Exhibit 10.1

AGREEMENT AND PLAN OF MERGER

This AGREEMENT AND PLAN OF MERGER (this “Agreement”), dated as of April 25,
2006, is made by and among HVHC Inc., a Delaware corporation (“Parent”);
Franklin Merger Sub Inc., a Delaware corporation and a direct, wholly owned
Subsidiary of Parent (“Merger Sub”); ECCA Holdings Shareholder Trust, a Delaware
statutory trust, solely in its capacity as the representative of the Company
Shareholders (the “Representative”); and ECCA HOLDINGS CORPORATION, a Delaware
corporation (the “Company”).

WHEREAS, the respective Boards of Directors of Parent, Merger Sub and the
Company have approved and declared advisable this Agreement and the merger of
Merger Sub with and into the Company (the “Merger”), upon the terms and subject
to the conditions set forth in this Agreement;

WHEREAS, the Board of Directors of the Company has submitted this Agreement to
the shareholders of the Company for adoption thereby;

WHEREAS, Parent, Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger.

NOW, THEREFORE, in consideration of the representations, warranties, covenants
and agreements contained in this Agreement, the parties hereto agree as follows:

ARTICLE I

The Merger

SECTION 1.01. The Merger. Upon the terms and subject to the conditions set forth
in this Agreement and in accordance with the Delaware General Corporation Law
(the “DGCL”), Merger Sub shall be merged with and into the Company at the
Effective Time. Following the Effective Time, the separate corporate existence
of Merger Sub shall cease, and the Company shall continue as the surviving
corporation in the Merger (the “Surviving Corporation”) and shall succeed to and
assume all the rights and obligations of Merger Sub in accordance with the DGCL.

SECTION 1.02. Closing. The closing of the Merger (the “Closing”) will take place
at 10:00 a.m. on a date to be specified by the parties (the “Closing Date”),
which shall be no later than the second Business Day after satisfaction or
waiver of the conditions set forth in Article VII (other than those conditions
that by their terms are to be satisfied at the Closing, but subject to the
satisfaction or waiver of

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those conditions), at the New York office of Bingham McCutchen LLP, unless
another date or place is agreed to in writing by the parties hereto.

SECTION 1.03. Effective Time. Subject to the provisions of this Agreement, as
soon as practicable on the Closing Date, the Company shall file a certificate of
merger (the “Certificate of Merger”) executed in accordance with the relevant
provisions of the DGCL and, as soon as practicable on or after the Closing Date,
shall make all other filings or recordings required under the DGCL. The Merger
shall become effective at such time as the Certificate of Merger is duly filed
with the Secretary of State of the State of Delaware, or at such other time as
Parent and the Company shall agree and shall specify in the Certificate of
Merger (the time the Merger becomes effective being the “Effective Time”).

SECTION 1.04. Effects of the Merger. The Merger shall have the effects set forth
in the DGCL.

SECTION 1.05. Certificate of Incorporation and Bylaws.

(a) The Certificate of Incorporation of the Surviving Corporation shall be
amended at the Effective Time to be in the form of Exhibit A hereto and, as so
amended, such Certificate of Incorporation shall be the Certificate of
Incorporation of the Surviving Corporation until thereafter changed or amended
as provided therein or by applicable Law.

(b) The Bylaws of Merger Sub, as in effect immediately prior to the Effective
Time, shall be the Bylaws of the Surviving Corporation until thereafter changed
or amended as provided therein or by applicable Law.

SECTION 1.06. Directors. The directors of Merger Sub immediately prior to the
Effective Time shall be the directors of the Surviving Corporation, each of such
directors to hold office, subject to the applicable provisions of the
Certificate of Incorporation and Bylaws of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.

SECTION 1.07. Officers. The officers of Merger Sub immediately prior to the
Effective Time shall be the officers of the Surviving Corporation, each of such
officers to hold office, subject to the applicable provisions of the Certificate
of Incorporation and Bylaws of the Surviving Corporation, until the earlier of
his resignation or removal or until his respective successor is duly elected and
qualified, as the case may be.

SECTION 1.08. Payment of GGC Transaction Fee. At the Closing, immediately
following the Effective Time, the Surviving Corporation shall pay the GGC
Transaction Fee by wire transfer of immediately available funds to an account
designated by GGC Administration, LLC, except to the extent the GGC Transaction

 

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Fee is paid by or on behalf of the Surviving Corporation pursuant to separate
obligation to make such payment. Payment by Parent of such fee pursuant to the
terms of that certain Purchase and Sale Agreement, dated as of the date of this
Agreement, by an among Parent, GGC-ECCA Holdings, LLC, GGC-ECCA Holdings II,
LLC, and the Representative (the “GGC Purchase Agreement”) shall satisfy the
Surviving Corporation’s obligations under this Section 1.08.

ARTICLE II

Effect of the Merger on the Capital Stock of the

Constituent Corporations; Exchange of Certificates

SECTION 2.01. Effect on Capital Stock. As of the Effective Time, by virtue of
the Merger and without any action on the part of the holder of any shares of
Company Capital Stock or any shares of capital stock of Merger Sub:

(a) Common Stock of Merger Sub. Each issued and outstanding share of common
stock of Merger Sub shall be converted into and become one validly issued, fully
paid and nonassessable share of common stock, par value $0.01 per share, of the
Surviving Corporation.

(b) Cancellation of Certain Stock. Each share of the Company Capital Stock that
is owned by the Company or any of its Subsidiaries or by Parent or Merger Sub
immediately prior to the Effective Time shall automatically be canceled and
retired and shall cease to exist.

(c) Company Capital Stock; Determination of Merger Consideration. The total
consideration (the “Merger Consideration”) to be paid to holders of Company
Capital Stock by Parent in connection with the Merger shall be equal to
$305,000,000 (the “Pre-Adjustment Merger Consideration”), plus (i) any Delay
Premium, plus (ii) any Net Debt Decrease, plus (iii) any Net Working Capital
Increase, minus (iv) any Net Debt Increase, minus (v) any Net Working Capital
Decrease, minus (vi) Final Closing Taxes, minus (viii) the Management Bonuses,
minus (viii) any Excess D&O Tail Cost, minus (ix) the GGC Transaction Fee. A
sample calculation of the Merger Consideration is set forth on Exhibit B (the
“Sample Merger Consideration Calculation”). The Merger Consideration shall be
determined by applying the same methodology as set out in the calculation of the
Sample Merger Consideration Calculation. The determination of the amount of
Merger Consideration that is payable at Closing is subject to the assumptions
and adjustments as set forth in Sections 2.01(d)(A) and (B) and, following the
Closing, the adjustments as set forth in Sections 2.01(d)(C) through (J). The
Merger Consideration shall be paid as follows, and as of the Effective Time, by
virtue of the Merger, automatically and without further action:

 

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(A) Each share of Company Series A-1 Preferred Stock outstanding as of the
Effective Time (other than any Dissent Shares and any shares cancelled pursuant
to Section 2.01(b)) shall be converted into a right to receive from Parent (upon
surrender of the Certificates representing such share in accordance with
Section 2.02(b)) an amount (the “Per Share Series A-1 Preferred Stock Merger
Consideration”) in cash equal to the quotient of (i) the greater of (x) the Base
A-1 Consideration and (y) the Final A-1 Consideration, divided by (ii) the
number of shares of Company Series A-1 Preferred Stock outstanding as at the
Effective Time.;

(B) Each share of Company Series A-3 Preferred Stock outstanding as of the
Effective Time (other than any Dissent Shares and any shares cancelled pursuant
to Section 2.01(b)) shall be converted into a right to receive from Parent (upon
surrender of the Certificates representing such share in accordance with
Section 2.02(b)) an amount (the “Per Share Series A-3 Preferred Stock Merger
Consideration”) in cash equal to $200 (proportionately adjusted for any stock
dividend, stock split, reverse stock split, or other subdivision or combination
of shares of Company Series A-3 Preferred Stock occurring after the date
hereof);

(C) (1) each share of Company Series B-1 Preferred Stock outstanding as of the
Effective Time (other than any Dissent Shares and any shares cancelled pursuant
to Section 2.01(b)) shall be converted into a right to receive from Parent (upon
surrender of the Certificates representing such share in accordance with
Section 2.02(b)): an amount (subject to estimation prior to the Closing as set
forth in Sections 2.01(d)(A) and (B) and to adjustment following the Closing as
set forth in Sections 2.01(d)(C) through (I); as so adjusted, the “Per Share
Series B-1 Preferred Stock Merger Consideration”) in cash equal to the quotient
of (i) the Series B-1 Merger Consideration, divided by (ii) the number of shares
of Company Series B-1 Preferred Stock outstanding as of the Effective Time;
provided, however, that Parent shall retain from the Series B-1 Preferred Stock
Merger Consideration an amount equal to the product of the Per Share Series B-1
Preferred Stock Merger Consideration times 49,387 (the “Set-Aside Amount”) in a
segregated, interest-bearing account and to be held pursuant to the terms and
conditions of the Ancillary Agreement; and

(2) each share of Company Series B-2 Preferred Stock outstanding as of the
Effective Time (other than any Dissent Shares and any shares cancelled pursuant
to Section 2.01(b)) shall be converted into a right to receive from Parent (upon
surrender of the Certificates representing such share in accordance with
Section 2.02(b)) an amount (subject to estimation prior to the Closing as set
forth in Sections 2.01(d)(A) and (B); as so adjusted, the “Per Share Series B-2
Preferred Stock Merger Consideration”) in cash equal to the quotient of (i) the
Series B-2 Merger Consideration, divided by (ii) the number of shares of Company
Series B-2 Preferred Stock outstanding as of the Effective Time.

 

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(D) all shares of Company Capital Stock shall no longer be outstanding and shall
be canceled and retired and shall cease to exist, and each holder of a
Certificate representing any such shares of Company Capital Stock shall cease to
have any rights with respect thereto, except the right to receive from Parent
(upon surrender of such Certificate in accordance with Section 2.02(b)) the Per
Share Series A-1 Preferred Stock Merger Consideration, Per Share Series A-3
Preferred Stock Merger Consideration, Per Share Series B-1 Preferred Stock
Merger Consideration or the Per Share Series B-2 Preferred Stock Merger
Consideration, if and as applicable.

(d) Merger Consideration Adjustments.

(A) The Parties agree that the determination of the amount of Merger
Consideration that is payable at Closing was based on (i) an assumed Closing Net
Working Capital in the amount of $7,400,000 (“Target Net Working Capital”) and
(ii) an assumed Closing Outstanding Net Debt equal to the Reference Date Net
Debt.

(B) No less than five (5) Business Days prior to the Closing Date the Company
shall prepare and deliver to Parent for Parent’s review, and the Company and
Parent shall mutually agree in good faith on, estimates of (i) the Existing
Company Indebtedness as of the Closing Date, the Closing Cash, and the Closing
Outstanding Net Debt (the last of such estimates, the “Estimated Closing
Outstanding Net Debt”) (ii) Estimated Closing Taxes, and (iii) Closing Net
Working Capital (such estimate, the “Estimated Closing Working Capital”). If
Parent and the Company cannot agree on the Estimated Closing Outstanding Net
Debt, Estimated Closing Taxes, and/or the Estimated Closing Working Capital,
then the amount(s) of such item(s) shall be as set forth in the Sample Merger
Consideration Calculation. For purposes of the payments to be made by Parent
(upon surrender of the Certificates representing shares in accordance with
Section 2.02(b)) at or following the Closing until the Final Closing Outstanding
Net Debt, Closing Taxes, and Final Closing Working Capital are determined
pursuant to this Agreement, such payments shall be made on the basis of
estimated Merger Consideration calculated on the assumption that the Final
Closing Outstanding Net Debt will be equal to the Estimated Closing Outstanding
Net Debt, Closing Taxes will be equal to Estimated Closing Taxes, and the Final
Closing Working Capital will be equal to the Estimated Closing Working Capital.
Such estimated Merger Consideration shall be subject to adjustment as provided
in Sections 2.01(d)(C) through (I) below.

(C) As promptly as practicable, but no later than 60 days after the Closing
Date, Parent and the Surviving Corporation shall prepare and deliver to the
Representative a closing statement (the “Closing Statement”) and a certificate
signed by an executive officer of the Parent (the “Closing Certificate”) based
on such Closing Statement setting forth the Surviving Corporation’s

 

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calculation of Closing Outstanding Net Debt, Closing Taxes, and Closing Net
Working Capital. Parent and the Surviving Corporation will permit a person
designated by the Representative to participate in the preparation of the
Closing Statement (solely for purposes of understanding the process and without
any right to specify the content of the Closing Statement). Closing Net Working
Capital shall be determined on the same basis and using the same accounting
principles, practices, assumptions, methodologies, and policies used in the
preparation of the December 31, 2005, audited consolidated financial statements
of ECCA and its Subsidiaries, including the notes thereto, included in the ECCA
SEC Documents (collectively, the “Working Capital Principles”). A sample
calculation of Net Working Capital is set forth on Exhibit C (the “Sample
Working Capital Calculation”). The Sample Working Capital Calculation was
determined in accordance with the Working Capital Principles.

(D) Upon the Representative’s review of the Closing Statement, if the
Representative disagrees with the Surviving Corporation’s calculation of the
Closing Outstanding Net Debt, Closing Taxes, and/or the Closing Net Working
Capital set forth in the Closing Certificate, the Representative may, within 15
days after delivery of the Closing Statement, deliver a written notice to the
Surviving Corporation, with a copy to Parent, disagreeing with any such
calculation and setting forth the Representative’s calculation of such amount (a
“Notice of Disagreement”). Any such Notice of Disagreement shall specify, in
reasonable detail, those items or amounts as to which the Representative
disagrees.

(E) If a Notice of Disagreement shall be duly delivered pursuant to
Section 2.01(d)(D), the Representative and the Surviving Corporation shall,
during the 15 days following such delivery, use their commercially reasonable
efforts to reach agreement on the disputed items or amounts in order to
determine, as may be required, the amount of the Closing Outstanding Net Debt
and/or the Closing Net Working Capital, as applicable. If during such period,
the Representative and the Surviving Corporation are unable to reach such
agreement, they shall promptly thereafter cause KPMG LLP (the “Accounting
Referee”) to review this Agreement and the disputed items or amounts for the
purpose of calculating the Closing Outstanding Net Debt, Closing Taxes, and/or
the Closing Net Working Capital, as applicable. If such firm is unable to serve
in such capacity, another firm of independent accountants of nationally
recognized standing reasonably satisfactory to Parent, the Surviving Corporation
and the Representative (which shall not have or have had any material
relationship with Parent, the Surviving Corporation or the Representative) shall
be selected in its stead. If Parent, the Surviving Corporation and the
Representative cannot agree upon an independent accounting firm to be the firm
that will act to determine the Closing Outstanding Net Debt, Closing Taxes
and/or the Closing Net Working Capital, as provided in the immediately preceding
sentence, within 30 days after the end of the aforesaid 30-day period, then the
Supreme Court of the County and

 

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State of New York, in a proceeding brought in accordance with Article 76 of the
New York Civil Practice Law and Rules (“CPLR”), shall be empowered to select
such an accounting firm. In any such case, a single partner of the selected
accounting firm shall act for the firm in the determination proceeding, and such
partner shall render a written decision as to each such disputed matter, as
promptly as practicable, but, in any case, no later than 30 days from the date
of the engagement of the Accounting Referee, including a statement in reasonable
detail of the basis for each such decision. In making such calculation, the
Accounting Referee shall consider only those items or amounts in the Closing
Statement and the Surviving Corporation’s calculation of Closing Outstanding Net
Debt, Closing Taxes, and/or Closing Net Working Capital as to which
Representative has disagreed. The Accounting Referee’s determination as to any
item or amount disputed by the Representative shall not be more beneficial to
the Surviving Corporation than the determination of that item or amount by the
Surviving Corporation in the Closing Statement nor more beneficial to the
Representative than the determination of that item or amount in the Notice of
Disagreement. Such report shall be final and binding upon the Representative and
the Surviving Corporation, and will be fully enforceable under and pursuant to
CPLR Article 76. The cost of such review and report shall be borne equally by
the Company Series B-1 Shareholders, on the one hand, and the Surviving
Corporation, on the other hand. The portion of the costs to be borne by the
Company Series B-1 Shareholders shall be paid by the Representative on behalf of
the Company Series B-1 Shareholders, solely from the Holdback that would
otherwise be payable to the Company Series B-1 Shareholders in accordance with
Section 2.01(f).

(F) The Representative, Parent and the Surviving Corporation shall, and shall
cause their Subsidiaries and respective representatives to, cooperate and assist
in the preparation of the Closing Statement and the calculation of Closing
Outstanding Net Debt, Closing Taxes, and Closing Net Working Capital and in the
conduct of the review of the Representative and, if necessary, the Accounting
Referee. Within the 15-day period specified in Section 2.01(d)(D), Parent and
the Surviving Corporation shall, and during the 15-day period specified in
Section 2.01(d)(E), the Representative shall, subject to normal procedures
associated with such review, make available, on reasonable notice and during
normal working hours, books, accounting records, work papers and personnel to
the extent necessary or reasonably requested to verify the amounts set forth in
the Closing Statement.

(G) If Final Outstanding Net Debt is more than Estimated Closing Outstanding Net
Debt, then the Merger Consideration shall be decreased on a dollar-for-dollar
basis by the full amount of such excess and such amount shall be paid to the
Surviving Corporation in accordance with Section 2.01(d)(I). If Final
Outstanding Net Debt is less than Estimated Closing Outstanding Net Debt, then
the Merger Consideration shall be increased on a

 

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dollar-for-dollar basis by the full amount of such deficiency, and the Surviving
Corporation shall pay the Representative such amount for distribution in
accordance with Section 2.01(d)(I). “Final Outstanding Net Debt” means Closing
Outstanding Net Debt (i) as shown in the Surviving Corporation’s Closing
Certificate delivered pursuant to Section 2.01(d)(C) if no Notice of
Disagreement with respect thereto is duly delivered pursuant to
Section 2.01(d)(D); or (ii) if such a Notice of Disagreement is delivered,
(1) as agreed by the Representative and Parent pursuant to Section 2.01(d)(E) or
(2) in the absence of such agreement, as shown in the Accounting Referee’s
determination delivered pursuant to Section 2.01(d)(E).

(H) If Estimated Closing Working Capital exceeds Final Net Working Capital, then
the Merger Consideration shall be decreased on a dollar-for-dollar basis by the
full amount of such excess and such amount shall be paid to the Surviving
Corporation in accordance with Section 2.01(d)(I). If Final Net Working Capital
exceeds the Estimated Closing Working Capital, then the Merger Consideration
shall be increased on a dollar-for-dollar basis by the full amount of such
excess, and the Surviving Corporation shall pay the Representative such amount
for distribution in accordance with Section 2.01(d)(I). “Final Net Working
Capital” means Closing Net Working Capital (i) as shown in the Surviving
Corporation’s calculation delivered pursuant to Section 2.01(d)(C) if no Notice
of Disagreement with respect thereto is duly delivered pursuant to
Section 2.01(d)(D); or (ii) if such a Notice of Disagreement is delivered,
(1) as agreed by the Representative and Parent pursuant to Section 2.01(d)(E),
or (2) in the absence of such agreement, as shown in the Accounting Referee’s
determination delivered pursuant to Section 2.01(d)(E).

(I) The amount of the payments required to be made pursuant to Sections
2.01(d)(G) and/or 2.01(d)(H) shall be netted together as one amount (such net
payment amount, the “Merger Consideration Adjustment Amount”). Any Merger
Consideration Adjustment Amount required to be made by Parent to the holders of
the Company Series B-1 Prefereed Stock shall be paid by Parent to the
Representative for distribution to the Series B-1 Stockholders in a manner
consistent with Section 2.02(b) within five Business Days of the determination
of the Merger Consideration Adjustment Amount. Any Merger Consideration
Adjustment Amount required to be made by the Company Series B Shareholders to
Parent shall be made by the Representative on behalf of the Company Series B
Shareholders, within five Business Days after the determination of the Merger
Consideration Adjustment Amount by wire transfer to an account designated in
writing by Parent.

(J) The Company shall be liable for all Final Closing Taxes. The Surviving
Corporation shall, as promptly as practicable after the Closing (and, in any
event, within 15 days following the earlier to occur of (1) the Representative’s
agreement with the Closing Taxes as set forth on the Closing Statement or,
(2) in the event of a Notice of Disagreement sent by the

 

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Representative regarding the Closing Taxes as set forth on the Closing
Statement, a final determination of the Closing Taxes by the Accounting Referee
(or as later agreed between the Representative and the Surviving Corporation),
with respect to the federal Tax Returns and forms set forth in clause (i)),
(i) file with the Internal Revenue Service (the “IRS”) (a) a federal income tax
return for the 2005 tax year, if not previously filed by the Company, (b) as
applicable and if not previously filed by the Company, a federal income tax
return for the partial 2006 tax year ending on the Closing Date, a federal
income tax return for the entire 2006 tax year, a federal income tax return for
the partial 2007 tax year ending on the Closing Date, and/or a federal income
tax return for the entire 2007 tax year, and (c) a Form 1139 Application for
Tentative Refund Claim, if applicable, and (ii) to the extent not previously
filed by the Company, file with all relevant state and local taxing authorities
all corresponding state and local forms, in each case, requesting a refund of
previously paid federal, state, and local income taxes, as applicable, with
respect to such 2005 tax year, 2006 tax year, and/or 2007 tax year, to which the
Surviving Corporation may be entitled after giving effect to all Tax deductions
generated as a result of the Merger and the other transactions contemplated
hereby. All such tax returns filed for all time periods prior to the Closing
shall be filed in a manner, and reflecting tax positions, consistent with
previous tax filings by the Company, and shall reflect as pre-Closing expenses
of the Company any and all expenses incurred or payable by the Company in
connection with this Agreement to the extent deductible and the transactions
contemplated hereby. The Surviving Corporation shall engage an accounting firm
mutually agreeable to the Surviving Corporation and the Representative to assist
it with the above-outlined process. Parent and the Surviving Corporation will
permit a person designated by the Representative to participate in the
preparation of all such Tax Returns set forth in the above-outlined process. If
Final Closing Taxes exceeds Estimated Closing Taxes (such excess amount, the
“Excess Taxes”), then the Merger Consideration shall be decreased on a
dollar-for-dollar basis by the full amount of such excess and such amount shall
be paid to the Surviving Corporation in accordance with Section 2.01(f). If
Estimated Closing Taxes exceeds Final Closing Taxes, then the Merger
Consideration shall be increased on a dollar-for-dollar basis by the full amount
of such excess, and the Surviving Corporation shall pay the Representative such
amount for distribution to the Series B-1 Stockholders. “Final Closing Taxes”
means Closing Taxes (i) as shown in the Surviving Corporation’s calculation
delivered pursuant to Section 2.01(d)(C) if no Notice of Disagreement with
respect thereto is duly delivered pursuant to Section 2.01(d)(D); or (ii) if
such a Notice of Disagreement is delivered, (1) as agreed by the Representative
and Parent pursuant to Section 2.01(d)(E), or (2) in the absence of such
agreement, as shown in the Accounting Referee’s determination delivered pursuant
to Section 2.01(d)(E).

