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ASSET TRANSFER AND MERGER AGREEMENT
by and among
SIGHT RESOURCE CORPORATION,
E.B. ACQUISITION CORP.,
THE ▇.▇. ▇▇▇▇▇ OPTICAL COMPANY,
▇▇▇▇▇ OPTICAL LABORATORIES, INC.,
▇.▇. ▇▇▇▇▇ OPTICIANS, INC.,
▇▇▇▇▇▇ ▇▇▇▇▇▇
and
▇▇▇▇▇▇ ▇▇▇▇▇▇
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dated as of July 1, 1996
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TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS.............................. 2
SECTION 1.01 Certain Defined Terms...................................... 2
SECTION 1.02 Singular/Plural............................................ 8
SECTION 1.03 Accounting Terms........................................... 8
SECTION 1.04 Gender..................................................... 8
ARTICLE II
PURCHASE AND SALE OF THE S CORPORATION ASSETS.............. 8
SECTION 2.01 Transfer of S Corporation Assets to
Acquisition................................................ 8
SECTION 2.02 Excluded Assets............................................ 9
SECTION 2.03 Assumption and Exclusion of
Liabilities................................................ 10
SECTION 2.04 Purchase Price............................................. 12
SECTION 2.05 Closing.................................................... 14
SECTION 2.06 Ancillary Agreements....................................... 14
ARTICLE III
THE MERGER............................... 14
SECTION 3.01 The Merger................................................. 14
SECTION 3.02 Conversion of Shares....................................... 14
SECTION 3.03 Effective Time............................................. 16
SECTION 3.04 Closing.................................................... 16
SECTION 3.05 Effects of the Merger...................................... 17
SECTION 3.06 Certificate of Incorporation and By-laws................... 17
SECTION 3.07 Directors and Officers..................................... 17
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS............ 18
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SECTION 4.01 Shareholder's Authority to Execute and
Perform Agreements; Validity............................... 18
SECTION 4.02 No Conflict................................................ 18
SECTION 4.03 No Distribution............................................ 18
SECTION 4.04 NASD....................................................... 19
SECTION 4.05 Legends.................................................... 19
ARTICLE V
REPRESENTATIONS AND WARRANTIES AS TO THE SELLERS............ 19
SECTION 5.01 Organization and Qualification............................. 20
SECTION 5.02 Corporate Power and Authority; Validity.................... 20
SECTION 5.03 No Conflict................................................ 20
SECTION 5.04 Financial Statements....................................... 21
SECTION 5.05 Absence of Undisclosed Liabilities......................... 21
SECTION 5.06 Absence of Material Adverse Change......................... 21
SECTION 5.07 Inventories................................................ 22
SECTION 5.08 Taxes...................................................... 22
SECTION 5.09 Litigation................................................. 22
SECTION 5.10 Certain Practices.......................................... 23
SECTION 5.11 Compliance with Law........................................ 23
SECTION 5.12 Licenses and Permits....................................... 23
SECTION 5.13 Labor and Employee Relations............................... 23
SECTION 5.14 Seller Employees........................................... 24
SECTION 5.15 Employee Benefits.......................................... 24
(a) Employee Benefit Plans........................................ 24
(b) Pension Plans................................................. 24
(c) Welfare Plans................................................. 25
SECTION 5.16 Tangible Properties........................................ 25
SECTION 5.17 Owned Premises............................................. 25
SECTION 5.18 Leased Parcels............................................. 25
SECTION 5.19 Environmental Matters...................................... 26
SECTION 5.20 Material Contracts......................................... 26
SECTION 5.21 Intellectual Property...................................... 27
SECTION 5.22 Significant Customers and Suppliers........................ 28
SECTION 5.23 Transactions With Affiliates............................... 28
SECTION 5.24 Insurance.................................................. 29
SECTION 5.25 Broker's Fee............................................... 29
SECTION 5.26 Capitalization............................................. 29
SECTION 5.27 Disclosure................................................. 29
ARTICLE VI
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REPRESENTATIONS AND WARRANTIES OF ACQUISITION AND SRC......... 29
SECTION 6.01 Organization and Qualification............................. 29
SECTION 6.02 Corporate Power and Authority; Validity.................... 30
SECTION 6.03 No Conflict................................................ 30
SECTION 6.04 SRC Capitalization......................................... 31
SECTION 6.06 Financial Statements of SRC................................ 31
SECTION 6.07 Broker's Fees.............................................. 31
SECTION 6.08 The Shares................................................. 31
SECTION 6.09 Absence of Material Adverse Change......................... 32
SECTION 6.10 Litigation................................................. 32
SECTION 6.11 Compliance with Law........................................ 32
SECTION 6.12 Licenses and Permits....................................... 32
SECTION 6.13 Environmental Matters...................................... 33
SECTION 6.14 Intellectual Property...................................... 33
SECTION 6.15 Insurance.................................................. 33
ARTICLE VII
COVENANTS OF THE SELLERS AND THE SHAREHOLDERS............. 34
SECTION 7.01 Cooperation................................................ 34
SECTION 7.02 Conduct of the Business.................................... 34
SECTION 7.03 Access..................................................... 34
ARTICLE VIII
COVENANTS OF SRC AND ACQUISITION................... 35
SECTION 8.01 Cooperation................................................ 35
SECTION 8.02 Access..................................................... 35
SECTION 8.03 Employees; Benefits........................................ 35
SECTION 8.04 Financial Reporting........................................ 36
SECTION 8.05 Employee Benefit Plan...................................... 36
SECTION 8.06 Cash and Cash Equivalents Certificate...................... 36
SECTION 8.07. Conduct of Business........................................ 37
SECTION 8.08 Certain Dividends or Distributions......................... 37
ARTICLE IX
CERTAIN POST-CLOSING COVENANTS.................... 37
SECTION 9.01 Organization of PC......................................... 37
SECTION 9.03 Certain Consents........................................... 38
SECTION 9.04 Further Assurances......................................... 38
SECTION 9.05 Name Change................................................ 39
SECTION 9.06 Survival of Covenants...................................... 39
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ARTICLE X
CONDITIONS TO CLOSING......................... 39
SECTION 10.01 SRC's and Acquisition's Obligation to
Close...................................................... 39
(a) No Material Adverse Economic Event............................ 39
(b) Representations and Warranties to be True and
Correct....................................................... 39
(d) Performance................................................... 40
(e) Secretary' Certificate........................................ 40
(f) No Material Adverse Change.................................... 40
(g) Opinion of Counsel............................................ 40
(h) Ancillary Agreements.......................................... 40
(i) Approval of SRC, Acquisition and Their
Counsel....................................................... 40
SECTION 10.02 The Sellers' and Shareholders'
Obligation to Close........................................ 41
(a) Representations and Warranties to be True and
Correct....................................................... 41
(b) Performance................................................... 41
(c) Secretary's Certificate....................................... 41
(d) Opinion of Counsel............................................ 41
(e) Ancillary Agreements.......................................... 41
(f) Approval of the Sellers, the Shareholders and
Their Counsel................................................. 42
ARTICLE XI
INDEMNIFICATION............................. 42
SECTION 11.01 Survival................................................... 42
SECTION 11.02 Indemnification by the Sellers and the
Shareholders............................................... 42
SECTION 11.03 Indemnification by ........................................ 43
SECTION 11.04 Claims for Indemnification................................. 43
SECTION 11.05 Indemnification Threshold.................................. 44
ARTICLE XII
TERMINATION.............................. 45
SECTION 12.01 Termination................................................ 45
SECTION 12.02 Effect of Termination...................................... 45
ARTICLE XIII
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COVENANT NOT TO COMPETE......................... 46
SECTION 13.01 Covenant Not to Compete.................................... 46
SECTION 13.02 Activities Considered Competitive.......................... 47
SECTION 13.03 Reasonableness of Restrictions............................. 47
SECTION 13.04 Remedies................................................... 47
ARTICLE XIV
MISCELLANEOUS............................. 48
SECTION 14.01 Notices.................................................... 48
SECTION 14.02 Entire Agreement........................................... 49
SECTION 14.03 Modifications and Amendments............................... 49
SECTION 14.04 No Waiver of Rights, Powers and
Remedies................................................... 49
SECTION 14.05 Assignment................................................. 50
SECTION 14.06 Parties in Interest........................................ 50
SECTION 14.07 Governing Law; Jurisdiction and Service
of Process................................................. 50
SECTION 14.08 Severability............................................... 50
SECTION 14.09 Interpretation............................................. 51
SECTION 14.10 Headings and Captions...................................... 51
SECTION 14.11 Enforcement................................................ 51
SECTION 14.12 Expenses................................................... 51
SECTION 14.13 Publicity.................................................. 51
SECTION 14.14 Confidentiality............................................ 52
SECTION 14.15 Counterparts............................................... 52
SECTION 14.16 Principal Place of Office.................................. 52
SECTION 14.17 Statutory Agent and Service of Process..................... 52
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INDEX TO EXHIBITS
EXHIBIT A - Form of Assignment and Assumption of Leases
EXHIBIT B - Form of ▇▇▇▇ of Sale
EXHIBIT C - Form of Consulting Agreement
EXHIBIT D - Form of Registration Rights Agreement
EXHIBIT E - Form of Opinion of Benesch, Friedlander,
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
EXHIBIT F - Form of Employment Agreement
EXHIBIT G - Form of Opinion of Mintz, Levin, Cohn,
Ferris, Glovsky and Popeo, P.C.
EXHIBIT H - Form of Guarantee Agreement
EXHIBIT I-1 - Form of Note
EXHIBIT I-2 - Form of ▇▇▇▇▇▇▇ Note
EXHIBIT I-3 - Form of Kulway Note
INDEX TO SCHEDULES
Schedule 3.02
Schedule 9.03
Disclosure Schedule
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ASSET TRANSFER AND MERGER AGREEMENT
This Asset Transfer and Merger Agreement is entered into as of the 1st
day of July, 1996, by and among Sight Resource Corporation, a Delaware
corporation ("SRC"), E.B. Acquisition Corp., a Delaware corporation
("Acquisition"), The ▇.▇. ▇▇▇▇▇ Optical Company, an Ohio corporation
("Optical"), ▇▇▇▇▇ Optical Laboratories, Inc., an Ohio corporation
("Laboratories"; Optical and Laboratories are sometimes hereinafter referred to
individually as an "S Corporation" or a "Seller" and collectively as the "S
Corporations"), ▇.▇. ▇▇▇▇▇ Opticians, Inc., an Ohio corporation ("Opticians";
individually a "Seller" and together with the S Corporations, the "Sellers") and
▇▇▇▇▇▇ ▇▇▇▇▇▇ ("Safran") and ▇▇▇▇▇▇ ▇▇▇▇▇▇ ("▇. ▇▇▇▇▇▇"); ▇▇▇▇▇▇, ▇. ▇▇▇▇▇▇ and
Optical are sometimes hereinafter referred to individually as a "Shareholder"
and collectively as the "Shareholders").
WHEREAS, the Sellers are engaged in the business of distributing and
selling eyeglasses, contact lenses, industrial eyewear and hearing aids and
providing related optical, optometric, and audiology goods and services to
persons with vision and hearing disorders (collectively, the "Business", with
that portion of the Business performed by the S Corporations being the "S
Corporation Business," and that portion of the Business performed by Opticians
being "Optician's Business");
WHEREAS, the S Corporations desire to sell, or otherwise transfer, the
assets used in or related to, or intended to be used in or related to, the S
Corporation Business to Acquisition; and
WHEREAS, the Shareholders are the owners of all the issued and
outstanding shares of capital stock of every kind and description of each
Seller, including Opticians (the "Optician Shares"); and
WHEREAS, the parties wish to effect the acquisition of Opticians by SRC
through a merger of Opticians with and into Acquisition, on the terms and
conditions hereof (the "Merger");
WHEREAS, the Merger is intended to be a "plan of reorganization" within
the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended
(the "Code").
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WHEREAS, Acquisition has been organized by SRC for the purpose of
acquiring such assets from the S Corporations and effecting the Merger;
NOW, THEREFORE, in consideration of the promises and the mutual
covenants contained in this Agreement, and for other good and valuable
consideration the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings:
"Action" means any claim, action, suit, arbitration,
mediation, inquiry, proceeding or investigation by or before any
Governmental Authority (or arbitrator or mediator, as the case may be),
whether at law or in equity.
"Affiliate" means, with respect to any specified Person, any
other Person that directly, or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control
with, such specified Person and, with respect to any natural person,
the term "Affiliate" shall also include (i) any spouse or any lineal
ancestor or descendant of such natural person, (ii) any trust or estate
any of the beneficiaries of which are such natural person or any of the
foregoing and (iv) any Person that directly, or indirectly, through one
or more intermediaries, controls, is controlled by, or is under common
control with, any of the foregoing.
"Agreement" or "this Agreement" means this Asset Transfer and
Merger Agreement dated the date hereof among SRC, Acquisition, the
Sellers and the Shareholders, as amended, modified or supplemented from
time to time in accordance with the provisions hereof.
"Ancillary Agreements" means the Assignment and Assumption of
Leases, the ▇▇▇▇ of Sale, the Consulting
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Agreement, the Employment Agreements, the Guarantee Agreement and the
Registration Rights Agreement.
"Assignment and Assumption of Leases" means the Assignment and
Assumption of Leases substantially in the form of Exhibit A attached
hereto between the S Corporations and Acquisition to be entered into on
the Effective Date.
"Assumed Liabilities" has the meaning specified in
Section 2.03.
"▇▇▇▇ of Sale" means the ▇▇▇▇ of Sale substantially in the
form of Exhibit B attached hereto between Seller and Acquisition to be
entered into on the Effective Date.
"Business" has the meaning specified in the recitals to
this Agreement.
"Closing" has the meaning specified in Section 3.04.
"Consulting Agreement" means the Consulting Agreement
substantially in the form of Exhibit C hereto between Acquisition and
Safran to be entered into on the Effective Date.
"control" (including the terms "controlled by" and "under
common control with"), with respect to the relationship between or
among two or more Persons, means the possession, directly or indirectly
or as trustee or executor, of the power to direct or cause the
direction of the affairs or management of a Person, whether through the
ownership of voting securities, as trustee or executor, by contract or
otherwise, including, without limitation, the ownership, directly or
indirectly, of securities having the power to elect a majority of the
board of directors or similar body governing the affairs of such
Person.
"Disclosure Schedule" means the Disclosure Schedule delivered
by Seller to Acquisition and dated September 18, 1996.
"Effective Date" has the meaning specified in Section
3.03.
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"Employment Agreements" means each of the Employment
Agreements substantially in the form of Exhibit F hereto between
Acquisition and each of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇ to be entered
into on the Effective Date.
"Encumbrance" means any security interest, pledge, mortgage,
lien (including, without limitation, environmental and tax liens),
charge, encumbrance, adverse claim, preferential arrangement, or
restriction of any kind, including, without limitation, any restriction
on the use, voting, transfer, receipt of income or other exercise of
any attributes of ownership.
"Environmental Laws" means any federal, state or local law,
including any statute, rule, regulation, ordinance, code or rule of
common law, as in effect on the date hereof, and any judicial or
administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, relating to the
environment, health, safety or Hazardous Materials.
"Environmental Permits" means all permits, approvals,
registrations, identification numbers, licenses and other
authorizations and filings required under any applicable Environmental
Law.
