Exhibit 99.2
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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
SIGHT RESOURCE CORPORATION,
EYESHOP ACQUISITION CORP.
AND
XXXXXXX.XXX, INC.
Dated as of May 23, 2001
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TABLE OF CONTENTS
Page
ARTICLE I THE MERGER.......................................................................... 1
1.1 The Merger..................................................................... 1
1.2 Effective Time................................................................. 2
1.3 Effect of the Merger........................................................... 2
1.4 Charter and By-Laws of Surviving Corporation................................... 2
1.5 Directors and Officers......................................................... 2
1.6 Total Consideration; Conversion of Company Shares.............................. 2
1.7 Cancellation of Treasury Shares................................................ 4
1.8 Stock Options.................................................................. 5
1.9 Capital Stock of EAC........................................................... 5
1.10 Adjustments to Exchange Ratio.................................................. 5
1.11 Fractional Shares.............................................................. 5
1.12 Surrender of Certificates...................................................... 6
1.13 Further Ownership Rights in Company Shares..................................... 7
1.14 Closing........................................................................ 7
1.15 Lost, Stolen or Destroyed Certificates......................................... 8
1.16 Tax Consequences............................................................... 8
1.17 Dissenter's Rights............................................................. 8
1.18 Further Assurances............................................................. 8
1.19 Closing of Company Transfer Books.............................................. 9
ARTICLE II REPRESENTATIONS AND WARRANTIES OF SRC AND EAC...................................... 9
2.1 Corporate Organization and Authorization....................................... 9
2.2 SRC Capitalization............................................................. 10
2.3 SRC Subsidiaries............................................................... 10
2.4 Organization, Existence and Good Standing of SRC Subsidiaries.................. 10
2.5 Noncontravention; Consents..................................................... 10
2.6 SRC Public Information......................................................... 11
2.7 No Material Adverse Changes.................................................... 12
2.8 Legal Proceedings.............................................................. 12
2.9 Contracts, etc................................................................. 12
2.10 Subsequent Events.............................................................. 13
2.11 Inventories.................................................................... 13
2.12 Tax Returns.................................................................... 14
2.13 Commissions and Fees........................................................... 14
2.14 Employee Benefit Plans; Employment Matters..................................... 14
2.15 Compliance with Laws in General................................................ 15
2.16 Intellectual Property.......................................................... 15
2.17 Insurance...................................................................... 16
2.18 Properties..................................................................... 16
2.19 Environmental Matters.......................................................... 16
2.20 Vote Required.................................................................. 17
2.21 Absence of Undisclosed Liabilities............................................. 17
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY..................................... 18
3.1 Corporate Organization......................................................... 18
3.2 Authorization of Agreement..................................................... 18
3.3 Capitalization................................................................. 18
3.4 Company Subsidiaries........................................................... 19
3.5 Non-Contravention; Consents.................................................... 19
3.6 Financial Information.......................................................... 20
3.7 Absence of Undisclosed Liabilities............................................. 20
3.8 No Material Adverse Changes.................................................... 20
3.9 Legal Proceedings.............................................................. 20
3.10 Commissions and Fees........................................................... 21
3.11 Information Statement; Proxy Statement......................................... 21
3.12 Compliance with Laws........................................................... 21
3.13 Subsequent Events.............................................................. 22
3.14 Tax Returns.................................................................... 22
3.15 Employee Benefit Plans; Employment Matters..................................... 23
3.16 Intellectual Property.......................................................... 23
3.17 Properties..................................................................... 24
3.18 Environmental Matters.......................................................... 24
3.19 Vote Required.................................................................. 25
ARTICLE IV CONDUCT OF BUSINESS PENDING THE MERGER............................................. 25
4.1 Conduct of Business Pending the Merger......................................... 25
4.2 No Solicitation; SRC Acquisition Proposals..................................... 28
4.3 No Solicitation; Company Acquisition Proposals................................. 28
ARTICLE V ADDITIONAL AGREEMENTS.............................................................. 29
5.1 Proxy Statement; Information Statement......................................... 29
5.2 Meeting of Company Stockholders................................................ 30
5.3 Exemption from State Anti-Takeover Laws........................................ 30
5.4 Standstill..................................................................... 30
5.5 Public Disclosures............................................................. 31
5.6 Indemnification................................................................ 31
5.7 Resignation of SRC Directors and Officers...................................... 32
5.8 Company Stock Options.......................................................... 32
5.9 Rights Agreement............................................................... 32
5.10 Access to Information; Confidentiality......................................... 33
5.11 Notification of Certain Matters................................................ 33
5.12 Covenants for Tax-Free Status.................................................. 34
5.13 Voting Agreements.............................................................. 34
5.14 Employment Agreement........................................................... 34
5.15 Restrictions on Sales.......................................................... 34
5.16 Registration Rights............................................................ 35
5.17 Carlyle Registration........................................................... 35
5.18 Relocation of SRC's Headquarters............................................... 36
5.19 U.K. Assets.................................................................... 36
5.20 Issuance of Additional Shares.................................................. 36
ARTICLE VI CONDITIONS OF MERGER............................................................... 36
6.1 Conditions to Obligation of Each Party to Effect the Merger.................... 36
6.2 Additional Conditions to Obligations of SRC and EAC............................ 37
6.3 Additional Conditions to Obligations of the Company............................ 38
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ARTICLE VII TERMINATION, AMENDMENT AND WAIVER................................................ 38
7.1 Termination.................................................................... 38
7.2 Effect of Termination.......................................................... 40
7.3 Fees and Expenses.............................................................. 40
7.4 Amendment...................................................................... 41
7.5 Waiver......................................................................... 41
ARTICLE VIII GENERAL PROVISIONS............................................................... 41
8.1 Survival of Representations and Warranties..................................... 41
8.2 Notices........................................................................ 42
8.3 Disclosure Schedules........................................................... 43
8.4 Certain Definitions............................................................ 43
8.5 Interpretation................................................................. 46
8.6 Severability................................................................... 46
8.7 Entire Agreement............................................................... 46
8.8 Assignment..................................................................... 46
8.9 Parties in Interest............................................................ 46
8.10 Failure or Indulgence Not Waiver; Remedies Cumulative.......................... 46
8.11 Governing Law.................................................................. 46
8.12 Counterparts................................................................... 47
EXHIBITS
Designation Description Section Reference
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Exhibit A Certificate of Merger 1.2
Exhibit B Certificate of Amendment 2.20
Exhibit C-1 Voting Agreement 5.13
Exhibit C-2 Voting Agreement 5.13
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AGREEMENT AND PLAN OF MERGER, dated as of May 23, 2001 (the
"Agreement") by and among SIGHT RESOURCE CORPORATION, a Delaware corporation
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("SRC"), EYESHOP ACQUISITION CORP., a Delaware corporation and a wholly owned
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subsidiary of SRC ("EAC"), and XXXXXXX.XXX, INC. (the "Company").
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WHEREAS, the Boards of Directors of SRC and the Company have each
determined that a business combination between SRC and the Company is in the
best interests of their respective companies and stockholders;
WHEREAS, in furtherance of such combination, the Boards of Directors
of SRC, EAC and the Company have each approved the merger (the "Merger") of EAC
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with and into the Company, in accordance with the General Corporation Law of the
State of Delaware (the "DGCL") and subject to the conditions set forth herein,
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which Merger will result in, among other things, the Company becoming a wholly
owned subsidiary of SRC;
WHEREAS, the Board of Directors of each of SRC and the Company has
unanimously determined that the Merger and issuance of the Merger Consideration
(as defined herein) is fair to, and in the best interests of, their respective
companies and stockholders and has approved and adopted this Agreement, has
approved the Merger and other transactions contemplated hereby, and has
recommended approval and adoption of this Agreement and the transactions
contemplated hereby by their respective stockholders;
WHEREAS, the Board of Directors of each of SRC and EAC has approved
and adopted this Agreement, including, in the case of SRC, as the sole
stockholder of EAC, and the other transactions contemplated hereby;
WHEREAS, each of SRC, EAC and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger;
WHEREAS, for federal income tax purposes, it is intended that the
Merger shall qualify as a tax-free reorganization within the meaning of Section
368(a) of the Code and the United States Treasury Regulations promulgated
thereunder; and
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, SRC, EAC and the Company hereby agree as
follows:
ARTICLE I
THE MERGER
1.1 The Merger. At the Effective Time (as defined in Section 1.2) and
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subject to and upon the terms and conditions of this Agreement and the DGCL, EAC
shall be merged with and into the Company, the separate corporate existence of
EAC shall cease and the Company shall, as the surviving corporation in the
Merger, continue its existence under the DGCL as a wholly
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owned subsidiary of SRC. The Company as the surviving corporation after the
Merger is hereinafter sometimes referred to as the "Surviving Corporation."
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1.2 Effective Time. As promptly as practicable after the satisfaction or,
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to the extent permitted hereunder, waiver of the conditions set forth in Article
VI, the parties hereto shall cause the Merger to be consummated by filing a
Certificate of Merger substantially in the form of Exhibit A (the "Certificate
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of Merger"), along with a certified copy of this Agreement, with the Secretary
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of State of the State of Delaware, executed in accordance with the relevant
provisions of the DGCL (the date and time of such filing, or such later date and
time as may be specified in the Certificate of Merger by mutual agreement of
SRC, EAC and the Company, being the "Effective Time").
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1.3 Effect of the Merger. At the Effective Time, the effect of the Merger
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shall be as provided in the applicable provisions of the DGCL. Without limiting
the generality of the foregoing, and subject thereto, at the Effective Time all
the property, rights, privileges, powers and franchises of the Company and EAC
shall vest in the Surviving Corporation, and all debts, liabilities and duties
of the Company and EAC shall become the debts, liabilities and duties of the
Surviving Corporation.
1.4 Charter and By-Laws of Surviving Corporation. Unless otherwise
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determined by SRC prior to the Effective Time, at the Effective Time the Charter
of the Company, as amended by the Certificate of Merger, shall be the Charter of
the Surviving Corporation until thereafter amended as provided by the DGCL. The
by-laws of the EAC shall be the by-laws of the Surviving Corporation until
thereafter amended as provided by the DGCL.
1.5 Directors and Officers.
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(a) At the Effective Time, the directors and officers of SRC shall be
those persons set forth on Schedule 1.5(a) hereto, in each case until their
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respective successors are duly elected or appointed and qualified or until their
earlier death, resignation or removal in accordance with SRC's Charter and by-
laws. Prior to the Effective Time, SRC shall deliver to the Company resignation
letters of the SRC directors who will cease to serve as directors and officers
who will cease to serve as officers, to be effective as of the Effective Time.
(b) The directors of the Company immediately prior to the Effective Time
shall be the initial directors of the Surviving Corporation, each to hold office
in accordance with the Charter of the Surviving Corporation. The officers of the
Company immediately prior to the Effective Time shall be the initial officers of
the Surviving Corporation, in each case until their respective successors are
duly elected or appointed and qualified or until their earlier death,
resignation or removal in accordance with the Surviving Corporation's Charter
and by-laws.
1.6 Total Consideration; Conversion of Company Shares.
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(a) Subject to the other provisions of this Article I, the shares of
capital stock of the Company (such shares being collectively referred to as the
"Company Shares") issued and outstanding immediately prior to the Effective Time
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(other than any Company Shares to be cancelled pursuant to Section 1.7 and any
Dissenting Shares as defined in Section 1.17) will be converted automatically
into the right to receive fully paid and nonassessable shares of common
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stock, par value $0.01 per share, of SRC ("SRC Common Stock") in the applicable
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ratio set forth below (each an "Exchange Ratio"), together with (x) cash, if
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any, in lieu of any fraction of SRC Common Stock, pursuant to Section 1.11, (y)
additional shares of SRC Common Stock as described in and issuable pursuant to
subsection (c) of this Section 1.6, and (z) additional shares of SRC Common
Stock as described in and issuable pursuant to subsection (d) of this Section
1.6 (all of which constitute the "Merger Consideration"):
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(i) Each share of Common Stock, par value $0.001 per share of the
Company (the "Company Common Shares"), will be converted into the right to
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receive 4.52 fully paid and nonassessable shares of SRC Common Stock (the
"Common Share Exchange Ratio").
(ii) Each share of Series A Convertible Preferred Stock, par
value $0.001 per share, of the Company (the "Company Series A Preferred Shares")
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will be automatically converted into the right to receive 9.79 fully paid and
nonassessable shares of SRC Common Stock.
(iii) Each share of Series B Convertible Preferred Stock, par
value $0.001 per share, of the Company (the "Company Series B Preferred Shares")
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will be automatically converted into the right to receive 33.72 fully paid and
nonassessable shares of SRC Common Stock.
(b) Each share of SRC Common Stock to be issued upon conversion of
Company Shares in accordance with this Section 1.6 shall include the
corresponding Series A Junior Participating Preferred Stock Purchase Right of
SRC (a "SRC Right") issued pursuant to the Rights Agreement dated as of May 15,
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1997 between the Company and American Stock Transfer & Trust Company, as amended
(as so amended, the "SRC Rights Agreement"). Prior to the Distribution Date (as
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defined in the SRC Rights Agreement), all references in this Agreement to the
SRC Common Stock issued in connection with the Merger shall be deemed to include
SRC Rights.
(c) As part of the Merger Consideration, the holders of Company Shares
shall be entitled to receive additional fully paid and nonassessable shares of
SRC Common Stock upon the exercise of or issuance in respect to the rights to
receive SRC Common Stock as set forth on Schedule 1.6(c) herein (the "Stock
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Rights") equal to the number of shares so issued by SRC thereby. Such additional
shares of SRC Common Stock shall be issued in respect of each Company Share
(that is, each Company Common Share, each Company Series A Preferred Share, and
each Company Series B Preferred Share) in proportion to the Exchange Ratio
applicable to each such share and in respect of each Company Share underlying a
Company Stock Option (as hereinater defined) assumed by SRC pursuant to Section
1.8(a) herein in proportion to the Exchange Ratio applicable to each such share
as if the holder thereof exercised such option in full immediately prior to the
Effective Time. Shares of SRC Common Stock issuable pursuant to this Subsection
(c) shall be issued within ten days following the end of the month in which such
shares of SRC Common Stock are issued pursuant to the Stock Rights.
Notwithstanding the preceding, an Optionholder shall be entitled to receive
additional shares of SRC Common Stock pursuant to this Subsection (c) only upon
and to the extent that such Optionholder has exercised options received by it
pursuant to Section 1.8(a) herein.
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(d) Also as part of the Merger Consideration, the holders of Company
Shares shall be entitled to receive additional fully paid and nonassessable
shares of SRC Common Stock only if and to the extent that (i) the options
described in Section 1.8(a) to purchase shares of SRC Common Stock expire or are
canceled unexercised and (ii) the shares of SRC Common Stock issuable to the
Optionholders pursuant to Subsection (c) of this Section 1.6 are not so
issuable. Such additional shares of SRC Common Stock issuable pursuant to this
Subsection (d) shall be issued in respect of each Company Share (that is, each
Company Common Share, each Company Series A Preferred Share, and each Company
Series B Preferred Share) in proportion to the Exchange Ratio applicable to each
such share and shall be issued within ten days following the end of the month in
which such options are canceled or expired.
(e) In the event of exercise of any of the options described in Section
1.8(a) by any of the Optionholders, SRC shall issue to persons who are, as of
the Effective Time, holders of Company Shares additional fully paid and
nonassessable shares of SRC Common Stock as follows:
(i) In the event the Optionholder pays the exercise price of the
option in cash, the number of shares of SRC Common Stock to be issued by
SRC shall equal such number of shares as, on the date of exercise of such
option, could be purchased with such cash proceeds at a purchase price
equal to fair market value (determined as provided below).
(ii) In the event the Optionholder pays the exercise price of the
option in shares of SRC Common Stock (either by delivering such shares to
SRC, or by authorizing SRC to withhold such shares from the shares
otherwise deliverable to the Optionholder upon exercise of the option), the
number of shares of SRC Common Stock to be issued by SRC shall equal the
number of such shares applied to the payment of the option exercise price.
Any shares issued by SRC pursuant to this Section 1.6(e) shall be allocated to
each Company Share (outstanding immediately prior to the Effective Time) in
proportion to the Exchange Ratio applicable to each such share. For purposes of
this Section 1.6(e), the fair market value of a share of SRC Common Stock shall
be determined in the same manner as such fair market value is determined for
purposes of the Company Option Plan.
(f) As of the Effective Time, all Company Shares issued and outstanding
immediately prior to the Effective Time shall no longer be outstanding and all
Company Shares shall automatically be redeemed and canceled and shall cease to
exist, and each holder of a certificate representing any such Company Shares
shall cease to have any rights with respect thereto, except the right to receive
the Merger Consideration and any cash in lieu of fractional shares of SRC Common
Stock to be issued or paid in consideration therefor upon surrender of such
certificate in accordance with Section 1.12 hereof, without interest.
1.7 Cancellation of Treasury Shares. Each Company Share held in the
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treasury of the Company and each Company Share, if any, owned by EAC or SRC,
immediately prior to the Effective Time shall be canceled and extinguished
without any conversion thereof.
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1.8 Stock Options.
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(a) At the Effective Time, each outstanding option to purchase stock of
the Company (a "Company Stock Option") under the Xxxxxxx.xxx, Inc. 2000 Long-
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Term Incentive Stock Plan (the "Company Option Plan"), other than any Company
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Stock Option that by its terms otherwise expires by virtue of the Merger,
whether vested or unvested, shall, in accordance with the terms of such Company
Stock Option and such Company Option Plan, by virtue of the Merger and without
any action on the part of the holder thereof, become and represent an option to
acquire, on the same terms and conditions as were applicable under such Company
Stock Option, the same number of shares of SRC Common Stock as the holder of
such Company Stock Option would have been entitled to receive pursuant to the
Merger had such holder exercised such option in full immediately prior to the
Effective Time (rounded downward to the nearest whole number), at a price per
share (rounded upward to the nearest whole cent) equal to (i) the aggregate
exercise price for shares of Company Common Stock purchasable pursuant to such
Company Stock Option immediately prior to the Effective Time divided by (ii) the
number of full shares SRC Company Common Stock deemed purchasable pursuant to
such Company Stock Option, in accordance with the foregoing as further set forth
in Section 5.8.
1.9 Capital Stock of EAC. Each share of common stock, par value $.01 per
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share, of EAC (the "EAC Common Stock") issued and outstanding immediately prior
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to the Effective Time shall be converted into and exchanged for one validly
issued, fully paid and nonassessable share of Common Stock, par value $.01 per
share, of the Surviving Corporation. Each stock certificate of EAC evidencing
ownership of any EAC Common Stock shall continue to evidence ownership of such
shares of capital stock of the Surviving Corporation.
1.10 Adjustments to Exchange Ratios. Without limiting any other provision
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of this Agreement, the Exchange Ratios shall be correspondingly adjusted to
reflect fully the effect of any stock split, reverse split, stock dividend
(including any dividend or distribution of securities convertible into SRC
Common Stock or Company Shares), reorganization, recapitalization,
reclassification, conversion, consolidation, contribution or exchange of shares
or other like change with respect to SRC Common Stock or Company Shares
occurring after the date hereof and prior to the Effective Time.
