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This excerpt taken from the LUX 20-F filed Jun 25, 2009. Material Contracts
The contracts described below have been entered into by Luxottica Group S.p.A. and/or its subsidiaries since June 30, 2007 and, as of the date of this annual report, contain provisions under which we or one or more of our subsidiaries has an obligation or entitlement which is or may be material to us. This discussion is not complete and should be read in conjunction with the agreements described below, each of which has been filed with the SEC as an exhibit to this annual report.
Contracts Relating to the Company’s Indebtedness
For a discussion of our material credit agreements and financings entered into since June 24, 2007, see “– The U.S.$1,500 Million Credit Facility, U.S.$500 Million Bridge Loan and Related Interest Rate Swaps”, “– The Euro 250 Million Revolving Credit Facility” and “– The U.S.$275 Million Senior Unsecured Guaranteed Notes of U.S. Holdings” in Item 5 – “Operating and Financial Review and Prospects – Liquidity and Capital Resources – Our Indebtedness.”
Luxottica Group S.p.A. 2008 Performance Shares Plan
In May 2008, a performance shares plan for the top managers of the Company and other companies directly or indirectly controlled by the Company to be identified by the Board was adopted. For further information on this plan, see Item 6—“Directors, Senior Management and Employees—Share Ownership.”
Merger Agreement with Oakley
On June 20, 2007, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Oakley and Norma Acquisition Corp., an indirect wholly-owned subsidiary of Luxottica formed for the purpose of effecting the transactions contemplated by the Merger Agreement, pursuant to which we acquired all of the outstanding equity interests of Oakley. Pursuant to the Merger Agreement, Norma Acquisition Corp. was merged with and into Oakley with Oakley surviving as an indirect wholly-owned subsidiary of Luxottica. At the effective time of the merger, each outstanding share of Oakley’s common stock was converted into the right to receive U.S.$29.30 per share in cash without interest, and each outstanding option was converted into the right to receive U.S.$29.30 per share in cash less the applicable exercise price of such option for each share of common stock underlying such option. The transaction closed on November 14, 2007.
Non-Competition Agreement with Oakley and Jim Jannard
Concurrently with the execution of the Merger Agreement, we entered into a Non-Competition Agreement (the “Non-Competition Agreement”) with Oakley, Norma Acquisition Corp. and Jim Jannard, the founder and majority stockholder of Oakley, pursuant to which Mr. Jannard agreed to not participate, directly or indirectly, in specified activities considered to be in competition with Oakley or any of its subsidiaries for a period of five years, subject to certain exceptions.
Those exceptions allow Mr. Jannard to (i) own, directly or indirectly, solely as a passive investment, less than 5.0 percent of any class of securities of any entity in competition with the Business (as defined in the Non-Competition Agreement) where equity securities are traded on any national securities exchange, provided that he is not a controlling person of, or a member of a group which controls, such entity, and (ii) be an investor, partner, member, director or principal of a private equity firm, venture capital firm or hedge fund that makes investments in a Competitor (as defined in the Non-Competition Agreement), provided that he completely recuses himself from selecting, advising or managing the investment in any such Competitor.
This excerpt taken from the LUX 20-F filed Jun 26, 2008. Material Contracts
The contracts described below have been entered into by Luxottica Group S.p.A. and/or its subsidiaries since June 30, 2006 and, as of the date of this annual report, contain provisions under which we or one or more of our subsidiaries has an obligation or entitlement which is or may be material to us. This discussion is not complete and should be read in conjunction with the agreements described below, each of which has been filed with the SEC as an exhibit to this annual report.
The Euro 250 Million Revolving Credit Facility
On May 29, 2008, we entered into a Euro 250 million revolving credit facility agreement, guaranteed by our subsidiary U.S. Holdings, with Intesa Sanpaolo S.p.A. as agent and Intesa Sanpaolo S.p.A., Banca Popolare di Vicenza S.c.p.A. and Banca Antonveneta S.p.A. as lenders. The final maturity of the credit facility is May 29, 2013. The credit facility is a Euro 250 million revolving facility, which will require repayment of equal quarterly installments of principal of Euro 30 million starting August 29, 2011 and a last repayment of Euro 40 million on the final maturity date. Interest accrues at Euribor (as defined in the agreement) plus a margin between 0.40 percent and 0.60 percent based on the “Net Debt/EBITDA” ratio, as defined in the agreement.
