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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT,
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT - February 26, 1997
(Date of Earliest Event Reported)
STERLING VISION, INC.
(Exact Name of Registrant as Specified in Charter)
New York 1-14128 11-3096941
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(State or Other Jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation) Identification No.)
1500 Hempstead Turnpike
East Meadow, New York 11554
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(Address of Principal Executive Offices)
(516) 390-2100
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(Registrant's telephone number, including area code)
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Item 5. Other Events.
On February 26, 1997, Sterling Vision, Inc. (the "Company" or
the "Registrant") entered into Convertible Debentures and Warrants Subscription
Agreements with certain investors in connection with the private placement of
units consisting of an aggregate of $8 million principal amount of convertible
debentures (collectively, the "Debentures") and an aggregate of 800,000
warrants (collectively, the "Warrants"), which Warrants entitle the holders
thereof to purchase a maximum number of 1.2 million shares of the Company's
common stock, par value $.01 per share (the "Common Stock"). The Company
anticipates using the net proceeds (approximately $7.5 million) of the private
placement: (i) to repay a portion of a loan made to it by certain principal
shareholders of the Company ($1,050,000); (ii) to pay down the Company's
revolving line of credit with the Chase Manhattan Bank ($1,000,000); and (iii)
the balance for general corporate purposes.
The Debentures bear no interest and mature on August 25,
1998. They are convertible at a price per share (the "Conversion Price") equal
to the lesser of $6.50 and 85% of the average closing bid price of the Common
Stock as reported on the Nasdaq National Market System for the 5 trading days
immediately preceding the date of conversion; provided, however, that the
Company has the right to redeem that portion of the Debentures requested to be
converted in the event the Conversion Price is $6.00 or less. In such event,
the redemption price will be equal to 115% of the face amount of that portion
of the Debentures requested to be converted. The Debentures are convertible
subject to the following limitations: 25% of the original principal amount is
convertible beginning on the date of issuance provided a registration statement
(the "Registration Statement") with respect to the underlying Common Stock is
then in effect; 50% of the original principal amount is convertible beginning
three months after the date of issuance; 75% of the original principal amount
is convertible beginning six months after the date of issuance; and the entire
original principal amount is convertible beginning nine months after the date
of issuance. Notwithstanding the foregoing, if, at any time, the intra-day bid
price of the Common Stock (as reported on the Nasdaq National Market System)
equals or exceeds $10, the entire principal amount of the Debentures will be
convertible at any time thereafter. At maturity, provided no Event of Default
exists under the Debentures and a Registration Statement covering the
underlying Common Stock is then effective, any outstanding Debentures will be
converted into shares of Common Stock.
The Warrants entitle the holders thereof to purchase an
aggregate of 800,000 shares of Common Stock at an exercise price per share
equal to the lower of $6.50 and the average of the Conversion Price of any
Debentures converted, by the holder, prior to the date of exercise. The
Warrants are exercisable until February 26, 2000. If a holder of a Warrant
exercises a Warrant at any time during the 2 year period after the Registration
Statement has been declared effective, then the holder will receive an
additional Warrant (a "Bonus Warrant") which shall entitle the holder to
purchase one share of Common Stock for each two Warrants previously exercised.
The Bonus Warrants have an exercise price of $7.50 per share and a term of 3
years from the date of grant.
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The Company has agreed to file a Registration Statement no
later than April 30, 1997, on behalf of the holders with respect to all of the
shares of Common Stock underlying the Debentures, the Warrants and the Bonus
Warrants, not to exceed, in any event, an aggregate amount equal to 19.999% of
the number of shares of Common Stock issued and outstanding on February 26,
1997; and the Company has agreed to maintain the effectiveness of such
Registration Statement until the earlier of : (i) 3 years; and (ii) the date
all the shares underlying the Debentures have been sold and the Warrants and
the Bonus Warrants have been exercised.
Item 7. Financial Statements and Exhibits.
Exhibit No. Document
4.1 Form of Convertible Debentures and Warrants Subscription
Agreement, with Exhibits attached thereto, representing the
form of Debenture, Warrant and Bonus Warrant.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, as amended, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned hereunto duly authorized.
STERLING VISION, INC.
By: /s/ Robert Greenberg
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Name: Robert Greenberg
Title: President and Chief
Executive Officer
Date: March 5, 1997
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CONVERTIBLE DEBENTURES AND WARRANTS SUBSCRIPTION AGREEMENT
OF STERLING VISION, INC.
THIS CONVERTIBLE DEBENTURES AND WARRANTS SUBSCRIPTION
AGREEMENT (the "Agreement") is made and entered into as of this 26th day of
February, 1997, by and between STERLING VISION, INC., a New York corporation
("Seller"), and _______________, a _____________ ("Buyer"), providing for the
purchase and sale of _________(____) Units (the "Units"), each Unit, consisting
of the principal amount of Eighty Thousand Dollars ($80,000.00) of certain
convertible debentures of Seller (the "Debentures"), convertible into shares
(the "Debenture Shares") of the common stock, par value $.01 per share (the
"Common Stock"), of Seller and Eight Thousand (8,000) Warrants (the "Warrants")
of Seller, each Warrant entitling Buyer to purchase one share (collectively,
the "Warrant Shares") of Common Stock (the Debenture Shares and the Warrant
Shares being hereinafter collectively referred to as the "Shares"), in
connection with an offering by Seller of an aggregate of 100 Units consisting
of Debentures, in the aggregate principal amount of Eight Million Dollars
($8,000,000), and an aggregate of Eight Hundred Thousand (800,000) Warrants.
Seller and Buyer (collectively, the "Parties") hereby represent and agree as
follows:
1. AGREEMENT TO SUBSCRIBE; PURCHASE PRICE.
(i) Buyer hereby subscribes for ________(___) Units,
consisting of Debentures having an aggregate principal amount
of __________ Dollars ($________) and _________(___)
Warrants. The Debentures shall be convertible into Shares in
accordance with the terms set forth in the form of Debenture
attached as Exhibit A to this Agreement. The Warrants shall
entitle Buyer to purchase Shares in accordance with the terms
of the form of Warrant attached as Exhibit B to this
Agreement. With respect to each Warrant exercised within a
maximum period of two years of the date of the effectiveness
of the Registration Statement (as defined in Section 4),
Buyer shall receive one (1) additional Warrant (the "Bonus
Warrant") for each two (2) Warrants exercised, which Bonus
Warrant shall entitle Buyer to purchase one (1) share of
Common Stock in accordance with the terms of the form of
Bonus Warrant attached as Exhibit C to this Agreement.
(ii) The Debentures shall bear no interest and shall
mature eighteen (18) months from the date of Closing (as
defined below). Subject to the terms and limitations
contained in the Debentures, the Debentures shall be
convertible into Shares at a price per Share (the "Conversion
Price") equal to the lesser of (x) $6.50 and (y) eighty five
percent (85%) of the average closing bid price of the Common
Stock on the Nasdaq National Market for the five (5) trading
days immediately preceding the date of requested conversion.
Notwithstanding the foregoing, Seller shall have the right to
redeem all or a portion of the Debentures for which Seller
has received from Buyer a notice of election to convert in
the event the Conversion Price
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of any such Debentures is Six Dollars ($6.00) or less, at a
redemption price equal to one hundred fifteen percent (115%)
of the face amount of such Debentures requested to be
converted. Subject to the terms and limitations contained
therein, the Warrants shall be exercisable at any time after
Closing. Each Warrant shall entitle the holder thereof to
purchase one Share at the lesser of (x) $6.50 and (y) the
average price per share actually paid for Shares which such
holder had previously purchased upon conversion of any
Debentures. The Warrants shall expire three (3) years from
the date of grant. The Bonus Warrants shall be exercisable at
any time after the date of issuance. Each Bonus Warrant shall
entitle the holder thereof to purchase one share of Common
Stock (all of such Common Stock collectively, the "Bonus
Shares") for a purchase price of $7.50. The Bonus Warrants
shall expire three (3) years from the date of grant thereof.
(iii) Buyer shall pay the aforesaid principal amount
as the purchase price for the Units subscribed for by it by
wire transfer of immediately available, Federal funds in
United States dollars against counter-delivery of Buyer's
Units by Seller. The closing of the purchase and sale of the
Units (the "Closing") shall take place on or about February
26, 1997, at 10:00 a.m. at the offices of Seller's counsel,
Camhy Karlinsky & Stein LLP, 1740 Broadway, 16th Floor, New
York, NY 10019.
2. BUYER'S REPRESENTATIONS AND COVENANTS.
Buyer represents, warrants and covenants to Seller as
follows:
(i) This Agreement has been duly authorized, validly
executed and delivered on behalf of Buyer and is a valid and
binding agreement of Buyer enforceable in accordance with its
terms, subject to general principles of equity and of
bankruptcy or other laws affecting the enforcement of
creditors' rights;
(ii) Buyer is purchasing the Units for its own
account for investment purposes only and not with a view
towards distribution. Buyer understands and agrees that it
must bear the economic risks of its investment for an
indefinite period of time. Buyer has received and carefully
reviewed copies of the Public Documents (as defined in
Section 3) and a letter from Seller setting forth certain
non-public information dated February 25, 1997 (the
"Letter"). Buyer understands that the offer and sale of the
Units are being made only by means of this Agreement. No
representations or warranties have been made to Buyer by
Seller, the officers or directors of Seller, or any agent,
employee or affiliate of any of them, except as specifically
set forth herein. Buyer is aware that the purchase of the
Units involves a high degree of risk and that it may sustain,
and has the financial ability to sustain, the loss of its
entire investment. Buyer has had the opportunity to ask
questions of, and receive answers satisfactory to it from,
Seller's management regarding Seller. Buyer understands that
no federal or state governmental authority has made any
finding or determination relating to the fairness
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of an investment in the Units and that no federal or state
governmental authority has recommended or endorsed, or will
recommend or endorse, the investment herein. Buyer, in making
the decision to purchase the Units subscribed for, has relied
upon independent investigation made by it and has not relied
on any information or representations made by third parties.
Buyer has significant assets and upon consummation of the
purchase of the Units will continue to have significant
assets exclusive of the Units. Buyer has not been organized
for the sole purpose of acquiring the Units;
(iii) Buyer is an "accredited investor" within the
meaning of Rule 501 promulgated under the Securities Act of
1933, as amended (the "Securities Act");
(iv) Buyer understands that the Units are being
offered and sold to it in reliance on specific provisions of
federal and state securities laws and that Seller is relying
upon the truth and accuracy of the representations,
warranties, agreements, acknowledgements and understandings
of Buyer set forth herein in order to determine the
applicability of such provisions;
(v) Buyer agrees that for a period of eighteen (18)
months from the Closing it shall not offer, sell, contract to
sell, grant any option to purchase or otherwise dispose of
any Common Stock (any of the foregoing, a "Sale") that Buyer
does not own as of such date, provided, however, that no such
restriction shall apply to any Shares and/or Bonus Shares to
be issued to Buyer upon the conversion of any Debentures or
the exercise of any Warrants or Bonus Warrants in the event
Seller receives from Buyer, within five (5) business days
after any such Sale, (x) a Notice of Conversion (as defined
in the form of Debenture attached as Exhibit A to this
Agreement) with respect to such Debentures or (y) the
Election to Exercise with respect to such Warrants or Bonus
Warrants, as the case may be;
(vi) Buyer has not employed any investment banker,
broker or finder or incurred any liability for any brokerage
fees, commissions or finder's fees in connection with the
transactions contemplated by this Agreement except that Buyer
has engaged and incurred a liability for a fee to LT Lawrence
& Co. in connection with the transactions contemplated by
this Agreement which Seller has agreed to pay; and
(vii) Buyer understands that neither the Units, the
Debentures, the Warrants, the Bonus Warrants, the Shares nor
the Bonus Shares have been registered under the Securities
Act and therefore it cannot dispose of any or all of the
Units, the Debentures, the Warrants, the Bonus Warrants, the
Shares or the Bonus Shares unless and until such Units,
Debentures, Warrants, Bonus Warrants, Shares or Bonus Shares,
as the case may be, are subsequently registered under the
Securities Act or exemptions from such registration are
available, it being understood that subject to certain
limitations, only the Shares and Bonus Shares shall be
registered by Seller.
