SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
May 30, 1996
----------------
Date of Report (Date of
Earliest Event Reported)
STERLING VISION, INC.
------------------------------------------
(Exact name of Registrant as specified in its Charter)
<TABLE>
New York 1-14128 11-3096941
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<CAPTION>
<S> <C> <C>
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification
incorporation) No.)
1500 Hempstead Turnpike 11554
East Meadow, NY -----
- --------------------- (Zip Code)
(Address of principal
executive offices)
</TABLE>
516/390-2100
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(Registrant's Telephone Number Including Area Code)
10 Peninsula Blvd Lynbrook, NY 11563
-------------------------------------
(Former Address, if changed since last Report)
<PAGE>
Item 5. Other Events
------------
On May 24, 1996, Sterling Vision DKM, Inc. (the "Buyer"), a wholly-owned
subsidiary of Sterling Vision, Inc. ("Sterling" or the "Registrant"), entered
into a series of arrangements which resulted in its acquisition of
substantially all of the assets of a retail optical chain consisting of
company-operated and franchised stores located in approximately 13 states.
On May 24, 1996, the Buyer and Norwest Investment Services, Inc. (the
"Seller") entered into an Asset Purchase Agreement pursuant to which the
Buyer agreed to purchase from the Seller, substantially all of the assets of
Vision Centers of America, Ltd., D&K Optical, Inc., Monfried Corporation and
Duling Finance Corporation (collectively, the "Company"), which assets
(collectively, the "Assets") were subject to a lien in favor of the Seller.
The Seller was entitled to exercise its rights as a secured creditor of the
Company as a result of the Company's default with respect to its obligations
to the Seller. The Assets acquired include: (i) all of the Company's
inventory, furniture, fixtures and equipment located in the approximately 20
retail optical stores then being operated by the Company, in the Company's
ophthalmic lens manufacturing facility and warehouses; and (ii) all of the
Company's general intangibles (other than leases), including franchise
agreements, promissory notes and accounts receivable related to approximately
75 retail optical stores then franchised by the Company. The Buyer purchased
the Assets at a private foreclosure sale subject to certain liens, claims and
encumbrances; however, Seller indemnified Buyer in an amount of up to
$400,000 for certain specified liens, claims or encumbrances. The purchase
price for the Assets was $4,150,000, which was paid by Buyer's delivery to
Seller of a ninety (90) day direct pay letter of credit in favor of Seller.
The purchase price was determined as a result of arms-length negotiations
between the Buyer and the Seller based upon the estimated market value of the
Assets acquired.
In addition, on May 24, 1996, the Buyer initially entered into two
Assignment and Assumption of Lease Agreements (one with respect to 11 Company
store leases and one with respect to approximately 45 leases for stores
subleased to franchisees), pursuant to which the Company, together with
certain of its affiliates, agreed to assign to the Buyer all of their right,
title and interest in and to each of the leases referred to therein, in
exchange for Buyer's payment to such entities of the aggregate sum of $50,000
and the assumption of all of the obligations (including those then past due
and owing to the respective landlords thereof) under such leases; provided,
however, that the Buyer was given the right and option, to be exercised on or
before July 24, 1996, to reject any one or more of such leases so assigned to
the Buyer. In addition, the Buyer contemplates entering into one or more
additional Assignment and Assumption of Lease Agreements with respect to
certain additional stores
<PAGE>
(both Company operated and franchised) leased to the Company, although there
can be no assurance that the Buyer will be able to secure such leases on
favorable terms.
In connection with the Asset Purchase Agreement, the Buyer also received
an option to purchase the stock of the Company for $100. Such option expires
on November 1, 1996 and is subject to, among other things, the Seller being
the holder of a certain judgment (the "Judgment") against Dr. Larry H. Joel,
the President of the Company. Additionally, the Buyer entered into a letter
agreement providing for the assignment of the Judgment, without recourse, to
the Buyer in exchange for, among other things, a release of any and all
claims Dr. Joel, the Company and certain of its affiliates may have against
the Seller. The Seller also agreed to release any and all claims against the
Company or Dr. Joel subject to certain conditions.
Additionally, the Buyer, subject to the approval of the members of
Sterling's Independent Committee of the Board of Directors, agreed to enter
into an oral consulting agreement with Dr. Joel, whereby the Company will pay
Dr. Joel the sum of $25,000 per month in exchange for consulting services
that Dr. Joel will render to the Company. Such consulting arrangement is on
a month-to-month basis and each party has the right to terminate the
agreement at any time.
Dr. Joel is also a shareholder, officer and director of Fast Cast
Corporation ("Fast Cast"), a company that sells equipment to produce
ophthalmic lenses, which lenses are made from a patented liquid monomer which
must also be purchased through Fast Cast. Certain members of the Cohen
family (the principal shareholders of Sterling) own an approximately 16%
interest in Fast Cast and Drs. Alan and Robert Cohen each serve as a director
of Fast Cast. Additionally, as of April 1, 1996, Fast Cast supplied
approximately $176,000 of molds and products to the Company's ophthalmic
laboratory and two of its retail optical stores and Sterling had purchased,
or committed to purchase, approximately $293,000 of Fast Cast equipment
through third party finance companies. In addition, as of April 1, 1996,
Fast Cast supplied approximately $244,000 of equipment and approximately
$39,000 of molds and products to franchisees of Sterling.
The closing of the transaction described herein took place on May 30,
1996.
Item 7. Financial Statements and Exhibits
---------------------------------
Asset Purchase Agreement, Assignment and Assumption of Leases and
related letter agreements, each dated May 24, 1996 by and between Norwest
Investment Services, Inc. or the Company and Sterling Vision DKM, Inc.
Exhibit 2.1 listed below omits certain schedules and exhibits, which are
referred to therein. The Registrant agrees to furnish a copy of any such
omitted schedule or exhibit supplementally upon request from the Commission's
Staff.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
STERLING VISION, INC.
