<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended SEPTEMBER 30, 1997 Commission File Number 0-21068
SIGHT RESOURCE CORPORATION
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 04-3181524
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 Jeffrey Avenue
Holliston, MA 01746
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(Address of principal executive offices)
508-429-6916
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(Issuer's telephone number)
Registrant formerly located at N/A
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(Former name, former address and former fiscal year, if changed since the last
report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
for such shorter period that the issuer was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
Yes X No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS:
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
On November 5, 1997, 8,756,500 shares of common stock, par value $0.01 per
share, were outstanding.
TOTAL PAGES 15
EXHIBIT INDEX AT PAGE 14
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SIGHT RESOURCE CORPORATION
INDEX
<TABLE>
<CAPTION>
<S> <C>
PART I. FINANCIAL INFORMATION PAGE
----
Item 1 Financial Statements
Consolidated Balance Sheet as of September 30, 1997, and
December 31, 1996 3
Consolidated Statement of Operations for the Three and Nine
Months Ended September 30, 1997 and 1996 4
Consolidated Statement of Cash Flows for the Nine
Months Ended September 30, 1997 and 1996 5
Notes to Consolidated Financial Statements 6
Item 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations 10
PART II. OTHER INFORMATION
Item 6 Exhibits and Reports on Form 8-K 14
Signatures 15
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
SIGHT RESOURCE CORPORATION
Consolidated Balance Sheets
(In thousands, except share and per share data)
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 3,883 $ 9,924
Accounts receivable, net of allowances
of $515 and $353, respectively 2,509 1,405
Inventories 4,133 2,489
Prepaid expenses and other current assets 803 286
Assets held for sale 56 458
-------- --------
Total current assets 11,384 14,562
-------- --------
Property and equipment 10,169 6,030
Less accumulated depreciation (4,236) (1,095)
-------- --------
Net property and equipment 5,933 4,935
-------- --------
Other assets:
Intangible assets, net 15,170 11,768
Other assets 1,399 165
-------- --------
Total other assets 16,569 11,933
-------- --------
$ 33,886 $ 31,430
======== ========
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Revolving note payable $ 1,475 $ 475
Current portion of long term debt 1,000 800
Accounts payable 2,678 1,843
Accrued expenses 4,682 3,670
-------- --------
Total current liabilities 9,835 6,788
-------- --------
Non-current liabilities:
Long term debt, less current maturities --- 1,600
Other liabilities 1,163 276
-------- --------
Non-current liabilities 1,163 1,876
-------- --------
Stockholders' equity:
Preferred Stock, $.01 par value. Authorized 5,000,000
shares; no shares issued and outstanding -- --
Common Stock, $.01 par value. Authorized 20,000,000
shares; issued 8,756,500 at September 30, 1997
and 8,648,768 at December 31, 1996 88 86
Additional paid-in capital 38,282 37,510
Common Stock issuable, 71,181 shares at September 30,
1997 and December 31, 1996 432 432
Treasury stock at cost
(shares at September 30, 1997: 30,600) (137) --
Accumulated deficit (15,777) (15,262)
-------- --------
Total stockholders' equity 22,888 22,766
-------- --------
$ 33,886 $ 31,430
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 4
SIGHT RESOURCE CORPORATION
Consolidated Statements of Operations
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30, September 30, September 30,
1997 1996 1997 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net revenue $12,674 $9,764 $33,141 $21,342
Cost of revenue 4,463 3,787 12,058 8,331
------- ------ ------- -------
Gross profit 8,211 5,977 21,083 13,011
Selling, general and administrative expenses 8,364 6,702 22,102 15,148
------- ------ ------- -------
Loss from operations (153) (725) (1,019) (2,137)
------- ------ ------- -------
Other income (expense)
Interest income 69 169 292 349
Interest expense (89) (38) (261) (151)
Gain on sale of assets 251 -- 474 --
------- ------ ------- -------
Total other income 231 131 505 198
------- ------ ------- -------
Net income (loss) $ 78 $ (594) $ (514) $(1,939)
======= ====== ======= =======
Earnings (loss) per common share $ 0.01 $(0.07) $ (0.06) $ (0.28)
======= ====== ======= =======
Weighted average number of common
shares outstanding 8,782 8,158 8,639 6,988
======= ====== ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 5
SIGHT RESOURCE CORPORATION
Consolidated Statements of Cash Flows
(In thousands)
<TABLE>
<CAPTION>
Nine Months Ended
September 30, September 30,
1997 1996
------------- -------------
<S> <C> <C>
Operating activities:
Net loss $ (514) $(1,939)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 1,482 1,497
Gain on sale of assets (474) --
Changes in operating assets and liabilities:
Accounts receivable (590) (358)
Inventories (727) 30
Prepaid expenses and other current assets (530) (222)
Accounts payable and accrued expenses (527) (1,185)
------- -------
Net cash used in operating activities (1,880) (2,177)
------- -------
Investing activities:
Purchases of property and equipment (1,284) (767)
Acquisition of subsidiaries (2,075) (2,854)
Proceeds from sale of assets 1,005 --
Other assets (430) (4)
------- -------
Net cash used in investing activities (2,784) (3,625)
------- -------
Financing activities:
Principal payments on long term debt (1,279) (300)
Net proceeds from issuance of common stock -- 9,935
Other liabilities 39 (349)
Purchase of common stock for treasury (137) --
------- -------
Net cash (used in) provided by financing activities (1,377) 9,286
------- -------
Net increase (decrease) in cash and cash equivalents (6,041) 3,484
Cash and cash equivalents, beginning of period 9,924 8,035
------- -------
Cash and cash equivalents, end of period $ 3,883 $11,519
======= =======
Supplemental Disclosure:
Interest paid $ 283 $ 158
======= =======
Equity issued associated with Credit Agreement $ 180 $ --
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE> 6
SIGHT RESOURCE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(1) THE COMPANY
(a) Nature of Business
The business of Sight Resource Corporation is to participate in the
delivery of a complete range of eye care products and services through
integrated networks of opticians, optometrists and ophthalmologists.
(b) US Acquisitions
During 1995, the Company acquired two primary eye care chains,
effective January 1, 1995 and July 1, 1995, respectively. The aggregate
purchase price paid in connection with the acquisitions consisted of
(i) $2,660 in cash, (ii) 555,525 shares of common stock, (iii) the
assumption of approximately $1,600 of net liabilities, and (iv) $660
payable over a 3 year period and $250 payable over 18 months,
contingent upon the occurrence of certain future events. The
transactions were accounted for using the purchase method of
accounting.
Effective July 1, 1996, the Company purchased certain assets and
assumed certain liabilities of The E.B. Brown Optical Company and Brown
Optical Laboratories, Inc. as well as entered into a merger with E.B.
Brown Opticians, Inc. (together "EB Brown") for approximately $4,000 in
cash, 521,997 shares of common stock issued, 71,181 shares of common
stock to be issued and $1,400 in notes payable over an eighteen month
period. EB Brown operated forty-two eye care centers located throughout
Ohio and Western Pennsylvania which provide optometric and audiology
goods and services to persons with vision and hearing disorders. The
transaction was accounted for using the purchase method of accounting.
Effective July 1, 1997, the Company acquired one hundred percent of the
outstanding shares of stock of Vision Holdings, Ltd. (formerly known as
Dr. Greenberg, an Optometry Corporation ("Dr. Greenberg")). The
purchase price paid in connection with this acquisition was $2,000 of
cash on hand and the assumption and payment of notes payable
outstanding as of July 1, 1997 of approximately $800. Dr. Greenberg
operated seventeen eye care centers in Southeast Louisiana and
Mississippi. The acquisition was accounted for using the purchase
method of accounting.
The results of operations of the four acquisitions have been included
in the consolidated financial statements from their respective dates of
acquisition. The excess of the purchase price and expenses associated
with each acquisition over the estimated fair value of the net assets
acquired has been recorded as goodwill.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of Presentation
The accompanying consolidated financial statements have been prepared
by the Company without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission. In the opinion of the Company,
these consolidated financial statements contain all adjustments
(consisting of only normal, recurring adjustments) necessary to present
fairly the financial position of Sight Resource Corporation as of
September 30, 1997 and the results of its operations for the three and
nine months ended September 30, 1997 and 1996 and its cash flow for the
nine months ended September 30, 1997 and 1996.
6
<PAGE> 7
SIGHT RESOURCE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
The accompanying consolidated financial statements and related notes
should be read in conjunction with the audited consolidated financial
statements which are contained in the Company's Annual Report on Form
10-K for the year ended December 31, 1996.
(b) Principles of Consolidation
The accompanying consolidated financial statements include the accounts
of the Company, its wholly-owned subsidiaries and three professional
corporations ("PCs") in which the Company's subsidiaries assume the
financial risks and rewards of such PCs through a management contract
and a stock agreement. The Company has no direct equity ownership in
the PCs. All significant intercompany balances and transactions have
been eliminated.
In preparation of these consolidated financial statements, in
conformity with generally accepted accounting principles, management of
the Company has made estimates and assumptions that affect the reported
amounts of assets and liabilities, such as accounts receivable,
inventory, impairment of property and equipment and intangibles. Actual
results could differ from those estimates.
(c) Revenue Recognition
Revenue and the related costs from the sale of eyewear are recognized
at the time an order is placed. The Company has fee for service
arrangements with all of its third party payors. Revenue is reported
net of the contractual allowances.
Under existing revenue sharing arrangements for refractive surgery
where the Company is not responsible for patient billing, the Company
receives a specified payment from the hospital or center for each
refractive surgical procedure performed. Accordingly, the Company
recognizes revenue on a per procedure basis at the time procedures are
performed. Under existing revenue-sharing arrangements for refractive
surgery where the Company is responsible for the collection from the
patient and payment to the ophthalmologist and other operating costs,
the total patient charge is recorded as revenue with the corresponding
expenses recorded in cost of revenue.
(d)Inventories
Inventories primarily consist of the costs of eyeglass frames, contact
lenses, ophthalmic lenses, sunglasses and other optical products and
are valued at the lower of cost (using the first-in, first-out method)
or market.
(e)Property and Equipment
Property and equipment is stated at cost. The Company provides for
depreciation at the time the property and equipment is placed in
service. The straight-line method is used over the estimated useful
life of the asset.
(f) Intangible Assets
Intangible assets resulting from business acquisitions consist of
customer lists, trademarks, non-compete agreements and the excess cost
of the acquisition over the fair value of the
7
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SIGHT RESOURCE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
net assets acquired (goodwill). Certain values assigned are based upon
independent appraisals and are amortized on a straight line basis over
a period of five to twenty-five years. The Company assesses the
recoverability of unamortized intangible assets on an ongoing basis by
comparing anticipated operating profits and future, undiscounted cash
flows to net book value. In performing this analysis, management
considers such factors as current results, trends, and future
prospects, in addition to other economic factors.
(g) Deferred Revenue
The Company offers a contact lens purchasing program in which, for a
set fee, customers may purchase contacts at discounted rates for a 12
month period. The Company recognizes revenue from the sales of its
contact lens purchasing program on a monthly basis over the life of the
program.
(h) Earnings (Loss) Per Share
Earnings per share are computed based on the weighted average number of
shares outstanding plus common stock equivalents related to stock
options and warrants, if such common stock equivalents cause dilution
in earnings per share in excess of 3%.
Net loss per share of common stock is based on the weighted average
number of common shares outstanding. Common stock equivalents are not
included in the calculation because they are antidilutive.
(3) DEBT
Debt is as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- ------------
<S> <C> <C>
Bank term loan, secured by all assets of one
of the Company's subsidiaries $ -- $1,000
Unsecured notes payable, 7% interest rate, $400 paid on
September 18, 1997 and $1,000 due on March 18, 1998; due
on demand if the Company's cash balance is less than $2,800 1,000 1,400
------ ------
1,000 2,400
Less current maturities 1,000 800
------ ------
Long term debt, less current maturities $ -- $1,600
====== ======
</TABLE>
8
<PAGE> 9
SIGHT RESOURCE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
At December 31, 1996, the Company had available a revolving credit
facility in the amount of $500 based on eligible accounts receivable
and inventory balances. As of December 31, 1996, $25 was unused.
