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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO
SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): MAY 15, 1996
SUMMIT TECHNOLOGY, INC.
MASSACHUSETTS 0-16937 04-2897945
(State or other jurisdiction (Commission File Number) I.R.S. Employer
of incorporation) Identification Number)
21 HICKORY DRIVE
WALTHAM, MASSACHUSETTS 02154
(Address of principal executive offices, including zip code)
(617) 890-1234
(Registrant's telephone number including area code)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
(a) On May 15, 1996, pursuant to the Agreement and Plan of Merger dated
April 19, 1996 (as amended, the "Merger Agreement") among Summit Technology,
Inc. (the "Registrant"), Summit Acquisition Corporation, a wholly-owned
subsidiary of the Registrant ("Summit Sub"), Lens Express, Inc. ("Lens"),
Mordechai Golan, Creslin Limited, Menderes Akdag and Huseyin Kizanlikli, the
Registrant acquired Lens by the merger of Summit Sub with and into Lens. The
purchase price paid by the Registrant under the Merger Agreement consisted of
1,708,500 shares of common stock, $.01 par value per share, of the Registrant.
The purchase price was calculated pursuant to a formula set forth in the Merger
Agreement which was determined by arms-length negotiation among the parties.
(b) Prior to the merger, Lens operated a mail-order contact lens
business. The Registrant intends that the surviving company from the merger will
continue to engage in such business.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED. It is currently
impracticable to provide the required financial statements in
this Current Report. All of the required financial statements
will be filed by amendment as soon as they become available.
(b) PRO FORMA FINANCIAL INFORMATION. It is currently impracticable
to provide the required pro forma financial information in
this Current Report. All of the required pro forma financial
information will be filed by amendment as soon as it becomes
available.
(c) EXHIBITS.
EXHIBIT
NUMBER TITLE
2.1 Agreement and Plan of Merger, dated April 19, 1996 (as amended, the
"Merger Agreement"), among Summit Technology, Inc. (the
"Registrant"), Summit Acquisition Corporation, a wholly-owned
subsidiary of the Registrant, Lens Express, Inc., Mordechai Golan,
Creslin Limited, Menderes Akdag and Huseyin Kizanlikli, including a
list of exhibits to the Merger Agreement. The Registrant will
furnish supplementally a copy of any omitted Exhibit to the Merger
Agreement to the Securities and Exchange Commission upon request.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SUMMIT TECHNOLOGY, INC.
By /s/ David F. Muller
-----------------------
David F. Muller
Chief Executive Officer
Date: May 24, 1996
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EXHIBIT INDEX
EXHIBIT DESCRIPTION PAGE
NUMBER
2.1 Agreement and Plan of Merger, dated April 19, 1996 (as
amended, the "Merger Agreement"), among Summit
Technology, Inc. (the "Registrant"), Summit Acquisition
Corporation, a wholly-owned subsidiary of the Registrant,
Lens Express, Inc., Mordechai Golan, Creslin Limited,
Menderes Akdag and Huseyin Kizanlikli, including a list
of exhibits to the Merger Agreement. The Registrant will
furnish supplementally a copy of any omitted Exhibit to
the Merger Agreement to the Securities and Exchange
Commission upon request.
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EXHIBIT 2.1
AMENDMENT NO. 1, dated as of May 15, 1996 (this "Amendment"), to the
Agreement and Plan of Merger, dated as of April 19, 1996, among (i) Summit
Technology, Inc., a Massachusetts corporation (the "Buyer"), (ii) Summit
Acquisition Corporation, a Florida corporation and wholly owned subsidiary of
the Buyer ("Summit Sub"), (iii) Mordechai Golan, Creslin Limited, Menderes
Akdag, and Huseyin Kizanlikli (each a "Shareholder" and collectively the
"Shareholders") and (iv) Lens Express, Inc., a Florida corporation (the
"Company").
W I T N E S S E T H
WHEREAS, the Buyer, Summit Sub, the Shareholders and the Company have
entered into an Agreement and Plan of Merger, dated as of April 19, 1996 (the
"Merger Agreement"; capitalized terms not defined herein have the meanings
ascribed to them in the Merger Agreement); and
WHEREAS, the Buyer, Summit Sub, the Shareholders and the Company desire
to amend the Merger Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements and understandings hereinafter set forth, the parties hereto agree as
follows:
SECTION 1. Amendment to the Merger Agreement. The Merger Agreement is,
as of the date hereof, hereby amended as follows:
(a) Section 3.4 shall be restated in full to read as follows:
"3.5. Conversion of Common Stock. At the Effective Time, all
of the issued and outstanding shares (the "Shares") of Common Stock
shall, by virtue of the Merger and without any action on the part of
the holders thereof, be converted into the immediate right to receive a
total number of shares of Buyer's Common Stock, $.01 par value ("Buyer
Common Stock") that is equal to the quotient obtained by dividing
$39,700,000 by the average closing price of Buyer Common Stock on the
Nasdaq National Market System (as reported in the Eastern Edition of
The Wall Street Journal) during the twenty trading day period ending on
May 10, 1996 (the "Average Price"); provided, however, that in no event
will such number be greater than 1,708,500 shares or less than
1,428,571 shares of Buyer Common Stock, except as necessary to make
appropriate adjustments for stock splits, dividends, recapitalizations
and the like. The certificates evidencing the shares of Buyer Common
Stock shall bear the legend required under Section 14 of this
Agreement."
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(b) The following definition shall be added as Section 11.2.23:
"11.2.23. HSR Act. The term "HSR Act" shall mean
the Hart-Scott - Rodino Antitrust Improvements Act of
1976."
SECTION 2. Effect of Amendment. Except as and to the extent modified
by this Amendment, the Merger Agreement shall remain in full force and effect in
all respects.
SECTION 3. Governing Law. This Amendment shall be governed by, and
construed in accordance with, the domestic substantive laws of the Commonwealth
of Massachusetts, without giving effect to any choice or conflict of law
provision or rule that would cause the application of the domestic substantive
laws of any other jurisdiction.
SECTION 4. Counterparts. This Amendment may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have hereunto set their hands under seal, as of the date first above
written.
SHAREHOLDERS:
CRESLIN LIMITED
By: /s/ Peter E. Leppard
------------------------------------------
Title: Director
/s/ Mordechai Golan
------------------------------------------
MORDECHAI GOLAN
/s/ Menderes Akdag
------------------------------------------
MENDERES AKDAG
/s/ Huseyin Kizanlikli
------------------------------------------
HUSEYIN KIZANLIKLI
COMPANY:
LENS EXPRESS, INC.
By: /s/ Mordechai Golan
------------------------------------------
Title: Chairman
SUMMIT:
SUMMIT TECHNOLOGY, INC.
By: /s/ David F. Muller
------------------------------------------
Title: Chief Executive Officer
SUMMIT SUB:
SUMMIT ACQUISITION CORPORATION
By: /s/ David F. Muller
------------------------------------------
Title: President
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Conformed Copy
================================================================================
AGREEMENT AND PLAN OF MERGER
BY AND
AMONG
SUMMIT TECHNOLOGY, INC,
SUMMIT ACQUISITION CORPORATION,
MORDECHAI GOLAN,
CRESLIN LIMITED,
MENDERES AKDAG,
HUSEYIN KIZANLIKLI
AND
LENS EXPRESS, INC.
----------------------------------------
Dated as of April 19, 1996
================================================================================
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TABLE OF CONTENTS
<TABLE>
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1. DEFINITIONS ............................................................................... 1
2. ACQUISITION OF CALL MART .................................................................. 1
3. THE MERGER ................................................................................ 1
3.1. Constituent, Surviving Corporation ...................................... 1
3.2. Time and Place of Closing ............................................... 2
3.3. Charter; By-Laws ........................................................ 2
3.4. Conversion of Common Stock .............................................. 2
3.5. Escrow .................................................................. 2
3.6. No Fractional Shares .................................................... 3
3.7. Conversion of Summit Sub Common Stock ................................... 3
4. GENERAL REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND THE SHAREHOLDERS ...................................................................... 3
4.1. Corporate Matters, etc .................................................. 3
4.2. Financial Statements .................................................... 4
4.3. Absence of Certain Changes or Events .................................... 5
4.4. Title to and Nature of Assets ........................................... 6
4.5. Non-Contravention, etc .................................................. 7
4.6. Tax Matters ............................................................. 7
4.7. Litigation, etc ......................................................... 9
4.8. Labor Matters ........................................................... 9
4.9. Insurance ............................................................... 10
4.10. Material Agreements ..................................................... 11
4.11. Liabilities ............................................................. 12
4.12. Conflicts of Interest ................................................... 12
4.13. Other Information ....................................................... 12
4.14. Books, Accounts, Records ................................................ 12
4.15. Managed Vision, Inc.; Managed Vision, Ltd. .............................. 13
4.16. Distributions, etc ...................................................... 13
4.17. Compliance, Permits ..................................................... 13
4.18. Product Liability and Recalls ........................................... 14
4.19. Regulatory Compliance ................................................... 14
4.20. Brokers or Finders Fees ................................................. 15
5. INDIVIDUAL REPRESENTATIONS AND WARRANTIES OF THE
SHAREHOLDERS .............................................................................. 15
5.1. Enforceability .......................................................... 15
5.2. Non-Contravention, etc .................................................. 15
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5.3. Title, etc .............................................................. 15
6. REPRESENTATIONS AND WARRANTIES OF THE BUYER ............................................... 15
6.1. Corporate Matters ....................................................... 16
6.2. Non-Contravention, etc .................................................. 16
6.3. Charter and By-Laws ..................................................... 16
6.4. Capitalization .......................................................... 16
6.5. Authority Relative to this Agreement .................................... 16
6.6. No Conflict, Required Filings and Consents .............................. 17
6.7. SEC Filings; Financial Statements ....................................... 17
6.8. Absence of Certain Changes or Events .................................... 18
6.9. Regulatory Environment .................................................. 18
7. CERTAIN AGREEMENTS OF THE PARTIES ......................................................... 18
7.1. Exclusivity ............................................................. 18
7.2. Access to Premises and Information ...................................... 19
7.3. Preparation for Closing ................................................. 19
7.4. Conduct of Business; Affirmative Covenants .............................. 19
7.5. Conduct of Business; Negative Covenants ................................. 20
7.6. Increased Insurance Coverage ............................................ 20
7.7. HSR Act ................................................................. 20
7.8. Interim Financial Statements of the Company ............................. 21
7.9. Changes in Buyer's Capital Structure .................................... 21
7.10. Expenses of Transaction ................................................. 21
7.11. Payment of HSR Filing Fee, Transfer Taxes and Other Charges ............. 21
7.12. Licensed Optician ....................................................... 21
7.13. Public Announcements .................................................... 21
7.14. Indemnification ......................................................... 22
8. CONDITIONS TO THE OBLIGATION TO CLOSE OF THE BUYER ........................................ 22
8.1. Representations, Warranties and Covenants ............................... 22
8.2. Legality; Governmental Authorization; General Litigation ................ 22
8.3. No Material Adverse Effect .............................................. 23
8.4. Escrow Agreements ....................................................... 23
8.5. Resignations, etc ....................................................... 23
8.6. HSR Act ................................................................. 23
8.7. Opinion of Counsel ...................................................... 23
8.8. Noncompetition Agreement ................................................ 23
8.9. Employment Agreement .................................................... 23
8.10. Compensation Agreements ................................................. 23
8.11. Pooling Letter .......................................................... 23
8.12. Call Mart Acquisition ................................................... 24
8.13. Acquisition of Managed Vision ........................................... 24
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8.14. Waiver of Indemnification ............................................... 24
9. CONDITIONS TO THE OBLIGATION TO CLOSE OF THE COMPANY AND
THE SHAREHOLDERS .......................................................................... 24
9.1. Representations, Warranties and Covenants ............................... 24
9.2. Absence of Litigation ................................................... 25
9.3. HSR Act ................................................................. 25
9.4. Shareholders' Termination ............................................... 25
9.5. Opinion of Counsel ...................................................... 25
9.6. Release of Guarantees ................................................... 25
9.7. Buyer's Certificate ..................................................... 25
10. INDEMNIFICATION ........................................................................... 25
10.1. Indemnification ......................................................... 25
10.2. Third Party Claims ...................................................... 26
10.3. Limitations on Indemnification .......................................... 27
11. DEFINITIONS ............................................................................... 29
11.1. Certain Matters of Construction ......................................... 29
11.2. Certain Definitions ..................................................... 29
12. GOVERNING LAW ............................................................................. 33
12.1. Governing Law ........................................................... 33
12.2. Consent to Jurisdiction ................................................. 33
12.3. Waiver of Jury Trial .................................................... 34
12.4. Reliance ................................................................ 34
13. TERMINATION ............................................................................... 34
13.1. Termination of Agreement ................................................ 34
13.2. Effect of Termination ................................................... 35
14. SECURITIES ACT AND POOLING RESTRICTIONS ................................................... 35
14.1. Shares not Registered ................................................... 35
14.2. Economic Risk; Sophistication ........................................... 35
14.3. Restrictions on Resale; Legends ......................................... 36
14.4. Restrictions on Transfer of Common Stock and Buyer Common
Stock ................................................................... 36
15. REGISTRATION RIGHTS ....................................................................... 36
15.1. General ................................................................. 36
15.2. Expenses ................................................................ 37
15.3. Further Obligations ..................................................... 37
15.4. Indemnification ......................................................... 39
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16. MISCELLANEOUS ............................................................................. 42
16.1. Entire Agreement; Waivers ............................................... 42
16.2. Amendment or Modification, etc .......................................... 42
16.3. Headings, etc ........................................................... 42
16.4. Exhibits; Listed Documents, etc ......................................... 42
16.5. Severability ............................................................ 42
16.6. Counterparts ............................................................ 43
16.7. Successors and Assigns .................................................. 43
16.8. Third Parties ........................................................... 43
16.9. Governing Law ........................................................... 43
16.10. Brokers ................................................................. 43
17. NOTICES ................................................................................... 43
</TABLE>
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (the "Agreement") is made as of the
19th day of April 1996, by and among (i) Summit Technology, Inc., a
Massachusetts corporation (the "Buyer"), (ii) Summit Acquisition Corporation, a
Florida corporation ("Summit Sub"), (iii) Mordechai Golan, Creslin Limited,
Menderes Akdag and Huseyin Kizanlikli (each a "Shareholder" and collectively,
the "Shareholders") and (iv) Lens Express, Inc., a Florida corporation (the
"Company").
WHEREAS, it is deemed advisable and in the best interests of each of
the Buyer, Summit Sub, the Company and the Shareholders that Summit Sub be
merged with and into the Company pursuant to the laws of the State of Florida
upon the terms and conditions contained in this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements and covenants set forth below, the parties hereto agree as follows:
1. DEFINITIONS.
Certain terms are used in this Agreement as specifically defined
herein. These definitions are set forth or referred to in Section 11.
