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EXHIBIT 10.1
SIGHT RESOURCE CORPORATION
SERIES B CONVERTIBLE PREFERRED
STOCK PURCHASE AGREEMENT
DATED OCTOBER 9, 1997
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TABLE OF CONTENTS
Page
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SECTION 1. DEFINITIONS.....................................................................................1
1.1 Defined Terms...................................................................................1
1.2 Other Defined Terms.............................................................................6
1.3 Other Definitional Provisions...................................................................7
SECTION 2. AUTHORIZATION AND SALE OF CONVERTIBLE PREFERRED
STOCK; WARRANTS AND WARRANT SHARES..............................................................7
2.1 Authorization of Convertible Preferred Stock;
Warrants and Warrant Shares.....................................................................7
2.2 Sale and Purchase of Convertible Preferred Stock;
Issuance of Warrants............................................................................7
2.3 Use of Proceeds.................................................................................7
SECTION 3. CLOSING DATE; DELIVERY..........................................................................8
3.1 Closing Date....................................................................................8
3.2 Delivery........................................................................................8
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY...................................................8
4.1 Organization, Good Standing and Qualification...................................................8
4.2 Capitalization..................................................................................8
4.3 Subsidiaries....................................................................................8
4.4 Partnerships, Joint Ventures...................................................................10
4.5 Authorization..................................................................................10
4.6 Governmental Consents..........................................................................10
4.7 Absence of Litigation..........................................................................10
4.8 Insurance......................................................................................10
4.9 Patents and Trademarks.........................................................................11
4.10 Compliance with Other Instruments and Legal Requirements.......................................11
4.11 Material Agreements; Action....................................................................11
4.12 Broker's Fees..................................................................................12
4.13 Registration Rights............................................................................12
4.14 Corporate Documents............................................................................12
4.15 Real Property..................................................................................13
4.16 Tangible Personal Property.....................................................................14
4.17 Environmental Matters..........................................................................14
4.18 Company SEC Reports and Financial Statements...................................................15
4.19 Changes........................................................................................16
4.20 Employee Benefit Plans.........................................................................17
4.21 Taxes..........................................................................................20
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4.22 Labor and Employment Matters...................................................................20
4.23 No Pending Transactions........................................................................21
4.24 Disclosure.....................................................................................21
SECTION 5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
PURCHASER......................................................................................22
5.1 Accredited Investor; Experience; Risk..........................................................22
5.2 Investment.....................................................................................22
5.3 Authorization..................................................................................22
5.4 Governmental Consents..........................................................................22
5.5 Broker's Fees..................................................................................22
5.6 Unregistered Shares............................................................................22
5.7 Access to Information..........................................................................23
5.8 Restricted Transfer of Securities .............................................................23
SECTION 6. CONDITIONS TO CLOSING OF PURCHASER.............................................................24
6.1 Representations and Warranties Correct.........................................................24
6.2 Covenants......................................................................................24
6.3 Opinion of Company's Counsel...................................................................24
6.4 No Material Adverse Change.....................................................................24
6.5 Certificate of Designation.....................................................................24
6.6 Consents.......................................................................................24
6.7 Issuance of Shares.............................................................................24
6.8 Certificates...................................................................................24
6.9 Warrants; Reservation of Common Stock..........................................................24
6.10 Appointment of Director........................................................................25
6.11 Bank Credit Facility...........................................................................25
SECTION 7. CONDITIONS TO CLOSING OF THE COMPANY...........................................................25
7.1 Representations................................................................................25
7.2 Covenants......................................................................................25
7.3 Purchase Price.................................................................................25
7.4 Certificate....................................................................................25
SECTION 8. COVENANTS OF THE COMPANY.......................................................................25
8.1 Information....................................................................................25
8.2 Preemptive Rights..............................................................................26
8.3 Company Registration...........................................................................27
8.4 Shelf Registration.............................................................................28
8.5 Certain Registration Matters...................................................................29
8.6 Regulatory Matters.............................................................................34
8.7 Access.........................................................................................34
8.8 Confidentiality................................................................................35
8.9 Amendment to NASD Listing Application..........................................................35
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8.10 Reservation of Warrant Shares..................................................................35
8.11 Bank Credit Facility...........................................................................35
8.12 Repurchase Rights .............................................................................36
8.13 Directors' and Officers' Insurance ............................................................36
8.14 Selection of President ........................................................................36
SECTION 9. MISCELLANEOUS..................................................................................36
9.1 Amendment; Waiver..............................................................................36
9.2 Notices........................................................................................36
9.3 Severability...................................................................................37
9.4 Successors and Assigns.........................................................................37
9.5 Survival of Representations, Warranties and Covenants..........................................38
9.6 Entire Agreement...............................................................................38
9.7 Choice of Law..................................................................................38
9.8 Counterparts...................................................................................38
9.9 Costs and Expenses.............................................................................38
9.10 No Third-Party Beneficiaries...................................................................38
9.11 Indemnification................................................................................38
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SIGHT RESOURCE CORPORATION
SERIES B CONVERTIBLE PREFERRED
STOCK PURCHASE AGREEMENT
SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT dated as of
October 9, 1997 (this "Agreement"), by and between SIGHT RESOURCE CORPORATION, a
Delaware corporation (the "Company"), and the purchasers listed on the signature
page hereto (collectively herein the "Purchaser").
W I T N E S S E T H
WHEREAS, the Company has issued and outstanding the shares of capital
stock described in Section 4.2 hereof and the Company has reserved for issuance
additional shares of capital stock upon the exercise of the outstanding
convertible securities, including rights, options and warrants, identified in
Section 4.2; and
WHEREAS, the Company proposes to issue and sell, and the Purchaser
desires to purchase, shares of the Company's Series B Convertible Preferred
Stock, par value $.01 per share, on the terms and conditions set forth herein;
and
WHEREAS, the Company proposes to issue, and the Purchaser desires to
acquire, the Class I Warrants and the Class II Warrants (each as hereafter
defined).
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements set forth herein, the parties hereto agree as follows:
SECTION 1
Definitions
1.1. Defined Terms. The following terms are defined as follows:
"Affiliate" means, with respect to any Person, (i) any Person that
holds direct or indirect beneficial ownership (as defined in Rule 13d-3 under
the Exchange Act) of voting securities or other voting interests representing at
least 10% of the outstanding voting power of a Person or equity securities or
other equity interests representing at least 10% of the outstanding equity
securities or equity interests in a Person, (ii) any brother, sister, parent,
child or spouse of such Person or any Person described in clause (i), and (iii)
any Person that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, such entity.
"Benefit Arrangement" means any benefit arrangement, obligation,
custom, or practice, whether or not legally enforceable, to provide benefits,
other than salary, as compensation for services rendered, to present or former
directors, employees, agents, or independent contractors, other than any
obligation, arrangement, custom or practice that is an Employee Benefit Plan,
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including, without limitation, employment agreements, severance agreements,
executive compensation arrangements, incentive programs or arrangements, sick
leave, vacation pay, severance pay policies, plant closing benefits, salary
continuation for disability, consulting, or other compensation arrangements,
workers' compensation, retirement, deferred compensation, bonus, stock option or
purchase, hospitalization, medical insurance, life insurance, tuition
reimbursement or scholarship programs, employee discounts, any plans subject to
Section 125 of the Code, and any plans providing benefits or payments in the
event of a change of control, change in ownership, or sale of a substantial
portion (including all or substantially all) of the assets of any business or
portion thereof, in each case with respect to any present or former employees,
directors, or agents.
"Change of Control" for the purpose of Section 8.12 of this Agreement
only, means any event or series of events by which (i) any Person or group
obtains a majority (by voting or otherwise) of the securities of the Company
ordinarily having the right to vote in the election of directors; (ii) during
any two year period, individuals who at the beginning of any such two year
period constituted the Board of Directors of the Company (together with any new
directors whose election by such Board or whose nomination for election by the
stockholders of the Company was approved by a vote of the majority of the
directors then still in office who were either directors at the beginning of
such period or whose election, recommendation, or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
Board of Directors of the Company then in office; (iii) the merger,
consolidation, reorganization, recapitalization, dissolution or liquidation of
the Company if as a result the current stockholders no longer own more than 50%
of the voting securities of the Company; (iv) any sale, lease, exchange or other
transfer of all, or substantially all, of the assets of the Company; or (v) the
adoption of a plan leading to the liquidation or dissolution of the Company.
"Class I Warrants" means the Class I Warrants in the form attached
hereto as Exhibit A.
"Class II Warrants" means the Class II Warrants in the form attached
hereto as Exhibit B.
"Code" means the Internal Revenue Code of 1986 (or any successor
thereto), as amended from time to time.
"Common Stock" means the Common Stock, par value $.01 per share, of the
Company.
"Company Benefit Arrangement" means any Benefit Arrangement sponsored
or maintained by the Company or its Subsidiaries or with respect to which the
Company or a Subsidiary has or may have any liability (whether actual,
contingent, with respect to any of its assets or otherwise) as of the Closing
Date, in each case with respect to any present or former directors, employees,
or agents of the Company or the Subsidiaries.
"Company Plan" means, as of the Closing Date, any Employee Benefit Plan
for which the Company or any Subsidiary is the "plan sponsor" (as defined in
Section 3(16)(B) of ERISA) or any Employee Benefit Plan maintained by the
Company or any Subsidiary or to which the Company or any Subsidiary is obligated
to make payments, in each case with respect to any present or former
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employees of the Company or the Subsidiaries.
"Company's Knowledge" or derivations thereof shall mean the knowledge
of the officers of the Company and each Subsidiary, and, with respect to
Sections 4.20 and 4.22, each person who conducts human resource and employee
benefits management functions for the Company or any Subsidiary, whether or not
an officer of the Company or such Subsidiary.
"Convertible Preferred Stock" means the Series B Convertible Preferred
Stock, par value $.01 per share, of the Company.
"Effectiveness Period" means the period commencing on the Closing Date
and ending on the date that all Registrable Securities shall have ceased to be
Registrable Securities.
"Employee Benefit Plan" has the meaning given in Section 3(3) of ERISA.
"Environmental Law" means any applicable foreign, federal, state or
local statute, regulation, ordinance or rule of common law as now in effect in
any way relating to the protection of human health and the environment
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C. Sections 9601 et seq.), the Hazardous
Materials Transportation Act (49 U.S.C. App. Sections 1801 et seq.), the
Resource Conservation and Recovery Act (42 U.S.C. Sections 6901 et seq.), the
Clean Water Act (33 U.S.C. Sections 1251 et seq.), the Clean Air Act (42 U.S.C.
Sections 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. Sections
2601 et seq.), the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C.
Sections 136 et seq.), and the Occupational Safety and Health Act (29 U.S.C.
Sections 651 et seq.), regulations promulgated pursuant to these statutes, and
common law principles of tort liability.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any regulation or rule issued thereunder.
"ERISA Affiliate" means any Person that together with the Company,
would be or was at any time treated as a single employer under Section 414 of
the Code or Section 4001 of ERISA and any general partnership of which the
Company is or has been a general partner.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Hazardous Material" means any substance, material or waste that is
regulated by the United States, the foreign jurisdictions in which the Company
or its Subsidiaries conducts business, or any applicable state or local
governmental authority including, without limitation, petroleum and its
by-products, asbestos, and any material or substance that is defined as a
"hazardous waste," "hazardous substance," "hazardous material," "restricted
hazardous waste," "industrial waste," "solid waste,"
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"contaminant," "pollutant," "toxic waste" or "toxic substance" under any
provision of Environmental Law.
"Holder" means, individually, a general or limited partner of the
Purchaser who shall acquire Registrable Securities, and, collectively, the
general or limited partners of the Purchaser who shall acquire Registrable
Securities.
"Lien" means any lien, pledge, mortgage, deed of trust, security
interest, claim, lease, charge, option, right of first refusal, easement,
servitude, transfer restriction under any shareholder or similar agreement,
encumbrance or any other restriction or limitation whatsoever.
"Material Adverse Effect" means a material adverse change to the
business, operations, financial condition, prospects (insofar as can reasonably
be foreseen), liabilities, assets or properties of any Person taken as whole.
"Multiemployer Plan" means any Employee Benefit Plan described in
Section 3(37) of ERISA.
