As filed with the Securities and Exchange Commission on July 6, 1995
Registration No.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
OPTICAL COATING LABORATORY, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 68-0164244
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
2789 NORTHPOINT PARKWAY
SANTA ROSA, CALIFORNIA 95407-7397
(Address of Principal Executive Offices)
OPTICAL COATING LABORATORY, INC.
1995 INCENTIVE COMPENSATION PLAN
(Full title of the plan)
HERBERT M. DWIGHT, JR.
Optical Coating Laboratory, Inc.
2789 Northpoint Parkway
Santa Rosa, California 95407-7397
(Name and address of agent for service)
Copies to:
JOHN V. ERICKSON
Collette & Erickson
555 California Street
San Francisco, California 94104
(415) 788-4646
CALCULATION OF REGISTRATION FEE
Proposed Proposed
maximum maximum
offering aggregate
Amount price offering Amount of
Title of Securities to be per unit price registration
to be registered registered per unit(a) price(a) fee
Common Stock,
$.01 par value 600,000 shares $9.0625 $5,550,000 $1,875.00
(a) Estimated solely for the purpose of determining the registration fee.
Pursuant to Section 6(b) of the Securities Act of 1933 and Rule 457(c) of
the Securities Act Rules, the computation of fees is based upon the average
of the high and low prices on June 30, 1995, of the Common Stock as
reported in The Wall Street Journal on July 3, 1995.
The approximate date of commencement of the proposed sale of the securities
to the public is as soon as practicable following the effective date of
this Registration Statement.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The Company hereby incorporates by reference into this Registration
Statement the following documents filed with the Commission:
1. The Company's annual report on Form 10-K for the fiscal year ended
October 31, 1994 filed pursuant to Section 13(a) of the Exchange Act;
2. The Company's quarterly report on Form 10-Q for the fiscal quarter
ended January 31, 1995, filed pursuant to Section 13(a) of the
Exchange Act;
3. The Company's quarterly report on Form 10-Q for the fiscal quarter
ended April 30, 1995, filed pursuant to Section 13(a) of the Exchange
Act;
4. The Company's proxy statement dated March 10, 1995, filed pursuant to
Section 14 of the Exchange Act;
5. The description of the Company's Common Stock, registered under
Section 12 of the Exchange Act, which is contained in the Registration
Statement filed under such Act, including any amendment or report
filed for the purpose of updating such description.
All reports and definitive proxy or information statements
subsequently filed pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act prior to the filing of a post-effective amendment which
indicates that all securities offered have been sold or which deregisters
all securities then remaining unsold shall be deemed to be incorporated by
reference into this Registration Statement and to be a part hereof from the
date of filing of such documents. See "Available Information." Any
statement contained in a document incorporated or deemed to be incorporated
herein by reference shall be deemed to be modified or superseded for
purposes of this Registration Statement to the extent that a statement
contained herein or in any other subsequently-filed document which also is
or is deemed to be incorporated by reference herein modifies or supersedes
such statement.
The Company will provide without charge to each person to whom a
prospectus is delivered, upon request of such person, a copy of any or all
of the foregoing documents incorporated herein by reference (other than
exhibits to such documents not specifically incorporated by reference).
Written or telephone requests should be directed to Optical Coating
Laboratory, Inc., 2789 Northpoint Parkway, Santa Rosa, California 95407-
7397, Telephone (707) 545-6440, Attention: John M. Markovich, Vice
President, Finance and Chief Financial Officer.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
In June 1986, Delaware enacted legislation which authorizes
corporations to eliminate the personal liability of directors to
corporations and their stockholders for monetary damages for breach or
alleged breach of directors' fiduciary "duty of care." Under prior
Delaware law, directors were accountable to corporations and their
stockholders for monetary damages for conduct constituting gross negligence
in the exercise of their duty of care. Although the new statute does not
change directors' duty of care, it enables corporations to limit available
relief to equitable remedies such as injunction or rescission. Numerous
lawsuits alleging breach of directors' duty of care have been filed in
connection with corporate mergers and acquisitions. The new statute
permits corporations to limit available remedies of stockholders in
connection with these transactions, as well as in other circumstances. The
legislation has no effect on director's liability for (1) breach of the
director's duty of loyalty, (2) acts or omissions not in good faith or
involving intentional misconduct or knowing violations of law, (3) a
corporation's illegal payment of dividends, and (4) approval of any
transaction from which the director derives an improper personal benefit.
The statute will have no effect on claims arising under the federal
securities laws.
In connection with the Company's reincorporation in Delaware in
November 1987, the Company included in its Certificate of Incorporation a
provision limiting directors' liability to the greatest extent permitted by
Delaware corporate law. In addition, the Certificate of Incorporation and
the Company's Bylaws provide that the Company will indemnify its directors
and officers to the fullest extent permitted under Delaware law, including
circumstances in which indemnification is otherwise discretionary. The
Company submitted these charter and Bylaw provisions to its stockholders,
who approved them in March 1987. In addition, the Company has entered into
separate Indemnification Agreements with its directors and officers to the
full extent permitted by applicable law and the Company's Certificate of
Incorporation. The general effect of the indemnification provisions of the
Bylaws and the Indemnification Agreements is to require the Company, among
other things, to indemnify its directors and officers against certain
liabilities that may arise by reason of their status or service as
directors or officers (provided the officer or director acted in good faith
and in a manner he or she believed to be in or not opposed to the best
interests of the Company and, with respect to a criminal proceeding,
provided he or she had no reasonable cause to believe that the conduct was
unlawful), and to advance their expenses (including attorneys' fees)
incurred as a result of any proceeding against them as to which they could
be indemnified. The Company believes that its charter and Bylaw provisions
and the separate Indemnification Agreements are necessary to attract and
retain qualified persons as directors and officers.
At present, the Company is not aware of any threatened litigation or
proceeding which could result in a claim for indemnification by any
director or officer.
Section 145 of the Delaware General Corporation Law provides for the
indemnification of officers, directors and other corporate agents in terms
sufficiently broad to indemnify such persons, under certain circumstances,
for liabilities (including reimbursement of expenses incurred) arising
under the Securities Act of 1933. Insofar as indemnification for
liabilities arising under the Securities Act of 1933 may be permitted to
directors, officers or persons controlling the Company pursuant to the
foregoing provisions, the Company has been informed that in the opinion of
the Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is therefore unenforceable.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
4(a) Restated Certificate of Incorporation dated June 10, 1988.
Incorporated by reference to Exhibit 4(a) of Registrant's Form 10-
Q for the quarter ended July 31, 1988.
4(b) Bylaws. Incorporated by reference to Registrant's Form 8-K dated
November 2, 1987.
4(c) Rights Agreement between Registrant and First Interstate Bank of
California dated November 25, 1987. Incorporated by reference to
Exhibit 4 of Registrant's Form 10-K for the fiscal year ended
October 31, 1987.
4(d) Stock Purchase Agreement dated as of February 6, 1995 by and
between the Registrant, Netra Corporation and the Sellers as
identified on the signature page of said agreement, each a
shareholder of Netra Corporation, for the purchase by the
Registrant of all of the shares of common and preferred stock of
Netra Corporation. Incorporated by reference to Exhibit (4) of
Registrant's Form 10-Q for the quarter ended April 30, 1995.
4(e) Optical Coating Laboratory, Inc. 12,000 shares of 8% Series C
Convertible Redeemable Preferred Stock Purchase Agreement among
the Registrant and the investors named therein dated as of May 1,
1995.
4(f) Certificate of Designation, Preferences and Rights of Series C
Convertible Redeemable Preferred Stock of Optical Coating
Laboratory, Inc. dated May 2, 1995.
5 Opinion and consent of Collette & Erickson.
15 Letter of Deloitte & Touche LLP regarding unaudited interim
financial information.
23(a) Consent of Deloitte & Touche LLP
23(b) Consent of Counsel (See Exhibit 5, above).
24 Power of Attorney (See page II-7).
28 Not Applicable
99 1995 Incentive Compensation Plan. Incorporated by reference to
Registrant's Proxy Statement dated March 10, 1995.
ITEM 9. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the
most recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in the registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the registration statement is on Form S-3 or Form S-8, and the information
required to be included in a post- effective amendment by those paragraphs
is contained in periodic reports filed by the registrant pursuant to
section 13 or section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each filing
of the registrant's annual report pursuant to section 13(a) or section
15(d) of the Securities Exchange Act of 1934 (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to section
15(d) of the Securities Exchange Act of 1934) that is incorporated by
reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(h) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions,
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against liabilities (other than the
payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-8 and has duly caused
this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Santa Rosa and State of
California, on the 6th day of July 1995.
OPTICAL COATING LABORATORY, INC.
By /s/JOHN M. MARKOVICH
John M. Markovich
Vice President, Finance
and Chief Financial Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears above or below hereby appoints John V. Erickson, Joseph C. Zils,
John M. Markovich or any of them, his true and lawful attorney-in-fact and
agent, with full power of substitution and resubstitution, for him in his
name, place and stead, in any and all capacities, to sign and file any and
all amendments to this registration statement under the Securities Act of
1933, and all exhibits and other documents in connection therewith, with
the Securities and Exchange Commission, granting unto each said attorney-in-
fact and agent full power and authority to do and perform each and every
act and thing requisite and necessary to be done in and about the premises,
as full to all intents and purposes as he might or could do in person,
hereby ratifying and confirming all that each said attorney-in-fact and
agent, or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
Chairman of the Board,
President and
/S/HERBERT M. DWIGHT, JR. Chief Executive Officer July 6, 1995
Herbert M. Dwight, Jr.
Vice President, Finance
/S/JOHN M. MARKOVICH and Chief Financial Officer July 6, 1995
John M. Markovich
Vice President and
/S/JOSEF WALLY Corporate Controller July 6, 1995
Josef Wally
Vice President
/S/JOHN MCCULLOUGH and Director July 6, 1995
John McCullough
/S/DOUGLAS C. CHANCE Director July 6, 1995
Douglas C. Chance
/S/JULIAN SCHROEDER Director July 6, 1995
Julian Schroeder
/S/RENN ZAPHIROPOULOS Director July 6, 1995
Renn Zaphiropoulos
INDEX TO EXHIBITS
EXHIBIT
NUMBER EXHIBIT
4(a) Restated Certificate of Incorporation dated June 10, 1988.
Incorporated by reference to Exhibit 4(a) of Registrant's Form 10-
Q for the quarter ended July 31, 1988.
4(b) Bylaws. Incorporated by reference to Registrant's Form 8-K dated
November 2, 1987.
4(c) Rights Agreement between Registrant and First Interstate Bank of
California dated November 25, 1987. Incorporated by reference to
Exhibit 4 of Registrant's Form 10-K for fiscal year ended October
31, 1987.
4(d) Stock Purchase Agreement dated as of February 6, 1995 by and
between the Registrant, Netra Corporation and the Sellers as
identified on the signature page of said agreement, each a
shareholder of Netra Corporation, for the purchase by the
Registrant of all of the shares of common and preferred stock of
Netra Corporation. Incorporated by reference to Exhibit (4) of
Registrant's Form 10-Q for the quarter ended April 30, 1995.
4(e) Optical Coating Laboratory, Inc. 12,000 shares of 8% Series C
Convertible Redeemable Preferred Stock Purchase Agreement among
the Registrant and the investors named therein dated as of May 1,
1995.
4(f) Certificate of Designation, Preferences and Rights of Series C
Convertible Redeemable Preferred Stock of Optical Coating
Laboratory, Inc. dated May 2, 1995.
5 Opinion and consent of Collette & Erickson.
15 Letter of Deloitte & Touche LLP regarding unaudited interim
financial information.
23(a) Consent of Deloitte & Touche LLP
23(b) Consent of Counsel (See Exhibit 5, above).
24 Power of Attorney (See page II-7).
28 Not Applicable
99 1995 Incentive Compensation Plan. Incorporated by reference to
Registrant's Proxy Statement dated March 10, 1995.
OPTICAL COATING LABORATORY, INC.
12,000 SHARES OF 8% SERIES C CONVERTIBLE REDEEMABLE
PREFERRED STOCK
PURCHASE AGREEMENT
DATED AS OF MAY 1, 1995
TABLE OF CONTENTS
Page
1. Authorization of Issue of 8% Series C Convertible
Redeemable Preferred Stock 1
2. Purchase and Sale of 8% Series C Convertible Redeemable
Preferred Stock; Closing 1
2A. Purchase and Sale of 8% Series C Convertible
Redeemable Preferred Stock 1
2B. Closing 1
3. Conditions of Closing 2
3A. Opinion of the Company's Counsel 2
3B. Representations and Warranties 2
3C. Charter Documents and By-Laws 2
3D. Purchase Permitted by Applicable Laws 3
3E. Flex Products Acquisition; Proceedings 3
3F. Compliance with Securities Laws 4
3G. Approval and Consents 4
3H. Material Changes 4
4. Affirmative Covenants 4
4A. Financial Statements 4
4B. Books and Records; Inspection of Property 6
4C. Additional Covenants Pending the Closing 7
4D. Stock to be Reserved 7
4E. Government Regulations 7
4F. ERISA 8
4G. Corporate Existence; Maintenance of Properties 8
4H. Insurance 9
4I. Further Assurances 9
4J. 1933 Act Registration Statements 9
4K. Transactions with Affiliates 10
4L. Use of Proceeds 10
5. Negative Covenants 10
5A. Restricted Payments 10
5B. ERISA 10
6. Representations, Covenants and Warranties 11
6A. Organization; Qualification and Authority 11
6B. Financial Statements 12
6C. Capital Stock and Related Matters 12
6D. Actions Pending 13
6E. Outstanding Debt 13
6F. Title to Properties 13
6G. Taxes 13
6H. Conflicting Agreements 13
6I. Offering 14
6J. Broker's or Finder's Commissions 14
6K. Regulation G, Etc 14
6L. Pollution and Other Regulations 15
6M. ERISA 15
6N. Agreements with Affiliates 15
6O. Possession of Franchises, Licenses, Etc 16
6P. Patents, Etc 16
6Q. Holding Company and Investment Company Status 16
6R. Governmental Consents 16
6S. Insurance Coverage 17
6T. Subsidiaries 17
6U. Disclosure 17
6V. Related Party Transactions 17
6W. Registration Rights 18
6X. Projections 18
7. Registration Rights 18
7A. Registration Statement 18
7B. Best Efforts 18
7C. Expenses 19
7D. Rule 144 19
8. Representations of the Investors 20
9. Definitions 20
10. Miscellaneous 23
10A. Home Office Payment 24
10B. Indemnification 23
10C. Registration Rights 24
10D. Restrictive Legend 24
10E. Survival of Representations and Warranties 25
10F. Successors and Assigns 25
10G. Notices 25
10H. Descriptive Headings 25
10I. Satisfaction Requirement 26
10J. Governing Law; Consent to Jurisdiction 26
10K. Remedies 26
10L. Entire Agreement 26
10M. Severability
26 10N. Amendments
27 10O. Counterparts
27
Exhibit A Form of Certificate of Designations
Exhibit B Form of Opinion of Company Counsel
Exhibit C Form of Put, Call, Right of
First Refusal and Co-Sale Agreement
OPTICAL COATING LABORATORY, INC.
