PURCHASE AND SALE AGREEMENT
AGREEMENT made as of the 30th day of September, 1996, between STERLING
VISION, INC. (the "Seller") a New York corporation with offices at 0000
Xxxxxxxxx Xxxxxxxxx, Xxxx Xxxxxx, Xxx Xxxx 00000 and EYE SITE (ONTARIO) LTD. a
corporation incorporated under the laws of the Province of Ontario, with offices
at 000 Xxxx Xxxxxx Xxxx, Xxxxxx, Xxxxxxx, Xxxxxx, X0X 0X0 (the "Purchaser").
W I T N E S S E T H
WHEREAS, Seller, and/or its affiliate, is the occupant of four separate
store premises, each of which is used for the operation of an IPCO OPTICAL
CENTER, said premises being located as follows: (i) Lime Ridge Mall, 000 Xxxxx
Xxxxx, Xxxxxxxx, Xxxxxxx (the "Lime Ridge Center"); (ii) Xxxxxx Xxxx, 00-00
Xxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxx (xxx "Hamilton Center"); (iii) Bramalea City
Center, 00 Xxxx Xxxxxx, Xxxxxxxx, Xxxxxxx (the "Bramalea Center"); and, (iv)
Atrium Bay, 000 Xxx Xxxxxx, Xxxxxxx, Xxxxxxx (the "Bay Street Center"), each of
said Centers is being occupied pursuant to the terms of Leases described on
Schedule "A" annexed hereto; and
WHEREAS, simultaneously with the consummation of the transactions provided
for hereunder, Purchaser, together with its affiliate Eye-Site Inc., is entering
into a Master Franchise Agreement (the "Master Franchise Agreement") with the
Seller pursuant to which Purchaser and Eye-Site Inc. shall become the Master
Franchisor and Sub-Franchisor of all Sterling Optical Centers presently located
and/or hereinafter operated in the province of Ontario, Canada and shall have an
exclusive license, subject to the terms and conditions set forth in said Master
Franchise Agreement, to offer franchises for Sterling Optical Centers; and
WHEREAS, in connection with the foregoing, Purchaser desires to operate
each of such four (4) Centers (hereinafter referred to as the "Centers") as a
Sterling Optical Center in accordance with the terms of the Master Franchise
Agreement; and
WHEREAS, Seller desires to sell and Purchaser desires to purchase
substantially all of the assets of Seller which are located at and which are
presently being used in connection with the operation of the CENTERS which are
the subject of this Agreement, at each of the Premises, which assets shall
include all of the leasehold improvements, equipment, furniture, fixtures,
signs, display devices, patient records, accounts receivable, work-in-progress
and other tangible and intangible assets of Seller presently located (and/or, on
the Effective
Date, to be located) at the Premises, together with certain of the inventory
located at each of the Centers which are the subject of this Agreement, all as
more particularly described in Schedule "B" annexed hereto and by this reference
made a part hereof (collectively, the "Assets").
NOW THEREFORE, in consideration of the foregoing recitals and of the
mutual terms, covenants, conditions and agreements herein contained it is hereby
agreed as follows:
ARTICLE 1. Sale of Assets
1.1. Effective as of September 30, 1996 (the "Effective
Date"), Seller shall sell to Purchaser, and Purchaser shall purchase from
Seller, the Assets including all furniture, fixtures and equipment which
furniture, fixtures and equipment shall be in their AS IS/WHERE IS condition,
all of the Assets being free and clear of all liens and encumbrances, except:
(i) the lien of Chemical Bank, which lien Seller shall be obligated
to have removed of record within 30 days following the Closing;
(ii) landlord liens or other interests or liens under the Leases for
each of the Centers; and
(iii) the lien to be retained by Seller, as more fully described
herein.
Seller will indemnify and hold Purchaser harmless from any cost or liability
which Purchaser incurs as a result of Seller's failure to remove the Chemical
Bank lien or landlord's lien which is the result of any amounts due to the
landlords for periods prior to the Closing.
1.2. Simultaneously with the Closing (as hereinafter defined),
and as a condition thereof, Purchaser, together with Eye-Site Inc., shall
execute the Master Franchise Agreement with Seller, and all such other
instruments and/or documents as are described herein or in Seller's Offering
Circular, dated June 15, 1996, a copy of which has been heretofore delivered to
Purchaser (the "Offering Circular"), all of which are required by Seller as a
condition to becoming a Sterling Optical Franchisee.
1.3 From and after the Effective Date, the Purchaser shall
assume all obligations and liabilities arising and/or accruing from and after
the Effective Date: (i) relative to its occupancy of each of the Centers; (ii)
under the Subleases for each of the Premises; and (iii) under the terms of the
leases
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or contracts described on Schedule annexed hereto. In addition, Purchaser, from
and after the Closing, shall assume responsibility for the repair or replacement
of any products previously provided to the existing customers of each Center
pursuant to product guaranties and/or warranties issued by Seller in connection
with its sale of merchandise from the Premises prior to Closing.
1.4 Within ninety (90) days following the Closing, or such
reasonable additional periods as Purchaser may require to obtain permits from
local authorities, and consent of the Landlords at each for each of the
Premises, Seller shall, at its cost and expense, replace all IPCO Optical
signage at each of the Centers, with Sterling Optical store front signage, in
accordance with the standard requirements of Seller.
