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As filed with the Securities and Exchange Commission on May 16, 2000
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
EMERGING VISION, INC.
(Exact Name of Registrant as Specified in Its Charter)
New York 11-3096941
(State of Incorporation) (I.R.S. Employer Identification No.)
44 West 18th Street
New York, New York 10011
(646) 638-9693
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
Joseph Silver, Esq.
Executive Vice President,
Secretary and General Counsel
1500 Hempstead Turnpike
East Meadow, New York 11554
(516) 390-2100
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent For Service)
Copy to:
Robert S. Matlin, Esq.
David M. Englander, Esq.
Camhy Karlinsky & Stein LLP
1740 Broadway, New York, New York 10019-4315
(212) 977-6600
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Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are to be offered pursuant
to dividend or interest reinvestment plans, please check the following box: / /
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act"), other than securities offered only in
connection with dividend or interest reinvestment plans, check the following
box: /X/
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earliest effective
registration statement for the same offering: / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering: / /
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box: / /
CALCULATION OF REGISTRATION FEE
-------------------------------
<TABLE>
<CAPTION>
Title of Security Amount to be Offering Price Aggregate Offering Registration
to be Registered Registered (1) Per Share (2) Price (2) Fee
- ---------------- -------------- ------------- ------------------ ------------
<S> <C> <C> <C> <C>
Common Stock,
$.01 par value 6,542,710 shares $3.64 $23,815,464 $6,288
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(1) Includes 4,365,140 shares owned by certain of the selling
shareholders and 2,177,570 shares issuable upon the exercise of warrants held by
certain of the selling shareholders.
(2) Estimated solely for purpose of calculating the registration fee
pursuant to Rule 457(c) on the basis of the average of the high and low prices
per share of our common stock as reported on the NASDAQ National Market System
on May 11, 2000.
(3) Pursuant to Rule 429 promulgated under the Securities Act, this
Registration Statement shall be deemed to amend the following registration
statements: (i) Registration Statement on Form S-3, Registration No. 333-26851,
with respect to a total of 80,000 shares; (ii) Registration Statement on Form
S-3, Registration No. 333-59827 with respect to 620,071 shares;
(iii) Registration Statement on Form S-3, Registration No. 333-81317 with
respect to 425,000 shares; and (iv) Registration Statement on Form S-3,
Registration No. 33-95835, with respect to 5,302,500 shares.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SECTION
8(A), MAY DETERMINE.
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The information contained in this Prospectus is not complete and may be changed.
We may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This Prospectus is not an offer
to sell, nor does it seek to solicit an offer to buy, these securities in any
state where the offer or sale is not permitted.
PROSPECTUS
Subject to Completion
May 16, 2000
6,542,710 Shares
of Common Stock
EMERGING VISION, INC.
(formerly Sterling Vision, Inc.)
Our common stock, par value $.01 per share ("Common Stock"), is listed on the
Nasdaq National Market System ("Nasdaq-NMS") under the symbol, "ISEE". On May
15, 2000, the closing price for the shares of our Common Stock as reported by
the Nasdaq-NMS was $4.125 per share.
This Prospectus relates to the proposed sale by the selling shareholders of an
aggregate of 4,365,140 of our shares of Common Stock owned by certain of the
selling shareholders and an additional 2,177,570 shares of Common Stock issuable
upon the exercise of our warrants held by certain of such selling shareholders
(collectively, the "Shares"). As used herein, the term "selling shareholder"
also includes pledgees, donees, transferees or other successors-in-interest to
the selling shareholders who are selling Shares received, after the date of this
Prospectus, from a selling shareholder.
The selling shareholders may sell all or a portion of the Shares of Common Stock
offered hereby in private transactions or in the over-the-counter market at
prices related to the prevailing prices of our Common Stock on the Nasdaq-NMS at
the time of sale. The selling shareholders may effect such transactions by
selling to or through one or more broker-dealers, and such broker-dealers may
receive compensation in the form of underwriting discounts, concessions, or
commissions from the selling shareholders. The selling shareholders and any
broker-dealers that participate in the distribution may, under certain
circumstances, be deemed to be "underwriters" within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"), and any commissions
received by such broker-dealers and any profits realized on their resale of any
Shares may be deemed to be underwriting discounts and commissions under the
Securities Act. In conjunction with the selling shareholders, we may agree to
indemnify such broker-dealers against certain liabilities, including liabilities
under the Securities Act. In addition, we have agreed to indemnify the selling
shareholders, with respect to the registration of the Shares, against certain
liabilities, including certain liabilities under the Securities Act. To the
extent required, the specified number of Shares to be sold, the names of the
selling shareholders, the public offering price, the names of any such
broker-
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dealers, and any applicable commissions or discounts with respect to any
particular offer will be set forth in a supplement to this Prospectus. See "Plan
of Distribution." Any securities covered by this Prospectus which qualify for
sale pursuant to Rule 144 under the Securities Act may be sold under that rule
rather than pursuant to this Prospectus.
This investment involves a high degree of risk. Please see "Risk Factors"
beginning on page 8 of this Prospectus to read about certain factors you should
consider before buying any Shares.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the securities offered hereby, or
determined if this Prospectus is truthful or complete. Any representation to the
contrary is a criminal offense.
The date of this Prospectus is May __, 2000
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly, and current reports, proxy statements, and other
information with the Securities and Exchange Commission ("SEC"). You may read or
copy any document we file at the Public Reference Room maintained by the SEC at
450 Fifth Street, NW, Judiciary Plaza, Room 1024, Washington, DC 20549, and at
the following Regional Offices of the SEC: Northeast Regional Office, Seven
World Trade Center, Suite 1300, New York, New York 10048; and Midwest Regional
Office, Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. Please call the SEC at 1-800-SEC-0330 for further information regarding
its public reference rooms. Our SEC filings are also available to the public
from the SEC's web site at http://www.sec.gov. Our Common Stock is listed on the
Nasdaq-NMS. Information concerning us is also available from Nasdaq's web site
at http://www.nasdaq.com.
If you are a stockholder, you may request a copy of these filings, at no cost,
by contacting us at the following address or telephone number: Emerging Vision,
Inc., 1500 Hempstead Turnpike East Meadow, New York 11554, Attention: William
Young, Vice President - Finance, Phone No.: (516) 390-2100
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" the information we have filed
with it, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this Prospectus. This Prospectus is part of a
Registration Statement which we filed with the SEC. We incorporate by reference
the documents listed below.
1. Our Annual Report on Form 10-K for the year ended December 31,1999,
dated March 30, 2000 (and Form 10-K/A with respect thereto, dated April
6, 2000);
2. Our Form 8-K, dated February 18, 2000;
3. Our Form 8-K, dated March 7, 2000;
4. Our Form 8-K, dated March 17, 2000;
5. Our Definitive Proxy Statement, dated March 27, 2000;
6. Our Form 8-K, dated April 4, 2000;
7. Our Form 8-K, dated April 25, 2000;
8. Our Definitive Proxy Statement, dated April 28, 2000;
9. Our Supplement to Notice of Special Meeting of Shareholders and Proxy
Statement, dated May 3, 2000; and our Quarterly Report on Form 10-Q for
the quarter ended March 31, 2000, dated May 15, 2000; and
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10. All other reports and other documents filed by us pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), from and after the date hereof.
Any financial statements and schedules hereafter incorporated in this Prospectus
that have been audited and are the subject of a report by independent
accountants will be incorporated in reliance on such reports and on the
authority of such firm(s) as experts in accounting and auditing to the extent
covered by consents filed with the SEC.
ADDITIONAL INFORMATION
You should rely only on the information provided in this document or other
information that we have referred you to. We have not authorized anyone to
provide you with information that is different. This Prospectus does not
constitute an offer or solicitation by anyone in any jurisdiction in which an
offer or solicitation would be unlawful.
Certain statements in this Prospectus constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. We
believe that the forward-looking statements contained in this Prospectus are
within the meaning of the safe harbor provisions afforded by Section 27A of the
Securities Act. Forward-looking statements contained in this Prospectus and the
other documents incorporated herein by reference, involve known and unknown
risks, uncertainties, and other factors which could cause our actual results,
financial or operating performance, or achievements to differ from the future
results, financial or operating performance, or achievements expressed or
implied by such forward-looking statements.
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PROSPECTUS SUMMARY
Because this is a summary of the terms of the offering of the securities made
hereby, it does not contain all of the information that may be important to you.
This Prospectus contains forward-looking statements. You should read the
following Summary, and the "Risk Factors" section, along with the more detailed
information and the financial statements and the notes to the financial
statements incorporated by reference in this Prospectus, before you decide
whether to participate in this offering.
ABOUT EMERGING VISION, INC.
General
Since our formation in 1992, we have been primarily engaged in the development
and operation of franchised and Company-owned retail optical stores. We have
also operated (through a majority-owned subsidiary) a limited number of laser
vision correction centers since January 1996. However, we have recently shifted
the focus of our business to the development and implementation of an
Internet-based, business-to-business strategy for the sale of optical products.
In support of this strategy, we recently completed a private placement from
which we raised in excess of $10 million, which is intended to be used in the
development of our e-commerce initiatives. We also have recently added several
new members to our Board of Directors and several new senior executives,
including a new chief executive officer and a new chief financial officer, who
have substantial experience in the development and operation of Internet-based
businesses. In addition, we have recently retained McDonald Investments, Inc., a
national investment banking firm specializing in the optical industry, to
explore various alternatives that might provide us with a more advantageous use
of our assets in support of our new, business-to-business Internet strategy
Existing Business
We, along with our franchisees, develop and operate retail optical stores
(collectively "Sterling Stores") principally under the trade names "Sterling
Optical" and "Site for Sore Eyes." We also operate VisionCare of California, a
specialized health care maintenance organization licensed by the California
Department of Corporations. VisionCare of California employs licensed
optometrists who render services in offices located immediately adjacent to, or
within, most Sterling Stores located in California.
Based upon domestic sales and number of locations of Company-owned and
franchised stores, we are one of the largest chains of retail optical stores and
the second largest chain of franchised optical stores in the United States. As
of March 31, 2000, there were 251 Sterling Stores in operation, of which 37 were
Company-owned stores (including 12 stores managed
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by franchisees) and 214 were franchised stores (including five stores which we
manage on behalf of franchisees). Currently, Sterling Stores are located in 26
States, the District of Columbia, Ontario, Canada, and the U.S. Virgin Islands.
Most Sterling Stores offer eyecare products and services such as prescription
and non-prescription eyeglasses, eyeglass frames, ophthalmic lenses, contact
lenses, sunglasses, and a broad range of related items. To the extent permitted
by individual state regulations, most Sterling Stores employ or affiliate with
an optometrist to provide professional eye examinations to the public, and fill
the prescriptions written by these employed or affiliated optometrists, as well
as from unaffiliated optometrists and ophthalmologists. Most Sterling Stores are
able to offer same-day service because most stores have an inventory of
ophthalmic and contact lenses, as well as on-site lab equipment for cutting and
edging ophthalmic lenses to fit into eyeglass frames.
In addition to our retail optical business, Insight Laser Centers, Inc.
("Insight"), which is a 66.67% owned subsidiary of ours, owns and operates two
laser vision correction centers located in New York City. These centers
specialize in the performance of the refractive laser surgical procedure known
as Laser Assisted In-Situ Keratomileusis ("LASIK"). This procedure, which
corrects certain degrees of myopia (near-sightedness), hyperopia
(far-sightedness) and astigmatisms with the use of excimer lasers, is performed
by licensed ophthalmologists in exchange for their payment to Insight of a fee
for each LASIK procedure performed. Insight also is in the process of: (i)
opening an additional center located in Bayside, New York; and (ii) awaiting the
receipt of building permits so that it may commence constructing an additional
center in Carle Place, New York, which is expected to open in the third quarter
of 2000. Insight has also finalized and/or is in the process of finalizing
agreements with other ophthalmologists who will perform the LASIK procedure in
additional offices to be located in the New York metropolitan area that will be
constructed and operated by Insight.
In addition, Insight is presently in the process of seeking to obtain up to $2
million of new capital in order to market and promote its refractive laser
surgery business.
In 1998, we purchased (through a wholly owned subsidiary) substantially all of
the tangible assets of a full service ambulatory surgery center located in
Garden City, New York, which contains three surgical operating rooms; and we
presently provide administrative and consulting services to the owner/licensee
of this facility pending the transfer of such license to an affiliate of ours.
