with its fiduciary duties
under applicable law. Nothing contained herein shall prevent the Board of
Directors from complying with Rule 14e-2(a) under the 1934 Act with regard to an
Acquisition Proposal; provided that if such disclosure has the effect of
withdrawing, modifying or qualifying the recommendation to the Company's
stockholders referred to in Section 6.02 hereof in a manner adverse to Parent,
Merger Subsidiary or the approval of this Agreement by the Board of Directors of
the Company, Parent shall have the right to terminate this Agreement to the
extent set forth in Section 10.01(c) of this Agreement. For the avoidance of
doubt, for all purposes under this Agreement, including Article 10, any
disclosure by the Board of Directors of the status of any Acquisition Proposal
(without comment on the merits thereof) shall not be considered a failure to
make, withdrawal or modification adverse to Parent or Merger Subsidiary of its
recommendation of approval of this Agreement and the Merger by the Company's
stockholders.
(c) The Board of Directors shall not take any of the actions referred to in
clauses (i) through (iii) of the preceding subsection unless the Company shall
have delivered to Parent a prior written notice advising Parent that it intends
to take such action. In addition, the Company shall notify Parent promptly (but
in no event later than 24 hours) after receipt by the Company of any Acquisition
Proposal or any request for information relating to the Company or any of its
Subsidiaries or for access to the business, properties, assets, books or records
of the Company or any of its Subsidiaries by any Third Party that may be
considering making an Acquisition Proposal. The Company shall provide such
notice orally and in writing and shall provide Parent with copies of any written
Acquisition Proposal. The Company shall provide to Parent any information
provided to such Third Party. The Company shall promptly inform Parent of any
material developments with respect to any such Acquisition Proposal, indication
or request. The Company shall, and shall cause its Subsidiaries and the
advisors, employees and other agents of the Company and any of its Subsidiaries
to, cease immediately and cause to be terminated any and all existing
activities, discussions and negotiations, if any, with any Third Party conducted
prior to the date hereof with respect to any Acquisition Proposal and shall use
its commercially reasonable efforts to
-27-
cause any such Third Party (or its agents or advisors) in possession of
confidential information about the Company that was furnished by or on behalf of
the Company to return or destroy all such information.
"Superior Proposal" means any bona fide, written Acquisition Proposal made
in compliance with the terms of this Agreement for at least a majority of the
outstanding Shares or all or substantially all of the assets of the Company and
its Subsidiaries, taken as a whole, which is reasonably capable of being
consummated on the terms proposed, and which the Board of Directors determines
in good faith by a majority vote, after consultation with outside legal counsel
and a financial advisor of nationally recognized reputation and taking into
account all the terms and conditions of the Acquisition Proposal (including any
break-up fees, expense reimbursement provisions and conditions to consummation
and such other facts as the Board of Directors deems in good faith are
appropriate) is more favorable and provides greater value to all the Company's
stockholders than as provided hereunder and for which financing, to the extent
required, is then fully committed and subject to no conditions other than those
set forth in the Commitment Letter (whether by including new conditions or
conditions similar to the Commitment Letter in a manner that makes such
commitment more conditional).
Section 6.05. Notices of Certain Events. The Company shall promptly notify
Parent 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;
(b) any notice or other communication from any governmental or regulatory
agency or authority in connection with the transactions contemplated by this
Agreement; and
(c) any actions, suits, claims, investigations or proceedings commenced or,
to its Knowledge, threatened against, relating to or involving or otherwise
affecting the Company or any of its Subsidiaries that, if pending on the date of
this Agreement, would have been required to have been disclosed pursuant to
Sections 4.13, 4.15, 4.24 or 4.25, as the case may be, or that relate to the
consummation of the transactions contemplated by this Agreement.
Section 6.06. Financing Cooperation. The Company agrees to provide, and
shall cause its Subsidiaries and their officers, directors, employees,
accountants, auditors, consultants, legal counsel, financing sources, agents and
other representatives to provide, all reasonable cooperation in connection with
the arrangement by Parent of the Financing, the consummation of the financing
and the refinancing of the Company's indebtedness, including (a) participation
in meetings, drafting sessions, due diligence sessions, management presentation
sessions, road shows and sessions with rating agencies; (b) preparation of
business projections, financial statements, offering and/or information
memoranda, private placement memoranda, prospectuses and similar documents and
(c) execution and delivery of any commitment letters, underwriting or placement
agreements, pledge and security documents, intercreditor arrangements,
definitive financing documents, instruments of discharge or release, notices, or
other requested certificates or documents, including a certificate of the chief
financial officer of the Company with respect to solvency matters, comfort
letters of accountants and consents of accountants for use of their reports in
any materials relating to the Financing; provided that the Financing may not
require the payment of any commitment or other similar fee or impose any other
liability on the Company prior to the Effective Time.
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ARTICLE 7
COVENANTS OF PARENT
Parent agrees that:
Section 7.01. Obligations of Merger Subsidiary. Parent shall, and shall
cause Merger Subsidiary to, take all action necessary to perform its obligations
under this Agreement and to consummate the Merger on the terms and conditions
set forth in this Agreement.
Section 7.02. Director and Officer Liability. Parent shall cause the
Surviving Corporation, and the Surviving Corporation hereby agrees, to do the
following:
(a) For six years after the Effective Time, Parent and the Surviving
Corporation shall jointly and severally indemnify and hold harmless the
present and former officers and directors of the Company (each an
"Indemnified Person") in respect of acts or omissions, or alleged acts or
omissions, occurring at or prior to the Effective Time to the fullest
extent permitted by Delaware Law or any other applicable laws or provided
under the Company's certificate of incorporation and bylaws in effect on
the date hereof; provided that such indemnification shall be subject to any
limitation imposed from time to time under applicable law.
(b) For six years after the Effective Time, the Surviving Corporation
shall provide officers' and directors' liability insurance in respect of
acts or omissions occurring prior to the Effective Time covering each such
Indemnified Person currently covered by the Company's officers' and
directors' liability insurance policy on terms with respect to coverage and
amount no less favorable than those of such policy in effect on the date
hereof; provided that, in satisfying its obligation under this Section
7.02, the Surviving Corporation shall not be obligated to pay premiums in
excess of 250% of the amount per annum the Company paid in its last full
fiscal year, which amount the Company has disclosed to Parent prior to the
date hereof (such 250% amount, the "Maximum Annual Premium"); provided
further, that if the annual premiums of such insurance coverage exceed such
amount, the Surviving Corporation shall be obligated to obtain a policy
with the greatest coverage available for the cost not exceeding the Maximum
Annual Premium. In lieu of the foregoing, the Company may purchase, prior
to the Effective Time, a six year "tail" prepaid officers' and directors'
liability insurance policy in respect of acts or omissions occurring prior
to the Effective Time covering each such Indemnified Person currently
covered by the Company's officers' and directors' liability insurance
policy; provided that the premium and terms of such insurance are
reasonably acceptable to Parent (it being understood that a policy with a
premium not in excess of the Maximum Annual Premium shall be deemed to be
reasonably acceptable to Parent).
(c) If Parent, the Surviving Corporation or any of its successors or
assigns (i) consolidates with or merges into any other Person and shall not
be the continuing or surviving corporation or entity of such consolidation
or merger, or (ii) transfers or conveys all or substantially all of its
properties and assets to any Person, then, and in each such case, to the
extent necessary, 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 7.02.
(d) The rights of each Indemnified Person under this Section 7.02
shall be in addition to any rights such Person may have under the
certificate of incorporation or bylaws of the Company or any of its
Subsidiaries, under Delaware Law or any other applicable laws or under any
agreement of any Indemnified Person with the Company or any of its
Subsidiaries. These rights
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shall survive consummation of the Merger and are intended to benefit, and
shall be enforceable by, each Indemnified Person.
Section 7.03. Financing. Parent shall use its commercially reasonable
efforts to obtain and effectuate the Financing, including using commercially
reasonable efforts to (a) negotiate definitive agreements with respect thereto
on terms and conditions contained therein and (b) to satisfy all conditions
applicable to Parent and Merger Subsidiary in such definitive agreements that
are within its control. In the event any portion of the Financing becomes
unavailable on the terms and conditions contemplated in the Commitment Letter
(including any "flex" provisions in any fee letter or otherwise), Parent shall
use its commercially reasonable efforts to arrange to obtain any such portion
from alternative sources at rates and on terms and conditions to Parent that are
not, in the reasonable judgment of Parent, materially less favorable, when taken
as a whole, to Parent than set forth in the Commitment Letter (including any
"flex" provisions in any fee letter or otherwise) and related documentation.
Parent shall give the Company prompt notice of any material breach by any party
of the Commitment Letter or any termination of the Commitment Letter. Parent
shall keep the Company informed on a reasonably current basis in reasonable
detail of the status of its efforts to arrange the Financing and shall not
permit any material amendment or modification to be made to, or any waiver of
any material provision or remedy under, the Commitment Letter without first
consulting the Company.