ARTICLE 2. Consideration
2.1. The Purchase Price for all of the Assets (other than with
respect to each of the Center's inventory and accounts receivable, which shall
be computed by Seller and paid for by Purchaser in accordance with Section 2.2
below), shall be the sum of Five Hundred Thousand (US$500,000) Dollars, payable
as follows:
(i) Fifty Thousand (US$50,000) Dollars, which has been
previously paid to Xxxxxxx Xxxxxxxx & Xxxxx as Escrow
Agent, Purchaser hereby directs be released by said
Escrow Agent to Seller at closing; and
(ii) The sum of Fifty Thousand (US$50,000) shall be paid by
Purchaser executing and delivering to Seller, at
Closing, a Promissory Note (the "$50,000 Note")
providing for the repayment of said amount, together
with interest thereon, computed at the rate of twelve
(12%) percent per annum, which Note shall be paid, in
two installments; the first installment of Twenty-Five
Thousand (US$25,000) Dollars shall be paid ninety (90)
days after the Closing and the remaining balance shall
be paid one hundred eighty (180) days after the Closing;
and
(iii) The sum of Four Hundred Thousand (US$400,000) Dollars by
Purchaser executing and delivering to Seller, at
Closing, a Promissory Note (the "Purchase Note")
providing for the repayment of said amount, together
with interest thereon, computed at the rate of twelve
(12%)
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percent per annum, in eighty-four (84) equal,
consecutive, monthly installments, each in the amount of
SEVEN THOUSAND SIXTY-ONE and 10/100 (US$7,061.10)
DOLLARS. Said payments shall commence on November 1,
1996 and continue on the first day of each and every
month thereafter to and including October 1, 2003, when
the then unpaid principal balance thereof, together with
all interest accrued and unpaid thereon, shall be due
and payable.
2.2 The above described Purchase Note, which shall be in the
form annexed hereto as Exhibit "C" (the "Purchase Note"), shall provide that in
the event that prior to full payment of the Purchase Note, Purchaser shall sell
or otherwise transfer the Franchise for any of the Centers, together with all or
substantially all of the assets pertaining thereto (in accordance with, and as
permitted by, the terms of the Master Franchise Agreement), then Purchaser shall
be obligated to pay to Seller, in reduction of the then outstanding balance of
the Purchase Note the greater of either (i) that portion of the Purchase Note
which the parties shall have, at Closing, allocated to the Center and which
amount is set forth on Schedule "C" or (ii) 100% of the net sale price for the
assets and Franchise for the Center, which, for purposes of this Agreement,
shall be deemed to be the gross sales price less reasonable and necessary costs
actually incurred by Purchaser which directly relate to the sale, such as
brokerage fees, transfer fees and reasonable attorneys fees. The Purchase Note
shall also provide that upon payment of said amount, Seller shall release its
security interest in the assets at the Center which is being transferred.
2.3 (i) In addition to the amounts set forth in Section 2.1
above, Purchaser, shall also be required to pay to Seller, as part of the
Purchase Price for the Assets, an amount equal to the value (as determined in
accordance with the provisions of this Section 2.3) of all of the Seller's
inventory located at each of the Centers on the Effective Date, which Purchaser
elects to purchase pursuant to the provisions of this Section 2.3, which amount
shall be payable pursuant to a Promissory Note as described in Section 2.3 (ii)
below. Purchaser shall also be obligated to pay to Seller, as part of the
Purchase Price, a sum equal to sixty (65%) percent of all of the Seller's
accounts receivable, which are not more than 120 days old, pertaining to each of
the Centers, and due and owing to Seller on the Closing Date; said amount shall
be payable in three equal monthly installments commencing thirty days after the
Closing and continuing on the sixtieth and ninetieth day after the Closing,
pursuant to a promissory note to be executed at Closing (the "AR Note").
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(ii) Purchaser and Seller shall jointly conduct an
inventory at each Center. The purchase price for the inventory shall be equal to
twenty-seven (27%) percent of the suggested retail price for each item.