E-commerce Initiatives
The Company has begun the process of developing a web-based optical portal
business that will focus on business-to-business opportunities. As part of its
new business strategy, the Company will seek to capitalize on the robust growth
potential in the business-to-business, e-commerce market, by providing
comprehensive e-commerce solutions for the buyers and suppliers of business
goods and services in the optical industry. This, the Company believes, will
lower the overall costs of business-to-business transactions by reducing the
inefficiencies experienced by both buyers and suppliers of eye care goods and
services in traditional business transactions. The Company believes that this
market is not currently being adequately served by Internet companies, which
tend to focus on consumers and not on the business-to-business market.
In implementing this new business initiative, the Company has developed a
strategic alliance and is presently working together with Rare Medium, Inc., the
web consulting services arm of Rare Medium Group, Inc., to develop and launch an
extensive network of state-of-the-art web sites designed to provide information,
interaction and electronic business-to-business commerce. Rare Medium is one of
the country's leading providers of Internet solutions and e-commerce strategies
that improve business processes and develop branding strategies, marketing
communications and interactive content to large and medium sized companies in
the financial, automotive, consumer servicing, retail and consumer goods
industries.
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Other
We were organized under the laws of the state of New York in January 1992; and
we changed our name to "Emerging Vision, Inc." effective April 17, 2000. Our
executive offices are located at 44 West 18th Street, New York, New York and
1500 Hempstead Turnpike, East
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Meadow, New York 11554. Our telephone number in New York City is (646) 638-9693;
and our telephone number in East Meadow, New York is (516) 390-2100 and our fax
number is (516) 390-2150.
RISK FACTORS
I. EXISTING BUSINESS
1. We have incurred a substantial net loss for each of the years ended December
31, 1997, 1998 and 1999 and are likely to incur a substantial net loss for the
year ending December 31, 2000.
We suffered a net loss for each of the years ended December 31, 1997, 1998 and
1999 and, in part, because of the change in focus of our business to an
Internet-based, business-to-business strategy, we are likely to incur a net loss
for the year ended December 31, 2000. Furthermore, there can be no assurance
that we will operate profitably or be commercially successful at any time in the
foreseeable future, as our ability to attain profitability in the future will
depend, in large part, on the success of our new Internet business strategy,
which is uncertain.
2. Potential conflicts of interest may arise as certain of our executive
officers and directors are involved with other companies in the optical
industry.
Dr. Alan Cohen, Vice Chairman of our Board of Directors and President
of our retail optical store division, together with Dr. Robert Cohen, one of our
directors, are also the executive officers and directors of
Cohen Fashion Optical, Inc. and its affiliate, Real Optical, LLC and, together
with certain members of their families and the family of Dr. Edward Cohen, a
former director of the Company, are the sole shareholders of those entities.
Drs. Alan, Robert and Edward Cohen are brothers. Cohen Fashion Optical, Inc. and
Real Optical, LLC operate and franchise retail optical stores similar to
Sterling Stores in the States of Connecticut, Florida, New Hampshire,
Massachusetts, New Jersey and New York and may, in the future, operate in other
states as well. As of the date hereof, many Cohen Fashion Optical stores are
located in the same shopping center or mall as, or in close proximity to,
certain Sterling Stores; and we cannot state that, in the future, Cohen Fashion
Optical will not open or franchise additional stores that are located in the
same areas as Sterling Stores. Furthermore, Sterling Stores and certain of the
Cohen Fashion Optical stores are joint providers under certain of our third
party benefit plans and we anticipate that such arrangements will continue in
the future. Because of the interests that the Cohen family has in Cohen Fashion
Optical, Inc. and Real Optical, LLC, we cannot state that conflicts of interest
will not arise that may cause the Cohen family shareholders to enter into
business relationships that are not favorable to us.
3. We significantly depend on the ability and experience of certain members of
our management.
We rely on the skills of certain members of our management team to guide our
operations
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(including, but not limited to, Mr. Gregory T. Cook, our President and Chief
Executive Officer, Ms. Sara V. Traberman, our Chief Financial Officer, and Dr.
Alan Cohen, the Vice Chairman of our Board of Directors and the President of our
retail optical store division), the loss of any one of which could have an
adverse effect on our operations. Furthermore, the terms of our employment
agreements with Mr. Cook and Ms. Traberman afford each such individual the right
to terminate the same upon the occurrence of certain specified events.
Accordingly, we cannot ensure that, in the future, they will continue to work
for us.
4. We do not control the management of all of the retail optical stores that
operate under our name.
We rely, in part, on our franchisees for business development. Since we do not
control the management of our franchised stores, we cannot assure that any
franchisee/owner will have the business acumen or financial resources to operate
its franchise successfully. If a substantial number of franchisees are not
successful, our financial condition and results of operations could be affected
adversely.
5. We compete with many types of eyewear providers.
The retail optical business is highly competitive and includes chains of retail
optical stores, superstores, individual retail outlets, and a large number of
individual opticians, optometrists, and ophthalmologists that provide
professional services and, in connection therewith, dispense prescription
eyewear. We, as retailers of prescription eyewear, generally service local
markets, and thus our competition varies substantially from one location or
geographic area to another.
6. There may be a potential for conflicts with existing franchisees as a result
of our e-commerce initiatives.
We have recently been contacted by a group of franchisees regarding our
proposed, e-commerce strategy and how such strategy may relate to the
obligations owed to such franchisees, although we believe that we have the right
to implement such new strategy.
7. We offer incentives to our customers and experience lower profit margins
because of it.
At times when our major competitors offer significantly lower prices for their
products, we are forced to do the same. Certain of our major competitors offer
promotional incentives to their customers, including "50% Off" on designer
frames and "Buy One, Get One Free" eyecare promotions and, in response thereto,
we have, from time to time, offered the same or similar incentives to our
customers. This practice has resulted in lower profit margins, and we cannot
guarantee that these competitive promotional incentives will not further
adversely impact our results of operations. Although we believe that our
Sterling Stores provide quality service and products at competitive prices,
several of the large retail optical chains have greater
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financial resources than us. Therefore, we cannot guarantee that we will be able
to continue to deliver cost-efficient products in the event of aggressive
pricing by our competitors.
8. We often provide purchase money financing for a substantial portion of the
sales price of our store assets that are sold to franchisees, and bear the risk
of nonpayment of such financing.
In many instances, we provide purchase money financing for a substantial portion
of the sales price of store assets sold to franchisees. Upon a sale of store
assets in circumstances when we finance a portion of the purchase price, we
recognize all of the gain on such sale, if any, before we receive all of the
proceeds from such conveyance. In certain instances in which franchisees have
defaulted on their purchase money obligations, we have been able to repossess
the franchisee's assets and sell such assets to another franchisee; however, we
cannot assure that we will be able to continue, or be successful, with this
practice in the future, and the failure to be able to do so could have a
material adverse effect on our financial condition and results of operations.
9. In prior years, we experienced substantial losses from our operation of our
laser vision correction centers.
An integral part of our business strategy of becoming a full-service eyecare
company has included developing and/or managing a chain of eyecare centers at
which there would be performed refractive laser surgery procedures, to be
operated under the tradename "Insight Laser". Until recently, our revenues from
the Insight Laser Center business grew only modestly and, as a result, we
experienced significant losses from the operation of this business in prior
years, including an approximate net loss of $1,100,000 for the year ended
December 31, 1998, and an approximate net loss of $1,400,000 for the year ended
December 31, 1997. Although our Insight Laser Center business operated
profitably for the year ended December 31, 1999, we cannot guarantee that such
business will continue to operate profitably or that our financial condition and
results of operations will not be adversely affected, in the future, as a result
of the continued operation of our Insight Laser Center business.
10. We face increasing competition in our laser vision correction business and
must continually adapt to technological changes and advances in order to succeed
in that business.
The market for excimer laser surgery is increasingly competitive. Our
majority-owned subsidiary, Insight, also competes with other treatments for
vision disorders, including eyeglasses, contact lenses, interocular lens
implants and corneal rings. Further, Insight expects that its competitors may
attempt to develop new products and/or procedures that compete directly with the
excimer lasers that it uses. In order to compete successfully, Insight must
adapt to technological changes and advances in the treatment of vision
disorders. In the markets it presently serves, Insight competes with locally
owned and operated laser centers or eye surgeons who have purchased their own
lasers and related equipment. In addition, it competes with several other
companies in providing access to excimer lasers. As of the date
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hereof, five excimer laser manufacturers have secured approval from the U.S.
Food and Drug Administration ("FDA") for the use of a third generation, narrow
scanning laser (with eye tracking systems) which will expand the market to
include treatment for higher degrees of visual correction and which may make
Insight's equipment obsolete or less marketable. Non-manufacturing companies
which compete with Insight include: Laser Vision Centers, Inc., Clear Vision
Laser Centers, Inc., LCA Vision Inc., NovaMed Eyecare Management, LLC, America
Vision Care, Physicians Resource Group, Inc., TLC The Laser Center, Inc. and
Vision Twenty-One, Inc. Other companies may similarly introduce other new or
enhanced laser products and, in such event, patients and surgeons may choose
other alternatives over the technology presently being used by Insight. If this
occurs, Insight may not be financially able to secure new equipment to allow it
to compete effectively.
11. Recent significant decreases in fees charged for excimer laser surgery have
harmed, and may continue to harm, Insight's business.
Recent, significant reductions in the fees charged by ophthalmologists to their
patients for excimer laser surgery, have reduced demand for Insight's services
by making it economically more attractive for eye surgeons to buy and install,
in their existing offices, their own excimer lasers, thereby eliminating their
need to pay Insight a per procedure fee. Also, the recent significant reductions
in fees charged for excimer laser surgery have forced, and may continue to
force, Insight to reduce its fees in response to this reduction in demand and as
a means to remain competitive with other laser access providers, which has
recently affected Insight's revenues and profitability and may, in the future,
have a material adverse effect on its financial condition and results of
operations.
12. An increase in the number of eye surgeons who perform enough excimer laser
surgery procedures to economically justify the purchase of their own lasers, has
harmed and may continue to harm our business.
As excimer laser surgery becomes more commonplace, the number of eye surgeons
who can economically justify the purchase of their own excimer laser equipment
will increase and, unless the number of laser surgeries performed by surgeons
using Insight's equipment significantly increases, its business would, in all
likelihood, be materially harmed by this trend.
14. Insight's success in the laser vision correction industry is dependent upon
market acceptance.
Market acceptance of the LASIK procedure is affected by many factors including:
o nonacceptance of laser refractive procedures as an alternative
to existing methods of treating refractive disorders;
o the relatively high cost of laser refractive procedures;
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o general resistance to surgery;
o the effectiveness of alternative, less intrusive, or less
expensive methods of correcting refractive disorders; and
o the possibility of known or unknown side effects.
Additionally, Insight's lasers are currently approved only for the correction of
certain degrees of myopia, hyperopia and/or astigmatisms. We cannot give any
assurance that market acceptance of Insight's services will increase by either
the ophthalmologic community or by the general population; and the failure to
achieve such acceptance could have a material adverse effect on Insight's
business, financial condition and results of operations.
14. As refractive laser surgery gains market acceptance, we may lose revenue
from traditional eyewear customers.
As traditional eyewear users undergo the LASIK procedure or other vision
correction techniques, the demand for contact lenses and eyeglasses will
decrease. As part of our business, we service and market contact lenses and
eyeglasses. A decrease in customer demand for such products could have a
material adverse effect on our financial condition and results of operations, as
well as that of our franchisees.
15. We are subject to a variety of state, local, and federal regulations that
affect the health care industry.
The regulatory requirements that we must satisfy to conduct our business will
vary from state to state. For example, some states have enacted laws governing
the ability of ophthalmologists and optometrists to enter into contracts with
business corporations or lay persons, and some states prohibit companies from
computing their royalty fees based upon a percentage of the gross revenues
generated by optometrists from exam fees. Various federal and state regulations
also limit the financial and non-financial terms of agreements with health care
providers and, therefore, our potential revenues may differ depending upon the
nature of our various health care provider affiliations.
Insight's excimer lasers are medical devices and are subject to regulation by
the FDA. Summit Technology, Inc. and VISX, Incorporated, the manufacturers of
the two excimer laser systems that it currently uses, have received approval
from the FDA for their use to treat certain refractive disorders. However, such
approval contains restrictions on the use, labeling, promotion, and advertising
of the excimer laser. If the FDA and/or other federal, state, or local
governmental agencies change the rules and regulations affecting the use of
excimer lasers for the LASIK procedure, Insight's business and results of
operations could be adversely affected.