By:/s/ Joseph Silver
----------------------
Joseph Silver
Executive Vice President
and Secretary
Dated: June 12, 1996
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description
- ------ -----------
2. Asset Purchase Agreement, Assignment and Assumption of Leases
and related letter agreements, each dated May 24, 1996 by and
between Norwest Investment Services, Inc. or the Company and
Sterling Vision DKM, Inc.
ASSET PURCHASE AGREEMENT
This Agreement is made this 24th day of May, 1996, by and between
NORWEST INVESTMENT SERVICES, INC. (the "Seller") and STERLING VISION DKM, INC.
(the "Buyer").
RECITALS
--------
A. Seller has a security interest in certain property owned by
Vision Centers of America, Ltd., D & K Optical, Inc., Monfried Corporation and
Duling Finance Corporation (collectively, the "Company").
B. The Company is in default with respect to its obligations to
Seller, and Seller is entitled to exercise its rights and remedies as a
secured creditor under the Uniform Commercial Code as enacted in Minnesota.
C. The Buyer desires to purchase from the Seller the accounts,
inventory, equipment, instruments, and general intangibles of the Company more
specifically described in Exhibit A attached hereto and made a part hereof,
(collectively the "Assets").
D. The Seller desires to sell the Assets to the Buyer in a private
sale to be effected in accordance with Section 9-504 of the Uniform Commercial
Code as adopted in Minnesota.
AGREEMENT
---------
ACCORDINGLY, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Conveyance of Assets. Subject to the terms and conditions set
--------------------
forth in this Agreement, the Seller agrees to sell, convey, transfer
and assign to the Buyer, and the Buyer agrees to purchase from the Seller, the
Assets. The Seller is not conveying any interest of the Company in real
estate, and the Buyer is making its own arrangements regarding any leases of
real property associated with the Assets.
2. Purchase Price. The purchase price for the Assets shall be
--------------
Four Million One Hundred Fifty Thousand Dollars ($4,150,000) (the
"Purchase Price'). Buyer shall pay Seller the Purchase Price by delivering to
Seller on the Closing Date (as defined in paragraph 3 below) a direct pay
letter of credit in favor of Seller from a bank acceptable to Seller in the
full amount of the Purchase Price in substantially the form attached hereto as
<PAGE>
Exhibit B, but, in any event, in form reasonably acceptable to Seller (the
"Letter of Credit"). The Seller may not draw on the Letter of Credit until 90
days have elapsed from the Closing Date.
3. Closing Date. Subject to the satisfaction of the conditions
------------
set forth below, the closing of the sale of the Assets to the Buyer
will occur on May 30, 1996, or upon such earlier date as the parties may
mutually agree (the "Closing Date"), commencing at 11:00 a.m. Central Time, at
the offices of Norwest Corporation, 1700 Norwest Center, 6th and Marquette,
Minneapolis, Minnesota.
(a) On the Closing Date, Seller will deliver to Buyer the following:
(i) A Bill of Sale duly executed by the Seller and
substantially in the form of Exhibit C attached hereto (the "Bill of
Sale").
(ii) All Promissory notes of franchisees in the form
delivered to Seller by the Company and as listed on Exhibit A
attached hereto (the "Franchisee Notes"), except to the extent the
Franchisee Notes may have been paid in full between the date hereof
and the Closing Date, and copies of Franchise Agreements (as defined
below) as the same may have been delivered to Seller by the Company.
(iii) Allonge endorsements substantially in the form of
Exhibit D attached hereto (the "Allonges") of each Franchisee Note,
duly executed by the Seller.
(iv) Any necessary UCC-3 forms of assignment, duly executed
by the Seller, for financing statements evidencing collateral
security for the Franchisee Notes (the "UCC-3's"), together with
copies of Seller's UCC-1 forms therefor, and necessary UCC-3 forms
of termination.
(v) A schedule indicating the outstanding balance on each
Franchisee Note based on the information reasonably available to the
Seller (the "Schedule").
(b) On the Closing Date, Buyer will deliver to Seller the following:
(i) The Letter of Credit.
(ii) Such sales tax exemption certificates and related sales tax
documents as may be reasonably required by the Seller, duly
executed by the Buyer.
<PAGE>
4. Representations and Warranties of Buyer. Buyer hereby makes
---------------------------------------
the following representations and warranties to Seller, its successors and
assigns, each of which is true and correct on the date hereof, shall remain
true and correct to and including the Closing Date and shall survive the
Closing Date and the transactions provided for herein:
(a) The Buyer is a corporation duly organized and existing
and in good standing under the laws of the State of Delaware with full
corporate power to enter into this Agreement and to carry out the terms
and provisions thereof. True and correct copies of the Buyer's Articles
of Incorporation and By-Laws have been delivered to the Seller by Buyer.
(b) The execution and delivery of this Agreement and the other
documents and instruments to be executed and delivered by the Buyer
pursuant hereto and the consummation of the transactions contemplated
hereby and thereby have been duly authorized by all necessary acts of the
Buyer and its Board of Directors. This Agreement does, and the other
documents and instruments to be executed and delivered by the Buyer
pursuant hereto will, constitute the legal, valid and binding agreements
of the Buyer.
(c) The Buyer has knowledge and experience in financial and
business matters such as the transaction contemplated hereby and is
capable of evaluating the merits and risks of a purchase of the Assets.
The Buyer has such gross income and net worth that an investment in the
Assets is suitable for it and the Buyer has sufficient means to absorb a
loss of its entire investment in the Assets.