PURCHASE AGREEMENT
DATED AS OF
MAY 1, 1995
To each of the Investors
Gentlemen:
The undersigned OPTICAL COATING LABORATORY, INC., a Delaware
corporation (the "Company"), and each of the investors named on Schedule
1 attached hereto (collectively, the "Investors"), hereby agree as
follows:
1. AUTHORIZATION OF ISSUE OF 8% SERIES C CONVERTIBLE
REDEEMABLE PREFERRED STOCK.
The Company will authorize the issuance and delivery of
12,000 shares of its 8% Series C Convertible Redeemable Preferred Stock,
par value $.01 per share (the "Preferred Stock"), having rights,
designations and preferences as specified therefor in the form of the
Certificate of Designations of the Company in the form of Exhibit A
attached hereto (the "Certificate of Designations").
2. PURCHASE AND SALE OF 8% SERIES C CONVERTIBLE REDEEMABLE
PREFERRED STOCK; CLOSING.
A. Purchase and Sale of 8% Series C Convertible Redeemable
Preferred Stock. The Company, subject to the terms and conditions herein
set forth, hereby agrees to sell to the Investors and, subject to the terms
and conditions herein set forth, each Investor severally agrees to purchase
from the Company, the aggregate number of shares of Preferred Stock set
forth opposite its name on the signature page hereof, for a purchase
price of One Thousand Dollars ($1,000.00) per share.
B. Closing. The purchase and delivery of the Preferred Stock
to be purchased by the Investors shall take place at a closing
(the "Closing") at the offices of Collette & Erickson, such Closing to be
held at 9:00 a.m., local time on such date as may be designated by the
Company on not less than 3 business days notice to special counsel to the
Investors but in no event later than May 15, 1995 (unless such date
shall be extended agreement of the parties hereto, herein called the "Closing
Date"). On the Closing Date, the Company will deliver the Preferred Stock
to be purchased by the Investors registered in the names of the Investors
and/or the Investors' nominees or other designees (designated in writing
to the Company at least one day prior to the Closing Date if differing
from any such nominee or designee specified on the signature page hereof)
for the total number of shares set forth opposite the name of the Investors
on the signature page hereof, against receipt of the purchase price therefor
by wire transfer of same day funds to an account at a financial institution
to be designated in writing by the Company no later than three days before
the Closing Date, or by such other payment method as is mutually agreed
to by the Investor so paying and the Company.
The purchase of all of the Preferred Stock is provided for in
this Agreement. The Company shall not be obligated to sell, nor shall the
Investors be obligated to buy, any of the Preferred Stock unless the
Investors purchase in the aggregate all of the Preferred Stock.
If at the Closing, the Company shall fail to tender to the
Investors any of the Preferred Stock to be purchased by them or any of the
conditions specified in Section 3 hereof shall not have been satisfied or
waived by the Investors, the Investors shall, at their election, be
relieved of all further obligations under this Agreement, without thereby
waiving any other rights they may have by reason of such failure or such non-
fulfillment.
3. CONDITIONS OF CLOSING. The Investors' obligations to purchase and
pay for the Preferred Stock to be purchased by them hereunder is subject to
the satisfaction, on or before the Closing Date, of the following conditions:
A. Opinion of the Company's Counsel. The Investors and their special
counsel shall have received from Collette & Erickson, counsel for the
Company, a legal opinion addressed to the Investors and dated the Closing
Date in substantially the form of Exhibit B attached hereto.
B. Representations and Warranties. The representations and warranties
contained in Section 6 hereof shall be true in all material respects when
made and on and as of the Closing Date, except to the extent of changes
caused by the transactions herein contemplated; and the Company shall
have delivered to each of the Investors an Officer's Certificate dated
the Closing Date, to such effect.
C. Charter Documents and By-Laws. Each Investor shall have received
a certificate, dated the Closing Date, of the Secretary of the Company
attaching (i) a true and complete copy of the Certificate of Incorporation
with all amendments thereto, and including all Certificates of Designations
of preferred stock of the Company as filed with the Secretary of State of the
State of Delaware, (ii) a true and complete copy of the Company's By-Laws in
effect as of such date, (iii) certificates of good standing of the
appropriate officials of Delaware and of each state or other jurisdiction
in which the Company is qualified to do business, and is doing business,
as a foreign corporation, and (iv) resolutions of the Board of Directors
of the Company authorizing the execution and delivery of this Agreement
and the Preferred Stock. Since the date hereof, the Company shall not have
amended or modified its Certificate of Incorporation or By-laws without
the express written consent of the Investors.
D. Purchase Permitted by Applicable Laws. The purchase of and payment
for the Preferred Stock to be purchased by the Investors hereunder shall not
be prohibited by any applicable law or governmental regulation (including,
without limitation, Regulations G, T and X of the Board of Governors of the
Federal Reserve System) and such purchase and payment shall not in and of
themselves subject the Investors to any material tax, penalty or liability
under or pursuant to any applicable law or governmental regulation, and the
Investors shall have received such certificates or other evidence as they may
request to establish compliance with this condition.
E. Flex Products Acquisition; Proceedings. (a) The Company shall
have consummated, or substantially contemporaneously with the Closing shall
consummate, the purchase of an additional 20% interest in Flex Products, Inc.
("Flex Products") pursuant to a Stock and Note Purchase Agreement dated as of
May 1, 1995 by and among the Company, SICPA Holdings S.A., ICI Americas Inc.,
ICI America Holdings Inc. and Flex Products, Inc. (the "Stock and Note
Purchase Agreement"), true and correct copies of which have been delivered to
the Investors. All corporate and other proceedings taken or to be taken in
connection with the transaction contemplated by the Stock and Note Purchase
Agreement, and all documents incident thereto, shall be reasonably
satisfactory in form and substance to the Investors and their special
counsel, and the Investors and their special counsel shall have received all
such counterpart originals or certified or other copies of such documents as
each of them may reasonably request. No amendment or modification of, or
waiver of any term, provision or closing or other condition of, the Stock and
Note Purchase Agreement shall be entered into, given or made without the
express written consent of the investors which consent will not be
unreasonably withheld or delayed.
(a) All corporate and other proceedings taken or to be taken in
connection with the transactions contemplated hereby, and all documents
incident thereto, shall be reasonably satisfactory in form and substance
to the Investors and their special counsel, and the Investors and their
special counsel shall have received all such counterpart originals or
certified or other copies of such documents as each of them may
reasonably request.
3F. Compliance with Securities Laws. The offering and sale of
the Preferred Stock under this Agreement shall have complied with all
applicable requirements of federal and state securities laws, and the
Investors shall have received evidence of such compliance in form and
substance satisfactory to them.
3G. Approval and Consents. The Company shall have duly received
all authorizations, consents, approvals, licenses, franchises, permits and
certificates by or of all federal, state and local governmental authorities
necessary for the issuance of the Preferred Stock and all thereof shall be
in full force and effect at the time of the Closing. The Company shall
have delivered to the Investors an Officer's Certificate, dated the Closing
Date, to such effect.
3H. Material Changes. Since October 31, 1994, there shall not
have been any changes in the business of the Company or any Subsidiary
which shall, singly or in the aggregate, have a material adverse effect on
the business, condition (financial or other), assets, properties, rights,
operations or prospects of the Company and its Subsidiaries, nor shall
there have been any development or discovery or any contingency or other
liability which has such effect. There shall exist no defaults under the
provisions of any instrument evidencing Indebtedness of the Company or any
of its Subsidiaries and the Company shall have delivered to the Investors
an Officer's Certificate, dated the Closing Date, to such effect.
4. AFFIRMATIVE COVENANTS. All covenants contained herein shall be
given independent effect. The provisions of this Section 4 are for the
benefit of Investors from the date hereof until the Closing Date and
thereafter so long as they hold any Preferred Stock and (except for the
covenant set forth at Section 4O) for each other holder of Preferred
Stock; provided, however, that the covenant set forth at Section 4J shall
also be for the benefit of Investors who hold Common Stock issued upon the
conversion of Preferred Stock and any other holders of such Common Stock.
The Investors agree to treat as confidential and not to disclose (except as
may be reasonably determined to be legally required) all information received
under this Section 4 to the extent such information is not and does not
become publicly available.
A. Financial Statements. The Company covenants that it will
deliver to each of the Investors and each other holder of Preferred Stock:
(i) as soon as practicable and in any event within 30 days
after the end of each month commencing with April of 1995 (other than
the last month) in each fiscal year, the consolidated statements of income,
changes in stockholders' equity and cash flow of the Company and its
Subsidiaries for such month and for the period from the beginning of the
current fiscal year to the end of such month and a consolidated balance
sheet of the Company as at the end of such month, setting forth in each
case in comparative form figures for the corresponding period in the
preceding fiscal year, all in reasonable detail and reasonably satisfactory
in scope to the Investors and prepared in accordance with GAAP on a basis
consistent with past practice, and certified by the chief financial officer
or chief accounting officer of the Company as fairly presenting the
financial condition of the Company and its Subsidiaries, subject to the
changes resulting from audit and year-end adjustments, provided that the
Investors acknowledge that this Section 4A(i) shall be applicable only to
the extent the Company, in its discretion, prepares such reports;
(ii) as soon as practicable and in any event within 45 days
after the end of each quarterly period (other than the last quarterly period)
in each fiscal year, consolidated statements of income, changes in
stockholders' equity and cash flow of the Company and its Subsidiaries for
such quarterly period and for the period from the beginning of the current
fiscal year to the end of such quarterly period and a consolidated balance
sheet of the Company and its Subsidiaries as at the end of such quarterly
period, setting forth in each case in comparative form figures for the
corresponding period in the preceding fiscal year, all in reasonable detail
and reasonably satisfactory in scope to the Investors and prepared in
accordance with GAAP on a basis consistent with past practice, and certified
by the chief financial officer or chief accounting officer of the Company
as fairly presenting the financial condition of the Company and its
Subsidiaries, subject to the changes resulting from audit and year-end
adjustments;
(iii) as soon as practicable and in any event within 90 days
after the end of each fiscal year, consolidated statements of income, changes
in stockholders' equity and cash flow of the Company and its Subsidiaries
for such year, and a consolidated balance sheet of the Company and its
Subsidiaries as at the end of such year, setting forth in each case
(commencing with any such reports delivered after the close of the
Company's first full fiscal year following the date hereof) in comparative
form corresponding figures from the preceding annual audit, all in
reasonable detail and reasonably satisfactory in scope to the Investors, and
audited by independent public accountants of recognized national standing
selected by the Company and reasonably satisfactory to the Investors, whose
report shall state that such consolidated financial statements present
fairly the financial condition of the Company and its subsidiaries in
accordance with GAAP on a basis consistent with prior years and that the
examination by such accountants has been made in accordance with generally
accepted auditing standards;
(iv) as soon as practicable after the Closing Date, and
thereafter as soon as practicable and in any event by the end of
each fiscal year, a budget for the Company and its Subsidiaries for
the following fiscal year, in reasonable detail and including those items
that are customarily included in Company budgets, and certified as to
its good-faith preparation by the chief financial officer or chief
accounting officer of the Company;
(v) promptly upon transmission thereof, copies of all financial
statements, information circulars and reports as the Company shall send
to its stockholders and copies of all registration statements and
prospectuses (without exhibits) and all reports which it or any of its
officers or directors file with the Commission or with any securities
exchange on which any of its securities are listed or with NASDAQ, and
copies of all press releases and other statements made available generally
by the Company or its Subsidiaries to the public concerning material
developments in the business of the Company and its Subsidiaries, taken
as a whole;
(vi) promptly upon receipt thereof, a copy of each other report
submitted to the Company or any of its Subsidiaries by independent
accountants in connection with any annual, interim or special audit made
by them of the books of the Company or any of its Subsidiaries; and
(vii) with reasonable promptness, such other financial and/or
operating data as the Investors may reasonably request.
Each Investor is hereby authorized to deliver a copy of any financial
statement or certificate delivered pursuant to this Section 4A to any
regulatory body having jurisdiction over the Investors provided that
such delivery is necessary to comply with a request of such regulatory
body and sufficient notice is given to the Company of such request prior
to such delivery to enable the Company to object to such delivery.
B. Books and Records; Inspection of Property. The Company
will keep and will cause each of its Subsidiaries to keep proper books
of record and accounts in which full, true and correct entries shall be
made of all dealings and transactions in relation to its business and
activities. The Company covenants that it will permit, upon reasonable
notice, any Person representing the Investors and designated in writing
by such Investors, at the Investors' expense, to visit and inspect any
of the properties of the Company and its Subsidiaries, to examine the
corporate, financial and operating records of the Company and its
Subsidiaries and make copies thereof or extracts therefrom and to discuss
the affairs, finances and accounts of any of such corporations with the
directors, officers and independent accountants of the Company and its
Subsidiaries, all at such reasonable times and as often as the Investors
may reasonably request.