"New Securities" means shares of Common Stock of the Company and any
securities or other rights convertible or exchangeable into or exercisable for
shares of Common Stock; provided, however, "New Securities" shall not include
(i) Common Stock issued or issuable upon conversion of the Convertible Preferred
Stock issued to Purchaser; (ii) Common Stock issued or issuable upon exercise of
the Warrants issued to Purchaser, (iii) securities issued by the Company as part
of any public offering pursuant to an effective registration statement under the
Securities Act; (iv) securities issued in connection with any stock split, stock
dividend or recapitalization of the Company; (v) equity securities and options
to purchase equity securities issued to management, directors or employees of or
consultants to the Company pursuant to plans outstanding as of the date hereof;
(vi) equity securities and options to purchase equity securities issued in
accordance with additional stock option or similar plans approved by the Board
or any class of stockholders, as required; (vii) securities issued in connection
with any merger or acquisition by the Company, and (viii) Common Stock or other
securities issued or issuable upon conversion of rights, options, warrants or
convertible securities issued and outstanding prior to the date hereof.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permits" means any approvals, authorizations, consents, licenses,
permits or certificates.
"Permitted Exceptions" means (i) all defects, exceptions, restrictions,
easements, rights of way and encumbrances disclosed in policies of title
insurance that have been made available to the Company; (ii) statutory Liens for
current taxes, assessments or other governmental charges not yet delinquent or
the amount or validity of which is being contested in good faith by appropriate
proceedings, provided an appropriate reserve is established therefor; (iii)
mechanics', carriers', workers', repairers' and similar Liens arising or
incurred in the ordinary course of business that
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would not result in a Material Adverse Effect on the Company or its
Subsidiaries; (iv) zoning, entitlement and other land use and environmental
regulations by any governmental body, provided that such regulations have not
been violated; and (v) such other imperfections in title, charges, easements,
restrictions and encumbrances that would not result in a Material Adverse Effect
on any Company Property subject thereto or affected thereby.
"Person" means an individual, partnership, limited liability company,
corporation, joint stock company, trust, unincorporated association, joint
venture or other entity, or a government or any political subdivision or agency
thereof.
"Qualified Plan" means any Employee Benefit Plan that meets, purports
to meet, or is intended to meet the requirements of Section 401(a) of the Code.
"Registrable Securities" means (i) shares of Common Stock or other
securities issued or issuable upon conversion of the Convertible Preferred
Stock; (ii) shares issued in connection with the exercise of the Preemptive
Rights as set forth in Section 8.2; (iii) shares of Common Stock issued or
issuable upon exercise of the Warrants, and (iv) any other shares of Common
Stock or securities issued in respect of such shares (because of stock splits,
stock dividends, reclassifications, recapitalization, mergers, consolidation,
share exchange or similar events); provided, however, that the foregoing shall
cease to be Registrable Securities upon the earlier of (x) the date that the
same are registered and disposed of pursuant to an effective registration
statement under the Securities Act and (y) the date upon which the Purchaser or
Holder has sold such Registrable Securities held by such Person without
registration pursuant to Rule 144 promulgated under the Securities Act.
"Release" means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal or leaching into the indoor
or outdoor environment, or into or out of any property;
"Remedial Action" means all actions to (x) clean up, remove, treat or
in any other way address any Hazardous Material; (y) prevent the Release of any
Hazardous Material so it does not endanger or threaten to endanger public health
or welfare or the indoor or outdoor environment; or (z) perform pre-remedial
studies and investigations or post-remedial monitoring and care.
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Subsidiaries" means each corporation in which the Company owns or
controls, directly or indirectly, capital stock or other equity interests
representing at least 50% of the outstanding voting stock or other equity
interests.
"Warrants" means (i) the Class I Warrants and (ii) the Class II
Warrants.
"Welfare Plan" means any Employee Benefit Plan described in Section
3(1) of ERISA.
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1.2 Other Defined Terms. The following terms shall have the meanings
assigned to them in the identified Sections of this Agreement.
"Balance Sheet" as defined in Section 4.18.
"Balance Sheet Date" as defined in Section 4.18.
"Bank Credit Facility" as defined in Section 6.11.
"Certificate of Designation" as defined in Section 2.1.
"Closing" as defined in Section 3.1.
"Closing Date" as defined in Section 3.1.
"Company 401(k) Plan" as defined in Section 4.20.
"Company Property" as defined in Section 4.16.
"Company SEC Reports" as defined in Section 4.18.
"GAAP" as defined in Section 4.18.
"Indemnified Party" as defined in Section 8.3.
"Indemnifying Party" as defined in Section 8.3.
"Initial Shelf Registration" as defined in Section 8.3.
"Inspectors" as defined in Section 8.3.
"Intellectual Property" as defined in Section 4.9.
"IRS" as defined in Section 4.20.
"Leased Properties" as defined in Section 4.15.
"Lock-up Period" as defined in Section 8.3(n).
"Losses" as defined in Section 8.3.
"Offer Period" as defined in Section 8.2.
"Owned Properties" as defined in Section 4.15.
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"Personal Property Leases" as defined in Section 4.16.
"Preferred Stock" as defined in Section 4.2.
"Proportionate Percentage" as defined in Section 8.2.
"Real Property Leases" as defined in Section 4.15(a).
"Shelf Registration" as defined in Section 8.3.
"Subsequent Shelf Registration" as defined in Section 8.3.
"Transaction Documents" as defined in Section 4.5.
1.3. Other Definitional Provisions. Terms defined in the singular shall
have a comparable meaning when used in the plural and vice versa.
SECTION 2
Authorization and Sale of Convertible Preferred Stock; Warrants and
Warrant Shares
2.1. Authorization of Convertible Preferred Stock; Warrants and Warrant
Shares. At Closing, the Company will have authorized the issuance and sale to
the Purchaser of 1,452,119 shares of Convertible Preferred Stock, having the
rights, preferences, privileges and restrictions set forth in the Certificate of
Designation attached to this Agreement as Exhibit 2.1 hereto (the "Certificate
of Designation"). In addition, the Company will have authorized the issuance of
the Class I Warrants and the Class II Warrants, and shall have reserved for
issuance the number of shares of Common Stock issuable, from time to time, upon
exercise thereof.
2.2. Sale and Purchase of Convertible Preferred Stock; Issuance of
Warrants. In reliance on the representations and warranties of the Company
contained herein and subject to the terms and conditions hereof, the Purchaser
agrees to purchase from the Company, and the Company agrees to sell to the
Purchaser, 1,452,119 shares of Convertible Preferred Stock, the Class I Warrants
and the Class II Warrants for the aggregate purchase price of Five Million
Eighty-Two Thousand Four Hundred Seventeen Dollars ($5,082,417). The aggregate
number of shares of Common Stock issuable upon conversion of the Convertible
Preferred Stock and upon exercise of the Class II Warrants represents
approximately 19.9% of the issued and outstanding Common Stock of the Company at
the date of Closing.
2.3 Use of Proceeds. The Company agrees to use the full proceeds from
the sale of the Convertible Preferred Stock (after deduction of the expenses of
this transaction) for acquisitions and related costs, fees and expenses and for
working capital purposes.
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SECTION 3
Closing Date; Delivery
3.1. Closing Date. The closing of the purchase and sale of the
Convertible Preferred Stock and the issuance of the Class I Warrants and Class
II Warrants hereunder (the "Closing") shall be held at the offices of ▇▇▇▇▇▇,
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇ on the earlier
of (i) November 24, 1997, (ii) the date on which the Company and the Company's
new President, which individual shall be reasonably acceptable to both the
Company and Purchaser, shall have executed an employment agreement, which
employment agreement shall be reasonably acceptable to both the Company and the
Purchaser, or (iii) on such other date or at such other place as the Purchaser
and the Company shall mutually agree (the date of the Closing being referred to
herein as the "Closing Date").
3.2. Delivery. At the Closing, the Company shall deliver to Purchaser a
certificate or certificates evidencing the shares of Convertible Preferred Stock
and the Class I Warrants and the Class II Warrants being purchased by it
registered in the Purchaser's name against delivery to the Company of payment in
an amount equal to the full purchase price of the shares of Convertible
Preferred Stock and the Class I Warrants and the Class II Warrants being
purchased by the Purchaser by certified check or wire transfer to an account
designated by the Company.
SECTION 4
Representations and Warranties of the Company
The Company hereby represents and warrants to, and agrees with, the
Purchaser as follows:
4.1. Organization, Good Standing and Qualification. Each of the Company
and its Subsidiaries (i) is an entity duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization, (ii) has
all requisite power and authority to carry on its business, (iii) is duly
qualified to transact business and is in good standing in all jurisdictions
where its ownership, lease or operation of property or the conduct of its
business requires such qualification, except where the failure to be so
qualified would not, and reasonably could not be expected to, have a Material
Adverse Effect on the Company and its Subsidiaries taken as a whole. The Company
has the corporate power and authority and is in possession of all franchises,
grants, authorizations, licenses, permits, easements, consents, certificates,
approvals and orders to (i) own, lease and operate its properties and to carry
on its business as now being conducted and (ii) execute and deliver this
Agreement and the documents and instruments contemplated hereby and to
consummate the transactions contemplated hereby.
4.2. Capitalization.
(a) The authorized capital stock of the Company is 25,000,000
shares, consisting of 20,000,000 shares of common stock, par value $.01 per
share ("Common Stock") of which 8,756,500 shares are issued and outstanding and
30,600 shares are held in treasury, and 5,000,000 shares of preferred stock, par
value $.01 per share ("Preferred Stock"), none of which are issued and
outstanding. Schedule 4.2 lists the options, rights and warrants of the Company
issued and outstanding prior to Closing. The Company has reserved for issuance
3,548,281 shares of Common
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Stock upon exercise or conversion of currently outstanding shares of
convertible preferred stock and rights, options, warrants and other convertible
securities. The Company has reserved for issuance 1,500,000 shares of Common
Stock under employee stock purchase plans, stock option plans or other Employee
Benefit Plans. The Company has reserved for issuance 2,584,837 shares of Common
Stock upon conversion of the authorized shares of Convertible Preferred Stock
and the Warrants. Except as set forth in this Section or listed on Schedule 4.2,
there are outstanding (a) no shares of capital stock or other voting stock of
the Company, (b) no securities of the Company or any Subsidiary convertible into
or exchangeable for shares of capital stock or voting securities of the Company,
(c) no options, warrants or other rights to acquire from the Company or any
Subsidiary (including any rights issuable or issued under any shareholder rights
plan or similar arrangement), and no obligations, contingent or otherwise, of
the Company or any Subsidiary to issue any capital stock, voting securities or
securities convertible into or exchangeable for capital stock or voting
securities of the Company or any Subsidiary, (d) no equity equivalent in the
earnings or ownership of the Company or any Subsidiary or any similar rights to
share earnings or ownership, and (e) no outstanding obligations of the Company
to repurchase, redeem or otherwise acquire any of its securities or to make any
investment (by loan, capital contribution or otherwise) in any entity. All
outstanding options, rights and warrants have been duly and validly issued and
are in full force and effect. All shares of capital stock subject to issuance
upon exercise of any options, rights or warrants or otherwise, upon issuance
pursuant to the instruments under which they are issuable, shall be duly
authorized, validly issued, fully paid for and non-assessable and free of all
preemptive rights. No outstanding options, warrants or other securities
exercisable for or convertible into shares of capital stock of the Company
require anti-dilution adjustments by reason of the consummation of the
transactions contemplated hereby.
(b) The issued and outstanding shares of capital stock of the
Company are duly authorized, validly issued, fully paid and non-assessable. The
shares of Convertible Preferred Stock to be issued pursuant to this Agreement,
upon delivery to the Purchaser of certificates therefor against payment in
accordance with the terms of this Agreement, and the shares of Common Stock
issuable upon conversion of the Convertible Preferred Stock and exercise of the
Warrants when issued upon conversion of such Convertible Preferred Stock or upon
exercise of such Warrants, (i) will be validly issued, fully paid and
non-assessable, (ii) will be free and clear of all Liens, and (iii) based upon
applicable federal and state securities laws presently in effect and assuming
that the representations of the Purchaser in Section 5 hereof are true and
correct, will be issued in compliance with all applicable federal and state
securities laws.
4.3. Subsidiaries. Schedule 4.3 sets forth a complete and accurate list
of all Subsidiaries of the Company, showing (as to each such Subsidiary) the
date of its incorporation, the jurisdiction of its incorporation, the number of
shares of its authorized capital stock, the number and class of shares thereof
duly issued and outstanding, the names of all stockholders of such Subsidiaries
and the number and percentage of the outstanding shares of each such class
owned, directly or indirectly, by all such stockholders, including the Company.
