<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
______________
Date of Report (Date of earliest event reported): April 15, 1999
--------------
Sight Resource Corporation
--------------------------
(Exact name of registrant as specified in its charter)
Delaware 0-21068 04-3181524
- ------------------ --------------------- ---------------------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
100 Jeffrey Avenue, Holliston, Massachusetts 01746
--------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (508) 429-6916
--------------
- --------------------------------------------------------------------------------
<PAGE>
Sight Resource Corporation
Index
Item Page No.
----------------------------------------------- --------
Item 2. Acquisition or Disposition of Assets 3
Item 5. Other Events 3
Item 7. Financial Statements and Exhibits 4
Item 8. Change in Fiscal Year 5
Signatures 6
Exhibit Index 7
2
<PAGE>
Item 2. Acquisition or Disposition of Assets.
On April 22, 1999, a wholly-owned subsidiary of the Registrant, Kent
Acquisition Corporation ("KAC"), completed its acquisition of all of the issued
and outstanding shares of capital stock of Kent Optical Company, a Michigan
corporation ("Kent"), Custom Optics, Inc., a Michigan corporation ("Custom"),
Kent-N.W. Grand Rapids, Inc., a Michigan corporation ("Kent-N.W."), Kent-
Hackley, Inc., a Michigan corporation ("Kent-Hackley"), Source Optical Supply,
Inc., a Michigan corporation ("Source," and collectively with Kent, Custom,
Kent-N.W. and Kent-Hackley, the "Companies"), pursuant to a Stock Purchase and
Sale Agreement (the "Purchase Agreement") by and among KAC, the Registrant, the
Companies and the stockholders of the Companies dated as of April 1, 1999 (the
"Acquisition"). In consideration for all the issued and outstanding stock of
the Companies, KAC paid $5,200,000 in cash provided pursuant to a term loan from
Fleet National Bank, more particularly described in Item 5 to this Form 8-K,
issued promissory notes in the aggregate amount of $1,000,000 and arranged for
the issuance of 160,000 unregistered shares of Common Stock of the Registrant.
The Companies are privately held primary eye care chains that operate eye care
centers in Michigan. The Registrant intends to continue the business operated
by the Companies. The purchase price for the Acquisition was determined by
negotiation between the parties based , in part, upon a multiple of the
Companies' earnings. This Acquisition was accounted for under the purchase
method of accounting. The Purchase Agreement and the press release dated April
23, 1999, filed as Exhibits 2.1 and 99.8, respectively, are incorporated herein
by reference.
Item 5. Other Events.
On April 15, 1999, the Registrant entered into a Loan Agreement (the "Loan
Agreement") with Fleet National Bank (the "Bank") pursuant to which the
Registrant may borrow up to $7,000,000 on a term loan basis, up to $3,000,000 on
a revolving credit basis and up to $10,000,000 on an acquisition credit basis,
subject to certain performance criteria, which loans are secured by all of the
assets of the Registrant and its wholly-owned subsidiaries.
On April 22, 1999, the Registrant borrowed $7,000,000 pursuant to the term
loan and $975,000 pursuant to the revolving line of credit to refinance existing
debt and finance the acquisition of the Companies by KAC, a wholly owned
subsidiary of the Registrant. Other amounts borrowed under the Loan Agreement
in the future are expected to be used to finance future acquisitions, provide
ongoing working capital and for other general corporate purposes.
The Loan Agreement and the press release dated April 23, 1999, filed as
Exhibits 99.1 and 99.9, respectively, are incorporated herein by reference.
3
<PAGE>
Item 7. Financial Statements and Exhibits.
(a) Financial statements of businesses acquired. The financial statements of
-------------------------------------------
the businesses acquired by the Registrant, as described in Item 2 of this
Form 8-K, are not included herein. The Registrant intends to file such
financial statements in an amendment to this Form 8-K not later than 60
days after May 7, 1999.
(b) Pro forma financial information. The pro forma financial information of
-------------------------------
the businesses acquired by the Registrant, as described in Item 2 of this
Form 8-K, are not included herein. The Registrant intends to file such pro
forma financial information in an amendment to this Form 8-K not later than
60 days after May 7, 1999.
(c) Exhibits.
--------
Exhibit No. Description
----------- -----------
2.1 Stock Purchase and Sale Agreement by and among Kent Optical
Company, Custom Optics, Inc., Kent-N.W. Grand Rapids, Inc.,
Kent-Hackley, Inc., Source Optical Supply, Inc., the
stockholders of such companies, Kent Acquisition Corporation and
Sight Resource Corporation, dated as of April 1, 1999.
99.1 Loan Agreement by and between Sight Resource Corporation and
Fleet National Bank, dated as of April 15, 1999.
99.2 $7,000,000 Term Loan Note between Sight Resource Corporation
and Fleet National Bank, dated as of April 15, 1999.
99.3 $3,000,000 Secured Revolving Line Note between Sight Resource
Corporation and Fleet National Bank, dated as of April 15, 1999.
99.4 $10,000,000 Secured Acquisition Term Note between Sight Resource
Corporation and Fleet National Bank, dated as of April 15, 1999.
99.5 Borrower Security Agreement by and between Sight Resource
Corporation and Fleet National Bank, dated as of April 15, 1999.
99.6 Borrower Stock Pledge Agreement by and between Sight Resource
Corporation and Fleet National Bank, dated as of April 15, 1999.
99.7 Trademark Security Agreement by and between Sight Resource
Corporation and Fleet National Bank, dated as of April 15, 1999.
4
<PAGE>
99.8 Press Release dated April 23, 1999, re: Acquisition.
99.9 Press Release dated April 23, 1999, re: Loan Agreement.
Item 8. Change in Fiscal Year.
On April 22, 1999, the Board of Directors of the Registrant authorized a
change in the Registrant's fiscal year end from the end of the calendar year
(December 31) to the last Saturday of the calendar year which, for the current
fiscal year, will be December 25, 1999. The transition period covering such
change in fiscal year end will be covered by the Registrant's Form 10-Q for the
first quarter of 1999.
5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SIGHT RESOURCE CORPORATION
Date: May 4, 1999 By: /s/ William T. Sullivan
-----------------------
William T. Sullivan
President
6
<PAGE>
EXHIBIT INDEX
-------------
Exhibit
Number Description
- ------ -----------
2.1 Stock Purchase and Sale Agreement by and among Kent Optical
Company, Custom Optics, Inc., Kent-N.W. Grand Rapids, Inc.,
Kent-Hackley, Inc., Source Optical Supply, Inc., the
stockholders of such companies, Kent Acquisition Corporation and
Sight Resource Corporation, dated as of April 1, 1999.
99.1 Loan Agreement by and between Sight Resource Corporation and
Fleet National Bank, dated as of April 15, 1999.
99.2 $7,000,000 Term Loan Note between Sight Resource Corporation
and Fleet National Bank, dated as of April 15, 1999.
99.3 $3,000,000 Secured Revolving Line Note between Sight Resource
Corporation and Fleet National Bank, dated as of April 15, 1999.
99.4 $10,000,000 Secured Acquisition Term Note between Sight Resource
Corporation and Fleet National Bank, dated as of April 15, 1999.
99.5 Borrower Security Agreement by and between Sight Resource
Corporation and Fleet National Bank, dated as of April 15, 1999.
99.6 Borrower Stock Pledge Agreement by and between Sight Resource
Corporation and Fleet National Bank, dated as of April 15, 1999.
99.7 Trademark Security Agreement by and between Sight Resource
Corporation and Fleet National Bank, dated as of April 15, 1999.
99.8 Press Release dated April 23, 1999, re: Acquisition.
99.9 Press Release dated April 23, 1999, re: Loan Agreement.
7
<PAGE>
EXHIBIT 2.1
================================================================================
STOCK PURCHASE AND SALE AGREEMENT
By and Among
KENT ACQUISITION CORP.,
KENT OPTICAL COMPANY, CUSTOM OPTICS, INC.,
KENT-N.W. GRAND RAPIDS, INC., KENT-HACKLEY, INC.
AND SOURCE OPTICAL SUPPLY, INC.
and
THE STOCKHOLDERS OF KENT OPTICAL COMPANY,
CUSTOM OPTICS, INC., KENT-N.W. GRAND RAPIDS, INC., KENT-HACKLEY, INC.
AND SOURCE OPTICAL SUPPLY, INC.
________________________
dated as of April 1, 1999
<PAGE>
===============================================================================
TABLE OF CONTENTS
PAGE
----
ARTICLE I PURCHASE AND SALE OF THE SHARES............................... 2
SECTION 1.01 Purchase and Sale of the Shares....................... 2
SECTION 1.02 Purchase Price........................................ 3
SECTION 1.03 Purchase Price Adjustments............................ 4
SECTION 1.04 Closing............................................... 5
SECTION 1.05 Further Assurances.................................... 5
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE SELLERS................ 5
SECTION 2.01 Title to Shares....................................... 6
SECTION 2.02 Seller's Authority to Execute and
Perform Agreement..................................... 6
SECTION 2.03 Purchase For Investment; Residence.................... 6
SECTION 2.04 Capitalization........................................ 7
SECTION 2.05 Organization and Qualification........................ 7
SECTION 2.06 Subsidiaries.......................................... 7
SECTION 2.07 Corporate Power and Authority......................... 7
SECTION 2.08 Validity, Etc......................................... 8
SECTION 2.09 Financial Statements.................................. 8
SECTION 2.10 Absence of Undisclosed Liabilities.................... 8
SECTION 2.11 Absence of Adverse Change; Conduct of
Business.............................................. 9
SECTION 2.12 Inventories........................................... 10
SECTION 2.13 Receivables........................................... 10
SECTION 2.14 Taxes................................................. 10
SECTION 2.15 Litigation............................................ 11
SECTION 2.16 Certain Practices..................................... 12
SECTION 2.17 Compliance with Law................................... 12
SECTION 2.18 Licenses and Permits.................................. 12
SECTION 2.19 Labor and Employee Relations.......................... 12
SECTION 2.20 Certain Employees..................................... 12
SECTION 2.21 Employee Benefits..................................... 13
SECTION 2.22 Tangible Properties................................... 13
SECTION 2.23 Owned Premises........................................ 14
SECTION 2.24 Leased Premises....................................... 15
SECTION 2.25 Environmental Matters................................. 15
SECTION 2.26 Insurance............................................. 15
SECTION 2.27 Outstanding Commitments............................... 15
SECTION 2.28 Intellectual Property................................. 16
SECTION 2.29 Significant Customers and Suppliers................... 16
SECTION 2.30 Banks, Brokers and Proxies............................ 16
SECTION 2.31 Assumptions, Guaranties, Etc. of
Indebtedness of Other Persons......................... 16
SECTION 2.32 Transactions With Affiliates.......................... 17
SECTION 2.33 Records............................................... 17
i
<PAGE>
TABLE OF CONTENTS
PAGE
----
SECTION 2.34 Medicare and Medicaid Programs........................ 17
SECTION 2.35 Fraud and Abuse....................................... 17
SECTION 2.36 Disclosure............................................ 17
SECTION 2.37 Year 2000 Compliance.................................. 18
SECTION 2.38 Dissolution of Jackson Optical, Inc................... 18
ARTICLE III REPRESENTATIONS AND WARRANTIES OF BUYER AND SRC............. 18
SECTION 3.01 Organization.......................................... 18
SECTION 3.02 Buyer Power and Authority............................. 18
SECTION 3.03 Validity, Etc......................................... 18
SECTION 3.04 Financial Statements of SRC........................... 19
SECTION 3.05 Absence of Material Adverse Change.................... 19
SECTION 3.06 The Payment Shares.................................... 19
SECTION 3.07 SRC SEC Documents..................................... 19
ARTICLE IV COVENANTS OF THE SELLERS..................................... 20
SECTION 4.01 Best Efforts Cooperation.............................. 20
SECTION 4.02 Access................................................ 20
SECTION 4.03 Insurance............................................. 20
SECTION 4.04 Compliance with Laws.................................. 20
SECTION 4.05 Keeping of Books and Records.......................... 20
SECTION 4.06 Actions Prior to Closing.............................. 21
SECTION 4.07 Notice of Changes..................................... 21
SECTION 4.08 Preservation of Business.............................. 21
SECTION 4.09 Litigation............................................ 21
SECTION 4.10 Continued Effectiveness of
Representations and Warranties........................ 21
SECTION 4.11 No Negotiations....................................... 22
SECTION 4.12 Resignations.......................................... 22
ARTICLE V COVENANTS OF THE BUYER AND SRC................................ 22
SECTION 5.01 Cooperation........................................... 22
SECTION 5.02 Continued Effectiveness of
Representations and Warranties........................ 22
SECTION 5.03 Registration of Shares................................ 22
ARTICLE VI MUTUAL COVENANTS............................................. 22
SECTION 6.01 Non-Competition....................................... 23
SECTION 6.02 Leases................................................ 23
SECTION 6.03 Reserved.............................................. 23
SECTION 6.04 Employment Agreement.................................. 23
ARTICLE VII CONDITIONS TO THE BUYER'S OBLIGATIONS....................... 23
SECTION 7.01 Consents.............................................. 23
SECTION 7.02 Representations and Warranties True................... 23
SECTION 7.03 Performance........................................... 23
SECTION 7.04 No Adverse Change..................................... 24
SECTION 7.05 Opinion of Counsel.................................... 24
SECTION 7.06 Resignations.......................................... 24
SECTION 7.07 No Actions, Suits or Proceedings...................... 24
SECTION 7.08 Investigation Satisfactory............................ 24
ii
<PAGE>
TABLE OF CONTENTS
PAGE
----
SECTION 7.09 Management Agreements................................. 24
SECTION 7.10 Closing Documents..................................... 24
SECTION 7.11 No Material Adverse Economic Event.................... 25
SECTION 7.12 Financing Commitment.................................. 25
SECTION 7.13 Tax and Accounting.................................... 25
ARTICLE VIII CONDITIONS TO THE SELLERS OBLIGATIONS...................... 25
SECTION 8.01 Representations and Warranties to be
True and Correct...................................... 25
SECTION 8.02 Performance........................................... 25
SECTION 8.03 No Actions, Suits or Proceedings...................... 25
SECTION 8.04 Closing Documents..................................... 26
SECTION 8.05 Tax and Accounting.................................... 26
SECTION 8.06 Other Agreements...................................... 26
SECTION 7.07 No Actions, Suits or Proceedings...................... 26
SECTION 8.08 Investigation Satisfactory............................ 26
SECTION 8.09 No Material Adverse Economic Event.................... 26
ARTICLE IX INDEMNIFICATION.............................................. 26
SECTION 9.01 Survival.............................................. 26
SECTION 9.02 Sellers' Indemnification of Buyer..................... 27
SECTION 9.03 Indemnification by Buyer.............................. 27
SECTION 9.04 Claims for Indemnification............................ 27
ARTICLE X TERMINATION................................................... 28
SECTION 10.01 Termination.......................................... 28
SECTION 10.02 Effect of Termination................................ 30
ARTICLE XI SRC GUARANTEE................................................ 30
SECTION 11.01 Guarantee............................................ 30
SECTION 11.02 Reserved............................................. 31
SECTION 11.03 Certain Bankruptcy Events............................ 31
ARTICLE XII MISCELLANEOUS............................................... 31
SECTION 12.01 Notices.............................................. 31
SECTION 12.02 Entire Agreement..................................... 32
SECTION 12.03 Modifications and Amendments......................... 32
SECTION 12.04 Waivers and Consents................................. 32
SECTION 12.05 Assignment........................................... 33
SECTION 12.06 Parties in Interest.................................. 33
SECTION 12.07 Governing Law........................................ 33
SECTION 12.08 Arbitration.......................................... 33
SECTION 12.09 Severability......................................... 33
SECTION 12.10 Interpretation....................................... 33
SECTION 12.11 Headings and Captions................................ 34
SECTION 12.12 Enforcement.......................................... 34
SECTION 12.13 Reliance............................................. 34
SECTION 12.14 Expenses............................................. 34
SECTION 12.15 No Broker or Finder.................................. 34
SECTION 12.16 Publicity............................................ 34
SECTION 12.17 Confidentiality...................................... 35
SECTION 12.18 Counterparts......................................... 35
iii
<PAGE>
Exhibits
- --------
1.02(a) Form of Escrow Agreement
1.02(b) Form of Promissory Note
6.01 Form of Non-Competition Agreement
6.02 Form of Real Estate Lease
6.04(a) Form of Employment Agreement (Westra)
6.04(b) Form of Employment Agreement (Cress)
6.04(c) Form of Employment Agreement (Almy)
6.04(d) Form of Employment Agreement (Burmeister)
7.05 Form of Opinion of McNeil Grafton
Schedules
- ---------
1.02 Purchase Price Allocation
2.01 Title to Shares
2.04 Capitalization
2.08 Validity, etc.
2.09 Financial Statement
2.11 Absence of Adverse Change; Conduct of Business
2.14 Taxes
2.15 Litigation
2.18 Licenses and Permits
2.20 Certain Employees
2.21 Employee Benefits
2.22 Tangible Properties
2.23 Owned Premises
2.24 Leased Premises
2.26 Insurance
2.27 Outstanding Commitments
2.28 Intellectual Property
2.29 Customers and Suppliers
2.30 Banks, Brokers and Proxies
2.31 Guaranties of Indebtedness of Other Persons
2.32 Transactions with Affiliates
2.37 Year 2000 Compliance
<PAGE>
STOCK PURCHASE AND SALE AGREEMENT
This Stock Purchase and Sale Agreement (this "Agreement") is entered into
as of the 1st day of April, 1999 by and among Kent Acquisition Corp. (the
"Buyer"), a Delaware corporation and wholly owned subsidiary of Sight Resource
Corporation, a Delaware Corporation ("SRC"), SRC (with respect to certain of the
provisions herein), Kent Optical Company, a Michigan corporation ("Kent"),
Custom Optics, Inc., a Michigan corporation ("Custom"), Kent - N.W. Grand
Rapids, Inc., a Michigan corporation ("Kent - N.W."), Kent-Hackley, Inc., a
Michigan corporation ("Kent Hackley") and Source Optical Supply, Inc., a
Michigan corporation ("Source" and collectively with Kent, Custom, Kent - N.W.
and Kent-Hackley, the "Companies"), and Timothy D. Westra ("Westra"), John C.
Cress ("Cress"), Gerald Almy ("Almy"), Steven Burmeister ("Burmeister"), Dennis
Toussaint ("Toussaint") and BACOVAST, L.L.C. ("BACOVAST" and collectively with
Westra, Cress, Almy, Burmeister and Toussaint, the "Sellers").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Sellers are the owners of all of the issued and outstanding
shares of capital stock of every kind and description of the Companies (said
shares being herein referred to as the "Shares"); and
WHEREAS, the Sellers desire to sell the Shares and the Buyer desires to
purchase the Shares upon the terms and conditions set forth herein; and
WHEREAS, the Buyer, the Companies and the Sellers desire to enter into
certain other agreements for their mutual benefit;
NOW THEREFORE, in consideration of the premises and of the mutual covenants
and agreements contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby mutually acknowledged, intending
to be legally bound, the parties hereby agree as follows:
ARTICLE I PURCHASE AND SALE OF THE SHARES
--------- -------------------------------
SECTION 1.01 Purchase and Sale of the Shares. On the basis of the
-------------------------------
representations, warranties and undertakings set forth in this Agreement, and on
the terms and subject to the conditions set forth in this Agreement, at the
Closing (as defined in Section 1.04), each Seller shall sell his, her or its
Shares to the Buyer, and the Buyer shall purchase such Shares from each Seller,
free and clear of all claims, charges, liens, contracts, rights, options,
security interests, mortgages, encumbrances and restrictions of every kind and
nature (collectively, the "Claims").
SECTION 1.02 Purchase Price. The purchase price for the Shares (the
--------------
"Purchase Price") is the amount per Share set forth on Schedule 1.02, for an
-------------
aggregate of $7,000,000 for all of the
2
<PAGE>
Shares, which will be paid as follows: (a) $5,200,000, subject to adjustment
herein, will be paid by wire transfer at the Closing in accordance with
instructions provided by the Sellers (the "Cash Portion"), (b) $175,000 will be
deposited in escrow (the "Escrow Fund") from the proceeds of the Cash Adjustment
(as defined in Section 1.03(b) hereto) pursuant to an escrow agreement (the
"Escrow Agreement") in substantially the form of Exhibit 1.02(a) hereto to
---------------
facilitate any adjustment of the Purchase Price pursuant to Section 1.03(a)
herein, provided, however, in the event that the proceeds of the Cash
--------
Adjustment (as defined in Section 1.03 hereto) are insufficient to fully
fund the Escrow Fund, an amount equal to the deficiency in the Escrow
Fund shall be deducted from the Cash Portion and shall be deposited into
the Escrow Fund pursuant to the Escrow Agreement, (c) Buyer will execute
and deliver a promissory note (the "Note") in the form of Exhibit 1.02(b)
---------------
attached hereto to each of Westra and Cress, which together will amount to an
aggregate principal amount of $1,000,000, and (d) Buyer will arrange for the
issuance by SRC to each of Westra and Cress of an amount of shares that will
together amount to an aggregate of 160,000 unregistered shares (the "Payment
Shares") of the Common Stock, par value $.01 per share of SRC (the "SRC Common
Stock"). Unless the per share Market Price, as defined below, reaches $5.00
during any period of time between the first anniversary of the Closing and the
second anniversary of the Closing each of Westra and Cress shall be entitled to
receive additional consideration in an amount equal to (a) the difference
between $5.00 and the greater of (i) the Market Price on the Closing Date or
(ii) the Market Price on the second anniversary of the Closing Date, multiplied
by (b) the number of Payment Shares then held by each of Westra and Cress (the
"Make Whole Payment"). At the Buyer's sole discretion, the Make Whole Payment
may be satisfied by the Buyer in cash or by the issuance of additional
unregistered shares of SRC Common Stock valued at the Market Price on the second
anniversary of the Closing Date and equal to the cash value of the Make Whole
Payment (the "Make Whole Shares"). In the event that the Make Whole Payment is
satisfied by Make Whole Shares and unless the per share Market Price reaches
$5.00 during any period of time between the third anniversary of the Closing and
the fourth anniversary of the Closing, each of Westra and Cress shall be
entitled to receive additional consideration in the form of a cash payment (the
"Second Make Whole Payment"), equal to (x) the difference between $5.00 and the
greater of (A) the Market Price on the Closing Date or (B) the Market Price on
the fourth anniversary of the Closing Date, multiplied by (y) the number of
Payment Shares and Make Whole Shares then held by each of Westra and Cress;
provided, however, the Second Make Whole Payment shall not exceed an aggregate
of fifty thousand dollars ($50,000) to each of Westra and Cress. In the event
that (1) either of Westra or Cress sell Payment Shares or Make Whole Shares at a
per share purchase price in excess of $5.00 or (2) the per share market price of
the SRC Common Stock exceeds $5.00 at any time between the first anniversary of
the Closing and the second anniversary of the Closing or between the third
anniversary of the Closing and the fourth anniversary of the Closing, then any
Make Whole Payment or Second Make Whole Payment shall be reduced in accordance
with the calculations set forth below. In the case of (1) above, the Make Whole
Payment or Second Make Whole Payment, as applicable, shall be reduced by an
amount equal to (i) the difference between the per share purchase price and
$5.00 multiplied by (ii) the number of Payment Shares or Make Whole Shares sold.
In the case of (2) above and if no Payment Shares or Make Whole Shares are sold,
then the Make Whole Payment or Second Make Whole Payment, as applicable, shall
be reduced by an amount equal to (i) the difference between the highest per
share market price at any time between the first anniversary of the Closing and
the second anniversary of the Closing, in the case of the Make Whole Payment, or
3
<PAGE>
between the third anniversary of the Closing and the fourth anniversary of the
Closing, in the case of the Second Make Whole Payment, and $5.00 multiplied by
(ii) the number of Payment Shares or Make Whole Shares then held by each of
Westra and Cress, as applicable. "Market Price" shall mean the average of the
closing prices (or, if there is no closing price, then the average of the daily
bid and asked prices) of the SRC Common Stock on the Nasdaq National Market
System ("NASDAQ") (or on any exchange on which the SRC Common Stock is then
traded) for the period of twenty (20) consecutive trading days ending two
business days prior to the applicable date of measurement.
SECTION 1.03 Purchase Price Adjustments.
--------------------------
(a) The parties acknowledge and agree that the Purchase Price has been
established with reference in part to the Net Worth (as defined below) and
aggregate Cash and Short Term Investments (as defined below) of the
Companies as of December 31, 1998, as reflected on the Base Balance Sheet
(as defined in Section 2.09 herein). As promptly as practicable, but in
any event within sixty (60) days after the Closing, the Buyer shall deliver
to the Sellers a statement of the Net Worth as of the Closing Date and Cash
and Short Term Investments of the Companies determined by the average of
the Cash and Short Term Investments as of March 31, 1999 and April 30, 1999
(the "Closing Statement"), which shall be prepared by the Buyer in
accordance with OCBOA (as defined in Section 2.09 herein) on a basis
consistent with the Base Balance Sheet and shall be audited and reported on
by KPMG Peat Marwick LLP ("Buyer's Accountant"). For purposes of this
Agreement, the term "Net Worth" shall mean total assets less total
liabilities, and the term "Cash and Short Term Investments" shall mean
cash, money market and short term investments.
The Closing Statement shall be conclusive and binding upon the parties hereto,
unless the Sellers object in writing to any item or items shown on the Closing
Statement within fifteen (15) business days after delivery to the Sellers of the
Closing Statement (the "Objection Period"). During the Objection Period, the
Sellers may request that all work papers of Buyer's Accountant which were used
in the preparation of the Closing Statement be mailed or, to the extent
commercially reasonable, transmitted by facsimile to Sellers' accountants. If
Buyer and the Sellers shall be unable to resolve any dispute with respect to the
Closing Statement within twenty (20) business days after delivery of the
Sellers' written objections, the matter or matters in dispute shall be submitted
(at the equal expense of Buyer and the Sellers) to such firm of independent
certified public accountants as Buyer on the one hand and the Sellers on the
other hand may mutually agree. The decision of such firm of independent
certified public accountants shall be conclusive and binding upon Buyer and
Sellers.
(i) If the Net Worth of the Companies as of the Closing Date conclusively
determined as set forth above is less than $800,000 there shall be refunded to
Buyer from the Escrow Fund in accordance with the terms of the Escrow Agreement
an amount equal to the difference between $800,000 and the Net Worth as stated
on the Closing Statement together with all interest earned thereon and (ii) if
the Cash and Short Term Investments held by the Companies as determined by the
average of the Cash and Short Term Investments as of March 31, 1999 and April
30, 1999 conclusively determined as set forth above is less than $125,000 there
shall be refunded to Buyer
4
<PAGE>
from the Escrow Fund in accordance with the terms of the Escrow Agreement an
amount equal to the difference between $125,000 and the Cash and Short Term
Investments as stated on the Closing Statement together with all interest earned
thereon. If such difference exceeds the amount of the Escrow Fund, the Sellers
shall refund to Buyer the amount held in the Escrow Fund and promptly pay to
Buyer the amount of such excess by wire transfer of immediately available funds
to an account designated by Buyer.
(b) If the Cash and Short Term Investments held by the Companies as determined
by the average of the Cash and Short Term Investments as of March 31, 1999
and April 30, 1999 is projected to exceed $125,000 (such projection to
occur two business days prior to Closing), then the Cash Portion of the
Purchase Price shall be increased by the aggregate amount of fifty percent
of the Cash and Short Term Investments projected to exceed $125,000 (the
"Cash Adjustment"); provided, however, any such Cash Adjustment shall be
subject to adjustment in accordance with provisions of Section 1.03(a)
herein and provided, further, that the first $175,000 of the Cash
Adjustment shall be deposited in the Escrow Fund pursuant to the Escrow
Agreement.
SECTION 1.04 Closing. Subject to the satisfaction or waiver by the parties
-------
of each of the conditions set forth in Articles VII and VIII of this Agreement,
the closing of the transactions contemplated by this Agreement (the "Closing")
shall take place at the offices of Mintz, Levin, Cohn, Ferris, Glovsky and
Popeo, P.C., One Financial Center, Boston, Massachusetts at 10 o'clock a.m., on
April 23, 1999, or such other location, date and time as may be agreed upon by
the parties (such date and time being referred to as the "Closing Date"). At
the Closing, in addition to the satisfaction or waiver of each of the conditions
set forth in Articles VII and VIII herein, the parties shall deliver such
further documents, resolutions, certificates and instruments as any party or
his, her or its counsel reasonably requests to facilitate the consummation of
the transactions contemplated hereby.
SECTION 1.05 Further Assurances. At any time and from time to time after the
------------------
Closing Date, at the request of the Buyer and without further consideration,
each Seller will execute and deliver such other instruments of sale, transfer,
conveyance, assignment and confirmation as may be reasonably requested in order
to more effectively transfer, convey and assign to the Buyer and to confirm the
Buyer's title to the Shares.
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE SELLERS
---------- ---------------------------------------------
A. As an inducement to the Buyer to enter into this Agreement and to
consummate the transactions contemplated hereby, each Seller, severally, and not
jointly and severally, hereby represents and warrants to and agrees with the
Buyer with respect to the Shares listed next to the name of such Seller on
Schedule 2.01 hereto that:
- -------------
SECTION 2.01 Title to Shares. Such Seller owns the Shares beneficially and
---------------
of record in the manner specified on Schedule 2.01 hereto, free and clear of all
-------------
Claims. There is no restriction affecting the ability of such Seller to
transfer the legal and beneficial title and ownership of the Shares to the Buyer
and, upon delivery thereof to the Buyer pursuant to the terms of this Agreement
5
<PAGE>
and of payment of the Purchase Price at the Closing, the Buyer will acquire
record and beneficial title to the Shares free and clear of all Claims. Such
Seller does not have outstanding any power of attorney.
SECTION 2.02 Seller's Authority to Execute and Perform Agreement. Such
---------------------------------------------------
Seller has the full legal right and power and all authority and approval
required by law to enter into this Agreement and to perform his, her or its
obligations hereunder. Said Seller has duly executed and delivered this
Agreement, and this Agreement is the legal, valid and binding obligation of said
Seller enforceable in accordance with its terms. On the Closing Date, neither
the execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby, nor the performance of this Agreement in
compliance with its terms and conditions by such Seller will (a) conflict with
or result in any violation of any trust agreement, certificate of incorporation,
by-law, judgment, decree, order, statute or regulation applicable to such Seller
or to the Shares of such Seller, or any breach of any agreement to which such
Seller is a party or by which such Seller or his, her or its Shares is bound, or
constitute a default thereunder, or result in the creation of any Claim of any
kind or nature on, or with respect to, his, her or its Shares, or (b) result in
any violation of, or be in conflict with, or constitute a default under, any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to such Seller.