On February 20, 1997, the Company entered into a Credit Agreement (the
"Agreement") with a bank pursuant to which the Company can borrow
$5,000 on a term loan basis and $5,000 on a revolving credit basis,
subject to certain performance criteria. Such certain performance
criteria include, among others, financial condition covenants such as
rolling EBITDA levels, indebtedness to EBITDA ratios, current ratio of
1:1 and minimum net worth requirement. The term loan facility bears
interest at the bank's prime rate plus 1.5% or LIBOR plus 3% at the
Company's election and the revolving credit facility bears interest at
the bank's prime rate plus 1.25% or LIBOR plus 2.75% at the Company's
election. These loans are secured by all assets of the Company and its
wholly owned subsidiaries. As of September 30, 1997, the entire term
loan was unused and $1,475 was outstanding on the revolving note. The
revolving note bears interest at the bank's prime rate plus 1.25%
(9.75% at September 30, 1997). As part of the Agreement, the Company
issued to the bank warrants to purchase 150,000 shares of the common
stock at a purchase price of $4.625 per share. The warrants expire
December 31, 2003. The warrants were accounted for as additional paid
in capital based upon the fair market value of the securities. Fair
value was determined by using the relationship of the interest rate
charged with the warrants versus the rate to be charged without the
warrants. This value approximated that obtained using the Black Scholes
Method.
As of September 30, 1997, the Company was not in compliance with two of
its financial covenants in the Agreement related to i.) minimum
requirement of earnings before interest, depreciation, amortization and
taxes and ii.) minimum net worth requirement. The Company obtained a
waiver from the bank for noncompliance with these covenants.
9
<PAGE> 10
PART I:
ITEM 2:
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995
Statements contained in this document which are not historical fact are
forward-looking statements based upon management's current expectations that are
subject to risks and uncertainties that could cause actual results to differ
materially from those set forth in or implied by forward-looking statements.
These risks are described in the Company's Annual Report on Form 10K for the
fiscal year ended December 31, 1996 filed with the Securities and Exchange
Commission.
OVERVIEW
The Company is in the business to manufacture, distribute and sell eyewear and
related products and services and, as necessary, to administer the business
functions of providing vision related medical services. The Company provides a
complete range of eye care products and services through integrated networks of
opticians, optometrists and ophthalmologists. The Company's services are
provided primarily to persons with common vision disorders, as well as to
persons with sight-threatening conditions. The Company's operations currently
consist of eighty-eight eye care centers, three management service organizations
("MSOs") and 5 laser vision correction ("LVC") centers which the Company has
established in association with leading hospitals, ambulatory surgery centers
and ophthalmologists. In addition, the Company operates a primary optical
laboratory and distribution center in Holliston, Massachusetts.
The Company's objective is to become the leading integrated provider of eye care
products and services in select, regional markets. To develop significant
regional integrated networks, the Company's business strategy focuses on (i)
acquiring and integrating the assets of regional eye care centers and the
practices of eye care professionals (optometrists and ophthalmologists), (ii)
employing or entering into management services contracts with these
professionals, (iii) continuing to market comprehensive and competitively priced
eye care programs to leading HMOs, insurance companies and other third party
payors in the Company's regional markets, (iv) expanding strategic affiliations,
for pathology co-management opportunities, with select hospitals, ambulatory
surgery centers and eye care professionals and (v) continuing to market and
provide access to LVC services through the Company's eye care centers.
The Company believes that its integrated approach to eye care provides
significant advantages, benefits and opportunities to patients, providers and
payors. Patients benefit from the convenience of eye care products and services
delivered at a single location. Eye care professionals benefit from the
supplemental management and administrative services and resources provided by
the Company, permitting them to continue to dedicate their time and effort to
their patients and professional practices. Payors benefit from the Company's
ability to conveniently provide a complete range of high quality eye care
products and services at competitive prices.
10
<PAGE> 11
RESULTS OF OPERATIONS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
NET REVENUE. The Company generated net revenue of approximately $12.7 million
and $33.1 million during the three and nine months ended September 30, 1997,
respectively, from the operation of its eighty-eight eye care centers and six
LVC centers as compared to net revenue of approximately $9.8 million and $21.3
million from its seventy-one eye care centers and ten LVC centers for the same
periods in 1996. The $2.9 million, or 29.8%, increase in net revenue for the
three months ended September 30, 1997 as compared to the three months ended
September 30, 1996, relates primarily to the additional seventeen eye care
centers acquired effective July 1, 1997. Of the $11.8 million, or 55.3%,
increase in net revenue for the nine months ended September 30, 1997 as compared
to the nine months ended September 30, 1996, approximately $11.0 million relates
to the additional forty one eye care centers acquired effective July 1, 1996 and
to the additional seventeen eye care centers acquired effective July 1, 1997.
COST OF REVENUE. Cost of revenue increased from $3.8 million for the three
months ended September 30, 1996 to $4.5 million for the three months ended
September 30, 1997. Cost of revenue as a percent of net revenue decreased from
38.8% for the three months ended September 30, 1996 to 35.2% for the three
months ended September 30, 1997. Cost of revenue increased from $8.3 million for
the nine months ended September 30, 1996 to $12.1 million for the nine months
ended September 30, 1997. Cost of revenue as a percent of net revenue decreased
from 39.0% for the nine months ended September 30, 1996 to 36.4% for the nine
months ended September 30, 1997. The decrease as a percentage of net revenue is
mainly attributable to reduced depreciation on ophthalmic equipment after the
write down due to the asset impairment recognized in the fourth quarter of 1996.
Cost of revenue for the three and nine months ended September 30, 1997 and 1996
principally consisted of (i) the cost of manufacturing, purchasing and
distributing optical products to its customers and (ii) the cost of delivering
LVC, including depreciation and maintenance on excimer lasers.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses were approximately $8.4 million and $22.1 million for
the three and nine months ended September 30, 1997, respectively, as compared to
$6.7 million and $15.1 million for the three and nine months ended September 30,
1996, respectively. The increase primarily relates to payroll and facility costs
incurred in operating additional eye care centers in the first three quarters of
fiscal 1997 as compared to the first three quarters in fiscal 1996. Selling,
general and administrative expenses, as a percentage of net revenue, declined
from 68.6% and 71.0% for the three and nine months ended September 30, 1996,
respectively, to 66.0% and 66.7% for the three and nine months ended September
30, 1997, respectively. This decrease as a percent of net revenue is a result of
the Company's growth through acquisitions and the realization of certain
efficiencies related to this growth.
OTHER INCOME AND EXPENSES. Interest income totaled $69,000 and $292,000 for the
three and nine months ended September 30, 1997, respectively, as compared to
$169,000 and $349,000 for the three and nine months ended September 30, 1996,
respectively. This decrease resulted from the investment of a lower average cash
balance during 1997 as compared to the same periods for 1996. Interest expense
totaled $89,000 and $261,000 for the three and nine months ended September 30,
1997 as compared to $38,000 and $151,000 for the three and nine months ended
September 30, 1996. This increase is associated with a higher average balance of
debt outstanding during 1997 as compared to the same periods in 1996. The sale
of certain ophthalmic equipment during the three months ended September 30, 1997
generated a gain of approximately $251,000. The sale of certain ophthalmic
equipment
11
<PAGE> 12
during the nine months ended September 30, 1997 generated a gain of
approximately $474,000.
NET INCOME (LOSS). The Company realized net income of $78,000 ($0.01 per share)
and a net loss of $514,000 ($0.06 per share) for the three and nine months ended
September 30, 1997 as compared to a net loss of $594,000 ($0.07 per share) and
$1.9 million ($0.28 per share) for the three and nine months ended September 30,
1996, respectively.
The change from net loss to net income is primarily attributable to increased
income generated by the additional forty-one eye care centers acquired by the
Company effective July 1, 1996 and the seventeen eye care centers acquired
effective July 1, 1997. The change from net loss per share to net income per
share was partially offset by an increase in the weighted average number of
common shares outstanding as of September 30, 1997.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1997, the Company had approximately $3.9 million in cash and
cash equivalents and working capital of approximately $1.5 million in comparison
to approximately $9.9 million in cash and cash equivalents and working capital
of approximately $7.8 million as of December 31, 1996.
On October 9, 1997, the Company signed a definitive purchase agreement for the
sale of approximately $5 million of its Series B Convertible Preferred Stock and
warrants to purchase common stock to The Carlyle Group. The transaction is
expected to close by the end of November, 1997.
As of September 30, 1997, the Company had securities outstanding which provide
it with potential sources of financing as outlined below:
<TABLE>
<CAPTION>
Potential
Securities proceeds
- ------------------------------------------ -----------
<S> <C> <C>
Warrants 2,472,100 $14,800,000
Class A Warrants 85,000 500,000
Unit Purchase Options 215,000 3,700,000
IPO Representative Warrants 85,000 1,300,000
Creditanstalt Warrants 150,000 694,000
Representative Warrants 170,000 1,400,000
-----------
$22,394,000
===========
</TABLE>
There can be no assurance that the Company will obtain any such proceeds from
the exercise of the above securities.
The Company has a Credit Agreement with a bank pursuant to which the Company can
borrow up to $5.0 million on a term loan basis and up to $5.0 million on a
revolving credit basis, subject to certain performance criteria. Such certain
performance criteria include, among others, financial condition covenants such
as rolling EBITDA levels, indebtedness to EBITDA ratios, current ratio of 1:1
and minimum net worth requirement. The term loan facility bears interest at the
bank's prime rate plus 1.5% or LIBOR plus 3% at the Company's election and the
revolving credit
12
<PAGE> 13
facility bears interest at the bank's prime rate plus 1.25% or LIBOR plus 2.75%
at the Company's election. As of September 30, 1997, approximately $1.5 million
was outstanding on the revolver. As part of the Agreement, the Company issued to
the bank warrants to purchase 150,000 shares of the common stock at a purchase
price of $4.625 per share. The warrants expire on December 31, 2003.
As of September 30, 1997, the Company was not in compliance with two of its
financial covenants in the Agreement related to a.) minimum requirement of
earnings before interest, depreciation, amortization and taxes and b.) minimum
net worth requirement. The Company obtained a waiver from the bank for
noncompliance with these covenants.
Effective July 1, 1997, the Company acquired one hundred percent of the
outstanding shares of stock of Vision Holdings, Ltd. (formerly known as Dr.
Greenberg, an Optometry Corporation ("Dr. Greenberg")). The purchase price paid
in connection with this acquisition was $2.0 million of cash on hand and the
assumption and payment of notes payable outstanding as of July 1, 1997 of
approximately $800,000. Dr. Greenberg operated seventeen eye care centers in
Southeast Louisiana and Mississippi. The acquisition was be accounted for using
the purchase method of accounting.
The Company anticipates that its working capital and sources of capital, such as
the credit facility, cash flow from operations, revenues from operations and
interest income from cash investments, will be adequate to fund the Company's
currently proposed activities for at least the next twelve months. The Company
anticipates using financing vehicles such as bank debt and other sources of
funding, such as additional equity offerings, to achieve its business plan,
including the acquisition of eye care centers. By acquiring eye care centers,
the Company gains critical mass of locations ensuring that potential patients
and third party payors will have convenient access to a wider variety of eye
care services. It also allows the Company to deliver these services at
considerable savings by using existing corporate and operational infrastructure,
which includes store operations, MIS, manufacturing, purchasing, distribution
and training. The Company is currently evaluating potential acquisition
candidates. Without additional funding, the Company's rate of future
acquisitions and size of future acquisitions could be limited.
13
<PAGE> 14
PART II. OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
<TABLE>
<CAPTION>
Exhibit
No. Title
- ------- -----
<S> <C>
10.1 Stock Purchase Agreement by and among Marjory O. Greenberg,
As Testamentary Executrix of the Succession of Tom I. Greenberg,
Peter Brown, and Vision Plaza Corp.
10.2* Promissory Note between Sight Resource Corporation
and Mr. Stephen Blinn
27 Financial Data Schedule
</TABLE>
* This exhibit relates to a management contract or compensatory plan or
arrangement required to be filed as an exhibit to this form.
Reports on Form 8-K
-------------------
NONE
14
<PAGE> 15
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 thereunto duly authorized.
<TABLE>
<S> <C>
Sight Resource Corporation
Date: November 14, 1997 /s/ William G. McLendon
----------------- ------------------------------------------
William G. McLendon
Chief Executive Officer and President
(principal executive officer)
Date: November 14, 1997 /s/ Alan MacDonald
----------------- ------------------------------------------
Alan MacDonald
Vice President, Finance and Administration
(principal financial and chief accounting
officer)
</TABLE>
15
<PAGE> 1
Exhibit 10.1
STOCK PURCHASE AGREEMENT
BY AND AMONG
MARJORY O. GREENBERG, AS TESTAMENTARY EXECUTRIX
OF THE SUCCESSION OF TOM I. GREENBERG,
PETER BROWN,
AND
VISION PLAZA CORP.