C. Additional Covenants Pending the Closing. The Company
covenants that pending the Closing it will not, without the written consent
of the Investors, take any action which would result (i) in any of the
representations or warranties contained in this Agreement not being true
at and as of the time immediately after such action or (ii) in any of the
covenants contained in this Agreement becoming unperformable. Pending the
Closing, the Company will promptly advise the Investors of any action or
event of which it becomes aware which has the effect of making incorrect
any of such representations or warranties or which has the effect of
rendering unperformable any of such covenants.
D. Stock to be Reserved. The Company covenants that all
shares of Common Stock that may be issued upon the conversion of the
Preferred Stock will, upon issuance, be validly issued, fully paid and
nonassessable and free from all taxes, liens and charges with respect to
the issuance thereof. The Company further covenants that during the period
within which the Preferred Stock may be converted, the Company will at
all times have authorized and reserved a sufficient number of shares of
Common Stock of the Company, par value $.01 per share (the "Conversion
Shares"), to permit the conversion of the Preferred Stock.
E. Government Regulations. The Company covenants that
it will comply with all applicable governmental restrictions and regulations
and obtain and maintain in good standing all licenses, permits and approvals
from any and all governments, governmental commissions, boards or agencies
of jurisdictions in which it or any of its Subsidiaries carries on business
required in respect of the operations of the Company except for those with
which the failure to comply or maintain would not have a material adverse
effect on the business, condition (financial or other), assets, properties,
rights, operations or prospects of the Company and its Subsidiaries taken
as a whole; provided that this Section 4E shall not prevent the Company or
any of its Subsidiaries from contesting in good faith the validity or
application of any such laws or regulations by appropriate legal
proceedings diligently pursued.
F. ERISA. Promptly (and in any event within 30 days)
after the Company or any of its Subsidiaries knows, or has reason to know,
that a Reportable Event with respect to any Pension Plan has occurred, that
a "prohibited transaction" within the meaning of Section 406 of ERISA or
Section 4975 of the Code has occurred with respect to any employee benefit
plan maintained by, or to which contributions are required of, the Company
or any of its Subsidiaries, that an application has been filed by the
Company or any of its Subsidiaries for a waiver of the minimum funding
standard under Section 302 of ERISA or Section 412 of the Code, that a
single employer Pension Plan has been amended in a manner requiring
security by the Company or any of its Subsidiaries pursuant to Section
401(a)(29) of the Code, that any Pension Plan is or may be terminated,
reorganized, partitioned or declared insolvent under Title IV of ERISA
or that the Company or any of its Subsidiaries will or may incur any
liability to or on account of a Pension Plan under Section 4062, 4063,
4064, 4201 or 4204 of ERISA, the Company will deliver to each Investor,
so long as it shall hold any of the Preferred Stock, a certificate of
the chief financial officer of the Company setting forth information as
to such occurrence and what action, if any, the Company is required or
proposes to take with respect thereto, together with any notices
concerning such occurrences which are (a) required to be filed by the
Company or the plan administrator of any such Pension Plan controlled by
the Company or its Subsidiaries, with the PBGC or (b) received by the
Company or its Subsidiaries from any plan administrator of a multiemployer
or other Pension Plan not under their control. The Company shall furnish
to each Investor, so long as it shall hold any of the Preferred Stock,
a copy of each annual report (Form 5500 Series) of any Pension Plan
received or prepared by the Company or any of its Subsidiaries. Each
annual report and any notice required to be delivered hereunder shall
be delivered no later than 10 days after the later of the date such
report or notice is filed with the Internal Revenue Service or the PBGC
or the date such report or notice is received by the Company or any of
its Subsidiaries, as the case may be.
G. Corporate Existence; Maintenance of Properties. The Company
covenants that it (i) will do or cause to be done all things necessary to
preserve and keep in full force and effect the corporate existence and
rights of the Company and all of its Subsidiaries (except that the corporate
existence of any of such Subsidiaries other than the Company, may be
terminated if such termination is, in the judgment of the Board of Directors
of the Company, in the best interest of the Company and is not materially
disadvantageous to the holders of Preferred Stock or any securities issued
upon conversion or exchange thereof), (ii) will cause its properties and
the properties of its Subsidiaries used or useful in the conduct of their
respective businesses, other than properties which in the aggregate are
not material to the business and operations of the Company and its
Subsidiaries taken as a whole, to be maintained and kept in good condition,
repair and working order and will cause to be made all repairs, renewals,
replacements, betterments and improvements thereto, all as in the judgment
of the Company may be reasonably necessary so that the businesses carried
on in connection therewith may be properly and advantageously conducted at
all times, and (iii) will, and will cause each of its Subsidiaries to,
qualify and remain qualified to conduct business in each jurisdiction where
the failure to do so would have a material adverse effect on the business,
condition (financial or other), assets, properties, rights, operations or
prospects of the Company and its Subsidiaries taken as a whole.
H. Insurance. The Company covenants that it will maintain,
and will cause each of its Subsidiaries to maintain, with financially
sound and reputable insurance companies, funds or underwriters, insurance
for the Company and its Subsidiaries of the kinds, covering the risks and
in the relative proportionate amounts usually carried by companies
conducting business activities similar to those of the Company and
its Subsidiaries.
I. Further Assurances. The Company covenants that it shall
cooperate with any of the Investors and execute such further instruments
and documents as the Investors shall reasonably request to carry out to the
satisfaction of such Investor the transactions contemplated by this
Agreement.
J. 1933 Act Registration Statements. The Company covenants
that it shall not file any registration statement under the Securities Act
of 1933, as amended (the "1933 Act") covering any securities unless it
shall first have given each Investor written notice thereof. The Company
further covenants that each Investor shall have the right, at any time
when it may be deemed by the Company to be a controlling person of the
Company, to participate in the preparation of such registration statement
(regardless of whether or not an Investor will be a selling security holder
in connection with such registration statement) and to request the
insertion therein of material furnished to the Company in writing which
in such Investor's judgment should be included. In connection with any
registration statement referred to in this paragraph 4L, the Company will
indemnify each Investor, its partners, officers and directors and each
person, if any, who controls such Investor within the meaning of Section 15
of the 1933 Act, against all losses, claims, damages, liabilities and
expenses caused by any untrue statement or alleged untrue statement of a
material fact contained in any registration statement or prospectus or
any preliminary prospectus or any amendment thereof or supplement thereto
or caused by any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages,
liabilities or expenses are caused by any untrue statement or alleged
untrue statement or omission or alleged omission contained in written
information furnished to the Company by such Investor expressly for use
in such registration statement. If, in connection with any such
registration statement, such Investor shall furnish written information to
the Company expressly for use in the registration statement, such Investor
will indemnify the Company, its directors, each of its officers who sign
such registration statement and each person, if any, who controls the
Company within the meaning of the 1933 Act against all losses, claims,
damages, liabilities an expenses caused by any untrue statement or alleged
untrue statement of a material fact or any omission or alleged omission of a
material fact required to be stated in the registration statement or
prospectus or any preliminary prospectus or any amendment thereof or
supplement thereto or necessary to make the statements therein not
misleading, but only to the extent that such untrue statement or alleged
untrue statement or such omission or alleged omission is contained in
information so furnished in writing by such Investor for use therein.
K. Transactions with Affiliates. The Company and its
Subsidiaries will conduct all business with their Affiliates on an
arm's-length basis.
L. Use of Proceeds. All of the proceeds of the sale of
Preferred Stock shall be used to make a payment to ICI Americas Inc.
and ICI American Holdings Inc. substantially contemporaneously with the
Closing pursuant to the Stock and Note Purchase Agreement. Until such
proceeds are so used, such proceeds shall be reserved therefor by the
Company in a designated account at Bank of America, National Trust and
Savings Association.
5. NEGATIVE COVENANTS. All covenants contained herein shall be
given independent effect. The provisions of this Section 5 are for the
benefit of the Investors from the date hereof to the Closing Date and
thereafter so long as they hold any Preferred Stock and for each other
holder of Preferred Stock.
A. Restricted Payments. The Company covenants that it will
not make, and will not permit any Subsidiary to make, any Restricted
Payments to the extent that such Restricted Payments exceed 25% of the
difference between (x) aggregate Net Income subsequent to January 31, 1995,
taken as one period and (y) (without duplication) all losses during such
period.
5B. ERISA. The Company covenants that it will not, and will not
permit any of its subsidiaries to: (i) permit any Pension Plan to incur any
accumulated funding deficiency, as defined in Section 412 of the Code and
Section 302 of ERISA, whether or not waived, (ii) cause or permit any
single employer Pension Plan to be terminated in other than a standard
termination within the meaning of Section 4041 of ERISA, (iii) fail to
make all required contributions to any Pension Plan as and when such
contributions are due, (iv) withdraw from any multiemployer Pension Plan
under circumstances which are reasonably likely to result in the
imposition on the Company or any of its Subsidiaries of any liability
under Section 4201 or 4204 of ERISA, (v) amend any single employer
Pension Plan in a manner requiring security by the Company or any of its
Subsidiaries pursuant to Section 401(a)(29) of the Code, (vi) knowingly
engage in any transaction in connection with which the Company or any of
its Subsidiaries could be subject to either a civil penalty assessed
pursuant to Section 502 of ERISA or any tax imposed by Section 4975 of
the Code, (vii) maintain or administer any "employee benefit plan" within
the meaning of Section 3(3) of ERISA in a manner that is contrary to its
terms or applicable laws, if the event or condition described in any of
clauses (i) through (vii) above would subject the Company or any of its
Subsidiaries to any liability that individually or in the aggregate is
material to the business and financial condition of the Company and
its Subsidiaries, considered as a whole.
6. REPRESENTATIONS, COVENANTS AND WARRANTIES. The Company
represents, covenants and warrants to each Investor that:
A. Organization; Qualification and Authority. The Company
is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. At the Closing Date, each
Operating Subsidiary of the Company will be a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction
of its incorporation. As of the Closing Date, the Company will be duly
qualified to do business as a foreign corporation and in good standing in
each jurisdiction in which the character of its properties or the nature
of its business makes such qualification necessary and in which the failure
to so qualify would have a material adverse effect on the business,
condition (financial or other), assets, properties, rights, operations or
prospects of the Company and its Subsidiaries taken as a whole. As of the
Closing Date, each Operating Subsidiary of the Company will be duly
qualified to do business as a foreign corporation and in good standing
in each jurisdiction in which the character of its properties or the nature
of its business makes such qualification necessary and in which the
failure to so qualify would have a material adverse effect on the business,
condition (financial or other), assets, properties, rights, operations
or prospects of the Company and its Subsidiaries taken as a whole.
The Company has the corporate power to own or lease its
properties and to carry on its business as now being conducted. The
Company has all requisite corporate power and authority to enter into
this Agreement and each agreement, certificate, instrument or document
executed by it pursuant hereto, to issue and sell the Preferred Stock and
to issue Common Stock upon conversion of the Preferred Stock. The
Company has the requisite corporate power and authority to carry out the
transactions contemplated hereby and thereby to be performed by it, and
the execution, delivery and performance hereof and thereof have been duly
authorized by all necessary corporate action. This Agreement
constitutes, and each other agreement or instrument executed and
delivered by the Company pursuant hereto or thereto or in connection
herewith or therewith will constitute, legal, valid and binding
obligations of the Company, enforceable against the Company in accordance
with their respective terms.
B. Financial Statements. The Company has furnished the Investors
with the following financial statements: consolidated balance sheets as at
October 31, 1992, 1993 and 1994 and January 31, 1994 and 1995 and
consolidated statements of operations, changes in stockholders' equity and
cash flow for the years ended October 31, 1992, 1993 and 1994 and the notes
thereto. Such financial statements were prepared in accordance with GAAP
on a basis consistent with past practice, and fairly present the financial
condition of the Company and its Subsidiaries (subject to the changes
resulting from audit and year-end adjustments). Through the Closing Date,
except as have been previously disclosed in writing to the Investors, there
have been no material adverse changes in the business, condition (financial
or other), assets, properties, rights, operations or prospects of the
Company and its Subsidiaries taken as a whole since October 31, 1994.
C. Capital Stock and Related Matters. The Company represents
and warrants that it has a total authorized capitalization consisting of
thirty million (30,000,000) shares of Common Stock, with par value of $.01,
and one hundred thousand (100,000) shares of Preferred Stock, of which ten
thousand (10,000) shares have been designated Series A Preferred Stock,
fifteen thousand (15,000) shares have been designated Series B Cumulative
Convertible Preferred Stock and twelve thousand (12,000) shares will,
prior to the Closing, have been designated Series C Convertible Redeemable
Preferred Stock, each of which series of Preferred Stock has or will have,
as the case may be, a par value of $.01. As of February 28, 1995, the
Company has issued and outstanding nine million thirteen thousand seven
hundred ninety three (9,013,793) shares of Common Stock and no other
shares. Of the Series B Cumulative Convertible Preferred Stock eight
thousand three hundred fifty (8,350) shares were previously issued and
outstanding, all of which have been repurchased by the Company or converted
into Common Stock by the holders thereof, cancelled and become authorized but
unissued shares of Preferred Stock, subject to reissuance as a new series of
Preferred Stock. All of the outstanding shares of Common Stock have been
duly authorized, are validly issued and outstanding, are fully paid and
nonassessable and have been issued in compliance with all applicable federal
and state securities laws; and no stockholder or other person has a right of
rescission in connection with any sale or issuance thereof.
D. Actions Pending. There is no action, suit, investigation or
proceeding pending or, to the knowledge of the Company, threatened against or
affecting the Company or any of its Subsidiaries or any of their properties
or rights, by or before any court, arbitrator or administrative or
governmental body, which would reasonably be expected to have a material
adverse effect on the business, condition (financial or otherwise), assets,
properties, rights, operations or prospects of the Company or its
Subsidiaries taken as a whole.