Purchaser shall be obligated to purchase inventory having a purchase price, in
the aggregate, from the four (4) Centers of not less than US$150,000. In the
event that the purchase price of all the inventory at the Centers exceeds
US$150,000, Purchaser shall have the right to select the inventory which
Purchaser desires to purchase, provided said inventory shall have an aggregate
purchase price of at least US$150,000, and all other inventory, which Purchaser
elects not to purchase, shall be boxed and removed by Seller within ten (10)
days after the Closing Date. The Inventory which Purchaser retains shall be paid
by Purchaser executing and delivering to Seller, at Closing, four (4) promissory
notes (the "Inventory Notes"), one for the inventory at each Center providing
for repayment of said amount, together with interest at 12% per annum, in
thirty-six (36) consecutive, equal monthly installments commencing November 1,
1996 and continuing to and including October 1, 1999. If, at Closing, the
purchase price of the inventory has not been determined, then at Closing,
Purchaser will execute the aforesaid Inventory Notes in blank, which note will
be held, in escrow, by Purchaser's attorney (the "Escrow Agent") pending the
determination by Seller of the amount due thereunder, based upon the physical
inventory conducted jointly by the parties and confirmed by both Seller and
Purchaser. Upon the Escrow Agent's receipt of Seller's computation of the
Purchase Price of said inventory, the Escrow Agent will notify Purchaser of the
aggregate amount thereof due, and thereafter the Escrow Agent will be authorized
to complete the Inventory Notes in accordance with the terms hereof and deliver
the same to Seller. In the event that Purchaser shall dispute any of the amounts
due, as computed by Seller, Purchaser shall be obligated, within ten (10) days
after receipt of the computation to so advise Seller, or Purchaser will be bound
by Seller's determination of the amount of the inventory. In the event that the
purchase price for the inventory, and therefore the amount of the Inventory
Notes, has not been conclusively determined at the date that payments are due to
commence, or, in the event that for any reason, said amount shall be in dispute,
then, until such time as the amount is conclusively determined, Purchaser shall
be obligated to make estimated payments based upon an aggregate estimated amount
of US$150,000, and monthly payments shall be in the aggregate amount of
$4,982.15. Upon final determination of the cost of the inventory, to the extent
the payments made by Purchaser shall exceed the amount due to Seller, or the
amount due to Seller, Purchaser shall receive a credit for the amounts paid,
against the next payments due under the Inventory Notes. In the event that the
estimated payments have been insufficient, Purchaser shall pay such additional
amounts within ten (10) days after notice. It is acknowledged and agreed that
all amounts due on the Inventory Notes will be payable in US Dollars. Each
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Inventory Note will provide that in the event of a sale or transfer of the
assets relating to the Center to which said Inventory Note relates, Purchaser
shall be obligated, prior to or simultaneously with said transfer, to pay the
remaining unpaid balance due on said Inventory Note.
(iii) As security for Purchaser's repayment of the $
50,000 Note, the Purchase Note, the Inventory Note, and the Master Franchise
Note, described in Section 4.1 below, Purchaser shall execute and deliver to
Seller a Security Agreement pursuant to which Seller will retain, until said
amounts shall have been paid in full (or until a partial release shall be
obtained by payment of the amounts described in Section 2.2), a security
interest in all of Purchaser's furniture, fixtures, leasehold improvements,
equipment, patient records, accounts receivable and inventory pertaining to each
of the Centers.
2.4 The allocation of the Purchase Price shall be as set forth
on Exhibit "F" annexed hereto, and both parties agree to use such allocation in
their income tax returns. Purchaser and Seller agree to furnish each other and
the Internal Revenue Service ("IRS") with such applicable information as may be
required under ss.1060 of the Internal Revenue Code and to cooperate in the
completion and timely filing of IRS Form 8594 (Asset Acquisition Statement).
2.5 All obligations under the $50,000 Note, the Purchase Note,
the Inventory Note, the AR Note, and the Master Franchise Note (as defined in
Section 4.1 herein) shall be personally guaranteed by Xxxxxxxx Xxx.
ARTICLE 3. Additional Payments; Adjustments
3.1 At Closing, and in addition to the amounts set forth in
Article 2, Purchaser, together with Eye-Site Inc., shall also be paying to
Seller, pursuant to the terms of the Master Franchise Agreement, the sum of TWO
HUNDRED TWENTY THOUSAND (US$220,000) DOLLARS, representing the Master Franchise
Fee. Of this amount, TWENTY THOUSAND ($20,000) DOLLARS shall be payable to
Seller at Closing and the balance shall be paid pursuant to the terms of a
Promissory Note, to be executed simultaneously with the closing, and containing
the terms described in the Master Franchise Agreement (the "Master Franchise
Note").
3.2 At Closing, to the extent possible, the parties shall make
such adjustments as may be necessary for the payment of customary closing
adjustments including, but not limited to, rent, utilities, insurance, and
employee salaries; provided, however, that Purchaser shall have no obligation to
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hire any employees of Seller; Seller agrees to terminate all employees at the
Centers as of the Closing Date and shall be responsible for all compensation due
through said date. Purchaser shall have the right, but not the obligation, at
Purchaser's cost and expense to hire any such employees from and after the
Closing Date. The parties agree that, if practicable, any adjustments due for
these amounts which may have been paid by Seller or be due from Seller shall be
made through post-closing adjustments.
3.3 Seller shall be responsible and shall pay all such tax,
severance, or other amounts, as it is required by law, to pay, as a transferor
of its business.
ARTICLE 4. Subleases
4.1 Simultaneously with the Closing, and as a condition
thereof, Purchaser shall execute four (4) Subleases with Seller or its designee;
one for the Lime Ridge Center (the "Lime Ridge Sublease"); one for the Hamilton
Center (the "Hamilton Sublease"); one for the Bramalea Center (the "Bramalea
Sublease"); and one for the Bay Street Center (the "Bay Street Sublease"). (The
Lime Ridge Sublease, the Hamilton Sublease, the Bramalea Sublease and the Bay
Street Sublease are hereinafter collectively referred to as the "Subleases.")
