Draft of 08/08/96 4:05:34 PM Registration No. 033-_______
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM S-4
Registration Statement
Under
The Securities Act of 1933
--------------------------
Optical Coating Laboratory, Inc.
(Exact name of registrant as specified in its charter)
------------------
Delaware 3827 68-0164244
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Classification Identification No.)
incorporation or Code Number)
organization)
2789 Northpoint Parkway
Santa Rosa, CA 95407-7397
(707) 545-6440
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Joseph C. Zils
Vice President, General Counsel and Secretary
Optical Coating Laboratory, Inc.
2789 Northpoint Parkway
Santa Rosa, CA
(707) 545-6440
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
John V. Erickson, Esq. Robert DeN. Cope, Esq.
Collette & Erickson LLP 44 Elm Street
555 California Street Suite 503
Suite 4350 Worcester, MA 01609-2523
San Francisco CA 94101-1791
----------------------
Approximate date of commencement of proposed sale
of the securities to the public:
As soon as practicable after the Registration Statement has become effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
====================================================================================================================
Title of each Proposed Maximum Proposed Maximum
class of securities Amount to be Offering Price Aggregate Offering Amount of
to be registered Registered Per Share (1) Price (1) Registration Fee
- ---------------- ------------ ---------------- ------------------ ----------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par 1,930,869 $1.94 $3,742,000 $748.40
value per share
====================================================================================================================
<FN>
(1) Estimated solely for the purpose of determining the registration fee in
accordance with Rule 457(f)(2) under the Securities Act of 1933, based
upon the book value as of March 31, 1996, the latest practicable date,
of the securities to be cancelled in the exchange.
</FN>
</TABLE>
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
The Exhibit Listing appears on Page _____.
<PAGE>
<TABLE>
CROSS REFERENCE SHEET
Between Items of Form S-4 and Prospectus
<CAPTION>
Item Location in Prospectus
- ---- ----------------------
<S> <C> <C>
A. Information About the Transaction
1. Forepart of the Registration
Statement and Outside Front
Cover Page of Prospectus .......... Outside Front Cover Page; Cross Reference Sheet
2. Inside Front and Outside Back
Cover Pages of Prospectus ......... Inside Front Cover Page; Table of Contents;
Available Information
3. Risk Factors and Ratio of
Earnings to Fixed Charges
and Other Information ............. Summary
4. Terms of the Transaction ......... Summary; Special Meeting; The Merger; Comparison of Rights
of Holders of OCLI Common Stock and OCA Common
Stock; Description of OCLI's Capital Stock; Certain
Federal Income Tax Consequences
5. Pro Forma Financial Information ... Summary
6. Material Contracts with the
Company Being Acquired ............ The Merger; Relationship and Transactions between
OCLI and OCA
7. Additional Information Required
for Reoffering by Persons
Deemed to be Underwriters ......... Not Applicable
8. Interests of Named Experts
and Counsel ................... Experts; Legal Opinions
9. Disclosure of Commission Position
on Indemnification for Securities
Act Liabilities ................... Not Applicable
B. Information About the Registrant
10. Information with Respect to S-3
Registrants ......................Available Information; Incorporation of Certain Documents by
Reference; Summary; Special Meeting; The Merger;
Comparison of Rights of Holders of OCLI Common
Stock and OCA Common Stock; Description of OCLI's
Capital Stock; Relationship and Transactions
between OCLI and OCA; OCLI and OCA Managements;
Ownership of OCA Common Stock and OCLI Common Stock
1
<PAGE>
Item Location in Prospectus
- ---- ----------------------
11. Incorporation of Certain
Information by Reference .......... Incorporation of Certain Documents by Reference
12. Information with Respect to S-2
or S-3 Registrants ................ Not Applicable
13. Incorporation of Certain
Information by Reference .......... Not Applicable
14. Information with Respect to
Registrants other than S-3
or S-2 Registrants ................ Not Applicable
C. Information about the Company Being Acquired
15. Information with Respect to
S-3 Companies ..................... Not Applicable
16. Information with Respect to
S-2 or S-3 Companies .............. Not Applicable
17. Information with Respect to
Companies Other than S-3 or S-2
Companies ........................ Summary; Special Meeting; The Merger; Rights of
Dissenting Shareholders; Comparison of Rights
of Holders of OCLI Common Stock and OCA Common
Stock; Relationship and Transactions between
OCLI and OCA; Management's Discussion and
Analysis of Financial Condition and Results of
Operations of OCA; OCLI and OCA Managements;
Ownership of OCA Common Stock and OCLI Common
Stock; Certain Relationships and Related
Transactions; Index to Financial Statements
D. Voting and Management Information
18. Information if Proxies,
Consents or Authorizations
are to be Solicited ............... Summary; The Meeting; The Merger; Ownership of OCA
Common Stock and OCLI Common Stock; Other
Matters
19. Information if Proxies,
Consents or Authorizations
are not to be Solicited or
in an Exchange Offer .............. Not Applicable
2
</TABLE>
<PAGE>
[OCA LETTERHEAD]
August 9, 1996
Dear Fellow Shareholders:
You are cordially invited to attend a Special Meeting of the
Shareholders of Optical Corporation of America ("OCA") to vote on the proposed
acquisition of OCA by Optical Coating Laboratory, Inc. ("OCLI") through the
merger (the "Merger") of OCA with a wholly-owned subsidiary of OCLI. Upon
consummation of the Merger, you will receive, in exchange for each share of OCA
Common Stock that you own on the effective date of the Merger, 2.042 shares of
OCLI Common Stock. Based on the closing price of OCLI Common Stock as reported
by NASDAQ on August 6, 1996, of $14.75 per share, the Merger is expected to
provide approximately $30.12 in value of OCLI Common Stock in exchange for each
share of OCA Common Stock. However, the closing price of the OCLI Common Stock
on the effective date of the Merger may be more or less than $14.75. Ten percent
of the shares of OCLI Common Stock you would be entitled to receive in the
Merger will be held in escrow to provide indemnification to OCLI against damages
incurred as a result of any misrepresentations, breaches of warranties and
breaches of covenants in connection with the Merger. See "THE MERGER --
Indemnification of OCLI; Escrow."
At the Special Meeting, Shareholders will be asked to approve and adopt
the Agreement and Plan of Merger.
The Special Meeting will be held at OCA's corporate offices located at
170 Locke Drive, Marlborough, Massachusetts 01752, on Tuesday, September 10,
1996, beginning at 10:00 a.m.
Management believes the Merger and the related transactions are in the
best interests of OCA and its Shareholders and recommends that you vote FOR
approval of these matters. For information concerning Management's reasons for
making this recommendation, please read carefully the sections in the enclosed
Proxy Statement/Prospectus entitled "THE MERGER."
It is very important that your shares be represented at the Special
Meeting, whether or not you plan to attend personally. Therefore, you should
complete and sign the enclosed proxy card and return it as soon as possible in
the enclosed postage-paid envelope. This will insure that your shares are
represented at the Special Meeting.
Yours very truly,
Donald A. Johnson, Chairman
3
<PAGE>
Optical Corporation of America
170 Locke Drive
Marlborough, Massachusetts 01752
(508) 481-9860
-------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER 10, 1996
-------------------
To the Holders of Common Stock of OPTICAL CORPORATION OF AMERICA:
NOTICE IS HEREBY GIVEN that a Special Meeting of the Shareholders (the
"Special Meeting") of Optical Corporation of America, a Massachusetts
corporation ("OCA"), will be held at the corporate offices of OCA located at 170
Locke Drive, Marlborough, Massachusetts 01752, on Tuesday, September 10, 1996 at
10:00 a.m. for the following purposes, all of which are more fully described in
the accompanying Proxy Statement/Prospectus:
1. To consider and vote upon a proposal to approve and adopt the
Agreement and Plan of Merger, dated June 28, 1996 (the "Merger Agreement"),
among OCA, Optical Coating Laboratory, Inc., a Delaware corporation ("OCLI"),
and OCA Acquisition Corp. ("Acquisition Corp."), a Delaware corporation which is
a wholly-owned subsidiary of OCLI, providing, among other things, for the merger
of Acquisition Corp. with and into OCA (the "Merger") pursuant to which each
share of OCA's common stock, $.01 par value per share ("OCA Common Stock"),
outstanding at the effective time of the Merger (other than shares with respect
to which dissenters' rights are perfected) will be converted into 2.042 shares
of OCLI's common stock, $.01 par value per share ("OCLI Common Stock"), and OCA
will become a wholly-owned subsidiary of OCLI, all as more fully described in
the accompanying Proxy Statement/Prospectus. A copy of the Merger Agreement
(including the principal exhibits thereto) is available without charge, upon
written or oral request, from Optical Corporation of America, 170 Locke Drive,
Marlborough, Massachusetts 01752, Attention: Clerk; telephone: (508) 481-9860,
facsimile: (508) 481-3559. In order to ensure timely delivery of the documents
requested, any such request should be made by August 16, 1996.
2. To transact such other business as may properly come before the
Special Meeting or any adjournments or postponements thereof.
The record date for the determination of Shareholders entitled to
notice of and to vote at the Special Meeting, and any adjournments or
postponements thereof, is August 9, 1996 (the "Record Date"). Only holders of
record of shares of OCA Common Stock at the close of business on the Record Date
are entitled to notice of and to vote at the Special Meeting. A list of OCA
Shareholders entitled to vote at the Special Meeting will be available, during
normal business hours, at OCA's corporate offices, 170 Locke Drive, Marlborough,
Massachusetts 01752, for 10 days prior to the Special Meeting for examination by
any OCA Shareholder for purposes germane to the Special Meeting.
Holders of OCA Common Stock have a right to dissent from the Merger,
and if the Merger is consummated, to receive "fair value" for their shares in
cash by complying with the provisions of
<PAGE>
Massachusetts law, including Sections 85 to 98 of Chapter 156B of the
Massachusetts Business Corporation Law, the full text of which is attached as
APPENDIX I to the Proxy Statement/Prospectus accompanying this Notice of Special
Meeting.
If the Merger is approved by the Shareholders at the Meeting and
effected by OCA, any Shareholder (1) who files with OCA before the taking of the
vote on the approval of the Merger, written objection to the Merger stating that
such Shareholder intends to demand payment for such Shareholder's OCA Common
Stock if the Merger is completed and (2) whose shares of OCA Common Stock are
not voted in favor of the Merger has or may have the right to demand in writing
from OCA, within twenty (20) days after the date of mailing to such Shareholder
of notice in writing that the Merger has become effective, payment for such
Shareholder's shares of OCA Common Stock and an appraisal of the value thereof.
OCA and any such Shareholder shall in such cases have the rights and duties and
shall follow the procedure set forth in Sections 88-98, inclusive, of Chapter
156B of the General Laws of Massachusetts.
Your vote is very important regardless of how many shares of OCA Common
Stock you own. Regardless of whether you plan to attend the Special Meeting, you
are requested to sign, date and return the enclosed Proxy without delay in the
enclosed postage-paid envelope. You may revoke your Proxy at any time prior to
its exercise. If you are present at the Special Meeting or any adjournments or
postponements thereof, you may revoke your Proxy and vote personally on the
matters properly brought before the Special Meeting.
By Order of the Board of Directors
Robert DeN. Cope, Assistant Clerk
August 9, 1996
PLEASE SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE
PLEASE DO NOT SEND IN STOCK CERTIFICATES AT THIS TIME
<PAGE>
SUBJECT TO COMPLETION - DATED AUGUST 9, 1996
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
PROXY STATEMENT/PROSPECTUS
------------------
PROXY STATEMENT
Optical Corporation of America
170 Locke Drive
Marlborough, MA 01752
(508) 481-9860
------------------
PROSPECTUS
Optical Coating Laboratory, Inc.
2789 Northpoint Parkway
Santa Rosa, CA 95407-7397
(707) 545-6440
1,930,869 Shares of Common Stock,
$.01 par value
------------------
This Proxy Statement/Prospectus is being furnished to Shareholders of
Optical Corporation of America, a Massachusetts corporation ("OCA"), in
connection with the proposed merger (the "Merger") of OCA Acquisition Corp., a
Delaware corporation ("Acquisition Corp."), which is a wholly-owned subsidiary
of Optical Coating Laboratory, Inc., a Delaware corporation ("OCLI"), with and
into OCA, pursuant to an Agreement and Plan of Merger by and among OCLI,
Acquisition Corp. and OCA dated June 28, 1996 (the "Merger Agreement").
See "THE MERGER" for a description of the terms and conditions of the
Merger.
All information in this Proxy Statement/Prospectus concerning OCLI and
Acquisition Corp. has been supplied by OCLI. All information contained in this
Proxy Statement/Prospectus concerning OCA has been supplied by OCA.
-------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES AGENCY NOR HAS THE
COMMISSION OR ANY STATE SECURITIES AGENCY PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
This Proxy Statement/Prospectus was first furnished to Shareholders of
OCA on or about August 9, 1996.
<PAGE>
TABLE OF CONTENTS
AVAILABLE INFORMATION
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
SUMMARY
The Special Meeting
The Merger
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
Rights of Dissenting Shareholders
Business of OCLI and Acquisition Corp.
Business of OCA
Market Prices
Ownership of Securities
Resale of OCLI Common Stock
Received in the Merger; Affiliates
Accounting Treatment; Regulatory Approvals
Certain Federal Income Tax Consequences
OCLI Selected Financial Data
OCA Selected Financial Data
Unaudited Pro Forma Combined Selected
Financial Data
SPECIAL MEETING
General
Purposes; Recommendation of the OCA Board of
Directors and Management
Record Date
Votes Required
Voting and Revocation of Proxies
Solicitation of Proxies
Dissenters' Rights
THE MERGER
Background of the Merger and Related Matters
OCLI's Reasons for the Merger
OCA's Reasons for the Merger
Structure and Terms of the Merger
Assumption of OCA Stock Options
Indemnification of OCLI; Escrow
Procedure for Exchange of Shares;
Fractional Shares
Management and Operations of OCA
After the Merger
Effective Date
<PAGE>
Conditions to Consummation of the Merger
Conduct of OCA's Business Pending the Merger
Accounting Treatment
Regulatory Approvals
Resale of OCLI Common Stock Received
in the Merger; Affiliates
Termination, Amendments and Expenses
Certain Effects of the Merger
Interests of Certain Persons in the Merger
Certain Employee Benefits Matters
RIGHTS OF DISSENTING SHAREHOLDERS
COMPARISON OF RIGHTS OF HOLDERS OF OCLI
COMMON STOCK AND OCA COMMON STOCK
Amendment of Charter and By-Laws
Certain Actions Requiring Supermajority Votes
Board of Directors
Removal of Directors
Special Meeting of Stockholders
Actions by Stockholders Without a Meeting
Cumulative Voting
Vote Required for Certain Mergers and Consolidations
Class Vote for Certain Reorganizations
Dissenters' Rights
Anti-Takeover Statutes
Stockholder Rights Plan
Preemptive Rights
Dividends
Limitation on Directors' Liability; Indemnification
Loans to Officers and Employees
Voting by Ballot
Inspection of Shareholder Lists
DESCRIPTION OF OCLI'S CAPITAL STOCK
Common Stock
2
<PAGE>
Preferred Stock
Stockholder Rights Plan
RELATIONSHIP AND TRANSACTIONS BETWEEN
OCLI AND OCA
BUSINESS OF OCA
General
Products and Services
Research and Development
Manufacturing
Sales, Marketing and Customer Support
Patents and Intellectual Property
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS OF OCA
OCLI AND OCA MANAGEMENTS
Executive Officers and Directors of OCA
OCLI Executive Officers and Directors
and Executive Compensation
OWNERSHIP OF OCA COMMON STOCK AND OCLI
COMMON STOCK
Ownership of OCA Common Stock
Ownership of OCLI Common Stock
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
EXPERTS
LEGAL OPINIONS
3
<PAGE>
OTHER MATTERS
OCA CONSOLIDATED FINANCIAL STATEMENTS WITH
ACCOUNTANTS' REPORT THEREON
APPENDIX I - Sections 85 to 98 of the
Massachusetts Business Corporation Law
APPENDIX II - FORM OF PROXY
4
<PAGE>
AVAILABLE INFORMATION
OCLI is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and in accordance therewith files
reports, proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy statements and other information
filed by OCLI with the Commission can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 or at its regional offices located at 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661, and 7 World Trade Center, Suite
1300, New York, New York 10048. Copies of such material can be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. In addition, OCLI's Common Stock is
listed on the Nasdaq National Market System, and the reports, proxy statements
and other information filed by OCLI with the Commission can be inspected at the
offices of The Nasdaq Stock Market, Reports Section, 1735 K Street N.W.,
Washington, D.C. 20006.
OCLI has filed with the Commission a Registration Statement on Form S-4
under the Securities Act of 1933, as amended, with respect to the OCLI Common
Stock offered by this Proxy Statement/Prospectus. This Proxy
Statement/Prospectus omits certain information contained in the Registration
Statement. Reference is hereby made to the Registration Statement and the
exhibits filed as a part thereof for further information with respect to OCLI
and the OCLI Common Stock offered hereby, and any statement herein concerning
any exhibit is qualified in all respects by the provisions of such exhibit.
No person is authorized to give any information or to make any
representations, other than those contained in this Proxy Statement/Prospectus,
in connection with the offering made hereby, and, if given or made, such
information or representations must not be relied on as having been authorized.
This Proxy Statement/Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy the securities to which it relates in any
jurisdiction in which, or to any person to whom, it is unlawful to make such an
offer or solicitation. Neither the delivery of this Proxy Statement/Prospectus
nor any offer or sale made hereunder shall, under any circumstances, create any
implication that there has been no change in the information set forth herein or
in the affairs of OCLI, Acquisition Corp. or OCA since the date hereof.
OCA is not subject to the informational requirements of the Exchange
Act. Copies of OCA's Articles of Organization and By-Laws, each as amended, are
available without charge, upon written or oral request, from Optical Corporation
of America, 170 Locke Drive, Marlborough, Massachusetts 01752, Attention: Clerk;
telephone: (508) 481-9860, facsimile: (508) 481-3559. In order to ensure timely
delivery of the documents requested, any such request should be made by August
16, 1996.
1
<PAGE>
INCORPORATION OF DOCUMENTS BY REFERENCE
This Proxy Statement/Prospectus incorporates by reference documents
which are not presented herein or delivered herewith. Copies of any such
documents relating to OCLI, other than exhibits to such documents (unless such
exhibits specifically are incorporated by reference in such documents), are
available without charge, upon written or oral request, from Optical Coating
Laboratory, Inc., 2789 Northpoint Parkway, Santa Rosa California, 95407-7397,
Attention: Joseph C. Zils, Esq., Secretary; telephone: (707) 525-7030,
facsimile: (707) 525-6840. In order to ensure timely delivery of the documents
requested, any such request should be made by August 16, 1996.
The following documents previously filed by OCLI with the Commission
are incorporated in this Proxy Statement/Prospectus by reference:
(1) OCLI's Annual Report on Form 10-K for the fiscal year ended
October 31, 1995.
(2) OCLI's Quarterly Report on Form 10-Q for the fiscal quarter
ended January 28, 1996.
(3) OCLI's Quarterly Report on Form 10-Q for the fiscal quarter
ended April 28, 1996.
(4) OCLI's Form 8-K dated May 8, 1995 regarding the Acquisition of
a Controlling Interest in Flex Products, Inc.
All reports and other documents subsequently filed by OCLI pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act after the date of this
Proxy Statement/Prospectus and prior to the date of the Special Meeting of
Shareholders of OCA shall be deemed to be incorporated by reference herein and
to be part hereof from the date of the filing of such reports and documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Proxy Statement/Prospectus to the extent that a statement
contained herein, or in any other subsequently filed document that also is or is
deemed to be incorporated by reference herein, modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute part of this Proxy
Statement/Prospectus.
2
<PAGE>
This Proxy Statement, which is being furnished to the Shareholders of
OCA, also constitutes the Prospectus of OCLI for the issuance of OCLI Common
Stock. Each person who controls or who is under common control with OCA at the
time the Merger is submitted for a vote of the OCA Shareholders may, in
connection with any distribution of the OCLI Common Stock received in the
Merger, be deemed to be an "underwriter" within the meaning of the Securities
Act of 1933, as amended, unless such stock is sold pursuant to paragraph (d) of
Rule 145 promulgated under such Act, pursuant to an effective registration
statement filed under such Act with respect to such sales or pursuant to another
applicable exemption therefrom. This Proxy Statement/Prospectus does not cover
any resales of the OCLI Common Stock received by such OCA Shareholders upon
consummation of the Merger, and no person is authorized to make any use of the
Proxy Statement/Prospectus in connection with any such resale. See "THE MERGER
- -- Resale of OCLI Common Stock Received in the Merger; Affiliates."
3
<PAGE>
SUMMARY
The following is a summary of certain information contained in this
Proxy Statement/Prospectus concerning the proposed merger (the "Merger") of OCA
Acquisition Corp., a Delaware corporation ("Acquisition Corp.") which is a
wholly-owned subsidiary of Optical Coating Laboratory, Inc., a Delaware
corporation ("OCLI"), with and into Optical Corporation of America, a
Massachusetts corporation ("OCA"). Acquisition Corp. has been formed
specifically for the purpose of carrying out the Merger. It is anticipated that
the Merger will be consummated on or about September 10, 1996 (the "Effective
Date"). This summary should be read in conjunction with, and is qualified in its
entirety by reference to, the full text of this Proxy Statement/Prospectus,
including the exhibits hereto. Each Shareholder is, therefore, urged to read the
entire Proxy Statement/Prospectus with care.
The Special Meeting
The Special Meeting. A Special Meeting of Shareholders of OCA will be
held on September 10, 1996, at 10:00 a.m. at the corporate offices of Optical
Corporation of America, 170 Locke Drive, Marlborough, Massachusetts 01752 (the
"Special Meeting"). Shareholders of record at the close of business on August 9,
1996 (the "Record Date") will be entitled to notice of and to vote at the
Special Meeting. The date of the mailing of this Proxy Statement/Prospectus to
Shareholders of OCA will be on or about August 9, 1996. At the close of business
on the Record Date, there were outstanding and entitled to vote 794,577 shares
of common stock, $.01 par value, of OCA (the "OCA Common Stock"), all of which
are expected to be outstanding and entitled to vote on the date of the Special
Meeting. See "NOTICE OF SPECIAL MEETING -- Ownership of OCLI Common Stock and
OCA Common Stock."
The purpose of the Special Meeting is to vote upon a proposal to
approve an Agreement and Plan of Merger dated June 28, 1996 (the "Merger
Agreement"), entered into by and among OCLI, Acquisition Corp. and OCA, pursuant
to which Acquisition Corp. will merge with and into OCA, and OCLI will become
the owner of all the issued and outstanding shares of OCA Common Stock (see "THE
MERGER"). The Merger Agreement (including the principal exhibits thereto) are
available without charge, upon written or oral request, from Optical Corporation
of America, 170 Locke Drive, Marlborough, Massachusetts 01752, Attention: Clerk;
telephone: (508) 481-9860, facsimile: (508) 481-3559. In order to ensure timely
delivery of the documents requested, any such request should be made by August
16, 1996.
4
<PAGE>
Required Vote. Approval of the Merger Agreement requires the
affirmative vote of the holders of two-thirds of the outstanding shares of OCA
Common Stock.
The Merger
Effective Date. The Merger shall become effective upon the later of the
date of filing of a Certificate of Merger with the Secretary of State of the
State of Delaware pursuant to Section 252 of the Delaware General Corporation
Law and the date of filing of Articles of Merger with the Secretary of State of
the Commonwealth of Massachusetts pursuant to Section 79 of the Massachusetts
Business Corporation Law (the "Effective Date"). It is anticipated that the
Effective Date will be on or about September 10, 1996.
Exchange of Shares; Fractional Shares. Upon consummation of the Merger,
each outstanding share of OCA Common Stock (other than shares held in OCA's
treasury and shares with respect to which statutory dissenters' rights are
perfected) will be converted into the right to receive 2.042 shares of OCLI
Common Stock, $.01 par value (the "OCLI Common Stock"), and OCLI will become the
owner of all of the issued and outstanding shares of OCA Common Stock. No
fractional shares of OCLI Common Stock will be issued in connection with the
Merger. Any OCA Shareholder otherwise entitled to a fractional share of OCLI
Common Stock as a result of the Merger shall receive cash in lieu thereof,
without interest, in an amount determined by multiplying such OCA Shareholder's
fractional interest by the closing price of OCLI Common Stock as reported on the
Nasdaq National Market System on the Effective Date. See "THE MERGER --
Procedure For Exchange of Shares; Fractional Shares."
Based on the number of outstanding shares of OCA Common Stock as of the
Record Date, and on the assumption that (i) no OCA Shareholders exercise
appraisal rights, (ii) no OCA Options are exercised prior to the Effective Date
(iii) OCA purchases, prior to the Effective Date, the 46,875 shares of OCA
Common Stock held by The Perkin-Elmer Corporation ("Perkin-Elmer") in
satisfaction of an obligation to Perkin-Elmer which has been outstanding since
August 31, 1995, and (iv) OCA Warrants to purchase 86,000 shares of OCA Common
Stock are exercised prior to the Effective Date as contemplated by the Merger
Agreement approximately 1,702,419 shares of OCLI Common Stock will be issued to
former OCA Shareholders upon the consummation of the Merger and an additional
132,731 shares of OCLI Common Stock will be reserved for issuance upon the
exercise of the options and warrants to purchase OCA Common Stock outstanding as
of the Effective Date (the "OCA Options" and the "OCA Warrants") assumed by
OCLI. As a result, 11,430,548 shares of OCLI
5
<PAGE>
Common Stock will then be outstanding, of which approximately 1,702,419 shares,
representing approximately 14.9% of the total, will be held by former holders of
OCA Common Stock.
Assumption of OCA Stock Options and OCA Warrants. At or prior to the
Effective Date, OCLI and OCA shall take all action necessary to cause the
assumption by OCLI as of the Effective Date of the then outstanding OCA Options
and OCA Warrants. Each of the OCA Options and the OCA Warrants shall be
converted without any action on the part of the holder thereof into an option to
purchase shares of OCLI Common Stock as of the Effective Date. As of the Record
Date, 41,000 shares of OCA Common Stock were subject to outstanding OCA Options
and 110,000 shares of OCA Common Stock were subject to outstanding OCA Warrants,
which would be equivalent to a total of approximately 308,742 shares of OCLI
Common Stock after conversion. See "THE MERGER -- Assumption of OCA Stock
Options and OCA Warrants."
Indemnification of OCLI; Escrow. Ten percent of the shares of OCLI
Common Stock issued in the Merger will be placed in escrow (the "Escrowed
Shares") and held pursuant to the Indemnification and Stock Escrow Agreement
attached as Exhibit A to the Merger Agreement (the "Escrow Agreement"). The
Escrowed Shares will be reserved to provide indemnification to OCLI against
damages incurred as a result of misrepresentations, breaches of warranties and
breaches of covenants contained in the Merger Agreement, the Escrow Agreement
and the other agreements executed in connection therewith, and to satisfy claims
of OCLI arising as a result of the Merger Agreement, the Escrow Agreement and
such other agreements. See Article 3 of the Merger Agreement and Section 4 of
the Escrow Agreement for a description of the representations, warranties and
covenants that are covered by the Escrow Agreement. In the event OCLI has an
appropriate claim for indemnification, shares of OCLI Common Stock will be
returned to OCLI in satisfaction of the claim. However, OCLI will be entitled to
indemnification only if and when the total of all Indemnifiable Amounts exceeds
$250,000, at which point OCLI will be entitled to indemnification for all
Indemnifiable Amounts, and not just those in excess of $250,000. The Escrow
Agreement requires the Escrow Agent to deliver to the Shareholders the Escrowed
Shares remaining in escrow after the date of the completion of the first audit
of OCA covering a period ending after the Effective Date, except that if there
is a claim by OCLI at or prior to such date, the Escrow Agent will retain
Escrowed Shares in an amount sufficient to cover such claims until they are
resolved. See "THE MERGER -- Indemnification of OCLI; Escrow."
6
<PAGE>
Conditions to the Merger. The consummation of the Merger is conditioned
upon, among other things, (i) approval of the Merger and the adoption of the
Merger Agreement by OCA Shareholders, (ii) the holders of not more than 10% of
the shares of OCA Common Stock having demanded their right to an appraisal of
their OCA Common Stock, and (iii) the representations and warranties of each
party to the Merger Agreement being true and correct as of the Effective Date
and the satisfaction of certain other conditions. The Merger Agreement may be
terminated by the mutual consent of the Boards of Directors of OCLI and OCA. If
the Merger is not consummated, OCA intends to operate in substantially the same
manner as it has in the past. Any of the conditions to the Merger may be waived
at any time prior to the Merger by the party or parties to the Merger Agreement
benefiting from such conditions. However, no assurance can be given that any of
such parties will determine to waive any unfulfilled conditions. See "THE MERGER
- -- Conditions to Consummation of the Merger."
Certain Effects of the Merger. If the Merger is consummated, the
holders of OCA Common Stock (other than holders of shares with respect to which
dissenters' rights are perfected) will exchange their shares of stock for OCLI
Common Stock. The rights of OCA Shareholders, which are presently governed by
Massachusetts law and by the Articles of Organization and the By-Laws of OCA,
each as amended, will be governed by Delaware law and the Amended and Restated
Certificate of Incorporation and By-Laws of OCLI. Certain differences in the
rights of OCA Shareholders will arise as a result of this change in governing
law as well as from distinctions between the Articles of Organization and
By-Laws of OCA, as amended, and the Amended and Restated Certificate of
Incorporation and By-Laws of OCLI. See "THE MERGER -- Certain Effects Of The
Merger" and "Comparison of Rights of Holders of OCLI Common Stock and OCA Common
Stock."
Interests of Certain Persons in the Merger. Upon consummation of the
Merger, all members of OCA's Board of Directors will resign, and OCLI intends to
name Herbert M. Dwight, Jr., Donald A. Johnson and Joseph C. Zils to OCA's
Board. OCLI expects Mr. Dwight, who is Chairman and President of OCLI, to serve
as Chairman of OCA's Board. OCLI currently intends that certain of the existing
officers of OCA will retain their offices after the Effective Date, but may
appoint additional officers of OCA. See "THE MERGER -- Interests of Certain
Persons in the Merger," and "OCLI AND OCA MANAGEMENTS -- Executive Officers and
Directors of OCA."
7
<PAGE>
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
Rights of Dissenting Shareholders
Under Massachusetts law, Shareholders who have not voted for the Merger
Agreement (collectively, "Dissenting Shareholders"), may, under varying
circumstances, receive cash in the amount of the fair market value (as
determined by agreement with OCA or by a court decision) of their shares in lieu
of the shares of OCLI Common Stock they would otherwise receive in the Merger.
Such Dissenting Shareholders must (i) deliver to OCA, before the vote on the
Merger Agreement is taken at the Special Meeting, written notice of such
Dissenting Shareholders' intent to demand payment for their shares of OCA Common
Stock and (ii) not vote such shares of OCA Common Stock in favor of the Merger
Agreement. Dissenting Shareholders must also comply with the other requirements
of Sections 86 to 98 of the Massachusetts Business Corporation Law, the full
text of which is attached to this Proxy Statement/Prospectus as APPENDIX I. Any
deviation from or failure to comply with all such requirements may result in the
forfeiture of the rights of Dissenting Shareholders. See "RIGHTS OF DISSENTING
SHAREHOLDERS."
Business of OCLI and Acquisition Corp.
Optical Coating Laboratory, Inc. (OCLI) designs, develops and
manufactures multi-layer thin film coatings which control and enhance light by
altering the transmission, reflection and absorption of its various wavelengths
to achieve a desired effect, such as anti-reflection, anti-glare,
electromagnetic shielding, electrical conductivity and abrasion resistance. OCLI
markets and distributes components to OEMs of optical and electro-optical
systems. OCLI sells its Glare/Guard(R) brand ergonomic computer display products
through resellers and officer retailers. OCLI is headquartered in Santa Rosa,
California and has manufacturing facilities in Santa Rosa, Hillend, Scotland and
Goslar, Germany.
Acquisition Corp. was formed specifically for the purpose of effecting
the transactions contemplated by the Merger Agreement. It is not anticipated
that, prior to the Merger, Acquisition Corp. will have any significant assets or
liabilities other than its rights and obligations under the Merger Agreement or
that Acquisition Corp. will engage in any activities other than those incidental
to its formation and the transactions contemplated by the Merger Agreement.
The principal executive offices of OCLI and Acquisition Corp. are
located at 2789 Northpoint Parkway, Santa Rosa, California 95407-7397 (telephone
number: (707) 545-
8
<PAGE>
6440). See "AVAILABLE INFORMATION" and "INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE."
Business of OCA
OCA develops, manufactures and markets optical and electro-optical
products, components and subsystems for a wide range of applications in the
medical, telecommunications, industrial, scientific, aerospace and defense
industries.
The principal executive offices of OCA are located at 170 Locke Drive,
Marlborough, Massachusetts 01752 (telephone number: 508-481-9860). OCA has
manufacturing facilities in Marlborough, Massachusetts and Garden Grove,
California. See "BUSINESS OF OCA" and "CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS."
Market Prices
The high, low and closing prices of OCLI's Common Stock on the Nasdaq
National Market System on June 28, 1996, the last business day preceding the
public announcement of the proposed Merger, were $18.00, $16.875 and $18.00,
respectively. The high, low and closing prices of OCLI's Common Stock on the
NASDAQ National Market System on August 6, 1996 were $14.875, $14.325 and
$14.75, respectively. Shareholders of OCA are urged to obtain current quotations
for the OCLI Common Stock.
The OCA Common Stock is not currently, and has never previously been,
traded on any established public market. Price quotations for OCA Common Stock
are, therefore, not available.
As of the Record Date, there were 1,029 record holders of OCLI Common
Stock and 49 record holders of OCA Common Stock.
Ownership of Securities
At the Record Date, there were a total of 794,577 shares of OCA Common
Stock outstanding all of which are expected to be outstanding and entitled to
vote on the date of the Special Meeting. Accordingly, the Merger will be
approved if 529,718 shares of OCA Common Stock are voted in favor of the Merger.
As of the Record Date, OCA's directors, officers, their respective affiliates
and family members held, directly or indirectly, 529,793 shares of
9
<PAGE>
OCA Common Stock, or approximately 66.7% of the shares of OCA Common Stock
outstanding as of such date. See "THE MERGER -- Interests of Certain Persons in
the Merger" and "OWNERSHIP OF OCA COMMON STOCK AND OCLI COMMON STOCK."
At the date hereof, approximately 2.08% of the shares of outstanding
OCLI Common Stock entitled to vote are held by directors and executive officers
of OCLI and their affiliates. The vote of stockholders of OCLI is not required
to approve the Merger Agreement or to consummate the Merger. See "SPECIAL
MEETING -- Voting and Revocation of Proxies."
Resale of OCLI Common Stock Received in the Merger; Affiliates
Certain officers, directors and principal Shareholders of OCA have
agreed that, until such time as financial results covering at least thirty days
of combined operations of OCA and OCLI have been published by OCLI, they will
not sell, transfer or otherwise dispose of, or offer or agree to sell, transfer
or otherwise dispose of any shares of OCLI Common Stock received by them
pursuant to the Merger or any securities which may be paid as a dividend or
otherwise distributed thereon or with respect thereto or issued or delivered in
exchange or substitution therefor. See "THE MERGER -- Resale Of OCLI Common
Stock Received In The Merger; Affiliates."
The Registration Statement and this Proxy Statement/Prospectus do not
relate to or cover the resale after the Effective Date of shares of OCLI Common
Stock issued to certain Shareholders of OCA in the Merger who may be deemed to
be "affiliates" of OCA and thus "underwriters" within the meaning of Rule 145
under the Securities Act of 1933, as amended (the "Securities Act"), and no
person is authorized to make any use of this Proxy Statement/Prospectus in
connection with any such resale. Such securities may not be publicly reoffered
or resold by such persons except pursuant to an effective registration statement
under the Securities Act or pursuant to another applicable exemption therefrom.
For this purpose, the term "affiliate" means any person who, directly, or
indirectly through one or more intermediaries, possesses the power to direct or
cause the direction of the management and policies of OCA, whether through the
ownership of OCA Common Stock, by contract, or otherwise.
10
<PAGE>
Accounting Treatment; Regulatory Approvals
The Merger is expected to meet all of the conditions for
pooling-of-interests accounting. It is a condition to the obligation of OCLI to
consummate the Merger that OCLI shall have received an opinion from Deloitte &
Touche LLP, OCA's independent accountants, to the effect that Deloitte & Touche
LLP, based on certain material representations provided by OCLI and OCA is not
aware of any fact concerning OCA that would preclude OCLI from accounting for
the Merger as a pooling-of-interests.
The Merger is subject to the requirements of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 and the regulations thereunder (the
"Antitrust Improvements Act"), which provide that certain acquisition
transactions (including the Merger) may not be consummated until certain
information has been furnished to the Antitrust Division of the Department of
Justice (the "Antitrust Division") and the Federal Trade Commission (the "FTC"),
and certain waiting period requirements have been satisfied. OCLI and OCA have
filed the required information and material with the Antitrust Division and the
FTC, but, as of the date of this Proxy Statement/Prospectus, the applicable
waiting period has not yet expired. There can be no assurance that the waiting
period will expire without a challenge to the Merger from the Antitrust Division
or the FTC. Termination of the waiting period does not preclude the Antitrust
Division, the FTC or any other party from challenging or seeking to delay or
enjoin the Merger on antitrust or other grounds. There can be no assurance that
any such challenge, if made, would not be successful; however, neither OCLI nor
OCA believes that the Merger will violate the antitrust laws. Any such action
taken or threatened prior to the consummation of the Merger could relieve OCLI
or OCA of their respective obligations to consummate the Merger. See "THE MERGER
- --Regulatory Approvals."
Except for the Antitrust Improvements Act filings, and filings with the
Secretary of State of the State of Delaware and Commonwealth of Massachusetts,
no federal or state regulatory approvals are required in order to consummate the
Merger.
Certain Federal Income Tax Consequences
The Merger is intended to qualify as a tax-free reorganization under
Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code").
Neither OCA nor OCLI intends to request a ruling from the Internal Revenue
Service with respect to the Merger. Assuming that the Merger is a tax-free
reorganization, (i) no gain or loss will be recognized by OCLI or OCA and (ii)
no gain or loss will be recognized by Shareholders of OCA other than
Shareholders perfecting statutory dissenters' rights or in connection with the
cash settlement of fractional shares. If the Merger fails to qualify as
11
<PAGE>
a reorganization under Section 368(a) of the Code, on the Effective Date each
shareholder of OCA will recognize gain or loss on the exchange of his OCA Common
Stock for OCLI Common Stock. Holders of OCA Common Stock are urged to consult
with their tax advisers to determine the particular tax consequences of the
Merger to them.
12
<PAGE>
Optical Coating Laboratory, Inc. Selected Financial Information
<TABLE>
The selected financial information presented below as of and for the
five years ended October 31, 1995 has been derived from OCLI's Consolidated
Financial Statements, which have been audited by Deloitte & Touche LLP,
independent public accountants. This information should be read in conjunction
with OCLI's Consolidated Financial Statements and related notes from OCLI's 1995
Annual Report to Stockholders on Form 10-K. The selected financial information
for the six-month periods ended April 30, 1995 and April 28, 1996 has not been
audited but, in the opinion of OCLI, includes all adjustments (consisting only
of normal, recurring adjustments) necessary to present fairly such information
in accordance with generally accepted accounting principles applied on a
consistent basis. The results of operations for the six-month period ended April
28, 1996 are not necessarily indicative of results for the entire year.
<CAPTION>
(In Thousands, Except Per Share Amounts)
Six Months Ended
Year Ended October 31, April 30, April 28,
----------------------------------------------------------- ------------------------
Statements of Operations Data 1991 1992 1993 1994 1995 1995 1996
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Revenue ................................. $ 103,711 $ 115,016 $ 123,013 $ 131,780 $ 169,417 $ 77,480 $ 92,362
Cost of sales ........................... 63,640 69,958 81,885 84,001 106,009 47,275 60,147
--------- --------- --------- --------- --------- --------- ---------
Gross Profit ........................ 40,071 45,058 41,128 47,779 63,408 30,205 32,215
Operating expenses:
Research and development ............ 7,691 8,178 5,926 5,229 8,401 3,019 5,010
Selling and administrative .......... 26,974 26,532 30,153 31,341 37,462 18,634 19,201
Restructuring charges ............... 2,742 9,746
Amortization of intangibles ......... 446 648 975 475 565
--------- --------- --------- --------- --------- --------- ---------
Total operating expense ............ 37,407 34,710 46,271 37,218 46,838 22,128 24,776
--------- --------- --------- --------- --------- --------- ---------
Income (loss) from operations ....... 2,664 10,348 (5,143) 10,561 16,570 8,077 7,439
--------- --------- --------- --------- --------- --------- ---------
Other income (expense):
Interest income ..................... 529 295 130 338 667 422 139
Interest expense .................... (2,014) (2,223) (2,998) (3,215) (3,547) (1,911) (1,723)
--------- --------- --------- --------- --------- --------- ---------
Insurance recovery ...................... 364 1,180
--------- ---------
Income before provision for
income taxes and minority
interest and cumulative effect
of accounting changes ........... 1,543 9,600 (8,011) 7,684 13,690 6,588 5,855
Provision for income taxes .............. 13 3,573 (2,274) 3,080 5,483 2,766 2,459
Minority interest ....................... -- -- -- -- 816 -- 585
Cumulative effect of accounting
changes ............................... (829) 510
Net income (loss) .............. 701 6,537 (5,737) 4,604 7,391 3,822 2,811
Dividend on convertible
redeemable preferred stock .......... (300) -- -- -- (462) -- (480)
--------- --------- --------- --------- --------- --------- ---------
Net income (loss) applicable to
common stock ......................... $ 401 $ 6,537 $ (5,737) $ 4,604 $ 6,929 $ 3,822 $ 2,331
========= ========= ========= ========= ========= ========= =========
Net income (loss) per share ............. $ .05 $ .75 $ (.65) $ .51 $ .73 $ .41 $ .23
========= ========= ========= ========= ========= ========= =========
Weighted average number of
common equivalent shares .............. 7,455 8,636 8,795 9,023 9,510 9,103 10,139
========= ========= ========= ========= ========= ========= =========
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
As of
As of October 31, April 30, April 28,
--------------------------------------------------------- ---------------------
Balance Sheet Data 1991 1992 1993 1994 1995 1995 1996
<S> <C> <C> <C> <C> <C> <C> <C>
Total Current Assets ........................... $ 38,249 $ 47,539 $ 41,353 $ 57,710 $ 61,194 $ 53,783 $ 62,724
Other Assets and Investments ................... $ 974 $ 896 $ 8,949 $ 9,159 $ 17,029 $ 10,937 $ 16,062
Property, Plant and Equipment, Net ............. $ 45,196 $ 42,878 $ 48,924 $ 52,010 $ 91,611 $ 61,667 $ 95,969
Total Assets ................................... $ 84,419 $ 91,313 $ 99,226 $118,879 $169,834 $126,387 $174,755
Total Current Liabilities ...................... $ 16,336 $ 20,140 $ 25,102 $ 29,018 $ 33,179 $ 33,648 $ 33,041
Common Stockholders' Equity .................... $ 43,112 $ 52,254 $ 47,135 $ 52,037 $ 62,537 $ 56,261 $ 64,130
Long Term Debt ................................. $ 20,935 $ 14,900 $ 23,110 $ 35,441 $ 47,267 $ 34,441 $ 49,117
14
</TABLE>
<PAGE>
<TABLE>
Optical Corporation of America Selected Financial Information
The selected financial information presented below as of and for the
five years ended June 30, 1995 has been derived from OCA's Consolidated
Financial Statements, which have been audited by Deloitte & Touche LLP,
independent public accountants. The selected financial information for the
nine-month periods ended March 31, 1995 and March 31, 1996 have not been audited
but, in the opinion of the management of OCA, includes all adjustments
(consisting only of normal, recurring adjustments) necessary to present fairly
such information in accordance with generally accepted accounting principles
applied on a consistent basis. The results of operations for the nine-month
period ended March 31, 1996 are not necessarily indicative of results for the
entire year.
<CAPTION>
Nine Months Ended
Year Ended June 30, March 31,
------------------------------------------------------------ -----------------------
1991 1992 1993 1994 1995 1995 1996
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Statements of Operations Data Unaudited Unaudited
Revenue ................................. $ 27,650 $ 29,689 $ 27,397 $ 25,174 $ 26,537 $ 19,735 $ 21,600
Cost of sales ........................... 20,195 21,998 22,048 19,237 19,905 14,880 15,644
-------- -------- -------- -------- -------- -------- --------
Gross Profit ........................ 7,455 7,691 5,349 5,937 6,632 4,855 5,956
Operating expenses:
Research and development ............ 595 614 491 99 568 335 1,167
Selling and administrative .......... 4,956 5,130 5,895 5,215 4,814 3,514 3,758
Restructuring charges ............... -- -- 1,241 -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Total operating expense ........... 5,551 5,744 7,627 5,314 5,382 3,849 4,925
-------- -------- -------- -------- -------- -------- --------
Income (loss) from operations ....... 1,904 1,947 (2,279) 623 1,250 1,006 1,031
-------- -------- -------- -------- -------- -------- --------
Other income (expense):
Interest expense .................... (989) (1,245) (679) (764) (734) (551) (627)
-------- -------- -------- -------- -------- -------- --------
Income before provision (benefit)
for income taxes and minority
interest ........................ 915 702 (2,957) (141) 516 455 404
Provision (benefit) for income taxes .... 240 285 (372) 6 8 20 20
-------- -------- -------- -------- -------- -------- --------
Net income (loss) .............. $ 675 $ 417 $ (2,585) $ (147) $ 508 $ 435 $ 384
======== ======== ======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
As of
As of June 30, March 31,
----------------------------------------------------------- --------------------
Balance Sheet Data 1991 1992 1993 1994 1995 1995 1996
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Total Current Assets .................... $ 9,516 $10,436 $10,332 $11,156 $ 9,555 $ 8,302 $ 9,575
Other Assets and Investments ............ $ 138 $ 70 $ 32 $ 79 $ 49 $ 54 $ 41
Property, Plant and Equipment, Net ...... $ 3,680 $ 4,358 $ 4,463 $ 4,134 $ 4,298 $ 4,162 $ 5,694
Total Assets ............................ $13,333 $14,865 $14,827 $15,369 $13,902 $12,517 $15,310
Total Current Liabilities ............... $ 5,950 $ 6,303 $ 7,973 $ 7,696 $ 6,523 $ 5,426 $ 7,514
Stockholders' Equity .................... $ 3,693 $ 4,787 $ 2,167 $ 1,922 $ 2,333 $ 2,309 $ 2,845
Long Term Debt .......................... $ 3,238 $ 3,148 $ 4,031 $ 4,997 $ 4,196 $ 3,981 $ 4,094
Redeemable Common Stock ................. $ 462 $ 559 $ 656 $ 753 $ 850 $ 850 $ 857
</TABLE>
15
<PAGE>
Unaudited Pro Forma Combined Selected Financial Data
The following tables present selected historical consolidated financial
data and pro forma combined financial information for OCLI and OCA and selected
per share data for OCLI Common Stock on a historical and pro forma combined
basis giving effect to the acquisition of 100% of the OCA shares by OCLI on a
pooling-of-interests accounting basis. The information is derived from the
consolidated historical financial statements of OCLI and OCA, including the
related notes thereto, appearing elsewhere or incorporated by reference herein.
The pro forma statement of income data for each period gives effect to the
Merger as if it had occurred at the beginning of such period, and the pro forma
balance sheet data gives effect to the Merger as if it had occurred on the
balance sheet date. The pro forma combined information has been prepared on the
assumption that the Merger will be accounted for on a pooling-of-interests
basis. Due to differences in reporting periods, OCA's results for the three
months ended September 30, 1994 were not included in the pro forma combined
statements of operations. For that three month period, OCA reported unaudited
revenue of $7,171,000 and unaudited net income of $91,000.
Redeemable common stock represents amounts payable by OCA to
Perkin-Elmer upon surrender of 46,875 shares of OCA common stock. The pro forma
data does not reflect payment for the shares.
Historical book value per share for OCLI is computed by dividing
stockholders' equity by the number of shares of common stock outstanding at the
end of the period. Historical book value per share for OCA is computed by
dividing stockholders' equity by the number of shares outstanding of OCA at the
end of the period multiplied by 2.042. Pro forma combined book value per share
is computed by dividing pro forma combined number of shares of common stock
outstanding at the end of the period after giving effect to the common shares
added pursuant to the merger.
These data are not necessarily indicative of the results of the future
operations of the combined entity or the actual results that would have occurred
had the Merger been consummated prior to the periods indicated.
16
<PAGE>
<TABLE>
Optical Coating Laboratory, Inc. and Subsidiaries
Pro Forma Condensed Combined Statement of Operations
For The Years Ended October 31, 1993 and June 30, 1993
(In Thousands, Except Per Share Amounts)
(Unaudited)
<CAPTION>
OCLI OCA
12 Months 12 Months
Ended Ended Pro Forma Pro Forma
10/31/93 6/30/93 Adjustments Combined
-------- ------- ----------- --------
<S> <C> <C> <C> <C>
Revenue ............................................. $ 123,013 $ 27,397 -- $ 150,410
Cost of sales ....................................... 81,885 22,048 -- 103,933
--------- --------- ---------
Gross profit .................................... 41,128 5,349 -- 46,477
Operating expenses:
Research and development ........................ 5,926 491 -- 6,417
Selling and administrative ...................... 30,153 5,895 -- 36,048
Restructuring charges ........................... 9,746 1,241 -- 10,987
Amortization of intangible assets ............... 446 -- 446
--------- --------- ---------
Total operating expense ...................... 46,271 7,627 -- 53,898
--------- --------- ---------
Income (loss) from operations ......... (5,143) (2,278) -- (7,421)
Other income (expense):
Interest income ................................. 130 -- -- 130
Interest expense ................................ (2,998) (679) -- (3,677)
--------- --------- ---------
Income before provision for
income taxes and minority
interest ......................... (8,011) (2,957) -- (10,968)
Provision for income taxes .......................... (2,274) (372) (531)(B) (3,177)
Minority interest ................................... -- -- -- --
--------- --------- ------ ---------
Net loss ................................... $ (5,737) $ (2,585) $ 531 $ (7,791)
========= ========= ====== =========
Net income (loss) per common and common
equivalent share.................................. $ (0.65) $ (.75)
========= =========
Weighted average number of common equivalent
shares............................................ 8,795 10,361
========= =========
</TABLE>
17
<PAGE>
<TABLE>
Optical Coating Laboratory, Inc. and Subsidiaries
Pro Forma Condensed Combined Statement of Operations
For The Year Ended October 31, 1994
(In Thousands, Except Per Share Amounts)
(Unaudited)
<CAPTION>
OCLI OCA
12 Months 12 Months
Ended Ended Pro Forma Pro Forma
10/31/94 6/30/94 Adjustments Combined
-------- ------- ----------- ---------
<S> <C> <C> <C> <C>
Revenue ................................................. $ 131,780 $ 25,174 $(514) $ 156,440
Cost of sales ........................................... 84,001 19,237 (514) 102,724
--------- --------- ------ ---------
Gross profit ........................................ 47,779 5,937 -- 53,716
Operating expenses:
Research and development ............................ 5,229 99 -- 5,328
Selling and administrative .......................... 31,341 5,215 -- 36,556
Restructuring charges ............................... -- -- --
Amortization of intangible assets ................... 648 -- 648
--------- --------- ---------
Total operating expense .......................... 37,218 5,314 -- 42,532
--------- --------- ---------
Income from operations .................... 10,561 623 -- 11,184
Other income (expense):
Interest income ..................................... 338 -- -- 338
Interest expense .................................... (3,215) (764) -- (3,979)
--------- --------- ---------
Income before (loss) provision for
income taxes and minority
interest .............................. 7,684 (141) -- 7,543
Provision for income taxes .............................. 3,080 6 (10)(B) 3,076
--------- --------- ------ ---------
Net income (loss) .............................. $ 4,604 $ (147) $ (10) $ 4,467
========= ========= ====== =========
Net income (loss) per common and common
equivalent share...................................... $ 0.51 $ 0.42
========= =========
Weighted average number of common equivalent
shares............................................... 9,023 10,707
========= =========
</TABLE>
18
<PAGE>
<TABLE>
Optical Coating Laboratory, Inc. and Subsidiaries
Pro Forma Condensed Combined Statement of Operations
For The Year Ended October 31, 1995
(In Thousands, Except Per Share Amounts)
(Unaudited)
OCLI OCA
12 Months 12 Months
Ended Ended Pro Forma Pro Forma
10/31/95 9/30/95 Adjustments Combined
-------- ------- ----------- --------
<S> <C> <C> <C> <C>
Revenue ................................................. $ 169,417 $ 27,599 (75)(A) $ 196,941
Cost of sales ........................................... 106,009 20,791 (75)(A) 126,725
--------- --------- ----- ---------
Gross profit ........................................ 63,408 6,808 -- 70,216
Operating expenses:
Research and development ............................ 8,401 772 -- 9,173
Selling and administrative .......................... 37,462 4,719 -- 42,181
Restructuring charges ............................... -- -- -- --
Amortization of intangible assets ................... 975 -- -- 975
--------- --------- ---------
Total operating expense .......................... 46,838 5,491 -- 52,329
--------- --------- ---------
Income from operations ................. 16,570 1,317 -- 17,887
Other income (expense):
Interest income ..................................... 667 4 -- 671
Interest expense .................................... (3,547) (716) -- (4,263)
--------- --------- ----- ---------
Income before provision for
income taxes and minority
interest ........................... 13,690 605 -- 14,295
Provision for income taxes .............................. 5,483 12 219(B) 5,714
Minority interest ....................................... 816 -- -- 816
--------- --------- ----- ---------
Net income ..................................... $ 7,391 $ 593 $(219) $ 7,765
========= ========= ===== =========
Dividend on convertible
redeemable preferred stock .......................... 462 -- -- 462
--------- --------- ----- ---------
Net income applicable to common stock ......... $ 6,929 $ 593 $(219) $ 7,303
========= ========= ===== =========
Net income per common and common
equivalent share..................................... $ 0.73 $0.65
========= =========
Weighted average number of common equivalent
shares.............................................. 9,511 11,212
========= =========
</TABLE>
19
<PAGE>
<TABLE>
Optical Coating Laboratory, Inc. and Subsidiaries
Pro Forma Condensed Combined Statement of Operations
For The Six Month Period Ended April 30, 1995
(In Thousands, Except Per Share Amounts)
(Unaudited)
<CAPTION>
OCLI OCA
6 Months 6 Months
Ended Ended Pro Forma Pro Forma
4/30/95 3/31/95 Adjustments Combined
------- ------- ----------- --------
<S> <C> <C> <C> <C>
Revenue ................................................. $ 77,480 $ 13,627 $ (75)(A) $ 91,032
Cost of sales ........................................... 47,275 10,315 (75)(A) 57,515
-------- -------- -------- --------
Gross pofit ......................................... 30,205 3,312 -- 33,517
Operating expenses:
Research and development ............................ 3,019 198 -- 3,217
Selling and administrative .......................... 18,634 2,399 -- 21,033
Restructuring charges ............................... -- -- -- --
Amortization of intangible assets ................... 475 -- -- 475
-------- -------- --------
Total operating expense .......................... 22,128 2,597 -- 24,725
-------- -------- --------
Income from operations ................. 8,077 715 -- 8,792
Other income (expense):
Interest income ..................................... 422 -- -- 422
Interest expense .................................... (1,911) (351) -- (2,262)
-------- -------- -------- --------
Income before provision for
income taxes and minority
interest ........................... 6,588 364 -- 6,952
Provision for income taxes .............................. 2,766 20 101(B) 2,887
-------- -------- -------- --------
Net income (loss) .............................. $ 3,822 $ 344 $ (101) $ 4,065
======== ======== ======== ========
Net income per common and common
equivalent share .................................... $ 0.42 $ 0.37
======== ========
Weighted average number of common equivalent
shares ............................................. 9,202 10,898
======== ========
</TABLE>
20
<PAGE>
<TABLE>
Optical Coating Laboratory, Inc. and Subsidiaries
Pro Forma Condensed Combined Statement of Operations
For The Six Month Period Ended April 28, 1996
(In Thousands, Except Per Share Amounts)
(Unaudited)
OCLI OCA
6 Months 6 Months
Ended Ended Pro Forma Pro Forma
4/28/96 3/31/96 Adjustments Combined
------- ------- ----------- --------
<S> <C> <C> <C> <C>
Revenue .............................................. $ 92,362 $ 14,430 $ (312)(A) $ 106,480
Cost of sales ........................................ 60,147 10,192 (312)(A) 70,027
--------- --------- --------- ---------
Gross profit ..................................... 32,215 4,238 36,453
Operating expenses:
Research and development ......................... 5,010 906 -- 5,916
Selling and administrative ....................... 19,201 2,663 -- 21,864
Restructuring charges ............................ -- -- -- --
Amortization of intangible assets ................ 565 -- -- 565
--------- --------- ---------
Total operating expense ....................... 24,776 3,569 -- 28,345
--------- --------- ---------
Income from operations .............. 7,439 669 -- 8,108
--------- --------- ---------
Other income (expense):
Interest income .................................. 139 -- 139
Interest expense ................................. (1,723) (445) -- (2,168)
--------- --------- --------- ---------
Income before provision for
income taxes and minority
interest ........................ 5,855 224 -- 6,079
Provision for income taxes ........................... 2,459 16 59(B)(C) 2,534
Minority interest .................................... 585 -- -- 585
--------- --------- --------- ---------
Net income (loss) ........................... 2,811 208 (59) 2,960
Dividend on convertible
redeemable preferred stock ....................... 480 -- -- 480
--------- --------- --------- ---------
Net income applicable to common stock ...... $ 2,331 $ 208 $ (59) $ 2,480
========= ========= ========= =========
Net income per common and common
equivalent share ................................. $ 0.23 $ 0.21
========= =========
Weighted average number of common equivalent
shares .......................................... 10,139 11,830
========= =========
</TABLE>
21
<PAGE>
Optical Coating Laboratory, Inc. and Subsidiaries
Pro Forma Condensed Combined Statements of Operations
(Dollars in Thousands)
(Unaudited)
Summary of pro forma adjustments - Dr(Cr):
(A) Elimination - Intercompany Activity
12 Months Ended 6 Months Ended
---------------------------- ------------------
1993 1994 1995 1995 1996
---- ---- ---- ---- ----
Revenue $ 514 $ 75 $ 75 312
Cost of Sales $ (514) $(75) $(75) (312)
To eliminate intercompany revenue and cost of sales on product purchased and
resold by OCLI and OCA.
(B) Tax Provision Adjustment to Valuation Allowance Recorded by OCA
12 Months Ended 6 Months Ended
------------------------- -----------------
1993 1994 1995 1995 1996
---- ---- ---- ---- ----
Deferred Income Tax Asset $ 531 $ (10) $ (219) $ (101) $ (59)
Provision for Income Taxes $ (531) $ 10 $ 219 $ 101 $ 59
To record the tax provision adjustment to each period resulting from adjustments
to the valuation allowance recorded by OCA.
22
<PAGE>
<TABLE>
Optical Coating Laboratory, Inc.
Pro Forma Condensed Combined Balance Sheet
(Dollars in Thousands)
(Unaudited)
<CAPTION>
OCLI OCA
As of As of Pro Forma Pro Forma
10/31/94 6/30/94 Adjustments Combined
-------- ------- ----------- --------
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and short-term investments ................... $ 19,663 $ 480 -- $ 20,143
Accounts receivable (net) ......................... 22,007 8,739 -- 30,746
Inventories ....................................... 10,559 1,885 -- 12,444
Current deferred income tax asset ................. 4,235 -- 314(A) 4,549
Other current assets .............................. 1,246 52 -- 1,298
--------- --------- --------- ---------
Total Current Assets ........................... 57,710 11,156 314 69,180
Other Assets and Investments ......................... 9,159 79 -- 9,238
Property, Plant and Equipment:
Property, plant and equipment ..................... 119,407 7,995 -- 127,402
Less accumulated depreciation ..................... (67,397) (3,861) (71,258)
--------- --------- --------- ---------
Property, plant and equipment (net) ............ 52,010 4,134 56,144
--------- --------- --------- ---------
Total Assets ..................................... $ 118,879 $ 15,369 $ 314 $ 134,562
========= ========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable .................................. 6,197 2,009 -- 8,206
Accrued compensation expenses ..................... 4,785 -- -- 4,785
Other accrued expenses ............................ 8,423 2,047 -- 10,470
Income taxes payable .............................. 1,671 -- -- 1,671
Notes payable ..................................... 428 2,900 -- 3,328
Current maturities on long-term debt .............. 6,878 741 -- 7,619
Deferred revenue .................................. 636 -- -- 636
--------- --------- --------- ---------
Total Current Liabilities ...................... 29,018 7,697 -- 36,715
Postretirement health and pension liabilities ........ 1,877 -- -- 1,877
Deferred income tax liabilities ...................... 506 -- -- 506
Long-term debt ....................................... 35,441 4,997 -- 40,438
Redeemable common stock .............................. -- 753 -- 753
Common stockholders' equity .......................... 52,037 1,922 314(A) 54,273
--------- --------- --------- ---------
Total Liabilities and Stockholders' Equity ....... $ 118,879 $ 15,369 $ 314(A) $ 134,562
========= ========= ========= =========
Book Value per Common Share ...................... $ 5.80 $ 1.23 $ 5.15
========= ========= =========
</TABLE>
23
<PAGE>
<TABLE>
Optical Coating Laboratory, Inc.
Pro Forma Condensed Combined Balance Sheet
(Dollars in Thousands)
(Unaudited)
<CAPTION>
OCLI OCA
As of As of Pro Forma Pro Forma
4/30/95 3/31/95 Adjustments Combined
------- ------- ----------- --------
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and short-term investments ................... $ 5,467 $ 322 -- $ 5,789
Accounts receivable (net) ......................... 27,782 6,176 -- 33,958
Inventories ....................................... 12,884 1,749 -- 14,633
Current deferred income tax asset ................. 4,934 -- 371(A) 5,305
Other current assets .............................. 2,716 54 2,770
--------- --------- --------- ---------
Total Current Assets ........................... 53,783 8,301 371 62,455
Other Assets and Investments ......................... 10,937 54 -- 10,991
Property, Plant and Equipment:
Property, plant and equipment ..................... 132,663 8,760 -- 141,423
Less accumulated depreciation ..................... (70,996) (4,598) -- (75,594)
--------- --------- ---------
Property, plant and equipment (net) ............ 61,667 4,162 -- 65,829
--------- --------- ---------
Total Assets ..................................... $ 126,387 $ 12,517 $ 371 $ 139,275
========= ========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable .................................. $ 7,461 $ 1,506 -- $ 8,967
Accrued compensation expenses ..................... 5,444 -- -- 5,444
Other accrued expenses ............................ 11,418 2,151 -- 13,569
Income taxes payable .............................. 918 -- -- 918
Notes payable ..................................... 339 1,300 -- 1,639
Current maturities on long-term debt .............. 7,473 469 -- 7,942
Deferred revenue .................................. 595 -- -- 595
--------- --------- --------- ---------
Total Current Liabilities ...................... 33,648 5,426 -- 39,074
Postretirement health and pension liabilities ........ 1,946 -- -- 1,946
Deferred income tax liabilities ...................... 91 -- -- 91
Long-term debt ....................................... 34,441 3,981 -- 38,422
Redeemable common stock .............................. -- 850 -- 850
Common stockholders' equity .......................... 56,261 2,260 371 58,892
--------- --------- --------- ---------
Total Liabilities and Stockholders' Equity ....... $ 126,387 $ 12,517 $ 371 $ 139,275
========= ========= ========= =========
Book Value per Common Share ...................... $ 6.22 $ 1.45 $ 5.55
========= ========= =========
</TABLE>
24
<PAGE>
<TABLE>
Optical Coating Laboratory, Inc.
Pro Forma Condensed Combined Balance Sheet
(Dollars in Thousands)
(Unaudited)
<CAPTION>
OCLI OCA
As of As of Pro Forma Pro Forma
10/31/95 9/30/95 Adjustments Combined
-------- ------- ----------- --------
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and short-term investments ..................... $ 6,602 $ 60 $ 6,662
Accounts receivable (net) ........................... 29,565 6,948 -- 36,513
Inventories ......................................... 15,886 1,863 -- 17,749
Current deferred income tax asset ................... 6,665 -- 382(A) 7,047
Other current assets ................................ 2,476 54 -- 2,530
--------- --------- --------- ---------
Total Current Assets ............................. 61,194 8,925 382 70,501
Other Assets and Investments ........................... 17,029 41 -- 17,070
Property, Plant and Equipment:
Property, plant and equipment ....................... 165,415 9,538 -- 174,953
Less accumulated depreciation ....................... (73,804) (5,143) -- (78,947)
--------- --------- --------- ---------
Property, plant and equipment (net) .............. 91,611 4,395 -- 96,006
--------- --------- --------- ---------
Total Assets ....................................... $ 169,834 $ 13,361 $ 382 $ 183,577
========= ========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable .................................... 10,324 1,570 -- 11,894
Accrued compensation expenses ....................... 6,559 -- -- 6,559
Other accrued expenses .............................. 9,515 1,554 -- 11,069
Income taxes payable ................................ -- -- -- --
Notes payable ....................................... 3,339 2,100 -- 5,439
Current maturities on long-term debt ................ 3,344 1,090 -- 4,434
Deferred revenue .................................... 98 -- -- 98
--------- --------- --------- ---------
Total Current Liabilities ........................ 33,179 6,314 -- 39,493
Postretirement health and pension liabilities .......... 2,150 -- -- 2,150
Deferred income tax liabilities ........................ 2,239 -- -- 2,239
Long-term debt ......................................... 47,267 3,729 -- 50,996
Minority interest ...................................... 11,105 -- -- 11,105
Convertible redeemable preferred stock ................. 11,357 -- -- 11,357
Redeemable common stock ................................ 857 857
Common stockholders' equity ............................ 62,537 2,461 382(A)(C) 65,380
--------- --------- --------- ---------
Total Liabilities and Stockholders' Equity .......... $ 169,834 $ 13,361 $ 183,577
========= ========= =========
Book Value per Common Share ......................... $ 6.59 $ 1.69 $ 5.97
========= ========= =========
</TABLE>
25
<PAGE>
<TABLE>
Optical Coating Laboratory, Inc.
Pro Forma Condensed Combined Balance Sheet
(Dollars in Thousands)
(Unaudited)
<CAPTION>
OCLI OCA
As of As of Pro Forma Pro Forma
4/30/96 3/31/96 Adjustments Combined
------- ------- ----------- --------
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and short-term investments ................... $ 4,499 $ 134 -- $ 4,633
Accounts receivable (net) ......................... 31,311 6,519 -- 37,830
Inventories ....................................... 18,294 2,856 -- 21,150
Current deferred income tax asset ................. 6,311 -- 339(A) 6,650
Prepaid expenses/other current assets ............. 2,309 66 -- 2,375
--------- --------- --------- ---------
Total Current Assets ........................... 62,724 9,575 339 72,638
Other Assets and Investments ......................... 16,062 41 -- 16,103
Property, Plant and Equipment:
Property, plant and equipment ..................... 174,872 11,430 -- 186,302
Less accumulated depreciation ..................... (78,903) (5,736) -- (84,639)
--------- --------- ---------
Property, plant and equipment (net) ............ 95,969 5,694 -- 101,663
--------- --------- --------- ---------
Total Assets ..................................... $ 174,755 $ 15,310 $ 339 $ 190,404
========= ========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable .................................. $ 10,931 $ 1,697 -- $ 12,628
Accrued compensation expenses ..................... 5,528 -- -- 5,528
Other accrued expenses ............................ 10,140 1,942 -- 12,082
Income taxes payable .............................. -- -- -- --
Notes payable ..................................... 2,321 2,550 -- 4,871
Current maturities on long-term debt .............. 3,412 1,325 -- 4,737
Deferred revenue .................................. 709 -- -- 709
--------- --------- --------- ---------
Total Current Liabilities ...................... 33,041 7,514 40,555
Postretirement health and pension liabilities ........ 2,174 -- -- 2,174
Deferred income tax liabilities ...................... 2,341 -- -- 2,341
Long-term debt ....................................... 49,117 4,094 -- 53,211
Minority interest .................................... 12,643 -- -- 12,643
Convertible redeemable preferred stock ............... 11,309 -- -- 11,309
Redeemable common stock .............................. 857 857
Common stockholders' equity .......................... 64,130 2,845 339(A) 67,314
--------- --------- --------- ---------
Total Liabilities and Stockholders' Equity ....... $ 174,755 $ 15,310 $ 339 $ 190,404
========= ========= ========= =========
Book Value per Common Share ...................... $ 6.69 $ 1.89 $ 6.07
========= ========= =========
</TABLE>
26
<PAGE>
Optical Coating Laboratory, Inc. and Subsidiaries
Pro Forma Condensed Combined Balance Sheets
(Dollars in Thousands)
(Unaudited)
Summary of pro forma adjustments - Dr(Cr):
(A) Adjustment to Deferred Tax Valuation Allowance for OCA
OCLI as of
10/31/94 10/31/95 4/30/95 4/28/96
-------- -------- ------- -------
Deferred Tax Asset 314 382 339 339
Common Stockholders' Equity (314) (382) (339) (339)
Record adjustment to deferred tax asset resulting from adjustment to OCA
valuation allowance.
27
<PAGE>
SPECIAL MEETING
General
This Proxy Statement/Prospectus is being furnished to holders of OCA
Common Stock in connection with the solicitation of proxies by the Board of
Directors of OCA for use at the OCA Special Meeting, which will be held at OCA's
corporate offices located at 170 Locke Drive, Marlborough, Massachusetts 01752,
on September 10, 1996 beginning at 10:00 a.m. and at any adjournments or
postponements thereof. This Proxy Statement/Prospectus is accompanied by a form
of proxy for use at the Special Meeting.
This Proxy Statement/Prospectus also constitutes the Prospectus of OCLI
with respect to the shares of OCLI Common Stock to be issued pursuant to the
Merger, which Prospectus is part of a Registration Statement on Form S-4 filed
by OCLI with the Commission under the Securities Act of 1933, as amended (the
"Securities Act").
No vote by the stockholders of OCLI is required to consummate the
Merger.
Purposes; Recommendation of the OCA Board of Directors and Management
The purposes of the Special Meeting are (i) to consider and vote upon a
proposal to adopt and approve the Merger Agreement and the transactions
contemplated thereby and (ii) to transact such other business as may properly
come before the Special Meeting and any adjournments or postponements thereof.
The Board of Directors of OCA is not presently aware of any such other business.
The management of OCA and OCA's Board of Directors have approved the
Merger Agreement and the transactions contemplated thereby and believe the
Merger and the other transactions contemplated by the Merger Agreement are fair
to and in the best interests of OCA and its Shareholders.
THE MANAGEMENT AND BOARD OF DIRECTORS OF OCA RECOMMEND THAT OCA
SHAREHOLDERS VOTE IN FAVOR OF THE ADOPTION AND APPROVAL OF THE
MERGER AGREEMENT.
Record Date
Only holders of record of OCA Common Stock as of the close of business
on August 9, 1996 are entitled to receive notice of and to vote at the Special
Meeting and any adjournments or postponements thereof. As of the close of
business on August 9, 1996, 794,577 shares of OCA Common Stock were outstanding,
all of which are expected to be outstanding and entitled to vote as of the date
of the Special Meeting. Each share of OCA Common Stock is entitled to one vote
upon each
28
<PAGE>
matter properly submitted at the Special Meeting. See "THE MERGER -- Interests
of Certain Persons in the Merger" and "OWNERSHIP OF OCA COMMON STOCK AND OCLI
COMMON STOCK."
Votes Required
Under Massachusetts law and pursuant to OCA's Articles of Organization
and the OCA By-Laws, each as amended, the affirmative vote of the holders of
two-thirds of the outstanding shares of OCA Common Stock is required to adopt
and approve the Merger Agreement and the transactions contemplated thereby.
The presence, in person or by proxy, at the Special Meeting of the
holders of at least a majority of the votes entitled to be cast at the Special
Meeting is necessary to constitute a quorum for the transaction of business.
Abstentions will be counted as present for the purposes of determining whether a
quorum is present but will not be counted as votes cast in favor of the Merger
Agreement. Because the vote on the Merger Agreement requires the approval of
two-thirds of the votes entitled to be cast by the holders of the outstanding
shares of OCA Common Stock, abstentions will have the same effect as a negative
vote on these proposals.
As of the Record Date, the directors and officers of OCA, together with
their respective affiliates and family members, owned directly or indirectly an
aggregate of 529,793 shares of OCA Common Stock, constituting approximately
66.7% of the then outstanding shares of OCA Common Stock expected to be entitled
to vote at the Special Meeting. Each of the directors and officers of OCA has
agreed with OCLI to vote his shares of OCA Common Stock in favor of the
proposals to adopt and approve the Merger Agreement. The affirmative vote of
these individuals, together with the affirmative vote of their respective family
members, virtually ensures the adoption and approval of the Merger Agreement by
the OCA Shareholders without regard to the votes of any other OCA Shareholders.
In addition, employees own another 54,500 of the shares expected to be
outstanding and entitled to vote at the Special Meeting.
29
<PAGE>
Voting and Revocation of Proxies
Shares of OCA Common Stock that are entitled to vote and are
represented by a proxy properly signed and received at or prior to the Special
Meeting, unless subsequently properly revoked, will be voted in accordance with
the instructions indicated thereon. If a proxy is signed and returned without
indicating any voting instructions, shares of OCA Common Stock represented by
such proxy will be voted FOR the proposal to adopt and approve the Merger
Agreement. The Board of Directors of OCA is not currently aware of any business
to be acted upon at the Special Meeting other than as described herein. If,
however, other matters are properly brought before the Special Meeting or any
adjournments or postponements thereof, the persons appointed as proxies will
have the discretion to vote or act thereon in accordance with their best
judgment.
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before the shares represented by such proxy are
voted at the Special Meeting by (i) filing with the Clerk of OCA a written
notice of revocation bearing a later date than the proxy, (ii) duly executing a
proxy relating to the same shares bearing a later date and delivering it to the
Clerk of OCA or (iii) voting in person at the Special Meeting. Attendance at the
Special Meeting will not in and of itself constitute a revocation of a proxy.
All written notices of revocation and other communications with respect to
revocation of proxies should be addressed as follows: Optical Corporation of
America, 170 Locke Drive, Marlborough, Massachusetts 01752, attention: Clerk,
and must be received before the taking of the vote at the Special Meeting.
Solicitation of Proxies
Each of OCLI and OCA will bear its respective costs incurred in
preparing this Proxy Statement/Prospectus (and the related Registration
Statement) and the form of proxy, except that OCA will bear the costs of mailing
proxy materials to OCA Shareholders in connection with the Special Meeting. In
addition to solicitation by mail, directors, officers and employees of OCA, who
will not be specifically compensated for such services, may solicit proxies from
OCA Shareholders personally or by telephone, telecopy, telegram or other means
of communication.
Dissenters' Rights
Shareholders of OCA who do not vote in favor of the adoption and
approval of the Merger Agreement and the transactions contemplated thereby
(collectively, "Dissenting Shareholders") have certain rights to demand payment
for the "fair value" of
30
<PAGE>
their shares of OCA Common Stock if they timely provide a written notice of
dissent prior to the Special Meeting and strictly comply with all other
applicable requirements under Massachusetts law. Failure to take any of the
steps required on a timely basis will result in the loss of dissenters' rights.
Merely voting against or failing to vote for the Merger Agreement will not
perfect a Dissenting Shareholder's dissenter's rights. The amount obtainable
upon the valid exercise of dissenters' rights cannot be predicted. The
procedures to be followed by Dissenting Shareholders are summarized in "RIGHTS
OF DISSENTING SHAREHOLDERS," and a copy of the applicable provisions of the
Massachusetts Business Corporation Law is attached as APPENDIX I to this Proxy
Statement/Prospectus and incorporated herein by this reference.
OCA SHAREHOLDERS SHOULD NOT SEND ANY STOCK CERTIFICATES
WITH THEIR PROXY CARDS.
THE MERGER
Background of the Merger and Related Matters
OCLI and OCA have worked together on several projects over the past six
years. Beginning in 1990, OCLI subcontracted with OCA for the coating of missile
domes for the U.S Department of Defense. Under this arrangement, OCA fabricated
the missile domes in its facilities in Garden Grove, California and sent them to
OCLI to be coated at its facilities in Santa Rosa. Since the initial order, OCLI
has received several follow-on orders from OCA for the coating of the missile
domes, in addition to several other smaller coating subcontracts, for which OCLI
has received orders worth approximately $657,000 since 1992, including
approximately $40,000 of sales after the second quarter of 1996.
Beginning in 1995, OCA subcontracted with OCLI for the supply of
optical subassemblies and optical fabrication. In fiscal 1995 OCLI placed orders
with OCA worth approximately $75,000 and orders year-to-date in fiscal 1996 are
worth $407,000, including approximately $200,000 of open orders at the end of
the second quarter of 1996.
In addition to being both suppliers and customers to each other over
the last several years, OCA and OCLI have both competed for optical filter
business in the defense, aerospace, medical instrumentation and office
automation market segments along with other companies including, but not limited
to, Barr Associates, Optical Filter Corporation, Varo, and Deposition Sciences,
Inc.
31
<PAGE>
In July of 1993, Frank Bufano, OCLI's Vice President and Director of
Operations, visited OCA's facilities in Massachusetts and met with John
Viggiano, OCA's Vice President and General Manager of East Coast operations, to
review OCA's capabilities and to discuss a possible strategic alliance between
the companies. Following Mr. Bufano's visit, Donald A. Johnson, CEO of OCA
summarized those discussions in a letter to Herbert M. Dwight, Jr., OCLI's
President and CEO, and suggested that Mr. Dwight and Mr. Johnson meet to discuss
a possible strategic alliance.
On October 28, 1993, as suggested by Mr. Johnson, Mr. Dwight visited
OCA's facilities in Garden Grove, California to review OCA's West Coast
operations and to discuss a possible strategic alliance between OCA and OCLI. In
subsequent discussions between OCLI's senior managers and Board of Directors, it
was determined that further discussions with OCA at that time were not in OCLI's
best interest in light of the other major projects and acquisitions OCLI had
already undertaken. In November of 1993, Mr. Dwight informed Mr. Johnson of
OCLI's decision not to pursue the discussions any further at that time. However,
it was agreed that the companies should revisit the possibilities in 6 to 12
months.
On July 15, 1994, in response to an invitation from OCA, Dr. Jim
Seeser, OCLI's Chief Technical Officer, Glenn Yamamoto, the Product Line Manager
for OCLI's instrumentation business, Lenn Mott, OCLI's Director of Engineering,
and Dr. James Rancourt, one of OCLI's Senior Scientists, visited OCA's
facilities in Garden Grove, California, to conduct a preliminary review of OCA's
business to determine whether OCLI had any interests in pursuing a strategic
business relationship. Based upon the findings of Dr. Seeser's team it was again
decided that there were current opportunities around which the companies should
seek to form a strategic relationship.
In April of 1995, in a series of telephone conversations between Mr.
Johnson, Mr. Viggiano and Mr. Yamamoto, OCLI learned of several new product
development efforts at OCA. During these conversations, OCLI was informed that
OCA's Shareholders were interested in developing some liquidity for their
investments, and it was suggested that representatives of the companies meet
again to discuss a possible strategic alliance. Over the next few months various
representatives from OCLI engaged in the review of OCA's new product development
efforts and independent studies of the respective market opportunities for these
new products.
On December 21, 1995, OCA and OCLI executed a Confidentiality Agreement
in order to allow for the exchange and discussion of OCA proprietary information
in contemplation of a possible acquisition of OCA by OCLI.
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On February 26, 1996, OCA's Board of Directors met with members of
OCLI's senior management group, including Herbert Dwight, John Markovich, John
McCullough, Jim Seeser, Rick Strandlund, Glenn Yamamoto, and Joseph Zils, to
discuss the proposed acquisition and agree in principle on the terms of the
transaction.
On March 1, 1996, OCA and OCLI executed a Letter of Intent setting
forth the general terms of the agreement and providing a schedule for the
execution of definitive agreements. Numerous telephone conversations and
meetings among counsel for OCA and OCLI and among representatives of OCA and
OCLI subsequently ensued. During the months of March 1996 through June 20, 1996,
OCA and OCLI negotiated the terms of the Agreement and Plan of Merger (the
"Agreement") and related agreements.
On June 20, 1996, at a regularly scheduled meeting, OCLI's Board of
Directors considered management's recommendations on the Agreement and
unanimously voted to adopt a resolution authorizing management to execute the
Agreement on behalf of OCLI.
On June 20, 1996, the Board of Directors of OCA, in a special
telephonic meeting, unanimously voted to adopt a resolution authorizing
management to execute the Agreement and to recommend its adoption to OCA's
Shareholders.
On June 28, 1996, the companies executed the Agreement setting forth
the terms and conditions under which OCLI would acquire all the outstanding
shares of OCA's stock.
OCLI's Reasons for the Merger
OCLI's purpose for engaging in the transactions contemplated by the
Agreement is to acquire OCA. OCLI believes that the acquisition of OCA will
provide OCLI with an established, well-recognized provider of optical
subassemblies, optical design, and fiber optic communication component design
and manufacturing to both government and industry. At the same time, OCLI hopes
both to identify opportunities to further commercialize OCA's existing
technologies and to combine its research and development activities with those
of OCA's with a goal of creating new technologies. It is anticipated that the
Merger will also allow the companies to realize additional economies in
manufacturing, support service and corporate administration. The structure of
the Merger was established to achieve the business objectives of OCLI, in light
of relevant financial,
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legal, tax and other considerations.
OCA's Reasons for the Merger
OCA believes that a number of significant strategic benefits will
accrue from the Merger. In addition to its established product lines, OCA has
recently developed an important position in the embryonic, but rapidly growing
market for fiber optics products used in telecommunications. These products
incorporate narrow bandpass filters produced by using OCA's MicroPlasma(TM) thin
film coating process. OCA believes that OCLI's manufacturing capacity, access to
capital, distribution network and international business presence as one of the
world's largest thin-film coating manufacturers will significantly benefit the
development, marketing, sales and distribution of OCA's product lines as well as
enable OCA to capitalize on domestic and international business opportunities.
There can be no assurances, however, that the OCA Shareholders will realize all
of the benefits expected from the Merger.
In evaluating the Merger, the Board of Directors and management of OCA
considered, among other things, (i) the OCLI Common Stock offered by OCLI as
consideration for the outstanding shares and options to purchase shares of OCA
Common Stock; (ii) information concerning the management, results of operations,
performance, financial condition and prospects of OCLI; (iii) the technology and
customer base of OCLI's businesses; (iv) the prospects for further growth in
value of OCLI's Common Stock; (v) current economic, industry and market
conditions affecting both OCA and OCLI; (vi) the terms of the Merger Agreement;
(vii) the tax-free nature of the Merger; and (viii) the potential impact of the
Merger on OCA's employees, suppliers and customers. Based on all of these
matters, and such other matters as OCA deemed relevant, the Board of Directors
and management of OCA unanimously support the Merger Agreement and recommend
that the holders of the OCA Common Stock vote for its approval and adoption.
Working Relationships. OCA has become well acquainted with OCLI, its
subsidiaries, its management, its products, and its business strategy. See
"BACKGROUND OF THE MERGER AND RELATED MATTERS."
Compatibility. In the opinion of OCA's management, the Merger with OCLI
will provide OCA Shareholders with a fair value for their OCA Common Stock, and
OCA will become an important part of a growing, well-respected business
operation, providing expanded opportunities for the growth and development of
OCA's employees.
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Stockholder Value. OCA Shareholders will receive OCLI Common Stock in a
tax free exchange. OCLI's Common Stock, which is traded on the NASDAQ, will
provide greater liquidity to OCA Shareholders than may be possible with OCA
Common Stock. The OCA Common Stock is not currently, and has never previously
been, traded on any established public market.
Summary. The management and the Board of Directors of OCA believe that
the terms of the Merger are fair to, and in the best interest of, OCA and its
Shareholders and unanimously have approved the Merger Agreement and the
transactions contemplated thereby.
Structure and Terms of the Merger
If the Merger is consummated, the outstanding shares of Acquisition
Corp. will be converted into new shares of OCA Common Stock (which will be held
by OCLI) and all of the previously outstanding shares of OCA Common Stock (other
than any such shares held in the treasury of OCA and shares with respect to
which dissenters' rights are perfected) will be converted into shares of OCLI
Common Stock. As a result of the Merger, OCA will become a wholly-owned
subsidiary of OCLI, and each person who previously held shares of OCA Common
Stock (other than those who perfect statutory dissenters' rights) will receive,
upon the surrender of their stock certificates to a designated agent of OCLI,
2.042 shares of OCLI Common Stock for each share of OCA Common Stock held. A
copy of the Merger Agreement (including the principal exhibits thereto) are
available without charge, upon written or oral request, from Optical Corporation
of America, 170 Locke Drive, Marlborough, Massachusetts 01752, Attention: Clerk;
telephone: (508) 481-9860, facsimile: (508) 481-3559. In order to ensure timely
delivery of the documents requested, any such request should be made by August
16, 1996.
Based on the number of outstanding shares of OCA Common Stock as of the
Record Date, and on the assumption that (i) no OCA Shareholders exercise
appraisal rights, (ii) no OCA options are exercised prior to the Effective Date,
(iii) OCA purchases, prior to the Effective Date, the 46,875 shares of OCA
Common Stock held on the Record Date by Perkin-Elmer in satisfaction of an
obligation to Perkin-Elmer which has been outstanding since August 31, 1995, and
(iv) OCA Warrants to purchase 86,000 shares of OCA Common Stock are exercised
prior to the Effective Date as contemplated by the Merger Agreement,
approximately 1,526,807 shares of OCLI Common Stock will be issued to former OCA
Shareholders upon the
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consummation of the Merger and an additional 132,731 shares of OCLI Common Stock
will be reserved for issuance upon the exercise of the OCA Options and OCA
Warrants assumed by OCLI. As a result, 11,430,548 shares of OCLI Common Stock
will then be outstanding, of which approximately 1,702,419 shares, representing
approximately 14.9% of the total, will be held by former holders of OCA Common
Stock.
Assumption of OCA Stock Options and OCA Warrants
At or prior to the Effective Date, OCLI and OCA shall take all action
necessary to cause the assumption by OCLI as of the Effective Date of the
options and warrants to purchase OCA Common Stock outstanding as of the
Effective Date (the "OCA Options" and "OCA Warrants"). Each of the OCA Options
and OCA Warrants shall be converted without any action on the part of the holder
thereof into an option to purchase shares of OCLI Common Stock (the "OCLI
Options" and "OCLI Warrants") as of the Effective Date. The number of shares of
OCLI Common Stock that each record holder of an option or warrant agreement
which represents OCA Options or OCA Warrants (the "Optionholders" and
"Warrantholders") shall be entitled to receive upon the exercise of such option
or warrant shall be a number of whole shares determined by multiplying the
number of shares of OCA Common Stock subject to such option, determined
immediately before the Effective Date, by 2.042. The exercise price of each
share of OCLI Common Stock subject to an assumed OCA Option or OCA Warrant shall
be the amount (rounded up to the nearest whole cent) obtained by dividing the
exercise price per share of OCA Common Stock at which such option or warrant is
exercisable immediately before the Effective Date by 2.042. The assumption and
substitution of OCA Options and OCA Warrants does not give the Optionholders and
Warrantholders additional benefits which they did not have immediately prior to
the Effective Date, result in any acceleration of any vesting schedule for any
OCA Option or OCA Warrant or relieve the Optionholders and Warrantholders of any
obligations or restrictions applicable to their options or warrants or the
shares obtainable upon exercise of the options or warrants. Only whole shares of
OCLI Common Stock shall be issued upon exercise of any former option or warrant
for OCA Common Stock, and the holder of such option or warrant shall receive in
cash the fair market value of the fractional share, net of the applicable
exercise price of the fractional share and applicable withholding taxes. As of
the Record Date, 41,000 shares of OCA Common Stock were subject to outstanding
OCA Options and 110,000 shares of OCA Common Stock were subject to outstanding
OCA Warrants, which would be equivalent to a total of approximately 308,342
shares of OCLI Common Stock after conversion.
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Indemnification of OCLI; Escrow
Upon consummation of the Merger, 10% of the shares of OCLI Common Stock
issued in the Merger will be placed in escrow (the "Escrowed Shares") and held
pursuant to the Indemnification and Stock Escrow Agreement attached as Exhibit A
to the Merger Agreement (the "Escrow Agreement"). The Escrowed Shares will be
reserved to provide indemnification to OCLI against costs, liabilities or
damages incurred, paid by or imposed upon OCLI, Acquisition Corp. or OCA after
the Effective Date as a result of misrepresentations, breaches of warranties and
breaches of covenants contained in the Merger Agreement, the Escrow Agreement
and the other agreements executed in connection therewith. See Article 3 of the
Merger Agreement and Section 4 of the Escrow Agreement for a description of the
representations and warranties that are covered by the Escrow Agreement.
In the event OCLI has an appropriate claim for indemnification, shares
of OCLI Common Stock held in the escrow account will be returned to OCLI in
satisfaction of the claim. The amount of indemnification to which OCLI would be
entitled with respect to an indemnifiable claim (the "Indemnifiable Amount")
shall be determined and computed by reference to the actual economic loss to
OCLI, Acquisition and/or OCA (and not just by reference to any effect on the
value of the shares of OCA) and shall be deemed to include all losses,
liabilities, expenses or costs incurred by OCLI and/or Acquisition, including
reasonable attorney's fees. For purposes of determining the number of shares of
OCLI Common Stock which would be returned to OCLI in satisfaction of a claim,
each share will be valued at the closing price of OCLI Common Stock on the
Nasdaq National Market System on the Effective Date. Thus, for purposes of
satisfying the indemnification requirements of the Escrow Agreement, the former
OCA Shareholders would not have the benefit of any increase, nor the risk of any
decrease, in the market price of shares of OCLI Common Stock after the Effective
Date. OCLI will be entitled to indemnification only if and when the total of all
Indemnifiable Amounts exceeds $250,000, at which point OCLI will be entitled to
indemnification for all Indemnifiable Amounts, and not just those in excess of
$250,000.
If a claim is made, the Escrow Agent will deliver to OCLI an amount of
shares with a total value equal to the Indemnifiable Amount within 30 days of
the demand unless written objection to such demand is received by the Escrow
Agent and OCLI from the Shareholder Representative (as defined below). If the
Shareholder Representative objects to OCLI's claim, the dispute may be submitted
to a court of competent jurisdiction if not previously settled.
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The Escrow Agreement requires the Escrow Agent to deliver to the OCA
Shareholders the Escrowed Shares remaining in escrow after the date of the
completion of the first audit of OCA covering a period ending after the
Effective Date, except that if there is a claim by OCLI at or prior to such
date, the Escrow Agent will retain Escrowed Shares in an amount sufficient to
cover such claims until they are resolved. Assuming that the Effective Date will
occur prior to October 31, 1996, which is the end of OCLI's current fiscal year,
such first audit is expected to be completed prior to the end of January 1997.
OCA is not aware of any claims threatened or asserted that it expects to give
rise to a right of indemnification under the Escrow Agreement. It should be
understood, however, that claims may arise in amounts which would result in all
of the Escrowed Shares being either distributed to OCLI or sold by the
Shareholder Representative pursuant to the Escrow Agreement, in which event none
of the Escrowed Shares would be distributed to the Shareholders at the end of
the escrow period.
Shares held in escrow will be registered in the name of the Escrow
Agent, and each former OCA Shareholder will be entitled to instruct the Escrow
Agent how to vote his shares with respect to matters placed before the OCLI
Stockholders. Former OCA Shareholders will be entitled to directly receive cash
dividends, if any, paid or declared out of earned surplus on the Escrowed Shares
during the escrow period; however, any additional shares of OCLI Common Stock or
other property that are distributed with respect to the Escrowed Shares during
the escrow period will be held pursuant to the Escrow Agreement to satisfy any
indemnification claims.
Kenneth D. Roberts, 72 Windsor Road, Wellesley Hills, Massachusetts
02181-6134, an OCA Shareholder, has agreed to serve as representative of the OCA
Shareholders for purposes of the Escrow Agreement (the "Shareholder
Representative"). Any action taken by the Shareholder Representative with
respect to the settlement of a claim against the Escrowed Shares will be binding
on all OCA Shareholders. The Shareholder Representative will have the right to
sell shares of OCLI Common Stock held in escrow in order to obtain funds to pay
any expenses incurred or anticipated to be incurred in connection with his
services.
Procedure for Exchange of Shares; Fractional Shares
Promptly following the consummation of the Merger, ChaseMellon
Shareholder Services, acting in the capacity of exchange agent (the "Exchange
Agent") will mail to each former OCA Shareholder a form of letter of
transmittal, together with instructions for the exchange of such holder's
certificates representing OCA Common Stock for certificates representing shares
of OCLI Common Stock. Upon surrender to the Exchange Agent of one or more
certificates for OCA Common Stock together with a
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properly completed letter of transmittal, the Exchange Agent will issue and mail
to the former OCA Shareholder a certificate representing a number of shares of
OCLI Common Stock that is equal to 90% of the number of shares of OCLI Common
Stock into which such shares of OCA Common Stock have been converted pursuant to
the Merger, and, where applicable, a check for the amount representing any
fractional share determined in the manner described in the following paragraph.
Under the Merger Agreement, a certificate representing the remaining 10% of the
shares of OCLI Common Stock into which an OCA Shareholder's shares of OCA Common
Stock have been converted will be placed in escrow and thereafter delivered to
the OCA Shareholder or returned to OCLI in accordance with the terms of the
Escrow Agreement. See "THE MERGER -- Indemnification of OCLI; Escrow."
Neither certificates nor scrip for fractional shares of OCLI Common
Stock shall be issued to OCA Shareholders and no OCA Shareholder shall be
entitled to any voting or other rights of a holder of shares for a fractional
share interest. Each OCA Shareholder who otherwise would have been entitled to
receive a fraction of a share of OCLI Common Stock shall receive cash in lieu
thereof, without interest, in an amount determined by multiplying such
Shareholder's fractional interest by the closing price of OCLI Common Stock as
reported on the Nasdaq National Market System on the Effective Date.
OCA SHAREHOLDERS SHOULD NOT SEND IN THEIR CERTIFICATES
UNTIL THEY RECEIVE THE LETTER OF TRANSMITTAL FORM AND
INSTRUCTIONS FROM THE EXCHANGE AGENT.
Management and Operations of OCA After the Merger
It is contemplated that after the Merger, OCA will continue to operate
as a separate entity and that OCLI does not presently intend to change the
domicile, name or operations of OCA. OCLI has advised OCA, however, that Herbert
M. Dwight, Jr., Donald A. Johnson and Joseph C. Zils will be named as directors
of OCA. OCLI currently intends that certain of the existing officers of OCA will
retain their offices after the Effective Date, but may appoint additional
officers of OCA from time to time. See "OCLI AND OCA MANAGEMENTS -- Executive
Officers and Directors of OCA."
Effective Date
The Merger shall become effective upon the later of the date of filing
of a Certificate of Merger with the Secretary of State of the State of Delaware
pursuant to Section 252 of the Delaware General Corporation Law and the date of
filing of Articles of
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Merger with the Secretary of State of the Commonwealth of Massachusetts pursuant
to Section 79 of the Massachusetts Business Corporation Law (the "Effective
Date"). It is currently expected that the Effective Date will be on or about
September 10, 1996.
Conditions to Consummation of the Merger
The respective obligations of OCLI, Acquisition Corp. and OCA under the
Merger Agreement are subject to a number of conditions specified in the Merger
Agreement. Unless all such conditions to the obligations have been satisfied or
waived by the party to the Merger Agreement benefiting from such conditions,
such party is not required to consummate the Merger and the transactions
contemplated in connection therewith.
The conditions to the obligations of OCA include the following: (i) the
representations and warranties of OCLI and Acquisition Corp. contained in the
Merger Agreement shall be true and correct in all material respects as of the
Effective Date, (ii) OCLI and Acquisition Corp. shall have performed in all
material respects their respective agreements contained in the Merger Agreement,
(iii) all necessary consents, permits or approvals necessary to consummate the
Merger by any governmental authority having jurisdiction over OCA, OCLI or
Acquisition Corp., or any other person in any contractual or other relationship
with OCA, OCLI or Acquisition Corp., shall have been granted, (iv) the OCA
Shareholders shall have approved the Merger and the execution, delivery and
performance of the Merger Agreement in accordance with the applicable laws of
the Commonwealth of Massachusetts, (v) the Registration Statement of which this
Proxy Statement/Prospectus is a part shall be effective and no stop order
suspending the effectiveness of such Registration Statement shall have been
issued and no proceedings for that purpose shall have been initiated or
threatened by the Commission, (vi) the Nasdaq National Market System shall have
approved the shares of OCLI Common Stock to be issued in the Merger for listing,
subject to official notice of issuance, (vii) no legal action or other
proceedings to restrain or prohibit the consummation of the transactions
contemplated by the Merger Agreement shall be pending or threatened, (viii) OCA
shall have received an opinion of Collette & Erickson, counsel for OCLI and
Acquisition Corp., dated the Effective Date, in form reasonably satisfactory to
OCA, and (ix) compliance with the filing and waiting period requirements of the
Antitrust Improvements Act.
The conditions to the obligations of OCLI and Acquisition Corp. include
the following: (i) OCA's representations and warranties contained in the Merger
Agreement shall be true and correct in all material respects as of the Effective
Date, (ii) OCA shall have performed in all material respects all of its
agreements contained in the Merger
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Agreement, (iii) all necessary consents, permits or approvals necessary to
consummate the Merger by any governmental authority having jurisdiction over
OCA, OCLI or Acquisition Corp. or any other person in any contractual or other
relationship with OCA, OCLI or Acquisition Corp. shall have been granted, (iv)
the Registration Statement of which this Proxy Statement/Prospectus is a part
shall be effective and no stop order suspending the effectiveness of such
Registration Statement shall have been issued and no proceedings for that
purpose shall have been initiated or threatened by the Commission, (v) the
Nasdaq National Market System shall have approved the shares of OCLI Common
Stock to be issued in the Merger for listing, subject to official notice of
issuance, (vi) the holders of not more than 10% of the shares of OCA Common
Stock shall have demanded and perfected their right to an appraisal of their OCA
Common Stock, (vii) OCLI shall have received from Deloitte & Touche LLP an
opinion to the effect that Deloitte & Touche LLP, based on certain material
representations from OCLI and OCA, is not aware of any fact that would preclude
OCLI from accounting for the Merger as a "pooling-of-interests" for accounting
purposes, (viii) OCLI shall have received an opinion of Robert DeN. Cope,
counsel for OCA and the OCA Shareholders, dated the Effective Date, in form
reasonably satisfactory to OCLI, (ix) no legal action or other proceedings to
restrain or prohibit the consummation of the transactions contemplated by the
Merger Agreement shall be pending or threatened, (x) compliance with the filing
and waiting period requirements of the Antitrust Improvements Act, and (xi)
exercise of certain of the OCA Warrants on or prior to Closing.
Conduct of OCA's Business Pending the Merger
OCA has agreed to carry on its business prior to the Effective Date in
substantially the same manner as prior to the date of the Merger Agreement. OCA
has further agreed, prior to the Effective Date to (i) maintain all of its
properties in customary repair, order and condition, reasonable wear and use and
damage covered by insurance excepted, and take all steps reasonably necessary to
maintain its intangibles, (ii) maintain insurance upon its properties and
insurance in respect of the kinds of risks currently insured against, in
accordance with its current practice, (iii) pay its taxes as they become due,
(iv) promptly advise OCLI in writing of any material adverse change in OCA's
condition (financial or otherwise), assets, liabilities, earnings, business or
prospects, (v) duly comply in all material respects with all laws, rules and
regulations applicable to OCA and to the conduct of its business, (vi) except as
required by law or by agreements existing on the date of the Merger Agreement,
preserve and maintain and prevent the disclosure or publication of any
proprietary information or trade secrets belonging to OCA, and (vii) promptly
advise OCLI of any written objection to the Merger from a Shareholder of OCA.
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Subject to certain exceptions, OCA has also agreed that prior to the
Effective Date, it will not engage in certain types of transactions without the
prior written consent of OCLI, including, among other transactions, (i) making
any changes in its management or granting any increase in compensation or bonus
to any member of management or, except in the ordinary course of business
consistent with past practice, entering into or altering or amending any
employment or consulting contract or similar agreement, (ii) entering into any
transaction or contract with any of its shareholders, officers, management,
directors or employees or their family members, (iii) creating, incurring,
assuming, guaranteeing, or otherwise becoming liable with respect to any
indebtedness other than in the ordinary course of business or pursuant to
existing financing commitments, (iv) amending its Articles of Organization or
By-Laws, (v) disposing of or encumbering any of its properties and assets other
than in the ordinary course of business, (vi) merging or consolidating with any
other corporation, or acquiring any stock, or any business, property or assets
of any other person, firm, association, corporation or other business
organization, (vii) issuing any shares of capital stock except pursuant to
existing OCA Options or OCA Warrants, or entering into any commitment or
agreement, or granting any option, warrant or right, calling for the issuance of
any shares of stock, or creating or issuing any securities convertible into any
such shares or convertible into securities in turn so convertible, (viii)
declaring any dividends on or in respect of shares of capital stock; or
redeeming, repurchasing or otherwise acquiring any shares of stock, (ix)
entering into, assuming or canceling any material contract, agreement,
obligation, lease, license or commitment except for those in the ordinary course
of business, or doing any act or omitting to do any act which would cause a
material breach of or default under any contract, commitment or obligation, (x)
amending, terminating or waiving any material right, (xi) making or committing
to make any capital expenditure, capital addition or capital improvement, (xii)
taking any action that would constitute or result in a breach of any
representation or warranty in the Merger Agreement, either as of the date made
or on the Effective Date, (xiii) taking any action directly or indirectly that
would prevent OCLI from accounting for the Merger and other transactions
contemplated by the Merger Agreement as a pooling-of-interests for accounting
purposes, (xiv) taking any action which would prevent the Merger from qualifying
as a tax-free reorganization under Section 368(a) of the Code, or (xv) taking
any action that constitutes an offer, offer to sell, offer for sale, or sale of
OCLI Common Stock except for the distribution of a preliminary or final form of
this Proxy Statement/Prospectus and related proxy materials.
Accounting Treatment
The Merger is expected to meet all of the conditions for
pooling-of-interests accounting. It is a condition to the obligation of OCLI to
consummate the Merger that
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OCLI shall have received an opinion from Deloitte & Touche LLP, OCA's
independent accountants, to the effect that Deloitte & Touche LLP, based on
material representations from OCLI and OCA, is not aware of any fact that would
preclude OCLI from accounting for the merger as a pooling-of-interests.
Regulatory Approvals
The Merger is subject to the requirements of the Antitrust Improvements
Act and the regulations thereunder, which provide that certain acquisition
transactions (including the Merger) may not be consummated until certain
information has been furnished to the Antitrust Division of the Department of
Justice (the "Antitrust Division") and the Federal Trade Commission (the "FTC"),
and certain waiting period requirements have been satisfied. OCLI and OCA have
filed the required information and material with the Antitrust Division and the
FTC, but, as of the date of this Proxy Statement/Prospectus, the applicable
waiting period has not yet expired. There can be no assurance that the waiting
period will expire without a challenge to the Merger from the Antitrust Division
or the FTC. Termination of the waiting period does not preclude the Antitrust
Division, the FTC or any other party from challenging or seeking to delay or
enjoin the Merger on antitrust or other grounds. There can be no assurance that
any such challenge, if made, would not be successful; however, neither OCLI nor
OCA believes that the Merger will violate the antitrust laws. Any such action
taken or threatened prior to the consummation of the Merger could relieve OCLI
or OCA of their respective obligations to consummate the Merger.
Resale of OCLI Common Stock Received in the Merger; Affiliates
Certain officers, directors and principal Shareholders of OCA have
entered into an agreement with OCA and with OCLI, in the form attached as
Exhibit C to the Merger Agreement, pursuant to which they have agreed that,
until such time as financial results covering at least thirty days of combined
operations of OCA and OCLI have been published by OCLI, they will not sell,
transfer or otherwise dispose of, or offer or agree to sell, transfer or
otherwise dispose of any shares of OCLI Common Stock received by them pursuant
to the Merger or any securities which may be paid as a dividend or otherwise
distributed thereon or with respect thereto or issued or delivered in exchange
or substitution therefor. Legends restricting the transfer of such shares of
OCLI Common Stock will be placed on all certificates representing such shares.
The shares of OCLI Common Stock to be issued in the Merger to the OCA
Shareholders pursuant to the Merger Agreement have been registered under the
Securities Act, thereby allowing such shares to be freely traded without
restriction by persons who
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are not deemed to be "affiliates," as that term is defined in the Securities
Act, of OCLI or of OCA. Certain officers, directors and principal Shareholders
of OCA may be deemed to be affiliates of OCA and thus "underwriters" within the
meaning of Rule 145 under the Securities Act. Such persons will not be able to
resell the OCLI Common Stock received by them in the Merger except pursuant to
an effective registration statement under the Securities Act or pursuant to
another applicable exemption therefrom. All persons who may be deemed to be
affiliates should carefully consider the limitations imposed by Rules 144 and
145 under the Securities Act prior to effecting resales of the OCLI Common
Stock.
Termination, Amendments and Expenses
The Merger Agreement may be terminated and the Merger contemplated
thereby abandoned at any time prior to the consummation of the Merger by the
mutual consent of OCLI and OCA. The Merger Agreement may be terminated by OCLI
or OCA acting alone if any of the conditions precedent to their obligations to
consummate the Merger have not been met or waived. The Merger Agreement may also
be terminated by OCLI or OCA acting alone if (i) there shall be an order of a
court in effect preventing consummation of the Merger or (ii) there shall be any
action taken, or any statute, rule, regulation or order enacted, promulgated,
issued or deemed applicable to the Merger, by a governmental entity that would
make consummation of the Merger illegal; or by OCLI or OCA if the Shareholders
disapprove the Merger or if the Closing does not occur by September 30, 1996.
In the event that the Merger is terminated in accordance with the terms
of the Merger Agreement, each party will be responsible for the costs incurred
by it in connection with the transactions contemplated by the Merger Agreement.
Certain Effects of the Merger
Upon consummation of the Merger, the holders of OCA Common Stock (other
holders of shares with respect to which statutory dissenters' rights are
perfected) will receive an equity interest in a larger diversified company of
which OCA will be a small part. OCLI will continue to be subject to the periodic
reporting requirements of the Exchange Act and, under current regulations
promulgated thereunder, will continue to furnish information to the Commission
so long as any securities of OCLI are listed on a national securities exchange
or held of record by at least 300 holders. See "AVAILABLE INFORMATION" and
"INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE." It is a condition to OCA's
and OCLI's obligations under the Merger Agreement that the shares of OCLI Common
Stock to be issued in
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connection with the Merger be listed on the Nasdaq National Market System. See
"THE MERGER -- Conditions to Consummation of the Merger."
The OCA Common Stock is not presently, and will not be after the
Merger, listed or traded in any established market.
It is expected that, following the Merger, the business and operations
of OCA will be continued by OCLI in substantially the same manner as it has been
operating. However, OCLI will continue to evaluate OCA's business and operations
following the Merger and will make such changes as are deemed appropriate.
Once the Merger is consummated, the holders of OCA Common Stock (other
than Perkin-Elmer and holders of shares with respect to which statutory
dissenters' rights are perfected) will exchange their shares of OCA Common Stock
for OCLI Common Stock. The rights of OCA Shareholders, which are presently
governed by Massachusetts law and by the Articles of Organization and By-Laws of
OCA, will be governed by Delaware law and the Amended and Restated Certificate
of Incorporation and By-Laws of OCLI. Certain differences in the rights of OCA
Shareholders will arise as a result of this change in governing law as well as
from distinctions between the Articles of Organization and By-Laws of OCA and
the Amended and Restated Certificate of Incorporation and By-Laws of OCLI. "THE
MERGER -- Certain Effects of the Merger" and "COMPARISON OF RIGHTS OF HOLDERS OF
OCLI COMMON STOCK AND OCA COMMON STOCK."
Interests of Certain Persons in the Merger
Shareholders should be aware that certain officers and directors of OCA
have interests, described below, which may present them with potential conflicts
of interest in connection with the transaction.
Upon consummation of the Merger, all members of OCA's Board of
Directors will resign, and OCLI intends to name Herbert M. Dwight, Jr., Donald
A. Johnson and Joseph C. Zils to OCA's Board. OCLI expects Mr. Dwight, who is
Chairman and President of OCLI, to serve as Chairman of OCA's Board. OCLI
currently intends that certain of the existing officers of OCA will retain their
offices after the Effective Date, but may appoint additional officers of OCA
from time to time.
OCLI does not presently intend to change the base cash compensation of
OCA's management. As of the date of this Proxy Statement/Prospectus, whether the
changes described above will have the effect of enhancing or reducing the
overall compensation of
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OCA's management cannot be determined. See "OCLI AND OCA MANAGEMENTS --
Executive Officers and Directors of OCA."
It is not anticipated that the directors of OCA will receive separate
compensation for serving in such capacities.
Certain Employee Benefits Matters
OCLI currently intends to maintain all material OCA employee benefit
plans or programs without significant modification after the Effective Date.
However, OCLI has reserved the right to modify or terminate any such benefit
plans or programs, including those described above, at any time or from time to
time after the Effective Date.
RIGHTS OF DISSENTING SHAREHOLDERS
The rights of holders of shares of OCA Common Stock who object to the
Merger are governed by Sections 86 to 98 of the Massachusetts Business
Corporation Law. The following is a summary of the applicable provisions and is
not intended to be a complete statement of such provisions and is qualified in
its entirety by reference to the full text of Sections 86 to 98, which is set
forth as APPENDIX I.
A SHAREHOLDER WHO ELECTS TO EXERCISE DISSENTERS' RIGHTS SHOULD MAIL OR OTHERWISE
DELIVER HIS WRITTEN NOTICE TO OPTICAL CORPORATION OF AMERICA, 170 LOCKE DRIVE,
MARLBOROUGH, MA 01752, ATTENTION: CLERK.
Once a Shareholder who proposes to claim his statutory rights to an
appraisal of the "fair value" of his shares of OCA Common Stock has given notice
to OCA as provided above and does not vote in favor of the Merger at the Special
Meeting, the following steps must occur (with careful attention to the time
limits imposed by the statute) for such dissenting Shareholder to perfect his
rights to be paid the "fair value" of his shares: (1) the Merger must be
approved by the required vote of the other Shareholders of OCA; (2) within ten
days after the Effective Date of the Merger, OCA must give notice that the
Merger has become effective to each Shareholder from whom it received written
notice of his election to dissent and demand payment for his shares and who did
not vote in favor of the Merger; (3) within twenty days of the date OCA mailed
such notice, the dissenting Shareholder must submit his written demand to OCA
for payment of the "fair value" of his shares; (4) within a further period of
thirty days (following the close of such twenty day period), OCA and the
dissenting Shareholder
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must attempt to agree on the "fair value" of his shares and, if they do, such
payment may be made by OCA; (5) if no agreement is reached, either OCA or the
dissenting Shareholder has a further period of four months (following the close
of such thirty day period ), in which to commence an action in the Superior
Court for Middlesex County of the Commonwealth of Massachusetts, demanding a
determination of the "fair value" of the shares of all Dissenting Shareholders
with whom OCA has been unable to agree; (6) only a single action may be
commenced and the parties must include OCA and all dissenting Shareholders with
whom OCA has been unable to agree; (7) the Superior Court then determines the
"fair value" of the OCA shares as of the day preceding the date of the vote at
the Special Meeting, and that value must exclude any element of value arising
from the expectation or accomplishment of the Merger. Finally, upon such
determination of value, OCA makes payment to the dissenting Shareholder for his
shares.
COMPARISON OF RIGHTS OF HOLDERS OF
OCLI COMMON STOCK AND OCA COMMON STOCK
The rights of the OCA Shareholders are governed by the laws of the
Commonwealth of Massachusetts, including the Massachusetts Business Corporation
Law (the "Massachusetts Law"), and by OCA's Articles of Organization, as amended
(the "OCA Articles"), and OCA's By-Laws, as amended (the "OCA By-Laws"). Upon
consummation of the Merger, the OCA Shareholders will become stockholders of
OCLI and their rights as stockholders and the internal affairs of OCLI will be
governed by the laws of the State of Delaware, including the General Corporation
Law of the State of Delaware (the "Delaware Law"), and by OCLI's Amended and
Restated Certificate of Incorporation (the "OCLI Certificate"), and OCLI's
By-Laws (the "OCLI By-Laws"), which differ in certain material respects from
Massachusetts Law, the OCA Articles and the OCA By-Laws. The following is a
summary of certain differences between the rights of OCA Shareholders compared
with those of OCLI Stockholders.
The following summary does not purport to be a complete description of
the rights of Shareholders of OCA or the rights of Stockholders of OCLI or a
comprehensive comparison of such rights, and is qualified in its entirety by
reference to the governing law, to the OCLI Certificate and By-Laws and to the
OCA Articles and By-Laws, to which Shareholders are referred. For more
information regarding reviewing or obtaining a copy of either company's charter
documents or by-laws, see "AVAILABLE INFORMATION."
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Amendment of Charter and By-Laws
Section 242 of the Delaware Law provides that stockholders may amend
their corporation's certificate of incorporation if a majority of the
outstanding stock entitled to vote thereon, and a majority of the outstanding
stock of each class entitled to vote thereon as a class, has been voted in favor
of the amendment. The Delaware Law also provides that after a corporation has
received any payment for its stock, the power to adopt, amend or repeal by-laws
resides with the stockholders entitled to vote. A corporation may, however,
grant to its board of directors in its certificate of incorporation concurrent
power to adopt, amend or repeal by-laws.
Under Massachusetts Law, amendments to a corporation's articles of
organization relating to changes in capital or its corporate name require the
vote of at least a majority of each class of stock outstanding and entitled to
vote thereon. Amendments relating to other matters require a vote of at least
two-thirds of each class outstanding and entitled to vote thereon; provided that
(i) the articles of organization or by-laws may provide for a greater proportion
and (ii) the articles of organization may provide for a lesser proportion but
not less than a majority of the outstanding shares of each class. Section 17 of
the Massachusetts Law provides that the stockholders have the power to make,
amend or repeal by-laws and, if authorized in the articles of organization of
the corporation, the by-laws may provide that directors may also make, amend or
repeal by-laws, except with respect to any provision thereof which by law, the
articles of organization or the by-laws requires action by the stockholders. Any
by-law adopted by the directors of the corporation may be amended or repealed by
the stockholders. In the event the directors make, amend or repeal any by-law,
notice of such action stating the substance of the change to the by-laws must be
given to all stockholders entitled to vote on by-law amendments not later than
the time of the giving of notice of the meeting of stockholders next following
the action by the directors.
OCLI. OCLI's Certificate expressly provides that the Board of Directors
is authorized to adopt, repeal, alter, amend or rescind OCLI's By-Laws.
OCA. OCA's Articles expressly provide that the Board of Directors is
authorized to adopt, repeal, alter, amend or rescind OCA's By-Laws.
Certain Actions Requiring Supermajority Votes
Both Delaware Law and Massachusetts Law set certain minimum voting
requirements for selected corporate actions that may be changed by appropriate
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provisions contained in a corporation's certificate of incorporation, articles
of organization and/or by-laws.
OCLI. Under the OCLI Certificate, any of the following actions shall
require the prior approval of not less than the indicated percentage of the
voting power of the outstanding shares of each class or series entitled to vote
thereon, notwithstanding that applicable law would otherwise permit such actions
with the approval of a lesser percentage: (i) removal of a director without
cause, pursuant to Section 141(k) of the Delaware Law: 90%; (ii) approval of a
merger or consolidation, pursuant to Subchapter IX of the Delaware Law: 66 2/3%.
The principal terms of a merger or consolidation may, however, be approved by a
majority of the outstanding shares of each class of the corporation, provided
the reorganization shall have been approved by all authorized directors when no
vacancies exist on the Board pursuant to Section 251 of the Delaware Law.
OCA. OCA's Articles contain no provision which changes the minimum
voting requirements established by the Massachusetts Business Corporation Law.
Board of Directors
Under both Delaware Law and Massachusetts Law, a corporation's board of
directors must consist of one or more individuals, with the number fixed by (or
in the manner provided in) the corporation's by-laws or its certificate of
incorporation or articles of organization, respectively.
OCLI. OCLI's By-Laws state that the Board shall consist of five
directors, until changed by an amendment of the By-Laws duly adopted by the
Board of Directors or by the Stockholders.
OCA. OCA's By-Laws state that the Board shall consist of such number of
directors as shall be fixed by a vote of the Shareholders at an Annual Meeting
thereof or Special Meeting called and held in lieu thereof, provided that the
number of directors shall not be less than three unless the number of
Shareholders is less than three, in which event the number of directors may
equal the number of Shareholders.
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Removal of Directors
Delaware Law permits any director or the entire board of directors to
be removed, with or without cause, by the vote of the holders of a majority of
the shares entitled to vote. Directors of a corporation with a classified board
of directors, however, can be removed only for cause unless the certificate of
incorporation provides otherwise.
Under Section 51 of the Massachusetts Law, unless the articles of
organization or by-laws provide otherwise, (i) directors and officers selected
by stockholders may be removed from their respective offices with or without
cause by the vote of the holders of a majority of the shares entitled to vote in
the election of directors or such officers, as the case may be, provided that
the directors of a class elected by a particular class of stockholders and
officers elected by a particular class of stockholders may be removed only by
the vote of the holders of a majority of the shares of the particular class of
stockholders entitled to vote for the election of such directors or officers, as
the case may be; (ii) officers elected or appointed by the directors may be
removed from their respective offices, with or without cause, by vote of a
majority of the directors then in office; and (iii) any director and any officer
elected by the stockholders, may be removed from office for cause by vote of a
majority of the directors then in office. A director or officer may be removed
for cause only after reasonable notice and an opportunity to be heard before the
body proposing to remove such director or officer.