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TABLE OF CONTENTS
Page
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Section 1. Terms of the Sale and Purchase of Stock
1.1 Conveyance of Stock. 1
1.2 Purchase Price: Liabilities Assumed 2
Section 2. Representations and Warranties of the Shareholders
2.1 Corporate Existence: Good Standing 2
2.2 Power and Authority for Transactions 3
2.3 Permits. Licenses and Governmental Authorizations 3
2.4 Corporate Records 3
2.5 Consents 4
2.6 The Company's Financial Information 4
2.7 Leases 4
2.8 Condition of Assets 4
2.9 Title to and Encumbrances on Property 4
2.10 Intellectual Property Rights: 5
2.11 Directors and Officers: Payroll Information: Employees 5
2.12 Legal Proceedings 6
2.13 Contracts 6
2.14 Subsequent Events 7
2.15 Taxes 9
2.16 Liabilities: Debt 9
2.17 Insurance Policies 10
2.18 Employee Benefit Plans 10
2.19 Adverse Agreements 10
2.20 Compliance with Laws in General 11
2.21 Medicare and Medicaid Programs 11
2.22 Fraud and Abuse 11
2.23 No Untrue Representations 12
2.24 Distributions and Repurchases 12
2.25 Ownership Interests of Interested Persons: Competitors 12
2.26 Inventory 12
2.27 Certain Practices 12
2.28 Environmental Matters 13
2.29 Significant Customers and Suppliers 13
2.30 Broker s Fee 13
Section 3. Representations and Warranties of Purchaser
3.1 Corporate Existence: Good Standing 13
3.2 Power and Authority 13
3.3 No Untrue Representations 14
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Section 4. Covenants of the Shareholders
4.1 Consummation of Agreement 14
4.2 Business Operations 14
4.3 Access and Notice 14
4.4 Approvals of Third Parties and Permits and Consents 14
4.5 Acquisition Proposals 15
4.6 Employee Matters 15
4.7 Distributions and Repurchases 15
4.8 Requirements to Effect Transaction 15
4.9 Voting of Shares 15
4.10 Accounting and Tax Matters 16
4.11 Conversion Transaction 17
4.12 Survival of Covenants 17
4.13 Covenant Not to Compete 17
Section 5. Covenants of Purchaser
5.1 Consummation of Agreement 18
5.2 Approvals of Third Parties and Permits and Consents 18
Section 6. Purchaser Conditions Precedent
6.1 Representations and Warranties 18
6.2 Covenants and Conditions 18
6.3 Proceedings 19
6.4 No Material Adverse Change 19
6.5 Approvals 19
6.6 Notice 19
6.7 Employment Arrangements 19
6.8 Consents and Approvals: Succession Court Approval 19
6.9 Closing Deliveries 20
6.10 Debt and Receivables 20
6.11 Resignations 20
6.12 Dissenting Shares 20
6.13 No Material Change in Working Capital 20
6.14 No Material Adverse Economic Effect 20
6.15 Opinion Letter 20
Section 7. The Company's and the Shareholders' Conditions Precedent
7.1 Representations and Warranties 20
7.2 Covenants and Conditions 21
7.3 Proceedings 21
7.4 Closing Deliveries 21
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Section 8. Closing Deliveries
8.1 Deliveries of the Company and the Shareholders 21
8.2 Deliveries of Purchaser 21
Section 9. Nature and Survival of Representations and
Warranties: Indemnification
9.1 Nature and Survival 22
Section 10. Termination 24
Section 11. Miscellaneous
11.1 Notices 24
11.2 Further Assurances 25
11.3 Each Party to Bear Costs 25
11.4 Public Disclosures 25
11.5 GOVERNING LAW 26
11.6 Captions 26
11.7 Integration of Exhibits 26
11.8 ENTIRE AGREEMENT/AMENDMENT 26
11.9 Counterparts 26
11.10 Binding Effect/Assignment 26
11.11 No Rule of Construction 26
11.12 Costs of Enforcement 26
11.13 Amendments: Waivers 27
11.14 Severability 27
11.15 Jimmy Bradford 27
11.16 Jeff Greenberg 27
11.17 Closing 27
11.18 Deposit 27
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT, made and executed as of the 1st day of
July, 1997 is by and among VISION PLAZA CORP. ("Purchaser"); and MRS. MARJORY O.
GREENBERG, in her capacity as the Testamentary Executrix of the Succession of
Tom I. Greenberg (Civil District Court No. 96-13287) and PETER BROWN
(individually "Shareholder," and collectively "Shareholders").
WITNESSETH:
WHEREAS, the Shareholders are the sole shareholders of Dr. Greenberg, An
Optometry Corporation, a Louisiana professional optometry corporation
("Parent"); and
WHEREAS, Vision Horizon, Inc., Vision Universe, Inc., Vision Lake
Forest, Inc., Vision Southland, Inc., Vision Hammond Square, Inc., Vision
Oakwood, Inc., Vision Uptown, Inc., Vision CBD, Inc., Vision Hattiesburg, Inc.,
Vision at the Dome, Inc., Vision Mississippi, Inc., Vision Esplanade, Inc.,
Vision Tomorrow, Inc., World Vision Quest, Inc., Orleans Spectacle Corp.,
Orleans Sunglasses, Inc., Vision Unlimited Laboratories, Inc., Eye Refractions
Consultants, Inc., Vision Williams, Inc., Vision Downtown, Inc., Vision Plaza,
Inc., Vision Frontiers, Inc. and Vision Quest, Inc. (the "Subsidiaries") are
wholly owned subsidiaries of Parent and represent all subsidiaries and
affiliates of Parent (Parent and Subsidiaries collectively referred to herein as
the "Company"); and
WHEREAS, the Company operates an optometry business in Louisiana and
Mississippi; and
WHEREAS, the Shareholders wish to sell to Purchaser, and Purchaser
wishes to acquire from the Shareholders, one hundred percent (100%) of the
shares of Parent, all upon the terms and subject to the conditions set forth
herein;
NOW THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, and for other good and valuable consideration, the
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
SECTION 1. TERMS OF THE SALE AND PURCHASE OF STOCK
The sale of the stock of the Parent which is to be sold hereunder and
the acquisition thereof by Purchaser shall be based on the respective
representations, warranties and agreements of the parties hereto, and shall be
subject to the terms and conditions herein stated, and shall occur upon the
satisfaction of all conditions precedent contained herein (the "Closing Date").
1.1 Conveyance of Stock. Subject to and upon the terms and
conditions contained herein, on the Closing Date, the Shareholders shall sell,
convey, transfer, deliver and assign to Purchaser one hundred percent (100%) of
their shares of the Parent which represents one hundred percent (100%) of the
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outstanding stock of the Parent, free and clear of any obligations, security,
intents, claims, liens and encumbrances whatsoever (the "Shares").
1.2 Purchase Price; Liabilities Assumed. As consideration for the
sale of the Shares by Shareholders, Purchaser shall, on the Closing Date,
provide Shareholders with the consideration specified in Annex I attached hereto
(the "Consideration"), the cash portion of which Consideration shall be payable
by federal wire or cashier's check. In addition to paying the Consideration
specified in Annex I, Purchaser shall cause the Parent to pay in full on the
Closing Date the following indebtedness: (i) the indebtedness owing to Mrs.
Marjory Greenberg as evidenced by the Promissory Note attached hereto as Exhibit
1.2(a) in an amount not to exceed the $470,585.80, (ii) the indebtedness owing
to Donald M. Weil as evidenced by the Promissory Note attached hereto as Exhibit
1.2(b) in an amount not to exceed $265,498.18, and (iii) the indebtedness owing
on Donald Weil s contract attached hereto as Exhibit 1.2C in an amount not to
exceed $63,000. Other than the indebtedness set forth in (i), (ii) and (iii)
above and as set forth on the Balance Sheet, the Shareholders represent and
warrant that there is no other indebtedness of the Company other than as
disclosed in this Agreement including the Exhibits attached hereto.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
The Shareholders, jointly and severally, hereby represent and warrant to
Purchaser as follows:
2.1 Corporate Existence: Good Standing. The Parent is a professional
optometry corporation duly organized, validly existing and in good standing
under the laws of the State of Louisiana; and the Companies other than Parent
are business corporations duly organized, validly existing and in goods standing
under the laws of the State of Louisiana. The Company has all necessary
corporate powers to own all of its assets and to carry on its business as such
business is now being conducted except as may have been caused by the death of
Dr. Tom 1. Greenberg, the only licensed optometrist shareholder of the Parent.
The Shareholders are the sole shareholders of the Parent and own all outstanding
shares of capital stock free of all security interests, claims, encumbrances and
liens in the amounts set forth on Exhibit 2.1. Each share of Company common
stock has been legally and validly issued and is fully paid and nonassessable.
Other than as set forth on Exhibit 2.1, no shares of capital stock of the
Company are owned by the Company in treasury. There are no outstanding (a)
bonds, debentures, notes or other obligations the holders of which have the
right to vote with the stockholders of the Company on any matter, (b) securities
of the Company convertible into equity interests in the Company, or (c)
commitments, options, rights or warrants to issue any such equity interests in
the Company, to issue securities of the Company convertible into such equity
interests, or to redeem any securities of the Company. No shares of capital
stock of the Company have been issued or disposed of in violation of the
preemptive rights, rights of first refusal or similar rights of any of the
Company's stockholders. The Company is not required to qualify to do business as
a foreign corporation in any other state or jurisdiction by reason of its
business, properties or activities in or relating to such other state or
jurisdiction , except for Vision Mississippi, Inc., which is qualified to do
business in Mississippi and except that no representation is made as to whether
Parent is required to qualify to do business as a foreign corporation
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in Mississippi. The Company does not have any assets, employees or offices in
any state other than Louisiana and Mississippi.
2.2 Power and Authority for Transactions. There is no action
required by law, the Company's Articles or Certificate of Incorporation, its
Bylaws or otherwise, to authorize the execution, delivery and performance of
this Agreement and such related documents, except the approval of the Civil
District Court in proceedings bearing number 96-13287 being the Succession of
Tom I. Greenberg. Each Shareholder has the legal capacity to enter into and
perform this Agreement and the other agreements to be executed and delivered in
connection herewith. This Agreement and all agreements and documents executed
and delivered in connection herewith have been, or will be as of the Closing
Date, duly executed and delivered by the Shareholders, as appropriate, and
constitute or will constitute the legal, valid and binding obligations of the
Shareholders, enforceable against the Shareholders in accordance with their
respective terms, except as may be limited by applicable bankruptcy, insolvency
or similar laws affecting creditors' rights generally or the availability of
equitable remedies. The execution and delivery of this Agreement, and the
agreements executed and delivered pursuant to this Agreement or to be executed
and delivered on the Closing Date, do not, and, subject to the receipt of
consents described on Exhibit 2.5 and the order of the court described in
Section 6.8 hereof, the consummation of the actions contemplated hereby will
not, violate any provision of the Articles or Certificate of Incorporation or
Bylaws of the Company or any provisions of, or result in the acceleration of,
any obligation under any mortgage, lien, lease, agreement, rent, instrument,
order, arbitration award, judgment or decree to which the Company or any
Shareholder is a party or by which the Company or any Shareholder is bound, or
violate any material restrictions of any kind to which the Company is subject,
or result in any lien or encumbrance on any of the Company's assets other than
as disclosed in this Agreement including the Exhibits attached hereto.
2.3 Permits. Licenses and Governmental Authorizations. All building
or other permits, certificates of occupancy, concessions, grants, franchises,
licenses, certificates of need and other governmental authorizations and
approvals required to be maintained by the Company and each doctor or licensed
employee of the Company have been duly obtained and are in full force and effect
and are described on Exhibit 2.3. There are no proceedings pending or, to the
knowledge of the Company and the Shareholders, threatened, which may result in
the revocation, cancellation or suspension, or any adverse modification, of any
thereof.
2.4 Corporate Records. True and correct copies of the Articles or
Certificate of Incorporation, Bylaws and minutes, if any, of the Company and all
amendments thereto of the Company have been delivered to Purchaser. The minute
books of the Company contain all minutes of the meetings of and consents to
actions taken without meetings of the Board of Directors and stockholders of the
Company since its formation which are in existence or have been prepared, the
Shareholders not representing and warranting that all meetings were documented
in the form of written minutes. The books of account of the Company have been
kept accurately in the ordinary course of business and the revenues, expenses,
assets and liabilities of the Company have been properly recorded in such books
in accordance with GAAP (as defined in section 2.6).
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2.5 Consents. Except as set forth on Exhibit 2.5, no consent,
authorization, permit, license or filing with any governmental authority, any
lender, lessor, any manufacturer or supplier or any other person or entity is
required to authorize, or is required in connection with, the execution,
delivery and performance of this Agreement and the agreements and documents
contemplated hereby on the part of the Company or the Shareholders.