B. As an inducement to the Buyer to enter into this Agreement and to
consummate the transactions contemplated hereby, Westra and Cress, jointly and
severally, hereby represent and warrant to the Buyer as follows:
SECTION 2.03 Purchase For Investment; Residence. Such Seller is acquiring
----------------------------------
the shares of SRC Common Stock and the Note issuable hereunder for investment
for his, her or its own account and not with a view to the distribution or
public offering thereof within the meaning of the Securities Act of 1933, as
amended (the "Securities Act"). Such Seller understands that the shares of SRC
Common Stock and the Note issuable hereunder have not been registered under the
Securities Act and may not be sold or transferred without such registration or
an exemption therefrom. Such Seller is sufficiently experienced in financial
and business matters to be capable of evaluating the risk of investment in SRC
Common Stock and the Note issuable hereunder and to make an informed decision
relating thereto. Such Seller has the financial capability for making the
investment, can afford a complete loss of the investment, and the investment is
a suitable one for such Seller. Such Seller is an Accredited Investor as
defined in Regulation D under the Securities Act. Prior to the execution and
delivery of this Agreement such Seller has had the opportunity to ask questions
of and receive answers from representatives of SRC concerning the finances,
operations, business and prospects of SRC. Such Seller is a resident of the
State of Michigan.
SECTION 2.04 Capitalization. The authorized, issued and outstanding capital
--------------
stock of each of the Companies on the date hereof is, and will on the Closing
Date be, as set forth on Schedule 2.04. All of the Shares are duly authorized,
-------------
validly issued, fully paid and non-assessable and were issued in full compliance
with all federal, state and local rules, laws and regulations. The
designations, powers, preferences, rights, qualifications, limitations and
restrictions in respect of each class and series of authorized capital stock of
each of the Companies are as set forth in each of the Companies' Articles of
Incorporation, as amended, correct and complete copies of which have
6
<PAGE>
been provided to the Buyer, and all such designations, powers, preferences,
rights, qualifications, limitations and restrictions are valid, binding and
enforceable in accordance with all applicable laws. There are, and at the
Closing Date there will be, no shares held in the corporate treasury of any of
the Companies and no shares reserved for issuance. Except as set forth on
Schedule 2.04, as of the date hereof, there are, and as of the Closing Date
- -------------
there will be, no outstanding subscriptions, options, warrants, rights, calls or
convertible securities, or other commitments of any nature relating to shares of
the capital stock of any of the Companies. As of the date hereof, there is, and
as of the Closing Date the Companies will have, no obligation (contingent or
other) to purchase, redeem or otherwise acquire any of their equity securities
or any interest therein or to pay any dividend or make any other distribution in
respect thereof.
SECTION 2.05 Organization and Qualification. Each of the Companies is a
------------------------------
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and is duly licensed or qualified to
transact business as a foreign corporation and is in good standing in each
jurisdiction in which the nature of each of the Companies' businesses or the
character of the properties owned or leased by each of the Companies requires
such licensing or qualification.
SECTION 2.06 Subsidiaries. None of the Companies (a) owns of record or
------------
beneficially, directly or indirectly, (i) any shares of capital stock or
securities convertible into capital stock of any other corporation or (ii) any
participating interest in any partnership, joint venture or other non-corporate
business enterprise or (b) controls, directly or indirectly, any other entity.
SECTION 2.07 Corporate Power and Authority. Each of the Companies has the
-----------------------------
corporate power and authority to own and hold its properties and to carry on its
business as presently conducted and contemplated to be conducted and to execute,
deliver and perform this Agreement and the other documents and instruments
contemplated hereby. The execution, delivery and performance of this Agreement
and the documents contemplated hereby and the consummation of the transactions
contemplated hereby and thereby have been duly authorized and approved by each
of the Companies. This Agreement and each of the other agreements, documents
and instruments to be executed and delivered by the Companies have been duly
executed and delivered by, and constitute the legal, valid and binding
obligation of, each of the Companies enforceable against each of such Companies
in accordance with their terms.
SECTION 2.08 Validity, Etc. Except as set forth on Schedule 2.08, neither
-------------- -------------
the execution and delivery of this Agreement and the other documents and
instruments contemplated hereby, the consummation of the transactions
contemplated hereby or thereby, nor the performance of this Agreement and such
other agreements in compliance with the terms and conditions hereof and thereof
will (a) violate, conflict with or result in any breach of any trust agreement,
Articles of Incorporation, bylaw, judgment, decree, order, statute or regulation
applicable to the Sellers or any of the Companies, (b) require any consent,
approval, authorization or permit of, or filing with or notification to, any
governmental or regulatory authority, (c) violate, conflict with or result in a
breach, default or termination or give rise to any right of termination,
cancellation or acceleration of the maturity of any payment date of any of the
obligations of any of the Companies or increase or otherwise offset the
obligations of the Companies under any law, rule, regulation, judgment, decree,
7
<PAGE>
order, governmental permit, license or order or any of the terms, conditions or
provisions of any mortgage, indenture, note, license, agreement or other
instrument or obligation related to the Companies or any of their assets or the
consummation of the transactions contemplated hereby or thereby, (d) violate any
order, writ, injunction, decree, statute, rule or regulation applicable to any
of the Companies or (e) result in the creation of any Claim upon the Shares or
any assets of the Companies.
SECTION 2.09 Financial Statements. The Companies have previously furnished
--------------------
to the Buyer, and attached hereto as Schedule 2.09, the final combined balance
-------------
sheet of the Companies (the "Base Balance Sheet") as at December 31, 1998 (the
"Balance Sheet Date"), as at December 31, 1997 and as at December 31, 1996 and
any related statements of income and cash flow and notes thereto. All such
financial statements (the "Financial Statements") have been prepared in
accordance with a version of the Other Comprehensive Basis of Accounting
("OCBOA") that is generally a tax basis of accounting used by the Companies to
file their income tax returns on an accrual basis, consistently applied. The
Financial Statements were prepared from the books and records of each of the
Companies, which books and records are complete and correct and accurately
reflect all transactions of each of the Companies' businesses. The Financial
Statements fairly present the financial position of each of the Companies as of
the dates thereof, and the results of its operations and cash flows for the
periods ended on the dates thereof. The Financial Statements reflect reserves
appropriate and adequate for all known material liabilities and reasonably
anticipated losses consistent with the requirements of OCBOA, consistently
applied. Since the date of the Base Balance Sheet, (a) there has been no change
in the assets, liabilities or financial condition of the assets of any of the
Companies from that reflected in the Base Balance Sheet except for changes in
the ordinary course of business consistent with past practice and which have not
been material or adverse and (b) none of the business, prospects, financial
condition, operations, property or affairs of any of the Companies has been
materially or adversely affected by any occurrence or development, individually
or in the aggregate, whether or not insured against.
SECTION 2.10 Absence of Undisclosed Liabilities. Except as and to the extent
----------------------------------
of the amounts specifically reflected or reserved against in the Base Balance
Sheet, none of the Companies has any liabilities or obligations of any nature
whatsoever, due or to become due, accrued, absolute, contingent or otherwise
except for liabilities and obligations incurred since the date of the Base
Balance Sheet in the ordinary course of business and consistent with past
practice. The Sellers do not know of, and have no reason to know of, any basis
for the assertion against any of the Companies of any liability or obligation
not fully reflected or reserved against in the Base Balance Sheet or incurred in
the ordinary course of business and consistent with past practice since the date
thereof. None of the Companies is bound by any agreement, or subject to any
charter or other corporate restriction or any legal requirement, which has, or
in the future can reasonably be expected to have, a material adverse effect on
any of the Companies' business.
SECTION 2.11 Absence of Adverse Change; Conduct of Business. Except as set
----------------------------------------------
forth on Schedule 2.11, since the Balance Sheet Date, the Companies have
-------------
conducted their businesses only in the usual and ordinary course consistent with
past practice, there have been no material adverse changes in the businesses of
the Companies and there are no known conditions or developments or contingencies
of any kind existing or which, so far as reasonably can be foreseen by the
Sellers,
8
<PAGE>
may result in any such change. Without limiting the foregoing, except as
set forth on Schedule 2.11, since the Balance Sheet Date, there has not been,
-------------
occurred or arisen:
(a) any material adverse change in the working capital, financial
condition, assets, liabilities, business or prospects of any of
the Companies;
(b) any loan, advance, agreement, arrangement or transaction between
any of the Companies and any employees of the Companies or their
affiliates;
(c) any mortgage or pledge of, or any lien placed on, any assets of
the Companies, tangible or intangible;
(d) any material transaction (which shall mean any transaction or
series of transactions totaling $10,000 or more) except in the
ordinary of business consistent with past practice;
(e) any declaration, setting aside or payment of any dividend or
other distribution on or in respect of any shares of the
Companies' capital stock, or any issuance or direct or indirect
redemption, retirement, purchase or other acquisition by any of
the Companies of any shares of their capital stock or other
securities;
(f) any change by any of the Companies in accounting methods,
principles or practices;
(g) any change in the charter or by-laws of any of the Companies; and
(h) any understanding entered into with respect to any commitment
(contingent or otherwise) to do any of the foregoing.
SECTION 2.12 Inventories. All of the Companies' inventory reflected on the
-----------
Base 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 the Companies' businesses as first quality
goods at prices having a value equal to the amounts reflected on the Base
Balance Sheet or, with respect to after-acquired inventory, at least equal to
the cost thereof plus markups consistent with past practice. Each item of such
inventory is valued on the Base Balance Sheet at the lower of cost or market, by
the first-in first-out method, in accordance with OCBOA, consistently applied.
------------------
Such inventory reflects write-downs to realizable values in the case of items
which are below standard quality or have become obsolete or unsaleable (except
at prices less than cost) through regular distribution channels in the ordinary
course of business of the Companies.
SECTION 2.13 Receivables. All receivables (whether notes, accounts or
-----------
otherwise) of the Companies (a) have arisen only from bona fide transactions in
the ordinary course of business consistent with past practice, (b) represent
valid obligations, and (c) shall be fully collected in the
9
<PAGE>
aggregate face amounts thereof within a reasonable time after the issuance
thereof, except for an allowance of approximately $34,500 for doubtful accounts
with respect to accounts receivable computed in a manner consistent with OCBOA
and as reflected in the Base Balance Sheet, and (d) are owned by the Companies
free of all Claims.
SECTION 2.14 Taxes. Except as set forth on Schedule 2.14, each of the
----- -------------
Companies has filed on a timely basis all returns, declarations, reports, claims
for refunds and information returns or statements relating to Taxes (which shall
mean all taxes including, without limitation, any federal, state, local, or
foreign income, gross receipts, license, payroll, employment, excise, severance,
stamp, occupation, premium, windfall profits, environmental (including taxes
under Sec. 59A of the Internal Revenue Code of 1986, as amended (the "Code")),
customs duties, capital stock franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not), including all schedules or
attachments thereto, and including any amendment thereof ("Tax Returns") and tax
reports required to be filed on or before the date hereof with the appropriate
governmental agencies in all jurisdictions in which such returns and reports are
required to be filed and all such Tax Returns were correct and complete in all
respects. Except as set forth on Schedule 2.14, all Taxes which have become due
-------------
or payable or required to be collected by the Companies or as otherwise
attributable to any periods ending on or before the date hereof or the Closing
Date and all interest and penalties thereon, whether disputed or not, have been
paid or will be paid in full on or prior to the Closing Date (whether or not
shown on any Tax Return).
Except as set forth on Schedule 2.14, none of the Companies is currently the
-------------
beneficiary of any extension of time within which to file any Tax Return. No
claim has been made by an authority in a jurisdiction where each of the
Companies does not file Tax Returns that they are or may be subject to taxation
by that jurisdiction. There are no tax liens pending or threatened against the
assets, properties or business of any of the Companies. None of the Companies
has taken or failed to take any action which could create any tax lien on any of
its assets. Except as set forth on Schedule 2.14, the Companies have withheld
-------------
and paid all Taxes required to have been withheld and paid by them.
No Seller or director or officer (or employee responsible for tax matters) of
any of the Companies expects any authority to assess any additional Taxes for
any period for which Tax Returns have been filed. Except as set forth on
Schedule 2.14, there is no dispute or claim concerning any Tax Liability (which
- -------------
shall mean any liability, whether known or unknown, whether assessed or
unassessed, whether accrued or unaccrued, and whether due or to become due) of
any of the Companies either (A) claimed or raised by any authority in writing or
(B) as to which any of the Sellers and the directors and officers (and employees
responsible for tax matters) of any of the Companies has knowledge. Schedule
--------
2.14 lists all federal, state, local and foreign income tax returns filed with
- ----
respect to the Companies for taxable periods ended on or after the Balance Sheet
Date, indicates those tax returns that have been audited, and indicates those
tax returns that currently are the subject of audit. The Sellers have delivered
to the Buyer correct and complete copies of all federal and state income tax
returns, examination reports, and statements of deficiencies assessed against or
agreed to by the Companies since the Balance Sheet Date.
10
<PAGE>
Schedule 2.14 lists all tax agreements which now exist or have existed within
- -------------
the past five years between any of the Companies and any taxing jurisdiction.
None of the Companies has waived any statute of limitations in respect of Taxes
or agreed to any extension of time with respect to a tax assessment or
deficiency.
None of the Companies has filed a consent under Code Sec. 341(f) concerning
collapsible corporations. None of the Companies has made any payments, is
obligated to make any payments, or is a party to any agreement that under
certain circumstances could obligate it to make any payments that will not be
deductible under Code Sec. 280G. None of the Companies has been a United States
real property holding corporation within the meaning of Code Sec. 897(c)(2)
during the applicable period specified in Code Sec. 897(c)(1)(A)(ii). All of
the Companies have disclosed on their federal income Tax Returns all positions
taken therein that could give rise to a substantial understatement of federal
income tax within the meaning of Code Sec. 6661. None of the Companies is a
party to any tax allocation or sharing agreement. None of the Companies has
ever been (nor has any liability for unpaid Taxes because it once was) a member
of an affiliated group.
SECTION 2.15 Litigation. Except as set forth on Schedule 2.15, there is no
---------- -------------
(a) action, suit, claim, proceeding or investigation pending or, to the best of
the Sellers' knowledge, threatened against or affecting any of the Companies
(whether or not such Company is a party or prospective party thereto), at law or
in equity, or before or by any Federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, (b) arbitration proceeding relating to any of the Companies or (c)
governmental inquiry pending or threatened against, involving or affecting any
of the Companies, and there is no basis for any of the foregoing. There are no
outstanding orders, writs, judgments, injunctions or decrees of any court,
governmental agency or arbitration tribunal against, involving or affecting any
of the Companies, and there are no facts or circumstances which may result in
the institution of any action, suit, claim or legal, administrative or
arbitration proceeding or investigation against, involving or affecting any of
the Companies or the transactions contemplated hereby.
SECTION 2.16 Certain Practices. None of the Companies nor any of their
-----------------
directors, officers or employees 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 any of the Companies (or assist in connection with any actual or
proposed transaction) which (a) could subject any of the Companies or the Buyer
to any damage or penalty in any civil, criminal or governmental litigation or
proceeding, or (b) if not continued in the future, could have an adverse effect
on any of the Companies.
SECTION 2.17 Compliance with Law. None of the Companies nor any Seller is
-------------------
subject to any judgment, order, writ, injunction, or decree that adversely
affects, individually or in the aggregate, its business, operations, properties,
assets or condition (financial or otherwise). To the knowledge of the Sellers,
each of the Companies has complied with and is not in default under, all laws,
ordinances, legal requirements, rules, regulations and orders applicable to it,
its operations, properties, assets, products and services. There is no existing
law, rule, regulation or order, and the Sellers are not aware of any proposed
law, rule, regulation or order, whether Federal or state, which would prohibit
or materially restrict any of the Companies or the Buyer from, or otherwise
11
<PAGE>
materially adversely affect any of the Companies or the Buyer in, conducting
each of the Companies' businesses in any jurisdiction in which such businesses
are now conducted or proposed to be conducted.
SECTION 2.18 Licenses and Permits. Schedule 2.18 lists all licenses,
-------------------- -------------
permits, pending applications, consents, approvals and authorizations of or from
any public or governmental agency, used in or otherwise necessary in the conduct
of each of the Companies' businesses (collectively, the "Permits") each of which
will remain in full force and effect following the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby.
SECTION 2.19 Labor and Employee Relations. None of the Companies is a party
----------------------------
to or bound by any collective bargaining agreement with any labor organization,
group or association covering any of their employees, and none of the Companies
nor any Seller has knowledge of any attempt to organize any of the Companies'
employees. There are no pending or threatened charges of unfair labor practices
or of employment discrimination or of any other wrongful action with respect to
any aspect of employment of any person employed or formerly employed by any of
the Companies. None of the Companies has experienced any work stoppages during
the last three years, and to the best of the Sellers' knowledge, no work
stoppage is planned.
SECTION 2.20 Certain Employees. Set forth in Schedule 2.20 is a list of the
----------------- -------------
names of all of the Companies' employees and consultants, together with the
title or job classification of each such person and the base annual and the
total compensation paid to each such person in fiscal year 1997 and anticipated
to be paid in fiscal year 1998. Except as specifically described on Schedule
--------
2.20, none of such persons has a written employment agreement with any of the
- ----
Companies which is not terminable on notice by such Company without cost or
other liability to such Company. To the knowledge of the Companies, no person
listed on Schedule 2.20 has an oral employment agreement or understanding with
-------------
any of the Companies. No person listed on Schedule 2.20 has indicated to any
-------------
officer of the Company employing such person that he or she intends to terminate
his or her employment with such Company or seeks a material change in his or her
duties or status.
SECTION 2.21 Employee Benefits. Except as set forth on Schedule 2.21
----------------- -------------
attached hereto, each of the Companies 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 Schedule 2.21 (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 Code, 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 any of the Companies has resulted in a
"prohibited
12
<PAGE>
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 Companies have not previously made, are not currently making,
and are 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 (a) the value of plan
assets (including commitments under insurance contracts) is at least equal to
the value of plan liabilities or (b) the value of plan liabilities in excess of
plan assets is disclosed on the Base Balance Sheet. The Company has made all
required Form 5500 filings and required reporting with respect to the Company
Plans on a timely basis. A true, correct and complete copy of each Company Plan
has been provided to the Buyer.
SECTION 2.22 Tangible Properties. Schedule 2.22 contains a true and complete
------------------- -------------
list of all tangible personal property owned by or leased to the Companies (the
"Tangible Personal Property"), by location. Each item of the Companies'
tangible personal property which has a value in excess of $1,000 is included on
such list. Except as shown on Schedule 2.22, all of the Companies have good and
-------------
marketable title free and clear of all Claims to the Tangible Personal Property
listed as owned by the Companies. With respect to Tangible Personal Property
leased by the Companies as lessee, all leases, conditional sale contracts,
franchises or licenses pursuant to which the Companies may hold or use (or
permit others to hold or use) such Tangible Personal Property are valid and in
full force and effect, and there is not under any of such instruments any
existing default or event of default or event which with notice or lapse of time
or both would constitute such a default. The Companies' possession and use of
such property has not been disturbed and no claim has been asserted against any
of the Companies adverse to their rights in such leasehold interests. The
Tangible Personal Property is adequate and usable for the purposes for which it
is currently used and has been properly maintained and repaired and each item of
Tangible Personal Property, whether owned or leased, is in good operating
condition and repair and has been properly maintained. During the past three
(3) years, there has not been any interruption of the operations of the
Companies' businesses due to the condition of any of the Tangible Personal
Property other than in the ordinary course of business consistent with past
practice.
SECTION 2.23 Owned Premises. Schedule 2.23 sets forth descriptions of all
-------------- -------------
real estate owned by the Companies, and all buildings and other structures
located on such real estate. Said real estate is hereinafter referred to as the
"Property" or the "Properties". Each of the Companies has good and marketable
title in fee simple to all Properties and holds sufficient rights in and to all
easements or other rights necessary for perpetual access thereto, and owns
outright all buildings and other structures, improvements and fixtures thereon,
in each case free and clear of all Claims or other interests or rights of third
parties, except those which do not and will not have an adverse effect on the
Properties. There are no encroachments from any of the Properties onto
adjoining real property, and there are no encroachments from any adjoining real
property onto any of the Properties, except those which do not and will not have
an adverse effect on the Properties. Each structure located on the Properties
is structurally sound, adequately maintained and is in good condition and repair
consistent with the uses to which it is presently being put. All structures,
improvements and fixtures on the Properties and the current uses of the
Properties conform to any and all federal, state and local laws, reclamation
laws, zoning, land use, subdivision, wetlands, building, health and safety and
other ordinances, laws, rules and regulations, except for those the
13
<PAGE>
nonconformance with which do not or would not have an adverse effect on the
Properties. No notice from any governmental body or other person has been
served upon, or received by, any of the Companies or any of the Sellers claiming
any violation of any such ordinance, law, rule or regulation, or requiring any
substantial work, repairs, reclamation, construction, alterations or
installation on or in connection with such Properties which has not been
complied with or that any right of access or other right enjoyed by any of the
Companies is being modified or terminated. There are no violations of any
covenant, restriction or other agreement or understanding, oral or written,
affecting or relating to title or use of the Properties and no such covenant,
restriction, agreement or understanding could cause a forfeiture or reversion of
title or abridge the use thereof. There are no pending or threatened
condemnation or similar proceedings or assessments affecting any of the
Properties, lawsuits by adjoining landowners or others, nor to the best of the
Sellers' knowledge, is any such lawsuit contemplated by any person, nor is any
condemnation or assessment contemplated by any governmental authority. None of
the Properties has been designated with any state or local authority for use
solely as "agricultural land", "open space", "conservation land" or similar
designation. There are no violations of any material covenant, restriction or
other agreement or understanding, oral or written, affecting or relating to
title or use of the Properties and no such covenant, restriction, agreement or
understanding could reasonably be expected to cause a forfeiture or reversion of
title. There are no pending or threatened condemnation or similar proceedings
or assessments affecting any of the Properties, nor to the best of the Sellers'
knowledge, is any such condemnation or assessment contemplated by any
governmental authority.
SECTION 2.24 Leased Premises. Schedule 2.24 sets forth a true and complete
--------------- -------------
list and description of each parcel of real property leased by the Companies
(the "Leased Parcels"). Except as set forth on Schedule 2.24, each lease
-------------
covering a Leased Parcel is in full force and effect (there existing no default
under any such lease or event which, with the lapse of time or notice or
otherwise, would constitute a default), conveys the leased real estate purported
to be conveyed thereunder, and is and will be following the Closing enforceable
by the Companies in accordance with its terms. All of the Companies have the
right to use the Leased Parcels in accordance with the terms of such leases free
and clear of all Claims or other interests or rights of third parties.
SECTION 2.25 Environmental Matters. The Companies and all premises occupied
---------------------
and used by them are in compliance with all applicable laws, rules, regulations,
orders, ordinances, judgments and decrees of all governmental authorities
(federal, state, and local). The Companies have received no notice of, and the
Sellers have no knowledge of any past, present or future events, conditions,
circumstances, activities, practices, incidents, actions or plans of the
Companies or the Companies' predecessors, either collectively, individually or
severally, which may interfere with or prevent continued compliance, or which
may give rise to any common law or legal liability, or otherwise form the basis
of any claim, action, suit, proceeding, hearing, or investigation, based on or
related to the disposal, storage, handling, manufacture, processing,
distribution, use, treatment, or transport, or the emission, discharge, release
or threatened release into the environment, of any Substance. As used in this
Section 2.25, the term "Substance" shall mean any pollutant, hazardous
substance, hazardous material, hazardous waste or toxic waste, as defined in any
presently enacted federal, state or local statute or any regulation that has
been promulgated pursuant thereto.
14
<PAGE>
SECTION 2.26 Insurance. The Companies are, and will be through the Closing,
---------
insured in respect of their properties, assets and businesses against risks
normally insured against by companies in similar lines of business under similar
circumstances. Schedule 2.26 correctly describes (by type, carrier, policy
-------------
number, limits, premium, and expiration date) the insurance coverage carried by
the Companies, which insurance will remain in full force and effect with respect
to all events occurring prior to the Closing. The Companies have not failed to
give any notice or present any claim under any such policy or binder in due and
timely fashion, have not received notice of cancellation or non-renewal of any
such policy or binder, are not aware of any threatened or proposed cancellation
or non-renewal of any such policy or binder, nor are aware of any insurance
premiums which will be materially increased in the future. There are no
outstanding claims under any such policy which have gone unpaid for more than 45
days, or as to which the insurer has disclaimed liability.
SECTION 2.27 Outstanding Commitments. Schedule 2.27 sets forth a
----------------------- -------------
description of all existing contracts, agreements, understandings, commitments,
licenses and franchises (collectively "Agreements"), whether written or oral,
relating to the Companies which involve amounts in excess of $10,000. Each of
the Companies has delivered or made available to the Buyer true, correct and
complete copies of all of the Agreements specified on Schedule 2.27 which are in
-------------
writing, and Schedule 2.27 contains an accurate and complete description of all
-------------
Agreements which are not in writing. Each of the Companies has paid in full all
amounts due as of the date hereof under each Agreement and as of the Closing
Date will have satisfied in full all of its liabilities and obligations
thereunder due in the ordinary course of business consistent with past practice
prior to the Closing. All of the Agreements are in full force and effect. The
Companies and each other party thereto have performed all the obligations
required to be performed by them to date, have received no notice of default and
are not in default (with due notice or lapse of time or both) under any
Agreement.
SECTION 2.28 Intellectual Property. Schedule 2.28 sets forth a list of
--------------------- -------------
all recipes, patents, inventions, know-how, show-how, designs, trade secrets,
copyrights, maskrights, trademarks, tradenames, servicemarks, manufacturing
processes, formulae, trade secrets, technology or the like, and all applications
for any of the foregoing, (collectively, "Intellectual Property") owned,
controlled or used by any of the Companies or of which any of the Companies is a
licensor or licensee, together in each case with a brief description of the
nature of such right. Each of the Companies owns or possesses adequate licenses
or other rights to use all Intellectual Property necessary or desirable to the
conduct of its business as conducted and as proposed to be conducted, and no
Claim is pending or, to the best of the Sellers' knowledge, threatened to the
effect that the operations of the Companies infringe upon or conflict with the
asserted rights of any other person under any Intellectual Property, and there
is no basis for any such claim (whether or not pending or threatened). None of
the Companies' Intellectual Property rights will be impaired by the consummation
of the transactions contemplated hereby, and all of such rights will be
enforceable immediately after the Closing without the consent or agreement of
any other party.
SECTION 2.29 Significant Customers and Suppliers. Set forth on Schedule
----------------------------------- --------
2.29 is a list of the ten largest customers and ten largest suppliers of each of
- ----
the Companies for the most recent
15
<PAGE>
twelve-month period, together with the amount of sales or purchases attributable
to such customers or suppliers expressed in dollars.
SECTION 2.30 Banks, Brokers and Proxies. Schedule 2.30 sets forth: (a)
-------------------------- -------------
the name of each bank, investment manager, trust company and stock or other
broker with which any of the Companies maintains an account or from which they
borrow money; (b) the names of all persons authorized by each of the Companies
to effect transactions therewith, or to have access to any safe deposit box or
vault; and (c) all proxies, powers of attorney, agency agreements or other like
instruments to act on behalf of the Companies or the Sellers in matters
concerning the business or affairs of the Companies.
SECTION 2.31 Assumptions, Guaranties, Etc. of Indebtedness of Other
------------------------------------------------------
Persons. Except as set forth on Schedule 2.31, the Companies have not assumed,
- ------- -------------
guaranteed, endorsed or otherwise become directly or contingently liable on any
indebtedness of any other person (including, without limitation, liability by
way of agreement, contingent or otherwise, to purchase, to provide funds for
payment, to supply funds to or otherwise invest in the debtor, or otherwise to
assure the creditor against loss), except for guaranties by endorsement of
negotiable instruments for deposit or collection in the ordinary course of
business.
SECTION 2.32 Transactions With Affiliates. Except as set forth on
----------------------------
Schedule 2.32, no director, officer or employee of any of the Companies, or
- -------------
member of the family of any such person, or any corporation, partnership, trust
or other entity in which any such person, or any member of the family of any
such person, has a substantial interest or is an officer, director, trustee,
partner or holder of any equity interest, is a party to any transaction with any
of the Companies. None of the Companies, Sellers, officers, supervisory
employees or directors of any of the Companies owns directly or indirectly on an
individual or joint basis any material interest in, or serves as an officer or
director or in another similar capacity of, any competitor or supplier of any of
the Companies.
SECTION 2.33 Records. The minute books, stock certificate books and stock
-------
transfer ledgers of each of the Companies are complete and correct in all
respects with respect to the matters set forth therein and complete and correct
copies of such records have been delivered to the Buyer.
SECTION 2.34 Medicare and Medicaid Programs. Each of the Companies and
------------------------------
each doctor and licensed employee of the Companies (the "Medical Personnel") are
qualified for participation in the Medicare and Medicaid programs and are
parties to provider agreements for such programs, which are in full force and
effect with no defaults having occurred thereunder. The Companies, the Sellers
and each of the Medical Personnel has timely filed all claims and other reports
required to be filed with respect to the purchase of services by third-party
payors, and all such claims and reports are complete and accurate and there is
no liability to any payor with respect thereto. There are no pending appeals or
other proceedings of any kind relating to Medicare or Medicaid claim
determinations or other reports required to be filed by the Companies, the
Sellers or the Medical Personnel. None of the Companies, the Sellers or any of
the Medical Personnel 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 or Medicaid programs.
16
<PAGE>
SECTION 2.35 Fraud and Abuse. Each of the Companies and all persons and
---------------
entities providing professional services for them have not, to the best of
knowledge of the Sellers, engaged in any activities that are prohibited under
Section 1320a-7b or Section 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.
SECTION 2.36 Disclosure. All documents and schedules delivered or to be
----------
delivered by or on behalf of the Companies or the Sellers to the Buyer in
connection with this Agreement and the transactions contemplated hereby are
true, correct and complete. Neither this Agreement, nor any Schedule or Exhibit
to this Agreement contains any untrue statement of a material fact or omits a
material fact necessary to make the statements contained herein or therein, in
light of the circumstances in which made, not misleading.