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We are also subject to regulations regarding our franchise business and in-store
laboratory operations, as well as the operation, in California, of VisionCare of
California, which is regulated by the California Department of Corporations. As
a franchisor, we are subject to various registrations and disclosure
requirements imposed by the Federal Trade Commission and by many of the states
in which we conduct our franchising operations. The Federal Occupational Safety
and Health Act regulates our in-store laboratory operations. Although we believe
that we are in material compliance with all such applicable laws and/or
regulations, we cannot guarantee that we will be able to sustain compliance if
these laws and/or regulations change in the future.
16. We are legally prohibited from inducing certain of our customers with
financial rewards in order to do business with us.
The Medicare and Medicaid anti-kickback statutes prohibit financial
relationships that aim to induce, arrange, or recommend the purchase of items or
services, or patient referrals to providers of services, for which payment may
be made under federally funded health care programs. These anti-kickback
statutes contain exceptions for, among other things, properly reported discounts
and compensation for bona fide employees. In addition, federal regulations
establish certain "safe harbors" from liability under the anti-kickback
statutes, including further refinements of the exceptions for discounts and
employee compensation, and a safe harbor for personal service contracts. Several
states also have statutes or regulations prohibiting financial relationships
with referral sources that are not limited to services for which Medicare and
Medicaid payment may be made. If we are sanctioned under these federal and/or
state anti-remuneration laws, we may be subjected to civil monetary penalties,
license suspension or revocation, exclusion of our providers or practitioners
from participation in Medicare and Medicaid, and criminal fines or imprisonment.
While we believe we are presently in compliance with these laws, we cannot
guarantee that some of our and/or Insight's business practices would not be
subject to challenge under any of these laws. Currently, we are not aware of any
challenge or potential challenge to our and/or Insight's business practices.
17. The prevailing market price of our Common Stock may be adversely effected by
sales of a substantial number of shares into the public market.
As of April 30, 2000, there were 25,558,564 shares of our Common Stock
outstanding, excluding 10,660,860 shares that were reserved for issuance under
our outstanding warrants, options and Senior Convertible Preferred Stock. Of the
outstanding shares, 1,667,480 are subject to the volume limitations on sale
set forth in Rule 144, and an additional 4,355,140 are subject to certain "lock-
up" provisions, as discussed below. Sales of the Shares offered hereby may
affect the market price of our Common Stock.
18. We have created provisions in our governing documents that will make it
difficult for our business to be acquired or our directors to be removed.
13
<PAGE>
Our amended and restated certificate of incorporation and amended and restated
by-laws contain certain provisions that are intended to discourage, delay, or
make it more difficult for a change of control over our business to occur. There
are also provisions designed to prevent the removal, by our shareholders, of
directors who serve on our classified Board of Directors, even if some, or a
majority, of them voted for the removal of a director. Currently, we have
authorized 5,000,000 shares of preferred stock, par value $.01 per share, of
which we have issued and outstanding approximately 3 shares of Senior
Convertible Preferred Stock, which are convertible into an aggregate of 334,166
shares of Common Stock. Our Board of Directors has the authority to fix the
rights, privileges, and preferences of the remaining authorized but unissued
shares of preferred stock without any further vote or action by the
shareholders. Therefore, the rights of the holders of our Common Stock are and
may, in the future, be subject to, and may be adversely affected by, the rights
of the holders of our Senior Convertible Preferred Stock, as well as the holders
of any additional preferred stock that may be issued in the future. In addition,
we are subject to the anti-takeover provisions of Section 912 of the Business
Corporation Law of the State of New York, which could have the effect of
delaying or preventing a change of control over our business.
II. INTERNET INITIATIVES
1. Internet-based, business-to-business commerce is a newly emerging market.
Internet-based, business-to-business commerce is a newly emerging market.
Consequently, it is difficult to evaluate our prospects for our proposed
web-based, optical portal business based on the performance of other companies
operating within this market. In addition, our historical financial information
is of limited value in projecting future operating results for this new
business.
2. We have only recently begun efforts to expand our e-commerce capabilities,
and these efforts will entail significant risks and require substantial
additional capital.
We have only recently begun efforts to expand our e-commerce capabilities.
Development of these new capabilities entails substantial risks and
uncertainties including, but not limited to, our limited experience to date in
conducting e-commerce, business-to-business transactions on the Internet, Rare
Medium, Inc.'s ability to develop websites and other proprietary technology and
transaction processing systems, on our behalf, needed to support such
capabilities, and uncertainty of market acceptance; and there can be no
assurance that we will not encounter substantial delays and/or unexpected
expenses related to such efforts. In addition, we will require substantial
additional capital in order to implement this web-based strategy; and there can
be no assurance that such additional capital will become available to us and,
even if available, that the terms thereof will be acceptable to us.
3. The success of our web-based, optical portal business will depend on
expanding market acceptance for Internet business-to-business electronic
commerce.
14
<PAGE>
Our success in implementing our new, web-based, optical portal business will
depend upon the widespread acceptance and use of the Internet as an effective
medium for business-to-business electronic commerce, particularly as a medium to
perform goods procurement and fulfillment functions in the optical markets. If
the use of the Internet in electronic commerce in such markets does no grow, or
if it grows more slowly than expected, our Internet-based business may suffer.
4. Security risks associated with electronic commerce may limit acceptance of
our web-based, optical portal business.
A fundamental requirement to conduct Internet-based, business-to-business
electronic commerce is the secure transmission of confidential information over
public networks. Failure to prevent security breaches of our web-based, optical
portal business, or well publicized security breaches affecting the Internet in
general, could significantly harm this business and, as a result, our operating
results and financial condition. There can be no certainty that advances in
computer capabilities, new discoveries in the field of cryptography, or other
developments will not result in an ability to compromise or breach the systems
which we will use to protect content and transactions from unauthorized access.
If these security measures are breached, a person could misappropriate propriety
or confidential information or cause interruptions in operations. There are
significant cost requirements to protect against security breaches or to
alleviate problems caused by breaches. Further, a well-publicized compromise of
security could deter potential customers from using the Internet to conduct
financial transactions or to transmit confidential information.
5. Additional governmental regulations may increase our costs of doing business.
The laws governing Internet transactions remain largely unsettled. The adoption
or modification of laws or regulations relating to the Internet could harm our
web-based, optical portal business's operating results and financial condition
by increasing its costs and administrative burdens. It may take years to
determine whether and how existing laws, such as those governing intellectual
property, privacy, libel, consumer protection and taxation, apply to the
Internet. Laws and regulations directly applicable to communications or commerce
over the Internet are becoming more prevalent. The growth and development of
electronic commerce may prompt calls for more stringent consumer protection
laws, as well as new laws governing the taxation of Internet-based commerce. We
must comply with new regulations in the United States, as well as any
regulations adopted by other countries where we may do business. Compliance with
any newly adopted laws may prove difficult for us and may harm our business,
operating results and financial condition.
6. Failure to expand the Internet infrastructure could limit future growth.
The recent growth in Internet traffic has caused periods of decreased
performance. If Internet usage continues to grow rapidly, its infrastructure may
not be able to support these demands and its performance and reliability may
decline. If outages or delays on the Internet occur
15
<PAGE>
frequently, overall Internet usage, including usage of our web sites, could grow
more slowly or decline. Our ability to increase the speed and scope of our
services to our customers is ultimately limited by, and depends upon the speed
and reliability of, both the Internet and the customers' internal networks.
Consequently, the emergence and growth of the market for our services will
depend upon improvements being made to the entire Internet, as well as to the
individual customers' networking infrastructures, to alleviate overloading and
congestion. If these improvements are not made, the ability of customers to
utilize our Internet-based services will be hindered, and our business,
operating results and financial condition may be adversely affected.
7. The Internet-based, business-to-business industry is highly competitive and
has low barriers to entry.
The market for Internet-based, business-to-business electronic commerce is
extremely competitive. Our competition is expected to intensify, as current
competitors expand their service offerings and new competitors, including
larger, more established companies with more resources, enter the market. There
can be no assurance that we will be able to compete successfully against current
or future competitors, or that competitive pressures will not harm our business,
operating results or financial condition. Because there are relatively low
barriers to entry in the electronic commerce market, competition from other
established and emerging companies may develop in the future. Increased
competition is likely to result in lower average transaction prices, reduced
margins and a decrease or loss of market share, any of which could harm our
business, operating results or financial condition. In addition, competitors may
be able to develop services that are superior to, or that achieve greater
acceptance than, the services to be offered by us as part of our web-based,
optical portal business.
8. We must have the ability to quickly adapt our web-based, optical portal
business to technological changes and customer preferences.
The Internet and electronic commerce industries are characterized by: (i) rapid
technological changes; (ii) changes in user and customer requirements and
preferences; (iii) frequent introductions of new products and services embodying
new technologies; and (iv) the emergence of new industry standards and
practices. If we do not respond to these developments quickly and efficiently,
we will not be competitive within the industry. If we fail to determine
accurately the features our customers require, enhance our then existing
services or develop new services, we may lose potential customers. If we do not
respond to the rapid technological changes in the industry, our services could
become obsolete and our business would be severely harmed.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the Shares of Common
Stock being offered hereby. All proceeds from the sale of such Shares will be
for the account of the selling
16
<PAGE>
shareholders. See "Selling Shareholders" and "Plan of Distribution." We may,
however, receive an aggregate of approximately $16,522,231 upon the exercise of
warrants held by the certain of the selling shareholders entitling them to
purchase an aggregate of 2,177,570 of the Shares that are covered by this
Prospectus. We intend to use all of the proceeds we may receive as a result of
such exercises, for general working capital purposes.
SELLING SHAREHOLDERS
The table below sets forth certain information, as of May 4, 2000, with respect
to the amount and percentage ownership of each selling shareholder before this
offering, the number of Shares covered by this Prospectus with respect to each
selling shareholder, and the amount and percentage ownership of each selling
shareholder after this offering, assuming that all of the Shares covered by this
Prospectus are sold by the selling shareholders. Except as otherwise described
in this Prospectus, none of the selling shareholders has had any position,
office, or other material relationship with us within the past three years,
other than as a result of the ownership of the Shares or other securities of
ours.
Of the Shares to be offered by the selling shareholders hereunder (i) 3,355,140
were issued as a result of the conversion of Series B Convertible Preferred
Stock acquired by such selling shareholders in a private placement completed by
the Company in March 2000 (the "Private Placement"), (ii) 1,677,570 are issuable
upon the exercise of warrants also issued in the Private Placement, (iii)
500,000 are issuable upon the exercise of warrants issued to Mueller & Company,
Inc. ("Mueller") and certain designees of KSH Investment Group, Inc. ("KSH") in
partial consideration for Mueller and KSH serving as placement agents in the
Private Placement, (iv) 1,000,000 were issued to Rare Medium, Inc. in
consideration of certain consulting services which it is presently performing
for the Company, and (v) 10,000 were issued to Teamwork Kommunikations GmbH, in
consideration of certain consulting services it is presently providing to the
Company. The warrants issued to the selling shareholders in the Private
Placement, and the warrants issued to Mueller and the designees of KSH are
exercisable during the period commencing on August 14, 2000 and ending on
February 13, 2005 at an exercise price of $7.5875 per share.
