-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RkfLQSYrnZxv7v2CgJnON1Ahme3IT3Yt6Z7eWhb81hjiAMRZYDoVwtenopJk2Oxp w3LzabRcpIeGIMEoKDt5FQ== 0000950135-97-002184.txt : 19970507 0000950135-97-002184.hdr.sgml : 19970507 ACCESSION NUMBER: 0000950135-97-002184 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970506 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SIGHT RESOURCE CORP CENTRAL INDEX KEY: 0000895651 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-HEALTH SERVICES [8000] IRS NUMBER: 043181524 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-21068 FILM NUMBER: 97596461 BUSINESS ADDRESS: STREET 1: 67 SOUTH BEFORD ST CITY: BURLINGTON STATE: MA ZIP: 01803 BUSINESS PHONE: 6172291100 MAIL ADDRESS: STREET 1: 67 SOUTH BEDFORD ST CITY: BURLINGTON STATE: MA ZIP: 01803 FORMER COMPANY: FORMER CONFORMED NAME: NEWVISION TECHNOLOGY INC DATE OF NAME CHANGE: 19940224 10-Q 1 SIGHT RESOURCE CORP. 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarterly Period Ended March 31, 1997 Commission File Number 0-21068 -------------- ------- SIGHT RESOURCE CORPORATION - -------------------------------------------------------------------------------- (Exact name of Registrant as specified in its charter) Delaware 04-3181524 - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 67 South Bedford Street Burlington, MA 01803 - -------------------------------------------------------------------------------- (Address of principal executive offices) 617-229-1100 -------------------------------------------------------------------------- (Issuer's telephone number) N/A - -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since the last report) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- APPLICABLE ONLY TO CORPORATE ISSUERS: State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: On April 28, 1997, 8,618,704 shares of common stock, par value $0.01 per share, were outstanding. TOTAL PAGES 13 EXHIBIT INDEX AT PAGE 12 2 SIGHT RESOURCE CORPORATION INDEX
PART I. FINANCIAL INFORMATION PAGE ---- Item 1 Financial Statements Consolidated Balance Sheets as of March 31, 1997 and December 31, 1996 3 Consolidated Statements of Operations for the Three Months Ended March 31, 1997 and 1996 4 Consolidated Statements of Cash Flows for the Three Months Ended March 31, 1997 and 1996 5 Notes to Consolidated Financial Statements 6 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 9 PART II. OTHER INFORMATION Item 6 Exhibits and Reports on Form 8-K 12 Signatures 13
2 3 PART I. FINANCIAL INFORMATION Item 1. Financial Statements SIGHT RESOURCE CORPORATION Consolidated Balance Sheets (In thousands, except share and per share data)
March 31, December 31, 1997 1996 -------- ------------ ASSETS Current assets: Cash and cash equivalents $ 8,252 $ 9,924 Accounts receivable, net of allowance of $381 and $353, respectively 1,875 1,405 Inventories 2,395 2,489 Prepaid expenses and other current assets 967 286 Assets held for sale 360 458 -------- -------- Total current assets 13,849 14,562 -------- -------- Property and equipment 6,470 6,030 Less accumulated depreciation (1,414) (1,095) -------- -------- Net property and equipment 5,056 4,935 -------- -------- Other assets: Intangible assets, net 11,604 11,768 Other assets 847 165 -------- -------- Total other assets 12,451 11,933 -------- -------- $ 31,356 $ 31,430 ======== ======== LIABILITIES & STOCKHOLDERS' EQUITY Current liabilities: Revolving note payable $ 1,475 $ 475 Current portion of long term debt 1,400 800 Accounts payable 1,384 1,843 Accrued expenses 4,395 3,670 -------- -------- Total current liabilities 8,654 6,788 -------- -------- Non-current liabilities: Long term debt, less current maturities --- 1,600 Other liabilities 280 276 -------- -------- Non-current liabilities 280 1,876 -------- -------- Stockholders' equity: Preferred Stock, $.01 par value. Authorized 5,000,000 shares; no shares issued and outstanding --- --- Common Stock, $.01 par value. Authorized 20,000,000 shares; issued 8,648,768 at March 31, 1997 and December 31, 1996. 86 86 Additional paid-in capital 37,690 37,510 Common stock issuable, 71,181 shares at March 31, 1997 and December 31, 1996 432 432 Treasury stock at cost (shares at March 31, 1997: 30,600) (137) --- Accumulated deficit (15,649) (15,262) -------- -------- Total stockholders' equity 22,422 22,766 -------- -------- $ 31,356 $ 31,430 ======== ========
See accompanying notes to consolidated financial statements. 3 4 SIGHT RESOURCE CORPORATION Consolidated Statements of Operations (In thousands, except per share data)