SECTION 2.37 Year 2000 Compliance. Except as set forth on Schedule 2.37,
-------------------- -------------
each of the Companies' management information systems, office automation systems
and internal LAN network management systems is year 2000 compliant. Except as
set forth on Schedule 2.37, all of the computer software programs utilized by
-------------
each of the Companies is year 2000 compliant. Schedule 2.37 sets forth the cost
-------------
to the Companies to become year 2000 compliant. As used herein, the term "year
2000 compliant" means, with respect to information technology, that the
information technology accurately processes date/time data (including, but not
limited to, calculating, comparing, and sequencing) from, into, and between the
twentieth and twenty-first centuries, and the years 1999 and 2000 and leap year
calculations, to the extent that other information technology, used in
combination with the information technology being acquired, properly exchanges
date/time data with it.
[SECTION 2.38 Dissolution of Jackson Optical, Inc. Jackson Optical, Inc.,
------------------------------------
a Michigan corporation ("Jackson"), will be dissolved and all assets and
liabilities of Jackson shall be distributed to and/or assumed by Source free and
clear of all claims, liens, encumbrances and voting interests. All liabilities
of Jackson to be assumed by Source have been reflected in the Base Balance Sheet
of the Corporation previously provided to Buyer as set forth in Schedule 2.09.
-------------
ARTICLE III REPRESENTATIONS AND WARRANTIES OF BUYER AND SRC
----------- -----------------------------------------------
The Buyer and SRC hereby represent and warrant to the Sellers as follows:
SECTION 3.01 Organization. Each of SRC and Buyer is duly incorporated,
------------
validly existing and in good standing under the laws of the State of Delaware
and is duly qualified to transact business as a foreign corporation in each
jurisdiction in which the failure to so qualify would have a material adverse
impact on the Buyer's ability to purchase the Shares.
SECTION 3.02 Buyer Power and Authority. Each of SRC and Buyer has the
-------------------------
corporate power and authority to execute, deliver and perform this Agreement and
the other documents and instruments contemplated hereby. The execution,
delivery and performance of this Agreement and
17
<PAGE>
the documents contemplated hereby and the consummation of the transactions
contemplated hereby and thereby have been duly authorized and approved by each
of SRC and Buyer. This Agreement, and each of the other agreements, documents
and instruments to be executed and delivered by Buyer or SRC, as applicable,
have been duly executed and delivered by, and constitute the valid and binding
obligation of Buyer or SRC enforceable against Buyer or SRC in accordance with
their terms, as applicable.
SECTION 3.03 Validity, Etc. Neither the execution and delivery of this
-------------
Agreement and the other documents and instruments contemplated hereby, the
consummation of the transactions contemplated hereby or thereby, nor the
performance of this Agreement and such other agreements in compliance with the
terms and conditions hereof and thereof will (a) conflict with or result in any
breach of any trust agreement, certificate of incorporation, bylaw, judgment,
decree, order, statute or regulation applicable to Buyer or SRC, as applicable,
(b) require any consent, approval, authorization or permit of, or filing with or
notification to, any governmental or regulatory authority, except for the
consent of Fleet National Bank or (c) result in a breach of or default (or give
rise to any right of termination, cancellation or acceleration) under any law,
rule or regulation or any judgment, decree, order, governmental permit, license
or order or any of the terms, conditions or provisions of any mortgage,
indenture, note, license, agreement or other instrument to which Buyer or SRC is
a party.
SECTION 3.04 Financial Statements of SRC The financial statements of SRC
---------------------------
and the related notes contained in its Report on Form 10-K for the fiscal year
ended December 31, 1998 (the "Report") present fairly the financial position of
SRC as of the dates indicated, and the results of its operations and cash flows
for the periods therein specified. Such financial statements (including the
related notes) have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
therein specified, except as disclosed in such Report.
SECTION 3.05 Absence of Material Adverse Change Since December 31, 1998,
----------------------------------
there has been no material adverse change in the business or financial condition
of SRC, and there is no condition or development or contingency of any kind
existing (other than (i) changes in the ordinary course of business consistent
with prior practice, (ii) activities of competitors in the ordinary course of
their respective businesses and (iii) changes of a general economic and
political nature) which, so far as reasonably can be foreseen by SRC, would,
individually or in the aggregate, reasonably be expected to have any material
adverse change in the business or financial condition of SRC.
SECTION 3.06 The Payment Shares Neither SRC nor the Buyer has sold any of
------------------
the Payment Shares or other securities of SRC, offered any of such securities
for sale, solicited any offers to purchase any of such securities, or otherwise
approached or negotiated (nor will SRC or the Buyer sell, offer, solicit or
otherwise approach or negotiate) in respect thereof, in such manner as would
result in bringing the Payment Shares, or any part thereof, within the
provisions of Section 5 of the Securities Act. Assuming the accuracy and
completeness of the representations and warranties of Westra and Cress contained
in Section 2.03 herein, the sale and transfer of the Payment Shares to Westra
and Cress is exempt from registration under the
18
<PAGE>
Securities Act pursuant to Section 4(2) of the Securities Act and such sale and
transfer are also exempt from registration and qualification under applicable
state securities and blue sky laws.
SECTION 3.07 SRC SEC Documents. True, correct and complete copies of all
-----------------
forms, reports, schedules, statements, and other documents filed by SRC up to
March 31, 1999, under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") or the Securities Act (such documents, as amended since the time
of filing, collectively, the "SRC SEC Documents") are available on the
Securities and Exchange Commission ("SEC") EDGAR Database at www.sec.gov. The
SRC SEC Documents, including, without limitation, any financial statements or
schedules included therein, at the time filed (and, in the case of registration
statements and proxy statements, on the dates of effectiveness and the dates of
mailing, respectively) complied as to form in all materials respects with the
applicable requirements of the Exchange Act and the Securities Act, as the case
may be, and the applicable rules and regulations of the SEC thereunder. The
financial statements of SRC included in the SRC SEC Documents at the time filed
(and, in the case of registration statements and proxy statements, on the date
of effectiveness and the date of mailing, respectively) complied as to form in
all materials respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto.
ARTICLE IV COVENANTS OF THE SELLERS
---------- ------------------------
The Sellers covenant and agree with the Buyer as follows:
SECTION 4.01 Best Efforts Cooperation. The Sellers shall use their best
------------------------
efforts in good faith to perform and fulfill and to cause each of the Companies
to perform and fulfill, all conditions and obligations to be fulfilled or
performed by them hereunder, to the end that the transactions contemplated
hereby will be fully and timely consummated.
SECTION 4.02 Access. Until the Closing, the Sellers shall give and shall
------
cause each of the Companies to give the Buyer, its attorneys, accountants,
financial and other advisors and other authorized representatives complete
access, as Buyer may reasonably request and consistent with the uninterrupted
operation of each of the Companies' business, to the Companies' offices,
properties, customers, suppliers, employees, products, technology, business and
financial records, contracts, business plans, budgets and projections,
agreements, commitments and other documents and information concerning the
Companies and persons employed by or doing business with the Companies.
Following the Closing, the Sellers shall provide the Buyer with access to any
and all records relating to the Companies that remain in the possession of third
parties.
SECTION 4.03 Insurance. Each of the Companies shall maintain with
---------
financially sound and reputable insurers, insurance against such casualties and
contingencies and of such types and in such amounts as is customary for
companies similarly situated.
SECTION 4.04 Compliance with Laws. Each of the Companies shall conduct
--------------------
its business in compliance with all applicable laws, rules, regulations and
orders.
19
<PAGE>
SECTION 4.05 Keeping of Books and Records. Each of the Companies shall
----------------------------
keep adequate records and books of account, in which complete entries will be
made in accordance with OCBOA consistently applied, reflecting all financial
transactions and in which all proper reserves for depreciation, depletion,
obsolescence, amortization, taxes, bad debts and other purposes in connection
with its business shall be made.
SECTION 4.06 Actions Prior to Closing. Each of the Companies shall (a)
------------------------
conduct its Business pending the Closing only in the ordinary and usual course
of business consistent with past practice; (b) maintain and keep its properties
in good condition; (c) use all reasonable efforts to maintain in accordance with
good business practice its present employees and its relationships with
suppliers and customers so that they will be preserved for Buyer after the
Closing; and (d) prior to the Closing, obtain all consents, waivers, approvals,
authorizations or orders required in connection with the authorization,
execution and delivery of this Agreement by the Companies. Except as expressly
contemplated by this Agreement or as consented to in writing by the Buyer,
during the period from the date of this Agreement to the Closing Date, each of
the Companies shall not, (a) issue, sell or pledge additional shares of capital
stock of any class (including the Shares) or securities convertible into any
such shares, including the declaration of any dividends; (b) repurchase,
reacquire or agree to repurchase or reacquire any of its shares of capital stock
of any class; (c) propose or adopt any amendments to the Articles of
Incorporation or bylaws of such Company; (d) incur any obligation or liability
or enter into any transaction, not in the ordinary course of business; (e) incur
any indebtedness for borrowed money; (f) make or agree to make any loans to, or
repay any loans from, any of its officers, directors or employees; and (g) agree
in writing or orally to take any of the foregoing actions or any other action
which would have made any representation or warranty in this Agreement untrue.
SECTION 4.07 Notice of Changes. Until the Closing, the Sellers shall
-----------------
notify the Buyer of any material change in the business of any of the Companies
as soon as it becomes apparent to the Sellers that any such change has or may
occur.
SECTION 4.08 Preservation of Business. Until the Closing, each of the
------------------------
Companies will, and the Sellers will cause them to, use their best efforts to
preserve their business organization intact, and to preserve their goodwill.
Following the Closing, each of the Companies shall maintain its existing
relationship with Charter Management Group, Inc. and will make available to the
Buyer and assist the Buyer in retaining the same employees of Charter Management
Group, Inc. who were leased to the Companies immediately prior to the Closing,
unless otherwise permitted by the Buyer.
SECTION 4.09 Litigation. The Sellers will promptly notify the Buyers of
----------
any lawsuits, claims, proceedings or investigations which are threatened or
commenced against or by any of the Companies, the Sellers or their affiliates,
or against any employee, consultant or director of the Companies.
SECTION 4.10 Continued Effectiveness of Representations and Warranties.
---------------------------------------------------------
From the date hereof up to and including the Closing Date, the Sellers will
advise the Buyer promptly in writing
20
<PAGE>
of any condition or circumstance occurring which could cause any representations
or warranties of the Sellers to become untrue in any material respect.
SECTION 4.11 No Negotiations. Until April 23, 1999, or the earlier
---------------
termination of this Agreement in accordance with its terms, none of the
Companies, the Sellers nor any of their affiliates, advisors, agents or
investment bankers shall, directly or indirectly, initiate discussions with,
engage in negotiations with, or provide any information to any corporation,
partnership, person or other entity or group involving the possible sale,
directly or indirectly, transfer or joint venture of any of the Companies, their
businesses or assets, or the capital stock of any of the Companies (an
"Acquisition Proposal") to any person or entity other than the Buyer. The
Companies shall promptly notify the Buyer upon receipt of any offer or
indication that any person is considering making an offer with respect to an
Acquisition Proposal or any request for information relative to any of the
Companies or for access to the properties, books and records of any of the
Companies, and will promptly reject any such offer or request.
SECTION 4.12 Resignations The Sellers will, to the extent that Buyer so
------------
requests, cause the officers and directors of all of the Companies and the
trustees and administrators of each Employee Plan to resign on or before the
Closing Date.
ARTICLE V COVENANTS OF THE BUYER AND SRC
--------- ------------------------------
SECTION 5.01 Cooperation. The Buyer shall use its best efforts in good
-----------
faith to perform and fulfill all conditions and obligations to be fulfilled or
performed by it hereunder to the end that the transactions contemplated hereby
will be fully and timely consummated.
SECTION 5.02 Continued Effectiveness of Representations and Warranties.
---------------------------------------------------------
From the date hereof up to and including the Closing Date, the Buyer will advise
the Sellers promptly in writing of any condition or circumstance occurring which
could cause any representations or warranties of the Buyer to become untrue in
any material respect.
SECTION 5.03 Registration of Shares. In the event that any Make Whole
----------------------
Payment shall be satisfied by the issuance of shares of SRC Common Stock, SRC
shall use its best efforts to cause to be effective at the time of the issuance
of such SRC Common Stock a registration statement on Form S-3 under the
Securities Act to permit the resale of such SRC Common Stock issued to Westra
and Cress.
ARTICLE VI MUTUAL COVENANTS
---------- ----------------
SECTION 6.01 Non-competition. At the Closing, each of Toussaint and
---------------
Bacovast will enter into a Non-competition and Confidentiality Agreement with
Buyer in substantially the form of Exhibit 6.01 attached hereto (the "Non-
------------
competition Agreements").
21
<PAGE>
SECTION 6.02 Leases. At the closing, the Sellers will, to the extent that
------
the Buyer so requests, enter into a real estate lease agreement with the Buyer
in the form of Exhibit 6.02 attached hereto (the "New Leases") for any
------------
properties owned by any of the Sellers and leased to any of the Companies for
use in their businesses as of the date hereof.
SECTION 6.03 Reserved.
--------
SECTION 6.04 Employment Agreements. At the Closing, Buyer and each of
---------------------
Westra, Cress, Almy and Burmeister will enter into an employment agreement in
substantially the form of Exhibit 6.04 attached hereto (the "Employment
------------
Agreements").
ARTICLE VII CONDITIONS TO THE BUYER'S OBLIGATIONS
----------- -------------------------------------
The obligation of the Buyer to pay the Purchase Price on the Closing Date
and to consummate the other transactions contemplated hereby is subject to the
satisfaction, on or before the Closing Date, of the following conditions each of
which may be waived by the Buyer in its sole discretion:
SECTION 7.01 Consents. All requisite governmental approvals and consents
--------
of third parties identified on Schedule 2.08 shall have been obtained and
-------------
delivered to Buyer.
SECTION 7.02 Representations and Warranties True. All of the
-----------------------------------
representations and warranties of the Sellers contained in this Agreement or in
any Schedules or other documents attached hereto or referred to herein or
delivered pursuant hereto or in connection with the transactions contemplated
hereby shall be true, correct and complete in all respects on and as of the date
hereof and on and as of the Closing Date, as if made on and as of the Closing
Date. On the Closing Date, the Sellers shall have executed and delivered to the
Buyer a certificate, in form and substance satisfactory to the Buyer and its
counsel, to such effect.
SECTION 7.03 Performance. The Sellers shall have performed and complied
-----------
with all covenants and agreements contained herein required to be performed or
complied with by them prior to or at the Closing Date. The Sellers shall have
executed and delivered to the Buyer a certificate, in form and substance
satisfactory to the Buyer and its counsel, in writing to such effect and to the
further effect that all of the conditions set forth in this Article VII have
been satisfied.
SECTION 7.04 No Adverse Change. No adverse change shall have occurred or
-----------------
be threatened in the condition (financial or other) of any of the Companies, the
results of their operations, properties, assets, liabilities or businesses.
SECTION 7.05 Opinion of Counsel. The Buyer shall have received the
------------------
opinion of McNeil Grafton, in substantially the form attached hereto as Exhibit
-------
7.05.
- ----
SECTION 7.06 Resignations. The Buyer shall have received copies of the
------------
written resignations delivered to each of the Companies from the officers and
directors of such Companies.
22
<PAGE>
SECTION 7.07 No Actions, Suits or Proceedings. As of the Closing Date, no
--------------------------------
action, suit, investigation or proceeding brought by any person, corporation,
governmental agency or other entity shall be pending or, to the knowledge of the
parties to this Agreement, threatened, before any court or governmental body (a)
to restrain, prohibit, restrict or delay the consummation of the transactions
contemplated hereby, or (b) which has or may have a material adverse effect on
the condition, financial or otherwise, or prospects of any of the Companies. No
order, decree or judgment of any court or governmental body shall have been
issued restraining, prohibiting, restricting or delaying, the consummation of
the transactions contemplated by this Agreement. No insolvency proceeding
affecting any of the Companies or any of the Sellers shall be pending.
SECTION 7.08 Investigation Satisfactory. The Buyer shall be satisfied in
--------------------------
all respects with the results of its investigation of the properties, prospects
and affairs of each of the Companies.
SECTION 7.09 Management Agreements. The Sellers shall have entered into
---------------------
the (a) Non-competition Agreements, (b) New Leases, and (c) Employment
Agreements, as applicable.
SECTION 7.10 Closing Documents. The Sellers shall have delivered: (a) the
-----------------
Certificates representing the Shares, duly endorsed to the Buyer; (b) a copy of
the resolutions of each of the Companies, certified by each of their
Secretaries, authorizing and approving the execution, delivery and performance
of this Agreement and the transactions contemplated hereby and the acts of the
officers and employees of each of the Companies in carrying out the terms and
provisions hereof; and (c) all of the books, data, documents, instruments and
other records relating to each of the Companies including without limitation the
original incorporation documents, foreign qualifications, bylaws, minute books,
stock record books, contracts and agreements referred to in Section 2.33.
SECTION 7.11 No Material Adverse Economic Event. There shall not have
----------------------------------
occurred (a) any general suspension of trading in, or limitation on prices for,
or other extraordinary event affecting securities on NASDAQ, (b) a declaration
of a banking moratorium or any suspension of payments in respect of banks in the
United States or (c) 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, or (d) in the case of any of the foregoing
existing on the Closing Date a material acceleration or worsening thereof.
SECTION 7.12 Financing Commitment. The Buyer shall have executed
--------------------
definitive loan documents with Fleet National Bank or a similar banking
institution for adequate financing to fund the transactions contemplated hereby.
SECTION 7.13 Tax and Accounting. The tax and accounting consequences of
------------------
the transactions contemplated hereby shall be acceptable to the Buyer.
23
<PAGE>
ARTICLE VIII CONDITIONS TO THE SELLERS' OBLIGATIONS
------------ --------------------------------------
The obligation of the Sellers to sell the Shares to Buyer and to consummate
the other transactions contemplated hereby is subject to the satisfaction, on or
before the Closing Date, of the following conditions, each of which may be
waived by the Sellers in their sole discretion:
SECTION 8.01 Representations and Warranties to be True and Correct. The
-----------------------------------------------------
representations and warranties contained in Article III shall be true, complete
and correct, on and as of the Closing Date, as if made on and as of such date,
and the Buyer shall have delivered to the Sellers a certificate, in form and
substance satisfactory to the Sellers and their counsel, to such effect.
SECTION 8.02 Performance. The Buyer shall have performed and complied
-----------
with all agreements contained herein required to be performed or complied with
by it prior to or at the Closing Date, and the Buyer shall have delivered a
certificate to the Sellers, in form and substance satisfactory to the Sellers
and its counsel to such effect.
SECTION 8.03 No Actions, Suits or Proceedings. As of the Closing Date, no
--------------------------------
action, suit, investigation or proceeding brought by any person, corporation,
governmental agency or other entity shall be pending or, to the knowledge of the
parties to this Agreement, threatened, before any court or governmental body to
restrain, prohibit, restrict or delay the consummation of the transactions
contemplated hereby. No order, decree or judgment of any court or governmental
body shall have been issued restraining, prohibiting, restricting or delaying,
the consummation of the transactions contemplated by this Agreement. No
insolvency proceeding affecting the Buyer shall be pending.
SECTION 8.04 Closing Documents. The Buyer shall have delivered the
-----------------
Purchase Price and all of the resolutions, certificates, documents and
instruments required by this Agreement.
SECTION 8.05 Tax and Accounting. The tax and accounting consequences of
------------------
the transactions contemplated hereby shall be acceptable to the Seller.
SECTION 8.06 Other Agreements. The Buyer shall have entered into the (a)
----------------
Non-competition Agreements, (b) New Leases, (c) Employment/Non-competition
Agreements and (d) Employment Agreements.
SECTION 8.07 No Actions, Suits or Proceedings. As of the Closing Date, no
--------------------------------
action, suit, investigation or proceeding brought by any person, corporation,
governmental agency or other entity shall be pending or, to the knowledge of the
parties to this Agreement, threatened, before any court or governmental body (a)
to restrain, prohibit, restrict or delay the consummation of the transactions
contemplated hereby, or (b) which has or may have a material adverse effect on
the condition, financial or otherwise, or prospects of the Buyer or SRC. No
order, decree or judgment of any court or governmental body shall have been
issued restraining, prohibiting, restricting or delaying, the consummation of
the transactions contemplated by this Agreement. No insolvency proceeding
affecting either the Buyer or SRC shall be pending.
24
<PAGE>
SECTION 8.08 Investigation Satisfactory. The Sellers shall be satisfied
--------------------------
in all respects with the results of their investigation of the properties,
prospects and affairs of each of the Buyer and SRC.
SECTION 8.09 No Material Adverse Economic Event. There shall not have
----------------------------------
occurred (a) any general suspension of trading in, or limitation on prices for,
or other extraordinary event affecting securities on NASDAQ, (b) a declaration
of a banking moratorium or any suspension of payments in respect of banks in the
United States or (c) 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, or (d) in the case of any of the foregoing
existing on the Closing Date a material acceleration or worsening thereof.
ARTICLE IX INDEMNIFICATION
---------- ---------------
SECTION 9.01 Survival. All representations and warranties in this
--------
Agreement, or in any instrument or document furnished in connection with this
Agreement or the transactions contemplated hereby, shall survive the Closing and
any investigation at any time made by or on behalf of any party for a period of
three (3) years. All such representations and warranties shall expire on the
third anniversary of the Closing Date, except that (a) claims, if any, asserted
in writing prior to such third anniversary identified as a claim for
indemnification pursuant to this Article IX shall survive until finally resolved
and satisfied in full, and (b) claims, if any, which are environmental in
nature, which are based upon fraud by the Seller, which relate to title to the
Shares or title to the assets of the Company, which assert tax liability or
which are in connection with Section 9.02(c) below 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. All covenants and
agreements contained herein shall survive until fully performed in accordance
with their terms.
SECTION 9.02 Sellers' Indemnification of Buyer. Each of Westra and
---------------------------------
Cress, jointly and severally, hereby agree to indemnify and hold harmless the
Buyer against any and all losses, liabilities, claims, judgments, assessments,
damages and expenses (including in the case of (c) below all costs of correcting
any operation or other defect that may violate the requirements of any
applicable law), including, but not limited to, reasonable attorneys' fees and
expenses actually incurred by the Buyer ("Damages") arising directly out of (a)
any breach of any representation, warranty, covenant, or agreement of the
Sellers contained in this Agreement, (b) negligence, willful misconduct or fraud
in connection with the conduct of the Business prior to the Closing or (c) the
Kent 401(k) profit sharing plan or the Kent Flex Plan, each described in
Schedule 2.21 hereto; provided, however, that (a) each Seller, severally, agrees
- ------------- -------- -------
to indemnify and hold harmless the Buyer against any Damages arising directly
out of any breach of the representations and warranties and agreements contained
in Sections 2.01 and 2.02 herein, (b) any claim for indemnification hereunder
shall be asserted prior to the expiration of the survival period set forth in
Section 9.01 and (c) no claim for indemnification hereunder, other than a claim
pursuant to clause (c) of this Section 9.02, shall be asserted against the first
$50,000 of Damages arising hereunder.
25
<PAGE>
SECTION 9.03 Indemnification by Buyer. Buyer shall indemnify and hold
------------------------
harmless Sellers against any and all Damages arising directly out of (a) any
breach of any representation, warranty, covenant, or agreement of Buyer
contained in this Agreement or (b) any corporate liabilities of the Companies
which have been assumed by the Buyer as a result of the transactions
contemplated hereunder and for which the Sellers have been found to be
individually liable, provided, however, that (a) any claim for indemnification
-------- -------
hereunder shall be asserted prior to the expiration of the survival period set
forth in Section 9.01, (b) no claim for indemnification hereunder shall be
asserted against the first $50,000 of Damages arising hereunder and (c) after
the Closing, the rights of the Seller under this Section 9.03 shall be the sole
remedies of the Seller for any breach of this Agreement.
SECTION 9.04 Claims for Indemnification.
--------------------------
(a) In the event of the occurrence of any event which any party
asserts is an indemnifiable event pursuant to this Article IX, the party
claiming indemnification (the "Indemnified Party") shall provide prompt notice
to the party required to provide indemnification (the "Indemnifying Party"),
specifying in detail the facts and circumstances with respect to such claim and
the basis for which indemnification is available 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, however,
that (a) the Indemnified Party shall be entitled to participate in the defense
of such claim at its own expense, (b) 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, injunctive or other
non-monetary relief would be imposed against the Indemnified Party, (c) 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, and shall assume all expense with
respect to the defense or settlement of any claim to the extent such claim seeks
an order, injunction or other equitable relief against the Indemnified Party
which, if successful, could materially interfere with the business, operations,
assets, condition (financial or otherwise) or prospects of the Indemnified
Party, provided that 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 Section 9.04 if the Indemnifying Party is entitled but
fails to assume control over the defense of a claim as provided in this Section
9.04, provided that the Damages associated with such claim are covered by the
indemnity provisions of Section 9.02 or 9.03 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 Article IX, 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.
26
<PAGE>
(b) All claims for indemnification by Buyer shall first be satisfied
by a pro rata reduction in the outstanding principal and interest due under the
Notes, to the extent that amounts remain outstanding under the Notes.
ARTICLE X TERMINATION
--------- -----------
SECTION 10.01 Termination. This Agreement may be terminated and the
-----------
transactions contemplated hereby may be abandoned at any time prior to the
Closing:
A. By mutual written consent duly authorized by the Board of Directors
of the Buyer and by the Sellers;
B. By the Buyer or the Sellers if:
(i) any court of competent jurisdiction or other
governmental body shall have issued an order, decree or
ruling, or taken any other action restraining,
enjoining or otherwise prohibiting the transactions
contemplated hereby, provided that this Agreement shall
not be terminated pursuant to this paragraph unless the
party terminating this Agreement has utilized its
reasonable best efforts to oppose the issuance of such
order, decree or ruling or the taking of such action;
(ii) the Closing has not occurred on or prior to April 23,
1999, for any reason other than the breach of any
provision of this Agreement by the party terminating
this Agreement; or
(iii) the other party breaches any of its representations,
warranties or covenants hereunder in any material
respect and such breach is not cured within five (5)
days, provided that the party seeking termination is
not in material breach of any of its representations,
warranties or covenants hereunder.
C. By the Buyer if:
(i) Any of the conditions set forth in Article VII hereof
has not been satisfied on or before April 23, 1999 or
shall have become incapable of fulfillment and shall
not have been waived by the Buyer, for any reason other
than a breach by the Buyer of any of its
representations, warranties or agreements hereunder; or
(ii) If in the Buyer's good faith judgment there is any
inaccuracy in any representations or breach of any
warranty contained
27
<PAGE>
therein, or any failure by the Seller to perform any
commitment, covenant or condition contained in this
Agreement, or there exists any error, misstatement or
omission with regard to any of the Exhibits, Schedules
or other documents referred to herein, or the Buyer in
its sole judgment is not satisfied with the results of
its investigation or the contents of any of the
Exhibits, Schedules, information or other documents, or
with the results of its examination of the business and
condition (financial or otherwise) of any of the
Companies.
D. By the Sellers if any of the conditions set forth in Article
VIII hereof has not been satisfied on or before April 23, 1999, or shall
have become incapable of fulfillment and shall not have been waived by the
Sellers, for any reason other than a breach by any Seller of any of their
representations, warranties or agreements hereunder;
Upon the occurrence of any of the events specified in this Section 10.01
(other than paragraph A hereof), written notice of such event shall forthwith be
given to the other parties to this Agreement, whereupon this Agreement shall
terminate.
SECTION 10.02 Effect of Termination. In the event of the termination and
---------------------
abandonment of this Agreement pursuant to Section 10.01, this Agreement, except
for the provisions of Articles IX, X and XI shall forthwith become void and be
of no effect, without any liability on the part of any party or its directors,
officers or shareholders. Nothing in this Section 10.02 shall relieve any party
to this Agreement of liability for breach of this Agreement.
If the Sellers or any of the Companies fails to fulfill its obligations
hereunder for any reason not excused by an express provision of this Agreement,
then the Buyer shall, in addition to any other remedies that it may have, have
the right to bring an action in any court of competent jurisdiction to obtain
specific performance of this Agreement, it being understood that the parties
agree that failure of the Sellers to consummate the purchase and sale of the
Shares or failure of the Sellers or any of the Companies to perform any of their
obligations contemplated by this Agreement (except for a failure excused by an
express provision of this Agreement) would cause irreparable injury to the Buyer
and that money damages would not provide an adequate remedy to the Buyer. The
Sellers and each of the Companies therefore waive all objections to the award of
equitable relief for such failure.
ARTICLE XI SRC GUARANTEE
---------- -------------
SECTION 11.01 Guarantee.
---------
(a) SRC hereby irrevocably and unconditionally guarantees (the
"Guarantee") to the Sellers the obligations of the Buyer under the Notes, the
Make Whole Payment, the Second Make Whole Payment and the payment obligations of
the Employment Agreements (each an
28
<PAGE>
"Obligation" and collectively the "Obligations"). Failing payment when due of
any amount so guaranteed for whatever reason, SRC shall be obligated, to pay the
same.
(b) SRC hereby agrees, to the fullest extent permitted by applicable
law, that its obligations with regard to this Guarantee shall be unconditional.
SRC hereby waives diligence, presentment, demand of payment, filing of claims
with a court in the event of insolvency or bankruptcy of the Buyer, any right to
require a proceeding first against the Buyer or right to require the prior
disposition of the assets of the Buyer to meet its obligations, protest, notice
and all demands whatsoever and covenants that this Guarantee will not be
discharged (except to the extent released pursuant to Section 11.02 herein)
except by complete performance of the Obligations.
(c) It is the intention of SRC and the Buyer that the Obligations
shall not be in excess of the maximum amount permitted by applicable law.
Accordingly, if the obligations in respect of the Guarantee would be annulled,
avoided or subordinated to the creditors of SRC by a court of competent
jurisdiction in a proceeding actually pending before such court as a result of a
determination both that such Guarantee was made by SRC without fair
consideration and, immediately after giving effort thereto, SRC was insolvent or
unable to pay its debts as they mature or left with an unreasonably small
capital, then the obligations of SRC under such Guarantee shall be reduced by
such court if and to the extent such reduction would result in the avoidance of
such annulment, avoidance or subordination. For purposes of this paragraph,
"fair consideration," "insolvency," "unable to pay its debts as they mature,"
"unreasonably small capital" and the effective times of reductions, if any,
required by this paragraph shall be determined in accordance with applicable
law.
SECTION 11.02 Reserved.
--------
SECTION 11.03 Certain Bankruptcy Events.
-------------------------
SRC hereby covenants and agrees, to the fullest extent that it may do so
under applicable law, that in the event of the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Buyer, SRC shall not file (or
join in any filing of), or otherwise seek to participate in the filing of, any
motion or request seeking to stay or to prohibit (even temporarily) execution on
the Guarantee and hereby waives and agrees not to take the benefit of any such
stay or execution, whether the bankruptcy law permits or otherwise.