<TABLE>
<CAPTION>
Common Stock
Beneficially Owned Prior Shares Offered Common Stock Beneficially
Name of Beneficial Owner to the Offering Hereunder Owned After Offering(1)
- ------------------------- ------------------------ -------------- -----------------------
Number Percent Number Percent
------ ------- ------ -------
<S> <C> <C> <C> <C> <C>
Rare Medium, Inc. 1,000,000 3.9% 1,000,000 -- --
Teamwork Kommunikations, GmbH 10,000 * 10,000 -- --
Mueller & Company, Inc. 644,257 2.5% 250,000 394,257 1.5%
Helen Kohn 105,699 * 105,699 -- --
Stuart Kohn 1,450 * 1,450 -- --
Michael Kohn 1,450 * 1,450 -- --
Ronit Sucoff 150,599 * 150,599 -- --
Lewis Mason 2,764 * 2,764 -- --
Michael Fenton 2,764 * 2,764 -- --
Darin Barker 2,008 * 2,008 -- --
Christopher Brothers 2,008 * 2,008 -- --
Jeffrey Sultan 1,589 * 1,589 -- --
Sean Hatsopoulos 936 * 936 -- --
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
Common Stock
Beneficially Owned Prior Shares Offered Common Stock Beneficially
Name of Beneficial Owner to the Offering Hereunder Owned After Offering(1)
- ------------------------- ------------------------ -------------- -----------------------
Number Percent Number Percent
------ ------- ------ -------
<S> <C> <C> <C> <C> <C>
David Raven 347 * 347 -- --
Paul Dorfman 2,081 * 2,081 -- --
Scott Sucoff 1,532 * 1,532 -- --
George Bisnoff 2,913 * 2,913 -- --
Gabriel Plaut 289 * 289 -- --
Aaron Katz 971 * 971 -- --
Morris Betesh 867 * 867 -- --
Peter O'Neil 1,226 * 1,226 -- --
Alan Bienhacker 850 * 850 -- --
Francis Anderson 2,598 * 2,598 -- --
Nancy Murdocco 1,385 * 1,385 -- --
Karen Ann Orlando 1,385 * 1,385 -- --
Frances Kehoe 1,385 * 1,385 -- --
Mary Ellen Spedale 952 * 952 -- --
Melissa Belyski 952 * 952 -- --
Kathy Rocklen 1,000 * 1,000 -- --
Timothy J. Lang 9,000 * 9,000 -- --
Gross Investment Co. LP 600,000 2.3% 600,000 -- --
Keren MYCB: Elias Foundation, Inc. 292,500 1.1% 150,000 142,500 *
William Barclay Armitage Trust 7,500 * 7,500 -- --
Joel B. Gardner 9,000 * 9,000 -- --
James A. Martens 9,000 * 9,000 -- --
David Ross 6,000 * 6,000 -- --
Tov Industrial Products, Inc. 7,500 * 7,500 -- --
Pairoj Ruktanonchai 7,500 * 7,500
Dr. Valery Berger 9,000 * 9,000 -- --
Lyudmila Korets 15,000 * 15,000 -- --
Jules M. Ness 38,000 * 18,000 20,000 *
Soleiman Rabanipour 18,000 * 18,000 -- --
Steven Rubel 24,000 * 24,000 -- --
Romar Fabrics Corp. Pension Fund 6,300 * 6,300 -- --
Bill and Claudia Berkley 15,000 * 15,000 -- --
Kostaki & Magdalini Bis 6,000 * 6,000 -- --
Alvan Bisnoff 15,000 * 15,000 -- --
Cipriani Family Trust 9,000 * 9,000 -- --
Richard Gerzof 21,000 * 21,000 -- --
James Milano 6,000 * 6,000 -- --
Thomas C. Coleman and Donna K. Norell,
JTWROS 7,500 * 7,500 -- --
Estelle Konviser 6,000 * 6,000 -- --
Fred Marcus 21,000 * 21,000 -- --
Lauren A. Daman, MD 9,000 * 9,000 -- --
Gary W. Pace 9,000 * 9,000 -- --
BNB Associates Investment LP 21,000 * 21,000 -- --
Michael Bollag 21,000 * 21,000 -- --
Harvey Greenfield 21,000 * 21,000 -- --
Lawrence Kaplan 21,000 * 21,000 -- --
Melvyn B. & Lea Ruskin 12,000 * 12,000 -- --
Leonard Russin 19,500 * 19,500 -- --
Nancy Severinsen 6,000 * 6,000 -- --
Cynthia & Yoav Shmuely 15,000 * 15,000 -- --
Jeffrey Sucoff 9,000 * 9,000 -- --
Dean Willard 12,000 * 12,000 -- --
Windy City, Inc. 45,000 * 45,000 -- --
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
Common Stock
Beneficially Owned Prior Shares Offered Common Stock Beneficially
Name of Beneficial Owner to the Offering Hereunder Owned After Offering(1)
- ------------------------- ------------------------ -------------- -----------------------
Number Percent Number Percent
------ ------- ------ -------
<S> <C> <C> <C> <C> <C>
Neil Coleman 84,000 * 84,000 -- --
Sean Greene 6,000 * 6,000 -- --
Barry & Marsha Reiss 6,000 * 6,000 -- --
Edwin & Cheryl Richardson 7,500 * 7,500 -- --
Scott Sakin 4,500 * 4,500 -- --
Robert Toll 36,000 * 36,000 -- --
Rik Partnership III 540,000 2.1% 540,000 -- --
Irwin Katsof 179,470 * 105,000 74,470 *
J. R. Group, Inc. 103,500 * 103,500 -- --
Anniston Capital, Inc. 13,200 * 13,200 -- --
Gregory S. Beyerl 6,000 * 6,000 -- --
Edwin R. Bindseil 9,000 * 9,000 -- --
James C. Carr 6,000 * 6,000 -- --
Raymond & Ellen Chow 9,000 * 9,000 -- --
Kevan A. Fight 7,500 * 7,500 -- --
M. Timothy & Lois W. Farrell 6,000 * 6,000 -- --
John T. Gannon 7,500 * 7,500 -- --
Fred K. Foulkes 7,500 * 7,500 -- --
David Ivers 7,500 * 7,500 -- --
Daryl & Joan Hill 7,500 * 7,500 -- --
Richard Kandel 6,600 * 6,600 -- --
Jeffrey I. Kohn 6,000 * 6,000 -- --
Lewis & Frayda Mason 7,500 * 7,500 -- --
Donald J. Poinsette 6,000 * 6,000 -- --
John H. Price, Jr. 6,000 * 6,000 -- --
Michael L. Shinn 6,000 * 6,000 -- --
Thomas E. Schoenauer 6,000 * 6,000 -- --
B. Gale & Carolu Wilson 6,600 * 6,600 -- --
Samuel J. Watts 7,500 * 7,500 -- --
Stanton N. & Jennifer A. Williams 7,500 * 7,500 -- --
Al-Kim Associates Profit Sharing Plan 45,000 * 45,000 -- --
Bear Stearns Sec Corp. FBO: Paul Berkman IRA 18,000 * 18,000 -- --
David M. Brandwein 6,000 * 6,000 -- --
Delbert W. Coleman 84,000 * 84,000 -- --
Douglas & Alexis Hogue 6,000 * 6,000 -- --
Richard Harriton 25,500 * 25,500 -- --
Ramin Kamfar 12,000 * 12,000 -- --
Lawrence & Audrey Kurtz 6,000 * 6,000 -- --
James W. Jacobs 10,500 * 10,500 -- --
Bear Stearns Sec Corp. FBO: Harvey Kohn IRA 42,000 * 42,000 -- --
Ronald Krinick 12,000 * 12,000 -- --
Gayle Mosenson 7,500 * 7,500 -- --
Richard T. Santulli 61,494 * 61,494 -- --
Michael Schmerin 9,000 * 9,000 -- --
Bear Stearns Sec Corp. FBO: Joel Schoenfeld IRA 12,000 * 12,000 -- --
Robert Spira 6,000 * 6,000 -- --
Reinhard & Reinhard BSSC Master Plan 6,000 * 6,000 -- --
Bruce E. Toll 86,520 * 86,520 -- --
Sigmund A. Eisenschewk 10,500 * 10,500 -- --
Gary & Robin Rubin 9,000 * 9,000 -- --
Wantanee Chalothorn 15,000 * 15,000 -- --
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
Common Stock
Beneficially Owned Prior Shares Offered Common Stock Beneficially
Name of Beneficial Owner to the Offering Hereunder Owned After Offering(1)
- ------------------------- ------------------------ -------------- -----------------------
Number Percent Number Percent
------ ------- ------ -------
<S> <C> <C> <C> <C> <C>
Meyer H. Abittan 12,000 * 12,000 -- --
Henry M. Klotz 12,000 * 12,000 -- --
R. G. Hildreth, Jr. 6,300 * 6,300 -- --
John Pappas 6,300 * 6,300 -- --
Harvey Straus 15,300 * 6,300 9,000 *
Barnett Family Limited Partnership Trust 7,500 * 7,500 -- --
Sean L. Cahill 7,500 * 7,500 -- --
Edmund T. Cranch 7,500 * 7,500 -- --
Glenn E. Egli & Dorothy W. Egli, JTWROS 7,500 * 7,500 -- --
Egon Fromm 7,500 * 7,500 -- --
Jo Idelson Gottschalk Rev. Trust, Jo & Shimon
Gottschalk, TTEES 6,000 * 6,000 -- --
Clifford A. Falkenau, Trust, DTD 11/6/97, Helen &
Clifford Falkenau, TTEES 5,946 * 5,946 -- --
Sheley Goldstein 7,500 * 7,500 -- --
R. Charles & Susan L. Husted 7,500 * 7,500 -- --
Norma Scalzulli 15,000 * 15,000 -- --
Steve Shook 7,500 * 7,500 -- --
Morris M. Macy 7,500 * 7,500 -- --
Steven R. Goldstein 7,500 * 7,500 -- --
A. Lee Royal 7,500 * 7,500 -- --
Philip L. Smith 7,500 * 7,500 -- --
Alkis P. Zingas, Trustee U/A Dated 12/2/81 18,000 * 12,000 6,000 *
Simon Pelman 9,000 * 9,000 -- --
Aaron Feder 6,000 * 6,000 -- --
Jeffrey Adwar 6,000 * 6,000 -- --
Albert Di Gangi 11,000 * 9,000 2,000 *
Anthony J. Moscheto 12,000 * 12,000 -- --
Robert & Barbara Myerson 8,000 * 6,000 2,000 *
The Nybor Group, Inc. 9,000 * 9,000 -- --
Jerome Waxenberg 6,000 * 6,000 -- --
Joel & Sandra Wenacur 7,500 * 7,500 -- --
Theodore & Susan Wenacur 7,500 * 7,500 -- --
Harold S. Hefter 3,000 * 3,000 -- --
Robert J. Margolin 10,713 * 10,713 -- --
Gregory A. Fahl 10,500 * 10,500 -- --
Allen Krenek & Lynn Krenek, JTWROS 7,500 * 7,500 -- --
Eddie E. Lee 12,000 * 12,000 -- --
Harold G. Nichter 10,500 * 10,500 -- --
Bear Stearns Sec Corp. FBO: Robert G. Ostrander 12,000 * 12,000 -- --
Ronald & Arlene Sumner 9,000 * 9,000 -- --
Igor Klener 21,000 * 21,000 -- --
Dennis A. Desmond 6,000 * 6,000 -- --
David Harari 9,500 * 7,500 2,000 *
Neal J. Nissel 42,855 * 42,855 -- --
S. J. Stile Associates 53,000 * 15,000 38,000 *
David Silver 11,645 * 9,645 2,000 *
Scott Silver 10,355 * 5,355 5,000 *
Carol Stahl 15,000 * 15,000 -- --
Altech Packaging Co., Inc. 20,000 * 15,000 5,000 *
Harry Adler 42,855 * 42,855 -- --
Ezer Mitzion, Inc. 662,142 2.6% 662,142 -- --
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
Common Stock
Beneficially Owned Prior Shares Offered Common Stock Beneficially
Name of Beneficial Owner to the Offering Hereunder Owned After Offering(1)
- ------------------------- ------------------------ -------------- -----------------------
Number Percent Number Percent
------ ------- ------ -------
<S> <C> <C> <C> <C> <C>
Reuven Dessler 42,855 * 42,855 -- --
Philip Huberfeld 42,855 * 42,855 -- --
Mueller Trading L.P. of Lakewood 21,426 * 21,426 -- --
Bernard & Edith Canner 40,000 * 30,000 10,000 *
Harry C. Kleinman SSB Keogh MP Custodian 15,000 * 15,000 -- --
Michael P. Deblasio & Katherine Deblasio, JTWROS 13,200 * 13,200 -- --
Donald R. Howren, Jr. 6,000 * 6,000 -- --
Norman O. King 7,800 * 7,800 -- --
Ray Kralovic Trust 12,900 * 12,900 -- --
Kevin P. Riegelsberger 6,000 * 6,000 -- --
Shadow Capital LLC 17,400 * 17,400 -- --
Glenn H. Spears 15,900 * 15,900 -- --
Neil S. & Cynthia D. Baseman Trustees, Baseman
Family Trust 15,000 * 15,000 -- --
Warren Bulman 6,000 * 6,000 -- --
Bear Stearns Sec Corp. FBO: John P. Donohue IRA 12,000 * 12,000 -- --
Marvin Goldstein 7,500 * 7,500 -- --
Harvey Greenfield 9,000 * 9,000 -- --
J. A. O. R. 10,500 * 10,500 -- --
Eric McAfee 12,000 * 12,000 -- --
Mittersill Investment Partners 15,000 * 15,000 -- --
Jerold Novack 12,000 * 12,000 -- --
Edward S. Raskin Family Ltd. 13,500 * 13,500 -- --
Howard & Diane Roher 6,000 * 6,000 -- --
Judy M. Shapiro 9,213 * 9,213 -- --
Rankin Smith 9,213 * 9,213 -- --
Spira Family Investment PS 15,000 * 15,000 -- --
E. Michael & Barbara Thoben 7,500 * 7,500 -- --
Stanley Green 12,000 * 12,000 -- --
Robin Rubin 1,500 * 1,500 -- --
Bear Stearns SEC Corp. Cust.: Craig M. Welsch
SEP/IRA 9,000 * 9,000 -- --
Anwar Malik 7,500 * 7,500 -- --
Ahmed Malik 7,500 * 7,500 -- --
Supat Siriat-Usdorn 3,000 * 3,000 -- --
Joseph & Maryann DiSalvo 6,300 * 6,300 -- --
Ronald H. Roth 6,300 * 6,300 -- --
Sky Rock Family Trust 6,300 * 6,300 -- --
James S. & Caren Cobb 22,500 * 22,500 -- --
Mark Cohen 7,500 * 7,500 -- --
Helen W. Falkenau, TTEE 6,000 * 6,000 -- --
Theodora B. Garbus 7,500 * 7,500 -- --
Jerold S. Stern 7,500 * 7,500 -- --
Xanadu Associates, LLC 12,500 * 7,500 5,000 *
Robin Schreiber Irrevocable Trust 6,000 * 6,000 -- --
Evan H. Schwarzward 6,000 * 6,000 -- --
Saul Raven 15,000 * 15,000 -- --
Anthony T. Gardocki Trust DTD 11/24/99 22,500 * 22,500 -- --
Joseph & Sandra Stewart 21,426 * 21,426 -- --
Marvin Zuckerman 9,000 * 9,000 -- --
Andrew G. Ougheltree 7,500 * 7,500 -- --
Dennis L. & Emma Pudvah 6,000 * 6,000 -- --
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
Common Stock
Beneficially Owned Prior Shares Offered Common Stock Beneficially
Name of Beneficial Owner to the Offering Hereunder Owned After Offering(1)
- ------------------------- ------------------------ -------------- -----------------------
Number Percent Number Percent
------ ------- ------ -------
<S> <C> <C> <C> <C> <C>
Michael Jemal 4,500 * 4,500 -- --
Tom Blakeley 12,000 * 12,000 -- --
Huberfeld/Bodner Partnership 498,604 2.0% 425,571 73,033 *
Old Oak Fund, Inc. 5,358 * 5,358 -- --
A. J. L. Investments 10,713 * 10,713 -- --
Maor, Inc. 5,355 * 5,355 -- --
</TABLE>
* Less than 1%
(1) The information set forth above is as of May 4, 2000. It is unknown
if, when, or in what amounts the selling shareholders may offer Shares
pursuant to this Prospectus. Because the selling shareholders may offer
all or some of the Shares covered hereby, no estimate can be given as
to the amount of Shares offered hereby that the selling shareholders
will continue to hold after this offering is declared effective and
thereafter considered complete. However, for purposes of this table,
we have assumed that, after completion of this offering, the selling
shareholders will have sold all of the Shares covered hereby.