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Buyer acknowledges that a legend substantially as follows
will be placed on the certificates representing the
Debentures, the Warrants, the Bonus Warrants, the Shares and
the Bonus Shares:
THE SECURITIES REPRESENTED HEREBY ARE RESTRICTED SECURITIES WITHIN THE MEANING
OF THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED,
TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN ACCORDANCE WITH SUCH ACT AND THE
RULES AND REGULATIONS PROMULGATED THEREUNDER AND IN ACCORDANCE WITH APPLICABLE
STATE SECURITIES LAWS. THE ISSUER OF THESE SECURITIES WILL NOT TRANSFER SUCH
SECURITIES EXCEPT UPON RECEIPT OF EVIDENCE SATISFACTORY TO THE ISSUER THAT THE
REGISTRATION PROVISIONS OF SUCH ACT HAVE BEEN COMPLIED WITH OR THAT SUCH
REGISTRATION IS NOT REQUIRED AND THAT SUCH TRANSFER WILL NOT VIOLATE ANY
APPLICABLE FEDERAL OR STATE SECURITIES LAWS.
3. SELLER'S REPRESENTATIONS AND COVENANTS.
Seller represents, warrants and covenants to Buyer as
follows:
(i) Seller has been duly incorporated and is validly
existing and in good standing under the laws of the State of
New York, with full corporate power and authority to own,
lease and operate its properties and to conduct its business
as currently conducted, and is duly registered and qualified
to conduct its business and is in good standing in each
jurisdiction or place where the nature of its properties or
the conduct of its business requires such registration or
qualification, except where the failure to register or
qualify is not reasonably anticipated to have a material
adverse effect on the condition (financial or other),
business, properties, net worth or results of operations of
Seller and its subsidiaries taken as a whole;
(ii) Seller has registered shares of its Common Stock
pursuant to Section 12 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), is in full compliance
with all reporting requirements of the Exchange Act, and the
Common Stock is quoted on the Nasdaq National Market (trading
symbol ISEE);
(iii) Seller has furnished Buyer with copies of
Seller's most recent Annual Report on Form 10-K filed with
the Securities and Exchange Commission (the "Commission"),
all Forms 10-Q and 8-K filed thereafter and all other filings
made with the Commission after the filing of the most recent
Form 10-K (collectively, the "Public Documents") and the
Letter. The Public Documents at the time of their filing did
not include any untrue statement of a material fact or omit
to state any material fact necessary in order to make the
statements contained therein, in light of the circumstances
under which they were made, not misleading. The Letter
contains additional, current material information about
Seller not previously disclosed;
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(iv) At the Closing, each of the Units, the
Debentures and the Warrants shall be duly authorized and
validly issued and when issued and delivered, the Bonus
Warrants shall be duly authorized and validly issued and each
of them shall be enforceable in accordance with their terms
(subject to general principles of equity and bankruptcy,
fraudulent conveyance, preference and other laws affecting
creditors' rights generally). The Shares, when issued and
delivered upon conversion of the Debentures or exercise of
the Warrants, and the Bonus Shares when issued upon exercise
of the Bonus Warrants, will be duly and validly authorized
and issued, fully paid and nonassessable, free from all
encumbrances and restrictions other than restrictions on
transfer imposed by applicable securities laws and/or this
Agreement, and will not subject the holders thereof to
personal liability by reason of being such holders. Seller
has reserved 2,477,506 shares of Common Stock equal to
19.999% of the shares of Common Stock to be outstanding on
the date of Closing for issuance upon conversion of the
Debentures and exercise of the Warrants and the Bonus
Warrants. There are no preemptive rights of any shareholder
of Seller with respect to the Debentures, the Warrants, the
Bonus Warrants, the Shares or the Bonus Shares;
(v) This Agreement has been duly authorized, validly
executed and delivered on behalf of Seller and is a valid and
binding agreement of Seller enforceable in accordance with
its terms, subject to general principles of equity and to
bankruptcy or other laws affecting the enforcement of
creditors' rights generally, and Seller has full power and
authority to execute and deliver this Agreement and the other
agreements and documents contemplated hereby and to perform
its obligations hereunder and thereunder;
(vi) The execution and delivery of this Agreement,
the issuance of the Debentures, the Warrants, the Bonus
Warrants, the Shares (upon conversion of the Debentures and
the exercise of the Warrants) and the Bonus Shares (upon
exercise of the Bonus Warrants), and the consummation of the
transactions contemplated by this Agreement by Seller, will
not conflict with or result in a breach of or a default under
any of the terms or provisions of, Seller's certificate of
incorporation or By-laws, or of any material provision of any
indenture, mortgage, deed of trust or other material
agreement or instrument to which Seller is a party or by
which it or any of its properties or assets is bound, any
material provision of any law, statute, rule, regulation, or
any existing applicable decree, judgment or order by any
court, federal or state regulatory body, administrative
agency, or other governmental body having jurisdiction over
Seller, or any of its properties or assets or will result in
the creation or imposition of any material lien, charge or
encumbrance upon any property or assets of Seller or any of
its subsidiaries pursuant to the terms of any agreement or
instrument to which any of them is a party or by which any of
them may be bound or to which any of their property or any of
them is subject;
(vii) No authorization, approval, filing with or
consent of any governmental body is required for the issuance
and sale of the Debentures, the
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Warrants, the Bonus Warrants, the Shares (upon conversion of
the Debentures or the exercise of the Warrants) or the Bonus
Shares (upon exercise of the Bonus Warrants) as contemplated
by this Agreement, except as may be required under the
securities or blue sky laws of the various states;
(viii) There is no action, suit or proceeding before
or by any court or governmental agency or body, domestic or
foreign, now pending or, to the actual knowledge of Seller
(without inquiry), threatened, against or affecting Seller,
or any of its properties, which would reasonably be
anticipated to result in any material adverse change in the
condition (financial or otherwise) or in the earnings,
business affairs, business prospects, properties or assets of
Seller and its subsidiaries, taken as a whole;
(ix) Seller shall issue the Debentures in the name of
Buyer in the amount specified in Section 1(i) above in
denominations of _________ Dollars ($_____). Seller shall
issue the Warrants in the name of Buyer in the amount
specified in Section 1(i) in denominations of ________(____)
Warrants. Upon conversion of the Debentures or the exercise of
the Warrants or the Bonus Warrants, Seller will issue one or
more certificates representing the Shares or the Bonus Shares,
as the case may be, in the name of Buyer, with a legend (if
applicable) substantially in the form specified by Section
2(vii) above, and in such denominations to be specified by
Buyer prior to conversion or exercise, as the case may be;
(x) Seller has not employed any investment banker,
broker or finder or incurred any liability for any brokerage
fees, commissions or finder's fees in connection with the
transactions contemplated by this Agreement except that
Seller has agreed to make payment, on behalf of Buyer, to LT
Lawrence & Co. of a finder's fee in an amount equal to six
percent (6%) of the aggregate principal amount of the
Debentures; and
(xi) Seller agrees that until the earlier of the
conversion of all the Debentures or the maturity date thereof
it shall not offer or sell Common Stock pursuant to
Regulation S under the Securities Act, without the prior
consent of Buyer. Seller agrees that for a period commencing
on the date of Closing and terminating one hundred eighty
(180) days after the Registration Statement is declared
effective, it shall not offer or sell Common Stock pursuant
to Regulation D under the Securities Act, without the prior
consent of Buyer. Notwithstanding the foregoing, during such
period Seller may grant stock options or warrants to purchase
Common Stock to employees and consultants and in connection
with the acquisition of any assets or the prepayment of debt,
and may issue Common Stock in connection with the acquisition
of any assets or the prepayment of debt or upon the exercise
of any option or warrant or the conversion of any security
outstanding on the date of Closing including but not limited
to the registration of Common Stock on Form S-8 and the
registration and issuance of Common Stock in connection with
the acquisition of all the capital stock
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of Singer Specs, Inc. and the conversion of debt owing to
BEC Corp.
4. REGISTRATION.
Seller hereby agrees to file, no later than April 30, 1997, a
registration statement (the "Registration Statement") under the Securities Act
on Form S-3, covering all the Shares and Bonus Shares, provided Seller shall
have no obligation to register any shares in excess of 2,477,506 shares. Seller
shall use its best efforts to cause the Registration Statement to become
effective within 60 days after the date of filing of the Registration
Statement. The Registration Statement shall be a "shelf" registration statement
for purposes of Rule 415 under the Securities Act, and Seller shall maintain
its effectiveness until the earlier of (x) three (3) years from the date the
Registration Statement has been declared effective and (y) the date all the
Debenture Shares have been sold and all of the Warrants and any Bonus Warrants
have been exercised. In furtherance of the foregoing, Seller shall, as
expeditiously as possible:
(i) before filing a registration statement or
prospectus or any amendments or supplements thereto (x)
furnish to one counsel selected by Buyer copies of all such
documents proposed to be filed, and (y) notify Buyer and such
counsel of any stop order issued or threatened by the
Commission and take all reasonable actions required to
prevent the entry of such stop order or to remove it if
entered;
(ii) prepare and file with the Commission such
amendments and supplements to any registration statement and
the prospectus included therein as may be necessary to keep
such registration statement effective until the earlier of
(i) the date the distribution described in the Registration
Statement is completed and (ii) the date all Shares and Bonus
Shares shall otherwise have been sold (but not before the
expiration of the period referred to in Section 4(3) of the
Securities Act and Rule 174 thereunder, if applicable), and
comply with the provisions of the Securities Act with respect
to the disposition of all securities covered by such
Registration Statement during such period in accordance with
the intended methods of disposition by the sellers thereof
set forth in such Registration Statement;
(iii) furnish to Buyer and any underwriter of the
Shares and the Bonus Shares to be included in the
Registration Statement, copies of such Registration Statement
as filed and each amendment and supplement thereto (in each
case including all exhibits thereto), the prospectus included
in such Registration Statement (including each preliminary
prospectus) and such other documents as Buyer may reasonably
request in order to facilitate the disposition of the Shares
and the Bonus Shares owned by Buyer;
(iv) use its reasonable best efforts to register or
qualify the Shares and the Bonus Shares under such other
securities or blue sky laws of such jurisdictions as
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Buyer or any underwriter of the Shares or the Bonus Shares
reasonably requests, and do any and all other acts which may
be reasonably necessary or advisable to enable Buyer to
consummate the disposition in such jurisdictions of the
Shares or the Bonus Shares; provided that Seller will not be
required to (x) qualify generally to do business in any
jurisdiction where it would not otherwise be required to
qualify but for this Section 4(iv), (y) subject itself to
taxation in any such jurisdiction, or (z) consent to general
service of process in any such jurisdiction;
(v) use its reasonable best efforts to cause the
Shares and the Bonus Shares covered by such Registration
Statement to be registered with or approved by such other
governmental agencies or other authorities as may be
necessary by virtue of the business and operations of Seller
to enable Buyer to consummate the disposition of the Shares
and the Bonus Shares;
(vi) notify Buyer and any underwriter of the Shares
or the Bonus Shares, at any time when a prospectus relating
thereto is required to be delivered under the Securities Act
(even if such time is after the period referred to in Section
4(ii)), of the happening of any event as a result of which
the prospectus included in such Registration Statement
contains an untrue statement of a material fact or omits to
state any material fact required to be stated therein or
necessary to make the statements therein in light of the
circumstances under which they were made not misleading, and
prepare a supplement or amendment to such prospectus so that,
as thereafter delivered to the purchasers of the Shares or
the Bonus Shares, such prospectus will not contain an untrue
statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the
statements therein in light of the circumstances under which
they were made not misleading;
(vii) make available for inspection by Buyer, any
underwriter participating in any disposition pursuant to such
Registration Statement, and any attorney, accountant or other
agent retained by Buyer or any such underwriter
(collectively, the "Inspectors"), all financial and other
pertinent records and pertinent corporate documents of Seller
(collectively, the "Records"), and cause Seller's officers,
directors and employees to supply all information reasonably
requested by any such Inspector, as shall be reasonably
necessary to enable them to exercise their due diligence
responsibility, in connection with such Registration
Statement. Records or other information which Seller
determines, in good faith, to be confidential and which it
notifies the Inspectors are confidential shall not be
disclosed by the Inspectors unless (x) the disclosure of such
Records or other information is necessary to avoid or correct
a misstatement or omission in the Registration Statement, or
(y) the release of such Records or other information is
ordered pursuant to a subpoena or other order from a court of
competent jurisdiction. Buyer shall, upon learning that
disclosure of such Records or other information is sought in
a court of competent jurisdiction, give notice to Seller and
allow Seller, at Seller's expense, to undertake appropriate
action to prevent disclosure of the Records or other
information deemed
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confidential;
(vii) furnish, at the request of Buyer, on the date
that the Shares and the Bonus Shares are delivered to the
underwriters for sale pursuant to such Registration Statement
or, if the Shares and the Bonus Shares are not being sold
through underwriters, on the date that the Registration
Statement with respect to the Shares and the Bonus Shares
becomes effective, (i) a signed opinion, dated such date, of
the legal counsel representing Seller for the purposes of
such registration, addressed to the underwriters, if any, or
if the Shares and the Bonus Shares are not being sold through
underwriters, then to Buyer, as to such matters as such
underwriters or Buyer, as the case may be, may reasonably
request and as would be customary in such a transaction; and
(y) a letter dated such date, from the independent certified
public accountants of Seller, addressed to the underwriters,
if any, or if the Shares and the Bonus Shares are not being
sold through underwriters, then to Buyer and, if such
accountants refuse to deliver such letter to Buyer, then to
Seller (xx) stating that they are independent certified
public accountants within the meaning of the Securities Act
and that, in the opinion of such accountants, the financial
statements and other financial data of Seller included in the
registration statement or the prospectus, or any amendment or
supplement thereto, comply as to form in all material
respects with the applicable accounting requirements of the
Securities Act, and (yy) covering such other financial
matters (including information as to the period ending not
more than five business days prior to the date of such
letter) with respect to the registration in respect of which
such letter is being given as Buyer may reasonably request
and as would be customary in such a transaction;
(ix) enter into customary agreements (including if
the method of distribution is by means of an underwriting, an
underwriting agreement in customary form) and take such other
actions as are reasonably required in order to expedite or
facilitate the disposition of the Shares and the Bonus Shares
to be so included in the Registration Statement; and
(x) use its reasonable best efforts to cause all the
Shares and the Bonus Shares to be quoted on the NASDAQ
National Market System.