1.11 Fractional Shares. No fraction of a share of SRC Common Stock will be
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issued hereunder, but in lieu thereof each holder of Company Shares who would
otherwise be entitled to a fraction of a share of SRC Common Stock (after
aggregating all fractional shares of SRC Common Stock to be received by such
holder) shall receive from SRC an amount of cash (rounded down to the nearest
whole cent) equal to the product of such fraction multiplied by the average
closing price per share (the "Closing Average") of SRC Common Stock (rounded to
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the nearest cent) on the over-the-counter market as reported by the National
Association of Securities Dealers' Automated Quotation System or, if not so
reported, the price as reported by the National Quotation Bureau, Inc., or any
organization performing a similar function (as reported in the Wall Street
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Journal, or, if not reported therein, any other authoritative source reasonably
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selected by Company) for the twenty (20) consecutive trading days ending on the
second trading day immediately prior to the Effective Time.
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1.12 Surrender of Certificates.
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(a) Exchange Agent. Prior to the Effective Time, SRC shall designate one
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or more Persons to act as Exchange Agent hereunder.
(b) SRC to Provide Common Stock. Promptly after the Effective Time, SRC
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shall make available to the Exchange Agent for exchange in accordance with this
Article I, through such reasonable procedures as SRC may adopt, the shares of
SRC Common Stock issuable pursuant to Section 1.6 in exchange for outstanding
Company Shares, together with an estimated amount of cash to be paid pursuant to
Section 1.11 in lieu of fractional shares.
(c) Exchange Procedures. Promptly after the Effective Time, the Surviving
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Corporation shall cause to be mailed to each holder of record of a certificate
or certificates (the "Certificates") which immediately prior to the Effective
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Time represented outstanding Company Shares whose shares were converted into the
right to receive shares of SRC Common Stock pursuant to Section 1.6, a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in such form and have such other
provisions as SRC may reasonably specify) and instructions for use in effecting
the surrender of the Certificates in exchange for certificates representing
shares of SRC Common Stock. Upon surrender of a Certificate for cancellation to
the Exchange Agent, together with such letter of transmittal, duly completed and
validly executed in accordance with the instructions thereto, the holder of such
Certificate shall be entitled to receive in exchange therefor, a certificate
representing the number of whole shares of SRC Common Stock and payment in lieu
of fractional shares which such holder has the right to receive pursuant to
Section 1.11, and the Certificate so surrendered shall forthwith be canceled.
Until so surrendered, each outstanding Certificate that, prior to the Effective
Time, represented Company Shares will be deemed from and after the Effective
Time, for all corporate purposes, other than the payment of dividends, to
evidence the ownership of the number of full shares of SRC Common Stock into
which such Company Shares shall have been so converted and the right to receive
an amount in cash in lieu of the issuance of any fractional shares in accordance
with Section 1.11. Any portion of the shares of SRC Common Stock deposited with
the Exchange Agent pursuant to Section 1.12(b) which remains undistributed to
the holders of the Certificates representing Company Shares for six (6) months
after the Effective Time shall be delivered to SRC, upon demand, and any holders
of Company Shares who have not theretofore complied with this Article I shall
thereafter look only to SRC for SRC Common Stock, any cash in lieu of fractional
shares of SRC Common Stock and any dividends or distributions with respect to
SRC Common Stock to which such holders may be entitled.
(d) Distributions With Respect to Unexchanged Shares. No dividends or
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other distributions declared or made after the Effective Time with respect to
SRC Common Stock with a record date after the Effective Time will be paid to the
holder of any unsurrendered Certificate with respect to the shares of SRC Common
Stock represented thereby until the holder of record of such Certificate shall
surrender such Certificate. Subject to applicable escheat Law, following
surrender of any such Certificate, there shall be paid to the record holder of
the certificates representing whole shares of SRC Common Stock issued in
exchange therefor, without interest, at the time of such surrender, the amount
of dividends or other distributions with a record date
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after the Effective Time theretofore paid with respect to such whole shares of
SRC Common Stock.
(e) Transfers of Ownership. If any certificate for shares of SRC Common
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Stock is to be issued in a name other than that in which the Certificate
surrendered in exchange therefor is registered, it will be a condition of the
issuance thereof that the Certificate so surrendered will be properly endorsed
and otherwise in proper form for transfer and that the Person requesting such
exchange will have paid to SRC, or any agent designated by it, any transfer or
other taxes required by reason of the issuance of a certificate for shares of
SRC Common Stock in any name other than that of the registered holder of the
certificate surrendered, or established to the satisfaction of SRC or any agent
designated by it that such tax has been paid or is not payable.
(f) No Liability. Notwithstanding anything to the contrary in this
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Agreement, none of the Exchange Agent, SRC, EAC or the Surviving Corporation
shall be liable to a holder of Company Shares for any SRC Common Stock or any
amount properly paid to a public official pursuant to any applicable abandoned
property, escheat or similar Law.
(g) Withholding of Tax. SRC or the Exchange Agent will be entitled to
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deduct and withhold from the consideration otherwise payable pursuant to this
Agreement to any holder of Company Shares such amounts as SRC (or any Affiliate
thereof) or the Exchange Agent are required to deduct and withhold with respect
to the making of such payment under the Code, or any provision of federal,
state, local or foreign tax law. To the extent that amounts are so withheld by
SRC or the Exchange Agent, such withheld amounts will be treated for all
purposes of this Agreement as having been paid to the holder of the Company
Shares in respect of whom such deduction and withholding were made by SRC.
1.13 Further Ownership Rights in Company Shares. All shares of SRC Common
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Stock (together with the other Merger Consideration) issued upon the surrender
for exchange of Company Shares in accordance with the terms of this Article I
(including any cash paid in respect thereof) shall be deemed to have been issued
in full satisfaction of all rights pertaining to such Company Shares under this
Article I, and there shall be no further registration of transfers on the
records of the Surviving Corporation of Company Shares which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation for any reason, they
shall be canceled and exchanged as provided in this Article I.
1.14 Closing. Unless this Agreement shall have been terminated and the
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transactions contemplated by this Agreement abandoned pursuant to the provisions
of Article VII, and subject to the provisions of Article VI, the closing of the
Merger (the "Closing") will take place at 10:00 a.m. (Eastern time) on a date
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(the "Closing Date") to be mutually agreed upon by the parties, which date shall
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be not later than the third Business Day after all the conditions set forth in
Article VI shall have been satisfied (or waived in accordance with Section 7.5,
to the extent the same may be waived), unless another time and/or date is agreed
to in writing by the parties. The Closing shall take place at the offices of
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., One Financial Center,
Boston, Massachusetts, unless another place is agreed to in writing by the
parties.
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1.15 Lost, Stolen or Destroyed Certificates. In the event any Certificates
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shall have been lost, stolen or destroyed, the Exchange Agent shall issue in
exchange for such lost, stolen or destroyed certificates, upon the making of an
affidavit of that fact by the holder thereof, such shares of SRC Common Stock
and cash for fractional shares, if any, as may be required pursuant to Section
1.11; provided, however, that SRC may, as a condition precedent to the issuance
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thereof, require the owner of such lost, stolen or destroyed certificates to
deliver a bond in such sum as it may reasonably direct as indemnity against any
claim that may be made against SRC or the Exchange Agent with respect to the
Certificates alleged to have been lost, stolen or destroyed.
1.16 Tax Consequences. For federal income tax purposes, the parties intend
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that the Merger be treated as a reorganization within the meaning of Section
368(c)(1)(A) and 368(a)(2)(E) of the Code, and that this Agreement shall be, and
is hereby, adopted as a plan of reorganization for purposes of Section 368 of
the Code. The parties shall not take a position on any Tax Return inconsistent
with this Section 1.16.
1.17 Dissenters' Rights. Any Company Shares outstanding immediately prior
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to the Effective Time and held by a holder who has not voted in favor of the
Merger or delivered a valid, unrevoked proxy in favor of the Merger, or
consented thereto in writing and who has delivered written notice to the Company
objecting to the Merger and demanding payment for his shares as required in
accordance, and has otherwise complied, with applicable DGCL ("Dissenting
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Shares"), shall not be converted into the right to receive the SRC Common Stock,
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unless and until such holder fails to elect to dissent from the Merger or
effectively withdraws or otherwise loses his right to payment of the fair value
of his shares under DGCL. If, after the Effective Time, any such holder fails to
perfect or effectively withdraws or loses his right to such payment, such
Dissenting Shares shall thereupon be treated as if they had been converted as of
the Effective Time into the right to receive SRC Common Stock to which such
holder is entitled, without interest or dividends thereon. Any amounts paid to
holders of Dissenting Shares in an appraisal proceeding will be paid by the
Surviving Corporation out of its own funds and will not be paid, directly or
indirectly, by SRC or EAC. The Company shall not, except with the prior written
consent of SRC, make any payment with respect to any such demands or offer to
settle or settle any such demands.
1.18 Further Assurances. If at any time after the Effective Time the
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Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments or assurances or any other acts or things are necessary,
desirable or proper (a) to vest, perfect or confirm, of record or otherwise, in
the Surviving Corporation its right, title or interest in, to or under any of
the rights, privileges, immunities, powers, purposes, franchises, properties or
assets of the Company or EAC, or (b) otherwise to carry out the purposes of this
Agreement, the Surviving Corporation and its proper officers and directors or
their designees shall be authorized to solicit in the name of the Company or EAC
any third party consents or other documents required to be delivered by any
third party, to execute and deliver, in the name and on behalf of the Company or
EAC, all such deeds, bills of sale, assignments and assurances and do, in the
name and on behalf of the Company or EAC, all such other acts and things
necessary, desirable or proper to vest, perfect or confirm its right, title or
interest in, to or under any of the rights, privileges, immunities, powers,
purposes, franchises, properties or assets of the Company or EAC and otherwise
to carry out the purposes of this Agreement.
8
1.19 Closing of Company Transfer Books. At the Effective Time, the stock
---------------------------------
transfer books of the Company shall be closed and no transfer of Company Shares
shall thereafter be made. If, after the Effective Time, certificates
representing shares of Company Shares are presented to the Surviving
Corporation, they shall be canceled and presented to the Exchange Agent in
accordance with Section 1.12.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SRC AND EAC
SRC and EAC each hereby represent and warrant to the Company, as of the
date hereof, as follows:
2.1 Corporate Organization and Authorization.
----------------------------------------
(a) Each of SRC and EAC is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. Each of SRC and
EAC has all necessary corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by SRC and EAC and the consummation by SRC and EAC of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action, and no other corporate proceedings on the part of SRC or EAC
are necessary to authorize this Agreement or to consummate the transactions
contemplated hereby (other than, with respect to the Merger, the approval of an
amendment to the Certificate of Incorporation of SRC increasing its authorized
shares of capital stock by the requisite vote of the holders of the then
outstanding shares of SRC capital stock entitled to vote thereon and the filing
and recordation of appropriate merger documents as required by the DGCL). This
Agreement has been duly and validly executed and delivered by SRC and EAC and,
assuming the due authorization, execution and delivery by the Company,
constitutes a legal, valid and binding obligation of SRC and EAC enforceable
against SRC and EAC in accordance with its terms.
(b) (i) Except as set forth on Schedule 2.1(b), SRC has all requisite
---------------
governmental authorizations, certificates, licenses, consents and approvals
required to carry on its business as presently conducted, except where the
failure to possess such authorizations, certificates, licenses, consents and
approvals (either individually or in the aggregate) would not have a SRC
Material Adverse Effect (as defined below). SRC is duly qualified to do business
as a foreign corporation and is in good standing in each jurisdiction where the
character of the property owned or leased by it or the nature of the activities
conducted by it makes such qualification necessary, except where the failure to
be so qualified and in good standing (either in one jurisdiction or in the
aggregate) would not have a SRC Material Adverse Effect (as defined below).
(ii) For purposes of this Agreement, "SRC Material Adverse Effect"
---------------------------
shall mean with respect to SRC, any fact, event, change, circumstance or effect
that is materially adverse to the business, financial condition, operations,
results of operations or assets of SRC
9
and the SRC Subsidiaries, taken as a whole, other than any fact, event, change,
circumstance or effect (i) relating to the economy or securities markets of the
United States or any other region in general, (ii) resulting from entering into
this Agreement or the consummation of the transactions contemplated hereby or
the announcement thereof, (iii) resulting from the continuation of any existing
unfavorable business or financial trend without a worsening thereof, or (iv)
resulting from its business, financial condition or results of operations that
have been disclosed to the Company.
(iii) Other than the obligations created under this Agreement, EAC has
neither incurred any obligation or liability nor engaged in any business
activities of any type or kind whatsoever, and is not obligated under any
contracts, claims, leases, liabilities (contingent or otherwise), loans or
otherwise.
2.2 SRC Capitalization. The authorized capital stock of SRC consists of
------------------
(i) 20,000,000 shares of SRC Common Stock, of which 9,468,952 shares are issued
and outstanding, as of the date of this Agreement, 2001, and 30,600 of such
authorized shares are issued and held as treasury shares and (ii) 5,000,000
shares of Preferred Stock, par value $.01 per share, of which (A) 200,000 shares
have been designated as Series A Junior Participating Preferred Stock, none of
which are issued and outstanding, and (B) 1,452,119 shares have been designated
as Series B Convertible Preferred Stock, all of which are issued and
outstanding. All of the issued and outstanding SRC Shares are duly and validly
issued, fully paid and nonassessable. Except as set forth on Schedule 2.2 of the
------------
SRC Disclosure Schedule or otherwise disclosed in the SRC Public Records (as
defined herein) filed with respect to periods ending on or after December 25,
1999, there are no options, warrants, or similar rights granted by SRC or any
other agreements to which SRC is a party providing for the issuance or sale by
it of any additional securities which would remain in effect after the Effective
Time.
2.3 SRC Subsidiaries. Schedule 2.3 of the SRC Disclosure Schedule sets
---------------- ------------
forth a list of all subsidiaries of SRC (individually, a "SRC Subsidiary", and
--------------
collectively, the "SRC Subsidiaries") and their states of incorporation. All of
----------------
the issued and outstanding shares of capital stock of each SRC Subsidiary are
duly and validly issued, fully paid and nonassessable and owned, directly or
indirectly, by SRC, free and clear of any liens, claims or encumbrances of any
nature whatsoever (collectively, "Liens").
-----
2.4 Organization, Existence and Good Standing of SRC Subsidiaries. Except
-------------------------------------------------------------
as set forth on Schedule 2.4 of the SRC Disclosure Schedule, each SRC Subsidiary
------------
is a corporation duly organized, validly existing and in good standing under the
laws of its respective state of incorporation and has all necessary corporate
power to own its properties and assets and to carry on its business as presently
conducted, except where the failure to be so organized, existing or in good
standing, or to have such power, would not, as may reasonably be foreseen,
individually or in the aggregate, have a SRC Material Adverse Effect.
2.5 Noncontravention; Consents.
--------------------------
(a) Neither the execution or delivery of this Agreement nor the
consummation of the transactions contemplated hereby does or will:
10
(i) violate, conflict with, or constitute a default under, the
Certificate of Incorporation, as amended, or Bylaws, as amended, of SRC; or
(ii) assuming that all consents, approvals, orders or authorizations
contemplated by subsection (b) below have been obtained and all filings
described therein have been made, (A) violate any statute or law or any rule,
regulation, order, writ, injunction, judgment or decree of any court or
governmental authority to which SRC or any of its assets or properties is
subject, which violation individually or in the aggregate has or would
reasonably be expected to have a SRC Material Adverse Effect or (B) except as
disclosed on Schedule 2.5(a) of the SRC Disclosure Schedule, result in a
---------------
violation or breach of, or constitute (with or without notice or lapse of time
or both) a default under, or give rise to any right of termination, acceleration
or modification of, any note, bond, mortgage, indenture, deed of trust, license,
lease or other agreement, instrument or obligation to which SRC is a party or by
which it or any of its assets or properties is bound, which default, breach or
other action individually or in the aggregate has or would reasonably be
expected to have a SRC Material Adverse Effect.
(b) Except for such filings, permits, authorizations, consents and
approvals as may be required under, and other applicable requirements of, the
Securities Act of 1933, as amended (the "Securities Act"), the Securities
--------------
Exchange Act of 1934, as amended (the "Exchange Act"), state securities or "Blue
------------
Sky" laws or regulations (the "Blue Sky Laws") or any exchange upon which SRC
-------------
Shares are listed, and except for the filing and recordation of a Certificate of
Merger as required by the DGCL, there is no other consent, approval, order or
authorization of, or filing with, or any permit from, or any notice to, any
court, arbitral tribunal, administrative agency or commission or other
governmental, regulatory or administrative authority required to be obtained by
SRC in connection with the execution of this Agreement and the consummation of
the transactions contemplated hereby the failure of which to obtain would, as
may reasonably be foreseen, individually or in the aggregate, (i) have a SRC
Material Adverse Effect or (ii) preclude, impair or materially delay
consummation of the transactions contemplated by this Agreement.
2.6 SRC Public Information.
----------------------
(a) SRC has filed all forms, reports, schedules, statements and other
documents required to be filed by it since January 1, 1999 under the Exchange
Act or the Securities Act (together with all subsequent forms, reports,
schedules, statements, amendments and other documents filed by SRC with the
United States Securities and Exchange Commission (the "SEC") prior to the
---
Effective Date, collectively, the "SRC Public Reports"). As of their respective
------------------
dates, the SRC Public Reports (x) did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading and (y) complied as to form in all material
respects with the applicable laws and rules and regulations of the SEC. No SRC
Subsidiary has been required to file any forms, reports, or other documents with
the SEC.
(b) The consolidated financial statements of SRC (including any footnotes
thereto) contained in the SRC Public Reports (the "SRC Financial Statements")
have been prepared from,
11
and are in accordance with, the books and records of SRC and have been prepared
in accordance with the published rules and regulations of the SEC and generally
accepted accounting principles ("GAAP") applied on a consistent basis during the
----
periods involved (except as may be otherwise indicated therein) and fairly
present the consolidated financial position of SRC and SRC Subsidiaries as of
the dates thereof and the consolidated results of operations, changes in
shareholders' equity and cash flows of SRC and SRC Subsidiaries for the periods
then ended. The consolidated balance sheet of SRC at December 30, 2000 included
in the SRC Public Reports is herein sometimes referred to as the "SRC Balance
-----------
Sheet."
-----
(c) The SRC Financial Statements reflect reserves appropriate and adequate
for all known material liabilities and reasonably anticipated losses and
disclosure of all contingent liabilities as required by generally accepted
accounting principles. SRC has disclosed to the Company all material facts
relating to the preparation of the SRC Financial Statements, including the basis
of accounting for affiliated transactions, and has made available, (or, upon
request, will make available) to the Company all worksheets, notes and schedules
related to such financial statements.