2. ACQUISITION OF CALL MART
The Company agrees that on or prior to the consummation of the Merger
it will acquire all of the outstanding capital stock of Call Mart, Inc., a
Florida corporation ("Call Mart") solely in exchange for common stock, par value
$1.00 per share (the "Common Stock") of the Company. Unless the context
otherwise requires, the representations, warranties and covenants of the Company
and the Shareholders in this Agreement assume that the Company acquired Call
Mart on or before the date hereof. In addition, Menderes Akdag and Huseyin
Kizanlikli are executing this Agreement each in his individual capacity as a
stockholder of Call Mart and for all purposes of this Agreement each shall be
deemed a Shareholder. References in this Agreement to the "Company" shall,
unless the context otherwise requires, be deemed to include the Company and Call
Mart.
3. THE MERGER.
3.1. Constituent, Surviving Corporation. The Company and Summit Sub
shall be the constituent corporations to the Merger. At the Effective Time,
Summit Sub shall be merged with and into the Company in accordance with the
Business Corporation Act of the State of Florida (the "Corporation Law"), and
the Company shall be the surviving corporation of the Merger (herein sometimes
called the "Surviving Corporation"). The name, identity,
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existence, rights, privileges, powers, franchises, properties and assets of the
Company shall continue unaffected and unimpaired by the Merger. At the Effective
Time, the identity and separate existence of Summit Sub shall cease, and all of
the rights, privileges, powers, franchises, properties and assets of Summit Sub
shall be vested in the Surviving Corporation.
3.2. Time and Place of Closing. Subject to Section 13, the closing of
the Merger and the other transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of Ropes & Gray, Boston,
Massachusetts, or such other location as the parties may agree, at 9:00 a.m.
(Boston time) on the third business day after the date of the expiration of the
applicable waiting period under the HSR Act, or, if the conditions to Closing
set forth in Section 8 shall not have been satisfied at such date, at such later
time or date as specified by Buyer, or in the event that the conditions set
forth in Section 9 shall not have been satisfied at such date, at such later
time or date as specified by the Shareholders, in each case prior to termination
of this Agreement, by not fewer than three (3) business days' prior written
notice to the other party (such date being referred to herein as the "Closing
Date").
3.3. Charter; By-Laws. From and after the Effective Time and thereafter
until amended as provided by law, the Articles of Incorporation of the Surviving
Corporation shall be the Charter of the Company and the By-Laws of the Surviving
Corporation shall be the ByLaws of the Company, each as in effect immediately
prior to the Effective Time.
3.4. Conversion of Common Stock. At the Effective Time, all of the
issued and outstanding shares (the "Shares") of Common Stock shall, by virtue of
the Merger and without any action on the part of the holders thereof, be
converted into the immediate right to receive a total number of shares of
Buyer's Common Stock, $.01 par value ("Buyer Common Stock") that is equal to the
quotient obtained by dividing $39,700,000 by the average closing price of Buyer
Common Stock on the Nasdaq National Market System (as reported in the Eastern
Edition of The Wall Street Journal) during the twenty trading day period ending
on the trading date immediately preceding the date of the expiration of the
applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976 (the "HSR Act") (the "Average Price"); provided, however, that in no
event will such number be greater than 1,700,000 shares or less than 1,428,571
shares of Buyer Common Stock, except as necessary to make appropriate
adjustments for stock splits, dividends, recapitalizations and the like. The
certificates evidencing the shares of Buyer Common Stock shall bear the legend
required under Section 14 of this Agreement.
3.5. Escrow. Ten percent (10%) of the aggregate number of shares of
Buyer Common Stock that each Shareholder shall become entitled to receive
pursuant to Section 3.4 (which in no event shall exceed a value based on the
Average Price of $4,000,000) shall be deposited into an escrow with Fleet
National Bank, as Escrow Agent (the "Escrow Agent"). Certificates representing
shares so deposited shall be registered in the name of the Shareholder entitled
to receive such shares. The rights and obligations of the Shareholders, the
Buyer and the Escrow Agent shall be in accordance with the escrow agreements in
the forms attached as
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Exhibit 3.5 hereto (individually, the "General Escrow Agreement" and the
"Litigation Escrow Agreement", collectively, "the Escrow Agreements").
3.6. No Fractional Shares. No certificates or scrip evidencing
fractional shares of Buyer Common Stock shall be issued upon the surrender for
exchange of certificates evidencing shares of Common Stock, and no dividend,
stock split or other distribution shall relate to any fractional share of Buyer
Common Stock, and such fractional interests shall not entitle the owner thereof
to vote or to any rights as a holder of Buyer Common Stock. In lieu of any
fractional shares of Buyer Common Stock, the Shareholders will receive payment
in cash for such shares.
3.7. Conversion of Summit Sub Common Stock. At the Effective Time, each
share of common stock, par value $.01, of Summit Sub ("Summit Sub Common Stock")
outstanding immediately prior to the Effective Time shall, by virtue of the
Merger and without any action on the part of the holder thereof, be converted
into one validly issued, fully paid, and nonassessable share of common stock of
the Surviving Corporation, $1.00 par value.
3.8. Filing of Certificate of Merger. At the Closing, the Company and
Summit Sub will cause a certificate of merger to be executed, attested and filed
with the office of the Secretary of State of the State of Florida as provided in
the Corporation Law.
3.9. Effect of the Merger. The Merger shall have the effect set forth
in the Corporation Law.
4. GENERAL REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND
THE SHAREHOLDERS.
In order to induce the Buyer to enter into and perform this Agreement
and to consummate the transactions contemplated hereby, the Company and the
Shareholders hereby jointly and severally make the following representations and
warranties to the Buyer.
4.1. Corporate Matters, etc.
4.1.1. Organization, Power and Standing. (a) The Company is a
corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation and has all requisite
corporate power and authority to execute, deliver and perform this
Agreement, and to consummate the transactions contemplated hereby. The
Company is duly qualified to do business as a foreign corporation, and
is in good standing as such, in each jurisdiction in which the failure
to be so qualified and in good standing could reasonably be expected to
have a Material Adverse Effect on the Company.
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(b) The Company has full right, capacity, corporate power and
authority to enter into this Agreement and to perform and carry out its
obligations hereunder. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been duly
and validly authorized by the Company's Board of Directors and
shareholders. No other corporate acts or proceedings on the part of the
Company are necessary to authorize this Agreement or the transactions
contemplated hereby. This Agreement constitutes the valid and legally
binding obligation of the Company and each of the Shareholders in
accordance with its terms, except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general
application of equitable principles when equitable remedies are sought
(assuming such obligations are also binding on Buyer). The Company
shall furnish to Buyer at Closing certified copies of all corporate
resolutions authorizing the transactions herein.
4.1.2. Capitalization; Title to Shares. The only issued and
outstanding shares of capital stock of the Company are the Shares, all
of which have been duly authorized and validly issued and are fully
paid and non-assessable, and all of which are beneficially owned and
held of record by the Shareholders. There is no Contractual Obligation
or Charter or By-law provision which obligates the Company to issue,
purchase or redeem, or make any payment in respect of, any shares of
capital stock or other securities convertible into or exchangeable for
shares of capital stock or which provides for any stock appreciation or
similar right or grants any right to share in the equity, income,
revenues or cash flow of the Company. The transfer and delivery of the
Shares by the Shareholders to Buyer as contemplated by this Agreement
will transfer good title to the Shares to Buyer, free and clear of all
security interests, liens, claims, encumbrances and other contractual
restrictions of any kind, in each case except for any of the foregoing
created or permitted to exist by or on behalf of Buyer.
4.1.3. Subsidiaries. The Company has no Subsidiaries except
Call Mart.
4.1.4. Charter and By-laws. The Shareholders have heretofore
caused to be delivered to the Buyer a true and complete copy of the
Company's Charter and By- laws.
4.2. Financial Statements.
(a) Exhibit 4.2 hereto contains the true and complete copies of the
consolidated financial statements of the Company as at and for the year ended
June 30, 1995, including in each case the notes thereto and the report thereon
of the Company's certified public accounting firm Coopers & Lybrand, L.L.P. (the
"Accountants"), and the unaudited balance sheet and statement of income for the
Company as at and for the nine-month period ended March 31, 1996 (the "Statement
Date"). All such financial statements, together with the notes thereto (the
"Financial Statements"), have been prepared in accordance with generally
accepted
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accounting principles applied on a consistent basis through the periods covered
by such statements and present fairly in all material respects the financial
position, the results of operations and the changes in financial position, as
the case may be, as of the respective dates and for the respective periods
indicated, and for the respective entities or divisions indicated, except that
such unaudited Financial Statements were or are subject to normal and recurring
year-end and tax adjustments.
(b) Exhibit 4.2 hereto also contains true and complete copies of the
federal tax returns for Call Mart for 1995 and the general ledger for Call Mart
for January 1, 1996 through March 31, 1996, which accurately reflects the assets
and liabilities of Call Mart and its transactions during such period.
4.3. Absence of Certain Changes or Events. Except as disclosed in
Exhibit 4.3 or any other Exhibit hereto or as expressly provided for or
contemplated in this Agreement, the Company has conducted its business since the
Statement Date only in the ordinary course, and since the Statement Date, there
has not been any:
(a) Change in the condition (financial or otherwise) of the assets,
liabilities or businesses of the Company, other than changes in the ordinary
course of business which in the aggregate have not had a Material Adverse Effect
on the Company;
(b) Loss, damage or destruction due to fire or other casualty, whether
or not insured, having a Material Adverse Effect on the Company;
(c) Change in the Charter or By-Laws of the Company;
(d) Issuance or sale of, or any authorization to issue or sell, any
shares of any class of capital stock of the Company, or any option, warrant or
other right to acquire any capital stock other than in connection with the Call
Mart acquisition.
(e) Mortgage, pledge or subject to lien, charge or any other
encumbrance of any assets or properties, tangible or intangible, except the
lien, if any, of current real and personal property taxes incurred but not yet
due and payable and leasehold interests in personal property arising from the
leasing of such property by the Company in the ordinary course of business;
(f) Sale, assignment or transfer of any of the assets or cancellation
of any debts or claims relating to the Company, except in each case in the
ordinary course of business;
(g) Sale, assignment or transfer by the Company of any patents,
trademarks, trade names, service marks, copyrights or other similar assets;
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(h) Waiver of any rights of substantial value to the Company, whether
or not in the ordinary course of business;
(i) Entrance by the Company into any collective bargaining agreement or
incurrence of any significant labor trouble or work stoppage;
(j) Capital expenditures in excess of one hundred thousand dollars
($100,000.00) individually or five hundred thousand dollars ($500,000.00) in the
aggregate by the Company; or
(k) Agreement by the Company to do any of the foregoing.
4.4. Title to and Nature of Assets.
(a) Leases. Exhibit 4.4(a) to this Agreement contains a complete and
accurate list of the real property leases to which the Company is a party (as
lessee or lessor) (the "Leases"). The Company has a valid and enforceable
leasehold interest in the Leases. The Company has in all material respects
performed all the obligations required to be performed by it prior to the date
hereof under the Leases and possesses and quietly enjoys the premises
thereunder. To the knowledge of the Shareholders and the Company, (i) all
buildings, structures and appurtenances located on any of the leased premises
are in good operating condition and in a state of good repair, and are adequate
and suitable for the purposes for which they are being used, (ii) none of such
buildings, structures or appurtenances (or any equipment therein), nor the
operation or maintenance thereof, violates any restrictive covenant or any
provision of any federal, state or local law, ordinance, rule or regulation, or
encroaches on any property owned by others and (iii) no condemnation proceeding
is pending or threatened which would preclude or impair the use of any such
property by the Company for the purposes for which it is currently used.
(b) Inventories. The inventories of the Company as shown on the
Financial Statements (the "Inventory") consist of items of a quality and
quantity useable and saleable in the ordinary course of its business. The
Company has good and marketable title to all items included in Inventory. All
such items in Inventory constitute products that may be sold in the United
States in compliance with all applicable rules and regulation of the United
States Food & Drug Administration (the "FDA").
(c) Equipment. Exhibit 4.4(c) to this Agreement contains a complete and
accurate schedule describing, and specifying the location of, all major
equipment in the possession of, or used by, the Company on the date hereof.
(d) Proprietary Rights. To the Shareholders' and the Company's
knowledge, there are no patents, patent applications, trademarks, service marks,
trade names, corporate names or copyrights necessary to the conduct of the
business of the Company as now conducted other than the items listed in Exhibit
4.4(d). The Company has not licensed from any third party
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<PAGE> 15
any proprietary rights or, infringed, misappropriated or otherwise conflicted
with any proprietary rights of any third parties except as set forth on Exhibit
4.4(d). To the Shareholders' and the Company's knowledge, no activity of any
third party infringes upon the rights of the Company to the items listed in
Exhibit 4.4(d), except as noted thereon. To the Shareholders' and the Company's
knowledge, the Company has good title to all of the trademarks and trade names
listed on Exhibit 4.4(d) hereto free and clear of any lien, charge, license or
other encumbrance.
(e) Accounts Receivable. Except as set forth in Exhibit 4.4(e) hereto,
the accounts receivable of the Company are or will be, as the case may be,
collectible in amounts not less than the aggregate amount thereof (net of
historical allowances for doubtful amounts established in accordance with
generally accepted accounting principles consistently applied), carried, or to
be carried, as the case may be, on the books of the Company.
(f) Title to Assets. Except as set forth in Exhibit 4.4(f) hereto, the
Company has good title to all its owned assets and properties, real and
personal, tangible and intangible, which constitute substantially all the assets
and interests in the assets that the Company utilizes in its business. Except as
set forth in Exhibit 4.4(f), all of the assets of the Company are free and clear
of restrictions on or conditions to transfer or assignment, and free and clear
of mortgages, liens, pledges, charges, encumbrances, equities, claims,
easements, rights of way, covenants, conditions or restrictions, except for (i)
those disclosed in the Exhibits to this Agreement; (ii) the lien of current
taxes not yet due and payable; (iii) any statutory landlord liens and any title
deficiencies which would have been prevented by compliance with applicable bulk
sale laws; and (iv) possible minor matters that, in the aggregate, are not
substantial in amount and do not materially detract from or interfere with the
present use of any of these assets, nor materially impair business operations.
4.5. Non-Contravention, etc. Except as set forth in Exhibit 4.5,
neither the execution and delivery of this Agreement nor the consummation of any
of the transactions contemplated hereby does or will constitute, result in or
give rise to (i) a breach of or a default or violation under any Charter or
By-Laws provision of the Company, (ii) the acceleration of the time for
performance of any obligation under any Contractual Obligation, (iii) the
imposition of any Lien upon or the forfeiture of any asset (including without
limitation any asset held under a Lease), (iv) a breach of or a default or
violation under any Contractual Obligation of the Company, or the requirement
that any consent under or waiver of any such Contractual Obligation, Charter or
By-Laws be obtained, or (v) any severance payments, right of termination,
modification of terms, or any other right or cause of action under any such
Contractual Obligation, Charter or By-laws provision.