Section 7.04. Access to Employees. Parent agrees that it and its Affiliates
after the date hereof and prior to the Effective Time shall not contact any
employee of the Company regarding his or her employment with the Surviving
Corporation after the Effective Time without the prior approval of the Company's
chief executive officer, which shall not be unreasonably withheld.
Notwithstanding the foregoing, the Company agrees that it will cooperate with
the Parent with respect to planning for Surviving Corporation's business after
the Effective Time, including cooperating with a post-transition integration
committee; provided that such planning does not interfere with the conduct of
the business of the Company and its Subsidiaries.
ARTICLE 8
COVENANTS OF PARENT AND THE COMPANY
The parties hereto agree that:
Section 8.01. Commercially Reasonable Efforts.
(a) Subject to the terms and conditions of this Agreement, the Company and
Parent shall use their commercially reasonable efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary, proper
or advisable under applicable laws to consummate the transactions contemplated
by this Agreement, including (i) preparing and filing as promptly as practicable
with any governmental authority or other third party all documentation to effect
all necessary filings, notices, petitions, statements, registrations,
submissions of information, applications and other documents and (ii) obtaining
and maintaining all approvals, consents, registrations, permits, authorizations
and other confirmations required to be obtained from any governmental authority
or other third party that are necessary, proper or advisable to consummate the
transactions contemplated by this Agreement; provided that Parent shall not be
obligated to (x) agree to (i) any restraint or prohibition on Parent's ownership
or operation (or that of its Affiliates) of all or any material portion of the
business or assets of the Company and its Subsidiaries, taken as a whole, or of
Parent and its Subsidiaries, taken as a whole, (ii) any disposal by Parent or
any of its Affiliates of or requirement to hold separate all or any material
portion of the business or assets of the Company and its Subsidiaries, taken as
a whole, or of Parent and its Subsidiaries, taken as a whole, (iii) any material
limitations on the ability of Parent, Merger Subsidiary or any of Parent's other
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Affiliates effectively to exercise full rights of ownership of the Shares,
including the right to vote any Shares acquired or owned by Parent, Merger
Subsidiary or any of Parent's other Affiliates on all matters properly presented
to the Company's stockholders, (iv) any divestiture by Parent, Merger Subsidiary
or any of Parent's other Affiliates of any Shares or (v) any other material
restrictions on the conduct of the business of Parent or any of its Affiliates
after the Effective Time (it being understood that any reference to the business
or assets of Parent or its Affiliates in clauses (i) through (v) shall include
the business and assets contributed pursuant to the Master Agreement) or (y)
undertake any litigation as a result of a decision by a governmental authority.
(b) In furtherance and not in limitation of the foregoing, each of Parent
(or, in lieu of Parent, the applicable Affiliate of Parent) and the Company
shall make an appropriate filing of a Notification and Report Form pursuant to
the HSR Act with respect to the transactions contemplated hereby as promptly as
practicable and in any event within 10 Business Days of the date hereof and to
supply as promptly as practicable any additional information and documentary
material that may be requested pursuant to the HSR Act and to take all other
actions necessary to cause the expiration or termination of the applicable
waiting periods under the HSR Act as soon as practicable.
Section 8.02. Certain Filings.
(a) The Company and Parent shall cooperate with one another (i) in
connection with the preparation of the Company Disclosure Documents, (ii) in
determining whether any action by or in respect of, or filing with, any
governmental body, agency, official, or authority is required, or any actions,
consents, approvals or waivers are required to be obtained from parties to any
material contracts, agreements, leases or other instruments, in connection with
the consummation of the transactions contemplated by this Agreement and (iii) in
taking such actions or making any such filings, furnishing information required
in connection therewith or with the Company Disclosure Documents and seeking
timely to obtain any such actions, consents, approvals or waivers.
(b) Parent and its counsel shall be given reasonable opportunity to review
and comment on the Company Disclosure Documents before any such document (or any
amendment thereto) is filed with the SEC, and reasonable and good faith
consideration shall be given to any comments made by such party and its counsel.
The Company shall provide Parent and its counsel with (i) any comments or other
communications, whether written or oral, that the Company or its counsel may
receive from time to time from the SEC or its staff with respect to any Company
Disclosure Document promptly after receipt of those comments or other
communications and (ii) a reasonable opportunity to participate in the response
to those comments and to provide comments on that response (to which reasonable
and good faith consideration shall be given), including by participating in any
discussions or meetings with the SEC.
Section 8.03. Public Announcements. Parent and the Company shall consult
with each other before issuing any press release or making any other public
statement, or scheduling any press conference or conference call with investors
or analysts, with respect to this Agreement or the transactions contemplated
hereby.
Section 8.04. Further Assurances. At and after the Effective Time, the
officers and directors of the Surviving Corporation shall be authorized to
execute and deliver, in the name and on behalf of the Company or Merger
Subsidiary, any deeds, bills of sale, assignments or assurances and to take and
do, in the name and on behalf of the Company or Merger Subsidiary, any other
actions and things to vest, perfect or confirm of record or otherwise in the
Surviving Corporation any and all right, title and interest in, to and under any
of the rights, properties or assets of the Company acquired or to be acquired by
the Surviving Corporation as a result of, or in connection with, the Merger.
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Section 8.05. Benefits Continuation; Severance.
(a) For not less than twelve months following the Effective Time, Parent
and the Surviving Corporation shall provide, or shall cause their Subsidiaries
to provide, benefits that are no less favorable in the aggregate than as
provided under Employee Plans or International Plans as in effect on the date
hereof applicable to such employee, for each employee of the Company and its
Subsidiaries as of the Effective Time ("Affected Employees"). Parent and the
Surviving Corporation shall comply with the terms of all the Employee Plans and
International Plans between the Company and its Subsidiaries and Affected
Employees or former employees of the Company and its Subsidiaries, subject to
any reserved right to amend or terminate any such Employee Plan or International
Plan; provided that no such amendment or termination may be inconsistent with
Parent's and the Surviving Corporation's obligations pursuant to the first
sentence of this Section 8.05. Without limiting the generality of the foregoing,
Parent and the Surviving Corporation agree to honor all obligations for
severance pay and other severance benefits to Affected Employees according to
the terms of the Employee Plan providing such pay and benefits, subject to any
reserved right to amend or terminate any Employee Plan; provided that no such
amendment or termination may be inconsistent with Parent's or the Surviving
Corporation's obligations pursuant to the first sentence of this Section 8.05.
Parent and the Surviving Corporation shall honor all vacation, holiday, sickness
and personal days accrued by Affected Employees.
(b) Employees shall be given credit for all service with the Company and
its Subsidiaries (or service credited by the Company or its Subsidiaries) under
all employee benefit plans and arrangements currently maintained or established
in the future by Parent or any of its Subsidiaries in which they are or become
participants for purposes of participation eligibility and vesting to the same
extent as if rendered to Parent or any of its Subsidiaries. The Surviving
Corporation and its Subsidiaries shall waive or cause to be waived any
preexisting condition limitation applicable to an Affected Employee other than
any limitation already in effect with respect to such Affected Employee that has
not been satisfied as of the Effective Time under the similar Employee Plan or
International Plan. The Surviving Corporation and its Subsidiaries agree to
recognize (or cause to be recognized) the dollar amount of all expenses incurred
by Affected Employees during the calendar year in which the Effective Time
occurs for purposes of satisfying the calendar year deductibles and co-payment
limitations for such year under the relevant benefit plans of the Surviving
Corporation and its Subsidiaries.
(c) Without limiting Section 11.05(a), no provision in this Section 8.05
shall be deemed to constitute an employment contract between the Surviving
Corporation and any individual, or a waiver of the Surviving Corporation's right
to discharge any employee at any time, with or without cause.
ARTICLE 9
CONDITIONS TO THE MERGER
Section 9.01. Conditions to Obligations of Each Party. The obligations of
the Company, Parent and Merger Subsidiary to consummate the Merger are subject
to the satisfaction of the following conditions:
(a) this Agreement shall have been approved and adopted by the
stockholders of the Company in accordance with Delaware Law;
(b) no provision of any applicable law and no judgment, injunction,
order or decree shall prohibit the consummation of the Merger;
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(c) all applicable waiting periods have expired or been terminated
under applicable antitrust statutes of, and all necessary consents and
approvals have been received from the relevant competition authorities of,
Australia, the European Union and Switzerland relating to the transactions
contemplated by this Agreement and the Master Agreement; and
(d) any applicable waiting periods under the HSR Act relating to the
transactions contemplated by this Agreement and the Master Agreement shall
have expired or been terminated.
