EXHIBIT 2.1
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STOCK PURCHASE AND SALE AGREEMENT
By and Among
KENT ACQUISITION CORP.,
KENT OPTICAL COMPANY, CUSTOM OPTICS, INC.,
KENT-N.W. GRAND RAPIDS, INC., ▇▇▇▇-▇▇▇▇▇▇▇, INC.
AND SOURCE OPTICAL SUPPLY, INC.
and
THE STOCKHOLDERS OF KENT OPTICAL COMPANY,
CUSTOM OPTICS, INC., KENT-N.W. GRAND RAPIDS, INC., ▇▇▇▇-▇▇▇▇▇▇▇, INC.
AND SOURCE OPTICAL SUPPLY, INC.
________________________
dated as of April 1, 1999
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TABLE OF CONTENTS
PAGE
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ARTICLE I PURCHASE AND SALE OF THE SHARES............................... 2
SECTION 1.01 Purchase and Sale of the Shares....................... 2
SECTION 1.02 Purchase Price........................................ 3
SECTION 1.03 Purchase Price Adjustments............................ 4
SECTION 1.04 Closing............................................... 5
SECTION 1.05 Further Assurances.................................... 5
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE SELLERS................ 5
SECTION 2.01 Title to Shares....................................... 6
SECTION 2.02 Seller's Authority to Execute and
Perform Agreement..................................... 6
SECTION 2.03 Purchase For Investment; Residence.................... 6
SECTION 2.04 Capitalization........................................ 7
SECTION 2.05 Organization and Qualification........................ 7
SECTION 2.06 Subsidiaries.......................................... 7
SECTION 2.07 Corporate Power and Authority......................... 7
SECTION 2.08 Validity, Etc......................................... 8
SECTION 2.09 Financial Statements.................................. 8
SECTION 2.10 Absence of Undisclosed Liabilities.................... 8
SECTION 2.11 Absence of Adverse Change; Conduct of
Business.............................................. 9
SECTION 2.12 Inventories........................................... 10
SECTION 2.13 Receivables........................................... 10
SECTION 2.14 Taxes................................................. 10
SECTION 2.15 Litigation............................................ 11
SECTION 2.16 Certain Practices..................................... 12
SECTION 2.17 Compliance with Law................................... 12
SECTION 2.18 Licenses and Permits.................................. 12
SECTION 2.19 Labor and Employee Relations.......................... 12
SECTION 2.20 Certain Employees..................................... 12
SECTION 2.21 Employee Benefits..................................... 13
SECTION 2.22 Tangible Properties................................... 13
SECTION 2.23 Owned Premises........................................ 14
SECTION 2.24 Leased Premises....................................... 15
SECTION 2.25 Environmental Matters................................. 15
SECTION 2.26 Insurance............................................. 15
SECTION 2.27 Outstanding Commitments............................... 15
SECTION 2.28 Intellectual Property................................. 16
SECTION 2.29 Significant Customers and Suppliers................... 16
SECTION 2.30 Banks, Brokers and Proxies............................ 16
SECTION 2.31 Assumptions, Guaranties, Etc. of
Indebtedness of Other Persons......................... 16
SECTION 2.32 Transactions With Affiliates.......................... 17
SECTION 2.33 Records............................................... 17
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SECTION 2.34 Medicare and Medicaid Programs........................ 17
SECTION 2.35 Fraud and Abuse....................................... 17
SECTION 2.36 Disclosure............................................ 17
SECTION 2.37 Year 2000 Compliance.................................. 18
SECTION 2.38 Dissolution of ▇▇▇▇▇▇▇ Optical, Inc................... 18
ARTICLE III REPRESENTATIONS AND WARRANTIES OF BUYER AND SRC............. 18
SECTION 3.01 Organization.......................................... 18
SECTION 3.02 Buyer Power and Authority............................. 18
SECTION 3.03 Validity, Etc......................................... 18
SECTION 3.04 Financial Statements of SRC........................... 19
SECTION 3.05 Absence of Material Adverse Change.................... 19
SECTION 3.06 The Payment Shares.................................... 19
SECTION 3.07 SRC SEC Documents..................................... 19
ARTICLE IV COVENANTS OF THE SELLERS..................................... 20
SECTION 4.01 Best Efforts Cooperation.............................. 20
SECTION 4.02 Access................................................ 20
SECTION 4.03 Insurance............................................. 20
SECTION 4.04 Compliance with Laws.................................. 20
SECTION 4.05 Keeping of Books and Records.......................... 20
SECTION 4.06 Actions Prior to Closing.............................. 21
SECTION 4.07 Notice of Changes..................................... 21
SECTION 4.08 Preservation of Business.............................. 21
SECTION 4.09 Litigation............................................ 21
SECTION 4.10 Continued Effectiveness of
Representations and Warranties........................ 21
SECTION 4.11 No Negotiations....................................... 22
SECTION 4.12 Resignations.......................................... 22
ARTICLE V COVENANTS OF THE BUYER AND SRC................................ 22
SECTION 5.01 Cooperation........................................... 22
SECTION 5.02 Continued Effectiveness of
Representations and Warranties........................ 22
SECTION 5.03 Registration of Shares................................ 22
ARTICLE VI MUTUAL COVENANTS............................................. 22
SECTION 6.01 Non-Competition....................................... 23
SECTION 6.02 Leases................................................ 23
SECTION 6.03 Reserved.............................................. 23
SECTION 6.04 Employment Agreement.................................. 23
ARTICLE VII CONDITIONS TO THE BUYER'S OBLIGATIONS....................... 23
SECTION 7.01 Consents.............................................. 23
SECTION 7.02 Representations and Warranties True................... 23
SECTION 7.03 Performance........................................... 23
SECTION 7.04 No Adverse Change..................................... 24
SECTION 7.05 Opinion of Counsel.................................... 24
SECTION 7.06 Resignations.......................................... 24
SECTION 7.07 No Actions, Suits or Proceedings...................... 24
SECTION 7.08 Investigation Satisfactory............................ 24
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SECTION 7.09 Management Agreements................................. 24
SECTION 7.10 Closing Documents..................................... 24
SECTION 7.11 No Material Adverse Economic Event.................... 25
SECTION 7.12 Financing Commitment.................................. 25
SECTION 7.13 Tax and Accounting.................................... 25
ARTICLE VIII CONDITIONS TO THE SELLERS OBLIGATIONS...................... 25
SECTION 8.01 Representations and Warranties to be
True and Correct...................................... 25
SECTION 8.02 Performance........................................... 25
SECTION 8.03 No Actions, Suits or Proceedings...................... 25
SECTION 8.04 Closing Documents..................................... 26
SECTION 8.05 Tax and Accounting.................................... 26
SECTION 8.06 Other Agreements...................................... 26
SECTION 7.07 No Actions, Suits or Proceedings...................... 26
SECTION 8.08 Investigation Satisfactory............................ 26
SECTION 8.09 No Material Adverse Economic Event.................... 26
ARTICLE IX INDEMNIFICATION.............................................. 26
SECTION 9.01 Survival.............................................. 26
SECTION 9.02 Sellers' Indemnification of Buyer..................... 27
SECTION 9.03 Indemnification by Buyer.............................. 27
SECTION 9.04 Claims for Indemnification............................ 27
ARTICLE X TERMINATION................................................... 28
SECTION 10.01 Termination.......................................... 28
SECTION 10.02 Effect of Termination................................ 30
ARTICLE XI SRC GUARANTEE................................................ 30
SECTION 11.01 Guarantee............................................ 30
SECTION 11.02 Reserved............................................. 31
SECTION 11.03 Certain Bankruptcy Events............................ 31
ARTICLE XII MISCELLANEOUS............................................... 31
SECTION 12.01 Notices.............................................. 31
SECTION 12.02 Entire Agreement..................................... 32
SECTION 12.03 Modifications and Amendments......................... 32
SECTION 12.04 Waivers and Consents................................. 32
SECTION 12.05 Assignment........................................... 33
SECTION 12.06 Parties in Interest.................................. 33
SECTION 12.07 Governing Law........................................ 33
SECTION 12.08 Arbitration.......................................... 33
SECTION 12.09 Severability......................................... 33
SECTION 12.10 Interpretation....................................... 33
SECTION 12.11 Headings and Captions................................ 34
SECTION 12.12 Enforcement.......................................... 34
SECTION 12.13 Reliance............................................. 34
SECTION 12.14 Expenses............................................. 34
SECTION 12.15 No Broker or Finder.................................. 34
SECTION 12.16 Publicity............................................ 34
SECTION 12.17 Confidentiality...................................... 35
SECTION 12.18 Counterparts......................................... 35
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Exhibits
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1.02(a) Form of Escrow Agreement
1.02(b) Form of Promissory Note
6.01 Form of Non-Competition Agreement
6.02 Form of Real Estate Lease
6.04(a) Form of Employment Agreement (▇▇▇▇▇▇)
6.04(b) Form of Employment Agreement (▇▇▇▇▇)
6.04(c) Form of Employment Agreement (▇▇▇▇)
6.04(d) Form of Employment Agreement (▇▇▇▇▇▇▇▇▇▇)
7.05 Form of Opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Schedules
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1.02 Purchase Price Allocation
2.01 Title to Shares
2.04 Capitalization
2.08 Validity, etc.
2.09 Financial Statement
2.11 Absence of Adverse Change; Conduct of Business
2.14 Taxes
2.15 Litigation
2.18 Licenses and Permits
2.20 Certain Employees
2.21 Employee Benefits
2.22 Tangible Properties
2.23 Owned Premises
2.24 Leased Premises
2.26 Insurance
2.27 Outstanding Commitments
2.28 Intellectual Property
2.29 Customers and Suppliers
2.30 Banks, Brokers and Proxies
2.31 Guaranties of Indebtedness of Other Persons
2.32 Transactions with Affiliates
2.37 Year 2000 Compliance
STOCK PURCHASE AND SALE AGREEMENT
This Stock Purchase and Sale Agreement (this "Agreement") is entered into
as of the 1st day of April, 1999 by and among Kent Acquisition Corp. (the
"Buyer"), a Delaware corporation and wholly owned subsidiary of Sight Resource
Corporation, a Delaware Corporation ("SRC"), SRC (with respect to certain of the
provisions herein), Kent Optical Company, a Michigan corporation ("Kent"),
Custom Optics, Inc., a Michigan corporation ("Custom"), Kent - N.W. Grand
Rapids, Inc., a Michigan corporation ("Kent - N.W."), ▇▇▇▇-▇▇▇▇▇▇▇, Inc., a
Michigan corporation ("▇▇▇▇ ▇▇▇▇▇▇▇") and Source Optical Supply, Inc., a
Michigan corporation ("Source" and collectively with Kent, Custom, Kent - N.W.
and ▇▇▇▇-▇▇▇▇▇▇▇, the "Companies"), and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("▇▇▇▇▇▇"), ▇▇▇▇ ▇.
▇▇▇▇▇ ("▇▇▇▇▇"), ▇▇▇▇▇▇ ▇▇▇▇ ("▇▇▇▇"), ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇▇▇"), ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇▇") and BACOVAST, L.L.C. ("BACOVAST" and collectively with
Westra, Cress, ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇, the "Sellers").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Sellers are the owners of all of the issued and outstanding
shares of capital stock of every kind and description of the Companies (said
shares being herein referred to as the "Shares"); and
WHEREAS, the Sellers desire to sell the Shares and the Buyer desires to
purchase the Shares upon the terms and conditions set forth herein; and
WHEREAS, the Buyer, the Companies and the Sellers desire to enter into
certain other agreements for their mutual benefit;
NOW THEREFORE, in consideration of the premises and of the mutual covenants
and agreements contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby mutually acknowledged, intending
to be legally bound, the parties hereby agree as follows:
ARTICLE I PURCHASE AND SALE OF THE SHARES
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SECTION 1.01 Purchase and Sale of the Shares. On the basis of the
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representations, warranties and undertakings set forth in this Agreement, and on
the terms and subject to the conditions set forth in this Agreement, at the
Closing (as defined in Section 1.04), each Seller shall sell his, her or its
Shares to the Buyer, and the Buyer shall purchase such Shares from each Seller,
free and clear of all claims, charges, liens, contracts, rights, options,
security interests, mortgages, encumbrances and restrictions of every kind and
nature (collectively, the "Claims").