"ERISA" has the meaning specified in Section 4.15.
"Excluded Assets" has the meaning specified in
Section 2.02.
"Excluded Liabilities" has the meaning specified in
Section 2.03.
"Financial Statements" has the meaning specified in
Section 5.04.
"GAAP" means United States generally accepted accounting
principles and practices in effect from time to time applied
consistently throughout the periods involved.
"Governmental Authority" means any United States federal,
state or local or any foreign government,
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governmental, regulatory or administrative authority, agency or
commission or any court, tribunal or arbitral body.
"Guarantee" means a Guarantee Agreement in substantially the
form as Exhibit H.
"Hazardous Materials" means any chemicals, materials or
substances defined as or included in the definition of "hazardous
substances", "hazardous wastes", "hazardous materials", "toxic
substances", "toxic pollutants", "contaminants" or "pollutants", or
words of similar import, under any applicable Environmental Law.
"Intellectual Property" means (i) trademarks, service marks,
trade dress, logos, trade names and corporate names and registrations
and applications for registration thereof, (ii) inventions, ideas,
conceptions of potentially patentable subject matter and patent
disclosures, whether or not reduced to practice and whether or not yet
made the subject of a pending patent application or applications, (iii)
statutory invention registrations, patents, patent registrations and
patent applications and all improvements thereto, (iv) copyrights
(registered or otherwise) and registrations and applications for
registration thereof, (v) computer software, data and documentation,
(vi) trade secrets and confidential business information, technology
(including know-how and show-how), copyrightable works, financial,
marketing and business data, pricing and cost information, business and
marketing plans and customer and supplier lists and information, (vii)
copies and tangible embodiments of all the foregoing, in whatever form
or medium, (viii) all rights to register trademarks and copyrights and
to obtain rights to apply for patents and (ix) all rights to ▇▇▇ for
present and past infringement of any of the Intellectual Property
rights hereinabove set out.
"Inventories" means all inventory, merchandise, goods, raw
materials, work-in-process, finished goods, packaging and supplies
owned by the S Corporations and related to the S Corporations Business,
maintained, held or stored by or for the S Corporations or any of their
respective Subsidiaries on the Effective Date and any prepaid deposits
for any of the same, but specifically excluding any
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inventory, merchandise, goods, raw materials, work-in-progress,
finished goods, packaging and supplies owned by any other Person and
held by or on behalf of either of the S Corporations as consignee.
"Leased Parcel" has the meaning specified in Section 5.18.
"Material Adverse Change" means a material adverse change in
the business, affairs, operations, assets, liabilities, prospects,
results of operations or the condition (financial or otherwise) of any
of the Sellers or the Business taken as a whole.
"Material Adverse Effect" means any circumstance, change in or
effect on any of the Sellers or any of their respective portions of the
Business that, individually or in the aggregate with any other
circumstances, changes in or effects on such Seller(s) or portion(s) of
the Business (i) is, or would be, materially adverse to the business,
affairs, operations, assets, liabilities, prospects, results of
operations or the condition (financial or otherwise) of the Sellers,
taken together, or the Business taken as a whole, or (ii) would
materially adversely affect the ability of Acquisition to (A) own the S
Corporation Assets or assets obtained pursuant to the Merger or (B)
operate and conduct the Business.
"Material Adverse Acquisition Change" means a material adverse
change in the business, affairs, operations, assets, liabilities,
prospects, results of operations or the condition (financial or
otherwise) of SRC and its subsidiaries (including Acquisition), taken
as a whole.
"Material Adverse Acquisition Effect" means any circumstance,
change in or effect on SRC and its subsidiaries (including
Acquisition), taken as a whole, or the SRC Business that, individually
or in the aggregate with any other circumstances, changes in or effects
on SRC and Acquisition, taken as a whole, or the SRC Business is, or
would be, materially adverse to the business, affairs, operations,
assets, liabilities, prospects, results of operations or the condition
(financial or otherwise) of SRC
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and its subsidiaries (including Acquisition), taken together.
"Material Contracts" has the meaning specified in Section
5.20.
"NASD" has the meaning specified in Section 4.04.
"NASDAQ" means the National Association of Securities Dealers,
Inc. Automatic Quotation System.
"SRC Common Stock" means the common stock of SRC, par value
$.01 per share.
"1995 Balance Sheet" has the meaning specified in Section
5.04.
"Order" means any order, writ, judgment, injunction, decree,
demand letter, stipulation, determination or award issued or entered by
or agreed to with any Governmental Authority.
"PC" has the meaning specified in Section 9.01.
"Permits" has the meaning specified in Section 5.12.
"Permitted Encumbrances" means such of the following as to
which no enforcement, collection, execution, levy or foreclosure
proceeding shall have been commenced: (i) liens for taxes, assessments
and governmental charges or levies in the nature of taxes or user fees
not yet due and payable in the ordinary course or, if due, that are
being contested in good faith; (ii) Encumbrances imposed by law, such
as, but not limited to, materialmen's, mechanics', carriers', workmen's
and repairmen's liens and other similar liens arising in the ordinary
course of business securing obligations that (a) are not overdue for a
period of more than 30 days and (b) are not in excess of $5,000 in the
case of a single property or $50,000 in the aggregate at any time;
(iii) pledges or deposits to secure obligations under workers'
compensation laws or similar legislation or to secure public or
statutory obligations; and (iv) minor survey exceptions, reciprocal
easement agreements and other
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customary encumbrances on title to real property that (a) were not
incurred in connection with any indebtedness, (b) do not render title
to the property encumbered thereby unmarketable and (c) do not and
could not, individually or in the aggregate, materially adversely
affect the value of or the use of such property for its present
purposes.
"Person" means any individual, partnership, firm, corporation,
association, trust, unincorporated organization or other entity.
"Purchase Price" has the meaning specified in Section 2.04.
"Receivables" means all accounts receivable, notes and other
amounts receivable from third parties, including (without limitation)
customers and employees, arising from the conduct of the Business prior
to the Effective Date, whether or not in the ordinary course, together
with any unpaid financing charges accrued thereon.
"Registration Rights Agreement" means the Registration Rights
Agreement substantially in the form of Exhibit D attached hereto
between SRC and the Shareholders to be entered into on the Effective
Date.
"SRC Business" means the business conducted by SRC and its
Subsidiaries, including but not limited to laser vision correction, the
distribution and sale of eyeglasses and contact lenses and the
provision of related optical and optometric goods and services to
persons with vision disorders.
"SRC Shares" has the meaning specified in Section 3.02.
"Subsidiary" means, with respect to any Person, any other
Person of which a majority of the capital stock or other ownership
interests are at the time directly or indirectly owned or controlled by
such Person.
"Tangible Personal Property" has the meaning specified
in Section 5.16.
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"Tax" or "Taxes" means any and all taxes, fees, levies,
duties, tariffs, imposts, and other charges of any kind (together with
any and all interest, penalties, additions to tax and additional
amounts imposed with respect thereto) imposed by any government or
taxing authority, including, without limitation: taxes or other charges
on or with respect to income, franchises, windfall or other profits,
gross receipts, property, sales, use, capital stock, payroll,
employment, social security, workers' compensation, unemployment
compensation, or net worth; taxes or other charges in the nature of
excise, withholding, ad valorem, stamp, transfer, value added, or gains
taxes; license, registration and documentation fees; and customs'
duties, tariffs, and similar charges.
"Transaction Documents" means this Agreement, the Ancillary
Agreements, and any certificate, instrument, financial statement,
report or other document delivered pursuant to this Agreement, any
Ancillary Agreement or the transactions contemplated hereby or thereby.
"Unrestricted Date" has the meaning specified in Section
3.02(b).
"S Corporation Assets" has the meaning specified in Section
2.01.
"Seller Employees" has the meaning specified in Section 5.14.
"Seller Optometrists" has the meaning specified in Section
9.01.
SECTION 1.02 Singular/Plural. Unless the context otherwise requires,
words defined herein in the singular include the plural and words defined herein
in the plural include the singular.
SECTION 1.03 Accounting Terms. Any accounting terms used in this
Agreement that are not specifically defined shall have the meanings customarily
given them in accordance with GAAP.
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SECTION 1.04 Gender. The use of the masculine or any other pronoun
herein when referring to any Person is for convenience only and shall be deemed
to refer to the particular Person intended regardless of the actual gender of
such Person or whether such Person is a corporate or other entity.
ARTICLE II
PURCHASE AND SALE OF THE S CORPORATION ASSETS
SECTION 2.01 Transfer of S Corporation Assets to Acquisition. Upon the
terms and subject to the conditions set forth in this Agreement, on the
Effective Date, each S Corporation shall transfer to Acquisition, free and clear
of all Encumbrances (other than Permitted Encumbrances), all of the assets,
properties, goodwill and rights owned by such S Corporation or in which such S
Corporation has any right or interest of every type and description, real,
personal and mixed, tangible and intangible, in each case belonging or related
to or used or intended to be used in the Business, other than the Excluded
Assets (collectively, the "S Corporation Assets"), including, without
limitation, the following (excluding, in each case, the Excluded Assets):
(i) all rights of the S Corporations under all contracts,
agreements, leases, commitments, and sales and purchase orders, and
under all commitments, bids and offers;
(ii) all of the S Corporations' interests in and rights to and
under all real or personal property owned or leased by the S
Corporations, including all leases or contracts relating thereto;
(iii) all rights of the S Corporations in Inventories and
Receivables;
(iv) all cash, cash equivalents and cash balances on deposit;
(v) all utility deposits, co-operative receivables and prepaid
expenses;
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(vi) all books of account, general, financial, tax and
personnel records, invoices, shipping records, supplier lists,
correspondence and other documents, records and files and all optical
computer software and other computer software programs of the S
Corporations and files and any rights thereto related to or used in the
S Corporations Business;
(vii) all rights of the S Corporations in Intellectual
Property, whether in the possession of either S Corporation or any
employee or consultant thereof;
(viii) the goodwill of the S Corporations relating to the
Business; and
(ix) all of the S Corporations' rights, titles and interests
in, to and under all other assets, rights and claims of every kind and
nature.
Without limiting the generality of the foregoing, all assets,
properties and rights of the S Corporations and their respective Affiliates
located on the Leased Parcels and used or intended to be used in or relating to
the Business (other than items of personal property owned by Affiliates who are
natural persons) shall be included in the S Corporation Assets.
SECTION 2.02 Excluded Assets. The S Corporation Assets shall exclude
the following assets owned by the S Corporations (the "Excluded Assets"):
(i) certain life insurance policies issued by Lincoln Mutual
Life Insurance Co., to wit: three policies on the life of Safran and
one policy each on the lives of ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, and one policy issued by New England Life Ins. Co. on
the life of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇;
(ii) notes receivable due from the Shareholders;
(iii) all books of account, general, financial, tax and
personnel records, invoices, shipping records, supplier lists,
correspondence and other documents, records and files and all computer
software programs and files and any rights
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thereto, in each case related to Excluded Assets or Excluded
Liabilities;
(iv) Limited partnership interests owned by Optical in First
Interstate Elyria Limited Partnership; First Interstate Hawthorne
Limited Partnership; and First Interstate Mentor Centers, L.P.;
(v) any tax refunds now or hereafter claimed in respect of the
Business's operations prior to the Effective Date; and
(vi) the SRC Shares (defined below) to be owned by Optical by
reason of the Merger.
SECTION 2.03 Assumption and Exclusion of Liabilities. (a) In connection
with its acquisition of the S Corporation Assets, Acquisition shall assume those
obligations and liabilities of the S Corporations, and only those obligations
and liabilities, specifically identified below (the "Assumed Liabilities"):
(i) accounts payable and accrued wages, salaries and vacation
benefits payable as of the Effective Date (other than wages and loans
payable to the Shareholders), in each case which have been incurred in
the ordinary course of business consistent with past practice and which
are reflected on the books of the S Corporations;
(ii) the obligations of each S Corporation under the Material
Contracts and under all other contracts and agreements entered into in
the ordinary course; and
(iii) the other liabilities of the S Corporations, if any,
fixed or contingent, liquidated or unliquidated, reflected on the
books, records or accounts of the S Corporations.
(iv) the Sellers' obligation to pay to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ as
follows:
(A) Four Hundred Thousand Dollars ($400,000.00) which
amount the S Corporations and their shareholders
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hereby direct SRC and Acquisition to pay on the Effective Date
by delivery of one or more official bank checks made payable to
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or by wire transfer;
(B) a promissory note in the original principal
amount of One Hundred Forty Thousand Dollars ($140,000.00),
substantially in the form of Exhibit I-2 attached hereto (the
"▇▇▇▇▇▇▇ Note"), which ▇▇▇▇▇▇▇ Note will bear interest at an
annual rate of the higher of (x) 7% or (y) the lowest interest
rate on the Effective Date that is necessary to avoid imputed
interest on the ▇▇▇▇▇▇▇ Note under the Internal Revenue Code,
and which Note will be payable as follows: (A) Forty Thousand
Dollars ($40,000.00) of the principal amount thereof, together
with interest thereon, will become due and payable one year
after the Effective Date and (B) One Hundred Thousand Dollars
($100,000.00) of the principal amount thereof, together with
interest thereon, will become due and payable eighteen months
after the Effective Date; provided that if, while any principal
amount of the ▇▇▇▇▇▇▇ Note is outstanding, SRC's balance of
cash and cash equivalents falls below Two Million Eight Hundred
Thousand Dollars ($2,800,000), then the holder or holders may,
at such holder's or holders' option, declare the ▇▇▇▇▇▇▇ Note
(and the interest thereon) due and payable in full.
(v) the Sellers' obligation to pay to ▇▇▇▇▇ ▇▇▇▇▇▇ the
following consideration at the following times:
(A) Eighty Thousand Dollars ($80,000.00) which amount
the S Corporations and their shareholders hereby direct SRC and
Acquisition to pay on the Effective Date by delivery of one or
more official bank checks made payable to ▇▇▇▇▇ ▇▇▇▇▇▇ or by
wire transfer;
(B) a promissory note in the original principal
amount of Twenty-Eight Thousand Dollars ($28,000),
substantially in the form of Exhibit I-3 attached hereto (the
"Kulway Note"), which Kulway Note will bear interest at an
annual rate of the higher of (x) 7% or (y) the lowest interest
rate on the Effective Date that
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is necessary to avoid imputed interest on the Kulway Note under
the Internal Revenue Code, and which Kulway Note will be
payable as follows: (A) Eight Thousand Dollars ($8,000.00) of
the principal amount thereof, together with interest thereon,
will become due and payable one year after the Effective Date
and (B) Twenty Thousand Dollars ($20,000.00) of the principal
amount thereof, together with interest thereon, will become due
and payable eighteen months after the Effective Date; provided
that if, while any principal amount of the Kulway Note is
outstanding, SRC's balance of cash and cash equivalents falls
below Two Million Eight Hundred Thousand Dollars ($2,800,000),
then the holder or holders may, at such holder's or holders'
option, declare the Kulway Note (and the interest thereon) due
and payable in full.