(e) Appraisal Rights. Notwithstanding anything in this Agreement to the
contrary, shares (“Dissent Shares”) of Company Capital Stock that are
outstanding immediately prior to the Effective Time and that are held by any

 

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person who is entitled to dissent from and who did not vote in favor of the
Merger (or consent thereto in writing), and who complies in all respects with,
Section 262 of the DGCL (the “Appraisal Statute”), in each case to the extent
applicable, shall not be converted into a right to receive any Merger
Consideration as provided in Section 2.01(c)(A), (B) and/or (C), as applicable,
but rather the holders of Dissent Shares shall be entitled to the right to
receive payment of the fair value of such Dissent Shares in accordance with the
Appraisal Statute; provided, however, that if any such holder shall fail to
perfect or otherwise shall waive, withdraw or lose the right to receive payment
of the fair cash value under the Appraisal Statute, then the right of such
holder to be paid the fair value of such holder’s Dissent Shares shall cease and
such Dissent Shares shall be deemed to have been converted as of the Effective
Time into, and to have become exchangeable solely for, the right to receive the
Merger Consideration as provided in Section 2.01(c)(A), (B) and/or (C), as
applicable, as adjusted pursuant to Section 2.01(d) hereof. The Company shall
give prompt notice to Parent of any objections or demands received by the
Company for appraisal of Company Common Stock pursuant to the Appraisal Statute.
Prior to the Closing, the Company shall have the right to direct all
negotiations and proceedings with respect to such objections or demands and,
after the Closing, the Representative shall have such right. Neither the Company
nor the Surviving Corporation shall, without the prior written consent of
Representative, make any payment with respect to, or settle or offer to settle,
any such objections or demands, or agree to do any of the foregoing. The
Surviving Corporation shall be indemnified by the holders of Company Series B-1
Preferred Stock on a dollar-for-dollar basis for any payment made by the
Surviving Corporation to a holder of Dissent Shares as a result of the exercise
of the appraisal rights provided for in this section in excess of the aggregate
Merger Consideration such holder would have received under Section 2.01(c), as
adjusted pursuant to Section 2.01(d) hereof if such holder had not exercised
such appraisal rights but instead tendered the Certificates for such Dissent
Shares to Parent with the required documentation as provided in Section 2.02(b)
(the “Excess Amount”). Any such Excess Amount shall be paid by the
Representative on behalf of the holders of Company Series B-1 Preferred Stock
solely from the Holdback that would otherwise be payable to the holders of
Company Series B-1 Preferred Stock in accordance with Section 2.01(d)(I).
Conversely, if the payment made by the Surviving Corporation to a holder of
Dissent Shares as a result of the exercise of the appraisal rights provided for
in this section is less than the aggregate Merger Consideration such holder
would have received under Section 2.01(c), as adjusted pursuant to
Section 2.01(d) hereof if such holder had not exercised such appraisal rights
but instead tendered the Certificates for such Dissent Shares to Parent with the
required documentation as provided in Section 2.02(b), then Parent and the
Surviving Corporation will pay the amount of such deficiency to the the
Representative on behalf of the Series B-1 Shareholders.

 

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(f) Holdback.

(i) At the Closing, $10,000,000 of Merger Consideration that the Company Series
B-1 Shareholders would otherwise be entitled to receive hereunder shall instead
be held back and paid over to an escrow agent in London mutually acceptable to
the Parent and the Representative (the “UK Escrow Agent”) to satisfy any Merger
Consideration Adjustment Amount, Excess Taxes, any Resolution-Related Amounts
and the obligations of the holders of Company Series B-1 Preferred Stock under
Sections 2.01(d)(E) and 2.01(e)(the aggregate amount so held back, the
“Holdback”). The Escrow Agent shall hold the Holdback pursuant to the terms of
an escrow agreement mutually acceptable to the Parent and the Representative,
which escrow agreement shall contain the terms in Exhibit G attached hereto (the
“UK Escrow Agreement”).

(ii) If and to the extent that the Merger Consideration Adjustment Amount and
Excess Taxes payable to Parent exceeds the Holdback (or the portion thereof
remaining after first having deducted any payments made or required to be made
under Sections 2.01(d)(E) and 2.01(e) and in respect of Resolution-Related
Amounts), the persons who were holders of Company Series B-1 Preferred Stock as
at the Effective Time shall be obligated, jointly and severally, to pay to
Parent such excess, by wire transfer of immediately available funds to an
account designated in writing by Parent, no later than five (5) Business Days
after such excess shall first have been determined to exist. Any portion of the
Holdback that is not used to make payments pursuant to Section 2.01(d)(E),
Section 2.01(e) or this Section 2.01(f), or to pay the Resolution-Related
Amounts shall, after such payments have been made or provided for, and after a
Resolution shall have occurred, be paid by the Escrow Agent to such persons in
accordance with their respective entitlements thereto.

(iii) Notwithstanding the foregoing, in the event that the Holdback exceeds
$6,000,000 after making any deduction for the Merger Consideration Adjustment
Amount, Excess Taxes, and any payments made or required to be made under
Sections 2.01(d)(E) and 2.01(e) (or making provisions for such amounts, as
applicable) prior to a Resolution, the Escrow Agent shall pay such excess amount
to the persons who were holders of Company Series B-1 Preferred Stock as of the
Effective Time.

(iv) In the event that the Holdback is less than $6,000,000 after making any
deduction for and Merger Consideration Adjustment Amount, Excess Taxes, and any
payments made or required to be made under Sections 2.01(d)(E) and 2.01(e) (or
making provisions for such amounts, as applicable) prior to a Resolution, the
persons who were holders of Company Series B-1 Preferred Stock as of the
Effective Time shall deliver an amount equal to such deficiency to the Escrow
Agent.

 

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SECTION 2.02. Deposit; Exchange of Certificates.

(a) Deposit.

(i) Upon the execution and delivery of this Agreement, Parent shall pay an
amount equal to five percent (5%) of the Pre-Adjustment Merger Consideration
(the “Initial Deposit”) to Buchanan Ingersoll, PC (the “Interim Escrow Agent”)
to hold in escrow pursuant to an escrow agreement mutually acceptable to the
Interim Escrow Agent, the Parent and the Representative (the “Interim Escrow
Agreement”).

(ii) Within seven (7) days after the execution and delivery of this Agreement,
Parent shall pay an additional amount equal to five percent (5%) of the
Pre-Adjustment Merger Consideration (the “Second Deposit”; and together with the
Initial Deposit and any interest or other income in respect of the Initial
Deposit and the Second Deposit, the “Deposit”) to the Interim Escrow Agent, or
if the UK Escrow Agent is in existence, the UK Escrow Agent (and Parent’s
failure to do so shall constitute a material breach of this Agreement, entitling
the Company to terminate this Agreement pursuant to Section 9.01(d) and for the
Company Shareholders to receive the Initial Deposit). The Interim Escrow Agent
or the UK Escrow Agent shall hold the Second Deposit in trust pursuant to the
Interim Escrow Agreement or the UK Escrow Agreement, as applicable and shall
not, other than pursuant to the terms of such agreement, distribute the Deposit
or any accrued interest to any person until the earlier of the Closing or the
termination of this Agreement. The Initial Deposit shall be paid by way of
cashier’s check delivered to the Interim Escrow Agent, and the Second Deposit
shall be paid by wire transfer of immediately available funds to an account
designated by the Interim Escrow Agent or the UK Escrow Agent, as applicable.

(iii) If the Closing occurs, the Interim Escrow Agent or the UK Escrow Agent, as
applicable to deliver the Deposit on the Closing Date to the Representative on
behalf of the Company Shareholders, which Deposit shall be deemed payment by
Parent of the applicable portion of the Merger Consideration payable in
accordance with Section 2.02(b).

(iv) If (1) this Agreement is terminated pursuant to Section 9.01(d) or (2) the
condition set forth in Section 7.02(g) (“Financing”) is not satisfied or waived
by December 31, 2006 (assuming the prior satisfaction or waiver of all other
conditions precedent to Parent’s and Merger Sub’s obligations to consummate the
Merger set forth in Section 7.01 and 7.02), the Interim Escrow Agent or the UK
Escrow Agent, as applicable shall deliver the Deposit to the Representative on
behalf of the holders of Company Series A-1 Preferred Stock and the Company
Series B-1 Shareholders as compensation for causing the Company to enter into
this Agreement, and which Deposit

 

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shall be paid as full and complete liquidated damages. If this Agreement is
terminated for any reason other than those referred to in the preceding
sentence, the Interim Escrow Agent or the UK Escrow Agent, as applicable shall
deliver the Deposit to Parent. All such payments shall be made within one
Business Day after the day on which the payment is due by wire transfer of
immediately available funds to the wire transfer address furnished by the
recipient to the Interim Escrow Agent or the UK Escrow Agent, as applicable.
Upon such payment, no party shall have any further liability under this
Agreement, except as set forth in Section 9.02.

(v) Notwithstanding anything herein to the contrary, the Representative and the
Parent shall select a UK Escrow Agent and shall cause the UK Escrow Agreement to
be executed as soon as practicable, but in any case within 30 days of the date
of this Agreement. As soon as practicable after the UK Escrow Agent has been
appointed, the Interim Escrow Agent shall deliver all funds then held by the
Interim Escrow Agent to the UK Escrow Agent (subject to any payments required
under the Interim Escrow Agreement) and the Interim Escrow Agreement shall
terminate upon the final payment of such funds in accordance with the terms of
the Interim Escrow Agent Agreement.

(vi) The Interim Escrow Agreement and the UK Escrow Agreement shall contain
terms and conditions which shall permit the Representative to satisfy any
payment obligations under this Agreement, including any requirement to make
payments with a stated amount of time.

(b) Exchange Procedure.

(i) Subject to the provisions of this Section 2.02(b), Parent shall, on the
Closing Date, pay and distribute to the Representative, on behalf of the Company
Shareholders, the portion of the Merger Consideration to which such holders of
Certificates are entitled pursuant to Section 2.01(c)(A), (B) and/or (C) hereof,
subject to the Holdback, the Set-Aside Amount (if applicable as of the Effective
Time) and the provisions of Section 2.01(f). Parent shall (1) have a
representative present at the Closing, (2) accept delivery of Certificates
surrendered with all properly completed transmittal materials at the Closing and
(3) make payment therefor at the Closing. The payment and distribution by Parent
of the Merger Consideration shall be effected pursuant to, and in accordance
with, the provisions of this Section 2.02(b). Any payments made pursuant to this
Section 2.02(b) shall be made by wire transfer of immediately available funds,
except that any payment of less than $10,000 may be made by check.

(ii) At the Closing, Representative shall deliver to Parent from each holder of
record of a certificate or certificates representing outstanding Company Capital
Stock (the “Certificates”), whose shares will be converted

 

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pursuant to Section 2.01(c)(A), (B) and/or (C) into the right to receive the
Merger Consideration, subject to the Holdback and the Set-Aside Amount (if
applicable at the Effective Time), (A) a Letter of Transmittal in the form
attached hereto as Exhibit D (the “Letter of Transmittal”). Upon surrender by
the Representative on behalf of each holder of record of such holder’s
Certificate(s) that immediately prior to the Effective Time represented
outstanding shares of Company Capital Stock whose shares were converted into the
right to receive Merger Consideration for cancellation to Parent, together with
such Letter of Transmittal, duly executed, and such other documents as may
reasonably be required pursuant to such instructions, the holder of such
Certificate shall be entitled to receive in exchange therefor cash in an amount
set forth in Section 2.01(c)(A), (B) or (C), as the case may be, subject to the
Holdback, the Set-Aside Amount (if applicable at the Effective Time) and the
adjustments provided for in Sections 2.01(d), and the Certificate so surrendered
shall forthwith be canceled. In the event of a transfer of ownership of Company
Capital Stock that is not registered in the transfer records of the Company,
payment may be made to a person other than the person in whose name the
Certificate so surrendered is registered, if such Certificate shall be properly
endorsed or otherwise be in proper form for transfer and the person requesting
such payment shall pay any transfer or other taxes required by reason of the
payment to a person other than the registered holder of such Certificate or
establish to the satisfaction of Parent that such tax has been paid or is not
applicable. No interest shall be paid or shall accrue on the cash payable upon
surrender of any Certificate.

(iii) By tendering shares of Company Capital Stock together with a Letter of
Transmittal, duly executed in accordance with this Section and by accepting the
consideration set forth in Section 2.01, each Company Shareholder agrees (A) to
the adjustments to Merger Consideration set forth in Section 2.01(d), (B) to the
indemnification obligations of the Company Series B Shareholders and the Company
Series B-1 Shareholders set forth in Sections 2.01(d)(E), 2.01(d)(I), 2.01(e)
and 2.01(f), (C) to the treatment of the Set-Aside Amount; and (D) to the
appointment of the Representative as representative of the Company Shareholder.

(c) No Further Ownership Rights in Company Capital Stock; Transfer Books.
Subject to the payment of the Set-Aside Amount pursuant to the terms of this
Agreement, the Merger Consideration paid in accordance with the terms of this
Article II upon conversion of any shares of Company Capital Stock shall be
deemed to have been paid in full satisfaction of all rights pertaining to such
shares of Company Capital Stock, and after the Effective Time there shall be no
further registration of transfers on the stock transfer books of the Surviving
Corporation of shares of Company Capital Stock that were outstanding immediately
prior to the Effective Time. If, after the Effective Time, any Certificates are
presented to the Surviving Corporation or Parent for any reason, they shall be
canceled and exchanged as provided in this Section 2.02(c).

 

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(d) No Liability. None of Parent, Merger Sub, the Company, the Surviving
Corporation, or the Representative shall be liable to any person in respect of
any payments or distributions of Merger Consideration delivered to a public
official pursuant to any applicable abandoned property, escheat or similar Law.
If any Certificate has not been surrendered prior to five years after the
Effective Time (or immediately prior to such earlier date on which the Merger
Consideration in respect of such Certificate would otherwise escheat to or
become the property of any Governmental Entity), any amounts payable in respect
of such Certificate shall, to the extent permitted by applicable Law, become the
property of the Surviving Corporation, free and clear of all claims or interests
of any person previously entitled thereto.

(e) 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, as indemnifying Parent and
the Surviving Corporation against any claim that may be made against Parent or
the Surviving Corporation with respect to such Certificate, Parent will pay, in
exchange for such lost, stolen or destroyed Certificate, applicable Per Share
Common Stock Merger Consideration or the Per Share Preferred Stock the Merger
Consideration to be paid in respect of the shares of Company Capital Stock
represented by such Certificate, as contemplated by this Agreement; provided,
however, that Parent may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen, or destroyed
Certificates to deliver a bond in such sum as it may reasonably direct as
indemnity against any claim that may be made against Parent or the Surviving
Corporation with respect to the Certificates alleged to have been lost, stolen
or destroyed.

(f) Withholding Rights. Parent shall be entitled to deduct and withhold from the
consideration otherwise payable to any holder of shares of Company Capital Stock
pursuant to this Agreement such amounts as may be required to be deducted and
withheld with respect to the making of such payment under the Internal Revenue
Code of 1986, as amended (the “Code”) and the rules and regulations promulgated
thereunder, or under any provision of state or foreign tax Law. To the extent
that amounts are so withheld and paid over to the appropriate taxing authority
by Parent, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of Company Capital Stock in respect
of which such deduction and withholding was made.

ARTICLE III

Representations and Warranties of the Company

Except as set forth in the disclosure schedule of the Company attached to this
Agreement (the “Company Disclosure Schedule”), the Company represents and
warrants to Parent and Merger Sub that each of the statements set forth below

 

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in this Article III is true and correct as of the date hereof (unless such
statement expressly relates to an earlier date in which case such statement is
true and correct as of such earlier date):

SECTION 3.01. Organization, Standing and Corporate Power.

(a) Each of the Company and its Subsidiaries is duly organized, validly existing
and in good standing under the Laws of the jurisdiction in which it is organized
and has all requisite power and authority to own, operate and lease its
properties and to carry on its business as now being conducted.

(b) Each of the Company and its Subsidiaries is duly qualified or licensed to do
business and is in good standing (other than tax good-standing, as to which this
representation is not made; representations about tax matters are set forth in
Section 3.14) in each jurisdiction in which the nature of its business or the
ownership, leasing or operation of its properties makes such qualification or
licensing necessary, other than in such jurisdictions where the failure to be so
qualified or licensed individually or in the aggregate has not had and would not
reasonably be expected to have a Company Material Adverse Effect. For purposes
of this Agreement, “Company Material Adverse Effect” shall mean any change,
event, occurrence, violation, circumstance or effect having or that is
reasonably likely to have a material adverse effect on (i) the ability of the
Company to perform its obligations under this Agreement or to consummate the
transactions contemplated hereby, or (ii) the business, assets (including
intangible assets), Liabilities, financial condition or results of operations of
the Company and its Subsidiaries, taken as a whole, except to the extent any
change or effect arises out of, results from or is attributable to (a) any
change in conditions in the United States, foreign or global economy or capital
or financial markets generally, including any change in interest or exchange
rates, which, in each, do not disproportionately affect the Company and its
Subsidiaries, taken as a whole, (b) any change in conditions (including any
change in general legal, regulatory, political, economic or business conditions
or any change in GAAP) in or otherwise generally affecting the industry in which
the Company and its Subsidiaries conduct business, which, in each case, do not
disproportionately affect the Company and its Subsidiaries, taken as a whole,
(c) the impact of the announcement of the execution of this Agreement or the
consummation of the transactions contemplated by this Agreement on any
relationships, contractual or otherwise, between the Company and its landlords,
suppliers, vendors, employees or Affiliate Professionals, or (d) any act of
terrorism or war (whether or not threatened, pending or declared), which does
not disproportionately affect the Company and its Subsidiaries, taken as a
whole. The Company has made available to Parent complete and correct copies of
its Organizational Documents, each as amended, and the Organizational Documents
of each Subsidiary of the Company, each as amended. Such Organizational
Documents of the Company and each of its Subsidiaries are in full force and
effect. None of the Company or any of its Subsidiaries is in violation of any
provision of its

 

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Organizational Documents. The respective Organizational Documents of the
Subsidiaries of the Company do not contain any provision limiting or otherwise
restricting the ability of the Company to control its Subsidiaries.

SECTION 3.02. Subsidiaries. Section 3.02 of the Company Disclosure Schedule
lists all the Subsidiaries of the Company and, for each such Subsidiary, its
state of incorporation and each jurisdiction in which such Subsidiary is
qualified or licensed to do business. All the outstanding shares of capital
stock of, or other equity interests in, each such Subsidiary have been duly
authorized, validly issued and are fully paid and nonassessable and are owned
directly or indirectly by the Company free and clear of all pledges, claims,
liens, charges, encumbrances or security interests of any kind or nature
whatsoever (each a “Lien,” and collectively, “Liens”), and free of any
restriction on the right to vote, sell or otherwise dispose of such capital
stock or other equity interests. Neither the Company nor any of its Subsidiaries
directly or indirectly owns capital stock of, or any other interest in, any
entity other than those Subsidiaries listed in Section 3.02 of the Company
Disclosure Schedule. There are no stock appreciation rights, stock options,
phantom stock, profit participation or similar rights with respect to the
capital stock of the Company or any direct or indirect Subsidiary of the Company
that are currently outstanding, nor is there any valid ground for the existence
of any bona fide claims with respect to any such rights that were previously
outstanding.

SECTION 3.03. Capital Structure. The authorized capital stock of the Company
consists of (i) 2,830,000 shares of Company Preferred Stock, of which
(A) 800,000 shares are designated as Company Series A-1 Preferred Stock, 735,661
shares of which are issued and outstanding; (B) 800,000 shares are designated as
Company Series A-2 Preferred Stock, no shares of which are issued and
outstanding; (C) 20,000 shares are designated as Series Company A-3 Preferred
Stock, 11,260 shares of which are issued and outstanding (which number of shares
may decrease to the extent that shares of Series Company A-3 Preferred Stock are
repurchased from employees on termination of their employment); (D) 1,200,000
shares are designated as Company Series B-1 Preferred Stock, 975,997 shares of
which are issued and outstanding; and (E) 10,000 shares are designated as
Company Series B-2 Preferred Stock, 4,990 shares of which are issued and
outstanding; and (ii) 2,950,000 shares of Company Common Stock, no shares of
which are issued or outstanding. All outstanding shares of Company Capital Stock
are duly authorized, validly issued, fully paid and nonassessable and not
subject to or issued in violation of any preemptive rights. Each of the shares
of Company Capital Stock is owned by the stockholders of the Company free and
clear of any Liens and each such Person has good title to such shares reported
as being owned by it beneficially or of record in Section 3.03 of the Company
Disclosure Schedule. There are no bonds, debentures, notes or other indebtedness
of the Company having the right to vote (or convertible into, or exchangeable
for, securities having the right to vote) on any matters on which shareholders
of the Company may vote. There are not issued, reserved for issuance or
outstanding (A) any securities of the Company

 

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or any of its Subsidiaries convertible into or exchangeable or exercisable for
shares of capital stock or voting securities of the Company or any of its
Subsidiaries or (B) any warrants, calls, options, subscriptions or other rights,
agreements or commitments to acquire from the Company or any of its
Subsidiaries, or any obligation of the Company or any of its Subsidiaries to
issue, any capital stock, voting securities or securities convertible into or
exchangeable or exercisable for capital stock or voting securities of the
Company or any of its Subsidiaries, and there are not any outstanding
obligations of the Company or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any such securities or to issue, deliver or sell, or cause to
be issued, delivered or sold, any such securities. Except for that certain
Amended and Restated Stockholders’ Agreement dated as of February 2, 2005, by
and among the Company and certain shareholders of the Company (a true and
complete copy of which has been made available to Parent) (the “Shareholders’
Agreement”), neither the Company nor any of its Subsidiaries nor, to the
Knowledge of the Company, any of the Company’s shareholders, is a party to any
voting agreement or proxy with respect to the voting of any such securities, and
the voting provisions of such Shareholders’ Agreement have not been amended
since February 2, 2005.