5. Representation and Warranties of the Seller. Seller makes no
------------------------------------------
representations or warranties to Buyer of any kind in connection with the sale
of the Assets, except as expressly set forth in this paragraph 5. Seller
hereby makes the following representations and warranties to the Buyer, its
uccessors and assigns, each of which is true and correct on the date hereof,
shall remain true and correct to and including the Closing Date and shall
survive the Closing Date and the transactions provided for herein:
(a) Seller is a corporation duly organized, validly existing
and in good standing under the laws of the State of Minnesota. Seller
has all requisite corporate power to enter into this Agreement and the
other documents and instruments to be executed and delivered by Seller
pursuant hereto and to carry out the terms and provisions thereof. The
execution and delivery of this Agreement and the other documents and
instruments to be executed and delivered by the Seller pursuant hereto
and the consummation of the transactions contemplated hereby have been
duly authorized by all necessary acts of Seller and its Board of
Directors. This Agreement does, and the other documents and instruments
<PAGE>
to be executed and delivered by the Seller pursuant hereto will,
constitute the legal, valid and binding agreements of the Seller.
(b) Seller has the full right, power and authority to sell,
convey, assign and transfer to Buyer the Assets pursuant to Section 9-504
of the Uniform Commercial Code as adopted in Minnesota.
(c) Seller hereby warrants that it has the right to convey,
and hereby does convey to Buyer, good, valid and indefeasible title to
the Assets free and clear of any and all liens, claims, and encumbrances
except those listed on Exhibit E hereto, and Seller further warrants that
the sale provided herein will vest in Buyer all right, title and interest
in and to the Assets free and clear of any liens, claims and encumbrances
except those listed on Exhibit E hereto.
(d) Seller hereby warrants that the interests and rights of
the Company under, in and to franchise agreements in existence on the
Closing Date (collectively "Franchise Agreements") are included in the
Assets conveyed hereunder exclusive of any rights or interest in real
estate. The Franchise Agreements are conveyed to Buyer subject to:
(i) any claims, defenses, setoffs, or other causes of actions
which the franchisees have had, now have or may have relating to the
Franchise Agreements;
(ii) the assignability and other provisions of the Franchise
Agreements themselves; and
(iii) provisions of any particular State's franchise laws or
similar statutes which regulate the Franchise Agreements.
(e) Seller has a net worth of not less than Thirty
Million ($30,000,00) Dollars.
6. Exclusion of All Other Warranties. Except as expressly
---------------------------------
set forth in paragraph 5 above, the Assets are conveyed without
recourse, representation or warranty of any kind or nature. Seller makes no
affirmations, promises, representations or warranties, expressed or implied,
as to the Assets, or as to the existence, condition or prior ownership of the
Assets except as set forth herein. Seller does not have possession of
----------------------------------
tangible Assets of the Company, other than the Franchisee Notes, copies of the
- ------------------------------
Franchise Agreements, as the same may have been delivered to the Seller, and
original Stock Certificates of each of the Company (the "Stock
Certificates") which Stock Certificates are subject to a separate agreement of
even date herewith. Seller has no obligation to assemble or deliver the
Assets to the Buyer except as set forth in paragraph 3(a)(ii) above. Buyer
and Seller agree that the Buyer is purchasing the Assets on an "as is, where
is" basis and without any representations or warranties of any kind (except
for those expressly set forth in paragraph 5). The Buyer acknowledges that
the Seller does not have, or hold itself out as having, any knowledge or skill
peculiar to the practices involved in the business of the Company and the
operation of the Assets, and that the Buyer has determined to purchase the
Assets upon the basis of the Buyer's own judgment, relying upon such
inspection of the Assets as the Buyer may have seen fit to make prior to the
Closing Date. Accordingly, except as set forth in paragraph 5, 6 and 8 of
this Agreement, THE SELLER MAKES NO AFFIRMATIONS, PROMISES OR WARRANTIES,
EXPRESS OR IMPLIED, as to the Assets, litigation involving the Assets, the
condition, quality or operating characteristics of the Assets, as to any prior
use of the Assets, as to the collectability of any of the Assets, or any other
---------------------------------------------
matter whatsoever, and the Buyer assumes all such excluded risks as to the
quality and performance of the Assets. Without limiting the generality of
the foregoing, Seller specifically DISCLAIMS AND EXCLUDES ANY WARRANTY OF
MERCHANTABILITY AND ANY WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE.
7. Conditions Precedent to Sale and Purchase of Assets and
-------------------------------------------------------
Payment of Purchase Price.
- -------------------------
(a) The obligation of the Seller to sell the Assets to
the Buyer is reasonably subject to (i) the Seller's receipt of any sales
tax exemption certificates reasonably required by the Seller; (ii) the
Seller's receipt of the Letter of Credit. The conditions precedent set
forth in this paragraph 7(a) are for the sole benefit of the Seller, and
may be waived by the Seller in its sole discretion.
(b) The obligation of the Buyer to purchase the Assets
from the Seller is subject to (i) the Buyer's receipt of the Bill of
Sale, (ii) the Buyer's receipt of the Franchisee Notes, copies of the
Franchise Agreements, as the same may have been delivered to the Seller,
(iii) the Buyer's receipt of the Allonges, (iv) the Buyer's receipt of
the UCC-3's, together with copies of UCC-1's therefor, and (v) the
Buyer's receipt of the Schedule. The conditions precedent set forth in
this paragraph 7(b) are for the sole benefit of the buyer and may be
waived by the Buyer in its sole discretion.
8. Limitation of Liability. In the event of any breach of
-----------------------
the warranties and representations set forth in paragraph 5 above, the Seller
shall effect a discharge of any existing lien, security interest or
encumbrance, and Seller shall hold harmless and indemnify Buyer with regard
to the defense of such adverse claims in accordance with the provisions
hereof. Buyer shall immediately notify Seller in writing of any claim made
known to Buyer for which Buyer believes the indemnity afforded hereunder
applies, and Seller shall select, if necessary, legal counsel reasonably
acceptable to Buyer to undertake the defense of such claims. Seller may, in
its sole discretion, settle, compromise or defend such claims and will
provide Buyer with reasonable notice of all action taken. Notwithstanding
<PAGE>
anything in this Agreement to the contrary, the liability of the Seller shall
be Undated to an aggregate sum equal to the Purchase Price less any payments
received by Buyer on the Franchisee Notes, the Seller shall not be liable for
incidental or consequential damages, and in no event shall the Seller have
any liability hereunder for any claim asserted for which Seller has not
received written notice thereof within three years from the Closing Date.