Section 9.02. Conditions to the Obligations of Parent and Merger
Subsidiary. The obligations of Parent and Merger Subsidiary to consummate the
Merger are subject to the satisfaction of the following further conditions:
(a) (i) the Company shall have performed in all material respects all
of its obligations hereunder required to be performed by it at or prior to
the Effective Time, (ii) the representations and warranties of the Company
contained in this Agreement and in any certificate or other writing
delivered by the Company pursuant hereto (A) that are qualified by
materiality or Material Adverse Effect shall be true at and as of the
Effective Time as if made at and as of such time (except that those
representations and warranties which address matters only as of a
particular date need only be true and correct as of such date) and (B) that
are not qualified by materiality or Material Adverse Effect shall be true
in all material respects at and as of the Effective Time as if made at and
as of such time (except that those representations and warranties that are
not qualified by materiality or Material Adverse Effect which address
matters only as of a particular date need only be true and correct in all
material respects as of such date) and (iii) Parent shall have received a
certificate signed by the Chief Executive Officer or Chief Financial
Officer of the Company to the foregoing effect;
(b) there shall not have been instituted or pending any action or
proceeding (or any investigation or other inquiry that might result in such
action or proceeding) by any government or governmental authority or
agency, domestic, foreign or supranational, before any court or
governmental authority or agency, domestic, foreign or supranational, (i)
challenging or seeking to make illegal, to delay materially or otherwise
directly or indirectly to restrain or prohibit the consummation of the
Merger or seeking to obtain material damages and (ii) seeking to restrain
or prohibit Parent's ownership or operation (or that of its Subsidiaries or
Affiliates) of all or any material portion of the business or assets of the
Company and its Subsidiaries, taken as a whole, or of Parent and its
Subsidiaries, taken as a whole, or to compel Parent or any of its
Subsidiaries or Affiliates to dispose of or hold separate all or any
material portion of the business or assets of the Company and its
Subsidiaries, taken as a whole, or of Parent and its Subsidiaries, taken as
a whole, which, in the case of clause (ii) only, have had or would
reasonably be expected to have a Material Adverse Effect on the Company;
(c) no action shall have been taken, and no law, statute, rule,
regulation, injunction, order or decree shall have been proposed, enacted,
enforced, promulgated, issued or deemed applicable to the Merger, by any
court, government or governmental authority or agency, domestic, foreign or
supranational, other than the application of the waiting period provisions
of the HSR Act and the applicable antitrust or merger control statutes of
Australia, the European Union and Switzerland, to the transactions
contemplated by this Agreement and the Master Agreement, that, in the
judgment of Parent, is likely, directly or indirectly, to result in any of
the consequences referred to in clauses (i) and (ii) of paragraph (b)
above;
(d) the Company shall have obtained the consent or approval to the
transactions contemplated hereby of each Person set forth in Section
9.02(d) of the Company Disclosure Schedule;
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(e) the holders of not more than 10% of the total outstanding Shares
shall have demanded appraisal of their Shares in accordance with Delaware
Law; and
(f) the lenders under the Commitment Letter (or in the commitment
letter related to any alternative financing) shall be ready and willing to
fund the amounts contemplated by the Commitment Letter on the terms set
forth therein (or in the commitment letters related to any alternative
financing) (including, in each case "flex" provisions in any fee letter or
otherwise) sufficient to consummate the Merger, refinance the debt of the
Company and its Subsidiaries and pay related fees and expenses.
Section 9.03. Conditions to the Obligations of the Company. The obligations
of the Company to consummate the Merger are subject to the satisfaction of the
following further conditions: (a) each of Parent and Merger Subsidiary shall
have performed in all material respects all of its obligations hereunder
required to be performed by it at or prior to the Effective Time and (b) the
representations and warranties of Parent contained in this Agreement and in any
certificate or other writing delivered by Parent pursuant hereto shall be true
in all material respects at and as of the Effective Time as if made at and as of
such time and the Company shall have received a certificate signed by an officer
of Parent to the foregoing effect.
ARTICLE 10
TERMINATION
Section 10.01. Termination. This Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Time (notwithstanding any
approval of this Agreement by the stockholders of the Company):
(a) by mutual written agreement of the Company and Parent;
(b) by either the Company or Parent, if:
(i) the Merger has not been consummated on or before April 30,
2005; provided that the right to terminate this Agreement pursuant to
this Section 10.01(b)(i) shall not be available to any party whose
breach of any provision of this Agreement results in the failure of
the Merger to be consummated by such time;
(ii) (A) there shall be any law that makes consummation of the
Merger illegal or otherwise prohibited or (B) any judgment,
injunction, order or decree of any court or governmental body having
competent jurisdiction enjoining the Company or Parent from
consummating the Merger is entered and such judgment, injunction,
order or decree shall have become final and nonappealable;
(iii) this Agreement shall not have been approved and adopted in
accordance with Delaware Law by the Company's stockholders at the
Company Stockholder Meeting (or any adjournment thereof).
(c) by Parent if:
(i) at any time prior to the adoption and approval of this
Agreement by the Company's Stockholders, the Board of Directors shall
(A) have failed to make, withdrawn, or modified in a manner adverse to
Parent, its approval or recommendation of this
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Agreement or the Merger, as permitted by Section 6.04(b) or (B)
approved, recommended or endorsed any Acquisition Proposal; or
(ii) the Company shall have breached its obligations under
Section 6.02 or 6.04, or, after receipt of an Acquisition Proposal,
shall have breached any of its obligations under this Agreement; or
(d) by the Company, if, at any time prior to the adoption of this
Agreement by the Company's stockholders, the Board of Directors determines
by a majority vote to enter into a binding written agreement concerning a
transaction that constitutes a Superior Proposal; provided that the Company
(A) has not willfully and materially breached its obligations under Section
6.02 or 6.04 and (B) shall have paid any amounts due pursuant to Section
11.04(b) and provided, further, that (i) the Company notifies Parent, in
writing and at least 3 Business Days prior to such termination, of its
intention to terminate this Agreement, attaching the terms and conditions
of such Superior Proposal and the most current versions of any related
agreements, and notifies and provides Parent a copy of any revision of such
Superior Proposal and (ii) Parent does not make, within 3 Business Days of
receipt of such written notification (or in the case of notification of a
revised Superior Proposal, 3 Business Days from the receipt of such revised
Superior Proposal), an offer that the Board of Directors determines in good
faith, after consultation with its financial advisors, is at least as
favorable to the stockholders as such Superior Proposal. The Company agrees
to notify Parent promptly if its intention to enter into such agreement
shall change at any time after giving such notification.
The party desiring to terminate this Agreement pursuant to this Section
10.01 (other than pursuant to Section 10.01(a)) shall give notice of such
termination to the other party.
Section 10.02. Effect of Termination. If this Agreement is terminated
pursuant to Section 10.01, this Agreement shall become void and of no effect
with no liability on the part of any party, Zeiss or EQT (or any stockholder,
director, officer, employee, agent, consultant or representative of such party,
Zeiss or EQT) to the other party hereto; provided that, except as provided in
Section 11.04(f), if such termination shall result from the willful failure of
either party to perform a covenant hereof, such party shall be fully liable for
any and all liabilities and damages incurred or suffered by the other party as a
result of such failure. The provisions of this Section 10.02 and Sections 11.04
through 11.10 shall survive any termination hereof pursuant to Section 10.01.
ARTICLE 11
MISCELLANEOUS
Section 11.01. Notices. All notices, requests and other communications to
any party hereunder shall be in writing (including facsimile transmission and
electronic mail ("e-mail") transmission, so long as a receipt of such e-mail is
requested and received) and shall be given,
if to Parent or Merger Subsidiary, to:
Carl Zeiss TopCo GmbH
Turnstrasse 27
73430 Aalen
Attention: Dr. Christian Muller
Facsimile No.: +49 7364 208395
E-mail: ch.mueller@zeiss.de
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with copies to:
Carl Zeiss AG
Carl-Zeiss-Straae 22
D-73447 Oberkochen
Attention: Ulrich Hoffmann
Facsimile No.: +49 7364 203911
E-mail: hoffmann@zeiss.de
EQT III Limited
East Wing, Trafalgar Park
St. Peter Port, Guernsey GY1 6HJ,
Channel Island
Attention: David Jeffreys
Facsimile No.: +44 1481 715602
E-mail: david@mailjeffreys.com
and
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: Phillip Mills
Facsimile No.: (212) 450 3800
E-mail: phillip.mills@dpw.com
if to the Company, to:
SOLA International Inc.
Torrey View Corporate Center
10590 West Ocean Air Drive
San Diego, CA 92130
Attention: Jeremy Bishop
Facsimile No.: (858) 314 0340
E-mail: jbishop@solaintl.com
with a copy to:
Cahill Gordon & Reindel LLP
80 Pine Street
New York, New York 10005
Attention: W. Leslie Duffy
Facsimile No.: (212) 378-2173
E-mail: wduffy@cahill.com
or to such other address or facsimile number as such party may hereafter specify
for the purpose by notice to the other parties hereto. All such notices,
requests and other communications shall be deemed received on the date of
receipt by the recipient thereof if received prior to 5 p.m. on a Business Day
in the place of receipt. Otherwise, any such notice, request or communication
shall be deemed not to have been received on the next succeeding Business Day in
the place of receipt.
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Section 11.02. Survival of Representations and Warranties. The
representations, warranties and agreements contained herein and in any
certificate or other writing delivered pursuant hereto shall not survive the
Effective Time, except for the agreements set forth in Sections 7.02, 8.04 and
11.05 through 11.10.