E. Outstanding Debt. There exists no default, which has not
been waived or cured, under the provisions of any instrument evidencing
Indebtedness of the Company or any of its Subsidiaries or of any agreement
relating thereto.
F. Title to Properties. Each of the Company and its
Subsidiaries has (i) good, sufficient and legal title to its real
property (other than real properties which it leases from others) subject
to no Lien of any kind except as set forth on Schedule 6F and (ii) good
title to all of its other properties and assets (other than properties and
assets which it leases from others and other than properties and assets
disposed of in the ordinary course of the Company's or such Subsidiary's
business), subject to no Lien of any kind except as set forth on Schedule
6F. Each of the Company and its Subsidiaries enjoys peaceful and
undisturbed possession under all leases necessary for the operation of
its properties and assets, none of which contains any provisions which
might materially and adversely affect or impair the operation of such
properties and assets, and all such leases are valid and subsisting and in
full force and effect.
G. Taxes. Each of the Company and its Subsidiaries has
filed all federal, state and other income tax returns which are required
to be filed, and each has paid all taxes or duly obtained extensions
therefor as shown on said returns and on all assessments received by it
to the extent that such taxes have become due or except such as are
being contested in good faith by appropriate proceedings and for which
adequate reserves have been established in accordance with GAAP.
H. Conflicting Agreements. Neither the execution nor delivery
of this Agreement or the Preferred Stock, the offering, issuance and sale
of the Preferred Stock, nor fulfillment of or compliance with the terms and
provisions hereof and thereof, including, without limitation, the conversion
of Preferred Stock into Common Stock, will conflict with, or result in a
breach of the terms, conditions or provisions of, or constitute a default
under, or result in any violation of, or result in the creation of any Lien
upon any of the properties or assets of the Company or any of its
Subsidiaries pursuant to the Certificate of Incorporation or By-Laws of
the Company or any of its Subsidiaries, any award of any arbitrator or
any agreement (including any agreement with stockholders), instrument,
order, judgment, decree, statute, law, rule or regulation to which the
Company or any of its Subsidiaries is subject, and neither the Company
nor any of its Subsidiaries is a party to, or otherwise subject to any
provision contained in, any instrument evidencing indebtedness of the
Company or any of its Subsidiaries, any agreement relating thereto or any
other contract or agreement (including its Certificate of Incorporation)
which contains dividend or redemption limitations on any capital stock of
the Company, except for this Agreement, the Certificate of Designations
and the Certificate of Designations in respect of the Series A Stock and
the Series B Stock.
I. Offering. Neither the Company nor any other Person acting
on its behalf has taken or will take any action which would subject the
issuance or sale of any of the Preferred Stock to the provisions of
Section 5 of the 1933 Act or violate the provisions of any securities,
Blue Sky law or similar law of any applicable jurisdiction.
J. Broker's or Finder's Commissions. Except as set forth on
Schedule 6J, no broker's or finder's fee or commission will be payable by
the Company with respect to the issuance and sale of the Preferred Stock
or the transactions contemplated hereby.
K. Regulation G, Etc. Neither the Company nor any of its
Subsidiaries owns or has any present intention of acquiring any "margin
stock" as defined in Regulation G of the Board of Governors of the Federal
Reserve System (herein called a "margin stock"). All of the proceeds of
the sale of the Preferred Stock will be used by the Company for general
corporate purposes, including the payments described in Section 4O hereof.
None of such proceeds will be used, directly or indirectly, for the purpose
of purchasing or carrying any margin stock or for the purpose of reducing
or retiring any indebtedness which was originally incurred to purchase or
carry margin stock or for any other purpose which might constitute this
transaction a "purpose credit" within the meaning of Regulation G. Neither
the Company, any of its Subsidiaries nor any agent acting on its behalf has
taken or will take any action which might cause this Agreement to violate
Regulation G, Regulation T, Regulation X or any other regulation of the
Board of Governors of the Federal Reserve System or to violate the 1934 Act,
in each case as in effect now or as the same may hereafter be in effect.
L. Pollution and Other Regulations. Each of the Company and
its Subsidiaries is in compliance with all applicable laws and regulations
relating to pollution and environmental control, equal employment opportunity,
employee safety and other like governmental laws and regulations, except for
those violations which, singly or in the aggregate, would not have a material
adverse effect on the business, condition (financial or other), assets,
properties, rights, operations or prospects or such of the Company or any
Subsidiary.
M. ERISA. Each of the Company and its Subsidiaries has
fulfilled its obligations under the minimum funding standards (without
regard to any funding waivers) of ERISA and the Code with respect to each
Pension Plan and is in substantial compliance in all material respects with
the provisions of ERISA and the Code. Neither the Company nor any
Subsidiary has incurred any liability to the PBGC (other than annual
premiums due to the PBGC) or a Pension Plan under Title IV of ERISA and
no set of facts or circumstances exists which could reasonably result in
the imposition of any such liability. The execution and delivery by the
Company of this Agreement and the purchase and delivery of the Preferred
Stock will not involve any "prohibited transaction" within the meaning
of Section 406 of ERISA or Section 4975 of the Code. Schedule 6M contains a
complete list and accurate description of each Pension Plan or other
"employee pension benefit plan" (as defined in Section 3(2) of ERISA)
maintained or contributed to by the Company or any Subsidiary
("Benefit Plan"). Each Benefit Plan that is intended to qualify under
Section 401 of the Code and the trust maintained pursuant thereto has been
determined to be exempt from federal income taxation under Section 501 of
the Code by the Internal Revenue Service, and to the best knowledge of
the Company, nothing has occurred with respect to any such plan since such
determination which could reasonably be expected to result in the loss of
such exemption or the imposition of any material liability, penalty or tax
under ERISA or the Code. Each Benefit Plan has at all times been maintained
in all material respects, by its terms and in operation, in accordance with
all applicable laws. Except as may be required under Section 4980B of the
Code and Section 601 of ERISA, neither the Company nor any of its
Subsidiaries has any material liability with respect to any plan that
provides retiree life or retiree health insurance to former employees.
N. Agreements with Affiliates. Except as set forth on
Schedule 6N, neither the Company nor any of its Subsidiaries is a
party to any material contract or agreement with, or any other commitment
to, any Affiliate of the Company or any of its Subsidiaries.
O. Possession of Franchises, Licenses, Etc. The Company and
its Subsidiaries possess all franchises, certificates, licenses, permits and
other authorizations from governmental political subdivisions or regulatory
authorities, that are necessary in any material respect for the ownership,
maintenance and operation of its properties and assets, and neither the
Company nor any of its Subsidiaries is in violation of any thereof which
would have a material adverse effect on the business, condition (financial or
other), assets, properties, rights, operation or prospects of the Company or
such Subsidiary.
P. Patents, Etc. The Company and its Subsidiaries own, or
have the right to use, the patents, patent applications, trademarks, service
marks and trade names ("Intellectual Property Rights") set forth in
Schedule 6P. Except as set forth in Schedule 6P, the Company or the
Subsidiaries owns, or has the right to use, the Intellectual Property
Rights free and clear of all Liens, claims for infringements or other
claims, or licenses or royalty arrangements of any kind except to the
extent such Liens, claims, licenses or royalty arrangements do not have
a material adverse effect on the business of the Company.
Q. Holding Company and Investment Company Status. Neither
the Company nor any of its Subsidiaries is, or upon the sale of the
Preferred Stock will be, an "investment company" or a company "controlled"
by an "investment company" within the meaning of the Investment Company
Act of 1940, as amended, or an "investment adviser" within the meaning of
the Investment Advisers Act of 1940, as amended.
R. Governmental Consents. Neither the nature of the Company
or any of its Subsidiaries nor any of their respective businesses or
properties, nor any relationship between the Company and any other Person,
nor any circumstance (other than circumstances relating to the Investors)
in connection with the offer, issue, sale or delivery of the Preferred
Stock hereunder is such as to require on behalf of the Company or any of
its Subsidiaries any consent, approval or other action by or any notice to
or filing with any court or administrative or governmental body in
connection with the execution and delivery of this Agreement, the offer,
issue, sale or delivery of the Preferred Stock or fulfillment of or
compliance with the terms and provisions hereof or the Preferred Stock,
including, without limitation, the conversion of the Preferred Stock for
Common Stock, other than filings which have been made or are not required
to be made until after the Closing Date.
S. Insurance Coverage. The properties of the Company and
each of its Subsidiaries are insured for the benefit of the Company or
such Subsidiary of the Company in amounts deemed adequate by the Company's
management against risks usually insured against by Persons operating
businesses similar to those of the Company or its Subsidiaries in the
localities where such properties are located.
T. Subsidiaries. Schedule 6T correctly sets forth the name of
each Subsidiary of the Company as of the date hereof and, at the Closing
Date, will set forth each such name as of the Closing Date, and in
each case the jurisdiction of its incorporation. All the outstanding
shares of stock of each Subsidiary of the Company have been validly issued
and are fully paid and non-assessable and all such outstanding shares are
owned by the Company or another Subsidiary of the Company free of any Lien
or claim, and no such Subsidiary has outstanding stock or securities
convertible into or exchangeable or exercisable for any shares of capital
stock, nor does it have outstanding any rights to subscribe for or to
purchase, any options for the purchase of, any agreements providing for
the issuance (contingent or otherwise) of, or any calls, commitments or
claims of any other character relating to the issuance of, any shares of
capital stock or any securities convertible into or exchangeable or
exercisable for any shares of capital stock other than certain put and call
rights with respect to shares of capital stock of Flex Products set forth
in an Agreement to be entered substantially contemporaneously with the
Closing between the Company and SICPA Holdings S.A. substantially in the
form of Exhibit C attached hereto.
U. Disclosure. All information heretofore furnished in
writing by the Company to the Investors for purposes of or in connection
with this Agreement or any transaction contemplated hereby does not, and
all such information hereafter furnished in writing by the Company or any
of its Subsidiaries to the Investors do not, contain any untrue statement of
a material fact or omit to state any material fact necessary to make such
information not misleading. There is no fact which has not been disclosed
to the Investors in writing which has had a material adverse effect, or
so far as the Company can now reasonably foresee will have a material
adverse effect, on the assets, properties, rights, business, prospects,
operations or condition (financial or otherwise) of the Company or any
subsidiary or on the Company's ability to perform its obligations under
this Agreement or any agreements, documents or instruments delivered
pursuant hereto.
V. Related Party Transactions. To the best knowledge of the
Company, except as set forth in the Company's proxy statement dated March
10, 1995, or as contemplated by or described in this Agreement (excluding
payments of salaries to employees in the Company or a subsidiary's ordinary
course of business), no current or former stockholder, director, officer
or key employee of the Company or any Subsidiary or any "Associate" (as
defined in Rule 405 promulgated under the 1933 Act) of any such person, is
presently, directly or indirectly through his affiliation with any other
person or entity, a party to any material transaction with the Company or
any Subsidiary providing for the furnishing of services by or to, or rental
of real or personal property from or to, or otherwise requiring cash
payments to or by any such person. In addition, except as set forth in
the Company's proxy statement dated March 10, 1995, there is no
relationship or transaction involving the Company or any Subsidiary which
is described in Item 404 of Regulation S-K promulgated under the 1933 Act
(but for purposes of this representation not limited by time period
applicable to such item).
W. Registration Rights. Except as contemplated by this
Agreement and the Certificate of Designations or as disclosed on Schedule
6W, no person has the right to cause the Company to effect the registration
under the 1933 Act of any shares of Common Stock or any other securities
(including debt securities) of the Company.
X. Projections. The projections and the assumptions
underlying the same previously delivered to the Investors, which
projections have been material to the Investors in their decision to
enter into this Agreement and purchase the Preferred Stock hereunder,
were reasonable in the best judgment of officers of the Company based
upon information reasonably available to the Company at the time such
projections were made.
7. REGISTRATION RIGHTS. The Company covenants that it will do
the following:
7A. Registration Statement. The Company will, at its expense,
prepare and file, following the Closing, a registration statement on Form S3
or Form S-1 as appropriate (or similar form prescribed by the SEC) (the
"Registration Statement") covering all the Preferred Stock and the
Conversion Shares and shall use its best efforts to have such Registration
Statement declared effective by not later than 270 days after the Closing.
7B. Best Efforts. The Company will use its best efforts to
maintain the effectiveness of the Registration Statement for up to the
earlier of (i) such time as none of the Investors hold Preferred Stock or
Conversion Shares or (ii) three (3) years from the date hereof, and from
time to time will amend or supplement the Registration Statement and the
prospectus contained therein as and to the extent necessary to comply with
the 1933 Act and any other applicable securities laws. The Company will
also (i) provide Investors with as many copies of the prospectus contained
in the Registration Statement or any amendment or supplement thereto or
such other documents as Investors may reasonably request; (ii) cause the
Conversion Shares to be listed on each securities exchange and quoted on
each quotation service on which similar securities issued by the Company
are then listed or quoted; (iii) provide a transfer agent and registrar
for all Conversion Shares registered pursuant to the Registration
Statement; (iv) comply with the reporting requirements of the Securities
Exchange Act of 1934 (the "1934 Act") with respect to the Common Stock
and deliver all reports and other documents prepared and filed with the
Commission under the 1934 Act to Investors promptly when filed and (iv)
otherwise use its best efforts to comply with all other applicable rules
and regulations of the SEC.
In addition, the Company shall use its best efforts to register
and qualify the securities covered by the Registration Statement under
the securities laws of such states as shall be reasonably requested by
the Investors, provided that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do business
or to file a general consent to service of process in any such states.
7C. Expenses. All expenses incident to the Company's
performance of or compliance with the provisions of paragraph 7A,
including without limitation all registration and filing fees, fees and
expenses of compliance with state securities laws, printing expenses,
messenger and delivery expenses and fees and disbursements of counsel for
the Company and the Investors and all independent certified public
accountants (including the expenses of any audit), and other persons
retained by the Company or the Investors shall be borne by the Company
but only to the extent expenses incurred by or on behalf of the Investors
are reasonable. The foregoing notwithstanding, the Company shall not be
required to bear the costs and expenses, if any, of any underwriter,
including underwriters' commissions and discounts.