OCLI. OCLI's By-Laws provide that any director may be removed from
office for cause only by the affirmative vote of the holders of at least eighty
percent (80%) of the combined voting power of the then outstanding shares of
stock entitled to vote generally in the election of directors, voting together
as a single class at an annual or special meeting of stockholders of the
corporation called for such purpose. Under the OCLI Certificate, removal of a
director without cause, pursuant to Section 141(k) of the Delaware Law would
require a 90% vote, with such action requiring the prior approval of not less
than the indicated percentage of the voting power of the outstanding shares of
each class or series entitled to vote thereon, notwithstanding that applicable
law would otherwise permit such action with the approval of a lesser percentage.
OCA. OCA's By-Laws provide that a director may be removed from office
(i) with or without cause by vote of the holders of a majority of the shares of
stock entitled to vote in the election of directors, or (ii) for cause by a
majority of the directors then in office. A director may be removed for cause
only after reasonable notice and an opportunity to be heard before the body
proposing removal.
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Special Meeting of the Stockholders
Under both Delaware Law and Massachusetts Law, special meetings of
stockholders may be called by the board of directors and by such other person or
persons authorized to do so by the corporation's certificate of incorporation or
articles of organization or by-laws. Under Delaware Law, if an annual meeting is
not held within 30 days of the date designated for such a meeting, or is not
held for a period of 13 months after the last annual meeting, the Delaware Court
of Chancery may summarily order a meeting to be held upon the application of any
stockholder or director.
Under Massachusetts Law, stockholders in case none of the officers is
able and willing to call a special meeting, the supreme judicial or superior
court, upon application of one or more stockholders who hold at least 10% in
interest, of the capital stock entitled to vote thereat, has jurisdiction to
authorize one or more of such stockholders to call a meeting by giving such
notice as is required by law.
OCLI. Pursuant to OCLI's By-Laws, special meetings of the stockholders
may be called by either (i) the Chairman, if there be one, or (ii) the
President, and shall be called by any such officer at the request in writing of
a majority of the Board of Directors.
OCA. OCA's By-Laws provide that special meetings of stockholders may be
called by the Board of Directors, by the Chairman or by the President. They may
also be called by the Clerk, or in case of the death, absence, incapacity or
refusal of the Clerk, by any other officer of OCA, upon receipt of written
application of one or more stockholders who hold at least 10% of the capital
stock entitled to vote at a meeting of stockholders.
Actions by Stockholders Without a Meeting
Unless a corporation's certificate of incorporation or articles of
organization provide otherwise, Delaware Law and Massachusetts Law allow any
action required to be taken, or which may be taken, at an annual or special
meeting of stockholders to be taken without prior notice and without a vote so
long as the written consent of stockholders is obtained.
OCLI. The OCLI Certificate provides that "Any action required or
permitted to be taken by the stockholders of the Corporation must be effected at
a duly called annual or special meeting of such holders and may not be effected
by any consent in writing by such holders unless such consent in writing shall
be signed either by the holders of 80% of the shares entitled to vote thereon,
or by
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the holders of the majority of the shares entitled to vote thereon, or by the
holders of the majority of the shares entitled to vote thereon where such action
has been approved by all authorized directors when no vacancies exist on the
Board."
OCA. The OCA By-Laws provide that any action required or permitted to
be taken by the Shareholders may be taken without a meeting if all Shareholders
entitled to vote on the matter consent to the action in writing and the written
consent is filed with the records of the meetings of Shareholders.
Cumulative Voting
Under Delaware Law, cumulative voting in the election of directors is
available only if specifically provided for in a corporation's certificate of
incorporation.
Under Massachusetts Law, it is generally understood that cumulative
voting is not permitted in Massachusetts corporations although Massachusetts Law
does not expressly prohibit it.
Neither the OCLI Certificate nor the OCA Articles provide for
cumulative voting.
Vote Required for Certain Mergers and Consolidations
Delaware Law, insofar as it relates to mergers and other corporate
reorganizations, does not differ substantially from Massachusetts Law. Both
Massachusetts Law and Delaware Law provide for a stockholder vote (except as
indicated below) of both the acquiring and acquired corporation to approve
mergers. In addition, while both Massachusetts Law and Delaware Law require a
stockholder vote of the selling corporation for the sale by a corporation of all
or substantially all of its assets, Massachusetts Law requires such a vote only
if the sale is not in the regular course of business. Both Massachusetts Law and
Delaware Law provide for a stockholder vote to approve the dissolution of a
corporation.
Both Massachusetts Law and Delaware Law do not require a stockholder
vote of the surviving corporation in a merger provided certain conditions are
satisfied. Massachusetts Law requires that after the merger (i) the articles of
organization of the surviving corporation will not differ from its articles
before the merger (except for amendments authorized absent shareholder
approval); and (ii) the shares to be delivered
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pursuant to the agreement of merger do not exceed 15% of the shares of the
Issuer of the same class outstanding immediately and to the effective date of
the merger; and (iii) the issue of such shares by the directors has been
authorized in accordance with Massachusetts Law. Delaware Law does not require a
shareholder vote of the surviving corporation in a merger if (i) the merger
agreement does not amend the existing certificate of incorporation; (ii) each
outstanding or treasury share of the surviving corporation before the merger is
unchanged after the merger; and (iii) the number of shares to be issued by the
surviving corporation in the merger does not exceed 20% of the shares
outstanding immediately prior to such issuance.
Both Massachusetts Law and Delaware Law do not require a stockholder
vote for certain "short-form mergers" between a parent company and its
subsidiary. Both Massachusetts Law and Delaware Law require that the subsidiary
be 90% owned by the parent.
Class Vote for Certain Reorganizations
Generally, neither Massachusetts Law nor Delaware Law require class
voting. However, Massachusetts Law provides that class or series voting as a
separate voting group is required (i) on a plan of merger if the plan contains a
provision which, if contained in a proposed amendment to the articles of
organization, would entitle the class or series to vote as a separate voting
group on the proposed amendment; or (ii) on a plan of share exchange if the
shares of such class or series of shares are to be converted or exchanged under
such plan or if the plan contains any provisions which, if contained in a
proposed amendment to articles of organization, would entitle the class or
series to vote as a separate voting group on the proposed amendment. Delaware
Law requires class voting where the transaction involves an amendment to the
certificate of incorporation which would increase or decrease the aggregate
number of authorized shares of the class, increase or decrease the par value of
the shares of the class, or alter or change the powers, preferences or special
rights of the shares of the class so as to affect them adversely.
Dissenters' Rights
Under both Massachusetts Law and Delaware Law, a dissenting stockholder
of a corporation participating in certain transactions, under varying
circumstances, may receive cash in the amount of the fair value of his or her
shares (as determined by a court) in lieu of the consideration otherwise
receivable in any such transaction. Under Delaware Law, dissenters' rights are
not available with respect to a plan of merger or share exchange or a proposed
sale or exchange of property to holders of shares of any class or series which,
on the record date fixed to determine the stockholders entitled to vote at the
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meeting of stockholders at which such action is to be acted upon or to consent
to any such action without a meeting, were either (i) listed on a national
securities exchange or designated as a national market system security on an
interdealer quotation system by the National Association of Securities Dealers,
Inc., or (ii) held of record by more than 2,000 stockholders. In addition, under
Delaware Law, dissenters' rights are not available for any shares of stock of
the constituent corporation surviving a merger if the merger did not require
stockholder approval of the surviving corporation. However, they are available
for the shares of stock of the constituent corporation which are not owned by
the parent corporation merging into itself a subsidiary of which is owns at
least 90% of the shares of each class of stock outstanding.
Massachusetts Law also provides dissenters' rights in connection with
(i) sales of substantially all of a corporation's assets, (ii) amendments to the
articles of organization that may adversely affect certain rights of preferences
of stockholders and (iii) control-share acquisitions. Delaware Law does not
provide dissenters' rights with respect to any sale of assets, reclassification
of stock or amendment to the certificate of incorporation.
Anti-Takeover Statutes
OCLI. OCLI is subject to Section 203 of the Delaware Law ("Section
203"), which regulates large accumulations of shares, including those made by
tender offers. Section 203 may have the effect of significantly delaying a
purchaser's ability to acquire the entire interest in OCLI if such acquisition
is not approved by OCLI's Board of Directors. In general, Section 203 prevents
an "Interested Stockholder" (defined generally as a person with 15% or more of a
corporation's outstanding voting stock) from engaging in a "Business
Combination" (defined below) with a Delaware corporation for three years
following the date such person became an Interested Stockholder. For purposes of
Section 203, the term "Business Combination" includes sales, or other
dispositions to the Interested Stockholder (except proportionately with the
corporation's other stockholders) of assets of the corporation or a subsidiary
equal to 10% or more of the aggregate market value of the corporation's
consolidated assets or its outstanding stock; the issuance or transfer by the
corporation or a subsidiary of stock of the corporation or such subsidiary to
the Interested Stockholder (except for transfers in a conversion or exchange or
a pro rata distribution or certain other transactions, none of which increase
the Interested Stockholder's proportionate ownership of any class or series of
the corporation's or such subsidiary's stock); or receipt by the Interested
Stockholder (except proportionately as a stockholder), directly or indirectly,
of any loans, advances, guarantees, pledges or other financial benefits provided
by or through the corporation or a subsidiary.
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The three-year moratorium imposed on Business Combinations by Section
203 does not apply if: (a) prior to the date on which such stockholder becomes
an Interested Stockholder the Board of Directors approves either the Business
Combination or the transaction which resulted in the person becoming an
Interested Stockholder; (b) the Interested Stockholder owns 85% of the
corporation's voting stock upon consummation of the transaction which made him
or her an Interested Stockholder (excluding from the 85% calculation shares
owned by directors who are also officers of the target corporation and shares
held by employee stock plans which do not permit employees to decide
confidentially whether to accept a tender or exchange offer); or (c) on or after
the date such person becomes an Interested Stockholder, the Board approves the
Business Combination and it is also approved at a stockholder meeting by holders
of two-thirds of the voting stock not owned by the Interested Stockholder.
Under Section 203, the restrictions described above do not apply if,
among other things, the corporation's original certificate of incorporation
contains a provision expressly electing not to be governed by Section 203.
OCLI's Certificate does not contain such a provision. OCLI could, at its option,
exclude itself from the coverage of Section 203 by amending its Certificate or
By-Laws at any time to exempt itself from coverage; but a by-law or charter
amendment may not become effective for a period of twelve months after the
amendment is adopted. The restrictions described above do not apply to certain
Business Combinations proposed by an Interested Stockholder following the
announcement or notification of one of certain extraordinary transactions
involving the corporation and a person who had not been an Interested
Stockholder during the previous three years or who became an Interested
Stockholder with the approval of a majority of the corporation's directors.
Section 203 is currently under challenge in lawsuits arising out of
ongoing takeover disputes, and it is not yet clear whether and to what extent
its constitutionality will be upheld by the courts. Although the United States
District Court of Delaware has consistently upheld Section 203, the Delaware
Supreme Court has not yet considered the issue. OCLI believes that, so long as
the enforceability of Section 203 is upheld, Section 203 will encourage any
potential acquirer to negotiate with OCLI's Board of Directors prior to
effecting any takeover attempt. Section 203 also should have the effect of
limiting the ability of a potential acquirer to make a two-tiered bid in which
all of OCLI's stockholders would not be treated equally. Section 203 should also
discourage certain potential acquirers unwilling to comply with its provisions.
Stockholders should note that the application of Section 203 to OCLI will confer
upon the Board the power to reject a proposed Business Combination, even though
a potential acquirer may be offering a substantial premium for OCLI's shares
over the then-current market price.
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OCA. Massachusetts Law prohibits a corporation with 200 or more
stockholders from engaging in a "Business Combination" (as defined in
Massachusetts Law) with an "Interested Stockholder" (defined generally as a
person who, together with affiliates and associates, owns 5% or more of such
corporation's outstanding voting stock, or as an affiliate or associate of such
corporation who, together with affiliates and associates, owned 5% or more of
such corporation's outstanding voting stock at any time within the immediately
preceding three-year period) for three years following the date such person
became an Interested Stockholder. The provision is not applicable when (i) prior
to the date the stockholder became an Interested Stockholder, the board of
directors of the corporation approved either the Business Combination or the
transaction that resulted in the stockholder becoming an Interested Stockholder,
(ii) upon consummation of the transaction that resulted in the stockholder
becoming an Interested Stockholder, such Interested Stockholder owned at least
90% of the outstanding voting stock of the corporation, not including shares
owned by directors who are also officers and by certain employee stock plans or
(iii) on or subsequent to the date the stockholder becomes an Interested
Stockholder, the Business Combination is approved by the board of directors of
the corporation and authorized at a meeting of stockholders, and not by written
consent, by the affirmative vote of the holders of at least two-thirds of the
outstanding voting stock entitled to vote thereon, excluding shares owned by the
Interested Stockholder. These restrictions generally do not apply to Business
Combinations with an Interested Stockholder that are proposed subsequent to the
public announcement of, and prior to the consummation or abandonment of, certain
mergers, sales of a majority of a corporation's assets or tender offers for 50%
or more of a corporation's voting stock. The Massachusetts Law allows
corporations to elect not to be subject to the preceding provisions of the
Massachusetts Law.
Stockholder Rights Plan
OCLI. In November 1987, OCLI adopted a Stockholder Rights Plan which
expires in November 1997, under which OCLI declared a dividend of preferred
stock purchase rights which only become exercisable, if not redeemed, ten days
after a person or group has acquired 20% or more of OCLI's Common Stock or the
announcement of a tender offer which would result in a person or group acquiring
30% or more of OCLI's Common Stock. Under certain circumstances, the plan allows
stockholders, other than the acquiring person or group, to purchase OCLI's
Common Stock or the common stock of the acquirer having a market value of twice
the exercise price.
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These rights, commonly referred to as a "poison pill," may have certain
anti-takeover effects. See "DESCRIPTION OF OCLI'S CAPITAL STOCK --Preferred
Stock and Stockholder Rights Plan."
OCA. OCA does not have a comparable stockholder rights agreement.
Preemptive Rights
OCLI. Delaware Law generally permits a Delaware corporation to provide
its stockholders with the preemptive right to subscribe to capital stock or
securities convertible into stock in its certificate of incorporation. The OCLI
Certificate does not provide for preemptive rights.
OCA. Massachusetts Law generally provides that no stockholder shall
have any preemptive right to acquire stock of the corporation except to the
extent provided in the articles of organization or in a by-law adopted by and
subject to amendment only by the stockholders.
Dividends
OCLI. Delaware Law provides that a corporation, unless otherwise
restricted by its certificate of incorporation, may declare and pay dividends
out of surplus, or if no surplus exists, out of net profit for the fiscal year
in which the dividend is declared or the preceding fiscal year (provided that
the amount of capital of the corporation following the declaration and payment
of the dividend is not less than the aggregate amount of the capital represented
by the issued and outstanding shares of all classes having preference upon the
distribution of assets). Additionally, Delaware Law provides that, in general, a
corporation may redeem or repurchase its shares only out of surplus.
OCA. Massachusetts Law describes no special sources for distributions.
It specifies instead the liabilities which can result from an improper
distribution by a corporation, both for the directors who authorize the
distribution and the stockholders who receive it. Generally, an improper
distribution is one made when a corporation is insolvent or would be rendered
insolvent by part or all of the distribution. To the extent of the damage to the
corporation, the directors who authorize it and the stockholders who receive it
are jointly and severally liable to the corporation.
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Limitation on Directors' Liability; Indemnification
In general, Delaware Law contains more extensive indemnification
provisions than does Massachusetts Law. Under Delaware Law, the corporation may
include in its certificate of incorporation a provision eliminating or limiting
the personal liability of a director to the corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director under a broad range
of circumstances. OCLI's Certificate includes a provision which eliminates the
directors' liability for monetary damages for a breach of the directors' duty of
care to OCLI or its stockholders (the "Delaware Duty of Care Provision"). As a
result of the Delaware Duty of Care Provision, no director of OCLI will be
liable for monetary damages for negligence or gross negligence occurring after
the Merger. Each director will remain personally liable to OCLI for failure to
act in good faith or to comply with his or her duty of loyalty to OCLI. The
directors will continue to be subject to equitable remedies, although such
remedies in some circumstances may not be available as a practical matter. In
addition, under Delaware Law, each director will remain liable for engaging in a
transaction from which such director derives an improper personal benefit or for
engaging in intentional misconduct or a knowing violation of law. Moreover, the
Delaware Duty of Care Provision also will not limit directors' liability for
violations of the federal securities laws. With regard to directors who are also
officers of OCLI, these persons would be insulated from liability only with
respect to their conduct as directors and would not be insulated from liability
for acts or omissions in their capacity as officers.
Section 67 of the Massachusetts Law provides that indemnification of
directors, officers, employees and other agents of a corporation, and persons
who serve at its request as directors, officers, employees or other agents of
another organization, may be provided by it to whatever extent specified in or
authorized by (i) the articles of organization, (ii) a by-law adopted by the
stockholder or (iii) a vote adopted by the holders of a majority of the shares
of stock entitled to vote on the election of directors. OCA's By-Laws provide
for indemnification of its directors, officers and employees to the full extent
permitted by the Massachusetts Law. Section 13(b) of the Massachusetts Law
allows a corporation to include in its articles of organization a provision that
limits or eliminates the personal liability of directors to the corporation and
its Shareholders for monetary damages for breach of fiduciary duty as a
director. OCA's Articles include provisions eliminating the personal liability
of OCA's directors for monetary damages resulting from breaches of their
fiduciary duty except (i) for any breach of the director's duty of loyalty to
OCA or its Shareholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) under
Sections 61 and 62 of
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the Massachusetts Law, or any amendatory or successor provisions thereto, or
(iv) with respect to any transaction from which the director derived an improper
personal benefit.
Delaware Law authorizes the corporation to indemnify any person or
party to any threatened, pending or completed action, suit or proceeding, other
than an action by or in the right of the corporation, by reason of the fact that
he or she was serving as a director, officer, employee or agent of the
corporation or is or was serving at the request of the corporation at a like
position of another corporation (the "Indemnitee") against expenses, judgments,
fines and amounts paid in settlement actually and reasonably incurred in
connection with such action if the Indemnitee acted in good faith and in a
manner he or she reasonably believed to be in, or not opposed to, the best
interests of the corporation (or, with respect to a criminal action, had no
reasonable cause to believe his or her conduct was unlawful). Massachusetts Law
contains a similar provision which authorizes the corporation to indemnify such
person against liability incurred in connection with such action if he or she
acted with the same requisite conduct.
Delaware Law also authorizes the corporation to indemnify such person
in connection with any threatened, pending or completed action by or in the
right of the corporation to procure a judgment in its favor against expenses
actually and reasonably incurred by him or her in connection with the defense or
settlement of such action if he or she acted with the requisite conduct.
In Massachusetts, the absence of an express provision for
indemnification does not limit any right of indemnification which exists
independently of the Massachusetts Law. Thus, the stockholders control
indemnification of personnel selected by them and the directors control
indemnification of all other personnel unless such indemnification is restricted
by the corporation's articles of organization or by-laws.
Under both Massachusetts Law and Delaware Law, the corporation must
provide for indemnification on a case by case basis after a determination that
the Indemnitee met the applicable standard of conduct. Similarly, both laws
provide that the determination is made in the first instance by the board of
directors by a majority vote of a quorum consisting of directors who were not
parties to such proceeding. However, under Massachusetts Law, if such a quorum
is not obtainable, or, even if obtainable if the board of directors (including
directors who are parties) so directs, the determination must be made by
majority vote of a committee duly designated by the board of directors
consisting solely of two or more directors not at the time parties to the
proceeding, by independent legal counsel or finally by the stockholders. Under
Delaware Law, if a quorum is not obtainable, or, even if obtainable a quorum of
disinterested directors so
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directs, the determination must be made by independent legal counsel in a
written opinion or by the stockholders.
Furthermore, both Massachusetts Law and Delaware Law provide that a
corporation may make other or further indemnification or advancement of expenses
of any of its directors, officers, employees or agents under any by-law,
agreement, vote of stockholders or disinterested directors, or otherwise both as
to action in an official capacity and as to action in another capacity while
holding such office. OCLI has indemnification agreements with its directors and
officers that provide for the maximum indemnification allowed by law.
OCLI's Certificate takes advantage of the permissive Delaware
indemnification laws and provides that: (i) OCLI is required to indemnify its
officers and directors to the full extent permitted by law; and (ii) expenses
incurred in defending a civil or criminal action, suit or proceeding may be paid
by OCLI in advance of the final disposition of such action, suit or proceeding
upon receipt of an undertaking by or on behalf of the director or officer to
repay such amount if it shall ultimately be determined that he is not entitled
to be indemnified by OCLI.
OCA's Articles contain no specific provision regarding indemnification.
OCA's By-Laws grant the right to indemnification to each person elected or
appointed a director, officer, employee or agent of the corporation except under
circumstances where such individual shall be determined, as provided in the
By-Laws, not to have acted in the best interest of OCA.
Loans to Officers and Employees
Both Massachusetts Law and Delaware Law provide that a corporation may
make loans to, or guarantee the obligations of, or otherwise assist, its
officers and other employees and those of its subsidiaries when such action, in
the judgment of the corporation's board of directors, may reasonably be expected
to benefit the corporation. However, while Massachusetts Law authorizes the
corporation to make a loan to, or guarantee the obligations of, or otherwise
assist a director as well, Delaware Law applies only to those directors who also
are officers or employees of the corporation or subsidiary.
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Voting By Ballot
Under Delaware Law, each stockholder has the right to require a vote by
written ballot for the election of directors at a stockholder meeting unless
otherwise restricted as provided in the certificate of incorporation.
There is no similar voting provision in the Massachusetts Law.
Inspection of Shareholder Lists
Massachusetts Law provides that a stockholder may inspect the
stockholders' list if (i) his demand is made in good faith and for a proper
purpose; (ii) he describes with reasonable particularity his purpose; and (iii)
the stockholders' list is directly connected with his purpose. Additionally,
Massachusetts Law provides to any stockholder an absolute right of inspection of
the stockholders' list for a ten-day period preceding a stockholder meeting.
Delaware Law provides to any stockholder of record the right to inspect the
stockholder list of the corporation for any purpose germane to the meeting for a
ten-day period preceding a stockholder meeting.
DESCRIPTION OF OCLI'S CAPITAL STOCK
The authorized capital stock of OCLI as of the Record Date consisted of
30,000,000 shares of authorized common stock, $.01 par value ("OCLI Common
Stock"), of which 9,728,129 shares were issued and outstanding, and 100,000
shares of authorized preferred stock, $.01 par value, ("OCLI Preferred Stock")
of which 12,000 shares of 8% Series C Convertible Redeemable Preferred Stock(the
"Series C Preferred Stock") were issued and outstanding.
Common Stock
Holders of OCLI Common Stock are entitled to one vote per share on all
matters to be voted upon by the stockholders. There are no cumulative voting
rights. The holders of OCLI Common Stock have no preemptive rights or rights to
convert their OCLI Common Stock into any other securities. The OCLI Common Stock
is not subject to redemption. Upon any liquidation, distribution or sale of
assets, dissolution or winding up of OCLI, the holders of OCLI Common Stock are
entitled to share pro rata in the assets of OCLI available for distribution
after provision for the payment of creditors and subject to the preferential
rights of any then outstanding OCLI Preferred Stock. The outstanding shares of
OCLI Common Stock are fully paid and nonassessable. There are no restrictions on
transferability contained in OCLI's Certificate or OCLI's By-Laws.
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Subject to preferences that may be applicable to any outstanding shares of OCLI
Preferred Stock, holders of OCLI Common Stock are entitled to receive ratably
such dividends as may be declared by the Board of Directors out of funds legally
available therefor. The OCLI Common Stock is listed on the Nasdaq National
Market System.
As of the Record Date, there were outstanding 9,728,129 shares of OCLI
Common Stock. Additional information concerning the rights of holders of OCLI
Common Stock, is set forth under "COMPARISON OF RIGHTS OF HOLDERS OF OCLI COMMON
STOCK AND OCA COMMON STOCK."
Preferred Stock
OCLI has authorized 100,000 shares of preferred stock, $.01 par value,
of which 10,000 shares were designated Series A Preferred Stock in connection
with OCLI's Stockholder Rights Plan. None of the Series A Preferred Stock is
issued. Additionally, 15,000 shares were designated Series B Preferred Stock, of
which 8,350 shares were issued and subsequently converted to OCLI Common Stock.
None of the Series B Preferred Stock is currently issued and outstanding.
In May 1995, as part of the financing of the acquisition of a
controlling interest in Flex Products, Inc., OCLI issued 12,000 shares of Series
C Preferred Stock in consideration for $1,000 per share. The Series C Preferred
Stock is convertible into OCLI Common Stock at any time by the holders at a
conversion price of $10.50 per common share (subject to adjustment in certain
circumstances). The Series C Preferred Stock is redeemable by OCLI commencing
two years from the date of issuance (if the OCLI Common Stock is trading at $17
per share or more for any 20 consecutive day period) and, after three years,
unconditionally, at 108% of the purchase price per share, declining to 100% over
four years. The holders of the Series C Preferred Stock are entitled to receive
a cumulative annual dividend of $80 per share, which is payable quarterly and
has preference to any other dividends being paid by OCLI.
The holders of shares of Series C Preferred Stock are not entitled to
notice of any stockholders' meetings or to vote on any matter, except as
provided by law or as otherwise specified in the Series C Preferred Stock
Certificate of Designation, Preferences and Rights. If, however, dividends on
the Series C Preferred Stock are in arrears in an amount equal to four quarterly
dividends, a default period would begin in which the holders of the Series C
Preferred Stock, voting as a class, would have the right to elect the greater of
two directors or a number of directors not less than 25% of the total number of
authorized directors. Such right terminates upon expiration of the default
period. The holders of the Series C Preferred Stock are entitled to a
liquidation
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preference equal to $1,000 per share plus accrued and unpaid dividends. OCLI may
not create any series or class of capital stock ranking prior or equal to the
Series C Preferred Stock unless the terms of any such series or class is
approved by the holders of not less than two-thirds of the outstanding shares of
Series C Preferred Stock voting separately as a class.
Pursuant to the terms of a Stock Purchase Agreement entered into with
the holders of the Series C Preferred Stock, OCLI may not pay any dividends or
make any other distributions in respect of, or redeem or repurchase any,
securities of OCLI to the extent such payments exceed 25% of the difference
between (a) aggregate "Net Income" (as such term is defined in the Stock
Purchase Agreement) of OCLI after January 31, 1995 and (b) all losses suffered
by OCLI during such period.
Stockholder Rights Plan
OCLI. In November 1987, OCLI adopted a Stockholder Rights Plan which
expires in November 1997, under which OCLI declared a dividend of preferred
stock purchase rights which only become exercisable, if not redeemed, ten days
after a person or group has acquired 20% or more of OCLI Common Stock or the
announcement of a tender offer which would result in a person or group acquiring
30% or more of OCLI Common Stock. Under certain circumstances, the plan allows
stockholders, other than the acquiring person or group, to purchase OCLI Common
Stock or the common stock of the acquirer having a market value of twice the
exercise price.
RELATIONSHIP AND TRANSACTIONS BETWEEN OCLI AND OCA
OCLI and OCA have worked together on several projects over the past six
years. Beginning in 1990, OCLI subcontracted with OCA for the coating of missile
domes for the U.S Department of Defense. Under this arrangement, OCA fabricated
the missile domes in its facilities in Garden Grove, California and sent them to
OCLI to be coated at it facilities in Santa Rosa. Since the initial order, OCLI
has received several follow-up orders from OCA for the coating of the missile
domes in addition to several other smaller coating subcontracts for which OCLI
has received orders worth approximately $657,000 since 1992, including
approximately $40,000 of sales after the second quarter of 1996.
Beginning in 1995, OCA subcontracted with OCLI for the supply of
optical subassemblies and optical fabrication. In fiscal 1995 OCLI placed orders
with OCA worth approximately $75,000 and orders year-to-date in fiscal 1996 are
worth $407,000,
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including approximately $200,000 of open orders at the end of the second quarter
of 1996.
In addition to being both suppliers and customers to each other over
the last several years, OCA and OCLI have both competed for optical filter
business in the defense, aerospace, medical instrumentation and office
automation market segments along with other companies including, but not limited
to, Barr Associates, Optical Filter Corporation, Varo, and Deposition Sciences,
Inc.
BUSINESS OF OCA
General
OCA develops, manufactures and markets optical and electro-optical
products, components and subsystems for a wide range of applications in the
medical, telecommunication, industrial, scientific, aerospace and defense
industries. OCA focuses on four categories of product and related services: (1)
Optical Filters, (2) Electro-Optical Sensors and Cameras, (3) Optical
Correlators and (4) Fiber Optics Communications Devices. OCA also enjoys a
significant business in optical components and subsystems for commercial and
governmental markets.
Products and Services
Optical Filters
OCA designs, manufactures and markets optical filters which incorporate
proprietary technology or multilayer thin film coatings. Optical thin film
coatings control and enhance light energy by altering the transmission,
reflection and absorption of the various wavelengths of light to achieve a
desired optical effect. OCA has developed and patented a thin-film coating
process called MicroPlasmaAE which permits OCA a distinct competitive advantage
in providing high quality optical filters to customers in various industries.
Optical filters are used as components in instruments and systems manufactured
by original equipment manufacturers, principally to bio-medical instrument
manufacturers. OCA has steadily increased its production capacity in this area
and has achieved a high level of automation. OCA expects that an increasing
share of the filters which it manufactures will be used in the production of its
Fiber Optic Communication Devices.
OCA's line of optical filters runs from the ultraviolet through the
visible and into the infrared spectrum of light. OCA also makes filters which
block certain wavelengths of light for eye-safe laser protection devices, and
passive intrusion filters which detect
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heat from bodies approaching a field of view and will activate a switching
mechanism. These products are often termed motion detection devices but in fact
rely on heat transmitted by a source at an infrared wavelength. Optical filters
are produced for a highly competitive market.
Electro-Optical Sensors and Cameras
OCA believes that it is recognized by its customers as an important
supplier of lightweight electro-optical sensor systems for airborne and
spaceborne applications. This recognition stems from OCA's participation in the
Brilliant Pebbles and Clementine Programs in the late 1980s and early 1990s
sponsored by the Strategic Defense Initiative/Ballistic Missile Division, which
allowed OCA to enhance its already strong opto-mechanical background with
state-of-the-art, in-house electronics design and fabrication capabilities.
OCA's color video cameras set a new standard for performance and low
mass. OCA plans to encourage use of this product and technology in both space
related and commercial applications.
OCA's experience with lightweight sensors positions it to capitalize
upon the shift from small numbers of large, costly spacecraft to much larger
numbers of small, relatively inexpensive spacecraft for both government and
commercial applications. OCA anticipates that a substantial fraction of its
future business can be derived from this technology base.
Optical Correlators
OCA has an established reputation in the field of Optical Processing.
Beginning in 1985, OCA became one of the original system hardware innovators in
this field, transforming theoretical analysis and scientific research into
development efforts for field deployable hardware which could be used for target
recognition and target tracking in missile systems. The fundamentals of the
technology employ the inherent strength of optics to process an entire scene of
data instantaneously (at the speed of light). Analytical speed combined with
relatively low power and packaging requirements, yields an attractive technology
for programs which incorporate optical processing. OCA will continue to support
government applications using optical processing for guidance and navigation and
radar imagery analysis; in particular, because optical processing provides the
foundation of its commercial correlator line.
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The potential for commercial applications is found in factory
automation, security, medical imagery and remote sensing imagery. OCA is
developing solutions for each of these applications. For example, OCA will
introduce in 1996 a commercial optical processor. The flash 256 Optical Fourier
Processor is an entirely new product for the image processing industry, with
significant competitive implications.
Fiber Optic Communications Devices
OCA has recently introduced a new line of optical devices for use in
the fiber optic communications market. OCA manufactures four devices
incorporating filters produced by OCA using its patented MicroPlasma(R) coating
process. These devices are (a) a Channel Add/Drop Filter, (b)a Tunable Bandpass
Fiber Optic Filter, (c) a 4 Channel Dense Wavelength Division Multiplexer (DWDM)
and (d) an 8 Channel Dense Wavelength Division Multiplexer (DWDM). These devices
generally operate in the 1530 to 1560 nanometer (nm) range and are unique
because of their ability to operate in a passive mode.
In addition to their narrow bandwidths, their low cross-talk (the
result of OCA's ability to produce 3 cavity and 5 cavity filter designs), low
insertion loss and durability, these devices also demonstrate high wavelength
stability and minimal temperature shift (less than .001 nm/"C temperature
shift). This minimal shift is the result of OCA's MicroPlasma(R) process.
OCA believes its devices are enabling technology which will accommodate
significantly increased data transmission over the existing installed base of
fiber optic cable. While other DWDM devices exist which might compete with those
manufactured by OCA, to date OCA believes its devices are the most advanced, and
filter based devices appear to have a technical advantage over alternative
technologies.
Optical Components and Subsystems
OCA plays significant role in the design and manufacture of leading
edge optical products. OCA has been selected repeatedly by leading commercial,
scientific and defense organizations to work cooperatively under formal teaming
agreements and strategic alliances to develop innovative solutions to optical
design, packaging and manufacturing problems for a wide range of product
applications. The importance of the technologies developed during these projects
continues to grow with the emergence of the small satellite industry for
commercial applications such as Earthwatch. OCA is currently developing the
telescope for the Earthwatch remote sensor which is expected to provide 3 meter
resolution photographs of the earth for commercial users.
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OCA's development of advanced infrared search and track (IRST) and
missile launch detection systems in cooperation with Westinghouse and Lockheed
Martin addresses a growing market for the protection and improvement of our
nation's existing air defense capabilities.
Research and Development
OCA focuses its research and development activities on the development
of new proprietary products, enhancements to existing products, and enhancements
of core technologies. OCA funds these activities from both internal sources and
external contracts.
Manufacturing
OCA's approach is to identify and perform internally those functions
which enable it to maintain control over critical portions of the production
process and which add value to its products. At the same time, OCA's purchasing
departments make every effort to insure that qualified suppliers are available
for functions which are better or more economically performed by others. Both
OCA's California and Massachusetts operations have complete, stand alone
capabilities appropriate to the support of the varying requirements of its
Business and customers. Engineering, manufacturing, sales and marketing
personnel are available at both locations.
In California, OCA designs, manufactures, costs, assembles and tests
electro-optical subsystems and complex electro-optical assemblies for customer
use in infrared, visible and ultraviolet systems. OCA's fabrication capabilities
are sophisticated and include Single Point Diamond Turning, electroless nickel
plating and Beryllium Hot Isostatic Pressing, and allow OCA to produce compact
and lightweight subsystems without the degree of subcontracting required by most
of its competitors.
In Massachusetts, OCA is a leading provider of thin film products for
OEM customers. OCA's state-of-the-art coatings, combined with its proprietary
automation processes, assure a solid market presence. Additional capacity is
being added to meet the forecasted demand for OCA's new products in the fiber
optic communications marketplace. The enabling technology is the optical filter
and OCA produces filters routinely that equate to over $10 million in annual
sales. The packaging capability to support the DWDM product growth is fully
operational.
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Sales, Marketing and Customer Support
The major products of OCA, as well as the Commercial and Government
Optics, are all supported by a direct technical sales force located at OCA's
California and Massachusetts operations. On an international basis, OCA
maintains representatives throughout Europe, Asia and South America.
Patents and Intellectual Property
OCA believes the success of its business depends more upon the technical
competence and creativity of its employees than on its patents, trademarks and
copyrights. Nevertheless, OCA seeks patents, when appropriate, on inventions
concerning new products and improvements as part of its ongoing research,
development and manufacturing activities. OCA also relies upon trade secret
protection for its confidential and proprietary information. OCA routinely
enters into confidentiality agreements with other entities and individuals.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS OF OCA
Overview
Current OCA management has been responsible for operations since March
of 1990. In the past six years, the management team has devoted its attention to
the transformation of a diverse operation, with heavy emphasis on government
contracts, into a unified business with significant commercial product lines.
The Company has materially improved its ability to withstand the fluctuations of
revenues and profits ordinarily expected from reliance on government contracts.
Nine Months ended March 31, 1996 and March 31, 1995
Net Sales: Net sales for the nine months ended March 31, 1996 were
$21.5 million as compared to $19.7 million for the corresponding period a year
ago, representing a 9% increase. This increase was primarily attributable to
increased sales of optical filter products used in biomedical instruments,
expanded sales of commercial optical components and subsystems used in high
precision semiconductor machinery and analytical instruments and sales from our
new product line of fiber optic products used by the telecommunications
industry. Sales of fiber optic products, mainly wavelength division multiplexer
devices, commenced with a low volume of prototype quantities
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during the nine months ended March 31, 1996. During this period the Company
began to ramp up for production of fiber optic products by adding personnel and
equipment.
During the nine months ended March 31, 1996 the combined revenues from
government optical components and subsystems and government electro-optical
sensors and cameras were virtually unchanged from the corresponding period a
year ago.
Gross Profit. Gross profit as a percentage of net sales was 27.6%
during the nine months ended March 31, 1996, a 3.0% improvement over 24.6% in
the corresponding period in 1995. In 1996 the gross profit percentage improved
as a result of increased sales of optical filter products incorporating our
patented MicroPlasma(R) coating process which result in higher margins, and more
favorable pricing of government contracts for optical components and subsystems.
Research and Development. Research and development expenditures for the
nine months ended March 31, 1996 increased by $832,000, or 248%, compared to the
corresponding period a year ago. As a percentage of net sales, research and
development expenditures for the same periods were 5.4% in 1996 compared to 1.7%
in 1995. The increased research and development expenditures relate to our
ongoing development of fiber optic products for the telecommunications industry.
Selling and Administrative. Selling and administrative expenses for the
nine months ended March 31, 1996 increased by $240,000 or 7%, compared to the
corresponding period a year ago. As a percentage of net sales, these
expenditures for the same periods were 17.4% in 1996 compared to 17.8% in 1995,
representing a slight decrease.
Earnings from Operations. The increased gross profit from additional
volume as well as improved product mix and pricing was almost entirely offset by
a higher level of research and development. Therefore, earnings remained
virtually unchanged, at $1.0 million, for the nine month period ended March 31,
1996 versus the same period in 1995.
Interest Expense. Interest expense increased during the nine months
ended March 31, 1996 by $76,000, or 13.8%, compared to the corresponding period
a year ago. The increase is due to a higher level of borrowings, and
specifically relate to $56,000 of interest accrued on the obligation to redeem
common stock held by The Perkin-Elmer Corporation, and $20,000 for other
borrowing.
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Provision For Income Taxes. The Company has a net operating loss
carryforward for federal and state income tax purposes, thus the effective tax
rate is not material. The income taxes for both periods shown are comparable.
Net Income. The Company had net income of $384,000 for the nine months
ended March 31, 1996 compard to $435,000 for the corresponding period a year
ago, a decrease of $51,000. This reduction in net income is principally a result
of increased research and development expenditures and interest expense, offset
by higher gross profit arising from increased sales.
Twelve Months ended June 30, 1995 and June 30, 1994
Net Sales. Net sales for the year ended June 30, 1995 were $26.5
million as compared to $25.2 million for the prior year, representing a 5.4%
increase. The company concentrated its efforts on the development of the
commercial segments of its business with the result that commercial revenues
increased by $6.7 million in 1995. The increase is attributable to expanding our
customer base for commercial optical components and subsystems used in high
precision semiconductor machinery and analytical instruments, and increased
sales of optical filter products used in biomedical instruments. Revenues
generated from government contracts decreased to $10.8 million in 1995 compared
to $16.2 million in 1994.
Gross Profit. Gross profit as a percentage of net sales was 25.0% in
1995, a 1.4% improvement over 23.6% in 1994. This improvement is a result of a
more favorable product mix caused by the Company's increased concentration on
commercial business.
Research and Development. Research and development expenditures in 1995
increased by $469,000, or 474%, compared to 1994. As a percentage of revenues,
research and development expenditures in 1995 were 2.1% compared to 0.4% in
1994. The increased research and development expenditures relate to our ongoing
development of fiber optic products for the telecommunications industry.
Selling and Administrative. Selling and administrative expenses for
1995 decreased $401,000, or 7.8%, compared to 1994. As a percentage of revenues
these expenditures were 18.1% in 1995 compared to 20.7% in 1994. The decrease
for 1995 was primarily attributable a $430,000 charge related to a bad debt in
1994. The customer filed for Chapter 11 protection and was subsequently
liquidated.
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Earnings From Operations. Earnings from operations doubled from
$623,000 in 1994 to $1.2 million in 1995. The increased gross profit from
additional sales volume and a more favorable product mix and lower selling and
administrative expenses resulted in a significant improvement despite a higher
level of research and development.
Interest Expense. Interest expense remained virtually even from 1994 to
1995, and there was no increase in the level of borrowings.
Provision For Income Taxes. The Company had a net operating loss
carryforward for federal and state income tax purposes, thus the effective tax
rate is not material.
Net Income. The Company had a net income of $508,000 in 1995 compared
to a net loss of $147,000 in 1994. The improvement was a result of increased
sales coupled with improved margins in 1995.
Twelve Months ended June 30, 1994 and June 30, 1993
Net Sales. Net sales for the year ended June 30, 1994 were $25.2
million as compared to $27.4 million for the prior year, representing an 8%
decrease. The decrease is directly related to a softening of government
contracts for optical and electro-optical components and subsystems. Revenues
generated from government contracts decreased to $16.2 million in 1994 compared
to $20.6 million in 1993. With the ongoing shrinkage of the defense budget, the
Company concentrated on increasing the commercial segments of its business and
exploring opportunities for new proprietary products. The results of these
efforts are expected to show a continuing improvement in product mix in future
years.
Gross Profit. Gross profit as a percentage of net sales was 23.6% in
19894, a 4.1% improvement over 19.5% in 1993. In 1994, the gross profit
percentage improved as a result of a more favorable product mix, as well as
improvements in optical filter margins from manufacturing cost reductions and
improved productivity.
Research and Development. Research and development expenditures in 1994
decreased by $392,000, or 80%, compared to 1993. As a percentage of revenues,
research and development expenditures in 1994 were 0.4% compared to 1.8% in
1993. However, in 1994 and 1993, the Company received Small Business Innovative
Research (SBIR) Program Contracts. These contracts provide the Company with
government sponsored funds for research and development in specific areas. The
revenue related to the SBIR contracts has been included in net sales and was
approximately $1,453,000 in
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1994 and $355,000 in 1993. Related expenses have been included in cost of goods
sold and were approximately $1,114,000 in 1994 and $254,000 in 1993.
Selling and Administrative. Selling and administrative expenses for
1994 decreased by $692,000, or 12.0% compared to 1993. As a percentage of
revenues these expenditures were 20.7% in 1994 compared to 21.5% in 1993. This
decrease is attributable to the Company's efforts to reduce costs in light of
lower anticipated revenues.
Restructuring Expenses. In 1993, the Company restructured its East
Coast operations by consolidating substantially all of its Westward facility
into its Marlborough facility. As a result of this restructuring, the Company
incurred costs of $833,000 related to a partial termination of the facility
lease and a related sublease, the write-off of certain assets and associated
costs of the restructuring. Concurrently, the Company also restructured its work
force, resulting in $408,000 of severance costs.
Earnings From Operations. Earnings from operations improved in 1994 to
$623,000 compared to a loss of $2.3 million in 1993. This is the result of
improved margins and reductions in expenses, as well as the non-recurring
restructuring charge only affecting 1993.
Interest Expense. Interest expense increased in 1994 by $85,000
compared to 1993. The increase is due to a higher level of borrowings.
Provision For Income Taxes. Due to the net loss in 1993 OCA has a net
operating loss carryforward for federal and state tax purposes. In 1993 a
portion of the tax loss was carried back to prior years resulting in a tax
benefit in 1993.
Net Income. The Company experienced a net loss of $147,000 in 1994 as
compared to a loss of $2.6 million in 1993.
Liquidity and Capital Resources
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Capital Expenditures during the years ended June 30, 1993, 1995 and
1995 were approximately $1.3 million, $.06 million and $1.2 million,
respectively. These expenditures were principally for machinery and equipment to
upgrade production capabilities. The Company's capital equipment purchases
through March 31, 1996 equaled $2.3 million and included approximately $1.1
million for the fiber optics products. The Company expects capital expenditures
in future quarters to continue to be significant as production capacity for
fiber optics products is added to the Company's current manufacturing facility.
At March 31, 1996, the Company had a positive working capital of
approximately $2.0 million, which excludes the amount owed to The Perkin-Elmer
Corporation for the repurchase of the shares of the Company's redeemable common
stock. See Note 5 to the Company's Financial Statements elsewhere herein. The
Company also had approximately $2.6 million of indebtedness for money borrowed
from its bank at March 31, 1996. The Company's availability for further
borrowing, based upon 80% of eligible accounts receivable, was approximately
$600,000 at the same date. The bank's commitment to its line of credit expires
November 1, 1996, and the Company anticipates no difficulty in being able to
obtain a renewal thereof.
In the absence of the proposed Merger transaction, the Company's
present capital resources would be inadequate for its projected needs. The
Company would need to raise additional equity capital in order to be able to
satisfy its obligation to redeem the shares of common stock presently owned by
The Perkin-Elmer Corporation and at the same time remain in compliance with the
terms of its agreements with its lenders. In addition, the Company has a
significant amount of subordinated indebtedness which will mature between July
1, 1997 and June 30, 1999. It is possible that the holders of this subordinated
indebtedness might elect to use a portion of the principal of their notes to pay
the exercise price of the Common Stock Purchase Warrants which they also hold.
However, based upon discussions with its investment advisors, the Company
believes that its current levels of operations and revenues will support its
ability to raise such equity and refinance such indebtedness.
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<PAGE>
OCLI AND OCA MANAGEMENTS
Executive Officers and Directors of OCA
After the Merger, the executive officers and directors of OCA are
expected to be as follows:
Executive Officers
Donald A. Johnson, Chairman and Chief Executive Officer
M.J. Devlin, President and Chief Operating Officer
J. Viggiano, Executive Vice President and General Manager,
East Coast Operations
Directors
Herbert M. Dwight, Jr., Chairman of the Board
Donald A. Johnson, Chief Executive Officer and Director
Joseph C. Zils, Director
Each director is elected to hold office until the next annual meeting
of Shareholders and until his successor is elected and qualified. The term of
office of each officer is one year or until a successor is chosen and qualified.
There are no family relationships among any of the executive officers or
directors.
OCLI Executive Officers and Directors and Executive Compensation
For information concerning the directors and executive officers of OCLI
and the compensation of the directors and executive officers of OCLI, see
"AVAILABLE INFORMATION" and "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
OWNERSHIP OF OCA COMMON STOCK AND OCLI COMMON STOCK
Ownership of OCA Common Stock
The following table sets forth, as of the Record Date, the beneficial
ownership of OCA Common Stock (including, on a pro forma basis, the beneficial
ownership of shares of OCLI Common Stock into which such shares of OCA Common
Stock are convertible upon consummation of the Merger) by (i) all persons known
to OCA to own beneficially five percent or more of the outstanding OCA Common
Stock, (ii) the directors of OCA, (iii) each of the executive officers of OCA
and (iv) the directors and all executive officers
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<PAGE>
of OCA together as a group. The addresses of each such persons are shown below.
The pro forma number of shares of OCLI Common Stock assumes an exchange ratio of
2.042 shares of OCLI Common Stock for each share of OCA Common Stock and assumes
the purchase by OCA, prior to the Effective Date, of the 46,875 shares of OCA
Common Stock held on the Record Date by Perkin-Elmer pursuant to a put option
previously exercised by Perkin-Elmer.
<TABLE>
<CAPTION>
Pro Forma
Ownership of Ownership of OCLI
OCA Common Stock Common Stock
-------------------------- ------------------------
Number of Percentage Number of Percentage
Shares of Shares of
Name and Address of Beneficially Outstanding Beneficially Outstanding
Beneficial Owner Title Owned Shares Owned Shares
<S> <C> <C> <C> <C> <C>
F. Sherman Hoyt Director 115,907 15.50% 236,682 2.10%
39 Main Street
Hollis, NH 03049
Stephen B. Loring Director 93,436 12.50% 190,796 1.70%
61 Lexington Circle
Holden, MA 01520
Donald A. Johnson Chairman, 83,580 11.18% 170,670 1.52%
18 Captain Brown's Lane Director & CEO
Acton, MA 01720
George Olmsted Director 66,524 8.90% 135,842 1.21%
62 Chase Street
Chatham, MA 02633-2404
Edward M. Muller Director 55,413 7.41% 113,153 1.01%
190 Sherman Street
Fairfield, CT 06430
Glen Wegner, M.D., J.D. Director 33,585(1) 4.44% 52,245 0.46%
22 Lathrop Road
Wellesley, MA 02181
Michael J. Devlin Director, 20,000 2.67% 40,840 0.36%
19596 Elmridge Lane President & COO
Huntington Beach, CA 92648
75
<PAGE>
Pro Forma
Ownership of Ownership of OCLI
OCA Common Stock Common Stock
-------------------------- ------------------------
Number of Percentage Number of Percentage
Shares of Shares of
Name and Address of Beneficially Outstanding Beneficially Outstanding
Beneficial Owner Title Owned Shares Owned Shares
John D. Viggiano Director, 19,500 2.61% 39,819 0.35%
84 Emer Road Executive VP
Marlborough, MA 01752 & GM-East Coast
George B. Whelton, Jr. Director 11,510 1.54% 23,503 0.21%
615 Route 13 South
Milford, NH 03055
Directors and Executive
Officers as a group 492,280 65.4% 1,005,236 8.79%
<FN>
(1) Includes 8,000 shares under an option that is exercisable within 60 days of
the Record Date.
</FN>
</TABLE>
Ownership of OCLI Common Stock
After giving effect to the Merger, assuming the purchase of the
Perkin-Elmer shares, full participation in the Merger by all OCA Shareholders
and the prior exercise of all outstanding options and warrants to purchase OCA
Common Stock, there will be approximately 11,430,548 shares of OCLI Common Stock
outstanding. After giving effect to the Merger, OCA Shareholders would own in
the aggregate approximately 14.9% of the issued and outstanding shares of OCLI
Common Stock.
For information concerning the ownership of OCLI Common Stock,
including OCLI Common Stock owned by directors and executive officers of OCLI,
see "AVAILABLE INFORMATION" and "INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE."
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
OCLI and OCA have worked together on several projects over the past six
years. Beginning in 1990, OCLI subcontracted with OCA for the coating of missile
domes for the U.S Department of Defense. Under this arrangement, OCA fabricated
the missile
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<PAGE>
domes in its facilities in Garden Grove, California and sent them to OCLI to be
coated at it facilities in Santa Rosa. Since the initial order, OCLI has
received several follow-up orders from OCA for the coating of the missile domes
in addition to several other smaller coating subcontracts for which OCLI has
received orders worth approximately $657,000 since 1992.
Beginning in 1995, OCA subcontracted with OCLI for the supply of
optical subassemblies and optical fabrication. In fiscal 1995 OCLI placed orders
with OCA worth approximately $75,000 and orders year-to-date in fiscal 1996 are
worth $407,000.
In addition to being both suppliers and customers to each other over
the last several years, OCA and OCLI have both competed for optical filter
business in the defense, aerospace, medical instrumentation and office
automation market segments along with other companies including, but not limited
to, Barr Associates, Optical Filter Corporation, Varo, and Deposition Sciences,
Inc.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the principal federal income tax
consequences of the Merger and is based upon the applicable provisions of the
Internal Revenue Code of 1986, As Amended (the "Code"), regulations thereunder,
and published rulings and court decisions. Neither OCA nor OCLI intend to seek a
ruling from the Internal Revenue Service with regard to the tax consequences of
the Merger.
Under present law, the Merger and the conversion of each share of OCA
Common Stock into OCLI Common Stock should have the following consequences for
federal income tax purposes:
1. The Merger will qualify as a "reorganization" as defined in Code
Sections 368(a)(1)(A) and 368(a)(2)(E).
2. No gain or loss will be recognized by OCA as a result of the Merger.
3. No gain or loss will be recognized by OCA Shareholders who exchange
all of their OCA Common Stock solely for OCLI Common Stock in the Merger.
Shareholders who exercise dissenters' rights will recognize gain or loss upon
the receipt of cash for their shares measured by the difference between the cash
received and the basis of their stock, provided they own no shares of OCLI
Common Stock.
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<PAGE>
4. The aggregate basis of the OCLI Common Stock received by an OCA
Shareholder will be the same as the aggregate basis of such Shareholder in the
OCA Common Stock converted in the Merger.
5. The holding period of the OCLI Common Stock received by an OCA
Shareholder will include the period during which such Shareholder held the OCA
Common Stock converted in the Merger, provided that such stock was held as a
capital asset on the Effective Date.
6. An OCA Shareholder who receives a cash payment in lieu of a
fractional share of OCLI Common Stock will be treated as if such fractional
share were distributed in the Merger and then redeemed by OCLI, and should
recognize capital gain or loss measured by the difference between the amount of
cash received and the Shareholder's basis in the fractional share (which will be
a pro rata portion of the Shareholder's basis in the OCLI Common Stock received
in the Merger), provided that such Shareholder's OCA Common Stock is held as a
capital asset on the Effective Date.
7. No gain or loss for federal income tax purposes will be recognized
by the holder of an option to purchase shares of OCA Common Stock solely as a
result of the conversion of such options into options to purchase OCLI Common
Stock.
In order for the Merger to qualify as a tax-free reorganization, the
OCA Shareholders must have the requisite "continuity of interest" through
ownership of the OCLI Common Stock. It is the ruling position of the Internal
Revenue Service that the "continuity of interest" requirement is satisfied if
there is a continuing interest through stock ownership in the acquiring
corporation on the part of the former shareholders of the acquired corporation,
without any plan or intention by the former shareholders of the acquired
corporation to sell, exchange or otherwise dispose of stock of the acquiring
corporation, that is equal in value, as of the effective date of the
reorganization, to at least 50% of the value of all the formerly outstanding
stock of the acquired corporation as of the same date. There can be no assurance
that the former Shareholders of OCA will not, pursuant to a present plan or
intention, sell or otherwise dispose of the OCLI Common Stock in a sufficient
amount to violate this requirement. However, the holders of a majority of such
shares have represented that they have no such present plan or intention.
Holders of OCA Common Stock are urged to consult with their tax
advisers as to the effect under state, local and foreign income and other tax
laws of the Merger.
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<PAGE>
EXPERTS
The consolidated financial statements and the related financial
statement schedule incorporated in this Registration Statement by reference from
Optical Coating Laboratory, Inc.'s Annual Report on Form 10-K for the year ended
October 31, 1995 have been audited by Deloitte & Touche LLP, independent
auditors as stated in their report, which is incorporated herein by reference,
and have been so incorporated in reliance on the report of such firm given upon
their authority as experts in accounting and auditing.
With respect to the unaudited interim financial information of Optical
Coating Laboratory, Inc. for the periods ended January 28, 1996 and January 31,
1995 and April 28, 1996 and April 30, 1995, which is incorporated herein by
reference, Deloitte & Touche LLP have applied limited procedures in accordance
with professional standards for a review of such information. However, as stated
in their reports included in the Optical Coating Laboratory, Inc.'s Quarterly
Reports on Form 10-Q for the quarters ended January 28, 1996 and January 31,
1995 and April 28, 1996 and April 30, 1995 and incorporated by reference herein,
they did not audit and they do not express an opinion on that interim financial
information. Accordingly, the degree of reliance on their reports on such
information should be restricted in light of the limited nature of the review
procedures applied. Deloitte & Touche LLP are not subject to the liability
provisions of Section 11 of the Securities Act of 1933 for their reports on the
unaudited interim financial information because those reports are not "reports"
or a "part" of the registration statement prepared or certified by an accountant
within the meaning of Sections 7 and 11 of the Act.
The consolidated financial statements of Optical Corporation of America
as of June 30, 1995 and 1994 and for each of the three years in the period ended
June 30, 1995 included and incorporated by reference in this Registration
Statement have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their report, which are included and incorporated by reference
therein, and have been so included and incorporated in reliance upon the report
of such firm given upon their authority as experts in accounting and auditing.
LEGAL OPINIONS
The validity of the OCLI Common Stock to be issued pursuant to the
Merger will be passed upon for OCLI by Collette & Erickson LLP, counsel to OCLI.
Partners in Collette & Erickson LLP own shares of OCLI Common Stock the fair
market value of which exceeds $50,000.
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<PAGE>
OTHER MATTERS
OCA is not aware of any other matters to be presented at the Special
Meeting of Shareholders other than as specified in the notice of such meeting
and this Proxy Statement/Prospectus.
80
<PAGE>
OPTICAL CORPORATION OF AMERICA AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
WITH ACCOUNTANTS' REPORT THEREON
81
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
Section 145 of the General Corporation Law of the State of Delaware, as
amended, gives Delaware corporations the power to indemnify each of their
present and former directors or officers under certain circumstances, if such
person acted in good faith and in a manner which he reasonably believed to be in
or not opposed to the best interests of the corporation.
Article Fourteen of the Registrant's Amended and Restated Certificate
of Incorporation and OCLI's By-Laws provide that OCLI 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 By-Law provisions to its stockholders, who
approved them in March 1987. In addition, OCLI has entered into separate
Indemnification Agreements with its directors and officers to the full extent
permitted by applicable law and OCLI's Certificate of Incorporation. The general
effect of the indemnification provisions of the By-Laws and the Indemnification
Agreements is to require OCLI, 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 OCLI 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 By-law provisions and the separate
Indemnification Agreements are necessary to attract and retain qualified persons
as directors and officers.
At present, OCLI 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.
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<PAGE>
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling OCLI
pursuant to the foregoing provisions, OCLI 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.
The Registrant maintains officers' and directors' insurance covering
certain liabilities that may be incurred by officers and directors in the
performance of their duties.
Item 21. Exhibits and Financial Statement Schedules.
See the Exhibit Index included immediately preceding the exhibits to
this Registration Statement.
Item 22. Undertakings.
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.
(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.
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<PAGE>
(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.
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 that is incorporated by reference in this
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.
The undersigned Registrant hereby undertakes as follows: that prior to
any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed to be underwriters, in addition to the information
called for by the other Items of the applicable form.
The Registrant undertakes that every prospectus (i) that is filed
pursuant to the immediately preceding undertaking or (ii) that purports to meet
the requirements of section 10(a)(3) of the Act and is used in connection with
an offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes 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.
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 such 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
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<PAGE>
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Santa Rosa, California,
on this 9th day of August, 1996.
Optical Coating Laboratory, Inc.
By: /s/ Joseph C. Zils
--------------------------------
Joseph C. Zils
Vice President, General Counsel
and Corporate Secretary
<TABLE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated:
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
Chairman of the Board, President,
and Chief Executive Officer
/s/ Herbert M. Dwight, Jr. (Principal Executive and
- -------------------------------- Operating Officer) August 9, 1996
Herbert M. Dwight, Jr.
Vice President, Finance
and Chief Financial Officer
/s/ John M. Markovich (Principal Financial and
- -------------------------------- Accounting Officer) August 9, 1996
John M. Markovich
/s/ John McCullough
- -------------------------------- Director and Vice President August 9, 1996
John McCullough
/s/ Douglas C. Chance
- -------------------------------- Director August 9, 1996
Douglas C. Chance
/s/ Julian Schroeder
- -------------------------------- Director August 9, 1996
Julian Schroeder
/s/ Renn Zaphiropoulos
- -------------------------------- Director August 9, 1996
Renn Zaphiropoulos
</TABLE>
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INDEX TO EXHIBITS
Exhibit
Number Exhibit
2+ Agreement and Plan of Merger by and among Optical Coating Laboratory,
Inc., a Delaware corporation, OCA Acquisition Corp., a Delaware
corporation, and Optical Corporation of America, a Massachusetts
corporation, dated June 28, 1996.
3.1+ Articles of Organization of Optical Corporation of America dated May
13. 1985, as amended, June 18, 1985, July 24, 1986 and October 29,
1990.
3.2+ By-Laws of Optical Corporation of America.
4.1 Rights Agreement between the Registrant and First Interstate Bank of
California dated November 25, 1987. Incorporated by reference to
Exhibit (4) of the Registrant's Form 10-K for the year ended October
31, 1987.
4.2 Note Purchase Agreement(s) dated as of May 27, 1994 for the private
placement of $18,000,000 of 8.71% Senior Notes due June 1, 2002 between
the Registrant and Connecticut Mutual Life Insurance Company, Modern
Woodman of America and American Life and Casualty Insurance Company.
Incorporated by reference to Exhibit (4)(a) of the Registrant's Form
10-Q for the quarter ended July 31, 1994.
4.3 Stock Purchase Agreement dated as of February 8, 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 the Registrant's Form 10-Q for the quarter
ended April 30, 1995.
4.4 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.
Incorporated by reference to Exhibit 4(e) of Registrant's Form S-8
dated July 6, 1995.
4.5 Certificate of Designation, Preferences and Rights of Series C
Convertible Redeemable Preferred Stock of Optical Coating Laboratory,
Inc. dated May 2, 1995. Incorporated by reference to Exhibit 4(f) of
Registrant's Form S-8 dated July 6, 1995.
5* Opinion and consent of Collette & Erickson.
10(a)+ Loan and Security Agreement between Silicon Valley Bank and Optical
Corporation of America dated May 27, 1994, as amended November 27,
1995.
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10(b)+ Warrant to Purchase Stock issued to Silicon Valley Bank by Optical
Corporation of America dated May 27, 1994.
10(c)+ Registration Rights Agreement between Silicon Valley Bank and Optical
Corporation of America dated May 27, 1994.
10(d)+ Anti-Dilution Agreement between Silicon Valley Bank and Optical
Corporation of America dated May 27, 1994.
10(e)+ Collateral Assignment, Patent Mortgage and Security Agreement between
Silicon Valley Bank and Optical Corporation of America dated May 27,
1994.
10(f)+ Promissory Note between General Electric Capital Corporation and
Optical Corporation of America dated June 23, 1994.
10(g)+ Master Security Agreement between General Electric Capital Corporation
and Optical Corporation of America dated June 21, 1994.
10(h)+ Inter-Creditor Agreement between General Electric Capital Corporation
and Optical Corporation of America dated June 21, 1994.
10(i)+ Promissory Note between General Electric Capital Corporation and
Optical Corporation of America dated December 28, 1995.
10(j)+ Cross-Collateral and Cross-Default Agreement between General Electric
Capital Corporation and Optical Corporation of America dated December
28, 1995.
10(k)+ Promissory Note between Perkin-Elmer Corporation and Optical
Corporation of America dated February 1, 1994.
10(l)+ Subordinated Note and Warrant Purchase Agreement between Massachusetts
Capital Resource Company and Optical Corporation of America dated May
28, 1992, as amended on March 14, 1994, June 30, 1994, September 30,
1994, July 20, 1995 and August 30, 1995.
10(m)+ Subordinated Note Due 1999 Issued to Massachusetts Capital Resource
Company By Optical Corporation of America dated May 28, 1992.
10(n)+ Common Stock Purchase Warrant Issued to Massachusetts Capital Resource
Company By Optical Corporation of America dated May 28, 1992.
10(o)+ Security Agreement between Massachusetts Capital Resource Company and
Optical Corporation of America dated March 15, 1994.
10(p)+ Subordinated Note and Warrant Purchase Agreement between Massachusetts
Capital Resource Company and Optical Corporation of America dated June
30, 1993.
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10(q)+ Patent Licensing Agreement between John Wilbur Hicks and Optical
Corporation of America dated May 30, 1995.
10(r)+ Agreement between John Wilbur Hicks and Optical Corporation of America
dated February 21, 1995.
10(s) Inter-Creditor Agreement between General Electric Capital Corporation
and Optical Corporation of America dated December 28, 1995.
11 Computation of per share earnings. Incorporated by reference to Exhibit
11 of Optical Coating Laboratory, Inc.'s Form 10-Q for the quarter
ended April 28, 1996.
13(a) Registrant's 1995 Annual Report to Stockholders for the fiscal year
ended October 31, 1995, not deemed to be filed herein except for
certain portions which have been incorporated herein by reference.
Incorporated by reference to the Registrant's Form 10-K for the year
ended October 31, 1995.
13(b) Registrant's Quarterly Report on Form 10-Q for the quarter ended
January 28, 1996 incorporated herein by reference.
13(c) Registrant's Quarterly Report on Form 10-Q for the quarter ended April
28, 1996 incorporated herein by reference.
15(a)* Letter of Deloitte & Touche LLP, San Francisco, California regarding
OCLI's unaudited interim financial information.
15(b)* Letter of Deloitte & Touche LLP, Costa Mesa, California regarding
OCLI's unaudited interim financial information.
23(a)* Consent of Deloitte & Touche LLP, San Francisco, California.
23(b)* Consent of Deloitte & Touche LLP, Costa Mesa, California.
23(c)* Consent of Counsel, Collette & Erickson, San Francisco, California
(included in Exhibit 5).
27+ Financial Data Schedule
99+ Form of proxy.
+ Items not previously filed.
* To be filed by amendment.
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APPENDIX 1
Massachusetts Business Corporation Law
Mass. Ann. Laws ch. 156B (1996)
S 85. Rights of Minority Stockholder, etc.
A stockholder in any corporation organized under the laws of Massachusetts
which shall have duly voted to consolidate or merge with another corporation or
corporations under the provisions of sections seventy-eight or seventy-nine who
objects to such consolidation or merger may demand payment for his stock from
the resulting or surviving corporation and an appraisal in accordance with the
provisions of sections eighty-six to ninety-eight, inclusive, and such
stockholder and the resulting or surviving corporation shall have the rights and
duties and follow the procedure set forth in those sections. This section shall
not apply to the holders of any shares of stock of a constituent corporation
surviving a merger if, as permitted by subsection (c) of section seventy-eight,
the merger did not require for its approval a vote of the stockholders of the
surviving corporation.
HISTORY: 1964, 723, S 1; 1969, 392, S 22.
S 86. Applicability of S 87 to 98; Prerequisites of Objecting Stockholder's
Right to Demand Payment for Shares and Appraisal Thereof.
If a corporation proposes to take a corporate action as to which any section
of this chapter provides that a stockholder who objects to such action shall
have the right to demand payment for his shares and an appraisal thereof,
sections eighty-seven to ninety-eight, inclusive, shall apply except as
otherwise specifically provided in any section of this chapter. Except as
provided in sections eighty-two and eighty-three, three, no stockholder shall
have such right unless (1) he files with the corporation before the taking of
the vote of the shareholders on such corporate action, written objection to the
proposed action stating that he intends to demand payment for his shares if the
action is taken and (2) his shares are not voted in favor of the proposed
action.
HISTORY: 1964, 723, S 1; 1965, 685, S 40; 1973, 749, S 1.
<PAGE>
S 87. Notice of Certain Stockholders' Meetings to Contain Statement of Rights of
Objecting Stockholders; Effect of Giving Notice; Form.
The notice of the meeting of stockholders at which the approval of such
proposed action is to be considered shall contain a statement of the rights of
objecting stockholders. The giving of such notice shall not be deemed to create
any rights in any stockholder receiving the same to demand payment for his
stock, and the directors may authorize the inclusion in any such notice of a
statement of opinion by the management as to the existence or non-existence of
the right of the stockholders to demand payment for their stock on account of
the proposed corporate action. The notice may be in such form as the directors
or officers calling the meeting deem advisable, but the following form of notice
shall be sufficient to comply with this section:
"If the action proposed is approved by the stockholders at the meeting and
effected by the corporation, any stockholder (1) who files with the corporation
before the taking of the vote on the approval of such action, written objection
to the proposed action stating that he intends to demand payment for his shares
if the action is taken and (2) whose shares are not voted in favor of such
action has or may have the right to demand in writing from the corporation (or,
in the case of a consolidation or merger, the name of the resulting or surviving
corporation shall be inserted), within twenty days after the date of mailing to
him of notice in writing that the corporate action has become effective, payment
for his shares and an appraisal of the value thereof. Such corporation and any
such stockholder shall in such cases have the rights and duties and shall follow
the procedure set forth in sections 88 to 98, inclusive, of chapter 156B of the
General Laws of Massachusetts."
HISTORY: 1964, 723, S 1; 1973, 749, S 2.
S 88. Corporation Taking Action, etc., to Notify Certain Objecting Stockholders
that Certain Approved Action Has Become Effective, etc.
The corporation taking such action, or in the case of a merger or
consolidation the surviving or resulting corporation, shall, within ten days
after the date on which such corporate action became effective, notify each
stockholder who filed a written objection meeting the requirements of section
eighty-six and whose shares were not voted in favor of the approval of such
action, that the
2
<PAGE>
action approved at the meeting of the corporation of which he is a stockholder
has become effective. The giving of such notice shall not be deemed to create
any rights in any stockholder receiving the same to demand payment for his
stock. The notice shall be sent by registered or certified mail, addressed to
the stockholder at his last known address as it appears in the records of the
corporation.
HISTORY: 1964, 723, S 1; 1973, 749, S 3.
S 89. Corporation to Pay to Certain Objecting Stockholders Fair Value of Their
Shares on Demand, etc.
If within twenty days after the date of mailing of a notice under subsection
(e) or section eighty-two, subsection (f) of section eighty-three, or section
eighty-eight, any stockholder to whom the corporation was required to give such
notice shall demand in writing from the corporation taking such action, or in
the case of a consolidation or merger from the resulting or surviving
corporation, payment for his stock, the corporation upon which such demand is
made shall pay to him the fair value of his stock within thirty days after the
expiration of the period during which such demand may be made.
HISTORY: 1964, 723, S 1; 1973, 749, S 4.
S 90. Bill in Equity to Determine Value of Stock of Objecting Stockholders on
Failure to Agree on Value Thereof, etc.
If during the period of thirty days provided for in section eighty-nine the
corporation upon which such demand is made and any such objecting stockholder
fail to agree as to the value of such stock, such corporation or any such
stockholder may within four months after the expiration of such thirty-day
period demand a determination of the value of the stock of all such objecting
stockholders by a bill in equity filed in the superior court in the county where
the corporation in which such objecting stockholder held stock had or has its
principal office in the commonwealth.
HISTORY: 1964, 723, S 1.
S 91. Bill in Equity to Determine Value of Stock of Objecting Stockholders on
Failure to Agree on Value Thereof, etc.; Parties to Bill, etc.; Service of Bill
on Corporation; Notice to Stockholder Parties, etc.
3
<PAGE>
If the bill is filed by the corporation, it shall name as parties respondent
all stockholders who have demanded payment for their shares and with whom the
corporation has not reached agreement as to the value thereof. If the bill is
filed by a stockholder, he shall bring the bill in his own behalf and in behalf
of all other stockholders who have demanded payment for their shares and with
whom the corporation has not reached agreement as to the value thereof and
service of the bill shall be made upon the corporation by subpoena with a copy
of the bill annexed. The corporation shall file with its answer a duly verified
list of all such other stockholders, and such stockholders shall thereupon be
deemed to have been added as parties to the bill. The corporation shall give
notice in such form and returnable on such date as the court shall order to each
stockholder party to the bill by registered or certified mail, addressed to the
last known address of such stockholder as shown in the records of the
corporation, and the court may order such additional notice by publication or
otherwise as it deems advisable. Each stockholder who makes demand as provided
in section eighty-nine shall be deemed to have consented to the provisions of
this section relating to notice, and the giving of notice by the corporation to
any such stockholder in compliance with the order of the court shall be a
sufficient service of process on him. Failure to give notice to any stockholder
making demand shall not invalidate the proceedings as to other stockholders to
whom notice was properly given, and the court may at any time before the entry
of a final decree make supplementary orders of notice.
HISTORY: 1964, 723, S 1.
S 92. Bill in Equity to Determine Value of Stock of Objecting Stockholders on
Failure to Agree on Value Thereof, etc.; Entry of Decree Determining Value of
Stock; Date on Which Value is to Be Determined.
After hearing the court shall enter a decree determining the fair value of
the stock of those stockholders who have become entitled to the valuation of and
payment for their shares, and shall order the corporation to make payment of
such value, together with interest, if any, as hereinafter provided, to the
stockholders entitled thereto upon the transfer by them to the corporation of
the certificates representing such stock if certificated or, if uncertificated,
upon receipt of an instruction transferring such stock to the corporation. For
this purpose, the value of the shares shall be determined as of the day
preceding the date of the vote approving the proposed corporate action
4
<PAGE>
and shall be exclusive of any element of value arising from the expectation or
accomplishment of the proposed corporate action.
HISTORY: 1964, 723, S 1.
Amended by 1983, 522, S 22, approved November 29, 1983; by S 24, effective
March 1, 1984.
S 93. Bill in Equity to Determine Value of Stock of Objecting Stockholders on
Failure to Agree on Value Thereof, etc.; Court May Refer Bill, etc., to Special
Master to Hear Parties, etc.
The court in its discretion may refer the bill or any question arising
thereunder to a special master to hear the parties, make findings and report the
same to the court, all in accordance with the usual practice in suits in equity
in the superior court.
HISTORY: 1964, 723, S 1.
S 94. Bill in Equity to Determine Value of Stock of Objecting Stockholders
Upon Failure to Agree Thereon; Notation of Pendancy of Bill on Stock
Certificates; Notation of Pendancy of Bill in Corporate Records Relative to
Uncertified Shares.
On motion the court may order stockholder parties to the bill to submit their
certificates of stock to the corporation for the notation thereon of the
pendancy of the bill and may order the corporation to note such pendancy in its
records with respect to any uncertificated shares held by such stockholder
parties, and may on motion dismiss the bill as to any stockholder who fails to
comply with such order.
HISTORY: 1964, 723, S 1.
Amended by 1983, 522, S 23, approved November 29, 1983; by S 24, effective
March 1, 1984.
S 95. Bill in Equity to Determine Value of Stock of Objecting Stockholders on
Failure to Agree on Value Thereof, etc.; Taxation of Costs, etc.; Interest on
Award, etc.
The costs of the bill, including the reasonable compensation and expenses of
any master appointed by the court, but exclusive of fees of counsel or of
experts retained by any party, shall be determined by the court and taxed upon
the parties to the bill, or any of them, in such
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<PAGE>
manner as appears to be equitable, except that all costs of giving notice to
stockholders as provided in this chapter shall be paid by the corporation.
Interest shall be paid upon any award from the date of the vote approving the
proposed corporate action, and the court may on application of any interested
party determine the amount of interest to be paid in the case of any
stockholder.
HISTORY: 1964, 723, S 1; 1965, 685, S 41.
S 96. Stockholder Demanding Payment for Stock Not Entitled to Notice of
Stockholders' Meetings or to Vote Stock or to Receive Dividends, etc.;
Exceptions.
Any stockholder who has demanded payment for his stock as provided in this
chapter shall not thereafter be entitled to notice of any meeting of
stockholders or to vote such stock for any purpose and shall not be entitled to
the payment of dividends or other distribution on the stock (except dividends or
other distributions payable to stockholders of record at a date which is prior
to the date of the vote approving the proposed corporate action) unless:
(1) A bill shall not be filed within the time provided in section ninety;
(2) A bill, if filed, shall be dismissed as to such stockholder; or
(3) Such stockholder shall with the written approval of the corporation, or
in the case of a consolidation or merger, the resulting or surviving
corporation, deliver to it a written withdrawal of his objections to and an
acceptance of such corporate action.
Notwithstanding the provisions of clauses (1) to (3) , inclusive, said
stockholder shall have only the rights of a stockholder who did not so demand
payment for his stock as provided in this chapter.
HISTORY: 1964, 723, S 1.
Amended by 1982, 149, approved June 14, 1982, effective 90 days thereafter.
S 97. Certain Shares Paid for by Corporation to Have Status of Treasury Stock,
etc.
The shares of the corporation paid for by the corporation pursuant to the
provisions of this chapter shall have the status of treasury stock, or in the
case of a consolidation or merger the shares or the securities of the resulting
or surviving corporation into which the shares of such objecting stockholder
would have been converted had he not
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<PAGE>
objected to such consolidation or merger shall have the status of treasury stock
or securities.
HISTORY: 1964, 723, S 1; 1965, 685, S 42.
S 98. Enforcement by Stockholder of Right to Receive Payment for His Shares to
Be Exclusive Remedy; Exception.
The enforcement by a stockholder of his right to receive payment for his
shares in the manner provided in this chapter shall be an exclusive remedy
except that this chapter shall not exclude the right of such stockholder to
bring or maintain an appropriate proceeding to obtain relief on the ground that
such corporate action will be or is illegal or fraudulent as to him.
HISTORY: 1964, 723, S 1; 1965, 685, S 43.
7
EXHIBIT 2
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
OPTICAL COATING LABORATORY, INC.,
A DELAWARE CORPORATION ("OCLI")
OCA ACQUISITION CORP.,
A DELAWARE CORPORATION ("ACQUISITION")
AND
OPTICAL CORPORATION OF AMERICA,
A MASSACHUSETTS CORPORATION ("OCA")
<PAGE>
AGREEMENT AND PLAN OF MERGER
TABLE OF CONTENTS
ARTICLE 1
THE MERGER
1.1. Agreement and Plan of Merger ............................... 1
1.2. Conversion of OCA's Shares ................................. 2
1.3. OCA Stock Options and Warrants ............................. 2
1.4. Limit on Issuance of OCLI Shares ........................... 3
1.5. Dissenting Shares .......................................... 3
1.6. Payment for the OCA Shares ................................. 3
1.7. Escrow Account ............................................. 4
1.8. Certain Other Agreements ................................... 5
1.9. No Fractional Shares of OCLI Common Stock .................. 5
1.10. Adjustments ................................................ 6
1.11. Closing of Stock Transfer Books ............................ 6
1.12. Lost Certificates .......................................... 6
1.13. Conversion of Acquisition Shares ........................... 7
1.14. Adoption ................................................... 7
ARTICLE II
CLOSING
2.1. Time and Place of Closing ................................... 7
2.2. Consummation of the Merger .................................. 8
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1. Definitions ................................................. 8
3.2. Representations and Warranties
Pertaining to OCA .......................................... 9
3.3. Representations and Warranties of
OCLI and Acquisition ........................................ 35
3.4. Representations and Warranties are Separate ................. 43
ARTICLE IV
COVENANTS
4.1. Acts of OCA ................................................. 43
4.2. Acts of OCLI ................................................ 46
4.3. Satisfaction of Conditions Precedent ........................ 46
4.4. Access to Records and Properties ............................ 47
4.5. Preparation of Registration Statement ....................... 48
4.6. Distribution of Proxy Materials;
Shareholders' Approval ...................................... 48
4.7. Certain Employee Benefits Matters ........................... 49
4.8. Expenses .................................................... 49
4.9. Indemnification of OCA by OCLI .............................. 50
<PAGE>
ARTICLE V
CONDITIONS TO OBLIGATIONS OF OCLI,
ACQUISITION AND OCA
5.1. Conditions to Obligations of OCLI
and Acquisition ............................................. 50
5.2. Conditions to Obligations of OCA ............................ 53
ARTICLE VI
MODIFICATION, TERMINATION AND WAIVER
6.1. Modification, Amendments and Waivers ........................ 56
6.2. Waivers ..................................................... 56
6.3. Termination ................................................. 56
6.4. Effect of Termination ....................................... 57
ARTICLE VII
REGISTRATION
7.1. Certain Definitions .......................................... 57
7.2. Incidental Registration ...................................... 57
7.3. Conditions to Obligation to Register Shares .................. 58
7.4. Registration Procedures ...................................... 58
7.5. Description of Expenses ...................................... 60
7.6. Indemnification Underwriting Agreements ...................... 60
ARTICLE VIII
GENERAL
8.1. Notices ..................................................... 62
8.2. Survival and Materiality of Representations ................. 62
8.3. Entire Agreement ............................................ 63
8.4. Parties in Interest ......................................... 63
8.5. No Implied Rights or Remedies ............................... 63
8.6. Headings .................................................... 63
8.7. Severability ................................................ 63
8.8. Counterparts ................................................ 63
8.9. No Solicitation ............................................. 63
8.10. Relief ...................................................... 64
8.11. Exhibits .................................................... 64
8.12. Assignment .................................................. 64
8.13. Further Assurances .......................................... 64
8.14. Gender ...................................................... 64
8.15. Public Announcement ......................................... 64
8.16. Governing Law ............................................... 64
ii
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT is executed as of June 28, 1996, by and among Optical
Coating Laboratory, Inc., a Delaware corporation, having an office at 2789
Northpoint Parkway, Santa Rosa, California 95407 ("OCLI"), OCA Acquisition
Corp., a Delaware corporation and a wholly-owned subsidiary of OCLI having an
address in OCLI's care ("Acquisition"), and Optical Corporation of America, a
Massachusetts corporation having an office at 170 Locke Drive, Marlborough,
Massachusetts 01752 and its Headquarters address at 7421 Orangewood Avenue,
Garden Grove, California 92641 ("OCA").
WHEREAS, the Boards of Directors of Acquisition and OCA deem it in the
best interest of such corporations and their respective shareholders that
Acquisition be merged into and with OCA on the terms and conditions set forth in
this Agreement, as a result of which OCA will become a wholly-owned subsidiary
of OCLI; and
WHEREAS, the Board of Directors of OCLI has approved the merger;
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements hereinafter set forth, and other good and valuable consideration, the
receipt of which is acknowledged by each party hereto, the parties hereto agree
as follows:
ARTICLE 1
THE MERGER
1.1. Agreement and Plan of Merger. Effective as of the Effective Date (as
defined in Section 2.2 below), Acquisition shall be merged with and into OCA
(hereinafter sometimes called the "Merger") in accordance with the terms of this
Agreement. OCA shall be the corporation surviving the Merger (the "Surviving
Corporation"), and the separate existence of Acquisition shall cease as of the
Merger. The Articles of Organization and Bylaws of OCA, in effect immediately
prior to the effective time of the Merger, shall thereafter continue in full
force and effect as the Articles of Organization and Bylaws of the Surviving
Corporation. The directors and officers of the Surviving Corporation, from and
after the Effective Date, shall be the directors and officers listed in the
Articles of Merger as defined in Section 2.2, each to hold office in accordance
with applicable law and the Articles of Organization and Bylaws
<PAGE>
of OCA. The effect of the Merger shall be as provided by applicable provisions
of the Delaware General Corporation Law ("DGCL") and the Massachusetts Business
Corporation Law ("MBCL").
1.2. Conversion of OCA's Shares. At the effective time of the Merger, each
share of OCA's common stock, $.01 par value ("OCA Common Stock"), outstanding
immediately prior thereto (herein referred to as a "OCA Share" and collectively
as the "OCA Shares") shall, by virtue of the Merger and without any action on
the part of the holder thereof, but subject to this Section and to Sections 1.4,
1.5, 1.6 and 1.7 below, be canceled and converted into the right to receive two
and 42/1000 (2.042) shares (the "OCLI Shares") of OCLI common stock, $0.01 par
value (the "OCLI Common Stock"). The whole and fraction of an OCLI Share into
which each OCA Share is to be converted pursuant to this Agreement is
hereinafter referred to as the "Exchange Ratio."
1.3. OCA Stock Options and Warrants. At or prior to the Effective Date,
OCLI and OCA shall take all action necessary to cause the assumption by OCLI as
of the Effective Date of the options and warrants to purchase OCA Common Stock
which are listed in the Disclosure Schedule described in Section 3.2 (the
"Disclosure Schedule"), outstanding as of the Effective Date (the "OCA
Options"). Each of the OCA Options shall be converted without any action on the
part of the holder thereof (but subject to any amendments thereto or waivers of
the terms and provisions thereof as may be required to permit such conversion,
as may be specified in the Disclosure Schedule) into an option to purchase
shares of OCLI Common Stock (the "OCLI Options") as of the Effective Date. The
number of shares of OCLI Common Stock that each record holder of an option or
warrant agreement which represents OCA Options (the "Optionholders") shall be
entitled to receive upon the exercise of such OCA Option shall be a number of
whole and fractional shares determined by multiplying the number of shares of
OCA Common Stock subject to such OCA Option, determined at the close of business
on the business day immediately preceding the Effective Date, by the Exchange
Ratio. The option exercise price of each share of OCLI Common Stock subject to
an assumed OCA Option shall be the amount (rounded up to the nearest whole cent)
obtained by dividing the exercise price per share of OCA Common Stock at which
such OCA Option is exercisable immediately before the Effective Date by the
Exchange Ratio. Except as described in the Disclosure Schedule, the assumption
and conversion of OCA Options to OCLI Options as provided herein shall not give
the
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<PAGE>
Optionholders additional benefits which they did not have immediately prior to
the Effective Date, result in any acceleration of any vesting schedule for any
OCA Option, or relieve the Optionholders of any obligations or restrictions
applicable to their OCA Options or the shares obtainable upon exercise of the
OCA Options. Only whole shares of OCLI Common Stock shall be issued upon
exercise of any OCLI Option and in lieu of receiving any fractional share of
OCLI Common Stock, the holder of such option shall receive in cash the fair
market value of the fractional share, net of the applicable exercise price of
the fractional share and applicable withholding taxes, if any.
1.4. Limit on Issuance of OCLI Shares. Anything to the contrary herein
notwithstanding, the total number of OCLI Shares which shall be required to be
issued pursuant to Section 1.2 and upon the exercise of OCA Options that are
converted into OCLI Options pursuant to Section 1.3 (calculated as if all such
OCLI Options are exercised on the Effective Date) shall not (except as such
number of shares shall be required to be adjusted pursuant to Section 1.10)
exceed 1,930,869. In the event that the application of the Exchange Ratio set
forth in Section 1.2 could result in the issuance of more than 1,930,869 Shares,
such Exchange Ratio rate shall be automatically adjusted such that the total
number of OCLI Shares will not exceed 1,930,869.
1.5. Dissenting Shares. Each outstanding OCA Share held by an OCA
shareholder who has demanded and perfected his or her right to an appraisal of
his or her OCA Shares in accordance with Sections 85-98 of the MBCL and who has
not effectively withdrawn or lost his or her right to such appraisal
("Dissenting Shares") shall not be converted into or represent the right to
receive the OCLI Shares represented by such OCA Shares pursuant to Section 1.2
above, but the holder thereof shall be entitled only to such rights as are
granted by Sections 85-98 of the MBCL.
1.6. Payment for the OCA Shares. Promptly following the Effective Date of
the Merger, First Interstate Bank of California (or its successor-in-interest),
OCLI's stock transfer agent (the "Exchange Agent"), shall transmit to each
record holder of an outstanding certificate which prior thereto represented OCA
Shares (the "Shareholders") a form of letter of transmittal and instructions for
use in effecting the surrender of such certificate and/or option or warrant
agreement in exchange for the OCLI Shares represented by such OCA Shares or
exercised OCA Option. Upon the surrender to the Exchange Agent of such
certificates and a duly executed letter of transmittal and
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<PAGE>
any required tax certifications, in accordance with such instructions, the
Exchange Agent shall deliver a certificate for the OCLI Shares that such person
is entitled to receive, minus the deduction specified in Section 1.7 and cash
(if any) to which such holder is entitled pursuant to Sections 1.2, 1.9 and 1.10
of this Agreement. It shall be a condition of such payment and delivery that the
surrendered certificate be properly endorsed or otherwise in proper form for
transfer and that the person requesting such shall pay any transfer or other
taxes required by reason of such payment or delivery or establish to the
satisfaction of the Exchange Agent, OCLI and/or the Surviving Corporation that
such tax has been paid or is not applicable. Until so surrendered for exchange,
each certificate heretofore representing OCA Common Stock (other than Dissenting
Shares) shall, subject to Section 1.7 hereof, be deemed for all purposes to
evidence the right to receive the consideration as described in accordance with
Section 1.2 above; provided, however, that unless and until any such outstanding
certificate is so surrendered, the holder of such outstanding certificate shall
cease to have any rights as a stockholder of OCA, except such rights, if any, as
such holder may have with respect to Dissenting Shares and shall not be entitled
to receive any consideration from the Surviving Corporation and/or OCLI with
respect to the OCA Shares represented by such certificate. Unless and until any
such outstanding certificates for OCA Shares shall be so surrendered, no
dividend (cash or stock) payable to holders of record of shares of OCLI Common
Stock as of any date subsequent to the Effective Date shall be paid to the
holder of any such outstanding certificate and his other rights as a stockholder
of OCLI shall be suspended, but upon such surrender of such outstanding
certificate there shall be paid to the record holder of the certificate of
shares of OCLI Common Stock issued in exchange therefor the amount of dividends,
if any, without interest and less any taxes which may have been imposed thereon,
that have theretofore become payable with respect to the number of those shares
of OCLI Common Stock represented by such certificate issued upon such surrender
and exchange, and his other rights as a stockholder of OCLI shall thereafter be
restored.
1.7. Escrow Account. For the purpose of providing support of the
representations and warranties contained herein and to induce OCLI to enter into
this Agreement, ten percent (10%) of OCLI Shares each Shareholder has the right
to beneficially receive pursuant to Section 1.2 shall be withheld from payment
to such Shareholder pursuant to Section 1.2 and shall be set aside in escrow
pursuant to the terms of an Indemnification and Stock Escrow Agreement to be
4
<PAGE>
entered into at the Closing by and among OCLI, OCA, the Shareholder
Representative (as defined therein) and First Interstate Bank, as escrow agent,
in the form of Exhibit A attached hereto and incorporated herein by reference
(the "Escrow Agreement"). The amount of shares placed in escrow pursuant to this
Section 1.7 shall be considered the "Escrowed Shares." The Escrowed Shares shall
be held as a trust fund and shall not be subject to any lien, attachment,
trustee process or any other judicial process of any creditor of any party, and
shall be held and disbursed by the Escrow Agent solely for the purposes and in
accordance with the terms of the Escrow Agreement. It is intended that the
assets held in escrow as above provided shall facilitate OCLI's and the
Surviving Corporation's ability to recover amounts to which they are entitled
under this Agreement or the Escrow Agreement and to satisfy claims of OCLI and
Acquisition arising as a result of this Agreement or the Escrow Agreement.
Accordingly, and to the extent necessary to provide such protection to OCLI and
the Surviving Corporation, property held in escrow thereunder shall be available
to satisfy claims of OCLI and the Surviving Corporation under this Agreement or
the Escrow Agreement to the extent provided in such agreements. The adoption of
this Agreement and the approval of the Merger by the Shareholders shall
constitute approval of the Escrow Agreement, including without limitation,
placement and escrow of the Escrowed Shares and the appointment of the
Shareholder Representative.
1.8. Certain Other Agreements. Concurrently with the execution and delivery
of this Agreement, OCA shall cause each individual identified in Exhibit B
("Affiliate") to deliver to OCLI an Affiliate Agreement in the form of Exhibit C
attached hereto and a Continuity of Interest Certificate in the form attached as
Exhibit D hereto, each duly executed and delivered by such Affiliates
(collectively, the "Affiliate Agreements").
1.9. No Fractional Shares of OCLI Common Stock. Notwithstanding any other
provision of this Agreement, neither certificates nor scrip for fractional
shares of OCLI Common Stock shall be issued to any holder of OCA Common Stock in
the Merger and the holder thereof shall not be entitled to any voting or other
rights of a holder of shares or a fractional share interest. Each OCA
Shareholder who otherwise would have been entitled to receive a fraction of a
share of OCLI Common Stock shall receive in lieu thereof cash, without interest,
in an amount determined by multiplying such Shareholder's fractional interest by
the closing price of OCLI Common Stock as reported on the Nasdaq
5
<PAGE>
National Market System on the Effective Date. All amounts of cash in respect of
fractional interests which have not been claimed at the end of three years from
the Effective Date by surrender of certificates for shares of OCA Common Stock
shall be delivered by the Exchange Agent to the Surviving Corporation, subject
to the provisions of applicable escheat or similar laws, for the account of the
holders entitled thereto.
1.10. Adjustments. In the event OCLI shall declare, pay, make or effect
between the date of this Agreement and the Effective Date (a) any stock dividend
or other distribution in respect of the OCLI Common Stock payable in shares of
capital stock of OCLI, (b) any stock split or other subdivision of outstanding
shares of OCLI Common Stock into a larger number of shares, (c) any combination
of outstanding shares of OCLI Common Stock into a smaller number of shares, (d)
any reclassification of OCLI Common Stock into other shares of capital stock or
securities, or (e) any exchange of the outstanding shares of OCLI Common Stock,
in connection with a merger or consolidation of OCLI or sale by OCLI of all or
part of its assets, for a different number or class of shares of stock or
securities of OCLI or for the shares of the capital stock or other securities of
any other corporation, appropriate adjustment shall be made in the Exchange
Ratio as may be required to put the Shareholders in the same position as if the
record date, with respect to any such transaction or transactions which shall so
occur, had been immediately after the Effective Date, or otherwise to carry out
the intents and purposes of this Agreement.
1.11. Closing of Stock Transfer Books. The stock transfer books of OCA
shall be closed at the close of business on the business day immediately
preceding the Effective Date. In the event of a transfer of ownership of OCA
Common Stock, the shares of OCLI Common Stock and cash (if any) to be issued in
the Merger as provided herein may be delivered to a transferee, if the
certificate representing such OCA Common Stock is presented to the Exchange
Agent, accompanied by all documents required to evidence and effect such
transfer and by payment of any applicable stock transfer taxes.
1.12. Lost Certificates. In the event any certificate representing a
Shareholder's OCA Shares or any instrument representing the right to acquire OCA
Shares shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming such certificate or option or
warrant instrument to be lost, stolen or
6
<PAGE>
destroyed, the Exchange Agent or the Surviving Corporation shall issue in
exchange for such lost, stolen or destroyed certificate or option or warrant
instrument the consideration or instrument payable or deliverable in exchange
therefor pursuant to this Article I. The Board of Directors of the Surviving
Corporation or the Exchange Agent may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen or
destroyed certificate or option or warrant instrument to give the Exchange Agent
or the Surviving Corporation a bond in such sum as it may direct as indemnity
against any claim that may be made against the Surviving Corporation with
respect to the certificate or option or warrant instrument alleged to have been
lost, stolen or destroyed.
1.13. Conversion of Acquisition Shares. At the Effective Date, each share
of Acquisition's common stock outstanding immediately prior thereto shall, by
virtue of the Merger and without any action on the part of the holder thereof,
be canceled and converted into one (1) fully paid and nonassessable common share
of the Surviving Corporation, which shares shall be registered in the name of
and beneficially owned by OCLI.
1.14. Adoption. This Agreement shall be submitted to the shareholders of
Acquisition and OCA as provided by law. In the case of Acquisition, OCLI, as its
sole shareholder, shall vote all its shares in favor of adoption of this
Agreement. In the case of OCA, this Agreement shall be submitted to its
shareholders at a duly called and held shareholder meeting for their approval
pursuant to the MBCL.
ARTICLE II
CLOSING
2.1. Time and Place of Closing. The closing under this Agreement (herein
called the "Closing") shall take place at the offices of Collette & Erickson,
555 California Street, San Francisco, California 94104, on the second business
day following the later of (i) the approval by the shareholders of OCA of the
execution, delivery and performance by OCA of this Agreement and (ii)
satisfaction of all other conditions to Closing as set forth in Article 5
hereof, or at such other time or date as may be mutually agreeable to the
parties hereto (the date on which Closing occurs being herein called the
"Closing Date"). All transactions at the Closing shall be deemed to take place
simultaneously and no transaction shall be deemed to have
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been completed and no document or certificate shall be deemed to have been
delivered until all transactions are completed and all documents delivered.
2.2. Consummation of the Merger. As soon as is practicable after the
satisfaction or waiver of the conditions set forth in Article V hereof, the
parties hereto will cause the Merger to be consummated by delivering to the
Secretary of State of the Commonwealth of Massachusetts articles of merger (the
"Articles of Merger") and to the Secretary of State of the State of Delaware a
certificate of merger (the "Certificate of Merger") in such form or forms as may
be required by, and executed and acknowledged in accordance with, the MBCL and
the DGCL, as the case may be. The Merger shall become effective at the later of
(x) the time that the Articles of Merger are filed by the Secretary of State of
the Commonwealth of Massachusetts or (y) the time that the Certificate of Merger
is filed by the Secretary of State of the State of Delaware, in each case in
accordance with the MBCL and the DGCL (or at such later time, which shall be as
soon as reasonably practicable, specified as the effective date in the Articles
of Merger or the Certificate of Merger). The term "Effective Date" shall mean
the later of (x) the date and time of the filing of the Articles of Merger by
the Secretary of State of the Commonwealth of Massachusetts or (y) the date and
time of the filing of the Certificate of Merger by the Secretary of State of the
State of Delaware (or such later time, which shall be as soon as reasonably
practicable, as may be specified in the Articles of Merger or the Certificate of
Merger).
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1. Definitions. The term "knowledge", when used below with respect to
OCA, shall mean actual knowledge of one or more of the following officers of
OCA: Donald A. Johnson, Michael J. Devlin, John D. Viggiano, Robert P.
Catterson, and Michael Scobey (its "Management") in each case after giving
effect to reasonable investigation conducted in the ordinary course of business.
The term "basis", when used below, shall mean any past or present fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act or transaction that forms or
could form the basis for any specified consequence. The term "ordinary course of
business", when used in this Agreement, shall mean the ordinary course of
business of OCA consistent with its past
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custom and practice (including with respect to frequency and amount). The term
"Code" when used in this Agreement shall mean the Internal Revenue Code of 1986,
as amended and in effect. The term "GAAP", when used in this Agreement, shall
mean generally accepted principles of accounting, consistently applied. The term
"liability", when used in this Agreement, shall mean and include any material
indebtedness, claim, loss, damage, deficiency (including deferred income tax),
cost, expense, guaranty or responsibility, absolute, accrued, contingent or
otherwise, and whether due or to become due. The term "Tax", when used in this
Agreement, shall mean any federal, state, local or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including without limitation Taxes
under Code Section 59A), customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated, or other tax or other fiscal charges
of any kind whatsoever, including without limitation any interest, penalty, or
addition thereto, whether disputed or not. The term "Tax Return", when used in
this Agreement, shall mean any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including without limitation
any schedule or attachment thereto, and any amendment thereof. The term
"delivered" includes physical delivery as well as making available for
examination and copying.
3.2. Representations and Warranties Pertaining to the OCA. OCA represents
and warrants to OCLI and Acquisition that, except as set forth on the Disclosure
Schedule attached hereto as Exhibit E (specifically identifying the relevant
subsection hereof):
(a) Organization and Qualification. OCA is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
described in the Disclosure Schedule ("Business") as it is now being conducted.
OCA has delivered to OCLI the Articles of Organization and Bylaws of OCA, each
as amended to date. Neither the nature of OCA's Business nor the character of
the properties owned or leased by OCA requires the qualification or licensing of
OCA as a foreign corporation in any domestic jurisdiction other than the
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State of California, in which OCA is duly qualified and licensed as a foreign
corporation and in good standing.
(b) Capitalization. The authorized capital stock of OCA consists of
2,000,000 shares of OCA Common Stock. There is no other capital stock of OCA
authorized for issuance. As of date of this Agreement, there were 783,577 shares
of OCA's Common Stock issued and outstanding, and these shares constitute the
total issued and outstanding share capital of OCA. The Disclosure Schedule sets
forth a complete and accurate list of all Shareholders, indicating the number of
OCA Shares held by such Shareholder and such Shareholder's residence address.
All of such shares have been duly authorized and validly issued, are fully paid,
nonassessable and free of preemptive rights. The offer and sale of all
outstanding securities of OCA complied with applicable federal, state and
foreign securities laws.
As of the date of this Agreement, OCA had authorized and reserved for
issuance 162,000 shares of OCA Common Stock upon the exercise of OCA Options in
the amounts listed on the Disclosure Schedule, which list indicates the address
of each OCA Optionholder. All other options or warrants to purchase OCA Common
Stock have expired or have been legally terminated. There are no other
outstanding options or warrants to purchase shares of OCA Common Stock. Since
June 30, 1995, no shares of capital stock of OCA have been repurchased from
shareholders. No shares of OCA's capital stock are reserved for issuance (except
for the OCA Options listed in the Disclosure Schedule) and there are no other
warrants, convertible instruments or other rights, agreements or commitments,
contingent or otherwise, obligating OCA to issue, sell or purchase stock. The
books and records of the OCA are complete and correct and accurately reflect the
conduct of the Business and affairs of OCA.
(c) Subsidiaries. OCA has no subsidiaries. OCA is not a partner or
joint venturer with any other person; and is not subject to any obligation,
contingent or otherwise, to provide funds to or make an investment (in the form
of a loan, capital contribution or otherwise) in any entity.
(d) Authority. Subject to shareholder approval, which will be sought
in accordance with applicable Massachusetts law, OCA has full right, power,
capacity and authority to execute, deliver and perform this Agreement, to
execute, deliver and file the Articles of Merger and to consummate the
transactions contemplated thereby. The Board
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of Directors of OCA has (i) determined that this Agreement and the transactions
contemplated hereby, including the Merger, are fair to and in the best interest
of the Shareholders, (ii) approved this Agreement and the transactions
contemplated hereby, including the Merger, and (iii) resolved to recommend
approval and adoption of this Agreement and the Merger by the Shareholders. This
Agreement has been duly and validly authorized by all necessary corporate action
on the part of OCA, subject only, in respect of the consummation of the Merger,
to approval by the shareholders of OCA holding 66_% in voting interest of the
outstanding OCA Shares. This Agreement has been duly and validly executed and
delivered by OCA and constitutes the valid and binding obligation of OCA
enforceable against it in accordance with its terms. Upon execution and delivery
for filing of the Articles of Merger, the Articles of Merger will have been duly
executed and delivered for filing by OCA.
Neither the execution, delivery and performance of this Agreement, the
delivery for filing of the Articles of Merger nor the consummation of the
transactions contemplated hereby will (i) conflict with or result in a
violation, breach, termination or acceleration of, or default (or would result
in a violation, breach, termination, acceleration or default with the giving of
notice or passage of time, or both) under any of the terms, conditions or
provisions of OCA's Articles of Organization or Bylaws, each as amended, or of
any note, bond, mortgage, indenture, license, agreement or other instrument or
obligation to which OCA is a party or by which it or any of its properties or
assets may be bound or affected; (ii) result in the violation of any order,
writ, injunction, decree, statute, rule or regulation applicable to OCA or its
properties or assets; (iii) result in the imposition of any lien, encumbrance,
charge or claim upon any of OCA's assets; or (iv) entitle any employee to
severance or other payments by OCA or create any other obligation to an
employee, including an increase in benefits.
Except for the approval by the Shareholders of the Merger, a filing under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"Antitrust Improvements Act"), the filing and effectiveness of a registration
statement on Form S-4 (the "Registration Statement") with the Securities and
Exchange Commission (the "Commission"), the delivery for filing of the Articles
of Merger with the Secretary of State of the Commonwealth of Massachusetts and
the delivery for filing by OCLI and Acquisition of the Certificate of Merger
with the Secretary
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of State of the State of Delaware, no consent or approval by, or notification to
or filing with, any court, governmental authority or third party is required in
connection with the execution, delivery and performance of this Agreement by OCA
or the consummation of the transactions contemplated hereby.
(e) Financial Statements. OCA has delivered to OCLI true and complete
copies of: (i) the unaudited balance sheet of OCA as of March 31, 1996 (the
"Balance Sheet") and the unaudited statements of earnings and cash flows for OCA
for the nine-month period ended March 31, 1996, (ii) the audited balance sheet
of OCA as of June 30, 1994 and 1995 and the audited statements of earnings and
cash flows for the same years, and (iii) the audited consolidated balance sheet
of OCA and its Subsidiary as of June 30, 1993 and the audited consolidated
statements of earnings and cash flows for OCA and its Subsidiary for the same
year (collectively, the "OCA Financial Statements"). Each of the OCA Financial
Statements has been prepared in accordance with GAAP (except as may be indicated
therein or in the notes thereto) and complies as to form in all material
respects to the interpretations and pronouncements of the Commission, and the
OCA Financial Statements fairly present the financial condition, results of
operations and cash flows of OCA (and its Subsidiary, as indicated) as at the
dates and for the periods indicated.
(f) No Undisclosed Liabilities; No Dealings with Shareholders,
Officers, Directors or Employees. OCA has no liabilities or obligations of any
nature, other than those shown or required to be shown by GAAP on the Balance
Sheet and those which have arisen after the date of the Balance Sheet in the
ordinary course of business which are not in the aggregate or individually
material. OCA does not have any contractual arrangement with, or commitment to
or from, any of its shareholders, officers, directors, employees as an entirety
or their respective family members (other than such as may have been entered
into in the normal course of employment), including, without limiting the
generality of the foregoing, any contractual arrangement or commitment whereby
any of such persons is directly or indirectly a joint investor or coventurer
with respect to, or owner, lessor, lessee, licensor or licensee of, any real or
personal property, tangible or intangible, owned or used by, or a lender to or
debtor of, OCA.
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(g) Tax Matters.
(i) OCA has accurately prepared and duly and timely filed all Tax
Returns that OCA was required to file and that were required to be filed by OCA
Applied Optics, a California corporation and a former subsidiary of OCA
("OCA-AO") which has been merged into OCA. All such Tax Returns were correct and
complete in all material respects. All taxes owed by OCA and OCA-AO as reflected
on the Tax Returns have been paid when due, other than those being contested in
good faith and where adequate reserves have been established therefor. No claim
or inquiry with respect to any material amount of Taxes has ever been made by an
authority in a jurisdiction where OCA and OCA-AO did not file Tax Returns for
any period ending on or before the Closing Date. There are no liens or other
security interests on any of the assets of OCA that arose in connection with any
failure (or alleged failure) to pay any Tax.
(ii) OCA has not filed a consolidated return with a company other
than OCA-AO.
(iii) OCA has delivered to OCLI true and complete copies of the
income, franchise, excise, sales, use, property and employment tax returns filed
by OCA and OCA-AO with any federal, state, local or foreign governmental
authority since January 1, 1989, together with all examination reports and
statements of deficiencies assessed, proposed in writing to be assessed against,
or agreed to by OCA or OCA-AO.
(iv) All Taxes of OCA or OCA-AO attributable to Tax periods or
portions thereof ending on or prior to the Effective Date, including Taxes that
may become payable by OCA or OCA-AO in future periods in respect of any
transactions or sales occurring on or prior to the Effective Date, that have not
yet been paid have, in the aggregate, been adequately reflected as a liability
on the books of OCA in accordance with GAAP.
(v) Without limiting the generality of the foregoing, OCA and
OCA-AO have withheld or collected and duly paid all Taxes required to have been
withheld or collected and paid in connection with payments to foreign persons,
sales and use Tax obligations with respect to any and all states, and amounts
paid or owing to any employee, independent contractor, creditor, stockholder or
other person.
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(vi) None of the Tax Returns of OCA or OCA-AO have been or are
being currently audited or examined by any governmental authority, nor have any
deficiencies for any Tax been asserted against OCA or OCA-AO.
(vii) There are no outstanding agreements or waivers extending
the statute of limitations applicable to any Tax Return of OCA or OCA-AO for any
period. Neither OCA nor OCA-AO is currently the beneficiary of any extension of
time within which to file any Tax Return.
(viii) Neither OCA nor OCA-AO has filed a consent under Code
Section 341(f) concerning collapsible corporations. Neither OCA nor OCA-AO has
made any payments, is obligated to make any payments, or is a party to any
agreement that could obligate it to make any payments that will be an "excess
parachute payment" under Code Section 280G. Neither OCA nor OCA-AO has been a
United States real property holding corporation within the meaning of Code
Section 897(c)(2) during the applicable period specified in Code Section
897(c)(1)(A)(ii). Neither OCA nor OCA-OA has been a passive foreign investment
company as defined in Code Sections 1291-1297. OCA and OCA-AO have disclosed on
their federal income Tax Returns all positions taken therein that could give
rise to a substantial understatement of federal income Tax within the meaning of
Code Section 6662. Neither OCA nor OCA-AO is a party to any Tax allocation or
sharing agreement. Neither OCA nor OCA-AO has liability for any Taxes of any
person (other than any of OCA and OCA-AO) under Treas. Reg. Section 1.1502-6 (or
any similar provision of federal, state, local, or foreign law), as a transferee
or successor, by contract, or otherwise.
(h) Properties; Environmental, Health and Safety Matters. OCA operates
only from leased facilities in Massachusetts and California which are described
in the Disclosure Schedule (the "Properties"), and owns leasehold improvements
at the Properties, the book values of which are included in the Balance Sheet.
OCA has good, full and marketable title to, or a valid and continuing leasehold
interest in, all personal properties and assets, reflected on the Balance Sheet
or acquired by OCA since the date of the Balance Sheet (except personal property
leases terminated, or personal property sold or otherwise disposed of, in the
ordinary course of business since the date of the Balance Sheet), free and clear
of all liens, attachments, pledges, encumbrances or security interests of any
nature whatsoever, except for liens for taxes not yet due and the rights of any
lessor under any lease to which OCA is a party. OCA has never owned any real
estate. All leases
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pursuant to which OCA leases real or personal property are in good standing, and
are valid and in full force and effect in accordance with their respective
terms. There are no defaults under any such leases attributable to OCA, and no
event has occurred that (whether or not with notice, lapse of time or both)
would constitute a default. All buildings, improvements, machinery, equipment,
vehicles and items of tangible personal property used in connection with OCA's
operations are structurally sound, are in good operating condition and repair,
are adequate for the uses to which they are being put and are not in need of
maintenance or repairs except for ordinary, routine maintenance.
To OCA's knowledge, the Disclosure Schedule sets forth or describes in
reasonable detail with respect to the Properties and to OCA's operations since
May 13, 1985:
(i) (a) landfills, surface impoundments, pits, ponds, lagoons,
underground injection wells, waste piles, land treatment units, incinerators and
any other units located on the Properties and used by OCA for the handling,
treatment, recycling, reuse, storage and disposal (hereinafter for the purposes
of this subsection 3.02(h) "Management") of Hazardous Materials and (b) all
underground, in-ground or on-ground storage tanks located on the Properties and
used by OCA;
(ii) for all units identified in clause (i)(a), information on
the time period used, type of Hazardous Material, method of Management, and
whether OCA has observed any evidence of releases of Hazardous Materials from
such units onto the ground or subsurface or into groundwater or surface waters;
(iii) for all tanks identified in clause (i)(b), information on
the time period used, material being stored, and when and what tests, if any,
have been conducted regarding tank integrity and test results, and whether OCA
has observed any evidence of releases of material from such units onto the
ground or subsurface or into groundwater or surface waters;
(iv) any evidence which has been observed by OCA, including
sample results, of soil or groundwater contamination on or migrating from the
Properties which is not addressed by clauses (ii) or (iii);
(v) a list of all sites to which Hazardous Materials have been
sent by OCA for Management, the owner or operator of such off-site facilities,
the transporter of
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such Hazardous Materials, type of Hazardous Materials, method of Management
used, and time period of use;
(vi) reports of releases (including continuous release reports)
of Hazardous Materials occurring on or from the Properties and reported by OCA
to (1) the National Response Center, State Emergency Response Commissions, Local
Emergency Planning Committees or the United States Environmental Protection
Agency (the "EPA") pursuant to requirements of the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986 ("CERCLA"), the Resource Conservation
and Recovery Act ("RCRA"), the Clean Water Act ("CWA") or other federal
statutes; or (2) any foreign, state or local governmental authority;
(vii) non-compliance by OCA since May 13, 1985 with conditions of
environmental permits or licenses issued pursuant to the Clean Air Act, CWA,
RCRA, the Toxic Substances Control Act ("TSCA"), the Safe Drinking Water Act,
CERCLA or similar foreign, state or local statutes, laws, ordinances, rules or
regulations;
(viii) Hazardous Waste Manifest Discrepancy Reports, RCRA
biennial reports or similar state reports, Discharge Monitoring Reports, air
emission monitoring reports and air emission inventories, filed by OCA with any
government agency;
(ix) Reports of environmental audits conducted by OCA, its
consultants, insurance companies or governmental agencies with respect to the
Properties, and action plans and progress reports of OCA responding to audit
findings;
(x) Claims, litigation and other legal proceedings (including but
not limited to notices of violation, notices of noncompliance, citations,
orders, consent orders, consent decrees and administrative or judicial
enforcement proceedings and proceedings which have been concluded [e.g., a
judgment or consent decree has been entered] but pursuant to which work is
ongoing [e.g., a decree requiring remedial activity to be undertaken]) made
against OCA seeking or alleging money damages (resulting from injury to person
or property), injunctive relief, remedial action, fines, penalties or any other
remedy by reason of (1) OCA's violation of or noncompliance with any law,
regulation, rule or requirement of law or regulation relating to pollution or
protection of the environment
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("Environmental Laws"), or any permit, license or registration issued
thereunder; or (2) OCA's disposal, discharge or release of Hazardous Materials,
whether or not in compliance with Environmental Laws; or (3) OCA's ownership,
operation or use of any landfill, surface impoundment, pit, pond, lagoon,
underground injection well, waste pile, land treatment unit, wastewater
treatment plant, air pollution control equipment, or any other unit used for
Management of Hazardous Material; or (4) exposure to any chemical substances,
noises or odors emanating from the Properties;
(xi) All environmentally related permits and licenses and pending
applications for such permits and licenses for the Properties, including
notifications made by OCA to governmental agencies pursuant to Sections 3010(a)
(notice of hazardous waste activity) and 9002 (underground storage tanks) of
RCRA and by comparable state laws, and notices and reports made by OCA pursuant
to Sections 302, 311, 312 and 313 of Title III of the Superfund Amendments and
Reauthorization Act of 1986 and comparable state laws;
(xii) All current and expired or terminated contracts involving
the off-site transportation or Management of Hazardous Materials generated by
OCA ;
(xiii) All reports of environmental assessments, surveys or
analyses conducted by or on behalf of OCA addressing the operational safety of
the Properties and/or activities (e.g., transportation) of OCA and/or hazards
and risks (including risk of episodic releases and impact of routine, continuous
releases) associated therewith, including but not limited to process risk
surveys, operational safety surveys, air emissions modeling, and risk
assessments, and action plans and progress reports of OCA responding to any such
reports;
(xiv) A description of the manner in which asbestos was or is
present on the Properties as documented in reports to OCA; and
(xv) A list of all governmental inspections relating to the
environment with respect to the Properties and any reports or studies generated
therewith by OCA.
Except as described in the Disclosure Schedule, OCA is not and has not been
in violation of any law, regulation or ordinance (including without limitation,
Environmental Laws and laws, regulations or ordinances relating to building,
health code, zoning, land use or similar matters) relating
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to the Properties. The Properties have not been polluted or contaminated, nor
have the Properties ever been the subject of environmental clean-up or
remediation. The Properties do not contain any Hazardous Material (as defined
below), nor has any Hazardous Material been discharged or spilled thereon. OCA
has never owned or operated a petroleum or hazardous waste landfill or any
petroleum or other hazardous waste treatment, storage or disposal facility.
There are no past or present events, conditions, circumstances, activities,
practices, incidents, actions or plans of OCA which may interfere with or
prevent continued compliance, or which may give rise to any common law or legal
liability, or otherwise form the basis of any claim, action, suit, proceeding,
hearing, or investigation, based on or related to the disposal, storage,
handling, manufacture, processing, distribution, use, treatment, or transport,
or the emission, discharge, release or threatened release into the environment,
of any pollutant or waste. There are no proceedings affecting the Properties or
threatened which could have an adverse effect on the present or expected future
use of any such property for the purposes for which it was acquired or the
purpose for which it is used. The Properties have not been on any federal or
state "Superfund" list or on EPA's Comprehensive Response, Compensation and
Liability Information System ("CERCLIS") list or on any analogous state
environmental agency list. OCA has not received any notice from any governmental
agency or other party seeking any information or alleging any liability with
regard to the Properties or with regard to any off-site environmental
conditions. The Properties are not subject to any lien under any Environmental
Laws for which OCA is responsible.
For purposes of this Agreement, "Hazardous Material" means any petroleum
product or any flammable, explosive or radioactive material, or any hazardous or
toxic waste, substance or material, including substances defined as "hazardous
substances", "hazardous materials", "solid waste" or "toxic substances" under
any applicable laws relating to hazardous or toxic materials and substances, air
pollution (including noise and odors), water pollution, liquid and solid waste,
pesticides, drinking water, community and employee health, environmental land
use management, stormwater, sediment control, nuisances, radiation, wetlands,
endangered species, environmental permitting and petroleum products, and may
include, but not be limited to, the Federal Insecticide, Fungicide, and
Rodenticide Act, as amended; the TSCA; the CWA; the National Environmental
Policy Act, as amended; the Solid Waste Disposal Act, as amended; the CERCLA, as
amended; the Clean Air Act, as
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amended; the Emergency Planning and Community Right-to-Know Act, as amended; the
Occupational Safety and Health Act, as amended; Hazardous Materials
Transportation Act, as amended; and all rules and regulations promulgated
pursuant to such federal, state, and county and foreign laws and ordinances.
(i) Accounts Receivable. All OCA's accounts and notes receivable of
OCA shown on the Balance Sheet and all accounts and notes receivable acquired by
OCA subsequent to the date of the Balance Sheet to the date hereof are valid and
enforceable, are not subject to any defense, set-off, counterclaim or claim for
refund, have arisen in the ordinary course of business and have been collected,
or are in the process of collection and are collectible in the ordinary course
of business and in any event within six months from the Effective Date, in the
aggregate recorded amounts thereof, less the applicable allowances reflected on
the Balance Sheet with respect to the accounts and notes receivable shown
thereon, or set up on a basis which is consistent with past practice on OCA's
books with respect to the accounts and notes receivable acquired subsequent to
the date of the Balance Sheet.
(j) Purchase and Sale Commitments. No outstanding purchase commitments
by OCA are in excess of the normal, ordinary and usual requirements of the
Business of OCA, and the aggregate of the contract prices to which OCA has
agreed in any outstanding purchase commitments is not so excessive when compared
with current market prices for the relevant commodities or services that a
material loss is likely to result. No outstanding commitment by OCA obligates
OCA to sell any product or service at a price which, because of currently
prevailing and projected costs of materials or labor, is likely to result in the
period beginning with the date of the Balance Sheet and ending June 30, 1997,
when all such sales commitments are taken in the aggregate for such period, in a
loss to OCA. There are no suppliers to OCA of significant goods or services with
respect to which practical alternative sources of supply, or comparable
products, are not available on comparable terms and conditions.