4.6. Tax Matters. Except as set forth in Exhibit 4.6 hereto:
(i) all Tax Returns that are required to be filed by or with
respect to the Company have been duly and timely filed (including
within any applicable extension
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<PAGE> 16
period) in accordance with all applicable Legal Requirements, and no
written claim has ever been received from any taxing authority in a
jurisdiction where the Company does not file Tax Returns that it is or
may be subject to taxation by that jurisdiction,
(ii) all Taxes shown to be due on the Tax Returns referred to
in clause (i) have been paid in full,
(iii) all other written assessments that are due have been
paid in full,
(iv) no Tax Return has been the subject of examination or
audit by the Internal Revenue Service ("IRS") or the appropriate state,
local or foreign taxing authority,
(v) no deficiencies have been asserted or assessments made as
a result of any examinations of the Tax Returns referred to in clause
(i) by the IRS or the appropriate state, local or foreign taxing
authority,
(vi) there is no action, suit, proceeding, audit, claim,
deficiency or assessment pending with respect to any Taxes of the
Company, and there are no Liens or other security interests on any of
the assets of the Company that arose in connection with any failure (or
alleged failure) to pay any Tax other than for current Taxes not yet
due and payable,
(vii) no waivers of statutes of limitations have been given or
requested by or with respect to any Taxes of the Company,
(viii) no written powers of attorney (for example, IRS Form
2848 or other similar authority) with respect to Taxes of the Company
are currently in force,
(ix) there is no Contractual Obligation covering any employee
or former employee of the Company that will give rise to the payment of
any amount that will be not deductible by reason of Section 280G of the
Code or subject to the excise tax under Section 4999 of the Code,
(x) the Company will not have as of the Closing Date any
liability for Taxes, except for Taxes which have been specifically
accrued for in full on the books and records of the Company in the
ordinary course of business (other than any such reserves for deferred
Taxes established to reflect timing differences between book and Tax
income),
(xi) the Company has paid to, or will cause to be paid to, the
IRS or the appropriate state, local or foreign taxing authority all
amounts withheld in respect of Taxes from the wages of the employees of
the Company under state law and the
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<PAGE> 17
applicable provisions of the Code, and any payments made to any
independent contractors, creditors, stockholders or other third
parties, and the Company will continue to do so with respect to all
wages and other payments paid by it through the Closing Date.
(xii) no consent to the application of Section 341(f) of the
Code has been made by or on behalf of the Company with regard to any
assets or property held, acquired or to be acquired by the Company.
4.7. Litigation, etc. There is no litigation, at law or in equity, or
any proceeding before or investigation by any Governmental Authority pending or,
to the knowledge of the Shareholders and the Company, threatened against the
Company, or any of its directors and officers, except as are listed in Exhibit
4.7. There is no litigation at law or in equity, or any proceeding before or
investigation by any Governmental Authority pending or, to the knowledge of the
Shareholders and the Company, threatened against the Company, or any of its
directors and officers, or any basis therefor, which seeks rescission of, seeks
to enjoin the consummation of, or otherwise relates to, this Agreement or any of
the transactions contemplated hereby. Except as set forth on Exhibit 4.7, no
judgment, decree or order of any Governmental Authority (i) has been issued
against any Person other than the Company or (ii) has been issued against the
Company which granted equitable relief binding the Company. The Freytag
litigation listed on Exhibit 4.7 is fully covered by insurance.
4.8. Labor Matters.
(a) Employee Name and Salaries. Exhibit 4.8(a) hereto is a true and
complete list of the names of all employees of the Company earning $50,000.00
per annum or more on the date of this Agreement, stating the current rates of
compensation payable to each. Each of such persons has signed a noncompetition
agreement in the form previously provided to the Buyer.
(b) Legal Compliance. Except as set forth on Exhibit 4.8(b) hereto, the
Company has complied (after expiration of any applicable cure period) in all
material respects with all applicable laws relating to the employment of labor,
including provisions thereof relating to wages, hours, equal opportunity,
collective bargaining and the payment of social security and other taxes.
(c) Collective Bargaining Agreements. Except as provided in Exhibit
4.8(c) hereto, the Company is not a party to any collective bargaining
agreements with respect to its business. There is no pending or, to the
Shareholders' and the Company's knowledge, threatened labor dispute, strike,
work stoppage, grievance or arbitration affecting the Company, its assets or the
employees of the Company. There are no pending or, to the knowledge of the
Shareholders and the Company, threatened claims for representation by any labor
organization with respect to any of the unrepresented employees of the Company.
There
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<PAGE> 18
are no pending or, to the knowledge of the Shareholders and the Company,
threatened unfair labor practice charges, and the Company has not taken any
action which is likely to give rise to any unfair labor practice charge.
(d) Employee Benefit Plans. Exhibit 4.8(d) lists all employee pension
plans (as defined in Section 3(2) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA")), all employee welfare plans (as defined in
Section 3(1) of ERISA), and all other bonus, stock option, stock purchase,
incentive, deferred compensation, supplemental retirement, severance and other
similar fringe or employee benefit plans, programs or arrangements, and any
material current or former employment, executive compensation or severance
agreements, written or otherwise, for the benefit of, or relating to, any
employee of the Company, any trade or business (whether or not incorporated)
which is a member of a controlled group including the Company or which is under
common control with the Company (an "ERISA Affiliate") within the meaning of
Section 414 of the Code, or any subsidiary of the Company, as well as each plan
with respect to which the Company or an ERISA Affiliate could incur liability
under Section 4069 (if such plan has been or were terminated) or Section 4212(c)
of ERISA (together, the "Employee Plans"). There have been made available to
Buyer copies of each such written Employee Plan (other than those referred to in
Section 4(b)(4) of ERISA).
Except as set forth in Exhibit 4.8(d), (i) none of the Employee Plans
promises or provides retiree medical or other retiree welfare benefits to any
person, and none of the Employee Plans is a "multiemployer plan" as such term is
defined in Section 3(37) of ERISA; (ii) there has been no "prohibited
transaction," as such term is defined in Section 406 of ERISA and Section 4975
of the Code, with respect to any Employee Plan, which could result in any
material liability of the Company; (iii) all Employee Plans are in compliance in
all material respects with the requirements prescribed by any and all statutes
(including ERISA and the Code), orders or governmental rules and regulations
currently in effect with respect thereto (including all applicable requirements
for notification to participants or the Department of Labor, Internal Revenue
Service (the "IRS") or Secretary of the Treasury), and the Company has performed
all material obligations required to be performed by it under, is not in any
material respect in default under or violation of, and has no knowledge of any
default or violation by any other party to, any of the Employee Plans; (iv) each
Employee Plan intended to qualify under Section 401(a) of the Code and each
trust intended to qualify under Section 501(a) of the Code is the subject of a
favorable determination letter from the IRS and, to the Shareholders' and the
Company's knowledge, nothing has occurred which may reasonably be expected to
impair such determination, (v) all contributions required to be made to any
Employee Plan pursuant to Section 412 of the Code, or the terms of the Employee
Plan, have been made on or before their due dates; (vi) none of the Employee
Plans are subject to Title IV of ERISA.
4.9. Insurance. Exhibit 4.9 hereto contains a true and complete list
and brief description of all insurance policies currently in force with respect
to the Company. Except as
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<PAGE> 19
set forth in Exhibit 4.9, each of the insurance policies is in good standing and
the premiums with respect thereto have been fully paid through the current
billed due date.
4.10. Material Agreements. Exhibit 4.10 hereto lists the following
contracts and other agreements to which the Company is a party (other than oral
agreements with suppliers that are cancelable on less than 90 days notice
without penalty):
(a) any agreement (or group of related agreements) for the lease of
personal property to or from any Person providing for lease payments in excess
of $100,000 per annum;
(b) any material agreement (or group of related agreements) for the
purchase or sale of raw materials, commodities, supplies, products, or other
personal property, or for the furnishing or receipt of services, the performance
of which will extend over a period of more than one year;
(c) any material agreement concerning a partnership or joint venture;
(d) any agreement (or group of related agreements) under which it has
created, incurred, assumed, or guaranteed any indebtedness in excess of $25,000
or under which it has imposed a security interest or other lien on any of its
assets, tangible or intangible;
(e) any agreement concerning confidentiality or noncompetition entered
into other than in the ordinary course of business;
(f) any material agreement involving any of the Company or its
Affiliates relating to the Company, its assets, liabilities and business;
(g) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other plan or arrangement for
the benefit of its current or former directors, officers, and employees (other
than those disclosed in Exhibit 4.8(c));
(h) any agreement under which it has advanced or loaned any amount in
excess of $10,000 to any of the Shareholders or its directors, officers, and
employees;
(i) any agreement under which the consequences of a default or
termination could have a Material Adverse Effect on the Company; or
(j) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of $100,000 within any
fiscal year.
The Shareholders have caused the Company to deliver or make available to the
Buyer a correct and complete copy of each written agreement listed in Exhibit
4.10. Except as disclosed in Exhibit 4.10, with respect to each such agreement:
(A) the agreement is legal, valid, binding,
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<PAGE> 20
enforceable, and in full force and effect, subject to applicable bankruptcy and
insolvency laws and with no representation or warranty as to the authority of
any party to enter into such agreements other than the Company; the agreement
will continue in such manner to be legal, valid, binding, enforceable, and in
full force and effect on identical terms following the consummation of the
transactions contemplated hereby; (B) no party is in breach or default, and no
event has occurred which with notice or lapse of time would constitute a breach
or default, or permit termination, modification, or acceleration, under the
agreement; and (C) no party has repudiated any provision of the agreement.
4.11. Liabilities Except as reflected in Exhibit 4.11 or set forth
elsewhere in this Agreement or the Financial Statements, to the Shareholders'
and the Company's knowledge, the Company has no liabilities or obligations of
any nature, whether absolute, accrued, contingent or otherwise that would be of
a type and nature that would be reported on a financial statement (including the
notes thereto) prepared in accordance with generally accepted accounting
principles and would be material, whether individually or in the aggregate, to
the consolidated financial condition or business of the Company taken as a
whole, other than liabilities or obligations arising in the ordinary course of
business.
4.12. Conflicts of Interest. Except as set forth in Exhibit 4.12
hereto, no officer, director, shareholder, employee, nor any spouse or child of
any of them, of the Company nor, to the Shareholders' and the Company's
knowledge, any Affiliate of the Company or any such person has, either directly
or indirectly, an equity, debt or other interest in any corporation,
partnership, joint venture, association, organization or other person or entity
(except as a holder of less than five percent of the issued and outstanding
stock of a publicly-held corporation) which furnishes or sells services or
products which are furnished to or sold by the Company. The agreements listed on
Exhibit 4.10 responsive to Section 4.10(f) are the only agreements between the
Shareholders or their Affiliates and the Company. Except as set forth in Exhibit
4.12, the Company has not purchased any inventory from any Affiliates in the
last 24 months.
4.13. Other Information. The information concerning the Company set
forth in this Agreement and the information to be provided by the Company to
Buyer for use in any filing or application to be made with any governmental body
in connection with the Agreement will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not false or misleading.
4.14. Books, Accounts, Records. For at least the last three years, the
Company has made and kept books, records and accounts, in reasonable detail,
which accurately and fairly reflect the transactions and dispositions of the
Company's assets and has maintained a system of internal accounting controls
sufficient to provide reasonable assurances that transactions were executed in
accordance with management's general or specific authorization and as necessary
to permit preparation of the Financial Statements in conformity with generally
accepted accounting principles and to maintain accountability for assets.
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<PAGE> 21
4.15. Managed Vision, Inc.; Managed Vision, Ltd. Managed Vision, Inc.,
a Florida corporation ("Managed Vision"), is a corporation duly organized,
validly existing and in good standing under the laws of the State of Florida,
with full corporate power to carry on its business as now being conduced, is
duly qualified or licensed to do business in the State of Texas and is in good
standing in the State of Florida. At Closing, Managed Vision shall have no
liability, contingent or otherwise, in excess of $5,000 and no assets, other
than those listed on Exhibit 4.15 hereto. The sole stockholders of all of the
issued and outstanding shares of the capital stock of Managed Vision are Huseyin
Kizanlikli and Iechiam Weizman. Managed Vision is the sole general partner of
Managed Vision, Ltd., a Florida limited partnership (the "Partnership"). The
Partnership is validly existing and in good standing under the laws of the State
of Florida, with full power to carry on its business as now being conducted, and
is duly qualified or licensed to do business in the State of Texas. The general
ledger of the Partnership attached as Exhibit 4.15 accurately reflects the
assets and liabilities of the Partnership and the transactions of the
Partnership during the period from January 1, 1996 to March 31, 1996. The
Partnership is in the business of providing discounts on eye care services and
products through a network of optometrists and opthalmologists. The sole limited
partners of the Partnership are Mordechai Golan and Mustafa Yesil.
4.16. Distributions, etc. Since March 31, 1996, except as set forth on
Exhibit 4.16, the Company has made no payments, by way of distribution,
dividend, bonus, compensation or otherwise, including under any Employee Plans
or any compensation arrangements established for the benefit of the directors of
the Company, to the Shareholders or any director of the Company, and has made
payments only in the ordinary course of business consistent with past practice
to Managed Vision, Call Mart and their respective Affiliates.
4.17. Compliance, Permits. Except as set forth in Exhibit 4.17, to the
Shareholders' and the Company's knowledge, and subject to the Company's current
policies with respect to the Regulatory Provisions as acknowledged by Buyer in
Section 6.9 hereof, the Company is not in conflict with, or in default or
violation of, (i) any law, rule, regulation, order, judgment or decree
applicable to the Company or by which any of its properties are bound or
affected or (ii) any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which the
Company is a party or by which the Company or any of its properties is bound or
affected, except for any such conflicts, defaults or violations which could not
reasonably be expected to have a Material Adverse Effect. Subject to Exhibit
4.17, the Company (or as expressly set forth in Exhibit 4.17, certain employees
of the Company) holds all material permits, licenses, easements, variances,
exemptions, consents, certificates, orders and approvals from governmental
authorities which are material to the operation of the business of the Company
as it is now being conducted (collectively, the "Company Permits"). The Company
is in compliance with the terms of the Company Permits, except where the failure
to so comply could not reasonably be expected to have a Material Adverse Effect
on the Company.