2.6 The Company's Financial Information. The Company has heretofore
furnished Purchaser with financial information about the Company disclosed on
Exhibit 2.6 attached hereto (the "Financial Statements"), including the
unaudited Balance Sheet ("Balance Sheet") as of March 31, 1997 ("Balance Sheet
Date"). Other than as disclosed in this Agreement including the Exhibits
attached hereto, the Financial Statements for the periods indicated, reflect all
liabilities of the Company required to be reported in accordance with generally
accepted accounting principles consistently applied ("GAAP"), reflect all
contingent liabilities of the Company required to be reported in accordance with
GAAP, as of their respective dates, and present fairly the financial position of
the Company as of such dates and the results of operations and cash flows for
the period or periods reflected therein. The Financial Statements do not include
as inventory any item that does not meet the definition of inventory (e.g. items
owned by a party other than the Company and held by or on behalf of the Company
as consignee are not included). The Financial Statements do not include as fixed
assets any operating leases.
2.7 Leases. Exhibit 2.7 attached hereto sets forth a list of all
leases pursuant to which the Company leases, as lessor or lessee, real or
personal property used in operating the business of the Company or otherwise.
All such leases listed on Exhibit 2.7 are valid and enforceable in accordance
with their respective terms, and there is not under any such lease any existing
default by the Company, as lessor or lessee, or any condition or event of which
the Company or any Shareholder has knowledge which with notice or lapse of time,
or both, would constitute a default, in respect of which the Company has not
taken adequate steps to cure such default or to prevent a default from
occurring. Nothing herein shall be deemed to imply that the Shareholders are
representing that the sale of the stock of the Company does not in and of itself
create a default in and under the leases.
2.8 Condition of Assets. All of the plants, structures and equipment
used by the Company in its business are in good condition and repair subject to
normal wear and tear and conform with all applicable ordinances, regulations and
other laws, and the Company and the Shareholders have no knowledge of any latent
defects therein.
2.9 Title to and Encumbrances on Property. A description of all
interests in real and personal property owned by the Company is set forth on
Exhibit 2.9. The Company has good, valid and marketable title to all of its
personal and real property, free and clear of any liens, claims, charges,
exceptions or encumbrances. The real and personal property described on Exhibit
2.9 and Exhibit 2.7 constitute the only real and personal property used in the
conduct of the Company's business.
2.10 Intellectual Property Rights. Except as set forth on Exhibit
2.10, the Company has no right, title or interest in or to patents, patent
rights, corporate
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names, assumed names, manufacturing processes, trade names, trademarks, service
marks, inventions, specialized treatment protocols, copyrights, formulas and
trade secrets or similar items and such items are the only such items necessary
for the conduct of its business. Set forth in Exhibit 2.10 is a listing of all
names of all predecessor companies of the Company, including the names of any
entities from whom the Company previously acquired significant assets. Except
for off-the-shelf software licenses and except as set forth on Exhibit 2.10, the
Company is not a licensee in respect of any patents, trademarks, service marks,
trade names, copyrights or applications therefor, or manufacturing processes,
formulas or trade secrets or similar items and no such licenses are necessary
for the conduct of its business. No claim is pending or has been made to the
effect that the present or past operations of the Company infringe upon or
conflict with the asserted rights of others to any patents, patent rights,
manufacturing processes, trade names, trademarks, service marks, inventions,
licenses, specialized treatment protocols, copyrights, formulas, know-how and
trade secrets. The Company is not in default under any license agreement or
contract relating to any such proprietary rights nor, to its knowledge, is any
other party. The Company has the sole and exclusive right to use all such
proprietary rights without infringing or violating the rights of any third
parties and no consents of any third parties are required for the use thereof by
the Purchaser.
2.11 Directors and Officers: Payroll Information: Employees. Set
forth on Exhibit 2.11 attached hereto is a true and complete list, as of the
date of this Agreement of: (a) the name of each director and officer of the
Company and the offices held by each, (b) the most recent payroll report of the
Company, showing all current employees of the Company and their current levels
of compensation, (c) promised increases in compensation of employees of the
Company that have not yet been effected, (d) oral or written employment
agreements or independent contractor agreements (and all amendments thereto) to
which the Company is a party, copies of which have been delivered to Purchaser,
and (e) all employee manuals, materials, policies, procedures and work-related
rules, copies of which have been delivered to Purchaser. The Company is in
compliance with all applicable laws, rules, regulations and ordinances
respecting employment and employment practices. The Company has not engaged in
any unfair labor practice. There are no unfair labor practices charges or
complaints pending or threatened against the Company, and the Company has never
been a party to any agreement with any union, labor organization or collective
bargaining unit. The 1996 W-2 and 1099 forms filed by the Company have been made
available to the Purchaser at Company s office.
No employee has a written employment agreement with the Company which is
not terminable on notice by the Company without cost or other liability to the
Company. No employee has indicated to the Company or the Shareholders that he or
she intends to terminate his or her employment by the Company or seek a material
change in his or her duties or status.
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2.12 Legal Proceedings. Other than as set forth on Exhibit 2.12
neither the Company nor any of the Company's assets is subject to any pending,
nor does the Company or any Shareholder have knowledge of any threatened,
litigation, governmental investigation, condemnation or other proceeding against
or relating to or affecting the Company, the outstanding shares of the Company's
stock, any of the assets of the Company, the operations, business or prospects
of the Company or the transactions contemplated by this Agreement, and, to the
knowledge of the Company and the Shareholders, no basis for any such action
exists, nor is there any legal impediment of which the Company or any
Shareholder has knowledge to the continued operation of its business in the
ordinary course, subject to consents set forth on Exhibit 2.5 and subject to the
provisions of the Louisiana Professional Optometry Corporation statute, being
R.S. 12:1110, et seq.
2.13 Contracts. The Company has delivered to Purchaser true copies of
all written, and disclosed to Purchaser all oral, outstanding contracts,
obligations and commitments of the Company ("Contracts"), all of which are
listed or incorporated by reference on Exhibit 2.7 (in the case of leases),
Exhibit 2.11 (in the case of employment agreements) and Exhibit 2.13 (in the
case of Contracts other than leases) attached hereto. Except as otherwise
indicated on such Exhibits, all of such Contracts are valid, binding and
enforceable in accordance with their terms and are in full force and effect, and
no defenses, offsets or counterclaims have been asserted or may be made by any
party thereto. Except as indicated on such Exhibits, there is not under any such
Contract any existing default by the Company, or any condition or event of which
the Company or any Shareholder has knowledge which with notice or lapse of time,
or both, would constitute a default. The Company and the Shareholders have no
knowledge of any default by any other party to such Contracts. Neither the
Company nor the Shareholders have received notice of the intention of any party
to any Contract to cancel or terminate any Contract or have any reason to
believe that any amendment or change to any Contract is contemplated by any
party thereto. Other than as disclosed in this Agreement including the Exhibits
attached hereto or listed on Exhibits 2.7, 2.11 and 2.3, the Company is not a
party to any material written or oral agreement contract, lease or arrangement,
including any:
(a) Contract related to the sale of any assets of the Company not
made in the ordinary course of business other than this Agreement;
(b) Employment, consulting or compensation agreement or arrangement;
(c) Labor or collective bargaining agreement;
(d) Lease agreement with respect to any property, whether as lessor
or lessee;
(e) Deed, bill of sale or other document evidencing an interest in
or agreement to purchase or sell real or personal property;
(f) Contract for the purchase of materials, supplies or equipment
(i) which is in excess of the requirements of its business now booked or for
normal operating inventories, or (ii) which is not terminable upon notice of
thirty (30)
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days or less, or (iii) under which the Company is likely to pay more than
$25,000;
(g) Agreement for the purchase from a supplier of all or
substantially all of the requirements of the Company of a particular product or
service;
(h) Loan agreement or other contract for money borrowed or lent or
to be borrowed or lent to another, except short term loans to employees in
amounts not in excess of one month s compensation;
(i) Contracts containing non-competition covenants; or
(j) Broker, distribution, dealer, manufacturer's representative,
franchise, agency, sales, promotion, market research, marketing consultant and
advertising contracts;
(k) Contracts and agreements with any governmental authority;
(l) Contracts and agreements with optometrists, ophthalmologists, or
other licensed eye care professionals;
(m) Contracts, agreements and arrangements between or among the
Company and any of its directors or shareholders or any member of the family of
any director or shareholder; or
(n) Other contracts or agreements that involve either an unperformed
commitment in excess of $1 ,000 or that terminate or can only be terminated by
the Company on more than 30 days after the date hereof.
2.14 Subsequent Events. Except as set forth on Exhibit 2.14. the
Company has not, since the Balance Sheet Date:
(a) Incurred any material obligation or liability (absolute,
accrued, contingent or otherwise) or entered into any contract, lease, license
or commitment, or incurred any indebtedness, except in connection with the
performance of this Agreement, other than in the ordinary course of business;
(b) Discharged or satisfied any material lien or encumbrance, or
paid or satisfied any material obligation or liability (absolute, accrued,
contingent or otherwise) other than (i) liabilities shown or reflected on the
Balance Sheet or (ii) liabilities incurred since the Balance Sheet Date in the
ordinary course of business;
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(c) Formed or acquired or disposed of any interest in any
corporation, partnership, joint venture or other entity;
(d) Made any payments to or loaned any money to any person or entity
other than in the ordinary course of business;
(e) Lost or terminated any employee, patient, customer or supplier
that has, individually or in the aggregate, a material adverse effect on its
business;
(f) Increased or established any reserve for taxes or any other
liability on its books or otherwise provided therefor, except as may have been
required due to income or operations of the Company since the Balance Sheet
Date;
(g) Mortgaged, pledged or subjected to any lien, charge or other
encumbrance any of the assets of the Company, tangible or intangible;
(h) Sold or contracted to sell or transferred or contracted to
transfer any of the assets used in the conduct of the Company's business or
cancelled any debts or claims or waived any rights, except in the ordinary
course of business;
(i) Increased the compensation of any officer, employee, consultant
or agent by more than the lesser of 12% or $6,000.00;
(j) Authorized or incurred any capital expenditures in excess of
Five Thousand and No/100 Dollars ($5,000.00);
(k) Except for this Agreement and any other agreement executed and
delivered pursuant to this Agreement, entered into any material transaction
other than in the ordinary course of business or permitted hereunder;
(l) Redeemed, purchased, sold or issued any stock, bonds or other
securities;
(m) Experienced damage, destruction or loss (whether or not covered
by insurance) materially and adversely affecting any of its properties, assets
or business, or experienced any other material adverse change in its financial
condition, assets, prospects, liabilities or business;
(n) Declared or paid a distribution, payment or dividend of any kind
on the capital stock of the Company;
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(o) Repurchased, approved any repurchase or agreed to repurchase any
of the Company's capital stock; or
(p) Suffered any material adverse change in the business of the
Company or to the assets of the Company.
2.15 Taxes. The Company has filed all tax returns (including tax
reports and other statements) required to be filed by it, and made all payments
of taxes (including any interest, penalty or addition thereto) required to be
made by it, on or before the date of this Agreement, with respect to income
taxes, real and personal property taxes, sales taxes, use taxes, employment
taxes, excise taxes and other taxes. All such tax returns are complete and
accurate in all respects and properly reflect the relevant taxes for the periods
covered thereby. The Company and the Shareholders have not received any notice
that any tax deficiency or delinquency has been asserted against the Company.
There are no audits relating to taxes of the Company threatened, pending or in
process. The Company is not currently the beneficiary of any waiver of any
statute of limitations in respect of taxes nor of any extension of time within
which to file any tax return or to pay any tax assessment or deficiency. There
are no liens or encumbrances relating to taxes on or threatened against any of
the assets of the Company. The Company has withheld and paid all taxes required
by law to have been withheld and paid by it. Neither the Company nor any
predecessor of the Company is or has been a party to any tax allocation or
sharing agreement or a member of an affiliated group of corporations filing a
consolidated federal income tax return. The Company has delivered to Purchaser
correct and complete copies of the Company's three most recently filed annual
state and federal income tax returns, together with all examination reports and
statements of deficiencies assessed against or agreed to by the Company during
the three calendar year period preceding the date of this Agreement. The Company
has not made any payments, is not obligated to make any payments, and is not a
party to any agreement that under any circumstance could obligate it to make any
payments that will not be deductible under Code section 280G.
2.16 Liabilities: Debt. Except to the extent reflected or reserved
against on the Balance Sheet and the indebtedness described in Section 1.2
hereof, the Company did not have, as of the Balance Sheet Date, and has not
incurred since that date and will not have incurred as of the Closing Date, any
liabilities or obligations of any nature, whether accrued, absolute, contingent
or otherwise, and whether due or to become due, other than those incurred in the
ordinary course of business. The Company and the Shareholders do not know, or
have reasonable grounds to know, of any basis for the assertion against the
Company as of the Balance Sheet Date, of any claim or liability of any nature in
any amount not fully reflected or reserved against on the Balance Sheet, or of
any claim or liability of any nature arising since that date other than those
incurred in the ordinary course of business or contemplated by this Agreement.