ARTICLE XII MISCELLANEOUS
----------- -------------
SECTION 12.01 Notices. All notices, requests, consents and other
-------
communications hereunder shall be in writing, shall be addressed to the
receiving party's address set forth below or to such other address as a party
may designate by notice hereunder, and shall be either (a) delivered by hand,
(b) made by telex, telecopy or facsimile transmission, (c) sent by recognized
overnight courier, or (d) sent by registered or certified mail, return receipt
requested, postage prepaid.
29
<PAGE>
If to the Buyer: With a copy to:
Sight Resource Corporation Mintz, Levin, Cohn, Ferris,
100 Jeffrey Avenue Glovsky and Popeo, P.C.
Holliston, MA 01746 One Financial Center
Attn: President Boston, MA 02111
Fax: (508) 429-6023 Attn: Lewis Geffen, Esquire
If to the Sellers: With a copy to:
As set forth on the
signature page hereof. Same as for the Companies.
If to the Companies: With a copy to:
c/o Kent Optical Company McNeil Grafton
1095 Third Street, Suite #10 20 S. Fifth Street, P.O. Box 185
Muskegon, MI 49441 Grand Haven, MI 49417
Phone: Phone: (616) 847-1000
Fax: Fax: (616) 847-1619
Attn: Timothy D. Westra Attn: Douglas J. McNeil, Esquire
All notices, requests, consents and other communications hereunder shall be
deemed to have been received (a) if by hand, at the time of the delivery thereof
to the receiving party at the address of such party set forth above, (b) if made
by telex, telecopy or facsimile transmission, at the time that receipt thereof
has been acknowledged by electronic confirmation or otherwise, (c) if sent by
overnight courier, on the next business day following the day such notice is
delivered to the courier service, or (d) if sent by registered or certified
mail, on the fifth business day following the day such mailing is made.
SECTION 12.02 Entire Agreement. This Agreement together with the Exhibits
----------------
and Schedules hereto and the other documents executed in connection herewith
(together, the "Documents") embodies the entire agreement and understanding
between the parties hereto with respect to the subject matter hereof and
supersedes all prior oral or written agreements and understandings relating to
the subject matter hereof. No statement, representation, warranty, covenant or
agreement of any kind not expressly set forth in the Documents shall affect, or
be used to interpret, change or restrict, the express terms and provisions of
this Agreement.
SECTION 12.03 Modifications and Amendments. The terms and provisions of
----------------------------
this Agreement may be modified or amended only by written agreement executed by
all parties hereto.
SECTION 12.04 Waivers and Consents. No failure or delay by a party hereto
--------------------
in exercising any right, power or remedy under this Agreement, and no course of
dealing between the parties hereto, shall operate as a waiver of any such right,
power or remedy of the party. No single or partial exercise of any right, power
or remedy under this Agreement by a party hereto, nor any abandonment or
discontinuance of steps to enforce any such right, power or remedy, shall
preclude such party from any other or further exercise thereof or the exercise
of any other right, power or
30
<PAGE>
remedy hereunder. The election of any remedy by a party hereto shall not
constitute a waiver of the right of such party to pursue other available
remedies. No notice to or demand on a party not expressly required under this
Agreement shall entitle the party receiving such notice or demand to any other
or further notice or demand in similar or other circumstances or constitute a
waiver of the rights of the party giving such notice or demand to any other or
further action in any circumstances without such notice or demand. The terms and
provisions of this Agreement may be waived, or consent for the departure
therefrom granted, only by written document executed by the party entitled to
the benefits of such terms or provisions. No such waiver or consent shall be
deemed to be or shall constitute a waiver or consent with respect to any other
terms or provisions of this Agreement, whether or not similar. Each such waiver
or consent shall be effective only in the specific instance and for the purpose
for which it was given, and shall not constitute a continuing waiver or consent.
SECTION 12.05 Assignment. Neither this Agreement, nor any right
----------
hereunder, may be assigned by any of the parties hereto without the prior
written consent of the other parties, except that the Buyer may assign all or
part of its rights and obligations under this Agreement to one or more direct or
indirect subsidiaries or affiliates (in which event, representations and
warranties relating to the Buyer shall be appropriately modified).
SECTION 12.06 Parties in Interest. This Agreement shall be binding upon
-------------------
and inure solely to the benefit of each party hereto and their permitted
assigns, and nothing in this Agreement, express or implied, is intended to
confer upon any other person any rights or remedies of any nature whatsoever
under or by reason of this Agreement. Nothing in this Agreement shall be
construed to create any rights or obligations except among the parties hereto,
and no person or entity shall be regarded as a third-party beneficiary of this
Agreement.
SECTION 12.07 Governing Law. This Agreement and the rights and
-------------
obligations of the parties hereunder shall be construed in accordance with and
governed by the internal laws of the State of Michigan, without giving effect to
the conflict of law principles thereof.
SECTION 12.08 Arbitration. Any controversy, dispute or claim arising out
-----------
of or in connection with this Agreement, or the breach, termination or validity
hereof, shall be settled by final and binding arbitration, to be conducted in
the first instance in Boston, Massachusetts, in the second instance in Grand
Rapids, Michigan and thereafter alternating between such locations, pursuant to
the then-obtaining Commercial Rules of the American Arbitration Association.
The decision or award of the arbitration panel shall be final, and judgment upon
such decision or award may be entered in any competent court or application may
be made to any competent court for judicial acceptance of such decision or award
and an order of enforcement. The arbitration panel shall allocate the costs of
the arbitration to any of the parties as it sees fit, and shall have the
discretion to require a party to pay the attorney's fees incurred by another
party in connection with the arbitration.
SECTION 12.09 Severability. In the event that any court of competent
------------
jurisdiction shall finally determine that any provision, or any portion thereof,
contained in this Agreement shall be void or unenforceable in any respect, then
such provision shall be deemed limited to the extent that
31
<PAGE>
such court determines it enforceable, and as so limited shall remain in full
force and effect. In the event that such court shall determine any such
provision, or portion thereof, wholly unenforceable, the remaining provisions of
this Agreement shall nevertheless remain in full force and effect.
SECTION 12.10 Interpretation. The parties hereto acknowledge and agree
--------------
that: (a) each party and its counsel reviewed and negotiated the terms and
provisions of this Agreement (except with respect to the disclosure schedules
regarding the business of the Companies which are the sole responsibility of the
Sellers) and have contributed to its revision; (b) the rule of construction to
the effect that any ambiguities are resolved against the drafting party shall
not be employed in the interpretation of this Agreement; and (c) the terms and
provisions of this Agreement shall be construed fairly as to all parties hereto
and not in favor of or against any party, regardless of which party was
generally responsible for the preparation of this Agreement.
SECTION 12.11 Headings and Captions. The headings and captions of the
---------------------
various subdivisions of this Agreement are for convenience of reference only and
shall in no way modify, or affect, or be considered in construing or
interpreting the meaning or construction of any of the terms or provisions
hereof.
SECTION 12.12 Enforcement. Each of the parties hereto acknowledges and
-----------
agrees that the rights acquired by each party hereunder are unique and that
irreparable damage would occur in the event that any of the provisions of this
Agreement to be performed by the other party were not performed in accordance
with their specific terms or were otherwise breached. Accordingly, in addition
to any other remedy to which the parties hereto are entitled at law or in
equity, each party hereto shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement by the other party and to enforce
specifically the terms and provisions hereof in any federal or state court to
which the parties have agreed hereunder to submit to jurisdiction.
SECTION 12.13 Reliance. The parties hereto agree that, notwithstanding
--------
any right of any party to this Agreement to investigate the affairs of any other
party to this Agreement, the party having such right to investigate shall have
the right to rely fully upon the representations and warranties of the other
party expressly contained in this Agreement and on the accuracy of any schedule
or other document attached hereto or referred to herein or delivered by such
other party or pursuant to this Agreement.
SECTION 12.14 Expenses. Each of the parties hereto shall pay its own fees
--------
and expenses (including the fees of any attorneys, accountants, appraisers or
others engaged by such party) in connection with this Agreement and the
transactions contemplated hereby whether or not the transactions contemplated
hereby are consummated; provided, however, that all expenses in excess of
--------
$25,000 billed to or incurred by each of the Companies in connection with this
Agreement and the transactions contemplated hereby after March 1, 1999 shall be
borne by the Sellers and not the Companies.
SECTION 12.15 No Broker or Finder. Each of the parties hereto represents
-------------------
and warrants to the other that no broker, finder or other financial consultant
has acted on its behalf in connection with this Agreement or the transactions
contemplated hereby in such a way as to create any liability
32
<PAGE>
on the other. Each of the parties hereto agrees to indemnify and save the other
harmless from any claim or demand for commission or other compensation by any
broker, finder, financial consultant or similar agent claiming to have been
employed by or on behalf of such party and to bear the cost of legal expenses
incurred in defending against any such claim.
SECTION 12.16 Publicity. No party shall issue any press release or
---------
otherwise make any public statement with respect to the execution of, or the
transactions contemplated by, this Agreement without the prior written consent
of the other party, except as may be required by law. The parties recognize
that the Buyer is a subsidiary of a publicly held company which is obligated
under the federal or state securities laws, rules or regulations to make
disclosures of material events affecting it. Upon advice by counsel that Buyer
or SRC is required to make such an announcement by the federal or state
securities laws, rules or regulations, Buyer or SRC may make such announcement.
Buyer agrees to promptly inform each of the Companies of such advice and, if
practicable, give each of the Companies an opportunity to comment upon the form
of any such announcement.
SECTION 12.17 Confidentiality. Each party acknowledges and agrees that
---------------
any information or data it has acquired from the other party, not otherwise
properly in the public domain, was received in confidence. Each party hereto
agrees not to divulge, communicate or disclose, except as may be required by law
or for the performance of this Agreement (including obtaining financing and
conducting due diligence), or use to the detriment of the disclosing party or
for the benefit of any other person or persons, or misuse in any way, any
confidential information of the disclosing party concerning the subject matter
hereof, including any trade or business secrets of the disclosing party and any
technical or business materials that are treated by the disclosing party as
confidential or proprietary, including without limitation information (whether
in written, oral or machine-readable form) concerning: general business
operations; methods of doing business, servicing clients, client relations, and
of pricing and making charge for services and products; financial information,
including costs, profits and sales; marketing strategies; business forms
developed by or for the disclosing party; names of suppliers, personnel,
customers, clients and potential clients; negotiations or other business
contacts with suppliers, personnel, customers, clients and potential clients;
form and content of bids, proposals and contracts; the disclosing party's
internal reporting methods; technical and business data, documentation and
drawings; software programs, however embodied; manufacturing processes;
inventions; diagnostic techniques; and information obtained by or given to the
disclosing party about or belonging to third parties.
SECTION 12.18 Counterparts. This Agreement may be executed in one or more
------------
counterparts, and by different parties hereto on separate counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
33
<PAGE>
IN WITNESS WHEREOF, the Buyer, each of the Companies and the Sellers
have executed this Stock Purchase and Sale Agreement as of the day and year
first above written.
The Buyer:
---------
ATTEST: KENT ACQUISITION CORP.
________________________ By: /s/ William T. Sullivan
-------------------------------------
Its: President
-------------------------------------
SRC (with respect to Article III,
---
Section 5.03 and Article XI only)
ATTEST SIGHT RESOURCE CORPORATION
________________________ By: /s/ William T. Sullivan
----------------------------------
Its: President
-------------------------------------
The Companies:
-------------
ATTEST: KENT OPTICAL COMPANY
/s/ Deana R. Olsen By: /s/ Timothy D. Westra
- ------------------- -----------------------------------
Its: President
----------------------------------
ATTEST: CUSTOM OPTICS, INC.
/s/ Deana R. Olsen By: /s/ Timothy D. Westra
- ------------------- -----------------------------------
Its: President
-----------------------------------
ATTEST: KENT - N.W. GRAND RAPIDS, INC.
/s/ Deana R. Olsen By: /s/ Timothy D. Westra
- ------------------- -----------------------------------
Its: President
-----------------------------------
34
<PAGE>
ATTEST: KENT-HACKLEY, INC.
/s/ Deana R. Olsen By: /s/ Timothy D. Westra
- ------------------- -----------------------------------
Its: President
-----------------------------------
ATTEST: SOURCE OPTICAL SUPPLY, INC.
/s/ Deana R. Olsen By: /s/ Timothy D. Westra
- ------------------- -----------------------------------
Its: President
------------------------
The Sellers:
-----------
ATTEST:
s/ Deana R. Olsen By: /s/ Timothy D. Westra
- ------------------ -----------------------------------
Timothy D. Westra
Address: 19081 Elizabeth Court
Spring Lake, MI 49456
ATTEST:
s/ Deana R. Olsen By: /s/ John C. Cress
- ------------------ -------------------------------
John C. Cress
Address: 4226 Vineyard
Muskegon, MI 49441
ATTEST:
s/ Deana R. Olsen By: /s/ Gerald Almy
- ------------------ -----------------------------
Gerald Almy
Address: 7460 Bridle Path, SE
Grand Rapids, MI 49546
[Signature Page to Stock Purchase and Sale Agreement]
35
<PAGE>
ATTEST:
s/ Deana R. Olsen By: /s/ Steven Burmeister
- ------------------ -----------------------------------
Steven Burmeister
Address: 6131 Lake Harbor Road
Muskegon, MI 49441
ATTEST:
s/ Deana R. Olsen By: /s/ Dennis Toussaint
- ------------------ ----------------------------------
Dennis Toussaint
Address: 10371 Portage Road
Kalamazoo, MI 49002
ATTEST: BACOVAST, L.L.C.
s/ Douglas J. McNeil By: /s/ Timothy D. Westra
- --------------------- -----------------------------------
Its:: /s/ Timothy D. Westra
-----------------------------------
Pursuant to Power of Attorney in Source
Optical Shareholder Agreement
[Signature Page to Stock Purchase and Sale Agreement]
36
<PAGE>
LIST OF OMITTED EXHIBITS AND SCHEDULES:
Listed below are all the schedules and exhibits that are omitted from Exhibit
2.1 in this Form 8-K. The Registrant agrees to furnish supplemental copies of
any omitted exhibit or schedule listed below to the Commission upon request.
Exhibits
- --------
1.02(a) Form of Escrow Agreement
1.02(b) Form of Promissory Note
6.01 Form of Non-Competition Agreement
6.02 Form of Real Estate Lease
6.04(a) Form of Employment Agreement (Westra)
6.04(b) Form of Employment Agreement (Cress)
6.04(c) Form of Employment Agreement (Almy)
6.04(d) Form of Employment Agreement (Burmeister)
7.05 Form of Opinion of McNeil Grafton
Schedules
- ---------
1.02 Purchase Price Allocation
2.01 Title to Shares
2.04 Capitalization
2.08 Validity, etc.
2.09 Financial Statement
2.11 Absence of Adverse Change; Conduct of Business
2.14 Taxes
2.15 Litigation
2.18 Licenses and Permits
2.20 Certain Employees
2.21 Employee Benefits
2.22 Tangible Properties
2.23 Owned Premises
2.24 Leased Premises
2.26 Insurance
2.27 Outstanding Commitments
2.28 Intellectual Property
2.29 Customers and Suppliers
2.30 Banks, Brokers and Proxies
2.31 Guaranties of Indebtedness of Other Persons
2.32 Transactions with Affiliates
2.37 Year 2000 Compliance
37
<PAGE>
Exhibit 99.1
LOAN AGREEMENT
--------------
LOAN AGREEMENT made this 15th day of April, 1999 by and between Fleet National
Bank, a national banking association organized and existing under the laws of
the United States of America with a principal place of business at One Federal
Street, Boston, MA 02110 (hereinafter referred to as the "Bank") and Sight
Resource Corporation, a Delaware corporation with a principal place of business
at 100 Jeffrey Avenue, Holliston, MA 01746 (hereinafter sometimes referred to as
the "Agent Borrower"), Cambridge Eye Associates, Inc., a Delaware corporation
with a principal place of business at 1 Highland Avenue, Unit 3B, Malden, MA,
Douglas Vision World, Inc., a Delaware corporation with a principal place of
business at 1 Highland Avenue, Unit 3B, Malden, MA, E.B. Brown Opticians, Inc.,
a Delaware corporation with a principal place of business at 1549 E. 30th
Street, Cleveland, Ohio, Eyeglass Emporium, Inc., a Delaware corporation with a
principal place of business at 100 Jeffrey Avenue, Holliston, MA 01746, Kent
Acquisition Corp. (whose name will be changed to Kent Optical Company in
conjunction with the execution of this Agreement), a Delaware corporation with a
principal place of business at 100 Jeffrey Avenue, Holliston, MA 01746, Shawnee
Optical, Inc., a Delaware corporation with a principal place of business at 2203
W. 38th Street, Erie, PA, and Vision Plaza, Corp., a Delaware corporation with a
principal place of business at 3301 Veterans Memorial Boulevard, Suite 54E,
Metarie, Louisiana (each of the foregoing corporations, including the
Agent Borrower shall be referred herein both individually and
collectively as the "Borrower").
For value received and in consideration of the granting by the Bank of
financial accommodations to Borrower, Borrower represents and warrants to and
agrees with the Bank as follows:
ARTICLE I
---------
DEFINITIONS AND RULES OF INTERPRETATION
---------------------------------------
For purposes of this Agreement, the following terms shall have the
following meanings:
1.01 "Acquisition Line" shall mean the non-revolving line of credit
established pursuant to this Agreement in the maximum principal amount of the
Commitment Amount.
1.02 "Acquisition Term Loan" shall mean the Loan or Loans evidencing an
Advance under the Acquisition Line.
1.03 "Acquisition Term Note" shall mean the promissory note or notes
evidencing an Advance under the Acquisition Line, in the form of Rider A
attached hereto.
1.04 "Adjusted Libor" shall mean an interest rate per annum determined by
Bank pursuant to the following formula:
Adjusted Libor = Libor
------------------------------
1.00 - Reserve Rate
<PAGE>
1.05 "Advance" shall mean any sum of money loaned by the Bank to the
Borrower pursuant to this Agreement.
1.06 "Affiliate" shall mean any Person (i) which directly or indirectly
controls, or is controlled by or is under common control with the Borrower or a
subsidiary, (ii) which directly or indirectly beneficially holds or owns ten
percent (10%) or more of any class of voting stock of the Borrower or any
subsidiary, or (iii) ten percent (10%) or more of the voting stock of which is
directly or indirectly beneficially owned or held by the Borrower or a
subsidiary.
1.07 "Agent Borrower" shall mean Sight Resource Corporation.
1.08 "Availability Period" shall mean that period commencing with the
date of this Agreement and ending on the Termination Date.
1.09 "Bank" shall mean and refer to Fleet National Bank, its successors
and assigns.
1.10 "Banking Day" shall mean a day on which banks are open for business
in Boston, Massachusetts, and if the applicable "Banking Day" relates to a Libor
Loan, a day on which dealings are carried on and banks are open for business in
the relevant Interbank Market.
1.11 "Borrower" shall mean each of the entities listed above and their
successors and permitted assigns or any entity which subsequently becomes a
party to this Agreement as a co-obligor.
1.12 "Borrowing Base" shall have the meaning set forth in Section 2.01
hereof.
1.13 "Borrowing Date" shall mean any day upon which an Advance is made.
1.14 "Cash Flow" shall mean, for any period, the sum of earnings before
interest and taxes, plus depreciation and amortization, less permitted
dividends, less taxes paid in the applicable period, less unfinanced capital
expenditures paid in the applicable period.
1.15 "Collateral" shall mean all collateral for the Loans, whether
pursuant to security agreements or otherwise.
1.16 "Commitment Amount" shall mean Ten Million ($10,000,000.00) Dollars.
1.17 "Credit Limit" shall mean Three Million ($3,000,000.00) Dollars.
1.18 "Debt Service" shall mean, for any period, the sum of the current
maturities of all long-term debt (including subordinated debt) and all interest
expense.
1.19 "Default" shall mean an Event of Default or an event which, with the
passage of time or the giving of notice or both, would constitute an Event of
Default.
1.20 "Dollars" or "$" shall mean currency of the United States of America.
2
<PAGE>
1.21 "Eligible Accounts Receivable" shall have the meaning set forth in
Section 2.03 hereof.
1.22 "Eligible Inventory" shall have the meaning set forth in Section 2.04
hereof.
1.23 "Eurocurrency Liabilities" shall have the meaning assigned to that
term in Regulation D of the Board of Governors of the Federal Reserve System, as
in effect from time to time.
1.24 "Eurodollars" shall mean Dollars acquired by Bank through the
purchase or other acquisition of deposits denominated in Dollars and made with
any bank or branch of a bank (including any branch of the Bank) located outside
the United States of America.
1.25 "Event of Default" is defined in Article X of this Agreement.
1.26 "Financing Agreements" shall mean this Agreement and all documents
executed in conjunction herewith, whether now or in the future, including,
without limitation, collateral documents, notes, and subordination agreements
required to be executed by Borrower or any Third Party in connection with the
loan arrangements between the Borrower and the Bank.
1.27 "GAAP" or "generally accepted accounting principles" shall mean
generally accepted accounting principles which are (1) consistent with the
principles promulgated or adopted by the Financial Accounting Standards Board
and (2) such that insofar as the use of accounting principles is pertinent,
certified public accountants would be able to deliver an unqualified opinion as
to financial statements in which such principles have been properly applied.
1.28 "Indebtedness" shall mean (i) all liabilities for borrowed money, for
the deferred purchase price of property or services, and under leases which are
or should be, under generally accepted accounting principles, recorded as
capital leases, in respect of which a person or entity is directly or
indirectly, absolutely or contingently liable as obligor, guarantor, endorser or
otherwise, or in respect of which such person or entity otherwise assures a
creditor against loss, (ii) all liabilities of the type described in (i) above
which are secured by (or for which the holder has an existing right, contingent
or otherwise, to be secured by) any lien upon property owned by such person or
entity, whether or not such person or entity has assumed or become liable for
the payment thereof, and (iii) all other liabilities or obligations which would,
in accordance with generally accepted accounting principles, be classified as
liabilities of such person or entity.
1.29 "Interbank Market" shall mean, with respect to any Libor Loan, the
London Interbank Eurodollar market.
1.30 "Interest Payment Date" shall mean the first Banking Day of each
month commencing on the first Banking Day of the first month next succeeding the
date hereof, through the Termination Date (as the same may be extended from time
to time by Bank, in its sole discretion).
3
<PAGE>
1.31 "Interest Period" shall mean:
(a) with respect to each Libor Loan, a period commencing on the Borrowing
Date of such Advance, and ending one, two, three, or six months
thereafter, as the case may be, as determined in accordance with the
provisions of this Agreement provided that (i) any Interest Period
which would otherwise end on a day which is not a Banking Day, shall
end and the next Interest Period shall commence on the next preceding
or the next succeeding day which is a Banking Day as determined in
good faith by the Bank in accordance with the then current bank
practices in the relevant Interbank Market, and (ii) no Interest
Period for a Libor Loan shall end after the Termination Date;
(b) with respect to the Prime Rate Loan(s), a period commencing on the
Borrowing Date of an Advance and ending on the date of repayment of
such Advance.
1.32 "Libor" shall mean, with respect to a Libor Loan, the rate per annum
at which deposits in Dollars are offered to Bank or Bank's representative or
agent for delivery on the Borrowing Date for such Advance, in the Interbank
Market at 11:00 a.m., local time, two Banking Days prior to such Borrowing Date
for a period equal to the Interest Period chosen by Borrower with respect to
such Advance and in an amount substantially equal to the principal amount of
such Advance. The Bank shall give prompt notice to the Borrower of the Libor
determined for each Advance and such notice shall be conclusive and binding,
absent manifest error, for all purposes.
1.33 "Libor Loan(s)" shall mean, when used in the singular, any Advance
under the Revolving Loan on which the interest rate is calculated by reference
to Libor and, when used in the plural, shall mean all such Advances.
1.34 "Loan(s)" shall mean the aggregate of the unpaid principal balance of
all Advances.
1.35 "Margin" shall mean: (i) with respect to each Prime Rate Loan, zero
(0%) percent; and (ii) with respect to each Libor Loan, two and one-half (2.5%)
percent until Profitability is achieved and two (2%) percent thereafter.
1.36 "Maturity Date" shall mean the date on which an Interest Period
expires.
1.37 "Net Worth" shall mean, as of any date, the total consolidated
stockholders' equity (including preferred stock) which would appear on the
balance sheet of Borrower, prepared in accordance with generally accepted
accounting principles consistently applied.
1.38 "Obligations" shall mean all debts, liabilities and Indebtedness of
Borrower to Bank hereunder including, without limitation, all interest, fees,
charges, expenses and overdrafts, and also including, without limitation, all
obligations and liabilities which Bank may incur or become liable for, on
account of, or as a result of any transactions between Bank and Borrower
hereunder.
4
<PAGE>
1.39 "Person" shall mean any individual, corporation (including a business
trust), partnership, trust, unincorporated association, joint stock company,
limited liability company or other legal entity or organization and any
government or agent or political subdivision thereof.
1.40 "Prime Rate" shall mean the rate of interest announced by the Bank in
Boston, Massachusetts, from time to time as its "Prime Rate", it being
understood that such rate is a reference rate, and not necessarily the lowest
rate of interest charged by Bank.
1.41 "Prime Rate Loan(s)" shall mean, when used in the singular, any
Advance under the Revolving Loan on which the interest rate is calculated by
reference to the Prime Rate and, when used in the plural, shall mean all such
Advances.
1.42 "Profitability" shall mean the time at which Borrower submits a
covenant compliance certificate demonstrating net income after taxes of at least
$1 on a consolidated basis for a period of three (3) months ending at the end of
the quarterly fiscal period ending March 31, 1999 (or the three (3) month period
ending at the end of any subsequent quarterly period if "Profitability" is not
achieved as of March 31, 1999).
1.43 "Reserve Rate" shall mean the rate (expressed as a decimal) at which
Bank would be required to maintain reserves under REGULATION D of the Board of
Governors of the Federal Reserve System against Eurodollar Liabilities if such
liabilities were outstanding.
1.44 "Revolving Loan" shall mean the discretionary revolving line of
credit established pursuant to this Agreement in the maximum principal amount of
the Credit Limit.
1.45 "Revolving Line Note" shall mean the note of even date in the maximum
principal amount of $3,000,000.00 evidencing the Advances under the Revolving
Loan.
1.46 "Termination Date" shall mean May 31, 2001.
1.47 "Term Loan" shall mean the loan from the Bank to the Borrower in the
original principal amount of Seven Million ($7,000,000.00) Dollars.
1.48 "Term Note(s)" shall mean the promissory note evidencing the Term
Loan.
1.49 "Third Party" shall mean any Person who has executed and delivered,
or who in the future may execute and deliver, to Bank any agreement, instrument,
or document, pursuant to which such Person has become a co-obligor with respect
to of the Obligations and/or has granted Bank a security interest in or lien on
some or all of such Person's real or personal property to secure the payment of
the Obligations.
1.50 "Transaction Documents" shall mean all agreements, instruments, notes
and documents executed in conjunction with the Loans, whether now existing or
hereafter arising.
1.51 For purposes of this Agreement, the following rules of interpretation
shall be used:
5
<PAGE>
(i) A reference to any document or agreement shall include such
document or agreement as amended, modified or supplemented from time to
time in accordance with its terms and the terms of this Agreement.
(ii) The singular includes the plural and the plural includes the
singular.
(iii) A reference to any law includes any amendment or modification
to such law.
(iv) A reference to any Person includes its permitted successors and
permitted assigns.
(v) Accounting terms capitalized but not otherwise defined herein
have the meanings assigned to them by generally accepted accounting
principles applied on a consistent basis by the accounting entity to which
they refer.
(vi) All capitalized terms not specifically defined herein or by
generally accepted accounting principles, which terms are defined in the
Uniform Commercial Code as in effect in the Commonwealth of Massachusetts
shall have the meanings assigned to them therein.
ARTICLE II
----------
AMOUNT AND TERMS OF CREDIT AND INTEREST
---------------------------------------
THE REVOLVING LOAN
------------------
2.01 Subject to the terms and conditions of this Agreement, the Bank
hereby establishes a revolving line of credit of up to $3,000,000.00 to be
advanced as hereinafter provided. The Bank may, in its discretion, from time to
time, make Advances comprising the Revolving Loan to the Agent Borrower upon the
Agent Borrower's request; provided, however, that no Advance will be made if,
after giving effect to the Agent Borrower's request for such Advance, the
outstanding principal balance of the Revolving Loan would exceed the lesser of:
(a) the Credit Limit; or
(b) the sum of:
(i) eighty percent (80%) of the face amount of the sum of the
Eligible Accounts Receivable of each Borrower less than ninety
(90) days from the invoice date thereof, plus
(ii) the lesser of: (x) $2,000,000.00 or (y) thirty percent (30%) of
the value (determined at the lower of cost or market value) of
the sum of the Eligible current Inventory of each Borrower (the
sum of (i) plus (ii) is hereinafter called the "Borrowing
Base").
6
<PAGE>
2.02 If at any time the aggregate Advances under the Revolving Loan exceed
the Borrowing Base, the Borrower shall immediately, on demand, pay to the Bank
an amount sufficient to reduce the aggregate amount of such Advances to an
amount less than the Borrowing Base.
2.03 For purposes of the Borrowing Base calculation set forth above,
Eligible Accounts Receivable are those which are owing to the Borrower which met
the following specifications at the time it came into existence and continues to
meet the same until collected in full:
(i) The account arose from the performance of services or an
outright sale of goods by Borrower, such goods have been
shipped to the account debtor, and Borrower has possession of,
or has delivered to Bank, shipping and delivery receipts
evidencing such shipment.
(ii) The account is not subject to any prior assignment, claim,
lien, or security interest, and Borrower will not make any
further assignment thereof or create any further security
interest therein (except in favor of Bank) nor permit
Borrower's rights therein to be reached by attachment, levy,
garnishment or other judicial process.
(iii) The account is not subject to set-off, credit, allowance or
adjustment by the account debtor, except discount allowed for
prompt payment and the account debtor has not complained as to
its liability thereon and has not returned any of the goods
from the sale of which the account arose.
(iv) The account arose in the ordinary course of Borrower's business
and did not arise from the performance of services or a sale of
goods to a supplier or employee of the Borrower.
(v) No notice of bankruptcy or insolvency of the account debtor has
been received by or is actually known by the Borrower.
(vi) The account is not owed by an account debtor whose principal
place of business is outside the United States of America,
unless such account is supported by a letter of credit
reasonably acceptable to the Bank in all respects.
(vii) The account is not owed by an entity which is a parent,
brother/sister, subsidiary or affiliate of any of the entities
constituting the Borrower.