(k) Governmental Authorizations. Set forth on the Disclosure Schedule
is a complete and accurate list of all material governmental permits, licenses,
franchises, concessions, zoning variances and other approvals, authorizations
and orders which have been obtained in connection with OCA's conduct of its
present Business. Such permits, licenses, franchises, concessions, zoning
variances, approvals, authorizations and orders constitute
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all governmental permits, licenses, franchises, concessions, zoning variances,
approvals, authorizations and orders which are required under all applicable
local, state, federal or foreign laws and regulations for the operation of the
Business being conducted by OCA as it has been heretofore conducted. All such
permits, licenses, franchises, concessions, zoning variances, approvals,
authorizations and orders are presently in full force and effect, OCA is in
material compliance with the requirements thereof (except for immaterial
violations that are unlikely to result in a suspension or forfeiture thereof),
no suspension or cancellation of any of them is threatened, the delivery for
filing of the Articles of Merger and the Certificate of Merger and the
consummation of the Merger will not adversely affect the validity or
effectiveness of, and will not require, for retention thereof after the change
of ownership resulting from the Merger, the consent or approval of any party to,
or any other person or governmental agency having jurisdiction of, any such
permit, license, franchise, concession, zoning variance, approval, authorization
or order. OCA has no knowledge of any fact or circumstance which would prevent,
limit or restrict OCA from continuing to operate its Business in the present
manner, and no new material requirements pertaining to the manner of operating
its current Business have been issued or announced by any governmental authority
since January 1, 1995, nor are there any disputes pending between OCA and any
governmental authority about OCA's current operations, and OCA has furnished or
made available to OCLI all reports and applications filed by OCA with any
governmental agency since January 1, 1993.
(l) Patents; Trademarks. OCA solely owns or has the right to use, free
and clear of any obligation of payment, encumbrance, lien or claim, all patents,
patent and know-how licenses, trademarks, trade names, service marks, brand
names and copyrights, and registrations and applications therefor, used in the
conduct of its Business or the use of which is necessary for its Business as now
being conducted (the "Intangibles"). OCA owns or possesses adequate rights to
use, free and clear of any obligation of payment, encumbrance, lien or claim,
all inventions, technology, technical know-how, processes, designs, trade
secrets, vendor and customer lists and other confidential information required
for or used in its current Business. To the extent that OCA has provided to the
U.S. Government any trade secrets, know how, or proprietary data, OCA has marked
such trade secrets, know how, and proprietary data with adequate restrictive
legends which identify such as either "restricted computer software" or "limited
rights
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data," as those terms are defined in the Federal Acquisition Regulations ("FAR")
at Subpart 27.4. To the extent that OCA has provided to any third party, other
than the U.S. Government, any trade secrets, know how, or proprietary data, such
information has been provided subject to an adequate non-disclosure agreement or
obligation. No person has made any claim or demand upon OCA pertaining to, and
no proceeding is pending or threatened, which challenges (i) the rights of OCA
in respect of any Intangibles or (ii) the rights of OCA to any confidential
information or trade secrets used in the conduct of its current Business. No
Intangible owned or used by OCA in its current Business is subject to any order,
ruling, decree, judgment or stipulation by or with any court, arbitrator or
administrative agency which is materially adverse to OCA's current Business. No
person has made any claim or demand upon OCA, infringed, or engaged in the
unauthorized use of, any patent, trademark, trade name, service mark, brand name
or copyright, or any invention, technology, technical know-how, process, design,
trade secret or other intellectual property of another. There is no infringement
or unauthorized use by a third party of any patent, trademark, trade name,
service mark, brand name or copyright, or any invention, technology, technical
know-how, process, design, trade secret or other intellectual property owned or
used by OCA. Each technical or managerial employee of OCA is bound by the terms
of an Employee Patent and Confidential Information Agreement or similar
agreement, a copy of which has been supplied to OCLI.
(m) Government Property; Accounting for Government Contracts. The
Disclosure Schedule contains an accurate list of the type and location of each
item of property owned or furnished directly or indirectly by the U.S.
Government or by non-government customers to be used by OCA in connection with
the performance of prime contracts or subcontracts for the U.S. Government or
any agency or department thereof or, as the case may be, for other
non-government customers; in each case where the original acquisition price
exceeded $10,000. All such property is present at the location so indicated, is
in as good condition as when originally furnished, except for ordinary wear and
tear, and is being accounted for pursuant to applicable Federal regulations or
customer requirements. OCA has claimed reimbursement under contracts with the
U.S. Government only for costs which are allowable, including costs specifically
allowed by FAR Part 31, entitled "Contract Cost Principles and Procedures."
OCA's cost accounting system complies with GAAP, and the Cost Accounting
Standards, as promulgated by the Cost Accounting
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Standards Board and reflected in Appendix B to the FAR. OCA has not made any
changes to its accounting practices that would require submission of a cost
impact proposal to the U.S. Government and no cost impact proposal has been
requested by the U.S. Government. There are no pending or threatened audits by
the Defense Contracts Audit Agency or other government audit authority under
which allowance and allocation of cost and/or accounting for cost is at issue or
that could lead to the disallowance of repayment of any material monies already
received.
(n) Insurance. All policies of insurance owned by OCA are listed on
the Disclosure Schedule. OCA (i) is not in default with respect to any material
provision of any policy of general liability, fire or other form of insurance
held by it; (ii) is current in the payment of all premiums due or has reserved
for such premiums due on such insurance, and has not failed to give any notice
or present any claim thereunder in due and timely fashion, except for claims
that are immaterial in both the nature of the claim and in the amount of such
claim; (iii) maintains insurance on all of its assets and its Business
(including products liability insurance) from insurers which are financially
sound and reputable, in amounts and coverages and against the kinds of risks and
losses reasonably prudent to be insured against by corporations engaged in the
same or similar businesses; (iv) no basis exists which would jeopardize the
coverage under any such insurance; and (v) under the terms of the policy
relating thereto, no such insurance will be automatically terminated or canceled
by reason of the execution, delivery and performance of this Agreement or the
consummation of the transactions contemplated hereby.
(o) Employee Benefit Plans. For the purposes of this Section 3.2(o),
the following definitions shall apply:
(i) Accumulated Funding Deficiency: An "accumulated funding
deficiency" as defined in ERISA Section 302(a)(2) or the last two sentences of
Section 412(a) of the Code, or, in either case, successor provisions to such
provisions adopted by amendments to ERISA or the Code, as the case may be, and
including, in each case, other provisions of ERISA, of the Code or of other law,
and regulations adopted under ERISA or the Code or such other law, modifying,
amending, interpreting or otherwise affecting the application of such
provisions, either in general or as applied to the nature or circumstances of a
particular entity that is a party to, or is affected by or is involved in the
transactions contemplated by, this Agreement and with respect to which entity
the use of the
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term in this Agreement, or in the particular location in this Agreement, is
relevant.
(ii) Complete Withdrawal: A "complete withdrawal" from a
Multiemployer Plan as defined in Section 4203 of ERISA or successor provisions
to such provision adopted by amendments to ERISA and including other provisions
of ERISA or of other law, and regulations adopted under ERISA or such other law,
modifying, amending, interpreting or otherwise affecting the application of such
provision, either in general or as applied to the nature or circumstances of a
particular entity that is a party to, or is affected by or is involved in the
transactions contemplated by this Agreement and with respect to which entity the
use of the term in this Agreement, or in the particular location in this
Agreement, is relevant.
(iii) ERISA: The Employee Retirement Income Security Act of 1974,
as amended and in effect at the time of execution of this Agreement.
(iv) ERISA Affiliate: The ERISA Affiliate of any party to this
Agreement shall mean any member of any controlled group of corporations, group
of trades or businesses under common control, or affiliated service group (as
defined for purposes of Section 414(b), (c) and (m), respectively, of the Code)
which includes that party to this Agreement.
(v) Multiemployer Plan: A "multiemployer plan" as defined in
ERISA Section 3(37) or Section 414(f) of the Code, or, in either case, successor
provisions to such provisions adopted by amendments to ERISA or the Code, as the
case may be, and including, in each case, other provisions of ERISA, of the Code
or of other law, and regulations adopted under ERISA or the Code or such other
law, modifying, amending, interpreting or otherwise affecting the application of
such provisions, either in general or as applied to the nature or circumstances
of a particular entity that is a party to, or is affected by or is involved in
the transactions contemplated by this Agreement and with respect to which entity
the use of the term in this Agreement, or in the particular location in this
Agreement, is relevant.
(vi) Partial Withdrawal: A "partial withdrawal" from a
Multiemployer Plan as defined in Section 4205 of ERISA or successor provisions
to such provision adopted by amendments to ERISA and including other provisions
of ERISA or of other law, and regulations adopted
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under ERISA or such other law, modifying, amending, interpreting or otherwise
affecting the application of such provision, either in general or as applied to
the nature or circumstances of a particular entity that is a party to, or is
affected by or is involved in the transactions contemplated by this Agreement
and with respect to which entity the use of the term in this Agreement, or in
the particular location in this Agreement, is relevant.
(vii) Plan Termination: A termination of a Pension Plan, whether
partial or complete, within the meaning of Title IV of ERISA.
(viii) PBGC: The Pension Benefit Guaranty Corporation.
(ix) Pension Plan: A "pension plan" or "employee pension benefit
plan" as defined in Section 3(2) of ERISA or successor provisions to such
provision adopted by amendments to ERISA and including other provisions of ERISA
or of other law, and regulations adopted under ERISA or such other law,
modifying, amending, interpreting or otherwise affecting the application of such
provision, either in general or as applied to the nature or circumstances of a
particular entity that is a party to, or is affected by or is involved in the
transactions contemplated by this Agreement and with respect to which entity the
use of the term in this Agreement, or in the particular location in this
Agreement, is relevant.
(x) Prohibited Transaction: A "prohibited transaction" as defined
in ERISA Section 406 or Section 4975(c) of the Code, or, in either case,
successor provisions to such provisions adopted by amendments to ERISA or the
Code, as the case may be, and including, in each case, other provisions of
ERISA, of the Code or of other law, and regulations adopted under ERISA or the
Code or such other law, modifying, amending, interpreting or otherwise affecting
the application of such provisions, either in general or as applied to the
nature or circumstances of a particular entity that is a party to, or is
affected by or is involved in the transactions contemplated by this Agreement
and with respect to which entity the use of the term in this Agreement, or in
the particular location in this Agreement, is relevant.
(xi) Reportable Event: A "reportable event" as defined in Section
4043(b) of ERISA or successor provisions to such provision adopted by amendments
to ERISA and including other provisions of ERISA or of other law, and
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regulations adopted under ERISA or such other law, modifying, amending,
interpreting or otherwise affecting the application of such provision, either in
general or as applied to the nature or circumstances of a particular entity that
is a party to, or is affected by or is involved in the transactions contemplated
by this Agreement and with respect to which entity the use of the term in this
Agreement, or in the particular location in this Agreement, is relevant.
(xii) Welfare Plan: A "welfare plan" or an "employee welfare
benefit plan" as defined in Section 3(1) of ERISA or successor provisions to
such provision adopted by amendments to ERISA and including other provisions of
ERISA or of other law, and regulations adopted under ERISA or such other law,
modifying, amending, interpreting or otherwise affecting the application of such
provision, either in general or as applied to the nature or circumstances of a
particular entity that is a party to, or is affected by or is involved in the
transactions contemplated by this Agreement and with respect to which entity the
use of the term in this Agreement, or in the particular location in this
Agreement, is relevant.
Except as disclosed in the Disclosure Schedule:
OCA does not maintain or contribute to any Pension Plan or any Welfare
Plan, nor has OCA or any of OCA's ERISA Affiliates ever had, an obligation to
contribute to any Multiemployer Plan. All Pension Plans and Welfare Plans of OCA
have been administered in compliance with their terms, ERISA and, where
applicable, the Code. OCA has applied to the Internal Revenue Service for a
favorable determination letter with respect to the qualification of each such
Pension Plan which is intended to qualify under Section 401(a) of the Code and
the exemption of any corresponding trust. A copy of each such application has
been furnished to OCLI, and OCA has no reason to believe that such favorable
determination letters will not be issued in the ordinary course. With respect to
each Pension Plan: (1) there is no fact, including, without limitation, any
Reportable Event, that exists that would constitute grounds for termination of
such Plan by the PBGC or for the appointment by the appropriate United States
District Court of a trustee to administer such plan, in each case as
contemplated by ERISA; (2) neither OCA nor any fiduciary, trustee or
administrator of any Pension Plan or Welfare Plan has engaged in any Prohibited
Transaction that could subject OCA to any tax or any penalty imposed by ERISA or
the Code; (3) OCA has no liability to the PBGC (other than for payment
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of premiums); and (4) there is no Accumulated Funding Deficiency with respect to
any Pension Plan maintained by OCA or any of OCA's ERISA Affiliates, whether or
not waived.
No Pension Plan or Welfare Plan, OCA or any of OCA's ERISA Affiliates, or
any "party in interest" or "disqualified person" (as such terms are defined in
Section 3 of ERISA and Section 4975 of the Code) with respect to any Pension
Plan or Welfare Plan has taken any action including the making of any
investment, or failed to take any action, that could subject any of them or any
other person to any liability for any tax or for breach of fiduciary duty with
respect to or in connection with any Pension Plan or Welfare Plan. No Pension
Plan or Welfare Plan, administrator or fiduciary of any Pension Plan or Welfare
Plan, or OCA has any liability under any provision of any applicable law by
reason of any communication or failure to communicate with respect to or in
connection with any Pension Plan or Welfare Plan, or any filing or failure to
file with any governmental entity. No Pension Plan or Welfare Plan,
administrator or fiduciary of any Pension Plan or Welfare Plan, or OCA or any of
OCA's ERISA Affiliates has any liability to any plan participant, beneficiary or
other person under any provision of any applicable law by reason of any payment
of benefits or other amounts or failure to pay benefits or any other amounts, or
by reason of any credit or failure to give credit for any benefits or rights
(such as, but not limited to, vesting rights) with respect to benefits under or
in connection with any Pension Plan or Welfare Plan, other than benefit claims
in the normal administration of each Pension Plan or Welfare Plan. OCA is not
delinquent or in arrears on any amounts owed to, or with respect to any
contributions under, any Pension Plan or Welfare Plan. No person is a
participant in or eligible for participation (without regard to age or service)
in, any Pension Plan or Welfare Plan who is not a present or former employee of
OCA or a beneficiary of such Pension Plan or Welfare Plan. Except as may be
required by the Consolidated Omnibus Budget Reconciliation Act of 1985
("COBRA"), none of the Pension Plans or Welfare Plans provides for continuing
accrual of benefits or coverage for any participant or beneficiary of a
participant after such participant's termination of employment with OCA.
Except to the extent COBRA requires OCA to offer health insurance and OCA
incurs administrative costs, there are no unfunded obligations under any Pension
Plan or Welfare Plan providing benefits after termination of employment to any
employee of OCA (or beneficiary thereof), including without limitation retiree
health coverage and deferred
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compensation. There has been no Plan Termination that has occurred during the
five-year period ending on the date hereof. OCA has no liability incurred under
Title IV of ERISA by OCA with respect to any Pension Plan maintained by a trade
or business (whether or not incorporated) which is under common control with, or
part of a controlled group of corporations with, OCA, within the meaning of
Sections 414(b) or (c) of the Code. No event has occurred and no condition
exists with respect to any Pension Plan or Welfare Plan that would subject OCA
to any tax under Section 4972, 4977, 4979 or 4980B of the Code or to a fine
under ERISA Section 502(c) with respect to any such plan. No Welfare Plan is
funded with a trust or other funding vehicle, other than insurance policies. No
Welfare Plan or Pension Plan, plan documentation or agreement, summary plan
description or other written communication distributed to employees prohibits
OCA from amending or terminating any such plan. There has occurred no Complete
Withdrawal or Partial Withdrawal with respect to any Multiemployer Plan that
could cause OCA to incur any liability under or as a result of ERISA other than
to the extent previously paid or fully provided for in the Balance Sheet, and
all payments required to be made to any such Plan by OCA under any applicable
collective bargaining agreements have been made. As of the date of the Balance
Sheet, OCA had no liability in connection with any Pension Plan, Welfare Plan or
other employee benefit plan which was not fully provided for on the Balance
Sheet. There are no actions, arbitration's or claims pending or threatened with
respect to any Pension Plan, Welfare Plan or other employee benefit plans or any
fiduciary or sponsor thereof.
(p) Descriptions and Lists. Set forth on the Disclosure Schedule is an
accurate and complete list of the following oral or written contracts,
agreements, leases and other documents in effect as of the date of this
Agreement to which OCA is a party or by which it or its properties or assets are
bound and relating to:
(i) interests in the Properties;
(ii) a list of (a) each executory or unexpired contract awarded
by the U.S. Government from which OCA derived revenue in fiscal 1995 or from
which OCA believes it will derive in fiscal 1996, which list (i) separates
contracts by category, i.e., fixed price, cost plus fixed fee, etc.; (ii)
includes designation as small business set aside and (iii) sets forth contract
value (plus options), contract funding, contract to-date cost, contract backlog
(plus options), and funds backlog, monthly
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expenditure rate, (b) each outstanding proposal submitted in response to
solicitations issued by any agency of the U.S. Government, (c) each agreement of
OCA made in the ordinary course of business (other than leases for real
property, bank loans and contracts awarded by the U.S. Government) which
involves aggregate future payments by or to OCA whose term extends beyond one
year after the date hereof; (d) all distributorship, sales, agency or franchise
agreements of OCA; (e) each agreement containing any covenant restricting the
freedom of OCA to compete in any line of business or area or with any person;
(f) each agreement obligating, absolutely or on a contingency basis, OCA to make
payments to a third party based on future sales, revenues or earnings of OCA
from a product or service; and (g) each agreement of OCA not made in the
ordinary course of business which is or was to be performed after the date of
this Agreement and not otherwise disclosed pursuant to another section of the
Disclosure Schedule, including (1) any obligation providing for indemnification
or responsibility for the obligations or losses of another person (including
guarantees) or (2) any financing agreements;
(iii) a list of (a) the names, titles, location, salaries,
bonuses, vacation and other allowances, and other employment conditions or
compensation arrangements of all members of Management, directors and other
employees whose base salary is in excess of $100,000 for fiscal 1996, including
the last date of any increase in such persons' compensation; (b) any of such
persons on leave of absence or who are currently collecting disability payments;
and (c) all employment, consulting or similar compensation agreements of OCA
which may not be terminated by OCA without penalty within thirty days after the
Closing;
(iv) a list of all loans to employees including amount due,
interest, term and collateral;
(v) a list of (a) all bonus, incentive compensation, deferred
compensation, profit-sharing, stock option, retirement, pension, severance,
indemnification, insurance, death benefit or other fringe benefit plans,
agreements or arrangements of OCA (or applying to OCA) in effect, or under which
any amounts remain unpaid, on the date hereof or to become effective after the
date hereof, the methods of computing OCA's obligations thereunder, and a
description of any funding vehicles therefor; (b) all agreements, plans or
arrangements under which any person may receive payments from OCA that may be
subject to the tax imposed by Section 4999 of the Code or included in the
determination of such person's "parachute payment" under
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Section 280G of the Code; and (c) all employee agreements or plans binding OCA,
including without limitation any stock option plan, stock appreciation right
plan, restricted stock plan, stock purchase plan, severance benefit plan or
employee benefit plan, any of the benefits of which will be increased, or the
vesting of the benefits of which will be accelerated, by the occurrence of the
Merger or the value of any of the benefits of which will be calculated on the
basis of any of the transactions contemplated by this Agreement;
(vi) a list of each agreement or other instrument or arrangement
defining the terms on which any indebtedness of OCA is or may be issued;
(vii) a list of each outstanding commitment by OCA to make a
capital expenditure, capital addition or capital improvement involving an amount
in excess of one hundred thousand dollars ($100,000);
(viii) a list of (a) aged accounts receivable; (b) any inventory
having a value in excess of fifty thousand dollars ($50,000); (c) any prepaid
expense in excess of fifty thousand dollars ($50,000); (d) all items of
machinery, equipment or other tangible personal property with a depreciated book
value in excess of fifty thousand dollars ($50,000); and (e) all automobiles and
trucks;
(ix) the name of every bank in which OCA has an account or safe
deposit box, the identifying number of all such accounts and safe deposit boxes,
and the names of all persons having power to borrow, discount debt obligations,
cash or draw checks or otherwise act on behalf of OCA in any dealings with such
banks;
(x) a list of all health and/or safety audit reports (and related
action plans) which were prepared since January 1, 1990;
(xi) a list of all industrial hygiene surveys and personnel
safety statistics prepared since January 1, 1990;
(xii) summaries of all epidemiological or toxicological studies,
conducted by or on behalf of, or in the possession of OCA;
(xiii) a list of all occupational safety and health reports filed
with governmental agencies or instrumentalities since January 1, 1990;
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(xiv) annual summaries of workers compensation liabilities in
excess of five thousand dollars ($5,000) per person per year since January 1,
1990;
(xv) a list of all citations, notices of violations, orders,
consent orders, administrative or judicial enforcement proceedings from
governmental agencies or instrumentalities with respect to health or safety
matters issued or pending since January 1, 1990;
(xvi) a list of each inspection by any governmental agency or
instrumentality concerning health, safety or environmental matters;
(xvii) a list of all submissions to health, safety and product
safety regulatory agencies since January 1, 1990;
(xviii) a list of each accident or event occurring after January
1, 1990 which has resulted in, or to OCA's best knowledge, may result in a claim
against OCA that personal injury, property damage or economic loss was caused by
OCA or involved any employee in his capacity as an employee, or any property of,
or product or service sold by, OCA; and
(xix) a list of all claims pending under the insurance policies
listed pursuant to Section 3.2(n) (including, in their aggregate amount,
employee benefit claims other than health or dental insurance claims and
workers' compensation claims in excess of $5,000 per year).
OCA has furnished or made available to OCLI a true, correct and complete
copy of each document that is referred to or otherwise related to any item
referred to in this Section 3.2(p) or otherwise in this Agreement.
(q) Validity. There is no default or claimed or purported or alleged
default on the part of OCA, or basis on which, with notice or lapse of time or
both (including notice of this Agreement), a default would exist, in any
material obligation on the part of OCA to be performed under any lease,
contract, plan, policy or other instrument or arrangement referred to in Section
3.2(p). OCA has received no "show cause" or "cure notice" under any contract
with the U.S. Government referred to in Section 3.2 (p)(ii). To OCA's knowledge,
there are no facts suggesting or indicating that the U.S. Government is
contemplating the termination for convenience of any executory or unexpired U.S.
Government contract referred to in Section 3.2(p)(ii).
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(r) No Changes. Since the date of the Balance Sheet there has not
been:
(i) any material adverse change in the financial condition,
assets, liabilities, earnings, or Business of OCA;
(ii) any damage, destruction or loss (whether or not covered by
insurance) to the Properties or the production equipment located therein which
materially and adversely affects the condition (financial or otherwise), assets,
liabilities, earnings or Business of OCA;
(iii) any declaration, setting aside or payment of any dividend,
or other distribution, in respect of OCA's capital stock or any direct or
indirect redemption;
(iv) any option to purchase OCA's capital stock granted to any
person, or any employment or deferred compensation agreement entered into
between OCA and any of its officers, directors or consultants;
(v) any issuance or sale by OCA of any stock (other than upon the
exercise of stock options), bonds or other corporate securities;
(vi) any statute, rule or regulation, or any government policy,
adopted which pertains particularly to OCA's Business (and not businesses in
general) and which would materially and adversely affect the Business or assets
of OCA;
(vii) any material mortgage, lien, attachment, pledge,
encumbrance or security interest created on any asset, tangible or intangible,
of OCA, or assumed by OCA with respect to any such asset, except for liens for
taxes not yet due, and for equipment leases and purchase money security
interests entered into in the ordinary course of business;
(viii) any indebtedness or other liability or obligation (whether
absolute, accrued, contingent or otherwise) incurred, or other transaction
(except that reflected in this Agreement or attributable to the obligations of
OCA under this Agreement or the preparation thereof) engaged in, by OCA, except
those in the ordinary course of business consistent with past practice;
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(ix) any obligation or liability discharged or satisfied by OCA,
except items included in current liabilities shown on the Balance Sheet and
current liabilities incurred since the date of the Balance Sheet in the ordinary
course of business consistent with past practice;
(x) any sale, assignment, lease, transfer or other disposition of
any tangible asset of OCA, except in the ordinary course of business, or any
sale, assignment, lease, transfer or other disposition of any of its patents,
trademarks, trade names, brand names, copyrights, licenses or other intangible
assets;
(xi) any amendment, termination or waiver of any material right
belonging to OCA, including with respect to government contracts;
(xii) any increase in the compensation or benefits payable or to
become payable by OCA to any of its officers, directors or employees except for
ordinary increases for non-management employees in accordance with prior
practice and increases for management employees which are properly chargeable to
a U.S. Government reimbursable account;
(xiii) any transaction or contract with a director or officer of
OCA or a member of any such director's or officer's family, including a loan,
change of employment conditions, change of pension rights or bonus, not approved
in writing by OCLI;
(xiv) any material reduction in the total funding available and
obligated by the U.S. Government for any cost-reimbursement contract;
(xv) any material increase in the costs incurred by OCA in excess
of an established funding ceiling as reflected in a "Limitation of Cost" clause,
"Limitation of Funds" clause, or any other provision contained in any
cost-reimbursement contract with the U.S. Government (or any subcontract
thereunder) purporting to limit to an pre-established amount the U.S.
Government's (or the prime contractor's) liability for reimbursement of incurred
costs; or
(xvi) any other material action or event not in the ordinary
course of business.
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(s) Litigation or Proceedings. OCA is not engaged in, or a party to,
or, to its knowledge, threatened with, any claim or legal action or other
proceeding before any court, any arbitrator of any kind or any administrative
agency, or any governmental investigation, suspension or debarment proceeding,
nor does any basis for any claim or legal action or other proceeding or
governmental investigation or any suspension or debarment proceeding exist.
There are no orders, rulings, decrees, judgments or stipulations to which OCA is
a party by or with any court, arbitrator or administrative agency which
individually or collectively materially affect OCA, or its Business or
properties.
(t) Compliance with Laws. OCA (i) has not been and is not in material
violation of any applicable building, zoning, occupational safety and health,
pension, export control, environmental control or other federal, state, local or
foreign law, ordinance, regulation, rule, order or governmental policy
applicable to the Properties or the production equipment located therein or the
operation thereof, or any employment, equal opportunity or similar law,
ordinance, regulation, rule or order or any applicable governmental policy, or
any other law, ordinance, regulation, rule, order or governmental policy
applicable to OCA, or its Business or assets; (ii) has not received any
complaint from any governmental authority, and to its knowledge none is
threatened, alleging that OCA is in material violation of any such law,
ordinance, regulation, order or policy; (iii) has not received any notice from
any governmental authority of any pending proceedings to take all or any part of
the Properties by condemnation or right of eminent domain and, to its knowledge,
no such proceeding is threatened; and (iv) is not a party to any agreement or
instrument, or subject to any charter or other corporate restriction or
judgment, order, writ, injunction, rule, regulation, code or ordinance,
compliance with which materially and adversely affects, or might reasonably be
expected materially and adversely to affect, the Business, Properties, assets or
financial condition of OCA taken as a whole.
(u) Corporate Practices. OCA has never, directly or indirectly: (i)
used any corporate funds for unlawful contributions, gifts, entertainment or
other unlawful expenses relating to political activity; (ii) made any unlawful
payment to foreign or domestic government officials or employees, or to foreign
or domestic political parties or campaigns, from corporate funds; (iii) violated
any provisions of the Foreign Corrupt Practices Act of 1977;
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(iv) established or maintained any unlawful or unrecorded fund of monies or
other assets; (v) made any false or fictitious entry on its books or records;
(vi) made any bribe, rebate, payoff, influence payment, kickback or other
unlawful payment to any person; (vii) made any bribe, kickback, finder's fee,
commission, or other payment or compensation of a similar or comparable nature,
whether lawful or not, to any person or entity, private or public, regardless of
form, whether in money, property or services, to obtain favorable treatment in
securing business or to obtain special concessions, or to pay for favorable
treatment for business secured or for special concessions already obtained;
(viii) submitted, or caused to be submitted, any false claims against the U.S.
Government or (ix) made, or caused to be made, any false statements to the U.S.
Government subject to prosecution under 18 U.S.C. Section 1001.
(v) Labor Matters. There are no collective bargaining agreements
covering any of OCA's employees. There are no labor organizing activities,
election petitions or proceedings, disputes, slowdowns, work stoppages or unfair
labor practice complaints pending or threatened against OCA or between OCA and
any of its employees, nor have there been any such activities or controversies
within the three years prior to this Agreement. No labor grievance has been
filed and no arbitration proceeding has arisen and is pending and no claim
therefor has been asserted.
(w) Brokers and Finders. OCA has not employed any broker, agent or
finder or incurred any liability on behalf of OCA for any brokerage fees,
agents' commissions or finders' fees in connection with the Merger.
(x) Powers of Attorney. OCA has no powers of attorney or similar
authorizations outstanding except in connection with requests for certificates
of tax good standing and like certificates.
(y) Product Warranties. OCA has no active warranties in effect in
connection with the sale of any products by it.
(z) No Termination of Relationship. As of the date hereof, no material
relationship between OCA and a distributor, customer, supplier, lender, employee
or other person may be terminated or adversely affected as a result of the
Merger.
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(aa) Pooling Accounting. OCA and, to the best of OCA's knowledge, the
Shareholders have taken no actions that would prevent OCLI from accounting for
the Merger as a pooling-of-interests for accounting purposes.
(bb) Continuity of Interest. To the best of OCA's knowledge, there is
no plan or intention on the part of the Shareholders to sell, exchange or
otherwise dispose of a number of shares of OCLI Shares received in the Merger
that would reduce the Shareholders' ownership of OCLI stock to a number of
shares having a value, as of the Effective Date, of less than fifty percent
(50%) of the value of all of the formerly outstanding stock of OCA as of the
same date. For purposes of this representation, shares of OCA Common Stock
surrendered by dissenters or exchanged for cash or in lieu of fractional shares
of OCLI Common Stock will be treated as outstanding OCA Common Stock on the
Effective Date. Moreover, shares of OCA Common Stock and shares of OCLI Common
Stock held by the Shareholders and otherwise sold, redeemed, or disposed of
prior or subsequent to the Merger will be considered in making this
representation.
(cc) Expenses. The Disclosure Schedule sets forth a description of all
fees and expenses OCA has paid or incurred as of the date hereof in connection
with the transactions contemplated hereby.
(dd) Statements True and Correct; Further Representations and
Warranties. This Agreement (including the Disclosure Schedule and any documents
described herein or in the Disclosure Schedule and delivered pursuant hereto)
does not contain any untrue statement of a material fact or omit any material
fact required to be stated herein or therein or necessary to make the statements
contained herein or therein, in the light of the circumstances under which they
were made, not misleading.
3.3. Representations and Warranties of OCLI and Acquisition. OCLI and
Acquisition represent and warrant to OCA that except as set forth in the OCLI
SEC Documents (as defined in Section 3.3(c) below) or the Disclosure Schedule
attached as Exhibit F (the "OCLI Disclosure Schedule") and specifically
identifying the relevant subsection thereof:
(a) Organization and Good Standing. OCLI is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as it is now being
conducted. Acquisition is a corporation
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duly organized, validly existing and in good standing under the laws of the
State of Delaware, and has all requisite corporate power and authority to carry
on its business as it is now being conducted. OCLI has delivered to OCA the
Certificate of Incorporation, as amended to date, of both OCLI and Acquisition.
OCLI and Acquisition are duly qualified to do business as a foreign corporation,
and are in good standing, in each jurisdiction in which the character of the
properties owned, operated or leased by the respective corporation or the nature
of the respective corporation's activities is such that qualification as a
foreign corporation is required by applicable law.
(b) Authority. Each of OCLI and Acquisition has full right, power,
capacity and authority to execute, deliver and perform this Agreement, to
consummate the transactions contemplated hereby and in the case of Acquisition
to execute, deliver and file the Articles of Merger and the Certificate of
Merger. The execution and delivery hereof, and the consummation of the
transactions contemplated hereby, have been duly and validly authorized by all
necessary corporate action on the part of OCLI and Acquisition, and this
Agreement constitutes the valid and legally binding obligation of OCLI and
Acquisition enforceable in accordance with its terms. Neither the execution,
delivery and performance of this Agreement, the delivery for filing of the
Certificate of Merger nor the consummation of the transactions contemplated
hereby will (i) conflict with or result in a violation, breach, termination,
acceleration of, or default (or would result in a violation, breach,
termination, acceleration or default with the giving of notice or passage of
time or both) under any of the terms, conditions or provisions of the respective
charter documents or Bylaws of OCLI or Acquisition, each as amended, or of any
note, bond, mortgage, indenture, license, agreement or other instrument or
obligation to which OCLI or Acquisition is a party, or by which OCLI or
Acquisition or any of their respective properties or assets may be bound or
affected, (ii) to the knowledge of OCLI, result in the violation of any order,
writ, injunction, decree, statute, rule or regulation applicable to OCLI or
Acquisition, or their respective properties or assets, or (iii) result in the
imposition of any lien, encumbrance, charge or claim upon any of OCLI's assets.
Except for a filing under the Antitrust Improvements Act, the filing and
effectiveness of the Registration Statement with the Commission, the delivery
for filing of the Articles of Merger with the Secretary of State of the
Commonwealth of Massachusetts and the delivery for filing by
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OCLI and Acquisition of the Certificate of Merger with the Secretary of State of
the State of Delaware, a filing of a listing application with the Nasdaq
National Market System and filings with certain states under "blue sky" laws, no
consent or approval by, or notification to or filing with, any court,
governmental authority or third party is required in connection with the
execution, delivery and performance of this Agreement by OCLI or Acquisition or
the consummation of the transactions contemplated hereby.
(c) SEC Documents. OCLI has delivered to OCA true and complete copies
of each report and definitive proxy statement filed by OCLI with the Commission
since October 31, 1994 as such documents have since the time of their filing
been amended (the "OCLI SEC Documents") and true and complete copies of each
exhibit referred to in the OCLI SEC Documents (but without duplication), as such
exhibits have since the time of their filing been amended (the "OCLI SEC
Exhibits") which are all the reports, proxy statements (other than preliminary
material) and exhibits that OCLI was required to file with the Commission since
such date. As of their respective dates, the OCLI SEC Documents complied in all
material respects with the requirements of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and the rules and regulations of the Commission
thereunder applicable to such OCLI SEC Documents and none of the OCLI SEC
Documents when filed contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, at the time in light of the circumstances under
which they were made, not misleading. The financial statements of OCLI included
in the OCLI SEC Documents complied as to form in all material respects with
applicable accounting requirements and with published rules and regulations of
the Commission with respect thereto, have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved (except as may be indicated therein or in the notes thereto
or, in the case of the unaudited statements, as permitted by Form 10-Q of the
Commission) and fairly present (subject, in the case of the unaudited
statements, to normal recurring audit adjustments) the consolidated financial
position of OCLI and its consolidated subsidiaries as at the dates thereof and
the consolidated results of their operations and cash flows for the periods then
ended. The OCLI SEC Exhibits complied in all material respects with the rules
and regulations of the Commission applicable thereto.
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(d) Capital Stock of OCLI. As of April 30, 1996, OCLI had authorized,
issued and outstanding the number of shares of capital stock as set forth in the
OCLI Disclosure Schedule.
All of such shares have been duly authorized and validly issued, are fully
paid, non-assessable and free of preemptive rights. The offer and sale of all
outstanding securities of OCLI complied with applicable federal and state and
foreign securities laws. The OCLI Shares to be delivered at the Closing pursuant
to this Agreement are duly authorized and, when and if so delivered, will be
validly issued, outstanding, fully paid and nonassessable.
On or prior to the Merger, 330,804 shares of OCLI Common Stock will have
been reserved for issuance upon the exercise of the OCA Options listed in the
Disclosure Schedule, together with such additional shares as may become issuable
pursuant to the operation of the anti-dilution provisions of the OCA Options.
The issuance and delivery of OCLI Shares upon the completion of the conversion
described in Section 1.2 of the Agreement will not require an adjustment in the
number of shares issuable upon the exercise of OCLI's outstanding securities
which are convertible into or exercisable for shares of OCLI Common Stock.
(e) Brokers and Finders. OCLI and Acquisition have not employed any
broker, agent or finder or incurred any liability for any brokerage fees,
agents' commissions or finders' fees in connection with the transactions
contemplated hereby.
(f) Novation of Contracts. OCLI and Acquisition acknowledge that
novation of OCA's U.S. Government contracts may be required after the Effective
Date.
(g) No Intent to Sell or Transfer OCA. OCLI has no present intention
of selling or otherwise disposing of the capital stock of OCA, of any division
of OCA or of any substantial portion of OCA's assets.
(h) No Changes. There has not been: (i) any material adverse change in
the financial condition, assets, liabilities or earnings of OCLI; (ii) any
material damage, destruction or loss (whether or not covered by insurance) to
OCLI's properties or the production equipment located therein which materially
and adversely affects the financial or operating condition of OCLI; (iii) any
statute, rule or regulation, or any government policy, adopted which pertains
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particularly to OCLI's business (and not businesses in general) and which would
materially and adversely affect OCLI's business or assets; (iv) any material
mortgage, lien, attachment, pledge, encumbrance or security interest created on
any material asset, tangible or intangible, of OCLI, or assumed by OCLI with
respect to any such asset, except for liens for taxes not yet due, and for
equipment leases and purchase money security interests entered into in the
ordinary course of business.
(i) Employee Benefit Plans. For the purposes of this Section 3.3(i),
the definitions as set forth in Section 3.2(o) shall apply. Except as disclosed
in the Disclosure Schedule:
OCLI does not maintain or contribute to any Pension Plan or any Welfare
Plan, nor has OCLI or any of OCLI's ERISA Affiliates ever had, an obligation to
contribute to any Multiemployer Plan. All Pension Plans and Welfare Plans of
OCLI have been administered in compliance with their terms, ERISA and, where
applicable, the Code. OCLI has applied to the Internal Revenue Service for a
favorable determination letter with respect to the qualification of each such
Pension Plan which is intended to qualify under Section 401(a) of the Code and
the exemption of any corresponding trust. A copy of each such application has
been furnished to OCA, and OCLI has no reason to believe that such favorable
determination letters will not be issued in the ordinary course. With respect to
each Pension Plan: (1) there is no fact, including, without limitation, any
Reportable Event, that exists that would constitute grounds for termination of
such Plan by the PBGC or for the appointment by the appropriate United States
District Court of a trustee to administer such plan, in each case as
contemplated by ERISA; (2) neither OCLI nor any fiduciary, trustee or
administrator of any Pension Plan or Welfare Plan has engaged in any Prohibited
Transaction that could subject OCLI to any tax or any penalty imposed by ERISA
or the Code; (3) OCLI has no liability to the PBGC (other than for payment of
premiums); and (4) there is no Accumulated Funding Deficiency with respect to
any Pension Plan maintained by OCLI or any of OCLI's ERISA Affiliates, whether
or not waived.
No Pension Plan or Welfare Plan, OCLI or any of OCLI's ERISA Affiliates, or
any "party in interest" or "disqualified person" (as such terms are defined in
Section 3 of ERISA and Section 4975 of the Code) with respect to any Pension
Plan or Welfare Plan has taken any action including the making of any
investment, or failed to take any action,
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that could subject any of them or any other person to any liability for any tax
or for breach of fiduciary duty with respect to or in connection with any
Pension Plan or Welfare Plan. No Pension Plan or Welfare Plan, administrator or
fiduciary of any Pension Plan or Welfare Plan, or OCLI has any liability under
any provision of any applicable law by reason of any communication or failure to
communicate with respect to or in connection with any Pension Plan or Welfare
Plan, or any filing or failure to file with any governmental entity. No Pension
Plan or Welfare Plan, administrator or fiduciary of any Pension Plan or Welfare
Plan, or OCLI or any of OCLI's ERISA Affiliates has any liability to any plan
participant, beneficiary or other person under any provision of any applicable
law by reason of any payment of benefits or other amounts or failure to pay
benefits or any other amounts, or by reason of any credit or failure to give
credit for any benefits or rights (such as, but not limited to, vesting rights)
with respect to benefits under or in connection with any Pension Plan or Welfare
Plan, other than benefit claims in the normal administration of each Pension
Plan or Welfare Plan. OCLI is not delinquent or in arrears on any amounts owed
to, or with respect to any contributions under, any Pension Plan or Welfare
Plan. No person is a participant in or eligible for participation (without
regard to age or service) in, any Pension Plan or Welfare Plan who is not a
present or former employee of OCLI or a beneficiary of such Pension Plan or
Welfare Plan. Except as may be required by the Consolidated Omnibus Budget
Reconciliation Act of 1985 ("COBRA"), none of the Pension Plans or Welfare Plans
provides for continuing accrual of benefits or coverage for any participant or
beneficiary of a participant after such participant's termination of employment
with OCLI.
Except to the extent COBRA requires OCLI to offer health insurance and OCLI
incurs administrative costs, there are no unfunded obligations under any Pension
Plan or Welfare Plan providing benefits after termination of employment to any
employee of OCLI (or beneficiary thereof), including without limitation retiree
health coverage and deferred compensation. There has been no Plan Termination
that has occurred during the five-year period ending on the date hereof. OCLI
has no liability incurred under Title IV of ERISA by OCLI with respect to any
Pension Plan maintained by a trade or business (whether or not incorporated)
which is under common control with, or part of a controlled group of
corporations with, OCLI, within the meaning of Sections 414(b) or (c) of the
Code. No event has occurred and no condition exists with respect to any Pension
Plan or Welfare Plan that would subject OCLI to any tax under Section 4972,
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4977, 4979 or 4980B of the Code or to a fine under ERISA Section 502(c) with
respect to any such plan. No Welfare Plan is funded with a trust or other
funding vehicle, other than insurance policies. No Welfare Plan or Pension Plan,
plan documentation or agreement, summary plan description or other written
communication distributed to employees prohibits OCLI from amending or
terminating any such plan. There has occurred no Complete Withdrawal or Partial
Withdrawal with respect to any Multiemployer Plan that could cause OCLI to incur
any liability under or as a result of ERISA other than to the extent previously
paid or fully provided for in the Balance Sheet, and all payments required to be
made to any such Plan by OCLI under any applicable collective bargaining
agreements have been made. As of the date of the Balance Sheet, OCLI had no
liability in connection with any Pension Plan, Welfare Plan or other employee
benefit plan which was not fully provided for on the Balance Sheet. There are no
actions, arbitration's or claims pending or threatened with respect to any
Pension Plan, Welfare Plan or other employee benefit plans or any fiduciary or
sponsor thereof.
(j) Litigation or Proceedings. OCLI is not engaged in, or a party to,
or to its knowledge threatened with, any claim or legal action or other
proceeding before any court, any arbitrator of any kind or any administrative
agency, or any governmental investigation, suspension or debarment proceeding,
nor, to OCLI's knowledge , does any basis for any claim or legal action or other
proceeding or governmental investigation, suspension or debarment proceeding
exist; and (ii) to OCLI's knowledge there are no orders, rulings, decrees,
judgments or stipulations to which OCLI is a party by or with any court,
arbitrator or administrative agency which would materially affect OCLI.
(k) Compliance with Laws. OCLI (i) has not been and is not in material
violation of any applicable building, zoning, occupational safety and health,
pension, export control, environmental control or other federal, state, local or
foreign law, ordinance, regulation, rule, order or governmental policy
applicable to OCLI's property or the production equipment located therein or the
operation thereof, or any employment, equal opportunity or similar law,
ordinance, regulation, rule or order or any applicable governmental policy, or
any other law, ordinance, regulation, rule, order or governmental policy
applicable to OCLI, or its business or assets; (ii) has not received any
complaint from any governmental authority, and to its knowledge none is
threatened, alleging that OCLI is in material violation of any such law,
ordinance, regulation,
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order or policy; (iii) has not received any notice from any governmental
authority of any pending proceedings to take all or any part of OCLI's property
by condemnation or right of eminent domain and, to its knowledge, no such
proceeding is threatened; and (iv) is not a party to any agreement or
instrument, or subject to any charter or other corporate restriction or
judgment, order, writ, injunction, rule, regulation, code or ordinance,
compliance with which materially and adversely affects, or might reasonably be
expected materially and adversely to affect, the business, property, assets or
financial condition of OCLI taken as a whole.
(l) Corporate Practices. OCLI has never, directly or indirectly: (i)
used any corporate funds for unlawful contributions, gifts, entertainment or
other unlawful expenses relating to political activity; (ii) made any unlawful
payment to foreign or domestic government officials or employees, or to foreign
or domestic political parties or campaigns, from corporate funds; (iii) violated
any provisions of the Foreign Corrupt Practices Act of 1977; (iv) established or
maintained any unlawful or unrecorded fund of monies or other assets; (v) made
any false or fictitious entry on its books or records; (vi) made any bribe,
rebate, payoff, influence payment, kickback or other unlawful payment to any
person; (vii) made any bribe, kickback, finder's fee, commission, or other
payment or compensation of a similar or comparable nature, whether lawful or
not, to any person or entity, private or public, regardless of form, whether in
money, property or services, to obtain favorable treatment in securing business
or to obtain special concessions, or to pay for favorable treatment for business
secured or for special concessions already obtained; (viii) submitted, or caused
to be submitted, any false claims against the U.S. Government or (ix) made, or
caused to be made, any false statements to the U.S. Government subject to
prosecution under 18 U.S.C.
Section 1001.
(m) Statements True and Correct; Further Representations and
Warranties. This Agreement (including the Exhibits and any documents delivered
pursuant hereto) and the OCLI SEC Documents and SEC Exhibits, when taken
together, do not contain any untrue statement of a material fact or omit any
material fact required to be stated herein or therein or necessary to make the
statements contained herein or therein, in the light of the circumstances under
which they were made, not misleading.
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3.4. Representations and Warranties are Separate. In the event of any
inconsistency or overlap among the representations and warranties made herein,
the representation and warranty most restrictive to the party making the
representations and warranties shall govern and control.
ARTICLE IV
COVENANTS
4.1. Acts of OCA. OCA agrees that, from the date hereof to the Closing,
except to the extent that OCLI shall otherwise give its written consent:
(a) Business in Ordinary Course. OCA will operate its Business only in
the ordinary course and consistent with past practice, and, to the extent of and
consistent with such operation, it will use its best efforts to preserve intact
its present Business organization and to preserve its relationships with
employees and persons having business dealings with it.
(b) Maintain Properties. OCA will maintain all of its Properties and
assets in customary repair, order and condition, reasonable wear and use and
damage covered by insurance excepted, and take all steps reasonably necessary to
maintain its Intangibles.
(c) Maintain Management. OCA will not make any changes in Management
of OCA.
(d) Compensation. OCA will not (i) grant any increase in compensation
or bonus to any member of Management or (ii) except in the ordinary course of
business consistent with past practice, enter into or amend or alter any bonus,
incentive compensation, deferred compensation, profit sharing, stock option,
retirement, severance, indemnification, pension, insurance, death benefit or
other fringe benefit plan, agreement or arrangement, or any employment or
consulting agreement.
(e) No Related Party Transactions. OCA will not enter into any
transaction or contract with any of its shareholders (except the Shareholder
Representative pursuant to the Escrow Agreement), officers, management,
directors or employees or their family members, including the lending of any
monies except that OCA may have outstanding special purpose loans to employees
who are not Management amounting to not more than $10,000 in the aggregate at
any one time.
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(f) Indebtedness. OCA will not create, incur, assume, guarantee, or
otherwise become liable with respect to any indebtedness for money borrowed
other than (i) in the ordinary course of business, (ii) pursuant to existing
financing commitments from Silicon Valley Bank and GE Capital or (iii) to OCLI.
(g) Maintain Books. OCA will maintain its books, accounts and records
in its usual, regular and ordinary manner.
(h) No Amendments. OCA will not amend its Articles of Organization or
Bylaws; and it will maintain its corporate existence and powers and its
qualification as a foreign corporation in the State of California.
(i) Pay Taxes. OCA will file all Tax Returns and pay all Taxes as they
become due.
(j) No Disposition or Encumbrances. OCA will refrain from disposing of
or encumbering any of its properties and assets other than in the ordinary
course of business.
(k) Insurance. OCA will maintain insurance in respect of the kinds of
risks currently insured against, in accordance with its current practice.
(l) No Mergers. OCA will not merge or consolidate with any other
corporation, or acquire any stock (except its own capital stock from P-E) or any
business, property or assets of any other person, firm, association, corporation
or other business organization.
(m) No Securities Issuance. OCA will not issue any shares of capital
stock except upon exercise of OCA Options, or enter into any commitment or
agreement, or grant any option, warrant or right, calling for the issuance of
any shares of stock, and will not create or issue any securities convertible
into any such shares or convertible into securities in turn so convertible, or
enter into any commitment or agreement, or grant any option, warrant or right,
calling for the issuance of any such convertible securities.
(n) Dividends; Repurchases. OCA will not declare any dividends on or
in respect of shares of capital stock; nor will it redeem, repurchase or
otherwise acquire any shares of stock.
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(o) Contracts. Except in the ordinary course of business consistent
with its past practice, OCA will not enter into, assume or cancel any material
contract, agreement, obligation, lease, license or commitment, and it will not
do any act or omit to do any act which would cause a material breach of or
default under any such contract, commitment or obligation of OCA.
(p) Advice of Change. OCA will promptly advise OCLI in writing of any
material adverse change in the condition (financial or otherwise), assets,
liabilities, earnings, or Business of OCA.
(q) Due Compliance. OCA will duly comply in all material respects with
all laws, rules and regulations applicable to it and to the conduct of its
Business.
(r) No Waivers of Rights. OCA will not amend, terminate or waive any
material right.
(s) Capital Commitments. OCA will not make or commit to make any
capital expenditure, capital addition or capital improvement other than for the
purposes and in the amounts described in the Disclosure Schedule.
(t) No Breaches. OCA will not take any action that would constitute or
result in a breach of any representation or warranty herein, either as of the
date made or on the Effective Date.
(u) Confidential Information. OCA shall not, except as required by law
or by agreements existing on the date hereof, disclose to any third person, and
shall preserve and maintain and prevent the disclosure or publication of, any
proprietary information or trade secrets belonging to OCA.
(v) Objections to the Merger. OCA will promptly advise OCLI of any
written objection to the Merger which it receives from a shareholder of OCA.
(w) Pooling Accounting. OCA will not take any action directly or
indirectly (e.g., through or by affiliates) that would prevent OCLI from
accounting for the Merger as a pooling-of-interests for accounting purposes.
(x) Tax-free Reorganization. OCA shall not take any action directly or
indirectly (e.g., through or by affiliates) that would prevent the Merger from
qualifying as
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a tax-free reorganization under Section 368(a) of the Code.
(y) Prospectus. OCA will not take any action that constitutes an
"offer," "offer to sell," "offer for sale," or "sale" of OCLI Shares within the
meaning of Rule 145 of the Securities Act, except for the distribution of the
Proxy Materials referred to in Section 4.5 (including preliminary forms thereof
distributed in accordance with Rule 430 under the Securities Act).
4.2. Acts of OCLI. OCLI agrees that, from the date hereof to the Closing,
except to the extent that OCA shall otherwise give its written consent:
(a) Tax-Free Reorganization. OCLI will not take any action directly or
indirectly (e.g., through or by affiliates) that would prevent the Merger from
qualifying as a tax-free reorganization under Section 368(a) of the Code.
(b) Advice of Change. OCLI will promptly advise OCA in writing of any
material adverse change in the condition (financial or otherwise) of its assets,
liabilities, earnings, business or prospects.
(c) Due Compliance. OCLI will duly comply in all material respects
with all laws, rules and regulations applicable to it and to the conduct of its
business.
(d) No Breaches. OCLI will not take any action that would constitute
or result in a breach of any representation or warranty herein, either as of the
date made or on the Effective Date.
(e) No Mergers. OCLI will not merge or consolidate with any other
corporation, or acquire any stock or any business, property or assets of any
other person, firm, association, corporation or other business organization
which would materially and adversely affect OCLI's ability to consummate the
Merger and perform its obligations under this Agreement.
(f) Confidential Information. OCLI will not disclose to any third
person, and shall preserve and maintain and prevent the disclosure or
publication of, any proprietary information or trade secrets belonging to OCA
and disclosed to OCLI.
4.3. Satisfaction of Conditions Precedent. The parties hereby agree,
subject to the terms and conditions
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provided in this Agreement, to use their reasonable efforts to take, or cause to
be taken, all action, and to do, or cause to be done, all things necessary,
appropriate or desirable under applicable laws and regulations to consummate the
transactions contemplated by this Agreement, including the satisfaction of the
conditions precedent contained in Article 5 hereof. Each party will use its
respective reasonable efforts to obtain consents of all third-parties and
governmental authorities necessary, appropriate or desirable for the
consummation of the transactions contemplated by this Agreement.
4.4. Access to Records and Properties. OCLI may, prior to the Closing,
through its employees, agents and representatives, make or cause to be made such
investigation as it deems necessary or advisable of the assets and business of
OCA. OCLI's knowledge obtained in the exercise of its rights hereunder shall
control when, as and if inconsistent with any representation or warranty by OCA
contained in this Agreement, in the Disclosure Schedule, or in any instrument or
document delivered pursuant hereto or thereto. As used herein, "OCLI's
knowledge" shall mean actual knowledge of one or more of the following officers
of OCLI: Herbert M. Dwight, Jr., John Markovich, Joseph Zils, James W. Seeser,
Glen Yamamoto, Kenneth Pietrelli and William Burgess. OCA will permit OCLI and
its employees, agents and representatives to have full access on reasonable
notice and during regular business hours to its properties, books, records,
contracts and other documents, to furnish to OCLI such financial and operating
data and other information with respect to its business and properties as OCLI
shall from time to time reasonably request, and to authorize OCA's employees,
agents, representatives and customers to discuss its affairs with employees,
agents and representatives of OCLI.
OCA may, prior to the Closing, through its employees, agents and
representatives, make or cause to be made such investigation as it deems
necessary or advisable of the assets and business of OCLI. OCA's knowledge (as
defined in Section 3.1) obtained in the exercise of its rights hereunder shall
control when, as and if inconsistent with any representation or warranty by OCLI
contained in this Agreement or in any instrument or document delivered pursuant
hereto. OCLI will permit OCA and its employees, agents and representatives to
have full access on reasonable notice and during regular business hours to its
properties, books, records, contracts and other documents, to furnish to OCA
such financial and operating data and other information with respect to its
business and properties as OCA shall
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from time to time reasonably request, and to authorize OCLI's employees, agents
and representatives to discuss its affairs with employees, agents and
representatives of OCA.
4.5. Preparation of Registration Statement. OCA shall cooperate with OCLI
in the preparation of a proxy statement/prospectus to be mailed to the
Shareholders in connection with the transactions contemplated hereby and in
Section 4.6 (the "Proxy Materials") which will be included within the
Registration Statement. When the Registration Statement or any post-effective
amendment thereto shall become effective, and at all times subsequent to such
effectiveness, up to and including the date of the special meeting of the
Shareholders with respect to the transactions contemplated by this Agreement,
such Registration Statement and Proxy Materials and all amendments or
supplements thereto, with respect to all information set forth therein furnished
or to be furnished by any party with respect to itself or its affiliates, (i)
will comply in all material respects with the applicable provisions of the
Securities Act and the Exchange Act and the rules and regulations promulgated by
the Commission thereunder and (ii) will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements contained therein not misleading. OCA shall
advise OCLI promptly of the happening of any event which makes untrue any
statement of a material fact contained in the Registration Statement or Proxy
Materials or any amendment or supplement thereto or omits to state a material
fact necessary in order to make any statement therein not misleading. OCLI shall
advise OCA, promptly after OCLI receives notice thereof, of the time when the
Registration Statement has become effective or any supplement or amendment has
been filed, of the issuance of any stop order or the suspension of the
qualification of OCLI Common Stock to be issued in connection with the Merger
for the offering or sale in any jurisdiction, of the initiation or threat of any
proceeding for any such purpose, or of any request by the Commission for the
amendment or supplementation of the Registration Statement or for additional
information.
4.6. Distribution of Proxy Materials; Shareholders' Approval. OCA shall
take all action necessary in accordance with applicable law to convene a meeting
of the Shareholders to be held at the earliest possible time after the effective
date of the Registration Statement for the purpose of approving and adopting
this Agreement (including the transactions contemplated hereby). OCA shall (i)
submit the Proxy Materials to the Shareholders, and its Board of
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Directors shall recommend to the Shareholders the adoption of this Agreement and
the approval of the Merger and such other matters referred to above; (ii) at
such meeting of the Shareholders, present this Agreement for adoption by its
Shareholders; and (iii) use all reasonable efforts to obtain all votes and
approvals of the Shareholders necessary for the approval and adoption of this
Agreement and the other matters under the MBCL, and its Articles of Organization
and by-laws.
4.7. Certain Employee Benefits Matters.
(a) OCLI currently intends to maintain all material Pension Plan,
Welfare Plans and other OCA employee benefit plans or programs without
significant modification after the Closing. Notwithstanding the foregoing, OCLI
expressly reserves the right to modify or terminate any Pension Plan, Welfare
Plan or other OCA benefit plan or program, at any time or from time to time,
except that no such modification shall effect a change in coverage or level of
benefit which would be any less advantageous to the covered employees or retired
employees than the most advantageous coverage or level of benefit at the time
maintained by OCLI for any other similarly constituted group of its employees or
retired employees.
(b) Except as may be otherwise required by ERISA, OCLI will give OCA
employees credit for service with OCA and its predecessors when such employees
become eligible for participation in any of OCLI's benefit plans which have
vesting or length of service requirements.
(c) All otherwise eligible OCA employees will be entitled to
participate in any employee plan adopted from time to time by OCLI, in
accordance with the terms thereof.
4.8. Expenses. Each party will bear entirely the respective out-of-pocket
expenses that it incurs in connection with the transactions contemplated hereby
including legal and accounting fees. Notwithstanding the foregoing, this Section
4.8 shall not be construed as relieving any party from any liability which it
may have for any breach of any representation or warranty made by it herein or
any failure to perform any obligation or comply with any covenant imposed on it
herein.
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4.9. Indemnification of OCA by OCLI.
(a) OCA upon its demand shall be indemnified by OCLI for the full
amount of all damages (as defined below) suffered by it as a direct or indirect
result of:
(i) the inaccuracy of any representation or warranty made by OCLI
in or pursuant to this Agreement, in the form and to the extent so made, or the
omission of any material fact relating thereto; and
(ii) any failure by OCLI to perform any obligation or comply with
any covenant or agreement specified in this Agreement or in any other document
executed at the Closing.
(b) For the purpose of this Agreement, the term "damages" shall be
determined and computed by reference to the actual economic loss to OCA (and not
just by reference to any effect on the value of the shares of OCA) and shall be
deemed to include all losses, liabilities, expenses or costs incurred by the
OCA, including reasonable attorneys' fees.
(c) The right of OCA to be indemnified pursuant to Section 4.9(a)
shall not apply until the sum of the damages suffered by OCA on a cumulative
basis equals or exceeds $250,000, at which point OCLI shall become liable for
all damages, not just amounts in excess of $250,000, and (ii) shall be only for
claims that are asserted by OCA before the date of completion of the first audit
of OCA covering a period ending after the Effective Date. In no event shall
OCLI's liability hereunder exceed an amount equal to (i) the aggregate number of
Escrowed Shares multiplied by (ii) the Per Share Value of such Escrowed Shares
(as determined in accordance with the Escrow Agreement). Notwithstanding the
foregoing, this Section 4.9(c) shall not apply in the event OCA has actual
knowledge of a breach of a representation or warranty.
ARTICLE V
CONDITIONS TO OBLIGATIONS OF OCLI,
ACQUISITION AND OCA
5.1. Conditions to Obligations of OCLI and Acquisition. The obligations of
OCLI and Acquisition to consummate the transactions contemplated hereby are
subject to the satisfaction, on or before the Closing, of the
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following conditions (unless waived in writing by OCLI and Acquisition in the
manner provided in Section 6.2 hereof):
(a) Representations, Warranties and Performance of OCA. The
representations and warranties set forth in Section 3.2 hereof shall be accurate
in all material respects on and as of the date hereof, and on and as of the
Effective Date, except as set forth on the Disclosure Schedule, as though made
on and as of the Effective Date, and OCA shall have performed in all material
respects all obligations and complied with in all material respects all
covenants required to be performed or to be complied with by it under this
Agreement prior to the Closing. OCA shall deliver to OCLI at the Closing a
certificate duly authorized by OCA and duly executed and delivered by an
authorized officer of OCA certifying to the foregoing.
(b) Authorization. All action necessary to authorize the execution,
delivery and performance hereof by OCA and the consummation of the transactions
contemplated hereby, including the approval by the Shareholders of the
execution, delivery and performance of this Agreement in accordance with the
applicable laws of the Commonwealth of Massachusetts and such other matters set
forth in the Proxy Materials, shall have been duly and validly taken by OCA. OCA
shall have furnished OCLI with a copy of all resolutions adopted by the Board of
Directors and shareholders of OCA in connection with such action, certified by
the Clerk or Assistant Clerk of OCA, together with copies of such other
instruments and documents as OCLI shall have reasonably requested.
(c) Consents. Any governmental authority having jurisdiction over OCA,
OCLI or Acquisition or any other person in any contractual or other relationship
with OCA, OCLI or Acquisition, to the extent that its consent or approval is
required by applicable law or regulation or any applicable contract or other
instrument for the performance of this Agreement or the consummation of the
transactions contemplated hereby or for the continuation of any material
existing contractual relationship, shall have granted any necessary consent or
approval, except novations of contracts with the U.S. Government.
(d) Permits and Approvals. Any and all consents, permits, approvals or
other actions of any person, jurisdiction or authority required in the
reasonable opinion of counsel for OCLI (including without limitation,
confirmation of filing of the Articles of Merger with the Secretary of State of
the Commonwealth of Massachusetts and
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the filing of the Certificate of Merger with the Secretary of State of the State
of Delaware) for lawful consummation of the transactions contemplated hereby
shall have been obtained, and shall be in full force and effect, and no such
consent, permit, approval or other action shall contain any provision that in
the reasonable judgment of such counsel is unduly burdensome.
(e) Registration Statement Effective. The Registration Statement shall
become effective and no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been initiated or threatened by the Commission.
(f) Good Standing Certificates. OCA shall have delivered to OCLI a
long-form corporate good standing certificate from the Secretary of State of The
Commonwealth of Massachusetts and a good standing certificate as a foreign
corporation from the Secretary of State of the State of California.
(g) Nasdaq Listing. The Nasdaq National Market System shall have
approved the OCLI Shares for listing, subject to official notice of issuance.
(h) Dissenters' Rights. The holders of not more than 10% of the OCA
Shares shall have demanded and perfected their right to an appraisal of their
OCA Shares in accordance with the MBCL.
(i) Accountants' Opinion. OCLI shall have received an opinion from
Deloitte & Touche LLP to the effect that Deloitte & Touche LLP is not aware of
any fact concerning OCA that would preclude OCLI from accounting for the Merger
as a "pooling-of-interests" for accounting purposes.
(j) Legal Opinions of Counsel for OCA. OCLI shall have received an
opinion of Robert DeN. Cope, OCA's counsel, dated the Effective Date and in form
reasonably satisfactory to OCLI.
(k) Performance of Affiliate Agreements. All the terms, covenants and
conditions of the Affiliate Agreements to be complied with and performed by OCA
and the Affiliates on or before the Effective Date shall have been fully
complied with and performed in all material respects.
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(l) No Litigation or Proceedings with Respect to the Merger. No legal
action or other proceedings to restrain or prohibit the consummation of the
transactions contemplated by this Agreement shall be pending or threatened.
(m) Stock Escrow Agreement. The Escrow Agreement shall be in full
force and effect.
(n) Documents Satisfactory. The form and substance of all legal
matters contemplated herein and of all papers used or delivered hereunder shall
be reasonably acceptable to OCLI and its counsel, and OCLI shall have received
all documents that it may have reasonably requested in connection with the
transactions contemplated hereby pursuant to Section 4.4, in form and substance
reasonably satisfactory to such counsel.
(o) Compliance with Antitrust Improvements Act. OCLI and OCA will have
complied with all applicable requirements under the Antitrust Improvements Act
relating to filings with and furnishing information to the Federal Trade
Commission and the United States Department of Justice in connection with the
transactions contemplated hereby and any waiting period (and any extension
thereof) applicable to the consummation of the Merger under the Antitrust
Improvements Act shall have expired or been terminated.
(p) The requirements of Section 1.8 shall have been satisfied.
(q) Exercise of OCA options. All of the OCA Options held by
Massachusetts Resource Capital Company and Silicon Valley Bank shall have been
exercised on or prior to Closing.
(r) Key Emloyee Agreements. Employment Agreements in the form set
forth in Exhibit G shall have been executed by OCA and each of the persons named
in Exhibit H.
5.2. Conditions to Obligations of OCA. The obligations of OCA to consummate
the transactions contemplated hereby are subject to the satisfaction, on or
before the Closing, of the following conditions (unless waived by OCA in writing
in the manner provided in Section 6.2 hereof):
(a) Representations, Warranties and Performance of OCLI and
Acquisition. The representations and warranties
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of OCLI and Acquisition set forth in Section 3.3 hereof shall be accurate in all
material respects on and as of the date hereof, and on and as of the Effective
Date, except as set forth on the OCLI Disclosure Schedule, as though made on and
as of the Effective Date, and OCLI and Acquisition shall have performed in all
material respects all obligations and complied in all material respects with all
covenants required to be performed or to be complied with by them under this
Agreement prior to the Closing. OCLI and Acquisition shall deliver to OCA at the
Closing a certificate duly authorized by OCLI and Acquisition and duly executed
and delivered by an authorized officer of OCLI and Acquisition certifying to the
foregoing.
(b) Authorization. All action necessary to authorize the execution,
delivery and performance hereof by OCLI and Acquisition and the consummation of
the transactions contemplated hereby shall have been duly and validly taken by
the Boards of Directors of OCLI and Acquisition and the shareholder of
Acquisition. OCLI and Acquisition shall have furnished OCA with a copy of all
resolutions adopted by the Boards of Directors of OCLI and Acquisition and the
shareholder of Acquisition in connection with such actions, certified by the
Secretary or an Assistant Secretary of OCLI and Acquisition, as the case may be,
together with copies of such other instruments and documents as OCA shall have
reasonably requested.
(c) Consents. Any governmental authority having jurisdiction over OCA,
OCLI or Acquisition, or any other person in any contractual or other
relationship with OCA, OCLI or Acquisition, to the extent that its consent or
approval is required by applicable law or regulation or any applicable contract
or other instrument for the performance of this Agreement or the consummation of
the transactions contemplated hereby, or for the continuation of any material
existing contractual relationship, shall have granted any necessary consent or
approval, except novation of contracts with the U.S. Government.
(d) Permits and Approvals. Any and all consents, permits, approvals or
other actions of any person, jurisdiction or authority required in the
reasonable opinion of counsel for OCA (including without limitation,
confirmation of filing of the Articles of Merger with the Secretary of State of
the Commonwealth of Massachusetts and the filing of the Certificate of Merger
with the Secretary of State of the State of Delaware) for lawful consummation of
the transactions contemplated hereby shall have been obtained, and shall be in
full force and effect, and no such
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consent, permit, approval or other action shall contain any provision that in
the reasonable judgment of such counsel is unduly burdensome.
(e) OCA Shareholder Approval. The approval by the Shareholders of the
execution, delivery and performance of this Agreement and the Merger in
accordance with the MBCL shall have been duly and validly obtained.
(f) Registration Statement Effective. The Registration Statement shall
become effective and no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been initiated or threatened by the Commission.
(g) Good Standing Certificates. OCLI shall deliver to OCA a long form
corporate good standing certificate from the Secretary of State of the State of
Delaware for OCLI and Acquisition.
(h) Nasdaq Listing. The Nasdaq National Market System shall have
approved the OCLI Shares for listing, subject to official notice of issuance.
(i) No Litigation or Proceedings with Respect to the Merger. No legal
action or other proceedings to restrain or prohibit the consummation of the
transactions contemplated by this Agreement shall be pending or threatened.
(j) Documents Satisfactory. The form and substance of all legal
matters contemplated herein and of all papers used or delivered hereunder shall
be reasonably acceptable to counsel for OCA and OCA shall have received all
documents that such counsel may have reasonably requested in connection with the
transactions contemplated hereby, in form and substance reasonably satisfactory
to such counsel.
(k) Legal Opinion of OCLI's Counsel. OCA shall have received an
opinion of OCLI's general counsel, dated the Effective Date and in form
reasonably satisfactory to OCA.
(l) Compliance with Antitrust Improvements Act. OCLI and OCA will have
complied with all applicable requirements under the Antitrust Improvements Act
relating to filings with and furnishing information to the Federal Trade
Commission and the United States Department of Justice
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in connection with the transactions contemplated hereby and any waiting period
(and any extension thereof) applicable to the consummation of the Merger under
the Antitrust Improvements Act shall have expired or been terminated.
ARTICLE VI
MODIFICATION, TERMINATION AND WAIVER
6.1. Modification, Amendments and Waivers. The parties may mutually amend
any provision of this Agreement at any time prior to the Effective Date;
provided, however, that any amendment effected subsequent to the OCA Shareholder
approval shall be subject to the restrictions set forth in the MBCL. No
amendment of any provision of this Agreement shall be valid unless the same
shall be in writing and signed by all of the parties.
6.2. Waivers. The parties hereto may, by a written signed
instrument, extend the time for or waive the performance of any of the
obligations of another party hereto or waive compliance by such other party
with any of the covenants or conditions contained herein.
6.3. Termination. At any time prior to the Closing, this Agreement may be
terminated (a) by mutual consent of OCLI and Acquisition, on the one hand, and
OCA on the other; (b) by OCLI and Acquisition if (i) there has been a material
breach by OCA of a covenant, representation or warranty contained in this
Agreement; (ii) OCLI has notified OCA in writing of the existence of such
breach; and (iii) OCA has failed to cure such breach within a reasonable period
of time after receiving such notice; (c) by OCA if (i) there has been a material
breach by OCLI or Acquisition of a covenant, representation or warranty
contained in this Agreement; (ii) OCA has notified OCLI in writing of the
existence of such breach; and (iii) OCLI or Acquisition, as the case may be, has
failed to cure such breach within 30 days after receiving such notice; (d) by
OCA or OCLI if (i) there shall be an order of a court in effect preventing
consummation of this Agreement or (ii) there shall be any action taken, or any
statute, rule, regulation or order enacted, promulgated, issued or deemed
applicable to this Agreement, by a governmental entity that would make
consummation of this Agreement illegal; or (e) by OCLI or OCA if the
Shareholders disapprove any matter submitted to them pursuant to Section 4.5 or
if the Closing does not occur by September 30, 1996.
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6.4. Effect of Termination. If this Agreement shall be terminated as
provided in Section 6.3, this Agreement shall forthwith become void (except as
otherwise provided in Section 4.8).
ARTICLE VII
REGISTRATION
7.1. Certain Definitions. As used in this Article VII, the following terms
shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange Commission.
"Holders" shall mean any Shareholder who holds at least Thirty Thousand
(30,000) Shares.
"Other Holders" shall mean all holders of OCLI's securities other than
Holders.
"Registration Expenses" and "Selling Expenses" shall mean the expenses so
described in Section 7.5.
"Securities Act" shall mean the Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder, all as the same shall be in
effect at the time.
"Shares" shall mean (a) the OCLI Shares (as defined in Section 1.2), and
(b) any securities issued with respect to the OCLI Shares by reason of stock
dividends, stock splits, or combinations, recapitalizations, reorganizations or
other corporate action.
"Underwriter" shall mean each person who is or may be deemed an
"underwriter," as that term is defined in Section 2(11) of the Securities Act,
in respect of securities which shall have been registered by OCLI under the
Securities Act pursuant to any of the provisions of this Article 7.
7.2. Incidental Registration. If OCLI for itself or any of its security
holders shall at any time or times on or after the Closing and prior to two
years from the Closing determine to register under the Securities Act any shares
of its capital stock or other securities (other than (i) the registration of an
offer and sale of securities to employees of, or other persons providing service
to, OCLI pursuant to an employee or similar benefit plan, registered on Form S-8
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or comparable form; or (ii) relating to a merger, acquisition or other
transaction of the type described in Securities Act Rule 145 or comparable rule,
registered on Form S-4 or similar form) OCLI will notify each Holder in each
case of such determination at least thirty (30) days prior to the filing of such
registration statement, and upon the request of a Holder given in writing within
twenty (20) days after the effective date of such notice, OCLI will use its best
efforts as soon as practicable thereafter to cause not more than fifty per cent
(50%) of the Shares owned by such Holder to be included in such registration
statement. Notwithstanding the foregoing, in the event the proposed registration
is in whole or in part an underwritten public offering, and the managing
underwriter determines and advises OCLI in writing that the inclusion of all
Shares of such requesting Holders and all shares of OCLI's capital stock or
other securities to be offered by it and by Other Holders, whether originally
covered by requests for registration or otherwise included, would interfere with
the marketing of such securities, then the number of shares of OCLI capital
stock otherwise to be included in the registration statement by Holders and
Other Holders shall be reduced as follows: (1) there shall first be excluded
shares proposed to be included by Other Holders not possessing contractual
rights to include the same and (2) any further reduction shall be pro rata among
such Holders and Other Holders (having such contractual rights) requesting
inclusion of their Shares in such registration in the proportion to the number
of shares of OCLI's capital stock then owned by each with respect to which it
has registration rights; provided, however, that there shall be no reduction in
the number of shares to be included therein by OCLI.
7.3. Conditions to Obligation to Register Shares. As a condition to OCLI's
obligation hereunder to cause Shares to be included in a registration statement,
the Holder shall provide such information and execute such documents as may
reasonably be required in connection with such registration.
7.4. Registration Procedures. If and whenever OCLI is required by the
provisions of this Article 7 to use its best efforts to include any of the
Shares in a registration statement filed under the Securities Act, OCLI shall,
as expeditiously as possible:
(a) Prepare and file with the Commission a registration statement with
respect to such Shares and use its best efforts to cause such registration
statement to become and remain effective.
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(b) Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective for
ninety (90) days from the date of its effectiveness or (unless otherwise
required by the Securities Act) until the Shares covered thereunder have been
sold, whichever is earlier.
(c) Furnish to each Holder such number of copies of the prospectus
contained in such registration statement (including each preliminary
prospectus), in conformity with the requirements of the Securities Act, and such
other documents as such Holder may reasonably request in order to facilitate the
disposition of the Shares owned by such Holder.
(d) Use its best efforts to register or qualify the Shares covered by
such registration statement under the securities or blue sky laws of such
jurisdictions as each selling Holder shall reasonably request, and do any and
all other acts and things which may be necessary or advisable to enable such
holder to consummate the disposition of the Shares owned by such Holder in such
jurisdictions during the period specified in 7.4(b).
(e) Notify each Holder of any Shares covered by such registration
statement at any time when a prospectus relating thereto is required to be
delivered under the Securities Act of the happening of any event as a result of
which the prospectus contained in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing. Each
Holder agrees, upon receipt of such notice, forthwith to cease making offers and
sales of the Shares pursuant to such registration statement or deliveries of the
prospectus contained therein for any purpose and to return to OCLI, for
modification and exchange, the copies of such prospectus not theretofore
delivered by such Holder; provided, that OCLI shall forthwith prepare and
furnish, after securing such approvals as may be necessary, to such Holder a
reasonable number of copies of any supplement to or amendment of such prospectus
that may be necessary so that, as thereafter delivered to the purchasers of such
Shares, such prospectus shall not include an untrue statement of a material fact
or omit to state a material fact required to be stated therein or
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necessary to make the statements therein not misleading in the light of the
circumstances then existing.
7.4.6. Promptly notify all selling Holders of any stop order or
similar proceeding initiated by state or federal regulatory bodies and use its
best efforts and take all necessary steps expeditiously to remove or terminate
such stop order or similar proceeding.
7.5. Description of Expenses. All expenses incurred by OCLI in complying
with any of the foregoing provisions of this Article 7, including without
limitation all federal and state registration, qualification and filing fees,
printing expenses, any premium involved in securing a policy or policies of
registration insurance (but only if OCLI in its sole discretion shall choose to
secure such a policy or policies, such policy or policies hereinafter referred
to as "Registration Insurance"), fees and disbursements of counsel for OCLI for
its services in facilitating the sale of Shares by the Holders in a registration
pursuant to Section 7.2, and accountants' fees and expenses (but excluding the
compensation of OCLI's regular employees which shall be paid in any event by
OCLI) incident to or required by any such registration are herein called
"Registration Expenses". All underwriting discounts and selling commissions
applicable to the sale of Shares hereunder are herein called "Selling Expenses".
If OCLI is required by the provisions of this Article 7 to use its best efforts
to effect the registration of any of the Shares under the Securities Act, the
Registration Expenses and Selling Expenses in connection with such registration
shall be borne as follows:
(a) All Registration Expenses shall be borne by OCLI.
(b) All Selling Expenses shall be borne pro rata by the Holders
including Shares in such registration.
7.6. Indemnification Underwriting Agreements.
(a) Registration Statements. In the event that OCLI registers under
the Securities Act any Shares held by a Holder:
(i) OCLI will indemnify and hold harmless such Holder, and each
Person, if any, who controls such Holder within the meaning of the Securities
Act, against any and all loss, liability or expense arising out of or based upon
any untrue statement or alleged untrue statement of a material fact in any
related registration statement,
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prospectus, offering circular, notification or other document furnished or
authorized by OCLI or any omission or alleged omission of any material fact
required to be stated therein or necessary to make the statements therein in
light of the circumstances under which they were made, not misleading, unless
such statement, alleged statement or omission was made in reliance upon material
expressly provided by such Holder for inclusion therein or upon an omission or
failure by any such Holder to furnish any statement with respect to such Holder
required to be included therein. In connection with any offering under this
Article 7 which is to be underwritten, OCLI further agrees to enter into an
underwriting agreement in usual and standard form respecting such offering.
(ii) OCLI's obligations under Section 7.2 are subject to the
following conditions: (a) that each Holder whose Shares are to be included in
any registration or qualification referred to in this Article 7 shall agree, in
writing, prior to the filing of such registration or qualification, to indemnify
and hold harmless OCLI, each Person, if any, who controls OCLI within the
meaning of the Securities Act and OCLI's officers and directors, against any and
all loss, liability or expense arising out of or based upon any untrue statement
or alleged untrue statement of a material fact in any related registration
statement, prospectus, offering circular, notification or other document or any
omission or alleged omission of any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, but only with reference to statements or
omissions made in reliance upon a statement in writing expressly furnished by or
on behalf of such Holder of inclusion therein, and (b) if such registration or
qualification relates to an offering which is to be underwritten that each such
Holder enters into an underwriting agreement in usual and standard form
respecting such offering.
(iii) A party required to indemnify another party pursuant to
this 7.6(a) ("Indemnifying Party") shall not be liable for any settlement of any
action or claim relating to such liability or expense effected without his or
its consent, but if any settlement is effected with his or its consent or if a
final judgment for the plaintiff is entered in any such action, such
Indemnifying Party will indemnify and hold harmless the indemnified party from
and against any loss or liability by reason of any such settlement or judgment.
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ARTICLE VIII
GENERAL
8.1. Notices. All notices, requests, demands, consents and other
communications which are required or permitted hereunder shall be in writing,
and shall be deemed given when actually received or if earlier, one day after
deposit with a nationally recognized air courier or express mail, charges
prepaid or three days after deposit in the U.S. mail by certified mail, return
receipt requested, postage prepaid, addressed as follows:
If to OCLI or Acquisition:
Optical Coating Laboratory, Inc.
2789 Northpoint Parkway
Santa Rosa, California 95407-7397
Attention: Joseph C. Zils, Vice President & General
Counsel
With a copy to:
Collette & Erickson
555 California Street
San Francisco, California 94104
Attention: John V. Erickson
If to OCA:
Optical Corporation of America
170 Locke Drive
Marlborough, Massachusetts 01752
Attention: Donald A. Johnson
With a copy to:
Robert DeN. Cope, Esq.
44 Elm Street, Suite 503
Worcester, Massachusetts 01609-2523
or to such other address as any party hereto may designate in writing to the
other parties, specifying a change of address for the purpose of this Agreement.
8.2. Survival and Materiality of Representations. Each of the
representations, warranties and agreements made by the parties hereto shall be
deemed material and shall survive the Closing and the consummation of the
transactions contemplated hereby for a period of one year. All
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statements contained in any certificates or other instruments delivered by or on
behalf of OCLI, Acquisition, or OCA or the Shareholders pursuant hereto or in
connection with the transactions contemplated hereby shall be deemed material
and shall constitute representations and warranties by the person making such
statement.
8.3. Entire Agreement. This Agreement supersedes any and all oral or
written agreements or understandings heretofore made relating to the subject
matter hereof (including without limitation the Letter of Intent executed by
OCLI and OCA dated March 5, 1996 but not the Confidentiality Agreement dated
December 21, 1995 between OCLI and OCA or the Confidentiality Agreement dated
April 29, 1996 between OCLI, James W. Seeser and OCA) and constitutes the entire
agreement of the parties relating to the subject matter hereof.
8.4. Parties in Interest. All covenants and agreements, representations and
warranties contained in this Agreement made by or on behalf of any of the
parties hereto shall bind and inure to the benefit of the parties hereto, and
their respective successors, assigns, heirs, executors, administrators and
personal representatives, whether so expressed or not.
8.5. No Implied Rights or Remedies. Except as otherwise expressly provided
herein, nothing herein expressed or implied is intended or shall be construed to
confer upon or to give any person, firm or corporation, other than the parties
hereto, any rights or remedies under or by reason of this Agreement.
8.6. Headings. The headings in this Agreement are inserted for convenience
of reference only and shall not be a part of or control or affect the meaning
hereof.
8.7. Severability. If any provision of this Agreement shall be declared
void or unenforceable by any judicial or administrative authority, the validity
of any other provision shall not be affected thereby.
8.8. Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
8.9. No Solicitation. Prior to the earlier of (i) the Closing or (ii) the
termination of this Agreement, OCA will not, directly or indirectly, solicit,
encourage or initiate
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any discussions with, or negotiate or otherwise deal with, or provide any
information to, any person other than OCLI concerning any merger, sale of
substantial assets or similar transactions involving OCA or any sale of its
capital stock.
8.10. Relief. In the event of a breach of the provisions of this Agreement
by a party to this Agreement prior to the Closing, in addition to any other
rights and remedies that party may have under law or in equity, the
non-breaching party shall have the right to specific performance and injunctive
relief, it being acknowledged and agreed that money damages will not provide an
adequate remedy. In the event litigation is maintained by a party to this
Agreement against any other party to enforce this Agreement or to seek any
remedy for breach, then the party prevailing in such litigation shall be
entitled to recover from the non-prevailing party reasonable attorneys' fees and
costs of suit.
8.11. Exhibits. The Exhibits attached hereto and referred to in this
Agreement are a part of this Agreement for all purposes.
8.12. Assignment. This Agreement and the rights and duties hereunder shall
be binding upon and inure to the benefit of the successors, assigns, heirs and
legal and personal representatives of the parties hereto, but shall not be
assignable or delegable by any party without the prior written consent of the
other parties and any purported assignment without such prior written consent
shall be null and void.
8.13. Further Assurances. OCA will execute and furnish to OCLI and
Acquisition all documents and will do or cause to be done all other things that
OCLI may reasonably request from time to time in order to give full effect to
this Agreement and to effectuate the intent of the parties.
8.14. Gender. In this Agreement, unless the context requires otherwise the
singular includes the plural, the plural the singular, the masculine gender
includes the neuter, masculine and feminine genders and vice versa.
8.15. Public Announcement. Except as required by law, the content and
timing of any public announcement pertaining to this Agreement shall be subject
to the prior agreement and approval of OCLI and OCA.
8.16. Governing Law. This Agreement shall be governed by the law of the
State of California applicable to
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agreements made and to be performed wholly within such jurisdiction, without
regard to the conflicts of laws provisions thereof.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first written above.
OPTICAL COATING LABORATORY, INC.
By: /s/ HERBERT M. DWIGHT, JR.
-------------------------------------
Title: Chairman & CEO
OCA ACQUISITION CORP.
By: /s/ HERBERT M. DWIGHT, JR.
-------------------------------------
Title: Chairman & CEO
OPTICAL CORPORATION OF AMERICA
By: /s/ DONALD A. JOHNSON
-------------------------------------
Title: Chairman & CEO
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INDEMNIFICATION AND STOCK ESCROW AGREEMENT
INDEMNIFICATION AND STOCK ESCROW AGREEMENT ("Agreement"), dated as of
___________, 1996 by and among Optical Coating Laboratory, Inc., a Delaware
corporation ("OCLI"), Optical Corporation of America, a Massachusetts
corporation ("OCA"), Kenneth D. Roberts (the "Shareholder Representative"), and
First Interstate Bank, as escrow agent ("Escrow Agent").
WHEREAS, OCLI, OCA Acquisition Corp., a Delaware corporation and a
wholly-owned subsidiary of OCLI, and OCA have entered into an Agreement and Plan
of Merger dated as of June 28, 1996 (the "Merger Agreement"), contemplating the
acquisition by OCLI of all of the issued and outstanding shares of capital stock
of OCA (the "OCA Shares"); and
WHEREAS, the parties desire that certain shares of OCLI common stock to be
issued pursuant to the Merger be received, held and disposed of by the Escrow
Agent subject to the terms and conditions herein expressed;
WHEREAS, the execution and delivery of this Agreement is a condition
precedent to the obligation of OCLI to consummate the transactions contemplated
by the Merger Agreement;
WHEREAS, the provisions of this Agreement are incorporated in the Merger
Agreement and the purpose of this separate instrument is the convenience of
OCLI, OCA and the Shareholders and to facilitate the engagement of the services
of the Escrow Agent and the Shareholders Representative.
NOW, THEREFORE, in consideration of these premises and other good and
valuable consideration, the parties hereto hereby agree as follows:
Section 1. Definitions. Capitalized terms used herein which are
defined in the Merger Agreement but not defined herein shall have the same
meanings herein as therein.
"Escrow Termination Date" shall mean the first to occur of the date of
completion of the first audit of OCA covering a period ending after the
Effective Date or the date which is the first anniversary of the Effective Date.
Section 2. Consent of Shareholders. By virtue of the Shareholders'
approval of the Merger Agreement, the
<PAGE>
Shareholders have, without any further act of any Shareholder, consented to:
(i) the establishment of the escrow account to ratify, confirm and
secure OCA's indemnification obligations under Section 4 of this Agreement in
the manner set forth herein, (ii) the appointment of Kenneth D. Roberts, 72
Windsor Road, Wellesley Hills, Massachusetts 02181-6134 (the "Shareholder
Representative") as their representative for purposes of this Agreement and as
attorney-in-fact and as agent for and on behalf of each Shareholder, (iii) that
the foregoing appointment and designation shall be deemed to be coupled with an
interest and shall survive the disability, death or incompetency of any
Shareholder, (iv) the taking by the Shareholder Representative of any and all
actions and the making of any decisions required or permitted to be taken or
made by him under this Agreement and (v) all of the other terms, conditions and
limitations of this Agreement.
Section 3. Deposit of Escrow Property. OCLI hereby deposits with Escrow
Agent, and Escrow Agent hereby acknowledges receipt of, a stock certificate
evidencing ___________ (______) shares of OCLI's common stock, $0.01 par value
per share (the "Escrowed Shares"). Such certificate has been issued in the name
of Escrow Agent or its nominee.
In case any distribution (except a cash dividend paid out of earned
surplus) or stock dividend shall be made on or in respect of the Escrowed
Shares, or any property shall be distributed upon or with respect to the
Escrowed Shares pursuant to the recapitalization, liquidation or
reclassification of the capital structure of OCLI or pursuant to the merger,
consolidation or reorganization of OCLI, the money, stock or property so
distributed or paid shall be delivered to and held by Escrow Agent hereunder.
Such money, stock and property, together with the Escrowed Shares, are sometimes
referred to hereinafter as the "Escrow Property." Shareholders shall be entitled
to receive, in proportion to their respective number of Escrowed Shares, and
OCLI shall cause to be paid directly to such Shareholders all cash dividends
paid in respect of the Escrowed Shares out of the earned surplus of OCLI.
While the Escrowed Shares are held by Escrow Agent, Shareholders shall be
entitled to direct Escrow Agent as to how to vote the Escrowed Shares, in
proportion to their respective number of Escrowed Shares, with respect to
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matters placed before the shareholders of OCLI, and Escrow Agent shall vote
accordingly.
Section 4. Holding and Distribution of Escrow Property. OCLI (including the
Surviving Corporation after the Merger) upon their demand shall be indemnified
by the Shareholders, subject to Section 5 hereof, for the full amount of all
damages (as defined below) suffered by them as a direct or indirect result of:
(i) the inaccuracy of any representation or warranty made by OCA in or
pursuant to the Merger Agreement, in the form and to the extent so made, or the
omission to state in or pursuant to the Merger Agreement any material fact
relating to any such representation or warranty; and
(ii) any failure by OCA to perform any obligation or comply with any
covenant or agreement specified in the Merger Agreement.
For the purpose of this Agreement, the term "damages" shall be determined
and computed by reference to the actual economic loss to OCLI and/or the
Surviving Corporation (and not just by reference to any effect on the value of
the shares of the Surviving Corporation) and shall be deemed to include all
losses, liabilities, expenses or costs incurred by the Surviving Corporation,
and including reasonable attorney's fees incurred in connection with objections
raised by the Shareholder Representative.
OCLI shall give the Shareholder Representative notice of any claim, action
or proceeding by a third party which is reasonably likely to result in a claim
for indemnification under this Section 4. OCLI shall have the right to defend,
contest, protest and otherwise control the resolution of any such claim, action
or proceeding (unless OCLI decides in good faith not to contest such claim and
such claim, action or proceeding relates to a matter which, if adversely
determined, would have no impact on the Surviving Corporation's liability in
another proceeding, goodwill or reputation or on the future conduct by the
Surviving Corporation of its business or on its Tax or accounting positions, in
which case the next paragraph shall apply), but shall keep the Shareholder
Representative regularly and routinely advised of the status of any such claim,
action or proceeding. The Shareholder Representative shall have the right to
participate in any such legal proceeding, subject to OCLI's right of control
thereof, at the expense of the Shareholder
3
<PAGE>
Representative by counsel of the Shareholder Representative's choice. OCLI,
acting in good faith, shall have the right in its sole discretion to settle any
such claim.
If the claim, action or proceeding is one which, if adversely determined,
would have no impact on OCLI's or the Surviving Corporation's liability in
another proceeding, goodwill or reputation or on the future conduct by the
Surviving Corporation of its business or on its Tax or accounting positions,
then (i) the Shareholder Representative shall have the right, at his expense, to
defend, contest, protest and otherwise control the resolution thereof, but shall
keep OCLI regularly and routinely advised of the status of any such claim,
action or proceeding and (ii) OCLI shall have the right to participate in any
such legal proceeding, subject to the Shareholder Representative's right of
control thereof, at OCLI's expense and with counsel selected by OCLI.
The Shareholder Representative shall be the person through whom all actions
on behalf of the Shareholders relating to this Agreement shall be made or
directed after the Closing Date, including those acts as are required,
authorized or contemplated by this Agreement with respect to the settlement of a
claim or the defense thereof. The other parties hereto are and will be entitled
to rely on any action so taken or any notice given by the Shareholder
Representative and entitled and authorized to give notices only to the
Shareholder Representative for any notice contemplated by this Agreement to be
given any such person. The Shareholder Representative shall be entitled to
reasonable compensation and shall be reimbursed for all reasonable expenses
incurred by him in each case from the Escrow Property. The Shareholder
Representative shall have the right to sell Escrow Property in order to obtain
funds to pay such compensation and expenses. The Shareholder Representative
shall furnish reports as to the status of the escrow to the Shareholders as and
when Escrowed Shares are released from the escrow or claims are paid. OCLI or
the Surviving Corporation shall not have any liability or responsibility to the
Shareholder Representative.
The Shareholder Representative shall receive and deliver notices on behalf
of the Shareholders and take all such action as in the Shareholder
Representative's discretion may be necessary, appropriate, permitted or
advisable to be taken under the terms of this agreement in order to consent to,
pay, contest, arbitrate, litigate or settle any claim or alleged claim asserted
hereunder.
4
<PAGE>
The Shareholder Representative shall not be personally liable to the other
Shareholders for any action taken, suffered or omitted by him in good faith and
reasonably believed by him to be authorized or within the discretion of the
rights or powers conferred upon him by this Agreement.
In acting as representative of the Shareholders, the Shareholder
Representative may rely upon, and shall be protected in acting or refraining
from acting upon, an opinion of counsel, certificate of auditors or other
certificate, statement, instrument, opinion, report, notice, request, consent,
order, arbitrator's award, appraisal, bond or other paper or document reasonably
believed by him to be genuine and to have been signed or presented by the proper
party or parties. The Shareholder Representative may consult with counsel and
any advice of such counsel shall be full and complete authorization and
protection in respect to any action taken or suffered or omitted by him in such
capacity in good faith and in accordance with such opinion of counsel. The
Shareholder Representative may perform his duties as Shareholder Representative
either directly or by or through his agents or attorneys and the Shareholder
Representative shall not be responsible to the other Shareholders for any
misconduct or negligence on the part of any agent or attorney appointed with
reasonable care by him hereunder.
Upon receiving notice of the death, resignation or incapacity of the
Shareholder Representative, the Shareholders shall by majority vote (based on
their number of OCA Shares held immediately prior to the Closing Date) appoint a
successor to fill the vacancy. The Shareholders may by such a majority vote
remove the Shareholder Representative with or without cause and appoint a
successor, provided that notice thereof is given by the new Shareholder
Representative to each of the other parties hereto.
Section 5. Limitation of Liability. The right of OCLI and the Surviving
Corporation to be indemnified pursuant to Section 4 shall be (a) limited to the
return to OCLI of the Escrow Property, (b) shall not apply until the sum of the
damages suffered by OCLI and the Surviving Corporation on a cumulative basis
equals or exceeds $250,000, at which point OCLI and the Surviving Corporation
shall be entitled to be indemnified for all damages, not just amounts in excess
of $250,000, and (c) only for claims that are asserted by OCLI before the Escrow
Termination Date.
5
<PAGE>
Section 6. Escrow Account. It is intended that the assets held in escrow as
above provided shall facilitate OCLI's and the Surviving Corporation's ability
to recover amounts to which they are entitled as a result of misrepresentations,
breaches of warranties and breaches of covenants contained in the Merger
Agreement and to satisfy claims of OCLI arising as a result thereof.
Accordingly, and to the extent necessary to provide such protection to OCLI and
the Surviving Corporation, property held in escrow hereunder shall be available
to satisfy claims of OCLI and the Surviving Corporation under this Agreement to
the extent provided herein. In the event the Escrow Property is insufficient to
pay the reasonable expenses and compensation of the Shareholder Representative
and all damages to OCLI and the Surviving Corporation, including by virtue of
the expiration of the escrow period, no Shareholder shall be liable under this
Agreement to pay any amount in addition to such Shareholder's proportionate
share of the Escrow Property expended by the Shareholder Representative or
claimed by OCLI prior to the Escrow Termination Date.
Section 7. Registration of Claims. In the event that OCLI or the Surviving
Corporation asserts any claim for indemnification against the Escrowed Shares,
it shall deliver to Escrow Agent and the Shareholder Representative a written
notice thereof (the "Notice of Claim") setting forth (a) a demand for payment of
a specified amount from the Escrowed Shares or, if such amount can not be
specified, the basis upon which the amount would be determined and (b) a
description of the asserted claim and the basis thereof, and OCLI shall deliver
to the Shareholder Representative thereafter such other information as may be
reasonably requested by the Shareholder Representative to evaluate the asserted
claim. It is understood and agreed among the parties hereto that OCLI's and the
Surviving Corporation's right to assert claims for indemnification under this
Agreement is limited to those matters set forth in this Agreement, although the
Escrow Agent shall have no obligation to determine or verify whether such
condition has been met.
Section 8. Payment of Amounts from Escrow Property Upon Demand Without
Objection. If OCLI delivers to the Shareholder Representative and Escrow Agent a
Notice of Claim pursuant to Section 7 hereof and if no written objection to such
demand is received by Escrow Agent and OCLI, from the Shareholder
Representative, within 30 days following the delivery of such Notice of Claim to
Escrow Agent and the Shareholder Representative, then Escrow Agent shall pay the
claim out of the Escrow Property by forthwith
6
<PAGE>
endorsing and delivering to OCLI the certificates representing the Escrowed
Shares. OCLI shall be entitled to retain that number of Escrowed Shares which,
when multiplied by the Per Share Value (as defined below), shall equal the
amount of the claim as provided in Section 4 hereof; provided, however, that
Notices of Claim must be delivered before the Escrow Termination Date and OCLI
may not retain more than the Escrowed Shares. OCLI shall return one or more
certificates for the excess Escrowed Shares to Escrow Agent for continued
holding hereunder. To the extent the value (calculated on the basis of the Per
Share Value, regardless of actual market value at the time) of the Escrowed
Shares retained by OCLI is less than the amount of the claim, Escrow Agent shall
also transfer to OCLI other Escrow Property, if any, in addition to the Escrowed
Shares.
The Per Share Value shall be the reported closing price of OCLI's Common
Stock on the Nasdaq National Market System on the date of this Agreement.
Section 9. Payment of Amounts from Escrow Property After Notice of
Objection. If OCLI delivers to the Shareholder Representative and Escrow Agent a
Notice of Claim pursuant to Section 7 hereof, and if the Shareholder
Representative shall give written objection thereto to Escrow Agent and OCLI
prior to the expiration of the 30-day period specified in Section 8, Escrow
Agent shall make no payment in respect of the demand set forth in such Notice of
Claim until it shall have received one of the following:
(a) written instructions signed on behalf of both OCLI and the
Shareholder Representative; or
(b) a final order of a court having jurisdiction over the asserted
claim, after expiration of any applicable appeal period.
Upon receipt of any such instructions or order, Escrow Agent shall pay such
amount from the Escrow Property to OCLI as may be directed by such instructions
or order; provided, however that (i) the limitations set forth in Section 8
hereof on the number of Escrowed Shares retainable by OCLI shall also apply to
claims paid under this Section 9, and (ii) all Escrowed Shares delivered to OCLI
shall be valued on the basis of the Per Share Value, regardless of the actual
market price of OCLI's Common Stock on the date such shares are delivered to
OCLI. If the final order of a court having jurisdiction over the asserted claim,
after expiration of any applicable appeal period, upholds the Shareholder
Representative's objection to the Escrow Agent,
7
<PAGE>
OCLI shall reimburse the Escrow Agent and Shareholder Representative for
reasonable attorneys' fees and expenses paid from the Escrow Property to pursue
the objection.
Section 10. Payment of Escrow Property to Shareholders. On the Escrow
Termination Date, Escrow Agent shall deliver to OCLI and the Shareholder
Representative a statement of the remaining balance, if any, of the Escrow
Property (calculated on the basis of the Per Share Value, regardless of the
actual market price of OCLI's Common Stock at that time), and the total amount
of all claims registered pursuant to Section 7 hereof and not theretofore
resolved and paid (the excess, if any, of such remaining balance over the total
amount of such claims shall be referred to as the "Final Escrow Balance"). OCLI
and the Shareholder Representative shall review the accuracy of the Final Escrow
Balance and notify Escrow Agent within 30 days of the foregoing statement of any
asserted discrepancy. Upon the expiration of the 30-day period after receipt by
OCLI and the Shareholder Representative of such statement, and if Escrow Agent
has not been notified of any discrepancy by OCLI or the Shareholder
Representative within the 30-day period specified in the preceding sentence,
Escrow Agent shall deliver to each Shareholder Escrow Property representing such
Shareholder's share of the Final Escrow Balance, free and clear of the escrow
created by this Agreement. After the last registered claim shall have been
resolved pursuant to Section 8 and Section 9 hereof, as the case may be, and
paid, the remaining balance, if any, of the Escrow Property shall be delivered
by Escrow Agent to the Shareholders, free and clear of the escrow created by
this Agreement; provided, however, that upon the disposition of any such claim
prior to the disposition of all such claims Escrow Agent shall deliver to
Shareholders the Escrow Property in excess of the amount of the remaining
aggregate claims as determined above. All payments by Escrow Agent to
Shareholders pursuant to this Agreement shall be made in proportion to the
Shareholders' respective interests in the Escrowed Shares.
Section 11. Responsibility of Escrow Agent. Escrow Agent may act upon any
instrument or other writing believed by it in good faith to be genuine and to
have been signed or presented by the proper person and shall not be liable to
any party hereto in connection with the performance of its duties hereunder,
except for its own negligence or willful misconduct. Escrow Agent's duties shall
be determined only with reference to this Escrow Agreement and applicable laws
and Escrow Agent is not charged with knowledge of, or any duties or
responsibilities in connection with, any other
8
<PAGE>
document or agreement. If in doubt as to its duties and responsibilities
hereunder, Escrow Agent may consult with counsel of its choice and shall be
protected in any action taken or omitted in connection with the advice or
opinion of such counsel.
If any party to this Agreement disagrees on anything connected with this
escrow (1) Escrow Agent will not have to settle the matter, (2) Escrow Agent may
wait for a settlement by appropriate legal proceedings or other means it may
require, and in such event it will not be liable for interest or damage, (3) if
Escrow Agent intervenes in or is made a party to any legal proceedings, it will
be entitled to such reasonable compensation for services, costs and attorney's
fees as the court may award and (4) Escrow Agent is entitled to hold documents
and assets deposited in this escrow pending settlement of the disagreement by
any of the above means.
Escrow Agent is to act as a depositary agent only and is hereby relieved of
any liability in connection with any representations made by the other parties
hereto or any of their agents. Escrow Agent shall not be responsible for and
shall not be under a duty to examine any other agreement.
Section 12. Indemnification and Fees of Escrow Agent. In consideration of
its acceptance of the appointment as Escrow Agent, OCLI shall indemnify and hold
Escrow Agent harmless as to any liability incurred by it to any other person,
firm or corporation by reason of its having accepted the same or in carrying out
any of the terms hereof, and to reimburse the Escrow Agent for all its
out-of-pocket expenses, including, among other things, reasonable counsel fees
and court costs, incurred by reason of its position hereunder or actions taken
pursuant hereto, except in the event of the negligence or willful misconduct of
Escrow Agent. The fees and charges set forth below for the services of Escrow
Agent will be considered compensation for Escrow Agent's ordinary services as
contemplated by this Agreement. In the event the conditions of the escrow are
not promptly fulfilled or Escrow Agent renders any service not provided for in
this Agreement or there is any assignment of any interest in the subject matter
of this escrow or modification of any interest or if any controversy arises in
connection with it, Escrow Agent will be reasonably compensated for such
extraordinary services, and will be reimbursed for all reasonable costs,
attorney's fees and expenses occasioned thereby, which compensation, costs, fees
and expenses shall be paid by OCLI.
9
<PAGE>
Escrow Agent's initial acceptance fee is $_________ and Escrow Agent's
annual fee hereunder is $_________, which fees are nonrefundable and shall be
paid in advance by OCLI.
Section 13. Resignation of Escrow Agent. Escrow Agent may resign and be
discharged from its duties hereunder at any time by giving not less than 60 days
prior written notice of such resignation to OCLI and the Shareholder
Representative, which notice shall specify the date when such resignation shall
take effect. Upon such notice, OCLI and the Shareholder Representative shall
appoint a successor escrow agent. If OCLI and the Shareholder Representative are
unable to agree upon a successor escrow agent within 30 days after such notice,
Escrow Agent may apply to a court of competent jurisdiction for such
appointment. Escrow Agent shall continue to serve until its successor delivers
to OCLI and the Shareholder Representative a duly executed instrument of
acceptance of the terms and conditions of this Agreement and receives the Escrow
Property.
Section 14. Investments. Escrow Agent shall invest the cash portion of the
Escrow Property, if any, in money market accounts at
____________________________________. Income from any such investment shall be
held by Escrow Agent, shall be reinvested in accordance with this Section 14 and
shall be considered part of the Escrow Property.
Section 15. Security Interest. To secure the obligations that may be owed
it hereunder, OCLI shall have a security interest in the Escrow Property, and
for purposes of protection of an enforceable security interest, possession of
the Escrow Property by the Escrow Agent shall be deemed possession by OCLI.
Section 16. Notices and Communications. Any notice or other communications
hereunder shall be deemed to have been duly delivered if delivered by hand or
overnight courier service to the party to whom such notice or other
communication is to be delivered at such party's address set forth below, or
sent by certified or registered mail, return receipt requested, postage prepaid,
as follows:
If to OCLI:
Optical Coating Laboratory, Inc.
2789 Northpoint Parkway
Santa Rosa, California 95407-7397
Attention: Joseph C. Zils, Vice
President & General Counsel
10
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With a copy to:
Collette & Erickson
555 California Street
San Francisco, California 94104
Attention: John V. Erickson, Esq.
If to OCA:
Optical Corporation of America
170 Locke Drive
Marlborough, Massachusetts 01752
Attention: Donald A. Johnson
With a copy to:
Robert DeN. Cope, Esq.
44 Elm Street, Suite 503
Worcester, Massachusetts 01609-2523
If to the Shareholder Representative:
Kenneth D. Roberts
72 Windsor Road
Wellesley Hills, Massachusetts 02181-6134
If to a Shareholder:
At Shareholder's respective address set forth on OCLI's stock
records.
If to Escrow Agent:
First Interstate Bank
------------------------------
------------------------------
------------------------------
Attention: Corporate Trust Division
or to such other address, or to the attention of such other individual, as
any party hereto may designate in writing to the other parties to this
Agreement. Any such notice, request, demand, consent or other communication
shall be deemed to have been given on the earlier of (i) the date of delivery if
by hand or by overnight courier service or (ii) five days after having been
mailed.
Section 17. Governing Law. This Agreement shall be governed by the law of
the State of California applicable to agreements made and to be performed wholly
within such
11
<PAGE>
jurisdiction, without regard to the conflicts of laws provisions thereof. Each
of the parties agrees to personal jurisdiction in any action brought under this
Agreement in any court, federal or state, within the State of California having
subject matter jurisdiction over such action. The parties to this Agreement
agree that any suit, action or proceeding arising out of or relating to this
Agreement may be instituted in the United States District Court located in San
Francisco, California, or, in the absence of jurisdiction, the Superior Court
for San Francisco County, California.
Each party waives any objection which such party may have now or hereafter
to the laying of the venue of any such suit, action or proceeding, and
irrevocably submits to the jurisdiction of any such court in any such suit,
action or proceeding and hereby agrees that such party cannot contest any
judgment rendered thereby based on lack of jurisdiction, improper venue or
inadequate service of process.
Section 18. Amendments. This instrument supersedes any and all prior
agreements among the parties with regard to the matters set forth herein and may
not be altered or amended except by a writing signed by the parties against whom
such alteration or amendment is sought.
Section 19. Waiver. No waiver of any term or provision of this Agreement
shall be effective unless made in a writing signed by the party against whom the
enforcement of the waiver is sought. No waiver of any term or provision of this
Agreement shall be deemed to be a waiver of any other breach of such term or
provision of this Agreement.
Section 20. Section Headings. The headings in this Agreement are
for the purposes of reference only and shall not limit or otherwise affect
any of the terms or provisions hereof.
Section 21. Successor and Assigns. The rights and obligations of the
parties hereto shall inure to the benefit of and shall be binding upon the
successors and assigns of each of them; provided, however, that neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto without the prior written consent of the
other parties hereto.
Section 22. Counterparts. This Agreement may be executed in several
identical counterparts each of which when executed by the parties hereto and
delivered shall be
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an original, but all of which together shall constitute a single instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first written above.
Optical Coating Laboratory,Inc.
By:
----------------------------------
Title:
----------------------------------
Optical Corporation of America
By:
----------------------------------
Title:
----------------------------------
SHAREHOLDER REPRESENTATIVE
-----------------------------------------
Kenneth D. Roberts
First Interstate Bank, as Escrow Agent
By:
----------------------------------
Title:
----------------------------------
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EXHIBIT B
LIST OF OCA AFFILIATES
Robert P. Catterson
Michael J. Devlin
F. Sherman Hoyt
Donald A. Johnson
Stephen B. Loring
Edward M. Muller
George Olmstead
John D. Viggiano
Glen Wegner
George B. Whelton, Jr.
<PAGE>
Optical Corporation of America
AFFILIATE AGREEMENT
June 28, 1996
Optical Corporation of America
7421 Orangewood Avenue
Garden Grove, California 92641
Optical Coating Laboratory, Inc.
2789 Northpoint Parkway
Santa Rosa, California 95407-7397
Ladies and Gentlemen:
The undersigned Shareholder (the "Shareholder") of Optical Corporation of
America, a Massachusetts corporation ("OCA"), understands that OCA has entered
into an Agreement and Plan of Merger (the "Merger Agreement") dated as of June
28, 1996 among Optical Coating Laboratory, Inc., a Delaware corporation
("OCLI"), OCA Acquisition Corporation, a Delaware corporation and a wholly-owned
subsidiary of OCLI ("Acquisition"), and OCA.
Pursuant to the Merger Agreement, Acquisition will merge (the "Merger")
with and into OCA, following which OCA will become a wholly-owned subsidiary of
OCLI. The Merger Agreement provides that, on the Effective Date of the Merger
(as defined in the Merger Agreement), all of the outstanding shares of capital
stock of OCA will be converted into shares of common stock of OCLI (the "OCLI
Common Stock") in accordance with the applicable exchange ratio specified in the
Merger Agreement.
The Shareholder has been advised that as of the date hereof, the
Shareholder may be deemed to be an "affiliate" of OCA, as the term "affiliate"
is (i) defined for purposes of paragraphs (c) and (d) of Rule 145 promulgated by
the Securities and Exchange Commission (the "Commission") under the Securities
Act of 1933, as amended (the "Act"), and (ii) used in and for purposes of
Accounting Series Releases 130 and 135, as amended, of the Commission.
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<PAGE>
The Shareholder understands that the representations, warranties and
covenants set forth herein will be relied upon by OCLI, Acquisition, OCA and
other shareholders of OCA, and their respective counsel and accounting firms.
The Shareholder represents, warrants and agrees with OCLI and OCA as
follows:
1. The Shareholder is the beneficial owner of the shares of OCA capital
stock and options to purchase OCA capital stock indicated on the last page
hereof (the "OCA Securities"), which at the date hereof and at all times up
until the Effective Date will be free and clear of any liens, claims, options,
charges or other encumbrances not described on such page. Except for OCA
Securities, the Shareholder does not beneficially own any shares of capital
stock of OCA or any other equity securities of OCA or any other options,
warrants or other rights to acquire any equity securities of OCA. The
Shareholder has full power and authority to make, enter into and carry out the
terms of this Agreement.
2. The Shareholder has been advised that the issuance of shares of OCLI
Common Stock to the Shareholder (the "OCLI Shares") in connection with the
Merger has been or will be registered with the Commission under the Act on a
registration statement on Form S-4. However, the Shareholder has also been
advised that since at the time the Merger is to be submitted for a vote of the
shareholders of OCA the Shareholder may be deemed to be an affiliate of OCA and
the distribution by the Shareholder of any OCLI Shares will not have been
registered under the Act, the Shareholder may not sell, transfer or otherwise
dispose of the OCLI Shares unless (i) such sale, transfer or other disposition
has been registered under the Act, (ii) such sale, transfer or other disposition
is made in compliance with Rule 145 promulgated by the Commission under the Act,
or (iii) such sale, transfer or other disposition is otherwise exempt from
registration under the Act.
3. The Shareholder shall not make any sale, transfer or other disposition
of the OCLI Shares in violation of the Act or the rules and regulations
promulgated thereunder.
4. Except as provided for in the Merger Agreement, the Shareholder
understands that OCLI is under no obligation to register the sale, transfer or
other disposition of the OCLI Shares, or OCLI Common Stock held on the
Shareholder's behalf, under the Act or to take any other action necessary
2
<PAGE>
in order to make compliance with an exemption from such registration available.
5. Notwithstanding any other provision hereof to the contrary, during the
period commencing on the date hereof and ending at such time as financial
results covering at least thirty days of combined operations of OCA and OCLI
have been published by OCLI in the form of a quarterly earnings report, an
effective registration statement filed with the Commission, a report to the
Commission on Form 10-K, 10-Q or 8-K, or any other public filing or announcement
which includes the combined results of operations of OCLI and OCA, the
Shareholder will not sell, transfer or otherwise dispose of, or offer or agree
to sell, transfer or otherwise dispose of, or in any other way reduce the risk
of the Shareholder's ownership of or investment in, any OCA Securities, any
shares of OCA common stock or other equity securities of OCA which the
Shareholder purchases or acquires after the execution of this Agreement, the
OCLI Shares or any securities which may be paid as a dividend or otherwise
distributed thereon or with respect thereto or issued or delivered in exchange
or substitution therefor (all such shares and other securities being referred to
herein, collectively, as "Restricted Securities"), or any option, right or other
interest with respect to any Restricted Securities. Without limiting the
foregoing, the Shareholder acknowledges that such restriction prohibits the
acquisition of a "put" option or other hedging instrument with respect to OCLI
common stock.
6. Stock transfer instructions will be given to OCLI's transfer agent with
respect to the OCLI Shares and there will be placed on the certificates for the
OCLI Shares, or any substitutions therefor, a legend stating in substance:
"The shares represented by this certificate were issued in a transaction to
which Rule 145 promulgated under the Securities Act of 1933 applies. The
shares represented by this certificate may only be transferred in
accordance with the terms of an agreement dated as of June 28, 1996 between
the registered holder hereof and OCLI, a copy of which agreement is on file
at the principal offices of OCLI."
7. Unless the transfer by the Shareholder of the OCLI Shares has been
registered under the Act, or a sale is made in compliance with Rule 145, OCLI
reserves the right to put
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<PAGE>
a legend on the certificates issued to any transferee of the Shareholder stating
in substance:
"The shares represented by this certificate have not been registered under
the Securities Act of 1933 and were acquired from a person who received
such shares in a transaction to which Rule 145 promulgated under the
Securities Act of 1933 applies. The shares may not be sold, pledged or
otherwise transferred except in accordance with an exemption from the
registration requirements of the Securities Act of 1933."
8. The legends set forth in paragraphs 6 and 7 above shall be removed by
delivery of substitute certificates without the applicable legend if, in the
opinion of counsel to OCLI, (a) such legend is not required for purposes of the
Act or (b) the sale or other disposition of the shares evidenced by the
certificate is permitted by the provisions of Rule 145(d)). In any event, such
legend may be removed upon request of the Shareholder no later than two years
after the Merger is consummated, unless the Shareholder is then an "affiliate"
of OCLI within the meaning of Rule 145(d).
9. At every meeting of the shareholders of OCA called with respect to any
of the following, and at every adjournment thereof, and on every action or
approval by written consent of the shareholders of OCA with respect to any of
the following, the Shareholder shall vote all his OCA Shares: (i) in favor of
approval of the Merger Agreement and the Merger and any matter that could
reasonably be expected to facilitate the Merger; and (ii) against approval of
any proposal made in opposition to or competition with consummation of the
Merger (the foregoing is hereinafter referred to as an "Opposing Proposal").
10. Except as required by law, including actions which Shareholder
determines after consultation with legal counsel are required pursuant to
Shareholder's fiduciary duties under applicable law, Shareholder will not, and
will not permit any entity under Shareholder's control to: (i) solicit proxies
or become a "participant" in a "solicitation" (as such terms are defined in
Regulation 14A under the Exchange Act) with respect to an Opposing Proposal;
(ii) initiate a shareholders' vote or action by consent of OCA shareholders with
respect to an Opposing Proposal; or (ii) become a member of a "group" (as such
term is used in Section 13(d) of the Exchange Act) with respect
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<PAGE>
to any voting securities of OCA, in connection with an Opposing Proposal.
11. The Shareholder hereby covenants and agrees to execute and deliver any
additional documents reasonably necessary or appropriate, in the opinion of
OCLI, to carry out the intent of this Agreement.
12. Miscellaneous.
12.1 If any term, provisions, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, all other terms, provisions, covenants and restrictions of this
Agreement shall nevertheless remain in full force and effect and shall in no way
be affected, impaired or invalidated.
12.2 This Agreement and all of the provisions hereof shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, but, except as otherwise specifically provided
herein, neither this Agreement nor any of the rights, interests or obligations
of the parties hereto may be assigned by either of the parties without the prior
written consent of the other.
12.3 This Agreement may not be modified, amended, altered or
supplemented except upon the execution and delivery of a written agreement
executed by the parties hereto.
12.4 The parties hereto acknowledge that OCLI will be irreparably
harmed and that there will be no adequate remedy at law for a violation of any
of the covenants or agreements of Shareholder set forth herein. Therefore, it is
agreed that, in addition to any other remedies that may be available to OCLI
upon any such violation, OCLI shall have the right to enforce such covenants and
agreements by specific performance, injunctive relief or by any other means
available to OCLI at law or in equity.
12.5 All notices, requests, claims,, demands and other communications
hereunder shall be in writing and sufficient if delivered in person, by cable,
telegram or telex, or sent by mail (registered or certified mail, postage
prepaid, return receipt requested) or overnight courier (prepaid) to the
respective parties as follows:
5
<PAGE>
If to OCA: Optical Corporation of America
170 Locke Drive
Marlborough, Massachusetts 01752
Attention: Donald A. Johnson
with a copy to: Robert DeN. Cope, Esq.
44 Elm St., Apt. 503
Worcester, Massachusetts 01609-2523
If to OCLI or Optical Coating Laboratory, Inc.
Acquisition 2789 Northpoint Parkway
Santa Rosa, California 95407-7397
Attention: Joseph C. Zils, Esq., Vice
President and General Counsel
with a copy to: Collette & Erickson
555 California Street
San Francisco, California 94104
Attention: John V. Erickson, Esq.
If to Shareholder: to the address set forth on the last page hereof or to such
other address as any party may have furnished to the other in writing in
accordance herewith, except that notices of change of address shall only be
effective upon receipt.
12.6. This Agreement contains the entire understanding of the parties
in respect of the subject matter hereof, and supersedes all prior negotiations
and understandings between the parties with respect to such subject matter.
12.7 This Agreement may be executed in several counterparts, each of
which shall be an original, but all of which together shall constitute one and
the same agreement.
13. OCLI agrees to publish, as promptly as practicable following the
Merger, results covering at least thirty days of combined operations of OCLI and
OCA in the form of a quarterly earnings report, an effective registration
statement filed with the Commission, a report to the Commission on Form 10-K,
10-Q or 8-K, or any other public filing or announcement which includes the
combined results of operations of OCLI and OCA; provided, however, that OCLI
shall be under no obligation to publish any such financial information other
than with respect to a fiscal quarter of OCLI.