(b) the S Corporations shall retain, and shall be responsible for
paying, performing and discharging when due, all liabilities and obligations of
the S Corporations or any of their Affiliates relating to the operation or
conduct of the S Corporation Business or ownership of the S Corporation Assets
prior to the Effective Date other than the Assumed Liabilities (the "Excluded
Liabilities"), relating to:
(i) all Taxes (other than sales taxes) imposed on or with respect
to income now or hereafter owed by the S Corporations or any of the
shareholders of the S Corporations or attributable to the S Corporation
Business or the S Corporation Assets, relating to any period, or any
portion of any period, ending on or prior to the Effective Date;
(ii) all liabilities relating to or arising out of the Excluded
Assets;
(iii) all accrued wages, salaries, vacation benefits and loans
payable to the Shareholders (which shall be discharged in full prior to
the Effective Date by the S Corporations);
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(iv) all amounts due in respect of notes payable to the Affiliates
of the S Corporations other than notes payable from one of the Sellers
to any other Seller; and
(v) all other liabilities or obligations of the S Corporations,
contingent or otherwise, relating to or arising out of the operation of
the S Corporation Business or ownership of the S Corporation Assets
prior to the Effective Date which are not reflected on the books,
records or accounts of the S Corporations;
provided, however, that the S Corporations and their shareholders reserve the
right to contest in good faith and through proper proceedings the Excluded
Liabilities which the S Corporations shall retain pursuant to the terms of this
Agreement.
SECTION 2.04 Purchase Price. (a) The aggregate purchase price for the S
Corporation Assets and the assumption of the Assumed Liabilities (the "Purchase
Price"), shall consist of the elements set forth in Sections 2.04(b) and (c) and
shall be payable as set forth therein.
(b) In consideration for the transfer of the S Corporation Assets, upon
the terms and subject to the conditions set forth in this Agreement, on the
Effective Date the S Corporations (or their designee or designees) shall
receive:
(i) Three Million Five Hundred Twenty Thousand Dollars
($3,520,000.00), which amount the S Corporations and their shareholders
hereby direct SRC and Acquisition to pay on the Effective Date by
delivery of official bank checks as follows: (A) One Million Two
Hundred Fifty Thousand Dollars ($1,250,000.00) to Laboratories and (B)
Two Million Two Hundred Seventy Thousand Dollars ($2,270,000.00) to
Optical; and
(ii) a promissory note in the original principal amount of One
Million Two Hundred Thirty-Two Thousand Dollars ($1,232,000) payable to
Optical, substantially in the form of Exhibit I-1 attached hereto (the
"Note"), which Note will bear interest at an annual rate of the higher
of (x) 7% or (y) the lowest interest rate on the Effective Date that is
necessary to avoid imputed interest on the Note
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under the Internal Revenue Code, and which Note will be payable (in the
respective amounts to be agreed to between the S Corporations and
Acquisition on or before the Effective Date) as follows: (A) Three
Hundred Fifty-Two Thousand Dollars ($352,000) of the principal amount
thereof, together with interest thereon, will become due and payable
one year after the Effective Date and (B) Eight Hundred Eighty Thousand
Dollars ($880,000) of the principal amount thereof, together with
interest thereon, will become due and payable eighteen months after the
Effective Date; provided that if, while any principal amount of the
Note is outstanding, SRC's balance of cash and cash equivalents falls
below Two Million Eight Hundred Thousand Dollars ($2,800,000), then the
holder or holders may, at such holder's or holders' option, declare the
Note (and the interest thereon) due and payable in full.
(c) In consideration for the transfer of the S Corporation Assets, upon
the terms and subject to the conditions set forth in this Agreement, Acquisition
shall, on the Effective Date, assume the Assumed Liabilities and SRC shall
guarantee the performance of Acquisition pursuant to the Guarantee Agreement
referred to in Section 10.02 of the Agreement.
(d) The Purchase Price shall be allocated to the transferred tangible
assets in the amounts equal to their fair market value, as reasonably determined
by Acquisition, SRC and the S Corporations. The allocation of the Purchase Price
paid to Optical will include an allocation of at least One Million Two Hundred
Thirty-Two Thousand Dollars ($1,232,000.00) to intangibles. For all tax
purposes, the parties agree to report the transactions contemplated by this
Agreement in a manner consistent with the terms of this Agreement, including
such allocation, and that none of them shall take any position inconsistent
therewith in any tax return, in any refund claim, in any litigation, or
otherwise.
SECTION 2.05 Closing. At the Closing (as defined in Section 3.04), the
S Corporations shall deliver or cause to be delivered to Acquisition (i) the
executed ▇▇▇▇ of Sale transferring the S Corporation Assets to Acquisition, (ii)
the executed Assignment and Assumption of Leases, (iii) any other assignments or
other instruments of transfer reasonably required
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by Acquisition to legally effect the transfer of any S Corporation Assets from
the S Corporations to Acquisition in form and substance satisfactory to
Acquisition and (iv) all books, data, documents, instruments, and other records
relating to the S Corporation Business, the S Corporation Assets and the Assumed
Liabilities (other than those relating exclusively to Excluded Assets or
Excluded Liabilities). At the Closing, the parties shall also deliver or cause
to be delivered to the other parties the certificates, opinions and Ancillary
Agreements required to be delivered by the parties pursuant to Article X.
SECTION 2.06 Ancillary Agreements. On the Effective Date, Acquisition
shall enter into the Consulting Agreement and the Employment Agreements and SRC
shall enter into the Guarantee Agreement.
ARTICLE III
THE MERGER
SECTION 3.01 The Merger. On the basis of the representations,
warranties and undertakings set forth in this Agreement, on the terms and
subject to the conditions set forth in this Agreement, and in accordance with
the General Corporation Law of the State of Delaware (the "DGCL") and the
General Corporation Law of the State of Ohio (the "GCLO"), Opticians shall be
merged with and into Acquisition. The Merger shall occur at the Effective Time
(as defined in Section 3.03). Following the Merger, Acquisition shall be the
surviving corporation (the "Surviving Corporation") and the separate corporate
existence of Opticians shall cease.
SECTION 3.02 Conversion of Shares.
(a) At the Effective Time, by virtue of the Merger and without any
action on the part of Acquisition, Opticians, the Shareholders or any other
party:
(i) All Optician Shares outstanding immediately prior to the
Effective Time shall be converted into and become the right to receive,
in the aggregate, $3,168,000.00 worth of shares of SRC Common Stock
(the "SRC Shares"),
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payable by the issuance of a number of SRC Shares (rounded to the
nearest whole share) calculated by dividing (A) $3,168,000.00, by (B)
the average of the closing sale price of SRC Common Stock as reported
by NASDAQ for the twenty (20) consecutive trading days ending two
business days prior to the Effective Date (the "Firm Merger
Consideration").
(ii) Each share of the common stock of Acquisition, $0.01 par value
per share ("Acquisition Common Stock"), outstanding immediately prior
to the Effective Time shall be converted into and become one validly
issued, fully paid and nonassessable share of common stock, $0.01 par
value per share, of the Surviving Corporation.
(b) If, during the twenty (20) consecutive trading days ending on the
date (the "Unrestricted Date") that the SRC Shares first become unrestricted as
to their transferability under the federal securities laws of the United States,
whether by operation of Rule 144 under the Securities Act of 1933, as amended
(the "Securities Act") or pursuant to the registration of the SRC Shares under
the Securities Act, the average of the closing sale price of SRC Common Stock as
reported by NASDAQ (or on the primary major stock exchange or over-the counter
market upon which such stock is then traded) is less than $2.75 per share (as
adjusted for any stock split, stock dividend, recapitalization, reclassification
or any such similar event), then on the Unrestricted Date the shareholders of
Opticians shall be entitled to receive an additional number of shares of SRC
Common Stock equal to twenty percent of the number of SRC Shares constituting
the Firm Merger consideration, as adjusted for any stock split, stock dividend,
recapitalization, reclassification or any such similar event (the "Contingent
Merger Consideration" and, together with the Firm Merger Consideration,
collectively the "Merger Consideration").
(c) The Merger Consideration shall be allocated among the Shareholders
pro rata to the number of Shares held by each Shareholder as set forth on
Schedule 3.02.
(d) At the Closing or as soon as practicable after the Effective Time,
each Shareholder shall surrender such Shareholder's certificates representing
Optician Shares to SRC (acting, until such time as all certificates representing
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Optician Shares shall have been exchanged in accordance herewith, as Exchange
Agent hereunder (the "Exchange Agent")) in exchange for such Shareholder's pro
rata share of the Merger Consideration. Upon a Shareholder's surrender of
certificate to the Exchange Agent, such Shareholder shall be entitled to receive
in exchange therefor such shareholder's pro rate portion of the Merger
Consideration, as set forth in Section 3.02(c). Until surrendered in accordance
with the provisions of this Section 3.02(d), each Optician Share certificate
shall represent for all purposes the right to receive payment of Merger
Consideration.
SECTION 3.03 Effective Time. As soon as practicable after satisfaction
or waiver of all conditions set forth in Article X, the parties shall cause a
certificate of merger (the "Delaware Certificate of Merger") with respect to the
Merger to be filed and recorded in accordance with Section 251(c) of the DGCL,
shall cause a certificate of merger (the "Ohio Certificate of Merger", and
together with the Delaware Certificate of Merger, the "Certificates of Merger")
with respect to the Merger to be filed and recorded in accordance with Section
1701.81 of the GCLO and shall take all such further actions as may be required
by law to make the Merger effective. The Merger shall be effective upon the
later to occur of filing of the Delaware Certificate of Merger or the Ohio
Certificate of Merger, or at such later time as is specified in either
Certificate of Merger (the "Effective Time"). The date on which the Effective
Time occurs is referred to herein as the "Effective Date".
SECTION 3.04 Closing. Immediately prior to filing of the Certificates
of Merger, a closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C. at 10:00 a.m., on September 18, 1996 or at such other
location, date and time as may be agreed upon by the parties.
At the Closing, in addition to the materials described in Section 2.05:
(a) Acquisition shall deliver or cause to be delivered to
Opticians the following:
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(i) A certificate of the Secretary of Acquisition, dated as of
the Effective Date, certifying as to the incumbency of the officers of
Acquisition;
(ii) A certificate of recent date of the Secretary of State of the
State of Delaware as to the legal existence and good standing of
Acquisition;
(iii) Certified resolutions of the Board of Directors of
Acquisition and SRC authorizing this Asset Transfer and Merger
Agreement and related transactions;
(iv) Such other documents, instruments or certificates as shall
reasonably be requested by the Sellers or their counsel; and
(b) the Sellers shall deliver or cause to be delivered to Acquisition
the following:
(i) A copy of the resolutions of each Seller., certified by its
Secretary, authorizing the execution and delivery of this Agreement and
the transactions contemplated hereby;
(ii) A certificate of recent date of the Secretary of State of the
State of Ohio as to the legal existence and good standing of each
Seller; and
(iii) Such other documents, instruments or certificates as shall
reasonably be requested by SRC, Acquisition or their counsel.
SECTION 3.05 Effects of the Merger. The Merger shall have the effects
set forth in Sections 259, 260 and 261 of the DGCL and in Sections 1701.78,
1701.81 and 1701.82 of the GCLO.
SECTION 3.06 Certificate of Incorporation and By-laws. The Certificate
of Incorporation and By-laws of Acquisition in each case as in effect
immediately prior to the Effective Time, shall be the Certificate of
Incorporation and By-laws of the Surviving Corporation immediately after the
Effective Time.
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SECTION 3.07 Directors and Officers. The directors and officers of
Acquisition immediately prior to the Effective Time shall be the directors and
officers of the Surviving Corporation immediately after the Effective Time.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
As an inducement to SRC and Acquisition to enter into this Agreement
and to consummate the transactions contemplated hereby, each of the Shareholders
hereby represents and warrants to SRC and Acquisition as follows (but as to
Section 4.02(iii), only Safran and Optical make such representations), except as
otherwise set forth in the Disclosure Schedule:
SECTION 4.01 Shareholder's Authority to Execute and Perform Agreements;
Validity. Such Shareholder has the full legal right and power and all authority
and approval required by law to execute and deliver this Agreement and the other
Transaction Documents to which such Shareholder is a party and perform his or
her obligations thereunder. This Agreement and each of the other Transaction
Documents to be executed and delivered by such Shareholder has been duly
executed and delivered by such Shareholder, and constitutes such Shareholder's
legal, valid and binding obligation, enforceable against such Shareholder in
accordance with its terms.
SECTION 4.02 No Conflict. Neither the execution and delivery by such
Shareholder of this Agreement and the other Transaction Documents to which such
Shareholder is a party, the consummation by such Shareholder of the transactions
contemplated hereby or thereby, nor the performance by such Shareholder of his
or her obligations under this Agreement and such other Transaction Documents in
compliance with the terms and conditions hereof and thereof, will (i) require
any consent, approval, authorization or permit of, or filing with or
notification to, any Governmental Authority, (ii) violate, conflict with or
result in a breach, default or termination (or give rise to any right of
termination, cancellation or acceleration of the maturity of any payment date of
any of the obligations of such Shareholder or increase or otherwise affect the
obligations of such Shareholder) under any law, rule, regulation or any
governmental permit, license or Order or any of the terms, conditions or
provisions of any mortgage, indenture, note, license, agreement or other
instrument or obligation to which such Shareholder is a party or by which he or
she or any of his or her assets are bound or
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affected or (iii) result in the creation of any Encumbrance upon any of the S
Corporation Assets or the Assets to obtained by Acquisition pursuant to the
Merger.
SECTION 4.03 No Distribution. In connection with the Merger, each
Shareholder will be acquiring the SRC Shares for its, his or her own account for
investment and not with a view to or for sale in connection with the
distribution of the SRC Shares nor with any present intention of selling or
otherwise disposing of all or any part of the SRC Shares. Such Shareholder
agrees that it, he or she must bear the economic risk of the SRC Shares for an
indefinite period of time because, among other reasons, the SRC Shares have not
been registered under the Securities Act or under the securities laws of any
state and, therefore, cannot be resold, pledged, assigned, or otherwise disposed
of unless they are subsequently registered under the Securities Act and under
applicable securities laws of certain states or an exemption from such
registration is available.
SECTION 4.04 NASD. Such Shareholder is not a member the National
Association of Securities Dealers, Inc. (the "NASD") and has not, for a period
of 12 months prior to the date of this Agreement, been affiliated or associated
with any company, firm, or other entity which is a member of the NASD. Such
Shareholder does not own any stock or other interest in any member of the NASD
(other than interests acquired in open market purchases).
SECTION 4.05 Legends. Such Shareholder acknowledges that, until
registered under the Securities Act and applicable state securities laws or
transferred pursuant to the provisions of Rule 144, the Shares, whether upon
initial issuance or upon any transfer thereof, shall bear a legend (and SRC
shall make a notation on its books of transfer to such effect), prominently
stamped or printed thereon, in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), OR ANY APPLICABLE STATE
SECURITIES LAWS, HAVE BEEN ACQUIRED FOR INVESTMENT AND
NOT WITH A VIEW TO DISTRIBUTION OR RESALE AND MAY NOT
BE SOLD, MORTGAGED, PLEDGED, HYPOTHECATED OR OTHERWISE
TRANSFERRED IN THE
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ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT COVERING
SUCH SECURITIES UNDER THE ACT AND ANY APPLICABLE STATE
SECURITIES LAWS UNLESS THERE HAS BEEN RENDERED TO THE
COMPANY A WRITTEN OPINION OF COUNSEL IN FORM AND
SUBSTANCE SATISFACTORY TO THE COMPANY TO THE EFFECT
THAT REGISTRATION IS NOT REQUIRED UNDER THE ACT OR
UNDER APPLICABLE STATE SECURITIES LAWS."