Luxottica Group S.p.A. 2008 Performance Shares Plan
In May 2008, a performance shares plan for the top managers of the Company and other companies directly or indirectly controlled by the Company to be identified by the Board (the “Plan”) was adopted. The Plan is intended to strengthen the loyalty of our key employees and to recognize their contributions to our success on a medium- to long-term
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basis. The beneficiaries of the Plan will be granted the right to receive ordinary shares, without consideration, at the end of a three-year vesting period and subject to achievement of certain Company performance targets to be determined by the our Board. The Plan will have a term of five years, during which the Board may resolve to issue different grants to the Plan’s beneficiaries. The Plan covers a maximum of 6,500,000 ordinary shares. Each annual grant will not exceed 2,000,000 ordinary shares. See Item 6—“Directors, Senior Management and Employees—Share Ownership” for more information.
The U.S.$1,500 Million Credit Facility and U.S.$500 Million Bridge Loan
To finance the Oakley acquisition, on October 12, 2007, we and our subsidiary U.S. Holdings entered into two credit facilities with a group of banks providing for certain term loans and a short-term bridge loan for an aggregate principal amount of U.S.$2.0 billion. The term loan facility is a five-year term loan of U.S.$1.5 billion, with options to extend the maturity on two occasions for one year each time. The Mandated Lead Arrangers and Bookrunners for the term loan are Citigroup N.A. (acting also as Documentation Agent), Intesa San Paolo S.p.A., The Royal Bank of Scotland plc and UniCredit Markets and Investment Banking (acting through Bayerische Hypo—und Vereinsbank AG—Milan Branch) (acting also as Facility Agent). The term loan facility is divided into two facilities, Facility D and Facility E. Facility D consists of an amortizing term loan in an aggregate amount of U.S.$1.0 billion, made available to U.S. Holdings, and Facility E consists of a bullet term loan in an aggregate amount of U.S.$500 million, made available to the Company. Each facility has a five-year term, with options to extend the maturity on two occasions for one year each time. The term loan has a spread of between 20 and 40 basis points over LIBOR, depending on the Group’s ratio of net debt to EBITDA. Interest accrues on the term loan at LIBOR (as defined in the agreement) plus 0.40 percent (5.503 percent for Facility D and 5.458 percent for Facility E on December 31, 2007). The final maturity of the credit facility is October 12, 2012. This credit facility contains certain financial and operating covenants. We were in compliance with those covenants as of March 31, 2008. We had borrowed U.S.$1.5 billion under this credit facility as of December 31, 2007.
The short-term bridge loan facility is for an aggregate principal amount of U.S.$500 million. This facility is underwritten by Bank of America Securities Limited and UniCredit Market and Investment Banking (acting through Bayerische Hypo—und Vereinsbank AG—Milan Branch). Interest accrues on the short term bridge loan at LIBOR (as defined in the agreement) plus 0.15 percent (5.208 percent on December 31, 2007). The final maturity of the credit facility was eight months from the first utilization date.
The Amendment Agreement to the Bridge Loan
On April 29, 2008, we and our subsidiary U.S. Holdings entered into an amendment and transfer agreement to the U.S. $500 million short-term bridge loan facility discussed above. The terms of such amendment agreement, among other things, reduced the total facility amount from U.S. $500 million to U.S. $150 million and provide for a final maturity date that is eighteen (18) months from the effective date of the agreement.
Merger Agreement with Oakley
On June 20, 2007, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Oakley, a developer, manufacturer and distributor of performance optics products including sunglasses, prescription eyewear, goggles and electronically-enabled eyewear, and Norma Acquisition Corp., an indirect wholly-owned subsidiary of Luxottica Group S.p.A. formed for the purpose of effecting the transactions contemplated by the Merger Agreement, pursuant to which we acquired all of the outstanding equity interests of Oakley. Pursuant to the Merger Agreement, Norma Acquisition Corp. was merged with and into Oakley with Oakley surviving as an indirect wholly-owned subsidiary of Luxottica. At the effective time of the merger, each outstanding share of Oakley’s common stock was converted into the right to receive U.S.$29.30 per share in cash without interest, and each outstanding option was converted into the right to receive U.S.$29.30 per share in cash less the applicable exercise price of such option for each share of common stock underlying such option. The transaction closed on November 14, 2007.
Non-Competition Agreement with Oakley and Jim Jannard
Concurrently with the execution of the Merger Agreement, we entered into a Non-Competition Agreement (the “Non-Competition Agreement”) with Oakley, Norma Acquisition Corp. and Jim Jannard, the founder and majority shareholder of Oakley, pursuant to which Mr. Jannard agreed to not participate, directly or indirectly, in specified activities considered to be in competition with Oakley or any of its subsidiaries for a period of five years, subject to certain exceptions.