6
<PAGE>
Very truly yours,
------------------------------------
(Print Shareholder's Name)
Shareholders' Address:
------------------------------------
------------------------------------
------------------------------------
Number of shares of OCA Common Stock beneficially owned by the
Shareholder: ___________
Number of shares of OCA Common Stock subject to options
beneficially owned by the Shareholder: ______________
Encumbrances: _______________________
Accepted this 28th day of June, 1996.
Optical Corporation of America
By: _____________________________
Title: ____________________________
Accepted this 28th day of June, 1996.
Optical Coating Laboratory, Inc.
By: _____________________________
Title: ____________________________
<PAGE>
Very truly yours,
Robert P. Catterson
Shareholders' Address:
8004 Santa Rita Street
Corona, California 91719
Number of shares of OCA Common Stock beneficially owned by the
Shareholder: 5,200
Number of shares of OCA Common Stock subject to options beneficially
owned by the Shareholder: 1,000
Encumbrances: None
Accepted this 28th day of June, 1996.
Optical Corporation of America
By:
Title:
Accepted this 28th day of June, 1996.
Optical Coating Laboratory, Inc.
By:
Title:
Very truly yours,
Michael J. Devlin
Shareholders' Address:
1856 Mariposa Lane
Fullerton, California 92633
Number of shares of OCA Common Stock beneficially owned by the
Shareholder: 20,000
Number of shares of OCA Common Stock subject to options beneficially
owned by the Shareholder: -0-
Encumbrances: None
Accepted this 28th day of June, 1996.
Optical Corporation of America
By:
Title:
Accepted this 28th day of June, 1996.
Optical Coating Laboratory, Inc.
By:
Title:
Very truly yours,
F. Sherman Hoyt
Shareholders' Address:
39 Main Street
Hollis, New Hampshire 03049
Number of shares of OCA Common Stock beneficially owned by the
Shareholder: 115,907
Number of shares of OCA Common Stock subject to options beneficially
owned by the Shareholder: -0-
Encumbrances: None
Accepted this 28th day of June, 1996.
Optical Corporation of America
By:
Title:
Accepted this 28th day of June, 1996.
Optical Coating Laboratory, Inc.
By:
Title:
Very truly yours,
Donald A. Johnson
Shareholders' Address:
729 Promontory Drive - West
Newport Beach, California 92660
Number of shares of OCA Common Stock beneficially owned by the
Shareholder: 83,580
Number of shares of OCA Common Stock subject to options beneficially
owned by the Shareholder: -0-
Encumbrances: None
Accepted this 28th day of June, 1996.
Optical Corporation of America
By:
Title:
Accepted this 28th day of June, 1996.
Optical Coating Laboratory, Inc.
By:
Title:
Very truly yours,
Stephen B. Loring
Shareholders' Address:
61 Lexington Circle
Holden, Massachusetts 01520
Number of shares of OCA Common Stock beneficially owned by the
Shareholder: 93,436
Number of shares of OCA Common Stock subject to options beneficially
owned by the Shareholder: -0-
Number of shares of OCA Common Stock subject to warrants beneficially
owned by the Shareholder: 5,120
Encumbrances: None
Accepted this 28th day of June, 1996.
Optical Corporation of America
By:
Title:
Accepted this 28th day of June, 1996.
Optical Coating Laboratory, Inc.
By:
Title:
Very truly yours,
Edward M. Muller
Shareholders' Address:
190 Sherman Street
Fairfield, Connecticut 06430
Number of shares of OCA Common Stock beneficially owned by the
Shareholder: 55,413
Number of shares of OCA Common Stock subject to options beneficially
owned by the Shareholder: -0-
Encumbrances: None
Accepted this 28th day of June, 1996.
Optical Corporation of America
By:
Title:
Accepted this 28th day of June, 1996.
Optical Coating Laboratory, Inc.
By:
Title:
Very truly yours,
George Olmsted
Shareholders' Address:
62 Chase Street
Chatham, Massachusetts 02633-2404
Number of shares of OCA Common Stock beneficially owned by the
Shareholder: 67,349
Number of shares of OCA Common Stock subject to options beneficially
owned by the Shareholder: -0-
Encumbrances: None
Accepted this 28th day of June, 1996.
Optical Corporation of America
By:
Title:
Accepted this 28th day of June, 1996.
Optical Coating Laboratory, Inc.
By:
Title:
Very truly yours,
John D. Viggiano
Shareholders' Address:
84 Emer Road
Marlborough, Massachusetts 01752
Number of shares of OCA Common Stock beneficially owned by the
Shareholder: 19,500
Number of shares of OCA Common Stock subject to options beneficially
owned by the Shareholder: 2,000
Encumbrances: None
Accepted this 28th day of June, 1996.
Optical Corporation of America
By:
Title:
Accepted this 28th day of June, 1996.
Optical Coating Laboratory, Inc.
By:
Title:
Very truly yours,
Glen Wegner
Shareholders' Address:
22 Lathrop Road
Wellesley, Massachusetts 02181
Number of shares of OCA Common Stock beneficially owned by the
Shareholder: 25,585
Number of shares of OCA Common Stock subject to options beneficially
owned by the Shareholder: 8,000
Encumbrances: None
Accepted this 28th day of June, 1996.
Optical Corporation of America
By:
Title:
Accepted this 28th day of June, 1996.
Optical Coating Laboratory, Inc.
By:
Title:
Very truly yours,
George B. Whelton, Jr.
Shareholders' Address:
615 Route 13 South
Milford, New Hampshire 03055
Number of shares of OCA Common Stock beneficially owned by the
Shareholder: 11,510
Number of shares of OCA Common Stock subject to options beneficially
owned by the Shareholder: -0-
Encumbrances: None
Accepted this 28th day of June, 1996.
Optical Corporation of America
By:
Title:
Accepted this 28th day of June, 1996.
Optical Coating Laboratory, Inc.
By:
Title:
<PAGE>
CONTINUITY OF INTEREST CERTIFICATE
In order to induce Optical Coating Laboratory, Inc., a Delaware corporation
("OCLI"), OCA Acquisition Corp., a Delaware corporation and wholly-owned
subsidiary of OCLI ("Acquisition") and Optical Corporation of America, a
Massachusetts corporation ("OCA"), to enter into and to close under an Agreement
and Plan of Merger dated as of June 28, 1996 by and among OCLI, Acquisition and
OCA (the "Agreement"), the undersigned shareholders of OCA hereby represent to
OCLI, Acquisition and OCA that based upon such investigation as the undersigned
deem appropriate for the purposes of the delivery of this Certificate and in
reliance upon their examination of the Shareholder Ledger of OCA prepared by
Robert DeN. Cope, OCA's Assistant Clerk, and dated May 22, 1996 with respect to
the identity and holdings of each of the nineteen (19) Shareholders of OCA who
owns one per cent (1%) or more of OCA's outstanding Common Stock, $.01 par value
(the "OCA Stock"), there is no plan or intention by the Shareholders who own one
per cent (1%) or more of the OCA Stock, and to the best of the knowledge of
OCA's Management (as such term is defined in the Agreement) there is no plan or
intention on the part of the remaining Shareholders of OCA, to sell, exchange,
or otherwise dispose of a number of shares of OCLI Common Stock which will be
received pursuant to the merger transaction specified in the Agreement (the
"Merger") that would reduce the ownership by the Shareholders of OCA of shares
of OCLI Common Stock to a number of shares having a value, as of the date of the
Merger, of less than fifty per cent (50%) of the value of all of the formerly
outstanding OCA Stock as of the same date. [For the purposes of the foregoing
calculations and representation, shares of OCA Stock exchanged for cash or other
property, surrendered by dissenters or exchanged for cash in lieu of fractional
shares of OCLI Common Stock will be treated as outstanding OCLI Common Stock on
the date of the Merger. No shares of OCA Stock can be sold, redeemed or disposed
of without the consent of a majority of the Board of Directors of OCA and the
undersigned have no way of knowing whether shares of OCLI Common Stock are owned
by any OCA Shareholder.]
IN WITNESS WHEREOF, the undersigned have executed this certificate as on
June 28, 1996.
Robert P. Catterson
Michael J. Devlin
F. Sherman Hoyt
Donald A. Johnson
Stephen B. Loring
Edward M. Muller
George Olmsted
John D. Viggiano
Glen Wegner
George B. Whelton, Jr.
<PAGE>
EXHIBIT E
OCA DISCLOSURE SCHEDULE
Notes 1 & 2.
SECTION 1.3
The OCA Options are:
1. The Common Stock Purchase Warrant to purchase 76,000 shares of OCA's
Common Stock (the "MCRC Warrant"), issued pursuant to a Subordinated Note and
Warrant Purchase Agreement between OCA and Massachusetts Capital Resource
Company ("MCRC") dated as of May 28, 1992, a copy of which (together with all
amendments thereto delivered by the parties to and including the date of the
Agreement) has been delivered to OCLI by OCA (the "MCRC Agreement"), together
with the rights applicable to such MCRC Warrant and to MCRC as a holder of OCA
Common Stock issued upon the exercise thereof which are specified in the MCRC
Agreement and the MCRC Warrant.
2. The Warrant to Purchase 10,000 shares of OCA's Common Stock (the "SVB
Warrant"), issued pursuant to a Loan and Security Agreement between OCA and
Silicon Valley Bank ("SVB") dated May 27, 1994, a copy of which (together with
all amendments thereto delivered by the parties to and including the date of the
Agreement) has been delivered to OCLI by OCA (the "SVB Agreement"), together
with the rights applicable to such SVB Warrant and to SVB as a holder of OCA
Common Stock issued upon the exercise thereof which are specified in the SVB
Agreement, the SVB Warrant, the Registration Rights Agreement and the
Anti-Dilution Agreement executed and delivered in connection with the SVB
Warrant.
3. The Common Stock Purchase Warrants to purchase 24,000 shares of OCA's
Common Stock (the "11% Noteholders' Warrants"), issued pursuant to separate
Subordinated Note and Warrant Purchase Agreements between OCA and the several
Purchasers named on the Schedule attached hereto (the "11% Noteholders") all
dated as of June 30, 1993, a conformed copy of which (together with the
amendments thereto, if any, delivered by the parties to and including the date
of the Agreement) has been delivered to OCLI by OCA (the "11% Noteholders'
Agreement"), together with the rights applicable to such 11% Noteholders'
Warrants and to the 11% Noteholders as the holders of OCA Common Stock issued
upon the exercise thereof which are specified in the 11% Noteholders' Agreement
and the 11% Noteholders' Warrants.
<PAGE>
4. The Incentive Stock Options to purchase 44,000 shares of OCA's Common
Stock (the "OCA Incentive Stock Options"), issued and outstanding pursuant to
OCA's three Incentive Stock Option Plans, the "1986, 1988 and 1990 Plans", to
employees of OCA (the "OCA Optionees") are reflected on the three Schedules,
each marked "Prepared by Robert DeN. Cope 5/21/96", which have been delivered to
OCLI by OCA and on the Summary of Outstanding Stock Options dated March 18, 1996
showing them by expiration date. Copies of the 1986, 1988 and 1990 Plans have
been delivered to OCLI by OCA.
5. The non-qualified option to purchase 8000 shares of OCA's Common Stock
on or prior to January 2, 1997 issued to Glen Wegner, a Director and former
employee of OCA (the "Wegner Option"), a copy of which has been delivered to
OCLI by OCA.
The amendments and waivers referred to in Section 1.3 are:
1. In the case of the MCRC Warrant, as follows: the exercise by MCRC of the MCRC
Warrant in accordance with its terms and contemporaneously with the Effective
Date, accompanied by MCRC's waiver (if OCA's indebtedness to MCRC is to remain
outstanding after the Effective Date) of the following provisions of the MCRC
Agreement: Section 4.02 (e) and Article V.
2. In the case of the SVB Warrant, as follows: the exercise of the SVB Warrant
in accordance with the Conversion right set forth therein accompanied by (x)
SVB's waiver (if OCA's indebtedness to SVB is to remain outstanding after the
Effective Date) of Section 6.1(l) of the SVB Agreement, (y) SVB's agreement that
Section 1.7.3 of the SVB Warrant shall apply to the transaction of which the
Merger is a part and (z) SVB's waiver of its rights under its Registration
Rights Agreement and Antidilution Agreement with OCA.
3. In the case of the 11% Noteholders' Warrants, as follows: the assumption and
exchange of an OCLI Option containing substantially equivalent terms and
conditions for each such Warrant the holder of which elects to not exercise such
Warrant in full as of the Effective Date,, accompanied by such holder's waiver
(if OCA's indebtedness to such holder is to remain outstanding after the
Effective Date) of Section 4.02(a) of the 11% Noteholders' Agreement.
4. In the case of the OCA Incentive Stock Options, none. However, OCA
understands that at or prior to the Effective
2
<PAGE>
Date OCLI will have acted to issue in exchange for and replacement of each OCA
Incentive Stock Option which has not previously terminated or been exercised by
the holder thereof, an OCLI Option containing substantially equivalent terms and
conditions and otherwise complying with the Agreement.
5. In the case of the Wegner Option, None.
EXCEPTIONS:
Reference is hereby made to Section 16 of each of the 1986, 1988 and 1990 Plans
for the consequences of OCLI's failure to issue OCLI Options to the Optionees.
SECTION 3.2(A)
The Business of OCA as it is now being conducted is described as follows:
GENERAL
OCA develops, manufactures and markets optical and electro-optical
products, components and subsystems for a wide range of applications in the
medical, telecommunication, industrial, scientific, aerospace and defense
industries. OCA focuses on four categories of product and related services: (1)
Optical Filters, (2) Electro-Optical Sensors and Cameras, (3) Optical
Correlators and (4) Fiber Optics Communications Devices. OCA also enjoys a
significant business in optical components and subsystems for commercial and
government markets.
PRODUCTS AND SERVICES
(1) OPTICAL FILTERS
OCA designs, manufactures and markets optical filters which incorporate
proprietary technology for multi-layer thin film coatings. Optical thin film
coatings control and enhance light energy by altering the transmission,
reflection and absorption of the various wavelengths of light to achieve a
desired optical effect. OCA has developed a thin-film coating process call
MicroPlasma' (patent pending) which permits OCA a distinct competitive advantage
in providing high quality optical filters to customers in various industries.
Optical filters are used as components in instruments and systems manufactured
by original equipment manufacturers (OEMs), principally to bio-medical
instrument manufacturers. OCA has steadily
3
<PAGE>
increased its production capacity in this area and has achieved a high level of
automation. OCA expects that an increasing share of the filters which it
manufactures will be used in the production of its Fiber Optic Communication
Devices.
In addition, OCA produces a variety of filters and coatings utilizing
standard or traditional evaporation technologies, including "soft" coatings. OCA
also produces epoxy dye plates that eliminate the need for expensive, often
difficult to obtain, filter color glass. The unique dye process used by OCA is
applicable to traditional coatings, as well as MicroPlasma coatings, and often
is a more cost competitive process for filter manufacturing.
OCA's line of optical filters runs from the ultraviolet through the visible
and into the infrared spectrum of light. OCA also makes filters which block
certain wavelengths of light for eye-safe laser protection devices, and passive
intrusion filters which detect heat from bodies approaching a field of view and
will activate a switching mechanism. These products are often termed motion
detection devices but in fact rely on heat transmitted by a source at an
infrared wavelength.
Optical filters are produced for a highly competitive market.
(2) ELECTRO-OPTICAL SENSORS AND CAMERAS
OCA is recognized by its customers as a premiere supplier of lightweight
electro-optical sensor systems for airborne and spaceborne applications. This
recognition stems from OCA's participation in the Brilliant Pebbles and
Clementine Programs in the late 1980s and early 1990s sponsored by the Strategic
Defense Initiative/Ballistic Missile Division, which allowed OCA to enhance its
already strong opto-mechanical background with state-of-the-art, in-house
electronics design and fabrication capabilities.
OCA's color video cameras set a new standard for performance and low mass.
OCA plans to encourage use of this product and technology in both space related
and commercial applications.
OCA's new Wide Field of View Star Tracker Camera has been selected for use
on both the Mars Surveyor '98 Orbiter and Lander Missions. In this version,
image processing to determine spacecraft attitude is accomplished by the
spacecraft computer, using Stellar Compass software licensed
4
<PAGE>
by OCA to the user. For applications where the user prefers a self-contained
Star Tracker to compute the spacecraft's attitude directly, OCA has teamed with
Southwest Research Institute to supply a state-of-the-art RAD-6000 based
computer module. OCA's product offers the most cost effective solution for
attitude determination in the developing field of small, low-cost spacecraft and
has been selected as the "baseline" for a number of new programs.
OCA's experience with lightweight sensors positions it to capitalize upon
the shift from small numbers of large, costly spacecraft to much larger numbers
of small, relatively inexpensive spacecraft for both government and commercial
applications. OCA anticipates that a substantial fraction of its future business
can be derived from this technology base.
(3) OPTICAL CORRELATORS
OCA has an established reputation in the field of Optical Processing.
Beginning in 1985, OCA became one of the original system hardware innovators in
this field, transforming theoretical analysis and scientific research into
development efforts for field deployable hardware which could be used for target
recognition and target tracking in missile systems. The fundamentals of the
technology employ the inherent strength of optics to process an entire scene of
data instantaneously (at the speed of light). Analytical speed combined with
relatively low power and packaging requirements, yields an attractive technology
for programs which incorporate optical processing. OCA will continue to support
government applications using optical processing for guidance and navigation and
radar imagery analysis; in particular, because optical processing provides the
foundation of its commercial correlator line.
The potential for commercial applications is found in factory automation,
security, medical imagery and remote sensing imagery. OCA is developing
solutions for each of these applications. For example, OCA will introduce in
1996 a commercial optical processor. The Flash 256 Optical Fourier Processor is
an entirely new product for the image processing industry, with significant
competitive implications.
(4) FIBER OPTIC COMMUNICATIONS DEVICES
OCA has recently introduced a new line of optical devices for use in the
fiber optic communications market. OCA manufactures four devices incorporating
filters produced
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by OCA using its proprietary MicroPlasma' (patent pending) coating process.
These devices are (a) a Channel Add/Drop Filter, (b) a Tunable Bandpass Fiber
Optic Filter, (c) a 4 Channel Dense Wavelength Division Multiplexer (DWDM) and
(d) an 8 Channel Dense Wavelength Division Multiplexer (DWDM). These devices
generally operate in the 1530 to 1560 nanometer (nm) range and are unique
because of their ability to operate in a passive mode.
In addition to their narrow bandwidths, their low cross-talk (the result of
OCA's ability to produce 3 cavity and 5 cavity filter designs), low insertion
loss and durability, these devices also demonstrate high wavelength stability
and minimal temperature shift (less than .001 nm/DC temperature shift). This
minimal shift is the result of OCA's MicroPlasma' process.
OCA believes its devices are enabling technology which will accommodate
significantly increased data transmission over the existing installed base of
fiber optic cable. While other DWDM devices exist which might compete with those
manufactured by OCA, to date OCA believes its devices are the most advanced, and
filter based devices appear to have a technical advantage over alternative
technologies.
OPTICAL COMPONENTS AND SUB-SYSTEMS
OCA plays a significant role in the design and manufacture of leading edge
optical products. OCA has been selected repeatedly by leading commercial,
scientific and defense organizations to work cooperatively under formal teaming
agreements and strategic alliances to develop innovative solutions to optical
design, packaging and manufacturing problems for a wide range of product
applications. The importance of the technologies developed during these projects
continues to grow with the emergence of the small satellite industry for
commercial applications such as Earthwatch. OCA is currently developing the
telescope for the Earthwatch remote sensor which is expected to provide 3 meter
resolution photographs of the earth for commercial users.
OCA has also been a supplier to the semi-conductor equipment industry.
Contracts from KLA, SVG and others total over two million dollars on an annual
basis.
OCA's development of advanced infrared search and track (IRST) and missile
launch detection systems in cooperation with Westinghouse and Lockheed Martin
addresses a growing
6
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market for the protection and improvement of our nation's existing air defense
capabilities.
RESEARCH AND DEVELOPMENT
OCA focuses its research and development activities on the development of
new proprietary products, enhancements to existing products, and enhancements of
core technologies. OCA funds these activities from both internal sources and
external contracts.
MANUFACTURING
OCA's approach is to identify and perform internally those functions which
enable it to maintain control over critical portions of the production process
and which add value to its products. At the same time, OCA's purchasing
departments make every effort to insure that qualified suppliers are available
for functions which are better or more economically performed by others. Both
OCA's California and Massachusetts operations have complete, stand alone
capabilities appropriate to the support of the varying requirements of its
Business and customers. Engineering, manufacturing Sales and Marketing personnel
are available at both locations.
In California, OCA designs, manufactures, coats, assembles and tests
electro-optical subsystems and complex electro-optical assemblies for customer
use in infrared, Visible and Ultraviolet systems. OCA's fabrication capabilities
are sophisticated and include Single Point Diamond Turning, electroless nickel
plating and Beryllium Hot Isostatic Pressing, and allow OCA to produce compact
and lightweight subsystems without the degree of subcontracting required by most
of its competitors.
In Massachusetts, OCA is a leading provider of thin film products for OEM
customers. OCA's state-of-the-art coatings, combined with its proprietary
automation processes, assure a solid market presence. Additional capacity is
being added to meet the forecasted demand for OCA's new products in the fiber
optic communications marketplace. The enabling technology is the optical filter
and OCA produces filters routinely that equate to over $10 million in annual
sales. The packaging capability to support the DWDM product is operational.
7
<PAGE>
SALES, MARKETING AND CUSTOMER SUPPORT
The major products of OCA, as well as the Commercial and Government Optics,
are all supported by a direct technical sales force located at OCA's California
and Massachusetts operations. On an international basis, OCA maintains
representatives throughout Europe, Asia and South America.
PATENTS AND INTELLECTUAL PROPERTY
OCA believes the success of its business depends more upon the technical
competence and creativity of its employees than on its patents, trademarks and
copyrights. Nevertheless, OCA seeks patents, when appropriate, on inventions
concerning new products and improvements as part of its ongoing research,
development and manufacturing activities. OCA also relies upon trade secret
protection for its confidential and proprietary information. OCA routinely
enters into confidentiality agreements with other entities and individuals.
SECTION 3.2(B)
The Shareholders of OCA are those named on the 1996 - Shareholder Ledger
consisting of 10 pages prepared by Robert DeN. Cope, OCA's Assistant Clerk,
edition of May 22, 1996, which has been delivered to OCLI by OCA (the
"Shareholder Ledger").
The total number of shares of OCA Common Stock authorized to be issued upon
the exercise of outstanding OCA Options is 162,000 shares of which:
76,000 shares are reserved for the MCRC Warrant
10,000 shares are reserved for the SVB Warrant
24,000 shares are reserved for the 11% Noteholders' Warrants
44,000 shares are reserved for OCA's employees who are holders of OCA
Incentive Stock Options
8,000 shares are reserved for the holder of the Wegner Option
EXCEPTIONS:
a) OCA repurchased 8700 shares of its Common Stock on or about July 14, 1995
from two former employees upon termination of their employment. Reference is
made to the Shareholder Ledger.
8
<PAGE>
b) In addition to the 44,000 shares of Common Stock reserved for holders of OCA
Incentive Stock Options, there are 59,000 shares reserved for the grant of
additional Incentive Stock Options under OCA's 1990 Incentive Stock Option Plan.
c) The OCA Options are subject to anti-dilution provisions which are automatic
in their application.
d) OCA is obligated to repurchase 46,875 shares of its Common Stock from The
Perkin-Elmer Corporation. See Section 3.2(q).
SECTION 3.2(C)
EXCEPTIONS:
OCA, in the ordinary course of business, advances funds and property to
subcontractors and other suppliers.
SECTION 3.2(D)
EXCEPTIONS:
a) Second Paragraph -
Clause (i) The Consents of OCA's lenders, SVB, General Electric Capital
Corporation ("GE Capital"), MCRC and the 11% Noteholders, are required for the
consummation of the transactions contemplated by the Agreement. The Consent of
OCLI as a lender is assumed. See Section 3.2(f).
b) Third Paragraph -
The Consents of OCA's lenders, SVB, GE Capital, MCRC and the 11%
Noteholders, are required for the consummation of the transactions contemplated
by the Agreement. The Consent of OCLI as a lender is assumed.
SECTION 3.2(E)
EXCEPTIONS:
Last Sentence -
The audited and unaudited, internally prepared, Financial Statements do not
comply fully with the requirements of the Commission, in that they do not
include:
9
<PAGE>
1. 3 year Profit and Loss Statements (2 years shown)
2. 3 year Cash Flow Statements (2 years shown)
3. Additional foot notes on Balance Sheet
4. Earnings Per Share
5. Further disclosure on income taxes
6. More detailed description of revenue recognition
7. Products Statements covering: a) business segments, b) international versus
domestic, and c) commercial versus government
8. SX schedule for changes in evaluation
SECTION 3.2(F)
EXCEPTIONS:
a) First Sentence -
1. Accounting, Consulting, Legal and miscellaneous related expenses
incurred in connection with the transactions contemplated by this Agreement and
disclosed pursuant to Section 3.2(cc)
2. $800,000 13% Subordinated Note due 1998 issued pursuant to a Loan
Agreement dated May 3, 1996 between OCA and OCLI (the "OCLI Loan").
3. On March 23, 1990, OCA purchased from The Perkin-Elmer Corporation
("P-E") certain assets related to P-E's Applied Optics Operations.
Included among these assets were certain contracts for which final
settlement of P-E's price redeterminable costs has yet to occur. Audit
activities conducted by the Defense Contract Audit Agency ("DCAA") for P- E's
fiscal years 1987-1989 and fiscal year 1990 through March 22, 1990 reveal issues
related to P-E's allocation of certain costs which have been questioned by DCAA.
Currently, OCA awaits DCAA's acceptance of an offer of settlement of these
issues. OCA estimates that its likely exposure will not exceed $150,000.
In this connection, OCA maintains a general purpose contract cost reserve
which was established to address the impact of cost issues; these issues and the
amount of the
10
<PAGE>
reserve may fluctuate from year to year. At March 31, 1996 the balance of this
reserve was $370,000.
b) Second Sentence -
1. The 11% Noteholders are also holders of Common Stock Purchase Warrants
of OCA and those 11% Noteholders who are marked with an f on the schedule
thereof which has been delivered to OCLI by OCA are either Directors of OCA,
related to Directors of OCA or shareholders of OCA.
2. F. Sherman Hoyt and George Olmsted, shareholders and Directors of OCA,
are part owners of the building at One Lyberty Way, Westford, Massachusetts a
portion of which is occupied by OCA as a subtenant.
3. OCA will designate a Shareholder Representative in accordance with the
terms of the Agreement.
c) Reference is also made to Section 3.2(q) of this Disclosure Schedule.
SECTION 3.2(G)(VI)
EXCEPTION:
The Internal Revenue Service examined the AO Pension Plan on May 20, 1996.
OCA has not been advised of any exceptions.
SECTION 3.2(H)
The Properties currently occupied by OCA under leases are identified below.
Copies of the applicable instruments named above have been delivered to OCLI by
OCA. Reference is also made to Section 3.2(o) of this Disclosure Schedule.
1. 7421 Orangewood Avenue, Garden Grove, California;
Lessor - P-E
Lease dated February 1, 1995 among P-E and OCA
2. 170 Locke Drive, Marlborough, Massachusetts
The Prime Lease is dated November 29, 1982 and is between Third
Marlboro Development Trust, as Lessor and Oerlikon-Buhrle USA,
Inc. (Balzers Optical Group Division)("Balzers"), as Lessee First
Amendment to Lease is dated July 31, 1990 and makes Contraves
USA, Inc. successor in
11
<PAGE>
interest to Balzers Sublease dated March 31, 1992 among Contraves
and OCA
3. One Lyberty Way, Westford, Massachusetts
The Prime Lease is between the Trustees of Three Lyberty Realty
Trust ("Owner") and Controlonics, Inc. ("Controlonics"). The
Sublease is dated September 21, 1982, is between Controlonics and
MicroCoatings, Inc., and was assumed by OCA following its
purchase of assets of MicroCoatings, Inc. on June 19, 1985.
The Lease Extension agreement is dated May 1, 1987 and is between
OCA and the Owner; the Lease is for 19,688 square feet of which
12,453 square feet are subleased to Barr Associates. The Lease,
Sublease and Lease Extension expire on August 15, 1997 and OCA
does not intend to renew them or to extend the terms thereof.
EXCEPTIONS:
a) First Paragraph - Second Sentence:
The tangible personal properties and assets owned by OCA are subject to
security interests under the Massachusetts and California Uniform Commercial
Codes for the benefit of OCA's lenders: SVB, GE Capital and MCRC
b) First Paragraph - Fourth Sentence:
Included among Balance Sheet Liabilities of OCA is a promissory note for
the balance of rent for the Garden Grove Property which was overdue prior to the
delivery of such promissory note.
c) First Paragraph - Last Sentence:
Notwithstanding the adequacy of the physical structures on the Properties
for the uses to which they are put by OCA, the interiors of the structures
undergo periodic reconstruction to accommodate the changing business needs of
OCA's manufacturing processes and personnel requirements.
d) Third Paragraph -
As to the entire paragraph:
12
<PAGE>
1. Except as set forth in item 2 below, the Properties are the only real
property which have been leased by OCA.
2. Not included among the Properties, but occupied by OCA-AO during the period,
April 4, 1990 to April 3, 1993, pursuant to a Lease dated March 27, 1990 between
Koll Business Centers - Orange and OCA-AO, were Suites 7, 8 and 9 of the
building at 11562 Knott Street, Garden Grove, CA for use for office, research
and development purposes and related uses (the "Koll Property"). OCA makes no
representations whatsoever regarding the Koll Property, which is the only "other
real property previously leased" as OCA interprets this Section 3.2(h).
3. The Hazardous Material, if any, contained on the Properties is described in
the reports described below.
4. With respect to the Fifth Sentence, reference is made to the reports
described below.
5. With respect to the Sixth Sentence, OCA is not aware of a threatened
proceeding.
6. With respect to the Eighth Sentence, reference is made to the reports
described below.
In connection with the Second Paragraph of this Section 3.2(h), OCA has
delivered to OCLI copies of the following documents:
(I) - with respect to its 7421 Orangewood Avenue, Garden Grove, CA Property:
Environmental Integrity Assessment prepared 1989 by Bennett & Associates, Inc.
for P-E
Reports of Truesdail Laboratories, Inc. To GeoRemediation, Inc. dated April 20
and 23, 1990
Letter dated April 27, 1990 from GeoRemediation Inc. to OCA
Letter dated May 1, 1990 from GeoRemediation Inc. to OCA
Letter dated August 27, 1990 from GeoRemediation, Inc. to OCA
Environmental Audit and Limited Environmental Property Investigation dated March
21, 1990 prepared by ICG Hydrotech, Inc. for Pettis, Tester, Kruse & Krinsky
13
<PAGE>
Letter dated March 30, 1990 from ICG Hydrotech, Inc. to Pettis, Tester, Kruse &
Krinsky
Letter dated December 3, 1991 from Bowditch & Dewey to Donald A. Johnson
Letter dated July 16, 1992 from GeoRemediation, Inc. to House Food Industrial
Co. LTD and Baker & McKenzie (Los Angeles Office)
Letter dated October 4, 1993 from Baker & McKenzie (Los Angeles Office) to
Charles J. Heinzer at P-E
Phase I Environmental Site Assessment from Geraghty & Miller, Inc. for P-E dated
April 1994
Inter-office Memorandum dated January 5, 1995 from M.J. Aber to Donald A.
Johnson
(II) - with respect to its 170 Locke Drive, Marlborough, MA Property:
Preliminary Environmental Site Assessment Report prepared by Briggs Associates,
Inc. for Third Marlboro Development Trust dated February 13, 1992
Letter dated March 26, 1992 from Briggs Associates, Inc. to Third Marlboro
Development Trust
(III) - with respect to its One Lyberty Drive, Westford, MA Property:
Report of Thermo Analytical Inc. and Skinner & Sherman Laboratories, Inc. for
Normandeau Associates NH and Barr Associates dated 2/23/93
In addition, OCLI has informed OCA of OCLI's receipt of a report of Montgomery
Watson, dated June 14, 1996 with respect to its examination of the Properties
for OCLI.
SECTION 3.2(I)
EXCEPTION:
Accounts Receivable not exceeding $82,683 arising under cost reimbursable
contracts which are awaiting final rate determinations will not necessarily be
collectible within six months of the Effective Date.
14
<PAGE>
In this connection, OCA maintains the general purpose cost reserve
described in Section 3.2 (f). To date, the final rate determinations for the
years 1990 through 1994 have been audited by DCAA without exceptions. The level
of cost type revenue for the first nine months of the current fiscal year was
approximately $1.3 million.
SECTION 3.2(J)
EXCEPTION:
Brush Wellman, the only domestic manufacturer of beryllium, is the only
supplier of significant goods and services with respect to which practical
alternative sources of supply, or comparable products, are not available on
comparable terms and conditions.
SECTION 3.2(K)
Second, third and fourth sentences - Reference is made to the description
of the Spar Contract Matter; see 3.2(s) of this Disclosure Schedule, below.
EXCEPTION: No others
SECTION 3.2(L)
EXCEPTIONS:
First Sentence - (1) The Hicks Patent, U.S. Patent 4,768,859. There are
royalty obligations and limits on exclusivity of OCA's rights in the Hicks
License Agreement, a copy of which has been delivered to OCLI by OCA.
(2) OCA's "automated core drilling software" is OCA's only
custom-produced software; documentary evidence of the manner in which it was
obtained is in OCA's files; and this work was based on code developed by Michael
E. Scobey, a member of Management, with the consultant engaged by OCA doing only
the fill-in code drafting.
(3) OCA is unlikely to have exclusive rights to the "mill
lane chamber control software" incorporated by the manufacturer into certain
coating chamber apparatus purchased by OCA.
(4) OCA owns certain custom software in use at its
Marlborough Operations which was created
15
<PAGE>
entirely by Michael E. Scobey. All other software of whose use OCA is aware is
off-the-shelf "commercial software."
Fifth and Seventh Sentences - OCA has made available to OCLI (a) a copy of
a December 14, 1995 letter to an employee of OCA from DiCon Fiberoptics, Inc.
and (b) a draft of a possible reply thereto.
Eighth Sentence - OCA believes that their is infringement or potential
infringement of the Hicks `859 Patent under which is has an exclusive license
from J. Wilbur Hicks, by on or more of a number of companies. OCA has made
available to OCLI a copy of its January 29, 1996 letter to E-Tek Dynamics, Inc.
Other companies believed to be infringing or potentially infringing the Hicks
`859 Patent include DiCon Fiberoptics, Inc., JDS Fitel, Barr Associates and
OCLI. In some cases, these infringing or potentially infringing products are
made with cavity filters supplied by OCA. There is potential infringement by the
major telecommunications companies which purchase the filter tap and
multiplexing devices from the above-named companies.
A copy of OCA's "Employment Agreement" has been delivered to OCLI by OCA.
SECTION 3.2(M)
The list required by the first sentence of this Section has been delivered
to OCLI by OCA.
EXCEPTIONS:
Last sentence - reference is made to Section 3.2(f) of this Disclosure
Schedule, above
SECTION 3.2(N)
The list of OCA's insurance policies which is required by the first
sentence of this Section has been delivered to OCLI by OCA.
EXCEPTIONS:
Clause (iv) - no basis exists for which OCA is responsible.
16
<PAGE>
SECTION 3.2(O)
EXCEPTIONS:
With respect to the first paragraph following the definitions:
1. OCA maintains a Pension Plan which was established for the employees of
OCA's subsidiary OCA Applied Optics, Inc., a California corporation, and which
has since been dissolved (the "AO Pension Plan"). The AO Pension Plan was frozen
effective October 31, 1993.
2. OCA maintains a Profit Sharing 401(k) Plan and Trust which was
established for all its employees (the "OCA 401(k) Plan").
3. The applications for a favorable determination letter filed by or on
behalf of OCA, copies of which have been delivered to OCLI by OCA, are:
x. For the 401(k) Plan, Plan 001, dated 3/29/94
y. For the AO Pension Plan, Plan 002, dated 6/26/95
The favorable determination letters are attached to each such
application.
SECTION 3.2(P)
Except as noted, the lists referred to below were delivered to OCLI by OCA
on or about May 16, 1996 accompanying the Letter from David R. Fengler to Joseph
C. Zils of that date and were further detailed in a Schedule dated 5/20/96
prepared by OCA and delivered to Joseph C. Zils on June 24, 1996:
Clause (i) The Properties are listed in Section 3.2(h) of this Disclosure
Schedule.
Clause (ii) The list.
Clause (iii)The list (on June 24, 1996)
Clause (iv) None
Clause (v) The list refers to clause (a); clause (b) - none; and clause (c)
- - None.
Clause (vi) The agreements with SVB, MCRC, GE Capital, the 11% Noteholders
and OCLI, referred to elsewhere on this Disclosure schedule, have been delivered
to OCLI by OCA. OCA is also obligated to complete the repayment to P-E of: (a)
the $240,000 balance of a $400,000 promissory note to
17
<PAGE>
P-E dated February 1, 1994 due February 1, 1997 representing unpaid rent in such
amount for the period May 1, 1993 to December 31, 1993 and (b) the obligation
referred to in Section 3.2(q) of this Disclosure Schedule.
Clause (vii) None
Clause (viii) The list.
Clause (ix) The list.
Clause (x) The list.
Clause (xi) The list.
Clause (xii) The list.
Clause (xiii) The list.
Clause (xiv) The list.
Clause (xv) The list.
Clause (xvi) The list.
Clause (xvii) The list.
Clause (xviii) Reference is made to Clause (xiv)
Clause (xix) One claim is pending. It relates to internal rain damage
incurred while the Garden Grove Property was being re-roofed on July 16, 1995.
The claim is between and among OCA's insurer (Chubb and Sons, P-E's insurer
(Zurich America), and the roofing contractor's insurer (Insurance Claims
Specialists). The damage incurred is estimated to be $110,598 and OCA has been
reimbursed $57,708 thus far.
SECTION 3.2(Q)
EXCEPTIONS:
First Sentence
OCA is a party to a Letter Agreement dated July 23, 1990 with P-E (a copy
of which has been delivered to OCLI by OCA), in accordance with the terms of
which P-E made demand upon OCA by letter dated August 1, 1995 for the repurchase
of 46,875 shares of the Common Stock of OCA owned by P-E (the "P-E Shares"). OCA
has not repurchased the P-E Shares because it can not do so without the consent
of SVB, MCRC, the 11% Noteholders and OCLI (as the holder of the OCLI Loan) and
such consents have not been granted.
SECTION 3.2(R)
EXCEPTIONS:
Clauses (i)-(iv) None
Clause (v) The OCLI Loan.
Clause (vi) None, to OCA's knowledge
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<PAGE>
Clause (vii) The security interest in the equipment acquired on or about
April 30, 1996 and financed by GE Capital.
Clause (viii) The OCLI Subordinated Loan
Clause (ix) None
Clauses (x)-(xvi) None
SECTION 3.2(S)
EXCEPTIONS:
First Sentence -
a) P-E has commenced an action to require OCA to repurchase the P-E Shares.
See Section3.2(q) of this Disclosure Schedule, above.
b) The Spar Contract Matter. OCA is a party to a contract with Spar
Aerospace Limited of Brampton, Ontario, Canada ("Spar") which provides for the
export to Canada for inclusion in the International Space Station of certain
equipment to be manufactured by OCA. OCA has identified the possibility of its
non-compliance with certain U.S. Government Export Control Regulations and has
initiated and engaged in voluntary discussions with the Office of Defense Trade
Controls, Bureau of Political Military Affairs, U. S. Department of State
regarding future commitments to minimize the likelihood of improper export by
OCA. Until such discussions are concluded, OCA has voluntarily suspended any
scheduled delivery to Spar which could be subject to such Regulations.
OCA's billings on the Spar Contract are based on milestones to be achieved
by OCA. If achievement of these milestones is delayed while OCA awaits a
response from the Department of State, there is no relief to OCA's current
inventories. OCA expects this matter to be resolved within the current milestone
billing schedule.
SECTION 3.2(T)
See item b) under preceding section.
SECTION 3.2(Y)
OCA's product warranties have been delivered to OCLI by OCA and consist of
those contained in its normal terms and conditions of sale and a form of
warranty and limitation of liability for use under the name of OCA Applied
Optics.
19
<PAGE>
SECTION 3.2(CC)
As of the date of the Agreement, OCA has paid or incurred the sum of
$147,000 as costs in connection with the transactions which are the subject of
the Merger Agreement.
SECTION 4.1(S)
As of the date of the Agreement, where OCA receives orders from Nortel in
the amount of $6,000,000, OCA plans to make capital expenditures, capital
additions and capital improvements in the ordinary course of business during the
period from the date of this Agreement through September 30, 1996 in an
aggregate amount of $1,576,000.
Where OCA does not receive these orders, capital expenditures, capital
additions and capital improvements in the ordinary course of business are not
expected to exceed $1,311,000.
- -----------
Note 1. Capitalized Terms used in this Disclosure Schedule shall have the
meanings ascribed to them in the Agreement and Plan of Merger (the "Agreement")
which this Disclosure Schedule accompanies.
Note 2. All section references are to the Agreement.
20
<PAGE>
EXHIBIT F
OCLI DISCLOSURE DOCUMENT
SECTION 3.3, REPRESENTATIONS AND WARRANTIES OF OCLI AND ACQUISITION
SUBSECTION 3.3(B), AUTHORITY
The consent of Bank of America NT & SA will be required prior to closing.
SUBSECTION 3.3(D), CAPITAL STOCK OF OCLI
As of May 31, 1996, OCLI had 30,000,000 shares of Common Stock, $.01 par value,
authorized of which 9,710,829 shares were issued and outstanding, and 100,000
shares of preferred stock authorized of which 12,000 shares of Series C
Convertible Redeemable Preferred Stock, $.01 par value, were issued and
outstanding.
SUBSECTION 3.3(I), EMPLOYEE BENEFIT PLANS
1. Medical Benefit - OCLI provides medical insurance to its employees through
Health Plan of the Redwoods (HPR), a federally qualified health
maintenance organization.
2. Dental Benefit - OCLI offers two dental plan choices to employees, (1)
through a dental maintenance organization (DMO) and (2) through a
traditional plan.
3. Vision Benefit - OCLI offers a vision care benefit to employees electing
to participate in the plan.
4. Disability Benefit - OCLI provides paid wage insurance which accumulates
at the rate of 20 hours of paid wage insurance for each three months of
service up to certain maximums. OCLI also provides Company-paid long-term
disability insurance.
5. Life/Accident Insurance - OCLI provides basic Company-paid life insurance
for each regular, full-time employee. OCLI also offers voluntary term life
insurance for employees and their dependents, voluntary personal accident
insurance and business travel accident insurance for employees while on
Company business.
<PAGE>
6. Flexible Spending Account - OCLI has established reimbursement accounts
which allow participants to set aside pre-tax dollars to use to pay for
certain eligible expenses such as health, dental and vision care and
dependent/child care expenses.
7. German National Pension Insurance Program - OCLI/MMG Division, Germany.
SUBSECTION 3.3(J), LITIGATION OR PROCEEDINGS
Optical Coating Laboratory, Inc., California
1. Optical Coating Laboratory, Inc. versus Pilkington PLC Complaint for
Patent Infringement
Attorneys for Plaintiff:
Robert S. W. Barry/John Reynolds
Bird & Bird
90 Fetter Lane
London EC4A IJP
TEL: 44-1-71-415-6000
Attorneys for Defendant:
Bristows, Cooke & Carpmael
10 Lincoln's Inn Fields
London WC2A 3BP
TEL: 44-1-71-400-8000
2. Optical Coating Laboratory, Inc. versus Applied Vision Limited Complaint
for Patent Infringement
Attorneys for Plaintiff:
H. Ross Workman/Larry Laycock
Workman, Nydegger & Seeley
1000 Eagle Gate Tower
60 East South Temple
Salt Lake City, Utah 84111
TEL: 801-533-9800
John V. Erickson
William S. Farmer
Collette & Erickson
555 California Street
Suite 4350
San Francisco, CA 94101-1791
TEL: 415-788-4646
2
<PAGE>
Attorneys for Defendant:
Malcolm B. Wittenberg/
Scott D. Baker/
Connie L. Ellerbach
CROSBY, HEAFEY, ROACH & MAY, P.C.
1999 Harrison Street
Oakland, CA 94612-3573
TEL: 510-763-2000
3. RawTech Corporation versus OCLI Complaint for Breach of Written Contract.
Damages claimed are approximately $250,000.
Attorneys for Plaintiff:
Randal B. Acker
415 N.W. 18th Avenue, Suite 320
Portland, Oregon 97209
Tel: (503) 228-2495
Attorneys for Defendant:
Gregory J. Miner
Bogle & Gates P.L.L.C
1400 KOIN Center
222 S.W. Columbia
Portland, Oregon 97201
Tel: (503) 222-1515
4. Myrtle L. DeJoria versus Pinkerton Service Corporation and OCLI Complaint
for Damages (OCLI has been named in a lawsuit brought by an ex-Pinkerton
employee against Pinkerton for wrongful termination.)
Attorneys for Plaintiff:
Maryclare Lawrence
Conner, Slabach, Lawrence & Rodney
829 Sonoma Avenue, Suite 1
Santa Rosa, CA 95404
Tel: (707) 523-0480
Attorneys for Defendant:
Collette & Erickson
555 California Street
Suite 4350
San Francisco, CA 94101-1791
TEL: 415-788-4646
SUBSECTION 3.3(K), COMPLIANCE WITH LAWS
In 1988, Optical Coating Laboratory, Inc. ("OCLI" or the "Company")
discovered ground water contamination at its principal facilities in Santa Rosa.
The Company conducted
3
<PAGE>
extensive investigations to determine the lateral and vertical extent and the
environmental impact of the contamination. During 1990, OCLI substantially
completed its investigation and study and formulated a plan of remediation. The
total cost of the investigation was approximately $5 million which has been
charged to operations in prior periods.
Based upon extensive tests conducted to date, it has not been demonstrated
that contaminant levels pose a current public health hazard. OCLI has
established a program for reducing contaminant concentration levels to
acceptable federal and state levels with the assistance of its environmental
consultants and under the regulatory guidance of the California Regional Water
Quality Control Board. OCLI is continuing to evaluate the effectiveness of its
monitoring, extraction and remediation systems. In addition, the Company
anticipates drilling additional monitoring and extraction wells in connection
with its final remediation plan.
Based upon the extensive tests conducted and advice of environmental
consultants, OCLI believes the accruals it has previously established to
complete the remediation plan are sufficient and that the annual cost of
maintaining compliance with environmental standards related to the above matter
will not have a material adverse effect on the Company's business, financial
position or prospects.
4
<PAGE>
EMPLOYMENT AGREEMENT
AGREEMENT made as of June __, 1996 by and between Optical Corporation of
America, having its principal place of business at 170 Locke Drive, Marlborough,
MA 01752(the "Company"), and _______________________________ (the "Employee"),
whose address is set forth on the execution page hereof.
1. Term of Employment. The Company hereby agrees to employ the Employee, and
the Employee hereby agrees to be employed by the Company, commencing on the date
hereof, for a period of two (2) years, subject to the terms and provisions
hereof. As used herein, the phrase "employment term" refers to the entire period
of employment of the Employee by the Company hereunder, whether for the period
provided above, a lesser period if terminated earlier as hereinafter provided,
or a greater period if extended by mutual written agreement of the Company and
the Employee.
2. Duties of Employee. The Employee shall initially be employed with the job
description and title, if any, specified on the execution page hereof. In such
employment, his duties and authority shall be as determined from time to time by
the Company. The Employee will devote his knowledge, skill, working time and
energy to the performance of his duties in an efficient, trustworthy and
businesslike manner, and will not engage in any other business, profession or
occupation for compensation or otherwise which would conflict with the rendition
of such services, either directly or indirectly, without the prior written
consent of the Company. The Employee shall serve in such capacities and shall do
and perform all such services, acts or things necessary and appropriate in the
course of his employment as reasonably required from time to time by the
Company. The Employee shall not directly or indirectly render any services of a
business, commercial or professional nature during the employment term to any
other person or organization, whether for compensation or otherwise, that would
conflict with the rendition of services under this agreement, without the prior
written consent of the Company.
3. Compensation of Employee. For the period of his employment term,
the Employee shall be compensated for his services as follows:
(a) the Employee shall receive compensation as specified on the
execution page hereof and will be entitled to merit increases on the basis of
the Company's consideration and appraisal of the contributions of the Employee
to the Company's operating efficiency, growth, production and profits, on his
normal annual review date during the period of his employment under this
Agreement; and
1
<PAGE>
(b) the Employee shall be included to the extent eligible thereunder
under any and all employee benefit plans providing benefits for all of the
Company's employees.
[The Company may, in its discretion, determine to include the Employee
in short term incentive, long term incentive, and other benefit plans of the
Company, in accordance with the terms thereof.]
All compensation paid hereunder shall be subject to any and all necessary
withholdings and deductions for Social Security taxes, income taxes, and the
like and any elective deductions or deferrals under the Company's employee
benefit plans, and shall be paid in equal installments, based upon the payroll
period established by the Company for employees exempt from the Fair Labor
Standards Act.
4. Expenses. The Employee is authorized to incur reasonable business
expenses necessary in the performance of his duties hereunder, including travel,
meal and lodging expenses, provided such expenses have been incurred in
conformity with the Company's policy prevailing from time to time for all such
business expenses. The Employee shall provide the Company documentary evidence
in form reasonably required by the Company to confirm the propriety of such
expenses and to enable the Company, to the extent possible, to deduct such
expenses for federal and state income tax purposes.
5. Termination.
(a) The Company shall have the right to terminate the employment of the
Employee with or without cause. If the Company shall terminate the Employee's
employment for cause, the Company shall deliver to him a written notice thereof
and the Company's obligations under this Agreement to make any further payments
to the Employee shall thereupon cease and terminate. As used herein, the term
"cause" shall mean any of the following: (i) a willful breach of duty by the
Employee in the course of his employment; (ii) the Employee's habitual neglect
of his duty or continued incapacity to perform it; (iii) the Employee's
misappropriation of any funds or property of the Company; (iv) any attempt by
the Employee to obtain personal profit from any transaction in which the
Employee has an interest which is adverse to the interest of the Company, unless
the Employee shall have first obtained the consent of the Board of Directors;
(v) the Employee's engagement in any other business, profession, or occupation
for compensation or otherwise, which materially conflicts with the rendition of
services hereunder, either directly or indirectly, after being notified in
writing by the Board of Directors to cease engaging in such other business,
profession or occupation; (vi) the Employee's conviction of a felony. If the
Company shall terminate the Employee's employment for any reason other than
cause or his disability as specified in Section 5(b), the Employee shall
continue to be paid
2
<PAGE>
his salary as provided herein until the earlier of the last day of the
employment term or his death.
(b) If the Employee shall become disabled prior to the last day of the
employment term so that he is unable to perform the regular duties of his
employment on a full-time basis, he shall continue to receive the same salary
which he was receiving under this Agreement immediately prior to such disability
for a period of twelve (12) calendar months thereafter, or until the last day of
the employment term, or until his death, whichever is the shorter period (the
"Disability Period"), provided, however, that the Company's obligation under
this sentence shall be reduced by any disability insurance received by the
Employee for the pay period in question on account of insurance coverage the
premium for which was paid by the Company. If the Disability Period ends prior
to the last day of the employment term and at the end of the Disability Period
the Employee is unable to resume his regular duties hereunder on a full-time
basis, the Company shall have the right to terminate his employment hereunder by
notice thereof in writing delivered to him. Upon such termination of employment,
the Company's obligation to make any further payments to the Employee under this
Agreement shall terminate.
(c) If the Employee receives a payment under this Section 5, the
Employee shall not be entitled to any severance payments that might otherwise be
payable to the Employee.
(d) Upon termination of his employment for any reason, the Employee
shall, except as otherwise required by law or by the plan document, cease
participation in all employee benefit plans, fringe benefit programs and
perquisites maintained by the Company, irrespective of any continuation of
salary payments under this Agreement beyond the date his employment is
terminated. Nothing herein, shall preclude the Company from amending or
terminating any employee benefit plan or fringe benefit program.
6. Non-Competition.
(a) While the Employee is employed by the Company and for a period of
one (1) year after the termination or cessation of such employment for any
reason (the "Non-Compete Period"), the Employee will not directly or indirectly
own any equity or option or right to acquire any equity in any Competitive
Business (as hereinafter defined) or:
i. Render services to any Competitive Business which involve or
relate to the development, manufacture, marketing, sale, merchandising, leasing,
servicing, support or promotion of any Competitive Product (as hereinafter
defined) to any customer or prospective customer of the Company whom the
Employee called, contacted, solicited or served while employed by the Company,
for whose account the Employee supervised, monitored or was otherwise
responsible for
3
<PAGE>
on behalf of the Company, at any time during the 2-year period ending on the
date of termination of the Employee's employment by the Company; or
ii. Solicit, divert or take away, or attempt to divert or to take
away, the business or patronage of (a) any of the clients or customers or
prospective clients or customers of the Company whom the Employee called,
contacted, solicited or served while employed by the Company or (b) any accounts
or prospective accounts of the Company which the Employee supervised, monitored,
or was otherwise responsible for while employed by the Company; or
iii. Recruit, solicit or induce, or attempt to induce, any
employee or employees of the Company to terminate their employment with, or
otherwise cease their relationship with, the Company.
(b) If, after diligent efforts, the Employee is unable within one month
after the termination of his employment with the Company, due principally to the
restrictions contained in this Agreement, to obtain a position equivalent to or
better than the Employee's position with the Company with a Non-Competitive
Business, the Company shall pay to the Employee, on a monthly basis, in advance,
commencing with the first day of the second month after termination of the
Employee's employment with the Company, as additional consideration for the
Employee's obligations under this Agreement, a sum equal to the Employee's base
pay at termination, exclusive of extra compensation, incentive payments,
commissions, bonus or employee benefits ("Base Pay"), for each month of such
unemployment, until the termination of the Employee's non-compete obligations
under this Agreement. Following the termination of his employment by the
Company, the Employee shall notify the Company as to his current employment
status in writing within 15 days after the start of any calendar month as to
which he seeks payment under this Section 6(b). The Employee must, as a
condition to such payment, establish to the Company's reasonable satisfaction
his diligent efforts to obtain employment with a non-Competitive Business.
(c) If, after diligent efforts, the Employee is unable within one month
after the termination of his employment with the Company, due principally to the
restrictions contained in this Agreement, to obtain a position with a
non-Competitive Business at a rate of compensation at least equivalent to his
rate of compensation at the time of his termination of employment, and
therefore, accepts a position at a lower rate of compensation, the Company shall
pay to the Employee, on a monthly basis during the period beginning upon the
commencement of such new employment and ending upon the termination of the
Employee's non-compete obligations under this Agreement, as additional
consideration for the Employee's obligations under this Agreement, a sum equal
to the difference between his monthly rate of compensation at the time of
termination and his monthly rate of compensation
4
<PAGE>
at this new position; provided, that the Company shall not be required to pay in
any month an amount in excess of the Employee's monthly Base Pay at termination.
Following the termination of his employment by the Company, the Employee shall
notify the Company as to his current employment status in writing within 15 days
after the start of any calendar month as to which he seeks payment under this
Section 6(c). The Employee must, as a condition to such payment, establish to
the Company's reasonable satisfaction his diligent efforts to obtain employment
with a non-Competitive Business at a compensation level commensurate to his
level with the Company.
(d) The Company may, at its option, at any time during the first thirty
(30) days following termination upon prior written notice to the Employee,
notify the Employee that it will not make any payments to the Employee pursuant
to Sections 6(b) or 6(c), in which event the Employee shall be relieved of the
non-compete obligations set forth in Section 6(a), other than those set forth in
Sections 6(a)(ii) and 6(a)(iii).
(e) For the purpose of any stock option agreement held by the Employee,
the Employee's employment should not be deemed terminated until all payments
under this Agreement close.
(f) If any restriction set forth in this Section 6 is found by any
court of competent jurisdiction to be unenforceable because its extends for too
long a period of time or over too great a range of activities or in too broad a
geographic area, it shall be interpreted to extend only over the maximum period
of time, range of activities or geographic area as to which it may be
enforceable.
(g) The restrictions contained in this Section 6 are necessary for the
protection of the business and goodwill of the Company and are considered by the
Employee to be reasonable for such purpose. The Employee agrees that any breach
of this Agreement will cause the Company substantial and irrevocable damage and
therefore, in the event of any such breach, in addition to such other remedies
which may be available, the Company shall have the right to seek specific
performance and injunctive relief.
(h) For purposes of this Section 6:
i. "Competitive Business" means any person, entity or organization
which is engaged in or about to become engaged in, design, development
(including research), production, marketing, leasing, selling or servicing of a
Competitive Product; and
ii. "Competitive Product" means any product, process, system or
service of any person, entity or organization other than the Company, in
existence or under development, which is the same as or similar to or competes
with, either directly or indirectly, any product, process, system or service
provided,
5
<PAGE>
manufactured, developed, marketed, sold or rendered by the Company during the
three-year period ending on the date of termination of the Employee's employment
with the Company.
7. Arbitration. Any controversy between the Company and the Employee
involving the construction or application of any of the terms, provisions or
conditions of this Agreement, any claim hereunder, or any claim pertaining to
any covenant of good faith and fair dealing or any other duty implied by law,
shall on the written request of either party served on the other be submitted to
arbitration in the Commonwealth of Massachusetts pursuant to the Commercial
Arbitration Rules of the American Arbitration Association. A single arbitrator
shall be selected in accordance with the Commercial Arbitration Rules of the
American Arbitration Association. The arbitrator shall not have the power to
alter, amend or modify the terms of this agreement. The decision of the
arbitrator shall be final and binding. The costs of arbitration, including the
reasonable attorneys fees of the prevailing party, shall be borne by the losing
party. Arbitration as provided herein shall be the exclusive means to resolve
any of the controversies referred to in this Section 7.
8. Notices. Any notices to be given hereunder by either party to the other
may be effected by personal delivery in writing or by mail, registered or
certified, postage prepaid with return receipt requested. Mail notices shall be
addressed to the parties at the address of Company appearing above or at the
address of the Employee appearing beneath his signature on the execution page
hereof by written notice in accordance with this paragraph. Notices delivered
personally shall be deemed communicated as of actual receipt; mail notices shall
be deemed communicated as of two days after mailing.
9. Agreement Supersedes Any Inconsistent Prior Agreements or
Understandings. The terms of this Agreement supersede any inconsistent prior
promises, policies, representations, understandings, arrangements or agreements
between the parties.
10. No Waiver. No delay or omission by the Company in exercising any right
under this Agreement will operate as a waiver of that or any other right. A
waiver or consent given by the Company on any one occasion is effective only in
that instance and will not be construed as a bar to or waiver of any right on
any other occasion.
11. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Massachusetts.
OPTICAL CORPORATION OF AMERICA
By: _____________________________
Title: __________________________
6
<PAGE>
EMPLOYEE
_________________________________
Address:
_________________________________
_________________________________
Job Description: see attached copy
Title:___________________________
Present Salary: $_______________
Annual Review Date: _________________
[Incentive Compensation: ____________
_________________________________]
7
<PAGE>
EXHIBIT H
LIST OF KEY OCA EMPLOYEES
Robert B. Runk
Michael E. Scobey
Derek E. Spock
Paul D. Stupik
John D. Viggiano
[GRAPHIC The Commonwealth of Massachusetts
OMITTED] Secretary of the Commonwealth
State House, Boston, Massachusetts 02133
William Francis Galvin
Secretary of the
Commonwealth
July 29, 1996
TO WHOM IT MAY CONCERN:
I hereby certify that according to the records of this office
Optical Corporation of America
is a domestic corporation organized on May 13, 1985, under the general laws of
the Commonwealth of Massachusetts.
I further certify that there are no procceedings presently pending
under the Massachusetts General Laws Chapter 156B section 101 for said
corporations dissolutions; that articles of dissolution have not been filed by
said corporation; that, said corporation has filed all annual reports, and paid
all fees with respect to such reports, and so far as appears of record said
corporation has legal existence and is in good standing with this office.
In testimony of which,
[SEAL] I have hereunto affixed the
Great Seal of the Commonwealth
on the date first above written.
/s/ William Francis Galvin
Secretary of the Commonwealth
* This is not a tax clearance. Certificates certifying that all taxes
due and payable by the corporation have been paid or provided for are issued by
the department of Revenue.
** MGL Chapter 156B Section 83A provides that certain consolidations
and mergers may be filed with the division within thirty days after the
-----
effective date of the merger or consolidation.
<PAGE>
CD 82. 10M-10/80 C830976 Filing Fee $100.00
The Commonwealth of Massachusetts
MICHAEL JOSEPH CONNOLLY
Secretary of State
ONE ASHBURTON PLACE FEDERAL IDENTIFICATION
/s/ BOSTON, MASS. 02108 NO. 04-2868710
- ----------- -------------------
Examiner
ARTICLES OF
MERGER OF PARENT AND SUBSIDIARY CORPORATIONS
PURSUANT TO GENERAL LAWS, CHAPTER 156B, SECTION 82
The fee for filing this certificate is prescribed by General Laws,
Chapter 156B, Section 114.
Make check payable to the Commonwealth of Massachusetts.
* * * *
We, John D. Viggiano and Robert DeN. Cope Vice President*
--------------------------------------------------
and Assistant Clerk* of Optical Corporation of America
---------------------------------------------
name of corporation
organized under the laws of the Commonwealth of Massachusetts and
----------------------------------
herein called the parent corporation, do hereby certify as follows:
1. That the subsidiary corporation(s) to be merged into the
parent corporation are/is as follows:
State of Date of
Name Organization Organization
/s/
OCA Optics, Inc. California 1/26/90
(Formerly OCA Applied Optics, Inc.)
2. That the parent corporation owns at least ninety per cent of
the outstanding shares of each class of the stock of each subsidiary
corporation to be merged into the parent coproation.
3. That in the case of each of the above-named corporations the
laws of the state of its organization, if other than Massachusetts,
permit the merger herein provided for and that all action required
under the laws of each such state in connection with this merger has
been duly taken. (If all the corporations are organized under the
laws of Massachusetts and if General Laws, Chapter 156B is
applicable to them, then Paragraph 3 may be deleted.)
4
- ------- *Delete the inapplicable words. In case the parent corporation is
P.C. organized under the laws of a state other than Massachusetts these
articles are to be signed by officers having corresponding powers
and duties.
<PAGE>
4. That by unanimous written consent of the directors of the parent
corporation the following vote, pursuant to subsection (a) of General Laws,
Chapter 156B, Section 82, was duly adopted:
VOTED:
To merge, effective March 31, 1993, the Corporation's wholly owned
subsidiary, OCA Applied Optics, Inc. (a California corporation) into
the Corporaton so that the Corporation is the surviving corporation;
and to authorize and direct the Chairman, the President, any Vice
President, the Treasurer, the Clerk and any of the Assistant Clerks,
acting singly or together, for and in the name of and on behalf of the
Corporation, to prepare, certify, execute and deliver any and all
documents or notices which may be necessary or appropriate to effect
such merger and to take any and all other action in connection
therewith which any one or more of them shall deem necessary or
desirable, his or their signature(s) to be conclusive evidence of
approval by the Corporation.
NOTE: Votes for which the space provided above is not sufficient should be set
out on continuation sheets to be numbered 2A, 2B, etc. Continuation sheets
must have a left-hand margin 1 inch wide for binding. Only one side should
be used.
<PAGE>
5. The effective date of the merger as specified in the vote set out under
Paragraph 4 is March 31, 1993
6. (This Paragraph 6 may be deleted if the parent corporation is organized
under the laws of Massachusetts.) The parent corporation hereby agrees that it
may be sued in the Commonwealth of Massachusetts for any prior obligation of any
subsidiary corporation organized under the laws of Massachusetts with which it
has merged, and any obligation hereafter incurred by the parent corporation,
including the obligation created by subsection (e) of General Laws, Chapter
156B, Section 82, so long as any liability remains outstanding against the
parent corporation in the Commonwealth of Massachusetts and it hereby
irrevocably appoints the Secretary of the Commonwealth as its agent to accept
service of process for the enforcement of any such obligations, including taxes,
in the same manner as provided in Chapter 181.
IN WITNESS WHEREOF and under the penalties of perjury we have hereto signed
our names this 30th day of March, 1993 .
--------------- ------------------------
/s/ John D. Viggiano
------------------------------- Vice President*
John D. Viggiano
/s/ Robert DeN. Cope
------------------------------- Assistant Clerk*
Robert DeN. Cope
*Delete the inapplicable words. In case the parent corporation is organized
under the laws of a state other than Massachusetts these articles are to be
signed by officers having corresponding powers and duties.
<PAGE>
SECRETARY OF
THE COMMONWEALTH
1993 MAR 31 PM 3:41
CORPORATION DIVISION
425364
COMMONWEALTH OF MASSACHUSETTS
ARTICLES OF MERGER OF PARENT AND SUBSIDIARY CORPORATIONS
(General Laws, Chapter 156B, Section 82)
I hereby approve the within articles of merger of parent and subsidiary
corporations and, the filing fee in the amount of $250.00 having been paid, said
articles are deemed to have been filed with me this 31st day of March, 1993.
/s/ Michael Joseph Connolly
MICHAEL JOSEPH CONNOLLY
Secretary of State
Effective 3/31/93
------------------------------
A TRUE COPY ATTEST
/s/ William Francis Galvin
WILLIAM FRANCIS GALVIN
SECRETARY OF THE COMMONWEALTH
DATE 7/30/96 CLERK JMc
------------------------------
TO BE FILLED IN BY CORPORATION
Photo Copy of Merger To Be Sent
TO:
Pamela S. Stevens, Esq.
Bowditch & Dewey
311 Main Street
Worcester, MA 01608
Telephone 508/791-3511
Copy Mailed
<PAGE>
/s/ The Commonwealth of Massachusetts
- -------- OFFICE OF THE MASSACHUSETTS SECRETARY OF STATE
Examiner MICHAEL J. CONNOLLY, Secretary
ONE ASHBURTON PLACE, BOSTON, MASSACHUSETTS 02108
ARTICLES OF AMENDMENT
General Laws, Chapter 156B, Section 72
FEDERAL IDENTIFICATION
NO. 04-2868710
------------------
We Donald A. Johnson , President, and
Robert DeN. Cope Assistant Clerk of
Optical Corporation of America
----------------------------------------------------------------------
(EXACT Name of Corporation)
located on On Lyberty Way, Westford, MA 01886
---------------------------------------------------------
(MASSACHUSETTS Address of Corporation)
do hereby certify that these ARTICLES OF AMENDMENT affecting Articles
NUMBERED: 3
----------------------------------------------------------------------
(Number those articles 1, 2, 3, 4, 5 and/or 6 being amended hereby)
/s/
- -------- of the Articles of Organization were duly adopted at a meeting held on
Name October 29, 1990, by vote of:
Approved
354,902 shares of Common Stock out of 670,304 shares outstanding.
------- ------------------ ----------
type, class & series (if any)
being at least a majority of each type, class or series outstanding
and entitled to vote thereon:
C __
P __
M __ 1 For amendments adopted pursuant to Chapter 156B, Section 70.
R.A. __ 2 For amendments adopted pursuant to Chapter 156B, Section 71.
Note: If the space provided under any Amendment or item on this form
is insufficient, additions shall be set forth on separate 8-1/2x11
sheets of paper leaving a left-hand margin of at least 1 inch for
binding. Additions to more than one Amendment may be continued on a
- -------- single sheet so long as each Amendment requiring each such addition is
P.C. clearly indicated.
<PAGE>
To CHANGE the number of shares and the par value (if any) of any type, class or
series of stock which the corporation is authorized to issue, fill in the
following:
The total presently authorized is:
WITHOUT PAR VALUE STOCKS WITH PAR VALUE STOCKS
- ----------------------------------- ---------------------------------------
TYPE NUMBER OF SHARES TYPE NUMBER OF SHARES PAR VALUE
- ----------------------------------- ---------------------------------------
COMMON: COMMON: 1,000,000 $.01
- ----------------------------------- ---------------------------------------
PREFERRED: PREFERRED:
- ----------------------------------- ---------------------------------------
CHANGE the total authorized to:
WITHOUT PAR VALUE STOCKS WITH PAR VALUE STOCKS
- ----------------------------------- ---------------------------------------
TYPE NUMBER OF SHARES TYPE NUMBER OF SHARES PAR VALUE
- ----------------------------------- ---------------------------------------
COMMON: COMMON: 2,000,000 $.01
- ----------------------------------- ---------------------------------------
PREFERRED: PREFERRED:
- ----------------------------------- ---------------------------------------
<PAGE>
The foregoing amendment will become effective when these articles of amendment
are filed in accordance with Chapter 156B, Section 6 of The General Laws unless
these articles specify, in accordance with the vote adopting the amendment, a
later effective date not more than thirty days after such filing, in which event
the amendment will become effective on such later date. EFFECTIVE DATE: ________
IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereto signed our
names this 29th day of October, in the year 1990.
/s/ Donald A. Johnson
- ------------------------------- President
Donald A. Johnson
/s/ Robert DeN. Cope
- ------------------------------- Assistant Clerk
Robert DeN. Cope
<PAGE>
348428
SECRETARY OF
THE COMMONWEALTH
1990 NOV 27 AM 10:56
CORPORATION DIVISION
THE COMMONWEALTH OF MASSACHUSETTS
ARTICLES OF AMENDMENT
GENERAL LAWS, CHAPTER 156B, SECTION 72
=======================================
I hereby approve the within articles of
amendment and, the filing fee in the
amount of $1000.00 having been paid,
said articles are deemed to have been
filed with me this 27th day of November,
1990.
/s/ Michael J. Connolly
MICHAEL J. CONNOLLY
Secretary of State
------------------------------
A TRUE COPY ATTEST
/s/ William Francis Galvin
WILLIAM FRANCIS GALVIN
SECRETARY OF THE COMMONWEALTH
DATE 7/30/96 CLERK JMc
------------------------------
TO BE FILLED IN BY CORPORATION
PHOTOCOPY OF ARTICLES OF AMENDMENT TO BE SENT
TO:
Robert DeN. Cope, Esq.
Bowditch & Dewey
311 Main St.
Worcester, MA 01608
Telephone: (508) 791-3511
<PAGE>
FORM CD-72-30M-3/83-172595
/s/ The Commonwealth of Massachusetts
- --------- OFFICE OF THE MASSACHUSETTS SECRETARY OF STATE
Examiner MICHAEL JOSEPH CONNOLLY, Secretary
ONE ASHBURTON PLACE, BOSTON, MASS. 02108
FEDERAL IDENTIFICATION
NO. 04-2868710
ARTICLES OF AMENDMENT
General Laws, Chapter 156B, Section 72
This certificate must be submitted to the Secretary of the
Commonwealth within sixty days after the date of the vote of
stockholders adopting the amendment. The fee for filing this
certificate is prescribed by General Laws, Chapter 156B, Section 114.
Make check payable to the Commonwealth of Massachusetts.
-------------
We Donald A. Johnson , President, and
Robert DeN. Cope Assistant Clerk of
MICROCOATINGS, INC.
----------------------------------------------------------------------
(Name of Corporation)
/s/ located at One Lyberty Way, Westford, MA 01886
- -------- -----------------------------------------------------------
Name
Approved do hereby certify that the following amendment to the articles of
organization of the corporation was duly adopted by unanimous consent
given July 24, 1986, by the holders of all of the shares of
------------
common stock outstanding
----------------
(Class of Stock)
CROSS OUT
INAPPLICABLE being at least a majority of each class outstanding
CLAUSE and entitled to vote thereon:(1)
To amend Article 1 of the Articles of Organization by
deleting said Article in its entirety and substituting
therefor the following new Article 1:
The name by which the corporation shall be known is:
OPTICAL CORPORATION OF AMERICA
To amend Article 3 of the Articles of Organization as follows (over):
C __
P __ 1 For amendments adopted pursuant to Chapter 156B, Section 70.
M __ 2 For amendments adopted pursuant to Chapter 156B, Section 71.
Note: If the space provided under any Amendment or item on this form
is insufficient, additions shall be set forth on separate 8-1/2x11
sheets of paper leaving a left-hand margin of at least 1 inch for
binding. Additions to more than one Amendment may be continued on a
- ------- single sheet so long as each Amendment requiring each such addition is
P.C. clearly indicated.
<PAGE>
To CHANGE the number of shares and the par value, if any, of each class of stock
within the corporation fill in the following:
The total presently authorized is:
- --------------------------------------------------------------------------------
NO PAR VALUE WITH PAR VALUE
KIND OF STOCK NUMBER OF SHARES NUMBER OF SHARES PAR VALUE
- --------------------------------------------------------------------------------
COMMON 15,000 NONE
- --------------------------------------------------------------------------------
PREFERRED NONE NONE
- --------------------------------------------------------------------------------
CHANGE the total to:
- --------------------------------------------------------------------------------
NO PAR VALUE WITH PAR VALUE
KIND OF STOCK NUMBER OF SHARES NUMBER OF SHARES PAR VALUE
- --------------------------------------------------------------------------------
COMMON NONE 1,000,000 .01
- --------------------------------------------------------------------------------
PREFERRED NONE NONE
- --------------------------------------------------------------------------------
<PAGE>
The foregoing amendment will become effective when these articles of amendment
are filed in accordance with Chapter 156B, Section 6 of The General Laws unless
these articles specify, in accordance with the vote adopting the amendment, a
later effective date not more than thirty days after such filing, in which event
the amendment will become effective on such later date.
IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereto signed our
names this 24th day of July, in the year 1986.
/s/ Donald A. Johnson
------------------------------- President
/s/ Robert DeN. Cope
------------------------------- Assistant Clerk
<PAGE>
SECRETARY OF
THE COMMONWEALTH
1986 AUG 4 AM 10:23
CORPORATION DIVISION
THE COMMONWEALTH OF MASSACHUSETTS
ARTICLES OF AMENDMENT
(General Laws, Chapter 156B, Section 72)
I hereby approve the within articles of
amendment and, the filing fee in the
amount of $425 having been paid, said
articles are deemed to have been filed
with me this 4th day of August, 1986.
/s/ Michael Joseph Connolly
MICHAEL JOSEPH CONNOLLY
Secretary of State
------------------------------
A TRUE COPY ATTEST
/s/ William Francis Galvin
WILLIAM FRANCIS GALVIN
SECRETARY OF THE COMMONWEALTH
DATE 7/30/96 CLERK JMc
------------------------------
TO BE FILLED IN BY CORPORATION
PHOTO COPY OF AMENDMENT TO BE SENT
TO: Douglas M. Kirkpatrick, Esquire
Bowditch & Dewey
311 Main St.
Worcester, Massachusetts 01608
Telephone: (617) 791-3511
Copy Mailed
<PAGE>
FORM CD-72-30M-3/83-172595
/s/ The Commonwealth of Massachusetts
- --------- OFFICE OF THE MASSACHUSETTS SECRETARY OF STATE
Examiner MICHAEL J.CONNOLLY, Secretary
ONE ASHBURTON PLACE, BOSTON, MASSACHUSETTS 02108
FEDERAL IDENTIFICATION
NO. APPLIED FOR
------------------
000221953
ARTICLES OF AMENDMENT
General Laws, Chapter 156B, Section 72
This certificate must be submitted to the Secretary of the
Commonwealth within sixty days after the date of the vote of
stockholders adopting the amendment. The fee for filing this
certificate is prescribed by General Laws, Chapter 156B, Section 114.
Make check payable to the Commonwealth of Massachusetts.
------------------
We, Donald A. Johnson , President, and
Robert DeN. Cope Clerk of
DAJ Acquisition Corp.
----------------------------------------------------------------------
(Name of Corporation)
/s/
- -------- located at One Lyberty Way, Westford, MA 01886
Name ----------------------------------------------------------
Approved
do hereby certify that the following amendment to the articles of
organization of the corporation was duly adopted by Consent Vote dated
June 18, 1985, by the holders of all of the shares of common stock
---------- -------------
outstanding
CROSS OUT
INAPPLICABLE being at least a majority of each class outstanding
CLAUSE and entitled to vote thereon:(1)
That the name of the Corporation be and it is hereby
changed from "DAJ Acquisition Corp." to "MicroCoatings,
Inc.", and that the proper officers be, and they hereby
are, authorized to file Articles of Amendment with the
Massachusetts Secretary of State to effect such change.
C _X_
P ___ 1 For amendments adopted pursuant to Chapter 156B, Section 70.
M ___ 2 For amendments adopted pursuant to Chapter 156B, Section 71.
Note: If the space provided under any Amendment or item on this form
is insufficient, additions shall be set forth on separate 8-1/2x11
sheets of paper leaving a left-hand margin of at least 1 inch for
6 binding. Additions to more than one Amendment may be continued on a
- -------- single sheet so long as each Amendment requiring each such addition is
P.C. clearly indicated.
<PAGE>
To CHANGE the number of shares and the par value, if any, of each class of stock
within the corporation fill in the following:
The total presently authorized is:
- --------------------------------------------------------------------------------
NO PAR VALUE WITH PAR VALUE
KIND OF STOCK NUMBER OF SHARES NUMBER OF SHARES PAR VALUE
- --------------------------------------------------------------------------------
COMMON
- --------------------------------------------------------------------------------
PREFERRED
- --------------------------------------------------------------------------------
CHANGE the total to:
- --------------------------------------------------------------------------------
NO PAR VALUE WITH PAR VALUE
KIND OF STOCK NUMBER OF SHARES NUMBER OF SHARES PAR VALUE
- --------------------------------------------------------------------------------
COMMON
- --------------------------------------------------------------------------------
PREFERRED
- --------------------------------------------------------------------------------
<PAGE>
MICROCOATINGS, INC.
One Liberty Way
Westford, Massachusetts 01886
June 18, 1985
Office of the Secretary of State
Corporations Division
One Ashburton Place
Boston, MA 02109
Re: Consent to Use of Corporate Name
Dear Sir or Madam:
MicroCoatings, Inc., a Massachusetts corporation (the "Company"), has
entered into an Asset Purchase Agreement between it and DAJ Acquisition Corp., a
Massachusetts corporation ("Acquisition"), whereby substantially all of the
assets of the Company were sold to Acquisition. Pursuant to said Agreement, the
Company agreed to change its name and to consent to the use of the name
"MicroCoatings, Inc." by Acquisition. The change of name of the Company has been
approved by the stockholders of the Company and Articles of Amendment to effect
the same are being filed with your office today and are enclosed herewith.
As President of the Company, I hereby consent on behalf of the Company to
the use of its corporate name, "MicroCoatings, Inc", by Acquisition pending and
after the effectiveness of the above-referenced Articles of Amendment
I have also enclosed a check in the amount of $75.00 to cover the fee for
the Amendment. Please acknowledge receipt of the letter and the enclosres by
date-stamping and signing the enclosed acknowledgement copy and return it to the
messenger.
<PAGE>
-2-
Office of the Secretary of State June 18, 1985
Thank you very much.
Very truly yours,
/s/ John C. Simons, Jr.
John C. Simons, Jr.
President
JCS/dhg
Enclosures
cc: DAJ Acquisition Corp.
<PAGE>
The foregoing amendment will become effective when these articles of amendment
are filed in accordance with Chapter 156B, Section 6 of The General Laws unless
these articles specify, in accordance with the vote adopting the amendment, a
later effective date not more than thirty days after such filing, in which event
the amendment will become effective on such later date.
IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereto signed our
names this 18th day of June, in the year 1985.
/s/ Donald A. Johnson
------------------------------- President
/s/ Robert DeN. Cope
------------------------------- Clerk
<PAGE>
SECRETARY OF
THE COMMONWEALTH
1985 JUN 19 A 11:02
CORPORATION DIVISION
64173 99666
THE COMMONWEALTH OF MASSACHUSETTS
ARTICLES OF AMENDMENT
(General Laws, Chapter 156B, Section 72)
I hereby approve the within articles of
amendment and, the filing fee in the
amount of $75.00 having been paid, said
articles are deemed to have been filed
with me this 19th day of June, 1985.
/s/ Michael Joseph Connolly
MICHAEL JOSEPH CONNOLLY
Secretary of State
------------------------------
A TRUE COPY ATTEST
/s/ William Francis Galvin
WILLIAM FRANCIS GALVIN
SECRETARY OF THE COMMONWEALTH
DATE 7/30/96 CLERK JMc
------------------------------
TO BE FILLED IN BY CORPORATION
PHOTO COPY OF AMENDMENT TO BE SENT
TO: Peter R. Johnson, Esquire
Bowditch & Dewey
311 Main St.
Worcester, Massachusetts 01608
Telephone: (617) 791-3511
Copy Mailed
<PAGE>
30M-CD ARO-3 (Rev 4/85) 503-31
NOTE: ONCE DOCUMENT IS ACCEPTED AND FILED, CHANGES MUST BE BY AMENDMENT
OR CERTIFICATE OF CHANGE ONLY!
/s/ The Commonwealth of Massachusetts
- --------- OFFICE OF THE MASSACHUSETTS SECRETARY OF STATE
Examiner MICHAEL JOSEPH CONNOLLY, Secretary
ONE ASHBURTON PLACE, BOSTON, MASSACHUSETTS 02108
ARTICLES OF ORGANIZATION
(Under G.L. Ch. 156B)
Incorporators
NAME POST OFFICE ADDRESS
Include given name in full in case of natural persons; in case of a
corporation, give state of incorporation.
DONALD A. JOHNSON 18 Captain Brown's Lane
Acton, MA 01720
/s/
- -------- The above-named incorporator acts to form a corporation under the
Name provisions of General Laws, Chapter 156B and hereby state(s):
Approved
1. The name by which the corporation shall be known is:
DAJ Acquisition Corp.
2. The purpose for which the corporation is formed is as follows:
To the extent that business corporations organized under Chapter
156B of the Massachusetts General Laws may now or hereafter be
permitted under the laws of the Commonwealth of Massachusetts, in
this Commonwealth or anywhere on Earth or elsewhere:
To engage in the design, development, manufacture, marketing and
sale of optical interference filters, optical coatings, and
related products, parts and supplies incorporatig thin-film
technology.
C ___
P _X_ See Continuation Sheet 2A
M _X_
R.A. ___
Note: If the space provided under any article or item on this form is
insufficient, additions shall be set forth on separate 8-1/2x11 sheets
of paper leaving a left-hand margin of at least 1 inch for binding.
6 Additions to more than one article may be continued on a single sheet
- ------- so long as each article requiring each such addition is clearly
P.C. indicated.
<PAGE>
2. The total number of shares and the par value, if any, of each class of stock
within the corporation is authorized as follows:
- --------------------------------------------------------------------------------
WITHOUT PAR VALUE WITH PAR VALUE
CLASS OF STOCK --------------------------------------------------------------
NUMBER OF SHARES NUMBER OF SHARES PAR VALUE AMOUNT
- --------------------------------------------------------------------------------
Preferred None $
- --------------------------------------------------------------------------------
Common 15,000
- --------------------------------------------------------------------------------
*4. If more than one class is authorized, a description of each of the
different classes of stock with, if any, the preferences, voting powers,
qualifications, special or relative rights or privileges as to each class
thereof and any series now established: NONE
*5. The restrictions, if any, imposed by the Articles of Organization upon the
transfer of shares of stock of any class are as follows: NONE
*6. Other lawful provisions, if any, for the conduct and regulation of business
and affairs of the corporation, for its voluntary dissolution, or for
limiting, defining, or regulating the powers of the corporation, or of its
directors or stockholders, or of any class of stockholders:
See Continuation Sheet 6A
*If there are no provisions state "None".
<PAGE>
CONTINUATION SHEET 2A
To organize or cause to be organized under the laws of the Commonwealth of
Massachusetts or of any other jurisdiction, corporations, associations,
partnerships, limited partnerships, ventures or other entities for the purpose
of accomplishing any or all of the purposes for which the Corporation is
organized; to become a stockholder, partner, limited partner or other
participant in any such corporation, association, partnership or other entity;
and to dissolve, wind up, liquidate, merge or consolidate any such corporation,
association, partnership or other entity or cause the same to be dissolved,
wound up, liquidated, merged or consolidated.
To provide capital for, to participate in and arrange the financing of the
business of, and to enter into cooperative financial arrangements with or on
behalf of, any such corporation, association, partnership, limited partnership,
venture or other entity, and any other corporation, association, partnership,
limited partnership, venture or other entity which may be or become affiliated
with the Corporation.
To provide management services of all kinds for any corporation,
association, partnership, limited partnership, venture or other entity.
To engage in any business or transaction permitted by the laws of the
Commonwealth of Massachusetts to a corporation organized under Chapter 156B of
the General Laws, whether or not related to any purpose or business described
above.
<PAGE>
Continuation Sheet 6A
To the extent permitted by the By-Laws, meeting of the stockholders of this
corporation may be held anywhere in the United States.
To the extent permitted by law and by the By-laws, the directors (as well as the
stockholders) of this corporation shall have the power to make, amend or repeal,
in whole or in part, the By-laws.
The corporation may at any time enter into agreements to redeem and/or redeem
its outstanding stock from any stockholder or stockholders without having to
extend the same offer to its other stockholders.
The corporation may be a partner and/or a joint venturer in any business
enterprise which it would have the power to conduct by itself.
The corporation may make loans to or guarantee the obligations of other persons,
corporations, or entities.
The corporation may do everything necessary or proper for the accomplishment of
the purposes enumerated in Section 2 or incidental to the powers herein named,
or which shall at any time appear conducive or expedient for the protection or
benefit of the corporation either as holders of or interested in any property or
otherwise, with all the powers now or hereafter conferred by the laws of
Massachusetts and by the principles of the common law, and the enumeration of
specific powers hereinbefore stated shall not be construed to limit or restrict
in any manner the aforesaid general powers of the corporation.
<PAGE>
7. By-laws of the corporation have been duly adopted and the initial
directors, president, treasurer and clerk, whose names are set out below,
have been duly elected.
8. The effective date of organization of the corporation shall be the date of
filing with the Secretary of the Commonwealth or if later date is desired,
specify date, (not more than 30 days after the date of filing.)
9. The following information shall not for any purpose be treated as a
permanent part of the Articles of Organization of the corporation.
a. The post office address of the initial principal office of the
corporation of Massachusetts is:
ONE LYBERTY WAY, WESTFORD, MA 01886
b. The name, residence, and post office address of each of the initial
directors and following officers of the corporation are as follows:
NAME RESIDENCE POST OFFICE ADDRE
President: )
)
)- Donald A. Johnson 18 Captain Brown's Lane same
Treasurer: ) Acton, MA 01720
Clerk: Robert DeN. Cope 47 Westwood Drive same
Worcester, MA 01609
Directors: Donald A. Johnson same as above same as above
George B. Whelton, Jr. 102 Dow Road same
Hollis, N.H. 03049
F. Sherman Hoyt 39 Main Street same
Hollis, N.H. 03049
c. The date initially adopted on which the corporation's fiscal year ends
is:
March 31
d. The date initially fixed in the by-laws for the annual meeting of
stockholders of the corporation is:
the third Wednesday in September
c. The name and business address of the resident agent, if any, of the
corporation is: None
IN WITNESS WHEREOF and under the penalties of perjury the INCORPORATOR(S)
sign(s) these Articles of Organization this 8th day of May, 1985
/s/ Donald A. Johnson
----------------------------------------------------------------
----------------------------------------------------------------
----------------------------------------------------------------
The signature of each incorporator which is not a natural person must be an
individual who shall show the capacity in which he acts and by signing shall
represent under the penalties of perjury that he is duly authorized on its
behalf to sign these Articles of Organization.
<PAGE>
RECEIVED
MAY 13 1985
SECRETARY OF STATE
CORPORATION DIVISION
THE COMMONWEALTH OF MASSACHUSETTS
ARTICLES OF ORGANIZATION
GENERAL LAWS CHAPTER 156B, SECTION 12
=====================================
I hereby certify that, upon an
examination of the within-written
articles of organization, duly
submitted to me, it appears that
the provisions of the General Laws
relative to the organization of
corporations have been complied
with, and I hereby approve said
articles; and the filing fee in
the amount of $150.00 having been
paid, said articles are deemed to
have been filed with me this 13th
day of May 1985
Effective date
/s/ Michael Joseph Connolly
MICHAEL JOSEPH CONNOLLY
Secretary of State
PHOTO COPY OF ARTICLES OF ORGANIZATION TO BE SENT
TO BE FILLED IN BY CORPORATION
TO: Peter R. Johnson, Esquire
Bowditch & Dewey
...........................................
311 Main Street
...........................................
Worcester, MA 01608
...........................................
Telephone (617) 791-3511
..................................
FILING FEE: 1/20 of 1% of the total amount
of the authorized capital stock with par
value, and one cent a share for all
authorized shares without par value, but
not less than $150 General Laws, Chapter
156B. Shares of stock with a par value
less than one dollar shall be deemed to
have par value of one dollar per share.
Copy Mailed
BY-LAWS
of
OPTICAL CORPORATION OF AMERICA
ARTICLE I
Stockholders
1. Annual Meeting - The Board of Directors, the Chairman or the
President shall determine the date, hour, place and manner of conducting the
Annual Meeting, provided that such meeting be scheduled to occur within six
months after the end of the fiscal year of the Corporation. The purposes for
which an annual meeting is to be held, in addition to those prescribed by law,
the Articles of Organization, or these By-Laws, may be specified by the Board of
Directors, by the Chairman or by the President. If no such date for the Annual
Meeting is established or said Meeting has not been held on the date determined,
a special meeting may be held in place thereof with all the force and effect of
an annual meeting.
2. Special Meetings - Special meetings of the stockholders may be
called by the Board of Directors, by the Chairman or by the President. Upon the
written application of one or more stockholders who hold at least ten percent
(10%) of the capital stock entitled to vote at a meeting, special meetings shall
be called by the Clerk, or in case of the death, absence, incapacity, or refusal
of the Clerk, by any other officer of the Corporation.
3. Place of Meetings - All meetings of the stockholders shall be
held at the principal office of the Corporation unless a different place (within
the United States) is fixed by the Board of Directors, by the Chairman or by the
President and stated in the notice of the meeting.
4. Notice of Meetings - A written notice of every meeting, annual
and special, of the stockholders, stating the date, hour and place thereof, and
the purposes for which the meeting is to be held, shall be given by the Clerk,
or by an Assistant Clerk, Secretary, or an Assistant Secretary, if there is one,
or by the person calling the meeting, at least seven days before the meeting, to
each stockholder entitled to vote thereat and to each stockholder, who by law,
the Articles of Organization, or these By-laws is entitled to such notice, by
leaving such notice with him or at his residence or usual place of business or
by mailing it postage prepaid and addressed to such stockholder at his address
as it appears upon the records of the Corporation. Notice need not be given to a
stockholder if a written waiver of notice, executed before or after the meeting
by such stockholder or by his attorney thereunto authorized, is filed with the
records of the meeting.
5. Quorum - The holders of a majority in interest of all stock
issued, outstanding, and entitled to vote shall be required to constitute a
quorum for the transaction of business at all meetings of the stockholders.
Stock owned directly or indirectly by the Corporation, if any, shall not be
deemed outstanding for this purpose. In the absence of a quorum, any meeting
-1-
<PAGE>
maybe adjourned from time to time, and the meeting may be held as adjourned
without further notice.
6. Voting and Proxies - Stockholders entitled to vote shall have
one vote for each share of stock entitled to vote and a proportionate vote for
each fractional share entitled to vote held by them of record according to the
records of the Corporation, unless otherwise provided by law or by the Articles
of Organization. Stockholders entitled to vote may vote either in person or by
written proxy which need not be sealed or attested. Proxies shall be filed with
the Clerk of the meeting, or of any adjournment thereof, before being voted.
Except as otherwise limited therein, proxies shall entitle the persons named
therein to vote at any adjournment of such meeting. A proxy with respect to
stock held in the name of two or more persons shall be valid if executed by any
one of them unless at or prior to exercise of the proxy the Corporation receives
a specific written notice to the contrary from any one of them. A proxy
purporting to be executed by or on behalf of a stockholder shall be deemed valid
unless challenged at or prior to its exercise, and the burden of proving
invalidity shall rest on the challenger.
No proxy dated more than six months before the meeting named
therein shall be valid, and no proxy shall be valid after the final adjournment
of such meeting; provided however that if a proxy is coupled with an interest
sufficient in law to support an irrevocable power, including without limitation,
an interest in the shares or in the Corporation generally, it may be made
irrevocable if it so provides. Such an irrevocable proxy need not specify the
meeting to which it applies and it shall be valid and enforceable until the
interest terminates, or for such shorter period as the proxy specifies.
7. Action at Meeting - When a quorum is present at any meeting of
the stockholders, a majority of the stock present or represented and voting on a
matter, except where a larger vote is required by law, the Articles of
Organization, or these By-laws, shall decide any matter to be voted on by the
stockholders. Any election by stockholders shall be determined by a plurality of
the votes cast by the stockholders entitled to vote at the election. No ballot
shall be required for such election unless requested by a stockholder present or
represented at the meeting and entitled to vote in the election. Except where
acting in a fiduciary capacity, the Corporation shall not directly or indirectly
vote any share of its own stock. No stock shall be voted if any installment of
the subscription therefor has been duly demanded by the Corporation and is
overdue and unpaid.
8. Action Without Meeting - Any action to be taken by
stockholders may be taken without a meeting if all stockholders entitled to vote
on the matter consent to the action by a writing filed with the records of the
meetings of stockholders. Such consent shall be treated for all purposes as a
vote at a meeting.
ARTICLE II
-2-
<PAGE>
The Board of Directors
1. Powers - The business of the Corporation shall be managed by a
Board of Directors who may exercise all the powers of the Corporation, except as
otherwise provided by law, the Articles of Organization, or these By-laws. In
the event of a vacancy in the Board of Directors, the remaining Directors,
except as otherwise provided by law, may exercise the powers of the full Board
until the vacancy is filled.
2. Membership and Election - The Board of Directors shall consist
of at least three members; except that whenever there shall be less than three
stockholders, it may consist of as few members as there are stockholders. The
exact number shall be determined at each annual meeting of the stockholders
(subject to change as provided in this Article II). At each annual meeting of
the stockholders, the Directors shall be elected by such stockholders as have
the right to vote for the election of Directors. No Director need be a
stockholder.
3. Vacancies - Any vacancy in the Board of Directors, however
occurring, may be filled by the stockholders or, in the absence of stockholder
action, by vote of a majority of the Directors then in office.
4. Enlargement of the Board - The number constituting the Board
of Directors may be increased and one or more additional Directors elected at
any special meeting of the stockholders or by the Board of Directors by vote of
a majority of the Directors then in office.
5. Tenure - Except as otherwise provided by law, the Articles of
Organization, or these By-laws, Directors shall hold office until the next
Annual Meeting of the stockholders and thereafter until their successors are
chosen and qualified. Any Director may resign by delivering his written
resignation to the Corporation at its principal office or to the President,
Clerk, or Treasurer. Such resignation shall be effective upon receipt unless it
is specified to be effective at some other time or upon the happening of some
other event.
6. Removal - A Director may be removed from office (a) with or
without cause by vote of the holders of a majority of the shares of stock
entitled to vote in the election of Directors, or (b) for cause by vote of a
majority of the Directors then in office. A Director may be removed for cause
only after reasonable notice and opportunity to be heard before the body
proposing removal.
7. Meetings - Regular meetings of the Board of Directors may be
held without call or notice at such places and at such times as the Board of
Directors may from time to time determine, provided that any Director who is
absent when such determination is made shall be given notice of the
determination. A regular meeting of the Directors may be held without a call or
notice at the same place as the Annual Meeting of stockholders, or the Special
Meeting held in lieu thereof, following such meeting of stockholders provided
either that every Director is present at the meeting at which the Annual Meeting
is fixed or any absent Director has received the minutes of such meeting.
Special meetings of the Directors may be held upon the oral or written call
therefor by the Chairman, President, Treasurer, or two or more Directors,
designating the time, date, and place thereof.
-3-
<PAGE>
8. Notice of Special Meetings - Notice of the date, hour and
place of all special meetings of the Board of Directors shall be given to each
Director by the Secretary or an Assistant Secretary, or, if there be no
Secretary or Assistant Secretary, by the Clerk or an Assistant Clerk, or, in
case of the death, absence, incapacity, or refusal of such persons, by the
officer or one of the Directors calling the meeting. Notice shall be given to
each Director either in person or by telephone, or by telegram sent to the
Director's business or home address at least twenty-four hours in advance of the
meeting, or by written notice mailed to his business or home address at least
forty-eight hours in advance of the meeting. Notice need not be given to any
Director if a written waiver of notice, executed by the Director before or after
the meeting, is filed with the records of the meeting, or to any Director who
attends the meeting without protesting prior thereto or at its commencement the
lack of notice. A notice or waiver of notice of a meeting of the Board of
Directors need not specify the purposes of the meeting.
9. Quorum - At any meeting of the Board of Directors, a majority
of the Directors then in office shall constitute a quorum. Less than a quorum
may adjourn any meeting from time to time, and the meeting may be held as
adjourned without further notice. One or more Directors may participate in a
meeting by means of a conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other
at the same time. Participation in a meeting pursuant to the foregoing sentence
shall constitute presence in person at such meeting.
10. Action at Meeting - At any meeting of the Board of Directors
at which a quorum is present, a majority of those present may take any action on
behalf of the Board of Directors except to the extent that a larger number is
required by law, the Articles of Organization, or these By-laws.
11. Action Without Meeting - Any action by the Board of Directors
may be taken without a meeting if a written consent thereto is signed by all the
Directors then in office and filed with the records of the meetings of the Board
of Directors. Such consent shall be treated as a vote of the Board of Directors
for all purposes.
12. Committees - The Board of Directors may, by vote of a
majority of the Directors then in office, elect from its number an Executive
Committee or other committees and may by like vote delegate thereto some or all
of its powers except those which by law, by the Articles of Organization, or by
these By-laws it is prohibited from delegating. In no event shall the following
powers be delegated by the Board of Directors to any committee established by
it:
i. The power to change the principal office of the
Corporation.
ii. The power to amend these By-laws.
iii. The power to elect officers required by law, by the
Articles of Organization, or by these By-laws to be
elected by the stockholders or the Directors and the
power to fill vacancies in any such offices.
-4-
<PAGE>
iv. The power to change the number of members constituting
the Board of Directors and the power to fill vacancies
in the Board of Directors.
v. The power to remove officers from office or Directors
from the Board of Directors.
vi. The power to authorize the payment of any dividend or
distribution to stockholders.
vii. The power to authorize the reacquisition for value of
stock of the Corporation.
viii. The power to authorize a merger of the Corporation.
Except as the Board of Directors may otherwise determine, any such committee may
make rules for the conduct of its business, but, unless otherwise provided by
the Board of Directors or in such rules, its business (including the keeping of
a record of its meetings) shall be conducted as nearly as may be in the same
manner as is provided by these By-laws for the Board of Directors, including the
ability to participate in meetings telephonically, and to act by written consent
in lieu of a meeting as provided in Sections 9 and 11, respectively. Each such
committee shall report its action to the Board of Directors, which shall have
the power to rescind any action taken. However, in the case of the Executive
Committee, no such rescission shall have retroactive effect.
ARTICLE III
Officers
1. Enumeration - The officers of the Corporation shall be chosen
by the Board of Directors and by the President as follows:
(a) The officers chosen by the Board of Directors shall be a President,
a Treasurer, and a Clerk, and may include a Chairman of the Board of
Directors, a General Manager, a Secretary, a Controller, and one or
more Assistant Clerks, Assistant Secretaries or Assistant Treasurers;
and
(b) The President may appoint such other officers with such titles and
terms of office as the President may from time to time determine,
including one or more Vice-Presidents and Assistant Secretaries and one
or more officers (including Presidents and Vice-Presidents) of each
division or divisional unit of the Corporation.
2. Election - Officers to be chosen by the Board of Directors
shall be elected at its first meeting following the Annual Meeting of
stockholders. All other officers may be appointed by the President at such
meeting or by written action delivered to the Clerk of the corporation at any
other time and from time to time.
3. Qualification - No officer need be a stockholder, and only the
President and the Chairman of the Board, if one be elected, need be a Director.
Any two or more offices may be
-5-
<PAGE>
held by the same person. The Clerk shall be a resident of Massachusetts, unless
the Corporation has a Resident Agent appointed for the purpose of service of
process. Any officer may be required by the Board of Directors to give bond for
the faithful performance of his duties to the Corporation in such amount and
with such sureties as the Board of Directors may determine.
4. Tenure - Except as otherwise provided by law, by the Articles
of Organization, or by these By-laws, the officers of the Corporation shall hold
office until their successors are chosen and qualify, unless a different term is
specified by the action of the Board of Directors or of the President, as the
case may be, electing or appointing him or until his earlier death, resignation
or removal. Any officer may resign by delivering his written resignation to the
Corporation at its principal office or to the President or the Clerk. Such
resignation shall be effective upon receipt unless it is specified to be
effective at some other time or upon the happening of some other event.
5. Removal - Any officer elected or appointed by the Board of
Directors or by the President may be removed at any time, with or without cause,
by the affirmative vote of a majority of the Board of Directors or a committee
duly authorized to do so, except that any officer appointed by the President may
also be removed at any time, with or without cause, by the President; provided
that an officer may be removed for cause only after reasonable notice and
opportunity to be heard by the Board of Directors.
6. Vacancies - Any vacancy occurring in the office of the
President, Treasurer or Clerk of the Corporation, or such other offices to which
the Board of Directors is entitled to elect individuals as prescribed in Section
1 above, however arising, may be filled by the Board of Directors, at its
discretion; all other vacancies in all other offices, however arising, may be
filled by the President, at his discretion.
7. Chairman of the Board, President, and Vice Presidents - The
Chairman of the Board, if chosen, otherwise the President shall preside at all
meetings of the Board of Directors and of the stockholders. The Chairman, if
chosen, otherwise the President shall be the chief executive officer of the
Corporation, shall, subject to the direction of the Board of Directors, have
general supervision and control of the business of the Corporation, and shall
perform such other duties and have such other powers as may be designated from
time to time by the Board of Directors. Each Vice President shall perform such
duties and have such powers as may be designated from time to time by the Board
of Directors.
8. Treasurer and Assistant Treasurers - The Treasurer shall,
subject to the direction of the Board of Directors, have general charge of the
financial affairs of the Corporation and shall cause to be kept accurate books
of account of the affairs of the Corporation. The Treasurer shall have custody
of all funds, securities, and valuable documents of the Corporation, except as
the Board of Directors may otherwise provide. In addition, the Treasurer shall
perform such other duties and have such other powers as may be designated from
time to time by the Board of Directors. Each Assistant Treasurer shall perform
such duties and have such powers as may be designated from time to time by the
Board of Directors.
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<PAGE>
9. Clerk and Assistant Clerks - The Clerk shall attend and keep a
record of all the meetings of stockholders. In case a Secretary or an Assistant
Secretary is not chosen, the Clerk shall attend and keep a record of all the
meetings of the Board of Directors. In addition, the Clerk shall perform such
other duties and have such other powers as may be designated from time to time
by the Board of Directors. Each Assistant Clerk shall perform such duties and
have such powers as may be designated from time to time by the Board of
Directors. In the absence of the Clerk from any meeting of the stockholders, an
Assistant Clerk, if one is chosen, otherwise a Temporary Clerk designated by the
person presiding at the meeting, shall perform the duties of the Clerk at such
meeting. Unless a Transfer Agent is appointed, the Clerk shall keep or cause to
be kept, at the principal office of the Corporation in Massachusetts or at the
Clerk's office if in Massachusetts, or if it is not located in Massachusetts, at
the office of the Resident Agent, the stock and transfer records of the
Corporation, in which are contained the names of all stockholders and the record
address and the amount of stock held by each.
10. Secretary and Assistant Secretaries - If a Secretary is
chosen, it shall be the Secretary's duty to attend and keep a record of all the
meetings of the Board of Directors. In addition, the Secretary shall perform
such other duties and have such other powers as may be designated from time to
time by the Board of Directors. Each Assistant Secretary shall perform such
duties and have such powers as may be designated from time to time by the Board
of Directors. In the absence of the Secretary, an Assistant Secretary, if one is
chosen and present, or the Clerk if present, or an Assistant Clerk if one is
chosen and present, otherwise a Temporary Secretary designated by the person
presiding at a meeting of the Board of Directors shall perform the duties of the
Secretary at such meeting.
11. Other Officers - Each other officer, including a General
Manager and a Controller, if any, that may be chosen by the Board of Directors
or by the President as provided in this Article III, shall perform such duties
and have such powers as may be designated from time to time by the Board of
Directors, or the President, respectively, as set forth in this Article III.
12. Other Powers and Duties - Each officer shall, subject to
these By-laws, and in addition to the duties and powers specifically set forth
in these By-laws, have such duties and powers as are customarily incident to his
office. The exercise of any power which by law, by the Articles of Organization,
or by these By-laws, or under any vote of the stockholders or the Board of
Directors, may be exercised by an officer of the Corporation only in the event
of absence of another officer or any other contingency, shall bind the
Corporation in favor of anyone relying thereon in good faith, whether or not
such absence or contingency existed.
ARTICLE IV
Capital Stock
1. Shares Represented by Certificates and Uncertificated Shares -
The Board of Directors may provide by resolution that some or all of any shares
shall be uncertificated shares. Unless such a resolution is adopted, each
stockholder shall be entitled to
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<PAGE>
a certificate of the capital stock of the Corporation stating the number, the
class and the designation of the series, if any, of the shares held by him, in
such form as may be prescribed from time to time by the Board of Directors. Such
certificate shall be signed by the Chairman of the Board, the President or a
Vice President and by the Treasurer or an Assistant Treasurer. Such signatures
may be facsimile if the certificate is signed by a Transfer Agent or Registrar,
other than a Director, officer, or employee of the Corporation. In case any
officer who has signed or whose facsimile signature has been placed on any such
certificate shall have ceased to be such officer before such certificate is
issued, it may be issued by the Corporation with the same effect as if he were
such officer at the time of its issue. Every certificate for shares of stock,
which are subject to any restriction on transfer pursuant to the Articles of
Organization, these By-laws, or any agreement to which the Corporation is a
party, shall have the restriction noted conspicuously on the certificate or
shall set forth on its face or back either the full text of the restriction or a
statement of the existence of such restriction and a statement that the
Corporation will furnish a copy of such restriction to the holder of such
certificate upon written request and without charge. Every certificate issued
when the Corporation is authorized to issue more than one class or series of
stock shall set forth on its face or back either the full text of the
preferences, voting powers, qualifications, and special and relative rights of
the shares of each class and series authorized to be issued or a statement of
the existence of such preferences, powers, qualifications, and rights, and a
statement that the Corporation will furnish a copy thereof to the holder of such
certificate upon written request and without charge.
2. Transfers - Subject to the restrictions, if any, stated or
noted on the stock certificates, shares of stock may be transferred on the books
of the Corporation by the surrender to the Corporation or its Transfer Agent of
the certificate therefor properly endorsed or accompanied by a written
assignment and power of attorney properly executed, with necessary transfer
stamps affixed, and with such proof of the authenticity of signature as the
Corporation or its Transfer Agent may reasonably require. Uncertificated shares
of capital stock of the Corporation shall be transferred on the books of the
Corporation upon the written assignment of the record holder of such
uncertificated shares.
3. Record Holder - Except as may be otherwise required by law, by
the Articles of Organization, or by these By-laws, the Corporation shall be
entitled to treat the record holder of stock as shown on its books as the owner
of such stock for all purposes, including the payment of dividends and the right
to vote with respect thereto, regardless of any transfer, pledge, or other
disposition of such stock, until the shares have been transferred on the books
of the Corporation in accordance with the requirements of these By-laws. It
shall be the duty of each stockholder to notify the Corporation of his latest
post office address.
4. Record Date - The Board of Directors may fix in advance a time
of not more than sixty (60) days preceding the date of any meeting of
stockholders, or the date for the payment of any dividend or the making of any
distribution to stockholders, or the last day on which the consent or dissent of
stockholders may be effectively expressed for any purpose, as the record date
for determining the stockholders having the right to notice of and to vote at
such
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<PAGE>
meeting, and any adjournment thereof, or the right to receive such dividend or
distribution, or the right to give such consent or dissent. In such case, only
stockholders of record on such record date shall have such right,
notwithstanding any transfer of stock on the books of the Corporation after the
record date. Without fixing such record date, the Board of Directors may for all
or any of such purposes close the transfer books for all or any part of such
period. In the event no record date is fixed and the transfer books are not
closed: (i) The record date for determining stockholders having the right to
notice of or to vote at a meeting of stockholders shall be at the close of
business on the date next preceding the day on which notice is given; and (ii)
The record date for determining stockholders for any other purpose shall be at
the close of business on the day on which the Board of Directors acts with
respect thereto.
5. Replacement of Certificates - In case of the alleged loss or
destruction or the mutilation of a certificate of stock, a duplicate certificate
may be issued in place thereof, upon such terms as the Board of Directors may
prescribe.
6. Issue of Stock - Unless otherwise voted by the stockholders,
the whole or any part of any unissued balance of the authorized capital stock of
the Corporation, or the whole or any part of any capital stock of the
Corporation held in its treasury, may be issued or disposed of by vote of the
Board of Directors to such persons, in such manner, for such consideration
(whether cash, tangible or intangible property, services or expenses, or for a
debt or note, or as a stock dividend), and on such terms as the Board of
Directors may determine from time to time, without first offering the same for
subscription to stockholders of the Corporation.
ARTICLE V
Indemnification of Directors, Officers and Others
The Corporation shall indemnify each person now or hereafter
elected or appointed a Director, officer, employee or agent of the Corporation
(including each person who serves at its request as a Director, officer,
employee or agent of any other organization in which the Corporation has any
interest as a stockholder, creditor, or otherwise, or who serves at its request
in any capacity with respect to any employee benefit plan) against all expense
reasonably incurred or paid by him in connection with the defense or disposition
of any actual or threatened claim, action, suit, or proceeding (civil, criminal,
or other, including appeals) in which he may be involved as a party or otherwise
by reason of his having served in any such capacity, or by reason of any action
or omission or alleged action or omission (including those antedating the
adoption of these By-laws) by him while serving in any such capacity; except for
expense incurred or paid by him with respect to: (i) any matter as to which he
shall have been adjudicated in any proceeding not to have acted in the
reasonable belief that his action was in the best interests of the Corporation,
or (ii) any matter as to which he shall agree or be ordered by any court of
competent jurisdiction to make payment to the Corporation, or (iii) any matter
as to which the Corporation shall be prohibited by law or by order of any court
of competent jurisdiction from indemnifying him. Such indemnification shall
include payment by the
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<PAGE>
Corporation of expenses incurred in defending a civil or criminal action or
proceeding in advance of the final disposition of such action or proceeding,
upon receipt of an undertaking by the person indemnified to repay such payment
if he shall eventually be adjudicated to be not entitled to indemnification
under these By-laws.
No matter disposed of by settlement, compromise, or the entry of
a consent decree, nor a judgment of conviction or the entry of any plea in a
criminal proceeding, shall of itself be deemed an adjudication of not having
acted in the reasonable belief that the action taken or omitted was in the best
interests of the Corporation. The term "expense" shall include, without
limitation, settlements, attorneys' fees, costs, judgments, fines, penalties,
and other liabilities. The right of indemnification herein provided for shall be
severable, shall be in addition to any other right which any such person may
have or obtain, shall continue as to any such person who has ceased to be such
Director or officer and shall inure to the benefit of the heirs and personal
representatives of any such person.
ARTICLE VI
Miscellaneous Provisions
1. Fiscal Year - Except as from time to time otherwise determined
by the Board of Directors, the fiscal year of the Corporation shall end on June
30 in each year.
2. Seal - If the Board of Directors determines to adopt a seal of
the Corporation, such seal shall, subject to alteration by the Board of
Directors, bear its name, the word "Massachusetts," and year of its
incorporation.
3. Execution of Instruments - All deeds, leases, transfers,
contracts, bonds, notes and other obligations authorized to be executed by an
officer of the Corporation in its behalf shall be signed by the President or the
Treasurer except as the Board of Directors may generally or in particular cases
otherwise determine.
4. Voting of Securities - Except as the Board of Directors may
otherwise designate, the Chairman, President or Treasurer may waive notice of
and act on behalf of the Corporation, or appoint any person or persons to act as
proxy or attorney in fact for this Corporation (with or without discretionary
power and/or power of substitution) at any meeting of stockholders or beneficial
owners of any other corporation or organization, any of the securities of which
may be held by this Corporation.
5. Corporate Records - The original, or attested copies, of the
Articles of Organization, By-laws, and records of all meetings of the
Incorporators and stockholders and the stock and transfer records, which shall
contain the names of all stockholders and the record address and the amount of
stock held by each, shall be kept in Massachusetts at the principal office of
the Corporation or at an office of its Transfer Agent, Clerk, or Resident Agent.
Said copies and records need not all be kept in the same office. They shall be
available at all reasonable times for the inspection of any stockholder for any
proper purpose but not to secure
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<PAGE>
a list of stockholders or other information for the purpose of selling said list
or information or copies thereof or of using the same for a purpose other than
in the interest of the applicant, as a stockholder, relative to the affairs of
the Corporation.
6. Power to Contract with the Corporation - In the absence of
fraud, (a) no contract or other transaction between this Corporation and one or
more of its stockholders, Directors, or officers, or between this Corporation
and any other corporation or other organization in which one or more of this
Corporation's stockholders, Directors, or officers are stockholders, directors,
or officers, or are otherwise interested, and (b) no other contract or
transaction by this Corporation in which one or more of its stockholders,
Directors, or officers is otherwise interested, shall be in any way affected or
invalidated even though the vote or action of the stockholders, Directors, or
officers having such interests (even if adverse) may have been necessary to
obligate this Corporation upon such contract or transaction; provided the nature
of such interest (though not necessarily the extent or details thereof) shall be
disclosed or shall have been known to at least a majority of the Directors then
in office who are not so interested; and no stockholder, Director, or officer
having such interest (even if adverse) shall be liable to this Corporation, or
to any stockholder or creditor thereof, or to any other person for any loss
incurred by it under or by reason of such contract or transaction, nor shall any
such stockholder, Director, or officer be accountable for gains or profits
realized thereon, or disqualified from owning or continuing to own stock of this
Corporation, or serving or continuing to serve as a director or officer thereof.
Any stockholder, Director, or officer in any way interested in any contract or
transaction described in the foregoing sentence shall be deemed to have
satisfied any requirement for disclosure thereof to the Directors if he gives to
at least a majority of the disinterested Directors then in office a general
notice that he is or may be so interested.
7. Evidence of Authority - A certificate by the Clerk, the
Secretary, or an Assistant Clerk or Assistant Secretary as to any action taken
by the stockholders, Directors, or any officer or representative of the
Corporation shall, as to all who rely thereon in good faith, be conclusive
evidence of such action.
8. Ratification - Any action taken on behalf of the Corporation
by a Director or any officer or representative of the Corporation which requires
authorization by the stockholders or by the Board of Directors shall be deemed
to have been duly authorized if subsequently ratified by the stockholders, if
action by them was necessary for authorization, or by the Board of Directors, if
action by it was necessary for authorization.
9. Articles of Organization - All references in these By-laws to
the Articles of Organization shall be deemed to refer to the Articles of
Organization of the Corporation, as amended, and in effect from time to time.
ARTICLE VII
Amendments
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<PAGE>
The power to make, amend, or repeal these By-laws, in whole or in
part, shall be in both the stockholders and the Board of Directors. Such power
may be exercised by the stockholders at any meeting of the stockholders by vote
of a majority of the stock represented at such meeting and entitled to vote
thereat, provided that the notice for such meeting indicated a change in the
By-laws was to be considered (but it shall not be necessary that such notice
contain the subject matter of the proposed by-law change, unless the same shall
be required by law, the Articles of Organization, or these By-laws). Such power
may be exercised by the Board of Directors by vote of a majority of the
Directors then in office, provided that:
(a) the Board of Directors may not make any new by-law or amend
or repeal any provision of these By-laws which by law, the Articles of
Organization, or these By-laws requires action by the stockholders;
(b) the Board of Directors may not make any new by-law or amend
or repeal any provision of these By-laws which alters the procedure for making,
amending, or repealing these By-laws;
(c) any new by-law or any amendment or repeal of any provision
of these By-laws made or adopted by the Board of Directors may be amended or
repealed by the stockholders; and
(d) not later than the time of giving notice of the meeting of
stockholders next following the making of any new by-law or the amending or
repealing of any provision of these By-laws by the Board of Directors, notice
thereof stating the substance of such new by-law or of such amendment or repeal
shall be given to all stockholders entitled at the time of such notice to vote
on amending these By-laws.