ARTICLE V
REPRESENTATIONS AND WARRANTIES AS TO THE SELLERS
As an inducement to SRC and Acquisition to enter into this Agreement
and to consummate the transactions contemplated hereby, the Sellers and Safran
hereby, jointly and severally, represent and warrant to SRC and Acquisition as
follows, except as otherwise set forth in the Disclosure Schedule (a disclosure
on the Disclosure Schedule as to any Section of this Article V shall be deemed a
disclosure for all purposes of this Article V and as to all Sections thereof):
SECTION 5.01 Organization and Qualification. Each of the Sellers is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Ohio, and is duly licensed or qualified to transact business as
a foreign corporation and is in good standing in each jurisdiction in which the
ownership or leasing of its assets or properties requires it to be so licensed
or qualified, except where the failure to be so licensed or qualified would not
individually, or in the aggregate, have a Material Adverse Effect. The Sellers
have no Subsidiaries.
SECTION 5.02 Corporate Power and Authority; Validity. Each of the
Sellers has the corporate power and authority (i) to own and hold its assets and
properties and to carry on the Business and (ii) to execute, deliver and perform
this Agreement and the other Transaction Documents to which it is a party. The
execution, delivery and performance of this Agreement and such other Transaction
Documents and the consummation of the transactions contemplated hereby and
thereby have been duly
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authorized and approved by each of the Sellers and the Shareholders. This
Agreement has been, and each of the other Transaction Documents to be executed
and delivered by the Sellers will be, duly executed and delivered by the
Sellers. This Agreement constitutes, and each such other Transaction Document
when so duly executed and delivered will constitute, the legal, valid and
binding obligation of the Sellers enforceable against the Sellers in accordance
with its respective terms, except as enforceability may be subject to the
application of general equitable principles and to bankruptcy, insolvency,
moratorium or other similar laws affecting creditors' rights.
SECTION 5.03 No Conflict. Neither the execution and delivery by the
Sellers of this Agreement and the other Transaction Documents to which they are
a party, the consummation by the Sellers of the transactions contemplated hereby
or thereby, nor the performance by the Sellers of this Agreement and such other
Transaction Documents in compliance with the terms and conditions hereof and
thereof, will (i) violate, conflict with or result in any breach of their
Articles or Certificate of Organization, or other charter document, or By-laws,
(ii) require by or on behalf of any of the Sellers any consent, approval,
authorization or permit of, or filing with or notification to, any Governmental
Authority, (iii) violate, conflict with or result in a breach, default or
termination (or give rise to any right of termination, cancellation or
acceleration of the maturity of any payment date of any of the obligations of
any of the Sellers or increase or otherwise affect the obligations of any of the
Sellers) under any law, rule, regulation or any governmental permit, license or
Order or any of the terms, conditions or provisions of any mortgage, indenture,
note, license, agreement or other instrument or obligation to which any of the
Sellers is a party or by which the Sellers or any of their assets are bound or
affected or (iv) result in the creation of any Encumbrance upon any of the S
Corporation Assets or the assets to obtained by Acquisition by means of the
Merger.
SECTION 5.04 Financial Statements. Each of the Sellers has previously
furnished to SRC true and complete copies of its (i) internally prepared balance
sheet for the fiscal year ended as of December 31, 1995 (the "1995 Balance
Sheets") and the related profit and loss statement, (together, the "1995
Financial Statements"), (ii) internally prepared balance sheets for the
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fiscal year ended as of December 31, 1994 and the related profit and loss
statement and (iii) internally prepared balance sheets of each of the Sellers
and related profit and loss statements for the periods ended March 31, 1996 and
June 30, 1996 (the "Interim Financial Statements"). All such financial
statements referred to in the previous sentence (the "Financial Statements")
present fairly the financial position of the Sellers as of the dates thereof and
the results of its operations for the periods ended on the dates thereof.
Interim Financial Statements shall account for any recurring year-end
adjustments. The 1995 Financial Statements reflect reserves appropriate and
adequate for all known material liabilities and reasonably anticipated losses
and disclosure of all contingent liabilities. Each of the Sellers has disclosed
to SRC, the basis of accounting for affiliated transactions, and has made
available to SRC all worksheets, notes and schedules related to such financial
statements.
SECTION 5.05 Absence of Undisclosed Liabilities. Except as and to the
extent of the amounts reflected on or reserved against in the 1995 Balance
Sheets, or as otherwise disclosed in writing to SRC and Acquisition, there are
no liabilities or obligations of the Sellers of any nature whatsoever, due or to
become due, accrued, absolute, contingent or otherwise, except for current
liabilities incurred in the ordinary course of business and consistent with past
practice that, individually or in the aggregate, have had or would reasonably be
expected to have a Material Adverse Effect.
SECTION 5.06 Absence of Material Adverse Change. Since the date of the
1995 Balance Sheets, there has been no Material Adverse Change, and to the
knowledge of Sellers and Safran, there is no condition or development or
contingency of any kind existing or in prospect (other than (i) changes in the
ordinary course of business consistent with prior practice, (ii) activities of
competitors in the ordinary course of their respective businesses and (iii)
changes of a general economic and political nature) which, so far as
reasonably can be foreseen by the Sellers, would, individually or in the
aggregate, reasonably be expected to have any Material Adverse Change. None of
the Sellers are bound by any agreement, or subject to any charter or other
corporate restriction or any legal requirement, which has, or in the future
would reasonably be expected to have, a Material Adverse Effect, but the Sellers
and Safran make no prediction as
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to the profitability or loss that may be experienced by reason of future
performance or experience under any Material Agreement.
SECTION 5.07 Inventories. All of the Inventory of the Business
reflected on the 1995 Balance Sheets or thereafter acquired (and not
subsequently sold in the ordinary course of business) consist of items of a
quality and quantity usable or saleable in the ordinary course of business as
first quality items (except obsolete or discontinued Inventory or except to the
extent specifically reserved against), valued in a manner consistent with past
practice and, with respect to after-acquired inventory, valued at prices at
least equal to the lower of the cost thereof or fair market value. The
inventories and supplies of the Business are at normal and adequate levels for
the continuation of business in the ordinary course. All work-in-progress can be
completed for sale in the ordinary course of business in accordance with the
usual standards and practices of the Sellers.
SECTION 5.08 Taxes. All returns and reports relating to Taxes required
to be filed by the Sellers on or before the date hereof have been timely filed
with the appropriate Governmental Authorities in all jurisdictions in which such
returns and reports are required to be filed and all amounts shown as owing
thereon have been paid. All other Taxes (other than Taxes with respect to the
transactions contemplated hereby) which have become due and payable or have been
required to be collected by the Sellers and all interest and penalties thereon,
have been paid or collected, as the case may be, other than those being
contested in good faith by a Seller and which are not adverse to the financial
condition of the Business and have been reflected in the Financial Statements or
otherwise disclosed to SRC. All deposits required by law to be made by the
Sellers with respect to employees' withholding taxes have been duly made.
Acquisition shall have no liability for any Taxes imposed on or related to
income of the Business prior to the Effective Date. The Sellers have not
knowingly taken or failed to take any action which could create any tax lien on
any of their assets.
SECTION 5.09 Litigation. There is no Action pending or, to the
knowledge of the Sellers, threatened against, contemplated or affecting the
Sellers, the Business or the transactions contemplated hereby (whether or not a
Seller is a party or
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prospective party thereto) that if adversely determined would have a Material
Adverse Effect or that involves the validity of this Agreement or any Ancillary
Agreement. There are no outstanding Orders involving or affecting the Sellers,
the Business or the transactions contemplated hereby. There is no Action by the
Sellers pending or threatened against others with respect to or relating in any
way to the Business or the Seller's Assets.
SECTION 5.10 Certain Practices. Neither the Sellers nor, to Sellers'
knowledge, any of their officers has, directly or indirectly, given or agreed to
give any significant rebate, gift or similar benefit to any supplier, customer,
governmental employee or other person who was, is or may be in a position to
help or hinder the Seller or the Business (or assist in connection with any
actual or proposed transaction) which (i) could subject the Seller, SRC or
Acquisition to any damage or penalty in any civil, criminal or governmental
Action, or (ii) if not continued in the future, would result in a Material
Adverse Effect.
SECTION 5.11 Compliance with Law. Since January 1, 1991, each Seller
has complied in all material respects with all laws, ordinances, legal
requirements, rules, regulations and Orders applicable to it, its operations,
properties, assets, products and services and is not in violation of or in
default under any such law, ordinance, legal requirement, rule, regulation or
Order, which non-compliance, violation or default would reasonably be expected
to have a Material Adverse Effect.
SECTION 5.12 Licenses and Permits. The Disclosure Schedule lists all
types of material licenses, permits, pending applications, consents, approvals
and authorizations of or from any Governmental Authority, used in or otherwise
necessary for the operation or conduct of the Business or the ownership or use
of the S Corporation Assets and assets to be obtained from Opticians
(collectively, the "Permits"). No other Permits are required by the Sellers for
the conduct of the Business or the ownership or use of the S Corporation Assets
and assets to be obtained from Opticians. Each Seller has complied in all
material respects with all conditions and requirements imposed by the Permits. A
Seller owns or has the right to use the Permits in accordance with the terms
thereof, and each Permit is valid
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and in full force and effect, other than those Permits the loss or invalidity of
which would not have, individually or in the aggregate, a Material Adverse
Effect.
SECTION 5.13 Labor and Employee Relations. None of the Sellers is a
party to or bound by any collective bargaining agreement with any labor
organization, group or association covering any of its employees, and no Seller
has actual knowledge of any material attempt to organize any of such employees
by any person, unit or group seeking to act as their bargaining agent.
SECTION 5.14 Seller Employees. The Sellers have provided or made
available to Acquisition a list of the names of the employees of the Business
who will, to the Sellers' knowledge, be available for employment by Acquisition
as of the Effective Date (the "Seller Employees"), and a list of the names of
the Seller Optometrists (as defined in Section 9.01), in each case together with
1995 "W-2" wage information with respect to each such person, except the Seller
Optometrists are not employees of the Sellers and, thereby, have no W-2 wage
information. No Seller Employee or Seller Optometrist has a written employment
agreement with any of the Sellers which is not terminable on notice by such
Seller without cost or other liability to the Sellers. No Seller Employee or
Seller Optometrist has indicated to the Sellers or any Shareholder that he or
she intends to terminate his or her employment in connection with the Business
or seek a material change in his or her duties or status in connection with the
Business.
SECTION 5.15 Employee Benefits.
(a) Employee Benefit Plans. The Disclosure Schedule contains a complete
and correct list of each "employee benefit plan" (as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"))
covering any of the Sellers' present or former employee and each other material
plan or arrangement providing for severance benefits, deferred compensation,
fringe benefits, pension benefits, insurance benefits, profit sharing,
retirement benefits, stock purchases, stock options, incentives, bonuses,
vacations, disability benefits, hospitalization benefits, medical insurance,
life insurance and other employee benefit plans, programs or arrangements or any
similar type of benefit or compensation
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covering any present or former Seller employee (an "Employee Plan"), whether or
not such Employee Plan has been terminated. The Sellers have provided
Acquisition and SRC with complete and correct copies of the material documents
comprising each Employee Plan and (where applicable) the summary plan
description for each Employee Plan. Each Employee Plan which is subject to ERISA
conforms in all material respects to, and its operation and administration are
in all material respects in compliance with, all applicable requirements of
ERISA. There has been no prohibited transaction under Section 406 of ERISA or
Section 4975 of the Internal Revenue Code with respect to any Employee Plan.
There are no Actions pending (other than routine claims for benefits) or, to
Seller's knowledge, threatened against any Employee Plan or against the assets
of any Employee Plan.
(b) Pension Plans. Except as set forth on the Disclosure Schedule, the
Sellers have not maintained or contributed to, and have not been required to
maintain or contribute to, any Employee Plan which is intended to be qualified
as a pension plan under Section 401(a) of the Internal Revenue Code or which is
an "employee pension benefit plan" (as defined in Section 3(2) of ERISA).
(c) Welfare Plans. None of the Employee Plans is an employee welfare
benefit plan (as defined in Section 3(1) of ERISA), other than a Seller's
Section 125 health program.
SECTION 5.16 Tangible Properties. With respect to all tangible personal
property owned by or leased to the Sellers and belonging or relating to or used
or intended to be used in the Business (the "Tangible Personal Property"), (i)
the Sellers have good and merchantable title free and clear of all Encumbrances
(other than Permitted Encumbrances) to all Tangible Personal Property owned by
the Sellers and (ii) all leases, conditional sale contracts, franchises or
licenses relating to leased Tangible Personal Property are valid and in full
force and effect, and, to the actual knowledge of the Sellers, there is no
existing default or event of default or event which with notice or lapse of time
or both would constitute such a default under any of such instruments. The
Tangible Personal Property is adequate and usable for the purposes for which it
is currently used and has been properly maintained and repaired and each
material item of Tangible Personal Property, whether owned or
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leased, is in good operating condition and repair and has been properly
maintained, ordinary wear and tear excepted.
SECTION 5.17 Owned Premises. There is no real property owned by the
Sellers, and all buildings and other structures utilized by the Sellers are
located on the Leased Parcels, except the land and building at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇, which is fully owned by Opticians.
SECTION 5.18 Leased Parcels. The Disclosure Schedule sets forth a
summary of lease information (including the identity of the lessors of the
leased properties and lease terms and other information reasonably requested by
Acquisition or SRC in writing) with respect to each parcel or portion of real
property leased by the Sellers, respectively (the "Leased Parcels"). Each lease
covering a Leased Parcel (i) is in full force and effect (no event of default or
default by lessee, or to the knowledge of the Sellers, by Lessor, which, with
the lapse of time or notice or both, would entitle the lessor to terminate the
same exists under any such lease), (ii) conveys the leased real estate purported
to be conveyed thereunder and (iii) is enforceable by the Sellers. The Sellers
have the right to use the Leased Parcels in accordance with the terms of the
respective leases free and clear of all Encumbrances (other than Permitted
Encumbrances) or other interests or rights of third parties, except those which
do not have a Material Adverse Effect. All current uses by the respective
Sellers of the Leased Parcels to their knowledge conform in all material
respects to all applicable laws, ordinances, rules and regulations. There is no
violation by the Sellers and, to the Sellers' actual knowledge, by any other
Person, of any material covenant, restriction or other agreement contained in
any lease covering a Leased Parcel, except those which do not or would not have
a Material Adverse Effect.
SECTION 5.19 Environmental Matters. To the Sellers' knowledge, no event
has occurred or condition exists or operating practice is being employed that
could give rise to any Action or Order under any Environmental Law or
Environmental Permit. The Sellers are in compliance with all Environmental Laws,
except where the noncompliance therewith has not had and would not have a
Material Adverse Effect.