4.4 Each of the Subleases shall provide that Purchaser shall
have the right, at such time as all amounts under the $50,000 Note, the Purchase
Note, the Inventory Note and the Master Franchise Note have been paid, and
provided that neither Purchaser nor any of its subsidiaries or affiliates shall
be in default under the Master Agreement, any of the Subleases or any other
agreement with Seller or any of its subsidiaries or affiliates, to negotiate
with the landlord for each of said Premises for consent to an assignment of the
Lease from Seller, or such other Lessee of the Premises, as then may be
appropriate, provided said assignment shall release Seller, and/or the then
Lessee, as the case may be, from all further liability under each said lease.
All costs and expenses relating to such assignments shall be borne by Purchaser.
In the event that Purchaser shall obtain an assignment of any of said Leases,
then for as long as any amounts are due and owing under the Purchase Note, the
Inventory Note, the $50,000 Note or the Master Franchise Note simultaneously
with the assignment and as security for Purchaser's obligations under said
Notes, Purchaser shall deliver to Seller a collateral assignment of the Lease
being assigned to Purchaser, or any subsequent lease pursuant to which Purchaser
may occupy the Premises. The Collateral Assignment of Lease shall be in
substantially the form annexed hereto as Exhibit "___" and shall, as a condition
to the assignment of such Lease, require the consent of the Master Landlord of
the Premises
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covered thereby. Upon full payment of each of the Notes, the Collateral
Assignments shall be returned to Purchaser.
4.5 Purchaser acknowledges that each of the Subleases requires
the consent of the landlords thereunder. Seller and Purchaser agree to use their
best efforts to obtain the consent of the respective landlords to each of the
Subleases, and Purchaser agrees to supply to Seller all such documentation and
information, as may be requested by the landlord on said Premises or which is
otherwise necessary in connection with the obtaining of any of the landlord
consents. Purchaser and Seller agree to make all such reasonable modifications
to the terms of the Subleases and hereunder as may be required by the Landlord
thereunder in connection with said consents. If such consents are not obtained,
or if an attempted sublease thereof would be ineffective, or result in a default
under the Lease to the Premises, until such consent is obtained, Seller and
Purchaser will cooperate to design a mutually agreeable alternative arrangement
under which Purchaser would obtain the benefits and assume the obligations
thereunder in accordance with this Agreement.
ARTICLE 5. Representations by Seller and Purchaser
5.1. The Seller warrants and represents to the Purchaser that
on the date hereof, and on the Effective Date, the following statements and
information set forth under this Section 6.1 or in any Schedule or Exhibit
referred to herein, are true and complete, not misleading and do not omit any
material information:
(a) Seller is a duly organized, validly existing corporation
and has full power and authority to enter into this Agreement, and the Master
Franchise Agreement, and all other documents described or contemplated
hereunder.
(b) Seller shall, on the Effective Date, have good and
marketable title to all of the Assets being conveyed pursuant to this Agreement,
which shall not be subject to any mortgage, lien or encumbrance, except as may
otherwise be set forth herein, and except for any security interest in the lien
upon the Assets:
(i) to be retained by the Seller pursuant to the Security
Agreement being executed simultaneously herewith;
(ii) in favor of the present landlords of any of the Centers
(pursuant to the Leases); and
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(iii) presently held by Seller's lender(s), which security
interest and lien will be discharged and removed by Seller
within 30 days after the Effective Date.
(c) Except as set forth on Schedule 6.1 annexed hereto, and
except for the Subleases, there is no service agreement or other contract or
agreement in effect relating to any of the Centers, which Purchaser shall be
obligated to assume.
(d) The Seller shall indemnify and hold Purchaser harmless
from any costs, claims, or liabilities, including reasonable attorney's fees,
arising out of any claim arising from the conduct of any of the Centers prior to
the Effective Date.
(e) The Seller's execution and delivery of this Agreement and
all other documents executed or to be executed by Seller in connection with the
consummation of the transactions embodied herein do not require the consent of
any third party, except for consent of the Landlords for the Subleases, and will
not result in the breach of any other agreement to which Seller is a party, nor
will it result in the breach of any terms or provisions of the Certificate of
Incorporation or the By-Laws of the Seller, nor will it conflict with, result in
a breach of, or constitute a default under any applicable law, judgment, order,
injunction, decree, rule and/or regulation or ruling of any court or
governmental authority.
(f) The Lime Ridge Lease, the Bramalea Lease, the Hamilton
Lease, and the Bay Street Lease, copies of which have been heretofore delivered
to Purchaser, each represent the entire agreement between the respective tenant
and Master Landlord thereunder, and each is in full force and effect (subject to
obtaining the necessary consents to the Subleases as described in Article 5
above), and except as set forth on Schedule "A", have not been modified or
amended, and Seller has received no notice from any of the Master Landlords that
any of said leases is in default, nor has it received notice of any default
which has not been cured.
(g) The execution and delivery of this Agreement and all other
documents executed and to be executed by Seller in connection with the
consummation of the transactions embodied herein, have been duly and validly
authorized, and all requisite corporate action has been taken to make each of
them valid and binding upon the Seller in accordance with each of their
respective terms (subject to obtaining the necessary consents to the Subleases
as described in Article 5 above).
(h) The Seller is not subject to any pending or threatened
bankruptcy or insolvency or similar proceeding, and Seller has not made, nor is
it threatening to make, any
9
assignment for the benefit of creditors, bulk sale of assets or is (or any of
its property is) subject to any receiver, assignee, custodian, liquidator,
conservator, committee, trustee or similar officer.