9. Servicing of the Franchisee Notes. Following the closing
---------------------------------
contemplated under paragraph 3 hereof, all rights, responsibilities and
obligations with respect to the servicing of the Franchisee Notes shall pass
to the Buyer. Seller shall deliver to Buyer, in the form received, any
collections on the Franchisee Notes received by Seller after the Closing
Date. Buyer shall have no claim against Seller for the manner in which
Seller has heretofore serviced the Franchisee Notes, and Buyer agrees not to
seek any recovery from or liability of any kind against Seller arising from
claims asserted by obligors under the Franchisee Notes.
10. Taxes. The Buyer shall be responsible for paying all
-----
sales, use or other taxes, except net income taxes, which arise as a result
of the conveyance of the Assets. The Buyer shall execute and deliver to the
Seller any sales tax exemption reasonably certificates required by the
Seller. Buyer hereby agrees to indemnify and hold Seller harmless against
and from any and all liability for losses or damages Seller may suffer
as a result of any claim, demand, cost, expense or judgment of any type, kind,
character or nature (including attorneys' fees and court costs) which Seller
incurs or suffers as a result of any claim relating to any sales, use or other
taxes, except net income taxes, which arise as a result of the conveyance of
the Assets.
11. Entire Agreement, Binding Effect. This Agreement contains
--------------------------------
the entire Agreement between the parties hereto, with respect to the
transaction contemplated herein, and shall be binding upon the parties hereto
and their respective heirs, legal representatives, successors and assigns.
There are no agreements or understandings between the parties other than
those set forth herein or executed simultaneously herewith.
12. Time of the Essence. Time is of the essence of each and
-------------------
every term of this Agreement.
13. Headlines. Paragraph headings in this Agreement are
---------
included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
14. Modifications. No modifications or amendments to this
-------------
Agreement may be made except in a writing signed by all of the parties hereto.
<PAGE>
15. Governing Law; Jurisdiction. The laws of the State of
--------------------------
Minnesota shall govern the enforcement and performance of this Agreement.
Each of the parties hereto consents to the exclusive exercise of jurisdiction
by the federal courts located in Minnesota or the courts of the state of
Minnesota, as the case may be, to hear and determine any action,
proceeding or counterclaim arising out of or relating to this Agreement or
performance hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
NORWEST INVESTMENT SERVICES, INC.
By /s/ Terry Jackson
----------------
its Authorized Signer
-----------------
STERLING VISION DKM, INC.
By /s/Robert Greenberg
---------------------
its President
------------------
<PAGE>
JOSEPH SILVER
ATTORNEY AT LAW
1500 HEMPSTEAD TURNPIKE
EAST MEADOW, NEW YORK 11554
TEL: (516) 390-2100
FAX: (510) 390-2150
May 24, 1996
Dr. Larry Joel, President
Duling Optical Corporation, et al
4510 Robards Lane
Louisville, Kentucky 40218
Re: ~ASSIGNMENT~AND~ASSUMPTION~OF~LEASES~
-----------------------------------
Dear Dr. Joel:
In accordance with your understanding and agreement with Dr. Robert
Cohen, I am transmitting to you herewith a copy of each of two (2) Assignment
and Assumption Agreements (collectively, the "Agreements") pursuant to which
Duling Optical Corporation, D & K Optical, Inc., Monfried Optical Company,
together with certain of their affiliates (collectively, the "Assignors")
agrees to assign to Sterling Vision DKM, Inc. ("DKM") all of their right,
title and interest in and to each of the Leases referred to therein, all in
exchange for DKM's payment to such entities of the aggregate sum of Fifty
Thousand ($50,000) Dollars and the assumption of all obligations and/or
liabilities of each such entity under each Lease to which it is a party.
With respect to the foregoing, this letter will serve to confirm my
agreement to hold each of said Agreements, in escrow, pending the Assignor's
receipt of said aggregate sum of Fifty Thousand ($50,000) Dollars.
Very truly yours,
/s/ Joseph Silver
Joseph Silver
JS/pas
cc: Thomas Fafinsky, Esq.
<PAGE>
ASSIGNMENT AND ASSUMPTION OF LEASE
(COMPANY STORE LEASES)
This Assignment and Assumption of Lease Agreement (the "Agreement') is
being entered into this 24th day of May, 1996, by and between Duling Optical
Corporation, a Delaware corporation, D & K Optical, Inc., a Delaware
corporation, and Monfried Optical Company, a Delaware corporation, each having
an office at 4415 Poplar Level Road, Louisville, Kentucky 40213 (each
individually referred to as an "Assignor" and, collectively, as the
"Assignors"), and Sterling Vision on DKM, Inc., a Delaware corporation having
its principal office at 1500 Hempstead Turnpike, East Meadow, New York 11554.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, one of the Assignors is the Tenant under one or more of the
leases described in Exhibit "A" annexed hereto (each individually referred to
as a "Lease" and, collectively, as the "Leases") relating to the premises
specified in each Lease (the "Premises"); and
WHEREAS, concurrently with the execution hereof, the Assignee is entering
into an Asset Purchase Agreement (the "Agreement") with Norwest Investment
Services, Inc. ("Norwest") pursuant to which Norwest has agreed to sell to the
Assignee substantially all of the assets of the Assignors which are subject to
a lien in favor of Norwest (collectively, the "Assets"); and
WHEREAS, in connection with the sale by Norwest to the Assignee of
substantially all of such Assets of the Assignor, the Assignee desires to
purchase from each Assignor named under a Lease all of such Assignor's right,
title and interest as the Tenant under each such Lease and, in connection
therewith, to assume the obligations of such Assignor under the Lease so
assigned; and
WHEREAS, each of the Assignors is so willing to sell and assign to the
Assignee all of its right, title and interest under each of the Leases to
which it is a party.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Assignor and Assignee hereby covenant and agree, as follows:
1. Assignment. Subject to, and contingent upon, the Assignee's
----------
purchase from Norwest of the Assets, the Assignor that is the Tenant under the
Lease, effective as of the closing of said acquisition of said Assets by the
Assignee (the "Effective Date"), hereby grants, bargains, sells, conveys,
assigns, transfers, sets over and delivers to Assignee, its successors and
assigns, all of such Assignor's right, title and interest in and to each of
<PAGE>
the Leases to which it is a party, including any security deposit and advance
rental payments held by the Landlord thereunder, and such Assignor's leasehold
interest in the Premises covered thereby.
