-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, tJbuUXPKO8PbWA5fJe2B7nACt+hY54IPUMl/TuzAkXIFYei8XdoBkySABSdgv9eJ UsLGbqoJGaFoBxhNVMRnqQ== 0000074697-95-000013.txt : 199507100000074697-95-000013.hdr.sgml : 19950710 ACCESSION NUMBER: 0000074697-95-000013 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 19950706 EFFECTIVENESS DATE: 19950725 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: OPTICAL COATING LABORATORY INC CENTRAL INDEX KEY: 0000074697 STANDARD INDUSTRIAL CLASSIFICATION: OPTICAL INSTRUMENTS & LENSES [3827] IRS NUMBER: 680164244 STATE OF INCORPORATION: DE FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: S-8 SEC ACT: 1933 Act SEC FILE NUMBER: 033-60891 FILM NUMBER: 95552408 BUSINESS ADDRESS: STREET 1: 2789 NORTHPOINT PKWY CITY: SANTA ROSA STATE: CA ZIP: 95407 BUSINESS PHONE: 7075456440 MAIL ADDRESS: STREET 1: 2789 NORTHPOINT PARKWAY CITY: SANTA ROSA STATE: CA ZIP: 95407-7397 S-8 1 As filed with the Securities and Exchange Commission on July 6, 1995 Registration No. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM S-8 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 OPTICAL COATING LABORATORY, INC. (Exact name of registrant as specified in its charter) DELAWARE 68-0164244 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 2789 NORTHPOINT PARKWAY SANTA ROSA, CALIFORNIA 95407-7397 (Address of Principal Executive Offices) OPTICAL COATING LABORATORY, INC. 1995 INCENTIVE COMPENSATION PLAN (Full title of the plan) HERBERT M. DWIGHT, JR. Optical Coating Laboratory, Inc. 2789 Northpoint Parkway Santa Rosa, California 95407-7397 (Name and address of agent for service) Copies to: JOHN V. ERICKSON Collette & Erickson 555 California Street San Francisco, California 94104 (415) 788-4646 CALCULATION OF REGISTRATION FEE Proposed Proposed maximum maximum offering aggregate Amount price offering Amount of Title of Securities to be per unit price registration to be registered registered per unit(a) price(a) fee Common Stock, $.01 par value 600,000 shares $9.0625 $5,550,000 $1,875.00 (a) Estimated solely for the purpose of determining the registration fee. Pursuant to Section 6(b) of the Securities Act of 1933 and Rule 457(c) of the Securities Act Rules, the computation of fees is based upon the average of the high and low prices on June 30, 1995, of the Common Stock as reported in The Wall Street Journal on July 3, 1995. The approximate date of commencement of the proposed sale of the securities to the public is as soon as practicable following the effective date of this Registration Statement. PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE. The Company hereby incorporates by reference into this Registration Statement the following documents filed with the Commission: 1. The Company's annual report on Form 10-K for the fiscal year ended October 31, 1994 filed pursuant to Section 13(a) of the Exchange Act; 2. The Company's quarterly report on Form 10-Q for the fiscal quarter ended January 31, 1995, filed pursuant to Section 13(a) of the Exchange Act; 3. The Company's quarterly report on Form 10-Q for the fiscal quarter ended April 30, 1995, filed pursuant to Section 13(a) of the Exchange Act; 4. The Company's proxy statement dated March 10, 1995, filed pursuant to Section 14 of the Exchange Act; 5. The description of the Company's Common Stock, registered under Section 12 of the Exchange Act, which is contained in the Registration Statement filed under such Act, including any amendment or report filed for the purpose of updating such description. All reports and definitive proxy or information statements subsequently filed pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which deregisters all securities then remaining unsold shall be deemed to be incorporated by reference into this Registration Statement and to be a part hereof from the date of filing of such documents. See "Available Information." Any statement contained in a document incorporated or deemed to be incorporated herein by reference shall be deemed to be modified or superseded for purposes of this Registration Statement to the extent that a statement contained herein or in any other subsequently-filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. The Company will provide without charge to each person to whom a prospectus is delivered, upon request of such person, a copy of any or all of the foregoing documents incorporated herein by reference (other than exhibits to such documents not specifically incorporated by reference). Written or telephone requests should be directed to Optical Coating Laboratory, Inc., 2789 Northpoint Parkway, Santa Rosa, California 95407- 7397, Telephone (707) 545-6440, Attention: John M. Markovich, Vice President, Finance and Chief Financial Officer. ITEM 4. DESCRIPTION OF SECURITIES. Not applicable. ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL. Not applicable. ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS. In June 1986, Delaware enacted legislation which authorizes corporations to eliminate the personal liability of directors to corporations and their stockholders for monetary damages for breach or alleged breach of directors' fiduciary "duty of care." Under prior Delaware law, directors were accountable to corporations and their stockholders for monetary damages for conduct constituting gross negligence in the exercise of their duty of care. Although the new statute does not change directors' duty of care, it enables corporations to limit available relief to equitable remedies such as injunction or rescission. Numerous lawsuits alleging breach of directors' duty of care have been filed in connection with corporate mergers and acquisitions. The new statute permits corporations to limit available remedies of stockholders in connection with these transactions, as well as in other circumstances. The legislation has no effect on director's liability for (1) breach of the director's duty of loyalty, (2) acts or omissions not in good faith or involving intentional misconduct or knowing violations of law, (3) a corporation's illegal payment of dividends, and (4) approval of any transaction from which the director derives an improper personal benefit. The statute will have no effect on claims arising under the federal securities laws. In connection with the Company's reincorporation in Delaware in November 1987, the Company included in its Certificate of Incorporation a provision limiting directors' liability to the greatest extent permitted by Delaware corporate law. In addition, the Certificate of Incorporation and the Company's Bylaws provide that the Company will indemnify its directors and officers to the fullest extent permitted under Delaware law, including circumstances in which indemnification is otherwise discretionary. The Company submitted these charter and Bylaw provisions to its stockholders, who approved them in March 1987. In addition, the Company has entered into separate Indemnification Agreements with its directors and officers to the full extent permitted by applicable law and the Company's Certificate of Incorporation. The general effect of the indemnification provisions of the Bylaws and the Indemnification Agreements is to require the Company, among other things, to indemnify its directors and officers against certain liabilities that may arise by reason of their status or service as directors or officers (provided the officer or director acted in good faith and in a manner he or she believed to be in or not opposed to the best interests of the Company and, with respect to a criminal proceeding, provided he or she had no reasonable cause to believe that the conduct was unlawful), and to advance their expenses (including attorneys' fees) incurred as a result of any proceeding against them as to which they could be indemnified. The Company believes that its charter and Bylaw provisions and the separate Indemnification Agreements are necessary to attract and retain qualified persons as directors and officers. At present, the Company is not aware of any threatened litigation or proceeding which could result in a claim for indemnification by any director or officer. Section 145 of the Delaware General Corporation Law provides for the indemnification of officers, directors and other corporate agents in terms sufficiently broad to indemnify such persons, under certain circumstances, for liabilities (including reimbursement of expenses incurred) arising under the Securities Act of 1933. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or persons controlling the Company pursuant to the foregoing provisions, the Company has been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is therefore unenforceable. ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED. Not applicable. ITEM 8. EXHIBITS. 4(a) Restated Certificate of Incorporation dated June 10, 1988. Incorporated by reference to Exhibit 4(a) of Registrant's Form 10- Q for the quarter ended July 31, 1988. 4(b) Bylaws. Incorporated by reference to Registrant's Form 8-K dated November 2, 1987. 4(c) Rights Agreement between Registrant and First Interstate Bank of California dated November 25, 1987. Incorporated by reference to Exhibit 4 of Registrant's Form 10-K for the fiscal year ended October 31, 1987. 4(d) Stock Purchase Agreement dated as of February 6, 1995 by and between the Registrant, Netra Corporation and the Sellers as identified on the signature page of said agreement, each a shareholder of Netra Corporation, for the purchase by the Registrant of all of the shares of common and preferred stock of Netra Corporation. Incorporated by reference to Exhibit (4) of Registrant's Form 10-Q for the quarter ended April 30, 1995. 4(e) Optical Coating Laboratory, Inc. 12,000 shares of 8% Series C Convertible Redeemable Preferred Stock Purchase Agreement among the Registrant and the investors named therein dated as of May 1, 1995. 4(f) Certificate of Designation, Preferences and Rights of Series C Convertible Redeemable Preferred Stock of Optical Coating Laboratory, Inc. dated May 2, 1995. 5 Opinion and consent of Collette & Erickson. 15 Letter of Deloitte & Touche LLP regarding unaudited interim financial information. 23(a) Consent of Deloitte & Touche LLP 23(b) Consent of Counsel (See Exhibit 5, above). 24 Power of Attorney (See page II-7). 28 Not Applicable 99 1995 Incentive Compensation Plan. Incorporated by reference to Registrant's Proxy Statement dated March 10, 1995. ITEM 9. UNDERTAKINGS. (a) The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the registration statement is on Form S-3 or Form S-8, and the information required to be included in a post- effective amendment by those paragraphs is contained in periodic reports filed by the registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (h) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Santa Rosa and State of California, on the 6th day of July 1995. OPTICAL COATING LABORATORY, INC. By /s/JOHN M. MARKOVICH John M. Markovich Vice President, Finance and Chief Financial Officer POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears above or below hereby appoints John V. Erickson, Joseph C. Zils, John M. Markovich or any of them, his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him in his name, place and stead, in any and all capacities, to sign and file any and all amendments to this registration statement under the Securities Act of 1933, and all exhibits and other documents in connection therewith, with the Securities and Exchange Commission, granting unto each said attorney-in- fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as full to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that each said attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated. SIGNATURE TITLE DATE Chairman of the Board, President and /S/HERBERT M. DWIGHT, JR. Chief Executive Officer July 6, 1995 Herbert M. Dwight, Jr. Vice President, Finance /S/JOHN M. MARKOVICH and Chief Financial Officer July 6, 1995 John M. Markovich Vice President and /S/JOSEF WALLY Corporate Controller July 6, 1995 Josef Wally Vice President /S/JOHN MCCULLOUGH and Director July 6, 1995 John McCullough /S/DOUGLAS C. CHANCE Director July 6, 1995 Douglas C. Chance /S/JULIAN SCHROEDER Director July 6, 1995 Julian Schroeder /S/RENN ZAPHIROPOULOS Director July 6, 1995 Renn Zaphiropoulos INDEX TO EXHIBITS EXHIBIT NUMBER EXHIBIT 4(a) Restated Certificate of Incorporation dated June 10, 1988. Incorporated by reference to Exhibit 4(a) of Registrant's Form 10- Q for the quarter ended July 31, 1988. 4(b) Bylaws. Incorporated by reference to Registrant's Form 8-K dated November 2, 1987. 4(c) Rights Agreement between Registrant and First Interstate Bank of California dated November 25, 1987. Incorporated by reference to Exhibit 4 of Registrant's Form 10-K for fiscal year ended October 31, 1987. 4(d) Stock Purchase Agreement dated as of February 6, 1995 by and between the Registrant, Netra Corporation and the Sellers as identified on the signature page of said agreement, each a shareholder of Netra Corporation, for the purchase by the Registrant of all of the shares of common and preferred stock of Netra Corporation. Incorporated by reference to Exhibit (4) of Registrant's Form 10-Q for the quarter ended April 30, 1995. 4(e) Optical Coating Laboratory, Inc. 12,000 shares of 8% Series C Convertible Redeemable Preferred Stock Purchase Agreement among the Registrant and the investors named therein dated as of May 1, 1995. 4(f) Certificate of Designation, Preferences and Rights of Series C Convertible Redeemable Preferred Stock of Optical Coating Laboratory, Inc. dated May 2, 1995. 5 Opinion and consent of Collette & Erickson. 15 Letter of Deloitte & Touche LLP regarding unaudited interim financial information. 23(a) Consent of Deloitte & Touche LLP 23(b) Consent of Counsel (See Exhibit 5, above). 24 Power of Attorney (See page II-7). 28 Not Applicable 99 1995 Incentive Compensation Plan. Incorporated by reference to Registrant's Proxy Statement dated March 10, 1995. EX-4 2 OPTICAL COATING LABORATORY, INC. 12,000 SHARES OF 8% SERIES C CONVERTIBLE REDEEMABLE PREFERRED STOCK PURCHASE AGREEMENT DATED AS OF MAY 1, 1995 TABLE OF CONTENTS Page 1. Authorization of Issue of 8% Series C Convertible Redeemable Preferred Stock 1 2. Purchase and Sale of 8% Series C Convertible Redeemable Preferred Stock; Closing 1 2A. Purchase and Sale of 8% Series C Convertible Redeemable Preferred Stock 1 2B. Closing 1 3. Conditions of Closing 2 3A. Opinion of the Company's Counsel 2 3B. Representations and Warranties 2 3C. Charter Documents and By-Laws 2 3D. Purchase Permitted by Applicable Laws 3 3E. Flex Products Acquisition; Proceedings 3 3F. Compliance with Securities Laws 4 3G. Approval and Consents 4 3H. Material Changes 4 4. Affirmative Covenants 4 4A. Financial Statements 4 4B. Books and Records; Inspection of Property 6 4C. Additional Covenants Pending the Closing 7 4D. Stock to be Reserved 7 4E. Government Regulations 7 4F. ERISA 8 4G. Corporate Existence; Maintenance of Properties 8 4H. Insurance 9 4I. Further Assurances 9 4J. 1933 Act Registration Statements 9 4K. Transactions with Affiliates 10 4L. Use of Proceeds 10 5. Negative Covenants 10 5A. Restricted Payments 10 5B. ERISA 10 6. Representations, Covenants and Warranties 11 6A. Organization; Qualification and Authority 11 6B. Financial Statements 12 6C. Capital Stock and Related Matters 12 6D. Actions Pending 13 6E. Outstanding Debt 13 6F. Title to Properties 13 6G. Taxes 13 6H. Conflicting Agreements 13 6I. Offering 14 6J. Broker's or Finder's Commissions 14 6K. Regulation G, Etc 14 6L. Pollution and Other Regulations 15 6M. ERISA 15 6N. Agreements with Affiliates 15 6O. Possession of Franchises, Licenses, Etc 16 6P. Patents, Etc 16 6Q. Holding Company and Investment Company Status 16 6R. Governmental Consents 16 6S. Insurance Coverage 17 6T. Subsidiaries 17 6U. Disclosure 17 6V. Related Party Transactions 17 6W. Registration Rights 18 6X. Projections 18 7. Registration Rights 18 7A. Registration Statement 18 7B. Best Efforts 18 7C. Expenses 19 7D. Rule 144 19 8. Representations of the Investors 20 9. Definitions 20 10. Miscellaneous 23 10A. Home Office Payment 24 10B. Indemnification 23 10C. Registration Rights 24 10D. Restrictive Legend 24 10E. Survival of Representations and Warranties 25 10F. Successors and Assigns 25 10G. Notices 25 10H. Descriptive Headings 25 10I. Satisfaction Requirement 26 10J. Governing Law; Consent to Jurisdiction 26 10K. Remedies 26 10L. Entire Agreement 26 10M. Severability 26 10N. Amendments 27 10O. Counterparts 27 Exhibit A Form of Certificate of Designations Exhibit B Form of Opinion of Company Counsel Exhibit C Form of Put, Call, Right of First Refusal and Co-Sale Agreement OPTICAL COATING LABORATORY, INC. PURCHASE AGREEMENT DATED AS OF MAY 1, 1995 To each of the Investors Gentlemen: The undersigned OPTICAL COATING LABORATORY, INC., a Delaware corporation (the "Company"), and each of the investors named on Schedule 1 attached hereto (collectively, the "Investors"), hereby agree as follows: 1. AUTHORIZATION OF ISSUE OF 8% SERIES C CONVERTIBLE REDEEMABLE PREFERRED STOCK. The Company will authorize the issuance and delivery of 12,000 shares of its 8% Series C Convertible Redeemable Preferred Stock, par value $.01 per share (the "Preferred Stock"), having rights, designations and preferences as specified therefor in the form of the Certificate of Designations of the Company in the form of Exhibit A attached hereto (the "Certificate of Designations"). 