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<PAGE> 22
4.18. Product Liability and Recalls.
4.18.1. Except as set forth in Exhibit 4.18.1, the Company is
not aware of any claim, or the basis of any claim, against the Company
for injury to person or property of employees or any third parties
suffered as a result of the sale of any product or performance of any
service by the Company, including claims arising out of the defective
or unsafe nature of its products or services, which could reasonably be
expected to have a Material Adverse Effect on the Company. Except as
set forth in Exhibit 4.18.1, for the past five years the Company has
had no product liability lawsuits. All claims listed on Exhibit 4.18.1
are fully covered by insurance and the insurance carrier has assumed
the defense of such claims without any reservations of rights.
4.18.2. Except as set forth in Exhibit 4.18.2 or except as
would not, individually or in the aggregate, have a Material Adverse
Effect on the Company, (a) since January 1, 1994 through the date
hereof the Company has not received any written notices, citations or
decisions by any governmental or regulatory body that any product
produced, manufactured, marketed or distributed at any time by the
Company (the "Company Products") is defective or fails to meet any
applicable standards promulgated by any such governmental or regulatory
body, (b) the Company has complied with the laws, regulations and
specifications with respect to design, manufacture, labeling, testing
and inspection of Company Products promulgated by the FDA, (c) since
January 1, 1994 through the date hereof the Company has not received
notice that there have been any recalls, field notifications or
seizures ordered or threatened by any such governmental or regulatory
body with respect to any of the Company Products and (d) since January
1, 1994 through the date hereof the Company has not received any
warning letter or Section 305 notices from the FDA.
4.19. Regulatory Compliance. The regulatory files provided to Buyer's
representative, James Lightman, to the Shareholders' and the Company's
knowledge, were complete and correct and constituted all of the written
communications received from regulatory authorities relating to the business
since June 30, 1991. Except as set forth on Exhibit 4.19, the Company (i) since
June 30, 1991 has received no communications from the regulatory authorities of
jurisdictions other than those listed on such Exhibit, (ii) the last
communication from the Federal Trade Commission was April 18, 1994, (iii) no
legal action has been taken against the Company by the regulatory authorities of
any state other than Florida, Washington and Texas, and all such actions taken
by the foregoing jurisdictions have been fully resolved, (iv) no state has
issued any cease and desist order with respect to the Company's business except
California, which issued orders in 1994 and 1995, and Florida in 1991 and (v) to
the Shareholders' and the Company's knowledge, there are no regulatory actions
pending in any jurisdiction against the Company.
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<PAGE> 23
4.20. Brokers or Finders Fees. Except for the fees and expenses of
Smith Barney, which will be paid by the Company after Closing, the Shareholders
and the Company have not incurred any liability, contingent or otherwise, for
brokerage or finder's fees or agent's commissions or other similar payment in
connection with this Agreement or the transactions contemplated hereby.
5. INDIVIDUAL REPRESENTATIONS AND WARRANTIES OF THE
SHAREHOLDERS.
In order to induce the Buyer to enter into and perform this Agreement
and to consummate the transactions contemplated hereby, each Shareholder hereby
severally, but not jointly, represents and warrants to the Buyer as follows:
5.1. Enforceability. This Agreement has been duly executed and
delivered by the Shareholder, and is Enforceable against the Shareholder in
accordance with its terms.
5.2. Non-Contravention, etc. Except as indicated in Exhibit 5.2, (a)
neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby does or will constitute, result in or give rise
to any breach or violation of, or any default or right or cause of action under,
any Contractual Obligation of the Shareholder or any Legal Requirement
applicable to the Shareholder which would have a Material Adverse Effect on the
Company and (b) other than with respect to the HSR Act, no approval, consent,
waiver, authorization or other order of, and no declaration, filing,
registration, qualification or recording with, any Governmental Authority or any
other Person, including without limitation any party to any Contractual
Obligation of the Shareholder, is required to be made by or on behalf of the
Shareholder in connection with the execution, delivery or performance of this
Agreement and the transactions contemplated hereby by the Shareholder.
5.3. Title, etc. The Shareholder has good and marketable title to the
number of Shares owned by such Shareholder, free and clear of any Liens. Except
pursuant to this Agreement, there is no Contractual Obligation pursuant to which
the Shareholder has, directly or indirectly, granted any option, warrant or
other right to any Person to acquire any Shares or direct or indirect interests
in the Company.
6. REPRESENTATIONS AND WARRANTIES OF THE BUYER.
In order to induce the Shareholders to enter into and perform this
Agreement and to consummate the transactions contemplated hereby, the Buyer
represents and warrants to the Shareholders as follows:
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<PAGE> 24
6.1. Corporate Matters. The Buyer is a corporation duly organized,
validly existing and in good standing under the laws of The Commonwealth of
Massachusetts and has all requisite power and authority to execute, deliver and
perform this Agreement and to consummate the transactions contemplated hereby.
The Buyer is duly qualified or licensed to do business as a foreign corporation,
and is in good standing as such, in each jurisdiction in which the failure to be
so qualified or licensed and in good standing could reasonably be expected to
have a Material Adverse Effect on the Buyer. The Buyer has heretofore delivered
to the Shareholders a true and complete copy of the Buyer's Charter and By-laws.
6.2. Non-Contravention, etc. Neither the execution, delivery nor
performance of this Agreement nor the consummation of the transactions
contemplated hereby does or will constitute, result in or give rise to any
breach or violation of, or any default or right or cause of action under, any
Contractual Obligation of or the Charter or By-Laws of the Buyer or any Legal
Requirement applicable to the Buyer. No approval, consent, waiver, authorization
or other order of, and no declaration, filing, registration, qualification or
recording with, any Governmental Authority or any other Person, including
without limitation any party to any Contractual Obligation of the Buyer, is
required to be obtained or made by or on behalf of the Buyer in connection with
the execution, delivery or performance of this Agreement and the transactions
contemplated hereby by the Buyer, except for items which shall have been
obtained or made and shall be in full force and effect at the Closing.
6.3. Charter and By-Laws. Buyer has heretofore furnished to the
Shareholders complete and correct copy of its Charter and By-Laws, as amended to
date. Such Charter and By-Laws are in full force and effect. Buyer is not in
violation of any of the provisions of its Charter or By-Laws.
6.4. Capitalization. As of December 31, 1995, the authorized capital
stock of Buyer consisted of 60,000,000 shares of Buyer Common Stock of which
29,226,322 shares were issued and outstanding, all of which are validly issued,
fully paid and non-assessable, 5,000,000 shares of preferred stock, none of
which were issued and outstanding, 5,284 shares of Buyer Common Stock were held
in treasury, 2,899,923 shares were reserved for future issuance under Buyer's
stock option plans, and 375,000 shares were reserved for issuance under the
Buyer's employee stock purchase plan. No material change in such capitalization
has occurred between December 31, 1995 and the date hereof.
6.5. Authority Relative to this Agreement. The Buyer has all necessary
corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by Buyer and
the consummation by Buyer of the transactions contemplated hereby have been duly
and validly authorized by all necessary corporate action on the part of Buyer,
and no other corporate proceedings on the part of Buyer are necessary to
authorize this Agreement or to consummate the transactions contemplated thereby.
This Agreement has been duly and validly executed and delivered by and, assuming
the due
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<PAGE> 25
authorization, execution and delivery by the Company, constitutes a legal, valid
and binding obligation of the Buyer.
6.6. No Conflict, Required Filings and Consents.
6.6.1. No Conflict. The execution and delivery of this
Agreement by Buyer do not, and the performance of this Agreement by
Buyer will not, (i) conflict with or violate the Charter or By-Laws of
Buyer, (ii) conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to Buyer or any of its subsidiaries or by
which its or their respective properties are bound or affected, or
(iii) result in any breach of or constitute a default (or an event
which with notice or lapse of time or both would become a default)
under, or impair Buyer's or any of its subsidiaries' rights or alter
the rights or obligations of any third party under, or give to others
any rights of termination, amendment, acceleration or cancellation of,
or result in the creation of a lien or encumbrance on any of the
properties or assets of Buyer or any of its subsidiaries pursuant to,
any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which
Buyer or any of its subsidiaries is a party or by which Buyer or any of
its subsidiaries or its or any of their respective properties are bound
or affected, except in any such case for any such conflicts,
violations, breaches, defaults or other occurrences that could not
reasonably be expected to have a Material Adverse Effect on the Buyer.
6.6.2. Consents. The execution and delivery of this Agreement
by Buyer does not, and the performance of this Agreement by Buyer will
not, require any consent, approval, authorization or permit of, or
filing with or notification to, any governmental or regulatory
authority, domestic or foreign, except (i) for applicable requirements,
if any, of the Securities Act of 1933, as amended, and the rules and
regulations thereunder (the "1933 Act"), the Securities Exchange Act of
1934, as amended, and the rules and regulations thereunder (the "1934
Act"), state securities laws or blue sky laws and the rules and
regulations thereunder, the HSR Act and (ii) where the failure to
obtain such consents, approvals, authorizations or permits, or to make
such filings or notifications, would not prevent or delay consummation
of the transactions contemplated hereby, or otherwise prevent Buyer
from performing its obligations under this Agreement, and would not
have a Material Adverse Effect on the Buyer.
6.7. SEC Filings; Financial Statements. Buyer has timely filed all
forms, reports and documents required to be filed with the SEC since January 1,
1990 (collectively, the "Buyer SEC Reports"), and has heretofore delivered to
the Shareholders, in the form filed with the SEC, (i) its Annual Reports on Form
10-K for the fiscal years ended December 31, 1993, 1994, and 1995 (ii) all proxy
statements relating to Buyer's meetings of stockholders (whether annual or
special) held since January 1, 1995, (iii) all other reports or registration
statements (other than Reports on Form 10-Q not referred to in clause (ii)
above) filed by Buyer with the SEC since January 1, 1995, and (iv) all
amendments and supplements to all
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such reports and registration statements filed by Buyer with the SEC. The Buyer
SEC Reports and any such reports, forms and other documents filed by Buyer after
the date of this Agreement (i) were prepared or will be prepared in all material
respects in accordance with, and comply (or will comply) with, the requirements
of the 1933 Act or the 1934 Act, as the case may be, and (ii) did not at the
time they were filed or will not at the time they are filed (or if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing) contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. None of Buyer's subsidiaries is required to file any
forms, reports or other documents with the SEC. Each of the consolidated
financial statements (including, in each case, any related notes thereto)
contained in the Buyer SEC Reports has been prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes
thereto) and each fairly presents the consolidated financial position of Buyer
and its subsidiaries as at the respective dates thereof and the consolidated
results of its operations and cash flows for the periods indicated, except that
the unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments which were not or are not expected to be material
in amount.
6.8. Absence of Certain Changes or Events. Since December 31, 1995,
Buyer has conducted its business in the ordinary course and there has not
occurred: (i) any Material Adverse Effect on the Buyer; (ii) any amendments or
changes in the Charter or By-Laws of Buyer; (iii) any damage to, destruction or
loss of any assets of the Buyer (whether or not covered by insurance) that could
have a Material Adverse Effect on the Buyer; (iv) any material change by Buyer
in its accounting methods; (v) any material revaluation by Buyer of any of its
assets, including without limitation, writing down the value of inventory or
writing off notes or accounts receivable other than in the ordinary course of
business; or (vi) any sale of a material amount of assets of Buyer except in the
ordinary course of business.
6.9. Regulatory Environment. The Buyer understands that various
government regulatory agencies may argue or have argued that the Company may be
subject to laws, rules or regulations ("Regulatory Provisions"), the
applicability of which the Company may dispute or has disputed in good faith.
The Buyer further understands that such Regulatory Provisions have resulted, and
may continue to result, in related expenses to the Company.
7. CERTAIN AGREEMENTS OF THE PARTIES.
7.1. Exclusivity. Prior to the Closing, the Shareholders will not, and
the Shareholders will cause the Company and all Affiliates, directors, officers,
employees, representatives and agents of the Company or the Shareholders not to,
directly or indirectly, solicit or initiate or enter into discussions or
transactions or Contractual Obligations with or encourage or provide any
information to any Person (other than the Buyer and its designees) concerning
any sale of stock by (or by the Shareholders of), or any merger or share
exchange
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<PAGE> 27
or sale or other disposition of securities or substantial assets or
recapitalization or any similar transaction involving, the Company. The
Shareholders will notify the Buyer immediately upon becoming aware that any
Person has made any proposal, offer, inquiry, or contact with respect to any
such transaction.
7.2. Access to Premises and Information. Prior to the Closing, the
Shareholders will cause the Company to permit the Buyer and its respective
authorized representatives to have reasonable access to their premises and
documents, books and records and to make copies at Buyer's expense during normal
business hours of such financial and operating data and other information with
respect to the Company and its Subsidiaries as the Buyer shall reasonably
request. The Shareholders will make available to Buyer at Buyer's expense such
additional information and copies of documents, books and records relating to
the Company as may be reasonably requested by the Buyer.
7.3. Preparation for Closing. Each party will use its best efforts to
bring about the fulfillment of each of the conditions precedent to the
obligations of the other parties hereto set forth in this Agreement, and will
render all reasonable assistance (not requiring the expenditure of funds) to
such other parties requested by such other parties in connection with such other
parties' best efforts.
7.4. Conduct of Business; Affirmative Covenants. The Company will,
prior to the Closing, conduct its business only in the ordinary course and will
not do, or cause to be done, anything which is represented and warranted not to
have been done by it under this Agreement since the Statement Date pursuant to
Section 4.3 and Section 4.16 and which would have a Material Adverse Effect on
the Company. Without limiting the foregoing, the Company will, until the Closing
Date, use its commercially reasonable best efforts in the manner previously
employed the Company in its operation of its business to:
(a) Preserve its business intact;
(b) Maintain its properties in customary repair, working order and
condition, reasonable wear and tear excepted;
(c) Continue its operations in the usual, regular and ordinary course
and manner;
(d) Maintain in full force and effect the insurance policies disclosed
in Exhibit 4.9 (or policies providing substantially the same coverage), copies
of which will be made available to Buyer for its inspection;
(e) Keep available to Buyer the services of the present officers and
employees of the Company;
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(f) Subject to Section 4.17, preserve and keep in full force in
accordance with their terms any and all confidential information, trade secrets,
licenses and permits, and comply in all material respect with the requirements
of all material applicable laws, rules, regulations and orders of all regulatory
agencies and authorities having jurisdiction over the Company, except to the
extent that the Company in good faith believes such laws, rules, regulations or
orders do not apply;
(g) Pay and discharge, or cause to be paid and discharged, all lawful
taxes, assessments and governmental charges or levies imposed upon it or upon
its income or property to the extent due and payable except for those items
being contested, if any;
(h) Promptly notify Buyer in writing of any legal investigation,
action, suit or proceeding commenced against it before any court or any
governmental department, session, board, bureau, agency or instrumentality; and
(i) Preserve for Buyer the goodwill of the suppliers, customers and
others having business relations with the Company except as otherwise permitted
by this Agreement or consented to by Buyer in writing.