Section 11.03. Amendments and Waivers.
(a) Any provision of this Agreement may be amended or waived prior to the
Effective Time if, but only if, such amendment or waiver is in writing and is
signed, in the case of an amendment, by each party to this Agreement or, in the
case of a waiver, by each party against whom the waiver is to be effective;
provided that, after the adoption of this Agreement by the stockholders of the
Company and without their further approval, no such amendment or waiver shall
reduce the amount or change the kind of consideration to be received in exchange
for the Shares.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
Section 11.04. Expenses.
(a) Except as otherwise provided herein, all costs and expenses incurred in
connection with this Agreement shall be paid by the party incurring such cost or
expense.
(b) If a Payment Event occurs, the Company shall pay to Parent (by wire
transfer of immediately available funds), within five Business Days following
the first Payment Event a fee of $22,200,000, unless such Payment Event occurred
as a result of a termination under Section 10.01(d), in which case the Company
shall pay such fee to Parent simultaneously with the occurrence of such Payment
Event.
"Payment Event" means (i) the termination of this Agreement pursuant to
Section 10.01(c) or 10.01(d); or (ii) following any termination of this
Agreement pursuant to Section 10.01(b) if a bona fide Acquisition Proposal shall
have been made prior to, and not withdrawn by, such termination pursuant to
Section 10.01(b) and within 12 months of any such termination pursuant to
Section 10.01(b) of this Agreement, stockholders of the Company receive, or the
Company enters into any agreement for the stockholders of the Company to
receive, pursuant to any event described in clauses (i) through (iv) hereof,
cash, securities or other consideration having an aggregate value, when taken
together with the value of any securities of the Company or its Subsidiaries
otherwise held by such stockholders after such event, in excess of $28.00 per
Share (adjusted for any change in the outstanding Shares after the date hereof
in a manner consistent with Section 2.07): (i) the Company merges with or into,
or is acquired, directly or indirectly, by merger or otherwise by, a Third Party
and the stockholders of the Company immediately prior to such merger or
acquisition own less than 50% of the capital stock of to such Third Party; (ii)
a Third Party, directly or indirectly, acquires more than 50% of the total
assets of the Company and its Subsidiaries, taken as a whole; (iii) a Third
Party, directly or indirectly, acquires more than 50% of the outstanding Shares,
other than a transaction which results in the stockholders of the Company
immediately prior to such transaction owning more than 50% of the outstanding
capital stock of such Third Party or (iv) the Company adopts or implements a
plan of liquidation, recapitalization or share repurchase relating to more than
50% of the outstanding Shares or an extraordinary dividend relating to more than
50% of the outstanding Shares or 50% of the assets of the Company and its
Subsidiaries, taken as a whole.
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(c) The Company shall reimburse Parent and EQT and Zeiss (by wire transfer
of immediately available funds), no later than 5 Business Days after submission
of reasonable documentation thereof, for 100% of their reasonable out-of-pocket
fees and expenses (including reasonable fees and expenses of their counsel)
actually incurred by any of them in connection with this Agreement and the
Master Agreement and the transactions contemplated hereby and thereby (including
the arrangement of, obtaining the commitment to provide or obtaining any
financing for such transactions and currency and interest rate swaps or other
hedging arrangements) up to $10,000,000 for Parent, EQT and Zeiss in the
aggregate upon any termination of this Agreement pursuant to (i) Section
10.01(b)(i) in connection with a failure to satisfy the conditions set forth in
Section 9.02(a), (ii) Section 10.01(c) or 10.01(d) or (iii) (in addition to the
circumstances described in clause (i) of this sentence but without duplication)
Section 10.01(b), if a bona fide Acquisition Proposal shall have been made prior
to, and not withdrawn by, such termination pursuant to Section 10.01(b).
(d) Upon termination of this Agreement pursuant to Section 10.01(b)(i), if,
at the time of such termination, all other conditions set forth in Article 9
have been satisfied other than Section 9.02(f), then Parent shall reimburse the
Company (by wire transfer of immediately available funds), no later than 5
Business Days after submission of reasonable documentation thereof, for 100% of
its reasonable out-of-pocket fees and expenses (including reasonable fees and
expenses of their counsel) actually incurred by it in connection with this
Agreement and the transactions contemplated hereby up to $1,750,000 in the
aggregate.
(e) The Company acknowledges that the agreements contained in this Section
11.04 are an integral part of the transactions contemplated by this Agreement
and that, without these agreements, Parent and Merger Subsidiary would not enter
into this Agreement. Accordingly, if the Company fails promptly to pay any
amount due to Parent pursuant to this Section 11.04, it shall also pay any costs
and expenses incurred by Parent or Merger Subsidiary in connection with a legal
action to enforce this Agreement that results in a judgment against the Company
for such amount.
(f) If amounts required to be paid to Parent, Zeiss, EQT or the Company, as
applicable, pursuant to this Section 11.04 are paid when due, such payment shall
be the exclusive remedy of the receiving party for any claims arising out of
this Agreement.
Section 11.05. Binding Effect; Benefit; Assignment.
(a) The provisions of this Agreement shall be binding upon and, except as
provided in Section 7.02, shall inure to the benefit of the parties hereto and
their respective successors and assigns. Except as provided in Section 7.02, no
provision of this Agreement is intended to confer any rights, benefits,
remedies, obligations or liabilities hereunder upon any Person other than the
parties hereto and their respective successors and assigns.
(b) No party may assign, delegate or otherwise transfer any of its rights
or obligations under this Agreement without the consent of each other party
hereto, except that Parent or Merger Subsidiary may transfer or assign, in whole
or from time to time in part, to one or more of its Subsidiaries, the right to
enter into the transactions contemplated by this Agreement, but no such transfer
or assignment shall relieve Parent or Merger Subsidiary of its obligations
hereunder.
Section 11.06. Governing Law. This Agreement shall be governed by and
construed in accordance with the law of the State of Delaware, without regard to
the conflicts of law rules of such state.
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Section 11.07. Jurisdiction. The parties hereto agree that any suit, action
or proceeding seeking to enforce any provision of, or based on any matter
arising out of or in connection with, this Agreement or the transactions
contemplated hereby shall be brought in any federal court located in the State
of Delaware or any Delaware state court, and each of the parties hereby
irrevocably consents to the jurisdiction of such courts (and of the appropriate
appellate courts therefrom) in any such suit, action or proceeding and
irrevocably waives, to the fullest extent permitted by law, any objection that
it may now or hereafter have to the laying of the venue of any such suit, action
or proceeding in any such court or that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum. Process in
any such suit, action or proceeding may be served on any party anywhere in the
world, whether within or without the jurisdiction of any such court. Without
limiting the foregoing, each party agrees that service of process on such party
as provided in Section 11.01 shall be deemed effective service of process on
such party.
Section 11.08. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
Section 11.09. Counterparts; Effectiveness. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have received
a counterpart hereof signed by all of the other parties hereto. Until and unless
each party has received a counterpart hereof signed by the other party hereto,
this Agreement shall have no effect and no party shall have any right or
obligation hereunder (whether by virtue of any other oral or written agreement
or other communication).
Section 11.10. Entire Agreement. Other than the Confidentiality Agreement,
this Agreement (including the Company Disclosure Schedule and the Exhibits)
constitutes the entire agreement between the parties with respect to the subject
matter of this Agreement and supersedes all prior agreements and understandings,
both oral and written, between the parties with respect to the subject matter of
this Agreement.
Section 11.11. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any party. Upon such
a determination, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions contemplated
hereby be consummated as originally contemplated to the fullest extent possible.
Section 11.12. Specific Performance. The parties hereto agree that
irreparable damage would occur if any provision of this Agreement were not
performed in accordance with the terms hereof and that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
or to enforce specifically the performance of the terms and provisions hereof in
any federal court located in the State of Delaware or any Delaware state court,
in addition to any other remedy to which they are entitled at law or in equity.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
SOLA INTERNATIONAL INC.
By: /s/ Jeremy C. Bishop
----------------------------------------
Name:
Title:
CARL ZEISS TOPCO GMBH
By: /s/ Christian Muller
----------------------------------------
Name: Dr. Christian Muller
Title: Managing Director
SUN ACQUISITION, INC.
By: /s/ Ulrich Hoffmann
----------------------------------------
Name: Ulrich Hoffmann
Title:
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Annex B
VOTING AND SUPPORT AGREEMENT
VOTING AND SUPPORT AGREEMENT dated as of December 5, 2004 between Carl
Zeiss TopCo GmbH, a German company ("Parent"), Sun Acquisition, Inc., a Delaware
corporation and an indirect wholly owned subsidiary of Parent ("Merger
Subsidiary"), and those directors and executive officers of the Company listed
on Appendix A hereto (together the "D&O Stockholders").