SECTION 1.02 Purchase Price. The purchase price for the Shares (the
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"Purchase Price") is the amount per Share set forth on Schedule 1.02, for an
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aggregate of $7,000,000 for all of the
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Shares, which will be paid as follows: (a) $5,200,000, subject to adjustment
herein, will be paid by wire transfer at the Closing in accordance with
instructions provided by the Sellers (the "Cash Portion"), (b) $175,000 will be
deposited in escrow (the "Escrow Fund") from the proceeds of the Cash Adjustment
(as defined in Section 1.03(b) hereto) pursuant to an escrow agreement (the
"Escrow Agreement") in substantially the form of Exhibit 1.02(a) hereto to
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facilitate any adjustment of the Purchase Price pursuant to Section 1.03(a)
herein, provided, however, in the event that the proceeds of the Cash
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Adjustment (as defined in Section 1.03 hereto) are insufficient to fully
fund the Escrow Fund, an amount equal to the deficiency in the Escrow
Fund shall be deducted from the Cash Portion and shall be deposited into
the Escrow Fund pursuant to the Escrow Agreement, (c) Buyer will execute
and deliver a promissory note (the "Note") in the form of Exhibit 1.02(b)
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attached hereto to each of ▇▇▇▇▇▇ and ▇▇▇▇▇, which together will amount to an
aggregate principal amount of $1,000,000, and (d) Buyer will arrange for the
issuance by SRC to each of ▇▇▇▇▇▇ and ▇▇▇▇▇ of an amount of shares that will
together amount to an aggregate of 160,000 unregistered shares (the "Payment
Shares") of the Common Stock, par value $.01 per share of SRC (the "SRC Common
Stock"). Unless the per share Market Price, as defined below, reaches $5.00
during any period of time between the first anniversary of the Closing and the
second anniversary of the Closing each of ▇▇▇▇▇▇ and ▇▇▇▇▇ shall be entitled to
receive additional consideration in an amount equal to (a) the difference
between $5.00 and the greater of (i) the Market Price on the Closing Date or
(ii) the Market Price on the second anniversary of the Closing Date, multiplied
by (b) the number of Payment Shares then held by each of ▇▇▇▇▇▇ and ▇▇▇▇▇ (the
"Make Whole Payment"). At the Buyer's sole discretion, the Make Whole Payment
may be satisfied by the Buyer in cash or by the issuance of additional
unregistered shares of SRC Common Stock valued at the Market Price on the second
anniversary of the Closing Date and equal to the cash value of the Make Whole
Payment (the "Make Whole Shares"). In the event that the Make Whole Payment is
satisfied by Make Whole Shares and unless the per share Market Price reaches
$5.00 during any period of time between the third anniversary of the Closing and
the fourth anniversary of the Closing, each of ▇▇▇▇▇▇ and ▇▇▇▇▇ shall be
entitled to receive additional consideration in the form of a cash payment (the
"Second Make Whole Payment"), equal to (x) the difference between $5.00 and the
greater of (A) the Market Price on the Closing Date or (B) the Market Price on
the fourth anniversary of the Closing Date, multiplied by (y) the number of
Payment Shares and Make Whole Shares then held by each of ▇▇▇▇▇▇ and ▇▇▇▇▇;
provided, however, the Second Make Whole Payment shall not exceed an aggregate
of fifty thousand dollars ($50,000) to each of ▇▇▇▇▇▇ and ▇▇▇▇▇. In the event
that (1) either of ▇▇▇▇▇▇ or ▇▇▇▇▇ sell Payment Shares or Make Whole Shares at a
per share purchase price in excess of $5.00 or (2) the per share market price of
the SRC Common Stock exceeds $5.00 at any time between the first anniversary of
the Closing and the second anniversary of the Closing or between the third
anniversary of the Closing and the fourth anniversary of the Closing, then any
Make Whole Payment or Second Make Whole Payment shall be reduced in accordance
with the calculations set forth below. In the case of (1) above, the Make Whole
Payment or Second Make Whole Payment, as applicable, shall be reduced by an
amount equal to (i) the difference between the per share purchase price and
$5.00 multiplied by (ii) the number of Payment Shares or Make Whole Shares sold.
In the case of (2) above and if no Payment Shares or Make Whole Shares are sold,
then the Make Whole Payment or Second Make Whole Payment, as applicable, shall
be reduced by an amount equal to (i) the difference between the highest per
share market price at any time between the first anniversary of the Closing and
the second anniversary of the Closing, in the case of the Make Whole Payment, or
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between the third anniversary of the Closing and the fourth anniversary of the
Closing, in the case of the Second Make Whole Payment, and $5.00 multiplied by
(ii) the number of Payment Shares or Make Whole Shares then held by each of
▇▇▇▇▇▇ and ▇▇▇▇▇, as applicable. "Market Price" shall mean the average of the
closing prices (or, if there is no closing price, then the average of the daily
bid and asked prices) of the SRC Common Stock on the Nasdaq National Market
System ("NASDAQ") (or on any exchange on which the SRC Common Stock is then
traded) for the period of twenty (20) consecutive trading days ending two
business days prior to the applicable date of measurement.
SECTION 1.03 Purchase Price Adjustments.
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(a) The parties acknowledge and agree that the Purchase Price has been
established with reference in part to the Net Worth (as defined below) and
aggregate Cash and Short Term Investments (as defined below) of the
Companies as of December 31, 1998, as reflected on the Base Balance Sheet
(as defined in Section 2.09 herein). As promptly as practicable, but in
any event within sixty (60) days after the Closing, the Buyer shall deliver
to the Sellers a statement of the Net Worth as of the Closing Date and Cash
and Short Term Investments of the Companies determined by the average of
the Cash and Short Term Investments as of March 31, 1999 and April 30, 1999
(the "Closing Statement"), which shall be prepared by the Buyer in
accordance with OCBOA (as defined in Section 2.09 herein) on a basis
consistent with the Base Balance Sheet and shall be audited and reported on
by KPMG Peat Marwick LLP ("Buyer's Accountant"). For purposes of this
Agreement, the term "Net Worth" shall mean total assets less total
liabilities, and the term "Cash and Short Term Investments" shall mean
cash, money market and short term investments.
The Closing Statement shall be conclusive and binding upon the parties hereto,
unless the Sellers object in writing to any item or items shown on the Closing
Statement within fifteen (15) business days after delivery to the Sellers of the
Closing Statement (the "Objection Period"). During the Objection Period, the
Sellers may request that all work papers of Buyer's Accountant which were used
in the preparation of the Closing Statement be mailed or, to the extent
commercially reasonable, transmitted by facsimile to Sellers' accountants. If
Buyer and the Sellers shall be unable to resolve any dispute with respect to the
Closing Statement within twenty (20) business days after delivery of the
Sellers' written objections, the matter or matters in dispute shall be submitted
(at the equal expense of Buyer and the Sellers) to such firm of independent
certified public accountants as Buyer on the one hand and the Sellers on the
other hand may mutually agree. The decision of such firm of independent
certified public accountants shall be conclusive and binding upon Buyer and
Sellers.
(i) If the Net Worth of the Companies as of the Closing Date conclusively
determined as set forth above is less than $800,000 there shall be refunded to
Buyer from the Escrow Fund in accordance with the terms of the Escrow Agreement
an amount equal to the difference between $800,000 and the Net Worth as stated
on the Closing Statement together with all interest earned thereon and (ii) if
the Cash and Short Term Investments held by the Companies as determined by the
average of the Cash and Short Term Investments as of March 31, 1999 and April
30, 1999 conclusively determined as set forth above is less than $125,000 there
shall be refunded to Buyer
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from the Escrow Fund in accordance with the terms of the Escrow Agreement an
amount equal to the difference between $125,000 and the Cash and Short Term
Investments as stated on the Closing Statement together with all interest earned
thereon. If such difference exceeds the amount of the Escrow Fund, the Sellers
shall refund to Buyer the amount held in the Escrow Fund and promptly pay to
Buyer the amount of such excess by wire transfer of immediately available funds
to an account designated by Buyer.
(b) If the Cash and Short Term Investments held by the Companies as determined
by the average of the Cash and Short Term Investments as of March 31, 1999
and April 30, 1999 is projected to exceed $125,000 (such projection to
occur two business days prior to Closing), then the Cash Portion of the
Purchase Price shall be increased by the aggregate amount of fifty percent
of the Cash and Short Term Investments projected to exceed $125,000 (the
"Cash Adjustment"); provided, however, any such Cash Adjustment shall be
subject to adjustment in accordance with provisions of Section 1.03(a)
herein and provided, further, that the first $175,000 of the Cash
Adjustment shall be deposited in the Escrow Fund pursuant to the Escrow
Agreement.
SECTION 1.04 Closing. Subject to the satisfaction or waiver by the parties
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of each of the conditions set forth in Articles VII and VIII of this Agreement,
the closing of the transactions contemplated by this Agreement (the "Closing")
shall take place at the offices of Mintz, Levin, Cohn, Ferris, Glovsky and
Popeo, P.C., ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ at 10 o'clock a.m., on
April 23, 1999, or such other location, date and time as may be agreed upon by
the parties (such date and time being referred to as the "Closing Date"). At
the Closing, in addition to the satisfaction or waiver of each of the conditions
set forth in Articles VII and VIII herein, the parties shall deliver such
further documents, resolutions, certificates and instruments as any party or
his, her or its counsel reasonably requests to facilitate the consummation of
the transactions contemplated hereby.
SECTION 1.05 Further Assurances. At any time and from time to time after the
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Closing Date, at the request of the Buyer and without further consideration,
each Seller will execute and deliver such other instruments of sale, transfer,
conveyance, assignment and confirmation as may be reasonably requested in order
to more effectively transfer, convey and assign to the Buyer and to confirm the
Buyer's title to the Shares.
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE SELLERS
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A. As an inducement to the Buyer to enter into this Agreement and to
consummate the transactions contemplated hereby, each Seller, severally, and not
jointly and severally, hereby represents and warrants to and agrees with the
Buyer with respect to the Shares listed next to the name of such Seller on
Schedule 2.01 hereto that:
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SECTION 2.01 Title to Shares. Such Seller owns the Shares beneficially and
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of record in the manner specified on Schedule 2.01 hereto, free and clear of all
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Claims. There is no restriction affecting the ability of such Seller to
transfer the legal and beneficial title and ownership of the Shares to the Buyer
and, upon delivery thereof to the Buyer pursuant to the terms of this Agreement
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and of payment of the Purchase Price at the Closing, the Buyer will acquire
record and beneficial title to the Shares free and clear of all Claims. Such
Seller does not have outstanding any power of attorney.
SECTION 2.02 Seller's Authority to Execute and Perform Agreement. Such
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Seller has the full legal right and power and all authority and approval
required by law to enter into this Agreement and to perform his, her or its
obligations hereunder. Said Seller has duly executed and delivered this
Agreement, and this Agreement is the legal, valid and binding obligation of said
Seller enforceable in accordance with its terms. On the Closing Date, neither
the execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby, nor the performance of this Agreement in
compliance with its terms and conditions by such Seller will (a) conflict with
or result in any violation of any trust agreement, certificate of incorporation,
by-law, judgment, decree, order, statute or regulation applicable to such Seller
or to the Shares of such Seller, or any breach of any agreement to which such
Seller is a party or by which such Seller or his, her or its Shares is bound, or
constitute a default thereunder, or result in the creation of any Claim of any
kind or nature on, or with respect to, his, her or its Shares, or (b) result in
any violation of, or be in conflict with, or constitute a default under, any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to such Seller.
B. As an inducement to the Buyer to enter into this Agreement and to
consummate the transactions contemplated hereby, ▇▇▇▇▇▇ and ▇▇▇▇▇, jointly and
severally, hereby represent and warrant to the Buyer as follows:
SECTION 2.03 Purchase For Investment; Residence. Such Seller is acquiring
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the shares of SRC Common Stock and the Note issuable hereunder for investment
for his, her or its own account and not with a view to the distribution or
public offering thereof within the meaning of the Securities Act of 1933, as
amended (the "Securities Act"). Such Seller understands that the shares of SRC
Common Stock and the Note issuable hereunder have not been registered under the
Securities Act and may not be sold or transferred without such registration or
an exemption therefrom. Such Seller is sufficiently experienced in financial
and business matters to be capable of evaluating the risk of investment in SRC
Common Stock and the Note issuable hereunder and to make an informed decision
relating thereto. Such Seller has the financial capability for making the
investment, can afford a complete loss of the investment, and the investment is
a suitable one for such Seller. Such Seller is an Accredited Investor as
defined in Regulation D under the Securities Act. Prior to the execution and
delivery of this Agreement such Seller has had the opportunity to ask questions
of and receive answers from representatives of SRC concerning the finances,
operations, business and prospects of SRC. Such Seller is a resident of the
State of Michigan.