Three Months Ended March 31, March 31, 1997 1996 --------------------------- Net revenue $10,440 $ 5,660 Cost of revenue 3,849 2,262 ------- ------- Gross profit 6,591 3,398 Selling, general and administrative expenses 7,000 4,082 ------- ------- Loss from operations (409) (684) ------- ------- Other income (expense) Interest income 102 94 Interest expense (80) (58) ------- ------- Total other income (expense) 22 36 ------- ------- Net loss ($387) ($648) ======= ======= Net loss per common share ($0.04) ($0.10) ======= ======= Weighted average number of common shares outstanding 8,638 6,347 ======= =======
See accompanying notes to consolidated financial statements. 4 5 SIGHT RESOURCE CORPORATION Consolidated Statements of Cash Flows (In thousands)
Three Months Ended March 31, 1997 March 31, 1996 ------------------- ------------------- Operating activities: Net loss ($387) ($648) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 483 435 Changes in operating assets and liabilities: Accounts receivable (470) (378) Inventories 94 (114) Prepaid expenses and other current assets (681) (373) Accounts payable and accrued expenses 266 (399) ------- ------- Net cash used in operating activities (695) (1,477) ------- ------- Investing activities: Purchases of property and equipment (440) (229) Proceeds from sale of assets 98 376 Other assets (502) (37) ------- ------- Net cash provided by(used in) investing activities (844) 110 ------- ------- Financing activities: Principal payments on long term debt --- (100) Other liabilities 4 10 Net proceeds from exercise of warrants --- 1 Purchase of common stock for treasury (137) --- ------- ------- Net cash used in financing activities (133) (89) ------- ------- Net (decrease) in cash and cash equivalents (1,672) (1,456) Cash and cash equivalents, beginning of period 9,924 8,035 ------- ------- Cash and cash equivalents, end of period $ 8,252 6,579 ======= ======= Supplemental Disclosure: Interest paid $ 102 $ 44 ======= ======= Equity issued associated with credit agreement $ 180 --- ======= =======
See accompanying notes to consolidated financial statements. 5 6 SIGHT RESOURCE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) (1) THE COMPANY (a) Nature of Business The business of Sight Resource Corporation is to participate in the delivery of a complete range of eye care products and services through integrated networks of opticians, optometrists and ophthalmologists. (b) US Acquisitions During 1995, the Company acquired two primary eye care chains, effective January 1, 1995 and July 1, 1995, respectively. The aggregate purchase price paid in connection with the acquisitions consisted of (i) $2,660 in cash, (ii) 555,525 shares of common stock, (iii) the assumption of approximately $1,600 of net liabilities, and (iv) $660 payable over a 3 year period and $250 payable over 18 months, contingent upon the occurrence of certain future events. The transactions were accounted for using the purchase method of accounting. Effective July 1, 1996, the Company purchased certain assets and assumed certain liabilities of The E.B. Brown Optical Company and Brown Optical Laboratories, Inc. as well as entered into a merger with E.B. Brown Opticians, Inc. (together "EB Brown") for approximately $4,000 in cash, 521,997 shares of common stock issued, 71,181 shares of common stock to be issued and $1,400 in notes payable over an eighteen month period. EB Brown operates forty-two eye care centers located throughout Ohio and western Pennsylvania which provide optometric and audiology goods and services to persons with vision and hearing disorders. The transaction was accounted for using the purchase method of accounting. The results of operations of the three acquisitions have been included in the consolidated financial statements from their respective dates of acquisition. The excess of the purchase price and expenses associated with each acquisition over the estimated fair value of the net assets acquired has been recorded as goodwill. (2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Basis of Presentation The accompanying consolidated financial statements have been prepared by the Company without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of the Company, these consolidated financial statements contain all adjustments (consisting of only normal, recurring adjustments) necessary to present fairly the financial position of Sight Resource Corporation as of March 31, 1997 and the results of its operations and cash flows for the three months ended March 31, 1997 and 1996. The accompanying consolidated financial statements and related notes should be read in conjunction with the audited consolidated financial statements which are contained in the Company's Annual Report on Form 10-K for the year ended December 31, 1996. (b) Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries and entities in which the Company's subsidiaries