Seller may require Buyer to furnish to Seller such
information regarding the distribution of the Shares and the Bonus Shares as
Seller may from time to time reasonably request in writing. Buyer agrees to
timely cooperate with Seller in connection with the preparation and filing of
the Registration Statement and to promptly furnish to Seller such information
regarding Buyer and the distribution of the Shares and Bonus Shares as
reasonably requested by Seller. Buyer represents and warrants that no
information furnished in writing to Seller will contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements contained therein not misleading.
Buyer agrees that, upon receipt of any notice from Seller of
the happening of any
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<PAGE>
event of the kind described in Section 4(vi) hereof, Buyer will forthwith
discontinue disposition of the Shares and the Bonus Shares pursuant to the
Registration Statement until Buyer's receipt of the copies of the supplemented
or amended prospectus contemplated by Section 4(vi) hereof, and, if so directed
by Seller, Buyer will deliver to Seller (at Seller's expense) all copies, other
than permanent file copies then in Buyer's possession, of the prospectus
covering the Shares and the Bonus Shares current at the time of receipt of such
notice. In the event Seller shall give any such notice, Seller shall extend the
period during which the Registration Statement shall be maintained effective
pursuant to this Agreement by the number of days during the period from and
including the date of the giving of such notice pursuant to Section 4(vi)
hereof to and including the date when Buyer shall have received the copies of
the supplemented or amended prospectus contemplated by Section 4(vi) hereof.
5. EXPENSES OF REGISTRATION.
All expenses incurred in connection with the registration of
the Shares and the Bonus Shares contemplated by this Agreement, excluding
underwriters' discounts and commissions and the fees of Buyer's counsel, but
including, without limitation, all registration, filing and qualification fees,
word processing, duplicating, printers, and Seller's accounting fees (including
the expenses of any special audits or "cold comfort" letters required by or
incident to such performance and compliance), exchange listing fees or National
Association of Securities Dealers fees, messenger and delivery expenses, all
fees and expenses of complying with securities or blue sky laws and fees and
disbursements of counsel for Seller shall be paid by Seller. Buyer shall bear
and pay any underwriting commissions and discounts applicable to the Shares and
the Bonus Shares offered for its account and the fees of its counsel in
connection with any registrations, filings and qualifications made pursuant to
this Agreement.
6. INDEMNIFICATION AND CONTRIBUTION
IN CONNECTION WITH REGISTRATION.
1. Subject to Buyer's obligation to indemnify Seller as provided in Section
6(ii), Seller agrees to indemnify, to the full extent permitted by law, Buyer,
its officers, directors, employees, shareholders, attorneys and agents and each
person who controls Buyer (within the meaning of the Securities Act) against
any and all losses, claims, damages, liabilities and expenses resulting from
any untrue or alleged untrue statement of material fact contained in any
Registration Statement, (including any prospectus or preliminary prospectus
constituting a part thereof) or any amendment thereof or supplement thereto or
any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein (in case of a
prospectus or preliminary prospectus, in the light of the circumstances under
which they were made) not misleading. Seller will also indemnify any
underwriters of the Shares and the Bonus Shares, their officers and directors
and each person who controls such underwriters (within the meaning of the
Securities Act) to the same extent as provided above with respect to the
indemnification of Buyer.
(i) In connection with any Registration Statement
(pursuant to which the
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<PAGE>
Shares and the Bonus Shares are to be registered), Buyer will
furnish promptly to Seller in writing such information with
respect to Buyer as Seller reasonably requests for use in
connection with any such Registration Statement or amendment
thereof or supplement thereto and agrees to indemnify, to the
extent permitted by law, Seller, its officers, directors,
employees, shareholders, attorneys and agents and each person
who controls Seller (within the meaning of the Securities
Act) against any and all losses, claims, damages, liabilities
and expenses resulting from any untrue or alleged untrue
statement of material fact or any omission or alleged
omission of a material fact required to be stated in the
Registration Statement, (including the prospectus or
preliminary prospectus constituting a part thereof) or any
amendment thereof or supplement thereto or necessary to make
the statements therein (in the case of a prospectus or
preliminary prospectus, in the light of the circumstances
under which they were made) not misleading, to the extent,
but only to the extent, that such untrue statement or
omission is contained in any information with respect to
Buyer furnished or required to be furnished by Buyer.
Notwithstanding the foregoing, the liability of Buyer under
this Section 6(ii) shall be limited to an amount equal to the
gross proceeds of the Shares and the Bonus Shares sold by
Buyer under the Registration Statement, unless such liability
arises out of or is based on the gross negligence and/or
willful misconduct of Buyer.
(ii) Any person entitled to indemnification hereunder
agrees to give prompt written notice to the indemnifying
party after the receipt by such person of any written notice
of the commencement of any action, suit, proceeding or
investigation for which such person will or may claim
indemnification or contribution pursuant to this Agreement
and, unless in the reasonable judgment of such indemnified
party, a conflict of interest may exist between such
indemnified party and the indemnifying party with respect to
such claim, permit the indemnifying party to assume the
defense of such claims with counsel reasonably satisfactory
to such indemnified party. Whether or not such defense is
assumed by the indemnifying party, the indemnifying party
will not be subject to any liability for any settlement made
without its consent (but such consent will not be
unreasonably withheld and/or delayed). Failure by such person
to provide said notice to the indemnifying party shall in and
of itself not create liability except to the extent of any
injury directly resulting therefrom. No indemnifying party
will consent to entry of any judgment or enter into any
settlement which does not include, as an unconditional term
thereof, the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect
of such claim or litigation. If the indemnifying party is not
entitled to, or elects not to, assume the defense of a claim,
it will not be obligated to pay the fees and expenses of more
than one counsel with respect to such claim, unless in the
reasonable judgment of any indemnified party a conflict of
interest may exist between such indemnified party and any
other such indemnified parties with respect to such claim, in
which event the indemnifying party shall be obligated to pay
the fees and expenses of such additional counsel or counsels.
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<PAGE>
(iii) If, for any reason, the indemnity provided for
in this Section 6 is unavailable to, or is insufficient to
hold harmless, an indemnified party, then the indemnifying
party shall contribute to the amount paid or payable by the
indemnified party as a result of such losses, claims,
damages, liabilities or expenses (x) in such proportion as is
appropriate to reflect the relative benefits received by the
indemnifying party on the one hand and the indemnified party
on the other, or (y) if the allocation provided by clause (x)
above is not permitted by applicable law, or provides a
lesser sum to the indemnified party than the amount
hereinafter calculated, in such proportion as is appropriate
to reflect not only the relative benefits received by the
indemnifying party on the one hand and the indemnified party
on the other but also the relative fault of the indemnifying
party and the indemnified party as well as any other relevant
equitable considerations. The relative fault of such
indemnifying party and indemnified parties shall be
determined by reference to, among other things, whether any
action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission
to state a material fact, has been made by, or relates to
information supplied (or required to be supplied) by, such
indemnifying party or indemnified parties, and the parties'
relative intent, knowledge, access to information and
opportunity to correct or prevent such action. The amount
paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be
deemed to include, subject to the limitations set forth in
Section 6(iii), any legal or other fees or expenses
reasonably incurred by such party in connection with any
investigation or proceeding.
The parties hereto agree that it would not be just
and equitable if contribution pursuant to this Section 6(iv)
were determined by pro rata allocation or by any other method
of allocation which does not take account of the equitable
considerations referred to in the immediately preceding
paragraph. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
If indemnification is available under this Section 6,
the indemnifying parties shall indemnify each indemnified
party to the full extent provided in Sections 6(i) and (ii)
without regard to the relative fault of said indemnifying
party or indemnified party or any other equitable
consideration provided for in this Section 6.
(iv) The provisions of this Section 6 shall survive
any termination of this Agreement.
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<PAGE>
2. TRANSFER OF RIGHTS AND OBLIGATIONS.
The rights and obligations of Buyer under this Agreement
(including the registration rights with respect to the Shares and the Bonus
Shares) may be assigned to any person; provided that such transfer may
otherwise be effected in accordance with applicable securities laws; provided
further, that Buyer shall give Seller written notice at or prior to the time of
such transfer stating the name and address of the transferee and identifying
the securities with respect to which the rights under this Agreement are being
transferred; provided further, that such transferee shall agree in writing, in
form and substance satisfactory to Seller, to be bound by the provisions of
this Agreement; and provided further, that such assignment shall be effective
only if immediately following such transfer the further disposition of such
securities by such transferee is restricted under the Securities Act. With
respect to the foregoing, in the event of any such transfer by Buyer, such
transferee (of the rights and obligations of the Buyer hereunder) shall
thereafter be deemed to be Buyer hereunder.
1. INDEMNIFICATION BY BUYER.
In addition to the indemnification provisions contained in
Section 6 hereof, Buyer hereby agrees to indemnify and hold harmless Seller and
its officers, directors, shareholders, employees, agents and attorneys against
any and all losses, claims, damages, liabilities and expenses incurred by each
such person in connection with defending or investigating any such claims or
liabilities, whether or not resulting in any liability to such person, to which
any such indemnified party may become subject under the Securities Act, or
under any other statute, at common law or otherwise, insofar as such losses,
claims, demands, liabilities and expenses arise out of or are based upon (i)
any untrue statement or alleged untrue statement of a material fact made by
Buyer, (ii) any omission or alleged omission of a material fact with respect to
Buyer or (ii) any breach of any representation, warranty or agreement made by
Buyer in this Agreement.
2. DELIVERIES AT CLOSING.
(i) Buyer shall make the following deliveries to
Seller at the Closing: (x) payment of the Purchase Price as
provided in Section 1(i); and (y) deliver an investor
questionnaire in the form attached as Exhibit D to this
Agreement.
(ii) Seller shall make the following deliveries to
Buyer at the Closing: (x) deliver in the name of Buyer
certificates for the Debentures and the Warrants.
3. MISCELLANEOUS.
(i) This Agreement shall be governed by and
interpreted in accordance with the laws of the State of New
York without giving effect to the rules governing the
conflicts of laws.
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<PAGE>
(ii) This Agreement may be executed by facsimile
signature and in counterparts, each of which shall be deemed
an original, but all of which together shall constitute one
and the same instrument.
(iii) Each of the Parties agrees to pay its own
expenses incident to this Agreement and the performance of
its obligations hereunder, including, but not limited to, the
fees and expenses of each such Party's legal counsel.
(iv) All notices and other communications provided
for or permitted hereunder shall be made in writing by hand
delivery, express overnight courier, registered first class
mail, overnight courier, or telecopied, initially to the
address set forth below, and thereafter at such other
address, notice of which is given in accordance with the
provisions of this Section 10.
if to Seller:
Sterling Vision, Inc.
1500 Hempstead Turnpike
East Meadow, NY 11554
Attn: General Counsel
Telephone: 516-390-2144
Telecopier: 516-390-2150
with a copy (which shall not constitute notice) to:
Camhy Karlinsky & Stein LLP
1740 Broadway, 16th Floor
New York, NY 10019
Attn: Robert S. Matlin, Esq.
Telephone: 212-977-6600
Telecopier: 212-977-8389
if to Buyer, at such address as is listed for Buyer on
the signature page hereto.
All such notices and communications shall be deemed to have
been duly given: when delivered by hand, if personally
delivered; three (3) business days after being deposited in
the mail, postage prepaid, if mailed; the next business day
after being deposited with an overnight courier, if deposited
with a nationally recognized, overnight courier service; when
receipt is acknowledged, if telecopied.