2. Representations and Warranties of Assignor. The Assignor that is
------------------------------------------
the Tenant under each Lease hereby represents and warrants as to each such
Lease that, as of the date hereof and, to the best of its knowledge and
belief, as of the Effective Date: (i) such Assignor is and will be the owner
and holder of the Tenant's interest under such Lease; (ii) such Assignor has
made no prior assignments of such Lease or of any rights therein except as
between the parties hereto; (iii) since January 1, 1996, such Lease has not
been modified or amended, except as specifically set forth in Exhibit A
annexed hereto and except as to certain arrangements regarding the payment of
past due rents; (iv) such Lease is in full force and effect and the term
thereof has commenced pursuant to the provisions thereof; (v) subject to the
rights of Norwest, such Assignor is in possession of the Premises; (vi) such
Assignor has not commenced any action or given or served any notice for the
purpose of terminating such Lease; and (vii) such Assignor has full power and
authority to execute, deliver and perform this Agreement, and this Agreement
constitute the valid and binding obligation of such Assignor, enforceable in
accordance with its terms, and no consent or approval of any third party is
required with respect to this Agreement except for the consent of the Landlord
under each of said Leases.
3. Indemnification. Assignors, jointly and severally, each hereby
---------------
covenant and agree to indemnify and hold Assignee harmless from and against
any and all liability, loss or damage (including, but not limited to,
reasonable attorneys' fees) which Assignee may incur by reason of any breach
by any of the Assignors of any of its representations and/or warranties
contained herein and/or the failure of any Assignor to comply with its
obligations as set forth in Paragraph 5 hereof.
4. Assumption. Subject to, and contingent upon, the Assignee's
----------
acquisition of the Assets from Norwest, the Assignee hereby covenants and
agrees to assume all of the obligations on the part of the Tenant under each
of the Leases to be performed or observed, and whether or not the same arose
and/or became payable prior to the Effective Date hereof.
5. Cooperation. Assignors each covenant and agree to promptly
cooperate with the Assignee and to take such further action and to execute
such further documents and instruments as may be reasonably requested by
Assignee in order to carry out the provisions and purposes of the Agreement.
6. Binding Nature. This Agreement shall be binding upon, and shall
--------------
inure to the benefit of, the parties hereto, and each of their respective
legal representatives, successors and/or assigns.
<PAGE>
7. Invalidity. If any term, covenant or condition of this Agreement
----------
shall be held to be invalid, illegal or unenforceable, in any respect, this
Agreement shall be construed without such provision.
8. Counterparts; Governing Law: No Modification. This Agreement may be
--------------------------------------------
executed in counterparts, each of which shall be deemed an original, but all
of which taken together shall constitute one and the same instrument and, as
to each Lease assigned hereunder, shall be governed by, and construed in
accordance with, the internal laws of the State in which the Premises covered
by such Lease is located. No modification or amendment of any provision of
this Agreement or any waiver of any term hereof shall, in any event, be
effective unless made by an instrument, in writing, signed by all of the
parties hereto.
IN WITNESS WHEREOF, Assignors and Assignee have caused this Agreement to
be duly executed as of the day and year first above written.
ASSIGNORS: DULING OPTICAL CORPORATION
By: /s/ Larry Joel
---------------------
Larry Joel, President
D & K OPTICAL, INC.
By: /s/ Larry Joel
----------------------
Larry Joel, President
MONFRIED OPTICAL COMPANY
By: /s/ Larry Joel
----------------------
Larry Joel, President
ASSIGNEE: STERLING VISION DKM, INC.
By: /s/ Robert Greenberg
---------------------
Robert Greenberg,
President
<PAGE>
STATE OF Kentucky )
) ss.:
COUNTY OF Jefferson )
On this 24th day of May, 1996, before me personally came Larry Joel,
an individual residing at 8910 Cromwell Lane, Louisville, Kentucky 40222 who,
being by me duly sworn, did depose and say that he is the President of each of
Duling Optical Corporation, D & K Optical, Inc. and Monfried Optical Company,
the corporations named in and which executed the above instrument, and that he
signed his name thereto pursuant to the authority granted him by the Board of
Directors of each of said corporations.
/s/ Apryl L. Robinson
------------------------------
Notary Public, State of
My Commission Expires: 3-27-98
(Notary Seal)
STATE OF NEW YORK )
) ss.:
COUNTY OF NASSAU )
On this 24th day of May, 1996, before me personally came Robert
Greenberg, an individual residing at 58 Starling Court, Roslyn, New York 11576
who, being by me duly sworn, did depose and say that he is the President of
Sterling Vision DKM, Inc., the corporation named in and which executed the
above instrument, and that he signed his name thereto pursuant to the
authority granted him by the Board of Directors of said corporation.
