THIRD AMENDMENT TO CONVERTIBLE PREFERRED STOCK
AND WARRANTS SUBSCRIPTION AGREEMENT
This Amendment to Convertible Preferred Stock and Warrants Subscription
Agreement (the "Agreement") is being made and entered into as of the 7th day of
December, 1999, by and between Sterling Vision, Inc., a New York corporation
(the "Company"), and the holders of shares of the Company's Convertible
Preferred Stock executing this Agreement.
W I T N E S S E T H:
In consideration of the sum of $10.00 and other good and valuable
consideration to each of the parties in hand paid to the other, the receipt and
sufficiency of which is hereby acknowledged, it is hereby agreed as follows:
1. All capitalized terms used (but not otherwise defined) herein shall
have the respective, identical meanings ascribed to them in that
certain Convertible Preferred Stock and Warrants Subscription
Agreement, dated April 14, 1999, effective as of February 17, 1998,
between the Company and the Holders;
2. Subsections 1.3 of the Amendment, relating to the Company's
obligation to effect certain redemptions, is hereby deleted in its
entirety.
3. Subsection 3.1(a) of the Amendment is hereby amended to provide that
the Conversion Price is $0.75 (75 cents).
4. The Company shall within 45 days after the date hereof file a
registration statement under the Securities Act of 1933 (the "New
Registration Statement") to register the additional shares of
Convertible Preferred Stock which shall be issuable as a result of
the reduction in the Conversion Price effected by this Amendment. The
New Registration Statement shall be considered a "Registration
Statement" for all purposes of the Agreement and the Amendment,
including without limitation, for purposes of the requirement to
obtain and maintain effectiveness, allocation of costs and expenses,
delivery of prospectuses, and penalties for delayed filings or
effectiveness. Fort the purposes of calculating time periods for the
New Registration Statement which under the Agreement run from the
"Closing, the term "Closing" shall mean the date of this Amendment.
5. Subsection 4.1 of the Amendment is hereby amended by deleting ",prior
to February 17, 2000," and the penultimate sentence of such Section.
6. The Exercise Price of the Warrants issued under Exhibit C of the
Agreement is hereby reduced to $2 per share.
7. The Company will on Holder's request promptly file a formal amendment
to the Company's certificate of incorporation to reflect the
amendments effected hereby.
8. Sections 3.2(a) and (b) of the Amendment are hereby amended to read as
follows:
Section 3.2 Conversion Procedure.
(a) To convert the Convertible Preferred Stock into
Common Stock, the Holder need only complete, sign and deliver
to the Company the Notice of Conversion attached hereto,
together with an affidavit that it is then the holder of the
shares of Convertible Preferred Stock then being
4
converted. No representation letter or other documentation
shall be required. The date upon which the Company receives
the completed Notice of Conversion (by recognized, overnight
courier, hand-delivery or facsimile, followed by
hand-delivery or courier delivery within two (2) business
days thereafter) is the conversion date, whether or not the
Company has theretofore received the original of the
Convertible Preferred Stock. Within seven (7) business days
after its receipt of the Notice of Conversion, as aforesaid,
whether or not the Company has then received the original of
the Convertible Preferred Stock from the Holder, the Company
shall cause its transfer agent to issue and deliver a
certificate for the number of full shares of Common Stock
issuable upon such conversion, and the Company shall deliver
to such Holder a check for any fraction of a share. The
person in whose name the certificate representing shares of
Common Stock is to be registered shall be treated as a
shareholder of record on and after the conversion date. Upon
surrender of a share of Convertible Preferred Stock that is
to be converted in part, the Company shall issue to the
Holder new shares of Convertible Preferred Stock, equal in
number to the unconverted portion of the Convertible
Preferred Stock surrendered.
(b) Notwithstanding the provisions of Subsection
3.2(a) above, from and after the date that any registration
statement is effective as to any shares issuable on conversion
of the Convertible Preferred Stock, the Company, if so
requested by the Holder, shall, within three (3) business days
after its receipt of the Notice of Conversion (as required
pursuant to Subsection 3.2(a) above), whether or not the
Company has then received the original of such Convertible
Preferred Stock from the Holder, serve written instructions on
its transfer agent to "DWAC" the shares of Common Stock to be
issued upon any such conversion of the Convertible Preferred
Stock, it being understood that no further documentation shall
be required of a Holder in connection therewith.
9. This Amendment also constitutes a notice of conversion whereby each
Holder converts the number of shares of Convertible Preferred Stock
set forth below into the number of shares of Common Stock set forth
below. A registration statement is in effect with respect to such
shares. The Company represents that immediately after its receipt of
a fully executed copy of this Agreement it will serve irrevocable
written instructions on its transfer agent to "DWAC" such shares of
Common Stock to each such Holder.