PLAN OF DISTRIBUTION
The sale of all or a portion of the Shares by the selling shareholders
may be effected, from time to time, in private transactions or over-the-counter
market transactions at prices related to the prevailing prices of the shares of
our Common Stock on the Nasdaq-NMS at the time of sale, or at negotiated prices.
The selling shareholders may effect such transactions by selling to or through
one or more broker-dealers, and such broker-dealers may receive compensation in
the form of underwriting discounts, concessions, or commissions from the selling
shareholders. The selling shareholders and any broker-dealers that participate
in the distribution of the Shares may, under certain circumstances, be deemed to
be "underwriters" within the meaning of the Securities Act, and any commissions
received by such broker-dealers and any profits realized on their resale of
Shares may be deemed to be underwriting discounts and commissions under the
Securities Act. We may agree with the selling shareholders to indemnify such
broker-dealers against certain liabilities, including liabilities under the
Securities Act. In addition, we have agreed to indemnify certain of the selling
shareholders, with respect to the Shares being offered hereby, against certain
liabilities, including certain liabilities under the Securities Act.
To the extent required under the Securities Act, a supplemental
prospectus will be filed, disclosing (a) the name of any such broker-dealers,
(b) the number of Shares involved, (c) the price at which such Shares are to be
sold, (d) the commissions paid or discounts or concessions
22
<PAGE>
allowed to such broker-dealers, where applicable, (e) whether or not such
broker-dealers conducted any investigation to verify the information set out or
incorporated by reference in this Prospectus, as supplemented, and (f) other
facts material to the transaction.
Each selling shareholder may be subject to the applicable provisions of
the Exchange Act and the rules and regulations promulgated thereunder,
including, without limitation, Regulation M, which provisions may limit the
timing of purchases and sales of any of our securities by the selling
shareholders.
There is no assurance that any of the selling shareholders will sell
any of the Shares.
We have agreed to pay all costs and expenses incurred in connection
with the registration of the Shares offered hereby, except that the selling
shareholders will be responsible for all selling commissions, transfer taxes,
and related charges in connection with the offer and sale of such shares and the
fees of the selling shareholders' counsel.
We have agreed with the holders of the Shares and warrants issued
pursuant to the Private Placement (including the holders of the warrants issued
to Mueller and the designees of KSH) to keep the registration statement of which
this Prospectus forms a part continuously effective until the earlier of: (i)
the fifth anniversary of the effective date of the registration statement; and
(ii) the date that all of the Shares registered for sale hereunder on behalf of
such holders have been sold. Such holders have agreed with us not to sell,
transfer or dispose of the Shares registered hereunder until the earliest of (i)
the expiration of six months following the date on which this registration
statement is first filed with the SEC; (ii) the date on which the composite
closing price of our Common Stock, as reported on Nasdaq-NMS (or the principal,
registered national securities exchange on which our Common Stock may then be
trading) is $12.00 or greater for a period of 10 consecutive trading days; or
(iii) the date on which our Common Stock is no longer trading on Nasdaq-NMS or a
registered national securities exchange.
In addition, Rare Medium, Inc. ("Rare Medium") has agreed that, with
respect to the 1,000,000 Shares issued to it and being registered hereby, it
will not sell more than 500,000 shares on or before the earlier of May 29, 2000
and the effective date of the registration statement of which this Prospectus
forms a part, and not sell more than an additional 250,000 shares during each
90-day period thereafter. Furthermore, we have agreed with Rare Medium: (i) to
keep the registration statement of which this Prospectus forms a part,
continuously effective until March 1, 2002; and (ii) that in the event Rare
Medium sells in open market transactions any of the 1,000,000 Shares being
registered hereby at a price of less than $3.00 per share (without regard to
commissions or other transaction related expenses), we will, under certain
circumstances, pay to Rare Medium the amount of the difference, either in cash
or (if available) additional registered shares of our Common Stock.
23
<PAGE>
DESCRIPTION OF OUR CAPITAL STOCK
The following general summary of our capital stock is qualified in its entirety
by reference to our amended and restated certificate of incorporation, a copy of
which is on file with the SEC. See "Where You Can Find More Information" for a
description of the documents incorporated by reference in this Prospectus.
General
We are authorized to issue 50,000,000 shares of Common Stock, $.01 par value,
and 5,000,000 shares of Preferred Stock, $.01 par value. As April 30, 2000, we
had 25,558,564 shares of Common Stock issued and outstanding and approximately
3 issued and outstanding shares of our Senior Convertible Preferred Stock.
Common Stock
As holders of shares of our Common Stock, you are entitled to dividends when and
as declared by the Board of Directors from legally available funds therefore
and, upon liquidation, you are entitled to share pro rata in any stockholder
distribution. However, we have no intention to pay dividends on shares of our
Common Stock in the foreseeable future as our Board of Directors has decided to
retain earnings to finance our operations and expansion. You have one,
non-cumulative vote for each share held. There are no pre-emptive or
subscription rights to purchase our securities. We have reserved the Shares
being registered hereby for issuance upon the exercise of the warrants sold in
the Private Placement.
Preferred Stock
We have designated 35 shares of our preferred stock as Senior Convertible
Preferred Stock, of which approximately 3 shares were issued and outstanding
as of April 30, 2000. The holders of the Senior Convertible Preferred Stock vote
as a single class with the Common Stock, on an as-converted basis, on all
matters on which the holders of the Common Stock are entitled to vote. Each
outstanding share of Senior Convertible Preferred Stock may currently be
converted into Common Stock at the conversion price of $.75 per share.
Until the Senior Convertible Preferred Stock has been converted into Common
Stock, we cannot consolidate, merge or transfer all or substantially all of our
assets to any person unless the terms of such consolidation, merger, or transfer
include the preservation of the Senior Convertible Preferred Stock. There is a
liquidation preference of $100,000 per share of Senior Convertible Preferred
Stock.
24
<PAGE>
Warrants
As of the date of this Prospectus, we had outstanding warrants exercisable for
an aggregate of 4,332,570 shares of our Common Stock at a weighted average
exercise price of approximately $5.45 per share.
Transfer Agent
The transfer agent for our Common Stock is Chase Mellon Shareholder Services.
LEGAL MATTERS
Our counsel, Camhy Karlinsky & Stein LLP, New York, New York, has passed on the
legality of the Shares to which this Prospectus relates.
EXPERTS
The financial statements incorporated by reference in this Prospectus and
elsewhere in the registration statement (of which this Prospectus forms a part),
have been audited by Arthur Andersen LLP and Deloitte & Touche LLP, independent
public accountants, as indicated in their reports with respect thereto, and are
included herein in reliance upon the authority of said firms as experts in
accounting and auditing.
CHANGES IN, AND DISAGREEMENTS WITH, CERTIFYING ACCOUNTANTS
On or about April 15, 1998, our Executive and Audit Committees considered the
reappointment of Deloitte & Touche LLP as our principal accountants. These
Committees determined that it was in our best interest to select another firm of
independent public accountants as our auditors for the 1998 calendar year. In
response to such determination, certain members of our management team commenced
their selection process by interviewing a number of other firms of certified
public accountants.
On April 24, 1998, the Audit Committee recommended to the Board of Directors
that it select Arthur Andersen LLP as such auditors. The Board of Directors
accepted this recommendation. Also on April 24, 1998, Deloitte &Touche LLP
notified us, in writing, of its decision to resign as our auditors, effective
immediately.
Deloitte & Touche's report for the year ended December 31, 1997 did not contain
an adverse opinion or a disclaimer of opinion, nor was it qualified or modified
as to uncertainty, audit scope, or accounting principles.
25
<PAGE>
For the year ended December 31, 1997, our management disagreed with Deloitte &
Touche LLP on the treatment, for financial accounting purposes, of our
Convertible Debentures Due August 25, 1998, which disagreement was ultimately
resolved to Deloitte's satisfaction; and Deloitte & Touche LLP advised
management of a reportable condition regarding inventory controls, which we are
addressing through the testing (for subsequent installation in the Sterling
Stores we operate) of a point-of-sale computer system. In addition, Deloitte
&Touche LLP previously advised us that it was in disagreement with our proposed
1998 accounting treatment of our Senior Convertible Preferred Stock, which
disagreement was resolved to Deloitte & Touche LLP's satisfaction.
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Our amended and restated certificate of incorporation provides that a director
shall not be liable to us or our shareholders for damages for any breach of duty
in such capacity as a director, except for liability in the event that
o a judgment or other final adjudication adverse to such
director establishes that his/her acts or omissions were in
bad faith or involved intentional misconduct or a knowing
violation of law or that such director personally gained a
financial profit or other advantage to which he/she was not
legally entitled; or
o that such director's acts violated Section 719 of the Business
Corporation Law of the State of New York.