7D. Rule 144. With a view to making available to Investors the
benefits of Rule 144 promulgated under the Securities Act ("Rule 144")
and any other rule or regulation of the SEC that may at any time permit
Investors to sell the Conversion Shares to the public without
registration or pursuant to the Registration Statement, the Company
covenants and agrees to use its best efforts to: (i) make and keep public
information available, as those terms are understood and defined in Rule
144, until such date as all of the Conversion Shares shall have been
resold; (ii) take such action, including the voluntary registration of
its Common Stock under Section 12 of the 1934 Act, as is necessary to
enable Investors to sell the Conversion Shares; (iii) file with the SEC
in a timely manner all reports and other documents required of the
Company under the 1933 Act and the 1934 Act; and (iv) furnish to each
Investor upon request, as long as any Investor owns any Preferred Stock
or Conversion Shares (A) a written statement by the Company that it has
complied with the reporting requirements of the 1933 Act and the 1934
Act, or that it qualifies as a registrant whose securities may be resold
pursuant to Form S-3 (at any time when it so qualifies); (B) a copy of
the most recent annual or quarterly report of the Company; and (C) such
other information as may be reasonably requested in order to avail
Investors of any rule or regulation of the SEC that permits the selling
of any Conversion Shares without registration or pursuant to such form.
8. REPRESENTATIONS OF THE INVESTORS. The Investors represent,
and in making this sale to the Investors it is specifically understood
and agreed, that the Investors are acquiring the Preferred Stock to be
purchased by them hereunder for their own accounts for the purpose of
investment and not with a view to or for sale in connection with any
distribution thereof; provided, however, that nothing herein contained
shall prevent the Investors from selling or transferring any Preferred
Stock or Common Stock issued upon conversion of any Preferred Stock in
any transaction that is exempt from the registration provisions of the
1933 Act. Each of the Investors represents that it is an "accredited
investor" as defined in Regulation D under the 1933 Act. Each of the
Investors also represents that the designee specified below the name of
each Investor on the signature page hereof, is a "purchaser
representative" as defined in Regulation D under the 1933 Act.
9. DEFINITIONS. For the purpose of this Agreement, and in
addition to terms defined elsewhere in this Agreement, the following
terms shall have the following meanings. In addition, all terms of an
accounting character not specifically defined herein shall have the
meanings assigned thereto by GAAP.
"Affiliate" shall mean, with respect to any Person, a Person
directly or indirectly controlling, controlled by, or under common
control with, such Person. A Person shall be deemed to control a
corporation if such Person possesses, directly or indirectly, the power
to direct or cause the direction of the management and policies of such
corporation, whether through the ownership of voting securities, by
contract or otherwise.
"Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
"Commission" shall mean the United States Securities and
Exchange Commission or any governmental body or agency succeeding to its
functions.
"Common Stock" shall mean any of the shares of common stock,
par value $.01 per share, of the Company.
"Controlled Subsidiary" shall mean any Subsidiary from which
the Company may take its pro rata share of dividends or other
distributions on capital stock, and fully redeem its equity investment
therein, in each case free of any Liens or contractual restrictions or
other restrictions of any kind whatsoever except those imposed by those
provisions of the corporation statute of the Subsidiary's jurisdiction of
incorporation relating to dividends and other distributions and
redemptions and as may be imposed by bankruptcy, insolvency, moratorium,
reorganization and other laws relating to or affecting the rights and
remedies of creditors.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time. Section references to ERISA are
to ERISA as in effect at the date of this Agreement and any subsequent
provisions of ERISA amendatory thereof, supplemental thereto or
substituted therefor.
"ERISA Affiliate" shall mean each trade or business (whether or
not incorporated) which together with the Company or a Subsidiary of the
Company would be deemed to be a "single employer" within the meaning of
Section 4001 of ERISA immediately following the acquisition.
"GAAP" shall mean generally accepted accounting principles
consistently applied in the United States throughout the period or
periods in question.
"Indebtedness" of any Person as of any date shall mean and
include (i) all indebtedness for money borrowed of such Person or
evidenced by notes, bonds, debentures or similar evidences of
indebtedness of such Person, (ii) indebtedness of such Person under
leases which are capitalized under GAAP as of the time they were entered
into, (iii) indebtedness of such Person representing the deferred and
unpaid purchase price of any property or business (excluding in any event
trade and service payables incurred in the ordinary course of business
and constituting current liabilities), (iv) all guarantees by such Person
of Indebtedness of others (including repurchase arrangements and
financial condition or liquidity maintenance arrangements), (v) all
obligations of such Person in respect of interest rate protection
agreements and foreign currency hedging arrangements and (vi) all
obligations of such Person as an account party in respect of letters of
credit (other than documentary letters of credit) and in respect of
banker's acceptances, in the case of each of the foregoing clauses, in
the principal amount that such indebtedness would be shown on a balance
sheet of such Person prepared as of such date in accordance with GAAP.
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any agreement to give
any of the foregoing, any conditional sale or other title retention
agreement, any lease in the nature thereof, and the filing of or
agreement to give any financing statement or like instrument under the
laws of any jurisdiction).
"NASDAQ" shall mean the electronic inter-dealer quotation
system operated by a subsidiary of the National Association of Securities
Dealers, Inc.
"Net Income" shall mean income after taxes and before
extraordinary items of income and loss.
"Officer's Certificate" shall mean a certificate signed in the
name of the Company, by its President, one of its Vice Presidents or its
Treasurer.
"Operating Subsidiary" shall mean each [information to be
furnished].
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Section 4002 of ERISA, or any successor entity
thereto.
"Pension Plan" shall mean any multiemployer plan or single-
employer plan, as defined in Section 4001 of ERISA and subject to Title
IV of ERISA, which is maintained for employees of the Company, any of its
Subsidiaries or any ERISA Affiliates.
"Person" shall mean and include an individual, a partnership, a
joint venture, a corporation, a trust, an unincorporated organization and
a government or any department or agency thereof.
"Preferred Stock" shall mean the 8% Convertible Redeemable
Preferred Stock, par value $.01 per share, of the Company, having rights,
designations and preferences as set forth in the Certificate of
Designations.
"Reportable Event" shall mean an event described in Section
4043(c) of ERISA with respect to which the 30-day notice requirement has
not been waived by the PBGC or is otherwise inapplicable.
"Restricted Payment" shall mean (i) any dividend or other
distribution on any shares of the capital stock (except dividends or
distributions payable solely in shares of such capital stock or in
respect of the Preferred Stock) of the Company, (ii) any payment on
account of the purchase, redemption, retirement or acquisition of (a) any
shares of the capital stock of the Company other than the Preferred Stock
which may be purchased, redeemed, retired or acquired pursuant to a
purchase offer made in writing to all holders thereof or (b) any option,
warrant, convertible security or other right to acquire shares of the
capital stock of the Company other than the Preferred Stock or (iii)
except for transactions set forth on Schedules 6N and 6V or other
transactions on terms not less favorable than those obtainable from
unaffiliated third persons after arm's-length negotiations, any
transaction involving the transfer of funds or assets to or for the
account of, or the incurrence of a liability (contingent or otherwise) or
obligation to or with respect to, an Affiliate other than a Controlled
Subsidiary. Nothing contained in this definition shall prohibit payment
by any Subsidiary to the Company or to any Controlled Subsidiary.
"Series A Stock" shall mean any of the shares of Series A
Preferred Stock, par value $.01 per share, of the Company.
"Series B Stock" shall mean any of the shares of Series B
Cumulative Convertible Preferred Stock, par value $.01 per share, of the
Company.
"Stock and Note Purchase Agreement" shall have the meaning
ascribed thereto in Section 3E.
"Subsidiary" shall mean any corporation, partnership or other
entity at least a majority of the outstanding voting shares (or
equivalent controlling influence) of which is at the time directly or
indirectly owned or controlled (either alone or through Subsidiaries or
together with Subsidiaries) by the Company or another Subsidiary.
10. MISCELLANEOUS.
Y. Home Office Payment. The Company agrees that, so long as
the Investors shall hold any Preferred Stock, it will make payments of
dividends and redemption payments on such Preferred Stock not later than
12:00 o'clock noon, Pacific time on the date such payment is due, by
transfer of immediately available funds for credit to the Investors.
Payments shall be made to the account of the Investors specified on the
attachments to the signature page hereto or such other account in the
United States as the Investors may designate in writing, notwithstanding
any contrary provision contained herein or in the Preferred Stock or in
the Company's Certificate of Incorporation with respect to the place of
payment. The Company agrees to afford the benefits of this Section 10A
to any institutional investor of recognized standing which is the direct
or indirect transferee of any of the Preferred Stock.
Z. Indemnification. The Company agrees, whether or not the
transactions hereby contemplated shall be consummated, to pay, and save the
Investors harmless against liability for the payment of, all reasonable
and necessary out-of-pocket expenses arising in connection with the
transactions and other agreements and instruments contemplated by this
Agreement, any other agreement or instrument to be executed and delivered
in connection with the transactions contemplated by this Agreement, the
Certicate of Designations and any subsequent modification hereof or thereof
or consent hereunder or thereunder regardless of whether any such
modification or consent becomes effective, including, without limitation,
stock or securities transfer taxes, costs and expenses which may be
incurred in connection with the conversion and exchangeability features of
the Preferred Stock or the issuance of the Preferred Stock, all taxes,
together in each case with interest and penalties, if any, and any income
tax payable by the Investors in respect of any reimbursement of amounts
payable pursuant to this Section 10B (but not if such income tax is payable
by the Investors solely because they have deducted from income the expenses
so reimbursed to them), all printing, reproduction and similar costs and
the reasonable fees and expenses of Willkie Farr & Gallagher, special
counsel to the Investors in connection with this Agreement and the
transactions contemplated hereunder (such fees and expenses of Willkie Farr
& Gallagher to be paid at the Closing) and the cost and expenses,
including reasonable attorneys' fees, incurred by the Investors in enforcing
any of their rights hereunder or thereunder, including without limitation
costs and expenses incurred in any bankruptcy case. The Company agrees to
indemnify the Investors and hold the Investors harmless from and against any
and all liabilities, losses, damages, costs and expenses of any kind
(including, without limitation, the reasonable fees and disbursements of the
Investors' special counsel in connection with any investigative,
administrative or judicial proceeding, whether or not the Investors shall be
designated a party thereto) which may be incurred by the Investors, relating
to or arising out of this Agreement, the Preferred Stock or any actual or
proposed use of the proceeds of the sale of the Preferred Stock hereunder,
provided that the Investors shall not have the right to be indemnified
hereunder for their own gross negligence or willful misconduct as determined
by a court of competent jurisdiction. The obligations of the Company under
this Section 10B shall remain in force and effect for as long as the
Preferred Stock are outstanding and shall survive the transfer of any
thereof.
AA. Registration Rights. The Company covenants that it will not
hereafter enter into any agreement with respect to its securities which is
inconsistent with the rights granted in this Agreement.
BB. Restrictive Legend. Each share of Preferred Stock or
Common Stock issuable upon conversion of the Preferred Stock prior to
an effective registration shall bear the following (or substantially
equivalent) legend thereon:
"The transfer of these securities is subject to certain
restrictions set forth in a Purchase Agreement, dated as of May
1, 1995, and any amendments thereto. The securities
represented hereby have not been registered under the
Securities Act of 1933, as amended, or applicable state
securities laws, and the securities may not be sold,
transferred or otherwise disposed of in the absence of such
registration or an exemption therefrom under said Act and such
laws and the respective rules and regulations thereunder."
CC. Survival of Representations and Warranties. All
representations and warranties contained herein or made in
writing by or on behalf of any party to this Agreement in
connection herewith shall survive the execution and delivery
of this Agreement, regardless of any investigation made by the
Investors or on their behalf.
DD. Successors and Assigns. All covenants and agreements in
this Agreement contained by or on behalf of the parties hereto shall bind
and inure to the benefit of the respective successors and assigns of the
parties hereto whether so expressed or not.
EE. Notices. All communications provided for hereunder shall
be sent by registered or certified mail, overnight air courier service or
telecopier if within a reasonable time a permanent copy is transmitted by
any of the other methods described above and, if to the Investors, addressed
to the Investors in the manner in which its address appears on the signature
page hereof, with a copy to William J. Grant, Jr., Esq., at Willkie Farr
& Gallagher, 153 East 53rd Street, New York, New York 10022, if to the
Company, addressed to it at 2789 Northpoint Parkway, Santa Rosa, California
95402-7397, Attention: President, with a copy to John V. Erickson, Esq.,
at Collette & Erickson, 555 California Street, San Francisco, California
94104-1791 or to such other address with respect to any party as such party
shall notify the other in writing; provided, however, that any such
communication to the Company may also, at the option of the Investors, be
either delivered to the Company at the Company's address set forth above
or to any officer of the Company.
FF. Descriptive Headings. The descriptive headings of the
several Sections of this Agreement are inserted for convenience only and
do not constitute a part of this Agreement.
GG. Satisfaction Requirement. If any agreement, certificate
or other writing, or any action taken or to be taken, is by the terms of
this Agreement required to be satisfactory to the Investors, the
determination of such satisfaction shall be made by the Investors in their
sole and exclusive judgment exercised in good faith.
HH. Governing Law; Consent to Jurisdiction. This Agreement
shall be construed and enforced in accordance with, and the rights of
the parties shall be governed by, the law of the State of Delaware,
without giving effect to the choice of law or conflicts principles thereof.