2. PURCHASE AND SALE OF 8% SERIES C CONVERTIBLE REDEEMABLE PREFERRED STOCK; CLOSING. A. Purchase and Sale of 8% Series C Convertible Redeemable Preferred Stock. The Company, subject to the terms and conditions herein set forth, hereby agrees to sell to the Investors and, subject to the terms and conditions herein set forth, each Investor severally agrees to purchase from the Company, the aggregate number of shares of Preferred Stock set forth opposite its name on the signature page hereof, for a purchase price of One Thousand Dollars ($1,000.00) per share. B. Closing. The purchase and delivery of the Preferred Stock to be purchased by the Investors shall take place at a closing (the "Closing") at the offices of Collette & Erickson, such Closing to be held at 9:00 a.m., local time on such date as may be designated by the Company on not less than 3 business days notice to special counsel to the Investors but in no event later than May 15, 1995 (unless such date shall be extended agreement of the parties hereto, herein called the "Closing Date"). On the Closing Date, the Company will deliver the Preferred Stock to be purchased by the Investors registered in the names of the Investors and/or the Investors' nominees or other designees (designated in writing to the Company at least one day prior to the Closing Date if differing from any such nominee or designee specified on the signature page hereof) for the total number of shares set forth opposite the name of the Investors on the signature page hereof, against receipt of the purchase price therefor by wire transfer of same day funds to an account at a financial institution to be designated in writing by the Company no later than three days before the Closing Date, or by such other payment method as is mutually agreed to by the Investor so paying and the Company. The purchase of all of the Preferred Stock is provided for in this Agreement. The Company shall not be obligated to sell, nor shall the Investors be obligated to buy, any of the Preferred Stock unless the Investors purchase in the aggregate all of the Preferred Stock. If at the Closing, the Company shall fail to tender to the Investors any of the Preferred Stock to be purchased by them or any of the conditions specified in Section 3 hereof shall not have been satisfied or waived by the Investors, the Investors shall, at their election, be relieved of all further obligations under this Agreement, without thereby waiving any other rights they may have by reason of such failure or such non- fulfillment. 3. CONDITIONS OF CLOSING. The Investors' obligations to purchase and pay for the Preferred Stock to be purchased by them hereunder is subject to the satisfaction, on or before the Closing Date, of the following conditions: A. Opinion of the Company's Counsel. The Investors and their special counsel shall have received from Collette & Erickson, counsel for the Company, a legal opinion addressed to the Investors and dated the Closing Date in substantially the form of Exhibit B attached hereto. B. Representations and Warranties. The representations and warranties contained in Section 6 hereof shall be true in all material respects when made and on and as of the Closing Date, except to the extent of changes caused by the transactions herein contemplated; and the Company shall have delivered to each of the Investors an Officer's Certificate dated the Closing Date, to such effect. C. Charter Documents and By-Laws. Each Investor shall have received a certificate, dated the Closing Date, of the Secretary of the Company attaching (i) a true and complete copy of the Certificate of Incorporation with all amendments thereto, and including all Certificates of Designations of preferred stock of the Company as filed with the Secretary of State of the State of Delaware, (ii) a true and complete copy of the Company's By-Laws in effect as of such date, (iii) certificates of good standing of the appropriate officials of Delaware and of each state or other jurisdiction in which the Company is qualified to do business, and is doing business, as a foreign corporation, and (iv) resolutions of the Board of Directors of the Company authorizing the execution and delivery of this Agreement and the Preferred Stock. Since the date hereof, the Company shall not have amended or modified its Certificate of Incorporation or By-laws without the express written consent of the Investors. D. Purchase Permitted by Applicable Laws. The purchase of and payment for the Preferred Stock to be purchased by the Investors hereunder shall not be prohibited by any applicable law or governmental regulation (including, without limitation, Regulations G, T and X of the Board of Governors of the Federal Reserve System) and such purchase and payment shall not in and of themselves subject the Investors to any material tax, penalty or liability under or pursuant to any applicable law or governmental regulation, and the Investors shall have received such certificates or other evidence as they may request to establish compliance with this condition. E. Flex Products Acquisition; Proceedings. (a) The Company shall have consummated, or substantially contemporaneously with the Closing shall consummate, the purchase of an additional 20% interest in Flex Products, Inc. ("Flex Products") pursuant to a Stock and Note Purchase Agreement dated as of May 1, 1995 by and among the Company, SICPA Holdings S.A., ICI Americas Inc., ICI America Holdings Inc. and Flex Products, Inc. (the "Stock and Note Purchase Agreement"), true and correct copies of which have been delivered to the Investors. All corporate and other proceedings taken or to be taken in connection with the transaction contemplated by the Stock and Note Purchase Agreement, and all documents incident thereto, shall be reasonably satisfactory in form and substance to the Investors and their special counsel, and the Investors and their special counsel shall have received all such counterpart originals or certified or other copies of such documents as each of them may reasonably request. No amendment or modification of, or waiver of any term, provision or closing or other condition of, the Stock and Note Purchase Agreement shall be entered into, given or made without the express written consent of the investors which consent will not be unreasonably withheld or delayed. (a) All corporate and other proceedings taken or to be taken in connection with the transactions contemplated hereby, and all documents incident thereto, shall be reasonably satisfactory in form and substance to the Investors and their special counsel, and the Investors and their special counsel shall have received all such counterpart originals or certified or other copies of such documents as each of them may reasonably request. 3F. Compliance with Securities Laws. The offering and sale of the Preferred Stock under this Agreement shall have complied with all applicable requirements of federal and state securities laws, and the Investors shall have received evidence of such compliance in form and substance satisfactory to them. 3G. Approval and Consents. The Company shall have duly received all authorizations, consents, approvals, licenses, franchises, permits and certificates by or of all federal, state and local governmental authorities necessary for the issuance of the Preferred Stock and all thereof shall be in full force and effect at the time of the Closing. The Company shall have delivered to the Investors an Officer's Certificate, dated the Closing Date, to such effect. 3H. Material Changes. Since October 31, 1994, there shall not have been any changes in the business of the Company or any Subsidiary which shall, singly or in the aggregate, have a material adverse effect on the business, condition (financial or other), assets, properties, rights, operations or prospects of the Company and its Subsidiaries, nor shall there have been any development or discovery or any contingency or other liability which has such effect. There shall exist no defaults under the provisions of any instrument evidencing Indebtedness of the Company or any of its Subsidiaries and the Company shall have delivered to the Investors an Officer's Certificate, dated the Closing Date, to such effect. 4. AFFIRMATIVE COVENANTS. All covenants contained herein shall be given independent effect. The provisions of this Section 4 are for the benefit of Investors from the date hereof until the Closing Date and thereafter so long as they hold any Preferred Stock and (except for the covenant set forth at Section 4O) for each other holder of Preferred Stock; provided, however, that the covenant set forth at Section 4J shall also be for the benefit of Investors who hold Common Stock issued upon the conversion of Preferred Stock and any other holders of such Common Stock. The Investors agree to treat as confidential and not to disclose (except as may be reasonably determined to be legally required) all information received under this Section 4 to the extent such information is not and does not become publicly available. A. Financial Statements. The Company covenants that it will deliver to each of the Investors and each other holder of Preferred Stock: (i) as soon as practicable and in any event within 30 days after the end of each month commencing with April of 1995 (other than the last month) in each fiscal year, the consolidated statements of income, changes in stockholders' equity and cash flow of the Company and its Subsidiaries for such month and for the period from the beginning of the current fiscal year to the end of such month and a consolidated balance sheet of the Company as at the end of such month, setting forth in each case in comparative form figures for the corresponding period in the preceding fiscal year, all in reasonable detail and reasonably satisfactory in scope to the Investors and prepared in accordance with GAAP on a basis consistent with past practice, and certified by the chief financial officer or chief accounting officer of the Company as fairly presenting the financial condition of the Company and its Subsidiaries, subject to the changes resulting from audit and year-end adjustments, provided that the Investors acknowledge that this Section 4A(i) shall be applicable only to the extent the Company, in its discretion, prepares such reports; (ii) as soon as practicable and in any event within 45 days after the end of each quarterly period (other than the last quarterly period) in each fiscal year, consolidated statements of income, changes in stockholders' equity and cash flow of the Company and its Subsidiaries for such quarterly period and for the period from the beginning of the current fiscal year to the end of such quarterly period and a consolidated balance sheet of the Company and its Subsidiaries as at the end of such quarterly period, setting forth in each case in comparative form figures for the corresponding period in the preceding fiscal year, all in reasonable detail and reasonably satisfactory in scope to the Investors and prepared in accordance with GAAP on a basis consistent with past practice, and certified by the chief financial officer or chief accounting officer of the Company as fairly presenting the financial condition of the Company and its Subsidiaries, subject to the changes resulting from audit and year-end adjustments; (iii) as soon as practicable and in any event within 90 days after the end of each fiscal year, consolidated statements of income, changes in stockholders' equity and cash flow of the Company and its Subsidiaries for such year, and a consolidated balance sheet of the Company and its Subsidiaries as at the end of such year, setting forth in each case (commencing with any such reports delivered after the close of the Company's first full fiscal year following the date hereof) in comparative form corresponding figures from the preceding annual audit, all in reasonable detail and reasonably satisfactory in scope to the Investors, and audited by independent public accountants of recognized national standing selected by the Company and reasonably satisfactory to the Investors, whose report shall state that such consolidated financial statements present fairly the financial condition of the Company and its subsidiaries in accordance with GAAP on a basis consistent with prior years and that the examination by such accountants has been made in accordance with generally accepted auditing standards; (iv) as soon as practicable after the Closing Date, and thereafter as soon as practicable and in any event by the end of each fiscal year, a budget for the Company and its Subsidiaries for the following fiscal year, in reasonable detail and including those items that are customarily included in Company budgets, and certified as to its good-faith preparation by the chief financial officer or chief accounting officer of the Company; (v) promptly upon transmission thereof, copies of all financial statements, information circulars and reports as the Company shall send to its stockholders and copies of all registration statements and prospectuses (without exhibits) and all reports which it or any of its officers or directors file with the Commission or with any securities exchange on which any of its securities are listed or with NASDAQ, and copies of all press releases and other statements made available generally by the Company or its Subsidiaries to the public concerning material developments in the business of the Company and its Subsidiaries, taken as a whole; (vi) promptly upon receipt thereof, a copy of each other report submitted to the Company or any of its Subsidiaries by independent accountants in connection with any annual, interim or special audit made by them of the books of the Company or any of its Subsidiaries; and (vii) with reasonable promptness, such other financial and/or operating data as the Investors may reasonably request. Each Investor is hereby authorized to deliver a copy of any financial statement or certificate delivered pursuant to this Section 4A to any regulatory body having jurisdiction over the Investors provided that such delivery is necessary to comply with a request of such regulatory body and sufficient notice is given to the Company of such request prior to such delivery to enable the Company to object to such delivery. B. Books and Records; Inspection of Property. The Company will keep and will cause each of its Subsidiaries to keep proper books of record and accounts in which full, true and correct entries shall be made of all dealings and transactions in relation to its business and activities. The Company covenants that it will permit, upon reasonable notice, any Person representing the Investors and designated in writing by such Investors, at the Investors' expense, to visit and inspect any of the properties of the Company and its Subsidiaries, to examine the corporate, financial and operating records of the Company and its Subsidiaries and make copies thereof or extracts therefrom and to discuss the affairs, finances and accounts of any of such corporations with the directors, officers and independent accountants of the Company and its Subsidiaries, all at such reasonable times and as often as the Investors may reasonably request. C. Additional Covenants Pending the Closing. The Company covenants that pending the Closing it will not, without the written consent of the Investors, take any action which would result (i) in any of the representations or warranties contained in this Agreement not being true at and as of the time immediately after such action or (ii) in any of the covenants contained in this Agreement becoming unperformable. Pending the Closing, the Company will promptly advise the Investors of any action or event of which it becomes aware which has the effect of making incorrect any of such representations or warranties or which has the effect of rendering unperformable any of such covenants. D. Stock to be Reserved. The Company covenants that all shares of Common Stock that may be issued upon the conversion of the Preferred Stock will, upon issuance, be validly issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issuance thereof. The Company further covenants that during the period within which the Preferred Stock may be converted, the Company will at all times have authorized and reserved a sufficient number of shares of Common Stock of the Company, par value $.01 per share (the "Conversion Shares"), to permit the conversion of the Preferred Stock. E. Government Regulations. The Company covenants that it will comply with all applicable governmental restrictions and regulations and obtain and maintain in good standing all licenses, permits and approvals from any and all governments, governmental commissions, boards or agencies of jurisdictions in which it or any of its Subsidiaries carries on business required in respect of the operations of the Company except for those with which the failure to comply or maintain would not have a material adverse effect on the business, condition (financial or other), assets, properties, rights, operations or prospects of the Company and its Subsidiaries taken as a whole; provided that this Section 4E shall not prevent the Company or any of its Subsidiaries from contesting in good faith the validity or application of any such laws or regulations by appropriate legal proceedings diligently pursued. F. ERISA. Promptly (and in any event within 30 days) after the Company or any of its Subsidiaries knows, or has reason to know, that a Reportable Event with respect to any Pension Plan has occurred, that a "prohibited transaction" within the meaning of Section 406 of ERISA or Section 4975 of the Code has occurred with respect to any employee benefit plan maintained by, or to which contributions are required of, the Company or any of its Subsidiaries, that an application has been filed by the Company or any of its Subsidiaries for a waiver of the minimum funding standard under Section 302 of ERISA or Section 412 of the Code, that a single employer Pension Plan has been amended in a manner requiring security by the Company or any of its Subsidiaries pursuant to Section 401(a)(29) of the Code, that any Pension Plan is or may be terminated, reorganized, partitioned or declared insolvent under Title IV of ERISA or that the Company or any of its Subsidiaries will or may incur any liability to or on account of a Pension Plan under Section 4062, 4063, 4064, 4201 or 4204 of ERISA, the Company will deliver to each Investor, so long as it shall hold any of the Preferred Stock, a certificate of the chief financial officer of the Company setting forth information as to such occurrence and what action, if any, the Company is required or proposes to take with respect thereto, together with any notices concerning such occurrences which are (a) required to be filed by the Company or the plan administrator of any such Pension Plan controlled by the Company or its Subsidiaries, with the PBGC or (b) received by the Company or its Subsidiaries from any plan administrator of a multiemployer or other Pension Plan not under their control. The Company shall furnish to each Investor, so long as it shall hold any of the Preferred Stock, a copy of each annual report (Form 5500 Series) of any Pension Plan received or prepared by the Company or any of its Subsidiaries. Each annual report and any notice required to be delivered hereunder shall be delivered no later than 10 days after the later of the date such report or notice is filed with the Internal Revenue Service or the PBGC or the date such report or notice is received by the Company or any of its Subsidiaries, as the case may be. G. Corporate Existence; Maintenance of Properties. The Company covenants that it (i) will do or cause to be done all things necessary to preserve and keep in full force and effect the corporate existence and rights of the Company and all of its Subsidiaries (except that the corporate existence of any of such Subsidiaries other than the Company, may be terminated if such termination is, in the judgment of the Board of Directors of the Company, in the best interest of the Company and is not materially disadvantageous to the holders of Preferred Stock or any securities issued upon conversion or exchange thereof), (ii) will cause its properties and the properties of its Subsidiaries used or useful in the conduct of their respective businesses, other than properties which in the aggregate are not material to the business and operations of the Company and its Subsidiaries taken as a whole, to be maintained and kept in good condition, repair and working order and will cause to be made all repairs, renewals, replacements, betterments and improvements thereto, all as in the judgment of the Company may be reasonably necessary so that the businesses carried on in connection therewith may be properly and advantageously conducted at all times, and (iii) will, and will cause each of its Subsidiaries to, qualify and remain qualified to conduct business in each jurisdiction where the failure to do so would have a material adverse effect on the business, condition (financial or other), assets, properties, rights, operations or prospects of the Company and its Subsidiaries taken as a whole. H. Insurance. The Company covenants that it will maintain, and will cause each of its Subsidiaries to maintain, with financially sound and reputable insurance companies, funds or underwriters, insurance for the Company and its Subsidiaries of the kinds, covering the risks and in the relative proportionate amounts usually carried by companies conducting business activities similar to those of the Company and its Subsidiaries. I. Further Assurances. The Company covenants that it shall cooperate with any of the Investors and execute such further instruments and documents as the Investors shall reasonably request to carry out to the satisfaction of such Investor the transactions contemplated by this Agreement. J. 1933 Act Registration Statements. The Company covenants that it shall not file any registration statement under the Securities Act of 1933, as amended (the "1933 Act") covering any securities unless it shall first have given each Investor written notice thereof. The Company further covenants that each Investor shall have the right, at any time when it may be deemed by the Company to be a controlling person of the Company, to participate in the preparation of such registration statement (regardless of whether or not an Investor will be a selling security holder in connection with such registration statement) and to request the insertion therein of material furnished to the Company in writing which in such Investor's judgment should be included. In connection with any registration statement referred to in this paragraph 4L, the Company will indemnify each Investor, its partners, officers and directors and each person, if any, who controls such Investor within the meaning of Section 15 of the 1933 Act, against all losses, claims, damages, liabilities and expenses caused by any untrue statement or alleged untrue statement of a material fact contained in any registration statement or prospectus or any preliminary prospectus or any amendment thereof or supplement thereto or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such losses, claims, damages, liabilities or expenses are caused by any untrue statement or alleged untrue statement or omission or alleged omission contained in written information furnished to the Company by such Investor expressly for use in such registration statement. If, in connection with any such registration statement, such Investor shall furnish written information to the Company expressly for use in the registration statement, such Investor will indemnify the Company, its directors, each of its officers who sign such registration statement and each person, if any, who controls the Company within the meaning of the 1933 Act against all losses, claims, damages, liabilities an expenses caused by any untrue statement or alleged untrue statement of a material fact or any omission or alleged omission of a material fact required to be stated in the registration statement or prospectus or any preliminary prospectus or any amendment thereof or supplement thereto or necessary to make the statements therein not misleading, but only to the extent that such untrue statement or alleged untrue statement or such omission or alleged omission is contained in information so furnished in writing by such Investor for use therein. K. Transactions with Affiliates. The Company and its Subsidiaries will conduct all business with their Affiliates on an arm's-length basis. L. Use of Proceeds. All of the proceeds of the sale of Preferred Stock shall be used to make a payment to ICI Americas Inc. and ICI American Holdings Inc. substantially contemporaneously with the Closing pursuant to the Stock and Note Purchase Agreement. Until such proceeds are so used, such proceeds shall be reserved therefor by the Company in a designated account at Bank of America, National Trust and Savings Association. 5. NEGATIVE COVENANTS. All covenants contained herein shall be given independent effect. The provisions of this Section 5 are for the benefit of the Investors from the date hereof to the Closing Date and thereafter so long as they hold any Preferred Stock and for each other holder of Preferred Stock. A. Restricted Payments. The Company covenants that it will not make, and will not permit any Subsidiary to make, any Restricted Payments to the extent that such Restricted Payments exceed 25% of the difference between (x) aggregate Net Income subsequent to January 31, 1995, taken as one period and (y) (without duplication) all losses during such period. 5B. ERISA. The Company covenants that it will not, and will not permit any of its subsidiaries to: (i) permit any Pension Plan to incur any accumulated funding deficiency, as defined in Section 412 of the Code and Section 302 of ERISA, whether or not waived, (ii) cause or permit any single employer Pension Plan to be terminated in other than a standard termination within the meaning of Section 4041 of ERISA, (iii) fail to make all required contributions to any Pension Plan as and when such contributions are due, (iv) withdraw from any multiemployer Pension Plan under circumstances which are reasonably likely to result in the imposition on the Company or any of its Subsidiaries of any liability under Section 4201 or 4204 of ERISA, (v) amend any single employer Pension Plan in a manner requiring security by the Company or any of its Subsidiaries pursuant to Section 401(a)(29) of the Code, (vi) knowingly engage in any transaction in connection with which the Company or any of its Subsidiaries could be subject to either a civil penalty assessed pursuant to Section 502 of ERISA or any tax imposed by Section 4975 of the Code, (vii) maintain or administer any "employee benefit plan" within the meaning of Section 3(3) of ERISA in a manner that is contrary to its terms or applicable laws, if the event or condition described in any of clauses (i) through (vii) above would subject the Company or any of its Subsidiaries to any liability that individually or in the aggregate is material to the business and financial condition of the Company and its Subsidiaries, considered as a whole. 6. REPRESENTATIONS, COVENANTS AND WARRANTIES. The Company represents, covenants and warrants to each Investor that: A. Organization; Qualification and Authority. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. At the Closing Date, each Operating Subsidiary of the Company will be a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation. As of the Closing Date, the Company will be duly qualified to do business as a foreign corporation and in good standing in each jurisdiction in which the character of its properties or the nature of its business makes such qualification necessary and in which the failure to so qualify would have a material adverse effect on the business, condition (financial or other), assets, properties, rights, operations or prospects of the Company and its Subsidiaries taken as a whole. As of the Closing Date, each Operating Subsidiary of the Company will be duly qualified to do business as a foreign corporation and in good standing in each jurisdiction in which the character of its properties or the nature of its business makes such qualification necessary and in which the failure to so qualify would have a material adverse effect on the business, condition (financial or other), assets, properties, rights, operations or prospects of the Company and its Subsidiaries taken as a whole. The Company has the corporate power to own or lease its properties and to carry on its business as now being conducted. The Company has all requisite corporate power and authority to enter into this Agreement and each agreement, certificate, instrument or document executed by it pursuant hereto, to issue and sell the Preferred Stock and to issue Common Stock upon conversion of the Preferred Stock. The Company has the requisite corporate power and authority to carry out the transactions contemplated hereby and thereby to be performed by it, and the execution, delivery and performance hereof and thereof have been duly authorized by all necessary corporate action. This Agreement constitutes, and each other agreement or instrument executed and delivered by the Company pursuant hereto or thereto or in connection herewith or therewith will constitute, legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms. B. Financial Statements. The Company has furnished the Investors with the following financial statements: consolidated balance sheets as at October 31, 1992, 1993 and 1994 and January 31, 1994 and 1995 and consolidated statements of operations, changes in stockholders' equity and cash flow for the years ended October 31, 1992, 1993 and 1994 and the notes thereto. Such financial statements were prepared in accordance with GAAP on a basis consistent with past practice, and fairly present the financial condition of the Company and its Subsidiaries (subject to the changes resulting from audit and year-end adjustments). Through the Closing Date, except as have been previously disclosed in writing to the Investors, there have been no material adverse changes in the business, condition (financial or other), assets, properties, rights, operations or prospects of the Company and its Subsidiaries taken as a whole since October 31, 1994. C. Capital Stock and Related Matters. The Company represents and warrants that it has a total authorized capitalization consisting of thirty million (30,000,000) shares of Common Stock, with par value of $.01, and one hundred thousand (100,000) shares of Preferred Stock, of which ten thousand (10,000) shares have been designated Series A Preferred Stock, fifteen thousand (15,000) shares have been designated Series B Cumulative Convertible Preferred Stock and twelve thousand (12,000) shares will, prior to the Closing, have been designated Series C Convertible Redeemable Preferred Stock, each of which series of Preferred Stock has or will have, as the case may be, a par value of $.01. As of February 28, 1995, the Company has issued and outstanding nine million thirteen thousand seven hundred ninety three (9,013,793) shares of Common Stock and no other shares. Of the Series B Cumulative Convertible Preferred Stock eight thousand three hundred fifty (8,350) shares were previously issued and outstanding, all of which have been repurchased by the Company or converted into Common Stock by the holders thereof, cancelled and become authorized but unissued shares of Preferred Stock, subject to reissuance as a new series of Preferred Stock. All of the outstanding shares of Common Stock have been duly authorized, are validly issued and outstanding, are fully paid and nonassessable and have been issued in compliance with all applicable federal and state securities laws; and no stockholder or other person has a right of rescission in connection with any sale or issuance thereof. D. Actions Pending. There is no action, suit, investigation or proceeding pending or, to the knowledge of the Company, threatened against or affecting the Company or any of its Subsidiaries or any of their properties or rights, by or before any court, arbitrator or administrative or governmental body, which would reasonably be expected to have a material adverse effect on the business, condition (financial or otherwise), assets, properties, rights, operations or prospects of the Company or its Subsidiaries taken as a whole. E. Outstanding Debt. There exists no default, which has not been waived or cured, under the provisions of any instrument evidencing Indebtedness of the Company or any of its Subsidiaries or of any agreement relating thereto. F. Title to Properties. Each of the Company and its Subsidiaries has (i) good, sufficient