/s/ Joseph Silver
--------------------------
Notary Public, State of New York
My Commission Expires:
(Notary Seal)
<PAGE>
ASSIGNMENT AND ASSUMPTION OF LEASE
(FRANCHISED STORE LEASES)
This Assignment and Assumption of Lease Agreement (the "Agreement") is
being entered into this 24th day of May, 1996, by and between Duling Optical
Corporation, a Delaware corporation, Duling Optical Co., a Delaware
corporation, D & K Optical, Inc., a Delaware corporation, D & K Optical, Inc.,
a Minnesota corporation, Vision Optical Co., Inc., an Iowa corporation, Vision
Optical Co., an Iowa corporation, Kindy Optical Company, an Iowa corporation,
Kindy Optical Company, a Delaware corporation, D & K Optical Co. of South
Dakota, an Iowa corporation, Duling optical of South Dakota, Inc., a Delaware
corporation, Duling optical, Inc., a Delaware corporation, and Monfried
Optical Company, a Delaware corporation, each having an office at 4415 Poplar
Road, Louisville, Kentucky 40233 (each individually referred to as an
"Assignor" and, collectively, as the "Assignors"), and Sterling Vision DKM,
Inc., a Delaware corporation having its principal office at 1500 Hempstead
Turnpike, East Meadow, New York 11554.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, one of the Assignors is the Tenant under one or more of the
leases described in Exhibit "A" annexed hereto (each individually referred to
as a "Lease" and, collectively, as the "Leases") relating to the premises
specified in each Lease (the "Premises"); and
WHEREAS, concurrently with the execution hereof, the Assignee is entering
into an Asset Purchase Agreement (the "Agreement") with Norwest Investment
Services, Inc. ("Norwest") pursuant to which Norwest has agreed to sell to the
Assignee substantially all of the assets of the Assignors which are subject to
a lien in favor of Norwest (collectively, the "Assets"); and
WHEREAS, in connection with the sale by Norwest to the Assignee of
substantially all of such Assets of the Assignor, the Assignee desires to
purchase from each Assignor named under a Lease all of such Assignor's right,
title and interest as the Tenant under each such Lease and, in connection
therewith, to assume the obligations of such Assignor under the Lease so
assigned; and
WHEREAS, each of the Assignors is so willing to sell and assign to the
Assignee all of its right, title and interest under each of the Leases to
which it is a party.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Assignor and Assignee hereby covenant and agree, as follows:
<PAGE>
1. Assignment. Subject to, and contingent upon, the Assignee's
----------
purchase from Norwest of the Assets, the Assignor that is the Tenant under the
Lease, effective as of the closing of said acquisition of said Assets by the
Assignee (the "Effective Date"), hereby grants, bargains, sells, conveys,
assigns, transfers, sets over and delivers to Assignee, its successors and
assigns, all of such Assignor's right, title and interest in and to each of
the Leases to which it is a party, including any security deposit and advance
rental payments held by the Landlord thereunder, and such Assignor's leasehold
interest in the Premises covered thereby.
2. Representations and Warranties of Assignor. The Assignor that is
------------------------------------------
the Tenant under each Lease hereby represents and warrants as to each such
Lease that, as of the date hereof and, to the best of its knowledge and
belief, as of the Effective Date: (i) such Assignor is and will be the owner
and holder of the Tenant's interest under such Lease; (ii) such Assignor has
made no prior assignments of such Lease or of any rights therein except as
between the parties hereto; (iii) since January 1, 1996, such Lease has not
been modified or amended, except as specifically set forth in Exhibit A
annexed hereto and except as to certain arrangements regarding the payment of
past due rents; (iv) such Lease is in full force and effect and the term
thereof has commenced pursuant to the provisions thereof; (v) such Assignor's
franchisee is in possession of the Premises; (vi) such Assignor has not
commenced any action or given or served any notice for the purpose of
terminating such Lease; and (vii) subject to the rights of Norwest, such
Assignor has full power and authority to execute, deliver and perform this
Agreement, and this Agreement constitute the valid and binding obligation of
such Assignor, enforceable in accordance with its terms, and no consent or
approval of any third party is required with respect to this Agreement except
for the consent of the Landlord under each of said Leases.
3. Indemnification. Assignors, jointly and severally, each hereby
---------------
covenant and agree to Indemnify and hold Assignee harmless from and against
any and all liability, loss or damage (including, but not limited to,
reasonable attorneys' fees) which Assignee may incur by reason of any breach
by any of the Assignors of any of its representations and/or warranties
contained herein and/or the failure of any Assignor to comply with its
obligations as set forth in Paragraph 5 hereof.
4. Assumption. Subject to, and contingent upon, the Assignee's
----------
acquisition of the Assets from Norwest, the Assignee hereby covenants and
agrees to assume all of the obligations on the part of the Tenant under each
of the Leases to be performed or observed, and whether or not the same arose
and/or became payable prior to the Effective Date hereof.
5. Cooperation. Assignors each covenant and agree to promptly
-----------
cooperate with the Assignee and to take such further action and to execute
such further documents and instruments as may be reasonably requested by
Assignee in order to carry out the provisions and purposes of the Agreement.
6. Binding Nature. This Agreement shall be binding upon, and shall
--------------
inure to the benefit of, the parties hereto, and each of their respective
legal representatives, successors and/or assigns.
7. Invalidity. If any term, covenant or condition of this Agreement
----------
shall be held to be invalid, illegal or unenforceable, in any respect, this
Agreement shall be construed without such provision.
8. Counterparts; Governing Law: No Modification. This Agreement may be
--------------------------------------------
executed in counterparts, each of which shall be deemed an original, but all
of which taken together shall constitute one and the same instrument and, as
to each Lease assigned hereunder, shall be governed by, and construed in
accordance with, the internal laws of the State in which the Premises covered
by such Lease is located. No modification or amendment of any provision of
this Agreement or any waiver of any term hereof shall, in any event, be
effective unless made by an instrument, in writing, signed by all of the
parties hereto.
IN WITNESS WHEREOF, Assignors and Assignee have caused this Agreement to
be duly executed as of the day and year first above written.