Any legal action or proceeding with respect to this Agreement may be
brought in the courts of the State of Delaware or of the United States of
America for the District of Delaware, and, by execution and delivery of
this Agreement, the Company hereby accepts for itself and in respect of
its property, generally and unconditionally, the jurisdiction of the
aforesaid courts. The Company irrevocably consents to the service of
process out of any of the aforementioned courts in any such action
or proceeding by the mailing of copies thereof by registered or certified
mail, postage prepaid, to the Company at its address set forth opposite
its signature below, such service to become effective 30 days after
such mailing. Nothing herein shall affect the right of the Company,
the Investors or any holder of Preferred Stock to serve process in any
other manner permitted by law or to commence legal proceedings or otherwise
proceed against the Company in any other jurisdiction.
II. Remedies. In case any one or more of the covenants
and/or agreements set forth in this Agreement shall have been breached
by the Company or any Investor, the Company or the Investors (or any of
them), as applicable, may proceed to protect and enforce its or their
rights either by suit in equity and/or by action at law, including, but
not limited to, an action for damages as a result of any such breach
and/or an action for specific performance of any such covenant or agreement
contained in this Agreement. The Company or an Investor acting pursuant
to this Section 10K shall be indemnified against all liability, loss or
damage, together with all reasonable costs and expenses related thereto
(including reasonable legal and accounting fees and expenses) in accordance
with Section 10B.
JJ. Entire Agreement. This Agreement and the other
writings referred to herein or delivered pursuant hereto contain the
entire agreement among the parties with respect to the subject matter
hereof and supersedes all prior and contemporaneous arrangements or
understandings, written or oral, with respect thereto.
KK. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof,
and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other
jurisdiction.
LL. Amendments. This Agreement may be amended, and the
observance of any term of this Agreement may be waived, with (and only
with) the written consent of the Company and each of the Investors.
MM. Counterparts. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original, and
it shall not be necessary in making proof of this Agreement to produce or
account for more than one such counterpart.
If you are in agreement with the foregoing, please sign the form
of acceptance on the space provided below, whereupon this letter shall
become a binding agreement between the parties hereto.
Very truly yours,
OPTICAL COATING LABORATORY, INC.
By: /S/HERBERT M. DWIGHT, JR.
Herbert M. Dwight, President and
Chief Executive Officer
The foregoing Agreement is
hereby accepted as of the
date first above written.
[NAME OF INVESTOR]
By: 8% Series C Convertible
Name: Redeemable Preferred
Stock:
Title: Shares
Purchase Price: $
Employer ID Number
(Name of Designee)
[NAMES OF INVESTORS]
Number of Shares
Name and Address at $1,000 per share
NAP & COMPANY (EMP ID 51-6000279) 3,500
as nominee for the Delaware State
Employees' Retirement Fund
c/o Pecks Management Partners Ltd.
One Rockefeller Plaza, Suite 320
New York, NY 10020
Attn: Arther W. Berry
FUELSHIP & COMPANY (EMP ID 04-2809861)
750 as nominee for the Declaration of
Trust for Defined Benefit Plans of
Zeneca Holdings Inc.
c/o Pecks Management Partners Ltd.
One Rockefeller Plaza, Suite 320
New York, NY 10020
Attn: Arther W. Berry
LINDSAY & CO. (EMP ID 91-1146641) 4,000
as nominee for Smith Barney
Fundamental Value Fund Inc.
388 Greenwich Street, 22nd Floor
New York, NY 10013
Attn: Lee Augsburger
Golden Gate Development and Investment 747
Limited Partnership (EMP ID 04-3015977)
747 c/o Advent International Corporation
101 Federal Street
Boston, MA 02110
Attn: Douglas Kingsley
Advent Performance Materials Limited 643
Partnership (EMP ID 06-1265669)
c/o Advent International Corporation
101 Federal Street
Boston, MA 02110
Attn: Douglas Kingsley
Advent International Investors II 10
Limited Partnership (EMP ID 04-3162542)
c/o Advent International Corporation
101 Federal Street
Boston, MA 02110
Attn: Douglas Kingsley
Adwest Limited Partnership 350
(EMP ID 04-2975787)
c/o Advent International Corporation
101 Federal Street
Boston, MA 02110
Attn: Douglas Kingsley
Lion Investment Limited 1,000
33 Robert Adam Street
London, England W1M5AH
Attn: Sarah Redhead
Modern Woodmen of America 1,000
1701 1st Avenue
Rock Island, IL 61201
Attn: Investment Department
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS OF SERIES C
CONVERTIBLE REDEEMABLE PREFERRED STOCK
of
Optical Coating Laboratory, Inc.
Pursuant to Section 151 of the General Corporation Law of the
State of Delaware
We, Herbert M. Dwight, President and Chief Executive Officer, and
Joseph C. Zils, Vice President and Secretary, of Optical Coating Laboratory,
Inc., a corporation organized and existing under the General Corporation Law
of the State of Delaware (the "Corporation"), in accordance with the
provisions of Section 103 thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by
the Certificate of Incorporation of the said Corporation, the said Board of
Directors on May 1, 1995, adopted the following resolution creating a series
of 12,000 shares of Preferred Stock designated as Series C Convertible
Redeemable Preferred Stock:
RESOLVED, that pursuant to the authority vested in the Board of
Directors of this Corporation in accordance with the provisions of its
Certificate of Incorporation, a series of Preferred Stock of the Corporation
be and it hereby is created, and that the designation and amount thereof and
the voting powers, preferences and relative, participating, optional and
other special rights of the shares of such series, and the qualifications,
limitations or restrictions thereof are as follows:
Section 1. Designation and Amount. The shares of such series
shall be designated as " 8% Series C Convertible Redeemable Preferred Stock"
(hereinafter referred to as "Series C Preferred Stock"), shall have a par
value of $.01 per share, and the number of shares constituting such
series shall be 12,000.
Section 2. Dividends and Distributions.
(A) The holders of Series C Preferred Stock shall be entitled to
receive, when, as and if declared by the Board of Directors out of funds
legally available therefor, cumulative dividends at the rate of Eighty
Dollars ($80.00) per share per annum, payable quarterly on the last day of
March, June, September and December of each year (each such date being
referred to herein as the "Quarterly Dividend Payment Date"), commencing
on the first Quarterly Dividend Payment Date after the first issuance (the
"Issuance Date") of a share or fraction of a share of Series C Preferred
Stock.
(B) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series C Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares of Series C
Preferred Stock, unless the date of issue of such shares is prior to the
record date for the first Quarterly Dividend Payment Date, in which case
dividends on such shares shall begin to accrue from the date of issue of
such shares, or unless the date of issue is a Quarterly Dividend Payment
Date or is a date after the record date for the determination of holders
of shares of Series C Preferred Stock entitled to receive a quarterly
dividend and before such Quarterly Dividend Payment Date, in either of
which events such dividends shall begin to accrue and be cumulative from
such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall
bear interest at the rate of 8% per annum. Dividends paid on the shares
of Series C Preferred Stock in an amount less than the total amount of
such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the
time outstanding. In the event dividends paid on the shares of Series C
Preferred Stock are in an amount less than the total amount of such
dividends at the time accrued and payable on such shares, then the
amount equal to the difference between the dividends paid and the dividends
accrued and payable shall continue to accrue and be cumulative. The Board
of Directors may fix a record date for the determination of holders of
shares of Series C Preferred Stock entitled to receive payment of a dividend
or distribution declared thereon, which record date shall be no more than
thirty (30) days prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series C
Preferred Stock shall have the following voting rights:
(A) Except as otherwise provided herein or by law, the holders of
shares of Series C Preferred Stock shall not be entitled to notice of any
shareholders' meetings or to vote on any matter.
(B) (i) If at any time dividends on any Series C Preferred Stock
shall be in arrears in an amount equal to four (4) quarterly dividends
thereon, the occurrence of such contingency shall mark the beginning of a
period (herein called a "default period") which shall extend until such
time when all accrued and unpaid dividends for all previous quarterly
dividend periods and for the current quarterly dividend period on all
shares of Series C Preferred Stock then outstanding shall have been
declared and paid or set apart for payment. During each default period,
all holders of Series C Preferred Stock, voting as a class, shall have the
right to elect the greater of (x) two (2) Directors or (y) a whole number
of Directors not less than twenty-five percent (25%) of the total number
of authorized Directors, including Directors authorized after any expansion
of the authorized number of Directors pursuant to subparagraph 3(C)(ii)
(the "Series C Preferred Directors").
(ii) During any default period, such voting right of the
holders of Series C Preferred Stock may be exercised initially at a special
meeting called pursuant to subparagraph (iii) of this paragraph 3(B) or
at any annual meeting of stockholders, and thereafter at annual meetings
of stockholders provided that neither such voting right nor the right of
the holders of any other series of Preferred Stock, if any, to increase,
in certain cases, the authorized number of Directors shall be exercised
unless the holders of one third (1/3) in number of shares of the Series
C Preferred Stock outstanding shall be present in person or by proxy.
The absence of a quorum of the holders of Common Stock shall not affect
the exercise by the holders of the Series C Preferred Stock of such
voting right. At any meeting at which the holders of the Series C Preferred
Stock shall exercise such voting right initially during an existing default
period, they shall have the right, voting as a class, to elect Directors to
fill such vacancies, if any, in the Board of Directors as may then exist up
to the number of Series C Preferred Directors or, if such right is exercised
at an annual meeting, to elect the Series C Preferred Directors. If the
number of Series C Preferred Directors which may be so elected at any
special meeting does not amount to the required number, the authorized
number of Directors shall be automatically increased as shall be necessary
to permit the election by the holders of the Series C Preferred Stock of
the required number and the approval of the holders of the shares of
Common Stock shall not be necessary for such increase. After the holders
of the Series C Preferred Stock shall have exercised their right to elect
Directors in any default period and during the continuance of such period,
the number of Directors shall not be increased or decreased except by vote
of the holders of Series C Preferred Stock as herein provided or pursuant
to the rights of any equity securities ranking senior to or pari passu with
the Series C Preferred Stock.
(iii) Notwithstanding anything to the contrary contained in the
Corporation's Certificate of Incorporation or By-Laws, unless the holders of
Series C Preferred Stock shall, during an existing default period, have
previously exercised their right to elect Directors, the Board of Directors
may order, or any stockholder or stockholders owning in the aggregate not
less than ten percent (10%) of the total number of shares of the Series C
Preferred Stock outstanding may request, the calling of a special meeting
of the holders of the Series C Preferred Stock, which meeting shall thereupon
be called by the President, a Vice-President or the Secretary of the
Corporation. Notice of such meeting and of any annual meeting at which
holders of the Series C Preferred Stock are entitled to vote pursuant to
this subparagraph 3(B)(iii) shall be given to each holder of record of the
Series C Preferred Stock by mailing a copy of such notice to him at his
last address as the same appears on the books of the Corporation. Such
meeting shall be called for a time not earlier than ten (10) days and not
later than sixty (60) days after such order or request or in default of the
calling of such meeting within sixty (60) days after such order or
request, such meeting may be called at the expense of the Corporation on
similar notice by any stockholder or stockholders owning in the aggregate
not less than ten percent (10%) of the total number of shares of the
Series C Preferred Stock outstanding. Notwithstanding the provisions of
this subparagraph 3(B)(iii), no such special meeting shall be called
during the period within sixty (60) days immediately preceding the date
fixed for the next annual meeting of the stockholders.
(iv) In any default period, the holders of Common Stock, and
other classes of stock of the Corporation, if applicable, shall continue
to be entitled to elect the whole number of Directors until the holders
of the Series C Preferred Stock shall have exercised their right to elect
the Series C Preferred Directors voting as a class, after the exercise of
which right (x) the Directors so elected by the holders of the Series C
Preferred Stock shall continue in office until their successors shall have
been elected by such holders or until the expiration of the default period,
and (y) any vacancy in the Board of Directors may (except as provided in
subparagraph 3(B)(ii)) be filled by vote of a majority of the remaining
Directors theretofore elected by the holders of the class of stock which
elected the Director whose office shall have become vacant. References in
this paragraph 3(B) to Directors elected by the holders of a particular
class of stock shall include Directors elected by such Directors to fill
vacancies as provided in clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default period,
(x) the right of the holders of the Series C Preferred Stock as a class
to elect Directors shall cease, (y) the term of any Directors elected by
the holders of the Series C Preferred Stock as a class shall terminate,
and (z) the number of Directors shall be such number as may be provided
for in the Certificate of Incorporation or By-laws irrespective of any
increase made pursuant to the provisions of subparagraph 3(B)(ii) (such
number being subject, however, to change thereafter in any manner provided
by law or in the Certificate of Incorporation or By-laws). Any vacancies
in the Board of Directors effected by the provisions of clauses (y) and
(z) in the preceding sentence may be filled by a majority of the remaining
Directors.
(C) Except as set forth herein or as otherwise required by law,
holders of Series C Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled
to vote with holders of Common Stock as set forth herein) for taking any
corporate action.
Section 4. Redemptions.
(A) Optional Redemptions by the Corporation. The Corporation, at
its option, at any time and from time to time commencing on the day after
the day that is the second anniversary of the Issuance Date, may redeem
out of funds legally available therefor all or any shares of the Series C
Preferred Stock then outstanding by paying in cash therefor an amount equal
to One Thousand Eighty Dollars ($1,080) per share declining in equal annual
increments of Twenty Dollars ($20.00) to One Thousand Dollars ($1,000) per
share on the day after the day that is the fifth anniversary of the Issuance
Date and thereafter, together with the amount of any dividends accrued and
unpaid thereon to the date of the redemption. The foregoing notwithstanding,
the Corporation shall not exercise its rights under this Section 5(A) until
the day after the day that is the third (3) anniversary of the Issuance
Date unless at any time during the period beginning on the day that is the
day after the day that is the second anniversary of the Issuance Date and
ending on the day that is the third anniversary of the Issuance Date the
average Closing Price of the Common Stock of the Corporation for any
twenty (20) consecutive trading days shall be greater than $17.00 per
share, such Closing Price to be adjusted for stock splits or stock dividends
occurring prior to or during such twenty (20) day period. The term "Closing
Price" when used herein means the closing bid price of the Common Stock of
the Corporation reported by the National Association of Securities Dealers
Automated Quotation Systems, Inc. ("NASDAQ") or, if the shares of Common
Stock of the Corporation are then listed on a National Securities Exchange
(registered under the Securities Exchange Act of 1934), or the NASDAQ
National Market System or other comparable listing which lists last sale
prices, the reported last sale price per share or, in case no such reported
sale takes place on such day, the average of reported closing bid and asked
prices per share, in either case on such exchange, or if such prices are
not recorded by NASDAQ and the shares of Common Stock are not listed or
admitted to trading on such a National Securities Exchange, the mean between
the closing bid and asked prices as furnished by any member of the
National Association of Securities Dealers, Inc. selected from time to
time by the Corporation for that purpose.