Our amended and restated bylaws provides for our indemnification of directors
and officers, to the fullest extent permitted by applicable law, for all costs
reasonably incurred in connection with any action, suit, or proceeding in which
such director or officer is made a party by virtue of his or her being an
officer or director of our Company, if such director or officer acted in good
faith, for a purpose which he/she reasonably believed to be in the best
interests of our Company, and in criminal actions or proceedings, in addition,
had no reasonable cause to believe that his/her conduct was unlawful. We have
not entered into indemnification agreements with any of our directors.
Insofar as indemnification for liabilities arising under the Securities Act may
be available to directors, officers and controlling persons of our Company
pursuant to the foregoing provisions, or otherwise, we have been advised that,
in the opinion of the SEC, such indemnification is against public policy as
expressed in the Securities Act and is, therefore,
26
<PAGE>
unenforceable.
No dealer, salesperson, or other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus and, if given or made, such information or representations must not
be relied upon as having been authorized. Neither the delivery of this
Prospectus nor any sale made hereunder shall, under any circumstances, create
any implication that there has been no change in our affairs since the date
hereof or that the information contained herein is correct as of any date
subsequent to the date hereof. This Prospectus does not constitute an offer to
sell or a solicitation of an offer to buy any securities offered hereby by
anyone in any jurisdiction in which such offer or solicitation is not authorized
or in which the person making the offer is not qualified to do so, or to anyone
to whom it is unlawful to make such offer or solicitation.
27
<PAGE>
You may rely only on the information contained in this Prospectus. We have not
authorized anyone to provide information different from that contained in this
Prospectus. Neither the delivery of this Prospectus nor the sale of the Shares
of our Common Stock means that information contained in this Prospectus is
correct after the date of this Prospectus. This Prospectus is not an offer to
sell or a solicitation of an offer to buy these Shares of Common Stock in any
circumstances under which the offer or solicitation is unlawful.
6,542,710 Shares
Emerging Vision, Inc.
(formerly Sterling Vision, Inc.)
Common Stock
Prospectus
May , 2000
TABLE OF CONTENTS
Page
Where You Can Find More Information......................................... 3
Incorporation of Certain Documents by Reference............................. 3
Additional Information...................................................... 4
Prospectus Summary.......................................................... 5
Risk Factors................................................................ 8
Use of Proceeds............................................................. 16
Selling Shareholders........................................................ 17
Plan of Distribution........................................................ 21
Description of Our Capital Stock............................................ 24
Legal Matters............................................................... 25
Experts..................................................................... 25
Changes In, and Disagreements With, Certifying Accountants.................. 25
Disclosure of Commission Position on Indemnification for
Securities Act Liabilities.............................................. 26
28
<PAGE>
================================================================================
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the costs and expenses payable in connection with
the sale of the Common Stock being registered hereby. Except for the Securities
and Exchange Commission ("SEC") registration fee, all expenses are estimated:
Item Amount
- -------------------------------------------------------- ------------
SEC registration fee.................................... $ 6,288.00
Printing and engraving expenses......................... $ 1,500.00
Legal fees and expenses................................. $ 7,500.00
Accounting fees and expenses.................. $ 5,000.00
------------
Total................................................... $ 20,288.00
The holders of the shares being registered hereby will be responsible for all
selling commissions, transfer taxes, and related charges in connection with the
offer and sale of the shares offered hereby.
Item 15. Indemnification of Directors and Officers.
Our amended and restated certificate of incorporation provides that a director
shall not be liable to us or our shareholders for damages for any breach of duty
in such capacity except for liability in the event a judgment or other final
adjudication adverse to such director establishes that his/her acts or omissions
were in bad faith or involved intentional misconduct or a knowing violation of
law or that such director personally gained a financial profit or other
advantage to which he/she was not legally entitled or that such director's acts
violated Section 719 of the Business Corporation Law of the State of New York.
Our amended and restated bylaws provide for our indemnification of directors
and officers, to the fullest extent permitted by applicable law, for all costs
reasonably incurred in connection with any action, suit, or proceeding in which
such director or officer is made a party by virtue of his or her being an
officer or director of the Company, if such director or officer acted in good
faith, for a purpose which he/she reasonably believed to be in the best
interests of our business, and in criminal actions or proceedings, in addition,
had no reasonable cause to believe that his/her conduct was unlawful. We have
not entered into indemnification agreements with any of our directors.
II-1
<PAGE>
Item 16. Exhibits.
<TABLE>
<CAPTION>
Exhibit
Number Description of Document
- --------- --------------------------------------------------------------------
<S> <C>
4.1 Specimen Common Stock Certificate of Registrant(1)
4.2 Form of warrant issued to purchasers in the Registrant's private
placement ("Private Placement") of units consisting of Series B
Convertible Preferred Stock and warrants to purchase Series B
Convertible Perferred Stock(2)
4.3 Form of warrant issued to Placement Agents (and/or their respective
designees) in connection with the Registrant's Private Placement(2)
5.1 Opinion of Camhy Karlinsky & Stein LLP(2)
23.1 Consent of Arthur Andersen LLP(2)
23.2 Consent of Deloitte & Touche LLP(2)
23.3 Consent of Camhy Karlinsky & Stein LLP(3)
24.1 Power of Attorney (at II-4)
</TABLE>
- ----------
(1) Incorporated by reference to Registrant's Registration Statement on
Form S-1 (Commission File No. 33-98368).
(2) Filed herewith.
(3) Included as part of Exhibit 5.1.
Item 17. Undertakings.
The undersigned Registrant hereby undertakes:
1. To file, during any period in which offers or sales of the shares
being registered hereby are being made, a post-effective amendment to this
Registration Statement to:
(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in such prospectus any facts or events which,
individually or together, represent a fundamental change in the information in
this Registration Statement;
(iii) To include any additional or changed material
information on the plan of distribution;
provided, however, that sub-paragraphs 1(i) and 1(ii) do not apply if the
information required in a post-effective amendment is contained in a periodic
report filed by the Registrant
II-2
<PAGE>
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934,
as amended, and incorporated by reference in this Registration Statement;
2. That, for the purpose of determining liability under the Securities
Act, it shall treat each post-effective amendment as a new registration
statement of the securities offered, and treat the offering of the securities,
at that time, as an initial bona fide offering; and
3. To remove from registration, by means of a post-effective amendment,
any of the securities being registered hereby which remains unsold at the
termination of the offering.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described in Item 15, 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
Securities Act and is, therefore, unenforceable.
In the event a claim for indemnification against such liabilities,
other than the payment, by the Registrant, of expenses incurred or paid by a
director, officer of 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 shares being registered hereby, 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 as to whether such indemnification by the Registrant is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication, of such issue, by such court.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant has duly caused this Registration Statement on Form S-3 to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
and State of New York, on May 15, 2000.
EMERGING VISION, INC.
By:/s/ Gregory T. Cook
----------------------------------
Gregory T. Cook
President and Chief Executive Officer
By:/s/ Sara V. Traberman
----------------------------------
Sara V. Traberman
Chief Financial Officer
(chief financial and accounting officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints each of Gregory T. Cook and Joseph
Silver, singly, as his/her true and lawful attorney-in-fact and agent, with full
power of substitution for him/her and in his/her name, place and stead, in any
and all capacities, to sign any and all amendments and post-effective amendments
to this Registration Statement, and to file the same, with all exhibits thereto,
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 fully to all intents and purposes as
he/she might or could do in person, thereby ratifying and confirming all that
each said attorney-in-fact and agent, or his/her substitutes, may lawfully do or
cause to be done by virtue thereof.
II-4
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
Chairman of the Board of Directors May , 2000
- -----------------------------------------
William F. Stasior
/s/ Alan Cohen Vice Chairman of the Board of May 15, 2000
- ----------------------------------------- Directors
Alan Cohen
/s/ Gregory T. Cook President, Chief Executive Officer May 15, 2000
- ----------------------------------------- and Director
Gregory T. Cook
/s/ Robert Cohen Director May 15, 2000
- -----------------------------------------
Robert Cohen
/s/ Joel Gold Director May 15, 2000
- -----------------------------------------
Joel Gold
Director May , 2000
- -----------------------------------------
Suresh V. Mathews
</TABLE>
II-5
<PAGE>
THIS WARRANT AND ANY SHARES ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), NOR
UNDER ANY STATE SECURITIES LAW AND SUCH SECURITIES MAY NOT BE PLEDGED, SOLD,
ASSIGNED, HYPOTHECATED, OR OTHERWISE TRANSFERRED UNTIL (1) A REGISTRATION
STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE ACT AND ANY APPLICABLE
STATE SECURITIES LAW OR (2) THE COMPANY RECEIVES AN OPINION OF COUNSEL TO THE
COMPANY OR COUNSEL TO THE HOLDER OF SUCH SECURITIES, WHICH COUNSEL AND OPINION
ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES MAY BE PLEDGED,
SOLD, ASSIGNED, HYPOTHECATED, OR TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS.
THE EXERCISE OF THIS WARRANT AND/OR THE TRANSFER OF THE SHARES OF COMMON STOCK
ISSUABLE UPON THE EXERCISE HEREOF (OR UPON THE CONVERSION OF THE SERIES B
CONVERTIBLE PREFERRED STOCK ISSUED UPON THE EXERCISE HEREOF) IS FURTHER
RESTRICTED AS DESCRIBED HEREIN.
STERLING VISION, INC.
Warrant for the purchase of shares of Series B Convertible Preferred Stock,
$.01 par value per share
THIS CERTIFIES that, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, __________________________, a
______________ having an office at
_______________________________________________ (the "Initial Holder"), is
entitled to subscribe for and purchase from Sterling Vision, Inc., a New York
corporation (the "Company"), upon the terms and conditions set forth herein, at
any time or from time to time during the period commencing on August __, 2000
and expiring at 5:00 p.m. on _______________, 2005 (the "Exercise Period"),
_____________ shares of the Company's Series B Convertible Preferred Stock, $.01
par value per share (the "Series B Preferred Stock"), at a price (the "Exercise
Price") per one-half share of Series B Convertible Preferred Stock (or one share
of Common Stock, as discussed below) of and --/100 ($ ) Dollars. Notwithstanding
the foregoing if, as and when the Series B Preferred Stock is automatically
converted into the Company's Common Stock (on a 2:1 basis, subject to possible
adjustment), notice of which shall be promptly delivered to the Holder by the
Company, this Warrant, to the extent that it has not been previously exercised
for Series B Preferred Stock, shall thereupon become exercisable for such number
of shares of the Company's Common Stock, par value $.01 per share (the "Common
Stock") as shall equal the product of the number of shares of Series B Preferred
Stock into which this Warrant is then exercisable and the number of shares of
Common Stock issuable upon the conversion of each share of Series B Preferred
Stock. As used herein, the term "this Warrant" shall
<PAGE>
mean and include this Warrant and any Warrant or Warrants hereafter issued as a
consequence of the exercise or transfer of this Warrant in whole or in part. As
used herein, the term "Holder" shall include the Initial Holder and any
transferee to whom this Warrant has been transferred in accordance with, and as
permitted by, the terms hereof.
The number of shares of Series B Preferred Stock or Common Stock (as
applicable) issuable upon the exercise of this Warrant (the "Warrant Shares")
may be adjusted from time to time as hereinafter set forth.
1. This Warrant may be exercised during the Exercise Period, as to the
whole or any lesser number of whole Warrant Shares, by transmission to the
Company, by telecopy, of the Election to Exercise attached hereto followed,
within three (3) business days, by the surrender of this Warrant (with the
Election to Exercise duly executed) to the Company (to the attention of its
General Counsel) at its offices at 1500 Hempstead Turnpike, East Meadow, New
York 11554, or at such other place as is designated in writing by the Company,
together with a certified or bank cashier's check payable to the order of the
Company, in an amount equal to the product of the Exercise Price and the number
of Warrant Shares for which this Warrant is being exercised (the "Aggregate
Exercise Price").
2. Notwithstanding anything to the contrary contained in this Warrant,
and in addition to inability of the Holder to exercise this Warrant until six
(6) months after the date hereof, this Warrant shall not be exercisable by the
Holder to the extent that and so long as the Common Stock which would be
acquired upon such exercise (or which would be issuable upon conversion of the
Series B Preferred Stock if the Warrant is exercised for Series B Preferred
Stock), when aggregated with any other shares of Common Stock at the time of
exercise beneficially owned by the Holder and not previously sold by the Holder,
would aggregate more than 4.9% of the then outstanding shares of Common Stock of
the Company. For this purpose, "beneficial ownership" shall be determined in
accordance with the provisions of Section 13(d) of the Securities Exchange Act
of 1934, as amended, and the rules and regulations promulgated thereunder. The
opinion of the Holder's counsel shall be conclusive in calculating the Holder's
beneficial ownership.