assume the financial risks and rewards of such entities through a management contract. The Company 6 7 SIGHT RESOURCE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) has no direct equity ownership in the management service organizations. All significant intercompany balances and transactions have been eliminated. In preparation of these consolidated financial statements in conformity with generally accepted accounting principles, management of the Company has made estimates and assumptions that affect the reported amounts of assets and liabilities, such as accounts receivable, inventory impairment of property and equipment and intangibles. Actual results could differ from those estimates. (c) Revenue Recognition Under existing revenue sharing arrangements for refractive surgery where the Company is not responsible for patient billing, the Company receives a specified payment from the hospital or center for each refractive surgical procedure performed. Accordingly, the Company recognizes revenue on a per procedure basis at the time procedures are performed. Under existing revenue-sharing arrangements for refractive surgery where the Company is responsible for the collection from the patient and payment to the ophthalmologist and other operating costs, the total patient charge is recorded as revenue with the corresponding expenses recorded in cost of revenue. Revenue and the related costs from the sale of eyewear are recognized at the time an order is placed. Revenue is reported net of contractual allowances. (d) Inventories Inventories primarily consist of the costs of eyeglass frames, contact lenses, ophthalmic lenses, sunglasses and other optical products and are valued at the lower of cost (using the first-in, first-out method) or market. (e) Property and Equipment Property and equipment is stated at cost. The Company provides for depreciation at the time the property and equipment is placed in service. The straight-line method is used over the estimated useful life of the assets. (f) Intangible Assets Intangible assets resulting from business acquisitions consist of customer lists, trademarks, non-compete agreements and the excess cost of the acquisition over the fair value of the net assets acquired (goodwill). Certain values assigned are based upon independent appraisals and are amortized on a straight line basis over a period of five to twenty-five years. The Company assesses the recoverability of unamortized intangible assets on an ongoing basis by comparing anticipated operating profits and future, undiscounted cash flows to net book value. (g) Deferred Revenue The Company recognizes revenue from the sales of its contact lens purchasing program over the life of the program. 7 8 SIGHT RESOURCE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) (h) Net Loss Per Share Net loss per share of common stock is based on the weighted average number of common shares outstanding. Common stock equivalents are not included in the calculation because they are antidilutive. (3) DEBT Debt is as follows:
MARCH 31, DECEMBER 31, 1997 1996 ---- ---- Bank term loan secured by all assets of one of the Company's subsidiaries $ - $1,000 Unsecured notes payable, 7% interest rate, $400 due on September 18, 1997 and $1,000 due on March 18, 1998; due on demand if the Company's cash balance is less than $2,800 1,400 1,400 ------ ------ 1,400 2,400 Less current maturities 1,400 800 ------ ------ Long term debt, less current maturities $ 0 $1,600 ====== ======
At December 31, 1996, the Company had available a revolving credit facility in the amount of $500 based on eligible accounts receivable and inventory balances. As of December 31, 1996, $25 was unused. On February 20, 1997, the Company entered into a Credit Agreement (the "Agreement") with a bank pursuant to which the Company can borrow $5,000 on a term loan basis and $5,000 on a revolving credit basis, subject to certain performance criteria. These loans are secured by all assets of the Company and its wholly owned subsidiaries. As of March 31, 1997, the entire term loan was unused and $1,475 is outstanding on the revolving note. The revolving note bears interest at the bank's prime rate plus 1.25% (9.75% at March 31, 1997). As part of the Agreement, the Company issued to the bank warrants to purchase 150,000 shares of the common stock at a purchase price of $4.625 per share. The warrants expire December 31, 2003. 