(viii) The account debtor is not located in the State of New Jersey
or Minnesota unless Borrower has filed and shall file all
legally required Notice of Business Activities Report(s) with
the New Jersey Division of Taxation or the Minnesota Department
of Revenue.
(ix) The account is not evidenced by a promissory note.
7
<PAGE>
(x) The account did not arise out of any sale made on a bill and
hold, dating or delayed shipment basis.
(xi) The account did not arise out of a contract with the United
States government or any department, agency or instrumentality
thereof, unless the Borrower has complied with the Federal
Assignment of Claims Act.
(xii) The Bank in its reasonable banking judgement exercised in good
faith does not deem the account to be unacceptable for any
reason.
2.04 For purposes of the Borrowing Base calculations set forth above,
Eligible Inventory means Borrower's finished goods which are initially and at
all times until sold new and unused, in first-class condition, merchantable and
saleable through normal trade channels; at a location which has been identified
in writing to the Bank; subject to a perfected security interest in favor of
Bank; owned by Borrower free and clear of any lien except in favor of Bank; not
obsolete; not scrap, waste, defective goods and the like; have been produced by
Borrower in accordance with the Federal Fair Labor Standards Act of 1938, as
amended, and all rules, regulations and orders promulgated thereunder; and have
not been designated by Bank in its reasonable banking judgement exercised in
good faith as unacceptable for any reason upon notice to Borrower.
2.05 Bank shall not be required to make an Advance under the Revolving
Loan unless Bank shall have received from the Borrower a request in the form of
Exhibit A attached hereto for such Advance (herein a "Notice of Borrowing"),
which request complies with the requirements of this Section 2.05. Each Notice
of Borrowing shall designate (a) the Borrowing Date for the requested Advance,
(b) the amount of the Advance, which amount shall be no less than One Hundred
Thousand ($100,000.00) Dollars if the Advance will be a Libor Loan, and provided
that no more than eight (8) Libor Loans shall be outstanding at any one time;
and (c) if such Notice of Borrowing requests a Libor Loan, it must state the
Interest Period. Each Notice of Borrowing must be received by Bank (x) before
12:00 p.m. (Boston time) on the designated Borrowing Date if the Advance will be
a Prime Rate Loan; and (y) not less than two Banking Days prior to the Borrowing
Date if the Advance will be a Libor Loan. A Notice of Borrowing may be
transmitted by telephone, telecopier, telex, cable, overnight courier, hand
delivery or mail. If a Notice of Borrowing is transmitted by telephone,
telecopier, telex, or cable, the Borrower shall immediately mail to Bank written
confirmation thereof.
2.06 After receipt from the Borrower of any Notice of Borrowing which
requests a Libor Loan, Bank shall determine if it is able to make such Advance
(or if it is unable to do so for reasons described in this Section 2.06 only)
and will notify the Borrower upon confirmation of its ability to do so. If Bank
determines in good faith that, by reason of circumstances affecting the
Interbank Market, adequate and reasonable methods do not exist for ascertaining
the Libor which would otherwise be applicable to such Advance then Bank shall so
notify the Borrower on or before 4:00 p.m. on the Banking Day prior to the
Borrowing Date specified in the Notice of Borrowing, and in such event, Bank
shall not be obligated to make such Advance and the Notice of Borrowing shall be
deemed to have been withdrawn by the Borrower with Bank's consent and
substituted with a request for a Prime Rate Loan in an amount equal to the
requested Libor Loan.
8
<PAGE>
2.07 Except as otherwise provided in Section 2.06 above, any Notice of
Borrowing requesting a Libor Loan shall be irrevocable and binding upon the
Borrower. In the event the Borrower fails to borrow the Advance requested on
the Borrowing Date specified in such Notice of Borrowing, the Borrower shall
indemnify Bank against any and all losses and reasonable expenses incurred by
Bank by reason of such failure including, without limiting the generality of the
foregoing, all losses and reasonable expenses incurred by reason of the
liquidation, disposition or reemployment of deposits or other funds acquired by
Bank to fund such Advance including, without limitation, compensation provided
for in Section 2.24 of this Agreement.
2.08 All net proceeds of each Advance shall be credited to any demand
deposit account maintained by the Borrower with Bank or the loan account
established pursuant to this Revolving Loan (the "Loan Account"), the specified
amount and account to be designated by the Borrower in the Notice of Borrowing
issued with respect to such Advance.
2.09 No Advances of new money shall be available to the Borrower after the
Termination Date.
2.10 The Borrower shall pay interest on the unpaid principal balance of
each Prime Rate Loan from the Borrowing Date for such Advance at a variable per
annum rate equal to the Prime Rate in effect from time to time. Interest
accrued under this Section 2.10 shall be paid monthly in arrears on each
Interest Payment Date.
2.11 The Borrower shall pay interest on the aggregate unpaid principal
balance of each Libor Loan from the Borrowing Date for such Advance through and
including the Maturity Date chosen by the Borrower with respect to such Advance
at a per annum rate equal to the aggregate of the Adjusted Libor plus Margin,
and shall pay all interest accrued but unpaid under this Section 2.11 on the
sooner to occur of the Interest Payment Date or such Maturity Date.
2.12 If a Libor Loan is not repaid in full on its Maturity Date, then such
Advance shall bear interest at the rate described in Section 2.10 from and after
such Maturity Date through the Termination Date and thereafter, as set forth in
Section 2.13 until paid in full.
2.13 From and after the occurrence of an Event of Default and acceleration
of the Borrower's Obligations to the Bank under this Agreement, at the option of
the Bank: (a) all Prime Rate Loans shall bear interest at a variable per annum
rate equal to the aggregate of the Prime Rate in effect from time to time plus
four percent (4%) until paid in full; and (b) each Libor Loan shall bear
interest at the rate established therefor pursuant to Section 2.11 until such
Advance's Maturity Date, and thereafter at the rate set forth in clause (a) of
this Section 2.13 until paid in full.
2.14 Each rate of interest determined hereunder by reference to the Prime
Rate shall change effective as of the opening of business on each day on which a
change in the Prime Rate becomes effective.
2.15 All interest, fees and other charges payable under this Agreement
shall be computed on the basis of a year of three hundred sixty (360) days for
the actual number of days elapsed.
9
<PAGE>
2.16 If the Bank shall have determined in good faith at its reasonable
discretion that the adoption of any applicable law, rule or regulation regarding
capital requirements for banks or bank holding companies, or any change therein,
or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by the Bank with any
request or directive of such entity regarding capital adequacy (whether or not
having the force of law) has the effect of reducing the return on the Bank's
capital to a level below that which the Bank could have achieved (taking into
consideration the Bank's policies with respect to capital adequacy immediately
before such adoption, change or compliance and assuming that the Bank's capital
was fully utilized prior to such adoption, change or compliance) but for such
adoption, change or compliance as a consequence of its commitment to make
Advances hereunder by any amount deemed by the Bank in good faith to be
material:
(i) the Bank shall promptly after its determination of such occurrence
give written notice thereof to the Borrower; and
(ii) the Borrower shall pay to the Bank as an additional fee from time to
time on demand such amount as the Bank certifies to be the amount
that will reasonably compensate it for such reduction (attributable
to the Credit Limit under this Agreement).
A certificate of the Bank claiming compensation under this Section 2.16
shall be conclusive in the absence of manifest error. Such certificate shall
set forth the nature of the occurrence giving rise to such compensation, the
additional amount or amounts to be paid to it hereunder and the method by which
amounts were determined. In determining such amount, the Bank may use any
reasonable averaging and attribution methods.
2.17 In consideration of the Bank establishing the Revolving Loan, the
Borrower shall pay the Bank a fee equal to one-quarter of one (.25%) percent of
the Credit Limit, such fee to be payable at closing and on the anniversary date
of the closing in each year that the Revolving Loan remains in effect.
2.18 Any Prime Rate Loan may be repaid in whole or in part at any time
without premium or penalty.
2.19 Each Libor Loan shall be repaid in full on its Maturity Date.
2.20 Except as otherwise provided herein with respect to Bank's rights
following the occurrence of an Event of Default, no Libor Loan may be repaid
prior to its Maturity Date unless Borrower shall indemnify Bank for all losses
and reasonable expenses resulting from such prepayment as more particularly
described in Section 2.07 hereof.
2.21 Any Advance under the Revolving Loan (whether a Prime Rate Loan or a
Libor Loan) may be repaid with the proceeds of another Advance under the
Revolving Loan (whether a Prime Rate Loan or a Libor Loan), subject to the terms
of Section 2.01. Accordingly, the Borrower may convert a Prime Rate Loan to a
Libor Loan, a Libor Loan to a Prime Rate Loan, Prime Rate Loans may be repaid
with the proceeds of another Prime Rate Loan and a Libor Loan may be repaid with
the proceeds of another Libor Loan, but in all cases subject to the terms of
Section 2.01 hereof.
10
<PAGE>
2.22 Borrower hereby authorizes and directs Bank to pay all principal,
interest, fees, and other charges due from Borrower to Bank hereunder by (i)
charging such amounts against any general demand deposit account of the Borrower
maintained with the Bank as a condition for establishing the financing
arrangements with the Borrower; or (ii) debiting the Loan Account in the amount
of such sums due and treating the same as an Advance to the Borrower under the
Revolving Loan, which Advance shall accrue interest as a Prime Rate Loan;
provided, however, the Bank shall have no obligation to do so unless (i)
sufficient funds are on deposit in such demand deposit accounts; and/or (ii)
such Advance would not exceed the lesser of the Borrowing Base or the Commitment
Amount and/or (iii) no Default exists. The provisions of this Section 2.22
shall not limit the rights of the Bank under Section 2.24 of this Agreement or
the obligation of the Borrower to pay interest as provided elsewhere in this
Agreement.
2.23 Notwithstanding any other provision of this Agreement, (a) if the
introduction of or any change in any law or regulation (or change in the
interpretation thereof) applicable to Bank or any foreign branch, agent or
correspondent thereof shall make it unlawful, or (b) if any central bank or
other governmental authority having jurisdiction over Bank or any such branch,
agent or correspondent, shall assert that it is unlawful, for Bank to perform
its obligations hereunder or for any such branch, agent or correspondent to act
on behalf of Bank to make Libor Loans to the Borrower or to continue to fund or
maintain Libor Loans to the Borrower hereunder, or (c) if Bank determines after
making all reasonable efforts, that deposits of the relevant amount and for the
relevant Advances to the Borrower are not available to Bank in the Interbank
Market, then, on notice thereof by Bank to the Borrower, the obligation of the
Bank to the Borrower to make future Libor Loans shall terminate. If, as a
result of any of the foregoing described events, Bank is prohibited from
maintaining Libor Loans, the Bank shall, upon the happening of such event,
notify the Borrower and the Borrower shall, in the case of each Libor Loan, on
the Maturity Date of such Libor Loan (or, in any event, if the Bank so requests,
on such earlier date as may be required by the relevant law, regulation or
interpretation), either prepay such Libor Loan or convert such Libor Loan into a
Prime Rate Loan.
2.24 If, due to payments made by the Borrower pursuant to this Agreement
or due to the acceleration of the maturity of the Loans pursuant to Article X
hereof or due to any other reason, including, without limitation, by reason of a
payment made pursuant to Section 2.20 of this Agreement, Bank receives payments
of principal of any Libor Loan prior to the Maturity Date for such Advance, the
Borrower shall, upon demand by Bank, pay to Bank any amounts reasonably required
to compensate Bank for any additional losses, costs or expenses which it may
reasonably incur as a result of such payment, including, without limitation, any
loss, costs or expenses reasonably incurred by reason of the liquidation of
reemployment of deposits or other funds acquired by Bank to fund or maintain
such Advances.
2.25 Whenever any payment of interest, charges or fees to be made
hereunder shall be stated to be due on a day other than a Banking Day, such
payment shall be made on the next succeeding Banking Day (except as provided in
the definition of Maturity Date) and such next succeeding Banking Day shall be
utilized in the computation of the payment of such interest, charges and other
fees.
11
<PAGE>
2.26 Borrower shall pay to Bank on demand any and all reasonable counsel
fees and other reasonable expenses incurred by Bank in connection with the
preparation, enforcement or amendment of this Agreement, or of any documents
relating thereto, and any and all expenses, including, but not limited to, all
reasonable attorneys' fees and expenses, and all other expenses of like or
unlike nature which may be expended by Bank to obtain or enforce payment or in
the prosecution or defense of any action or concerning any matter growing out of
or connected with the subject matter of this Agreement, or the Obligations or
any of Bank's rights or interests therein or thereto, including, without
limiting the generality of the foregoing, any reasonable counsel fees or
expenses incurred in any bankruptcy or insolvency proceedings of Borrower.
ARTICLE III
-----------
THE TERM LOAN
-------------
3.01 Subject to the terms and conditions of this Agreement, the Bank will
make the Term Loan to the Borrower on the date of execution of this Agreement in
the original principal amount of Seven Million ($7,000,000.00) Dollars, as
evidenced by the Term Note.
3.02 Interest on the principal balance of the Term Loan shall be payable
at the rate equal to the Adjusted Libor plus two and three-quarters percent
(2.75%) until Profitability is achieved and Adjusted Libor plus two and one-
quarter (2.25%) percent thereafter, (or in either case a comparable interest
rate swap as more particularly described in the Term Note. Interest shall be
computed on the basis of a 360-day year, for the actual number of days elapsed.
Default interest shall be charge in accordance with the provisions of the Term
Note.
3.03 The principal balance of the Term Loan shall be payable in eighty
four (84) consecutive monthly installments of $83,333.00 per month, commencing
six (6) months from the date of the Term Note.
3.04 The Term Loan shall be subject to a prepayment premium as described
in the Term Note.
3.05 In consideration of the Bank establishing the Term Loan, the Borrower
shall pay a facility fee equal to one-half of one (.50%) percent of the original
principal balance of the Term Note at the time of execution thereof.
3.06 The Borrower hereby directs the Bank to debit its demand deposit
account(s) with the Bank in satisfaction of any payments required with respect
to the Term Loan.
ARTICLE IV
----------
THE ACQUISITION LINE
--------------------
12
<PAGE>
4.01 Subject to and upon the conditions of this Agreement, during the
Availability Period, at the request of the Borrower, the Bank may make Advances
to the Borrower in an aggregate amount not to exceed the Commitment Amount.
4.02 All Advances under the Acquisition Line shall bear interest, at the
Borrower's option, at either a variable rate of the Bank's Prime Rate or at a
fixed rate equivalent to Adjusted Libor plus two and three-quarters (2.75%)
percent until Profitability is achieved and Adjusted Libor plus two and one-
quarter (2.25%) percent thereafter for 30-day Libor contracts, or at a
comparable interest swap rate established at the time of any proposed Advance
under the Acquisition Line.
4.03 All Advances under the Acquisition Line shall be evidenced by
separate Acquisition Term Notes to be executed at the time of such Advance.
4.04 Each Advance under the Acquisition Line shall be payable with
interest only for the first 6 months and then fully amortized on a straight-line
basis over a seven year term thereafter, provided that no Acquisition Term Note
shall have a maturity date beyond November 30, 2008.
4.05 Advances under the Acquisition Line bearing interest in relation to
Libor or at a fixed rate swap shall be subject to possible make-whole premiums,
in accordance with the terms of Section 2.24 hereof.
4.06 The proceeds of the Acquisition Line shall be used by the Borrower to
acquire new companies within its existing lines of business.
4.07 Any Advances under the Acquisition Line shall be subject to the
following conditions precedent:
(i) The absence of an Event of Default under this Agreement at the
time of any proposed Advance;
(ii) Prior Bank approval of the proposed structure and terms of any
acquisition in which the purchase price exceeds $750,000.00, provided that
acquisitions for less than $750,000.00 shall not require Bank approval but shall
require prior notice to the Bank;
(iii) The additional debt to be incurred must be adequately serviced
by existing, trailing four quarters of earnings before interest and taxes plus
depreciation and amortization on a consolidated basis;
(iv) All financial covenants contained in this Agreement must be
achievable on a pro-forma basis and the "acquisition criteria" set forth in
Section C8 of the Commitment Letter from the Bank to the Borrower dated March
10, 1999 must be adhered to in all respects;
(v) Any future seller debt must be subordinated to the Loans upon
terms and conditions reasonably satisfactory to the Bank and must be unsecured.
13
<PAGE>
(vi) Borrower shall provide a pro-forma balance sheet, income
statement and statement of cash flows at the time of any proposed Advance and
after giving effect to the proposed acquisition.
4.08 In consideration of the Bank establishing the Acquisition Line, the
Borrower shall pay a facility fee at closing of one half of one (.50%) percent
of the Commitment Amount. Additionally, the Acquisition Line will be subject to
an unused line fee equal to one half of one (.50%) percent of the difference
between (x) the Commitment Amount and (y) the average daily balance outstanding
under Acquisition Line. That percentage shall decrease to one quarter of one
(.25%) percent of the difference between (x) and (y) upon the Borrower achieving
Profitability. The unused line fee will be calculated and payable quarterly in
arrears. Any Advances under the Acquisition Line shall also be subject to an
advance fee equal to one-quarter of one (.25%) percent of the amount of any such
Advance, payable at the time of such Advance.
ARTICLE V
---------
WARRANTIES AND REPRESENTATIONS BY EACH BORROWER
-----------------------------------------------
5.01 Bank enters into this Agreement in reliance upon the warranties and
representations of the Borrower set forth in this Article, each of which is
acknowledged by each entity constituting a Borrower to be material. Each such
warranty and representation shall be deemed to have been newly made on each
Borrowing Date except to the extent that, on or prior thereto, Bank shall have
received from the Borrower notice of a change with respect thereto, which change
is not a breach of this Agreement.
5.02 Borrower has no places of business other than that shown at the
beginning of this Agreement, unless other places of business are listed on
Schedule "A", annexed hereto, in which event Borrower represents that Borrower
has additional places of business at those locations set forth on Schedule "A"
(as such schedule shall be updated from time to time).
5.03 Each Borrower's principal executive office and the offices where
Borrower keeps its records are those shown at the beginning of this Agreement.
5.04 Each Borrower is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and shall hereafter
remain in corporate good standing as a corporation in that state, and is duly
qualified as a foreign corporation and is in corporate good standing in each
jurisdiction in which the failure to so qualify would have a material adverse
effect on the condition (financial or otherwise), business, operations,
properties or prospects of the Borrower, and shall hereafter remain duly
qualified and in good standing in every other state in which the failure to so
qualify would have a material adverse effect on the condition (financial or
otherwise), business, operations, properties or prospects of the Borrower.
5.05 Borrower's exact legal name is as set forth in this Agreement and
except with respect to Kent Acquisition Corp., Borrower will not change
Borrower's legal name, without giving Bank at least ten (10) days' prior written
notice of the same.
14
<PAGE>
5.06 The execution, delivery and performance of this Agreement, and any
other document executed in connection herewith, are within the Borrower's
corporate powers, have been duly authorized, are not in contravention of law or
the terms of the Borrower's charter, by-laws or other incorporation papers, or
of any material indenture, agreement or undertaking to which the Borrower is a
party or by which it or any of its properties may be bound.
5.07 All charter or other incorporation papers and all amendments thereto
of Borrower have been duly filed and are in proper order. To the Borrower's
knowledge, all capital stock issued by Borrower and outstanding was and is
properly issued and all books and records of Borrower, including but not limited
to its minute books, by-laws and books of account, are accurate and up to date
and will be so maintained.
5.08 Borrower owns all of the assets reflected in the most recent of
Borrower's financial statements provided to Bank, except assets sold or
otherwise disposed of in the ordinary course of business or as Borrower has
otherwise advised Bank, and such assets together with any assets acquired since
such date, are free and clear of any lien, pledge, security interest, charge,
mortgage or encumbrance of any nature whatsoever, except: (i) the security
interests and other encumbrances on Borrower's assets listed on Schedule "B"
annexed hereto or (ii) those capital leases (if any) set forth on Schedule "C"
annexed hereto.
5.09 To the Borrower's knowledge, Borrower has made or filed all tax
returns, reports and declarations relating to any material tax liability
required by any jurisdiction to which they are subject or has received lawful
extensions of the filing of the same; has paid all taxes shown or determined to
be due thereon except those being contested in good faith and which Borrower
has, prior to the date of such contest, identified in writing to Bank as being
contested; and have made adequate provision for the payment of all taxes so
contested.
5.10 Borrower (i) is subject to no charter, corporate or other legal
restriction, or any judgment, award, decree, order, governmental rule or
regulation or contractual restriction which could have a material adverse effect
on its financial condition, business or prospects, and (ii) is in compliance
with its charter documents and by-laws, all material contractual requirements by
which it or any of its properties may be bound and (in all material respects)
all applicable laws, rules and regulations (including without limitation those
relating to environmental protection) other than laws, rules or regulations the
validity or applicability of which Borrower is contesting in good faith or
provisions of any of the foregoing the failure to comply with which cannot
reasonably be expected to materially adversely affect Borrower's financial
condition, business or prospects.
5.11 There is no action, suit, proceeding or investigation pending or, to
Borrower's knowledge, threatened against or affecting it or any of its assets
before or by any court or other governmental authority which, if determined
adversely to Borrower, would have a material adverse effect on its financial
condition, business or prospects except as otherwise disclosed to Bank.
15
<PAGE>
ARTICLE VI
----------
AFFIRMATIVE COVENANTS
---------------------
6.01 The Borrower will, duly and punctually, pay all interest, principal,
fees and other charges becoming due to Bank and will duly and punctually perform
all things on its part to be done or performed under the Financing Agreements or
pursuant to any instrument, document or agreement executed pursuant thereto.
6.02 Borrower agrees to keep all of its insurable assets insured with
coverage and in amounts not less than that usually carried by one engaged in a
like business and in any event not less than that reasonably required by Bank.
6.03 Borrower will at all times keep accurate and complete records of
Borrower's Inventory, Accounts and other assets, and Bank, or any of its agents,
shall have the right to call at Borrower's place or places of business at
intervals to be determined by Bank, and without hindrance or delay, to inspect,
audit, check, and make extracts and/or copies from any copies of the books,
records, journals, orders, receipts, correspondence which relate to Borrower's
Accounts, and other assets or other transactions between the parties thereto and
the general financial condition of Borrower. Prior to the occurrence of an
Event of Default, Bank shall give Borrower not less than forty-eight (48) hours
prior notice of any intended inspection or audit and shall conduct such
inspection or audit during normal business hours.
6.04 Borrower will maintain its corporate existence in good standing and
comply in all material respects, with all laws and regulations of the United
States or of any state or states thereof or of any political subdivision
thereof, or of any governmental authority which may be applicable to it or to
its business.
6.05 Borrower will pay all real and personal property taxes, assessments
and charges and all franchises, income, unemployment, old age benefits,
withholding, sales and other taxes assessed against it, or payable by it at such
times and in such manner as to prevent any penalty from accruing or any lien or
charge from attaching to its property. Notwithstanding the foregoing, Borrower
may contest in good faith the payment of any such taxes, provided that Borrower
establishes adequate reserves to cover the payment of any such taxes.
6.06 Borrower will immediately notify Bank upon receipt of notification of
any potential or known release or threat of release of hazardous materials,
hazardous waste, hazardous or toxic substance or oil from any site operated by
Borrower or of the incurrence of any expense or loss in connection therewith or
with the Borrower's obtaining actual knowledge of any investigation or action by
any governmental authority in connection with the assessment, containment or
removal of any hazardous material or oil from any site operated by Borrower.
As used herein, the terms "hazardous waste," "hazardous or toxic substance,"
"hazardous material" or "oil" shall have the same meanings as defined and used
in any of the following (the "Acts"): the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. Section 9601 et
--
seq.; the Federal Resource Conservation and Recovery Act, 42 U.S.C. Sections
- ----
6901 et seq.; the Hazardous Materials Transportation Act, 49 U.S.C. Sections
-------
1801 et seq.; the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq.;
------- -------
M.G.L.A. c. 21E (Massachusetts Oil and Hazardous Material Release Prevention
Act); M.G.L.A. c. 21C (Massachusetts Hazardous Waste Management Act); and/or the
regulations adopted and publications promulgated pursuant to any of the Acts, as
the same may be amended from time to time.
16
<PAGE>
6.07 Except for Bank's gross negligence or willful misconduct, Borrower
will indemnify and save Bank harmless from all loss, costs, damage, liability or
expenses (including, without limitation, court costs and reasonable attorneys'
fees) that Bank may sustain or incur by reason of enforcing the Obligations, or
in the prosecution or defense of any action or proceeding concerning any matter
growing out of or in connection with this Agreement and/or any other documents
now or hereafter executed in connection with this Agreement and/or the
Obligations. This indemnity shall survive the repayment of the Obligations and
the termination of Bank's agreement to make Loans available to Borrower and the
termination of this Agreement.
6.08 All Advances by Bank to Borrower under the Revolving Loan constitute
one general revolving fluctuating loan, and all Indebtedness of Borrower to Bank
under this Agreement constitute one general Obligation. It is distinctly
understood and agreed that all of the rights of Bank contained in this Agreement
shall likewise apply, insofar as applicable, to any modification of or
supplement to this Agreement. Any Default of this Agreement by Borrower shall
constitute, likewise, a default by Borrower of any Notes in which the Borrower
is a maker and the Bank a holder, and any default by Borrower of any such Notes
shall constitute a Default under this Agreement. The entire Obligation of
Borrower to Bank shall become due and payable when payments become due and
payable hereunder upon termination of this Agreement. Similarly, any default by
Borrower under any other agreement or Note with Bank shall constitute a default
of this Agreement and a default of this Agreement shall constitute a default of
any other agreement or Note with Bank.
ARTICLE VII
-----------
NEGATIVE COVENANTS
------------------
7.01 (Minimum Net Worth). Borrower (on a consolidated basis) will not
-----------------
permit its Net Worth to be less than $25,000,000.00 as at the end of any fiscal
quarter of Borrower commencing with the fiscal quarter ending March 31, 1999.
The minimum Net Worth figure shall increase annually (commencing with the fiscal
quarter ending March 31, 2000) by an amount equal to 50% of the prior year's net
income after taxes, without deduction for any losses sustained.
7.02 (Minimum Indebtedness to Net Worth Ratio). Borrower (on a
---------------------------------------
consolidated basis) will not permit its total Indebtedness to be more than 100%
of its Net Worth as at the end of any fiscal quarter of Borrower, commencing
with the fiscal quarter ending March 31, 1999.
7.03 (Minimum Debt Service Coverage Ratio). Borrower (on a consolidated
-----------------------------------
basis) will not permit its Cash Flow to be less than 125% of its Debt Service
for the twelve month period ending on the last day of any fiscal quarter of
Borrower, commencing with the fiscal quarter ending March 31, 1999.
17
<PAGE>
7.04 (Maximum Funded Debt Coverage Ratio). Borrower (on a consolidated
-----------------------------------
basis) will not permit the principal amount of outstanding Loans for the twelve
month period ending on the last day of any fiscal quarter of Borrower to be more
than three hundred fifty (350%) percent of the Borrower's earnings before
interest and taxes plus depreciation and amortization for the applicable period.
7.05 (Minimum Net Profit). Borrower will not permit its consolidated net
--------------------
income after taxes to be less than one dollar ($1) in each of the first three
fiscal quarters of each fiscal year of Borrower and on an annual basis (except
that for the second quarter of 1999 (June 30, 1999)) $347,222.00 of deferred
financing expenses shall be excluded from the net profit calculation. Each of
the first three quarters of each fiscal year and the annual calculation shall be
separate and distinct tests.
7.06 (Minimum EBITDA and net income after taxes as a percentage of
-------------------------------------------------------------
budget): Borrower (on a consolidated basis) shall not permit its EBITDA and net
- --------
income after taxes to be less than the following amounts as at the end of the
following fiscal quarters:
<TABLE>
<CAPTION>
Minimum EBITDA Minimum Net Income Fiscal Quarter Ending after taxes
- ------------------------- ------------------ --------------------- -----------
<S> <C> <C> <C>
$850,000.00 $210,000.00 March 31, 1999
$1,100,000.00 $285,000.00 June 30, 1999
$1,135,000.00 $300,000.00 September 30, 1999
$620,000.00 N/A December 31, 1999
</TABLE>
7.07 Borrower will not at any time create, permit to be created or suffer
to exist any lien, encumbrance or security interest of any kind upon any of its
assets, now owned or hereafter acquired, except liens and encumbrances set forth
on Schedule "B" annexed hereto, and except: (i) liens for taxes assessments and
other governmental charges not yet due or which are being contested in good
faith and by appropriate proceedings if adequate reserves with respect thereto
are maintained on the Borrower's books in accordance with GAAP; (ii) carrier's,
warehousemen's, mechanic's, materialmen's, repairmen's or other like liens
arising in the ordinary course of business which are not overdue for a period of
more than 90 days or which are being contested in good faith and by appropriate
proceedings; (iii) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation; (iv) deposits to
secure the performance of bids, trade contracts (other than for borrowed money),
leases, statutory obligations, surety and appeal bonds, performance bonds and
other obligations of a like nature incurred in the ordinary course of business
of the Borrower; (v) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount, and which do not in any case
materially detract from the value of the property subject thereto or interfere
with the ordinary conduct of the business;(vi) liens which were in existence at
closing and which secured obligations reflected on the Borrower's financial
statements; (vii) liens pursuant to capitalized leases incurred in the ordinary
course of business and (viii) purchase money security interests in acquired
assets.
7.08 Borrower will not at any time pay any dividends on or make any
distribution on account of any class of Borrower's capital stock in cash or in
property (other than additional
18
<PAGE>
shares of such stock) or redeem, purchase or otherwise acquire, directly or
indirectly any such stack unless Borrower remains in compliance with this
Agreement after giving effect to such dividend, redemption or purchase.
7.09 Borrower will not have outstanding at any time loans or advances to
Borrower's directors, officers and employees in excess of $750,000.00 in the
aggregate, excluding advances to officers or employees with respect to expenses
incurred by them in the ordinary course of their duties which are properly
reimbursable by Borrower.
7.10 Borrower will not at any time assume, guaranty, endorse or otherwise
become directly or contingently liable in respect of any Indebtedness (except
guarantees by endorsement of instruments for deposit or collection in the
ordinary course of business and guarantees in favor of Bank) of any Person,
except as set forth in Schedule 7.10 hereof.
7.11 Borrower will not at any time (i) use any loan proceeds to purchase or
carry any "margin stock" (as defined in Regulation U of the Board of Governors
of the Federal Reserve System) or (ii) invest in or purchase any stock or
securities of any individual, partnership, trust or other corporation except (x)
readily marketable direct obligations of, or obligations guaranteed by, the
United States of America or any agency thereof, (y) time deposits with or
certificates of deposit issued by Bank or (z) pursuant to Advances under the
Acquisition Line.