All indebtedness of the Company (including without limitation, indebtedness for
borrowed money, guaranties and capital lease obligations) is described on the
Balance Sheet or in Section 1.2. The Company and the Shareholders represent and
warrant that all indebtedness due and owing to Hibernia National Bank as
reflected on the July 1996 financial statements provided to Purchaser has been
extinguished and replaced by the indebtedness set forth on Exhibit 1.2(a) due
Mrs. Marjory Greenberg. Other than said indebtedness to Mrs. Marjory Greenberg,
the Company has no liability or obligation to any other director or other
shareholder of the Company or any
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family member of a shareholder other than due Jeff Greenberg, a Company
employee.
2.17 Insurance Policies. Valid and enforceable property, liability,
malpractice, worker's compensation and other insurance necessary to the
operations of the business are outstanding and duly in force and will remain
duly in force through the Closing Date. All such policies are described in
Exhibit 2.17 attached hereto and true and correct copies have been delivered to
Purchaser. Neither the Company nor any Shareholder has received notice or other
communication from the issuer of any such insurance policy cancelling or
amending such policy or threatening to do so, nor is the Company or any
shareholder on notice of any material increase in any insurance premiums
relating to such policies. Neither the Company, nor each Shareholder nor any
doctor employee of the Company has any outstanding claims, settlements or
premiums owed against any insurance policy.
2.18 Employee Benefit Plans. Except as set forth on Exhibit 2.18
attached hereto, the Company has not established, does not maintain, and is not
obligated to make contributions to or under or otherwise participate in, (a) any
bonus or other type of compensation or employment plan, program, agreement,
policy, commitment, contract or arrangement (whether or not set forth in a
written document); (b) any pension, profit-sharing, retirement or other plan,
program or arrangement; or (c) any other employee benefit plan, fund or program,
including, but not limited to, those described in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"). All such plans
listed on Exhibit 2.20 (individually "Company Plan," and collectively "Company
Plans") have been operated and administered in all material respects in
accordance with all applicable laws, rules and regulations, including without
limitation, ERISA, the Internal Revenue Code of 1986, as amended, Title VII of
the Civil Rights Act of 1964, as amended, the Equal Pay Act of 1967, as amended,
the Age Discrimination in Employment Act of 1967, as amended, and the related
rules and regulations adopted by those federal agencies responsible for the
administration of such laws. No act or failure to act by the Company has
resulted in a "prohibited transaction" (as defined in ERISA) with respect to the
Company Plans. No "reportable event" (as defined in ERISA) has occurred with
respect to any of the Company Plans. The Company has not previously made, is not
currently making, and is not obligated in any way to make, any contributions to
any multi- employer plan within the meaning of the Multi-Employer Pension Plan
Amendments Act of 1980. With respect to each Company Plan, either (i) the value
of plan assets (including commitments under insurance contracts) is at least
equal to the value of plan liabilities or (ii) the value of plan liabilities in
excess of plan assets is disclosed on the Balance Sheet. The Company has made
all required Form 5500 filings and required reporting with respect to the
Company Plans on a timely basis.
2.19 Adverse Agreements. The Company is not, and will not as of the
Closing Date, be a party to any agreement or instrument or subject to any
charter or other corporate restriction or any judgment, order, writ, injunction,
decree, rule or regulation that materially and adversely affects the condition
(financial or otherwise), operations, assets, liabilities, business or prospects
of the Company other than as disclosed in this Agreement including the Exhibits
attached hereto.
2.20 Compliance with Laws in General. The Company, the Shareholders
and to the best knowledge of the Shareholders, Company's doctor
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and licensed employees have complied with all applicable laws, rules,
regulations and licensing requirements, including, without limitation, the
Federal Environmental Protection Act, the Occupational Safety and Health Act,
the Americans with Disabilities Act and any environmental laws and medical waste
laws, and there exist no violations by the Company, any Shareholder or any
doctor or licensed employee of the Company of any federal, state or local law or
regulation. Neither the Company nor any Shareholder has received any notice of a
violation of any federal, state and local laws, regulations and ordinances
relating to the operations of the business and assets of the Company and no
notice of any pending inspection or violation of any such law, regulation or
ordinance has been received by the Company or any Shareholder.
2.21 Medicare and Medicaid Programs. The Company and each doctor and
licensed employee of the Company is qualified for participation in the Medicare
and Medicaid programs and is party to provider agreements for such programs
which are in full force and effect with no defaults having occurred thereunder.
The Company, each Shareholder and each doctor and licensed employee of the
Company has timely filed all claims or other reports required to be filed with
respect to the purchase of services by third-party payors, and all such claims
or reports are complete and accurate, and there is no liability to any payor
with respect thereto. There are no pending appeals, overpayment determinations,
adjustments, challenges, audit, litigation or notices of intent to open Medicare
or Medicaid claim determinations or other reports required to be filed by the
Company, any Shareholder and any licensed employee of the Company. Neither the
Company, nor any Shareholder, nor to the knowledge of the Shareholders, any
doctor or licensed employee of the Company has been convicted of, or pled guilty
or nolo contendere to, patient abuse or negligence, or any other Medicare or
Medicaid program related offense and none has committed any offense which may
serve as the basis for suspension or exclusion from the Medicare and Medicaid
programs.
2.22 Fraud and Abuse. The Company and all persons and entities
providing professional services for the Company's business have not, to the
knowledge of the Company and the Shareholders, engaged in any activities which
are prohibited under ss. 1320a-7b or ss. 1395nn of Title 42 of the United States
Code or the regulations promulgated thereunder, or related state or local
statutes or regulations, or which are prohibited by rules of professional
conduct, including, but not limited to, the following: (a) knowingly and
willfully making or causing to be made a false statement or representation of a
material fact in any application for any benefit or payment; (b) knowingly and
willfully making or causing to be made any false statement or representation of
a material fact for use in determining rights to any benefit or payment; (c) any
failure by a claimant to disclose knowledge of the occurrence of any event
affecting the initial or continued right to any benefit or payment on its own
behalf or on behalf of another, with the intent to fraudulently secure such
benefit or payment; and (d) knowingly and willfully soliciting or receiving any
remuneration (including any kickback, bribe or rebate) directly or indirectly,
overtly or covertly, in cash or in kind, or offering to pay or receive such
remuneration (i) in return for referring an individual to a person for the
furnishing or arranging for the furnishing of any item or service for which
payment may be made in whole or in part by Medicare or Medicaid, or (ii) in
return for purchasing, leasing or ordering or arranging for, or recommending,
purchasing, leasing or ordering any good, facility, service or item for which
payment may be made in whole or in part by Medicare or
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Medicaid, or (e) referring a patient for designated health services to or
providing designated health services to a patient upon referral from an entity
or person with which the doctor or an immediate family member has a financial
relationship, and to which no exception under ss.1395nn of Title 42 of the
United States Code applies.
2.23 No Untrue Representations. No representation or warranty by the
Company or any Shareholder in this Agreement, and no Exhibit or certificate
issued or executed by, or information furnished by, officers or directors of the
Company or any Shareholder and furnished or to be furnished to Purchaser
pursuant hereto, or in connection with the transactions contemplated hereby,
contains or will contain any untrue statement of a material fact, or omits or
will omit to state a material fact necessary to make the statements or facts
contained therein not misleading.
2.24 Distributions and Repurchases. No distribution, payment or
dividend of any kind has been declared or paid by the Company on any of its
capital stock since the Balance Sheet Date. No repurchase of any of the
Company's capital stock has been approved, effected or is pending, or is
contemplated by the Board of Directors of the Company.
2.25 Ownership Interests of Interested Persons: Competitors. Neither
the Company, nor any of its directors, officers, or Shareholders (or members of
the family of any thereof) is, or within the last three years was, a party to
any contract, lease, agreement or arrangement, including, but not limited to,
any joint venture or consulting agreement with or has any financial interest in
any doctor, hospital, pharmacy, home health agency or other person or entity
which is in a position to make or influence referrals to, or otherwise generate
business for, the Company or to provide services, lease space, lease equipment
or engage in any other venture or activity with the Company or compete with the
Company other than as disclosed in this Agreement including the Exhibits
attached hereto.
2.26 All of the inventory reflected on the balance sheet or
thereafter acquired (and not subsequently sold in the ordinary course of
business) consist of items of a quality and quantity usable or saleable in the
ordinary course of business as first quality items (except obsolete or
discontinued inventory or except to the extent specifically reserved against),
valued in a manner consistent with past practice and, with respect to
after-acquired inventory, valued at prices at least equal to the lower of the
cost thereof or fair market value. The inventories and supplies of the Company
are at normal and adequate levels for the continuation of the Company s business
in the ordinary course. All work-in-progress can be completed for sale in the
ordinary course of business in accordance with the usual standards and practices
of the Company.
2.27 Certain Practices. Neither the Company nor, to the best
knowledge of the Shareholders, any of its officers, directors or stockholders
has, directly or indirectly, given or agreed to give any significant rebate,
gift or similar benefit to any supplier, customer, governmental employee or
other person who was, is or may be in a position to help or hinder the Company
(or assist in connection with any actual or proposed transaction) which could
subject the Company or Purchaser to any damage or penalty in any civil, criminal
or governmental action, other than as disclosed in this Agreement including the
Exhibits attached hereto.
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2.28 Environmental Matters. Except as set forth on Exhibit 2.29 or
other than as disclosed in this Agreement including the Exhibits attached
hereto, no event has occurred or condition exists or operating practice is being
employed that could give rise to any claim, action, order or award under any
environmental law or environmental permit. The Company is and the Company s
leased properties are in compliance with all environmental laws, except where
the noncompliance therewith has not had and would not have a material adverse
effect on the Company s business, operations, assets, liabilities or financial
condition.
2.29 Significant Customers and Suppliers. Set forth on Exhibit 2.28
is a list of the ten largest customers and ten largest suppliers of the Company
for the most recent twelve month period, together with the amount of sales or
purchases attributable to such customers or suppliers expressed in dollars. No
customer or supplier which was significant to the Company during the past three
years has terminated, materially reduced or threatened to terminate or
materially reduce its purchases from or provision of products or services to the
Company, as the case may be.
2.30 Broker's Fee. No person has or will have, as a result of the
execution, delivery and performance by the Shareholders of this Agreement, any
right, interest or claim against or upon Purchaser or any other person for any
commission, fee or other compensation as finder or broker or in any similar
capacity.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to the Shareholders as follows:
3.1 Corporate Existence: Good Standing. Purchaser is a corporation
duly organized and existing and in good standing under the laws of the State of
Delaware, respectively.
3.2 Power and Authority. Purchaser has corporate power to execute,
deliver and perform this Agreement and all agreements and other documents
executed and delivered by it pursuant to this Agreement, and has taken all
actions required by law, its Certificate or Articles of Incorporation, its
Bylaws or otherwise, to authorize the execution, delivery and performance of
this Agreement and such related documents. The execution and delivery of this
Agreement and the agreements related hereto executed and delivered pursuant to
this Agreement do not and, subject to the receipt of consents to assignments of
leases and other contracts where required and the receipt of regulatory
approvals where required, the consummation of the transactions contemplated
hereby will not, violate any provision of the Certificate or Articles of
Incorporation or Bylaws of Purchaser or any provisions of, or result in the
acceleration of, any obligation under any mortgage, lien, lease, agreement
instrument, order, arbitration award, judgment or decree to which Purchaser is a
party or by which either of them is bound, or violate any restrictions of any
kind to which Purchaser is subject.
3.3 No Untrue Representations. No representation or warranty by
Purchaser in this Agreement, and no Exhibit or certificate issued by officers or
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<PAGE> 18
directors of Purchaser and furnished or to be furnished to the Company or the
Shareholders pursuant hereto, or in connection with the transactions
contemplated hereby, contains or will contain any untrue statement of a material
fact, or omits or will omit to state a material fact necessary to make the
statements or facts contained therein not misleading.
SECTION 4. COVENANTS OF THE SHAREHOLDERS
The Shareholders, jointly and severally, agree that between the date
hereof and the Closing Date:
4.1 Consummation of Agreement. The Company and the Shareholders
shall use their best efforts to cause the consummation of the transactions
contemplated hereby in accordance with their terms and conditions.