SECTION 2.04 Capitalization. The authorized, issued and outstanding capital
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stock of each of the Companies on the date hereof is, and will on the Closing
Date be, as set forth on Schedule 2.04. All of the Shares are duly authorized,
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validly issued, fully paid and non-assessable and were issued in full compliance
with all federal, state and local rules, laws and regulations. The
designations, powers, preferences, rights, qualifications, limitations and
restrictions in respect of each class and series of authorized capital stock of
each of the Companies are as set forth in each of the Companies' Articles of
Incorporation, as amended, correct and complete copies of which have
6
been provided to the Buyer, and all such designations, powers, preferences,
rights, qualifications, limitations and restrictions are valid, binding and
enforceable in accordance with all applicable laws. There are, and at the
Closing Date there will be, no shares held in the corporate treasury of any of
the Companies and no shares reserved for issuance. Except as set forth on
Schedule 2.04, as of the date hereof, there are, and as of the Closing Date
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there will be, no outstanding subscriptions, options, warrants, rights, calls or
convertible securities, or other commitments of any nature relating to shares of
the capital stock of any of the Companies. As of the date hereof, there is, and
as of the Closing Date the Companies will have, no obligation (contingent or
other) to purchase, redeem or otherwise acquire any of their equity securities
or any interest therein or to pay any dividend or make any other distribution in
respect thereof.
SECTION 2.05 Organization and Qualification. Each of the Companies is a
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corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and is duly licensed or qualified to
transact business as a foreign corporation and is in good standing in each
jurisdiction in which the nature of each of the Companies' businesses or the
character of the properties owned or leased by each of the Companies requires
such licensing or qualification.
SECTION 2.06 Subsidiaries. None of the Companies (a) owns of record or
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beneficially, directly or indirectly, (i) any shares of capital stock or
securities convertible into capital stock of any other corporation or (ii) any
participating interest in any partnership, joint venture or other non-corporate
business enterprise or (b) controls, directly or indirectly, any other entity.
SECTION 2.07 Corporate Power and Authority. Each of the Companies has the
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corporate power and authority to own and hold its properties and to carry on its
business as presently conducted and contemplated to be conducted and to execute,
deliver and perform this Agreement and the other documents and instruments
contemplated hereby. The execution, delivery and performance of this Agreement
and the documents contemplated hereby and the consummation of the transactions
contemplated hereby and thereby have been duly authorized and approved by each
of the Companies. This Agreement and each of the other agreements, documents
and instruments to be executed and delivered by the Companies have been duly
executed and delivered by, and constitute the legal, valid and binding
obligation of, each of the Companies enforceable against each of such Companies
in accordance with their terms.
SECTION 2.08 Validity, Etc. Except as set forth on Schedule 2.08, neither
-------------- -------------
the execution and delivery of this Agreement and the other documents and
instruments contemplated hereby, the consummation of the transactions
contemplated hereby or thereby, nor the performance of this Agreement and such
other agreements in compliance with the terms and conditions hereof and thereof
will (a) violate, conflict with or result in any breach of any trust agreement,
Articles of Incorporation, bylaw, judgment, decree, order, statute or regulation
applicable to the Sellers or any of the Companies, (b) require any consent,
approval, authorization or permit of, or filing with or notification to, any
governmental or regulatory authority, (c) violate, conflict with or result in a
breach, default or termination or give rise to any right of termination,
cancellation or acceleration of the maturity of any payment date of any of the
obligations of any of the Companies or increase or otherwise offset the
obligations of the Companies under any law, rule, regulation, judgment, decree,
7
order, governmental permit, license or order or any of the terms, conditions or
provisions of any mortgage, indenture, note, license, agreement or other
instrument or obligation related to the Companies or any of their assets or the
consummation of the transactions contemplated hereby or thereby, (d) violate any
order, writ, injunction, decree, statute, rule or regulation applicable to any
of the Companies or (e) result in the creation of any Claim upon the Shares or
any assets of the Companies.
SECTION 2.09 Financial Statements. The Companies have previously furnished
--------------------
to the Buyer, and attached hereto as Schedule 2.09, the final combined balance
-------------
sheet of the Companies (the "Base Balance Sheet") as at December 31, 1998 (the
"Balance Sheet Date"), as at December 31, 1997 and as at December 31, 1996 and
any related statements of income and cash flow and notes thereto. All such
financial statements (the "Financial Statements") have been prepared in
accordance with a version of the Other Comprehensive Basis of Accounting
("OCBOA") that is generally a tax basis of accounting used by the Companies to
file their income tax returns on an accrual basis, consistently applied. The
Financial Statements were prepared from the books and records of each of the
Companies, which books and records are complete and correct and accurately
reflect all transactions of each of the Companies' businesses. The Financial
Statements fairly present the financial position of each of the Companies as of
the dates thereof, and the results of its operations and cash flows for the
periods ended on the dates thereof. The Financial Statements reflect reserves
appropriate and adequate for all known material liabilities and reasonably
anticipated losses consistent with the requirements of OCBOA, consistently
applied. Since the date of the Base Balance Sheet, (a) there has been no change
in the assets, liabilities or financial condition of the assets of any of the
Companies from that reflected in the Base Balance Sheet except for changes in
the ordinary course of business consistent with past practice and which have not
been material or adverse and (b) none of the business, prospects, financial
condition, operations, property or affairs of any of the Companies has been
materially or adversely affected by any occurrence or development, individually
or in the aggregate, whether or not insured against.
SECTION 2.10 Absence of Undisclosed Liabilities. Except as and to the extent
----------------------------------
of the amounts specifically reflected or reserved against in the Base Balance
Sheet, none of the Companies has any liabilities or obligations of any nature
whatsoever, due or to become due, accrued, absolute, contingent or otherwise
except for liabilities and obligations incurred since the date of the Base
Balance Sheet in the ordinary course of business and consistent with past
practice. The Sellers do not know of, and have no reason to know of, any basis
for the assertion against any of the Companies of any liability or obligation
not fully reflected or reserved against in the Base Balance Sheet or incurred in
the ordinary course of business and consistent with past practice since the date
thereof. None of the Companies is bound by any agreement, or subject to any
charter or other corporate restriction or any legal requirement, which has, or
in the future can reasonably be expected to have, a material adverse effect on
any of the Companies' business.
SECTION 2.11 Absence of Adverse Change; Conduct of Business. Except as set
----------------------------------------------
forth on Schedule 2.11, since the Balance Sheet Date, the Companies have
-------------
conducted their businesses only in the usual and ordinary course consistent with
past practice, there have been no material adverse changes in the businesses of
the Companies and there are no known conditions or developments or contingencies
of any kind existing or which, so far as reasonably can be foreseen by the
Sellers,
8
may result in any such change. Without limiting the foregoing, except as
set forth on Schedule 2.11, since the Balance Sheet Date, there has not been,
-------------
occurred or arisen:
(a) any material adverse change in the working capital, financial
condition, assets, liabilities, business or prospects of any of
the Companies;
(b) any loan, advance, agreement, arrangement or transaction between
any of the Companies and any employees of the Companies or their
affiliates;
(c) any mortgage or pledge of, or any lien placed on, any assets of
the Companies, tangible or intangible;
(d) any material transaction (which shall mean any transaction or
series of transactions totaling $10,000 or more) except in the
ordinary of business consistent with past practice;
(e) any declaration, setting aside or payment of any dividend or
other distribution on or in respect of any shares of the
Companies' capital stock, or any issuance or direct or indirect
redemption, retirement, purchase or other acquisition by any of
the Companies of any shares of their capital stock or other
securities;
(f) any change by any of the Companies in accounting methods,
principles or practices;
(g) any change in the charter or by-laws of any of the Companies; and
(h) any understanding entered into with respect to any commitment
(contingent or otherwise) to do any of the foregoing.
SECTION 2.12 Inventories. All of the Companies' inventory reflected on the
-----------
Base Balance Sheet or thereafter acquired (and not subsequently sold in the
ordinary course of business) consist of items of a quality and quantity usable
or saleable in the ordinary course of the Companies' businesses as first quality
goods at prices having a value equal to the amounts reflected on the Base
Balance Sheet or, with respect to after-acquired inventory, at least equal to
the cost thereof plus markups consistent with past practice. Each item of such
inventory is valued on the Base Balance Sheet at the lower of cost or market, by
the first-in first-out method, in accordance with OCBOA, consistently applied.
------------------
Such inventory reflects write-downs to realizable values in the case of items
which are below standard quality or have become obsolete or unsaleable (except
at prices less than cost) through regular distribution channels in the ordinary
course of business of the Companies.
SECTION 2.13 Receivables. All receivables (whether notes, accounts or
-----------
otherwise) of the Companies (a) have arisen only from bona fide transactions in
the ordinary course of business consistent with past practice, (b) represent
valid obligations, and (c) shall be fully collected in the
9
aggregate face amounts thereof within a reasonable time after the issuance
thereof, except for an allowance of approximately $34,500 for doubtful accounts
with respect to accounts receivable computed in a manner consistent with OCBOA
and as reflected in the Base Balance Sheet, and (d) are owned by the Companies
free of all Claims.
SECTION 2.14 Taxes. Except as set forth on Schedule 2.14, each of the
----- -------------
Companies has filed on a timely basis all returns, declarations, reports, claims
for refunds and information returns or statements relating to Taxes (which shall
mean all taxes including, without limitation, any federal, state, local, or
foreign income, gross receipts, license, payroll, employment, excise, severance,
stamp, occupation, premium, windfall profits, environmental (including taxes
under Sec. 59A of the Internal Revenue Code of 1986, as amended (the "Code")),
customs duties, capital stock franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not), including all schedules or
attachments thereto, and including any amendment thereof ("Tax Returns") and tax
reports required to be filed on or before the date hereof with the appropriate
governmental agencies in all jurisdictions in which such returns and reports are
required to be filed and all such Tax Returns were correct and complete in all
respects. Except as set forth on Schedule 2.14, all Taxes which have become due
-------------
or payable or required to be collected by the Companies or as otherwise
attributable to any periods ending on or before the date hereof or the Closing
Date and all interest and penalties thereon, whether disputed or not, have been
paid or will be paid in full on or prior to the Closing Date (whether or not
shown on any Tax Return).
Except as set forth on Schedule 2.14, none of the Companies is currently the
-------------
beneficiary of any extension of time within which to file any Tax Return. No
claim has been made by an authority in a jurisdiction where each of the
Companies does not file Tax Returns that they are or may be subject to taxation
by that jurisdiction. There are no tax liens pending or threatened against the
assets, properties or business of any of the Companies. None of the Companies
has taken or failed to take any action which could create any tax lien on any of
its assets. Except as set forth on Schedule 2.14, the Companies have withheld
-------------
and paid all Taxes required to have been withheld and paid by them.
No Seller or director or officer (or employee responsible for tax matters) of
any of the Companies expects any authority to assess any additional Taxes for
any period for which Tax Returns have been filed. Except as set forth on
Schedule 2.14, there is no dispute or claim concerning any Tax Liability (which
-------------
shall mean any liability, whether known or unknown, whether assessed or
unassessed, whether accrued or unaccrued, and whether due or to become due) of
any of the Companies either (A) claimed or raised by any authority in writing or
(B) as to which any of the Sellers and the directors and officers (and employees
responsible for tax matters) of any of the Companies has knowledge. Schedule
--------
2.14 lists all federal, state, local and foreign income tax returns filed with
----
respect to the Companies for taxable periods ended on or after the Balance Sheet
Date, indicates those tax returns that have been audited, and indicates those
tax returns that currently are the subject of audit. The Sellers have delivered
to the Buyer correct and complete copies of all federal and state income tax
returns, examination reports, and statements of deficiencies assessed against or
agreed to by the Companies since the Balance Sheet Date.
10
Schedule 2.14 lists all tax agreements which now exist or have existed within
-------------
the past five years between any of the Companies and any taxing jurisdiction.
None of the Companies has waived any statute of limitations in respect of Taxes
or agreed to any extension of time with respect to a tax assessment or
deficiency.
None of the Companies has filed a consent under Code Sec. 341(f) concerning
collapsible corporations. None of the Companies has made any payments, is
obligated to make any payments, or is a party to any agreement that under
certain circumstances could obligate it to make any payments that will not be
deductible under Code Sec. 280G. None of the Companies has been a United States
real property holding corporation within the meaning of Code Sec. 897(c)(2)
during the applicable period specified in Code Sec. 897(c)(1)(A)(ii). All of
the Companies have disclosed on their federal income Tax Returns all positions
taken therein that could give rise to a substantial understatement of federal
income tax within the meaning of Code Sec. 6661. None of the Companies is a
party to any tax allocation or sharing agreement. None of the Companies has
ever been (nor has any liability for unpaid Taxes because it once was) a member
of an affiliated group.
SECTION 2.15 Litigation. Except as set forth on Schedule 2.15, there is no
---------- -------------
(a) action, suit, claim, proceeding or investigation pending or, to the best of
the Sellers' knowledge, threatened against or affecting any of the Companies
(whether or not such Company is a party or prospective party thereto), at law or
in equity, or before or by any Federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, (b) arbitration proceeding relating to any of the Companies or (c)
governmental inquiry pending or threatened against, involving or affecting any
of the Companies, and there is no basis for any of the foregoing. There are no
outstanding orders, writs, judgments, injunctions or decrees of any court,
governmental agency or arbitration tribunal against, involving or affecting any
of the Companies, and there are no facts or circumstances which may result in
the institution of any action, suit, claim or legal, administrative or
arbitration proceeding or investigation against, involving or affecting any of
the Companies or the transactions contemplated hereby.