(v) This Agreement together with the Exhibits and
Schedules hereto constitutes the entire agreement of the
Parties with respect to the subject matter
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<PAGE>
hereof and supersedes all prior oral or written proposals or
agreements relating thereto. This Agreement may not be
amended or any provision hereof waived in whole or in part,
except by a written amendment signed by both of the Parties.
IN WITNESS WHEREOF, this Agreement was duly executed on the
date first written above.
STERLING VISION, INC.
By: ______________________________________
Robert Greenberg
President and Chief Executive Officer
Address:
Sterling Vision, Inc.
1500 Hempstead Turnpike
East Meadow, NY 11554
Telephone: 516-390-2100
Fax: 516-390-2150
________________
By: ______________________________________
Name: ________________________________
Title:________________________________
Address:
__________________________________________
__________________________________________
Telephone:________________________________
Fax:______________________________________
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<PAGE>
AMENDMENT TO CONVERTIBLE DEBENTURES
AND WARRANTS SUBSCRIPTION AGREEMENT
THIS AMENDMENT (the "Amendment") to CONVERTIBLE DEBENTURES
AND WARRANTS SUBSCRIPTION AGREEMENT is made and entered into as of this 26th
day of February, 1997, by and between STERLING VISION, INC., a New York
corporation ("Seller"), and __________________, a __________________ ("Buyer").
W I T N E S S E T H:
WHEREAS, Seller and Buyer have entered into a Convertible
Debentures and Warrants Subscription Agreement, dated as of February 26, 1997
(the "Agreement"); and
WHEREAS, Seller and Buyer have agreed to amend and modify
certain of the terms contained in the Agreement.
NOW, THEREFORE, in consideratin of the foregoing and other
good and valluable consideration, the receipt, sufficiency and adequacy of
which are hereby acknowledged, the parties hereto hereby agree as follows:
1. Section 3(xi) of the Agreemet is hereby amended by
deleting the phrase "without the prior consent of Buyer" appearing in the first
and second sentence of such Section and substituting the phrase "without the
prior consent of the holders representing a majority of the then outstanding
principal amount of the Debentures" in its place.
2. Except as amended hereby, the Agreement shall remain in
full force and effect.
3. This Amendment shall be governed by and interpreted in
accordance with the laws of the State of New York without giving effect to the
rules governing the conflicts of laws.
4. This Amendment may be executed by facsimile signature and
in counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the udnersigned have executed this
Amendment as of the date first written above.
STERLING VISION, INC.
By: ________________________________________
Robert Greenberg
President and Chief Executive Officer
Address:
Sterling Vision, Inc.
1500 Hempstead Turnpike
East Meadow, New York 11554
Telephone: (516) 390-2100
Fax: (516) 390-2150
________________________________________
By: ________________________________________
Name:
Title:
<PAGE>
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), NOR UNDER ANY STATE SECURITIES LAW AND
SUCH SECURITIES MAY NOT BE PLEDGED, SOLD, ASSIGNED, HYPOTHECATED, OR OTHERWISE
TRANSFERRED UNTIL (1) A REGISTRATION STATEMENT WITH RESPECT THERETO IS
EFFECTIVE UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAW OR (2) THE
COMPANY RECEIVES AN OPINION OF COUNSEL TO THE COMPANY OR COUNSEL TO THE HOLDER
OF SUCH SECURITIES, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO
THE COMPANY, THAT SUCH SECURITIES MAY BE PLEDGED, SOLD, ASSIGNED, HYPOTHECATED,
OR TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND
APPLICABLE STATE SECURITIES LAWS.
STERLING VISION, INC.
CONVERTIBLE DEBENTURE DUE AUGUST 25, 1998
$___________________ February 26, 1997 No._____
FOR VALUE RECEIVED, STERLING VISION, INC., a New York corporation
the "Company"), hereby promises to pay to the order of ________ (the "Original
Holder"), or registered assigns (collectively with the Original Holder, the
"Holder") on August 25, 1998 (the "Maturity Date"), the principal amount of
dollars ________ ($ ________). This Convertible Debenture (the "Debenture") has
been issued pursuant to that certain Convertible Debentures and Warrants
Subscription Agreement executed between the Original Holder and the Company
dated February 26, 1997 (the "Agreement").
Article 1. Method of Payment.
This Debenture must be surrendered to the Company free and clear
of any and all claims, liens or encumbrances in order for the Holder to receive
payment of the principal amount hereof. Subject to Articles 2 and 3 hereof, the
Company shall pay the principal of this Debenture in United States dollars.
Principal payments shall be subject to withholding (if any) under applicable
United States Federal Internal Revenue Service Regulations.
Article 2. Conversion.
Section 2.1 Conversion Privilege
(a) Subject to the terms and conditions of this Debenture,
the Holder of this Debenture shall have the right, prior to the Maturity Date,
exercisable at one or more times, at its option, to convert all or a portion of
this Debenture into the common stock, par value $.01 per share
Exhibit A
<PAGE>
("Common Stock"), of the Company at the times hereafter specified. The
number of shares of Common Stock issuable upon the conversion of this
Debenture shall be determined by dividing the principal amount hereof to be
converted by the Conversion Price (as defined in paragraph (b) of this Section
2.1 below) in effect on the conversion date and rounding the result to the
nearest 1/100th of a share.
(b) Subject to the provisions of Article 3 hereof, less
than all of the principal amount of this Debenture may be converted into Common
Stock if the portion converted is $1,000 or a whole multiple of $1,000, it
being understood that the provisions of this Article that apply to the
conversion of this Debenture also apply to the conversion of a portion of it.
All or any portion of this Debenture is convertible, from time to time, subject
to the following limitations: 25% of the original principal amount of this
Debenture shall be convertible beginning on the date of issuance of this
Debenture provided that the Registration Statement (as defined in the
Agreement) has been declared effective; 50% of the original principal amount of
this Debenture shall be convertible beginning three (3) months after the date
of issuance of this Debenture; 75% of the original principal amount of this
Debenture shall be convertible beginning six (6) months after the date of
issuance of this Debenture; and the entire original principal amount of this
Debenture shall be convertible beginning nine (9) months after the date of
issuance of this Debenture. Notwithstanding the foregoing restrictions, if at
any time the bid price of the Common Stock on the Nasdaq National Market System
or the Nasdaq SmallCap Market equals or exceeds $10.00 (whether intra-day or
otherwise), at any time thereafter prior to the Maturity Date, the entire
principal amount of this Debenture, at the option of the Holder, shall be
convertible into Common Stock at the Conversion Price. The "Conversion Price"
for each conversion shall equal the lesser of (i) $6.50 and (ii) the number
obtained by multiplying .85 by the average Closing Bid Price of the Common
Stock for the five (5) trading days immediately preceding the date of the
Company's receipt of Holder's Notice of Conversion (as described in Section
2.2) for such conversion (the foregoing number being hereinafter referred to as
the "Market Price"). For purposes hereof, the "Closing Bid Price" shall mean
the closing bid price on the Nasdaq National Market System published by the
Nasdaq Stock Market or if no longer traded on the Nasdaq National Market, the
closing bid price on the Nasdaq Small Cap Market, the over-the-counter market
or the principal national securities exchange on which the Common Stock is so
traded, and if such closing bid prices are not available, the mean of the high
and low prices on the principal national securities exchange, the
over-the-counter market or the Nasdaq Stock Market on which the Common Stock is
so traded.
(c) Notwithstanding anything contained herein to the
contrary, prior to the Maturity Date this Debenture shall not be convertible by
the Holder to the extent that and so long as the Common Stock which would be
acquired upon such conversion when aggregated with any other shares of Common
Stock at the time of conversion beneficially owned by the Holder and not
theretofore sold by the Holder would aggregate more than 4.9% of the then
outstanding shares of Common Stock of the Company. For this purpose,
"beneficial ownership" shall be calculated in accordance with the provisions of
Section 13(d) of the Securities Exchange Act of 1934 and the rules
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<PAGE>
and regulations promulgated thereunder. The opinion of the Holder's counsel
shall be conclusive in calculating the Holder's beneficial ownership.
(d) In the event any portion of this Debenture remains
outstanding on the Maturity Date, such portion will automatically be converted
into Common Stock as of the Maturity Date in the manner set forth in this
Section 2.1; provided an Event of Default does not then exist under this
Debenture and the Registration Statement is then effective and provided further
the Company shall be entitled to effect a Redemption (as defined in Article 3)
in accordance with the terms of Section 3.1(a) in the event the Conversion
Price on such date shall equal or be less than $6.00.
Section 2.2 Conversion Procedure. To convert this Debenture into
Common Stock the Holder must (a) complete and sign the Notice of Conversion
attached hereto and (b) surrender the Debenture to the Company free and clear
of any and all claims, liens and/or encumbrances. Except as otherwise provided
herein, the date upon which the Company receives the completed Notice of
Conversion (by recognized overnight courier, hand-delivery or facsimile,
followed by hand-delivery or courier delivery within two (2) business days
thereafter) is the conversion date, provided that the Company shall not be
required to deliver a certificate for shares of Common Stock unless and until
the Company receives the original Debenture. Within five (5) business days
after receipt of the Notice of Conversion as aforesaid, provided the Company
has received the original Debenture from the Holder, the Company shall deliver
a certificate as specified in the Agreement for the number of full shares of
Common Stock issuable upon the conversion and a check for any fraction of a
share. The person in whose name the certificate representing shares of Common
Stock is to be registered shall be treated as a shareholder of record on and
after the conversion date. Upon surrender of a Debenture that is to be
converted in part, the Company shall issue to the Holder a new Debenture equal
in principal amount to the unconverted portion of the Debenture surrendered.
Section 2.3 Fractional Shares. The Company shall not issue a
fractional share of Common Stock upon the conversion of all or any portion of
this Debenture. Instead, the Company shall pay, in lieu of any fractional
share, the cash value thereof at the Conversion Price of the Common Stock as
determined pursuant to Section 2.1 above.
Section 2.4 Taxes on Conversion. The Company shall pay any
documentary, stamp or similar issue or transfer tax due on the issuance of
Common Stock upon the conversion of this Debenture. The Holder, however, shall
pay any such tax which is due because such shares are issued in a name other
than its name.
Section 2.5 Company to Reserve Stock. The Company shall reserve out of
its authorized but unissued Common Stock for issuance as provided in the
Subscription Agreement a number of shares of Common Stock equal to 19.999% of
the number of shares of Common Stock outstanding on the date of issuance of
this Debenture. All shares of Common Stock which may be issued upon the
conversion hereof shall be fully paid and nonassessable.
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<PAGE>
Section 2.6 Restrictions on Transfer. This Debenture
and the Common Stock issuable upon the conversion hereof have not been
registered under the Act and have been sold pursuant to an exemption under the
Act. The Debenture may not be pledged, transferred or resold except pursuant to
registration, under or an exemption from, the Act. Any shares of Common Stock
issued hereunder shall bear a restrictive legend similar to the legend set
forth on the first page hereof.
Article 3. Redemption
Section 3.1 Redemption Rights
(a) In the event the Company receives a Notice of
Conversion and the Conversion Price shall equal or be less than $6.00, the
Company, at its sole option, may nevertheless redeem such portion of the
Debenture as shall have been requested to be converted by paying the Holder an
amount equal to one hundred fifteen percent (115%) of the face amount of such
portion of this Debenture as shall have been requested to be redeemed (a
"Redemption").
(b) In addition to the right of redemption set forth in
Section 3.1(a) above, in the event the Company receives a Notice of Conversion
and the number of shares of Common Stock to be issued upon conversion of this
Debenture together with (i) the number of shares of Common Stock previously
issued upon conversion of the Debentures and (ii) the number of shares of
Common Stock issued or issuable (assuming in the case of the Warrants an
Exercise Price (as defined in the Warrants) at $6.50 per share of Common Stock)
upon exercise of the Warrants and Bonus Warrants (as such terms are defined in
the Agreement) equals or exceeds twenty percent (20%) (the "Twenty Percent
Threshold") of the number of outstanding shares of Common Stock on the date of
execution of the Agreement, the Company may effect a Redemption at the price
provided in Section 3.1(a) above for such portion of this Debenture as shall
have been requested to be converted in excess of the Twenty Percent Threshold.
(c) In the event that the Company desires to effect a
Redemption, the Company shall provide notice of such event to the Holder of
this Debenture within five (5) business days of receipt of the Notice of
Conversion (a "Redemption Notice"), and any such redemption shall occur by
payment by the Company by wire transfer of the applicable redemption amount not
later than five (5) business days following the date of the Redemption Notice
(the "Redemption Date").