4.2 Business Operations. The Company and the Shareholders shall
operate the Company's business in the ordinary course. The Company shall not
enter into any lease, contract, indebtedness, commitment, purchase or sale or
acquire or dispose of any capital asset except in the ordinary course of
business. The Company and the Shareholders shall use their best efforts to
preserve the business and assets of the Company intact and shall not take any
action that would have an adverse effect on the business or assets of the
Company, including without limitation, any action the primary purpose or effect
of which is to generate or preserve cash; provided that the Company may continue
to operate in the ordinary course of business. The Company and the Shareholders
shall use their best efforts to preserve intact the relationships with payors,
customers, suppliers, patients and others having significant business relations
with the Company. The Company shall collect its receivables and pay its trade
payables in the ordinary course of business. The Company shall not introduce any
new method of management, operations or accounting.
4.3 Access and Notice. The Company and the Shareholders shall permit
Purchaser and their authorized representatives access to, and make available for
inspection, all of the assets and business of the Company and all of its assets,
including employees, customers and suppliers and permit Purchaser, and its
authorized representatives to inspect and make copies of all documents, records
and information with respect to the business or assets of the Company as
Purchaser or its representatives may request. The Company and the Shareholders
shall promptly notify Purchaser in writing of (a) any notice or communication
relating to a default or event that, with notice or lapse of time or both, could
become a default, under any contract, commitment or obligation to which the
Company is a party, and (b) any adverse change in the Company's business,
financial condition or the conditions of its assets.
4.4 Approvals of Third Parties and Permits and Consents. The Company
and the Shareholders shall use their best efforts to secure all necessary
approvals and consents of third parties to the consummation of the transactions
contemplated hereby, including consents described on Exhibit 2.5. The Company
and the Shareholders shall use their best efforts to obtain all licenses,
permits, approvals or other authorizations required under any law, rule,
regulation, or otherwise for the consummation of the transactions contemplated
hereby. Following the Closing Date and at the expense of the Shareholders, the
Shareholders shall, upon Purchaser's request, exercise their best efforts to
obtain
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<PAGE> 19
any such approvals, consents, permits, licenses or authorizations which have not
been obtained on or prior to the Closing Date.
4.5 Acquisition Proposals. The Company and the Shareholders shall
not, and shall use their best efforts to cause the Company's employees, agents
and representatives not to, initiate, solicit or encourage, directly or
indirectly, any inquiries or the making or implementation of any proposal or
offer, including without limitation, any proposal or offer to the Shareholders,
with respect to a merger, acquisition, consolidation or similar transaction
involving, or the purchase of all or any significant portion of the assets or
any equity securities of the Company or engage in any negotiations concerning,
or provide any confidential information or data to, or have any discussions
with, any person relating to such proposal or offer, and the Company and the
Shareholders will immediately cease any such activities, discussions or
negotiations heretofore conducted with respect to any of the foregoing.
4.6 Employee Matters. The Shareholders shall not, without the prior
written approval of Purchaser, except as required by law, increase the cash
compensation of any Shareholder or other employee or an independent contractor
of the Company, adopt, amend or terminate any compensation plan, employment
agreement, independent contractor agreement, employee policies and procedures or
employee benefit plan, take any action that could deplete the assets of any
employee benefit, or fail to pay any premium or contribution due or file any
report with respect to any employee benefit plan or take any actions with
respect to its employees or employee matters without prompt written notice
thereof to the Purchaser or which might have a material adverse effect on the
Company, its business, assets or prospects.
4.7 Distributions and Repurchases. No distribution, payment or
dividend of any kind will be declared or paid by the Company, nor will any
repurchase of any of the Company's capital stock be approved or effected.
4.8 Requirements to Effect Transaction. The Company and each
Shareholder shall use their best efforts to take, or cause to be taken, all
actions necessary to effect the transaction contemplated hereby under applicable
law, including without limitation the filing with the appropriate government
officials of all necessary documents in form approved by counsel for the parties
to this Agreement.
4.9 Voting of Shares. Each Shareholder agrees that until the earlier
of the Closing Date or the termination of this Agreement, each such Shareholder
shall vote all shares of Company common stock owned by the Shareholders at any
meeting of the stockholders of the Company or take action by written consent for
adoption of this Agreement, as hereby amended, and in favor of the transaction
contemplated hereby and any other transactions contemplated by this Agreement,
and against any action, omission or agreement which would impede or interfere
with, or have the effect of discouraging, the transaction contemplated hereby.
4.10 Accounting and Tax Matters. The Company will not change in any
material respect the accounting methods or practices followed by the Company
(including any material change in any assumption underlying, or any method of
calculating, any bad debt, contingency or other reserve), except as may
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<PAGE> 20
be required by generally accepted accounting principles. The Company will not
make any material tax election except in the ordinary course of business
consistent with past practice, change any material tax election already made,
adopt any tax accounting method except in the ordinary course of business
consistent with past practice, change any tax accounting method, enter into any
closing agreement, settle any tax claim or assessment or consent to any tax
claim or assessment or any waiver of the statute of limitations for any such
claim or assessment. The Company will duly, accurately and timely (without
regard to any extensions of time) file all returns, information statements and
other documents relating to taxes of the Company required to be filed by it, and
pay all taxes required to be paid by it, on or before the Closing Date.
The following provisions shall govern the allocation of
responsibility as between the Purchaser and the Shareholders for certain tax
matters following the Closing Date:
(a) The Purchaser and the Shareholders shall cooperate
fully, as and to the extent reasonably requested by the other, in connection
with the filing of returns and other forms required to be filed with respect to
any taxes, fees, levies, duties, tariffs, imposts and other charges of any kind
imposed by any government or taxing authority ("Taxes") and as to any audit,
litigation or other proceeding with respect to Taxes. Such cooperation shall
include the retention and (upon the other s reasonable request) the provision of
records and information which are reasonably relevant to any such audit,
litigation or other proceeding and making employees available on a mutually
convenient basis to provide additional information and explanation of any
material provided. The Shareholders and the Purchaser agree (i) to retain all
books and records with respect to matters relating to Taxes for each taxable
period until the expiration of the statute of limitations (and, to the extent
notified by the Purchaser or the Shareholders, any extensions thereof) of the
respective taxable periods, and to abide by all record retention agreements
entered into with any taxing authority, and (ii) to give the other reasonable
written notice prior to transferring, destroying or discarding any such books
and records and, if the party so requests, to allow the other party to take
possession of such books and records.
(b) The Purchaser and the Shareholders further agree, upon
reasonable request, to use their reasonable best efforts to obtain any
certificate or other document from any governmental authority or any other
person as may be necessary to mitigate, reduce or eliminate any Tax imposed
(including, but not limited to, with respect to the transactions contemplated
herein).
4.11 Conversion Transaction. On or prior to the Closing Date, the
Shareholders and the Company shall file with the Secretary of State of Louisiana
an amendment to and/or a restatement of the Company's Articles of Incorporation
and shall take such other action as may be necessary to convert itself into a
general business corporation.
4.12 Survival of Covenants. All covenants contained in this Agreement
(regardless of whether expressly labeled as such) shall survive the Closing.
4.13 Covenant Not to Compete. Each of the Shareholders agrees that,
during the period commencing on the Closing Date and ending on the third
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<PAGE> 21
anniversary of the Closing Date, the Shareholder will not, without the prior
written consent of Purchaser:
(a) for itself or on behalf of any other person, directly or
indirectly, either as principal, partner, agent, independent contractor,
stockholder, consultant, representative or in any other capacity, own, manage,
operate or control, or otherwise in any manner have a financial interest in any
business which is directly or indirectly competitive with the Company or the
business as conducted by Purchaser located anywhere in the state(s) of Louisiana
and Mississippi (the "Restricted Territory"), except that nothing contained
herein shall preclude the Shareholders from purchasing or owning securities of
any such business if such securities are publicly traded, and provided that such
holdings do not exceed two (2%) percent of the issued and outstanding securities
of any class of securities of such business; or
(b) without limiting the generality of the preceding clause
(a), either individually or on behalf of or through any third party, solicit,
divert or appropriate or attempt to solicit, divert or appropriate, for the
purpose of competing with the Company or the business as conducted by Purchaser
or any present or future parent, subsidiary or other affiliate of Purchaser
which is engaged in a similar business as Purchaser, any existing or prospective
customer, partner, supplier, licensee or licensor of Purchaser located within
the Restricted Territory; or
(c) either individually or on behalf of or through any third
party, directly or indirectly, employ, or knowingly permit any company or
business organization directly or indirectly controlled by it to employ, or
solicit, entice or persuade or attempt to solicit, entice or persuade to leave
the services of Purchaser or any such parent, subsidiary or affiliate for any
reason, any other employees of or consultants to Purchaser.
For the purposes of this section, the engaging in a business
activity shall be deemed "competitive" with the business as conducted by
Purchaser if such activity, directly or indirectly, relates to the business of
distributing and selling eyeglasses and contact lenses and providing related
optical and optometric prescriptions, goods and services to persons with vision
disorders, or the business of participating in any manner in the delivery of
vision corrective or refractive services (including, without limitation, photo
refractive keratectomy) to persons with vision disorders.
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Each Shareholder recognizes and acknowledges that (i) the types
of competition which are prohibited by this Agreement are narrow and reasonable
in relation to the types of business activities in which the Shareholder is or
may engage and (ii) the specific but broad geographical scope of the provisions
of this section is reasonable, legitimate and fair to the Shareholder in light
of Purchaser s need to conduct its business in a large geographic area in order
to have a sufficient base to make its business profitable and in light of the
limited restrictions on the type of business activities prohibited herein
compared to the types of business activities in which the Shareholder is or may
engage.
Each Shareholder hereby expressly acknowledges that any breach
or threatened breach of any of the terms and/or conditions set forth in this
section will result in substantial, continuing and irreparable injury to
Purchaser. Therefore, the Shareholder hereby agrees that, in addition to any
other remedy that may be available to Purchaser, Purchaser shall be entitled to
injunctive relief, specific performance or other equitable relief by a court of
appropriate jurisdiction in the event of any breach or threatened breach of the
terms of this Agreement. Furthermore, in addition to the remedies Purchaser may
seek and obtain pursuant to this section, the period during which the covenants
contained herein apply shall be extended by any and all periods during which the
Shareholder shall be found by a court of competent jurisdiction to have been in
violation of the covenants contained in this Agreement.
SECTION 5. COVENANTS OF PURCHASER
Purchaser agrees that between the date hereof and the Closing Date:
5.1 Consummation of Agreement. Upon the satisfaction of Purchaser's
conditions precedent, Purchaser shall cause the consummation of the transactions
contemplated hereby in accordance with their terms and provisions.
5.2 Approvals of Third Parties and Permits and Consents. Purchaser
shall use its best efforts to secure all necessary approvals and consents of
third parties to the consummation of the transactions contemplated hereby.
SECTION 6. PURCHASER CONDITIONS PRECEDENT
The obligations of Purchaser hereunder are subject to the fulfillment at
or prior to the Closing Date of each of the following conditions:
6.1 Representations and Warranties. The representations and
warranties of the Shareholders contained herein shall have been true and correct
in all respects when initially made and shall be true and correct in all
respects as of the Closing Date.
6.2 Covenants and Conditions. The Shareholders shall have performed
and complied with all covenants and conditions required by this Agreement to be
performed and complied with by the Shareholders prior to the Closing Date, in
form and substance reasonably satisfactory to Purchaser.
6.3 Proceedings. No action, proceeding or order by any court or
governmental body shall have been threatened orally or in writing, asserted,
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<PAGE> 23
instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated hereby.
6.4 No Material Adverse Change. No material adverse change in the
condition (financial or otherwise), operations, assets, liabilities, business or
prospects of the Company shall have occurred since the Balance Sheet Date.
6.5 Approval of the following named lessors of the properties to the
following subsidiaries to the consummation of the transactions contemplated
hereby:
Vision Oakwood, Inc.
Vision CBD, Inc.
Vision Esplanade, Inc.
Vision Tomorrow, Inc.
6.6 The Company shall have given notice of the transactions
contemplated hereby by notices prepared by the Purchaser to the reasonable
satisfaction of the Shareholders to the lessors of the following subsidiaries:
Vision Plaza, Inc.
Vision Horizon, Inc.
Vision Lake Forest, Inc.
Vision Southland, Inc.
Vision Hammond Square, Inc.
Vision Uptown, Inc.
Vision Frontiers, Inc.
Vision Unlimited Laboratories, Inc.
Vision Universe, Inc.
Vision Mississippi, Inc.
Orleans Spectacle Corp.
6.7 Employment Arrangements. The Company and Shareholders will
cooperate with Purchaser and any professional corporation or association created
at the suggestion of Purchaser for the purpose of employing all of the
professional employees of the Company.
6.8 Consents and Approvals: Succession Court Approval. The
Shareholders shall have obtained the approval of the court in the Succession of
Tom I. Greenberg, bearing proceeding number 96-13287 of the Civil District Court
for the Parish of Orleans, State of Louisiana, to sell the Company stock at a
price not to exceed the purchase price.