All of the outstanding capital stock of, or other ownership interests in, each
Subsidiary, is owned by the Company, directly or indirectly, free and clear of
any Lien. All outstanding shares of the capital stock of the Company and any
Subsidiary have been duly authorized and validly issued and are fully paid and
non-assessable and are free of
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any preemptive rights. There are no outstanding securities of any Subsidiary
convertible into or evidencing the right to purchase or subscribe for any shares
of capital stock of any Subsidiary, there are no outstanding or authorized
options, warrants, calls, subscriptions, rights, commitments or any other
agreements of any character obligating any Subsidiary to issue any shares of its
capital stock or any securities convertible into or evidencing the right to
purchase or subscribe for any shares of such stock, and there are no agreements
or understandings with respect to the voting, sale, transfer or registration of
any shares of capital stock of any Subsidiary.
4.4. Partnerships, Joint Ventures. Except as set forth on Schedule 4.4,
the Company is not a party to, and does not hold, any equity interests in any
partnership, limited partnership, limited liability company or other joint
venture of any kind.
4.5. Authorization. The Company has all requisite corporate power and
authority to execute and deliver this Agreement and each agreement, document or
instrument adopted, entered into or delivered by it as contemplated herewith
(the "Transaction Documents") and to perform its obligations hereunder and
thereunder. The execution, delivery and performance of the Agreement and the
transactions contemplated hereby have been duly authorized by all necessary
corporate, including shareholder (if required), action on the part of the
Company. Each Transaction Document to which it is a party has been duly and
validly executed and delivered by the Company and constitutes the legal, valid
and binding obligation of the Company, enforceable against it in accordance with
its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law or
in equity) and except to the extent that rights to indemnification and
contribution under this Agreement may be limited by federal or state securities
laws or public policy relating thereto.
4.6. Governmental Consents. Except as set forth on Schedule 4.6, no
consent, approval, order or authorization of, or registration, qualification,
designation, declaration or filing with, any federal, state, or local
governmental authority on the part of the Company is required in connection with
the valid execution and delivery by the Company of the Transaction Documents to
which it is a party, or the consummation by the Company of the transactions
contemplated by the Transaction Documents to which it is a party.
4.7. Absence of Litigation. There are no claims, actions, suits,
proceedings or investigations pending or, to the knowledge of the Company,
threatened against the Company or any of its Subsidiaries, or any properties or
rights of the Company or its Subsidiaries, before any court, arbitrator or
administrative, governmental or regulatory authority or body, domestic or
foreign, that could reasonably be expected to have a Material Adverse Effect on
the Company and its Subsidiaries taken as a whole.
4.8. Insurance. The Company and its Subsidiaries maintain insurance of
the type and in the amount described in Schedule 4.8, and that is customary in
their industries, from time to time,
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15
with respect to their respective businesses and are in compliance with all
material requirements and provisions thereof.
4.9. Patents and Trademarks. The Company and its Subsidiaries have
sufficient title and ownership of (or rights under license agreements to use)
all patents, trademarks, service marks, trade names, copyrights, trade secrets,
proprietary rights and processes ("Intellectual Property") necessary for their
businesses. There are no outstanding options, licenses or agreements of any kind
relating to the foregoing, nor is the Company or any of its Subsidiaries bound
by or a party to any options, licenses or agreements of any kind with respect to
the patents, trademarks, service marks, trade names, copyrights, trade secrets,
proprietary rights and processes of any other Person. A list of all patents,
patent applications, registered trademarks, trademark applications, registered
copyrights and copyright applications owned by the Company or any of its
Subsidiaries is set forth on Schedule 4.9. Within the past five years, the
Company has not received any communications alleging that the Company or any of
its Subsidiaries has violated or, by conducting its business as proposed, would
violate any of the patents, trademarks, service marks, trade names, copyrights,
trade secrets, proprietary rights and processes of any other Person, nor is the
Company aware of any such violations.
4.10. Compliance with Other Instruments and Legal Requirements.
(a) None of the Company or any of its Subsidiaries is in
violation or default of any provisions of its certificate of incorporation,
by-laws, or comparable organizational documents. None of the Company or any of
its Subsidiaries is in violation or default in any material respect under any
provision, instrument, judgment, order, writ, decree, contract or agreement to
which it is a party or by which it is bound or of any provision of any federal,
state or local statute, rule or regulation applicable to the Company or any of
its Subsidiaries (including, without limitation, any law, rule or regulation
relating to protection of the environment and the maintenance of safe and
sanitary premises), which could reasonably be expected to have a Material
Adverse Effect on the Company and its Subsidiaries taken as a whole. Except as
set forth on Schedule 4.10, the execution, delivery and performance of each
Transaction Document and the consummation of the transactions contemplated
hereby and thereby will not result in any such violation or be in conflict with
or constitute, with or without the passage of time or giving of notice, either a
default under or give rise to any obligations under, the Certificate of
Incorporation or By-Laws of the Company, or any note, bond, mortgage, indenture,
lease, license, permit, contract, agreement or other instrument or obligation,
decree or order to which the Company or any Subsidiary is a party or by which
the Company or any Subsidiary or its properties or assets is or may be bound, or
violate any law, order, rule or regulation applicable to the Company or any
Subsidiary, except for conflicts, breaches and violations which could not result
in a Material Adverse Effect on the Company and its Subsidiaries taken as a
whole, and does not require any consent, waiver or approval thereunder, or
constitute an event that results in the creation of any material Lien upon any
assets of the Company or any of its Subsidiaries.
(b) The Company and its Subsidiaries have all material Permits
of all governmental entities required to conduct their respective businesses as
currently conducted by the
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16
Company and its Subsidiaries.
(c) Except as set forth on Schedule 4.10, the transactions
contemplated by this Agreement and the Transaction Documents will not constitute
a change of control under any Employee Benefit Plan, rights plan, contract or
agreement to which it is a party, or under any law, rule or regulation to which
it is subject.
4.11. Material Agreements; Action. Except as set forth on Schedule
4.11, there are no material contracts, agreements, commitments, understandings
or proposed transactions, whether written or oral, to which the Company or any
of its Subsidiaries is a party or by which it is bound that involve or relate
to: (i) any of their respective officers, directors, stockholders or partners or
any Affiliate thereof; (ii) the sale of any of the assets of the Company or any
of its Subsidiaries other than in the ordinary course of business; (iii)
covenants of the Company or any of its Subsidiaries not to compete in any line
of business or with any Person in any geographical area; (iv) the acquisition by
the Company or any of its Subsidiaries of any operating business or the capital
stock of any other Person; (v) the borrowing of money; (vi) the expenditure of
more than $50,000 in the aggregate or the performance by the Company or any
Subsidiary extending for a period more than one year from the date hereof, other
than in the ordinary course of business, or (vii) the license of any
Intellectual Property or other material proprietary right to or from the Company
or any of its Subsidiaries. There have been made available to the Purchaser and
its representatives true and complete copies of all such agreements. All such
agreements are in full force and effect and are the legal, valid and binding
obligation of the Company or its Subsidiaries, enforceable against them in
accordance with their terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally and subject, as to enforceability, to general principles of
equity (regardless of whether enforcement is sought in a proceeding at law or in
equity). None of the Company or any of its Subsidiaries is in default in any
material respect under any such agreements nor, to the Company's Knowledge, is
any other party to any such agreements in default thereunder in any material
respect.
4.12. Brokers' Fees. Except as set forth on Schedule 4.12, no broker,
finder, investment banker or other Person is entitled to any brokerage fee,
finder's fee or other commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by the Company.
4.13. Registration Rights. Except as set forth in Schedule 4.13 or
pursuant to this Agreement, the Company has not granted or agreed to grant any
registration rights, including piggyback registration rights, to any Person.
Schedule 4.13 sets forth the name of the persons granted such registration
rights and a description of such registration rights.
4.14. Corporate Documents. True and correct copies of the Certificate
of Incorporation and the By-laws of the Company, as amended, have been delivered
to the Purchaser.
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4.15. Real Property.
(a) Schedule 4.15(a) sets forth a complete list of all real
property and interests in real property owned (the "Owned Properties") or leased
(the "Leased Properties") by the Company and its Subsidiaries as lessee or
lessor (the Leased Properties together with the Owned Properties, being referred
to herein individually as a "Company Property" and collectively as the "Company
Properties"). The Company Property constitutes all interests in real property
currently used or currently held for use in connection with the businesses of
the Company and its Subsidiaries and which are necessary for the continued
operation of the businesses of the Company and its Subsidiaries as such
businesses are currently conducted. The Company and its Subsidiaries have a
valid and enforceable leasehold interest under each of the leases for Leased
Property (the "Real Property Leases"), and none of the Company or any of its
Subsidiaries has received any written notice of any default or event which, with
notice or lapse of time, or both, would constitute a default by the Company or
any of its Subsidiaries under any of the Real Property Leases. All of the
Company Property, buildings, fixtures and improvements thereon owned or leased
by the Company and its Subsidiaries are in good operating condition and repair
(subject to normal wear and tear) except for deficiencies which do not have a
Material Adverse Effect. The Company has delivered or otherwise made available
to the Purchaser true, correct and complete copies of the Real Property Leases,
together with all amendments, modifications or supplements, if any, thereto.
(b) The Company and its Subsidiaries have all material
certificates of occupancy and Permits of any governmental body necessary or
useful for the current use and operation of each Company Property, and the
Company and its Subsidiaries have fully complied with all material conditions of
the Permits applicable to them. No default or violation, or event which, with
the lapse of time or giving of notice or both would become a default or
violation, has occurred in the due observance of any such Permit, which could
reasonably be expected to have a Material Adverse Effect on the Company and its
Subsidiaries taken as a whole.
(c) There does not exist any actual, or, to the Company's
Knowledge, threatened or contemplated condemnation or eminent domain proceedings
that affect any Company Property or any part thereof, and none of the Company or
any of its Subsidiaries has received any notice, oral or written, of the
intention of any governmental body or other Person to take or use all or any
part thereof.
(d) None of the Company or any of its Subsidiaries has
received any written notice from any insurance company that has issued a policy
with respect to any Company Property requiring performance of any structural or
other repairs or alterations to such Company Property.
(e) Except as set forth in Schedule 4.15(e) none of the
Company or any of its Subsidiaries owns or holds, and is obligated under or a
party to, any option, right of first refusal or other contractual right to
purchase, acquire, sell, assign or dispose of any real estate or any portion
thereof or interest therein.
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4.16. Tangible Personal Property.
(a) Schedule 4.16(a) sets forth all leases of personal
property ("Personal Property Leases") involving annual payments in excess of
$50,000 relating to personal property used in the business of the Company and
its Subsidiaries or to which the Company or any of its Subsidiaries is a party
or by which the properties or assets of the Company or any of its Subsidiaries
is bound. The Company has delivered or otherwise made available to the Purchaser
true, correct and complete copies of the Personal Property Leases, together with
all amendments, modifications or supplements, if any, thereto.
(b) Each of the Company and its Subsidiaries has a valid
leasehold interest under each of the Personal Property Leases under which it is
a lessee, and there is no material default under any Personal Property Lease by
the Company or any of its Subsidiaries, or, to the Company's Knowledge, by any
other party thereto, and no event has occurred which, with the lapse of time or
the giving of notice or both would constitute a default thereunder.
(c) Except as set forth on Schedule 4.16(c), each of the
Company and its Subsidiaries has good and marketable title to all of the items
of tangible personal property reflected in the balance sheets referred to in
Section 4.18 (except as sold or disposed of subsequent to the date thereof in
the ordinary course of business consistent with past practice), free and clear
of any and all Liens other than the Permitted Exceptions. All such items of
tangible personal property that, individually or in the aggregate, are material
to the operation of the business of the Company and its Subsidiaries are in good
condition and in a state of good maintenance and repair (ordinary wear and tear
excepted).
(d) All of the items of tangible personal property used by the
Company and its Subsidiaries under the Personal Property Leases are in good
condition and repair (ordinary wear and tear excepted) and are suitable for the
purposes used except for deficiencies which could not reasonably be expected to
have a Material Adverse Effect.