SECTION 3.04. Authority; Noncontravention.

(a) (i) The Company has all requisite corporate power and authority to execute
and deliver this Agreement, perform its obligations hereunder and to consummate
the transactions contemplated by this Agreement. The execution and delivery of
this Agreement by the Company and the consummation by the Company of the
transactions contemplated by this Agreement have been duly authorized by all
necessary corporate action on the part of the Company, and no other corporate
proceedings on the part of the Company are necessary to authorize this Agreement
or to consummate the transactions contemplated hereby other than the adoption of
this Agreement by the requisite vote or consent of the Company Shareholders.
This Agreement has been duly executed and delivered by the Company and, assuming
the due authorization, execution and delivery by each of the Parent, Merger Sub,
and the Representative, constitutes a legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms (subject
to applicable bankruptcy, solvency, fraudulent transfer, reorganization,
moratorium and other Laws affecting creditors’ rights generally from time to
time in effect). The Board of Directors of the Company, at a meeting duly called
and held, duly adopted resolutions (1) approving and declaring advisable this
Agreement, the Merger and the other transactions contemplated by this Agreement,
(2) resolving that the adoption of this Agreement be submitted to a vote of the
Company Shareholders and (3) recommending that the Company Shareholders adopt
this Agreement.

(ii) The Company has all requisite corporate power and authority to execute and
deliver the Ancillary Agreement, perform its obligations thereunder and
consummate the transactions contemplated by the Ancillary Agreement. The

 

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execution and delivery of the Ancillary Agreement by the Company and the
consummation by the Company of the transactions contemplated by the Ancillary
Agreement have been duly authorized by all necessary corporate action on the
part of the Company, and no other corporate proceedings on the part of the
Company are necessary to authorize the Ancillary Agreement or to consummate the
transactions contemplated thereby. The Ancillary Agreement has been duly
executed and delivered by the Company and, assuming the due authorization,
execution and delivery thereof by each of the other parties thereto, upon
Closing will constitute a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms (subject to
applicable bankruptcy, solvency, fraudulent transfer, reorganization, moratorium
and other Laws affecting creditors’ rights generally from time to time in
effect).

(b) The execution and delivery of this Agreement do not, and the consummation of
the Merger and the other transactions contemplated by this Agreement and
compliance with the provisions of this Agreement will not conflict with, require
the consent, waiver, approval or authorization from any party to, or result in
any violation or breach of, or default (with or without notice or lapse of time
or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to the loss of a benefit under, or result in
the creation of any Lien in or upon any of the properties or other assets of the
Company or any of its Subsidiaries under, (i) the Organizational Documents of
the Company or any of its Subsidiaries, (ii) any Material Contract, (iii) any
other loan or credit agreement, bond, debenture, note, mortgage, indenture,
lease or other contract, agreement, obligation, commitment, arrangement,
understanding, instrument, permit or license, whether oral or written (each, a
“Contract”), to which the Company or any of its Subsidiaries is a party or any
of their respective properties or other assets is subject or (iv) subject to the
governmental filings and other matters referred to in Section 3.05, any Law
applicable to the Company or any of its Subsidiaries or their respective
properties or other assets, other than, in the case of clause (ii) or (iii), any
such conflicts, consents, waivers, approvals, authorizations, violations,
breaches, defaults, rights, losses or Liens that individually or in the
aggregate have not had and would not reasonably be expected to have a Company
Material Adverse Effect.

SECTION 3.05. Governmental Approvals and Consents. No material consent, waiver,
approval, order, license, or permit of, or authorization of, action by or in
respect of, or registration, declaration or filing with or notification to, any
Governmental Authority is required by or with respect to the Company or any of
its Subsidiaries in connection with the execution and delivery of this Agreement
by the Company or the consummation by the Company of the Merger or the other
transactions contemplated by this Agreement, except for (a) the filing of a
notification and report form by the Company or its “ultimate parent” under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”)
and (b) the filing of the Certificate of Merger with the Secretary of State of
the

 

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State of Delaware. Any approvals of the execution and delivery of this Agreement
and the consummation of the Merger required to be obtained from the creditors of
the Company’s ultimate parent corporation and its other Subsidiaries which are
in liquidation proceedings in Hong Kong, and from the Hong Kong court overseeing
such liquidation, under applicable law, or under the terms of applicable
liquidation orders, have been obtained without any conditions and remain in full
force and effect.

SECTION 3.06. ECCA SEC Documents; No Undisclosed Liabilities.

(a) Since March 1, 2005, ECCA has filed, and after the date hereof ECCA will
file, certain reports, schedules, forms, statements and other documents
(including exhibits and other information incorporated therein) with the
Securities and Exchange Commission (the “SEC”) (such documents, the “ECCA SEC
Documents”). As of their respective dates, the ECCA SEC Documents complied or
will comply, as the case may be, in all material respects with the requirements
of the Securities Act of 1933, as amended (the “Securities Act”), or the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), as the case
may be, and the rules and regulations of the SEC promulgated thereunder
applicable to such ECCA SEC Documents, and, as of their respective dates, none
of the ECCA SEC Documents contained or will contain, as the case may be, any
untrue statement of a material fact or omitted or will omit, as the case may be,
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading, provided that, if ECCA amends any of the ECCA SEC
Documents, the fact of such amendment shall not, in and of itself, be deemed to
mean or imply that any representation or warranty in this Agreement was not true
when made or became untrue thereafter.

(b) The financial statements of ECCA included in the ECCA SEC Documents
previously filed were prepared, and any financial statements included in any
ECCA SEC Documents after the date hereof will be prepared, in accordance with
generally accepted accounting principles as applied in the United States
(“GAAP”) applied on a consistent basis during the periods involved (except as
may be indicated in the notes thereto) and fairly presented or will present, as
the case may be, in all material respects the consolidated financial position of
the Company as of the respective dates thereof and the consolidated results of
its operations and cash flows for the respective periods covered thereby
(subject, in the case of unaudited statements, to normal year-end audit
adjustments).

(c) Neither the Company nor any of its Subsidiaries has any indebtedness,
obligations or other liabilities (absolute, accrued, fixed, contingent or
otherwise) (“Liabilities”) including any Liabilities which, if known, would be
required to be reflected or reserved against on a consolidated balance sheet of
the Company prepared in accordance with GAAP or the notes thereto, except
Liabilities

 

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(i) reflected or reserved against on the audited balance sheet of ECCA as of
December 31, 2005 (the “Audited Balance Sheet Date”) (including the notes
thereto) included in the ECCA SEC Documents, (ii) incurred since the Audited
Balance Sheet Date and reflected in any unaudited balance sheet of ECCA included
in the ECCA SEC Documents, (iii) incurred in the ordinary course of business
since such date, (iv) incurred by the Company or its Subsidiaries under this
Agreement in connection with the transactions contemplated hereby, or (iv) which
are not otherwise material to the Company and its Subsidiaries, taken as a
whole. This Section 3.06(c) does not relate to any matters with respect to
environmental matters and taxes, which are addressed solely in Section 3.11 and
Section 3.14, respectively.

SECTION 3.07. Absence of Certain Changes or Events. Subject to the final
sentence of this Section 3.07, except for actions undertaken in connection with
this Agreement and the transactions contemplated hereby, since the Audited
Balance Sheet Date (a) the Company and its Subsidiaries have conducted their
respective businesses in all material respects in the ordinary course consistent
with past practice, (b) there have not been any changes or effects that
individually or in the aggregate would reasonably be expected to have or have
had a Company Material Adverse Effect, (c) neither the Company nor any of its
Subsidiaries has engaged in any material transaction or entered into any
material agreement outside the ordinary course of business, (d) neither the
Company nor any of its Subsidiaries has increased the compensation of any
officer or granted any general salary or benefits increase to their respective
employees, other than in the ordinary course of business, (e) there has been no
declaration, setting aside or payment of any dividend or other distribution with
respect to the Company Capital Stock, or any repurchase, redemption or other
acquisition by the Company or any of its Subsidiaries of any stock or other
securities of the Company or any of its Subsidiaries, (f) there has been no
change by the Company in accounting principles, practices or methods, (g) there
has been no implementation of any employment loss that could implicate the
Worker Adjustment and Retraining Notification Act, as amended, or any similar
state or local law, regulation or ordinance, (h) there has been no material
damage, destruction, or loss (whether or not covered by insurance) to any of the
properties of the Company or its Subsidiaries, (i) there has been no
indebtedness for borrowed money incurred by the Company or any of its
Subsidiaries or any commitment to incur indebtedness entered into by the Company
or any of its Subsidiaries, other than Existing Company Indebtedness, (j) there
has been no amendment of the Organizational Documents of the Company or any of
its Subsidiaries, and (k) there has been no agreement, whether oral or written,
by the Company or any of its Subsidiaries to do any of the foregoing. This
Section 3.07 does not relate to any matters with respect to environmental
matters and taxes, which are addressed solely in Section 3.11 and Section 3.14,
respectively.

SECTION 3.08. Litigation. There is no suit, action or proceeding pending or, to
the Knowledge of the Company, threatened against the Company or any of its
Subsidiaries or any of their respective properties or assets that

 

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individually or in the aggregate has had or would reasonably be expected to have
a Company Material Adverse Effect, nor is there any judgment, decree,
injunction, rule or order of any Governmental Authority or arbitrator
outstanding against, or, to the Knowledge of the Company, investigation by any
Governmental Authority involving, the Company or any of its Subsidiaries that
individually or in the aggregate has had or would reasonably be expected to have
a Company Material Adverse Effect. This Section 3.08 does not relate to any
matters with respect to environmental matters and taxes, which are addressed
solely in Section 3.11 and Section 3.14, respectively.

SECTION 3.09. Contracts.

(a) Section 3.09 of the Company Disclosure Schedule lists any Contract, to which
the Company or any of its Subsidiaries is a party or any of their respective
properties or other assets is subject or with respect to which the Company or
any of its Subsidiaries has a beneficial interest, and which fall within any of
the following categories:

 

  (i) Contracts the absence of which or default under would have a Company
Material Adverse Effect;

 

  (ii) is a supplier, vendor or other Contract that has provided for payments by
or to the Company or any of its Subsidiaries, individually or collectively, in
excess of $500,000 during the twelve month period ended December 31, 2005;

 

  (iii) joint venture, partnership and similar agreements involving a sharing of
profits, losses, costs or liabilities, the absence of which or default under
would reasonably be expected to have a Company Material Adverse Effect;

 

  (iv) Contracts containing terms purporting to limit the ability of the Company
or any of its Subsidiaries to solicit or secure the business of any person,
award business to any person or compete in any line of business in any
geographic area or to hire, solicit or conduct business with any individual or
other person;

 

  (v) Contracts which contain minimum purchase conditions or requirements or
other terms that restrict or limit in any material respect the purchasing
relationships of the Company or any of its Subsidiaries or which would limit or
materially adversely affect the contractual relationships of Parent, the Company
or any of their respective Affiliates;

 

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  (vi) Contracts that, individually or in the aggregate, contain any outstanding
commitments for capital expenditures during the 2006 fiscal year in excess of
$250,000;

 

  (vii) indentures, mortgages, promissory notes, loan agreements and guarantees
of amounts in excess of $250,000, letters of credit, fidelity or performance
bonds or other agreements, instruments or commitments of the Company or any of
its Subsidiaries for the borrowing or the lending of amounts in excess of
$250,000 or providing for the creation of any material Lien upon any of the
assets of the Company or any of its Subsidiaries;

 

  (viii) Contracts with or for the benefit of any Affiliate (including any
shareholder or Affiliate of any shareholder) of the Company or any of its
Subsidiaries (each an “Affiliate Contract”);

 

  (ix) any Contract for the employment of any officer, individual consultant or
employee (other than any at-will employment arrangements); any written employee
manual or policy; or any Contract, program or policy (whether written or oral)
providing for severance or similar benefits, “change of control” payments,
bonuses, profit-sharing payments or post-retirement benefits;

 

  (x) any Contract (A) for the sale of goods or services outside the ordinary
course of business consistent with past practice, or (B) providing for the grant
of any preferential right to purchase any assets or rights of the Company or any
of its Subsidiaries;

 

  (xi) any power of attorney granted by the Company or any of its Subsidiaries
that is currently effective;

 

  (xii) any licenses issued to the Company by Governmental Authorities,
necessary for the conduct of the respective businesses of the Company and its
Subsidiaries the absence of which would have a Company Material Adverse Effect;

 

  (xiii) any Contract requiring payments by the Company in excess of $250,000 in
the twelve month period following the Closing that has an unexpired term as of
the date hereof in excess of one year and that cannot be terminated by the
Surviving Corporation after the Closing in accordance with its terms upon not
more than 60 days’ notice without penalty or cost (other than leases covering
optical retail store premises);

 

  (xiv)

Contracts for any real property pursuant to which the Company occupies real
property as a tenant, sublessee, licensee, concessionaire

 

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or otherwise or subleases real property as a sublessor, including all Leases for
the Leased Properties and the Subleased Properties;

 

  (xv) material settlement agreements and/or releases to which the Company
and/or one of its Subsidiaries or Affiliates is a party;

 

  (xvi) any Contract required to be filed with the SEC as an exhibit to the ECCA
SEC Documents and which was not so filed;

 

  (xvii) any Contracts that materially restrict or would materially restrict the
ability of the Company (including the Surviving Corporation after giving effect
to the consummation of the Merger) or any of its Subsidiaries from competing or
otherwise conducting their respective businesses substantially as such
businesses are conducted on the date of this Agreement;

 

  (xviii) any material amendments, supplements and modifications in respect of
any of the foregoing; and

 

  (xix) any other Contract not otherwise set forth in Section 3.09 of the
Company Disclosure Schedule which involves an amount or has a value to the
Company and its Subsidiaries, taken as a whole, in excess of $500,000.

All of the Contracts required to be disclosed by this Section 3.09(a) are
referred to in this Agreement “Material Contracts.”

(b) True and complete copies of each Material Contract, including all amendments
and supplements thereto, have been made available to Parent. Each Material
Contract is in full force and effect against the Company or its Subsidiary party
thereto and, to the Company’s Actual Knowledge, against each other party
thereto; valid and enforceable against the Company or its Subsidiary party
thereto and, to the Company’s Actual Knowledge, against each other party
thereto; the Company and/or each of its Subsidiaries party thereto has duly
performed in all material respects all of its obligations thereunder to the
extent that such obligations to perform have accrued; and no material breach or
default, alleged material breach or default, or event which would (with the
passage of time, notice or both) constitute a material breach or default
thereunder by the Company or any of its Subsidiaries or, to the Actual Knowledge
of the Company, any other party or obligor with respect thereto, has occurred or
as a result of this Agreement or the performance hereof will occur. Except as
disclosed in the ECCA SEC Documents, there are no Contracts entered into on or
after March 1, 2005, or, to the Company’s Actual Knowledge, entered into prior
to that date and still in effect, between or among any of the Company and/or any
of its Subsidiaries, on the one hand, and any Affiliate thereof, on the other
hand, that would be required to be disclosed under Item 404 of Regulation S-K
under the Securities Act. Except as disclosed in the

 

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ECCA SEC Documents, other than loans in connection with cashless exercises of
stock options or advancements of relocation, travel or other business expenses,
there are no outstanding loans to any executive officer or director of the
Company or any of its Subsidiaries. Except as disclosed in the ECCA SEC
Documents, since March 1, 2005, and, to the Company’s Actual Knowledge, prior to
such date, neither the Company nor any of its Subsidiaries has extended or
maintained credit, arranged for the extension of credit, or renewed any
extension of credit in the form of a personal loan to or for any director or
executive officer of the Company. There are no renegotiations occurring with
respect to, or any pending requests on the part of the Company or, to the
Company’s Actual Knowledge, on the part of any other party, to renegotiate, any
Material Contract.

SECTION 3.10. Compliance with Laws. Each of the Company and its Subsidiaries is
in compliance with all statutes, laws, ordinances, rules, regulations,
judgments, orders and decrees of any Governmental Authority (collectively,
“Laws”) applicable to it, its properties or other assets or its business or
operations, except for instances of noncompliance that individually or in the
aggregate have not had and would not reasonably be expected to have a Company
Material Adverse Effect. This Section 3.10 does not relate to any matters with
respect to environmental matters and taxes, which are addressed solely in
Section 3.11 and Section 3.14, respectively. Each of the Company and its
Subsidiaries has obtained all federal, state, local and foreign governmental
approvals, authorizations, Certificates, filings, franchises, licenses, notices,
permits and rights (collectively, “Permits”) necessary for it to own, lease or
operate its properties and assets and to carry on its business as presently
conducted except as have not had and would not reasonably be expected to have a
Company Material Adverse Effect and there has not occurred any default under any
such Permit, except to the extent that any such failure to hold Permits and any
such default would not have a Company Material Adverse Effect.

SECTION 3.11. Environmental Matters. (a) Each of the Company and its
Subsidiaries is, in material compliance with all Environmental Laws, (b) there
is no order, decree, judgment, settlement, investigation, suit, claim, action or
proceeding pending, or, to the Actual Knowledge of the Company, threatened
against the Company or any of its Subsidiaries or, to the Actual Knowledge of
the Company, any real property owned, operated or leased by the Company or any
of its Subsidiaries relating to or arising under Environmental Laws, and neither
the Company nor any of its Subsidiaries has received any notice of or other
correspondence relating to, or entered into or assumed by Contract or operation
of Law or otherwise, any obligation, liability, order, settlement, judgment,
injunction or decree relating to or arising under Environmental Laws, which
would reasonably be expected to result in the Company incurring material
liability under such Environmental Laws and (c) since March 1, 2005, and, to the
Company’s Actual Knowledge, prior to that date, neither the Company nor its
Subsidiaries has treated, stored, disposed of, arranged for or knowingly
permitted the disposal of, transported, handled or released any Hazardous
Substances, or owned or operated

 

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any property or facility (and no such property or facility is contaminated by
any such substance), or taken any other action, in each case that has given or
would give rise to material liabilities, including any material liability for
response costs, corrective action costs, personal injury, property damage,
natural resources damages or attorney fees, pursuant to any Environmental Laws.
This Section 3.11 represents the sole and exclusive representation and warranty
of the Company regarding environmental matters. For purposes of this Agreement,
“Environmental Laws” shall mean all applicable Laws relating to the protection
of the environment or human health as it relates to environmental protection.
“Hazardous Substances” means all substances, wastes, materials or chemicals
classified or regulated as hazardous or toxic or as a pollutant or contaminant
under Environmental Laws, including petroleum (including crude oil or any
fraction thereof) and petroleum products, asbestos and asbestos-containing
materials.

SECTION 3.12. Labor Matters. Except as provided in Section 3.12 of the Company
Disclosure Schedule, there are no collective bargaining or other labor
agreements to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries is bound. Since March 1, 2005, and,
to the Company’s Actual Knowledge, prior to such date, no labor organization or
group of employees of the Company or any of its Subsidiaries has made a demand
for recognition or certifications with the National Labor Relations Board or any
other labor relations tribunal or authority; and neither the Company nor any of
its Subsidiaries has experienced any actual or threatened employee strikes, work
stoppages, slowdowns or lockouts. Since March 1, 2005, and, to the Company’s
Actual Knowledge, prior to such date, the Company and each of its Subsidiaries
has complied in all material respects with all collective bargaining and other
labor or employment agreements. Except as provided in Section 3.13(a)(iii) of
the Company Disclosure Schedule, there are no employment, severance, consulting
or similar agreements covering employees or individual consultants of the
Company or any of its Subsidiaries. There is no unfair labor practice charge or
complaint pending against the Company or any Subsidiary, or, to the Company’s
Actual Knowledge, threatened; and no grievance or arbitration proceeding arising
out of or under a collective bargaining agreement is pending or, to the
Company’s Actual Knowledge, is threatened with respect to the Company’s or any
of the Subsidiaries’ operations. Neither the Company nor any of the Subsidiaries
has any Equal Employment Opportunity Commission charges or other claim of
employment discrimination or other claim of alleged violation of any Law
concerning employment, pending or, to the Company’s Actual Knowledge, currently
threatened against it. No wage and hour investigation by any Governmental
Authority has been made of the Company or any of the Subsidiaries since March 1,
2005, and, to the Company’s Actual Knowledge, prior to such date. There are no
occupational health and safety claims against the Company or any of the
Subsidiaries that would reasonably be expected to have a Company Material
Adverse Effect. Since March 1, 2005, and, to the Company’s Actual Knowledge,
prior to such date, neither the Company nor any of the Subsidiaries has
effectuated (A) a “plant closing” (as defined in the Worker

 

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Adjustment and Retraining Notification Act (the “WARN Act”)) affecting any site
of employment or one or more facilities or operating units within any site of
employment or operating unit or facility of the Company or any of the
Subsidiaries; or (B) a “mass layoff” (as defined in the WARN Act) affecting any
site of employment or operating unit or facility of the Company or any of the
Subsidiaries; nor has the Company or any of the Subsidiaries been affected by
any transaction or engaged in layoffs or employment terminations sufficient in
number to trigger application of any similar state or local law. None of the
Company’s or any of the Subsidiaries employees has suffered an “employment loss”
(as that term is used in the WARN Act) within ninety (90) days prior to the date
hereof. The Company and the Subsidiaries are in compliance in all material
respects with the terms and provisions of the Immigration Reform and Control Act
of 1986, as amended, and all related regulations promulgated thereunder, and
have not been subject to any investigation or complaint by the U.S. Immigration
and Naturalization Service or the Department of Justice nor, to the Company’s
Actual Knowledge, is any such investigation or complaint threatened.