8 9 PART I: ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS "SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 Statements contained in this document which are not historical fact are forward-looking statements based upon management's current expectations that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by forward-looking statements. These risks are described in the Company's Form 10K for the fiscal year ended December 31, 1996 filed with the Securities and Exchange Commission. OVERVIEW The Company provides a complete range of eye care products and services through integrated networks of opticians, optometrists and ophthalmologists. The Company's services are provided primarily to persons with common vision disorders, as well as to persons with sight-threatening conditions. The Company's operations currently consist of 72 eye care centers, a centralized optical laboratory and distribution center, two management service organizations ("MSOs") and ten laser vision correction ("LVC") centers which the Company has established in association with leading hospitals, ambulatory surgery centers and ophthalmologists. The Company's objective is to become the leading integrated provider of eye care products and services in select, regional markets. To develop significant regional integrated networks, the Company's business strategy focuses on (i) acquiring and integrating the assets of regional multi-site eye care centers and the practices of eye care professionals (optometrists and ophthalmologists), (ii) employing or entering into management services contracts with these professionals, (iii) continuing to market comprehensive and competitively priced eye care programs to leading HMOs, insurance companies and other third party payors in the Company's regional markets, (iv) expanding strategic affiliations, for pathology co-management opportunities, with select hospitals, ambulatory surgery centers and eye care professionals and (v) continuing to market and provide access to LVC services through the Company's eye care centers. The Company believes that its integrated approach to eye care provides significant advantages, benefits and opportunities to patients, providers and payors. Patients benefit from the convenience of eye care products and services delivered at a single location. Eye care professionals benefit from the supplemental management and administrative services and resources provided by the Company, permitting them to continue to dedicate their time and effort to their patients and professional practices. Payors benefit from the Company's ability to conveniently provide a complete range of eye care products and services with the highest quality at the lowest cost. 9 10 RESULTS OF OPERATIONS THREE MONTHS ENDED MARCH 31, 1997 AND 1996 NET REVENUE. The Company generated net revenue of approximately $10.4 million during the three months ended March 31, 1997, from the operation of its 72 eye care centers and ten laser vision correction centers as compared to net revenue of approximately $5.7 million from its 29 eye care centers and six laser vision correction centers for the same period in 1996. Of the $4.7 million, or 82.5%, increase in net revenue, approximately $3.9 million relates to the additional forty-two eye care centers acquired effective July 1, 1996. The remaining increase is due to increases in laser vision correction services and revenue generated in existing eye care centers. COST OF REVENUE. Cost of revenue increased from approximately $2.3 million for the three months ended March 31, 1996 to approximately $3.9 million for the three months ended March 31, 1997. Cost of revenue as a percent of net revenue decreased from 40.0% for the three months ended March 31, 1996 to 36.9% for the three months ended March 31, 1997. The decrease as a percentage of net revenue is attributable to reduced depreciation on ophthalmic equipment after the write down due to the asset impairment recognized in the fourth quarter of 1996, as well as manufacturing efficiencies realized at the Company's central lab. Cost of revenue for the three months ended March 31, 1997 and 1996 principally consisted of (i) the cost of manufacturing, purchasing and distributing optical products to its customers and (ii) the cost of delivering laser vision correction services, including depreciation and maintenance on excimer lasers. SELLING, GENERAL AND ADMINISTRATION EXPENSES. Selling, general and administration expenses were approximately $7.0 million for the three months ended March 31, 1997 as compared to approximately $4.1 million for the three months ended March 31, 1996. The increase primarily relates to payroll and facility costs incurred in operating additional eye care centers in the first quarter of fiscal 1997 as compared to the first quarter of fiscal 1996. Selling, general and administrative expenses, as a percentage of net revenue, declined from 72.1% in 1996 to 67.0% in 1997. This decrease is primarily a result of operating efficiencies which the Company began to realize from the