4.17. Environmental Matters.
Except as set forth on Schedule 4.17:
(a) The operations of each of the Company and its Subsidiaries
are in compliance in all material respects with all applicable Environmental
Laws and all Permits issued to them pursuant to Environmental Laws or otherwise;
(b) Each of the Company and its Subsidiaries has obtained all
material Permits required under all applicable Environmental Laws necessary to
operate its business;
(c) None of the Company or any of its Subsidiaries is the
subject of any outstanding written order, agreement or arrangement with any
governmental authority or Person respecting (i) Environmental Laws, (ii)
Remedial Action or (iii) any Release or threatened Release
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19
of a Hazardous Material;
(d) None of the Company or any of its Subsidiaries has
received any written communication alleging either or both that the Company or
any of its Subsidiaries may be in violation of any Environmental Law, or any
Permit issued pursuant to Environmental Law, or may have any liability under any
Environmental Law;
(e) None of the Company or any of its Subsidiaries, to the
Company's Knowledge, has any current contingent liability in connection with any
Release of any Hazardous Materials into the indoor or outdoor environment
(whether on-site or off-site);
(f) None of the Company or any of its Subsidiaries has
received notice of any investigations of the business, operations, or currently
or previously owned, operated or leased property of the Company or its
Subsidiaries, and to the Company's Knowledge, there are no pending or threatened
investigations that could lead to the imposition of any liability pursuant to
Environmental Law;
(g) There is not located at any of the properties owned, or to
the Company's Knowledge, at any of the properties leased or operated by the
Company or any of its Subsidiaries any (i) underground storage tanks, (ii)
asbestos-containing material, (iii) equipment containing polychlorinated
biphenyls, any (iv) Hazardous Materials located at any Company Property (other
than for Hazardous Materials used or stored by the Company or any Subsidiary in
the ordinary course of business and in material compliance with applicable
Environmental Laws and Permits); and
(h) The Company has provided to the Purchaser all
environmentally related audits, studies, reports, analyses and results of
investigations, if any, to the Company's Knowledge, that have been performed
with respect to the currently or previously owned, leased or operated properties
of the Company or any of its Subsidiaries.
4.18. Company SEC Reports and Financial Statements.
(a) The Company has delivered to Purchaser true and complete
copies of all periodic reports, statements and other documents that the Company
has filed with the SEC under the Exchange Act since December 31, 1996
(collectively, the "Company SEC Reports"), each in the form (including exhibits
and any amendments thereto) required to be filed with the SEC. Except as set
forth on Schedule 4.18, as of their respective dates, each of the Company's SEC
Reports (i) complied in all material respects with all applicable requirements
of the Securities Act and the Exchange Act, and the rules and regulations
promulgated thereunder, respectively, (ii) were filed in a timely manner, and
(iii) did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. None of the Subsidiaries is required to file any forms, reports
or other documents with the SEC.
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20
(b) Each of the audited consolidated financial statements of
the Company (including any related notes and schedules thereto) included (or
incorporated by reference) in its Annual Report on Form 10-K for the fiscal year
ended December 31, 1996, are accurate and complete and fairly presents, in
conformity with generally accepted accounting principles ("GAAP") applied on a
consistent basis throughout the periods involved (except as may be noted
therein), and in conformity with the SEC's Regulation S-X, the consolidated
financial position of the Company and its consolidated subsidiaries as of its
date and the consolidated results of operations and changes in financial
position for the period then ended.
(c) Except as and to the extent set forth (or incorporated by
reference) in the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996 (the "Balance Sheet Date") or as set forth on Schedule 4.18,
none of the Company or any of its Subsidiaries has incurred any liability or
obligation of any nature whatsoever (whether due or to become due, accrued,
fixed, contingent, liquidated, unliquidated or otherwise) that would be required
by GAAP to be accrued on, reflected on, or reserved against it, on a
consolidated balance sheet (the "Balance Sheet") (or in the applicable notes
thereto) of the Company or any of its Subsidiaries prepared in accordance with
GAAP consistently applied, other than liabilities or obligations which arose in
the ordinary course of business and consistent with past practices since such
date and which do not or could not individually or in the aggregate have a
Material Adverse Effect.
4.19. Changes. Except as set forth on Schedule 4.19, since December 31,
1996, there has not been:
(a) any change in the assets, liabilities, financial condition
or operating results of the Company or any of its Subsidiaries, except changes
in the ordinary course of business that could not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect;
(b) any damage, destruction or loss, whether or not covered by
insurance that could reasonably be expected, individually or in the aggregate,
to have a Material Adverse Effect;
(c) any waiver by the Company or any of its Subsidiaries of a
valuable right or of a material debt owed to it outside of the ordinary course
of business or that otherwise could reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect;
(d) any satisfaction or discharge of any Lien or payment of
any obligation by the Company or any of its Subsidiaries that could reasonably
be expected, individually or in the aggregate, to have a Material Adverse
Effect;
(e) any change or amendment to a contract or arrangement by
which the Company or any of its Subsidiaries or any of their respective assets
or properties is bound or subject that could reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect;
- 16 -
21
(f) other than in the ordinary course of business, any
material increase in excess of $25,000 annually in any compensation arrangement
or agreement with any employee of the Company or any of its Subsidiaries
receiving compensation;
(g) any events or circumstances that otherwise could
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect; and
(h) none of the Company or any of its Subsidiaries has (i)
declared or paid any dividends, or authorized or made any distribution upon or
with respect to any class or series of its capital stock or equity interests,
(ii) incurred any indebtedness for money borrowed in excess of $20,000, (iii)
made any loans or advances to any Person, other than ordinary advances for
travel expenses not exceeding $20,000, or (iv) sold, exchanged or otherwise
disposed of any of its assets or rights for consideration in excess of $20,000
in any one transaction or series of related transactions.
4.20. Employee Benefit Plans
(a) Schedule 4.20(a) contains a complete and accurate list of
all Company Plans and Company Benefit Arrangements. Schedule 4.20(a)
specifically identifies all Company Plans (if any) that are Qualified Plans.
(b) With respect, as applicable, to Employee Benefit Plans and
Benefit Arrangements:
(i) true, correct, and complete copies of all of the
following documents with respect to each Company Plan and Company Benefit
Arrangement, to the extent applicable, have been delivered to the
Purchaser: (A) all documents constituting the Company Plans and Company Benefit
Arrangements, including, but not limited to, trust agreements, insurance
policies, service agreements, and formal and informal amendments thereto; (B)
the most recent applicable Forms 5500 or 5500 C/R and any financial statements
attached thereto for the prior three years; (C) the most recent Internal Revenue
Service (the "IRS") determination letter and the latest IRS determination letter
that covered the qualification of the entire Company Plan (if different), and
copies of the materials submitted by the Company to obtain those letters; (D)
the most recent summary plan descriptions (if required by ERISA); (E) the most
recent written descriptions of all non-written agreements relating to any such
plan or arrangement (if such documents or writings exist), (F) all material
reports submitted within the two years preceding the date of this Agreement by
third-party administrators, actuaries, investment managers, consultants, or
other independent contractors; (G) all material notices that were given to the
Company within the two years preceding the date of this Agreement by the IRS,
Department of Labor, or any other governmental agency or entity with respect to
any plan or arrangement; and (H) employee manuals or handbooks containing
personnel or employee relations policies;
(ii)the Sight Resource 401(k) Plan (the "Company
401(k) Plan") is the only Qualified Plan. The Company and its Subsidiaries have
never maintained or contributed
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22
to another Qualified Plan. The Company 401(k) Plan qualifies in all material
respects under Section 401(a) of the Code, and any trusts maintained pursuant
thereto are exempt from federal income taxation under Section 501 of the Code,
and no material event has occurred with respect to the design or operation of
any of the Company's Qualified Plans that could cause the loss of such
qualification or exemption or the imposition of any liability, lien, penalty, or
tax under ERISA or the Code;
(iii) the Company and the Subsidiaries have never sponsored or
maintained, had any obligation to sponsor or maintain, or had any liability
(whether actual or contingent, with respect to any of its assets or otherwise)
with respect to any Employee Benefit Plan subject to Section 302 of ERISA or
Section 412 of the Code or Title IV of ERISA (including any Multiemployer Plan);
(iv) each Company Plan and each Company Benefit Arrangement has been
operated in material compliance with its constituent documents and with all
applicable provisions of the Code, ERISA and other laws, including federal and
state securities laws;
(v) to the Company's Knowledge, there are no pending claims or lawsuits
by, against, or relating to any Employee Benefit Plans or Benefit Arrangements
that are Company Plans or Company Benefit Arrangements that would, if
successful, result in liability of the Company or any Stockholder, and no claims
or lawsuits have been asserted, instituted or, to the Company's Knowledge,
threatened by, against, or relating to any Company Plan or Company Benefit
Arrangement, against the assets of any trust or other funding arrangement under
any such Company Plan, by or against the Company or the Subsidiaries with
respect to any Company Plan or Company Benefit Arrangement, or by or against the
plan administrator or any fiduciary of any Company Plan or Company Benefit
Arrangement. No notice has been received of a pending or potential audit or
examination by the IRS, Department of Labor, or any other governmental agency or
entity of any Company Plan or Company Benefit Arrangement, and, to the Company's
Knowledge, no such audit or examination is presently being conducted. No matters
are pending with respect to the Company 401(k) Plan under the IRS's Voluntary
Compliance Resolution Program, its Closing Agreement Program, or any other
governmental compliance programs;
(vi) no Company Plan or Company Benefit Arrangement contains any
provision or is subject to any law that would prohibit the transactions
contemplated by this Agreement or that would give rise to any vesting of
benefits, severance, termination, or other payments or liabilities as a result
of the transactions contemplated by this Agreement;
(vii) with respect to each Company Plan, there has occurred no non-
exempt "prohibited transaction" (within the meaning of Section 4975 of the Code)
or transaction prohibited by Section 406 of ERISA or breach of any fiduciary
duty described in Section 404 of ERISA that would, if successfully litigated,
result in any material liability for the Company or any Stockholder, officer,
director, or employee of the Company;
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23
(viii) the Company has complied, in all material respects, with all
reporting, disclosure, and notice requirements of ERISA and the Code with
respect to each Company Plan and each Company Benefit Arrangement;
(ix) all amendments and actions required to bring the Company Benefit
Plans into conformity with the applicable provisions of ERISA, the Code, and
other applicable laws have been made or taken except to the extent such
amendments or actions (A) are not required by law to be made or taken until
after the Effective Date and (B) are disclosed on Schedule 4.20(b)(ix);
(x) arrangements for payment have been made of all amounts that the
Company and each Subsidiary is required to pay as contributions to the Company
Benefit Plans as of the last day of the most recent fiscal year of each of the
plans ended before the date of this Agreement; all benefits accrued under any
unfunded Company Plan or Company Benefit Arrangement will have been paid,
accrued, or otherwise adequately reserved in accordance with GAAP as of the
Balance Sheet Date; and all monies withheld from employee paychecks with respect
to Company Plans have been transferred to the appropriate plan within 30 days of
such withholding;
(xi) except as disclosed on Schedule 4.20(b)(xi), the Company and the
Subsidiaries have not prepaid or prefunded any Welfare Plan through a trust,
reserve, premium stabilization, or similar account, nor do they provide benefits
through a voluntary employee beneficiary association as defined in Section
501(c)(9);
(xii) to the Company's Knowledge, no statement, either written or oral,
has been made by the Company or the Subsidiaries to any Person with regard to
any Company Plan or Company Benefit Arrangement that was not in accordance with
the Company Plan or Company Benefit Arrangement and that could have an adverse
economic consequence to the Company or the Subsidiaries;
(xiii) the Company and the Subsidiaries have no liability (whether
actual, contingent, with respect to any of its assets or otherwise) with respect
to any Employee Benefit Plan or Benefit Arrangement that is not a Company
Benefit Arrangement or with respect to any Employee Benefit Plan sponsored or
maintained (or which has been or should have been sponsored or maintained) by
any ERISA Affiliate;
(xiv) all group health plans of the Company and its ERISA Affiliates
have been operated in material compliance with the requirements of Sections
4980B (and its predecessor) and 5000 of the Code; and
(xv) no employee or former employee of the Company or beneficiary of
any such employee or former employee is, by reason of such employee's or former
employee's employment, entitled to receive any benefits, including, without
limitation, death or medical benefits (whether or not insured) beyond retirement
or other termination of employment as described in Statement of Financial
Accounting Standards No. 106, other than (i) death or retirement benefits under
a Qualified Plan, (ii) deferred compensation benefits accrued as liabilities on
the Closing
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24
Statement or (iii) continuation coverage mandated under Section 4980B of the
Code or other applicable law.