Those exceptions allow Mr. Jannard to (i) own, directly or indirectly, solely as a passive investment, less than 5.0 percent of any class of securities of any entity in competition with the Business (as defined in the Non-Competition
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Agreement) where equity securities are traded on any national securities exchange, provided that he is not a controlling person of, or a member of a group which controls, such entity, and (ii) be an investor, partner, member, director or principal of a private equity firm, venture capital firm or hedge fund that makes investments in a Competitor (as defined in the Non-Competition Agreement), provided that he completely recuses himself from selecting, advising or managing the investment in any such Competitor.
Luxottica Group S.p.A. 2006 Stock Option Plan
In July 2006, we adopted an employee stock option plan providing for the issuance of options covering up to 20,000,000 ordinary shares of nominal value of Euro 0.06 each. The purpose of the plan is to provide additional incentives to key employees of the Group. See Item 6—“Directors, Senior Management and Employees—Share Ownership” for more information.
This excerpt taken from the LUX 20-F filed Jun 29, 2007. Material Contracts The contracts described below have been entered into by Luxottica Group S.p.A. and/or its subsidiaries since January 1, 2006 and, as of the date of this annual report, contain provisions under which we or one or more of our subsidiaries has an obligation or entitlement which is or may be material to us. This discussion is not complete and should be read in conjunction with the agreements described below, each of which has been filed with the SEC as an exhibit to this annual report. 70 Merger Agreement with Oakley On June 20, 2007, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Oakley, a developer, manufacturer and distributor of performance optics products including sunglasses, prescription eyewear, goggles, and electronically enabled eyewear, and Norma Acquisition Corp., an indirect wholly-owned subsidiary of Luxottica Group S.p.A. formed for the purpose of effecting the transactions contemplated by the Merger Agreement, pursuant to which we will acquire all of the outstanding equity interests of Oakley. Pursuant to the Merger Agreement, Norma Acquisition Corp. will be merged with and into Oakley with Oakley surviving as an indirect wholly-owned subsidiary of Luxottica. At the effective time of the merger, each outstanding share of Oakley’s common stock will be converted into the right to receive U.S.$29.30 per share in cash without interest, and each outstanding option will be converted into the right to receive U.S.$29.30 per share in cash less the applicable option exercise price of such option for each share of common stock underlying such option. The transaction is expected to close in the second half of 2007. Completion of the merger is subject to customary closing conditions, including, among others: (i) approval by Oakley’s shareholders; (ii) the receipt of antitrust approvals, or the expiration or termination of the applicable waiting period, under the Hart-Scott-Rodino Antitrust Improvements Act and under certain non-U.S. laws; (iii) the absence of any order or injunction prohibiting the consummation of the merger; and (iv) the receipt of all requisite consents from governmental entities. The Merger Agreement contains certain termination rights for both Oakley and us. The Merger Agreement provides that, in certain specified circumstances, Oakley must pay us a termination fee of U.S.$69 million (generally in the event the Board of Directors of Oakley changes its recommendation that its shareholders approve the principal terms of the Merger Agreement and the merger or elects to pursue a superior acquisition proposal from a third party). The Merger Agreement also obligates us to pay Oakley a termination fee of U.S.$80 million under specified circumstances where requisite antitrust approval has not been received. Non-Competition Agreement with Oakley and Jim Jannard Concurrently with the execution of the Merger Agreement, we entered into a Non-Competition Agreement (the “Non-Competition Agreement”) with Oakley, Norma Acquisition Corp. and Jim Jannard, the founder and majority shareholder of Oakley, pursuant to which Mr. Jannard agrees to not participate, directly or indirectly, in specified activities considered to be in competition with Oakley or any of its subsidiaries for a period of five years, subject to certain exceptions. Those exceptions allow Mr. Jannard to (i) own, directly or indirectly, solely as a passive investment, less than 5.0 percent of any class of securities of any entity in competition with the Business (as defined in the Non-Competition Agreement) where equity securities are traded on any national securities exchange, provided that he is not a controlling person of, or a member of a group which controls, such entity, and (ii) be an investor, partner, member, director or principal of a private equity firm, venture capital firm, or hedge fund that makes investments in a Competitor (as defined in the Non-Competition Agreement), provided that he completely recuses himself from selecting, advising or managing the investment in any such Competitor. Luxottica Group S.p.A. 2006 Stock Option Plan In July 2006, we adopted an employee stock option plan providing for the issuance of options covering up to 20,000,000 ordinary shares of nominal value of Euro 0.06 each. The purpose of the plan is to provide additional incentives to key employees of the Group. See Item 6—“Directors, Senior Management and Employees—Share Ownership” for more information. Amended Euro 1,130 Million and U.S.