(d) Except as and to the extent of the amounts specifically reflected on
or reserved against in the SRC Balance Sheet or as set forth on Schedule 2.6 of
------------
the SRC Disclosure Schedule, there are no liabilities or obligations of SRC (or
any SRC Subsidiary) of the type required to be reflected on a balance sheet
prepared in accordance with GAAP or disclosed in the footnotes thereto, due or
to become due, accrued, absolute, contingent or otherwise, except for current
liabilities incurred since the date of the SRC Balance Sheet in the ordinary
course of business and consistent with past practice.
2.7 No Material Adverse Changes. Since December 30, 2000 and on or prior
---------------------------
to the date hereof, except as set forth on Schedule 2.7 of the SRC Disclosure
------------
Schedule or in the SRC Public Reports filed prior to the date hereof, there has
been no change, event, loss or occurrence in the business of SRC (including the
incurrence of any liability of any nature, whether accrued, contingent or
otherwise) or any SRC Subsidiary that has had or would reasonably be expected to
have a SRC Material Adverse Effect.
2.8 Legal Proceedings. Except as set forth on Schedule 2.8 of the SRC
----------------- ------------
Disclosure Schedule or described in the SRC Public Reports, as of the date of
this Agreement SRC has no Knowledge of any material pending or material
threatened litigation, governmental investigation or other proceeding against
SRC or any SRC Subsidiary or the transactions contemplated by this Agreement for
which SRC or any SRC Subsidiary is uninsured or which, if resolved adversely to
SRC, would, as may reasonably be foreseen, individually or in the aggregate,
have a SRC Material Adverse Effect.
2.9 Contracts, etc. SRC has made available to Company true copies of all
--------------
material written contracts, obligations and commitments of SRC and the SRC
Subsidiaries entered into in connection with and related to the business and
operations of SRC and the SRC Subsidiaries which contracts, obligations or
commitments are material to the operations of SRC and the SRC Subsidiaries,
taken as a whole. Except as otherwise set forth on Schedule 2.9 of the SRC
------------
Disclosure Schedule, to SRC's Knowledge, all of such contracts, obligations and
commitments are valid,
12
binding and enforceable in accordance with their terms (assuming the other
parties thereto are bound) and are in full force and effect, except where such
invalidity or unenforceability would not, as may reasonably be foreseen,
individually or in the aggregate, have a SRC Material Adverse Effect. Except as
set forth on Schedule 2.9 of the SRC Disclosure Schedule, to SRC's Knowledge no
------------
default or alleged default by SRC or the SRC Subsidiaries exists under such
contracts, obligations or commitments, except for defaults or alleged defaults
which would not, as may reasonably be foreseen, individually or in the
aggregate, have a SRC Material Adverse Effect.
2.10 Subsequent Events. Except as set forth on Schedule 2.10 of the SRC
----------------- -------------
Disclosure Schedule or disclosed in the SRC Public Reports, neither SRC nor any
SRC Subsidiary has, since December 30, 2000:
(a) discharged or satisfied any material lien or encumbrance, or paid or
satisfied any material obligation or liability (absolute, accrued, contingent or
otherwise) other than (i) liabilities shown or reflected on the SRC Balance
Sheet or (ii) liabilities incurred since the date of the SRC Balance Sheet in
the ordinary course of business, which discharge or satisfaction would not, as
may reasonably be foreseen, individually or in the aggregate, have a SRC
Material Adverse Effect;
(b) increased or established any reserve for taxes or any other liability
on its books or otherwise provided therefor which would, as may reasonably be
foreseen, individually or in the aggregate, have a SRC Material Adverse Effect,
except as may have been required due to income or operations of SRC since the
date of the SRC Balance Sheet;
(c) mortgaged, pledged or subjected to any lien, charge or other
encumbrance any of the assets, tangible or intangible, which assets are material
to the consolidated business or financial condition of SRC;
(d) sold or transferred any of the assets material to the consolidated
business of SRC, canceled any material debts or claims or waived any material
rights, except in the ordinary course of business;
(e) except for this Agreement and any other agreement executed and
delivered pursuant to this Agreement, entered into any material transaction
other than in the ordinary course of business or permitted under this Agreement;
or
(f) issued any stock, bonds or other securities, other than stock options
granted to employees, directors or consultants of SRC or warrants granted to
third parties or shares of common stock issuable pursuant thereto or pursuant to
any other contract or agreement outstanding as of the date hereof, all of which
are disclosed on Schedule 2.2 of the SRC Disclosure Schedule.
------------
2.11 Inventories. All inventories reflected on the SRC Balance Sheet were
-----------
as of the date thereof, and those existing at the Effective Time, are (and will
be) carried at amounts which reflect valuations pursuant to SRC's normal
inventory valuation policy of stating inventory at the lower of cost or market
on a first-in first-out basis, all in accordance with GAAP. Except as set forth
in Schedule 2.11 of the SRC Disclosure Schedule, since the date of the SRC
-------------
Balance Sheet,
13
no inventory items have been sold or disposed of except through sales in the
ordinary course of business and consistent with past practice.
2.12 Tax Returns. SRC and the SRC Subsidiaries have filed all tax returns
-----------
required to be filed by them or requests for extensions to file such returns or
reports have been timely filed and granted and have not expired, except to the
extent that such failures to file do not, as may reasonably be foreseen,
individually or in the aggregate, have a SRC Material Adverse Effect. Except as
disclosed on Schedule 2.12 of the SRC Disclosure Schedule, SRC or any SRC
-------------
Subsidiary has made all payments shown as due on such returns. Except as
disclosed on Schedule 2.12 of the SRC Disclosure Schedule, SRC has not been
-------------
notified that any tax returns of SRC are currently under audit by the Internal
Revenue Service or any state or local tax agency. Except as set forth on
Schedule 2.12 of the SRC Disclosure Schedule, no agreements have been made by
-------------
SRC for the extension of time or the waiver of the statute of limitations for
the assessment or payment of any federal, state or local taxes.
2.13 Commissions and Fees. Except as set forth on Schedule 2.13 of the SRC
-------------------- -------------
Disclosure Schedule, there are no valid claims for brokerage commissions or
finder's or similar fees in connection with the transactions contemplated by
this Agreement attributable to any agreement or commitment made by or on behalf
of SRC.
2.14 Employee Benefit Plans; Employment Matters.
------------------------------------------
(a) Except as set forth on Schedule 2.14(a) of the SRC Disclosure
----------------
Schedule, neither SRC nor any SRC Subsidiary has established or maintains or is
obligated to make contributions to or under or otherwise participate in (i) any
bonus or other type of incentive compensation plan, program, agreement, policy,
commitment, contract or arrangement (whether or not set forth in a written
document), (ii) any pension, profit-sharing, retirement or other plan, program
or arrangement providing for deferred compensation, or (iii) any other employee
benefit plan, fund or program described in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"). Except as
-----
disclosed on Schedule 2.14(a) of the SRC Disclosure Schedule, all such plans
----------------
listed on Schedule 2.14(a) of the SRC Disclosure Schedule (individually, a
----------------
"Plan" and collectively, the "Plans") have been operated and administered in all
---- -----
material respects in accordance with, as applicable, 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. Except as disclosed on Schedule 2.14(a) of the
----------------
SRC Disclosure Schedule, no act or failure to act by SRC or any SRC Subsidiary
has resulted in a "prohibited transaction" (as defined in ERISA) with respect to
the Plans that is not subject to a statutory or regulatory exception. No
"reportable event" (as defined in ERISA) which requires the filing of a report
thereof with the Pension Benefit Guaranty Corporation has occurred with respect
to any of the Plans which is subject to Title IV of ERISA. None of SRC or the
SRC Subsidiaries has previously made, is currently making, or is 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, as amended. Except as
disclosed on Schedule 2.14(a) of the SRC Disclosure Schedule, each Plan (and any
----------------
trust relating thereto) intended to be a qualified plan under Section 401(a) of
the Internal Revenue Code (the "Code") either has been determined by the
----
Internal Revenue Service to
14
be so qualified or is the subject of a pending application for such a
determination that was timely filed. No accumulated funding deficiency (as
determined in Section 412 of the Code and Section 302 of ERISA) exists (whether
or not waived) with respect to any Plan, and all required contributions have
been made. No Plan that is a defined benefit plan has been terminated, and no
proceedings to terminate any such Plan are pending, contemplated or threatened.
(b) Except as set forth on Schedule 2.14(b) of the SRC Disclosure
----------------
Schedule, neither SRC nor any SRC Subsidiary is not a party to any oral or
written union, guild or collective bargaining agreement which agreement covers
employees in the United States (nor is it aware of any union organizing activity
currently being conducted with respect to any of its employees).
2.15 Compliance with Laws in General. Except as set forth on Schedule
------------------------------- --------
2.15 of the SRC Disclosure Schedule or disclosed in the SRC Public Reports, SRC
----
and the SRC Subsidiaries hold all material permits, licenses, variances,
exemptions, orders, registrations and approvals of all governmental entities
which are required for the operation of the business of SRC and its SRC
Subsidiaries (collectively, the "SRC Permits"), except where the failure to have
-----------
any such SRC Permits individually or in the aggregate would not have a SRC
Material Adverse Effect. SRC and the SRC Subsidiaries are in compliance with the
terms of the SRC Permits and all applicable statutes, laws, ordinances, rules
and regulations, except where the failure so to comply individually or in the
aggregate would not have a SRC Material Adverse Effect.
2.16 Intellectual Property.
---------------------
(a) Except as set forth in Schedule 2.16(a) of the SRC Disclosure
----------------
Schedule, SRC owns, or is licensed or otherwise entitled to exercise all rights
under or with respect to all patents, trademarks, trade names, service marks,
copyrights, and any applications therefor, and trade secrets (the "Intellectual
------------
Property Rights") employed in the operation of the business of SRC and the SRC
---------------
Subsidiaries as currently conducted. Schedule 2.16 of the SRC Disclosure
-------------
Schedule lists all SRC registered copyrights, registered trademarks, trade names
and service marks, and any applications therefor (the "SRC Intellectual Property
-------------------------
Rights"). Schedule 2.16(a) lists all material licenses, sublicenses and other
------ ----------------
agreements (each, a "Material IP Agreement") as to which SRC or any SRC
---------------------
Subsidiary is a party and pursuant to which SRC or any SRC Subsidiary is
authorized to use third party patents, registered copyrights, registered
trademarks, trade names and service marks, and any applications therefor (the
"Third Party Intellectual Property Rights").
----------------------------------------
(b) SRC is not, and as a result of the execution and delivery of this
Agreement or the performance of its obligations hereunder will not be, in
violation of any Material IP Agreement. Except as disclosed in Schedule 2.16(b)
----------------
and except for those Intellectual Property Rights which are in the public
domain, SRC is the sole and exclusive owner or licensee of, with all right,
title and interest in and to (free and clear of any liens or encumbrances), its
Intellectual Property Rights, and has sole and exclusive rights in respect
thereof, and is not contractually obligated to pay any compensation to any third
party in connection therewith.
(c) Except as disclosed in Schedule 2.16(c), no claims with respect
----------------
to the SRC Intellectual Property Rights have been asserted against SRC or any
SRC Subsidiary and SRC
15
does not know of any grounds for any claims (i) to the effect that any business
of SRC as currently conducted infringes on or misappropriates any patents,
copyrights, trademarks, trade names or service marks in which a third party has
any rights, (ii) challenging the ownership, validity or effectiveness of any of
the SRC Intellectual Property Rights. Except as set forth on Schedule 2.16(c),
----------------
no SRC Intellectual Property Right is subject to any lien, encumbrance or other
secured interest.
2.17 Insurance. Schedule 2.17 of the SRC Disclosure Schedule sets
--------- -------------
forth a complete and correct list of all material insurance policies and
programs (other than welfare benefit insurance policies and programs), including
self-insurance programs, maintained by SRC.
2.18 Properties. Schedule 2.18 of the SRC Disclosure Schedule sets
---------- -------------
forth a list of all material real property owned by SRC. Schedule 2.18 of the
-------------
SRC Disclosure Schedule sets forth by office location all material real property
used or occupied by SRC that is held under lease or sublease by SRC (the
"Leases"). Except for the properties subject to the Leases and as set forth on
------
Schedule 2.18 of the SRC Disclosure Schedule, SRC and the SRC Subsidiaries have
-------------
good title, free and clear of all liens, mortgages, claims, restrictions,
pledges, or other claims or encumbrances to all their material tangible
properties and tangible assets reflected on the SRC Balance Sheet or acquired
since the date thereof, except for (i) liens for current taxes not yet due and
payable, (ii) assets disposed of since the date of the SRC Balance Sheet in the
ordinary course of business, (iii) liens imposed by law and incurred in the
ordinary course of business for obligations not yet due to carriers,
warehousemen, laborers and materialmen, (iv) liens in respect of pledges or
deposits under workers' compensation laws, and (v) liens and encumbrances which
do not affect marketability of title or the use being made of such properties or
immaterial title defects, all of which, individually and in the aggregate, do
not have a SRC Material Adverse Effect. The Leases are in full force and effect,
and SRC holds a valid existing leasehold interest under each of the Leases on
the terms set forth in such Leases, SRC has made available to the Company
complete and accurate copies of each of the Leases, and none of the Leases has
been modified in any material respect, except to the extent such modifications
are disclosed by the copies delivered to the Company or which modifications
individually or in the aggregate, do not have a SRC Material Adverse Effect.
2.19 Environmental Matters.
---------------------
(a) Except as set forth on Schedule 2.19(a), neither SRC nor any SRC
----------------
Subsidiary (i) has received written notice from any person, including but not
limited to, a governmental entity, alleging that SRC or any SRC Subsidiary is in
violation of any applicable material Environmental Law or otherwise may be
liable under any applicable Environmental Law, including but not limited to,
liability in connection with a Cleanup (as hereinafter defined), which violation
or liability is unresolved or which is reasonably likely to result in a SRC
Material Adverse Effect, (ii) knows of any event or circumstance that exists
which (A) may constitute or result in a violation by SRC or any SRC Subsidiary
of, or the failure on the part of SRC or any SRC Subsidiary to comply with such
Environmental Laws, or (B) may give rise to any obligation on the part of SRC or
any SRC Subsidiary to undertake, or to bear all or any portion of the cost of
any Cleanup which, in the case of clauses (A) or (B), could have a SRC Material
Adverse Effect.
16
(b) Except as set forth on Schedule 2.19(b), to the Knowledge of SRC,
----------------
there have been no releases, spills or discharges of Regulated Materials (as
hereinafter defined) on or underneath any location which is owned, leased or
otherwise operated by SRC or any SRC Subsidiary (the "SRC Properties"), which
--------------
release, spills or discharges could have a SRC Material Adverse Effect. There
are no pending or, to the Knowledge of SRC, threatened, claims, liens,
encumbrances or other restrictions of any nature, resulting from Environmental
Laws, with respect to or affecting any of the SRC Properties.
(c) For the purposes of this Agreement the following terms shall have
the following meanings:
"Cleanup" means all actions required to: (a) cleanup, remove, treat or
-------
remediate Regulated Materials; (ii) prevent the release of Regulated Materials
so that they do not migrate, endanger or threaten to endanger public health or
welfare or the environment; (iii) perform pre-remedial studies and
investigations and post-remedial monitoring and care; (iv) respond to any
government or private party requests for information or documents in any way
relating to cleanup, removal, treatment or remediation or potential cleanup,
removal, treatment or remediation of Regulated Materials in the environment; or
(v) any legal or administrative proceeding related to items (i) through (iv)
including, but not limited to, actions brought by third parties to recover costs
incurred with respect to Cleanup.
"Environmental Laws" shall mean all federal, state, local laws,
------------------
statutes, ordinances, codes, rules and regulations related to the protection of
the environment, natural resources, or the handling, use, recycling, generation,
treatment, storage, transportation or disposal of Regulated Materials.
"Regulated Materials" shall mean any pollutants, contaminants, toxic,
-------------------
hazardous or extremely hazardous substances, materials, wastes, constituents,
compounds, chemicals, natural or man-made elements or forces that are regulated
by, or may now or in the future form the basis of liability under, any
Environmental Laws.
2.20 Vote Required. The following stockholder votes are the only votes
-------------
required of the holders of any class or series of SRC or EAC capital stock
necessary to approve this Agreement, the Merger and the transactions
contemplated hereby: (a) the affirmative vote of a majority of the outstanding
EAC Shares entitled to vote thereon; and (b) the affirmative vote of a majority
of the issued and outstanding SRC Common Stock and SRC Preferred Stock voting
together as a single class in connection with the amendment of the SRC
Certificate of Incorporation to increase the authorized capital stock of SRC, in
the form attached hereto as Exhibit B (the "SRC Certificate of Amendment").
---------
2.21 Absence of Undisclosed Liabilities. Except as and to the extent
----------------------------------
of the amounts specifically reflected on or reserved against in the SRC
Financial Statements or as set forth on Schedule 2.21 of the SRC Disclosure
-------------
Schedule, there are no liabilities or obligations of SRC of any material nature
whatsoever, due or to become due, accrued, absolute, contingent or
17
otherwise, except for current liabilities incurred in the ordinary course of
business and consistent with past practice.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to each of SRC and EAC, as of
the date hereof, as follows (for purposes of this Article III and the
corresponding Disclosure Schedules, all references to the Company shall include
the Company Subsidiaries):
3.1 Corporate Organization.
----------------------
(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware.
(b) The Company has all requisite governmental authorizations,
certificates, licenses, consents and approvals required to carry on its business
as presently conducted, except where the failure to possess such authorizations,
certificates, licenses, consents and approvals (either individually or in the
aggregate) would not have a Company Material Adverse Effect (as defined below).
The Company is duly qualified to do business as a foreign corporation and is in
good standing in each jurisdiction where the character of the property owned or
leased by it or the nature of the activities conducted by it makes such
qualification necessary, except where the failure to be so qualified and in good
standing (either in one jurisdiction or in the aggregate) would not have a
Company Material Adverse Effect. For purposes of this Agreement, "Company
-------
Material Adverse Effect" shall mean with respect to Company, any fact, event,
-----------------------
change, circumstance or effect that is materially adverse to the business,
financial condition, operations, results of operations or assets of the Company
and its Subsidiaries, taken as a whole.
3.2 Authorization of Agreement. The Company has all requisite
--------------------------
corporate power and authority to execute and deliver this Agreement and each
instrument required hereby to be executed and delivered by it at the Closing, to
perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. The execution and delivery by the
Company of this Agreement and each instrument required hereby to be executed and
delivered by it at the Closing and the performance of its obligations hereunder
and thereunder have been duly and validly authorized by the Board of Directors
of the Company. Except for filing of the Certificate of Merger, no other
corporate proceedings on the part of the Company are necessary to authorize the
consummation of the transactions contemplated hereby. This Agreement has been
duly executed and delivered by the Company and, assuming due authorization,
execution and delivery hereof by SRC and EAC, constitutes a legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms.