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SECTION 5.20 Material Contracts. (a) The Disclosure Schedule sets forth
a description of the following written contracts, agreements, commitments,
licenses and franchises to which any Seller is a party and that relate to the
Business (the "Material Contracts"):
(i) all contracts, agreements, invoices, purchase
orders and other arrangements, for the purchase or sale of merchandise,
supplies or other property or for the furnishing of services under the
terms of which the Sellers in the aggregate (A) are likely to pay or
receive more than $50,000 during the calendar year ended December 31,
1996 or (B) are likely to pay or receive more than $50,000 over the
remaining term of the contract;
(ii) all broker, distributor, dealer, manufacturer's
representative, franchise, agency, sales promotion, market research,
marketing consulting and advertising contracts and agreements to which
a Seller is a party and which involve payments in the aggregate in
excess of $50,000;
(iii) all management contracts or contracts with
independent contractors or consultants (or similar arrangements) that
are not cancelable without penalty or further payment within 30
calendar days of notice of such cancellation and which involve payments
in the aggregate in excess of $50,000;
(iv) all material contracts and agreements with any
Governmental Authority;
(v) all contracts and agreements with optometrists;
(vi) all contracts and agreements that limit the ability
of the Sellers to compete in any line of business or with any Person
or in any geographic area or during any period of time;
(vii) all contracts, agreements and other arrangements
between or among the Sellers and any officer,
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director or Shareholder (or member of the family of any officer,
director or Shareholder);
(viii) all contracts, agreements and other arrangements
under any Employee Plan; and
(ix) all other contracts, agreements and other
arrangements, whether or not made in the ordinary course of business,
the absence of which would result in a Material Adverse Effect.
(b) Each Material Contract is valid and binding on the respective
parties thereto and is in full force and effect as to the Sellers and, to the
Sellers' actual knowledge, as to the other party or parties thereto.
(c) Each Material Contract is freely and fully assignable to
Acquisition without penalty or other adverse consequences and upon consummation
of the transactions contemplated by this Agreement, shall continue in full force
and effect without penalty or other adverse consequence and unaffected by such
transactions.
(d) None of the Sellers is in material breach or default under the
terms of any Material Contract. To the actual knowledge of the Sellers, no other
party to any Material Contract is in material breach or default thereunder.
SECTION 5.21 Intellectual Property. (a) The Disclosure Schedule sets
forth a list of all trademarks, trade names, service marks, logos and copyrights
owned, controlled, licensed or used by the Sellers and related to or used or
intended to be used in the Business. The Sellers have delivered or made
available to SRC and Acquisition true and complete copies (or descriptions) of
all of such Intellectual Property rights. All trademarks listed on the
Disclosure Schedule are in full force, the Sellers are aware of no third party
claim affecting the use or ownership thereof and all applications listed therein
as pending have been prosecuted in good faith as required by law and are in good
standing. The Sellers own or possesses adequate licenses or other rights to use
all Intellectual Property known to the Sellers to be necessary to conduct the
Business as conducted and as proposed to be conducted, except where the
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failure to do so would not have a Material Adverse Effect, and all such rights
will be duly and validly transferred to Acquisition pursuant to the terms of
this Agreement, free of all Encumbrances, except where the failure to make such
transfer would not have a Material Adverse Effect.
(b) All of the Sellers' rights in the Intellectual Property rights,
licenses, contracts and other agreements listed or described on the Disclosure
Schedule are in full force and effect and the Sellers are aware of no third
party claim affecting the use thereof. The Sellers are not in default under any
such license, contract or other agreement and, to the actual knowledge of the
Sellers, there are no defaults by any other party to any such license, contract
or other agreement. The Sellers have not granted any person or entity any right
to use any of the Intellectual Property used or intended to be used in or
related to the Business for any purpose.
(c) None of the Sellers' rights in the Intellectual Property listed or
described on the Disclosure Schedule is involved in any interference or
opposition proceeding, and there has been no written notice received by the
Sellers that any such proceeding will hereafter be commenced. The Sellers have
used all commercially reasonable efforts to protect their Intellectual Property
used or intended to be used in or related to the Business against infringement
by others and to preserve its trade secrets and confidential or proprietary
information and, to the knowledge of the Sellers, none of such Intellectual
Property is being infringed by others. To the knowledge of the Sellers, there
has been no infringement by any of the Sellers or their respective Subsidiaries
with respect to any Intellectual Property rights of others which has resulted in
a claim against any of the Sellers or any of their respective Subsidiaries.
SECTION 5.22 Significant Customers and Suppliers. Set forth on the
Disclosure Schedule is a list of the ten largest customers and ten largest
suppliers of the Business for the most recent twelve-month period, together with
the amount of sales or purchases attributable to such customers or suppliers
expressed in dollars. No customer or supplier which was significant to the
Business during the past three years, has terminated, materially reduced or
threatened to terminate or materially reduce its
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purchases from or provision of products or services to the Business, as the case
may be.
SECTION 5.23 Transactions With Affiliates. No director, officer or
Shareholder, or Affiliate of any such person, to the Sellers' knowledge, (i) has
any direct or indirect financial interest in any competitor, supplier or
customer of the Sellers, (ii) owns, directly or indirectly, in whole or in part,
any material tangible or intangible property that any Seller uses or has used in
the conduct of the Business. The Sellers do not have any liability or obligation
to any director, officer or Shareholder, or Affiliate of any such person.
SECTION 5.24 Insurance. Subject to normal deductibles and
self-insurance, each Seller is, and will be through the Effective Date,
adequately insured with responsible insurers against risks normally insured
against by companies in similar lines of business under similar circumstances.
The Sellers (i) have not failed to give any notice or present any claim under
any such policy or binder in due and timely fashion, (ii) have not received
notice of cancellation or non-renewal of any such policy or binder, (iii) are
not aware of any threatened or proposed cancellation or non-renewal of any such
policy or binder, (iv) have not received notice of any insurance premiums which
will be materially increased in the future, and (v) are not aware of any
insurance premiums which will be materially increased in the future. There are
no outstanding claims under any such policy which have gone unpaid for more than
45 days, or as to which the insurer has disclaimed liability.
SECTION 5.25 Broker's Fee. No Person has or will have, as a result of
the execution, delivery and performance by the Sellers of this Agreement or the
Ancillary Agreements, any right, interest or claim against or upon Acquisition,
SRC or any other Person for any commission, fee or other compensation as finder
or broker or in any similar capacity.
SECTION 5.26 Capitalization. All of the issued and outstanding capital
stock of the Sellers is owned by the Shareholders.
SECTION 5.27 Disclosure. This Agreement, including, without limitation,
the schedules and exhibits hereto and the
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certificates or other instruments or documents made or delivered in connection
herewith or therewith, taken as a whole, to the Sellers' knowledge, do not
contain any untrue statement of a material fact or omit any material fact
necessary to make the statements contained herein or therein not misleading in
view of the circumstances under which they were made.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF ACQUISITION AND SRC
Each of Acquisition and SRC hereby represents and warrants to the
Sellers and the Shareholders as follows, except as otherwise set forth in the
schedules to this Agreement:
SECTION 6.01 Organization and Qualification. Acquisition is duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware. Each of SRC and its other Subsidiaries is duly incorporated,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation, and is duly licensed or qualified to transact business as a
foreign corporation and is in good standing in each jurisdiction in which the
ownership or leasing of its assets or properties requires it to be so licensed
or qualified, except where the failure to be so licensed or qualified would not
individually, or in the aggregate, have a material adverse effect on the
business or operations of SRC and its subsidiaries, taken as a whole.
SECTION 6.02 Corporate Power and Authority; Validity. Each of
Acquisition and SRC has the corporate power and authority to (i) own and hold
its properties and (ii) execute, deliver and perform this Agreement and the
other Transaction Documents to which it is a party. All corporate (including
stockholder, if applicable) action necessary for the execution, delivery and
performance by Acquisition and SRC of this Agreement and such other Transaction
Documents and the consummation by Acquisition and SRC of the transactions
contemplated hereby and thereby has been duly taken, and any applicable
preemptive rights with respect to issuance of the SRC Shares have been waived.
This Agreement has been, and each of the other Transaction Documents when
executed and delivered by Acquisition or SRC will be, duly executed and
delivered by such party, as the case may be. This
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Agreement constitutes, and each such Transaction Documents when duly executed
and delivered by such party will be, the valid and binding obligation of such
party, enforceable against such party in accordance with its, respective terms,
except as enforceability may be subject to the application of general equitable
principles and to bankruptcy, insolvency, moratorium or other similar laws
affecting creditors' rights.
SECTION 6.03 No Conflict. Neither the execution and delivery by
Acquisition or SRC of this Agreement and the other Transaction Documents to
which it is to be a party, the consummation by such parties of the transactions
contemplated hereby or thereby, nor the performance by such parties of this
Agreement and such other Transaction Documents in compliance with the terms and
conditions hereof and thereof, will (i) violate, conflict with or result in any
breach of its Certificate of Incorporation or By-laws, (ii) require by or on
behalf of SRC or Acquisition any consent, approval, authorization or permit of,
or filing with or notification to, any Governmental Authority, (iii) violate,
conflict with or result in a breach, default or termination (or give rise to any
right of termination, cancellation or acceleration of the maturity of any
payment date of any of the obligations of SRC or Acquisition or increase or
otherwise affect the obligations of SRC or Acquisition) under any law, rule,
regulation, governmental permit, license or any Order or any of the terms,
conditions or provisions of any mortgage, indenture, note, license, agreement or
other instrument or obligation to which Acquisition or SRC is a party or by
which SRC or Acquisition or any of their respective assets are bound or affected
or (iv) result in the creation of any Encumbrance upon the assets of Acquisition
or SRC.
SECTION 6.04 SRC Capitalization. The authorized capital stock of SRC
consists on the date hereof, and will on the Effective Date consist, of
20,000,000 shares of SRC Common Stock and 5,000,000 shares of undesignated
preferred stock, par value $.01 per share. As of September 15, 1996, 8,121,715
shares of SRC Common Stock are issued and outstanding, and all of such shares
are duly authorized, validly issued, fully paid and non-assessable. The shares
of SRC Common Stock to be issued to Opticians on the Effective Date will be duly
authorized, validly issued, fully paid and non-assessable.
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SECTION 6.05 The Note. The Note, when duly executed and delivered, will
be the valid and binding obligation of Acquisition, enforceable against
Acquisition in accordance with its terms, except as enforceability may be
subject to the application of general equitable principles and to bankruptcy,
insolvency, moratorium or other similar laws affecting creditors' rights.
SECTION 6.06 Financial Statements of SRC. The financial statements of
SRC and the related notes contained in its Report on Form 10-K for the fiscal
year ended December 31, 1995 and its Reports on 10-Q for the quarters ended
March 31, 1996 and June 30, 1996 present fairly the financial position of SRC as
of the dates indicated, and the results of its operations and cash flows for the
periods therein specified. Such financial statements (including the related
notes) have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods therein
specified, except as disclosed in such Report.
SECTION 6.07 Broker's Fees. No Person has or will have, as the result
of the execution, delivery and performance by SRC or Acquisition of this
Agreement or the Ancillary Agreements, any right, interest or claim against or
upon the Sellers or any other Person for any commission, fee or other
compensation as finder, broker or in any similar capacity.
SECTION 6.08 The Shares. Neither SRC nor Acquisition nor any other
Person acting on behalf of either of them has sold any of the SRC Shares or
other securities of SRC to, or offered any thereof for sale to, or solicited any
offers to purchase any thereof from, or otherwise approached or negotiated (nor
will SRC, Acquisition or any such person sell, offer, solicit or otherwise
approach or negotiate) in respect thereof or in such manner, as would result in
bringing the SRC Shares, or any part thereof, within the provisions of Section 5
of the Securities Act. The sale and transfer of the SRC Shares to Opticians is
exempt from registration under the Securities Act pursuant to Section 4(2). Such
sale and transfer are also exempt from registration and qualification under
applicable state securities and blue sky laws.
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SECTION 6.09 Absence of Material Adverse Change. Since June 30, 1996,
there has been no Material Adverse Acquisition Change, and there is no condition
or development or contingency of any kind existing or in prospect (other than
(i) changes in the ordinary course of business consistent with prior practice,
(ii) activities of competitors in the ordinary course of their respective
businesses and (iii) changes of a general economic and political nature) which,
so far as reasonably can be foreseen by the SRC and Acquisition, would,
individually or in the aggregate, reasonably be expected to have any Material
Adverse Acquisition Change. Neither SRC nor Acquisition are bound by any
agreement, or subject to any charter or other corporate restriction or any legal
requirement, which has, or in the future would reasonably be expected to have, a
Material Adverse Acquisition Effect, but SRC and Acquisition make no prediction
as to the profitability or loss that may be experienced by reason of future
performance or experience under any material agreement.
SECTION 6.10 Litigation. There is no Action pending or, to the
knowledge of the SRC and Acquisition, threatened against, contemplated or
affecting SRC, Acquisition or the SRC Business or the transactions contemplated
hereby (whether or not SRC or Acquisition is a party or prospective party
thereto) that if adversely determined would have a Material Adverse Acquisition
Effect or that involves the validity of this Agreement or any Ancillary
Agreement. There are no outstanding Orders involving or affecting Acquisition,
SRC, the SRC Business or the transactions contemplated hereby.
SECTION 6.11 Compliance with Law. SRC and Acquisition have complied in
all material respects with all laws, ordinances, legal requirements, rules,
regulations and Orders applicable to them, their operations, properties, assets,
products and services and are not in violation of or in default under any such
law, ordinance, legal requirement, rule, regulation or Order, which
non-compliance, violation or default would reasonably be expected to have a
Material Adverse Acquisition Effect.
SECTION 6.12 Licenses and Permits. SRC and its subsidiaries have
adequate rights to all material licenses, permits, pending applications,
consents, approvals and authorizations of or from any Governmental Authority,
used in or otherwise necessary for the operation or conduct of the SRC
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Business (collectively, the "SRC Permits"). No other SRC Permits are required
for the conduct of the SRC Business. SRC has complied in all material respects
with all conditions and requirements imposed by the SRC Permits. SRC owns or has
the right to use the SRC Permits in accordance with the terms thereof, and each
SRC Permit is valid and in full force and effect, other than those SRC Permits
the loss or invalidity of which would not have, individually or in the
aggregate, a Material Adverse Acquisition Effect.
SECTION 6.13 Environmental Matters. To the knowledge of SRC and
Acquisition, no event has occurred or condition exists or operating practice is
being employed that could give rise to any Action or Order under any
Environmental Law or Environmental Permit. SRC and Acquisition are in compliance
with all Environmental Laws, except where the noncompliance therewith has not
had and would not have a Material Adverse Acquisition Effect.
SECTION 6.14 Intellectual Property. None of the rights of SRC and
Acquisition in Intellectual Property is involved in any interference or
opposition proceeding, and there has been no written notice received by SRC or
Acquisition that any such proceeding will hereafter be commenced. SRC and
Acquisition have used all commercially reasonable efforts to protect their
Intellectual Property used or intended to be used in or related to the SRC
Business against infringement by others and to preserve its trade secrets and
confidential or proprietary information and, to the knowledge of SRC and
Acquisition, none of such Intellectual Property is being infringed by others. To
the knowledge of SRC and Acquisition, there has been no infringement by SRC or
Acquisition or their respective Subsidiaries with respect to any Intellectual
Property rights of others which has resulted in a claim against SRC or
Acquisition or any of their respective Subsidiaries.