acquisition and expansion of multi-site eye care centers. OTHER INCOME AND EXPENSES. Interest income totaled $102,000 for the three months ended March 31, 1997 as compared to $94,000 for the three months ended March 31, 1996. This increase resulted from the investment of a higher average cash balance during the first quarter of 1997 as compared to the same period in 1996. Interest expense totaled $80,000 for the three months ended March 31, 1997 as compared to $58,000 for the three months ended March 31, 1996. The increase is associated with a higher average balance of debt outstanding in the first quarter of 1997 as compared to the same period in prior year. NET LOSS. The Company realized a net loss of $387,000 ($0.04 per share) for the three months ended March 31, 1997, as compared to $648,000 ($0.10 per share) for the three months ended March 31, 1996. 10 11 LIQUIDITY AND CAPITAL RESOURCES At March 31, 1997, the Company had approximately $8.3 million in cash and cash equivalents and working capital of approximately $5.2 million in comparison to approximately $9.9 million in cash and cash equivalents and working capital of approximately $7.8 million as of December 31, 1996. The decrease in working capital is mainly due to debt becoming current as of March 31, 1997. As of March 31, 1997, the Company had securities outstanding which provide it with potential sources of financing as outlined below:
Securities Potential proceeds - -------------------------------------------------------------- ----------- Warrants 2,472,100 $14,800,000 Class A Warrants 85,000 500,000 Unit Purchase Options 215,000 3,700,000 IPO Representative Warrants 85,000 1,300,000 Creditanstalt Warrants 150,000 694,000 Representative Warrants 170,000 1,400,000 ----------- $22,394,000 ===========
There can be no assurance that the Company will obtain any such proceeds from the exercise of the above securities. On February 20, 1997, the Company entered into a Credit Agreement (the "Agreement") with a bank pursuant to which the Company can borrow $5 million on a term loan basis and $5 million on a revolving credit basis, subject to certain performance criteria. These loans are secured by all assets of the Company and its wholly owned subsidiaries. Amounts borrowed under the Agreement will be used to finance future acquisitions, provide ongoing working capital and for other general corporate purposes. In addition, the Company refinanced existing bank debt using the revolving credit facility. As part of the Agreement, the Company issued to the bank warrants to purchase 150,000 shares of the common stock at a purchase price of $4.625 per share. The warrants expire December 31, 2003. The Company anticipates that its working capital and sources of capital, such as the new credit facility, will be adequate to fund the Company's currently proposed activities for at least the next twelve months. The Company anticipates using financing vehicles such as bank debt and other sources of funding, such as additional equity offerings, to achieve its business plan, including the acquisition of multi-site eye care centers. By acquiring multi-site eye care centers, the Company gain a critical mass of locations ensuring that potential patients and third party payors will have convenient access to a wider variety of eye care services. It also allows the Company to deliver these services at considerable savings by using existing corporate and operational infrastructure, which includes store operations, MIS, manufacturing, purchasing, distribution and training. The Company is currently evaluating potential acquisition candidates. Without additional funding, the Company's rate of acquisition and size of acquisition could be limited. 11 12 PART II. OTHER INFORMATION Item 6 EXHIBITS AND REPORTS ON FORM 8-K a. Exhibits furnished as Exhibits hereto: 10.1 Amendment No. 1 to Employment Agreement dated January 2, 1997, among Cambridge Eye Associates, Inc., Sight Resource Corporation and Elliot S. Weinstock, O.D. b. On March 7, 1997, the Company filed a Form 8-K related to the Credit Agreement, dated February 20, 1997, between the Company and Creditanstalt Corporate Finance Corporation, Inc. 12 13 SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Sight Resource Corporation Date: May 5, 1997 /S/ WILLIAM G. MCLENDON ----------- ------------------------ William G. McLendon Chief Executive Officer and President (principal executive officer) Date: May 5, 1997 /S/ ALAN MACDONALD ----------- ------------------------ Alan MacDonald Vice President, Finance and Administration (principal financial and accounting officer) 13 EX-10.1 2 AMENDMENT 1 TO EMPLOYMENT AGREEMENT 1 EXHIBIT 10.1 AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT --------------------------------------- THIS AMENDMENT (the "Amendment"), dated as of January 2, 1997, and among CAMBRIDGE EYE ASSOCIATES, INC. (f/k/a CEA Acquisition Corp.), a Delaware corporation (the "Company"), SIGHT RESOURCE CORPORATION (f/k/a NewVision Technology, Inc.), a Delaware corporation ("SRC"), and ELLIOT S. WEINSTOCK, O.D. (the "Employee"). WHEREAS, the parties have previously entered into an Employment Agreement dated as of February 24, 1995 (the "Agreement"; capitalized terms used herein without definition having the meanings ascribed to such terms in the Agreement), pursuant to which, among other things, the Employee serves as the Company's President; WHEREAS, in connection with the settlement of a dispute between Irwin Mesch ("Mesch") on the one hand, and the Employee, the Company, ESW, Inc. (f/k/a Cambridge Eye Associates. Inc.), Thomas J. Baker and SRC on the other hand, the parties and Mesch entered into a Settlement Agreement and Mutual Release dated as of December 27, 1995, pursuant to which, among other things, the Company and SRC transferred to Mesch the aggregate sum of $288,000 and an aggregate of 14,300 shares of common stock of SRC (the "Mesch Settlement"); and WHEREAS, in connection with the foregoing, the parties desire to amend and/or clarify certain terms and provisions of the Agreement. NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows: Section 1. RELEASE. In consideration of the amendments to the Agreement described below, and in exchange for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by all parties hereto, each of SRC, the Company, Douglas Vision World, Inc., Cambridge Eye Doctors of New Hampshire, Inc., E.B. Brown Opticians, Inc. and Optometric Providers, Inc. on behalf of itself and its respective agents, successors, predecessors, assigns, employees, officers, directors, shareholders, parents, subsidiaries and affiliated corporations, partners, limited partners, trustees, servants and attorneys (collectively, the "SRC Releasors") hereby forever releases, discharges and covenants not to sue each of the Employee and ESW, Inc. and their respective heirs, administrators, executors, agents, servants, successors, assigns, predecessors, employees, officers, directors, shareholders, parents, subsidiaries and affiliated corporations, partners, 2 limited partners, trustees and attorneys (collectively, the "Employee Releasees") of, from and concerning all manner of actions, causes of action, suits, sums of money, covenants, contracts, agreements, promises, liabilities, damages, rights, claims and demands whatsoever, whether in law or in equity (collectively, the "Claims"), whether known or unknown, vested or contingent, direct or indirect, which any SRC Releasor ever had, now has or hereafter may have against any Employee Releasee for any reason whatsoever, in each case which Claim (a) is based on an action or failure to act from the beginning of the world to the date of this Amendment and (b) arises out of or in any way relates to (i) the Agreement, (ii) the Asset Transfer Agreement dated as of February 24, 1995 by and among SRC, the Company, ESW, Inc. (f/k/a Cambridge Eye Associates, Inc.) and the Employee, (iii) any Ancillary Agreement (as defined in such Asset Transfer Agreement), (iv) the Optometric Records Transfer Agreement, dated February 24, 1995, among ESW, Inc., Optometric Providers, Inc. and the Company, (v) the Amended and Restated Credit Agreement, dated as of February 24, 1995, between the Company and Arab Banking Corporation and all documents related to the transactions contemplated thereby, (vi) the Advisory Board Agreement, dated August 18, 1994, between the Employee and SRC, (vii) the Non-Disclosure and Confidentiality Agreement, dated August 18, 1994, between SRC and the Employee, (viii) the Non-Qualified Stock Option Agreement, dated August 19, 1994, as amended, between SRC and the Employee, (ix) Mesch and (x) the Mesch Settlement. Section 2. AMENDMENT TO DUTIES AS PRESIDENT. The last sentence of Section 1 of the Agreement is amended by deleting such sentence in its entirety and substituting in lieu thereof the following: "Until January 5, 1997, you agree to devote your full business time and energies to the business and affairs of the Company and its Subsidiaries, if any, as is necessary from time to time for your fulfillment of your obligations to the Company hereunder. From January 5 through December 31, 1997, you agree to devote approximately two full business days per week to the business and affairs of the Company and its Subsidiaries which (i) relate to Optometric Providers, Inc. or (ii) which relate to the Management Agreement between the Company and Optometric Providers, Inc." Section 3. AMENDMENT TO TERM OF