SECTION 2.16 Certain Practices. None of the Companies nor any of their
-----------------
directors, officers or employees has, directly or indirectly, given or agreed to
give any significant rebate, gift or similar benefit to any supplier, customer,
governmental employee or other person who was, is or may be in a position to
help or hinder any of the Companies (or assist in connection with any actual or
proposed transaction) which (a) could subject any of the Companies or the Buyer
to any damage or penalty in any civil, criminal or governmental litigation or
proceeding, or (b) if not continued in the future, could have an adverse effect
on any of the Companies.
SECTION 2.17 Compliance with Law. None of the Companies nor any Seller is
-------------------
subject to any judgment, order, writ, injunction, or decree that adversely
affects, individually or in the aggregate, its business, operations, properties,
assets or condition (financial or otherwise). To the knowledge of the Sellers,
each of the Companies has complied with and is not in default under, all laws,
ordinances, legal requirements, rules, regulations and orders applicable to it,
its operations, properties, assets, products and services. There is no existing
law, rule, regulation or order, and the Sellers are not aware of any proposed
law, rule, regulation or order, whether Federal or state, which would prohibit
or materially restrict any of the Companies or the Buyer from, or otherwise
11
materially adversely affect any of the Companies or the Buyer in, conducting
each of the Companies' businesses in any jurisdiction in which such businesses
are now conducted or proposed to be conducted.
SECTION 2.18 Licenses and Permits. Schedule 2.18 lists all licenses,
-------------------- -------------
permits, pending applications, consents, approvals and authorizations of or from
any public or governmental agency, used in or otherwise necessary in the conduct
of each of the Companies' businesses (collectively, the "Permits") each of which
will remain in full force and effect following the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby.
SECTION 2.19 Labor and Employee Relations. None of the Companies is a party
----------------------------
to or bound by any collective bargaining agreement with any labor organization,
group or association covering any of their employees, and none of the Companies
nor any Seller has knowledge of any attempt to organize any of the Companies'
employees. There are no pending or threatened charges of unfair labor practices
or of employment discrimination or of any other wrongful action with respect to
any aspect of employment of any person employed or formerly employed by any of
the Companies. None of the Companies has experienced any work stoppages during
the last three years, and to the best of the Sellers' knowledge, no work
stoppage is planned.
SECTION 2.20 Certain Employees. Set forth in Schedule 2.20 is a list of the
----------------- -------------
names of all of the Companies' employees and consultants, together with the
title or job classification of each such person and the base annual and the
total compensation paid to each such person in fiscal year 1997 and anticipated
to be paid in fiscal year 1998. Except as specifically described on Schedule
--------
2.20, none of such persons has a written employment agreement with any of the
----
Companies which is not terminable on notice by such Company without cost or
other liability to such Company. To the knowledge of the Companies, no person
listed on Schedule 2.20 has an oral employment agreement or understanding with
-------------
any of the Companies. No person listed on Schedule 2.20 has indicated to any
-------------
officer of the Company employing such person that he or she intends to terminate
his or her employment with such Company or seeks a material change in his or her
duties or status.
SECTION 2.21 Employee Benefits. Except as set forth on Schedule 2.21
----------------- -------------
attached hereto, each of the Companies has not established, does not maintain,
and is not obligated to make contributions to or under or otherwise participate
in, (a) any bonus or other type of compensation or employment plan, program,
agreement, policy, commitment, contract or arrangement (whether or not set forth
in a written document); (b) any pension, profit-sharing, retirement or other
plan, program or arrangement; or (c) any other employee benefit plan, fund or
program, including, but not limited to, those described in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). All such
plans listed on Schedule 2.21 (individually "Company Plan," and collectively
-------------
"Company Plans") have been operated and administered in all material respects in
accordance with all applicable laws, rules and regulations, including without
limitation, ERISA, the Code, Title VII of the Civil Rights Act of 1964, as
amended, the Equal Pay Act of 1967, as amended, the Age Discrimination in
Employment Act of 1967, as amended, and the related rules and regulations
adopted by those federal agencies responsible for the administration of such
laws. No act or failure to act by any of the Companies has resulted in a
"prohibited
12
transaction" (as defined in ERISA) with respect to the Company Plans. No
"reportable event" (as defined in ERISA) has occurred with respect to any of the
Company Plans. The Companies have not previously made, are not currently making,
and are not obligated in any way to make, any contributions to any multi-
employer plan within the meaning of the Multi-Employer Pension Plan Amendments
Act of 1980. With respect to each Company Plan, either (a) the value of plan
assets (including commitments under insurance contracts) is at least equal to
the value of plan liabilities or (b) the value of plan liabilities in excess of
plan assets is disclosed on the Base Balance Sheet. The Company has made all
required Form 5500 filings and required reporting with respect to the Company
Plans on a timely basis. A true, correct and complete copy of each Company Plan
has been provided to the Buyer.
SECTION 2.22 Tangible Properties. Schedule 2.22 contains a true and complete
------------------- -------------
list of all tangible personal property owned by or leased to the Companies (the
"Tangible Personal Property"), by location. Each item of the Companies'
tangible personal property which has a value in excess of $1,000 is included on
such list. Except as shown on Schedule 2.22, all of the Companies have good and
-------------
marketable title free and clear of all Claims to the Tangible Personal Property
listed as owned by the Companies. With respect to Tangible Personal Property
leased by the Companies as lessee, all leases, conditional sale contracts,
franchises or licenses pursuant to which the Companies may hold or use (or
permit others to hold or use) such Tangible Personal Property are valid and in
full force and effect, and there is not under any of such instruments any
existing default or event of default or event which with notice or lapse of time
or both would constitute such a default. The Companies' possession and use of
such property has not been disturbed and no claim has been asserted against any
of the Companies adverse to their rights in such leasehold interests. The
Tangible Personal Property is adequate and usable for the purposes for which it
is currently used and has been properly maintained and repaired and each item of
Tangible Personal Property, whether owned or leased, is in good operating
condition and repair and has been properly maintained. During the past three
(3) years, there has not been any interruption of the operations of the
Companies' businesses due to the condition of any of the Tangible Personal
Property other than in the ordinary course of business consistent with past
practice.
SECTION 2.23 Owned Premises. Schedule 2.23 sets forth descriptions of all
-------------- -------------
real estate owned by the Companies, and all buildings and other structures
located on such real estate. Said real estate is hereinafter referred to as the
"Property" or the "Properties". Each of the Companies has good and marketable
title in fee simple to all Properties and holds sufficient rights in and to all
easements or other rights necessary for perpetual access thereto, and owns
outright all buildings and other structures, improvements and fixtures thereon,
in each case free and clear of all Claims or other interests or rights of third
parties, except those which do not and will not have an adverse effect on the
Properties. There are no encroachments from any of the Properties onto
adjoining real property, and there are no encroachments from any adjoining real
property onto any of the Properties, except those which do not and will not have
an adverse effect on the Properties. Each structure located on the Properties
is structurally sound, adequately maintained and is in good condition and repair
consistent with the uses to which it is presently being put. All structures,
improvements and fixtures on the Properties and the current uses of the
Properties conform to any and all federal, state and local laws, reclamation
laws, zoning, land use, subdivision, wetlands, building, health and safety and
other ordinances, laws, rules and regulations, except for those the
13
nonconformance with which do not or would not have an adverse effect on the
Properties. No notice from any governmental body or other person has been
served upon, or received by, any of the Companies or any of the Sellers claiming
any violation of any such ordinance, law, rule or regulation, or requiring any
substantial work, repairs, reclamation, construction, alterations or
installation on or in connection with such Properties which has not been
complied with or that any right of access or other right enjoyed by any of the
Companies is being modified or terminated. There are no violations of any
covenant, restriction or other agreement or understanding, oral or written,
affecting or relating to title or use of the Properties and no such covenant,
restriction, agreement or understanding could cause a forfeiture or reversion of
title or abridge the use thereof. There are no pending or threatened
condemnation or similar proceedings or assessments affecting any of the
Properties, lawsuits by adjoining landowners or others, nor to the best of the
Sellers' knowledge, is any such lawsuit contemplated by any person, nor is any
condemnation or assessment contemplated by any governmental authority. None of
the Properties has been designated with any state or local authority for use
solely as "agricultural land", "open space", "conservation land" or similar
designation. There are no violations of any material covenant, restriction or
other agreement or understanding, oral or written, affecting or relating to
title or use of the Properties and no such covenant, restriction, agreement or
understanding could reasonably be expected to cause a forfeiture or reversion of
title. There are no pending or threatened condemnation or similar proceedings
or assessments affecting any of the Properties, nor to the best of the Sellers'
knowledge, is any such condemnation or assessment contemplated by any
governmental authority.
SECTION 2.24 Leased Premises. Schedule 2.24 sets forth a true and complete
--------------- -------------
list and description of each parcel of real property leased by the Companies
(the "Leased Parcels"). Except as set forth on Schedule 2.24, each lease
-------------
covering a Leased Parcel is in full force and effect (there existing no default
under any such lease or event which, with the lapse of time or notice or
otherwise, would constitute a default), conveys the leased real estate purported
to be conveyed thereunder, and is and will be following the Closing enforceable
by the Companies in accordance with its terms. All of the Companies have the
right to use the Leased Parcels in accordance with the terms of such leases free
and clear of all Claims or other interests or rights of third parties.
SECTION 2.25 Environmental Matters. The Companies and all premises occupied
---------------------
and used by them are in compliance with all applicable laws, rules, regulations,
orders, ordinances, judgments and decrees of all governmental authorities
(federal, state, and local). The Companies have received no notice of, and the
Sellers have no knowledge of any past, present or future events, conditions,
circumstances, activities, practices, incidents, actions or plans of the
Companies or the Companies' predecessors, either collectively, individually or
severally, which may interfere with or prevent continued compliance, or which
may give rise to any common law or legal liability, or otherwise form the basis
of any claim, action, suit, proceeding, hearing, or investigation, based on or
related to the disposal, storage, handling, manufacture, processing,
distribution, use, treatment, or transport, or the emission, discharge, release
or threatened release into the environment, of any Substance. As used in this
Section 2.25, the term "Substance" shall mean any pollutant, hazardous
substance, hazardous material, hazardous waste or toxic waste, as defined in any
presently enacted federal, state or local statute or any regulation that has
been promulgated pursuant thereto.
14
SECTION 2.26 Insurance. The Companies are, and will be through the Closing,
---------
insured in respect of their properties, assets and businesses against risks
normally insured against by companies in similar lines of business under similar
circumstances. Schedule 2.26 correctly describes (by type, carrier, policy
-------------
number, limits, premium, and expiration date) the insurance coverage carried by
the Companies, which insurance will remain in full force and effect with respect
to all events occurring prior to the Closing. The Companies have not failed to
give any notice or present any claim under any such policy or binder in due and
timely fashion, have not received notice of cancellation or non-renewal of any
such policy or binder, are not aware of any threatened or proposed cancellation
or non-renewal of any such policy or binder, nor are aware of any insurance
premiums which will be materially increased in the future. There are no
outstanding claims under any such policy which have gone unpaid for more than 45
days, or as to which the insurer has disclaimed liability.
SECTION 2.27 Outstanding Commitments. Schedule 2.27 sets forth a
----------------------- -------------
description of all existing contracts, agreements, understandings, commitments,
licenses and franchises (collectively "Agreements"), whether written or oral,
relating to the Companies which involve amounts in excess of $10,000. Each of
the Companies has delivered or made available to the Buyer true, correct and
complete copies of all of the Agreements specified on Schedule 2.27 which are in
-------------
writing, and Schedule 2.27 contains an accurate and complete description of all
-------------
Agreements which are not in writing. Each of the Companies has paid in full all
amounts due as of the date hereof under each Agreement and as of the Closing
Date will have satisfied in full all of its liabilities and obligations
thereunder due in the ordinary course of business consistent with past practice
prior to the Closing. All of the Agreements are in full force and effect. The
Companies and each other party thereto have performed all the obligations
required to be performed by them to date, have received no notice of default and
are not in default (with due notice or lapse of time or both) under any
Agreement.
SECTION 2.28 Intellectual Property. Schedule 2.28 sets forth a list of
--------------------- -------------
all recipes, patents, inventions, know-how, show-how, designs, trade secrets,
copyrights, maskrights, trademarks, tradenames, servicemarks, manufacturing
processes, formulae, trade secrets, technology or the like, and all applications
for any of the foregoing, (collectively, "Intellectual Property") owned,
controlled or used by any of the Companies or of which any of the Companies is a
licensor or licensee, together in each case with a brief description of the
nature of such right. Each of the Companies owns or possesses adequate licenses
or other rights to use all Intellectual Property necessary or desirable to the
conduct of its business as conducted and as proposed to be conducted, and no
Claim is pending or, to the best of the Sellers' knowledge, threatened to the
effect that the operations of the Companies infringe upon or conflict with the
asserted rights of any other person under any Intellectual Property, and there
is no basis for any such claim (whether or not pending or threatened). None of
the Companies' Intellectual Property rights will be impaired by the consummation
of the transactions contemplated hereby, and all of such rights will be
enforceable immediately after the Closing without the consent or agreement of
any other party.