7.5. Conduct of Business; Negative Covenants. The Company will not,
prior to the Closing, except in the ordinary course of its business, or as
otherwise permitted by this Agreement or consented to by Buyer in writing:
(a) Subject to Section 4.17, knowingly fail in any material respect to
comply with any laws, ordinances, regulations or other governmental restrictions
applicable to its business operations, except to the extent that the Company
believes in good faith that such laws, ordinances, regulations or other
governmental restrictions do not apply; or
(b) Grant any powers of attorney in connection with the operation of
its business.
7.6. Increased Insurance Coverage. At the written request of Buyer and
at Buyer's sole expense, the amount of insurance which, at the date of this
Agreement, the Company carries on any of its properties or in respect of its
operations, shall be increased, to the extent available, by such amount or
amounts as Buyer shall specify.
7.7. HSR Act. Within five business days after the execution of this
Agreement, the Buyer and the Company shall each prepare and file all documents
with the Federal Trade Commission and the United States Department of Justice as
are required for the Buyer and the Company to comply with the HSR Act and shall
promptly furnish all material thereafter requested by any of the regulatory
agencies having jurisdiction over such filings. The parties hereto shall request
and use their best efforts to obtain an acceleration of the applicable waiting
period under the HSR Act.
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<PAGE> 29
7.8. Interim Financial Statements of the Company. The Company will
maintain its books and records in the usual, regular and ordinary manner and
promptly advise Buyer in writing of any material adverse change (financial or
otherwise). Within thirty (30) days after the end of each calendar month after
the date hereof until Closing, the Company will deliver, prior to Closing, to
Buyer unaudited summaries of consolidated earnings and unaudited consolidated
balance sheets of the Company for the prior month and the comparative period of
the preceding fiscal year.
7.9. Changes in Buyer's Capital Structure. Buyer covenants and agrees
that, prior to the Closing, it will not consummate any transaction which would
result in a material change in the capital structure of the Buyer as set forth
in Section 6.4 hereof.
7.10. Expenses of Transaction. Whether or not the transactions
contemplated hereby are consummated, each party hereto will pay the respective
expenses incurred by such party in connection with the preparation and execution
of this Agreement and the consummation of the transactions contemplated hereby.
Without limiting the generality of the foregoing, (i) the Company agrees to pay
the fees and expenses of Smith, Barney and (ii) the Company agrees to pay to
Gunster, Yoakley, Valdes-Fauli & Stewart, P.A., counsel to the Shareholders,
$100,000, provided that the Shareholders shall be liable for any additional
legal fees and expenses in excess of such amount.
7.11. Payment of HSR Filing Fee, Transfer Taxes and Other Charges. The
Buyer shall pay any filing fees required to be paid by it under the HSR Act. In
addition, the Buyer shall pay all stock transfer Taxes, sales Taxes, documentary
stamp Taxes, recording charges and other similar Taxes arising under any Legal
Requirement in connection with the Merger. Each of the parties hereto shall
prepare and file, and shall fully cooperate with each other party with respect
to the preparation and filing of, any Tax Returns and other filings relating to
any such Taxes or charges as may be required.
7.12. Licensed Optician. For a period of up to one year following the
Closing, Mordechai Golan agrees to serve as the licensed optician for the
Company in all states in which the Company is required to have a licensed
optician and for such services shall receive compensation equal to $40,000 per
year, payable monthly; provided, however, that the Buyer agrees promptly to
initiate a search for, and use its reasonable efforts to cause the Company to
find, a suitable replacement.
7.13. Public Announcements. Neither Buyer, the Company nor the
Shareholders or any of their officers, employees, representatives, agents and
Affiliates will, without the consent of the Buyer and the Company, issue any
press release or make any other public statement concerning the transactions
contemplated by this Agreement; provided, however, that the Company may make any
announcement that, upon the advice of counsel, it believes to be necessary to
satisfy any disclosure obligations under the Federal securities laws or the
rules of any self-regulatory organization by which the Company is bound.
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<PAGE> 30
7.14. Indemnification. Subject to Section 8.14, Buyer shall cause the
Surviving Corporation to keep in effect the provisions in its Charter and
By-Laws containing the provisions with respect to exculpation of director and
officer liability and indemnification set forth in the Charter and By-Laws of
the Company on the date of this Agreement, which provisions shall not be
amended, repealed or otherwise modified except as required by applicable law or
except to make changes permitted by applicable law that would enlarge the
exculpation or rights of indemnification thereunder.
8. CONDITIONS TO THE OBLIGATION TO CLOSE OF THE BUYER.
The obligations of the Buyer and Summit Sub at the Closing to effect
the Merger and the other transactions contemplated by this Agreement are subject
to the satisfaction, at or prior to the Closing, of all of the following
conditions, compliance with which, or the occurrence of which, may be waived
prior to the Closing in writing by the Buyer in its sole discretion:
8.1. Representations, Warranties and Covenants.
8.1.1. Continued Accuracy of Representations and Warranties.
All representations and warranties of the Shareholders and the Company
contained in this Agreement shall be true and correct as of the Closing
with the same force and effect as if made at and as of the Closing
(except that representations and warranties made as of a specific date
shall continue to be true and correct as at such date), and the Company
shall have delivered to Buyer a certificate to such effect, dated the
Closing Date, and executed by a duly authorized officer of the Company.
8.1.2. Performance of Agreements. The Shareholders and the
Company shall have performed and satisfied all covenants and agreements
required by this Agreement to be performed or satisfied by them or it
at or prior to the Closing, and the Company shall have delivered to
Buyer a certificate to such effect, dated the Closing Date, and
executed by a duly authorized officer of the Company.
8.2. Legality; Governmental Authorization; General Litigation. The
consummation of the Merger and the other transactions contemplated by this
Agreement, shall not be prohibited by any Legal Requirement, and shall not
subject the Company, the Buyer or Summit Sub to any penalty or Tax or other
material liability other than liabilities created by the Buyer or Summit Sub, if
any, except to the extent Summit Sub inherits the liabilities of the Company as
contemplated by this Agreement. The Shareholders shall have caused to have been
obtained or made and be in full force and effect all material approvals,
consents, waivers, authorizations and other orders of, and declarations,
filings, registrations, qualifications and recordings with, any Governmental
Authority necessary to be obtained or made by the Shareholders or the Company,
in order to permit the consummation of the transactions
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<PAGE> 31
contemplated hereby. No action or proceeding shall have been instituted at or
prior to the Closing before any court, arbitrator or other governmental body by
any Person other than the Buyer or any of its Affiliates, or instituted or
threatened in writing by any Governmental Authority, relating to this Agreement
or any of the transactions contemplated hereby or against the Company, the
Shareholders, the Buyer, or Summit Sub, the result of which could reasonably be
expected to prevent or make illegal the consummation of any such transaction or
could reasonably be expected to otherwise have a Material Adverse Effect on the
Buyer or have a Material Adverse Effect on the Company.
8.3. No Material Adverse Effect. Without limiting the generality of
Section 8.1, since the Statement Date, no Material Adverse Effect on the Company
shall have occurred, nor shall any event or events have occurred which could
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect on the Company.
8.4. Escrow Agreements. The Escrow Agreements, in substantially the
form set forth in Exhibit 3.5 hereto, shall have been duly executed by each of
the Shareholders and the Escrow Agent.
8.5. Resignations, etc. The Buyer shall have received written
resignations from all directors of the Company.
8.6. HSR Act. The waiting period under the HSR Act shall have expired,
and there shall not be any outstanding order of a court of competent
jurisdiction restraining the consummation of the transactions contemplated
hereby.
8.7. Opinion of Counsel. Buyer shall have received an opinion of
counsel to the Shareholders, in form and substance reasonably satisfactory to
the Buyer, and in substantially the form of Exhibit 8.7 hereto.
8.8. Noncompetition Agreement. Buyer shall have received executed
copies of the Noncompetition Agreement in substantially the form of Exhibit 8.8
hereto.
8.9. Employment Agreement. The Company shall have entered into an
employment agreement with Menderes Akdag on terms set forth on Exhibit 8.9.
8.10. Compensation Agreements. Any existing compensation agreements
between the Company and the Chairman and Vice Chairman of the Company and
between the Company and the Shareholders shall be terminated.
8.11. Pooling Letter. The Buyer shall have received from Peat Marwick a
letter dated the Effective Date, in form and substance satisfactory to the
Company, approving the treatment of the transactions contemplated by this
Agreement on a "pooling of interests" basis
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in accordance with generally accepted accounting principles; and such
transactions shall so qualify.
8.12. Call Mart Acquisition. The Company shall have acquired all of the
outstanding capital stock of Call Mart.
8.13. Acquisition of Managed Vision. Subject to confirmation that it is
able to do so pursuant to applicable regulatory requirements, the Buyer shall
have acquired all of the equity in the Partnership and Managed Vision for
consideration consisting solely of Buyer Common Stock (valued at the Average
Price which in no event shall be less than $23.53 per share or more than $28 per
share) having an aggregate value of $200,000. If for regulatory reasons the
Buyer is unable to acquire the equity of the Partnership and Managed Vision, the
Company shall have on or before the Closing amended its agreement with the
Partnership on terms and conditions reasonably satisfactory to the Buyer.
8.14. Waiver of Indemnification. Each of the Shareholders, Yalie Golan
and Engin Yesil shall have executed and delivered an agreement, in form and
substance satisfactory to Buyer, waiving all of their rights to indemnification
under the Company's Charter, By-Laws or otherwise within respect to the Seriani
Litigation (as defined in Section 10).
9. CONDITIONS TO THE OBLIGATION TO CLOSE OF THE COMPANY AND THE
SHAREHOLDERS.
The obligations of the Company and the Shareholders at the Closing to
effect the Merger and the other transactions contemplated by this Agreement are
subject to the satisfaction, at or prior to the Closing, of all of the following
conditions, compliance with which, or the occurrence of which, may be waived
prior to the Closing in writing by the Company and the Shareholders in their
sole discretion:
9.1. Representations, Warranties and Covenants.
9.1.1. Continued Accuracy of Representations and Warranties.
All representations and warranties of the Buyer contained in this
Agreement shall be true and correct as of the Closing with the same
force and effect as if made at and as of the Closing (except that
representations and warranties made as of a specific date shall
continue to be true and correct as at such date), and Buyer shall have
delivered to the Shareholders a certificate to such effect, dated the
Closing Date, and executed by a duly authorized officer of the Buyer.
9.1.2. Performance of Agreements. The Buyer and Summit Sub
shall have performed and satisfied all covenants and agreements
required by this Agreement to be performed or satisfied by the Buyer or
Summit Sub at or prior to the Closing, and the
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<PAGE> 33
Buyer shall have delivered to the Shareholders a certificate to such
effect, dated the Closing Date, and executed by a duly authorized
officer of the Buyer.
9.2. Absence of Litigation. No action or proceeding shall have been
instituted at or prior to the Closing before any court, arbitrator or other
governmental body by any Person other than the Shareholders or the Company, or
instituted or threatened by any Governmental Authority, relating to this
Agreement or any of the transactions contemplated hereby or against the Buyer or
Summit Sub, the result of which could prevent or make illegal the consummation
any such transaction or could otherwise have a Material Adverse Effect on the
Buyer.
9.3. HSR Act. The waiting period under the HSR Act shall have expired,
and there shall not be any outstanding order of a court of competent
jurisdiction restraining the consummation of the transactions contemplated
hereby.
9.4. Shareholders' Termination. The Shareholders shall not have
terminated this Agreement pursuant to Section 13.1(f).
9.5. Opinion of Counsel. The Shareholders shall have received an
opinion of counsel for Buyer, in form and substance reasonably satisfactory to
the Shareholders, and in substantially the form of Exhibit 9.5 hereto.
9.6. Release of Guarantees. The Shareholders and their Affiliates shall
have obtained releases, full and unconditional, of all liabilities and
guarantees with respect to any Company indebtedness to P.T. Bank, Indonesia or
Buyer shall have caused such indebtedness to be repaid in full.
9.7. Buyer's Certificate. Buyer shall have delivered to the
Shareholders a certificate in form and substance satisfactory to the
Shareholders to the effect that Buyer is not aware, as of the Closing Date, of
any material breach of the representations and warranties set forth in Sections
4 and 5 of this Agreement.
10. INDEMNIFICATION.
10.1. Indemnification. Each of the Shareholders (in his or its capacity
as indemnifying party, an "Indemnifying Party") hereby agrees to indemnify each
of the Buyer and its Affiliates (each in its capacity as indemnified party, an
"Indemnitee") and hold each of the Buyer and such Affiliates harmless, and the
Buyer (in its capacity as indemnifying party, an "Indemnifying Party") hereby
agrees to indemnify each of the Shareholders (in his capacity as indemnified
party, an "Indemnitee") and hold each of the Shareholders harmless, from,
against and in respect of the following (herein called a "Loss" or "Losses"):
any and all damages, deficiencies, claims, actions, charges, suits, proceedings,
demands, assessments, judgments, orders, decrees, awards, penalties, fines,
amounts paid in settlement, losses (including without limitation any diminution
in value), costs, expenses, fees, obligations and
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liabilities (including without limitation costs of collection and reasonable
attorneys' fees and expenses) arising from or related to any of the following:
10.1.1. The Shareholders. In the case of any or all of the
Shareholders as Indemnifying Party (i) any breach of a representation
or warranty made by or on behalf of such Shareholder or the Company in
this Agreement or any document, instrument or certificate delivered
pursuant thereto (as each such representation or warranty would read if
all qualifications as to knowledge or materiality (including without
limitation in the definition of Material Adverse Effect) were deleted
therefrom) and (ii) any breach or violation of any covenant or
agreement made by or on behalf of the Shareholders or the Company in
this Agreement. Notwithstanding anything herein to the contrary, the
obligation of each Shareholder to indemnify an Indemnitee for breaches
of such Shareholder's representations and warranties in Section 5 shall
be several and not joint.
10.1.2. Seriani and Other Litigation. Without limiting the
generality of the Shareholders' obligations under Section 10.1.1., the
Shareholders agree to indemnify the Company and the Buyer against any
Losses arising out of Joseph Seriani and Rhonda Seriani v. Yalie Golan,
Engin Kamil Yesil, Mordechai Golan and Lens Express, Inc. (Cir. Ct.,
Broward Cty, No. 93-08026) or any subsequent litigation filed that
alleges similar conduct occurring prior to the date hereof (the
"Seriani Litigation") and any Losses arising out of three complaints
filed in late February and early March 1996 with the Equal Employment
Opportunity Commission; provided, however, that the Buyer agrees to pay
up to $75,000 in post Closing legal fees incurred by the Company in
connection with the Seriani Litigation.