7.12 Borrower (except the Agent Borrower with respect to its own stock)
will not at any time (except with Bank's prior consent) sell, transfer or
otherwise dispose of any stock of any Borrower or any subsidiary of Borrower
without prior consent of Bank.
7.13 Borrower will not at any time (except with Bank's prior consent) (a)
merge or consolidate with or into any corporation, (b) convey, lease or sell all
or any material portion of its property or assets or business to any Person, or
(c) convey, lease, trade or sell any of its assets to any Person for less than
the fair market value thereof, except for obsolescent equipment or equipment or
other assets of minimal value to Borrower.
7.14 All future Indebtedness to officers, stockholders, directors,
employees, associates or selling parties as a result of acquisitions under the
Acquisition Line shall be subordinated to the Obligations on terms and
conditions reasonably satisfactory to Bank.
19
<PAGE>
ARTICLE VIII
------------
BORROWER'S REPORTS
------------------
8.01 Agent Borrower will furnish Bank as soon as available, and in any
event within forty-five (45) days after the close of each of the first three
quarterly periods of its fiscal year, on a consolidated and consolidating basis
with its subsidiaries, internally prepared financial statements, including a
balance sheet as of the end of such period, a statement of income and retained
earnings for the period commencing at the end of the previous fiscal year and
ending with the end of such quarter and a statement of cash flows for such
period, all in reasonable detail and stating in comparative form the respective
figures for the corresponding date and period in the previous fiscal year, and
all prepared in accordance with generally accepted accounting principles
consistently applied, and certified by the Chief Financial Officer of the Agent
Borrower (subject to year end adjustment).
8.02 Agent Borrower will furnish Bank, annually, as soon as available, and
in any event within one hundred and twenty (120) days after the end of each
fiscal year of Agent Borrower, on a consolidated and consolidating basis with
its subsidiaries, a balance sheet as of the end of such fiscal year, a statement
of income and retained earnings for such fiscal year, and a statement of cash
flows for such fiscal year, all in reasonable detail and stating in comparative
form the respective figures for the corresponding date and period in the prior
fiscal year, and all prepared in accordance with generally accepted accounting
principles consistently applied, accompanied by an unqualified opinion thereon
by an accounting firm or other independent public accountants selected by the
Borrower and reasonably acceptable to Bank.
8.03 Agent Borrower will furnish Bank, annually, as soon as available and
not more than 120 days after the end of each fiscal year, its financial
projections for the next succeeding year in form and substance reasonably
satisfactory to Bank.
8.04 Agent Borrower shall deliver to Bank notice of non-compliance with the
provisions of this Agreement promptly upon learning of such non-compliance, or
if any representation or warranty contained herein is no longer true and
accurate in any material respect.
8.05 Agent Borrower shall also deliver to Bank a Covenant Compliance
Certificate in the form of Exhibit "B" attached hereto indicating its compliance
or lack thereof with the financial covenants set forth in Article VII. Such
Covenant Compliance Certificate shall be furnished to the Bank simultaneously
with the submission of financial statements required hereunder.
8.06 Agent Borrower shall furnish the Bank monthly, within twenty (20) days
after the close of each fiscal month with a borrowing base certificate, accounts
receivable aging and inventory designation, each such certificate, aging and
designation to be in such form and certified by such officers of the Agent
Borrower as the Bank may request from time to time.
8.07 In addition to the foregoing, the Borrower promptly shall provide the
Bank with such other and additional information concerning the Borrower, the
operation of the Borrower's business, and the Borrower's financial condition,
including financial reports and statements furnished to its stockholders, and as
the Bank may from time to time reasonably request from the
20
<PAGE>
Borrower so as not to unreasonably disrupt Borrower's business or operations.
All financial information provided to the Bank by the Borrower shall be prepared
in accordance with generally accepted accounting or auditing principles (as
applicable) applied consistently in the preparation thereof and with prior
periods to fairly reflect the financial conditions of the Borrower at the close
of, and its results of operations for, the periods in question.
ARTICLE IX
----------
CONDITIONS TO CONTINUING ADVANCES
---------------------------------
9.01 The obligation of Bank to make each Advance to the Borrower is subject
to the continuing satisfaction of the conditions set forth in this Article IX.
9.02 Bank shall have received the following documents in form and substance
reasonably satisfactory to the Bank prior to the first Advance hereunder: (i)
the certified resolutions of the Board of Directors of the Borrower approving
and authorizing the execution, delivery and performance by the Borrower of its
obligations under this Agreement and under each of the other Financing
Agreements; (ii) a certificate of the Secretary of the Borrower certifying the
names and true signatures of the officers of the Borrower authorized to sign
this Agreement; (iii) the certified charter and by-laws of the Borrower; (iv)
all documents evidencing other necessary corporate action and governmental
approvals, if any, with respect to this Agreement and all other Financing
Agreements; and (v) such other documents, instruments, certificates and other
agreements as Bank shall reasonably request.
9.03 The representations and warranties contained in this Agreement shall
have been correct in all material respects as of the date on which made and
shall also be correct in all material respects and as of the date of each
Advance with the same effect as if made on the date of such Advance except to
the extent that (i) the facts upon which such representations and warranties are
based may in the ordinary course be changed by the transactions permitted or
contemplated hereby, (ii) such representations and warranties relate expressly
to an earlier date or (iii) such representations and warranties are or have not
been current as a result of changes for which the Borrower has notified the Bank
and such changes do not constitute a breach of the terms of this Agreement.
9.04 The Borrower shall have performed and complied with all terms and
conditions herein required to be performed or complied with by it prior to or at
the time of the Advance and at such Advance there shall exist and be continuing
no Default.
9.05 All corporate action of the Borrower necessary for the valid
execution, delivery and performance by the Borrower of this Agreement and all
other Financing Agreements shall have been duly and effectively taken.
9.06 Bank shall have received a Notice of Borrowing from the Borrower as
required by Section 2.04 and, the giving of such Notice of Borrowing shall be
deemed a representation and warranty by the Borrower on the date of such Advance
that all conditions set forth in this Article IX have been satisfied.
21
<PAGE>
9.07 No change shall have occurred in any law, regulations thereunder or
interpretations thereof, which in the reasonable opinion of Bank would make it
illegal for Bank to made the Advances at the rates provided for hereunder.
ARTICLE X
---------
EVENTS OF DEFAULT
-----------------
10.01 The occurrence of any one or more of the following events with
respect to the Agent Borrower or any other Borrower shall constitute an Event of
Default:
10.02 The failure to make, when due, any payment of principal or interest
under this Agreement, the Financing Agreements, the Term Note or any Acquisition
Notes and the expiration of five (5) days after notice from Bank of such
nonpayment.
10.03 Default in the observance of any of the covenants or agreements of
Borrower contained in Section 7.01, 7.02, 7.03, 7.04, 7.05 or 7.06 of this
Agreement.
10.04 Default in the observance of any of the material covenants or
agreements of Borrower contained in this Agreement or the Financing Agreements
(other than those specified in Sections 8.01, 8.02, 10.02 or 10.03 above or in
the payment of any fee, cost or expense payable to Bank under the Financing
Agreements), which is not remedied within the earlier of thirty (30) days after
(i) written notice thereof by Bank to Borrower, or (ii) the date Borrower was
required to give notice to Bank under Section 8.04.
10.05 The determination by Bank that any representation or warranty now or
hereafter made by the Borrower to Bank under this Agreement or in any documents,
instrument, agreement, or paper delivered by Borrower pursuant to this Agreement
was not true or accurate when given in any material respect.
10.06 The occurrence of any event such that any Indebtedness for borrowed
money of the Borrower to any lender other than Bank, in excess of One Million
($1,000,000.00) Dollars is accelerated.
10.07 Any act by, against, or relating to the Borrower, or its property or
assets, which act constitutes the application for, consent to, or sufferance of
the appointment of a receiver, trustee or other person, pursuant to court action
or otherwise, over all, or any material part of the Borrower's property (and if
involuntary, the expiration of ninety (90) days from the date of such act
without a stay or dismissal in that period).
10.08 The granting of any trust mortgage or execution of an assignment for
the benefit of the creditors of the Borrower, or the occurrence of any other
voluntary or involuntary liquidation or extension of debt agreement for the
Borrower; the failure by the Borrower to generally pay the uncontested debts of
the Borrower as they mature; adjudication of bankruptcy or insolvency relative
to the Borrower; the entry of an order for relief or similar order with
22
<PAGE>
respect to the Borrower in any proceeding pursuant to Title 11 of the United
States Code entitled "Bankruptcy" (hereinafter the "Bankruptcy Code") or any
other federal bankruptcy law (and if involuntary, the expiration of ninety (90)
days from the date of such filing without a stay or dismissal within that time
period); the filing of any complaint, application, or petition by or against the
Borrower initiating any matter in which the Borrower is or may be granted any
relief from the debts of the Borrower pursuant to the Bankruptcy Code or any
other insolvency statute or procedure (and if involuntary, the expiration of
ninety (90) days from the date of such filling without a stay or dismissal
within that time period); the calling or sufferance of a meeting of creditors of
the Borrower; the meeting by the Borrower of a formal or informal creditor's
committee; the offering by or entering into by the Borrower of any composition,
extension or any other arrangement seeking relief or extension for a material
portion of the debts of the Borrower, or the initiation of any other judicial or
non-judicial proceeding or agreement by, against or including the Borrower which
seeks or intends to accomplish a reorganization or arrangement with creditors.
10.09 The entry of any final judgment(s) in excess of $250,000.00 Dollars
against any Borrower.
10.10 The occurrence of any material (in excess of $250,000.00) uninsured
loss, theft, damage or destruction to any material asset(s) of the Borrower.
10.11 The termination of existence, dissolution, or liquidation of the
Borrower, or the ceasing to carry on actively any substantial part of Borrower's
current business.
10.12 The occurrence of an Event of Default in any other Indebtedness of
Borrower to Bank, whether now existing or hereafter arising and the expiration
of any applicable grace period.
Upon the occurrence of an Event of Default, Bank may declare any obligation
Bank may have hereunder to be canceled, declare all Obligations and Indebtedness
of Borrower to Bank to be due and payable and proceed to enforce payment of the
Obligations and Indebtedness and to exercise any and all of the rights and
remedies afforded to Bank under the terms of this Agreement or otherwise.
23
<PAGE>
ARTICLE XI
----------
NOTICE
------
11.01 All notices and other communications provided for hereunder shall,
unless otherwise stated herein, be in writing (including overnight courier,
telecopier, telegraphic, telex or cable communication) and mailed, telecopied,
telegraphed, telexed, cabled or delivered to the addresses set forth in Section
11.02 below. All such notices and communications shall, when mailed, telecopied
(with confirmed receipt), telegraphed, telexed or cabled, be effective when
deposited in the mails, telecopied, delivered to the telegraph company,
confirmed by telex answer back or delivered to the cable company, respectively.
11.02 The addresses to which such communications shall be sent are as
follows:
(a) If intended for any Borrower, to:
Sight Resource Corporation
100 Jeffrey Avenue
Holliston, MA 01746
Attn: William T. Sullivan, Chief Executive Officer
FAX: (508)-429-6023
With a copy to:
Lewis J. Geffen, Esq. and Mary-Laura Greely, Esq.
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
One Financial Center
Boston, MA 02111
FAX: 617-542-2241
(b) If intended for Bank, to:
Fleet National Bank
One Federal Street
Boston, MA 02110-2010
Attn: Mr. Gregory P. Buscone, Vice President
FAX: (617) 346-0415
with copies to:
Brian T. Garrity, Esq.
Shapiro, Israel & Weiner, P.C.
100 North Washington Street
Boston, MA 02114
FAX: (617) 742-2355
11.03 The addresses and telecopier numbers set forth herein may be changed
by notice hereunder.
24
<PAGE>
ARTICLE XII
-----------
CONSENT TO JURISDICTION AND JURY TRIAL WAIVER
---------------------------------------------
12.01 BORROWER AND BANK EACH HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES ANY RIGHT IT MAY HAVE OR HEREAFTER HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT. Borrower hereby certifies that neither Bank nor any of its
representatives, agents or counsel has represented, expressly or otherwise, that
Bank would not, in the event of any such suit, action or proceeding, seek to
enforce this waiver of right to trial by jury. Borrower acknowledges that Bank
has been induced to enter into this Agreement by, among other things, this
waiver. Borrower acknowledges that Borrower has read the provisions of this
Agreement and in particular, this Section 12.01; has consulted legal counsel;
understands the right Borrower is granting in this Agreement and is waiving in
this Section 12.01 in particular; and makes the above waiver knowingly,
voluntarily and intentionally.
12.02 Borrower and Bank agree that any action or proceeding to enforce or
arising out of this Agreement may be commenced in any court of the Commonwealth
of Massachusetts sitting in the county of Suffolk, or in the United States
District Court for the District of Massachusetts.
ARTICLE XIII
------------
MISCELLANEOUS
-------------
13.01 The Borrower will, from time to time, execute and deliver to Bank all
such other and further instruments and documents and take or cause to be taken
all such other and further action as Bank may reasonably request in order to
effect in Bank all rights contemplated in this Agreement.
13.02 The Borrower may take any action herein prohibited or omit to perform
any act required to be performed by the Borrower upon obtaining Bank's prior
written consent to each such action, or omission to act. No waiver on Bank's
part on any one occasion shall be deemed a waiver on any other occasion. Bank
shall not be deemed to have waived any of its rights hereunder unless such
waiver shall be in writing and duly signed by an authorized officer of Bank,
which shall include any vice president or more senior officer of Bank.
13.03 This Agreement may be amended only by an instrument in writing and
duly signed by the Borrower and an authorized officer of Bank which shall
include any vice president or more senior officer of Borrower.
13.04 All covenants, agreements, representations and warranties contained
in this Agreement shall bind the Borrower, its successors and assigns, and shall
inure to Bank's benefit and the benefit of Bank's successors and assigns,
whether expressed or not.
25
<PAGE>
13.05 All rights of Bank hereunder shall be cumulative. Bank shall not be
required to have recourse to any property of the Borrower before enforcing its
rights or remedies against the Borrower. The Borrower hereby waives presentment
and protest of any instrument and any notice thereof.
13.06 If any provision of this Agreement or any other Financing Agreement
shall be held to be illegal or unenforceable, such illegality or
unenforceability shall relate solely to such provision and shall not affect the
remainder of this Agreement.
13.07 This Agreement shall be construed and enforced in accordance with the
laws of the Commonwealth of Massachusetts.
13.08 This Agreement shall take effect as an instrument under seal.
13.09 The captions herein contained are inserted as a matter of convenience
only and such captions do not form a part of this Agreement and shall not be
utilized in the construction hereof.
13.10 In the event that the Borrower fails to make any payment or take any
action required by this Agreement, Bank may, but shall not be required to, make
such payment or take, or cause to be taken, such action. If Bank chooses to
make any such payment or to take or cause to be taken any such action, the
amount of such payment and the cost of such action shall become one of the
Obligations, shall be payable upon demand and, until paid in full, shall bear
interest at the rate established pursuant to the terms of this Agreement.
13.11 Calculation of Adjusted Libor, as well as all other fees and charges
payable with respect to each Libor Loan shall be made and paid as though Bank
had actually funded the relevant Libor Loan through the purchase of a Eurodollar
deposit at Libor in an amount equal to the amount of the Libor Loan and having a
maturity comparable to the relevant Interest Period and through the transfer of
such Eurodollar deposit from an offshore agent or office of Bank to a domestic
office of Bank in the United States of America, provided, however, that Bank may
fund each Libor Loan in any manner it sees fit in accordance with applicable law
and the foregoing assumptions shall be nevertheless used for the calculation of
the Libor Rate and such other fees and charges.
13.12 All Obligations hereunder shall be the joint and several Obligations
of each Borrower hereunder and Bank may look to any Borrower for the
satisfaction of any such Obligations. This relationship is more particularly
described in the Agented Borrowing Agreement among the Agent Borrower, each
Borrower and the Bank of even date, which Agented Borrowing Agreement is
incorporated herein as if set forth in full herein.
13.13 Bank may at any time pledge all or any portion of its rights under
the Financing Agreements including any portion of the promissory notes to any of
the twelve (12) Federal Reserve Banks organized under Section 4 of the Federal
Reserve Act, 12 U.S.C. Section 341. No such pledge or enforcement thereof shall
release Bank from its obligations under any of the Financing Agreements.
26
<PAGE>
13.14 Bank shall have the unrestricted right in the event of additional
financing arrangements with Borrower not in contemplation at the time of the
execution of this Agreement at any future time and from time to time, and
without the consent of Borrower, but with written notice to Borrower to grant to
one or more banks or other financial institutions (each a "Participant")
participating interests in Bank's obligation to lend hereunder and/or any or all
of the Loans held by Bank hereunder. In the event of any such grant by Bank of
a participating interest to a Participant, Bank shall remain responsible for the
performance of its obligations hereunder and Borrower shall continue to deal
solely and directly with Bank in connection with Bank's rights and obligations
hereunder. Bank may furnish any information concerning Borrower in its
possession from time to time to prospective Participants, provided that Bank
shall require any such prospective Participant to agree in writing to maintain
the confidentiality of such information.
13.15 Upon receipt of an affidavit of an officer of Bank as to the loss,
theft, destruction or mutilation of the Revolving Line Note, Term Note or any
Acquisition Term Notes or any other security document which is not of public
record, and, in the case of any such loss, theft, destruction or mutilation,
upon surrender and cancellation of such note or other security document,
Borrower will issue, in lieu thereof, a replacement note or other security
document in the same principal amount thereof and otherwise of like tenor.
ARTICLE XIV
-----------
SECURITY, CROSS COLLATERALIZATION AND CROSS TERMINATION
-------------------------------------------------------
14.01 The Loans by the Bank hereunder are secured pursuant to the
respective Security Agreements (All Assets) of each Borrower hereunder. The
Bank may look to all Collateral for the satisfaction of the Borrowers'
Obligations to the Bank under this Agreement and under the Financing Agreements
without any requirement to marshall any assets. Upon termination of the
Revolving Loan, other than from internally generated funds, all Obligations of
the Borrower to the Bank shall be due and payable in full.
IN WITNESS WHEREOF, the parties hereto have cause this Agreement to be
executed as an instrument under seal as of the day and year first above written.
Witness: FLEET NATIONAL BANK
(As to all)
/s/ Brian T. Garrity By: /s/ Gregory P. Buscone
- ------------------------ ---------------------------------------
Brian T. Garrity Gregory P. Buscone, Vice President
27
<PAGE>
SIGHT RESOURCE CORPORATION
By: /s/ William T. Sullivan
----------------------------------------
William T. Sullivan, Chief Executive Officer
CAMBRIDGE EYE ASSOCIATES, INC.
By: /s/ William T. Sullivan
----------------------------------------
William T. Sullivan, President
DOUGLAS VISION WORLD, INC.
By: /s/ William T. Sullivan
----------------------------------------
William T. Sullivan, President
E.B. BROWN OPTICIANS, INC.
By: /s/ William T. Sullivan
----------------------------------------
William T. Sullivan, President
EYEGLASS EMPORIUM, INC.
By: /s/ William T. Sullivan
----------------------------------------
William T. Sullivan, President
KENT ACQUISITION CORP.
By:: /s/ William T. Sullivan
----------------------------------------
William T. Sullivan, President
SHAWNEE OPTICAL, INC.
By: /s/ William T. Sullivan
----------------------------------------
William T. Sullivan, President
VISION PLAZA CORP.
By: /s/ William T. Sullivan
----------------------------------------
William T. Sullivan, President
28
<PAGE>
SCHEDULES
The following Schedules to the within Loan Agreement are respectively
described in the section indicated. Those Schedules in which no information has
been inserted shall be deemed to read "None".
SCHEDULE "A"
------------
Borrower's Places of Business (Section 5.02)
Address Property Located at Such Address
- ------------------------------------ ------------------------------------------
29
<PAGE>
SCHEDULE "B"
------------
Other Encumbrances and Liens (Section 5.08)
Secured Party Description Payment Terms and
or Mortgagee of Collateral Dates of Maturity
- ------------ ------------- -----------------
30
<PAGE>
SCHEDULE "C"
------------
Leases (Section 5.08)
Lessor Description of Property Date of Lease and Term Rental Payable
- ------ ----------------------- ---------------------- --------------
31
<PAGE>
EXHIBIT A
---------
_______________, 199__
Fleet National Bank
One Federal Street
Boston, Massachusetts 02110
Attn: Mr. Gregory P. Buscone
Vice President
Re: Loan Agreement between Fleet National Bank (the "Bank") and Sight Resource
Corporation (the "Agent Borrower") and others dated April 15, 1999 (the
"Agreement")
Gentlemen:
In accordance with Section 2.04 of the Agreement, the Borrower hereby
requests the following Advance:
(1) Borrowing Date: ______________________
(2) Interest Rate Type
(LIBOR, or Prime) _______________________
(3) Amount of Advance*: _______________________
(4) Interest Period: _______________________
(1, 2, 3, or 6 months for
LIBOR Loans)
The Borrower hereby certifies that all representations and warranties
contained in the Agreement are true and accurate in all material respects on the
date of this Notice of Borrowing as though such representations or warranties
had been made on this date (except to the extent such representation or warranty
expressly relates to an earlier date).
All capitalized terms used herein which are defined in the Agreement shall
have the meanings set forth in the Agreement.
Very truly yours,
SIGHT RESOURCE CORPORATION
(For itself and on behalf of all of the Borrowers)
By:_____________________________________
*minimum of $100,000.00 for LIBOR Loans.
32
<PAGE>
EXHIBIT B
---------
TO LOAN AGREEMENT
COMPLIANCE CERTIFICATE
----------------------
Sight Resource Corporation (the "Agent Borrower") hereby certifies to Fleet
National Bank (the "Bank") pursuant to the Loan Agreement between Agent Borrower
and others and Bank dated April 15, 1999, as may be amended from time to time
("Loan Agreement") that:
A. General
-------
1. Capitalized terms not defined herein shall have the meanings set forth
in the Loan Agreement.
2. The Borrower has complied in all material respects with all the terms,
covenants and conditions to be performed or observed by it contained in the Loan
Agreement and the Financing Agreements to which Borrower is a party.
3. Neither on the date hereof nor, if applicable, after giving effect to
the Advance made on the date hereof, does there exist an Event of Default or an
event which would with notice or the lapse of time, or both, constitute an Event
of Default.
4. The representations and warranties contained in the Loan Agreement and
in any certificate, document or financial or other statement furnished at any
time thereunder are true, correct and complete in all material respects with the
same effect as though such representations and warranties had been made on the
date hereof, except to the extent that any such representation and warranty
relates solely to an earlier date (in which case such representation and
warranty shall be true, correct and complete on and as of such earlier date).
B. Financial Covenants:
-------------------
As of the date hereof or, for such period as may be designated below, the
computations, ratios and calculations as set forth below in accordance with
Sections 7.01, 7.02, 7.03, 7.04, 7.05, and 7.06 of the Loan Agreement are true
and correct:
(a) (Section 7.01) Net Worth as of ________, 19__:
------------
(i) Net Worth = $__________________
(ii) Minimum amount required pursuant
to the Loan Agreement as at the end
of each fiscal quarter of Borrower = $25,000.00 at March 31, 1999
and thereafter plus 50% of
the prior year's net income
at March 31 in each
subsequent fiscal year
(commencing March 31, 2000)
33
<PAGE>
(b) (Section 7.02) Indebtedness to Net Worth as of _____________, 199__:
------------
(i) Net Worth = $__________________
(ii) Aggregate Indebtedness (Consolidated) $__________________
(iii) (ii) as a percentage of (i) = ______%
(iv) Maximum Percentage Permitted
Pursuant to Loan Agreement = 100% as at the end of each
fiscal quarter of Borrower
(c) (Section 7.03) Cash Flow to Debt Service for the Twelve (12) month
------------
period ending ______________, 199__:
(i) Earnings before Interest and Taxes = $__________________
(ii) Depreciation = $__________________
(iii) Amortization = $__________________
(iv) Dividends Paid or Payable = $__________________
(v) Cash Flow equals (i) plus (ii)
plus (iii) less (iv) = $___________________
(vi) Total payments of the current
maturities of all capital leases = $___________________
(vii) Total payments of the current
maturities of principal on
long-term liabilities = $___________________
(viii) Total Interest Expense = $___________________
34
<PAGE>
(ix) Debt Service equals (vi)
plus (vii) plus (viii) = $___________________
(x) (v) as a Percentage of (ix)
(Cash Flow to Debt Service) = _____________%
(xi) Minimum Percentage required pursuant
to the Loan Agreement = 125% as at the end of
each fiscal quarter
of Borrower
(d) (Section 7.04) Aggregate Advances to Cash Flow for the twelve month
period ending ___________, 19___:
(i) Aggregate Advances = $_____________
(ii) Cash Flow (from Section 7.03(v) above) = $_____________
(iii) (i) as a percentage of (ii) = ___________ %
(iv) Maximum percentage permitted pursuant
to the Loan Agreement = 350% as at the end
of the twelve month
period ending on the
last day of any fiscal
quarter of Borrower
(e) (Section 7.05) Borrowers' profit for the twelve month period ending
-------------
__________, 19____:
(i) Consolidated Net Income = $_____________
(ii) Minimum amount required under the
Agreement = $1.00 as at the end
of any of the first
three fiscal quarters
of each fiscal year
and annually for each
fiscal year (except
that for the
calculation for March
31, 1999, deferred
finance charges shall
be excluded from the
calculation of net
income).
(f) (Section 7.06) Borrowers EBITDA and net income after taxes for the
fiscal quarter ending _________, 199___:
35
<PAGE>
(i) EBITDA = $_____________
(ii) Net Income = $_____________
(iii) Minimum EBITDA and net income required:
Minimum EBITDA Minimum Net Income Fiscal Quarter Ending after taxes
-------------- ------------------ --------------------- -----------
$850,000.00 $210,000.00 March 31, 1999
$1,100,000.00 $285,000.00 June 30, 1999
$1,135,000.00 $300,000.00 September 30, 1999
$620,000.00 N/A December 31, 1999
IN WITNESS WHEREOF, the undersigned, duly authorized officer of Sight
Resource Corporation has executed and delivered this Certificate in the name and
on behalf of itself and each Borrower ________________, 199__.
SIGHT RESOURCE CORPORATION
By:_______________________________
Its:
36
<PAGE>
Exhibit 99.2
SECURED TERM NOTE
$7,000,000.00 April 15, 1999
Boston, Massachusetts
For value received, the undersigned jointly and severally promise to pay to
Fleet National Bank ("Bank"), or order, at its office at One Federal Street,
Boston, Massachusetts 02110, or at such other place as may be designated in
writing by the holder hereof, the principal sum of Seven Million ($7,000,000.00)
Dollars in eighty-four (84) consecutive monthly installments, as follows:
$83,333.00 on November 1, 1999 and the same amount (except the last installment,
which shall be in the amount of the remaining outstanding principal balance) on
the 1st day of each month thereafter until this note is paid in full. Interest
shall be charged on the said principal sum outstanding at a rate equal to the
Adjusted Libor plus two and three-quarters percent (2.75%) as defined in the
undersigneds' Loan Agreement with the Bank of even date (the "Loan Agreement"),
adjusted every month as provided below. Interest on the aggregate principal
balance owing to the Bank at the close of each day shall be payable monthly in
arrears commencing on the 1st day of the month next succeeding the date hereof,
and continuing on the 1st day of each month thereafter until such principal
balance is fully and finally paid. Notwithstanding the foregoing interest
provisions, the undersigned shall have the benefit of, and be subject to the
terms of, that certain ISDA Master Swap Agreement between the undersigned and
the Bank dated April 15, 1999 (the "Swap Agreement").
The Adjusted Libor shall be calculated on the date hereof, and recalculated
on the numerically corresponding day of each month thereafter, provided that if
such day is not a Banking Day, then the Adjusted Libor shall be recalculated on
the next preceding or the next succeeding day which is a Banking Day as
determined in good faith by the Bank in accordance with the then current bank
practices in the relevant Interbank Market (such date hereinafter referred to as
an "Adjustment Date"). Interest shall be computed on the basis of the actual
number of days elapsed over a year of 360 days. Each Adjusted Libor interest
rate calculated hereunder on an Adjustment Date shall become the applicable
interest rate until the next Adjustment Date.
If this note is not paid in full on the date of maturity or upon the
exercise by the holder of its rights in the event of the undersigned's default,
interest on unpaid balances shall thereafter be payable at an interest rate per
annum equal to five (5%) percent greater than the rate of interest specified
herein.
If the entire amount of any required principal and/or interest is not paid
in full within ten (10) days after the same is due, the undersigned shall pay to
the Bank a late fee equal to five (5%) percent of the required payment. In no
event, however, shall the outstanding principal advances evidenced by this note
bear interest rate in excess of the maximum interest permitted by applicable
law.
In the event of prepayment of this note, whether by acceleration or
otherwise, the undersigned shall pay to Bank any amounts required to compensate
Bank for any additional
<PAGE>
losses, costs or expenses which it may reasonably incur as a result of such
payment, including, without limitation, any loss, costs or expenses incurred by
reason of the liquidation or redeployment of deposits or other funds acquired by
Bank to fund or maintain the loan evidenced by this note. The provisions of this
paragraph, however, shall be subject in all respects to the provisions of the
Swap Agreement.
At the option of the holder, this note shall become immediately due and
payable without notice or demand upon the occurrence at any time of (i) the
failure to pay in full and when due any installment of principal or interest
hereunder; or (ii) one or more Events of Default as defined in the Loan
Agreement and the expiration of any applicable grace period.
Any and all deposits or other sums at any time or times credited by or due
from the holder to, and all securities or other property in possession of the
holder for safekeeping or otherwise and belonging to, any maker, indorser, or
guarantor of this note are and shall be subject to a security interest in favor
of the holder to secure payment of this note and the payment and performance of
any and all other liabilities and obligations, direct or indirect, absolute or
contingent, due or to become due or that may hereafter be contracted, of said
respective maker, indorser, or guarantor to the holder. Upon any of the events
specified above or upon non-payment of this note or any of such liability or
obligation whenever due, and at any time or times thereafter, without any demand
or notice, except to such extent as notice may be required by applicable law,
the holder may sell or dispose of any or all such securities or other property
and may exercise any and all the rights accorded the holder by the Massachusetts
Uniform Commercial Code. The holder may apply or set off such deposits or other
sums at any time whether or not the liability of the maker, indorser or
guarantor is then due. The provisions of this paragraph are cumulative to, and
not exclusive of, any other rights that the holder has with respect to such
deposits, sums, securities or other property under other agreements or
applicable principles of law. The holder shall have no duty to take steps to
preserve rights against prior parties as to such securities or other property.