EMPLOYMENT. Section 2(a) of the Agreement is amended by deleting the words "the third anniversary thereof" in the second line thereof and inserting in lieu thereof the words "December 31, 1997" in lieu thereof. Section 4. AMENDMENT TO COMPENSATION AS PRESIDENT. -2- 3 Section 3(a) of the Agreement is amended by deleting such subsection in its entirety and substituting in lieu thereof the following new Section 3(a): In consideration for your services under this Agreement (i) until January 5, 1997 you shall be paid at the annual rate of One Hundred Seventy-Five Thousand Dollars ($175,000) and (ii) after January 5, 1997 you shall be paid at the annual rate of Seventy Thousand Dollars ($70,000), subject in each case to increase from time to time by action of the Board in accordance with your performance and the Company's performance ("Base Salary"), and payable at such intervals as may be agreed upon by the Company and you, less any amounts required to be withheld under applicable law. Such compensation will be reduced by any disability payments which you receive with respect to the applicable period under this Agreement, after taking into account the tax benefit (if any) of such payments." Section 5. AMENDMENT TO SEVERANCE PROVISIONS. (a) In connection with the foregoing amendments to the Agreement, Section 3(b) of the Agreement is amended by deleting such subsection in its entirety and substituting in lieu thereof the following new Section 3(b): "(b) In the event your employment shall be terminated by the Company without Cause at any time prior to December 31, 1997, or in the event that you terminate your employment hereunder prior to December 31, 1997 by reason of any material change in your duties imposed by the Board of Directors of the Company (other than any change contemplated by that certain Amendment No. 1 to this Agreement dated as of January 2, 1997) or by reason of any material breach by the Company of its obligations to you, the Company shall (i) during the period beginning on the date of such termination and ending on December 31, 1997, pay you the Base Salary to which you would be entitled to during such period pursuant to Section 3(a) and (ii) during the period beginning on the date of such termination and ending on the earlier of June 30, 1998 and the date which is 12 months after the date of such termination, pay and provide to you such benefits as you were then receiving or entitled to pursuant to Section 6(a) hereof; PROVIDED, HOWEVER, that the benefits described in paragraph 2 of Schedule A to the Agreement, shall continue as provided in such paragraph 2. (b) In connection with the foregoing amendments to the Agreement, the fourth paragraph of Section 7 of the Agreement is amended by deleting such paragraph in its entirety and substituting in lieu thereof the following new paragraph: -3- 4 "In the event of such a termination of employment as a result of your death or total and permanent disability, the Company shall have no further obligations hereunder except as provided in Sections 3 and 9 hereof and except as provided below in this Section 7: (a) In the event of death prior to December 31, 1997, (i) the Company shall pay to your estate amounts, at the Base Salary rate in effect on the termination date, payable in monthly payments, through December 31, 1997 and (ii) through the earlier of June 30, 1998 and the date which is 12 months after your death, your estate shall be entitled to continue to receive the benefits you have been receiving or were entitled to under paragraph 3 of Schedule A and under paragraph 2 of Schedule A; and (b) In the event of total and permanent disability prior to December 31, 1997, (i) the Company shall pay to you (or your estate) amounts, at the Base Salary rate in effect on the termination date, payable in monthly payments, through December 31, 1997 and (ii) through the earlier of June 30, 1998 and the date which is 12 months after such termination date you (or your estate) shall continue to be entitled to receive such benefits as you were then receiving pursuant to Section 6(a) hereof and under paragraph 2 of Schedule A. Amounts to which you would otherwise be entitled under clause (i) of this subparagraph (b) above shall be reduced by the amount of any disability insurance proceeds actually paid to you or paid for your benefit (or to your estate or legal representatives) with respect to such payment period following the termination date under any disability policy provided by the Company. (c) In connection with the foregoing amendments to the Agreement, the first sentence of Section 8(a) of the Agreement is amended by deleting such sentence in its entirety and substituting in lieu thereof the following new sentence: "In the event