10.1.3. The Buyer. In the case of the Buyer as Indemnifying
Party (i) any breach of a representation or warranty made by or on
behalf of the Buyer in this Agreement or any document, instrument or
certificate delivered pursuant thereto (as each such representation or
warranty would read if all qualifications as to knowledge or
materiality (including without limitation in the definition of Material
Adverse Effect) were deleted therefrom); (ii) any breach or violation
of any covenant or agreement made by or on behalf of the Buyer in this
Agreement and (iii) the operation of the Company after Closing.
10.2. Third Party Claims. Promptly after the receipt by any Indemnitee
of notice of the commencement of any Action against such Indemnitee by a third
party, such Indemnitee shall, if a claim with respect thereto is or may be made
against any Indemnifying Party pursuant to this Section 10, give such
Indemnifying Party written notice thereof. Subject to the Cut-Off Date, the
failure to give such notice shall not relieve any Indemnifying Party from any
obligation hereunder except where, and then solely to the extent that, such
failure actually and materially prejudices the rights of such Indemnifying
Party. Such Indemnifying Party shall have the right to defend such claim, at
such Indemnifying Party's expense and with counsel of its choice reasonably
satisfactory to the Indemnitee, provided that the Indemnifying
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<PAGE> 35
Party conducts the defense of such claim actively and diligently. If the
Indemnifying Party assumes the defense of such claim, the Indemnitee agrees to
reasonably cooperate in such defense so long as the Indemnitee is not materially
prejudiced thereby. So long as the Indemnifying Party is conducting the defense
of such claim as provided in the previous sentence, the Indemnitee may retain
separate co-counsel at its sole cost and expense and may participate in defense
of such claim, and neither the Indemnified Party nor the Indemnitee will consent
to the entry of any judgment or enter into any settlement with respect to such
claim without the prior written consent of the other, which consent will not be
unreasonably withheld. In the event the Indemnifying Party does not or ceases to
conduct the defense of such claim as so provided, (x) the Indemnitee may defend
against, and consent to the entry of any judgment or enter into any settlement
with respect to, such claim in any manner it may reasonably deem to be
appropriate, (y) the Indemnifying Party will reimburse the indemnitee promptly
and periodically for the reasonable and actual costs of defending against such
claim, including attorneys' fees and expenses, and (z) the Indemnifying Party
will remain responsible for any Losses the Indemnitee may suffer as a result of
such claim to the full extent provided in this Section 10.
10.3. Limitations on Indemnification.
(a) No claim may be made by the Buyer or any of its Affiliates as
Indemnified Party pursuant to Section 10.1.1 after the first to occur of (i) the
delivery by the Company's independent auditors of their report on the financial
statements of the Buyer, which statements shall include the assets and results
of operations of the Company, for the year ended December 31, 1996 and (ii) the
first anniversary of the Closing Date (hereinafter referred to as the "CutOff
Date"), except for Buyer's Reserved Claims. "Buyer's Reserved Claims" shall mean
(i) all claims as to which such Indemnified Party has given any Indemnifying
Party written notice on or prior to the Cut-Off Date and (ii) all claims under
Section 10.1.1 to the extent they result from a misrepresentation or inaccuracy
in a statement made in Section 5.3 hereof. Claims in respect of Buyer's Reserved
Claims may be made at any time subject to the statute of limitations applicable
thereto.
(b) The Shareholders shall not have any obligation under Section 10.1.1
hereof to indemnify the Buyer in respect of any Loss incurred due to any
inaccuracy in or the breach of any representation and warranty contained in any
Section hereof (other than Section 5.3, until the total of all such Losses
incurred by the Buyer (excluding Losses incurred in respect of the
representations and warranties contained in Section 5.3 hereof) exceeds (i) with
respect to all matters except breaches of the representations and warranties
that relate to Inventory, $250,000, whereupon the Buyer shall be entitled to
indemnification hereunder for the entire amount of all such Losses (excluding
Losses incurred in respect of the representations and warranties contained in
Section 5.3 hereof) in excess of $250,000 and (ii) with respect to breaches of
the representations and warranties that relate to Inventory, $50,000, whereupon
the Buyer shall be entitled to indemnification hereunder for the entire amount
of all such Losses in excess of $50,000; provided, however, that if Buyer has
not taken a physical
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<PAGE> 36
inventory of such Inventory on or before 30 days after the Closing Date, Buyer
shall not be entitled to such indemnification hereunder. The Shareholders shall
be obligated under Section 10.1.1 hereof to indemnify the Buyer in respect of
any Loss incurred due to any inaccuracy in or the breach of any representation
and warranty contained in Section 5.3 hereof. Notwithstanding the foregoing, and
subject to Section 10.3(e), the aggregate maximum recovery in respect of all
Losses incurred by the Buyer under this Section 10.3(b) shall not exceed the
value of the shares of Buyer Common Stock deposited in escrow pursuant to the
General Escrow Agreement by the Shareholders pursuant to Section 3.5 hereof.
(c) No claim may be made by any Shareholder as Indemnified Party
pursuant to Section 10.1.3 after the Cut-Off Date, except for Shareholders'
Reserved Claims. "Shareholders' Reserved Claims" shall mean all claims as to
which such Indemnified Party has given any Indemnifying Party written notice on
or prior to the Cut-Off Date. Claims in respect of Shareholders' Reserved Claims
may be made at any time subject to the statute of limitations applicable
thereto.
(d) The Buyer shall not have any obligation under Section 10.1.3 to
indemnify any Shareholder in respect of any Loss until the aggregate combined
total of all Losses incurred by all Shareholders exceeds $250,000, whereupon the
Stockholders shall be entitled to indemnification hereunder for the entire
aggregate cumulative amount of all such Losses in excess of $250,000, up to an
aggregate maximum recovery in respect of such Losses of $4,000,000.
(e) None of the foregoing limitations provided in this Section 10.3
shall apply to the indemnification obligations of the Shareholders pursuant to
Section 10.1.2; provided that the aggregate maximum recovery in respect of all
Losses incurred by the Buyer under Section 10.1.2 shall not exceed the value of
the shares of Buyer Common Stock deposited in escrow pursuant to the Litigation
Escrow Agreement by the Shareholders pursuant to Section 3.5 hereof.
(f) This Section 10 provides the exclusive rights and remedies of the
parties with respect to Losses after Closing, all other remedies at law or in
equity being waived by the parties. Without limiting the foregoing, no
Shareholder shall have any right of contribution against the Company with
respect to Losses resulting from the breach of any of the representations and
warranties of the Company made herein, or with respect to the failure by the
Company to perform any covenants required to be performed by the Company
pursuant to this Agreement.
(g) Any amounts payable under this Section 10 as indemnification for
any Loss shall be paid solely in Buyer Common Stock, which shall be valued at a
price per share equal to the Average Price, regardless of the actual fair market
value on the date the claim is settled.
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11. DEFINITIONS.
For purposes of this Agreement:
11.1. Certain Matters of Construction. In addition to the definitions
referred to as set forth below in this Section 11:
(a) The words "hereof", "herein", "hereunder" and words of similar
import shall refer to this Agreement as a whole and not to any particular
Section or provision of this Agreement, reference to Sections, Exhibits or
Schedules are, unless the context otherwise requires, references to Sections of,
and Exhibits and Schedules to, this Agreement, and references to a particular
Section of this Agreement shall include all subsections thereof.
(b) The words "party" and "parties" shall refer to each of the
Shareholders, the Buyer and Summit Sub.
(c) Definitions shall be equally applicable to both the singular and
plural forms of the terms defined, and references to the masculine, feminine or
neuter gender shall include each other gender.
(d) Accounting terms used herein and not otherwise defined herein are
used herein as defined by generally accepted accounting principles in effect as
of the date hereof.
11.2. Certain Definitions. The following terms shall have the following
meanings:
11.2.1. Action. The term "Action" shall mean any claim,
action, cause of action or suit (in contract or tort or otherwise),
arbitration or proceeding by or before any Governmental Authority.
11.2.2. Affiliate. The term "Affiliate" shall mean, as to any
specified Person at any time, (i) each Person directly or indirectly
controlling, controlled by or under direct or indirect common control
with such specified Person at such time, (ii) each Person who is or has
been within two years prior to the time in question an officer,
director or direct or indirect beneficial holder of at least 5% of any
class of the outstanding capital stock of such specified Person and the
members of the immediate family of each such officer, director or
holder (and, if such specified Person is a natural person, of such
specified Person), and (iii) each Person of which such specified Person
or an Affiliate (as defined in clauses (i) or (ii) above) thereof
shall, directly or indirectly, beneficially own at least 5% of any
class of outstanding capital stock or other evidence of beneficial
interest at such time, provided, however, that in the case the time in
question is after the Closing, the Shareholders and each of their
Affiliates (as determined by the provisions of this Section 11.2.2
other than this proviso) (other than the Buyer and the Company) shall
be deemed not to be Affiliates of the Buyer or
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the Company and the Buyer and the Company shall be deemed not to be
Affiliates of its Shareholders and such Persons, for any purposes of
this Agreement.
11.2.3. Business Day. The term "Business Day" shall mean any
day on which banking institutions in New York, New York are customarily
open for the purpose of transacting business.
11.2.4. By-laws. The term "By-laws" shall mean all by-laws
relating to such Person, as from time to time in effect.
11.2.5. Charter. The term "Charter" shall mean the certificate
or articles of incorporation or organization, statute, constitution,
joint venture or partnership agreement or articles or other charter
documents of any Person (other than an individual), each as from time
to time in effect.
11.2.6. Code. The term "Code" shall mean the Federal Internal
Revenue Code of 1986 or any successor statute, and the rules and
regulations thereunder, and in the case of any referenced section of
any such statute, rule or regulation, any successor section thereto,
collectively and as from time to time amended and in effect.
11.2.7. Contractual Obligation. The term "Contractual
Obligation" shall mean, with respect to any Person, any contract,
agreement, deed, mortgage, lease, license, commitment, undertaking,
arrangement or understanding, written or oral, or other document or
instrument including without limitation any document or instrument
evidencing or otherwise relating to any indebtedness but excluding the
Charter and Bylaws of such Person, to which or by which such Person is
a party or otherwise subject or bound or to which or by which any
property or right of such Person is subject or bound.
11.2.8. Distribution. The term "Distribution" shall mean, with
respect to the capital stock of or other evidence of beneficial
interest in any Person, (i) the declaration or payment of any dividend
on or in respect of any shares of any class of such capital stock or
beneficial interest; (ii) the purchase, redemption or other retirement
of any shares of any class of such capital stock or beneficial
interest, directly, or indirectly through a Subsidiary or otherwise;
(iii) any other distribution on or in respect of any shares of any
class of such capital stock or beneficial interest, or on or in respect
of any stock appreciation or similar right, and (iv) any payment or
other transfer of all or any part of any interest in any asset to any
Affiliate.
11.2.9. Effective Date. The term "Effective Date" shall mean
the date on which this Agreement becomes effective in accordance with
the the Corporation Law.
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11.2.10. Effective Time. The term "Effective Time" shall mean
the time at which the certificate of merger shall be filed in the
office of the Secretary of State of Florida in accordance with the
Corporation Law.
11.2.11. Enforceable. The term "Enforceable" shall mean, with
respect to any Contractual Obligation stated to be Enforceable by or
against any Person, that such Contractual Obligation is a legal, valid
and binding obligation enforceable by or against such Person in
accordance with its terms, except to the extent that enforcement of the
rights and remedies created thereby is subject to bankruptcy,
insolvency, reorganization, moratorium and other similar laws of
general application affecting the rights and remedies of creditors and
to general principles of equity (regardless of whether enforceability
is considered in a proceeding in equity or at law)
11.2.12. Governmental Authority. The term "Governmental
Authority" shall mean any U.S. Federal, state or local or any foreign
government, governmental authority, regulatory or administrative
agency, governmental commission, court or tribunal (or any department,
bureau or division thereof) or any arbitral body.
11.2.13. Governmental Order. The term "Governmental Order"
shall mean any order, writ, judgment, injunction, decree, stipulation,
determination or award entered by or with any Governmental Authority.
11.2.14. Knowledge. The term "knowledge" or any term of
similar meaning (i) with respect to any Person, shall be deemed to
include any information that such Person would have discovered upon a
reasonable investigation of the subject matter, (ii) with respect to
the Company, shall be deemed to include the knowledge of any
Shareholder, executive officer or director of the Company, and (iii)
with respect to Buyer shall be deemed to include the knowledge of any
executive officer of the Buyer.
11.2.15. Legal Requirement. The term "Legal Requirement" shall
mean any federal, state, local or foreign law, statute, standard,
ordinance, code, order, rule, regulation, resolution or promulgation,
or any order, judgment or decree of any Governmental Authority, or any
license, franchise, permit or similar right granted under any of the
foregoing, or any similar provision having the force and effect of law.
11.2.16. Lien. The term "Lien" shall mean any mortgage,
pledge, lien, security interest, charge, adverse or prior claim,
encumbrance, restriction on transfer, conditional sale or other title
retention device or arrangement (including without limitation a capital
lease), transfer for the purpose of subjection to the payment of any
indebtedness, or restriction on the creation of any of the foregoing,
whether relating to any property or right or the income or profits
therefrom; provided, however, that the term "Lien" shall not include
(i) statutory liens for Taxes to the extent that the payment thereof is
not in arrears or otherwise due, (ii) encumbrances in the nature of
zoning
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restrictions, easements, rights or restrictions of record on the use of
real property if the same do not detract from the value of such
property or impair its use in the business of the Company as currently
conducted, (iii) statutory or common law liens to secure landlords,
lessors or renters under leases or rental agreements confined to the
premises rented to the extent that no payment or performance under any
such lease or rental agreement is in arrears or is otherwise due, (iv)
deposits or pledges made in connection with, or to secure payment of,
worker's compensation, unemployment insurance, old age pension programs
mandated under applicable Legal Requirements or other social security
and (v) statutory or common law liens in favor of carriers,
warehousemen, mechanics and materialmen, statutory or common law liens
to secure claims for labor, materials or supplies and other like liens,
which secure obligations to the extent that payment thereof is not in
arrears or otherwise due.
11.2.17. Material Adverse Effect. The term "Material Adverse
Effect" shall mean any change in or effect on the assets, condition or
prospects, financial or otherwise, of the Company or the Buyer, as the
case may be, which, when considered either singly or in the aggregate
together with all other adverse changes or effects with respect to
which such phrase is used in this Agreement, is materially adverse to
the Company or the Buyer, as the case may be.
11.2.18. Merger. The term "Merger" shall mean the merger of
Summit Sub with and into the Company in accordance with the terms and
conditions of this Agreement.
11.2.19. Person. The term "Person" shall mean any individual,
partnership, corporation, association, trust, joint venture,
unincorporated organization or other entity, and any government,
governmental department or agency or political subdivision thereof.
11.2.20. Subsidiary. The term "Subsidiary" shall mean any
Person of which the Company (or other specified Person) shall own
directly or indirectly through a Subsidiary, a nominee arrangement or
otherwise at least a majority of the outstanding capital stock (or
other shares of beneficial interest) presently entitled to vote
generally or at least a majority of the partnership, joint venture or
similar interests, or in which the Company (or other specified Person)
is a general partner or joint venturer without limited liability.