SECTION 2.29 Significant Customers and Suppliers. Set forth on Schedule
----------------------------------- --------
2.29 is a list of the ten largest customers and ten largest suppliers of each of
----
the Companies for the most recent
15
twelve-month period, together with the amount of sales or purchases attributable
to such customers or suppliers expressed in dollars.
SECTION 2.30 Banks, Brokers and Proxies. Schedule 2.30 sets forth: (a)
-------------------------- -------------
the name of each bank, investment manager, trust company and stock or other
broker with which any of the Companies maintains an account or from which they
borrow money; (b) the names of all persons authorized by each of the Companies
to effect transactions therewith, or to have access to any safe deposit box or
vault; and (c) all proxies, powers of attorney, agency agreements or other like
instruments to act on behalf of the Companies or the Sellers in matters
concerning the business or affairs of the Companies.
SECTION 2.31 Assumptions, Guaranties, Etc. of Indebtedness of Other
------------------------------------------------------
Persons. Except as set forth on Schedule 2.31, the Companies have not assumed,
------- -------------
guaranteed, endorsed or otherwise become directly or contingently liable on any
indebtedness of any other person (including, without limitation, liability by
way of agreement, contingent or otherwise, to purchase, to provide funds for
payment, to supply funds to or otherwise invest in the debtor, or otherwise to
assure the creditor against loss), except for guaranties by endorsement of
negotiable instruments for deposit or collection in the ordinary course of
business.
SECTION 2.32 Transactions With Affiliates. Except as set forth on
----------------------------
Schedule 2.32, no director, officer or employee of any of the Companies, or
-------------
member of the family of any such person, or any corporation, partnership, trust
or other entity in which any such person, or any member of the family of any
such person, has a substantial interest or is an officer, director, trustee,
partner or holder of any equity interest, is a party to any transaction with any
of the Companies. None of the Companies, Sellers, officers, supervisory
employees or directors of any of the Companies owns directly or indirectly on an
individual or joint basis any material interest in, or serves as an officer or
director or in another similar capacity of, any competitor or supplier of any of
the Companies.
SECTION 2.33 Records. The minute books, stock certificate books and stock
-------
transfer ledgers of each of the Companies are complete and correct in all
respects with respect to the matters set forth therein and complete and correct
copies of such records have been delivered to the Buyer.
SECTION 2.34 Medicare and Medicaid Programs. Each of the Companies and
------------------------------
each doctor and licensed employee of the Companies (the "Medical Personnel") are
qualified for participation in the Medicare and Medicaid programs and are
parties to provider agreements for such programs, which are in full force and
effect with no defaults having occurred thereunder. The Companies, the Sellers
and each of the Medical Personnel has timely filed all claims and other reports
required to be filed with respect to the purchase of services by third-party
payors, and all such claims and reports are complete and accurate and there is
no liability to any payor with respect thereto. There are no pending appeals or
other proceedings of any kind relating to Medicare or Medicaid claim
determinations or other reports required to be filed by the Companies, the
Sellers or the Medical Personnel. None of the Companies, the Sellers or any of
the Medical Personnel has been convicted of, or pled guilty or nolo contendere
to, patient abuse or negligence, or any other Medicare or Medicaid program
related offense and none has committed any offense which may serve as the basis
for suspension or exclusion from the Medicare or Medicaid programs.
16
SECTION 2.35 Fraud and Abuse. Each of the Companies and all persons and
---------------
entities providing professional services for them have not, to the best of
knowledge of the Sellers, engaged in any activities that are prohibited under
Section 1320a-7b or Section 1395nn of Title 42 of the United States Code or the
regulations promulgated thereunder, or related state or local statutes or
regulations, or which are prohibited by rules of professional conduct.
SECTION 2.36 Disclosure. All documents and schedules delivered or to be
----------
delivered by or on behalf of the Companies or the Sellers to the Buyer in
connection with this Agreement and the transactions contemplated hereby are
true, correct and complete. Neither this Agreement, nor any Schedule or Exhibit
to this Agreement contains any untrue statement of a material fact or omits a
material fact necessary to make the statements contained herein or therein, in
light of the circumstances in which made, not misleading.
SECTION 2.37 Year 2000 Compliance. Except as set forth on Schedule 2.37,
-------------------- -------------
each of the Companies' management information systems, office automation systems
and internal LAN network management systems is year 2000 compliant. Except as
set forth on Schedule 2.37, all of the computer software programs utilized by
-------------
each of the Companies is year 2000 compliant. Schedule 2.37 sets forth the cost
-------------
to the Companies to become year 2000 compliant. As used herein, the term "year
2000 compliant" means, with respect to information technology, that the
information technology accurately processes date/time data (including, but not
limited to, calculating, comparing, and sequencing) from, into, and between the
twentieth and twenty-first centuries, and the years 1999 and 2000 and leap year
calculations, to the extent that other information technology, used in
combination with the information technology being acquired, properly exchanges
date/time data with it.
[SECTION 2.38 Dissolution of ▇▇▇▇▇▇▇ Optical, Inc. ▇▇▇▇▇▇▇ Optical, Inc.,
------------------------------------
a Michigan corporation ("▇▇▇▇▇▇▇"), will be dissolved and all assets and
liabilities of ▇▇▇▇▇▇▇ shall be distributed to and/or assumed by Source free and
clear of all claims, liens, encumbrances and voting interests. All liabilities
of ▇▇▇▇▇▇▇ to be assumed by Source have been reflected in the Base Balance Sheet
of the Corporation previously provided to Buyer as set forth in Schedule 2.09.
-------------
ARTICLE III REPRESENTATIONS AND WARRANTIES OF BUYER AND SRC
----------- -----------------------------------------------
The Buyer and SRC hereby represent and warrant to the Sellers as follows:
SECTION 3.01 Organization. Each of SRC and Buyer is duly incorporated,
------------
validly existing and in good standing under the laws of the State of Delaware
and is duly qualified to transact business as a foreign corporation in each
jurisdiction in which the failure to so qualify would have a material adverse
impact on the Buyer's ability to purchase the Shares.
SECTION 3.02 Buyer Power and Authority. Each of SRC and Buyer has the
-------------------------
corporate power and authority to execute, deliver and perform this Agreement and
the other documents and instruments contemplated hereby. The execution,
delivery and performance of this Agreement and
17
the documents contemplated hereby and the consummation of the transactions
contemplated hereby and thereby have been duly authorized and approved by each
of SRC and Buyer. This Agreement, and each of the other agreements, documents
and instruments to be executed and delivered by Buyer or SRC, as applicable,
have been duly executed and delivered by, and constitute the valid and binding
obligation of Buyer or SRC enforceable against Buyer or SRC in accordance with
their terms, as applicable.
SECTION 3.03 Validity, Etc. Neither the execution and delivery of this
-------------
Agreement and the other documents and instruments contemplated hereby, the
consummation of the transactions contemplated hereby or thereby, nor the
performance of this Agreement and such other agreements in compliance with the
terms and conditions hereof and thereof will (a) conflict with or result in any
breach of any trust agreement, certificate of incorporation, bylaw, judgment,
decree, order, statute or regulation applicable to Buyer or SRC, as applicable,
(b) require any consent, approval, authorization or permit of, or filing with or
notification to, any governmental or regulatory authority, except for the
consent of Fleet National Bank or (c) result in a breach of or default (or give
rise to any right of termination, cancellation or acceleration) under any law,
rule or regulation or any judgment, decree, order, governmental permit, license
or order or any of the terms, conditions or provisions of any mortgage,
indenture, note, license, agreement or other instrument to which Buyer or SRC is
a party.
SECTION 3.04 Financial Statements of SRC The financial statements of SRC
---------------------------
and the related notes contained in its Report on Form 10-K for the fiscal year
ended December 31, 1998 (the "Report") present fairly the financial position of
SRC as of the dates indicated, and the results of its operations and cash flows
for the periods therein specified. Such financial statements (including the
related notes) have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
therein specified, except as disclosed in such Report.
SECTION 3.05 Absence of Material Adverse Change Since December 31, 1998,
----------------------------------
there has been no material adverse change in the business or financial condition
of SRC, and there is no condition or development or contingency of any kind
existing (other than (i) changes in the ordinary course of business consistent
with prior practice, (ii) activities of competitors in the ordinary course of
their respective businesses and (iii) changes of a general economic and
political nature) which, so far as reasonably can be foreseen by SRC, would,
individually or in the aggregate, reasonably be expected to have any material
adverse change in the business or financial condition of SRC.
SECTION 3.06 The Payment Shares Neither SRC nor the Buyer has sold any of
------------------
the Payment Shares or other securities of SRC, offered any of such securities
for sale, solicited any offers to purchase any of such securities, or otherwise
approached or negotiated (nor will SRC or the Buyer sell, offer, solicit or
otherwise approach or negotiate) in respect thereof, in such manner as would
result in bringing the Payment Shares, or any part thereof, within the
provisions of Section 5 of the Securities Act. Assuming the accuracy and
completeness of the representations and warranties of ▇▇▇▇▇▇ and ▇▇▇▇▇ contained
in Section 2.03 herein, the sale and transfer of the Payment Shares to ▇▇▇▇▇▇
and ▇▇▇▇▇ is exempt from registration under the
18
Securities Act pursuant to Section 4(2) of the Securities Act and such sale and
transfer are also exempt from registration and qualification under applicable
state securities and blue sky laws.
SECTION 3.07 SRC SEC Documents. True, correct and complete copies of all
-----------------
forms, reports, schedules, statements, and other documents filed by SRC up to
March 31, 1999, under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") or the Securities Act (such documents, as amended since the time
of filing, collectively, the "SRC SEC Documents") are available on the
Securities and Exchange Commission ("SEC") ▇▇▇▇▇ Database at ▇▇▇.▇▇▇.▇▇▇. The
SRC SEC Documents, including, without limitation, any financial statements or
schedules included therein, at the time filed (and, in the case of registration
statements and proxy statements, on the dates of effectiveness and the dates of
mailing, respectively) complied as to form in all materials respects with the
applicable requirements of the Exchange Act and the Securities Act, as the case
may be, and the applicable rules and regulations of the SEC thereunder. The
financial statements of SRC included in the SRC SEC Documents at the time filed
(and, in the case of registration statements and proxy statements, on the date
of effectiveness and the date of mailing, respectively) complied as to form in
all materials respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto.
ARTICLE IV COVENANTS OF THE SELLERS
---------- ------------------------
The Sellers covenant and agree with the Buyer as follows:
SECTION 4.01 Best Efforts Cooperation. The Sellers shall use their best
------------------------
efforts in good faith to perform and fulfill and to cause each of the Companies
to perform and fulfill, all conditions and obligations to be fulfilled or
performed by them hereunder, to the end that the transactions contemplated
hereby will be fully and timely consummated.
SECTION 4.02 Access. Until the Closing, the Sellers shall give and shall
------
cause each of the Companies to give the Buyer, its attorneys, accountants,
financial and other advisors and other authorized representatives complete
access, as Buyer may reasonably request and consistent with the uninterrupted
operation of each of the Companies' business, to the Companies' offices,
properties, customers, suppliers, employees, products, technology, business and
financial records, contracts, business plans, budgets and projections,
agreements, commitments and other documents and information concerning the
Companies and persons employed by or doing business with the Companies.
Following the Closing, the Sellers shall provide the Buyer with access to any
and all records relating to the Companies that remain in the possession of third
parties.
SECTION 4.03 Insurance. Each of the Companies shall maintain with
---------
financially sound and reputable insurers, insurance against such casualties and
contingencies and of such types and in such amounts as is customary for
companies similarly situated.
SECTION 4.04 Compliance with Laws. Each of the Companies shall conduct
--------------------
its business in compliance with all applicable laws, rules, regulations and
orders.
19
SECTION 4.05 Keeping of Books and Records. Each of the Companies shall
----------------------------
keep adequate records and books of account, in which complete entries will be
made in accordance with OCBOA consistently applied, reflecting all financial
transactions and in which all proper reserves for depreciation, depletion,
obsolescence, amortization, taxes, bad debts and other purposes in connection
with its business shall be made.
