EXHIBIT 2
CERTIFICATE OF DESIGNATIONS
OF THE
SERIES B PREFERRED STOCK
OF BOLLE INC.
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Pursuant to Section 151 of the
General Corporation Law of the
State of Delaware
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The undersigned, Peter H. Trembath, does hereby certify as follows:
FIRST: That he is the duly elected and acting Secretary of Bolle Inc., a
Delaware corporation (the "corporation").
SECOND: That the following resolution was duly adopted by the Board of
Directors of the corporation:
RESOLVED, that pursuant to authority conferred upon the Board of Directors
of the corporation in accordance with the General Corporation Law of the State
of Delaware and the provisions of the Restated Certificate of Incorporation of
the corporation (the "Restated Certificate"), there is hereby created a new
series of preferred stock of the corporation, which shall be designated "Series
B Preferred Stock" and shall consist of Ten Thousand (10,000) shares, and have
the powers, designations, preferences and relative, participating, and other
rights of the shares of such series, and the qualifications, limitations and
restrictions thereof, as set forth below.
Section 1. Dividends.
(a) The holders of the Series B Preferred Stock, shall be entitled to
accrue cumulative cash dividends, whether or not declared by the Board of
Directors of the corporation, at the dividend rate per annum as set forth in
Section 1(b) below and no more, on each share of Series B Preferred Stock,
payable semi-annually on June 30 and December 31 of each year commencing
December 31, 1997, such dividends shall be cumulative, so that if at any time
dividends per semi-annum at the applicable dividend rate, on each share, shall
not have been declared and paid, or set apart for payment, for all preceding
dividend periods, the deficiency shall be declared and paid, or set apart for
payment, before any dividends shall be declared and paid, or set apart for
payment, on the common stock (the "Common Stock") of the
corporation or the Series A Preferred Stock (the "Series A Stock") of the
corporation.
(b) The dividend rate (the "Dividend Rate") for the Series B Preferred
Stock shall be at the per annum rate of:
(i) 5% of the Liquidation Preference per share per annum during the
period commencing on the date of issuance of shares of the Series B Preferred
Stock through December 31, 1997;
(ii) 6% of the Liquidation Preference per share per annum during the
period commencing January 1, 1998 through June 30, 1998;
(iii) 7% of the Liquidation Preference per share per annum during the
period commencing July 1, 1998 through December 31, 1998;
(iv) 8% of the Liquidation Preference per share per annum during the
period commencing January 1, 1999 through June 30, 1999;
(v) 9% of the Liquidation Preference per share per annum during the
period commencing July 1, 1999 through December 31, 1999; and
(vi) 10% of the Liquidation Preference per share per annum commencing
January 1, 2000 and thereafter until the Series B Preferred Stock shall have
been redeemed.
(c) Any unpaid dividends (whether declared or accruing) on Series B
Preferred Stock will bear interest at the applicable Dividend Rate commencing
from the date that such dividend has accrued up to and including the date on
which such dividend is paid. Holders of Series B Preferred Stock will not
receive any dividends other than the preferred dividends provided for in this
Section 1, and will not participate with the Common Stock in the payment of
dividends.
(d) Subject to the provisions of this Section 1(d), the corporation will
use its commercially reasonable efforts in good faith to declare and pay
accrued dividends on the shares of Series B Preferred Stock as set forth in
this Section 1. The corporation shall only declare or pay any dividends on the
Series B Preferred Stock out of funds legally available therefor and to the
extent that the corporation is permitted to declare or pay such
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dividends under the terms and conditions of its senior indebtedness pursuant to
the terms of the credit agreement among the corporation, the lenders executing
a signature thereto and NationsBank, National Association, as Agent, entered
into in connection with the corporation becoming a separate public company as a
result of a spinoff by BEC Group, Inc., as may be amended from time to time
(the "Senior Indebtedness").