3. Upon each exercise of the Holder's rights to purchase Warrant
Shares, the Holder shall be deemed to be the holder of record of the Warrant
Shares issuable upon such exercise, notwithstanding that the transfer books of
the Company shall then be closed or certificates representing such Warrant
Shares shall not then have been actually delivered to the Holder. Within seven
(7) business days after each such exercise of this Warrant and receipt by the
Company of this Warrant, the Election to Exercise and the Aggregate Exercise
Price, the Company shall issue and deliver to the Holder a certificate or
certificates for the Warrant Shares issuable upon such exercise, registered in
the name of the Holder or his/her/its designee. If this Warrant should be
exercised in part only, the Company shall, upon surrender of this Warrant for
cancellation, execute and deliver a new Warrant evidencing the right of the
Holder to purchase the balance of the Warrant Shares (or portions thereof)
subject to purchase hereunder.
<PAGE>
4. Any Warrants issued upon the transfer or exercise in part of this
Warrant shall be registered in a warrant register (the "Warrant Register") as
they are issued. The Company shall be entitled to treat the registered holder of
this Warrant on the Warrant Register as the owner in fact thereof for all
purposes and shall not be bound to recognize any equitable or other claim to, or
interest in, such Warrant on the part of any other person, and shall not be
liable for any damages resulting from any change in registration of this
Warrant, if this Warrant is registered in the name of a fiduciary or the nominee
of a fiduciary, unless made with the actual knowledge of the general counsel of
the Company that such fiduciary or nominee is committing a breach of trust in
requesting such change in registration. This Warrant shall be transferable on
the Warrant Register only upon delivery thereof duly endorsed by the Holder or
by his/her/its duly authorized attorney or representative, or accompanied by
proper evidence of succession, assignment or authority to transfer, subject in
all cases to compliance with the terms and provisions hereof. In all cases of
transfer by an attorney, executor, administrator, guardian, or other legal
representative, duly authenticated evidence of his or its authority shall be
produced. Upon any registration of transfer, the Company shall deliver a new
Warrant or Warrants to the person(s) entitled thereto. This Warrant may be
exchanged, at the option of the Holder hereof, for another Warrant, or for other
Warrants of different denominations, of like tenor and representing in the
aggregate the right to purchase a like number of Warrant Shares (or portions
thereof), upon surrender to the Company or its duly authorized agent.
Notwithstanding anything contained herein to the contrary, the Company shall
have no obligation to cause Warrants to be transferred on its books to any
person if, in the opinion of counsel to the Company, such transfer: (i) is not
then permitted pursuant to the terms hereof; or (ii) does not comply with the
provisions of the Act, the rules and regulations promulgated thereunder, and/or
any applicable state securities laws.
5. The Company shall at all times reserve and keep available out of its
authorized and unissued Preferred Stock and Common Stock, solely for the purpose
of providing for the exercise of the rights to purchase all Warrant Shares
granted pursuant to this Warrant, such number of shares of Series B Preferred
Stock and Common Stock equal to the number of Warrant Shares covered hereby. The
Company covenants that all shares of Series B Preferred Stock or Common Stock,
as the case may be, issuable upon the exercise of this Warrant, upon receipt by
the Company of the Aggregate Exercise Price therefor, shall be validly issued,
fully paid, nonassessable, and free of preemptive rights.
6. The issuance of any shares or other securities upon the exercise of
this Warrant, and the delivery of certificates or other instruments representing
such shares or other securities, shall be made without charge to the Holder for
any tax or other charge in respect of such issuance, other than applicable
transfer taxes. The Company shall not, however, be required to pay any tax which
may be payable in respect of any transfer involved in the issuance and delivery
of any certificate in a name other than that of the Holder, and the Company
shall not be required to issue or deliver any such certificate unless and until
the person or persons requesting such issuance shall
<PAGE>
have paid to the Company the amount of such tax or shall have established, to
the satisfaction of the Company, that such tax has been paid.
7. In the event that as a result of reorganization, merger,
consolidation, liquidation, recapitalization, stock split, or combination of
shares, the outstanding shares of Series B Preferred Stock or Common Stock of
the Company, as applicable, are at any time increased or decreased or changed
into or exchanged for a different number or kind of shares or other security of
the Company or of another corporation, then appropriate adjustments in the
Exercise Price and in the number and kind of such securities then subject to
this Warrant shall be made effective as of the date of such occurrence so that
the position of the Holder, upon exercise, will be the same as it would have
been had he/she/it owned, immediately prior to the occurrence of such event, the
Series B Preferred Stock or Common Stock, as applicable, subject to this
Warrant. Such adjustment shall be made successively whenever any event listed
above shall occur and the Company will notify the Holder of this Warrant of each
such adjustment. Any fraction of a share resulting from any adjustment shall be
eliminated.
8. Unless and until registered by the Company under the Securities Act
of 1933, as amended (the "Act"), the Warrant Shares issued upon the exercise of
this Warrant shall be subject to a stop transfer order and the certificate or
certificates evidencing such Warrant Shares shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN NOT
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SUCH SHARES
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT, OR AN EXEMPTION FROM REGISTRATION UNDER SUCH
ACT. SUCH SHARES ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AS
CONTAINED IN A WARRANT, DATED ______________, 2000, COPIES OF WHICH ARE
ON FILE WITH THE SECRETARY OF THE COMPANY."
9. In addition to the foregoing, the Holder of this Warrant shall be
prohibited from offering, selling, contracting to sell or otherwise disposing of
or transferring the Warrant Shares until the earliest of: (i) the expiration of
the six (6) month period following the date of the Company's filing, with the
Securities and Exchange Commission, of a registration statement seeking
registration, under the Act, of such shares of the Company's Common Stock into
which the Series B Preferred Stock (to be issued upon the exercise of this
Warrant) will convert (subject to the Company's receipt of the approval of a
majority of its stockholders); (ii) the date on which the composite closing
price of the Company's Common Stock, as reported on the Nasdaq National Market
System (or the principal, registered, national securities exchange on which the
Common Stock may then be trading), is $12.00 or greater for a period of ten (10)
consecutive trading days;
<PAGE>
and (iii) the date on which the Company's Common Stock is no longer traded on
the Nasdaq National Market System or any other registered, national securities
exchange.
10. Upon receipt of evidence satisfactory to the Company of the loss,
theft, destruction or mutilation of any Warrant (and upon surrender of any
Warrant if mutilated), and upon reimbursement of the Company's reasonable
incidental expenses and, if reasonably requested, an indemnity reasonably
acceptable to the Company, the Company shall execute and deliver to the Holder
thereof a new Warrant of like date, tenor, and denomination.
11. The Holder of this Warrant shall not have, solely on account of
such status, any rights of a stockholder of the Company, either at law or in
equity, or to any notice of meetings of stockholders or of any other proceedings
of the Company, except as provided in this Warrant.
12. This Warrant shall be construed in accordance with the laws of the
State of New York applicable to contracts made and performed within such State,
without regard to principles of conflicts of law.
Dated: _____________, 2000
STERLING VISION, INC.
By:
-------------------------------
Name: Dr. Robert Cohen
Title: Chairman
<PAGE>
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer the
attached Warrant.)
FOR VALUE RECEIVED, ______________________________ hereby sells,
assigns, and transfers unto __________________ a Warrant to purchase __________
shares of Series B Convertible Preferred Stock, $.01 per value or share, or
Common Stock, $.01 par value per share, of Sterling Vision, Inc. (the
"Company"), as applicable, together with all right, title, and interest therein,
and does hereby irrevocably constitute and appoint attorney to transfer such
Warrant on the books of the Company, with full power of substitution.
Dated:
Signature
-----------------------------------
Signature Guaranteed:
NOTICE
The signature on the foregoing Assignment must correspond to the name
as written upon the face of this Warrant in every particular, without alteration
or enlargement or any change whatsoever.
<PAGE>
To: Sterling Vision, Inc.
1500 Hempstead Turnpike
East Meadow, New York 11554
ELECTION TO EXERCISE
The undersigned hereby exercises his, her, or its rights to
purchase _______ shares of the Company's Class B Convertible Preferred
Stock, or _______ shares of the Company's Common Stock (collectively,
the "Warrant Shares") covered by the within Warrant and tenders payment
herewith in the amount of $_________ in accordance with the terms
thereof; and the undersigned certifies that this Warrant is owned by
the undersigned free and clear of any and all claims, liens and/or
encumbrances and requests that certificates for such securities be
issued in the name of, and delivered to:
----------------------------
----------------------------
----------------------------
(Print Name, Address and Social Security
or Tax Identification Number)
and, if such number of Warrant Shares shall not be all the Warrant
Shares covered by the within Warrant, that a new Warrant for the
balance of the Warrant Shares covered by the within Warrant be
registered in the name of, and delivered to, the undersigned at the
address stated below.
The undersigned request that the shares to be issued pursuant to this Election
to Exercise be issued by issuance of a Certificate therefor to the above
entity/individual.
Dated: Name:
----------------- ------------------------------
(Print)
Address:
------------------------------------------------------------------------
------------------------------
(Signature)
<PAGE>
WARRANT NO.: UW-
THIS WARRANT AND ANY SHARES ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),NOR
UNDER ANY STATE SECURITIES LAW AND SUCH SECURITIES MAY NOT BE PLEDGED, SOLD,
ASSIGNED, HYPOTHECATED, OR OTHERWISE TRANSFERRED UNTIL (1) A REGISTRATION
STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE ACT AND ANY APPLICABLE
STATE SECURITIES LAW OR (2) THE COMPANY RECEIVES AN OPINION OF COUNSEL TO THE
CONPANY OR COUNSEL TO THE HOLDER OF SUCH SECURITIES, WHICH COUNSEL AND OPINION
ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES MAYBE PLEDGED,
SOLD, ASSIGNED, HYPOTHECATED, OR TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS.
THE EXERCISE OF THIS WARRANT AND/OR THE TRANSFER OF THE SHARES OF COMMON STOCK
ISSUABLE UPON THE EXERCISE HEREOF IS FURTHER RESTRICTED AS DESCRIBED HEREIN.
STERLING VISION, INC.
Warrant for the purchase of shares of Common Stock,
$.01 par value per share
THIS CERTIFIES that, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, [ ],
an individual having an office at [ ] (the "Initial
Holder"), is entitled to subscribe for and purchase from Sterling Vision, Inc.,
a New York corporation (the "Company"), upon the terms and conditions set forth
herein, at any time or from time to time during the period commencing on August
14, 2000 and expiring at 5:00 p.m. on February 13, 2005 (the "Exercise Period"),
[ ] shares of the Company's Common Stock, $.O1 par value per share
(the "Common Stock"), at a price (the "Exercise Price") per share of Common
Stock of Seven and 5875/1000 ($7.5875) Dollars. As used herein, the term "this
Warrant" shall mean and include this Warrant and any Warrant or Warrants
hereafter issued as a consequence of the exercise or transfer of this Warrant in
whole or in part. As used herein, the term "Holder" shall include the Initial
Holder and any transferee to whom this Warrant has been transferred in
accordance with, and as permitted by, the terms hereof.
The number of shares of Common Stock issuable upon the exercise of this
Warrant (the "Warrant Shares") may be adjusted from time to time as hereinafter
set forth
<PAGE>
l . This Warrant may be exercised during the Exercise Period, as to the
whole or any lesser number of whole Warrant Shares, by transmission to the
Company, by telecopy, of the Election to Exercise attached hereto followed,
within three (3) business days, by the surrender of this Warrant (with the
Election to Exercise duly executed) to the Company (to the attention of its
General Counsel) at its offices at 1500 Hempstead Turnpike, East Meadow, New
York 11554, or at such other place as is designated in writing by the Company,
together with a certified or bank cashier's check payable to the order of the
Company, in an amount equal to the product of the Exercise Price and the number
of Warrant Shares for which this Warrant is being exercised (the "Aggregate
Exercise Price").
2. Notwithstanding anything to the contrary contained in this Warrant,
and in addition to inability of the Holder to exercise this Warrant until six
(6) months after the date hereof, this Warrant shall not be exercisable by the
Holder to the extent that and so long as the Common Stock which would be
acquired upon such exercise, when aggregated with any other shares of Common
Stock at the time of exercise beneficially owned by the Holder and not
previously sold by the Holder, would aggregate more than 4.9% of the then
outstanding shares of Common Stock of the Company, For this purpose, "beneficial
ownership" shall be determined in accordance with the provisions of Section
13(d) of the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder. The opinion of the Holder's counsel shall be
conclusive in calculating the Holder's beneficial ownership.