3.3 Capitalization. The authorized capital stock of the Company
--------------
consists of (i) 1,700,000 shares of Company Common Stock, of which 609,554
shares are issued and outstanding, as of the date of this Agreement, and none of
which are issued and held as treasury shares and (ii)
18
900,000 shares of Preferred Stock, par value $0.001 per share. Of the shares of
Preferred Stock, (i) 200,000 constitute Company Series A Preferred Shares, of
which 118,178 are issued and outstanding as of the date of this Agreement, (ii)
416,840 constitute Company Series B Preferred Shares, of which 75,082 are issued
and outstanding as of the date of this Agreement, and (iii) 283,160 are
undesignated and have not been issued. Except as set forth on Schedule 3.3 of
------------
the Company Disclosure Schedule, there are not any outstanding or authorized
subscriptions, options, warrants, calls, rights, commitments or any other
agreements of any character obligating Company to issue any additional shares of
capital stock of the Company or any other securities convertible into or
evidencing the right to subscribe for any such shares. All of the outstanding
shares of Company Common Stock are duly authorized, validly issued, fully paid
and nonassessable and not subject to preemptive rights.
3.4 Company Subsidiaries. Schedule 3.4 of the Company Disclosure
-------------------- ------------
Schedule sets forth a list of all subsidiaries of the Company (individually, a
"Company Subsidiary", and collectively, the "Company Subsidiaries") and their
------------------ --------------------
states of incorporation. All of the issued and outstanding shares of capital
stock of each Company Subsidiary are duly and validly issued, fully paid and
nonassessable and owned, directly or indirectly, by the Company, free and clear
of any Liens.
3.5 Non-Contravention; Consents.
---------------------------
(a) Neither the execution or delivery of this Agreement nor the
consummation of the transactions contemplated hereby does or will:
(i) violate, conflict with, or constitute a default under, the
Certificate of Incorporation, as amended, or Bylaws, as amended, of the Company
or any Company Subsidiary; or
(ii) assuming that all consents, approvals, orders or
authorizations contemplated by subsection (b) below have been obtained and all
filings described therein have been made, (A) violate any statute or law or any
rule, regulation, order, writ, injunction, judgment or decree of any court or
governmental authority to which the Company or any Company Subsidiary or any of
their respective assets or properties are subject, which violation, individually
or in the aggregate, has or would reasonable be expected to have a Company
Material Adverse Effect, or (B) except as disclosed on Schedule 3.5 of the
------------
Company Disclosure Schedule, result in a violation or breach of, or constitute
(with or without notice or lapse of time or both) a default under, or give rise
to any right of termination, acceleration or modification of, any note, bond,
mortgage, indenture, deed of trust, license, lease or other agreement,
instrument or obligation to which Company or any Company Subsidiary is a party
or by which their or any of their assets or properties may be bound, which
default, breach or other action individually or in the aggregate has or would
reasonably be expected to have a Company Material Adverse Effect.
(b) Except for such filings, permits, authorizations, consents and
approvals as may be required under, and other applicable requirements of, the
Securities Act, the Exchange Act and the Blue Sky laws, and except for the
filing and recordation of a Certificate of Merger as required by the DGCL, there
is no other consent, approval, order or authorization of, or filing
19
with, or any permit from, or any notice to, any court, arbitral tribunal,
administrative agency or commission or other governmental, regulatory or
administrative authority required to be obtained by the Company in connection
with the execution of this Agreement and the consummation of the transactions
contemplated hereby, the failure of which to obtain would, as may reasonably be
foreseen, individually or in the aggregate, (i) have a Company Material Adverse
Effect, or (ii) preclude, impair or materially delay consummation of the
transactions contemplated by this Agreement.
3.6 Financial Information. The Company has previously furnished to
---------------------
SRC true and complete copies of the unaudited balance sheet of the Company and
its Subsidiaries for the fiscal years ended as of December 31, 2000 and the
related results of operations, changes in shareholders' equity and cash flows of
Company and its Subsidiaries for the period then ended (the audited balance
sheet of the Company and its Subsidiaries for the fiscal year ended as of
December 31, 2000, the "Company Balance Sheet"). All such financial statements
---------------------
referred to in the previous sentence (the "Financial Statements") have been
--------------------
prepared from, and are in accordance with, the books and records of Company and,
except as indicated on Schedule 3.6 of the Company Disclosure Schedule, (i) have
------------
been prepared in accordance with GAAP (except as may be otherwise indicated
therein) and (ii) fairly present the consolidated financial position of Company
and its Subsidiaries as of the date thereof and the consolidated results of
operations, changes in shareholders' equity and cash flows of Company and its
Subsidiaries for the periods then ended, except that such unaudited financial
statements are subject to normal and recurring year-end adjustments. The
Financial Statements reflect reserves appropriate and adequate for all known
material liabilities and reasonably anticipated losses and disclosure of all
contingent liabilities as required by generally accepted accounting principles.
The Company has disclosed to SRC all material facts relating to the preparation
of the Financial Statements, including the basis of accounting for affiliated
transactions, and has made (or upon request by SRC will make) available to SRC
any worksheets, notes and schedules related to such financial statements.
3.7 Absence of Undisclosed Liabilities. Except as and to the extent
----------------------------------
of the amounts specifically reflected on or reserved against in the Company
Balance Sheet or as set forth on Schedule 3.7 of the Company Disclosure
------------
Schedule, there are no liabilities or obligations of the Company of any material
nature whatsoever, due or to become due, accrued, absolute, contingent or
otherwise, except for current liabilities incurred in the ordinary course of
business and consistent with past practice.
3.8 No Material Adverse Changes. Since December 31, 2000 and on or
---------------------------
prior to the date hereof, except as set forth on Schedule 3.8 of the Company
------------
Disclosure Schedule, the Company has conducted its business only in the ordinary
and usual course and in a manner consistent with past practice and, since such
date, there has been no change, event, loss or occurrence in the business of
Company (including the incurrence of any liability of any nature, whether
accrued, contingent or otherwise) that has had or would reasonably be expected
to have a Company Material Adverse Effect.
3.9 Legal Proceedings. Except as set forth on Schedule 3.9 of the
----------------- ------------
Company Disclosure Schedule, as of the date this Agreement, the Company has no
Knowledge of any material pending or material threatened litigation,
governmental investigation or other proceeding against the
20
Company or the transactions contemplated by this Agreement for which the Company
is uninsured or which, if resolved adversely to the Company, would, as may
reasonably be foreseen, individually or in the aggregate, have a Company
Material Adverse Effect.
3.10 Commissions and Fees. Except as set forth on Schedule 3.10, there
-------------------- -------------
are no claims for brokerage commissions, investment bankers' fees or finder's
fees in connection with the transaction contemplated by this Agreement
attributable to any agreement or commitment made by or on behalf of the Company.
3.11 Information Statement; Proxy Statement. The information supplied
--------------------------------------
by the Company for inclusion in the Information Statement shall not, at the time
it is distributed to stockholders of the Company, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The information
supplied by the Company for inclusion in the Proxy Statement (as defined in
Section 5.1 herein) shall not, on the date the Proxy Statement is first mailed
to the stockholders of SRC, at the time of the SRC Stockholders' Meeting and at
the Effective Time, contain any statement which, at such time, is false or
misleading with respect to any material fact, or omit to state any material fact
necessary in order to make the statements made therein, in light of the
circumstances under which they are made, not false or misleading or omit to
state any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for the SRC
Stockholders' Meeting which has become materially false or misleading. If at any
time prior to the Effective Time any event relating to the Company or any of its
affiliates, officers or directors is discovered by the Company which should be
set forth in an amendment to the Information Statement or an amendment or
supplement to the Proxy Statement, the Company shall promptly inform SRC.
3.12 Compliance with Laws.
--------------------
(a) Each of Company and its Subsidiaries has all permits, licenses,
variances, exemptions, orders, registrations and approvals of all governmental
entities (collectively, the "Company Permits") necessary to conduct the business
---------------
of the Company and its Subsidiaries as currently conducted, respectively; such
Company Permits are in full force and effect; and all applications for renewal
necessary to maintain any Company Permit in effect have been filed, except, in
each case, where the failure to own, maintain or renew such Company Permits
would not, individually or in the aggregate, have a Company Material Adverse
Effect. No proceeding is pending, or to the Knowledge of the Company, threatened
to revoke or limit any Company Permit.
(b) Neither the Company nor any of its Subsidiaries is in violation
of any applicable law, ordinance or regulation or any order, judgment,
injunction, decree or other requirement of any court, arbitrator or governmental
or regulatory body, except for violations that would not, in the aggregate, have
a Company Material Adverse Effect.
(c) To the Knowledge of the Company, there is no investigation or
review pending by any governmental body or authority with respect to the
Company.
21
3.13 Subsequent Events. Except as set forth on Schedule 3.13 of the
----------------- -------------
Company Disclosure Schedule the Company has not, since December 31, 2000:
(a) discharged or satisfied any material lien or encumbrance, or paid
or satisfied any material obligation or liability (absolute, accrued, contingent
or otherwise) other than (i) liabilities shown or reflected on the Company
Balance Sheet or (ii) liabilities incurred since the date of the Company Balance
Sheet in the ordinary course of business, which discharge or satisfaction would
not, as may reasonably be foreseen, individually or in the aggregate, have a
Company Material Adverse Effect;
(b) increased or established any reserve for taxes or any other
liability on its books or otherwise provided therefor which would, as may
reasonably be foreseen, individually or in the aggregate, have a Company
Material Adverse Effect, except as may have been required due to income or
operations of the Company since the date of the Company Balance Sheet;
(c) mortgaged, pledged or subjected to any lien, charge or other
encumbrance any of the assets, tangible or intangible, which assets are material
to the consolidated business or financial condition of the Company;
(d) sold or transferred any of the assets material to the
consolidated business of the Company, canceled any material debts or claims or
waived any material rights, except in the ordinary course of business;
(e) except for this Agreement and any other agreement executed and
delivered pursuant to this Agreement, entered into any material transaction
other than in the ordinary course of business or permitted under this Agreement;
or
(f) issued any stock, bonds or other securities, other than stock
options granted to employees, directors or consultants of the Company or
warrants granted to third parties or shares of common stock issuable pursuant
thereto or pursuant to any other contract or agreement outstanding as of the
date hereof, all of which are disclosed on Schedule 3.3 of the Company
------------
Disclosure Schedule.
3.14 Tax Returns. The Company has filed all tax returns required to be
-----------
filed by it or requests for extensions to file such returns or reports have been
timely filed and granted and have not expired, except to the extent that such
failures to file do not, as may reasonably be foreseen, individually or in the
aggregate, have a Company Material Adverse Effect. Except as disclosed on
Schedule 3.14 of the Company Disclosure Schedule, the Company has made all
-------------
payments shown as due on such returns. Except as disclosed on Schedule 3.14 of
-------------
the Company Disclosure Schedule, the Company has not been notified that any tax
returns of the Company are currently under audit by the Internal Revenue Service
or any state or local tax agency. Except as set forth on Schedule 3.14 of the
-------------
Company Disclosure Schedule, no agreements have been made by the Company for the
extension of time or the waiver of the statute of limitations for the assessment
or payment of any federal, state or local taxes.
22
3.15 Employee Benefit Plans; Employment Matters.
------------------------------------------
(a) Except as set forth on Schedule 3.15(a) of the Company Disclosure
----------------
Schedule, the Company has neither established nor maintains nor is obligated to
make contributions to or under or otherwise participate in (i) any bonus or
other type of incentive compensation plan, program, agreement, policy,
commitment, contract or arrangement (whether or not set forth in a written
document), (ii) any pension, profit-sharing, retirement or other plan, program
or arrangement providing for deferred compensation, or (iii) any other employee
benefit plan, fund or program described in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"). Except as
-----
disclosed on Schedule 3.15(a) of the Company Disclosure Schedule, all such plans
----------------
listed on Schedule 3.15(a) of the Company Disclosure Schedule (individually, a
----------------
"Company Plan" and collectively, the "Company Plans") have been operated and
------------ -------------
administered in all material respects in accordance with, as applicable, 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. Except as disclosed on Schedule
--------
3.15(a) of the Company Disclosure Schedule, no act or failure to act by the
-------
Company has resulted in a "prohibited transaction" (as defined in ERISA) with
respect to the Company Plans that is not subject to a statutory or regulatory
exception. No "reportable event" (as defined in ERISA) which requires the filing
of a report thereof with the Pension Benefit Guaranty Corporation has occurred
with respect to any of the Company Plans which is subject to Title IV of ERISA.
The Company has not previously made, is not currently making, and is not
obligated in any way to make, any contributions to any multi-employer plan
within the meaning of the Multi-Employer Pension Plan Amendments Act of 1980, as
amended.
(b) Except as set forth on Schedule 3.15(b) of the Company Disclosure
----------------
Schedule, the Company is not a party to any oral or written union, guild or
collective bargaining agreement which agreement covers employees in the United
States (nor is it aware of any union organizing activity currently being
conducted with respect to any of its employees).
3.16 Intellectual Property.
---------------------
(a) Except as set forth in Schedule 3.16(a) of the Company Disclosure
----------------
Schedule, the Company owns, or is licensed or otherwise entitled to exercise all
rights under or with respect to all Intellectual Property Rights employed in the
operation of the Company's business as currently conducted. Schedule 3.16 of the
-------------
Company Disclosure Schedule lists all Company registered copyrights, registered
trademarks, trade names and service marks, and any applications therefor (the
"Company Intellectual Property Rights"). Schedule 3.16(a) lists all material
------------------------------------ ----------------
licenses, sublicenses and other agreements (each, a "Company Material IP
-------------------
Agreement") as to which the Company is a party and pursuant to which the Company
---------
is authorized to use Third Party Intellectual Property Rights.
(b) The Company is not, and as a result of the execution and delivery
of this Agreement or the performance of its obligations hereunder will not be,
in violation of any Company Material IP Agreement. Except as disclosed in
Schedule 3.16(b) and except for those Intellectual Property Rights which are in
----------------
the public domain, the Company is the sole and
23
exclusive owner or licensee of, with all right, title and interest in and to
(free and clear of any liens or encumbrances), its Intellectual Property Rights,
and has sole and exclusive rights in respect thereof, and is not contractually
obligated to pay any compensation to any third party in connection therewith.
(c) Except as disclosed in Schedule 3.16(c), no claims with respect
----------------
to the Company Intellectual Property Rights have been asserted against the
Company and the Company does not know of any grounds for any claims (i) to the
effect that any business of the Company as currently conducted infringes on or
misappropriates any patents, copyrights, trademarks, trade names or service
marks in which a third party has any rights, (ii) challenging the ownership,
validity or effectiveness of any of the Company Intellectual Property Rights.
Except as set forth on Schedule 3.16(c), no Company Intellectual Property Right
----------------
is subject to any lien, encumbrance or other secured interest.
3.17 Properties. Schedule 3.17 of the Company Disclosure Schedule sets
---------- -------------
forth a list of all material real property owned by the Company. Schedule 3.17
-------------
of the Company Disclosure Schedule sets forth by office location all material
real property used or occupied by the Company that is held under lease or
sublease by the Company (the "Company Leases"). Except for the properties
--------------
subject to the Company Leases and as set forth on Schedule 3.18 of the Company
-------------
Disclosure Schedule, the Company has good title, free and clear of all liens,
mortgages, claims, restrictions, pledges, or other claims or encumbrances to all
their material tangible properties and tangible assets reflected on the Company
Balance Sheet or acquired since the date thereof, except for (i) liens for
current taxes not yet due and payable, (ii) assets disposed of since the date of
the Company Balance Sheet in the ordinary course of business, (iii) liens
imposed by law and incurred in the ordinary course of business for obligations
not yet due to carriers, warehousemen, laborers and materialmen, (iv) liens in
respect of pledges or deposits under workers' compensation laws, and (v) liens
and encumbrances which do not affect marketability of title or the use being
made of such properties or immaterial title defects, all of which, individually
and in the aggregate, do not have a Company Material Adverse Effect. The Company
Leases are in full force and effect, and the Company holds a valid existing
leasehold interest under each of the Company Leases on the terms set forth in
such Company Leases, the Company has delivered to SRC complete and accurate
copies of each of the Company Leases, and none of the Company Leases has been
modified in any material respect, except to the extent such modifications are
disclosed by the copies delivered to SRC or which modifications individually or
in the aggregate, do not have a Company Material Adverse Effect.
3.18 Environmental Matters.
---------------------
(a) Except as set forth on Schedule 3.18(a), neither the Company nor
----------------
any Company Subsidiary (i) has received written notice from any person,
including but not limited to, a governmental entity, alleging that the Company
or any Company Subsidiary is in violation of any applicable material
Environmental Law or otherwise may be liable under any applicable Environmental
Law, including but not limited to, liability in connection with a Cleanup (as
hereinafter defined), which violation or liability is unresolved or which is
reasonably likely to result in a Company Material Adverse Effect, (ii) knows of
any event or circumstance that exists which (A) may constitute or result in a
violation by the Company of, or the failure on the part of
24
the Company to comply with such Environmental Laws, or (B) may give rise to any
obligation on the part of the Company to undertake, or to bear all or any
portion of the cost of any Cleanup which, in the case of clauses (A) or (B),
could have a Company Material Adverse Effect.
(b) Except as set forth on Schedule 3.18(b), to the Knowledge of the
----------------
Company, there have been no releases, spills or discharges of Regulated
Materials on or underneath any location which is owned, leased or otherwise
operated by the Company (the "Company Properties"), which release, spills or
------------------
discharges could have a Company Material Adverse Effect. There are no pending
or, to the Knowledge of the Company, threatened, claims, liens, encumbrances or
other restrictions of any nature, resulting from Environmental Laws, with
respect to or affecting any of the Company Properties.
3.19 Vote Required. The following stockholder vote is the only vote
-------------
required of the holders of any class or series of Company capital stock
necessary to approve this Agreement, the Merger and the transactions
contemplated hereby: the affirmative vote of a majority of the outstanding
Company Shares entitled to vote thereon and the affirmative vote of a majority
of the Company Series B Preferred Shares entitled to vote thereon.