$325 Million Credit Facility and Related Interest Rate Swaps In March 2006, we amended our credit facility with a group of banks to provide for borrowings of an aggregate of Euro 1,130 million and an aggregate of U.S.$325 million in favor of Luxottica Group S.p.A. and our subsidiary U.S. Holdings. The credit facility consists of three tranches: Tranche A is an amortizing term loan of Euro 405 million that is to be used to refinance Luxottica Group S.p.A.’s existing debt as it matures and for other general corporate purposes and will require nine equal quarterly installments of Euro 45 million beginning in June 2007; Tranche B is a term loan of U.S.$325 million that was used by U.S. Holdings to finance the acquisition of Cole and will mature in March 2011; and Tranche C is a revolving credit facility equivalent to Euro 725 million, available in Euro or U.S.$, in favor of both Luxottica Group S.p.A. and U.S. Holdings, that is to be used for general corporate purposes and all outstanding borrowings, if any, will mature in March 2011. On December 31, 2006, U.S.$ 190 million (Euro 144.0 million) had been drawn from Tranche C by US Holdings and Euro 100 million by Luxottica Group S.p.A. We can select interest periods of one, two, three or six months with interest accruing on Euro-denominated loans based on the corresponding Euribor rate and U.S. dollar-denominated loans based on the corresponding Libor rate, both plus a margin between 0.20 percent and 0.40 percent based on the “Net debt/EBITDA” ratio, as defined in 71 the agreement. The interest rates on December 31, 2006 were 3.97 percent for Tranche A, 5.62 percent for Tranche B, 5.60 percent on Tranche C amounts borrowed in US dollars and 3.96 percent on Tranche C amounts borrowed in Euro. This credit facility contains certain financial and operating covenants. The Company was in compliance with those covenants as of December 31, 2006. Under this credit facility, Euro 895.2 million was outstanding as of December 31, 2006. In February 2007, we exercised an option included in the amendment to extend the maturity date of Tranches B and C to March 2012. For additional information, see Note 8 to our Consolidated Financial Statements included in Item 18 of this annual report. In June 2005, we entered into nine interest rate swap transactions with various banks with an aggregate initial notional amount of Euro 405 million which will decrease by Euro 45 million every three months starting on June 3, 2007 (“Club Deal Swaps”). These swaps will expire on June 3, 2009. The Club Deal Swaps were entered into as a cash flow hedge on Tranche A of the credit facility discussed above. The Club Deal Swaps exchange the floating rate of Euribor for an average fixed rate of 2.40 percent per annum. The ineffectiveness of cash flow hedges was tested both at the inception date and at each year end. The results of the tests indicated that the cash flow hedges are highly effective and the amounts of ineffectiveness, if any, on each date of testing were immaterial. As a consequence approximately Euro 5.2 million, net of taxes, is included in other comprehensive income as of December 31, 2006. Based on current interest rates and market conditions, the estimated aggregate amount to be recognized as earnings from other comprehensive income for these cash flow hedges in fiscal 2007 is approximately Euro 3.6 million, net of taxes. This excerpt taken from the LUX 6-K filed Jun 25, 2007. Section 3.21. Material Contracts.(a) As of the date of this Agreement, there does not exist any violation or default under (nor does there exist any condition which upon the passage of time or the giving of notice or both would cause or result in a violation or default under) any material contract (as such term is defined in Item 601(b)(10) of Regulation S-K under the Securities Act) to which the Company or any of its Subsidiaries is a party or by which any of them or any of their properties or assets is bound, except for such violations or defaults as have been waived or which would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.(b) Other than those contracts that are filed as exhibits to the SEC Reports filed and publicly available prior to the date of this Agreement (the “Filed Contracts”), Section 3.21(b) of the Company Disclosure Schedule lists all written and oral contracts, agreements, guarantees, leases, and executory contracts that exist as of the date hereof to which the Company or any of its Subsidiaries is a party or by which it is bound that (i) are required to be filed as an exhibit to an SEC Report, (ii) materially restrict or would materially restrict the ability of the Company, Parent (after giving effect to the consummation of the Merger) or any of their respective Subsidiaries from competing or otherwise conducting their respective businesses substantially as such businesses are conducted on the date of this Agreement, or (iii) contain minimum annual requirements of the Company or its Subsidiaries to make or become liable to make payments of $1,000,000 or more in any 12-month period, and, with respect to (ii) and (iii), which have a term of more than one year and cannot be cancelled on less than 90 days’ notice without a material penalty or other material financial cost to the Company or any of its Subsidiaries (the contracts so described and the Filed Contracts are referred to herein collectively as the “Contracts”).