and legal title to its real property (other than real properties which it leases from others) subject to no Lien of any kind except as set forth on Schedule 6F and (ii) good title to all of its other properties and assets (other than properties and assets which it leases from others and other than properties and assets disposed of in the ordinary course of the Company's or such Subsidiary's business), subject to no Lien of any kind except as set forth on Schedule 6F. Each of the Company and its Subsidiaries enjoys peaceful and undisturbed possession under all leases necessary for the operation of its properties and assets, none of which contains any provisions which might materially and adversely affect or impair the operation of such properties and assets, and all such leases are valid and subsisting and in full force and effect. G. Taxes. Each of the Company and its Subsidiaries has filed all federal, state and other income tax returns which are required to be filed, and each has paid all taxes or duly obtained extensions therefor as shown on said returns and on all assessments received by it to the extent that such taxes have become due or except such as are being contested in good faith by appropriate proceedings and for which adequate reserves have been established in accordance with GAAP. H. Conflicting Agreements. Neither the execution nor delivery of this Agreement or the Preferred Stock, the offering, issuance and sale of the Preferred Stock, nor fulfillment of or compliance with the terms and provisions hereof and thereof, including, without limitation, the conversion of Preferred Stock into Common Stock, will conflict with, or result in a breach of the terms, conditions or provisions of, or constitute a default under, or result in any violation of, or result in the creation of any Lien upon any of the properties or assets of the Company or any of its Subsidiaries pursuant to the Certificate of Incorporation or By-Laws of the Company or any of its Subsidiaries, any award of any arbitrator or any agreement (including any agreement with stockholders), instrument, order, judgment, decree, statute, law, rule or regulation to which the Company or any of its Subsidiaries is subject, and neither the Company nor any of its Subsidiaries is a party to, or otherwise subject to any provision contained in, any instrument evidencing indebtedness of the Company or any of its Subsidiaries, any agreement relating thereto or any other contract or agreement (including its Certificate of Incorporation) which contains dividend or redemption limitations on any capital stock of the Company, except for this Agreement, the Certificate of Designations and the Certificate of Designations in respect of the Series A Stock and the Series B Stock. I. Offering. Neither the Company nor any other Person acting on its behalf has taken or will take any action which would subject the issuance or sale of any of the Preferred Stock to the provisions of Section 5 of the 1933 Act or violate the provisions of any securities, Blue Sky law or similar law of any applicable jurisdiction. J. Broker's or Finder's Commissions. Except as set forth on Schedule 6J, no broker's or finder's fee or commission will be payable by the Company with respect to the issuance and sale of the Preferred Stock or the transactions contemplated hereby. K. Regulation G, Etc. Neither the Company nor any of its Subsidiaries owns or has any present intention of acquiring any "margin stock" as defined in Regulation G of the Board of Governors of the Federal Reserve System (herein called a "margin stock"). All of the proceeds of the sale of the Preferred Stock will be used by the Company for general corporate purposes, including the payments described in Section 4O hereof. None of such proceeds will be used, directly or indirectly, for the purpose of purchasing or carrying any margin stock or for the purpose of reducing or retiring any indebtedness which was originally incurred to purchase or carry margin stock or for any other purpose which might constitute this transaction a "purpose credit" within the meaning of Regulation G. Neither the Company, any of its Subsidiaries nor any agent acting on its behalf has taken or will take any action which might cause this Agreement to violate Regulation G, Regulation T, Regulation X or any other regulation of the Board of Governors of the Federal Reserve System or to violate the 1934 Act, in each case as in effect now or as the same may hereafter be in effect. L. Pollution and Other Regulations. Each of the Company and its Subsidiaries is in compliance with all applicable laws and regulations relating to pollution and environmental control, equal employment opportunity, employee safety and other like governmental laws and regulations, except for those violations which, singly or in the aggregate, would not have a material adverse effect on the business, condition (financial or other), assets, properties, rights, operations or prospects or such of the Company or any Subsidiary. M. ERISA. Each of the Company and its Subsidiaries has fulfilled its obligations under the minimum funding standards (without regard to any funding waivers) of ERISA and the Code with respect to each Pension Plan and is in substantial compliance in all material respects with the provisions of ERISA and the Code. Neither the Company nor any Subsidiary has incurred any liability to the PBGC (other than annual premiums due to the PBGC) or a Pension Plan under Title IV of ERISA and no set of facts or circumstances exists which could reasonably result in the imposition of any such liability. The execution and delivery by the Company of this Agreement and the purchase and delivery of the Preferred Stock will not involve any "prohibited transaction" within the meaning of Section 406 of ERISA or Section 4975 of the Code. Schedule 6M contains a complete list and accurate description of each Pension Plan or other "employee pension benefit plan" (as defined in Section 3(2) of ERISA) maintained or contributed to by the Company or any Subsidiary ("Benefit Plan"). Each Benefit Plan that is intended to qualify under Section 401 of the Code and the trust maintained pursuant thereto has been determined to be exempt from federal income taxation under Section 501 of the Code by the Internal Revenue Service, and to the best knowledge of the Company, nothing has occurred with respect to any such plan since such determination which could reasonably be expected to result in the loss of such exemption or the imposition of any material liability, penalty or tax under ERISA or the Code. Each Benefit Plan has at all times been maintained in all material respects, by its terms and in operation, in accordance with all applicable laws. Except as may be required under Section 4980B of the Code and Section 601 of ERISA, neither the Company nor any of its Subsidiaries has any material liability with respect to any plan that provides retiree life or retiree health insurance to former employees. N. Agreements with Affiliates. Except as set forth on Schedule 6N, neither the Company nor any of its Subsidiaries is a party to any material contract or agreement with, or any other commitment to, any Affiliate of the Company or any of its Subsidiaries. O. Possession of Franchises, Licenses, Etc. The Company and its Subsidiaries possess all franchises, certificates, licenses, permits and other authorizations from governmental political subdivisions or regulatory authorities, that are necessary in any material respect for the ownership, maintenance and operation of its properties and assets, and neither the Company nor any of its Subsidiaries is in violation of any thereof which would have a material adverse effect on the business, condition (financial or other), assets, properties, rights, operation or prospects of the Company or such Subsidiary. P. Patents, Etc. The Company and its Subsidiaries own, or have the right to use, the patents, patent applications, trademarks, service marks and trade names ("Intellectual Property Rights") set forth in Schedule 6P. Except as set forth in Schedule 6P, the Company or the Subsidiaries owns, or has the right to use, the Intellectual Property Rights free and clear of all Liens, claims for infringements or other claims, or licenses or royalty arrangements of any kind except to the extent such Liens, claims, licenses or royalty arrangements do not have a material adverse effect on the business of the Company. Q. Holding Company and Investment Company Status. Neither the Company nor any of its Subsidiaries is, or upon the sale of the Preferred Stock will be, an "investment company" or a company "controlled" by an "investment company" within the meaning of the Investment Company Act of 1940, as amended, or an "investment adviser" within the meaning of the Investment Advisers Act of 1940, as amended. R. Governmental Consents. Neither the nature of the Company or any of its Subsidiaries nor any of their respective businesses or properties, nor any relationship between the Company and any other Person, nor any circumstance (other than circumstances relating to the Investors) in connection with the offer, issue, sale or delivery of the Preferred Stock hereunder is such as to require on behalf of the Company or any of its Subsidiaries any consent, approval or other action by or any notice to or filing with any court or administrative or governmental body in connection with the execution and delivery of this Agreement, the offer, issue, sale or delivery of the Preferred Stock or fulfillment of or compliance with the terms and provisions hereof or the Preferred Stock, including, without limitation, the conversion of the Preferred Stock for Common Stock, other than filings which have been made or are not required to be made until after the Closing Date. S. Insurance Coverage. The properties of the Company and each of its Subsidiaries are insured for the benefit of the Company or such Subsidiary of the Company in amounts deemed adequate by the Company's management against risks usually insured against by Persons operating businesses similar to those of the Company or its Subsidiaries in the localities where such properties are located. T. Subsidiaries. Schedule 6T correctly sets forth the name of each Subsidiary of the Company as of the date hereof and, at the Closing Date, will set forth each such name as of the Closing Date, and in each case the jurisdiction of its incorporation. All the outstanding shares of stock of each Subsidiary of the Company have been validly issued and are fully paid and non-assessable and all such outstanding shares are owned by the Company or another Subsidiary of the Company free of any Lien or claim, and no such Subsidiary has outstanding stock or securities convertible into or exchangeable or exercisable for any shares of capital stock, nor does it have outstanding any rights to subscribe for or to purchase, any options for the purchase of, any agreements providing for the issuance (contingent or otherwise) of, or any calls, commitments or claims of any other character relating to the issuance of, any shares of capital stock or any securities convertible into or exchangeable or exercisable for any shares of capital stock other than certain put and call rights with respect to shares of capital stock of Flex Products set forth in an Agreement to be entered substantially contemporaneously with the Closing between the Company and SICPA Holdings S.A. substantially in the form of Exhibit C attached hereto. U. Disclosure. All information heretofore furnished in writing by the Company to the Investors for purposes of or in connection with this Agreement or any transaction contemplated hereby does not, and all such information hereafter furnished in writing by the Company or any of its Subsidiaries to the Investors do not, contain any untrue statement of a material fact or omit to state any material fact necessary to make such information not misleading. There is no fact which has not been disclosed to the Investors in writing which has had a material adverse effect, or so far as the Company can now reasonably foresee will have a material adverse effect, on the assets, properties, rights, business, prospects, operations or condition (financial or otherwise) of the Company or any subsidiary or on the Company's ability to perform its obligations under this Agreement or any agreements, documents or instruments delivered pursuant hereto. V. Related Party Transactions. To the best knowledge of the Company, except as set forth in the Company's proxy statement dated March 10, 1995, or as contemplated by or described in this Agreement (excluding payments of salaries to employees in the Company or a subsidiary's ordinary course of business), no current or former stockholder, director, officer or key employee of the Company or any Subsidiary or any "Associate" (as defined in Rule 405 promulgated under the 1933 Act) of any such person, is presently, directly or indirectly through his affiliation with any other person or entity, a party to any material transaction with the Company or any Subsidiary providing for the furnishing of services by or to, or rental of real or personal property from or to, or otherwise requiring cash payments to or by any such person. In addition, except as set forth in the Company's proxy statement dated March 10, 1995, there is no relationship or transaction involving the Company or any Subsidiary which is described in Item 404 of Regulation S-K promulgated under the 1933 Act (but for purposes of this representation not limited by time period applicable to such item). W. Registration Rights. Except as contemplated by this Agreement and the Certificate of Designations or as disclosed on Schedule 6W, no person has the right to cause the Company to effect the registration under the 1933 Act of any shares of Common Stock or any other securities (including debt securities) of the Company. X. Projections. The projections and the assumptions underlying the same previously delivered to the Investors, which projections have been material to the Investors in their decision to enter into this Agreement and purchase the Preferred Stock hereunder, were reasonable in the best judgment of officers of the Company based upon information reasonably available to the Company at the time such projections were made. 7. REGISTRATION RIGHTS. The Company covenants that it will do the following: 7A. Registration Statement. The Company will, at its expense, prepare and file, following the Closing, a registration statement on Form S3 or Form S-1 as appropriate (or similar form prescribed by the SEC) (the "Registration Statement") covering all the Preferred Stock and the Conversion Shares and shall use its best efforts to have such Registration Statement declared effective by not later than 270 days after the Closing. 7B. Best Efforts. The Company will use its best efforts to maintain the effectiveness of the Registration Statement for up to the earlier of (i) such time as none of the Investors hold Preferred Stock or Conversion Shares or (ii) three (3) years from the date hereof, and from time to time will amend or supplement the Registration Statement and the prospectus contained therein as and to the extent necessary to comply with the 1933 Act and any other applicable securities laws. The Company will also (i) provide Investors with as many copies of the prospectus contained in the Registration Statement or any amendment or supplement thereto or such other documents as Investors may reasonably request; (ii) cause the Conversion Shares to be listed on each securities exchange and quoted on each quotation service on which similar securities issued by the Company are then listed or quoted; (iii) provide a transfer agent and registrar for all Conversion Shares registered pursuant to the Registration Statement; (iv) comply with the reporting requirements of the Securities Exchange Act of 1934 (the "1934 Act") with respect to the Common Stock and deliver all reports and other documents prepared and filed with the Commission under the 1934 Act to Investors promptly when filed and (iv) otherwise use its best efforts to comply with all other applicable rules and regulations of the SEC. In addition, the Company shall use its best efforts to register and qualify the securities covered by the Registration Statement under the securities laws of such states as shall be reasonably requested by the Investors, provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states. 