(B) Determination of Number of Redeemable Shares. The number of
shares to be set forth in the redemption notice described in paragraph 5(C)
below to be redeemed from each holder of Series C Preferred Stock in
redemptions under this Section 5 will be the number of whole shares
determined, as nearly as practicable to the nearest share, by multiplying
the total number of shares of Series C Preferred Stock to be redeemed times
a fraction, (i) the numerator of which is the total number of shares of
Series C Preferred Stock then held by such holder and (ii) the denominator
of which is the total number of shares of Series C Preferred Stock then
outstanding.
(C) Notice of Redemption. Notice of any redemption of Series C
Preferred Stock pursuant to this Section 5 specifying the time and place of
redemption and the redemption price will be mailed by certified or registered
mail, return receipt requested, to each holder of record of Series C
Preferred Stock at the address of such holder shown on the Corporation's
records, not more than sixty (60) nor less than forty five (45) days prior
to the date on which such redemption is to be made. Such notice shall
state that the holders have conversion rights pursuant to Section 6
hereof up until the day that is five (5) days before the Conversion Date.
If less than all Series C Preferred Stock owned by a holder is then to be
redeemed, the notice will also specify the number of shares and the
certificate numbers thereof which are to be redeemed. Upon mailing any
such notice of redemption, the Corporation will become obligated to redeem
on the date of redemption specified therein all Series C Preferred
Stock specified therein. In case less than all Series C Preferred Stock
represented by any certificate is redeemed in any redemption pursuant to
this Section 5, a new certificate will be issued representing the
unredeemed Series C Preferred Stock without cost to the holder thereof.
(D) Method of Redemption. If on, prior to or after any date
fixed for redemption of the Series C Preferred Stock, the Corporation
shall deposit, with any bank or trust company in the State of California,
as a trust fund, a sum sufficient to redeem, as of the date fixed for
redemption thereof, the shares called for redemption, with irrevocable
instructions and authority to the bank or trust company to pay, on or
after the date fixed for redemption, the redemption price of the shares
to their respective holders upon surrender of their share certificates,
then from and after the latter of the date fixed for redemption or
the date of deposit, but not until such date, the shares so called shall be
redeemed and dividends shall cease to accrue after the date fixed for
redemption. The deposit shall constitute full payment of the shares to
their holders, and from and after the later of the date of the deposit
and the date fixed for redemption the shares shall no longer be outstanding,
and the holders thereof shall cease to be stockholders with respect to such
shares, and shall have no rights with respect thereto except the right to
receive from the bank or trust company payment of the redemption price of
the shares without interest, upon the surrender of their certificates
therefor. If the holders of shares of Series C Preferred Stock so called
for redemption shall not have claimed, at the end of six (6) months from
the date fixed for redemption, any funds so deposited, such bank or trust
company shall thereupon pay over to the Corporation such unclaimed
funds, and such bank or trust company shall thereafter be relieved of all
responsibility in respect thereof to such holders, and such holders shall
look only to the Corporation for payment of the redemption price.
Section 5. Conversion Rights.
(A) Conversion at Holder's Option. Subject to and in compliance
with the provisions of this Section 6, each share of Series C Preferred
Stock may, at the option of the holder thereof and notwithstanding any
notice of redemption to be made pursuant to Section 5, be converted at
any time into such number of fully paid and nonassessable shares of Common
Stock equal to the "Conversion Ratio" in effect at the time of conversion;
provided, however, that the right of a holder to convert shares of Series C
Preferred Stock called for redemption pursuant to Section 5 shall terminate
five (5) days prior to the date on which such redemption is to be made.
The Conversion Ratio of each share of Series C Preferred Stock shall be
the amount of $1,000, together with the amount of any dividends accrued
and unpaid thereon to the Conversion Date, divided by the Conversion Price.
The initial Conversion Price shall be an amount equal to $10.50.
(B) Adjustments to Conversion Price. The Conversion Price is
subject to adjustment as provided in this paragraph 6(B):
(i) If the Corporation shall at any time, or from time to
time, after the Issuance Date, issue or sell any Additional Shares of Common
Stock (as hereinafter defined in subparagraphs 6(B)(ii) and 6(B)(iii)),
for a consideration per share less than the Closing Price for the twenty
(20) consecutive trading days immediately preceding the date of such
issuance or sale (the "Market Price"), then as of the date of such issuance
or sale of Additional Shares of Common Stock, and each subsequent such
issuance or sale of Additional Shares of Common Stock, the Conversion Price
(calculated to the nearest cent) shall be reduced to the Conversion Price
determined by multiplying the Conversion Price in effect prior to such
event times a fraction the numerator of which shall be an amount equal
to the sum of (a) the product derived by multiplying the Market Price on
the day of such issuance or sale times the number of shares of "Common
Stock Deemed Outstanding" (as defined below) immediately prior to such
issuance or sale, plus (b) the consideration, if any, received or deemed
to be received by the Corporation upon such issuance or sale, and the
denominator of which shall be the product of the number of shares of
Common Stock Deemed Outstanding immediately after such issuance or sale
times the Market Price on the day of such issuance or sale. The foregoing
notwithstanding, in the event the Corporation shall at any time issue or
sell Additional Shares of Common Stock at a price less than $7.50 per share
regardless of what the Market Price is on the date of such issuance or
sale, then as of the date of such issuance or sale of Additional Shares
of Common Stock, and each subsequent such issuance or sale of Additional
Shares of Common Stock, the Conversion Price (calculated to the nearest
cent) shall be reduced to the Conversion Price determined by multiplying
the Conversion Price in effect prior to such event times a fraction the
numerator of which shall be an amount equal to the sum of (c) the product
derived by multiplying the Conversion Price on the day of such issuance
or sale times the number of shares of Common Stock Deemed Outstanding
immediately prior to such issuance or sale, plus (d) the consideration,
if any, received or deemed to be received by the Corporation upon
such issuance or sale, and the denominator of which shall be the product
of the number of shares of Common Stock Deemed Outstanding immediately
after such issuance or sale times the Conversion Price on the day of
such issuance or sale. The number of shares of "Common Stock Deemed
Outstanding", when used herein, shall equal the sum of the number of
shares of Common Stock then outstanding plus the number of shares of Common
Stock then obtainable pursuant to (x) options to purchase or rights to
subscribe for Common Stock, (y) securities by their terms convertible
into or exchangeable for Common Stock and (z) options to purchase or
rights to subscribe for such convertible or exchangeable securities.
(ii) If, after the Issuance Date, the Corporation shall
in any manner grant or offer any warrant, right or option to purchase
Common Stock (other than options described in Section 6(B)(iii) below)
at a price per such Additional Shares of Common Stock (as defined
below) (determined by dividing (a) the consideration actually received or
\to be received by the Corporation for the Issue of such Additional Shares
of Common Stock by (b) the total number of shares of Common Stock necessary
to effect the exercise of all such warrants, rights or options) less than
the Market Price per share of the Common Stock of the Corporation on the
day of such grant or offer, or, regardless of the Market Price, less than
$7.50 per share, all shares of Common Stock which the holders of such rights
or options shall be entitled to purchase pursuant to such rights or
options shall, subject to the provisions of subparagraph 6(B)(iii),
be deemed to be "Additional Shares of Common Stock" issued as of the date
of the offering of such warrants, rights or options, and the maximum
aggregate consideration named in such warrants, rights or options for the
shares of Common Stock covered thereby, plus the consideration received
by the Corporation for such warrant, right or option, if any, shall be
deemed to be the consideration actually received by the Corporation for
the issue of such Additional Shares of Common Stock.
If, after the Issuance Date, the Corporation shall in any manner
issue any stock (other than Series C Preferred Stock) or obligations
directly or indirectly convertible into or exchangeable for Common Stock
and the price per share for which Common Stock is issuable upon such
conversion or exchange (determined by dividing (a) the total amount
received by the Corporation in consideration for the issue of such
convertible stock or obligations, plus the total amount of premiums
payable to the Corporation upon conversion or exchange, by (b) the total
number of shares of Common Stock necessary to effect the conversion or
exchange of all such convertible stock or obligations) shall be less than
the Market Price per share of the Common Stock of the Corporation on the
date of any such issue, or, regardless of the Market Price, less than $7.50
per share, then such issue shall, subject to the provisions of subparagraph
6(B)(iv), be deemed to be an issue of "Additional Shares of Common Stock"
in an amount equal to the total maximum number of shares of Common Stock
necessary to effect the conversion or exchange of all such convertible
stock or obligations. The total amount received by the Corporation in
consideration for the issue of such convertible stock or obligations, plus
the total amount of premiums payable to the Corporation upon conversion or
exchange, shall be deemed to be the consideration actually received for
the sale of such Additional Shares of Common Stock.
In determining the amount of the consideration received by the
Corporation upon the issuance of warrants, rights or options to purchase
Common Stock or stock or obligations convertible or exchangeable for
Common Stock for the purposes of this subparagraph (ii), the amount of
the consideration in cash and other than cash shall be determined pursuant
to subparagraphs (v), (vi) and (vii) of this paragraph 6(B).
(iii) The term "Additional Shares of Common Stock," as used in
this paragraph 6(B), shall mean all shares of Common Stock issued by the
Corporation after the Issuance Date (including shares deemed to be
"Additional Shares of Common Stock" pursuant to subparagraph 6(B)(ii)),
whether or not subsequently reacquired or acquired by the Corporation,
other than the following:
(A) Shares issued upon conversion of any shares of
Preferred Stock;
(B) Shares issued upon exercise of any warrants or
options outstanding on the Issuance Date; or
(C) Shares of Common Stock of the Corporation, or
options to purchase Common Stock of the Corporation, issued to officers,
directors and employees of, and consultants to, the Corporation or its
subsidiaries pursuant to stock purchase or option plans or arrangements or
other officer, director, employee or consultant stock incentive or
benefit plans or arrangements, including, without limitation, any employee
stock ownership plan but in no event to exceed at any time an aggregate
amount of 5% of the Corporation's Common Stock Deemed Outstanding.
(iv) Upon the expiration of any unexercised warrants, options
or rights or the termination of any unexercised right to convert or
exchange, in respect of which any adjustments shall have been made pursuant
to subparagraph (i) of this paragraph 6(B), the Conversion Price then in
effect shall forthwith be readjusted to such Conversion Price as would
have been obtained had the adjustments made upon the issuance of such
warrants, options, rights, or convertible or exchangeable securities been
made upon the basis of the delivery of only the number of shares of Common
Stock actually delivered upon the exercise of such options or rights or
upon conversion or exchanges of such securities. Such readjustment of
the Conversion Price shall not affect any prior redemption or conversion
of shares of Series C Preferred Stock hereunder.
(v) In case of the issuance of Additional Shares of Common
Stock for a consideration part or all of which shall be in cash, the gross
amount of the cash consideration therefor shall be deemed to be the amount
of cash received by the Corporation for such shares, provided, however,
any compensation or discount in the sale, underwriting, or purchase thereof
by underwriters or dealers or others performing similar services or for
any expenses incurred in connection therewith shall be deducted from
the amount of said consideration.
(vi) In case of the issuance (other than as a dividend or
other distribution with respect to any capital stock of the Corporation
or upon conversion or exchange of other securities of the Corporation)
of Additional Shares of Common Stock for a consideration part or all of
which shall be other than cash, the amount of the consideration other
than cash therefor shall be deemed to be the value of such consideration as
determined in good faith by the Board of Directors, irrespective of the
accounting treatment thereof.
(vii) In case Additional Shares of Common Stock are issued as a
dividend or other distribution on any class of capital stock of the
Corporation, the Conversion Price then in effect shall be reduced by
multiplying the Conversion Price by a fraction of which the numerator
shall be the number of shares of Common Stock outstanding at the close of
business on the date fixed for determination of stockholders entitled to
receive such dividend and the denominator shall be the sum of such number
of shares and the total number of shares constituting such dividend or
other distribution.
(viii) In case outstanding shares of Common Stock shall be
subdivided into a greater number of shares of Common Stock, the Conversion
Price in effect at the opening of business on the date following the day upon
which such subdivision becomes effective shall be proportionately reduced,
and, onversely, in case outstanding shares of Common Stock shall be
combined into a smaller number of shares of Common Stock, the Conversion
Price in effect at the opening of business on the date following the day
upon which such combination becomes effective shall be proportionately
increased, such reductions or increases to be effected as provided below.
In the event of any such subdivision or combination, the Conversion
Price then in effect shall be reduced or increased, as the case may be,
by multiplying it by a fraction of which the numerator shall be the number
of shares of Common Stock outstanding at the close of business on the date
immediately preceding the effective date of such subdivision or combination
and the denominator shall be the number of shares of Common Stock
outstanding immediately after such subdivision or combination becomes
effective.
(ix) In the event the Corporation shall suffer a "Change in
Control," as hereinafter defined, and at a time when the Market Price per
share of the Common Stock of the Corporation on the day immediately
preceding the announcement of the transaction giving rise to such Change
in Control (the "Immediate Market Price") is less than the Conversion Price
then in effect, the Conversion Price shall be reduced to an amount equal
to the greater of (A) the Immediate Market Price and (B) from the first
day after the Issuance Date to the day that is the first anniversary of
the Issuance Date, $9.50 per share; from the first day after the day that
is the first anniversary of the Issuance Date to the day that is the second
anniversary of the Issuance Date, $9.00 per share; and from the first day
after the day that is the second anniversary of the Issuance Date to the
day that is the third anniversary of the Issuance Date, $8.50 per share.