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
4.1 Conduct of Business Pending the Merger.
--------------------------------------
(a) By SRC. Except as contemplated by this Agreement or as set forth
------
on Schedule 4.1(a) of the SRC Disclosure Schedule, during the period from the
---------------
date of this Agreement to the Effective Time, SRC and the SRC Subsidiaries shall
in all material respects conduct its operations according to its ordinary and
usual course of business and consistent in all material respects with past
practice and SRC shall use commercially reasonable efforts to preserve intact in
all material respects the business organization of SRC, keep available the
services of its current officers, and preserve in all material respects the
goodwill of those having advantageous business relationships with it and the SRC
Subsidiaries. Without limiting the generality of the foregoing, and except as
contemplated by this Agreement, as set forth in the SRC Disclosure Schedule or
as described in Schedule 4.1(a) of the SRC Disclosure Schedule, prior to the
---------------
Effective Time, neither SRC nor any of the SRC Subsidiaries, as the case may be,
will, without the prior written consent of the Company:
(i) issue, sell or pledge, or authorize or propose the
issuance, sale or pledge of, additional shares of its capital stock or
securities convertible into any such shares, or any rights, warrants or options
to acquire any such shares or other convertible securities, other than shares of
SRC Common Stock issuable upon the exercise of options or warrants issued and
outstanding on the date hereof;
(ii) split, combine, subdivide, reclassify or redeem, or
purchase or otherwise acquire, or propose to do any of the foregoing with
respect to, any of its outstanding securities;
25
(iii) declare or pay any dividend or distribution on the SRC
Common Stock;
(iv) subject to the fiduciary duties of the Board of Directors
of SRC and except described in Schedule 4.1(a) of the SRC Disclosure Schedule,
---------------
purchase or otherwise acquire, sell or otherwise dispose of or encumber (or
enter into any agreement to so purchase or otherwise acquire, sell or otherwise
dispose of or encumber) material properties or material assets except in the
ordinary course of business;
(v) subject to the rights of the stockholders of SRC under
applicable law, adopt any amendments to the Certificate of Incorporation or
Bylaws of SRC except the Certificate of Amendment;
(vi) (A) increase the compensation of any of its directors,
officers or key employees, except pursuant to the terms of agreements or plans
currently in effect, in amounts consistent with past practice; (B) pay or agree
to pay any pension, retirement allowance or other employee benefit not required
or permitted by any existing plan, agreement or arrangement to any director,
officers or key employee consistent with past practice; (C) commit itself (other
than pursuant to any collective bargaining agreement) to any additional pension,
profit-sharing, bonus, extra compensation, incentive, deferred compensation,
stock purchaser, stock option, stock appreciation right, group insurance,
severance pay, retirement or other employee benefit plan, agreement or
arrangement, or to any employment or consulting agreement with or for the
benefit of any director, officer or key employee, whether past or present
consistent with past practice; or (D) except as required by applicable law or as
reported on Schedule 4.1(a)(vi) of the SRC Disclosure Schedule, amend in any
-------------------
material respect any such material plan, agreement or arrangement; or
(vii) except in the ordinary course of business and consistent
with past practice, (A) incur any material amount of long-term indebtedness for
borrowed money or issue any material amount of debt securities or assume,
guarantee or endorse the obligations of any other person except for obligations
of wholly-owned SRC Subsidiaries; (B) make any material loans, advances or
capital contributions to, or investments in, any other person (other than to
wholly-owned SRC Subsidiaries or customary loans or advances to employees in
amounts not material to the maker of such loan or advance); (C) pledge or
otherwise encumber shares of capital stock of SRC or a material portion of the
capital stock of any SRC Subsidiaries, or (D) mortgage or pledge any of its
material assets, tangible or intangible, or create or suffer to exist any
material lien thereupon.
(b) By the Company. Except as contemplated by this Agreement or as
--------------
set forth on Schedule 4.1 of the Company Disclosure Schedule, during the period
------------
from the date of this Agreement to the Effective Time, the Company and the
Company Subsidiaries shall in all material respects conduct its operations
according to its ordinary and usual course of business and consistent in all
material respects with past practice and the Company shall use commercially
reasonable efforts to preserve intact in all material respects the business
organization of the Company, keep available the services of its current
officers, and preserve in all material respects the goodwill of those having
advantageous business relationships with it and the Company Subsidiaries.
Without limiting the generality of the foregoing, and except as
26
contemplated by this Agreement, as set forth in the Company Disclosure Schedule
or as disclosed in writing to the Company on or prior to the date hereof, prior
to the Effective Time, neither the Company nor any of the Company Subsidiaries,
as the case may be, will, without the prior written consent of Company:
(i) issue, sell or pledge, or authorize or propose the
issuance, sale or pledge of, additional shares of its capital stock or
securities convertible into any such shares, or any rights, warrants or options
to acquire any such shares or other convertible securities, other than shares of
Company Common Stock issuable upon the exercise of options or warrants issued
and outstanding on the date hereof;
(ii) split, combine, subdivide, reclassify or redeem, or
purchase or otherwise acquire, or propose to do any of the foregoing with
respect to, any of its outstanding securities;
(iii) declare or pay any dividend or distribution on the Company
Common Stock;
(iv) subject to the fiduciary duties of the Board of Directors
of the Company and except pursuant to agreements or arrangements in effect on
the date hereof, purchase or otherwise acquire, sell or otherwise dispose of or
encumber (or enter into any agreement to so purchase or otherwise acquire, sell
or otherwise dispose of or encumber) material properties or material assets
except in the ordinary course of business;
(v) subject to the rights of the stockholders of the Company
under applicable law, adopt any amendments to the Certificate of Incorporation
or Bylaws of the Company;
(vi) (A) increase the compensation of any of its directors,
officers or key employees, except pursuant to the terms of agreements or plans
currently in effect, in amounts consistent with past practice; (B) pay or agree
to pay any pension, retirement allowance or other employee benefit not required
or permitted by any existing plan, agreement or arrangement to any director,
officers or key employee in amounts consistent with past practice; (C) commit
itself (other than pursuant to any collective bargaining agreement) to any
additional pension, profit-sharing, bonus, extra compensation, incentive,
deferred compensation, stock purchaser, stock option, stock appreciation right,
group insurance, severance pay, retirement or other employee benefit plan,
agreement or arrangement, or to any employment or consulting agreement with or
for the benefit of any director, officer or key employee, whether past or
present in amounts consistent with past practice; or (D) except as required by
applicable law or as reported on Schedule 4.1 of the Company Disclosure
------------
Schedule, amend in any material respect any such material plan, agreement or
arrangement; or
(vii) except in the ordinary course of business and consistent
with past practice, (A) incur any material amount of long-term indebtedness for
borrowed money or issue any material amount of debt securities or assume,
guarantee or endorse the obligations of any other person except for obligations
of wholly-owned Company Subsidiaries; (B) make any material loans, advances or
capital contributions to, or investments in, any other person (other than to
wholly-owned Company Subsidiaries or customary loans or advances to employees in
amounts
27
not material to the maker of such loan or advance); (C) pledge or otherwise
encumber shares of capital stock of the Company or a material portion of the
capital stock of any Company Subsidiaries, or (D) mortgage or pledge any of its
material assets, tangible or intangible, or create or suffer to exist any
material lien thereupon.
4.2 No Solicitation; SRC Acquisition Proposals. From the date hereof
------------------------------------------
until the earlier of the termination of this Agreement or the Effective Time,
SRC shall not, and will direct each officer, director, representative and agent
of SRC not to, directly or indirectly, encourage, solicit, participate in or
initiate discussions or negotiations with or provide any information to any
corporation, partnership, person or other entity or group (other than the
Company or an affiliate or an associate of the Company) concerning any offers or
proposals for any merger, sale of all or substantially all of the assets of, or
tender offer for SRC Common Stock or similar transactions involving SRC or any
SRC Subsidiaries (a "SRC Acquisition Proposal"). Notwithstanding the foregoing,
------------------------
SRC may, (i) directly or indirectly, furnish information and access, in response
to unsolicited requests therefor to any corporation, partnership, person or
other entity or group, pursuant to appropriate confidentiality agreements, and
may participate in discussions and negotiate with such corporation, partnership,
person or other entity or group concerning any SRC Acquisition Proposal if the
Board of Directors of SRC determines in its good faith judgment in the exercise
of its fiduciary duties, after consultation with legal counsel and its financial
advisors, that such action is appropriate in furtherance of the best interest of
its stockholders and (ii) to the extent applicable, comply with Rule 14e-2 or
14d-9 promulgated under the Exchange Act with regard to an SRC Acquisition
Proposal. SRC shall promptly notify the Company if it shall, on or after the
date hereof, have entered into a confidentiality agreement with any third party
in response to any unsolicited request for information and access in connection
with a possible SRC Acquisition Proposal involving such party. To the fullest
extent permissible, SRC shall promptly and fully advise the Company of the terms
of the SRC Acquisition Proposal.
4.3 No Solicitation; Company Acquisition Proposals. From the date
----------------------------------------------
hereof until the earlier of the termination of this Agreement or the Effective
Time, the Company shall not, and will direct each officer, director,
representative and agent of the Company not to, directly or indirectly,
encourage, solicit, participate in or initiate discussions or negotiations with
or provide any information to any corporation, partnership, person or other
entity or group (other than SRC or an affiliate or an associate of SRC)
concerning any offers or proposals for any merger, sale of all or substantially
all of the assets of, or tender offer for Company Common Stock or similar
transactions involving the Company or any Company Subsidiaries (a "Company
-------
Acquisition Proposal"). Notwithstanding the foregoing, the Company may, directly
--------------------
or indirectly, furnish information and access, in response to unsolicited
requests therefor to any corporation, partnership, person or other entity or
group, pursuant to appropriate confidentiality agreements, and may participate
in discussions and negotiate with such corporation, partnership, person or other
entity or group concerning any Company Acquisition Proposal if the Board of
Directors of the Company determines in its good faith judgment in the exercise
of its fiduciary duties, after consultation with legal counsel and its financial
advisors, that such action is appropriate in furtherance of the best interest of
its stockholders. The Company shall promptly notify SRC if it shall, on or after
the date hereof, have entered into a confidentiality agreement with any third
party in response to any unsolicited request for information and access in
connection with a possible Company Acquisition Proposal involving such party. To
the fullest extent permissible, the Company shall promptly and fully advise SRC
of the terms of the Company Acquisition Proposal.
28
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Proxy Statement; Information Statement.
--------------------------------------
(a) As promptly as practicable following the date of this Agreement,
SRC shall prepare an Information Statement (the "Information Statement") and a
---------------------
proxy statement, which shall be filed with the SEC (such proxy statement as
amended or supplemented from time to time being referred to herein as the "Proxy
-----
Statement"). SRC shall obtain and furnish the information required to be
---------
included in the Information Statement and, after consultation with the Company
respond promptly to any comments made by the SEC with respect to the Proxy
Statement (which comments shall promptly be furnished to the Company), if any,
and cause the Proxy Statement, including any amendments or supplements thereto,
to be mailed to the stockholders of SRC and the Information Statement, including
any amendments or supplements thereto, to be mailed to the stockholders of the
Company. SRC shall also take any action required to be taken under Blue Sky or
other securities Laws in connection with the issuance of Parent Common Stock in
the Merger.
(b) Except as set forth below, SRC, acting through its Board of
Directors, shall in accordance with applicable law, its Certificate of
Incorporation and Bylaws duly call, give notice of, convene and hold a meeting
(the "SRC Stockholders Meeting") of its stockholders as soon as practicable
------------------------
after the date hereof to consider and vote upon an increase in the authorized
capital stock of SRC. Notwithstanding the immediately preceding sentence, in the
event that prior to the giving of notice of the SRC Stockholder Meeting the
Board of Directors receives a SRC Acquisition Proposal, the Board of Directors
may determine not to call the SRC Stockholders Meeting. The Company (i) acting
through its Board of Directors, shall in accordance with applicable law, its
Certificate of Incorporation and Bylaws duly call, give notice of, convene and
hold an annual or special meeting (the "Company Stockholders Meeting") of its
----------------------------
stockholders as soon as practicable after the date hereof to consider and vote
upon approval of this Agreement and the transactions contemplated hereby; or
(ii) in accordance with applicable law, its Certificate of Incorporation and
By-Laws shall take action by written consent of its stockholders holding the
requisite number of shares necessary to take such action to approve this
Agreement and the transactions contemplated hereby (the "Stockholders Consent").
(c) Subject to the provisions of this Section 5.1(c), SRC will
include in the Proxy Statement to be sent to holders of SRC Common Stock with
respect to the SRC Stockholders Meeting the recommendation of its Board of
Directors that its stockholders vote in favor of an increase in the authorized
capital stock of SRC. Notwithstanding the immediately preceding sentence, in the
event that prior to the mailing of the Proxy Statement the Board of Directors
receives a SRC Acquisition Proposal, the Board of Directors may withdraw or
modify its recommendation of this Agreement and the transactions contemplated
hereby.
(d) Subject to the limitations set forth in Section 5.1(b), SRC will
use its commercially reasonable efforts (i) to obtain and furnish the
information required to be included
29
by it in the Proxy Statement, (ii) to file the Proxy Statement with the SEC,
(iii) after consultation with the other parties hereto, respond as promptly as
is reasonably practicable to any comments made by the SEC with respect to the
Proxy Statement and any preliminary version thereof, and (iv) pending clearance
of the Proxy Statement by the SEC, cause the Proxy Statement to be mailed to its
stockholders at the earliest practicable time following the date of this
Agreement. The information provided and to be provided by SRC, the Company and
EAC for use in the Proxy Statement shall, as of the date of mailing of the Proxy
Statement and as of the date of the SRC Stockholders Meeting, not include any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading.
(e) The Company shall promptly furnish to SRC all information with
respect to the Company and the Company Subsidiaries as may be reasonably
requested in connection with the preparation of the Proxy Statement and the
Information Statement. The Company and the Company Subsidiaries shall promptly
supplement, update and correct any information provided by it for use in the
Proxy Statement or the Information Statement if and to the extent that it is or
shall have become incomplete, false or misleading.
5.2 Meeting of Company Stockholders. The Company shall promptly after
-------------------------------
the date hereof take all action necessary in accordance with the DGCL and its
Charter and By-laws to (i) obtain the Stockholders Consent; or (ii) duly call,
give notice of and (unless SRC requests otherwise) hold the Company
Stockholders' Meeting as soon as practicable following the date hereof and shall
consult with SRC in connection therewith. The Company shall solicit from
Stockholders of the Company proxies in favor of the Merger and shall take all
other action necessary or advisable to secure the vote or consent of
Stockholders required by the DGCL to authorize the Merger.
5.3 Exemption from State Anti-Takeover Laws. The Company shall take
---------------------------------------
all commercially reasonable steps necessary to exempt the Company and the Merger
from the requirements of any state anti-takeover statute or other similar state
law which would prevent or impede the consummation of the transactions
contemplated hereby, by action of the Company's Board of Directors or otherwise.
SRC shall take all commercially reasonable steps necessary, either by action of
SRC's Board of Directors, EAC's Board of Directors, or otherwise, to exempt SRC,
EAC, and the Merger from the requirements of any state anti-takeover statute or
other similar state law which would prevent or impede the consummation of the
transactions contemplated hereby.
5.4 Standstill. In the event of the termination of this Agreement by
----------
any party, neither the Company nor its subsidiaries, employees, officers or
affiliates shall, for a period of eighteen months from the date of this
Agreement, directly or indirectly (unless and until the Company shall have
received the prior written invitation or approval of a majority of the Board of
Directors of SRC) (i) solicit, seek or offer to effect, or effect, (ii)
negotiate with or provide any information to the Board of Directors of SRC, any
director or officer of SRC, any stockholder of SRC, any employee or union or
other labor organization representing employees of SRC or any other person with
respect to, (iii) make any statement or proposal, whether written or oral,
either alone or in concert with others, to the Board of Directors of SRC, any
director or officer of SRC or any stockholder of SRC, any union or other labor
organization representing employees of SRC or any other person with respect to,
or (iv) make any public announcement (except as
30
required by law) or proposal or offer whatsoever (including, but not limited to,
any "solicitation" of "proxies" as such terms are defined or used in Regulation
14A of the Exchange Act) with respect to:
(a) any form of business combination or transaction involving SRC or
any affiliate thereof, including, without limitation, a merger, tender or
exchange offer or liquidation of SRC's assets;
(b) any form of restructuring, recapitalization or similar
transaction with respect to SRC or any affiliate thereof;
(c) any purchase of any securities or assets, or rights or options to
acquire any securities or assets (through purchase, exchange, conversion or
otherwise), of SRC or any affiliate thereof;
(d) any proposal to seek representation on the Board of Directors of
SRC or otherwise to seek to control or influence the management, Board of
Directors or policies of SRC or any affiliate thereof;
(e) any request or proposal to waive, terminate or amend the
provisions of this Section 5.4; or
(f) any proposal or other statement inconsistent with the terms of
this Section 5.4 or instigate, encourage, join, act in concert with or assist
(including, but not limited to, providing or assisting in any way in the
obtaining of financing for or acting as a joint bidder or co-bidder for SRC) any
third party to do any of the foregoing.
5.5 Public Disclosures. SRC and the Company shall consult with and
------------------
obtain the approval of the other party before issuing any press release or other
public announcement with respect to the Merger or this Agreement and shall not
issue any such press release prior to such consultation and approval, except as
may be required by applicable Law or any listing agreement related to the
trading of the shares of either party on any national securities exchange or
national automated quotation system, in which case the party proposing to issue
such press release or make such public announcement shall use reasonable efforts
to consult in good faith with the other party before issuing any such press
release or making any such public announcement.
5.6 Indemnification.
---------------
(a) Subject to the occurrence of the Effective Date, until the six
year anniversary date of the Effective Date, the parties agree that all rights
to indemnification or exculpation now existing in favor of each present and
former employee (including any employee who serves or served in a fiduciary
capacity of any Plans), agent, director or officer of SRC and the SRC
Subsidiaries (the "Indemnified Parties") as provided in the respective charters
-------------------
or Bylaws or otherwise in effect as of the date hereof shall survive the
Effective Date.
(b) In the event SRC or any SRC Subsidiary or any of its successors
or assigns (i) consolidates with or merges into any other person and shall not
be the continuing or surviving
31
corporation or entity of such consolidation or merger, or (ii) transfers or
conveys all or substantially all of its properties and assets to any person,
then, and in each such case, to the extent necessary, proper provision shall be
made so that the successors and assigns of SRC or such SRC Subsidiary assume the
obligations set forth in this Section 5.6.
(c) The provisions of this Section 5.6 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party and his or her
heirs and representatives.
5.7 Resignation of SRC Directors and Officers. On or prior to the
-----------------------------------------
Closing Date, SRC shall deliver to the Company evidence satisfactory to the
Company of the resignation of the Directors and Officers of SRC (other than
those set forth on Schedule 1.5), such resignations to be effective at the
------------
Effective Time.
5.8 Company Stock Options.
---------------------
(a) At the Effective Time, each outstanding option to purchase stock
of the Company (a "Company Stock Option") under the Company Option Plan, other
--------------------
than any Company Stock Option that by its terms otherwise expires by virtue of
the Merger, whether vested or unvested, shall, in accordance with the terms of
such Company Stock Option and such Company Option Plan, by virtue of the Merger
and without any action on the part of the holder thereof, become and represent
an option to acquire, on the same terms and conditions as were applicable under
such Company Stock Option, the same number of shares of SRC Common Stock as the
holder of such Company Stock Option would have been entitled to receive pursuant
to the Merger had such holder exercised such option in full immediately prior to
the Effective Time (rounded downward to the nearest whole number), at a price
per share (rounded upward to the nearest whole cent) equal to (i) the aggregate
exercise price for shares of Company Common Stock purchasable pursuant to such
Company Stock Option immediately prior to the Effective Time divided by (ii) the
number of full shares SRC Company Common Stock deemed purchasable pursuant to
such Company Stock Option in accordance with the foregoing.