(c) Schedule 4.20(c) hereto sets forth an accurate list, as of
the date hereof, of all officers, directors, and key employees of the Company
and lists all employment agreements with such officers, directors, and key
employees and the rate of compensation (and the portions thereof attributable to
salary, bonus, and other compensation respectively) of each such Person as of
(a) December 31, 1996 and (b) the date hereof.
(d) The Company has not declared or paid any bonus
compensation in contemplation of the transactions contemplated by this
Agreement.
4.21. Taxes. Except as set forth on Schedule 4.21, all federal and
state and all material local and foreign tax returns, reports and statements
required to be filed by the Company and its Subsidiaries have been filed or have
been caused to be filed with the appropriate governmental agencies in all
jurisdictions in which such returns, reports and statements are required to be
filed and all such returns, reports and statements are true, complete and
correct in all material respects. All taxes, charges and other impositions due
and payable by the Company and its Subsidiaries have been paid in full on a
timely basis except where contested in good faith and by appropriate proceedings
if adequate reserves therefor have been established on the books and records of
the Company or Subsidiary in accordance with GAAP. The provision for taxes of
each of the Company and its Subsidiaries as shown in the Company SEC Reports is
sufficient for all unpaid taxes, charges and other impositions of any nature due
or accrued as of the date of the financial statements contained in such Company
SEC Report, whether or not assessed or disputed. Proper and accurate amounts
have been withheld by the Company and its Subsidiaries from their respective
employees for all periods in full and complete compliance with the tax, social
security and unemployment withholding provisions of applicable federal, state,
local and foreign law and such withholdings have been timely paid to the
respective governmental agencies. The Company has not received notice of any
audit or of any proposed deficiencies from any governmental authority, and no
controversy with respect to taxes of any type is pending or threatened. Except
for routine filing extensions granted as a matter of right under applicable law,
none of the Company or any of its Subsidiaries has executed or filed with the
IRS or any other governmental authority any agreement or other document
extending, or having the effect of extending, the period of assessment or
collection of any taxes, charges or other impositions. None of the Company or
any of its Subsidiaries has agreed or is required to make any adjustment under
Section 481(a) of the Code by reason of a change in accounting method or
otherwise. Further, none of the Company or any of its Subsidiaries has any
obligation under any tax-sharing agreement.
4.22. Labor and Employment Matters. With respect to employees of and
service providers to the Company and the Subsidiaries: (a) the Company and the
Subsidiaries are and have been in compliance in all material respects with all
applicable laws respecting employment and employment practices, terms and
conditions of employment and wages and hours, including without limitation any
such laws respecting employment discrimination, workers' compensation, family
and medical leave, the Immigration Reform and Control Act, and occupational
safety and health requirements,
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and have not and are not engaged in any unfair labor practice; (b) there is not
now, nor within the past three years has there been, any unfair labor practice
complaint against the Company or any Subsidiary pending or, to the Company's or
any Subsidiary's Knowledge, threatened before the National Labor Relations Board
or any other comparable authority; (c) there is not now, nor within the past
three years has there been, any labor strike, slowdown or stoppage actually
pending or, to the Company's or any Subsidiary's Knowledge, threatened against
or directly affecting the Company or any Subsidiary; (d) to the Company's or any
Subsidiary's Knowledge, no labor representation organization effort exists nor
has there been any such activity within the past three years; (e) no grievance
or arbitration proceeding arising out of or under collective bargaining
agreements is pending and, to the Company's or any Subsidiary's Knowledge, no
claims therefor exist or have been threatened; (f) the employees of the Company
and the Subsidiaries are not and have never been represented by any labor union,
and no collective bargaining agreement is binding and in force against the
Company or any Subsidiary or currently being negotiated by the Company or any
Subsidiary; and (g) to the Company's Knowledge, all Persons classified by the
Company or its Subsidiaries as independent contractors do satisfy and have
satisfied the requirements of law to be so classified, and the Company and its
Subsidiaries have fully and accurately reported their compensation on IRS Forms
1099 when required to do so. To the Company's Knowledge, none of the employees
of the Company or any of its Subsidiaries is obligated under any contract or
other agreement (including licenses, covenants or commitments of any nature), or
subject to any judgment, decree or order of any court or administrative agency,
that materially interferes with the use of the employee's best efforts to
promote the interests of the Company and its Subsidiaries or conflicts with the
business as currently conducted by the Company or its Subsidiaries.
4.23 No Pending Transactions. Except for the transactions contemplated
by this Agreement, neither the Company nor any Subsidiary is a party to or bound
by or the subject of any agreement, undertaking, commitment or discussions or
negotiations with any person that could result in (i) the sale, merger,
consolidation or recapitalization of the Company or any Subsidiary, (ii) the
sale of all or substantially all of the assets of the Company or any Subsidiary,
or (iii) a change of control of more than five percent of the outstanding
capital stock of the Company or any Subsidiary.
4.24 Disclosure. Neither this Agreement nor any of the Transaction
Documents nor any Exhibit or Schedule hereto or thereto, nor any report,
certificate or instrument furnished to the Purchaser or its counsel in
connection with the transactions contemplated hereby or thereby, when read
together, contains or will contain any untrue statement of a material fact or
omits or will omit to state a material fact necessary in order to make the
statements contained herein or therein, in light of the circumstances under
which they were made, not misleading.
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SECTION 5
Representations, Warranties and Covenants of the Purchaser
The Purchaser hereby represents and warrants to and agrees with the
Company, as follows:
5.1. Accredited Investor; Experience; Risk. The Purchaser is an
accredited investor within the definition of Regulation D of the Securities Act.
The Purchaser has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of the purchase of
the Convertible Preferred Stock and Warrants.
5.2. Investment. The Purchaser is acquiring the Convertible Preferred
Stock and Warrants for investment purposes only, for its own account and not as
a nominee or agent for any other Person, and not with a view to, or for resale
in connection with, any distribution thereof in violation of applicable law.
5.3. Authorization. The Purchaser represents that it has all requisite
power and authority to enter into and perform its obligations under the
Transaction Documents to which it is a party. The execution, delivery and
performance of the Transaction Documents to which Purchaser is a party have been
duly authorized by all necessary action on the part of Purchaser. Each
Transaction Document to which the Purchaser is a party has been duly and validly
executed and delivered by the Purchaser and constitutes the legal, valid and
binding obligation of the Purchaser, enforceable against it in accordance with
its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law or
in equity) and except to the extent that rights to indemnification and
contribution under this Agreement may be limited by federal or state securities
laws or public policy relating thereto.
5.4. Governmental Consents. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state, or local governmental authority on the part of
Purchaser is required in connection with the valid execution and delivery by the
Purchaser of the Transaction Documents to which it is a party, or the
consummation by the Purchaser of the transactions contemplated by the
Transaction Documents to which it is a party, except for such filings as have
been made prior to the Closing.
5.5. Brokers' Fees. No broker, finder, investment banker or other
Person is entitled to any brokerage fee, finder's fee or other commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by the Purchaser.
5.6. Unregistered Shares. The Purchaser understands and acknowledges
that none of the Convertible Preferred Stock, the shares of Common Stock
issuable upon conversion of the Convertible Preferred Stock, the Warrants or the
shares of Common Stock issuable upon exercise
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of the Warrants have been registered under the Securities Act or any state
securities laws and are therefore "unregistered securities" as that term is used
in the Securities Act, and as such may not be offered for sale, sold or
otherwise disposed of without such registration or an opinion of counsel
reasonably satisfactory to the Company that such sale or disposition can be made
pursuant to an exemption from registration under the Securities Act and any
applicable state securities laws. Purchaser agrees a legend that reflects the
foregoing shall be placed on any certificates evidencing the securities
purchased herein and that, so long as the legend may remain on such
certificates, that the Company may maintain appropriate "stop transfer" orders
with respect to such securities on its books and records and with those to whom
it may delegate registrar and transfer functions. Purchaser further agrees and
acknowledges that, except as set forth in Section 8.3 of this Agreement, the
Company does not have any obligation or other commitment to register any of the
securities issued or to be issued pursuant to this Agreement.
5.7. Access to Information. The Purchaser acknowledges receipt of the
Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1996
and Quarterly Report on Form 10-Q for the fiscal period ended June 30, 1997. The
Purchaser further represents and acknowledges that it has carefully read such
reports and has been furnished by the Company during the course of this
transaction with all additional information regarding the Company that it has
requested; that Purchaser has been afforded the opportunity to ask questions of
and receive answers from duly authorized officers or other representatives of
the Company concerning the Company and the terms and conditions of this
transaction and has utilized such opportunity to Purchaser's satisfaction.
5.8 Restricted Transfer of Securities. The Purchaser agrees that, for a
period of two (2) years commencing on the date of this Agreement (the
"Restricted Period"), the securities issued or to be issued pursuant to this
Agreement, including without limitation the Registrable Securities
(collectively, the "Issued Securities"), may not be sold, assigned or otherwise
transferred to a Restricted Person without the prior written consent of the
Company. For purposes of this Section 5.8, "Restricted Person" means any Person
engaged in or intending to be engaged in, either directly or indirectly
(including, without limitation, through an Affiliate or in concert with another
Person), any business in which the Company is operating on the date of the
proposed sale, assignment or transfer. Following the Restricted Period, the
Issued Securities may be sold, assigned or otherwise transferred without
limitation if the average closing price for the Common Stock quoted on the
Nasdaq National Market System (or on any exchange on which the Common Stock is
then listed) for the thirty (30) trading days immediately prior to the last day
of the Restricted Period (the "Benchmark Price") is equal to or less than $12.00
per share. If the Benchmark Price is greater than $12.00 per share, then the
restrictions on the Issued Securities set forth in the first sentence of this
Section 5.8 shall continue after the Restricted Period. Notwithstanding anything
contained in this Section to the contrary, the Purchaser may assign any or all
of the Issued Securities to partners or Affiliates of the Purchaser or officers
or directors of partners or Affiliates of the Purchaser without consent of the
Company so long as such partner, Affiliate, officer or director agrees in
writing to be bound by the terms of this Agreement.
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SECTION 6
Conditions to Closing of Purchaser
The Purchaser's obligation to purchase the Convertible Preferred Stock
at the Closing is, at the option of the Purchaser, subject to the fulfillment on
or prior to the Closing Date of the following conditions:
6.1. Representations and Warranties Correct. The representations and
warranties made by the Company in Section 4 hereof shall be true and correct
when made, and shall be true and correct on the Closing Date with the same force
and effect as if they had been made on and as of such date.
6.2. Covenants. All covenants, agreements and conditions contained in
this Agreement to be performed by the Company on or prior to the Closing Date
shall have been performed or complied with in all material respects.
6.3. Opinion of Company's Counsel. The Purchaser shall have received
from Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., counsel to the
Company, an opinion addressed to the Purchaser, dated the Closing Date, in
substantially the form of Exhibit 6.3 hereto.
6.4. No Material Adverse Change. Since December 31, 1996, there shall
not have occurred any events or circumstances that could reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.
6.5. Certificate of Designation. The Certificate of Designation shall
have been duly adopted and executed by the Company and accepted for record by
the Secretary of State of Delaware.
6.6. Consents. All consents, approvals, registrations, qualifications
and Permits from, and all filings with, any third party or governmental
authority necessary for the consummation of the transactions contemplated herein
or in the Transaction Documents shall have been obtained.
6.7. Issuance of Shares. The Company shall have issued 1,452,119 shares
of Convertible Preferred Stock at the Closing pursuant to this Agreement, and
shall have delivered to the Purchaser a stock certificate representing such
Convertible Preferred Stock.
6.8. Certificates. The Purchaser shall have received a certificate of
the President or a Vice President of the Company to the effect set forth in
Sections 6.1, 6.2, 6.4, and 6.5.
6.9 Warrants; Reservation of Common Stock. The Company shall have
issued the Class I Warrant and the Class II Warrant in the forms attached hereto
as Exhibits A and B, respectively, to the Purchaser, and shall have reserved for
issuance a sufficient number of shares of Common Stock issuable to Purchaser or
Holders upon exercise thereof.
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6.10 Appointment of Director. The directors of the Company shall have
appointed the designee of Purchaser as a director of the Company effective as of
the Closing.