SECTION 6.15 Insurance. Subject to normal deductibles and
self-insurance, SRC is, and will be through the Effective Date, adequately
insured with responsible insurers against risks normally insured against by
companies in similar lines of business under similar circumstances. SRC (i) has
not failed to give any notice or present any claim under any such policy or
binder in due and timely fashion, (ii) has not received notice of cancellation
or non-renewal of any such policy or binder, (iii)
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is not aware of any threatened or proposed cancellation or non-renewal of any
such policy or binder, (iv) has not received notice of any insurance premiums
which will be materially increased in the future, and (v) is not aware of any
insurance premiums which will be materially increased in the future. There are
no outstanding claims under any such policy which have gone unpaid for more than
45 days, or as to which the insurer has disclaimed liability.
SECTION 6.16 SRC SEC Documents. SRC has heretofore made available to
Sellers and Shareholders true, correct and complete copies of all forms,
reports, schedules, statements, and other documents filed by it since December
31, 1995, under the Securities Exchange Act of 1934, as amended (the "Exchange
Act") or the Securities Act of 1933, as amended (the "Securities Act") (such
documents, as amended since the time of filing, collectively, the "Sight
Resource SEC Documents"). The Sight Resource SEC Documents, including, without
limitation, any financial statements or schedules included therein, at the time
filed (and, in the case of registration statements and proxy statements, on the
dates of effectiveness and the dates of mailing, respectively) complied as to
form in all materials respects with the applicable requirements of the Exchange
Act and the Securities Act, as the case may be, and the applicable rules and
regulations of the SEC thereunder. The financial statements of Sight Resource
included in the Sight Resource SEC Documents at the time filed (and, in the case
of registration statements and proxy statements, on the date of effectiveness
and the date of mailing, respectively) complied as to form in all materials
respects with applicable accounting requirements and with the published rules
and regulations of the SEC with respect thereto.
ARTICLE VII
COVENANTS OF THE SELLERS AND THE SHAREHOLDERS
In addition to the covenants contained in other sections of this
Agreement, each of the Sellers and Shareholders hereby covenant and agree as
follows:
SECTION 7.01 Cooperation. The Sellers and each of the Shareholders
shall use its reasonable best efforts in good faith
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to perform and fulfill all conditions and obligations to be fulfilled or
performed by it hereunder, to the end that the transactions contemplated hereby
will be fully and timely consummated.
SECTION 7.02 Conduct of the Business. Until the Effective Date, the
Sellers and the Shareholders shall operate the Business only in the ordinary
course consistent with past practice, except with respect to the management of
cash and accounts payable in order to liquidate any accruals owed to the
Shareholders prior to the Effective Date. Without limiting the generality of the
foregoing, until the Effective Date, no Seller nor any Shareholder shall,
without the prior written consent of SRC, engage in or omit to knowingly engage
in any transaction or knowingly take or omit to take any action which would have
a Material Adverse Effect.
SECTION 7.03 Access. The Sellers shall, upon reasonable request and
notice and at reasonable times, give SRC and Acquisition, their attorneys,
accountants and other authorized representatives access to the assets and
properties of the Sellers (including all books of account, general, financial,
tax and personnel records, invoices, shipping records, supplier lists,
correspondence and other documents, records and files and all computer software
programs and files), for the reasonable and legitimate due diligence inquiries
of SRC and Acquisition.
ARTICLE VIII
COVENANTS OF SRC AND ACQUISITION
SECTION 8.01 Cooperation. SRC and Acquisition shall each use its
reasonable best efforts in good faith to perform and fulfill all conditions and
obligations to be fulfilled or performed by it hereunder, to the end that the
transactions contemplated hereby will be fully and timely consummated.
SECTION 8.02 Access. After the Effective Date, Acquisition shall, upon
reasonable request and notice and at reasonable times, give the Sellers and each
Shareholder, their attorneys, accountants and other authorized representatives
access to the assets and properties of Acquisition (including all
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books of account, general, financial, tax and personnel records, invoices,
shipping records, supplier lists, correspondence and other documents, records
and files and all computer software programs and files), for the reasonable and
legitimate tax, business or financial purposes of the Sellers or such
Shareholder.
SECTION 8.03 Employment; Benefits. On the Effective Date, Acquisition
shall offer employment to all persons who were employees of the Sellers on
substantially similar terms and conditions (including health and fringe
benefits) as were in effect immediately prior to the Effective Date, provided
that Acquisition shall have no obligation to continue the employment of any such
person or maintain such terms and conditions. Should Acquisition determine to
cease providing such benefits to the Continuing Employees (as defined below),
then Acquisition will provide the Continuing Employees (who are such at that
time), so long as any such Continuing Employee is employed by Acquisition, with
a program of employee benefits comparable to the employee benefits provided to
similarly situated employees of other Subsidiaries of SRC. With respect to
medical benefits provided to the Continuing Employees, SRC and Acquisition agree
to waive all waiting periods and pre-existing condition exclusions, and to give
the Continuing Employees credit for any copayments and deductibles paid or
incurred as if such copayments and deductibles had been paid or incurred under
SRC and its Subsidiaries' medical programs. In addition, SRC and Acquisition
will give each Continuing Employee credit for service with Sellers for purposes
of eligibility and, if applicable, vesting under SRC and its Subsidiaries'
employee benefit programs including, without limitation, programs or policies
for vacation pay, sick pay and severance benefits. For purposes of this Section
8.03, the term "Continuing Employees" means each employee of Sellers who, in
connection with Acquisition's offer of employment contemplated by this Section
8.03, becomes employed or is hired by Acquisition.
SECTION 8.04 Financial Reporting. SRC shall cause all financial
statements published by it, which refer to the transactions contemplated by this
Agreement, to contain a note stating the actual Effective Date of this Agreement
as well as the "as of July 1, 1996" date.
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SECTION 8.05 Employee Benefit Plan. On or prior to the second
anniversary of the Effective Date, SRC shall cause to become effective under the
Securities Act a registration statement on Form S-8 (or any successor form
thereto), which registration statement shall cover the issuance to, and
subsequent resale by:
(1) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ of Three Hundred Sixty Thousand Dollars ($360,000)
worth of shares of SRC Common Stock, payable by the issuance of a
number of shares of SRC Common Stock (rounded to the nearest whole
share) calculated by dividing (A) $360,000 by (B) the average of the
closing sale price of SRC Common Stock as reported by NASDAQ for the
twenty (20) consecutive trading days ending two business days prior to
the Effective Date; and
(2) ▇▇▇▇▇ ▇▇▇▇▇▇ of Hundred Seventy Two Thousand Dollars ($72,000) worth of
shares of SRC Common Stock, payable by the issuance of a number of
shares of SRC Common Stock (rounded to the nearest whole share)
calculated by dividing (A) $72,000 by (B) the average of the closing
sale price of SRC Common Stock as reported by NASDAQ for the twenty
(20) consecutive trading days ending two business days prior to the
Effective Date.
It is the intent of the parties that SRC's obligation to issue such
Shares of SRC Common Stock to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇ shall constitute
an "employee benefit plan" as such term is defined in Rule 405 under the
Securities Act. In addition, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇ shall continue to
be employed by Acquisition after the Effective Date, subject to Acquisition's
rights under Section 8.03 and under the Employment Agreements.
On or about the date of the effectiveness of said registration
statement, SRC shall issue said shares of SRC Common Stock as aforesaid.
SECTION 8.06 Cash and Cash Equivalents Certificate. SRC shall provide
Safran, within fifteen (15) business days after the end of each month during
which the Note is outstanding a certificate of cash and cash equivalents setting
forth and certifying to the aggregate balance of SRC cash and cash
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equivalents held by SRC at the end of each such month, signed by the President,
any Vice President or the Treasurer of SRC.
SECTION 8.07. Conduct of Business. So long as the Note is outstanding,
Acquisition shall, and SRC shall cause Acquisition to, continue to operate the
Business as a going concern in substantially the same areas and fields of
business as in effect immediately prior to the Effective Date (it being
understood that neither the marketing of photorefractive keratectomy nor the
opening of new optical stores shall be considered a breach of this Section
8.07).
SECTION 8.08 Certain Dividends or Distributions. So long as the Note is
outstanding, Acquisition shall not, and SRC shall cause Acquisition not to, (i)
declare or pay any cash dividend or other distribution payable in cash, (ii)
redeem, repurchase or otherwise acquire for value any capital stock of
Acquisition or (iii) loan or advance any amount of cash to SRC or any of its
other Subsidiaries, (each of the dispositions referred to in Section 8.08 (i),
Section 8.08 (ii) and Section 8.08 (iii) above shall be referred to as a
"Distribution"), UNLESS:
(a) Safran consents to the Distribution;
(b) the amount of the Distribution, together with all (if any) other
Distributions after the Effective Date, is less than or equal to the
aggregate amounts that SRC (or any of its Subsidiaries other than
Acquisition) has loaned or contributed to Acquisition after the
Effective Date, and SRC gives Safran prior or prompt subsequent notice
of such Distribution; or
(c) SRC provides Safran with five (5) business days prior notice of
such Distribution together with a certificate of the chief financial
officer or president of SRC dated as of the date such notice is given
(the "Reserve Certificate") which represents that SRC has uncommitted
cash reserves (after giving effect to such Distribution) in an amount
equal to 110% of the "Remaining Rent Obligation." The Remaining Rent
Obligation shall be determined by multiplying the average monthly
rent obligations of Optical (contingent or otherwise) pursuant to the
leases listed on Schedule 9.03 hereto which remain then in effect (the
"Scheduled Leases") during the twelve (12) month period immediately
preceding the date of the Reserve Certificate by the remaining number
of months that Optical is obligated under the Scheduled Leases.
ARTICLE IX
CERTAIN POST-CLOSING COVENANTS
In addition to the covenants contained in other sections of this
Agreement, each of the Sellers and Shareholders hereby covenant and agree as
follows:
SECTION 9.01 Organization of PC. If requested by SRC, each of the
Sellers and each of the Shareholders shall, so long as Safran is serving as a
consultant to Acquisition, cooperate with and perform all necessary acts
reasonably requested by SRC and/or Acquisition (or their designees) to
facilitate the organization of a professional services corporation (the "PC") to
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employ the optometrists providing optometric services to those Persons who are
customers and potential customers of the Sellers as of the Effective Date (the
"Seller Optometrists"). Without limiting the foregoing, the Sellers and each of
the Shareholders shall, to the extent requested by Acquisition or SRC, use
reasonable efforts to assist with (i) the formation of the PC, (ii) the
procurement of group provider number(s) for the PC, (iii) the procurement,
execution and delivery of employment agreements between each of the Seller
Optometrists and the PC in form and substance satisfactory to Acquisition and
SRC, which agreements shall provide for, among other matters, (A) the terms and
conditions of each Seller Optometrist's employment, (B) appropriate
confidentiality and noncompetition provisions, (C) the transfer by each Seller
Optometrist to the PC of such Seller Optometrist's patient records and (D) the
assignment of fees and other amounts due or to become due to each such Seller
Optometrist from any provider/payor contract or similar agreement, all in
compliance with applicable laws and regulations.
SECTION 9.02 Employee Matters. (a) As between the Sellers and
Acquisition, Acquisition shall retain responsibility for and continue to pay all
medical, dental, life insurance, disability, supplemental unemployment, worker's
compensation and other welfare plan expenses and benefits for each person who is
or was an employee of a Seller on or prior to the Effective Date (including the
Seller Employees and the Seller Optometrists), with respect to claims incurred
by such employee or his or her covered dependents prior to the Effective Date.
As between the Sellers and Acquisition, Acquisition shall be responsible for and
shall pay all such expenses and benefits with respect to claims incurred by any
Seller Employee or his or her covered dependents on or after the Effective Date.
For purposes of this subsection (a), a medical, dental or similar claim is
deemed incurred when the services that are the subject of the claim are
performed and any other claim is deemed incurred when the event occurs which
entitles the employee or his or her dependents to benefits.
(b) No provision of this Section 9.02 shall create any third-party
beneficiary rights in any person or organization, including, without limitation,
employees or former employees (including any beneficiary or dependent thereof)
of the Sellers or any of their Affiliates, and trustees, administrators,
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participants or beneficiaries of any employee benefit plan or arrangement,
including the currently existing plans of the Sellers, and no provision of this
Section 9.02 shall create such third-party beneficiary rights in any such person
or organization in respect of any benefits that may be provided, directly or
indirectly, under any such employee benefit plan or arrangement.
SECTION 9.03 Certain Consents. Following the Effective Date and at the
expense of Acquisition, the Sellers and the Shareholders shall, upon the request
of Acquisition, use their reasonable best efforts to obtain any consents to
assignment of third parties ("Third Parties") required by the relevant contracts
(including all leases, sub-leases and agreements listed on Schedule 9.03) which
were not obtained on or prior to the Effective Date. As between the Sellers and
the Third Parties, the assignment of the leases, sub-leases and agreements shall
be deemed to occur when such consents have been obtained, and as between the
Seller and Acquisition, the assignment of such leases, sub-leases and agreements
shall be deemed to have occurred as of the Effective Date and shall not be
deemed a breach of such leases, sub-leases and agreements by the Seller.
SECTION 9.04 Further Assurances. At any time and from time to time
after the Effective Date, at the reasonable request of SRC or Acquisition, but
without further cost to the Sellers, the Sellers and the Shareholders shall
execute and deliver such other instruments of sale, transfer, conveyance,
assignment and confirmation as may be reasonably requested in order to more
effectively transfer, convey and assign to Acquisition and to confirm
Acquisition's title to the S Corporation Assets and assets obtained from
Opticians by means of the Merger.
SECTION 9.05 Name Change. At the request of SRC or Acquisition, but
without further cost to the Sellers, the Sellers shall change their corporate
names and shall execute and deliver such other instruments or documents, and
take such further action, as may be reasonably requested in order that
Acquisition may lawfully register and file with, or obtain authorization from,
any Governmental Authority to use the names "▇.▇. ▇▇▇▇▇ Optical Co., Inc.",
"▇▇▇▇▇ Optical Laboratories, Inc." and "▇.▇. ▇▇▇▇▇ Opticians" and any corporate
or trade name similar thereto or any derivative thereof.
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SECTION 9.06 Survival of Covenants. All covenants contained in this
Agreement or in any Transaction Document (regardless of whether any such
covenant is set forth under a heading captioned "Covenants" or words of similar
import) shall survive the Closing.
ARTICLE X
CONDITIONS TO CLOSING
SECTION 10.01 SRC's and Acquisition's Obligation to Close. The
obligation of SRC and Acquisition to deliver the Transaction Documents to which
it is a party and to consummate the transactions contemplated hereby and thereby
is subject to the satisfaction, on or before the Effective Date, of the
following conditions (each of which may be waived by SRC and Acquisition in
their sole discretion):
(a) No Material Adverse Economic Event. There shall not have occurred
(i) any general suspension of trading in, or limitation on prices for, or other
extraordinary event affecting securities on NASDAQ, (ii) a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States, (iii) any material limitation (whether or not mandatory) by any
Governmental Authority on, or any other event which might affect the extension
of credit by, lending institutions generally or (iv) in the case of any of the
foregoing existing on the Effective Date, a material acceleration or worsening
thereof.