(b) From and after the Closing, SRC shall be considered to be "the
Company" for purposes of the Company Option Plan.
(c) As soon as reasonably practicable after the Closing, SRC shall
file with the SEC and cause to become effective a Registration Statement on Form
S-8 covering the shares of SRC Common Stock subject to the options described in
Section 1.8(a).
(d) The Board of Directors of the Company (or Board committee
administering such plans) shall have approved, prior to the date of this
Agreement, and shall take, prior to or as of the Effective Time, all necessary
actions, if any, pursuant to and in accordance with the terms of the Company
Stock Plan and the instruments evidencing the Company Stock Options, to provide
for the conversion of the Company Stock Options into options to acquire SRC
Common Stock in accordance with this Section 5.8, and to provide that no consent
of the holders of the Company Stock Options is required in connection with such
conversion.
5.9 Rights Agreement. On or prior to the Effective Time, SRC will
----------------
either (a) amend its Amended and Restated Rights Agreement dated as of May 15,
1997 with American Stock
32
Transfer & Trust Company (the "Rights Agreement") so that the consummation of
----------------
the transactions contemplated hereby do not and will not, with or without the
passage of time, result in (i) the grant of any rights to any person under the
Rights Agreement or enable or require SRC's outstanding rights to be exercised,
distributed or triggered, (ii) the Company or any of its stockholders or
affiliates becoming an "Acquiring Person" (as defined in the Rights Agreement),
or (iii) a "Distribution Date" (as defined in the Rights Agreement) or (b)
redeem the rights outstanding under the Rights Agreement.
5.10 Access to Information; Confidentiality.
--------------------------------------
(a) Upon reasonable notice, each party shall (and shall cause each of
its Subsidiaries to) afford to the officers, employees, accountants, counsel and
other representatives of the other party, reasonable access, during the period
prior to the Effective Time, to all its properties, books, contracts,
commitments and records and, during such period, each party shall (and shall
cause each of its Subsidiaries to) furnish promptly to the other all information
concerning its business, properties, books, contracts, commitments, record and
personnel as such other party may reasonably request, and each party shall make
available to the other party the appropriate individuals for discussion of such
party's business, properties and personnel as the other party may reasonably
request. No investigation pursuant to this Section 5.10(a) shall affect any
representations or warranties of the parties herein or the conditions to the
obligations of the parties hereto.
(b) Subject to Section 5.5, each party shall keep all information
obtained pursuant to Section 5.10(a) confidential in accordance with the terms
of the confidentiality agreements, dated January 29, 2001 (the "Confidentiality
---------------
Agreement"), each between SRC and the Company.
---------
5.11 Notification of Certain Matters.
-------------------------------
(a) The Company shall give prompt notice to SRC, and SRC shall give
prompt notice to the Company, of the occurrence, or non-occurrence, of any event
the occurrence, or non-occurrence, of which results in any representation or
warranty contained in this Agreement to be untrue or inaccurate in any material
respect (or, in the case of any representation or warranty qualified by its
terms by materiality or Material Adverse Effect, then untrue or inaccurate in
any respect) and any failure of the Company, SRC or EAC, as the case may be, to
comply with or satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by it hereunder; provided, however,
-------- -------
that the delivery of any notice pursuant to this Section 5.11 shall not limit or
otherwise affect the remedies available hereunder to the party receiving such
notice.
(b) Each of the Company and SRC shall give prompt notice to the other
of (i) any notice or other communication from any Person alleging that the
consent of such Person is or may be required in connection with the Merger, (ii)
any notice or other communication from any Governmental Authority in connection
with the Merger, (iii) any Litigation, relating to or involving or otherwise
affecting the Company or its Subsidiaries or SRC that relates to the
consummation of the Merger; (iv) the occurrence of a default or event that, with
notice or lapse of time or both, will become a default under any contract which
is material to SRC or any material agreement of the Company; and (v) any change
that is reasonably likely to have a
33
Material Adverse Effect on the Company or SRC or is likely to delay or impede
the ability of either SRC or the Company to consummate the transactions
contemplated by this Agreement or to fulfill their respective obligations set
forth herein.
5.12 Covenants for Tax-Free Status Prior to and after the Effective
-----------------------------
Time, each Party shall use all commercially reasonable efforts to cause the
Merger to qualify as a reorganization within the meaning of Section 368(a) of
the Code, and will not take any action reasonably likely to cause the Merger not
to so qualify.
5.13 Voting Agreements.
-----------------
(a) SRC shall use its best efforts to furnish to the Company upon
or promptly after the execution of this Agreement a voting agreement
substantially in the form of Exhibit C-1 attached hereto executed by or on
-----------
behalf of each of Carlyle U.S. Venture Partners, L.P., Carlyle Venture Partners,
L.P., Carlyle Venture Coinvestment, L.L.C., C/S Venture Investors, L.P., and
each member of the Board of Directors of SRC.
(b) The Company shall use its best efforts to furnish to SRC upon or
promptly after the execution of this Agreement voting agreements (i)
substantially in the form of Exhibit C-1 attached hereto executed by or on
-----------
behalf of each of the Purchasers (as defined in that certain Common Stock
Purchase Agreement dated as of the date hereof among SRC, the Company and the
purchasers therein), and (ii) substantially in the form of Exhibit C-2 attached
-----------
hereto executed by or on behalf of the stockholders of the Company holding such
number of shares of Company capital stock necessary to approve this Agreement,
the Merger and the transactions contemplated hereby.
5.14 Employment Agreement. Upon or promptly after the execution of
--------------------
this Agreement, Eyeshop shall use its best efforts to cause Xxxxxx Xxxxxxx to
enter into an employment agreement with SRC, in form and substance reasonably
satisfactory to SRC.
5.15 Restrictions on Sales. Subject to the Provisions of Section 5.15
---------------------
herein, the Company agrees that it shall use its best efforts to cause each of
its stockholders ("Company Stockholders") who are not Management Stockholders to
agree that until the date that is two years after the Closing Date and each
Management Stockholder to agree that until the date that is three years after
the Closing Date, it will not, nor will it permit any of its Affiliates to,
sell, solicit an offer to sell or propose to sell, any of the Merger
Consideration except as follows:
(a) a Company Stockholder and a Management Stockholder may transfer
all or a portion of its Merger Consideration to any of its Affiliates or other
Company Stockholders so long as such Affiliates or other Company Stockholders
agree in writing to be bound by the terms of this Section 5.15;
(b) a Company Stockholder and a Management Stockholder may transfer
its share of Merger Consideration upon the occurrence of a Liquidity Event; and
(c) A Company Stockholder and a Management Stockholder may transfer
Shares pursuant to Rule 144 promulgated under the Securities Act of 1933, as
amended, provided that
34
(A) during the period of time between one year and two years after the Closing
Date, no Company Stockholder may transfer more than fifteen percent of its share
of the Merger Consideration and (B) during the period of time between two years
and three years after the Closing Date, no Management Stockholder may transfer
more than forty-five percent of its share of the Merger Consideration.
5.16 Registration Rights. At or prior to the Effective Time, SRC shall
-------------------
execute and tender to the Company Stockholders and the Management Stockholders
for execution by them a Registration Rights Agreement (the "Registration Rights
Agreement") in form and substance satisfactory to SRC, the Company Stockholders
and the Management Stockholders. The Registration Rights Agreement shall provide
that, commencing two years after the Effective Time, the Company Stockholders
and the Management Stockholders shall have the following registration rights
with respect to the SRC Common Stock:
(a) two demand rights, provided that at least twelve months shall
have elapsed between each demand and until such time that is three years after
the Effective Time, no Management Stockholder shall be permitted to register SRC
Common Stock held by him or her in excess of forty-five percent of the Shares
originally purchased by such Management Stockholders pursuant to this Agreement;
(b) unlimited piggyback (incidental) rights subject to (A)
underwriter cutbacks and (B) until such time that is three years after the
Effective Time, no Management Stockholder shall be permitted to register SRC
Common Stock held by him or her in excess of forty-five percent of the Shares
originally purchased by such Management Stockholders pursuant to this Agreement;
and
(c) an unlimited number of Registration Statements on Form S-3 (or
equivalent Form) provided that the reasonably anticipated price to the public
would be at least $1,000,000, and until such time that is three years after the
Effective Time, no Management Stockholder shall be permitted to register SRC
Common Stock held by him or her in excess of forty-five percent of the Shares
originally purchased by such Management Stockholders pursuant to this Agreement.
Such registration rights (i) shall be provided by SRC at its sole
expense (other than underwriting discounts and commissions) and (ii) shall be
subject to customary terms and conditions.
5.17 Carlyle Registration. The Company Stockholders acknowledge that
--------------------
Carlyle Venture Partners, L.P. and certain of its affiliates ("Carlyle") possess
the right to register shares of the Company's Common Stock. The Company
Stockholders agree that in the event the Company Stockholders exercise their
demand or Form S-3 rights pursuant to the Registration Rights Agreement, the
Purchasers shall extend to Carlyle the opportunity to register a portion of the
unregistered shares of Common Stock held by it equivalent to one-third of the
aggregate shares of Common Stock proposed to be registered.
35
5.18 Relocation of SRC's Headquarters. As promptly as practicable
--------------------------------
following the Closing, the headquarters of SRC will be relocated to such
premises in the greater Cincinnati, Ohio area as may be selected by Eyeshop and
approved by the Board of Directors of SRC.
5.19 U.K. Assets. Eyeshop will use its best efforts to acquire the
-----------
assets of Eyeshop Limited from liquidation in the United Kingdom.
5.20 Issuance of Additional Shares. Other than as provided in this
-----------------------------
Agreement or the Merger Agreement, or as described or contemplated in Section
2.3 or Section 3.3, as applicable, until after the Effective Time, neither party
hereto shall, except with the prior consent of the other party, issue, agree to
issue, or grant any rights to acquire, any shares of its respective capital
stock other than with respect to SRC (i) options to purchase Common Stock of SRC
pursuant to the SRC's 1992 Employee, Director and Consultant Stock Option Plan,
as amended, issued in the ordinary course of business and consistent with past
practice, (ii) warrants in connection with a bank financing and (iii) dividends
in the form of Common Stock to Carlyle.
ARTICLE VI
CONDITIONS OF MERGER
6.1 Conditions to Obligation of Each Party to Effect the Merger. The
-----------------------------------------------------------
respective obligations of each party to effect the Merger shall be subject to
the satisfaction at or prior to the Effective Time of the following conditions,
any or all of which may be waived by the party entitled to the benefit thereof,
in whole or in part, to the extent permitted by applicable Law:
(a) Clearance of the Proxy Statement. No stop order suspending the
--------------------------------
clearance of the Proxy Statement shall have been issued by the SEC and no
proceedings for that purpose shall have been initiated;
(b) Stockholder Approval. This Agreement and the Merger shall have
--------------------
been authorized by the requisite vote of the Stockholders of (i) the Company in
accordance with the DGCL and the Charter and by-laws of the Company and (ii) EAC
in accordance with the DGCL and the Charter and by-laws of EAC;
(c) Regulatory Approvals. All approvals and consents of applicable
--------------------
Courts and/or Governmental Authorities required to consummate the Merger shall
have been received, except for such approvals and consents, the failure of which
to have been so received, shall not have a Material Adverse Effect;
(d) No Injunctions or Restraints; Illegality. No temporary
----------------------------------------
restraining order, preliminary or permanent injunction or other Order (whether
temporary, preliminary or permanent) issued by any court of competent
jurisdiction or other legal restraint or prohibition (an "Injunction"")
----------
preventing the consummation of the Merger shall be in effect which is
non-appealable, nor shall any proceeding brought by any administrative agency or
commission or other Governmental Authority, domestic or foreign, seeking any of
the foregoing be pending, and there shall not be any action taken, or any
statute, rule, regulation or order enacted, entered,
36
enforced or deemed applicable to the Merger, which makes the consummation of the
Merger illegal;
(e) No Order. No Court or Governmental Authority having jurisdiction
--------
over the Company or SRC shall have been enacted, issued, promulgated, enforced
or entered any Law, Regulation or Order (whether temporary, preliminary or
permanent) which is then in effect and which has the effect of making the Merger
illegal or otherwise prohibiting consummation of the substantially on the terms
contemplated by this Agreement without an opportunity for appeal by either
party; and
(f) Closing of Common Stock Purchase Agreement. The Second Closing
------------------------------------------
shall have occurred under the Common Stock Purchase Agreement dated May 23, 2001
among SRC, the Company, and the persons listed on Exhibit A to such Agreement.
6.2 Additional Conditions to Obligations of SRC and EAC. The
---------------------------------------------------
obligations of SRC and EAC to effect the Merger are also subject to the
following conditions, any or all of which may be waived by SRC and EAC, in whole
or in part, to the extent permitted by applicable Law:
(a) Representations and Warranties. The representations and
------------------------------
warranties of the Company contained in this Agreement and the Related Agreements
shall be true and correct in all material respects on and as of the Effective
Time, except for changes contemplated by this Agreement (together with the
Company Disclosure Schedule) (except for those (x) representations and
warranties that are qualified by materiality or Material Adverse Effect, in
which case such representations and warranties shall be true and correct in all
respects and (y) representations and warranties which address matters only as of
a particular date (in which case such representations and warranties qualified
as to materiality or Material Adverse Effect shall be true and correct in all
respects, and those not so qualified shall be true and correct in all material
respects, on and as of such particular date), with the same force and effect as
if made on and as of the Effective Time, and the SRC and EAC shall have received
a certificate to such effect signed by the Chief Financial Officer of the
Company and of each of the Subsidiaries;
(b) Agreement and Covenants. The Company shall have performed or
-----------------------
complied in all material respects with all agreements and covenants required by
this Agreement and the Related Agreements to be performed or complied with by it
on or prior to the Effective Time. SRC and EAC shall have received a certificate
to such effect signed by the Chief Executive Officer and Chief Financial Officer
of the Company;
(c) No Material Adverse Effect. From and including the date hereof,
--------------------------
there shall not have occurred any event and no circumstance shall exist which,
alone or together with any one or more other events or circumstances has had, is
having or would reasonably be expected to have a Company Material Adverse
Effect;
(d) Merger Certificate. The Company shall have executed and
-------------------
delivered the Merger Certificate; and
(e) Opinion of Counsel to the Company. SRC shall have received the
---------------------------------
opinion of Xxxxxxxx Xxxx LLP dated the Closing Date in the form agreed upon by
the parties.
37
6.3 Additional Conditions to Obligations of the Company. The
---------------------------------------------------
obligation of the Company to effect the Merger is also subject to the following
conditions, any or all of which may be waived by Company, in whole or in part,
to the extent permitted by applicable Law:
(a) Representation and Warranties. The representations and warranties
-----------------------------
of SRC and EAC contained in this Agreement and the Related Agreements shall be
true and correct in all material respects on and as of the Effective Time,
except for changes contemplated by this Agreement (together with the SRC
Disclosure Schedule), (except for those (x) representations and warranties that
are qualified by materiality or Material Adverse Effect, in which case such
representations and warranties shall be true and correct in all respects and (y)
representations and warranties which address matters only as of a particular
date (in which case such representations and warranties qualified as to
materiality or Material Adverse Effect shall be true and correct in all
respects, and those not so qualified shall be true and correct in all material
respects, on and as of such particular date), with the same force and effect as
if made on and as of the Effective Time, and the Company shall have received a
certificate to such effect signed by the Chief Financial Officer of SRC, with
respect to SRC, and the Chief Financial Officer of EAC, with respect to EAC;
(b) Agreement and Covenants. SRC and EAC shall have performed or
-----------------------
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it on or prior to the
Effective Time, and the Company shall have received a certificate to such effect
signed by the Chief Executive Officer of EAC, with respect to the EAC;
(c) No Material Adverse Effect. From and including the date hereof,
--------------------------
there shall not have occurred any event and no circumstance shall exist which,
alone or together with any one or more other events or circumstance has had, is
having or would reasonably be expected to have SRC Material Adverse Effect;
(d) Merger Certificate. EAC shall have executed and delivered the
------------------
Merger Certificate; and
(e) Opinion of Counsel to SRC. EAC shall have received the opinion of
-------------------------
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. dated the Closing Date, in
the form of agreed upon by the parties.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. This Agreement may be terminated and the Merger
-----------
contemplated hereby may be abandoned at any time prior to the Effective Time,
notwithstanding approval thereof by the Stockholders of the Company:
(a) By mutual written consent duly authorized by the Boards of
Directors of SRC and the Company; or
38
(b) By either SRC or the Company if the Merger shall not have been
consummated on or before September 30, 2001; and provided, that the right to
--------
terminate this Agreement under this Section 7.1 shall not be available to any
party whose willful failure to fulfill any material obligation under this
Agreement has been the cause of, or resulted in, the failure of the Merger to
have been consummated on or before such date; or
(c) By either SRC or the Company, if a court of competent
jurisdiction or governmental, regulatory or administrative agency or commission
shall have issued an order, decree or ruling or taken any other action, in each
case which has become final and non-appealable which prohibits the Merger; or
(d) By SRC, if, at the Company Stockholders' Meeting (including any
adjournment or postponement thereof), the requisite vote of the Stockholders of
the Company to authorize the SRC Certificate of Amendment shall not have been
obtained; or
(e) By the Company, if, at the SRC Stockholders' Meeting (including
any adjournment or postponement thereof), the requisite vote of the Stockholders
of SRC to authorize the SRC Certificate of Amendment shall not have been
obtained; or
(f) By SRC if the Board of Directors of the Company withdraws or
modifies in a manner adverse to SRC its determination to recommend that the
holders of Company Shares approve this Agreement and the transactions
contemplated hereby;
(g) By the Company if the Board of Directors of SRC withdraws or
modifies any manner adverse to the Company its determination to recommend that
the holders of SRC Common Stock and SRC Preferred Stock approve the SRC
Certificate Amendment;
(h) By the Company if a SRC Acquisition Proposal has been made and
the Board of Directors of SRC determines, in the exercise of its good faith
judgment (after consultation with and advice from outside legal counsel), that
such termination is in the best interests of the holders of SRC Common Stock; or
(i) By SRC, if neither SRC nor EAC is in material breach of its
obligations under this Agreement, and if (i) there has been a breach at any time
by the Company of any of its representations and warranties hereunder such that
Section 6.2(a) would not be satisfied (treating such time as if it were the
Effective Time for purposes of this Section 7.1(h)) or (ii) there has been the
breach on the part of the Company of any of its covenants or agreements
contained in this Agreement such that Section 6.2(b) will not be satisfied
(treating such time as if it were the Effective Time for purposes of this
Section 7.1(h)), and, in both case (i) and case (ii), such breach (if curable)
has not been cured within 30 days after written notice to the Company; or
(j) By the Company, if it is not in material breach of its
obligations under this Agreement, and if (i) there has been a breach at any time
by SRC or EAC of any of their respective representations and warranties
hereunder such that Section 6.3(a) would not be satisfied (treating such time as
if it were the Effective Time for purposes of this Section 7.1(i)), or (ii)
there has been the breach on the part of SRC or EAC of any of their respective
covenants or agreements contained in this Agreement such that Section 6.3(b)
would not be satisfied
39
(treating such time as if it were the Effective Time for purposes of this
Section 7.1(i)), and, in both case (i) and case (ii), such breach (if curable)
has not been cured within 30 days after written notice to SRC and EAC.