Article 4. Certain Payments
Section 4.1 Registration Statement. In the event the
Registration Statement is not declared effective within one hundred twenty
(120) days after the Closing (as defined in the Agreement), this Debenture,or
any portion hereof outstanding on and after such date, shall bear interest at a
rate per annum equal to eighteen percent (18%). Such interest shall be due and
payable each January 1, April 1, July 1 and December 1 thereafter until and all
accrued amounts shall be due and payable on the earlier of the date the
Registration Statement has been declared effective, all of
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<PAGE>
this Debenture has been converted into Common Stock or the Holder has received
payment of the principal amount hereof.
Section 4.2 Failure to Convert or Redeem. In the event the Company
breaches its obligation to deliver certificates for Common Stock under Section
2.2 above or as contemplated by Section 2.1(d) above or to make payment in
connection with a Redemption as provided in Section 3.1(c) above, the Company
shall be required to make payment to the Holder of this Debenture within five
(5) business days after each demand by the Holder, of an amount equal to One
Thousand Dollars ($1,000) per day with respect to each One Hundred Thousand
Dollars ($100,000) principal amount of this Debenture outstanding during such
period as such breach continues.
Section 4.3 Rights and Remedies. The rights and remedies provided
to the Holder under Sections 4.1 and 4.2 above shall not limit any other rights
and remedies afforded by law to the Holder.
Article 5. Recapitalization, Mergers, etc.
Section 5.1 Recapitalization Generally. In case the Company, prior
to the Maturity Date, shall (i) subdivide its outstanding Common Stock
(including by means of a dividend or distribution on the Common Stock payable
in Common Stock), (ii) combine its outstanding Common Stock into a smaller
number of shares, or (iii) issue by capital reorganization or reclassification
of its Common Stock (other than a subdivision or combination of its shares
provided for above, a reorganization, merger, consolidation, or sale of assets
provided for elsewhere in this Article 5, or the issuance of any shares of
Common Stock in connection with the acquisition of assets or the repayment of
debt) any shares of Common Stock of the Company, the Conversion Price in effect
thereafter shall be adjusted so that it shall equal the lesser of (x) $6.50 as
adjusted to reflect such action and (y) the Market Price as adjusted to the
extent necessary to reflect such action. In case of any such action, the
Conversion Price set forth in Section 3.1(a) under which the Company may effect
a Redemption and the $10.00 bid price set forth in Section 2.1(b) shall be
adjusted to reflect such action. An adjustment made pursuant to this subsection
shall become effective retroactively immediately after the effective date in
the case of a subdivision, combination or reclassification.
Section 5.2 Mergers. Until this Debenture is paid in full or has
been converted into Common Stock, the Company shall not consolidate or merge
into, or transfer all or substantially all of its assets to, any person, unless
such person assumes the obligations of the Company under this Debenture and
immediately after such transaction no Event of Default exists. Any reference
herein to the Company shall refer to such surviving or transferee corporation
and the obligations of the Company shall terminate upon such assumption. If the
Company merges or consolidates with another corporation or sells or transfers
all or substantially all of its assets to another person and the holders of the
Common Stock are entitled to receive stock, securities or property in respect
of, or in
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<PAGE>
exchange for, Common Stock, then, as a condition of such merger, consolidation,
sale or transfer the Company and any such successor, purchaser or transferee
shall amend this Debenture to provide that it may thereafter be converted on
the terms and subject to the conditions set forth above into the stock,
securities or property receivable upon such merger, consolidation, sale or
transfer by a holder of shares of Common Stock into which this Debenture might
have been converted immediately before such merger, consolidation, sale or
transfer, entity in such merger, consolidation, sale or transfer. In any such
case, appropriate adjustment shall be made in the application of the provisions
of this Article 5 with respect to the rights of the Holder upon and after such
merger, consolidation, sale or transfer to the end that the provisions of this
Article 5 (including adjustment of the Conversion Price then in effect and the
number of shares issuable upon conversion of this Debenture) shall be
applicable after that event as nearly equivalently as may be practicable.
Except as otherwise provided herein, the Conversion Price shall be the same as
the applicable Conversion Price defined in Article 3 above.
Article 6. Reports.
The Company will mail to the Holder hereof at its address as shown
on the Register (as defined in Section 8.2) a copy of any annual, quarterly or
current report that it files with the Securities and Exchange Commission
promptly after the filing thereof and a copy of any annual, quarterly or other
report or proxy statement that it gives to its shareholders generally at the
time such report or statement is sent to shareholders.
Article 7. Defaults and Remedies.
Section 7.1 Events of Default. An "Event of Default" shall be
deemed to have occurred if (a) the Company fails to issue Common Stock upon
conversion, within the time period specified in Section 2.2, (b) the Company
fails to comply with any of its other agreements in this Debenture and such
failure continues for thirty (30) days after receipt of written notice from the
Holder, (c) any of the representations or warranties made by the Company herein
or in the Agreement shall be false or misleading, in any material respect, as
of the date made or (d) the Company breaches, in any material respect, any of
its agreements contained in the Agreement. Notwithstanding the foregoing, the
Company's failure to have the Registration Statement declared effective within
one hundred twenty (120) days after the Closing shall not constitute an Event
of Default provided the Company complies with the obligations set forth in
Section 4.1 and provided further that such failure shall not prohibit the
Holder from pursuing any other rights and remedies available at law.
Section 7.2 Acceleration. If an Event of Default occurs and is
continuing, the Holder hereof by notice to the Company may declare the
principal of this Debenture to be due and payable. Upon such declaration, the
principal shall be due and payable immediately without presentment, demand,
protest or notice of any kind, all of which are hereby expressly waived,
anything herein or in any note or other instruments contained to the contrary
notwithstanding, and the Holder may immediately, and without expiration of any
period of grace, enforce any and all of the Holder's rights
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<PAGE>
or remedies afforded by law. The Company expressly waives demand and
presentment for payment, notice of nonpayment, protest, notice of protest,
notice of dishonor, notice of acceleration or intent to accelerate, bringing of
suit and diligence in taking any action to collect amounts called for hereunder
and shall be directly and primarily liable for the payment of all sums owing
and to be owing hereon, regardless of and without any notice, diligence, act or
omission as or with respect to the collection of any amount called for
hereunder and for the payment of reasonable legal fees incurred by the Holder
in bringing suit to collect amounts due and payable hereunder.
Article 8. Registered Debentures.
Section 8.1 Series. This Debenture is one of a numbered series of
Debentures issued to the Holder and certain other parties and designated as
"Convertible Debentures Due August 25, 1998." Such Debentures are referred to
herein collectively as the "Debentures."
Section 8.2 Record Ownership. The Company shall maintain a
register of the holders of the Debentures (the "Register") showing their names
and addresses and the serial numbers and principal amounts of Debentures issued
to or transferred of record by them from time to time. The Register may be
maintained in electronic, magnetic or other form. The Company may treat the
person named as the Holder of this Debenture in the Register as the sole owner
of the Debenture. The Holder of the Debenture is the person exclusively
entitled to receive notifications with respect to the Debenture, convert it
into Common Stock and otherwise exercise all of the rights and powers as the
absolute owner hereof.
Section 8.3 Registration of Transfer. Transfers of this Debenture
may be registered on the books of the Company maintained for such purpose
pursuant to Section 8.2 above (i.e., the Register). Transfers shall be
registered when this Debenture is presented to the Company with a request to
register the transfer hereof and the Debenture is duly endorsed by the Holder,
reasonable assurances are given that the endorsements are genuine and
effective, the Company has received a certificate from the Holder that it owns
this Debenture free and clear of all claims, liens and/or encumbrances, and the
Company has received evidence satisfactory to it that such transfer is rightful
and in compliance with all applicable laws, including tax laws and State and
Federal securities laws. When this Debenture is presented for transfer and duly
transferred hereunder, it shall be canceled and one or more new Debentures
showing the name(s) of the transferee(s) as the Holder(s) thereof shall be
issued in lieu hereof. When this Debenture is presented to the Company with a
reasonable request to exchange it for an equal principal amount of Debentures
of other denominations, the Company shall make such exchange and shall cancel
this Debenture and issue, in lieu thereof, Debentures having a total principal
amount equal to this Debenture in the denominations requested by the Holder.
Section 8.4 Worn and Lost Debentures. If this Debenture becomes
worn, defaced or mutilated but is still substantially intact and recognizable,
the Company or its agent may issue a new Debenture in lieu hereof upon its
surrender. Where the Holder of this Debenture claims that the
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<PAGE>
Debenture has been lost, destroyed or wrongfully taken, the Company shall issue
a new Debenture in place of the original Debenture if the Holder so requests by
written notice to the Company (which notice is actually received by the Company
before it is notified that this Debenture has been acquired by a bona fide
purchaser) and the Holder has delivered to the Company an indemnity bond in
such amount and issued by such surety as the Company deems satisfactory
together with an affidavit of the Holder setting forth the facts concerning
such loss, destruction or wrongful taking and such other information in such
form and with such proof or verification as the Company may request.
Article 9. Notices.
All notices and other communications provided for or permitted
hereunder shall be made in writing by hand delivery, registered first class
mail, overnight courier, or telecopied, initially to the address set forth
below, and thereafter at such other address, notice of which is given in
accordance with the provisions of this Article 9.
All notices to Holders are to be directed to each Holder at such
address as is listed for such Holder in the Register.
All notices to the Company are to be directed to:
Sterling Vision, Inc.
1500 Hempstead Turnpike
East Meadow, NY 11554
Attn: General Counsel
Telephone: 516-390-2144
Telecopier: 516-390-2150
-8-
<PAGE>
with a copy (which shall not constitute notice) to:
Camhy Karlinsky & Stein LLP
1740 Broadway
16th Floor
New York, NY 10019
Attn: Robert S. Matlin, Esq.
Telephone: 212-977-6600
Telecopier: 212-977-8389
All such notices and communications shall be deemed to have been
duly given: when delivered by hand, if personally delivered; three (3) business
days after being deposited in the mail, postage prepaid, if mailed; the next
business day after being deposited with an overnight courier, if deposited with
a nationally recognized, overnight courier service; when receipt is
acknowledged if telecopied.
Article 10. Times.
Where this Debenture authorizes or requires the payment of money
or the performance of a condition or obligation on a Saturday or Sunday or a
public holiday, or authorizes or requires the payment of money or the
performance of a condition or obligation within, before or after a period of
time computed from a certain date, and such period of time ends on a Saturday
or a Sunday or a public holiday, such payment may be made or condition or
obligation performed on the next succeeding business day, and if the period
ends at a specific hour, such payment may be made or condition performed, at or
before the same hour of such next succeeding business day, with the same force
and effect as if made or performed in accordance with the terms of this
Debenture.
Article 11. Rules of Construction.
In this Debenture, unless the context otherwise requires, words in
the singular number include the plural, and in the plural include the singular,
and words of the masculine gender include the feminine and the neuter, and when
the sense so indicates, words of the neuter gender may refer to any gender. The
numbers and titles of sections contained in this Debenture are inserted for
convenience of reference only, and they neither form a part of this Debenture
nor are they to be used in the construction or interpretation hereof. Wherever,
in this Debenture, a determination of the Company is required or allowed, such
determination shall be made by a majority of the Board of Directors of the
Company and if it is made in good faith, it shall be conclusive and binding
upon the Company and the Holder of this Debenture.
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<PAGE>
Article 12. Nature of the Obligation; Rank.
No provision of this Debenture shall alter or impair the
obligation of the Company, which is absolute and unconditional, to pay the
principal of this Debenture at the time and place and in the coin or currency,
herein prescribed. This Debenture and all other Debentures now or hereafter
issued of similar terms are direct obligations of the Company. This Debenture
ranks equally with all other Debentures now or hereafter issued under the terms
set forth herein.
Article 13. Governing Law.
The validity, terms, performance and enforcement of this Debenture
shall be governed and construed by the provisions hereof and in accordance with
the laws of the State of New York without regard to the laws governing
conflicts of laws.
IN WITNESS WHEREOF, the Company has duly executed this Debenture
as of the date first written above.
STERLING VISION, INC.
By:______________________________
Name:____________________________
Title:___________________________
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<PAGE>
NOTICE OF CONVERSION
[To be completed and signed only upon conversion of Debenture]
The undersigned, the Holder of this Debenture, hereby irrevocably
elects to exercise the right to convert it into Common Stock, par value $.01
per share, of Sterling Vision, Inc. as follows:
[Complete if less than all Dollars ($ )*
of the principal amount is -------------------------------------------------
to be converted] ($1,000 or integral multiples of $1,000)
[Signature must be -------------------------------------------------
guaranteed if registered (Name of Holder of shares if different than
holder of stock differs registered Holder of Debenture)
from registered Holder of
Debenture]
-------------------------------------------------
(Address of Holder of shares if different than
address of registered Holder of Debenture)
-------------------------------------------------
(Social Security or EIN of Holder of shares if
different than Holder of Debenture)
* If the principal amount of the Debenture to be converted is less than the
entire principal amount thereof, a new Debenture for the balance of the
principal amount shall be returned to the Holder of the Debenture. All notices
to be transmitted by hand delivery, facsimile or overnight courier.