SECTION 3.13. Employee Benefit Plans.

(a) List of Plans. Set forth in Section 3.13 of the Company Disclosure Schedule
is an accurate and complete list of all material domestic and foreign
(i) “employee benefit plans,” within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended, and the regulations
thereunder (“ERISA”); (ii) bonus, stock option, stock purchase, restricted
stock, incentive, statutory fringe benefit, “voluntary employees’ beneficiary
associations” (“VEBAs”) under Section 501(c)(9) of the Code, profit-sharing,
pension, or retirement, deferred compensation, medical, life insurance,
disability, accident, salary continuation, severance, accrued leave, vacation,
sick pay, sick leave, supplemental retirement and unemployment benefit plans,
programs, and/or arrangements, commitments and/or practices (whether or not
insured); and (iii) employment, consulting, termination, and severance contracts
or agreements; for active, retired or former employees or directors, whether or
not any such plans, programs, arrangements, commitments, contracts, agreements
and/or practices (referred to in (i), (ii) or (iii) above) are in writing or are
otherwise exempt from the provisions of ERISA; established, maintained or
contributed to (or with respect to which an obligation to contribute has been
undertaken) by the Company or any of its Subsidiaries or with respect to which
the Company or any of its Subsidiaries (including, for this purpose and for the
purpose of all of the representations in this Section 3.13, any predecessors of
the Company or of any of its Subsidiaries and all employers (whether or not
incorporated) that would be treated together with the Company or any of its
Subsidiaries as a single employer within the meaning of Section 414 of the Code)
has incurred any liability (contingent or otherwise) since March 1, 2005, and,
to the Company’s Actual Knowledge, prior to such date (each, a “Company Benefit
Plan” and collectively, the “Company Benefit Plans”).

 

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(b) Documents. The Company has made available to Parent correct and complete
copies of all material documents in connection with each Company Benefit Plan,
including (where applicable): (i) each Company Benefit Plan (or, in the case of
any such Company Benefit Plan that is unwritten, descriptions thereof) as in
effect on the date hereof, together with all amendments thereto; (ii) the most
recent annual reports on Form 5500 required to be filed with the Internal
Revenue Service (the “IRS”); (iii) the most recent summary plan descriptions,
summaries of material modifications, and material communications; (iv) all
current trust agreements, declarations of trust, insurance or group annuity
contract, and other documents establishing funding arrangements (and all
amendments thereto and the latest financial statements thereof); (v) the most
recent IRS determination letter, if any; (vi) the two most recently prepared
actuarial valuation reports; (vii) the most recently prepared financial
statements; and (viii) all service provider agreements, investment management
agreements, subscription agreements, participation agreements, and recordkeeping
agreements. With respect to any unwritten plan, the Company has made a
reasonably detailed summary thereof available to Parent.

(c) Status of Plans. Since March 1, 2005, and, to the Company’s Actual
Knowledge, prior to such date, each Company Benefit Plan (including any related
trust) has been administered in all material respects in accordance with its
terms and has complied in all material respects, including in form, with the
applicable provisions of ERISA, the Code and all other applicable Laws. No
complete or partial termination of any Company Benefit Plan has occurred since
March 1, 2005, or, to the Company’s Actual Knowledge, prior to such date, or is
expected to occur with respect to any Company Benefit Plan that is an “employee
benefit plan” within the meaning of ERISA with respect to which the Company or
any of its Subsidiaries has any outstanding liability. Neither the Company nor
any of its Subsidiaries has any commitment, intention or understanding to
create, modify, or terminate any Company Benefit Plan. Except as required to
maintain the tax-qualified status of any Company Benefit Plan, no condition or
circumstance exists that would prevent the amendment or termination of any
Company Benefit Plan. Benefits under all Company Benefit Plans are as
represented and have not been increased (other than as required by the Company
Benefit Plans) subsequent to the date as of which documents have been provided.

(d) Tax Qualification. Each Company Benefit Plan intended to be qualified under
Section 401(a) of the Code has, as currently in effect, been determined to be so
qualified by the IRS. Each trust established in connection with any Company
Benefit Plan which is intended to be exempt from federal income taxation under
Section 501(a) of the Code has, as currently in effect, been determined to be so
exempt by the IRS. Each VEBA has been determined by the IRS to be exempt from
federal income tax under Section 501(c)(9) of the Code. Since the date of each
most recent determination referred to in this paragraph (d), no event has
occurred and no condition or circumstance has existed that resulted or is likely
to result in the revocation of any such determination or that would adversely

 

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affect the qualified status of any such Company Benefit Plan or the exempt
status of any such trust or VEBA.

(e) Contributions. All contributions, premiums and benefit payments under or in
connection with the Company Benefit Plans that are required to have been made
since March 1, 2005, or, to the Company’s Actual Knowledge, prior to such date,
in accordance with the terms of the Company Benefit Plans have been timely made
or have been reflected on the most recent consolidated balance sheet (to the
extent they properly should be accrued as of the date thereof) filed or
incorporated by reference into the ECCA SEC Documents. No such contributions
and/or premiums that have been deducted for income tax purposes since March 1,
2005, or, to the Company’s Actual Knowledge, prior to such date, have been
challenged or disallowed by any Governmental Entity, and to the Actual Knowledge
of the Company, no event has occurred and no condition or circumstance has
existed that could give rise to any such challenge or disallowance. Since
March 1, 2005, and, to the Company’s Actual Knowledge, prior to such date,
neither the Company nor any of its Subsidiaries has incurred any material
unfunded liabilities pursuant to any Company Benefit Plan that is a “pension
plan” within the meaning of Section 3(2) of ERISA that is not intended to be
qualified under Section 401(a) of the Code.

(f) No Pension Plans. Since March 1, 2005, and, to the Company’s Actual
Knowledge, prior to such date, neither the Company nor any of its Subsidiaries
has maintained or contributed to, or incurred any obligation to contribute to,
any “multiple employer plan” (within the meaning of the Code or ERISA) or any
“multiemployer plan” (as defined in Section 4001(a)(3) of ERISA) or an “employee
pension benefit plan” (within the meaning of Section 3(2) of ERISA subject to
Section 412 of the Code or Section 302 or Title IV of ERISA.

(g) Litigation; Pending or Threatened Claims; Excise Tax. No claims are pending
against the Company Benefit Plans, or the Company or any of its Subsidiaries
with respect to the Company Benefit Plans except for benefit payments in the
normal course of business, and to the Actual Knowledge of the Company, no
employee, beneficiary, dependent, or Governmental Authority has threatened any
appeal or litigation regarding any matter with respect to the Company Benefit
Plans. Since March 1, 2005, and, to the Company’s Actual Knowledge, prior to
such date, neither the Company nor any of its Subsidiaries has incurred any
material liability for any tax or excise tax arising under Chapter 43 of the
Code, and no event has occurred and no condition or circumstance has come into
existence that would give rise to any such material liability. Neither the
Company nor any Subsidiary is a member of an “affiliated service group” within
the meaning of Section 414(m) of the Code.

(h) Welfare Plans. Neither the Company nor any of its Subsidiaries maintains any
Company Benefit Plan which is (a) a “group health plan” (as such term is defined
in Section 5000(b)(1) of the Code or Section 607(1) of ERISA) that

 

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has not since March 1, 2005, and, to the Company’s Actual Knowledge, prior to
such date, been administered and operated in all material respects in compliance
with the applicable requirements of Part 6 of Subtitle B of Title I of ERISA and
Section 4980B of the Code or (b) a “group health plan” (as defined in 45 Code of
Federal Regulations Section 160.103) that has not since March 1, 2005, and, to
the Company’s Actual Knowledge, prior to such date, been administered and
operated in all material respects in compliance with the applicable requirements
of the Health Insurance Portability and Accountability Act of 1996 and the
regulations promulgated thereunder, and neither the Company nor any of its
Subsidiaries is subject to any liability, including additional contributions,
fines, taxes, penalties or loss of tax deduction as a result of such
administration and operation since March 1, 2005, and, to the Company’s Actual
Knowledge, prior to such date. No Company Benefit Plan which is such a group
health plan is a “multiple employer welfare arrangement,” within the meaning of
Section 3(40) of ERISA. Each Company Benefit Plan that is intended to meet the
requirements of Section 125 of the Code meets such requirements, and each
program of benefits for which employee contributions are provided pursuant to
elections under any Company Benefit Plan meets the requirements of the Code
applicable thereto in each case except where such non-compliance has not had and
would reasonably likely not have a material liability. Neither the Company nor
any of its Subsidiaries maintains any Company Benefit Plan which is an “employee
welfare benefit plan” (as such term is defined in Section 3(1) of ERISA) that
since March 1, 2005, or, to the Company’s Actual Knowledge, prior to such date,
has provided any “disqualified benefit” (as such term is defined in
Section 4976(b) of the Code) with respect to which a material excise tax would
be imposed.

(i) Post-Retiree Benefits. Neither the Company nor any of its Subsidiaries
maintains any Company Benefit Plan (other than a plan qualified under
Section 401(a) of the Code) providing for post-employment or retiree health or
life insurance and/or other welfare benefits (other than as required under Part
6 of Subtitle B of Title I of ERISA and Section 4980B of the Code) and since
March 1, 2005, and, to the Company’s Actual Knowledge, prior to such date,
neither the Company nor any of its Subsidiaries have any obligation to provide
any such benefits to any retired or former employees or active employees
following such employees’ retirement or termination of service.

(j) Prohibited Transactions. Neither the Company nor any of its Subsidiaries nor
any of their respective directors, officers, employees or, to the Knowledge of
the Company, other persons who participate in the operation of any Company
Benefit Plan or related trust or funding vehicle, has since March 1, 2005, or,
to the Company’s Actual Knowledge, prior to such date, engaged in any
transaction with respect to any Company Benefit Plan or breached any applicable
fiduciary responsibilities or obligations under Title I of ERISA that would
subject any of them to a material tax, penalty or liability for prohibited
transactions or breach of any obligations under ERISA or the Code or would
result in any material

 

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claim being made under, by or on behalf of any such Company Benefit Plan by any
party with standing to make such claim.

(k) Triggering Events. Except as described in Section 6.02 of this Agreement,
the execution of this Agreement and the consummation of the transactions
contemplated hereby, do not constitute a triggering event under any Company
Benefit Plan, policy or arrangement which (either alone or upon the occurrence
of any additional or subsequent event) will result in any payment (whether of
severance pay or otherwise), “parachute payment” (as such term is defined in
Section 280G of the Code), acceleration, vesting or increase in benefits to any
employee or former employee or director of the Company or any of its
Subsidiaries.

(l) Section 409A. No Company Benefit Plan subject to the requirements of
Section 409A of the Code has since March 1, 2005 or, to the Company’s Actual
Knowledge, prior to that date, failed, in form or in operation, to satisfy such
requirements, as interpreted by proposed, temporary, or final regulations or
other guidance issued by the Internal Revenue Service.

SECTION 3.14. Taxes. Since March 1, 2005, and, to the Company’s Actual
Knowledge, prior to such date, each of the Company and its Subsidiaries has
timely filed, or has caused to be timely filed on its behalf (taking into
account any extension of time within which to file), with the appropriate
authorities, all federal income and other Tax Returns and reports required to be
filed; all such Tax Returns and reports have been true, correct and complete in
all material respects, and each of the Company and its Subsidiaries have paid,
or caused to be paid or adequately reserved for in accordance with GAAP all
Taxes due with respect to them. Since March 1, 2005, and, to the Company’s
Actual Knowledge, prior to such date, no deficiencies for any Taxes have been
assessed against the Company or any of its Subsidiaries that are still pending.
Neither the Company nor any of its Subsidiaries (i) has made since March 1, 2005
or, to the Company’s Actual Knowledge, prior to such date, a payment or entered
into a settlement in an amount pursuant to an audit or other examination of
Taxes by the tax authorities of any nation, state or locality and no audit is
contemplated or pending; or (ii) is presently contesting any material Tax
liability before any court, tribunal or agency. Since March 1, 2005, and, to the
Company’s Actual Knowledge, prior to such date, neither the Company nor any of
its Subsidiaries has been included in any “consolidated,” “unitary” or
“combined” Tax Return provided for under the law of the United States, any
foreign jurisdiction or any state or locality with respect to Taxes for any
taxable period for which the statute of limitations has not expired other than
the consolidated, unitary or combined group of which the Company and its
Subsidiaries are the sole members. Since March 1, 2005, and, to the Company’s
Actual Knowledge, prior to such date, all material Taxes which the Company and
or any of its Subsidiaries was required by law to withhold or collect in
connection with amounts paid or owing to any employee, independent contractor,
creditor,

 

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stockholder or other third party have been duly withheld or collected, and have
been timely paid over to the proper authorities to the extent due and payable.
No written claim has been made since March 1, 2005 or to the Company’s Actual
Knowledge, prior to such date, by any taxing authority in a jurisdiction where
the Company or any of its Subsidiaries does not file Tax Returns that the
Company or any of its Subsidiaries is or may be subject to taxation by that
jurisdiction and has not received any correspondence asserting that the Company
has not properly filed Tax Returns in any tax jurisdiction. There are no tax
sharing, allocation, indemnification or similar agreements entered into since
March 1, 2005, or to the Company’s Actual Knowledge, entered into on or prior to
March 1, 2005, in effect as between the Company or any of its Subsidiaries and
any other party under which Parent, the Company or any of its Subsidiaries would
be liable for any Taxes or other claims of any party after the Closing Date.
Since March 1, 2005, and, to the Company’s Actual Knowledge, prior to such date,
neither the Company nor any of its Subsidiaries has applied for, been granted,
or agreed to any accounting method change for which it will be required to take
into account any adjustment under Section 481 of the Code or any similar
provision of the Code or the corresponding tax laws of any nation, state or
locality. There are no material deferred intercompany transactions between the
Company and any of its Subsidiaries or between its Subsidiaries which will
result in the recognition of income upon the consummation of the transaction
contemplated by this Agreement. Neither the Company nor any of its Subsidiaries
is a real property personal holding company as defined under Section 897(c)(2)
of the Code. The Company and its Subsidiaries have not applied for or been
granted any private letter ruling from the IRS or any comparable ruling from any
other taxing authority. The Company is not, and has not been since March 1,
2005, or to the Company’s Actual Knowledge, prior to that date, a “United States
real property holding corporation” within the meaning of Section 897(c)(2) of
the Code.

For purposes of this Agreement the term “Taxes” shall mean all taxes,
assessments, charges, duties, fees, levies or other governmental charges,
including all federal, state, local, foreign and other income, franchise,
profits, gross receipts, capital gains, capital stock, transfer, property,
sales, use, value-added, occupation, property, excise, severance, windfall
profits, stamp, license, payroll, social security, withholding and other taxes,
assessments, charges, duties, fees, levies or other governmental charges of any
kind whatsoever (whether payable directly or by withholding and whether or not
requiring the filing of a Tax Return), all estimated taxes, deficiency
assessments, additions to tax, penalties and interest and shall include any
liability for such amounts as a result either of being a member of a combined,
consolidated, unitary or affiliated group or of a contractual obligation to
indemnify any person or other entity. For purposes of this Agreement the term
“Tax Return” shall mean all tax returns, statements, forms and reports
(including elections, declarations, disclosures, schedules, estimates and
information Tax Returns) for Taxes.

 

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SECTION 3.15. Title to Properties.

(a) None of the Company or any of its Subsidiaries owns any fee interest in any
real property. Section 3.15(a) of the Company Disclosure Schedule contains (i) a
complete and accurate list of all leasehold or subleasehold estates of the
Company or its Subsidiaries and other rights of the Company or its Subsidiaries
to use or occupy any land, buildings, structures, improvements, fixtures or
other interest in real property (including any amendments or modifications
thereto) (“Leased Properties”) and (ii) a complete and accurate list of all
subleases (including any amendments or modifications thereto) pursuant to which
the Company or its Subsidiaries subleases real property as a sublessor
(“Subleased Properties”). Each of the Company and its Subsidiaries has good and
marketable title to, or valid leasehold interests in, all its Leased Properties
and Subleased Properties, except for defects in title, easements, restrictive
covenants and similar encumbrances that individually or in the aggregate have
not interfered, and would not reasonably be expected to interfere, in any
material respect with the use or occupancy thereof or any portion thereof in the
continued operation of the Company or the Subsidiaries’ business as currently
conducted thereon. All such Leased Properties are free and clear of all Liens,
except for Liens that individually or in the aggregate have not interfered, and
would not reasonably be expected to interfere, in any material respect with the
use or occupancy thereof or any portion thereof in the continued operation of
the Company or the Subsidiaries’ business as currently conducted thereon.

(b) Since March 1, 2005, and, to the Company’s Actual Knowledge, prior to such
date, each of the Company and its Subsidiaries has complied in all material
respects, with the terms of all leases and subleases to which it is a party or
under which it is in occupancy, of any real property and all such leases and
subleases are in full force and effect, except for such noncompliance that
individually or in the aggregate has not had and would not reasonably be
expected to have a Company Material Adverse Effect. The delivery and performance
of this Agreement or the consummation of the transactions contemplated by this
Agreement will not conflict with, require the consent, waiver, approval or
authorization from any party, or result in any violation or breach of, or
default (with or without notice or lapse of time or both) under, or give rise to
a right of termination, cancellation or acceleration of any obligation, the
triggering of any payment or other obligation or to the loss of a benefit under,
any Leases, whether pursuant to any “change in control” or any other provisions
thereof, by operation of law or otherwise, except for such consents, waivers,
approvals, or authorizations, which failure to obtain, individually or in the
aggregate, would not reasonably be expected to have a Company Material Adverse
Effect. Since March 1, 2005, and, to the Company’s Actual Knowledge, prior to
such date, the Company and its Subsidiaries’ possession and quiet enjoyment of
the Leased Properties under such Leases have not been materially disturbed, and
to the Company’s and its Subsidiaries’ Knowledge, there are no material disputes
with respect to such

 

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Leases. Neither the Company and its Subsidiaries nor to the Knowledge of the
Company, any other party to the Leases is in material breach or default under
such Leases, and since March 1, 2005, and, to the Company’s Actual Knowledge,
prior to such date, no event has occurred or circumstance exist which, with the
delivery of notice, the passage of time or both, would constitute such a
material breach or default, or permit the termination, material modification or
acceleration of rent under such Leases. Since March 1, 2005, and, to the
Company’s Actual Knowledge, prior to such date, no security deposit or portion
thereof deposited with respect to such Leases has been applied in respect of a
breach or default under such Leases which has not been redeposited in full.
Since March 1, 2005, and, to the Company’s Actual Knowledge, prior to such date,
the Company and its Subsidiaries have not subleased or granted use or occupancy
rights of any Leased Properties to any third-party. None of the other parties to
such Leases is an Affiliate of, and to the Actual Knowledge of the Company no
such party has any economic interest in, the Company or its Subsidiaries. Since
March 1, 2005, and, to the Company’s Actual Knowledge, prior to such date, the
Company and its Subsidiaries have not collaterally assigned or granted any other
security interest in such Leases or any interest therein.

(c) All Leased Properties are supplied with utilities necessary for the current
operation of each such Leased Property.

(d) This Section 3.15 does not relate to any matters with respect to
intellectual property, which are addressed solely in Section 3.16.

SECTION 3.16. Intellectual Property.

(a) Section 3.16(a) of the Company Disclosure Schedule sets forth a true and
complete list of (i) all registrations and all applications for registrations
for Intellectual Property and proprietary software owned by the Company and its
Subsidiaries and (ii) all other Intellectual Property that is material to the
business and operations of the Company or any of its Subsidiaries as presently
conducted. All domestic and foreign patents, patent applications, patent
disclosures, trademarks (including all registrations and applications), service
marks (including all registrations and applications), certification marks
(including all registrations and applications), copyrights (including all
registrations and applications), mask works (including all registrations and
applications) internet domain names, computer software, trade secrets, trade
names, source codes, know-how, methods, processes, procedures, apparatus,
equipment, industrial property, discoveries, inventions, designs, drawings,
plans, specifications, engineering data, manuals, development projects, research
and development work in progress, technology or other proprietary rights or
confidential information owned by or licensed to the Company or any of its
Subsidiaries, are referred herein to as the “Intellectual Property.” The Company
and its Subsidiaries own all right, title and interest, free

 

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and clear of all Liens and encumbrances, or have a valid right to use pursuant
to a written agreement, all of the Intellectual Property.

(b) Except for any and all computer software, firmware and hardware license
agreements, since March 1, 2005, and, to the Company’s Actual Knowledge, prior
to such date, neither the Company nor any of its Subsidiaries has become party
to any license or agreement, whether as licensor, licensee or otherwise with
respect to any Intellectual Property. Except for such exceptions as,
individually or in the aggregate, have not had and would not reasonably be
expected to have a Company Material Adverse Effect, none of the licenses or
other agreements relating to the Intellectual Property to which the Company or
any of its Subsidiaries is a party is subject to termination or cancellation or
change in its terms or provisions as a result of this Agreement or the
transactions provided for in this Agreement.

(c) To the Company’s Knowledge, the current operations of the business of the
Company and its Subsidiaries do not infringe, misappropriate or otherwise
violate the intellectual property rights of any Person and, to the Knowledge of
the Company, the Intellectual Property of the Company and its Subsidiaries is
not being infringed upon by any Person.

(d) No claim is currently pending with respect to any intellectual property
against the Company or its Subsidiaries (as evidenced by their receipt of legal
process or a written claim) or, to the Knowledge of the Company, is threatened
by any Person nor to the Knowledge of the Company is there any valid ground for
any bona fide claims (i) to the effect that the manufacture, sale or use of any
product or process as used (currently or, to the Company’s Actual Knowledge, in
the past) or offered or proposed for use or sale by the Company or any of its
Subsidiaries infringes on any copyright, trade secret, patent, trade mark or
other intellectual property right of any person, (ii) challenging the right of
the Company or any of its Subsidiaries relating to the use of any Intellectual
Property, or (iii) challenging the ownership, validity or effectiveness of any
Intellectual Property. To the Knowledge of the Company, all Intellectual
Property is valid, enforceable and subsisting.