(b) Representations and Warranties to be True and Correct. All of the
representations and warranties of the Sellers and the Shareholders contained in
this Agreement or any Ancillary Agreement shall be true, correct and complete in
all material respects on and as of the date hereof and on and as of the
Effective Date, as if made on and as of the Effective Date (except to the extent
any such representation or warranty speaks as of a different date, in which case
such representation or warranty shall still be true, correct and complete as of
such different date). On the Effective Date, the Sellers and the Shareholders,
as appropriate, shall have executed and delivered to SRC a certificate, in form
and substance satisfactory to SRC and its counsel, to such effect.
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(d) Performance. The Sellers and the Shareholders shall have each
performed and complied with all covenants and agreements contained herein
required to be performed or complied with by it, him or her, as the case may be,
prior to or at the Effective Date. On the Effective Date, the Sellers and the
Shareholders, as appropriate, shall have each executed and delivered to SRC a
certificate, in form and substance satisfactory to SRC and its counsel, to such
effect and to the further effect that all of the conditions set forth in this
Section 10.01 have been satisfied.
(e) Secretary' Certificate. SRC shall have received a certificate of
the Secretary or an Assistant Secretary of each of the Sellers, dated as of the
Effective Date, certifying as to (i) the attached true and correct copies of the
charter and by-laws of the Sellers, (ii) the incumbency of the officers
executing the Transaction Documents on behalf of the Sellers and (iii) the
attached true and correct copies of resolutions of the Sellers authorizing and
approving the execution, delivery and performance of this Agreement and the
Ancillary Agreements and the transactions contemplated hereby and thereby, and
the acts of the officers of the Sellers in carrying out the terms and provisions
hereof.
(f) No Material Adverse Change. No Material Adverse Change affecting
the Sellers taken together shall have occurred since the date hereof.
(g) Opinion of Counsel. SRC shall have received the opinion of Benesch,
Friedlander, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel to the Sellers and the Shareholders, in
substantially the form of Exhibit E attached hereto.
(h) Ancillary Agreements. SRC shall have received executed counterparts
of each of the Ancillary Agreements substantially in the form attached hereto.
(i) Approval of SRC, Acquisition and Their Counsel. All actions,
proceedings, consents, instruments and documents required to be delivered by, or
at the behest or direction of, the Sellers and the Shareholders hereunder or
incident to their respective performance hereunder, and all other related
matters,
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shall be reasonably satisfactory as to form and substance to SRC, Acquisition
and its counsel.
SECTION 10.02 The Sellers' and Shareholders' Obligation to Close. The
obligation of the Sellers to transfer the S Corporation Assets and assets of
Opticians to Acquisition, the obligation of the Sellers and the Shareholders to
deliver the Transaction Documents to which each of them is a party and to
consummate the transactions contemplated hereby and thereby is subject to the
satisfaction, on or before the Effective Date, of the following conditions (each
of which may be waived by the Sellers and the Shareholders in their sole
discretion):
(a) Representations and Warranties to be True and Correct. The
representations and warranties of SRC and Acquisition contained in this
Agreement or any Ancillary Agreement shall be true, complete and correct in all
material respects on and as of the date hereof and on and as of the Effective
Date, as if made on and as of such date (except to the extent any such
representation or warranty speaks as of a different date, in which case such
representation or warranty shall still be true, correct and complete as of such
different date). On the Effective Date, SRC and Acquisition shall have executed
and delivered to the Sellers a certificate, in form and substance satisfactory
to the Sellers and their counsel, to such effect.
(b) Performance. Acquisition and SRC each shall have performed and
complied with all covenants and agreements contained herein required to be
performed or complied with by each of them prior to or at the Effective Date,
and Acquisition and SRC shall have each executed and delivered a certificate to
the Sellers, in form and substance satisfactory to the Sellers and its counsel,
to such effect.
(c) Secretary's Certificate. The Sellers shall have received a
certificate of the Secretary or an Assistant Secretary of Acquisition and SRC,
dated as of the Effective Date, certifying as to (i) the attached true and
correct copies of the charter and by-laws of Acquisition and SRC, (ii) the
incumbency of the officers executing the Transaction Documents on behalf of
Acquisition and SRC and (iii) the attached true and correct copies of
resolutions of Acquisition and SRC authorizing and approving the execution,
delivery and performance of this
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Agreement and the Ancillary Agreements and the transactions contemplated hereby
and thereby, and the acts of the officers of Acquisition and SRC in carrying out
the terms and provisions hereof.
(d) Opinion of Counsel. The Sellers and the Shareholders shall have
received the opinion of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.,
counsel to SRC and Acquisition, in substantially the form of Exhibit G attached
hereto.
(e) Ancillary Agreements. The Sellers and the Shareholders and other
persons mentioned in Section 1.01, "Employment Agreements" shall have received
executed counterparts of each of the Ancillary Agreements to which they are to
become parties in substantially the form attached hereto.
(f) Approval of the Sellers, the Shareholders and Their Counsel. All
actions, proceedings, consents, instruments and documents required to be
delivered by, or at the behest or direction of, SRC or Acquisition hereunder or
incident to their respective performance hereunder, and all other related
matters, shall be reasonably satisfactory as to form and substance to the
Sellers, the Shareholders and their counsel.
ARTICLE XI
INDEMNIFICATION
SECTION 11.01 Survival. All representations and warranties in this
Agreement, or in any instrument or document furnished in connection with this
Agreement or the transactions contemplated hereby (regardless of whether any
such representation or warranty is set forth under a heading captioned
"Representations and Warranties", or words of similar import, or whether
contained within in any covenant or other provision this Agreement or any such
instrument or document), shall survive the Closing and any investigation at any
time made by or on behalf of any party for a period of eighteen (18) months
following the Effective Date. All such representations and warranties shall
expire eighteen months after the Effective Date (the "Expiration Date"), except
that (i) claims, if any, asserted in writing on or prior to the Expiration
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Date identified as a claim for indemnification pursuant to this Article XI shall
survive until finally resolved and satisfied in full, and (ii) claims, if any,
that (A) are based upon knowing fraud by any party hereto or (B) assert
liability for any Taxes imposed on or with respect to income shall survive for
the full period of the applicable statute of limitations, and until finally
resolved and satisfied in full if asserted on or prior to such date.
SECTION 11.02 Indemnification by the Sellers and the Shareholders. Each
of the Sellers and each Shareholder shall, jointly and severally, indemnify,
defend, and hold harmless SRC and Acquisition and their Affiliates and the
respective officers, directors and employees of the foregoing, and their
successors and permitted assigns from, against and with respect to any claim,
liability, obligation, loss, damage, assessment, judgment, cost and expense
(including, without limitation, reasonable attorneys', consultants' and
accountants' fees and costs and expenses reasonably incurred in investigating,
preparing, defending against or prosecuting any Action) of any kind or character
(collectively, "Damages"), arising out of or in any manner incident, relating or
attributable to (except that ▇. ▇▇▇▇▇▇ will have liability under this Article XI
or otherwise only for a breach of any representation or warranty expressly made
by her in Article IV):
(a) any inaccuracy in any representation or breach of warranty
of any of the Sellers or Shareholders contained in this Agreement or in
any Ancillary Agreement;
(b) any failure by any of the Sellers or Shareholders to
perform or observe, or to have performed or observed, in full, any
covenant, agreement or condition to be performed or observed by it
under this Agreement or under any Ancillary Agreement to which it is a
party;
(c) the Sellers' operation or conduct of the Business prior to
the Effective Date, other than as to Assumed Liabilities; or
(d) the Excluded Liabilities.
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SECTION 11.03 Indemnification by Acquisition and SRC. SRC and
Acquisition shall, jointly and severally, indemnify, defend, and hold harmless
the Sellers and Shareholders and their Affiliates and the respective officers,
directors and employees of the foregoing, and their successors and permitted
assigns from, against and with respect to any Damages, arising out of or in any
manner incident, relating or attributable to:
(a) any inaccuracy in any representation or breach of warranty
of Acquisition or SRC contained in this Agreement or in any Ancillary
Agreement; or
(b) any failure by either of Acquisition or SRC to perform or
observe, or to have performed or observed, in full, any covenant,
agreement or condition to be performed or observed by it under this
Agreement or under any Ancillary Agreement to which it is a party.
SECTION 11.04 Claims for Indemnification. (a) In the event of the
occurrence of any event which any party asserts is an indemnifiable event
pursuant to this Article XI, the party claiming indemnification (the
"Indemnified Party") shall provide prompt notice to the party required to
provide indemnification (the "Indemnifying Party"), specifying in reasonable
detail the facts and circumstances (to the extent then known) with respect to
such claim and the basis for which indemnification is available hereunder. If
such event involves the claim of any third party the Indemnifying Party shall
have the right to control the defense or settlement of such claim; provided
that:
(i) the Indemnified Party shall be entitled to participate in
the defense of such claim at its own expense,
(ii) the Indemnifying Party shall obtain the prior written
approval of the Indemnified Party (which approval shall not be
unreasonably withheld or delayed) before entering into any settlement
of such claim if, pursuant to or as a result of such settlement, an
Order, injunctive or other non-monetary relief would be imposed against
the Indemnified Party,
(iii) the Indemnifying Party shall not be entitled to control
(but shall be entitled to participate at its own
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expense in the defense of), and the Indemnified Party shall be entitled
to have sole control over, any claim which seeks an Order, injunction
or other non-monetary relief against the Indemnified Party; provided
that (1) the Indemnified Party shall provide written notice to the
Indemnifying Party of its election to assume control over the defense
of such claim pursuant to this clause (iii) and (2) the Indemnified
Party shall obtain the prior written approval of the Indemnifying Party
(which approval shall not be unreasonably withheld or delayed) before
entering into any settlement of such claim, and/or
(iv) if the Indemnifying Party is entitled but fails to assume
control over the defense of a claim as provided in this Section 11.05,
the Indemnified Party shall have the right to defend such claim,
provided further that the Indemnified Party shall obtain the prior
written approval of the Indemnifying Party (which approval shall not be
unreasonably withheld or delayed) before entering into any settlement
of such claim if, pursuant to or as a result of such settlement,
injunctive or other non-monetary relief would be imposed against the
Indemnifying Party.
(b) In the event that the Indemnifying Party shall be obligated to
indemnify the Indemnified Party pursuant to this Article XI, the Indemnifying
Party shall, upon payment of such indemnity in full, be subrogated to all rights
of the Indemnified Party with respect to the claim to which such indemnification
relates.
SECTION 11.05 Indemnification Threshold. (a) No claim which any party
asserts as an indemnifiable claim pursuant to this Article XI shall be made by
such party against any of the Sellers or any of their respective shareholders
with respect to any item of Damage unless such item, together with the aggregate
of all prior Damages of such party, shall exceed $90,000 (the "Basket Amount"),
in which event such party shall only be entitled, subject to the provisions of
this Article XI, to make a claim for indemnification hereunder to the extent of
any such excess over the Basket Amount.
(b) Each of (i) the Sellers and Shareholders, collectively, and (ii)
Acquisition and SRC, collectively, shall not have any
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liability for indemnity hereunder to the Indemnified Parties, individually and
collectively, for any Damages in excess of an amount equal to Nine Million
Dollars ($9,000,000).
ARTICLE XII
TERMINATION
SECTION 12.01 Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Effective Time:
(a) by mutual written consent duly authorized by the Boards of
Directors of SRC and the Sellers;
(b) by SRC or the Sellers if:
(i) any Governmental Authority shall have issued an Order
restraining, enjoining or otherwise prohibiting the transactions
contemplated hereby; provided that this Agreement shall not be
terminated pursuant to this paragraph unless the party terminating this
Agreement has utilized its reasonable best efforts to oppose the
issuance of such Order;
(ii) the Effective Time has not arrived on or prior to
December 31, 1996 for any reason other than the breach of any provision
of this Agreement by the party terminating this Agreement; or
(iii) the other party breaches any of its representations,
warranties or covenants contained herein.
Upon the occurrence of any of the events specified in this Section
12.01 (other than subsection (a)), written notice of such event shall forthwith
be given to the other parties to this Agreement, whereupon this Agreement shall
terminate.
SECTION 12.02 Effect of Termination. In the event of the termination
and abandonment of this Agreement pursuant to Section 12.01, this Agreement,
except for the provisions of Articles XI and XIII, shall forthwith become void
and be of no effect.
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Nothing in this Section 12.02 shall relieve any party to this Agreement of
liability for a knowing and material breach of this Agreement, it being
understood that a breach of a warranty or representation, or other failure of
condition, without fault, will not give rise to liability on the part of any
party.
ARTICLE XIII
COVENANT NOT TO COMPETE
SECTION 13.01 Covenant Not to Compete. Each of the Sellers and each
Shareholder agrees that, during the period commencing on the Effective Date and
ending on the fifth anniversary of the Effective Date, the Sellers and such
Shareholders will not, without the prior written consent of SRC and Acquisition:
(a) for itself or on behalf of any other Person, directly or
indirectly, either as principal, partner, agent, independent
contractor, stockholder, consultant, representative or in any other
capacity, own, manage, operate or control, or otherwise in any manner
have a financial interest in any business which is directly or
indirectly competitive with the Business as conducted by Acquisition
located anywhere in the State of Ohio or the State of Pennsylvania (the
"Restricted Territory"), except that nothing contained herein shall
preclude any Shareholder from purchasing or owning securities of any
such business if such securities are publicly traded, and provided that
such holdings do not exceed one (1%) percent of the issued and
outstanding securities of any class of securities of such business; or
(b) without limiting the generality of the preceding clause
(a), either individually or on behalf of or through any third party,
solicit, divert or appropriate or attempt to solicit, divert or
appropriate, for the purpose of competing with the Business as
conducted by Acquisition or any present or future parent, subsidiary or
other affiliate of Acquisition which is engaged in a similar business
as Acquisition, any existing or prospective customer, partner,
supplier, licensee or licensor of Acquisition located within the
Restricted Territory; or
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(c) either individually or on behalf of or through any third
party, directly or indirectly, employ (other than a former employee who
has not been employed by Acquisition for the prior six months or an
employee whose employment was terminated by Acquisition), or knowingly
permit any company or business organization directly or indirectly
controlled by it to employ, or solicit, entice or persuade or attempt
to solicit, entice or persuade to leave the services of Acquisition or
any such parent, subsidiary or affiliate for any reason, any other such
employees of or consultants to Acquisition.
SECTION 13.02 Activities Considered Competitive. For the purposes of
Section 13.01, the engaging in a business activity shall be deemed "competitive"
with the Business as conducted by Acquisition if such activity, directly or
indirectly, relates to the business of distributing and selling eyeglasses,
contact lenses, industrial eyewear and hearing aids and providing related
optical, optometric and audiology prescriptions, goods and services to persons
with vision disorders, or the business of participating in any manner in the
delivery of vision corrective of refractive services (including, without
limitation, photorefractive keratectomy) to persons with vision disorders;
provided that the following shall not be deemed competitive with the
Business: the manufacture and non-retail sale of (i) "safety" glasses and (ii)
"clip-in" eyewear.
SECTION 13.03 Reasonableness of Restrictions. Each Seller and each
Shareholder recognizes and acknowledges that (i) the types of competition which
are prohibited by this Agreement are narrow and reasonable in relation to the
types of business activities in which such Seller or Shareholder is or may
engage and (ii) the specific but broad geographical scope of the provisions of
this Article XIII is reasonable, legitimate and fair to such Seller and
Shareholder in light of Acquisition's need to conduct its business in a large
geographic area in order to have a sufficient base to make its business
profitable and in light of the limited restrictions on the type of business
activities prohibited herein compared to the types of business activities in
which such Seller and Shareholder is or may engage.