Every maker, indorser, and guarantor of this note, or the obligation
represented by this note, waives presentment, demand, notice, protest, and all
other demands or notices in connection with the delivery, acceptance,
indorsement, performance, default, or enforcement of this note, assents to any
and all extensions or postponements of the time of payment or any other
indulgence, to any substitution, exchange, or release of collateral, and/or to
the addition or release of any other party or person primarily or secondarily
liable, and generally waives all suretyship defenses and defenses in the nature
thereof.
The undersigned will pay all costs and expenses of collection, including
attorneys' fees, incurred or paid by the holder in enforcing this note or the
obligations hereby evidenced, to the extent permitted by law.
No delay or omission of the holder in exercising any right or remedy
hereunder shall constitute a waiver of any such right or remedy. Acceptance by
the holder of any payment after acceleration shall not be deemed a waiver of
such acceleration. A waiver on one occasion shall
2
<PAGE>
not operate as a bar to or waiver of any such right or remedy on any future
occasion.
The holder need not enter payments of principal or interest upon this note
but may maintain a record thereof on a separate ledger maintained by the holder.
The word "holder" as used in this note shall mean the payee or indorsee of
this note who is in possession of it or the bearer if this note is at the time
payable to bearer.
THE UNDERSIGNED AND THE BANK HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHT TO TRIAL BY JURY THAT THE UNDERSIGNED OR THE BANK
MAY HAVE IN ANY ACTION OR PROCEEDING, IN LAW OR IN EQUITY, IN CONNECTION WITH
THE TRANSACTION DOCUMENTS OR THE TRANSACTIONS RELATED THERETO. THE UNDERSIGNED
HEREBY CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF THE BANK HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT THE BANK WOULD NOT, IN THE EVENT OF LITIGATION,
SEEK TO ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL PROVISION. THE UNDERSIGNED
ACKNOWLEDGES THAT THE BANK HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE PROVISIONS OF THIS SECTION.
All capitalized terms used herein and not otherwise defined shall have the
meanings set forth in the Loan Agreement. This Note is issued pursuant to the
Loan Agreement, which more explicitly describes the rights and obligations of
the undersigned and the Bank.
All rights and obligations hereunder shall be governed by the law of the
Commonwealth of Massachusetts and this note shall be deemed to be under seal.
Witness: SIGHT RESOURCE CORPORATION
/s/ Brian T. Garrity By: /s/ William T. Sullivan
- --------------------------- --------------------------
Brian T. Garrity William T. Sullivan, President
(As to all)
CAMBRIDGE EYE ASSOCIATES, INC.
By: /s/ William T. Sullivan
--------------------------------
William T. Sullivan, President
3
<PAGE>
DOUGLAS VISION WORLD, INC.
By: /s/ William T. Sullivan
------------------------------------
William T. Sullivan, President
E.B. BROWN OPTICIANS, INC.
By: /s/ William T. Sullivan
------------------------------------
William T. Sullivan, President
EYEGLASS EMPORIUM, INC.
By: /s/ William T. Sullivan
------------------------------------
William T. Sullivan, President
SHAWNEE OPTICAL, INC.
By: /s/ William T. Sullivan
------------------------------------
William T. Sullivan, President
VISION PLAZA CORP.
By: /s/ William T. Sullivan
------------------------------------
William T. Sullivan, President
- --------------------------------------------------------------------------------
THIS NOTE IS SECURED PURSUANT A SECURITY AGREEMENT
(ALL ASSETS) FROM EACH OF THE MAKERS OF THIS NOTE,
ALL OF EVEN DATE HEREWITH.
- --------------------------------------------------------------------------------
4
<PAGE>
Exhibit 99.3
SECURED REVOLVING LINE NOTE
$3,000,000.00 April 15, 1999
Boston, Massachusetts
On May 31, 2001, for value received, the undersigned, jointly and severally
promise to pay to the order of Fleet National Bank (the "Bank") at the office of
Bank at One Federal Street, Boston, Massachusetts 02110, or such other place as
the Bank shall designate, Three Million ($3,000,000.00) Dollars, or such lesser
principal amount advanced to the undersigned by the Bank under the revolving
line of credit established pursuant to a Loan Agreement of even date (the
"Agreement"), which remains outstanding, together with interest thereon as
follows: (i) on outstanding principal designated as a Prime Rate Loan
pursuant to Section 2.05 of the Agreement, interest shall accrue from the date
thereof, payable monthly in arrears on the first day of each calendar month
prior to the due date thereof, and upon the due date thereof, at a fluctuating
interest rate per annum equal to the Bank's Prime Rate in effect from time to
time. Each change in such interest rate shall take effect simultaneously with
the corresponding change in such Prime Rate. "Prime Rate" shall mean the rate
of interest announced by the Bank in Boston, Massachusetts, from time to time as
its Prime Rate, it being understood that such rate is a reference rate and not
necessarily the lowest rate of interest charged by Bank, (ii) on outstanding
principal designated as a Libor Loan pursuant to Section 2.05 of the Agreement,
interest shall accrue from the Borrowing Date for such Advance through and
including the Maturity Date chosen by the undersigned with respect to such
Advance, at a fixed interest rate per annum equal to the aggregate of the
Adjusted Libor plus Margin, and shall be payable on the sooner of the first day
of each month or the Maturity Date. All capitalized terms not otherwise defined
herein shall have the meanings set forth in the Agreement.
This note shall, at the option of the Bank, become immediately due and
payable without notice or demand upon the occurrence of any Event of Default
under the Agreement, subject to any applicable grace periods set forth therein.
If this note is not paid in full on the date of maturity or upon the
exercise by the holder of its rights in the event of the undersigned default,
interest on unpaid balances shall thereafter be payable at an interest rate per
annum equal to four (4%) percent greater than the rate of interest specified
herein.
Any and all deposits or other sums at any time or times credited by or due
from the holder to, and all securities or other property in possession of the
holder for safekeeping or otherwise and belonging to, any maker, indorser, or
guarantor of this note are and shall be subject to a security interest in favor
of the holder to secure payment of this note and the payment and performance of
any and all other liabilities and obligations, direct or indirect, absolute or
contingent, due or to become due or that may hereafter be contracted, of said
respective maker, indorser, or guarantor to the holder. Upon any of the events
specified above or upon
<PAGE>
non-payment of this note or any of such liability or obligation whenever due,
and at any time or times thereafter, without any demand or notice, except to
such extent as notice may be required by applicable law, the holder may sell or
dispose of any or all such securities or other property and may exercise any and
all the rights accorded the holder by the Massachusetts Uniform Commercial Code.
Upon the occurrence of an Event of Default under the Agreement the holder may
apply or set off such deposits or other sums at any time whether or not the
liability of the maker, indorser or guarantor is then due. The provisions of
this paragraph are cumulative to, and not exclusive of, any other rights that
the holder has with respect to such deposits, sums, securities or other property
under other agreements or applicable principles of law. The holder shall have no
duty to take steps to preserve rights against prior parties as to such
securities or other property.
Every maker, indorser, and guarantor of this note, or the obligation
represented by this note, waives presentment, demand, notice, protest, and all
other demands or notices in connection with the delivery, acceptance,
indorsement, performance, default, or enforcement of this note, assents to any
and all extensions or postponements of the time of payment or any other
indulgence, to any substitution, exchange, or release of collateral, and/or to
the addition or release of any other party or person primarily or secondarily
liable, and generally waives all suretyship defenses and defenses in the nature
thereof.
The undersigned will pay all reasonable costs and expenses of collection,
including reasonable attorneys' fees, incurred or paid by the holder in
enforcing this note or the obligations hereby evidenced, to the extent permitted
by law.
No delay or omission of the holder in exercising any right or remedy
hereunder shall constitute a waiver of any such right or remedy. Acceptance by
the holder of any payment after acceleration shall not be deemed a waiver of
such acceleration. A waiver on one occasion shall not operate as a bar to or
waiver of any such right or remedy on any future occasion.
The holder need not enter payments of principal or interest upon this note
but may maintain a record thereof on a separate ledger maintained by the holder.
The word "holder" as used in this note shall mean the payee or indorsee of
this note who is in possession of it or the bearer if this note is at the time
payable to bearer.
2
<PAGE>
THE UNDERSIGNED AND THE BANK HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHT TO TRIAL BY JURY THAT THE UNDERSIGNED OR THE BANK
MAY HAVE IN ANY ACTION OR PROCEEDING, IN LAW OR IN EQUITY, IN CONNECTION WITH
THE TRANSACTION DOCUMENTS OR THE TRANSACTIONS RELATED THERETO. THE UNDERSIGNED
HEREBY CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF THE BANK HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT THE BANK WOULD NOT, IN THE EVENT OF LITIGATION,
SEEK TO ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL PROVISION. THE UNDERSIGNED
ACKNOWLEDGES THAT THE BANK HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE PROVISIONS OF THIS SECTION.
All capitalized terms used herein and not otherwise defined shall have the
meanings set forth in the Agreement. This Note is issued pursuant to the
Agreement, which more explicitly describes the rights and obligations of the
undersigned and the Bank.
In the event of prepayment of this note, whether by acceleration or
otherwise, all principal amounts prepaid with respect to Libor Loans shall be
subject to "make whole" prepayment provisions as more particularly described in
the Agreement.
All rights and obligations hereunder shall be governed by the laws of the
Commonwealth of Massachusetts and this note shall be deemed to be under seal.
If the entire amount of any required principal and/or interest is not paid
in full within ten (10) days after the same is due, the undersigned shall pay to
the Bank a late fee equal to four (4%) percent of the required payment.
The undersigned hereby authorizes the Bank to debit its loan account
created pursuant to the Agreement for any payments required hereunder, whether
principal, interest or fees. This note is issued pursuant to the Agreement, to
which reference may be had with respect to the rights and obligations of the
undersigned and the Bank pursuant thereto.
WITNESS: SIGHT RESOURCE CORPORATION
/s/ Brian T. Garrity By: /s/ William T. Sullivan
- --------------------- --------------------------
Brian T. Garrity William T. Sullivan, President
(As to all)
3
<PAGE>
CAMBRIDGE EYE ASSOCIATES, INC.
By:/s/ William T. Sullivan
---------------------------------
William T. Sullivan, President
DOUGLAS VISION WORLD, INC.
By:/s/ William T. Sullivan
---------------------------------
William T. Sullivan, President
E.B. BROWN OPTICIANS, INC.
By:/s/ William T. Sullivan
--------------------------
William T. Sullivan, President
EYEGLASS EMPORIUM, INC.
By:/s/ William T. Sullivan
--------------------------
William T. Sullivan, President
KENT ACQUISITION CORP.
By:/s/ William T. Sullivan
--------------------------
William T. Sullivan, President
SHAWNEE OPTICAL, INC.
By:/s/ William T. Sullivan
--------------------------
William T. Sullivan, President
4
<PAGE>
VISION PLAZA CORP.
By:/s/ William T. Sullivan
--------------------------
William T. Sullivan, President
- -------------------------------------------------------------------------------
THIS NOTE IS SECURED PURSUANT TO SECURITY AGREEMENT (ALL ASSETS) FROM EACH OF
THE MAKERS OF THIS NOTE, ALL OF EVEN DATE HEREWITH.
- -------------------------------------------------------------------------------
5
<PAGE>
Exhibit 99.4
RIDER A
SECURED ACQUISITION TERM NOTE
$__________ ________, 1999/200__
Boston, Massachusetts
For value received, the undersigned jointly and severally promise to pay to
Fleet National Bank ("Bank"), or order, at its office at One Federal Street,
Boston, Massachusetts 02110, or at such other place as may be designated in
writing by the holder hereof, the principal sum of [the principal amount of the
Advance under the Acquisition Line) ($_____________) Dollars in eighty-four (84)
consecutive monthly installments, as follows: [1/84th of the amount of the
Advance] on [The 1st day of the 6th month following the date of the Advance] and
the same amount (except the last installment, which shall be in the amount of
the remaining outstanding principal balance) on the 1st day of each month
thereafter until this note is paid in full. Interest shall be charged on the
said principal sum outstanding at a rate equal to the Adjusted Libor plus two
and three-quarters percent (2.75%) prior to the undersigned achieving
Profitability and Adjusted Libor plus two and one-quarter (2.25%) percent
thereafter as those terms are defined in the undersigneds' Loan Agreement with
the Bank of even date (the "Loan Agreement"), adjusted every month as provided
below. Interest on the aggregate principal balance owing to the Bank at the
close of each day shall be payable monthly in arrears commencing on the 1st day
of the month next succeeding the date hereof, and continuing on the 1st day of
each month thereafter until such principal balance is fully and finally paid.
Notwithstanding the foregoing interest provisions, the undersigned shall have
the benefit of, and be subject to the terms of, that certain ISDA Master Swap
Agreement between the undersigned and the Bank dated April ___, 1999 (the "Swap
Agreement").
The Adjusted Libor shall be calculated on the date hereof, and recalculated
on the numerically corresponding day of each month thereafter, provided that if
such day is not a Banking Day, then the Adjusted Libor shall be recalculated on
the next preceding or the next succeeding day which is a Banking Day as
determined in good faith by the Bank in accordance with the then current bank
practices in the Interbank Market (such date hereinafter referred to as an
"Adjustment Date"). Interest shall be computed on the basis of the actual
number of days elapsed over a year of 360 days. Each Adjusted Libor interest
rate calculated hereunder on an Adjustment Date shall become the applicable
interest rate until the next Adjustment Date.
If this note is not paid in full on the date of maturity or upon the
exercise by the holder of its rights in the event of the undersigned's default,
interest on unpaid balances shall thereafter be payable at an interest rate per
annum equal to four (4%) percent greater than the rate of interest specified
herein.
If the entire amount of any required principal and/or interest is not paid
in full within ten (10) days after the same is due, the undersigned shall pay to
the Bank a late fee equal to four (4%) percent of the required payment. In no
event, however, shall the outstanding principal advances evidenced by this note
bear interest rate in excess of the maximum interest permitted by applicable
law.
<PAGE>
In the event of prepayment of this note, whether by acceleration or
otherwise, the undersigned shall pay to Bank any amounts required to compensate
Bank for any additional losses, costs or expenses which it may reasonably incur
as a result of such payment, including, without limitation, any loss, costs or
expenses incurred by reason of the liquidation or redeployment of deposits or
other funds acquired by Bank to fund or maintain the loan evidenced by this
note. The provisions of this paragraph, however, shall be subject in all
respects to the provisions of the Swap Agreement.
At the option of the holder, this note shall become immediately due and
payable without notice or demand upon the occurrence at any time of one or more
Events of Default as defined in the Loan Agreement and the expiration of any
applicable grace period.
Any and all deposits or other sums at any time or times credited by or due
from the holder to, and all securities or other property in possession of the
holder for safekeeping or otherwise and belonging to, any maker, indorser, or
guarantor of this note are and shall be subject to a security interest in favor
of the holder to secure payment of this note and the payment and performance of
any and all other liabilities and obligations, direct or indirect, absolute or
contingent, due or to become due or that may hereafter be contracted, of said
respective maker, indorser, or guarantor to the holder. Upon any of the events
specified above or upon non-payment of this note or any of such liability or
obligation whenever due, and at any time or times thereafter, without any demand
or notice, except to such extent as notice may be required by applicable law,
the holder may sell or dispose of any or all such securities or other property
and may exercise any and all the rights accorded the holder by the Massachusetts
Uniform Commercial Code. Upon the occurrence of an Event of Default under the
Loan Agreement the holder may apply or set off such deposits or other sums at
any time whether or not the liability of the maker, indorser or guarantor is
then due. The provisions of this paragraph are cumulative to, and not exclusive
of, any other rights that the holder has with respect to such deposits, sums,
securities or other property under other agreements or applicable principles of
law. The holder shall have no duty to take steps to preserve rights against
prior parties as to such securities or other property.
Every maker, indorser, and guarantor of this note, or the obligation
represented by this note, waives presentment, demand, notice, protest, and all
other demands or notices in connection with the delivery, acceptance,
indorsement, performance, default, or enforcement of this note, assents to any
and all extensions or postponements of the time of payment or any other
indulgence, to any substitution, exchange, or release of collateral, and/or to
the addition or release of any other party or person primarily or secondarily
liable, and generally waives all suretyship defenses and defenses in the nature
thereof.
The undersigned will pay all reasonable costs and expenses of collection,
including reasonable attorneys' fees, incurred or paid by the holder in
enforcing this note or the obligations hereby evidenced, to the extent permitted
by law.
2
<PAGE>
No delay or omission of the holder in exercising any right or remedy
hereunder shall constitute a waiver of any such right or remedy. Acceptance by
the holder of any payment after acceleration shall not be deemed a waiver of
such acceleration. A waiver on one occasion shall not operate as a bar to or
waiver of any such right or remedy on any future occasion.
The holder need not enter payments of principal or interest upon this note
but may maintain a record thereof on a separate ledger maintained by the holder.
The word "holder" as used in this note shall mean the payee or indorsee of
this note who is in possession of it or the bearer if this note is at the time
payable to bearer.
THE UNDERSIGNED AND THE BANK HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHT TO TRIAL BY JURY THAT THE UNDERSIGNED OR THE BANK
MAY HAVE IN ANY ACTION OR PROCEEDING, IN LAW OR IN EQUITY, IN CONNECTION WITH
THE TRANSACTION DOCUMENTS OR THE TRANSACTIONS RELATED THERETO. THE UNDERSIGNED
HEREBY CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF THE BANK HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT THE BANK WOULD NOT, IN THE EVENT OF LITIGATION,
SEEK TO ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL PROVISION. THE UNDERSIGNED
ACKNOWLEDGES THAT THE BANK HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE PROVISIONS OF THIS SECTION.
All capitalized terms used herein and not otherwise defined shall have the
meanings set forth in the Loan Agreement. This Note is issued pursuant to the
Loan Agreement, which more explicitly describes the rights and obligations of
the undersigned and the Bank.
All rights and obligations hereunder shall be governed by the law of the
Commonwealth of Massachusetts and this note shall be deemed to be under seal.
Witness: SIGHT RESOURCE CORPORATION
/s/ Brian T. Garrity By: /s/ William T. Sullivan
- --------------------- ------------------------------------
Brian T. Garrity William T. Sullivan, President
(As to all)
CAMBRIDGE EYE ASSOCIATES, INC.
By: /s/ William T. Sullivan
-------------------------------
William T. Sullivan, President
3
<PAGE>
DOUGLAS VISION WORLD, INC.
By: /s/ William T. Sullivan
-------------------------------
William T. Sullivan, President
E.B. BROWN OPTICIANS, INC.
By: /s/ William T. Sullivan
-------------------------------
William T. Sullivan, President
EYEGLASS EMPORIUM, INC.
By: /s/ William T. Sullivan
-------------------------------
William T. Sullivan, President
SHAWNEE OPTICAL, INC.
By: /s/ William T. Sullivan
-------------------------------
William T. Sullivan, President
VISION PLAZA CORP.
By: /s/ William T. Sullivan
-------------------------------
William T. Sullivan, President
- -------------------------------------------------------------------------------
THIS NOTE IS SECURED PURSUANT A SECURITY AGREEMENT
(ALL ASSETS) FROM EACH OF THE MAKERS OF THIS NOTE, ALL OF EVEN DATE HEREWITH.
- -------------------------------------------------------------------------------
4
<PAGE>
Exhibit 99.5
SECURITY AGREEMENT
(All Assets)
Sight Resource Corporation, a Delaware corporation with a principal place
of business at 100 Jeffrey Avenue, Holliston, MA 01746, on behalf of itself and
any successors or assigns (the "Borrower"), and Fleet National Bank, a national
banking association with a usual place of business at One Federal Street,
Boston, Massachusetts 02110, its successors and assigns (the "Bank"), are the
parties to this Agreement. In consideration of the Bank's extending or having
extended loans and/or other financial considerations to the Borrower on this
date or on one or more occasions, the Borrower agrees with the Bank as follows:
SECTION 1. THE SECURITY INTEREST: As security for the payment and performance
of all Liabilities (as defined below) now existing or hereafter arising of the
Borrower to the Bank, whether arising by future advances or otherwise, the
Borrower hereby grants a security interest to the Bank in the following
property, wherever located, and in all proceeds and products of such property:
1.01 ALL INVENTORY of the Borrower now existing or hereafter arising; meaning
all goods, merchandise, raw materials, supplies, goods in process,
finished goods, and other tangible personal property held by the Borrower
for processing, sale, or other business purpose, or to be used or
consumed in the Borrower's business.
1.02 ALL ACCOUNTS AND ACCOUNTS RECEIVABLE of the Borrower now existing or
hereafter arising; meaning all accounts, accounts receivable, papers,
notes, drafts, acceptances, and all other debts, obligations, and
liabilities in whatever form owing to the Borrower from any person, firm,
corporation, or any other legal entity ("Account Debtors").
1.03 ALL DOCUMENTS of the Borrower now existing or hereafter arising; meaning
all documents of title, including bills of lading, dock warrants, dock
receipts, warehouse receipts, and orders for the delivery of goods, and
also any other document which in the regular course of business or
financing is treated as adequately evidencing that the person in the
possession of it is entitled to receive, hold, and dispose of the
document and goods it covers.
1.04 ALL INSTRUMENTS of the Borrower now existing or hereafter arising;
meaning all negotiable instruments, securities, and any other writings
which evidence a right to payment of money and are not themselves
security agreements or leases and are of a type which are in the ordinary
course of business transferred by delivery with any necessary endorsement
or assignment.
1.05 ALL CHATTEL PAPER of the Borrower now existing or hereafter arising;
meaning a writing or writings which evidence both a monetary obligation
and a security interest in or a lease of specific goods.
<PAGE>
1.06 ALL GENERAL INTANGIBLES, including, but not limited to, choses in action
of the Borrower now existing or hereafter arising, meaning any personal
property other than goods, accounts, chattel papers, documents, and
instruments, including, but not limited to, general intangibles of the
following description or type: goodwill, literary rights, contract rights
and rights to performance, copyrights, trade-marks, patents, computer
programs, access codes, source codes, trade secrets, customer lists and
all tax refunds.
1.07 ALL INVESTMENT PROPERTY of the Borrower, where located, now or hereafter
existing or hereafter acquired including all securities (whether
certificated or not), security entitlements, security accounts, financial
assets and related rights, together with all proceeds of any of the
foregoing.
1.08 ALL OTHER GOODS of the Borrower, wherever located, now existing or
hereafter acquired; meaning all motor vehicles, equipment, machinery, and
other tangible personal property, whether fixtures or not, any and all
records relating to any of the Collateral (as defined below) and all
attachments and accessories thereto and substitutes therefor.
It is the Borrower's express intention that the continuing grant of this
security interest remain as security for payment and performance of all of its
Liabilities, whether now existing, or which may hereinafter be incurred by
future advances, or otherwise, and whether or not such Liabilities are related
to any transactions described in this Agreement, by class or kind, or whether or
not contemplated by the parties at the time of the granting of this security
interest. The notice of the continuing grant of this security interest
therefore shall not be required to be stated on the face of any document
representing any of the Borrower's Liabilities nor otherwise identify it as
being secured hereby. If any Liability of the Borrower shall be or become
excused, the Borrower hereby expressly hypothecates his, her, its, or their
ownership interest in the Collateral to the extent required to satisfy such
Liabilities, without restriction or limitation. Any such Liabilities will
include all advances by the Bank whether or not the advances are made pursuant
to commitments.
SECTION 2. DEFINITIONS: All types of Collateral mentioned in Section 1 shall
have the meanings given to them under Chapter 106 of the Massachusetts General
Laws unless specifically defined otherwise in that section or elsewhere in this
Agreement. In addition, as used herein, the following terms shall have the
following respective meanings:
2.01 LIABILITIES means all liabilities of the Borrower to the Bank of every
kind and description, including those arising under a Loan Agreement with
the Bank of even date (the "Loan Agreement"), direct or indirect,
absolute or contingent, due or to become due, now existing or hereafter
arising, regardless of how they arise or by what agreement or instrument
they may be evidenced, including those arising under this Agreement, or
whether evidenced by any agreement or instrument, including obligations
to perform acts and refrain from taking action as well as obligations to
pay money.
2
<PAGE>
2.02 COLLATERAL means any and all property of the Borrower in which the Bank
now has, by this Agreement, or hereafter acquires a security interest and
specifically includes without limitation all inventory, accounts,
documents, instruments, chattel paper, general intangibles, investment
property and other goods, as those terms are defined in Section 1 hereof.
SECTION 3. BORROWER'S REPRESENTATIONS, WARRANTIES AND COVENANTS: To induce the
Bank to enter into this Agreement the Borrower represents, warrants, agrees, and
covenants that:
3.01 BORROWER OWNS ASSETS: The Borrower owns all its assets (excluding leased
assets), including the Collateral, as represented on any papers furnished
to the Bank and has and will have the exclusive right and authority to
grant security interests therein.
3.02 ASSETS FREE OF ENCUMBRANCES: All the Borrower's assets, including the
Collateral, are and will be kept in good condition and clear of all
security interests, mortgages, liens, and encumbrances, except those
granted or allowed under this Agreement and those set forth on the
attached Schedule A, and the Borrower has marketable title to all
Collateral and shall defend the same against the claims and demands of
all persons. The Bank has the right but not the duty to discharge any
liability giving rise to a lien on Collateral, including any liens of any
taxing authority, and the Borrower shall repay the Bank immediately for
all amounts paid by the Bank to discharge such liabilities.
3.03 LOCATION OF COLLATERAL: Tangible Collateral, including, but not limited
to, equipment, inventory, and fixtures, and if the Bank permits the
Borrower to retain possession thereof, instruments, documents, and
chattel paper, will be kept in the possession of the Borrower at its
place of business named above, or those set forth on the attached
Schedule A. The location or locations of such Collateral shall not be
changed without providing written notice thereof to the Bank.
Immediately upon the Bank's request, whether or not the Borrower is in
default with respect to any Liability to the Bank, the Borrower will turn
over to the Bank all instruments, documents and chattel paper which are
Collateral under this Agreement.
3.04 RECORDS AND INFORMATION WITH RESPECT TO BORROWER AND COLLATERAL:
(a) The Borrower will furnish all information, financial or otherwise,
that a duly authorized lending officer of the Bank deems reasonably
necessary to properly inform the Bank with respect to Collateral or
the condition of the Borrower. The Borrower will inform the Bank
immediately in the event of any material change in the Borrower's
financial condition or in the event of any material breach of this
Agreement or in the event that any of the representations and
warranties herein contained do not continue to be true and correct
in any material respect as though continuously made to the Bank.
3
<PAGE>
(b) The Borrower will execute upon the request of the Bank such
financing statements and like papers as the Bank deems reasonably
necessary to properly protect Collateral and its security interest
therein and will pay the cost of filing them in such offices as the
Bank requests.
3.05 FIXTURES: If any machinery, equipment, or other property serving as
Collateral under this Agreement is or will be attached to any real
estate, the Borrower will, upon Bank's request, furnish the Bank with a
description of such real estate with a disclaimer, signed by all persons
having an interest in said real estate, of any interest in the Collateral
which has or may have priority over the Bank's interest, and will notify
the Bank in writing of any intended sale, mortgage, or conveyance of such
real estate, and will give written notice of the terms and conditions of
this Agreement to any prospective purchaser, mortgagee, or grantee of
such real estate.
3.06 LIABILITIES OWING TO BORROWER: Any liabilities in whatever form owing to
the Borrower from any person, firm, or other legal entity serving as
Collateral are and will be good and valid indebtedness not subject to any
defenses, set-offs, claims, counter-claims, or agreements under which any
deduction or discount may be made thereon, except as specified to the
Bank on a statement or invoice made available to the Bank on or prior to
the date hereof or from time to time hereafter.
3.07 RETURNED MERCHANDISE: The Bank may in its unfettered discretion charge to
the Borrower the amount represented to be owing on any liability, in
whatever form owing to the Borrower, from whatever source, if said
liability serves as Collateral under this Agreement, and if any
merchandise giving rise to any such liability is returned, and until such
debit is made, Borrower shall hold any such returned merchandise
segregated in trust for the Bank subject to its exclusive disposition.
3.08 TAXES: The Borrower will pay any sales or other taxes which may become
due and payable with respect to a sale or other transaction giving rise
to any Collateral, unless such tax is being contested in good faith by
appropriate proceedings with appropriate reserves established.
3.09 CHATTEL PAPER: The Borrower agrees to label all chattel paper serving as
Collateral under this Agreement with the words, "Subject to the security
interest of (the Bank)", naming the Bank.
3.10 INSURANCE:
(a) The Borrower agrees at its own expense to keep all Collateral
insured in accordance with the requirements of the Loan Agreement.
(b) The Bank shall have no risk, liability, or responsibility in
connection with payment or non-payment of any loss, the sole
obligation of the Bank being to
4
<PAGE>
credit the Borrower's loan account with the net proceeds of any
insurance payments received on account of any loss.
3.11 SALE OF COLLATERAL: Unless otherwise specifically provided by this
Agreement or the Loan Agreement, the Borrower will not sell any
Collateral without the prior written consent of the Bank.
Notwithstanding, provided the Borrower is not in default hereunder the
Borrower shall have the right to sell inventory, which may be Collateral,
in the ordinary course of its business. A sale in the ordinary course of
business shall not include a transfer in total or partial satisfaction of
a debt, other than a debt which has arisen solely as a result of
prepayment or deposit by customers of the Borrower for items of inventory
subsequently to be purchased or delivered. Borrower shall also be
entitled to sell (or trade in) obsolete equipment or inventory so long as
Borrower receives therefor a sum (or credit) substantially equal to such
equipment's or inventory's fair value.
3.12 BANK'S RIGHT TO POSSESSION:
(a) Unless otherwise provided by law, at any time after the occurrence
of an Event of Default hereunder, the Bank shall have the right to
the immediate possession of all Collateral and its products and
proceeds, and in its sole discretion may operate and use said
Collateral, complete work in process, and sell Collateral without
being liable to the Borrower on account of any losses, damage, or
depreciation that may occur as a result thereof so long as the Bank
shall act in good faith, in a commercially reasonable manner.
(b) Unless otherwise provided by law, at any time after the occurrence
of an Event of Default hereunder, the Bank may, at the expense of
the Borrower, maintain possession of the Borrower's premises by the
use of a custodian or custodians, or in such other manner as the
Bank may determine.
(c) Unless otherwise provided by law, at any time after the occurrence
of an Event of Default hereunder, the Bank may at all times, at the
expense of the Borrower, enter upon any premises on which Collateral
may be situated and remove any such Collateral to such other places
as the Bank determines.