(i) The Seller has not been served in any, nor is it aware of
any threatened or pending, litigation, relating to any of the Centers which
would impair the ability of the Seller from performing its obligations under
this Agreement and/or any of the other documents referred to herein.
(j) Seller has paid, or will promptly following the Closing
pay, any and all taxes relating to the operation of each of the Centers,
including all income, business and sales taxes, and has, or will promptly after
the Closing, file all tax returns relating thereto due and owing through the
Closing Date.
(k) From and after the date hereof, to the Closing Date,
Seller shall be obligated to maintain the inventory at each of the Centers at
its customary operating levels.
(l) Schedule D, annexed hereto, sets forth a true and correct
statement of the aggregate sales of each of the Centers for the year ended
December 31, 1995.
(m) On the date hereof and on the Effective Date, the
statements and information set forth in this Section 6.1 or any Schedule or
Exhibit referred to herein are true and complete, are not misleading and do not
omit any material information.
5.2. The Purchaser represents and warrants to the Seller
(which representations and warranties shall survive Closing) that on the date
hereof and on the Effective Date the following statements and information set
forth in this Section 6.2 or in any Schedule or Exhibit referred to herein, are
true and complete, not misleading and do not omit any material information:
(a) The Purchaser is and on the Effective Date will be a
corporation duly organized, validly existing and in good standing under the laws
of the Province of Ontario.
(b) The execution and delivery of this Agreement and all other
documents executed and to be executed in connection with the consummation of
this transaction embodied herein, have been duly and validly authorized and all
requisite corporate action has been taken to make each of them valid and binding
upon the Purchaser in accordance with each of their terms.
(c) The Purchaser's execution and delivery of this Agreement
and all other documents executed or to be executed by Purchaser in connection
with the consummation of the
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transactions embodied herein do not require the consent of any third party and
will not result in the breach of any other agreement to which Purchaser or any
guarantor hereunder is a party, nor will it result in the breach of any terms or
provisions of the Certificate of Incorporation or the By-Laws of the Purchaser,
nor will it conflict with, result in a breach of, or constitute a default under
any applicable law, judgment, order, injunction, decree, rule and/or regulation
or ruling of any court or governmental authority.
(d) Eye-Site Inc. an affiliate of Purchaser, is the sole owner
of each of the five centers described on Schedule E hereunder, which centers,
simultaneously herewith are, pursuant to the terms of the Master Franchise
Agreement, being converted to Sterling Optical Centers.
(e) The sole shareholder of Purchaser and Eye-Site Inc. is
Xxxxxxxx Xxx.
(f) At least ten (10) days prior to the date hereof, Purchaser
has received and reviewed a copy of the Offering Circular and each of the
Leases.
(g) Neither the Purchaser, Eye-Site Inc. nor any of their
shareholders referred to herein are subject to any pending or threatened
bankruptcy or insolvency or similar proceeding, and none of them has made, or is
threatening to make, any assignment for the benefit of creditors, bulk sale of
assets or is (or any of its or their property is) subject to any receiver,
assignee, custodian, liquidator, conservator, committee, trustee or similar
officer.
(h) Neither the Purchaser, Eye-Site, Inc., nor any of its
shareholders referred to herein have been served in any litigation, nor are they
aware of any threatened or pending litigation an adverse outcome of which would
impair the ability of the Purchaser or any such guarantor from performing its or
his obligations under this Agreement and/or any of the other documents referred
to herein.
(i) On the date hereof and on the Effective Date, the
statements and information set forth in this Section 6.2 or any Schedule or
Exhibit referred to herein are true and complete, are not misleading and do not
omit any material information.
ARTICLE 6. Waiver of Bulk Sales
6.1 Purchaser waives Seller's compliance with the provisions
of all applicable laws relating to bulk transfers. Except as otherwise set forth
herein, Seller shall be liable for and shall indemnify, defend and hold
Purchaser harmless from any
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claims or demands of, or any liabilities to, any public agency or taxing
authority, any creditor and any other person or entity asserting loss by reason
of any matters that are within the scope of or related to any applicable "Bulk
Sales Act". Seller agrees that within a reasonable time following the Closing,
it shall be obligated to pay the amounts due to its creditors on account of the
Centers. Nothing in this Section shall estop or prevent either Purchaser or
Seller from asserting as a bar or defense to any actions or proceeding brought
under any such law that it is not applicable to the sale contemplated under this
Agreement.
ARTICLE 7. Closing Date
7.1. The Closing shall be held at the offices of Seller at
0000 Xxxxxxxxx Xxxxxxxx, Xxxx Xxxxxx, Xxx Xxxx, at 10:00 o'clock in the forenoon
on the 30th day of September, 1996, or at such other time and place as the
parties shall mutually agree (the "Closing Date").
ARTICLE 8. Documents to be Delivered at Closing
8.1. The following documents shall be executed and delivered
at the Closing:
(a) Purchaser shall execute each of the Notes described
herein.
(b) Purchaser and Seller or its designee shall execute the
Subleases.
(c) Purchaser and Eye-Site Inc. shall execute and deliver to
Seller the Master Franchise Agreement and all related agreements required to be
executed by Franchisees of Seller.