WHEREAS, Parent, Merger Subsidiary, and Sola International Inc., a Delaware
corporation (the "Company"), propose to enter into an Agreement and Plan of
Merger dated as of the date hereof (as the same may be amended or supplemented,
the "Merger Agreement") providing for, among other things, the merger of Merger
Subsidiary with and into the Company upon the terms and subject to the
conditions set forth in the Merger Agreement;
WHEREAS, as of the date hereof, each D&O Stockholder directly owns the
number of Shares set forth on Appendix A hereto (of record or through a
brokerage firm or other nominee arrangement) (such Shares being referred to
herein as the "Original Shares"; the Original Shares, together with any other
outstanding shares of capital stock of the Company or other outstanding voting
securities of the Company acquired (of record or through a brokerage firm or
other nominee arrangement) by D&O Stockholders after the date hereof and during
the term of this Agreement (including through the exercise of any stock
options), being collectively referred to herein as the "Subject Shares"); and
WHEREAS, as a condition to its willingness to enter into the Merger
Agreement, Parent and Merger Subsidiary have required that the D&O Stockholders
enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements set forth herein and in the Merger
Agreement, the parties hereto agree as follows:
ARTICLE 1
AGREEMENT TO VOTE
Section 1.01. Voting. Each D&O Stockholder hereby agrees that during the
time this Agreement is in effect such D&O Stockholder shall (or shall cause the
relevant record holder(s) to), in connection with any meeting or action by
written consent of the stockholders of the Company: (a) vote his or her Subject
Shares in favor of adoption of the Merger Agreement; (b) vote his or her Subject
Shares against any action or agreement that would reasonably be expected to
result in a breach of any representation, warranty, covenant or agreement of the
Company under the Merger Agreement; and (c) vote his or her Subject Shares
against any action or agreement that would reasonably be expected to prevent,
impede, interfere with, delay or postpone the consummation of the Merger,
including, without limitation any (i) Acquisition Proposal, (ii) reorganization,
recapitalization, liquidation or winding-up of the Company or any other
extraordinary transaction involving the Company or (iii) corporate action the
consummation of which would frustrate the purposes, or prevent or delay the
consummation, of the transactions contemplated by the Merger Agreement.
Section 1.02. Grant Of Irrevocable Proxy. (a) During the term of this
Agreement, each D&O Stockholder hereby grants to Merger Subsidiary, and to each
officer of Parent, a proxy to vote his or her Subject Shares as indicated in
Section 1.01. Each D&O Stockholder intends this proxy to be, and this proxy is,
irrevocable and coupled with an interest and each D&O Stockholder will
immediately take such further action or execute such other instruments as may be
necessary to effectuate the intent of this proxy. Each D&O Stockholder hereby
ratifies and confirms all that such irrevocable proxy may lawfully do or cause
to be done. Each D&O Stockholder hereby revokes any proxy previously granted by
him or her with respect to his or her Subject Shares. Each D&O Stockholder
intends such proxy to be irrevocable in accordance with Delaware Law.
(b) Each D&O Stockholder represents that any proxies heretofore given in
respect of the Shares are not irrevocable, and that any such proxies are hereby
revoked.
(c) Each D&O Stockholder understands and acknowledges that Parent and
Merger Subsidiary are entering into the Merger Agreement in reliance upon, among
other things, such D&O Stockholder's execution and delivery of this Agreement.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE D&O STOCKHOLDERS
Each D&O Stockholder represents and warrants to Parent and Merger
Subsidiary as to himself, severally and not jointly, as follows:
Section 2.01. Ownership Of Original Shares. Each D&O Stockholder is the
beneficial owner of the number of Original Shares set forth on Appendix A
hereto. As of the date hereof, each D&O Stockholder does not directly own (of
record or through a brokerage firm or other nominee arrangement) any outstanding
shares of capital stock of the Company other than his or her Original Shares.
Each D&O Stockholder has the sole right to Transfer and direct the voting of his
or her Original Shares, and none of his or her Original Shares is subject to any
voting trust or other agreement, arrangement or restriction with respect to the
Transfer or the voting of the Original Shares, except as set forth in this
Agreement.
Section 2.02. Power; Binding Agreement. Each D&O Stockholder has the legal
capacity, power and authority to enter into and perform all of his or her
obligations under this Agreement. The execution, delivery and performance of
this Agreement by each D&O Stockholder will not violate any other agreement to
which such D&O Stockholder is a party including, without limitation, any voting
agreement, stockholders agreement or voting trust. This Agreement has been duly
and validly executed and delivered by each D&O Stockholder and constitutes a
valid and binding agreement of each D&O Stockholder, enforceable against each
D&O Stockholder in accordance with its terms.
Section 2.03. No Conflicts. No authorization, consent or approval of, or
filing with, any court or any public body or authority is necessary for the
fulfillment by each D&O Stockholder of such D&O Stockholder's obligations under
this Agreement. The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby will not constitute a
breach, violation or default (or any event which, with notice or lapse
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of time or both, would constitute a default) under, or result in the termination
of, or accelerate the performance required by, or result in a right of
termination or acceleration under, any note, bond, mortgage, indenture, deed of
trust, license, lease, agreement or other instrument to which such D&O
Stockholder is a party or by which such D&O Stockholder's Subject Shares are
bound.
ARTICLE 3
COVENANTS OF THE D&O STOCKHOLDERS
Section 3.01. Covenants of the D&O Stockholders. Each D&O Stockholder
agrees as to himself, severally and not jointly, as follows:
(a) Except as contemplated by the terms of this Agreement and the Merger
Agreement, such D&O Stockholder shall not:
(i) sell, transfer, pledge, assign or otherwise dispose of (including
by gift) (collectively, "Transfer"), or consent to or permit any Transfer
of, or enter into any contract, option or other arrangement or
understanding with respect to the Transfer of, his or her Subject Shares to
any person, other than Merger Subsidiary or Merger Subsidiary's designee;
provided that three months prior to the expiration of any option to
purchase Shares in accordance with its terms, the D&O Stockholder who is
the holder of that option to purchase Shares may sell, transfer, pledge,
assign or otherwise dispose of, or enter into any contract, option or other
arrangement or understanding with respect to the sale, transfer, pledge,
assignment or other disposition of, any Subject Shares in connection with
the exercise (cashless or otherwise) of that option to purchase Shares in
an amount that is sufficient to satisfy the payment of the exercise price
and any transaction costs and any tax liability incurred by the D&O
Stockholder in connection with such exercise;
(ii) enter into, or otherwise subject his or her Subject Shares to,
any voting arrangement, whether by proxy, voting agreement, voting trust,
power-of-attorney or otherwise, with respect to his or her Subject Shares;
or
(iii) take any other action that would in any way restrict, limit or
interfere with the performance of his or her obligations hereunder or the
transactions contemplated to be performed by him hereunder.
(b) Such D&O Stockholder hereby irrevocably and unconditionally waives, and
agrees to prevent the exercise of, any rights of appraisal or rights to dissent
in connection with the Merger that such D&O Stockholder may have with respect to
his or her Subject Shares.
(c) Such D&O Stockholder hereby agrees that any attempted transfer or other
disposition in violation of Section 4.01(a)(i) shall be null and void.
Section 3.02. No Solicitation; Other Offers. Each D&O Stockholder, solely
in his or her capacity as the owner of his or her Subject Shares as provided in
Section 4.13 of this Agreement (without limiting the obligations of such D&O
Stockholder as a director or officer of the Company), agrees that he or she
shall not directly or indirectly, (1) solicit, initiate or take any action to
facilitate or encourage the submission of any Acquisition Proposal or , (2)
enter into or
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participate in any discussions or negotiations with, furnish any information
relating to the Company or any of its Subsidiaries or afford access to the
business, properties, assets, books or records of the Company or any of its
Subsidiaries to, otherwise cooperate in any way with, or knowingly assist,
participate in, facilitate or encourage any effort by any Third Party that is
seeking to make, or has made, an Acquisition Proposal.
Section 3.03. Further Assurances. Each D&O Stockholder shall, from time to
time, execute and deliver, or cause to be executed and delivered, such
additional or further transfers, assignments, endorsements, consents and other
instruments as Parent or Merger Subsidiary may reasonably request for the
purpose of such D&O Stockholder's effective performance of his or her
obligations under this Agreement and to vest the power to vote his or her
Subject Shares as contemplated by Section 1.02. Parent and Merger Subsidiary
jointly and severally agree to use reasonable best efforts to take, or cause to
be taken, all actions necessary to comply promptly with all legal requirements
that may be imposed with respect to the transactions contemplated by this
Agreement.
ARTICLE 4
MISCELLANEOUS
Section 4.01. Expenses. All costs and expenses incurred by any party in
connection with this Agreement shall be paid by the party incurring such cost or
expense.
Section 4.02. Specific Performance; Remedies. The parties hereto agree that
if any of the provisions of this Agreement were not to be performed in
accordance with their specific terms or were to be otherwise breached,
irreparable damage would occur, no adequate remedy at law would exist and
damages would be difficult to determine, and that in such circumstances the
parties will be entitled to specific performance of the terms hereof, in
addition to any other remedy at law or equity. The parties agree that no party
shall be entitled to money damages for any breach of this Agreement; provided
that a party shall be entitled to recover any reasonable costs and expenses
incurred in connection with a successful legal action to enforce the terms of
this Agreement.