6.11 Bank Credit Facility. The Company shall have secured from the
lenders under the Credit Facility dated February 20, 1997 (the "Bank Credit
Facility"), by and among the Company and Creditanstalt Corporate Finance, Inc.
(the "Bank"), (i) appropriate amendments to the Bank Credit Facility modifying
the covenants thereunder so that the Company shall be in full compliance with
all of the covenants thereunder on the Closing Date, and (ii) waivers of all
violations, breaches of covenants and events of default under the Bank Credit
Facility, in form and substance acceptable to the Purchaser, in its sole
discretion.
SECTION 7
Conditions to Closing of the Company
The Company's obligation to issue and sell the Convertible Preferred
Stock at the Closing is, at the option of the Company, subject to the
fulfillment of the following conditions:
7.1. Representations. The representations and warranties made by the
Purchaser in Section 5 hereof shall be true and correct when made, and shall be
true and correct on the Closing Date with the same force and effect as if they
had been made on and as of such date.
7.2. Covenants. All covenants, agreements and conditions contained in
this Agreement to be performed by the Purchaser on or prior to the Closing Date
shall have been performed or complied with in all respects.
7.3. Purchase Price. The Purchaser shall have tendered the purchase
price for the Convertible Preferred Stock and Warrants of Five Million
Eighty-Two Thousand Four Hundred Seventeen Dollars ($5,082,417).
7.4. Certificate. The Company shall have received a certificate from
the General Partner of the Purchaser to the effect set forth in Sections 7.1 and
7.2.
SECTION 8
Covenants of the Company
8.1. Information. Commencing on the Closing Date and continuing so long
as any shares of Convertible Preferred Stock remain outstanding, the Company
shall deliver to the Purchaser the information specified in this Section 8.1
unless the Purchaser at any time specifically requests that such information not
be delivered to it:
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(a) Monthly Financial Statements. As soon as available, but in
any event not later than thirty (30) days after the end of each monthly fiscal
period (other than the last monthly fiscal period of the fourth fiscal quarter
of the Company), the unaudited consolidated balance sheet of the Company and its
Subsidiaries as at the end of each such period and the related unaudited
consolidated statements of income and cash flows of the Company and its
Subsidiaries for such period and for the elapsed period in such fiscal year, all
in reasonable detail and stating in comparative form the figures as of the end
of and for the comparable periods of the preceding fiscal year. All such
financial statements shall be prepared in accordance with GAAP on a consistent
basis throughout the periods reflected therein except as stated therein and
shall be accompanied by a certificate of the Company's President or Chief
Financial Officer to such effect.
(b) Board Materials. As soon as available, but in no event
later than when delivered to members of the Company's Board of Directors, all
materials which the Company distributes to the members of the Board of
Directors.
(c) Budget. The Company shall furnish the Purchaser as soon as
available, but in no event later than 30 days following the end of each fiscal
year, a consolidated and consolidating budget for the following fiscal year.
(d) Other Reports and Statements. Promptly upon any
distribution to its stockholders generally, to its directors or to the financial
community of an annual report, quarterly report, proxy statement, registration
statement or other similar report or communication, a copy of each such annual
report, quarterly report, proxy statement, registration statement or other
similar report or communication and promptly upon filing by the Company with the
SEC or with The National Market System, Inc., the National Association of
Securities Dealers, Inc. or any national securities exchange or other market
system of any all regular and other reports or applications, a copy of each such
report or application; and a copy of such report or statement and copies of all
press releases and other statements made available generally by the Company to
the public concerning material developments in the Company.
8.2 Preemptive Rights.
(a) If, after the Closing Date but prior to the conversion of
the Convertible Preferred Stock into Common Stock the Company shall propose to
issue or sell New Securities or enters into any contracts, commitments,
agreements, understandings or arrangements of any kind relating to the issuance
or sale of any New Securities, the Purchaser shall have the right to purchase
that number of New Securities at the same price and on the same terms proposed
to be issued or sold by the Company so that the Purchaser would after the
issuance and sale of all such New Securities, hold the same proportionate
interest (the "Proportionate Percentage") of the then outstanding shares of
Common Stock as was held by the Purchaser immediately prior to such issuance and
sale (based upon the number of shares of Common Stock to be received upon
conversion of the Convertible Preferred Stock and exercise of the Class II
Warrants).
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(b) The Company shall give the Purchaser written notice of its
intention to issue and sell New Securities, describing the type of New
Securities, the price and the general terms and conditions upon which the
Company proposes to issue the same. The Purchaser shall have fifteen (15) days
(the "Offer Period") from the giving of such notice to agree to purchase all (or
any part) of its Proportionate Percentage of New Securities for the price and
upon the terms and conditions specified in the notice by giving written notice
to the Company and stating therein the quantity of New Securities to be
purchased.
(c) If the Purchaser fails to provide notice to the effect
that Purchaser agrees to exercise in full such right within the Offer Period,
the Company shall have 125 days thereafter to sell the New Securities in respect
of which the Purchaser's rights were not exercised, at a price and upon general
terms and conditions no more favorable to the buyers thereof than specified in
the Company's notice to Purchaser pursuant to this Section. If the Company has
not sold the New Securities within such 125-day period, the Company shall not
thereafter issue or sell any New Securities, except by giving the Purchaser the
right to purchase its Proportionate Percentage in the manner provided above.
8.3 Company Registration.
(a) If the Company proposes to register any of its securities
either for its own account or the account of a security holder or holders
exercising their respective demand registration rights, other than a
registration relating solely to employee benefit plans, or a registration
relating to a corporate reorganization or other transaction under Rule 145, or a
registration on any registration form that does not permit secondary sales, the
Company will (i) promptly give to the Purchaser and to each Holder written
notice thereof, and (ii) use its best efforts to include in such registration
(and any related qualification under blue sky laws or other compliance), except
as set forth in Section 8.3(b) below, and in any underwriting involved therein,
all the Registrable Securities specified in a written request or requests, made
by the Purchaser and any Holder and received by the Company within fifteen (15)
days after the written notice from the Company described in clause (i) above is
delivered by the Company.
(b) If the registration as to which the Company gives notice
is for a registered public offering involving an underwriting, the Company shall
so advise the Purchaser and the Holders as a part of the written notice given
pursuant to Section 8.3(a). In such event, the right of the Purchaser and any
Holder to registration pursuant to this Section 8.3 shall be conditioned upon
such participation in such underwriting and the inclusion of the Purchaser's and
the Holder's Registrable Securities in the underwriting to the extent provided
herein. The Purchaser and all Holders proposing to distribute their securities
through such underwriting shall (together with the Company and the other holders
of securities of the Company with registration rights to participate therein
distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the representative of the
underwriter or underwriters selected by the Company.
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Notwithstanding any other provision of this Section 8.3, if the
underwriters advise the Company in writing that marketing factors require a
limitation on the number of shares to be underwritten, the underwriters may
(subject to the limitations set forth below) exclude all Registrable Securities
from, or limit the number of Registrable Securities to be included in, the
registration and underwriting. The Company shall so advise all holders of
securities requesting registration, and the number of shares of securities that
are entitled to be included in the registration and underwriting shall be
allocated first to the Company and to the Purchaser and thereafter to all other
holders of securities requesting registration. If any person does not agree to
the terms of any such underwriting, he shall be excluded therefrom by written
notice from the Company or the underwriter. Any Registrable Securities or other
securities excluded or withdrawn from such underwriting shall be withdrawn from
such registration.
8.4. Shelf Registration.
(a) As soon as practicable after Closing, the Company shall
prepare and file with the SEC a registration statement for an offering to be
made on a delayed or continuous basis pursuant to Rule 415 of the Securities Act
(a "Shelf Registration") registering the resale from time to time by the
Purchaser and each Holder of all of the Registrable Securities issuable upon
conversion of the Convertible Preferred Stock (the "Initial Shelf
Registration"). The registration statement for any Shelf Registration shall be
on Form S-3 or another appropriate form permitting registration of such
Registrable Securities for resale by the Purchaser and each Holder in the manner
or manners designated by them, from time to time, which may include an
underwritten offering, subject to the underwriter being reasonably acceptable to
the Company and the Purchaser. The Company shall use its best efforts to cause
the Initial Shelf Registration to become effective under the Securities Act as
promptly as is practicable and to keep the Initial Shelf Registration
continuously effective under the Securities Act until the end of the
Effectiveness Period.
(b) From and after the exercise of any Warrant, in whole or in
part, within 45 days after receipt of written notice from the Purchaser or
Holder, the Company shall effect a Shelf Registration for all or a portion of
the Warrant shares which have been theretofore issued to Purchaser or Holder;
provided, however, that (A) the number of Warrant shares sought to be included
in any Shelf Registration shall not be less than 50% of the shares of Common
Stock or other securities for which the Warrant is exercisable and (B) in no
event shall the Company be obligated to effect a Shelf Registration pursuant to
this paragraph on more than one occasion in any 12-month period.
(c) If the Initial Shelf Registration or any Subsequent Shelf
Registration (as defined below) ceases to be effective for any reason at any
time during the Effectiveness Period (other than because all Registrable
Securities shall have been sold or shall have ceased to be Registrable
Securities), the Company shall use its best efforts to obtain the prompt
withdrawal of any order suspending the effectiveness thereof, and in any event
shall within thirty (30) days of such cessation of effectiveness amend the Shelf
Registration in a manner reasonably expected to obtain the withdrawal of the
order suspending the effectiveness thereof, or file an additional Shelf
Registration covering all of the Registrable Securities then outstanding (a
"Subsequent Shelf
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Registration"). If a Subsequent Shelf Registration is filed, the Company shall
use all reasonable efforts to cause the Subsequent Shelf Registration to become
effective as promptly as is practicable after such filing and to keep such
registration statement continuously effective until the end of the Effectiveness
Period.
(d) The Company shall supplement and amend the Shelf
Registration if required by the rules, regulations or instructions applicable to
the registration form used by the Company for such Shelf Registration, if
required by the Securities Act or the SEC, or if reasonably requested by the
Purchaser or a majority of Holders or by any managing underwriter, if any, of
such Registrable Securities with respect to the offer and sale or other
disposition of the Registrable Securities during the Effective Period.
(e) From time to time, the Company shall (i) prepare and file
with the SEC a post-effective amendment to the Shelf Registration or a
supplement to the related prospectus or a supplement or amendment to any
document incorporated therein by reference or any other required document, so
that such registration statement will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, so that, as thereafter
delivered to purchasers of the Registrable Securities being sold thereunder,
such prospectus will not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; (ii) provide the Purchaser and the Holders with copies of any
registration statement, prospectus, document incorporated by reference therein,
or such other documents filed with the SEC in such numbers as the Purchaser and
the Holders shall reasonably request; and (iii) inform the Purchaser and the
Holders that the Company has complied with its obligations and that the
registration statement and related prospectus may be used for the purpose of
selling all or any of such Registrable Securities (or that, if the Company has
filed a post-effective amendment to the Shelf Registration which has not yet
been declared effective, the Company will notify Purchaser to that effect, will
use its best efforts to secure the effectiveness of such post-effective
amendment and will immediately so notify Purchaser when the amendment has become
effective).
8.5 Certain Securities Registration Matters. Whenever the Company is
required under Section 8.3 or 8.4 to effect the registration with the SEC of any
Registrable Securities, the following provisions shall apply:
(a) The Company shall cause the Registrable Securities covered
by such registration statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary by virtue of the
business and operations of the Company to enable Purchaser or Holder to
consummate the disposition of such Registrable Securities.
(b) The Company shall cause all Registrable Securities covered
by any registration statement to be listed with the Nasdaq Stock Market, or on
each securities exchange on which similar securities issued by the Company are
then listed and, unless the same already exists, provide a transfer agent,
registrar and CUSIP number for all such Registrable Securities not later
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than the effective date of the registration statement.
(c) The Company shall enter into such customary agreements
(including an underwriting agreement in customary form, if applicable) and take
all such other actions as the Purchaser or Holder or the underwriters, if any,
reasonably request in order to expedite or facilitate the disposition of such
Registrable Securities pursuant to the registration statement.