(k) By the Company if any person or group (as defined in Section
13(d)(3) of the Exchange Act), other than the Company or any of its Affiliates,
shall have become the beneficial owner (as defined in Rule 13D-3 promulgated
under the Exchange Act) of shares of SRC Common Stock and/or SRC Preferred Stock
representing 20% or more of the voting power of all classes of capital stock of
SRC (excluding, for purposes of such calculation, shares of SRC Common Stock to
be issued pursuant to this Agreement and shares of SRC Common Stock issued
pursuant to the Stock Purchase Agreement).
7.2 Effect of Termination. Except as provided in this Section 7.2, in
---------------------
the event of the termination of this Agreement pursuant to Section 7.1, this
Agreement (other than this Section 7.2 and Sections 5.4 (Standstill), 5.10(b)
(Confidentiality), 7.3 and Article VIII, all of which shall survive such
termination) will forthwith become void, and there will be no liability on the
part of SRC, EAC or the Company or any of their respective officers or directors
to the other and all rights and obligations of any party hereto will cease,
except that nothing herein will relieve any party from liability for any breach,
prior to termination of this Agreement in accordance with its terms, of any
representation, warranty, covenant or agreement contained in this Agreement.
7.3 Fees and Expenses.
-----------------
(a) Except as set forth in this Section 7.3, all fees and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses, whether or not the
Merger is consummated; provided, however, that SRC and the Company shall share
-------- -------
equally all fees and expenses, other than attorneys' fees, incurred in relation
to the Information Statement (including financial statements and exhibits) and
any amendments or supplements thereto.
(b) If this Agreement is terminated pursuant to Section 7.1(k) then
SRC shall reimburse the Company for all of its Stipulated Expenses not later
than two (2) Business Days after the date of such termination.
(c) If this Agreement is terminated pursuant to Section 7.1(e),
7.1(g), 7.1(h), or 7.1(j) (but only if, in the case of termination pursuant to
Section 7.1(j), the breach of representation or warranty by SRC or EAC is
knowing or the breach of covenant by SRC or EAC is willful), then, not later
than two Business Days after the date of such termination, (i) SRC shall
reimburse the Company for all of its Stipulated Expenses, and (ii) SRC shall pay
to the Company a termination fee in the amount of $50,000. An additional fee of
$175,000 shall be payable by SRC to the Company if both (i) this Agreement is
terminated as described above or as described in Section 7.3(b), and (ii) within
365 days after such termination there is consummated a transaction of the type
described in the definition of SRC Acquisition Proposal yielding consideration
per share of SRC Common Stock greater than $0.30. Such additional fee shall be
payable within two Business Days following such consummation.
40
(d) If this Agreement is terminated pursuant to Section 7.1(d),
7.1(f) or 7.1(i) (but only if, in the case of termination pursuant to Section
7.1(i), the breach of representation or warranty by the Company is knowing or
the breach of covenant by the Company is willful), then, not later than two
Business Days after the date of such termination, the Company shall reimburse
SRC for all of its Stipulated Expenses. In addition, a termination fee of
$175,000 shall be payable by the Company to SRC if both (i) this Agreement is
terminated as described above, and (ii) within 365 days after such termination
there is consummated a transaction of the type described in the definition of
Company Acquisition Proposal yielding consideration per share of Company Common
Shares greater than $2.60. Such termination fee shall be payable within two
Business Days following such consummation.
(e) As used in this Agreement, the term "Stipulated Expenses" of a
-------------------
party shall mean those fees and expenses actually incurred by such party in
connection with this Agreement and the transactions contemplated hereby and
thereby, including fees and expenses of counsel, investment bankers,
accountants, experts, consultants and other Representatives.
(f) This Section 7.3 shall be the exclusive right and remedy any
party may have hereunder or at law or in equity for any termination of this
Agreement or any breach of this Agreement.
7.4 Amendment. This Agreement may be amended by the parties hereto by
---------
action taken by or on behalf of their respective Boards of Directors at any time
prior to the Effective Time; provided, however, that, after approval of the
-------- -------
Merger by the Stockholders of the Company, no amendment may be made which would
reduce the amount or change the type of consideration into which each share of
Company Shares shall be converted upon consummation of the Merger. This
Agreement may not be amended except by an instrument in writing signed by all of
the parties hereto.
7.5 Waiver. At any time prior to the Effective Time, any party hereto
------
may extend the time for the performance of any of the obligations or other acts
required hereunder, waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto and waive
compliance with any of the agreements or conditions contained herein. Any such
extension or waiver shall be valid if set forth in an instrument in writing
signed by the party or parties to be bound thereby.
ARTICLE VIII
GENERAL PROVISIONS
8.1 Survival of Representations and Warranties.
------------------------------------------
(a) Except as set forth in Section 8.1(b) of this Agreement, the
representations, warranties and agreements of each party hereto will remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any other party hereto, any Person controlling any such party or
any of their officers, directors, representatives or agents whether prior to or
after the execution of this Agreement.
41
(b) The representations and warranties in this Agreement will
terminate at the Effective Time; provided, however, this Section 8.1(b) shall in
-------- -------
no way limit any covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time or after the termination of
this Agreement pursuant to Article VII.
8.2 Notices. All notices or other communications which are required
-------
or permitted hereunder shall be in writing and sufficient if delivered
personally or sent by nationally-recognized overnight courier or by registered
or certified mail, postage prepaid, return receipt requested, or by electronic
mail, with a copy thereof to be delivered by mail (as aforesaid) within 24 hours
of such electronic mail, or by telecopier, with confirmation as provided above
addressed as follows:
(a) If to SRC or EAC:
Sight Resource Corporation
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Telecopier: (000) 000-0000
Attention: President
With copies to:
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Telecopier: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
(b) If to the Company:
Xxxxxxx.xxx, Inc.
0000 Xxxxxxxxxxxx Xx.
Xxxxxxxxxx, Xxxx 00000
Telecopier: (000) 000-0000
Attention: President
With copies to:
Xxxxxxxx Xxxx LLP
0000 Xxxxxxxxxx Xxxxx X.X.
Xxxxxx, Xxxx 00000
Telecopier: (000) 000-0000
Attention: J. Xxxxxxx Xxxx, Esq.
or to such other address as the party to whom notice is to be given may have
furnished to the other party in writing in accordance herewith. All such notices
or communications shall be deemed to be received (a) in the case of personal
delivery, on the date of such delivery, (b) in the
42
case of nationally-recognized overnight courier, on the next Business Day after
the date when sent (c) in the case of facsimile transmission or telecopier or
electronic mail, upon confirmed receipt, and (d) in the case of mailing, on the
third Business Day following the date on which the piece of mail containing such
communication was posted.
8.3 Disclosure Schedules. The Company Disclosure Schedule and the SRC
--------------------
Disclosure Schedule each shall be divided into sections corresponding to the
sections and subsections of this Agreement. Disclosure of any fact or item in
any section of a party's Disclosure Schedule shall not, should the existence of
the fact or item or its contents be relevant to any other section of the
Disclosure Schedule, be deemed to be disclosed with respect to such sections.
8.4 Certain Definitions. For purposes of this Agreement, the term:
-------------------
(a) "Affiliate" means, with respect to any Person, any other Person
---------
that directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, the first mentioned Person;
including, without limitation, any partnership or joint venture in which the
Company (either alone, or through or together with any other Subsidiary) has,
directly or indirectly, an interest of 5% or more of the issued and outstanding
capital stock of such Person.
(b) "Business Day" means any day other than a Saturday, Sunday or day
------------
on which banks are permitted to close in the State of New York or in the State
of Delaware.
(c) "Common Share Exchange Ratio" has the meaning indicated in
---------------------------
Section 1.6(a).
(d) "Company Disclosure Schedule" means a schedule of even date
---------------------------
herewith delivered by the Company to SRC concurrently with the execution of this
Agreement, which, among other things, will identify exceptions to the Company's
representations and warranties contained in Article III by specific section and
subsection references.
(e) "Control" (including the terms "controlled by" and "under common
-------
control with") means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the management or
policies of a Person, whether through the ownership of stock, as trustee or
executor, by contract or credit arrangement or otherwise.
(f) "Court" means any court or arbitration tribunal of the United
-----
States, any domestic state, or any foreign country, and any political
subdivision thereof.
(g) "Environmental Claim" means any claim, action, cause of action,
-------------------
investigation or notice by any Person alleging potential liability (including,
without limitation, potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resources damages, property damages,
personal injuries or penalties) arising out of, based on or resulting from (a)
the presence, release or disposal of any Hazardous Materials at any location,
whether or not owned or operated by the Company, or (b) circumstances forming
the basis of any violation, or alleged violation, of any Environmental Law.
43
(h) "Environmental Laws" means any Law pertaining to: (i) the
------------------
protection of health, safety and the indoor or outdoor environment; (ii) the
conservation, management or use of natural resources and wildlife; (iii) the
protection or use of surface water and ground water; (iv) the management,
manufacture, possession, presence, use, generation, transportation, treatment,
storage, disposal, release, threatened release, abatement, removal, remediation
or handling of, or exposure to, any Hazardous Material; or (v) pollution
(including any release to air, land, surface water and ground water); and
includes, without limitation, the Comprehensive Environmental, Response,
Compensation, and Liability Act of 1980, as amended, and the Regulations
promulgated thereunder and the Solid Waste Disposal Act, as amended, 42 U.S.C.
ss. 6901 et seq.
(i) "Exchange Agent" means any bank or trust company organized under
--------------
the Laws of the United States or any of the states thereof and having a net
worth in excess of $100 million designated and appointed to act in the
capacities required under Section 1.12(a).
(j) "Exchange Ratio" has the meaning indicated in Section 1.6(a).
--------------
(k) "Governmental Authority" means any governmental agency or
----------------------
authority (other than a Court) of the United States, any domestic state, or any
foreign country, and any political subdivision or agency thereof, and includes
any authority having governmental or quasi-governmental powers.
(l) "Hazardous Material" means any substance, chemical, compound,
------------------
product, solid, gas, liquid, waste, by-product, pollutant, contaminant or
material which is hazardous or toxic and is regulated under any Environmental
Law, and includes without limitation, asbestos or any substance containing
asbestos, polychlorinated biphenyls or petroleum (including crude oil or any
fraction thereof).
(m) "Knowledge" means (i) in the case of an individual, knowledge of
---------
a particular fact or other matter deemed to be possessed by the individual if
such individual is actually aware of such fact or other matter or (ii) in the
case of an entity (other than an individual) such entity will be deemed to have
"Knowledge" of a particular fact or other matter if any individual who is
serving as a director or executive officer of such Person (or in any similar
capacity) has, or at any time had, Knowledge of such fact or other matter.
(n) "Law" means all laws, statutes and ordinances of any Governmental
---
Agency including all decisions of Courts having the effect of law in each such
jurisdiction.
(o) "Lien" means any mortgage, pledge, security interest, attachment,
----
encumbrance, lien (statutory or otherwise), option, conditional sale agreement,
right of first refusal, first offer, termination, participation or purchase or
charge of any kind (including any agreement to give any of the foregoing);
provided, however, that the term "Lien" shall not include (i) statutory liens
for Taxes, which are not yet due and payable or are being contested in good
faith by appropriate proceedings, (ii) statutory or common law liens to secure
landlords, lessors or renters under leases or rental agreements confined to the
premises rented, (iii) deposits or pledges made in connection with, or to secure
payment of, workers' compensation, unemployment insurance, old age pension or
other social security programs mandated under applicable Laws, (iv) statutory or
44
common law liens in favor of carriers, warehousemen, mechanics and materialmen,
to secure claims for labor, materials or supplies and other like liens, and (v)
restrictions on transfer of securities imposed by applicable state and federal
securities Laws.
(p) "Liquidity Event" means (a) the closing of a firm commitment
---------------
underwritten public offering pursuant to an effective registration statement
under the Securities Act covering the offer and sale of common stock for the
account of SRC to the public with net proceeds to SRC of not less than
$15,000,000 or (b) the closing of a consolidation or merger of SRC, or a sale of
all or substantially all of the assets of SRC, other than (i) a merger,
consolidation or sale of all or substantially all of the assets of SRC in a
transaction in which the shareholders of SRC immediately prior to the
transaction possess more than 50% of the voting securities of the surviving
entity (or parent, if any) immediately after the transaction or (ii) the
transactions contemplated by this Agreement.
(q) "Litigation" means any suit, action, arbitration, cause of
----------
action, claim, complaint, criminal prosecution, investigation, demand letter,
governmental or other administrative proceeding, whether at law or at equity,
before or by any Court or Governmental Authority, before any arbitrator or other
tribunal.
(r) "Management Stockholder" means each of Xxxxxx Xxxxxxx, X. Xxxx
----------------------
Xxxxxx, Xxxxx Risk, and Xxxxxx Likes.
(s) "Optionholder" means the holder of a Company Stock Option
------------
immediately prior to the Effective Time.
(t) "Order" means any judgment, order, writ, injunction or decree of
-----
any Court or Governmental Authority.
(u) "Person" means an individual, corporation, partnership,
------
association, trust, unincorporated organization, limited liability company,
other entity or group (as defined in Section 13(d)(3) of the Exchange Act).
(v) "Regulation" means any rule or regulation of any Governmental
----------
Authority having the effect of Law.
(w) "SRC" Certificate Amendment" has the meaning indicated in Section
--------------------------
2.20.
(aa) "SRC Stock" means SRC Common Stock and SRC Preferred.
---------
(bb) "Subsidiary" or "Subsidiaries" of the Company, the Surviving
---------- ------------
Corporation, SRC or any other Person means any corporation, partnership, joint
venture, limited liability company or other legal entity of which the Company,
the Surviving Corporation, SRC or such other Person, as the case may be, (either
alone or through or together with any other Subsidiary) owns, directly or
indirectly, 50% or more of the stock or other equity interests the holders of
which are generally entitled to vote for the election of the board of directors
or other governing body of such corporation or other legal entity.
45
8.5 Interpretation. When a reference is made in this Agreement to
--------------
Sections, subsections, Schedules or Exhibits, such reference shall be to a
Section, subsection, Schedule or Exhibit to this Agreement unless otherwise
indicated. The words "include," "includes" and "including" when used herein
shall be deemed in each case to be followed by the words "without limitation."
The word "herein" and similar references mean, except where a specific Section
or Article reference is expressly indicated, the entire Agreement rather than
any specific Section or Article. The table of contents and the headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
8.6 Severability. If any term or other provision of this Agreement is
------------
invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the extent possible.
8.7 Entire Agreement. This Agreement (including all exhibits and
----------------
schedules hereto) constitutes the entire agreement and supersedes all prior
agreements and undertakings (other than the Confidentiality Agreement), both
written and oral, among the parties, or any of them, with respect to the subject
matter hereof and, except as otherwise expressly provided herein, are not
intended to confer upon any other Person any rights or remedies hereunder.
8.8 Assignment. This Agreement shall not be assigned by operation of
----------
law or otherwise, except that EAC may assign all or any of their rights
hereunder to any Affiliate provided that no such assignment shall relieve the
assigning party of its obligations hereunder.
8.9 Parties in Interest. This Agreement shall be binding upon and
-------------------
inure solely to the benefit of each party hereto, and other than with respect to
Section 5.6 (indemnification) which the parties hereto intend to establish third
party beneficiary rights, nothing in this Agreement, express or implied, is
intended to or shall confer upon any other Person any right, benefit or remedy
of any nature whatsoever under or by reason of this Agreement.
8.10 Failure or Indulgence Not Waiver; Remedies Cumulative. No failure
-----------------------------------------------------
or delay on the part of any party hereto in the exercise of any right hereunder
will impair such right or be construed to be a waiver of, or acquiescence in,
any breach of any representation, warranty or agreement herein, nor will any
single or partial exercise of any such right preclude other or further exercise
thereof or of any other right. All rights and remedies existing under this
Agreement are cumulative to, and not exclusive to, and not exclusive of, any
rights or remedies otherwise available.
8.11 Governing Law. This Agreement and the agreements, instruments and
-------------
documents contemplated hereby will be governed by and construed in accordance
with the Law of the State of Delaware (exclusive of conflicts of law principles)
("Delaware Law"). Delaware Courts within the State of Delaware and, more
------------
particularly to the fullest extent such Court shall
46
have subject matter jurisdiction over the matter, the Court of Chancery of the
State of Delaware, will have exclusive jurisdiction over any and all disputes
between the parties hereto, whether in law or equity, arising out of or relating
to this Agreement and the agreements, instruments and documents contemplated
hereby. The parties consent to and agree to submit to the jurisdiction of such
Courts, provided, however, that such consent to jurisdiction is solely for the
-------- -------
purpose referred to in this Section 8.11 and shall not be deemed to be a general
submission to the jurisdiction of such Courts or in the State of Delaware other
than for such purpose. Each of the parties hereby waives, and agrees not to
assert in any such dispute, to the fullest extent permitted by applicable
Delaware Law, any claim that (i) such party is not personally subject to the
jurisdiction of such Courts, (ii) such party and such party's property is immune
from any legal process issued by such Courts or (iii) any Litigation commenced
in such Courts is brought in an inconvenient forum.
8.12 Counterparts. This Agreement may be executed in one or more
------------
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
[Remainder of this page intentionally left blank]
47
IN WITNESS WHEREOF, SRC, EAC and the Company have caused this Agreement
and Plan of Merger to be executed as of the date first written above by their
respective officers thereunto duly authorized.
SIGHT RESOURCE CORPORATION
By /s/ Xxxxxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: President
EYESHOP ACQUISITION CORP.
By /s/ Xxxxxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: President
XXXXXXX.XXX, INC.
By /s/ Xxxxxx Xxxxxxx
-------------------------------------
Name: Xxxxxx Xxxxxxx
Title: Vice President
48
EXHIBIT A
---------
FORM OF
CERTIFICATE OF MERGER
OF
EYESHOP ACQUISITION CORP., a Delaware Corporation,
WITH AND INTO
XXXXXXX.XXX, INC., a Delaware Corporation
********************
Pursuant to Section 251 of the General Corporation Law of the State of
Delaware, the undersigned corporations organized and existing under and by
virtue of the General Corporation Law of the States of Delaware, DO HEREBY
CERTIFY:
FIRST: That the name and state of incorporation of each of the
-----
constituent corporations are as follows:
NAME STATE OF INCORPORATION
---- ----------------------
1. Xxxxxxx.xxx, Inc. Delaware
2. Eyeshop Acquisition Corp. Delaware
SECOND: That an Agreement and Plan of Merger dated as of May 23, 2001
------
by and among Sight Resource Corporation, Xxxxxxx.xxx, Inc. and Eyeshop
Acquisition Corp. has been approved, adopted, certified, executed and
acknowledged by each of the constituent corporations in accordance with the
requirements of Section 251 of the General Corporation Law of the state of
Delaware.