(e) Since March 1, 2005, and, to the Company’s Actual Knowledge, prior to such
date, neither the Company nor any of its Subsidiaries has made any claim in
writing of a violation, infringement, misuse or misappropriation by any Person
of the Company’s or any of its Subsidiaries’ rights to, or in connection with,
any Intellectual Property which claim has not been fully settled or adjudicated.

(f) Since March 1, 2005, and, to the Company’s Actual Knowledge, prior to such
date, the Company has not received any notice of, and the Company is not
currently aware of, any interferences, oppositions, or other contested
proceedings, either pending or, to the Actual Knowledge of the Company,
threatened, in the United States Patent and Trademark Office, the United States

 

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Copyright Office, or any Governmental Entity relating to any pending application
of the Company with respect to any Intellectual Property.

(g) To the Knowledge of the Company, no Intellectual Property is subject to any
outstanding order, judgment, decree, stipulation or agreement to which the
Company or any of its Subsidiaries is a party or otherwise has Actual Knowledge
of restricting in any manner the licensing, assignment or other transfer, use or
enforceability thereof by the Company or any of its Subsidiaries that,
individually or in the aggregate, have had or would reasonably be expected to
have a Company Material Adverse Effect.

(h) Since March 1, 2005, and, to the Company’s Actual Knowledge, prior to such
date, the Company and each of its Subsidiaries have taken commercially
reasonable steps to protect and preserve the validity of the Intellectual
Property and confidentiality of all trade secrets and confidential proprietary
information used or held for use in their respective businesses.

(i) Since March 1, 2005, and, to the Company’s Actual Knowledge, prior to such
date, the Company has not agreed to indemnify any person or entity for any
interference, infringement, misappropriation or violation with respect to any
Intellectual Property of the Company.

(j) The Intellectual Property represents all intellectual property rights
reasonably necessary for the operation of the business of the Company and its
Subsidiaries as currently conducted.

(k) All federal, state and foreign trademarks listed on Section 3.16(a) of the
Company Disclosure Schedules owned and used by the Company and its Subsidiaries
are owned by ECCA Enterprises, Inc. (“Enterprises”) and all domain names listed
on Section 3.16(a) of the Company Disclosure Schedules owned and used by the
Company and its Subsidiaries are owned by Eye Care Holdings, Inc. and record
title of all such Trademarks is accurately reflected at the United States Patent
and Trademark Office or other relevant Governmental Entity. All proprietary
software listed on Section 3.16(a) is owned by ECCA Management Services Ltd.
Section 3.16(k) of the Company Disclosure Schedules sets forth all inter-company
license agreements with Enterprises pursuant to which the Company and its
Subsidiaries use the Intellectual Property. All agreements relating to
Intellectual Property licensed to and used by the Company and its Subsidiaries
contain provisions granting each of the Company and its Subsidiaries right to
use such Intellectual Property in each of their respective businesses.

(l) The computer software, computer firmware, computer hardware (whether general
purpose or special purpose), and other similar or related items of automated,
computerized and/or software system(s) that are used or relied on by the

 

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Company and its Subsidiaries in the conduct of their businesses are sufficient
in any material respect for the current needs of such businesses.

(m) All trademark license agreements between ECCA Enterprises, Inc. and the
Company and its Subsidiaries contain the same terms and provisions as the
Trademark License Agreement entered into between ECCA Enterprises, Inc. and
EyeMasters, Inc. dated April 30, 2003.

(n) All trademark license agreements between Enclave Advancement Group, Inc. and
optometrists contain substantially similar terms and conditions as the standard
form license agreement provided to the Parent Representatives pursuant to
Section 3.09.

(o) Other than optometrists who have entered into trademark license agreements
pursuant to Section 3.16(n), all optometrists who use MASTER EYE ASSOCIATES in
connection with their services have entered into sublease agreements containing
substantially similar terms and conditions to the form sublease agreements
provided to the Parent Representatives, including Sections 2.4 (Intellectual
Property) and 7.1 (Indemnification) provided in such form sublease agreements.

SECTION 3.17. Brokers and Other Advisors. No broker, investment banker,
financial advisor or other person is entitled to any broker’s, finder’s,
financial advisor’s or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company.

SECTION 3.18. Insurance; Fidelity Bonds. Set forth in Section 3.18 of the
Company Disclosure Schedule is an accurate and complete list of all insurance
policies, including policies of fire, casualty, liability, errors and omissions,
directors’ and officers’ liability and workers’ compensation insurance held by
the Company and its Subsidiaries. Such insurance policies are reasonable and
sufficient for the operation of their respective businesses. All such insurance
policies are in full force and effect and all premiums due and payable that are
necessary to maintain such policies in full force and effect have been paid.
Neither the Company nor any of its Subsidiaries has received any notice of
cancellation or modification in coverage amounts of insurance policies. During
the 12 month period immediately preceding the date hereof, no insurer under any
insurance policy has canceled or generally disclaimed liability under any such
policy or, to the Knowledge of Company, indicated any intent to do so or not to
renew any insurance policy, except as may be required under applicable state
insurance Laws.

SECTION 3.19. Relationships with Optometrists and Ophthalmologists.

 

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(a) Since March 1, 2005, and, to the Company’s Actual Knowledge, prior to such
date, the Company and its Subsidiaries have maintained generally good commercial
working relationships with each of their material affiliated optometrists,
ophthalmologists and other eye care professionals (each an “Affiliated
Professional” and collectively, the “Affiliated Professionals”). Since March 1,
2005, and, to the Company’s Actual Knowledge, prior to such date, neither the
Company nor any of its Subsidiaries has received (i) any written notice of or
has any Knowledge of the intention of or threat by any Affiliated Professional
to cancel, terminate or otherwise materially and adversely modify its
relationship or any Contract or agreement (including, any business management
agreement) with the Company or any of its Subsidiaries or (ii) any material
dispute with any Affiliated Professional.

(b) Except for such exceptions that would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect: (i) each
agreement between the Company or any of its Subsidiaries and any Affiliated
Professional is valid and enforceable against the Company or its Subsidiary, as
the case may be, party thereto, and to the Company’s Actual Knowledge, against
the other party thereto; (ii) since March 1, 2005, and, to the Company’s Actual
Knowledge, prior to such date, the Company and/or each of its Subsidiary party
thereto has duly performed in all material respects all of their respective
obligations thereunder to the extent that such obligations to perform have
accrued; (iii) and no material breach or default, alleged breach or default, or
event which would (with the passage of time, notice or both) constitute a breach
or default thereunder by the Company or any of its Subsidiaries or, to the
Actual Knowledge of the Company, any other party or obligor with respect
thereto, has occurred since March 1, 2005 or, to the Company’s Actual Knowledge,
prior to such date, or as a result of this Agreement or the performance hereof
will occur. The relationships of the Company and its Subsidiaries with each of
its material suppliers are good commercial working relationships, and since
March 1, 2005, and, to the Company’s Actual Knowledge, prior to such date, no
such supplier has canceled or otherwise terminated, or threatened in writing to
cancel or otherwise terminate, its relationship with the Company or any of its
Subsidiaries. Since March 1, 2005, and, to the Company’s Actual Knowledge, prior
to such date, the Company has not received any written notice that any such
supplier may cancel or otherwise materially and adversely modify its
relationship with the Company or any of its Subsidiaries or limit its services,
supplies or materials to the Company or any of its Subsidiaries, or of the
Company and its Subsidiaries either as a result of the transactions contemplated
hereby or otherwise.

SECTION 3.20. Managed Vision Care. Section 3.20 of the Company Disclosure
Schedule sets forth a list of the top twenty (ranked by revenues received by the
Company and its Subsidiaries in 2005) managed vision care plans to whose members
the Company or its Subsidiaries provide vision care products and services, who
have provided the Company or its Subsidiaries, ranked in order of the revenues

 

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provided to the Company or its Subsidiaries (the “Managed Care Plans”). There is
no dispute pending nor to the Knowledge of the Company is any dispute threatened
with a Managed Care Plan. Since March 1, 2005, and, to the Company’s Actual
Knowledge, prior to such date, neither the Company nor any of its Subsidiaries
has received any information from any Managed Care Plan that such plan will not
continue to maintain its existing relationship with the Company, or will
renegotiate with the Company, after the execution of this Agreement or that any
such Managed Care Plan intends to terminate or materially modify existing
contracts or arrangements with the Company or any of its Subsidiaries. None of
the Company or any of its Subsidiaries, nor to the Company’s Actual Knowledge,
any other party, is in material breach of or default under any material
agreement, contract or arrangement between the Company or such Subsidiary and
any Managed Care Plan.

SECTION 3.21. Non-Arm’s-Length Transactions. Other than as an owner of publicly
traded securities, neither the Company nor any of its Subsidiaries have any
direct or indirect ownership interest in the business of any material customer,
supplier, manufacturer or distributor of the Company or any of its Subsidiaries.
To the Knowledge of the Company, there are no existing or proposed agreements,
arrangements and transactions between an officer or director of the Company or
any of its Subsidiaries on the one hand, and any material supplier or customer
of the Company or any of its Subsidiaries, on the other hand.

SECTION 3.22. Sole Representations and Warranties.

(a) Except for the representations and warranties contained in this Article III,
none of the Company, any advisor to any person referred to in this paragraph
(a) or any other person makes any express or implied representation or warranty
on behalf of the Company, and the Company hereby disclaims any such
representation or warranty whether by the Company, any of its respective
Affiliates, officers, directors, employees, agents or representatives of any
person referred to in this subparagraph (a) or by any other person.

(b) In particular, without limiting the foregoing disclaimer, none of the
following shall be deemed to constitute a representation or warranty of any
person referred to in paragraph (a) of this Section 3.22: (i) any information
set forth in any documents distributed to any third party in connection with the
proposed sale of the Company, except for the information set forth in this
Agreement, as qualified by the Company Disclosure Schedule; (ii) any financial
projection or forecast relating to the Company; or (iii) any oral or written
information presented to Parent, Merger Sub, their Affiliates or advisors during
any management presentation, including any question and answer session thereto.
With respect to any projection or forecast delivered by or on behalf of the
Company to Parent, Merger Sub, their Affiliates or advisors, Parent and Merger
Sub acknowledge that (A) there are uncertainties inherent in attempting to make
such projections and

 

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forecasts; (B) each is familiar with such uncertainties; (C) each is taking full
responsibility for making its own evaluation of the adequacy and accuracy of all
such projections and forecasts so furnished to it and is not relying on any such
projections or forecasts; and (D) it shall have no claim against any person with
respect thereto.

SECTION 3.23. Books and Records. The minute books and stock records of the
Company and each of its Subsidiaries have all been made available to Parent and,
as they relate to the period from March 1, 2005 to date, are complete and
correct in all material respects and since March 1, 2005, have been maintained
in accordance with ordinary corporate practices. The minute books of the Company
and each of its Subsidiaries accurately reflect in all material respects all
meetings held of, and corporate action taken by, the shareholders and the boards
of directors of the Company and each of its Subsidiaries since March 1, 2005,
and no meetings of such shareholders or any such board of directors has been
held since March 1, 2005, at which any significant action was taken for which
minutes have not been prepared and are not contained in such minute books. At
the Closing, all of those books and records will be in the possession of the
Company or its Subsidiaries.

SECTION 3.24. Sufficiency of Assets. The buildings, plants, structures, and
equipment owned or leased by the Company and its Subsidiaries are adequate for
the uses to which they are being put and are sufficient for the continued
conduct of the businesses of the Company and its Subsidiaries after the Closing
in substantially the same manner as conducted prior to the Closing.

SECTION 3.26 Accounts Receivable. All accounts receivable of the Company and its
Subsidiaries that are reflected in the accounting records of the Company and its
Subsidiaries as of date hereof and the Closing Date, net of any applicable
reserves reflected in those accounting records, represent or will represent
valid obligations arising from sales actually made or services actually
performed in the ordinary course of business.

SECTION 3.27 Inventory. All inventory of the Company and its Subsidiaries, net
of any applicable reserves reflected in the accounting records of the Company
and its Subsidiaries, consists of a quality and quantity that to the Company’s
Knowledge is usable and salable in the ordinary course of business, except for
obsolete items and items of below-standard quality, all of which have been
written off or written down to net realizable value in the accounting records of
the Company and its Subsidiaries, as the case may be. All inventories not
written off have been priced at the lower of cost or market. Cost is determined
using the weighted-average method, which approximates the first-in, first-out
method.

 

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ARTICLE IV

Representations and Warranties of Parent and Merger Sub

Parent and Merger Sub represent and warrant to the Company that each of the
statements set forth below is true and correct as of the date hereof (unless
such statement expressly relates to an earlier date in which case such statement
is true and correct as of such earlier date):

SECTION 4.01. Organization, Standing and Corporate Power. Each of Parent and
Merger Sub is a corporation duly organized, validly existing and in good
standing under the Laws of the jurisdiction in which it is incorporated and has
all requisite corporate power and authority to own, operate and lease its
properties and to carry on its business as now being conducted. Each of Parent
and Merger Sub is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the nature of its business or the
ownership, leasing or operation of its properties makes such qualification or
licensing necessary, other than in such jurisdictions where the failure to be so
qualified or licensed individually or in the aggregate has not had and would not
reasonably be expected to have a Parent Material Adverse Effect. For purposes of
this Agreement, “Parent Material Adverse Effect” shall mean any change, event,
occurrence, violation, circumstance or effect having or that is reasonably
likely to have a material adverse effect on (i) the ability of Parent to perform
its obligations under this Agreement or to consummate the transactions
contemplated hereby, or (ii) the business, assets (including intangible assets),
Liabilities, financial condition or results of operations of Parent and its
Subsidiary, taken as a whole, except for any change or effect that arises out
of, results from or is attributable to (a) any change in conditions in the
United States, foreign or global economy or capital or financial markets
generally, including any change in interest or exchange rates, which, in each,
do not disproportionately affect Parent and its Subsidiary, taken as a whole,
(b) any change in conditions (including any change in general legal, regulatory,
political, economic or business conditions or any change in GAAP) in or
otherwise generally affecting industries in which Parent and its Subsidiary
conduct business, which, in each case, do not disproportionately affect Parent
and its Subsidiary, taken as a whole, (c) the impact of the announcement of the
execution of this Agreement, or the consummation of the transactions
contemplated hereby, on the relationships, contractual or otherwise, between
Parent and its landlords, suppliers, vendors or employees or (d) any act of
terrorism or war (whether or not threatened, pending or declared), which does
not disproportionately affect Parent and its Subsidiary, taken as a whole.
Parent has made available to the Company complete and correct copies of its
Organizational Documents and the Organizational Documents of Merger Sub.

SECTION 4.02. Authority; Noncontravention.

 

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(a) (i) Each of Parent and Merger Sub has all requisite corporate power and
authority to execute and deliver this Agreement, perform its obligations
hereunder and, consummate the transactions contemplated by this Agreement. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated by this Agreement have been duly authorized by all
necessary corporate action on the part of Parent and Merger Sub and no other
corporate proceedings on the part of Parent or Merger Sub are necessary to
authorize this Agreement or to consummate the transactions contemplated hereby.
This Agreement has been duly executed and delivered by Parent and Merger Sub
and, assuming the due authorization, execution and delivery by the other parties
hereto, constitutes a legal, valid and binding obligation of Parent and Merger
Sub enforceable against Parent and Merger Sub in accordance with its terms
(subject to applicable bankruptcy, solvency, fraudulent transfer,
reorganization, moratorium and other Laws affecting creditors’ rights generally
from time to time in effect). The respective Board of Directors of Parent and
Merger Sub, at a meeting duly called and held, duly adopted resolutions
approving and declaring advisable this Agreement and the Merger and the other
transactions contemplated hereby, and this Agreement and the Merger and the
other transactions contemplated hereby have been approved by Parent as the sole
stockholder of Merger Sub.

(ii) Each of Parent and Merger Sub has all requisite corporate power and
authority to execute and deliver the Ancillary Agreement, perform its
obligations thereunder and consummate the transactions contemplated by the
Ancillary Agreement. The execution and delivery of the Ancillary Agreement by
Parent and Merger Sub and the consummation by Parent and Merger Sub of the
transactions contemplated by the Ancillary Agreement have been duly authorized
by all necessary corporate action on the part of Parent and Merger Sub, and no
other corporate proceedings on the part of Parent or Merger Sub are necessary to
authorize the Ancillary Agreement or to consummate the transactions contemplated
thereby. The Ancillary Agreement has been duly executed and delivered by Parent
and Merger Sub and, assuming the due authorization, execution and delivery
thereof by the other parties thereto, upon Closing will constitute a legal,
valid and binding obligation of Parent and Merger Sub, enforceable against
Parent and Merger Sub in accordance with its terms (subject to applicable
bankruptcy, solvency, fraudulent transfer, reorganization, moratorium and other
Laws affecting creditors’ rights generally from time to time in effect).

(b) The execution and delivery of this Agreement do not, and the consummation of
the Merger and the other transactions contemplated by this Agreement and
compliance with the provisions of this Agreement will not, conflict with,
require the consent, waiver, approval or authorization from any party to, or
result in any violation or breach of, or default (with or without notice or
lapse of time or both) under (i) the Organizational Documents of Parent and the
Organizational Documents of Merger Sub, (ii) any Contract to which Parent or
Merger Sub is a party or any of their respective properties or other assets is
subject

 

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or (iii) subject to the governmental filings and other matters referred to in
Section 4.03, any Law applicable to Parent or Merger Sub or their respective
properties or other assets, other than, in the case of clauses (ii) and (iii),
any such conflicts, consents, waivers, approvals, authorizations, violations, or
breaches, defaults, rights, losses or Liens that individually or in the
aggregate have not had and would not reasonably be expected to have a Parent
Material Adverse Effect.

SECTION 4.03. Governmental Approvals. No consent, approval, order or
authorization of, action by or in respect of, or registration, declaration or
filing with, any Governmental Authority is required by or with respect to Parent
or Merger Sub in connection with the execution and delivery of this Agreement by
Parent and Merger Sub or the consummation by Parent and Merger Sub of the Merger
or the other transactions contemplated by this Agreement, except for (a) the
filing of a notification and report form by Parent or its “ultimate parent”
under the HSR Act, (b) the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware, and (c) compliance with any
requirements of the applicable securities laws or the stock exchanges on which
any securities of Parent or any of its Affiliates are subject and (d) such other
consents, approvals, orders, authorizations, registrations, and declarations and
filings the failure of which to be obtained or made individually or in the
aggregate would not reasonably be expected to have a Parent Material Adverse
Effect.

SECTION 4.04. Brokers and Other Advisors. No broker, investment banker,
financial advisor or other person (other than Citigroup Global Markets, Inc.,
which has been retained by Parent, and the fees and expenses of which will be
paid by Parent) is entitled to any broker’s, finder’s, financial advisor’s or
other similar fee or commission in connection with the transactions contemplated
by this Agreement based upon arrangements made by or on behalf of Parent.

SECTION 4.05. Financial Capacity. As of the date hereof, Parent and Merger Sub
have provided to the Company true, correct, and complete copies of a commitment
letter from Citigroup Global Markets, Inc. and PNC Capital Markets, LLC, to
provide debt financing to the Parent and Merger Sub (the “Debt Commitment
Letter”) and a commitment letter from Parent to Merger Sub, of which the Company
is an express third-party beneficiary, to provide equity financing to Merger Sub
(the “Equity Commitment Letter,” and together with the Debt Commitment Letter,
the “Commitment Letters”). Subject to the terms and conditions set forth
therein, the proceeds from the financing transactions contemplated by the
Commitment Letters, together with cash on hand as of the date hereof, will
provide sufficient funds for Parent and Merger Sub to consummate the
transactions contemplated by this Agreement. As of the date hereof, (i) the
Commitment Letters are in full force and effect and (ii) Parent and Merger Sub
do not believe or have any reason to believe that they will not be able to
obtain the financing contemplated by the Commitment Letters. Each of Parent and
Merger Sub agrees that, without the prior written consent of the Company, it
shall not

 

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amend or alter any provision of the Commitment Letters that would reduce the
amounts of financing to be provided thereby or to add additional conditions
precedent or concurrent to such financings or that could adversely affect the
timing or certainty of the Closing. The transactions contemplated by the
Commitment Letters are not subject to conditions other than those set forth in
the Commitment Letters.

SECTION 4.06. Conduct of Business. Merger Sub is a corporation formed solely for
the purpose of consummating the Merger and the other transactions contemplated
hereby and has not engaged in any business activity except as contemplated by
this Agreement in furtherance of the transactions contemplated hereby.

 

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ARTICLE V

Covenants Relating to Conduct of Business

SECTION 5.01. Conduct of Business.