(d) The Company shall make available for inspection by the
Purchaser, Holder and any underwriter participating in any disposition pursuant
to such registration statement, and any attorney, accountant or other agent
retained by the Purchaser, Holder or underwriter (collectively, the
"Inspectors"), all financial and other records, pertinent corporate documents
and agreements and access to properties and management and other information of
the Company as shall be necessary to enable them to exercise their due diligence
responsibility, and cause the Company's officers, directors and employees to
supply all information reasonably requested by any Inspector in connection with
such registration statement, provided that any Inspector shall have first
executed and delivered to the Company a confidentiality agreement in customary
form protecting the confidentiality of such information, except as otherwise
required to be disclosed by law.
(e) If the Registrable Securities are to be sold in an
underwritten offering or in a private transaction involving the sale or transfer
of at least forty percent (40%) of the Registrable Securities issuable upon
conversion of the Convertible Preferred Stock acquired pursuant to this
Agreement, the Company shall obtain "cold comfort" letters and updates thereof
from the Company's independent public accountants and an opinion from the
Company's counsel in customary form and covering such matters of the type
customarily covered by "cold comfort" letters and opinion letters as the
managing underwriter or Purchaser, as the case may be, may reasonably request,
and one copy of such "cold comfort" letter and opinion letter shall be provided
to each of the Purchaser and the Holder.
(f) The Purchaser and Holders shall, upon receipt of any
notice from the Company of the happening of any event of the kind described in
Section 8.5(i), discontinue disposition of its Registrable Securities pursuant
to the registration statement covering such Registrable Securities until receipt
of the copies of the supplemented or amended prospectus and, if so directed by
the Company, the Purchaser and Holders will deliver to the Company (at the
Company's expense) all copies, other than permanent file copies then in the
Purchaser's and Holders' possession, of the prospectus covering such Registrable
Securities current at the time of receipt of such notice.
(g) All fees and expenses incident to the Company's
performance of or compliance with a registration statement requirement pursuant
to this Agreement shall be borne by the Company whether or not any of the
registration statements become effective, other than commissions and
underwriter's discounts, if any, and transfer taxes payable by Purchaser and/or
the Holder. Such fees and expenses shall include, without limitation, (i) all
registration and filing fees (including, without limitation, fees and expenses
(x) with respect to filings required to be made with the National Association of
Securities Dealers, Inc. and (y) of compliance with federal securities or
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Blue Sky laws (including, without limitation, fees and disbursements of one
counsel to Purchaser in connection with Blue Sky qualifications of the
Registrable Securities under the laws of such jurisdictions as the managing
underwriter, if any, or the Purchaser may designate)), (ii) printing expenses,
(iii) messenger, telephone and delivery expenses, (iv) reasonable fees and
disbursements of counsel for the Company and one counsel for the Purchaser in
connection with the registration, (v) fees and disbursements of all independent
certified public accountants (including the expenses of any special audit and
"comfort" letters required by or incident to such performance) and (vi)
Securities Act liability insurance obtained by the Company in its sole
discretion. In addition, the Company shall pay its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit, the
fees and expenses incurred in connection with the listing of the Registrable
Securities on any securities exchange or the Nasdaq Stock Market, as the case
may be, on which similar securities issued by the Company are then listed and
the fees and expenses of any Person, including special experts, retained by the
Company. Notwithstanding the provisions of this subsection, the Purchaser or the
Holders, as the case may be, shall pay all registration expenses to the extent
the Company is prohibited by applicable Blue Sky laws from paying for or on
their behalf.
(h) The Company shall use its reasonable best efforts to
register or qualify the Registrable Securities under such securities or Blue Sky
laws in such jurisdictions as the Purchaser or the Holders may reasonably
request; provided that the Company shall not be required in connection therewith
or as a condition thereof to (i) qualify or register as a foreign corporation in
any such jurisdiction, (ii) execute a general or limited consent to service of
process in any such jurisdiction, (iii) make any undertaking with respect to the
conduct of its business, (iv) subject itself to taxation as a foreign
corporation in any such jurisdiction or (v) enter into any agreement with any
state securities or "blue sky" commission or agency, including, without
limitation, any agreement to escrow shares of its capital stock.
(i) If, in the reasonable judgment of the Company, it is
advisable to suspend use of the prospectus for a period of time due to pending
material corporate developments or similar material events that have not yet
been publicly disclosed and as to which the Company believes public disclosure
will be prejudicial to the Company, the Company shall deliver a certificate in
writing, signed by its Chief Executive Officer, Chief Financial Officer or
General Counsel, to the Purchaser and Holders and the managing underwriter, if
any, to the effect of the foregoing and, upon receipt of such certificate, the
Purchaser's and Holders' selling period will not commence until the Purchaser,
Holders or managing underwriter, if any, has received copies of the supplemented
or amended Prospectus, or until it is or they are advised in writing by the
Company that the Prospectus may be used, and has received copies of any
additional or supplemental filings that are incorporated or deemed incorporated
by reference in such Prospectus. The Company will use all reasonable efforts to
ensure that the use of the Prospectus may be resumed, and the selling period may
commence, upon the earlier of (x) public disclosure of such pending material
corporate development or similar material event or (y) a determination by the
Company that, in the judgment of the Company, public disclosure of such material
corporate development or similar material event would not be prejudicial to the
Company. Notwithstanding the foregoing, the Company shall not under any
circumstances be entitled to exercise its right under this Section 8.5(i) to
defer the selling period
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36
more than one time in any 12-month period or two times in any 24-month period;
and provided, further, that the period in which a selling period is suspended
shall not exceed ninety (90) days.
(j) In the event of the registration or qualification of any
Registrable Securities with the SEC pursuant to a registration statement, the
Company agrees to indemnify and hold harmless Purchaser, Holders and each
officer, partner, employee, agent and representative of Purchaser and Holders,
each underwriter, broker or dealer, if any, of such Registrable Securities, and
each other Person, if any, who controls Purchaser and Holder, underwriter,
broker or dealer within the meaning of the Securities Act, Exchange Act or any
other applicable securities laws, from and against any and all losses, claims,
damages or liabilities (or actions in respect thereof) (collectively, the
"Losses") joint or several, to which any of them may become subject under the
Securities Act or any other applicable securities laws or otherwise, insofar as
such Losses arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
under which such Registrable Securities were registered or qualified under the
Securities Act or any other applicable securities laws, any preliminary
prospectus or final prospectus relating to such Registrable Securities, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, or any
violation by the Company of any rule or regulation under the Securities Act or
any other applicable securities laws applicable to the Company or relating to
any action or inaction required by the Company in connection with any such
registration or qualification and will reimburse Purchasers, each officer,
director, employee, agent and representative of Purchaser, Holders, underwriter,
broker or dealer and each such controlling Person for any legal or other
expenses reasonably incurred by any of them in connection with investigating or
defending any such Loss; provided, however, that the Company will not be liable
in any such case to the extent that any such Loss arises out of or is based upon
untrue statement of a material fact or omission to state a material fact
necessary to make the statements, in light of the circumstances under which they
were made in such registration statement, such preliminary prospectus, such
final prospectus or such amendment or supplement thereto, not misleading, in
reliance upon and in conformity with written information furnished to the
Company by Purchaser, Holders, or any officer, partner, employee, agent and
representative thereof specifically and expressly for use in the preparation
thereof,or any violation of any rule or regulation under the Securities Act or
applicable securities laws, in which case such person agrees to indemnify and
hold harmless the Company and its Affiliates from and against any and all
Losses, joint or several, to which any of them may become subject under the
Securities Act or any other applicable securities laws or otherwise; and
provided, further, that the Company shall not be liable to any Person who
participates as an underwriter in the offering or sale of Registrable Securities
or any other Person, if any, who controls such underwriter within the meaning of
the Securities Act, in any such case to the extent that any such Loss (or action
or proceeding in respect thereof) or expense arises out of such Person's failure
to send or give a copy of the Prospectus, as the same may be then supplemented
or amended, to the Person asserting an untrue statement or alleged untrue
statement or omission or alleged omission at or prior to the written
confirmation of the sale of Registrable Securities to such Person if such
statement or omission was corrected in such Prospectus so long as such
Prospectus, and any amendments or supplements thereto, have been furnished to
such underwriter in sufficient numbers and in a timely-manner to permit
distribution thereof.
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Promptly after receipt by a Person entitled to indemnification
under this Section 8.5(j) (an "Indemnified Party") of notice of the commencement
of any action or claim relating to any registration statement as to which
indemnity may be sought hereunder, such Indemnified Party will, if a claim for
indemnification hereunder in respect thereof is to be made against any other
party hereto (an "Indemnifying Party"), give written notice to such Indemnifying
Party of the commencement of such action or claim, but the omission to so notify
the Indemnifying Party will not relieve the Indemnifying Party from any
liability that it may have to any Indemnified Party except to the extent that
the Indemnifying Party is actually prejudiced thereby. In case any such action
is brought against an Indemnified Party, and it notifies an Indemnifying Party
of the commencement thereof, the Indemnifying Party will be entitled (at its own
expense) to participate in and, to the extent that it may wish, jointly with any
other indemnifying party similarly notified, to assume the defense, with counsel
reasonably satisfactory to such Indemnified Party, of such action provided that
the Indemnifying Party shall not settle or compromise such action, except upon
the prior written consent of the Indemnified Party and, after notice from the
Indemnifying Party to such Indemnified Party of its election so to assume the
defense thereof, the Indemnifying Party will not be liable to such Indemnified
Party for any legal or other expenses subsequently incurred by such Indemnified
Party in connection with the defense thereof, other than the reasonable cost of
investigation; provided, however, that the assumption of such defense shall not
give rise in the reasonable opinion of the Indemnified Party or its counsel to
any conflict. Notwithstanding the foregoing, the Indemnified Party shall have
the right to employ its own counsel in any such case, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party unless (A) the
employment of such counsel shall have been authorized in writing by the
Indemnifying Party in connection with the defense of such suit, action, claim or
proceeding, (B) the Indemnifying Party shall not have employed counsel
(reasonably satisfactory to the Indemnified Party) to take charge of the defense
of such action, suit, claim or proceeding, or (C) such Indemnified Party shall
have reasonably concluded, based upon the advice of counsel, that there may be
defenses available to it that are different from or additional to those
available to the Indemnifying Party which, if the Indemnifying Party and the
Indemnified Party were to be represented by the same counsel, could result in a
conflict of interest for such counsel or materially prejudice the prosecution of
the defenses available to such Indemnified Party. If any of the events specified
in clauses (A), (B) or (C) of the preceding sentence shall have occurred or
shall otherwise be applicable, then the reasonable fees and expenses of one
counsel or firm of counsel selected by the Indemnified Party (and reasonably
acceptable to the Indemnifying Party) shall be borne by the Indemnifying Party.
If, in any such case, the Indemnified Party employs separate counsel, the
Indemnifying Party shall not have the right to direct the defense of such
action, suit, claim or proceeding on behalf of the Indemnified Party and the
Indemnified Party shall assume such defense and/or settle or compromise such
action; provided, however, that an Indemnifying Party shall not be liable for
the settlement or compromise of any action, suit, claim or proceeding effected
without its prior written consent, which consent shall not be unreasonably
withheld.
(iii) Notwithstanding the foregoing, to the extent
that the provisions on indemnification and contribution contained in the
underwriting agreement entered into in connection with any underwritten public
offering contemplated by this Agreement are in conflict with the foregoing
provisions, the provisions in such underwriting agreement shall be controlling.
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38
(k) The Purchaser and each Holder holding securities included
in any registration shall furnish to the Company such information regarding the
Purchaser or such Holder and the distribution proposed by the Purchaser or such
Holder as the Company may reasonably request in writing and as shall be
reasonably required in connection with any registration, qualification or
compliance referred to in this Section 8.
(l) The Company shall not, directly or indirectly, enter into
any merger, consolidation, or reorganization in which the Company shall not be
the surviving corporation unless the proposed surviving corporation shall, prior
to such merger, consolidation, or reorganization, agree in writing to assume the
obligations of the Company under this Section, and for that purpose references
hereunder to "Registrable Securities" shall be deemed to be references to the
securities that the Purchaser or Holders, as the case may be, would be entitled
to receive in exchange for Registrable Securities under any such merger,
consolidation, or reorganization; provided, however, that the provisions of this
Section shall not apply in the event of any merger, consolidation, or
reorganization in which the Company is not the surviving corporation if the
Purchaser and Holders are entitled to receive in exchange for their Registrable
Securities consideration consisting solely of (i) cash, (ii) securities of the
acquiring corporation that may be immediately sold to the public without
registration under the Securities Act, or (iii) securities of the acquiring
corporation that the acquiring corporation has agreed to register within 90 days
of completion of the transaction for resale to the public pursuant to the
Securities Act.