Section 4.03. Notices. All notices and other communications hereunder will
be in writing and will be deemed given if delivered personally, telecopied
(which is confirmed) or mailed by registered or certified mail (return receipt
requested) to the parties at the following addresses (or at such other address
for a party as is specified by like notice):
(a) if to Merger Subsidiary or Parent to:
Carl Zeiss TopCo GmbH
Turnstrasse 27
73430 Aalen
Attention: Dr. Christian Muller
Facsimile No.: +49 7364 208395
E-mail: ch.mueller@zeiss.de
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with copies to:
Carl Zeiss AG
Carl-Zeiss-Straae 22
D-73447 Oberkochen
Attention: Ulrich Hoffmann
Facsimile No.: +49 7364 203911
E-mail: hoffmann@zeiss.de
EQT III Limited
East Wing, Trafalgar Park
St. Peter Port, Guernsey GY1 6HJ,
Channel Island
Attention: David Jeffreys
Facsimile No.: +44 1481 715602
E-mail: david@mailjeffreys.com
and
Davis, Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: Phillip Mills
Facsimile No.: (212) 450 3800
E-mail: phillip.mills@dpw.com
(b) if to any D&O Stockholder, to his or her address listed on Appendix A
hereto or to any other address or facsimile number as that party may hereafter
specify for this purpose by notice to the other parties.
All such notices, requests and other communications shall be deemed received on
the date of receipt by the recipient thereof if received before 5 p.m. local
time on a business day in the place of receipt. Otherwise, any such notice,
request or communication shall be deemed not to have been received until the
next succeeding business day in the place of receipt.
Section 4.04. Amendments. This Agreement may not be modified, amended,
altered or supplemented, except upon the execution and delivery of a written
agreement executed by each party hereto whose rights or obligations are being
amended.
Section 4.05. Assignment. 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
each of the other parties whose rights or obligations would be affected by such
assignment and any such purported assignment without such prior written consent
shall be null and void; provided that Merger Subsidiary and Parent may assign
this Agreement and any of their respective rights, interests and obligations
hereunder to any of their respective direct or indirect Subsidiaries without
such prior written consent, but no such assignment shall relieve either such
party of its obligations under this Agreement. Subject to the
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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.
Each D&O Stockholder agrees as to himself, severally and not jointly, that this
Agreement and his or her obligations hereunder shall attach to his or her
Subject Shares and shall be binding upon any person or entity to which legal or
beneficial ownership of such Subject Shares shall pass, whether by operation of
law or otherwise, including such D&O Stockholder's heirs, guardians,
administrators or successors.
Section 4.06. Governing Law; Jurisdiction. This Agreement shall be governed
by and construed in accordance with the laws of the State of Delaware,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof. Each of Stockholder and Parent irrevocably submits
to the exclusive jurisdiction of any Delaware state or federal court sitting in
the State of Delaware in any action arising out of or relating to this
Agreement, hereby irrevocably agrees that all claims in respect of such action
shall be heard and determined in such Delaware state or federal court, and
hereby irrevocably waives, to the fullest extent it may effectively do so, the
defense of an inconvenient forum to the maintenance of such action or
proceeding.
Section 4.07. Counterparts. This Agreement may be executed in two or more
counterparts, all of which will be considered one and the same agreement and
will become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
Section 4.08. Interpretation. When a reference is made in this Agreement to
a Section, such reference will be to a Section of this Agreement unless
otherwise indicated. The headings contained in this Agreement are for reference
purposes only and will not affect in any way the meaning or interpretation of
this Agreement. Whenever the words "include", "includes" or "including" are used
in this Agreement they will be deemed to be followed by the words "without
limitation". References to the "Company" include the Subsidiaries of the Company
unless the context clearly requires otherwise. The phrases "the date of this
Agreement", "the date hereof" and terms of similar import, unless the context
otherwise requires, will be deemed to refer to December 5, 2004. As used in this
Agreement, the term "affiliate" shall have the meaning set forth in Rule 12b-2
of the Exchange Act; provided that in no event will Parent or Merger Subsidiary,
on the one hand, or the Company or any of its Subsidiaries, on the other, be
considered an affiliate of the other such party(ies).
Section 4.09. Defined Terms. Capitalized terms used but not defined herein
shall have the respective meanings set forth in the Merger Agreement.
Section 4.10. Stop Transfer Restriction. In furtherance of this Agreement,
each D&O Stockholder shall and hereby does authorize Merger Subsidiary's counsel
to notify the Company's transfer agent that there is a stop transfer restriction
with respect to all of his or her Subject Shares (and that this Agreement places
limits on the voting and transfer of his or her shares); provided that (a) each
such notification to the Company's transfer agent in accordance with this
Section 4.10 shall provide that the relevant stop transfer restriction shall not
limit the exercise by that D&O Stockholder of any options to purchase Shares, or
the transfer of his or her Subject Shares in compliance with Section 3.01, (b)
Merger Subsidiary's counsel shall notify the Company's transfer agent that any
such stop transfer restrictions shall, with respect to each D&O
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Stockholder, terminate and be of no further force or effect on and after April
30, 2005 if the Merger Agreement is terminated in accordance with its terms and
(c) Merger Subsidiary's counsel shall give prompt notice to Company's transfer
agent once this Agreement and such stop transfer has terminated.
Section 4.11. Entire Agreement; No Third Party Beneficiaries. This
Agreement (i) constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof and (ii) is not intended to confer upon any
person other than the parties hereto any rights or remedies hereunder.
Section 4.12. Severability. Whenever possible, each provision of this
Agreement will be interpreted in a such manner as to be effective and valid
under applicable law but if any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under any applicable law or
rule in any jurisdiction, such invalidity, illegality or unenforceability will
not affect any other provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
Section 4.13. D&O Stockholder Capability. By executing and delivering this
Agreement, each D&O Stockholder makes no agreement or understanding herein in
his or her capacity or actions as a director, officer or employee of the Company
or any subsidiary of the Company. Each D&O Stockholder is signing and entering
into this Agreement solely in his or her capacity as the owner of his or her
Subject Shares, and nothing herein shall limit or affect in any way any actions
that may be hereafter taken by him or her in his or her capacity as an employee,
officer or director of the Company or any Subsidiary of the Company.
Section 4.14. Validity. The invalidity or unenforceability of any provision
of this Agreement will not affect the validity or enforceability of any other
provisions hereof, which will remain in full force and effect. Upon any
determination that any term or other provision is invalid or incapable of being
enforced, the parties shall negotiate in good faith to modify this Agreement so
as to effect the original intent of the parties as closely as possible in order
that the transactions contemplated by this Agreement may be consummated as
originally contemplated to the fullest extent possible.
Section 4.15. Binding Effect On Signatories. Once this Agreement has been
executed by Parent and Merger Subsidiary, this Agreement shall be binding,
severally and not jointly, upon each D&O Stockholder who executes this
Agreement. Each such executing D&O Stockholder shall be bound hereby, regardless
of whether or not any other D&O Stockholder executes this Agreement.
Section 4.16. Expiration. This Agreement and the rights and obligations of
the respective parties hereto under this Agreement shall terminate, and be of no
further force or effect, on the earliest to occur of (A) the Effective Time, (B)
the termination of this Agreement by written notice from Parent or Merger
Subsidiary to each D&O Stockholder and (C) the termination of the Merger
Agreement in accordance with its terms; provided that Sections 4.01, 4.03, 4.06,
4.08, 4.11, 4.13, 4.14 and 4.17 shall survive any such termination.
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Section 4.17. Nonsurvival Of Representations And Warranties. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement will survive the Effective Time or any termination of
this Agreement. This Section 4.17 shall not limit any covenant or agreement of a
party that by its terms expressly contemplates performance after the Effective
Time.
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, Parent, Merger Subsidiary and each D&O Stockholder have
caused this Agreement to be signed, in the case of Parent and Merger Subsidiary,
by their respective officers thereunto duly authorized, as of the date first
written above.
CARL ZEISS TOPCO GMBH
By: /s/ Christian Muller
------------------------------
Name: Dr. Christian Muller
Title: Managing Director
SUN ACQUISITION, INC.