6.9 Closing Deliveries. Purchaser shall have received all documents,
duly executed in form and substance satisfactory to Purchaser and its counsel,
referred to in Section 8.1.
6.10 Debt and Receivables. There shall be no indebtedness,
receivables or payables between the Company and its shareholders or affiliates
and the Company shall not have any liabilities, including indebtedness,
guaranties and capital leases, that are not disclosed in Section 2.16.
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6.11 Purchaser shall have received written resignations from any
officer or director of the Company whose resignation is requested by Purchaser,
each such resignation to be effective as of the Closing date.
6.12 Dissenting Shares. No holder of the Company's common stock shall
have demanded appraisal for the shares of Company common stock held by such
holder in accordance with the Louisiana Business Law.
6.13 No Material Change in Working Capital. There shall have been no
material change in the Company s Working Capital.
6.14 No Material Adverse Economic Event. There shall not have
occurred (i) any general suspension of trading in, or limitation on prices for,
or other extraordinary event affecting securities on NASDAQ, (ii) a declaration
of a banking moratorium or any suspension of payments in respect of banks in the
United States, (iii) any material limitation (whether or not mandatory) by any
governmental authority on, or any other event which might affect the extension
of credit by, lending institutions generally or (iv) in the case of any of the
foregoing existing on the date of execution hereof, a material acceleration or
worsening thereof.
6.15 The receipt of an opinion letter of Baldwin & Haspel, L.L.C.
substantially in the form annexed hereto as Annex 2 as modified by a letter
dated June 26, 1997 from Leon H. Rittenberg, Jr. to Leonard Weiser-Varon.
SECTION 7. THE COMPANY'S AND THE SHAREHOLDERS' CONDITIONS PRECEDENT
The obligations of the Company and the Shareholders hereunder are
subject to fulfillment at or prior to the Closing Date of each of the following
conditions:
7.1 Representations and Warranties. The representations and
warranties of Purchaser contained herein shall have been true and correct in all
respects when initially made and shall be true and correct in all respects as of
the Closing Date.
7.2 Covenants and Conditions. Purchaser shall have performed and
complied with all covenants and conditions required by this Agreement to be
performed and complied with by Purchaser prior to the Closing Date.
7.3 Proceedings. No action, proceeding or order by any court or
governmental body shall have been threatened orally or in writing, asserted,
instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated hereby.
7.4 Closing Deliveries. The Company shall have received all
documents, duly executed in form satisfactory to the Company and its counsel,
referred to in Section 8.2.
SECTION 8. CLOSING DELIVERIES
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8.1 Deliveries of the Company and the Shareholders. At or prior to
the Closing, the Company and the Shareholders shall deliver to Purchaser the
following, all of which shall be in a form satisfactory to counsel to Purchaser:
(a) stock certificates evidencing the Shareholders'
ownership of the Shares together with blank stock powers executed by such
Shareholders;
(b) certificates of each Shareholder, dated as of the
Closing Date, (i) as to the truth and correctness of the representations and
warranties of each Shareholder contained herein; (ii) as to the performance of
and compliance by each Shareholder with all covenants contained herein; and
(iii) certifying that all conditions precedent of each Shareholder to the
Closing have been satisfied;
(c) a certificate, dated within 20 days of the Closing Date,
of the Secretary of the State of Louisiana establishing that the Company is in
existence and is in good standing to transact business in its state of
incorporation, and a certificate, dated within 20 days of the Closing Date, of
the Secretary of State of the State of Mississippi establishing that the Vision
Mississippi, Inc. is in existence and is in good standing to transact business
in Mississippi;
(d) all authorizations, consents, approvals, permits and
licenses referred to in Sections 2.3 and 2.5;
(e) the resignations of the directors and officers of the
Company as requested by Purchaser; and
(f) such other instruments and documents as reasonably
requested by Purchaser to carry out and effect the purpose and intent of this
Agreement.
8.2 Deliveries of Purchaser. At or prior to the Closing, Purchaser
shall deliver to the Company the following, all of which shall be in a form
satisfactory to counsel to the Company and the Shareholders:
(a) the Consideration;
(b) a copy of the resolutions of the Board of Directors of
Purchaser authorizing the execution, delivery and performance of this Agreement
and all related documents and agreements each certified by the Secretary as
being true and correct copies of the original thereof;
(c) certificates of the President of Purchaser, dated as of
the Closing Date, (i) as to the truth and correctness of the representations and
warranties of Purchaser contained herein; (ii) as to the performance of and
compliance by Purchaser with all covenants contained herein; and (iii)
certifying that all conditions precedent of Purchaser to the Closing have been
satisfied;
(d) a certificate of the Secretary of Purchaser certifying
as to the incumbency of the directors and officers of Purchaser and as to the
signatures of such directors and officers who have executed documents delivered
at the Closing on behalf of Purchaser;
20
<PAGE> 26
(e) certificates, dated within 20 days of the Closing Date,
of the Secretary of the State of Delaware establishing that Purchaser is in
existence and is in good standing to transact business in the State of Delaware;
(f) such other instruments and documents as reasonably
requested by the Company or Shareholders to carry out and effect the purpose and
intent of this Agreement.
SECTION 9. NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION
9.1 Nature and Survival. All statements contained in this Agreement
or in any Exhibit attached hereto, any agreement executed pursuant hereto, and
any certificate executed and delivered by any party pursuant to the terms of
this Agreement, shall constitute representations and warranties. All such
representations and warranties, and all representations and warranties expressly
labeled as such in this Agreement shall survive the date of this Agreement and
the Closing Date for a period of two (2) years following the Closing Date (the
"Second Anniversary"), except that (i) all claims, if any, asserted in writing
on or prior to the Second Anniversary identified as a claim for indemnification
pursuant to this section 9.1 shall survive until finally resolved and satisfied
in full, and (ii) claims, if any, that (A) are based upon fraud by any party
hereto or (B) assert liability for any taxes imposed on or with respect to
income shall survive for the full period of the applicable statute of
limitations, and until finally resolved and satisfied in full if asserted on or
prior to such date.
The Shareholders shall jointly and severally indemnify, defend,
and hold harmless Purchaser and its affiliates, and the officers, directors and
employees of the foregoing, and their successors and assigns from, against and
with respect to any claim, liability, obligation, loss, damage, assessment,
judgment, cost and expense (including, without limitation, reasonable attorneys
, consultants and accountants fees and costs and expenses reasonably incurred in
investigating, preparing, defending against or prosecuting any claim, action or
proceeding) of any kind or character (collectively, "Damages"), arising out of
or in any manner incident, relating or attributable to:
(a) any inaccuracy in any representation or breach of
warranty of the Shareholders contained in this Agreement or in any related
document;
(b) any failure by the Shareholders to perform or observe,
or to have performed or observed, in full, any covenant, agreement or condition
to be performed or observed by them under this Agreement; or
(c) the Shareholder's ownership of the shares or any
uninsured third party claims arising from matters occurring prior to the
Closing.
In the event of the occurrence of any event which any party
asserts is an indemnifiable event pursuant to this section 9.1, the party
claiming indemnification (the "Indemnified Party") shall provide prompt notice
to the party required to provide indemnification (the "Indemnifying Party"),
specifying in reasonable detail the facts and circumstances (to the extent then
known) with respect to such claim and the basis for which indemnification is
available
21
<PAGE> 27
hereunder. If such event involves the claim of any third party, the Indemnifying
Party shall have the right to control the defense or settlement of such claim;
provided that:
(i) the Indemnified Party shall be entitled to participate
in the defense of such claim at its own expense,
(ii) the Indemnifying Party shall obtain the prior written
approval of the Indemnified Party (which approval shall not be unreasonably
withheld or delayed) before entering into any settlement of such claim if,
pursuant to or as a result of such settlement, an order, injunctive or other
non-monetary relief would be imposed against the Indemnified Party,
(iii) the Indemnifying Party shall not be entitled to control
(but shall be entitled to participate at its own expense in the defense of), and
the Indemnified Party shall be entitled to have sole control over, any claim
which seeks an order, injunction or other non-monetary relief against the
Indemnified Party; provided that (1) the Indemnified Party shall provide written
notice to the Indemnifying Party of its election to assume control over the
defense of such claim pursuant to this clause (iii) and (2) the Indemnified
Party shall obtain the prior written approval of the Indemnifying Party (which
approval shall not be unreasonably withheld or delayed) before entering into any
settlement of such claim, and/or
(iv) if the Indemnifying Party is entitled but fails to
assume control over the defense of a claim as provided in this section 9.1, the
Indemnified Party shall have the right to defend such claim, provided further
that the Indemnified Party shall obtain the prior written approval of the
Indemnifying Party (which approval shall not be unreasonably withheld or
delayed) before entering into any settlement of such claim if, pursuant to or as
a result of such settlement, injunctive or other non-monetary relief would be
imposed against the Indemnifying Party.
In the event that the Indemnifying Party shall be obligated to
indemnify the Indemnified Party pursuant to this section 9.1, the Indemnifying
Party shall, upon payment of such indemnity in full, be subrogated to all rights
of the Indemnified Party with respect to the claim to which such indemnification
relates.
However, the Shareholders shall not be required to indemnify any
Indemnified Party for any item of damage unless the aggregate amount of such
item of damage, together with the aggregate amount of all prior damages of such
party, exceeds $25,000.00, in which event the Indemnified Party shall be
entitled to indemnification for damages in excess of $25,000.00.
SECTION 10. TERMINATION
This Agreement may be terminated:
(a) at any time by mutual agreement of all parties;
22
<PAGE> 28
(b) at any time prior to the Closing by Purchaser if any material
representation or material warranty of the Company or any Shareholder contained
in this Agreement or in any certificate or other document executed and delivered
by the Company or any Shareholder pursuant to this Agreement is or becomes
untrue or breached in any material respect or if the Company or any Shareholder
fails to comply in any material respect with any covenant or agreement contained
herein, and any such misrepresentation, noncompliance or breach is not cured,
waived or eliminated within twenty (20) days after receipt of written notice
thereof;
(c) at any time prior to the Closing by the Shareholders if any
material representation or material warranty of Purchaser contained in this
Agreement or in any certificate or other document executed and delivered by
Purchaser pursuant to this Agreement is or becomes untrue or breached in any
material respect or if Purchaser fails to comply in any material respect with
any covenant or agreement contained herein and such misrepresentation,
noncompliance or bread is not cured, waived or eliminated within twenty (20)
days after receipt of written notice thereof;
SECTION 11. MISCELLANEOUS
11.1 Notices. Any communications required or desired to be given
hereunder shall be deemed to have been properly given if sent by hand delivery,
or by facsimile and overnight courier, to the parties hereto at the following
addresses, or at such other address as either party may advise the other in
writing from time to time:
23
<PAGE> 29
If to the Purchaser:
Vision Plaza Corp.
c/o Cambridge Eye Associates, Inc.
100 Jeffrey Avenue
Holliston, MA 01746
Attention: Alan B. MacDonald
with a copy of each notice directed to Purchaser to:
Lewis Geffen
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, PC
One Financial Center
Boston, Massachusetts 02111
If to the Shareholders:
Mrs. Marjory Greenberg
One River Place, Apt. 4H
3 Poydras Street
New Orleans, LA 70130
with a copy to:
Leon H. Rittenberg, Jr.
1100 Poydras Street, Suite 2200
New Orleans, LA 70163-2200
Facsimile: 504-585-7751
All such communications shall be deemed to have been delivered on the date of
hand delivery or on the next business day following the deposit of such
communications, properly addressed and postage prepaid with the overnight
courier.
11.2 Further Assurances. Each party hereby agrees to perform any
further acts and to execute and deliver any documents which may be reasonably
necessary to carry out the provisions of Agreement.
11.3 Each Party to Bear Costs. Each of the parties to this Agreement
shall pay all of the costs and expenses incurred by such party in connection
with the transactions contemplated by this Agreement, whether or not such
transactions are consummated.
11.4 Public Disclosures. Except as otherwise required by law, no
party to this Agreement shall make any public or other disclosure of this
Agreement or the transactions contemplated hereby without the prior consent of
the other parties. The parties to this Agreement shall cooperate with respect to
the form and content of any such disclosures.
11.5 GOVERNING LAW. THIS AGREEMENT SHALL BE INTERPRETED, CONSTRUED
AND ENFORCED IN ACCORDANCE WITH
24
<PAGE> 30
THE LAWS OF THE STATE OF LOUISIANA AND APPLIED WITHOUT GIVING EFFECT TO ANY
CONFLICTS OF LAWS PRINCIPLES.
11.6 Captions. The captions or headings in this Agreement are made
for convenience and general reference only and shall not be construed to
describe, define or limit the scope or intent of the provisions of this
Agreement.