(a) Conduct of Business by the Company. During the period from the date of this
Agreement to the Effective Time, the Company shall, and shall cause each of its
Subsidiaries to (x) carry on its business in the ordinary course consistent with
past practice and, to the extent consistent therewith, use all commercially
reasonable efforts to preserve intact its current business organizations, keep
available the services of its current officers and employees and preserve its
relationships with customers, suppliers, licensors, licensees, distributors and
others having business dealings with it with the intention that its goodwill and
ongoing business shall be unimpaired at the Effective Time and (y) promptly
notify Parent of (A) the occurrence of any Company Material Adverse Effect,
(B) the material breach of any representation or warranty of the Company
contained herein, which breach, alone or together with any other breaches of the
representations and warranties of the Company contained herein, would reasonably
be expected to result in a Company Material Adverse Effect or the failure to
satisfy any condition to the obligations of Parent and Merger Sub to consummate
the transactions contemplated hereby, and (C) any material change with respect
to the disclosures set forth on the Company Disclosure Schedule. Without
limiting the generality of the foregoing, during the period from the date of
this Agreement to the Effective Time, except as provided in Section 5.01(a) of
the Company Disclosure Schedule or as contemplated by this Agreement, the
Company shall not, and shall not permit any of its Subsidiaries to, without
Parent’s prior written consent (such consent not to be unreasonably withheld,
conditioned or delayed with respect to any matters set forth in clauses (iv),
(v), (vi), (x), (xi), (xii), (xiii) and, to the extent relating to any of the
foregoing, clause (xxiv)):

(i) (A) declare, set aside or pay any dividends on, or make any other
distributions (whether in cash, stock or property) in respect of, any of its
capital stock, other than dividends or distributions by a direct or indirect
wholly owned Subsidiary of the Company to its parent, (B) split, combine or
reclassify any of its capital stock or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution for shares of its
capital stock, (C) purchase, redeem or otherwise acquire any shares of its
capital stock or any other securities thereof or any rights, warrants or options
to acquire any such shares or other securities (other than repurchases of shares
from employees on termination of their employment pursuant to pre-existing
repurchase agreements), or (D) purchase or otherwise acquire any capital stock
(securities convertible into or exercisable for any capital stock) of any other
Person;

 

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(ii) issue, deliver, sell, grant, pledge or otherwise encumber any shares of its
capital stock, any other voting securities or any securities convertible into,
or any rights, warrants or options to acquire, any such shares, voting
securities or convertible securities, or any “phantom” stock, “phantom” stock
rights, stock appreciation rights or stock based performance units;

(iii) amend the Certificate of Incorporation (including any Certificates of
Designation) or Bylaws of the Company or the comparable charter or
organizational documents of any of its Subsidiaries;

(iv) acquire in any manner an amount of assets of any third party, individually,
in excess of $250,000 or, in the aggregate, in excess of $500,000, except for
(A) acquisitions of assets in the ordinary course of business consistent with
past practice and (B) pursuant to existing Contracts as of the date hereof;

(v) (A) sell, transfer, pledge, guarantee, lease, license, mortgage, sell and
leaseback or otherwise encumber or subject to any Lien or otherwise dispose of
any of its properties or other assets to a third party (including, without
limitation, terminating or surrendering any leasehold interest prior to its
normal expiration), individually, in excess of $250,000 or, in the aggregate, in
excess of $500,000, except for (x) sales of properties or other assets in the
ordinary course of business consistent with past practice and (y) pursuant to
existing Contracts as of the date hereof; (B) incur, assume or modify any
indebtedness for money borrowed or guarantee thereof, including capitalized
lease obligations, in excess of $250,000 and drawdowns or borrowings under the
credit facilities of the Company in effect on the date hereof; (C) acquire
directly or indirectly, by repurchase or otherwise any shares of the capital
stock of the Company or any Subsidiary except as contemplated by this Agreement
and except for repurchases of shares from employees on termination of their
employment pursuant to pre-existing repurchase agreements; or (D) enter into or
renew any lease or other commitment in respect of real or personal property to
be performed over a period exceeding one year where the present value of
payments to be made thereunder exceeds $10,000 individually or $100,000 in the
aggregate, other than renewals of pre-existing expiring leases in each case in
the ordinary course of business consistent with past practices of the Company
and which the Company will provide Parent with at least five (5) Business Days’
advance notice of such action, together with copies of appropriate
documentation;

(vi) except as set forth in Section 5.01(a)(vi) of the Company Disclosure
Schedule, make any new capital expenditure which, individually, is in excess of
$50,000 or, in the aggregate, are in excess of $100,000;

 

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(vii) grant to any director, officer or employee of the Company or any of its
Subsidiaries (A) any material increase in compensation, bonus or other benefits
other than (i) pursuant to a bona fide promotion in the ordinary course of
business, (ii) a bonus paid prior to the Closing, (iii) any increase in
compensation, bonus or benefits after December 31, 2006 (if applicable) made in
consultation with Parent or (B) any increase in severance or termination pay, in
each case except in the ordinary course of business consistent with past
practice or as required by any employment, severance or termination agreement in
effect as of the date hereof;

(viii) pay or award any benefit to any director, officer or employee not
required by any existing Company Benefit Plan;

(ix) (A) enter into any employment, deferred compensation, supplemental
retirement or other similar agreement (or any amendment to any such existing
agreement) with any director or officer of the Company or any of its
Subsidiaries (B) increase or accelerate the vesting and/or payment of, benefits
under any existing severance or termination pay policies or employment
agreements, in each case except as required by any employment, option, severance
or termination agreement in effect as of the date hereof and (C) except as
required by Law, and except for arrangements entered into in connection with the
hiring of new personnel in the ordinary course of business consistent with past
practice, establish, adopt, enter into, amend or terminate any employee benefit
plan or any collective bargaining, thrift, compensation or other plan,
agreement, trust, fund, policy or arrangement for the benefit of any directors,
officers or employees;

(x) except with respect to the Action, which the Company may settle in its sole
discretion, cancel, settle or compromise any material claims or litigation in
excess of $100,000 individually or $250,000 in the aggregate or waive, release
or assign any material rights or claims involving in excess of $100,000
individually or $250,000 in the aggregate;

(xi) sell, assign, transfer, license or convey any of their respective
intellectual property rights, except in the ordinary course of business and
shall not allow any registered intellectual property to be abandoned or expire,
except for patents expiring at the end of their statutory term and except for
intellectual property not material to the business of the Company and its
Subsidiaries which the Company or its Subsidiary reasonably determine not to be
worth maintaining;

(xii) except as required by applicable Law or GAAP, make any material change in
its method of accounting or accounting principles;

 

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(xiii) enter into, amend or terminate any Material Contract other than in the
ordinary course of business;

(xiv) (A) change its method of collection of accounts receivable, (B) write-off
as uncollectible any notes or accounts receivable, except write-offs in the
ordinary course of business consistent with past practice charged to applicable
reserves, or (C) defer, delay or postpone making payments of any accounts
payable, accrued expenses or other obligations of the Company unless such
deferral or postponement is due to a good faith dispute as to liability or
amount or is in accordance with the Company’s past practices as to the timing of
payments or other obligations, or accelerate the collection of any accounts or
other receivables or amounts owing to the Company unless such acceleration is in
accordance with the Company’s past practices as to the timing of such
collections;

(xv) make any loans, advances or capital contributions to, or investments in,
any other Person other than loans, advances, and reimbursements of expenses to
employees or capital contributions by the Company or any of its Subsidiaries to
any direct or indirect wholly owned Subsidiary of the Company;

(xvi) (A) file or cause to be filed any amended Tax Returns; (B) prepare any Tax
Return of the Company or any of its Subsidiaries in a manner that is
inconsistent with the past practices with respect to the treatment of items on
such Tax Returns except to the extent that any inconsistency is required by Law;
(C) incur any material liability for Taxes other than in the ordinary course of
business; and (D) enter into any settlement or closing agreement with a taxing
authority that materially increases or may materially increase the Tax liability
of the Company or any of its Subsidiaries for any period;

(xvii) add to or modify any of the Company Benefit Plans other than
(i) contributions made in accordance with the normal practices of the Company
and its Subsidiaries or (ii) modifications required by or under applicable law;

(xviii) acquire (by merger, consolidation or acquisition of stock or assets) any
corporation, partnership or other business organization or division thereof or
make any investment in another entity (other than an entity that is a wholly
owned Subsidiary of the Company as of the date hereof);

(xix) authorize, recommend, propose or announce an intention to adopt a plan of
complete or partial liquidation or dissolution of the Company or any of its
Subsidiaries;

 

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(xx) make any material tax election not required by law or settle or compromise
any material tax liability other than in the ordinary course of business;

(xxi) other than in the ordinary course of business, (i) waive, discharge or
settle any rights of substantial value or (ii) cancel or forgive any
indebtedness for borrowed money in excess of $100,000 owed to the Company or any
of its Subsidiaries other than indebtedness of the Company or a wholly owned
Subsidiary of the Company;

(xxii) voluntarily permit any material insurance policy owned by the Company and
naming the Company or any of its Subsidiaries as a beneficiary or a loss payee
to be canceled or terminated, except in the ordinary course of business;

(xxiii) enter into any joint venture, partnership or similar agreement; or

(xxiv) authorize any of, or commit, propose or agree to take any of, the
foregoing actions.

(b) Other Actions. The Company and Parent shall not, and shall not permit any of
their respective Subsidiaries to, take any action that would, or that would
reasonably be expected to, result in (i) any of the representations and
warranties of such party set forth in this Agreement that are qualified by
materiality becoming untrue or (ii) any of such representations and warranties
that are not so qualified becoming untrue in any material respect.

SECTION 5.02. No Solicitation by the Company. The Company shall not, nor shall
it authorize or permit any of its Subsidiaries, any of their respective
directors, officers or employees or any investment banker, financial advisor,
attorney, accountant or other advisor, agent or representative retained by it or
any of its Subsidiaries or controlled Affiliates to, (i) solicit, initiate,
facilitate or knowingly encourage, directly or indirectly, the initiation of a
Company Proposal, (ii) enter into any agreement, arrangement or understanding
with respect to any Company Proposal, or agree to approve or endorse any Company
Proposal or enter into any agreement, arrangement or understanding that to the
Knowledge of the Company would require the Company to abandon, terminate or fail
to consummate the Merger, (iii) initiate or participate in any discussions or
negotiations with, or furnish or disclose any information to, any Person (other
than Parent or Merger Sub or any of their representatives) in connection with
any Company Proposal or (iv) facilitate or further in any other manner any
inquiries or the making or submission of any proposal that constitutes, or may
reasonably be expected to lead to, any Company Proposal. The Company shall, and
shall cause its Subsidiaries to, immediately cease and cause to be terminated
all existing discussions or

 

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negotiations with any person conducted heretofore with respect to any Company
Proposal.

The Company shall not participate, directly or indirectly, in any negotiations
regarding, or furnish to any other Person, any information with respect to, or
otherwise cooperate in any way with, or assist, any effort or attempt by any
other person to do or seek any of the activities prohibited by in this section.
Should the Company receive any proposal, inquiry or contact with respect to a
Company Proposal or any of the other activities prohibited by this section, it
will as promptly as practicable, and in any event within two Business Days, give
written notice thereof to Parent and also shall provide Parent with such
information regarding such proposal, inquiry or contact as Parent reasonably may
request.

The Company shall be liable for any action taken by any of its Subsidiaries or
any of the Company’s or its Subsidiaries’ respective directors, officers or
employees or any investment banker, financial advisor, attorney, accountant or
other advisor, agent or representative retained by it or any of its Subsidiaries
or controlled Affiliates, in violation of this Section 6.02.

For purposes of this Agreement, “Company Proposal” shall mean (i) any proposal
or offer for a merger, consolidation, dissolution, recapitalization or other
business combination involving the Company or any of its Subsidiaries, (ii) any
proposal for the issuance of any equity securities of the Company or any of its
Subsidiaries (other than upon exercise of Company Options) or (iii) any proposal
or offer to acquire in any manner, directly or indirectly, (A) any equity
securities of the Company or any of its Subsidiaries or (B) any of the assets of
the Company or any of its Subsidiaries outside the ordinary course of business
and consistent with past practices, in each case other than the transactions
contemplated by this Agreement and the agreements to be executed in connection
herewith.

SECTION 5.03. Non-USRPHC Certificate. The Company shall furnish to Parent on or
before the Closing Date a certificate stating that the Company is not, and since
March 1, 2005, and, to the Company’s Actual Knowledge, prior to that date has
not been, a “United States real property holding corporation” within the meaning
of Section 897(c)(2) of the Code.

SECTION 5.04 Compliance with Contractual Obligations. The Company shall, and
shall cause its Subsidiaries to, use commercially reasonable efforts to comply
with all Contractual Obligations thereof (as that term is defined in the Credit
Agreement set forth in Exhibit 10.3 to ECCA’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2005) except where the failure to comply
therewith would not, individually or in the aggregate, reasonably be expected to
result in a Company Material Adverse Effect.

 

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ARTICLE VI

Additional Agreements

SECTION 6.01. Debt Tender. Upon the request, and at the expense, of Parent, the
Company shall (a) promptly commence a cash tender offer to purchase all of the
outstanding Notes and (b) solicit the consent of the holders of the Notes to
amend the Indenture to eliminate all material covenants and related defaults and
to permit the transactions contemplated by this Agreement, including the
financing thereof, which acceptance for payment of the Notes shall be
conditioned upon consummation of the Merger (clauses (a) and (b) together, the
“Debt Tender”). Parent shall be responsible for payment of all costs and
expenses, including legal and other professional and service fees and expenses,
printing, mailing, and other costs and expenses incurred or paid by the Company
in connection with the Debt Tender, which it will pay to the Company upon the
Company’s request from time to time in advance of the Company’s incurrence of
such costs and expenses (subject to reimbursement by the Company to the extent
that the aggregate amount of such advances exceeds the aggregate amount of such
costs and expenses actually incurred or paid). The Surviving Corporation shall
take any and all other additional steps or actions and execute any and all
additional documents, instruments or certificates necessary to effect the
purchase of tendered Notes or redemption of the Notes and satisfaction and
discharge of the Indenture, as applicable, all at the expense of the Surviving
Corporation and/or Parent. For the avoidance of doubt, consummation of the
Merger shall not be conditioned upon the results of the Debt Tender.

SECTION 6.02. Management Bonus. At the Closing, immediately following the
Effective Time, the Surviving Corporation shall pay to each person entitled
thereto the management bonus (individually, a “Management Bonus” and
collectively, the “Management Bonuses”) to which such person is entitled
pursuant to the Company’s Sale Transaction Bonus Plan adopted October 28, 2005,
as amended (the aggregate amount of all which Management Bonuses shall not
exceed $2,600,000). Prior to the Closing, the Company shall use commercially
reasonable efforts to ensure that the tax deductions with respect to the
Management Bonuses shall not be disallowed under Section 280G of the Code and
the individuals who receive such payments shall not be subject to the excise tax
imposed by Section 4999 of the Code.

SECTION 6.03. Commercially Reasonable Efforts. Upon the terms and subject to the
conditions set forth in this Agreement, each of the parties agrees to use its
commercially reasonable efforts to take, or cause to be taken, all actions, and
to do, or cause to be done, and to assist and cooperate with the other parties
in doing, all things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the Merger and the other
transactions contemplated by this Agreement, including using commercially
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accomplish the following: (a) the taking of all acts necessary to cause the
conditions to Closing to be satisfied as promptly as practicable, (b) the
obtaining of all necessary actions, waivers, consents and approvals from
Governmental Authorities and the making of all necessary registrations and
filings (including filings with Governmental Authorities, if any) and the taking
of all steps as may be necessary to obtain an approval or waiver from, or to
avoid an action or proceeding by any Governmental Authority with respect to the
transactions contemplated hereunder, (c) the obtaining of all necessary
consents, approvals or waivers from third parties set forth on Section 3.04 of
the Company Disclosure Schedule that relate to the Leases or which the failure
to so obtain would have a Company Material Adverse Effect, (d) the defending of
any lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement or the consummation of the transactions contemplated
hereby, including seeking to have any stay or temporary restraining order
entered by any court or other Governmental Authority vacated or reversed and
(e) the execution and delivery of any additional instruments necessary to
consummate the transactions contemplated by, and to fully carry out the purposes
of, this Agreement. In connection with and without limiting the foregoing, the
Company and Parent each agree to use its commercially reasonable efforts to take
promptly any and all actions necessary to avoid or eliminate each and every
impediment under any antitrust or competition Laws that may be asserted by any
federal, state and local and non-United States antitrust or competition
authority, so as to enable the parties to close the transactions contemplated by
this Agreement as expeditiously as possible, including committing to or
effecting, by consent decree, hold separate orders, trust or otherwise the sale
or disposition of such of its assets or businesses as are required to be
divested in order to avoid the entry of, or to effect the dissolution of, any
decree, order, judgment, injunction, temporary restraining order or other order
in any suit or proceeding, that would otherwise have the effect of preventing or
materially delaying the consummation of the Merger and the other transactions
contemplated by this Agreement. In addition, each of the Company and Parent
agree to use its commercially reasonable efforts to take promptly any and all
actions necessary to vacate or lift any order relating to antitrust or
competition that would have the effect of making any of the transactions
contemplated by this Agreement illegal or otherwise prohibiting or materially
delaying their consummation.

Without limiting the generality of the foregoing, each of Parent and the Company
agrees to do the following (or if applicable, to cause its “ultimate parent” to
do so):

(1) within five Business Days following the execution of this Agreement, make
its required filing under the HSR Act (if it has not already done so);

 

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(2) as promptly as is practicable after receiving any governmental request under
the HSR Act for additional information, documents, or other materials, use
commercially reasonable efforts to comply with such request;

(3) cooperate with the others in connection with resolving any governmental
inquiry or investigation relating to their respective HSR Act filings or the
proposed Merger or any related inquiry or investigation;

(4) promptly inform the other of any communication with, and any proposed
understanding, agreement, or undertaking with any governmental entity relating
to their respective HSR Act filings or the proposed Merger or any related
inquiry or investigation; and

(5) to the extent reasonably practicable, give the other reasonable advance
notice of, and, to the extent permitted, the opportunity to participate in
(directly or through its representatives), any meeting or conference with any
governmental entity relating to their respective HSR Act filings or the proposed
Merger or any related inquiry or investigation.

SECTION 6.04. Indemnification, Exculpation and Insurance.

(a) From and after the Effective Time, Parent shall, and shall cause the
Surviving Corporation to, and the Surviving Corporation shall, indemnify and
hold harmless, to the fullest extent permitted under applicable Law, the
individuals who on or prior to the Effective Time were directors, officers or
employees of the Company or any of its Subsidiaries (collectively, the
“Indemnitees”) with respect to all acts or omissions by them in their capacities
as such or taken at the request of the Company or any of its Subsidiaries at any
time prior to the Effective Time. Parent agrees that, and shall cause the
Surviving Corporation to assume, all rights of the Indemnitees to
indemnification and exculpation from liabilities for acts or omissions occurring
at or prior to the Effective Time as provided in the respective Organizational
Documents of the Company or any of its Subsidiaries as now in effect, and any
indemnification agreements or arrangements of the Company or any of its
Subsidiaries disclosed in Section 6.04 of the Company Disclosure Schedule shall
survive the Merger and shall continue in full force and effect in accordance
with their terms. For a period of not less than six years from the Effective
Time, such rights shall not be amended, or otherwise modified in any manner that
would adversely affect the rights of the Indemnitees with respect to
indemnification and exculpation from liabilities for acts or omissions occurring
prior to the Effective Time, unless such modification is required by Law. In
addition, the Surviving Corporation shall pay any expenses of any Indemnitee
under this Section 6.04 as incurred to the fullest extent permitted under
applicable Law, provided that the person to whom expenses are advanced provides
an undertaking to repay such advances to the extent required by applicable Law.

 

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(b) Parent, from and after the Effective Time, shall cause (i) the Certificate
of Incorporation and Bylaws of the Surviving Corporation to contain provisions
no less favorable to the Indemnitees with respect to limitation of certain
liabilities of directors, officers, employees and agents and indemnification
than are set forth as of the date of this Agreement in the Certificate of
Incorporation and Bylaws of the Company and (ii) the Organizational Documents of
each Subsidiary of the Surviving Corporation to contain the current provisions
regarding indemnification of directors, officers, employees which provisions in
each case shall not be amended, repealed or otherwise modified in a manner that
would adversely affect the rights thereunder of the Indemnitees.

(c) Except as provided in the Ancillary Agreement with respect to the Action,
the Indemnitee shall have the right (but not the obligation) to control the
defense of, including the investigation of, any litigation, claim or proceeding
(each, a “Claim”) relating to any acts or omissions covered under this
Section 6.04 with counsel selected by the Indemnitee; provided, however, that
(i) such control of the defense and the selection of counsel by the Indemnitee
is in compliance with the provisions of any tail insurance policy obtained
pursuant to Section 6.04(f) below, (ii) the Surviving Corporation shall be
permitted to participate in the defense of such Claim at its own expense and
(ii) the Surviving Corporation shall not be liable for any settlement effected
without its written consent, which consent shall not be unreasonably withheld or
delayed.

(d) In the event any Claim is asserted or made, any determination required to be
made with respect to whether an Indemnitee’s conduct complies with the standards
set forth under applicable Law, the applicable organizational documents of the
Company or any of its Subsidiaries or any indemnification agreements or
arrangements of the Company or any of its Subsidiaries, as the case may be,
shall be made by independent legal counsel selected jointly by such Indemnitee
and the Surviving Corporation.

(e) Each of Parent, the Surviving Corporation and the Indemnitee shall
cooperate, and cause their respective Affiliates to cooperate, in the defense of
any Claim and shall provide access to properties and individuals as reasonably
requested and furnish or cause to be furnished records, information and
testimony, and attend such conferences, discovery proceedings, hearings, trials
or appeals, as may be reasonably requested in connection therewith.

(f) As of the Effective Time, ECCA shall be permitted to have obtained, and, for
a six-year period thereafter, the Surviving Corporation shall cause ECCA to
maintain in effect, a so-called “tail” policy for such six-year period from the
ECCA’s current directors’ and officers’ liability insurance carrier, covering
acts or omissions occurring prior to the Effective Time with respect to those
persons who are currently covered by ECCA’s directors’ and officers’ liability
insurance policy on terms with respect to such coverage and amount no less
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ECCA’s directors and officers currently covered by such insurance than those of
such policy in effect on the date hereof (the “Minimum Insurance”), provided,
however, that if ECCA is unable to obtain the Minimum Insurance for a premium of
$750,000 or less, then ECCA shall, at the election of the Representative
(i) obtain as much comparable insurance as practicable for a premium of
$750,000, or (ii) obtain the Minimum Insurance, in which case the premium cost
thereof that exceeds $750,000 shall be the “Excess D&O Tail Cost.”

(g) The provisions of this Section 6.04: (i) are intended to be for the benefit
of, and shall be enforceable by, each Indemnitee, his or her heirs and his or
her representatives, and (ii) are in addition to, and not in substitution for,
any other rights to indemnification or contribution that any such person may
have, including pursuant to any indemnification agreements or arrangement of the
Company or any of its Subsidiaries set forth in Section 6.04 of the Company
Disclosure Schedule.

(h) In the event that the Surviving Corporation or any of its successors or
assigns (i) consolidates with or merges into any other person and is not 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, proper provision shall be made so
that the successors and assigns of the Surviving Corporation shall assume all of
the obligations thereof set forth in this Section 6.04.