11.2.21. Taxes. The term "Taxes" shall mean any federal,
state, local, or foreign income, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation, premium, windfall
profits, environmental (including taxes under Code Section 59A),
customs duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real or personal
property, sales, use, transfer, registration, value added, alternative
or add-on minimum, estimated, or other
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tax of any kind whatsoever, including any interest, penalty, or
addition thereto, whether disputed or not.
11.2.22. Tax Return. The term "Tax Return" shall mean all
federal, state, local and foreign Tax returns, Tax reports, claims for
refund of Tax and declarations of estimated Tax, or other statement
relating to Taxes and any schedule or attachments to any of the
foregoing.
12. GOVERNING LAW.
12.1. Governing Law. This Agreement shall be governed by and construed
in accordance with the domestic substantive laws of The Commonwealth of
Massachusetts, without giving effect to any choice or conflict of law provision
or rule that would cause the application of the domestic substantive laws of any
other jurisdiction.
12.2. Consent to Jurisdiction. Each of the parties agrees that all
actions, suits or proceedings arising out of or based upon this Agreement or the
subject matter hereof may be brought and maintained in the federal and state
courts of the State of Florida. Each of the parties hereto by execution hereof
(i) hereby irrevocably submits to the jurisdiction of the federal and state
courts in the State of Florida for the purpose of any action, suit or proceeding
arising out of or based upon this Agreement or the subject matter hereof and
(ii) hereby waives to the extent not prohibited by applicable law, and agrees
not to assert, by way of motion, as a defense or otherwise, in any such action,
suit or proceeding, any claim that he or it is not subject personally to the
jurisdiction of the above-named courts, that he or it is immune from
extraterritorial injunctive relief or other injunctive relief, that his or its
property is exempt or immune from attachment or execution, that any such action,
suit or proceeding may not be brought or maintained in one of the above-named
courts, that any such action, suit or proceeding brought or maintained in one of
the above-named courts should be dismissed on grounds of forum non conveniens,
should be transferred to any court other than one of the above-named courts,
should be stayed by virtue of the pendency of any other action, suit or
proceeding in any court other than one of the above-named courts, or that this
Agreement or the subject matter hereof may not be enforced in or by any of the
above-named courts. Each of the parties hereto hereby consents to service of
process in any such suit, action or proceeding in any manner permitted by the
laws of the State of Florida, agrees that service of process by registered or
certified mail, return receipt requested, at the address specified in or
pursuant to Section 17 is reasonably calculated to give actual notice and waives
and agrees not to assert by way of motion, as a defense or otherwise, in any
such action, suit or proceeding any claim that service of process made in
accordance with Section 17 does not constitute good and sufficient service of
process. The provisions of this Section 12.2 shall not restrict the ability of
any party to enforce in any court any judgment obtained in a federal or state
court of the State of Florida.
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12.3. Waiver of Jury Trial. To the extent not prohibited by applicable
law which cannot be waived, each of the parties hereto hereby waives, and
covenants that he or it will not assert (whether as plaintiff, defendant, or
otherwise), any right to trial by jury in any forum in respect of any issue,
claim, demand, cause of action, action, suit or proceeding arising out of or
based upon this Agreement or the subject matter hereof, in each case whether now
existing or hereafter arising and whether in contract or tort or otherwise. Any
of the parties hereto may file an original counterpart or a copy of this Section
12.3 with any court as written evidence of the consent of each of the parties
hereto to the waiver of his or its right to trial by jury.
12.4. Reliance. Each of the parties hereto acknowledges that he or it
has been informed by each other party that the provisions of Section 12
constitute a material inducement upon which such party is relying and will rely
in entering into this Agreement and the transactions contemplated hereby.
13. TERMINATION.
13.1. Termination of Agreement. This Agreement may be terminated by the
parties only as provided below:
(a) The Buyer and the Shareholders may terminate this Agreement by
mutual written consent at any time prior to the Closing.
(b) The Buyer may terminate this Agreement by giving written notice to
the Shareholders at any time prior to the Closing in the event there has been a
material breach of any representation or warranty made by the Shareholders or
the Company in this Agreement (including without limitation the Exhibits hereto)
(as each such representation or warranty would read if all qualifications as to
materiality (including without limitation in the definition of Material Adverse
Effect) or knowledge were deleted therefrom) or a material breach or material
violation by the Shareholders or the Company of any covenant or agreement made
in or any duty with respect to this Agreement (including without limitation the
Exhibits hereto).
(c) The Shareholders may terminate this Agreement by giving written
notice to the Buyer at any time prior to the Closing in the event there has been
a material breach of any representation or warranty made by the Buyer in this
Agreement (including without limitation the Exhibits hereto) (as each such
representation or warranty would read if all qualifications as to materiality
(including without limitation in the definition of Material Adverse Effect) or
knowledge were deleted therefrom) or a material breach or material violation by
the Buyer of any covenant or agreement made in or any duty with respect to this
Agreement (including without limitation the Exhibits hereto).
(d) The Buyer may terminate this Agreement by giving written notice to
the Shareholders at any time on or after June 30, 1996 (the "Final Termination
Date") but prior to
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the Closing if the Closing shall not have occurred on or before the Final
Termination Date by reason of the failure of any condition set forth in Section
8 to be satisfied (unless the failure results primarily from one or more
breaches or violations of this Agreement by the Buyer or inaccuracies in
representations of the Buyer hereunder).
(e) The Shareholders may terminate this Agreement by giving written
notice to the Buyer at any time on or after the Final Termination Date but prior
to the Closing if the Closing shall not have occurred on or before the Final
Termination Date by reason of the failure of any condition set forth in Section
9 to be satisfied (unless the failure results primarily from one or more
breaches or violations of this Agreement by the Shareholders or the Company or
inaccuracies in representations of the Shareholders or the Company hereunder).
13.2. Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 13.1, all obligations of the parties hereunder
shall terminate without any liability of any party to any other party; provided,
however, that no termination of this Agreement shall relieve any party of
liabilities in respect of any breaches or violations of this Agreement or any
duty with respect hereto by such party or any inaccuracies in any
representations by such party hereunder prior to termination.
14. SECURITIES ACT AND POOLING RESTRICTIONS
14.1. Shares not Registered. The Shareholders acknowledge that the
Buyer Common Stock to be delivered to the Shareholders pursuant to this
Agreement has not and will not be registered under the 1933 Act and may not be
resold except pursuant to an effective registration statement under the 1933 Act
or pursuant to an exemption from registration. Except for and subject to Section
15, the Buyer Common Stock to be acquired by the Shareholders pursuant to this
Agreement is being acquired solely for their own account, for investment
purposes only, with no present intention of distributing, selling or otherwise
disposing of it in connection with a distribution.
14.2. Economic Risk; Sophistication. The Shareholders are able to bear
the economic risk of an investment in the Buyer Common Stock acquired pursuant
to this Agreement and can afford to sustain a total loss on such investment and
have such knowledge and experience in financial and business matters that they
are capable of evaluating the merits and risks of the proposed investment and
therefore have the capacity to protect their own interests in connection with
the acquisition of the Buyer Common Stock. The Shareholders have had an adequate
opportunity to ask questions and receive answers from the officers of the Buyer
concerning any and all matters relating to the business, operations and
prospectus of the Buyer. The Shareholders have asked any and all questions in
the nature described in the preceding sentence and all questions have been
answered to their satisfaction.
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14.3. Restrictions on Resale; Legends. The Shareholders covenant and
agree that they will not offer, sell, assign, pledge, hypothecate, transfer or
otherwise dispose of the Buyer Common Stock to be acquired by them pursuant to
this Agreement except after full compliance with all of the applicable
provisions of the 1933 Act and the rules and regulations promulgated by the SEC
thereunder. The certificates of Buyer Common Stock issued pursuant to the Merger
shall bear the following legend until such time as the registration statement
relating thereto has been declared effective by the SEC:
THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 AND MAY ONLY BE SOLD OR OTHERWISE TRANSFERRED IF
THE HOLDER HEREOF COMPLIES WITH THE PROVISIONS OF SUCH ACT.
14.4. Restrictions on Transfer of Common Stock and Buyer Common Stock.
Until the publication by Buyer of financial results which include at least 30
days of combined results of operations of Buyer and the Company, the
Shareholders covenant and agree with Buyer that they will not, without the prior
written consent of Buyer, transfer, sell, assign, pledge, hypothecate, give,
create a security interest in or lien on, place in trust, assign or in any other
way encumber or dispose of, directly or indirectly and whether or not by
operation of law or for value ("Transfer"), any shares of Common Stock or Buyer
Common Stock, except for (a) a Transfer between a Shareholder and such
Shareholder's spouse or children, or trust for the benefit of any of them, or
(b) a Transfer between a Shareholder and such Shareholder's guardian or
conservator and, upon the death of such Shareholder, such Shareholder's
executor, administrator and heirs. Buyer agrees to file in a timely manner all
reports it is required to file under the 1934 Act.
15. REGISTRATION RIGHTS.
15.1. General. Prior to the Closing, Buyer shall file (and shall use
its reasonable efforts to cause to become effective as soon as practicable
following the date on which Buyer makes publicly available financial results
covering at least 30 days of post-Merger combined operations of Buyer and the
Company) a registration statement on Form S-3 under the 1933 Act, covering the
Registrable Securities. As used herein, the term "Registrable Securities" shall
mean the shares of Buyer Common Stock issued to the Shareholders in connection
with the Merger; provided, however, that once issued, such shares of Buyer
Common Stock and other securities shall cease to be Registrable Securities when
(x) a registration statement with respect to the sale of such securities shall
have become effective under the 1933 Act and such securities shall have been
disposed of in accordance with such registration statement, (y) they shall have
been sold pursuant to Rule 144 promulgated under the 1933 Act ("Rule 144"), or
(z) they shall have ceased to be outstanding.
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15.2. Expenses. Buyer or the Company shall pay all expenses incident to
Buyer's performance of or compliance with its obligations under this Section 15
to effect the registration of Registrable Securities required hereunder,
including, without limitation, all registration, filing, and listing fees, all
registration, filing, qualification and other fees and expenses of complying
with securities or blue sky laws, all word processing, duplicating and printing
expenses, messenger, shipping and delivery expenses, the fees and disbursement
of counsel for the Company and of its independent public accountants, and any
legal fees and expenses of up to $10,000 of counsel retained by the
Shareholders, and further excluding any fees and disbursement of underwriters,
underwriting discounts and commissions and transfer taxes, if any, in respect of
Registrable Securities, which fees, expenses, discounts, commissions and taxes
in respect of Registrable Securities shall be payable by the holders thereof (in
the case of an underwritten offering and the underwriter's fees, expenses,
discounts or commissions, pro rata among such holders in proportion to the
number of Registrable Securities being sold by them). Buyer will use reasonable
efforts to effect the registration of such Registrable Securities in accordance
with any intended method of disposition thereof specified in writing by holders
of a majority of the Registrable Securities.
15.3. Further Obligations. Without limiting the foregoing, Buyer will:
(a) prepare and file with the SEC, the registration statements on Form
S-3 to effect such registrations (including such audited financial statements as
may be required by the 1933 Act) and use its reasonable efforts to cause such
registration statement to become effective in the time frame outlined in Section
15.1; provided, that as far in advance as practical before filing such
registration statement or any amendment thereto, and in any event at least five
(5) days prior to any such filing, Buyer will furnish to the Shareholders copies
of reasonably complete drafts of all such documents proposed to be filed
(including any registration statement and including exhibits), and any
Shareholder shall have the opportunity to object to any information pertaining
solely to such holder that is contained therein and Buyer will make the
corrections reasonably requested by such Shareholders with respect to such
information prior to filing any such registration statement or amendment;
(b) prepare and file with the SEC such amendments and supplements to
such registration statements and any prospectus used in connection therewith as
may be necessary to maintain the effectiveness of such registration statements
and to comply in all material respects with the requirements of the 1933 Act
with respect to the disposition of all Registrable Securities included in such
registration statement, in accordance with the intended methods of disposition
thereof, until the earlier of (i) such time as all of such securities have been
disposed of in accordance with the intended methods of disposition by the seller
or sellers thereof set forth in such registration statement or (ii) two years
after the Closing Date, and in the event that any Registrable Securities remain
unsold at the end of such period, Buyer may file a post-effective amendment to
the registration statement for the purpose of removing such Registrable
Securities from registered status;
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(c) promptly notify each holder of Registrable Securities and the
underwriter or underwriters, if any:
(i) when such registration statement or any prospectus used in
connection therewith, or any amendment or supplement thereto, has been
filed and, with respect to such registration statement or any
post-effective amendment thereto, when the same has become effective;
(ii) of any written request by the SEC for amendments or
supplements to such registration statement or prospectus or for
supplemental information;
(iii) of the notification to Buyer by the SEC of its
initiation of any proceeding with respect to the issuance by the SEC
of, or of the issuance by the SEC of, any stop order suspending the
effectiveness of such registration statement; and
(iv) of the receipt by Buyer of any notification with respect
to the suspension of the qualification of any Registrable Securities
for sale under the applicable securities or blue sky laws of any
jurisdiction;
(d) furnish to each holder of Registrable Securities included in the
registration statement such number of conformed copies of the registration
statement and of each amendment and supplement thereto (in each case including
all exhibits and documents incorporated by reference), such number of copies of
the prospectus contained in such registration statement (including each
preliminary prospectus and any prospectus supplement) and any other prospectus
filed under Rule 424 promulgated under the 1933 Act relating to such holder's
Registrable Securities, and such other documents, as such seller may reasonably
request to facilitate the disposition of such holder's Registrable Securities;
(e) use its reasonable best efforts to register or qualify or receive
an exemption for all Registrable Securities included in the registration
statement under such other securities or blue sky laws of such jurisdictions as
each holder thereof shall reasonably request which request is made within ten
(10) days following the original filing of the registration statement and to
keep such registration or qualification in effect for so long as the
registration statement remains in effect, and take any other action which may be
reasonably necessary or advisable to enable such holder to consummate the
disposition in such jurisdictions of the Registrable Securities owned by such
holder, except that Buyer shall not for any such purpose be required (i) to
qualify generally to do business as a foreign corporation in any jurisdiction
wherein it would not but for the requirements of this paragraph (e) be obligated
to be so qualified, (ii) to consent to general service of process in any such
jurisdiction or (iii) to subject itself to taxation in any such jurisdiction by
reason of such registration or qualification; and
(f) use all reasonable efforts to obtain withdrawal of any order
suspending the effectiveness of a registration statement, or the lifting of any
suspension of qualification (or
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exemption from qualification) of the offer and sale of any of the Registration
Securities in any jurisdiction.