(d) Eye Site, Inc., and Xxxxxxxx Xxx, the sole shareholder of
Purchaser and Eye-Site Inc., shall execute and deliver to Seller, their Guaranty
for all obligations under this Agreement, the $50,000 Note, the Purchase Note,
the Inventory Notes, the AR Note, and the Master Franchise Note.
(e) Purchaser shall execute such Financing Statements,
Security Agreements, Telephone Assignment Agreements and other documents as
Seller shall reasonably request to enable Seller to perfect its security
interest in the Assets and all other assets hereafter acquired by Purchaser for
use in connection with the operation of any of the Centers.
(f) The Shareholder of Purchaser shall execute and deliver to
Seller a Guaranty and Assumption Agreement in form
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annexed hereto as Exhibit " " pursuant to he agrees to be bound by the terms of
the Master Franchise Agreement as applicable to the shareholders, officers and
directors of the Purchaser, including, the obligation to take or refrain from
taking certain actions and engage or refrain from engaging in certain
activities, as described in the Master Franchise Agreement.
(g) Purchaser and Eye-Site Inc. shall execute and deliver to
Seller a Debit Authorization Agreement, in form annexed hereto as Exhibit " "
authorizing Seller to electronically debit Purchaser's bank account for the
amounts due under the Notes and the Master Franchise Agreement.
(h) Purchaser and Eye-Site Inc. shall each deliver to Seller a
certified copy of its Certificate of Incorporation, a good standing
certificate/certificate of status, and certified resolutions authorizing the
Purchaser to enter into the transaction.
(i) Purchaser and Eye-Site Inc. shall each cause its counsel
to deliver to Seller an opinion of counsel to the effect that: (i) Purchaser is,
and on the Closing Date will be, a corporation duly organized, validly existing
and in good standing under the laws of the Province of Ontario; (ii) the
execution and delivery of this Agreement and all other documents executed
(and/or to be executed) in connection herewith by Purchaser have been duly and
validly authorized and all requisite corporate action has been taken to make
them valid and binding upon Purchaser, enforceable against Purchaser in
accordance with each of their respective terms; and (iii) the consummation of
the transactions contemplated by this Agreement will not result in the breach of
any term or provision of the Certificate of Incorporation or By-Laws of
Purchaser.
(j) On or before the Closing Date, Seller will deliver to
Purchaser a Xxxx of Sale conveying title to the Assets to the Purchaser.
(k) Seller shall deliver to Purchaser a certified copy of its
Certificate of Incorporation, a good standing certificate, and certified
resolutions authorizing the Seller to enter into the transaction.
(l) Seller shall cause its counsel to deliver to Purchaser an
opinion of counsel to the effect that: (i) Seller is, and on the Closing Date
will be, a corporation duly organized, validly existing and in good standing
under the laws of the state of New York; (ii) the execution and delivery of this
Agreement and all other documents executed (and/or to be executed) in connection
herewith by Seller have been duly and validly authorized and all requisite
corporate action has been taken to make them valid and binding upon Seller,
enforceable
13
against Seller in accordance with each of their respective terms; and (iii) the
consummation of the transactions contemplated by this Agreement will not result
in the breach of any term or provision of the Certificate of Incorporation or
By-Laws of Seller.
(m) Seller shall deliver to Purchaser assignments of each of
the telephone numbers at the Centers.
(n) Seller shall deliver to Purchaser the appropriate election
under Section 167 of the Exercise Tax Act (Canada) and a certificate required
under Section 6 of the Retail Sales Tax Act.
(o) Each of the parties shall deliver to the other, a
Certificate, executed by an officer of the Corporation confirming that as of the
Closing Date, all representations are true and correct.
(p) Seller shall use its reasonable diligent efforts to cause
the landlords at each of the Centers to deliver to Purchaser, an acknowledgment
that the lease is in full force and effect and there is no outstanding default
thereunder.
ARTICLE 9. Binding Effect
9.1. Except as otherwise provided herein or in the Master
Franchise Agreement with respect to the Purchaser's limitations on assignments,
this Agreement shall be binding upon and inure to the benefit of the parties
hereto, their successors and assigns, personal representatives and other
distributees.
ARTICLE 10. Notices
10.1. Any notice, request, instruction or other document given
hereunder by any party hereto shall be in writing and delivered personally, by
courier service which obtains a signed receipt upon delivery, or sent by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to Seller to: Sterling Vision, Inc.
0000 Xxxxxxxxx Xxxxxxxx
Xxxx Xxxxxx, Xxx Xxxx 00000
Attn: President
Fax No.: 000-000-0000
with copies to be
sent to: Sterling Vision, Inc.
14
0000 Xxxxxxxxx Xxxxxxxx
Xxxx Xxxxxx, Xxx Xxxx 00000
Attn: General Counsel
Fax No.: 000-000-0000
Xxxxxxx Xxxxxxxx & Flohr
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxx, Esq.
Fax No.: 000-000-0000
If to Purchaser to:
Eye Site (Ontario) Ltd.
000 Xxxx Xxxxxx Xxxx
Xxxxxx, Xxxxxxx
Xxxxxx X0X 0X0
Fax No.: 000-000-0000
with copies to be sent to:
Xxxxxx Van Winssen, Esq.