Date: Sign:
------------------ ------------------------------------------------
(Signature must conform in all respects to name
of Holder shown on face of Debenture)
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<PAGE>
ASSIGNMENT OF DEBENTURE
The undersigned hereby sell(s) and assign(s) and transfer(s) unto
- -------------------------------------------------------------------------------
(name, address and SSN or EIN of assignee)
- -------------------------------------------------------------------------------
(principal amount of Debenture, $1,000 or integral multiples of $1,000)
of principal amount of the Debenture.
Date: Sign:
------------------ ------------------------------------------------
(Signature must conform in all respects to name
of Holder shown on face of Debenture)
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<PAGE>
THIS WARRANT AND ANY SHARES ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), NOR
UNDER ANY STATE SECURITIES LAW AND SUCH SECURITIES MAY NOT BE PLEDGED, SOLD,
ASSIGNED, HYPOTHECATED, OR OTHERWISE TRANSFERRED UNTIL (1) A REGISTRATION
STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE ACT AND ANY APPLICABLE
STATE SECURITIES LAW OR (2) THE COMPANY RECEIVES AN OPINION OF COUNSEL TO THE
COMPANY OR COUNSEL TO THE HOLDER OF SUCH SECURITIES, WHICH COUNSEL AND OPINION
ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES MAY BE
PLEDGED, SOLD, ASSIGNED, HYPOTHECATED, OR TRANSFERRED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS.
THE TRANSFER OF THIS WARRANT AND THE SHARES ISSUABLE UPON THE EXERCISE HEREOF
IS RESTRICTED AS DESCRIBED HEREIN.
STERLING VISION, INC.
Warrant for the purchase of shares of Common Stock,
$.01 par value per share
No.___
THIS CERTIFIES that, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, ____________________
(the "Holder"), is entitled to subscribe for and purchase from Sterling Vision,
Inc., a New York corporation (the "Company"), upon the terms and conditions set
forth herein, at any time or from time to time, during the period commencing on
the date hereof and expiring at 5:00 p.m. on February 26, 2000 (the "Exercise
Period"), ________________ shares of the Company's common stock, $.01 par value
per share (the "Common Stock"), at a price (the "Exercise Price") per share of
Common Stock equal to the lesser of (x) $6.50 and (y) the average price per
share actually paid for Common Stock which the Holder previously acquired upon
conversion of any Debentures (as defined in the Convertible Debentures and
Warrants Subscription Agreement dated as of February 26, 1997 (the
"Subscription Agreement") between the Company and the Holder) prior to the
Company's receipt of this Warrant, together with the Election to Exercise
attached thereto and the Exercise Price therefor. As used herein, the term
"this Warrant" shall mean and include this Warrant and any Warrant or Warrants
hereafter issued as a consequence of the exercise or transfer of this Warrant
in whole or in part. This Warrant is one of a series of warrants issued to the
original Holder in connection with the sale by the Company of certain units
consisting of convertible debentures and this Warrant. As used herein, the term
"Holder" shall include any transferee to whom this Warrant has been transferred
in accordance with the terms hereof.
Exhibit B
<PAGE>
The number of shares of Common Stock issuable upon exercise
of the Warrants (the "Warrant Shares") may be adjusted from time to time as
hereinafter set forth.
1. Subject to the provisions of Section 2, this Warrant may
be exercised during the Exercise Period, as to the whole or any lesser number
of whole Warrant Shares, by transmission by telecopy of the Election to
Exercise, followed within three (3) business days by the surrender of this
Warrant (with the Election to Exercise attached hereto duly executed) to the
Company at its office at 1500 Hempstead Turnpike, East Meadow, New York 11554,
or at such other place as is designated in writing by the Company, together
with a certified or bank cashier's check payable to the order of the Company,
in an amount equal to the product of the Exercise Price and the number of
Warrant Shares for which this Warrant is being exercised (the "Aggregate
Exercise Price").
2. Notwithstanding anything to the contrary contained in
Section 1, in the event the number of Warrant Shares for which this Warrant is
being exercised together with (i) the number of Warrant Shares and Bonus
Warrant Shares (as defined in the Subscription Agreement), issued or issuable
(assuming, in the case of Warrant Shares, an Exercise Price of $6.50) to Holder
and (ii) the number of shares of Common Stock issued or issuable (assuming a
Conversion Price (as defined in the Subscription Agreement) of $6.50) upon
conversion of the Debentures issued to Holder equals or exceeds twenty percent
(20%) (the "Twenty Percent Threshold") of the number of outstanding shares of
Common Stock on the date of execution of the Subscription Agreement, the
Company shall have the right to redeem such portion of this Warrant as shall
have been requested to be exercised in excess of the Twenty Percent Threshold
for an amount per Warrant Share equal to the excess of the Closing Bid Price of
the Common Stock on the trading day immediately preceding the date of exercise
over the Exercise Price.
3. Notwithstanding anything to the contrary contained in this
Warrant, this Warrant shall not be exercisable by the Holder to the extent that
and so long as the Common Stock which would be acquired upon such exercise when
aggregated with any other shares of Common Stock at the time of exercise
beneficially owned by the Holder and not previously sold by the Holder would
aggregate more than 4.9% of the then outstanding shares of Common Stock of the
Company. For this purpose, "beneficial ownership" shall be calculated in
accordance with the provisions of Section 13(d) of the Securities Exchange Act
of 1934 and the rules and regulations promulgated thereunder. The opinion of
the Holder's counsel shall be conclusive in calculating the Holder's beneficial
ownership.
4. Upon each exercise of the Holder's rights to purchase
Warrant Shares, the Holder shall be deemed to be the holder of record of the
Warrant Shares issuable upon such exercise, notwithstanding that the transfer
books of the Company shall then be closed or certificates representing such
Warrant Shares shall not then have been actually delivered to the Holder.
Within
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<PAGE>
five (5) business days after each such exercise of this Warrant and receipt by
the Company of this Warrant, the Election to Exercise and the Aggregate
Exercise Price, the Company shall issue and deliver to the Holder a certificate
or certificates for the Warrant Shares issuable upon such exercise, registered
in the name of the Holder or its designee. If this Warrant should be exercised
in part only, the Company shall, upon surrender of this Warrant for
cancellation, execute and deliver a new Warrant evidencing the right of the
Holder to purchase the balance of the Warrant Shares (or portions thereof)
subject to purchase hereunder.
5. In the event the Company fails to deliver to the Holder a
certificate or certificates for the Warrant Shares in accordance with Section
4, the Company shall be required to make payment to the Holder of this Warrant
within five (5) business days after each demand by the Holder, of an amount
equal to One Thousand Dollars ($1,000.00) per day with respect to each One
Hundred Thousand Dollars ($100,000.00) of Warrant Shares (based on the Exercise
Price) to be issued to the Holder with respect to the Election to Exercise
delivered to the Company.
6. In the event this Warrant is exercised in whole or in part
within two (2) years after the Registration Statement (as defined in the
Subscription Agreement) is declared effective, upon any such exercise the
Company shall issue to the Holder warrants ("Bonus Warrants") in accordance
with the terms of, and in the form of warrant attached as Exhibit C to, the
Subscription Agreement. The Holder shall receive one (1) Bonus Warrant with
respect to each two (2) Warrants exercised prior to the expiration of said two
(2) year period, which Bonus Warrant shall entitle the Holder to purchase one
(1) share of Common Stock for a purchase price of $7.50.
7. Any Warrants issued upon the transfer or exercise in part
of this Warrant shall be numbered and shall be registered in a warrant register
(the "Warrant Register") as they are issued. The Company shall be entitled to
treat the registered holder of any Warrant on the Warrant Register as the owner
in fact thereof for all purposes and shall not be bound to recognize any
equitable or other claim to, or interest in, such Warrant on the part of any
other person, and shall not be liable for any registration of transfer of
Warrants which are registered or to be registered in the name of a fiduciary or
the nominee of a fiduciary unless made with the actual knowledge of the general
counsel of the Company that a fiduciary or nominee is committing a breach of
trust in requesting such registration of transfer. This Warrant shall be
transferable on the Warrant Register only upon delivery thereof duly endorsed
by the Holder or by his duly authorized attorney or representative, or
accompanied by proper evidence of succession, assignment, or authority to
transfer, subject in all cases to compliance with the Subscription Agreement.
In all cases of transfer by an attorney, executor, administrator, guardian, or
other legal representative, duly authenticated evidence of his or its authority
shall be produced. Upon any registration of transfer, the Company shall deliver
a new Warrant or Warrants to the person entitled thereto. This Warrant may be
exchanged, at the option of the Holder thereof, for another Warrant, for other
Warrants of different denominations, of like tenor and representing in the
aggregate the right to purchase a like number of Warrant Shares (or portions
thereof), upon surrender to the Company or its duly authorized agent.
Notwithstanding anything contained herein to the contrary, the Company shall
have no obligation to cause Warrants
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<PAGE>
to be transferred on its books to any person if, in the opinion of counsel to
the Company, such transfer does not comply with the provisions of the Act, and
the rules and regulations thereunder, and any applicable state securities laws.
8. The Company shall at all times reserve and keep available
out of its authorized and unissued Common Stock, solely for the purpose of
providing for the exercise of the rights to purchase all Warrant Shares granted
pursuant to the Warrants, a number of shares of Common Stock equal to 19.999%
of the number of shares of Common Stock outstanding on the date of issuance
hereof. The Company covenants that all shares of Common Stock issuable upon
exercise of this Warrant, upon receipt by the Company of the full Exercise
Price therefor, shall be validly issued, fully paid, nonassessable, and free of
preemptive rights.
9. (a) The Exercise Price in effect at any time and the
number and kind of securities purchasable upon the exercise of this Warrant
shall be subject to adjustment from time to time upon the happening of certain
events, as follows:
(b) In case the Company shall (i) declare a dividend or
make a distribution on its outstanding shares of Common Stock, in each case, in
shares of Common Stock, (ii) subdivide or reclassify its outstanding shares of
Common Stock into a greater number of shares, or (iii) combine or reclassify
its outstanding shares of Common Stock into a smaller number of shares, the
Exercise Price in effect at the time of the record date for such dividend or
distribution or of the effective date of such subdivision, combination or
reclassification shall be adjusted so that it shall equal the price determined
by multiplying the Exercise Price by a fraction, the denominator of which shall
be the number of shares of Common Stock outstanding after giving effect to such
action, and the numerator of which shall be the number of shares of Common
Stock outstanding immediately prior to such action. Such adjustment shall be
made successively whenever any event listed above shall occur.
(c) Upon each adjustment of the Exercise Price pursuant to
the provisions of this Section 9, the number of Warrant Shares issuable upon
the exercise at the adjusted Exercise Price of each Warrant shall be adjusted
to the nearest number of whole shares of Common Stock by multiplying a number
equal to the Exercise Price in effect immediately prior to such adjustment by
the number of Warrant Shares issuable upon exercise of this Warrant immediately
prior to such adjustment and dividing the product so obtained by the adjusted
Exercise Price.
(d) For the purpose of this Agreement, the term "Common
Stock" shall mean (i) the class of stock designated as Common Stock in the
Articles of Incorporation of the Company as amended as of the date hereof, or
(ii) any other class of stock resulting from successive changes or
reclassifications of such Common Stock consisting solely of changes in par
value, or from par value to no par value, or from no par value to par value.
-4-
<PAGE>
(e) In case of any consolidation of the Company with, or
merger of the Company into, another corporation (other than a consolidation or
merger which does not result in any reclassification or change of the
outstanding Common Stock), the corporation formed by such consolidation or
merger shall execute and deliver to the Holder a supplemental warrant agreement
providing that the Holder of this Warrant shall have the right thereafter
(until the expiration of such Warrant) to receive, upon exercise of such
Warrant, the kind and amount of shares of stock and other securities and
property receivable upon such consolidation or merger by a holder of the number
of shares of Common Stock for which such Warrant might have been exercised
immediately prior to such consolidation, merger, sale or transfer. Such
supplemental warrant agreement shall provide for adjustments which shall be
identical to the adjustments provided in this Section 9. The above provision of
this subsection shall similarly apply to successive consolidations or mergers.