(i) The obligations of Parent and the Surviving Corporation under this
Section 6.04 shall not be terminated or modified in such a manner as to
adversely affect any Indemnitee to whom this Section 6.04 applies without the
consent of the affected Indemnitee (it being expressly agreed that the
Indemnitees are third party beneficiaries of this Section 6.04).

(j) Parent hereby unconditionally guarantees, from and after the Effective Time,
the timely payment of all funds owed by, and the timely performance of all other
obligations of, the Surviving Corporation under this Section 6.04. Parent agrees
that its payment obligations hereunder are unconditional, irrespective of the
validity or enforceability of this Agreement against the Surviving Company or
any other circumstance which might otherwise constitute a legal or equitable
discharge or defense of a guarantor (other than the defenses of statute of
limitations, which are not waived). Parent hereby acknowledges that its
obligations under this Section 6.04 constitute a guaranty of payment and not
merely of collectability and Parent hereby waives (i) promptness, diligence,
presentment, demand of payment, protest and order in connection with this
guarantee, and all other defenses in the nature of suretyship or guarantor’s
defenses, and (ii) any requirement that any party enforcing the guarantee pursue
or exhaust any right to take any action against the Surviving Company or any
other person prior to or contemporaneously with proceeding to exercise any right
against Parent hereunder.

 

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SECTION 6.05. Fees and Expenses. Except as otherwise provided herein, including
Section 2.01(d)), all fees and expenses incurred in connection with this
Agreement, the Merger and the other transactions contemplated by this Agreement
shall be paid by the party incurring such fees or expenses, whether or not the
Merger is consummated, except that Parent shall bear and pay the costs and
expenses incurred in connection with the filing fees for the notification and
report forms under the HSR Act and any similar foreign, supranational or other
antitrust Laws.

SECTION 6.06. Public Announcements. Parent and the Company shall consult with
each other before issuing, and give each other the opportunity to review and
comment upon, any press release or other public statements with respect to the
transactions contemplated by this Agreement, including the Merger, and shall not
issue any such press release or make any such public statement prior to such
consultation, except as may be required by applicable Law, court process or as
required or requested by any securities exchange or securities quotation system
on which the securities of Parent’s ultimate parent corporation are listed. The
parties agree that the initial press release to be issued with respect to the
transactions contemplated by this Agreement shall be in the form heretofore
reasonably agreed to by the parties.

SECTION 6.07. Notification of Certain Matters. The Company shall give prompt
notice to Parent, and Parent shall give prompt notice to the Company, of (i) any
notice or other communication received by such party (and, in the case of
Parent, any received by Merger Sub) from any Governmental Authority in
connection with the Merger or the transactions contemplated thereby or from any
Person alleging that the consent of such Person is or may be required in
connection with the Merger or the transactions contemplated thereby, if the
subject matter of such communication or the failure of such party to obtain such
consent would be material to the transaction, (ii) any actions, suits, claims,
investigations or proceedings commenced or, to such party’s Knowledge,
threatened against, relating to or involving or otherwise affecting such party
or any of its Subsidiaries which relate to the Merger or the transactions
contemplated thereby, (iii) the occurrence, or failure to occur, of any event
which occurrence or failure would be likely to cause any representation or
warranty contained in this Agreement and required to be made by the notifying
party to be untrue or inaccurate in any material respect any time from the date
hereof to the Closing Date and (iv) and material failure to comply with or
satisfy a covenant, condition or agreement to be complied with or satisfied by
it hereunder, and each party shall use reasonable efforts to remedy such
failure.

SECTION 6.08. Access to Information. From the date hereof until the Effective
Time, the Company shall, and shall cause its Subsidiaries, and each of their
respective officers, directors and employees, counsel, advisors, accountants,
financial advisors, lenders and representatives (collectively, the “Company

 

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Representatives”) to, provide Parent and Merger Sub and their respective
officers, employees, counsel, advisors, accountants, financial advisors,
financial sources, Affiliates and representatives (collectively, the “Parent
Representatives”) reasonable access during normal business hours and upon
reasonable notice, to the officers, directors, employees, accountants,
properties, offices and other facilities and to the books and records of the
Company and its Subsidiaries, as will permit Parent and Merger Sub to make
inspections of such as either of them may reasonably require, and will cause the
Company Representatives and the Company’s Subsidiaries to (a) furnish Parent,
Merger Sub and the Parent Representatives with such regularly prepared financial
and operating data and other information with respect to the business and
operations of the Company and its Subsidiaries as Parent and Merger Sub may from
time to time reasonably request and (b) notify Parent of the filing by the
Company of any form, report, schedule, statement, registration statement and
other documents filed by the Company or its Subsidiaries during such period
pursuant to the requirements of the United States federal or state securities
laws. Parent and Merger Sub acknowledge that all of their legal, accounting and
business due diligence have been completed prior to the date of this Agreement
(which acknowledgement will not affect any rights granted hereunder to Parent
and Merger Sub with respect to access to information and the Company’s
cooperation).

SECTION 6.09. Leases. Promptly after the execution and delivery of this
Agreement, true and complete copies of all Leases, including all amendments,
supplements and any other modifications thereto and summaries thereof, shall be
made available to the Parent Representatives. Prior to the Closing, the Company
and its Subsidiaries will give Parent, Merger Sub and its officers, employees,
agents, and representatives and lenders the right to contact, with the
participation of the Company, the landlords under the Leases for the purposes of
attempting to obtain landlord lien waivers, estoppel certificates and such other
agreements (which shall not bind Parent, Merger Sub or the Company unless the
Closing occurs) as may be requested by Parent or Merger Sub or their lenders
with the consent of the Company, which consent will not unreasonably be
withheld, and preparation of surveys and conduct of Phase I environmental site
assessments to the extent permitted by the landlords and Leases, provided all
such activities are coordinated by the Company in advance and the Company is
present for and has the right to participate in any contact, communication or
inspection pursuant to this Section 6.09.

SECTION 6.10. [Reserved.]

SECTION 6.11. Cooperation with Financing. The Company shall, and shall cause
each of its Subsidiaries to, at Parent’s and Merger Sub’s expense, use
commercially reasonable efforts to assist Parent and Merger Sub in their efforts
to obtain financing for the transactions contemplated by this Agreement,
including assisting with the preparation of confidential information memoranda,
and shall

 

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use commercially reasonable efforts to cause its independent accountants to
cooperate with and assist Parent and Merger Sub in preparing such confidential
information memoranda and other marketing materials as the potential lenders may
reasonably request, including annual audited, quarterly and monthly unaudited,
and pro forma financial statements for use in connection with the financing.
Without limiting the generality of the foregoing, the Company shall use
commercially reasonable efforts, at Parent’s and Merger Sub’s expense, to:
(a) upon reasonable prior notice, make senior management and other
representatives of the Company and its Subsidiaries available to (1) participate
in and assist in the preparation of materials for meetings with prospective
lenders, (2) participate and assist in the preparation of materials for meetings
with rating agencies; (b) cause the present and former independent accountants
for the Company and its Subsidiaries to participate in the preparation of the
confidential information memoranda; (c) take such actions and provide such
information and assistance as potential lenders may reasonably request in
connection with establishing the collateral to secure the financing; (d) provide
such other information and assistance as potential lenders may reasonably
request in connection with a financing; and (e) execute any reasonably necessary
management representation letters to the Company’s and its Subsidiaries’
accountants to issue unqualified reports with respect to the financial
statements to be included in any information provided to potential lenders.

The Parent and Merger Sub shall, at the Parent’s expense, use commercially
reasonable efforts to (i) fully satisfy in all material respects, on a timely
basis, all terms, conditions, representations, and warranties set forth in the
Commitment Letters, and (ii) enforce their rights under the Commitment Letters.
The Parent shall use commercially reasonable efforts to enter into definitive
agreements with respect to the financings contemplated by the Commitment Letters
as soon as reasonably practicable but in any event no later than the Closing.
The Parent will furnish correct and complete copies of such executed definitive
agreements to the Company promptly upon execution. The Parent shall keep the
Company reasonably informed on an regular basis with respect to all material
activity concerning the status of the financings contemplated by the Commitment
Letters and shall give the Company prompt notice of any adverse change or event
with respect to such financings. Without limiting the foregoing, the Parent
agrees to notify the Company promptly, and in any event within two (2) Business
Days, if at any time prior to the Closing Date (i) any Commitment Letter shall
expire or be terminated for any reason, or (ii) any financing source that is a
party to any Commitment Letter notifies the Parent that such source no longer
intends to either provide or underwrite financing to the Parent on the terms set
forth therein. Other than in connection with this Agreement, the Parent shall
not, and shall cause its direct and indirect Subsidiaries and other Affiliates
not to, without the prior written consent of the Company, take any action or
enter into any transaction, including any merger, acquisition, joint venture,
disposition (including the disposition of any capital stock of any Subsidiary),
lease, contract, or debt or equity

 

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financing, that could reasonably be expected to materially impair, delay, or
prevent the Parent’s and Merger Sub’s obtaining of the financings contemplated
by any Commitment Letter. The Parent and Merger Sub shall not without the prior
written consent of the Company amend or alter, or agree to amend or alter,
(i) the Equity Commitment Letter without the prior written consent of the
Company or (ii) any Debt Commitment Letter in any manner that could materially
impair or delay or prevent the transactions contemplated by this Agreement. If
any Commitment Letter is terminated or modified in a manner materially adverse
to the Parent for any reason, the Parent shall use commercially reasonable
efforts to (i) obtain, and, if obtained, it will provide the Company with a copy
of, a new financing commitment that provides for at least the same amount of
financing as contemplated by such terminated or modified Commitment Letter as
originally issued; (ii) enter into definitive agreements with respect to such
new financing; and (iii) obtain funds under such agreements to the extent
necessary to consummate the transactions contemplated by this Agreement;
provided that the Parent shall be under no obligation to obtain or seek to
obtain any financing commitment containing terms or funding conditions
materially less favorable to the Parent or the Merger Sub than those included in
such terminated or modified Commitment Letter. In the event that, after use of
Parent’s commercially reasonable efforts, Parent is unable to obtain such new
financing as described in the immediately preceding sentence, then the Company
may, in its sole discretion, propose an alternative new financing that provides
for at least the same amount of financing as contemplated by the Commitment
Letters as originally issued on terms that are not materially less favorable to
the Parent and its Affiliates than those set forth in the Commitment Letters as
originally issued, and Parent shall use commercially reasonable efforts to enter
into definitive agreements with respect to such alternative new financing and
obtain funds under such agreements to the extent necessary to consummate the
transactions contemplated by this Agreement. In the event that a new Debt
Commitment Letter is executed in accordance with this section, then such new
Debt Commitment Letter shall be the “Debt Commitment Letter” for purposes of
this Agreement.

ARTICLE VII

Conditions Precedent

SECTION 7.01. Conditions to Each Party’s Obligation to Effect the Merger. The
respective obligations of each party to effect the Merger is subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:

(a) Antitrust. The waiting period (and any extension thereof), filings or
approvals applicable to the Merger under the HSR Act or any other

 

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applicable foreign, supranational or other antitrust Laws, shall have expired,
been terminated, been made or been obtained.

(b) No Injunctions or Restraints. No temporary restraining order, preliminary or
permanent injunction or other judgment or order shall have been issued by or
pending before any court of competent jurisdiction and no other statute, Law,
rule, legal restraint or prohibition (collectively, “Restraints”) shall be in
effect preventing or restraining the consummation of the Merger or any of the
actions contemplated in the Ancillary Agreement and no Governmental Authority
shall have threatened the Company, Parent or Merger Sub in writing with any such
Restraint.

SECTION 7.02. Conditions to Obligations of Parent and Merger Sub. The
obligations of Parent and Merger Sub to effect the Merger are further subject to
the satisfaction or waiver on or prior to the Closing Date of the following
conditions:

(a) Representations and Warranties. (1) The representations and warranties of
the Company set forth in Sections 3.01(a), 3.02, 3.03, 3.04, 3.05 and 3.06(b) of
this Agreement shall be (A) true and correct in all material respects, in the
case of representations not qualified by materiality or Company Material Adverse
Effect and (B) true and correct in all respects, in the case of representations
that are so qualified, on the date hereof and as of the Closing Date as if made
on and as of that date, except that any such representations and warranties that
expressly relate to a specified date need be true and correct, or true and
correct in all material respects, as the case may be, only as of such date, and
(2) the cumulative effect of all breaches and inaccuracies of all other
representation and warranties of the Company set forth in Article III of this
Agreement on the date hereof and as of the Closing Date as if made on and as of
that date (or in the case of representations and warranties that expressly
relate to a specified date, as of such date) (for this purpose disregarding any
qualification or limitation as to materiality or Company Material Adverse
Effect) shall not have had, and shall not be reasonably likely to have, a
Company Material Adverse Effect. Parent shall have received a certificate signed
on behalf of the Company by an executive officer of the Company to such effect.

(b) Performance of Obligations of the Company. The Company shall have performed
in all material respects all obligations required to be performed by it under
this Agreement at or prior to the Closing Date and Parent shall have received a
certificate signed on behalf of the Company by an executive officer of the
Company to such effect.

(c) Appraisal Rights. Holders of not more than five per cent (5%) of the shares
of Company Capital Stock shall have exercised and perfected appraisal rights in
accordance with Section 262 of the DGCL.

 

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(d) Termination of Agreements. Any and all agreements by and between (i) the
Company or any of its Subsidiaries on the one hand, and (ii) any director,
officer or Company Shareholder owning five percent (5%) or more of the Company
Capital Stock, on the other hand, including the Shareholders’ Agreement, shall
have each been terminated in accordance with its terms and shall no longer be in
effect as of the Closing Date; provided, however, that no employment agreement,
no indemnification or contribution agreement disclosed in Section 6.04 of the
Company Disclosure Schedule, no agreement relating to a Company Benefit Plan,
and no agreement listed in Section 7.02(d) of the Company Disclosure Schedule is
hereby required to be terminated (all of such agreements, collectively, the
“Surviving Agreements”). Without limiting the generality of the foregoing, any
and all management or advisory agreements by and between the Company or any of
its Subsidiaries, on the one hand, and Moulin or Golden Gate Private Equity,
Inc. or any of their respective Subsidiaries or Affiliates, on the other hand,
including, without limitation, (i) the Advisory Agreement, dated as of
February 1, 2005, among ECCA Holdings Corporation, LFS-Merger Sub, Inc. and
Moulin and (ii) the Advisory Agreement, dated as of February 1, 2005, by and
among ECCA Holdings Corporation, LFS Merger Sub, Inc., and GGC Administration,
LLC, or any other agreement providing for the payment of a fee or other similar
payment in respect of this Agreement or the consummation of the Merger, shall
have each been terminated in accordance with their terms and shall no longer be
in effect after the Effective Time, and except as provided in Section 1.08
hereof, any such fee that would have been payable thereunder shall no longer be
payable in any respect.

(e) Shareholder Approval. The Company Shareholders shall have duly adopted this
Agreement pursuant to the requirements of the Company’s certificate of
incorporation and by-laws and applicable law.

(f) Third Party Consents. The Company shall have obtained all required consents
set forth in Section 7.02(g) of the Company Disclosure Schedule.

(g) Financing. Parent and Merger Sub shall have received proceeds of the
financing transactions contemplated by the Debt Commitment Letter on terms and
conditions that are not materially less favorable to Parent and Merger Sub than
as set forth therein.

(h) Legal Opinion. Parent shall have received the written legal opinion of
counsel to the Company, dated as of the Closing Date and addressed to Parent, in
form and substance mutually acceptable to the Company and its counsel, on the
one hand, and Parent and Merger Sub and their counsel, on the other hand.

(i) Ancillary Agreement. Neither the Company nor the Representative shall have
repudiated the Ancillary Agreement or otherwise caused the Ancillary Agreement
to not be able to become in full force and effect in accordance with its terms
as of the Closing.

 

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(j) Company Material Adverse Effect. Since the Audited Balance Sheet Date, there
shall have been no Company Material Adverse Effect, and Parent shall have
received a certificate signed by the Chief Executive Officer of the Company to
the foregoing effect.

(k) Legal Action. No claim, action, suit, arbitration or other formal legal
proceeding shall be pending or shall have been brought, which if decided
adversely thereto, would be reasonably likely to result in a Company Material
Adverse Effect; provided, however, that for purposes of clarity the parties
agree that no claim, suit, arbitration, other formal legal proceeding pending
against the Company as of the date of this Agreement is reasonably likely to
result in a Company Material Adverse Effect. Additionally, other than the
Action, there must not have been made or threatened by any Person any claim
asserting that such Person is the holder or the beneficial owner of, or has the
right to acquire or to obtain beneficial ownership of, any stock of, or any
other voting, equity, or ownership interest in, any of the Company or any of its
Subsidiaries.

SECTION 7.03. Conditions to Obligation of the Company. The obligation of the
Company to effect the Merger is further subject to the satisfaction or waiver on
or prior to the Closing Date of the following conditions:

(a) Representations and Warranties. The representations and warranties of Parent
and Merger Sub in Article IV of this Agreement shall be true and correct in all
material respects on the date hereof and as of the Closing Date as if made on
and as of that date, except that any such representations and warranties that
expressly relate to a specified date shall be true and correct only as of such
date; provided, however, that this clause (a) shall be deemed satisfied if the
cumulative effect of all inaccuracies of such representations and warranties
(for this purpose disregarding any qualification or limitation as to knowledge,
materiality or Parent Material Adverse Effect) would not be reasonably likely to
have a Parent Material Adverse Effect. Company shall have received a certificate
signed on behalf of Parent by an executive officer of Parent to such effect.

(b) Performance of Obligations of Parent and Merger Sub. Parent and Merger Sub
shall have performed in all material respects all obligations required to be
performed by them under this Agreement at or prior to the Closing Date, and the
Company shall have received a certificate signed on behalf of Parent by an
executive officer of Parent to such effect.

(c) Legal Opinion. The Representative shall have received the written legal
opinion of counsel to Parent and Merger Sub, dated as of the Closing Date and
addressed to the Company Shareholders, in form and substance mutually acceptable
to the Representative and its counsel, on the one hand, and Parent and Merger
Sub and their counsel, on the other hand.

 

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SECTION 7.04. Frustration of Closing Conditions. None of the Company, Parent or
Merger Sub may rely on the failure of any condition set forth in Section 7.01,
7.02 or 7.03, as the case may be, to be satisfied if such failure was caused by
such party’s own failure to use its commercially reasonable efforts to
consummate the Merger and the other transactions contemplated by this Agreement.

ARTICLE VIII

[Intentionally left blank]

ARTICLE IX

Termination, Amendment and Waiver

SECTION 9.01. Termination. This Agreement may be terminated at any time prior to
the Effective Time:

(a) by mutual written consent of Parent and Merger Sub on the one hand and the
Company on the other hand;

(b) by either Parent or the Company:

(i) if the Merger shall not have been consummated on or before December 31,
2006; provided, that the right to terminate this Agreement under this
Section 9.01(b)(i) shall not be available to any party whose action or failure
to act has been the principal cause of or resulted in the failure of the Merger
to be consummated on or before such date; or

(ii) if any Restraint having the effect set forth in Section 7.01(b) shall be in
effect and shall have become final and nonappealable;

(c) by Parent, if the Company shall have breached or failed to perform any of
its representations, warranties, covenants or agreements set forth in this
Agreement, which breach or failure to perform (A) would give rise to the failure
of a condition set forth in Section 7.02(a) or (b) and (B) is not cured by the
Company within 30 calendar days following receipt of written notice of such
breach or failure to perform from Parent; or

(d) by the Company, if Parent shall have (i) failed to pay the Second Deposit to
the Representative within seven (7) days after the execution and delivery of
this Agreement as required by Section 2.02; or (ii) breached or failed to
perform

 

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any of its representations, warranties, covenants or agreements set forth in
this Agreement, in the case of this “subclause (ii),” which breach or failure to
perform (A) would give rise to the failure of a condition set forth in
Section 7.03(a) or (b) and (B) is not cured by Parent within 30 calendar days
following receipt of written notice of such breach or failure to perform from
the Company.

SECTION 9.02. Effect of Termination. In the event of termination of this
Agreement by either the Company or Parent as provided in Section 9.01 prior to
the Effective Time, this Agreement shall forthwith become void and have no
effect, without any liability or obligation on the part of Parent, Merger Sub or
the Company, other than the provisions of Section 2.02 with respect to the
payment of the Deposit to the Representative on behalf of the holders of Company
Series A-1 Preferred Stock and the Company Series B-1 Shareholders as liquidated
damages, the provisions of Section 6.05 (and any other provision herein related
to the payment of expenses), Section 8.02(b), Section 9.01, this Section 9.02
and Article X, which provisions shall survive such termination, and except to
the extent that such termination results from the willful breach by the Company
of its representations, warranties, covenants or agreements set forth in this
Agreement. Nothing contained in this Section 9.02 shall relieve the Company from
liability for any willful breach of this Agreement.

SECTION 9.03. Amendment. At any time prior to the Effective Time, this Agreement
may be amended by the parties hereto; provided, however, that there shall be
made no such amendment that by Law requires further approval by the Company
Shareholders without such approval having been obtained; and provided, further,
that there shall be made no such amendment without the prior written consent of
the holders of at least a majority of the outstanding shares of each of (i) the
Company Series A Preferred Stock, and (ii) the Company Series B Preferred Stock,
respectively. This Agreement may not be amended except by an agreement in
writing signed (in counterparts or otherwise) on behalf of each of the parties
hereto.

SECTION 9.04. Extension; Waiver. At any time prior to the Effective Time, the
parties may (a) extend the time for the performance of any of the obligations or
other acts of the other parties, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto or (c) waive compliance with any of the agreements of any other
party or conditions to its obligations contained herein; provided, however, that
there shall be made no waiver that by Law requires further approval by the
Company Shareholders without such approval having been obtained; and provided,
further, that there shall be made no such waiver without the prior written
consent of the holders of at least a majority of the outstanding shares of each
of (i) the Company Series A Preferred Stock, and (ii) the Company Series B
Preferred Stock, respectively. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such

 

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party. The failure of any party to this Agreement to assert any of its rights
under this Agreement or otherwise shall not constitute a waiver of such rights.