7C. Expenses. All expenses incident to the Company's performance of or compliance with the provisions of paragraph 7A, including without limitation all registration and filing fees, fees and expenses of compliance with state securities laws, printing expenses, messenger and delivery expenses and fees and disbursements of counsel for the Company and the Investors and all independent certified public accountants (including the expenses of any audit), and other persons retained by the Company or the Investors shall be borne by the Company but only to the extent expenses incurred by or on behalf of the Investors are reasonable. The foregoing notwithstanding, the Company shall not be required to bear the costs and expenses, if any, of any underwriter, including underwriters' commissions and discounts. 7D. Rule 144. With a view to making available to Investors the benefits of Rule 144 promulgated under the Securities Act ("Rule 144") and any other rule or regulation of the SEC that may at any time permit Investors to sell the Conversion Shares to the public without registration or pursuant to the Registration Statement, the Company covenants and agrees to use its best efforts to: (i) make and keep public information available, as those terms are understood and defined in Rule 144, until such date as all of the Conversion Shares shall have been resold; (ii) take such action, including the voluntary registration of its Common Stock under Section 12 of the 1934 Act, as is necessary to enable Investors to sell the Conversion Shares; (iii) file with the SEC in a timely manner all reports and other documents required of the Company under the 1933 Act and the 1934 Act; and (iv) furnish to each Investor upon request, as long as any Investor owns any Preferred Stock or Conversion Shares (A) a written statement by the Company that it has complied with the reporting requirements of the 1933 Act and the 1934 Act, or that it qualifies as a registrant whose securities may be resold pursuant to Form S-3 (at any time when it so qualifies); (B) a copy of the most recent annual or quarterly report of the Company; and (C) such other information as may be reasonably requested in order to avail Investors of any rule or regulation of the SEC that permits the selling of any Conversion Shares without registration or pursuant to such form. 8. REPRESENTATIONS OF THE INVESTORS. The Investors represent, and in making this sale to the Investors it is specifically understood and agreed, that the Investors are acquiring the Preferred Stock to be purchased by them hereunder for their own accounts for the purpose of investment and not with a view to or for sale in connection with any distribution thereof; provided, however, that nothing herein contained shall prevent the Investors from selling or transferring any Preferred Stock or Common Stock issued upon conversion of any Preferred Stock in any transaction that is exempt from the registration provisions of the 1933 Act. Each of the Investors represents that it is an "accredited investor" as defined in Regulation D under the 1933 Act. Each of the Investors also represents that the designee specified below the name of each Investor on the signature page hereof, is a "purchaser representative" as defined in Regulation D under the 1933 Act. 9. DEFINITIONS. For the purpose of this Agreement, and in addition to terms defined elsewhere in this Agreement, the following terms shall have the following meanings. In addition, all terms of an accounting character not specifically defined herein shall have the meanings assigned thereto by GAAP. "Affiliate" shall mean, with respect to any Person, a Person directly or indirectly controlling, controlled by, or under common control with, such Person. A Person shall be deemed to control a corporation if such Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of such corporation, whether through the ownership of voting securities, by contract or otherwise. "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time. "Commission" shall mean the United States Securities and Exchange Commission or any governmental body or agency succeeding to its functions. "Common Stock" shall mean any of the shares of common stock, par value $.01 per share, of the Company. "Controlled Subsidiary" shall mean any Subsidiary from which the Company may take its pro rata share of dividends or other distributions on capital stock, and fully redeem its equity investment therein, in each case free of any Liens or contractual restrictions or other restrictions of any kind whatsoever except those imposed by those provisions of the corporation statute of the Subsidiary's jurisdiction of incorporation relating to dividends and other distributions and redemptions and as may be imposed by bankruptcy, insolvency, moratorium, reorganization and other laws relating to or affecting the rights and remedies of creditors. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time. Section references to ERISA are to ERISA as in effect at the date of this Agreement and any subsequent provisions of ERISA amendatory thereof, supplemental thereto or substituted therefor. "ERISA Affiliate" shall mean each trade or business (whether or not incorporated) which together with the Company or a Subsidiary of the Company would be deemed to be a "single employer" within the meaning of Section 4001 of ERISA immediately following the acquisition. "GAAP" shall mean generally accepted accounting principles consistently applied in the United States throughout the period or periods in question. "Indebtedness" of any Person as of any date shall mean and include (i) all indebtedness for money borrowed of such Person or evidenced by notes, bonds, debentures or similar evidences of indebtedness of such Person, (ii) indebtedness of such Person under leases which are capitalized under GAAP as of the time they were entered into, (iii) indebtedness of such Person representing the deferred and unpaid purchase price of any property or business (excluding in any event trade and service payables incurred in the ordinary course of business and constituting current liabilities), (iv) all guarantees by such Person of Indebtedness of others (including repurchase arrangements and financial condition or liquidity maintenance arrangements), (v) all obligations of such Person in respect of interest rate protection agreements and foreign currency hedging arrangements and (vi) all obligations of such Person as an account party in respect of letters of credit (other than documentary letters of credit) and in respect of banker's acceptances, in the case of each of the foregoing clauses, in the principal amount that such indebtedness would be shown on a balance sheet of such Person prepared as of such date in accordance with GAAP. "Lien" shall mean any mortgage, pledge, security interest, encumbrance, lien or charge of any kind (including any agreement to give any of the foregoing, any conditional sale or other title retention agreement, any lease in the nature thereof, and the filing of or agreement to give any financing statement or like instrument under the laws of any jurisdiction). "NASDAQ" shall mean the electronic inter-dealer quotation system operated by a subsidiary of the National Association of Securities Dealers, Inc. "Net Income" shall mean income after taxes and before extraordinary items of income and loss. "Officer's Certificate" shall mean a certificate signed in the name of the Company, by its President, one of its Vice Presidents or its Treasurer. "Operating Subsidiary" shall mean each [information to be furnished]. "PBGC" shall mean the Pension Benefit Guaranty Corporation established pursuant to Section 4002 of ERISA, or any successor entity thereto. "Pension Plan" shall mean any multiemployer plan or single- employer plan, as defined in Section 4001 of ERISA and subject to Title IV of ERISA, which is maintained for employees of the Company, any of its Subsidiaries or any ERISA Affiliates. "Person" shall mean and include an individual, a partnership, a joint venture, a corporation, a trust, an unincorporated organization and a government or any department or agency thereof. "Preferred Stock" shall mean the 8% Convertible Redeemable Preferred Stock, par value $.01 per share, of the Company, having rights, designations and preferences as set forth in the Certificate of Designations. "Reportable Event" shall mean an event described in Section 4043(c) of ERISA with respect to which the 30-day notice requirement has not been waived by the PBGC or is otherwise inapplicable. "Restricted Payment" shall mean (i) any dividend or other distribution on any shares of the capital stock (except dividends or distributions payable solely in shares of such capital stock or in respect of the Preferred Stock) of the Company, (ii) any payment on account of the purchase, redemption, retirement or acquisition of (a) any shares of the capital stock of the Company other than the Preferred Stock which may be purchased, redeemed, retired or acquired pursuant to a purchase offer made in writing to all holders thereof or (b) any option, warrant, convertible security or other right to acquire shares of the capital stock of the Company other than the Preferred Stock or (iii) except for transactions set forth on Schedules 6N and 6V or other transactions on terms not less favorable than those obtainable from unaffiliated third persons after arm's-length negotiations, any transaction involving the transfer of funds or assets to or for the account of, or the incurrence of a liability (contingent or otherwise) or obligation to or with respect to, an Affiliate other than a Controlled Subsidiary. Nothing contained in this definition shall prohibit payment by any Subsidiary to the Company or to any Controlled Subsidiary. "Series A Stock" shall mean any of the shares of Series A Preferred Stock, par value $.01 per share, of the Company. "Series B Stock" shall mean any of the shares of Series B Cumulative Convertible Preferred Stock, par value $.01 per share, of the Company. "Stock and Note Purchase Agreement" shall have the meaning ascribed thereto in Section 3E. "Subsidiary" shall mean any corporation, partnership or other entity at least a majority of the outstanding voting shares (or equivalent controlling influence) of which is at the time directly or indirectly owned or controlled (either alone or through Subsidiaries or together with Subsidiaries) by the Company or another Subsidiary. 10. MISCELLANEOUS. Y. Home Office Payment. The Company agrees that, so long as the Investors shall hold any Preferred Stock, it will make payments of dividends and redemption payments on such Preferred Stock not later than 12:00 o'clock noon, Pacific time on the date such payment is due, by transfer of immediately available funds for credit to the Investors. Payments shall be made to the account of the Investors specified on the attachments to the signature page hereto or such other account in the United States as the Investors may designate in writing, notwithstanding any contrary provision contained herein or in the Preferred Stock or in the Company's Certificate of Incorporation with respect to the place of payment. The Company agrees to afford the benefits of this Section 10A to any institutional investor of recognized standing which is the direct or indirect transferee of any of the Preferred Stock. Z. Indemnification. The Company agrees, whether or not the transactions hereby contemplated shall be consummated, to pay, and save the Investors harmless against liability for the payment of, all reasonable and necessary out-of-pocket expenses arising in connection with the transactions and other agreements and instruments contemplated by this Agreement, any other agreement or instrument to be executed and delivered in connection with the transactions contemplated by this Agreement, the Certicate of Designations and any subsequent modification hereof or thereof or consent hereunder or thereunder regardless of whether any such modification or consent becomes effective, including, without limitation, stock or securities transfer taxes, costs and expenses which may be incurred in connection with the conversion and exchangeability features of the Preferred Stock or the issuance of the Preferred Stock, all taxes, together in each case with interest and penalties, if any, and any income tax payable by the Investors in respect of any reimbursement of amounts payable pursuant to this Section 10B (but not if such income tax is payable by the Investors solely because they have deducted from income the expenses so reimbursed to them), all printing, reproduction and similar costs and the reasonable fees and expenses of Willkie Farr & Gallagher, special counsel to the Investors in connection with this Agreement and the transactions contemplated hereunder (such fees and expenses of Willkie Farr & Gallagher to be paid at the Closing) and the cost and expenses, including reasonable attorneys' fees, incurred by the Investors in enforcing any of their rights hereunder or thereunder, including without limitation costs and expenses incurred in any bankruptcy case. The Company agrees to indemnify the Investors and hold the Investors harmless from and against any and all liabilities, losses, damages, costs and expenses of any kind (including, without limitation, the reasonable fees and disbursements of the Investors' special counsel in connection with any investigative, administrative or judicial proceeding, whether or not the Investors shall be designated a party thereto) which may be incurred by the Investors, relating to or arising out of this Agreement, the Preferred Stock or any actual or proposed use of the proceeds of the sale of the Preferred Stock hereunder, provided that the Investors shall not have the right to be indemnified hereunder for their own gross negligence or willful misconduct as determined by a court of competent jurisdiction. The obligations of the Company under this Section 10B shall remain in force and effect for as long as the Preferred Stock are outstanding and shall survive the transfer of any thereof. AA. Registration Rights. The Company covenants that it will not hereafter enter into any agreement with respect to its securities which is inconsistent with the rights granted in this Agreement. BB. Restrictive Legend. Each share of Preferred Stock or Common Stock issuable upon conversion of the Preferred Stock prior to an effective registration shall bear the following (or substantially equivalent) legend thereon: "The transfer of these securities is subject to certain restrictions set forth in a Purchase Agreement, dated as of May 1, 1995, and any amendments thereto. The securities represented hereby have not been registered under the Securities Act of 1933, as amended, or applicable state securities laws, and the securities may not be sold, transferred or otherwise disposed of in the absence of such registration or an exemption therefrom under said Act and such laws and the respective rules and regulations thereunder." CC. Survival of Representations and Warranties. All representations and warranties contained herein or made in writing by or on behalf of any party to this Agreement in connection herewith shall survive the execution and delivery of this Agreement, regardless of any investigation made by the Investors or on their behalf. DD. Successors and Assigns. All covenants and agreements in this Agreement contained by or on behalf of the parties hereto shall bind and inure to the benefit of the respective successors and assigns of the parties hereto whether so expressed or not. EE. Notices. All communications provided for hereunder shall be sent by registered or certified mail, overnight air courier service or telecopier if within a reasonable time a permanent copy is transmitted by any of the other methods described above and, if to the Investors, addressed to the Investors in the manner in which its address appears on the signature page hereof, with a copy to William J. Grant, Jr., Esq., at Willkie Farr & Gallagher, 153 East 53rd Street, New York, New York 10022, if to the Company, addressed to it at 2789 Northpoint Parkway, Santa Rosa, California 95402-7397, Attention: President, with a copy to John V. Erickson, Esq., at Collette & Erickson, 555 California Street, San Francisco, California 94104-1791 or to such other address with respect to any party as such party shall notify the other in writing; provided, however, that any such communication to the Company may also, at the option of the Investors, be either delivered to the Company at the Company's address set forth above or to any officer of the Company. FF. Descriptive Headings. The descriptive headings of the several Sections of this Agreement are inserted for convenience only and do not constitute a part of this Agreement. GG. Satisfaction Requirement. If any agreement, certificate or other writing, or any action taken or to be taken, is by the terms of this Agreement required to be satisfactory to the Investors, the determination of such satisfaction shall be made by the Investors in their sole and exclusive judgment exercised in good faith. HH. Governing Law; Consent to Jurisdiction. This Agreement shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the law of the State of Delaware, without giving effect to the choice of law or conflicts principles thereof. Any legal action or proceeding with respect to this Agreement may be brought in the courts of the State of Delaware or of the United States of America for the District of Delaware, and, by execution and delivery of this Agreement, the Company hereby accepts for itself and in respect of its property, generally and unconditionally, the jurisdiction of the aforesaid courts. The Company irrevocably consents to the service of process out of any of the aforementioned courts in any such action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to the Company at its address set forth opposite its signature below, such service to become effective 30 days after such mailing. Nothing herein shall affect the right of the Company, the Investors or any holder of Preferred Stock to serve process in any other manner permitted by law or to commence legal proceedings or otherwise proceed against the Company in any other jurisdiction. II. Remedies. In case any one or more of the covenants and/or agreements set forth in this Agreement shall have been breached by the Company or any Investor, the Company or the Investors (or any of them), as applicable, may proceed to protect and enforce its or their rights either by suit in equity and/or by action at law, including, but not limited to, an action for damages as a result of any such breach and/or an action for specific performance of any such covenant or agreement contained in this Agreement. The Company or an Investor acting pursuant to this Section 10K shall be indemnified against all liability, loss or damage, together with all reasonable costs and expenses related thereto (including reasonable legal and accounting fees and expenses) in accordance with Section 10B. JJ. Entire Agreement. This Agreement and the other writings referred to herein or delivered pursuant hereto contain the entire agreement among the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous arrangements or understandings, written or oral, with respect thereto. KK. Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. LL. Amendments. This Agreement may be amended, and the observance of any term of this Agreement may be waived, with (and only with) the written consent of the Company and each of the Investors. MM. Counterparts. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original, and it shall not be necessary in making proof of this Agreement to produce or account for more than one such counterpart. If you are in agreement with the foregoing, please sign the form of acceptance on the space provided below, whereupon this letter shall become a binding agreement between the parties hereto. Very truly yours, OPTICAL COATING LABORATORY, INC. By: /S/HERBERT M. DWIGHT, JR. Herbert M. Dwight, President and Chief Executive Officer The foregoing Agreement is hereby accepted as of the date first above written. [NAME OF INVESTOR] By: 8% Series C Convertible Name: Redeemable Preferred Stock: Title: Shares Purchase Price: $ Employer ID Number (Name of Designee) [NAMES OF INVESTORS] Number of Shares Name and Address at $1,000 per share NAP & COMPANY (EMP ID 51-6000279) 3,500 as nominee for the Delaware State Employees' Retirement Fund c/o Pecks Management Partners Ltd. One Rockefeller Plaza, Suite 320 New York, NY 10020 Attn: Arther W. Berry FUELSHIP & COMPANY (EMP ID 04-2809861) 750 as nominee for the Declaration of Trust for Defined Benefit Plans of Zeneca Holdings Inc. c/o Pecks Management Partners Ltd. One Rockefeller Plaza, Suite 320 New York, NY 10020 Attn: Arther W. Berry LINDSAY & CO. (EMP ID 91-1146641) 4,000 as nominee for Smith Barney Fundamental Value Fund Inc. 388 Greenwich Street, 22nd Floor New York, NY 10013 Attn: Lee Augsburger Golden Gate Development and Investment 747 Limited Partnership (EMP ID 04-3015977) 747 c/o Advent International Corporation 101 Federal Street Boston, MA 02110 Attn: Douglas Kingsley Advent Performance Materials Limited 643 Partnership (EMP ID 06-1265669) c/o Advent International Corporation 101 Federal Street Boston, MA 02110 Attn: Douglas Kingsley Advent International Investors II 10 Limited Partnership (EMP ID 04-3162542) c/o Advent International Corporation 101 Federal Street Boston, MA 02110 Attn: Douglas Kingsley Adwest Limited Partnership 350 (EMP ID 04-2975787) c/o Advent International Corporation 101 Federal Street Boston, MA 02110 Attn: Douglas Kingsley Lion Investment Limited 1,000 33 Robert Adam Street London, England W1M5AH Attn: Sarah Redhead Modern Woodmen of America 1,000 1701 1st Avenue Rock Island, IL 61201 Attn: Investment Department EX-4 3 CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS OF SERIES C CONVERTIBLE REDEEMABLE PREFERRED STOCK of Optical Coating Laboratory, Inc. Pursuant to Section 151 of the General Corporation Law of the State of Delaware We, Herbert M. Dwight, President and Chief Executive Officer, and Joseph C. Zils, Vice President and Secretary, of Optical Coating Laboratory, Inc., a corporation organized and existing under the General Corporation Law of the State of Delaware (the "Corporation"), in accordance with the provisions of Section 103 thereof, DO HEREBY CERTIFY: That pursuant to the authority conferred upon the Board of Directors by the Certificate of Incorporation of the said Corporation, the said Board of Directors on May 1, 1995, adopted the following resolution creating a series of 12,000 shares of Preferred Stock designated as Series C Convertible Redeemable Preferred Stock: RESOLVED, that pursuant to the authority vested in the Board of Directors of this Corporation in accordance with the provisions of its Certificate of Incorporation, a series of Preferred Stock of the Corporation be and it hereby is created, and that the designation and amount thereof and the voting powers, preferences and relative, participating, optional and other special rights of the shares of such series, and the qualifications, limitations or restrictions thereof are as follows: Section 1. Designation and Amount. The shares of such series shall be designated as " 8% Series C Convertible Redeemable Preferred Stock" (hereinafter referred to as "Series C Preferred Stock"), shall have a par value of $.01 per share, and the number of shares constituting such series shall be 12,000. Section 2. Dividends and Distributions. (A) The holders of Series C Preferred Stock shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available therefor, cumulative dividends at the rate of Eighty Dollars ($80.00) per share per annum, payable quarterly on the last day of March, June, September and December of each year (each such date being referred to herein as the "Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date after the first issuance (the "Issuance Date") of a share or fraction of a share of Series C Preferred Stock. (B) Dividends shall begin to accrue and be cumulative on outstanding shares of Series C Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such shares of Series C Preferred Stock, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of shares of Series C Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall bear interest at the rate of 8% per annum. Dividends paid on the shares of Series C Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. In the event dividends paid on the shares of Series C Preferred Stock are in an amount less than the total amount of such dividends at the time accrued and payable on such shares, then the amount equal to the difference between the dividends paid and the dividends accrued and payable shall continue to accrue and be cumulative. The Board of Directors may fix a record date for the determination of holders of shares of Series C Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be no more than thirty (30) days prior to the date fixed for the payment thereof. Section 3. Voting Rights. The holders of shares of Series C Preferred Stock shall have the following voting rights: (A) Except as otherwise provided herein or by law, the holders of shares of Series C Preferred Stock shall not be entitled to notice of any shareholders' meetings or to vote on any matter. (B) (i) If at any time dividends on any Series C Preferred Stock shall be in arrears in an amount equal to four (4) quarterly dividends thereon, the occurrence of such contingency shall mark the beginning of a period (herein called a "default period") which shall extend until such time when all accrued and unpaid dividends for all previous quarterly dividend periods and for the current quarterly dividend period on all shares of Series C Preferred Stock then outstanding shall have been declared and paid or set apart for payment. During each default period, all holders of Series C Preferred Stock, voting as a class, shall have the right to elect the greater of (x) two (2) Directors or (y) a whole number of Directors not less than twenty-five percent (25%) of the total number of authorized Directors, including Directors authorized after any expansion of the authorized number of Directors pursuant to subparagraph 3(C)(ii) (the "Series C Preferred Directors"). (ii) During any default period, such voting right of the holders of Series C Preferred Stock may be exercised initially at a special meeting called pursuant to subparagraph (iii) of this paragraph 3(B) or at any annual meeting of stockholders, and thereafter at annual meetings of stockholders provided that neither such voting right nor the right of the holders of any other series of Preferred Stock, if any, to increase, in certain cases, the authorized number of Directors shall be exercised unless the holders of one third (1/3) in number of shares of the Series C Preferred Stock outstanding shall be present in person or by proxy. The absence of a quorum of the holders of Common Stock shall not affect the exercise by the holders of the Series C Preferred Stock of such voting right. At any meeting at which the holders of the Series C Preferred Stock shall exercise such voting right initially during an existing default period, they shall have the right, voting as a class, to elect Directors to fill such vacancies, if any, in the Board of Directors as may then exist up to the number of Series C Preferred Directors or, if such right is exercised at an annual meeting, to elect the Series C Preferred Directors. If the number of Series C Preferred Directors which may be so elected at any special meeting does not amount to the required number, the authorized number of Directors shall be automatically increased as shall be necessary to permit the election by the holders of the Series C Preferred Stock of the required number and the approval of the holders of the shares of Common Stock shall not be necessary for such increase. After the holders of the Series C Preferred Stock shall have exercised their right to elect Directors in any default period and during the continuance of such period, the number of Directors shall not be increased or decreased except by vote of the holders of Series C Preferred Stock as herein provided or pursuant to the rights of any equity securities ranking senior to or pari passu with the Series C Preferred Stock. (iii) Notwithstanding anything to the contrary contained in the Corporation's Certificate of Incorporation or By-Laws, unless the holders of Series C Preferred Stock shall, during an existing default period, have previously exercised their right to elect Directors, the Board of Directors may order, or any stockholder or stockholders owning in the aggregate not less than ten percent (10%) of the total number of shares of the Series C Preferred Stock outstanding may request, the calling of a special meeting of the holders of the Series C Preferred Stock, which meeting shall thereupon be called by the President, a Vice-President or the Secretary of the Corporation. Notice of such meeting and of any annual meeting at which holders of the Series C Preferred Stock are entitled to vote pursuant to this subparagraph 3(B)(iii) shall be given to each holder of record of the Series C Preferred Stock by mailing a copy of such notice to him at his last address as the same appears on the books of the Corporation. Such meeting shall be called for a time not earlier than ten (10) days and not later than sixty (60) days after such order or request or in default of the calling of such meeting within sixty (60) days after such order or request, such meeting may be called at the expense of the Corporation on similar notice by any stockholder or stockholders owning in the aggregate not less than ten percent (10%) of the total number of shares of the Series C Preferred Stock outstanding. Notwithstanding the provisions of this subparagraph 3(B)(iii), no such special meeting shall be called during the period within sixty (60) days immediately preceding the date fixed for the next annual meeting of the stockholders. (iv) In any default period, the holders of Common Stock, and other classes of stock of the Corporation, if applicable, shall continue to be entitled to elect the whole number of Directors until the holders of the Series C Preferred Stock shall have exercised their right to elect the Series C Preferred Directors voting as a class, after the exercise of which right (x) the Directors so elected by the holders of the Series C Preferred Stock shall continue in office until their successors shall have been elected by such holders or until the expiration of the default period, and (y) any vacancy in the Board of Directors may (except as provided in subparagraph 3(B)(ii)) be filled by vote of a majority of the remaining Directors theretofore elected by the holders of the class of stock which elected the Director whose office shall have become vacant. References in this paragraph 3(B) to Directors elected by the holders of a particular class of stock shall include Directors elected by such Directors to fill vacancies as provided in clause (y) of the foregoing sentence. (v) Immediately upon the expiration of a default period, (x) the right of the holders of the Series C Preferred Stock as a class to elect Directors shall cease, (y) the term of any Directors elected by the holders of the Series C Preferred Stock as a class shall terminate, and (z) the number of Directors shall be such number as may be provided for in the Certificate of Incorporation or By-laws irrespective of any increase made pursuant to the provisions of subparagraph 3(B)(ii) (such number being subject, however, to change thereafter in any manner provided by law or in the Certificate of Incorporation or By-laws). Any vacancies in the Board of Directors effected by the provisions of clauses (y) and (z) in the preceding sentence may be filled by a majority of the remaining Directors. (C) Except as set forth herein or as otherwise required by law, holders of Series C Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein) for taking any corporate action. Section 4. Redemptions. (A) Optional Redemptions by the Corporation. The Corporation, at its option, at any time and from time to time commencing on the day after the day that is the second anniversary of the Issuance Date, may redeem out of funds legally available therefor all or any shares of the Series C Preferred Stock then outstanding by paying in cash therefor an amount equal to One Thousand Eighty Dollars ($1,080) per share declining in equal annual increments of Twenty Dollars ($20.00) to One Thousand Dollars ($1,000) per share on the day after the day that is the fifth anniversary of the Issuance Date and thereafter, together with the amount of any dividends accrued and unpaid thereon to the date of the redemption. The foregoing notwithstanding, the Corporation shall not exercise its rights under this Section 5(A) until the day after the day that is the third (3) anniversary of the Issuance Date unless at any time during the period beginning on the day that is the day after the day that is the second anniversary of the Issuance Date and ending on the day that is the third anniversary of the Issuance Date the average Closing Price of the Common Stock of the Corporation for any twenty (20) consecutive trading days shall be greater than $17.00 per share, such Closing Price to be adjusted for stock splits or stock dividends occurring prior to or during such twenty (20) day period. The term "Closing Price" when used herein means the closing bid price of the Common Stock of the Corporation reported by the National Association of Securities Dealers Automated Quotation Systems, Inc. ("NASDAQ") or, if the shares of Common Stock of the Corporation are then listed on a