THIRD: That the name of the surviving corporation of the merger is
-----
Xxxxxxx.xxx, Inc. (the "Surviving Corporation").
---------------------
FOURTH: That the Certificate of Incorporation of Xxxxxxx.xxx, Inc. shall
------
be the Certificate of Incorporation of the Surviving Corporation.
FIFTH: That the executed copy of the Agreement and Plan of Merger is on
-----
file at an office of the Surviving Corporation. The address of such office is:
Xxxxxxx.xxx, Inc.
0000 Xxxxxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
SIXTH: That a copy of the Agreement and Plan of Merger will be
-----
furnished by the Surviving Corporation, on request and without cost, to any
stockholder of the constituent corporations.
IN WITNESS WHEREOF, the undersigned, being the President of Xxxxxxx.xxx,
Inc., does hereby execute this Certificate of Merger and so certifies, affirms
and acknowledges under penalties of perjury that this is his free act and deed
and that the facts stated herein are true, this __ day of ______, 2001.
Xxxxxxx.xxx, Inc.
By:________________________________
Xxxxxx Xxxxxxx, Vice President
EXHIBIT B
---------
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
SIGHT RESOURCE CORPORATION
Pursuant to Section 242
of the General Corporation Law of
the State of Delaware
---------------------
Sight Resource Corporation (hereinafter called the "Corporation"),
organized and existing under and by virtue of the General Corporation Law of the
State of Delaware, does hereby certify as follows:
At a meeting of the Board of Directors of the Corporation a resolution
was duly adopted, pursuant to Section 242 of the General Corporation Law of the
State of Delaware, setting forth an amendment to the Amended and Restated
Certificate of Incorporation of the Corporation and declaring said amendment to
be advisable. The stockholders of the Corporation duly approved said proposed
amendment by written consent in accordance with Sections 228 and 242 of the
General Corporation Law of the State of Delaware, and written notice of such
consent has been given to all stockholders who have not consented in writing to
said amendment. The resolution setting forth the amendment is as follows:
RESOLVED: That the first paragraph of Article FOURTH of the Restated
--------
Certificate of Incorporation of the Corporation as filed on November 2, 1992 as
amended on May 10, 1994 be and hereby is deleted and the following first
paragraph of Article FOURTH is inserted in lieu thereof:
"FOURTH: The total number of shares of all classes of stock which
the Corporation shall have authority to issue is (i) 50,000,000 shares of Common
Stock, $.0l par value per share ("Common Stock"), and (ii) 5,000,000 shares of
Preferred Stock, $.01 par value per share ("Undesignated Preferred Stock")."
Signed this 10/th/ day of April, 2001.
SIGHT RESOURCE CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxx
----------------------------------------
Xxxxxxx X. Xxxxxxxx, President
EXHIBIT C-1
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Stockholder Voting Agreement
----------------------------
April 5, 2001
Xxxxxxx.xxx, Inc.
0000 Xxxxxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: President
Re: Stockholder Agreement
---------------------
Ladies and Gentlemen:
The undersigned (the "Stockholder") owns of record and beneficially the
number of shares (the "Owned Shares") of common stock and/or preferred stock of
Sight Resource Corporation, a Delaware corporation (the "Company"), as set forth
below. On even date herewith, the Company, Xxxxxxx.xxx, Inc. ("Eyeshop") and
Eyeshop Acquisition Corporation ("Merger Sub") entered into an Agreement and
Plan of Merger (the "Merger Agreement") with respect to the merger (the
"Merger") of Merger Sub with and into Eyeshop. The Stockholder wishes to
facilitate the proposed Merger, acknowledges that the proposed Merger will
benefit the Stockholder and agrees that Eyeshop and Merger Sub would not enter
into the Merger Agreement unless the Stockholder enters into this Stockholder
Agreement. For all purposes of this Stockholder Agreement, the term "Owned
Shares" shall include any additional shares of Company capital stock as to which
the Stockholder acquires beneficial ownership after the execution hereof.
In consideration of the foregoing, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound hereby, the Stockholder agrees as follows:
1. The Stockholder irrevocably and
unconditionally agrees that he, she or it (a) will vote all of the Owned
Shares in favor of an Amendment to the Company's Charter that increases
the number of authorized shares to 50,000,000 shares of Common Stock,
$0.01 par value per share and 5,000,000 shares of Preferred Stock, $0.01
par value per share; (b) will vote all of the Owned Shares in favor of
an increase in the number of shares of Common Stock issuable pursuant to
the 1992 Employee, Director and Consultant Stock Option Plan, as
amended, to 4,500,000 shares; (c) will not vote such Owned Shares (or
otherwise provide a proxy or consent or a voting agreement with respect
thereto) in favor of any other SRC Acquisition Proposal (as defined in
the Merger Agreement); and (d) shall vote all Owned Shares in favor of
the following nominees to the Board of Directors: E. Xxxx Xxxxxx, Xxxxxx
Xxxxxxx and/or Xxxxxxx Xxxxxxx (and, for any of the foregoing who does
not serve, that person's designee), on the one hand, and Xxxxxxxxx
Xxxxxxx, Xxxxxxx XxXxxxxx and/or Xxxx Xxxxxxx (and, for any of the
foregoing who does not serve, that person's designee), on the other
hand, and, to the extent there are additional positions on the Board not
filled by any of the foregoing, for any additional nominees recommended
to the shareholders for election by the Board of Directors of the
Company.
2. The Stockholder agrees that, until the earlier of (i) the
consummation of the Merger or (ii) the termination of the Merger Agreement, he,
she or it will not (a) directly or indirectly, sell, transfer, pledge, assign
or otherwise dispose of, or enter into any contract, option, commitment or
other arrangement or understanding with respect to the sale, transfer, pledge,
assignment or other disposition of, any of the Owned Shares or (b) take any
action or omit to take any action which, in either case, would prohibit,
prevent or preclude Stockholder from performing its obligations under this
Stockholder Agreement.
3. The Stockholder agrees that irreparable damage would occur in the
event that any of the provisions of this Stockholder Agreement were not
performed by it in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the Company and Eyeshop and Merger Sub
shall be entitled to an injunction or injunctions to prevent breaches of this
Stockholder Agreement by the Stockholder and to enforce specifically the terms
and provisions hereof in any court of the United States or any state having
jurisdiction, this being in addition to any other remedy to which it is entitled
at law or in equity, and that the Stockholder waives the posting of any bond or
security in connection with any proceeding related thereto.
4. This Stockholder Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original. This
Stockholder Agreement shall become effective when one counterpart signature page
has been signed by the Stockholder and delivered to Eyeshop (which delivery may
be by facsimile).
5. The Stockholder agrees to execute and deliver all such further
documents, certificates and instruments and take all such further reasonable
action as may be necessary or appropriate, in order to consummate the
transactions contemplated hereby. The Stockholder hereby agrees not to engage in
any transaction involving any securities of Eyeshop or Merger Sub that would
violate applicable securities laws.
6. Notwithstanding anything in this Stockholder Agreement to the
contrary, the Company, Eyeshop and Merger Sub understand and agree that (i)
Owned Shares may be subject to liens, encumbrances or restrictions (other than
those relating to voting) arising in connection with pledges of Owned Shares by
the Stockholder or its affiliates that exist as of the date hereof and (ii) any
transfer of Owned Shares pursuant to any bona fide foreclosure under any such
pledge shall not violate this Stockholder Agreement.
7. The Stockholder represents and warrants to the Company, Eyeshop
and Merger Sub that:
(a) the Stockholder has all necessary power and authority to
execute this Stockholder Agreement including the irrevocable proxy attached
hereto;
(b) the Stockholder owns or controls (regardless of in what
capacity) the number of Owned Shares set forth below free from any lien,
encumbrance or restriction whatsoever (except as otherwise permitted by Section
6 above) and with full power to vote the Owned Shares without the consent or
approval of any other person;
(c) this Stockholder Agreement and the attached proxy have
been duly executed and delivered by the Stockholder and each constitutes a valid
and binding agreement of the Stockholder, enforceable in accordance with its
terms; and
(d) neither the execution nor delivery of this Stockholder
Agreement and the attached proxy by the Stockholder will (i) require the
consent, waiver, approval, license or authorization, or any filing with, any
person or public authority, (ii) with or without the giving of notice or the
lapse of time, or both, conflict with or constitute a violation of, or default
under, or give rise to any right of acceleration under any indenture, contract,
commitment, agreement, arrangement or other instrument of any kind to which the
Stockholder is a party or by which the Stockholder is bound, or (iii) violate
any applicable law, rule, regulation, judgment, order or decree of any
governmental instrumentality or court having jurisdiction over the Stockholder.
8. This Stockholder Agreement shall terminate on the termination of
the Merger Agreement or at the Effective Time of the Merger provided for in the
Merger Agreement, as the case may be; provided, however, in the event that this
Stockholder Agreement is terminated at the Effective Time of the Merger, the
provisions set forth in Section 1(d) shall survive termination of this
Stockholder Agreement for a period of three years from the Effective Time of the
Merger.
IN WITNESS WHEREOF, the parties have executed this agreement as of the
date and year first above written.
STOCKHOLDER:
___________________________________
Name:______________________________
Address:___________________________
____________________________
____________________________
Spouse (if applicable)
___________________________________
Name:______________________________
Number of Shares of
Common Stock ________________
Number of Shares of
Preferred Stock ________________
IRREVOCABLE PROXY FOR THE
STOCKHOLDER AGREEMENT OF COMPANY
By its execution hereof and in order to secure the obligations of the
undersigned set forth in the Stockholder Agreement ("Stockholder Agreement")
dated April 5, 2001, by and between Xxxxxxx.xxx, Inc. (the "Eyeshop") and the
undersigned, the undersigned hereby irrevocably constitutes and appoints the
President and the Secretary of Eyeshop, and each of such officers singly, as its
true and lawful attorneys-in-fact, to: (1) vote, in accordance with the
Stockholder Agreement, all shares of capital stock of Sight Resource Corporation
("SRC") which the undersigned may be entitled to vote upon the matters set forth
in paragraph 1(a) and 1(b) of the Stockholder Agreement at any annual or special
meeting of the stockholders of SRC (but not to vote such shares on any other
matter); (2) to exercise written consent in lieu of voting with respect to the
matters set forth in clause (1); and (3) to execute, acknowledge, swear to and
file in the undersigned's name, place and stead any consent, approval, or other
documents to be executed by the stockholders in connection with the items in
clauses (1) and (2). The Proxy hereby granted is irrevocable and shall be deemed
coupled with an interest in the Stockholder Agreement for the term stated
therein and it shall survive the undersigned's insolvency.
IN WITNESS WHEREOF, the undersigned has executed this Irrevocable Proxy
this 5th day of April 2001.
___________________________________
Name:______________________________
Address:___________________________
____________________________
____________________________
Spouse (if applicable)
___________________________________
Name:______________________________
EXHIBIT C-2
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Form of Stockholder Agreement (Eyeshop Stockholders)
----------------------------------------------------
March ____, 2001
Sight Resource Corporation
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: President
Re: Stockholder Agreement
---------------------
Ladies and Gentlemen:
The undersigned (the "Stockholder") owns of record and beneficially the
number of shares (the "Owned Shares") of common stock [and/or preferred stock]
of Xxxxxxx.xxx, Inc., a Delaware corporation (the "Company"), as set forth
below. On even date herewith, the Company, Sight Resource Corporation ("SRC")
and Eyeshop Acquisition Corporation ("Merger Sub") entered into an Agreement and
Plan of Merger (the "Merger Agreement") with respect to the merger (the
"Merger") of Merger Sub with and into the Company. Such Company common stock
[and/or preferred stock] will be converted in the Merger into shares of the
common stock, par value $.01 per share, of SRC ("SRC Common Stock"). The
Stockholder wishes to facilitate the proposed Merger, acknowledges that the
proposed Merger will benefit the Stockholder and agrees that SRC and Merger Sub
would not enter into the Merger Agreement unless the Stockholder enters into
this Agreement. For all purposes of this Agreement, the term "Owned Shares"
shall include any additional shares of Company capital stock as to which the
Stockholder acquires beneficial ownership after the execution hereof.
In consideration of the foregoing, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound hereby, the Stockholder agrees as follows:
1. The Stockholder irrevocably and unconditionally agrees that he, she
or it (a) will vote all of the Owned Shares in favor of the Merger Agreement and
the Merger at any meeting or meetings of the Company's stockholders called to
vote upon the Merger Agreement and the Merger and (b) will not vote such Owned
Shares (or otherwise provide a proxy or consent or a voting agreement with
respect thereto) in favor of any other Company Acquisition Proposal (as defined
in the Merger Agreement).
2. The Stockholder agrees that he, she or it will not (a) directly or
indirectly, sell, transfer, pledge, assign or otherwise dispose of, or enter
into any contract, option, commitment or other arrangement or understanding with
respect to the sale, transfer, pledge, assignment or other disposition of, any
of the Owned Shares or (b) take any action or omit to take any action which, in
either case, would prohibit, prevent or preclude Stockholder from performing its
obligations under this Agreement.
3. The Stockholder agrees that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed by it in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the Company and SRC and Merger Sub shall be entitled to
an injunction or injunctions to prevent breaches of this Agreement by the
Stockholder and to enforce specifically the terms and provisions hereof in any
court of the United States or any state having jurisdiction, this being in
addition to any other remedy to which it is entitled at law or in equity, and
that the Stockholder waives the posting of any bond or security in connection
with any proceeding related thereto.
4. This Agreement may be executed in one or more counterparts, each of
which shall be deemed to constitute an original. This Agreement shall become
effective when one counterpart signature page has been signed by the Stockholder
and delivered to the SRC (which delivery may be by facsimile).
5. The Stockholder agrees to execute and deliver all such further
documents, certificates and instruments and take all such further reasonable
action as may be necessary or appropriate, in order to consummate the
transactions contemplated hereby. The Stockholder hereby agrees not to engage in
any transaction involving any securities of SRC or Merger Sub that would violate
applicable securities laws.
6. Notwithstanding anything in this Agreement to the contrary, the
Company, SRC and Merger Sub understand and agree that (i) Owned Shares may be
subject to liens, encumbrances or restrictions (other than those relating to
voting) arising in connection with pledges of Owned Shares by the Stockholder or
its affiliates that exist as of the date hereof and (ii) any transfer of Owned
Shares pursuant to any bona fide foreclosure under any such pledge shall not
violate this Agreement.
7. The Stockholder represents and warrants to the Company, SRC and
Merger Sub that:
(a) the Stockholder has all necessary power and authority to execute
this letter agreement including the irrevocable proxy attached hereto;
(b) the Stockholder owns or controls (regardless of in what
capacity) the number of Owned Shares set forth below free from any lien,
encumbrance or restriction whatsoever (except as otherwise permitted by Section
6 above) and with full power to vote the Owned Shares without the consent or
approval of any other person;
(c) this letter agreement and the attached proxy have been duly
executed and delivered by the Stockholder and each constitutes a valid and
binding agreement of the Stockholder, enforceable in accordance with its terms;
and
(d) neither the execution nor delivery of this letter agreement and
the attached proxy by the Stockholder will (i) require the consent, waiver,
approval, license or authorization, or any filing with, any person or public
authority, (ii) with or without the giving of notice or the lapse of time, or
both, conflict with or constitute a violation of, or default under, or give rise
to any right of acceleration under any indenture, contract, commitment,
agreement, arrangement or other instrument of any kind to which the Stockholder
is a party or by which the Stockholder is bound, or (iii) violate any applicable
law, rule, regulation, judgment, order or decree of any governmental
instrumentality or court having jurisdiction over the Stockholder.
8. The Stockholder irrevocably and unconditionally agrees that he, she
or it will vote all of the SRC Common Stock acquired in the Merger (the "Merger
Shares") in favor of the following nominees to the Board of Directors of SRC: E.
Xxxx Xxxxxx, Xxxxxx Xxxxxxx and/or Xxxxxxx Xxxxxxx (and, for any of the
foregoing who does not serve, that person's designee), on the one hand, and
Xxxxxxxxx Xxxxxxx, Xxxxxxx XxXxxxxx and/or Xxxx Xxxxxxx (and, for any of the
foregoing who does not serve, that person's designee), on the other hand, and,
to the extent that there are additional positions on the Board not filled by any
of the foregoing, for any additional nominees recommended to the shareholders
for election by the Board of Directors of SRC. Merger Shares shall include any
SRC Common Stock shares acquired after the execution of this Shareholder
Agreement.
9. The Agreement shall terminate on the termination of the Merger
Agreement or at the Effective Time of the Merger provided for in the Merger
Agreement, as the case may be; provided, however, in the event that this
Stockholder Agreement is terminated at the Effective Time of the Merger, the
provisions set forth in Section 8 shall survive termination of this Stockholder
Agreement for a period of three years from the Effective Time of the Merger.
IN WITNESS WHEREOF, the parties have executed this agreement as of the
date and year first above written.
STOCKHOLDER:
___________________________________
Name:______________________________
Address:___________________________
____________________________
____________________________
Spouse (if applicable)
___________________________________
Name:______________________________
Number of Shares of
Common Stock ________________
[Number of Shares of Series A
Preferred Stock _________________
Number of Shares of Series B
Preferred Stock _________________]
IRREVOCABLE PROXY FOR THE
STOCKHOLDER AGREEMENT OF COMPANY
By its execution hereof and in order to secure the obligations of the
undersigned set forth in the Stockholder Agreement ("Stockholder Agreement")
dated March ____, 2001, by and between Sight Resource Corporation ("SRC") and
the undersigned, the undersigned hereby irrevocably constitutes and appoints the
President and the Secretary of SRC and each of such officers singly, as its true
and lawful attorneys-in-fact, to: (1) vote, in accordance with the Stockholder
Agreement, all shares of capital stock of Xxxxxxx.xxx, Inc. ("Eyeshop") which
the undersigned may be entitled to vote upon the matters set forth in the
Stockholder Agreement at any annual or special meeting of the stockholders of
Eyeshop (but not to vote such shares on any other matter); (2) to exercise
written consent in lieu of voting with respect to the matters set forth in
clause (1); and (3) to execute, acknowledge, swear to and file in the
undersigned's name, place and stead any consent, approval, or other documents to
be executed by the stockholders in connection with the items in clauses (1) and
(2). The Proxy hereby granted is irrevocable and shall be deemed coupled with an
interest in the Stockholder Agreement for the term stated therein and it shall
survive the undersigned's insolvency.
IN WITNESS WHEREOF, the undersigned has executed this Irrevocable Proxy
this ____ day of March, 2001.
___________________________________
Name:______________________________
Address:___________________________
____________________________
____________________________
Spouse (if applicable)
___________________________________
Name:______________________________