ARTICLE X

General Provisions

SECTION 10.01. Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time; and thereafter no
party or other person will have any liability in respect of any breach of any
such representation or warranty. This Section 10.01 shall not limit any covenant
or agreement of the parties which by its terms contemplates performance after
the Effective Time.

SECTION 10.02. Notices. Except for notices that are specifically required by the
terms of this Agreement to be delivered orally, all notices, requests, claims,
demands and other communications hereunder shall be in writing and shall be
deemed given if delivered personally, facsimiled (which is confirmed) or sent by
overnight courier (providing proof of delivery) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):

if to Parent or Merger Sub, to:

HVHC Inc.

1800 Center Street

Camp Hill, PA 17089

Attention: Robert Gray

Telecopier No. +1 412 544 7526

with a copy (which shall not constitute notice) sent at the same time and by the
same means to:

Edward A. Bittner, Jr.

Senior Counsel

Highmark, Inc.

Fifth Avenue Place

120 Fifth Avenue

Suite 2180

Pittsburgh, PA 15222-3099

Telecopier No. +1 412 544 7423

and to:

 

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Buchanan Ingersoll

One Oxford Centre, 20th Floor

301 Grant Street

Pittsburgh, PA

Telecopier No. +1 412 562 1041

Attention: Thomas M. Thompson

if to Representative:

ECCA Holdings Shareholder Trust

c/o Ferrier Hodgson Limited

14/F, Hong Kong Club Building

3A Chater Road, Central

Hong Kong

Attention: John Batchelor

with a copy (which shall not constitute notice) sent at the same time and by the
same means to:

Johnson Stokes & Master

16th Floor, Prince’s Building

10 Chater Road, Central

Hong Kong

Attention: Nicholas Poole, Esq.

Telecopier No. +852 2103 5128

and

Kirkland & Ellis LLP

555 California Street

San Francisco, CA 94104

Attention: Stephen Oetgen, Esq.

Telecopier No. +1 415 439 1500

 

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and

Bingham McCutchen LLP

150 Federal Street

Boston, MA 02110

Attention: Brian Keeler, Esq.

Telecopier No. +1 617 428 6324

if to the Company, to:

ECCA Holdings

c/o Ferrier Hodgson Limited

14/F, Hong Kong Club Building

3A Chater Road, Central

Hong Kong

Attention: John Batchelor

with copies (which shall not constitute notice) sent at the same time and by the
same means to:

Eye Care Centers of America, Inc.

11103 West Avenue

San Antonio, TX 78213

Facsimile No.: (210) 524-6996

Attention: Chief Financial Officer

and

Johnson Stokes & Master

16th Floor, Prince’s Building

10 Chater Road, Central

Hong Kong

Attention: Nicholas Poole, Esq.

Telecopier No. +852 2103 5128

and

Kirkland & Ellis LLP

555 California Street

San Francisco, CA 94104

Attention: Stephen Oetgen, Esq.

Telecopier No. +1 415 439 1500

 

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and

Bingham McCutchen LLP

150 Federal Street

Boston, MA 02110

Attention: Brian Keeler

Telecopier No. +1 617 428 6324

SECTION 10.03. Definitions. For purposes of this Agreement:

“Action” means the “Action,” as such term is defined in the Ancillary Agreement.

An “Affiliate” of any person means another person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, such first person.

“Ancillary Agreement” means the Ancillary Agreement, dated as of the date
hereof, by and among Parent, Merger Sub, the Company and the Representative.

“Base A-1 Consideration” means the sum of (i) US$146,000,000 less (ii) the GGC
Transaction Fee plus (iii) the product of (x) 42.572% multiplied by (y) the
Delay Premium.

“Business Day” means any day, other than a Saturday, Sunday or a day on which
the banks or national securities exchanges located in New York, New York shall
be authorized or required by Law to close.

“Cash” means, as of the relevant time of reference, the cash, cash equivalents,
and marketable securities (valued at fair market value) of the Company and its
Subsidiaries, determined in accordance with GAAP, including, for purposes of
clarification, uncashed checks, cash at retail stores of the Company and its
Subsidiaries, and credit card payments being processed.

“Closing Cash” means Cash as of the Effective Time. For the avoidance of doubt,
Closing Cash will include the cash that is to be used to pay the Management
Bonuses that the Surviving Corporation is required to pay immediately after the
Effective Time pursuant to Section 6.02. Any cash that was spent prior to the
Effective Time to purchase the Minimum Insurance shall be included in the
calculation of Closing Cash.

“Closing Outstanding Net Debt” means the amount by which the aggregate principal
amount of the Existing Company Indebtedness outstanding as of the Effective Time
exceeds the Closing Cash.

 

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“Closing Net Working Capital” means the Net Working Capital as of the Effective
Time.

“Closing Taxes” means the amount of all Income Taxes of the Company related to
the tax periods (or any portion thereof) ending on or prior to the Closing Date
which have not previously been paid.

“Company Capital Stock” means the capital stock of the Company, consisting of
Company Common Stock, Company Series A Preferred Stock and Company Series B
Preferred Stock.

“Company Common Stock” means the Company’s Common Stock, $0.01 par value per
share (consisting of its Class M Non-Voting Common Stock, Class A Voting Common
Stock and Class A Non-Voting Common Stock).

“Company Preferred Stock” means the Company’s Preferred Stock, $0.01 par value
per share (consisting of the Company Series A Preferred Stock and Company Series
B Preferred Stock).

“Company Series A Preferred Stock” means, collectively, the Company Series A-1
Preferred Stock, Company Series A-2 Preferred Stock and Company Series A-3
Preferred Stock.

“Company Series A-1 Preferred Stock” means the Company’s Series A-1
Participating Preferred Stock, par value $0.01 per share.

“Company Series A-2 Preferred Stock” means the Company’s Series A-2
Participating Preferred Stock, par value $0.01 per share.

“Company Series A-3 Preferred Stock” means the Company’s Series A-3 Non-Voting
Participating Preferred Stock, par value $0.01 per share.

“Company Series B Preferred Stock” means, collectively, the Company Series B-1
Preferred Stock and Company Series B-2 Preferred Stock.

“Company Series B-1 Preferred Stock” means the Company’s Series B-1
Participating Preferred Stock, par value $0.01 per share.

“Company Series B-2 Preferred Stock” means the Company’s Series B-2 Non-Voting
Participating Preferred Stock, par value $0.01 per share.

“Company Series B Shareholders” means the holders of record of shares of Company
Series B Preferred Stock.

 

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“Company Series B-1 Shareholders” means the holders of record of shares of
Company Series B-1 Preferred Stock.

“Company Shareholders” means the holders of record of shares of Company Capital
Stock.

“Delay Premium” means, in the event that the Closing occurs after September 30,
2006, an amount equal to the interest that would accrue on the Pre-Adjustment
Merger Consideration if interest accrued thereon daily at the rate of 5.0% per
annum, calculated on the basis of a 365-day year from October 1, 2006, through
the Closing Date.

“ECCA” means Eye Care Centers of America, Inc., a Texas corporation that is a
wholly owned Subsidiary of the Company.

“Estimated Closing Taxes” means, as of the Closing Date, the total of all
amounts accrued for Income Taxes with respect to all Pre-Closing Periods which
have not previously been paid by the Company.

“Existing Company Indebtedness” means all (i) funded indebtedness of the Company
and its Subsidiaries, including, (A) all funded obligations for borrowed money,
(B) funded obligations evidenced by bonds, notes, debentures, loan agreements or
similar instruments, (C) otherwise as an account party in respect of or arising
under letters of credit, bankers’ acceptances, bank guaranties, surety bonds and
similar instruments, (ii) the aggregate amount required to be capitalized under
leases under which the Company or any of its Subsidiaries is the lessee,
(iii) obligations of the Company or any of its Subsidiaries for deferred
purchase price of property or services (other than trade accounts payable in the
ordinary course of business), and (iv) all accrued and unpaid interest on any of
the foregoing; provided, however, that Existing Company Indebtedness shall not
include any Note Takeout Fees or Waiver Fees or any Existing Company
Indebtedness owing between the Company and any of its Subsidiaries (or between
any of such Subsidiaries).

“Final A-1 Consideration” means an amount determined in accordance with the
following formula:

Final A-1 Consideration = A + B {C – D – E – F – A – (G*H)}

where:

A = Base A-1 Consideration

 

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B    =    42.979% C    =    The Merger Consideration (as finally determined
after having taken into account the Merger Consideration Adjustment Amount and
having finally determined and made an adjustment for the difference between the
Estimated Closing Taxes and the Final Closing Taxes and, for avoidance of doubt,
without being reduced by the Set-Aside Amount or the amount of the Holdback) D
   =   

Series A-3 Merger Consideration

E    =   

Series B-2 Merger Consideration

F    =    The sum of (x) the Holdback less any portion of the Holdback that has
been used to satisfy any Merger Consideration Adjustment Amount plus (y) any
amounts paid by holders of Company Series B-1 Preferred Stock pursuant to
Section 2.01(f)(ii) and Section 2.01 (f)(iv) that are not paid or satisfied out
of the Holdback G    =   

Minimum Series A-1 Per Share Return

H    =   

Number of shares of Company Series B-1 Preferred Stock

“GGC Transaction Fee” means a fee equal to $3,000,000 that will be paid by the
Parent or the Company to GGC Administration, LLC (either pursuant to this
Agreement or pursuant to a separate obligation to make such payment) in
satisfaction of the termination of the Advisory Agreement dated as of
February 1, 2005, by and among the Company, ECCA’s predecessor-by-merger,
LFS-Merger Sub, Inc., and GGC Administration, LLC.

“Governmental Authority” means any:

(a) nation, state, county, city, town, village, district, or other jurisdiction
of any nature;

(b) federal, state, local, municipal, foreign, or other government;

(c) governmental or quasi-governmental authority of any nature (including any
governmental agency, branch, department, official, or entity and any court or
other tribunal); or

 

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(d) organization or body (including any multinational organization or body)
entitled to exercise any administrative, executive, judicial, legislative,
police, regulatory, or taxing authority or power of any nature (including,
without limitation, the High Court of the Hong Kong Special Administrative
Region Court of First Instance and the appropriate committee of inspection (if
applicable) and the Hong Kong Stock Exchange).

“Income Taxes” means all taxes on the income of the Company and its Subsidiaries
assessed at the federal, state or local level in the United States of America.

“Indenture” means the Indenture dated as of February 4, 2005, between ECCA’s
predecessor-by-merger, LFS-Merger Sub, Inc. and The Bank of New York as trustee.

“Knowledge” of (i) any person that is an individual means such individual’s
actual knowledge and (ii) any person that is not an individual means, with
respect to any matter in question, the knowledge of such person’s Chief
Executive Officer, Chief Financial Officer and other officers having primary
responsibility for such matter, after due inquiry as to the matter in question,
except that any reference to “Actual Knowledge” means the actual knowledge of
such persons, without their having made, or having any duty to make, any such
inquiry. The Knowledge or Actual Knowledge of the Company with respect to the
representations and warranties of the Company in Article III hereof shall
include Knowledge of the current board of directors of ECCA as of the date of
this Agreement and as of the Closing.

“Leases” means all leases, subleases, licenses, concessions and other agreements
(written or oral) pursuant to which the Company or any Subsidiary holds any
Leased Property, including the right to all security deposits and other amounts
and instruments deposited by or on behalf of the Company or any Subsidiary
thereunder.

“Minimum Series A-1 Per Share Return” means the product of Base A-1 Merger
Consideration plus the GGC Transaction Fee divided by the number of shares of
Company A-1 Preferred Stock outstanding as of the Effective Time

“Moulin” means Moulin Global Eyecare Holdings Limited, a Bermuda corporation
formerly named Moulin International Holdings Limited.

“Net Debt Decrease” means the amount, if any, by which the Reference Date Net
Debt exceeds the Closing Outstanding Net Debt.

“Net Debt Increase” means the amount, if any, by which the Closing Outstanding
Net Debt exceeds the Reference Date Net Debt.

 

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“Net Working Capital” means the following, as per the Company’s and its
Subsidiaries’ management accounts: the aggregate consolidated book value of the
current assets of the Company and its Subsidiaries (excluding Cash,
miscellaneous prepaid expenses and deferred taxes) minus the aggregate
consolidated book value of the current liabilities of the Company and its
Subsidiaries (excluding Existing Company Indebtedness, accrued interest, federal
and state income taxes, deferred taxes, any accrual in respect of the cost of
the Minimum Insurance, and deferred revenue (including the accounts referred to
as “warranty and certificate revenues” in the Company’s and its Subsidiaries’
management accounts)) and minus any Transaction Costs.

“Net Working Capital Decrease” means the amount, if any, by which the Target Net
Working Capital exceeds the Final Net Working Capital.

“Net Working Capital Increase” means the amount, if any, by which the Final Net
Working Capital exceeds the Target Net Working Capital.

“Notes” means ECCA’s 10.75% notes due 2015, issued pursuant to the Indenture.

“Note Takeout Fees” means all tender, redemption, or prepayment penalties, and
premiums (including any interest accruing after the Closing) incurred in
repaying, redeeming, or tendering for (including any associated consent
solicitation) the Notes and any related legal and other professional, printing,
mailing, and other fees and expenses incurred or paid by the Company in
connection with the Debt Tender.

“Organizational Documents” means (a) the articles or certificate of
incorporation or association and the bylaws of a corporation; (b) the
partnership agreement and any statement of partnership of a general partnership;
(c) the limited partnership agreement and the certificate of limited partnership
of a limited partnership; (d) any charter or similar document adopted or filed
in connection with the creation, formation, or organization of a Person; and
(e) any amendment to any of the foregoing.

“Person” or “person” means an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity.

“Plaintiff” means the “Plaintiff,” as such term is defined in the Ancillary
Agreement.

“Reference Date Net Debt” means $296,740,776, which is the amount of the
Existing Company Indebtedness as of January 31, 2006.

 

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“Resolution” means the “Resolution,” as such term is defined in the Ancillary
Agreement.

“Resolution-Related Amounts” means the “Resolution-Related Amounts” as such term
is defined in the Ancillary Agreement.

“Senior Credit Facility” means the credit facility under the Credit Agreement
dated as of March 1, 2005, among ECCA’s predecessor-by-merger, LFS-Merger Sub,
Inc., the Company, JPMorgan Chase Bank, N.A., as administrative agent, and the
other parties signatory thereto.

“Series A Merger Consideration” means the aggregate amount of the Merger
Consideration payable or which, but for the provisions of Section 2.01(b)
hereof, would have been payable to the holders of shares of Company Series A
Preferred Stock pursuant to Sections 2.01(c)(A) and (B) hereof.

“Series B-1 Merger Consideration” means the difference of (i) the Merger
Consideration, minus (ii) the Series A Merger Consideration, minus (iii) the
Series B-2 Merger Consideration.

“Series B-2 Merger Consideration” means 115% of the product of (i) the
pre-adjustment Merger Consideration subject to adjustment for the estimations
set out in Section 2.01(d)(A), Section 2.01(d)(B) and Section 2.01(J),
multiplied by (ii) a fraction, the numerator of which is the number of shares of
Company Series B-2 Preferred Stock outstanding as of the Effective Time, and the
denominator of which is the number of shares of Company Capital Stock
outstanding as of the Effective Time.

A “Subsidiary” of any person means another person, an amount of the voting
securities, other voting rights or voting partnership interests of which is
sufficient to elect at least a majority of its board of directors or other
governing body (or, if there are no such voting interests, 50% or more of the
equity interests of which) is owned directly or indirectly by such first person.

“Transaction Costs” means any costs and expenses incurred or payable by the
Company in connection with the transactions contemplated by this Agreement,
which costs and expenses are unpaid as of the Closing Date and are not reflected
in the books of the Company as current liabilities as of the Closing Date.

“Waiver Fees” means all fees and expenses incurred or payable in connection with
the waiver of any default under the Senior Credit Facility occurring by reason
of the consummation of the Merger or the other transactions contemplated by this
Agreement, including without limitation, any penalties or premiums.

 

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SECTION 10.04. Interpretation.

(a) When a reference is made in this Agreement to an Article, a Section, Exhibit
or Schedule, such reference shall be to an Article of, a Section of, or an
Exhibit or Schedule to, this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and shall 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 shall be deemed to be followed by the words “without
limitation.” The words “hereof,” “herein,” and “hereunder” and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement. References to “dollars” or
“$” mean United States dollars. All terms defined in this Agreement shall have
the defined meanings when used in any certificate or other document made or
delivered pursuant hereto unless otherwise defined therein. The definitions
contained in this Agreement are applicable to the singular as well as the plural
forms of such terms and to the masculine as well as to the feminine and neuter
genders of such term. Any agreement, instrument or statute defined or referred
to herein or in any agreement or instrument that is referred to herein means
such agreement, instrument or statute as from time to time amended, modified or
supplemented, including (in the case of agreements or instruments) by waiver or
consent and (in the case of statutes) by succession of comparable successor
statutes and references to all attachments thereto and instruments incorporated
therein. References to a person are also to its permitted successors and
assigns.

(b) Any information disclosed in any section of the Company Disclosure Schedule
shall be considered disclosed in each and every other Company Disclosure
Schedule in which the information is required to be included to the extent that
such disclosure sets forth facts in sufficient detail so that the relevance of
the disclosure would be reasonably apparent to a reader of such disclosure. Any
disclosure in any Company Disclosure Schedule of any contract, document,
liability, default, breach, violation, limitation, impediment or other matter,
although the provision for such disclosure may require such disclosure only if
such contract, document, liability, default, breach, violation, limitation,
impediment or other matter be “material” or shall have a Company Material
Adverse Effect, shall not be construed against the Company as an assertion by
the Company that any such contract, document, liability, default, breach,
violation, limitation, impediment or other matter is, in fact, material or shall
have a Company Material Adverse Effect.

SECTION 10.05. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.

 

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SECTION 10.06. Entire Agreement; Third-Party Beneficiaries. Unless expressly
agreed otherwise, this Agreement, including the disclosure schedules hereto, and
the confidentiality agreement dated as of October 31, 2005, (a) constitute the
entire agreement, and supersede all prior and contemporaneous agreements and
understandings, both written and oral, among the parties or between any of them
with respect to the subject matter of this Agreement and (b) are not intended to
confer upon any person other than the parties any rights or remedies, except
that GGC Administration LLC is an intended third-party beneficiary of and
entitled to enforce rights and remedies under Section 1.08 (“Payment of GGC
Transaction Fee”) and Article X (“General Provisions”); the Company Shareholders
are intended third-party beneficiaries of and entitled to enforce rights and
remedies under Section 9.03 (“Amendment”) and Article X (“General Provisions”);
and except that if the Closing occurs, then from and after the Closing the
Company Shareholders will be intended third-party beneficiaries of and entitled
to enforce rights and remedies under Article II (“Effect of the Merger on the
Capital Stock of the Constituent Corporations; Exchange of Certificates”); the
persons entitled to receive the Management Bonuses will be intended third-party
beneficiaries of and entitled to enforce rights and remedies under Section 6.02
(“Management Bonuses”) and Article X (“General Provisions”); and the Indemnitees
will be intended third-party beneficiaries of and entitled to enforce rights and
remedies under Section 6.04 (“Indemnification, Exculpation and Insurance”) and
Article X (“General Provisions”).

SECTION 10.07. Governing Law. As to matters of corporate law, this Agreement
shall be governed by, and construed in accordance with, the Laws of the State of
Delaware, and as to all other matters in accordance with the Laws of the State
of New York, regardless of the Laws that might otherwise govern under applicable
principles of conflicts of laws thereof.

SECTION 10.08. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned, in whole or in part, by
operation of Law or otherwise by any of the parties without the prior written
consent of the other parties, except that Merger Sub may assign, in its sole
discretion, any of or all its rights, interests and obligations under this
Agreement to Parent or to any direct, wholly owned Subsidiary of Parent
incorporated in Delaware if such assignment would not cause a delay in the
consummation of the Merger, but no such assignment shall relieve Merger Sub of
any of its obligations hereunder. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of, and be enforceable by,
the parties and their respective successors and permitted assigns.

SECTION 10.09. Specific Enforcement; Consent to Jurisdiction. The parties agree
that irreparable damage would occur and that the parties would not have any
adequate remedy at law in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were

 

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otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions of this Agreement in any federal
or New York State court located in the Borough of Manhattan, City and State of
New York, this being in addition to any other remedy to which they are entitled
at law or in equity. In addition, each of the parties hereto (a) consents to
submit itself to the personal jurisdiction of any federal or New York State
court located in the Borough of Manhattan, City and State of New York in the
event any dispute arises out of this Agreement or the transactions contemplated
by this Agreement, (b) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request, on any basis whatsoever, for
leave from any such court, and (c) agrees that it will not bring any action
relating to this Agreement or the Merger or the other transactions contemplated
by this Agreement in any court other than a federal or New York State court
located in the Borough of Manhattan, City and State of New York.

SECTION 10.10. Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible to the fullest extent
permitted by applicable Law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.

[Remainder of Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.

 

HVHC INC.

  By:         

Name:

Title:

FRANKLIN MERGER SUB INC.

 

By:

        

Name:

Title:

ECCA HOLDINGS CORPORATION

 

By:

        

Name:

Title:

ECCA HOLDINGS SHAREHOLDER TRUST,

solely in its capacity as Representative and with no other obligations
hereunder:

 

By:

        

Name:

Title:

 

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Exhibits and Schedules

 

Exhibit A   

Certificate of Incorporation of Surviving Corporation

Exhibit B   

Sample Merger Consideration Calculation

Exhibit C   

Sample Working Capital Calculation

Exhibit D   

Letter of Transmittal

Exhibit E   

Terms of Escrow Agreement

Company Disclosure Schedule

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Exhibit A

Certificate of Incorporation of Surviving Corporation

--------------------------------------------------------------------------------

Exhibit B

Sample Merger Consideration Calculation

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Exhibit C

Sample Working Capital Calculation

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Exhibit D

Letter of Transmittal

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Exhibit E

Terms of Escrow Agreement