The term a "Change in Control," when used herein, shall mean the
acquisition of a number of shares of capital stock of the Corporation
which, in the aggregate, would have voting rights in excess of forty
percent (40%) of all Voting rights of all shareholders of the Corporation
then outstanding by any person together with all affiliates and associates
of such person, as those terms are defined in Rule 12b-2 of the General
Rules and Regulations under the Securities Exchange Act of 1934, as amended
(collectively an "Acquiring Person"), excluding the Corporation, any
subsidiary of the Corporation, any employee benefit plan of the Corporation
or of any subsidiary of the Corporation, or any person or entity organized,
appointed or established by the Corporation for or pursuant to the terms
of any such plan, including any such acquisitions pursuant to a "merger or
consolidation" (within the meaning of Subchapter IX of the General
Corporation Law of the State of Delaware). The foregoing notwithstanding,
no Change in Control shall be deemed to have occurred if (A) more than 50%
of the aggregate consideration received or retained in such transaction by
the holders of Common Stock of the Corporation shall consist of
"Marketable Stock," as hereinafter defined, of the surviving corporation
or (B) if the holders of Common Stock of the Corporation receive or
retain in connection with such transaction a number of shares of capital
stock of the surviving corporation which, in the aggregate, would have
voting rights in excess of fifty percent (50%) of all voting rights of
all shareholders of the surviving corporation. The term "Marketable Stock,"
when used herein, shall mean common stock of the surviving corporation,
which is (or will, upon distribution thereof, be) listed on a National
Securities Exchange (registered under the Securities Exchange Act of 1934),
the NASDAQ National Market System or other comparable listing.
(x) In the event the Corporation fails to cause a
registration statement under the Securities Act of 1933, as amended, to
become effective in respect of the shares of Common Stock issuable upon
conversion of the Series C Preferred Stock by the date that is 270 days
after the Issuance Date pursuant to the terms of the Purchase Agreement,
dated as of May 1, 1995, between the Corporation and each of the investors
named on Schedule 1 thereto, the Conversion Price then in effect, if
higher, shall be reduced to $9.45 per share.
(C) Notice of Adjustment in Conversion Rights and Conversion Ratio.
Upon any adjustment or other change relating to the Conversion Price and
Conversion Ratio or the securities purchasable on exercise of the right to
convert Series C Preferred Stock, then and in each such case the Corporation
shall within 30 days of such adjustment give written notice thereof, by first
class mail, postage prepaid, addressed to each holder of record of Series C
Preferred Stock at the address of such holder as shown on the books of the
Corporation, which notice shall state the Conversion Ratio and Conversion
Price resulting from such adjustment and the increase or decrease in
the number or other denominations of securities purchasable at such price
upon conversion of shares of Series C Preferred Stock, setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based. The Corporation shall supply current information
concerning the foregoing to any holder of Series C Preferred Stock at
any time upon demand.
(D) Other Notices. In case at any time: (i) the Corporation
shall pay any dividend or make any distribution to the holders of its
Common Stock and/or Series C Preferred Stock; (ii) the Corporation shall
offer for subscription pro rata to the holders of its Common Stock and/or
Series C Preferred Stock any additional shares of stock of any class or
other rights; or (iii) there shall be any capital reorganization or
reclassification of the capital stock of the Corporation, or consolidation
or merger of the Corporation with or into or the sale of all or
substantially all of its assets to another corporation or entity;
then, in any one or more of said cases, the Corporation shall give written
notice, by first class mail, postage prepaid, addressed to each holder of
record of Series C Preferred Stock, at the address of such holder as shown
on the books of the Corporation, of the date on which (i) the books of
the Corporation shall close or a record shall be fixed for determining
the stockholders entitled to such dividend, distribution or subscription
rights, or (ii) such reorganization, reclassification, consolidation,
merger or sale shall take place, as the case may be. Such notice shall
also specify the date as of which the holders of Common Stock and Series C
Preferred Stock of record shall participate in such dividend, distribution
or subscription rights, or shall be entitled to exchange their
Series C Preferred Stock or Common Stock for securities or other property
deliverable upon such reorganization, reclassification, consolidation,
merger or sale, as the case may be. Such written notice shall be given
at least thirty (30) days prior to the record date or the date on which
the Corporation's transfer books are closed with respect thereto.
(E) Exercise of Right to Convert. To exercise the conversion
privilege provided in paragraph 6(A), a holder of Series C Preferred Stock
shall give written notice to the Corporation at its principal office that
such holder elects to convert such shares. Such notice shall also state
the name or names (with address or addresses) in which the certificate
or certificates for shares of Common Stock issuable upon such conversion
shall be issued. If less than all Series C Preferred Stock owned by a
holder is meant to be converted, the notice will also specify the number
of shares and the certificate numbers thereof which are to be converted.
The date when a holder's written notice is received by the Corporation in
the case of a conversion pursuant to paragraph 6(A) shall be the "Conversion
Date." As promptly as practicable after the Conversion Date and upon
receipt of the certificate or certificates representing the shares to be
converted, the Corporation shall issue and shall deliver at its principal
office to the holder of the shares of Series C Preferred Stock being
converted, or on its written order, a certificate or certificates as it
may request for the number of full shares of Common Stock issuable upon
the conversion of such shares of Series C Preferred Stock in accordance
with the provisions of this Section 6, and cash, as provided in
paragraph 6(F), in respect of any fraction of a share of Common Stock
issuable upon such conversion. Such conversion shall be deemed to have
been effected at the close of business on the Conversion Date, and at
such time the rights of the holder or holders of the converted shares of
Series C Preferred Stock shall cease and the person or persons in whose
name or names any certificate or certificates for shares of Common Stock
shall be issuable upon such conversion shall be deemed to have become
the holder or holders of record of the shares of Common Stock represented
thereby.
(F) Fractional Shares. No fractional shares of Common Stock
or scrip representing fractional shares shall be issued upon conversion
of Series C Preferred Stock. Instead of any fractional shares of Common
Stock which would otherwise be issuable upon conversion of Series C Preferred
Stock (and which shall be determined with respect to each holder by
considering the ratio of those shares registered in his name to the total
number of shares of Series C Preferred Stock then outstanding), the
Corporation shall pay to the holder of the shares of Series C Preferred
Stock which were converted cash in respect of such fraction in an amount
equal to the same fraction of the Closing Price on the Conversion Date,
but only if and when such cash is legally available for that purpose.
(G) Certificates. In the event some but not all of the shares of
Series C Preferred Stock represented by a certificate or certificates
surrendered by a holder are converted, the Corporation shall execute and
deliver to or on the order of the holder, at the expense of the Corporation,
a new certificate representing the number of shares of Series C Preferred
Stock which were not converted.
(H) Reservation of Common Stock. The Corporation shall at all
times ensure that all shares of Common Stock that may be issued upon the
conversion of the Preferred Stock will, upon issuance and upon full payment
therefor, be validly issued, fully paid and nonassessable and free from
all taxes, liens and charges with respect to the issuance thereof. During
the period within which the Preferred Stock may be converted, the Corporation
will at all times have authorized and reserved a sufficient number of shares
of Common Stock of the Corporation, par value $.01 per share (the "Conversion
Shares"), to permit the conversion of the Preferred Stock.
(I) Conversion. Without limiting the provisions of subparagraph
6(B)(vii) above, upon any conversion of any shares of Series C Preferred
Stock under this Section 6 or otherwise, no adjustment to the Conversion
Price then in effect shall be made on account of declared and unpaid
dividends on the shares of Series C Preferred Stock surrendered for
conversion.
(J) No Impairment. The Corporation will not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities
or any other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms to be observed or performed hereunder by
the Corporation, but will at all times in good faith assist in the carrying
out of all the provisions of this Section 6 and in the taking of all such
action as may be necessary or appropriate in order to protect the conversion
rights of the holders of the Series C Preferred Stock against impairment.
Section 6. Reacquired Shares. Any shares of Series C Preferred
Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and cancelled promptly after the acquisition
thereof. All such shares shall upon their cancellation become authorized
but unissued shares of Preferred Stock and may be reissued as part of a new
series of Preferred Stock to be created by resolution or resolutions of the
Board of Directors, subject to the conditions and restrictions on issuance
set forth herein.
Section 7. Liquidation, Dissolution, Winding Up or Merger, etc.
(A) Upon any liquidation (voluntary or otherwise), dissolution or winding
up of the Corporation, no distribution shall be made to the holders of
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series C Preferred Stock unless, prior
thereto, the holders of shares of Series C Preferred Stock shall have
received One Thousand Dollars ($1,000) per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment (the "Series C Liquidation Preference").
(B) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series C Liquidation Preference
and the liquidation preferences of all other series of Preferred Stock, if
any, which rank on a parity upon liquidation, dissolution or winding up
with the Series C Preferred Stock, then such remaining assets shall be
distributed ratably to the holders of such parity shares in proportion to
their respective liquidation preferences.
Section 8. Ranking. The Series C Preferred Stock shall rank
prior to all other series and classes of the Corporation's capital stock as
to the payment of dividends and the distribution of assets, and the
Corporation may not create any series or class of capital stock ranking
prior to or pari passu with the Series C Preferred Stock unless the terms
of any such series or class shall be approved by not less than sixty-six
and two-thirds percent (66 2/3%) of the outstanding shares of Series C
Preferred Stock, voting separately as a class.
Section 9. Amendment. The Certificate of Incorporation of the
Corporation shall not be further amended in any manner which would materially
alter or change the powers, preferences or special rights of the Series C
Preferred Stock so as to affect them adversely without the affirmative vote
of the holders of not less than sixty-six and two-thirds percent (66 2/3%)
of the outstanding shares of Series C Preferred Stock, voting separately
as a class, provided however that with respect to dividend rights,
redemption rights, conversion rights and this provision, no amendments
shall be made without the consent of every holder of Series C Preferred
Stock.
Section 11. Fractional Shares. Series C Preferred Stock may be
issued in fractions of a share which shall entitle the holder thereof, in
proportion to such holder's fractional shares, to exercise voting rights,
receive dividends, participate in distributions and to have the benefit of
all of the rights of holders of shares of Series C Preferred Stock.
IN WITNESS WHEREOF, we have executed and subscribed this Certificate
and do affirm the foregoing as true under the penalties of perjury this
1ST day of May, 1995.
/S/HERBERT M. DWIGHT, JR.
Herbert M. Dwight,
President and Chief Executive Officer
Attest:
/S/JOSEPH C. ZILS
Joseph C. Zils, Vice President
and Secretary
Joseph C. Zils, Vice President
and General Counsel
June 28, 1995
Page 2
June 28, 1995
Joseph C. Zils, Vice President
and General Counsel
Optical Coating Laboratory, Inc.
2789 Northpoint Parkway
Santa Rosa, California 95407-7397
Re: ISSUANCE OF SECURITIES ON FORM S-8
REGISTRATION STATEMENT
Dear Mr. Zils:
This letter is written to you in connection with the filing on or about
June 29, 1995, of a Registration Statement on Form S-8 with the Securities and
Exchange Commission for the purpose of registering Common Stock, $.01 par value,
offered by Optical Coating Laboratory, Inc. (the "Company), which shares were or
are to be offered pursuant to the Company's 1995 Incentive Compensation plan
(the "Plan").
As counsel for the Company we have examined, among other things, originals
or copies identified to our satisfaction as being true copies of the above-
referenced Registration Statement, Certificate of Incorporation and Bylaws of
the Company, the corporate resolutions adopting the Plan authorizing the
issuance of options, unrestricted stock bonuses, restricted stock bonuses, stock
paid for with a recourse and non recourse promissory note, and stock withholding
to satisfy tax liabilities under the Plan, and other pertinent documents and
instruments of the Company. In addition to such examination, we have obtained
from Directors and Officers of the Company other such information and advice as
we have deemed necessary for purposes of this opinion.
On the basis of the foregoing and our examination and consideration of such
other factual and legal matters as we have deemed appropriate in the premises,
we are of the opinion that the shares to be registered will, when sold in
accordance with the terms of the Plan, be legally issued, fully paid and non-
assessable.
We consent to the filing of this letter with the Securities and Exchange
Commission as an exhibit to the aforementioned Registration Statement.
Very truly yours,
Collette & Erickson
JVE:JGP:tm
OCLI 1.881
F:\DOC\0186\01866401.DOC, 6/27/95, 08:21 AM
EXHIBIT 23(A)
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration
Statement of Optical Coating Laboratory, Inc. on Form S-8 of our report
dated December 14, 1994, appearing in the Annual Report on Form 10-K of
Optical Coating Laboratory, Inc. for the year ended October 31, 1994.
June 28, 1995
San Francisco, California
EXHIBIT 15
July 6, 1995
Optical Coating Laboratory, Inc.
Santa Rosa, California
We have made a review, in accordance with standards
established by the American Institute of Certified Public
Accountants, of the unaudited interim financial information
of Optical Coating Laboratory, Inc. and subsidiaries for the
periods ended January 31, 1995 as indicated in our report
dated February 15, 1995, and April 30, 1995 as indicated in
our report dated May 22, 1995, are being used in this
Registration Statement. Because we did not perform an audit,
we expressed no opinion on such interim financial
information.
We are aware that our reports referred to above, which were
included in your Quarterly reports on Form 10-Q for the
quarters ended January 31, 1995 and April 30, 1995, are
being used in this Registration Statement.
We are also aware that the aforementioned reports, pursuant
to Rule 436(c) under the Securities Act of 1933, are not
considered a part of the Registration Statement prepared or
certified by an accountant or a report prepared or certified
by an accountant within the meaning of Sections 7 and 11 of
that Act.
DELOITTE & TOUCHE LLP