SECTION 2. Rights on Liquidation. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the corporation (any such
event being hereinafter referred to as a "Liquidation"), before any
distribution of assets of the corporation shall be made to or set apart for the
holders of Common Stock or Series A Stock, the holders of Series B Preferred
Stock shall be entitled to receive payment out of such assets of the
corporation in an amount equal to Five Thousand Five Hundred French Francs
(FF5,500) per share of Series B Preferred Stock (such amount being referred to
as the "Liquidation Preference" for the Series B Preferred Stock), plus any
accumulated and unpaid dividends thereon (whether or not earned or declared) on
the Series B Preferred Stock. If the assets of the corporation available for
distribution to the holders of Series B Preferred Stock shall not be sufficient
to make in full the payment herein required, such assets shall be distributed
pro-rata among the holders of Series B Preferred Stock based on the aggregate
Liquidation Preference of the shares of Series B Preferred Stock held by each
such holder. If the assets of the corporation available for distribution to the
holders of Series B Preferred Stock shall exceed the distribution required to
be made to the holders of Series B Preferred Stock as herein described, such
excess assets shall be distributed pro-rata among the holders of Common Stock
and the holders of Series B Preferred stock shall not participate in any such
excess distribution.
SECTION 3. Conversion. The holders of any share of Series B Preferred
Stock shall not have the right to convert any such shares into shares of Common
Stock of the corporation.
Section 4. Redemption.
(a) Optional Redemption. (i) Cash Redemption. Following notice pursuant
to Section 4(c)(ii) hereof given to all holders of Series B Preferred Stock
during the period (the "Redemption Period") so long as shares of Series B
Preferred Stock are outstanding, the corporation may at the option of the Board
of Directors of the corporation, redeem, out of funds legally available
therefor, in whole or in part the shares of Series B Preferred Stock. The
corporation shall effect any such redemption
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by paying in cash (the "Cash Redemption") for each such share to be redeemed an
amount equal to the Liquidation Preference, per share, plus any accumulated and
unpaid dividends thereon (whether or not earned or declared) on such shares to
the Redemption Date (as hereinafter defined) (such total amounts are
hereinafter referred to as the "Redemption Price").
(ii) Debt Redemption. Following notice pursuant to Section
4(c)(iii) below hereof given to all holders of Series B Preferred Stock during
the period (the "Debt Redemption Period") commencing January 1, 1998 and so
long as shares of Series B Preferred Stock are outstanding, the corporation
may, at the option of the Board of Directors of the corporation, redeem in
whole or in part the shares of Series B Preferred Stock. The corporation shall
effect any such redemption (the "Debt Redemption") by issuing to the holders of
the Series B Preferred Stock a subordinated debt instrument (the "Subordinated
Debt"). Except as otherwise provided in Section 4(e) below, the Subordinated
Debt shall contain substantially the same powers, designations, preferences and
relative, participating, or other rights, and qualifications, limitations and
restrictions as the Series B Preferred Stock including, but not limited to,
mandatory redemption and Cash Redemption rights, Liquidation rights and the
protections provided in Section 6 hereof.
(b) Mandatory Redemption. Notwithstanding anything contained herein
to the contrary, the corporation shall redeem, out of funds legally available
therefor, the Series B Preferred Stock (if not previously redeemed) pursuant to
the terms of Section 4 herein following notice pursuant to Section 4(c)(ii)
hereof given to all holders of Series B Preferred Stock, upon the earlier
occurrence of (i) on the earlier of (A) the third anniversary date from the
issuance of the Series B Preferred Stock if redemption is then permitted under
the terms and conditions of the corporation's Senior Indebtedness, (B) such
later date as redemption is first permitted under the terms and conditions of
the corporation's Senior Indebtedness; or (ii) the closing of any equity
financing by the corporation (a "Public Offering"), but only to the extent of
the net cash proceeds of such financing by the corporation and no more than the
Redemption Price of the then outstanding shares of Series B Preferred Stock,
and provided further, that such redemption would not violate any of the terms
and conditions of the corporation's Senior Indebtedness; or (iii) a Change of
Control (as defined in the agreements relating to the corporation's Senior
Indebtedness), which has resulted in the corporation's payment in full of all
amounts due with respect to
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its Senior Indebtedness. Subject to the provisions of this Section 4(b), the
corporation will use its commercially reasonable efforts in good faith to
redeem the Series B Preferred Stock when required to be redeemed pursuant to
the terms of this Section 4(b). The corporation shall effect any such Cash
Redemption by paying in cash for each such share to be redeemed an amount equal
to the Liquidation Preference, per share, plus any accumulated and unpaid
dividends thereon (whether or not earned or declared) on such shares to the
Redemption Date. The corporation shall use its commercially reasonable efforts
to close a Public Offering during 1998.