National Securities Exchange (registered under the Securities Exchange Act of 1934), or the NASDAQ National Market System or other comparable listing which lists last sale prices, the reported last sale price per share or, in case no such reported sale takes place on such day, the average of reported closing bid and asked prices per share, in either case on such exchange, or if such prices are not recorded by NASDAQ and the shares of Common Stock are not listed or admitted to trading on such a National Securities Exchange, the mean between the closing bid and asked prices as furnished by any member of the National Association of Securities Dealers, Inc. selected from time to time by the Corporation for that purpose. (B) Determination of Number of Redeemable Shares. The number of shares to be set forth in the redemption notice described in paragraph 5(C) below to be redeemed from each holder of Series C Preferred Stock in redemptions under this Section 5 will be the number of whole shares determined, as nearly as practicable to the nearest share, by multiplying the total number of shares of Series C Preferred Stock to be redeemed times a fraction, (i) the numerator of which is the total number of shares of Series C Preferred Stock then held by such holder and (ii) the denominator of which is the total number of shares of Series C Preferred Stock then outstanding. (C) Notice of Redemption. Notice of any redemption of Series C Preferred Stock pursuant to this Section 5 specifying the time and place of redemption and the redemption price will be mailed by certified or registered mail, return receipt requested, to each holder of record of Series C Preferred Stock at the address of such holder shown on the Corporation's records, not more than sixty (60) nor less than forty five (45) days prior to the date on which such redemption is to be made. Such notice shall state that the holders have conversion rights pursuant to Section 6 hereof up until the day that is five (5) days before the Conversion Date. If less than all Series C Preferred Stock owned by a holder is then to be redeemed, the notice will also specify the number of shares and the certificate numbers thereof which are to be redeemed. Upon mailing any such notice of redemption, the Corporation will become obligated to redeem on the date of redemption specified therein all Series C Preferred Stock specified therein. In case less than all Series C Preferred Stock represented by any certificate is redeemed in any redemption pursuant to this Section 5, a new certificate will be issued representing the unredeemed Series C Preferred Stock without cost to the holder thereof. (D) Method of Redemption. If on, prior to or after any date fixed for redemption of the Series C Preferred Stock, the Corporation shall deposit, with any bank or trust company in the State of California, as a trust fund, a sum sufficient to redeem, as of the date fixed for redemption thereof, the shares called for redemption, with irrevocable instructions and authority to the bank or trust company to pay, on or after the date fixed for redemption, the redemption price of the shares to their respective holders upon surrender of their share certificates, then from and after the latter of the date fixed for redemption or the date of deposit, but not until such date, the shares so called shall be redeemed and dividends shall cease to accrue after the date fixed for redemption. The deposit shall constitute full payment of the shares to their holders, and from and after the later of the date of the deposit and the date fixed for redemption the shares shall no longer be outstanding, and the holders thereof shall cease to be stockholders with respect to such shares, and shall have no rights with respect thereto except the right to receive from the bank or trust company payment of the redemption price of the shares without interest, upon the surrender of their certificates therefor. If the holders of shares of Series C Preferred Stock so called for redemption shall not have claimed, at the end of six (6) months from the date fixed for redemption, any funds so deposited, such bank or trust company shall thereupon pay over to the Corporation such unclaimed funds, and such bank or trust company shall thereafter be relieved of all responsibility in respect thereof to such holders, and such holders shall look only to the Corporation for payment of the redemption price. Section 5. Conversion Rights. (A) Conversion at Holder's Option. Subject to and in compliance with the provisions of this Section 6, each share of Series C Preferred Stock may, at the option of the holder thereof and notwithstanding any notice of redemption to be made pursuant to Section 5, be converted at any time into such number of fully paid and nonassessable shares of Common Stock equal to the "Conversion Ratio" in effect at the time of conversion; provided, however, that the right of a holder to convert shares of Series C Preferred Stock called for redemption pursuant to Section 5 shall terminate five (5) days prior to the date on which such redemption is to be made. The Conversion Ratio of each share of Series C Preferred Stock shall be the amount of $1,000, together with the amount of any dividends accrued and unpaid thereon to the Conversion Date, divided by the Conversion Price. The initial Conversion Price shall be an amount equal to $10.50. (B) Adjustments to Conversion Price. The Conversion Price is subject to adjustment as provided in this paragraph 6(B): (i) If the Corporation shall at any time, or from time to time, after the Issuance Date, issue or sell any Additional Shares of Common Stock (as hereinafter defined in subparagraphs 6(B)(ii) and 6(B)(iii)), for a consideration per share less than the Closing Price for the twenty (20) consecutive trading days immediately preceding the date of such issuance or sale (the "Market Price"), then as of the date of such issuance or sale of Additional Shares of Common Stock, and each subsequent such issuance or sale of Additional Shares of Common Stock, the Conversion Price (calculated to the nearest cent) shall be reduced to the Conversion Price determined by multiplying the Conversion Price in effect prior to such event times a fraction the numerator of which shall be an amount equal to the sum of (a) the product derived by multiplying the Market Price on the day of such issuance or sale times the number of shares of "Common Stock Deemed Outstanding" (as defined below) immediately prior to such issuance or sale, plus (b) the consideration, if any, received or deemed to be received by the Corporation upon such issuance or sale, and the denominator of which shall be the product of the number of shares of Common Stock Deemed Outstanding immediately after such issuance or sale times the Market Price on the day of such issuance or sale. The foregoing notwithstanding, in the event the Corporation shall at any time issue or sell Additional Shares of Common Stock at a price less than $7.50 per share regardless of what the Market Price is on the date of such issuance or sale, then as of the date of such issuance or sale of Additional Shares of Common Stock, and each subsequent such issuance or sale of Additional Shares of Common Stock, the Conversion Price (calculated to the nearest cent) shall be reduced to the Conversion Price determined by multiplying the Conversion Price in effect prior to such event times a fraction the numerator of which shall be an amount equal to the sum of (c) the product derived by multiplying the Conversion Price on the day of such issuance or sale times the number of shares of Common Stock Deemed Outstanding immediately prior to such issuance or sale, plus (d) the consideration, if any, received or deemed to be received by the Corporation upon such issuance or sale, and the denominator of which shall be the product of the number of shares of Common Stock Deemed Outstanding immediately after such issuance or sale times the Conversion Price on the day of such issuance or sale. The number of shares of "Common Stock Deemed Outstanding", when used herein, shall equal the sum of the number of shares of Common Stock then outstanding plus the number of shares of Common Stock then obtainable pursuant to (x) options to purchase or rights to subscribe for Common Stock, (y) securities by their terms convertible into or exchangeable for Common Stock and (z) options to purchase or rights to subscribe for such convertible or exchangeable securities. (ii) If, after the Issuance Date, the Corporation shall in any manner grant or offer any warrant, right or option to purchase Common Stock (other than options described in Section 6(B)(iii) below) at a price per such Additional Shares of Common Stock (as defined below) (determined by dividing (a) the consideration actually received or \to be received by the Corporation for the Issue of such Additional Shares of Common Stock by (b) the total number of shares of Common Stock necessary to effect the exercise of all such warrants, rights or options) less than the Market Price per share of the Common Stock of the Corporation on the day of such grant or offer, or, regardless of the Market Price, less than $7.50 per share, all shares of Common Stock which the holders of such rights or options shall be entitled to purchase pursuant to such rights or options shall, subject to the provisions of subparagraph 6(B)(iii), be deemed to be "Additional Shares of Common Stock" issued as of the date of the offering of such warrants, rights or options, and the maximum aggregate consideration named in such warrants, rights or options for the shares of Common Stock covered thereby, plus the consideration received by the Corporation for such warrant, right or option, if any, shall be deemed to be the consideration actually received by the Corporation for the issue of such Additional Shares of Common Stock. If, after the Issuance Date, the Corporation shall in any manner issue any stock (other than Series C Preferred Stock) or obligations directly or indirectly convertible into or exchangeable for Common Stock and the price per share for which Common Stock is issuable upon such conversion or exchange (determined by dividing (a) the total amount received by the Corporation in consideration for the issue of such convertible stock or obligations, plus the total amount of premiums payable to the Corporation upon conversion or exchange, by (b) the total number of shares of Common Stock necessary to effect the conversion or exchange of all such convertible stock or obligations) shall be less than the Market Price per share of the Common Stock of the Corporation on the date of any such issue, or, regardless of the Market Price, less than $7.50 per share, then such issue shall, subject to the provisions of subparagraph 6(B)(iv), be deemed to be an issue of "Additional Shares of Common Stock" in an amount equal to the total maximum number of shares of Common Stock necessary to effect the conversion or exchange of all such convertible stock or obligations. The total amount received by the Corporation in consideration for the issue of such convertible stock or obligations, plus the total amount of premiums payable to the Corporation upon conversion or exchange, shall be deemed to be the consideration actually received for the sale of such Additional Shares of Common Stock. In determining the amount of the consideration received by the Corporation upon the issuance of warrants, rights or options to purchase Common Stock or stock or obligations convertible or exchangeable for Common Stock for the purposes of this subparagraph (ii), the amount of the consideration in cash and other than cash shall be determined pursuant to subparagraphs (v), (vi) and (vii) of this paragraph 6(B). (iii) The term "Additional Shares of Common Stock," as used in this paragraph 6(B), shall mean all shares of Common Stock issued by the Corporation after the Issuance Date (including shares deemed to be "Additional Shares of Common Stock" pursuant to subparagraph 6(B)(ii)), whether or not subsequently reacquired or acquired by the Corporation, other than the following: (A) Shares issued upon conversion of any shares of Preferred Stock; (B) Shares issued upon exercise of any warrants or options outstanding on the Issuance Date; or (C) Shares of Common Stock of the Corporation, or options to purchase Common Stock of the Corporation, issued to officers, directors and employees of, and consultants to, the Corporation or its subsidiaries pursuant to stock purchase or option plans or arrangements or other officer, director, employee or consultant stock incentive or benefit plans or arrangements, including, without limitation, any employee stock ownership plan but in no event to exceed at any time an aggregate amount of 5% of the Corporation's Common Stock Deemed Outstanding. (iv) Upon the expiration of any unexercised warrants, options or rights or the termination of any unexercised right to convert or exchange, in respect of which any adjustments shall have been made pursuant to subparagraph (i) of this paragraph 6(B), the Conversion Price then in effect shall forthwith be readjusted to such Conversion Price as would have been obtained had the adjustments made upon the issuance of such warrants, options, rights, or convertible or exchangeable securities been made upon the basis of the delivery of only the number of shares of Common Stock actually delivered upon the exercise of such options or rights or upon conversion or exchanges of such securities. Such readjustment of the Conversion Price shall not affect any prior redemption or conversion of shares of Series C Preferred Stock hereunder. (v) In case of the issuance of Additional Shares of Common Stock for a consideration part or all of which shall be in cash, the gross amount of the cash consideration therefor shall be deemed to be the amount of cash received by the Corporation for such shares, provided, however, any compensation or discount in the sale, underwriting, or purchase thereof by underwriters or dealers or others performing similar services or for any expenses incurred in connection therewith shall be deducted from the amount of said consideration. (vi) In case of the issuance (other than as a dividend or other distribution with respect to any capital stock of the Corporation or upon conversion or exchange of other securities of the Corporation) of Additional Shares of Common Stock for a consideration part or all of which shall be other than cash, the amount of the consideration other than cash therefor shall be deemed to be the value of such consideration as determined in good faith by the Board of Directors, irrespective of the accounting treatment thereof. (vii) In case Additional Shares of Common Stock are issued as a dividend or other distribution on any class of capital stock of the Corporation, the Conversion Price then in effect shall be reduced by multiplying the Conversion Price by a fraction of which the numerator shall be the number of shares of Common Stock outstanding at the close of business on the date fixed for determination of stockholders entitled to receive such dividend and the denominator shall be the sum of such number of shares and the total number of shares constituting such dividend or other distribution. (viii) In case outstanding shares of Common Stock shall be subdivided into a greater number of shares of Common Stock, the Conversion Price in effect at the opening of business on the date following the day upon which such subdivision becomes effective shall be proportionately reduced, and, onversely, in case outstanding shares of Common Stock shall be combined into a smaller number of shares of Common Stock, the Conversion Price in effect at the opening of business on the date following the day upon which such combination becomes effective shall be proportionately increased, such reductions or increases to be effected as provided below. In the event of any such subdivision or combination, the Conversion Price then in effect shall be reduced or increased, as the case may be, by multiplying it by a fraction of which the numerator shall be the number of shares of Common Stock outstanding at the close of business on the date immediately preceding the effective date of such subdivision or combination and the denominator shall be the number of shares of Common Stock outstanding immediately after such subdivision or combination becomes effective. (ix) In the event the Corporation shall suffer a "Change in Control," as hereinafter defined, and at a time when the Market Price per share of the Common Stock of the Corporation on the day immediately preceding the announcement of the transaction giving rise to such Change in Control (the "Immediate Market Price") is less than the Conversion Price then in