By: /s/ Ulrich Hoffmann
------------------------------
Name: Ulrich Hoffmann
Title:
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D&O STOCKHOLDERS
/s/ Jeremy C. Bishop
----------------------------------------------
Name: Jeremy C. Bishop
Title: President & Chief Executive Officer
/s/ Maurice J. Cunniffe
----------------------------------------------
Name: Maurice J. Cunniffe
Title: Chairman of the Board of Directors
/s/ Andrew Feshbach
----------------------------------------------
Name: Andrew Feshbach
Title: Director
/s/ Robert A. Muh
----------------------------------------------
Name: Robert A. Muh
Title: Director
/s/ Colombe Nicholas
----------------------------------------------
Name: Colombe Nicholas
Title: Director
/s/ Jackson L. Schultz
----------------------------------------------
Name: Jackson L. Schultz
Title: Director
/s/ Charles F. Smith
----------------------------------------------
Name: Charles F. Smith
Title: Director
/s/ Barry J. Packham
----------------------------------------------
Name: Barry J. Packham
Title: Executive Vice President & General
Manager, North America
/s/ Mark Ashcroft
----------------------------------------------
Name: Mark Ashcroft
Title: Executive Vice President & General
Manager, Europe
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/s/ Ronald F. Dutt
----------------------------------------------
Name: Ronald F. Dutt
Title: Executive Vice President & Chief
Financial Officer
/s/ David A. Cross
----------------------------------------------
Name: David A. Cross
Title: Vice President & Managing Director,
Asia Pacific
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Appendix A
Subject Shares
Shares
Subject to
Options
[For
Information
D&O Shares Purposes
Stockholders Title Owned Only] Address
Jeremy C. Bishop President & Chief 10,000 389,800 SOLA International Inc.
Executive Officer 10590 W. Ocean Air Dr.
Suite 300
San Diego, CA 92130
Maurice J. Cunniffe Chairman of the Board 275,600 69,709 American Optical
of Directors 80 Field Point Road
Greenwich, CT 06830
Andrew Feshbach Director 0 3,753 Big Dog Holdings, Inc.
121 Gray Avenue
Santa Barbara, CA 93101
Robert A. Muh Director 3,000 31,440 Sutter Securities Inc.
555 California Street
Suite 3330
San Francisco, CA
94104
Colombe Nicholas Director 0 8,000 55 Hudson Street
New York, NY
10013
Jackson L. Schultz Director 8,000 38,916 1780 Manor Drive
Hillsborough, CA
94010
Charles F. Smith Director 0 14,530 505 Frontera Drive,
Pacific Palisades, CA
90272
Barry J. Packham Executive Vice 0 39,000 SOLA International Inc.
President & General 10590 W. Ocean Air Dr.
Manager, North America Suite 300
San Diego, CA 92130
Shares
Subject to
Options
[For
Information
D&O Shares Purposes
Stockholders Title Owned Only] Address
Mark Ashcroft Executive Vice 0 120,000 SOLA International
President & General 1st Floor, 4 Oaks House
Manager, Europe 160 Lichfield Road
Sutton Coldfield
West Midlands,
B74 2TZ
United Kingdom
Ronald F. Dutt Executive Vice 500 85,000 SOLA International Inc.
President & Chief 10590 W. Ocean Air Dr.
Financial Officer Suite 300
San Diego, CA
92130
David A. Cross Vice President & 0 64,270 SOLA International
Managing Director, Sherriffs Road
Asia Pacific Lonsdale
SA 5160
Australia
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Annex C
[LETTERHEAD OF UBS SECURITIES LLC]
December 5, 2004
The Board of Directors
SOLA International Inc.
10590 West Ocean Air Drive
San Diego, California 92130
Dear Members of the Board:
We understand that SOLA International Inc. ("SOLA") proposes to enter into
an Agreement and Plan of Merger, dated as of December 5, 2004 (the "Agreement"),
among SOLA, Carl Zeiss TopCo GmbH, an entity formed by Carl Zeiss AG ("Zeiss")
and EQT III Limited ("EQT" and, such newly formed entity, "Parent"), and Sun
Acquisition, Inc., a wholly owned subsidiary of Parent ("Merger Sub"), pursuant
to which, among other things, (i) Merger Sub will be merged with and into SOLA
(the "Merger") and (ii) each outstanding share of the common stock, par value
$0.01 per share, of SOLA ("SOLA Common Stock") will be converted into the right
to receive $28.00 in cash (the "Merger Consideration"). The terms and conditions
of the Merger are more fully set forth in the Agreement.
You have requested our opinion as to the fairness, from a financial point
of view, of the Merger Consideration to the holders of SOLA Common Stock (other
than affiliates of SOLA).
UBS Securities LLC ("UBS") has acted as financial advisor to SOLA in
connection with the Merger and will receive a fee for its services, a
significant portion of which is contingent upon the consummation of the Merger
and a portion of which is payable in connection with this opinion. UBS in the
past has provided services to SOLA unrelated to the proposed Merger, for which
services UBS has received compensation. In addition, UBS currently is providing
services to certain portfolio companies of EQT, for which services UBS expects
to receive compensation, and an affiliate of UBS is an investor in a fund
managed by EQT. In the ordinary course of business, UBS, its successors and
affiliates may hold or trade securities of SOLA and affiliates of Zeiss and EQT
for their own accounts and accounts of customers and, accordingly, may at any
time hold a long or short position in such securities.
Our opinion does not address the relative merits of the Merger as compared
to other business strategies or transactions that might be available with
respect to SOLA or the underlying business decision of SOLA to effect the
Merger. Our opinion does not constitute a recommendation to any stockholder of
SOLA as to how such stockholder should vote or act with respect to any matters
relating to the Merger. At your direction, we have not been asked to, nor do we,
offer any opinion as to the terms of the Agreement or the form of the Merger. We
have assumed, with your consent, that each of SOLA, Parent and Merger Sub will
comply with all material terms of the Agreement and that the Merger will be
consummated in accordance with its terms without waiver, modification or
amendment of any material term, condition or agreement. We also have assumed,
with your consent, that all governmental, regulatory or other consents and
approvals necessary for the consummation of the Merger will be obtained without
any adverse effect on SOLA or the Merger. In connection with our engagement, we
were not requested to,
and we did not, solicit third party indications of interest in the possible
acquisition of all or a part of SOLA.
In arriving at our opinion, we have, among other things: (i) reviewed
certain publicly available business and historical financial information
relating to SOLA; (ii) reviewed certain internal financial information and other
data relating to the business and financial prospects of SOLA that were provided
to us by the management of SOLA and not publicly available, including financial
forecasts and estimates prepared by the management of SOLA; (iii) conducted
discussions with members of the senior management of SOLA concerning the
business and financial prospects of SOLA; (iv) reviewed current and historical
market prices of SOLA Common Stock; (v) reviewed publicly available financial
and stock market data with respect to certain companies in lines of businesses
we believe to be generally comparable to those of SOLA; (vi) compared the
financial terms of the Merger with publicly available financial terms of certain
other transactions which we believe to be generally relevant; (vii) reviewed the
Agreement and certain related documents; and (viii) conducted such other
financial studies, analyses and investigations, and considered such other
information, as we deemed necessary or appropriate.
In connection with our review, with your consent, we have not assumed any
responsibility for independent verification of any of the information provided
to or reviewed by us for the purpose of this opinion and have, with your
consent, relied on such information being complete and accurate in all material
respects. In addition, at your direction, we have not made any independent
evaluation or appraisal of any of the assets or liabilities (contingent or
otherwise) of SOLA, nor have we been furnished with any such evaluation or
appraisal. With respect to the financial forecasts referred to above, we have
assumed, at your direction, that they have been reasonably prepared on a basis
reflecting the best currently available estimates and judgments of the
management of SOLA as to the future financial performance of SOLA. Our opinion
is necessarily based on economic, monetary, market and other conditions as in
effect on, and the information available to us as of, the date of this opinion.
Based upon and subject to the foregoing, it is our opinion that, as of the
date hereof, the Merger Consideration is fair, from a financial point of view,
to the holders of SOLA Common Stock (other than affiliates of SOLA).
Very truly yours,
/s/ UBS Securities LLC
UBS SECURITIES LLC
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Annex D
SECTION 262 OF THE DELAWARE GENERAL CORPORATION LAW
Section 262. Appraisal Rights.