(f) No adjustment in the number of Warrant Shares shall be
required if such adjustment is less than one; provided, however, that any
adjustments which by reason of this Section 9(f) are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 9 shall be made to the nearest
one-thousandth of a share.
(g) In any case in which this Section 9 shall require that
an adjustment in the number of Warrant Shares be made effective as of a record
date for a specified event, the Company may elect to defer, until the
occurrence of such event, issuing to the Holder, if the Holder exercised this
Warrant after the record date, the Warrant Shares, if any, issuable upon such
exercise over and above the Warrant Shares, if any, issuable upon such exercise
prior to such adjustment; provided, however, that the Company shall deliver to
the Holder a due bill or other appropriate instrument evidencing the Holder's
right to receive such additional Warrant Shares upon the occurrence of the
event requiring such adjustment.
(h) Whenever there shall be an adjustment as provided in
this Section 9, the Company shall promptly cause written notice thereof to be
sent by certified mail, postage prepaid, to the Holder, at its address as it
shall appear in the Warrant Register, which notice shall be accompanied by an
officer's certificate setting forth the number of Warrant Shares issuable upon
the exercise of this Warrant if such Warrant were exercisable on the date of
such notice, and setting forth a brief statement of the facts requiring such
adjustment and the computation thereof, which officer's certificate shall be
conclusive evidence of the correctness of any such adjustment absent manifest
error.
10. In case at any time the Company shall propose
(a) to pay any dividend or make any distribution on shares
of Common Stock in shares of Common Stock or make any other distribution (other
than regularly scheduled cash dividends which are not in a greater amount per
share than the most recent such cash dividend) to all holders of Common Stock;
or
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<PAGE>
(b) to issue any rights, warrants, or other securities to
all holders of Common Stock entitling them to purchase any additional shares of
Common Stock or any other rights, warrants, or other securities; or
(c) to effect any reclassification or change of
outstanding shares of Common Stock, or any consolidation or merger as described
in Section 9; or
(d) to effect any liquidation, dissolution, or winding-up
of the Company,
then, and in any one or more of such cases, the Company shall give written
notice thereof, by registered mail, postage prepaid, to the Holder at the
Holder's address as it shall appear in the Warrant Register, mailed at least 15
days prior to (i) the date as of which the holders of record of shares of
Common Stock to be entitled to receive any such dividend, distribution, rights,
warrants, or other securities are to be determined, or (ii) the date on which
any such reclassification, change of outstanding shares of Common Stock,
consolidation, merger, liquidation, dissolution, or winding-up is expected to
become effective, and the date as of which it is expected that holders of
record of shares of Common Stock shall be entitled to exchange their shares for
securities or other property, if any, deliverable upon such reclassification,
change of outstanding shares, consolidation, merger, sale, lease, conveyance of
property, liquidation, dissolution, or winding-up.
11. The issuance of any shares or other securities upon the
exercise of this Warrant, and the delivery of certificates or other instruments
representing such shares or other securities, shall be made without charge to
the Holder for any tax or other charge in respect of such issuance, other than
applicable transfer taxes. The Company shall not, however, be required to pay
any tax which may be payable in respect of any transfer involved in the issue
and delivery of any certificate in a name other than that of the Holder, and
the Company shall not be required to issue or deliver any such certificate
unless and until the person or persons requesting the issue thereof shall have
paid to the Company the amount of such tax or shall have established to the
satisfaction of the Company that such tax has been paid.
12. The Company shall file a registration statement covering
the Warrant Shares and otherwise comply with its obligations with respect to
the Warrant Shares, all as set forth in the Subscription Agreement. All
expenses incurred in connection with any such registration statement shall be
paid as provided in the Subscription Agreement.
13. (a) The Company agrees to indemnify and hold harmless the
Holder, its officers, directors, employees, shareholders, attorneys and agents,
and each person, if any, who controls any such person (within the meaning of
the Act) as provided in Section 6 of the Subscription Agreement. The foregoing
agreement to indemnify shall be in addition to any liability the Company may
otherwise have, including liabilities arising under this Warrant.
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<PAGE>
(b) The Holder agrees to indemnify and hold harmless the
Company, its officers, directors, employees, shareholders, attorneys and agents
and each person who controls the Company (within the meaning of the Act) as
provided in Section 6 of the Subscription Agreement.
14. Unless registered as contemplated by Section 12 hereof,
the Warrant Shares issued upon exercise of the Warrants shall be subject to a
stop transfer order and the certificate or certificates evidencing such Warrant
Shares shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN NOT
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SUCH
SHARES MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT, OR AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACT. SUCH SHARES ARE
SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER CONTAINED IN A
WARRANT, DATED FEBRUARY 26, 1997, COPIES OF WHICH ARE ON FILE
WITH THE SECRETARY OF THE COMPANY."
15. Upon receipt of evidence satisfactory to the Company of
the loss, theft, destruction, or mutilation of any Warrant (and upon surrender
of any Warrant if mutilated), and upon reimbursement of the Company's
reasonable incidental expenses and, if reasonably requested, an indemnity
reasonably acceptable to the Company, the Company shall execute and deliver to
the Holder thereof a new Warrant of like date, tenor, and denomination.
16. The Holder of any Warrant shall not have, solely on
account of such status, any rights of a stockholder of the Company, either at
law or in equity, or to any notice of meetings of stockholders or of any other
proceedings of the Company, except as provided in this Warrant.
-7-
<PAGE>
17. This Warrant shall be construed in accordance with the
laws of the State of New York applicable to contracts made and performed within
such State, without regard to principles of conflicts of law.
Dated: February 26, 1997
STERLING VISION, INC.
By: _____________________________
Name:
Title:
-8-
<PAGE>
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer the
attached Warrant.)
FOR VALUE RECEIVED, _________________________________________
____________________________ hereby sells, assigns, and transfers unto
__________________ a Warrant to purchase __________ shares of Common Stock,
$.01 par value per share, of Sterling Vision, Inc. (the "Company"), together
with all right, title, and interest therein, and does hereby irrevocably
constitute and appoint attorney to transfer such Warrant on the books of the
Company, with full power of substitution.
Dated: ______________________
Signature______________________________
Signature Guaranteed:
NOTICE
The signature on the foregoing Assignment must correspond to
the name as written upon the face of this Warrant in every particular, without
alteration or enlargement or any change whatsoever.
<PAGE>
To: Sterling Vision, Inc.
1500 Hempstead Turnpike
East Meadow, New York 11554
ELECTION TO EXERCISE
The undersigned hereby exercises his or its rights to purchase _______
Warrant Shares covered by the within Warrant and tenders payment herewith in
the amount of $_________ in accordance with the terms thereof, certifies that
this Warrant is owned by the undersigned free and clear of any and all claims,
liens and/or encumbrances and requests that certificates for such securities be
issued in the name of, and delivered to:
_________________________________________
_________________________________________
_________________________________________
(Print Name, Address and Social Security
or Tax Identification Number)
and, if such number of Warrant Shares shall not be all the Warrant Shares
covered by the within Warrant, that a new Warrant for the balance of the
Warrant Shares covered by the within Warrant be registered in the name of, and
delivered to, the undersigned at the address stated below.
Dated:_______________________ Name:_________________________________
(Print)
Address:_______________________________________________________________________
______________________________________
(Signature)
<PAGE>
THIS WARRANT AND ANY SHARES ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), NOR
UNDER ANY STATE SECURITIES LAW AND SUCH SECURITIES MAY NOT BE PLEDGED, SOLD,
ASSIGNED, HYPOTHECATED, OR OTHERWISE TRANSFERRED UNTIL (1) A REGISTRATION
STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE ACT AND ANY APPLICABLE
STATE SECURITIES LAW OR (2) THE COMPANY RECEIVES AN OPINION OF COUNSEL TO THE
COMPANY OR COUNSEL TO THE HOLDER OF SUCH SECURITIES, WHICH COUNSEL AND OPINION
ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES MAY BE
PLEDGED, SOLD, ASSIGNED, HYPOTHECATED, OR TRANSFERRED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS.
THE TRANSFER OF THIS WARRANT AND THE SHARES ISSUABLE UPON THE EXERCISE HEREOF
IS RESTRICTED AS DESCRIBED HEREIN.
STERLING VISION, INC.
Warrant for the purchase of shares of Common Stock,
$.01 par value per share
No.___
THIS CERTIFIES that, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, _____________ (the
"Holder"), is entitled to subscribe for and purchase from Sterling Vision,
Inc., a New York corporation (the "Company"), upon the terms and conditions set
forth herein, at any time or from time to time, during the period commencing on
the date hereof and expiring at 5:00 p.m. on the third anniversary of the date
of issuance (the "Exercise Period"), ____________ shares of the Company's
common stock, $.01 par value per share ("the Common Stock"), at a price (the
"Exercise Price") per share of Common Stock equal to $7.50. As used herein, the
term "this Warrant" shall mean and include this Warrant and any Warrant or
Warrants hereafter issued as a consequence of the exercise or transfer of this
Warrant in whole or in part. This Warrant is one of a series of warrants issued
to the original Holder in connection with the exercise of certain warrants by
the original Holder. As used herein, the term "Holder" shall include any
transferee to whom this Warrant has been transferred in accordance with the
terms hereof.
Exhibit C
<PAGE>
The number of shares of Common Stock issuable upon exercise
of the Warrants (the "Bonus Warrant Shares") may be adjusted from time to time
as hereinafter set forth.
1. Subject to the provisions of Section 2, this Warrant may
be exercised during the Exercise Period, as to the whole or any lesser number
of whole Bonus Warrant Shares, by transmission by telecopy of the Election to
Exercise, followed within three (3) business days by the surrender of this
Warrant (with the Election to Exercise attached hereto duly executed) to the
Company at its office at 1500 Hempstead Turnpike, East Meadow, New York 11554,
or at such other place as is designated in writing by the Company, together
with a certified or bank cashier's check payable to the order of the Company in
an amount equal to the product of the Exercise Price and the number of Bonus
Warrant Shares for which this Warrant is being exercised (the "Aggregate
Exercise Price").
2. Notwithstanding Section 1, in the event the number of
Bonus Warrant Shares for which this Warrant is being exercised together with
(i) the number of Warrant Shares (as defined in the Convertible Debentures and
Warrants Subscription Agreement dated as of February 26, 1997 (the
"Subscription Agreement"), between the Company and the Holder) and Bonus
Warrant Shares issued or issuable (assuming, in the case of Warrant Shares, an
Exercise Price of $6.50) to Holder and (ii) the number of shares of Common
Stock issued or issuable (assuming a Conversion Price (as defined in the
Subscription Agreement) of $6.50) upon conversion of the Debentures (as defined
in the Subscription Agreement) equals or exceeds twenty percent (20%) (the
"Twenty Percent Threshold") of the number of outstanding shares of Common Stock
on the date of execution of the Subscription Agreement, the Company shall have
the right to redeem such portion of this Warrant as shall have been requested
to be exercised in excess of the Twenty Percent Threshold for an amount per
Bonus Warrant Share equal to the excess of the Closing Bid Price of the Common
Stock on the trading day immediately preceding the date of exercise over the
Exercise Price. For purposes hereof, the "Closing Bid Price" shall mean the
closing bid price on the Nasdaq National Market System published by the Nasdaq
Stock Market or if no longer traded on the Nasdaq National Market, the closing
bid price on the Nasdaq Small Cap Market, the over-the-counter market or the
principal national securities exchange on which the Common Stock is so traded
and if such closing bid prices are not available, the mean of the high and low
prices on the principal national securities exchange, the over-the-counter
market or the Nasdaq Stock Market on which the Common Stock is so traded.
3. Notwithstanding anything to the contrary contained in this
Warrant, this Warrant shall not be convertible by the Holder to the extent that
and so long as the Common Stock which would be acquired upon such exercise when
aggregated with any other shares of Common Stock at the time of exercise
beneficially owned by the Holder and not previously sold by the Holder would
aggregate more than 4.9% of the then outstanding shares of Common Stock of the
Company. For this purpose, "beneficial ownership" shall be calculated in
accordance with the provisions of Section 13(d) of the Securities Exchange Act
of 1934 and the rules and regulations promulgated thereunder. The opinion of
the Holder's counsel shall be conclusive in calculating the Holder's beneficial
ownership.
-2-
<PAGE>
4. Upon each exercise of the Holder's rights to purchase
Bonus Warrant Shares, the Holder shall be deemed to be the holder of record of
the Bonus Warrant Shares issuable upon such exercise, notwithstanding that the
transfer books of the Company shall then be closed or certificates representing
such Bonus Warrant Shares shall not then have been actually delivered to the
Holder. Within five (5) business days after each such exercise of this Warrant
and receipt by the Company of this Warrant, the Election to Exercise and the
Aggregate Exercise Price, the Company shall issue and deliver to the Holder a
certificate or certificates for the Bonus Warrant Shares issuable upon such
exercise, registered in the name of the Holder or its designee. If this Warrant
should be exercised in part only, the Company shall, upon surrender of this
Warrant for cancellation, execute and deliver a new Warrant evidencing the
right of the Holder to purchase the balance of the Bonus Warrant Shares (or
portions thereof) subject to purchase hereunder.