11.7 Integration of Exhibits. All Exhibits attached to this Agreement
are integral parts of this Agreement as if fully set forth herein, and all
statements appearing therein shall be deemed disclosed for all purposes and not
only in connection with the specific representation in which they are explicitly
referenced.
11.8 ENTIRE AGREEMENT/AMENDMENT. THIS INSTRUMENT, INCLUDING ALL
EXHIBITS ATTACHED HERETO, CONTAINS THE ENTIRE AGREEMENT OF THE PARTIES AND
SUPERSEDES ANY AND ALL PRIOR OR CONTEMPORANEOUS AGREEMENTS BETWEEN THE PARTIES,
WRITTEN OR ORAL, WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED HEREBY.
11.9 Counterparts. This Agreement may be executed in several
counterparts, each of which when so executed shall be deemed to be an original,
and such counterparts shall together constitute and be one and the same
instrument.
11.10 Binding Effect/Assignment. This Agreement shall be binding on,
and shall inure to the benefit of, the parties hereto, and their respective
successors and assigns, and no other person shall acquire or have any right
under or by virtue of this Agreement. No party may assign any right or
obligation hereunder without the prior written consent of the other parties;
provided, however, that Purchaser may assign its rights and obligations
hereunder to an affiliate, which assignment shall not release Purchaser of its
obligations hereunder.
11.11 No Rule of Construction. The parties acknowledge that this
Agreement was initially prepared by Shareholders, and that all parties have read
and negotiated the language used in this Agreement. The parties agree that,
because all parties participated in negotiating and drafting this Agreement, no
rule of construction shall apply to this Agreement which construes ambiguous
language in favor of or against any party by reason of that party's role in
drafting this Agreement.
11.12 Costs of Enforcement. In the event that Purchaser, on the one
hand, or the Company or the Shareholders, on the other hand, file suit in any
court against any other party to enforce the terms of this Agreement against the
other party or to obtain performance by it hereunder, the prevailing party will
be entitled to recover all reasonable costs, including reasonable attorneys'
fees, from the other party as part of any judgment in such suit. The term
"prevailing party" shall mean the party in whose favor final judgment after
appeal (if any) is rendered with respect to the claims asserted in the
Complaint. "Reasonable attorneys' fees" are those reasonable attorneys' fees
actually incurred in obtaining a judgment in favor of the prevailing party.
25
<PAGE> 31
11.13 Amendments: Waivers. This Agreement may be amended, modified or
supplemented only by an instrument in writing executed by all the parties
hereto. Any waiver of the terms and conditions hereof must be in writing, and
signed by the parties hereto. The waiver of any of the terms and conditions of
this Agreement shall not be construed as a waiver of any other terms and
conditions hereof.
11.14 Severability. If any provision of this Agreement shall be found
to be illegal, invalid or unenforceable under present or future laws, such
provision shall be fully severable and this Agreement shall be construed and
enforced as if such provision never comprised a part hereof; and the remaining
provisions hereof shall remain in full force and effect. In lieu of such
provision, there shall be added automatically as part of this Agreement, a
provision as similar in its terms to such provision as may be possible and be
legal, valid and enforceable.
11.15 Jimmy Bradford. The Company may grant Jimmy Bradford an
employment contract for a term of not more than two years and for compensation
not less than that which he is presently earning upon terms and conditions
reasonably satisfactory to Purchaser.
11.16 Jeff Greenberg. The Company may grant Jeff Greenberg a
consulting contract for a term of two years at an annual compensation of
$35,000.00 per year, which contract shall require consulting services of not
less than twenty hours per month. This compensation shall be paid quarterly upon
receipt of appropriate invoices.
11.17 Closing. The Closing shall take place at the offices of Baldwin
& Haspel, L.L.C. in New Orleans, Louisiana. If the Closing has not been
consummated prior to July 30, 1997, the Closing shall be at 10:00 a.m. on July
31, 1997.
11.18 Deposit. Upon the execution of this Agreement by the Sellers,
the Purchaser becomes obligated to deposit immediately with Baldwin & Haspel,
L.L.C. Fifty Thousand and No/100 ($50,000.00) Dollars, and failure to do shall
be considered a breach of this Agreement. This deposit is to be non-interest
bearing and shall be placed in any federally insured banking or savings and loan
institution without responsibility on the part of Baldwin & Haspel, L.L.C. in
case of failure or suspension of such institution. In the event that Purchaser
fails to comply with this Agreement within the time specified, Sellers shall
have the right to declare the deposit ipso facto forfeited without formality
beyond tender of title to Purchaser. The forfeiture of said deposit shall be
deemed as liquidated damages and not as a penalty for Purchaser's failure to
comply with this Agreement. In the event that Purchaser complies with this
Agreement within the time specified, the deposit shall be credited against the
purchase price if the sale is consummated and if the sale is not consummated, it
shall be returned to the Purchaser.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
26
<PAGE> 32
PURCHASER:
VISION PLAZA CORP.
BY: /s/ Alan B. MacDonald
--------------------------------------------
ALAN B. MACDONALD
VICE PRESIDENT
SHAREHOLDERS:
/s/ Marjory O. Greenberg
- ------------------------------------------------
MARJORY O. GREENBERG, AS TESTAMENTARY
EXECUTRIX OF THE SUCCESSION OF TOM I. GREENBERG
/s/ Peter Brown
- ------------------------------------------------
PETER BROWN
27
<PAGE> 33
INDEX TO EXHIBITS
Exhibit Description
1.2(a) Promissory Note - Mrs. Marjory O. Greenberg
1.2(b) Promissory Note - Donald Weil
1.2(c) Agreement- $63,000
2.1 Capitalization of the Company
2.3 Permits and Licenses
2.5 Consents
2.6 Financial Statements
2.7 Leases
2.9 Real and Personal Property; Encumbrances
2.10 Patents and Trademarks; Names
2.11(a) through
2.11(c) Directors and Officers; Payroll Information
2.12 Litigation
2.13 Contracts (other than Leases)
2.14 Changes Since Balance Sheet Date
2.17 Insurance Policies
8.1(h) Shareholder Release
ANNEX I Consideration
ANNEX II Legal Opinion
28
<PAGE> 34
ANNEX I
CONSIDERATION
The consideration to be received by the Shareholders pursuant to the
Agreement (the "Consideration") is $1,832,916.02 cash payable to Mrs. Marjory O.
Greenberg, in her capacity as the Testamentary Executrix of the Succession of
Tom I. Greenberg (Civil District Court No. 96-13287) and $168,000.00 cash
payable to Peter Brown.
As additional consideration, the Purchaser shall cause the payment
of the consulting fees due Jeff Greenberg in the amount of $35,000.00 per year
for two years pursuant to the terms of section 11.16.
29
<PAGE> 1
EXHIBIT 10.2
PROMISSORY NOTE
$594,110.80 Holliston, Massachusetts
as of September 2, 1997
FOR VALUE RECEIVED, Stephen M. Blinn, an individual residing at 6 Thoreau
Circle, Beverly, MA 01915 (the "Borrower") hereby promises to pay to Sight
Resource Corporation, a Delaware corporation (the "Lender") at 100 Jeffrey
Avenue, Holliston, MA 01746, or at such other place as the Lender may from time
to time designate, the principal amount of Five Hundred Ninety Four Thousand One
Hundred Ten Dollars and Eighty Cents ($594,110.80) in lawful money of the United
States of America, on the Maturity Date (as hereinafter defined). Interest shall
accrue on the outstanding principal balance hereof commencing on the date hereof
until maturity (whether as stated, by acceleration or otherwise) at a rate of
six and fifty-five hundredths percent (6.55%) per annum, compounding annually,
and shall be payable semi-annually on the earlier of the Maturity Date or the
occurrence of an "Event of Default" (as hereinafter defined). Interest on
overdue payments shall be payable at a rate of two percent (2%) per annum above
the rate payable hereunder. In no event shall the rate of interest hereunder
exceed the maximum interest rate permitted by applicable law.
The Borrower may, at its option, at any time and from time to time, prepay
all or any part of the principal balance of this Note, without penalty or
premium.
This Note shall, at the option of the Lender, become immediately due and
payable upon notice or demand upon the occurrence of any of the following events
(each, an "Event of Default"):
(a) Borrower shall fail to make any payment when due which failure continues
for five(5) days after written receipt of notice from the Lender; or
(b) The occurrence of any of the following with respect to the Borrower: the
admission in writing of his inability, or the general inability, to pay his
debts as they become due, appointment of a receiver for any part of the
property of, legal or equitable assignment, conveyance or transfer of
property for the benefit of creditors by, or the commencement of any
proceedings under any bankruptcy or insolvency laws by or against, the
Borrower, provided that it shall not be an Event of Default hereunder if a
proceeding under any bankruptcy or insolvency laws commenced against the
Borrower is dismissed within ninety (90) days.
The "Maturity Date" shall mean the earlier to occur of (a) September 2,
2007 or (b) the date upon which the Borrower receives the proceeds of the sale
of not less than 20,000 shares of Common Stock of the Lender, the shares having
been acquired by the exercise of options for which the Borrower used the funds
received on account of this Note.
No act, omission or delay by the Lender or course of dealing between the
Lender and the Borrower shall constitute a waiver of the rights and remedies of
the Lender hereunder. No single or partial waiver by the Lender of any default
or right or remedy which it may have shall operate as a waiver of any other
default, right or remedy or of the same default, right or remedy on a future
occasion.
This Note shall be governed by and construed in accordance with the laws of
The Commonwealth of Massachusetts (without giving effect to the conflict of laws
principles thereof).
<PAGE> 2
Any legal action or proceeding with respect to this Note may be brought in the
courts of The Commonwealth of Massachusetts or of the United States of America
for the District of Massachusetts, and, by execution and delivery of this Note,
the Borrower hereby accepts for itself and in respect of its property, generally
and unconditionally, the jurisdiction of the aforesaid courts. The Borrower
hereby knowingly, voluntarily, intentionally and irrevocably waives, in
connection with any such action or proceeding: (i) any objection, including,
without limitation, any objection to the laying of venue or based on the grounds
of forum non conveniens, which it may now or hereafter have to the bringing of
any such action or proceeding in such respective jurisdictions, (ii) the right
to interpose any setoff, non-compulsory counterclaim or cross-claim and (iii) to
the maximum extent not prohibited by law, any right it may have to a trial by
jury in respect of any litigation directly or indirectly arising out of, under
or in connection with this Note. The Borrower irrevocably consents to the
service of process of any of the aforementioned courts in any such action or
proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, to the Borrower at its address set forth above. Nothing herein
shall affect the right of the Lender to serve process in any other manner
permitted by law or to commence legal proceedings or otherwise proceed against
the Borrower in any other jurisdiction.
No provision hereof shall be modified, altered or limited except by a
written instrument expressly referring to this Note and to such provision, and
executed by the Borrower and the Lender.
This Note and all obligations evidenced hereby shall be binding upon the
heirs, executors, administrators, successors and assigns of the Borrower and
shall, together with the rights and remedies of the Lender hereunder, inure to
the benefit of the Lender, its successors, endorsees and assigns.
In the event the Lender or any holder hereof shall refer this Note to an
attorney for collection, the Borrower agrees to pay, in addition to unpaid
principal and interest, all the costs and expenses incurred in attempting or
effecting collection hereunder, including reasonable attorney's fees, whether or
not suit is instituted.
This Note shall take effect as an instrument under seal in The Commonwealth
of Massachusetts.
/s/ Stephen M. Blinn
--------------------
Stephen M. Blinn
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SIGHT
RESOURCE CORPORATION'S BALANCE SHEET AND STATEMENT OF OPERATIONS AS OF AND
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY
BY SUCH REFERENCE TO SUCH FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1997.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<EXCHANGE-RATE> 1
<CASH> 3,883
<SECURITIES> 0
<RECEIVABLES> 3,024
<ALLOWANCES> 515
<INVENTORY> 4,133
<CURRENT-ASSETS> 11,384
<PP&E> 10,169
<DEPRECIATION> 4,236
<TOTAL-ASSETS> 33,886
<CURRENT-LIABILITIES> 9,835
<BONDS> 0
0
0
<COMMON> 88
<OTHER-SE> 22,800
<TOTAL-LIABILITY-AND-EQUITY> 33,886
<SALES> 33,141
<TOTAL-REVENUES> 33,141
<CGS> 12,058
<TOTAL-COSTS> 12,058
<OTHER-EXPENSES> 22,102
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 261
<INCOME-PRETAX> (514)
<INCOME-TAX> 0
<INCOME-CONTINUING> (514)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (514)
<EPS-PRIMARY> (0.06)
<EPS-DILUTED> 0
</TABLE>