(a) Any stockholder of a corporation of this State who holds shares of
stock on the date of the making of a demand pursuant to subsection (d) of this
section with respect to such shares, who continuously holds such shares through
the effective date of the merger or consolidation, who has otherwise complied
with subsection (d) of this section and who has neither voted in favor of the
merger or consolidation nor consented thereto in writing pursuant to ss.228 of
this title shall be entitled to an appraisal by the Court of Chancery of the
fair value of the stockholder's shares of stock under the circumstances
described in subsections (b) and (c) of this section. As used in this section,
the word "stockholder" means a holder of record of stock in a stock corporation
and also a member of record of a nonstock corporation; the words "stock" and
"share" mean and include what is ordinarily meant by those words and also
membership or membership interest of a member of a nonstock corporation; and the
words "depository receipt" mean a receipt or other instrument issued by a
depository representing an interest in one or more shares, or fractions thereof,
solely of stock of a corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to ss.251 (other than a merger effected pursuant to ss.251(g)
of this title), ss.252, ss.254, ss.257, ss.258, ss.263 or ss.264 of this title:
(1) Provided, however, that no appraisal rights under this section
shall be available for the shares of any class or series of stock, which
stock, or depository receipts in respect thereof, at the record date fixed
to determine the stockholders entitled to receive notice of and to vote at
the meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 holders; and further provided that no
appraisal rights shall be available for any shares of stock of the
constituent corporation surviving a merger if the merger did not require
for its approval the vote of the stockholders of the surviving corporation
as provided in subsection (f) of ss.251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series
of stock of a constituent corporation if the holders thereof are required
by the terms of an agreement of merger or consolidation pursuant to
ss.ss.251, 252, 254, 257, 258, 263 and 264 of this title to accept for such
stock anything except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect
thereof;
b. Shares of stock of any other corporation, or depository
receipts in respect thereof, which shares of stock (or depository
receipts in respect thereof) or depository receipts at the effective
date of the merger or consolidation will be either listed on a
national securities exchange or designated as a national market system
security on an interdealer quotation system by the National
Association of Securities Dealers, Inc. or held of record by more than
2,000 holders;
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c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or
d. Any combination of the shares of stock, depository receipts
and cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a., b. and c. of
this paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under ss.253 of this title is not owned by the
parent corporation immediately prior to the merger, appraisal rights shall
be available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights
are provided under this section is to be submitted for approval at a
meeting of stockholders, the corporation, not less than 20 days prior to
the meeting, shall notify each of its stockholders who was such on the
record date for such meeting with respect to shares for which appraisal
rights are available pursuant to subsection (b) or (c) hereof that
appraisal rights are available for any or all of the shares of the
constituent corporations, and shall include in such notice a copy of this
section. Each stockholder electing to demand the appraisal of such
stockholder's shares shall deliver to the corporation, before the taking of
the vote on the merger or consolidation, a written demand for appraisal of
such stockholder's shares. Such demand will be sufficient if it reasonably
informs the corporation of the identity of the stockholder and that the
stockholder intends thereby to demand the appraisal of such stockholder's
shares. A proxy or vote against the merger or consolidation shall not
constitute such a demand. A stockholder electing to take such action must
do so by a separate written demand as herein provided. Within 10 days after
the effective date of such merger or consolidation, the surviving or
resulting corporation shall notify each stockholder of each constituent
corporation merger who has complied with this subsection and has not voted
in favor of or consented to the or consolidation of the date that the
merger or consolidation has become effective; or
(2) If the merger or consolidation was approved pursuant to ss.228 or
ss.253 of this title, then, either a constituent corporation before the
effective date of the merger or consolidation, or the surviving or
resulting corporation within ten days thereafter, shall notify each of the
holders of any class or series of stock of such constituent corporation who
are entitled to appraisal rights of the approval of the merger or
consolidation and that appraisal rights are available for any or all shares
of such class or series of stock of such constituent corporation, and shall
include in such notice a copy of this section. Such notice may, and, if
given on or after the effective date of the merger or consolidation, shall,
also notify such stockholders of the effective date of the merger or
consolidation. Any stockholder entitled to appraisal rights may, within 20
days after the date of mailing of such notice, demand in writing from the
surviving or resulting corporation the appraisal of such holder's shares.
Such demand will be sufficient if it reasonably informs the corporation of
the identity of the stockholder and that the stockholder intends thereby to
demand
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the appraisal of such holder's shares. If such notice did not notify
stockholders of the effective date of the merger or consolidation, either
(i) each such constituent corporation shall send a second notice before the
effective date of the merger or consolidation notifying each of the holders
of any class or series of stock of such constituent corporation that are
entitled to appraisal rights of the effective date of the merger or
consolidation or (ii) the surviving or resulting corporation shall send
such a second notice to all such holders on or within 10 days after such
effective date; provided, however, that if such second notice is sent more
than 20 days following the sending of the first notice, such second notice
need only be sent to each stockholder who is entitled to appraisal rights
and who has demanded appraisal of such holder's shares in accordance with
this subsection. An affidavit of the secretary or assistant secretary or of
the transfer agent of the corporation that is required to give either
notice that such notice has been given shall, in the absence of fraud, be
prima facie evidence of the facts stated therein. For purposes of
determining the stockholders entitled to receive either notice, each
constituent corporation may fix, in advance, a record date that shall be
not more than 10 days prior to the date the notice is given, provided, that
if the notice is given on or after the effective date of the merger or
consolidation, the record date shall be such effective date. If no record
date is fixed and the notice is given prior to the effective date, the
record date shall be the close of business on the day next preceding the
day on which the notice is given.
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who has
complied with subsections (a) and (d) hereof and who is otherwise entitled to
appraisal rights, may file a petition in the Court of Chancery demanding a
determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any stockholder shall have the right to
withdraw such stockholder's demand for appraisal and to accept the terms offered
upon the merger or consolidation. Within 120 days after the effective date of
the merger or consolidation, any stockholder who has complied with the
requirements of subsections (a) and (d) hereof, upon written request, shall be
entitled to receive from the corporation surviving the merger or resulting from
the consolidation a statement setting forth the aggregate number of shares not
voted in favor of the merger or consolidation and with respect to which demands
for appraisal have been received and the aggregate number of holders of such
shares. Such written statement shall be mailed to the stockholder within 10 days
after such stockholder's written request for such a statement is received by the
surviving or resulting corporation or within 10 days after expiration of the
period for delivery of demands for appraisal under subsection (d) hereof,
whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the addresses
therein stated. Such notice shall also be given by 1 or more publications at
least 1 week before the day of the hearing, in a newspaper of general
circulation published in the City of Wilmington, Delaware or such publication as
the Court deems advisable. The forms of the notices by mail and by publication
shall be approved by the Court, and the costs thereof shall be borne by the
surviving or resulting corporation.
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(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery
or other pretrial proceedings and may proceed to trial upon the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has submitted
such stockholder's certificates of stock to the Register in Chancery, if such is
required, may participate fully in all proceedings until it is finally
determined that such stockholder is not entitled to appraisal rights under this
section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded appraisal rights as provided in subsection (d) of
this section shall be entitled to vote such stock for any purpose or to receive
payment of dividends or other distributions on the stock (except dividends or
other distributions payable to stockholders of record at a date which is prior
to the effective date of the merger or consolidation); provided, however, that
if no petition for an appraisal shall be filed within the time provided in
subsection (e) of this section, or if such stockholder shall deliver to the
surviving or resulting corporation a written withdrawal of such stockholder's
demand for an appraisal and an acceptance of the merger or consolidation, either
within 60 days after the effective date of the merger or consolidation as
provided in subsection (e) of this section or thereafter with the written
approval of the corporation, then the right of such stockholder to an appraisal
shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Court
of Chancery shall be dismissed as to any stockholder without the approval of the
Court, and such approval may be conditioned upon such terms as the Court deems
just.
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(1) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation.
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SPECIAL MEETING OF STOCKHOLDERS
PROXY
OF
SOLA INTERNATIONAL INC.
This proxy is being solicited by the board of directors of SOLA International
Inc.
The undersigned, having read the Notice of Special Meeting of Stockholders and
the Proxy Statement dated [ ], 2005, receipt of which are hereby
acknowledged, hereby appoints(s) Maurice J. Cunniffe and Jeremy C. Bishop and
each of them, with full power and authority to act without the other and with
full power of substitution, as proxies to represent and vote, as directed
herein, all shares the undersigned is entitled to vote at the special meeting of
stockholders of SOLA International Inc. to be held at [ ], [ ],
California [ ] on [ ], 2005 at [ ] a.m., local time, and
all continuations, adjournments or postponements thereof.
You are encouraged to specify your choices by marking the appropriate boxes.
Unless otherwise marked, the proxies are appointed with the power and authority
to vote the undersigned's shares "FOR" the proposals described on this proxy
card. Please complete your voting selection, date, sign and mail your proxy card
in the envelope provided as soon as possible.
The Board of Directors unanimously recommends a vote FOR:
1. Approval and adoption of the Agreement and Plan of Merger, dated as of
December 5, 2004, by and among SOLA International Inc., Sun Acquisition,
Inc. and Carl Zeiss TopCo GmbH, the parent of Sun Acquisition, and the
merger contemplated by such merger agreement.
FOR AGAINST ABSTAIN
(continued, and to be signed and dated on reverse side)
(continued from other side)
IN THEIR DISCRETION THE PROXIES ARE AUTHORIZED AND EMPOWERED TO VOTE UPON OTHER
MATTERS THAT MAY PROPERLY COME BEFORE THE SPECIAL MEETING AND ALL CONTINUATIONS,
ADJOURNMENTS OR POSTPONEMENTS THEREOF, INCLUDING, IF SUBMITTED TO A VOTE OF THE
STOCKHOLDERS, A MOTION TO ADJOURN THE SPECIAL MEETING TO ANOTHER TIME OR PLACE
FOR THE PURPOSE OF SOLICITING ADDITIONAL PROXIES.
NAMES:
DATE:
NOTE: Please sign your name exactly as it appears on your stock certificate(s).
Joint owners should each sign. When signing as attorney, executor,
administrator, trustee or guardian please give full title as such. If a
corporation, partnership or other entity, please sign in full.
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