(c) Except as set forth in Section 3.21(c) of the Company Disclosure Schedule and except for open purchase orders entered into in the ordinary course of business for materials or supplies, there does not exist any contract to which the Company or any of its Subsidiaries is a party providing for its purchase from a third party, at a cost of $1,000,000 or more in any twelve-month period, of products for resale by the Company or any of its Subsidiaries at retail: (i) under which a violation or default would be caused by the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby; or (ii) that cannot by virtue of its terms be cancelled or terminated by the Company or any of its Subsidiaries, without a material penalty or other material financial cost to the Company or any of its Subsidiaries, on less than ninety (90) days’ notice to the other party to such Contract.Section 3.22. Opinion of Financial Advisor. The Board received, at its meeting held on June 20, 2007, the opinion, dated June 20, 2007, of Goldman, Sachs & Co. that, as of such date and subject to the assumptions, qualifications and limitations set forth in such opinion, the $29.30 in cash per Share to be received by the holders of the Shares pursuant to this Agreement26 This excerpt taken from the LUX 20-F filed Jun 28, 2006. Material Contracts The contracts described below have been entered into by Luxottica Group S.p.A. and/or its subsidiaries since January 1, 2004 and, as of the date of this annual report, contain provisions under which we or one or more of our subsidiaries has an obligation or entitlement which is or may be material to us. This discussion is not complete and should be read in conjunction with the agreements described below, each of which has been filed with the SEC as an exhibit to this annual report. 79
Credit Agreements and Other Financing Agreements Amended Euro 1,130 Million and U.S. $325 Million Credit Facility and Related Interest Rate Swaps In March 2006, we amended our credit facility with a group of banks to provide for borrowings of an aggregate of Euro 1,130 million and an aggregate of U.S. $325 million in favor of Luxottica Group S.p.A. and our subsidiary U.S. Holdings. The credit facility consists of three tranches: Tranche A is an amortizing term loan of Euro 405 million that is to be used to refinance Luxottica Group S.p.A.’s existing debt as it matures and for other general corporate purposes and will require nine equal quarterly installments of Euro 45 million beginning in June 2007; Tranche B is a term loan of U.S. $325 million that was used by U.S. Holdings to finance the acquisition of Cole and will mature in March 2011; and Tranche C is a revolving credit facility equivalent to Euro 725 million, available in Euro or U.S.$, in favor of both Luxottica Group S.p.A. and U.S. Holdings, that is to be used for general corporate purposes and all outstanding borrowings, if any, will mature in March 2011. At December 31, 2005, Euro 294.9 million had been drawn from Tranche C. We may select interest periods of one, two, three or six months with interest accruing on Euro-denominated loans based on the corresponding EURIBOR rate, plus a margin, and U.S. dollar-denominated loans based on the corresponding LIBOR rate, plus a margin of between 0.20 percent and 0.40 percent based on the “Net Debt/EBITDA” ratio, as defined in the agreement. The interest rates on December 31, 2005 was 2.94 percent for Tranche A, 4.56 percent for Tranche B and a 4.49 percent weighted average rate on Tranche C. The credit facility also contains certain financial and operating covenants. We were in compliance with those covenants as of December 31, 2005. Under this credit facility, Euro 974.3 million was outstanding as of December 31, 2005. In June 2005, we entered into nine interest rate swap transactions with various banks with an aggregate initial notional amount of Euro 405 million which will decrease by Euro 45 million every three months starting on June 3, 2007 (“Club Deal Swaps”). These swaps will expire on June 3, 2009. The Club Deal Swaps were entered into as a cash flow hedge on Tranche A of the credit facility discussed above. The Club Deal Swaps exchange the floating rate of Euribor for an average fixed rate of 2.40 percent per annum. The cash flow hedges are deemed to be highly effective and as such the change in the fair value of the swaps will be included on the balance sheets in other comprehensive income. Any ineffectiveness and the amounts needed to properly reflect interest expense will be amortized out of OCI and recorded in the appropriate periods. As a result, approximately Euro 3.5 million is included in OCI as of December 31, 2005. Based on current interest rates and market conditions, the estimated aggregate amount to be recognized into earnings from OCI for these cash flow hedges in fiscal 2006 is approximately Euro 0.4 million, net of taxes. 80 | EXCERPTS ON THIS PAGE:
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