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<PAGE>
<TABLE>
BY-LAWS
of
OPTICAL CORPORATION OF AMERICA
TABLE OF CONTENTS
<S> <C>
ARTICLE I. Stockholders ................................................................................... (i)1
1. Annual Meeting ................................................................................... (i)1
2. Special Meetings ................................................................................. (i)2
3. Place of Meetings ................................................................................ (i)2
4. Notice of Meetings ............................................................................... (i)2
5. Quorum ........................................................................................... (i)3
6. Voting and Proxies ............................................................................... (i)3
7. Action at Meeting ................................................................................ (i)4
8. Action Without Meeting ........................................................................... (i)5
ARTICLE II. The Board of Directors ........................................................................ (i)5
1. Powers ........................................................................................... (i)5
2. Membership and Election .......................................................................... (i)6
3. Vacancies ........................................................................................ (i)7
4. Enlargement of the Board ......................................................................... (i)7
5. Tenure ........................................................................................... (i)7
6. Removal .......................................................................................... (i)7
7. Meetings ......................................................................................... (i)8
8. Notice of Special Meetings ....................................................................... (i)8
9. Quorum ........................................................................................... (i)9
10. Action at Meeting ................................................................................ (i)9
11. Action Without Meeting ........................................................................... (i)9
12. Committees .......................................................................................(i)10
i. The power to change the principal
office of the Corporation. ........................................................... (i)10
ii. The power to amend these By-laws. .................................................... (i)10
iii. The power to elect officers required
by law, by the Articles of
Organization, or by these By-laws to
be elected by the stockholders or the
Directors and the power to fill
vacancies in any such offices. ....................................................... (i)10
iv. The power to change the number of
members constituting the Board of
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<PAGE>
Directors and the power to fill
vacancies in the Board of Directors. ................................................ (i)10
v. The power to remove officers from
office or Directors from the Board of
Directors. .......................................................................... (i)10
vi. The power to authorize the payment of
any dividend or distribution to
stockholders. ....................................................................... (i)10
vii. The power to authorize the
reacquisition for value of stock of
the Corporation. .................................................................... (i)10
viii. The power to authorize a merger of
the Corporation. .................................................................... (i)10
ARTICLE III. Officers .................................................................................... (i)11
1. Enumeration ..................................................................................... (i)11
2. Election ........................................................................................ (i)11
3. Qualification ................................................................................... (i)12
4. Tenure .......................................................................................... (i)12
5. Removal ......................................................................................... (i)13
6. Vacancies ....................................................................................... (i)13
7. Chairman of the Board, President, and Vice
Presidents ...................................................................................... (i)13
8. Treasurer and Assistant Treasurers .............................................................. (i)14
9. Clerk and Assistant Clerks ...................................................................... (i)14
10. Secretary and Assistant Secretaries ............................................................. (i)15
11. Other Officers .................................................................................. (i)15
12. Other Powers and Duties ......................................................................... (i)15
ARTICLE IV. Capital Stock ................................................................................ (i)16
1. Shares Represented by Certificates and
Uncertificated Shares ........................................................................... (i)16
2. Transfers ....................................................................................... (i)17
3. Record Holder ................................................................................... (i)18
4. Record Date ..................................................................................... (i)18
5. Replacement of Certificates ..................................................................... (i)19
6. Issue of Stock .................................................................................. (i)19
ARTICLE V. Indemnification of Directors, Officers and
Others ........................................................................................ (i)20
ARTICLE VI. Miscellaneous Provisions ..................................................................... (i)23
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<PAGE>
1. Fiscal Year ..................................................................................... (i)23
2. Seal ............................................................................................ (i)23
3. Execution of Instruments ........................................................................ (i)23
4. Voting of Securities ............................................................................ (i)24
5. Corporate Records ............................................................................... (i)24
6. Power to Contract with the Corporation .......................................................... (i)25
7. Evidence of Authority ........................................................................... (i)26
8. Ratification .................................................................................... (i)26
9. Articles of Organization ........................................................................ (i)26
ARTICLE VII. Amendments .................................................................................. (i)27
(a) the Board of Directors may not make any new
by-law or amend or repeal any provision of
these By-laws which by law, the Articles of
Organization, or these By-laws requires
action by the stockholders; ................................................................ (i)27
(b) the Board of Directors may not make any new
by-law or amend or repeal any provision of
these By-laws which alters the procedure
for making, amending, or repealing these
By-laws; ................................................................................... (i)27
(c) any new by-law or any amendment or repeal
of any provision of these By-laws made or
adopted by the Board of Directors may be
amended or repealed by the stockholders;
and ........................................................................................ (i)27
(d) not later than the time of giving notice of
the meeting of stockholders next following
the making of any new by-law or the
amending or repealing of any provision of
these By-laws by the Board of Directors,
notice thereof stating the substance of
such new by-law or of such amendment or
repeal shall be given to all stockholders
entitled at the time of such notice to vote
</TABLE>
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SILICON VALLEY BANK
LOAN AND SECURITY AGREEMENT
BORROWER: OPTICAL CORPORATION OF AMERICA
ADDRESS: 7421 ORANGEWOOD AVENUE
GARDEN GROVE, CALIFORNIA 92641
DATE: MAY 27, 1994
THIS LOAN AND SECURITY AGREEMENT is entered into on the above date between
SILICON VALLEY BANK ("Silicon"), whose address is 3000 Lakeside Drive, Santa
Clara, California 95054-2895 and the borrower named above (the "Borrower"),
whose chief executive office is located at the above address ("Borrower's
Address").
1. LOANS.
1.1 Loans. Silicon, in its reasonable discretion, will make loans to the
Borrower (the "Loans") in amounts determined by Silicon in its reasonable
discretion up to the amount ("Credit Limit") shown on the Schedule to this
Agreement (the "Schedule"), provided no Event of Default and no event which,
with notice or passage of time or both, would constitute an Event of Default has
occurred. The Borrower is responsible for monitoring the total amount of Loans
and other Obligations outstanding from time to time, and Borrower shall not
permit the same, at any time, to exceed the Credit Limit. If at any time the
total of all outstanding Loans and all other Obligations exceeds the Credit
Limit, the Borrower shall immediately pay the amount of the excess to Silicon,
without notice or demand.
1.2 Interest. All Loans and all other monetary Obligations shall bear
interest at the rate shown on the Schedule hereto. Interest shall be payable
monthly, on the due date shown on the monthly billing from Silicon to the
Borrower. Silicon may, in its discretion, charge interest to Borrower's deposit
accounts maintained with Silicon.
1.3 Fees. The Borrower shall pay to Silicon a loan origination fee in the
amount shown on the Schedule hereto concurrently herewith. This fee is in
addition to all interest and other sums payable to Silicon and is not
refundable.
2. GRANT OF SECURITY INTEREST.
2.1 Obligations. The term "Obligations" as used in this Agreement means the
following: the obligation to pay all Loans and all interest thereon when due,
and to pay and perform when due all other present and future indebtedness,
liabilities, obligations, guarantees, covenants, agreements, warranties and
representations of the Borrower to Silicon,
<PAGE>
whether joint or several, monetary or non-monetary, and whether created pursuant
to this Agreement or any other present or future agreement or otherwise. Silicon
may, in its discretion, require that Borrower pay monetary Obligations in cash
to Silicon, or charge them to Borrower's Loan account, in which event they will
bear interest at the same rate applicable to the Loans. Silicon may also, in its
discretion, charge any monetary Obligations to Borrower's deposit accounts
maintained with Silicon.
2.2 Collateral. As security for all Obligations, the Borrower hereby grants
Silicon a continuing security interest in all of the Borrower's interest in the
types of property described below, whether now owned or hereafter acquired, and
wherever located (collectively, the "Collateral"): (a) All accounts, contract
rights, chattel paper, letters of credit, documents, securities, money, and
instruments, and all other obligations now or in the future owing to the
Borrower; (b) All inventory, goods, merchandise, materials, raw materials, work
in process, finished goods, farm products, advertising, packaging and shipping
materials, supplies, and all other tangible personal property which is held for
sale or lease or furnished under contracts of service or consumed in the
Borrower's business, and all warehouse receipts and other documents; and (c) All
equipment, including without limitation all machinery, fixtures, trade fixtures,
vehicles, furnishings, furniture, materials, tools, machine tools, office
equipment, computers and peripheral devices, appliances, apparatus, parts, dies,
and jigs; (d) All general intangibles including, but not limited to, deposit
accounts, goodwill, names, trade names, trademarks and the goodwill of the
business symbolized thereby, trade secrets, drawings, blueprints, customer
lists, patents, patent applications, copyrights, security deposits, loan
commitment fees, federal, state and local tax refunds
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<PAGE>
Silicon Valley Bank Loan and Security Agreement
- --------------------------------------------------------------------------------
and claims, all rights in all litigation presently or hereafter pending for any
cause or claim (whether in contract, tort or otherwise), and all judgments now
or hereafter arising therefrom, all claims of Borrower against Silicon, all
rights to purchase or sell real or personal property, all rights as a licensor
or licensee of any kind, all royalties, licenses, processes, telephone numbers,
proprietary information, purchase orders, and all insurance policies and claims
(including without limitation credit, liability, property and other insurance),
and all other rights, privileges and franchises of every kind; (e) All books and
records, whether stored on computers or otherwise maintained; and (f) All
substitutions, additions and accessions to any of the foregoing, and all
products, proceeds and insurance proceeds of the foregoing, and all guaranties
of and security for the foregoing; and all books and records relating to any of
the foregoing. Silicon's security interest in any present or future technology
(including patents, trade secrets, and other technology) shall be subject to any
licenses or rights now or in the future granted by the Borrower to any third
parties in the ordinary course of Borrower's business; provided that if the
Borrower proposes to sell, license or grant any other rights with respect to any
technology in a transaction that, in substance, conveys a major part of the
economic value of that technology, Silicon shall first be requested to release
its security interest in the same, and Silicon may withhold such release in its
discretion.*
*The security interest of Silicon is subject to the Intercreditor Agreement
dated as of MAR. 31, 1994 (the "Intercreditor Agreement") among Silicon,
Borrower, Massachusetts Business Development Corporation, Fleet Credit
Corporation and Massachusetts Capital Resource Company.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BORROWER.
The Borrower represents and warrants to Silicon as follows, and the
Borrower covenants that the following representations will continue to be true,
and that the Borrower will comply with all of the following covenants:
3.1 Corporate Existence and Authority. The Borrower, if a corporation, is
and will continue to be, duly authorized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation. The Borrower is and
will continue to be qualified and licensed to do business in all jurisdictions
in which any failure to do so would have a material adverse effect on the
Borrower. The execution, delivery and performance by the Borrower of this
Agreement, and all other documents contemplated hereby have been duly and
validly authorized, are enforceable against the Borrower in accordance with
their terms, and do not violate any law or any provision of, and are not grounds
for acceleration under, any agreement or instrument which is binding upon the
Borrower.
3.2 Name; Trade Names and Styles. The name of the borrower set forth in the
heading to this Agreement is its correct name. Listed on the Schedule hereto are
all prior names of the Borrower and all of Borrower's present and
<PAGE>
prior trade names. The Borrower shall give Silicon 15 days' prior written notice
before changing its name or doing business under any other name. The Borrower
has complied, and will in the future comply, with all laws relating to the
conduct of business under a fictitious business name.
3.3 Place of Business; Location of Collateral. The address set forth in the
heading to this Agreement is the Borrower's chief executive office. In addition,
the Borrower has places of business and Collateral is located only at the
locations set forth on the Schedule to this Agreement. The Borrower will give
Silicon at least 15 days prior written notice before changing its chief
executive office or locating the Collateral at any other location.
3.4 Title to Collateral; Permitted Liens. The Borrower is now, and will at
all times in the future be, the scale owner of all the Collateral, except for
items of equipment which are leased by the Borrower. The Collateral now is and
will remain free and clear of any and all liens, charges, security interests,
encumbrances and adverse claims, except for the following ("Permitted Liens"):
(i) purchase money security interests in specific items of equipment; (ii)
leases of specific items of equipment; (iii) liens for taxes not yet payable;
(iv) additional security interests and liens consented to in writing by Silicon
in its reasonable discretion, which consent shall not be unreasonably withheld;
and (v) security interests being terminated substantially concurrently with this
Agreement*. Silicon will have the right to require, as a condition to its
consent under subparagraph (iv) above, that the holder of the additional
security interest or lien sign an intercreditor agreement on Silicon's then
standard form, acknowledge that the security interest is subordinate to the
security interest in favor of Silicon, and agree not to take any action to
enforce its subordinate security interest so long as any Obligations remain
outstanding, and that the Borrower agree that any uncured default in any
obligation secured by the subordinate security interest shall also constitute an
Event of Default under this Agreement. Silicon now has, and will continue to
have, a perfected and enforceable security interest in all of the Collateral,
subject only to the Permitted Liens, and the Borrower will at all times defend
Silicon and the Collateral against all claims of others. None of the Collateral
now is or will be affixed to any real property in such a manner, or with such
intent, as to become a fixture.
*and (vi) the security interests which are subject to the Intercreditor
Agreement referred to in Section 2.2 above.
3.5 Maintenance of Collateral. The Borrower will maintain the Collateral in
good working condition, and the Borrower will not use the Collateral for any
unlawful purpose. The Borrower will immediately advise Silicon in writing of any
material loss or damage to the Collateral.
3.6 Books and Records. The Borrower has maintained and will maintain at the
Borrower's Address complete and accurate books and records, comprising an
accounting
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Silicon Valley Bank Loan and Security Agreement
- --------------------------------------------------------------------------------
system in accordance with generally accepted accounting principles.
3.7 Financial Condition and Statements. All financial statements now or in
the future delivered to Silicon have been, and will be, prepared in conformity
with generally accepted accounting principles and now and in the future will
completely and * reflect the financial condition of the Borrower, at the times
and for the periods therein stated. Since the last date covered by any such
statement, there has been no material adverse change in the financial condition
or business of the Borrower. The Borrower is now and will continue to be
solvent. The Borrower will provide Silicon: (i) within 30 days after the end of
each month, a monthly financial statement prepared by the Borrower, and a
Compliance Certificate in such form as Silicon shall reasonably specify, signed
by the Chief Financial Officer of the Borrower, certifying that as of the end of
such month the Borrower was in full compliance with all of the terms and
conditions of this Agreement, and setting forth calculations showing compliance
with the financial covenants set forth on the Schedule and such other
information as Silicon shall reasonably request; and (ii) within 120 days
following the end of the Borrower's fiscal year, complete annual financial
statements, certified by ** independent certified public accountants acceptable
to Silicon.
*fairly
**Deloitte & Touche or other
3.8 Tax Returns and Payments; Pension Contributions. The Borrower has
timely filed, and will timely file, all tax returns and reports required by
foreign federal, state and local law, and the Borrower has timely paid, and will
timely pay, all foreign, federal, state and local taxes, assessments, deposits
and contributions now or in the future owed by the Borrower. The Borrower may,
however, defer payment of any contested taxes, provided that the Borrower (i) in
good faith contests the Borrower's obligation to pay the taxes by appropriate
proceedings promptly and diligently instituted and conducted, (ii) notifies
Silicon in writing of the commencement of, and any material development in, the
proceedings, and (iii) posts bonds or takes any other steps required to keep the
contested taxes from becoming a lien upon any of the Co11ateral. The Borrower is
unaware of any claims or adjustments proposed for any of the Borrower's prior
tax years which could result in additional taxes becoming due and payable by the
Borrower. The Borrower has paid, and shall continue to pay all amounts necessary
to fund all present and future pension, profit sharing and deferred compensation
plans in accordance with their terms*, and the Borrower has not and will not
withdraw from participation in, permit partial or complete termination of, or
permit the occurrence of any other event with respect to, any such plan which
could result in any liability of the Borrower, incuding, without limitation, any
liability to the Pension Benefit Guaranty Corporation or its successors or any
other governmental agency.
<PAGE>
*except for a payment due April 15, 1994, which is being paid concurrently
herewith together will all applicable interest and penalties (if any).
3.9 Compliance with Law. The Borrower has complied, and will comply, in all
material respects, with all provisions of all foreign, federal, state and local
laws and regulations relating to the Borrower, including, but not limited to,
those relating to the Borrower's ownership of real or personal property, conduct
and licensing of the Borrower's business, and environmental matters.
3.10 Litigation. Except as disclosed in the Schedule, there is no claim,
suit, litigation, proceeding or investigation pending or (to best of the
Borrower's knowledge) threatened by or against or affecting the Borrower in any
court or before any governmental agency (or any basis therefor known to the
Borrower) which may result, either separately or in the aggregate, in any
material adverse change in the financial condition or business of the Borrower,
or in any material impairment in the ability of the Borrower to carry on its
business in substantially the same manner as it is now being conducted. The
Borrower will promptly inform Silicon in writing of any claim, proceeding,
litigation or investigation in the future threatened or instituted by or against
the Borrower involving amounts in excess of $100,000.
3.11 Use of Proceeds. All proceeds of all Loans shall be used solely for
lawful business purposes.
4. ADDITIONAL DUTIES OF THE BORROWER.
4.1 Financial and Other Covenants. The Borrower shall at all times comply
with the financial and other covenants set forth in the Schedule to this
Agreement.
4.2 Overadvance; Proceeds of Accounts. If for any reason the total of all
outstanding Loans and all other Obligations exceeds the Credit Limit, without
limiting Silicon's other remedies, and whether or not Silicon declares an Event
of Default, Borrower shall remit to Silicon all checks and other proceeds of
Borrower's accounts and general intangibles, in the same form as received by
Borrower, within one day after Borrower's receipt of the same, to be applied to
the Obligations in such order as Silicon shall determine in its discretion.
4.3 Insurance. The Borrower shall, at all times insure all of the tangible
personal property Collateral and carry such other business insurance, with
insurers reasonably acceptable to Silicon, in such form and amounts as Silicon
may reasonably require. All such insurance policies shall name Silicon as an
additional loss payee, and shall contain a lenders loss payee endorsement in
form reasonably acceptable to Silicon. Upon receipt of the proceeds of any such
insurance, Silicon shall apply such proceeds in reduction of the Obligations as
Silicon shall determine in its sole and absolute discretion, except that,
provided no Event of Default has occurred, Silicon shall release to the Borrower
insurance proceeds with respect to equipment totaling less than $100,000, which
shall be utilized by the Borrower for the replacement of the equipment with
respect
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Silicon Valley Bank Loan and Security Agreement
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to which the insurance proceeds were paid. Silicon may require reasonable
assurance that the insurance proceeds so released will be so used. If the
Borrower fails to provide or pay for any insurance, Silicon may, but is not
obligated to, obtain the same at the Borrower's expense. The Borrower shall
promptly deliver to Silicon copies of all reports made to insurance companies*.
**
*which are material to Silicon
**Silicon's rights under this Section 4.3 shall be subject to the rights of
the other lenders with security interests in the Collateral under the
Intercreditor Agreement.
4.4 Reports. The Borrower shall provide Silicon with such written reports
with respect to the Borrower (including without limitation budgets, sales
projections, operating plans and other financial documentation), as Silicon
shall from time to time reasonably specify.
4.5 Access to Collateral, Books and Records. At all reasonable times, and
upon one business day notice, Silicon, or its agents, shall have the right to
inspect the Collateral, and the right to audit and copy the Borrower's
accounting books and records and Borrower's books and records relating to the
Collateral. Silicon shall take reasonable steps to keep confidential all
information obtained in any such inspection or audit, but Silicon shall have the
right to disclose any such information to its auditors, regulatory agencies, and
attorneys, and pursuant to any subpoena or other legal process*. The foregoing
audits shall be at Silicon's expense, except that the Borrower shall reimburse
Silicon for its reasonable out of pocket costs for semi-annual accounts
receivable audits by third parties retained by Silicon, and Silicon may debit
Borrower's deposit accounts with Silicon for the cost of such semi-annual
accounts receivable audits (in which event Silicon shall send notification
thereof to the Borrower). Notwithstanding the foregoing, after the occurrence of
an Event of Default all audits shail be at the Borrower's expense.
*provided that Silicon shall, to the extent reasonably feasible, give
Borrower prior written notice thereof and an opportunity to oppose or quash such
disclosure
4.6 Negative Covenants. Except as may be permitted in the Schedule hereto,
the Borrower shall not, without Silicon's prior written consent, do any of the
following: (i) merge or consolidate with another corporation, except that the
Borrower may merge or consolidate with another corporation if the Borrower is
the surviving corporation in the merger and the aggregate value of the assets
acquired in the merger do not exceed 25% of Borrower's Tangible Net Worth (as
defined in the Schedule) as of the end of the month prior to the effective date
of the merger, and the assets of the corporation acquired in the merger are not
subject to any liens or encumbrances, except Permitted Liens; (ii) acquire any
assets outside the ordinary course of business for an aggregate purchase price
exceeding 25% of Borrower's Tangible Net Worth (as defined in the Schedule) as
of the end of the month prior to the effective date of the
<PAGE>
acquisition; (iii) enter into any other transaction outside the ordinary course
of business (except as permitted by the other provisions of this Section); (iv)
sell or transfer any Collateral, except for the sale of finished inventory in
the ordinary course of the Borrower's business, and except for the sale of
obsolete or unneeded equipment in the ordinary course of business; (v) make any
loans of any money or any other assets; (vi) incur any debts, outside the
ordinary course of business, which would have a material, adverse effect on the
Borrower or on the prospect of repayment of the Obligations; (vii) guarantee or
otherwise become liable with respect to the obligations of another party or
entity; (viii) pay or declare any dividends on the Borrower's stock (except for
dividends payable solely in stock of the Borrower); (ix) redeem, retire,
purchase or otherwise acquire, directly or indirectly, any of the Borrower's
stock; (x) make any change in the Borrower's capital structure which has a
material adverse effect on the Borrower or on the prospect of repayment of the
Obligations; or (xi) dissolve or elect to dissolve. Transactions permitted by
the foregoing provisions of this Section are only permitted if no Event of
Default and no event which (with notice or passage of time or both) would
constitute an Event of Default would occur as a result of such transaction.
4.7 Litigation Cooperation. Should any third-party suit or proceeding be
instituted by or against Silicon with respect to any Collateral or in any manner
relating to the Borrower, the Borrower shall, without expense to Silicon, make
available the Borrower and its officers, employees and agents and the Borrower's
books and records to the extent that Silicon may deem them reasonably necessary
in order to prosecute or defend any such suit or proceeding.
4.8 Verification. Silicon may, from time to time, following prior
notification to Borrower, verify directly with the respective account debtors
the validity, amount and other matters relating to the Borrower's accounts, by
means of mail, telephone or otherwise, either in the name of the Borrower or
Silicon or such other name as Silicon may reasonably choose, provided that no
prior notification to Borrower shall be required following an Event of Default.
4.9 Execute Additional Documentation. The Borrower agrees, at its expense,
on request by Silicon, to execute all documents in form satisfactory to Silicon,
as Silicon, may deem reasonably necessary or useful in order to perfect and
maintain Silicon's perfected security interest in the Collateral, and in order
to fully consummate all of the transactions contemplated by this Agreement.
5. TERM.
5.1 Maturity Date. This Agreement shall continue in effect until the
maturity date set forth on the Schedule hereto (the "Maturity Date").
5.2 Early Termination. This Agreement may be terminated, without penalty,
prior to the Maturity Date as follows: (i) by the Borrower, effective three
business days after written notice of termination is given to Silicon; or (ii)
by Silicon at any time after the occurrence of an Event of Default, without
notice, effective immediately.
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Silicon Valley Bank Loan and Security Agreement
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5.3 Payment of Obligations. On the Maturity Date or on any earlier
effective date of termination, the Borrower shall pay and perform in full all
Obligations, whether evidenced by installment notes or otherwise, and whether or
not all or any part of such Obligations are otherwise then due and payable.
Without limiting the generality of the foregoing, if on the Maturity Date, or on
any earlier effective date of termination, there are any outstanding letters of
credit issued by Silicon or issued by another institution based upon an
application, guarantee, indemnity or similar agreement on the part of Silicon,
then on such date Borrower shall provide to Silicon cash collateral in an amount
equal to the face amount of all such letters of credit plus all interest, fees
and cost due or to become due in connection therewith, to secure all of the
Obligations relating to said letters of credit, pursuant to Silicon's then
standard form cash pledge agreement. Notwithstanding any termination of this
Agreement, all of Silicon's security interests in all of the Collateral and all
of the terms and provisions of this Agreement shall continue in full force and
effect until all Obligations have been paid and performed in full; provided
that, without limiting the fact that Loans are subject to the reasonable
discretion of Silicon, Silicon may, in its sole discretion, refuse to make any
further Loans after termination. No termination shall in any way affect or
impair any right or remedy of Silicon, nor shall any such termination relieve
the Borrower of any Obligation to Silicon, until all of the Obligations have
been paid and performed in full. Upon payment and performance in full of all the
Obligations, Silicon shall promptly deliver to the Borrower termination
statements, requests for reconveyances and such other documents as may be
required to fully terminate any of Silicon's security interests.
6. EVENTS OF DEFAULT AND REMEDIES.
6.1 Events of Default. The occurrence of any of the following events shall
constitute an "Event of Default" under this Agreement, and the Borrower shall
give Silicon immediate written notice thereof: (a) Any warranty, representation,
statement, report or certificate made or delivered to Silicon by the Borrower or
any of the Borrower's officers, employees or agents, now or in the future, shall
be untrue or misleading in any material respect; or (b) the Borrower shall fail
to pay when due any Loan or any interest thereon or any other monetary
Obligation; or (c) the total Loans and other Obligations outstanding at any time
exceed the Credit Limit; or (d) the Borrower shall fail to comply with any of
the financial covenants set forth in the Schedule or shall fail to perform any
other non-monetary Obligation which by its nature cannot be cured; or (e) the
Borrower shall fail to pay or perform any other non-monetary Obligation, which
failure is not cured within 5 business days after the date due; or (f) Any levy,
assessment, attachment, seizure, lien or encumbrance is made on all or any part
of the Collateral which is not cured within 10 days after the occurrence of the
same; or (g) Dissolution, termination of existence, insolvency or business
failure of the Borrower; or appointment of a receiver, trustee or custodian, for
all or any part of the property of, assignment for the benefit of creditors by,
or the
<PAGE>
commencement of any proceeding by the Borrower under any reorganization,
bankruptcy, insolvency, arrangement, readjustment of debt, dissolution or
liquidation law or statute of any jurisdiction, now or in the future in effect;
or (h) the commencement of any proceeding against the Borrower or any guarantor
of any of the Obligations under any reorganization, bankruptcy, insolvency,
arrangement, readjustment of debt, dissolution or liquidation law or statute of
any jurisdiction, now or in the future in effect, which is not cured by the
dismissal thereof within 30 days after the date commenced; (i) revocation or
termination of, or limitation or denial of liability upon, any guaranty of the
Obligations or any attempt to do any of the foregoing; or commencement of
proceedings by any guarantor of any of the Obligations under any bankruptcy or
insolvency law; or (j) revocation or termination of, or limitation or denial of
liability upon, any pledge of any certificate of deposit, securities or other
property or asset of any kind pledged by any third party to secure any or all of
the Obligations, or any attempt to do any of the foregoing; or commencement of
proceedings by or against any such third party under any bankruptcy or
insolvency law; or (k) the Borrower makes any payment on account of any
indebtedness or obligation which has been subordinated to the Obligations other
than as permitted in the applicable subordination agreement or if any person who
has subordinated such indebtedness or obligations terminates or in any way
limits his subordination agreement; or (l) there shall be a change in the record
or beneficial ownership of an aggregate of more than 20% of the outstanding
shares of stock of the Borrower, in one or more transactions, compared to the
ownership of outstanding shares of stock of the Borrower in effect on the date
hereof, without the prior written consent of Silicon; or (m) the Borrower shall
generally not pay its debts as they become due; or the Borrower shall conceal,
remove or transfer any part of its property, with intent to hinder, delay or
defraud its creditors, or make or suffer any transfer of any of its property
which may be fraudulent under any bankruptcy, fraudulent conveyance or similar
law*. Silicon may cease making any Loans hereunder during any of the above cure
periods, and thereafter if an Event of Default has occurred.
*; or (n) if any default or event of default occurs and is continuing under
any document or instrument evidencing or relating to any indebtedness which is
subordinated in whole or in part to the Obligations or which is secured by a
security interest in any of the Collateral, unless the same is waived in writing
by the holder thereof
6.2 Remedies. Upon the occurrence of any Event of Default, and at any time
thereafter, Silicon, at its option, and without notice or demand of any kind
(all of which are hereby expressly waived by the Borrower), may do any one or
more of the following: (a) Cease making Loans or otherwise extending credit to
the Borrower under this Agreement or any other document or agreement; (b)
Accelerate and declare all or any part of the Obligations to be immediately due,
payable, and performable, notwithstanding any deferred or installment payments
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Silicon Valley Bank Loan and Security Agreement
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allowed by any instrument evidencing or relating to any Obligation; (c) Take
possession of any or all of the Collateral wherever it may be found, and for
that purpose the Borrower hereby authorizes Silicon without judicial process to
enter onto any of the Borrower's premises without interference to search for,
take possession of, keep, store, or remove any of the Collateral, and remain on
the premises or cause a custodian to remain on the premises in exclusive control
thereof without charge for so long as Silicon deems it reasonably necessary in
order to complete the enforcement of its rights under this Agreement or any
other agreement; provided, however, that should Silicon seek to take possession
of any or all of the Collateral by Court process, the Borrower hereby
irrevocably waives: (i) any bond and any surety or security relating thereto
required by any statute, court rule or otherwise as an incident to such
possession; (ii) any demand for possession prior to the commencement of any suit
or action to recover possession thereof; and (iii) any requirement that Silicon
retain possession of and not dispose of any such Collateral until after trial or
final judgment; (d) Require the Borrower to assemble any or all of the
Collateral and make it available to Silicon at places designated by Silicon
which are reasonably convenient to Silicon and the Borrower, and to remove the
Collateral to such locations as Silicon may deem advisable; (e) Require Borrower
to deliver to Silicon, in kind, all checks and other payments received with
respect to all accounts and general intangibles, together with any necessary
indorsements, within one day after the date received by the Borrower; (f)
Complete the processing, manufacturing or repair of any Collateral prior to a
disposition thereof and, for such purpose and for the purpose of removal,
Silicon shall have the right to use the Borrower's premises, vehicles, hoists,
lifts, cranes, equipment and all other property without charge; (g) Sell, lease
or otherwise dispose of any of the Collateral in its condition at the time
Silicon obtains possession of it or after further manufacturing, processing or
repair, at any one or more public and/or private sales, in lots or in bulk, for
cash, exchange or other property, or on credit, and to adjourn any such sale
from time to time without notice other than oral announcement at the time
scheduled for sale. Silicon shall have the right to conduct such disposition on
the Borrower's premises without charge, for such time or times as Silicon deems
reasonable, or on Silicon's premises, or elsewhere and the Collateral need not
be located at the place of disposition. Silicon may directly or through any
affiliated company purchase or lease any Collateral at any such public
disposition, and if permissible under applicable law, at any private
disposition. Any sale or other disposition of Collateral shall not relieve the
Borrower of any liability the Borrower may have if any Collateral is defective
as to title or physical condition or otherwise at the time of sale; (h) Demand
payment of, and collect any accounts and general intangibles comprising
Collateral and, in connection therewith, the Borrower irrevocably authorizes
Silicon to endorse or sign the Borrower's name on all collections, receipts,
instruments and other documents, to take possession of and open mail addressed
to the Borrower and remove therefrom payments made with respect to any item
<PAGE>
of the Collateral or proceeds thereof, and, in Silicon's sole discretion, to
grant extensions of time to pay, compromise claims and settle accounts and the
like for less than face value; (i) Offset against any sums in any of Borrower's
general, special or other deposit accounts with Silicon; and (j) Demand and
receive possession of any of the Borrower's federal and state income tax returns
and the books and records utilized in the preparation thereof or referring
thereto. All reasonable attorneys' fees, expenses, costs, liabilities and
obligations incurred by Silicon with respect to the foregoing shall be added to
and become part of the Obligations, shall be due on demand, and shall bear
interest at a rate equal to the highest interest rate applicable to any of the
Obligations. Without limiting any of Silicon's rights and remedies, from and
after the occurrence of any Event of Default*, the interest rate applicable to
the Obligations shall be increased by an additional four percent per annum.
*and written notice thereof to Borrower
6.3 Standards for Determining Commercial Reasonableness. The Borrower and
Silicon agree that a sale or other disposition (collectively, "sale") of any
Collateral which complies with the following standards will conclusively be
deemed to be commercially reasonable: (i) Notice of the sale is given to the
Borrower at least seven days prior to the sale, and, in the case of a public
sale, notice of the sale is published at least seven days before the sale in a
newspaper of general circulation in the county where the sale is to be
conducted*; (ii) Notice of the sale describes the collateral in general,
non-specific terms; (iii) The sale is conducted at a place designated by
Silicon, with or without the Collateral being present; (iv) The sale commences
at any time between 8:00 a.m. and 6:00 p.m; (v) Payment of the purchase price in
cash or by cashier's check or wire transfer is required; (vi) With respect to
any sale of any of the Collateral, Silicon may (but is not obligated to) direct
any prospective purchaser to ascertain directly from the Borrower any and all
information concerning the same. Silicon may employ other methods of noticing
and selling the Collateral, in its discretion, if they are commercially
reasonable.
*and, if different, the county in which the Borrower's chief executive
office (presently Orange County, California) and principal office (presently
Middlesex County, Massachusetts) are located.
6.4 Power of Attorney. Upon the occurrence of any Event of Default, without
limiting Silicon's other rights and remedies, the Borrower grants to Silicon an
irrevocable power of attorney coupled with an interest, authorizing and
permitting Silicon (acting through any of its employees, attorneys or agents) at
any time, at its option, but without obligation, with or without notice to the
Borrower, and at the Borrower's expense, to do any or all of the following, in
the Borrower's name or otherwise: (a) Execute on behalf of the Borrower any
documents that Silicon may, in its sole and absolute discretion, deem advisable
in order to perfect and maintain Silicon's security interest in the Collateral,
or in order to exercise a right of the Borrower or Silicon, or in order to fully
consummate all the transactions contemplated
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Silicon Valley Bank Loan and Security Agreement
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under this Agreement, and all other present and future agreements; (b) Execute
on behalf of the Borrower any document exercising, transferring or assigning any
option to purchase, sell or otherwise dispose of or to lease (as lessor or
lessee) any real or personal property which is part of Silicon's Collateral or
in which Silicon has an interest; (c) Execute on behalf of the Borrower, any
invoices relating to any account, any draft against any account debtor and any
notice to any account debtor, any proof of claim in bankruptcy, any Notice of
Lien, claim of mechanic's, materialman's or other lien, or assignment or
satisfaction of mechanic's, materialman's or other lien; (d) Take control in any
manner of any cash or non-cash items of payment or proceeds of Collateral;
endorse the name of the Borrower upon any instruments, or documents, evidence of
payment or Collateral that may come into Silicon's possession; (e) Endorse all
checks and other forms of remittances received by Silicon; (f) Pay, contest or
settle any lien, charge, encumbrance, security interest and adverse claim in or
to any of the Collateral, or any judgment based thereon, or otherwise take any
action to terminate or discharge the same; (g) Grant extensions of time to pay,
compromise claims and settle accounts and general intangibles for less than face
value and execute all releases and other documents in connection therewith; (h)
Pay any sums required on account of the Borrower's taxes or to secure the
release of any liens therefor, or both; (i) Settle and adjust, and give releases
of, any insurance claim that relates to any of the Collateral and obtain payment
therefor; (j) Instruct any third party having custody or control of any books or
records belonging to, or relating to, the Borrower to give Silicon the same
rights of access and other rights with respect thereto as Silicon has under this
Agreement; and (k) Take any action or pay any sum required of the Borrower
pursuant to this Agreement and any other present or future agreements. Silicon
shall exercise the foregoing powers in a commercially reasonable manner. Any and
all reasonable sums paid and any and all reasonable costs, expenses,
liabilities, obligations and attorneys' fees incurred by Silicon with respect to
the foregoing shall be added to and become part of the Obligations, shall be
payable on demand, and shall bear interest at a rate equal to the highest
interest rate applicable to any of the Obligations. In no event shall Silicon's
rights under the foregoing power of attorney or any of Silicon's other rights
under this Agreement be deemed to indicate that Silicon is in control of the
business, management or properties of the Borrower.
6.5 Application of Proceeds. All proceeds realized as the result of any
sale of the Collateral shall be applied by Silicon first to the costs, expenses,
liabilities, obligations and attorneys' fees incurred by Silicon in the exercise
of its rights under this Agreement, second to the interest due upon any of the
Obligations, and third to the principal of the Obligations, in such order as
Silicon shall determine in its sole discretion. Any surplus shall be paid to the
Borrower or other persons legally entitled thereto; the Borrower shall remain
liable to Silicon for any deficiency. If, Silicon, in its sole discretion,
directly or indirectly enters into a deferred payment or other credit
transaction with any purchaser at
<PAGE>
any sale or other disposition of Collateral, Silicon shall have the option,
exercisable at any time, in its sole discretion, of either reducing the
Obligations by the principal amount of purchase price or deferring the reduction
of the Obligations until the actual receipt by Silicon of the cash therefor.
6.6 Remedies Cumulative. In addition to the rights and remedies set forth
in this Agreement, Silicon shall have all the other rights and remedies accorded
a secured party under the California Uniform Commercial Code and under all other
applicable laws, and under any other instrument or agreement now or in the
future entered into between Silicon and the Borrower, and all of such rights and
remedies are cumulative and none is exclusive. Exercise or partial exercise by
Silicon of one or more of its rights or remedies shall not be deemed an
election, nor bar Silicon from subsequent exercise or partial exercise of any
other rights or remedies. The failure or delay of Silicon to exercise any rights
or remedies shall not operate as a waiver thereof, but all rights and remedies
shall continue in full force and effect until all of the Obligations have been
fully paid and performed.
7. GENERAL PROVISIONS.
7.1 Notices. All notices to be given under this Agreement shall be in
writing and shall be given either personally or by regular first-class mail, or
certified mail return receipt requested, addressed to Silicon or the Borrower at
the addresses shown in the heading to this Agreement, or at any other address
designated in writing by one party to the other party. All notices shall be
deemed to have been given upon delivery in the case of notices personally
delivered to the Borrower or to Silicon, or at the expiration of two business
days following the deposit thereof in the United States mail, with postage
prepaid.
7.2 Severability. Should any provision of this Agreement be held by any
court of competent jurisdiction to be void or unenforceable, such defect shall
not affect the remainder of this Agreement, which shall continue in full force
and effect.
7.3 Integration. This Agreement and such other written agreements,
documents and instruments as may be executed in connection herewith are the
final, entire and complete agreement between the Borrower and Silicon and
supersede all prior and contemporaneous negotiations and oral representations
and agreements, all of which are merged and integrated in this Agreement. There
are no oral understandings, representations or agreements between the parties
which are not set forth in this Agreement or in other written agreements signed
by the parties in connection herewith.
7.4 Waivers. The failure of Silicon at any time or times to require the
Borrower to strictly comply with any of the provisions of this Agreement or any
other present or future agreement between the Borrower and Silicon shall not
waive or diminish any right of Silicon later to demand and receive strict
compliance therewith. Any waiver of any default shall not waive or affect any
other default, whether
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Silicon Valley Bank Loan and Security Agreement
- --------------------------------------------------------------------------------
prior or subsequent thereto. None cf the provisions of this Agreement or any
other agreement now or in the future executed by the Borrower and delivered to
Silicon shall be deemed to have been waived by any act or knowledge of Silicon
or its agents or employees, but only by a specific written waiver signed by an
officer of Silicon and delivered to the Borrower. The Borrower waives demand,
protest, notice of protest and notice of default or dishonor, notice of payment
and nonpayment, release, compromise, settlement, extension or renewal of any
commercial paper, instrument, account, general intangible, document or guaranty
at any time held by Silicon on which the Borrower is or may in any way be
liable, and notice of any action taken by Silicon, unless expressly required by
this Agreement.
7.5 No Liability for Ordinary Negligence. Neither Silicon, nor any of its
directors, officers, employees, agents, attorneys or any other person affiliated
with or representing Silicon shail be liable for any claims. demands, losses or
damages, of any kind whatsoever, made, claimed, incurred or suffered by the
Borrower or any other party through the ordinary negligence of Silicon, or any
of its directors, officers, employees, agents, attorneys or any other person
affiliated with or representing Silicon.
7.6 Amendment. The Terms and provisions of this Agreement may not be waived
or amended, except in a writing executed by the Borrower and a duly authorized
officer of Silicon.
7.7 Time of Essence. Time is of the essence in the performance by the
Borrower of each and every obligation under this Agreement.
7.8 Attorneys Fees and Costs. The Borrower shall reimburse Silicon for all
reasonable attorneys' fees and all filing, recording, search, title insurance,
appraisal, audit, and other reasonable costs incurred by Silicon, pursuant to,
or in connection with, or relating to this Agreement (whether or not a lawsuit
is filed), including, but not limited to, any reasonable attorneys' fees and
costs Silicon incurs in order to do the following: prepare and negotiate this
Agreement and the documents relating to this Agreement; obtain legal advice in
connection with this Agreement; enforce, or seek to enforce, any of its rights;
prosecute actions against, or defend actions by, account debtors; commence,
intervene in, or defend any action or proceeding; initiate any complaint to be
relieved of the automatic stay in bankruptcy; file or prosecute any probate
claim, bankruptcy claim, third-party claim, or other claim; examine, audit,
copy, and inspect any of the Collateral or any of the Borrower's books and
records; protect, obtain possession of, lease, dispose of, or otherwise enforce
Silicon's security interest in, the Collateral; and otherwise represent Silicon
in any litigation relating to the Borrower. In satisfying Borrower's obligation
hereunder to reimburse Silicon for attorneys fees, Borrower may, for
convenience, issue checks directly to Silicon's attorneys, Levy, Small & Lallas,
but Borrower acknowledges and agrees that Levy, Small & Lallas is representing
only Silicon and not Borrower in connection with this Agreement. If either
Silicon or the Borrower files any
<PAGE>
lawsuit against the other predicated on a breach of this Agreement, the
prevailing party in such action shall be entitled to recover its reasonable
costs and attorneys' fees, including (but not limited to) reasonable attorneys'
fees and costs incurred in the enforcement of, execution upon or defense of any
order, decree, award or judgment. All attorneys' fees and costs to which Silicon
may be entitled pursuant to this Paragraph shall immediately become part of the
Borrower's Obligations, shall be due on demand, and shall bear interest at a
rate equal to the highest interest rate applicable to any of the Obligations*.
*after demand or charge to Borrower's loan account
7.9 Benefit of Agreement. The provisions of this Agreement shall be binding
upon and inure to the benefit of the respective successors, assigns, heirs,
beneficiaries and representatives of the parties hereto; provided, however, that
the Borrower may not assign or transfer any of its rights under this Agreement
without the prior written consent of Silicon, and any prohibited assignment
shall be void. No consent by Silicon to any assignment shall release the
Borrower from its liability for the Obligations.
7.10 Joint and Several Liability. If the Borrower consists of more than one
person, their liability shall be joint and several, and the compromise of any
claim with, or the release of, any Borrower shall not constitute a compromise
with, or a release of, any other Borrower.
7.11 Paragraph Headings; Construction. Paragraph headings are only used in
this Agreement for convenience. The Borrower acknowledges that the headings may
not describe completely the subject matter of the applicable paragraph, and the
headings shall not be used in any manner to construe, limit, define or interpret
any term or provision of this Agreement. This Agreement has been fully reviewed
and negotiated between the parties and no uncertainty or ambiguity in any term
or provision of this Agreement shall be construed strictly against Silicon or
the Borrower under any rule of construction or otherwise.
7.12 Mutual Waiver of Jury Trial. The Borrower and Silicon each hereby
waive the right to trial by jury in any action or proceeding based upon, arising
out of, or in any way relating to, this Agreement or any other present or future
instrument or agreement between Silicon and the Borrower, or any conduct, acts
or omissions of Silicon or the Borrower or any of their directors, officers,
employees, agents, attorneys or any other persons affiliated with Silicon or the
Borrower, in all of the foregoing cases, whether sounding in contract or tort or
otherwise.
7.13 Governing Law; Jurisdiction; Venue. This Agreement and all acts and
transactions hereunder and all rights and obligations of Silicon and the
Borrower shall be governed by, and in accordance with, the laws of the State of
California. Any undefined term used in this Agreement that is defined in the
California Uniform Commercial Code shall have the meaning assigned to that term
in the California Uniform Commercial Code. As a material part of
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Silicon Valley Bank Loan and Security Agreement
- --------------------------------------------------------------------------------
the consideration to Silicon to enter into this Agreement, the Borrower (i)
agrees that all actions and proceedings relating directly or indirectly hereto
shall, at Silicon's option, be litigated in courts located within California,
and that the exclusive venue therefor shall be Orange County; (ii) consents to
the jurisdiction and venue of any such court and consents to service of process
in any such action or proceeding by personal delivery or any other method
permitted by law; and (iii) waives any and all rights the Borrower may have to
object to the jurisdiction of any such court, or to transfer or change the venue
of any such action or proceeding.
Borrower:
OPTICAL CORPORATION OF AMERICA
By /s/ Donald A. Johnson
-----------------------------
Donald A. Johnson, Chairman and Treasurer
Silicon:
SILICON VALLEY BANK
By /s/ Jerry L. Dale
------------------------------
Title VICE PRESIDENT
---------------------------
30,177-1
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<PAGE>
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LOGO HERE SILICON VALLEY BANK
AMENDMENT TO LOAN AGREEMENT
Borrower: Optical Corporation of America
Address: 7421 Orangewood Avenue
Garden Grove, California 92641
Date: November 27, 1995
THIS AMENDMENT TO LOAN AGREEMENT is entered into between SILICON VALLEY
BANK ("Silicon") and the borrower named above (the "Borrower").
The Parties agree to amend the Loan and Security Agreement between
them, dated May 27, 1994 (the "Loan Agreement"), as follows. (Capitalized terms
used but not defined in this Amendment, shall have the meanings set forth in the
Loan Agreement.)
1. Extension of Maturity Date. The Maturity Date "November 1, 1995" set
forth in Section 5.1 of the Schedule to the Loan Agreement is amended to read as
follows: "November 1, 1996".
2. Modification to Certain Financial Covenants. The following financial
covenants set forth in Section 4.1 of the Schedule to the Loan Agreement are
amended, effective as of the date hereof, as follows:
2.1 Debt to Tangible Net Worth. The Debt to Tangible Net Worth Ratio
set forth in the Schedule to the Loan Agreement, which presently reads "Borrower
shall maintain a ratio of total liabilities to tangible net worth of not more
than 2.3 to 1." is amended to read as follows:
"Borrower shall maintain a ratio of total liabilities to tangible net
worth of not more than 2.0 to 1."
2.2 Tangible Net Worth. The Tangible Net Worth covenant set forth in
the Schedule to the Loan Agreement, which presently reads "Borrower shall
maintain a tangible net worth of not less than $4,800,000." is amended to read
as follows:
"Borrower shall maintain a tangible net worth of not less than
$5,000,000."
All other financial covenants set forth in the Schedule continue unchanged.
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Silicon Valley Bank Amendment to Loan Agreement
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3. June 30, 1995 Financial Statements. Notwithstanding the provisions
of Section 3.7(i), the monthly financial statements and Compliance Certificate
for the month ending June 30, 1995 shall be provided to Silicon on or before 90
days after such date.
4. Indebtedness. Section 4 of the Section titled "Other Covenants" in
the Schedule is amended to read as follows:
"4. Indebtedness. Without limiting any of the foregoing terms
or provisions of this Agreement, Borrower shall not incur or permit to
be outstanding any indebtedness for borrowed money, except for
(i) indebtedness to Silicon,
(ii) the present outstanding loan to the Borrower from
Massachusetts Business Development Corp. ("MBDC") in the amount of not
more than $1,300,000 (the "MBDC Loan"), and
(iii) subordinated indebtedness in an amount not to exceed
$2,250,000 (which shall be on terms and conditions satisfactory to
Silicon in its discretion),
(iv) the present Promissory Note to The Perkin-Elmer
Corporation in a principal amount not to exceed $400,000,
(v) the present outstanding term loan from G.E. Capital
Corporation in the amount of not more than $1,200,000,
(vi) indebtedness incurred in the future for the purchase
price of or lease of equipment in an aggregate amount not exceeding
$1,500,000 at any time outstanding,
(vii) a new term loan (the "MBDC Replacement Loan") in an
amount not to exceed $1,500,000, the proceeds of which shall be used to
pay in full the MBDC Loan on the date the loan is made, and provide
working capital to the Borrower.
Prior to the later of the date hereof or the date any of the forgoing
loans is made, Borrower shall cause MBDC, G.E. Capital Corporation, and
the lender under the MBDC Replacement Loan to enter into intercreditor
agreements with Silicon on terms satisfactory to Silicon, which shall
include an agreement on the part of such lender to give Silicon notice
of any default at the same time it transmits such notice to the
Borrower, and an opportunity to cure such default within 30 days after
such notice is given. Without limiting any of the provisions of Section
6.1 above, the giving of any such notice of default shall constitute an
Event of Default under this Loan Agreement."
5. Martin Marieta Reference. The reference in the Schedule to "Martin
Marietta" is hereby changed to "Lockheed Martin (formerly Martin Marietta)".
6. Foreign Accounts. The phrase in Section 1.1 of the Schedule, which
presently reads accounts owing from an account debtor outside the United States
or Canada (unless pre-approved by Silicon in its discretion, or backed by a
letter of credit
-2-
<PAGE>
Silicon Valley Bank Amendment to Loan Agreement
-------------------------------------------------------------------------
satisfactory to Silicon, or FCIA insured satisfactory to Silicon)" is amended to
read as follows:
"accounts owing from an account debtor outside the United States or
Canada ("Foreign Accounts") (unless pre-approved by Silicon in its
discretion, or FCIA insured satisfactory to Silicon, provided that in
no event will more than an aggregate of $250,000 of non-FCIA insured
Foreign Accounts outstanding at any time be eligible for borrowing)
7. Fee. Borrower shall concurrently pay to Silicon a facility fee in
the amount of $15,000, which shall be in addition to all interest and all other
fees payable to Silicon and shall be non-refundable.
8. Representations True. Borrower represents and warrants to Silicon
that all representations and warranties set forth in the Loan Agreement, as
amended hereby, are true and correct.
9. General Provisions. This Amendment, the Loan Agreement, any prior
written amendments to the Loan Agreement signed by Silicon and the Borrower, and
the other written documents and agreements between Silicon and the Borrower set
forth in full all of the representations and agreements of the parties with
respect to the subject matter hereof and supesede all prior discussions,
representations, agreements and understandings between the parties with respect
to the subject hereof. Except as herein expressly amended, all of the terms and
provisions of the Loan Agreement (including without limitation all financial
covenants), and all other documents and agreements between Silicon and the
Borrower shall continue in full force and effect and the same are hereby
ratified and confirmed.
BORROWER. Silicon:
Optical Corporation of America Silicon Valley Bank
By /s/ DONALD A. JOHNSON By__________________________________
---------------------------------- Title_______________________________
CHAIRMAN
By /s/ JOHN O. VIGGIANO
----------------------------------
EXECUTIVE VICE PRESIDENT
-3-
<PAGE>
-------------------------------------------------------------------------
LOGO HERE SILICON VALLEY BANK
CERTIFIED RESOLUTION
Borrower: Optical Corporation of America, a corporation
organized under the laws of the State of
Massachusetts
Date: November 27, 1995
I, the undersigned, Secretary or Assistant Secretary of the above-named
borrower, a corporation organized under the laws of the state set forth above,
do hereby certify that the following is a full, true and correct copy of
resolutions duly and regularly adopted by the Board of Directors of said
corporation as required by law, and by the by-laws of said corporation, and that
said resolutions are still in full force and effect and have not been in any way
modified, repealed, rescinded, amended or revoked.
RESOLVED, that this corporation borrow from Silicon Valley Bank ("Silicon"),
from time to time, such sum or sums of money as, in the judgment of the
officer or officers hereinafter authorized hereby, this corporation may
require.
RESOLVED FURTHER, that any officer of this corporation be, and he or she is
hereby authorized, directed and empowered, in the name of this corporation,
to execute and deliver to Silicon, and Silicon is requested to accept, the
loan agreements, security agreements, notes, financing statements, and other
documents and instruments providing for such loans and evidencing and/or
securing such loans, with interest thereon, and said authorized officers are
authorized from time to time to execute renewals, extensions and/or
amendments of said loan agreements, security agreements, and other
documents and instruments.
RESOLVED FURTHER, that said authorized officers be and they are hereby
authorized, directed and empowered, as security for any and all indebtedness
of this corporation to Silicon, whether arising pursuant to this resolution
or otherwise, to grant, transfer, pledge, mortgage, assign, or otherwise
hypothecate to Silicon, or deed in trust for its benefit, any property of
any and every kind, belonging to this corporation, including, but not
limited to, any and all real property, accounts, inventory, equipment,
general intangibles, instruments, documents, chattel paper, notes, money,
deposit accounts, furniture, fixtures, goods, and other property of every
kind, and to execute and deliver to Silicon any and all grants, transfers,
trust receipts, loan or credit agreements, pledge agreements, mortgages,
deeds of trust, financing statements, security agreements and other
hypothecation agreements, which said instruments and the note or notes and
other instruments referred to in the preceding paragraph may contain such
provisions, covenants, recitals and agreements as Silicon may require and
said authorized officers may approve, and the execution thereof by said
authorized officers shall be conclusive evidence of such approval.
RESOLVED FURTHER, that the Silicon may conclusively rely upon a certified
copy of these resolutions and continue to conclusively rely on such
certified copy of these resolutions for all past, present and future
transactions until written notice of any change hereto is given to Silicon
by this corporation by certified mail, return receipt requested.
-1-
<PAGE>
Silicon Valley Bank Certified Resolution
-------------------------------------------------------------------------
The undersigned further hereby certifies that the following persons are the
duly elected and acting officers of the corporation named above as borrower
and that the following are their actual signatures:
NAMES OFFICE(S) ACTUAL SIGNATURES
- ----- --------- -----------------
Donald A. Johnson Chairman x /s/ DONALD A. JOHNSON
- ------------------------ --------------------- ---------------------------
________________________ _____________________ x___________________________
________________________ _____________________ x___________________________
________________________ _____________________ x___________________________
IN WITNESS WHEREOF, I have hereunto set my hand as such Secretary or
Assistant Clerk on the date set forth above.
/s/ PAMELA M. OWEN
----------------------------------------------
Secretary or Assistant Clerk
-2-
<PAGE>
SILICON VALLEY BANK
Schedule to
LOAN AND SECURITY AGREEMENT
BORROWER:
ADDRESS: OPTICAL CORPORATION OF AMERICA
7421 ORANGEWOOD AVENUE
GARDEN GROVE, CALIFORNIA 92641
DATE: MAY 27, 1994
<TABLE>
<CAPTION>
<S> <C>
Credit Limit An amount not to exceed the lesser of: (i) $4,000,000 at any one time outstanding; or (ii) 80% of the Net Amount
(Section 1.1): of Borrower's accounts, which Silicon in its discretion deems eligible for borrowing. "Net Amount" of an account
means the gross amount of the account, minus all applicable sales, use, excise and other similar taxes and minus
all discounts, credits and allowances of any nature granted or claimed.
Without limiting the fact that the determination of which accounts are eligible for borrowing is a matter of
Silicon's discretion, the following will not be deemed eligible for borrowing: accounts outstanding for more
than 90 days from the invoice date, accounts subject to any contingencies, accounts owing from an account debtor
outside the United States or Canada (unless pre-approved by Silicon in its discretion, or backed by a letter of
credit satisfactory to Silicon, or FCIA insured satisfactory to Silicon), accounts owing from one account debtor
to the extent they exceed 25% of the total eligible accounts outstanding (except that in the case of Martin
Marietta said percentage shall be 35%), accounts owing from an affiliate of Borrower, accounts owing from
governmental agencies or entities to the extent they exceed $300,000 in the aggregate (unless there as been
compliance with applicable statutes, rules and regulations with respect to the assignment of governmental
claims), and accounts owing from an account debtor to whom Borrower is or may be liable for goods purchased from
such account debtor or otherwise (other than by reason of taxes owing from the Borrower to a governmental entity
or agency). In addition, if more than 50% of the accounts owing from an account debtor are outstanding more than
90 days from the invoice date or are otherwise not eligible accounts, then all accounts owing from that account
debtor will be deemed ineligible for borrowing.
Letter of Credit Sublimit
Silicon, in its reasonable discretion, will from time to time during the term of this Agreement issue letters of
credit for the account of the Borrower ("Letters of Credit"), in an aggregate amount at any one time outstanding
not to exceed $1,000,000, upon the request of the Borrower, provided that, on the date the Letters of Credit are
to be issued, Borrower has available to it Loans in an amount equal to or greater than the face amount of the
Letters of Credit to be issued.
-1-
<PAGE>
Silicon Valley Bank Schedule to Loan and Security Agreement
--------------------------------------------------------------------------------------------------------------------------
Prior to the issuance of any Letters of Credit, Borrower shall execute and deliver to Silicon Applications for
Letters of Credit and such other documentation as Silicon shall specify (the "Letter of Credit Documentation").
Fees for the Letters of Credit shall be as provided in the Letter of Credit Documentation.
The Credit Limit set forth above and the Loans available under this Agreement at any time shall be reduced by
the face amount of Letters of Credit from time to time outstanding.
Interest Rate A rate equal to the "Prime Rate" in effect from time to time, plus 2% per annum. Interest shall be calculated on
(Section 1.2): the basis of a 360-day year for the actual number of days elapsed. "Prime Rate" means the rate announced from
time to time by Silicon as its "prime rate;" it is a base rate upon which other rates charged by Silicon are
based, and it is not necessarily the best rate available at Silicon. The interest rate applicable to the
Obligations shall change on each date there is a change in the Prime Rate.
In the event the Borrower has two consecutive fiscal quarters in which it realizes net income and Borrower's
ratio of Debt to Tangible Net Worth, as of the most recent month end, is not more than 1.0 to 1, then the
interest rate shall be reduced to rate equal to the "Prime Rate" in effect from time to time, plus 1% per annum.
The foregoing interest rate reduction shall go into effect following Silicon's review and approval of Borrower's
financial statements showing Borrower is entitled to such rate reduction. Notwithstanding the foregoing, in no
event shall an interest rate reduction go into effect if, at the date it is to go into effect, an Event of
Default has occurred.
Loan Origination Fee
(Section 1.3): $30,000, payable $10,000 upon commitment, $5,000 concurrently herewith, and $15,000 (the "$15,000 Balance") on
the earlier of the July 31, 1995 or termination of this Agreement (including without limitation termination as a
result of an Event of Default). If the Borrower meets its projections for its fiscal year ending June 30, 1995,
previously delivered to Silicon, and this Loan Agreement is then in effect, Silicon agrees to waive the $15,000
Balance.
Maturity Date
(Section 5.1): November 1, 1995
Prior Names of Borrower
(Section 3.2): DAJ Acquisition Corp., and MicroCoatings, Inc.
Trade Names of Borrower
(Section 3.2): MicroCoatings, Lambda Ten Optics, OCA Applied Optics
Other Locations and Addresses
(Section 3.3): 170 Locke Drive, Marlborough, MA and One Liberty Way,
Westford, MA
Material Adverse Litigation
(Section 3.10): NONE
-2-
<PAGE>
Silicon Valley Bank Schedule to Loan and Security Agreement
--------------------------------------------------------------------------------------------------------------------------
Negative Covenants-Exceptions
(Section 4.6): Without Silicon's prior written consent, Borrower may do the following, provided that, after giving effect
thereto, no Event of Default has occurred and no event has occurred which, with notice or passage of time or
both, would constitute an Event of Default, and provided that the following are done in compliance with all
applicable laws, rules and regulations: (i) repurchase shares of Borrower's stock pursuant to any employee stock
purchase or benefit plan, provided that the total amount paid by Borrower for such stock does not exceed
$100,000 in any fiscal year.
Financial Covenants
(Section 4.1): Borrower shall comply with all of the following covenants. Compliance shall be determined as of the end of each
month, except as otherwise specifically provided below:
Quick Asset Ratio: Borrower shall maintain a ratio of "Quick Assets" to current liabilities of not less than 0.6 to 1.
Tangible Net Worth:
Borrower shall maintain a tangible net worth of not less than $4,800,000.
Debt to Tangible
Net Worth Ratio: Borrower shall maintain a ratio of total liabilities to tangible net worth of not more than 2.3 to 1.
Backlog Borrower shall maintain a minimum backlog, as of the end of each fiscal quarter for the upcoming four fiscal
quarters (on a rolling four-quarter basis), of not less than $13,000,000.
Profitability Borrower shall not incur a loss (after taxes) for the fiscal quarter any fiscal quarter ending or reported
during the term of this Agreement, except that Borrower may incur a loss in one fiscal quarter during the term
of this Agreement in an amount not to exceed $100,000. Borrower shall not incur a loss (after taxes) for any
fiscal year ending or reported during the term of this Agreement.
Definitions: "Tangible net worth" means the excess of total assets over total liabilities, determined in accordance with
generally accepted accounting principles, excluding however all assets which would be classified as intangible
assets under generally accepted accounting principles, including without limitation goodwill, licenses, patents,
trademarks, trade names, copyrights, capitalized software and organizational costs, licenses and franchises.
"Quick Assets" means cash on hand or on deposit in banks, readily marketable securities issued by the United
States, readily marketable commercial paper rated "A-1" by Standard & Poor's Corporation (or a similar rating by
a similar rating organization), certificates of deposit and banker's acceptances, and accounts receivable (net
of allowance for doubtful accounts).
Subordinated Debt: "Liabilities" for purposes of the foregoing covenants do not include indebtedness which is subordinated to the
indebtedness to Silicon under a subordination agreement in form specified by Silicon or by
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<PAGE>
Silicon Valley Bank Schedule to Loan and Security Agreement
--------------------------------------------------------------------------------------------------------------------------
language in the instrument evidencing the indebtedness which is acceptable to Silicon.
Other Covenants
(Section 4.1): Borrower shall at all times comply with all of the following additional covenants:
1. Banking Relationship. Borrower shall at all times maintain its primary banking relationship with Silicon.
2. Monthly Borrowing Base Certificate and Agings. Within 20 days after the end of each month, Borrower shall
provide Silicon with a Borrowing Base Certificate in such form as Silicon shall specify, and an aged listing of
Borrower's accounts receivable and accounts payable.
3. Warrants. The Borrower shall provide Silicon with five-year warrants to purchase 10,000 shares of common
stock of the Borrower, at $11.00 per share, on the terms and conditions in the Warrant to Purchase Stock and
related documents being executed concurrently with this Agreement.
4. Indebtedness. Without limiting any of the foregoing terms or provisions of this Agreement, Borrower shall not
incur or permit to be outstanding--- indebtedness for borrowed money, except for (i) indebtedness to Silicon,
(ii) indebtedness incurred in the future for the purchase price of or lease of equipment in an aggregate amount
not exceeding $200,000 at any time outstanding, (iii) a term loan (the "New Term Loan") in an original principal
amount not to exceed $2,000,000 the proceeds of which shall be used to repay the outstanding loan to the
Borrower from Fleet Credit Corporation and for working capital, (iv) the present outstanding loan to the
Borrower from Massachusetts Business Development Corp. ("MBDC") in the amount of not more than $1,300,000, and
(v) subordinated indebtedness in an amount not to exceed $2,250,000 (which shall be on terms and conditions
satisfactory to Silicon in its discretion). Borrower shall cause the lender under the New Term Loan and MBDC to
enter into intercreditor agreements with Silicon on terms satisfactory to Silicon, which shall include an
agreement on the part of such lender to give Silicon notice of any default at the same time it transmits such
notice to the Borrower, and an opportunity to cure such default within 30 days after such notice is given.
Without limiting any of the provisions of Section 6.1 above, the giving of any such notice of default shall
constitute an Event of Default under this Loan Agreement.
.
5. Daily Collateral Control. In the event Borrower is not in compliance with the Financial Covenants set forth
above in Section 4.1, the following provisions shall apply (without limiting Silicon's other rights and remedies
as a result of the same):
Borrower shall provide to Silicon transaction reports with respect to all of Borrower's sales, receipts and
other transactions on a weekly basis within 2 days after the end of each week, and Borrower shall provide
Silicon with copies of Borrower's sales and collection journals, and such other information, in such detail
and with such frequency as Silicon shall from time to time specify. Borrower shall also provide Silicon with
the Borrowing Base Certificate and an aged listing of Borrower's accounts receivable
-4-
<PAGE>
Silicon Valley Bank Schedule to Loan and Security Agreement
--------------------------------------------------------------------------------------------------------------------------
and accounts payable referred to in Section 2 above on a semi-monthly basis, within 5 days after the 15th and
last day of each month.
6. Lockbox. All proceeds of accounts and other Collateral shall, at the direction of Silicon, be deposited by
Borrower into a lockbox account, or such other "blocked account" as Silicon may require (a "Blocked Account")
pursuant to an arrangement with Silicon or such other bank as may be selected by Borrower and be acceptable to
Silicon. Borrower shall issue to any such bank an irrevocable letter of instruction directing said bank to
transfer such funds so deposited to Silicon, either to any account maintained by Silicon at said bank or by wire
transfer to appropriate account(s) of Silicon. All funds deposited in a Blocked Account shall immediately become
the sole property of Silicon and Borrower shall obtain the agreement by such bank to waive any offset rights
against the funds so deposited. Silicon assumes no responsibility for any Blocked Account arrangement, including
without limitation, any claim of accord and satisfaction or release with respect to deposits accepted by any
bank thereunder.
7. Initial Audit. The first, semi-annual audit referred to in Section 4.5 of this Agreement shall be completed
by 5/25/94, at a cost to Borrower not to exceed $4,000, and the results of such audit shall be reviewed by
Silicon and shall be satisfactory to Silicon in its discretion prior to funding of any Loans hereunder.
Borrower:
OPTICAL CORPORATION OF AMERICA
By /s/ Donald A. Johnson
---------------------------
Donald A. Johnson,
Chairman and Treasurer
Silicon:
SILICON VALLEY BANK
By /s/ Jerry L. Dale
---------------------------
Title VICE PRESIDENT
--------------------------- 30,177-1
</TABLE>
-5-
THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR
OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT
OR PURSUANT TO RULE 144 OR AN OPINION OF COUNSEL TO THE CORPORATION, THAT SUCH
REGISTRATION IS NOT REQUIRED.
-------------------------
WARRANT TO PURCHASE STOCK
WARRANT TO PURCHASE 10,000 ISSUE DATE: MAY 27, 1994
SHARES OF THE COMMON EXPIRATION DATE: MAY 31, 1999
STOCK (PAR VALUE $.01 PER SHARE) OF INITIAL EXERCISE PRICE: $11.00 PER SHARE
OPTICAL CORPORATION OF AMERICA
THIS WARRANT CERTIFIES THAT, for the agreed upon value of $1.00 and for other
good and valuable consideration, SILICON VALLEY BANK ("Holder") is entitled to
purchase the number of fully paid and non-assessable shares of the class of
securities (the "Shares") of the corporation (the "Company") at the initial
exercise price per Share (the "Warrant Price") all as set forth above and as
adjusted pursuant to Article 2 of this Warrant, subject to the provisions and
upon the terms and conditions set forth in this Warrant.
ARTICLE 1. EXERCISE.
1.1 Method of Exercise. Holder may exercise this Warrant by delivering a
duly executed Notice of Exercise in substantially the form attached as Appendix
I to the principal * office of the Company. Unless Holder is exercising the
conversion right set forth in Section 1.2, Holder shall also deliver to the
Company a check for the aggregate Warrant Price for the Shares being purchased.
*chief executive
1.2 Conversion Right. In lieu of exercising this Warrant as specified in
Section 1.l, Holder may from time to time convert this Warrant, in whole or in
part, into a number of Shares determined by dividing (a) the aggregate fair
market value of the Shares or other securities otherwise issuable upon exercise
of this Warrant minus the aggregate Warrant Price of such Shares by (b) the
fair market value of one Share. The fair market value of the Shares shall be
determined pursuant Section 1.4.
1.4 Fair Market Value. If the Shares are traded in a public market, the
fair market value of the Shares shall be the closing price of the Shares (or the
closing price of the Company's stock into which the Shares are convertible)
reported for the business day immediately before Holder delivers its Notice of
Exercise to the Company. If the Shares are not traded in a public market, the
Board of Directors of the Company shall determine fair market value in its
reasonable good faith judgment. The foregoing notwithstanding, if Holder
advises the Board of Directors in writing that Holder disagrees with such
determination, then the Company and Holder shall promptly agree upon a reputable
investment banking firm to undertake such valuation. If the valuation of such
investment banking firm
<PAGE>
is greater than that determined by the Board of Directors, then all fees and
expenses of such investment banking firm shall be paid by the Company. In all
other circumstances, such fees and expenses shall be paid by Holder.
1.5 Delivery of Certificate and New Warrant. Promptly after Holder
exercises or converts this Warrant, the Company shall deliver to Holder
certificates for the Shares acquired and, if this Warrant has not been fully
exercised or converted and has not expired, a new Warrant representing the
Shares not so acquired.
1.6 Replacement of Warrants. On receipt of evidence reasonably satisfactory
to the Company of the loss, theft, destruction or mutilation of this Warrant
and, in the case of loss, theft or destruction, on delivery of an indemnity
agreement reasonably satisfactory in form and amount to the Company or, in the
case of mutilation, or surrender and cancellation of this Warrant, the Company
at its expense shall execute and deliver, in lieu of this Warrant, a new warrant
of like tenor.
1.7 Repurchase on Sale, Merger or Consolidation of the Company.
1.7.1. "Acquisition". For the purpose of this Warrant, "Acquisition" means
any sale, license, or other disposition of all or substantially all of the
assets of the Company, or any reorganization, consolidation, or merger of the
Company where the holders of the Company's securities before the transaction
beneficially own less than 50% of the outstanding voting securities of the
surviving entity after the transaction.
1.7.2. Assumption of Warrant. If upon the closing of any Acquisition the
successor entity assumes the obligations of this Warrant, then this Warrant
shall be exercisable for the same securities, cash, and property as would be
payable for the Shares issuable upon exercise of the unexercised portion of this
Warrant as if such Shares
-1-
<PAGE>
Warrant to Purchase Stock
-------------------------------------------------------------------
were outstanding on the record date for the Acquisition and subsequent closing.
The Warrant Price shall be adjusted accordingly.
1.7.3. Nonassumption. If upon the closing of any Acquisition the successor
entity does not assume the obligations of this Warrant and Holder has not
otherwise exercised this Warrant in full, then the unexercised portion of this
Warrant shall be deemed to have been automatically converted pursuant to Section
1.2 and thereafter Holder shall participate in the acquisition on the same terms
as other holders of the same class of securities of the Company.
1.7.4. Purchase Right. Notwithstanding the foregoing, at the election of
Holder, the Company shall purchase the unexercised portion of this Warrant for
cash upon the closing of any Acquisition for an amount equal to (a) the fair
market value of any consideration that would have been received by Holder in
consideration of the Shares had Holder exercised the unexercised portion of this
Warrant immediately before the record date for determining the shareholders
entitled to participate in the proceeds of the Acquisition. less (b) the
aggregate Warrant Price of the Shares, but in no event less than zero.
ARTICLE 2. ADJUSTMENTS TO THE SHARES.
2.1 Stock Dividends, Splits, Etc. If the Company declares or pays a
dividend on its common stock (or the shares if the Shares are securities other
than common stock) payable in common stock, or other securities, subdivides the
outstanding common stock into a greater amount of common stock, or, if the
Shares are securities other than common stock, subdivides the Shares in a
transaction that increases the amount of common stock into which the Shares are
convertible, then upon exercise of this Warrant, for each Share acquired, Holder
shall receive, without cost to Holder, the total number and kind of securities
to which Holder would have been entitled had Holder owned the Shares of record
as of the date the dividend or subdivision occurred.
2.2 Reclassification, Exchange or Substitution. Upon any reclassification,
exchange, substitution, or other event that results in a change of the number
and/or class of the securities issuable upon exercise or conversion of this
Warrant, Holder shall be entitled to receive, upon exercise or conversion of
this Warrant, the number and kind of securities and property that Holder would
have received for the Shares if this Warrant had been exercised immediately
before such reclassification, exchange, substitution, or other event. The
Company or its successor shall promptly issue to Holder a new Warrant for such
new securities or other property. The new Warrant shall provide for adjustments
which shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Article 2 including,
<PAGE>
without limitation, adjustments to the Warrant Price and to the number of
securities or property issuable upon exercise of the new Warrant. The provisions
of this Section 2.2 shall similarly apply to successive reclassifications,
exchanges, substitutions, or other events.
2.3 Adjustments for Combinations, Etc. If the outstanding Shares are
combined or consolidated, by reclassification or otherwise, into a lesser number
of shares, the Warrant Price shall be proportionately increased.
2.4 Adjustments for Diluting Issuances. The Warrant Price and the number of
Shares issuable upon exercise of this Warrant or shall be subject to adjustment,
from time to time in the manner set forth on Exhibit A in the event of Diluting
Issuances (as defined on Exhibit A).
2.5 No Impairment. The Company shall not, by amendment of its Articles of *
or through a 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 under this Warrant by the Company, but shall at all times
in good faith assist in carrying out of all the provisions of this Article 2 and
in taking all such action as may be necessary or appropriate to protect Holder's
rights under this Article against impairment. If the Company takes any action
affecting the Shares other than as described above that adversely affects
Holder's rights under this Warrant, the Warrant Price shall be adjusted downward
and the number of Shares issuable upon exercise of this Warrant shall be
adjusted upward in such a manner that the aggregate Warrant Price of this
Warrant is unchanged.
*Organization
2.6 Fractional Shares. No fractional Shares shall be issuable upon exercise
or conversion of the Warrant and the number of Shares to be issued shall be
rounded down to the nearest whole Share. If a fractional share interest arises
upon any exercise or conversion of the Warrant, the Company shall eliminate such
fractional share interest by paying Holder an amount computed by multiplying the
fractional interest by the fair market value of a full Share.
2.7 Certificate as to Adjustments. Upon each adjustment of the Warrant
Price, the Company at its expense shall promptly compute such adjustment, and
furnish Holder with a certificate of its Chief Financial Officer setting forth
such adjustment and the facts upon which such adjustment is based. The Company
shall, upon written request, furnish Holder a certificate setting forth the
Warrant Price in effect upon the date thereof and the series of adjustments
leading to such Warrant Price.
<PAGE>
Warrant to Purchase Stock
-------------------------------------------------------------------
ARTICLE 3. REPRESENTATIONS AND COVENANTS OF THE COMPANY.
3.1 Representations and Warranties. The Company hereby represents and
warrants to the Holder as follows:
(a) The initial Warrant Price referenced on the first page of this Warrant
is not greater than (i) the price per share at which the Shares were last issued
in an arms-length transaction in which at least $500,000 of the Shares were sold
and (ii) the fair market value of the Shares as of the date of this Warrant.
(b) All Shares which may be issued upon the exercise of the purchase right
represented by this Warrant, and all securities, if any, issuable upon
conversion of the Shares, shall, upon issuance, be duly authorized, validly
issued, fully paid and non-assessable, and free of any liens and encumbrances
except for restrictions on transfer provided for herein or under applicable
federal and state securities laws.
3.2 Notice of Certain Events. If the Company proposes at any time (a) to
declare any dividend or distribution upon its common stock, whether in cash,
property, stock, or other securities and whether or not a regular cash dividend;
(b) to offer for subscription pro rata to the holders of any class or series of
its stock any additional shares of stock of any class or series or other rights;
(c) to effect any reclassification or recapitalization of common stock; (d) to
merge or consolidate with or into any other corporation, or sell, lease,
license, or convey all or substantially all of its assets, or to liquidate,
dissolve or wind up; or (e) offer holders of registration rights the opportunity
to participate in an underwritten public offering of the company's securities
for cash, then, in connection with each such event, the Company shall give
Holder (1) at least 20 days prior written notice of the date on which a record
will be taken for such dividend, distribution, or subscription rights (and
specifying the date on which the holders of common stock will be entitled
thereto) or for determining rights to vote, if any, in respect of the matters
referred to in (c) and (d) above; (2) in the case of the matters referred to in
(c) and (d) above at least 20 days prior written notice of the date when the
same will take place (and specifying the date on which the holders of common
stock will be entitled to exchange their common stock for securities or other
property deliverable upon the occurrence of such event); and (3) in the case of
the matter referred to in (e) above, the same notice as is given to the holders
of such registration rights.
3.3 Information Rights. So long as the Holder holds this Warrant and/or any
of the Shares, the Company shall deliver to the Holder (a) promptly after
mailing, copies of all notices or other written communications to the
shareholders of the Company, (b) within * days after the end of each fiscal year
of the Company, the annual audited financial statements of the Company ratified
by independent public accountants of recognized standing and (c) within
forty-five (45) days after the end of each of the first three quarters of each
fiscal year, the Company's quarterly, unaudited financial statements.
<PAGE>
*120
3.4 Registration Under Securities Act of 1933, as amended. The Company
agrees that the Shares or, if the Shares are convertible into common stock of
the Company, such common stock, shall be subject to the registration rights set
forth on Exhibit B, if attached.
ARTICLE 4. MISCELLANEOUS
4.1 Term: Notice of Expiration. This Warrant is exercisable, in whole or in
part, at any time and from time to time on or before the Expiration Date set
forth above. The Company shall give Holder written notice of Holder's right to
exercise this Warrant in the form attached as Appendix 2 not more than 90 days
and not less than 30 days before the Expiration Date. If the notice is not so
given, the Expiration Date shall automatically be extended until 30 days after
the date the Company delivers the notice to Holder.
4.2 Legends. This Warrant and the Shares (and the securities issuable,
directly or indirectly, upon conversion of the Shares, if any) shall be
imprinted with a legend in substantially the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT AN
EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR PURSUANT TO RULE 144 OR AN
OPINION OF COUNSEL TO THE CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.
4.3 Compliance with Securities Laws on Transfer. This Warrant and the
Shares issuable upon exercise of this Warrant (and the securities issuable,
directly or indirectly, upon conversion of the Shares, if any) may not be
transferred or assigned in whole or in part without compliance with applicable
federal and state securities laws by the transferor and the transferee
(including, without limitation, the delivery of investment representation
letters and legal opinions reasonably satisfactory to the Company, if reasonably
requested by the Company). The Company shall not require Holder to provide an
opinion of counsel if the transfer is to an affiliate of Holder or if there is
no material question as to the availability of current information as referenced
in Rule 144(c), Holder represents that it has complied with Rule 144(d) and (e)
in reasonable detail, the selling broker represents that it has complied with
Rule 144(f), and the Company is provided with a copy of Holders notice of
proposed sale.
4.4 Transfer Procedure. Subject to the provisions of Section 4.3, Holder
may transfer all or part of this Warrant or the Shares issuable upon exercise of
this Warrant (or the securities issuable, directly or indirectly, upon
conversion of the Shares, if any) by giving the Company * notice of the portion
of the Warrant being transferred setting forth the name, address and taxpayer
identification number of the transferee and surrendering this Warrant to the
Company for reissuance to the transferee(s) (and Holder if
<PAGE>
Warrant to Purchase Stock
-------------------------------------------------------------------
applicable). Unless the Company is filing financial information with the SEC
pursuant to the Securities Exchange Act of 1934, the Company shall have the
right to refuse to transfer any portion of this Warrant to any person who
directly ** competes with the Company.
*prior written **or indirectly
4.5 Notices. All notices and other communications from the Company to the
Holder, or vice versa, shall be deemed delivered and effective when given
personally or mailed by first-class registered or certified mail, postage
prepaid, at such address as may have been furnished to the Company or the
Holder, as the case may be, in writing by the Company or such holder from time
to time.
4.6 Waiver. This Warrant and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought.
4.7 Attorneys Fees. In the event of any dispute between the parties
concerning the terms and provisions of this Warrant, the party prevailing in
such dispute shall be entitled to collect from the other party all costs
incurred in such dispute, including reasonable attorneys' fees.
4.8 Governing Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of California, without giving effect to
its principles regarding conflicts of law.
OPTICAL CORPORATION OF AMERICA
By /s/ DONALD A. JOHNSON,
---------------------------------------------
Donald A. Johnson,
Chairman and Treasurer
<PAGE>
APPENDIX 1
NOTICE OF EXERCISE
1. The undersigned hereby elects to purchase ____________ shares of the
Common/Series ______ Preferred [strike one] Stock of ____________ pursuant to
the terms of the attached Warrant, and tenders herewith payment of the purchase
price of such shares in full.
1. The undersigned hereby elects to convert the attached Warrant into
Shares/cash [strike one] in the manner specified in the Warrant. This conversion
is exercised with respect to ________ of the Shares covered by the Warrant.
[Strike paragraph that does not apply.]
2. Please issue a certificate or certificates representing said shares in
the name of the undersigned or in such other name as is specified below:
________________________
(NAME)
________________________
________________________
(ADDRESS)
3. The undersigned represents it is acquiring the shares solely for its own
account and not as a nominee for any other party and not with a view toward the
resale or distribution thereof except in compliance with applicable securities
laws.
- ------------------------------------------------------------
(Signature)
- ------------------------------------------------------------
(Date)
20,
<PAGE>
Warrant to Purchase Stock
-------------------------------------------------------------------
APPENDIX 2
NOTICE THAT WARRANT IS ABOUT TO EXPIRE
------------, ----
(Name of Holder)
(Address of Holder)
Attn: Chief Financial Officer
Dear ______________________:
This is to advise you that the Warrant issued to you described below will
expire on _____________________________, 19__.
Issuer:
Issue Date:
Class of Security Issuable:
Exercise Price per Share:
Number of Shares Issuable:
Procedure for Exercise:
Please contact [name of contact person at (phone number)] with any
questions you may have concerning exercise of the Warrant. This is your only
notice of pending expiration.
(Name of Issuer)
By ____________________________________
Its ___________________________________
<PAGE>
EXHIBIT A
ANTI-DILUTION PROVISIONS
In the event of the issuance (a "Diluting Issuance") by the Company, after
the Issue Date of the Warrant, of securities at a price per share less than the
Warrant Price, or, if the Shares are common stock, less than the then conversion
price of the Company's Series ______ Preferred Stock, then the number of shares
of common stock issuable upon conversion of the Shares, or if the Shares are
common stock, the number of Shares issuable upon exercise of the Warrant, shall
be adjusted as a result of Diluting Issuances in accordance with the Holder's
standard form of Anti-Dilution Agreement in effect on the Issue Date.
Under no circumstances shall the aggregate Warrant Price payable by the
Holder upon exercise of the Warrant increase as a result of any adjustment
arising from a Diluting Issuance.
<PAGE>
Warrant To Purchase Stock
-------------------------------------------------------------------
EXHIBIT B
REGISTRATION RIGHTS
The Shares (if common stock), or the common stock issuable upon conversion
of the Shares, shall be deemed "registrable securities" or otherwise entitled to
"piggy back" registration rights in accordance with the terms of the following
agreement (the "Agreement") between the Company and its investor(s):
- --------------------------------------------------------------------------------
___ [Identify Agreement by date, title and parties. If no Agreement exists,
indicate by "none".]
The Company agrees that no amendments will be made to the Agreement which
would have an adverse impact on Holder's registration rights thereunder without
the consent of Holder. By acceptance of the Warrant to which this Exhibit B is
attached, Holder shall be deemed to be a party to the Agreement.
If no Agreement exists, then the Company and the Holder shall enter into
Holder's standard form of Registration Rights Agreement as in effect on the
Issue Date of the Warrant.
SILICON VALLEY BANK
REGISTRATION RIGHTS AGREEMENT
ISSUER: OPTICAL CORPORATION OF AMERICA
ADDRESS: 7421 ORANGEWOOD AVENUE
GARDEN GROVE, CALIFORNIA
DATE: MAY 27, 1994
THIS REGISTRATION RIGHTS AGREEMENT is entered into as of the above date by and
between SILICON VALLEY BANK ("Purchaser"), whose address is 3000 Lakeside Drive,
Santa Clara, California 95054-2895 and the above Company, whose address is set
forth above.
RECITALS
A. Concurrently with the execution of this Agreement, the Purchaser is
purchasing from the Company a Warrant to Purchase Stock (the "Warrant") pursuant
to which Purchaser has the right to acquire from the Company the shares (as
defined in the Warrant).
B. By this Agreement, the Purchaser and the Company desire to set forth the
registration rights of the Shares all as provided herein.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
conditions hereinafter set forth, the parties hereto mutually agree as follows:
1. Registration Rights. The Company covenants and agrees as follows:
1.1 Definitions. For purposes of this Section 1:
(a) The term "register," "registered," and "registration" refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act of 1933, as amended (the
"Securities Act"), and the declaration or ordering of effectiveness of such
registration statement or document;
(b) The term "Registerable Securities" means (i) the Shares (if Common
Stock) or all shares of Common Stock of the Company issuable or issued upon
conversion of the Shares and (ii) any Common Stock of the Company issued as (or
issuable upon the conversion or exercise of any warrant, right or other security
which is issued as) a dividend or other distribution with respect to, or in
exchange for or in replacement of, any stock referred to in (1).
(c) The terms "Holder" or "Holders" means the Purchaser or qualifying
transferees under subsection 1.8 hereof who hold Registrable Securities.
(d) The term "SEC" means the Securities and Exchange Commission.
1.2 Company Registration.
(a) Registration. If at any time or from time to time, the Company shall
determine to register any of its securities, for its own account or the account
of any of its shareholders, other than a registration on Form S-1 or S-8
relating solely to employee stock option or purchase plans, or a registration on
Form S-4 relating solely to an SEC Rule 145 transaction, or a registration on
any other form (other than Form S-l, S-2, S-3 or S-18, or their successor forms)
or any successor to such forms, which does not include substantially the same
information as would be required to be included in a registration statement
covering the sale of Registrable Securities, the Company will:
(i) promptly give to each Holder written notice thereof (which shall
include a list of the jurisdictions in which the Company intends to attempt to
qualify such securities under the applicable blue sky or other state securities
laws); and
(ii) include in such registration (and compliance), and in any underwriting
involved therein, all the Registrable Securities specified in a written request
or requests, made within 30 days after receipt of such written notice from the
Company, by any Holder or Holders, except as set forth in subsection 1.2(b)
below.
(b) Underwriting. If the registration of which the Company gives notice is
for a registered public offering involving an underwriting, the Company shall so
advise
-l-
<PAGE>
Silicon Valley Bank Registration Rights Agreement
- --------------------------------------------------------------------------------
the Holder's as a part of the written notice given pursuant to subsection
1.2(a)(i). In such event the right of any Holder to registration pursuant to
this subsection 1.2 shall be conditioned upon such Holder's participation in
such underwriting and the inclusion of such Holder's Registrable Securities in
the underwriting to the extent provided herein. All Holders proposing to
distribute their securities through such underwriting shall together with the
Company and the other shareholders distributing their securities through such
underwriting) enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting by the Company.
1.3 Expenses of Registration. All expenses incurred in connection with any
registration, qualification or compliance pursuant to this Section l including
without limitation, all registration, filing and qualification fees, printing
expenses, fees and disbursements of counsel for the Company and expenses of any
special audits incidental to or required by such registration, shall be borne by
the Company except the Company shall not be required to pay underwriters' fees,
discounts or commissions relating to Registrable Securities. All expenses of any
registered offering not otherwise borne by the Campany shall be borne pro rata
among the Holders partic!paring in the offering and the Company.
1.4 Registration Procedures. In the case of each registration,
qualification or compliance effected by the Company pursuant to this
Registration Rights Agreement, the Company will keep each Holder participating
therein advised in writing as to the initiation of each registration,
qualification and compliance and as to the completion thereof. Except as
otherwise provided in subsection 1.3, at its expense the Company will:
(a) Prepare and file with the SEC a registration statement with respect to
such Registrable Securities and use its best efforts to cause such registration
statement to become effective, and, upon the request of the Holders of a
majority of the Registrable Securities registered thereunder, keep such
registration statement effective for up to 120 days.
(b) Prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement.
(c) Furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as they may reasonably request in order
to facilitate the disposition of Registrable Securities owned by them.
(d) Use its best efforts to register and qualify the securities covered by
such registration statement under such other securities or Blue Sky laws of such
jurisdictions
<PAGE>
Silicon Valley Bank Registration Rights Agreement
- --------------------------------------------------------------------------------
as shall be reasonably requested by the Holders, 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 or jurisdictions.
(e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter of such offering. Each Holder participating
in such underwriting shall also enter into and perform its obligations under
such an agreement.
(f) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act or the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
1.5 Indemnification.
(a) The Company will indemnify each Holder of Registrable Securities and
each of its officers, directors and partners, and each person controlling such
Holder, with respect to which such registration, qualification or compliance has
been effected pursuant to this Agreement, and each underwriter, if any, and each
person who controls any underwriter of the Registrable Securities held by or
issuable to such Holder, against all claims, losses, expenses, damages and
liabilities (or actions in respect thereto) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any prospectus, offering circular or other document (including any related
registration statement, notification or the like) incident to any such
registration, qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statement therein not misleading, or any violation or
alleged violation by the Company of the Securities Act, the Securities Exchange
Act of 1934, as amended ("Exchange Act"), or any state securities law applicable
to the Company or any rule or regulation promulgated under the Securities Act,
the Exchange Act or any such state law and relating to action or inaction
required of the Company in connection with any such registration, qualification
or compliance, and will reimburse each such Holder, each of its officers,
directors and partners, and each person controlling such Holder, each such
underwriter and each person who controls any such underwriter, within a
reasonable amount of time after incurred for any reasonable legal and any other
expenses incurred in connection with investigating, defending or settling any
such claim, loss, damage, liability or action; provided, however, that the
indemnity agreement contained in this subsection 1.5(a) shall not apply to
amounts paid in settlement of any such claim, loss, damage, liability, or
-2-
<PAGE>
Silicon Valley Bank Registration Rights Agreement
- --------------------------------------------------------------------------------
action if such settlement is effected without the consent of the Company (which
consent shall not be unreasonably withheld); and provided further, that the
Company will not be liable in any such case to the extent that any such claim,
loss, damage or liability arises out of or is based on any untrue statement or
omission based upon written information furnished to the Company by an
instrument duly executed by such Holder or underwriter specifically for use
therein.
(b) Each Holder will, if Registrable Securities held by or issuable to such
Holder are included in the securities to which such registration, qualification
or compliance is being effected, indemnify the Company, each of its directors
and officers, each underwriter, if any, of the Company's securities covered by
such a registration statement, each person who controls the Company within the
meaning of the Securities Act, and each other such Holder, each of its officers,
directors and partners and each person controlling such Holder, against all
claims, losses, expenses, damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained any such registration statement,
prospectus, offering circular or other document, or 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, and will reimburse the
Company, such Holders, such directors, officers, partners, persons or
underwriters for any reasonable legal or any other expenses incurred in
connection with investigating, defending or settling any such claim, loss,
damage, liability or action, in each case to the extent, but only to the extent,
that such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering circular
or other document in reliance upon and in conformity with written information
furnished to the Company by an instrument duly executed by such Holder
specifically for use therein; provided, however, that the indemnity agreement
contained in this subsection 1.5(b) shall not apply to amounts paid in
settlement of any such claim, loss, damage, liability or action if such
settlement is effected without the consent of the Holder (which consent shall
not be unreasonably withheld); and provided further, that the total amount for
which any Holder shall be liable under this subsection 1.5(b) shall not in any
event exceed the aggregate proceeds received by such Holder from the sale of
Registrable Securities held by such Holder in such registration.
(c) Each party entitled to indemnification under this subsection 1.5 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom; provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not be
<PAGE>
Silicon Valley Bank Registration Rights Agreement
- --------------------------------------------------------------------------------
unreasonably withheld), and the Indemnified Party may participate in such
defense at such party's expense; and provided further, that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations hereunder, unless such failure resulted in
prejudice to the Indemnifying Party; and provided further, that an Indemnified
Party (together with all other Indemnified Parties which may be represented
without conflict by one counsel) shall have the right to retain one separate
counsel, with the fees and expenses to be paid by the Indemnifying Party, if
representation of such Indemnified Party by the counsel retained by the
Indemnifying Party would be inappropriate due to actual or potential differing
interests between such Indemnified Party and any other party represented by such
counsel in such proceeding. No Indemnifying Party, in the defense of any such
claim or litigation, shall, except with the consent of each Indemnified Party,
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party of a release from all liability in respect to such
claim or iitigation.
1.6 Information by Holder. Any Holder or Holders of Registrable Securities
included in any registration shall promptly furnish to the Company such
information regarding such Holder or Holders and the distribution proposed by
such Holder or Holders as the Company may request in writing and as shall be
required in connection with any registration, qualification or compliance
referred to herein.
1.7 Rule 144 Reporting. With a view to making available to Holders the
benefits of certain rules and regulations of the SEC which may permit the sale
of the Registrable Securities to the public without registration, the Company
agrees at all times to:
(a) make and keep public information available, as those terms are
understood and defined in SEC Rule 144, after 90 days after the effective date
of the first registration filed by the Company for an offering of its securities
to the general public;
(b) file with the SEC in a timely manner all reports and other documents
required of the Company under the Securities Act and the Exchange Act (at any
time after it has become subject to such reporting requirements); and
(c) so long as a Holder owns any Registrable Securities, to furnish to such
Holder forthwith upon request a written statement by the Company as to its
compliance with the reporting requirements of said Rule 144 (at any time after
90 days after the effective date of the first registration statement flied by
the Company for an offering of its securities to the general public), and of the
Securities Act and the Exchange Act (at any time after it has become subject to
such reporting requirements), a copy of the most recent annual or quarterly
report of the Company, and such other reports and documents so filed by the
Company as the Holder may reasonably request in complying with any rule or
regulation of the SEC allowing the Holder to sell any such securities without
registration.
-3-
<PAGE>
Silicon Valley Bank Registration Rights Agreement
- --------------------------------------------------------------------------------
1.8 Transfer of Registration Rights. Holders' rights to cause the Company
to register their securities and keep information available, granted to them by
the Company under subsections 1.2 and 1.7 may be assigned to a transferee or
assignee of a Holder's Registrable Securities not sold to the public, provided,
that the Company is given written notice by such Holder at the time of or within
a reasonable time after said transfer, stating the name and address of said
transferee or assignee and identifying the securities with respect to which such
registration rights are being assigned*. The Company may prohibit the transfer
of any Holders' rights under this subsection 1.8 to any proposed transferee or
assignee who the Company reasonably believes is a competitor of the Company.
*and provided that the foregoing shall apply only to (i) the initial
transferee from Silicon Valley Bank, and (ii) subsequent transferees to whom the
transfer was made with the written consent of the Company (which shall not be
unreasonably withheld)
2. General.
2.1 Waivers and Amendments. With the written consent of the record or
beneficial holders of at least a majority of the Registrable Securities, the
obligations of the Company and the rights of the Holders of the Registrable
Securities under this Agreement may be waived (either generally or in a
particular instance, either retroactively or prospectively, and either for a
specified period of time or indefinitely), and with the same consent the
Company, when authorized by resolution of its Board of Directors, may enter into
a supplementary agreement for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement;
provided, however, that no such modification, amendment or waiver shall reduce
the aforesaid percentage of Registrable Securities. Upon the effectuation of
each such waiver, consent, agreement of amendment or modification, the Company
shall promptly give written notice thereof to the record holders of the
Registrable Securities who have not previously consented thereto in writing.
This Agreement or any provision hereof may be changed, waived, discharged or
terminated only by a statement in writing signed by the party against which
enforcement of the change, waiver, discharge or termination is sought, except to
the extent provided in this subsection 2. 1.
2.2 Governing Law. This Agreement shall be governed in all respects by the
laws of the State of California as such laws are applied to agreements between
California residents entered into and to be performed entirely within
California.
2.3 Successors and Assigns. Except as otherwise expressly provided herein,
the provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.
<PAGE>
Silicon Valley Bank Registration Rights Agreement
- --------------------------------------------------------------------------------
2.4 Entire Agreement. Except as set forth below, this Agreement and the
other documents delivered pursuant hereto constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and thereof.
2.5 Notices. etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by first class mail,
postage prepaid, certified or registered mail, return receipt requested,
addressed (a) if to Holder, at such Holder's address as set forth in the heading
to this Agreement, or at such other address as such Holder shall have furnished
to the Company in writing, or (b) if to the Company, at the Company's address
set forth in the heading to this Agreement, or at such other address as the
Company shall have furnished to the Holder in writing.
2.6 Severability. In case any provision of this Agreement shall be invalid,
illegal, or unenforceable, the validity, legality and enforceability of the
remaining provisions of this Agreement or any provision of the other Agreements
shall not in any way be affected or impaired thereby.
2.7 Titles and Subtitles. The titles of the sections and subsections of
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
2.8 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
Company:
OPTICAL CORPORATION OF AMERICA
By /s/ Donald A. Johnson
------------------------------
Donald A. Johnson
Chairman and Treasurer
Purchaser:
SILICON VALLEY BANK
By /s/ Jerry L. Dale
--------------------------------
Title Vice President
-----------------------------
20,
-4-
-----------------------------------------------------------------
LOGO HERE SILICON VALLEY BANK
ANTIDILUTION AGREEMENT
Issuer: Optical Corporation of America
Address: 7421 Orangewood Avenue
Garden Grove, California
Date: May 27, 1994
THIS AGREEMENT is entered into as of the above date by and between SILICON
VALLEY BANK ("Purchaser"), whose address is 3000 Lakeside Drive, Santa Clara,
California 95054-2895, and the above Company, whose address is set forth above.
RECITALS
A. Concurrently with the execution of this Antidilution Agreement, the
Purchaser is purchasing from the Company a Warrant to Purchase Stock (the
"Warrant") pursuant to which Purchaser has the right to acquire from the
Company the Shares (as defined in the Warrant).
B. By this Antidilution Agreement, the Purchaser and the Company desire to
set forth the adjustment in the number of Shares issuable upon exercise of the
Warrant as a result of a Diluting Issuance (as defined in Exhibit A to the
Warrant).
C. Capitalized terms used herein shall have the same meaning as set forth
in the Warrant.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
conditions hereinafter set forth, the parties hereto mutually agree as follows:
1. Definitions. As used in this Antidilution Agreement, the following
terms have the following respective meanings:
(a) "Option" means any right, option, or warrant to subscribe for,
purchase, or otherwise acquire common stock or Convertible Securities.
(b) "Convertible Securities" means any evidences of indebtedness, shares of
stock, or other securities directly or indirectly convertible into or
exchangeable for common stock.
(c) "Issue" means to grant, issue, sell, assume, or fix a record date for
determining persons entitled to receive, any security (including Options),
whichever of the foregoing is the first to occur.
<PAGE>
(d) "Additional Common Shares" means all common stock (including reissued
shares) issued (or deemed to be issued pursuant to Section 2) after the date of
the Warrant. Additional Common Shares does not include, however, any common
stock issued in a transaction described in Sections 2.1 and 2.2 of the Warrant;
any common stock Issued upon conversion of preferred stock outstanding on the
date of the Warrant; the Shares; or common stock Issued as incentive or in a
nonfinancing transaction to employees, officers, directors, or consultants to
the Company.
(e) The shares of common stock ultimately Issuable upon exercise of an
Option (including the shares of common stock ultimately Issuable upon conversion
or exercise of a Convertible Security Issuable pursuant to an Option) are deemed
to be Issued when the Option is Issued. The shares of common stock ultimately
Issuable upon conversion or exercise of a Convertible Security (other than a
Convertible Security Issued pursuant to an Option) shall be deemed Issued upon
Issuance of the Convertible Security.
2. Deemed Issuance of Additional Common Shares. The shares of common stock
ultimately Issuable upon exercise of an Option (including the shares of common
stock ultimately Issuable upon conversion or exercise of a Convertible Security
Issuable pursuant to an Option) are deemed to be Issued when the Option is
Issued. The shares of common stock ultimately Issuable upon conversion or
exercise of a Convertible Security (other than a Convertible Security Issued
pursuant to an Option) shall be deemed Issued upon Issuance of the Convertible
Security. The maximum amount of common stock Issuable is determined without
regard to any future adjustments permitted under the instrument creating the
Options or Convertible Securities.
-1-
<PAGE>
Silicon Valley Bank Antidilution Agreement
-----------------------------------------------------------------
3. Adjustment of Warrant Price for Diluting Issuances.
3.1 Weighted Average Adjustment. If the Company Issues Additional Common
Shares after the date of the Warrant and the consideration per Additional Common
Share (determined pursuant to Section 9) is less than the Warrant Price in
effect immediately before such Issue, the Warrant Price in effect immediately
before such Issue shall be reduced, concurrently with such Issue, to a price
(calculated to the nearest hundredth of a cent) determined by muitiplying the
Warrant Price by a fraction:
(a) the numerator of which is the amount of common stock outstanding
immediately before such Issue plus the amount of common stock that the aggregate
consideration received by the Company for the Additional Common Shares would
purchase at the Warrant Price in effect immediately before such Issue, and
(b) the denominator of which is the amount of common stock outstanding
immediately before such Issue plus the number of such Additional Common Shares.
3.2 Adjustment of Number of Shares. Upon each adjustment of the Warrant
Price, the number of Shares issuable upon exercise of the Warrant shall be
increased to equal the quotient obtained by dividing (a) the product resulting
from multiplying (i) the number of Shares issuable upon exercise of the Warrant
and (ii) the Warrant Price, in each case as in effect immediately before such
adjustment, by (b) the adjusted Warrant Price.
3.3 Securities Deemed Outstanding. For the purpose of this Section 3, all
securities issuable upon exercise of any outstanding Convertible Securities or
Options, warrants, or other rights to acquire securities of the Company shall be
deemed to be outstanding.
4. No Adjustment for Issuances Following Deemed Issuances. No adjustment to
the Warrant Price shall be made upon the exercise of Options or conversion of
Convertible Securities.
5. Adjustment Following Changes in Terms of Options or Convertible
Securities. If the consideration payable to, or the amount of common stock
Issuable by, the Company increases or decreases, respectively, pursuant to the
terms of any outstanding Options or Convertible Securities, the Warrant Price
shall be recomputed to reflect such increase or decrease. The recomputation
shall be made as of the time of the Issuance of the Options or Convertible
Securities. Any changes in the Warrant Price that occurred after such Issuance
because other Additional Common Shares were Issued or deemed Issued shall also
be recomputed.
6. Recomputation Upon Expiration of Options or Convertible Securities. The
Warrant Price computed upon the original Issue of any Options or Convertible
Securities, and any subsequent adjustments based thereon, shall be recomputed
when any Options or rights of conversion under Convertible Securities expire
without having been exercised. In the case of Convertible Securities or Options
<PAGE>
for common stock, the Warrant Price shall be recomputed as if the only
Additional Common Shares Issued were the shares of Common stock actually Issued
upon the exercise of such securities, if any, and as if the only consideration
received therefor was the consideration actually received upon the Issue,
exercise or conversion of the Options or Convertible Securities. In the case of
Options for Convertible Securities, the Warrant Price shall be recomputed as if
the only Convertible Securities Issued were the Convertible Securities actually
Issued upon the exercise thereof, if any, and as if the only consideration
received therefor was the consideration actually received by the Company
(determined pursuant to Section 9), if any, upon the Issue of the Options for
the Convertible Securities.
7. Limit on Readjustments. No readjustment of the Warrant Price pursuant to
Sections 5 or 6 shall increase the Warrant Price more than the amount of any
decrease made in respect or the Issue of any Options or Convertible Securities.
8. 30 Day Options. In the case of any Options that expire by their terms
not more than 30 days after the date of Issue thereof, no adjustment of the
Warrant Price shall be made until the expiration or exercise of all such
Options.
9. Computation of Consideration. The consideration received by the Company
for the Issue of any Additional Common Shares shall be computed as follows:
(a) Cash shall be valued at the amount of cash received by the
Corporation, excluding amounts paid or payable for accrued interest or accrued
dividends.
(b) Property. Property other than cash shall be computed at the fair
market value thereof at the time of the Issue as determined in good faith by the
Board of Directors of the Company.
(c) Mixed Consideration. The consideration for Additional Common Shares
Issued together with other property of the Company for consideration that covers
both shall be determined in good faith by the Board of Directors.
(d) Options and Convertible Securities. The consideration per Additional
Common Share for Options and Convertible Securities shall be determined by
dividing:
(i) the total amount, if any, received or receivable by the Company for the
Issue of the Options or Convertible Securities, plus the minimum amount of
additional consideration (as set forth in the instruments relating thereto,
without regard to any provision contained therein for a subsequent adjustment of
such consideration) payable to the Company upon exercise of the Options or
conversion of the Convertible Securities, by
(ii) the maximum amount of common stock (as set forth in the instruments
relating thereto, without regard to any provision contained therein for a
subsequent adjustment of
-2-
<PAGE>
Silicon Valley Bank Antidilution Agreement
-----------------------------------------------------------------
such number) ultimately Issuable upon the exercise of such Options or the
conversion of such Convertible Securities.
10. General.
10.1 Governing Law. This Antidilution Agreement shall be governed in all
respects by the laws of the State of California as such laws are applied to
agreements between California residents entered into and to be performed
entirely within California.
10.2 Successors and Assigns. Except as otherwise expressly provided herein,
the provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.
10.3 Entire Agreement. Except as set forth below, this Antidilution
Agreement and the other documents delivered pursuant hereto constitute the full
and entire understanding and agreement between the parties with regard to the
subjects hereof and thereof.
10.4 Notices. etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by first class mail,
postage prepaid, certified or registered mail, return receipt requested,
addressed (a) if to Purchaser at Purchaser's address as set forth in the heading
to this Agreement, or at such other address as Purchaser shall have furnished to
the Company in writing, or (b) if to the Company, at the Company's address set
forth in the heading to this Agreement, or at such other address as the Company
shall have furnished to the Purchaser in writing.
10.5 Severability. In case any provision of this Antidilution Agreement
shall be invalid, illegal, or unenforceable, the validity, legality and
enforceability of the remaining provisions of this Antidilution Agreement shall
not in any way be affected or impaired thereby.
10.6 Titles and Subtitles. The titles of the sections and subsections of
this Agreement are for convenience of reference only and are not to be
considered in construing this Antidilution Agreement.
10.7 Counterparts. This Antidilution Agreement may be executed in any
number of counterparts, each of which shall be an original, but all of which
together shall constitute one instrument.
Company:
OPTICAL CORPORATION OF AMERICA
By /s/ DONALD A. JOHNSON
------------------------------
Donald A. Johnson
Chairman and Treasurer
Purchaser:
SILICON VALLEY BANK
By______________________________
Title VICE PRESIDENT
---------------------------
38112-V1 2/10/92
20,
-3-
COLLATERAL ASSIGNMENT PATENT MORTGAGE
AND SECURITY AGREEMENT
This Collateral Assignment, Patent Mortgage and Security Agreement is
made as of May 27, 1994, by and between Optical Corporation of America
("Assignor"), and Silicon Valley Bank, a California banking corporation
("Assignee").
RECITALS
A. Assignee has agreed to lend to Assignor certain funds (the "Loans"),
pursuant to a Loan and Security Agreement dated May 27, 1994 (the "Loan
Agreement") and Assignor desires to borrow such funds from Assignee.
B. In order to induce Assignee to make the Loans, Assignor has agreed
to assign certain intangible property to Assignee for purposes of securing the
obligations of Assignor to Assignee.
NOW, THEREFORE, THE PARTIES HERETO AGREE AS FOLLOWS:
1. Assignment. Patent Mortgage and Grant of Security Interest. As
collateral security for the prompt and complete payment and performance of all
of Assignor's present or future indebtedness, obligations and liabilities to
Assignee, Assignor hereby assigns, transfers, conveys and grants a security
interest and mortgage to Assignee, as security, but not as an ownership
interest, in and to Assignor's entire right, title and interest in, to and under
the following (all of which shall collectively be called the "Collateral"):
(a) All of present and future United States registered
copyrights and copyright registrations, including, without limitation, the
registered copyrights listed in Exhibit A-1 to this Agreement (and including all
of the exclusive rights afforded a copyright registrant in the United States
under 17 U.S.C. ss.106 and any exclusive rights which may in the future arise by
act of Congress or otherwise) and all present and future applications for
copyright registrations (including applications for copyright registrations of
derivative works and compilations) (collectively, the "Registered Copyrights"),
and any and all royalties, payments, and other amounts payable to Assignor in
connection with the Registered Copyrights, together with all renewals and
extensions of the Registered Copyrights, the right to recover for all past,
present, and future infringements of the Registered Copyrights, and all computer
programs, computer databases, computer program flow diagrams, source codes,
object codes and all tangible property embodying or incorporating the Registered
Copyrights, and all other rights of every kind whatsoever accruing thereunder or
pertaining thereto.
(b) All present and future copyrights which are not
registered in the United States Copyright Office (the "Unregistered
Copyrights"), whether now owned or hereafter acquired, including without
limitation the Unregistered Copyrights listed in Exhibit A-2 to this Agreement,
and any and all royalties, payments, and other amounts payable to Assignor in
connection with the Unregistered Copyrights, together with all renewals and
extensions of the Unregistered Copyrights, the right to recover for all past,
present, and future infringements of the Unregistered Copyrights, and all
computer programs, computer databases, computer program flow diagrams, source
codes, object codes and all tangible property embodying or incorporating the
Unregistered Copyrights, and all other rights of every kind whatsoever accruing
thereunder or pertaining thereto. The Registered Copyrights and the Unregistered
Copyrights collectively are referred to herein as the "Copyrights."
(c) All right, title and interest in and to any and all
present and future license agreements with respect to the Copyrights, including
without limitation the license agreements listed in Exhibit A-3 to this
Agreement (the "Licenses").
-1-
<PAGE>
(d) All present and future accounts, accounts receivable and
other rights to payment arising from, in connection with or relating to the
Copyrights.
(e) Any and all trade secrets, and any and all intellectual
property rights in computer software and computer software products now or
hereafter existing, created, acquired or held;
(f) Any and all design rights which may be available to
Assignor now or hereafter existing, created, acquired or held;
(g) All patents, patent applications and like protections
including, without limitation, improvements, divisions, continuations, renewals,
reissues, extensions and continuations-in-part of the same, including without
limitation the patents and patent applications set forth on Exhibit B attached
hereto (collectively, the "Patents");
(h) Any trademark and servicemark rights, whether registered
or not, applications to register and registrations of the same and like
protections, and the entire goodwill of the business of Assignor connected with
and symbolized by such trademarks, including without limitation those set forth
on Exhibit C attached hereto (collectively, the "Trademarks");
(i) Any and all claims for damages by way of past, present and
future infringements of any of the rights included above, with the right, but
not the obligation, to sue for and collect such damages for said use or
infringement of the intellectual property rights identified above;
(j) All licenses or other rights to use any of the Copyrights,
Patents or Trademarks, and all license fees and royalties arising from such use
to the extent permitted by such license or rights;
(k) All amendments, extensions, renewals and extensions of any
of the Copyrights, Trademarks or Patents; and
(l) All proceeds and products of the foregoing, including
without limitation all payments under insurance or any indemnity or warranty
payable in respect of any of the foregoing.
THE INTEREST IN THE COLLATERAL BEING ASSIGNED HEREUNDER SHALL NOT BE CONSTRUED
AS A CURRENT ASSIGNMENT, BUT AS A CONTINGENT ASSIGNMENT TO SECURE ASSIGNOR'S
OBLIGATIONS TO ASSIGNEE UNDER THE LOAN AGREEMENT.
2. Authorization and Request. Assignor authorizes and requests that the
Register of Copyrights and the Commissioner of Patents and Trademarks record
this conditional assignment.
3. Covenants and Warranties. Assignor represents, warrants, covenants
and agrees as follows:
(a) Assignor is now the sole owner of the Collateral, except
for non-exclusive licenses granted by Assignor to its customers in the ordinary
course of business.
(b) Listed on Exhibits A-1 and A-2 are all copyrights owned by
Assignor, in which Assignor has an interest, or which are used in Assignor's
business.
(c) Each employee, agent and/or independent contractor who has
participated in the creation of the property constituting the Collateral has
either executed an assignment of his or her rights of authorship to Assignor or
is an employee of Assignor acting within the scope of his or
-2-
<PAGE>
her employment and was such an employee at the time of said creation.
(d) All of Assignor's present and future software, computer
programs and other works of authorship subject to United States copyright
protection, the sale, licensing or other disposition of which results in
royalties receivable, license fees receivable, accounts receivable or other sums
owing to Assignor (collectively, "Receivables"), have been and shall be
registered with the United States Copyright Office prior to the date Assignor
requests or accepts any loan from Assignee with respect to such Receivables and
prior to the date Assignor includes any such Receivables in any accounts
receivable aging, borrowing base report or certificate or other similar report
provided to Assignee, and Assignor shall provide to Assignee copies of all such
registrations promptly upon the receipt of the same.
(e) Assignor shall undertake all reasonable measures to cause
its employees, agents and independent contractors to assign to Assignor all
rights of authorship to any copyrighted material in which Assignor has or may
subsequently acquire any right or interest.
(f) Performance of this Assignment does not conflict with or
result in a breach of any agreement to which Assignor is bound, except to the
extent that certain intellectual property agreements prohibit the assignment of
the rights thereunder to a third party without the licensor's or other party's
consent and this Assignment constitutes an assignment.
(g) During the term of this Agreement, Assignor will not
transfer or otherwise encumber any interest in the Collateral, except for
non-exclusive licenses granted by Assignor in the ordinary course of business or
as set forth in this Assignment;
(h) Each of the Patents is valid and enforceable, and no part
of the Collateral has been judged invalid or unenforceable, in whole or in part,
and no claim has been made that any part of the Collateral violates the rights
of any third party;
(i) Assignor shall promptly advise Assignee of any material
adverse change in the composition of the Collateral, including but not limited
to any subsequent ownership right of the Assignor in or to any Trademark, Patent
or Copyright not specified in this Assignment;
(j) Assignor shall (i) protect, defend and maintain the
validity and enforceability of the Trademarks, Patents and Copyrights, (ii) use
its best efforts to detect infringements of the Trademarks, Patents and
Copyrights and promptly advise Assignee in writing of material infringements
detected and (iii) not allow any Trademarks, Patents, or Copyrights to be
abandoned, forfeited or dedicated to the public without the written consent of
Assignee, which shall not be unreasonably withheld unless Assignor determines
that reasonable business practices suggest that abandonment is appropriate.
(k) Assignor shall promptly register the most recent version
of any of Assignor's Copyrights, if not so already registered, and shall, from
time to time, execute and file such other instruments, and take such further
actions as Assignee may reasonably request from time to time to perfect or
continue the perfection of Assignee's interest in the Collateral;
(l) This Assignment creates, and in the case of after acquired
Collateral, this Assignment will create at the time Assignor first has rights in
such after acquired Collateral, in favor of Assignee a valid and perfected first
priority security interest in the Collateral in the United States securing the
payment and performance of the obligations evidenced by the Loan Agreement upon
making the filings referred to in clause (m) below;
(m) To its knowledge, except for, and upon, the filing with
the United States Patent and Trademark office with respect to the Patents and
Trademarks and the Register of Copyrights with respect to the Copyrights
necessary to perfect the security interests and
-3-
<PAGE>
assignment created hereunder and except as has been already made or obtained, no
authorization, approval or other action by, and no notice to or filing with, any
U.S. governmental authority or U.S. regulatory body is required either (i) for
the grant by Assignor of the security interest granted hereby or for the
execution, delivery or performance of this Assignment by Assignor in the U.S. or
(ii) for the perfection in the United States or the exercise by Assignee of its
rights and remedies thereunder;
(n) All information heretofore, herein or hereafter supplied
to Assignee by or on behalf of Assignor with respect to the Collateral is
accurate and complete in all material respects.
(o) Assignor shall not enter into any agreement that would
materially impair or conflict with Assignor's obligations hereunder without
Assignee's prior written consent, which consent shall not be unreasonably
withheld. Assignor shall not permit the inclusion in any material contract to
which it becomes a party of any provisions that could or might in any way
prevent the creation of a security interest in Assignor's rights and interest in
any property included within the definition of the Collateral acquired under
such contracts, except that certain contracts may contain anti-assignment
provisions that could in effect prohibit the creation of a security interest in
such contracts.
(p) Upon any executive officer of Assignor obtaining actual
knowledge thereof, Assignor will promptly notify Assignee in writing of any
event that materially adversely affects the value of any material Collateral,
the ability of Assignor to dispose of any material Collateral or the rights and
remedies of Assignee in relation thereto, including the levy of any legal
process against any of the Collateral.
4. Assignee's Rights. Assignee shall have the right, but not the
obligation, to take, at Assignor's sole expense, any actions that Assignor is
required under this Assignment to take but which Assignor fails to take, after
fifteen (15) days' notice to Assignor. Assignor shall reimburse and indemnify
Assignee for all reasonable costs and reasonable expenses incurred in the
reasonable exercise of its rights under this section 4.
5. Inspection Rights. Assignor hereby grants to Assignee and its
employees, representatives and agents the right to visit, during reasonable
hours upon prior reasonable written notice to Assignor, and any of Assignor's
plants and facilities that manufacture, install or store products (or that have
done so during the prior six-month period) that are sold utilizing any of the
Collateral, and to inspect the products and quality control records relating
thereto upon reasonable written notice to Assignor and as often as may be
reasonably requested, but not more than one (1) in every six (6) months;
provided, however, nothing herein shall entitle Assignee access to Assignor's
trade secrets and other proprietary information.
6. Further Assurances; Attorney in Fact.
(a) Upon an Event of Default, on a continuing basis
thereafter, Assignor will, subject to any prior licenses, encumbrances and
restrictions and prospective licenses, make, execute, acknowledge and deliver,
and file and record in the proper filing and recording places in the United
States, all such instruments, including, appropriate financing and continuation
statements and collateral agreements and filings with the United States Patent
and Trademarks Office and the Register of Copyrights, and take all such action
as may reasonably be deemed necessary or advisable, or as requested by Assignee,
to perfect Assignee's security interest in all Copyrights, Patents and
Trademarks and otherwise to carry out the intent and purposes of this Collateral
Assignment, or for assuring and confirming to Assignee the grant or perfection
of a security interest in all Collateral.
(b) Upon an Event of Default, Assignor hereby irrevocably
appoints Assignee as Assignor's attorney-in-fact, with full authority in the
place and stead of Assignor and in the
-4-
<PAGE>
name of Assignor, Assignee or otherwise, from time to time in Assignee's
discretion, upon Assignor's failure or inability to do so, to take any action
and to execute any instrument which Assignee may deem necessary or advisable to
accomplish the purposes of this Collateral Assignment, including:
(i) To modify, in its sole discretion, this Collateral
Assignment without first obtaining Assignor's approval of or signature to such
modification by amending Exhibit A-l, Exhibit A-2, Exhibit A-3, Exhibit B and
Exhibit C, thereof, as appropriate, to include reference to any right, title or
interest in any Copyrights, Patents or Trademarks acquired by Assignor after the
execution hereof or to delete any reference to any right, title or interest in
any Copyrights, Patents or Trademarks in which Assignor no longer has or claims
any right, title or interest; and
(ii) To file, in its sole discretion, one or more financing or
continuation statements and amendments thereto, relative to any of the
Collateral without the signature of Assignor where permitted by law.
7. Events of Default. The occurrence of any of the following shall
constitute an Event of Default under the Assignment:
(a) An Event of Default occurs under the Loan Agreement; or
(b) Assignor breaches any warranty or agreement made by
Assignor in this Assignment.
8. Remedies. Upon the occurrence and continuance of an Event of
Default, Assignee shall have the right to exercise all the remedies of a secured
party under the California Uniform Commercial Code, including without limitation
the right to require Assignor to assemble the Collateral and any tangible
property in which Assignee has a security interest and to make it available to
Assignee at a place designated by Assignee. Assignee shall have a nonexclusive,
royalty free license to use the Copyrights, Patents and Trademarks to the extent
reasonably necessary to permit Assignee to exercise its rights and remedies upon
the occurrence of an Event of Default. Assignor will pay any expenses (including
reasonable attorney's fees) incurred by Assignee in connection with the exercise
of any of Assignee's rights hereunder, including without limitation any expense
incurred in disposing of the Collateral. All of Assignee's rights and remedies
with respect to the Collateral shall be cumulative.