Xxxxxxxxx, Menningra, Xxxx
Xxxxxxxx & Xxxxxxxxxxx
000 Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxx Xxxxxxx
Xxxxxx X0X 582
Fax No.: 000-000-0000
10.2 Either party may specify a different address for the
sending of communications and notices, by a notice sent in the manner provided
above.
10.3 Notices personally delivery or delivered by courier
service shall be deemed given when received; and notices sent by certified or
registered mail shall be deemed given three (3) days after the same are
deposited in the United States or Canadian mail.
ARTICLE 11. Indemnification
11.1 Purchaser agrees to indemnify in respect of, and hold
Seller harmless against, any and all damages, claims and losses, together with
reasonable attorneys' fees (collectively called "Damages") based upon, resulting
from, or otherwise in respect of: (i) Purchaser's conduct of the operation of
any of the Centers from and after the Closing Date, (ii) Purchaser's performance
of all of the terms of this Agreement, the Master Franchise Agreement, the
Subleases, the Notes, the Security Agreement, the Guaranties and/or any other
document or agreement
15
with (including the obligation to pay any sum of money to) the Seller, or any of
its subsidiaries, affiliates and/or related companies (hereinafter collectively
called the "Agreements") and (iii) any misrepresentation, breach of warranty or
nonfulfillment or failure to perform any covenant or agreement on the part of
Purchaser to be performed pursuant to the Agreements.
11.2 Seller agrees to indemnify in respect of, and hold
Purchaser harmless against, any and all damages, claims and losses, together
with reasonable attorneys' fees (collectively called "Damages") based upon,
resulting from, or otherwise in respect of: (i) the operation of any of the
Centers prior to the Effective Date, (ii) Seller's performance of all of the
terms of this Agreement and the Master Franchise Agreement and/or any other
document or agreement with the Purchaser, or any of its subsidiaries, affiliates
and/or related companies (hereinafter collectively called the "Agreements") and
(iii) any misrepresentation, breach of warranty or nonfulfillment or failure to
perform any covenant or agreement on the part of Seller to be performed pursuant
to the Agreements.
ARTICLE 12. Broker
12.1 The parties hereto represent and warrant to the other
that all negotiations relating to this Agreement have been carried on by them
directly, without the intervention of any person, firm or corporation, and each
of the parties indemnifies and holds harmless the other against and in respect
of any claim for a brokerage or other commission relating to this Agreement or
the transactions contemplated hereunder. The representations contained in this
Article 12 shall survive the Closing.
ARTICLE 13. Nature and Survival of Representations
13.1 Except for representations and warranties which are
specifically stated herein to survive the Closing, no representation, warranty
or agreement made by Seller hereunder shall be deemed to survive the Closing,
and no representation, other as expressly stated in this Agreement, shall be
binding upon Seller. All representations, warranties and agreements of Purchaser
made hereunder shall survive the Closing.
ARTICLE 14. Arbitration
14.1 This Agreement shall be construed and enforced in
accordance with the laws of the Province of Ontario. The parties hereto consent
and agree that all controversies, disputes or claims arising between the Seller
and Purchaser in
16
connection with, arising from, or with respect to: (1) this Agreement; (2) the
relationship of the parties created hereunder; or (3) the validity of this
Agreement, the Master Franchise Agreement or any other agreement between the
parties, or any provision thereof (except as otherwise set forth below) which
shall not be resolved within fifteen (15) days after either party shall notify
the other in writing of such controversy, dispute or claim, shall be submitted
for arbitration, pursuant to the Arbitrations Act S.O. 1991, ch.17 in Ontario,
Canada on demand of either party. Such arbitration proceedings shall be
conducted by a panel of three (3) arbitrators located in Ontario, Canada. Each
of the parties shall have thirty (30) days from receipt of the election to
proceed to arbitration to designate one arbitrator; the two arbitrators shall
thereafter have fifteen (15) days to designate a third arbitrator. In the event
that any of the arbitrators shall fail to be appointed in accordance with the
foregoing provisions, either party may apply to the Ontario Court (General
Division) to appoint the remaining arbitrator or arbitrators, as the case may
be. The arbitration shall commence thirty (30) days after appointment of all of
the arbitrators. The arbitrators shall have the right to award or include in
their award any relief which they deem proper under the circumstances, including
without limitation, money damages (with interest on unpaid amounts from date
due), specific performance and injunctive relief. The award and decision of the
arbitrators shall be conclusive and binding upon all parties hereto, with no
appeal, and judgment upon the award may be entered in any court of competent
jurisdiction. The parties acknowledge and agree that any arbitration award may
be enforced against either or both of them in any such court of competent
jurisdiction and each waives any right to contest the validity or enforceability
of such award. The parties further agree to be bound by the provisions of any
statute of limitations which would otherwise be applicable to the controversy,
dispute or claim which is the subject of any arbitration proceeding initiated
hereunder.
14.2 Nothing herein shall prevent Seller or any of its
affiliates from seeking action in any court of competent jurisdiction in the
event of a violation or default under any Sublease with Purchaser relating to
any of the Premises subleased by Seller or its affiliates.