SECTION 4.06 Actions Prior to Closing. Each of the Companies shall (a)
------------------------
conduct its Business pending the Closing only in the ordinary and usual course
of business consistent with past practice; (b) maintain and keep its properties
in good condition; (c) use all reasonable efforts to maintain in accordance with
good business practice its present employees and its relationships with
suppliers and customers so that they will be preserved for Buyer after the
Closing; and (d) prior to the Closing, obtain all consents, waivers, approvals,
authorizations or orders required in connection with the authorization,
execution and delivery of this Agreement by the Companies. Except as expressly
contemplated by this Agreement or as consented to in writing by the Buyer,
during the period from the date of this Agreement to the Closing Date, each of
the Companies shall not, (a) issue, sell or pledge additional shares of capital
stock of any class (including the Shares) or securities convertible into any
such shares, including the declaration of any dividends; (b) repurchase,
reacquire or agree to repurchase or reacquire any of its shares of capital stock
of any class; (c) propose or adopt any amendments to the Articles of
Incorporation or bylaws of such Company; (d) incur any obligation or liability
or enter into any transaction, not in the ordinary course of business; (e) incur
any indebtedness for borrowed money; (f) make or agree to make any loans to, or
repay any loans from, any of its officers, directors or employees; and (g) agree
in writing or orally to take any of the foregoing actions or any other action
which would have made any representation or warranty in this Agreement untrue.
SECTION 4.07 Notice of Changes. Until the Closing, the Sellers shall
-----------------
notify the Buyer of any material change in the business of any of the Companies
as soon as it becomes apparent to the Sellers that any such change has or may
occur.
SECTION 4.08 Preservation of Business. Until the Closing, each of the
------------------------
Companies will, and the Sellers will cause them to, use their best efforts to
preserve their business organization intact, and to preserve their goodwill.
Following the Closing, each of the Companies shall maintain its existing
relationship with Charter Management Group, Inc. and will make available to the
Buyer and assist the Buyer in retaining the same employees of Charter Management
Group, Inc. who were leased to the Companies immediately prior to the Closing,
unless otherwise permitted by the Buyer.
SECTION 4.09 Litigation. The Sellers will promptly notify the Buyers of
----------
any lawsuits, claims, proceedings or investigations which are threatened or
commenced against or by any of the Companies, the Sellers or their affiliates,
or against any employee, consultant or director of the Companies.
SECTION 4.10 Continued Effectiveness of Representations and Warranties.
---------------------------------------------------------
From the date hereof up to and including the Closing Date, the Sellers will
advise the Buyer promptly in writing
20
of any condition or circumstance occurring which could cause any representations
or warranties of the Sellers to become untrue in any material respect.
SECTION 4.11 No Negotiations. Until April 23, 1999, or the earlier
---------------
termination of this Agreement in accordance with its terms, none of the
Companies, the Sellers nor any of their affiliates, advisors, agents or
investment bankers shall, directly or indirectly, initiate discussions with,
engage in negotiations with, or provide any information to any corporation,
partnership, person or other entity or group involving the possible sale,
directly or indirectly, transfer or joint venture of any of the Companies, their
businesses or assets, or the capital stock of any of the Companies (an
"Acquisition Proposal") to any person or entity other than the Buyer. The
Companies shall promptly notify the Buyer upon receipt of any offer or
indication that any person is considering making an offer with respect to an
Acquisition Proposal or any request for information relative to any of the
Companies or for access to the properties, books and records of any of the
Companies, and will promptly reject any such offer or request.
SECTION 4.12 Resignations The Sellers will, to the extent that Buyer so
------------
requests, cause the officers and directors of all of the Companies and the
trustees and administrators of each Employee Plan to resign on or before the
Closing Date.
ARTICLE V COVENANTS OF THE BUYER AND SRC
--------- ------------------------------
SECTION 5.01 Cooperation. The Buyer shall use its best efforts in good
-----------
faith to perform and fulfill all conditions and obligations to be fulfilled or
performed by it hereunder to the end that the transactions contemplated hereby
will be fully and timely consummated.
SECTION 5.02 Continued Effectiveness of Representations and Warranties.
---------------------------------------------------------
From the date hereof up to and including the Closing Date, the Buyer will advise
the Sellers promptly in writing of any condition or circumstance occurring which
could cause any representations or warranties of the Buyer to become untrue in
any material respect.
SECTION 5.03 Registration of Shares. In the event that any Make Whole
----------------------
Payment shall be satisfied by the issuance of shares of SRC Common Stock, SRC
shall use its best efforts to cause to be effective at the time of the issuance
of such SRC Common Stock a registration statement on Form S-3 under the
Securities Act to permit the resale of such SRC Common Stock issued to ▇▇▇▇▇▇
and ▇▇▇▇▇.
ARTICLE VI MUTUAL COVENANTS
---------- ----------------
SECTION 6.01 Non-competition. At the Closing, each of ▇▇▇▇▇▇▇▇▇ and
---------------
Bacovast will enter into a Non-competition and Confidentiality Agreement with
Buyer in substantially the form of Exhibit 6.01 attached hereto (the "Non-
------------
competition Agreements").
21
SECTION 6.02 Leases. At the closing, the Sellers will, to the extent that
------
the Buyer so requests, enter into a real estate lease agreement with the Buyer
in the form of Exhibit 6.02 attached hereto (the "New Leases") for any
------------
properties owned by any of the Sellers and leased to any of the Companies for
use in their businesses as of the date hereof.
SECTION 6.03 Reserved.
--------
SECTION 6.04 Employment Agreements. At the Closing, Buyer and each of
---------------------
Westra, Cress, ▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇ will enter into an employment agreement in
substantially the form of Exhibit 6.04 attached hereto (the "Employment
------------
Agreements").
ARTICLE VII CONDITIONS TO THE BUYER'S OBLIGATIONS
----------- -------------------------------------
The obligation of the Buyer to pay the Purchase Price on the Closing Date
and to consummate the other transactions contemplated hereby is subject to the
satisfaction, on or before the Closing Date, of the following conditions each of
which may be waived by the Buyer in its sole discretion:
SECTION 7.01 Consents. All requisite governmental approvals and consents
--------
of third parties identified on Schedule 2.08 shall have been obtained and
-------------
delivered to Buyer.
SECTION 7.02 Representations and Warranties True. All of the
-----------------------------------
representations and warranties of the Sellers contained in this Agreement or in
any Schedules or other documents attached hereto or referred to herein or
delivered pursuant hereto or in connection with the transactions contemplated
hereby shall be true, correct and complete in all respects on and as of the date
hereof and on and as of the Closing Date, as if made on and as of the Closing
Date. On the Closing Date, the Sellers shall have executed and delivered to the
Buyer a certificate, in form and substance satisfactory to the Buyer and its
counsel, to such effect.
SECTION 7.03 Performance. The Sellers shall have performed and complied
-----------
with all covenants and agreements contained herein required to be performed or
complied with by them prior to or at the Closing Date. The Sellers shall have
executed and delivered to the Buyer a certificate, in form and substance
satisfactory to the Buyer and its counsel, in writing to such effect and to the
further effect that all of the conditions set forth in this Article VII have
been satisfied.
SECTION 7.04 No Adverse Change. No adverse change shall have occurred or
-----------------
be threatened in the condition (financial or other) of any of the Companies, the
results of their operations, properties, assets, liabilities or businesses.
SECTION 7.05 Opinion of Counsel. The Buyer shall have received the
------------------
opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, in substantially the form attached hereto as Exhibit
-------
7.05.
----
SECTION 7.06 Resignations. The Buyer shall have received copies of the
------------
written resignations delivered to each of the Companies from the officers and
directors of such Companies.
22
SECTION 7.07 No Actions, Suits or Proceedings. As of the Closing Date, no
--------------------------------
action, suit, investigation or proceeding brought by any person, corporation,
governmental agency or other entity shall be pending or, to the knowledge of the
parties to this Agreement, threatened, before any court or governmental body (a)
to restrain, prohibit, restrict or delay the consummation of the transactions
contemplated hereby, or (b) which has or may have a material adverse effect on
the condition, financial or otherwise, or prospects of any of the Companies. No
order, decree or judgment of any court or governmental body shall have been
issued restraining, prohibiting, restricting or delaying, the consummation of
the transactions contemplated by this Agreement. No insolvency proceeding
affecting any of the Companies or any of the Sellers shall be pending.
SECTION 7.08 Investigation Satisfactory. The Buyer shall be satisfied in
--------------------------
all respects with the results of its investigation of the properties, prospects
and affairs of each of the Companies.
SECTION 7.09 Management Agreements. The Sellers shall have entered into
---------------------
the (a) Non-competition Agreements, (b) New Leases, and (c) Employment
Agreements, as applicable.
SECTION 7.10 Closing Documents. The Sellers shall have delivered: (a) the
-----------------
Certificates representing the Shares, duly endorsed to the Buyer; (b) a copy of
the resolutions of each of the Companies, certified by each of their
Secretaries, authorizing and approving the execution, delivery and performance
of this Agreement and the transactions contemplated hereby and the acts of the
officers and employees of each of the Companies in carrying out the terms and
provisions hereof; and (c) all of the books, data, documents, instruments and
other records relating to each of the Companies including without limitation the
original incorporation documents, foreign qualifications, bylaws, minute books,
stock record books, contracts and agreements referred to in Section 2.33.
SECTION 7.11 No Material Adverse Economic Event. There shall not have
----------------------------------
occurred (a) any general suspension of trading in, or limitation on prices for,
or other extraordinary event affecting securities on NASDAQ, (b) a declaration
of a banking moratorium or any suspension of payments in respect of banks in the
United States or (c) any material limitation (whether or not mandatory) by any
governmental authority on, or any other event which might affect the extension
of credit by, lending institutions, or (d) in the case of any of the foregoing
existing on the Closing Date a material acceleration or worsening thereof.
SECTION 7.12 Financing Commitment. The Buyer shall have executed
--------------------
definitive loan documents with Fleet National Bank or a similar banking
institution for adequate financing to fund the transactions contemplated hereby.
SECTION 7.13 Tax and Accounting. The tax and accounting consequences of
------------------
the transactions contemplated hereby shall be acceptable to the Buyer.
23
ARTICLE VIII CONDITIONS TO THE SELLERS' OBLIGATIONS
------------ --------------------------------------
The obligation of the Sellers to sell the Shares to Buyer and to consummate
the other transactions contemplated hereby is subject to the satisfaction, on or
before the Closing Date, of the following conditions, each of which may be
waived by the Sellers in their sole discretion:
SECTION 8.01 Representations and Warranties to be True and Correct. The
-----------------------------------------------------
representations and warranties contained in Article III shall be true, complete
and correct, on and as of the Closing Date, as if made on and as of such date,
and the Buyer shall have delivered to the Sellers a certificate, in form and
substance satisfactory to the Sellers and their counsel, to such effect.
SECTION 8.02 Performance. The Buyer shall have performed and complied
-----------
with all agreements contained herein required to be performed or complied with
by it prior to or at the Closing Date, and the Buyer shall have delivered a
certificate to the Sellers, in form and substance satisfactory to the Sellers
and its counsel to such effect.
SECTION 8.03 No Actions, Suits or Proceedings. As of the Closing Date, no
--------------------------------
action, suit, investigation or proceeding brought by any person, corporation,
governmental agency or other entity shall be pending or, to the knowledge of the
parties to this Agreement, threatened, before any court or governmental body to
restrain, prohibit, restrict or delay the consummation of the transactions
contemplated hereby. No order, decree or judgment of any court or governmental
body shall have been issued restraining, prohibiting, restricting or delaying,
the consummation of the transactions contemplated by this Agreement. No
insolvency proceeding affecting the Buyer shall be pending.
SECTION 8.04 Closing Documents. The Buyer shall have delivered the
-----------------
Purchase Price and all of the resolutions, certificates, documents and
instruments required by this Agreement.
SECTION 8.05 Tax and Accounting. The tax and accounting consequences of
------------------
the transactions contemplated hereby shall be acceptable to the Seller.
SECTION 8.06 Other Agreements. The Buyer shall have entered into the (a)
----------------
Non-competition Agreements, (b) New Leases, (c) Employment/Non-competition
Agreements and (d) Employment Agreements.
SECTION 8.07 No Actions, Suits or Proceedings. As of the Closing Date, no
--------------------------------
action, suit, investigation or proceeding brought by any person, corporation,
governmental agency or other entity shall be pending or, to the knowledge of the
parties to this Agreement, threatened, before any court or governmental body (a)
to restrain, prohibit, restrict or delay the consummation of the transactions
contemplated hereby, or (b) which has or may have a material adverse effect on
the condition, financial or otherwise, or prospects of the Buyer or SRC. No
order, decree or judgment of any court or governmental body shall have been
issued restraining, prohibiting, restricting or delaying, the consummation of
the transactions contemplated by this Agreement. No insolvency proceeding
affecting either the Buyer or SRC shall be pending.
24
SECTION 8.08 Investigation Satisfactory. The Sellers shall be satisfied
--------------------------
in all respects with the results of their investigation of the properties,
prospects and affairs of each of the Buyer and SRC.