(d) Unless otherwise provided by law, the Bank may at any time, after
the occurrence of an Event of Default hereunder, transfer any
Collateral into its own name or that of its nominee and may at any
time after demand or the occurrence of an Event of Default hereunder
receive the income thereon and hold the same as security for
Liabilities or apply it to principal or interest due on the
Liabilities.
5
<PAGE>
SECTION 4. COLLECTION:
4.01 (a) The Bank may at any time and from time to time after the occurrence
of an Event of Default hereunder require the Borrower to establish a
"lock box" arrangement with the Bank for the receipt of Account
Debtor remittances.
(b) The Bank may at any time after the occurrence of an Event of Default
hereunder, notify Account Debtors, on any Collateral, or require the
Borrower to notify such Account Debtors, that they shall make all
payments on their account or accounts with the Borrower directly to
the Bank; or require the Borrower to hold all proceeds received from
collection in trust for the Bank without commingling the same with
other funds of the Borrower, and to turn the same over to the Bank
immediately upon receipt the identical form received, at which time
the Bank may at its option either apply such proceeds to the
Liabilities of the Borrower, in accordance with Section 4.03, or
release such proceeds to the Borrower for use in its business.
(c) The Bank has the right at any time after the occurrence of an Event
of Default hereunder, directly or through its agent, to collect
proceeds directly from Account Debtors, on any Collateral and for
that purpose to do all acts and things necessary or incident
thereto, including the right to sue on such accounts, and to sell,
transfer, set over, compromise, discharge, or extend the whole or
any part of the accounts.
6
<PAGE>
(d) Borrower does hereby make, constitute and appoint any officer or
agent of Bank as Borrower's true and lawful attorney-in-fact, with
power to endorse the name of Borrower or any of Borrower's officers
or agents upon any notices, checks, drafts, money orders, or other
instruments of payment (including payments payable under any policy
of insurance on the Collateral) or Collateral that may come into
possession of the Bank in full or part payment of any amounts owing
to Bank; to sign and endorse the name of Borrower or any of
Borrower's officers or agents upon any warehouse receipts, drafts
against debtors, assignments, verifications and notices in
connection with accounts, and any instruments or documents relating
thereto, or to Borrower's rights therein; to give written notice to
such office or officials of the United States Post Office to effect
such change or changes of address so that all mail addressed to the
Borrower may be delivered directly to the Bank; granting unto
Borrower's said attorney full power to do any and all things
necessary to be done in and about the premises as fully and
effectually as Borrower might or could do, and hereby ratifying all
that said attorney shall lawfully do or cause to be done by virtue
hereof. Neither the Bank nor the attorney shall be liable for any
acts or omissions nor for any errors of judgment or mistake, except
for their gross negligence or willful misconduct. This power of
attorney shall be irrevocable for the term of this Agreement and all
transactions hereunder and thereafter as long as Borrower may be
indebted to Bank. With the exception of the power granted to the
Bank to endorse checks, drafts, and any other form of payment, which
right may be exercised at any time and from time to time, the Bank
will not exercise any of the powers granted hereunder absent the
occurrence of an Event of Default hereunder.
4.02 Until the Bank exercises the rights contained in Section 4.01 following
an Event of Default hereunder, the Borrower may continue to collect
proceeds from Account Debtors on any Collateral and use the proceeds in
any lawful manner not inconsistent with the terms of this Agreement.
4.03 In the event that the Bank exercises the rights contained in Section 4.01
following an Event of Default hereunder, the Bank shall credit to the
Borrower the proceeds obtained from Account Debtors of the Borrower, such
credits to be entered within two (2) business days after receipt of the
proceeds. Such credits, however, are conditional upon final payment to
the Bank at its office in cash or solvent credits of the items giving
rise to them, and, if any item is not so paid, the amount of any credit
given with respect to any of the Borrower's Liabilities shall be reversed
or, in the discretion of the Bank, it shall be charged to any deposit
accounts of the Borrower with the Bank, whether or not the item is
returned.
SECTION 5. DEFAULT AND ACCELERATION:
7
<PAGE>
5.01 Any or all of the Liabilities of the Borrower to the Bank shall, at the
option of the Bank and notwithstanding any time or credit allowed by any
instrument evidencing a Liability, be immediately due and payable without
notice or demand upon the occurrence of any of the following events of
default (each an "Event of Default" hereunder):
(a) The occurrence of an Event of Default under the Loan Agreement
following the expiration of any applicable grace period;
(b) An injunction or attachment against property of the Borrower remains
undischarged for a period of thirty (30) days;
(c) The security interest granted to the Bank in the Collateral shall,
at any time after the execution and delivery of this Agreement, for
any reason, ceases (i) to create a valid and perfected first
priority security interest in the Collateral including, without
limitation, the occurrence of any event which would cause a lien
creditor, as that term is defined in Section 9-301 of the Code, to
take priority over advances made by Bank; (ii) this Agreement shall
cease to be in full force and effect or shall be declared null and
void, or the validity or enforceability hereof shall be contested by
the Borrower; or (iii) any guarantor of the Liabilities denies it
has any further liability or obligation with respect to such
Liabilities or terminates its guaranty or fails to honor any of its
Liabilities under such guaranty.
5.02 Upon the occurrence of any Events of Default set forth in Section 5.01,
the Bank shall have all the rights and remedies of a secured party under
Chapter 106, Article 9, of the Massachusetts General Laws, in addition to
all other rights and remedies mentioned in this Agreement. Unless
otherwise provided by law, the Bank may require the Borrower to assemble
any tangible personal property constituting Collateral and make it
available to the Bank at a place to be designated by the Bank which is
reasonably convenient to both parties.
5.03 The Borrower hereby grants to the Bank a nonexclusive irrevocable license
in connection with the Bank's exercise of its rights hereunder, to use,
apply and affix any trademark, trade name, logo or the like in which the
Borrower now or hereafter has rights, which license may be used solely by
the Bank upon the occurrence of any Event of Default.
SECTION 6. EXPENSES:
6.01 The Borrower shall pay or reimburse the Bank on demand for all reasonable
out-of-pocket expenses which the Bank may incur in connection with this
Agreement and the preparation thereof, the making of any loan in
connection herewith, or the collection of the Borrower's Liabilities
secured under this Agreement, including but not limited to reasonable
attorney's fees, and reasonable fees and expenses related to the
perfection and protection of any security interest granted by
8
<PAGE>
the Borrower; or the Bank, if it chooses, may charge any of the
Borrower's funds on deposit with the Bank.
SECTION 7. GOVERNING LAW, MODIFICATION, AND WAIVERS:
7.01 This Agreement, including modifications or additions thereto, will be
governed, interpreted, and construed in accordance with the laws of the
Commonwealth of Massachusetts.
7.02 The rights, remedies, powers, privileges and discretions of the Bank
hereunder shall be cumulative and not exclusive of any rights or remedies
which it would otherwise have.
7.03 Any determination that any provision of this Agreement or any application
thereof is invalid, illegal or unenforceable in any respect in any
instance shall not affect the validity, legality and enforceability of
such provision in any other instance, nor the validity, legality or
enforceability of any other provision of this Agreement.
7.04 No modification of this Agreement will be binding unless in writing and
signed by a duly authorized lending officer of the Bank.
7.05 Any default by the Borrower may be waived by the Bank in writing signed
by a duly authorized lending officer of the Bank, but no such waiver
shall extend to any subsequent default or any other default.
7.06 No delay on the part of the Bank in exercising any of the rights granted
or referred to in this Agreement shall be held to constitute a waiver.
SECTION 8. NOTICE, ASSIGNMENT, TERMINATION:
8.01 Unless otherwise provided for by law, any demand, notice, or other
communication to the Borrower that the Bank may elect to give shall be
effective if sent in accordance with the terms of the Loan Agreement.
8.02 If at any time or times by assignment or otherwise the Bank assigns this
Agreement, such assignment shall carry with it the Bank's powers and
rights under this Agreement and the transferee shall become vested with
said powers and rights whether or not they are specifically referred to
in the transfer. If and to the extent the Bank retains any other
Liability or Collateral, the Bank will continue to have the rights and
powers herein set forth with respect thereto.
8.03 This Agreement shall continue until all Liabilities of the Borrower to
the Bank have been satisfied.
9
<PAGE>
8.04 Any obligations the Bank may have to the Borrower, whether now existing
or hereafter arising, run only to the Borrower and may not be assigned or
transferred by said Borrower without the written consent of a duly
authorized officer of the Bank.
SECTION 9. HEADINGS: SEAL:
9.01 Headings preceding the text of the several sections hereof are for the
convenience of reference only and shall not constitute a part of this
Agreement nor shall they affect its meaning, construction, or effect.
9.02 It is intended that this Agreement take effect as a sealed instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed as a sealed instrument this 15th day of April, 1999.
WITNESS: FLEET NATIONAL BANK
(As to Both)
/s/ Brian T. Garrity By: /s/ Gregory P. Buscone
- --------------------- --------------------------------------------
Witness Gregory P. Buscone, Vice President
SIGHT RESOURCE CORPORATION
By: /s/ William T. Sullivan
--------------------------------------------
William T. Sullivan, Chief Executive Officer
10
<PAGE>
SCHEDULE A
ENCUMBRANCES
------------
SECURED PARTY OR LESSOR: COLLATERAL:
- ----------------------- ----------
ADDITIONAL LOCATIONS
--------------------
11
<PAGE>
EXHIBIT 99.6
SECURITY AGREEMENT (Pledged Collateral)
In consideration of loans heretofore, now, or hereafter made to Sight
Resource Corporation (hereinafter called the "Pledgor") by Fleet National Bank
(hereinafter called the "Bank"), and to secure payment of any liability or
obligation of the Pledgor to the Bank, direct or indirect, primary or secondary,
now existing or hereafter arising (said liabilities and obligations hereby
secured being hereinafter called "Obligations"), the Pledgor assigns, transfers
and delivers to the Bank the collateral described on Exhibit A attached hereto
and made a part hereof, together with any additions to or substitutions for said
property and any and all proceeds of the same, all of which shall hereinafter be
referred to as "Collateral".
Upon an event of default hereunder, or upon default in the payment or
performance of any of the Obligations as set forth and more particularly
described as an "Event of Default" under that certain Loan Agreement between
Bank and Pledgor of even date (the "Loan Agreement"), or upon the occurrence of
any event which would entitle the Bank to accelerate the maturity of any of the
Obligations in each case beyond any applicable grace periods, and at any time or
times thereafter, without any demand or notice, except as may be required by
applicable law, the Bank may sell or otherwise dispose of any or all of the
Collateral and may exercise any and all rights and remedies accorded to it by
Article 9 of the Massachusetts Uniform Commercial Code, as amended from time to
time, or otherwise accorded by law, all as the Bank or any authorized person
acting for it may determine, including, without limitation of the foregoing,
bidding and/or becoming purchaser at any public sale, free from any right of
redemption, which the Pledgor hereby waives and releases, and no purchaser shall
be responsible for the application of the purchase money. The Pledgor agrees
that five (5) days notice will be deemed reasonable, if any is required.
The Bank at its option, upon any event of default hereunder or under the
Loan Agreement may, but shall have no obligation to do so, demand, sue for,
collect, or make any compromise or settlement it deems desirable with reference
to the Collateral, including, without limitation, the exercise of all rights of
a secured party or mortgagee as to any security for any Collateral. The Bank
shall have no duty as to collection or protection of any Collateral or any
income or distribution thereon nor as to the preservation of any rights,
including, without limitation, rights against prior parties, beyond safekeeping
of the Collateral or as otherwise required by law.
The Bank may apply any and all proceeds of the Collateral, however
arising, and other amounts collected or received in the exercise of its rights
hereunder to the Obligations, whether or not then due, and may exercise said
rights, without regard to the existence of any other security for any
Obligation.
The Pledgor hereby waives notice of any and all advances, extensions or
renewals, and of any default hereunder or as to any Obligation except as
provided under the Loan Agreement, as well as presentment, demand, notice, and
protest as to any and all Obligations and also all
<PAGE>
Obligations of the Pledgor hereunder; and the Pledgor agrees that any Collateral
may be exchanged or surrendered from time to time without notice to or further
assent from the Pledgor and without in any manner releasing the Bank's rights in
any other Collateral and the Pledgor hereby waives all suretyship defenses
generally.
No delay or omission by the Bank in exercising or enforcing any of its
rights, powers, privileges, remedies, immunities or discretions (all of which
are hereinafter collectively referred to as the "Bank's rights and remedies")
hereunder shall constitute a waiver thereof; and no waiver by the Bank of any
default of the Borrower hereunder shall operate as a waiver of any other default
hereunder. No term or provision hereof shall be waived, altered or modified
except with the prior written consent of the Bank, which consent makes explicit
reference to this Agreement. Except as provided in the preceding sentence, no
other agreement or transaction, of whatsoever nature, entered into between the
Bank and the Borrower at any time (whether before, during or after the effective
date or term of this Agreement), shall be construed in any particular as a
waiver, modification or limitation of any of the Bank's rights and remedies
under this Agreement (nor shall anything in this Agreement be construed as a
waiver, modification or limitation of any of the Bank's rights and remedies
under any such other agreement or transaction), but all of the Bank's rights and
remedies not only under the provisions of this Agreement but also of any such
other agreement or transaction shall be cumulative and not alternative or
exclusive, and may be exercised by the Bank at such time or times and in such
order of preference as the Bank in its sole discretion may determine.
If any provision of this Agreement or portion of such provision or the
application thereof to any person or circumstance shall to any extent be held
invalid or unenforceable, the remainder of this Agreement (or the remainder of
such provision) and the application thereof to other persons or circumstances
shall not be affected thereby.
This Agreement shall be binding upon and inure to the benefit of the
respective successors and assigns of the parties hereto, and shall remain in
full force and effect (and the Bank shall be entitled to rely thereon,
notwithstanding payment of all Obligations of the Borrower to the Bank at any
time or times) until terminated as to future transactions by written notice from
either party to the other party of the termination hereof; provided that any
such termination shall not release or affect any Collateral in which the Bank
already has a security interest or any Obligations incurred or rights accrued
hereunder prior to the effective date of such notice (as hereinafter defined) of
such termination. Notwithstanding any such termination, the Bank shall have a
security interest in all Collateral to secure the payment and performance of
Obligations arising after such termination as a result of commitments or
undertakings made or entered into by the Bank prior to such termination. The
Bank may transfer and assign this Agreement and deliver the Collateral to the
assignee, who shall thereupon have all the rights of the Bank; and the Bank
shall then be relieved and discharged of any responsibility or liability with
respect to this Agreement and the Collateral.
This Agreement is intended to take effect as a sealed instrument and has
been executed or completed and is to be performed in the Commonwealth of
Massachusetts, and it and all transactions hereunder or pursuant hereto shall be
governed as to interpretation, validity, effect,
2
<PAGE>
rights, duties and remedies of the parties hereunder and in all other respects
by the domestic laws of the Commonwealth of Massachusetts.
Witness our hands this 15th day of April, 1999.
WITNESS: PLEDGOR: SIGHT RESOURCE CORPORATION
Address: 100 Jeffrey Avenue
Holliston, MA 01746
/s/ Brian T. Garrity By: /s/ William T. Sullivan
- ----------------------------- ------------------------------------
(As to Both) Brian T. Garrity William T. Sullivan, Chief
Executive Officer
FLEET NATIONAL BANK
By: /s/ Gregory P. Buscone
----------------------------------
Gregory P. Buscone, Vice President
3
<PAGE>
EXHIBIT A
---------
COLLATERAL
4
<PAGE>
EXHIBIT 99.7
TRADEMARK SECURITY AGREEMENT
----------------------------
THIS SECURITY AGREEMENT is entered into as of April 15, 1999, by and
between Sight Resource Corporation, a Delaware corporation having its principal
place of business at 100 Jeffrey Avenue, Holliston, Massachusetts 01746 (the
"Borrower"), and Fleet National Bank, a national banking association organized
and exiting under the laws of the United States of America with a usual place of
business at One Federal Street, Boston, Massachusetts 02110 ("Bank").
NOW THEREFORE, in consideration of the premises, Borrower hereby agrees
with Bank as follows:
1. Grant of Security Interest. Borrower hereby grants to Bank a first
priority security interest in, and conditionally assigns, but does not transfer
title to Bank, all of Borrower's right, title and interest in and to the
following (collectively, the "Collateral") to secure payment and performance of
all obligations of Borrower to Bank whether such obligations are direct or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, including without limitation, those liabilities of Borrower
to Bank pursuant to a Loan Agreement of even date between Bank and Borrower (the
"Loan Agreement") (collectively, the "Obligations").
The Collateral shall consist of the following:
(a) Each of the trademarks, and rights and interests protectible as
trademarks, which are presently, or in the future may be, owned, created,
acquired or used (whether pursuant to a license or otherwise) by Borrower, in
whole or in part, and all trademark rights with respect thereto throughout the
world, including all proceeds thereof (including license royalties and proceeds
of infringement suits), and rights to renew and extend such trademarks and
trademark rights;
(b) All of Borrower's right, title and interest, in and to the trademarks
and trademark registrations listed on Schedule A attached hereto, as the same
may be updated hereafter from time to time;
(c) All of Borrower's right, title and interest to register trademark
claims under any state or federal trademark law or regulation of any foreign
country, and to apply for, renew and extend the trademark registrations and
trademark rights, the right (without obligation) to sue or bring opposition or
cancellation proceedings in the name of Borrower or in the name of Bank for
past, present and future infringements of the trademarks, registrations or
trademark rights and all rights (but not obligations) corresponding thereto in
the United States and any foreign country, and the associated goodwill;
(d) All general intangibles relating to the Collateral; and
(e) All proceeds of any and all of the foregoing (including, without
limitation, license royalties and proceeds of infringement suits) and, to the
extent not otherwise included, all payments under insurance, or any indemnity,
warranty or guaranty payable by reason of loss or damage to or otherwise with
respect to the Collateral.
<PAGE>
2. Warranties and Representations. Borrower hereby warrants and represents to
Bank the following:
(a) A true and complete schedule setting forth all federal and state
trademark registrations owned or controlled by Borrower or licensed to Borrower,
together with a summary description and full information in respect of the
filing or issuance thereof and expiration dates is set forth on Schedule A;
(b) To the best of Borrower's knowledge, each of the trademarks and
trademark registrations is valid and enforceable, and Borrower is not presently
aware of any past, present or prospective claim by any third party that any of
the trademarks are invalid or unenforceable, or that the use of any trademarks
violates the rights of any third person, or of any basis for any such claims;
(c) To the best of Borrower's knowledge, Borrower is the sole and exclusive
owner of the entire and unencumbered right, title and interest in and to each of
the trademarks and trademark registrations free and clear of any liens, charges
and encumbrances, including, without limitation, pledges, assignments, licenses,
shop rights and covenants by Borrower not to sue third persons;
(d) Borrower has used and will continue to use proper statutory notice in
connection with its use of each of the trademarks;
(e) Borrower has used and will continue to use consistent standards of high
quality (which may be consistent with Borrower's past practices) in the
manufacture, sale and delivery of products and services sold or delivered under
or in connection with the trademarks, including, to the extent applicable, in
the operation and maintenance of its merchandising operations, and will continue
to maintain the validity of the trademarks;
(f) Except for the filing of financing statements with the Secretary of the
Commonwealth of Massachusetts, the Town Clerk of Holliston, Massachusetts and
the City Clerk of Malden, Massachusetts under the Uniform Commercial Code and
filings with the United States Patent and Trademark Office necessary to perfect
the security interests created hereunder, no authorization, approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required either for the grant by Borrower of the security
interest hereunder or for the execution, delivery or performance of this
Agreement by Borrower or for the perfection of or the exercise by Bank of its
rights hereunder to the Collateral in the United States.
3. After-Acquired Trademark Rights. If Borrower shall obtain rights to any
new trademarks, the provisions of this Agreement shall automatically apply
thereto. Borrower shall give prompt notice in writing to Bank with respect to
any such new trademarks or renewal or extension of any trademark registration.
Borrower shall bear any reasonable expenses incurred in connection with future
applications for trademark registration.
2
<PAGE>
4. Litigation and Proceedings. Borrower shall commence and diligently
prosecute in its own name, as the real party in interest, for its own benefit,
and its own expense, such suits, administrative proceedings or other actions for
infringement or other damages as are in its reasonable business judgment
necessary to protect the Collateral. Borrower shall provide to Bank any
information with respect thereto requested by Bank. Bank shall provide at
Borrower's expense all necessary cooperation in connection with any such suit,
proceeding or action, including, without limitation, joining as a necessary
party. Following Borrower's becoming aware thereof, Borrower shall notify Bank
of the institution of, or any adverse determination in, any proceeding in the
United States Patent and Trademark Office, or any United States, state or
foreign court regarding Borrower's claim of ownership in any of such trademarks,
its right to apply for the same, or its right to keep and maintain such
trademark rights.
5. Power of Attorney. Borrower grants Bank a power of attorney (which shall
not be exercised absent the occurrence of an Event of Default hereunder), having
the full authority, and in the place of Borrower and in the name of Borrower,
from time to time in Bank's discretion to take any action and to execute any
instrument which Bank may deem reasonably necessary or advisable to accomplish
the purposes of this Agreement, including, without limitation, as may be subject
to the provisions of the Loan Agreement:
(a) To endorse Borrower's name on all applications, documents, papers and
instruments necessary for Bank to use or maintain the Collateral;
(b) To ask, demand, collect, sue for, recover, impound, receive and give
acquittance and receipts for money due or to become due under or in respect of
any of the Collateral;
(c) To file any claims or take any action or institute any proceedings that
Bank may deem necessary or desirable for the collection of any of the Collateral
or otherwise to enforce Bank's rights with respect to any of the Collateral and
to assign, pledge, convey or otherwise transfer title in or dispose of the
Collateral to any person.
7. Right to Inspect. Borrower grants to Bank and its employees and agents the
right to visit Borrower's plants and facilities which manufacture, inspect or
store products sold under any of the trademarks, and to inspect the products and
quality control records relating thereto at reasonable times during regular
business hours upon reasonable prior notice.
8. Events of Default. Any of the following events shall be an Event of
Default:
(a) Borrower fails to make any payment of principal or interest or any
other payment on any Obligation when due and payable (beyond any applicable
grace period), by acceleration or otherwise; and
(b) the occurrence of an Event of Default as that term is defined in the
Loan Agreement after the expiration of any applicable grace period or
termination for any reason of the Loan Agreement.
3
<PAGE>
9. Specific Remedies. Upon the occurrence of any Event of Default:
(a) Bank may cease advancing money or extending credit to or for the
benefit of Borrower under the Loan Agreement or under any other agreement
between Borrower and Bank.
(b) Bank may declare all Obligations to be due and payable immediately,
whereupon they shall immediately become due and payable without presentment,
demand, protest or notice of any kind, all of which are hereby expressly waived
by Borrower;
(c) Bank may set off against the Obligations all Collateral, balances,
credits, deposits, accounts or moneys of Borrower then or thereafter held with
Bank, including amounts represented by certificates of deposit;
(d) Bank may notify licensees to make royalty payments on license
agreements directly to Bank;
(e) Bank may sell or assign the Collateral and associated goodwill at
public or private sale for such amounts, and at such time or times as Bank deems
advisable. Any requirement of reasonable notice of any disposition of the
Collateral shall be satisfied if such notice is sent to Borrower ten (10) days
prior to such disposition. Borrower shall be credited with the net proceeds of
such sale only when they are actually received by Bank, and Borrower shall
continue to be liable for any deficiency remaining after the Collateral is sold
or collected;
(f) If the sale is to be a public sale, Bank shall also give notice of the
time and place by publishing a notice one time at least ten (10) calendar days
before the date of the sale in a newspaper of general circulation in the county
in which the sale is to be held; and
(g) To the maximum extent permitted by applicable law, Bank may be the
purchaser of any or all of the Collateral and associated goodwill at any public
sale and shall be entitled, for the purpose of bidding and making settlement or
payment of the purchase price for all or any portion of the Collateral sold at
any public sale, to use and apply all or any part of the Obligations as a credit
on account of the purchase price of any Collateral payable by Bank at such sale.
10. Governing Law. All acts and transactions hereunder and the rights and
obligations of the parties hereto shall be governed, construed and interpreted
in accordance with the laws of the Commonwealth of Massachusetts.
4
<PAGE>
IN WITNESS WHEREOF, the Borrower and Bank have caused this Agreement to be
executed by their duly authorized officers as of the date first above written.
FLEET NATIONAL BANK
By: /s/ Gregory T. Buscone
----------------------------------
Gregory P. Buscone, Vice President
SIGHT RESOURCE CORPORATION
By: /s/ William T. Sullivan
----------------------------------
William T. Sullivan, Chief Executive Officer
5
<PAGE>
COMMONWEALTH OF MASSACHUSETTS
Suffolk, ss. April 15, 1999
Then personally appeared the above-named, Gregory P. Buscone, Vice
President, and acknowledged the foregoing instrument to be the free act and deed
of Fleet National Bank, before me,
/s/ Brian T. Garrity
---------------------------------------
Brian T. Garrity, Notary Public
My commission expires: October 12, 2001
COMMONWEALTH OF MASSACHUSETTS
Suffolk, ss. April 15, 1999
Then personally appeared the above-named, William T. Sullivan, Chief
Executive Officer, and acknowledged the foregoing instrument to be the free act
and deed of Sight Resource Corporation, before me,
/s/ Brian T. Garrity
---------------------------------------
Brian T. Garrity, Notary Public
My commission expires: October 12, 2001
6
<PAGE>
SCHEDULE A
TO A TRADEMARK SECURITY AGREEMENT
BETWEEN SIGHT RESOURCE CORPORATION (Borrower)
AND
FLEET NATIONAL BANK (Bank)
DATED: April 15, 1999
REGISTERED TRADEMARKS (USA)
---------------------------
Trademark Registration No. Issue Date
- --------- ---------------- ----------
REGISTRATION PENDING FOR TRADEMARKS (USA)
-----------------------------------------
Trademark Serial No. Filing Date
- --------- ---------- -----------
7
<PAGE>
EXHIBIT 99.8
NEWS RELEASE
April 23, 1999
SIGHT RESOURCE ACQUIRES KENT OPTICAL,
CHAIN WITH 28 LOCATIONS IN MICHIGAN
With fourth Mid-West acquisition,
Company now operates 130 retail eye care centers
(Holliston, Massachusetts) - Sight Resource Corporation (NASDAQ: VISN), a
leading provider of primary eye care services and managed vision care programs,
today announced that it has acquired Kent Optical Company, Inc., a privately-
held primary eye care chain with operations in central and southwest Michigan.
Terms of the acquisition were not disclosed.
The Company's seventh acquisition, Kent Optical is the second completed by Sight
Resource in 1999 and its fourth acquisition in the Mid-West. Sight Resource now
operates 130 retail eye care centers with annualized revenues of approximately
$70 million, placing it among the top fifteen chains in the United States in
sales and number of locations.
Founded in 1965, Kent Optical's headquarters are located in Muskegon, Michigan.
With 28 retail eye care centers generating approximately $10 million in
annualized revenues, Kent Optical is a prominent name in a region that includes
locations in Battle Creek, Grand Rapids, Kalamazoo and Muskegon. In addition to
its traditional retail optical business, the company operates a successful
safety eyewear business that has been well received by large manufacturers in
the region. Kent's President, Tim Westra, and Vice President and Director of
Optometry, Dr. John C. Cress, will remain with Sight Resource in senior
management roles.
William T. Sullivan, President and Chief Executive Officer of Sight Resource
Corporation, stated, "Kent Optical is yet another profitable addition to our
growing company. We believe that we can grow Kent's market share and expand its
presence outside its current region. I am very pleased that Tim Westra and Dr.
John Cress have agreed to stay on and work with us to accomplish these
objectives. Tim and John have built an excellent business and collectively we
plan to utilize our resources to grow our business."
Sight Resource provides a complete range of primary eye care products and
services through its primary eye care centers, managed care programs, laser
vision correction centers and integrated networks of opticians, optometrists and
ophthalmologists. The Company's wholly-owned subsidiaries include Cambridge Eye
Doctors in Massachusetts and New Hampshire, E.B. Brown Opticians in Ohio and
Pennsylvania, Eyeglass Emporium in Indiana, Shawnee Optical in Ohio and
Pennsylvania, Vision Plaza in Louisiana and Mississippi, Vision World in Rhode
Island, and now Kent Optical in Michigan.
CONTACT: Nils Bonde-Henriksen, Manager of Corporate Communications, 508-429-
6916, ext. 111
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995: Statements contained in this news release 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 and additional factors affecting the Company's business are
described in the Company's Form 10-K for the fiscal year ended December 1998
filed with the Securities and Exchange Commission.
<PAGE>
EXHIBIT 99.9
NEWS RELEASE
April 23, 1999
SIGHT RESOURCE OBTAINS NEW $20 MILLION
CREDIT FACILITY FROM FLEET NATIONAL BANK
(Holliston, Massachusetts) - Sight Resource Corporation (NASDAQ: VISN), a
leading provider of primary eye care services and managed vision care programs,
today announced that it has obtained a new $20 million credit facility from
Fleet National Bank, Boston, Massachusetts. The credit facility will be used to
finance future acquisitions, refinance existing debt, provide working capital
and for other general corporate purposes.
The $20 million credit facility includes a $3 million revolving line of credit,
a term loan of $7 million and an acquisition line of credit of $10 million.
In conjunction with obtaining the new credit facility from Fleet National Bank,
the Company intends to take a first quarter, non-recurring non-cash charge of
approximately $323,000 for unamortized deferred financing costs associated with
the Company's prior credit facility.
William T. Sullivan, President and Chief Executive Officer of Sight Resource
Corporation, stated, "We are very pleased that Fleet National Bank has
demonstrated its support for our business strategy. Our new management team has
worked diligently to improve existing performance, demonstrate the merits of our
acquisition strategy and earn the confidence of our new partners at Fleet. We
believe that this credit facility will play an important role in allowing us to
continue to implement our acquisition strategy and meet our growth plans for
1999."
Sight Resource provides a complete range of primary eye care products and
services through its primary eye care centers, managed care programs, laser
vision correction centers and integrated networks of opticians, optometrists and
ophthalmologists. The Company's wholly-owned subsidiaries include Cambridge Eye
Doctors in Massachusetts and New Hampshire, E.B. Brown Opticians in Ohio and
Pennsylvania, Eyeglass Emporium in Indiana, Shawnee Optical in Ohio and
Pennsylvania, Vision Plaza in Louisiana and Mississippi, and Vision World in
Rhode Island.
CONTACT: Nils Bonde-Henriksen, Manager of Corporate Communications, 508-429-
6916, ext. 111
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995: Statements contained in this news release 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 and additional factors affecting the Company's business are
described in the Company's Form 10-K for the fiscal year ended December 1998
filed with the Securities and Exchange Commission.