effect, the Conversion Price shall be reduced to an amount equal to the greater of (A) the Immediate Market Price and (B) from the first day after the Issuance Date to the day that is the first anniversary of the Issuance Date, $9.50 per share; from the first day after the day that is the first anniversary of the Issuance Date to the day that is the second anniversary of the Issuance Date, $9.00 per share; and from the first day after the day that is the second anniversary of the Issuance Date to the day that is the third anniversary of the Issuance Date, $8.50 per share. The term a "Change in Control," when used herein, shall mean the acquisition of a number of shares of capital stock of the Corporation which, in the aggregate, would have voting rights in excess of forty percent (40%) of all Voting rights of all shareholders of the Corporation then outstanding by any person together with all affiliates and associates of such person, as those terms are defined in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended (collectively an "Acquiring Person"), excluding the Corporation, any subsidiary of the Corporation, any employee benefit plan of the Corporation or of any subsidiary of the Corporation, or any person or entity organized, appointed or established by the Corporation for or pursuant to the terms of any such plan, including any such acquisitions pursuant to a "merger or consolidation" (within the meaning of Subchapter IX of the General Corporation Law of the State of Delaware). The foregoing notwithstanding, no Change in Control shall be deemed to have occurred if (A) more than 50% of the aggregate consideration received or retained in such transaction by the holders of Common Stock of the Corporation shall consist of "Marketable Stock," as hereinafter defined, of the surviving corporation or (B) if the holders of Common Stock of the Corporation receive or retain in connection with such transaction a number of shares of capital stock of the surviving corporation which, in the aggregate, would have voting rights in excess of fifty percent (50%) of all voting rights of all shareholders of the surviving corporation. The term "Marketable Stock," when used herein, shall mean common stock of the surviving corporation, which is (or will, upon distribution thereof, be) listed on a National Securities Exchange (registered under the Securities Exchange Act of 1934), the NASDAQ National Market System or other comparable listing. (x) In the event the Corporation fails to cause a registration statement under the Securities Act of 1933, as amended, to become effective in respect of the shares of Common Stock issuable upon conversion of the Series C Preferred Stock by the date that is 270 days after the Issuance Date pursuant to the terms of the Purchase Agreement, dated as of May 1, 1995, between the Corporation and each of the investors named on Schedule 1 thereto, the Conversion Price then in effect, if higher, shall be reduced to $9.45 per share. (C) Notice of Adjustment in Conversion Rights and Conversion Ratio. Upon any adjustment or other change relating to the Conversion Price and Conversion Ratio or the securities purchasable on exercise of the right to convert Series C Preferred Stock, then and in each such case the Corporation shall within 30 days of such adjustment give written notice thereof, by first class mail, postage prepaid, addressed to each holder of record of Series C Preferred Stock at the address of such holder as shown on the books of the Corporation, which notice shall state the Conversion Ratio and Conversion Price resulting from such adjustment and the increase or decrease in the number or other denominations of securities purchasable at such price upon conversion of shares of Series C Preferred Stock, setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based. The Corporation shall supply current information concerning the foregoing to any holder of Series C Preferred Stock at any time upon demand. (D) Other Notices. In case at any time: (i) the Corporation shall pay any dividend or make any distribution to the holders of its Common Stock and/or Series C Preferred Stock; (ii) the Corporation shall offer for subscription pro rata to the holders of its Common Stock and/or Series C Preferred Stock any additional shares of stock of any class or other rights; or (iii) there shall be any capital reorganization or reclassification of the capital stock of the Corporation, or consolidation or merger of the Corporation with or into or the sale of all or substantially all of its assets to another corporation or entity; then, in any one or more of said cases, the Corporation shall give written notice, by first class mail, postage prepaid, addressed to each holder of record of Series C Preferred Stock, at the address of such holder as shown on the books of the Corporation, of the date on which (i) the books of the Corporation shall close or a record shall be fixed for determining the stockholders entitled to such dividend, distribution or subscription rights, or (ii) such reorganization, reclassification, consolidation, merger or sale shall take place, as the case may be. Such notice shall also specify the date as of which the holders of Common Stock and Series C Preferred Stock of record shall participate in such dividend, distribution or subscription rights, or shall be entitled to exchange their Series C Preferred Stock or Common Stock for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger or sale, as the case may be. Such written notice shall be given at least thirty (30) days prior to the record date or the date on which the Corporation's transfer books are closed with respect thereto. (E) Exercise of Right to Convert. To exercise the conversion privilege provided in paragraph 6(A), a holder of Series C Preferred Stock shall give written notice to the Corporation at its principal office that such holder elects to convert such shares. Such notice shall also state the name or names (with address or addresses) in which the certificate or certificates for shares of Common Stock issuable upon such conversion shall be issued. If less than all Series C Preferred Stock owned by a holder is meant to be converted, the notice will also specify the number of shares and the certificate numbers thereof which are to be converted. The date when a holder's written notice is received by the Corporation in the case of a conversion pursuant to paragraph 6(A) shall be the "Conversion Date." As promptly as practicable after the Conversion Date and upon receipt of the certificate or certificates representing the shares to be converted, the Corporation shall issue and shall deliver at its principal office to the holder of the shares of Series C Preferred Stock being converted, or on its written order, a certificate or certificates as it may request for the number of full shares of Common Stock issuable upon the conversion of such shares of Series C Preferred Stock in accordance with the provisions of this Section 6, and cash, as provided in paragraph 6(F), in respect of any fraction of a share of Common Stock issuable upon such conversion. Such conversion shall be deemed to have been effected at the close of business on the Conversion Date, and at such time the rights of the holder or holders of the converted shares of Series C Preferred Stock shall cease and the person or persons in whose name or names any certificate or certificates for shares of Common Stock shall be issuable upon such conversion shall be deemed to have become the holder or holders of record of the shares of Common Stock represented thereby. (F) Fractional Shares. No fractional shares of Common Stock or scrip representing fractional shares shall be issued upon conversion of Series C Preferred Stock. Instead of any fractional shares of Common Stock which would otherwise be issuable upon conversion of Series C Preferred Stock (and which shall be determined with respect to each holder by considering the ratio of those shares registered in his name to the total number of shares of Series C Preferred Stock then outstanding), the Corporation shall pay to the holder of the shares of Series C Preferred Stock which were converted cash in respect of such fraction in an amount equal to the same fraction of the Closing Price on the Conversion Date, but only if and when such cash is legally available for that purpose. (G) Certificates. In the event some but not all of the shares of Series C Preferred Stock represented by a certificate or certificates surrendered by a holder are converted, the Corporation shall execute and deliver to or on the order of the holder, at the expense of the Corporation, a new certificate representing the number of shares of Series C Preferred Stock which were not converted. (H) Reservation of Common Stock. The Corporation shall at all times ensure that all shares of Common Stock that may be issued upon the conversion of the Preferred Stock will, upon issuance and upon full payment therefor, be validly issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issuance thereof. During the period within which the Preferred Stock may be converted, the Corporation will at all times have authorized and reserved a sufficient number of shares of Common Stock of the Corporation, par value $.01 per share (the "Conversion Shares"), to permit the conversion of the Preferred Stock. (I) Conversion. Without limiting the provisions of subparagraph 6(B)(vii) above, upon any conversion of any shares of Series C Preferred Stock under this Section 6 or otherwise, no adjustment to the Conversion Price then in effect shall be made on account of declared and unpaid dividends on the shares of Series C Preferred Stock surrendered for conversion. (J) No Impairment. The Corporation will not, by amendment of its Certificate of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Corporation, but will at all times in good faith assist in the carrying out of all the provisions of this Section 6 and in the taking of all such action as may be necessary or appropriate in order to protect the conversion rights of the holders of the Series C Preferred Stock against impairment. Section 6. Reacquired Shares. Any shares of Series C Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and cancelled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock to be created by resolution or resolutions of the Board of Directors, subject to the conditions and restrictions on issuance set forth herein. Section 7. Liquidation, Dissolution, Winding Up or Merger, etc. (A) Upon any liquidation (voluntary or otherwise), dissolution or winding up of the Corporation, no distribution shall be made to the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series C Preferred Stock unless, prior thereto, the holders of shares of Series C Preferred Stock shall have received One Thousand Dollars ($1,000) per share, plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment (the "Series C Liquidation Preference"). (B) In the event, however, that there are not sufficient assets available to permit payment in full of the Series C Liquidation Preference and the liquidation preferences of all other series of Preferred Stock, if any, which rank on a parity upon liquidation, dissolution or winding up with the Series C Preferred Stock, then such remaining assets shall be distributed ratably to the holders of such parity shares in proportion to their respective liquidation preferences. Section 8. Ranking. The Series C Preferred Stock shall rank prior to all other series and classes of the Corporation's capital stock as to the payment of dividends and the distribution of assets, and the Corporation may not create any series or class of capital stock ranking prior to or pari passu with the Series C Preferred Stock unless the terms of any such series or class shall be approved by not less than sixty-six and two-thirds percent (66 2/3%) of the outstanding shares of Series C Preferred Stock, voting separately as a class. Section 9. Amendment. The Certificate of Incorporation of the Corporation shall not be further amended in any manner which would materially alter or change the powers, preferences or special rights of the Series C Preferred Stock so as to affect them adversely without the affirmative vote of the holders of not less than sixty-six and two-thirds percent (66 2/3%) of the outstanding shares of Series C Preferred Stock, voting separately as a class, provided however that with respect to dividend rights, redemption rights, conversion rights and this provision, no amendments shall be made without the consent of every holder of Series C Preferred Stock. Section 11. Fractional Shares. Series C Preferred Stock may be issued in fractions of a share which shall entitle the holder thereof, in proportion to such holder's fractional shares, to exercise voting rights, receive dividends, participate in distributions and to have the benefit of all of the rights of holders of shares of Series C Preferred Stock. IN WITNESS WHEREOF, we have executed and subscribed this Certificate and do affirm the foregoing as true under the penalties of perjury this 1ST day of May, 1995. /S/HERBERT M. DWIGHT, JR. Herbert M. Dwight, President and Chief Executive Officer Attest: /S/JOSEPH C. ZILS Joseph C. Zils, Vice President and Secretary EX-5 4 Joseph C. Zils, Vice President and General Counsel June 28, 1995 Page 2 June 28, 1995 Joseph C. Zils, Vice President and General Counsel Optical Coating Laboratory, Inc. 2789 Northpoint Parkway Santa Rosa, California 95407-7397 Re: ISSUANCE OF SECURITIES ON FORM S-8 REGISTRATION STATEMENT Dear Mr. Zils: This letter is written to you in connection with the filing on or about June 29, 1995, of a Registration Statement on Form S-8 with the Securities and Exchange Commission for the purpose of registering Common Stock, $.01 par value, offered by Optical Coating Laboratory, Inc. (the "Company), which shares were or are to be offered pursuant to the Company's 1995 Incentive Compensation plan (the "Plan"). As counsel for the Company we have examined, among other things, originals or copies identified to our satisfaction as being true copies of the above- referenced Registration Statement, Certificate of Incorporation and Bylaws of the Company, the corporate resolutions adopting the Plan authorizing the issuance of options, unrestricted stock bonuses, restricted stock bonuses, stock paid for with a recourse and non recourse promissory note, and stock withholding to satisfy tax liabilities under the Plan, and other pertinent documents and instruments of the Company. In addition to such examination, we have obtained from Directors and Officers of the Company other such information and advice as we have deemed necessary for purposes of this opinion. On the basis of the foregoing and our examination and consideration of such other factual and legal matters as we have deemed appropriate in the premises, we are of the opinion that the shares to be registered will, when sold in accordance with the terms of the Plan, be legally issued, fully paid and non- assessable. We consent to the filing of this letter with the Securities and Exchange Commission as an exhibit to the aforementioned Registration Statement. Very truly yours, Collette & Erickson JVE:JGP:tm OCLI 1.881 EX-23 5 F:\DOC\0186\01866401.DOC, 6/27/95, 08:21 AM EXHIBIT 23(A) INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in this Registration Statement of Optical Coating Laboratory, Inc. on Form S-8 of our report dated December 14, 1994, appearing in the Annual Report on Form 10-K of Optical Coating Laboratory, Inc. for the year ended October 31, 1994. June 28, 1995 San Francisco, California EX-15 6 EXHIBIT 15 July 6, 1995 Optical Coating Laboratory, Inc. Santa Rosa, California We have made a review, in accordance with standards established by the American Institute of Certified Public Accountants, of the unaudited interim financial information of Optical Coating Laboratory, Inc. and subsidiaries for the periods ended January 31, 1995 as indicated in our report dated February 15, 1995, and April 30, 1995 as indicated in our report dated May 22, 1995, are being used in this Registration Statement. Because we did not perform an audit, we expressed no opinion on such interim financial information. We are aware that our reports referred to above, which were included in your Quarterly reports on Form 10-Q for the quarters ended January 31, 1995 and April 30, 1995, are being used in this Registration Statement. We are also aware that the aforementioned reports, pursuant to Rule 436(c) under the Securities Act of 1933, are not considered a part of the Registration Statement prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of Sections 7 and 11 of that Act. DELOITTE & TOUCHE LLP -----END PRIVACY-ENHANCED MESSAGE-----