ASSIGNORS: DULING OPTICAL CORPORATION
By: /s/ Larry Joel
---------------------
Larry Joel, President
DULING OPTICAL CO.
By: /s/ Larry Joel
----------------------
Larry Joel, President
D & K OPTICAL, INC., a Delaware
corporation
By: /s/ Larry Joel
------------------------
Larry Joel, President
<PAGE>
D & K OPTICAL, INC., a Minnesota
corporation
By: /s/ Larry Joel
------------------------
Larry Joel, President
VISION OPTICAL CO., INC.
By: /s/ Larry Joel
------------------------
Larry Joel, President
VISION OPTICAL CO.
By: /s/ Larry Joel
------------------------
Larry Joel, President
KINDY OPTICAL COMPANY, an Iowa
corporation
By: /s/ Larry Joel
------------------------
Larry Joel, President
KINDY OPTICAL COMPANY, an Delaware
corporation
By: /s/ Larry Joel
------------------------
Larry Joel, President
<PAGE>
D & K OPTICAL CO. OF SOUTH DAKOTA
By: /s/ Larry Joel
------------------------
Larry Joel, President
DULING OPTICAL OF SOUTH DAKOTA, INC.
By: /s/ Larry Joel
------------------------
Larry Joel, President
DULING OPTICAL, INC.
By: /s/ Larry Joel
------------------------
Larry Joel, President
MONFRIED OPTICAL COMPANY
By: /s/ Larry Joel
------------------------
Larry Joel, President
ASSIGNEE: STERLING VISION DKM, INC.
By: /s/ Robert Greenberg
------------------------
Robert Greenberg,
President
<PAGE>
STATE OF Kentucky )
) ss.:
COUNTY OF Jefferson )
On this 24th day of May, 1996, before me personally came Larry Joel, an
individual residing at 8910 Crommell Lane, Louisville, Kentucky 40222 who,
being by me duly sworn, did depose and say that he is the President of each of
Duling Optical Corporation, Duling Optical Co., D & K Optical, Inc., D & K
Optical, Inc., Vision Optical Co., Inc., Vision Optical Co., Kindy Optical
Company, Kindy Optical Company, D & K Optical Co. of South Dakota, Duling
Optical of South Dakota, Inc., Duling Optical, Inc. and Monfried Optical
Company, the corporations named in and which executed the above instrument,
and that he signed his name thereto pursuant to the authority granted him by
the Board of Directors of each of said corporations.
/s/ Apryl L. Robinson
---------------------------
Notary Public, State of
My Commission Expires: 3-27-98
(Notary Seal)
STATE OF NEW YORK )
) ss.:
COUNTY OF NASSAU )
On this 24th day of May, 1996, before me personally came Robert
Greenberg, an individual residing at 58 Starling Court, Roslyn, New York 11576
who, being by me duly sworn, did depose and say that he is the President of
Sterling Vision DKM, Inc. the corporation named in and which executed the
above instrument, and that he signed his name thereto pursuant to the
authority granted him by the Board of Directors of said corporation.
/s/ Joseph Silver
-----------------------------
Notary Public, State of
My Commission Expires: Joseph Silver
Notary Public, State of New York
(Notary Seal) No. 3667925
Qualified in Nassau County
Commission Expires January 31, 1998
<PAGE>
JOSEPH SILVER{PRIVATE
ATTORNEY AT LAW
1500 HEMPSTEAD TURNPIKE
EAST MEADOW, NEW YORK 11554
Tel: (516) 390-2100
Fax: (516) 390-2150
May 24, 1996
Vision Centers of America, Ltd.
D&K Optical, Inc.
Monfried Corporation
Duling Finance Corporation
4415 Poplar Level Road
Louisville, KY
Attn.: Dr. Larry Joel, President
J:\DATA\CLI\95\40695\011\STERLING.DOC
Page Two
Dr. Larry Joel
May 24, 1996
Gentlemen:
As you are aware, Sterling Vision DKM, Inc. ("DKM") has entered into a certain
Asset Purchase Agreement (the "Agreement") with Norwest Investment Services,
Inc. ("Norwest") pursuant to which DKM has agreed to purchase from Norwest all
of the assets of Vision Centers of America, Ltd. D&K Optical, Inc., Monfried
Corporation and Duling Finance Corporation (collectively, the "Companies")
subject to a lien in favor of Norwest.
The terms of said Agreement require Norwest, subject to its receipt of a
general release executed by each of the Companies in its favor: (1) to execute
and deliver to DKM a general release in favor of each of the Companies (the
"Bank Release"); and (ii) to cancel and discharge the Confession of Judgment
previously executed by Duling Finance Corporation in favor of Norwest.
With respect to the foregoing, this letter will serve to confirm our
understanding and agreement, as follows:
1. Simultaneously upon your execution hereof, each of you shall execute and
deliver to me the General Release annexed hereto; and
2. Said General Release shall be held by me, in escrow, pending DKM's
delivery to you of the Bank Release, together with evidence that Norwest
has canceled and discharged the Confession of Judgment referred to
herein.
<PAGE>
If the foregoing correctly sets forth our understanding and agreement, kindly
sign and return to me a duplicate copy of this letter together with the
General Release annexed hereto.
Very truly yours,
/s/ Joseph Silver
Joseph Silver
AGREED AND CONSENTED TO:
May 24, 1996
VISION CENTERS OF AMERICA, LTD.
D&K OPTICAL, INC.