5. Any Warrants issued upon the transfer or exercise in part
of this Warrant shall be numbered and shall be registered in a warrant register
(the "Warrant Register") as they are issued. The Company shall be entitled to
treat the registered holder of any Warrant on the Warrant Register as the owner
in fact thereof for all purposes and shall not be bound to recognize any
equitable or other claim to or interest in such Warrant on the part of any
other person, and shall not be liable for any registration of transfer of
Warrants which are registered or to be registered in the name of a fiduciary or
the nominee of a fiduciary unless made with the actual knowledge of the general
counsel of the Company that a fiduciary or nominee is committing a breach of
trust in requesting such registration of transfer. This Warrant shall be
transferable on the Warrant Register only upon delivery thereof duly endorsed
by the Holder or by his duly authorized attorney or representative, or
accompanied by proper evidence of succession, assignment, or authority to
transfer, subject in all cases to compliance with the Subscription Agreement.
In all cases of transfer by an attorney, executor, administrator, guardian, or
other legal representative, duly authenticated evidence of his or its authority
shall be produced. Upon any registration of transfer, the Company shall deliver
a new Warrant or Warrants to the person entitled thereto. This Warrant may be
exchanged, at the option of the Holder thereof, for another Warrant, or other
Warrants of different denominations, of like tenor and representing in the
aggregate the right to purchase a like number of Bonus Warrant Shares (or
portions thereof), upon surrender to the Company or its duly authorized agent.
Notwithstanding anything contained herein to the contrary, the Company shall
have no obligation to cause Warrants to be transferred on its books to any
person if, in the opinion of counsel to the Company, such transfer does not
comply with the provisions of the Act and the rules and regulations thereunder.
6. The Company shall at all times reserve and keep available
out of its authorized and unissued Common Stock, solely for the purpose of
providing for the exercise of the rights to purchase all Bonus Warrant Shares
granted pursuant to the Warrants, such number of shares of Common Stock as
shall, from time to time, be sufficient therefor. The Company covenants that
all shares of Common Stock issuable upon exercise of this Warrant, upon receipt
by the Company of the full Exercise Price therefor, shall be validly issued,
fully paid, nonassessable, and free of preemptive rights.
-3-
<PAGE>
7. (a) The Exercise Price in effect at any time and the
number and kind of securities purchasable upon the exercise of this Warrant
shall be subject to adjustment from time to time upon the happening of certain
events as follows:
(b) In case the Company shall (i) declare a dividend or
make a distribution on its outstanding shares of Common Stock, in each case, in
shares of Common Stock, (ii) subdivide or reclassify its outstanding shares of
Common Stock into a greater number of shares, or (iii) combine or reclassify
its outstanding shares of Common Stock into a smaller number of shares, the
Exercise Price in effect at the time of the record date for such dividend or
distribution or of the effective date of such subdivision, combination or
reclassification shall be adjusted so that it shall equal the price determined
by multiplying the Exercise Price by a fraction, the denominator of which shall
be the number of shares of Common Stock outstanding after giving effect to such
action, and the numerator of which shall be the number of shares of Common
Stock outstanding immediately prior to such action. Such adjustment shall be
made successively whenever any event listed above shall occur.
(c) Upon each adjustment of the Exercise Price pursuant
to the provisions of this Section 7, the number of Bonus Warrant Shares
issuable upon the exercise at the adjusted Exercise Price of each Warrant shall
be adjusted to the nearest number of whole shares of Common Stock by
multiplying a number equal to the Exercise Price in effect immediately prior to
such adjustment by the number of Bonus Warrant Shares issuable upon exercise of
this Warrant immediately prior to such adjustment and dividing the product so
obtained by the adjusted Exercise Price.
(d) For the purpose of this Agreement, the term "Common
Stock" shall mean (i) the class of stock designated as Common Stock in the
Articles of Incorporation of the Company as amended as of the date hereof, or
(ii) any other class of stock resulting from successive changes or
reclassifications of such Common Stock consisting solely of changes in par
value, or from par value to no par value, or from no par value to par value.
(e) In case of any consolidation of the Company with, or
merger of the Company into, another corporation (other than a consolidation or
merger which does not result in any reclassification or change of the
outstanding Common Stock), the corporation formed by such consolidation or
merger shall execute and deliver to the Holder a supplemental warrant agreement
providing that the Holder of this Warrant shall have the right thereafter
(until the expiration of such Warrant) to receive, upon exercise of such
Warrant, the kind and amount of shares of stock and other securities and
property receivable upon such consolidation or merger by a holder of the number
of shares of Common Stock for which such Warrant might have been exercised
immediately prior to such consolidation, merger, sale or transfer. Such
supplemental warrant agreement shall provide for adjustments which shall be
identical to the adjustments provided in this Section 7. The above provision of
this subsection shall similarly apply to successive consolidations or mergers.
-4-
<PAGE>
(f) No adjustment in the number of Bonus Warrant Shares
shall be required if such adjustment is less than one; provided, however, that
any adjustments which by reason of this Section 7(f) are not required to be
made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 7 shall be made to the nearest
one-thousandth of a share.
(g) In any case in which this Section 7 shall require
that an adjustment in the number of Bonus Warrant Shares be made effective as
of a record date for a specified event, the Company may elect to defer, until
the occurrence of such event, issuing to the Holder, if the Holder exercised
this Warrant after the record date, the Bonus Warrant Shares, if any, issuable
upon such exercise over and above the Bonus Warrant Shares, if any, issuable
upon such exercise prior to such adjustment; provided, however, that the
Company shall deliver to the Holder a due bill or other appropriate instrument
evidencing the Holder's right to receive such additional Bonus Warrant Shares
upon the occurrence of the event requiring such adjustment.
(h) Whenever there shall be an adjustment as provided in
this Section 7, the Company shall promptly cause written notice thereof to be
sent by certified mail, postage prepaid, to the Holder, at its address as it
shall appear in the Warrant Register, which notice shall be accompanied by an
officer's certificate setting forth the number of Bonus Warrant Shares issuable
upon the exercise of this Warrant if such Warrant were exercisable on the date
of such notice, and setting forth a brief statement of the facts requiring such
adjustment and the computation thereof, which officer's certificate shall be
conclusive evidence of the correctness of any such adjustment absent manifest
error.
8. In case at any time the Company shall propose
(a) to pay any dividend or make any distribution on
shares of Common Stock in shares of Common Stock or make any other distribution
(other than regularly scheduled cash dividends which are not in a greater
amount per share than the most recent such cash dividend) to all holders of
Common Stock; or
(b) to issue any rights, warrants, or other securities to
all holders of Common Stock entitling them to purchase any additional shares of
Common Stock or any other rights, warrants, or other securities; or
(c) to effect any reclassification or change of
outstanding shares of Common Stock, or any consolidation or merger, described
in Section 7; or
(d) to effect any liquidation, dissolution, or winding-up
of the Company,
then, and in any one or more of such cases, the Company shall give written
notice thereof, by registered mail, postage prepaid, to the Holder at the
Holder's address as it shall appear in the
-5-
<PAGE>
Warrant Register, mailed at least 15 days prior to (i) the date as of which the
holders of record of shares of Common Stock to be entitled to receive any such
dividend, distribution, rights, warrants, or other securities are to be
determined, or (ii) the date on which any such reclassification, change of
outstanding shares of Common Stock, consolidation, merger, liquidation,
dissolution, or winding-up is expected to become effective, and the date as of
which it is expected that holders of record of shares of Common Stock shall be
entitled to exchange their shares for securities or other property, if any,
deliverable upon such reclassification, change of outstanding shares,
consolidation, merger, sale, lease, conveyance of property, liquidation,
dissolution, or winding-up.
9. The issuance of any shares or other securities upon the
exercise of this Warrant, and the delivery of certificates or other instruments
representing such shares or other securities, shall be made without charge to
the Holder for any tax or other charge in respect of such issuance, other than
applicable transfer taxes. The Company shall not, however, be required to pay
any tax which may be payable in respect of any transfer involved in the issue
and delivery of any certificate in a name other than that of the Holder and the
Company shall not be required to issue or deliver any such certificate unless
and until the person or persons requesting the issue thereof shall have paid to
the Company the amount of such tax or shall have established to the
satisfaction of the Company that such tax has been paid.
10. The Company shall file a registration statement covering
the Bonus Warrant Shares and otherwise comply with its obligations with respect
to the Bonus Warrant Shares, all as set forth in the Subscription Agreement.
All expenses incurred in connection with any such registration statement shall
be paid as provided in the Subscription Agreement.
11. (a) The Company agrees to indemnify and hold harmless the
Holder, its officers, directors, employees, shareholders, attorneys and agents,
and each person, if any, who controls any such person (within the meaning of
the Act) as provided in Section 6 of the Subscription Agreement. The foregoing
agreement to indemnify shall be in addition to any liability the Company may
otherwise have, including liabilities arising under this Warrant.
(b) The Holder agrees to indemnify and hold harmless the
Company, its officers, directors, employees, shareholders, attorneys and agents
and each person who controls the Company (within the meaning of the Act) as
provided in Section 6 of the Subscription Agreement.
12. Unless registered as contemplated by Section 10 hereof,
the Bonus Warrant Shares issued upon exercise of the Warrants shall be subject
to a stop transfer order and the certificate or certificates evidencing such
Bonus Warrant Shares shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
NOT REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
SUCH SHARES MAY NOT BE
-6-
<PAGE>
OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT, OR AN EXEMPTION FROM
REGISTRATION UNDER SUCH ACT. SUCH SHARES ARE SUBJECT TO
CERTAIN RESTRICTIONS ON TRANSFER CONTAINED IN A WARRANT,
DATED ____________, 199__, COPIES OF WHICH ARE ON FILE WITH
THE SECRETARY OF THE COMPANY."
13. Upon receipt of evidence satisfactory to the Company of
the loss, theft, destruction, or mutilation of any Warrant (and upon surrender
of any Warrant if mutilated), and upon reimbursement of the Company's
reasonable incidental expenses and, if reasonably requested, an indemnity
reasonably acceptable to the Company, the Company shall execute and deliver to
the Holder thereof a new Warrant of like date, tenor, and denomination.
14. The Holder of any Warrant shall not have, solely on
account of such status, any rights of a stockholder of the Company, either at
law or in equity, or to any notice of meetings of stockholders or of any other
proceedings of the Company, except as provided in this Warrant.
15. This Warrant shall be construed in accordance with the
laws of the State of New York applicable to contracts made and performed within
such State, without regard to principles of conflicts of law.
Dated: ______________________, 199__
STERLING VISION, INC.
By:______________________________
Name:
Title:
-7-
<PAGE>
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer the
attached Warrant.)
FOR VALUE RECEIVED, ________________________________________
________________________________________ hereby sells, assigns, and transfers
unto __________________ a Warrant to purchase __________ shares of Common
Stock, $.01 par value per share, of Sterling Vision, Inc. (the "Company"),
together with all right, title, and interest therein, and does hereby
irrevocably constitute and appoint _______________________________ attorney to
transfer such Warrant on the books of the Company, with full power of
substitution.
Dated:___________________
Signature ________________________________
Signature Guaranteed:
NOTICE
The signature on the foregoing Assignment must correspond to
the name as written upon the face of this Warrant in every particular, without
alteration or enlargement or any change whatsoever.
<PAGE>
To: Sterling Vision, Inc.
1500 Hempstead Turnpike
East Meadow, New York 11554
ELECTION TO EXERCISE
The undersigned hereby exercises his or its rights to purchase _______
Bonus Warrant Shares covered by the within Warrant and tenders payment herewith
in the amount of $_________ in accordance with the terms thereof, certifies
that he owns this Warrant free and clear of any and all claims, liens and/or
encumbrances and requests that certificates for such securities be issued in
the name of, and delivered to:
________________________________________
________________________________________
________________________________________
(Print Name, Address and Social Security
or Tax Identification Number)
and, if such number of Bonus Warrant Shares shall not be all the Bonus Warrant
Shares covered by the within Warrant, that a new Warrant for the balance of the
Bonus Warrant Shares covered by the within Warrant be registered in the name
of, and delivered to, the undersigned at the address stated below.
Dated:________________ Name___________________________________
(Print)
Address:_______________________________________________________________________
_______________________________________
(Signature)