9. Indemnity. Assignor agrees to defend, indemnify and hold harmless
Assignee and its officers, employees, and agents against: (a) all obligations,
demands, claims, and liabilities claimed or asserted by any other party in
connection with the transactions contemplated by this Agreement, and (b) all
losses or expenses in any way suffered, incurred, or paid by Assignee as a
result of or in any way arising out of, following or consequential to
transactions between Assignee and Assignor, whether under this Assignment or
otherwise (including without limitation, reasonable attorneys fees and
reasonable expenses), except for losses arising form or out of Assignee's gross
negligence or willful misconduct.
10. Release. At such time as Assignor shall completely satisfy all of
the obligations secured hereunder, Assignee shall execute and deliver to
Assignor all assignments and other instruments as may be reasonably necessary or
proper to terminate Assignee's security interest in the Collateral, subject to
any disposition of the Collateral which may have been made by Assignee pursuant
to this Agreement. For the purpose of this Agreement, the obligations secured
hereunder shall be deemed to continue if Assignor enters into any bankruptcy or
similar proceeding at a time when any amount paid to Assignee could be ordered
to be repaid as a preference or pursuant to a similar theory, and shall continue
until it is finally determined that no such repayment can be ordered.
-5-
<PAGE>
11. No Waiver. No course of dealing between Assignor and Assignee, nor
any failure to exercise nor any delay in exercising, on the part of Assignee,
any right, power, or privilege under this Agreement or under the Loan Agreement
or any other agreement, shall operate as a waiver. No single or partial exercise
of any right, power, or privilege under this Agreement or under the Loan
Agreement or any other agreement by Assignee shall preclude any other or further
exercise of such right, power, or privilege or the exercise of any other right,
power, or privilege by Assignee.
12. Rights Are Cumulative. All of Assignee's rights and remedies with
respect to the Collateral whether established by this Agreement, the Loan
Agreement, or any other documents or agreements, or by law shall be cumulative
and may be exercised concurrently or in any order.
13. Course of Dealing. No course of dealing, nor any failure to
exercise, nor any delay in exercising any right, power or privilege hereunder
shall operate as a waiver thereof.
14. Attorneys' Fees. If any action relating to this Assignment is
brought by either party hereto against the other party, the prevailing party
shall be entitled to recover reasonable attorneys fees, costs and disbursements.
15. Amendments. This Assignment may be amended only by a written
instrument signed by both parties hereto. To the extent that any provision of
this Agreement conflicts with any provision of the Loan Agreement, the provision
giving Assignee greater rights or remedies shall govern, it being understood
that the purpose of this Agreement is to add to, and not detract from, the
rights granted to Assignee under the Loan Agreement. This Agreement, the Loan
Agreement, and the documents relating thereto comprise the entire agreement of
the parties with respect to the matters addressed in this Agreement.
16. Severability. The provisions of this Agreement are severable. If
any provision of this Agreement is held invalid or unenforceable in whole or in
part in any jurisdiction, then such invalidity or unenforceability shall affect
only such provision, or part thereof, in such jurisdiction, and shall not in any
manner affect such provision or part thereof in any other jurisdiction, or any
other provision of this Agreement in any jurisdiction.
17. Counterparts. This Assignment may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute the same instrument.
18. California Law and Jurisdiction. This Assignment shall be governed
by the laws of the State of California, without regard for choice of law
provisions. Assignor and Assignee consent to the nonexclusive jurisdiction of
any state or federal court located in Orange County, California.
19. Confidentiality. In handling any confidential information, Assignee
shall exercise the same degree of care that it exercises with respect to its own
proprietary information of the same types to maintain the confidentiality of any
non-public information thereby received or received pursuant to this Assignment
except that the disclosure of this information may be made (i) to the affiliates
of the Assignee, (ii) to prospective transferee or purchasers of an interest in
the obligations secured hereby, provided that they have entered into a
comparable confidentiality agreement in favor of Assignor and have delivered a
copy to Assignor, (iii) as required by law, regulation, rule or order, subpoena
judicial order or similar order and (iv) as may be required in connection with
the examination, audit or similar investigation of Assignee.
-6-
<PAGE>
20. WAIVER OF RIGHT TO JURY TRIAL. ASSIGNEE AND ASSIGNOR EACH HEREBY
WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON,
ARISING OUT OF, OR IN ANY WAY RELATING TO: (I) THIS AGREEMENT; OR (II) ANY OTHER
PRESENT OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN ASSIGNEE AND ASSIGNOR; OR
(III) ANY CONDUCT, ACTS OR OMISSIONS OF ASSIGNEE OR ASSIGNOR OR ANY OF THEIR
DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSONS
AFFILIATED WITH ASSIGNEE OR ASSIGNOR; IN EACH OF THE FOREGOING CASES, WHETHER
SOUNDING IN CONTRACT OR TORT OR OTHERWISE.
IN WITNESS WHEREOF, the parties hereto have executed this Assignment on the
day and year first above written.
ADDRESS OF ASSIGNOR: Assignor:
7421 Orangewood Avenue Optical Corporation of America
Garden Grove, California 92641
By /s/ Donald A. Johnson
-----------------------
Donald A. Johnson,
Chairman and Treasurer
-7-
<PAGE>
Exhibit "A-1" attached to that certain Collateral Assignment, Patent Mortgage
and Security Agreement
EXHIBIT "A-l"
REGISTERED COPYRIGHTS
REG. NO. REG. DATE COPYRIGHT
- -------- --------- ---------
-8-
<PAGE>
Exhibit "A-2" attached to that certain Collateral Assignment, Patent Mortgage
and Security Agreement
EXHIBIT "A-2"
UNREGISTERED COPYRIGHTS
DESCRIPTION OF COPYRIGHTS
-9-
<PAGE>
Exhibit "A-3" attached to that certain Collateral Assignment, Patent Mortgage
and Security Agreement
EXHIBIT "A-3"
DESCRIPTION OF LICENSE AGREEMENTS
-10-
<PAGE>
Exhibit "B" attached to that certain Collateral Assignment, Patent Mortgage and
Security Agreement
EXHIBIT "B"
PATENTS
DOCKET NO. COUNTRY SERIAL NO. FILING DATE PATENT NO. STATUS
- ---------- ------- --------- ----------- ---------- ------
AS-4002 U.S. 7-457469 12/27/89 5,018,844
CM-2077 U.S. 737,140 10/29/76 4,056,307
AO-2483 U.S. 942,570 9/15/78 4,203,328
AS-3839 U.S. 7-426256 11/20/89 5,069,532
AO-91-011 U.S. 7-735855 7/25/91 5,266,806
-11-
<PAGE>
Exhibit "C" attached to that certain Collateral Assignment, Patent Mortgage and
Security Agreement
EXHIBIT "C"
TRADEMARKS
MARK COUNTRY SERIAL NO. STATUS
---- ------- --------- -------
MicroPlasma(R) Filed in the Office 45634
of the Secretary of the
Commonwealth (Massachusetts),
and Secretary's Certificate
of Registration Issued.
June 28, 1991
-12-
PROMISSORY NOTE
06-23-94
-----------
(Date)
7421 Orangewood Avenue, Garden Grove, Orange County, CA
- --------------------------------------------------------------------------------
(Address of Maker)
FOR VALUE RECEIVED, Optical Corporation of America dba OCA Applied Optics
("Maker") promises, jointly and severally, if more than one, to pay to the order
of General Electric Capital Corporation or any subsequent holder hereof (each, a
"Payee") at its office located at 7700 Irvine Center Drive Suite 400, Irvine, CA
92718 or at such other place as Payee or the holder hereof may designate, the
principal sum of One Million Five Hundred Thousand and 00/100 Dollars
($1,500,000.00), with interest thereon, from the date hereof through and
including the dates of payment, at the floating per annum simple interest rate
("Contract Rate") calculated as hereinafter set forth. The Contract Rate shall
be adjusted once each calendar month, and such adjustment shall be effective
during the adjustnent period ("Adjustment Period") as hereinafter defined. Each
Adjustment Period shall commence at the close of business on the fifteenth day
of a calendar month and shall continue through the same day of the next
succeeding calendar month. The Contract Rate for each Adjustment Period shall be
equal to the sum of (i) Three and Sixty-Six Hundreths percent (3.66%) per annum
plus (ii) a variable per annum interest rate which shall be equal to the rate
listed for "l-Month" Commercial Paper under the column indicating an average
rate as stated in the Federal Reserve Statistical Release H.15 (519) for the
second calendar month ("Current CPR") preceding the calendar month in which the
Adjustment Period commences. If, for any reason whatsoever, the Federal Reserve
Statistical Release H.13 (519) is no longer published, the Current CPR shall be
equal to the latest Commercial Paper Rate for high grade unsecured notes of 30
days maturity sold through dealer by major corporations in multiples of $1,000,
as indicated in the "Money Rates" column of the Wall Street Journal, Eastern
Edition, published on the first Business Day of the calendar month preceding the
month in which the interest payment being adjusted shall be due and payable.
Subject to the other provisions hereof, the principal on this Note is payable in
lawful money of the United States in Fifty-Nine (59) consecutive monthly
installments of Twenty-Five Thousand and 00/100 Dollars ($25,000.00) each
("Periodic Installment") and a final installment which shall be in the amount of
the total outstanding unpaid principal. The first Periodic Installment shall be
due and payable on 7-15-94 and the following Periodic Installments and the final
installment shall be due and payable on the same day of each succeeding period
(each, a "Payment Date"). In addition to the payments of principal provided
above, interest at the Contract Rate shall be payable on the Payment Date. All
payments shall be applied first to interest and then to principal. Each payment
may, at the option of the Payee, be calculated and applied on an assumption that
such payment would be made on its due date. The acceptance by Payee of any
payment which is less than payment in full of all amounts due and owing at such
time shall not constitute a waiver of Payee's right to receive payment in full
at such time or at any prior or subsequent time. Interest shall be calculated on
the basis of a 365 day year (366 day leap year).
The Maker hereby expressly authorizes the Payee to insert the date value is
actually given in the blank space on the face hereof and on all related
documents pertaining hereto.
This Note may be secured by a security agreement, chattel mortgage, pledge
agreement or like instrument (each of which being hereinafter called a "Security
Agreement").
Time is of the essence hereof. If any installment or any other sum due under
this Note or any Security Agreement is not received within ten (10) days after
the applicable due date, the Maker agrees to pay, in addition to the amount of
each such installment or other sum, a late payment charge of five percent (5%)
of said installment or other sum, but not exceeding any lawful maximum. If (i)
Maker fails to make payment of any amount due hereunder within ten (10) days
after the same becomes due and payable; or (ii) Maker is in default under or
fails to perform under any term or condition contained in any Security
Agreement, then the entire principal sum remaining unpaid, together with all
interest thereon and any other sum payable under this Note or the Security
Agreement, at the election of Payee, shall immediately become due and payable,
with interest thereon at the lesser of eighteen percent {18%) per annum or the
highest rate not prohibited by applicable law from the date of such accelerated
maturity until paid (both before and after any judgment).
The Maker may prepay in full, but not in part, its entire indebtedness hereunder
upon payment of an additional sum as a premium equal to the following
percentages of the original principal balance for the indicated period:
Prior to the first annual anniversary date of this Note: three percent (3%)
Thereafter and prior to the second annual
anniversary date of this Note: two percent (2%)
Thereafter and prior to the third annual
anniversary date of this Note: one percent (1%)
Thereafter and prior to the fourth annual
anniversary date of this Note: zero percent (0%)
Thereafter and prior to the fifth annual
anniversary date of this Note: zero percent (0%)
and zero percent (0%) thereafter, plus all other sums due hereunder or
under any Security Agreement.
It is the intention of the parties hereto to comply with the applicable usury
laws; accordingly, it is agreed that, notwithstanding any provision to the
contrary in this Note or any Security Agreement, in no event shall this Note or
any Security Agreement require the payment or permit the collection of interest
in excess of the maximum amount permitted by applicable law. If any such excess
interest is contracted for, charged or received under this Note or any Security
Agreement, or if all of the principal balance shall be prepaid, so that under
any of such circumstances the amount of interest contracted for, charged or
received under this Note or the Security Agreement on the principal balance
shall exceed the maximum amount of interest permitted by applicable law, then in
such event (a) the provisions of this paragraph shall govern and control, (b)
neither Maker nor any other person or entity now or hereafter liable for the
payment hereof shall be obligated to pay the amount of such interest to the
extent that it is in excess of the maximum amount of interest permitted by
applicable law, (c) any such excess which may have been collected shall be
either applied as a credit against the then unpaid principal balance or refunded
to Maker, at the option of the Payee, and (d) the effective rate of interest
shall be automatically reduced to the maximum lawful contract rate allowed under
applicable law as now or hereafter construed by the courts having jurisdiction
thereof. It is further agreed that without limitation of the foregoing, all
calculations of the rate of interest contracted for, charged or received under
this Note or the Security Agreement which are made for the purpose of
determining whether such rate exceeds the maximum lawful contract rate, shall be
made, to the extent permitted by applicable law, by amortizing, prorating,
allocating and spreading in equal parts during the period of the full stated
term of the indebtedness evidenced hereby, all interest at any time contracted
for, charged or received from Maker or otherwise by Payee in connection with
such indebtedness; provided, however, that if applicable state law is amended or
the law of the United States of America preempts any applicable state law, so
that it becomes lawful for the Payee to receive a greater interest per annum
rate than is presently allowed, the Maker agrees that, on the effective date of
such amendment or preemption, as the case may be, the lawful maximum hereunder
shall be increased to the maximum interest per annum rate allowed by the amended
state law or the law of the
<PAGE>
United States of America.
The Maker and a1l sureties, endorsers, guarantors or any others (each such
person, other than the Maker, an "Obligor") who may at any time become liable
for the payment hereof jointly and severally consent hereby to any and all
extensions of time, renewals, waivers or modifications of, and all substitutions
or releases of, security or of any party primarily or secondarily liable on this
Note or any Security Agreement or any term and provision of either, which may be
made, granted or consented to by Payee, and agree that suit may be brought and
maintained against any one or more of them, at the election of Payee without
joinder of any other as a party thereto, and that Payee shall not be required
first to foreclose, proceed against, or exhaust any security hereof in order to
enforce payment of this Note. The Maker and each Obligor hereby waive
presentment, demand for payment, notice of nonpayment, protest, notice of
protest, notice of dishonor, and all other notices in connection herewith, as
well as filing of suit (if permitted by law) and diligence in collecting this
Note or enforcing any of the security hereof, and agree to pay (if permitted by
law) all expenses incurred in collection, including Payee's actual attorneys'
fees. Maker and each Obligor agree that fees not in excess of twenty percent
(20%) of the amount then due shall be deemed reasonable.
THE MAKER HEREBY UNCONDITIONALLY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM
OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR INDIRECTLY, THIS
NOTE, ANY OF THE RELATED DOCUMENTS, ANY DEALINGS BETWEEN MAKER AND PAYEE
RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION OR ANY RELATED TRANSACTIONS,
AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN MAKER AND PAYEE. THE
SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES
THAT MAY BE FILED IN ANY COURT (INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS,
TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY
CLAIMS.) THIS WAIVER IS IRREVOCABLE MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS NOTE, ANY RELATED DOCUMENTS, OR
TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS TRANSACTION OR ANY RELATED
TRANSACTION. IN THE EVENT OF LITIGATION, THIS NOTE MAY BE FILED AS A WRITTEN
CONSENT TO A TRIAL BY THE COURT.
This Note and any Security Agreement constitute the entire agreement of the
Maker and Payee with respect to the subject matter hereof and supercedes all
prior understandings, agreements and representations, express or implied.
No variation or modification of this Note, or any waiver of any of its
provisions or conditions, shall be valid unless in writing and signed by an
authorized representative of Maker and Payee. Any such waiver, consent,
modification or change shall be effective only in the specific instance and for
the specific purpose given.
Any provision in this Note or any Security Agreement which is in conflict with
any statute, law or applicable rule shall be deemed omitted, modified or altered
to conform thereto.
Optical Corporation of America
dba OCA Applied Optics
/s/ Pamela M. Owen By: /s/ Donald A. Johnson (L.S.)
- ------------------------------------ -------------------------------------
(Witness) (Signature)
Pamela M. Owen Donald A. Johnson, Chairman
- ------------------------------------ -------------------------------------
(Print name) Print name (and title, if applicable)
32 Regalo Drive, Mission Viejo, CA 04-2868710
- ------------------------------------ -------------------------------------
(Address) (Federal tax identification number)
3000 (3/91)
MASTER SECURITY AGREEMENT
THIS MASTER SECURITY AGREEMENT, made as of June 21, 1994 ("Agreement"), by
and between General Electric Capital Corporation, a New York corporation with an
address at 7700 Irvine Center Drive Suite 400, Irvine, CA ("Secured Party"), and
Optical Corporation of America, a corporation organized and existing under the
laws of the State of Massachusetts with its chief executive offices located at
7421 Orangewood Avenue, Garden Grove, CA ("Debtor").
In consideration of the promises herein contained and of certain other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Debtor and Secured Party hereby agree as follows:
1. CREATION OF SECURITY INTEREST.
Debtor hereby gives, grants and assigns to Secured Party, its successors
and assigns forever, a security interest in and against any and all property
listed on any collateral schedule now or hereafter annexed hereto or made a part
hereof ("Collateral Schedule"), and in and against any and all additions,
attachments, accessories and accessions thereto, any and all substitutions,
replacements or exchanges therefor, and any and all insurance and/or other
proceeds thereof (all of the foregoing being hereinafter individually and
collectively referred to as the "Collateral"). The foregoing security interest
is given to secure the payment and performance of any and all debts, obligations
and liabilities of any kind, nature or description whatsoever (whether primary,
secondary, direct, contingent, sole, joint or several, or otherwise, and whether
due or to become due) of Debtor to Secured Party, now existing or hereafter
arising, including but not limited to the payment and performance of certain
Promissory Notes from time to time identified on any Collateral Schedule
(collectively "Notes" and each a "Note"), and any renewals, extensions and
modifications of such debts, obligations and liabilities (all of the foregoing
being hereinafter referred to as the "Indebtedness").
2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF DEBTOR.
Debtor hereby represents, warrants and covenants as of the date hereof and
as of the date of execution of each Collateral Schedule hereto that:
(a) Debtor is, and will remain, duly organized, existing and in good
standing under the laws of the State set forth in the first paragraph of this
Agreement, has its chief executive offices at the location set forth in such
paragraph, and is, and will remain, duly qualified and licensed in every
jurisdiction wherever necessary to carry on its business and operations;
(b) Debtor has adequate power and capacity to enter into, and to perform
its obligations, under this Agreement, each Note and any other documents
evidencing, or given in connection with, any of the Indebtedness (all of the
foregoing being hereinafter referred to as the "Debt Documents");
(c) This Agreement and the other Debt Documents have been duly authorized,
executed and delivered by Debtor and constitute legal, valid and binding
agreements enforceable under all applicable laws in accordance with their terms,
except to the extent that the enforcement of remedies may be limited under
applicable bankruptcy and insolvency laws;
(d) No approval, consent or withholding of objections is required from any
governmental authority or instrumentality with respect to the entry into, or
performance by, Debtor of any the Debt Documents, except such as may have
already been obtained;
(e) The entry into, and performance by, Debtor of the Debt Documents will
not (i) violate any of the organizational documents of Debtor or any judgment,
order, law or regulation applicable to Debtor, or (ii) result in any breach of,
constitute a default under, or result in the creation of any lien, claim or
encumbrance on any of Debtor's property (except for liens in favor of Secured
Party) pursuant to, any indenture mortgage, deed of trust, bank loan, credit
agreement, or other agreement or instrument to which Debtor is a party;
(f) There are no suits or proceedings pending or threatened in court or
before any commission, board or other administrative agency against or affecting
Debtor which could, in the aggregate, have a material adverse effect on Debtor,
its business or operations, or its ability to perform its obligations under the
Debt Documents;
(g} All financial statements delivered to Secured Party in connection with
the Indebtedness have been prepared in accordance with generally accepted
accounting principles, and since the date of the most recent financial
statement, there has been no material adverse change;
(h) The Collateral is not, and will not be, used by Debtor for personal,
family or household purposes;
(i) The Collateral is, and will remain, in good condition and repair and
Debtor will not be negligent in the care and use thereof;
(j) Debtor is, and will remain, the sole and lawful owner, and in
possession of, the Collateral, and has the sole right and lawful authority to
grant the security interest described in this Agreement; and
(k) The Collateral is, and will remain, free and clear of all liens, claims
and encumbrances of every kind, nature and description, except for (i) liens in
favor of Secured Party,* (ii) liens for taxes not yet due or for taxes being
contested in good faith and which do not involve, in the reasonable judgment of
Secured Party, any risk of the sale, forfeiture or loss of any of the
Collateral, and (iii) inchoate materialmen's, mechanic's, repairmen's and
similar liens arising by operation of law in the normal course of business for
amounts which are not delinquent (all of such permitted liens being hereinafter
referred to as "Permitted Liens").
*and liens permitted by the debt documents which include an Intercreditor
agreement of even date herewith by and among Secured Party, debtors and others.
3. COLLATERAL.
(a) Until the declaration of any default hereunder, Debtor shall remain in
possession of the Collateral; provided, however, that Secured Party shall have
the right to possess (i) any chattel paper or instrument that constitutes a part
of the Collateral, and (ii) any other Collateral which because of its nature may
require that Secured Party's security interest therein be perfected by
possession. Secured Party, its successors and assigns, and their respective
agents, shall have the right to examine and inspect any of the Collateral at any
time during normal business hours. Upon any request from Secured Party, Debtor
shall provide Secured Party with ?????? of the then current location of the
Collateral.
(b) Debtor shall (i) use the Collateral only in its trade or business, (ii)
maintain all of the Collateral in good condition and working order, (iii) use
and maintain the Collateral only in compliance with all applicable laws, and
(iv) keep all of the Collateral free and clear of all liens, claims and
encumbrances (except for Permitted Liens).
(c) Debtor shall not, without the prior written consent of Secured Party,
(i) part with possession of any of the Collateral (except to Secured Party or
for maintenance and repair), (ii) remove any of the Collateral from the
continental United States, or (iii) sell, rent, lease, mortgage, grant a
security interest in or otherwise
<PAGE>
transfer or encumber (except for Permitted Liens) any of the Collateral.
(d) Debtor sha11 pay promptly when due all taxes, license fees, assessments
and public and private charges levied or assessed on any of the Collateral, on
the use thereof, or on this Agreement or any of the other Debt Documents. At its
option, Secured Party may discharge taxes, liens, security interests or other
encumbrances at any time levied or placed on the Collateral and may pay for the
maintenance, insurance and preservation of the Collateral or to effect
compliance with the terms of this Agreement or any of the other Debt Documents.
Debtor shall reimburse Secured Party, on demand, for any and all costs and
expenses incurred by Secured Party in connection therewith and agrees that such
reimbursement obligation sha11 be secured hereby.
(e) Debtor shall, at all times, keep accurate and complete records of the
Collateral, and Secured Party, its successors and assigns, and their respective
agents, shall have the right to examine, inspect and make extracts from all of
Debtor's books and records relating to the Collateral at any time during normal
business hours.
(f) If agreed by the parties, Secured Party may, but shall in no event be
obligated to, accept substitutions and exchanges of property for property, and
additions to the property, constituting all or any part of the Collateral. Such
substitutions, exchanges and additions shall be accomplished at any time and
from time to time, by the substitution of a revised Collateral Schedule for the
Collateral Schedule now or hereafter annexed. Any property which may be
substituted, exchanged or added as aforesaid shall constitute a portion of the
Collateral and shall be subject to the security interest granted herein.
Additions to, reductions or exchanges of, or substitutions for, the Collateral,
payments on account of any obligation or liability secured hereby, increases in
the obligations and liabilities secured hereby, or the creation of additional
obligations and liabilities secured hereby, may from time to time be made or
occur without affecting the provisions of this Agreement or the provisions of
any obligation or liability which this Agreement secures.
(g) Any third person at any time and from time to time holding all or any
portion of the Collateral shall be deemed to, and shall, hold the Collateral as
the agent of, and as pledge holder for, Secured Party. At any time and from time
to time, Secured Party may give notice to any third person holding all or any
portion of the Collateral that such third person is holding the Collateral as
the agent of, and as pledge holder for, the Secured Party.
4. INSURANCE.
The Collateral shall at all times be held at Debtor's risk, and Debtor
shall keep it insured against loss or damage by fire and extended coverage
perils, theft, burglary, and for any or all Collateral which are vehicles, for
risk of loss by collision, and where requested by Secured Party against other
risks as required thereby, for the full replacement value thereof, with
companies, in amounts and under policies acceptable to Secured Party. Debtor
shall, if Secured Party so requires, deliver to Secured Party, policies or
certificates of insurance evidencing such coverage. Each policy shall name
Secured Party as loss payee thereunder, shall provide for coverage to Secured
Party regardless of the breach by Debtor of any warranty or representation made
therein, shall not be subject to co-insurance, and shall provide for thirty (30)
days written notice to Secured Party of the cancellation or material
modification thereof. Debtor hereby appoints Secured Party as its attorney in
fact to make proof of loss, claim for insurance and adjustments with insurers,
and to execute or endorse all documents, checks or drafts in connection with
payments made as a result of any such insurance policies. Proceeds of insurance
shall be applied, at the option of Secured Party, to repair or replace the
Collateral or to reduce any of the Indebtedness secured hereby.
5. REPORTS.
(a) Debtor shall promptly notify Secured Party in the event of (i) any
change in the name of Debtor, (ii) any relocation of its chief executive
offices, (iii) any relocation of any of the Collateral, (iv) any of the
Collateral being lost, stolen, missing, destroyed, materially damaged or worn
out, or (v) any lien, claim or encumbrance attaching or being made against any
of the Collateral other than Permitted Liens.
(b) Debtor agrees to furnish its annual financial statements and such
interim statements as Secured Party may require in form satisfactory to Secured
Party. Any and all financial statements submitted and to be submitted to Secured
Party have and will have been prepared on a basis of generally accepted
accounting principles, and are and will be complete and correct and fairly
present Debtor's financial condition as at the date thereof. Secured Party may
at any reasonable time examine the books and records of Debtor and make copies
thereof.
6. FURTHER ASSURANCES.
(a) Debtor shall, upon request of Secured Party, furnish to Secured Party
such further information, execute and deliver to Secured Party such documents
and instruments (including, without limitation, Uniform Commercial Code
financing statements) and do such other acts and things, as Secured Party may at
any time reasonably request relating to the perfection or protection of the
security interest created by this Agreement or for the purpose of carrying out
the intent of this Agreement. Without limiting the foregoing, Debtor shall
cooperate and do all acts deemed necessary or advisable by Secured Party to
continue in Secured Party a perfected first security interest in the Collateral,
and shall obtain and furnish to Secured Party, any subordinations, releases,
landlord, lessor, or mortgagee waivers, and similar documents as may be from
time to time requested by, and which are in form and substance satisfactory to,
Secured Party.
(b) Debtor hereby grants to Secured Party the power to sign Debtor's name
and generally to act on behalf of Debtor to execute and file applications for
title, transfers of title, financing statements, notices of lien and other
documents pertaining to any or all of the Collateral. Debtor shall, if any
certificate of title be required or permitted by law for any of the Collateral,
obtain such certificate showing the lien hereof with respect to the Collateral
and promptly deliver same to Secured Party.
(c) Debtor shall indemnify and defend the Secured Party, its successors and
assigns, and their respective directors, officers and employees, from and
against any and all claims, actions and suits (including, without limitation,
related attorneys' fees) of any kind, nature or description whatsoever arising,
directly or indirectly, in connection with any of the Collateral.
<PAGE>
7. EVENTS OF DEFAULT.
Debtor shall be in default under this Agreement and each of the other
Debt Documents upon the occurrence of any of the following "Event(s) of
Default":
(a) Debtor fails to pay any installment or other amount due or coming due
under any of the Debt Documents within ten (10) days after its due date;
(b) Any attempt by Debtor, without the prior written consent of Secured
Party, to sell, rent, lease, mortgage, grant a security interest in, or
otherwise transfer or encumber (except for Permitted Liens) any of the
Collateral;
(c) Debtor fails to procure, or maintain in effect at all times, any of the
insurance on the Collateral in accordance with Section 4 of this Agreement;
(d) Debtor breaches any of its other obligations under any of the Debt
Documents and fails to cure the same within thirty (30) days after written
notice thereof.
(e) Any warranty, representation or statement made by Debtor in any of the
Debt Documents or otherwise in connection with any of the Indebtedness shall be
false or misleading in any material respect;
(f) Any of the Collateral being subjected to, or being threatened with,
attachment, execution, levy, seizure or confiscation in any legal proceeding or
otherwise;
(g) Any default by Debtor under any other agreement between Debtor and
Secured Party;
(h) Any dissolution, termination of existence, merger, consolidation,
change in controlling ownership, insolvency, or business failure of Debtor or
any guarantor or other obligor for any of the Indebtedness (collectively
"Guarantor"), or if Debtor or any Guarantor is a natural person, any death or
incompetency of Debtor or such Guarantor;
(i) The appointment of a receiver for all or of any part of the property of
Debtor or any Guarantor, or any assignment for the benefit of creditors by
Debtor or any Guarantor; or
(j) The filing of a petition by Debtor or any Guarantor under any
bankruptcy, insolvency or similar law, or the filing of any such petition
against Debtor or any Guarantor if the same is not dismissed within thirty (30)
days of such filing.
8. REMEDIES ON DEFAULT.
(a) Upon the occurrence of an Event of Default under this Agreement, the
Secured Party, at its option, may declare any or all of the Indebtedness,
including without limitation the Notes, to be immediately due and payable,
without demand or notice to Debtor or any Guarantor. The obligations and
liabilities accelerated thereby shall bear interest (both before and after any
judgment) until paid in full at the lower of eighteen percent (18%) per annum or
the maximum rate not prohibited by applicable law.
(b) Upon such declaration of default, Secured Party shall have all of the
rights and remedies of a Secured Party under the Uniform Commercial Code, and
under any other applicable law. Without limiting the foregoing, Secured Party
shall have the right to (i) notify any account debtor of Debtor or any obligor
on any instrument which constitutes part of the Collateral to make payment to
the Secured Party, (ii) with or without legal process, enter any premises where
the Collateral may be and take possession and/or remove said Collateral from
said premises, (iii) sell the Collateral at public or private sale, in whole or
in part, and have the right to bid and purchase at said sale, and/or (iv) lease
or otherwise dispose of all or part of the Collateral, applying proceeds
therefrom to the obligations then in default. If requested by Secured Party,
Debtor shall promptly assemble the Collateral and make it available to Secured
Party at a place to be designated by Secured Party which is reasonably
convenient to both parties. Secured Party may also render any or all of the
Collateral unusable at the Debtor's premises and may dispose of such Collateral
on such premises without liability for rent or costs. Any notice which Secured
Party is required to give to Debtor under the Uniform Commercial Code of the
time and place of any public sale or the time after which any private sale or
other intended disposition of the Collateral is to be made shall be deemed to
constitute reasonable notice if such notice is given to the last known address
of Debtor at least five (5) days prior to such action.
(c) Proceeds from any sale or lease or other disposition shall be applied:
first to all costs of repossession, storage, and disposition including without
limitation attorneys', appraisers', and auctioneers' fees; second, to discharge
the obligations then in default; third, to discharge any other Indebtedness of
Debtor to Secured Party, whether as obligor, endorser, guarantor, surety or
indemnitor; fourth, to expenses incurred in paying or settling liens and claims
against the Collateral; and lastly, to Debtor, if there exists any surplus.
Debtor shall remain fully liable for any deficiency.
(d) In the event this Agreement, any Note or any other Debt Documents are
placed in the hands of an attorney for collection of money due or to become due
or to obtain performance of any provision hereof, Debtor agrees to pay all
reasonable attorneys' fees incurred by Secured Party, and further agrees that
payment of such fees is secured hereunder. Debtor and Secured Party agree that
such fees to the extent not in excess of twenty percent (20%) of subject amount
owing after default (if permitted by law, or such lesser sum as may otherwise be
permitted by law) shall be deemed reasonable.
(e) Secured Party's rights and remedies hereunder or otherwise arising are
cumulative and may be exercised singularly or concurrently. Neither the failure
nor any delay on the part of the Secured Party to exercise any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power or privilege preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. Secured
Party shall not be deemed to have waived any of its rights hereunder or under
any other agreement, instrument or paper signed by Debtor unless such waiver be
in writing and signed by Secured Party. A waiver on any one occasion shall not
be construed as a bar to or waiver of any right or remedy on any future
occasion.
(f) DEBTOR HEREBY UNCONDITIONALLY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR INDIRECTLY,
THIS AGREEMENT, ANY OF THE OTHER DEBT DOCUMENTS, ANY OF THE INDEBTEDNESS SECURED
HEREBY, ANY DEALINGS BETWEEN DEBTOR AND SECURED PARTY RELATING TO THE SUBJECT
MATTER OF THIS TRANSACTION OR ANY RELATED TRANSACTIONS, AND/OR THE RELATIONSHIP
THAT IS BEING ESTABLISHED BETWEEN DEBTOR AND SECURED PARTY. THE SCOPE OF THIS
WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE
FILED IN ANY COURT (INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS). THIS
WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN
WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT, ANY OTHER DEBT DOCUMENTS, OR TO
ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS TRANSACTION OR ANY RELATED
TRANSACTION. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A
WRITTEN CONSENT TO A TRIAL BY THE COURT.
9. MISCELLANEOUS.
<PAGE>
(a) This Agreement, any Note and/or any of the other Debt Documents may be
assigned, in whole or in part, by Secured Party without notice to Debtor, and
Debtor hereby waives any defense, counterclaim or cross-complaint by Debtor
against any assignee, agreeing that Secured Party shall be solely responsible
therefor.
(b) All notices to be given in connection with this Agreement shall be in
writing, shall be addressed to the parties at their respective addresses set
forth hereinabove (unless and until a different address may be specified in a
written notice to the other party), and shall be deemed given (i) on the date of
receipt if delivered in hand or by facsimile transmission, (ii) on the next
business day after being sent by express mail, and (iii) on the fourth business
day after being sent by regular, registered or certified mail. As used herein,
the term "business day" shall mean and include any day other than Saturdays,
Sundays, or other days on which commercial banks in New York, New York are
required or authorized to be closed.
(c) Secured Party may correct patent errors herein and fill in all blanks
herein or in any Collateral Schedule consistent with the agreement of the
parties.
(d) Time is of the essence hereof. This Agreement shall be binding, jointly
and severally, upon all parties described as the "Debtor" and their respective
heirs, executors, representatives, successors and assigns, and shall inure to
the benefit of Secured Party, its successors and assigns.
(e) This Agreement and its Collateral Schedules constitute the entire
agreement between the parties with respect to the subject matter hereof and
supercede all prior understandings (whether written, verbal or implied) with
respect thereto. This Agreement and its Collateral Schedules shall not be
changed or terminated orally or by course of conduct, but only by a writing
signed by both parties hereto. Section headings contained in this Agreement have
been included for convenience only, and shall not affect the construction or
interpretation hereof.
(t) This Agreement shall continue in full force and effect until all of the
Indebtedness has been indefeasibly paid in full to Secured Party. The surrender,
upon payment or otherwise, of any Note or any of the other documents evidencing
any of the Indebtedness shall not affect the right of Secured Party to retain
the Collateral for such other Indebtedness as may then exist or as it may be
reasonably contemplated will exist in the future. This Agreement shall
automatically be reinstated in the event that Secured Party is ever required to
return or restore the payment of all or any portion of the Indebtedness (all as
though such payment had never been made).
IN WITNESS WHEREOF, Debtor and Secured Party, intending to be legally bound
hereby, have duly executed this Agreement in one or more counterparts, each of
which shall be deemed to be an original, as of the day and year first aforesaid.
SECURED PARTY: DEBTOR:
General Electric Capital Corporation Optical Corporation of America
By: Michelle H. Steinberg By: Donald A. Johnson
------------------------------------ --------------------------------
Title: Region Credit Manager Title: Chairman
-------------------------------- ----------------------------
<PAGE>
COLLATERAL SCHEDULE
This collateral schedule describes collateral in which Optical
Corporation of America ("debtor") is granting to General Electric Capital
Corporation as a ("secured party") in connection with indebtedness that the
debtor is seeking to obtain.
All equipment now owned or hereafter acquired, including but not limited to the
following:
Analytical; cleaning; coating; computer; general manufacturing support;
heat treating; inspection; laboratory; machine tooling; metal working;
office; office furniture; paint; photo copy; plating; polishing; shop
support; test; welding and wood working equipment.
Such equipment is located at: 7421 Orangewood Avenue, Garden Grove, CA 92642.
Equipment specifically excluded from this Collateral Schedule has been listed
on the attached schedule, any alterations or replacements thereof, or any
alterations of or additions to the Premises that become fixtures.
<PAGE>
(3/91)
COLLATERAL SCHEDULE NO. 002
THIS COLLATERAL SCHEDULE NO. 002 is annexed to and made a part of that
certain Master Security Agreement dated as of June 21, 1994 between General
Electric Capital Corporation as Secured Party and Optical Corporation of America
dba OCA Applied Optics as Debtor and describes collateral in which Debtor has
granted Secured Party a security interest in connection with the Indebtedness
(as defined in the Security Agreement) including without limitation that certain
Promissory Note dated December 28, 1995 in the original principal amount of
$203,987.63.
Description Year/Model Serial Number Location
All equipment wherever located now owned or hereafter acquired
including but not limited to the following:
Analytical, cleaning, coating, computer, general manufacturing support,
heat treating, inspection, laboratory, machine tooling, metal working,
office, office furniture, paint, photo copy, plating, polishing, shop
support, test, welding and wood working equipment plus all other
attachments, accessories, additions, replacements and substitutions now
or hereafter made a part of the equipment or attached thereto.
SECURED PARTY: DEBTOR:
General Electric Capital Corporation Optical Corporation of America
dba OCA Applied Optics
By: /s/ MARGARET F. McGINTY By: /s/ DONALD A. JOHNSON
--------------------------------- -------------------------------
Title: Region Credit Analyst Title: Chairman
--------------------------------- -------------------------------
Date: December 28, 1995 Date: December 28, 1995
--------------------------------- -------------------------------
<PAGE>
COLLATERAL SCHEDULE NO. 003
THIS COLLATERAL SCHEDULE NO. 003 is annexed to and made a part of that
certain Master Security Agreement dated as of June 21, 1994 between General
Electric Corporation as Secured Party and Optical Corporation of America dba OCA
Applied Optics as Debtor and describes collateral in which Debtor has granted
Secured Party a security interest in connection with the Indebtedness (as
defined in the Security Agreement) including without limitation that certain
Promissory Note dated __________________________ in the original principal
amount of $1,200,000.00.
Description Year/Model Serial Number Location
All equipment wherever located now owned or hereafter acquired including
but not limited to the following:
Analytical, cleaning, coating, computer, general manufacturing support,
heat treating, inspection, laboratory, machine tooling, metal working,
office, office furniture, paint, photo copy, plating, polishing, shop
support, test, welding and wood working equipment plus all other
attachments, accessories, additions, replacements and substitutions now
or hereafter made a part of the equipment or attached thereto.
SECURED PARTY: DEBTOR:
General Electric Capital Corporation Optical Corporation of America dba
OCA Applied Optics
By: _____________________________ By: _________________________________
Title: _____________________________ Title: _________________________________
Date: _____________________________ Date: _________________________________
<PAGE>
(3/91)
COLLATERAL SCHEDULE NO. 1
THIS COLLATERAL SCHEDULE NO. 1 is annexed to and made a part of that
certain Master Security Agreement dated as of 6/21/94 between General Electric
Capital Corporation as Secured Party and Optical Corporation of America dba OCA
Applied Optics as Debtor and describes collateral in which Debtor has granted
Secured Party a security interest in connection with the Indebtedness (as
defined in the Security Agreement) including without limitation that certain
Promissory Note dated 6/23/94 in the original principal amount of $1,500,000.00.
DESCRIPTION YEAR/MODEL SERIAL NUMBER LOCATION
All equipment located in the state of California now owned or hereafter
acquired, including but not limited to the following:
Analytical; cleaning; coating; computer; general manufacturing
support; heat treating; inspection; laboratory; machine
tooling; metal working; office; office furniture; paint; photo
copy; plating; polishing; shop support; test; welding and wood
working equipment.
Such equipment is located at 7421 Orangewood Avenue, Garden Grove, CA 92642
SECURED PARTY: DEBTOR:
General Electric Capital Corporation Optical Corporation of America dba
OCA Applied Optics
By: Michelle H. Steinberg By: Donald A. Johnson
------------------------------- -------------------------------
Title: Region Credit Manager Title: Chairman
------------------------------- -------------------------------
Date: 6/21/94 Date: 6/21/94
------------------------------- -------------------------------
<PAGE>
DATE: 06/21/1994 FIXED ASSET MANAGEMENT SYSTEM Version 7.00 PAGE: 1
TIME: 14:58:20 Report Maker
FIXED ASSETS BY LOCATION
For the Period 07/01/1993 to 06/30/1994
<TABLE>
Entity Number : 00001 Perkin-Elmer Corporation
<CAPTION>
Ending Ending Net Book
Ent. Asset LOC. Cost Acct Net Basis Accumulated Value
No. Number Description CODE DIVISION Center Number FIN FIN FIN
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
00001 16708 COMPRESSOR - ING/RANDIOTE 6665 100 0115 2814 3950 3950 0
00001 16726 AIR DRYER SYS W/AFTERCOOL 6665 100 0115 2814 2283 2283 0
00001 18743 NICKEL PLATE INPUT SYS 6665 100 0115 2814 34632 34632 0
00001 28299 PAGING SYSTEM 6665 100 0115 2814 1834 1761 73
00001 28301 ARCHITECT SERV-MEZZANINE 6665 100 0115 2814 3476 3338 138
00001 28357 HONEYWELL EMERGNCY EVACSYS 6665 100 0115 2814 6036 4477 1559
00001 28482 SIX FL. DRAINS IR MAV. JE12 6665 100 0115 2814 15245 9782 5463
00001 59065 WALTON STEAM HUMIDIFIER 6665 100 0115 2814 2181 1181 1000
00001 59066 WALTON STEAM HUMIDIFIER 6665 100 0115 2814 2181 1181 1000
00001 59074 HVAC. SYS. FOR SPEC. PROG. 6665 100 0115 2814 9675 8734 941
00001 75555 AIR POLLUTION CONTROL SYS. 6665 100 0115 2814 6828 6828 0
00001 75634 WATER TOWER W/PUMP-GCKA5 6665 100 0115 2814 996 996 0
00001 75774 LAND-GARDEN GROVE 7.93 AC 6665 100 0115 2811 450509 0 450509
00001 76092 ADD GARDEN GROVE BUILDING 6665 100 0115 2813 2929724 1169781 1759943
00001 76107 PARKING AREA-GARDEN GROVE 6665 100 0115 2812 79441 69792 9649
00001 76108 CARPET-GARDEN GROVE-AOD 6665 100 0115 2814 31596 29481 2115
00001 76207 CHAIN LINK FENCE-EAST PAR 6665 100 0115 2812 900 900 0
00001 76209 FENCEPAR@GATES-GARDEN GROVE 6665 100 0115 2812 3231 3231 0
00001 76226 CHAIN LINK FENCE 6665 100 0115 2812 8080 8000 0
00001 76227 AOD DLDG-AODL TO TAG 76092 6665 100 0115 2813 121149 45509 75640
00001 76233 SPRAY PAINT BOOT MMOO 200RX2 6665 100 0115 2814 15483 15483 0
00001 76234 BUILDING IMPROVE - COMPUTER 6665 100 0115 2814 16515 16515 0
00001 76235 BUILDING IMPROVE - ASSEMBLED 6665 100 0115 2814 18094 18094 0
00001 76285 BLDGIMPROVE-ELECTRONICK PL 6665 100 0115 2814 5620 5620 0
00001 76291 WEATHER PROTECTION COVER 6665 100 0115 2814 29806 29807 1999
00001 76481 GAS-ELEC-COATAREA 6665 100 0115 2814 47253 41991 5262
00001 76434 MEZZANINE 6665 100 0115 2814 10726 10300 426
00001 76435 MEZZANINE 6665 100 0115 2814 40160 38564 1596
00001 76437 PARKING LOT EXPANSION 6665 100 0115 2812 8904 8550 354
00001 7648101 A/C INST GAS/ELEC COAT AR 6665 100 0115 2814 17945 11515 6430
- ------------------------------------------------------------------------------------------------------------------------------------
Total Cost Center 0115 99950 3924373 1600276 2324097
- ------------------------------------------------------------------------------------------------------------------------------------
Total DIVISION 100 99950 3924373 1600276 2324097
</TABLE>
<PAGE>
DATE: 06/21/1994 FIXED ASSET MANAGEMENT SYSTEM Version 7.00 PAGE: 2
TIME: 14:58:20 Report Maker
FIXED ASSETS BY LOCATION
For the Period 07/01/1993 to 06/30/1994
<TABLE>
Entity Number : 00001 Perkin-Elmer Corporation
<CAPTION>
Ending Ending Net Book
Ent. Asset LOC. Cost Acct Net Basis Accumulated Value
No. Number Description CODE DIVISION Center Number FIN FIN FIN
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
00001 54685 EPSON EQUITY III 6665 211 0384 1647 2322 2322 0
00001 54686 SERVER 200 W/DISK DR VAX/VMS 6665 211 0384 1647 10496 7435 3061
00001 54687 TAPE DRIVE 95M8 6665 211 0384 1647 2086 1478 608
- ------------------------------------------------------------------------------------------------------------------------------------
Total Cost Center 0384 19995 14904 11235 3669
- ------------------------------------------------------------------------------------------------------------------------------------
Total DIVISION 211 19995 14904 11235 3669
- ------------------------------------------------------------------------------------------------------------------------------------
Total LOCATION CODE 6665 19945 3939277 1611511 2327766
- ------------------------------------------------------------------------------------------------------------------------------------
Grand Total 19945 3939277 1611511 2327766
</TABLE>
INTERCREDITOR AGREEMENT
THIS AMENDED INTERCREDITOR AGREEMENT (this "Agreement"), is dated as of
June 21, 1994 (the "Effective Date") notwithstanding the actual execution hereof
by the parties hereto on different and subsequent dates, and is by and among:
A. OPTICAL CORPORATION OF AMERICA, a Massachusetts corporation ("Borrower");
B. MASSACHUSETTS BUSINESS DEVELOPMENT CORPORATION, a Massachusetts corporation
("MBDC"), GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation ("GE
Capital"), SILICON VALLEY BANK, a California banking corporation ("Lender") and
MASSACHUSETTS CAPITAL RESOURCE COMPANY, a Massachusetts special purpose limited
partnership ("MCRC").
RECITALS
WHEREAS, pursuant to a Loan and Security Agreement and related
documentation, Lender provides a revolving line of credit to "Borrower" and
provides other credit accommodations to Borrower, all of which may be amended,
modified, extended, or renewed from time to time (the "Lender Credit"), and
Borrower has secured the Lender Credit by granting Lender security interests in
certain of Borrower's assets as more particularly described in the Loan and
Security Aqreement and related documents, as amended (the "Lender Credit
Documents"); and
WHEREAS, MBDC has entered into a Loan Agreement, as amended, with Borrower
whereby MBDC has loaned to Borrower the sum of $1,760,000.00 (the "MBDC Credit")
of which $1,216,000 was outstanding on the Effective Date, and Borrower has
secured the MBDC Credit by granting MBDC security interests in certain of
Borrower's assets, as more particularly described in the MBDC Loan Agreement
(the "MBDC Credit Documents"); and
WHEREAS, GE Capital has entered into a Master Security Agreement with
Borrower whereby GE Capital has loaned to Borrower the sum of $1,500,000 (the
"GE Capital Credit") on the Effective Date, and Borrower has secured the GE
Capital Credit by granting GE Capital security interests in certain of
Borrower's assets, as more particularly described in the GE Capital Master
Security Agreement (the "GE Capital Credit Documents"); and
WHEREAS, MCRC has entered into a Purchase Agreement, as amended, with
Borrower whereby MCRC has loaned to Borrower the sum of $1,500,000 (the "MCRC
Credit") all of which was outstanding on the Effective Date and Borrower has, at
MCRC's request and with the approval of the Lender, MBDC and GE Capital, secured
the MCRC Credit effective as of March 15, 1994 by granting MCRC security
interests in certain of Borrower's assets as more particularly
<PAGE>
described in an amending Agreement and a Security Agreement, both dated as of
March 15, 1994 between Borrower and MCRC (the "MCRC Credit Documents"); and
WHEREAS, with the intention that this Agreement shall constitute part of
the financing documentation referred to above with MBDC, GE Capital, the Lender
and MCRC, and each of MBDC, GE Capital, the Lender and MCRC have agreed to
execute this Agreement in order to establish the relative priorities of their
respective liens and security interests in Borrower's assets;
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. CERTAIN DEFINITIONS. In addition to the terms defined in the recitals
hereto, the terms "Accounts," "Inventory," "General Intangibles," "Equipment,"
"Deposit Accounts," "Chattel Paper," "Documents," "Instruments," and
"collateral" shall have the meanings ascribed to them by the Uniform Commercial
Code.
2. PRIORITIES.
A. ACCOUNTS, INVENTORY AND GENERAL INTANGIBLES
(i) The lien of Lender with respect to the Accounts, Inventory, Deposit
Accounts, General Intangibles, Chattel Paper, Documents and Instruments, and all
proceeds thereof and all books and records relating thereto granted to it and
arising pursuant to the Lender Credit Documents shall constitute a first
priority lien on all such collateral (the "Lender Collateral") as security for
present or future Lender Credit, plus interest, fees and expenses.
(ii) The lien of MBDC with respect to the Lender Collateral, granted to
it and arising pursuant to the MBDC Credit Documents shall constitute a second
priority lien on all such collateral as security for the MBDC Credit, plus
interest, fees and expenses.
(iii) The lien of MCRC with respect to the Lender Collateral, granted
to it and arising pursuant to the MCRC Credit Documents shall constitute a third
priority lien on all such collateral as security for the MCRC Credit, plus
interest, fees and expenses.
(iv) GE Capital neither claims any security interest in the Lender
Collateral and shall not hereafter acquire any security interest in the Lender
Collateral without the Lender's prior written consent.
-2-
<PAGE>
B. EQUIPMENT NOW IN MASSACHUSETTS
{i) The lien of MBDC with respect to all Equipment of the Borrower now
located in Massachusetts (whether or not such Equipment remains located in
Massachusetts) used or usable in connection with Borrower's business operations
including but not limited to, Equipment located at One Lyberty Way, Westford,
Massachusetts 01886 and 170 Locke Drive, Marlborough, Massachusetts 01752,
granted to it and arising pursuant to the MBDC Credit Documents, shall
constitute a first priority lien on all such collateral (the "MBDC Collateral")
as security for the MBDC Credit, plus interest, fees and expenses.
(ii) The lien of Lender with respect to all MBDC Collateral shall
constitute a second priority lien on all such collateral as security for present
or future Lender Credit, plus interest, fees and expenses.
(iii) The lien of MCRC with respect to all MBDC Collateral shall
constitute a third priority lien on all such collateral as security for present
or future MCRC Credit, plus interest, fees and expenses.
C. EQUIPMENT NOW IN CALIFORNIA
(i) The lien of GE Capital with respect to all Equipment of the
Borrower now located in California (whether or not such Equipment remains
located in California) used or usable in connection with Borrower's business
operations including, but not limited to, Equipment located at 7421 Orangewood
Avenue, Garden Grove, CA 92642, granted to it and arising pursuant to the GE
Capital Credit Documents, shall constitute a first priority lien on all such
collateral (the "GE Capital Collateral") as security for the GE Capital Credit,
plus interest, fees and expenses.
(ii) The lien of Lender with respect to all GE Capital Collateral shall
constitute a second priority lien on all such collateral as security for present
or future Lender Credit, plus interest, fees and expenses.
(iii) The lien of MBDC with respect to all GE Capital Collateral shall
constitute a third priority lien on all such collateral as security for present
or future MBDC Credit, plus interest, fees and expenses.
{iv) The lien of MCRC with respect to all GE Capital Collateral shall
constitute a fourth priority lien on all such collateral as security for present
or future MCRC Credit, plus interest, fees and expenses.
-3-
<PAGE>
D. PURCHASE MONEY SECURITY INTERESTS. MBDC, GE Capital, the Lender and
MCRC agree to advise each other on a best efforts basis of any intent to provide
financing to Borrower on a purchase money priority basis. Notwithstanding the
foregoing, any future advances to Borrower by Lender or MBDC or GE Capital or
MCRC to finance the purchase of equipment with respect to which the Lender or
MBDC or GE Capital or MCRC shall be entitled to purchase money priority under
the Uniform Commercial Code shall, to the extent of any such purchase money
security interest, be senior to any liens referred to herein notwithstanding any
other provisions contained herein.
3. DISTRIBUTION OF PROCEEDS OF COLLATERAL. In the event of any
distribution of the proceeds of the collateral following default, whether by
reason of liquidation, bankruptcy, arrangement, receivership, assignment for the
benefit of creditors or any other action or proceeding involving the
readjustment of the obligations and indebtedness of Borrower, or the application
of the assets of Borrower to the payment or liquidation thereof, or as a result
of foreclosure or the dissolution or winding up of Borrower's assets, all
distributions of proceeds of the collateral shall be made to the Lender, to GE
Capital, to MBDC and to MCRC in accordance with their respective priorities of
liens, as set forth in Section 2 above. Each party agrees that should it receive
monies from the collection sale, liquidation, casualty, or other disposition of,
or as a result of its lien in, the collateral, at any time during the term of
this Agreement, it will, unless otherwise restricted or prohibited by law, hold
the same in trust for and promptly pay over the same to the party entitled to
receive such monies to the extent that the same is secured by the priorities of
liens provided hereunder.
4. NOTICES OF DEFAULT. The Lender, GE Capital, MBDC and MCRC agree to
give each other copies of all notices being provided to Borrower of default,
acceleration, commencement of foreclosure proceedings or exercise of any power
of sale pursuant to the Lender Credit Documents, the MBDC Credit Documenus, the
GE Capital Credit Documents or the MCRC Credit Documents, in each case
concurrently with the giving of such notice to Borrower; provided, however, that
no failure of any party to give such notice shall affect the relative priorities
of the liens established in this Agreement, or the exercise by any party of its
rights and remedies under its financing documentation.
5. REMEDIES. MBDC agrees that it shall not seek to enforce its security
interest in the Lender Collateral, nor shall MBDC co11ect any accounts of
Borrower or in any manner interfere with Lender's security interest in the
Lender Collateral unless and until MBDC receives written notice from Lender that
the Lender Credit has been satisfied in full. Lender agrees that it shall not
seek to enforce its security interest in the MBDC Collateral or in any manner
interfere with MBDC's security interest in the MBDC Collateral unless and until
Lender receives written notice from MBDC that the MBDC Credit has been satisfied
in full. Lender
-4-
<PAGE>
agrees that it shall not seek to enforce its security interest in the GE Capital
Collateral or in any manner interfere with GE Capital's security interest in the
GE Capital Collateral unless and until Lender receives written notice from GE
Capital that the GE Capital Credit has been satisfied in full. MBDC agrees that
it shall not seek to enforce its security interest, if any, in the GE Capital
Collateral or in any manner interfere with GE Capital's security interest in the
GE Capital Collateral unless and until MBDC receives written notice from GE
Capital that the GE Capital Credit has been satisfied in full. MCRC agrees that
it shall not seek to enforce its security interest in the Lender Collateral, nor
shall MCRC collect any accounts of Borrower or in any manner interfere with
Lender's security interest in the Lender Collateral unless and until MCRC
receives written notice from Lender that the Lender Credit has been satisfied in
full. MCRC agrees that it shall not seek to enforce its security interest in the
MBDC Collateral, nor shall MCRC collect any accounts of Borrower or in any
manner interfere with MBDC's security interest in the MBDC Collateral unless and
until MCRC receives written notice from MBDC Collateral unless and until MCRC
receives written notice from MBDC that the MBDC Credit has been satisfied in
full. MCRC agrees that it shall not seek to enforce its security interest in the
GE Capital Collateral, nor shall MCRC collect any accounts of Borrower or in any
manner interfere with GE Capital's security interest in the GE Capital
Collateral unless and until MCRC receives written notice from GE Capital that
the GE Capital Credit has been satisfied in full.
6. TERM. This Agreement shall be irrevocable by the Lender, GE Capital,
MBDC and MCRC until all indebtedness, obligations, and liabilities of Borrower
to Lender, GE Capital, MBDC and MCRC, respectively, have been paid and fully
satisfied and all financing arrangements between Borrower, Lender, MBDC, GE
Capital and MCRC have been terminated.
7. ADDITIONAL ASSURANCES. The parties agree to execute, acknowledge and
deliver to each other all other and further instruments, documents, or
assurances that either party may reasonably request to give full force and
effect to the provisions of this Agreement.
8. PARTIES. This Agreement shall be binding upon, and shall inure to
the benefit of, the parties hereto, and their respective affiliates, successors,
and assigns. The term "Borrower" as used herein shall also refer to the
successors and assigns of "Borrower", including without limitation, a receiver,
trustee, custodian, or debtor-in-possession.
9. NOTICES. All notices, requests, demands, and other communications
required or permitted hereunder shall be in writing, deposited in the United
States mails, certified mail, return receipt requested, with proper postage
prepaid, and addressed to the party to be notified as follows, unless such party
has specified by notice given in accordance herewith of another address:
-5-
<PAGE>
A. IF TO THE LENDER: SILICON VALLEY BANK
4600 Campus Drive Suite 105
Newport Beach, CA 92660
Attn: Mr. Jerry Dale
B. IF TO MBDC: MASSACHUSETTS BUSINESS
DEVELOPMENT CORPORATION
One Liberty Square
Boston, MA 02109
Attn: President
C. IF TO GE CAPITAL: GENERAL ELECTRIC CAPITAL
CORPORATION
7700 Irvine Center Drive
Suite 400
Irvine, CA 92714
D. IF TO MCRC: MASSACHUSETTS CAPITAL
RESOURCE COMPANY
420 Boylston Street
Boston, Massachusetts 02116
Attn: Richard W. Anderson, Senior Vice President
E. IF TO BORROWER: OPTICAL CORPORATION OF AMERICA
7421 Orangewood Avenue
Garden Grove, CA 92642
Attn: Treasurer
10. RELATIONSHIP OF PARTIES. This Agreement is entered into solely for
the purposes set forth above and no party assumes any responsibiiity to advise
any other party of information regarding the financial condition of Borrower, or
regarding the collateral, or of any other circumstances bearing upon the risk of
nonpayment of the obligations of Borrower. Each party shall be responsible for
its relationship with Borrower and each party may alter, amend, supplement,
release, discharge, or otherwise modify any terms of their respective Notes,
Loan Agreements and Credit Documents with Borrower without notice to, or consent
of the other party, provided that no such alteration, amendment, supplement,
release, discharge or modification shall affect the relative priorities of the
parties hereto.
11. NO THIRD PARTY BENEFICIARIES. Nothing contained in this Agreement
shall be deemed to indicate that this Agreement has been entered into for the
benefit of any person other than the parties hereto.
12. SECTION TITLES. The section titles contained in this Agreement are
and shall be without substantive meaning or content of any kind whatsoever and
are not part of the agreement between the parties hereto.
-6-
<PAGE>
13. TERMINATION OF PRIOR INTERCREDITOR AGREEMENTS. Lender, MBDC, MCRC
and Borrower, to the extent of their respective interests therein, hereby
terminate, effective with the execution of this Agreement, the following
Intercreditor Agreements:
A. Dated June 25, 1991 by and among Borrower, MBDC and OCA Applied
Optics, Inc.;
B. Dated March 31, 1992 by and among Borrower, MBDC and OCA Applied
Optics, Inc.; and
C. Dated February 16, 1993 between MBDC and Bank of the West.
D. Dated March 31, 1993 by and among Borrower, Bank of the West, MBDC
and Fleet.
E. Dated March 31, 1994 by and among Borrower, Silicon Valley Bank,
MBDC, Fleet and MCRC.
14. GENERAL. This Agreement shall in no way be construed as a
commitment or agreement by MBDC, GE Capital, Lender or MCRC to continue
financing arrangements with the Borrower and they may terminate such
arrangements at any time, in accordance with their respective agreement with the
Borrower. MBDC, GE Capital, Lender and MCRC each represent and warrant to the
other that it has not heretofore transferred or assigned any Financing Statement
naming Borrower as debtor and it as secured party, and that it will not do so
without first delivering a copy of this Agreement to the proposed transferee or
assignee. This Agreement is solely for the benefit of MBDC, GE Capital, Lender
and MCRC and their respective successors and assigns, and neither the Borrower
nor any other person shall have any right, benefit, priority or interest under,
or because of the existence of, this Agreement. This Agreement sets forth in
full the terms of agreement among the parties with respect to the subject matter
hereof, and may not be modified or amended, nor may any rights hereunder be
waived, except in a writing signed by MBDC, GE Capital, Lender and MCRC. In the
event of any litigation between any of the parties based upon or arising out of
this Agreement, the prevailing party shall be entitled to recover all of its
costs and expensed (including without limitation reasonable attorneys' fees)
from the non-prevailing party.
-7-
<PAGE>
IN WITNESS WHEREOF, This Agreement has been duly executed as an
instrument under seal, all as of the date first above written.
SILICON VALLEY BANK
OPTICAL CORPORATION OF
AMERICA
By: /s/ JERRY L. DALE
---------------------------------
Its: VICE PRESIDENT
--------------------------------
By: /s/ DONALD A. JOHNSON
----------------------------------
Chairman
MASSACHUSETTS BUSINESS
DEVELOPMENT CORPORATION
By: /s/ GRESH LATTIMORE, JR.
---------------------------------
Its: VICE PRESIDENT
MASSACHUSETTS CAPITAL RESOURCE GENERAL ELECTRICAL CAPITAL
COMPANY CORPORATION
By: /s/ RICHARD W. ANDERSON By: /s/ MICHELLE H. STEINBERG
---------------------------------- ---------------------------------
Its Senior Vice President Its REGIONAL CREDIT MANAGER
------------------------------
-8-
PROMISSORY NOTE
12-28-95
--------
(DATE)
7421 Orangewood Avenue, Garden Grove, Orange County, CA 92642
-------------------------------------------------------------
(Address of Maker)
FOR VALUE RECEIVED, Optical Corporation of America dba OCA Applied Optics
("Maker") promises, jointly and severally if more than one, to pay to the order
of General Electric Capital Corporation or any subsequent holder hereof (each, a
"Payee") at its office located at 7700 Irvine Center Drive Suite 400, Irvine, CA
92718 or at such other place as Payee or the holder hereof may designate, the
principal sum of Two Hundred Three Thousand Nine Hundred Eighty-Seven and 63/100
Dollars ($203,987.63), with interest on the unpaid principal balance, from the
date hereof through and including the dates of payment, at a fixed, simple
interest rate of Nine and Ninety-Three Hundredths percent (9.93%) per annum, to
be paid in lawful money of the United States, in Sixty (60) consecutive monthly
installments of principal and interest of Four Thousand Two Hundred Seventy-Two
and 29/100 Dollars ($4,872.29) each ("Periodic Intallment") and a final
installment which shall be in the amount of the total outstanding principal and
interest. The first Periodic Installment shall be due and payable on 1-28-96 and
the following Periodic Installments and the final installment shall be due and
payable on the same day of each succeeding period (each, a "Payment Date").
All payments shall be applied first to interest and then to principal. The
acceptance by Payee of any payment which is less than payment in full of all
amounts due and owing at such time shall not constitute a waiver of Payee's
right to receive payment in full at such time or at any prior or subsequent
time. Interest shall be calculated on the basis of a 365 day year (366 day leap
year). The payment of any Periodic Installment after its due date shall result
in a corresponding decrease in the portion of the Periodic Installment credited
to the remaining unpaid principal balance. The payment of any Periodic
Installment prior to its due date shall result in a corresponding increase in
the portion of the Periodic Installment credited to the remaining unpaid
principal balance.
The Maker hereby expressly authorizes the Payee to insert the date value is
actually given in the blank space on the face hereof and on all related
documents pertaining hereto.
This Note may be secured by a security agreement, chattel mortgage, pledge
agreement or like instrument (each of which is hereinafter called a "Security
Agreement.")
Time is of the essence hereof. If any installment or any other sum due under
this Note or any Security Agreement is not received within ten (10) days after
its due date, the Maker agrees to pay, in addition to the amount of each such
installment or other sum, a late payment charge of five percent (5%) of the
amount of said installment or other sum, but not exceeding any lawful maximum.
If (i) Maker fails to make payment of any amount due hereunder within (10) days
after the same becomes due and payable; or (ii) Maker is in default, or fails to
perform, under any term or condition contained in any Security Agreement, then
the entire principal sum remaining unpaid, together with all accrued interest
thereon and any other sum payable under this Note or any Security Agreement, at
the election of Payee, shall immediately become due and payable, with interest
thereon at the lesser of eighteen percent (18%) per annum or the highest rate
not prohibited by applicable law from the date of such accelerated maturity
until paid (both before and after any judgment).
<TABLE>
The Maker may prepay in full, but not in part, its entire indebtedness hereunder
upon payment of an additional sum as a premium equal to the following
percentages of the original principal balance for the indicated period:
<S> <C> <C>
Prior to the first annual anniversary date of this Note: three percent (3%)
Thereafter and prior to the second annual anniversary date of this Note: two percent (2%)
Thereafter and prior to the third annual anniversary date of this Note: one percent (1%)
Thereafter and prior to the fourth annual anniversary date of this Note: zero percent (0%)
Thereafter and prior to the fifth annual anniversary date of this Note: zero percent (0%)
</TABLE>
and zero percent (0%) thereafter, plus all other sums due hereunder or
under any Security Agreement.
It is the intention of the parties hereto to comply with the applicable usary
laws; accordingly, it is agreed that, notwithstanding any provision to the
contrary in this Note or any Security Agreement, in no event shall this Note or
any Security Agreement require the payment or permit the collection of interest
in excess of the maximum amount permitted by applicable law. If any such excess
interest is contracted for, charged or received under this Note or any Security
Agreement, or if all of the principal balance shall be prepaid, so that under
any of such circumstances the amount of interest contracted for, charged or
received under this Note or any Security Agreement on the principal balance
shall exceed the maximum amount of interest permitted by applicable law, then in
such event (a) the provisions of this paragraph shall govern and control, (b)
neither Maker nor any other person or entity now or hereafter liable for the
payment hereof shall be obligated to pay the amount of such interest to the
extent that it is in excess of the maximum amount of interest permitted by
applicable law, (c) any such excess which may have been collected shall be
either applied as a credit against the then unpaid principal balance or refunded
to Maker, at the option of the Payee, and (d) the effective rate of interest
shall be automatically reduced to the maximum lawful contract rate allowed under
applicable law as now or hereafter construed by the courts having jurisdiction
thereof. It is further agreed that without limitation of the foregoing, all
calculations of the rate of interest contracted for, charged or received under
this Note or any Security Agreement which are made for the purpose of
determining whether such rate exceeds the maximum lawful contract rate, shall be
made, to the extent permitted by applicable law, by amortizing, prorating,
allocating and spreading in equal parts during the period of the full stated
term of the indebtedness evidenced hereby, all interest at any time contracted
for, charged or received from Maker or otherwise by Payee in connection with
such indebtedness; provided, however, that if any appiicable state law is
amended or the law of the United Status of America preempts any applicable state
law, so that it becomes lawful for the Payee to receive a greater interest per
annum rate than is presently allowed, the Maker agrees that, on the effective
date of such amendment or preemption, as the case may be, the lawful maximum
hereunder shall be increased to the maximum interest per annum rate allowed by
the amended state law or the law of the United States of America.
The Maker and all sureties, endorsers, guarantors or any others (each such
person, other than the Maker, an "Obligor") who may at any time become liable or
the payment hereof jointly and severally consent hereby to any and all
extensions of time, renewals, waivers or modifications of, and all substitutions
or releases of, security or of any party, primarily or secondarily liable on
this Note or any Security Agreement or any term and provision of either, which
may be made, granted or consented to by Payee, and agree that suit may be
brought and maintained against any one or more of them, at the election of Payee
without joinder of any other as a party thereto, and that Payee shall not be
required first to foreclose, proceed against, or exhaust any security hereof in
order to enforce payment of this Note. The Maker and each Obligor hereby waives
presentment, demand for payment, notice of nonpayment, protest, notice of
protest, notice of dishonor and all other notices in connection herewith, as
well as filing of suit (if permitted by law} and diligence in collecting
<PAGE>
this Note or enforcing any of the security hereof, and agrees to pay (if
permitted by law) all expenses incurred in collection, including Payee's actual
attorneys' fees. Maker and each Obligor agrees that fees not in excess of twenty
percent (20%) of the amount then due shall be deemed reasonable.
THE MAKER HEREBY UNCONDITIONALLY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM
OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR INDIRECTLY, THIS
NOTE, ANY OF THE RELATED DOCUMENTS, ANY DEALINGS BETWEEN MAKER AND PAYEE
RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION OR ANY RELATED TRANSACTIONS,
AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN MAKER AND PAYEE. THE
SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES
THAT MAY BE FILED IN ANY COURT (INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS,
TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY
CLAIMS.) THIS WAIVER IS IRREVOCABLE MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS NOTE, ANY RELATED DOCUMENTS, OR
TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS TRANSACTION OR ANY RELATED
TRANSACTION. IN THE EVENT OF LITIGATION, THIS NOTE MAY BE FILED AS A WRITTEN
CONSENT TO A TRIAL BY THE COURT.
This Note and any Security Agreement constitute the entire agreement of the
Maker and Payee with respect to the subject matter hereof and supercedes all
prior understandings, agreements and representations, express or implied.
No variation or modification of this Note, or any waiver of any of its
provisions or conditions, shall be valid unless in writing and signed by an
authorized representative of Maker and Payee. Any such waiver, consent,
modification or change shall be effective only in the specific instance and for
the specific purpose given.
Any provision in this Note or any Security Agreement which is in conflict with
any statute, law or applicable rule shall be deemed omitted, modified or altered
to conform thereto.
Optical Corporation of America
dba OCA Applied Optics
By: /s/ Donald A. Johnson (L.S.)
- ------------------------------------ -------------------------------
(Witness) (Signature)
Donald A. Johnson, Chairman
- ------------------------------------ -----------------------------------
(Print Name) Print name (and title, if applicable)
04-2868710
- ------------------------------------ (Federal tax identification number)
(Address)
3010 (3/91)
CROSS-COLLATERAL AND CROSS-DEFAULT AGREEMENT
General Electric Capital Corporation
7700 Irvine Center Drive Suite 400
Irvine, CA 92718
Gentlemen:
You have entered into or purchased one or more conditional sale contracts,
lease agreements, chattel mortgages, security agreements, notes and other choses
in action (herein designated "Accounts") arising from the bona fide sale or
lease to us, by various vendors or lessors, of equipment and inventory, (herein
designated "Collateral") and/or you have made direct loans to or otherwise
extended credit to us evidenced by interests in Collateral.
In order to induce you to extend our time of payment on one or more
Accounts and/or to make additional loans to us and/or to purchase additional
Accounts and/or to lease us additional equipment, and in consideration of you so
doing, and for other good and valuable consideration, the receipt of which we
hereby acknowledge, we agree as follows:
All presently existing and hereafter acquired Collateral in which you have
or shall have a security interest shall secure the payment and performance of
all of our liabilities and obligations to you of every kind and character,
whether joint or several, direct or indirect, absolute or contingent, due or to
become due, and whether under presently existing or hereafter created Accounts
or agreements, or otherwise.
We further agree that your security interest in the property covered by any
Account now held or hereafter acquired by you shall not be terminated in whole
or in part until and unless all indebtedness of every kind, due or to become
due, owed by us to you is fully paid and satisfied and the terms of every
Account have been fully performed by us. It is further agreed that you are to
retain your security interest in all property covered by all Accounts held or
acquired by you, as security for payment and performance under each such
Account, notwithstanding the fact that one or more of such Accounts may become
fully paid.
This instrument is intended to create cross-default and cross-security
between and among all the within described Accounts now owned or hereafter
acquired by you.
A default under any Account or agreement shall be deemed to be a default
under all other Accounts and agreements. A default shall result if we fail to
pay any sum when due on any Account or agreement, or if we breach any of the
other terms and conditions thereof, or if we become insolvent, cease to do
business as a going concern, make an assignment for the benefit of creditors, or
if a petition for a receiver or in bankruptcy is filed by or against us, or if
any of our property is seized, attached or levied upon. Upon our default any or
all Accounts and agreements shall, at your option, become immediately due and
payable without notice or demand to us or any other party obligated thereon, and
you shall have and may exercise any and all rights and remedies of a secured
party under the Uniform Commercial Code as enacted in the applicable
jurisdiction and as otherwise granted to you under any Account or other
agreement. We hereby waive, to the maximum extent permitted by law, notices of
default, notices of repossession and sale or other disposition of collateral,
and all other notices, and in the event any such notice cannot be waived, we
agree that if such notice is mailed to us postage prepaid at the address shown
below at least five (5) days prior to the exercise by you of any of your rights
or remedies, such notice shall be deemed to be reasonable and shall fully
satisfy any requirement for giving notice.
All rights granted to you hereunder sha11 be cumulative and not
alternative, shall be in addition to and shall in no manner impair or affect
your rights and remedies under any existing Account, agreement, statute or role
of law.
This agreement may not be varied or altered nor its provisions waived
except by your duly executed written agreement. This agreement shall inure to
the benefit of your successors and assigns and shall be binding upon our heirs,
administrators, executors, legal representatives, successors and assigns.
IN WITNESS WHEREOF, this agreement is executed this 28th day of December,
1995.
Optical Corporation of America dba OCA Applied Optics
(Name of Proprietorship, Partnership or Corporation,
as applicable)
By: /s/ DONALD A. JOHNSON
---------------------------------------------
(Signature)
Title: Chairman
---------------------------------------------
(Owner, Partner or Officer, as applicable)
Address: 7421 Orangewood Ave, Garden Grove, CA 92642
---------------------------------------------
---------------------------------------------
---------------------------------------------
PROMISSORY NOTE
DATE: February 1, 1994
FOR VALUE RECEIVED, the undersigned, OPTICAL CORPORATION OF AMERICA, a
corporation organized and existing under the laws of the Commonwealth of
Massachusetts, with its principal place of business in Garden Grove, California
(herein called "Maker") promises to pay to the order of the Perkin-Elmer
Corporation, a New York Corporation with its principal place of business at 761
Main Street, Norwalk, Connecticut (the "Corporation"), at such place, or other
place as may be designated in writing by the holder of this Note, the principal
sum of Four Hundred Thousand Dollars ($400,000), plus interest on the
outstanding principal balance at the rate of ten percent (10%) per annum.
Payments of interest are due quarterly and shall commence on May 1, 1994, and be
payable on the first day of August, November, February and May in each year
thereafter in accordance with Payment Schedule I attached hereto. Payments of
principal are due in five (5) quarterly installments of Eighty Thousand Dollars
($80,000) commencing on February 1, 1996, and on the first day May, August, and
November 1996, with a final payment on February 1, 1997 in accordance with
Payment Schedule I attached hereto.
Should Maker default in any obligation under this Note, the holder of this Note
at its option may, without giving notice to the Maker, in additional to all
other remedies, declare the whole sum of unpaid principal and accrued interest
to be due and payable, and thereafter the whole sum of unpaid principal and
accrued interest shall forthwith become due and payable.
The Maker waives demand, presentment for payment, notice of dishonor, protest
and notice of protest; waives any and all lack of diligence or delays in the
collection or enforcement hereof; and consents that the time of payment may be
extended or this Note may be renewed without notice, and without releasing the
undersigned.
In event that any action shall be instituted on this Note, or any action or
proceeding is taken with respect to a default hereunder, the prevailing part in
any such action or proceeding shall be paid by the other party all expenses in
connection therewith, including reasonable attorneys' fees.
<PAGE>
This Note shall be governed by and be construed in accordance with the laws of
the State of Connecticut.
No course of dealing between the Maker and the holder of this Note and no delay
on the part of the holder of this Note in exercising any rights of the holder of
this Note shall operate as a waiver of the rights of the holder of this Note;
nor shall any delay, unless agreed to in writing by the Maker and the holder of
this Note, constitute a forbearance. No covenant or other provision of this Note
nor any default may be waived otherwise than by a written instrument signed by
the party so waiving such covenant or other provisions or default; provided
however, that no such waiver shall extend to or impair any obligation not
expressly waived, or impair any right consequent thereon. Any waiver may be
given subject to satisfaction of conditions stated therein.
Any other provisions herein or in any other agreement between the holder hereof
and Maker to the contrary notwithstanding, in no event shall the amount paid or
agreed to be paid as interest exceed the highest lawful rate, then the latter
shall be the applicable interest under this Note.
The Maker hereby waives all fights of set-off and counterclaim with respect to
this Note including rights of set-off and counterclaim with respect to this Note
which may arise from claims heretofore unknown to the Maker.
IN WITNESS WHEREOF, this Note has been duly executed bv Maker as of the day and
year first above written.
OPTICAL CORPORATION OF AMERICA
By: /s/ DONALD A. JOHNSON
---------------------------------
Name: Donald A. Johnson
Title: Chairman
<PAGE>
PAYMENT SCHEDULE I
(to Promissory Note dated February 1, 1994 from OPTICAL CORPORATION OF AMERICA)
Rent $ 51,214
Months 8
--------
Arrearage 409,712
Payment
with Note (9,712)
--------
Note $400,000
QUARTERLY INTEREST
Payments beginning
5/1/94 $10,000
PRINCIPAL & INTEREST
Payments per schedule below.
- --------------------------------------------------------------------------------
Beginning Ending
Balance Payment Interest Principal Balance
- --------------------------------------------------------------------------------
2/1/96 400,000 90,000 10,000 80,000 320,000
5/1/96 320,000 88,000 8,000 80,000 240,000
8/1/96 240,000 86,000 6,000 80,000 160,000
11/1/96 160,000 84,000 4,000 80,000 80,000
2/1/97 80,000 82,000 2,000 80,000 0
- --------------------------------------------------------------------------------
----
MCRC
----
Richard W. Anderson
Senior Vice President
MASSACHUSETTS CAPITAL RESOURCE COMPANY
The Berkeley at 420 Boylston Street
Boston, MA 02116
(617) 536-3900 Fax (617) 536-7930
<PAGE>
OPTICAL CORPORATION OF AMERICA
SALE OF SUBORDINATED NOTES AND WARRANTS
May 28, 1992
Closing Documents
-----------------
Document
Number Description
- -------- -----------
1. Subordinated Note and Warrant Purchase Agreement, dated as of May 28,
1992, (the "Agreement") between Optical Corporation of America (the
"Company") and Massachusetts Capital Resource Company ("MCRC").
2. Subordinated Note No. Sub-l, due June 30, 1999, from the Company to
MCRC in the principal amount of $1,500,000.
3. Warrant No. W-l, from the Company to MCRC exercisable for the purchase
of 76,000 shares of Common Stock of the Company.
<PAGE>
OPTICAL CORPORATION OF AMERICA
Subordinated Note and Warrant Purchase Agreement
Dated as of May 28, 1992
<PAGE>
OPTICAL CORPORATION OF AMERICA
Note and Warrant Purchase Agreement
Dated as of May 28, 1992
INDEX
Page
----
ARTICLE I
Purchase, Sale and Terms of Notes and Warrants
1.01. The Notes ........................................................ 1
1.02. The Warrants ..................................................... 1
1.03. Purchase and Sale of Notes and Warrants .......................... 1
(a) The Closing ................................................ 1
(b) Allocation of Purchase Price ............................... 2
(c) Use of Proceeds ............................................ 2
1.04. Payments and Endorsements ........................................ 2
1.05. Redemptions ...................................................... 2
(a) Required Redemptions ....................................... 2
(b) Optional Redemptions Without Premium ....................... 3
(c) Optional Redemptions With Premium .......................... 3
(d) Notice of Redemptions; Pro rata Redemptions................. 3
1.06. Payment on Non-Business Days ..................................... 3
1.07. Registration, etc ................................................ 4
1.08. Transfer and Exchange of Notes ................................... 4
1.09. Replacement of Notes ............................................. 4
1.10. Subordination .................................................... 5
(a) Payment of Senior Debt ..................................... 5
(b) No Payment on Notes Under Certain Conditions................ 6
(c) Payments Held in Trust ..................................... 6
(d) Subrogation ................................................ 6
(e) Scope of Section ........................................... 7
(f) Survival of Rights ......................................... 7
(g) Amendment or Waiver ........................................ 7
(h) Senior Debt Defined ........................................ 7
1.11. Representations by the Purchaser ................................. 8
1.12. Disclosure of Information by the Purchaser ....................... 8
ARTICLE II
Conditions to Purchaser's Obligation
2.01. Representations and Warranties ................................... 9
2.02. Documentation at Closing ......................................... 9
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ARTICLE III
Representations and Warranties
3.01. Organization and Standing ....................................... 10
3.02. Corporate Action ................................................ 10
3.03. Governmental Approvals .......................................... 11
3.04. Litigation ...................................................... 11
3.05. Compliance with Other Instruments ............................... 11
3.06. Federal Reserve Regulations ..................................... 12
3.07. Title to Assets, Patents ........................................ 12
3.08. Financial Information ........................................... 13
3.09 Taxes ........................................................... 13
3.l0. ERISA ........................................................... 13
3.11. Transactions with Affiliates .................................... 14
3.12. Assumptions or Guaranties of Indebtedness
of Other Persons ................................................ 14
3.13. Investments in Other Persons .................................... 14
3.14. Equal Employment Opportunity .................................... 14
3.15. Status of Notes and Warrants as Qualified
Investments ..................................................... 15
3.16. Securities Act .................................................. 15
3.17. Disclosure ...................................................... 15
3.18. No Brokers or Finders ........................................... 16
3.19. Other Agreements of Officers .................................... 16
3.20. Capitalization; Status of Capital Stock ......................... 16
3.21. Labor Relations ................................................. 17
3.22. Insurance ....................................................... 17
3.23. Books and Records ............................................... 17
3.24. Foreign Corrupt Practices Act ................................... 17
3.25. Environmental Matters ........................................... 17
3.26. Registration Rights ............................................. 18
ARTICLE IV
Covenants of the Company
4.01. Affirmative Covenants of the Company Other
Than Reporting Requirements ..................................... 18
(a) Punctual Payment .......................................... 18
(b) Payment of Taxes and Trade Debt ........................... 18
(c) Maintenance of Insurance .................................. 19
(d) Preservation of Corporate Existence ....................... 19
(e) Compliance with Laws ...................................... 19
(f) Visitation Rights ......................................... 19
(g) Keeping of Records and Books of Account ................... 20
(h) Maintenance of Properties, etc ............................ 20
(i) Compliance with ERISA ..................................... 20
(j) Maintenance of Debt to Equity Ratio ....................... 20
(k) Interest Coverage ......................................... 20
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(l) Foreign Corrupt Practices Act ............................. 20
(m) Equal Employment Opportunity .............................. 21
(n) Status of Notes and Warrants as
Qualified Investments ..................................... 21
(o) Attendance at Board Meetings .............................. 21
(p) Compensation .............................................. 21
(q) Guaranty .................................................. 22
(r) Budget .................................................... 22
4.02. Negative Covenants of the Company ............................... 22
(a) Liens ..................................................... 22
(b) Indebtedness .............................................. 23
(c) Lease Obligations ......................................... 23
(d) Assumptions or Guaranties of Indebtedness
of Other Persons .......................................... 23
(e) Mergers, Sale of Assets, etc .............................. 24
(f) Investments in Other Persons .............................. 24
(g) Distributions ............................................. 25
(h) Dealings with Affiliates .................................. 26
(i) Maintenance of Ownership of Subsidiaries .................. 26
(j) Change in Nature of Business .............................. 26
4.03. Reporting Requirements .......................................... 26
4.04. Termination of Certain Covenants ................................ 28
ARTICLE V
Reqistration Rights
5.01. "Piggy Back" Registration ....................................... 28
5.02. Required Registration ........................................... 29
5.03. Registration on Form S-3 ........................................ 29
5.04. Effectiveness ................................................... 29
5.05. Indemnification of Holder of Registrable Shares ................. 30
5.06. Indemnification of Company ...................................... 31
5.07. Exchange Act Registration ....................................... 32
5.08. Damages ......................................................... 32
5.09. Further Obligations of the Company .............................. 32
5.10. Limitations ..................................................... 33
5.11. Letter of Opinion of Counsel in Lieu of
Registration .................................................... 34
5.12. Expenses ........................................................ 34
ARTICLE VI
Events of Default
6.01. Events of Default ............................................... 34
6.02. Annulment of Defaults ........................................... 36
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ARTICLE VII
Definitions and Accounting Terms
7.01. Certain Defined Terms ........................................... 37
7.02 Accounting Terms ................................................ 41
ARTICLE VIII
Miscellaneous
8.01. No Waiver; Cumulative Remedies .................................. 41
8.02. Amendments, Waivers and Consents ................................ 41
8.03. Addresses for Notices, etc ...................................... 42
8.04. Costs, Expenses and Taxes ....................................... 43
8.05. Binding Effect; Assignment ...................................... 43
8.06. Survival of Representations and Warranties ...................... 43
8.07. Prior Agreements ................................................ 43
8.08. Severability .................................................... 43
8.09. Governing Law ................................................... 43
8.10. Headings ........................................................ 43
8.11. Sealed Instrument ............................................... 43
8.12 Counterparts .................................................... 44
8.13. Further Assurances .............................................. 44
EXHIBITS
1.01 Form of Subordinated Notes
1.02 Form of Common Stock Purchase Warrants
2.02(a) Form of Guaranty
2.02(c) Matters to be Covered by Opinion Letter
3.04 Schedule of Litigation
3.05 Schedule of Indebtedness
3.07 Schedule of Mortgages, Pledges, etc.
3.08 Financial Statements
3.08(a) Schedule of Certain Transactions
3.11 Schedule of Transactions with Affiliates
3.12 Schedule of Assumptions and Guaranties
3.15 Certificate re "Qualified Investments"
3.20 Schedule of Capital Stock, Options and Other Rights
3.25 Schedule of Environmental Matters
7.01(a) List of Key Employees
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<PAGE>
OPTICAL CORPORATION OF AMERICA
170 Locke Drive
Marlborough, Massachusetts 01752
As of May 28, 1992
Massachusetts Capital Resource Company
420 Boylston Street
Boston, Massachusetts 02116
Re: Subordinated Notes due 1999 and
Common Stock Purchase Warrants
Gentlemen:
Optical Corporation of America, a Massachusetts corporation (the
"Company"), hereby agrees with Massachusetts Capital Resource Company (the
"Purchaser") as follows:
ARTICLE I
PURCHASE, SALE AND TERMS OF NOTES AND WARRANTS
1.01. The Notes. The Company has authorized the issuance and sale to the
Purchaser of the Company's Subordinated Notes, due June 30, 1999, in the
original principal amount of $1,500,000. The Subordinated Notes shall be
substantially in the form set forth in Exhibit 1.01 hereto and are herein
referred to individually as a "Note" and collectively as the "Notes", which
terms shall also include any notes delivered in exchange or replacement
therefor.
1.02. The Warrants. The Company has also authorized the issuance and sale
to the Purchaser of the Company's Common Stock Purchase Warrants for the
purchase (subject to adjustment as provided therein) of 76,000 shares of the
Company's Common Stock. The Common Stock Purchase Warrants shall be
substantially in the form set forth in Exhibit 1.02 hereto and are herein
referred to individually as a "Warrant" and collectively as the "Warrants",
which terms shall also include any warrants delivered in exchange or replacement
therefor.
1.03. Purchase and Sale of Notes and Warrants.
(a) The Closing. The Company agrees to issue and sell to the
Purchaser, and, subject to and in reliance upon the representations, warranties,
terms and conditions of this Agreement, the Purchaser agrees to purchase the
Notes and the Warrants for an aggregate purchase price of $1,500,000. Such
purchase and sale shall take place at a closing (the "Closing") to
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be held at the office of Messrs. Testa, Hurwitz & Thibeault, Exchange Place, 53
State Street, Boston, Massachusetts, on May 28, 1992 at 2:00 P.M., or on such
other date and at such time as may be mutually agreed upon. At the Closing the
Company will initially issue one Note, payable to the order of the Purchaser, in
the principal amount of $1,500,000 and one Warrant, registered in the name of
the Purchaser, to purchase (subject to adjustment as provided therein) 76,000
shares of the Company's Common Stock, against delivery to the Company of a check
or a receipt of a wire transfer, in the amount of $1,500,000 in payment of the
full purchase price for the Notes and Warrants.
(b) Allocation of Purchase Price. The Company and the Purchaser,
having adverse interests and as a result of arm's length bargaining, agree that
(i) neither the Purchaser nor any of its partners has rendered or has agreed to
render any services to the Company in connection with this Agreement or the
issuance of the Notes and Warrants; (ii) the Warrants are not being issued as
compensation; and (iii) the assumed prices at which the Notes would be issued if
they were issued apart from the Warrants are 100% of the principal amount
thereof. The Company and the Purchaser recognize that this Agreement determines
the original issue discount to be taken into account as such by the Company and
the Purchaser for federal income tax purposes on the Notes and they agree to
adhere to this Agreement for such purposes.
(c) Use of Proceeds. The Company agrees to use the full proceeds
from the sale of the Notes and Warrants as working capital for its operations in
Massachusetts, including for the repayment of temporary financing obtained by it
with which to pay part of the purchase price for its acquisition on March 31,
1992 of certain assets of Contraves USA, Inc. pursuant to that certain Asset
Purchase Agreement, dated January 31, 1992, as amended by Amendment No. 1, dated
March 31, 1992. Further, the Company agrees that full proceeds from the sale of
the Notes and Warrants will be utilized for purposes which increase or maintain
equal opportunity employment in the Commonwealth of Massachusetts.
1.04. Payments and Endorsements. Payments of principal, interest and
premium, if any, on the Notes, shall be made directly by check duly mailed or
delivered to the Purchaser at its address referred to in Section 8.03 hereof,
without any presentment or notation of payment, except that prior to any
transfer of any Note, the holder of record shall endorse on such Note a record
of the date to which interest has been paid and all payments made on account of
principal of such Note.
1.05. Redemptions.
(a) Required Redemptions. Beginning on and with September 30, 1994,
and on the last day of December, March, June and September in each year
thereafter through and including June 30, 1999, the Company will redeem, without
premium, $75,000 in principal amount of the Notes, or such lesser amount as may
be
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then outstanding, together with all accrued and unpaid interest then due on the
amount so redeemed. On the stated or accelerated maturity of the Notes, the
Company will pay the principal amount of the Notes then outstanding together
with all accrued and unpaid interest then due thereon. No optional redemption of
less than all of the Notes shall affect the obligation of the Company to make
the redemptions required by this subsection.
(b) Optional Redemptions Without Premium. In addition to the
redemptions of the Notes required under subsection 1.05(a), on each required
redemption date with respect to the Notes, the Company may also voluntarily
redeem, together with all accrued and unpaid interest then due thereon, but
without premium, an additional principal amount of the Notes not to exceed the
amount of the required redemption due on such date. This right of redemption of
the Notes under this subsection 1.05(b) shall not be cumulative.
(c) Optional Redemptions With Premium. Except as provided in
subsections 1.05(a) and (b) and in addition thereto, the Company may at any
time, on or after July 1, 1992, (no optional redemption being permitted prior to
said date) redeem the Notes in whole or in part (in integral multiples of
$10,000) together with interest due on the amount so redeemed through the date
of redemption, and a premium equal to the percentage of the principal amount of
the Notes redeemed under this subsection applicable to the twelve month period
in which such redemption is made, as follows:
12-month period
ending Premium
--------------- -------
June 30, 1993 11%
June 30, 1994 9%
June 30, 1995 7%
June 30, 1996 5%
June 30, 1997 3%
June 30, 1998 2%
June 30, 1999 0%
(d) Notice of Redemptions; Pro rata Redemptions. Notice of any
optional redemptions pursuant to subsections 1.05(b) or (c) shall be given to
all registered holders of the Notes at least ten (10) business days prior to the
date of such redemption. Each redemption of Notes pursuant to subsections
1.05(a), (b) or (c) shall be made so that the Notes then held by each holder
shall be redeemed in a principal amount which shall bear the same ratio to the
total principal amount of Notes being redeemed as the principal amount of Notes
then held by such holder bears to the aggregate principal amount of the Notes
then outstanding.
1.06. Payment on Non-Business Days. Whenever any payment to be made
shall be due on a Saturday, Sunday or a public holiday
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under the laws of the Commonwealth of Massachusetts, such payment may be made on
the next succeeding business day, and such extension of time shall in such case
be included in the computation of payment of interest due.
1.07. Registration, etc. The Company shall maintain at its principal offlce
a register of the Notes and shall record therein the names and addresses of the
registered holders of the Notes, the address to which notices are to be sent and
the address to which payments are to be made as designated by the registered
holder if other than the address of the holder, and the particulars of all
transfers, exchanges and replacements of Notes. No transfer of a Note shall be
valid unless made on such register for the registered holder or his executors or
administrators or his or their duly appointed attorney, upon surrender therefor
for exchange as hereinafter provided, accompanied by an instrument in writing,
in form and execution reasonably satisfactory to the Company. Each Note issued
hereunder, whether originally or upon transfer, exchange or replacement of a
Note or Notes, shall be registered on the date of execution thereof by the
Company and shall be dated the date to which interest has been paid on such
Notes or Note. The registered holder of a Note shall be that Person in whose
name the Note has been so registered by the Company. A registered holder shall
be deemed the owner of a Note for all purposes of this Agreement and, subject to
the provisions hereof, shall be entitled to the principal, premium, if any, and
interest evidenced by such Note free from all equities or rights of setoff or
counterclaim between the Company and the transferor of such registered holder or
any previous registered holder of such Note.
1.08. Transfer and Exchange of Notes. The registered holder of any Note or
Notes may, prior to maturity or prepayment thereof, surrender such Note or Notes
at the principal office of the Company for transfer or exchange. Within a
reasonable time after notice to the Company from a registered holder of its
intention to make such exchange and without expense (other than transfer taxes,
if any) to such registered holder, the Company shall issue in exchange therefor
another Note or Note, in such denominations as requested by the registered
holder, for the same aggregate principal amount as the unpaid principal amount
of the Note or Notes so surrendered, and having the same maturity and rate of
interest, containing the same provisions and subject to the same terms and
conditions as the Note or Notes so surrendered. Each new Note shall be made
payable to such Person or Persons, or registered assigns, as the registered
holder of such surrendered Note or Notes may designate, and such transfer or
exchange shall be made in such a manner that no gain or loss of principal or
interest shall result therefrom.
1.09. Replacement of Notes. Upon receipt of evidence satisfactory to the
Company of the loss, theft, destruction or mutilation of any Note and, if
requested in the case of any such loss, theft or destruction, upon delivery of
an indemnity bond or
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other agreement or security reasonably satisfactory to the Company, or, in the
case of any such mutilation, upon surrender and cancellation of such Note, the
Company will issue a new Note, of like tenor and amount and dated the date to
which interest has been paid, in lieu of such lost, stolen, destroyed or
mutilated Note; provided, however, if any Note of which Massachusetts Capital
Resource Company, its nominee, or any of its partners is the registered holder
is lost, stolen or destroyed, the affidavit of the President, Treasurer or any
Assistant Treasurer of the registered holder setting forth the circumstances
with respect to such loss, theft or destruction shall be accepted as
satisfactory evidence thereof, and no indemnification bond or other security
shall be required as a condition to the execution and delivery by the Company of
a new Note in replacement of such lost, stolen or destroyed Note other than the
registered holder's written agreement to indemnify the Company.
1.10. Subordination. The Company, for itself, its successors and assigns,
covenants and agrees, and the Purchaser and each successor holder of the Notes
by his or its acceptance thereof, likewise covenants and agrees, that
notwithstanding any other provision of this Agreement or the Notes, the payment
of the principal of and interest on each and all of the Notes shall be
subordinated in right of payment, to the extent and in the manner hereinafter
set forth, to the prior payment in full of all Senior Debt (as hereinafter
defined) at any time outstanding. The provisions of this Section 1.10 shall
constitute a continuing representation to all Persons who, in reliance upon such
provisions, become the holders of or continue to hold Senior Debt, and such
provisions are made for the benefit of the holders of Senior Debt, and such
holders are hereby made obligees hereunder to the same extent as if their names
were written herein as such, and they or any of them may proceed to enforce such
provisions against the Company or against the holder of any Note without the
necessity of joining the Company as a party.
(a) Payment of Senior Debt. In the event of any insolvency or
bankruptcy proceedings, or any receivership, liquidation, reorganization or
other similar proceedings in connection therewith, relative to the Company or to
its property, or, in the event of any proceedings for voluntary liquidation,
dissolution or other winding up of the Company or distribution or marshalling of
its assets or any composition with creditors of the Company, whether or not
involving insolvency or bankruptcy, then and in any such event all Senior Debt
shall be paid in full before any payment or distribution of any character,
whether in cash, securities or other property, shall be made on account of the
Notes; and any such payment or distribution, except securities which are
subordinate and junior in right of payment to the payment of all Senior Debt
then outstanding in terms of substantially the same tenor as this Section 1.10,
which would, but for the provisions hereof, be payable or deliverable in respect
of the Notes shall be paid or delivered directly to the holders of Senior Debt
(or their duly authorized representatives),
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in the proportions in which they hold the same, until all Senior Debt shall have
been paid in full, and every holder of the Notes by becoming a holder thereof
shall, by his or its acceptance thereof, be deemed to have designated and
appointed the holder or holders of Senior Debt (and their duly authorized
representatives) as his or its agents and attorneys-in-fact to demand, sue for,
collect and receive such Senior Debt holder's ratable share of all such payments
and distributions and to file any necessary proof of claim therefor and to take
all such other action for and in the name of the holders of the Notes or
otherwise, as such Senior Debt holders (or their authorized representatives) may
determine to be necessary or appropriate for the enforcement of this Section
1.10. The Purchaser and each successor holder of the Notes by its or his
acceptance thereof agrees to execute, at the request of the Company, a separate
agreement with any holder of Senior Debt on the terms set forth in this Section
1.10, and to take all such other action as such holder or such holder's
representative may request in order to enable such holder to enforce all claims
upon or in respect of such holder's ratable share of the Notes.
(b) No Payment on Notes Under Certain Conditions. In the event
that any default occurs in the payment of the principal of or interest on any
Senior Debt (whether as a result of the acceleration thereof by the holders of
such Senior Debt or otherwise) and during the continuance of such default for a
period up to sixty (60) days and thereafter if judicial proceedings shall have
been instituted with respect to such defaulted payment, or (if a shorter period)
until such payment has been made or such default has been cured or waived in
writing by such holder of Senior Debt then and during the continuance of such
event no payment of principal of or interest on the Notes shall be made by the
Company or accepted by any holder of the Notes who has received written notice
from the Company or from a holder of Senior Debt of such events.
(c) Payments Held in Trust. In case any payment or
distribution shall be paid or delivered to any holder of the Notes before all
Senior Debt shall have been paid in full, despite or in violation or
contravention of the terms of this subordination, such payment or distribution
shall be held in trust for and paid and delivered ratably to the holders of
Senior Debt (or their duly authorized representatives), until all Senior Debt
shall have been paid in full.
(d) Subrogation. Subject to the payment in full of all Senior
Debt and until the Notes shall be paid in full, the holders of the Notes shall
be subrogated to the rights of the holders of Senior Debt (to the extent of
payments or distributions previously made to such holders of Senior Debt
pursuant to the provisions of subsections (a) and (c) of this Section 1.10) to
receive payments or distributions of assets of the Company applicable to the
Senior Debt. No such payments or distributions applicable to the Senior Debt
shall, as between the Company and its creditors, other than the holders of
Senior Debt and the holders of the Notes, be deemed
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to be a payment by the Company to or on account of the Notes; and for the
purposes of such subrogation, no payments or distributions to the holders of
Senior Debt to which the holders of the Notes would be entitled except for the
provisions of this Section 1.10 shall, as between the Company and its creditors,
other than the holders of Senior Debt and the holders of the Notes, be deemed to
be a payment by the Company to or on account of the Senior Debt.
(e) Scope of Section. The provisions of this Section 1.10 are
intended solely for the purpose of defining the relative rights of the holders
of the Notes, on the one hand, and the holders of the Senior Debt, on the other
hand. Nothing contained in this Section 1.10 or elsewhere in this Agreement or
the Notes is intended to or shall impair, as between the Company, its creditors
other than the holders of Senior Debt, and the holders of the Notes, the
obligation of the Company, which is unconditional and absolute, to pay to the
holders of the Notes the principal of and interest on the Notes as and when the
same shall become due and payable in accordance with the terms thereof, or to
affect the relative rights of the holders of the Notes and creditors of the
Company other than the holders of the Senior Debt, nor shall anything herein or
therein prevent the holder of any Note from accepting any payment with respect
to such Note or exercising all remedies otherwise permitted by applicable law
upon default under such Note, subject to the rights, if any, under this Section
1.10 of the holders of Senior Debt in respect of cash, property or securities of
the Company received by the holders of the Notes.
(f) Survival of Rights. The right of any present or future holder of
Senior Debt to enforce subordination of the Notes pursuant to the provisions of
this Section 1.10 shall not at any time be prejudiced or impaired by any act or
failure to act on the part of the Company or any such holder of Senior Debt,
including, without limitation, any forbearance, waiver, consent, compromise,
amendment, extension, renewal, acceptance or taking or release of security of or
in respect of any Senior Debt, or by noncompliance by the Company with the terms
of such subordination regardless of any knowledge thereof such holder may have
or otherwise be charged with.
(g) Amendment or Waiver. The provisions of this Section 1.10 may not
be amended or waived in any manner which is detrimental to any Senior Debt
without the requisite consent of the holders of all then existing Senior Debt
according to the applicable provisions thereof.
(h) Senior Debt Defined. The term "Senior Debt" shall mean (i) all
Indebtedness of the Company for money borrowed from banks or other institutional
lenders, including any extensions or renewals thereof, whether outstanding on
the date hereof or thereafter created or incurred, which is not by its terms or
by separate agreement subordinate and junior to or on a parity with the Notes
and which is permitted hereby at the time it is created
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or incurred, and (ii) all guaranties by the Company which are not by their terms
or by separate agreement subordinate and junior to or on a parity with the Notes
and which are permitted hereby at the time they are made, of Indebtedness of any
Subsidiary if such Indebtedness would have been Senior Debt pursuant to the
provisions of clause (i) of this sentence had it been Indebtedness of the
Company. In making any loans which are (or the guaranties of which are) intended
to be Senior Debt, the lenders or purchasers thereof shall be entitled to rely
as to the fact that such Indebtedness or guaranty is permitted hereby upon a
certificate by the Company's chief financial officer purporting to show such
Indebtedness or guaranty will not result in the Company's failure to comply with
the provisions of Article IV hereof in effect as of the date of the loan or
guarantee.
1.11. Representations by the Purchaser. The Purchaser represents that
it is acquiring the Notes and Warrants for its own account and that the Notes
and Warrants are being and will be acquired for the purpose of investment and
not with a view to distribution or resale thereof or of the Common Stock or
other securities receivable upon the exercise of the Warrants; subject,
nevertheless, to the condition that the disposition of the property of the
Purchaser shall at all times be within its control. The acquisition by the
Purchaser of the Notes and Warrants shall constitute a confirmation of this
representation.
1.12. Disclosure of Information by the Purchaser. The Company
understands that the Purchaser is a special purpose limited partnership
organized under Chapter 109 of the General Laws of the Commonwealth of
Massachusetts and Chapter 816 of the Acts and Resolves of 1977 of the
Commonwealth of Massachusetts (the "Capital Resource Company Act"), and as such,
in accordance with such provisions, the Purchaser, in order to obtain certain
benefits for itself and its partners, is required to file certain reports and
otherwise disclose information relating to the business, financial affairs, and
future prospects of the Company and its affiliates (as defined in the aforesaid
legislation) with the Clerk of the Senate and the Clerk of the House of
Representatives of the General Court of the Commonwealth of Massachusetts, the
Secretary of Manpower Affairs, the Commissioner of Insurance and the Department
of Revenue of the Commonwealth of Massachusetts, and that such reports and other
information may constitute "public records" within the purview of Section 7 of
Chapter 4 of the General Laws of the Commonwealth of Massachusetts. In addition,
information relating to the business, financial affairs and future prospects of
the Company and its affiliates must be disclosed to others in order to obtain
independent confirmation that financing on substantially similar terms to
financing provided pursuant to this Agreement was not elsewhere available to the
Company. The Company hereby authorizes the Purchaser to disclose all such
information relating to the business, financial affairs and future prospects of
the Company and its affiliates as has been or may in the future be presented
<PAGE>
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to the Purchaser to all such persons as the Purchaser in good faith deems
necessary or appropriate in order to fulfill its obligations under the Capital
Resource Company Act.
ARTICLE II
CONDITIONS TO PURCHASER'S OBLIGATION
The obligation of the Purchaser to purchase and pay for the Notes and
Warrants at the Closing is subject to the following conditions:
2.01. Representations and Warranties. Each of the representations and
warranties of the Company set forth in Article III hereof shall be true on the
date of the Closing.
2.02. Documentation at Closing. The Purchaser shall have received prior to
or at the Closing all of the following, each in form and substance satisfactory
to the Purchaser and its special counsel:
(a) A duly executed Guaranty (the "Guaranty") from OCA Applied
Optics, Inc., a California corporation and a wholly-owned subsidiary of the
Company ("OCA-AO"), of the full, prompt and timely performance by the Company of
all of the Company's obligations to the Purchaser, such Guaranty to be
substantially in the form set forth in Exhibit 2.02(a) hereto.
(b) A certified copy of all charter documents of the Company and
OCA-AO; a certified copy of the resolutions of the Board of Directors and, to
the extent required, the stockholders of the Company and OCA-AO evidencing
approval of this Agreement, the Notes, the Warrants, the Guaranty, and other
matters contemplated hereby; a certified copy of the By-laws of the Company and
OCA-AO; and certified copies of all documents evidencing other necessary
corporate or other action and governmental approvals, if any, with respect to
this Agreement, the Notes, the Warrants and the Guaranty.
(c) A favorable opinion of Messrs. Bowditch & Dewey, counsel for the
Company and OCA-AO, as to matters set forth in Exhibit 2.02(c), and as to such
other matters as the Purchaser, or its special counsel, may reasonably request.
(d) A certificate of the Clerk or an Assistant Clerk of each of the
Company and OCA-AO which shall certify the names of the officers authorized to
sign this Agreement, the Notes, the Warrants, the Guaranty and the other
documents or certificates to be delivered pursuant to this Agreement by the
Company and OCA-AO, or any of their respective officers, together with the true
signatures of such officers. The Purchaser may conclusively rely on such
certificates until it shall receive a further certificate of the Clerk or an
Assistant Clerk of the Company and OCA-AO, as
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the case may be, cancelling or amending the prior certificate and submitting the
signatures of the officers named in such further certificate.
(e) A certificate from a duly authorized officer of the Company
stating that (i) the representations and warranties of the Company contained in
Article III hereof and otherwise made by the Company in writing in connection
with the transactions contemplated hereby are true and correct, and (ii) no
condition or event has occurred or is continuing or will result from execution
and delivery of this Agreement, the Notes, the Warrants or the Guaranty which
constitute an Event of Default or would constitute an Event of Default but for
the requirement that notice be given or time elapse or both.
(f) A certificate, in the form attached as Exhibit 3.15 hereto,
shall have been executed and delivered by a duly authorized officer of the
Company.
(g) Payment for the costs, expenses, taxes and filing fees
identified in Section 8.04 as to which the Purchaser gives the Company notice
prior to the Closing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants as follows:
3.01. Organization and Standing. The Company and OCA-AO are each a duly
organized and validly existing corporation in good standing under the laws of
the jurisdiction in which it was organized and has all requisite corporate power
and authority for the ownership and operation of its properties and for the
carrying on of its business as now conducted and as now proposed to be
conducted. Neither the nature of the business conducted by the Company or
OCA-AO, nor the character of the properties owned or held under lease by the
Company or OCA-AO requires the Company or OCA-AO to be qualified or licensed as
a foreign corporation in any state or jurisdiction. OCA-AO is the only
Subsidiary of the Company and all of its outstanding capital stock has been duly
authorized and validly issued, is fully paid and nonassessable, and is owned
beneficially and of record by the Company free and clear of any lien, right,
encumbrance or restriction of any nature, including, without limitation, any
lien, right, encumbrance or restriction on transfer, other than the pledge
thereof by the Company to Greyhound Financial Corporation pursuant to a Pledge
Agreement dated as of March 23, 1990, a copy of which has been delivered to the
Purchaser.
3.02. Corporate Action. The Company and OCA-AO have all necessary corporate
power and have taken all corporate action required to make all the provisions of
this Agreement, the Notes,
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the Warrants, the Guaranty and any other agreements and instruments executed in
connection herewith and therewith the valid and enforceable obligations they
purport to be. Sufficient shares of authorized but unissued Common Stock of the
Company have been reserved by appropriate corporate action in connection with
the prospective exercise of the Warrants. Neither the issuance of the Notes or
Warrants, nor the issuance of shares of Common Stock upon the exercise of the
Warrants, is subject to preemptive or other similar statutory or contractual
rights and will not conflict with any provisions of any agreement or instrument
to which the Company or OCA-AO is a party or by which it is bound.
3.03. Governmental Approvals. No authorization, consent, approval, license,
exemption of or filing or registration with any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, is or will be necessary for, or in connection with, the offer,
issuance, sale, execution or delivery by the Company and OCA-AO of, or for the
performance by either of them of their respective obligations under, this
Agreement, the Notes, the Warrants or the Guaranty.
3.04. Litigation. Except as is set forth on Exhibit 3.04, there is no
litigation or governmental proceeding or investigation pending or, to the best
of the knowledge of the Company, threatened against the Company or OCA-AO
affecting any of its properties or assets, or against any Key Employee of the
Company or OCA-AO where such litigation, proceeding or investigation, either
individually or in the aggregate, would have a material adverse effect on the
Company or OCA-AO, nor, to the best of the knowledge of the Company, has there
occurred any event or does there exist any condition on the basis of which any
litigation, proceeding or investigation might properly be instituted. Neither
the Company nor OCA-AO, nor, to the best of the knowledge of the Company, any
Key Employee of the Company or OCA-AO is in default with respect to any order,
writ, injunction, decree, ruling or decision of any court, commission, board or
other government agency affecting the Company or OCA-AO. There are no actions or
proceedings pending or threatened (or any basis therefor known to the Company)
which might result, either in any case or in the aggregate, in any material
adverse change in the business, operations, affairs or condition of the Company
or OCA-AO or in any of its properties or assets, or which might call into
question the validity of this Agreement, the Notes, the Warrants or the
Guaranty or any action taken or to be taken pursuant hereto or thereto.
3.05. Compliance with Other Instruments. The Company and OCA-AO each is in
compliance in all respects with the terms and provisions of this Agreement and
of its respective charter and bylaws and in all material respects with the terms
and provisions of the mortgages, indentures, leases, agreements and other
instruments and of all judgments, decrees, governmental orders, statutes, rules
and regulations by which it is bound or to which its properties or assets are
subject. There is no term or
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provision in any of the foregoing documents and instruments which materially
adversely affects the business, assets or financial condition of either the
Company or OCA-AO. Neither the execution and delivery of this Agreement, the
Notes, the Warrants, the Guaranty, nor the consummation of any transactions
contemplated hereby or thereby, has constituted or resulted in or will
constitute or result in a default or violation of any term or provision in any
of the foregoing documents or instruments. A schedule of Indebtedness of the
Company and OCA-AO (including lease obligations required to be capitalized in
accordance with applicable Statements of Financial Accounting Standards) is
attached as Exhibit 3.05.
3.06. Federal Reserve Regulations. Neither the Company nor OCA-AO is
engaged in the business of extending credit for the purpose of purchasing or
carrying margin stock (within the meaning of Regulation G of the Board of
Governors of the Federal Reserve System), and no part of the proceeds of the
Notes or Warrants will be used to purchase or carry any margin security or to
extend credit to others for the purpose of purchasing or carrying any margin
security or in any other manner which would involve a violation of any of the
regulations of the Board of Governors of the Federal Reserve System.
3.07. Title to Assets, Patents. Except as is set forth in Exhibit 3.07,
each of the Company and OCA-AO has good and clear record and marketable title
in fee to such of its fixed assets as are real property, and good and
merchantable title to all of its other assets, now carried on its books
including those reflected in the most recent consolidated balance sheet of the
company and OCA-AO which forms a part of Exhibit 3.08 attached hereto, or
acquired since the date of such balance sheet (except personal property disposed
of since said date in the ordinary course of business) free of any mortgages,
pledges, charges, liens, security interests or other encumbrances. Each of the
Company and OCA-AO enjoys peaceful and undisturbed possession under all leases
under which it is operating, and all said leases are valid and subsisting and in
full force and effect. Each of the Company and OCA-AO owns or has a valid right
to use the patents, patent rights, licenses, permits, trade secrets, trademarks,
trademark rights, trade names or trade name rights or franchises, copyrights,
inventions and intellectual property rights being used to conduct its business
as now operated and as now proposed to be operated; and the conduct of its
business as now operated and as now proposed to be operated does not and will
not conflict with valid patents, patent rights, licenses, permits, trade
secrets, trademarks, trademark rights, trade names or trade name rights or
franchises, copyrights, inventions and intellectual property rights of others.
Neither the Company nor OCA-AO has any obligation to compensate any Person for
the use of any such patents or such rights nor has the Company or OCA-AO granted
to any Person any license or other rights to use in any manner any of such
patents or such rights of the Company or OCA-AO.
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3.08. Financial Information. The consolidated financial statements of the
Company and OCA-AO attached as Exhibit 3.08 present fairly the consolidated
financial position of the Company and OCA-AO as at the dates thereof and their
results of operations for the periods covered thereby and have been prepared in
accordance with generally accepted accounting principles consistently applied.
The financial statements so attached are: (1) for the two years ended June 30,
1991 and June 30, 1990, certified by Deloitte & Touche and (ii) for the
nine-month period ended March 31, 1992, being unaudited and subject to year-end
adjustments consisting of normal recurring items which will not be material in
the aggregate. Neither the Company nor OCA-AO has any liability contingent or
otherwise not disclosed in the aforesaid financial statements or in the notes
thereto that could, together with all such other liabilities, materially affect
the financial condition of the Company or OCA-AO, nor does the Company have any
reasonable grounds to know of any such liability. Except as set forth in Exhibit
3.08(a), since the date of the certified financial statements for the year ended
June 30, 1991, (i) there has been no adverse change in the business, assets or
condition, financial or otherwise, operations or prospects, of the Company or
OCA-AO; (ii) neither the business, condition, operations or prospects of the
Company or OCA-AO nor any of their properties or assets has been adversely
affected as a result of any legislative or regulatory change, any revocation or
change in any franchise, license or right to do business, or any other event or
occurrence, whether or not insured against; (iii) neither the Company nor OCA-AO
has incurred any additional Indebtedness for money borrowed or redeemed, whether
in whole or in part, any Indebtedness for money borrowed; (iv) neither the
Company nor OCA-AO has purchased or sold any assets, other than in the ordinary
course of business; (v) neither the Company nor OCA-AO has issued or sold any of
its capital stock, or any options, warrants or convertible securities
exercisable therefor; and (vi) neither the Company nor OCA-AO has entered into
any material transaction or made any distribution on its capital stock. The
Company has delivered to the Purchaser a true, correct and complete copy of each
agreement, instrument and document evidencing each of the transactions set forth
in Exhibit 3.08(a).
3.09. Taxes. The Company and OCA-AO have accurately prepared and timely
filed all federal, state and other tax returns required by law to be filed by
them, and all taxes shown to be due and all additional assessments have been
paid or provision made therefor. The Company knows of no additional assessments
or adjustments pending or threatened against the Company or OCA-AO for any
period, nor of any basis for any such assessment or adjustment.
3.10. ERISA. No employee benefit plan established or maintained, or to
which contributions have been made, by the Company or OCA-AO, which is subject
to part 3 of Subtitle B of Title I of The Employee Retirement Income Security
Act of 1974, as amended ("ERISA") had an accumulated funding deficiency (as such
term is defined in Section 302 of ERISA) as of the last day of the
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most recent fiscal year of such plan ended prior to the date hereof, and no
material liability to the Pension Benefit Guaranty Corporation has been incurred
with respect to any such plan by the Company or OCA-AO.
3.11. Transactions with Affiliates. Except as is set forth in Exhibit 3.11,
there are no loans, leases, royalty agreements or other continuing transactions
between the Company or OCA-AO and any Person owning five percent (5%) or more of
any class of capital stock of the Company or OCA-AO or other entity controlled
by such stockholder or a member of such stockholder's family.
3.12. Assumptions or Guaranties of Indebtedness of Other Persons. Except as
is set forth on Exhibit 3.12, neither the Company nor OCA-AO has assumed,
guaranteed, endorsed or otherwise become directly or contingently liable on
(including, without limitation, liability by way of agreement, contingent or
otherwise, to purchase, to provide funds for payment, to supply funds to or
otherwise invest in the debtor or otherwise to assure the creditor against loss)
any Indebtedness of any other Person.
3.13. Investments in Other Persons. Neither the Company nor OCA-AO has made
any loan or advance to any Person which is outstanding on the date of this
Agreement, nor is the Company or OCA-AO obligated or ccmmitted to make any such
loan or advance, nor does the Company or OCA-AO own any capital stock or assets
comprising the business of, obligations of, or any interest in, any Person.