MONFREID CORPORATION
DULING FINANCE CORPORATION
By: /s/ Dr. Larry Joel
---------------------------
Dr. Larry Joel, President
<PAGE>
GENERAL RELEASE
KNOW ALL MEN BY THESE PRESENTS that VISION CENTERS OF AMERICA, LTD., D &
K OPTICAL, INC., MONFRIED CORPORATION and DULING FINANCE CORPORATION, each a
Delaware corporation having an office at 4415 Poplar Level Road, Louisville,
Kentucky 40222, on behalf of each of themselves and each of their respective
successors and assigns (collectively, the "RELEASOR"), in consideration of the
sum of Ten ($10.00) Dollars and other good and valuable consideration to each
in hand paid by each of the RELEASEES hereinafter named, the receipt and
sufficiency of which are hereby acknowledged, hereby absolutely and
unconditionally releases Norwest Investment Services, Inc. and each of its
affiliates and/or subsidiaries, and each of their respective officers,
directors, shareholders, employees and agents, and each of such individual's
heirs, executors, administrators and personal representatives, and each of
such entity's successors and/or assigns (collectively, the "RELEASEES"), from
any and all liabilities, claims, demands, actions and causes of action, and
from all damages, injuries, losses, contribution, indemnities, compensation,
costs and expenses, of any kind or nature whatsoever, whether known or
unknown, asserted or unasserted, whether sounding in tort or in contract,
and/or by reason of any matter, cause or thing, whatsoever, from the beginning
of the world to the date of this Release.
IN WITNESS WHEREOF, the undersigned has executed this General Release as
of the 24th day of May, 1996.
VISION CENTERS OF AMERICA, INC.
By: /s/ Dr. Larry Joel
-------------------------
Dr. Larry Joel, President
D & K OPTICAL, INC.
By: /s/ Dr. Larry Joel
--------------------------
Dr. Larry Joel, President
MONFRIED CORPORATION
By: /s/ Dr. Larry Joel
--------------------------
Dr. Larry Joel, President
DULING FINANCE CORPORATION
By: /s/ Dr. Larry Joel
--------------------------
Dr. Larry Joel, President
<PAGE>
STATE OF Kentucky )
) ss.:
COUNTY OF Jefferson )
On this 24th day of May, 1996, before me personally came Larry Joel, an
individual residing at 8910 Cromwell Lane, Louisville, Kentucky 40222 who,
being by me duly sworn, did depose and say that he is the President of each of
Vision Centers of America, Ltd., D & K Optical, Inc., Monfried Corporation and
Duling Finance Corporation, the corporations named in and which executed the
above instrument, and that he signed his name thereto pursuant to the
authority granted him by the Board of Directors of each of said corporations.
/s/ Apryl L. Robinson
---------------------------
Notary Public, State of
My Commission Expires: 3/27/98
(Notary Seal)
<PAGE>
GENERAL RELEASE
KNOWN ALL MEN BY THESE PRESENTS that LARRY JOEL, an individual
residing at 8910 Comwell Hill, Louisville, Kentucky 40222, on behalf of
himself and his heirs, executors, administrators and personal representatives
(the "RELEASOR"), in consideration of the sum of Ten ($10.00) Dolalrs and
other good and valuable consideration to him and in hand paid by each of the
RELEASEES hereinafter named, the receipt and sufficiency of which are hereby
acknowledged, hereby absolutely and unconditionally releases Norwest Investment
Services Inc. and each of its affiliates and/or subsidiaries, and each of
their respective officers, directors, shareholders, employees and agents, and
each of such individual's heirs, executors, administrators and personal
representatives, and each of such entity's successors and/or asssigns
(collectively, the "RELEASEES"), from any and all liabilities, claims,
demands, actions and causes of action, and from all damages, injuries, losses,
contribution, indemnities, compensation, costs and expenses, of any kind or
nature whatsoever, whether known or unknown, asserted or unasserted, whether
sounding in tort or in contract, and/or by reason of any matter, cause or
thing, whatsoever, from the beginning of the world to the date of this
Release.
IN WITNESS WHEREOF, the undersigned has executed this General Release
as of the 24th day of May, 1996.
/s/ Larry Joel
--------------------
Larry Joel
<PAGE>
Duling Optical Corporation
D & K Optical, Inc.
Monfried Optical Company
4415 Poplar Level Road
Louisville, Kentucky 40213
Attn: Dr. Larry Joel
Re: ASSIGNMENT OF LEASES
Gentlemen:
Reference is made to those two (2) certain Assignment and Assumption of
Lease Agreements, each dated May 24, 1996, pursuant to which Duling Optical
Corporation, D & K Optical, Inc., Monfried Optical Company and certain of
their respective affiliates (collectively, ithe "Assignors") assigned to
Sterling Vision DKM, Inc. ("DKM") all of their right, title and interest in
and to the leases for eleven (11) Company-operated stores and forty-four (44)
franchised/associated stores (collectively, the "Assigned Leases").
With resepct to the foregoing, this letter, when fully executed, will serve
to confirm our understanding and agreement that DKM shall have the right,
on or before July 24, 1996, to notify the Assignors, in writing, of DKM's
election not to include one (1) or more of said leases in the group of
Assigned Leases.
If the foregoing correctly sets forth our understanding and agreement, kindly
indicate such acceptance by signing, in the space below, and returning to
the undersigned a duplicate copy of this letter..
Very truly yours,
STERLING VISION DKM, INC.
By: /s/ Joseph Silver
---------------------
Joseph Silver,
Executive Vice President &
General Counsel
<PAGE>
AGREED AND CONSENTED TO:
May , 1996
DULING OPTICAL CORPORATION
MONFRIED OPTICAL COMPANY
D & K OPTICAL, INC. a Delaware corporation
D & K OPTICAL, INC., a Minnesota corporation
VISION OPTICAL CO., INC.
VISION OPTICAL CO.
KINDY OPTICAL COMPANY, an Iowa corporation
KINDY OPTICAL COMPANY, a Delaware corporation
D & K OPTICAL CO. OF SOUTH DAKOTA
DULING OPTICAL OF SOUTH DAKOTA
DULING OPTICAL, INC.
By: /s/ Larry Joel
---------------------------
Larry Joel, President
JS/pas
Enclosure