you, the Company, or a successor to the Company elects to terminate your employment upon a Change of Control (as defined in Section 8(b) below), provided that the terminating party gives notice of such termination (a "Change of Control Notice") within twenty-four (24) months of a Change of Control, then upon such termination pursuant to this paragraph, you (or your estate, if you die prior to receiving the payments hereinafter set forth in this -4- 5 sentence) shall, through the period ending on December 31, 1997, be entitled to receive, in monthly payments, your Base Salary in effect on the date of such termination." Section 6. AMENDMENT TO COMPETITION. In connection with the foregoing amendments to the Agreement, Section 10 of the Agreement shall be amended by deleting such Section in its entirety, which amendment shall only become effective as of the date which is the later of (i) the date you cease to be an employee of the Company or any of its affiliates and (ii) the date you cease to be a director of SRC. Section 7. AMENDMENT TO NOTICE PROVISION. Section 15 of the Agreement is amended to provide that the address for notices and communications to the Employee is as follows: 53 Brush Hill Road, Sherborn, MA 01770. Section 8. CONFORMING AMENDMENT. In connection with the foregoing amendments to the Agreement, the term "Acquisition" appearing in Sections 24 and 25 is deleted and the term "the Company" is inserted in lieu thereof. Section 9. FURTHER ASSURANCES; COVENANTS. Each party hereby agrees, at any time and from time to time after the date hereof, at the reasonable request of the other party, to execute and deliver such other agreements, certificates or instruments as may be reasonably requested in order to more effectively amend the Agreement as set forth above. SRC and the Company hereby represent and covenant as follows: (i) as promptly as practicable after the execution and delivery of this Amendment, the Employee shall be replaced as a Trustee of the Cambridge Eye Associates so-called "401(k) plan"; and (ii) the Key Man Life Insurance Policy regarding the Employee and referred to in Section 4.01(f) of the Amended and Restated Credit Agreement, dated as of February 24, 1995, between the Company and Arab Banking Corporation, has been terminated and is no longer in effect. Section 10. ADVISORY BOARD. The Advisory Board Agreement, dated August 18, 1994 between the Employee and SRC and the Non-Disclosure and Confidentiality Agreement, dated August 18, 1994, between SRC and the Employee are hereby terminated and are null and void and of no further force or effect. Section 11. EFFECT OF AMENDMENT. The parties hereby ratify and confirm all of the provisions of the Agreement, as amended hereby, and agree and acknowledge that the Agreement as so amended remains in full force and effect. -5- 6 Section 12. GOVERNING LAW. This Amendment shall be deemed to be a contract made under the laws of the Commonwealth of Massachusetts and for all purposes shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts applicable to contracts to be made and performed entirely within the Commonwealth of Massachusetts. Section 13. COUNTERPARTS. This Amendment may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. -6- 7 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed, all as of the day and year first above written. SIGHT RESOURCE CORPORATION By /s/ William G. McLendon ------------------------------------ William G. McLendon President Hereunto Duly Authorized CAMBRIDGE EYE ASSOCIATES, INC. By: /s/ Alan MacDonald ------------------------------------ Alan MacDonald Treasurer Hereunto Duly Authorized /s/ Elliot S. Weinstock ------------------------------------ Elliot S. Weinstock For Purposes of Section 1: Douglas Vision World, Inc. By /s/ Alan MacDonald ------------------------------------ Name: Title: Hereunto Duly Authorized Cambridge Eye Doctors of New Hampshire, Inc. By /s/ Alan MacDonald ------------------------------------ Name: -7- 8 Title: Hereunto Duly Authorized E.B. Brown Opticians, Inc. By /s/ Alan MacDonald ------------------------------------ Name: Title: Hereunto Duly Authorized Optometric Providers, Inc. (f/k/a New Vision Optometry, Inc.) By /s/ Alan MacDonald ------------------------------------ Name: Title: Hereunto Duly Authorized -8- EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SIGHT RESOURCE CORPORATION'S BALANCE SHEET AND STATEMENT OF OPERATIONS AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1997. 1,000 3-MOS DEC-31-1997 JAN-01-1997 MAR-31-1997 8,252 0 1,875 381 2,395 13,849 6,470 (1,414) 31,356 8,654 0 0 0 86 22,336 31,356 10,440 10,440 3,849 7,000 0 0 (22) (387) 0 (387) 0 0 0 (387) (.04) (.04)
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