SECTION 13.04 Remedies. Each Seller and each Shareholder hereby
expressly acknowledges that any breach or threatened
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breach of any of the terms and/or conditions set forth in this Article XIII will
result in substantial, continuing and irreparable injury to Acquisition and/or
SRC. Therefore, each Seller and each Shareholder hereby agrees that, in addition
to any other remedy that may be available to Acquisition or SRC, each of
Acquisition and SRC shall be entitled to injunctive relief, specific performance
or other equitable relief by a court of appropriate jurisdiction in the event of
any breach or threatened breach of the terms of this Agreement. Furthermore, in
addition to the remedies Acquisition and/or SRC may seek and obtain pursuant to
this Section 13.04, the period during which the covenants contained herein apply
shall be extended by any and all periods during which any Seller or Shareholder
shall be found by a court of competent jurisdiction to have been in violation of
the covenants contained in this Agreement.
SECTION 13.05 No Consideration. The parties acknowledge that no
consideration of a monetary nature (cash or securities) is being paid by
Acquisition or SRC for the undertakings and covenants of the Sellers contained
in this Article XIII, but that same are being given by the Sellers in
consideration of Acquisition and SRC entering into this Agreement.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.01 Notices. All notices, requests, consents and other
communications hereunder shall be in writing, shall be addressed to the
receiving party's address set forth below or to such other address as a party
may designate by notice hereunder, and shall be either (i) delivered by hand,
(ii) made by telecopy or facsimile transmission, (iii) sent by recognized
overnight courier, or (iv) sent by registered or certified mail, return receipt
requested, postage prepaid:
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If to SRC or Acquisition:
Sight Resource Corporation
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President
With a copy to:
Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
If to any of the Sellers or the Shareholders:
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: President
With a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
All notices, requests, consents and other communications hereunder shall be
deemed to have been received (i) if by hand, at the time of the delivery thereof
to the receiving party at the address of such party set forth above or as so
designated, (ii) if made by telecopy or facsimile transmission, at the time that
receipt thereof has been acknowledged by electronic confirmation or otherwise,
if on a business day, and otherwise on the first following business day, (iii)
if sent by overnight courier, on the next business day following the day such
notice is delivered to the courier service or (iv) if sent by registered
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or certified mail, on the fifth business day following the day such mailing is
made.
SECTION 14.02 Entire Agreement. The Transaction Documents collectively
embody the entire agreement and understanding among the parties hereto with
respect to the subject matter hereof and supersede all prior oral or written
agreements and understandings relating to the subject matter hereof. No
statement, representation, warranty, covenant or agreement of any kind not
expressly set forth in the Transaction Documents shall affect, or be used to
interpret, change or restrict, the express terms and provisions of this
Agreement.
SECTION 14.03 Modifications and Amendments. The terms and provisions of
this Agreement may be amended, modified, supplemented or waived only by written
agreement executed by all parties hereto.
SECTION 14.04 No Waiver of Rights, Powers and Remedies. No failure or
delay by a party hereto in exercising any right, power or remedy under this
Agreement, and no course of dealing between the parties hereto, shall operate as
a waiver of any such right, power or remedy of the party. No single or partial
exercise of any right, power or remedy under this Agreement by a party hereto,
nor any abandonment or discontinuance of steps to enforce any such right, power
or remedy, shall preclude such party from any other or further exercise thereof
or the exercise of any other right, power or remedy hereunder. The election of
any remedy by a party hereto shall not constitute a waiver of the right of such
party to pursue other available remedies. No notice to or demand on a party not
expressly required under this Agreement shall entitle the party receiving such
notice or demand to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the party giving such
notice or demand to any other or further action in any circumstances without
such notice or demand. The terms and provisions of this Agreement may be waived,
or consent for the departure therefrom granted, only by written document
executed by the party entitled to the benefits of such terms or provisions. No
such waiver or consent shall be deemed to be or shall constitute a waiver or
consent with respect to any other terms or provisions of this Agreement, whether
or not similar. Each such waiver or consent shall be effective only in the
specific
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instance and for the purpose for which it was given, and shall not constitute a
continuing waiver or consent.
SECTION 14.05 Assignment. Neither this Agreement, nor any right or
obligation hereunder, may be assigned by any of the parties hereto without the
prior written consent of the other parties, and any attempted assignment without
such consent shall be null and void.
SECTION 14.06 Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto and their permitted
assigns, and nothing in this Agreement, express or implied, (i) is intended to
confer upon any other Person any rights or remedies of any nature whatsoever
under or by reason of this Agreement or (ii) shall be construed to create any
rights or obligations except among the parties hereto, and no Person shall be
regarded as a third-party beneficiary of this Agreement; provided that the
provisions of Sections 8.03 and 8.05 and the provisions of Article XI shall be
enforceable by, and inure to the benefit of, the Person entitled to the benefit
thereunder.
SECTION 14.07 Governing Law; Jurisdiction and Service of Process. This
Agreement and the rights and obligations of the parties hereunder shall be
construed in accordance with and governed by the internal law of the State of
Delaware, without giving effect to the conflicts of law principles thereof. Any
legal action or proceeding with respect to this Agreement shall be brought in
the courts of Massachusetts or of the United States of America for the Eastern
District of Massachusetts. By execution and delivery of this Agreement, each of
the parties hereto accepts for itself and in respect of its property, generally
and unconditionally, the jurisdiction of the aforesaid courts. Each of the
parties hereto irrevocably consents to the service of process of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by certified mail, postage prepaid, to the party at its address set
forth in Section 14.01 hereof. Notwithstanding anything in this Section 14.07 to
the contrary, nothing herein shall be construed to prevent any of the Sellers or
Shareholders from objecting to the personal jurisdiction of any such court and
neither SRC nor Acquisition will interpose the language of this Section 14.07 as
a defense to such objection.
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SECTION 14.08 Severability. In the event that any court of competent
jurisdiction shall finally determine that any provision, or any portion thereof,
contained in this Agreement shall be void or unenforceable in any respect, then
such provision shall be deemed limited to the extent that such court determines
it enforceable, and as so limited shall remain in full force and effect. In the
event that such court shall determine that any such provision, or portion
thereof, is wholly unenforceable, the remaining provisions of this Agreement
shall nevertheless remain in full force and effect.
SECTION 14.09 Interpretation. The parties hereto acknowledge and agree
that: (i) each party and its counsel reviewed and negotiated the terms and
provisions of this Agreement (except with respect to the Disclosure Schedule
regarding the Business which is the sole responsibility of the Sellers and
Shareholders) and have contributed to its revision; (ii) the rule of
construction to the effect that any ambiguities are resolved against the
drafting party shall not be employed in the interpretation of this Agreement;
and (iii) the terms and provisions of this Agreement shall be construed fairly
as to all parties hereto and not in favor of or against any party, regardless of
which party was generally responsible for the preparation of this Agreement.
SECTION 14.10 Headings and Captions. The headings and captions of the
various subdivisions of this Agreement are for convenience of reference only and
shall in no way modify, or affect, or be considered in construing or
interpreting the meaning or construction of any of the terms or provisions
hereof.
SECTION 14.11 Enforcement. Each of the parties hereto acknowledges and
agrees that the rights acquired by each party hereunder are unique and that
irreparable damage would occur in the event that any of the provisions of this
Agreement to be performed by the other party were not performed in accordance
with their specific terms or were otherwise breached. Accordingly, in addition
to any other remedy to which the parties hereto are entitled at law or in
equity, each party hereto shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement by the other party and to enforce
specifically the terms and provisions hereof in any federal or state court of
competent jurisdiction.
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SECTION 14.12 Expenses. Except as expressly provided herein or in any
other Transaction Document, each of the parties hereto shall pay its own fees
and expenses (including the fees of any attorneys, accountants, appraisers or
others engaged by such party) in connection with this Agreement and the
transactions contemplated hereby whether or not the transactions contemplated
hereby are consummated.
SECTION 14.13 Publicity. No party hereto may issue any press release or
otherwise make any public statement with respect to the execution of, or the
transactions contemplated by, this Agreement without the prior written consent
of the other parties hereto, except as may be required by applicable law. Prior
to making any public disclosure so required by applicable law, the disclosing
party shall, if practicable, give the other parties a copy of the proposed
disclosure and reasonable opportunity to make suggestions with respect to the
same.
SECTION 14.14 Confidentiality. The parties acknowledge and agree that
any information or data it has acquired from the other parties, not otherwise
properly in the public domain, was received in confidence. The parties agree not
to divulge, communicate or disclose any such confidential information concerning
the subject matter hereof, including any trade or business secrets and any
technical or business materials that are treated by the disclosing party as
confidential or proprietary, including without limitation information (whether
in written, oral or machine-readable form) concerning: general business
operations; methods of doing business, servicing clients, client relations, and
of pricing and making charge for services and products; financial information,
including costs, profits and sales; marketing strategies; business forms
developed; names of suppliers, personnel, customers, clients and potential
clients; negotiations or other business contacts with suppliers, personnel,
customers, clients and potential clients; form and content of bids, proposals
and contracts; internal reporting methods; technical and business data,
documentation and drawings; software programs, however embodied; inventions;
diagnostic techniques; and information obtained by or given to the parties about
or belonging to third parties. In the event that this Agreement is terminated
and/or the Effective Time does not arrive, the parties agree to return to the
disclosing party any such confidential information and all copies (in whatever
medium)
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thereof, regardless of the location, it received or reproduced (in whole or in
part), and shall thereafter continue to use its reasonable best efforts to
maintain the confidentiality thereof, including by its employees and agents.
SECTION 14.15 Counterparts. This Agreement may be executed in one or
more counterparts, and by the parties hereto in separate counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
SECTION 14.16 Principal Place of Office. The place where the principal
office of Acquisition, the surviving corporation, is to be located is ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
SECTION 14.17 Statutory Agent and Service of Process. Acquisition
consents that it may be sued and served with process in the State of Ohio and
Acquisition hereby irrevocably appoints the Secretary of State of Ohio as its
agent to accept service of process in any proceeding in Ohio to enforce against
Acquisition any obligation of Opticians or to enforce the rights of a dissenting
shareholder of Opticians. Acquisition further states that it desires to transact
business in the State of Ohio as a foreign corporation and appoints as its
designated agent, The ▇▇▇▇▇▇▇▇-▇▇▇▇ Corporation System, Inc., ▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, and irrevocably consents to service of any
process, notice, or demand on such agent so long as the authority of such agent
continues and to service of any process, notice, or demand on the Secretary of
State of Ohio in the events provided for in Section 1703.19 of the Revised Code
of Ohio. The principal office of Acquisition to which the Secretary of State of
Ohio shall forward notice of service of process is ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: President.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
SIGHT RESOURCE CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------------
Title: President
--------------------------------------
E.B. ACQUISITION CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------------
Title: President
--------------------------------------
▇.▇. ▇▇▇▇▇ OPTICIANS, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
Title: President
--------------------------------------
THE ▇.▇. ▇▇▇▇▇ OPTICAL COMPANY
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
Title: President
--------------------------------------
▇.▇. ▇▇▇▇▇ OPTICAL LABORATORIES, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
Title: President
--------------------------------------
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/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
Signed by ▇▇▇▇▇▇ ▇▇▇▇▇▇
Attorney in Fact
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SCHEDULE 3.02
Shareholders of Opticians
Name Number of Shares
---- ----------------
The ▇.▇. ▇▇▇▇▇ Optical Company 100
▇▇▇▇▇▇ ▇▇▇▇▇▇ 50
---
Total Outstanding Shares 150
===
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SCHEDULE 9.03
LEASES
(1) "Ashland Square," ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇;
(2) "Ashtabula," ▇▇▇▇ ▇. ▇▇▇▇▇, #▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇;
(3) "Athens," ▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇;
(4) "Beachwood Place," ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇;
(5) "Beachwood Place/Sunglasses Only," ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇;
(6) "Pavillion Mall," ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇▇▇▇, ▇▇▇▇;
(7) "Meadowbrook Square," ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇;
(8) "Main Store," offices 1549-1553, 1557 and ▇▇▇▇-▇▇▇▇,
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇;
(9) "Main Store Parking Lot," ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇;
(10) "Huntington Building," ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇;
(11) "Severance Medical," ▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇;
(12) "Severance Town Center," ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇;
(13) "New Market," ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇;
(14) "Liberty Village," 3323 Liberty, Erie, Pennsylvania;
(15) "Millcreek Mall," Erie, Pennsylvania;
(16) "Euclid Square" ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇;
(17) "Westgate," ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇;
(18) "Findlay Village," ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇-▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇;
(19) "Lakewood," ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇;
(20) "Macedonia," ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇;
(21) "▇▇▇▇▇▇▇▇ ▇▇▇▇," ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ (Ontario),
Ohio;
(22) "Marietta," Lafayette Center, Marietta, Ohio;
(23) "Marion," ▇▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇;
(24) "Massillon Village," ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇;
(25) "Eastgate," ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇;
(26) "Erie Commons," ▇▇▇▇ ▇. ▇▇▇▇▇ #▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇;
(27) "Southland," ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇;
(28) "Eastwood," ▇▇▇ ▇▇▇▇▇▇▇▇ #▇▇▇, ▇▇▇▇▇, ▇▇▇▇;
(29) "Great Northern," ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇;
(30) "Parmatown," ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇;
(31) "Sandusky Mall," ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ #▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇;
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(32) "Solon Park Place," ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇;
(33) "Streetsboro," ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇;
(34) "Southpark Center," Strongsville, Cleveland, Ohio;
(35) "Franklin Park," Franklin Park Mall, Toledo, Ohio;
(36) "Foundation Park," ▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇;
(37) "North Towne Square," ▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇;
(38) "Woodville Mall," ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇;
(39) "Lane Avenue," ▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇;
(40) "May Medical," ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇;
(41) "Gateway," ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇;
(42) "Zanesville," ▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇ #▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇;
(43) "2530 Superior Avenue Partners", ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇;
SUBLEASES
(1) The sublease with ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇.
(2) The sublease with Dr. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
(3) The sublease with ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
(4) The sublease with Dr. Brain ▇▇▇▇▇.
(5) The sublease with Dr. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇.
(6) The sublease with Dr. John ▇▇▇▇▇ ▇▇▇▇▇▇.
(7) The sublease with ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇.
(8) The sublease with Euclid Foundation d.b.a. University
Mednet.
OTHER AGREEMENTS
(1) Agreement with Novadyne Computer Systems, Inc.
(2) Vision and Hearing Services Provider Agreement with
QualChoice, Inc.
(3) Preferred Vision Provider Agreement with Metropolitan
Life.
(4) Doctor Provider Agreement with Managed Vision, Inc.
(5) Agreement with Vision Plus.
(6) Agreement with Value Added Benefits, Ltd. (Discount
Optical services to be utilized for the benefit of employees.)
(7) Agreement with ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and Eyevan ("Frames").
(8) Agreement with ▇▇▇▇ ▇▇▇▇▇ Spectacles ("Frames").
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(9) Agreement with National Vision Administrators.
(10) Agreement with MediMET Vision.
70