(c) Redemption Procedures. (i) General. In the event of any
redemption pursuant hereto, the corporation shall effect such redemption as
follows. The number of shares subject to redemption shall be allocated pro rata
among the holders of outstanding shares of Series B Preferred Stock based upon
the number of shares held by each such holder.
(ii) Cash Redemption Procedures. During the Redemption Period,
and at least 10 days prior to the date fixed for any redemption of Series B
Preferred Stock pursuant to Section 4(a)(i) above (the "Redemption Date"),
written notice shall be sent to each holder of record of Series B Preferred
Stock to be redeemed, notifying such holder of the redemption to be effected,
specifying the Redemption Date, the Redemption Price, the place at which
payment may be obtained and calling upon such holder to surrender to the
corporation, in the manner and at the place designated, his certificate or
certificates representing the shares to be redeemed (the "Redemption Notice").
On or after the Redemption Date, each holder of Series B Preferred Stock to be
redeemed shall surrender to the corporation the certificate or certificates
representing such shares, in the manner and at the place designated in the
Redemption Notice, and thereupon the Redemption Price of such shares shall be
payable to the order of the person whose name appears on such certificate or
certificates as the owner thereof and each surrendered certificate shall be
cancelled. In the event less than all the shares represented by any such
certificate are redeemed, a new certificate shall be issued representing the
unredeemed shares.
(iii) Debt Redemption Procedures. During the Debt Redemption
Period, and at least 10 days prior to the date fixed for any redemption of
Series B Preferred Stock pursuant to Section 4(a)(ii) above (the "Debt
Redemption Date"), written notice shall be sent to each holder of record of
Series B Preferred Stock, notifying such holder of the redemption to be
effected, specifying
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the Debt Redemption Date, and calling upon such holder to surrender to the
corporation, in the manner and at the place designated, his certificate or
certificates representing the shares to be redeemed (the "Debt Redemption
Notice"). On or after the Debt Redemption Date, each holder of Series B
Preferred Stock to be redeemed shall surrender to the corporation the
certificate or certificates representing such shares, in the manner and at the
place designated in the Debt Redemption Notice, and thereupon the Subordinated
Debt instrument shall be delivered to the person whose name appears on such
certificate or certificates as the owner thereof and each surrendered
certificate shall be cancelled. In the event less than all the shares
represented by any such certificate are redeemed, a new certificate shall be
issued representing the unredeemed shares.
(iv) From and after the close of business on the Redemption Date
or the Debt Redemption Date, as the case may be, unless there shall have been a
default in payment of the Redemption Price or issuance of the Subordinated Debt
instrument, as the case may be, all rights of the holders of the shares of
Series B Preferred Stock designated for redemption as holders of Series B
Preferred Stock (except the right to receive the Redemption Price without
interest or the Subordinated Debt instrument, as the case may be, upon
surrender of their certificate or certificates) shall cease with respect to
such shares, and such shares shall not thereafter be transferred on the books
of the corporation or be deemed to be outstanding for any purpose whatsoever.
(d) Status of Redeemed or Purchased Shares. Any shares of the Series
B Preferred Stock at any time purchased, redeemed or otherwise acquired by the
corporation shall not be reissued and shall be retired.