3. Upon each exercise of the Holder's rights to purchase Warrant
Shares, the Holder shall be deemed to be the holder of record of the Warrant
Shares issuable upon such exercise, notwithstanding that the transfer books of
the Company shall then be closed or certificates representing such Warrant
Shares shall not then have been actually delivered to the Holder. Within seven
(7) business days after each such exercise of this Warrant and receipt by the
Company of this Warrant, the Election to Exercise and the Aggregate Exercise
Price, the Company shall issue and deliver to the Holder a certificate or
certificates for the Warrant Shares issuable upon such exercise, registered in
the name of the Holder or his/her/its designee. If this Warrant should be
exercised in part only, the Company shall, upon surrender of this Warrant for
cancellation, execute and deliver a new Warrant evidencing the right of the
Holder to purchase the balance of the Warrant Shares (or portions thereof)
subject to purchase hereunder.
4. Any Warrants issued upon the transfer or exercise in part of this
Warrant shall be registered in a warrant register (the "Warrant Register") as
they are issued. The Company shall be entitled to treat the registered holder of
this Warrant on the Warrant Register as the owner in fact thereof for all
purposes and shall not be bound to recognize any equitable or other claim to, or
interest in, such Warrant on the part of any other person, and shall not be
liable for any damages resulting from any change in registration of this
Warrant, if this Warrant is registered in the name of a fiduciary or the nominee
of a fiduciary, unless made with the actual knowledge of the general
<PAGE>
counsel of the Company that such fiduciary or nominee is committing a breach of
trust in requesting such change in registration. This Warrant shall be
transferable on the Warrant Register only upon delivery thereof duly endorsed by
the Holder or by his/her/its duly authorized attorney or representative, or
accompanied by proper evidence of succession, assignment or authority to
transfer, subject in all cases to compliance with the terms and provisions
hereof. In all cases of transfer by an attorney, executor, administrator,
guardian, or other legal representative, duly authenticated evidence of his or
its authority shall be produced. Upon any registration of transfer, the Company
shall deliver a new Warrant or Warrants to the person(s) entitled thereto. This
Warrant may be exchanged, at the option of the Holder hereof, for another
Warrant, or for other Warrants of different denominations, of like tenor and
representing in the aggregate the right to purchase a like number of Warrant
Shares (or portions thereof), upon surrender to the Company or its duly
authorized agent. Notwithstanding anything contained herein to the contrary, the
Company shall have no obligation to cause Warrants to be transferred on its
books to any person if, in the opinion of counsel to the Company, such transfer:
(i) is not then permitted pursuant to the terms hereof; or (ii) does not comply
with the provisions of the Act, the rules and regulations promulgated
thereunder, and/or any applicable state securities laws.
5. The Company shall at all times reserve and keep available out of its
authorized and unissued Common Stock, solely for the purpose of providing for
the exercise of the rights to purchase all Warrant Shares granted pursuant to
this Warrant, such number of shares of Common Stock equal to the number of
Warrant Shares covered hereby. The Company covenants that all shares of Common
Stock issuable upon the exercise of this Warrant, upon receipt by the Company of
the Aggregate Exercise Price therefor, shall be validly issued, fully paid,
nonassessable, and free of preemptive rights.
6. The issuance of any shares or other securities upon the exercise of
this Warrant, and the delivery of certificates or other instruments representing
such shares or other securities, shall be made without charge to the Holder for
any tax or other charge in respect of such issuance, other than applicable
transfer taxes. The Company shall not, however, be required to pay any tax which
may be payable in respect of any transfer involved in the issuance and delivery
of any certificate in a name other than that of the Holder, and the Company
shall not be required to issue or deliver any such certificate unless and until
the person or persons requesting such issuance shall have paid to the Company
the amount of such tax or shall have established, to the satisfaction of the
Company, that such tax has been paid.
7. In the event that as a result of reorganization, merger,
consolidation, liquidation, recapitalization, stock split, or combination of
shares, the outstanding shares of Common Stock of the Company ate at any time
increased or decreased or changed into or exchanged for a different number or
kind of shares or other security of the Company or of another corporation, then
appropriate adjustments in the Exercise Price and in the number and kind of such
securities then subject to this Warrant shall be made effective as of the date
of such occurrence so that the position
<PAGE>
of the Holder, upon exercise, will be the same as it would have been had
he/she/it owned, immediately prior to the occurrence of such event, the Common
Stock subject to this Warrant. Such adjustment shall be made successively
whenever any event listed above shall occur and the Company will notify the
Holder of this Warrant of each such adjustment. Any fraction of a share
resulting from any adjustment shall be eliminated.
8. Unless and until registered by the Company under the Securities Act
of 1933, as amended (the "Act"), the Warrant Shares issued upon the exercise of
this Warrant shall be subject to a stop transfer order and the certificate or
certificates evidencing such Warrant Shares shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN NOT
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SUCH SHARES
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT, OR AN EXEMPTION FROM REGISTRATION UNDER SUCH
ACT. SUCH SHARES ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AS
CONTAINED IN A WARRANT, DATED FEBRUARY 29, 2000, COPIES OF WHICH ARE ON
FILE WITH THE SECRETARY OF THE COMPANY."
9. In addition to the foregoing, the Holder of this Warrant shall be
prohibited from offering, selling, contracting to sell or otherwise disposing of
or transferring the Warrant Shares until the earliest of: (i) the expiration of
the six (6) month period following the date of the Company's filing, with the
Securities and Exchange Commission, of a registration statement seeking
registration, under the Act, of such shares of the Company's Common Stock into
which this Warrant will convert; (ii) the date on which the composite closing
price of the Company's Common Stock, as reported on the Nasdaq National Market
System (or the principal, registered, national securities exchange on which the
Common Stock may then be trading), is $12.00 or greater for a period often (10)
consecutive trading days; and (iii) the date on which the Company's Common Stock
is no longer traded on the Nasdaq National Market System or any other
registered, national securities exchange.
10. Upon receipt of evidence satisfactory to the Company of the loss,
theft, destruction or mutilation of any Warrant (and upon surrender of any
Warrant if mutilated), and upon reimbursement of the Company's reasonable
incidental expenses and, if reasonably requested, an indemnity reasonably
acceptable to the Company, the Company shall execute and deliver to the Holder
thereof a new Warrant of like date, tenor, and denomination.
<PAGE>
11. The Holder of this Warrant shall not have, solely on account of
such status, any rights of a stockholder of the Company, either at law or in
equity, or to any notice of meetings of stockholders or of any other proceedings
of the Company, except as provided in this Warrant.
12. This Warrant shall be construed in accordance with the laws of the
State of New York applicable to contracts made and performed within such State,
without regard to principles of conflicts of law.
Dated: February 29, 2000
STERLING VISION, INC.
By: /s/ Joseph Silver
--------------------------------
Name: Joseph Silver
Title: Executive Vice President
<PAGE>
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer the
attached Warrant.)
FOR VALUE RECEIVED, ______________________________ hereby sells,
assigns, and transfers unto _____________________ a Warrant to purchase
______________ shares of Common Stock, $.01 par value per share, of Sterling
Vision, Inc. (the "Company"), together with all right, title, and interest
therein, and does hereby irrevocably constitute and appoint
________________________ attorney to transfer such Warrant on the books of the
Company, with full power of substitution.
Dated:
-----------------------------------
Signature
Signature Guaranteed:
NOTICE
The signature on the foregoing Assignment must correspond to the name
as written upon the face of this Warrant in every particular, without alteration
or enlargement or any change whatsoever.
<PAGE>
To: Sterling Vision, Inc.
1500 Hempstead Turnpike
East Meadow, New York 11554
ELECTION TO EXERCISE
The undersigned hereby exercises his, her, or its rights to
purchase shares of the Company's Common Stock (collectively, the
"Warrant Shares") covered by the within Warrant and tenders payment
herewith in the amount of $ in accordance with the terms thereof;
and the undersigned certifies that this Warrant is owned by the
undersigned free and clear of any and all claims, liens and/or
encumbrances and requests that certificates for such securities be
issued in the name of, and delivered to:
------------------------
------------------------
------------------------
(Print Name, Address and Social Security
or Tax Identification Number)
and, if such number of Warrant Shares shall not be all the Warrant
Shares covered by the within Warrant, that a new Warrant for the
balance of the Warrant Shares covered by the within Warrant be
registered in the name of, and delivered to, the undersigned at the
address stated below.
The undersigned request that the shares to be issued pursuant to this Election
to Exercise be issued by issuance of a Certificate therefor to the above
entity/individual.
Dated: Name:
------------------------ --------------------------
(Print)
Address:
------------------------------------------------------------------------
-------------------------------
(Signature)
<PAGE>
May 15, 2000
Board of Directors
Emerging Vision, Inc.
1500 Hempstead Turnpike
East Meadow, New York 11554
Re: Emerging Vision, Inc. -- Registration Statement on Form S-3
Gentlemen:
You have requested our opinion in connection with the above-captioned
Registration Statement on Form S-3 (the "Registration Statement") to be filed by
Emerging Vision, Inc., a New York corporation (the "Company"), with the
Securities and Exchange Commission pursuant to the Securities Act of 1933, as
amended (the "Act"), and the rules and regulations promulgated thereunder (the
"Rules"). The Registration Statement relates to the issuance by the Company of
an aggregate of 6,542,710 shares of its Common Stock, par value $.01 per share
(the "Common Stock"), consisting of the following: (i) 3,355,140 shares (the
"Private Placement Shares") issued upon the conversion of the Company's Series B
Convertible Preferred Stock, par value $.01 per share ("Series B Preferred
Stock"), in April 2000 that were sold as part of a private placement completed
by the Company in March 2000, (ii) 1,677,570 shares (the "Private Placement
Warrant Shares") issuable upon the exercise of warrants ("Private Placement
Warrants") also sold as part of the private placement, (iii) 500,000 shares
("Placement Agent Warrant Shares") issuable upon exercise of warrants (the
"Placement Agent Warrants") issued to the placement agents and/or their
designees in partial consideration of the services which they rendered in
connection with the private placement and (iv) an aggregate of 1,010,000 shares
issued to two consulting firms which are performing certain services on behalf
of the Company (the "Consulting Shares").
We have examined such records and documents and have made such
examination of law as we considered necessary to form a basis for the opinions
set forth herein. In our examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals, and
the conformity with the originals of all documents submitted to us as copies
thereof.
Based upon such examination, it is our opinion that when there has been
compliance with the Act and applicable state securities laws that:
37
<PAGE>
1. The Private Placement Shares and the Consulting Shares have
been validly issued, and are fully paid and non-assessable;
and
2. The Private Placement Warrant Shares, when issued and
delivered in accordance with the terms of the Private
Placement Warrants, and the Placement Agent Warrants Shares,
when issued in accordance with the terms of the Placement
Agent Warrants, will be validly issued, fully paid and
non-assessable.
We hereby consent to the filing of this opinion as an exhibit to this
Registration Statement and to the reference to our Firm under the caption "Legal
Matters" in this Registration Statement.
Very truly yours,
/s/ CAMHY KARLINSKY & STEIN LLP
CAMHY KARLINSKY & STEIN LLP
<PAGE>
CONSENT OF ARTHUR ANDERSEN LLP
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement of our report dated
March 29, 2000 included in Emerging Vision, Inc.'s Form 10-K for the year ended
December 31, 1999 and to all references to our Firm included in this
registration statement.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Melville, New York
May 15, 2000
<PAGE>
CONSENT OF DELOITTE & TOUCHE LLP
EXHIBIT 23.2
INDEPENDENT AUDITOR'S CONSENT
To the Board of Directors of
Emerging Vision, Inc.
East Meadow, New York
We consent to the incorporation by reference in this Registration Statement of
Emerging Vision, Inc. (formally known as Sterling Vision, Inc.) on Form S-3 of
our report dated April 15, 1998, appearing in the Annual Report on Form 10-K of
Sterling Vision, Inc. for the year ended December 31, 1997.
We also consent to the reference to us under the heading "Experts" in the
Prospectus included as part of such Registration Statement.
/s/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
New York, New York
May 16, 2000