10. The Company confirms that a registration statement with respect to
the shares issuable under the Warrants is in effect.
11. The four paragraphs of the Warrants which begin with the words "This
Warrant may be exercised" are hereby amended to read as follows:
This Warrant may be exercised during the Exercise Period, as to
the whole or any lesser number of whole Warrant Shares, by
transmission to the Company, by telecopy, of the Election to Exercise
attached hereto, whether or not this warrant is surrendered, to the
Company at its office at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, or at such other place as is designated in writing by the
Company, together with a certified or bank cashier's check payable to
the order of the Company, in an amount equal to the product of the
Exercise Price and the number of Warrant Shares for which this Warrant
is being exercised (the "Aggregate Exercise Price"). No representation
letter or other documentation shall be required, other than the
affidavit executed by the Holder of said Warrant that it/she is then
the Holder thereof.
Notwithstanding anything to the contrary contained in this
Warrant, this Warrant: (i) shall be exercisable, in whole or in part,
notwithstanding the conversion of all or any part of the Preferred
Stock and/or the payment thereof; and (ii) shall not be exercisable by
the Holder to the extent that and so long as the Common Stock which
would be acquired upon such exercise when aggregated with any other
shares of Common Stock at the time of exercise beneficially owned by
the Holder and not previously sold by the Holder would aggregate more
than 4.9% of the then outstanding shares of Common Stock of the
Company. For this purpose, "beneficial
5
ownership" shall be calculated in accordance with the provisions of
Section 13(d) of the Securities Exchange Act of 1934 and the rules and
regulations promulgated thereunder. The opinion of the Holder's
counsel shall be conclusive in calculating the Holder's beneficial
ownership.
(a) Upon each exercise of the Holder's rights to purchase
Warrant Shares and the Holder's payment to the Company of the
Aggregate Exercise Price therefor, the Holder shall thereafter be
deemed to be the holder of record of the Warrant Shares issuable upon
such exercise, notwithstanding that the transfer books of the Company
shall then be closed or certificates representing such Warrant Shares
shall not then have been actually delivered to the Holder. Within
seven (7) business days after each such exercise of this Warrant and
receipt by the Company of the Election to Exercise, and the Holder's
payment to the Company of the Aggregate Exercise Price therefor, the
Company shall cause its transfer agent to issue and deliver to the
Holder a certificate or certificates for the Warrant Shares issuable
upon such exercise, registered in the name of the Holder or its
designee. If this Warrant should be exercised in part only, the
Company shall, upon surrender of this Warrant for cancellation,
execute and deliver a new Warrant evidencing the right of the Holder
to purchase the balance of the Warrant Shares (or portions thereof)
subject to purchase hereunder.
(b) Notwithstanding the provisions of Subsection 3(a) above,
the Company, if so requested by the Holder, shall, within three (3)
business days after its receipt of the Election to Exercise and the
Aggregate Exercise Price (as required pursuant to Subsection 3(a)
above), serve written instructions on its Transfer Agent to "DWAC" the
shares of Common Stock to be issued upon any such election, it being
understood that no further documentation shall be required of the
Holder in connection therewith.
12. Except as amended hereby, the Agreement and the Amendment (as
heretofore amended) are ratified and confirmed. This Agreement may be
signed in counterparts. It and the agreements and instruments amended
thereby, set forth in full all of the parties' understandings. It may
be enforced by decrees of specific performance, without posting bond
or other security, as well as by other remedies. It may not be
changed or terminated orally.
IN WITNESS HEREOF, the undersigned have executed this Amendment this
December 7, 1999.
STERLING VISION, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇, E.V.P.
6
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Holders Outstanding Total shares Common Stock Common Warrants Signature
principal of common issuable on stock Owned
amount of issuable on current remaining
Preferred Stock conversion of conversion to be
after prior Preferred converted
conversions Stock
---------------------------------------------------------------------------------------------------------------------------
Huberfeld/▇▇▇▇▇▇ $850,000 1,133,333 297,500 835,833 200,000 /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Family
Foundation
---------------------------------------------------------------------------------------------------------------------------
Huberfeld/▇▇▇▇▇▇ 900,000 1,200,000 315,000 885,000 180,000 /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Partnership
---------------------------------------------------------------------------------------------------------------------------
Ace Foundation, Inc. 1,000,000 1,333,334 350,000 983,334 200,000 /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------------------------------------------------------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇ 100,000 133,333 35,000 98,333 20,000 /s/ ▇▇▇▇ ▇▇▇▇▇▇
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Cong. Ahavas Tzedoka
V'Chesed 0 0 0 0 100,000 /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
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Total $2,850,000 3,800,000 997,500 2,802,500 700,000
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