3.14. Equal Employment Opportunity. The Company has reviewed its employment
practices and policies and those of OCA-AO and, to the best of its knowledge,
the Company and OCA-AO are in full compliance with (a) all applicable laws of
the United States, of the Commonwealth of Massachusetts and of each other
applicable jurisdiction, relating to equal employment opportunity (including,
without limitation, Title VII of the Civil Rights Act of 1964, as amended (42
U.S.C. ss.000e-17), the Age Discrimination in Employment Act of 1967, as amended
(29 U.S.C. ss.621-634), the Equal Pay Act of 1963 (29 U.S.C. ss.206(d)), and any
rules, regulations and administrative orders and Executive Orders relating
thereto; Mass. Gen. Laws. c. 15lB, Mass. Gen. Laws c. 149 ss.24A et seq. and
ss.105A et seq., and any rules or regulations relating thereto; and (b) the
applicable terms, relating to equal employment opportunity, of any contract,
agreement or grant the Company or OCA-AO has with, from, or relating (by way of
subcontract or otherwise) to any other contract, agreement or grant of, any
federal or state governmental unit ("Government Contract"), including, without
limitation, any terms required pursuant to Federal Executive Order No. 11246 and
Massachusetts Executive Order No. 74 (both as amended). To the best of the
Company's knowledge, it and OCA-AO have kept all records required to be kept,
and have filed all reports, affirmative action plans and forms (including,
without limitation and where applicable, Form EEO-1) required to be filed
pursuant to any such applicable law or the terms of any such
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Government-Contract. Neither the Company nor OCA-AO has been subject to any
adverse final determination or order, with respect to any charge of employment
discrimination made against it, by the United States Equal Employment
Opportunity Commission, the Massachusetts Commission Against Discrimination or
any other governmental unit (including, without limitation, any such
governmental unit with which it has a Government Contract), and neither the
Company nor OCA-AO is presently, to the best of the Company's knowledge, subject
to any formal proceedings before, or investigations by, such commissions or
governmental units.
3.15. Status of Notes and Warrants as Qualified Investments. The Company
has duly authorized the execution and delivery to the Purchaser on behalf of the
Company of the certificate attached as Exhibit 3.15 hereto, setting forth such
statements, information and related data as are necessary to permit the
Purchaser to determine and demonstrate that the Notes and Warrants issued
pursuant to this Agreement will constitute "qualified investments" within the
meaning of that term as set forth in the Capital Resource Company Act and that
the full proceeds of the Notes and Warrants will be used for purposes which will
materially increase or maintain equal opportunity employment in the Commonwealth
of Massachusetts. All such statements, information and related data presented in
such certificate as are not based on estimates and projections of future events
are true and correct as of the date of such certificate and all such statements,
information and related data based upon estimates or projections of future
events have been carefully considered and prepared on behalf of the Company.
3.16. Securities Act. Neither the Company nor anyone acting on its behalf
has offered any of the Notes, Warrants or similar securities, or solicited any
offers to purchase or made any attempt by preliminary conversation or
negotiations to dispose of the Notes, Warrants or similar securities, to any
Person other than the Purchaser or the institutions described in Exhibit 3.15.
Neither the Company nor anyone acting on its behalf has offered or will offer to
sell the Notes, Warrants or similar securities to, or solicit offers with
respect thereto from, or enter into any preliminary conversations or
negotiations relating thereto with, any Person, so as to bring the issuance and
sale of the Notes and Warrants under the registration provisions of the
Securities Act.
3.17. Disclosure. Neither this Agreement, the financial statements
incorporated herein as Exhibit 3.08, the Certificate set forth as Exhibit 3.15
hereof, the Business Plan, nor any other agreement, document, certificate,
schedule, exhibit or written statement furnished to the Purchaser or its special
counsel by or on behalf of the Company or OCA-AO in connection with the
transactions contemplated hereby contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements
contained herein or therein not misleading. There is no fact within the special
knowledge of the Company or any of its Key Employees which has not been
disclosed
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herein or in writing by the Company to the Purchaser and which materially
adversely affects, or in the future in the Company's opinion may, insofar as it
can now foresee, materially adversely affect the business, properties, assets or
condition, financial or otherwise, of the Company or OCA-AO. Without limiting
the foregoing, the Company has no knowledge that there exists any patent,
invention, device, application or principle or any statute, rule, law,
regulation, standard or code which would materially adversely affect the
condition, financial or otherwise, or the operations of the Company or OCA-AO.
3.18. No Brokers or Finders. No Person has or will have, as a result of the
transactions contemplated by this Agreement, any right, interest or valid claim
against or upon the Company or OCA-AO for any commission, fee or other
compensation as a finder or broker because of any act or omission by the Company
or OCA-AO or any agent of the Company or OCA-AO.
3.19. Other Agreements of Officers. To the best of the knowledge of the
Company, no Key Employee of the Company or OCA-AO is a party to or bound by any
agreement, contract or commitment, or subject to any restrictions, particularly
but without limitation in connection with any previous employment of any such
person, which materially and adversely affects, or in the future may (so far as
the Company can reasonably foresee) materially and adversely affect, the
business or operations of the Company or OCA-AO or the right of any such person
to participate in the affairs of the Company or OCA-AO. To the best of the
knowledge of the Company, no Key Employee has any present intention of
terminating his employment with the Company or OCA-AO and neither the Company
nor OCA-AO has any present intention of terminating any such employment.
3.20. Capitalization; Status of Capital Stock. The Company has a total
authorized capitalization consisting of 2,000,000 shares of Common Stock, of
which 768,005 shares are issued and outstanding and no shares of which are held
by the Company as Treasury Stock. A complete list of the outstanding capital
stock of the Company and the names in which such capital stock is registered is
set forth in Exhibit 3.20 hereto. All the outstanding shares of capital stock of
the Company have been duly authorized, are validly issued and, with the
exception of 9,638 shares issued on March 23, 1990, 6,667 shares issued on
September 10, 1991 and 1,000 shares issued on March 30, 1992 which remain in
escrow pending satisfaction of certain conditions established by the Company,
are fully paid and nonassessable. The shares of Common Stock issuable upon
exercise of the Warrants, when so issued, will be duly authorized, validly
issued and fully paid and nonassessable. Except as otherwise indicated on
Exhibit 3.20, there are no options, warrants or rights to purchase shares of
capital stock or other securities of the Company authorized, issued or
outstanding, nor is the Company obligated in any other manner to issue shares of
its capital stock or other securities. There are no restrictions on the transfer
of the
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Notes, the Warrants or shares of Common Stock issued or issuable upon exercise
of the Warrants, other than those imposed by relevant state and federal
securities laws. No holder of any security of the Company is entitled to
preemptive or similar statutory or contractual rights, either arising pursuant
to any agreement or instrument to which the Company is a party, or which are
otherwise binding upon the Company. Neither the issuance of the Notes or the
Warrants nor the shares of Common Stock issued upon exercise of the Warrants
will result in an adjustment under the antidilution or exercise rights of any
holders of any outstanding shares of capital stock, options, warrants or other
rights to acquire any securities of the Company. The offer and sale of all
shares of capital stock and other securities of the Company issued before the
Closing complied with or were exempt from all federal and state securities laws.
3.21. Labor Relations. To the best of the knowledge of the Company, no
labor union or any representative thereof has made any attempt to organize or
represent employees of the Company or OCA-AO. There are no unfair labor practice
charges, pending trials with respect to unfair labor practice charges, pending
material grievance proceedings or adverse decisions of a Trial Examiner of the
National Labor Relations Board against the Company or OCA-AO. Furthermore, to
the best of the knowledge of the Company, relations with employees of the
Company and OCA-AO are good and there is no reason to believe that any labor
difficulties will arise in the foreseeable future.
3.22. Insurance. The Company and OCA-AO carry insurance covering their
properties and business adequate and customary for the type and scope of the
properties and business, but in any event in amounts sufficient to prevent the
Company or OCA-AO from becoming a co-insurer.
3.23. Books and Records. The books of account, ledgers, order books,
records and documents of the Company and OCA-AO accurately and completely
reflect all material information relating to the business of the Company and
OCA-AO, the nature, acquisition, maintenance, location and collection of the
assets of the Company and OCA-AO, and the nature of all transactions giving rise
to the obligations or accounts receivable of the Company and OCA-AO.
3.24. Foreign Corrupt Practices Act. The Company has reviewed its practices
and policies and that of OCA-AO and to the best of its knowledge and belief
neither it nor OCA-AO is engaged, nor has any officer, director, employee or
agent of the Company or OCA-AO engaged, in any act or practice which would
constitute a violation of the Foreign Corrupt Practices Act of 1977, or any
rules or regulations promulgated thereunder.
3.25. Environmental Matters. Neither the Company nor OCA-AO has caused or,
to the best of the Company's knowledge, allowed, and neither the Company nor
OCA-AO has arranged with any party
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for, the generation, use, transportation, treatment, storage or disposal of any
Hazardous Substances in connection with the operation of its business or
otherwise except in material compliance with applicable Environmental Laws. The
Company and OCA-AO and the operations of their respective business are, to the
best of the Company's knowledge, in material compliance with all Environmental
Laws. Except as otherwise disclosed on Exhibit 3.25 attached hereto, neither the
Company nor OCA-AO has received any citation, directive, letter or other
communication, written or oral, or any notice of any proceedings, claims or
lawsuits, from any person, entity or governmental authority alleging any
violation or potential violation of any Environmental Law in connection with the
operation of its Business, and the Company is not aware of any basis therefor.
Each of the Company and OCA-AO has obtained and is currently maintaining in full
force and effect all necessary material permits, licenses and approvals referred
to in any Environmental Laws applicable to its premises and the business
conducted thereon and is in material compliance with all such permits, licenses
and approvals. To the best of the Company's knowledge, except as otherwise
disclosed on Exhibit 3.25, neither the Company nor OCA-AO has caused or allowed
a release, or a threat of release, of any Hazardous Substances onto its premises
or any other property.
3.26. Registration Rights. Other than the Purchaser pursuant to the terms
of Article V hereof, no Person has demand or other rights to cause the Company
to file any registration statement under the Securities Act relating to any
securities of the Company or any right to participate in any such registration
statement.
ARTICLE IV
COVENANTS OF THE COMPANY
4.01. Affirmative Covenants of the Company Other Than Reporting
Requirements. Without limiting any other covenants and provisions hereof, the
Company covenants and agrees that, as long as any of the Notes or Warrants are
outstanding, it will perform and observe the following covenants and provisions
and will cause each Subsidiary to perform and observe such of the following
covenants and provisions as are applicable to such Subsidiary:
(a) Punctual Payment. Pay the principal of, premium, if any, and
interest on each of the Notes at the times and place and in the manner provided
in the Notes and herein.
(b) Payment of Taxes and Trade Debt. Pay and discharge, and cause
each Subsidiary to pay and discharge, all taxes, assessments and governmental
charges or levies imposed upon it or upon its income or profits or business, or
upon any properties belonging to it, prior to the date on which penalties attach
thereto, and all lawful claims which, if unpaid, might become a lien or charge
upon any properties of the Company or any
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Subsidiary, provided that neither the Company nor the Subsidiary shall be
required to pay any such tax, assessment, charge, levy or claim which is being
contested in good faith and by appropriate proceedings if the Company or
Subsidiary concerned shall have set aside on its books adequate reserves with
respect thereto. Pay and cause each Subsidiary to pay, when due, or in
conformity with customary trade terms, all lease obligations, all trade debt,
and all other Indebtedness incident to the operations of the Company or its
Subsidiaries, except such as are being contested in good faith and by
appropriate proceedings if the Company or Subsidiary concerned shall have set
aside on its books adequate reserves with respect thereto.
(c) Maintenance of Insurance. Maintain, and cause each Subsidiary to
maintain, insurance with responsible and reputable insurance companies or
associations in such amounts and covering such risks as is usually carried by
companies engaged in similar businesses and owning similar properties in the
same general areas in which the Company or such Subsidiary operates, but in any
event in amounts sufficient to prevent the Company or such Subsidiary from
becoming a co-insurer.
(d) Preservation of Corporate Existence. Preserve and maintain, and
cause each Subsidiary to preserve and maintain, its corporate existence, rights,
franchises and privileges in the jurisdiction of its incorporation, and qualify
and remain qualified, and cause each Subsidiary to qualify and remain qualified,
as a foreign corporation in each jurisdiction in which, in the reasonable
opinion of its Board of Directors, such qualification is necessary or desirable
in view of its business and operations or the ownership of its properties;
provided, however, that nothing herein contained shall prevent any merger,
consolidation or transfer of assets permitted by subsection 4.02(e). Preserve
and maintain, and cause each Subsidiary to preserve and maintain, all licenses
and other rights to use patents, processes, licenses, trademarks, trade names,
inventions, intellectual property rights or copyrights owned or possessed by it
and necessary to the conduct of its business.
(e) Compliance with Laws. Comply, and cause each Subsidiary to
comply, with all applicable laws, rules, regulations and orders of any
governmental authority, noncompliance with which could materially adversely
affect its business or condition, financial or other.
(f) Visitation Riqhts. At any reasonable time and from time to time,
permit the Purchaser or any agents or representatives thereof designated by it
in writing, to examine and make copies of and extracts from the records and
books of account of, and visit and inspect the properties of, the Company and
any Subsidiary, and to discuss the affairs, finances and accounts of the Company
and any Subsidiary with any of their officers or directors and independent
accountants.
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(g) Keeping of Records and Books of Account. Keep, and cause each
Subsidiary to keep, adequate records and books of account, in which complete
entries will be made in accordance with generally accepted accounting
principles, consistently applied (except for any changes mandated by generally
accepted accounting principles), reflecting all financial transactions of the
Company and such Subsidiary, and in which, for each fiscal year, all proper
reserves for depreciation, depletion, obsolescence, amortization, taxes, bad
debts and other purposes in connection with its business shall be made.
(h) Maintenance of Properties, etc. Maintain and preserve, and cause
each Subsidiary to maintain and preserve, all of its properties, necessary or
useful in the proper conduct of its business, in good repair, working order and
condition, ordinary wear and tear excepted.
(i) Compliance with ERISA. Comply, and cause each Subsidiary to
comply, with all minimum funding requirements applicable to any pension or other
employee benefit or employee contribution plans which are subject to ERISA or to
the Internal Revenue Code of 1986, as amended (the "Code"), and comply, and
cause each Subsidiary to comply, in all other material respects with the
provisions of ERISA and the Code, and the rules and regulations thereunder,
which are applicable to any such plan. Neither the Company nor any Subsidiary
will permit any event or condition to exist which could permit any such plan to
be terminated under circumstances which would cause the lien provided for in
Section 4068 of ERISA to attach to the assets of the Company or any
Subsidiary.
(j) Maintenance of Debt to Equity Ratio. Maintain a ratio of
Consolidated Indebtedness, other than Indebtedness represented by the Notes, to
Consolidated Net Worth, plus Indebtedness represented by the Notes, of not more
than 2 to 1, such ratio to be measured at the end of each fiscal quarter of the
Company.
(k) Interest Coverage. Maintain a ratio of Consolidated Net Earnings
Available for Interest Charges to Interest Charges of not less than 1.5 to 1
through and including June 30, 1993, and not less than 2 to 1 thereafter, such
ratio to be measured at the end of each fiscal quarter of the Company as an
average of the four (4) most recent fiscal quarters of the Company.
(1) Foreign Corrupt Practices Act. Comply, and cause each Subsidiary
to comply, and cause each officer, director, employee and agent of the Company
and each Subsidiary to comply, at all times with the prohibitions on certain
acts and practices set forth in the Foreign Corrupt Practices Act of 1977, and
any rules or regulations promulgated thereunder.
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(m) Equal Employment Opportunity. Comply, and cause each Subsidiary
to comply, with all applicable laws of the United States, the Commonwealth of
Massachusetts, and of each other applicable jurisdiction relating to equal
employment opportunity, any rules, regulations, administrative orders and
Executive Orders relating thereto and the applicable terms, relating to equal
employment opportunity, of any Government Contract; and keep, and cause each
Subsidiary to file, all reports, affirmative action plans and forms required to
be filed, pursuant to any such applicable law or the terms of any such
Government Contract; provided, however, the Company or any Subsidiary shall not
be considered to have failed to comply with the foregoing during any period that
any matter relating to the Company's or such Subsidiary's employment practices
is being contested by the Company or such Subsidiary in appropriate proceedings,
or thereafter, if the Company or such Subsidiary complies with any final
determination issued in such proceedings.
(n) Status of Notes and Warrants as Qualified Investments. In the
event that any of the statements, information and related data provided by or on
behalf of the Company or any Subsidiary and relied upon by the Purchaser in
determining that the Notes and Warrants constitute "qualified investments"
within the meaning of that term in the Capital Resource Company Act shall be put
in issue in any formal or informal proceedings initiated or conducted by or on
behalf of the Commonwealth of Massachusetts, the Company shall, upon reasonable
notice and at its expense, provide, and, cause each Subsidiary to provide, such
additional information, witnesses and related data as may be reasonably
necessary or appropriate to support the representations and warranties set
forth in Article III.
(o) Attendance at Board Meetinqs. The Company shall permit the
Purchaser or its designee to have one observer attend each meeting of its Board
of Directors and each meeting of any standing committee thereof which is
authorized to act on the Company's behalf without further action by the
Directors. The Company shall provide the Purchaser and such designee with notice
of the time and place of such meeting in the same manner and at the same time as
it shall provide such notice to its directors or committee members, as the case
may be. The Company shall also provide to the Purchaser copies of all notices,
reports, minutes and consents at the time and in the manner as they are provided
to the Board of Directors or committee.
(p) Compensation. The Company shall pay to its management or
management of any Subsidiary compensation at a rate of compensation which is not
in excess of that commonly paid to management in companies of similar size, of
similar maturity and in similar businesses and all management compensation and
all policies relating thereto shall be approved an advance by a majority of the
members of that Company's Board of Directors.
<PAGE>
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(q) Guaranty. OCA-AO shall, at all times, comply with all of the
terms and conditions of the Guaranty as is applicable to it and shall not amend,
terminate or waive any of the provisions thereof without the prior written
consent of the Purchaser.
(r) Budget. The Company will prepare and submit to its Board of
Directors, for approval, a consolidated and consolidating budget for each fiscal
year of the Company prior to the beginning of such fiscal year (except that for
fiscal year 1993 Budget shall be submitted prior to September 30, 1992), which
budget shall be in reasonable detail and shall include projected cash flow
requirements, gross income and operating results and other relevant information
on a monthly basis and which shall be accompanied by a written discussion and
analysis by management of such budget. A copy of such budget as approved by the
Board of Directors of the Company (the "Budget"), together with such written
discussion, shall be furnished to the Purchaser within fourteen (14) days after
such approval by the Board of Directors of the Company.
4.02. Negative Covenants of the Company. Without limiting any other
covenants and provisions hereof, the Company covenants and agrees that, as long
as any of the Notes or Warrants are outstanding, it will comply with and observe
the following covenants and provisions, and will cause each Subsidiary to comply
with and observe such of the following covenants and provisions as are
applicable to such Subsidiary, and will not:
(a) Liens. Create, incur, assume or suffer to exist, or permit any
Subsidiary to create, incur, assume or suffer to exist, any mortgage, deed of
trust, pledge, lien, security interest or other charge or encumbrance (including
the lien or retained security title of a conditional vendor) of any nature, upon
or with respect to any of its properties, now owned or hereafter acquired, or
assign or otherwise convey any right to receive income, except that the
foregoing restrictions shall not apply to mortgages, deeds of trust, pledges,
liens, security interests or other charges or encumbrances:
(i) for taxes, assessments or governmental charges or levies on
property of the Company or any Subsidiary if the same shall not at the time
be delinquent or thereafter can be paid without penalty, or are being
contested in good faith and by appropriate proceedings;
(ii) imposed by law, such as carriers', warehousemen's and
mechanics' liens and other similar liens arising in the ordinary course of
business;
(iii) arising out of pledges or deposits under worker's
compensation laws, unemployment insurance, old age pensions, or other
social security or retirement benefits, or similar legislation;
<PAGE>
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(iv) securing the performance of bids, tenders, contracts (other
than for the repayment of borrowed money), statutory obligations and
surety bonds;
(v) in the nature of zoning restrictions, easements and rights or
restrictions of record on the use of real property which do not materially
detract from its value or impair its use in the ordinary course of
business;
(vi) arising by operation of law in favor of the owner or
sublessor of leased premises and confined to the property rented;
(vii) arising from any litigation or proceeding which is being
contested in good faith by appropriate proceedings, provided, however, that
no execution or levy has been made; and
(viii) described in Exhibit 3.07 which secure the Indebtedness
set forth in Exhibit 3.05, provided that no such lien is extended to cover
other or different property of the Company or any Subsidiary (except by the
application of an after-acquired property clause included in the original
terms of such Indebtedness and the security therefor).
(b) Indebtedness. Create, incur, assume or suffer to exist, or
permit any Subsidiary to create, incur, assume or suffer to exist, any liability
with respect to Indebtedness except for:
(i) the Notes;
(ii) Indebtedness for money borrowed provided that such
Indebtedness for money borrowed does not result in the Company's failure to
comply with all of the provisions of Article IV hereof;
(iii) Current Liabilities, other than for borrowed money, which
are incurred in the ordinary course of business; and
(iv) Indebtedness with respect to lease obligations, provided
that such lease obligations do not violate subsection 4.02(c).
(c) Lease Obligations. Create, incur, assume or suffer to exist, or
permit any Subsidiary to create, incur, assume or suffer to exist, any
obligations as lessee for the rental or hire of real or personal property in
connection with any sale and leaseback transaction.
(d) Assumptions or Guaranties of Indebtedness of Other Persons.
Assume, guarantee, endorse or otherwise become directly or contingently liable
on, or permit any Subsidiary to assume, guarantee, endorse or otherwise become
directly or contingently
<PAGE>
-24-
liable on (including, without limitation, liability by way of agreement,
contingent or otherwise, to purchase, to provide funds for payment, to supply
funds to or otherwise invest in the debtor or otherwise to assure the creditor
against loss) any Indebtedness of any other Person, except for guaranties by
endorsement of negotiable instruments for deposit or collection in the ordinary
course of business.
(e) Mergers, Sale of Assets, etc. Merge or consolidate with, or
sell, assign, lease or otherwise dispose of or voluntarily part with the control
of (whether in one transaction or in a series of transactions) a material
portion of its assets (whether now owned or hereafter acquired) or sell, assign
or otherwise dispose of (whether in one transaction or in a series of
transactions) any of its accounts receivable (whether now in existence or
hereafter created) at a discount or with recourse, to, any Person, or permit any
Subsidiary to do any of the foregoing, except for sales or other dispositions of
assets in the ordinary course of business and except that (1) any Subsidiary may
merge into or consolidate with or transfer assets to any other Subsidiary, (2)
any Subsidiary may merge into or transfer assets to the Company, (3) the Company
may merge any Person into it or otherwise acquire such Person as long as the
Company is the surviving entity, such merger or acquisition does not result in
the violation of any of the provisions of this Agreement and no such violation
exists at the time of such merger or acquisition, and, provided that such merger
or acquisition does not result in the issuance (in one or more transactions) of
shares of the voting stock of the Company representing in the aggregate more
than twenty percent (20%) of the total outstanding voting stock of the Company,
on a fully diluted basis, immediately following the issuance thereof and (4) the
Company may sell fixed assets up to fifteen percent (15%) (based upon its then
net book value) of its consolidated net fixed assets in any one (1) twelve (12)
consecutive month period.
(f) Investments in Other Persons. Make or permit any Subsidiary to
make, any loan or advance to any Person, or purchase, otherwise acquire, or
permit any Subsidiary to purchase or otherwise acquire, all or substantially all
of the capital stock, all or substantially all of the assets comprising the
business of, obligations of, or any interest in, any Person, except:
(i) investments by the Company or a Subsidiary in evidences of
indebtedness issued or fully guaranteed by the United States of America and
having a maturity of not more than one year from the date of acquisition;
(ii) investments by the Company or a Subsidiary in certificates
of deposit, notes, acceptances and repurchase agreements having a maturity
of not more than one year from the date of acquisition issued by a bank
organized in the United States having capital, surplus and undivided
profits of at least $100,000,000 and whose parent holding company has
<PAGE>
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long-term debt rated Aa1 or higher, and whose commercial paper (if rated)
is rated Prime 1, by Moody's Investors Service, Inc.;
(iii) loans or advances from a Subsidiary to the Company;
(iv) investments by the Company or a Subsidiary in the
highest-rated commercial paper having a maturity of not more than one year
from the date of acquisition; and
(v) other loans, advances and investments; provided that the
aggregate amount of all such loans, advances and investments does not
exceed, at any one time outstanding, ten percent (10%) of the Consolidated
Net Worth of the Company as of the end of its then most recent fiscal
quarter.
(g) Distributions. Declare or pay any dividends, purchase, redeem,
retire, or otherwise acquire for value any of its capital stock (or rights,
options or warrants to purchase such shares) now or hereafter outstanding,
return any capital to its stockholders as such, or make any distribution of
assess to its stockholders as such, or permit any Subsidiary to do any of the
foregoing (such transactions being hereinafter referred to as "Distributions"),
except that the Subsidiaries may declare and make payment of cash and stock
dividends, return capital and make distributions of assets to the Company;
provided, however, that nothing herein. contained shall prevent the Company
from:
(i) repurchasing any shares of Common Stock pursuant to any
Shareholder Agreement, as in effect on the date hereof, between the Company
and any of its shareholder; provided, however, if the purchase price
thereunder exceeds $25,000, that no more than $25,000 shall be paid in cash
and the balance of such purchase price shall be represented by a promissory
note payable over the maximum number of annual Installments, with the
lowest interest rate, permitted by such Shareholder Agreement and, further,
provided, that the Company and the holder of each such promissory note
shall have executed and delivered to the Purchaser, at the time of such
repurchase, a subordination agreement, in form and substance satisfactory
to the Purchaser, subordinating all payments of interest and principal
under said promissory note to the prior payments of the Notes, except that
scheduled principal and interest payments will be permitted of at the time
of each such payment there does not exist an Event cf Default under this
Agreement or an event which, but for the requirement that notice be given
or time elapse or both, would constitute an Event of Default under this
Agreement, or
(ii) effecting a stock split or declaring or paying any dividend
consisting of shares of any class of capital stock to the holders of shares
of such class of capital stock, or
<PAGE>
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(iii) redeeming any stock of a deceased stockholder out of
insurance held by the Company on that stockholder's life, or
(iv) repurchasing 46,875 shares of its Common Stock as presently
constituted upon the terms described in Note 2 to the Company's audited
financial statements for the fiscal year ended June 30, 1991 (Exhibit
3.08), provided that on the date of such repurchase or within thirty (30)
days prior thereto the Company has issued and sold shares of its Common
Stock at a price per share not less than the repurchase price per share and
has received an aggregate consideration from such sale of not less than the
full repurchase price,
if in the case of any such transaction there does not exist at the time of such
Distribution an Event of Default or an event which, but for the requirement that
notice be given or time elapse or both, would constitute an Event of Default and
provided that such Distribution can be made in compliance with the other terms
of this Agreement.
(h) Dealings with Affiliates. Except as is set forth in Exhibit
3.11, enter or permit any Subsidiary to enter into any transaction with any
holder of 5% or more of any class of capital stock of the Company, or any member
of their families or any corporation or other entity in which any one or more of
such stockholders or members of their immediate families directly or indirectly
holds five percent (5%) or more of any class of capital stock except in the
ordinary course of business and on terms not less favorable to the Company or
the Subsidiary than it would obtain in a transaction between unrelated parties.
(i) Maintenance of Ownership of Subsidiaries. Sell or otherwise
dispose of any shares of capital stock of any Subsidiary, except to the Company
or another Subsidiary, or permit any Subsidiary to issue, sell or otherwise
dispose of any shares of its capital stock or the capital stock of any
Subsidiary, except to the Company or another Subsidiary, provided, however, that
nothing herein contained shall prevent any merger, consolidation or transfer of
assets permitted by subsection 4.02(e).
(j) Change in Nature of Business. Make, or permit any Subsidiary to
make, any material change in the nature of its Business.
4.03. Reporting Requirements. The Company will furnish to each
registered holder of any Note and Warrant and to any holder of at least
twenty-five percent (25%) of the Registrable Shares and to any holder of Common
Stock issued upon exercise of any Warrant who is or was a partner of the
Purchaser:
(a) as soon as possible and in any event within five (5) days after
the occurrence of each Event of Default or each event
<PAGE>
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which, with the giving of notice or lapse of time or both, would constitute an
Event of Default, the statement of the chief financial officer of the Company
setting forth details of such Event of Default or event and the action which the
Company proposes to take with respect thereto;
(b) as soon as available and in any event within thirty (30) days
after the end of each fiscal quarter of each fiscal year of the Company,
consolidated and consolidating balance sheets of the Company and its
Subsidiaries as of the end of such quarter and consolidated and consolidating
statements of income and retained earnings and statement of cash flows of the
Company and its Subsidiaries for the period commencing at the end of the
previous fiscal year and ending with the end of such quarter, setting forth in
each case in comparative form the corresponding figures for the corresponding
period of the preceding fiscal year and to Budget, all in reasonable detail and
duly certified (subject to year-end audit adjustments) by the chief financial
officer of the Company as having been prepared in accordance with generally
accepted accounting principles consistently applied;
(c) as soon as available and in any event within ninety (90) days
after the end of each fiscal year of the Company, a copy of the annual audit
report for such year for the Company and its Subsidiaries, including therein
consolidated balance sheets of the Company and its Subsidiaries as of the end of
such fiscal year and consolidated statements of income and retained earnings and
a consolidated statement of cash flow of the Company and its Subsidiaries for
such fiscal year, setting forth in each case in comparative form the
corresponding figures for the preceding fiscal year, all duly certified by
independent public accountants of recognized standing acceptable to the
Purchaser. A consolidating balance sheet as of the end of such fiscal year and a
consolidating statement of income for such fiscal year will be shown as
additional information and the auditors' report thereon will be limited to an
opinion in all material respects in relation to the consolidated financial
statements taken as a whole;
(d) at the time of delivery of each quarterly and annual statement,
a certificate, executed by the chief financial officer in the case of quarterly
statements and the Company's independent public accountants in the case of
annual statements, stating that such officer or accountants, as the case may be,
has caused this Agreement, the Notes, the Warrants and the Guaranty to be
reviewed and has no knowledge of any default by the Company or any Subsidiary in
the performance or observance of any of the provisions of this Agreement, the
Notes, the Warrants or the Guaranty or, if such officer or accountant has such
knowledge, specifying such default and the nature thereof. Each such certificate
shall set forth computations in reasonable detail demonstrating compliance with
the provisions of subsections 4.01(j) and (k) and subsections 4.02(b) and (c);
<PAGE>
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(e) promptly upon receipt thereof, any written report submitted to
the Company by independent public accountants in connection with an annual or
interim audit of the books of the Company and its Subsidiaries made by such
accountants;
(f) promptly after the commencement thereof, notice of all actions,
suits and proceedings before any court or governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, affecting the
Company or any Subsidiary of the type described in Section 3.04; and
(g) promptly after sending, making available, or filing the same,
such reports and financial statements as the Company or any Subsidiary shall
send or make available to the stockholders of the Company or the Securities and
Exchange Commission and such other information respecting the business,
properties or the condition or operations, financial or otherwise, of the
Company or any of its Subsidiaries as the Purchaser may from time to time
reasonably request.
4.04 Termination of Certain Covenants. The covenants set forth in
subsections 4.01(a), (b), (c), (j) and (k) and in subsections 4.02(a), (b), (c),
(d), (f) and (g)(iv) shall terminate and be of no further force or effect when
the Notes have been redeemed in their entirety. Further, all of the covenants
set forth in Sections 4.01, 4.02 and 4.03 shall. terminate and be of no further
force and effect upon the latter of (i) when the Notes have been redeemed in
their entirety and (ii) when the Company shall be subject to the reporting
requirements of the Exchange Act.
ARTICLE V
REGISTRATION RIGHTS
5.01. "Piggy Back" Registration. If at any time the Company shall determine
to register under the Securities Act (including pursuant to a demand of any
stockholder of the Company exercising registration rights) any of its Common
Stock of the type which has been or may be issued upon the exercise of the
Warrants, other than on Form S-8 or its then equivalent or pursuant to a
registration of Common Stock in connection with a merger, acquisition or other
transaction of the type described in Rule 145 registered on Form S-4, it shall
send to each holder of Registrable Shares, including each holder who has the
right to acquire Registrable Shares, written notice of such determination and,
if within thirty (30) days after receipt of such notice, such holder shall so
request in writing, the Company shall use its best efforts to include in such
registration statement all or any part of the Registrable Shares such holder
requests be registered, except that if, in connection with any offering
involving an underwriting of Common Stock to be issued by the Company, the
managing underwriter shall impose a limitation on the number of
<PAGE>
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shares of such Common Stock which may be included in any such registration
statement because, in its judgment, such limitation is necessary to effect an
orderly public distribution, and such limitation is imposed pro rata among the
holders of such Common Stock having an incidental ("piggy back") right to
include such Common Stock in the registration statement according to the amount
of such Common Stock which each holder had requested to be included pursuant to
such right, then the Company shall be obligated to include in such registration
statement only such limited portion of the Registrable Shares with respect to
which such holder has requested inclusion hereunder. No incidental right under
this Section 5.01 shall be construed to limit any registration required under
Section 5.02.
5.02. Required Registration. If on any one occasion, one or more holders of
at least forty percent (40%) of the Registrable Shares shall notify the Company
in writing that it or they intend to offer or cause to be offered for public
sale at least forty percent (40%) of the Registrable Shares, the Company will so
notify all holders of Registrable Shares, including all holders who have a right
to acquire Registrable Shares. Upon written request of any holder given within
thirty (30) days after the receipt by such holder from the Company of such
notification, the Company will use its best efforts to cause such of the
Registrable Shares as may be requested by any holder thereof (including the
holder or holders giving the initial notice of intent to offer) to be registered
under the Securities Act as expeditiously as possible. If the Company determines
to include shares to be sold by it in any registration requests pursuant to this
Section 5.02, such registration shall be deemed to have been a registration
under Section 5.01 of this Article V.
5.03. Registration on Form S-3. In addition to the rights provided the
holder of Registrable Shares in Sections 5.01 and 5.02 above, if the
registration of Registrable Shares under the Securities Act can be effected on
Form S-3 (or any similar form promulgated by the Securities and Exchange
Commission), the Company will promptly so notify each holder of Registrable
Shares, including each holder who has a right to acquire Registrable Shares, and
then will at any time, and from time to time, thereafter, as expeditiously as
possible, use its best efforts to effect qualification and registration under
the Securities Act on said Form S-3 of all or such portion of the Registrable
Shares as the holder or holders shall specify.
5.04. Effectiveness. The Company will use its best efforts to maintain the
effectiveness for ninety (90) days from the date of its effectiveness or until
the Registrable Shares covered thereby have been sold, whichever is earlier, and
from time to time will amend or supplement such registration statement and the
prospectus contained therein as and to the extent necessary to comply with the
Securities Act and any applicable state securities statute or regulation. The
Company will also provide each holder
<PAGE>
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of Registrable Shares with as many copies of the prospectus contained in any
such registration statement as it may reasonably request.
5.05. Indemnification of Holder of Registrable Shares. In the event that
the Company registers any of the Registrable Shares under the Securities Act, to
the extent permitted by applicable law, the Company will indemnify and hold
harmless each holder and each underwriter of the Registrable Shares so
registered (including any broker or dealer through whom such shares may be sold)
and each person, if any, who controls such holder or any such underwriter within
the meaning of Section 15 of the Securities Act from and against any and all
losses, claims, damages, expenses or liabilities, joint or several, to which
they or any of them become subject under the Securities Act or under any other
statute or at common law or otherwise, and, except as hereinafter provided, will
reimburse each such holder, each such underwriter and each such controlling
person, if any, for any legal or other expenses reasonably incurred by them or
any of them in connection with investigating or defending any actions whether or
not resulting in any liability, insofar as such losses, claims, damages,
expenses, liabilities or actions arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the
registration statement, in any preliminary or amended preliminary prospectus or
in the prospectus (or the registration statement or prospectus as from time to
time amended or supplemented by the Company) or arise out of or are based upon
the omission or alleged omission to state therein a material fact required to be
stated therein or necessary in order to make the statements therein not
misleading or any violation by the Company of any rule or regulation promulgated
under the Securities Act applicable to the Company and relating to action or
inaction required of the Company in connection with such registration, unless
such untrue statement or omission was made in such registration statement,
preliminary or amended, preliminary prospectus or prospectus in reliance upon
and in conformity with information furnished in writing to the Company in
connection therewith by such holder of Registrable Shares, any such underwriter
or any such controlling person expressly for use therein. Promptly after receipt
by any holder of Registrable Shares, any underwriter or any controlling person,
of notice of the commencement of any action in respect of which indemnity may be
sought against the Company, such holder of Registrable Shares, or such
underwriter or such controlling person, as the case may be, will notify the
Company in writing of the commencement thereof, and, subject to the provisions
hereinafter stated, the Company shall assume the defense of such action
(including the employment of counsel, who shall be counsel satisfactory to such
holder of Registrable Shares, such underwriter or such controlling person, as
the case may be), and the payment of expenses insofar as such action shall
relate to any alleged liability in respect of which indemnity may be sought
against the Company. Such holder of Registrable Shares, any such underwriter or
any such controlling person shall have the right to employ separate counsel in
any such
<PAGE>
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action and to participate in the defense thereof but the fees and expenses of
such counsel shall not be at the expense of the Company unless the employment of
such counsel has been specifically authorized by the Company. The Company shall
not be liable to indemnify any person for any settlement of any such action
effected without the Company's consent. The Company shall not, except with the
approval of each party being indemnified under this Section 5.05, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to the
parties being so indemnified of a release from all liability in respect to such
claim or litigation.
5.06. Indemnification of Company. In the event that the Company registers
any of the Registrable Shares under the Securities Act, to the extent permitted
by applicable law, each holder of the Registrable Shares so registered will
indemnity and hold harmless the Company, each of its directors, each of officers
who have signed the registration statement, each underwriter of the Registrable
Shares so registered (including any broker or dealer through whom such of the
shares may be sold) and each person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act from and against any and all losses,
claims, damages, expenses or liabilities, joint or several, to which they or any
of them may become subject under the Securities Act or under any other statute
or at common law or otherwise, and, except as hereinafter provided, will
reimburse the Company and each such director, officer, underwriter or
controlling person for any legal or other expenses reasonably incurred by them
or any of them in connection with investigating or defending any actions whether
or not resulting in any liability, insofar as such losses, claims, damages,
expenses, liabilities or actions arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the
registration statement, in any preliminary or amended preliminary prospectus or
in the prospectus (or the registration statement or prospectus as from time to
time amended or supplemented) or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary in order to make the statements therein not misleading, but only
insofar as any such statement or omission was made in reliance upon and in
conformity with information furnished in writing to the Company in connection
therewith by such holder of Registrable Shares expressly for use therein;
provided, however, that such holder's obligations hereunder shall be limited to
an amount equal to the proceeds to such holder of the Registrable Shares sold in
such registration. Promptly after receipt of notice of the commencement of any
action in respect of which indemnity may be sought against such holder of
Registrable Shares, the Company will notify such holder of Registrable Shares in
writing of the commencement thereof, and such holder of Registrable Shares
shall, subject to the provisions hereinafter stated, assume the defense of such
action (including the employment of counsel, who shall be counsel satisfactory
to
<PAGE>
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the Company) and the payment of expenses insofar as such action shall relate to
the alleged liability in respect of which indemnity may be sought against such
holder of Registrable Shares. The Company and each such director, officer,
underwriter or controlling person shall have the right to employ separate
counsel in any such action and to participate in the defense thereof but the
fees and expenses of such counsel shall not be at the expense of such holder of
Registrable Shares unless employment of such counsel has been specifically
authorized by such holder of Registrable Shares. Such holder of Registrable
Shares shall not be liable to indemnify any person for any settlement of any
such action effected without such holder's consent.
5.07. Exchange Act Registration. If the Company at any time shall list any
of its Common Stock of the type which may be issued upon the exercise of the
Warrants on any national securities exchange and shall register such Common
Stock under the Exchange Act, the Company will, at its expense, simultaneously
list on such exchange and maintain such listing of, all of the Common Stock from
time to time issuable upon exercise of the Warrants. If the Company becomes
subject to the reporting requirements of either Section 13 or Section 15(d) of
the Exchange Act, the Company will use its best efforts to timely file with the
Securities and Exchange Commission such information as the Securities and
Exchange Commission may require under either of said Sections; and in such
event, the Company shall use its best efforts to take all action as may be
required as a condition to the availability of Rule 144 under the Securities Act
(or any successor exemptive rule hereinafter in effect) with respect to such
Common Stock. The Company shall furnish to any holder of Registrable Shares
forthwith upon request (i) a written statement by the Company as to its
compliance with the reporting requirements of Rule 144, (ii) a copy of the most
recent annual or quarterly report of the Company as filed with the Securities
and Exchange Commission, and (iii) such other reports and documents as a holder
may reasonably request in availing itself of any rule or regulation of the
Securities and Exchange Commission allowing a holder to sell any such
Registrable Securities without registration.
5.08. Damages. The Company recognizes and agrees that the holder of
Registrable Shares will not have an adequate remedy if the Company fails to
comply with this Article V and that damages will not be readily ascertainable,
and the Company expressly agrees that, in the event of such failure, it shall
not oppose an application by the holder of Registrable Shares or any other
person entitled to the benefits of this Article V requiring specific performance
of any and all provisions hereof or enjoining the Company from continuing to
commit any such breach of this Article V.
5.09. Further Obligations of the Company. Whenever under the preceding
Sections of this Article V, the Company is required hereunder to register
Registrable Shares, it agrees that it shall also do the following:
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(a) Furnish to each selling holder such copies of each preliminary
and final prospectus and such other documents as said holder may reasonably
request to facilitate the public offering of its Registrable Shares;
(b) Use its best efforts to register or qualify the Registrable
Shares covered by said registration statement under the applicable securities or
"blue sky" laws of such jurisdictions as any selling holder may reasonably
request; provided, however, that the Company shall not be obligated to qualify
to do business in any jurisdiction where it is not then so qualified or to take
any action which would subject it to the service of process in suits other than
those arising out of the offer or sale of the securities covered by the
registration statement in any jurisdiction where it is not then so subject;
(c) Furnish to each selling holder a signed counterpart of
(i) an opinion of counsel for the Company, dated the effective
date of the registration statement, and
(ii) "comfort" letters signed by the Company's independent public
accountants who have examined and reported on the Company's financial
statements included in the registration statement, to the extent permitted
by the standards of the American Institute of Certified Public
Accountants,
covering substantially the same matters with respect to the registration
statement (and the prospectus included therein) and (in the case of the
accountants' "comfort" letters) with respect to events subsequent to the date of
the financial statements, as are customarily covered in opinions of issuer's
counsel and in accountants' "comfort" letters delivered to the underwriters in
underwritten public offerings of securities, to the extent that the Company is
required to deliver or cause the delivery of such opinion or "comfort" letters
to the underwriters in an underwritten public offering of securities;
(d) Permit each selling holder or his counsel or other
representatives to inspect and copy such corporate documents and records as may
reasonably be requested by them;
(e) Furnish to each selling holder a copy of all documents filed and
all correspondence from or to the Securities and Exchange Commission in
connection with any such offering; and
(f) Use its best efforts to insure the obtaining of all necessary
approvals from the National Association of Securities Dealers, Inc.
5.10 Limitations. Notwithstanding the foregoing provisions of this Article
V:
<PAGE>
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(a) The Company shall not be obligated to cause any registration to
become effective within the ninety (90) day period preceding the effective date
of a Company-initiated registration or prior to the expiration of ninety (90)
days following the effective date of the most recent Company-initiated
registration;
(b) The Company shall not be required to maintain and keep any such
registration effective for a period exceeding ninety (90) days from the
effective date thereof; and
(c) The Company shall be entitled to postpone the filing of any such
registration for a period not to exceed ninety (90) days from the giving of
notice of or receipt of a request for any registration, if the Company, in its
good faith judgment with advice of counsel, reasonably believes that it would be
advisable to withhold the public release of information which in the reasonable
judgment of the Company would be required to be disclosed in such registration
statement.
5.11 Letter of Opinion of Counsel in Lieu of Registration. The Company will
not be required to register any outstanding Registrable Shares in connection
with any demand made pursuant to Sections 5.01, 5.02 or 5.03 if, in the written
opinion of counsel for the Company, reasonably acceptable to such holder in form
and substance, such holder is able to sell all of its Registrable Shares without
regard to time or volume limitations or manner of sale, in accordance with Rule
144(k) under the Securities Act and applicable state securities laws.
5.12. Expenses. In the case of a registration under Section 5.01, 5.02 or
5.03, the Company shall bear all costs and expenses of each such registration,
including, but not limited to, printing, legal and accounting expenses,
Securities and Exchange Commission filing fees and "blue sky" fees and expenses;
provided, however, that the Company shall have no obligation to pay or otherwise
bear (i) any portion of the fees or disbursements of more than one counsel for
the selling holders of Registrable Shares in connection with the registration of
their Registrable Shares, or (ii) any portion of the underwriters' commissions
or discounts attributable to the Registrable Shares being offered and sold by
the holders of Registrable Shares.
ARTICLE VI
EVENTS OF DEFAULT
6.01. Events of Default. If any of the following events "Events of
Default") shall occur and be continuing:
(a) The Company shall fail to pay any required installment of
principal or any payment of interest or premium on any of the Notes when due; or
<PAGE>
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(b) The Company shall default in the performance of any covenant
contained in subsection 4.01(j) or (k) or shall default for ten (10) days in
the performance of any covenant contained in Section 4.02; or
(c) Any representation or warranty made by the Company or any
Subsidiary in this Agreement or by the Company or any Subsidiary (or any
officers of the Company or any Subsidiary) in any certificate, instrument or
written statement contemplated by or made or delivered pursuant to or in
connection with this Agreement, shall prove to have been incorrect when made in
any material respect; or
(d) The Company or any Subsidiary shall fail to perform or observe
any other term, covenant or agreement contained in this Agreement, the Notes,
the Warrants or the Guaranty on its part to be performed or observed and any
such failure remains unremedied for ten (10) business days after written notice
thereof shall have been given to the Company by any registered holder of the
Notes; or
(e) The Company or any Subsidiary shall fail to pay any Indebtedness
for borrowed money (other than as evidenced by the Notes) owing by the Company
or such Subsidiary (as the case may be), or any interest or premium thereon,
when due (or, if permitted by the terms of the relevant document, within any
applicable grace period), whether such Indebtedness shall become due by
scheduled maturity, by required prepayment, by acceleration, by demand or
otherwise, or shall fail to perform any term, covenant or agreement on its part
to be performed under any agreement or instrument (other than this Agreement or
the Notes) evidencing or securing or relating to any Indebtedness owing by the
Company or any Subsidiary, as the case may be, when required to be performed
(or, if permitted by the terms of the relevant document, within any applicable
grace period), if the effect of such failure to pay or perform is to accelerate,
or to permit the holder or holders of such Indebtedness, or the trustee or
trustees under any such agreement or instrument to accelerate, the maturity of
such Indebtedness, unless such failure to pay or perform shall be waived by the
holder or holders of such Indebtedness or such trustee or trustees; or
(f) The Company or any Subsidiary shall be involved in financial
difficulties as evidenced (i) by its admitting in writing its inability to pay
its debts generally as they become due; (ii) by its commencement of a voluntary
case under Title 11 of the United States Code as from time to time in effect, or
by its authorizing, by appropriate proceedings of its Board of Directors or
other governing body, the commencement of such a voluntary case; (iii) by its
filing an answer or other pleading admitting or failing to deny the material
allegations of a petition filed against it commencing an involuntary case under
said Title 11, or seeking, consenting to or acquiescing in the relief therein
provided, or by its failing to controvert timely
<PAGE>
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the material allegations of any such petition; (iv) by the entry of an order for
relief in any involuntary case commenced under said Title 11; (v) by its seeking
relief as a debtor under any applicable law, other than said Title 11, of any
jurisdiction relating to the liquidation or reorganization of debtors or to the
modification or alteration of the rights of creditors, or by its consenting to
or acquiescing in such relief; (vi) by the entry of an order by a court of
competent jurisdiction (a) finding it to be bankrupt or insolvent, (b) ordering
or approving its liquidation, reorganization or any modification or alteration
of the rights of its creditors, or (c) assuming custody of, or appointing a
receiver or other custodian for, all or a substantial part of its property; or
(vii) by its making an assignment for the benefit of, or entering into a
composition with, its creditors, or appointing or consenting to the appointment
of a receiver or other custodian for all or a substantial part of its property;
or
(g) Any judgment, writ, warrant of attachment or execution or
similar process shall be issued or levied against a substantial part of the
property of the Company or any Subsidiary and such judgment, writ, or similar
process shall not be released, vacated or fully bonded within (60) days after
its issue or levy; or
(h) OCA-AO shall fail, on or before June 30, 1993, to pay, in full,
all of its obligations under that certain Loan Agreement, dated as of March 23,
1990, between OCA-AO and Greyhound Financial Corporation; or
(i) The Company shall fail, on or before June 30, 1993, to merge
OCA-AO with and into the Company;
then, and in any such event, the Purchaser or any other holder of the Notes may,
by notice to the Company, declare the entire unpaid principal amount of the
Notes, all interest accrued and unpaid thereon and all other amounts payable
under this Agreement to be forthwith due and payable, whereupon the Notes, all
such accrued interest and all such amounts shall become and be forthwith due and
payable (unless there shall have occurred an Event of Default under subsection
6.01(f) in which case all such amounts shall automatically become due and
payable), without presentment, demand, protest or further notice of any kind,
all of which are hereby expressly waived by the Company.
6.02. Annulment of Defaults. Section 6.01 is subject to the condition
that, if at any time after the principal of any of the Notes shall have become
due and payable, and before any judgment or decree for the payment of the moneys
so due, or any thereof, shall have been entered, all arrears of interest upon
all the Notes and all other sums payable under the Notes and under this
Agreement (except the principal of the Notes which by such declaration shall
have become payable) shall have been duly paid, and every other default and
Event of Default shall have been made good or cured, then and in every such case
the holders of seventy-five
<PAGE>
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percent (75%) or more in principal amount of all Notes then outstanding may, by
written instrument filed with the Company, rescind and annul such declaration
and its consequences; but no such rescission or annulment shall extend to or
affect any subsequent default or Event of Default or impair any right consequent
thereon.
ARTICLE VII
DEFINITIONS AND ACCOUNTING TERMS
7.01. Certain Defined Terms. As used in this Agreement, the following terms
shall have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):
"Agreement" means this Subordinated Note and Warrant Purchase Agreement as
from time to time amended and in effect between the parties.
"Business" means the design, development manufacture and marketing of
optical and electro-optical systems, subsystems, sophisticated assemblies and
components for commercial, industrial, military, aerospace and scientific
applications and other activities related to one or more of the foregoing.
"Business Plan" means the Optical Corporation of America Confidential
Memorandum as delivered by the Company to the Purchaser on or about March 24,
1992.
"Capital Resource Company Act" shall have the meaning assigned to that term
in Section 1.12.
"Code" shall have the meaning assigned to that term in Section 4.01(i).
"Company" means and shall include Optical Corporation of America and its
successors and assigns.
"Common Stock" includes (a) the Company's Common Stock, $.01 par value per
share, as authorized on the date of this Agreement, (b) any other capital stock
of any class or classes (however designated) of the Company, authorized on or
after the date hereof, the holders of which shall have the right, without
limitation as to amount, either to all or to a share of the balance of current
dividends and liquidating dividends after the payment of dividends and
distributions on any shares entitled to preference, and the holders of which
shall ordinarily, in the absence of contingencies, be entitled to vote for the
election of a majority of directors of the Company (even though the right so to
vote has been suspended by the happening of such a contingency), and (c) any
other securities into which or for which
<PAGE>
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any of the securities described in (a) or (b) may be converted or exchanged
pursuant to a plan of recapitalization, reorganization, merger, sale of assets
or otherwise.
"Consolidated" and "consolidating" when used with reference to any term
defined herein mean that term as applied to the accounts of the Company and its
Subsidiaries consolidated in accordance with generally accepted accounting
principles.
"Consolidated Net Earnings Available for Interest Charges" means, for any
period, Consolidated Net Income for such period plus (a) interest paid or
accrued by the Company and its Subsidiaries with respect to all Indebtedness for
such period and (b) income and excess profit taxes for such period and all other
taxes for such period which are imposed on or measured by income after deduction
of interest charges.
"Consolidated Net income" means, for any period, the net income (or net
deficit) of the Company and its Subsidiaries for such period, after all
expenses, taxes and other proper charges, determined in accordance with
generally accepted accounting principles eliminating (i) all intercompany items,
(ii) all earnings attributable to equity interests in Persons that are not
Subsidiaries unless actually received by the Company or its Subsidiaries, (iii)
all income arising from the forgiveness, adjustment or negotiated settlement of
any Indebtedness, and (iv) any increase or decrease of income arising from any
change in the method of accounting for any item from that employed in the
preparation of the financial statements attached hereto as Exhibit 3.08.
"Consolidated Net worth" means, at any dates, the sum of (a) the par value
of all of the stock of the Company issued and outstanding, (b) the amount of any
additional paid-in-capital and
(i) the positive retained earnings, if any, of the Company and its
Subsidiaries, or
(ii) less, the amount of any deficit in the retained earnings of the
Company and its Subsidiaries
as the same appears on a consolidated balance sheet of the Company and its
Subsidiaries prepared in accordance with generally accepted accounting
principles consistently applied as of such date, after eliminating all
intercompany items and all amounts properly attributable to (1) any write-up in
the book value of any asset resulting from a revaluation thereof after the date
of this Agreement; (2) the amount of any intangible assets including patents,
trademarks, unamortized debt discount and expense, goodwill, covenants and
agreements and the excess of the purchase price paid for assets or stock
acquired over the value assigned thereto on the books of the Company or of the
Subsidiary which
<PAGE>
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shall have acquired the same; (3) earnings attributable to any other Person
unless actually received by the Company or its Subsidiaries; and (4) changes in
the method of accounting.
"Current Liabilities" means all liabilities of any corporation which would,
in accordance with generally accepted accounting principles consistently
applied, be classified as current liabilities of a corporation conducting a
business the same as or similar to that of such corporation, including, without
limitation, all rental payments due under leases required to be capitalized in
accordance with applicable Statements of Financial Accounting Standards and
fixed prepayments of, and sinking fund payments with respect to, Indebtedness
(including Indebtedness evidenced by the Notes), which payments are required to
be made within one year from the date of determination.
"Distribution" shall have the meaning assigned to that term in Section
4.02(g).
"Environmental Laws" means all foreign, federal, state or local laws,
ordinances and regulations pertaining to human health or the environment
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. Sections 9601, et seq., the Emergency
Planning and Community Right-to-Know Act, 42 U.S.C. Sections 11001, et seq., the
Resource Conservation and Recovery Act, 42 U.S.C. Sections 6901, et seq., and
the Massachusetts Oil and Hazardous Material Release Prevention and Response
Act, M.G.L. Chapter 21E.
"ERISA" shall have the meaning assigned to that term in Section 3.10.
"Events of Default" shall have the meaning assigned to that term in Section
6.01.
"Exchange Act" means the Securities Exchange Act of 1934 or any similar
federal statute, and the rules and regulations of the Securities and Exchange
Commission (or of any other Federal Agency then administering the Exchange Act)
thereunder, all as the same shall be in effect at the time.
"Government Contract" shall have the meaning assigned to that term in
Section 3.14.
"Guaranty" shall have the meaning assigned to that term in Section 2.02(a).
"Hazardous Substances" means oil and petroleum products, asbestos,
polychlorinated biphenyls and urea formaldehyde, and any other substance
classified as hazardous, toxic or as wastes under any Environmental Laws.
"Indebtedness" means all obligations, contingent and otherwise, which
should, in accordance with generally accepted
<PAGE>
-40-
accounting principles consistently applied, be classified upon the obligor's
balance sheet as liabilities, but in any event including, without limitation,
liabilities secured by any mortgage on property owned or acquired subject to
such mortgage, whether or not the liability secured thereby shall have been
assumed, and also including, without limitation, (i) all guaranties,
endorsements and other contingent obligations, in respect of Indebtedness of
others, whether or not the same are or should be so reflected in said balance
sheet, except guaranties by endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business and (ii)
the present value of any lease payments (other than those which are treated as
Current Liabilities) due under leases required to be capitalized in accordance
with applicable Statements of Financial Accounting Standards, determined in
accordance with applicable Statements of Financial Accounting Standards.
"Interest Charges" means the interest expense of the Company and its
Subsidiaries incurred in any period with respect to Indebtedness (including the
current portion thereof)
"Key Employees" means the individuals named on Exhibit 7.01(a) attached
hereto.
"Notes" shall have the meaning assigned to that term in Section 1.01.
"OCA-AO" shall have the meaning assigned to that term in Section 2.02(a).
"Person" means an individual, corporation (other than the Company or
OCA-AO), partnership, joint venture, trust, or unincorporated organization, or a
government or any agency or political subdivision thereof.
"Purchaser" means and shall include not only the Massachusetts Capital
Resource Company but also any other holder or holders of any of the Notes or
Warrants.
"Registrable Shares" means and shall include the shares of Common Stock
issued and issuable upon exercise of the Warrants.
"Securities Act" means the Securities Act of 1933 or any similar Federal
statute, and the rules and regulations of the Securities and Exchange Commission
(or of any other Federal agency then administering the Securities Act)
thereunder, all as the same shall be in effect at the time.
"Senior Debt" shall have the meaning assigned to that term in Section
1.10(h).
"Subsidiary" or "Subsidiaries" means any corporation or trust of which the
Company and/or any of its other Subsidiaries (as
<PAGE>
-41-
herein defined) directly or indirectly owns at the time all of the outstanding
shares of every class of such corporation or trust other than directors'
qualifying shares.
"Warrants" shall have the meaning assigned to that term in Section 1.02.
7.02. Accounting Terms. All accounting terms not specifically defined
herein shall be construed in accordance with generally accepted accounting
principles consistent with those applied in preparation of the financial
statements attached hereto as Exhibit 3.08, and all financial data submitted
pursuant to this Agreement and all financial tests to be calculated in
accordance with this Agreement shall be prepared and calculated in accordance
with such principles.
ARTICLE VIII
MISCELLANEOUS
8.01. No Waiver; Cumulative Remedies. No failure or delay on the part of
the Purchaser, or any other holder of the Notes or Warrants in exercising any
right, power or remedy hereunder or under any agreement, document or instrument
executed or delivered in connection herewith, shall operate as a waiver thereof;
nor shall any single or partial exercise of any such right, power or remedy
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy hereunder. The remedies herein provided are cumulative
and not exclusive of any remedies provided by law.
8.02. Amendments, Waivers and Consents. Any provision in this Agreement,
the Notes or the Warrants to the contrary notwithstanding, changes in or
additions to this Agreement may be made, and compliance with any covenant or
provision herein or therein set forth may be omitted or waived, if the Company
(i) shall, in the case of the Notes, obtain consent thereto in writing from the
holder or holders of at least seventy-five percent (75%) in principal amount of
all Notes then outstanding, and (ii) shall, in the case of the Warrants, obtain
the consent thereto in writing from the holder or holders of at least
seventy-five percent (75%) of the shares of Common Stock issued and issuable
upon exercise of the Warrants, and (iii) shall, in each case, deliver copies of
such consent in writing to any holders who did not execute the same; provided
that no such consent shall be effective to reduce or to postpone the date fixed
for the payment of the principal (including any required redemption) or interest
payable on any Note, without the consent of the holder thereof, or to reduce the
percentage of the Notes and Warrants the consent of the holders of which is
required under this Section. Any waiver or consent may be given subject to
satisfaction of conditions stated therein and any waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given. Written
<PAGE>
-42-
notice of any waiver or consent effected under this subsection shall promptly be
delivered by the Company to any holders who did not execute the same.
8.03. Addresses for Notices, etc. All notices, requests, demands and
other communications provided for hereunder shall be in writing (including
telecopier communication) and mailed or telecopied or delivered to the
applicable party at the addresses indicated below:
If to the Company:
Optical Corporation of America
7421 Orangewood Avenue
Garden Grove, California 94621
Attention: Chairman
Telecopy Number: (714) 898-0587
with a copy to the attention of:
George Olmsted, Clerk
Optical Corporation of America
170 Locke Drive
Marlborough, Massachusetts 01752
Telecopy Number: (508) 485-0526
If to the Purchaser:
Payments should be mailed to:
Massachusetts Capital Resource Company
P.O. Box 3707
Boston, Massachusetts 02241
and all other deliveries and other communications
made at or sent to:
Massachusetts Capital Resource Company
420 Boylston Street
Boston, Massachusetts 02116
Attention: Richard W. Anderson, Senior Vice
President
Telecopy Number: (617) 536-7930
If to any other holder of the Notes or Warrants: at such holder's address
for notice as set forth in the register maintained by the Company, or, as to
each of the foregoing, at such other address as shall be designated by such
Person in a written notice to the other party complying as to delivery with the
terms of this Section. All such notices, requests, demands and other
communications shall, when mailed or telecopied, respectively, be effective when
deposited in the mails or transmitted during regular business hours by telecopy,
or delivered in hand, respectively, addressed as aforesaid.
<PAGE>
-43-
8.04. Costs, Expenses and Taxes. The Company agrees to pay on demand all
costs and expenses of the Purchaser in connection with the preparation,
execution and delivery of this Agreement, the Notes, the Warrants, the Guaranty
and other instruments and documents to be delivered hereunder, including the
reasonable fees and out-of-pocket expenses of Messrs. Testa, Hurwitz &
Thibeault, special counsel for the Purchaser, with respect thereto, as well as
the reasonable fees and out-of-pocket expenses of legal counsel, independent
public accountants and other outside experts reasonably retained by the
Purchaser in connection with the amendment or enforcement of this Agreement, the
Notes, the Warrants, the Guaranty and other instruments and documents to be
delivered hereunder or thereunder. In addition, the Company shall pay any and
all stamp and other taxes payable or determined to be payable in connection with
the execution and delivery of this Agreement, the Notes, the Warrants, the
Guaranty and the other instruments and documents to be delivered hereunder or
thereunder and agrees to save the Purchaser harmless from and against any and
all liabilities with respect to or resulting from any delay in paying or
omission to pay such taxes and filing fees.
8.05. Binding Effect; Assignment. This Agreement shall be binding upon and
inure to the benefit of the Company and the Purchaser and their respective
successors and assigns, except that the Company shall not have the right to
assign its rights hereunder or any interest herein without the prior written
consent of the Purchaser.
8.06. Survival of Representations and Warranties. All representations and
warranties made in this Agreement, the Notes, the Warrants, the Guaranty or any
other instrument or document delivered in connection herewith or therewith,
shall survive the execution and delivery hereof or thereof and the making of the
loans.
8.07. Prior Agreements. This Agreement constitutes the entire agreement
between the parties and supersedes any prior understandings or agreements
concerning the subject matter hereof.
8.08. Severability. The invalidity or unenforceability of any provision
hereof shall in no way affect the validity or enforceability of any other
provision.
8.09. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the Commonwealth of Massachusetts.
8.10. Headings. Article, Section and subsection headings in this Agreement
are included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.
8.11. Sealed Instrument. This Agreement is executed as an instrument under
seal.
<PAGE>
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8.12. Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and each of the parties hereto may execute this Agreement by signing
any such counterpart.
8.13. Further Assurances. From and after the date of this Agreement, upon
the request of the Purchaser, the Company and each Subsidiary shall execute and
deliver such instruments, documents and other writings as may be necessary or
desirable to confirm and carry out and to effectuate fully the intent and
purposes of this Agreement, the Notes, the Warrants and the Guaranty.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
OPTICAL CORPORATION OF AMERICA
By /s/ DONALD A. JOHNSON
--------------------------------------
Donald A. Johnson, Chairman and
Chief Executive Officer
MASSACHUSETTS CAPITAL RESOURCE COMPANY
By /s/ RICHARD W. ANDERSON
--------------------------------------
Richard W. Anderson, Senior Vice
President
<PAGE>
Amendment to the Note and Warrant Purchase Agreement
Dated as of May 28, 1992
between
Optical Corporation of America
and
Massachusetts Capital Resource Company
This Amendment is dated as of June 30, 1994, is by and between Optical
Corporation of America (the "Company") and Massachusetts Capital Resource
Company (the "Purchaser"), amends that certain Note and Warrant Purchase
Agreement between the Company and the Purchaser referenced above (the
"Agreement") and is to the following effect:
1. All capitalized terms not specifically defined herein shall have
the meanings ascribed to them in the Agreement.
2. The following definition is added to Section 7.01 of the
Agreement:
"'Subordinated Indebtedness' shall mean (i) the Notes; (ii) the 1993
subordinated notes due 1997 between the Company and certain other
purchasers in the aggregate principal amount of $750,000.00 so long as
by their terms or by separate agreement they remain subordinate and
junior to Senior Debt in substantially the same manner and
substantially to the same extent as the Notes are subordinate and
junior to Senior debt."
3. Section 4.0(j) of the Agreement is amended to read hereafter
as follows:
"(j) Maintenance of Debt to Equity Ratio. Maintain a ratio of
Consolidated Indebtedness, other than Subordinated Indebtedness,
to consolidated Net Worth, plus Subordinated Indebtedness of not
more than 2 to 1, such ratio to be measured at the end of each
fiscal quarter of the Company."
4. Section 4.01(k) of the Agreement is amended to read hereafter as
follows:
"(k) Interest Coverage. Maintain a ratio of Consolidated Net Earnings
Available for Interest Charges to Interest Charges of:
(i) not less than 1.5 to 1 through and including September 30,
1994;
<PAGE>
(ii) not less than 1.75 to 1 thereafter through and including
December 31, 1994; and
(iii) not less than 2.0 to 1 thereafter,
such ratio to be measured at the end of each fiscal quarter of the
Company as an average of the four (4) most recent fiscal quarters of
the Company."
5. The Purchaser waives compliance by the Company with Sections
4.01(j) and 401(k) of the Agreement through the effective date of this
Amendment.
IN WITNESS WHEREOF, the undersigned have caused this Amendment to be
executed by a duly authorized officer effective as of the date first above
written.
OPTICAL CORPORATION OF AMERICA
By: /s/ DONALD A. JOHNSON
------------------------------
Donald A. Johnson
Chairman and Chief Executive Officer
MASSACHUSETTS CAPITAL RESOURCE COMPANY
By: /s/ RICHARD W. ANDERSON
--------------------------------
Richard W. Anderson
Senior Vice President
<PAGE>
Amendment to the Note and Warrant Purchase Agreement
Dated as of May 28, 1992
between
Optical Corporation of America
and
Massachusetts Capital Resource Company
This Amendment is dated as of September 30, 1994, is by and between
Optical Corporation of America (the "Company") and Massachusetts Capital
Resource Company (the "Purchaser"), amends that certain Note and Warrant
Purchase Agreement between the Company and the Purchaser referenced above (the
"Agreement") and is to the following effect:
1. All capitalized terms not specifically defined herein shall have
the meanings ascribed to them in the Agreement.
2. Section 4.01 (k) of the Agreement is amended to read hereafter as
follows:
"(k) Interest Coverage. Maintain a ratio of Consolidated Net Earnings
Available for Interest Charges to Interest Charges of:
(i) not less than 1.0 to 1 through and including December 31,
1994;
(ii) not less than 1.25 to 1 thereafter through and including
March 31, 1995; and
(iii) not less than 2.0 to 1 thereafter,
such ratio to be measured at the end of each fiscal quarter of the
Company as an average of the four (4) most recent fiscal quarters of
the Company."
3. The Purchaser waives compliance by the Company with Section
4.01(k) of the Agreement through the effective date of this Amendment.
IN WITNESS WHEREOF, the undersigned have caused this Amendment to be
executed by a duly authorized officer effective as of the date first above
written.
OPTICAL CORPORATION OF AMERICA
By: /s/ DONALD A. JOHNSON
------------------------------
Donald A. Johnson
Chairman and Chief Executive Officer
MASSACHUSETTS CAPITAL RESOURCE COMPANY
By: /s/ RICHARD W. ANDERSON
--------------------------------
Richard W. Anderson
Senior Vice President
<PAGE>
Amendment to the Note and Warrant Purchase Agreement
Dated as of May 28, 1992
between
Optical Corporation of America
and
Massachusetts Capital Resource Company
This Amendment is dated as of August 30, 1995, is by and between
Optical Corporation of America (the "Company") and Massachusetts Capital
Resource Company (the "Purchaser"), amends that certain Note and Warrant
Purchase Agreement between the Company and the Purchaser referenced above (the
"Agreement") and is to be the following effect:
1. All capitalized terms not specifically defined herein shall have
the meanings ascribed to them in the Agreement.
2. Section 4.01(k) of the Agreement is amended to read hereafter as
follows:
"(k) Interest Coverage. Maintain a ratio of Consolidated Net Earnings
Available for Interest Charges to Interest Charges of:
(i) not less than 1.0 to 1 through and including December 31,
1994;
(ii) not less than 1.25 to 1 thereafter through and including
March 31, 1995;
(iii) not less than 1.50 to 1 thereafter through and including
June 30, 1996; and
(iv) not less than 2.0 to l thereafter,
such ratio to be measured at the end of each fiscal quarter of the
Company as an average of the four (4) most recent fiscal quarters of
the Company."
3. The Purchaser waives compliance by the Company with Section
4.01(k) of the Agreement through the effective date of this Amendment.
IN WITNESS WHEREOF, the undersigned have caused this Amendment to be
executed by a duly authorized officer effective as of the date first above
written.
OPTICAL CORPORATION OF AMERICA
By: /s/ DONALD A. JOHNSON
------------------------------
Donald A. Johnson
Chairman and Chief Executive Officer
MASSACHUSETTS CAPITAL RESOURCE COMPANY
By: /s/ RICHARD W. ANDERSON
--------------------------------
Richard W. Anderson
Senior Vice President
<PAGE>
AMENDMENT
Amendment, made as of the 20th day of July 1995, by and among Optical
Corporation of America, a Massachusetts corporation, (the "Company") and
Massachusetts Capital Resource Company, a Massachusetts special purpose limited
partnership, (the "Purchaser").
WHEREAS, the Company and the Purchaser have entered into a certain
Subordinated Note and Warrant Purchase Agreement, dated as of May 28, 1992 and
as amended to date, (the "Purchase Agreement"); and
NOW, THEREFORE, the Company and the Purchaser do hereby agree with each
other as follows:
Section 1.05(a) of the Purchase Agreement is hereby amended, effective as
July 20, 1995, in its entirety to read as follows:
"Beginning on and with September 30, 1996, and on the last day of December,
March, June and September in each year thereafter through and including June 30,
1999, the Company will redeem, without premium, $125,000 in principal amount of
the Notes, or such lesser amount as may then be outstanding, together with all
accrued and unpaid interest then due on the amount so redeemed."
In WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized as of the date
first above written.
OPTICAL CORPORATION OF AMERICA
By /s/ DONALD A. JOHNSON
-----------------------------------
Title: Chairman and CEO
-------------------------------
MASSACHUSETTS CAPITAL RESOURCE CO.
By: /s/ RICHARD W. ANDERSON
-----------------------------------
Richard W. Anderson
Senior Vice President
<PAGE>
AGREEMENT, made as of this 15th day of March 1994, by and between
Optical Corporation of America, a Massachusetts corporation, (the "Company") and
Massachusetts Capital Resource Company, a Massachusetts special purpose limited
partnership ("MCRC")
WHEREAS, the Company and MCRC have entered into a certain Subordinated
Note and Warrant Purchase Agreement, dated as of May 28, 1992 (the "Purchase
Agreement"), pursuant to which the Company, among other things, issued to MCRC
the Company's Subordinated Note, due June 30, 1999, in the original principal
amount of $1,500,000 (the "Note"); and
WHEREAS, the Company acknowledges that there presently exists an Event
of Default (as that term is defined in the Purchase Agreement) as a result of
the Company's failure to meet the interest coverage test set forth in Section
4.01(k) of the Purchase Agreement as of December 31, 1993; and
WHEREAS, the Company desires that MCRC waive the existing Event of
Default and amend certain portions of the Purchase Agreement; and
WHEREAS, MCRC, in accordance with and relying upon the terms and
conditions set forth herein, is willing to grant such waiver and amend the
Purchase Agreement;
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt of which is hereby acknowledged, the parties
hereto do hereby agree with each other as follows:
1. Upon the Effective Date, the first sentence of Section 1.05(a) of
the Purchase Agreement is amended, in its entirety, effective as of February 17,
1994, as follows:
"Beginning on and with September 30, 1995, and on the last day of
December, March, June and September in each year thereafter through and
including June 30, 1999, the Company will redeem, without premium,
$93,750 in principal amount of the Notes, or such lesser amount as may
then be outstanding, together with all accrued and unpaid interest then
due on the amount so redeemed."
2. Upon the Effective Date, Section 4.02(a) of the Purchase Agreement
is amended by striking the period at the end of clause (viii) thereof and by
adding the following
"; and
(ix) now or hereafter granted to the Purchaser to secure the
Company's performance under this Agreement and the Notes"
<PAGE>
- 2 -
3. The Company shall, on the date hereof, execute and deliver to MCRC a
security agreement (the "Security Agreement"), together with all related
financing statements, such Security Agreement and each other document executed
therewith to be in form and substance satisfactory to MCRC. Further, on the date
hereof, the Company, Massachusetts Business Development Corporation, Fleet
Credit Corporation and the Bank of the West shall have amended that certain
Intercreditor Agreement, dated March 31, 1993, to include MCRC, such amendment
to be in form and substance satisfactory to MCRC.
4. The Company represents and warrants to MCRC as follows:
(a) The Company is a duly organized and validly existing
corporation in good standing under the laws of the Commonwealth of Massachusetts
and has all requisite corporate power and authority for the ownership and
operation of its property and carrying on of its business as now being
conducted and proposed to be conducted. Neither the nature of the business
conducted by the Company nor the character of the properties owned or held under
lease by the Company requires the Company to be qualified or licensed as a
foreign corporation in any state or jurisdiction other than the State of
California in which it is so qualified and in good standing.
(b) The Company has all necessary corporate power and has
taken all corporate action required to make all the provisions of this Agreement
and the Security Agreement the valid and enforceable obligations they purport to
be.
(c) No authorization, consent, approval, license, exemption of
or filing or registration with any court or governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, is or will be
necessary for, or in connection with, the execution or delivery by the Company
of, or for the performance by it of its obligations under, this Agreement or the
Security Agreement.
(d) Neither the execution and delivery of this Agreement, the
Security Agreement, nor the consummation of any transactions contemplated hereby
or thereby has constituted or resulted in or will constitute or result in a
default or violation of any term or provision of the Company's charter or
by-laws or, with notice or the passage of time, any mortgages, indentures,
leases, agreements or other instruments or any judgments, decrees, governmental
orders, statutes, rules and regulations by which the Company is bound or to
which its properties or assets are subject.
(e) That, except for the default under Section 4.01(k) of the
Purchase Agreement referred to herein, no event has occurred and is continuing
which constitutes an Event of Default under the Purchase Agreement or which
would become an Event of default upon a lapse of time or with notice if
applicable.
<PAGE>
- 3 -
5. The "Effective Date" shall be that date, on or before March 15,
1994, on which the Company shall have delivered to the Purchaser, or its special
counsel, each of the following:
(a) A certified copy of all charter documents of the Company
(or, in lieu thereof, a certificate of the Clerk or Assistant Clerk of the
Company stating that there have been no amendments thereto since May 28, 1992);
a certified copy of the resolutions of the Board of Directors and, to the extent
required, the stockholders of the Company evidencing approval of this Agreement
and the Security Agreement and other matters contemplated hereby; a certified
copy of the By-laws of the Company (or, in lieu thereof, a certificate of the
Clerk or Assistant Clerk of the Company stating that there have been no
amendments thereto since May 28, 1992); and certified copies of all documents
evidencing other necessary corporate or other action and governmental approval,
if any, with respect to this Agreement and the Security Agreement.
(b) A certificate of the Clerk or an Assistant Clerk of the
Company which shall certify the names of the officers of the Company authorized
to sign this Agreement, the Security Agreement and the other documents or
certificates to be delivered pursuant to this Agreement and the Security
Agreement by the Company, or any of its officers, together with the true
signature of such officers.
(c) A certificate from a duly authorized officer of the
Company to the effect that the Company has duly complied with and satisfied all
of the conditions set forth in Sections 8 and 9 of that certain Extension
Agreement, dated February 17, 1994, between the Company and the Bank of the
West.
(d) A favorable opinion of Messrs. Bowditch & Dewey, counsel
for the Company, as to such matters as the Purchaser, or its special counsel,
may reasonably request.
6. Upon the Effective Date, MCRC waives the Company's compliance with
Section 4.01(k) of the Purchase Agreement through the Company's fiscal quarter
ending December 31, 1993, but waives no other default under the Purchase
Agreement. The Company acknowledges and agrees that upon any Event of Default
MCRC shall, at any time and from time to time, be free, in its sole discretion,
to exercise any and all of its rights and remedies under the Purchase
Agreement, the Notes and the Security Agreement, including, without limitation,
the acceleration of the entire principal and interest of the Note due to any
Event of Default.
7. The Comany will promptly pay all reasonable legal fees and expenses
of Testa, Hurwitz & Thibeault, special counsel to MCRC, in connection with the
negotiation and execution of this Agreement and the Security Agreement.
<PAGE>
- 4 -
8. The Purchase Agreement and the Note, as herein amended, are each
hereby ratified and confirmed.
9. This Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one and the same instrument and either of
the parties hereby may execute this Agreement by signing any such counterpart.
10. This Agreement shall be effective as of the Effective Date,
provided that such Effective Date occurs on or before March 15, 1994.
11. This Agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Massachusetts and shall have the effect of
a sealed instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
OPTICAL CORPORATION OF AMERICA
By: /s/ DONALD A. JOHNSON
----------------------------------
Donald A. Johnson, Chairman
MASSACHUSETTS CAPITAL RESOURCE COMPANY
By:/s/ RICHARD W. ANDERSON
---------------------------------
Richard W. Anderson, Senior
Vice President
OPTICAL CORPORATION OF AMERICA
SUBORDINATED NOTE DUE 1999
No. Sub-1
$1,500,000 May 28, 1992
For value received, Optical Corporation of America, a Massachusetts
corporation (the "Company"), hereby promises to pay to Massachusetts Capital
Resource Company or registered assigns (hereinafter referred to as the "Payee"),
on or before June 30, 1999, the principal sum of One Million Five Hundred
Thousand Dollars ($1,500,000) or such part thereof as then remains unpaid, to
pay interest from the date hereof on the whole amount of said principal sum
remaining from time to time unpaid at the rate of eleven percent (11%) per
annum, such interest to be payable quarterly on the last day of March, June,
September and December in each year, the first such payment to be due and
payable on June 30, 1992, until the whole amount of the principal hereof
remaining unpaid shall become due and payable, and to pay interest at the rate
of sixteen percent (16%) (so far as the same may be legally enforceable) on all
overdue principal (including any overdue required redemption), premium and
interest. Principal, premium, if any, and interest shall be payable in lawful
money of the United States of America, in immediately available funds, at the
principal office of the Payee or at such other place as the legal holder may
designate from time to time in writing to the Company. Interest shall be
computed on the basis of a 360-day year and a 30-day month.
This Note is issued pursuant to and is entitled to the benefits of a
certain Subordinated Note and Warrant Purchase Agreement, dated as of May 28,
1992, between the Company and Massachusetts Capital Resource Company (as the
same may be amended from time to time, hereinafter referred to as the
"Agreement"), and each holder of this Note, by his acceptance hereof, agrees to
be bound by the provisions of the Agreement, including, without limitation, that
(i) this Note is subject to prepayment, in whole or in part, as specified in
said Agreement, (ii) the principal of, and premium and interest on, this Note is
subordinated to Senior Debt, as defined in the Agreement and (iii) in case of an
Event of Default, as defined in the Agreement, the principal of this Note may
become or may be declared due and payable in the manner and with the effect
provided in the Agreement.
As further provided in the Agreement, upon surrender of this Note for
transfer or exchange, a new Note or new Notes of the same tenor dated the date
to which interest has been paid on the surrender Note and in an aggregate
principal amount equal to the unpaid principal amount of the Note so surrendered
will be issued to, and registered in the name of, the transferee or transferees.
<PAGE>
- 2 -
The Company may treat the person in whose name this Note is registered as the
owner hereof for the purpose of receiving payment and for all other purposes.
In case any payment herein provided for shall not be paid when due, the
Company promises to pay all cost of collection, including all reasonable
attorney's fees.
This Note shall be governed by, and construed in accordance with, the
laws of the Commonwealth of Massachusetts and shall have the effect of a sealed
instrument.
The Company and all endorsers and guarantors of this Note hereby waive
presentment, demand, notice of nonpayment, protest and all other demands and
notices in connection with the delivery, acceptance, performance or enforcement
of this Note.
OPTICAL CORPORATION OF AMERICA
By /s/ DONALD A. JOHNSON
--------------------------------------
Donald A. Johnson, Chairman and
Chief Executive Officer
Attest
By /s/ PAMELA M. OWEN
----------------------------
Assistant Clerk
Right to Purchase 76,000 Shares
of Common Stock of
Optical Corporation of America
No. W-1
OPTICAL CORPORATION OF AMERICA
Common Stock Purchase Warrant
OPTICAL CORPORATION OF AMERICA, a Massachusetts corporation (the
"Company"), hereby certifies that, for value received Massachusetts Capital
Resource Company, or registered assigns, is entitled, subject to the terms set
forth below, to purchase from the Company at any time or from time to time
before 5:00 P.M., Boston time, on June 30, 1999, or such later time as may be
specified in Section 17 hereof, 76,000 fully paid and nonassessable shares of
Common Stock, $.01 par value, of the Company, at a purchase price per share of
$11.00 (such purchase price per share as adjusted from time to time as herein
provided is referred to herein as the "Purchase Price"). The number and
character of such shares of Common Stock and the Purchase Price are subject to
adjustment as provided herein.
This Warrant is one of the Common Stock Purchase Warrants (the
"Warrants") evidencing the right to purchase shares of Common Stock of the
Company, issued pursuant to a certain Subordinated Note and Warrant Purchase
Agreement (the "Agreement"), dated as of May 28, 1992, between the Company and
Massachusetts Capital Resource Company, a copy of which is on file at the
principal office of the Company in the Commonwealth of Massachusetts and the
holder of this Warrant shall be entitled to all of the benefits of the
Agreement, as provided therein.
As used herein the following terms, unless the context otherwise
requires, have the following respective meanings:
(a) The term "Company" shall include Optical Corporation of
America and any corporation which shall succeed to or assume the
obligations of the Company hereunder.
(b) The term "Common Stock" includes (a) the Company's Common
Stock, $.01 par value per share, as authorized on the date of the
Agreement, (b) any other capital stock of any class or classes (however
designated) of the Company, authorized on or after such date, the
holders of which shall have the right, without limitation as to amount,
either to all or to a share of the balance of current dividends and
liquidating dividends after the payment of dividends and distributions
on any shares entitled to preference, and the holders of which shall
ordinarily, in the absence of
<PAGE>
contingencies, be entitled to vote for the election of a majority of
directors of the Company (even though the right so to vote has been
suspended by the happening of such a contingency) and (c) any other
securities into which or for which any of the securities described in
(a) or (b) may be converted or exchanged pursuant to a plan of
recapitalization, reorganization, merger, sale of assets or otherwise.
(c) The term "Other Securities" refers to any stock (other
than Common Stock) and other securities of the Company or any other
person (corporate or otherwise) which the holders of the Warrants at
any time shall be entitled to receive, or shall have received, on the
exercise of the Warrants, in lieu of or in addition to Common Stock, or
which at any time shall be issuable or shall have been issued in
exchange for or in replacement of Common Stock or Other Securities
pursuant to section 5 or otherwise.
1. Exercise of Warrant.
1.1. Full Exercise. This Warrant may be exercised in full by
the holder hereof by surrender of this Warrant, with the form of subscription at
the end hereof duly executed by such holder, to the Company at its principal
office in the Commonwealth of Massachusetts, accompanied by payment, in cash or
by certified or official bank check payable to the order of the Company, in the
amount obtained by multiplying (a) the number of shares of Common Stock for
which this Warrant is then exercisable by (b) the Purchase Price then in effect.
1.2. Partial Exercise. This Warrant may be exercised in part
by surrender of this Warrant in the manner and at the place provided in
subsection 1.1 except that the amount payable by the holder on such partial
exercise shall be the amount obtained by multiplying (a) the number of shares
of Common Stock designated by the holder in the form of subscription at the end
hereof by (b) the Purchase Price then in effect. On any such partial exercise
the Company at its expense will forthwith issue and deliver to or upon the order
of the holder hereof a new Warrant or Warrants of like tenor, in the name of the
holder hereof or as such holder (upon payment by such holder of any applicable
transfer taxes) may request, calling in the aggregate on the face or faces
thereof for the number of shares of Common Stock for which such Warrant or
Warrants may still be exercised.
1.3. Payment by Notes Surrender. Notwithstanding the payment
provisions of subsections 1.1 and 1.2, all or part of the payment due upon
exercise of this Warrant in full or in part may be made by the surrender by such
holder to the Company of any of the Company's Notes issued pursuant to the
Agreement and such Notes so surrendered shall be credited against such payment
in an amount equal to the principal amount thereof plus premium (if any) and
accrued interest to the date of surrender.
<PAGE>
1.4. Company Acknowledgment. The Company will, at the time of
the exercise of the Warrant, upon the request of the holder hereof acknowledge
in writing its continuing obligation to afford to such holder any rights to
which such holder shall continue to be entitled after such exercise in
accordance with the provisions of this Warrant. If the holder shall fail to make
any such request, such failure shall not affect the continuing obligation of the
Company to afford to such holder any such rights.
1.5. Trustee for Warrant Holders. In the event that a bank or
trust company shall have been appointed as trustee for the holders of the
Warrants pursuant to subsection 4.2, such bank or trust company shall have all
the powers and duties of a warrant agent appointed pursuant to section 12 and
shall accept, in its own name for the account of the Company or such successor
person as may be entitled thereto, all amounts otherwise payable to the Company
or such successor, as the case may be, on exercise of this Warrant pursuant to
this section 1.
2. Delivery of Stock Certificates, etc., on Exercise. As soon as
practicable after the exercise of this Warrant in full or in part, and in any
event within 10 days thereafter, the Company at its expense (including the
payment by it of any applicable issue taxes) will cause to be issued in the name
of and delivered to the holder hereof, or as such holder (upon payment by such
holder of any applicable transfer taxes) may direct, a certificate or
certificates for the number of fully paid and nonassessable shares of Common
Stock (or Other Securities) to which such holder shall be entitled on such
exercise, plus, in lieu of any fractional share to which such holder would
otherwise be entitled, cash equal to such fraction multiplied by the then
current market value of one full share, together with any other stock or other
securities and property (including cash, where applicable) to which such holder
is entitled upon such exercise pursuant to section 1 or otherwise.
3. Adjustment for Dividends in Other Stock, Property, etc.;
Reclassification, etc. In case at any time or from time to time, the holders of
Common Stock (or Other Securities) shall have received, or (on or after the
record date fixed for the determination of shareholders eligible to receive)
shall have become entitled to receive, without payment therefor,
(a) other or additional stock or other securities or property
(other than cash) by way of dividend, or
(b) any cash (excluding cash dividends payable solely out of
earnings or earned surplus of the Company), or
(c) other or additional stock or other securities or property
(including cash) by way of spin-off, split-up, reclassification,
recapitalization, combination of shares or similar corporate
rearrangement,
<PAGE>
other than additional shares of Common Stock (or Other Securities) issued as a
stock dividend or in a stock-split (adjustments in respect of which are provided
for in subsection 5.4), then and in each such case the holder of this Warrant,
on the exercise hereof as provided in section 1, shall be entitled to receive
the amount of stock and other securities and property (including cash in the
cases referred to in subdivisions (b) and (c) of this section 3) which such
holder would hold on the date of such exercise if on the date hereof he had
been the holder of record of the number of shares of Common Stock called for on
the face of this Warrant and had thereafter, during the period from the date
hereof to and including the date of such exercise, retained such shares and all
such other or additional stock and other securities and property (including cash
in the cases referred to in subdivisions (b) and (c) of this section 3)
receivable by him as aforesaid during such period, giving effect to all
adjustments called for during such period by sections 4 and 5.
4. Adjustment for Reorganization, Consolidation, Merger, etc.
4.1. In case at any time or from time to time, the Company
shall (a) effect a reorganization, (b) consolidate with or merge into any other
person, or (c) transfer all or substantially all of its properties or assets to
any other person under any plan or arrangement contemplating the dissolution of
the Company, then, in each such case, the holder of this Warrant, on the
exercise hereof as provided in section 1 at any time after the consummation of
such reorganization, consolidation or merger or the authorization of such
dissolution (but in no event later than thirty (30) days following the the
effective date of such dissolution), as the case may be, shall receive, in lieu
of the Common Stock (or Other Securities) issuable on such exercise prior to
such consummation or such effective date, the stock and other securities and
property (including cash) to which such holder would have been entitled upon
such consummation or in connection with such dissolution, as the case may be, if
such holder had so exercised this Warrant, immediately prior thereto, all
subject to further adjustment thereafter as provided in sections 3 and 5.
4.2. Dissolution. In the event of any dissolution of the
Company following the transfer of all or substantially all of its properties or
assets, the Company, prior to such dissolution, shall at its expense deliver or
cause to be delivered the stock and other securities and property (including
cash, where applicable) receivable by the holders of the Warrants after the
effective date of such dissolution pursuant to this section 4 to a bank or trust
company having its principal office in Boston, Massachusetts, as trustee for the
holder or holders of the Warrants.
4.3. Continuation of Terms. Upon any reorganization,
consolidation, merger or transfer (and any dissolution following any transfer)
referred to in this section 4, this Warrant shall
<PAGE>
continue in full force and effect and the terms hereof shall be applicable to
the shares of stock and other securities and property receivable on the exercise
of this Warrant after the consummation of such reorganization, consolidation or
merger or the effective date of dissolution following any such transfer, as the
case may be, and shall be binding upon the issuer of any such stock or other
securities, including, in the case of any such transfer, the person acquiring
all or substantially all of the properties or assets of the Company, whether or
not such person shall have expressly assumed the terms of this Warrant as
provided in section 6.
5. Adjustment for Issue or Sale of Common Stock at Less Than The
Purchase Price in Effect.
5.1. General. If the Company shall at any time or from time to
time, issue any additional shares of Common Stock (other than shares of Common
Stock excepted from the provisions of this section 5 by subsections 5.4 or 5.5)
without consideration or for a net consideration per share less than the
Purchase Price in effect immediately prior to such issuance, then, and in each
such case: (a) the Purchase Price shall be lowered to an amount determined by
multiplying such Purchase Price then in effect by a fraction:
(1) the numerator of which shall be (a) the number of
shares of Common Stock outstanding immediately prior to the issuance of
such additional shares of Common Stock, plus (b) the number of shares
of Common Stock which the net aggregate consideration, if any, received
by the Company for the total number of such additional shares of Common
Stock so issued would purchase at the Purchase Price in effect
immediately prior to such issuance, and
(2) the denominator of which shall be (a) the number
of shares of Common stock outstanding immediately prior to the issuance
of such additional shares of Common Stock plus (b) the number of such
additional shares of Common Stock so issued;
and (b) the holder of this Warrant shall thereafter, on the exercise hereof as
provided in section 1, be entitled to receive the number of shares of Common
Stock determined by multiplying the number of shares of Common Stock which would
otherwise (but for the provisions of this subsection 5.1) be issuable on such
exercise by the fraction of which (i) the numerator is the Purchase Price which
would otherwise (but for the provisions of this subsection 5.1) be in effect,
and (ii) the denominator is the Purchase Price in effect on the date of such
exercise.
5.2. Definitions, etc. For purposes of this section 5 and of
section 7:
The issuance of any warrants, options or other subscription or
purchase rights with respect to shares of
<PAGE>
Common Stock and the issuance of any securities convertible into or
exchangeable for shares of Common Stock (or the issuance of any
warrants, options or any rights with respect to such convertible or
exchangeable securities) shall be deemed an issuance at such time of
such Common Stock if the Net Consideration Per Share which may be
received by the Company for such Common Stock (as hereinafter
determined) shall be less than the Purchase Price at the time of such
issuance and, except as hereinafter provided, an adjustment in the
Purchase Price and the number of shares of Common Stock issuable upon
exercise of this Warrant shall be made upon each such issuance in the
manner provided in subsection 5.1. Any obligation, agreement or
undertaking to issue warrants, options, or other subscription or
purchase rights at any time in the future shall be deemed to be an
issuance at the time such obligation, agreement or undertaking is made
or arises. No adjustment of the Purchase Price and the number of shares
of Common Stock issuable upon exercise of this Warrant shall be made
under subsection 5.1 upon the issuance of any shares of Common Stock
which are issued pursuant to the exercise of any warrants, options or
other subscription or purchase rights or pursuant to the exercise of
any conversion or exchange rights in any convertible securities if any
adjustment shall previously have been made upon the issuance of any
such warrants, options or other rights or upon the issuance of any
convertible securities (or upon the issuance of any warrants, options
or any rights therefor) as above provided. Any adjustment of the
Purchase Price and the number of shares of Common Stock issuable upon
exercise of this Warrant with respect to this subsection 5.2 which
relates to warrants, options or other subscription or purchase rights
with respect to shares of Common Stock shall be disregarded if, as, and
when all of such warrants, options or other subscription or purchase
rights expire or are cancelled without being exercised, so that the
Purchase Price effective immediately upon such cancellation or
expiration shall be equal to the Purchase Price in effect at the time
of the issuance of the expired or cancelled warrants, options or other
subscriptions or purchase rights, with such additional adjustments as
would have been made to that Purchase Price had the expired or
cancelled warrants, options or other subscriptions or purchase
rights not been issued. For purposes of this subsection 5.2, the "Net
Consideration Per Share" which may be received by the Company shall be
determined as follows:
(A) The "Net Consideration Per Share" shall mean the
amount equal to the total amount of consideration, if any,
received by the Company for the issuance of such warrants,
options, subscriptions, or other purchase rights or
convertible or exchangeable securities, plus the minimum
amount of consideration, if any, payable to the Company upon
exercise or conversion thereof, divided by the aggregate
number of shares of Common Stock that would be issued if all
such warrants, options,
<PAGE>
subscriptions, or other purchase rights or convertible or
exchangeable securities were exercised, exchanged or
converted.
(B) The "Net Consideration Per Share" which may be
received by the Company shall be determined in each instance
as of the date of issuance of warrants, options, subscriptions
or other purchase rights, or convertible or exchangeable
securities without giving effect to any possible future price
adjustments or rate adjustments which may be applicable with
respect to such warrants, options, subscriptions or other
purchase rights or convertible securities.
For purposes of this section 5, if a part or all of the consideration
received by the Company in connection with the issuance of shares of
the Common Stock or the issuance of any of the securities described in
this section 5, consists of property other than cash, such
consideration shall be deemed to have the same value as shall be
determined in good faith by the Board of Directors of the Company.
This subsection 5.2 shall not apply under any of the circumstances
described in subsection 5.4.
5.3. Dilution in Case of Other Securities. In case any Other
Securities shall be issued or sold, or shall become subject to issue upon the
conversion or exchange of any stock (or Other Securities) of the Company (or any
other issuer of Other Securities or any other person referred to in section 4)
or to subscription, purchase or other acquisition pursuant to any rights or
options granted by the Company (or such other issuer or person), for a
consideration per share such as to dilute the purchase rights evidenced by this
Warrant, the computations, adjustments and readjustments provided for in this
section 5 with respect to the Purchase Price and the number of shares of Common
Stock issuable upon exercise of this Warrant shall be made as nearly as possible
in the manner so provided and applied to determine the amount of Other
Securities from time to time receivable on the exercise of the Warrants, so as
to protect the holders of the Warrants against the effect of such dilution.
5.4. Extraordinary Events. In the event that the Company shall
(i) issue additional shares of the Common Stock as a dividend or other
distribution on outstanding Common Stock, (ii) subdivide its outstanding shares
of Common Stock, or (iii) combine its outstanding shares of the Common Stock
into a smaller number of shares of the Common Stock, then, in each such event,
the Purchase Price shall, simultaneously with the happening of such event, be
adjusted by multiplying the then Purchase Price by a fraction, the numerator of
which shall be the number of shares of Common Stock outstanding immediately
prior to such event and the denominator of which shall be the number of shares
of Common Stock outstanding immediately after such event, and the product so
<PAGE>
obtained shall thereafter be the Purchase Price then in effect. The Purchase
Price, as so adjusted, shall be readjusted in the same manner upon the happening
of any successive event or events described herein in this subsection 5.4. The
holder of this Warrant shall thereafter, on the exercise hereof as provided in
section 1, be entitled to receive that number of shares of Common Stock
determined by multiplying the number of shares of Common Stock which would
otherwise (but for the provisions of this subsection 5.4) be issuable on such
exercise by a fraction of which (i) the numerator is the Purchase Price which
would otherwise (but for the provisions of this subsection 5.4) be in effect,
and (ii) the denominator is the Purchase Price in effect on the date of such
exercise.
5.5. Excluded Shares. Section 5.1 shall not apply to the
issuance of shares of Common Stock, or options therefor, to directors, officers
and employees of the Company pursuant to any stock options, stock purchase,
stock ownership or compensation plan approved by the Company's Board of
Directors, provided that the aggregate number of shares, and options therefor
(including options outstanding on the date hereof), so issued to directors,
officers and employees does not exceed 150,000.
6. No Dilution or Impairment. The Company will not, by amendment of its
Articles of Organization 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 of the Warrants, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of the holders of the
Warrants against dilution or other impairment. Without limiting the generality
of the foregoing, the Company (a) will not increase the par value of any shares
of stock receivable on the exercise of the Warrants above the amount payable
therefor on such exercise, (b) will take all such action as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid
and nonassessable shares of stock on the exercise of all Warrants from time to
time outstanding, (c) will not issue any capital stock of any class which is
preferred as to dividends or as to the distribution of assets upon voluntary or
involuntary dissolution, liquidation or winding up, unless the rights of the
holders thereof shall be limited to a fixed sum or percentage of par value in
respect of participation in dividends and in any such distribution of assets,
and (d) will not transfer all or substantially all of its properties and assets
to any other person (corporate or otherwise), or consolidate with or merge into
any other person or permit any such person to consolidate with or merge into the
Company (if the Company is not the surviving person), unless such other person
shall expressly assume in writing and will be bound by all the terms of the
Warrants.
<PAGE>
7. Accountants' Certificate as to Adjustments. In each case of any
adjustment or readjustment in the shares of Common Stock (or Other Securities)
issuable on the exercise of the Warrants, the Company at its expense will
promptly cause independent certified public accountants of recognized standing
selected by the Company to compute such adjustment or readjustment in accordance
with the terms of the Warrants and prepare a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based, including a statement of (a) the
consideration received or receivable by the Company for any additional shares of
Common Stock (or Other Securities) issued or sold or deemed to have been issued
or sold, (b) the number of shares of Common Stock (or Other Securities)
outstanding or deemed to be outstanding, and (c) the Purchase Price and the
number of shares of Common Stock to be received upon exercise of this Warrant,
in effect immediately prior to such issue or sale and as adjusted and readjusted
as provided in this Warrant. The Company will forthwith mail a copy of each such
certificate to each holder of a Warrant, and will, on the written request at any
time of any holder of a Warrant, furnish to such holder a like certificate
setting forth the Purchase Price at the time in effect and showing how it was
calculated.
8. Notices of Record Date, etc. In the event of
(a) any taking by the Company of a record of the
holders of any class or securities for the purpose of determining the
holders thereof who are entitled to receive any dividend or other
distribution, or any right to subscribe for, purchase or otherwise
acquire any shares of stock of any class or any other securities or
property, or to receive any other right, or
(b) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the
Company or any transfer of all or substantially all the assets of the
Company to or consolidation or merger of the Company with or into any
other person, or
(c) any voluntary or involuntary dissolution,
liquidation or winding-up of the Company, or
(d) any proposed issue or grant by the Company of any
shares of stock of any class or any other securities, or any right or
option to subscribe for, purchase or otherwise acquire any shares of
stock of any class or any other securities (other than with respect to
the Excluded Shares referred to in subsection 5.5 and the issue of
Common Stock on the exercise of the Warrants),
then and in each such event the Company will mail or cause to be mailed to each
holder of a Warrant a notice specifying (i) the date on which any such record is
to be taken for the purpose of
<PAGE>
such divideend, distribution or right, and stating the amount and character of
such dividend, distribution or right, (ii) the date on which any such
reorganization, reclassification, recapitalization, transfer, consolidation,
merger, dissolution, liquidation or winding-up is to take place, and the time,
if any is to be fixed, as of which the holders of record of Common Stock (or
Other Securities) shall be entitled to exchanse their shares of Common Stock (or
Other Securities) for securities or other property deliverable on such
reorganization, reclassification, recapitalization, transfer, consolidation,
merger, dissolution, liquidation or winding-up, and (iii) the amount and
character of any stock or other securities, or rights or options with respect
thereto, proposed to be issued or granted, the date of such proposed issue or
grant and the persons or class of persons to whom such proposed issue or grant
is to be offered or made. Such notice shall be mailed at least 20 days prior to
the date specified in such notice on which any such action is to be taken.
9. Reservation of Stock, etc., Issuable on Exercise of Warrants. The
Company will at all times reserve and keep available, solely for issuance and
delivery on the exercise of the Warrants, all shares of Common Stock (or Other
Securities) from time to time issuable on the exercise of the Warrants.
10. Exchange of Warrants. On surrender for exchange of any Warrant,
properly endorsed, to the Company, the Company at its expense will issue and
deliver to or on the order of the holder thereof a new Warrant or Warrants of
like tenor, in the name of such holder or as such holder (on payment by such
holder of any applicable transfer taxes) may direct, calling in the aggregate on
the face or faces thereof for the number of shares of Common Stock called for on
the face or faces of the Warrant or Warrants so surrendered.
11. Replacement of Warrants. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of any
Warrant and, in the case of any such loss, theft or destruction of any Warrant,
on delivery of an indemnity agreement or security reasonably satisfactory in
form and amount to the Company or, in the case of any such mutilation, on
surrender and cancellation of such Warrant, the Company at its expense will
execute and deliver, in lieu thereof, a new Warrant of like tenor.
12. Warrant Aqent. The Company may, by written notice to each holder of
a Warrant, appoint an agent having an office in either Boston, Massachusetts or
New York, New York for the purpose of issuing Common Stock (or Other Securities)
on the exercise of the Warrants pursuant to section 1, exchanging Warrants
pursuant to section 10, and replacing Warrants pursuant to section 11, or any of
the foregoing, and thereafter any such issuance, exchange or replacement, as the
case may be, shall be made at such office by such agent.
<PAGE>
13. Remedies. The Company stipulates that the remedies at law of the
holder of this Warrant in the event of any default or threatened default by the
Company in the performance of or compliance with any of the terms of this
Warrant are not and will not be adequate, and that such terms may be
specifically enforced by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any of the terms
hereof or otherwise.
14. Negotiability, etc. This Warrant is issued upon the following
terms, to all of which each holder or owner hereof by the taking hereof
consents and agrees:
(a) title to this Warrant may be transferred by
endorsement (by the holder hereof executing the form of assignment at
the end hereof) and delivery in the same manner as in the case of a
negotiable instrument transferable by endorsement and delivery;
(b) any person in possession of this Warrant properly
endorsed is authorized to represent himself as absolute owner hereof
and is empowered to transfer absolute title hereto by endorsement and
delivery hereof to a bona fide purchaser hereof for value; each prior
taker or owner waives and renounces all of his equities or rights in
this Warrant in favor of each such bona fide purchaser, and each such
bona fide purchaser shall acquire absolute title hereto and to all
rights represented hereby; and
(c) until this Warrant is transferred on the books of
the Company, the Company may treat the registered holder hereof as the
absolute owner hereof for all purposes, notwithstanding any notice to
the contrary.
15. Notices, etc. All notices and other communications from the Company
to the ho1der of this Warrant shall be mailed by first class registered or
certified mail, postage prepaid, at such address as may have been furnished to
the Company in writing by such holder or, until any such holder furnishes to the
Company an address, then to, and at the address of, the last holder of this
Warrant who has so furnished an address to the Company.
16. Miscellaneous. This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or termination
is sought. This Warrant shall be construed and enforced in accordance with and
governed by the laws of the Commonwealth of Massachusetts. The headings in this
Warrant are for purposes of reference only, and shall not limit or otherwise
affect any of the terms hereof. This Warrant is being executed as an instrument
under seal. The invalidity or unenforceability of any provision hereof shall in
no way affect the validity or enforceability of any other provision.
<PAGE>
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17. Expiration. The right to exercise this Warrant shall expire at 5:00
P.M., Boston time, on the later of (i} June 30, 1999 or (ii} at such time as all
principal and interest on the Notes (as defined in the Agreement) is paid in
full.
Dated: May 28, 1992 OPTICAL CORPORATION OF AMERICA
By /s/ DONALD A. JOHNSON
--------------------------------------
Donald A. Johnson, Chairman and
Chief Executive Officer
Attest:
By /s/ ROBERT DEN. COPE
----------------------------
Assistant Clerk
<PAGE>
FORM OF SUBSCRIPTION
(To be signed only on exercise of Warrant)
TO OPTICAL CORPORATION OF AMERICA
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise this Warrant for, and to purchase thereunder, ..........
shares of Common Stock of OPTICAL CORPORATION OF AMERICA and herewith makes
payment of $........ therefor, and requests that the certificates for such
shares be issued in the name of, and delivered to .............. , whose address
is .......................
Dated: ...................................
(Signature must conform to name
of holder as specified on the
face of the Warrant)
...................................
(Address)
---------------------
FORM OF ASSIGNMENT
(To be signed only on transfer of Warrant)
For value received, the undersigned hereby sells, assigns, and
transfers unto ..................... the right represented by the within Warrant
to purchase ........... shares of Common Stock of OPTICAL CORPORATION OF AMERICA
to which the within Warrant relates, and appoints ..................... Attorney
to transfer such right on the books of OPTICAL CORPORATION OF AMERICA with full
power of substitution in the premises.
Dated: ...................................
(Signature must conform to name
of holder as specified on the
face of the Warrant)
...................................
(Address)
Signed in the presence of:
..........................
SECURITY AGREEMENT
------------------
The undersigned, Optical Corporation of America, a Massachusetts
corporation with a place of business and executive office located at 7421
Orangewood Avenue, Garden Grove, California 92641 (hereinafter referred to as a
"Debtor") hereby grants to Massachusetts Capital Resource Company, a
Massachusetts special purpose limited partnership, with a place of business at
420 Boylston Street, Boston, Massachusetts 02116 (hereinafter called the
"Secured Party"), a security interest in and agrees and acknowledges that
Secured Party has and will continue to have a security interest in the
following:
(A) All of Debtor's inventory of whatever name, nature, kind or
description, all Debtor's goods held for sale or lease or to be furnished under
contracts of service, finished goods, work in process, raw materials, materials
used or consumed by the Debtor, parts, supplies, all wrapping, packaging,
advertising, labeling, and shipping materials, devices, names and marks, all
contract rights and documents relating to any of the foregoing, whether any of
the foregoing be now existing or hereafter arising, wherever located, now owned
or hereafter acquired by the Debtor (all of which is sometimes hereinafter
referred to as "Inventory");
(B) All of the Debtor's presently owned and hereafter acquired
equipment, machinery, furniture, fixtures and all other tangible personal
property of whatsoever kind or nature, together with all proceeds thereof,
additions and accessions thereto or replacements thereof or substitutions
therefor (all of which is sometimes hereinafter referred to as "Equipment");
(C) All of the Debtor's accounts, accounts receivable, notes, bills,
drafts, acceptances, instruments, documents, chattel paper and all other debts,
obligations and liabilities in whatever form owing to the Debtor for goods sold
by it or for services rendered by it, or however otherwise established or
created, all guaranties and security therefor, all right, title and interest of
the Debtor in the goods or services which gave rise thereto, including rights of
an unpaid seller of goods or services; whether any of the foregoing be now
existing or hereafter arising, now or hereafter received by or owing or
belonging to the Debtor (all of which are sometimes hereinafter referred to as
"Accounts");
(D) All of the Debtor's general intangibles, including without
limitation, names, goodwill, trade secrets, copyrights, trademarks, trademark
applications, tradenames, patents, patent applications, licenses, other
intellectual property, permits, governmental approvals, deposit accounts, tax
refunds, claims under insurance policies (whether or not proceeds from
Collateral), other rights to payment, rights of setoff, choses in action, rights
under judgments, computer programs and software, contract rights, and all
contracts and agreements to, or of which it is a party or beneficiary, and all
intangible personal property
<PAGE>
- 2 -
of whatsoever kind or nature now owned by the Debtor as well as any and all
thereof that may be hereafter acquired and in and to all proceeds thereof;
(E) All of the Debtor's books and records, as they exist from time to
time, relating to (A) through (D) above, inclusive;
(F) All other assets of every nature and description, whether it be now
existing or hereafter arising and whether now or hereafter belonging to the
Debtor;
(all hereinafter sometimes collectively referred to as "Collateral"); to secure
the payment of all sums due or which may become due under certain Subordinated
Notes, due June 30, 1999, of the Debtor in the original aggregate principal
amount of One Million Five Hundred Thousand Dollars ($1,500,000), such notes
being issued pursuant to a certain Subordinated Note and Warrant Purchase
Agreement (the "Purchase Agreement") by and between the Debtor and Secured
Party, dated May 28, 1992, (hereinafter sometimes collectively referred to as
"Obligation" or "Obligations").
I. WARRANTIES AND COVENANTS.
The Debtor hereby warrants and covenants that:
(A) The Equipment and Inventory are used primarily for business
purposes.
(B) The Equipment and Inventory of the Debtor will be kept at the
Debtor's places of business, set forth in Exhibit A attached hereto. The Debtor
will promptly notify the Secured Party of any change in the location of the
Collateral, and the Debtor will not remove the Equipment from the locations set
forth in Exhibit A without the prior written consent of the Secured Party. The
Debtor will notify the Secured Party, at least twenty (20) days prior to any
such event, of any change in the Debtor's exact legal name, any change in its
places of business or locations of Equipment or Inventory as set forth in
Exhibit A or its establishment of any new place of business or location of
Equipment or Inventory or office where its records concerning Accounts and
other assets are kept.
(C) Except for (i) the security interest granted hereby and (ii) the
permitted encumbrances set forth on Exhibit B attached hereto (the "Permitted
Encumbrances"), the Debtor is the owner of its presently owned Collateral and
will be the owner of its Collateral hereafter acquired free from any adverse
lien, security interest or encumbrance, and the Debtor will defend the
Collateral against the claims and demands of all persons at any time claiming
the same or any interest therein.
<PAGE>
- 3 -
(D) No financing statements (other than the Permitted Encumbrances, if
any) covering any Collateral or any proceeds thereof are on file in any public
office, and at the request of Secured Party, the Debtor will join with Secured
Party in executing one or more (i) financing statements pursuant to the Uniform
Commercial Code, (ii) title certificate lien application forms; and (iii) other
documents necessary or advisable to perfect the security interests evidenced
hereby, all in form satisfactory to Secured Party and the Debtor will pay the
cost of filing the same or filing or recording this Agreement in all public
offices wherever filing or recording is deemed by Secured Party to be necessary
or desirable.
(E) The Debtor will have and maintain insurance at all times with
respect to all its Collateral against risks of fire (including so-called
extended coverage), theft, embezzlement and such other risks as Secured Party
may reasonably require containing such terms, in such form, for such periods and
written by such companies as may be reasonably satisfactory to Secured Party;
and, if requested by the Secured Party, all policies of insurance shall provide
for at least twenty (20) days' written cancellation notice to Secured Party. If
and when requested by the Secured Party, the Debtor shall furnish Secured Party
with certificates or other evidence satisfactory to Secured Party of compliance
with the foregoing insurance provision and the Secured Party may act either in
its name or as attorney for the Debtor (for that purpose by these presents duly
authorized and appointed with full power of substitution and revocation) in
obtaining, adjusting, settling and cancelling such insurance and endorsing any
drafts in payment of any loss.
(F) The Debtor will upon request made by the Secured Party render to
the Secured Party a list of all Accounts assigned hereunder and a statement
indicating the total dollar amount of the Accounts then outstanding.
(G) The only offices where the Debtor keeps records concerning any
Accounts are listed on Exhibit A and the Debtor will not remove any of such
records from said offices without written consent of the Secured Party.
(H) The Debtor will keep its Collateral free from any adverse lien,
security interest or encumbrances except the Permitted Encumbrances, if any. The
Debtor will at all times keep accurate and complete records of its Accounts, and
the Secured Party or any of its agents shall have the right at reasonable times
and upon prior notice, to inspect the Debtor's books and records relating to
said Accounts or to any other transactions to which the Debtor is a party and
from which an Account might arise and to make extracts from said books and
records. The Debtor shall immediately notify the Secured Party of any event
causing material loss or depreciation in value of any of its Accounts and the
amount of such loss or depreciation.
<PAGE>
- 4 -
(I) If any of a Debtor's Accounts arise out of contracts with the
United States or any department, agency or instrumentality thereof, the Debtor
will immediately notify the Secured Party thereof in writing and will execute
any instruments and take any steps required by the Secured Party in order that
all monies due and to become due under such contracts shall be assigned to the
Secured Party and notice thereof given to the government under the Federal
Assignment of Claims Act. Notwithstanding the foregoing, the Secured Party shall
not request the Debtor to provide notice to the United States or any department,
agency or instrumentality thereof until an Event of Default has occurred.
(J) Subsequent to the occurrence of any Event of Default, if any of a
Debtor's Accounts should be evidenced by promissory notes, trade acceptances or
other instruments for the payment of money, the Debtor will immediately deliver
same to the Secured Party, appropriately endorsed to the Secured Party's order
and, regardless of the form of such endorsement, such Debtor hereby waives
presentment, demand or notice of any kind with respect thereto. This Agreement
may, but need not be supplemented by separate assignments of Accounts to the
Secured Party and if such assignments are given the rights and security
interests given thereby shall be in addition to and not in limitation of the
rights and security interests given by this Agreement.
(K) The Debtor will pay promptly when due all taxes and assessments
upon its Collateral or for its use or operation or upon this Agreement or upon
any note or notes secured hereby. In its sole discretion, the Secured Party may:
(i) discharge taxes and liens levied or placed on Collateral; (ii) pay for
insurance thereon or the maintenance and preservation thereof; or (iii) if the
Debtor shall fail to make required deposits in respect of F.I.C.A. or any
withholding taxes, make such deposits or pay such taxes, in whole or in part, or
set up such reserves as the Secured Party in its sole discretion deem necessary
in respect of the Debtor's liability therefor. Any amount so paid, deposited or
reserved for shall constitute a loan for all purposes hereunder, and the Debtor
promises to repay the Secured Party such amounts upon the Secured Party's
demand. Nothing herein shall be deemed to obligate the Secured Party to do any
of the foregoing and the making of any one or more such payments; deposits or
reserves shall not constitute an agreement by the Secured Party to take any
further or similar action or a waiver of any right of the Secured Party
hereunder.
(L) The Debtor will keep its Collateral at all times in good order and
repair, reasonable wear and tear and insured damage from fire and other casualty
excepted, and will make necessary renewals of and replacements to the same with
goods of equal value and serviceability, free of all liens, security interests
and encumbrances (which are not permitted by this Agreement), which goods shall
automatically become subject to this Agreement.
<PAGE>
- 5 -
II. ADDITIONAL RIGHTS AND ASSURANCES.
(A) At the Secured Party's request, the Debtor at its expense will
promptly and duly execute and deliver such documents and assurances and take
such actions as may be necessary or desirable or as the Secured Party may
request in order to correct any defect, error or omission which may at any time
be discovered or to more effectively carry out the intent and purpose of this
Agreement and to establish, perfect and protect the Secured Party's security
interest, rights and remedies created or intended to be created hereunder.
(B) Subject to Article VI of this Agreement, the Secured Party will at
any time following an occurrence of an Event of Default hereunder have the right
to take physical possession of the Collateral and to maintain such possession on
the Debtor's premises or to remove the Collateral or any part thereof to such
other places as the Secured Party may desire. If the Secured Party exercises
such right, the Debtor shall at its sole expense upon the Secured Party's
request assemble the same and make it available to the Secured Party at a place
reasonably convenient to the Secured Party. If any Inventory is in the
possession or control of any of the Debtor's agents or processors, the Debtor
shall, at the Secured Party's request, notify them of the Secured Party's
security interest therein and, at the Secured Party's request, instruct them to
hold the same for the Secured Party's account and subject to the Secured Party's
instructions.
(C) The Secured Party may at any time after an occurrence of an Event
of Default (i) in its own name or in the name of others communicate with account
debtors in order to verify with them to the Secured Party's satisfaction the
existence, amount and terms of any Accounts and the absence of any reductions,
discounts, defenses or offsets with respect thereto, or (ii) notify account
debtors that Collateral has been assigned to the Security Party and that
payments by such debtors shall be made directly to the Secured Party. At the
Secured Party's request, the Debtor will notify any or all such debtors of such
assignment, give instruction and/or indicate on billings to such debtors that
their Accounts shall be paid to the Secured Party and/or supply such debtors
with a copy of this Agreement.
(D) Subsequent to the occurrence of any Event of Default, the Secured
Party shall have full power, in its own name or that of the Debtor, to collect,
endorse, compromise, settle, sell or otherwise deal with any or all of the
Collateral or proceeds thereof. Subsequent to the occurrence of any Event of
Default, the Debtor agrees upon request of the Secured Party to appoint any
officer or agent of the Secured Party as true and lawful attorney-in-fact, with
power of substitution, to endorse the name of the Debtor or any of its officers,
trustees or agents upon any Accounts, notes, checks, drafts, money orders, or
other instruments of payment (including under any policy of insurance on
Collateral) or Collateral that may come into possession of the
<PAGE>
- 6 -
Secured Party in full or part payment of any amounts owing to Secured Party; to
sign and endorse the name of the Debtor or any of its officers, trustees or
agents upon any invoice, freight or express bill, bill of lading, storage or
warehouse receipts, drafts against debtors, assignments, verifications and
notices in connection with Accounts, and any instruments or documents relating
thereto or to the Debtor's rights therein; to give written notice to such
offices and officials of the United States Postal Service to effect such change
or changes of address so that all mail addressed to the Debtor may be delivered
directly to the Secured Party; to take any and all other actions necessary or
appropriate to collect, compromise, settle, sell or otherwise deal with any or
all of the Collateral or proceeds thereof; and to obtain, adjust, settle and
cancel any insurance; hereby granting to each said attorney-in-fact or his
substitute full power to do any and all things necessary or appropriate to be
done in and about the premises as fully and effectually as the Debtor might or
could do, and hereby ratifying all that any said attorney-in-fact or his
substitute shall lawfully do or cause to be done by virtue hereof.