14.3 Nothing herein contained shall bar Seller's or
Purchaser's right to obtain preliminary injunctive relief against conduct or
threatened conduct, that will cause it loss or damages, under customary equity
rules, including applicable rules for obtaining restraining orders and
preliminary injunctions. Purchaser agrees that Seller may have such injunctive
relief, without bond, but upon due notice, in addition to such further and other
relief as may be available at equity or law, and the sole remedy of Purchaser,
in the event of the entry of such injunction, shall be the dissolution of such
injunction, if
17
warranted, upon hearing duly had, all claims for damages by reason of the
wrongful issuance of any such injunction being expressly waived hereby.
ARTICLE 15. Miscellaneous
15.1. The captions as used in this Agreement are inserted as a
matter of convenience and for reference, and in no way define, limit or describe
the scope of this Agreement nor the intent of any provision thereof.
15.2. The parties hereto agree to execute such other documents
and take such other steps as may from time to time be required to consummate the
transactions contemplated hereby and to vest in Purchaser good and unencumbered
title to the assets which are the subject matter of this Agreement. The
Purchaser further agrees that within ten (10) days following a written request
by Seller or its attorney, Purchaser will re-execute any documents signed in
connection with this Agreement which was incorrectly drafted or signed, execute
any document or instrument that inadvertently was not signed and cooperate in
the adjustment or correction of clerical errors. Failure of Purchaser to comply
with its obligations under this provision shall be deemed to be a default of
this Agreement and the date. It is agreed that this provision is intended merely
to allow for correction of inadvertent or ministerial errors and is not intended
to change the essence of the transaction.
15.3 In the event that one or more provisions of this
Agreement shall at any time be found to be invalid or otherwise rendered
unenforceable, such provision or provisions shall be severable from this
Agreement so that the validity or enforceability of the remaining provisions
shall be not affected thereby.
15.4. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same agreement.
15.5. No waiver of any of the provisions of this Agreement by
any party shall be deemed or shall constitute a waiver of any other provisions,
whether or not similar, nor shall any waiver constitute a continuing waiver. No
waiver shall be binding unless executed in writing by the party making the
waiver.
15.6. This Agreement may not be assigned by Purchaser except
as may otherwise be expressly permitted under the terms of the Master Franchise
Agreement.
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15.7. Wherever in this Agreement, the singular and the plural
shall be interchangeable.
15.8. This Agreement represents the entire understanding of
the parties with respect to the subject matter hereto, and no modification or
amendment shall be binding unless in writing and signed by each of the parties
hereto. Purchaser has entered into this Agreement without relying upon any
promise, statement, remedies, representation warranties, conditions or other
inducements, expressed or implied, oral or written, not set forth herein.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the date set forth adjacent to their respective signatures.
SELLER:
STERLING VISION, INC.
BY:___________________________
PURCHASER:
EYE SITE ONTARIO, LTD.
BY:___________________________
19
Schedule A
Leases
1. The Lime Ridge Center is occupied pursuant to the terms of that certain lease
dated March 1, 1984 by and between the Cadillac Fairview Corporation, Limited,
as Landlord, and Sterling Optical Corp. (formerly known as IPCO Corporation), as
Tenant, which lease was assigned to Seller pursuant to an Assignment of Lease
dated June 19, 1992 between Sterling Optical Corp. as Assignor, Seller as
Assignee and the Cadillac Fairview Corporation, Limited as Landlord (hereinafter
referred to as the "Lime Ridge Lease").
2. The Hamilton Center is occupied pursuant to the terms of that certain lease
dated October 12, 1983 by and between the Cadillac Fairview Corporation,
Limited, as Landlord, and Sterling Optical Corp. (formerly known as IPCO
Corporation), as Tenant, which lease was assigned to Seller pursuant to an
Assignment of Lease dated June 19, 1992 between Sterling Optical Corp. as
Assignor, Seller as Assignee and the Cadillac Fairview Corporation, Limited as
Landlord (hereinafter referred to as the "Xxxxxxxx Lease").
3. The Bramalea Center is occupied pursuant to the terms of that certain lease
dated the 13th day of July, 1992 by and between Bramalea Limited, as Landlord
and Sterling Vision of Bramalea, Inc., as Tenant (the "Bramalea Lease").
4. The Bay Street Center is occupied pursuant to the terms of that certain lease
dated July 1, 1984 by and between CIBC Development Corporation, as Landlord and
Sterling Vision of Bay Street Inc., as Tenant (the "Bay Street Lease")
The Lime Ridge Lease, the Hamilton Lease, the Bramalea Lease and the Bay
Street Lease are hereinafter collectively referred to as the "Leases"
SCHEDULE C
ALLOCATION OF PURCHASE PRICE
BAY STREET CENTER $124,312.00
BRAMALEA CENTER 102,765.00
HAMILTON CENTER 67,183.00
LIME RIDGE CENTER $205,739.00
-----------
SCHEDULE D
SCHEDULE OF SALES - 0/0/00-00/00/00
XXX XXXXXX CENTER $ 571,962.00
BRAMALEA CENTER 472,824.00
HAMILTON CENTER 309,112.00
LIME RIDGE CENTER 946,608.00
-------------
TOTAL $2,300,506.00