Buyer may require each Shareholder whose Registrable Securities are
being registered to, and each such holder as a condition to including
Registrable Securities in such registration shall, furnish Buyer and any
underwriters with such information and affidavits regarding such holder and the
distribution of such securities as Buyer and such underwriters may from time to
time reasonably request in writing and to otherwise cooperate in connection with
such registration. At any time during the effectiveness of the registration
statement covering Registrable Securities offered by a holder, if such holder
becomes aware of any change materially affecting the accuracy of the information
contained in such registration statement or the prospectus (as then amended or
supplemented) relating to such holder, it will immediately notify Buyer of such
change.
Upon receipt of any notice from Buyer of the existence of any facts as
a result of which any prospectus included 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, in the light of the circumstances under which they were
made, not misleading, each holder of Registrable Securities will forthwith
discontinue such holder's disposition of Registrable Securities pursuant to the
registration statement until such Holder receives copies of a supplemented or
amended prospectus from Buyer and, if so directed by Buyer, shall deliver to
Buyer (at Buyer's expense) all copies, other than permanent file copies, then in
such holder's possession of the prospectus relating to such Registrable
Securities current at the time of receipt of such notice. If requested by Buyer,
the Shareholders shall not effect any sales using the prospectus for a period
not to exceed 180 days if, in the good faith determination of Buyer's board of
directors, premature disclosure of any information that would be required to be
included in the prospectus would be detrimental to the Buyer. In the event Buyer
shall give any such notice, the period referred to in paragraph (b) of this
Section 15.3 shall be extended by a number of days equal to the number of days
during the period from the giving of such notice from Buyer to stop trading to
the date when the copies of the supplemented or amended prospectus are sent to
holders whose Registrable Securities are included in such registration
statement.
15.4. Indemnification.
(a) Buyer shall, to the full extent permitted by law, indemnify and
hold harmless each seller of Registrable Securities included in the registration
statement filed pursuant to this Section 15, its directors, officers, and
partners, and each other Person, if any, who controls any such seller within the
meaning of the 1933 Act, against any Losses to which such seller or any such
director, officer, partner or controlling Person may become subject under the
1933 Act or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon any untrue
statement of any material fact contained in such registration statement, any
preliminary prospectus, final prospectus or prospectus
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supplement contained therein or filed with the Commission, or any amendment or
supplement thereto, or any omission to state therein a material fact required to
be stated therein or necessary to make the statements therein (in the case of a
prospectus, in the light of the circumstances under which they were made) not
misleading; provided, that Buyer shall not be liable in any such case to the
extent that any such loss, claim, damage or liability (or action in respect
thereof) arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in any such registration
statement, preliminary prospectus, final prospectus, amendment or supplement in
reliance upon and in conformity with information furnished to Buyer by such
seller. Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such seller or any such director, officer,
partner or controlling Person, and shall survive the transfer of such securities
by such seller.
(b) Each Person whose Registrable Securities are included or are to be
included in the registration statement filed pursuant to this Section 15, as a
condition to including such holder's Registrable Securities in each registration
statement, shall, to the full extent permitted by law, indemnify and hold
harmless Buyer, its directors and officers, and each other Person, if any, who
controls Buyer within the meaning of the 1933 Act, against any Losses to which
Buyer or any such director or officer or controlling Person may become subject
under the 1933 Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement of any material fact contained in any such registration
statement, any preliminary prospectus, final prospectus or prospectus supplement
contained therein or filed with the Commission, or any amendment or supplement
thereto, or any omission to state therein a material fact required to be stated
therein or necessary to make the statements therein (in the case of a
prospectus, in the light of the circumstances under which they were made) not
misleading, if such untrue statement or omission was made in reliance upon and
in conformity with written information furnished to Buyer by such seller
specifically stating that it is for use in the preparation of such registration
statement, preliminary prospectus, final prospectus, amendment or supplement;
provided, however, that the obligation to provide indemnification pursuant to
this Section 15 shall be several, and not joint and several, among such
indemnifying parties on the basis of the number of Registrable Securities of
each such indemnifying party included in such registration statement.
Notwithstanding any contrary provision of Section 10, the indemnification
obligation of the Shareholders under this Section 15 shall in no way be limited
to (and Buyer shall not be constrained to seek in response to any failure to
provide indemnity pursuant to this Section 15) recourse against Buyer Common
Stock held by the Escrow Agent. The foregoing indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of Buyer
or any such director, officer or controlling Person and shall survive the
transfer of such securities by such seller. Such holders shall also indemnify
each other Person who participates (including as an underwriter) in the offering
or sale of Registrable Securities, their officers and directors and each other
Person, if any, who controls any such participating Person within the meaning of
the 1933 Act to the same extent as provided above with respect to Buyer.
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(c) Promptly after receipt by any party of notice of the commencement
of any action or proceeding involving a claim referred to in the preceding
paragraph (a) or (b) of this Section 15.4, such party shall, if a claim in
respect thereof is to be made against another party pursuant to such paragraphs,
give written notice to the latter of the commencement of such action, provided
that any failure of any Person to give notice as provided herein shall not
relieve any other Person of its obligations under the preceding paragraph of
this Section 15.4, except to the extent that such other Person is actually
prejudiced by such failure. In case any such action is brought, the party
obligated to indemnify pursuant to the foregoing provisions of this Section 15.4
shall be entitled to participate in and, unless, in the reasonable judgment of
any indemnified party, a conflict of interest between such indemnified party and
any indemnifying party exists with respect to such claim, to assume the defense
thereof, jointly with any other indemnifying party similarly notified to the
extent that it may wish, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party for any legal
or other expenses subsequently incurred by the latter in connection with the
defense thereof other than reasonable costs of investigation; provided that the
indemnified party may participate in such defense at the indemnified party's
expense. No indemnifying party shall 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 each indemnified party of a release from
all liability in respect to such claim or litigation without the consent of the
indemnified party. No indemnifying party shall be subject to any liability for
any settlement made without its consent, which consent shall not be unreasonably
withheld.
(d) If the indemnity and reimbursement obligation provided for in any
paragraph of this Section 15.4 is unavailable or insufficient to hold harmless a
party entitled to indemnification hereunder in respect of any losses, claims,
damages or liabilities (or actions with respect thereto) referred to therein,
the party obligated to indemnify hereunder shall contribute to the amount paid
or payable by the indemnified party as a result of such losses, claims, damages
or liabilities (or actions) in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and the indemnified
party on the other hand in connection with statements or omissions which
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. Relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the indemnifying party or the indemnified
party and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission. The parties
hereto agree that it would not be just and equitable if contributions pursuant
to this paragraph were to be determined by pro rata allocation or by any other
method of allocation which does not take account of the equitable considerations
referred to in the first sentence of this paragraph. No Person guilty of
fraudulent
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misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to contribution from any Person not guilty of such fraudulent
misrepresentation.
16. MISCELLANEOUS.
16.1. Entire Agreement; Waivers. This Agreement constitutes the entire
agreement among the parties hereto pertaining to the subject matter hereof and
supersedes all prior and contemporaneous agreements, understandings,
negotiations and discussions, whether oral or written, of the parties with
respect to such subject matter. No waiver of any provision of this Agreement
shall be deemed to or shall constitute a waiver of any other provision hereof
(whether or not similar), shall constitute a continuing waiver unless otherwise
expressly provided nor shall be effective unless in writing and executed (i) in
the case of a waiver by the Buyer, by the Buyer, and (ii) in the case of a
waiver by any Shareholders, by the Shareholders.
16.2. Amendment or Modification, etc. The parties hereto may not amend
or modify this Agreement except in such manner as may be agreed upon by a
written instrument executed by the Buyer and the Shareholders. Any written
amendment, modification or waiver executed by the Buyer and the Shareholders
shall be binding upon the Buyer and the Shareholders.
16.3. Headings, etc. Section and subsection headings are not to be
considered part of this Agreement, are included solely for convenience, are not
intended to be full or accurate descriptions of the content thereof and shall
not affect the construction hereof. This Agreement shall be deemed to express
the mutual intent of the parties, and no rule of strict construction shall be
applied against any party.
16.4. Exhibits; Listed Documents, etc. The description of any item,
matter or document in any Exhibit hereto for the purpose of modifying,
qualifying or disclosing any exemption to any representation or warranty of any
party made herein, shall be sufficient to comply with and apply to any and all
Exhibits, representations and warranties hereunder notwithstanding the absence
of reference to such other Exhibits, representations or warranties. Any matter
disclosed in any Exhibit hereto shall be deemed sufficient disclosure for all
other purposes of this Agreement. All Exhibits are a part of this Agreement.
16.5. Severability. In the event that any provision hereof would, under
applicable law, be invalid or unenforceable in any respect, such provision shall
(to the extent permitted by applicable law) be construed by modifying or
limiting it so as to be valid and enforceable to the maximum extent compatible
with, and possible under, applicable law. The provisions hereof are severable,
and in the event any provision hereof should be held invalid or unenforceable in
any respect, it shall not invalidate, render unenforceable or otherwise affect
any other provision hereof.
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<PAGE> 51
16.6. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one and the same instrument.
16.7. Successors and Assigns. All of the terms and provisions of this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective transferees, successors and assigns (each of which
such transferees, successors and assigns shall be deemed to be a party hereto
for all purposes hereof); provided, however, that (i) no party may transfer any
of its rights or obligations hereunder without the consent of the Buyer and the
Shareholders, except that, without the consent of the Shareholders, Buyer may
assign its rights hereunder to a wholly-owned subsidiary of Buyer, and (ii) no
transfer or assignment by any party shall relieve such party of any of its
obligations hereunder. Except as expressly provided herein, this Agreement shall
not confer any right or remedy upon any Person other than the parties and their
respective transferees, successors and assigns.
16.8. Third Parties. Unless expressly stated herein to the contrary,
nothing in this Agreement, whether express or implied, is intended to confer any
rights or remedies under or by reason of this Agreement on any persons other
than the parties hereto and their respective legal representatives, successors
and permitted assigns, nor is anything in this Agreement intended to relieve or
discharge the obligation or liability of any third persons to any party to this
Agreement, nor shall any provision give any third persons any right of
subrogation or action over or against any party to this Agreement.
16.9. Governing Law. This Agreement and all transactions contemplated
by this Agreement shall be governed by, and construed in and enforced in
accordance with, the internal laws of The Commonwealth of Massachusetts without
regard to principles of conflicts of laws thereof.
16.10. Brokers. Except pursuant to Section 4.20 hereof, each of the
parties represents and warrants that such party has dealt with no broker or
finder in connection with any of the transactions contemplated by this
Agreement, and, insofar as such party knows, no broker or other person is
entitled to any commission or finder's fee in connection with any of these
transactions. The parties each agree to indemnify and hold harmless one another
against any loss, liability, damage, cost, claim or expense incurred by reason
of any brokerage commission or finder's fee alleged to be payable because of any
act, omission or statement of the indemnifying party.
17. NOTICES.
Any notices or other communications required or permitted hereunder
shall be effective if in writing and delivered personally or sent by telecopier,
Federal Express, or registered or certified mail, postage prepaid, addressed as
follows:
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<PAGE> 52
<TABLE>
<S> <C>
If to the Shareholders:
With a copy to:
Creslin Limited Gunster, Yoakley, Valdes-Fauli & Stewart, P.A.
350 SW 12 Avenue Broward Financial Center - Suite 1400
Deerfield Beach, FL 33442 500 East Broward Boulevard
Fort Lauderdale, FL 33394
Attention: Michael G. Platner, Esq.
Mr. Mordechai Golan
350 SW 12 Avenue
Deerfield Beach, FL 33442
If to the COMPANY: With a copy to:
Lens Express, Inc. Gunster, Yoakley, Valdes-Fauli & Stewart, P.A.
350 SW 12 Avenue Broward Financial Center - Suite 1400
Deerfield Beach, FL 33442 500 East Broward Boulevard
Attention: Mr. Menderes Akdag Fort Lauderdale, FL 33394
Attention: Michael G. Platner, Esq.
If to the BUYER OR
SUMMIT SUB: With a copy to:
Summit Technology, Inc. Ropes & Gray
21 Hickory Drive One International Place
Waltham, MA 02154 Boston, MA 02110
Attention: General Counsel Attention: David C. Chapin, Esq.
</TABLE>
Unless otherwise specified herein, such notices or other communications shall be
deemed effective (a) on the date delivered, if delivered personally, (b) two
business days after being sent by Federal Express, if sent by Federal Express,
(c) one business day after being delivered, if delivered by telecopier with
confirmation of good transmission, and (d) three business days after being sent,
if sent by registered or certified mail. Each of the parties hereto shall be
entitled to specify a different address by giving notice as aforesaid to each of
the other parties hereto.
[SPACE INTENTIONALLY LEFT BLANK]
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<PAGE> 53
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have hereunto set their hands under seal, as of the date first above
written.
SHAREHOLDERS:
CRESLIN LIMITED
By: /s/ Peter E. Leppard
-----------------------------------
Title: Director
/s/ Mordechai Golan
--------------------------------------
MORDECHAI GOLAN
/s/ Menderes Akdag
--------------------------------------
MENDERES AKDAG
/s/ Huseyin Kizanlikli
--------------------------------------
HUSEYIN KIZANLIKLI
COMPANY:
LENS EXPRESS, INC.
By: /s/ Mordechai Golan
-----------------------------------
Title: Chairman
SUMMIT:
SUMMIT TECHNOLOGY, INC.
By: /s/ David F. Muller
-----------------------------------
Title: Chief Executive Officer
SUMMIT SUB:
SUMMIT ACQUISITION CORPORATION
By: /s/ David F. Muller
-----------------------------------
Title: President
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<PAGE> 54
LIST OF EXHIBITS
3.5 - General Escrow Agreement
3.5 - Litigation Escrow Agreement
4.2 - Financial Statements
4.3 - Absence of Certain Changes or Events
4.4(a) - Leases
4.4(c) - Equipment
4.4(d) - Proprietary Rights
4.4(e) - Accounts Receivable
4.4(f) - Title to Assets
4.5 - Non-Contravention
4.6 - Tax Matters
4.7 - Litigation
4.8(a) - Employee Names and Compensation
4.8(b) - Legal Compliance
4.8(c) - Collective Bargaining Agreements
4.8(d) - Employee Benefit Plans
4.9 - Insurance
4.10 - Material Agreements
4.11 - Liabilities
4.12 - Conflicts of Interest
<PAGE> 55
4.15 - Managed Vision Inc.; Managed Vision Ltd.
4.17 - Compliances; Permits
4.18 - Product Liability and Recalls
4.19 - Regulatory Compliance
8.7 - Form of Company Counsel's Opinion
8.8 - Form of Non-Disclosure and Non-Competition Agreement
8.9 - Terms of Menderes Akdag Employment Agreement
9.5 - Form of Opinion of Summit's Counsel
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