SECTION 8.09 No Material Adverse Economic Event. There shall not have
----------------------------------
occurred (a) any general suspension of trading in, or limitation on prices for,
or other extraordinary event affecting securities on NASDAQ, (b) a declaration
of a banking moratorium or any suspension of payments in respect of banks in the
United States or (c) any material limitation (whether or not mandatory) by any
governmental authority on, or any other event which might affect the extension
of credit by, lending institutions, or (d) in the case of any of the foregoing
existing on the Closing Date a material acceleration or worsening thereof.
ARTICLE IX INDEMNIFICATION
---------- ---------------
SECTION 9.01 Survival. All representations and warranties in this
--------
Agreement, or in any instrument or document furnished in connection with this
Agreement or the transactions contemplated hereby, shall survive the Closing and
any investigation at any time made by or on behalf of any party for a period of
three (3) years. All such representations and warranties shall expire on the
third anniversary of the Closing Date, except that (a) claims, if any, asserted
in writing prior to such third anniversary identified as a claim for
indemnification pursuant to this Article IX shall survive until finally resolved
and satisfied in full, and (b) claims, if any, which are environmental in
nature, which are based upon fraud by the Seller, which relate to title to the
Shares or title to the assets of the Company, which assert tax liability or
which are in connection with Section 9.02(c) below shall survive for the full
period of the applicable statute of limitations, and until finally resolved and
satisfied in full if asserted on or prior to such date. All covenants and
agreements contained herein shall survive until fully performed in accordance
with their terms.
SECTION 9.02 Sellers' Indemnification of Buyer. Each of ▇▇▇▇▇▇ and
---------------------------------
▇▇▇▇▇, jointly and severally, hereby agree to indemnify and hold harmless the
Buyer against any and all losses, liabilities, claims, judgments, assessments,
damages and expenses (including in the case of (c) below all costs of correcting
any operation or other defect that may violate the requirements of any
applicable law), including, but not limited to, reasonable attorneys' fees and
expenses actually incurred by the Buyer ("Damages") arising directly out of (a)
any breach of any representation, warranty, covenant, or agreement of the
Sellers contained in this Agreement, (b) negligence, willful misconduct or fraud
in connection with the conduct of the Business prior to the Closing or (c) the
Kent 401(k) profit sharing plan or the Kent Flex Plan, each described in
Schedule 2.21 hereto; provided, however, that (a) each Seller, severally, agrees
------------- -------- -------
to indemnify and hold harmless the Buyer against any Damages arising directly
out of any breach of the representations and warranties and agreements contained
in Sections 2.01 and 2.02 herein, (b) any claim for indemnification hereunder
shall be asserted prior to the expiration of the survival period set forth in
Section 9.01 and (c) no claim for indemnification hereunder, other than a claim
pursuant to clause (c) of this Section 9.02, shall be asserted against the first
$50,000 of Damages arising hereunder.
25
SECTION 9.03 Indemnification by Buyer. Buyer shall indemnify and hold
------------------------
harmless Sellers against any and all Damages arising directly out of (a) any
breach of any representation, warranty, covenant, or agreement of Buyer
contained in this Agreement or (b) any corporate liabilities of the Companies
which have been assumed by the Buyer as a result of the transactions
contemplated hereunder and for which the Sellers have been found to be
individually liable, provided, however, that (a) any claim for indemnification
-------- -------
hereunder shall be asserted prior to the expiration of the survival period set
forth in Section 9.01, (b) no claim for indemnification hereunder shall be
asserted against the first $50,000 of Damages arising hereunder and (c) after
the Closing, the rights of the Seller under this Section 9.03 shall be the sole
remedies of the Seller for any breach of this Agreement.
SECTION 9.04 Claims for Indemnification.
--------------------------
(a) In the event of the occurrence of any event which any party
asserts is an indemnifiable event pursuant to this Article IX, the party
claiming indemnification (the "Indemnified Party") shall provide prompt notice
to the party required to provide indemnification (the "Indemnifying Party"),
specifying in detail the facts and circumstances with respect to such claim and
the basis for which indemnification is available hereunder. If such event
involves the claim of any third party, the Indemnifying Party shall have the
right to control the defense or settlement of such claim; provided, however,
that (a) the Indemnified Party shall be entitled to participate in the defense
of such claim at its own expense, (b) the Indemnifying Party shall obtain the
prior written approval of the Indemnified Party (which approval shall not be
unreasonably withheld or delayed) before entering into any settlement of such
claim if, pursuant to or as a result of such settlement, injunctive or other
non-monetary relief would be imposed against the Indemnified Party, (c) the
Indemnifying Party shall not be entitled to control (but shall be entitled to
participate at its own expense in the defense of), and the Indemnified Party
shall be entitled to have sole control over, and shall assume all expense with
respect to the defense or settlement of any claim to the extent such claim seeks
an order, injunction or other equitable relief against the Indemnified Party
which, if successful, could materially interfere with the business, operations,
assets, condition (financial or otherwise) or prospects of the Indemnified
Party, provided that the Indemnified Party shall provide written notice to the
Indemnifying Party of its election to assume control over the defense of such
claim pursuant to this Section 9.04 if the Indemnifying Party is entitled but
fails to assume control over the defense of a claim as provided in this Section
9.04, provided that the Damages associated with such claim are covered by the
indemnity provisions of Section 9.02 or 9.03 the Indemnified Party shall have
the right to defend such claim, provided further that the Indemnified Party
shall obtain the prior written approval of the Indemnifying Party (which
approval shall not be unreasonably withheld or delayed) before entering into any
settlement of such claim if, pursuant to or as a result of such settlement,
injunctive or other non-monetary relief would be imposed against the
Indemnifying Party. In the event that the Indemnifying Party shall be obligated
to indemnify the Indemnified Party pursuant to this Article IX, the Indemnifying
Party shall, upon payment of such indemnity in full, be subrogated to all rights
of the Indemnified Party with respect to the claim to which such indemnification
relates.
26
(b) All claims for indemnification by Buyer shall first be satisfied
by a pro rata reduction in the outstanding principal and interest due under the
Notes, to the extent that amounts remain outstanding under the Notes.
ARTICLE X TERMINATION
--------- -----------
SECTION 10.01 Termination. This Agreement may be terminated and the
-----------
transactions contemplated hereby may be abandoned at any time prior to the
Closing:
A. By mutual written consent duly authorized by the Board of Directors
of the Buyer and by the Sellers;
B. By the Buyer or the Sellers if:
(i) any court of competent jurisdiction or other
governmental body shall have issued an order, decree or
ruling, or taken any other action restraining,
enjoining or otherwise prohibiting the transactions
contemplated hereby, provided that this Agreement shall
not be terminated pursuant to this paragraph unless the
party terminating this Agreement has utilized its
reasonable best efforts to oppose the issuance of such
order, decree or ruling or the taking of such action;
(ii) the Closing has not occurred on or prior to April 23,
1999, for any reason other than the breach of any
provision of this Agreement by the party terminating
this Agreement; or
(iii) the other party breaches any of its representations,
warranties or covenants hereunder in any material
respect and such breach is not cured within five (5)
days, provided that the party seeking termination is
not in material breach of any of its representations,
warranties or covenants hereunder.
C. By the Buyer if:
(i) Any of the conditions set forth in Article VII hereof
has not been satisfied on or before April 23, 1999 or
shall have become incapable of fulfillment and shall
not have been waived by the Buyer, for any reason other
than a breach by the Buyer of any of its
representations, warranties or agreements hereunder; or
(ii) If in the Buyer's good faith judgment there is any
inaccuracy in any representations or breach of any
warranty contained
27
therein, or any failure by the Seller to perform any
commitment, covenant or condition contained in this
Agreement, or there exists any error, misstatement or
omission with regard to any of the Exhibits, Schedules
or other documents referred to herein, or the Buyer in
its sole judgment is not satisfied with the results of
its investigation or the contents of any of the
Exhibits, Schedules, information or other documents, or
with the results of its examination of the business and
condition (financial or otherwise) of any of the
Companies.
D. By the Sellers if any of the conditions set forth in Article
VIII hereof has not been satisfied on or before April 23, 1999, or shall
have become incapable of fulfillment and shall not have been waived by the
Sellers, for any reason other than a breach by any Seller of any of their
representations, warranties or agreements hereunder;
Upon the occurrence of any of the events specified in this Section 10.01
(other than paragraph A hereof), written notice of such event shall forthwith be
given to the other parties to this Agreement, whereupon this Agreement shall
terminate.
SECTION 10.02 Effect of Termination. In the event of the termination and
---------------------
abandonment of this Agreement pursuant to Section 10.01, this Agreement, except
for the provisions of Articles IX, X and XI shall forthwith become void and be
of no effect, without any liability on the part of any party or its directors,
officers or shareholders. Nothing in this Section 10.02 shall relieve any party
to this Agreement of liability for breach of this Agreement.
If the Sellers or any of the Companies fails to fulfill its obligations
hereunder for any reason not excused by an express provision of this Agreement,
then the Buyer shall, in addition to any other remedies that it may have, have
the right to bring an action in any court of competent jurisdiction to obtain
specific performance of this Agreement, it being understood that the parties
agree that failure of the Sellers to consummate the purchase and sale of the
Shares or failure of the Sellers or any of the Companies to perform any of their
obligations contemplated by this Agreement (except for a failure excused by an
express provision of this Agreement) would cause irreparable injury to the Buyer
and that money damages would not provide an adequate remedy to the Buyer. The
Sellers and each of the Companies therefore waive all objections to the award of
equitable relief for such failure.
ARTICLE XI SRC GUARANTEE
---------- -------------
SECTION 11.01 Guarantee.
---------
(a) SRC hereby irrevocably and unconditionally guarantees (the
"Guarantee") to the Sellers the obligations of the Buyer under the Notes, the
Make Whole Payment, the Second Make Whole Payment and the payment obligations of
the Employment Agreements (each an
28
"Obligation" and collectively the "Obligations"). Failing payment when due of
any amount so guaranteed for whatever reason, SRC shall be obligated, to pay the
same.
(b) SRC hereby agrees, to the fullest extent permitted by applicable
law, that its obligations with regard to this Guarantee shall be unconditional.
SRC hereby waives diligence, presentment, demand of payment, filing of claims
with a court in the event of insolvency or bankruptcy of the Buyer, any right to
require a proceeding first against the Buyer or right to require the prior
disposition of the assets of the Buyer to meet its obligations, protest, notice
and all demands whatsoever and covenants that this Guarantee will not be
discharged (except to the extent released pursuant to Section 11.02 herein)
except by complete performance of the Obligations.
(c) It is the intention of SRC and the Buyer that the Obligations
shall not be in excess of the maximum amount permitted by applicable law.
Accordingly, if the obligations in respect of the Guarantee would be annulled,
avoided or subordinated to the creditors of SRC by a court of competent
jurisdiction in a proceeding actually pending before such court as a result of a
determination both that such Guarantee was made by SRC without fair
consideration and, immediately after giving effort thereto, SRC was insolvent or
unable to pay its debts as they mature or left with an unreasonably small
capital, then the obligations of SRC under such Guarantee shall be reduced by
such court if and to the extent such reduction would result in the avoidance of
such annulment, avoidance or subordination. For purposes of this paragraph,
"fair consideration," "insolvency," "unable to pay its debts as they mature,"
"unreasonably small capital" and the effective times of reductions, if any,
required by this paragraph shall be determined in accordance with applicable
law.
SECTION 11.02 Reserved.
--------
SECTION 11.03 Certain Bankruptcy Events.
-------------------------
SRC hereby covenants and agrees, to the fullest extent that it may do so
under applicable law, that in the event of the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Buyer, SRC shall not file (or
join in any filing of), or otherwise seek to participate in the filing of, any
motion or request seeking to stay or to prohibit (even temporarily) execution on
the Guarantee and hereby waives and agrees not to take the benefit of any such
stay or execution, whether the bankruptcy law permits or otherwise.
ARTICLE XII MISCELLANEOUS
----------- -------------
SECTION 12.01 Notices. All notices, requests, consents and other
-------
communications hereunder shall be in writing, shall be addressed to the
receiving party's address set forth below or to such other address as a party
may designate by notice hereunder, and shall be either (a) delivered by hand,
(b) made by telex, telecopy or facsimile transmission, (c) sent by recognized
overnight courier, or (d) sent by registered or certified mail, return receipt
requested, postage prepaid.
29
If to the Buyer: With a copy to:
Sight Resource Corporation Mintz, Levin, Cohn, Ferris,
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Glovsky and Popeo, P.C.
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ One Financial Center
Attn: President ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇▇▇▇▇▇, Esquire
If to the Sellers: With a copy to:
As set forth on the
signature page hereof. Same as for the Companies.