(e) Gross-Up Factor. In the event of any Debt Redemption pursuant to
Section 4(a)(ii) above, the interest rates from time to time payable on such
Subordinated Debt shall be equal to the Dividend Rates in effect from time to
time per Section 1(b) increased by a factor based upon the amount directly
attributable to the corporation's tax savings expected to be received from the
corporation's deduction of interest payments in respect of the Subordinated
Debt in computing the corporation's taxable income in respect of each year that
the Subordinated Debt is outstanding (the "Gross Up Factor"). The
determinations required to be made under this Section 4(e), including whether
and when a Gross-Up Factor is required and the amount of such Gross-Up Factor
and the marginal combined Federal, state and local income tax rate and other
assumptions to be utilized in arriving at such determination, shall
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be made by the corporation's independent auditors (the "Accounting Firm"),
which shall provide detailed supporting calculations both to the corporation
and the holders of the Subordinated Debt within ninety (90) days after the
corporation's year end. All fees and expenses of the Accounting Firm shall be
born solely by the corporation. Any Gross-Up Factor, as determined pursuant to
this Section 4(e), shall accrue for the benefit to the holders of the
Subordinated Debt as of the relevant dates set forth in such Section 1(b) and
all accrued interest and Gross Up Factor shall accumulate and be paid in
accordance with Section 1, including (without limitation) the provisions of
Section 1(c). Any determination by the Accounting Firm shall be binding upon
the corporation and the holders of the Subordinated Debt.
Section 5. Voting Rights. The holders of the Series B Preferred Stock
shall not be entitled to vote except as to matters in respect of which they
shall at the time be indefeasibly vested by statute with such right.
Section 6. Protective Provisions. (a) So long as any shares of Series
B Preferred Stock are outstanding, the corporation shall not, without first
obtaining the approval (by vote or written consent, as provided by law) of the
holders of at least 90% of the then outstanding shares of Series B Preferred
Stock:
(i) alter or change the rights, preferences or privileges of the
shares of Series B Preferred Stock so as to affect adversely the shares of such
series;
(ii) declare or pay a dividend or otherwise make a distribution
on any security issued by the corporation which is junior to the Series B
Preferred Stock including the Series A Stock with respect to dividends or upon
liquidation (other than dividends or distributions payable in Common Stock or
other securities or rights convertible into or entitling the holder thereof to
receive, directly or indirectly, additional shares of Common Stock of the
corporation).
(iii) the corporation shall not enter into any agreements that
prohibit the corporation from declaring or paying dividends hereunder or
redeeming the Series B Preferred Stock other than the Senior Indebtedness
and any other agreements in effect as of the date of issuance of the Series B
Preferred Stock.
(iv) the corporation shall not issue any class or series of
Preferred Stock that ranks Senior to or pari
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passu with the Series B Preferred Stock with respect to dividend, redemption or
liquidation rights.
(b) in the event that the corporation does not redeem the Series B
Preferred Stock for cash in full on or before the third anniversary date from
the issuance of the Series B Preferred Stock, the corporation shall be
prohibited from issuing or incurring any Indebtedness for Money Borrowed (as
defined below) which ranks senior to or pari passu with the Series B Preferred
Stock, other than senior bank indebtedness (including Senior Indebtedness) not
to exceed $30 million in theaggregate, until the corporation redeems for cash
in full the Series B Preferred Stock. For purposes of this Section 6(iv),
Indebtedness for Money Borrowed shall mean all indebtedness in respect of money
borrowed, evidenced by a promissory note, bond, debenture or similar written
obligation for the payment of money, other than trade payables, capital leases,
the deferred purchase price of any property or asset, conditional sales or
similar title retention agreements incurred in the ordinary course of business.
SECTION 7. Transferability. The holders of shares of the Series B
Preferred Stock are entitled to transfer shares of the Series B Preferred
Stock, subject to strict compliance with all applicable laws.
SECTION 8. Priority. The Series B Preferred Stock ranks senior to the
Series A Stock with respect to dividend, redemption and liquidation rights and
otherwise.
IN WITNESS WHEREOF, Bolle Inc. has caused this Certificate of
Designations of the Series B Preferred Stock to be signed by Peter H. Trembath,
its Secretary, this 2nd day of March, 1998.
BOLLE INC.
By: /s/ Peter H. Trembath
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Name: Peter H. Trembath
Title: Secretary