8.6 Regulatory Matters. Each of the Company and Purchaser will (i) make
on a prompt and timely basis all governmental or regulatory notifications,
filings or submissions, as necessary for the consummation of the transactions
contemplated hereby, including any filings required pursuant to the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Act, if required, (ii) use all reasonable efforts to
cooperate with the other and its representatives in (A) determining which
notifications, filings and submissions are required to be made prior to the
Closing Date with, and which consents, approvals, permits or authorizations are
required to he obtained prior to the Closing Date from, any governmental
authority in connection with the execution, delivery and performance of this
Agreement and the transactions contemplated hereby, and (B) timely making of all
such notifications, filings or submissions and timely seeking all such consents,
approvals, permits or authorizations, and (iii) use all reasonable efforts to
take, or cause to be taken, all other action and do, or cause to be done, all
other reasonable things necessary or appropriate to consummate the transactions
contemplated by this Agreement. The Purchaser shall have no obligation to expend
any funds in connection with the action to be taken by the Company pursuant to
this section.
8.7 Access. So long as the Purchaser holds at least fifteen percent
(15%) of the Convertible Preferred Stock purchased hereunder, subject to the
provisions of Section 8.8 hereof, upon the written request of the Purchaser, the
Company shall afford the Purchaser and its accountants, counsel and other
representatives, full access during normal business hours to all of its
properties, books, contracts, commitments and records, permit them to copy or
make extracts therefrom and, the Company shall furnish promptly to Purchaser all
information concerning its business, properties and personnel as Purchaser may
reasonably request; provided, however, that no investigation pursuant to this
Section 8.7 shall affect any representations or warranties of either
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39
party hereunder.
8.8 Confidentiality. From and after the date of this Agreement, each of
the Company and Purchaser agree to hold, and will cause its employees, agents
and representatives to hold, in confidence, unless compelled to disclose by
judicial or administrative process or, in the written opinion of their counsel,
by other requirements of law, information furnished by the Company, on the one
hand, to Purchaser and information furnished by Purchaser, on the other hand, to
the Company in connection with the transactions contemplated by this Agreement,
and each of such persons agree that they shall not release or disclose such
information to any other person, except their respective officers, directors,
partners, employees, auditors, attorneys, financial advisors and other
consultants, advisors and representatives who need to know such information and
who have been informed of the confidential nature of such information and have
been directed to treat such information as confidential. The foregoing
provisions of this Section 8.8 shall not apply to any such information which (i)
becomes generally available to the public other than as a result of a disclosure
by any person bound hereunder, (ii) was available to a person bound hereunder on
a non-confidential basis prior to its disclosure hereunder, or (iii) becomes
available to any person bound hereunder on a non-confidential basis by virtue of
the disclosure thereof by a source other than the party providing such
information in reliance upon the protection of confidentiality reposed hereby.
Notwithstanding anything herein to the contrary, from and after the
date of this Agreement, if either party to this Agreement or any agreement
contemplated herein shall be required by law to file as part of any public
record this Agreement or the agreements relating to any transactions
contemplated hereby, both parties shall jointly identify those provisions, if
any, of such agreements that shall remain confidential and shall request and
seek confidential treatment of those provisions in accordance with the
applicable provisions of any applicable law, rule or regulation, and shall take
all reasonable actions necessary to secure such confidential treatment.
8.9 Amendment to NASD Listing Application. As soon as practical
following the execution of this Agreement, the Company shall prepare and file
with the NASD, and obtain the NASD's approval of, an amendment to the Company's
Nasdaq National Market Listing Application reflecting the consummation of the
transactions completed hereby, together with all documents, instruments and
other materials which are or will be required to be filed or delivered under the
Company's Nasdaq listing agreement and the NASD By-Laws.
8.10 Reservation of Warrant Shares. From and after the consummation of
the transactions contemplated herein and under the Warrants, the Company shall
at all times reserve for issuance the number of shares of Common Stock issuable
upon exercise of the Warrant on a fully-diluted basis in accordance with the
terms thereof.
8.11 Bank Credit Facility. At the Closing Date, the Company covenants
and agrees that (i) the loan covenants under the Bank Credit Facility presently
allows the Company and its Subsidiaries to conduct business as currently
conducted without violating such covenants, and (ii) all past conflicts,
violations or breaches of, or defaults under, the loan covenants have been cured
or waived by the Bank.
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8.12 Repurchase Rights. If at any time there shall be a Change of
Control of the Company, the Purchaser and Holders shall have the right (the
"Repurchase Right"), at its or their sole option, upon ten days' prior written
notice to the Company (the "Redemption Notice"), to require the Company to
purchase from the Purchaser or Holders, all but not less than all, of the shares
of the outstanding Convertible Preferred Stock held by the Purchaser or Holder
(the "Repurchase Right"), at a price equal to 105% of the liquidation preference
for the Convertible Preferred Stock (subject to adjustment in accordance with
adjustments to the Series B Conversion Price provided for in the Certificate of
Designation relating to the Convertible Preferred Stock), plus accrued and
unpaid dividends to the date of redemption, whether or not declared. The Company
shall deliver written notice to the Purchaser and Holders promptly upon the
occurrence of an event of a Change of Control.
8.13 Directors' and Officers' Insurance. As soon as practical following
the execution of this Agreement, but in no event later than December 1, 1997,
the Company shall obtain a directors' and officers' liability insurance policy
providing coverage in the amount of $5 million and having such other terms as
are reasonably acceptable to Purchaser.
8.14 Selection of President. As soon as practical following the
execution of this Agreement, the Company shall reach an agreement, which
agreement shall be reasonably acceptable to both the Company and Purchaser, to
hire an individual to become the Company's new President, which individual shall
be reasonably acceptable to both the Company and Purchaser.
SECTION 9
Miscellaneous
9.1. Amendment; Waiver. Neither this Agreement nor any provision hereof
may be amended, modified, supplemented or waived, except by a written instrument
executed by (i) the Company and (ii) the Purchaser.
9.2. Notices. Any notices or other communications required or permitted
hereunder shall be sufficiently given if in writing and delivered in Person,
transmitted by facsimile transmission (fax) or sent by registered or certified
mail (return receipt requested) or recognized overnight delivery service,
postage pre-paid, addressed as follows, or to such other address has such party
may notify to the other parties in writing:
(a) if to the Company:
Sight Resource Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Chief Executive Officer
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
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41
with a copy to:
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile No.: 617-542-2241
(b) if to the Purchaser:
Carlyle Venture Partners, L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
A notice or communication will be effective (i) if delivered in Person or by
overnight courier, on the business day it is delivered, (ii) if transmitted by
telecopier, on the business day of actual confirmed receipt by the addressee
thereof, and (iii) if sent by registered or certified mail, three (3) business
days after dispatch.
9.3. Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
9.4. Successors and Assigns. Except as otherwise provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors and permitted assigns of the parties hereto. No party hereto may
assign its rights or delegate its obligations under this Agreement without the
prior written consent of the other parties hereto, except that Purchaser may
assign its rights under this Agreement to the Holders.
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42
9.5 Survival of Representations, Warranties and Covenants. All
representations, warranties and covenants made in, pursuant to, or in connection
with, this Agreement shall survive the execution and delivery of this Agreement,
any investigation at any time made by or on behalf of the Purchaser, and the
sale and purchase of the Convertible Preferred Stock, and issuance of the
Warrants for a period of eighteen (18) months commencing on the Closing Date.
9.6. Entire Agreement. This Agreement and the other documents delivered
pursuant hereto constitute the full and entire understanding and agreement
between the parties with regard to the subject matter hereof and thereof and
supersede and cancel all prior representations, alleged warranties, statements,
negotiations, undertakings, letters, acceptances, understandings, contracts and
communications, whether verbal or written, among the parties hereto and thereto
or their respective agents with respect to or in connection with the subject
matter hereof.
9.7. Choice of Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Delaware, without regard to
principles of conflict of laws.
9.8. Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, with the
same effect as if all parties had signed the same document. All such
counterparts shall be deemed an original, shall be construed together and shall
constitute one and the same instrument.
9.9. Costs and Expenses. The Company shall pay all reasonable fees and
disbursements incurred in connection with the transactions contemplated hereby
(including the fees and disbursements of the Purchaser's legal counsel) as well
as other reasonable out-of-pocket expenses incurred by Purchaser in connection
with the negotiation and execution of the Transaction Documents and the fees and
expenses of any required governmental filings, not to exceed $75,000 if the
Closing occurs, but not to exceed $25,000 if the Closing does not occur.
9.10. No Third-Party Beneficiaries. Nothing in this Agreement will
confer any third party beneficiary or other rights upon any Person (specifically
including any employees of the Company and its Subsidiaries) or entity that is
not a party to this Agreement.
9.11. Indemnification.
(a) The Company agrees to indemnify and hold harmless the
Purchaser and its Affiliates, and their respective partners, co-investors,
officers, directors, employees, agents, consultants, attorneys and advisers
(each, an "Indemnified Party"), from and against any and all actual losses,
claims, damages, liabilities, costs and expenses (including, without limitation,
liabilities, costs and expenses and all reasonable fees, expenses and
disbursements of counsel), joint or several (hereinafter collectively referred
to as a "Loss"), which may be incurred by or asserted or awarded against any
Indemnified Party in connection with or in any manner arising out of or relating
to any investigation, litigation or proceeding or the preparation of any defense
with respect thereto, arising out of or in connection with or relating to the
transactions contemplated by this Agreement and the other Transaction Documents,
except to the extent such Loss is found in a final
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43
judgment by a court of competent jurisdiction to have resulted from such
Indemnified Party's gross negligence or willful misconduct.
(b) An Indemnified Party shall give written notice to the
Company of any claim with respect to which it seeks indemnification within ten
(10) days after the discovery by such parties of any matters giving arise to a
claim for indemnification pursuant to Section 9.11(a); provided that the failure
of any Indemnified Party to give notice as provided herein shall not relieve the
Company of its obligations under this Section 9.11, except to the extent that
the Company is actually prejudiced by such failure to give notice. In case any
such action or claim is brought against any Indemnified Party, the Company shall
be entitled to participate in and, unless in the reasonable good faith judgment
of the Indemnified Party a conflict of interest between such Indemnified Party
and the Company may exist in respect of such action or claim, to assume the
defense thereof, with counsel reasonably satisfactory to the Indemnified Party
and, after notice from the Company to the Indemnified Party of its election so
to assume the defense thereof, the Company shall not be liable to such
Indemnified Party for any legal or other expenses subsequently incurred by the
latter in connection with the defense thereof other than reasonable costs of
investigation. In any event, unless and until the Company elects in writing to
assume and does so assume the defense of any such action or claim the
Indemnified Party's reasonable costs and expenses arising out of the defense,
settlement or compromise of any such action or claim shall be Losses subject to
indemnification hereunder. If the Company elects to defend any such action or
claim, then the Indemnified Party shall be entitled to participate in such
defense with counsel of its choice at its sole cost and expense. The Company
shall not be liable for any settlement of any action or claim effected without
its written consent. Anything in this Section 9.11 to the contrary
notwithstanding, the Company shall not, without the Indemnified Party's prior
written consent, settle or compromise any claim or consent to entry of any
judgment in respect thereof that imposes any future obligation on the
Indemnified Party or that does not include, as an unconditional term thereof,
the giving by the claimant or the plaintiff to the Indemnified Party, a release
from all liability in respect of such claim.
[Remainder of Page Intentionally Left Blank]
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44
SERIES B CONVERTIBLE PREFERRED
STOCK PURCHASE AGREEMENT SIGNATURE PAGE
IN WITNESS WHEREOF, the Company and the Purchaser have caused this
Agreement to be executed effective as of the date first above written.
SIGHT RESOURCE CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------------
Title: CEO
--------------------------------------
CARLYLE VENTURE PARTNERS, L.P.
By: /s/ J. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------------------
Authorized Signatory
C/S VENTURE INVESTORS, L.P.
By: /s/ J. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------------------
Authorized Signatory
CARLYLE U.S. VENTURE PARTNERS, L.P.
By: /s/ J. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------------------
Authorized Signatory
CARLYLE VENTURE COINVESTMENT, L.L.C.
By: /s/ J. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------------------
Authorized Signatory
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