If to the Companies: With a copy to:
c/o Kent Optical Company ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ #▇▇ 20 S. Fifth Street, P.O. Box 185
Muskegon, MI 49441 ▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Phone: Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire
All notices, requests, consents and other communications hereunder shall be
deemed to have been received (a) if by hand, at the time of the delivery thereof
to the receiving party at the address of such party set forth above, (b) if made
by telex, telecopy or facsimile transmission, at the time that receipt thereof
has been acknowledged by electronic confirmation or otherwise, (c) if sent by
overnight courier, on the next business day following the day such notice is
delivered to the courier service, or (d) if sent by registered or certified
mail, on the fifth business day following the day such mailing is made.
SECTION 12.02 Entire Agreement. This Agreement together with the Exhibits
----------------
and Schedules hereto and the other documents executed in connection herewith
(together, the "Documents") embodies the entire agreement and understanding
between the parties hereto with respect to the subject matter hereof and
supersedes all prior oral or written agreements and understandings relating to
the subject matter hereof. No statement, representation, warranty, covenant or
agreement of any kind not expressly set forth in the Documents shall affect, or
be used to interpret, change or restrict, the express terms and provisions of
this Agreement.
SECTION 12.03 Modifications and Amendments. The terms and provisions of
----------------------------
this Agreement may be modified or amended only by written agreement executed by
all parties hereto.
SECTION 12.04 Waivers and Consents. No failure or delay by a party hereto
--------------------
in exercising any right, power or remedy under this Agreement, and no course of
dealing between the parties hereto, shall operate as a waiver of any such right,
power or remedy of the party. No single or partial exercise of any right, power
or remedy under this Agreement by a party hereto, nor any abandonment or
discontinuance of steps to enforce any such right, power or remedy, shall
preclude such party from any other or further exercise thereof or the exercise
of any other right, power or
30
remedy hereunder. The election of any remedy by a party hereto shall not
constitute a waiver of the right of such party to pursue other available
remedies. No notice to or demand on a party not expressly required under this
Agreement shall entitle the party receiving such notice or demand to any other
or further notice or demand in similar or other circumstances or constitute a
waiver of the rights of the party giving such notice or demand to any other or
further action in any circumstances without such notice or demand. The terms and
provisions of this Agreement may be waived, or consent for the departure
therefrom granted, only by written document executed by the party entitled to
the benefits of such terms or provisions. No such waiver or consent shall be
deemed to be or shall constitute a waiver or consent with respect to any other
terms or provisions of this Agreement, whether or not similar. Each such waiver
or consent shall be effective only in the specific instance and for the purpose
for which it was given, and shall not constitute a continuing waiver or consent.
SECTION 12.05 Assignment. Neither this Agreement, nor any right
----------
hereunder, may be assigned by any of the parties hereto without the prior
written consent of the other parties, except that the Buyer may assign all or
part of its rights and obligations under this Agreement to one or more direct or
indirect subsidiaries or affiliates (in which event, representations and
warranties relating to the Buyer shall be appropriately modified).
SECTION 12.06 Parties in Interest. This Agreement shall be binding upon
-------------------
and inure solely to the benefit of each party hereto and their permitted
assigns, and nothing in this Agreement, express or implied, is intended to
confer upon any other person any rights or remedies of any nature whatsoever
under or by reason of this Agreement. Nothing in this Agreement shall be
construed to create any rights or obligations except among the parties hereto,
and no person or entity shall be regarded as a third-party beneficiary of this
Agreement.
SECTION 12.07 Governing Law. This Agreement and the rights and
-------------
obligations of the parties hereunder shall be construed in accordance with and
governed by the internal laws of the State of Michigan, without giving effect to
the conflict of law principles thereof.
SECTION 12.08 Arbitration. Any controversy, dispute or claim arising out
-----------
of or in connection with this Agreement, or the breach, termination or validity
hereof, shall be settled by final and binding arbitration, to be conducted in
the first instance in Boston, Massachusetts, in the second instance in Grand
Rapids, Michigan and thereafter alternating between such locations, pursuant to
the then-obtaining Commercial Rules of the American Arbitration Association.
The decision or award of the arbitration panel shall be final, and judgment upon
such decision or award may be entered in any competent court or application may
be made to any competent court for judicial acceptance of such decision or award
and an order of enforcement. The arbitration panel shall allocate the costs of
the arbitration to any of the parties as it sees fit, and shall have the
discretion to require a party to pay the attorney's fees incurred by another
party in connection with the arbitration.
SECTION 12.09 Severability. In the event that any court of competent
------------
jurisdiction shall finally determine that any provision, or any portion thereof,
contained in this Agreement shall be void or unenforceable in any respect, then
such provision shall be deemed limited to the extent that
31
such court determines it enforceable, and as so limited shall remain in full
force and effect. In the event that such court shall determine any such
provision, or portion thereof, wholly unenforceable, the remaining provisions of
this Agreement shall nevertheless remain in full force and effect.
SECTION 12.10 Interpretation. The parties hereto acknowledge and agree
--------------
that: (a) each party and its counsel reviewed and negotiated the terms and
provisions of this Agreement (except with respect to the disclosure schedules
regarding the business of the Companies which are the sole responsibility of the
Sellers) and have contributed to its revision; (b) the rule of construction to
the effect that any ambiguities are resolved against the drafting party shall
not be employed in the interpretation of this Agreement; and (c) the terms and
provisions of this Agreement shall be construed fairly as to all parties hereto
and not in favor of or against any party, regardless of which party was
generally responsible for the preparation of this Agreement.
SECTION 12.11 Headings and Captions. The headings and captions of the
---------------------
various subdivisions of this Agreement are for convenience of reference only and
shall in no way modify, or affect, or be considered in construing or
interpreting the meaning or construction of any of the terms or provisions
hereof.
SECTION 12.12 Enforcement. Each of the parties hereto acknowledges and
-----------
agrees that the rights acquired by each party hereunder are unique and that
irreparable damage would occur in the event that any of the provisions of this
Agreement to be performed by the other party were not performed in accordance
with their specific terms or were otherwise breached. Accordingly, in addition
to any other remedy to which the parties hereto are entitled at law or in
equity, each party hereto shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement by the other party and to enforce
specifically the terms and provisions hereof in any federal or state court to
which the parties have agreed hereunder to submit to jurisdiction.
SECTION 12.13 Reliance. The parties hereto agree that, notwithstanding
--------
any right of any party to this Agreement to investigate the affairs of any other
party to this Agreement, the party having such right to investigate shall have
the right to rely fully upon the representations and warranties of the other
party expressly contained in this Agreement and on the accuracy of any schedule
or other document attached hereto or referred to herein or delivered by such
other party or pursuant to this Agreement.
SECTION 12.14 Expenses. Each of the parties hereto shall pay its own fees
--------
and expenses (including the fees of any attorneys, accountants, appraisers or
others engaged by such party) in connection with this Agreement and the
transactions contemplated hereby whether or not the transactions contemplated
hereby are consummated; provided, however, that all expenses in excess of
--------
$25,000 billed to or incurred by each of the Companies in connection with this
Agreement and the transactions contemplated hereby after March 1, 1999 shall be
borne by the Sellers and not the Companies.
SECTION 12.15 No Broker or Finder. Each of the parties hereto represents
-------------------
and warrants to the other that no broker, finder or other financial consultant
has acted on its behalf in connection with this Agreement or the transactions
contemplated hereby in such a way as to create any liability
32
on the other. Each of the parties hereto agrees to indemnify and save the other
harmless from any claim or demand for commission or other compensation by any
broker, finder, financial consultant or similar agent claiming to have been
employed by or on behalf of such party and to bear the cost of legal expenses
incurred in defending against any such claim.
SECTION 12.16 Publicity. No party shall issue any press release or
---------
otherwise make any public statement with respect to the execution of, or the
transactions contemplated by, this Agreement without the prior written consent
of the other party, except as may be required by law. The parties recognize
that the Buyer is a subsidiary of a publicly held company which is obligated
under the federal or state securities laws, rules or regulations to make
disclosures of material events affecting it. Upon advice by counsel that Buyer
or SRC is required to make such an announcement by the federal or state
securities laws, rules or regulations, Buyer or SRC may make such announcement.
Buyer agrees to promptly inform each of the Companies of such advice and, if
practicable, give each of the Companies an opportunity to comment upon the form
of any such announcement.
SECTION 12.17 Confidentiality. Each party acknowledges and agrees that
---------------
any information or data it has acquired from the other party, not otherwise
properly in the public domain, was received in confidence. Each party hereto
agrees not to divulge, communicate or disclose, except as may be required by law
or for the performance of this Agreement (including obtaining financing and
conducting due diligence), or use to the detriment of the disclosing party or
for the benefit of any other person or persons, or misuse in any way, any
confidential information of the disclosing party concerning the subject matter
hereof, including any trade or business secrets of the disclosing party and any
technical or business materials that are treated by the disclosing party as
confidential or proprietary, including without limitation information (whether
in written, oral or machine-readable form) concerning: general business
operations; methods of doing business, servicing clients, client relations, and
of pricing and making charge for services and products; financial information,
including costs, profits and sales; marketing strategies; business forms
developed by or for the disclosing party; names of suppliers, personnel,
customers, clients and potential clients; negotiations or other business
contacts with suppliers, personnel, customers, clients and potential clients;
form and content of bids, proposals and contracts; the disclosing party's
internal reporting methods; technical and business data, documentation and
drawings; software programs, however embodied; manufacturing processes;
inventions; diagnostic techniques; and information obtained by or given to the
disclosing party about or belonging to third parties.
SECTION 12.18 Counterparts. This Agreement may be executed in one or more
------------
counterparts, and by different parties hereto on separate counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
33
IN WITNESS WHEREOF, the Buyer, each of the Companies and the Sellers
have executed this Stock Purchase and Sale Agreement as of the day and year
first above written.
The Buyer:
---------
ATTEST: KENT ACQUISITION CORP.
________________________ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
Its: President
-------------------------------------
SRC (with respect to Article III,
---
Section 5.03 and Article XI only)
ATTEST SIGHT RESOURCE CORPORATION
________________________ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------
Its: President
-------------------------------------
The Companies:
-------------
ATTEST: KENT OPTICAL COMPANY
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------- -----------------------------------
Its: President
----------------------------------
ATTEST: CUSTOM OPTICS, INC.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------- -----------------------------------
Its: President
-----------------------------------
ATTEST: KENT - N.W. GRAND RAPIDS, INC.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------- -----------------------------------
Its: President
-----------------------------------
34
ATTEST: ▇▇▇▇-▇▇▇▇▇▇▇, INC.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------- -----------------------------------
Its: President
-----------------------------------
ATTEST: SOURCE OPTICAL SUPPLY, INC.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------- -----------------------------------
Its: President
------------------------
The Sellers:
-----------
ATTEST:
s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------ -----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Address: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
ATTEST:
s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
------------------ -------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ATTEST:
s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
------------------ -----------------------------
▇▇▇▇▇▇ ▇▇▇▇
Address: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
[Signature Page to Stock Purchase and Sale Agreement]
35
ATTEST:
s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
------------------ -----------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ATTEST:
s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------ ----------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Address: ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ATTEST: BACOVAST, L.L.C.
s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------- -----------------------------------
Its:: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
Pursuant to Power of Attorney in Source
Optical Shareholder Agreement
[Signature Page to Stock Purchase and Sale Agreement]
36
LIST OF OMITTED EXHIBITS AND SCHEDULES:
Listed below are all the schedules and exhibits that are omitted from Exhibit
2.1 in this Form 8-K. The Registrant agrees to furnish supplemental copies of
any omitted exhibit or schedule listed below to the Commission upon request.
Exhibits
--------
1.02(a) Form of Escrow Agreement
1.02(b) Form of Promissory Note
6.01 Form of Non-Competition Agreement
6.02 Form of Real Estate Lease
6.04(a) Form of Employment Agreement (▇▇▇▇▇▇)
6.04(b) Form of Employment Agreement (▇▇▇▇▇)
6.04(c) Form of Employment Agreement (▇▇▇▇)
6.04(d) Form of Employment Agreement (▇▇▇▇▇▇▇▇▇▇)
7.05 Form of Opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Schedules
---------
1.02 Purchase Price Allocation
2.01 Title to Shares
2.04 Capitalization
2.08 Validity, etc.
2.09 Financial Statement
2.11 Absence of Adverse Change; Conduct of Business
2.14 Taxes
2.15 Litigation
2.18 Licenses and Permits
2.20 Certain Employees
2.21 Employee Benefits
2.22 Tangible Properties
2.23 Owned Premises
2.24 Leased Premises
2.26 Insurance
2.27 Outstanding Commitments
2.28 Intellectual Property
2.29 Customers and Suppliers
2.30 Banks, Brokers and Proxies
2.31 Guaranties of Indebtedness of Other Persons
2.32 Transactions with Affiliates
2.37 Year 2000 Compliance
37