(E) The Debtor hereby assigns to the Secured Party all sums, including
without limitation return of premiums, which may become payable under any and
all of such Debtor's policies of insurance and directs each insurance company
issuing any such policy to make payment which would otherwise be due thereunder
to the Debtor directly to the Secured Party.
(F) To the extent permitted by Debtor's lease on any premises or place
of business, the Debtor hereby grants to the Secured Party, for a term
commencing on the date of the occurrence of any Event of Default and continuing
as long as any of the Obligations remain outstanding, at a rental of $1.00 for
such entire term, the right to the use of all premises or places of business
which such Debtor now or hereafter may have and where any Collateral may be
located for the purpose of protecting or enforcing the Secured Party's rights
to the Collateral.
(G) In the event of the sale, exchange or disposition of any of the
Collateral (other than finished goods in the ordinary course of business) or any
interest therein (and no such sale, exchange or other disposition is hereby
authorized or consented to), the Secured Party's security interest shall
nevertheless continue in such Collateral (including without limitation all
proceeds, cash and non-cash) notwithstanding such sale, exchange or other
disposition; and the Secured Party's receipt of any such proceeds shall not be
deemed or construed to be an authorization of or consent to any such sale,
exchange or other disposition.
(H) Any and all instruments, documents, policies and certificates of
insurance, securities, goods, accounts, choses in action, general intangibles,
chattel paper, cash, property and the proceeds thereof (whether or not the same
are Collateral or proceeds thereof) owned by the Debtor or in which the Debtor
has
<PAGE>
- 7 -
an interest, which now or hereafter are at any time in possession or control of
the Secured Party or any affiliate of the Secured Party or in transit by mail or
carrier to or from the Secured Party or such affiliate or in the possession of
any third party acting in its behalf, without regard to whether the Secured
Party or such affiliate received the same in pledge, for safekeeping, as agent
for collection or transmission or otherwise or had conditionally released the
same, shall constitute security for Obligations and may be applied at any time
to Obligations which are then owing, whether due or not due.
(I) A carbon, photographic, or other reproduction of a security
agreement or a financing statement is sufficient as a financing statement to the
extent permitted under applicable law.
III. EVENTS OF DEFAULT.
The Debtor shall be in default under this Agreement upon the happening
of any of the following events or conditions (individually and collectively an
"Event of Default"):
(A) Failure by the Debtor to observe or perform any covenant or
agreement referred to herein and, if no other grace or cure period is applicable
thereto, the continuance of such failure for fifteen (]5) business days;
(B) Sale, transfer or assignment of any of the Collateral (including
via an assignment of transfer of any interest of the Debtor) (except the sale of
inventory in the ordinary course of business; loss, theft, or substantial
damage or destruction of any of the Collateral which is not fully and adequately
insured against as hereinbefore provided; or
(C) An Event of Default (as defined in the Purchase Agreement or under
any of the documents referred to therein) shall have occurred and is continuing
and such Event of Default has not been annulled.
IV. REMEDIES.
(A) If an Event of Default occurs:
(1) The Secured Party may declare all obligations secured hereby to
be immediately due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived.
(2) The Secured Party may exercise and shall have any and all
rights and remedies accorded it by the Massachusetts Uniform Commercial Code or
the Uniform Commercial Code as adopted in such state whose laws govern the
disposition of certain Collateral. The requirement of reasonable notice shall be
met, if notice containing such information as may be required under applicable
law is mailed, postage prepaid, to the Debtor or other
<PAGE>
- 8 -
person entitled thereto at least ten (10) days (including non-business days)
before the time of sale or disposition of the Collateral. The Debtor shall pay
to the Secured Party on demand any and all expenses, including reasonable legal
expenses and reasonable attorney's fees, incurred or paid the Secured Party in
protecting or enforcing any rights of the Secured Party hereunder, including its
right to take possession of the Collateral, storing and disposing of the same or
in collecting the proceeds thereof.
(3) The Debtor designates and appoints the Secured Party its true
and lawful attorney with full power of substitution in its own name or in the
name of such Debtor to demand, collect, receive, receipt for, sue for, compound
and give acquittance for, any and all amounts due and to become due on the
Accounts and to endorse the name of such Debtor on all commercial paper given in
payment or part-payment thereof and in its reasonable discretion to file any
claim or take any other action which the Secured Party may reasonably deem
necessary or appropriate to protect and preserve and realize upon the security
interest of the Secured Party in the Accounts or the proceeds thereof. The
Secured Party shall also have the right to (i) open all mail addressed to the
Debtor; (ii) change the Post Office box or mailing address of the Debtor; and
(iii) use the Debtor's stationery and billing forms or facsimiles thereof, for
the purpose of collecting Accounts and realizing upon the Collateral.
(B) The Debtor understands and agrees the Secured Party may exercise
its rights hereunder without affording the Debtor an opportunity for a
preseizure hearing before the Secured Party, through judicial process or
otherwise, takes possession of the Collateral upon the occurrence of an Event of
Default, and the Debtor expressly waives its constitutional right, if any, to
such prior hearing.
(C) No delay in accelerating the maturity of any obligation as
aforesaid or in taking any other action with respect to any Event of Default or
in exercising any rights with respect to the Collateral such affect the rights
of the Secured Party later to take such action with respect thereto, and no
waiver as to one Event of Default shall affect rights as to any other default.
V. MISCELLANEOUS.
(A) The Debtor irrevocably
(1) agrees that any suit, action, or other legal proceeding arising
out of this Agreement may be brought in the courts of record of the Commonwealth
of Massachusetts or the courts of the United States located in such state;
(2) consents to the jurisdiction of each such court in any such
suit; action or proceeding; and
<PAGE>
- 9 -
(3) to the extent permitted under applicable law, waives any
objection which it may have to the laying of venue of such suit, action or
proceeding in any of such courts and waives any right to a trial by jury in any
of such courts.
For such time as the Obligations shall be unpaid in whole or in part,
the Debtor irrevocably designates both Donald A. Johnson and the President of
the Debtor, and either of them, as its agent to accept and acknowledge on its
behalf service of any and all process in any such suit, action or proceeding
brought in any such court and agree and consent that any such service of process
upon such agent and written notice of such service to the Debtor by registered
or certified mail shall be taken and held to be valid personal service upon the
Debtor whether the Debtor shall then be doing business within the Commonwealth
of Massachusetts and that any such service of process shall be of the same force
and validity as if service were made upon it according to the laws governing the
validity and requirements of such service in such states and waives all claim of
error by reason of any such service. Any notice, process, pleadings or other
papers served upon the aforesaid designated agent shall, at the same time, be
sent by certified or registered mail to the Debtor.
(B) In case any one or more of the provisions contained herein should
be invalid, illegal or unenforceable in any respect, the validity, legality or
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby.
(C) All rights of the Secured Party hereunder shall inure to the
benefit of its successors and assigns; and all obligations of the Debtor shall
bind the successors or assigns of the Debtor. All the provisions of this
Agreement shall be construed by and administered in accordance with the local
laws of the Commonwealth of Massachusetts. This Agreement shall become effective
when it is signed by the Debtor. The Debtor acknowledges receipt of a copy of
this Agreement.
(D) In the absence of gross negligence or willful misconduct, neither
the Secured Party nor any attorney-in-fact appointed hereunder shall be liable
to the Debtor or any other person for any act or omission, any mistake of fact
or any error of judgment in exercising any right or remedy granted herein.
VI. FIRST RIGHTS OF OTHER SECURED CREDITORS.
The Secured Party and the Debtor acknowledge that the Debtor has
granted a security interest to Massachusetts Business Development Corporation,
Fleet Credit Corporation and Bank of the West (collectively the "Other Secured
Creditors") to secure certain obligations of the Debtor to the Other Secured
Creditors. The Secured Party and the Debtor hereby expressly acknowledge that
the security interest in the Collateral created hereby is subordinate and junior
to the security interest of the Other
<PAGE>
- 10 -
Secured Creditors in the manner and to the extent set forth in that certain
Intercreditor Agreement, dated as of March 31, 1993 among the Debtor, the
Secured Party and the Other Secured Creditors.
Signed, sealed and delivered this 15th day of March 1994.
OPTICAL CORPORATION OF AMERICA
By /s/ DONALD A. JOHNSON
----------------------------------------
Donald A. Johnson, Chairman
Acknowledged and Accepted:
MASSACHUSETTS CAPITAL RESOURCE COMPANY
By /s/ RICHARD W. ANDERSON
-------------------------------------------
Richard W. Anderson, Senior Vice President
<PAGE>
EXHIBIT A
---------
Locations of Equipment, Inventory, Records Concerning
Accounts Receivables and Other Assets
Debtor's Place of Business
The Debtor's sole places of business are located at:
7421 Orangewood Avenue, Garden Grove, California 92641;
Lyberty Way, Westford, Massachusetts 01886; and
170 Locke Drive, Marlborough, Massachusetts 01752
<PAGE>
EXHIBIT B
---------
Permitted Encumbrances
"Permitted Encumbrances" includes all of those mortgages, deeds of
trust, pledges, liens, security interests or other charges or encumbrances
permitted by Section 4.02(a) of the Purchase Agreement.
OPTICAL CORPORATION OF AMERICA
Subordinated Note and Warrant Purchase Agreement
Dated as of June 30, 1993
<PAGE>
OPTICAL CORPORATION OF AMERICA
Note and Warrant Purchase Agreement
Dated as of June 30, 1993
INDEX
Page
----
ARTICLE I
Purchase, Sale and Terms of Notes and Warrants
1.01. The Notes .......................................................
1.02. The Warrants ....................................................
1.03. Purchase and Sale of Notes and Warrants .........................
(a) The Closing ............................................
(b) Allocation of Purchase Price ...........................
(c) Use of Proceeds ........................................
1.04. Payments and Endorsements .......................................
1.05. Redemptions .....................................................
(a) Required Redemptions ...................................
(b) Optional Redemptions Without Premium ...................
(c) Notice of Redemptions; Pro rata Redemptions.............
1.06. Registration, etc. ..............................................
1.07. Transfer and Exchange of Notes ..................................
1.08. Replacement of Notes ............................................
1.09. Subordination ...................................................
(a) Payment of Senior Debt .................................
(b) No Payment on Notes Under Certain Conditions............
(c) Payments Held in Trust .................................
(d) Subrogation ............................................
(e) Scope of Section .......................................
(f) Survival of Rights .....................................
(g) Amendment or Waiver ....................................
(h) Senior Debt Defined ....................................
1.10. Representations by the Purchaser ................................
ARTICLE II
Conditions to Purchaser's Obligation
2.01. Representations and Warranties ...................................
2.02. Documentation at Closing .........................................
ARTICLE III
Representations and Warranties
3.01. Organization and Standing .......................................
3.02. Corporate Action ................................................
3.03. Governmental Approvals ..........................................
<PAGE>
3.04. Litigation ......................................................
3.05. Compliance with Other Instruments ...............................
3.06. Financial Information ...........................................
3.07. Securities Act ..................................................
3.08. Disclosure ......................................................
3.09. No Brokers or Finders ...........................................
3.10. Capitalization; Status of Capital Stock .........................
ARTICLE IV
Covenants of the Company
4.01. Affirmative Covenants of the Company Other
Than Reporting Requirements .....................................
(a) Punctual Payment ...........................................
(b) Payment of Taxes and Trade Debt ............................
(c) Preservation of Corporate Existence ........................
4.02. Negative Covenants of the Company...............................
(a) Mergers, Sale of Assets, etc. ............................
(b) Distributions ..............................................
(c) Change in Nature of Business ..............................
4.03. Reporting Requirements ..........................................
ARTICLE V
Events of Default
5.01. Events of Default ................................................
5.02. Annulment of Defaults ............................................
ARTICLE VI
Definitions and accounting Terms
6.01. Certain Defined Terms ............................................
6.02. Accounting Terms .................................................
ARTICLE VII
Miscellaneous
7.01. No waiver; Cumulative Remedies ..................................
7.02. Amendments, Waivers and Consents ................................
7.03. Addresses for Notices, etc. .....................................
7.04. Costs, Expenses and Taxes .......................................
7.05. Binding Effect; Assignment ......................................
7.06. Survival of Representations and Warranties ......................
7.07. Prior Agreements ................................................
7.08. Severability ....................................................
7.09. Governing Law ...................................................
7.10. Headings ........................................................
<PAGE>
7.11. Sealed Instrument ...............................................
7.12. Counterparts ....................................................
7.13. Further Assurances ..............................................
SCHEDULE I. Names of Other Purchasers
EXHIBITS
1.01 Form of Subordinated Notes
1.02 Form of Common Stock Purchase Warrants
2.02(c) Matters to be Covered by Opinion Letter
3.04 Schedule of Litigation
3.06 Financial Statements
3.06(a) Schedule of Certain Transactions
3.07 Schedule of Other Purchasers
3.10 Schedule of Capital Stock, Options and
Other Rights
<PAGE>
OPTICAL CORPORATION OF AMERICA
170 Locke Drive
Marlborough, Massachusetts 01752
As of June 30, 1993
To the Purchaser(s) named on Schedule I
attached hereto
Re: 11% Subordinated Notes due 1997 and
Common Stock Purchase Warrants
Dear Purchaser:
Optical Corporation of America, a Massachusetts corporation (the
"Company"), hereby agrees with you (individually and collectively the
"Purchaser") as follows:
ARTICLE I
PURCHASE, SALE AND TERMS OF NOTES AND WARRANTS
1.01. The Notes. The Company has authorized the issuance and sale to
the Purchaser (and to one or more other Purchasers, including those named in
Exhibit 3.07, who may now or at any time prior to July 31, 1993 enter into an
agreement in substantially the form of this Agreement, sometimes hereinafter
referred to as the "Other Purchasers") of the Company's 11% Subordinated Notes
due July 1, 1997, in an aggregate original principal amount not to exceed the
sum of $750,000. The 11% Subordinated Notes are to be substantially in the form
set forth in Exhibit 1.01 hereto and are herein referred to individually as a
"Note" and collectively as the "Notes", which terms shall also include any notes
subsequently delivered in exchange or replacement therefor.
1.02. The Warrants. The Company has also authorized the issuance and
sale to the Purchaser and the Other Purchasers of the Company's Common Stock
Purchase Warrants for the purchase (subject to adjustment as provided therein)
of not to exceed 24,000 shares of the Company's Common Stock of the par value of
$.01 per share; and such Warrants will be issued at the rate of one Warrant for
800 shares of Common Stock for each $25,000 principal amount of the Notes. The
Common Stock Purchase Warrants are to be substantially in the form set forth in
Exhibit 1.02 hereto and are herein referred to individually as a "Warrant" and
collectively as the "Warrants", which terms shall also include any warrants
subsequently delivered in exchange or replacement therefor.
1.03. Purchase and Sale of Notes and Warrants.
(a) The Closing. The Company will issue and sell to the
Purchaser, and, subject to and in reliance upon the
<PAGE>
representations, warranties, terms and conditions of this Agreement, the
Purchaser will purchase a Note and a Warrant for an aggregate purchase price
equal to the principal amount of the Note set opposite the Purchaser's name on
Schedule I hereto. Such purchase and sale shall take place at a closing (the
"Closing") to be held at the offices of Messrs. Bowditch & Dewey, 311 Main St.,
Worcester, Massachusetts on such date and at such time as may be mutually agreed
upon by the Company and the Purchaser, but in no event later than June 30,1993.
At the Closing the Company will initially issue one Note, payable to
the order of the Purchaser, in the principal amount set forth opposite the
Purchaser's name on Schedule I hereto and one Warrant, registered in the name of
the Purchaser, to purchase (subject to adjustment as provided therein) the
number of shares which is also set forth opposite the Purchaser's name on
Schedule I hereto, of the Company's Common Stock, against delivery to the
Company of a check or a receipt of a wire transfer, in an amount equal to the
principal amount of the Note being purchased by the Purchaser, in payment of the
full purchase price for the Note and Warrant.
(b) Allocation of Purchase Price. The Company and the
Purchaser, having adverse interests and as a result of arm's length bargaining,
have established that (i) the Purchaser has not rendered or agreed to render any
services to the Company in connection with this Agreement or the issuance of any
of the Notes and Warrants; (ii) the Purchaser's Warrant is not being issued as
compensation; and (iii) the price at which the Notes would be issued if it were
assumed that they were issued apart from the Warrants is an amount equal to 100%
of the aggregate principal amount thereof. The Company and the Purchaser
recognize that the agreement specified herein establishes that the original
issue discount to be taken into account as such by the Company and the Purchaser
for federal income tax purposes with respect to the sale of the Note is Zero,
and they will adhere to the agreement specified herein for such purposes.
(c) Use of Proceeds. The Company will use the full
proceeds from the sale of the Notes and Warrants for the refinancing of current
obligations for indebtedness for money borrowed and for working capital.
1.04. Payments and Endorsements. Payments of principal and interest on
the Notes, shall be made directly by check duly mailed or delivered to the
Purchaser at the address specified on Schedule I hereto, without any presentment
or notation of payment, except that prior to any transfer of any Note, the
holder of record shall endorse on such Note a record of the date to which
interest has been paid and all payments made on account of principal of such
Note.
-2-
<PAGE>
1.05. Redemptions.
(a) Required Redemptions. On July 1, 1995 and on July 1,
1996 the Company will redeem, without premium, twenty-five per cent (25%) of the
original principal amount of, and on July 1, 1997 all of the balance of, the
principal amount of the Notes, or such lesser amount as may be then outstanding,
together with all accrued and unpaid interest then due on the amount so
redeemed. On the stated or accelerated maturity of the Notes, the Company will
pay the principal amount of the Notes then outstanding together with all accrued
and unpaid interest then due thereon. No optional redemption of less than all of
the outstanding principal amount of the Notes shall affect the obligation of the
Company to make the redemptions required by this subsection.
(b) Optional Redemptions Without Premium. In addition to
the redemptions of the Notes on each required redemption date with respect to
the Notes, the Company may also voluntarily redeem, together with all accrued
and unpaid interest then due thereon, but without premium, an additional
principal amount of the Notes not to exceed the amount of the required
redemption due on such date. The right of redemption of the Notes under this
subsection 1.05(b) shall not be cumulative.
(c) Notice of Redemptions; Pro rata Redemptions. No notice
of an optional redemption pursuant to subsection 1.05(b) need be given. Each
redemption of Notes shall be made so that the Notes then held by each holder
shall be redeemed in a principal amount which shall bear the same ratio to the
total principal amount of Notes being redeemed as the principal amount of Notes
then held by such holder bears to the aggregate principal amount of the Notes
then outstanding
1.06 Registration, etc. The Company shall maintain at its principal
office a register of the Notes and shall record therein the names and addresses
of the registered holders of the Notes, the address to which notices are to be
sent and the address to which payments are to be made as designated by the
registered holder if other than the address of the holder, and the particulars
of all transfers, exchanges and replacements of Notes. No transfer of a Note
shall be valid unless made on such register for the registered holder or his
executors or administrators or his or their duly appointed attorney, upon
surrender thereof for exchange as hereinafter provided, accompanied by an
instrument in writing, in form and execution reasonably satisfactory to the
Company. Each Note issued hereunder, whether originally or upon transfer,
exchange or replacement of a Note or Notes, shall be registered on the date of
execution thereof by the Company and shall be dated the date to which interest
has been paid on such Notes or Note. The registered holder of a Note shall be
that Person in whose name the Note has been so registered by the Company. A
registered holder shall be deemed the owner of a Note for all purposes of this
Agreement and, subject to the provisions hereof, shall be entitled to the
principal, premium, if any, and interest evidenced by such Note free from all
equities or rights
-3-
<PAGE>
of setoff or counterclaim between the Company and the transferor of such
registered holder or any previous registered holder of such Note.
1.07. Transfer and Exchange of Notes. The registered holder of any Note
or Notes may, prior to maturity or prepayment thereof, surrender such Note or
Notes at the principal office of the Company for transfer or exchange. Within a
reasonable time after notice to the Company from a registered holder of its
intention to make such exchange and without expense (other than transfer taxes,
if any) to such registered holder, the Company shall issue in exchange therefor
another Note or Note, in such denominations as requested by the registered
holder, for the same aggregate principal amount as the unpaid principal amount
of the Note or Notes so surrendered, and having the same maturity and rate of
interest, containing the same provisions and subject to the same terms and
conditions as the Note or Notes so surrendered. Each new Note shall be made
payable to such Person or Persons, or registered assigns, as the registered
holder of such surrendered Note or Notes may in writing designate, and such
transfer or exchange shall be made in such a manner that no gain or loss of
principal or interest shall result therefrom.
1.08. Replacement of Notes. Upon receipt of evidence satisfactory to
the Company of the loss, theft, destruction or mutilation of any Note and, if
requested in the case of any such loss, theft or destruction, upon delivery of
an indemnity bond or other agreement or security reasonably satisfactory to the
Company, or, in the case of any such mutilation, upon surrender and cancellation
of such Note, the Company will issue a new Note, of like tenor and amount and
dated the date to which interest has been paid, in lieu of such lost, stolen,
destroyed or mutilated Note.
1.09 Subordination. The Company, for itself, its successors and
assigns, covenants and agrees, and the Purchaser and each successor holder of
the Notes by his or its acceptance thereof, likewise covenants and agrees, that
notwithstanding any other provision of this Agreement or the Notes, the payment
of the principal of and interest on each and all of the Notes shall be
subordinated in right of payment, to the extent and in the manner hereinafter
set forth, to the prior payment in full of all Senior Debt (as hereinafter
defined) at any time outstanding. The provisions of this Section 1.09 shall
constitute a continuing representation to all Persons who, in reliance upon such
provisions, become the holders of or continue to hold Senior Debt, and such
provisions are made for the benefit of the holders of Senior Debt, and such
holders are hereby made obligees hereunder to the same extent as if their names
were written herein as such, and they or any of them may proceed to enforce such
provisions against the Company or against the holder of any Note without the
necessity of joining the Company as a party.
(a) Payment of Senior Debt. In the event of any insolvency
or bankruptcy proceedings, or any receivership,
-4-
<PAGE>
liquidation, reorganization or other similar proceedings in connection
therewith, relative to the Company or to its property, or, in the event of any
proceedings for voluntary liquidation, dissolution or other winding up of the
Company or distribution or marshalling of its assets or any composition with
creditors of the Company, whether or not involving insolvency or bankruptcy,
when and in any such event all Senior Debt shall be paid in full before any
payment or distribution of any character, whether in cash, securities or other
property, shall be made on account of the Notes; and any such payment or
distribution (except securities which are subordinate and junior in right of
payment to the payment of all Senior Debt then outstanding in terms of
substantially the same tenor as this Section 1.09), which would, but for the
provisions hereof, be payable or deliverable in respect of the Notes shall be
paid or delivered directly to the holders of Senior Debt (or their duly
authorized representatives), in the proportions in which they hold the same,
until all Senior Debt shall have been paid in full, and every holder of the
Notes by becoming a holder thereof shall, by his or its acceptance thereof, be
deemed to have designated and appointed the holder or holders of Senior Debt
(and their duly authorized representatives) as his or its agents and
attorneys-in-fact to demand, sue for, collect and receive such Senior Debt
holder's ratable share of all such payments and distributions and to file any
necessary proof of claim therefor and to take all such other action for and in
the name of the holders of the Notes or otherwise, as such Senior Debt holders
(or their authorized representatives) may determine to be necessary or
appropriate for the enforcement of this Section 1.09. The Purchaser and each
successor holder of the Notes by his or its acceptance thereof agrees to
execute, at the request of the Company, a separate agreement with any holder of
Senior Debt on the terms set forth in this Section 1.09, and to take all such
other action as such holder or such holder's representative may request in order
to enable such holder to enforce all claims upon or in respect of such hoider's
ratable share of the Notes.
(b) No Payment on Notes Under Certain Conditions. In the
event that any default occurs in the payment of the principal of or interest on
any Senior Debt (whether as a result of the acceleration thereof by the holders
of such Senior Debt or otherwise) and during the continuance of such default for
a period up to sixty (60) days and thereafter if judicial proceedings shall have
been instituted with respect to such defaulted payment, or (if a shorter period)
until such payment has been made or such default has been cured or waived in
writing by such holder of Senior Debt, then and during the continuance of such
event no payment of principal of or interest on the Notes shall be made by the
Company or accepted by any holder of the Notes who has received written notice
from the Company or from a holder of Senior Debt of such events.
(c) Payments Held in Trust. In case any payment or
distribution shall be paid or delivered to any holder of the Notes before all
Senior Debt shall have been paid in full, despite or in violation or
contravention of the terms of this Section 1.09, such
-5-
<PAGE>
payment or distribution shall be held in trust for and paid and delivered
ratably to the holders of Senior Debt (or their duly authorized
representatives), until all Senior Debt shall have been paid in full.
(d) Subrogation. Subject to the payment in full of all
Senior Debt and until the Notes shall be paid in full, the holders of the Notes
shall be subrogated to the rights of the holders of Senior Debt (to the extent
of payments or distributions previously made to such holders of Senior Debt
pursuant to the provisions of subsections (a) and (c) of this Section 1.09) to
receive payments or distributions of assets of the Company applicable to the
Senior Debt. No such payments or distributions applicable to the Senior Debt
shall, as between the Company and its creditors, other than the holders of
Senior Debt and the holders of the Notes, be deemed to be a payment by the
Company to or on account of the Notes; and for the purposes of such subrogation,
no payments or distributions to the holders of Senior Debt to which the holders
of the Notes would be entitled except for the provisions of this Section 1.09
shall, as between the Company and its creditors, other than the holders of
Senior Debt and the holders of the Notes, be deemed to be a payment by the
Company to or on account of the Senior Debt.
(e) Scope of Section. The provisions of this Section 1.09
are intended solely for the purpose of defining the relative rights of the
holders of the Notes, on the one hand, and the holders of the Senior Debt, on
the other hand. Nothing contained in this Section 1.09 or elsewhere in this
Agreement or the Notes is intended to or shall impair, as between the Company,
its creditors other than the holders of Senior Debt, and the holders of the
Notes, the obligation of the Company, which is unconditional and absolute, to
pay to the holders of the Notes the principal of and interest on the Notes as
and when the same shall become due and payable in accordance with the terms
thereof, or to affect the relative rights of the holders of the Notes and
creditors of the Company other than the holders of the Senior Debt, nor shall
anything herein or therein prevent the holder of any Note from accepting any
payment with respect to such Note or exercising all remedies otherwise permitted
by applicable law upon default under such Note, subject to the rights, if any,
under this Section 1.09 of the holders of Senior Debt in respect of cash,
property or securities of the Company received by the holders of the Notes.
(f) Survival of Rights. The right of any present or future holder of Senior
Debt to enforce subordination of the Notes pursuant to the provisions of this
Section 1.09 shall not at any time be prejudiced or impaired by any act or
failure to act on the part of the Company or any such holder of Senior Debt,
including, without limitation, any forbearance, waiver, consent, compromise,
amendment, extension, renewal, acceptance or taking or release of security of or
in respect of any Senior Debt, or by noncompliance
-6-
<PAGE>
by the Company with the terms of such subordination regardless of any knowledge
thereof such holder may have or otherwise be charged with.
(g) Amendment or Waiver. The provisions of this Section
1.09 may not be amended or waived in any manner which is detrimental to any
Senior Debt without the requisite consent of the holders of any Senior Debt
according to the applicable provisions thereof.
(h) Senior Debt Defined. The term "Senior Debt" shall mean
(i) all Indebtedness of the Company for money borrowed from banks or other
institutional lenders, including any extensions or renewals thereof, whether
outstanding on the date hereof or thereafter created or incurred, which is not
by its terms or by separate agreement subordinate and junior to or on a parity
with (x) the Notes and (y) the Subordinated Notes due 1999 in the original
principal amount of $1,500,000 issued pursuant to an Agreement dated as of May
28, 1992 between the Company and Massachusetts Capital Resource Company (the
"1992 Notes"), and which is permitted by the terms of this Agreement at the time
it is created or incurred, and (ii) all guaranties by the Company which are not
by their terms or by separate agreement subordinate and junior to or on a parity
with the Notes and the 1992 Notes and which are permitted by the terms of this
Agreement at the time they are made, of Indebtedness of any Subsidiary if such
Indebtedness would have been Senior Debt pursuant to the provisions of clause
(i) of this sentence had it been Indebtedness of the Company. In making any
loans which are (or the guaranties of which are) intended to be Senior Debt, the
lenders or purchasers thereof shall be entitled to rely as to the fact that such
Indebtedness or guaranty is permitted hereby upon a certificate by the Company's
chief financial officer purporting to show such Indebtedness or guaranty will
not result in the Company's failure to comply with the provisions of Article IV
hereof in effect as of the date of the loan or guaranty.
1.10. Representations by the Purchaser. The Purchaser represents that
it is acquiring the Note and Warrant for its own account and that the Note and
Warrant are being and will be acquired for the purpose of investment and not
with a view to distribution or resale thereof or of the Common Stock or other
securities receivable upon the exercise of the Warrants. The acquisition by the
Purchaser of the Note and Warrant shall constitute a confirmation of this
representation.
ARTICLE II
CONDITIONS TO PURCHASER'S OBLIGATION
The obligation of the Purchaser to purchase and pay for the Note and
Warrant at the Closing is subject to the following conditions:
-7-
<PAGE>
2.01. Representations and Warranties. Each of the representations and
warranties of the Company set forth in Article III hereof shall be true on the
date of the Closing.
2.02. Documentation at Closing. The Purchaser shall have received prior
to or at the Closing all of the following:
(a) A copy of all charter documents of the Company; a copy
of the resolutions of the Board of Directors of the Company evidencing approval
of this Agreement, the Notes, the Warrants, and other matters contemplated
hereby; a copy of the By-laws of the Company; and copies of all documents
evidencing other necessary corporate or other action with respect to this
Agreement, the Notes and the Warrants.
(b) A favorable opinion of Messrs. Bowditch & Dewey,
counsel for the Company, as to matters set forth in Exhibit 2.02(b).
(c) A certificate of the Clerk or an Assistant Clerk of
the Company establishing the identity of the officers authorized to sign this
Agreement, the Note, the Warrant and the other documents or certificates to be
delivered pursuant to this Agreement by the Company, together with the true
signatures of such officers.
(d) A certificate from a duly authorized officer of the
Company stating that (i) the representations and warranties of the Company
contained in Article III hereof and otherwise made by the Company in writing in
connection with the transactions contemplated hereby are true and correct, and
(ii) no condition or event has occurred or is continuing or will result from
execution and delivery of this Agreement, the Notes or the Warrants which
constitute, an Event of Default or would constitute an Event of Default but for
the requirement that notice be given or time elapse or both.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants as follows:
3.01. Organization and Standing. The Company is a duly organized and
validly existing corporation in good standing under the laws of the Commonwealth
of Massachusetts and has all requisite corporate power and authority for the
ownership and operation of its properties and for the carrying on of its
Business. Neither the nature of the business conducted by the Company, nor the
character of the properties owned or held under lease by the Company requires it
to be qualified or licensed as a foreign corporation in any state or
jurisdiction other than the State of California, in which it is duly qualified
and in good standing. The Company has no Subsidiaries.
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3.02. Corporate Action. The Company has all necessary corporate power
and has taken all corporate action required to make all the provisions of this
Agreement, the Notes, the Warrants, and any other agreements and instruments
executed in connection herewith and therewith the valid and enforceable
obligations they purport to be. Sufficient shares of authorized but unissued
Common Stock of the Company have been reserved by appropriate corporate action
in order to permit the exercise of the Warrants. Neither the issuance of the
Notes or Warrants, nor the issuance of shares of Common Stock upon the exercise
of the Warrants, is subject to preemptive or other similar statutory or
contractual rights and will not conflict with any provisions of any agreement or
instrument to which the Company is a party or by which it is bound.
3.03. Governmental Approvals. No authorization, consent, approval,
license, exemption of or filing or registration with any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, is or will be necessary for, or in connection with, the offer,
issuance, sale, execution or delivery by the Company of, or for the performance
by it of its obligations under, this Agreement, the Notes or the Warrants.
3.04. Litigation. Except as is set forth on Exhibit 3.04, there is no
litigation or governmental proceeding or investigation pending or, to the
knowledge of the Company, threatened against the Company affecting any of its
properties or assets, where such litigation, proceeding or investigation, either
individually or in the aggregate, would have a material adverse effect on the
Company; nor, to the knowledge of the Company, has there occurred any event or
does there exist any condition on the basis of which any litigation, proceeding
or investigation might properly be instituted. The Company is not in default
with respect to any order, writ, injunction, decree, ruling or decision of any
court, commission, board or other government agency affecting the Company. There
are no actions or proceedings pending or threatened (or any basis therefor known
to the Company) which might result, either in any case or in the aggregate, in
any material adverse change in the business, operations, affairs or condition of
the Company or in any of its properties or assets, or which might call into
question the validity of this Agreement, the Notes or the Warrants or any action
taken or to be taken pursuant hereto or thereto.
3.05. Compliance with Other Instruments. The Company is in compliance
in all respects with the terms and provisions of this Agreement and of its
Articles of Organization and bylaws and in all material respects with the terms
and provisions of the mortgages, indentures, leases, agreements and other
instruments, and of all judgments, decrees, governmental orders, statutes, rules
and regulations, by which it is bound or to which its properties or assets are
subject, except as set forth on Exhibit 3.05. There is no term or provision in
any of the foregoing
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documents and instruments which materially adversely affects the business,
assets or financial condition of the Company. Neither the execution and delivery
of this Agreement, the Notes or the Warrants, nor the consummation of any
transactions contemplated hereby or thereby, constitutes or results in or will
constitute or result in a default or violation of any term or provision in any
of the foregoing documents or instruments.
3.06. Financial Information. The consolidated financial statements of
the Company (and of its former Subsidiary, OCA Applied Optics, Inc., which was
merged into the Company effective March 31, 1993) attached as Exhibit 3.06
present fairly the consolidated financial position of the Company and such
Subsidiary as at the dates thereof and the results of their operations for the
periods covered thereby and have been prepared in accordance with generally
accepted accounting principles consistently applied. The financial statements so
attached are: (1) for the two years ended June 30, 1992 and June 30, 1991,
certified by Deloitte & Touche and (ii) for the nine-month period ended March
31, 1993, being unaudited and subject to year-end adjustments consisting of
normal recurring items which will not be material in the aggregate. The Company
has no liability, contingent or otherwise, not disclosed in the aforesaid
financial statements or in the notes thereto that could, together with all such
other liabilities, materially affect the financial condition of the Company, nor
does the Company have any reasonable grounds to know of any such liability.
Except as set forth in Exhibit 3.06(a), since the date of the nine-month
financial statements for the period ended March 31, 1993, (i) there has been no
adverse change in the business, assets or condition, financial or otherwise,
operations or prospects, of the Company; (ii) neither the business, condition,
operations or prospects of the Company nor any of its properties or assets has
been adversely affected as a result of any legislative or regulatory change, any
revocation or change in any franchise, license or right to do business, or any
other event or occurrence, whether or not insured against; (iii) the Company has
not incurred any additional Indebtedness for money borrowed or redeemed, whether
in whole or in part, any Indebtedness for money borrowed; (iv) the Company has
not purchased or sold any assets, other than in the ordinary course of business;
(v) the Company has not issued or sold any of its capital stock, or any options,
warrants or convertible securities exercisable therefor; and (vi) the Company
has not entered into any material transaction or made any distribution on its
capital stock.
3.07. Securities Act. Neither the Company nor anyone acting on its
behalf has offered the Notes or the Warrants or similar securities, or solicited
any offers to purchase or made any attempt by preliminary conversation or
negotiations to dispose of the Notes, Warrants or similar securities, to any
Person other than the Purchaser or the Other Purchasers described in Exhibit
3.07. Neither the Company nor anyone acting on its behalf has offered or will
offer to sell the Notes, Warrants or similar securities to, or solicit offers
with respect thereto from, or
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enter into any preliminary conversations or negotiations relating thereto with,
any Person, so as to bring the issuance and sale of the Notes and Warrants under
the registration provisions of the Securities Act.
3.08. Disclosure. Neither this Agreement, the financial statements
incorporated herein as Exhibit 3.06, nor any other agreement, document,
certificate, schedule, exhibit or written statement furnished to the Purchaser
by or on behalf of the Company in connection with the transactions contemplated
hereby, contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein or
therein not misleading. There is no fact which to the knowledge of the Company
has not been disclosed herein or in writing by the Company to the Purchaser and
which materially adversely affects, or in the future may, insofar as the Company
can now foresee, materially adversely affect the business, properties, assets or
condition, financial or otherwise, of the Company.
3.09. No Brokers or Finders. No Person has or will have, as a result of
the transactions contemplated by this Agreement, any right, interest or valid
claim against or upon the Company for any commission, fee or other compensation
as a finder or broker because of any act or omission by the Company or any
agent of the Company.
3.10. Capitalization; Status of Capital Stock. The Company has a total
authorized capitalization consisting of 2,000,000 shares of Common Stock, of
which 768,005 shares have been issued, 765,277 shares are outstanding and 2728
shares are held by the Company as Treasury Stock. All the outstanding shares of
capital stock of the Company have been duly authorized, are validly issued and
are fully paid and nonassessable. The shares of Common Stock issuable upon
exercise of the Warrants, when so issued, will be duly authorized, validly
issued and fully paid and nonassessable. Except as otherwise indicated on
Exhibit 3.10, there are no options, warrants or rights to purchase shares of
capital stock or other securities of the Company authorized, issued or
outstanding, nor is the Company obligated in any other manner to issue shares of
its capital stock or other securities. There are no restrictions on the transfer
of the Notes, the Warrants or shares of Common Stock issued or issuable upon
exercise of the Warrants, other than those imposed by relevant state and federal
securities laws. No holder of any security of the Company is entitled to
preemptive or similar statutory or contractual rights, either arising pursuant
to any agreement or instrument to which the Company is a party, or which are
otherwise binding upon the Company. Neither the issuance of the Notes or the
Warrants nor the issuance of the shares of Common Stock issuable upon exercise
of the Warrants will result in an adjustment under the antidilution or exercise
rights of any holders of any outstanding shares of capital stock, options,
warrants or other rights to acquire any securities of the Company. The offer and
sale of all
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shares of capital stock and other securities of the Company issued before the
Closing complied with or were exempt from all federal and state securities laws.
ARTICLE IV
COVENANTS OF THE COMPANY
4.01. Affirmative Covenants of the Company Other Than Reporting
Requirements. Without limiting any other covenants and provisions hereof, the
Company covenants and agrees that it will perform and observe the following
covenants and provisions and will cause each Subsidiary to perform and observe
such of the following covenants and provisions as are applicable to such
Subsidiary:
(a) Punctual Payment. Pay the principal of and interest on
each of the Notes at the times and place and in the manner provided in the Notes
and herein.
(b) Payment of Taxes. Pay and discharge all taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits or business, or upon any properties belonging to it, prior to
the date on which penalties attach thereto, and all lawful claims which, if
unpaid, might become a lien or charge upon any properties of the Company or any
Subsidiary, provided that neither the Company nor the Subsidiary shall be
required to pay any such tax, assessment, charge, levy or claim which is being
contested in good faith and by appropriate proceedings if the Company or
Subsidiary concerned shall have set aside on its books adequate reserves with
respect thereto, except such as are being contested in good faith and by
appropriate proceedings if the Company or Subsidiary concerned shall have set
aside on its books adequate reserves with respect thereto.
(c) Preservation of Corporate Existence. Preserve and
maintain (i) its corporate existence, rights, franchises and privileges in the
jurisdiction of its incorporation, and qualify and remain qualified, as a
foreign corporation in each jurisdiction in which, in the reasonable opinion of
its Board of Directors, such qualification is necessary or desirable in view of
its business and operations or the ownership of its properties; provided,
however, that nothing herein contained shall prevent any merger, consolidation
or transfer of assets permitted by subsection 4.02(a); and (ii) all licenses and
other rights to use patents, processes, licenses, trademarks, trade names,
inventions, intellectual property rights or copyrights owned or possessed by it
and necessary to the conduct of its business.
4.02. Negative Covenants cf the Company. Without limiting any other
covenants and provisions hereof, the Company covenants and agrees that it will
comply with and observe the following
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covenants and provisions, and will cause each Subsidiary to comply with and
observe such of the following covenants and provisions as are applicable to such
Subsidiary, and will not:
(a) Mergers, Sale of Assets, etc. Merge or consolidate
with, or sell, assign, lease or otherwise dispose of or voluntarily part with
the control of (whether in one transaction or in a series of transactions) a
material portion of its assets (whether now owned or hereafter acquired) or sell
assign or otherwise dispose of (whether in one transaction or in a series of
transactions) any of its accounts receivable (whether now in existence or
hereafter created) at a discount or with recourse, to, any Person, except for
sales or other dispositions of assets in the ordinary course of business and
except that any Subsidiary may merge into or consolidate with or transfer assets
to any other Subsidiary, (2) any Subsidiary may merge into or transfer assets to
the Company, (3) the Company may merge any Person into it or otherwise acquire
such Person provided that the Company is the surviving entity, such merger or
acquisition does not result in the violation of any of the provisions of this
Agreement and no such violation exists at the time of such merger or
acquisition; and provided that such merger or acquisition does not result in the
issuance (in one or more transactions) of shares of the voting stock of the
Company representing in the aggregate more than twenty percent (20%) of the
total outstanding voting stock of the Company, on a fully diluted basis,
immediately following the issuance thereof and (4) the Company may sell fixed
assets up to fifteen percent (15%) (based upon its then net book value) of its
consolidated net fixed assets in any single twelve (12) consecutive month
period.
(b) Distributions. Declare or pay any dividends, purchase,
redeem, retire, or otherwise acquire for value any of its capital stock (or
rights, options or warrants to purchase such shares) now or hereafter
outstanding, return any capital to its stockholders as such, or make any
distribution of assets to its stockholders as such, or permit any Subsidiary to
do any of the foregoing (such transactions being hereinafter referred to as
"Distributions"), except that any Subsidiary may declare and make payment of
cash and stock dividends, return capital and make distributions of assets to the
Company; provided, however, that nothing herein contained shall prevent the
Company from:
(i) repurchasing any shares of Common Stock
pursuant to any Shareholder Agreement, as in effect on the date hereof,
between the Company and any of its shareholders; provided, however, (x)
if the purchase price thereunder exceeds $25,000, that no more than
$25,000 shall be paid in cash and the balance of such purchase price
shall be represented by a promissory note payable over the maximum
number of annual installments, with the lowest interest rate, permitted
by such Shareholder Agreement and (y) that the Company and the holder
of each such promissory note shall have executed and delivered to the
Purchaser, at the time of such repurchase, a subordination agreement in
form and
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substance satisfactory to the Purchaser, subordinating all payments of
interest and principal under said promissory note to the prior payments
of the Notes and the 1992 Notes, except that scheduled principal and
interest payments may be made if at the time of each such payment there
does not exist an Event of Default under this Agreement or an event
which, but for the requirement that notice be given or time elapse or
both, would constitute an Event of Default under this Agreement, or
(ii) effecting a stock split or declaring or
paying any dividend consisting of shares of any class of capital stock
to the holders cf shares of such class of capital stock, or
(iii) redeeming any stock of a deceased
stockholder out of insurance held by the Company on that stockholder's
life, or
(iv) repurchasing 46,875 shares of its Common
Stock as presently constituted upon the terms described in Note 6 to
the Company's audited financial statements for the fiscal year ended
June 30, 1992 (Exhibit 3.06), provided that on the date of such
repurchase or within thirty (30) days prior thereto the Company has
issued and sold shares of its Common Stock at a price per share not
less than the repurchase price per share and has received an aggregate
consideration from such sale of not less than the full repurchase
price,
if in the case of any such transaction there does not exist at the time of such
Distribution an Event of Default or an event which, but for the requirement that
notice be given or time elapse or both, would constitute an Event of Default and
provided that such Distribution can be made in compliance with the other terms
of this Agreement.
(c) Change in Nature of Business. Make any material change
in the nature of its Business.
4.03. Reporting Requirements. The Company will furnish to each
registered holder of any Note or any Warrant and to any holder of at least
twenty-five percent (25%) of the Shares of Common Stock issued upon exercise of
the Warrants:
(a) as soon as possible and in any event within five (5)
days after the occurrence of each Event of Default or each event which, with the
giving of notice or lapse of time or both, would constitute an Event of Default,
the statement of the chief financial officer of the Company setting forth
details of such Event of Default or event and the action which the Company
proposes to take with respect thereto;
(b) as soon as available and in any event within
forty-five (45) days after the end of each interim quarter of each
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fiscal year of the Company, furnish a balance sheet of the Company as of the end
of such quarter shown in comparative form with the corresponding balance sheet
at the end of the preceding fiscal year, and a statement of earnings for the
period commencing at the end of the previous fiscal year and ending with the end
of each quarter shown in comparative form with the statement of earnings for the
corresponding period in the preceding fiscal year, all in reasonable detail
(subject to year end audit adjustments);
(c) as soon as available and in any event within one
hundred twenty (120) days after the end of each fiscal year of the Company, a
copy of the annual audit report for such year for the Company, including therein
a balance sheet of the Company as of the end of such fiscal year and a statement
of earnings and retained earnings and a statement of cash flow of the Company
for such fiscal year, setting forth in each case in comparative form the
corresponding figures for the preceding fiscal year, all duly certified by
independent public accountants of recognized standing; and
(d) promptly after sending, making available, or filing
the same, such reports and financial statements as the Company shall send or
make available to the stockholders of the Company or the Securities and Exchange
Commission and such other information respecting the business, properties or the
condition or operations, financial or otherwise, of the Company as the Purchaser
may from time to time reasonably request.
ARTICLE V
EVENTS OF DEFAULT
5.01. Events of Default. If any of the following events ("Events of
Default") shall occur and be continuing:
(a) The Company shall fail to pay any required installment
of principal or any payment of interest on any of the Notes when due; or
(b) The Company shall default for ten (10) business days
in the performance of any covenant contained in Section 4.02; or
(c) Any representation or warranty made by the Company or
any Subsidiary in this Agreement or by the Company or any Subsidiary (or any
officers of the Company or any Subsidiary) in any certificate, instrument or
written statement contemplated by or made or delivered pursuant to or in
connection with this Agreement, shall prove to have been incorrect when made in
any material respect; or
(d) The Company or any Subsidiary shall fail to perform or
observe any other term, covenant or agreement contained in this Agreement, the
Notes or the Warrants on its part to be
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performed or observed and any such failure remains unremedied for ten (10)
business days after written notice thereof shall have been given to the Company
by any registered holder of the Notes; or
(e) The Company or any Subsidiary shall fail to pay any
Indebtedness for borrowed money (other than as evidenced by the Notes) owing by
the Company or such Subsidiary (as the case may be), or any interest or premium
thereon, when due (or, if permitted by the terms of the relevant document,
within any applicable grace period), whether such Indebtedness shall become due
by scheduled maturity, by required prepayment, by acceleration, by demand or
otherwise, or shall fail to perform any term, covenant or agreement on its part
to be performed under any agreement or instrument (other than this Agreement or
the Notes) evidencing or securing or relating to any Indebtedness owing by the
Company or any Subsidiary, as the case may be, when required to be performed
(or, if permitted by the terms of the relevant document, within any applicable
grace period), if the effect of such failure to pay or perform is to accelerate,
or to permit the holder or holders of such Indebtedness, or the trustee or
trustees under any such agreement or instrument to accelerate, the maturity of
such Indebtedness, unless such failure to pay or perform shall be waived by the
holder or holders of such indebtedness or such trustee or trustees; or
(f) The Company or any Subsidiary shall be involved in
financial difficulties as evidenced (i) by its admitting in writing its
inability to pay its debts generally as they become due; (ii) by its
commencement of a voluntary case under Title 11 of the United States Code as
from time to time in effect, or by its authorizing, by appropriate proceedings
of its Board of Directors or other governing body, the commencement of such a
voluntary case; (iii) by its filing an answer or other pleading admitting or
failing to deny the material allegations of a petition filed against it
commencing an involuntary case under said Title 11, or seeking, consenting to or
acquiescing in the relief therein provided, or by its failing to controvert in a
timely manner the material allegations of any such petition; (iv) by the entry
of an order for relief in any involuntary case commenced under said Title 11;
(v) by its seeking relief as a debtor under any applicable law, other than said
Title 11, of any jurisdiction relating to the liquidation or reorganization of
debtors or to the modification or alteration of the rights of creditors, or by
its consenting to or acquiescing in such relief; (vi) by the entry of an order
by a court of competent jurisdiction (a) finding it to be bankrupt or insolvent,
(b) ordering or approving its liquidation, reorganization or any modification or
alteration of the rights of its creditors, or (c) assuming custody of, or
appointing a receiver or other custodian for, all or a substantial part of its
property; or (vii) by its making an assignment for the benefit of, or entering
into a composition with, its creditors, or appointing or consenting to the
appointment of a receiver or other custodian for all or a substantial part of
its property; or
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(g) Any judgment, writ, warrant of attachment or execution
or similar process shall be issued or levied against a substantial part of the
property of the Company or any Subsidiary and such judgment, writ, or similar
process shall not be released, vacated or fully bonded within (60) days after
its issue or levy;
then, and in any such event, the Purchaser or any other holder of the Notes may,
by notice to the Company, declare the entire unpaid principal amount of the
Notes, all interest accrued and unpaid thereon and all other amounts payable
under this Agreement to be forthwith due and payable, whereupon the Notes, all
such accrued interest and all such amounts shall become and be forthwith due and
payable (unless there shall have occurred an Event of Default under subsection
5.01(f) in which case all such amounts shall automatically become due and
payable), without presentment, demand protest or further notice of any kind all
of which are hereby expressly waived by the Company.
5.02. Annulment of Defaults. Section 5.01 is subject to the condition
that, if at any time after the principal of any of the Notes shall have become
due and payable, and before any judgment or decree for the payment of the moneys
so due, or any thereof, shall have been entered, all arrears of interest upon
all the Notes and all other sums payable under the Notes and under this
Agreement (except the principal of the Notes which by such declaration shall
have become payable) shall have been duly paid, and every other default and
Event of Default shall have been made good or cured, then and in every such case
the holders of seventy-five percent (75%) or more in principal amount of all
Notes then outstanding may, by written instrument filed with the Company,
rescind and annul such declaration and its consequences; but no such rescission
or annulment shall extend to or affect any subsetdent default or Event of
Default or impair any right consequent thereon.
ARTICLE VI
DEFINITIONS AND ACCOUNTING TERMS
6.01. Certain Defined Terms. As used in this Agreement, the following
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):
"Agreement" means this Subordinated Note and Warrant Purchase Agreement
as from time to time amended and in effect between the parties.
"Business" means the design, development manufacture and marketing of
optical and electro-optical systems, subsystems, sophisticated assemblies and
components for commercial, industrial, military, aerospace and scientific
applications and other activities related to one or more of the foregoing.
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"Company" means and shall include Optical Corporation of America and
its successors and assigns.
"Common Stock" includes (a) the Company's Common Stock, $.01 par value
per share, as authorized on the date of this Agreement, (b) any other capital
stock of any class or classes (however designated) of the Company, authorized on
or after the date hereof, the holders of which shall have the right, without
limitation as to amount, either to all or to a share of the balance of current
dividends and liquidating dividends after the payment of dividends and
distributions on any shares entitled to preference, and the holders of which
shall ordinarily, in the absence of contingencies, be entitled to vote for the
election of a majority of the directors of the Company (even though the right so
to vote has been suspended by the happening of such a contingency), and (c) any
other securities into which or for which any of the securities described in (a)
or (b) may be converted or exchanged pursuant to a plan of recapitalization,
reorganization, merger, sale of assets or otherwise.
"Consolidated" and "consolidating" when used with reference to any term
defined herein mean that term as applied to the accounts of the Company and its
Subsidiaries consolidated in accordance with generally accepted accounting
principles.
"Distribution" shall have the meaning assigned to that term in Section
4.02(b).
"Events of Default" shall have the meaning assigned to that term in
Section 5.01.
"Indebtedness" means all obligations, contingent and otherwise, which
should, in accordance with generally accepted accounting principles consistently
applied, be classified upon the obligor's balance sheet as liabilities, but in
any event including, without limitation, liabilities secured by any mortgage on
property owned or acquired subject to such mortgage, whether or not the
liability secured thereby shall have been assumed, and also including, without
limitation, (i) all guaranties, endorsements and other contingent obligations,
in respect of Indebtedness of others, whether or not the same are or should be
so reflected in said balance sheet, except guaranties by endorsement of
negotiable instruments for deposit or collection or similar transactions in the
ordinary course of business and (ii) the present value of any lease payments
(other than those which are treated as Current Liabilities) due under leases
required to be capitalized in accordance with applicable Statements of Financial
Accounting Standards, determined in accordance with applicable Statements of
Financial Accounting Standards.
"Notes" shall have the meaning assigned to that term in Section 1.01.
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"Person" means an individual, corporation (other than the Company),
partnership, joint venture, trust, or unincorporated organization, or a
government or any agency or political subdivision thereof.
"Purchaser" means and shall include not only the Person who is a party
to this Agreement with the Company but also any other holder or holders of any
of the Notes or Warrants.
"Senior Debt" shall have the meaning assigned to that term in Section
1.09(h).
"Subsidiary" or "Subsidiaries" means any corporation or trust of which
the Company and/or any of its other Subsidiaries (as herein defined) directly or
indirectly owns at the time all of the outstanding shares of every class of such
corporation or trust other than directors' qualifying shares.
"Warrants" shall have the meaning assigned to that term in Section
1.02.
6.02. Accounting Terms. All accounting terms not specifically defined
herein shall be construed in accordance with generally accepted accounting
principles consistent with those applied in preparation of the financial
statements attached hereto as Exhibit 3.06, and all financial data submitted
pursuant to this Agreement and all financial tests to be calculated in
accordance with this Agreement shall be prepared and calculated in accordance
with such principles.
ARTICLE VII
MISCELLANEOUS
7.01. No Waiver; Cumulative Remedies. No failure or delay on the part
of the Purchaser, or any other holder of the Notes or Warrants in exercising any
right, power or remedy hereunder or under any agreement, document or instrument
executed or delivered in connection herewith, shall operate as a waiver thereof;
nor shall any single or partial exercise of any such right, power or remedy
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy hereunder. The remedies herein provided are cumulative
and not exclusive of any remedies provided by law.
7.02. Amendments, Waivers and Consents. Any provision in this
Agreement, the Notes or the Warrants to the contrary notwithstanding, changes in
or additions to this Agreement may be made, and compliance with any covenant or
provision herein or therein set forth may be omitted or waived, if the Company
(i) shall, in the case of the Notes, obtain consent thereto in writing from the
holder or holders of at least seventy-five percent (75%) in principal amount of
all Notes then outstanding, and (ii) shall, in the case of the Warrants, obtain
the consent thereto in writing
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from the holder or holders of at least seventy-five percent (75%) of the shares
of Common Stock issued and issuable upon exercise of the Warrants, and (iii)
shall, in each case, deliver copies of such consent in writing to any holders
who did not execute the same; provided that no such consent shall be effective
to reduce or to postpone the date fixed for the payment of the principal
(including any required redemption) or interest payable on any Note, without the
consent of the holder thereof, or to reduce the percentage of the Notes and
Warrants the consent of the holders of which is required under this Section. Any
waiver or consent be given subject to satisfaction of conditions stated therein
and any waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given. Written notice of any waiver or
consent effected under this subsection shall promptly be delivered by the
Company to any holders who did not execute the same.
7.03. Addresses for Notices, etc. All notices, requests, demands and
other communications provided for hereunder shall be in writing (including
telecopier communication) and mailed or telecopied or delivered to the
applicable party at the addresses indicated below:
If to the Company:
Optical Corporation of America
7421 Orangewood Avenue
Garden Grove, California 94621
Attention: Chairman
Telecopy Number: (714) 898-0587
with a copy to the attention of:
George Olmsted, Clerk
Optical Corporation of America
170 Locke Drive
Marlborough, Massachusetts 01752
Telecopy Number: (508) 481-3559
and with a copy to the attention of:
Robert DeN. Cope
Bowditch & Dewey
311 Main Street
Worcester, Massachusetts 01608
Telecopy Number: (508) 756-7636
If to the Purchaser payments and notices should be mailed to:
The Purchaser's address set forth on
Schedule I hereto.
If to any other holder of the Notes or Warrants: at such holder's
address for notice as set forth in the register maintained by the Company, or,
as to each of the foregoing, at
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such other address as shall be designated by such Person in a written notice to
the other party complying as to delivery with the terms of this Section. All
such notices, requests, demands and other communications shall, when mailed or
telecopied, respectively, be effective when deposited in the mails or
transmitted during regular business hours by telecopy, or delivered in hand,
respectively, addressed as aforesaid.
7.04. Costs, Expenses and Taxes. The Company agrees to pay on demand
all costs and expenses of the Purchaser in connection with the preparation,
execution and delivery of this Agreement, the Notes and the Warrants and the
other instruments and documents to be delivered hereunder. In addition, the
Company shall pay any and all stamp and other taxes payable or determined to be
payable in connection with the execution and delivery of this Agreement, the
Notes and the Warrants and the other instruments and documents to be delivered
hereunder or thereunder and agrees to save the Purchaser harmless from and
against any and all liabilities with respect to or resulting from any delay in
paying or omission to pay such taxes and filing fees.
7.05. Binding Effect; Assignment. This Agreement shall be binding upon
and inure to the benefit of the Company and the Purchaser and their respective
successors and assigns, except that the Company shall not have the right to
assign its rights hereunder or any interest herein without the prior written
consent of the Purchaser.
7.06. Survival of Representations and Warranties. All representations
and warranties made in this Agreement, the Notes and the Warrants or any other
instrument or document delivered in connection herewith or therewith, shall
survive the execution and delivery hereof or thereof and the making of the
loans.
7.07. Prior Agreements. This Agreement constitutes the entire agreement
between the parties and supersedes any prior understandings or agreements
concerning the subject matter hereof.
7.08. Severability. The invalidity or unenforceability of any provision
hereof shall in no way affect the validity or enforceability of any other
provision.
7.09. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the Commonwealth of Massachusetts.
7.10. Headings. Article, Section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
7.11. Sealed Instrument. This Agreement is executed as an instrument
under seal.
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7.12. Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and each of the parties hereto may execute this Agreement by signing
any such counterpart.
7.13. Further Assurances. From and after the date of this Agreement,
upon the request of the Purchaser, the Company and each Subsidiary shall execute
and deliver such instruments, documents and other writings as may be necessary
or desirable to confirm and carry out and to effectuate fully the intent and
purposes of this Agreement, the Notes and the Warrants.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
OPTICAL CORPORATION OF AMERICA
By /s/ DONALD A. JOHNSON
----------------------------------------
Donald A. Johnson, Chairman and
Chief Executive Officer
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SCHEDULE I
Warrant for
Name and Address Principal Number of Shares
of Purchaser Amount of Note of Common Stock
- ------------ -------------- ---------------
Arlette B. Swift $15,000.00 480
c/o Kenneth S. Safe, Jr.
Welch & Forbes
45 School Street
Boston, MA 02108
E. Kent Swift, Jr. $30,000.00 960
c/o Kenneth S. Safe, Jr.
Welch & Forbes
45 School Street
Boston, MA 02108
Ernest B. Dane, Jr. Trust $25,000.00 800
c/o Kenneth S. Safe, Jr.
Welch & Forbes
45 School Street
Boston, MA 02108
Edith Loebs $50,000.00 1600
c/o Kenneth S. Safe, Jr.
Welch & Forbes
45 School Street
Boston, MA 02108
Louise Mauran $50,000.00 1600
c/o Kenneth S. Safe, Jr.
Welch & Forbes
45 School Street
Boston, MA 02108
Kenneth S. Safe, Jr. $50,000.00 1600
c/o Kenneth S. Safe, Jr.
Welch & Forbes
45 School Street
Boston, MA 02108
Elizabeth M. Smith $50,000.00 1600
c/o Kenneth S. Safe, Jr.
Welch & Forbes
45 School Street
Boston, MA 02108
<PAGE>
Elizabeth K. Safe $50,000.00 1600
c/o Kenneth S. Safe, Jr.
Welch & Forbes
45 School Street
Boston, MA 02108
David M. Berwind $25,000.00 800
c/o Kenneth S. Safe, Jr.
Welch & Forbes
45 School Street
Boston, MA 02108
Jeanne M. Berwind $25,000.00 800
c/o Kenneth S. Safe, Jr.
Welch & Forbes
45 School Street
Boston, MA 02108
Richard Houlihan $25,000.00 800
25 Otsego Road
Worcester, MA 01609
Russell W. Johnson $50,000.00 1600
49 Ideal Road
Worcester, MA 01604
Stephen B. Loring $125,000.00 4000
61 Lexington Circle
Holden, MA 01520
WCIS as Trustee $25,000.00 800
individual Retirement
Account #14-5164
365 Main Street
Trust Department
Worcester, MA 01608
Janet B. Fitzgibbons $20,000.00 640
Agent for
Susan F. Fitzgibbons,
Peter G. Fitzgibbons,
John B. Fitzgibbons and
Michael S. Fitzgibbons
40 Norfolk Road
Brookline, MA 02167
Russell W. Johnson $25,000.00 800
49 Ideal Road
Worcester, MA 01604
Stephen B. Loring $35,000.00 1120
61 Lexington Circle
Holden, MA 01520
<PAGE>
Charlotte S. Johnson $75,000.00 2400
49 Ideal Road
Worcester, MA 01604
<PAGE>
SAMPLE NOTE
Exhibit 1.01
OPTICAL CORPORATION OF AMERICA
11% SUBORDINATED NOTE DUE 1997
No. 1993-Sub-______
$125,000.00 June ____, 1993
For value received, Optical Corporation of America, a Massachusetts
corporation (the "Company"), hereby promises to pay to Stephen B. Loring (the
"Payee"), on or before July 1, 1997, the principal sum of One Hundred
Twenty-Five Thousand Dollars ($125,000.00) or such part thereof as then remains
unpaid, to pay interest from the date hereof on the whole amount of said
principal sum remaining from time to time unpaid at the rate of eleven percent
(11%) per annum, such interest to be payable monthly on the first day of each
month commencing with the month following the date hereof, until the whole
amount of the principal hereof remaining unpaid shall become due and payable,
and to pay interest at the rate of sixteen percent (16%) (so far as the same may
be legally enforceable) on all overdue principal (including any overdue required
redemption). Principal and interest shall be payable in lawful money of the
United States of America, in immediately available funds, at the principal
office of the Payee or at such other place as the legal holder may designate
from time to time in writing to the Company. Interest shall be computed on the
basis of a 360-day year and a 30-day month.
This Note is issued pursuant to and is entitled to the benefits of a
certain Subordinated Note and Warrant Purchase Agreement, dated as of June 30,
1993, between the Company and the original Purchaser of this Note (as the same
may be amended from time to time, and hereinafter referred to as the
"Agreement"), and each holder of this Note, by his acceptance hereof, agrees to
be bound by the provisions of the Agreement, including, without limitation, that
(i) this Note is subject to prepayment, in whole or in part, as specified in
said Agreement, (ii) the principal of, and interest on, this Note is
subordinated to Senior Debt, as defined in the Agreement and (iii) in case of an
Event of Default, as defined in the Agreement, the principal of this Note may
become or may be declared due and payable in the manner and with the effect
provided in the Agreement.
As further provided in the Agreement, upon surrender of this Note for
transfer or exchange, a new Note or new Notes of the same tenor dated the date
to which interest has been paid on the surrendered Note and in an aggregate
principal amount equal to the
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unpaid principal amount of the Note so surrendered will be issued to, and
registered in the name of, the transferee or transferees. The Company may treat
the person in whose name this Note is registered as the owner hereof for the
purpose of receiving payment and for all other purposes.
In case any payment herein provided for shall not be paid when due, the
Company shall pay all costs of collection, including all reasonable attorney's
fees.
This Note shall be governed by, and construed in accordance with, the
laws of the Commonwealth of Massachusetts and shall have the effect of a sealed
instrument.
The Company and all endorsers and guarantors of this Note hereby waive
presentment, demand, notice of nonpayment, protest and all other demands and
notices in connection with the delivery, acceptance, performance or enforcement
of this Note.
OPTICAL CORPORATION OF AMERICA
By_____________________________
Donald A. Johnson, Chairman and
Chief Executive Officer
Attest:
By___________________________________
Assistant Clerk
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<PAGE>
SAMPLE WARRANT
Exhibit 1.02
Right to Purchase 4,000
Shares of Common Stock of
Optical Corporation of America
No. 1993-W-1
OPTICAL CORPORATION OF AMERICA
Common Stock Purchase Warrant
OPTICAL CORPORATION OF AMERICA, a Massachusetts corporation (the
"Company"), hereby certifies that, for value received Stephen B. Loring, or
registered assigns, is entitled, subject to the terms set forth below, to
purchase from the Company at any time or from time to time before 5:00 P.M.,
Boston time, on July 1, 1997, or such later time as may be specified in Section
17 hereof, 4,000 fully paid and nonassessable shares of Common Stock, $.01 par
value, of the Company, at a purchase price per share of Eleven Dollars ($11.00)
(such purchase price per share as adjusted from time to time as herein provided
is referred to herein as the "Purchase Price"). The number and character of such
shares of Common Stock and the Purchase Price are subject to adjustment as
provided herein.
This Warrant is one of the Common Stock Purchase Warrants (the
"Warrants") evidencing the right to purchase shares of Common Stock of the
Company, issued pursuant to a certain Subordinated Note and Warrant Purchase
Agreement (the "Agreement"), dated as of June 30, 1993, between the Company and
the original Purchaser of this Warrant, a copy of which is on file at the
principal office of the Company in the Commonwealth of Massachusetts; and the
holder of this Warrant shall be entitled to all of the benefits of the
Agreement, as provided therein.
As used herein the following terms, unless the context otherwise
requires, have the following respective meanings:
(a) The term "Company" shall include Optical Corporation
of America and any corporation which shall succeed to or assume the obligations
of the Company hereunder.
(b) The term "Common Stock" includes (a) the Company's
Common Stock, $.01 par value per share, as authorized on the date of the
Agreement, (b) any other capital stock of any class or classes (however
designated) of the Company, authorized on or after such date, the holders of
which shall have the right, without limitation as to amount, either to all or to
a share of the balance of current dividends and liquidating dividends after the
payment of dividends and distributions on any shares entitled to preference, and
the holders of which shall ordinarily, in the absence of contingencies, be
entitled to vote for the election of a majority of directors of the Company
(even though the right so
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to vote has been suspended by the happening of such a contingency) and (c) any
other securities into which or for which any of the securities described in (a)
or (b) may be converted or exchanged pursuant to a plan of recapitalization,
reorganization, merger, sale of assets or otherwise.
(c) The term "Other Securities" refers to any stock (other
than Common Stock) and other securities of the Company or any other person
(corporate or otherwise) which the holders of the Warrants at any time shall be
entitled to receive, or shall have received, on the exercise of the Warrants, in
lieu of or in addition to Common Stock, or which at any time shall be issuable
or shall have been issued in exchange for or in replacement of Common Stock or
Other Securities pursuant to Section 5 or otherwise.
1. Exercise of Warrant.
1.1. Full Exercise. This Warrant may be exercised in full by the
holder hereof by surrender of this Warrant, with the form of subscription at the
end hereof duly executed by such holder, to the Company at its principal office
in the Commonwealth of Massachusetts, accompanied by payment, in cash or by
certified or official bank check payable to the order of the Company, in the
amount obtained by multiplying (a) the number of shares of Common Stock for
which this Warrant is then exercisable by (b) the Purchase Price then in effect.
1.2. Partial Exercise. This Warrant may be exercised in part by
surrender of this Warrant in the manner and at the place provided in subsection
1.1 except that the amount payable by the holder on such partial exercise shall
be the amount obtained by multiplying (a) the number of shares of Common Stock
designated by the holder in the form of subscription at the end hereof by (b)
the Purchase Price then in effect. On any such partial exercise the Company at
its expense will forthwith issue and deliver to or upon the order of the holder
hereof a new Warrant or Warrants of like tenor, in the name of the holder hereof
or as such holder (upon payment by such holder of any applicable transfer taxes)
may request, calling in the aggregate on the face or faces thereof for the
number of shares of Common Stock for which such Warrant or Warrants may still be
exercised.
1.3. Payment by Notes Surrender. Notwithstanding the payment
provisions of subsections 1.1 and 1.2, all or part of the payment due upon
exercise of this Warrant in full or in part may be made by the surrender by such
holder to the Company of any of the Company's Notes issued pursuant to the
Agreement and such Notes so surrendered shall be credited against such payment
in an amount equal to the principal amount thereof and accrued interest to the
date of surrender.
1.4. Company Acknowledgment. The Company will, at the time of the
exercise of the Warrant, upon the request of the holder hereof, acknowledge in
writing its continuing obligation to
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afford to such holder any rights to which such holder shall continue to be
entitled after such exercise in accordance with the provisions of this Warrant.
If the holder shall fail to make any such request, such failure shall not affect
the continuing obligation of the Company to afford to such holder any such
rights.
1.5. Trustee for Warrant Holders. in the event that a bank or
trust company shall have been appointed as trustee for the holders of the
Warrants pursuant to subsection 4.2, such bank or trust company shall have all
the powers and duties of a warrant agent appointed pursuant to Section 12 and
shall accept, in its own name for the account of the Company or such successor
person as may be entitled thereto, all amounts otherwise payable to the Company
or such successor, as the case may be, on exercise of this Warrant pursuant to
this Section 1.
1.6. Shareholder Agreement as Condition to Exercise. If, upon any
full or partial exercise of this Warrant, eighty-five percent (85%) or greater
of the shares of Common Stock of the company are subject to a shareholder
agreement between the Company and the owners of such shares of Common Stock,
then as a condition to exercise of this Warrant the holder hereof shall become a
party to such shareholder agreement and shall be subject to all of the terms and
conditions therein.
2. Delivery of Stock Certificates, etc., on Exercise. As soon as
practicable after the exercise of this Warrant in full or in part, and in any
event within ten (10) days thereafter, the Company at its expense (including the
payment by it of any applicable issue taxes) will cause to be issued in the name
of and delivered to the holder hereof, or as such holder (upon payment by such
holder of any applicable transfer taxes) may direct, a certificate or
certificates for the number of fully paid and nonassessable shares of Common
Stock (or Other Securities) to which such holder shall be entitled on such
exercise, plus, in lieu of any fractional share to which such holder would
otherwise be entitled, cash equal to such fraction multiplied by the then
current market value of one full share, together with any other stock or other
securities and property (including cash, where applicable) to which such holder
is entitled upon such exercise pursuant to Section 1 or otherwise.
3. Adjustment for Dividends in Other Stock, Property, etc.;
Reclassification, etc. In case at any time or from time to time, the holders of
Common Stock (or Other Securities) shall have received, or (on or after the
record date fixed for the determination of shareholders eligible to receive)
shall have become entitled to receive, without payment therefor,
(a) other or additional stock or other securities or
property (other than cash) by way of dividend, or
(b) any cash (excluding cash dividends payable solely out
of earnings or earned surplus of the Company), or
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<PAGE>
(c) other or additional stock or other securities or
property (including cash) by way of spin-off, split-up, reclassification,
recapitalization, combination of shares or similar corporate rearrangement,
other than additional shares of Common Stock (or Other Securities) issued as a
stock dividend or in a stock-split (adjustments in respect of which are provided
for in subsection 5.4), then and in each such case the holder of this Warrant,
on the exercise hereof as provided in Section 1, shall be entitled to receive
the amount of stock and other securities and property (including cash in the
cases referred to in subdivisions (b) and (c) of this Section 3) which such
holder would hold on the date of such exercise if on the date hereof he had been
the holder of record of the number of shares of Common Stock called for on the
face of this Warrant and had thereafter, during the period from the date hereof
to and including the date of such exercise, retained such shares and all such
other or additional stock and other securities and property (including cash in
the cases referred to in subdivisions (b) and (c) of this Section 3) receivable
by him as aforesaid during such period, giving effect to all adjustments called
for during such period by Sections 4 and 5.
4. Adjustment for Reorganization, Consolidation, Merger, etc.
4.1. In case at any time or from time to time, the Company shall (a)
effect a reorganization, (b) consolidate with or merge into any other person, or
(c) transfer all or substantially all of its properties or assets to any other
person under any plan or arrangement contemplating the dissolution of the
Company, then, and in each such case, the holder of this Warrant, on the
exercise hereof as provided in Section 1 at any time after the consummation of
such reorganization, consolidation or merger or the authorization of such
dissolution (but in no event later than thirty (30) days following the effective
date of such dissolution), as the case may be, shall receive, in lieu of the
Common Stock (or Other Securities) issuable on such exercise prior to such
consummation or such effective date, the stock and other securities and property
(including cash) to which such holder would have been entitled upon such
consummation or in connection with such dissolution, as the case may be, if such
holder had so exercised this Warrant, immediately prior thereto, all subject to
further adjustment thereafter as provided in Sections 3 and 5.
4.2. Dissolution. In the event of any dissolution of the Company
following the transfer of all or substantially all of its properties or assets,
the Company, prior to such dissolution, shall at its expense deliver or cause to
be delivered the stock and other securities and property (including cash, where
applicable) receivable by the holders of the Warrants after the effective date
of such dissolution pursuant to this Section 4 to a
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bank or trust company having an office in Boston or Worcester, Massachusetts, as
trustee for the holder or holders of the Warrants.
4.3. Continuation of Terms. Upon any reorganization, consolidation,
merger or transfer (and any dissolution following any transfer) referred to in
this Section 4, this Warrant shall continue in full force and effect and the
terms hereof shall be applicable to the shares of stock and other securities and
property receivable on the exercise of this Warrant after the consummation of
such reorganization, consolidation or merger or the effective date of
dissolution following any such transfer, as the case may be, and shall be
binding upon the issuer of any such stock or other securities, including, in the
case of any such transfer, the person acquiring all or substantially all of the
properties or assets of the Company, whether or not such person shall have
expressly assumed the terms of this Warrant as provided in Section 6.
5. Adjustment for Issue or Sale of Common Stock at Less Than The
Purchase Price in Effect.
5.1. General. If the Company shall at any time or from time to time,
issue any additional shares of Common Stock (other than shares of Common Stock
excepted from the provisions of this Section 5 by subsections 5.4 or 5.5)
without consideration or for a net consideration per share less than the
Purchase Price in effect immediately prior to such issuance, then, and in each
such case: (a) the Purchase Price shall be lowered to an amount determined by
multiplying such Purchase Price then in effect by a fraction:
(1) the numerator of which shall be (a) the number of
shares of Common Stock outstanding immediately prior to the issuance of such
additional shares of Common Stock, plus (b) the number of shares of Common Stock
which the net aggregate consideration, if any, received by the Company for the
total number of such additional shares of Common Stock so issued would purchase
at the Purchase Price in effect immediately prior to such issuance, and
(2) the denominator of which shall be (a) the number of
shares of Common Stock outstanding immediately prior to the issuance of such
additional shares of Common Stock plus (b) the number of such additional shares
of Common Stock so issued;
and (b) the holder of this Warrant shall thereafter, on the exercise hereof as
provided in Section 1, be entitled to receive the number of shares of Common
Stock-determined by multiplying the number of shares of Common Stock which would
otherwise (but for the provisions of this subsection 5.1) be issuable on such
exercise by the fraction of which (i) the numerator is the
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Purchase Price which would otherwise (but for the provisions of this subsection
5.1) be in effect, and (ii) the denominator is the Purchase Price in effect on
the date of such exercise.
5.2. Definitions, etc. For purposes of this Section 5 and of Section 7:
The issuance of any warrants, options or other subscription or purchase
rights with respect to shares of Common Stock and the issuance of any
securities convertible into or exchangeable for shares of Common Stock (or
the issuance of any warrants, options or other rights with respect to such
convertible or exchangeable securities) shall be deemed an issuance at such
time of such Common Stock if the Net Consideration Per Share which may be
received by the Company for such Common Stock (as hereinafter determined)
shall be less than the Purchase Price at the time of such issuance and,
except as hereinafter provided, an adjustment in the Purchase Price and the
number of shares of Common Stock issuable upon exercise of this Warrant
shall be made upon each such issuance in the manner provided in subsection
5.1. Any obligation, agreement or undertaking to issue warrants, options,
or other subscription or purchase rights at any time in the future shall be
deemed to be an issuance at the time such obligation, agreement or
undertaking is made or arises. No adjustment of the Purchase Price and the
number of shares of Common Stock issuable upon exercise of this Warrant
shall be made under subsection 5.1 upon the issuance of any shares of
Common Stock which are issued pursuant to the exercise of any warrants,
options or other subscription or purchase rights or pursuant to the
exercise of any conversion or exchange rights in any convertible securities
if any adjustment shall previously have been made upon the issuance of any
such warrants, options or other rights or upon the issuance of any
convertible securities (or upon the issuance of any warrants, options or
other rights therefor) as above provided. Any adjustment of the Purchase
Price and the number of shares of Common Stock issuable upon exercise of
this Warrant with respect to this subsection 5.2 which relates to warrants,
options or other subscription or purchase rights with respect to shares of
Common Stock shall be disregarded if, as, and when all of such warrants,
options or other subscription or purchase rights expire or are cancelled
without being exercised, so that the Purchase Price effective immediately
upon such cancellation or expiration shall be equal to the Purchase Price
in effect at the time of the issuance of the expired or cancelled warrants,
options or other subscriptions or purchase rights, with such additional
adjustments as would have been made to that Purchase Price had the expired
or cancelled warrants, options or other subscriptions or purchase rights
not been issued. For purposes of this subsection 5.2, the "Net
Consideration Per Share" which may be received by the Company shall be
determined as follows:
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(A) The "Net Consideration Per Share" shall mean the
amount equal to the total amount of consideration, if any, received by
the Company for the issuance of such warrants, options, subscriptions,
or other purchase rights or convertible or exchangeable securities,
plus the minimum amount of consideration, if any, payable to the
Company upon exercise or conversion thereof, divided by the aggregate
number of shares of Common Stock that would be issued if all such
warrants, options, subscriptions, or other purchase rights or
convertible or exchangeable securities were exercised, exchanged or
converted.
(B) The "Net Consideration Per Share" which may be
received by the Company shall be determined in each instance as of the
date of issuance of warrants, options, subscriptions or other purchase
rights, or convertible or exchangeable securities without giving effect
to any possible future price adjustments or rate adjustments which may
be applicable with respect to such warrants, options, subscriptions or
other purchase rights or convertible securities.
For purposes of this Section 5, if a part or all of the consideration
received by the Company in connection with the issuance of shares of the
Common Stock or the issuance of any of the securities described in this
Section 5, consists of property other than cash, such consideration shall
be deemed to have the same value as shall be determined in good faith by
the Board of Directors of the Company.
This subsection 5.2 shall not apply under any of the circumstances
described in subsection 5.4.
5.3. Dilution in Case of Other Securities. In case any Other Securities
shall be issued or sold, or shall become subject to issue upon the conversion or
exchange of any stock (or Other Securities) of the Company (or any other issuer
of other Securities or any other person referred to in Section 4) or to
subscription, purchase or other acquisition pursuant to any rights or options
granted by the Company (or such other issuer or person), for a consideration per
share such as to dilute the purchase rights evidenced by this warrant, the
computations, adjustments and readjustments provided for in this Section 5 with
respect to the Purchase Price and the number of shares of Common Stock issuable
upon exercise of this Warrant shall be made as nearly as possible in the manner
so provided and applied to determine the amount of Other Securities from time to
time receivable on the exercise of the Warrants, so as to protect the holders of
the Warrants against the effect of such dilution.
5.4. Extraordinary Events. In the event that the Company shall (i)
issue additional shares of the Common Stock as a dividend or other distribution
on outstanding Common Stock, (ii) subdivide its outstanding shares of Common
Stock, or (iii) combine
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its outstanding shares of the Common Stock into a smaller number of shares of
the Common Stock, then, in each such event, the Purchase Price shall,
simultaneously with the happening of such event, be adjusted by multiplying the
then Purchase Price by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to such event and the
denominator of which shall be the number of shares of Common Stock outstanding
immediately after such event, and the product so obtained shall thereafter be
the Purchase Price then in effect. The Purchase Price, as so adjusted, shall be
readjusted in the same manner upon the happening of any successive event or
events described herein in this subsection 5.4. The holder of this Warrant shall
thereafter, on the exercise hereof as provided in Section 1, be entitled to
receive that number of shares of Common Stock determined by multiplying the
number of shares of Common Stock which would otherwise (but for the provisions
of this subsection 5.4) be issuable on such exercise by a fraction of which (i)
the numerator is the Purchase Price which would otherwise (but for the
provisions of this subsection 5.4) be in effect, and (ii) the denominator is the
Purchase Price in effect on the date of such exercise.
5.5. Excluded Shares. Section 5.1 shall not apply to the issuance of
shares of Common Stock, or options therefor, to directors, officers and
employees of the Company pursuant to any stock options, stock purchase, stock
ownership or compensation plan approved by the Company's Board of Directors,
provided that the aggregate number of shares, and options therefor (including
options outstanding on the date hereof), so issued to directors, officers and
employees does not exceed 150,000 shares.
6. No Dilution or Impairment. The Company will not, by amendment of its
Articles of Organization 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 of the Warrants, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of the holders of the
Warrants against dilution or other impairment. Without limiting the generality
of the foregoing, the Company (a) will not increase the par value of any shares
of stock receivable on the exercise of the Warrants above the amount payable
therefor on such exercise, (b) will take all such action as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid
and nonassessable shares of stock on the exercise of all Warrants from time to
time outstanding, (c) will not issue any capital stock of any class which is
preferred as to dividends or as to the distribution of assets upon voluntary or
involuntary dissolution, liquidation or winding up, unless the rights of the
holders thereof shall be limited to a fixed sum or percentage of par value in
respect of participation in dividends and in any such distribution of assets,
and (d) will not transfer all or substantially all of its properties and assets
to any other person
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(corporate or otherwise), or consolidate with or merge into any other person or
permit any such person to consolidate with or merge into the Company (if the
Company is not the surviving person), unless such other person shall expressly
assume in writing and will be bound by all the terms of the Warrants.
7. Accountants' Certificate as to Adjustments. In each case of any
adjustment or readjustment in the shares of Common Stock (or Other Securities)
issuable on the exercise of the Warrants, the Company at its expense will
promptly cause independent certified public accountants of recognized standing
selected by the Company to compute such adjustment or readjustment in accordance
with the terms of the Warrants and prepare a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based, including a statement of (a) the
consideration received or receivable by the Company for any additional shares of
Common Stock (or Other Securities) issued or sold or deemed to have been issued
or sold, (b) the number of shares of Common Stock (or Other Securities)
outstanding or deemed to be outstanding, and (c) the Purchase Price and the
number of shares of Common Stock to be received upon exercise of this Warrant,
in effect immediately prior to such issue or sale and as adjusted and readjusted
as provided in this Warrant. The Company will forthwith mail a copy of each such
certificate to each holder of a Warrant, and will, on the written request at any
time of any holder of a Warrant, furnish to such holder a like certificate
setting forth the Purchase Price at the time in effect and showing how it was
calculated.
8. Notices of Record Date, etc. In the event of
(a) any taking by the Company of a record of the holders
of any class or securities for the purpose of determining the holders
thereof who are entitled to receive any dividend or other distribution,
or any rightto subscribe for, purchase or otherwise acquire any shares
of stock of any class or any other securities or property, or to
receive any other right, or
(b) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the
Company or any transfer of all or substantially all the assets of the
Company to or consolidation or merger of the Company with or into any
other person, or
(c) any voluntary or involuntary dissolution, liquidation
or winding-up of the Company, or
(d) any proposed issue or grant by the Company of any
shares of stock of any class or any other securities, or any right or
option to subscribe for, purchase or otherwise acquire any shares of
stock of any class or any other
-34-
<PAGE>
securities (other than with respect to the Excluded Shares referred to
in subsection 5.5 and the issue of Common Stock on the exercise of the
Warrants),
then and in each such event the Company will mail or cause to be mailed to each
holder of a Warrant a notice specifying (i) the date on which any such record
is to be taken for the purpose of such dividend, distribution or right, and
stating the amount and character of such dividend, distribution or right, (ii)
the date on which any such reorganization, reclassification, recapitalization,
transfer, consolidation, merger, dissolution, liquidation or winding-up is to
take place, and the time, if any is to be fixed, as of which the holders of
record of Common Stock (or Other Securities) shall be entitled to exchange their
shares of Common Stock (or Other Securities) for securities or other property
deliverable on such reorganization, reclassification, recapitalization,
transfer, consolidation, merger, dissolution, liquidation or winding-up, and
(iii) the amount and character of any stock or other securities, or rights or
options with respect thereto, proposed to be issued or granted, the date of such
proposed issue or grant and the persons or class of persons to whom such
proposed issue or grant is to be offered or made. Such notice shall be mailed at
least twenty (20) days prior to the date specified in such notice on which any
such action is to be taken.
9. Reservation of Stock, etc., Issuable on Exercise of Warrants. The
Company will at all times reserve and keep available, solely for issuance and
delivery on the exercise of the Warrants, all shares of Common Stock (or Other
Securities) from time to time issuable on the exercise of the Warrants.
10. Exchange of Warrants. On surrender for exchange of any Warrant,
properly endorsed, to the Company, the Company at its expense will issue and
deliver to or on the order of the holder thereof a new Warrant or Warrants of
like tenor, in the name of such holder or as such holder (on payment by such
holder of any applicable transfer taxes) may direct, calling in the aggregate on
the face or faces thereof for the number of shares of Common Stock called for on
the face or faces of the Warrant or Warrants so surrendered.
11. Replacement of Warrants. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of any
Warrant and, in the case of any such loss, theft or destruction of any Warrant,
on delivery of an indemnity agreement or security reasonably satisfactory in
form and amount to the Company or, in the case of any such mutilation, on
surrender and cancellation of such Warrant, the Company at its expense will
execute and deliver, in lieu thereof, a new Warrant of like tenor.
12. Warrant Agent. The Company may, by written notice to each holder of
a Warrant, appoint an agent having an office in either Boston or Worcester,
Massachusetts for the purpose of issuing Common Stock (or Other Securities) on
the exercise of the
-35-
<PAGE>
Warrants pursuant to Section 1, exchanging Warrants pursuant to Section 10, and
replacing Warrants pursuant to Section 11, or any of the foregoing, and
thereafter any such issuance, exchange or replacement, as the case may be, shall
be made at such office by such agent.
13. Remedies. The Company stipulates that the remedies at law of the
holder of this Warrant in the event of any default or threatened default by the
Company in the performance of or compliance with any of the terms of this
Warrant are not and will not be adequate, and that such terms may be
specifically enforced by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any of the terms
hereof or otherwise.
14. Negotiability, etc. This Warrant is issued upon the following
terms, to all of which each holder or owner hereof by the taking hereof consents
and agrees:
(a) title to this Warrant may be transferred by
endorsement (by the holder hereof executing the form of assignment at
the end hereof) and delivery in the same manner as in the case of a
negotiable instrument transferable by endorsement and delivery;
(b) any person in possession of this Warrant properly
endorsed is authorized to represent himself as absolute owner hereof
and is empowered to transfer absolute title hereto by endorsement and
delivery hereof to a bona fide purchaser hereof for value; each prior
taker or owner waives and renounces all of his equities or rights in
this Warrant in favor of each such bona fide purchaser, and each such
bona fide purchaser shall acquire absolute title hereto and to all
rights represented hereby; and
(c) until this Warrant is transferred on the books of the
Company, the Company may treat the registered holder hereof as the
absolute owner hereof for all purposes, notwithstanding any notice to
the contrary.
15. Notices, etc. All notices and other communications from the Company
to the holder of this Warrant shall be mailed by first class registered or
certified mail, postage prepaid, at such address as may have been furnished to
the Company in writing by such holder or, until any such holder furnishes to the
Company an address, then to, and at the address of, the last holder of this
Warrant who has so furnished an address to the Company.
16. Miscellaneous. This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or termination
is sought. This Warrant shall be construed and enforced in accordance with and
governed by the laws of the Commonwealth of Massachusetts. The headings in this
Warrant are for purposes of reference only, and shall not
-36-
<PAGE>
limit or otherwise affect any of the terms hereof. This Warrant is being
executed as an instrument under seal. The invalidity or unenforceability of any
provision hereof shall in no way affect the validity or enforceability of any
other provision.
17. Expiration. The right to exercise this Warrant shall expire at 5:00
P.M., local time at the place where the then principal office of the Company is
located in the Commonwealth of Massachusetts, on the later of (i) July 1, 1997
or (ii) at such time as all principal and interest on the Notes (as defined in
the Agreement) is paid in full.
Dated: June ____, 1993 OPTICAL CORPORATION OF AMERICA
By_____________________________________
Donald A. Johnson, Chairman
and Chief Executive Officer
Attest:
By________________________________
Assistant Clerk
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<PAGE>
FORM OF SUBSCRIPTION
(To be signed only on exercise of Warrant)
TO OPTICAL CORPORATION OF AMERICA
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise this Warrant for, and to purchase thereunder,
................ shares of Common Stock of OPTICAL CORPORATION OF AMERICA and
herewith makes payment of $............ therefor, and requests that the
certificates for such shares be issued in the name of, and delivered to
............................................................... whose address is
................................................................................
Dated: ...................................
Signature must conform to name of
holder as specified on the face of
the Warrant)
...................................
(Address)
------------------
FORM OF ASSIGNMENT
(To be signed only on transfer of Warrant)
For value received, the undersigned hereby sells, assigns, and
transfers unto ........................................... the right represented
by the within Warrant to purchase .................................. shares of
Common Stock of OPTICAL CORPORATION OF AMERICA to which the within Warrant
relates, and appoints ............................. Attorney to transfer such
right on the books of OPTICAL CORPORATION OF AMERICA with full power of
substitution in the premises.
Dated: ....................................
(Signature must conform to name of
holder as specified on the face of
the Warrant)
....................................
(Address)
Signed in the presence of:
.....................................
-38-
Patent License Agreement
THIS AGREEMENT is made effective as of 5/30/95 by and between John
Wilbur Hicks ("Hicks") of 312 Howard Street, Northborough, MA 01532 and Optical
Corporation of America, a Massachusetts Corporation having a place of business
at 170 Locke Drive ("OCA"). Marlborough, MA 01782.
Hicks is the owner of U.S. Patent 4,768,849, which was granted to Hicks
by the U.S. Patent and Trademark Office on September 6, 1988, and corresponding
foreign patent(s) and application(s) (collectively referred to herein as the
"Patent"). In accordance with an agreement between Hicks and OCA dated February
21, 1995 (the "Prior Agreement"), and in consideration of the mutual agreements
set forth here, Hicks and OCA agree as follows:
LICENSE GRANT
1. Hicks hereby grants and agrees to grant to OCA a world-wide irrevocable
license, with a right to sub-license, to make, have made, use and sell products
which are covered by any valid and subsisting claim(s) of the Patent. Such
license is exclusive except that with respect to products which are covered by
any valid and subsisting claim(s) of the Patent and which involve optical
wavelenghs which are less than equal to 1.1u:
(a) Hicks retains the right to make, have made, use and sell such
products: and
(b) OCA shall sell such products only to Hicks unless Hicks
consents otherwise in writing.
2. Hicks warrants and represents that no continuation, divisional or
continuation-in-part applications based on U.S. General No. 907,622, filed
September 15, 1988 (the patent application from which U.S. Patent 4,768,849
issued) have been filed in the U.S. Patent and Trademark Office. Furthermore,
with respect to products which are within the scope of any claim of the Patent,
Hicks shall not assert against OCA or its sub-licensees, or the customers,
agents, partners or suppliers of OCA or any sub-licensee, any intellectual
property, including but not limited to any patents, which Hicks currently owns
or may acquire during the term of this Agreement. Hicks shall not assign to any
third party or otherwise dispose of any such intellectual property except in
conjunction with an obligation on the assignee of such intellectual property to
be bound by the non-assertion obligation of this Paragraph.
3. Hicks shall maintain the Patent in force for its maximum permissible
time duration by timely payment of all maintenance fees, annuities or the like.
Hicks may at any time during the term of this Agreement be discharged from this
obligation to pay maintenance fees, annuities or the like, by offering to assign
to OCA title to and all his rights in the Patent (including the U.S. patent
and/or any or all corresponding foreign patent(s) and application(s), without
further consideration, not less than three (3) months prior to the due date for
the next due maintenance fee, annuity or the like. Any such assignment shall
not negate or terminate the non-assertion obligation of Paragraph 2, above, but
shall remove the assigned patent(s) (meaning whichever one or more of the U.S.
and corresponding foreign patent(s) and application(s) are assigned to OCA) as
the basis for the royalty obligation of Paragraph 4, below.
1
<PAGE>
PAYMENT AND ACCOUNTING
4. OCA shall pay to Hicks a royalty of two percent (2%) of the net sales
price of the products covered by any valid and subsisting claim of the Patent
licensed under this Agreement, except such products as are sold to Hicks. Only a
single royalty payment shall be payable pursuant to this Agreement with respect
to any one product, not withstanding that it may be made, sold, resold and/or
used in multiple countries in which is covered by a valid and subsisting claim
of the Patent.
5. Within forty-five (45) days of the end of each calendar quarter, OCA
shall provide to Hicks:
(a) a quarterly royalty statement, in writing, which contains (i) the
quantity of the licensed products which were sold during the
prior calendar quarter and for which revenues were received by
OCA, and (ii) the total net sales price received for the products
of subparagraph 5(a)(i); and
(b) a royalty payment calculated in accordance with Paragraph 4 and
subject to the Consulting Fee offset recited in the third
paragraph of Section D of the Prior Agreement.
6. Within ninety (90) days of the end of each calendar year, OCA shall
provide to Hicks, in writing, an annual royalty statement, prepared and
certified by OCA's certified public accountants, which contains (i) the quantity
of products licensed under Paragraph 1 which were sold during the prior calendar
year and for which revenues were received by OCA, and (ii) the total net sales
price received by OCA for such products.
TERM AND TERMINATION
7. The term of this Agreement shall extend from the date first written
above to the date of expiration of the Patent.
ENFORCEMENT AND SUB-LICENSING
8. OCA shall have the exclusive right to enforce the Patent against third
parties for infringement of Patent, and shall have the right, unless otherwise
waived by OCA in writing, to control the defense of the Patent against
invalidity or unenforceability claims brought by a third party in any court,
patent office, or any other judicial or administrative tribunal.
9. Hicks shall provide any necessary non-monetary support to OCA
reasonably required for enforcement or defense as set forth in Paragraph 8, and
Hicks shall allow OCA to intervene, to the extent permitted by law, in any
action involving the Patent in which Hicks is a named party.
10. OCA shall bear its costs in any enforcement or defense as set forth in
Paragraph 8, and OCA shall reimburse Hicks for travel and incidental expenses
incurred at OCA's request for work related to such enforcement or defense.
2
<PAGE>
11. In the event that OCA grants a sub-license under the Patent, OCA shall
pay to Hicks 15% of all monetary revenues received by OCA for such sub-license.
In the event that any enforcement or defense as set forth in Paragraph 8 results
in any type of monetary award paid to OCA, OCA shall pay to Hicks 15% of such
award, after subtracting all costs and expenses, including but not limited to
attorney's fees, incurred by OCA in enforcement or defense of the Patent.
OTHER
12. Any controversy or claim arising under or related to this Agreement
shall be resolved by good faith negotiations between the parties. In the event
that any controversy or claim cannot be resolved after good faith negotiations,
the sole remedy shall be resolution of such controversy or claim by arbitration
held in Marlborough, Massachusetts (or such other location as the parties may
mutually select at that time) before a single arbitrator in accordance with the
commercial rules of the American Arbitration Association.
13. This Agreement is binding upon and shall inure to the benefit of the
parties hereto and their repective successors and assigns.
14. This Agreement, taken together with the Prior Agreement, constitutes
the entire agreement between the parties with respect to the subject matter set
forth above. To the extent that this Agreement and the Prior Agreeement are
inconsistent or in conflict, this Agreement shall control.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
an instrument under seal all as of the day and year first above written.
OPTICAL CORPORATION OF AMERICA
By: /s/ John D. Viggiano /s/ John Wilbur Hicks
--------------------------------- ------------------------------
John D. Viggiano John Wilbur Hicks
Its Vice-President
3
AGREEMENT
THIS AGREEMENT dated as of February 21, 1995 is between John Wilbur
Hicks ("Hicks") of 312 Howard Street, Northborough, MA 01532 and Optical
Corporation of America, a Massachusetts corporation ("CCA") having a place of
business at 170 Locke Drive, Marlborough, MA 01752. In consideration of the
mutual agreements set forth herein, Hicks and OCA agree as follows:
A. Consulation and Cooperation.
During the Term of this Agreement, Hicks will advise and consult with
OCA in the following Field of Cooperation, namely the application of
thin-film coating technology available to OCA to the production by OCA
of components and products incorporating those components useful in
fiber-optic systems ("Products").
OCA recognizes that Hicks is developing overall fiber-optic systems for
information distribution to and from multiple users. The parties
recognize that OCA product development and design may require
discussion and consideration with Hicks of overall systems performance
requirements. However, nothing in this Agreement will give OCA any
rights (i) to require Hicks to provide his proprietary overall systems
know-how to third parties on OCA's behalf, or (ii) to any share of
compensation which Hicks may receive from third parties for the
provision of such overall systems know-how and design which is outside
the scope of the services Hicks will provide OCA under this Agreement.
OCA will not require that thin-film devices be used or specified by
Hicks in such systems. Hicks will not require OCA to provide Hicks, his
Affiliates or licensees, with products conceived of or developed by OCA
during the Term of this Agreement or under license to OCA from Hicks or
his Affiliates.
B. Contact Within OCA
Until further notice, OCA has designated Michael A Scobey, its Vice
President, to act on its behalf for the purposes of this Agreement.
C. Term and Compensation
Hicks will provide advisory and consulting services to OCA in the Field
of Cooperation for a period of five (5) years from the date of this
Agreement.
As compensation for such services, OCA will pay Hicks a fee of Six
Thousand Dollars ($6,000.00) upon execution of this Agreement and a
further fee of Eighteen Thousand Dollars ($18,000.00) per year for each
year of the Term payable in equal monthly installments (the "Consulting
Fee").
For each year of the Term after the first, the Consulting Fee shall be
adjusted, upwards or downwards, as the case may be, by multiplying the
Consulting Fee paid for the prior year by the percentage increase or
decrease as the case may be, in the Consumer Price index during the
course of such prior year. For the purposes hereof, the term
<PAGE>
"Consumer Price Index" refers to the "Consumer Price Index All Cities"
published by the Bureau of Labor Statistics, U.S. Department of Labor,
during such prior year (or its generally recognized successor index).
D. OCA's Rights to License Technology of Hicks and Affiliates
Upon written request by OCA, Hicks will license U.S. Patent #4,768,849
(the "Patent") to OCA with the exclusive right to produce or have
produced Products covered by the Patent for applications involving
Optical wavelengths which are greater than 1.1u for the remaining life
of the Patent. OCA may produce or have produced Products covered by the
Patent for applications involving Optical wavelenghs which are less
than 1.1u but only for sale to Hicks or a designated affiliate, unless
Hicks shall otherwise consent in writing. Hicks shall not purchase
Products covered by the Patent for applications involving optical
wavelengths which are less than 1.1u from a source other than OCA
without first haven given OCA the opportunity to propose to build such
Product for Hicks at a competitive price. If OCA elects not to make
such a proposal or if Hicks purchases such Product from a source other
than OCA, Hicks or an affiliate shall pay OCA a royalty of five percent
(5%) of the net sales of such Product.
As compensation for all the rights of use described in the preceding
paragraph, OCA will pay to or on the direction of Hicks, or to his
designated Affiliate, a royalty of two percent (2%) of the net sales of
the Product.
Commencing with the second year of the Term, one-half of the Consulting
Fee paid to Hicks by OCA pursuant to the foregoing Paragraph C will be
considered to be payment pro tanto of any royalties due Hicks pursuant
to this Paragraph D from Products sales by OCA (the "Running
Royalties") but in any year, Hicks will receive no less than fifty
percent (50%) of the Consulting Fee plus fifty percent (50%) of the
Running Royalty. Should Hicks decide not to obtain or maintain patent
coverage for Products, or technologies falling within the Field of
Cooperation, Hicks will give OCA prompt written notice of his
intentions and OCA will be free thereafter to pursue or maintain the
coverage OCA's expense and Hicks will assign such patent to OCA.
E. Other Patents Obtained by OCA or Hicks During the Term of this
Agreement
During the term of this Agreement Product concepts within the Field of
Cooperation will be disclosed by Hicks to OCA and, OCA will have six
(6) months in which to decide if it will seek patent protection for the
inventions which incorporate the concepts. Should OCA decline, Hicks
will be free to pursue coverage at Hicks' expense. Except as
hereinafter provided, no additional compensation will be due Hicks from
OCA or due OCA from Hicks for use of such patents.
Hicks will provide any necessary non-monetary support to OCA reasonably
required for the preparation, submission and prosecution of patents
initially prepared during the Term of this Agreement. OCA will
reimburse Hicks for travel and incidental expenses incurred at OCA's
request for patent related work.
2
<PAGE>
If OCA elects to seek patent protection for the inventions which
incorporate the Product concepts within the Field of Cooperation which
are disclosed by Hicks to OCA, but thereafter chooses not to produce or
have produced Products covered by such patents, upon request by Hicks,
OCA will grant to Hicks or an Affiliate the right to produce or have
produced Products covered by such patents for the remaining life of
such Patents. For such rights, if exercised, Hicks or an Affiliate will
pay OCA a royalty of twelve (12%) of the net sales of the Products.
F. Discontinuance: Defense Expense
In either case, once the original patent holder, applicant or assignee,
having given due notice to the other party, discontinues prosecution or
maintenance, no royalty will be due for Products produced under the
abandoned coverage.
The burden of defense and the litigation expenses associated with
defense of patents will be first borne by the party holding the patent
or applying for patent coverage and each such party herein agrees to
carry out such defense with dilligence. However, should either Hicks or
OCA anticipate costs or difficulties such that they cannot prudently
proceed with defense, each agrees to advise the other in timely fashion
so that the other can opt to proceed with defense. In such a case,
future royalties due under licese of the challenged patent or patents
will first be applied to the costs of defense.
G. Confidentiality
OCA has attached to this letter the Confidentiality and Non-Disclosure
Agreement with Hicks dated September 16, 1994 (the "Attachment"), the
terms and provisions of which are incorporated herein by reference.
H. General
This Agreement is binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns, as well as
any Affiliate of either party. For the purposes of this Agreement the
term "Affiliate" shall mean any individual who is related to a party
and any other person, firm or corporation which controls, is controlled
by, or is under common control with either party to this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
an instrument under seal all as of the day and year first above written.
OPTICAL CORPORATION OF AMERICA
By: /s/ John D. Viggiano /s/ John Wilbur Hicks
--------------------------------- ---------------------------------
John D. Viggiano John Wilbur Hicks
Its Vice-President
3
INTERCREDITOR AGREEMENT
-----------------------
THIS SECOND AMENDED INTERCREDITOR AGREEMENT (this "Agreement"), is
dated as of December 28, 1995, (the "Effective Date") notwithstanding the actual
execution hereof by the parties hereto on different and subsequent dates, and is
by and among:
A. OPTICAL CORPORATION OF AMERICA, a Massachusetts corporation ("Borrower");
B. GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation ("GE Capital"),
SILICON VALLEY BANK, a California banking corporation ("Lender") and
MASSACHUSETTS CAPITAL RESOURCE COMPANY, a Massachusetts special purpose limited
partnership ("MCRC").
RECITALS
--------
WHEREAS, pursuant to a Loan and Security Agreement and related
documentation, Lender provides a revolving line of credit to "Borrower" and
provides other credit accommodations to Borrower, all of which may be amended,
modified, extended, or renewed from time to time (the "Lender Credit"), and
Borrower has secured the Lender Credit by granting Lender security interests in
certain of Borrower's assets as more particularly described in the Loan and
Security Agreement and related documents, as amended (the "Lender Credit
Documents"); and
WHEREAS, pursuant to a Master Security Agreement and related
documentation, GE Capital provides equipment credit to Borrower, all of which
may be amended, modified, extended or renewed from time to time (the "GE Capital
Credit"), and Borrower has secured the GE Capital Credit by granting GE Capital
security interest in certain of Borrower's assets, as more particularly
described in the GE Capital Master Security Agreement (the "GE Capital Credit
Documents"); and
WHEREAS, MCRC has entered into a Purchase Agreement, as amended, with
Borrower whereby MCRC has loaned to Borrower the sum of $l,500,000 (the "MCRC
Credit") all of which was outstanding on the Effective Date and Borrower has, at
MCRC's request and with the approval of the Lender and GE Capital, secured the
MCRC Credit effective as of March 15, 1994 by granting MCRC security interest in
certain of borrower's assets as more particularly described in an amending
Agreement and a Security Agreement, both dated as of March 15, 1994, between
Borrower and MCRC (the "MCRC Credit Documents"); and
WHEREAS, with the intention that this Agreement shall constitute part
of the financing documentation referred to above with GE Capital, the Lender and
MCRC, and each of GE Capital, the Lender and MCRC have agreed to execute this
Agreement in order to establish the relative priorities of their respective
liens and security interests in Borrower's assets;
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
<PAGE>
1. CERTAIN DEFINITIONS. In addition to the terms defined in the
recitals hereto, the terms "Accounts," "Inventory," "General Intangibles,"
"Equipment," "Deposit Accounts," "Chattel Paper," "Documents," "Instruments,"
and "collateral" shall have the meanings ascribed to them by the Uniform
Commercial Code.
2. PRIORITIES.
A. ACCOUNTS, INVENTORY AND GENERAL INTANGIBLES
(i) The lien of Lender with respect to the Accounts,
Inventory, Deposit Accounts, General Intangibles, Chattel Paper, Documents and
Instruments, and all proceeds thereof and all books and records relating thereto
granted to it and arising pursuant to the Lender Credit Documents shall
constitute a first priority lien on all such collateral (the "Lender
Collateral") as security for present or future Lender Credit, plus interest,
fees and expenses.
(ii) The lien of MCRC with respect to the Lender Collateral,
granted to it and arising pursuant to the MCRC Credit Documents shall constitute
a second priority lien on all such collateral as security for the MCRC Credit,
plus interest, fees and expenses.
(iii) GE Capital neither has nor claims any security interest
in the Lender Collateral and shall not hereafter acquire any security interest
in the Lender Collateral without the Lender's prior written consent.
B. EOUIPMENT NOW IN MASSACHUSETTS.
(i) The lien of GE Capital with respect to all equipment of
the Borrower now located in Massachusetts (whether or not such Equipment remains
located in Massachusetts), used or usable in connection with Borrower's business
operations including, but not limited to, Equipment located at One Lyberty Way,
Westford, Massachusetts 01886 and 170 Locke Drive, Marlborough, Massachusetts
01752, granted to it and arising pursuant to the GE Capital Credit Documents,
shall constitute a first priority lien on all such collateral (the "GE Capital
Collateral") as security for the GE Capital Credit, plus interest, fees and
expenses.
(ii) The lien of Lender with respect to all GE Capital
Collateral shall constitute a second priority lien on all such collateral as
security for present or future Lender Credit, plus interest, fees and expenses.
(iii) The lien of MCRC with respect to all GE Capital
Collateral shall constitute a third priority lien on all such collateral as
security for present or future MCRC Credit, plus interest, fees and expenses.
C. EQUIPMENT NOW IN CALIFORNIA.
(i) The lien of GE Capital with respect to all Equipment of
the Borrower now located in California (whether or not such Equipment remains
located in California) used or usable in connection with Borrower's business
operations including,
2
<PAGE>
but not limited to, Equipment located at 7421 Orangewood Avenue, Garden Grove,
CA 92641, granted to it and arising pursuant to the GE Capital Credit Documents,
shall constitute a first priority lien on all such collateral (the "GE Capital
Collateral") as security for the GE Capital Credit, plus interest, fees and
expenses.
(ii) The lien of Lender with respect to all GE Capital
Collateral shall constitute a second priority lien on all such collateral as
security for present or future Lender Credit, plus interest, fees and expenses.
(iii) The lien of MCRC with respect to all GE Capital
Collateral shall constitute a third priority lien on all such collateral as
security for present or future MCRC Credit, plus interest, fees and expenses.
D. PURCHASE MONEY SECURITY INTERESTS. GE Capital, the Lender and MCRC
agree to advise each other on a best efforts basis of any intent to provide
financings to Borrower on a purchase money priority basis. Notwithstanding the
foregoing, any future advances to Borrower by Lender or GE Capital or MCRC to
finance the purchase of equipment with respect to which the Lender or GE Capital
or MCRC shall be entitled to purchase money priority under the Uniform
Commercial Code shall, to the extent of any such purchase money security
interest, be senior to any liens referred to herein notwithstanding any other
provisions contained herein.
3. DISTRIBUT!ON OF PROCEEDS OF COLLATERAL. In the event of any
distribution of the process of the collateral following default, whether by
reason of liquidation, bankruptcy, arrangement, receivership, assignment for the
benefit of creditors or any other action or proceeding involving the
readjustment of the obligations and indebtedness of Borrower, or the application
of the assets of Borrower to the payment or liquidation thereof, or the result
of foreclosure or the dissolution or winding up of Borrower's assets, all
distributions of proceeds of the collateral shall be made to the Lender, to GE
Capital, and to MCRC in accordance with their respective priorities of liens, as
set forth in Section 2 above. Each party agrees that should it receive monies
from the collection sale, liquidation, casualty, or other disposition of, or as
a result of its lien in, the collateral, at any time during the term of this
Agreement, it will, unless otherwise restricted or prohibited by law, hold the
same in trust for and promptly pay over the same to the party, entitled to
receive such monies to extent that the same is secured by the priorities of
liens provided thereunder.
4. NOTICES OF DEFAULT. The Lender, GE Capital, and MCRC agree to give
each other copies of all notices being provided to Borrower of default,
acceleration, commencement of foreclosure proceeds or exercise of any power of
sale pursuant to the Lender Credit Documents, the GE Capital Credit Documents or
the MCRC Credit Documents, in each case concurrently with the giving of such
notice to Borrower; provided, however, that no failure of any party to give such
notice shall affect the relative priorities of the liens established in this
Agreement or the exercise by any party of its rights and remedies under its
financing documentation.
5. REMEDIES. Lender agrees that it shall not seek to enforce its
security interest in the GE Capital Collateral or in any manner interfere with
GE Capital's security interest in the GE Capital Collateral unless and until
Lender receives written notice from GE Capital that the GE Capital Credit has
been satisfied in full. MCRC agrees that it shall not seek to enforce its
security interest in the Lender Collateral, nor shall MCRC collect any accounts
of Borrower or in any manner interfere with Lender's security
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interest in the Lender Collateral unless and until MCRC receives written notice
from Lender that the Lender Credit has been satisfied in full. MCRC agrees that
it shall not seek to enforce its security interest in the GE Capital Collateral,
nor shall MCRC collect any accounts of Borrower or in any manner interfere with
GE Capital's security interest in the GE Capital Collateral unless and until
MCRC receives written notice from GE Capital that the GE Capital Credit has been
satisfied in full.
6. TERM. This Agreement shall be irrevocable by the Lender, GE Capital,
and MCRC until all indebtedness, obligations, and liabilities of Borrower to
Lender, GE Capital, and MCRC, respectively, have been paid and fully satisfied
and all financing arrangements between Borrower, Lenders, GE Capital and MCRC
have been terminated.
7. ADDITIONAL ASSURANCES. The parties agree to execute, acknowledge,
and deliver to each other all other and further instruments, documents, or
assurances that either party may reasonably request to give full force and
effect to the provisions of this Agreement.
8. PARTIES. This Agreement shall be binding upon, and shall inure to
the benefit of, the parties hereto, and their respective affiliates, successors,
and assigns. The term "Borrower" as used herein shall also refer to the
successors and assigns of "Borrower", including without limitation, a receiver,
trustee, custodian, or debtor-in-possession.
9. NOTICES. All notices, requests, demands, and other communications
required or permitted hereunder shall be in writing, deposited in the United.
States mails, certified mail, return receipt requested, with proper postage
prepaid, and addressed to the party to be notified as follows, unless such party
has specified by notice given in accordance herewith of another address:
A. IF TO THE LENDER: SILICON VALLEY BANK
4600 Campus Drive - Suite 105
Newport Beach, CA 92660
Attn: Mr. Jerry Dale
B. IF TO GE CAPITAL: GENERAL ELECTRIC CAPITAL
CORPORATION
7700 Irvine Center Drive - Suite 400
Irvine, CA 92714
C. IF TO MCRC: MASSACHUSETTS CAPITAL
RESOURCE COMPANY
420 Boylston Street
Boston, Massachusetts 02116
Attn: Richard W. Anderson
Senior Vice President
D. IF TO BORROWER: OPTICAL CORPORATION OF AMERICA
7421 Orangewood Avenue
Garden Grove, CA 92641
Attn: Treasurer
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10. RELATIONSHIP OF PARTIES. This Agreement is entered into solely for
the purposes set forth above and no party assumes any responsibility, to advise
any other party of information regarding the financial condition of Borrower, or
regarding the collateral, or of any other circumstances bearing upon the risk of
nonpayment of the obligations of Borrower. Each party shall be responsible for
its relationship with Borrower and each party may alter, amend, supplement,
release, discharge, or otherwise modify any terms of their respective Notes,
Loan Agreements and Credit Documents with Borrower without notice to, or consent
of the other party, provided that no such alteration, amendment, supplement,
release, discharge or modification shall affect the relative priorities of the
parties hereto.
11. NO THIRD PARTY BENEFICIARIES. Nothing contained in this Agreement
shall be deemed to indicate that this Agreement has been entered into for the
benefit of any person other than the parties hereto.
12. SECTION TITLES. The section titles contained in this Agreement are
and shall be without substantive meaning or content of any kind whatsoever and
are not part of the agreement between the parties hereto.
13. TERMINATION OF PRIOR INTERCREDITOR AGREEMENT. The parties, to the
extent of their respective interests herein, hereby terminate, effective with
the execution of this Agreement, the Intercreditor Agreement dated as of June
21, 1994 by and among Borrower, Lender, GE Capital and Massachusetts Business
Development Corporation.
14. GENERAL. This Agreement shall in no way be construed as a
commitment or agreement by GE Capital, Lender or MCRC to continue financing
arrangements with the Borrower and they may terminate such arrangements at any
time, in accordance with their respective agreement with the Borrower. GE
Capital, Lender and MCRC each represent and warrant to the other that it has not
heretofore transferred or assigned any Financing Statement naming Borrower as
debtor and it as secured party, and that it will not do so without first
delivering a copy of this Agreement to the proposed transferee or assignee. This
Agreement is solely for the benefit of, GE Capital, Lender and MCRC and their
respective successors and assigns, and neither the Borrower nor any other person
shall have any right, benefit, priority or interest under, or because of the
existence of, this Agreement. This Agreement sets forth in full the terms of
agreement among the parties with respect to the subject matter hereof, and may
not be modified or amended, nor may any rights hereunder be waived, except in a
writing signed by GE Capital, Lender and MCRC. In the event of any litigation
between any of the parties based upon or arising out of this Agreement, the
prevailing party shall be entitled to recover all of its costs and expenses
(including without limitation reasonable attorneys' fees) from the
non-prevailing party.
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IN WITNESS WHEREOF, this Agreement has been duly executed as an instrument
under seal, all as of the date first above written.
OPTICAL CORPORATION OF AMERICA SILICON VALLEY BANK
By: /s/ DONALD A. JOHNSON By: /s/ BONNIE J. RENTA
------------------------------- -----------------------------------
Chairman Its: Vice President
-----------------------------------
MASSACHUSETTS CAPITAL RESOURCE GENERAL ELECTRIC CAPITAL
COMPANY CORPORATION
By: /s/ RICHARD W. ANDERSON By: /s/ MARGARET F. McGINTY
------------------------------- -----------------------------------
Its Senior Vice President Its: Region Credit Analyst
-----------------------------------
6
PROXY
OPTICAL CORPORATION OF AMERICA
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Robert DeN. Cope and Donald A. Johnson,
or either of them, with full power of substitution as proxies of the undersigned
and hereby authorizes them to represent the undersigned and to vote all shares
of Optical Corporation of America ("OCA") held by undersigned at the Special
Meeting of Shareholders to be held at OCA's corporate offices located at 170
Locke Drive, Marlborough, Massachusetts 01752, on September 10, 1996, beginning
at 10:00 A.M., and at any adjournment or postponement thereof, in the following
manner:
ITEM 1. APPROVAL OF THE PRINCIPAL TERMS OF THE MERGER DESCRIBED IN THE
PROXY STATEMENT WHICH ACCOMPANIED THIS PROXY. THIS PROPOSAL INVOLVES MERGING A
WHOLLY-OWNED SUBSIDIARY OF OPTICAL COATING LABORATORY, INC. ("OCLI") WITH AND
INTO OCA. UPON CONSUMMATION OF THE MERGER, EACH SHARE OF COMMON STOCK OF OCA
HELD ON THE RECORD DATE SHALL BE CONVERTED INTO SHARES OF COMMON STOCK OF OCLI
DETERMINED PURSUANT TO THE EXCHANGE RATIO DESCRIBED IN THE PROXY STATEMENT.
(MANAGEMENT RECOMMENDS A VOTE FOR ITEM 1.)
[ ] FOR [ ] AGAINST [ ] ABSTAIN
ITEM 2. In their discretion, upon such other matters as may properly be brought
before the meeting or any adjournment thereof;
with all powers that the undersigned would possess if personally present, and
hereby ratifies and confirms all that said proxies may do in the premises.
(Continued and to be signed on reverse side)
IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR ITEM 1.
This proxy when properly executed, will be voted in the manner directed therein
by the undersigned Stockholder.
If the stock is issued in the names of two or more persons, only one of them
needs to sign the proxy. A proxy executed by a corporation should be signed in
its name by an authorized officer. Executors, administrators and trustees should
so indicate when signing.
Dated: , 1996
Signature of Stockholder
Signature of Stockholder
Please sign exactly as name
or names appear hereon.
PLEASE COMPLETE, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
